TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 1764
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....wing grounds of appeal; (1) Whether on the facts and circumstances of the case and in law, the learned Commissioner (Appeals) was correct in deleting the addition of Rs. 1,50,00,000/- on account of share premium/share application money/unexplained cash credit under section 68 without appreciating the fact that Shri Praveen Kumar Jain was proved to be one of the leading entry providers operating in Mumbai who could not be produced by the assessee as his witness during the assessment proceeding before the assessing officer. (2) The appellant prays that the order of Commissioner (Appeals) on the grounds be set aside and that of assessing officer be restored. 2. Brief facts of the case are that Assessee Company is engaged in the construction business. The assessee filed its return of income for relevant assessment year on 29 September 2008 declaring total income of Rs. 1,13,354/-. The return was processed and accepted under section 143(1) of the Income tax Act. Subsequently, the assessment was reopened on 18 March 2015 under section 147 after recording the reasons of reopening. Notice under section 148 dated 18 March 2015 was served on the assessee. Assessee contested the reopen....
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....he order of assessing officer be restored. 4. On the other hand the ld. AR for the assessee strongly objected the submission of the ld. DR and supported the order of the ld. Commissioner (Appeals). It was argued that the assessee received share application money from thirteen people during the relevant financial year. All the parties were genuine. The share application money was received by the assessee through account payee cheques or by RTGS. All payments were credited in the bank account of the assessee. The assessee allotted equity share of the company to the share applicants after passing a resolution. All the details of the share applicants along with their ITR acknowledgement, Audited accounts report, PAN cards and relevant extract of bank account of share applications were given to the assessing officer. The assessee proved the identity, capacity of the parties and the genuineness of the transaction. All the share applicants were responded to the notices issued by assessing officer under section 133(6) of the Income tax Act. All applicants complied and filed the required detailed required by assessing officer. The copy of the documents filed by assessee consisting copy of ....
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....ish International ITA No 4299 of 2009 (Bombay) (vi) ACIT Vs Paradise Inland Shipping Private Ltd ITA No. 327/PNJ/2015 (vii) PCIT Vs Paradise Inland Shipping Private Ltd 84 taxman.com 58(Bombay), (viii) Anil C. Jain Vs ACIT ITA No. 369&370/M/2017, (ix) Maruti Impex Vs JCIT ITA 3823/M/2014, (x) Nathuram Premchand Vs CIT 49 ITR 561(All). 5. In the rejoinder arguments the learned DR for the revenue argued that the retraction of Praveen Kumar Jain was without supporting material. It was further argued that matter may be remanded back to the file of assessing officer for verification of the documentary evidences furnished by assessee and for cross examination of the parties. The learned AR of the assessee strongly objected to the submission of the DR for revenue and would submit that the matter cannot be kept open for ever, when the learned Commissioner (Appeals) has already considered the documentary evidences furnished by assessee and the assessing officer has also given his remand report during first appellate stage. 6. We have considered the rival submission of the parties and have gone through the orders of authorities below. During the re-assessment preceding the assess....
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....issioner (Appeals) in para 8 of his order. We have further noted that on the submission of assessee, the learned Commissioner (Appeals) vide his order dated 07 November 2016 sought the remand report from assessing officer. The assessing officer furnished interim remand report on 9th November 2016. And final remand report on 6 January 2017. In the report dated 6 January 2017 the assessing officer contended that summons under section 131 were issued to the assessee and its investor. Neither the assessee nor any other person attended the office of assessing officer. The assessee did not appear to avail the opportunity given to them to cross examine the witnesses. The assessee was informed by learned Commissioner (Appeals) on 17 January 2017 about the report of assessing officer and to explain for noncompliance of the summon under section 131 issued by assessing officer. The assessee disputed the report of the assessing officer. The assessee contended that they were present in response to the notice of assessing officer but the witness summoned by assessing officer did not attended. The assessee left the office of assessing officer on that day with his permission. The assessee specific....
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....which is a deeming provision. Several case laws including those of the Apex Court and High Court have considered credits made to capital account of the assessee's to be covered under the provisions of section 68 and therefore deemed income. The rule for application of section 68 is that the identity and credit worthiness of the investor/lender / creditor has to be established and the genuineness of the transaction has to be established. I also do not find merit in the argument that merely because there is a specific amendment to section 68 in respect of credit in the form of share capital or share application money in the case of private company, requiring the person in whose name such credit is there to explain the nature and source of such sum, which is brought on statute w.e.f . 01.04.2013, hence no such addition u/s 68 can be made in earlier years. The amendment only makes the onus more severe in such cases but it is incorrect to read it as if no such additions could be made u/s 68 in respect of share application money in the earlier assessment years. 18. The Apex Court upheld the addition u/s 68 in the case of credits as share capital in the case of N. Tarika Property I....
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.... parties unless proved and corroborated. Similarly, retraction may be rejected as motivated, but the same can be considered only against the person who has retracted in his assessment. Such statement in the case of another person loses its sanctity unless opportunity of cross examination is granted and / or is corroborated with other evidences. When the investor company is filing regular return of income and there is a transaction through banking channel, no addition can be made without having any contrary or cogent evidences in possession. Over such issue there are plethora of judgements to support the appellant. Some of them are discussed here below:- "(i) The Hon'ble Supreme Court in the case of CIT V/s Lovely Exports 6 DTR 308 has held as under: "If the share application money is received by the assessee company from alleged bogus share holders who's name are given to the Assessing Officer then the department is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of assessee company". (ii) The Hon'ble Bombay High Court in the case of CIT v/s Creative World Telefllms Ltd 333 ITR 100 ha....
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....burden of proof on the tax payer to explain the nature and source of any credit found in the books. But, when assessee proves or submit the basic information like identification, genuineness of transactions and creditworthiness of the creditors, onus is discharged by him and if Assessing Officer disbelieve the genuineness of the same, he has to prove otherwise, merely, doubting or pointing out some discrepancy is not the foundation for discarding the genuineness of the deposit or share money or substance of the matter, held by the Hon'ble Supreme Court in the case of CIT v. Gujarat Heavy Chemicals Ltd. (2002) 256 ITR 795 (SC). In view of the above the question of making any addition u/s. 68 of the Act does not arise." 22. Further, Hon'ble jurisdictional ITAT in the case of ITO-10(2)(3) vs. M/s J.J. Multitrade Pvt. Ltd. ITA No.2158 & 2159/Mum/2014 order dated 11.03.2015 has deleted additions on similar facts. Further, the Hon'ble jurisdictional ITAT in the case of M/s S.D.B. Estate Pvt. Ltd. vs ITO-5(3)(2) ITA No.584/M/2015 has deleted similar addition made u/s 68 of the I.T. Act. The Hon'ble ITAT (Jaipur Bench) in the case of Bharti Syntex Ltd. vs. DCIT ITA No....
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....se, it is cardinal principle of natural justice, that before conclusions are drawn against a person based on statement of a third party, he must be allowed an opportunity for cross examination. This has not been provided. There is a limit to the capacity or responsibility expected of an assessee to prove facts. The assessing officer has" not inquired into or reported on assessment in the case of the investor companies. If the statements recorded of Shri Pravin Jain and others (which were retracted) are ignored, there is no specific evidence cited by the assessing officer in respect of the investor companies and the appellant which would shift the burden back on the appellant u/s 68. The assessing officer has stated that the appellant has not disproved the findings of the department. Now the question is what are the appellant specific findings that has to be disproved is not spelt out. In this fact matrix, and the judicial decisions covering the scope of section 68, the addition made of Rs. 1,50,00,000/- u/s 68 in the case of the appellant is deleted. The grounds of appeal in this regard are allowed as above." 7. The Hon'ble Bombay High Court in a recent decision in PCIT Vs Paradi....
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....rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot re-appreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration. 8. The Apex Court in the case of Orissa Corpn. (P.) Ltd. (supra), has observed at Para 13 thus : "13. In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were income- tax assessees. Their index number was in the fil....
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....t." 8. In view of the above factual and legal discussion and considering the latest decision of Hon'ble Jurisdictional High Court referred above, we have noted that the ld Commissioner (Appeals) passed the order after considering the entire material available before him. We have seen that the order passed by ld. Commissioner (Appeals) is reasoned one and does not require any further interference at our end. The facts of various decision relied by ld. DR in Rajmandir Estate Pvt Ltd (supra), in CIT Vs Jansamparak Advertising and Marketing (P) Ltd (supra) in CIT Vs N.R. Portfolio (supra), though is at variance on facts and is of non jurisdictional High Court. The decision of jurisdictional High Court in PCIT Vs Paradise Inland Shipping (P) Ltd (supra) is binding precedent on this Tribunal. In the result the grounds of appeal raised by the revenue is dismissed. 9. In the result the appeal by revenue for AY 2008-09 is dismissed. ITA No. 3755/M/2017 for AY 2009-10 by revenue. 10. The revenue has raised identical grounds of appeal as raised in appeal for AY 2008-09. The facts for the year under consideration is at little variance. The assessment order for the year under consideratio....
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....ting evidences, it is noted that the AO has not been able to pin point the specific evidences relating to appellant company which would clearly show that the share application money has been received in lieu of cash. In the assessment order the assessing officer has referred to the statement of Shri Pravin Jain recorded at the time of search but has not considered the retraction thereafter in which it was stated that statement recorded at the time of search was under undue pressure and that such statements had been retracted. It is further noted from details called and submitted by the appellant that the advances were repaid as follows: Sr. No. Name of the company Amount Date of repayment 1. Lexus Infotech Ltd. 30,00,000 13/14.3.2013 2. Raghunandan Rayons Ltd. 35,00,000 13.3.2012 3. Sanjivani Enviro Protection Ltd. 35,00,000 14.3.2012 Total 1,00,00,000 19. The fact remains that the investor companies are assessed to tax and have filed their returns of income. The parties have responded to the notices u/s 133(6). The appellant has filed audited accounts of the investors and contended that they have genuine business activity. Th....
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....burden. When the tax payer explains We credit by providing evidence of identity, confirmation and credit worthiness, the burden shifts on the revenue to show that the explanation is not satisfactory or incorrect. In the case of credit as share capital by corporate entity, whose existence is shown by its registration with Registrar of companies and its filing of tax returns, adverse conclusion is not justified merely. because its directors are not produced personally before the assessing officer by the tax payer. 23. In the remand proceedings only the legal requirement was indicated that if any statements of third parties are to be relied upon, opportunity for cross examination must be provided. Further, instead of and other than generalities the assessing officer was given an opportunity to put together appellant specific evidence justifying the addition. 24. It can be seen from the observation of the Assessing Officer that he has only referred to the information related to the outcome of search in the case of Shr i Pravin Kumar J ain Group who were al l egedl y providing accommodat ion entries but the Ld. Assessing Officer has fai led to demonstrate any such specific evidenc....
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.... of the shareholders, their PAN/ GIR numbers and had also given the cheque numbers, name of the bankers. The Assessing Officer ought to have found out their details through PAN cards, bank statements. Thus, the view taken by the Tribunal could not be faulted. The Hon'ble Supreme Court of India in the case of CIT vs. Orissa Corporation reported in 159 ITR 78 (SC) has herd as under "That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessee's. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notice under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they are creditworthy. There was no effort made to pursue the socalled alleged creditors. In those Circumstances, the respondent could not do anything further. In the premises, if the Tribunal to the conclusion that the Respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable ....
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....rmation along with copies of share certificate, bank statement, memorandum of articles, copy of share application money, audited balance sheet and P&L a/c of these parties were filed. These are similar details as were filed in case of three other companies for asst. yr. 2005-06. We have already disposed of the appeal for asst. yr. 2005-06 whereby we have held that the assessee has discharged its onus by filing necessary details and further have relied on the decisions of Hon'ble Supreme Court and Hon'ble Delhi High Court along with various other decisions of Tribunal and have held that addition cannot be made under S.68 in the hands of the assessee company. Therefore, in view of the same reasoning, we cancel the entire addition made and confirmed by the lower authorities here also. The above decision of ITAT also related to Mr.Mukesh Choksi's case of investment in share application money. On perusal of above case it is clear that if a bogus shareholder has invested the money and if appellant receives such money as share application money and appellant during assessment proceedings provides the details like name &address of the corporate entity, PAN No., ROC No., then....
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....-13 by revenue. 14. The revenue has raised identical grounds of appeal as raised in appeal for AY 2008-09 and in 2009-10, except variation of figure of addition under section 68 of the Act. The facts for the year under consideration are also at variance. The assessment order for the year under consideration was passed on similar lines by the assessing officer, making the similar additions under section 68 of the Act for Rs. 2,46,00,000/- The ld. Commissioner (Appeals) has deleted the entire additions by the order of same date. 15. The ld. DR for the revenue argued on the similar lines as argued the appeal for earlier year and relied on all those decisions which were relied by him for AY 2008-09 & 2009-10. On the other hand the ld. AR for the assessee submitted that the assessment for the year under consideration was completed under section 143(3) on 31.03.2015. The ld AR for the assessee specifically pointed out that during the relevant period the assessee has availed loan from five parties. The assessee provided all details required by assessing officer to prove the genuineness of the loan transaction. The ld. AR for assessee argued that the assessee has paid interest on such l....
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....tive and the assessing officer has incorrectly referred to it as negative In the case of Viraj Mercantile P. Ltd., the current year loss is mainly 'n so1rLt of exchange loss of Rs. 3.35 crores. The capital and reserves of Park Tools Ltd. is Rs. 43,54,392/- and not 34,29,392/- The capital and reserves of Utakantha Trading & Properties Ltd. is Rs. 2,50,31,098/- and not 24,31,098/- as mentioned by the assessing officer. This does indicate that the assessing officer has passed the assessment order in a hurry without confronting the appellant with a show cause notice. 9.19. A perusal of the assessment order shows that though the conclusions of the investigation wing has been referred to in the assessment order, there are no specific reference to the appellant company. There are no evidences brought on record to show that there is any cash t rai l in respect of the amounts received by the appellant company from the investors. Though the AO was specifically asked to furnish specific incriminating evidences, it is noted that the AO has not been able to pin point the specific evidences relating to appellant company which would clearly show that the share application money has been re....
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....r incorrect. In the case of credit as loans by corporate entity, whose existence is shown by its registration with Registrar of companies and its filing of tax returns, adverse conclusion is not justified merely because its directors are not produced personal ly before the assessing officer by the tax payer. 9.23. In the remand proceedings only the legal requirement was indicated that if any statements of third parties are to be relied upon, opportunity for cross examination must be provided. Further, instead of and other than generalities, the assessing officer was given an opportunity to put together appellant specific evidence justifying the addition. 9.24. It can be seen from the observation of the Assessing Officer that he has only referred to the information related to the outcome of search in the case of Shri Pravin Kumar Jain Group who were allegedly providing accommodat ion ent ries but the Ld. Assessing Of ficer has fai led to demonstrate any such specific evidence that the appellant has in reality obtained any accommodation entries. There is no direct specific mention of the appellant by the director or key persons of the investor companies. There is no evidence of....
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.... (iii) The Hon'ble Supreme Court of India in the case of CIT vs. Orissa Corporation reported in 159 ITR 78 (SC) has held as under: "That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the avenue that the said creditors were income-tax assessee's. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notice under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they are creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the Respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence". Reliance is also placed on the following decisions: i. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Value Capital Services P. Ltd. (2008) 307 ITR 334 (Delhi). ii. Hon'ble Punj....
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.... for asst. yr. 2005-06. We have already disposed of the appeal for asst. yr. 2005-06 whereby we have held that the assessee has discharged its onus by filing necessary details and further have relied on the decisions of 1-lon'bIe Supreme Court and Hon'ble Delhi High Court along with various other decisions of Tribunal and have held that addition cannot made under S.68 in the hands of the assessee company. Therefore, in view of the same reasoning, we cancel the entire addition made and confirmed by the lower authorities here also. The above decision of ITAT also related to Mr.Mukesh Choksi's case of investment in share application money. On perusal of above case it is clear that if a bogus shareholder has invested the money and if appellant receives such money as share application money and appellant during assessment proceedings provides the details like name &address of the corporate entity, PAN No., ROC No., then ITAT held that this may be referred to the concerned A.O. for proceeding against such bogus shareholders instead of adding the amount u/ s. 68 of the I.T. Act in the name of the company." 9.26. It is noted that no specific incriminating material linking....
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....2-13 by assessee 18. The assessee has raised following grounds of appeals; (1) The Commissioner (Appeals) erred in upholding the action of assessing officer in reducing transportation charges Rs. 52,000/- from work in progress on the ground that the said charges do not pertain to the relevant assessment year. The appellants contend that on the facts and in the circumstances of the case and in law, the Commissioner (Appeals) ought not to have upheld the action of assessing officer in as much as the impugned charges have been correctly recorded in the books of account of the year under reference and the Commissioner (Appeals) has not correctly appreciated the facts of the case; as such the charges ought not to have been reduced from the work in progress. (2) The Commissioner (Appeals) erred in upholding the action of assessing officer in reducing purchase of goods Rs. 45215/- from work in progress on the ground that the said purchases were made from the dealers which was declared as 'suspicious' as per the information posted on the website of Maharashtra Sale tax Department and was involved in providing accommodation entries. The appellants contend that on the facts and ....
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....icer inasmuch Commissioner (Appeals) has not correctly appreciated the facts of the case and hence, the impugned reduction of the said payments from work in progress is untenable in law. 19. At the outset of hearing of the appeal the learned AR of the assessee submits that the assessee has filed an application for admission of additional evidence; vide application dated 26 September 2017. We have perused the application filed by assessee for admission of additional evidence. In the application the assessee has contended that they have filed a paper book containing page No. 117 to 172. It is also contended in the application that these evidence were sent to their Chartered Accountant who were attending proceedings before first appellate authority. The required documents were compiled by Mr. Anjan Bhavsar Chartered Accountants (CA) to send to their Authorised representative. The said CA Mr. Anjan Bhavsar remained under a genuine belief that all the documents have been send by him to their representative. However, inadvertently, certain parts of papers and documents were not sent due to bona fides mistake and due to lake of coordination between him and the authorised representative, ....