TaxTMI 
TaxTMI 
2012 (10) TMI 86
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....IT(A)-III, Baroda dated 20.02.2009 in respect of penalty proceedings u/s 271(1)(c ) of the Act. Since all these appeals belong to the same assessee and heard together, for the sake of convenience the same are being disposed of by passing a consolidated order. 2. First we will take up ITA No.1542 of 2005 and ITA No.1444 of 2005. Grounds in ITA No.1542 of 2005 are as under:- "On the facts and the circumstances of the case and in law, the ld. CIT(A) erred: 1) In deleting addition of Rs.41,99,900/- made by the A.O., u/s 68 of the Act. The decision given by him is arbitrary and without appreciating the facts of the case as will be evident from the undermentioned facts gathered from enquiry at the assessmen....
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....ions and consequently, to delete the addition of Rs.13,00,100/-." 3. Brief facts of the case are that assessee company was incorporated on 10th May, 2000. The authorized capital of the company is Rs.1.20 crores having Rs.1,20,000/- equity shares each of Rs.10/-. During the year under appeal all the equities shares were issued, subscribed and fully paid up i.e. the company has shown collection of Rs.1.20 crores with paid up share capital along with Rs.56,000/- as share application money in its books of accounts from 53 persons. The company did not start its business activities during the year under appeal. During the ocurse of assessment proceedings the list of share holders along with their holding in shares were furnished. The mode o....
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....hri V.D. Unhad 100000 100000 2. Shri P.O. Unhad 20000 80000 100000 3. Shri K.D. Amipura 100000 100000 4. Shri J. D. Amipura 100000 100000 5 Shri R.D. Amipura 100000 100000 6. Shri C.D. Amipura 100000 100000 7. Shri V.L. Amipura 100000 100000 8. Shri L.L. Amipura 25000 75000 100000 Total 445000 355000 80000 Category 'D' : Where letters were served, but replies were received through post. Rs. 22,00,000/-:- Sr.No Name of Applicants Paid by Cash Paid by D.D. Total Rs. 1. Shri J. S. Lakhani 50000 50000 100000 2. Shri B.C. Lakhani 20000 80000 100000 3. Shri J.J. Lakhani 28000 72000 100000 4. Shri....
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....pura 100000 100000 2. Shri Devesh K Shah 100 100 Total Rs. 100100 100100 For the reasons given by the A.O. from para 2.2 to 2.13 of his order he concluded his finding as under:- "In view of the above discussions, it is clear that genuineness and creditworthiness of share application money claimed in the names of above 45 persons have not been proved. Hence, an amount of Rs.55,00,000/- is held as unexplained share application money and the same is treated as income from undisclosed sources in the hands of assessee company. Accordingly, an addition of Rs.55,00,000/- is made u/s 68 of the Act to the income returned by the assessee company. Penalty proceedings u/s 271(1)(c) is also initiated....
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....en the genuineness of the transaction is not in doubt in this case and therefore, even the addition sustained by ld. CIT(A) is required to be deleted. Ld. D.R., on the other hand, placing reliance on the decision of the order of the A.O. and for the reasons given by the A.O. in his order for making such addition in respect of share application money received from share holders (for want of creditworthiness of the share holders) argued that the relief given by ld. CIT(A) was not justifiable and therefore, the order passed by ld. CIT(A) may kindly be set aside and that of the A.O. be restored. 6. After hearing both the parties and perusing the record, we find that there is no dispute about the fact that names and addresses of the persons f....
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....in toto. 2. The ld. CIT(A) has grossly erred in law and on facts by confirming the penalty by ignoring the basic facat that the company being a new company passing through its construction period having not commenced any business activities can not receive such huge income in its first year and accordingly also, your appellant, company prays for cancellation of the penalty in toto. 3. The ld. CIT(A) has grossly erred in law and on facts by ignoring the basic fact that the company being a public company can not have direct contacts with the prospective investors for a longer period and hence, any change in address should not be viewed against your appellant company for considering the share application monies u/s 68 of the I.T. Act as ....