TaxTMI 
TaxTMI 
2016 (5) TMI 364
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....t, 1961." 2. The assessee is engaged in the business of manufacturing and trading of transformers. The assessee filed its return of income on 30/09/2008 declaring total income of Rs. 6,34,790/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). All the grounds of the revenue are against deleting the addition of Rs. 2.16 crores made U/s 68 of the Act considering the affidavits and not discharging the burden casted on the assessee. The ld Assessing Officer observed that the assessee had introduced fresh cash capital of Rs. 6,11,50,000/- in three different heads, Rs. 80,00,000/- as unsecured loan, Rs. 2,25,00,000/- in Reserve and Surplus and Rs. 3,06,50,000/- as share application money. A letter was sent to ADIT(Inv.), Unit-3(III), Kolkata to verify the source of cash capital introduction in the case of assessee during the F.Y. 2007-08. The ld Assessing Officer got the interim report from ADIT, Kolkata, which was received on 14/12/2010 in the office. According to the report in nine cases, copies were returned back. Departmental Inspectors were deputed to ascertain the existence of 9 concerns. They were also could not ascertain the existence of thes....
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....U/s 68 of the Act. The assessee replied vide letter dated 27/12/2011, it was submitted that the department had not enquired on their changed addresses and all the datas are available on MCA site. It is clear from the report sent by the ADIT that as per new addresses provided by the ACIT, Circle-7, Jaipur inquiry were also made by deputing departmental inspectors to verify the existence of the concerns but they could not find out any business activities done by these concerns. So she held that there is a reason to add back whole amount received from 9 companies, which are not traceable. She further held that in case of some companies, investment fund was unexplained. The creditworthiness of the creditors had not been proved. She also considered the case laws cited by the assessee but which were found distinguishable. Accordingly, the ld Assessing Officer made addition of Rs. 2.16 crores U/s 68 of the Act. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing as under:- "2.3. I have carefully examined contents of the 'Interim Report' dated 14/12/2010, of ADI (Inv.) Kolkata, w....
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....neness of the above loan transactions, they have submitted confirmations, affidavits, PAN No., copy of relevant returns of income, bank statement of relevant period and complete address of such creditors etc. Accordingly, the loans under considerations should be considered as proper and genuine u/s. 68 of the IT Act. In the light of the above factual and legal positions, I tent to agree with the Ld. AR that as far as appellant is concerned they have discharge their legal obligation u/s. 68 by filing all the possible evidences and statutory documents, as discussed above. The AO has simply followed the 'Interim Report' of the ADI, which itself is found of non conclusive and half cooked in nature, being not a final report as such. Moreover,- the non availability aspect, i.r.o,, to cash creditors is concerned, in my opinion the ADI report is not very clear about the exact reason and the follow-up action taken in this regard, specially when theses parties are not only assessed to tax but filed the returns for the relevant period also. In the light of the voluminous documentary evidences, it would be rather difficult to understand and appreciate the findings given by the ADI in ....
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....racom P. Ltd. Rs.5,00,000/- The undisputed facts i.r.o. of the above share capital/application money received by the AO are that the investors/creditors of such transactions are 'Private Limited Companies' only. Accordingly while deciding the issue under consideration, the above vital aspect has to be kept in mind. In this regard, the appellant has submitted confirmations, affidavits, PAN No., copy of relevant returns of income, bank statements of relevant period and complete address of such companies alongwith the R.O.C. papers also. Here the ratios upheld by various courts, including the Hon'ble Supreme Court in the case of M/s. Lovely Export Pvt. Ltd. 216 CTR 195 and M/s. Stellar Investment Ltd. 251 ITR 463, are found quite relevant and applicable, as found dealt with the issue, similar to the present appellate proceedings also. In the above decision, the Hon'ble Apex Court has categorically held that even if the share application money has been received from so- called bogus share holders, whose identity have been given and proved, under no circumstances such share capital can be regarded as undisclosed income of the company. In the present case t....
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....sed above. It is also found that the AO has disapproved or disbelieved the above transactions, simply on the basis of a half cooked and inconclusive observations of the ADI (Inv.) Kolkota, discussed in his interim report. In the light of the various court's decisions, including of the Apex Court and the Jurisdictional High Court and Tribunal as relied upon by the appellant also, it is evident that the AO has failed to make out any reasonable and proper case u/s. 68 of the Act towards share capital money and cash credits received by the appellant, by refuting the documentary evidences submitted in these regards. On the other hand, it is felt that the AO has also simply rejected the voluminous supporting evidences of the appellant in a cryptic and summary manner in the impugned assessment order, which cannot be upheld, under the given circumstances. Accordingly the entire addition of Rs. 2.16 crores made u/s. 68 of IT Act is hereby deleted. Consequently this ground of appeal is upheld. 4. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer and argued that the assessee had not proved the identity, genuineness and creditworth....
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....l). iv. CIT Vs. Nivedan Vanijya Niyojan Ltd. 263 ITR 623 (Cal) v. Hidusthan Tea Trading Co. Ltd. Vs. CIT 263 ITR 289 (Cal) vi. CIT Vs. Dhar Ispat (P) Ltd. 180 CTR 491 (MP). vii. CIT Vs. Biju Patnaik (SC) 160 ITR 674 viii. Roshan De Hatti Vs. CIT (SC) 107 ITR 938 ix. Sumati Dayal Vs. CIT (SC) 214 ITR 801 x. Vasantibai N. Shah Vs. CIT (Bom) 213 ITR 805 xi. Sreelekha Banarjee & Ors. Vs. CIT (SC) 49 ITR 112 xii. CIT Vs. Precision Finance P. Ltd. (Cal) 208 ITR 465 xiii. K.C.N. Chandrasekhar Vs. ACIT (ITAT, Bang) 66 TTJ 355 xiv. CIT Vs. United Commercial & Industrial Co. (P) Ltd. (Cal) 187 ITR 596. xv. CIT Vs. Sophia Finance Limited (Del) 205 ITR 98 xvi. CIT Vs. Active Traders P. Ltd. (Cal) 214 ITR 583 xvii CIT Vs. Nivedan Vaniya Niyojan Ltd. (Cal) 263 ITR 623 xviii. CIT Vs. Bhagwati Jewels Ltd. (Del) 201 ITR 461 xix. CIT Vs. Rathi Finlease Ltd. (MP) 215 CTR 429 xx. ACIT Vs. Dhanlaxmi Steel Re-rolling Mills (ITAT, Hyd) 57 ITD 361. xxi. Pradip Kumar Loyalka Vs. ITO (ITAT, Pat-TM) 63 ITD 87. Therefore, order of the Assessing Of....
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....f the assessee merely on suspicion. Since the identity of the cash creditors had been established by the assessee company. The ld Assessing Officer at best could have assessed such amount in the hands of those companies. There is also no allegation by the ld Assessing Officer or in the interim report by ADIT Kolkata that these companies were part of any racket or were entry operators. The ld Assessing Officer made routine enquiry to ADIT, Kolkata. There is also no information on which these cases were assessed by reopening. He further relied on the following case laws:- (i) CIT Vs Vacmet Packaging (India) (P) Ltd. (2014) 367 ITR 217 (All). (ii) CIT Vs Pranav Foundations Ltd. (2014) 51 Taxmann.com 198 (Mad). (iii) CIT Vs Vrindavan Farms (P) Ltd. ITA No. 71/2015 Delhi High Court. (iv) CIT Vs Som Tobacco India Ltd. (2014) 42 taxmann.com 310 (All). (v) Fair Finvest Ltd. (2013) 357 ITR 146 (Delhi). (vi) CIT Vs Morani Automotives (P) Ltd. (2014) 264 CTR 86 (Raj.) (vii) CIT Vs First Point Finance Ltd. (2006) 286 ITR 477 (Raj.). (viii) CIT Vs Supertech Diamond Tools (P) Ltd. (2014) 44 taxmann.com 460 (Raj). (i....
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....cer heavily relied on the Inspector's report in confirming the addition but result of the enquiry of the Inspector has not been communicated to the assessee, which is against the principles of natural justice. As per Assessing Officer, in case of 5 companies, the source of fund was not found explained. The ld Assessing Officer again gave show cause notice on 23/12/2010. The assessee filed reply on 27/12/2010 and it was claimed before the Assessing Officer that no enquiry has been made by the Assessing Officer on changed addresses. The ld Assessing Officer had not considered the evidence filed by the assessee during the course of assessment proceedings i.e. affidavits confirming the transaction, PAN number, complete addresses of creditors, copy of balance sheet, ITR for A.Y. 2008-09, bank statement and form No. 18. The assessee had discharged its onus by providing the requisite evidences to prove the identity, genuineness and creditworthiness of the cash creditors. The ld Assessing Officer herself had accepted the remaining cash creditors to the tune of Rs. 3.95 crores explained on the basis of similar evidences produced by the assessee as genuine. The loan/share capitals were recei....