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2010 (4) TMI 1116
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....-. The return was initially processed u/s. 143(1) of the Act on 31.03.2003. Subsequently, in the light of the information received from Investigation Wing of the department, the AO issued a notice u/s. 148 on 07.11.2006 after recording reasons thereof and taking prior approval from the Additional Commissioner of Income Tax. The assessee vide its letter dated 11.12.2006 submitted that return already filed on 30.10.2001 may be treated as return filed in response to notice u/s. 148 of the Act. Notice u/s. 143(2) was issued on 26.02.2007 and was duly served upon the assessee. In the course of assessment proceedings, the assessee's authorized representative vide letter dated 07.03.2007 requested the AO to provide the reasons recorded for initiating proceedings u/s. 148 of the Act, and, accordingly, these reasons were provided to the assessee by the AO vide letter dated 09.03.2007. The assessee then filed objections to the initiation of proceedings u/s. 147 of the Act. The objections so filed by the were considered and disposed off by the AO vide order dated 17.05.2007. 3. It has been further observed by the AO that the assessee company was incorporated on 12.10.1999, and the current ....
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....by the AO in the assessment order that statement of Shri S H Mallick, Shri Vishal Aggarwal, Shri Umesh Gupta, and other persons were recorded on oath by then Addl. Director of Income Tax (Investigation), and in those statements, these parties have categorically denied of ever making any investment in share capital of companies. These persons further stated that they were engaged in the business of providing accommodation entries and used to take cash for giving cheques/drafts. These persons had given list of individuals and companies, which were being used by them in this activity of providing accommodation entries. 10. The AO then stated that entire alleged share application money of Rs. 63,50,000/- was received between 22.03.2001 to 29.03.2001, and entire share capital were received in few days in the month of May 2000. 11. The AO then pointed out that most of the share applicants were having a bank account in a common bank, and then he listed the names of persons having account in the common bank viz., State Bank of Bikaner and Jaipur, New Rohtak Road, New Delhi (eleven share applicants having bank account in this bank), Federal Bank, Karol Bagh (six share applicants havin....
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....ax returns, books of accounts, share certificate allegedly issued by the assessee and source of investment in the shares. 15. For the purpose of servicing of summons at the addresses of the aforesaid parties, the AO deputed Ms. Renu Kamra, Inspector of the Department. The inspector visited at the given addresses and then submitted a report that these parties or persons were not available at the address/es given by the assessee. The AO apprised the assessee about the Inspector's report and asked the assessee to either depute someone to accompany the Inspector or to get the summons otherwise served or to produce the parties for examination and verification. The assessee then intimated the AO that the assessee has already filed share application forms wherein name of the assessee, father's name, bank details, PAN etc. establishing their identity and as such, no further prove of identity is required. However, the assessee vide letter dated 26.11.2007 provided new address of the following persons: 1. M/s. Shivam Softech Ltd. 2. M/s. Shimmer Marketing (P) Ltd. 3. M/s. Welcome Coir Industries Ltd. 4. M/s. Maa Shakumbhari Stone Crushers (P) Ltd. 16....
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....and profit & loss account, annual return filed with the Registrar of Companies, which includes list of share holders, both the old as well as new, and copy of Form no. 2 i.e. copy of return of allotment of shares alongwith the list of new share holders, which was filed and registered with Registrar of Companies, acknowledgment of return of income of the share applicants, balance sheet, profit & loss account, CIN identification from website of ROC, affidavit from the directors and confirmation letters. These details were placed at pages 235 to 1062 of the paper book filed before the CIT(A). (iv) That out of forty four share applicants from whom share capital/share application money was received, the AO had issued notice u/s. 131 to just twelve parties, and no enquiries from any other party was ever made by the AO, and, therefore, the addition in respect of other party to whom notices u/s. 131 was not issued, is otherwise not warranted. Moreover, there is no adverse information from Investigation Wing in respect of other share-applicants other then 12 share holders mentioned in the reasons recorded for issuing notice u/s. 148 of the Act. (v) The details of sharehold....
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....quiry was made at all in the case of remaining 33 parties. (e) Without conducting any enquiry in case of remaining 33 parties and in the absence of any material brought on record suggesting that the parties has given accommodation entries to the assessee, the AO was not justified in making addition in respect of remaining 33 parties. With regard to the 11 parties in whose case summons were issued but not served, the AO has not brought any material on record to prove that the money received from these parties was the assessee's own unaccounted money. (f) The AO has simply relied upon the information received from Investigation Wing of the department without making any concrete efforts to verify the facts stated in the report of the Investigation Wing. (g) The assessee has submitted all the details including confirmation from the parties, which goes to establish that assessee have bee able to discharge the burden that lay upon the assessee. (h) The CIT(A) relied upon the decision of Hon'ble Apex Court in the case of CIT vs. Lovely Exports Pvt. Ltd. (supra). The CIT(A) has also relied upon the following decision:- (i) CIT vs. Divine Leasing....
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....that it is beyond assessee's control to produce them before the AO for verification is not believable, and it is seems to be a well thought strategy so that real state of affairs between the assessee and investor may not be brought to light. He further contended that the facts of the present case are very peculiar where the department has been able to collect information by way of Investigation Wing that the share applicants have not really invested their own money towards share capital of the company, but it is the assessee's own money which has been introduced in the garb of share capital routed through banking channels by arranging affairs on papers. He, therefore, submitted that the various details filed by the assessee are not acceptable on their face value unless, they are being collaborated and supported by examining the shareholders. The ld. DR has relied upon the decision of co-ordinate Bench of the Tribunal in the case of ITO vs. M/s. Omega Biotech Ltd., ITA no. 2860/Delhi/2009 of ITAT, Delhi Bench 'B', New Delhi, order dated 31.1.2009 24. The ld. counsel for the assessee, on the other hand, reiterated the contentions and submissions that were made before the CIT(A). S....
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....ued were not found available at the addresses given by the assessee. The AO also stated that the assessee has also failed to produce these parties for his examination and verification. However, the AO has made the addition in respect of share capital/share application money received from all 44 parties except the Director, Shri Ajay Singhal. The AO received adverse information in respect of 12 parties out of which the AO issued summons to ten parties. With regard to the rest 32 parties in respect of which no adverse information were received from the Investigation Wing, we find that the AO had issued summons only to two parties viz., (i) M/s. Shivam Softech Ltd. and (ii) M/s. Rubal Chemicals (P) Ltd., and no enquiry, whatsoever, were conducted in respect of the rest 30 parties. In respect of these 30 parties, the assessee has furnished all the necessary supporting evidences and material establishing their identity and genuineness of the transaction. The assessee has furnished acknowledgement receipt of return of income filed by those parties. In respect of these 30 parties, the A.O. has not brought any material on record to prove and establish that the share application money paid ....
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....y were engaged in the business of providing accommodation entries, we find that the AO had issued summons u/s. 131 to 10 parties out of 12 parties with a view to examine and verify the genuineness of the transaction, but the summons so issued by the AO could not be served on those persons or parties as they were not found available at the given address. Therefore, it is not the case where the AO has failed to make any enquiry to ascertain the facts came to light from the investigation conducted by the Investigation Wing. Since all the 12 persons, whom notices u/s. 131 were issued by the AO, have not appeared before the AO for his examination and verification, it was totally impracticable on the part of the AO to provide an opportunity to cross examine them by the assessee. It is not the case where these persons were examined by the AO and their statement were recorded by him, and the AO then failed to provide an opportunity to the assessee to cross examine them. The stage of providing opportunities to the assessee to cross examine the person did not arise at all in as much, appearance of all those persons even before the AO could not be procured, despite best efforts made by the AO....
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....ssessee company. In order to decide this issue as to whether the share capital or share application money received from twelve parties referred to in the report of Investigation Wing, is unaccounted money of the assessee company or any other person, it is necessary to make further enquiry and verification by examining the concerned parties as well as by taking into account other surrounding circumstantial evidences. We, therefore, restore the issue limited to the addition on account of share capital/ share application money received from 12 parties, to the file of the AO for his further examination and verification. The AO shall make such further enquiries and investigation as he may thinks fit and proper. The AO may also make enquiry from the Registrar of Companies or from the respective AO assessing those 12 parties in order to find out as to whether these parties were actually carrying on any business activity as claimed by them either in the return of income filed before the Income Tax Department or in the return filed before the ROC. Needless to mention that the AO shall provide reasonable opportunity of being heard to the assessee by putting all the materials or information t....