TaxTMI 
TaxTMI 
2010 (11) TMI 838
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....s are that assessee is a limited company, engaged in the business of telecom consultancy and technology products. The assessee filed its return on 31-12-1999 declaring income of Rs.46,987/- (30% of book profit computed u/s 115Ja). The assessment was originally completed on 22- 03-2002 ex party u/s 144 of I.T. Act by making an addition of Rs.1,43,37,219/- as unexplained investment in share capital u/s 69. Assessee filed appeal before ld. CIT(A), who upheld the ex party assessment in principle. As regards the addition of Rs.1,43,37,219/- as unexplained investment, the ld. CIT(A) required the assessee to file certain information in respect of shares allotted and share application money like, names/address/PAN/date and mode of receipt of money/copies of share application forms and confirmation, assessee complied therewith. CIT(A) deleted additions of Rs.96,49,219/- where confirmations were filed and by holding that confirmations were not proper, confirmed the balance addition of Rs.46,88,000/-. 2.1. The department filed appeal before ITAT against order of Ld. CIT(A) against deletion of Rs.96,49,219/- while the assessee filed cross objection against the addition of Rs.46,88,00....
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....ny to maintain supports and accounting papers beyond eight years. Also kindly note that company management and ownership changed in 2001, subsequent to which most of the earlier shareholders ceased to be shareholders in the company. The company has no empowerment to seek details such as those indicated by you (phone bill/electricity bill/voter ID card etc.) nor were we required to collect or maintain these by prevalent law when the share capital was raised in the nineties. All documents as sought during the appeal proceedings were submitted in original to the Hon'ble Commissioner (Appeals), New Delhi including documents relating to court cases filed for declaration of accounts since the company is not empowered by law to seek information from past shareholders. These cases were replied to proving that the purposeless to wait for the fifteen to twenty years that it would take to get a final order in this matter and inspite of not being at any fault whatsoever, we had requested the Commissioner (Appeals) to take the stand he deemed appropriate and close the matter. The income tax department would definitely have access to the records collected by the Hon'ble Commissioner (A....
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....ry letters complete address of the persons and their PANs have also been mentioned. Ld, CIT(A) held that from these letters, the identity of the persons stands established and the persons in question have also confirmed that they have invested in shares of he appellant company. Therefore, these investments were treated to be r and addition to that extent was deleted by Ld. CIT(A). During the present assessment proceedings vide questionnaire dated 24.8.2008, assessee was asked to file copy of bank statement of each person showing debit entry in bank for DD/cheque/cash, copy of bank statement showing the credit entry. Shri Satish Mehta attended the proceedings from time to time but did not file his own bank statement. In fact assessee merely submitted that we are not in possession of any paper for A.Y 1999-2000. Assessee further stated that it has no empowerment to seek details such as hose indicated by the Assessing Officer (phone bid/electricity bill/voter ID card etc.) nor was it required to collect or maintain these by prevalent law when the share capital was raised in the nineties. Shri Satish Mehta who attended the proceedings from time to time could have filed the re....
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....ng the year Rs.3 lakhs), R. Marwaha (addition during the year Rs.5 lakhs), A. Vaghani (addition during the year Rs.4.35 lakhs) and A.Khurana (addition during the year Rs.5 lakhs) The appellant company has failed to file confirmations in respect of these persons. Instead of their postal addresses, details of the cheques through which the amounts have been received and copy of the bank statement of the appellant company showing the receipt of these amounts have been filed. Further it is stated that the appellant company has filed a suit in the court against these persons for rendition of accounts. Ld. CIT(A) has held that the assessee has failed to file any confirmatory letters from these persons even though it was allowed more than adequate opportunity to do the same. Ld. CIT(A) held that AO was justified in treating these amounts as unexplained investments of the appellant company Further perusal of the bank statement tiled before CIT(A) reveals that the narration against these deposits in the bank account of the assessee are as under: Name Amount Narration mentioned remarks In the Bank statement A. Akhan/Y.A. Khan Rs.2,55,000 CD-582 ....
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....current address, copy of bank account of each persons etc. However assessee submitted that it has no empowerment to seek details such as those indicated by the Assessing Officer (phone bull electricity bill/voter ID card etc) nor was it required to collect or maintain these by prevalent law when the share capital was raised in the nineties. Even if the assessee was not empowered to seek their Bank statement etc he could have made effort to seek their addresses, but assessee chose not to do so since he was not ready to put any person to test of enquiry. Assessee company has a limited number of shareholders. Various types of information/dividend etc have to be communicated/delivered by the company to such shareholder. Also persons who have genuinely invested their hard earned money in shares of the company always track the same for various reasons and company can easily trace them if it desires so. However assessee did not provide their current address as sought vide the questionnaire dated 24.8.2008. Hence notice u/s 133(6) or summons u/s 131 could not be issued and no investigation regarding the genuinity of the claim of the assessee could be made. In the absence of these, genuinen....
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....e has been considered. Facts on record show that the Hon'ble ITAT has set aside the order of CIT(A) and restored the matter to the file of the AO with the direction to examine the evidence adduced by the assessee before the CIT((A) and to take decision afresh in accordance with law after giving adequate opportunity of being heard to the assessee. Record shows that the AO, in compliance to the directions of the Hon'ble ITAT,. Issued statutory notices u/s 143(2) and 142(1) along with a query letter dated 24-08-2008 fixing the case for 22-09-2008 on which date no compliance was made. Thereafter also the AO had allowed the assessee further opportunities to comply with the queries raised vide letter dated 24-8-2008. The AO has brought on record that in spite of opportunities provided, the assessee failed to provide the current addresses of persons from whom the share application money amounting to Rs.1,43,37,219/- was stated to have been received. The AO has stated that since the assessee did not provide the current address of these persons/parties as required vide query letter dated 24-8-2008, no notice u/s 133(6) or summons u/s 131 could be issued to those persons and hence no investi....
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....nvoked his powers of inquiry. CIT(A) decided the issue about admission of additional evidence and rejected the AO's alternative request inasmuch it was AO failed to carry the necessary inquiries for submitting the remand report. A lower functionary cannot ask the superior appellate forum to decide one issue first and then give further time for another issue as it will result into waste of time and delaying the justice. CIT(A) thereafter passed an order on merits. ITAT in this background only in the interest of natural justice set aside the matter back to AO with specific directions to examine the material adduced before CIT(A) which was in possession of AO also for remand report. Learned counsel, therefore, contends that the scope of ITAT direction was clear that AO should carry out further inquiries on the basis of which revenue accepted the order of ITAT setting aside the matter back to the file of AO. (ii) Learned counsel vehemently argues that in the mean while by the time fresh proceedings could be taken up a long period of about 8 years elapsed. AO instead of carrying out the directions of ITAT insisted for more evidence from the assessee, which was beyond the direc....
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....ted 05-12-02.(3) PB A-7-CIT(A) has discussed this issue and held that identity stood proved.(4) PB 67 r.w. PB 60-Mode of payment conveyed.(5) PB 81-82-Copy of share application register.(6) PB 83-Details of shares issued against individual payments, transfers, etc. (7) PB 115 r.w. 114-Share allotment form - Promoter Quota. Notices confirmation from record, that it has complete address and PAN. Asks for bank statement, phone bill, voter ID. This party appeared before the AO himself. 2. H. Mehta 4 Party is a director.(pb 124) (1) PB-129- Confirmation with PAN and address filed with letter dated 05-12-02. (2) PB A- 7-CIT(A) discussed this issue and held that identity stood proved. (3) PB66 r.w. PB 60- Mode of payment conveyed. (4) PB 81-82- Copy of share application register.(5) PB 93- Details of share issued against individual payments, transfers, etc. (6) PB 118 r.w. 114- share allotment form -Promoter Quota. Notices confirmation from record, that it has complete address and PAN. Asks for bank statement, phone bill, voter ID. States that current address not provided by Assessee, so summons could not be issued. 3. A. Sarin. 25.47 Investment through Angel Inves....
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....nst individual payments, transfers etc. (8) PB 139- Cheque details. (9) PB 140-143- Copy of our bank statement. Postal address, cheque details, and copy of Assessee's bank statement filed. No confirmation or PAN given. Since current address not given, summons could not be issued. Assessee states cases have been filed against party for rendition of accounts, but AO holds that they have not been pursued. 7. Ritu Dalmia. 3 Shares issued through broker. (PB-140)(1) PB-2- PAN given vide letter dated 15-09-03, along with cheque details. (2) PB-152- AD slip of letter to party asking for confirmation. (3) PB 155- Copy of letter. (4) PB-103- Details of share transfer as per ROC records. (5) PB 81-82- Copy of share application register. (6) PB-152-153- Details of cheque received through broker with our bank statement. Postal address, cheque details, and copy of Assessee's bank statement filed. No confirmation or PAN given. Since current address not given, summons could not be issued. Assessee states cases have been filed against party for rendition of accounts, but AO holds that they have not been pursued. 8. R. Marwaha 5 Investment through broker (PB- 152)-(1) PB 104....
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....application register. Confirmation along with complete address on record. Further asked to provide current address, copy of bank account, voter ID, etc. Assessee has not even provided the current address, so summons could not be issued. 12. M. Kapoor 2.2. Allottee is company Stakeholder (PB 175) (1) PB-A-8-CIT(A) notices confirmation from party with full address, and holds that identity stands established. (2) Pb 176- confirmation with address.(3) PB 99- Details of share transfer as per ROC records. (4) Pb 81-82- Copy of share application register. Confirmation along with complete address on record. Further asked to provide current address, copy of bank account, voter ID, etc. Assessee has not even provided the current address, so summons could not be issued. 13. K. Sarkar 2 Allottee is company Stakeholder (PB 175) (1) PB-A-8-CIT(A) notices confirmation from party with full address, and holds that identity stands established. (2) This party was before AO. (3) PB-177- confirmation with full address. (4) PB 100- Details of share transfer as per ROC records. (5) Pb 81-82- Copy of share application register. Confirmation along with complete address on record.....
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....9-03. (2) PB-60- Party is in Ottawa, Canada. (3) PB-96 Details of share transfer as per ROC records. (4) PB 68 r.w. PB 60- Mode of payment conveyed. (5) PB 81-82- Copy of share application register. (4) PB 183-Letter from Broker asking for transfer of shares. Confirmation along with complete address on record. Further asked to provide current address, copy of bank account, voter ID, etc. Assessee has not even provided the current address, so summons could not be issued. 19. J. Aggarwal 7 (1) PB-3-PAN given vide letter dated 15-09-03.along with cheque details. (2) PB-60- Party is in Milan, Italy. (3) PB-97- Details of share transfer as per ROC records. (4) PB 66 r.w. PB 60-Mode of payment conveyed. (5) PB 81-82- Copy of share application register. (6) PB 183- Letter from Broker asking for transfer of shares. Confirmation along with complete address on record. Further asked to provide current address, copy of bank account, voter ID, etc. Assessee has not even provided the current address, so summons could not be issued. 20. R. Dehmubed 2.91 (1) PB A-9-CIT(A) notices evidence and directs relief. (2) PB 107- Details of share transfer as per ROC records. (3) PB 8....
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....he assessees produced copies of sale and purchase bills of the share brokers through whom the transactions took place and photocopies of confirmations of persons who had contributed the fresh share application money. The assessee furnished the PAN(GIR) numbers of the applicants, the details of the cheque numbers and dates. The assessees contended that letters sent to the shareholders had not been responded to. 4. The Assessing Officer required the assessee to furnish bank statement to substantiate the money availability with the assessee and also to prove the genuineness of the transactions. This not having been done, the Assessing Officer got enquiries made through an Income-tax Inspector who found that none of the applicants were found to exist at the address given in the confirmations. However, the report of the Income-tax Inspector was furnished to the assessees on 22nd February, 2000 and the assessment order was passed on the very next day, that is, 23rd February, 2000 giving the assessees no time to respond. 5. Before the Cit(A) the assessees furnished additional evidence, copies of which were sent by the CIT(A) to the Assessing Officer for comments. Despi....
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....ble proof or acceptable explanation by the assessee; (5) the Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, against the assessee; (7) The Assessing Officer is duty - bound to investigating the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation." 9. We are of the view that no substantial question of law arises in these appeals. Accordingly, these appeals are dismissed." 10. We are also informed that a Special Leave Petition against the aforesaid Division Bench judgment in the case of the respondent-assessee has been dismissed by the Supreme Court. Accordingly, we are of the opinion that no question of law arises in the present cases as the matter is fully covered by the judgment of the Supreme Court in Lovely Exports (P) Ltd.'s case (supra) as well as Division bench judgment of ....
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....i High Court in the cases of: (ii) CIT vs. Victor Electodes Ltd. in ITA no. 586/2010 dated 12-05- 2010; and (iii) CIT vs. Winstral Petrochemicals Pvt. Ltd. in ITA no. 592/2010 dated 12-05-2010. 3.3. Learned counsel further contends that relevant details in respect of each and every share applicant, which could reasonably establish the identity of share-holders, their creditworthiness and genuineness of share applicants were already filed before CIT(A) and were forwarded to AO as well, therefore, the findings that there is absence of sufficient material to establish their identity, is contrary to record. Assessee explained before AO and CIT(A) that the direction of the ITAT was limited to verify the documents filed by assessee before CIT(A), however, both the lower authorities have chosen to uphold the addition going beyond the ITAT directions and further in not considering the material which was available on their record. Section 68 puts initial burden on the assessee which has been duly discharged, the entire material has been ignored merely because new evidence was not filed by assessee. Even in the case of ex parte assessment, same has to be fair an....
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....sh Mehta: Confirmation, PAN no. with other details are filed. (2) A. Sarin: The investment is through a broker, confirmation, PAN, address filed. (3) A. Sarin: The investment is through a broker, confirmation, PAN, address filed. (4) N. Sarin: The investment is through a broker, confirmation, PAN, address filed. (5) D. Sarin: The investment is through a broker, confirmation, PAN, address filed. (6) K.A. Khan: Assessee has filed suit against this share-holder, which is not disputed. (7) Ritu Dalmia: Investment through broker. PAN number, ROC record filed. (8) R. Marwaha: Investment through broker. Assessee has field suit against this share-holder. (9) A. Vaghani: Investment through broker. Suit is filed by the assessee with other details. (10) A. Khurana: Investment through broker. Details of cheques, PAN. Applicant is NRI and suit filed. (11) R. Behl: Confirmation; address full details filed. (12) M. Kapoor: Confirmation; address full details filed. (13) K. Sarkar: Confirmation; address full details filed. (14) S. Rajkundra: Confirmation; address full de....