2012 (10) TMI 314 - AT - Income Tax

Tribunal upholds assessment reopening & deletion of share capital addition

The Tribunal upheld the re-opening of the assessment under Section 148, dismissing the assessee's cross-objection. Additionally, the Tribunal upheld the ... Validity of re-opening of Assessment - supply of information by the Investigation Wing - Unexplained Cash Credits - held that:- As decided by Court in the case of [AGR Investment Ltd. V Addl. CI T 2011 (1) TMI 48 - DELHI HIGH COURT] It was open to the assessee to participate in the re-assessment proceedings and put forth its stand in detail to satisfy the AO that there was no escapement of taxable income. It is evident that mere communication of information emanating from the investigation and not interpretation thereof, is not the same thing. If there is an information from the investigation, on which AO has acted, as is in the present case, then AO has jurisdiction u/s 147 r.w.s. 148 of the Act - findings of the CIT(A) are upheld and C.O. of the assessee is dismissed. Unexplained Cash Credits - issue of new share capital - held that:- The appellant has discharged onus, within the meaning of Section 68 of the Act and also in consonance with the general principles of law. The AO made the impugned addition, primarily on the ground of non-production of the persons, who subscribed to the share capital, as is evident from the extracts of findings of the AO. - onus shifts on the AO, to bring credible material on record to show the non-existence of such subscribers and non-genuineness of such transactions. - Addition deleted - decided in favor of assessee. Decision of Apex Court in CIT V Steller Investment Ltd. [2000 (7) TMI 76 - SUPREME COURT] followed Issues Involved1. Validity of the re-opening of assessment under Section 148 of the Income-tax Act, 1961.2. Deletion of addition of Rs. 1,95,00,000/- made by the Assessing Officer (AO) on account of disallowance on the issue of new share capital.Issue-wise Detailed Analysis1. Validity of the Re-opening of Assessment under Section 148Arguments by the Assessee:The assessee contended that the notice issued by the AO was not based on any fresh material nor on the application of mind. The assessment was originally framed under Section 143(3) on 24.12.2008. The assessee referred to the CIT(A)'s order and various case laws, including CIT v. Paramjit Kaur and N.D. Bhatt v. IBM World Trade Corporation, arguing that the initiation of re-assessment proceedings was based on suspicion and not on valid grounds.Arguments by the Revenue:The Revenue argued that the reasons recorded under Section 148 were valid for initiating action under Section 147 read with Section 148. Information was received from the Investigation Wing after the original assessment, which indicated that the assessee was a beneficiary of accommodation entries provided by Shri Tarun Goyal.Tribunal's Findings:The Tribunal held that the AO had duly applied his mind to the information provided by the Investigation Wing. The reasons recorded by the AO were specific, definite, and relevant, establishing a direct nexus between the reasons and the formation of belief for the escapement of income. The Tribunal cited various case laws, including CIT v. P.V.S. Beedies Pvt. Ltd. and AGR Investment Ltd. v. Addl. CIT, to support the validity of the re-opening of the assessment.Conclusion:The Tribunal upheld the re-opening of the assessment under Section 148, dismissing the assessee's cross-objection.2. Deletion of Addition of Rs. 1,95,00,000/- on Account of New Share CapitalArguments by the Revenue:The Revenue contended that the CIT(A) erred in deleting the addition made by the AO. The AO had made the addition on the ground that the assessee failed to produce the persons who subscribed to the share capital for verification. The Revenue relied on the decisions in Aggarwal Coal Corporation Pvt. Ltd. v. Addl. CIT and Power Drugs Ltd. v. CIT.Arguments by the Assessee:The assessee argued that it had provided all necessary details to prove the identity, creditworthiness, and genuineness of the transactions related to the share capital. The assessee relied on various case laws, including CIT v. Steller Investments (P) Ltd. and CIT v. Lovely Exports Pvt. Ltd., to support its contention.Tribunal's Findings:The Tribunal noted that the assessee had filed comprehensive evidence, including affidavits, income tax returns, bank statements, and other financial documents, to prove the identity, creditworthiness, and genuineness of the share subscribers. The Tribunal found that the AO had failed to rebut the evidence provided by the assessee. The Tribunal also noted that the AO had ignored the assessee's request to issue summons under Section 131 and had primarily made the addition based on non-production of the subscribers.Conclusion:The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 1,95,00,000/-, finding no infirmity in the CIT(A)'s findings. The Tribunal dismissed the Revenue's appeal on this ground.Final DecisionBoth the cross-objection of the assessee and the appeal of the Revenue were dismissed. The Tribunal upheld the re-opening of the assessment under Section 148 and the deletion of the addition of Rs. 1,95,00,000/- made by the AO.