TMI Blog2023 (4) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... - HELD THAT:- As addition has been made on account of cash payment noted to have been made by the assessee for investment in land; the source of which was not explained. No evidences were filed to the Assessing Officer, nor to the learned CIT(A)explaining the source of investment. CIT(A) has recorded a finding to this effect that the assessee has failed to prove the source of investment in cash in the land purchased. Even additional evidences filed by the assessee were considered by the Ld.CIT(A) and found to be of no relevance - Decided against assessee. Disallowance of employee benefit expenses and other expenses in the absence of any evidence filed by the assessee to substantiate its claim - HELD THAT:- In the absence of representation of the assessee before us, the findings of the Ld.CIT(A) remain un controverted upholding the disallowances - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... oved the creditworthiness and genuineness of the of share capital raised during the year. Further, the appellant has failed to discharge the burden of proof vis a vis credits in the books and the genuineness. Therefore, an amount an of Rs.25,00,000/- is added to the total income of the assessee as unexplained cash credit under section 68 of the Act by the A.O. On the other hand appellant has contended that he has already submitted the details in the prescribed format as asked by the A.O. along with filed the copy of income tax return, PAN, Passport and copy of ROC for issuing of shares. The appellant has also argued that A.O. has not verified all the details submitted at the time of assessment proceedings. The appellant has relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. Divine Leasing and Finance ltd. and CIT vs. Lovely Exports Pvt. Ltd. (2008) 299 ITR 268 (Del.). Further the appellant has relied upon the various decisions insupport of its claim. Therefore delete the addition made of share capital under Section 68 6fthe I.T. Act. 2.4 I have gone through the above facts of the case carefully. In order to discharge the burden cast upon the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction. In such a case it cannot said that the affidavits can be rejected only after cross verification. In this judgement CIT v/s Nova promoters fin lease private limited in 18 taxmann.com 217 Hon'ble Delhi High Court has made the following observation:- 19. The position thus is that even where a reference of a question of law is made to the High Court under Section 66 of the Indian Income Tax. Act, 1922 or Section 256 of the Income Tax Act, 1961 over which the High Court exercises advisory jurisdiction, and not appellate jurisdiction, where normally the findings of fact recorded by the Tribunal are binding on the High Court, it has been held by the Supreme Court that the findings are not binding on the High Court if they are perverse or if the findings are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. The position in an appeal under Section 260A of the Act is "a fortiori" as the judgment of the Supreme Court in the case ofDIT v. Bharat Dimond Bourse, (supra ) would show. We shall demonstrate in the following paragraphs as to how both the CIT (Appeals) and the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Stock Exchange. No evidence had been brought on record by the Assessing Officer to indicate that the shareholders were either benamidars of the assessee-company or fictitious or that the share application monies were the unaccounted income of the assessee-company. The Tribunal accordingly held that the onus that lay on the assessee under sec. 68 stood discharged. 34. In respect of the other assessee, namely, General Exports & Credits Ltd., the monies were received by the said company on issue of rights shares to five companies pursuant to the renunciation of rights by several individual shareholders. A search had been conducted on the premises of the assessee, but those renunciation forms were not found with the assessee. As in the case of Divine Leasing & Finance Ltd., the five companies were registered in Sikkim at the same address. They all filed replies to the department asking for further time to provide the details of their investments. They had also filed returns of income under the Sikkim Taxation Manual and had subscribed to the shares through banking channels. Moreover, the investigations carried out into those companies by the income-tax department at Calcutta and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that when details were furnished by the assessee, the burden shifted to the Assessing Officer to investigate into the creditworthiness of the share applicants which he was unable to discharge. Thus, the order of the Tribunal deleting the addition was held not giving rise to any question of law, much less any substantial question of law. 36. It is not only relevant to note the above facts, which distinguish those three cases (supra) from the case before us, but it is also relevant tonote the following observations made by this court in the above three cases: "There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessed it should not be harassed by the revenues insistence that it should prove the negative. In the case of a public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders' register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec. 68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed "accommodation entry providers", whose business it is to help assessees bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this court in CIT v. Oasis Hospitalities Private Limited, (2011) 333 ITR 119. We have given utmost consideration to the judgment. It disposes of several appeals in the case of different assessees. Except the case of CIT v Oasis Hospitalities P Ltd. (ITA Nos. 2093 & 2095/2010), the other cases fall under the category of Orissa Corporation (supra). However, in the case of Oasis Hospitalities P Ltd., there is reference to information received by the Assessing Officer from the investigation wing of the revenue on the basis of which it was found that six investors belong to one Mahesh Garg Group who were not carrying on any real business activity and were engaged in the business of providing accommodation entries. They were entry operators and the assessee in that case was alleged to be a beneficiary. While disposing of these appeals, this court observed: - "The Assessees filed copies of PAN, acknowledgement of filing income tax returns of the companies, their bank account statements for the relevant period, i.e., for the period when the cheques were cleared. However, the parties were not produced in spite of specific direction of the AO instead of taking opportunities in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,000 made under section 68 of the Act as well as the consequential addition of Rs.2,96,250. We accordingly answer the substantial questions of law in the negative and in favour of the department. The assessee shall pay costs which we assess at Rs. 30,000/-. The jurisdictional High Court (Hon'ble Gujarat High Court) in the case of Kaushal H. Patel vs. Income-tax Officer [2014] 50 taxmann.com 136 (Gujarat) the Hon'ble High Court had held that: "Where assessee received huge amount through banking channels as cash credits in its bank account but failed to render an explanation for same, said amount was to be treated as income in hands of assessee". 2.7. In view of the above-mentioned facts and legal position, I hold that the assessing officer is justified in coming to the conclusion that the received of Rs.25,00,000/- shown by the appellant and share application money from 2 individuals HiteshbhaiBalubhai Shah &PoojanHiteshbhai Shah are not genuine. The assessing officer has given detailed reason in the assessment order for coming to this conclusion (as discussed supra) which is not repeated here. In view of various discrepancies pointed out by the assessing officer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... address, PAN of persons from whom unsecured loan has been taken. The appellant has submitted return of income of Bhavnaben Hitesh Shah from whom unsecured loan of Rs.5,00,000/- has been accepted during the year under consideration but appellant has not furnished the confirmation in this regard. The appellant has failed to prove the creditworthiness and genuineness before A.O. Therefore, an amount an of Rs.5,00,000/- is added to the total income of the assessee as unexplained cash credit under section 68 of the Act by the A. O. The appellant has submitted that the Assessing Officer has made addition of Rs. 5,00,000/- u/s.68 after holding that the appellant has failed to prove genuineness of transaction. The A.R. in the written submissions has stated that unsecured loan of Rs.5,00,000/- which is taken from family members of the promoters and funds has been received though banking channels only from the relative of the directors. Further, the appellant has relied upon the decision of Hon'ble Gujarat High Court in the case ofNemi Chand Kothari vs. CIT (2003) 264 ITR 254. 3.4. After going through the assessment order and the submission of the appellant, itis seen that during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e determination under appeal. The position in an appeal under Section 260A of the Act is "a fortiori" as the judgment of the Supreme Court in the case of DIT v. Bharat Dimond Bourse, (supra) would show. We shall demonstrate in the following paragraphs as to how both the CIT (Appeals) and the Tribunal have failed to appreciate the evidence in the proper perspective and on the lines indicated by the Hegde J. in the case of Durga Prasad More (supra). The present case is also not one, as we shall show presently, where the conclusion of the Tribunal is a reasonable conclusion which should not normally be disturbed even if the appellate court would have taken a different view on the same evidence and material. In the present appeal the evidence and material on record, properly considered in the light of the surrounding circumstances and without attaching weight to neutral circumstances or circumstances of no relevance, point to only one conclusion, namely, that the monies introduced by the assesses as share subscriptions from 15 companies were its own unaccounted monies. The jurisdictional High Court (Hon'ble Gujarat High Court) in the case of Kaushal H. Patel vs. Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the whole purchase price of land and building were recorded in the books." 10. The learned CIT(A) has dealt with the facts of this case and has adjudicated the issue at paragraph Nos. 4.3 to 4.5 of his order as under:- "4.3 I have carefully considered the Assessment Order and submission filed by the Appellant. It is seen from balance sheet that assessee has purchased land and building of Rs.1,12,88,865/-. The A.O. has asked to appellant to submit the details regarding purchase deed of land and source of investment in immovable property with supporting evidences during the year consideration. Further on careful perusal of purchase deed, the A.O. has observed that appellant has paid as consideration in cash as under: Sr. No. Amount Rs. Cheque / Pay order no /Cash Date Bank Details City 1 1,00,000/- Cash 27.03.2012 N. A. N.A. 2 15,00,000/- Cash 28.03.2012 N.A. N.A. 3 10,00,000/- Cash 29.03.2012 N. A. N.A. 4 10,00,000/- Cash 30.03.2012 N.A. N.A. Total 36,00,000/- The appellant has not submitted any evidences in support of source of cash payment made for purchase of land. In the absence of supporting evidence, the A.O. has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservations cannot be picked in isolation as to treat that as the conclusion of the Tribunal. When one reads the order of the Assessing Officer, that of the Commissioner (Appeals) and also of the Tribunal, inescapable conclusion one arrives at is that the Revenue authorities as well as the Tribunal found the entire transaction not genuine. There was sufficient evidence on record to suggest that in case of all the depositors, their bank accounts contained meager balance shortly before sizable amount of Rs. 1 lakh and upward were given to the assessee through such account. In such bank accounts, cash amounts were credited and immediately entire amounts were withdrawn through issuance of such cheques in favour of the assessee. It was noticed that such creditors did not maintain any books of account. Nowhere their capacity to raise such amount for drawing cheque of sizable amounts was established. In short therefore, the very genuineness of the transaction was not established. This therefore, is not a case where the Revenue makes addition on the assessee failing to establish source of the source. All issues are essentially based on facts and appreciation of evidence on record. No quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises ostensibly was a firm floated for carrying on the business of prize tickets and for collecting deposits from the public. K. Palanisamy was the man behind the said activity. His statement was recorded on various dates. He has admitted that the partners were fictitious. They were not eligible to any shares in the profits of the firm.K. Palanisamy has further stated that monies were lying in various banks in FDRs. in the names of these so-called partners. He further claimed that part of this amount belonged to the members of the public. This part of the statement was not accepted by the Department. In view of the aforestated position the Assessing Officer proceeded to frame the assessment in the hands of Palanisamy on protective basis and in the hands of deposit holders for unexplained deposits. The most important aspect of the case is that although M/s. V.V. Enterprises was stated to be a registered firm, there were no bank accounts in the name of such a firm. There were no accounts in the name of any of the partners of the alleged firm. There were no deposits in the name of the alleged firm. There were no deposits in the name of any of the partners of the alleged firm. None of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that members of the public have been placing their deposits with the said firm through their relatives and friends, therefore, there was no question of linking up all these amounts with the books of the firm as ordered by the Tribunal. In the above facts, the Department was right in holding that income on unexplained investments cannot be considered in the hands of the firm found to be fictitious. Therefore, the Tribunal had erred in directing linking up of the deposits with the accounts of the alleged firm. Where a deposit stands in the name of a third person and where that person is related to the assessee then in such a case the proper course would be to call upon the person in whose books the deposit appears or the person in whose name the deposit stands should be called upon to explain such deposit. In the present case, there is no evidence recording registration of the firm. In the present case, books of accounts are not properly maintained. In the present case, there is no explanation regardingthe source of investment. . In the present case, the evidence of K. Palanisamy,indicates that even the partners of the firm were fictitious. In the above circumstances, the Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentation of the assessee before us to counter the findings of the Ld.CIT(A) we see no reason to interfere in the order of the Ld.CIT(A) confirming the addition of unexplained investment to the tune of Rs.36 lacs. Ground No.3 of the assessee's appeal is accordingly dismissed. 12. Ground of appeal No.4 taken by the assessee reads as under:- "4. The ld. CIT(A) has grossly erred in law and on facts in confirming the disallowance of Rs.13,54,000/- (actual Rs.13,54,854/-), detailed as under, in total disregard of the facts and nature of the expenditure. (i) Employee Expenses Sr. No. Name of expenditure Amount (Rs). 1 Remuneration to Director 5,00,000/- 2 Salary 1,44,000/- Total 6,44,000/- (ii) Other Expenses:- Sr. No. Name of expenditure Amount (Rs). 1 Accounting charges 15,000/- 2 Audit Fees 10,000/- 3 Bank Charges 625/- 4 Conveyance Expenses 30,215/- 5 Documentary Charges 50,000/- 6 Legal Expenses 23,500/- 7 Machinery Purchase 5,00,000/- 8 Miscellaneous Expenses 6,334/- 9 Preliminary Expenses W/off 17,324/- 10 Property Valuation Charges 50,000/- 11 Telephone Expenses 7,856/- Total 7,10,854/- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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