TaxTMI 
TaxTMI 
2017 (8) TMI 20
X X X X Extracts X X X X
X X X X Extracts X X X X
....or the sake of convenience, the grounds raised in ITA No.6104/Mum/2012 as well as grounds raised in Cross Objection No.259/Mum/2014 are reproduced hereunder :- Grounds raised by revenue in ITA No.6104/Mum/2012 are as under :- 1. Whether on facts and in the circumstances of the case and in law. The Ld.CIT(A) is justified in allowing the addition made of Rs. 3,00,00,000/- u/s.68 on account of unexplained investment in share capital of various companies. Without appreciating the fact that the assessment order framed after due verification. 2. Whether on facts and in the circumstances of the case and in law. The Ld.CIT(A) is justified in allowing the addition made of Rs. 2,00,00,000/- u/s.68 on account of unexplained investment as share application money from Delton Exim P.Ltd. without appreciating the fact that the assessment order was framed after due verification. Grounds raised by assessee in ITA No.6104/Mum/2012 are as under :- 1. On the facts & circumstances of the case the Learned CIT has erred in concluding that the action of the Learned Assessing Officer in invoking the provisions of Section 153C is justified. The appellant prays that the condi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ari Halan Karburi Proprties Pvt. Ltd. 8. Shri Narayan Hari Halan Cikura Properties Pvt. Ltd. 6. Further, it was also revealed that all the above said Directors are brothers and are from the same family. As all the above said 7 companies including the Jogia Properties Ltd., were doing their business from the same place, i.e. 20, Bhatia Niwas, 233/235, Samuel Street, Masjid Bundr, Mumbai - 400 009, the AO observed that all these concerns are not well established companies, which is also proved from the income & expenditure statement that no rent, electricity charges or any other expenditure is claimed which would show normal functioning of the concern. Therefore, from these facts and the material found during the course of search/survey and post search proceedings it is concluded by AO that the above concerns are sister concerns and the nature and the modus operandi is same as that of the assessee company. Hence, as the warrant has been issued in this name of M/s. Jogia Properties Pvt. Ltd., this company is covered u/s. 153A and the above concerns are co-related to each other the other group concerns (i.e., other 7 companies mentioned above including the assessee compa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h in lieu of the cheques received as share capital. Ans. ... ... ... Out of the total 18 parties mentioned in your question, we have reviewed the records and the documents. I have consulted my other two directors also. However, owing to the above facts mentioned by you and the circumstances today, I am offering the sum of Rs. 13.15 Crores, received as share capital recorded in the books of accounts from following 5 parties as unexplained credits in A. Y. 2009-10: Sl. No. Name of the company Share capital (Rs.) 1 M/s Hingora Finvest Pvt. Ltd. 17500000 2 M/s Oshin Investment & Finance Pvt. Ltd. 37500000 3 M/s Sidh Housing Development Co. Ltd. 17500000 4 M/s Gyaneshwar Trading & Finance Pvt. Ltd. 21500000 5 M/s Doldrum Investment & Finance Pvt. Ltd. 37500000 Total: 13,15,00,000 8. In response to the AO's query, the assessee had filed various submissions in respect of return of income filed along with confirmations with various financial statements in respect of share application money and the share capital. 9. In reply to the AO's query, the assessee, vide their letter dated 01-112011 has submitted as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....against our company. No summons were issued to us by the Investigation Wing in the search proceedings of Jogia Properties Ltd. We do not have any relationship with Jogia Properties Ltd. 3. We understand that the search proceedings started on 4/3/2010 continued in the case of Jogia Properties Ltd. and on 15/4/2010 the prohibitory order was lifted which was placed in the business premises of M/s. Jogia Properties Ltd. I was asked to be present at the premises of Jogia Properties Ltd. situated at 208, Ashirwad Building, Ahmedabad Street, Masjid Bunder, Mumbai - 400 009 to explain the papers belonging to the company found from the premises of Jogia Properties Ltd. Statement u/s. 132 was recorded by the Income tax officials. At that point of time I did not have all books of account or records of our company. I was informed that transaction of share application with the five parties viz. Oshin Investments & Finance Pvt. Ltd., Sidh Housing Development Co. Ltd., Gyaneshwar Trading & Finance Pvt. Ltd., Hingora Finvest Pvt. Ltd. and Doldrum Investment & Finance Pvt. Ltd. who are the shareholders of our company are not genuine. Reference was made to the statement of one Mr. Jose Math....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5. I further state that all the five companies are independent existing corporate bodies. They are registered with Registrar of Companies. They are maintaining regular books of accounts. They have their own bank accounts. They have filed the return of income. They have filed a confirmation to the effect that they have made investments in the equity shares of the company from their bank account. They have submitted the details of their bank account from which the said investments are made. They all are assessed to tax having PAN. 6. I submit that once the identity of the shareholder is established and their confirmation is filed which is supported with various papers, documents etc. then the burden is discharged by the company. The shareholders have also confirmed the said investments which further supports our claim that they have made the investments in the share capital of our company. 7. I would further like to point out that there is nothing on record to suggest that our company has made the cash payments to all the five shareholders for the purpose of making investments into the share capital of the company. 8. All the five shareholding companies....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y are carrying on their business from the said premises. Without prejudice we submit that if for some reason the notices are not served or notices are returned back does not mean that our transaction with the said company is not genuine especially when we have submitted before you various documents and papers in support of the claim that they have invested into share capital of our company. We have discharged our burden by establishing the genuineness of the share capital. 13. We further state that we have produced sufficient evidence in support of the claim that the shareholding companies have made investments in the share capital. Non production of the director should not be construed that the investments made by the shareholding company is not genuine. 14. We further state that there is no incriminatory documents or papers which are contrary to the facts submitted to you. 15. I would like to state that whatever is required to be produced in support of the share capital introduced by the five shareholding companies, we have submitted the same before you. All the five shareholding companies are in existence, having their separate independent identity and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atement of Shri Jose Mathew was retracted by an affidavit filed before the Dy. Director of Investigation and there was no discrepancy found in the share capital and no incriminating document was found and seized and the appellant also retracted the statement recorded u/s. 131 by not offering income in the return filed. Therefore, the undisclosed income declared in the statement has not been disclosed in the return of income filed. After considering the reply of the appellant, the AO has given his observation and inferences of each company-wise. In nutshell, the AO has raised objection that the equity share of Rs. 10/- of the assessee is issued at a premium of Rs. 240/- per share and the assessee has not provided share application form. Secondly, it was alleged that no board resolution was provided. Thirdly, no bank account statement was submitted. Fourthly, the confirmation certificate submitted was signed only by one Director. Next, the AO has raised the 'objection that P & L account and Balance-sheet submitted were not certified by the Chartered Accountant. Finally, the AO, objected that the Directors of the company were not produced to prove the identity, creditworthiness an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere found during the search and survey operations, it was submitted that no search and survey was undertaken against the appellant and other 7 group of companies and nobody has asked for the documents during the search and survey operations. To strengthen the evidences submitted before the AO, the AR of the appellant has also relied on various decisions including the decision of Hon'ble Supreme Court in case of Lovely Exports Pvt. Ltd. supra. Thus, the AR of the appellant has argued that since all the documents were submitted to prove the identity, creditworthiness and genuineness of the transaction of the investing companies, no addition is called for. 4.7 From the perusal of the submissions and the arguments of the AO, it is observed that in the present case 9 investing companies supra has made investment in the shares at a premium of Rs. 240/- per share. The AO has raised objections regarding the submissions filed by the appellant during the assessment proceedings each company-wise and the AR of the appellant has also rebut the objections of the AO each company-wise in the submissions filed during the appellate proceedings. Since the facts and documents in all the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....noticed that all the investing companies are assessed to tax. Secondly, from the perusal of bank details submitted, it is noticed that the date of cheque with cheque No. name of the bank, amount etc. all details were submitted before the AO. The copy of P&L account and the balance-sheet of each company was submitted, from the perusal of which it shows that each company have reserves and surplus of substantial amount as disclosed in the balance-sheet. The confirmation certificate was also submitted before the AO duly signed by the director of the investing company to confirm that investment was made for the purchase of shares of this company. The objection of the AO that investing companies are showing very low income cannot determine the investments made by. these companies because the balance-sheet shows the reserves and surplus worth crores of rupees in all cases. The other objection of the AO that documents submitted during the course of assessment proceedings were not found during the course of search is not based on any reasoning and substance because no search operation was carried out in case of the assessee and other 7 group companies. Further, the AR has also submitted tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....portunity was given to the AO to represent his case and the submissions of the appellant were also given to the AO for his counter comments. Since the facts of the investing companies in all the cases is the same, therefore, to avoid repetition and for the sake of convenience, the submissions in the case of M/s. Martand Properties Ltd. was given to the AO. The gist of the AO's comments is reproduced as under: "Para-wise reply on para-wise submission made by assessee is as follows: Para 1,2,3,4,5,6 and 7 of the submission made by assessee As explained by the Assessing Officer in his order in para number 2,3,4,5,6 and 7 and specially 8, the assessee's case is covered under Section 153C and notice issued to assessee and order passed by the assessing officer is not bad in law. Para 8 and 9 of the submission made by assessee. Claim of the assessee that the all investing companies in the appellant company are independent companies cannot be accepted. All four companies i.e., Oshin, Sidh Housing, Doldrum Gyaneshwar have same registered address. All these companies are running the so-called business from the same place and have a common dire....
X X X X Extracts X X X X
X X X X Extracts X X X X
....will not help assessee's cause. Also the fact that investing company is not generating any net profit indicates that it should not have surplus funds to invest in the appellant company. These contradictions tilt the case in favour of revenue following principle of preponderance of probability. Para 24. 25, 26 and 27 of the submission made by assessee. Assessee's claim that assessing officer has not contradicted material produced by the assessee company cannot be accepted. Assessing Officer has in detail brought upon the contradictions in the submission made by the assessee. Address of the investing company was not located when enquiries were made by Investigation Wing of Kolkata. Investing companies does not have any significant net profit to have surplus funds to invest money Into appellant company. These facts tilt the case in favour of revenue by following principle of preponderance of probability. Further statement given by Mr. John Mathews clearly indicates that investment transaction was not genuine and was in lieu of cash paid by the appellant company. Para 28, 29, 30, 31, 32, 33, 34 and 350f the submission made by assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome under section 68 and hence assessee is liable to pay interest on the tax which he is not paid at the time of filing of return or at the stages of advance-tax payment. Para 45 of the submission made by assessee. No comments. In view of the above, it is requested that addition made by the assessing officer may be upheld". 4.10 The comments of the AD were also given to the AR of the appellant for further submission. The AR has made submissions and submitted that no new facts has been brought on record by the AO except the repetition as given in the assessment order. The submissions of the AR are also reproduced above. From the perusal of the remand report and submission of the appellant, it is observed that the AO has repeated the same arguments as given in the assessment order and no new fact has been brought on record. Since the facts of the assessment order and arguments of the AD has been discussed, therefore, no further comments are required. 4.11 It is also pertinent to mention that during the appellate proceedings the case was discussed with the AD and the Addl, CIT, Central Range-8, Shri R.M. Tiwari. During the discussion, I hav....
X X X X Extracts X X X X
X X X X Extracts X X X X
....: "COMMISSIONER OF INCOME TAX VS. OASIS HOSPITA LmES PVT. LTD. 333 ITR pg. 119 We may also usefully refer to the judgment of the Supreme Court in the case of Commissioner of Income Tax Vs. P. Mohanakala [(2007) 291 ITB 278 (SC)]. In that case, the assessee had received foreign gifts from one common donor. The payments were made to them by Instruments issued by foreign banks and credited to the respective accounts of the assessees by negotiations through bank in India. The evidence indicated that the donor was to receive suitable compensation from the assessees. The AO held that the gifts though apparent were not real and accordingly treated all those amounts which were credited In the books of account of the assessee, as their Income applying Section 68 of the Act. The assessee did not contend that even If their explanation was not satisfactory the amounts were not of the nature of Income. The CIT (A) confirmed the assessment. On further appeal, there was a difference of opinion between the two Members of the Appellate Tribunal and the matter was referred to the Vice President who concurred with the findings and conclusions of the AO and the CIT(A). On appeal, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that even If the explanation is not acceptable, the material and attending circumstances available on record do not ITA Nos.2093, 2094, 2095 of 2010, 514 of 2007 & 539 of 2008 Page 13 of 27 justify the sum found credited In the books being treated as a receipt of Income nature. We would like to refer to another judgment of the Division Bench of this Court in the case of Commissioner of Income Tax Vs. Value Capital Services P. Ltd. [(2008) 307 ITR 334 (Delhi)]. The Court In that case held that the additional burden was on the Department to show that even if share application did not have the means to make investment, the Investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. In the absence of such findings, addition could not be made in the income of the assessee under Section 68 of the Act. It is also of relevance to point out that In Commissioner of Income Tax Vs. Stellar Investment Ltd. [(1991) ITR 287 (Del.)] where the increase in subscribed capital of the respondent company accepted by the ITRO and rejected by the CIT on the ground that a detailed investigation was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....firms, proprietary concerns and individuals and for the operation of these bank accounts, filing Income tax returns etc., persons are hired. Most of these persons work on part-time basis and are called upon to sign documents, cheque books, etc. whenever required. Whenever any' beneficiary Is Interested In taking, an entry, he would approach the entry operator and handover the cash along with commission and take cheques, Demand Draft, Postal Order. The cash Is deposited by the Entry Operator In a bank account either In his name or In the name of relative/friends or other person hired by him for the purposes of opening the bank account. After the deposit of cash when there is sufficient balance, the Entry Operator Issues Demand Draft, Postal Orders, cheques in the name of beneficiary. Most of these concerns/individuals also have obtained PAN* from the Department and are filing Inc. returns, but what Is shown In the return Is not actual state of affairs. The assessees filed copies of PAN, acknowledgement of filing income tax returns of the companies, their bank account statements for the relevant period, l.e., for the period when the cheques were cleared. However, parties....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r as Assessing Company is concerned, it is not disputed that money was paid to its towards the aforesaid share application money, by means of cheques. It is not for the Assessing Company to probe as to the source from where n/s Diamond Protein Ltd. collected the aforesaid money. It was for the Assessing ITA Nos.2093, 2094, 2095 of 2010, 514 of 2007 & 539 of 2008 Page 17 of 27 Officer, in these circumstances to inquire into the affairs of M/s Diamond Protein Ltd. which is an independent company inasmuch as no finding is arrived at by the Assessing Officer that the two companies are umbrella companies or have any relationship with each other. " We are, therefore, of the opinion that there is no merit in these two appeals, which are accordingly dismissed at the admission stage Itself. ITA NO.2094 of 2010 In this case, the assessee had shown receipt of 99.18 lacs on account of share application money. In order to prove the genuineness of the transactions and Identity of the share applicants and their creditworthiness, the assessee had filed confirmation from these parties, which were 30 In number. The assessee had also supplied Income tax particulars of these....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplied for the shares. The shares also been allotted to respective persons in respect of which intimation was given to Registrar of Companies and necessary evidence has also been placed on record in the paper book which found place at page 23 and 24 of the paperbook. The assessee also had placed on record the evidence as well as copy of income-tax returns of the share applicants. Keeping in view all these evidences it cannot be held that the assessee did not establish the identity of the share applicants. If it is so, then the law as pronounced by the Hon'ble Supreme Court in the case of CIT vs. Lovely Exports Pvt. Ltd. (supra) is clear that if the share application ITA , 2095 of 2010, 514 of 2007 & 539 of 2008 Page 19 of 27 money is received by the assessee company from alleged bogus shareholders whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments In accordance with law, but the same cannot be regarded as undisclosed income of the assessee. In this view of the situation, we find no Infirmity in the order of the CIT(A) vide which addition made on account of share application money has been deleted. " Having regard ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the ground that in some cases where summons issued were returned unserved and in some cases summons though served but there was no compliance. In this connection, it may be mentioned that In the case of CIT v. Orissa Corporation Ltd. [1986] 159 ITR 78 (SC) the Hon'ble Court has held that when the assessee borrows the loan and if an assessee gives names and addresses of the creditors, who are assessed to tax and full particulars' Is furnished then the assessee ahs discharged the duty. If the Revenue merely issues summons under section 131 and does not pursue the matter further, the assessee does not become responsible for the same even if the creditors do not appear. Addition cannot be made under section 68". No question of law, far less any substantial question of law arises for out consideration. We may, however, briefly reflect upon a submission made by the learned counsel for the respondent to the effect that the assessee had, in its letter dated March 8, 1999, requested the Assessing Officer to examine the assessment records of the share applicants whose GR Nos. had been supplied. It is not controverted that action was not taken by the Assessing Officer, but ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the above circumstances, the view taken by the Tribunal cannot be faulted. No substantial question of law is involved in the appeal. In the result, the appeal is dismissed in limine with no order as to costs. CIT v. STL Extrusion P. Ltd. (MP) [2011] 333 tm 269 The said order was challenged by the respondent before the Tribunal. The Tribunal by the impugned order dated May 10, 2010, allowed the appeal of the respondent by observing thus: "3. We have considered the rival submissions of learned representatives of both, sides and perused the material available on record. Ground No. 1 is, general in nature, therefore, requires no deliberation from our side. For ground No.2 the brief facts are that the assessee company is engaged in the business of manufacturing and trading of PVC riqid pipes, originally filed its return of loss of Rs. 22, 91,022 on November 30, 2000. A search under section 132 was carried out at the premises of the assessee company on October 8, 2003. Consequent to search, a notice under section 153C read with section 153A was served upon the assesee on June 3, 2004 to which the assessee again filed the return of loss, I.e., Rs. 22,91,022/- as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Impugned addition under section 68 of the Act has been made by the learned Assessing officer by suspecting that the share application money is bogus without appreciating the facts and the contents of the affidavit have not been disapproved. Thus, the undisputed fact is that the assessee has proved the Identity of the subscribers with the help of affidavits which were not found to be bogus or false. An affidavit Is not a mere piece of paper rather It carried Its authenticity as the contents of the same are duly sworn before a Magistrate or a Notary Public/Oath Commissioner, as the case may be. During the signing of these affidavits, the deponent, appears before the person before whom they are sworm and their signatures are duly taken on the register maintained by such Notary Public. If the Assessing Officer was apprehensive on the authenticity of such affidavit, nothing prevented him to cross examine the deponents and to verify the contents of such affidavits but that was not done in the present appeals. Therefore, in view of a decision of the hon'ble apex court In the case of Mehta Parikh and Company v. CIT (supra), these affidavits become unchallengeable. The ratio l....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... there is no justification for making the Impugned addition because once the existence of the investors/share subscribers is proved, the onus shifts on the Revenue to establish that either the share applicants are bogus or the impugned money belongs to the assessee company itself. Once the confirmation letters are filed, no addition can be made on account of the share application money in the hands of the company. Our view finds support from the decision in Shri Barkha Synthetics Limited v. Asst. CIT [2006]283 ITR 377; 155 Taxman 289 (Raj). The cases like CIT v. G.P. International Limited [2010] 325 ITR 25 (P& H); 229 CTR (P&H) 86, CIT v. Steller Investment Limited [1991] 192 ITR287 and Sphla Finance Limited [1994] 205 ITR 98 (Delhi) support the case of the assessee". 4.13' In my knowledge there were two decisions in favour of the revenue which were also confronted to the assessee during the appellate proceedings, the decision of Hon'ble Delhi High Court in case of Nova promoters & Finleys P. Ltd. (342 ITR 169). The AR of the appellant has submitted that the facts of the present case are distinguishable as all evidences in support of claim that investment was made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eholder/subscriber is established, payment was made through account payee cheques, net worth of the subscriber is proved by filing balance-sheet and moreover, confirmation letters are filed, no addition can be made on account of share application money in the hands of the company. In totality of facts and circumstances, it is held .that the three conditions of section 68 are proved by submission of documentary evidences and no incriminating document was found and seized and nothing adverse was found in the investigation of the bank account by the AO in each case of the company, therefore, the addition made by the AO is not sustainable, hence deleted. 13. Similarly, addition made by AO on account of share capital in the case of M/s. Auster Properties Ltd., was deleted by CIT(A) after observing as under:- "Since the appellant company is a group company and the modus operandi for collecting the share application money and the evidences filed relating to the investing companies are the same and there is no change in the facts and circumstances of the present case, therefore, the same decision is followed in this case. In the case of M/s. Reva Properties Ltd., there were 9 c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not recorded in the context of this case but was recorded in some other case. He has given a general statement that he was giving accommodation entries to the companies against cash received from them. Nowhere in the statement he has stated that he has received cash from the assessee company and issued cheque against this cash as share application money. There is no mention in the statement that transaction with the assessee company was not genuine. No incriminating document was found and seized during* search operation to prove that cash was given against cheques received from these companies. Even independent enquiry made for the bank account of these companies, the AO has not found any instance of cash deposit against issuing .of cheques. Now, it has to be examined whether these companies had fulfilled the conditions of section 68. For identity, the each company has PAN and regularly assessed to tax. For creditworthiness, each company has independent bank account and details were submitted to the AO. For genuineness of transaction, all payments were made through account payee cheques duly reflected in the bank of each company and. 'the assessee company's bank account. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd was also issuing the bogus bills. From this statement, the AO has drawn inference that the share capital subscribed by these companies was bogus, i.e. cheques were issued against cash received from the assessee company. During assessment proceedings, the AR of the appellant has submitted details relating to these companies. It was submitted that all the companies were having PAN and independently and regularly assessed to tax. Complete details of cheque No.,' date of cheque, bank a/c. share allotment letters giving detail of share certificate No., copy of bank account of the assessee was submitted before the AO. But the AO has not accepted these documents and relied on the statement of Mr. Choksi only and added back the share application money by holding it as unexplained cash credit uls, 68 of the LT. Act. 4.6 From the perusal and submission of the appellant and facts of the case, it is noticed that the statement of Mr. Choksi was not recorded in the context of this case but was recorded in some other case. He has given a general statement that he was giving accommodation entries to the companies against cash received from them. Nowhere in the statement he has stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rch relating to the share application money. Therefore, it is held that the identity, creditworthiness and genuineness of the transaction has been proved and the addition made by the Assessing Officer u/s. 68 is not sustainable, hence deleted. 16. Addition made on account of share capital in case of M/s. Archieve Reality Developers Pvt. Ltd., was deleted by CIT(A) after observing as under:- Since the appellant company is a group company and the modus operandi for collecting the share application money and the evidences filed relating to the investing companies are the same and there is no change in the facts and circumstances of the present case, therefore, the same decision is followed in this case. In the case of M/s. Reva Properties Ltd., there were 9 companies who have subscribed the share application money but in the present case there are 5 companies. All the companies are the same as discussed in the case of M/s. Reva Properties Ltd., On the basis of the submissions made and the bank enquiry made by the Assessing Officer, no discrepancy was pointed out and moreover, no incriminating document was found and seized during the course of search relating to the share a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....., 2009-10 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Doldrum Investments & Finance P.Ltd., 2009-10 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Gyaneshwar Trading & Finance Co.Ltd., 2009-10 Refer page No.11 of the Order of the CIT(A) in the case of Archieve Realty Developers Ltd., Sidh Housing Development Co. Ltd., 2009-10 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., 3 Auster Properties Ltd., Oshin Investment & Fin P. Ltd., 2008-09 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Doldrum Investments & Finance P. Ltd., 2008-09 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., 4 Auster Properties Ltd., Oshin Investment & Fin P. Ltd., 2009-10 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of Jogia Properties Ltd., Hingora Finvest Pvt. Ltd., 2008-09 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Sidh Housing Development Co. Ltd., 2008-09 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Gyaneshwar Trading & Finance Co. Ltd., 2008-09 Refer page No.11 of the Order of the CIT(A) in the case of Karburi Properties Ltd., Hema Trading Company Pvt. Ltd., 2008-09 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Deltron Exim Pvt. Ltd., 2008-09 Refer page No.10 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., 7 Karburi Properties Ltd., Oshin Investment & Fin P. Ltd., 2009-10 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Mihir Agencies Pvt. Ltd., 2009-10 Refer page No.13 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., 8 Reva Properties ltd., ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpex Ltd., 2008-09 Refer page No.11 of the Order of the CIT(A) in the case of Vedisa Properties Ltd., Gyaneshwar Trading & Finance Co. Ltd., 2008-09 Refer page No.11 of the Order of the CIT(A) in the case of Vedisa Properties Ltd., Deltron Exim Pvt. Ltd., Refer page No.10 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., 12 Vedisa Properties Ltd., Oshin Investment & Fin P. Ltd., 2009-10 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Doldrum Investments & Finance P. Ltd., 2009-10 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Sidh Housing Development Co. Ltd., 2009-10 Refer page No.11 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Gyaneshwar Trading & Finance Co. Ltd., 2009-10 Refer page No.11 of the Order of the CIT(A) in the case of Vedisa Properties Ltd., Deltron Exim Pvt. Ltd., 2009-10 Refer page No.10 of the Order of the Hon'ble ITAT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stion of law arising from the facts can be raised before the Hon'ble Tribunal. The ratio of this decision is applicable on the facts of the case. We also rely upon the decision in the case of Pratap Singh Ravinderjeet Singh 218 ITR pg.536 (M.P. High Court), wherein it has been held that legal issue which goes to the root of the matter then it should be admitted. 5. We also submit that under R le 27 of Income Tax Appellate Tribunal Rules, the Respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him. The Hon'ble Commr. of Income Tax (Appeals) has decided the issue of the validity of issue of notice u/s 153C against us. According to us, we are eligible to defend ourselves on the issue of validity of notice u/s 153C. We rely upon the decision of Hon'ble Mumbai Tribunal in the case of ACIT vs Triace, ITA No.2827/MUM/04 (A.Y.1995-96) wherein the issue was identical. The assessee challenged the validity of notice u/s 148 of Income Tax Act, 1961. The Learned CIT(Appeal) held the said issue against the assessee, but gave relief on merits. The assessee did not filed the appeal to the Hon'ble Tribuna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the copy of the satisfaction recorded and as to how the conditions of Section 153C are satisfied. The Assessing Officer has not recorded any satisfaction applicable to A.Y. 2008-09. Our attention was invited to the satisfaction which is on page 7 of the paper book. The Assessing Officer has recorded a noting for A.Y. 2004-05 to A.Y. 2009-10. There is no recording of the satisfaction as applicable to A.Y. 2008-09. He has referred to page 1 of Annexure A-1 seized in the case of Jogia Properties Ltd, he has referred to page No.1 as the document. As per learned A.R. this paper cannot be considered as document. Page No.1 is on page No.8 of the paper book. This page contains the details of various companies giving the details of their bank account with Union Bank of India, Nariman Point branch with the name of the persons who are authorized to operate the said" bank account. The name of the assessee company is appearing at Sr.No.13. These details must have been prepared by Jogia Properties Pvt. Ltd. Page No.1 by no stretch of imagination can be construed as a document belonging to the assessee. This is a piece of paper wherein details of bank account of 24 companies are mentioned and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....invited to Page 31 of the CIT(A)'s order wherein he has given a finding that "even independent enquiry made about the bank account of these companies, the AO has not found any instance of cash deposit against issue of cheques". This finding is not challenged by the Department. There are total six assesses and the Ld. CIT (A) has treated the case of M/s. Reva Properties Ltd., as the lead case. He has given a finding on internal page 29 giving a reference to the case of Reva Properties Ltd., and also has stated that the facts are the same in all cases. During the hearing the Ld. Counsel for the appellant has produced the order passed by Ld. CIT(A) in the case of Reva Properties Ltd and in para 4.11 internal page 27, he has given a finding that during appellate proceedings he had discussed the matter with the Ld. AO and the Ld. Addl. Commr. and asked whether any investigation regarding bank details have been made. He has stated that the Ld. Commr. has fairly admitted that complete bank enquiries were made in case of all Investing companies on the basis of the details submitted by the assessee upto third down layer but nowhere it was found that cash was deposited in any account before ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt or documents seized belonging to a person other than the person referred to in section 153A, then the books of account will be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each other person and issue notice and assess or re-assess his income in accordance with the provisions of section 153A. 32. It was vehemently argued by learned CIT(DR) that nowhere in the language of section 153C is mentioned the words „incriminating' or „undisclosed'. Therefore, the intention is very clear that if the documents belonging to the other person are found in the search and seizure operation, then the AO has the jurisdiction to issue notice u/s. 153C r.w.s. 153A after recording the reasons. In the present case, the documents which were found and seized belonging to the assessee. Secondly, the statement of Shri Jose Mathew was recorded on the date of search and a consequent statement of Shri Ajay Kumar was recorded on 15/04/2010 who has made a disclosure on account of share application money in case of companies mentioned in the assessment order in respective years. On the basis of the seized papers a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e made out of the share capital of the company, which consisted of the share application money received from various other concerns. It was also revealed that there was one common director in some of the above stated seven companies e.g. Shri Ajay Kumar has been the director of M/s Jogia Properties Pvt. Ltd., M/s Auster Properties Pvt. Ltd. and M/s Reva Properties Pvt. Ltd. Similarly Shri Om Hari Halan has been a director in M/s Archive Realty Developers Pvt. Ltd. and M/s. Vedisa Properties Pvt. Ltd.; Similarly Sh. Narayan Hari Halan was director in M/s. Martand Properties Pvt. Ltd., M/s. Karburi Proprties Pvt. Ltd. and M/s. Cikura Properties Pvt. Ltd. Further, it was also revealed that all the above said Directors were closely related to each other. The case of the assessee was thus covered under section 153A and the other seven companies were covered u/s. 153C of the I.T. Act. 3. During the course of another separate survey action in the case of „M/s. Shree Global trade fin. Ltd.' i.e. the company in which the assessee company had made investment, statement of one Shri Jose Mathew, Jt. General Manager in the said company „M/s. Shree Global trade fin. Ltd.' wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for taxation in the return filed, therefore, the AO gave a show cause notice to the assessee to submit complete details of share application money received and utilized. The AO also asked the assessee to submit the complete evidences to prove the identity, credit worthiness and genuineness of the transaction of the share holding companies. In response to the show cause notice, the Ld. AR of the assessee submitted its reply along with relevant details, confirmations and evidences etc.; The AO however was not satisfied with the reply of the assessee and noted certain discrepancies in the evidences submitted by the assessee viz. the assessee had not provided share application form; No Board resolution was provided; Bank statements were not provided in some cases or that the directors of the company were not produced for cross examination. The AO thereafter discussed the issue of retraction of statement given by the Director of the company, Shri Ajay Kumar and observed that the statement recorded by the income-tax authorities u/s. 131 has evidentiary value even after its retraction and that the same can be used against the assessee. The AO further held that the documents filed relatin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....them. Nowhere in the statement, had he stated that cash was received from the assessee company and cheque was issued against the cash as share application money. There was no mention in the said statement that transaction with the assessee company was not genuine. No incriminating document was found and seized during search operation to prove that cash was given against cheques received from these companies. Even independent enquiry made in respect of the bank accounts of these companies, the AO could not find any instance of cash deposit against issuing of cheques. The Ld. CIT(A) thereafter examined the applicability of section 68 of the Act to the set of facts of the case of the assessee and concluded that for the establishment of identity, each company was having PAN and regularly assessed to tax; For creditworthiness, each company had independent bank account and details were submitted to the AO; For genuineness of transaction, all payments were made through account payee cheques duly reflected in the bank of each company and the assessee company's bank account. Therefore, all the conditions, i.e. identity, creditworthiness and genuineness of transaction were fulfilled. Thu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... investments made in the share capital of the assessee company, certificate from the auditors to the effect that the said company was assessed to tax and that the investment was duly reflected in their regular books of accounts. The details of allotment of shares, the complete details giving cheque number, name of the bank, date, amount, address, PAN Number, ROC Number etc. in respect of each of the 8 companies from whom the assessee had received the share application money in the AY 2008-09 was filed. The details of the notice issued by the assessee company for holding the meetings of the shareholders and the proof of dispatch of the notice to the shareholder were also submitted. The Ld. AR has further submitted that even in respect the 2 companies which belonged to Sh. Mukesh Chokshi, who had invested in the assessee company in the AY 2009-10, the assessee had submitted all the requisite details such as the name, address, PAN number, Registration number with Registrar of Companies, details of the bank account, details of shares allotted, intimation to ROC about issue of shares, issue of notices by the assessee company for holding, the meetings of the shareholders and proof of dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....133A and the necessary proof and evidence for the same was also produced before the AO. The AO had also thereafter not issued any notice to Mr. Jose Mathews. The Ld. AR therefore has submitted that no reliance can be placed in the statement of Mr. Jose Mathews. 9. We have considered the above submissions of the Ld. AR of the assessee. We have also gone through the statement of Sh. Ajay Kumar Halan, recorded under section 131 of the Act. The relevant part of his statement for the purpose of proper analysis is reproduced as under: Image Missing We find force in the above submissions of the Ld. AR. of the assessee. Mr. Jose Mathews was the employee of Shree Global Trade fin. Ltd. and not of the assessee company neither of the alleged seven Group companies of the assessee. The said Mr. Jose Mathews was even in no way related to the investing companies who made investments in the assessee company, the transactions relating to which have been treated bogus by the AO. When the said person was neither the employee of the assessee company nor was in any way related to the investing companies, his statement in the circumstances could not be said to have any evident....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., bank statements, balance sheets and other records of all the nine companies. Based on the information and documents he found that all the nine companies were genuine and they had invested in the share capital of the assessee company. No confessional statement was given by any of the nine shareholding company before the Investigation Wing. 11. We find force in this contention also of the Ld. AR. A perusal of the statement of Sh. Ajay Kumar, recorded under section 131 of the Act, as reproduced above, reveals that the acceptance or offer of the unexplained income was not based on his own knowledge or admission of facts but on the basis of facts and statements presented by the revenue before him. He has never admitted that the transactions were not genuine or the same were bogus. In answer to question No.13 put to him, he has stated to the investigation wing that he did not know Mr. Mukesh Choksi, neither he was aware of his group concerns. The shares were allotted to M/s. Talent Infoways and M/s Mihir Agencies in due course after duly complying with all the legal provisions. Similarly in the case of other companies as is revealed from the answer to question No.15, that owin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect and that merely on the basis of statement recorded during the search under mistaken belief and which has been retracted subsequently and without there being any corroborative evidence or incriminating material found, no addition can be made. As regards the statement of Mr. Mukesh Choksi relied upon by the revenue, the Ld. AR has submitted that he had never stated that assessee had given any cash to him or any accommodation entry was provided by him to the assessee. No name of the assessee figured in his statement recorded in any other case. During the course of survey/search on assessee also, not a single evidence was found to suggest that cash was given to Mr. Mukesh Choksi and accommodation entries were taken. The ld. AR has relied upon the decisions of the Hon'ble Bombay High Court as well as various decisions of the Mumbai Tribunal wherein it has been held that no reliance can be placed on the statement of Mr. Mukesh Choksi when the assessee has independently established the genuineness of the transaction. The Ld. AR has further relied upon the following decisions wherein it has been held that once the assessee submits the basic information about the inves....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... M/s. Kesar A. Gada in ITA No.300 of 2013 decided on 21.01.15(Bom. HC) 12. "CIT vs. Kasturben H. Gada" in ITA No.299 of 2013 decided on 21.01.15.(Bom HC) 13. CIT vs. M/s Sharda Credit Pvt. Ltd. ITA NO. 3090 of 2009 decided on 12.9.2011(Bom. HC) 14. We have perused the case laws relied upon by the Ld. Representatives of the parties. In our view, each case has to be decided on its own facts. Merely because, in the case of one company Gold Star Finvest Pvt. Ltd. run by Mukesh Chokshi, the income has been determined on percentage/commission basis treating the said company as accommodation entry provider, that itself cannot hold a justification to completely ignore the facts and evidences brought on the file by the assessee. The case of the assessee has to be adjudged on the basis of its own set of facts and evidences. Moreover the facts and circumstances of the case of the assessee are squarely covered by the various decisions of the Hon'ble Jurisdictional High Court Of Bombay. We further find that the issue, relating to the investments made by the companies relating to the said Mr. Mukesh Chokshi in some other cases, has travelled up to the level of Hon'ble....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of transaction and that in his statement Mr. Mukesh Chokshi had not mentioned the name of the respondent/assessee as one to whom accommodation entries were given, the Hon'ble Bombay High Court upheld the findings of the Ld. CIT(A) which were further confirmed by the Tribunal holding that the transactions were genuine and the additions under section 68 of the Act were not warranted. Similar findings have been given by the Hon'ble Bombay High Court in the case of "CIT vs. Kasturben H. Gada" in ITA No.299 of 2013 decided on 21.01.15. In CIT vs. M/s Sharda Credit Pvt. Ltd. (supra), the Hon'ble High Court has dismissed the appeal of the revenue on identical facts. The Hon'ble Bombay High Court while upholding the order of the Tribunal in the above stated appeals has also relied upon the decision of the Hon'ble Bombay High Court in the case of "Shri Mukesh R. Marolia" (supra). Even in the case of "Smt Rajni S Chowdhry" (supra), the Hon'ble Bombay High Court has upheld the decision of the Tribunal given on the basis of appreciation of evidence and factual finding, accepting the transaction carried carries through broker M/s Gold Star Finvest (P) ltd. as genuine. 15. We further f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of share capital which was deleted by the CIT(A). We found that CIT(A) in all these years have also deleted the addition after recording detailed finding which are as per material on record. Detailed finding has been recorded by CIT(A) while deleting addition in the hands of Jogia Properties Ltd., with reference to the very same share applicants and the Tribunal in its order dated 18/12/2015 had further fortified the finding of CIT(A). Thus two appellate authorities have given the concurrent finding with regard to the identity, genuineness and creditworthiness of all the share applicants, therefore, no addition was warranted on account of these share applicants. Respectfully following the order of the Tribunal in case of Jogia Properties Ltd., wherein also from the very same applicants, share capital was received except Gyaneshwar Trading & Finance Co.Ltd., We had also gone through the documentary evidences filed in case of Gyaneshwar Tradings to prove the identity, genuineness and creditworthiness. As per the documents placed at page 83 to 105 of paper book for A.Y.2008-09, all the three conditions have been satisfied and no addition u/s.68 is warranted for the amount invested b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nies. Place: Mumbai Dilip V. Lakhani Viresh Sohoni Dated: 20/08/2015 Authorised Representative Representative of Appellant 36. It is clear from the above inspection report that no satisfaction has been recorded by the AO of the searched person i.e., M/s. Jogia Properties Ltd., for initiating proceedings u/s.153C against these seven companies. 37. From the record we found that in the file of the company which was searched viz. Jogia Properties Ltd., the Ld. Assessing Officer has not recorded any satisfaction to comply with the provisions of Section 153C. A search & seizure action was taken against M/s. Jogia Properties Ltd and pages 1 to 126 which are a part of Annexure- A 1 were seized in the hands of Jogia Properties Ltd.,. The search took place on 4th and 5th March 2010. The Ld. Assessing Officer of Jogia Properties Ltd. did not record any satisfaction as per the provisions of Section 153C. The assessee has produced the copy of the inspection report which was obtained in the proceedings of Jogia Properties Ltd. In the inspection report it is clearly stated that the Ld. Assissing Officer of Jogia Properties Ltd has not recorded any satisfaction. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....age 3 is the copy of the satisfaction recorded u/s 153C in the hands of Karburi Properties Ltd. The reference to years are 2004-05 to 2009-10. The Ld. Assessing Officer has relied upon page 1 of Annexure - A 1 of the seized panchnama dated 04.03.2010. The said page 1 is on page 4 of the paper book. The said page contains the details of 24 entities giving the name, account number and the persons who are authorised signatory. This paper does not belong to Karburi Properties. During the course of investigation, the assessee had filed detailed explanation on the contents of pages 1 to 126 and copy of the submissions made before the Ld. Assessing Officer. The said explanation was accepted and there is not a whisper about the contents of any of the pages from 1 to 126 in the assessment order. 40. For understanding of legal requirement of initiating proceeding u/s.153C, we here below reproduce provision of Section 153C. Assessment of income of any other person. Section 153C reads as under. Assessment of Income of any other person. 153C. Notwithstanding anything contained in section 139, section 147, section 148, section 149, Section 151 and section 153, where th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reliance can be placed on the following judicial pronouncements. a. Vijaybhai N. Chandrani Vs. Asst. Commr. Of Income Tax Reported in 333 ITR 436 (Guj. HC) b. Pepsico India Holdings (P.) Ltd. Vs. Asst. Commr. Of Income Tax Reported in 228 Taxmann 116 (Delhi HC) c. Beejay Securities & Finance Ltd. ITA Nos. 4859 to 4865/MUM/2009 (AY. 2001-02 to AY. 2007-08) date of pronouncement 24/06/2011 d. M/s. Jindal Stainless Ltd. ITA Nos. 3480 & 3481 (Del) 2006 (AY. 2003-04 & 2004-05) Reported in 21 ITAT INDIA 812 (Delhi) e. LMJ International Ltd. ITA No. 2173/Koll2006 (AY. 1999-2000) Reported in 119 TTJ (Kol) 214. f. Right Development & Estate Pvt. Ltd. ITA Nos. 4616 to 4619/MUM/2009 (AY. 2004-05 to AY. 2007-08) date of pronouncement 23/09/2011. g. Asst. Commr. Of Income Tax Vs. Inlay Marketing Pvt. Ltd. (ITAT Delhi) h Tanvir Collections Pvt. Ltd. Vs. Asst. Commr. Of Income Tax (ITAT Delhi) i V. K. Fiscal Services Pvt. Ltd. Vs. Dy. Commr. Of Income Tax (ITAT Delhi) j. Dy. Commr. Of Income Tax, Central Circle-5 New Delhi Vs. Qualtron Commodities Pvt. Ltd. 54 Taxmann.com 295 (Delhi Tribunal) k Dy. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not fully aware about the business activity of the company. The statement made by Mr. Jose is not true. He also further stated that owing to the facts mentioned to him by the Authorised Officer and the circumstances of that case he is offering certain sum received as share capital as the income for A.Y. 2008-09 and 2009-10. The statement of the director cannot be referred to as the document found during the course of search and on the basis of the statement no notice u/s 153C can be issued. 46. We had also gone through the statement of Mr. Mukesh Chokshi. In this statement there is no reference to the assessee. There is no allegation that the assessee has given the cash and received the Cheque by way of share application. The statement of Mr. Mukesh Chokshi cannot be base for acquiring jurisdiction by issue of notice u/s 153C is concerned. The Tribunal have also dealt threadbare with the statement of Shri Mukesh Chokshi in its order dated 18/12/2015. 47. In view of the above, we can conclude that no document belonging to the assessee was found during the course of search and also none of the statements of Mr. Jose Mathews, Mr. Narayan Hari Halan or Mr.Mukesh Chokshi can be const....
X X X X Extracts X X X X
X X X X Extracts X X X X
....business activity at all in your company? We are undertaking the activity of investment. Various investment opportunities arises and it is not uncommon that small investments also yield huge returns over a period of time. Our share holders must have kept in their mind that the investments made by the company may yield good returns in future. Based on these facts, the share holders have invested in our company. Shri Jose Mathew in his statement recorded on 04-03-2010, during the course of survey in the premises of M/s. Shree Global Tradefinn Ltd., had deposed that your company is a group concern of M/s. Lloyds Steel. Hence, is your company in existence solely to provide share capital and other investments to M/s. Lloyds Steel and its group Document 2 Q. No. 12. Ans. Q. No. 13. Ans. Q.No. 14 Ans. : concerns. We have made Investments in equity share of various companies, the list of which is enclosed. As regards, the investment in preference shares of M/s. Shree Global Tradofinn Ltd., I would clarify that we have made investments in the group companies of M/s. Lloyds Steel, which is M/s Shree Global Tradefinn Ltd. ....