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TMI Blog2025 (4) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was an increase in share capital at Rs.7,15,80,000/-. Thus the AO vide order sheet entry dated 25-08-2010, asked the assessee to file the details viz. names and addresses of the persons who had subscribed to share capital along with date and mode of payment. However, no compliance was made. The AO vide show notice dated 1312-2010 reiterated the requirement of order sheet entry dated 25-08- 2010. It was further required of the assessee to furnish details of incometax in respect of the share subscribers along with copies of share certificates ete and also to prove the identity and creditworthiness of the creditors and genuineness of transaction. The AO vide order sheet noting dated 20-12-2010 further required the assessee to furnish confirmation letters from other share applicants besides the followings persons were required to be produced for examination and verification:- (i) Sh. Sanjeev (ii)Sh. Mukesh Gupta (iii) Sh. Surendra Pal Singh Again no compliance was made on the date fixed for compliance, however, on 27-12-2010, the authorized representative and Ld. counsel for the assessee appeared and furnished confirmation letters from M/s Doaba Rolling Mills (P) Ltd. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to make addition u/s 68 of the Act amounting to Rs.2,17,93,845/-which was added to the income of the assessee." 3. Aggrieved by the assessment order dated 29/12/2009, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 24/05/2012, deleted the addition of Rs. 1,80,00,000/- made by the A.O. on account of share capital and also deleted the addition of Rs. 2,17,93,845/- made on account of unsecured loan. Further sustained the addition of Rs. 5,35,80,000/- made u/s 68 of the Act. As against the order of the Ld. CIT(A) in deleting the additions the Department of Revenue preferred the Appeal in ITA No. 4185/Del/2012 on the following grounds:- "1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law in deleting the addition of Rs.1,80,00,000/- made by the Assessing Officer on account of share capital by ignoring the fact that M/s. K.K.Steels (P) Ltd. Failed to prove the genuineness of the transactions and director of both the companies is the same person and M/s. Doaba Rolling Mills (P) Ltd has not complied with the notices sent by the Assessing Officer under section 133(6) of the I.T.Act, 1961 during the course of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive and the income has been wrongly and illegally assessed at Rs 5,35,80,000/- 10. That the interests U/s 234B and 234C have been wrongly and illegally charged. The appellant has not committed any default of payment of Advance tax as it could not have anticipated such additions while estimating the current income. In any case the interest charged has been wrongly worked out and is excessive. 11. That the appellant reserves the right to add/ amend/ alter the grounds of appeal." 5. Pursuant to the above additions, a penalty proceedings was also initiated and an order of penalty came to be passed u/s 271(1)(c) of the Act on 31/03/2014, which has been called in question by the Assessee before the Ld. CIT(A) and the Ld. CIT(A) dismissed the appeal on 24/11/2014 by confirming the order of the penalty. Aggrieved by the order of the Ld. CIT(A) dated 24/11/2014 confirming the penalty.TheAssessee preferred the Appeal in ITA No. 155/Del/2015 on the following grounds:- "1. That the notice issued U/s 271 (1) (c) and order imposing penalty of Rs.1.82,12,000.00 under said section are illegal, bad in law, and without jurisdiction. 2. That in view of the facts and circumstance of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) of the Act, during the course of assessment proceedings as well as Remand Report proceedings. Thus, contended that, the order of the Ld. CIT(A) in deleting the above addition deserves to be reversed. 8. Heard the Ld. Departmental Representative and perused the material available on record. The Ld. CIT(A) while deleting the share application money received from M/s K. K. Steel Pvt. Ltd. and M/s Doaba Rolling Mills Ltd. observed that those Companies are sister concerned Companies of the Assessee and the Assessee has furnished the requisite details and evidence to establish identity and creditworthiness of the creditor and genuineness of the transaction. Considering the fact that the Department of Revenue has not brought anything on record to prove otherwise that those two Companies are not sister concern entities and also not brought anything on record to prove that the Assessee has not established identity and creditworthiness of the creditors, we find no error or infirmity in the order of the Ld. CIT(A) in deleting the addition of Rs. 1,80,00,000/- made by the A.O. 9. In Ground No. 2, the Department contended that the Ld. CIT(A) erred in deleting the addition of Rs. 2,17,93,84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that one Mr. Mukesh Gupta and Surender Pal Singh who are Directors in several Companies who have been reported as conduits in the report circulated to A.O. by the Director of Investigation, Delhi. Further as per the Remand Report, the share applicant Companies were not found at the given address and the same were found to be paper Companies. Further submitted that the Ld. CIT(A) has analyzed the entire issue judiciously and rightly confirmed the addition, which requires no interference at the hands of the Tribunal. 14. We have heard the Ld. Departmental Representative and perused the material available on record. The Ld. CIT(A) while examining the issue of addition made u/s 68 of the Act confirmed the additions made in respect of 21 Companies in following manners:- "The facts of the case, submissions made by the appellant remand,reports of the AO as well as rejoinders filed by the appellant have been carefully considered. It is observed that the AO had made addition at Rs.7,15,800/- on the ground that in the copies of 14 ITRs of the share applicants companies, income declared ranged from Nil to Rs. 10.000/- whereas the investment in share capital ranged from Rs. 10,00.000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of documentary evidence. The evidence adduced by the appellant has to be examined not superficially but in depth and having regard to the test of human probabilities and normal course of human conduct. It is pertinent to mention here that in the appellant's case two share subscribers are Sh. Mukesh Gupta and Sh. Surendra Pal Singh who are directors in several companies and have been reported as conduits in report circulated to the AOs by the Directorate of Investigation, Delhi. Further, the Hon'ble Delhi High in the case of the case of CIT vs. Nova Promoters & Finlease (P) Ltd. ITA No.342 of 2011 has also held Sh. Mukesh Gupta as conduit and based on the reasoning elucidated in the aforesaid order, the assessee has been held as beneficiary in the garb of share application money and the appeal filed by the Revenue stands allowed. Regarding other share applicant companies the AO has furnished remand report wherein it has been submitted that as per the report of the ITI the share applicant companies were not found at the given address. The fact remains that such companies which were paper companies and just being used as conduits have no physical office registered or working ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to why the share applicant companies who had confirmations in favour of the appellant, could not present themselves before the AO for being examined. Admittedly, the AO has made every effort to locate the share applicant companies by making/ issuing summons/s 131/ notices u/s 133(6) and enquiries conducted through the ITI. In the given facts and circumstances it is clear that these entries are not representing genuine share application monies, but rather they represent concocted/sham transaction merely with the purpose of routing assessee's undisclosed income into its books. But to reiterate, the documentary evidence like confirmation letters, copy of I.T. return as well as PAN of the entry giver lose their value, as they have been created on paper to lend the semblance of genuineness regarding identity and creditworthiness of these entry givers(listed from S.No.1 to 21 above) The bottom line is that the entry of the transaction is not genuine and this is why the appellant has not been able to produce these creditors for verification. Therefore, the addition made to the extent of Rs.5,35,80,000/- (being share application money from the persons/companies listed from S.No.1 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, notice u/s 133(6) of the Act the burden will also cast upon on the Assessee to prove the three limbs/requirements of the Section 68 of the Act, which has not been discharged by the Assessee. Considering the above facts and circumstances, we find no reason to interfere in the order of the Ld. CIT(A) in confirming the addition of Rs. 5,35,80,000/-. Finding no merits in the Grounds of appeal of the Assessee, we dismiss the same. 16. In the result, Appeal filed by the Assessee in ITA No. 4407/Del/2012 is dismissed. ITA No. 155/Del/2015 17. In the present Appeal, the Assessee has challenged the order of the Ld. CIT(A),wherein the Ld. CIT(A) upheld the impugned penalty of Rs. 1,82,12,000/- u/s 271(1)(c) of the Act. 18. The Ld. Departmental Representative relying on the orders of the Lower Authorities sought for dismissal of the Appeal filed by the Assessee. 19. Heard the Ld. Departmental Representative and perused the material available on record. 20. A penalty order u/s 271(1)(c) of the Act has been passed on 31/03/2014 consequent to the assessment order dated 29/12/2009, wherein the Ld. A.O. made addition u/s 68 of the Act. The Ld. CIT(A) while upholding the order of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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