TaxTMI 
TaxTMI 
2017 (6) TMI 482
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.... under Section 68. (ii) That the above said addition has been 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 ....
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....assessee. It has been recorded by Ld. AO that in regards to addresses of companies/shareholders, assessee had submitted that, it was not practically possible 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 ce....
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....s were not no longer shareholders of assessee, details only in respect of 7 parties being, Welcome Coir Industries Ltd., Shimmer Marketing, Onyx Exim, Hopewin Admark , Maa Shakumbhari, Shivam Softech, Rubal 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 veheme....
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.... contra Ld. CIT(DR) submitted that assessee has not discharged its initial onus required under section 68 of the Act. She submitted that three ingredients required to be established by assessee being identity, creditworthiness and most importantly genuineness of transaction has 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 ....
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....in (1971) 82 ITR 540 (SC) * CITvs. Precession Finance Pvt/Ltd., reported in 208 ITR 465 (Cal) * CIT vs. United Commercial and Industries Co. Pvt. Ltd., reported in 187 ITR 596 (Cal) * CIT vs. Nova Promoters and Finlease Pvt.Ltd., reported in 342 ITR 169 (Delhi) * Mukesh Shaw vs. ITO 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 ....
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....lable 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 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....
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....erned 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 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 a....
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....nal that it is not a case where Ld. AO failed to make any enquiry to ascertain facts that came in to light from investigation conducted by investigation wing. We refer to highlighted portions in above preproduction, from order of this Tribunal dated 16.04.2010. This Tribunal has also observed that since none of 14 creditors to whom notices under section 131 were issued by assessing officer has appeared before him for his examination and verification, 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 we....
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....s investigation any further. Similar view was taken by this Tribunal in the case of M/s Shivam Softek Ltd., and M/s Ruble Chemicals Pvt. Ltd., to whom summons u/s.131 was issued by AO, could not be served, as they were not available. 29. Now entire controversy boils down to main issue as to whether assessee has discharged its onus of proving identity, creditworthiness and most importantly the genuineness of the transactions. 30. Before us Ld. AR submitted 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....
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....ceeding. None of these documents discharge initial onus cast upon assessee regarding establishing identity, Creditworthiness and most importantly genuiness of transaction. 2. M/s. Shimmer Marketing Pvt.Ltd 34. The share application form is placed at page 85 which do not contain any day. This particular 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 cheque issued from 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 s....
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....stablish either creditworthiness or genuineness of transaction entered into between this applicant and assessee during assessment year 2001-02. There is no other detail that has been produced in respect of this applicant. 38. In the instant case assessee has not produced relevant information pertaining to assessment year 2001-02 to establish identity, creditworthiness and genuineness of transaction. There is no single document that has been placed on record which could prove 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 ....
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....tains to assessment year 2001-02. 6. Umesneh Securities Pvt.Ltd., 44. The share application form by this applicant placed at page 199 of paper book is dated 24.04.2000 wherein it has applied for 50,000 equity shares of assessee for Rs. 10/- each aggregating to Rs. 5 lakhs drawn on Keshav of Sahkari Bank Ltd. The bank statement has been placed at page 201 which shows an opening balance of Rs. 5250/- as on 07.04.2000. The bank has debited charges for issuing cheque book amounting to Rs. 50 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. ....
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....d from website of Ministry of Corporate Affairs wherein date of last approved balancesheet being 31.03.2010 has been mentioned. Page No. 215-223 is handwritten annual return under Companies Act for year ending 31st September 2009, Page 224-237 is annual return for year ending 30.09.2010. Page numbers 234-236 are Annexure to annual return being notice for conducting annual general meeting for approving audited balance sheet as on 31.03.2009, shows registered office of this applicant at 1st floor, plot No. 62, 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 ....
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....nature and receipt number. There is no PAN or GIR number that has been mentioned on return. At page 317 of paper book there is an intimation from department issued under section 143(1)(a) of the Act for assessment years 1997-98 which also does not contain GIR/pan number. Assessment order for assessment and 97- 98 has been annexed at page 318-319 of paper book. It is very pertinent to observed that in the assessment order, the income has been declared at Rs. 72,340/- which does not tally with any of figures mentioned in the intimation 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....
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....ne more very pertinent thing observed is that signature on the share application form is very much similar to signatures found on share applications of M/s. Maa Shakumbhari & M/s.Shivam Softech. 61. Page 368-369 is further period 05.03.2001 to 31.03.2001 wherein a pattern of deposit and withdrawal has been observed. Page 370 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. 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 ....
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....nts to be genuine in nature assessee would have had complete details, necessary to establish creditworthiness. Had transactions being genuine, these parties would have presented themselves before assessing officer for verification. Time and again, Ld. AR argued that assessing officer has not fulfilled his duties as directed by this Tribunal vide order dated 16/04/10. For which, we observe that even after providing all wrong details/information to the assessing officer, he attempted to visit these applicants by deputing inspector and also by issuing notices under 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....