TaxTMI 
TaxTMI 
2018 (6) TMI 1048
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.... the Revenue in as much as the twin conditions as laid out in Section 263 of the Income-tax Act, 1961 were not fulfilled. 2. That the order dated 12-01-2018 passed u/s 263 of the Income-tax Act, 1961 passed by the Ld Pr Commissioner of Income-Tax, Delhi -9, New Delhi is against law and facts on the file in as much as he was not justified to set aside the order dated 31-12-2016 passed u/s 143(3) of the Income-tax Act, 1961 for the AIY 2014-15 by the Assistant Commissioner of Income-Tax, Circle -25 (2), New Delhi and direct the Assessing Officer to :- (a) inquire into the issue of receipt of Rs. 7.80 crores on share premium/share capital from M/s Prosperity Mercantile Pvt Ltd and also receipt of Rs. 1 crore from M/s Prosperity Mercantile Pvt Ltd on behalf of Sh 8asant Kr Jain, a shareholder / Director in the Appellant Company on the ground that M/s Prosperity Mercantile Pvt Ltd is allegedly an entry/provider/shell/paper company which had been acquired by the Appellant Company for the purpose of allegedly routing its own unaccounted money. (b) inquire into the issue of NIL WIP found in the final accounts of the Appellant Company. " 2. The facts in brief q....
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....chase amount is Rs. 37.80 crores. Considering the nature of trade, the purchase amount seems on a higher side, so it also required further enquiries /verification." 4. Accordingly a show cause notice was issued u/s 263(1) on 23.8.2017. In response to which assessee filed its detailed objection / reply stating that the AO during the course of the assessment proceedings had duly enquired about the issue of share capital/share premium received during the year from M/s. Prosperity Mercantile (P) Ltd. and assessee was asked to justify the genuineness and creditworthiness alongwith the documentary evidence of source of amounts received in the bank account of M/s. Prosperity Mercantile Ltd. Based on such documents and after he was duly satisfied, he accepted the share capital which were received during the year. Apart from that, various legal submission were also made challenging the revisionary proceedings exercised u/s 263. To prove the genuineness and creditworthiness of the share capital/premium received, the assessee had filed a) confirmation of the company; b) bank statement of M/s. Prosperity Mercantile (P) Ltd.; c) computation of income and acknowledgement of filing income-tax ....
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....hiness of the company can be verified from the balance sheet enclosed. Here it is relevant to mention that the AO was not satisfied with the financial of the Co. and the sources of M/s. Prosperity Mercantile Private Limited. In this context he has asked the assessee to submit the documentary evidence for the sources of amount received in the bank account of M/s. Prosperity Mercantile Private Limited to verify the creditworthiness of M/s. Prosperity Mercantile Private Limited. However, the assessee in its reply dated. 23.12.2016 did not submit the requisite details as asked by the AO. In the bank statement, the payment to the assessee company' is visible but it is seen that the equivalent amount have been received by M/s. Prosperity Mercantile Private Limited on the same day or one day before through transfers or through cheque payments. The details in r/o source of these credits in the bank statement of M/s. Prosperity Mercantile Private Limited have not been furnished by the assessee. However, it is apparent that the AO has passed the assessment order on 31.12.2016 and did not make any addition on the issue of share capital/share premium u/s 68 of the IT Act. This issue has no....
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....re managed by the entry operators. With regard to the Investigation report in relation to M/s. Prosperity Mercantile Pvt. Ltd., Ld. CIT has noted down the various facts dealt by him from pages 16 to 19 :- "i. During the inquiry proceedings the assessee did not co-operate with the authorities on various pretexts. The summons were also issued to Sh. Naveen Kr. Jain who appears to be Director in the assessee company as well as in M/s. Prosperity Mercantile Pvt. Ltd. ii. M/s. Prosperity Mercantile Pvt. Ltd. was incorporated in Kolkata on 25.11.2010, the Directors of this company were Sh. N. C Barik and Sh. Balai Das and these two persons were also Directors in more than 250 companies. Then Sh. BK Sultania was appointed as Director who remained as Director till March, 2014. Sh. Sultania was also Director in 72 other companies. Similarly Sh. AK Sultania was also Director in M/s. Prosperity Mercantile Pvt. Ltd. apart from being Director in 49 other companies. iii. In the very first year (F. Y. 2010-11) in a short span of four months, M/s. Prosperity Mercantile Pvt. Ltd. raised share capital of Rs. 30.39 lakhs and also received share premium of Rs. 29.10 crores w....
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....ft blank. ix. In A. Y. 2014-15 in the Return of income of M/s. Prosperity Mercantile Pvt. Ltd. seven shareholders are shown which are as under: 1) M/s. Ashok Investors Trust Ltd. 2) M/s. Best Way Hire Purchase Pvt. Ltd. 3) M/s. Counter Stone Business Pvt. Ltd. 4) M/s. Ayudhya Wincom Pvt. Ltd. 5) M/s. Lifelong Ventures Pvt. Ltd. 6) M/s. Limbo Engineering Pvt. Ltd. 7) M/s. Orchid Infra Builders Pvt. Ltd. For the assessee company as well as for these seven shareholders same PAN No. DDDPD6061 D is used which on account of inquiry was found to be as bogus PAN, till A. Y. 2016- 17 same shareholders and same PAN is shown in the Return of income of M/s. Prosperity Mercantile Pvt. Ltd. x. The assessee company has many group companies some of which are mentioned below: 1) M/s. Astonis Marketing Pvt. Ltd. 2) M/s. Mukul Metrology Pvt. Ltd. 3) M/s. Vidya Knowledge Education Foundation 4) M/s. BDS Construction Pvt. Ltd. 5) M/s. SS Infra Ventures Pvt. Ltd. 6) M/s. SBM Business Pvt. Ltd. 7) M/s. Shubham Rolling Mills Pvt. Ltd. 8) M/s. Cla....
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....om Sh. Pankaj Kr. Jain, in which he stated that he is not been able to go out of Meerut so it is not possible for him to appear before the undersigned. However, he confirmed that he is a Director in M/s. Prosperity Mercantile Pvt. Ltd. and M/s. Prosperity Mercantile Pvt. Ltd. had purchased 27,45,000 equity shares of M/s. Vidya Prakashan Mandir Pvt. Ltd. and paid Rs. 28.40 per share through cheque. xv. Thereafter summons were again issued to Sh. Naveen Kr. Jain and Sh. Pankaj Kr. Jain on 18.12.2017 and they were requested to appear on any working day between 19th to 22nd December, 2017during office hours. However none of them attended. Sh. Pankaj Jain vide undated letter responded that summon reached to him on 22.12.2017 only so it was not possible for him to appear on the same date. A similar undated letter was also received from Sh. Naveen Kr. lain with the same submissions. From these proceedings it is clear that three reasonable opportunities were provided to' the Directors of M/s. Prosperity Mercantile Pvt. Ltd. for their personal appearance in the case of M/s. Vidya Prakahsan Mandir Pvt. Ltd. However, from the turn of events it is obvious that none of the....
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....y allotted by the assessee to M/s. Prosperity Mercantile Pvt. Ltd. Once this company had a huge reserve and surplus of more than 29.44 crore out of which it has subscribed to the share capital and share premium of 7.80 crores in the assessee company then creditworthiness stands proved. The genuineness of the transaction is also proved by the fact that these transactions have been made through banking channels and he drew our attention to the bank statement and submitted that the amount has been received on various dates out of huge credit balance available in the said bank account. (The copy of the bank statement is appearing from pages 53 to 59 of the paper book). Not only that, he submitted that in the case of M/s. Prosperity Mercantile Pvt. Ltd. assessment orders u/s 143(3) has been completed for the assessment year 2014-15 vide order dated 7.12.2016 and for the assessment year 2015-16 vide order dated 20.12.2017 after scrutiny. Copy of the said assessments has been placed in the supplementary paper book from pages 94 to 104 before us. Thus, he submitted that once a detailed scrutiny assessment u/s 143(3) has been made with regard to each and every item of the balance sheet and ....
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....t, catenas of judicial decisions have been relied upon. 11. We have heard the rival submissions, perused the relevant finding given in the impugned orders as well as the material referred to before us at the time of hearing. The main issue involved is with regard to credit of share capital account amounting to Rs. 2.75 crores and share premium amounting to Rs. 5.05 crores from a Kolkata based company, M/s. Prosperity Mercantile Private Limited. During the course of the assessment proceedings, though AO has asked to prove the genuineness of the transaction of receiving of share capital and share premium from M/s. Prosperity Mercantile Pvt. Ltd. and also creditworthiness of the said company, but as noted by the Ld. PCIT certain requisite details as asked by the AO were not filed. From the perusal of the reply filed by the assessee during the course of assessment proceedings, we find that assessee had filed confirmation of the party, details of payment alongwith bank statement, audited balance sheets of the subscribing company, sale purchase agreement and Income Tax Returns of the said company. All the other details as required by the AO which has not been furnished have not been s....
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....account entry is provided to the assessee company. However neither any link of any such bank account has been given by him nor has any such information has been received by him. 12. Even if it is reckoned for argument sake that AO has failed to carry out proper inquiry or verification about the source of funds with the subscribing company, but that would only satisfy one limb of assumption of jurisdiction u/s 263, that is, the assessment order passed by the assessing officer is erroneous, but second limb which is equally important to be established while exercising revisionary proceedings is that, such an order should also be prejudicial to the interest of the revenue, which needs to be established by the CIT/PCIT. In other words in the context of the present case, it has to be seen whether the company in whose name credit is standing in the books of the assessee, has offered any explanation about the nature and source of such sum so credited. From the entire reading of the impugned order passed u/s 263 it appears that M/s. Prosperity Mercantile Private Limited was having share holder companies who were in the either in the list of bogus shell companies or these companies may ha....
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....assessee's unaccounted money has been routed through circuitous manner. As noted by Ld. PCIT already action for reopening the assessment in the case of M/s. Prosperity Mercantile Pvt. Ltd. for the assessment year 2011-12 has been initiated when huge amount by way of share premium and share capital has been received by it. If the said company by whatever manner has received the fund 3 years back which stands accepted by the department in scrutiny proceedings year after year in its case and from the same fund has investment has been made in the assessment company in this year, then source ostensibly stands proved. In case something adverse is found in the reassessment proceedings of M/s. Prosperity Mercantile Pvt. Ltd. that assessee has routed some kind of unaccounted money for this purpose, then department is free to take action under the provisions of the Act and in accordance with law. But, until the source of funds with M/s. Prosperity Mercantile Pvt. Ltd. and investment made in the shares of assessee company stands accepted by the department and that too in scrutiny proceedings u/s 143(3) for the same assessment year which till date is final, then it cannot be held that nature a....