TaxTMI 
TaxTMI 
2020 (1) TMI 776
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....-10 and 2010-11 are identical, representatives of both the sides were heard at length on the facts of ITA No. 3333/DEL/2017 for A.Y 2009-10 and on such concession, we have considered the facts in A.Y 2009-10. 4. Having heard the representatives of both the sides at length, the case records were carefully perused and with the assistance of the ld. Counsel, we have considered the relevant material evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules, 1962. 5. During the course of scrutiny assessment proceedings, from the details submitted by the assessee and material available with the department, the Assessing Officer found that during F.Y. 2008-09, the assessee has raised share capital money to the tune of Rs. 2.30 crores as follows: Sl. No. Name and address of the Company No. of Shares Nominal value of share (Rs.) Premium paid per share (Rs.) Dated of allotment 1. M/s Topline Finvest Pvt. Ltd., 2, Lal Bazar Street, 107C, Todi Chamber, 1s t floor, Kolkata-700 001 25,000l 2,50,000 (Rs. 10 per share) 47,50,000 (Rs. 190 per share) 30.03.2009 2. M/s Spardan Vani jya Pvt. Ltd., 9/12, Lai Bazar Street, ....
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....ssing Officer sent a letter to the ADIT, INV, UNIT III(3), Kolkata requesting him to send report to enable the Assessing Officer to complete the assessment. In its report, the INV Wing stated that most of the companies were found to be non-existent, therefore, further investigation did not bring any additional result and status of the report remains the same. The report further stated that these companies are jamakharchi companies of Kolkata, having no real business and formed for the purpose of providing accommodation entry in the form of share capital and unsecured loans mostly. 13. In the light of the aforestated notings/observations, the Assessing Officer made an addition of Rs. 2.30 crores in A.Y 2009-10 and Rs. 5.15 in A.Y 2010-11. 14. The findings of the Assessing Officer can be summarised as under: i) Notices u/s 133(6) were not served. ii) Confirmations of all the parties were not received. iii) Companies were asked to attend the proceedings through their directors but all the directors did not attend the assessment proceedings. iv) Statement of Shri Sharma is adverse as being director of the company, he had no knowledge of the sha....
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....about the share allotment to these companies. However, we find that the Assessing Officer did nothing to do to bring on record who is the ultimate beneficiary of these transactions. If Shri Sampat Sharma categorically admitted that he is a dummy director, nothing prevented the Assessing Officer to lift the corporate veil. Having failed to lift the corporate veil, we have to look at the transactions and not through the transactions. 21. Another adverse comment made by the Assessing Officer is in respect of returned income of the investor companies. In our considered opinion, substance over form should prevail. The returned income may be one of the factors, but it is not be all and and all. If the returned income is not sufficient to justify the credit worthiness of the share applicants, then the most important factor is to look at the net worth of the applicant. 22. The five applicant companies are namely, i) Basukinath vanijya Pvt Ltd ii) Midnight Agencies Pvt Ltd iii) Spardan Vanijya Pvt Ltd iv) Topline Finvest Pvt Ltd v) Kokila Export Pvt Ltd 23. The net worth of these companies are as under: i) M/S BASUKINATH VANIJA ....
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.... 4,263 Provisions 7,564 6763 Total 11,828 11,026 Net Current Assets 24,01,43,311 111508019 Deferred Revenue Expenditure 38,000 16500 Total 24,01,81,311 11524519 M/S SPANDAN VAN1JA (P) LTD Address : 9/12, LAL BAZAAR STREET? BLOCK - E,2nd FLOOR KOLKATA, WEST BENGAL 700001 No. of shares : 25,000 PAN: AAJCS5887K Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 121780 13.08.2008 50,00,000 TOTAL 50,00,000 Return Filed on : 25.09.2009 Auditors of Company: Manabendra Bhattacharyya & Co Particulars As on 31.03.2009 As on 31.03.2008 Shareholders Fund Share capital 85,02,500 16,55,000 Reserve & Surplus 16,05,26,756 3,04,24,383 Total 16,90,29,256 3,20,79,383 Application of Funds Current Assets Loans & advances Stock of shares 14,43,57,000 1,61,47,000 Cash and bank balance 1,39,2625 49,280 Loans & Advances 1,28,70,884 57,45,237 Other Current Assets 10,70,0361 1,05,00,361 Less: Current Liabilities &....
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.... its directors, it was incumbent upon the Assessing Officer to specify his queries and the assessee cannot be held responsible once he has established the source. 25. In our considered opinion, whether the assessee has discharged the initial burden cast upon him by provisions of section 68 of the Act or not, is purely a question of fact and the facts on record, as discussed hereinabove, clearly demonstrate that the assessee has prima facie discharged the initial onus cast upon it by provisions of section 68 of the Act. 26. As mentioned elsewhere, the Assessing Officer has observed that these share applicant companies are non-existent and this observation was based upon the report of the INV Wing, Kolkata. We fail to understand that if these share applicant companies were non-existent, then how come they were assessed to Income tax, which is evident from their assessment orders placed in the paper book. 27. It would be pertinent to mention here that the applicant's premises were searched and not a single document was found during the course of search proceedings which could suggest that the assessee has purchased cheques by way of cash from these share applicant companies. ....
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....early distinguishable from the facts of the case in hand as explained elsewhere. 32. In the case of Navodaya Castle [supra], the assessee was unable to produce the directors and principal officers of the share holder companies and there were adverse remarks in respect of the bank account, which raised doubt on the identity and credit worthiness of the share holders. As mentioned elsewhere, the assessee did produce some directors of the share applicant companies but the Assessing Officer could record statement of only one director. Thereafter, the Assessing Officer did not ask the assessee nor forced the attendance of the directors of the share applicant companies and there are no adverse findings in so far as the bank accounts are concerned. 33. Similarly, in the case of NR Portfolio Pvt Ltd 42 Taxmann.com 339, the Hon'ble High Court of Delhi observed that if the Assessing Officer doubts the documents produced by the assessee, the onus shifts on the assessee to further substantiate the facts. In the case in hand, the assessee did file net worth of all the share applicant companies and further corroborated the share transactions with master data filed with Registrar of Com....
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.... 47,50,000 (Rs. 190 per share) 12. M/s Skylight Distributors Pvt. Ltd., 3, Saklat Palace, Kolkata- 700 072 25,000 2,50,000 (Rs. 10 per share) 47,50,000 (Rs. 190 per share) 13. M/s Tarakeshwar Commercial Pvt. Ltd., 9/12, Lai Bazar Street, Block E-, 2nd floor, Kolkata-700 001 10,000 1,00,000 (Rs. 10 per share) 19,00,000 (Rs. 190 per share) PARTICULARS As on 31.03.2010 As on 31.03.2009 Shareholders Fund Share capital 57,60,000 57,60,000 10,75,40,000 10,75,40,000 Total 11,33,00,000 11,33,00,000 Application of Funds Current Assets Loans & advances Stock of shares 9,98,50,000 11,30,00,000 Cash and bank balance 1,84,461 1,80,531.66 Loans & Advances 1,60,25,554 - Other Current Assets 1,00,000 - Less: Current Liabilities & Provisions 29,54,835.77 1,000 Net Current Assets 11,32,05,179.23 11,31,79,531.66 Preliminary Expenditure To the extent not written off or adjusted 5,320.20 7,093.60 Deferred Revenue Expenditure 65,400 87,200....
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....s & Advances 1,17,71,297 - Other Current Assets 5,00,000 - Less: Current Liabilities & Provisions 3,073 1,55,12,000 Net Current Assets 8,11,20,012.23 8,10,98,039.66 Preliminary Expenditure To the extent not written off or adjusted 5,320.20 7,093.60 Deferred Revenue Expenditure 53,400 71,200 Profit & Loss Account 21,267.57 23,666.74 Total 8,12,00,000 8,12,00,000 M/s Skylight Distributors Pvt Ltd Address 9/12, Lal Bazar Street, Block E 4th Floor, Kolkata No. of Shares: 12,500 PAN No. AAECR1291D Payments made Via Bank Name: Syndicate Bank Ward: ITO Ward 1(4) Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 197440 04.03.2010 50,00,000 TOTAL 50,00,000 Net Worth of the Company PARTICULARS As on 31.03.2010 As on 31.03.2009 Shareholders Fund Share capital 1,54,44,290 41,00,000 Reserve & Surplus 48,51,15,879 15,60,00,000 Total 50,05,60,169 16,01,00,000 Application of Funds Current Assets Loans & advances &n....
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.... Total 176,583,002.15 100,000 Application of Funds Current Assets Loans & advances Stock-in-Trade 124,650,000 - Sundry Debtors 1,104,666 - Cash & Bank Balances 10,106,506.65 81,437 Loans & Advances 41,210,007 - Total 177,071,179.65 81,437 Less: Current Liabilities & Provisions Net Current Assets 559,937.50 501 176,511,242.15 80,936 Miscellaneous Expenditure (To the extent not written off or adjusted) Preliminary Expenditure 71,760 15,930 Profit & Loss - 3,134 Total 176,583,002.15 100,000 M/S AMBIKA VINCOM PRIVATE LIMITED Address: 1, Mahendra Nath Roy Bye Lane, Howrah, West Bengal - 711101 No. of Shares: 10,000 PAN No. AAHCA3091P Sr. No. Cheque No./RTGS Date Amount (Rs) i) 894086 24.09.2009 20,00,000 TOTAL 20,00,000 Bank Name: Syndicate Bank Auditors of the Company: Pawan Maurya & Co. PARTICULARS As on 31.03.2010 As on 31.03.2009 Shareholders Fund &....
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.... No. of Shares: 50000 PAN No. AAFCP1441G Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 190442 25.02.2010 50,00,000 ii) 09.03.2010 50,00,000 TOTAL 100,00,000 Bank Name: Axis Bank Auditors of the Company: S. Sadhu & Assciates Net Worth of the Company PARTICULARS Shareholders Fund Share capital 15,500,000 Reserve & Surplus 735,347,864.15 Total 750,847,864.15 Application of Funds Current Assets Loans & advances Stock-in-trade 654,810,000 Sundry Debtors 36,594,799 Cash & Bank Balances 21,964,900.15 Loans & Advances 191,811,281 Total 905,180,980.15 Less: Current Liabilities & Provisions 154,499,796 Net Current Assets 750,681,184.15 Miscellaneous Expenditure To the extent not written off or adjusted) ______________________ Preliminary Expenses 166,680 Profit & Loss Account Total 750,847,864.15 M/S PUSHPANJALI COMMQ TRADE PRIVATE LIMITED Address: 3 Saklat Place, Kolkata, West Bengal 700072 No. of Shares: 25000 PAN No. AAEC....