TaxTMI 
TaxTMI 
2018 (7) TMI 1080
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.... b) Copy of communication/ statement dated 05-02-2011 of Sh. Suresh Kumar Gupta received from DIT (Investigation) allegedly recorded during the course of survey in some other case behind the back of the Appellant having not been provided to the Appellant, could not be made the basis for recording the reasons/reopening of the assessment. c) The AO had not applied his own mind independently after the receipt of the aforesaid alleged communication from DIT (Investigation), Unit VI (3), New Delhi as mentioned in the assessment order. 2) That without prejudice to ground No. 1 above, the Ld. CIT(A) has erred on facts and under the law in sustaining the addition of Rs. 30,50,000/- out of total addition of Rs. 92,50,000/- u/s 68 of I.T. Act on account of share capital received from the following parties: - M/s Omni Farms Pvt. Ltd. Rs. 11,50,000 - M/s Chandra Prabhu Finvest Pvt. Ltd. Rs. 8,50,000 - M/s Viagra Trading Company Pvt. Ltd. Rs. 6,50,000 - M/s Arun Finvest Pvt. Ltd. Rs. 4,00,000 Total Rs. 30,50,000 At any rate, the addition as sustained by the Ld. CIT(A) is very excessive. 3) That the Ld. CIT(A) has erred on ....
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....liance thereto the assessee vide letter dated 24.04.2012 stated that the original return of income filed may be treated to have been filed in response to notice u/s 148 of the Act. The assessee also raised objections on reopening of assessment which stood rejected vide letter dated 19.12.2012. On being asked to furnish the details of share application money received, with reference to the above information, the assessee filed the requisite details before the Assessing Officer. The Assessing Officer, however, on examination of the details of share application money found that the assessee had received accommodation entries in the garb of share application from the following companies controlled by aforesaid accommodation entry provider : S. No. Name Total Amount 1 Omni Farms P. Ltd. 11,50,000 2 Vasudeva Farms P Ltd. 16,50,000 3 Chander Prabhu Finvest P Ltd. 8,50,000 4 Griasho Co. P Ltd. 15,50,000 5 S.J. Security P Ltd. 15,00,000 6 Viagra Trading Co. P Ltd. 6,50,000 73,50,000 The Assessing Officer, therefore, observed that in view of the admission of Shri Suresh Kumar Gupta in his statement affir....
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..... 69C was restricted to Rs. 30,500/- treating it to be commission @ 1% paid by assessee on sustained addition of Rs. 30,50,000/- u/s. 68 of the Act. Aggrieved by rejection of legal ground and sustenance of additions, the assessee has challenged the impugned order by way of this appeal whereas the deletion of addition, noted above, has led the Revenue to come up in cross appeal before the Tribunal. 4. Since the common question of law and facts are involved in both these appeal, the same were heard together and are being disposed of by this consolidated order. For the sake of convenience and brevity, we first take up the appeal of the assessee. 5. With reference to ground No. 1, which assails the reopening of assessment u/s. 147/148, the ld. AR of the assessee submitted a written submissions stating as under : 1) Copies of reasons recorded before issuance of notice u/s 148 are placed at pages 22-24 of the paper book. From the reasons, it is evident that they have been recorded on the basis of vague information received from the Investigation Wing of the Department that Assessee has received accommodation entries of Rs. 72,00,000 from various companies and entities cont....
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.... P. Ltd. 6,50,000 11,50,000 5,00,000 Vasudeva Farms P Ltd. 15,00,000 16,50,000 1,50,000 S.J. Security P Ltd. 20,00,000 15,00,000 (5,00,000) In view of the above discrepancies, the reopening of assessment u/s 147/148 is bad in law. In this connection, reliance is placed on ITAT Delhi Bench order dated 14/08/2014 (ITA No. 4281/Del/2010) in the case of ITO vs. Comero Leasing & Financial P. Ltd., copy placed at pages 6-15 of the Synopsis which had relied upon 357 ITR 24 CIT vs. Suren International P Ltd. (Jurisdictional Delhi H.C.). (iv) Moreover, information received from the Investigation Wing cannot be said to be tangible material per-se without a further enquiry having been undertaken by the AO. In other words, reasons have been recorded on borrowed satisfaction which fails to demonstrate a live link between the tangible material and formation of belief that income has escaped assessment. Therefore, on such facts, reopening of assessment u/s 147/148 is bad in law. In this connection, reliance is placed on various case laws attached as Annexure - A placed at pages 16-17 of the Synopsis. In view of the above, reopening of as....
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.... 444 of paper book. In response to such notices, replies were received from 4 Cos. namely M/s Vasudeva Farms P Ltd., M/s Griasho Co. P Ltd., M/s S.J. Security P Ltd. and M/s FNS Consulting P Ltd., copies placed at pages 177-183, 296-302, 361-370 and 445-446 of paper book. However, no replies were received from the balance 4 Cos. namely Omni Farms Pvt. Ltd., Chandra Prabhu Finvest Pvt. Ltd., Viagra Trading Co. Pvt. Ltd and Arun Finvest Pvt. Ltd., though the notices were duly served on them. 4. AO made addition of Rs. 92,50,000/- (wrongly mentioned by AO as Rs. 90,50,000 in the assessment order) on account of fresh share capital raised from all 8 Cos. without controverting or disproving the documentary evidence as filed before him on the basis of information/reports received from the Investigation Wing. 5. The Ld. CIT(A) deleted addition of Rs. 62,00,000/- on account of share capital received from 4 share subscribers who had filed replies in response to notice u/s 133(6), a fact also admitted by the AO in the remand report dated 25/04/2014, copy placed at pages 454-457. However, addition of Rs. 30,50,000/- with regard to 4 share subscribers was confirmed by Ld CIT(A....
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.... Co. had given cash in lieu of share subscription money received during the year under consideration. (vi) In view of the above, the identity, genuineness and creditworthiness of all the 4 share subscribers stood proved. In this connection, reliance is placed on the case laws attached as Annexure C placed at pages 61-62 of the Synopsis. In view of the above facts, circumstances and the legal position of the case, the addition of Rs. 30,50,000/- u/s 68 of I.T. Act deserves to be deleted. At any rate, the addition as made is excessive. Ground No. 3: is against the addition of Rs. 30,500/- sustained by the Ld. CIT(A) on account of commission/premium allegedly paid @1% to entry operators out of Assessee's undisclosed income for receiving bogus accommodation entry in the form of share capital of Rs. 30,50,000/-. As this ground is interconnected with Ground No. 2 above, therefore, Assessee relies on the submissions/case laws made with regard to Ground No. 2 which are not being repeated here for the sake of brevity. In view of the above facts, circumstances and the legal position of the case, the addition of Rs. 30,500/- deserves to be deleted.....
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....ir share subscriptions, copies of their replies are placed at pages pages 177-183, 296-302, 361-370 and 445-446 of paper book. This fact has also been admitted by the AO in his remand report, copy placed at pages 454-457 of the paper book. 3. Moreover, no documentary evidence has been brought on record by the Dept. to prove that Assessee Co. had given cash in lieu of share subscription money received during the year under consideration. Ground No. 3: is against the deletion of addition of Rs. 62,00,000 made on account of share capital raised during the year under consideration from four share subscribers by ignoring the fact that the Assessee has not been able to justify payment of high premium for shares. 1. The above ground of the Revenue that Assessee has not been able to justify high premium paid for shares by the share subscribers is wholly misplaced as the same does not emanate either from the assessment order or CIT(A) order. Such issue was not raised by the authorities below and therefore, the ground is untenable and deserves to be dismissed. 2. Without prejudice to above, even otherwise, no adverse inference could be drawn against the As....
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....ks From To Bank Cheque/RTGS Cheque Date Amount Through 21.02.2005 Giriasho Co. P. Ltd. Randeep Investment P Ltd. OBC 210788 16 FEB,05 5,00,000 Deepak Jain 21.02.2005 Giriasho Co. P. Ltd. Randeep Investment P Ltd. OBC 210789 17 FEB,05 5,50,000 Deepak Jain 22.02.2005 Giriasho Co. Randeep OBC 210791 19 FEB,05 5,00,000 Deepak P. Ltd. Investment P Ltd. Jain 25.02.2005 S.J. Scurity Pvt. Ltd. Randeep Investment P Ltd. HDFC 271376 23FEB,05 5,00,000 Deepak Jain 12.03.2005 Vashudeva Farms Pvt. Ltd Randeep Investment P Ltd. SIB 766990 10 Mar,05 5,00,000 Deepak Jain 12.03.2005 S.J. Scurity Pvt. Ltd. Randeep Investment P Ltd. HDFC 271395 10 Mar,05 5,00,000 Deepak Jain 12.03.2005 S.J. Scurity Pvt. Ltd. Randeep Investment P Ltd. HDFC 271396 14Mar,05 5,00,000 Deepak Jain 14.03.2005 S.J. Scurity Pvt. Ltd. Randeep Investment P Ltd. HDFC 1667 12 Mar,05 5,00,000 Deepak Jain 16.03.2005 Vashudeva Farms Pvt. Ltd Randeep Investme....
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.... In view of the above, it is clear that AO did not apply his mind and recorded the reasons purely on borrowed satisfaction without making any enquiries on his own and therefore the reasons as recorded are bad in law as held by ITAT Delhi Bench vide its order dated 14/08/2014 (ITA No. 4281/Del/2010) in the case of ITO vs. Comero Leasing & Financial Pvt. Ltd. which was rendered after relying on Jurisdictional High Court judgment in the case of CIT vs. Suren International Pvt. Ltd. reported in 357 ITR 24, relevant portion of such ITAT judgment is reproduced below: "From the above, we find that at paragraph Nos.1, 2 & 3, the Assessing Officer has discussed the facts in general i.e., the investigation carried on by the Director of Income Tax (Investigation) and the finding of such investigation, the modus operandi, how the entry operator worked. The facts relating to assessee's case begin in ITA-4281 & 4949/D/2010 from paragraph 4. If we peruse the chart given by the Assessing Officer in the reasons recorded by which he formed an opinion that there was escapement of income of Rs. 53 lakhs, we find that several items have been considered twice. Item No.2 & 3, 4 & 5, 6 & 7, 8....
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....In view of our above findings, though we need not to enter into the merits of additions, but since both the parties have made extensive arguments on merits of the case, based on various case laws, we deem it proper to decide the appeals on merits also. 11. By way of ground No. 2, the assessee has challenged the sustenance of addition of Rs. 30,50,000 on account of share application money u/s 68 of I.T. Act. As culled out from the records, we find that the Assessee has raised fresh share application money amounting to Rs. 3,23,38,000 during the year under consideration out of which AO made addition of Rs. 92,50,000 u/s 68 of I.T. Act (wrongly mentioned by AO as Rs. 90,50,000) on account of share application money received from the following 8 Companies, as mentioned in the assessment order itself. On the cost of repetition, the details of such companies are reproduced as under : S. No. Share applicant Cos. Amount 1. Vasudeva Farms Pvt. Ltd. Rs.16,50,000 2. Giriasho Co. Pvt. Ltd. Rs.15,50,000 3. SJ Securities Pvt. Ltd. Rs.15,00,000 4. FNS Consulting Pvt. Ltd Rs.15,00,000 5. Omni Farms Pvt. Ltd. Rs.11,50,000 6. Chandra Pra....
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....,00,000 (iv) FNS Consulting Pvt. Ltd. - Rs. 15,00,000 The CIT(A) deleted the above addition aggregating to Rs. 62,00,000 as the documentary evidence as filed by the Assessee to prove the share application money received during the year under consideration was duly confirmed by the above mentioned share subscriber Companies. However, the CIT(A) confirmed the addition aggregating to Rs. 30,50,000/- as no replies were received from the following 4 Companies though the notices u/s 133(6) were duly served on them as also confirmed by the CIT(A) vide para 7 of the impugned order: (i) Omni Farms Pvt. Ltd., - Rs. 11,50,000 (ii) Chandra Prabhu Finvest Pvt. Ltd., - Rs. 8,50,000 (iii) Viagra Trading Co. Pvt. Ltd - Rs. 6,50,000 (iv) Arun Finvest Pvt. Ltd., - Rs. 4,00,000 On the perusal of the assessment order and the order of ld. CIT(A), we find that it is not the case of the Revenue that notices issued u/s 133(6) to the above mentioned 4 parties came back unserved or such parties were not available at the address given by the Assessee. Service of notice u/s 133(6), in fact proved the identity of such parties. Moreover, the fact that notices u....
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....on is based on some evidence on which a conclusion could be arrived at, no question of law as such arises". In CIT vs. Makhni and Tyagi (P) Ltd. 267 ITR 433 (Del) it was held by Hon'ble Jurisdictional High Court as under: "If the AO felt that their examination was absolutely necessary then he could have enforced their attendance as pointed out by Allahabad High Court in Nathu Ram Premchand v. CIT (1963) 49 ITR 561 (All) and E.M.C. (Works) (P) Ltd. v. ITO (1963) 49 ITR 650 (All). This Court is of the opinion that when documentary evidence was placed on record to prove the identity of all the shareholders including their PAN/GIR numbers and filing of other documentary evidence in the form of ration card, etc. which had neither been controverter nor disapproved by the AO, then no interference is called for". In Nathu Ram Prem Chand Vs. CIT, 49 ITR 561 (All), it was held as under: "No inference can be drawn against the assessee merely because the assessee had taken a dasti summons for production of a witness and had not produced him. It is the duty of the Income-tax Officer to enforce the attendance of the witness if his evidence is material, in exercis....
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.... "We also observe that the assessee has furnished all the necessary details of the aforesaid six companies along with PAN but none of the lower authorities have confirmed the same from the AO's having jurisdiction over the six aforesaid companies. Thus the assessee cannot be penalized merely on the ground that the six companies as discussed above failed to reply to the notices issued to them under section 133(6) of the Act". Following findings reached by ITAT Delhi Bench vide order dated 23/02/2018 (ITA No. 5955/Del/2014) in the case of Umbrella Project Pvt. Ltd. vs. ITO, support the case of assessee as under: "De horse the non-receipt of the reply, even for the sake of argument we assume that the AO has not received the reply, still the fact remains that 133(6) notice were served on these four shareholders. On going through the assessment order we note that it is not the case of the AO that notices have come back unserved or these shareholders were not available at the address given by the assessee. If that be so, we are of the view that no adverse inference can be drawn against the assessee merely because reply has not been received by the AO in response to not....
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....d on record, we find that all the share application money have been received by account payee cheques; that it no case is made out by the Revenue that cash was deposited by the share subscriber companies before issuing cheques on account of share application money; that the AO has not brought any material on record to either controvert or disprove the documentary evidences as filed by the Assessee; that no adverse inference can be drawn against the assessee, even if replies were not received from the share subscribers Companies though the notices u/s 133(6) were duly served on them; that it is not the case of the AO that notices had come back unserved or share subscriber Companies were not available at the address given by the assessee Co.; that the decisions relied upon by the Ld. AR are squarely applicable to the facts of assessee's case and go to support the case of the assessee; and that, therefore, we have no hesitation to conclude that the assessee Company produced sufficient documentary evidence including the confirmations, bank statements, balance sheets, ROC records, ITRs & PAN indicating Ward/Circle of the share applicants where they were assessed to income tax and hence,....