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TMI Blog2016 (4) TMI 1479X X X X Extracts X X X X X X X X Extracts X X X X ..... e nine companies who said to have invested in the shares of the assessee-company. Since the assessee specifically claims that the letters were not sent to the correct address of the investors, Tribunal is of the considered opinion that giving one more opportunity to the AO to send the letters to correct address of nine companies may not prejudice the interest of the Revenue.
This Tribunal is of the considered opinion that giving such an opportunity would definitely promote the cause of justice. Before concluding that the transactions are bogus or dubious in nature, this Tribunal is of the considered opinion that the existence of the so-called nine companies need to be ascertained.
Accordingly, the orders of the authorities below are set aside and the issue of addition made u/s 68 is remitted back to the file of the AO. AO shall issue notice to the nine companies in the address mentioned in the website of Department of Corporate Affairs. It is open to the assessee to furnish correct address of nine companies so as to enable the Assessing Officer to issue letters / show cause notice with regard to investment made in the assessee-company. X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Special Bench of this Tribunal in Merilyn Shipping and Transports (supra). We find that the Calcutta High Court in Cresent Export Syndicate (supra) examined the correctness of the decision of the Special Bench and found that the decision of the Special Bench is no longer a good law. A similar view was taken by the Gujarat High Court in Sikandarkhan N. Tunvar (supra). The Cochin Bench of this Tribunal had an occasion to examine an identical issue in Shri Thomas George Muthoot v. ACIT in I.T.A. No. 63 & 64/Coch/2014 dated 28.08.2014, and observed as follows:- "11. The next contention of the assessee is that the has already paid the amount, provisions of section 40(a)(ia) is applicable only in respect of amount which remains to be payable on the last day of the financial year. The Ld. representative placed his reliance on the decision of Special Bench of this Tribunal in Merilyn Shipping and Transport v. Addl.CIT (2012) 70 DTR 81 and also the judgment of the Allahabad High Court in CIT vs M/s Vector Shipping Services (P) Ltd. I.T.A. No. 122 of 2013 judgment dated 09-07-2013 and submitted that the SLP filed by the revenue in the Apex Court against the judgment of the Allahabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of doubt under the taxation law would go to the assessee. It is also equally settled principles of law that the judgment which discusses the point in issue elaborately and gives an elaborate reasoning has to be preferred when compared to the judgment which has no reasoning and discussion. Admittedly, the Calcutta High Court and Gujarat High Court have discussed the issue elaborately and the specific reasoning has also been recorded as to why the Special Bench is not correct. Therefore, this Tribunal is of the considered opinion that the judgments of the Calcutta High Court Crescent Exports Syndicate & Another (supra) and Gujarat High Court in Sikandarkhan N Tunvar (supra) have to be preferred when compared to the Allahabad High Court in M/s Vector Shipping Services (P) Ltd (supra). 13. For the purpose of convenience we reproducing below the observations made by the Calcutta High Court in Crescent Exports Syndicate & Another (supra) and Gujarat High Court in Sikandarkhan N Tunvar (supra): Calcutta High Court in Crescent Exports Syndicate & Another (supra) "Before dealing with the submissions of the learned Counsel appearing for the assessees in both the appeals we hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance shall be restricted to the money which is yet to be paid. What the Tribunal by majority did was to supply the casus omissus which was not permissible and could only have been done by the Supreme Court in an appropriate case. Reference in this regard may be made to the judgment in the case of Bhuwalka Steel Industries vs. Bombay Iron & Steel Labour Board reported in 2010(2) SCC 273. 'Unprotected worker' was finally defined in Section 2(11) of the Mathadi Act as follows:- ''unprotected worker' means a manual worker who is engaged or to be engaged in any scheduled employment." The contention raised with reference to what was there in the bill was rejected by the Supreme Court by holding as follows: "It must, at this juncture, be noted that in spite of Section 2(11), which included the words "but for the provisions of this Act is not adequately protected by legislation for welfare and benefits of the labour force in the State", these precise words were removed by the legislature and the definition was made limited as it has been finally legislated upon. It is to be noted that when the Bill came to be passed and received the assent of the Vice-President on 05-06-1969 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofessional services or fees for technical services or to a contractor of sub-contractor shall not be deducted in com putting the income of an assessee in case he has not deducted, or after deduction has not paid within the specified time. The language used by the legislature in the finally enacted law is clear and unambiguous whereas the language used in the bill was ambiguous. A few words are now necessary to deal with the submission of Mr. Bagchi and Ms. Roychowdhuri. There can be no denial that the provision in question is harsh. But that is no ground to read the same in a manner which was not intended by the legislature. This is our answer to the submission of Mr. Bagchi. The submission of Mr. Roychowdhuri that the second proviso sought to become effective from 1st April, 2013 should be held to have already become operative prior to the appointed date cannot also be acceded to for the same reason indicated above. The law was deliberately made harsh to secure compliance of the provisions requiring deductions of tax at source. It is not the case of an inadvertent error. For the reasons discussed above, we are of the opinion that the majority views expressed in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resident or amounts payable to a contractor or sub-contractor for carrying out any work. The language used is not that such amount must continue to remain payable till the end of the accounting year. Any such interpretation would require reading words which the legislature has not used. No such interpretation would even otherwise be justified because in our opinion, the legislature could not have intended to bring about any such distinction nor the language used in the section brings about any such meaning. If the interpretation s advanced by the assessees is accepted, it would lead to a situation where the assessee though was required to deduct the tax at source but no such deduction was made or more flagrantly deduction though made is not paid to the Government, would escape the consequence only because the amount was already paid over before the end of the year in contrast to another assessee who would otherwise be in similar situation but in whose case the amount remained payable till the end of the year. We simply do not see any logic why the legislature would have desired to bring about such irreconcilable and diverse consequences. We hasten to add that this is not the prime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady observed, we have serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provisions is amply clear. 38. In the result, w are of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 20 ITA No. 63&64m 83-85&7-72/Coch/2014 31st March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirement of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s Merilyn Shipping & Transports vs ACIT (supra), does not lay down correct law." 14. By following the judgments of the Calcutta High Court in Crescent Export Syndicate (supra) and the Gujarat High Court in Sikandarkhan N Tunvar (supra), this Tribunal is of the considered opinion that the decision of the Special Bench of this Tribunal in the case of M/s Merilyn Shipping & Transports (supra) and the judgment of the Allahabad High Court in Vector Shipping Services (P) Ltd (supra) are not applicable to the facts of the case under consideration whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terfere with the order of the lower authority and accordingly the same is confirmed. 7. The next issue arises for consideration is with regard to the addition of ₹169,00,000/- made by the Assessing Officer under Section 68 of the Act. 8. Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the Assessing Officer has made an addition of ₹3,00,00,000/- under Section 68 of the Act. The CIT(Appeals), by considering the facts of the case and remand report filed by the Assessing Officer, confirmed the addition to the extent of ₹169,00,000/-. However, he deleted the balance amount. The Revenue has filed appeal against the order of the CIT(Appeals) wherein part of the amount was deleted by the Commissioner. According to the Ld. counsel, the assessee has received a sum of ₹2.79 Crores from nine companies towards application money for allotment of shares. The shares were issued at premium of ₹990/- and the face value was ₹10/-. The Ld.counsel further submitted that the relationship among the investor companies was strained, therefore, the relevant material could not be furnished before the authorities below. According to the Ld. counsel, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o other companies. 10. Sh. A.B. Koli, the Ld. Departmental Representative further submitted that even the Minutes of the Board Meetings were not furnished before the authorities below or before this Tribunal. Copies of the share purchase agreement entered into with private parties were not filed before the authorities below or before this Tribunal. The Ld. D.R. further submitted that one Shri Ajay Sharma was the authorized signatory for three companies, namely, M/s First Choice Buildwell P. Ltd., M/s Good Morning Buildwell Pvt. Ltd. and M/s Armaan Infoways Pvt. Ltd. Similarly, one Shri Anil Kumar Agarwal was the authorized signatory for M/s Tripurari Enterprises Pvt. Ltd., M/s Ankey Associates Pvt. Ltd. and M/s Intelecom Ltd. Therefore, all the authorized signatories are the common persons. In the absence of substantial evidence to support the claim of share application money, the Assessing Officer has rightly found that the assessee has introduced its own funds, hence, the amounts are to be treated as unexplained credit in the hands of the assessee. Therefore, according to the Ld. D.R., the CIT(Appeals) is not justified in disallowing the claim of the assessee partly. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessee specifically claims that the letters were not sent to the correct address of the investors, this Tribunal is of the considered opinion that giving one more opportunity to the Assessing Officer to send the letters to correct address of nine companies may not prejudice the interest of the Revenue. This Tribunal is of the considered opinion that giving such an opportunity would definitely promote the cause of justice. Before concluding that the transactions are bogus or dubious in nature, this Tribunal is of the considered opinion that the existence of the so-called nine companies need to be ascertained. Accordingly, the orders of the authorities below are set aside and the issue of addition of ₹3,00,00,000/- made under Section 68 of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall issue notice to the nine companies in the address mentioned in the website of Department of Corporate Affairs. It is open to the assessee to furnish correct address of nine companies so as to enable the Assessing Officer to issue letters / show cause notice with regard to investment made in the assessee-company. The Assessing Officer, after call ..... X X X X Extracts X X X X X X X X Extracts X X X X
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