TaxTMI 
TaxTMI 
2018 (5) TMI 137
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.... of notice u/s 148 on 30.3.2012. In compliance to the notice u/s 148, a copy of return already filed on 17.10.2005 was filed with a request that the same may be treated as return filed in compliance to notice u/s 148. Prior to the issuance of notice u/s 148, a search and seizure operation was carried out on 10.01.2012 in the Minda Group of cases. Search was also carried out at the residence of Shri Nirmal Kumar Minda, (the assessee) and during the course of search and seizure, it was gathered that Minda Group had allegedly raised bogus share capital/share premium by taking accommodation entries through paper companies. It was also gathered that one of the major paper companies was M/s Pioneer Finvest Ltd. which had made investment in the Minda group of companies by way of share application money. During the course of search and seizure operation, it was also gathered that the group companies of the Minda group namely Minda Industries Ltd., Minda Investment and Minda Project had allegedly received money in the form of share application money and share premium money from M/s Pioneer Finvest Ltd. As per the information gathered during the course of search and seizure, during assessmen....
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....tantiate that the assessee had made cash payment of Rs. 25 crore in lieu of obtaining the cheques/share application money. 2.3 Now aggrieved, the department has approached the Income Tax Appellate Tribunal (ITAT) and has challenged the action of the Ld. Commissioner of Income Tax (Appeals) by raising the following grounds of appeal:- "1. That the Commissioner of Income Tax(A) has erred in law and on facts of the case in deleting the addition of Rs. 25 crores made by the Assessing Officer on account of undisclosed income. 2. (a) The order of the Commissioner of Income Tax(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 2.4 Further, in the instant case, the AO had initiated the proceedings u/s 147 of the Act, and before the Ld. CIT (Appeals), the assessee had challenged the initiation of the reassessment proceedings vide ground nos. 1.3, 1.4, 1.5, 1.7 & 1.8, and these grounds of the appeal of the assessee were dismissed by the Ld. CIT (Appeals) and since the addition made by the AO was deleted, the asse....
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....e of Sh. Khusro Irshad vs. ITO in ITA No. 2115/Del/2016. 4. The Ld. CIT (DR) opposed the aforesaid contentions and submitted that the assessee had in fact raised no such objections about the initiation of proceedings u/s 148 of the Act before the AO and, therefore, the aforesaid judgments were inapplicable and that the contentions of the assessee do not deserve to succeed. 5. We have considered the rival submissions and perused the material on record. It is seen that in the instant case, notice u/s 148 of the Act was issued on 30.03.2012, and after the receipt of the notice, the assessee filed a reply dated 07.05.2012 requesting the AO to provide a copy of the reasons. The same was provided to the assessee by the AO through a communication dated 08.10.2012, providing various details and such reply cannot be termed as objection to the initiation of the reassessment proceedings. Thereafter, another reply was filed on 19.03.2013, wherein the assessee made submissions vis a vis reasons to believe and stated that the original return of the assessee be accepted. In our considered opinion, this reply also cannot be termed as objection and further, this reply was filed at the fag- en....
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....mal Minda had not made any investment in M/s Pioneer Finvest Ltd. which was duly supported by the balance sheet as well as bank statement. It was further submitted by the learned counsel that in the aforesaid response it was submitted that the assessee was neither a director nor a shareholder in the company M/s Pioneer Finvest Ltd. 8.1 It was contended by the Ld. AR that there being no evidence that the assessee had made investment, the addition deleted by the learned CIT (Appeals) was entirely justified. It was further contended that no adverse inference can be drawn by the revenue against the assessee in the absence of any evidence that it was the assessee who had made the investment. The Ld. AR further contended that no adverse finding had been brought on record to conclude that the investment made by the assessee remained unexplained and came from unexplained resources. It was further submitted that it is not a case that M/s Pioneer Finvest Ltd. was a paper company because the said company was existing on record and had also been assessed to tax u/s 148 of the Act by an order dated 30.10.2012, wherein the income of the said company had been assessed at Rs. 27,52,930/-. The L....
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....on wing had observed that the shares of M/s Pioneer Finvest Ltd have been taken over by the entities and persons belonging to the assessee and in the post search enquiries conducted by the investigation wing, the AR of the Minda Group had admitted that M/s Pioneer Finvest Ltd had been acquired by the Minda Group at the cost of Rs. 10 per share whereas the Net Asset Value (NAV) of the share of the aforesaid company was more than Rs. 100 per share and, therefore, the share application money and share premium of Rs. 25 crore received by the Minda Group was an accommodation entry. vii. That during the course of the assessment, assessee was requested to file various details and documents which had not been provided by the assessee. viii. Notices u/s 133(6) of the Act were issued to M/s Chandni Commercial Pvt. Ltd and M/s Gyan Commercial Pvt. Ltd. and these notices remained undelivered. Further, the investigation wing had carried out investigation in respect of companies of the Ruia Group and none of the Ruia group companies were found existing, which proved that the companies formed by Shri Pawan Ruia were paper companies and entry operators. 9.1 In view of the afor....
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....vant to A.Y. 2005-2006 Minda Group of Companies took Rs. 2.5 crore share application money and Rs. 22.5 crores as share premium money from M/s Pioneer Finest Ltd. v) The appellant being the controlling person of Minda Group gave Rs. 25 Crores in cash to the above paper company and then received the above amount back in the guise of share application and share premium money in his group companies. vi) It is worth mentioning here that the paper company, M/s Pioneer Finest Ltd., was formed by one Shri Pawan Ruia, who was an entry operator. In the year 2004 the Investigation Wing of Kolkata carried out a search against him. In the search it was established that Shri Pawan Ruia was an entry operator/ vii) It was also claimed by the Investigation Wing that th Authorised Representative for the Minda Group of cases vide order sheet entry dated 29.03.2012 admitted that M/s Pioneer Finest Ltd., was acquired by the M/s Nirmal Minda Group at the cost of Rs. 10/- per share whereas the NAV of the share was more than Rs. 100/-. viii) It was also alleged by the investigation wing that the investment of M/s Pioneer Finest Ltd., was changed from the Ruia Group Of ....
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....-2006; that Minda Group of Companies took Rs. 2.5 crore share application money and Rs. 22.5 crores as share premium money from M/s Pioneer Finest Ltd., the appellant being the controlling person of Minda Group gave Rs. 25 crores in cash to the above paper company and then received the above amount back in the guise of share application and share premium money in his group companies; that M/s Pioneer Finest Ltd was acquired by the M/s Nirmal Minda Grup at the cost of Rs. 10/- per share whereas the NAV of the share was more than Rs. 100/-that the investment of M/s Pioneer Finest Ltd. Was changed from the Ruia Group fo Companies to investment in Nirmal Minda Group; that the share application money and share premium amount of Rs. 25/- crore received by the group companies of Minda was an accommodation entry; that the share capital /share premium of M/s Pioneer Finest Ltd. Increased by Rs. 2.50 crore and Rs. 22.50 crore respectively during F.Y. 2004-2005 and that the control of M/s Pioneer Finest Ltd. Was taken over by the entities of M/s Nirmal Kumar Minda by acquiring shares of M/s Pioneer Finest Ltd. @ 10/- each as against the NAV of more then Rs. 100/- each and payment of each by M....
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....er held that the AO had failed to bring any cogent material on record to prove that the assessee had acquired any share/s of M/s Pioneer Finvest Ltd. which could give him controlling rights in that company. He has also held that the AO had failed to establish that M/s Pioneer Finvest Ltd. had raised the share capital/share premium of Rs. 2.50 crores and Rs. 22.50 crores respectively during the FY 2004-05. He has further noted in his order that even during the course of proceedings before him he gave further opportunity to the AO to substantiate the allegation/s by going into the truth and veracity of the matter with the help of appraisal report, necessary details, assessment record, seized documents, statements etc but the AO failed to establish the allegation on the basis of which he had recorded the finding in his order for making the impugned addition. 9.3 The learned CIT (Appeals) finally concluded that in absence of any evidence brought on record justifying that the assessee had made investment the addition deserved to be deleted. In arriving at the aforesaid conclusion the learned CIT (A) also considered the fact that in the assessment of M/s Pioneer Finvest Ltd framed u/s....