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2019 (10) TMI 443
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....der the Act for filing an appeal against an order of the CIT(A) passed under section 250. 1.2 That there was a delay in filing of the appeal before your goodself due to the ill health of the Managing Director of the Company who is primarily responsible for the decision making of the Company and was thus incapable of arranging for the filing of the said appeal. 1.3 That there was a delay in filing of the appeal due to the unexpected resignation and disassociation of all the key employees and Chartered Accountant responsible for handling the accounts and other documentation of the Company. 1.4 That there was a delay in filing of the appeal due to the change in the registered office of the Company due to which there was a delay in the receipt of the order of the Hon'ble CIT(A) and also lead to the misplacement and mismanagement of the relevant documents required for the filing of the appeal. 2.0 Addition of share application money pending allotment 2.1 That on the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in confirming the addition made by the Learned Assessing Officer ("Learned AO") vide his order pass....
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....oney. The learned assessing officer noted that the above sum was received from Navya Infrapower Private Limited. Despite repeated opportunities given to the assessee, it could produce only on 30/03/2016 the balance sheet and bank account statement of Navya Infrapower Ltd. AO noted that the authorized representative has shown his inability to provide the copy of the income tax return in respect of above company. Therefore the learned assessing officer noted that the assessee company has failed to provide the desired information even after availing numerous and sufficient opportunities. Thereafter the learned assessing officer noted that it is the settled principle of law that the burden of providing the source of credit is on the assessee. Thus, the AO noted that Assessee Company has received share application money in the garb of accommodation entry from Messer Navya Infrapower Ltd. Further details of profit and loss account of the above company reveals that company has shown income from other sources to the extent of only INR 5100 for the year ended on 31st of March 2013. Thus, he held that the assessee has received share application money of Rs. 33300000/ - of which creditwort....
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....ted that the company has received share application money of INR 1 3690/- from Ananad Rao Infrastructure Private Ltd in financial year 2013 and Rs. 116068436/- before financial year 2013. Therefore total share application money received from Navya Infrastructure Private Limited of Rs. 116082396/- to issue 670996 shares at INR 173/- including share premium of INR 163/-. On the explanation of the assessee, the learned CIT - A sought information under section 133 (6) from the investor through speed post which was not received back. Further, no reply was also received from those parties. The CIT appeal also sent reminders to both the companies through speed post, which were also not received back, and no response was received. The learned CIT - A brought the fact of the notice issued by him to the assessee and assessee was requested to obtain the information from these two companies, as these companies were shareholders of the appellant. However, no reply was filed by the assessee. Thereafter in Para number 3.10 of the order the learned CIT - A analyzed the statement of account of Punchamrit Real Estate Private Limited and other shareholders. In Para number, 3.1 to he also noted the....
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....n these companies there are no salary expenses, electricity expenses, rental expenses and office maintenance expenses. Therefore, he held that it is clear from the fact that these companies in fact never existed and were only paper companies. He noted that it is evident that the transactions of the share capital were accommodation entries and the genuineness of the transaction and creditworthiness of the said applicants has not been proved. He further noted that from the details it is apparent that the amounts introduced by the various companies as share capital in the appellant company were received by these various companies in their bank accounts on the very same day or a couple of days prior to the date on which the share capital was introduced. These amounts were rooted to various bank accounts in order to give them effect of genuineness. He further referred to the annual accounts of those companies, found that there is a very small amount of share capital in the form of shareholders fund, and share application money. In each of these companies, there is a huge amount of share premium. The perusal of the profit and loss account of these companies had no substantial taxable inc....
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....of that there was a delay in receipt of the order of the learned CIT appeal which lead to the misplacement of the relevant documents required for the filing of the appeal. He therefore submitted that cause of delay in filing the above appeal is beyond the control of the assessee, not deliberate and may be condoned. 6. The learned departmental representative submitted that the order of the learned CIT - A was communicated to the assessee on 21/12/2017 as per the column number 6 of form number 36 whereas the assessee has filed appeal on fourth may 2018. Therefore, there is a considerable delay of more than 3 months in filing of the appeal. He further stated that the explanation given by the assessee does not show that there is a sufficient reason in filing of the appeal belatedly. 7. We have carefully considered the rival contention and found that the order of the learned CIT - appeal was communicated to the assessee on 21/12/2017; however, the assessee could file the appeal only on fourth may 2018. The assessee has submitted that the main person Shri Girdharilal who is the director of the company was seriously ill in the year 2016 and after a prolonged illness; he passed aw....
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....dditional evidences may be admitted. 9. He further submitted that the appellant is a private limited company owning 25.98% shares of RS India energy Ltd and 43.66% shares of RS India global energy limited. It also owns 63% shares of R K wind limited. This company also engaged in the business of production collection and distribution of electricity. The power trading Corp India Ltd the leading provider of power trading solution in India was established in the year 1999 is a government of India initiated public-private partnership whose primary focus is to develop commercially vibrant power market in the country. PTC India financial services Ltd has been promoted by PTC India Ltd as a company Incorporated under the companies act and registered with Reserve bank of India as a nonbanking financial company. In February 2009, a Memorandum of Understanding was signed among PTC energy Ltd, RS India global energy Ltd and RS India wind Energy private limited to setup 1000 MW wind energy project in different parts of India with the specific roles and responsibilities for each of the participating partner in the memorandum of understanding. He submitted the copy of the Memorandum of Underst....
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....areholders. In view of this, he submitted that the appellant has furnished the due evidences, which may kindly be admitted, and the instant appeal may kindly be set aside to the file of the learned assessing officer to examine the contention of the appellant in the light of the aforesaid factual position. He therefore submitted that there is no reason to hold that in such a transaction shareholder to be a non-genuine. He submitted that all these memorandum of understanding as well as the agreements could not be produced before the ld Lower authorities due to the situation prevailing on part of the assessee. These agreements needs to be analyzed to understand that the shareholders are genuine entities, the sources of funds is also explained and due to these agreements, there cannot be any doubt in the genuineness of the transactions. He referred to clause-by-clause conditions and understanding between those parties to show that there is complete clarity and business sense in those transactions. 10. The learned departmental representative vehemently supported the order of the lower authorities and submitted that despite being given a specific opportunity to the assessee at many po....
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....ent parts of India. The assessee has also produced before us the copy of the agreement entered with Navya Infrapower Ltd, one of the shareholders, held to be nongenuine and RS India global energy Ltd and RS India wind energy private limited. According to this agreement, there are certain arrangements between the parties for setting up of the power plant. Further as per annexure -4, assessee has shown that Mr Manoj, Sanjit Roy, Suman Devi and Shushil Kumar are the directors of the shareholder company and they also hold the permanent account number. Further the assessee has also tried to explain before us the source of the funds available with Navya Infrapower Private Limited in the form of share application and allotment money available of INR 1 6700000/- . Further, the bank statement of state bank of India of the shareholder is also produced wherein the transactions have been shown through banking channel. There are also amount credited because of premature closure of the fixed deposits receipts showing source of the funds invested in the appellant company. The confirmation has also been submitted of the depositor. As these details have been submitted by the assessee before us by i....