TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 815
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....Revenue against the order dated 03.11.2008 of CIT (Appeals). 2. The CIT (Appeals) had deleted the addition of Rs. 1.17 Crore made by the Assessing Officer on account of unexplained cash credits under Section 68 of the Income Tax Act. The assessee had filed its return of income on 30.11.2004 declaring 'Nil' income. However, tax was paid under Section 115JB on the book profit of Rs. 24,86,664/-. The assessee's case was selected for scrutiny. During the year, the assessee company received fresh share application money to the tune of Rs. 1,54,40,710/- from 16 entities which were as follows: KSK Share & Stock Brokers (P) Ltd., Kolkata 6,00,000 B.T. Technet Ltd., Delhi 20,00,000 Vital Fincon (P) Ltd., Kolkata 10,00,000 Lodhaso....
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....ing the assessee company, there was credit entry of the similar amount and in some cases even cash was deposited just before debit entry. Moreover, in some cases, the confirmation was given by the Companies in respect of purchase of shares i.e., they have confirmed that they have purchased the shares with the money so advanced. As against said confirmation, the assessee company has shown only the receipt of share application money pending allotment in the names of those Companies. Moreover, in none of the confirmation letters (All confirmations were on the Letter Head of the respective Companies), the telephone number of the respective Company was mentioned. Besides this, the A.O. observed that Spart on Commerce Ltd., Ludhiana and Savera Co....
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....hi and Changia Steels Pvt. Ltd., Delhi and notices under section 133(6) sent to Savera Commercial Enterprises Ltd., Ludhiana and Spartan Commerce Ltd., Ludhiana were received back un-served from the postal authorities with the remarks 'no such firm exists at the mentioned address". The assessee was, therefore, confronted with the same facts. The assessee was requested to get the compliance of these notices/ summons. On the date fixed, the A.P. received replies from courier from three Investors In respect of notice under section 133(6) of the I.T. Act viz. Reposit Trading Private Ltd., Kolkata, Bothra Suitings Pvt. Ltd' Kolkata and Everlast Fincon Pvt. Ltd., Kolkata. Only a letter was received from these companies. These companies have n....
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....n money was paid but no share have been allotted. The assessee did not explain as to why the premium was paid and why the amount has been taken from the Investors was kept pending for allotment of shares. No telephone number have been mentioned, on the Letter Head of the Investors. In the case of Ludhiana Investors, their accounts have been audited by the C.A. of Kolkata. The Ludhiana Investors have maintained Bank account at New Delhi. The assessee did not produce any of the Directors/Principal Officer of Investor Companies before A.O. for verification of the genuineness of the transaction in the matter. The A.O. issued summons under section 131 of the I.T. Act and notices under section 133(6) to the Investors to produce the documents and ....
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....Rs. 24,86,664/-. The assessee did not explain when assessee filed NIL returned income, why such Investors would make investment in assessee company that too at Premium without verifying the financials of the assessee, which were mostly from Kolkata and Ludhiana. 6.2. On going through the returned income filed by the Investor Companies, it was found that they have filed their returns of income at meager/low net income which ranges income in hundres to thousands only after claiming deductions. Thus, the assessee as well as the Investors have not justified for entering into such transaction. It also creates doubt in the explanation of assessee. It may also be noted here that four Investors from Kolkata have been operating from the same addre....