TaxTMI 
TaxTMI 
2015 (3) TMI 602
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....e addition of Rs. 9,00,000 made by the Assessing Officer on account of unexplained share capital received by the assessee-company without appreciating the fact that the creditworthiness of investors and genuineness of transaction could not be proved by the assessee. 3. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal." The only effective ground in the Revenue's appeal is against deleting the addition of Rs. 9 lakhs out of the addition of Rs. 30 lakhs made by the Assessing Officer on account of the share capital received by the company during the year. 3. The assessee has also filed cross-objection and the grounds of cross- objection are as under : "1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income-tax (Appeals) (CIT(A)) under section 153A/143(3) is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the pr....
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....ication money. (ii) That the addition has been confirmed despite the assessee bringing all material and evidences on record to prove the identity, genuineness and creditworthiness of the shareholder. (iii) That the addition has been confirmed without bringing any adverse material on record. 8(i) On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred both on facts and in law in confirming the disallowance of an amount of Rs. 18,645 made by the Assessing Officer by invoking the provisions of rule 8D under section 14A of the Act. (ii) That the disallowance has been made without there being any such expenses being incurred by the assessee. (iii) That the above said disallowance has been made ignoring the explanation of the assessee that no expenditure has been incurred in earning tax-free income. &n....
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....deputed to find out the whereabouts of these companies. Based on the report of the inspector, the Assessing Officer held that the share capital received by the assessee-company is not genuine and he accordingly made the addition of Rs. 30 lakhs as unexplained credit under section 68 of the Act. 8. The Assessing Officer further made an addition of Rs. 18,645 under section 14A of the Income-tax Act by invoking the provisions of rule 8D. 9. Aggrieved by the order of the Assessing Officer, the assessee came in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) after examining the facts of the case, upheld the addition of the Assessing Officer about the non-genuineness of the share capital of the company. However, he was of the view that the family members of the directors of the assessee-company have purchased these shares after paying 30 per cent. of the value of these shares i.e., Rs. 9 lakhs and hence the addition should be restricted to Rs. 21 lakhs and not Rs. 30 lakhs as made by the Assessing Officer. Accordingly he gave a relief of Rs. 9 lakhs. 10. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Reven....
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....and Co., Tax consultant, 6 Clive Row 4th floor, Room No. 6/7, Kolkata' placed above the door. 4.5 Thus, the registered office of these companies belongs to a tax consultant. The facts and evidences mentioned above indicate that there were no reasons why an unknown company in Kolkata would invest in a Private Limited. company at Delhi such significant amounts. The identity of the creditors has not been established fully. In view of the factors mentioned above, the creditworthiness of M/s. AC Steel and Holdings Pvt. Ltd. and the genuineness of the transaction are in doubt. In this context reliance is placed on the following judgments :. . . " 12.2. It was submitted that the above report in fact supports the case of the assessee. It was pointed out that the inspector has noted that there is a wooden board showing the name "AS Grewal and Co". The name of the company from whom share capital has been received included Grewal Steel and Holdings Pvt. Ltd. The common surname "Grewal" is not a coincidence and shows that Grewal Steel and Holdings Pvt. Ltd. is of the same person whose name "AS Grewal and Co.", the wooden bo....
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....the shares held by M/s. Sofed Comtrade Pvt. Ltd., were transferred to Smt. Anupama Bansal the daughter-in-law of the director of the assessee-company Smt. Geeta Devi Aggarwal for a total consideration of only Rs. 1,50,000 on June 30, 2006, i.e. at one-third of the cost of purchase." 12.5. On the basis of the above submission it was submitted that the findings given by the Assessing Officer and the Commissioner of Income-tax (Appeals) that the share capital received by the assessee is not correct. 12.6. As regards the addition on account of section 14A it was submitted that the assessee-company has made an investment of Rs. 44,54,119 out of which Rs. 36,50,000 was within the group company and in respect of the balance investment of Rs. 8,04,119.50 there is no change in the investment as compared to the last year. The Assessing Officer was not justified in invoking provisions of rule 8D and making this addition in the assessment year under consideration as rule 8D is applicable from the assessment year 2008-09 onwards. 13. We have heard both parties and considered the material on record. We have perused the assessment order as well as the Commissioner of Income-tax (Appeals)....
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....ake any effort to carry the investigation further. The sole basis for making addition about these companies is the inspector report. No doubts have been raised by the Assessing Officer about the documents filed by the assessee-company. The inspector report as alleged above cannot be a basis for disbelieving the assessee's version. 13.2. Further in the case of Sofed Comtrade Pvt. Ltd. we note that no enquiry whatsoever has been done by the Assessing Officer. The observations made by him are only raising a doubt without carrying out any investigation. Surprisingly we note that the Assessing Officer was having doubt in mind but he never issued any notice or summon to any of the directors. It is not a case where any confessional statement has been recorded by any entry provider of accommodation entry. It is a case of a doubt raised by the Assessing Officer but such doubt has not been converted into any evidence or material so as to substantiate the addition. We are of the view that the additions made by the Assessing Officer in respect of share capital received from these four companies are not justified and accordingly the same is directed to be deleted. 13.3. As regards the....