TaxTMI 
TaxTMI 
2010 (11) TMI 196
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....ellant had failed to prove the increase in share capital as well as reserves and surplus aggregating to Rs. 6.20 crore. 2.2 The Ld. CIT (A) ought to have considered the written submissions made by the appellant in this regard as well as the fresh balance sheet filed along with reply dated 23-6-2007 in remand proceedings with AO. The Ld. CIT (A) has failed to direct the AO to make necessary inquiries in view of the flows pointed out by the appellant". 2. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. 3. The facts of the case are that in this case return of income for the previous year relevant to AY 2004-05 was filed on12-7-2004 declaring loss of Rs. 1,850. The same was processed under section 143(1) of the IT Act on21-2-2005. The case was selected for scrutiny and accordingly notice under section 143(2) dated25-7-2005 of the IT Act was issued to the assessee. Subsequently notice under section. 143(2) of the IT Act dated11-8-2005 and notice under section. 142(1) of the IT Act was also served calling upon the assessee for the details on11-8-2005. In response t....
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....res of the assessee company. Subsequently, the Assessee Company submitted address of 55 shareholders on25-7-2006 and the addresses of total 82 shareholders were submitted by the Assessee Company on7-11-2006. Letter was again issued under section 133(6) of the IT Act to all the 82 shareholders. The letters issued under section 133(6) of the IT Act was returned un-served by the postal authorities regarding 72 shareholders out of 82 shareholders. The un-served letters received from the postal authorities were kept on record by the AO. The explanation/latest address of the shareholders from whom the letters were received back was also intimated to the assessee for reply. The assessee could not produce the latest address of the shareholders from whom the letters were received back before the AO at the assessment stage. Remaining 10 shareholders have not submitted any documentary evidence for the transactions made for acquiring the share of the Assessee Company or payment made as premium amounting to Rs. 100 per shares to the Assessee Company. The show cause notice as to why the share capital and reserve and surplus increased as per balance sheet as on 31-3-2004 of the Assessee Company c....
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....he fact of the matter is that the assessee filed a return. Certain entries in the accounts accompanying the return were found to be unsubstantiated and unexplained. The AO treated the unexplained entries as unexplained cash credit under section 68. Now the assessee has taken the stand that the balance sheet itself was bogus and entries contained therein could not be relied upon. Instead, another set of accounts was sought to be introduced as the correct set of accounts at the appellate stage. The only explanation offered is that the C.A.(Shri P.P. Patel) who prepared the accounts and filed the return, had forged the signature of the director due to some personal grievance. It is difficult to entertain such an explanation. The directors were aware that a return of income was required to be filed. They ought to have enquired from the C.A. about this matter, if, as alleged by them now, the C.A. did not obtain their signatures on the return but acted behind their backs by filing a forged return. The fact that no attempt was made by them to file a "genuine" return strongly indicates that they had full knowledge of concurred in filing of the return by Shri P.P. Patel. The AO has rightly ....
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....vit and correct balance sheet were referred to the AO under Rule 46A, therefore, there is sufficient compliance by the assessee. He has submitted that the AO however, did not make proper investigation into the matter and on the basis of return of income and the documents filed with the return of income were considered for the purpose of making the addition. He has submitted that considering the difficulties faced by the assessee; matter may be directed to be investigated. Learned Counsel for the assessee undertook before us that he would file copies of the letters dated8-3-2006,20-4-2006 and25-7-2006 filed before the AO giving the details of 82 shareholders, but same have not been filed. The learned Counsel for the assessee also submitted that dates of hearing noted in the assessment order vary with the reply of the assessee. He has submitted that assessee can file detailed paper book to explain the matter and on filing of the second paper book no objection has been raised. The learned Counsel for the assessee on going through the copy of the acknowledgement for filing of the return in question (PB-1) submitted that the particulars contained in the return of income belong to the as....
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....e should not be permitted to deny the same documents. The subsequent letters and the affidavit would not prove the case of the assessee. The onus was upon the assessee to prove its case, but the assessee failed to prove the same. He has submitted that in the affidavit of Shri B.A. Patel the filing of the return is not disputed and even the agreement dated22-1-2007 between Shri Narottam Joshi and Shri B.A. Patel is unsigned because it was not signed by Shri Narottam Joshi. He has submitted that assessee filed copy of the acknowledgement of the filing of the return for assessment year under appeal at page 1 of the paper book in which the personal data of the assessee have been shown which are known to the assessee only and the returned income is loss (-) Rs. 1850 which is same as accepted in 143(1) on dated 21-2-2005. The same is also not disputed by the assessee; therefore, authorities below rightly held that the Assessee Company filed genuine return of income. Learned D R submitted that if the shareholders did not belong to the assessee or that no return was filed, there was no reason for the assessee to file the details of 82 shareholders before the AO and copy of the acknowledgem....
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....ed the assessee to give the details of shareholders to whom the shares have been issued such as their names, addresses, PAN number and number of shares issued to them. The assessee furnished reply dated 20th April, 2006 and submitted the address of 11 shareholders out of 82 shareholders. The AO issued letters to such shareholders at the address given by the assessee seeking information regarding their source of payment and their PAN number along with copy of the balance sheet for acquiring shares of the assessee company. No reply or evidences were received by the AO in this regard. Subsequently, the assessee furnished addresses of further 55 shareholders out of 82 on 25-7-2006 and finally addresses were furnished on 7-11-2006. The AO issued letters under section 133(6) of the IT Act to all these 82 shareholders at the address furnished by the assessee. But, 72 letters received un-served by the postal authorities. Remaining 10 shareholders did not furnish any documentary evidences for transactions made for acquiring the shares of the Assessee Company. The assessee was asked to furnish new addresses of the shareholders and show-cause notice was also issued as to why the share capital....
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.... The assessee did not take any step before the AO to dispute the correctness of the findings recorded in the assessment order. Hon'ble Delhi High Court in the case of Deeksha Suri v. ITAT 232 ITR 395 held that the statement recorded by Court or Tribunal is presumed to be correct and cannot be permitted to be assailed as incorrect unless steps taken before the same forum. The contention of learned Counsel for the assessee is, therefore, rejected. The conduct of the assessee and its directors at the assessment stage in filing details of 82 shareholders, appearing at the assessment stage and in not disputing the findings of the AO would clearly show that the assessee at the later stage without any justification with after thought made incorrect allegation in the matter. 9. It may be noted that the balance sheet and the audit report filed with the return of income is prepared by Shri P.P. Patel & Associate, Chartered Accountants copy of which is filed at PB-2 - 6 in which the issue of share capital is mentioned. The assessee did not dispute the correctness of filing of the balance sheet and the audit report prepared by M/s. P.P. Patel & Associates (C.A.) for the Assessee Company at ....
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....turned income at (-) Rs. 1,850 is accepted under section 143 (1) of the IT Act before taking the matter for scrutiny assessment and copy of the same is also filed in the paper book of the assessee. These facts would show that the assessee accepted the returned income which is same as is filed by Shri P.P. Patel, Chartered Accountant. The assessee, therefore, accepted the genuineness of filing of the return under the signature of the directors and the balance sheet and audit report along with the same. Shri Narottam Joshi even if was a retired director of the assessee company, but chose to file the appeal before the learned CIT (A) as per form No. 35 available on record. He was not competent to do so. In the statement of facts signed by him before learned CIT (A), did not dispute the genuine return of income filed for the assessee company under his signature as well as of his son Shri Virul Joshi another director of the Assessee Company. 11. Rule 46A of the IT Rules provides that the assessee/appellant shall not be entitled to produce before the Commissioner (Appeals) any evidence, whether oral or documentary, other than evidence produced by him during the course of proceedings b....
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....ntained the statement that the balance sheet and profit & loss account dealt in this report are in agreement with the books of account of the assessee. The assessee did not produce any books of account and bank account before the Tribunal to justify its stand. The income is same as per balance sheet filed with the return of income of earlier year as well as of the fresh one prepared by the assessee. The above facts would prove that the assessee at assessment stage failed to explain source and genuineness of share capital and did not file any evidence. However, at the appellate stage when addition on merits has already been made by the AO, the assessee in order to frustrate the case of the revenue department, deliberately, motivatedly and afterthought denied the filing of genuine return of income and documents filed therein which is foundation of selecting the case for scrutiny assessment. In the absence of any material evidence on record, assessee cannot be permitted to deny filing of genuine return of income and documents, otherwise it would open floodgate of unnecessary tax litigation by unscrupulous persons. 12. Considering the above facts and discussions, it is clear that th....