TaxTMI 
TaxTMI 
2015 (8) TMI 604
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....ils, pleadings and written submissions made from time during the course of assessment proceedings. 4. That the interest as charged under Section 234B and 234C is illegal on various factual and legal grounds. 5. That the demand of Rs. 95,22,541/- created, pursuant to this assessment which is a disputed demand, be kindly stayed till disposal of the appeal. 6. That the several observation as made and inferences drawn are untenable, incorrect, unwarranted and uncalled for. 7. That the Appellant may take any other Ground or Grounds at the time of hearing of Appeal with the kind permission of the learned ITAT." 3. Ground Nos. 3, 5, 6 & 7 are general in nature so do not require any comments on our part. 4. Vide Ground No. 1 the grievance of the assessee relates to the confirmation of addition of Rs. 1,90,00,000/-made by the AO u/s 68 of the Income Tax Act, 1961 (hereinafter referred to as the Act) on account of share capital. 5. Facts related to this issue in brief are that the assessee filed the return of income through e-filing on 22.09.2010, declaring an income of Rs. 30,77,084/-. Later on, the case was selected for scrutiny. During the course of assessment proceeding....
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....are already filed and is available on record form Page 14 to Page 78. In the above light the identity, creditworthiness, and mode of transaction stands proved as per law." 7. The AO observed that the assessee only relied upon the PAN No. for the identity of the share application money subscribers, Balance Sheet and account payee cheques for capacity and genuineness of the aforesaid parties. He further observed that he had completed an assessment of M/s Parsandi Biotech Park Pvt. Ltd., Shastri Nagar, Meerut wherein share capital of Rs. 1,00,00,000/-subscribed by M/s Shalini Holdings Ltd. was held to be bogus. The AO observed that on enquiry, it was found that none of the Directors was available on the given address of the aforesaid companies and both were also not functioning and that the neighbours were also not aware of these companies. The AO extracted the following tabular matrix in respect of both the companies: S. No. Name of Company Returned income (In Rs.) Paid up capital (In Rs.) Share premium capital (In Rs.) Investment made in the assessee co. (In Rs.) No. of other cos. wherein investment ....
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.... above-named companies is not filed by assessee company to prove the creditworthiness and genuineness of the transactions. 4. Assessee company is not a public limited co. and not offered its share to general public and it is not clear as to how investment companies contacted to assessee company for investment in shares." 9. The AO accordingly made the addition of Rs. 1,90,00,000/- u/s 68 of the Act. The reliance was placed on the following case laws: • Sumati Dayal 214 ITR 801 (SC) • Macdowell & Co. 154 ITR 148 (SC) • Azadi Bachao Andolan 263 ITR 706 (SC) • Avarsale Automation Ltd. 266 ITR 178 (Kar.) • Nivedan Vanijya Niyojan Ltd. 263 ITR 623 (Cal) • Gyan Chand Anil Kumar 251 ITR 559 (MP) Ø Hindustan Tea Trading Co. Ltd. 263 ITR 289 (Cal) • Sophia Finance Ltd. 205 ITR 95 (Del) (FB) • Ram Lal Aggarwal 280 ITR 547 (All) • Precision Finance (P) Ltd. 208 ITR 465 (Cal) • Anil Rice Mill 282 ITR 236 (All) • CIT Vs M/s Nova Promoters & Finlease Pvt. Ltd., ITA No. 342 of 2011 (Del) 10. Being aggrieved the assessee carried the matter t....
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....008) 166 Taxman 7 (All) • CIT Vs AKJ Granites (P) Ltd. (2008) 301 ITR 298 (Raj.) • CIT(A) Vs Value Capital Services P. Ltd. (2008) 307 ITR 334 (Del) • CIT Vs Stellar Investment Co. Ltd. (1991) 192 ITR 287 (Del) • CIT Vs First Point Finance Ltd. (2006) 286 ITR 477 (Raj.) • CIT Vs Electro Polychem Ltd. (2007) 294 ITR 661 (Mad.) • Showveek Finance and Investment Pvt. Ltd. Vs CIT (2005) 6 MTC 951 (ITAT, LKO) • JCIT(OSD) Vs Yuvraj Construction and Leasing India Ltd. (2007) 10 MTC 271 (ITAT, LKO) • Uma Polymers (P) Ltd. Vs DCIT (2006) 100 ITD 1 (Jodh) (tm) • Indradhan Agro Products Ltd. Vs DCIT (2004) 89 TTJ 1958 (Del) • DCIT Vs Arjun Cold Storage and Gen. Mills (P) Ltd. (2009) 13 MTC 1001 (ITAT, Del) • Barkha Synthetics Ltd. Vs ACIT (2005) 197 CTR 432 (Raj.) • Aravali Trading Co. Vs ITO (2010) 187 Taxman 338 (Raj.) • Murlidhar Lahorimal Vs CIT 280 ITR 512 (Guj.) • CIT Vs Daulatram Rawatmal (1973) 87 ITR 349 (SC) • India Rice Mill Vs CIT (1996) 218 ITR 508 (All) • CIT Vs Jauhar....
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....ven and that now-a-days it is very easy to create an identity as far as filing of I.T Return, opening a bank account and maintaining site/information on Internet/site/ROC. The ld. CIT(A) also observed that furnishing of PAN is not a barometer of unassailable identity of a person giving him immunity from any probe and that the allotment of PAN is not sacrosanct and adequate parameter of identity and it needs to be strengthened and correlated with credible creditworthiness. The ld. CIT(A) was of the view that the facts of the assessee case are akin to the facts of CIT Vs Nova Promoters and Finlease Pvt. Ltd. rather than that of CIT Vs Gangeshwari Metals Pvt. Ltd. reported at 2013(1) TMI 624 (Del) relied by the assessee. The ld. CIT(A) further observed that the fact that the ACIT, Central Circle-23, New Delhi has accepted returned income of entry providers does not help the case of the assessee. He also observed that the transactions of the assessee with entry providers were not real transactions but only paper transactions for which the conduit companies had earned commission income. Therefore, accepting the returned income of commission, the assessee in hands of the entry providers ....
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....and the investment in the assessee company was only Rs. 20 lacs by M/s Apoorva Leasing Finance & Investment Pvt. Ltd. and Rs. 1.70 crores by M/s Shalini Holdings Ltd. The said fact was overlooked by the AO who simply mentioned the income declared by those companies but ignored this fact that the share capital was paid by both the companies out of their capital and not out of their income. As regards to the report of the Income Tax Inspector, the ld. Counsel for the assessee submitted that the said report had neither been provided nor confronted to the assessee and no such report had been enclosed by the AO with the assessment order. Therefore, the observations of the AO were without any basis and the cases relied by him had no application to the facts of the assessee. It was further stated that the assessee company is a closely held public limited company and has fulfilled all the provisions prescribed to issue share capital under the Companies Act and filed its return of allotment of shares in Form No. 2, copies of which is placed at pages 182 to 188 of the paper book. It was further stated that the reliance placed by the ld. CIT(A) in the case of M/s Nova Promoters Finlease Ltd. ....
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....said companies were registered with ROC and were regularly assessed with the Income Tax Department, copy of assessment order of the assessment year 2010-11 of M/s Apoorva Leasing Finance & Investment Pvt. Ltd. u/s 153C/153A is placed at page nos. 123 & 124 of the assessee's compilation and in the case of M/s Shalini Holdings Ltd., the similar documents are placed at page nos. 121 & 122 of the assessee's paper book which clearly established the identity of both the parties. The aforesaid parties applied in proper application form for allotment of the shares of the assessee company, copies of which are placed at page nos. 126 and 147 to 152 in the case of M/s Apoorva Leasing Finance & Investment Pvt. Ltd. and M/s Shalini Holdings Ltd. respectively. The amount was paid to the assessee through account payee cheque/RTGS which is reflected in their respective bank account statement, copies of which are placed at page nos. 127 and 153 to 156 in the case of M/s Apoorva Leasing Finance & Investment Pvt. Ltd. and M/s Shalini Holdings Ld. respectively. Both the above said parties were having worth Rs. 119,85 crores and Rs. 124.87 crores respectively, which is evident from their respective bal....
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....ese, the Commissioner (Appeals) held that the share application money or the source of the share application money had been satisfactorily explained. The Tribunal was of the opinion that no interference was warranted having regard to the facts of this case. This was a pure finding of fact. Section 68 was not applicable." 20. We are of the confirmed view that the ratio laid down in the aforesaid referred to cases is squarely applicable to the facts of the present case because the assessee furnished the PAN No. and copy of Income Tax Return of the share applicants to prove their identity and filed the copy of their balance sheets to prove the creditworthiness, share application money was received through banking channel and after allotment of the shares the information was furnished to the Registrar of Companies. Therefore, the transaction was genuine. In the present case, the assessee discharged the onus cast upon it to prove the identity and creditworthiness of the share applicant and genuineness of the transaction. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. Accordingly, the same is deleted. 21. The next issue vide Ground No. 2 r....
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.... Ld. AO has himself quoted that "After verification of the sales and the purchases made by the company and the claim of expenses nothing adverse has been noticed and as such, the trading results are accepted." (iv) That all the vehicle expense are fully vouched, audited and supported. Than any kind of addition based on any kind of presumption or assumption based on some self cooked formulas and calculations are not correct, true and match with the records. (v) That under these circumstances when the books of accounts are fully vouched, and no discrepancy has been pointed out by the Ld. Assessing Officer. Than this adhoc addition of Rs. 5,00,000/- in vehicle running expenses based on self cooked assumptions is totally unjust, uncalled for and needs to be deleted in full. (vi) That the Ld. Assessing Officer has forgotten that this is the case of a Limited Company and any addition without pointing out any discrepancy in books of accounts/Vouchers is not tenable in the eyes of the Law and the depreciation so disallowed by him also needs to be deleted in full. (vii) Now looking to the various facts and the contradiction in the order of ld. Assessing Officer the addition of R....