AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 820
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....reet, Kolkata- 700 001 1,00,00,000 Royalpet Commodities Pvt Ltd 23A, NS Road, Kolkata-700 001 2,00,00,000 Time Sound Barter Pvt Ltd., 5, Clive Row, Kolkata-700 001 1,50,00,000 Royalpet Traders Pvt Ltd 12/A, NS Road, Kolkata-700 001 50,00,000 Total: 5,00,00,000 2.1. To verify genuineness of the subscribers, AO started enquiry in the month of March, 2016 and referred to DDIT(Inv.), Kolkata on 07-03-2016. Basing on the report of DDIT(Inv.), AO was of the opinion that the companies are not in existence and made an addition of Rs. 5 Crores u/s. 68 of the Act. It was assessee's contention that all the companies were existing companies, filed their returns of income, had PAN numbers and furnished various details in the course of enquiry before the AO. However, AO rejected the same and relied on the report of DDIT and made an addition of Rs. 5 Crores. 3. Assessee has contested the same before the Ld.CIT(A) to submit that share application money was received through banking channels, shares were allotted and those companies were existing companies and reiterated on the evidence furnished before the AO to prove the identity and creditworthi....
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..... The appellant has submitted documentary evidence regarding identity. There is no doubt that the parties are existing Income tax assessee's, filing return of income, having PAN identity. Appellant also submitted Bank account copy to show investment worthiness. It only proves that these companies had money to invest. The share applications were made through proper documentation and payment was made through banking channels. On basis of the evidences submitted, there is no doubt regarding the genuineness of share application. If the Assessing officer had to prove otherwise, the Assessing Officer should have gone few steps more to confirm that the statement made by the Director of the Company Shri Manohar Lal Nangia is not true. Mere reliance on the statement recorded cannot be taken as final conclusion. In absence of such analysis, mere reliance of statement will not stand test of appeal. Following the stand taken by the Hyderabad Tribunal in the case of M/s. Komal Agrotech Private Limited Vs. ITO, Hyderabad in ITA No.437/Hyd/2016 dated 25.11.2016, I allow the appeal. Addition made by the Assessing Officer is dismissed". 4. Aggrieved, Revenue has raised the following....
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....opy of PAN, copy of the minutes of the meeting and copies of the ITRs were placed before the AO. However, he has given a common finding that there are no financials and bank account statements filed before him. 4.2. In reply, assessee has submitted that assessee has not furnished any bank statements of parties except the bank account of assessee before the AO and all other financials are part of the ITRs which were filed before the AO and confirmations of the amounts received in respect of the parties were also filed before the AO. It was also stated that no additional evidence was filed before Ld. CIT(A). Considering the above, we are of the opinion that there is no violation of Rule 46A and ground No. 5 raised by the Revenue is infructuous. 5. Coming to the addition of Rs. 5 Crores, it was the submission of Ld.DR that AO has enquired through DDIT(Inv.), Kolkata. On the basis of the findings of DDIT(Inv.), Kolkata, he has come to a conclusion that the above companies are bogus. In support of the same, Ld.CIT-DR has placed on record a Paper Book containing 85 pages, out of which, page Nos. 1 to 11 are copy of the assessment order. Page Nos. 12 to 85 are - letters and statemen....
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....ther relied on the decision of the Hon'ble AP High Court in the case of Lanco Industries Ltd., [242 ITR 357] (AP), that in the absence of a finding that persons to whom the share certificate are issued were in fact the dummies or stooges of the directors of the assessee-company, the same cannot be treated as 'unaccounted income of assessee'. It was submitted that the investment is not a pre-arranged transaction and further neither the enquiries nor the statements of the so called persons were confronted to assessee and no cross examination was provided. Following the principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. Sunita Dhadda in SLP (Civil) Diary No. 9432/2018, the presumption u/s. 292C against assessee is not available and since principles of natural justice are violated, the secondary evidence cannot be relied upon. It was submitted that the investment was reflected in the books of account of the investors, they had source as reflected in their balance sheets and there is no violation of Rule 46A by the CIT(A). 7. We have considered the rival contentions and perused the evidence placed on record. There is no dispute that assessee has received....
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....eness to otherwise bogus transactions. If any further inputs related to aforesaid case require, let me know so that necessary action at his end may be taken". 7.1. As can be seen from the above letter, the enquiries conducted through ITI were not part of the report. What the Revenue has placed on record now in the form of paper book are stated to be statements of Shri Monohar Lal Nangalia dt. 15-02-2008, 09-04-2008, 17-01-2014 and 14-11-2014, much before the present enquiry has started. In what connection the enquiries were conducted with Shri Monohar Lal Nangalia is not specified in the report of DDIT. Moreover, the department also placed on record the statements recorded from Shri Monohar Lal Nangalia as early as 09-04-2008 and 14-02-2008 and also statement of Mr. Satish Shah dt. 14-02- 2008. It is to be noted that the companies being enquired have invested in assessee-company in the Financial Year 2012-13 and how the statements of Shri Monohar Lal Nangalia and the so called statement of Shri Satish Shah, dt. 14-02- 2008 are relevant has not been explained either by the AO or by the Ld.CIT-DR. In fact as seen from the assessment order, except relying on the report rec....