TaxTMI 
TaxTMI 
2017 (2) TMI 627
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.... addition to this company, Mr. Mukesh choksi also floated many more companies, having same registered address. As per report Mr. Mukesh Choksi accepted that he used to give accommodation entries to various persons through his various companies. 5. During the course of scrutiny assessment AO asked about the same, assessee submitted the copies of cheques received and also the PAN details, return of income copies of the various parties which had introduced share capital in the Kalsha Builders Pvt. Ltd. The names and PAN Number of the companies introducing share capital are as follows, 1. Alliance Intermediaries Pvt. Ltd. PAN: AACCA9750E 2. Buniyad chemicals Pvt .Ltd. PAN: AABCB6954G 3. Coldstar Finvest Pvt. Ltd. PAN:. AABCG3811 B 4. Kaycee Shares Broking Pvt. Ltd. PAN: AACCJ(7839A 5. Mihir Agencies Pvt. Ltd. PAN: AAGFM0890D/ AABCH7898H 6. Alpha Chemie trade agencies Pvt. Ltd., PAN: AAGFA0609P/ AAECA6031C 6. AO stated that All six companies are part of Maha sagar securities Pvt. Ltd. i.e. owned by Mr. Mukesh Choksi, as appearing in the report received from investigation wing. This means, that assessee i.e. Kalsha Builders P....
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....ss/ share application money to various persons. Except for this, there is nothing on record brought by the AO to justify the addition. It is also an undisputed fact that transactions with these companies have been done through account payee cheque, respective bank statement have been brought on record before us. Even if we consider the statement of Shri Mukesh Choksi recorded u/s. 132(4) of the Act and also subsequently u/s. 131 of the Act, we do not find any reference to the assessee company, nowhere Shri Mukesh Choksi has said that he has arranged share capital for the assessee company. Merely because Shri Mukesh Choksi is indulged in clandestine activities would not make the transactions with the assessee company non genuine. The transactions have been done through account payee cheque and it is not a case of the Revenue authorities that prior to issuing the cheques the applicants have deposited cash in their respective bank account. The Hon'ble Supreme Court in the case of Lovely Export Pvt. Ltd. 216 C1R 195 has held that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the department i....
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....regarded as undisclosed income of assessee company." 2.4 In this background, it was submitted on behalf of the assessee that the Assessing Officer failed to appreciate that there is no documentary evidence against the assessee- company to support such impugned additions. It was further submitted by the assessee that the Assessing Officer failed to appreciate that the statements of any person recorded u/s 143(3) r.w.s. 147, the assessee-company has fully discharged the burden of proof, onus of proof and explained the source of share capital and advances received by established the identity, creditworthiness and genuineness of transaction by banking instruments with documentary evidences. The further stand of the assessee has been that the assessee company substantiated the details with the documentary evidences as extracted from the website of Ministry of Corporate Affairs, Government of India before the Assessing Officer. These facts have not been rebutted on behalf of the Revenue. 2.5 In view of the facts and circumstances of the present case as well as considering the decisions as discussed above on the similar issue, we are not inclined to interfere with the fi....
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....ssessing Officer, then the Department can always proceed against them and if necessary reopen their individual assessments. Held, dismissing the appeal, that there was no dispute that the assessee had given the details of names and addresses of the share holders, their PANI GIR numbers and had also given the cheque numbers, name of the bankers. The Assessing Officer ought to have found out their details through PAN cards, bank accounts details or from their bankers so as to reach the share holders. Thus, the view taken by the Tribunal could not be faulted. " Further Hon'ble Supreme Court in the case of Lovely Exports 6 DTR 308 (SC) has held as under: "If the share application money is received by the assessee company from alleged bogus share holders who's name are given to the AO then the department is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of assessee company." 6. Coming back to the facts of the present case, it is seen that investment in the capital share of the assessee company was made by five companies. These companies exist on the records of ROC. All these companie....
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....ling returns of income and are duly assessed and thus, identity of the shareholders is also established. (v) Applicant's name is not mentioned in any of the statement of Mr. C. Choksi Group recorded by the IT Department. In view of these peculiar facts and circumstances, we find that the assessee discharged its onus as per law, as stipulated section 68 of the Act. On the other hand, the Assessing Officer was not in position to controvert the factual material and documentary evidences placed by the assessee and he could not bring anything contrary on record to negate the documentary evidences furnished by the assessee. In view of the peculiar facts and circumstances of this case, order of ld. CIT(A) is upheld. Appeal filed by the Revenue is dismissed." 19. On the other hand, learned DR relied on the order of the lower authorities and contended that there was definite information from the investigation wing of income tax department according to which assessee is in respect of accommodation entry through the companies owned by Shri Mukesh Choksi alleged to be engaged in providing accommodation entries. 20. Our attention was also invited to the statement of ....
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.... 16 Copy of the PAN of the said Alpha Chemie Trade Agencies Pvt. Ltd. 17 Copy of the acknowledgement of furnishing of the return of income by Alpha Chemie Trade Agencies Pvt. Ltd. for AY 2007 - 08. 18 Copy of the Resolution passed for subscription of 200 equity shares by the said Alpha Chemie Trade Agencies Pvt. Ltd., 19 Copies of the documents in respect of subscription of 200 equity shares by Alpha Chemie Trade Agencies Pvt. Ltd. 20 Copy of the confirmation issued by Alpha Chemie Trade Agencies Pvt. Ltd. for subscription of 200 equity shares. 21 Copy of the bank statement of Alpha Chemie Trade Agencies Pvt. Ltd. with ICICI Bank Current Alc No.: 641405050145 22 Copy of the demand draft for a sum of Rs. 5 Lacs issued by ICICI Bank. 23 Copy of the certificate of incorporation of Bunivad Chemicals Ltd. 24 Copy of the PAN of the said Buniyad Chemicals Ltd., 25 Copy of the acknowledgement of furnishing of the return of income by Buniyad Chemicals Ltd. for AY 2007 - 08 26 Copy of the Resolution passed for subscr....
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....Copy of the PAN of the said Mihir Agencies Pvt. Ltd., 49 Copy of the acknowledgement of furnishing of the return of income by Mihir Agencies Pvt. Ltd.for AY 2007 - 08. 50 Copy of the Resolution passed for subscription of 600 equity shares by the said Mihir Agencies Pvt. Ltd. 51 Copies of the documents in respect of subscription of 600 equity shares by Mihir Agencies Pvt. Ltd. 52 Copy of the confirmations issued by Mihir Agencies Pvt. Ltd. for subscription of 600 equity shares. 53 Copy of the bank statement of Mihir Agencies Pvt. Ltd. with ICICI Bank Current Alc No.: 64105050061 54 Copy of the demand draft for a sum of Rs. 15 Lacs issued by ICICI Bank. 55 Copy of the share valuation report of the assessee's share." 22. We had also deliberated on the judicial pronouncements relied on by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the instant case. We found that in the A.Y.2009-10 learned AO has made addition for the share application money amounting....
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.... iii. Buniyad Chemicals Ltd., 200 AABCB6954G 5,00,000/- iv Kaycee Shares Broking Pvt. Ltd., 200 AACCK7839A 5,00,000/- v Mihir Agencies Pvt. Ltd., 600 AAGFM0809D 15,00,000/- vi Alpha Chemetrade Agencies Pvt. Ltd., 200 AAGFA0609P 5,00,000/- Total 2000 50,00,000/- 28. Since there was a failure to pay the last call money of Rs. 5,000/- per share by all the shareholders as stated above, the shares in question were forfeited. 29. As per the decision relied on by learned AR as reproduced above, the assessee has filed all the documentary evidence in support of share capital so received. In all these decisions, additions were made by AO on account of share subscription made by the group concerns of Shri Mukesh Choksi, on the plea that same was bogus and not genuine. 30. As can be observed from the above decisions, additions made under section 68 for share application money introduced by the fo....
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....ess any adverse evidence is on record as per verdict of Hon'ble Supreme Court in the case of Lovely Exports (supra). In the absence of any efforts on the Revenue's part it cannot be regarded as undisclosed income of assessee company. 36. We also found that vide letter dated 16/12/2011, the assessee requested AO to furnish material in respect of such evidence collected by him with a request to provide for cross examination of Shri Mukesh Choksi. However, the AO did not furnish the material on the basis of which he had come to this adverse conclusion nor was an opportunity, afforded to the assessee to cross examine Shri Mukesh Choksi in this regard. 37. We also found that the AO had never forwarded the material collected from the shareholders by the investigation wing, for the assessee's rebuttal including the opportunity called for by the assessee for cross examination of Shri. Mukesh Choksi. We also found that statement given by Shri. Mukesh Choksi, reproduced by the AO in Para 5 of the Assessment Order is too general and does not particularly mention about shareholding in the assessee company. Hon'ble Bombay High Court in the case of H.R. Mehta vs ACIT (387 ITR 561) ....
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....sessee himself, but no material direct or indirect exists on record to come to such a conclusion confidently and boldly. 39. On the basis of documentary evidence placed on record we found that the assessee has discharged the onus cast upon by proving the identity, genuineness and creditworthiness-of the parties from whom it had received share application money. 40. It was also argued by learned AR that Assessing Officer has made the addition merely on the basis of information received from the Investigation Wing in respect of search took place on Mahasagar Securities Pvt Ltd which was floated by Shri Mukesh Choksi. The AO has neither submitted the details of the information received and the copy of the statement recorded of Shri Mukesh Choksi to the Assessee nor allowed the assessee to cross examine. The AO has not proved that the investment actually emanated from the coffers of the assessee so as to enable it to be treated as undisclosed income of the assessee and in absence of such findings, addition u/s.68 is not warranted. 41. As per learned AR even, the findings of the CIT(A) for AY 2009 - 10 upholding the addition made of Rs. 2.50 Crores is on the basis of the theory....
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.... in three or four seasons not merely at one place but at three different centres namely Madras, Bangalore and Hyderabad appears, prima facie, to be wildand contrary to the statistical theories and experience of the frequencies and probabilities; c) The appellant's books does not show any drawings on race days or on the immediately preceding days for the purchase of the jackpot combination tickets, which entitled sizeable amounts varying generally between Rs. 2,000 to Rs. 3,000. The drawings recorded in the books cannot be eo- related to the various racing events at which the appellant made the alleged winnings; d) While the appellant's capital account was credited with the gross amounts of the race winnings, there were no debits either for expenses and purchase of tickets or for losses; and e) In view of the exceptional luck claimed to have been enjoyed by the appellant, her loss of interest in races from 1972 assumes significance. Winnings in racing became liable to income-tax from 1-04-1972 but one would not give up an activity yielding or likely to yield a large income merely because the income would suffer tax. The position would be different;....