TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 195
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.... when the assessee failed to produce the Directors or authorized representatives of the alleged investing companies for verification and thus genuineness of the share application money remained to the established. 3. Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 1,30,00,000/- made u/s 68 of the Income Tax Act when the creditworthiness of the investing companies was not established as the investing companies do not have any profit earning apparatus and income shown by them was not commensurate with the alleged investment claimed to be made. 4. Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 1,30,00,000/- made u/s 68 of the Income Tax Act by ignoring the fact that immediately prior to the making of investment there were identical deposits in the Bank account of the investing companies and thus mere routing of transaction through Bank account was not sufficient proof of creditworthiness or genuineness of the transactions. 5. Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 13,00,000/- made by....
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....g evidence as asked by the Assessing Officer, the assessee was asked to produce the Director or the employ duly authorized by the Director for verification and to explain the nature of transaction with source of investment duly supported by documentary evidence. The statement of the Director of the assessee company namely Shri B.L. Jat was recorded U/s 131 of the Act on 20/12/2016. The Assessing Officer held that the amount received in the form of alleged share application money is nothing but undisclosed income of the assessee and accordingly made addition of the entire share application money as unexplained cash credit U/s 68 of the Act. 4. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) and contended that the assessee discharged its obligation and onus by producing all relevant documents in support of its claim. The ld. CIT(A) held that the assessee has discharged its onus U/s 68 of the Act and consequently deleted the addition made by the Assessing Officer. 5. Before us, the ld CIT-DR has submitted that the assessee has failed to explain the nature of business activity carried on by the alleged share applicant companies, source of investment ....
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.... these companies. Thus, the ld AR has contended that the assessee has discharged his onus U/s 68 of the Act and therefore, the addition made by the Assessing Officer was not sustainable and was rightly deleted by the ld. CIT(A). In support of his contention, he has relied upon the following decisions: (i) PCIT Vs Paradise Inland Shipping (P) Ltd. (2018) 255 Taxman 160 (SC). (ii) PCIT Vs M/s Acquatic Remedies Pvt. Ltd. order dated 30/07/2018 (Bom) (HC) (iii) DCIT Vs. Alcon Biosciences (P) Ltd. (2018) 164 DTR 193 (Mum) (Trib). Thus, the ld AR has submitted that when the assessee has produced all documents which are also available with the different offices such as ITR filed by these companies then the genuineness of share application cannot be doubted. 7. We have considered the rival submissions as well as relevant material on record. The details of share application money received by the assessee as reproduced in the earlier part of this order reveals that the assessee received 1.30 crores as share application money for the A.Y. 2013-14 and Rs. 1,96,15,000/- for the A.Y. 2014-15. Except three companies being Rachna Vanijya Pvt. Ltd., Sargam Lefins Pvt. Ltd. and Versatile Co....
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....erties Pvt. Ltd., there was a deposit of Rs. 20.00 lacs on the same day just prior to the transfer of money of equal amount to the assessee on 05/4/2013. Similarly in the case of Liberal Properties Pvt. Ltd., an amount of Rs. 20.00 lacs was deposited just prior to the transfer of money to the assessee on 05/4/2013. In case of Mahavir Fincon Pvt. Ltd., it is only payment of Rs. 1.15 lacs and therefore, no such small deposit was made on that date but the deposit was there prior to the payment of Rs. 20.0 lacs for the A.Y. 2013-14. In case of Rachna Vanijya Pvt. Ltd. and Sargam Lefins Pvt. Ltd., amount of Rs. 20.00 lacs each was deposited just prior to the payment to the assessee of the equal amounts on 06/4/2013 and 08/4/2013 respectively. The bank statement of Surichi Distributors Pvt. Ltd. further reveals that there was a deposit of total amount of Rs. 70.00 lacs on three occasions on 08/4/2013, 10/4/2013 and 10/4/2013 when the corresponding amount was paid to the assessee. Thus, there is an identical pattern of deposits made in the bank accounts of all share applicant companies just prior to the payment to the assessee which clearly reveals the fact on record that the transaction....
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....ate opportunity of hearing. 8. Since this issue raised by the revenue in both the assessment years is common, therefore, the findings given for the A.Y. 2013-14 shall apply mutatis mutandis for the case of A.Y. 2014-15. Accordingly, both the appeals of the revenue are allowed for statistical purposes only. 9. In the C.O. of the assessee for the A.Y. 2013-14, the assessee the raised only the additional ground which was not raised either before the Assessing Officer or before the ld. CIT(A) as under: "The ld. A.O. as well as the ld. CIT(A) has erred on facts and in law in making/confirming various additions dehors any incriminating material found in search even when the assessment proceedings for the year under consideration was not pending as on the date of search." 10. We have heard the ld AR as well as the CIT-DR on the maintainability of the addition ground raised in the C.O. 37/JP/2017 for the A.Y. 2013-14. It is pertinent to note that sub-Section(4) of Section 253 of the Act contemplates the filing of C.O. by either of the parties on receipt of the notice of the appeal filed by the other party against the order of the ld. CIT(A). However, the scope of filing the C.O. is li....
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....Commissioner of income tax under section 253 ( 2) of the act. But only condition is that they must have an objection to any order passed by the specified authority. Therefore it is necessary that the order must be passed by the specified authority and the learned assessing officer must have objection against that order then only the appeal can be filed by the learned assessing officer. According to the provisions of section 253 (2) of The act, the principal Commissioner or commissioner, if he objects to any order passed by commissioner appeals, may appeal to the appellate tribunal against the order. If the appeal is filed by the assessee then revenue is a respondent and if the appeal is filed by the revenue then assessee is a respondent, and the respondent in both the situation is granted arrived to file cross objection in the appeal filed by the appellant. According to the provisions of section 253 (4), the assessee on receipt of notice that appeal against the order of the commissioner Appeals has been preferred by the Commissioner, may file a memorandum of cross objections in the prescribed manner against any part of the order of the Commissioner (appeals). Undoubtedly, the gro....
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....nt is subject matter of appeal. Clearly the provisions of section 263 and 264 prohibits the issues that are already pending in appeal. 23. The learned that authorised representative has relied upon the decision of the honourable Delhi High Court in case of CIT vs Bharat the general reinsurance Co Ltd (1971) (81 ITR 303) (Del). We have carefully considered that decision. The fact of the case was that that assessee included the income in the return for the assessment year 1958 - 59 and on appeal, the tribunal held that income from dividends was not assessable in the assessment year 1958 - 59, but it was assessable in the assessment year 1953 - 54. However, in that particular case the issue was before the appellate assistant Commissioner where the assessee objected to the inclusion of the dividend income as income pertaining to the relevant previous year and also objected to the increasing the quantum of dividend received by adopting the market value of the specie in which it had been received. The appellate assistant Commissioner rejected both the contentions. Therefore, in that particular decision, there was an issue, which was already decided by the appellate assistant Commissi....
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....cision it is apparent that the contention of the revenue in that appeal was that that the assessee in filing cross objections should have taken only the issues which have been raised by the revenue in its appeal in the cross objection of the assessee. Further in that particular case the assessee in cross objection raise the applicability of the registration of the firm holding when either one of the entities which was the subject matter of dispute before the assessing officer. Therefore, the assessment in that particular case was made holding the assessee former not entitled to registration as well as making the addition. Before the revenue the assessee in cross objection challenged the issue of registration of the firm. Therefore in that particular case both the issues were before the assessing officer emanating from the order of the AO. Hence the facts of that case are quite distinct from the facts before us. 26. The next decision relied upon by the learned authorised representative is of Asam company India Ltd versus Commissioner of income tax (2002) 256 ITR 423. The facts in that particular case is that in the return of income the applicant company claimed deduction under....
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....nce, the additional ground raised in the C.O. No. 37/JP/2017 is dismissed. 11. In C.O. 38/JP/2017 for the A.Y. 2014-15, the assessee has raised following grounds: "1. The Ld. CIT(A) has erred on facts and in law in confirming the disallowance of expenditure of Rs. 1,85,834/- incurred by the assessee for increasing the authorized share capital of the company by treating the same as capital expenditure. 2. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 70,500/- by considering the difference in the account statement with M/s Nahar Filling Station as undisclosed income of the assessee. He has further erred in not directing the AO to exclude this alleged undisclosed income from the income of the next year when the same was offered for tax. 3. The Ld. CIT(A) has erred on facts and in law in confirming the disallowance of Rs. 50,885/- on account of interest paid on late payment of TDS. 4. The assessee carves right to add, alter, amend, and modify any of the ground of appeal. 5. Necessary cost be allowed to the assessee." 12. Ground No. 1 of the C.O. is regarding the disallowance of expenditure incurred for increasing the authorized share capital....
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....n the case of Jai Steel (India) vs. ACIT (supra) wherein the Hon'ble High Court has held in para 21 to 26 and 29 as under :- "21. The argument raised by the counsel for the appellant to the effect that once a notice under Section 153A of the Act is issued, the assessments for six years are at large both for the AO and assessee has no warrant in law. 22. In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the assessee for the first time under Section 153A of the Act is not c....
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....assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub-section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the sec....
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....me determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisition was made." (Emphasis supplied) 24. The said judgment also in no uncertain terms holds that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observ....
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....ase of K.P. Varghese (supra)." It is pertinent to note that a similar view has been taken in a series of decisions by the Hon'ble Delhi High Court, Hon'ble Gujarat High Court as well as Hon'ble Bombay High court as relied upon by the ld. A/R. Thus it is held by the Hon'ble Jurisdictional High Court that the assessment or reassessment of 6 years is a mandatory requirement pursuant to the search under section 132 of the Act. However, in the absence of any incriminating material found, the same would not result in any addition and assessment passed earlier may have to be reiterated. Thus the AO cannot resort to the provisions of section 153A to fill up the lacuna left in the original assessment or not doing the original assessment except reassessment of the total income and addition, if any, based on incriminating material found during the course of search proceedings. In the case in hand, undisputedly no incriminating material was found to reveal any income not disclosed by the assessee in the return of income filed under section 139(1) of the IT Act. Rather the addition is made by the AO on account of disallowance of expenditure treating the same as capital in nature. Therefore, t....
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.... Rs. 70,500/- to the account of assessee for which entry was made in the books of accounts. Thereafter, the party reversed the same without intimation to the assessee resulting into difference. When this fact came to the notice of assessee, reverse entry of the same was passed in the subsequent year where the amount of Rs. 70,500/- is offered for tax. Thus, when the amount is already offered for tax in AY 2016-17, the addition made be deleted for which reliance is placed on the decision of Hon'ble Supreme Court in CIT Vs. Excel Industries Ltd. 358 ITR 295 in which it was held that when the rate of tax remained the same in present A.Y. as well as in subsequent A.Y., the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect, there is no need for the Revenue to continue with the litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. 18. On the other hand, the ld DR has relied upon the orders of the authorities below. 19. Since the assessee has now explained that there was reverse entry of the equal amount passed in the subsequent year and offered for ta....