TaxTMI 
TaxTMI 
2015 (11) TMI 1758
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....cumstances of the case, ld. CIT(A) has erred in maintaining the charging of interest u/s 234B as mandatory in nature even when no such interest was chargeable on the amount of income returned." 2. Short facts of the case are as under: "A search u/s 132 of the I.T. Act was executed on 21.11.2006 on the office and factory premises of the assessee. The assessee was served with the notice u/s 153A and assessee filed nil returned income and depreciation remained unadjusted of Rs. 791676 claimed to be carried forward. The facts of the all AYs are same but for the detail addition, we are reproducing the share application money received by the assessee and it was added to the total income of the assessee in respect of AYs from AY 2001-02 to 2004-05 which reads as under: 2.3.1] Assessment Year 2001-02 S.No Name of Company PAN No Amount Status 1. Authentic Investment & Finance Limited AAACA7079C 1000000 Share Allotted 2. Indo Capital Market Limited AAACI3899L 5,00,000 Amount Refunded on 05-03-2002 vide Ch No 631437 2.3.2] Assessment Year 2002-03 S.No Name of Company PAN No Shares Amount Status 1....
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....ing & Finance Ltd. 400000 1600000 2000000 9 Shreevar Overseas Ltd 500000 2000000 2500000 3800000 15200000 1,90,00,000 That Rs. 20,00,000/- transferred from share application money to share capital account in respect of M/s Authentic Investment and finance Limited of Rs. 10,00,000/- and M/s Priyans Sarees Industries Limited of Rs. 10,00,000/-. The assessee was asked to justify the amount of share capital and share application as received by the assessee of Rs. 1,90,00,000/-. The assessee had filed confirmation of share application /share capital, amount of share application and share capital received through an account payeee cheque, share application form and copy of board resolution has also been filed. The assessee also submits as under:- "1] That you have asked the assessee to justify the amount of share application/share capital of Rs. 2,35,00,000/-(Rupees Two Crore Thirty Five Lakhs Only). That you have proposed to added an amount of Rs. 2,35,00,000/- to the income of the assessee in respect of share application money/share capital as received by the assessee.That on....
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.... cheque. In that case there is no justification for making any addition on account of share application / share capital of Rs. 2,35,00,000/-( Correct amount of Rs. 1,90,00,000 /). That in view of the above, it is submitted that the amount of share application money / share capital of Rs. 2,35,00,000/-( Correct amount of Rs. 1,90,00,000 /) as received by the assessee is genuine. The same requires to be accepted as genuine." The assessee had again submitted complete details about the share holders by stating as under: "1.1] That you have asked from the assessee to justify the amount of share application money and share capital as received by the assessee in the year under consideration. 1.2] That in the year under consideration the assessee has received an amount of Rs. 1,85,00,000/- on account of share application/share capital. 1.3] Confirmation letter duly singed along with share application form have already been filed on Pg No. 38 to 83 of our earlier submission. 1.4.1] That entire amount of share application/ share capital received by the asseessee through an account payee cheques. 1.4.2] That share application form, copy of board resolution and confirmation l....
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....share application money were received by the assessee through an account payee cheques. Details of the same are as under:- Date Cheque No Bank Amount 21-01-2003 613414 IDBI Bank Ltd 1000000 06-02-2003 613413 IDBI Bank Ltd 1000000 2000000 Copy of share application money and covering letter with copy of board resolution are enclosed on Page Nos 76 to 78 of our earlier submission.That as explained to us Shri Suneet Kabra Director of the company M/s Shresth Leasing & Finance Limited. He has explained that on 27/11/2006 he has personally appeared before the ITO (Inv), Mumbai and his statement was recorded oath. That as remembered by him in reply to the question Nos 10 & 11 of his statement. He has accepted the amount invested by his company in the share capital of the assessee company.That when the assessee had filed complete details as to prove the genuineness of the amount of share application money/ share capital. The amount of share application/ capital was also received through an account payee cheque. Compete documents as available with the assessee has also been filed and as obtained by i....
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....cation money as received by the assessee company are as under:- Date Cheque No Bank Amount( Rs) 17-04-2002 750915 HDFC BANK 500000 18-04-2002 750916 HDFC BANK 500000 18-04-2002 750917 HDFC BANK 500000 14-02-2003 899585 HDFC BANK 500000 18-02-2003 899586 HDFC BANK 500000 12-03-2003 899594 HDFC BANK 500000 3000000 Copy of share application form as received by the assessee has already been filed on Page Nos 45 to 50 of our earlier submission.2.2.3.4]The said company was originally incorporated in the name of Janak Forgings P Limited on 11-07-1989. The name of company then changed to Janak Turbo Dynamics Limited. The said name finally changed to M/s HImgiri Dynamics Limited on 04-02-2002.That at the time of investment in the share application/ share capital address of the corporate office was given that of Mumbai. However, registered office of this company is situated at Indore itself. Present address of the said company is as under:- M/S HIMGIRI DYNAMICS LIMITED CL-101, SUKHLIA PANDIT DINDAYAL UPADHYAY NAGAR INDORE That entire amount of ....
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....shtra is enclosed.Copy of certificate of incorporation as issued by the Dy Registrar of Companies, Maharashtra , Mumbai in consequence to the order of the Hon'ble Company Law Board is enclosed.That officer of M/s Priyans Saree Industries Limited ( Now M/s Optimates Textile Industries Limited ) has been shifted from 102, Thanewala Tarace, 163 R.N.T Marg, Indore to 713, Raheja Centre, Nariman Point, Mumbai ( Maharashtra) . Copy of article of association and Memorandum of Association are enclosed.Copy of Balance Sheet of M/s Priyans Saree Industries Limited for the year ended on 31.03.2002 is enclosed. On perusal of the said Balance Sheet you will find that the said company has issued capital of Rs. 52998000/- and an amount of Rs. 36308000/- shown as invested in the share application money of Rs. 36308000/- .Copy of Balance sheet of the said company as on 31.03.2007 is also enclosed.The assessee has properly discharged onus lying on him by proving the identity , capacity and genuineness of the share application/ share capital.That when the assessee had filed complete details as to prove the genuineness of the amount of share application money/ share capital. The amount of share applic....
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....r as addressed to the Economic offence wing written by Shri Vivek Munbada one of the director of the company. Here, please be noted that share application form in respect of share application money as received by the assessee duly signed by Shri Vivek Mundada himself. Hence, there is no doubt about the genuineness of the share application money. e] Copy of share application form as signed by Shri Vivek Mundada and copy of Board resolution duly authorizing to Shri Vivek R Mundada are enclosed on Page Nos 37 to 40 of our earlier submission. f] That from the above, the assessee has properly discharged onus lying on his and also proved the genuineness of the share application money as received by him.The assessee has properly discharged onus lying on him by proving the identity , capacity and genuineness of the share application/ share capital.That when the assessee had filed complete details as to prove the genuineness of the amount of share application money/ share capital. The amount of share application/ capital was also received through an account payee cheque. Compete documents as available with the assessee has also been filed and as obtained by it with the ROC after depos....
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....nt of share application money/ share capital. The amount of share application/ capital was also received through an account payee cheque. Compete documents as available with the assessee has also been filed and as obtained by it with the ROC after depositing the requisite fee. In that case there is no reason to disbelieve on the amount of share application/ share capital as received by the assessee.That from the above documents and detail of TAN No existence of the above company stand proved. Hence, the amount of share application money/ share capital as received by the assessee be treated as genuine. M/s LYTON MANAGEMENT SERVICES ( P) LIMITED The assessee had received an amount of Rs. 30,00,000/- from the above said company on account of share application money/ share capital for allotment of 30000 Equity shares of Rs. 10/- each with premium of Rs. 40/-.The amount of share application money of Rs. 30,00,000/- received by the assessee through an account payee cheques. Details of the same are as under:- Date Cheque No Bank Amount(Rs) 20-02-2003 141604 IDBI BANK 500000 20-02-2003 141609 IDBI BANK 500000 20-02-2003 141610 IDBI BANK ....
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....as received by the assessee are as under:- Date Cheque No Bank Amount( Rs) 08-02-2003 141566 IDBI BANK 1000000 08-02-2003 141567 IDBI BANK 500000 1500000 Letter of confirmation, share application form and copy of board resolution are enclosed on Page Nos 41 to 44 of our earlier submission.PA No of the said applicant is as under:- AAACF4480A Copy of allotment of PA No, Certificate of Incorporation, Copy of Annual return as filed for the year ended on 31-03-2005 and 31- 03-2007 and copy of Balance Sheet for the year ended on 31.03.2007 are enclosed. From these documents existence of the assessee company stand proved. Copy of confirmation letter as received by the assessee has also been filed with our earlier submission.The assessee has properly discharged onus lying on him by proving the identity , capacity and genuineness of the share application/ share capital.That when the assessee had filed complete details as to prove the genuineness of the amount of share application money/ share capital. The amount of share application/ capital was also received through an account payee cheque. Compete documents....
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....tion/ capital was also received through an account payee cheque. Compete documents as available with the assessee has also been filed and as obtained by it with the ROC after depositing the requisite fee. In that case there is no reason to disbelieve on the amount of share application/ share capital as received by the assessee.That from the above documents and detail of TAN No existence of the above company stand proved. Hence, the amount of share application money/ share capital as received by the assessee be treated as genuine. MCSURE CAPITAL MARKET LIMITED The assessee company had received an amount of Rs. 500000/- on account of share application/ share capital.The share application and share capital was received by the assessee through an account payee cheque in respect of 10000 Equity shares of Rs. 10/- with share premium of Rs. 40/-. Copy of share application form and Board resolution enclosed on Page No 56 & 57 of our earlier submission.Name of the assessee company has been changed from M/s Mcsure Capital Market Limited to M/s Samyak International Limited w.e.f 01-04-2005. That on perusal of the Balance Sheet for the year ended on 31.03.2004 and perusal of the previous....
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....lication money/ share capital. The amount of share application/ capital was also received through an account payee cheque. Compete documents as available with the assessee has also been filed .That from the above documents and confirmation letter existence of the above company stand proved. Hence, the amount of share application money / share capital as received by the assessee be treated as genuine. The assessee's contention is not acceptable. Decisions quoted and relied by the assessee in its submissions are distinguishable on the facts which are not identical with the facts of the present case. It is not a simple case of taxing of share application money u/s 68 of the I.T Act, as the assessee has tried to project . It is a case of unaccounted income brought back into the books of accounts of the assessee company in a systematic & organized manner which can be evidenced from the pattern of cash deposits in the bank accounts of the companies discussed above in details from whom share application money were received by the assessee. These companies have been used as mere conduit companies for routing of unaccounted money into the business in the garb of share application money. ....
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....06. 2.2] That in the case of the above assessee search U/s 132 of the Income Tax Act was executed on 21-11-2006 and in consequence of search action, notice u/s 153A of the Income Tax Act was issued on 08-10-2007 for the Asst Year 2001-02 to 2006-07 and year of search was for the Asst Year 2007-08. 2.3] Year wise detail of share application money as received by the assessee and added to the income of the assessee is as under:- 2.3.1] Assessment Year 2001-02 S.No. Name of Company PAN No Amount Status 1. Authentic Investment & Finance Limited AAACA7079C 1000000 Share Allotted 2. Indo Capital Market Limited AAACI3899L 5,00,000 Amount Refunded on 05-03-2002 vide Ch mNo 631437 2.3.2] Assessment Year 2002-03 S.No. Name of Company PAN No Shares Amount Status 1. Priyans Saree P Limited AAACP1882C 20000 10,00,000 Share Allotted 2. Indo Capital Market Limited AAACI3899L 5,00,000 Amount refunded on 05-03-2002 2.3.3] Assessment Year 2003-04 S.no Name of Company PAN No Shares Amount Status 1. Delta Fashion Ltd. AAACD5697H....
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....fore the Appellate authority. 2.5.2] It is worth noting that the assessing officer himself while passing the assessment order has not make any Independent inquiry but he simply referred the inquiry conducted by the Investigation wing. The information as collected by the Investigation wing was also not made available to the assessee for its comments. The said approached of the assessing officer is not in consonance with the settled position of law. Hence, no negative inference can be drawn against the assessee. 2.5.3] The assessing officer during the course of assessment proceeding simply asked about the inquiry made by investigation wing of Surat and Mumbai but detail of the same was not provided. The assessing officer asked specific query only in respect of investment made by M/s Shresth Leasing & Finance Limited and also in respect of complaint filed by the director of M/s Delta Fashion Limited with the economic offence wing. 2.5.4.1] The assessee during the course of assessment proceeding and also in the appellate proceeding it was categorically explained that Shri Suneet Kabra, Director of M/s Shresth Leasing & Finance Limited, personally appeared before the ITO ( Inv)....
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....tement of the witness were to be made the basis of addition." 2.7.3] That in the following decisions also it was categorically held that information collected behind and back of the assessee cannot be used against the assessee until and unless the same was duly confronted with the assessee. For this preposition the assessee further relied on the following direct decisions:- S.No Reference of Decision Citation 1 Kishanchand Chellaram vs CIT 125 ITR 713 [SC] 2 Saraswati Industrial Syndicate Ltd vs CIT 237 ITR 001 [ SC] 3 Kalra Glue Factory vs Sales Tax Tribunal 167 ITR 498 [SC] 4 Prakash Chand Mehta vs CIT 220 ITR 277, 279[MP] 2.8] That when the assessee with the ample documents proved the identity of the share holders and also proved the genuineness and creditworthiness of the share applicants and the assessing officer utterly failed to disprove the documents filed by the assessee. Hence, there was no justification for the Assessing officer for adding the amount of share application money to the income of the assessee. 2.9.1] The Ld CIT(A) while maintaining the addition, heavily relied on the buy back of the shares by the directo....
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....these appeals are dismissed with no order as to costs. 2.10.5] The Hon'ble ITAT Indore bench in the case of STL Extrusion (P) Limited vide order dated 10.05.2010 being ITA no.(SS) 259, 260 /Ind/2008..... 2.10.7] That Hon'ble ITAT, Indore Bench in the case of M/s Rajshree Finsec P Ltd [Appeal No 545/ Ind/2010 dt 06-02-2012 for the Asst Year 2007-08 ] had an occasioned to discussed the decision in the case of M/s Agrawal Coal Corporation.... 2.10.8] That Hon'ble ITAT, Indore Bench, Indore vide its order dt 28-03-2012 in the case of M/s Mittal Appliances Limited for the Asst Year 2004-05 after considering the decisions as referred in Para 1.12.1 of this letter, accepted the amount of share application money as received by the assessee as genuine... 2.10.9] That Hon'ble Jodhpur Bench of ITAT in the case of ACIT vs M/s Supertech Diamond Tools P Ltd [ Appeal No ITA No 211/ Jodh/ 2009 dt 19-01-2012 for the Asst Year 2004-05 ]..... 2.10.10] That Hon'ble Delhi High Court in the case of CIT Vs. Oasis Hospitalities (P) Ltd reported in 333 ITR 119 (2011) .......... 2.10.11]That Hon'ble ITAT Delhi Bench in the case of M/s Excellance Town Planner P Limited [ Appeal No ITA No 87....
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....in the following decisions:- S.No REFERENCE CITATION 1 CIT vs. Rock Fort Metal & Mineral 198 Taxmann 497 (Del) 2 CIT vs. Winstral Petrochemicals (P) Ltd 330 ITR 603 (Del) 3 CIT v. Oasis Hospitalities (P) Ltd. 333 ITR 119 (Del) 4 CIT vs. Gangour Investment Ltd 335 ITR 359 (Del) 5 CIT vs. Tulip Finance Ltd 015 DTR 185 (Del) 2.15.3]That when the assessing officer failed to proved that funds not having emanated from the assessee company, there was no warrant for making addition of the said amount as undisclosed income of the assessee S.No REFERENCE CITATION 1 ACIT vs Geera Finance Ltd Tax Appeal No 67 of 2001 dt 10-11-2014 2 Value Capital Services P Ltd 221 CTR 511 [ Delhi ] 3 CIT vs Victory Spinning Mills Ltd T.C.(A) Nos 309 to 311 of 2014 dt 22-08-2014 4 DCIT vs Rank Shipping Agency P Ltd [ Appeal No ITA No 5946 / Mum/2008 dt 21-11-12 ] 2.15.4] That it is settled position of law in absence of any inquiry by the assessing officer no addition is to be made to the income of the assessee. For this preposition the assessee relied on the following decisions. That in the present case als....
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....P) Ltd 42 taxmann.com 377 [Delhi] 8 Subhlakshmi Vanijya (P) Ltd 60 taxmann.com 60 [ Kolkata] 9 Agrawal Coal Corporation (P) Ltd 19 taxmann.com 209 [ Indore] 10 CIT vs Nova Promoters & finlease [P] Ltd 342 ITR 169 [Delhi] 7. We have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that assessing officer while adding the amount of share application to the income of the appellant on the basis of report of the Investigation wing of Mumbai, Surat and Kolkata. He also referred the decision of Shri Sanjay Agrawal and Smt Meena Agrawal in the case of Hindustan Continentals Limited. However, these reports were not provided to the assessee. In case of Shri Sanjay Agrawal and Smt Meena Agrawal, the assessing officer making detailed inquiry in respect of Long term capital gain shown by both these persons in their income tax file but in the present case, the assessee has received share application money and complete details with documents were filed before the AO and before the Appellate authority.It is worth noting that the assessing officer himself while passing the asses....
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....ived from the bank account of the share applicant company with State Bank of Hyderabad and not from Union Bank of India. The reply as filed by the assessee was reproduced in the assessment order and not counters by the assessing officer.The assessing officer made an allegation that cash was deposited prior to issuance of the cheques to the assessee company but factually the said allegation was also not correct. The same can also be verifiable from the bank account of the share applicants as filed by the assessee in compilation.The assessing officer also grossly erred in adding the amount of share application money on the basis of inquiry done by the Investigation wing without confronting the same to the assessee. Any information and inquiry made in the case of the assessee and the same was not confronted with the assessee cannot be relied against the assessee. When the assessee with the ample documents proved the identity of the shareholders and also proved the genuineness and creditworthiness of the share applicants and the assessing officer utterly failed to disprove the documents filed by the assessee. Hence, there was no justification for the Assessing officer for adding the am....
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....rovisions of the Act. The existence of subscriber to share application is not in doubt as the assessee duly furnished their names, age, address, date of filing the application, number of shares for which respective applications were made, amount given and the source of income of the applicant. In view of these facts, we are of the considered opinion that there is no justification for making the impugned addition because once the existence of the investor/share subscribers is proved, onus shifts on the revenue to establish that either the share applicants are bogus or the impugned money belongs to the assessee company itself. Once the confirmation letters are filed, no addition can be made on account of share application in the hands of the company. Our view finds support from the decision in Shri Barkha Synthetics Ltd. v/s ACIT 155 Taxman 289 (Raj). The cases like CIT V/s GP International Ltd.229 CTR (P&H) 86, CIT V Steller Investment Limited 192 ITR 287 and Sophia Finance Limited 205 ITR 98 (Del) support the case of the assessee. The above order of ITAT Indore bench has also been confirmed by the Hon'ble M.P. High Court in the case of CIT V/s STL Extrusion (P) Ltd reported in 5....
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....e find that the substantial questions framed in these appeals do not arise for our consideration. Accordingly, all these appeals are dismissed with no order as to costs. Hon'ble Apex Court in the case of Lovely exports P Limited as reported in 11 ITJ 357 has held that:- "2. Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment." ITAT, Indore Bench in the case of M/s Rajshree Finsec P Ltd [Appeal No 545/ Ind/2010 dt 06-02-2012 for the Asst Year 2007-08 ] had an occasioned to discussed the decision in the case of M/s Agrawal Coal Corporation and held that :- "5. During hearing the learned Senior DR contended that the issue is covered by the decision of the Tribunal in the case of M/s Agrawal Coal Corporation decided by this Bench on 31st October, 2011 in ITA Nos. 151/Ind/2009....
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....ing with each and every case individually, especially in the light of the evidences, filed by the assessee, evidencing that the identity of such share applicants was very much proved by further filing of confirmation by them. 7. In view of these facts, the decision from Hon'ble Apex Court in Lovely Exports (supra) and uncontroverted fact that the summons issued to the impugned share applicants were duly received by them with further filing of confirmation by such share applicants, at least their identity is proved, therefore, this appeal of the assessee deserves to be allowed. Hon'ble Delhi High Court in the case of CIT Vs. Oasis Hospitalities (P) Ltd reported in 333 ITR 119 (2011) has held as under:- (i) Section 68 provides that if the assessee is not able to give satisfactory explanation as to the "nature and source" of a sum found credited in his books, the sum may be treated as the "undisclosed income" of the assessee. The initial burden is on the assessee to explain the "nature and source" of the credit and to do so, the assessee is required to prove (a) Identity of the shareholder (b) Genuineness of transaction and (c) credit worthiness of shareholders; ....
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....) 342 ITR 169 (Del.). However, on going through the said decision in Nova Promoters and Finlease (P) Ltd. (supra) we find that the facts are clearly distinguishable. In fact, in Nova Promoters and Finlease (P) Ltd. (supra) itself this Court has observed, in the context of Lovely Exports (P) Ltd. (supra), as under: - "The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holdersı register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec.68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of mate....
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....action of accommodation entry. The assessee was asked to explain as to why the said amount of Rs. 1,11,50,000/- may not be added to its income. In response, the assessee has submitted that there is no such credit in the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was Rs. 55,50,000/- and not Rs. 1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount is to be taken at Rs. 55,50,000/-. The assessee has further tried to explain the source of this amount of Rs. 55,50,000/- by furnishing copies of share application money, balance sheet, etc. of the parties mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly considered and found not acceptable. This entry remains unexplained in the hands of the assessee as has been arrived by the Investigation wing of the Department. As such entries of Rs. 55,50,000/- received by the assesse....
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....licants' account. As held concurrently by the CIT (Appeals) and the ITAT, these conclusions were clearly baseless and false. This Court is constrained to observe that the AO utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents. We place these observations on the record and direct a copy of the judgment to be furnished to the concerned income tax authorities for appropriate action towards reflecting these observations suitably in service record of the concerned AO to avoid such instances in the future. 7. For the above reasons, this Court is of the opinion that the concurrent findings of fact, as to the true identity of the share applicants, their creditworthiness and genuineness of the transaction, are based on sound reasoning and do not call for interference. No substantial question of law arises. The appeals are dismissed. [ Emphasis supplied ] In the case of ACIT vs M/s Krishna Sheet Processors P limited [ Appeal No ITA No 546/ Mum/ 2013 dt 30-06-2015] the amount of share premium of Rs. 1000/- was duly accepted as genuine. In view of the above, once the assessee has established the identity of ....
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....sessing officer even no affidavit was filed. In the present appeal in hand the assessee not only the bank account but also the affidavit and various other documents were filed. Hence, onus lying on the assessee has properly been discharged. Thus, fact of the present case is distinguishable with the fact of the case of M/s Gayathri Associates. In case of CIT vs Focus Exports (P) Ltd as reported in 51 taxmann.com 46, Hon'ble Delhi high court has observed that address and PA No of the share applicant was not provided. In the present appeal in hand the appellant company has provided the complete address , PA No and various other documents as to discharged onus lying on it. Hence, fact of the present appeal is distinguishable with the fact of Focus Exports (P) Ltd. In case of CIT vs P Mohankala as reported in 291 ITR 278, Hon'ble Apex Court has analysis the provision of section 68 of the Income Tax Act and observed that explanation of the assessee not accepted by the assessing does not tantamount to income of the assessee. In that case the Ld CIT[A] and Hon'ble ITAT also approved the order of the Assessing officer. In the present appeal in hand, the assessee company has explain....
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....Hon'ble Delhi High Court has observed that the assessing officer has recorded statement of the share applicant in that case and confronted with the assessee but the assessee failed to substantiate its contention. In the present appeal the assessing officer did not make any inquiry. Hence, rather decisions of the Hon'ble Delhi High court in the case of CIT vs Nova Promoters & Finlease (P) Limited [supra] support the case of theassessee. 9. On consideration of above and respectfully following the decision of the jurisdictional High Court in the case of CIT vs. STL Extrusion, 53 DTR 97 and jurisdictional High Court in the case of CIT vs. Peoples General Hospital (Appeal No.27/2008) (supra) and the decision of Hon'ble Supreme Court in the case of Lovely Export (supra), 11 TTJ 357 and other decisions as reproduced above, we are of the view that assessee co. has received share premium because assessee co. is engaged in business of rolling & steel Bar. The co. was incorporated in 13.10.1995 and having experience of more than 18 years of this line business. We are of the view that huge profit on the amount of share capital is justified. We are of the view that assessee has proved th....
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.... its return of total income. The assessing officer while passing order U/s 153A of the Income Tax Act added an amount of Rs. 19000000/- to the income of the assessee being share application money and share capital received from the following persons:- 1 Delta Fashion Ltd. D-1Nirnaya Sagar Press building,Dr.M.B. Velkar Street , Mumbai,400002 AAACD5 697H 400000 1600000 2000000 2 Frec Wings Import Limited 3,Mallick street,Kolkata, 700007 AAACF4 480A 300000 1200000 1500000 3 Himgiri Dynamics Ltd. 9, Moraji Velji Bldg. 1st Floor 7-C Dr.M.B. Velkar Street,Kalba Devi Road,Mumbai AACJO0 296M 600000 2400000 3000000 4 Hindustan continental Ltd. 7, Bamroo Colony, Jaora Comp.,Indore AABCH1 575M 400000 1600000 000000 5 Mcsure Capital Ltd. 308,Malwa Tower,10 Old Palasia, Indore AABCM 3526F 100000 400000 500000 6 Lyton Mgmt. Services Ltd 39,Kali Krishan Tagore Street , Kolkata AABCC0 767E 600000 2400000 3000000 7 Cube communication Ltd. 39, K.K. Tagore Street Kolkata AABCC0 767E 500000 2000000 2500000 8 Shreshth Leasing & Finance Ltd. 11....
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....income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section pending on the date of initiation of the search under s. 132 or making of requisition under s. 132A, as the case may be, shall abate." 1.4.2.2] That from the language of the first proviso of section 153A of the Income Tax Act it is clear that the Assessing officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. That when even otherwise the assessment proceeding is pending in that case the assessing officer has full right to call entire information as he desired. However, in case of re-assessment when assessment proceeding either completed or time for issuance of notice U/s 143(2) expired. In that case , the assessing officer can call information in respect of which certain incriminating documents were found and seized during the course of search. 1.4.2.3]In the present case no incrementing documents were found related to the Assessment Year 2003-04. Howeve....
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....ence, injustice, absurdity and anomaly. Suppose in the course of a search, nothing incriminating was found. Does this mean that an honest citizen be unduly harassed by facing automatic reopening of the concluded assessments merely because there was search action against him ? The absurdity of the construction gets all the more pronounced when say, no incriminating material is found relating to the "other person" but the material found indicates disclosed income. Suppose, loan confirmations relating to loans duly disclosed in the return of income of A are found at the time of search in the premises of B. Should the assessments of A be reopened for all the six preceding years merely because search action has been initiated against B ? In selecting out of different interpretations, the Courts shall adopt that which is just, reasonable and sensible rather than that which is none of those things. One may also refer to CBDT Circular No. 7 of 2003, dt. 15th Sept., 2003. A reading of the circular clearly indicates that the appeal, revision etc. arising out of earlier assessments shall not abate. In other words, there is no merger of the earlier assessments with the assessments done under t....
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....04 31-10-2003 31-10-2004 Concluded Assessment 1,90,00,000 4 2004-05 01-11-2004 30-11-2005 Concluded assessment 10,00,000 2,30,00,000 1.4.1] The Assessing officer in second para on Page No 1 of the assessment order categorically mentioned that:- " On screening of the Audited final account and on perusal of the details as submitted by the assessee. It was noticed that the assessee has received an amount of Rs. 1,65,00,000/- on account of share capital and Rs. 25,00,000/- on account of share application money from Shreevar overseas Limited __________". 1.4.2] The Ld CIT[A] vide his order dt 15-01-2010 in Para 2 on inner page No 2 in last two line stated that :- " The AO after issue of statutory notices and considering compliance made and on screening of the Audited final accounts and on perusal of the details as submitted by the assessee, the AO has noticed that the assessee has received an amount of Rs. 1,65,00,000 /- on account of share capital and Rs. 25,00,000/- on account of share application money_______________". 1.4.3]That from the above observ....
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....use (b) of sub- section (1) of section 153A of the Income Tax Act . 1.6.5] The appellant in its appeal has challenged that when no incriminating Material / documents were found as to substantiate the addition made by the Assessing officer. In that case, the Assessing officer was not justified in making the addition in the assessment order as passed U/s 153A r.w.s 143(3) of the Income Tax Act. 1.7.1] That Hon'ble Special Bench in the case of All Cargo Global Logistics Ltd vs DCIT reported in 20 ITJ 45 ( Trib- Mumbai)(SB) in Para 5 ( Refer Page No 54 of ITJ ) .... 1.7.2] That Hon'ble Delhi High Court in the case of CIT vs Anil Kumar Bhatia { Appeal Nos 1626,1632,1998,2006,2019,2020/2010 dt 07-08-2012} .... 1.7.3] That Hon'ble Delhi High Court in the case of CIT vs Smt Suraj Devi reported in 328 ITR 604 ........ 1.7.4] Hon'ble Delhi High court in the case of CIT vs Naveen Gera reported in 328 ITR 516 has ........ 1.7.5] That Hon'ble Miumbai Bench in the case of Shri Gurvinder Singh Bawa [ Appeal No 2075/Mum/2010 dt 16.11.2012] has also discussed the similar issue in detail. 1.7.6] That Hon'ble Indore Bench of ITAT in the case of Arun Sehlot, Bhopal [ Appeal No....
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....nts are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. VII] Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 38] The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 39] The question framed by the Court is answered in favour of the Assessee and against the Revenue." Emphasis Supplied 1.8] The assessee placed reliance on the legal synopsis and comparative chart of decisions as filed in support of....
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....ceedings pending on the date of initiation of search under section 132 or requisition shall not abate..........." Accordingly, as far as completed assessments are concerned, they do not abate. The AO cannot proceed to make the same addition in the block assessment without any incriminating material found in the course of search. The said view prevents the AO to undo what has already been completed and has become final in the original assessment proceedings. 9. We have heard both the sides. We have also gone through the case laws relied upon by both the sides. We have also considered various relevant facts of the case. It is a settled legal position that once a search and seizure action has taken place u/s 132 of the Act or a requisition has been made u/s 132A, the provisions of section 153A trigged and Assessing Officer is bound to issue notice u/s 153A of the Act. Once notices are issued u/s 153A of the Act then assessee is legally obliged to file return of income for six years. The assessment and reassessment for six years shall be finalised by the Assessing Officer. It is also held by various Courts that once notice u/s 153A of the Act issued, then assessment for six years....