TaxTMI 
TaxTMI 
2015 (2) TMI 286
X X X X Extracts X X X X
X X X X Extracts X X X X
....nfronting the proof of service of notice through registered post and verifying the authenticity of receipt of registered post as mentioned in the appellate order and address on which such registered post was sent by assessing officer and to whim it is served under the circumstances when it is specifically asked for by the appellant company and receipt of such notice is denied by the appellant company. 3. ld CIT(Appeals) is not justified in law and facts and circumstances of the case in holding the assessment order passed by the assessing officer as valid under the circumstances when it is passed by the assessing officer against the principal of natural justice and appreciating the correct facts of the case and without giving proper opportunity of being head. 4. Ld CIT(Appeal) is not justified in law and facts circumstances of the case in confirming the action of assessing officer in making the disallowance of Rs. 2,53,786/- under section 35D of the I.T. Act and holding the expenditure of Rs. 24,02,064/- under the various heads as capital expenditur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is." 3. The grounds raised by the Revenue are as follows:- "1. On the facts and circumstances of the case the ld CIT(A) has erred in holding that the deletion of late depositions of PF Contributions is covered by the amendment in the provisions of Section 43B brought about by Finance Act 2003. 2. On the facts and circumstances of the case the ld CIT(A) has erred in holding that the addition of Rs. 45 lacs to the share capital u/s 68 was invalid as it related to amounts received in earlier. 3. On the facts and circumstances of the case the ld CIT(A) has erred in deleting the addition of Rs. 23 lacs by the AO u/s 68, on account of share capital received from relative of a Director, by accepting fresh evidence without referring the issue to the AO, as per Rule 46A. 4. On the facts and circumstances of the case the ld CIT(A) has erred in deleting the addition of Rs. 32,30,000/- by the AO u/s 68, on account of sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....notice had been duly served upon the assessee within the period of limitation. Now, in this case, the notice u/s 143(2) was issued on 15-10-2004 and the notice was not received back unserved, hence, there is a presumption that notice was duly served upon the appellant within three to four days. The appellant has filed its return of income on 02-12-2003 and the notice u/s 143(2) was to be served upon the appellant on or before 31-12- 2004. The notice u/s 143(2) was issued and sent on 15-10-2004 has been deemed to be duly served upon the appellant within the stipulated time and , thus, the AO has validly assumed the jurisdiction to complete the assessment u/s 143(3). Therefore, this additional ground of appeal is dismissed." 7. The ld AR in the course of hearing denied the service of notice dated 15th October 2004, u/s 143(2) of the Act and thus contended that there was no valid assumption of jurisdiction under the Act and relied upon the case cited and reported in the case of Commissioner Of Income Tax vs Lunar Diamonds Ltd. 281 ITR 1, wherein it was held that in the absence of valid service of notice, the AO lack jurisdiction to frame an order of amendment u/s 143(3) of the Act. O....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Tribunal that no notice under section 143(2) of the Act had been served within the prescribed period was liable to be set aside." 9. Having regard to the above factual and judicial position which has not been proved otherwise by the ld AR, we are in agreement with the conclusion arrived by the ld CIT(A) that the notice dated 15th October 2004 was deemed to have been served upon the assessee. An affidavit of the assessee to state the contrary in this respect, does not in any manner overcome the binding statutory presumption in this respect without any evidence to rebuilt the same. Therefore we dismiss this ground of appeal of the assessee. 10. Apropos ground No. 5 of assessee's appeal is regarding addition of Rs. 8,136/- u/s 43B read with Section 2(24)(x) of the Act representing the employee contribution to PF and deposited late by the assessee, like-wise ground No. 1 of the revenue's appeal is regarding the deletion of addition made on account of late deposit of PF contribution by the employer u/s 43(B) of the Act. 11. The aforesaid the issue is no longer res-integra and stands covered by the ratio laid in the case of CIT Vs. Aimil Ltd. (2010) 321ITR508 , wherein it was held ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; "The shareholders can be categorized in four categories:- (a) Share allotted out of share application money received during earlier year ie.e. Financial Year.2001-02. 50,00,000/- (b) Individuals by cheque 23,00,000/- (c) Other corporate entities 1,61,70,000/- 2,68,00000/- 16. He further deleted the addition in respect of share capital raised of Rs. 100.30 lacs from 1st three categories and sustained the addition in respect of the 4th category of Rs. 161.70 lakhs. As such both the assessee and the revenue are in appeal. The ld AR submitted that the ld CIT(A), was incorrect in upholding the addition of Rs. 167.70 lakhs. He submitted that the complete evidence in shape of confirmation and company's Master details as obtained from the Web-site of ROC were placed on record in respect of share by the assessee. However the ld DR supported the finding of the ld CIT(A) that the addition was based on investigation carried out by Investigation Wing wherein it was found that some of the share-holders were engaged in providing entries after charging commission. She relied on the judgment of Nova Promoters 342ITR1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er issued by this office assessee did not submit this requisite information. This way assessee failed to discharge its onus to prove the genuineness of the subscribers and their credit worthiness. Even in the case of CIT Vs. Sophia Finance Ltd. (205ITR98) (Del) their lordships held that at least the identity of the subscribers has to be proved by the assessee. Since assessee company has credited its books of account with share capital raised during the year, assessee was having knowledge of the shareholders and their addresses. The assessee could not furnish even the address of the shareholders and thus the initial onus cast upon the assessee company under section 68 of the Act was not discharged. 18. However, in the appellate proceedings the assessee furnished the list of shareholders along with the evidences and categorized the shareholders into four categories which included share capital allotted in the proceedings Assessment Year's of Rs. 50 lakhs. The entire evidence was sent to the AO for his comments and in the remand report the AO objected to the admission of additional evidence. He has stated in his report dated 09th January 2007 as under:-  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not like to avail any such opportunity, but preferred to furnish only part details which assessee liked to submit at its discretion and in such a manner that the assessing officer may not be in a position to conduct any subsequent enquiries on the basis of information what so ever furnished by the assessee during the course of asstt. Proceedings. 4. Sir, first notice in this case was issued on 15.10.2004, and a questionnaire was issued to the assessee company on 15.6.2005, but despite a number of opportunities provided to the assessee company, it did not like to furnish the requisite information, and to appear for personal deposition. Sir, in view or the above reasons, and reasons explained in detail in the asstt. Order passed by the undersigned and more particularly in Para 2.13 of the order passed, assessee does not deserve to be allowed any opportunity as per provisions of rule 46A. However, as desired Para wise comments on the submissions made by the assessee under rule 46A are submitted for your kind. 19. Further on merits of the addition, in the remand report, it was stated as under:- &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....prove the nature and source of the receipt. If there is an entry in the account books of the assessee which shows the receipt of a sum, it is necessary for the assessee to establish, if asked, what the source of that money is and to prove that it does not bear the nature of income. 20. Apart from the above it was also stated as under:- "7.15 To prove the genuineness of the transaction, it is on the part of the assessee to prove the credit worthiness and existence of the subscriber at the given address. Nothing has been brought on records by the assessee, as to why the said list of the subscribers was not furnished during the course of asstt Proceedings, so that necessary enquiries could have been conducted by the A.O. to justify the genuineness of the transaction, and credit worthiness of the subscribers. Assessee has not produced any of the subscriber for personal deposition so that the genuineness of the transaction may be examined. The confirmations now filed even do not speak the mode of payment, date of payment etc. by the subscribers, and ay anything as to what is their source of income, out of w....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Ltd., Rs. 10,00,000/- 18. Maestro marketing & Advertising Pvt. Ltd., Rs.4,65,000/- 7.17 Sir, if your honour desire, the copy of the CD provided by the DIT (Investigation), New Delhi, can be produced before your honour, and that may be considered as an additional evidence of the Department. 7.18 Sir, Not only the above entries, but even the other entries are also not beyond doubt, in the present circumstances, when information has been received about the above named companies that these are engaged in the business of providing entries to the parties. As assessee was known this fact, that in actual majority of the share capital shown to have contributed during the year under consideration is bogus, it thought better in order to gain time that the requisite information should not be furnished to the Assessing Officer, so that in the absence of the list of the subscribers and their addresses, it will be difficult for the department to lay its hand on these transactions, and assessee shall succeed in its goal to convert its undi....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the shares were allotted out of share application money received during earlier year totaling to Rs. 45 lakhs only and not Rs. 50 lakhs as claimed by the applicant. Therefore, considering the facts and circumstances of the case, an addition to the extent of Rs. 45 lakhs only on this account deserves to be deleted as the amount was credited on the books in earlier year and addition of such amount cannot be made in Assessment Year 2003-04 under consideration. Hence, addition to the extent of Rs. 45 lakhs is deleted on this account." 23. It is well settled law that credit raised in the earlier year cannot be brought to tax in any subsequent year. Therefore we do not find any infirmity in the order in this regard passed by the ld CIT(A) and we confirm it. 24. So far as the balance addition of Rs. 223 lakhs is concerned, it pertains to sum raised during the year. The entire evidence in support of the aforesaid sum was furnished as additional evidence Under/Rule 46A, admission of which evidence was objected by the AO as is noted above in the remand report. However the ld CIT(A) has not recorded any specific finding as to admission of such additional evidence. Rule 46A postulates that....