AI Drafter 
TaxTMI 
TaxTMI 
2019 (11) TMI 1028
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....f Income Tax (Appeals) has erred in law by deleting the share capital of Rs. 4,28,50,000/- , and addition made u/s 68. Notices u/s 144 dated 16-10-2007 and 6-11-2007 were served properly on the assessee but no share capital subscriber was produced before Assessing Officer and Ld. CIT(Appeals) ignored this fact, merely filing documents cannot be treated as sufficient evidences to prove genuiness of credit as reported in 140 ITR 151 (All.) and 50 ITR (SC). 3. That the Ld. CIT(A) has erred in law and on facts by deleting the addition of unsecured loans of Rs. 1,18,63,549/-. The Ld. CIT(Appeals) has accepted fresh / additional evidences produced before him and ignored the request of Assessing Officer to examine the same. 4. That order of the Ld. CIT(A) be set aside and that of the A.O. be restored." [B]. Vide Assessment Order dated 05.12.2007 passed u/s 148/143(3) of the Income Tax Act, 1961 (in short "the Act"). In this Assessment Order, assessed U/s 143(3) of I.T. Act, on income of Rs. 5,75,52,110 ( rounded off). The relevant portion of the Assessment Order is reproduced as under:- "Return of income in original was filed by the assessee company on 31-10-....
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....y as how the proceedings of insurance of notice is time barred and bad in law as mentioned in the reply filed by the Counsel. Thereafter, notice u/s 143(2) and 142(1) issued alongwith the detailed questionnaire on 30.04.2007 and duly served upon the assessee company on 03.05.2007. The date was fixed for compliance on 07.05.2007 but no compliance was made on the date fixed nor any adjournment was sought. However, a letter dated 23.04.2007 was received on 07.05.2007 from the counsel wherein request was made for supply of reasons and ; adjourned the case sine die. Accordingly, assessee company was intimated that reasons have already been supplied vide letter dated 25.01.2007 and company was again asked to make compliance as per questionnaire dated 30.04.2007 and date was fixed for compliance on 11.06.2007 through notice u/s 142(1) dated 30.05.2007 attached with the reply. Again the compliance was made on the dated fixed nor any adjournment was sought. Hence notice u/s 148/ 143(2) /142(1) was issued on 06.11.2007 as under: To, The Principal Officer, M/s Rana Papers Ltd., Jansath Raod, Muzaffarnagar, Sub: Assessment Proceedings u/s 148/143(3)....
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....ion, the assessee has got same Share Application Money for against which the Shares have been issued to the applicants. In this connection it is further submitted as below: 1. That from the reason recorded u/s 148 it is not clear form the instrument no., whether, the entry belong to the assessee are not hence. some more elaborate and specific documentary evidence, if any, in your passions for u/s 148 available, the same may please be communicated so that proper compliance' reply can be made. 2. The assessee has receipt the money for purchase of shares through account payee demand draft only and the application are identifiable, assessed to tax and created worthy, in support of which the copies of the applications receipt for shares purchases are being filed for your ready reference. 3. It is further requested, that the assessee is filing the complete postal addresses of the applicants for your ready reference and it required the applicants may either be contacted u/s 133(6) or may be summons u/s 131. at the cost of the assessee, so that the real picture of these applicants will come out before the department The copies of Share Application are being e....
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....ction as genuine. The burden to prove nature and sources of the receipt is on the assessee as held by the Hon'ble S.C. in 57 ITR 532 (SC) 53 ITR 623 (SC). In the case of Sumati Dayal vs. CIT 214 ITR 801 the Hon'ble SC has held that the burden or proof is on the assessee to prove that the amount's credited in accounts do not represent income and the issue of genuineness of such credit I to be considered in the light to human probability and surroundings circumstances. In the instant case surrounding circumstances clearly speaks that assessee company has introduced its unaccounted money through accommodation entries. Therefore, assessee's contention is not acceptable and accommodation entries of Rs. 18,54,625/- are treated as income from undisclosed sources and added to the income of the assessee company. (Addition Rs. 18,54,625/-) Share Capital In the year under consideration company's authorized Share Capital has increased from Rs. 4,50,000/- to Rs. 9,05,00,000/-. The Issued, Subscribed and paid up capital in previous year was Rs. 4,08,98,000/- which in the year under consideration has increased to Rs. 8,37,48,000/-. Thus, there is increase of Rs. 4,28,50,000/-....
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....,000/- 6. M/s Paras Paper Co. Rs. 10,00,000/- 7. M/s Shree Sales Rs. 10,00,000/- 8. M/s Shyam Sunder & Co. Rs. 10,00,000/- 9. M/s Kraft Marketing Rs. 6,66,000/- Total Rs. 1,19,63,549/- In support or to prove genuineness of these loans assessee has field copies of ledger account of the company duly signed by the company's authorized signatory wherein date wise debit and credit entries are appearing. Neither these were signed by the loaner/ depositors nor separate confirmation letter or reply explaining sources of deposits/ assessment particular etc. have been given. Merely filing of copies of ledger account cannot be treated as sufficient evidence to prove genuineness of a credit as held by Hon'ble High Court of Allahabad 140 ITR 151 and Hon'ble SC 50 ITR 1. Reliance is also placed on 57 ITR 532, 53 ITR 623, 49 ITR 112, 35 ITR 416, 34 ITR 80(Al. SC. Judgment). In view of these facts unsecured loans of Rs. 1,19,63,549/- treated as unexplained and added to the income of the assessee. (Addition Rs. 1,19,63,549/-) Income Tax Expenses:- The assessee had debited income tax expenses at Rs. 58,415/- to the P &....
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....143(3) of I.T. Act, 1961 on income of Rs. 5,75,52,110/- interest u/s 234B- 14790045 have been charged. Issued notice of demand and challan Notice U/s 271 (1)(c) has been issued separately as the assessee company has concealed particulars of its income and furnished in accurate parituclars of its income with the meaning of section 271(1)(c) read with explanation 1 of section 271(1)(c) of the I.T. Act. Penalty notice u/s 271(1)(b) are being issued separately for non compliance of notice u/s 142(1) on fixed dated Sd/- (DILIP SINGH) Dy. Commissioner of Income Tax, Circle-1, Muzaffarnagar." [C] Assessee preferred appeal before the Ld. CIT(A) against the aforesaid Assessment Order dated 05.12.2007. Vide aforesaid impugned appellate order dated 27.03.2008 the Ld. CIT(A) deleted the additions of Rs. 18,54,625/- (on account of accommodation entries), Rs. 4,28,50,000/- (on account of addition made U/s 68 of I.T. Act towards share capital) and Rs. 1,18,63,549/- (on account of unsecured loans). The relevant portion of the order of the Ld. CIT(A) is reproduced as under:- "The appeal has been filed against the order of DCIT, Cirlce- I, Muzaffarnagar passed u/s 143(3)of th....
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....ncome- tax returns acknowledgement of these persons. However, AO concluded that these were not sufficient evidences to prove the genuineness of credit and added entire share application money of Rs. 4,28,50,000/- as unexplained income of the assessee. 3.3 The assessee was required to file details and evidences in respect of increase in unsecured loans to the extent of Rs. 19,63,549/-. The assessee filed copies of ledger account of the company signed by the company's authorized signatory but neither these were signed by loaners or depositors nor the said confirmation letter or reply explaining the source of deposits etc. were filed. The AO, therefore, treated these amounts of Rs. 1,19,63,549/- as unexplained and added to the income of the assessee. 3.4 The AO disallowed Rs. 58.415/- debited in profit and loss account as Income-tax expenses. 3.5 The AO further disallowed Rs. 30,261/- debited under the head subscription membership expenses for which no details/evidences were filed. 4. Written submissions made by the appellant's counsel during the appellate proceedings are reproduced as under: Sir, With reference \n the....
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....y have amply proved identification of Share Holder. genuineness of transactions, his creditworthiness by filing the relevant evidences of the share holder. The assessing officer has not given the copy of evidence as obtained by him nor any opportunity to cross examine them has been allowed. For invocation of section 68, proper enquiry is needed:- Section 6b empowers the Assessing Officer to make enquiry specifically to be satisfied regarding the cash credit. It he is satisfied that these entries are not genuine he has every right to add these amounts as income from other sources. The satisfaction of the Assessing Officer is the basis of invocation of the powers under section 68 and the satisfaction must be derived from relevant factors on the basis of proper enquiry envisaged under section 68 is an enquiry which is reasonable and just [Khundelwal Construction v. CIT, (1997)227 JTR 900,904( Gauh )]f In the facts of that case ,it has been held that the amount of cash credits could not be included in the total income of the assessee because the enquiry was not properly made. Amount found credited in the books of a company as receipt of shore application money:- Secti....
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....blish the identity of his creditor, the capacity of the creditor to advance the money and the genuineness of the transaction. If the assessee iestablished the aforesaid three preconditions, then it would be for the Department to disprove the same /CIT v. Buishnab Charan Mohanty,(1995)212 ITR 199,201 ( Ori)/. In the facts of that case, the Tribunal was held justified in holding that the transactions appearing in certain names were genuine transactions and the addition made under section 68 was untenable. In order to establish the fact of the receipt of the cash credit as required under section 68, the assessee must prove three important conditions .namely.) I) the identity of the person, (2) the genuineness of the transaction, and (3) the capability of the person giving the cash credit IJ(dan Timbers v.CIT, (1997)223 ITR 11,17 (Gauh)j The Assessing Officer's rejection, not of the explanation of the assessee, but of the explanation regarding the source of income of the depositor, cannot by itself lead to any inference regarding the non- genuine or fictitious character of the intries in the assessee s books of account /Sarogi Credit Corporation b, CIT,(1976) 103 ITR ....
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....on as the Tribunal did not make any endeavor to give any cogent reason why the income -tax returns file,' by the creditors and accepted by the /TO should be ignored [Jalan Timbers v. CIT (1997)223 ITR 11,17,18 (Gauh)]. But, when an explanation is offered by the assessee regarding the cash credits appearing in his books, if the evidence is shut out and the witnesses produced are not permitted to explain the credit, it will be open to the Tribunal to appraise the evidence as it is and reach its own conclusion which may result in the cash credit being accepted as genuine [CIT vs Ishwar Puss Shurnui ,(1986) 158 ITR 168,169 (Del)]. Explanation offered by the assessee:- An explanation prima facie reasonable cannot be rejected on capricious or arbitrary grounds [R.B.N.J.Naidu v. CIT, (1956) 29 ITR 194 (Nag); Kanpur steel Co. Ltd. v. CIT,(1957)32 ITR 56(All)] or on mere suspicion or on imaginary or irrelevant grounds [Lajwanti Sial v. CIT, (1956)30 ITR 228 (Nag)]. Where an assessee furnishes reasonable explanation , there is no justification for accepting his explanation in part and discarding / in relation to the rest [Chunilul Ticamchand coal Co. Ltd. v. CIT, (19....
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.... b) Copy of Return of income 15. Copy of Documents filed in respect of Smt Shahin Khatoon. a) Copy of the Application of Equity Shares b) Copy of Return of income 16. Copy of Documents filed in respect of Shir Noor Saleem Rana. a) Copy of the Application of Equity Shares b) Copy of Return of income 17. Copy of Documents filed in respect of Smt Saida Begam. a) Copy of the Application of Equity Shares b) Copy of Return of income 18. Copy of Documents filed in respect of Shri Ganeshi Lal Propk. Ganesh Trading Company. a) Copy of the Application of Equity Shares b) Copy of Intimation U/s 143(1) c) Copy of the Order passed U/s 154 d) Co9py of the Intimation U/s 143(1)(a) 19. Copy of Documents filed in respect of M/s Labh Tronics Overseas Pvt. Ltd. a) Copy of Confirmation b) Copy of the Return of Income 20. Copy of Documents filed in respect of M/s FNS Consultancy Pvt. Ltd. a) Copy of the Application of Equity Shares b) Copy of Confirmation c) Copy of the Return of Income 21. Copy of Documents....
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....Securities Pvt. Ltd. a) Copy of the Application of Equity Shares b) Copy of Confirmation c) Copy of Bank Account 34. Copy of Documents filed in respect of Sparrow Resorts Pvt. Ltd. a) Copy of the Application of Equity Shares b) Copy of Confirmation c) Copy of Bank Account 35. Copy of Documents filed in respect of Kanodia Pharmaceuticals Pvt. Ltd. a) Copy of the Application of Equity Shares b) Copy of Confirmation 36. Copy of Documents filed in respect of Blossom Advertisement Pvt. Ltd. a) Copy of the Application of Equity Shares b) Copy of Confirmation c) Copy of Bank Account 37. Copy of Documents filed in respect of Shri Sanjay Gupta a) Copy of the Application of Equity Shares b) Copy of Returns of Income 38. Copy of Documents filed in respect of Shri Rajesh Kumar. a) Copy of the Application of Equity Shares b) Copy of Returns of Income 39. Copy of Documents filed in respect of Shri Praveen Kumar. a) Copy of the Application of Equity Shares b) Copy of Returns of Income ....
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.... 54. Copy of Document filed in respect of Shri Om Prakash. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes 55. Copy of Document filed in respect of Shri Rajinder Kumar. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes 56. Copy of Document filed in respect of Shri Murari Lal. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes 57. Copy of Document filed in respect of Shri Mohinder Gupta. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes c) Copy of Intimation U/s 143(1) 58. Copy of Document filed in respect of Shri Krishana Bansal. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes c) Copy of Intimation U/s 143(1) 59. Copy of Document filed in respect of Shri Babu Lal. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes c) Copy of Intimation U/s 143(1) 60. Copy of Document filed in respect of Shri Ramesh Gupta. a) Copy of the Application of Equ....
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.... of Intimation 74. Copy of Document filed in respect of Shri Narender Kumar. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes 75. Copy of Document filed in respect of Shri Madan Singh. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes c) Copy of Intimation 76. Copy of Document filed in respect of Shri Mukesh Kumar. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes 77. Copy of Document filed in respect of Smt. Sunita Gupta. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes 78. Copy of Document filed in respect of Shri Beer Singh. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes c) Copy of Intimation 79. Copy of Document filed in respect of Shri Lal Chand. a) Copy of the Application of Equity Shares b) Copy of Returns of Incomes 80. Copy of Document filed in respect of Shri Raj Kumar Agarwal. a) Copy of the Application of Equity Shares b) Copy of Returns of Inc....
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.... 97. Submission to AO vide Letter dt. 15.11.07 98. Submission to CIT(A) dt. 21.02.08 99. Letter to CIT(A) dt. 21.02.08 100. Allahabad High Court in the case of Jaya Securities 101. Notice U/s 143(2), 142(1) with questionnaire dt. 30.04.07. 102 Details of Increase Shareholding 103. Details of Loan / Deposits 104. Details of few alleged shareholders details of others are available which are voluminous hence not filed if directed would be filed." [D.1] Perusal of records shows that precedents of Hon'ble Supreme Court of India, in the cases of Commissioner of Income -Tax, Orissa v. Orissa Corporation P. Ltd. 159 ITR 78; Hon'ble Supreme Court of India in the case of Commissioner of Income Tax v. J.K. Hosiery Factory 159 ITR 85; Hon'ble High Court of Delhi in the case of Commissioner of Income Tax v. Diamond Product Ltd. [2009] 177 TAXMAN 133 (Delhi); Hon'ble High Court of Punjab & Haryana in the case of Abheshek Industries Ltd. v. Commissioner of Income-tax, Central Circle [2009] 177 Taxman 335 (Punj. & Har.); Co-ordinate Bench of ITAT, Amritsar in the case of A.P. S. Associates (P.) Ltd. v. Assistant Commissione....
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.... respect of amount received as share capital from several companies, in view of fact that all of these companies were maintained by one person who was engaged in providing accommodation entries through paper companies and all such companies were located at same address, impugned addition was justified 3. CIT Vs Navodava Castle Pvt Ltd T20141 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 ....
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....on to assessee's income under section 68 in respect of share application money received from various investors, since assessee failed to produce them despite various opportunity granted to it and, moreover there was no evidence on record establishing genuine investments on their part in shares of assessee-company, impugned addition was to be confirmed 7. 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 ....
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....accordingly answer the substantial questions of law in the negative and in favour of the department. The assessee shall pay costs which we assess at Rs. 30,000/-. " 9. CIT Vs N R Portfolio Pvt Ltd [20141 42 taxmann.com 339 (Delhi)/[2014] 222 Taxman 157 (Delhi)(MAG)/[2014l 264 CTR 258 (Delhi) where Hon'ble Delhi High Court held that if AO doubts the documents produced by assessee, the onus shifts on assessee to further substantiate the facts or produce the share applicant in proceeding. It was held as follows: "30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and ....
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....the addition of Rs. 4,28,50,000/- made under Section 68 of I.T. Act in respect of share capital. The Ld. CIT(A) has observed in para 9.3.1 of the aforesaid impugned appellate order dated 27.03.2008; "....I have no doubt that if is AO's prerogative to verify the issue more deeply; but for that, he would have to issue letters U/s 133(6) and if required summons U/s 131 of the Act; to enforce their attendance and then to make personal inquiry. If after all this, any adverse finding comes forth; AO would be justified to take remedial action in the hands of the company. In the present case, AO can still make such indepth inquiry, in case he finds it worthwhile. But he would have to take pains to issue notices U/s 131 of the Income- tax Act, 1961, and take further action as mentioned earlier." With this line of reasoning, the Ld. CIT(A) went on to delete the aforesaid addition of Rs. 4,28,50,000/-. [E.3] In respect of the aforesaid addition of Rs. 1,19,63,549/- (on account of unsecured loans); perusal of paragraph 10 of the aforesaid impugned appellate order dated 27.03.2008, shows that the Ld. CIT(A) admitted additional evidences and went on to delete the aforesaid addition of Rs. 1,1....
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....C has plenary powers in disposing off an appeal; that the scope of his power is co-terminus with that of the ITO, and that he can do what the ITO can do and can also direct him to do what he failed to do. In the facts and circumstances of the case, therefore, we are of the view, considering the statutory position as discussed, that it was gross error, on the part of the Ld. CIT(A), having himself been of the view that further inquiries / investigation / verification; to not ensure that such further inquiries / investigation / verification were done during the pendency of appellate proceedings before the Ld. CIT(A); and in accordance with Section 250(4) of I.T. Act. For coming to this conclusion, we are guided by order of Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. M/s Jansampark Advertising And Marketing (2015) 375 ITR 373 (Del.) in which Hon'ble Delhi High Court held as under: "42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the add....
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....ar as the aforesaid addition of Rs. 1,18,63,549/- (subject matter to ground 3 of appeal) is in gross violation of the requirements prescribed under Rule 46A(2) and 46A(3) of I.T. Rules. Therefore, we set aside the order of the Ld. CIT(A) on the issue of aforesaid addition of Rs. 1,18,63,549/- and direct him to pass a fresh order on this issue while ensuring full adherence to Rule 46A of I.T. Rules. Ground no. 3 of appeal is disposed off accordingly, and is treated as partly allowed for statistical purposes. [H] In the result, appeal filed by Revenue is partly allowed for statistical purposes. Order pronounced in the open court on 15/11/19. ============= Document 1 Beneficiery Value of Instrument Date of Name of Bank name entry No. receipt entry giver DD of P& S Rs,2,00,500/- 146903 21 May,2001 Shyam Lal B.MZR DDof SBI.MZR Rs.2,00.500/- 489663 24 May,2001 Bansal -do- -do- 134049 -do- Trading. Co Savitri Devi DD of P&SB Rs.3,00,750/- 504104 26 May 2001 Navneet MZR Trading -do- Rs.2,00,500/- 132636 -do- Sita Devi DD of -do- 123564 2 June 2001 Raj Rani SBI,MZR....
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....ided on a consideration of all the relevant facts and circumstances of the case. It is quite legitimate in the case of an assessee who is known to be carrying on several activities of an income-earning character or who can reasonably be found to be involved in such activities, to draw the inference that the amounts found with him constitute income from undisclosed sources, in the absence of satisfactory explanation regarding their source. Such an inference should not be readily made in the case of a person, who has no known business or other source of income, or who cannot even be reasonably suspected as engaged in any income-earning activities. In the latter case, there must be more substantial reasons to reject the assessee's explanation, and draw the inference that the amounts round with him constituted income. [Mithoo Lal Tek Chund v. CIT, (1953)23 ITR 494 (AID); L. R. Brothers v. CIT, (1957)31 ITR 815 (ALL);Chaturbhuj & Co. v. CIT, (1959) 36 ITR 386 (All); Ram Kishan Dus Munna Lal v. CIT,(1961)41 ITR 452 (All).J Document 3 The fact thai an assessee was unable to satisfy the authorities as to the source from which the depositor ....
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.... already. issued and allotted shares to the subscribers on 30.03.2002. The details of shareholders have also been filed with Registrar of Companies, Kanpur. The assessing officer was having no reasons to treat the share application money as income of the company from undisclosed sources for following reasons:- 1. That all the subscriber has subscribed the share application money through account payee draft in favor of the appellant company. 2. That the appellant company has already allotted and issued shares to the said share applicant. Document 5 3. That the share applicant is regularly assessed to tax have given there assessment details, P.A.N. No. and has filed application for allotment of Shares. In the circumstances, share applicant was and is identifiable and creditworthy. 4. That it is undisputed, that all the shareholders had confirmed in writing about their investment in the share capital of assessee appellant and all of them had given there P.A.N. G.I.R. No. and other relevant particulars under which they were assessed to tax relied on CIT Vs. Makhni and Tyagi (P.) Ltd., reported in 267 ITR (2004) at page 433. ....
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....oans account as security. The debit & credit balance is taken together the balance as on 31.03.2002 is verifiable. The assessing officer has over looked the entire evidence and details as produced before him. He has also overlooked the fact that in some of the accounts there were opening credit balances he has also overlooked/ignored the confirmed copy of accounts of unsecured loans filed before him. Document 7 Sr. No. Particulars Amount Credit Closing Security Balance Deposit (S Unsecured Loan transferred from Sundry Debtors Account Sh. Noor Old Balance Saleem Rana, 1,00,000.00 0.00 Director of the Credit amount company, 6,06,549.00 M/S Doaba Final Rolling Mills Credit amount Lid.. Company is 51,91,000.00 7,06,549.00 0.00 51,91,000.00 M/S Sales assesse same Assessing Officer Sanjay Dr.27,87,182.00 10,00,000.00 Dr.17,87,182.00 Corp.. Kolkatta, M/S A.P. Enterprises, 0.00 3,00,000.00 Cr.3,00,000,00 Chandigarh, M/S Bharat Trading Company, Dr. 12,11.245.00 12,00,000,00 Dr.11.245.00 Faridabad 6 M/S ....
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....o our earlier reply, it is most respectfully submitted as under :- 1) That, the entire Share Application Money have been received through account payee demand drafts and duly credited in the bank accounts of the assessee appellant company. As required, the copy of account of the Share Application Money alongwith copies of bank statements, in support and verification of amount received are being filed. The assessee appellant company has not received any other amount except disclosed. The Share Application Money at Rs.4.28,50,000.00 is fully verifiable and therefore the addition made on this issue may please be deleted. 2) That, the copy of account of membership fees alongwith copies of vouchers in support of the payment made are also enclosed. The expenditure is off revenue in nature and has been incurred for business interest only and therefore should have been allowed. Kindly allow the appeal and oblige.... The matter being of high demand category, and also as per request of both CIT, Muzaffarnagar as well as of the appellant boying for deciding this appeal expeditiously; the AO was informed to attend hearing on 22.2.2....
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....eceived and transferred to security account_. (iv) Details regarding payment of subscription fee of Rs. 30,261/- not filed. Case discussed. Sd/- CIT(Appeals), MZR Sd/- Dilip Singh, DCIT Sd/- Dinesh Mohan, Adv. " 8. Another submission has been made by the appellant dated 24.2.2008 which is reproduced as under: Sir, With reference to your queries and in addition to our earlier reply, it is most respectfully submitted as under :- Document 12 That, an information, alleged to be received by the assessing officer, from DIT Investigation-1, New Delhi, regarding the receipt of amount of Rs. 18,54,625.00 from different parties through account payee demand draft on different dates has been added to the income of the assessee separately for the reasons but known to the assessing officer. The assessing officer has merely informed certain details regarding those entries, which are being explain one to one as below 1) Name of the person giving the amount is Sh. Shyam Lal beneficiary bank is Punjab & Sindh Bank, Muzaffarnagar amount of draft is Rs.2,00,500.00 instrument no.146903 dated 21.05.2001, the account no. of the ....
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....ccount no. of the concern party is 11176 with Jai Laxmi Co-operative Bank, Fatehpuri :- The assessee appellant has not received any such amount from Smt. Savitri Devi for which entire books of accounts and records have been checked out the information is not correct and not at all related to the assessee appellant company hence, in any circumstances, merely on information and without any documentary evidence can not be added as income. Actually the assessee appellant company has received an amount of Rs.2,00,000.00 from Smt. Sita Devi F/D/O Sh. Shyam Sunder, 5603/1, Balbir Nagar, Shahdara, Delhi vide demand draft no.250949 of dated 24.05.2001 of State Bank of Indore, Chandni Chowk, Delhi. - 4) Name of the person giving the amount is M/S Navneet Trading beneficiary bank is Punjab & Sindh Bank, Muzaffarnagar amount of draft is Rs.3,00,500.00 instrument no.504104 dated 26.05.2001, the account no. of the concern party is 1811 with Jai Laxmi Co-operative Bank, Fatehpuri :- From the records and books of the assessee it is admitted that the assessee appellant company has received a sum of Rs. 3,00,000.00 vide demand draft n....
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....nt no. is cheque no. by which the party has got prepared the demand draft in favor of assessee appellant. The assessee appellant company has not received any other amount in the name of Smt. Raj Rani except disclosed. 7) Name of the person giving the amount is Sh. Ram Prakash beneficiary bank is State Bank of Indore, Muzaffarnagar amount of draft is Rs.2,00,500.00 instrument no.116579 dated 02.06.2001, the account no. of the concern party is 10157 with Jai Laxmi Co-operative Bank, Fatehpuri :- From the records and books of the assessee it is admitted that the assessee appellant company has received a sum of Rs.2,00,000.00 vide demand draft no.251031 of dated 02.06.2001 from Sh. Ram Prakash S/O Sh. Ram Kishan Dass, R/O D-205, Bhajanpura, Delhi is assessed at P.A.No. ADNPP4641A to tax at DCIT, Circle-24(7), New Delhi in support of amount received the assessee appellant has filed copy of Share Application Money and copy of ITR before your goodself as well as before the assessing officer. The difference in instruments/ D.D. No. is not understandable may be, in the information received instrument no. is cheque no. by which the ....
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.....18,54,625.00 includes the draft commission the actual amount of the Share Application Money is at Rs.18,50,000.00 and Rs.4,625.00 is demand draft charges. The information received by the assessing officer and further supplied to the assessee appellant company is not complete, correct and in another terms is reliable. The assessing officer has also not supplied any documentary evidence or the basis of such informations. The assessee appellant company hereby specifically admit to have received the Share Application Money at Rs.4,28,50,000.00 and for which necessary documentary evidences and details have been filed before assessing officer. The alleged informations can not be relied on since no such drafts have been received by the assessee appellant company. Document 16 In the facts and circumstances of the case, it is most humbly prayed to kindly delete the additions made and allow the appeal & oblige...." 9. After careful consideration of all the facts and circumstances of the case and rival submissions, my findings are as under: 9.1 The re-opening proceedings were under taken, as is clear from the records, from the inq....
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.... Instrument No.144537 The assessee appellant has emphatically submitted that no such amount has been received from Sh. Ram Garg for which entire books of account and records have been checked. And therefore, the appellant has claimed that information is not correct. The appellant informs that the however similar amount had been received from different person namely Shri Mukesh Kumar. (iii) Bansal Trading Company Rs. 2,00,000/- Instrument No.505261. The assessee appellant has emphatically submitted that no such amount has been received from Shri Ram Prakash for which entire books of account and records have been checked. And therefore, the appellant has claimed that information is not correct. From the entire verification process and appellant's submission made; I infer that 'information' has not been processed by the AO, to the extent that it becomes basis for addition; in other words, information is still ‘unripeâ€. Document 19 I would like to mention that such information received from the Directorate is part of widening of intelligence /information net work so as to plug escapement of income. The informa....
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....ubstantiate increase in share capital. It is not disputed that name, address, amount of share allotment as well as copies of share applicant forms signed by these persons, their Income-tax returns, etc. have been placed before the AO. Further, such share allottees could be cross tallied from the form No.2 with ROC as well. I infer that the appellant was able to discharge its primary onus of tabling all the relevant details. Document 21 9.3.1 At this juncture, I feel compeiled to make certain observations regarding provisions of section 68 specially when 'credit' is in respect of share capital. Legal dictum of this aspect is that if share holders/ share applicants are identifiable i.e. name and complete address is available on record; explanation regarding source of fund has been given by way of bank statement, etc. evidence of creditworthiness by way of PAN, IT Returns etc.; have also been furnished; then AO should not insist on production of these persons, unless there is some specific adverse material available with the AO which warrant action on his part to make personal examination. If it is a routine verification/assessment; it....
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...., he cannot obdurately adhere to his suspicious and treat the subscribed capital as the undisclosed income of the Company.. Document 23 The ITAT dismissed the Revenue Appeal and thus there are concurrent findings pertaining to the factual matrix. The following paragraph from the impugned decision adequately encapsulates the necessary details: "Thus the question is whether in the present case, the AO had materials to conclude that the share applicants in question did not exist. It is seen that the assessee company has furnished the necessary details such as PAN No./Income tax Ward No./ration card of the share applicants and some of them are assessed to tax. The share application money has been received through banking channel. In some cases, the confirmations/ affidavits of share applicants containing the above detail were also filed. It is seen that the AO did not carry out any inquiry into the income tax record of the persons who have given the PAN No./Ward No. in order to ascertain the non-existence of the share applicants in question. The AO has neither controverted nor disapproved the material filed by the assessee. In the case ....