TaxTMI 
TaxTMI 
2015 (11) TMI 1455
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.... on 24th November 2014. The affidavit in support of the appeal has been signed by Mr. Narendra Prasad Sinha, posted as CIT -3. 3. Enclosed with the memorandum of appeal, is a copy of the certified copy of the impugned order of ITAT which bears different date stamps. One of them is a date stamp of the CIT-3 dated 1st August 2014. Next to it, is a noting of 5th August 2014 asking the matter to be put up for 'appeal effect' urgently. However, also enclosed is a copy of a covering letter dated 24th November 2014 from the Income Tax Officer (ITO), Headquarters-8 (Judicial), New Delhi addressed to the CIT-III (Post restructured) drawing the attention of the latter to the ITAT's order in the cases of the present Respondent, Five Vision Promoters Pvt. Ltd. ('Five Vision'). 4. By an order dated 9th October 2015 the Court required Mr. Kamal Sawhney, learned Senior standing counsel for the Revenue, to produce the certified copy of the order of the ITAT in original with the date stamp to show when it was received by the CIT-3. On the next date, i.e. 17th November 2015, Mr. Sawhney sought more time for that purpose. The Court was not inclined to grant further time for that purpose and....
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.... facts 8. The background to filing of these appeals is that the Assessee, Five Vision, is a company incorporated under the Companies Act, 1956 on 14th January 2005 with the object of running a shopping mall. The business of the Assessee had not commenced till 31st March 2009 because the Mall was under construction. 9. The genesis of the present proceedings is a search which commenced on 14th October 2008 in the premises of SVP Builders India Limited ('SVP Builders') and the SVP Group of Companies. Four companies were said to comprise the core of the SVP Group, of which the fourth was Five Vision. The other three are SVP Builders, SV Liquor (India) Ltd. and SVP Developers Ltd. These four companies were found to have received share capital from 106 companies between AYs 2003-04 to 2009-10. The said shareholders have been categorised Table-I, II and III shareholders. Table-I shareholders, which were 20 companies, were subjected to search under Section 132 of the Act. Table-II shareholders, comprised 12 companies against whom the proceedings were initiated under Section 153C of the Act consequent upon the search. Table-III shareholders, comprised 74 companies whose identity and exist....
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....turn of income for AY 2008-09 on 6th October 2008 and for AY 2009-10 on 26th September 2009. As far as AYs 2008-09 and 2009-10 are concerned, the total contribution to the equity share capital of Five Vision aggregated to Rs. 2 crores and Rs. 4.55 crores respectively. The said contribution was entirely from Table-III category shareholders. 14. Consequent upon the search that took place on the SVP Group of companies on 14th October 2008, notices were sent to Five Vision on 14th May 2010 under Section 153C of the Act for AYs 2007-08, 2008-09 and under Section 271F of the Act for AY 2009-10. In response to the above notices, the Assessee filed its return of income for AYs 2007-08 and 2008-09 on 4th June 2010. It replied on the same date to the notice under Section 271F stating that it had already filed a return for AY 2009-10 on 29th September 2009. It enclosed to the reply a hard copy of the said return. Thereafter, notices were again sent to the Assessee by the Assessing Officer ('AO') on 15th September 2010 under Section 143 (2) of the Act. The jurisdiction of the case was shifted from Meerut to Ghaziabad on 13th October 2010. Again notices under Section 142 (1) of Act were issued....
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....s and some filed affidavits but did not submit any other details. The letter of M/s. Ganesh Buildtech showed that it had invested Rs. 10.50 crores in 16 of the companies in figuring in Tables III and they in turn invested in the SVP Group companies. This was proof of the said companies acting as a "conduit channel". Further, the Assessee failed to produce the shareholders for cross-examination. (iv) Also, the nexus of the shareholders and the beneficiary, i.e. the SVP Group stood proved from the fact that shares were bought back by the individuals/concerns belonging to SVP Group. During the search, original share certificate worth Rs. 38 crores were found out of which some were seized. During the search one Shri Vijay Jindal gave a statement that the shares were allotted at Rs. 10 per share and later on bought back at Rs. 2-3/- per share. The actual average purchase price was Rs. 1.04 per share. Thus shares that were initially issued by the SVP Group to the extent of Rs. 81.19 crores had been cheaply bought back for Rs. 10.38 crores and therefore the transactions were sham. (v) Thus the Assessee had failed to prove the identity, genuineness and creditworthiness of the said shareh....
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....,57,27,500 in AY 2007-08, he added the sum of Rs. 1,74,75,000 received from it in AY 2007-08. This apparent contradiction showed that the addition was made without appreciating the complete facts on record. (iv) The decision of this Court in M/s. Nova Promoters and Finlease (P) Ltd. 342 ITR 169 (Del) was distinguishable on facts since in that case two directors of the shareholder companies admitted to maintaining benami accounts and providing accommodation entries, whereas in the present cases there were no such statements. Also, here the AO did not take any steps to rebut the confirmation and evidence tendered by the shareholders. (v) The common address of shareholders was not a valid basis to disregard the claim of the Assessee in view of the decision of this Court in CIT v. Winstral-Petrochemicals Pvt. Ltd. 330 ITR 603 (Del). (vi) The subsequent sale of the shares subscribed was not germane to the question of the genuineness of the share capital amount received by the Assessees. Once the capital raised stood explained, the issue of disinvestment by the shareholder subsequently was a non-issue. The addition if at all was to be examined in the hands of the person purchasing the....
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....d in the names of individuals/ concerns belonging to SVP group at a meagre price ranging from Rs. 0.50 to Rs. 2 per share. Fifthly, the persons available at the premises during search of the Table I companies denied the existence of such companies at that place. The Assessee had received huge amounts of money of Rs. 11 crores in cash in the form of share application money, which was not explained. Lastly, it was submitted that the decision in M/s. Nova Promoters and Finlease (P) Ltd. (supra) was wrongly distinguished by the ITAT in its application to the facts of the present case. 23. Mr. C.S. Aggarwal, learned Senior counsel for the Assessee, filed the entire record of the case submitted before the AO, CIT (A) and the ITAT and urged that no substantial question of law arises since the findings of the ITAT were purely factual and consistent with the well settled law explained by the Supreme Court and the High Courts in several decisions concerning Section 68 of the Act. Mr. Aggarwal pointed out that as regards the 38 shareholders who contributed share capital for AY 2007-08, a sum of Rs. 4,56,47,500, 14 belonged to Table-I, 9 to Table-II and 15 to Table-III. Evidence in respect of....
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....Supreme Court in Special Leave to Appeal (Civil) (CC) 375 of 2008) and decision dated 17th September 2012 of the Supreme Court in CIT v. Kamdhenu Steel & Alloys Limited [SLP (Civil) CC 15640 of 2012)]. In all the above three decisions the Supreme Court had affirmed the corresponding decisions of this Court including CIT v. Divine Leasing and Finance Ltd. 299 ITR 268. Reliance was also placed on the decision of this Court in (1994) CIT v. Sophia Finance Ltd. (1994)205 ITR 98 (FB) (Del). Law concerning Section 68 of the Act 28. Before proceeding to discuss the above submissions, a brief recapitulation of the legal position as regards Section 68 of the Act is necessary. Under Section 68 of the Act, the AO has jurisdiction to undertake enquiries with regard to the amount credited in the books of the accounts of an Assessee. This could be any sum whether in the form of sale proceeds or receipt of share capital money. First, the AO is to enquire whether the alleged shareholders in fact exist or not. The truthfulness of the assertion by the Assessee regarding the nature and the source of the credit in its books of accounts can be examined by the AO. Where the identity of the shareholder....
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....artment is free to proceed to re-open their individual assessments in accordance with law." 31. Likewise in CIT v. Dolphin Canpack Ltd. 283 ITR 190 the Court held no substantial question of law arose since the ITAT found that the Assessee had disclosed to the AO during the course of enquiry "not only the names and the particulars of the subscribers of the shares but also their bank accounts and the permanent account numbers issued by the income tax department. Superadded to all this was the fact that the amount received by the company was all by way of cheques." 32. The law was reiterated in CIT v. Kamdhenu Steel & Alloys Ltd. 206 Taxman 254. The Assessee there had given particulars of registration of the investing companies; confirmation from share applicants, their bank account details; and had shown payment through account payee cheques etc. In the circumstances, it was held that it could be said that the Assessee had discharged its initial onus and just because some of creditors/share applicants could not be found at the addresses given," would not give Revenue a right to invoke Section 68 without any additional material to support such a move." It was held likewise in Sartha....
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....Assessee is concerned has no legs to stand. Correspondingly, the further allegation that such 'on money' was routed back to the mainstream in the form of capital has also to fail. 37. The other submission that the Assessee was itself being used as a conduit for routing the 'on money' or that the investment in the Assessee was also for routing such 'on money' has not even prima facie been able to be established by the Revenue. On the one hand there is an attempt to treat the cash credit found in the Assessee's books of accounts to be 'undisclosed income of the Assessee' by showing the investors to be 'paper companies'. On the other hand, the attempt is to show that this money in fact belongs to certain other entities whose source has not been explained by the Assessee. As noted by the ITAT in the assessment proceedings of the investor companies, the monies invested were sought to be added as income of those companies by the AOs. The said additions were deleted by the CIT (A) in their cases holding that the additions if at all should be made in the hands of the beneficiaries. The Revenue then filed appeals in the ITAT insisting on the additions being sustained. Thus ....