TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1799
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....audited accounts for assessment year under appeal of all the persons who have advanced the share application money to the assessee company. The assessee was also asked to furnish copy of the bank statements from where the said investment in share application money was made. In response to that, assessee company has furnished the said details. On perusal of the details so furnished by the assessee company, it has been noticed in the case of following companies that amount of investment in share application money has not been reflected in copy of the audited accounts. 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 Lodhasons Consultancy Services (P) Ltd., Kolkata 10,00,000 Bothra Suitings Pvt. Ltd., Kolkata 3,00,000 Changia Steels Pvt. Ltd., Delhi 5,00,000 Sekhawati Finance Pvt. Ltd., Delhi 5,00,000 Dadhichi Trading & Holding Pvt. Ltd., Kolkata 15,00,000 KBR Township Pvt. Ltd., Kolkata 6,00,000 Everlast Fincon Pvt. Ltd., Kolkata 1,00,000 Sparton Commerce Ltd., Ludhiana 5,00,000 Reposit Trading Pvt. Ltd., Kolkata 5,00,000 Labh Tronics Overseas Pvt. Ltd., Delhi 5,00,00....
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....equired to appear in person with similar details above. Out of the above summons and notices sent, summons sent to Gracious Portfolio Pvt. Ltd., Delhi and Changia Steels Pvt. Ltd., Delhi and notices under section 133(6) sent to Savera Commercial Enterprises Ltd., Ludhiana and Sparton 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.O. 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 not sent the copies of the audited accounts, copy of the ITR and copy of the Bank account which could prove the genuineness of the transaction. The A.O. also noted from the envelopes that these envelopes have been sent through courier from Darya Ganj, New Delhi, which were also incorrect. The A.O. also r....
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....e, submitted that Ld. CIT(A) was not justified in deleting the addition. The Ld. D.R. in support of the above contention relied upon the following decisions : 1. Navodaya Castle Pvt. Ltd. vs. CIT 2015-TIOL-314-SC-IT 2. CIT vs. Navodaya Castle Pvt. Ltd. [2014] 367 ITR 306 (Del.) 3. CIT vs. Nova Promoters & Finlease (P) Ltd., 342 ITR 169 (Del.) 4. CIT vs. N.R. Portfolio Pvt. Ltd., [2013] 263 CTR 456 (Del.) 5. CIT vs. Ultra Modern Exports (P.) Ltd., 220 Taxman 165 (Del.). 6. CIT vs. Empire Builtech (P.) Ltd., 366 ITR 110 (Del.) 7. CIT vs. Focus Exports (P.) Ltd., [2015] 228 Taxman 88 (Del.) 8. CIT vs. Nipun Builders & Developers (P.) Ltd., 350 ITR 407 (Del.) 9. Rick Lunsford Trade & Investment Ltd., vs. CIT [2016] 385 ITR 399 (Cal.) 10. Rick Lunsford Trade & Investment Ltd., vs. CIT 2016-TIOL-207-SC-IT 11. Judgment of Hon'ble Delhi High Court in the case of Pr. CIT-6, New Delhi vs. NDR Promoters Pvt. Ltd., ITA.No.49/2018, Dated 17.01.2019. 12. Judgment of Hon'ble Supreme Court in the case of Pr. CIT (Central)-1 vs. NRA Iron & Steel (P.) Ltd., [2019] 103 taxmann.com 48 (SC). 5. On the other hand, Learned Counsel for the Assessee reiterated the submi....
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....liance have been made. Few of the Investors have filed their reply to the notice under section 133(6) of the I.T. Act, but, their replies have not been sent from Kolkata as same have been sent through courier from Darya Ganj, New Delhi without documents. Ludhiana Investors sent their reply to the notice under section 133(6) of the I.T. Act from Ludhiana address where they do not exist as per the report of the postal authorities. These factors clearly create a doubt and suspicion in the explanation of assessee. It is well settled Law that burden is upon assessee to prove identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. However, the assessee failed to do so. The assessee merely filed confirmation and certain documents which did not inspire confidence of the A.O. Whatever documentary evidences were produced, were full of doubts and did not prove creditworthiness of the Investors and genuineness of the transaction. 6.1. It may also be noted here that assessee filed return of income declaring NIL income. However, the tax was paid under section 115JB on the book profit of Rs. 24,86,664/-. The assessee did not explain when assessee file....
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....panies and all such companies were located at same address, impugned addition was justified." 6.4. The Hon'ble Supreme Court in the case of Pr. CIT (Central)-1 vs. NRA Iron & Steel Pvt. Ltd., 103 taxmann.com 48 (SC) in paras 11 to 16 held as under : "11. The principles which emerge where sums of money are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and creditworthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Secti....
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....ppellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company - Assessee had filed all the primary evidence, the onus on the Assessee stood discharged. The lower appellate authorities failed to appreciate that the investor companies which had filed income tax returns with a meagre or nil income had to explain how they had invested such huge sums of money in the Assesse Company - Respondent. Clearly the onus to establish the creditworthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor companies were found to be non-existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee. 14. The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private....