AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 20
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....d 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 condition of Section 153C is not satisfied and the Learned Assessing Office....
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....rectors 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 company) are covered u/s. 153C of the IT. Act. The AO further observed that a search action was conducted on one Shri Mukesh Chokshi who was operating many companies throug....
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....cumstances 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 under: 1. All the six shareholding companies who have made investments in our company 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 confirmat....
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.... 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 Mathew wherein he has stated that share application money is received by paying cash. I am not conversant with the provisions of Income Tax Act. I was not the director of the company during the financial year relevant to A.V. 2009-10. I did not have all the books of accounts or records. I had stated that Mr. Jose Mathew is not aware about the business activity of our company. The s....
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....ccount. 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 are not associates or group companies of our company. We do not have any other relationship with them except that they are shareholders of our company. We have not entered into any other transaction with them. None of the directors of our company is either the director or shareholder of all the five shareholding companies. None of the directors of give shareholding companies are directors or shareholders of our....
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.... 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 having their separate source of income. They have filed the confirmations for their shareholding in our company and also supported the same with the documents. In view of this we submit that the sum of Rs. 13,15,00,000/- should not be added as income for A.V. 200910 and 2010-11. 16. We also submit that M/s. Delton Exim Pvt. Ltd. is a genuine independent corporate body which has invested Rs. 1,00,00,000/- at the share capital in A.Y.2009-10 should not be add....
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.... 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 and genuineness of the investors and the documents submitted by the AR of the appellant were not found during the course of survey and search operation. In view of these Facts, the AO has treated the investment made by the above said 9 companies as unexplained u/s. 68 of the IT. Act and added back Rs. 6,00,00,000/- Rs. 7,20,00,000/- and Rs. 7,75,00,000/- to the taxable income for the AYs. 2007-08, 2008-09 & 2009-10 respectively. 4.6 On the other hand, the AR of the appellant has ....
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.... 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 companies are the same, therefore, to avoid repetition and for the sake of convenience, a combined discussion has been made for all the above said investing companies. As per the provisions of section 68, the AO is empowered to call for the details to prove the identity, creditworthiness and genuineness of the transaction. During the assessment proceedings, the AO has given show cause notice to the assessee company to submit complete details regarding the share application money received from t....
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....tted 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 that nobody had asked for the documents during the search operation in case of M/s. Jogia Properties Itd. 4.8 Now, the conditions of section 68 are to be examined on the basis of the papers submitted during the assessment proceedings and appellate proceedings. To prove the identity, the appellant has submitted the PAN and acknowledgment page of each investing company which proves that the assessee is an existing company. The details of bank account giving the cheque No., the date and name of th....
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.... 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 director viz. Mr. Jha. This clearly indicates that all these companies are managed by the same group. Para 11. 12. 13. 14, 15 and 16 of the submission made by assessee. Assessee has mentioned in these paragraphs basically documents submitted by the assessee to support its claim. However merely submitting some documents will not suffice for the purpose of the assessee. Assessing Officer In his order in para 22 sub para 1, 2, 3, 4, 5 and 6 has mentioned in detail flaws, contradictions and shortcomings in the submission of documents made by the....
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....s 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 assessee. Appellant company has not fully discharged its onus of proving genuineness of transaction and creditworthiness of investing company in the light of contradictions brought on the record by the assessing officer. Since appellant company has not fully discharged its basic onus, additions made under section 68 are fully justifiable. All the case laws relied upon by the assessee presume that assessee has discharged its primary onus completely. However this is not the case with the appellant company. . Para 36 37, 38 and 39 of the submission made by assessee 'Statement given by one of the director of the appellant company h....
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....mission 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 have asked the Addl. CIT to explain whether any investigation regarding the bank details have been made in this case. The Addl. CIT has fairly admitted that complete bank enquiries were made in case of all investing companies on the basis of details submitted by the assessee upto third down layer but nowhere it was found that cash was' deposited in any account before issuing the cheques for investment made in the purchase of shares of assessee company. He has further stated that since no adverse finding was recorded during the bank account investigation, therefore, it was not mentioned in the assessment order. 4.12 From the fact that the AO has made enquiries in all the bank accounts upto third down lay....
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....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 High Court re-appreciated the evidence and substituted Its own findings and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmises, conjecture and suspicion. On appeal to the Supreme Court, the Court while reversing the decision of the High Court held that the findings of the AO, CIT (A) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process ITA Nos.2093, 2094, 2095 of 2010, 514 of 2007 & 539 of 2008 Page 12 of 27 of banking transaction as not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent findings of fact. While doin....
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....d 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 required regarding the genuineness of subscribers to share capital, as there was a device of converting black money by issuing shares with the help of formation of an Investment which was reversed by the Tribunal, this Court held that even if it be assumed that the subscribers to the increased share capital were not genuine, under no circumstances the amount of share capital could be regarded as undisclosed income of the company. This view was confirmed by the Apex Court in CIT Vs. Stellar Investment Ltd. [(2001) 251 ITR 263 (SC)]. ITA Nos.2093, 2094, 2095 of 2010, 514 of 2007 & 539 of 2008 Page 14 of 27 Having taken note of the legal position in detail, we now proceed to decide each appeal on the application of aforesaid principles. IT....
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....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 were not produced in spite of specific direction of the AO instead of taking opportunities in this behalf. Since the socalled Directors of these companies were not produced on this ground coupled with the outcome the detailed inquiry made by the Investigating Wing of the Department, the AO made the addition. This addition could not be sustained as the primary onus was discharged by the assessee by producing PAN number, bank account, copies of. income tax returns of the share applicants, etc. We also find that the ITA Nos.2093, 2094, 2095 of 2010, 514 of 2007 & 539 of 2008 Page 16 of 27 Assessing Officer was influenced by the information received by the Investigating Wing and on that basis generally modus operandi by such Entry Operators is discussed in detail. However, whether suc....
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....A 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 share applicants. The AO issued notices under Section 133(6) of the Act, which remained unserved on 22 out of 30 parties. Even remaining 08 persons did not respond. Local inquiry made through Inspector revealed that the parties did not exist at the given addresses. On Inquiries from bank, the AO found various discrepancies In the statement sent by the bank and the statement produced by the assessee. Even some of the names given by the assessee were not the same as In the bank records. The AO confronted entire material to the assessee and allowed various opportunities. However, the assessee did not produce even a single party. Accordingly, the AO made an addition of '99.18 lacs to the Income of assessee on account of unexplained share capital under Section 68 of the Act. Similarly, the AO also made additi....
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....he 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 to the decisions noted above, we are of the view that the addition was rightly deleted by the CIT (A) and the tribunal. Requisite documents were furnished showing the existence of the shareholders from bank accounts and even their income tax details. From bank accounts of these shareholders, it was found that they had deposited certain cash and source thereof was questionable. The AO should have made further probe which he failed to do. Moreover, remedy with the Department lies in reopening the case of these Investors and the addition cannot be made in the hands of assessee. We accordingly dismiss this appeal". CIT vs. Divine Leasing & Finance Ltd., General Exports & Credits Ltd. & Lovely Exports P. Ltd. IT A No. 953/2006 The Income-tax Appellate Tribunal has dismissed the Revenue's appeal and thus there are concurrent findings perta....
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.... 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 It has justifiably been contended that this inaction is due to paucity of time left at that stage since the assessment had to be passed by March 31, 1999. It has been painted out that several adjournments had been granted by the Assessing Officer oil the asking of the assessee. The timing of the assessee's said letter is most suspect. Generally speaking, It is Incumbent on the Assessing Officer to manage his schedule, while granting adjournments, In such a manner that he does not run out of time for discharging the duties cast on him by the statute. In the present case, the details had been furnished to the Assessing Officer much before March 1999, but he failed to react to the shifting of the burden to Investigate Into the creditworthiness of the share applicants. Therefore, the appeal is dismissed. CIT vs. Lovely Exports P. Ltd. [2009]319 ITR (St.) 5 (SC) (para 2) - ITA....
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.... 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 origInally filed. During the assessment proceedings the assessee was asked about the details of increase in share capital of the assessee to which the assessee filed a list containing nine share holders from whom the share capital of Rs.l,59,300 and Rs. 15,31,200 was received. The assessee also filed confirmation from the subscribers through duly notarized affidavits containing, the details like name, address, age, source of Income, annual income, date of purchase of application of share tendered, number of shares purchased alongwith the amount given by subscribers. On receipt of these confirmations, neither anything was asked from the assessee nor any inquiry was made. The addition of Rs.l,59,300 was made by the Assessing Officer by observing as under: 'On a perusal of the submission made by the assessee In respect of share application money received by the assessee during the year. It is seen that In respect o....
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....e 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 laid down by the Hon'ble Delhi Court In the case of err v. Shiv Prakash Aggrawal [2008] 306 ITR 324 (relevant page 326) further fortifies out view. As far as the reliance of the Revenue upon the decision from the hon'ble jurisdictional High Court In the case of CIT v. Rathi Finance limited [2008] 215 CTR (MP) 429 to the extent that the assessee has to establish the genuineness of the credits, we are in full agreement with the argument but In the present appeal the assessee has duly established the Identity, source of the credits. Even It Is not the case that the shares have been Issued to nonexisting persons. Broadly we are of the view that once the Identity and source of the subscribers is established for making share application, no addition can be made under section 68 of the Act because even the hon'ble apex court in the case of CIT vs. Lovely Exports Limited even stepped ahead by concluding as under (2008) 216 CTR (SC) 19....
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....ourt 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 by genuine shareholders were submitted before the AO and during the appellate proceedings also. There is no allegation of availing accommodation entry as alleged in the decision of Hon'ble Delhi High Court. There is no proof of giving cash against the cheques issued by the investing companies. No statement of any director of the investing company was recorded nor any summons were issued. The AD has not rejected any submission made during the course of assessment proceedings. In an other case of Indore Bench of Tribunal in case of Agrawal Coal Corporation Ltd. (135 ITD 27.0), the AR has submitted that complete submissions from the investing companies, details of cheque No., name of the bank and date of cheques were submitted before the AO. The confirmation from the auditors of the company were also submitted. The balance-sheet and P&L account of the investing company which had shown substantial net worth were also submitted. The proof of filing statutory returns b....
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....ies 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 8 companies. Out of these 8 companies, 5 companies are the same as discussed in the case of M/s. Reva Properties Ltd. and M/s.Mihir Agencies P. Ltd., M/s. Alembic Securities Pvt. Ltd. & M/s. Alpha Chemi Trade Agency Pvt. Ltd. are new companies in this case who have subscribed the share capital in AY 2009-10 amounting to Rs. 1,50,000/-, 2,00,00,000/- & Rs. 7,90,00,000/- respectively. The papers relating to the identity, creditworthiness and genuineness of the transaction relating to these companies were also the same as submitted and discussed in the case of other companies. 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 application money. M/s. Alpha Chemi Trade Agency Pvt. Ltd., M/s. Alembic Securities Pvt. Ltd.,....
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....tted 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 are fulfilled. Thus reliance cannot be placed on a general statement of Mr. Choksi alone which is not corroborated by any documentary evidence. In totality of facts and circumstances, it is held that the case is covered by the decision of Hon'ble Supreme Court in the case of Lovely Exports (supra). Thus, the addition made by the Assessing Officer u/s. 68 is not sustainable, hence deleted and the ground of appeal is allowed. 14. Addition made on account of share capital in case of M/s.Karburi 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. Rev....
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....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. Therefore, all the conditions, Le. identity, creditworthin....
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....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 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. 17. Addition made on account of share capital in case of M/s. Chikura Properties Ltd., was deleted by CIT(A) after observing as under:- All these grounds are relating to the investment made by each company in the share application money of the assessee which is discussed in the above ground by taking a combined view because the facts and documentary evidence in each company are the same. Therefore, to avoid repetition and for the sake of convenience, all these grounds are discussed in a cumulative manner in the above grounds. Therefore, these grounds have become infructuous, hence dismissed. 18. However, the CIT(A) dismissed the legal ground taken by assessee with regard to validity of assessment framed u/s.153C. 19. Against the above, orders of CIT(A) revenue is in further appeal before us whereas assess....
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....roperties 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., Hingora Finvest Pvt. 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.12 of the Order of the CIT(A) in the case of Auster Properties Ltd., Mihir Agencies P. Ltd., 2009-10 Refer page No.13 of the Order of the Hon'ble ITAT J Bench in the case of Jogia Properties Ltd., Alembic Securities Pvt. Ltd., 2009-10 Refer page No.12 of the Order of the CIT(A) in the case of Auster Properties Ltd., Alpha Chemi trade Agency Pvt. Ltd., 2009-10 Refer page No.12 of the Order of the CIT(A) in the case of Auster Properties Ltd., 5 Cikura 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 ....
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....sp; 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., 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., Realgold trading co. 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., 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., 10 Reva 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 ....
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....ber 2014 which is registered under CO.NO.264/M/2014. As per learned AR, assessee had received the intimation about filing of the appeal by the Department in Form 36 alongwith Grounds of Appeal on 7th October 2013. As per provisions of Section 253(4) of Income Tax Act, 1961, assessee was required to file the cross objections within 30 days from the receipt of the intimation of filing the appeal by the Department. The said cross objection was required to be filed on or before 6th November, 2013. The said cross objection is filed on 23/12/2014. There is a delay of 410 days. 22. Application for condonation of delay was filed on the following grounds:- We were under a bonafide belief that once the addition made by the Assessing Officer is deleted and no addition survives after the order of CIT (Appeal) which will result into Nil demand against us and hence we are not eligible to file the cross objections as our grievance regarding the tax liability is resolved by the order of the Commr. of Income Tax (Appeal). In the present case the addition made by the Learned Assessing Officer is totally deleted by the Learned Commr. of Income Tax (Appeal) and there is no demand outstanding agains....
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.... your honour to kindly condone the delay in filing the cross objection and admit the legal ground regarding the validity of issue of notice u/s 153C. 23. With regard to filing of cross objection under Rule 27 of ITAT Rules, reliance was placed on the following decisions:- a. The Asst. Commr. Of Income Tax Cir 18(3) vs. M/s. Triace ITA No.2827/M/04 (Mumbai ITAT) b. National Thermal Power Co.Ltd., vs. Commissioner of Income Tax Reported in 229 ITR 383 (SC) c. Pratapsingh Ravindrajeet Singh vs. Commissioner of Income Tax Reported in 218 ITR 536 (Madhya Pradesh High Court) 24. With regard to applicability of the provisions of Section 153 C, learned AR submitted that the conditions of Section 153C are not satisfied. The learned Assesseing Officer has wrongly exercised the jurisdiction u/s 153C. The provisions of Section 153C can only be invoked when the Assessing Officer, who is dealing with the case of a person against whom search has taken place, is satisfied that any money, bullion, jewellery or other valuable article or thing or books of accounts or documents belongs to a person other than a person referred to in section 153 A then the books of accounts or documents or seize....
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....Reported in 333 ITR P.*436, wherein the Hon'ble Gujarat High Court has held that during the course of search the document belonging to other person should be found to initiate proceedings u/s. 153C, it was also held that there may be a reference to a petitioner in the paper seized in as much as his name is reflected in the seized paper and certain details are given under different column but it does not mean that the document belong to the petitioner. 26. With regard to merit of addition, learned AR contended that assessee has produced all the necessary evidences and proof in support of the claim that the amount of share capital received from eight parties is genuine and supported with the documents and provisions of Section 68 cannot apply to the said transactions. As per learned A.R. during the course of search no incrementing material was found to prove that the transactions with eight parties are not genuine and the assessee has given cash and has received the cheque from these parties. The assessee has produced the documents such as the proof of existence of the Corporate body, registration number with ROC, PAN No., balance sheet, ROC returns, details about the share capi....
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....ed AR also placed on record the order of the Co-ordinate Bench and contended that in the case of Jogia Properties Ltd, the Hon'ble JBench in appeal no. 6106 and 6107 for A.Y. 2008-09 and 2009-10 has approved the order of Ld. CIT (A) deleting the addition made by the Ld. Assessing Officer u/s 68. The parties who have made investments in Jogia Properties Ltd and the parties who have made investments in the share capital of the assessee company are same, except one party viz. Gyaneshwar Trading & Finance Co Ltd. The details of the said party is submitted at pages 83 to 105 of paper book for AY. 2008-09. The ratio of decision of the Hon'ble Tribunal in the case of Jogia Properties Ltd is also squarely applicable on the facts of the case. The Hon'ble Tribunal has also dealt with the issue of statement by Shri Jose Mathews, the directors of the company and also the statement of Mr. Mukesh Chokshi. The conclusion of the Hon'ble Tribunal on all these aspects also is applicable on the facts of the case. 30. On the other hand, learned CIT(DR) contended that, the documents were found and seized belonging to the assessee company which cannot be denied because the entries of th....
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....er authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us. We had also carefully gone through the order passed by Tribunal in case of Jogia Properties Ltd., wherein search was carried out u/s.132 and assessment was framed u/s.153A dated 18/12/2015, wherein the Tribunal have confirmed the action of the CIT(A) for deleting the addition made by AO on account of share capital. The precise observation of the Tribunal was as under:- The above titled appeals have been preferred by the Revenue against the common order dated 27.07.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to AY 2008-09 and AY 2009-10. As the facts and issues involved in both the appeals are similar and the impugned order of the Ld. CIT(A) is also common in both the appeals, hence the same are taken together for disposal with this common order. 2. The brief facts of the case as drawn out from the impugned order and the available record on the file are that a search and seizure operation was carried out u/s. 132 of the I.T. Act at the business premises of assessee on 04.03.2010 situated at 208, Ashirwad Bui....
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....e assessee company who in turn offered the amount received as share capital from the companies as mentioned in the assessment order as unexplained credits. Shri Jose Mathew and Sh. Ajay Kumar however, retracted from their statements latter on. 4. The Assessing Officer (hereinafter referred to as the AO) issued notice u/s. 153A to the assessee. In the return filed in response to the notice u/s 153A, the amount declared as undisclosed income in the statement of Shri Ajay Kumar, Director of the company during the search action had not been disclosed. The AO observed that all the above said 7 companies have been doing their business from the same place and that these concerns were also not well established companies. A total of ten companies (8 companies in AY 2008-09 & 2 companies in AY 2009-10), names of which have been mentioned in the assessment order, had subscribed to the shares of these companies including the assessee. The AO further noted that the above concerns were sister concerns and their nature and the modus operandi was same as that of the assessee company. The AO further observed that the search and seizure operation was also conducted on one Shri Mukesh Chokshi, who ....
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....and Rs. 3,90,00,000/- for the AYs. 2008-09 & 2009-10 respectively as undisclosed income of the assessee company u/s. 68 of the I.T. Act. Being aggrieved by the above additions, the assessee filed appeal before the CIT(A). 5. The Ld. CIT(A), after considering the submissions of the assessee and analyzing the facts and circumstances of the case, observed that 10 companies had subscribed the share application money in the assessee company. The papers relating to the identity, creditworthiness and genuineness of the transaction relating to these companies were submitted by the assessee to the AO. The AO had also made bank enquiry in this respect but no discrepancy or incriminating evidence was found. The Ld. CIT(A) further noted that no incriminating document relating to the share application money was found or seized during the course of search. Further in respect to the companies, M/s. Mihir Agencies P. Ltd. & M/s. Talent Infoway Ltd. in which one Mr. Mukesh Choksi has been a director, the Ld. CIT(A) observed that these companies had been registered with the registrar of companies. These companies had subscribed to the shares of the assessee company in AY 200910. The Ld. CIT(A) in ....
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.... We have heard the rival contentions of the Ld. Representatives of the parties at length and have also gone through the record. The contention of the Ld. DR has been that during the search action, Sh Ajay kumar, one of the directors of the company had admitted that the money received as share application money was unexplained income of the assessee and he had offered it for taxation. He therefore has contended that subsequent retraction is nothing but an afterthought of the assessee. The Ld. DR has further contended that Sh. Mukesh Chokshi was a hawala dealer, hence the share application money received by the assessee was the result of a bogus transaction. The Ld. DR in this respect has relied upon the decision of the co-ordinate bench of the Tribunal in the case of "Gold Star Finvest (p) Ltd."[2013] 33 Taxmann.com 129. The Ld. DR has also referred to the decisions of the Tribunal in the case of "M/s. Richmand Securities Pvt. Ltd." in ITA No.4624/Mum/2005 dated 29.8.2008 and further in the case "M/s. Mihir Agencies Pvt. Ltd." in ITA No.4912/Mum/2005 dated 30.5.2008 wherein the decision in the case of "M/s Gold Star Finvest (P) Ltd" has been followed. 7. The Ld. A.R. on the other ....
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....ete details of the share application money received together with confirmations and that there was no statutory obligation to obtain the application form from the investor. The investor companies had given a ledger account confirmations. Complete details about the bank account giving cheque number, date, name of bank was submitted. The Ledger Account confirmation in the books of Investor company was also submitted. The board resolution was not available with assessee as the assessee has got no legal right to ask for copy of board resolution when complete information about the investments made was available. The evidence relating to the net worth of the investing companies was also submitted. The Ld. DR on the other hand, though, has fairly admitted that no direct incriminating material against the assessee was found during the search action, he, however, has contended that it is a case of circumstantial evidence which is corroborated with the admission of one of the directors of the assessee company. At this stage the Ld. AR has pointed to the question No. 15 in the statement of Sh. Ajay Kumar, Director of the company, wherein it was pointed out to him that one Mr. Jose Mathews h....
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....009 to 15.2.2010, during the time when the transaction had taken place. He was not the employee of the assessee company nor was any way connected with the business of the assessee prior to 15.2.2010. He has further pointed out that there was no direct admission of Sh. Ajay Kumar about any unexplained income. He has demonstrated that he was given an impression that in view of the statement of Sh. Mukesh Chokshi and Sh. Mr. Jose Mathews in some other search or survey actions, it was established that the assessee had received unexplained investment, in response to which he stated that he has come to know about these facts then only as revealed by the department and taking into consideration the fact and circumstances as were before him when these question were put to him, he agreed to offer the amount as unexplained income of the company. In view of this the Ld. AR has submitted that no reliance can be placed on the statement of Sh. Ajay Kumar who was neither in any way connected with the activities of the company when the transaction took place nor his admission was based on his personal knowledge, rather he agreed to admit the additions on the basis of facts presented to him i.e. ....
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.... made by the AO cannot be held to be justified in any manner. The Ld. AR has further brought our attention in this respect to the Instructions issued by CBDT bearing No.F.No.286/2/2003-IT (Inv.II) dated 10/3/2003 wherein it has been stated that during the course of search/survey, no attempt should be made to obtain the confession as to the undisclosed income. Any action on the contrary shall be reviewed adversely. CBDT has also referred to the fact that if the confession statements are taken which are not based on credible evidence then later they are retracted. In the present case also, not a single incriminating material was found during the search action. The addition is made purely on the basis of declaration made by Sh Ajay Kumar, Director. The Ld. AR has relied upon the following decisions in this respect. (a) DCIT vs Pramukh Builders ITA No. 2170/Ahd./1999 A.Y. 1994-95 dated 6.7.2007 Reported in 115TTJ p. 330 (Third Member) (b) CIT vs. K. Bhuvanendra and Others 303 ITR p. 235 (Madras High Court) (c) S. Khader Khan Son Reported in 300 ITR p. 157 (Madras High Court) (d) Oriental Containers Ltd. vs. ACIT (2010) 6 Taxmann.com 121 (Mum). (e) Prem Sons ITA No.4698/MUM/....
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....Power Pvt. Ltd. 196 Taxman p. 444 (Delhi High Court) h) CIT vs HLT Finance Pvt. Ltd. (2011) 201 Taxman p. 28 (Delhi High Court) 13. On the other hand the Ld. DR has relied upon one decision of Mumbai ITAT in the case of Gold Star Finvest Pvt. Ltd. (supra) wherein while determining the income of that assessee, the Tribunal has estimated the income at certain percentage. The Ld. AR has however submitted that the ratio of this decision cannot overrule the decisions of Bombay High Court and several Mumbai ITAT decisions as relied upon by him. He has further relied upon the following decisions wherein the additions made by the AO on the basis of general statement of Mukesh Chokshi have ultimately been deleted by the higher authorities. 1. Kataria Ketan Ishwarlal Vs. ITO - ITA No.4304/M/2007 decided on 30.04.2010. 2. ACIT Vs. Shri Ravindrakumar Toshniwal - ITA No.5302/M/2008 decided on 24.02.2010 3. ITO Vs. Truptic Shah - ITA No.1442/M/2010 decided on 29.04.2011 4. Smt. Manjulaben L. Shah Vs. ITO - ITA No.3112/M/2014 decided on 31.10.2014 5. M/s SDB Estate private ltd. vs. ITO ITA No. 584/M/2015 decided on 15.04.2015 6. M/s. Yamuna Estate Pvt. Ltd. vs. ITO ITA No.2672/M/2....
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....ted, documented and supported in such an event, even though, the amount invested by the assessee has grown into a very sizeable amount which looks quite amazing, the evidence produced by the assessee cannot be brushed aside. The Tribunal under such circumstances deleted the addition. The Revenue took the matter to the Hon'ble Bombay High Court. The Hon'ble Bombay High Court, while adjudicating the above issue in the case styled as "CIT vs. Shri Mukesh R. Marolia" in ITA No.456 of 2007 decided on 07.09.2011, observed that though there was some discrepancy in the statement of director (Mr. Mukesh Chokshi) of M/s. Richmond Securities Pvt. Ltd. regarding the sale transaction, but owing to the factual finding given by the Tribunal on the basis of evidences furnished by the assessee, the decision of the Tribunal cannot be faulted. The Hon'ble Bombay High Court upheld the finding of the Tribunal holding the sale transactions as genuine. The Department preferred appeal before the Hon'ble Supreme Court. The Hon'ble Supreme Court dismissed the SLP No.20146/2012 styled as "CIT vs. Shri Mukesh R. Marolia vide order dated 27.01.14. Similarly in the case of "CIT vs. M/s. Kesar A. Gada in ITA....
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.... the assessee had given its own money to the investing company for the purpose of making investments. It may be observed that the Hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd. referred above has clearly laid down the law that once the assessee has given the complete details and the information of the investors who have made investments in the share capital of the company and proved identify then no addition can be made in the hands of the assessee company and in respect of such investments the department should proceed against the individual investor. In the case in hand also, the requisite details, proof, confirmation, evidences etc. are produced. The ratio of the decision of the Hon'ble Supreme Court is directly applicable on the facts of the case. In view of the above discussion of the matter, we do not find any infirmity in the factual finding given by the CIT(A) after duly appreciation of evidence on the file and the same is accordingly upheld. 16. In the result, the above captioned appeals of the Revenue are hereby dismissed. Order pronounced in the open court on 18.12.2015. 34. It is clear from the order of the Tribunal that all the share applicants fo....
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....e assessment framed u/s.153C on the plea that no satisfaction was recorded by AO of the searched person so as to empower the concerned AO of these concerns to make addition u/s.153C. Learned AR placed on record report on inspection taken of the records dated 28/08/2015 which reads as under:- Jogia Properties Ltd. A.Y. 2008-09 alld 2009-10 ITA No.6106/M/2012 and 6107/M/2012 Hearing fixed on 8th September, 2015 Report on the inspection taken of the records The appellant had made an application vide letter dated 05/08/2015 to the Assessing Officer requesting for inspection of the assessment records. The said assessment records were with the Hon'ble Commr. of Income Tax, DR, Smt. Neena Pandey, f-Bench, Mumbai ITAT. The Inspector Ms. Ambika Shashidharan, attached to f-Bench, Mumbai ITAT, gave the inspection of the records on 20/08/2015 at 3 pm. Shri Dilip V. Lakhani, Chartered Accountant, the authorised representative and Shri Viresh Sohoni, the representative of the appellant, took the inspection of the assessment records and the findings of the said inspection are as under. 1. There is no proof or evidence on record to the effect that the Assessing Officer gave t....
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....issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under section 158BD if the Assessing Officer was satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or assets were requisitioned under section 132A, he could proceed against such other person under section 158BC. Thus a condition precedent for issuing notice under section 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned should belong to such person. If the requirement is not satisfied, recourse cannot be had to the provisions of section 153C. Held, allowing the petition, that admittedly, the three loose papers recovered during the search proceedings did not belong to the petitioner. It was not the case of the Revenue that the three documents were in the handwriting of the petitioner. In the circumstances, when the condition precedent f....
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.... Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Ld. Assessing Officer shall not be required to issue notice for assessing or reassessing the total assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made except in cases where any assessrnent has abated." In Order to issue a valid notice u/s 153C, the Ld. Assessing Officer of a person against whom search action is taken, records a satisfaction that any money, bullion, jewellery or other valuable article or thing, or books of account or documents seized, belong to a person, other than a person referred to in Section 153A, then the such books of account or documents or assets seized shall be handed over to the Ld. Assessing Officer having jurisdiction over such other person. The recording of the satisfaction is a must and even if the Ld. Assessing Officer for the person searched and the 'other person' is the same, still the satisfaction has to be recorded by the Ld. Assessing Officer of the search ....
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.... Properties Ltd or any of these 7 companies. His statement has no evidential value. During the course of search and post search investigation also not a single piece of evidence was found by the Investigation Wing or by the Ld. Assessing Officer to prove what was originally stated by Mr. Jose Mathews. This retraction of statement of Jose Mathews have also been dealt by the Tribunal elaborately in its decision dated 18/12/2015 and after considering the same Tribunal had uphold the deletion of addition in respect of share capital. 44. From the record we found that of post search investigation on 15/04/2010, a summons u/s 131 was issued to the director of the company Mr. Narayan Hari Halan. He was appointed as director of the company on 15/02/2010. He was nowhere connected with the affairs of Jogia Properties Ltd or Karburi Properties Ltd., during the period 01/04/2007 to 31/03/2008 and 01/04/2008 to 31/03/2009. He was not aware about the affairs of the company for the period 01/04/2007 to 31/03/2009. 45. We found Tribunal have elaborately dealt with the summon issued to Mr. Narayan Hari Halan in its order dated 18/12/2015. We found that the director of the company while recording s....