TaxTMI 
TaxTMI 
2013 (1) TMI 185
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....nts. ii) Failed to produce the books of accounts before the A.O. stating that the same were voluminous which can never be a fact as the books of account can never be voluminous it is only the supporting details which can run into volumes. iii) The assessee's claim of reimbursement of the said amount from its clients not correct as is apparent from the summary of the payments given in sub-item 8 of para 6.lof the order of CIT(A)whereby it is clear that out of the said amount, an amount of Rs.4,70,58,697/- has been debited by the assessee to its own P a L A/c. iv) Ignoring the fact that the payments as listed in Sl.No.1 to 5 of sub-item 8 as aforesaid were payments to private parties except the element of customs duty under SLNo.1 and, therefore, the expenses were liable to TDS. v) The assessee's claim that it had deducted TDS of Rs.7,96,68,298/- was supported by any details before the A.O. or the CIT(A). The CIT(A) relied upon the paper books submitted before her and the details contained therein were ....
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.... your appellant prefers this appeal among others, on the following grounds of appeal, each of which is independent of and without prejudice to, the others: 1. On the facts and in the circumstances of the case, and in law, the learned CIT (A) erred in sustaining the addition of Rs.72.00.000/- made by the Assessing Officer on account of share premium amount received b the appellant on allotment of shares, holding the same to be a non-genuine transaction, even though there as adequate documentary evidence on record that established beyond doubt genuineness of the transaction. 2. The learned CIT(A) erred in sustaining the above addition on the basis of the statement of the Managing Director of the appellant recorded during the survey u/s. 133A, which statement was later retracted. The learned CIT(A) also erred in ignoring the uncontroverted documentary evidence on record. 3. The learned CIT (A) further erred in sustaining the addition of Rs.72,00,000/- on the basis of the retracted statement u/s. 133A even though additional income offered in that statement was Rs.25,00,000 only. 4. The learned CIT(A....
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....d and paid on behalf of the client will be reflected in the separate accounts mentioned in the ledger account of each client. (3) During the year, the appellant handled 2351 jobs resulting in voluminous business transactions. On 24.12.2007, the Assessing Officer called for various details of these payments in less than 5 working days. It was humanly impossible to compute the details in such short span of time due to sheer volume of transactions. (4)The appellant had not claimed these expenses as they did not constitute the appellant's expenses. (5) That the books of accounts are maintained as per the accounting standards and they are audited U/s 44AB. (6) That the appellant's case was scrutinized in the past and the books of accounts and the accounting procedure adopted by the assessee was accepted by the Department for earlier years. (7) Due to sheer volume of the business, only the income and expenses of appellant are reflected in the books of accounts and the expenses incurred on behalf of the clients are maintained separately. Such system is adopted by solicitors, advoc....
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....e is not obliged to deduct TDS. In any case, wherever the TDS provisions are applicable, the appellant deducted the TDS on Rs. 7,96,68,298/-." 6. Ld CIT(A) vide para 6.2 of the impugned order deleted the said addition of Rs.18.79 crores and stated that the said addition is devoid of any merit and contrary to evidence on record. Hence, department is in appeal before the Tribunal. 7. At the time of hearing, ld D.R. relied on order of AO. 8. On the other hand, ld A.R. relied on order of ld CIT(A). He further submitted that assessee is acting as clearing and forwarding agent to clear the import consignment. During the course of its activity, assessee made various payments on behalf of clients, such as shipment charges, custom duty and other incidental charges, etc, which assessee collected from the clients. Assessee charged its agency fees for rendering services to its clients. The agency commission is the income of the assessee which is reflected in profit and loss account as income and the amounts received towards various expenses paid by the assessee on behalf of clients got adjusted in the clients' accounts on payments being made on their behalf to various persons/agencies....
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.... were exported or imported, and the assessee thereafter raised the bill to its client separately indicating charges of the assessee as well as the charges paid by the assessee to shipping companies on behalf of its clients. Therefore, from the various details filed by the assessee and nature of the assessee's business of clearing and forwarding agents, we find that the assessee is nothing but an intermediary between the exporters and the shipping lines. The assessee facilitates the contract for carrying goods for and on behalf of its client i.e. exporters or importers, and the principle contract for carrying goods is between the exporter/importer and the shipping lines. An identical issue has been considered by the Hon'ble High Court of Delhi in the case of Commissioner of Income Tax vs. Cargo Linkers (supra), where the Hon'ble High Court was in agreement with the order passed by the Tribunal, which mainly decided an issue of fact, namely, the nature of the contract between the parties concerned, and it was found as a matter of fact that the contract was actually between the exporter and the airline, and the assessee was only an intermediary. It was, therefore, held that the assess....
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.... be invoked in respect of the payments made by the assessee to shipping lines for and on behalf of assessee's clients. Further, we also observe that department has not disputed the submissions made by the assessee before ld CIT(A) that assessee rendered 2351 jobs resulting in voluminous business transactions and the AO called for various details of the payments in less than 5 working days. We agree that it is not possible for computing the details in a short span of time and no adverse inference could be drawn for not able to furnish the same. Considering the facts of the case and the reasons as given by ld CIT(A), mentioned hereinabove, we hold that there is no reason to interfere with the order of ld CIT(A) in deleting the said addition of Rs.18,79,38,741 made by the AO. Accordingly, Ground Nos. 1 & 2 taken by department is rejected. 11. In respect of Ground No.3 of appeal taken by department, relevant facts are that assessee claimed bad debts written off of Rs.22,28,000. AO asked the assessee to produce all the details of the parties and the year in which such debt arose alongwith evidence of sales made to these parties and any correspondences, supporting documents to show th....
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....T vs. Oman International Bank, 100 ITD 285(Mum)(SB). Ld CIT(A) considered the submission of assessee and deleted the disallowance of Rs.22,28,000 made by the AO. Hence, this appeal by the department. 13. Ld D.R. relied on the order of AO and submitted that assessee could not furnish the details and no evidences were filed as to in which year the income actually credited by the assessee. 14. Ld A.R. made his submissions on the lines of submissions made before ld CIT(A). He submitted that AO disallowed the claim on the ground that details were not filed to demonstrate by the assessee that those debts become irrecoverable. He submitted that after the amendment in section 36(1)(vii) r.w.s 36(2), it is sufficient if assessee writes off bad debts in books of account to claim same as bad debts and it is not necessary to prove that debts have become bad. Ld A.R. referred the decision of Hon'ble Apex Court in the case of TRF Ltd Vs CIT (323 ITR 397) and submitted that after 1.4.1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable and it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. 15. ....
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....ear 2004-05 but no certificates were issued to the investors till the date of survey. Further, there was no resolution passed for allotment of those shares. AO has stated that statement u/s.133A of the Director of the assessee company Shri George Joseph was recorded on 23.2.2006, wherein, he admitted that the share premium account amounting to Rs.72 lakhs is the unaccounted money of the assessee, which was routed with the help of the concerns against whose name, the share premium is shown. AO has further stated that during the course of post survey enquiries and in response to letter dated 25.4.2006, assessee informed vide his letter dated 6.5.2006 that the statement recorded during the survey was given under pressure and the share premium account is genuine. However, AO did not accept the said retraction from the statement and stated that assessee retracted the statement after 2 and ½ months till he received the questionnaire from the department. AO has further stated that it is highly unlikely that even after passage of more than one year of receiving the money shares are not dispatched. Further, assessee could not furnish any correspondences from the parties who have inve....
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....hat assessee also filed return of allotment of shares before the Registrar of Companies and submitted that copy of the said return is placed at pages 407 to 409 of PB evidencing the allotment of 900 equity shares of the assessee company, filed on 21.11.2005. Ld A.R. submitted that book value of the share as on 31.3.2004 of the assessee company was Rs.10,305 and the assessee company discounted its valuation of about 20% and arrived at the premium of Rs.8000 per share. Ld A.R. submitted that assessee has filed requisite details before the authorities below establishing identity of the share applicants as well as their creditworthiness and the genuineness of the transaction but the AO disbelieved the genuineness of the allotment of shares merely relying on the statement made at the time of survey operation and ignoring that the statement was retracted by the assessee vide his subsequent letter dated 6.5.2006. Ld A.R. relying on the decision of ITAT Mumbai in the case of DCIT vs Premsons, (I.T.A. No.4698/M/2006), copy placed at pages 136 to 141 of PB submitted that CBDT Circular dated 10.3.2003 was considered and the Tribunal after considering the decision of Hon'ble Madras High Court ....
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....ddition made is not justified. 22. Ld A.R. also referred the decision of Hon'ble Supreme Court in the case of Lovely Exports Ltd., 216 CTR (SC) 195 and also the decision of Hon'ble apex Court in the case of CIT vs. Steller Investment Ltd., 251 ITR 263(SC) and submitted that if the assessee has proved identity of the share applicants and the AO considered that application money is received by the assessee from bogus shareholders whose names are given, AO could proceed to make the addition in the hands of the individual in accordance with law instead of making the assessment in the hands of the company who has issued the shares. Ld A.R. submitted that the addition made is not justified and same should be deleted. 23. On the other hand, ld D.R. supported the orders of authorities below. He referred para 7.10 of the order of ld CIT(A) and submitted that assessee received alleged share application money in financial year 2004-05 and survey had taken place in February, 2006 and it was found at the time of survey that share certificates of the shareholders were lying with the assessee company. There was no correspondence between the assessee and those share applicants, who applied f....
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....not genuine. Now the question arises as to whether, on the facts and circumstances of the case, the retraction of the statement made by Shri George Joseph is justified or not. 27. We observe that assessee filed copies of requisite details viz; copy of share application form from each of the above named four applicants' along with copy of board resolution, their bank statement giving particulars of cheque nos. and the amount debited from their accounts, as also copy of confirmation letters. Assessee has also filed the copy of the income tax return of each of the applicants evidencing that they are assessed to tax establishing their identity. Assessee has also filed copy of the certificate of incorporation and the Memorandum and Article of Association in the paper book. The above documents are placed at pages 30 to 113 of PB in the case of JMD Telefilms Inds. Ltd, at pages 114 to 175 in the case of Warner Multimedia Ltd., at pages 176 to 300 in the case of Shresth Leasing & Fin. Ltd and at pages 301 to 405 in the case of Trio Mercantile and Trading Ltd. Further, assessee has also filed copy of the return of allotment of shares filed before the Registrar of Companies on 21.11.2005,....
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....ore the Income tax Department. It was also stated in the Instruction that while recording statement during the course of search & seizure and survey operation, no attempt should be made to obtain confession as to the undisclosed income. The ITAT Mumbai in the case of Presons (supra) has also held after considering the decisions of Hon'ble Hon'ble Madras High Court in the case of CIT vs. S.Khader Khan son (supra) and the Hon'ble Kerala High Court in the case of Paul Mathew & Sons vs CIT (supra) and also considering the CBDT Instruction dated 10.3.2003 (supra) that no addition can be made or sustained simply on the basis of statement recorded at the time of survey/search. Therefore, there should be some material to co-relate the undisclosed income with such statement. Considering the above decisions and the material on record, we hold that said statement made at the time of survey on 23.2.2006 cannot be the sole basis for making the addition by treating the issuance of share at a premium of Rs.8000 as bogus. 30. Now coming to the question as to whether the assessee has discharged its burden which lay upon it to prove the genuineness of the issuance of shares. Hon'ble Rajasthan Hig....