TaxTMI 
TaxTMI 
2012 (12) TMI 3
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....tonn and without granting adequate opportunity of hearing is illegal, unjustified, and contrary to law and facts, beyond jurisdiction and deserves to be quashed. 3. That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in making enhancement to the assessed income by aggregate amount of Rs. 94,00,000/- by making further addition on account of share capital received from the following parties:- M/s SNG Fincap Ltd. 10,00,000/- M/s Bankey Bihari Corporation Ltd. 8,00,000/- M/s SAAR Enterprises (P) Ltd. 6,00,000/- M/s Kalyan Extraction Ltd. 15,00,000/- M/s EMEC Tours & Travels (P) Ltd. 5,00,000/- M/s Sunrise Developers (P) Ltd. 10,00,000/- M/s Sachdeva Financial Services (P) Ltd. 5,00,000/- M/s Blossom Advertisers (P) Ltd. 10,00,000/- M/s KVK Multi Fact Projects Ltd. 25,00,000/- Rs. 94,00,000/- 4. That in any case and in any view of the matter, action of ld. CIT(A) in making addition by way of enhancement of income that too without giving show cause notice as per law and without giving adequate opportunity of hearing and without providing opportunity of cross examination and wit....
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....216/Del/2008 was fixed for hearing before us. 5. At the time of hearing before us, it is stated by the learned counsel that the assessee has furnished the confirmation of all the shareholders, their Permanent Account Nos., share application form, their bank account etc. before the AO. The AO made verification from the concerned AO and also from the banks and the shareholder. Thus, the identity of the shareholder, creditworthiness of the shareholder as well as genuineness of the transaction is proved and the onus which lay upon the assessee u/s 68 of the I.T. Act is duly discharged. In support of his contentions, he relied upon the following decisions:- i) CIT vs Lovely Export P. Ltd. 216 CTR 195 (SC) ii) CIT vs Oasis Hospitalities (P) Ltd. 2010 (DHC) 51 DTR 74, 238 CTR 402 iii) CIT vs Dwarkadhish Investments(P) Ltd. 2010 (DHC) 330 ITR 298 iv) CIT vs Winstral Petrochemicals (P) Ltd. 2011 (DHC) 330 ITR 603 v) CIT vs Electro Polychemp Ltd. 2008 Madras HC 294 ITR 661 & SLP dismissed by Hon'ble SC vi) Jaya Securities Ltd. vs CIT 2008 All & SLP has been dismissed by the Hon'ble SC vii) ITO vs M/s Goel Sons Golden Estates Pvt. Ltd. ITA No. 4152(Del)/20....
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....t, Profit and Loss account for the Asstt. Year 2004-05. The AO of the assessee also had written a letter to the AO of the shareholder. There also positive reply was received. He also made verification from the bank. Thus, when all the shareholders are assessed to tax, they have affirmed investment in share capital, the amount has been received by cheque and in the balance sheet of the shareholder, the investment in the assessee's company is duly disclosed, there is no justification at all to hold that the assessee is unable to establish the identity of the shareholder and the genuineness of the transaction. The assessee has duly established the identity of the shareholder as well as the genuineness of the transaction. That after the decision of the Hon'ble Apex Court in the case of Lovely Export (supra), the assessee is not required to establish the creditworthiness of the shareholder. However, in this case, the assessee has established even the creditworthiness of the shareholder. 8. We have carefully considered the arguments of both the sides and perused the matter placed before us. At page 2 of the assessment order, the AO has given the details of share capital allotted durin....
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.... running from page no. 3 to 30 of the assessment order. However, for the sake of brevity, we will mention the details narrated by the AO in respect of first shareholder i.e. M/s Tek Hire Purchase & Leasing Co. Pvt. Ltd. It is admitted by both the parties that the facts relating to all the shareholders are more or less similar:- "1. M/s Tek Hire Purchase & Leasing Pvt. Ltd. This party has PAN number under the jurisdiction of ITO Rishikesh and has applied by making payment through DDNo. 659/20.01.2004 & DD No. 659525/17.01.2004 drawn on Indian Overseas Bank, Rishikesh. In response to letter sent on 19th June u/s 133(6) of the Income Tax Act, 1961, the party replied vide letter dated 10.7.2006. Though the party is having its registered office at Rishikesh, but this letter has been sent by the party from Delhi, as is clear from the receipt of the courier agency. The contents of the letter are revealing: TEK HIRE PURCHASE & LEASING CO. PRIVATE LIMITED Regd. Office: Inderlok Hotel, Railway Road, Rishikesh Dated: 10.07.2006 Before, The Asstt. Commissioner of Income Tax, Room NO. 212, Rohtak Circle Sub: Information u/s 133(6) of the Income Tax Act, 1961 Respec....
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.... was sent on 15.3.2004 by the assessee company to any of the so-called shareholders. 1.2 A letter dated 1st November, 2006 was written to the assessing officer of this party at Rishikesh to find out about its assessment records. Thereafter, commission u/s 131(1)(d) of the Income Tax Act, 1961 was issued to the ITO, Ward-1, Rishikesh, having jurisdiction over this party and following information was called. It is mentioned here that same information was called from the other parties also. "........ i) How did M/s Tek Hire Purchase & Leasing Company Pvt. Limited came to know that M/s Goel Die Cast Ltd. has invited for application for shares? ii) How did M/s Tek Hire Purchase & Leasing Co. Pvt. Ltd. approach M/s Goel Die Cast Ltd.? iii) Proof regarding sending of the application for shares to M/s Goel Die Cast Ltd. i.e. to submit copy of the dispatch register/copy of proof of dispatch by postal authority/courier receipt. iv) What was the mode by which M/s Tek Hire Purchase & Leasing Company Pvt. Ltd. received the information from M/s Goel Die Cast Ltd. that you have been allotted shares. v) Date on which M/s Tek Hire Purchase & Leasing Pvt. Limited have rec....
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....ary payable 30000/- It is interesting that there are no sundry creditors in the current liabilities. Expenditure on Admn. & General Overhead As at 31.03.2004 Salary to staff 45,600 Printing & Stationary 1246 Rent 7744 Water tax - Audit fees 13800 Misc. expenses 727 Preliminary Expens W/off 1450 Bank charges 6055 ROC Fee Expense 1500 Will a normal party having such type of expenses have the capacity to invest huge sums in shares. From the copy of balance sheet it is seen that the funds available with the party are Rs.29,20,655/-. Out of these total funds available with the party, the party has invested in following shares:- Goel Die Cast Ltd. 15,00,000/- Gyan Deepa Trade Pvt. Ltd. 10,00,000/- Parshvanath Share Broking Pvt. Ltd. 4,25,000/- Total 29,25,000/- There is clear mismatch. The party has tallied its balance sheet by the above mentioned items in current liabilities. It shows that the party in reality did not have funds to support these investments. These are long term investments. Where is the day to day earning to support the survival of company. It creates doubts that the c....
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....eness of the company on the ground that its earning is meager to support the survival of the company. However, the question is not whether the company will survive in the long run or not. The question is whether the company was existing on the day on which it invested in the share capital of the assessee company. It is undisputed that M/s Take Hire Purchase & Leasing Co. Pvt. Ltd. was existing company during the financial year 2003- 04. It furnished its return of income for AY 2004-05. From the totality of these facts, we are unable to agree with the AO or learned DR that the identity of the shareholder i.e. M/s Take Hire Purchase & Leasing was not established. We also do not find any justification for doubting the genuineness of the transaction. The shareholder has affirmed the investment in the assessee company. It produced share application form, allotment letter, balance sheet and also the copy of bank accounts. All these documents prove the genuineness of the transaction. The revenue, on the other hand, doubted the genuineness of the transaction on the basis of suspicion or irrelevant issues. On the totality of these facts, the decision of Hon'ble Apex Court in the case of CIT....