AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 604
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.... P& L account as sales. 3. Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred holding that the assessee had submitted all books of account before the Assessing Officer, when he had clearly failed to do so. 4. The appellant craves to be allowed to add any fresh grounds of appeal and /or delete or amend any of the ground of appeal. 2. Briefly stated facts of the case are that the assessee company filed its return of income electronically on 14/11/2007 declaring total income of Rs. 2761/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short 'the Act') was issued on 22/09/2008, which was duly served upon the assessee. During the assessment proceeding, compliance of various notices was made partly by the Authorised Representative appeared on behalf of the assessee. In the assessment completed under section 143(3) of the Act on 21/12/2009, the Assessing Officer made addition of Rs. 1,80,00,000/- under section 68 of the Act for the share application money/share capital shown to be received by the assessee during the year under consideration. The Assessing Officer also made addition of Rs. 6,14,000/- u....
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....ural Engineering (P.) Ltd. Vs. Deputy Commissioner of Income Tax [2018] 96 taxmann.com 255 (SC) 4. Konark Structural Engineering (P.) Ltd. Vs. DCIT, [2018] 90 taxmann.com 56 (Bombay) 5. DRB Exports (P.) Ltd. Vs. CIT [2018] 93 taxmann.com 490 (Calcutta) 6. CIT Vs. Nipun Builders & Developers (P.) Ltd. [30 taxmann.com 292, 214 Taxman 429, 350 ITR 407, 256 CTR 34] 7. CIT Vs. Nova Promotors & Finlease (P.) Ltd. [18 taxmann.com 217, 206 Taxman 207, 342 ITR 169, 252 CTR 187] 8. CIT Vs. Ultra Modern Exports (P.) Ltd. [40 taxmann.com 458, 220 Taxman 165] 9. CIT Vs. Frostair (P.) Ltd. [26 taxmann.com 11, 210 Taxman 221] 10. CIT Vs. NR Portfolio Pvt. Ltd. [2014] 42 taxmann.com 339 (Delhi) [2014] 222 Taxman 157 (Delhi) (MAG)/[2014] 264 CTR 258 (Delhi) 11. CIT Vs. Empire Buildtech (P.) Ltd. (366 ITR 110) 12. CIT Vs. Focus Exports (P.) Ltd [51 taxmann.com 46 (Delhi)/[2015] 228 Taxman 88] 13. PCIT Vs. Bikram Singh [2017] 85 taxmann.com 104 (Delhi)/[2017] 250 Taxman 273 (Delhi)/[2017] 399 ITR 407 (Delhi) 14. Rick Lunsford Trade & Investment Ltd. Vs. CIT [2016] 385 ITR 399 (Cal.) 15. Rick Lunsford Trade & Investment Ltd. Vs. CIT [2016-TIOL- 2017-SC-IT] (SC) 16. Hon'ble De....
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....pany, though the assessee filed confirmation along with copies of ITR acknowledgement from the share subscribers. The Assessing Officer also issued a final show cause on 02/12/2009, which has been reproduced in the assessment order. The said show cause notice also remained uncomplied. According to the Assessing Officer, on 17/12/2009, the authorised representative of the assessee attended however no further information was filed by him. The Assessing Officer made following observations in respect of the share capital/share premium received from the parties: (i) During the year assessee has shown sales of Rs. 6,14,400/- and against which deduted expenditure of Rs. 6,11,639/- claiming net profit of Rs. 2,761/- whereas in the immediately preceding year, there was no sale. (ii) The amount of income reflected in acknowledgement of return of income filed by the four share subscribers was nil and in respect of the remaining four parties, it was in the range of two to three thousand only. (iii) There are common directors in the share subscriber companies. (iv) The share capital/share premium has been subscribed in cash and even the assessee company has not shown any bank account i....
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....in terms of section 68 of the Act. 5.4 Before the Ld. CIT(A), the assessee accepted that due to non-cooperation of the subscribers to share capital, the directors of the assessee company were so perturbed and disturbed that they could not produce the books of accounts and other details as asked by the Assessing Officer. The assessee produced copy of the cashbook of the assessee company for the period from 01/04/2006 to 31/03/2007 before the learned CIT(A) in order to explain the cash received on account of share application money from various subscribers of share capital and further investment in share of various companies. The assessee also accepted that no dividend could be paid by the assessee company on the investment made by the subscribers of the share capital. Before the Ld. CIT(A), the assessee claimed that report of Inspector dated 09/12/2009 regarding no business activity at the addresses of the subscribers of the share capital, was not provided to the assessee. It was also contended that no cross-examination of Sh. K.K. Bansal was provided to the assessee. According to the assessee, there is nothing illegal to receive the share application money in cash and make further....
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....t notice issued to the 5 of the share applicants were returned unserved. The particulars of returns made available by the assessee and taken into consideration in paragraph 3.4 by the AO in this case would show that the said parties/applicants had disclosed very meager income. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. This discussion itself would reveal that even though the share applicants could not be accessed through notices, the assessee was in a position to obtain documents from them. While there can be no doubt that in Lovely Exports (P.) Ltd. (supra), the Court indicated the rule of "shifting onus" i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic burden stood discharged by furnishing relevant and material particulars, at the same time, that judgment cannot be said to limit the inferences that can be logically and legitimately drawn by the Revenue in the natural course of assessment proceedings. The information that assessee furnishes would have to be credible and at the same time verifiable. In this case, 5 share applicants could not....
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.... 68 of the Act and held that wherever the creditworthiness or genuineness of the subscriber of the share capital is not found to be satisfied, the addition made under section 68 of the Act, has been held to be justified. The relevant finding of the Hon'ble Supreme Court is reproduced as under: "11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged t....
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....3. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company - Assessee had filed all the primary evidence, the onus on the Assessee stood discharged. The lower appellate authorities failed to appreciate that the investor companies which had filed income tax returns with a meagre or nil income had to explain how they had invested such huge sums of money in the Assessee Company - Respondent. Clearly the onus to establish the credit worthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor companies were found to be non-existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee. 14. The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the ca....
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....ances, it cannot be said that the assessee has discharged its onus of explaining nature and source of the credit as required under section 68 of the Act. In the instant case, the Assessing Officer has not relied only on the report of the Inspector or on the statement of Sri. K.K. Bansal, who was engaged in providing accommodation entries and the Assessing Officer has taken into consideration the failure of the assessee in explaining the creditworthiness of the share subscriber companies as well as genuineness of the transaction. In view of the recent decision of the Hon'ble Supreme Court in the case of NRA Iron & Steel Pvt. Ltd.(supra), wherein the decision of in the case of CIT versus lovely export P Ltd (supra) has also been considered, we find that the assessee failed to establish the creditworthiness of the share subscriber parties and genuineness of the transaction and accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and restore the finding of the Assessing Officer of making addition under section 68 of the Act. The addition in dispute of Rs. 1.8 crore under section 68 of the Act is accordingly sustained. The ground No. 1 of the appeal of the R....
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....e before the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the [Assessing Officer], except in the following circumstances, namely :- (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the [Assessing Officer] ; or (c) where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any ground of appeal ; or (d) where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] s....