TaxTMI 
TaxTMI 
TaxTMI 
2017 (6) TMI 482
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....en confirmed despite the same being made ignoring the material and evidences brought on record by the appellant in support of his contention and by indulging in surmises and conjecture, (iii) That the above addition was made despite the assessee bringing al! the material and evidences on record to prove the identity of the shareholders. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts ad in law, in confirming the above additions despite the same being made in clear violation of the direction of the Hon'ble ITAT. 5. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts ad in law, in rejecting the contention of the appellant that the AO has failed to carry out the investigation as envisaged by the ITAT, particularly verification from the ROC record and the AO of these shareholders, while remanding the matter back to him. 6. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts ad in law, in rejecting the contention that the observation made by the AO that the inspector has made verification by personal visit on 19[" December, 2011 in respect of all these 14 pa....
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....e to submit the latest address of parties as they were no longer the share holders of Assessee. Assessee further submitted that interest and status of the corporate parties were available on ROC site which were filed before Ld. AO. 4. Ld. AO as per directions of this Tribunal vide order dated 16.04.2010 carried out certain and investigation to asserting true facts of identity, genuineness and creditworthiness of transactions made with above parties and assessee. Ld. AO accordingly issued notice dated 16.12.2011 to all parties on latest address provided by assessee, asking them to furnish following information: a) Your income tax particulars including PAN, Assessing Officer/Ward/Circle where being assessee to tax with copy of acknowledgement of latest return of the income filed by you. b) A note on nature of transactions held with the above mentioned Company/firm during the period from 01.04.2000 to 31.03.2001 giving details of payment received/made, mode of payment and date of payment. c) Furnish certified copy of ledger A/c of M/s Om Logistics Ltd. (aforesaid) for A.Y. 2001-02 as it appears that in your books of account for the relevant period. Details of tax deducted at ....
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.... Chemicals, as available with ROC could be filed before Ld. AO. Ld. AR submitted referred to Suma Finance & Investments where refund for AY 2010-11 has been issued by Ld. AO on 23.12.2011 and latest address of Maa Shakumbhari was also filed on 26.12.2011. 11. Ld. AR contends that despite these details provided by assessee, proceedings were completed mechanically and Ld. AO simply issued notice under section 133(6) to 14 parties upon which red notice was returned unserved with various remarks of parties not being available at the given address. Ld. AR submitted that assessing officer was aware about fact that these parties were not in contact with assessee anymore as it was categorically stated by assessee in the letter dated 14.11.2011 that they were no more shareholders of assessee as on date. 12. Ld. AR alleged that assessment order has been passed without conducting proper enquiry, investigation as directed by this Tribunal vide order dated 16.04.2010. It has been vehemently argued by him that assessee discharged its onus in the original proceeding itself and that earlier assessment order has been set aside not because assessee failed to discharge its onus but because on bench....
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....as not been established by assessee, either in first round of before Ld. AO proceedings or in subsequent proceedings, when matter was remanded by this Tribunal to assessing officer. She submitted that unless assessee provides with correct details of alleged creditors assessing officer cannot undertake any investigation in respect of same. 16. Ld. CIT DR submitted that assessment at initial stage was reopened in the case of assessee, as there was information received from investigation wing regarding various companies who were carrying on the activity of providing accommodation entries. She submitted that these companies had invested by way of share capital with assessee. Ld. CIT(DR) demonstrated taking us through the details submitted by assessee in respect of some alleged creditors to prove that documents were bogus and there has been no activity that was carried on by alleged creditors. She them on stated that there was a pattern of investment that was followed by all alleged creditors, which was evident from bank statements submitted by these alleged creditors placed in the paper book. She has submitted that no doubt these applications do have filed returns, however it does not....
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....TO reported in 204 taxman 615 (Jharkhand) * CIT vs. N R Portfolio Pvt. Ltd., reported in 29 taxmaan.com 291 (Delhi) * CIT vs. Focus Exports Pvt. Ltd., reported in 2 to 8 Taxmann 88 (Delhi) * Decision of Delhi ITAT in the case of Matchless Glass Services Pvt.Ltd vs. ACIT in ITA No. 31 to 2/del/2012 vide order dated 27.02.2017. 21. Ld. CIT(DR) submitted that under Section 68 of the Act, assessee has to offer an explanation in regard to any sum credited in the books of accounts she submitted that this could be any sum whether in the form of sale proceeds or receipt of share capital money or share premium etc. Thereafter, Ld. AO is to inquire that explanation offered by assessee is satisfactory or not. Ld. CIT DR vehemently argued that assessee has not established identity, creditworthiness and most importantly genuineness of transaction either in 1st round of assessment proceedings or in the 2nd round of assessment proceedings. She submitted that decisions relied upon by Ld. AR (even though they are recent decisions), do not support case of assessee as those are distinguishable on facts. The principles laid down by various decisions relied upon by revenue has not been satis....
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....hem 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 by issuing summons u/s. 131 and deputing the Inspector to serve the summons on them at the addresses given. Therefore, in the light of these peculiar circumstances of the case, the CIT(A) was unjustified in deleting the addition in respect of share capital or share application money received from 12 parties on the ground that the assessee was deprived from the opportunity to cross examine the concerned persons. The fact that these persons were not found available at the addresses given by the assessee was also brought to the notice of the assessee. The assessee has not brought any material to prove the actual physical existence of the share applicants except proving their existence on papers. When on an enquiry, conducted by the Investigation Wing, it ....
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....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 that may be gathered by the AO to the assessee for assessee's comments and explanation. In case any person is examined by the AO, and his statement is intend to be used by the AO against the assessee, the AO shall provide the opportunity of cross examination to the assessee. The assessee shall be at liberty to place or furnish any other evidence or material before the AO so as to justify the identity and existence of the share applicants and the genuineness of the share transaction. We order accordingly." 31. Similarly, the issue with regard to the addition in respect of two parties viz., (i) M/s. Shivam Softech Ltd. and (ii) M/s. Rubal Chemicals (P) Ltd., whom summons were issued by the AO but could not be served as they were not found available, is a....
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....ation, it was totally impracticable on the part of assessing officer to provide opportunity to cross examination by assessee. This Tribunal has also observed that assessee has not brought any material to prove actual physical existence of share applicants except proving their existence on papers. This Tribunal further records that on enquiry conducted by investigation wing it was found that all these persons were engaged in business of providing accommodation entries. Various documents in the nature of confirmation letters and other details submitted by assessee cannot be accepted on the face value and therefore, this Tribunal further records that CIT(A) in 1st round of proceedings failed to take note of the fact that when share applicants were not found available at the given addresses and were not available for AO's examination. This Tribunal observed that merely on the basis of certain papers existence of applicants cannot be accepted and it can therefore, be said that AO has failed to provide opportunity to assessee to cross examine them. It was on these background that this Tribunal observed that assessing officer in the original assessment proceedings did not merely on the ba....
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....bmitted that assessee had tendered all necessary documents pertaining to alleged creditors by way of reply dated 14.11.2011. On perusal of this letter, which is placed at page 27-37 of paper book, we observe that assessee is claiming that these alleged creditors are no longer shareholders of assessee, and therefore it was not practically possible for assessee to submit their latest address. However, assessee has submitted details of alleged creditors as per Company statutory records as on date. We have gone through each and every creditors and respective documents placed at pages 43-381 of paper book the details of which are as under: 1. Welcome Coir Industries Ltd. 31. The share application form is placed at page 43, which do not contain any day, person who has signed and with what a quality person has issued such a letter. This applicant has applied for 30,000 equity shares of assessee at Rs. 10 per share of relating to Rs. 3 Lacs. The payment has been made by way of check issued from Corporation bank at page 45 of paper book. On perusal of bank statement we observe that it is for a period of 10.05.2000 to 30.05.2000. The opening balance of this bank statement is nil. It is ver....
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....om Federal Bank at page 87 of paper book. On perusal of bank statement, we observe that balance in this account is quite meager as compared to transactions. Funds have been transferred in the account or clearing mostly on the every basis when cheque for share capital has been issued. The bank statement submitted is only a lease during month of March 2001. Page 86 is acknowledgement of return of income filed for assessment year 2000-2001. The PAN number has been applied for, by form No. 49 is placed at page 89 to 19 of paper book. It is pertinent to note that form No. 49 a does not contain address of this applicant and has been filed with circle 29(5), whereas return has been filed with Central circle 3 (5). The returns shows that assessee has earned profit from business and profession amounting to Rs. 1,789/-. The date of filing return appears to be April 2001, which creates a doubt that it has been filed only for the purposes of creating a façade of existence. 35. At page 91 of paper book, is the master data of M/s. Grassroots Marketing Pvt. Ltd., obtained from website of Ministry of Corporate Affairs which shows that applicant has filed balance sheet dated 31.03.2010. The....
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....ve any business activity being carried out by this alleged applicant. 4. Onyx Exim & Sales Pvt.Ltd 39. This undated share application form at page 113 of paper book reveals that this alleged applicant had applied for 30,000 equity shares of assessee of Rs. 10/- each aggregating to Rs. 3 Lacs. This applicant has made payment by way of cheque issued from Canara Bank, which is placed at page 114 of paper book. The bank statement produced at page 115 of paper book is for period 01.03.2001 to 31.03.2001. Peculiar thing observed on this account is that on 1st ______ deposit of Rs. 3,05,818.24/-, which has been withdrawn and then again deposited by way of various checks. One more peculiar thing observed is that this applicant has issued cheque amounting to Rs. 2 Lacs to Shimmer Marketing, whom we have dealt with hereinabove. This creates about that these companies might have made payments to each other. Page 116 of paper book is acknowledgement of return of income filed for assessment year 1999-2000 which has been not attested, as received by Department. The return shows that the applicant earned income under the head profit from business and profession amounting to Rs. 6,563/-. The ret....
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.... and subsequently there is a deposit of Rs. 10 Lacs into account. The bank statement also shows subsequent deposits of huge amounts and corresponding cash debits of more than 2 Lacs on various dates. Further bank statement has been provided only for a period of 01.04.2000 to 30.04.2000 with closing balance of Rs. 5415/- in the account as on last date. Page 202 of paper book is the copy of acknowledgement of return filed for assessment year 1999- 2000 with a net profit being declared at Rs. 4155/-. It is also observed that return has been filed as on 31.03.2000. Page 203 is another application presented by the applicant for 30,000 equity shares being issued by assessee aggregating value at Rs. 3 Lacs. This payment has been issued by applicant by way of cheque drawn on Keshav of Sahkari Bank Ltd. The next page 205 is bank statement for the period 15.032001 to 07.042001 wherein again opening balance as on 10.03.2001 is 5743. A similar pattern is observed during this period of deposit of huge amount and subsequent deposits/withdrawals by cash and check on various dates. 45. Page 207 is acknowledgement of return of income filed for assessment year 2000-2001 wherein net profit has been ....
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....Marble Market, Sector 20, Dwarka, New Delhi whereas master data obtained from Ministry of Corporate Affairs reveals registered address being the 4/4123, Vasant Kunj, New Delhi. 51. This itself shows that none of these addresses are correct as in a small period between 2009 to 2010 applicant has shown two different addresses as its registered office in a document which has been alleged to be on public domain. 52. The audit report annexed at page 238-264 is for year ending 31.03.2009 and 31.03.2010. Both these audit report do not contain profit and loss account of applicant. 53. The share application form if any, by this company for issuance of shares of assessee is not annexed herewith. 54. In the instant case assessee has not produced relevant information pertaining to assessment year 2001-02 to establish identity, creditworthiness and genuineness of the transaction. 9. M/s. Shivam Softech Ltd.,. 55. Page 265 is share application form M/s. Shivam Softech Ltd., has applied for 40,000 equity shares of assessee worth Rs. 10/-, shares aggregating to Rs. 4 lakh. The applicant has paid money by way of cheque drawn on Federal Bank. Page 267 of paper book is bank statement from 01.03....
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....ntimation issued by Department placed at page 317 for the very same assessment. 57. In the assessment order at page 318 the address which was typed has been cancelled and changed with the handwritten address. Page 319 of assessment order does not seem to be in usual format as issued by Department are thereby causing serious doubt on its authenticity. Master details of taint from Ministry of Corporate Affairs is placed at page 320 wherein balance sheet for year ended 31.03.2009 has been filed followed by annual return wherein balance sheet for year ending 31.03.2006 has been detailed at page 322-332 which is followed by annual return for year ending 31.03.2008 at page 333-340 followed by annual return for year ending 31.03.2009 from page 341-346. In the instant case assessee has not produced relevant information pertaining to assessment year 2001-02 to establish identity, creditworthiness and genuineness of the transaction. 11. Kiran Bansal 58. Share application form issued by this applicant is placed at page 355 of paper book wherein applicant has applied for allotment of 15,000 equity shares of Rs. 10 each aggregating to Rs. 1 lakh 50,000. The payment has been made by way of ch....
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....ing to Rs. 48,000 only and income from other sources at Rs. 18,300. There is no document that has been placed in the paper book which could prove the credibility of this applicant and the genuinely of the transaction for A. Y. 2001-02. 14. Amit Kumaar Singh 62. Page 372 is share application form submitted by this applicant for issuance of 15,000 equity shares of Rs. 10 each aggregating to Rs. 1,50,000. The payment has been made by this applicant by way of check drawn on Federal Bank Ltd., Placed at page 373 of paper book. The bank statement is placed at page 374 of paper book for a period of 01.03.2001 to 31.03.2001 wherein pattern of deposit and withdrawal has been observed. Page 375 ration card of brother of this applicant wherein applicant's name has been mentioned. Return of income for assessment year 1999- 2000 has been placed at page 371 of paper book wherein salary income has been shown amounting to Rs. 32,000 and income from business and profession at Rs. 23,140/-. There is no document that has been placed in the paper book which could prove the credibility of this applicant and the genuinely of the transaction for A. Y. 2001-02. 15. S. H. Malick 63. Page 377 is share....
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....nder section 133 (6) of the Act. It is well within the knowledge of the assessee that the assessing officer could have not found these applicants as they never existed in reality. 66. To our mind these documents cannot be relied upon as they do not pertain to period during which monies were introduced into assessee as alleged share application. None the less, assessee has also not produced copies of shares allotted, the folio number etc., to establish that shares were actually issued to these alleged applicants during relevant period, which was very much within realm of assessee. The belief of Ld. AO that unaccounted money is laundered as clean share capital by creating a façade of paper work, routing money through several bank accounts and getting it the seal of statutory approval has not been disproved by assessee in any manner what so ever. Bank statements of alleged subscribing companies are for a very limited period and not for whole year. Analysis of this statement does not throw any light whatsoever on source of funds of alleged subscriber companies. The use of words "any sum found credited in the books" in Section 68 indicates that said section is very widely worded....