TaxTMI 
TaxTMI 
2019 (5) TMI 1592
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....uction of share capital amounting to Rs. 48,40,520/- and share premium amounting to Rs. 11,61,72,480/- The 'reasons recorded' for reopening the case were as under : "Scrutiny Assessment in the case of the assessee for AY-2011-12 u/s 143(2) was selected through CASS and notice was sent on 12-08-2013. The return for AY 2011-12 was filed on 12-12- 2012. The CASS reasons for selection of the case for AY-2011-12 was "Large Share Premium Received". However, form B/s for AY- 2011-12, no such introduction of Share Capital, Share Premium (Reserve & Surplus), Unsecured Loans, Investments were seen. There were no changes in them in the AY 2011-12. The assessee was asked to file B/s for AY 2010-11 wherein it could be seen that the introduction of new Share Capital amounting to Rs. 48,40,520/-, Share Premium (Reserve & Surplus) amounting to Rs. 11,61,72,480/- and also Investments of Rs. 12,07,70,000/- had taken place. The assessee has not filed the ITR for AY 2010-11. Therefore the above mentioned new introductions in share capital, share premium with related investments are required to be scrutinized as it could not be done due to assessee's non- fili....
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.... these transactions. Therefore, the assessment order passed u/s 147/143(3) dated 29.03.2015 for the A.Y. 2010-11 is erroneous in so far as it is prejudicial to the interest of revenue and hence needs a review u/s 263 of the IT Act, 1961." 3. Ld. Pr. CIT in his impugned order had incorporated exactly the same reasoning as was proposed by the Assessing Officer vide letter dated 20.04.2015, placed at paper book page 537 to 543, and held that the order framed by the Assessing Officer u/s. 147/143(3) is not only erroneous in law but also prejudicial to the interest of Revenue. Accordingly, he set aside the assessment with the direction to reframe the assessment de novo. The main facts noted by the ld. Pr. CIT, can be summarised as under:- (i). Prior to issuance of notice u/s. 148, the assessee had not filed its return of income for the assessment year 2010-11. (ii). The balance sheet of the assessee as on 31.03.2010 reveals that the assessee has issued 4,94,052 equity shares at a face value of Rs. 10/- and premium of Rs. 240/- per share. The paid up capital was increased from Rs. 1,00,000/- to Rs. 49,40,520/- and the assessee had 'reserves & surplus shar....
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.... only after a lapse of four years of share application money, i.e., on 25.02.2014. On these reasons, he set aside the assessment order. 4. Before us, the ld. counsel for the assessee, first of all raised legal objection that here in this case, the Assessing Officer has sent a proposal to the Pr. CIT to initiate proceedings u/s. 263 and without any independent application of mind, the ld. Pr. CIT has initiated the revisionary proceedings u/s. 263. There has to be independent application of mind after the Pr. CIT has examined the assessment records himself and then reach to a conclusion that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue and he cannot acquire jurisdiction merely on the proposal of the Assessing Officer. In support, he relied upon following decisions: (i). Kishore Madnani vs. CIT (ITA No. 508/JP/2013- order dated 31.01.2014) (ii). Shri Dharmendra Kumar Bansal vs. CIT (ITA No. 350/JP/2013- order dated 28.02.2014. (iii) Shri Gaurav Bhatia vs. CIT (ITA No. 1730/Del/2013 - order dated 13.04.2017. Thus, he submitted that on this ground alone, such an action of the ld. Pr. CIT should be stru....
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.... invoking the deeming provision of section 68. Hence, on this ground also, the impugned revisionary order deserves to be quashed. 5. On the other hand, the ld. DR strongly supported the order of Ld. PCIT and submitted that mere filing of all the documents by the assessee does not mean that the AO has examined the issue. The Assessing Officer has to conduct proper enquiry about the creditworthiness and genuineness of the transaction specifically when proceedings have been initiated u/s. 147. Even from the perusal of the documents furnished by these companies like, Income-tax returns, balance sheet, profit and loss account, it can be seen that the income of all the 15 companies did not commensurate with the amount of share application money and share premium. This shows that there was no application of mind of the Assessing Officer on the details furnished by the assessee. He further submitted that the assessment order is very cryptic which finishes in few lines without adhering to the issue. Thus, in such situation and circumstances and in view of Explanation-2 to section 263, said order is deemed to be erroneous in so far as prejudicial to the interest of Revenue. In support,....
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.... given in the impugned order as well as various material and documents referred to before us at the time of hearing. In this case, action u/s. 147 was taken by the Assessing Officer only to examine the introduction of share capital and share premium aggregating to Rs. 12,10,13,000/-. From the records submitted before us, we find that the Assessing Officer in his notice u/s. 142(1) dated 17.07.2014 apart from asking various other details, had specifically asked for new share application money and share premium received during the financial year and to file confirmations along with all the details and also required the assessee to justify as to under what circumstances, shares were issued at such a high premium. In response, the assessee had filed detailed reply along with the documents as are available in the paper book. It was also informed to the Assessing Officer that the assessee company has allotted its equity shares not in consideration for any money, albeit the assessee has received investments held by allottee companies as reflected in their balance sheets. The detailed chart of investment received by the allottee company in Form No. 2 filed by the allottee companies was als....
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....irector of Bankey * Certificate of Incorporation of Bankey M/S. Jaguar Softeeh (P) Ltd tRs. 90,00,000/-) * Notice U/s. 133(6) dtd. 27.10.14. * Reply dtd. 03.1 1.14 of notice U/s. 133(6) * ITR Ack. -A.Y. 10-11. * Audited Financial statements - A.Y. 10-11. * Ledger A/c of assessee in the books of Jaguar - A.Y. 10-11. * Confirmation of A/c from Jaguar * Confirmation from Jaguar for subscribing the shares of assessee * Agreement for purchase of shares * Allotment letter from Pramhash Motor Finance Co. P Ltd. to Jaguar * -do- from Rewin Ceramics P Ltd. to Jaguar * -do- from Sainger Capital & Securities P Ltd. to Jaguar * -do- from Ganesh Ganga Investment P Ltd. to Jaguar * Affidavit by director of Jaguar * Certificate of Incorporation of Jaguar M/S. Millenium Agi o System (Rs. 80,00,000/-) * Notice U/s. 133(6) dtd. 27.10.14. * Reply dtd. 07.11.14 of notice U/s. 133(6) * PAN Card * Audited Financial statements - A.Y. 10-11. * Ledger A/c of assessee in the books of Millenium - A.Y. 10 - 11. ....
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..../c from Greenvision * Confirmation from Greenvision for subscribing the shares of assessee * Agreement for purchase of shares * Allotment letter from Upvan Leasing P Ltd. to Greenvision * Confirmation of application by Ganesh Ganga Investment P Ltd. * Affidavit by director of Greenvision * Certificate of Incorporation of Greenvision M/S. USK EXIM (P) Ltd (Rs. 80.00,000/-) * Notice U/s. 133(6) dtd. 27.10.14. * Reply dtd. 07.11.14 of notice U/s. 133(6) * ITR Ack. -A.Y. 10-11. * Audited Financial statements - A.Y. 10 - 11. * Ledger A/c of assessee in the books of USK Exim - A.Y. 10 - 11. * Confirmation of A/c from USK Exim * Confirmation from USK EXIM for subscribing the shares of assessee * Agreement for purchase of shares * Allotment letter from Anand Motor Product P Ltd. to USK Exim * -do- from AMP Motor P Ltd. to USK Exim * Affidavit by director of USK Exim * Certificate of Incorporation of USK Exim M/S. Star Delta Traders (P) Ltd (Rs. 1,00,00.000/-) * Notice U/s. 133(6) dtd. 27.10.14. ....
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....s. 133(6) * PAN Card * Audited Financial statements - A.Y. 10-11. * Ledger A/c of assessee in the books of Shubh - A.Y. 10-11. * Confirmation of A/c from Shubh * Confirmation from Shubh for subscribing the shares of assessee * Agreement for purchase of shares * Allotment letter from Rewin Ceramics P Ltd. to Shubh * -do- from Saral Communications P Ltd. to Shubh * -do- from Ganesh Ganga Investment P Ltd. to Shubh * -do- from Prabhash Motor Finance Co. P Ltd. to Shubh * Affidavit by director of Shubh * Certificate of Incorporation of Shubh M/S. Ranchor Electronics (P) Ltd (Rs. 86,50,000/-) * Notice U/s. 133(6) dtd. 27.10.14. * Reply dtd. 07.11.14 of notice U/s. 133(6) * PAN * ITR Ack. -A.Y. 10-11. * Audited Financial statements - A.Y. 10-11. * Ledger A/c of assessee in the books of Ranchor - A.Y. 10-11. * Confirmation of A/c from Ranchor * Confirmation from Ranchor for subscribing the shares of assessee * Agreement for purchase of shares * Allotment letter from Bhavya Aluminium P ....
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....eparates the case of the assessee from all other cases of share capital and share premium is that, here it is not the case where the assessee has received any money in form of cash or cheque in lieu of share application or share premium; rather the assessee had received investments in form of equity shares held by these companies in their balance sheet for a long time and duly disclosed in their income tax particulars. This fact is undisputed and is clearly borne out from various replies filed by the assessee before the Assessing Officer and also before the Ld. PCIT. The details of investments purchased by the assessee company in lieu of share allotment for the F.Y. 2009-10 is reproduced hereunder: Details of Investments Purchased In lieu of share allotment for the FY 2009-10 SL. No. Name of allottee Name of the script (Investments) No. of shares Value per share Value of Investment Gross value of Investments 1 Bankey Bihari Apparels Ltd. (36400 Eq shares of Rs. 10 each at a premium of Rs. 240 per share) Salasarji Infosoft Pvt. Ltd. Maharthi Steels Pvt. Ltd. Real Frame Infrastructure Pvt. Ltd. Welco Agencies Pvt. Ltd. Kanahiya I....
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....00 4000000 7000000 8 USKExlm Pvt. Ltd. (32000 Eq shares of Rs. 10 each at a premium of Rs. 240 per share) Anand Motor ProductsjM. Ltd. AMP Motor Pvt. Ltd. 25000 30000 200 100 5000000 3000000 8000000 9 Star Delta Traders Pvt. Ltd. (40000 Eq shares of Rs. 10 each at-a premium of Rs. 240 per share) Upvan Leasing Pvt. Ltd. Ganesh Ganga Investment Pvt. Ltd. Royal Mirage Financial Consultants (P)Ltd. 3000 25000 36000 1000 100 125 3000000 2500000 4500000 10000000 10 Join Fashion Pvt. Ltd. (32000 Eq shares of Rs. 10 each at a premium of Rs. 240 per share) Bhoomi Earthmovers Pvt. Ltd. Prabhas Motor Finance Co. Pvt. Ltd. Saral Communications Pvt. Ltd. 30000 5000 12500 100 500 200 3000000 2500000 2500000 8000000 11 At a premium of Rs. 240 per share) Ganesh Ganga Investment Pvt. Ltd. Rhythm Exim Pvt. Ltd. 45000 190000 100 10 4500000 1900000 &....
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....dger account for transactions with concerned company for F.Y. 2003-10 as per books of our company is attached for your kind reference. That we have not made any payment or received any amount by cash or bank from the said company during F.Y. 2003-10. That our company has subscribed 37680 equity shares of face value Rs. 10/- each of M/s. Canton Textile Mills Private Limited at a premium of Rs. 240/- per share aggregating to value Rs. 34,20.000/- during F.Y. 2009-10 only. Certified true photocopy of allotment letter/ agreement executed in this regard is enclosed. The aforesaid shares have been allotted to us towards agreed consideration of otherwise than cash of Rs. 34,20.000/- against sale of our pre-existing investment in 35360 equity shares of M/s. Royal Mirage Financial Consultants(P)Ltd., 2500 equity shares of M/s Upvan Leasing (P)Ltd. and 25000 equity shares of M/s Canesh Ganga Investment Pvt. Ltd. duly sold and transferred to M/s. Canton Textile Mills Private Limited at the same time during F.Y. 2003-10. Therefore we have not made any payment for the same in cash or by any mode through bank. Aforesaid transactions are duly recorded in our bo....
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.... in this case, once there is no transaction in terms of any money, then there could be no question of seeing the creditworthiness by way of their annual revenue or income. The reason being, all these companies were holding investments right from the earlier years in the form of equity shares of various companies and the shares held as investment by them has been transferred to the assessee in consideration for allotment of equity shares. Thus, the source of shares received by the assessee is flowing from investments held by them in their balance sheet which have been part of their assessment records. Under the peculiar facts and circumstances of the case, we do not find any reason that there was any lack of enquiry done by the AO or non-application of mind qua the creditworthiness or genuineness of the transaction. Once, the Assessing Officer has found that a transaction is not in terms of any money after the detailed inquiry and getting the entire records from these 15 companies, then we are unable to appreciate as to how the ld. Pr. CIT had reached to a conclusion that the Assessing Officer has failed to investigate the genuineness and creditworthiness of source of funds credited....