TaxTMI 
TaxTMI 
2019 (6) TMI 651
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....ated 30.03.2016 u/s. 148 of the Act and reopened the assessment for the A.Y. 2009-10. The assessee was asked to provide justification and past performance of the company to receive huge share premium and also to provide details such as income tax returns, copies of balance sheets, copy of bank statements of the shareholders namely M/s. Arena Textiles and Industries Pvt. Ltd., and from Shri Madanlal Paliwal, where the assessee received share application money of Rs. 1,99,20,000/- and Rs. 1,45,25,000/- respectively. 4. Assessee filed basic documents relating to the said share application money in respect of both the investors such as the income tax returns, copy of balance sheets and their bank statements to prove the identity, genuineness and creditworthiness of the shareholders. Assessee filed valuation report of the premium received from the shareholders. In the course of the assessment proceedings assessee also contended that the notice u/s. 148 of the Act dated 30.03.2016 which was sent though speed post was not served on the assessee within the time prescribed and therefore the assessment is time barred. However, not convinced with the submissions made by the assessee the As....
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....sessment was reopened within the prescribed time. In any case he submits that since the assessee has attended for the subsequent notices as per the provisions of section 292BB of the Act it shall be deemed that any notice under any provisions of this Act has been duly served in accordance with the provisions of the Act. 7. Coming to the merits of the case, the Ld. DR submitted that shareholder company could not be found by the investigation wing of Kolkata and therefore the Assessing Officer could not serve summons u/s. 131 of the Act. Ld. DR submits that the Inspector deputed could not found the company. Ld. DR also submits that the Statement of one Mr. Mantosh Kumar Yadav who provided only accommodation entries was recorded wherein he has stated that he is the Director of 66 Companies all these companies are paper companies and the shareholder from which the assessee has obtained share application money is one of such company. Ld. DR also submits that shareholder company has shown negligible taxable income. It is therefore submitted that the assessee has not provided any details to the Assessing Officer to prove the identity, genuineness and creditworthiness of the transaction....
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....tis B 403, Oshivara, Andheri (w), Mumbai, proves that the stand of the Assessing Officer is full of contradictions, irrelevant and against the just and fair view. Rather, the attempt has been made by the Assessing Officer to conceal the fact and report patently false facts. This can be verified from the assessment record as well as report of the Assessing Officer. dated 9/8/2017. It is submitted that having noticed that the notice u/s. 148 of the Act dated 25.04.2016 was time barred for A. Y. 2009-10, Assessing Officer sent notice dated 30/3/16 with a view to cover the failure of proper service of notice in time. Therefore, it is submitted that the contention of the Assessing Officer that valid issue and/service of notice u/s 148 was made is not tenable in law. 10. Ld. Counsel for the assessee further submits that the Appellant never participated in the assessment due to pendency of application u/s.144A. Therefore, he submits that the Assessing Officer has erroneously placed reliance u/s 292BB of the Act, and it is the settled law that legal defects cannot be cured even u/s 292BB particularly when the application u/s I44A remained unattended. Therefore, this plea of the Assessin....
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....nder: - "3.6 I have circumspected the spectrum of facts and circumstances of the case under appeal and have carefully considered the finding of the Assessing Officer in assessment order, counter representation of the Appellant, evidences on record, application under rule 46A, counter comments dated 09.08.2017 of the Assessing Officer and rival submission of the appellant. I find that Appellant has demonstrated with necessary evidences that no notice under 148 was ever issued in time on correct address of the Appellant i.e. " M/s Re N Raga Media Pvt. Ltd., Bunglow No. A8, SVP Nagar, Nr., Versova Tel.Exchange Andheri (W), Mumbai 400 053. The notice u/s 148 dated 25.04.2016 issued by ACIT Cir-2, Thane and served on assessee on 30.04.2016 was time barred because for issuing notice u/s 148 for AY 2009-10, limitation was upto 31.03.2016. For ready reference, copy of notice is demonstrated as under: - NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 PAN - AAKCS8934L Office of the Asst. Commissioner of Income-tax, Circle-2, Thane, Ashar I.T. Park, Road No. 16Z, Wagle estate, Ambika Nagar, Thane (W) Dated 25/04/2016 To, M/s Re N R....
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....u are requested to attend the office of undersigned on or before 07.09.2015 at 2.30 Purchase>Mumbai along with all the details of copy of Return, computation of income and Audit Report alongwith all enclosures. This letter is issued in vow of the provisions of Sec 129 of the I.T.Act 1961. Yours faithfully (DHIRAJ KUMAR) Asstt. Commissioner of Income-tax, Circle-2, Thane 3.8 When same Assessing Officer has intimated the appellant about change of incumbency at new and correct address in 2015, it is not understood as to why subsequently on 30.03.2016, he has issued notice on different or wrong address. However, a new notice u/s 148 dated 25.04.2016 was issued on correct address which was time barred, hence the factual clarification made by the learned A R cannot be ignored. Obviously, no such notice dated 30.03.2016 was ever issued on correct address. Similarly, no proper affixture was made at correct address on 31.03.2016 by the inspector. Further it is noteworthy that so called affixture has also been done, if at all has been done, at wrong address, therefore it is very evidence that while submitting the counter comment dated 09.08.2017, learned Assessing Office....
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....para 8 of the assessment order, learned Assessing Officer has mentioned the objection of the appellant, but has not demonstrated the fact that no such notice was ever issued at correct address and has therefore not refuted the objection of the appellant. It is pertinent to mentioned that by letter dated 24.12.2016, appellant has submitted its objection nevertheless, Assessing Officer had not refuted it with any reliable evidence in possession, hence such reassessment proceeding is bad in law as held by Hon'ble Bombay High Court in the case of Bayer Material Science Pvt.Ltd. vs. DCIT (2016)382 ITR 333(Bombay) and Bharat Jayantilal Patel Vs. Union of India (2015) 378 ITR 596(Bombay)." 13. None of these findings of the Ld. CIT(A) have been rebutted with evidences before us. As the Revenue could not prove that there was proper issue and service of notice u/s. 148 of the Act on the assessee within the time prescribed i.e. on or before 31.03.2016 for the A.Y. 2009-10, the Ld. CIT(A) has rightly concluded that the reopening u/s. 147 is bad in law. On this ground alone the assessment framed u/s. 143(3) r.w.s 147 of the Act is liable to be quashed. 14. Even on merits the Ld. CIT(A....
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....d more than sufficient evidences in support of its contention. 3.13. One glaring evidences is also there that M/s Arena Textiles And Industries Ltd. is being regularly assessed to tax. Copy of the assessment order of AY 2010-11 dated 22.03.2013 passed by DCIT(CENTRAL Circle)-XIII, Kolkata, creating demand of Rs. 3,07,560/- has been submitted. This is not new or additional evidence, but the basic evidence available with department. Similarly assessment order of AY 2009-10 dated 26.12.2011 of M/s Arena Textiles And Industries Ltd. has been submitted which proves the identity of the investor company. Similarly, copy of bank statement submitted reveals the advancement of money through proper channel, hence genuineness of transaction is also visible. Further, as clarified by the appellant, investor company was having sufficient fund to advance the share application money. It has got share holding funds of Rs. 48,15,43,667/- in AY 2009-10, hence creditworthiness is also established by the appellant. Therefore, unless contrary evidence is brought on record by the Assessing Officer, no such addition can be made on the basis of presumption and surmises. In making any assessment und....
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.... (iii) DCIT CC-1, Mumbai vs. M/s SBJ Trading (I) Ltd., (ITA No. 923/Mum/2013). Further, the Hon'ble ITAT "A" Bench, Mumbai has on 30.11.2015 decided similar matters having identical facts against such addition. These cases are : i) ITA No. 3645/Mum/2014: ITO 10(2)(4) vs M/s Superline Construction Pvt Ltd. ii) ITA No. 3644/Mum/2014: ITO 10(2)(4) vs M/s Sitara Properties Pvt Ltd. iii) ITA No. 3646/Mum/2014: ITO 10(2)(4) vs M/s Samsung Builder & Developer Pvt Ltd. iv) ITA No. 3647/Mum/2014: ITO 10(2)(4) vs M/s Soumya Trading & Finance Pvt Ltd. v) ITA No. 3648/Mum/2014: ITO 10(2)(2) vs M/s Prarup Properties Pvt Ltd vi) ITA No. 3650/Mum/2014: ITO 10(2)(2) vs M/s Roop Darshan Real Estate Pvt Ltd vii) ITA No. 3651/Mum/2014: ITO 10(2)(2) vs M/s Sumangal Builder & Developer PLtd. In all the above cases the Assessing Officers have made additions u/s 68 of Income Tax Act of Share Application Money received based on information provided by the Investigation Wing of Income Tax Department. However, the additions were deleted by the respective learned CIT(A) against which the department had filed Appeals bef....
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....ence". 16. Hon'ble Delhi High Court in the case of CIT v. Divine Leasing & Finance Ltd. [299 ITR 268] in para nos. 13 & 16 has held as under: "13. There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue. the Company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the IT Act. The burden of proof can seldom be discharged to the hilt by the assessee: if the....
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.... in Nova Promoters and Finlease Pvt. Ltd. 18 Taxman.com 217 wherein the Court has observed that cases of this type cannot be decided only on the basis of documentary evidences above and there is need to take into account the surrounding circumstances. 6.5 The Tribunal ought to have taken note of the fact that the assessee was not able to produce even a single party before the AO despite agreeing before the CIT(A) that it will produce all parties before the AO during remand proceedings." 2. Mr. Pinto, the learned counsel for the Assessee submits that the Assessing Officer upon considering all the facts had added Rs. 95 lakhs as income under Section 68 of the Income Tax Act. It needs to be considered that the Assessee had not discharged its onus to establish that the amount was received by the Assessee from the share holders as share application money. The Assessee could not prove the identity of the creditors, their credit worthiness and the genuineness of the transactions. The party from whom the Assessee had received the share amount never responded to the summons issued by the Assessing Officer. The Assessing Officer has considered the said aspect and thereafter....
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.... accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case. 7. Considering the above, no substantial question of law arises. The appeal stands dismissed. However, there is no order as to costs." 18. The Hon'ble Delhi High Court in the case of MOD Creations Pvt. Ltd., v. ITO [354 ITR 282] held as under: - "13. In the light of the above principle, let us examine as to what the authorities below found vis-à-vis the genuineness of the transactions and the creditworthiness of their creditors. (i) The fact that there was sufficient balance available with the creditors when cheques have been issued to the assessee company was established. (ii) It was also established that the funds available at the relevant point in time were not infused into the bank accounts of the creditors by way of cash but were in fact credited to their account again by wa....
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....the loan and not that of its directors and shareholders or that of the sub- creditors. If it had any doubts with regard to their credit worthiness, the revenue could always bring it to tax in the hands of the creditors and/or sub-creditors. [See CIT Vs. Divine Leasing & Finance Ltd., (2008) 299 ITR 268 (Delhi) and CIT Vs. M/s. Lovely Exports (P) Ltd. (2008) 216 CTR 195 (SC)]." 19. In the case of ACIT v. Shri Ramesh Ramswarupdas Jindal in ITA.No. 3091 to 3096/Mum/2017 dated 15.11.2017 the Coordinate Bench held as under: - "9. We have heard the rival submissions, perused the orders of the authorities below, the case laws relied on and the material furnished before us. The only issue involved in this appeal relates to the deletion of addition of Rs. 20 lakhs made by the Assessing Officer towards unexplained unsecured loans and interest thereon amounting to Rs. 2,35,246/. Search and seizure action u/s. 132 of the Act has been conducted in the case of Shri Pravin Kumar Jain and statements were recorded from him and he is said to have been deposed that he is providing only accommodation entries through various concerns. On the basis of this information received from DGIT(inve....
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....nts referred to and relied upon by the assessing officer have never been disclosed to the appellant opportunity for cross examination was also not given, hence such statement could not be utilized against the appellant without giving full and proper opportunity of cross examination as has been held vide Mahesh Gulabral Joshi Vs. CIT(A) (2005) 95 lTD 300 Mumbai ITAT and Hon'ble Supreme Court decision in the case of KishanchandChellaram Vs. CIT (125 ITR 713 (SC)). 6.3. Further during the course of assessment proceedings, the appellant has produced copy of a comprehensive Affidavit of Shri. Pravin Kumar Jain dated 25.04.2014 retracting, the statements made before the Investigation Wing. Assessing officer has not given opportunity to the appellant for cross examination of Shri Pravin Kumar Jain. Going by the discussion contained above, it is obvious that the inference drawn by the Assessing officer against the appellant is not sustainable for the simple reason that the principles of natural justice have not been followed. First and foremost, the appellant has not been given any access to the material (reports, intimations, statement etc.) used against it. Secondly, by withhold....
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....nnot be made merely on the basis of suspicion, surmises and conjectures. There has to be some concrete evidence whether direct or circumstantial. In this case, no such evidence is present. On the contrary, the appellant is showing from the record that he has received loan through account payee cheques from above TWO PARTIES. He has shown that the loans have been repaid through account payee cheque and as long as he was holding the loan, he has paid the interest after deducting TDS. With regard to the disallowance of interest on loans taken from afore-mentioned parties, the appellant submitted that the AO has also ignored the fact that the said interest expenses were incurred wholly, exclusively & necessarily for business of the Appellant. The interest paid on loans was subject to TDS. During the present proceedings, the appellant also submitted the details of the TDS made on the loans wherever it is applicable and the details of amount of TDS paid into the Government account. In the appellant case the addition made towards the said loans is deleted after discussing the issue in detail in the above paragraphs. 6.6. Thus, above discussion and various explanations leads to th....
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.... the case ACIT v. M/s. H.K. Pujara Builders in ITA.No. 930/Mum/2017 dated 31.10.2018, the Coordinate Bench held as under: - 6. We have heard the rival submissions, perused the orders of the authorities below. Assessing Officer made addition by placing reliance merely on the statements of Shri Praveen Kumar Jain Group and Shri Bhanwarlal Jain Group which were recorded u/s. 132(4) of the Act. No independent enquiry was carried out by the Assessing Officer, he has not brought any corroborative evidence to substantiate that the transactions are non-genuine. Assessee provided various evidences to establish that the transactions are genuine, creditors are identifiable and credit worthiness is proved. Following information is furnished by the assessee. (1) Confirmation of A/c. by the parties. (2) Income tax returns of the parties for A.Y.2012-13. (3) Bank Statements of the parties showing the loan transactions. 7. By providing all this information to the Assessing Officer the assessee has discharged the initial onus of proving genuineness of the transactions u/s. 68 of the Act. Even the assessee requested Assessing Officer for issue of notices ....
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....ut in the case of Mr.Pravin Kumar Jain the conclusions drawn therein cannot be applied ipso facto to all other cases. Simply relying on the report of the DGIT(Inv), Mumbai and statement the AO cannot conclude that all transactions are accommodation entries. 5.11. The case of the appellant is covered by the decision of ITAT, T Bench, Mumbai, in the case of Satish N. Doshi HUF Vs. ITO, Ward 21(2)(4), Mumbai in ITA No-2329/Mum/2009 and the decision of ITAT, 'E' Bench, Mumbai in the case of Shaf Broadcast Pvt. Ltd Vs. ACIT, Cir-9(3), Mumbai in ITA No.l819/Mum/2012. Both the cases relate to re-opening of assessment on the basis of statements of Mr. Mukesh Choksi and Mr. I.C. Choksi and associated brokerage companies. The Hon'ble ITAT on the analysis of the findings made in the assessment orders has reached to the conclusion that the re-opening itself is bad in law and quashed the orders accordingly. The ratio of these judgments is applicable to the facts of the instant case. This is confirmed by the Delhi Bench of the Income Tax Appellate Tribunal in the case of DCIT v. Nipun Builders & Developers P. Ltd. (ITA No.557/DEL/2010) wherein the Tribunal dismissed the Reve....
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....s are applied to the facts of the case under consideration, it can be seen that the identity of the creditors has been established as they are having PAN and they are regularly filing return of income. The genuineness of the transaction is established from the fact that both the acceptance and repayment of loan has been through banking channels. The creditworthiness of the lenders can be established from the statements. In the assessment order, the A.O. did not at all discuss the merit of submission made by the appellant and casually brushed aside the details filed by the appellant. Further, the appellant has stated that he had furnished all the relevant details during the course of the assessment proceedings and accordingly had duly discharged its onus by furnishing the identity and address of the parties. Further, the source of receipt through banking channels to substantiate the genuineness of the credits reflected in its books of Account. 5.14. Further, it may be pointed out that section 68 under which the addition has been made by the Assessing Officer reads as under-: "68. Where any sum is found credited in the books of an assesses maintained for any previou....
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....pex Limited CS-1, Silver Anklet, Yari Road, Versova, Mumbal 400 061 AAACA7065L 20,00,000 9% 2. Lexus Infotech Ltd. 626, Panchratna, Opera House, Mumbai 400 002 AAACL4646G 20,00,000 9% When the Assessing Officer asked the assessee to prove the genuineness of these loans, the assessee submitted the following documents: a. Copy of acknowledgment of income tax return filed for A.Y. 2007-08. b. Copy of PAN of the parties c. Copy of bank statement of the parties from where the cheque is issued. d. List of directors of the parties e. Copy of annual report of the parties for financial year 2006-07. f. Copy of loan confirmation from the parties. The Assessing Officer treated these loans to be non-genuine and made addition u/s 68 of the I.T Act on the basis of the statement of Shri Nilesh Parmar, one of the associate of Shri Praveen Kumar Jam, Director of Mohit International and one of the dummy Director of some of the companies of Shri Praveen Kumar Jam. Although said statement has been immediately retracted by him by filing an affidavit with the CBDT, the CIT(A) has deleted the said addition as ....
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....o discharge the burden to prove the credit worthiness as well as the genuineness of the transactions. 10. But in the impugned case, we noted that the assessee has submitted all the evidences including the confirmation of the creditors. This is not a case where the creditors have not given confirmations rather they have duly confirmed to giving loan to the assessee, the loans were received and returned through banking channels. The assessee has also submitted copies of bank accounts. The lender has not deposited cash into bank account. The assessee has duly discharged the onus with regard to identity of the lender, credit worthiness of the party and all supporting evidences as required u/s. 68 of the I.T.Act. Therefore, in our opinion the decisions relied upon by the DR does not assist the Revenue to the facts of the present case. 11. We have also gone through the decisions relied upon by the learned AR. We noted that this Tribunal in similar circumstances in the case of Komal Agrotech Pvt. Ltd. vs. ITO in ITA No. 437/Hyd/2016 vide its order dated 25.11.2016 has held as under: A plain reading of the assessment order demonstrates that the AO merely went by ....
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....is the beneficiary of accommodation entries provided by Shri Pravinkumar Jain from his bogus companies. The AO further observed that though the assessee has furnished details of identity, failed to prove genuineness of transactions and creditworthiness of the parties in the backdrop of clear findings of Investigation Wing that Shri Pravinkumar Jain has admitted that he was indulging in providing accommodation entries. This fact has been further confirmed by Shri Dinesh Choudhary, broker involved in arranging accommodation entries with Shri Pravinkumar Jain, who stated that Shri Pravinkumar Jain is indulging in providing accommodation entries, therefore, the AO opined that unsecured loans stated to be received from those companies are unexplained credit and hence made addition u/s 68 of the Act. It is the contention of the assessee that loans received from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd are supported by valid documents. The assessee further submitted that it has furnished confirmation letters alongwith copies of their bank statement and acknowledgement of IT returns showing the above transactions. The assessee further contended that in response to notices ....
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....ry evidences including their financial statements, bank statements and IT returns. 6. The AO has made addition u/s 68 of the Act, on the ground that the unsecured loans are bogus accommodation entries provided by Shri Pravinkumar Jain through his hawala companies. The provisions of section 68 deal with cases where any sum found credited in the books of account of the assessee in any financial year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, then sum so credited may be charged to income-tax as the income of the assessee of that previous year. A plain reading of section 68 makes it clear that the initial burden of proof lies on the assessee. It is well settled legal position that the assessee has to discharge 3 main ingredients in order to discharge the initial burden of proof, i.e. the identity of the creditor, the genuineness of transaction and creditworthiness of the creditors. Once the assessee discharges initial burden placed upon him, then the burden todis prove the said claim shifts upon the AO. In this case, the assessee has discharged his onus cast u/s 68....