TaxTMI 
TaxTMI 
2018 (12) TMI 195
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....dition of Rs. 1,30,00,000/- made u/s 68 of the Income Tax Act 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....
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....ants, source of investment and also to furnish the balance sheet, P&L account etc. of the share applicant companies. When the assessee failed to produce the supporting 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, t....
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....creditworthiness of the share applicant is also proved from the net worth of the companies as evident from the financial statements and particularly from the balance sheets of 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 receiv....
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....ts of these companies at Kolkata. We further note that a similar fact and pattern of deposit of amount is also found from the bank statements of these companies for the A.Y. 2014-15. In case of Canny Properties 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....
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....deposited in the bank account of the share applicants and further the present status of the holding of those shares allotted to the share applicant companies. Needless to say that the assessee be given appropriate 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 S....
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.... and therefore such grievance of the assessee gives the right to the assessee to file an appeal before the tribunal. Right of filing of the appeal is also granted to the learned assessing officer through the office of the principal Commissioner or 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 o....
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....delay. But certainly same cannot be agitated by the assessee before us in cross objection. 22. Even otherwise if the argument of the learned authorised representative is accepted it will make the provisions of section 263, 264 of the income tax act redundant if the assessment 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....
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.... a cross-objection. The only difference if at all there is any is that an appeal can be preferred within 60 days from the date of receipt of the order whereas a cross-objection can be filed within a period of 30 days of the date of service of the appeal by the opposite party. On careful reading of the above decision 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 t....
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....essee is dismissed." Therefore, having regard to the facts and circumstances of the present case, when the assessee has not raised this issue before the authorities below then the same cannot be raised in the C.O. as the scope of C.O. is limited only to challenge the order of the ld. CIT(A) or part of the ld. CIT(A) which is against the assessee. Hence, 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....
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.... of the Act. Once it is a case of reassessment under section 153A pursuant to the search and seizure action under section 132 of the Act, then the addition in the total income of the assessee can be made only on the basis of incriminating seized material found during the course of search. This issue has been considered and decided by the various High Courts including the Hon'ble Jurisdictional High Court in 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 whic....
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....under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note to the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the 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 und....
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...., there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income 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....
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....ts. 27. xxxx xxxx 28. xxxx xxxx 29. The argument of the counsel for the appellant if taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon'ble Supreme Court in the case 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....
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....l is confirmed. 16. Ground No. 2 of the C.O. for the A.Y. 2014-15 is regarding the addition of Rs. 70,500/- as undisclosed income of the assessee based on the statement. 17. The ld AR of the assessee has submitted that the assessee has produced ledger account of M/s Nahar Filling Station to show that there was no discrepancy in the accounts statement with M/s Nahar Filling Station and therefore, the addition made based on the statement is not sustainable. He has submitted that the difference has arisen since the party has initially debited charges of 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 ....