TaxTMI 
TaxTMI 
2019 (10) TMI 901
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.... for hearing on 10.07.2019. On the said date, a preliminary hearing took place wherein the department was required to address the facts relatable to ground No. 2. The ld. CIT-DR Ms. Joshi relying upon her written application sought some time. The hearing was accordingly adjourned to 11.07.2019. 3. On the said date, the ld. CIT-DR inviting attention to the assessment order submitted that the assessee belongs to Genex Group of cases on which search & seizure operation took place u/s 132 of the Act on 23.05.2013. During the search operation, various documents were found and seized from various business and residential premises of the group. Return in response to notice u/s 153A was filed. On the subject matter of the addition challenged by the Revenue in the present case, it was her submission that the assessee had shown Rs. 2.70 Crores in his audited books of account as receipt of share application money. Carrying the argument further, it was submitted that when the issue was enquired into by the AO, the assessee could offer no explanation and instead replied that the assessee had not received any share application money in the year under consideration. It was submitted that since....
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....d. Accordingly, it was her submission that the position as argued before the CIT(A) and considered by the CIT(A) is even otherwise not borne out from the record. 3.5 In the circumstances, it was her submission that either ground No. 1 raised by the Revenue be allowed, alternately addressing the violation of Rule 46A challenged in ground No. 2 by the Revenue, the matter may be remanded to the AO for setting right the statutory violation. 4. These aspects pointed out by the ld. CIT-DR were required to be addressed by the ld. AR who in the circumstances agreed that the matter may be remanded in terms of the prayer of the Revenue. No further submissions were made. 5. We have heard the rival submissions and perused the material available on record. Before adverting to facts, it is appropriate to address the specific grievance addressed by the Revenue in the present proceedings vide Ground No. 2 raised in the appeal. The fact that fresh evidences have been filed is not disputed by the ld. AR. The fact that fresh evidences were relevant or crucial for determining the issues is not disputed by the Revenue. The fact that the requirements of sub-rule (1) and (2) of the Rule 46A of the Inc....
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....ount of share application money received. 5.1 The appellant has submitted as under:- That on the facts and in the circumstances of the case and in law, Ld AO erred in making colossal and gargantuan addition of Rs. 2,70,00,000/- being Share Application Money received. The AO has made addition without verifying and going through the documentary evidences submitted. In this respect, it is stated that on 31st March, 2010, the assessee received 4 Cheques from Sh.Anubhav Aggarwal director of the Company. Details of cheques are as under: Date Cheque No. Amount 31.03.2010 478724 10000000.00 31.03.2010 478725 10000000.00 31.03.2010 478726 4000000.00 31.03.2010 478727 3000000.00 Total 27000000.00 But these cheques were never presented into the bank and cancelled on 05.04.2010. Photocopy of cheques cancelled, Copy of Share Application money are enclosed for your reference. Since no money was received the AO contention to prove the identity, genuineness and credit worthiness of Sh. Anubhav Aggarwal who is principal director of the Company does not arise. Hence it is prayed that this addition of Rs. 2,70,00,000/- may kindly be deleted. 5.2 I have gon....
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....ition as well as accounting and auditing principles and find that so far as accounting of share application money is concerned, the appellant was justified in passing accounting entries on 31 March 2000 and on receipt of 4 cheques from Sh. Anubhav Aggarwal amounting to Rs. 2.70 crores. However, when these cheques were not encashed and presented in the bank account, the auditor was duty bound to state in the audit report this fact as the amount stands duly reflected under the head share application money in the liability side of the balance sheet. This disclosure was not made by the auditor and therefore, I hold that audited accounts did not reflect a true and fair picture of the statement of affairs. 5.7 I find that provisions of section 271J have been inserted by the Finance Act 2017 to provide for penal consequences for furnishing an incorrect information in any report or a certificate furnished by an accountant under any provisions of this act. It would be relevant to reproduce the provisions of this section, which are as under:- [Penalty for furnishing incorrect information in reports or certificates. 271.J. Without prejudice to the provisions of this Act, where the Asses....
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.... reflected shows 'zero' funds as available as on 31s t March, 2011 with increase in share capital suggesting that some shares have been issued. Reference at this point of time may also be made again to the Balance Sheet as on 31s t March, 2011 extracted in the earlier part of this order which shows that there is an increase in Reserves and Surplus from Rs. 9 Crore odd to Rs. 18 Crore odd. When the said position is considered as expanded in Schedule-2 to the said Balance Sheet available at Paper Book page 63, it is seen that there is an increase in share premium from Rs. 7.70 Crore to Rs. 14.77 Crore odd, thereby suggesting that possibly shares have been allotted at a premium. The relevant extract of Balance Sheet from the respective pages in the Paper Book relied upon by the ld. CIT-DR are extracted hereunder for the sake of completeness: (Extract of Balance Sheet from Paper Book page 35) MESSERS B.R. SPINNERS PRIVATE LIMITED, LUDHIANA BALANCE SHEET AS ON 31ST MARCH 2010 SOURCES OF FUNDS SCHEDULE No. 31ST MARCH 2010 31ST MARCH No. 2009 SHARE HOLDER'S FUNDS Share Capital Rs. 1 47186500.00 47186500.00 Reserves & Surplus 2 94278634.41 90759144.31 Share Ap....
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....ion to him to comply with sub-rule (3) of Rule 46A. The procedure which the CIT(A) is required to follow is set out in Section 250 of the Income Tax Act. The Court went on to examine the distinction between sub-rule (4) of Rule 46A with sub-section (4) of Section 250 of the Act. Sub Section (4) of Section 250 of the Income Tax Act empowers the First Appellate Authority that; "he may direct the Assessing] Officer to make further inquiry and report the result of the same to the Deputy Commissioner (Appeals)] or, as the case may be, the Commissioner (Appeals)]. As noted Rule 46A of the Income Tax Rules governs production of additional evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals). Sub-Rule (4) of Rule 46A unambiguously clarifies that, "Nothing contained in this rule shall affect the power of the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the [Assessing Officer])....