TaxTMI 
TaxTMI 
2019 (10) TMI 999
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....nce liable to be set aside and quashed and declared non est in law. 2. On the facts and circumstances of the case, the learned Ld. CIT (A) erred both on facts and in law, in sustaining, the order passed by the Ld. Assessing Officer is bad and liable to be quashed as the same has been framed on the basis of satisfaction note which does not reveal any incriminating evidence leading to undisclosed income. 3. On the facts and circumstances of the case, the learned Ld. CIT (A) has erred, both on facts and in law, in sustaining the action of AO in completion of proceedings u/s 153A r. w .s. 153C, of the Act, solely on the basis Unverified/ unratified/ unsubstantiated/ unconfirmed statement of Shri Mul Chand Malu. 4. That on the facts and circumstances of the case, the learned Ld. CIT (A) has erred, both on facts and in law, in sustaining the assessment by the Ld. AO and making additions of Rs. 1,79,99,800/- on account of share capital and share premium, ignoring the facts and circumstances of the case. 5. That on the facts and circumstances of the case, the learned Ld. CIT (A) has erred, both on facts and in law, in sustaining the assessment by the Ld.....
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..... 3. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has confirmed the addition by dismissing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Undisputedly, assessment was framed in this case u/s 153C of the Act on the basis of search and seizure operation carried out at the premises of Kuber Group as well as the premises of Vikas Malu on 09.10.2014. It is also not in dispute that on the basis of search and seizure operation, satisfaction note was recorded, available at pages 64 & 65 of the paper book. It is also not in dispute that search and seizure operation was never been carried out at the premises of the assessee. 6. In the backdrop of the aforesaid facts and circumstances of the case, ld. AR for the assessee contended inter alia that in the satisfaction note recorded by the AO of the searched person, no discussion on the document seized pertai....
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....irectors of M/s Binapani Merchandise Pvt. Ltd before the AO and therefore onus cast on the assessee was never discharged. 2. In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to addition made u/s 68 of I.T. Act : 1. PCIT Vs NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48 (Se) where Hon'ble Supreme Court reverse order of lower Authorities holding that where there was failure of assessee to establish credit worthiness of investor companies, Assessing Officer was' justified in passing assessment order making additions under section 68 for share capital I premium received by assessee company. Merely because assessee company had filed all primary evidence, it could not be said that onus on assessee to establish credit worthiness of investor companies stood discharged 2. PCIT Vs NDR PROMOTERS PVT LTD (2019-TIOL- 172-HC-OEL-IT) where Hon'ble Delhi High Court held that a case involving make-believe paper work to camouflage the bogus nature of the transactions is to be treated as unexplained credit u/s 68 3. ITO Vs Synergy Finlease Pvt. Ltd (ITA No.4778/0eI/2013) where Hon'ble ....
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....le Pvt Ltd [2014] 367 ITR 306 (Del) where Hon'ble Delhi High Court accepted that since the assessee was unable to produce the directors and the principal officers of the six shareholder companies and also that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer had observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. "20. Now, when we go to the order of the Tribunal in the present case, we notice that the Tribunal has merely reproduced the order of the Commissioner of Income-tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its co-ordinate Bench in the case of MAF Academy P. Ltd., a decision which has been overturned by the Delhi High Court, vide its judgment in CIT v. MAF Academy P. Ltd. [2014] 206 DLT 277 ; [2014] 361 ITR 258(Delhi)). In the impugned order it is accepted that the assessee was unable to produce directors and principal officers of the six shareholder companies and also the fact that as per the information and details collected by the Ass....
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....ade addition under section 68 in respect of increase in share capital of assessee-company, in view of fact that addresses of most of purported shareholders were identical and they could not be traced out despite notice issued under section 131, Tribunal was justified in confirming impugned addition 11. CIT Vs Nipun Builders & Developers (P.) Ltd (30 taxmann.com 292, 214 Taxman 429, 350 ITR 407, 256 CTR 34) where Hon'ble Delhi High Court held that where assessee failed to prove identity and capacity of subscriber companies to pay share application money, amount so received was liable to be taxed under section 68. It was held as follows: "12. A perusal of the order of the Tribunal shows that it has gone on the basis of the documents submitted by the assessee before the AO and has held that in the light of those documents, it can be said that the assessee has established the identity of the parties. It has further been observed that the report of the investigation wing cannot conclusively prove that the assessee's own monies were brought back in the form of share application money. As noted in the earlier paragraph, it is not the burden of the AO to prove tha....
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....e negative and in favour of the department. The assessee shall pay costs which we assess at Rs. 30,000/-." 13. CIT Vs Ultra Modern Exports (P.) Ltd (40 taxmann.com 458, 220 Taxman 165) where Hon'ble Delhi High Court held that where in order to ascertain genuineness of assessee's claim relating to receipt of share application money, Assessing Officer sent notices to share applicants which returned unserved, however, assessee still managed to secure documents such as their income tax returns as well as bank account particulars, in such circumstances, Assessing Officer was justified in drawing adverse inference and adding amount in question to assessee's taxable income under section 68. It was held as follows: "9. As noticed previously, the CIT (A) was of the opinion that the assessee had discharged the basic onus which was cast upon it after considering the ruling in Lovely Exports (P.) Ltd.'s case (supra). The material and the records in this case show that 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 w....
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....e AO, in a given case where additions are sought to be made on account of share application moneys not found to be genuine, the basic facts of the case cannot be lost sight of. On a proper application of the ratio in Oasis - and subsequently, the Division Bench ruling in CIT v. Nova Promoters & Finlease (P) Ltd [2012J 206 Taxman 207/18 taxmann.com 217 (Delhi) it is evident that the AO took into account - if we may say so, in exhaustive detail, after a painstaking examination of the records after two or three layers of scrutiny- all the materials and held that the claim that the amounts claimed to be received on account of share applications were not based on genuine transactions. The CIT (A) upheld that order, after calling for a remand report. In these circumstances, the conclusion of the Tribunal, that the assessee had discharged its onus, appears to be based on a superficial understanding of the Jaw, and an uninformed one about the overall facts and circumstances of the case. 13. In view of the above reasons, the questions of law in these appeals are answered in favour of the revenue. The orders of the Assessing Officer are restored. The appeals are to succeed ....
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....es not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were through the banking channel, does not establish the genuineness of transactions. Loan entries are generally masked to pump in black money into banking channels and such practices continue to plague Indian economy 19 Rick Lunsford Trade & Investment Ltd Vs CIT [2016] 385 ITR 399 (Cal) The assessee did not produce books of account or bank accounts or shareholders' register. Eight out of fifty six persons from shareholders' list provided by assessee denied subscription. Remaining notices returned with endorsement "not known". Hon'ble Calcutta High Court held that unexplained share application money was rightly treated as assessee's income 20 Rick Lunsford Trade & Investment Ltd Vs CIT [2016- TIOL-207 -SC-IT] (Supreme Court) where Hon'ble Supreme Court dismissed SLP upholding that it is open to the Revenue Department to make addition on account of alleged share capital u/s 68, where the assessee company has failed to show genuineness of its shareholders." ....
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....6 & 49 Ledger accounts found of Green valley Resorts. Trial Balance. Journal entry in the Books of Blooming Dale Resorts purchase of shares amounting of Rs. 5,00,000/-. Amounting to Rs. 10,00,000/- given to Blooming Dale Resorts and KuberBreweries Ltd. The AO of the searched person has handed over the above seized documents with his satisfaction to the undersigned being the AO of M/s Marudhara Marketing Pvt. Ltd., the person other than the person searched for initiating action u/s 153C of t he Act. I have carefully gone through these seized documents and have patiently applied my mind in the seized documents as handed over to me by the A.O. of the searched persons namely Sh. Vikas Malu. 1/8, West Patel Nagar, New Delhi from where these documents were seized along with the satisfaction and I am satisfied that these seized documents have a bearing on the determination of the total income M/s Marudhara Marketing Pvt. Ltd, PAN:AACCM8162GH for the relevant assessment years referred to in sub-section (1) of section 153A of the Act and that it is a fit case for initiating proceedings u/s 153C of the Act. Accordingly, notice u/s 153A r.w.s 153C of th....
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....ppened from time to time that during the course of conducting a search and seizure operation u/s. 132 of the Act, money, bullion, jewellery or other valuable article or thing or books of account or documents belonging to another person were seized. On one hand, the seized materials were sent to the Assessing Authority having jurisdiction over the other person and on the other hand, the Assessing Authority receiving such seized material acts mechanically initiates proceedings His 153C of the Act without any verification. Such interpretation is never the intendment of the Legislature. The Legislature found that multiplicity of proceedings resulted and confusion reigned supreme. In order to eliminate such contradictory situations, it was made clear that the Assessing Authority while receiving such seized material belonging to the other person shall be satisfied that such material must be of incriminating nature", Thus, the Amending Act, in fact, explained the procedure to deal with a situation where incriminating materials found in course of a search belonged to a third person. The provision was amended to stop unintended consequences and to prevent undue hardship on the third party w....
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....o 50 of the paper book, which is a letter issued by the AO to the assessee. AO further categorically mentioned at page 50 of the paper book that financials for AY 2009-10 to 2014-15 are available on ITD/MCA. All these facts go to prove that the assessment was not pending on the date of search and as such, was not liable to be reopened u/s 153C of the Act as no incriminating material and the items which are already disclosed cannot be reassessed. 14. Hon'ble Supreme Court in case of CIT vs. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) decided this legal issue by holding the decision rendered by the Tribunal in favour of the assessee by returning following findings :- "Search and Seizure-New scheme of assessment in search cases- Validity of Proceeding u/s 153C-Assessee was educational institution registered under the Bombay Public Trusts Act, 1950 and Societies Registration Act, 1860-Assessee also got itself registered under Section 12AA and because of said registration under Section 12AA of the Act, Sections 11 and 12 of the Act apply to assessee as per which income earned by assessee from property held for charitable or religious purposes (Section 11) and....