TaxTMI 
TaxTMI 
2020 (2) TMI 244
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....companies and non-production of books of accounts. Further, these additions were allegedly made after post search inquiries, further inquiries during assessment proceedings also. Elaborate facts are recorded in the assessment order with respect to allegation of tax evasion and consequent noncooperation by assessee. 2. The assessee has raised the following grounds of appeal in ITA NO. 3745/Del/2016 for the Assessment Year 2006-07:- "1. That an appeal against the impugned order of the learned A.O. was filed before CIT [Appeals] on 26th April 2013 but CIT [Appeals] has passed an Ex-Parte order by confirming the demand of Ld. A.O. on 14.03..2016 without taking into consideration the reasons due to which the appellant could not provide the necessary documents and evidence and could not attend the hearings before the CIT [Appeals]. Some of the reasons are provided below:- [a] That Mr. Anand Tiwari, one of the Directors of the Appellant Company has been suffering from a chronic liver disease for the past 4-5 years. On account of his severe illness he has been admitted/treated in various hospitals in India as well as abroad on innumerable occasions and has been bed-ridden for mos....
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....(d) That the authorized representative, representing the appellant company before the respondent extracted huge money from the appellant but did not properly put forward the case before the respondent. They should at least have represented the difficulties being faced by the company and ought to have defended the appellant to the best of their capacity on the basis of records which were within their possession and knowledge. But most unfortunately they failed to perform their professional duty, resulting in passing of the impugned order. (e) That the respondent ought to have considered the aforementioned bona fide reasons and extra ordinary circumstances and should have granted further time to the appellant to satisfy the respondent on the aspect that the demand raised by the Ld. A.O. was illegal and unwarranted. The ex-parte order passed by the respondent is unwarranted and has resulted in extreme prejudice to the appellant. (f) That the appellant is entitled for hearing instead of the case being decided unheard. (g) That the failure on part of the appellant in pursuing its appeal was neither deliberate nor intentional and the same was occasioned due to reasons mentioned ....
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.... there are contradictions in the stand taken by the Ld. A.O., e.g. the Ld. A.O. has failed to explain (a) as to why he is accepting the sales/turnover appearing in the P/L Account, when according to him there were on plant & machinery and other fixed assets; and (b) as to why he is making addition on account of unexplained investment in the plant & machinery, when according to him there were no plant & machinery. 7. That on the facts of the case and under the law ,the Ld. A.O. has erred in making disallowance of Rs. 1,92,06,750/-, on account of alleged bogus claim of depreciation on the plant & machinery. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. 8. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of Rs. 15,29,00,000/-, on account of share capital, thereby treating the said amount as unexplained share capital. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. 9. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of Rs. 8,39,80,000/-, on account of unsecure loan, thereby treating the said amount as unex....
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....has been suffering from a chronic liver disease for the past 4-5 years. On account of his severe illness he has been admitted/treated in various hospitals in India as well as abroad on innumerable occasions and has been bed-ridden for most of the time during these years. The medical record of Mr. Anand Tiwari is voluminous and the same can be filed before this Hon'ble Tribunal, if so directed. On account of his severe medical condition, Mr. Anand Tiwari has been completely incapacitated in dealing with the affairs of the company in any manner whatsoever. In any event, the affairs of the company, particularly financial and taxation related matters of the company were being looked after by Mr. P.K. Tiwari, the other Director of the company, from the very inception. (b) That Mr. P.K. Tiwari, the other director of the appellant company, was himself suffering from various illnesses and had also been incarcerated during the relevant time. Due to financial crisis, the company had started making defaults in paying installments to various banks and also in fulfilling other financial obligation. Consequently, the banks had filed false & frivolous complaints with the Central Bureau of ....
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....ellant is entitled for hearing instead of the case being decided unheard. (g) That the failure on part of the appellant in pursuing its appeal was neither deliberate nor intentional and the same was occasioned due to reasons mentioned above. (h) That the extra-ordinary adverse situation suffered by the appellant entitles it for a fair hearing before this Tribunal so that the case can be decided on merits instead of being thrown out on account of non representation. (i) The company did everything within its power by engaging professionals to represent it before the respondent but the said professionals failed to perform their duty by not advising the company in the matter and by not representing it in bona-fide manner. (j) That the company sought a number of adjournments and tried to present its case. (k) That due to lack of funds and non availability of documents as explained above, the company, inspite of taking many adjournments, was not able to defend its case before CIT (Appeals). (l) That no reasonable opportunity was provided to the Company to present its case and to justify the grounds for quashing the impugned order of the learned A.O. [m) That the impu....
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....e and under the law ,the Ld. A.O. has erred in making addition of Rs. 46,70,00,000/-, on account of share capital/ application money, thereby treating the same as unexplained credit/ share capital and share application money. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. 10. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of Rs. 6,90,00,000/-, on account of investment in the property bearing Plot NO. 13, Sector 16A, Film City, Noida, thereby treating the said amount as unexplained investment. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. The investment in the said property were duly accounted for/ recorded in the books of accounts and were reflected in the balance sheet. 11. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of Rs. 1,28,65,19,625/-, on account of investment in the plant & machinery, thereby treating the same as unexplained investment. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. The investment in the said property were duly accounted for/ re....
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....rector of the appellant company, was himself suffering from various illnesses and had also been incarcerated during the relevant time. Due to financial crisis, the company had started making defaults in paying installments to various banks and also in fulfilling other financial obligation. Consequently, the banks had filed false & frivolous complaints with the Central Bureau of Investigation (C.B.I.). The C.B.I. officials had started making inquiries not only from the directors, but also from the family/staff members etc. The C.B.I. officials had also started calling not only the directors, but also the staff members, to their office. The C.B.I. officials had started making visits to the office of the company. Mr. P.K. Tiwari was incarcerated in connection with the CBI cases from July, 2012 to October, 2012 and from September 2014 to March 2015. The Appellant Company was going through severe financial crunch during all these years, due to which most of the company staff left the company as their salaries could not be paid. On the other hand, Mr. P.K. Tiwari could not devote time to pursue the appeals on account of the aforementioned reasons. On account of his advance age, frequent ....
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....ase. (k) That due to lack of funds and non availability of documents as explained above, the company, inspite of taking many adjournments, was not able to defend its case before CIT (Appeals). (l) That no reasonable opportunity was provided to the Company to present its case and to justify the grounds for quashing the impugned order of the learned A.O. [m) That the impugned order, confirming the order of A.O., was passed by the CIT [Appeals) without considering the grounds provided by the Company or the documents or evidences to be provided on part of the Company and the order was passed ex parte. (n) That the Company has valid grounds and will be able to establish that the impugned order passed by the learned A.O. was bad in law and was based only on presumptions, if a reasonable opportunity is provided to the company. (o) That the grounds provided by the company in the appeal before the CIT [Appeals) which were not considered by it before confirming the impugned order of learned A.O. are provided below. 2. That the assessment order dated 18.03.2013, passed by the Ld. A.O. U/s 144 r.w.s. 153A, is bad in law. 3. That the assessment order dated 18.03.2013 passed....
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....erty were duly accounted for/recorded in the books of accounts and were reflected in the balance sheet. 11. That on the facts of the case and under the law ,the Ld. A.O. has erred in making addition of Rs. 5,91,47,066/-, on account of investment in Plant & Machinery, thereby treating the same as unexplained investment. The observation of the Ld. A.O. are either factually incorrect or are legally untenable. The investment in the said property were duly accounted for/recorded in the books of accounts and were reflected in the balance sheet. 12. That the total income assessed at Rs. 38,70,33,835/- is arbitrary, unjust, illegal & highly excessive. 13. That on the facts of the case and under the law, the Ld. A.O. has erred in not allowing set off of losses of the earlier years. 14. That the income tax liability created at Rs. 13,15,52,801/- is arbitrary, unjust, illegal & highly excessive. 15. That the Ld. A.O. has erred in not giving full credit of prepaid taxes. 16. That on the facts of the case and under the law, the Ld. A.O. has erred in charging interest u/s 234A. Without prejudice, the interest charged is highly excessive. 17. That on the facts of the case ....
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....officials had started making inquiries not only from the directors, but also from the family/staff members etc. The C.B.I. officials had also started calling not only the directors, but also the staff members, to their office. The C.B.I. officials had started making visits to the office of the company. Mr. P.K. Tiwari was incarcerated in connection with the CBI cases from July, 2012 to October, 2012 and from September 2014 to March 2015. The Appellant Company was going through severe financial crunch during all these years, due to which most of the company staff left the company as their salaries could not be paid. On the other hand, Mr. P.K. Tiwari could not devote time to pursue the appeals on account of the aforementioned reasons. On account of his advance age, frequent incarceration and the extra ordinary financial crises and other adverse conditions, Mr. P.K. Tiwari was under acute depression and could not therefore, focus on the matter. (c) That the senior officials of the company in finance department left the company after committing serious acts of omissions and commission. It is learnt that such officials had been involved in various irregularities due to which the com....
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.... A.O., was passed by the CIT [Appeals) without considering the grounds provided by the Company or the documents or evidences to be provided on part of the Company and the order was passed ex parte. (n) That the Company has valid grounds and will be able to establish that the impugned order passed by the learned A.O. was bad in law and was based only on presumptions, if a reasonable opportunity is provided to the company. (o) That the grounds provided by the company in the appeal before the CIT [Appeals) which were not considered by it before confirming the impugned order of learned A.O. are provided below. 2. That the assessment order dated 18.03.2013, passed by the Ld. A.O. U/s 144 r.w.s. 153A, is bad in law. 3. That the assessment order dated 18.03.2013 passed u/s 144 r.w.s. 153A, deserves to be quashed, because natural justice has been denied by the Ld. A.O. to the assessee. 4. That on the facts of the case and under the law, the Ld. A.O. has erred in not taking into consideration the assessee's reply, vide letter dated 15.03.2013[filed on 18.03.2013). 5. That on the facts of the case and under the law, the Ld. A.O. has erred in altogether ignoring the asse....
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....essed at Rs. 1,89,60,17,693/- is arbitrary, unjust, illegal & highly excessive. 13. That on the facts of the case and under the law, the Ld. A.O. has erred in not allowing set off of losses of the earlier years. 14. That the income tax liability created at Rs. 57,58,68,383/- is arbitrary, unjust, illegal & highly excessive. 15. That the Ld. A.O. has erred in not giving full credit of prepaid taxes. 16. That on the facts of the case and under the law, the Ld. A.O. has erred in charging interest u/s 234A. Without prejudice, the interest charged is highly excessive. 17. That on the facts of the case and under the law, the Ld. A.O. has erred in charging interest u/s 234B, Without prejudice, the interest charged is highly excessive. That the reasonable opportunity be provided to the Company for evidencing and establishing the above mentioned grounds which it could not do before the CIT (Appeals). The appellant craves leave to raise additional ground(s) of appeal to alter/modify the ground(s) of appeal, and/or to withdraw the ground(s) of appeal, either prior to or during the course of appellate proceedings." 6. The assessee has raised the following grounds of appe....
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....mpany as their salaries could not be paid. On the other hand, Mr. P.K. Tiwari could not devote time to pursue the appeals on account of the aforementioned reasons. On account of his advance age, frequent incarceration and the extra ordinary financial crises and other adverse conditions, Mr. P.K. Tiwari was under acute depression and could not therefore, focus on the matter. (c) That the senior officials of the company in finance department left the company after committing serious acts of omissions and commission. It is learnt that such officials had been involved in various irregularities due to which the company and its present directors have suffered the extra ordinary circumstances and trauma. On account of such grave situation, the matter before the respondent could not be pursued in a proper manner. (d) That the authorized representative, representing the appellant company before the respondent extracted huge money from the appellant but did not properly put forward the case before the respondent. They should at least have represented the difficulties being faced by the company and ought to have defended the appellant to the best of their capacity on the basis of record....
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....der of learned A.O. are provided below. 2. That the assessment order dated 18.03.2013, passed by the Ld. A.O. U/s 144 r.w.s. 153A, is bad in law. 3. That the assessment order dated 18.03.2013 passed u/s 144 r.w.s. 153A, deserves to be quashed, because natural justice has been denied by the Ld. A.O. to the assessee. 4. That on the facts of the case and under the law, the Ld. A.O. has erred in not taking into consideration the assessee's reply, vide letter dated 15.03.2013[filed on 18.03.2013). 5. That on the facts of the case and under the law, the Ld. A.O. has erred in altogether ignoring the assessee's reply, vide Receipt dated 15.03.2013(Friday), Which had been filed on Dak counter Vide Receipt dated 18.03.2013(Monday). 6. That on the facts of the case and under the law, the Ld. A.O. has erred in ignoring the total loss of Rs. 3,96,86,668/- declared by the assessee vide it's return of income, while computing the total income assessed. 7. That the impugned assessment order deserves to be quashed because there are contradictions in the stand taken by the Ld. A.O., e.g. the Ld. A.O. has failed to explain as to why he is accepting the sales/turnover appe....
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.... above mentioned grounds which it could not do before the CIT (Appeals). The appellant craves leave to raise additional ground(s) of appeal to alter/modify the ground(s) of appeal, and/or to withdraw the ground(s) of appeal, either prior to or during the course of appellate proceedings." 7. We first state the facts for Ay 2006-07. 8. The brief facts of the case shows that search u/s 132 of the Act was conducted of M/s. Century Communication Group (M/s. Mahuaa Media Group) of cases on 11.03.2011, where the assessee was also covered. The appellant company was promoted by Shri P.K. Tewari and family members and therefore, notice u/s 153A was issued on 09.10.2012 against which the assessee did not file any return of income. The assessee objected 153A proceeding which was rejected. Subsequently, on 28.02.2013 the assessee filed return of income declaring a total income of Rs. 275204/- under normal provision and book profit of Rs. 10576424/-. Subsequently, questionnaires were issued to the assessee but no reply was forthcoming. The ld AO noted that the assessee has not filed any return of income u/s 139 of the Act for this year. During the course of search several incriminating ma....
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....ey were without adequate proof. As most of the investors are based in Kolkata the Inspectors were deputed to find out the companies. The inspector's report states that no such companies were found at the addresses. Such inspector's report were part of the assessment order. Therefore, the ld AO made an addition of Rs. 15.29 crores on account of unexplained share capital. 10. Assessee received a loan of Rs. 8,39,80,000/- and assessee was asked to explain the creditworthiness, genuineness of the loan. Despite number of opportunities the assessee did not furnish any information the addition of Rs. 83980,000/- was made. 11. The assessee was found to have acquired a premises in Bandra(West), Mumbai for Rs. 3,67,50,000/-. Despite calling for the details of the source of the funds no such information was made available to the assessee and therefore, the ld AO made addition of the above amount. 12. During the search it was found that the assessee has purchased plant and machinery of Rs. 25,60,90,000/- from various companies which are found to be bogus. The assessee also did not file the bills of those assets and therefore, the above amount was considered as unexplained investment of t....
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....the Books of accounts as well as the vouchers and bills for the expenditure to show that they have been acquired from known sources. This has not been done by the assessee. Merely producing the audited balance sheet does not suffice for the allowance of the expenditure. She further submitted that there was a search pursuant to which the complete details were available about the tax evasion by assessee. All software purchases are conclusively proved as bogus. She further referred to the facts of the case to show that there was a search by Central bureau of investigation on the assessee company which itself shows that how the company was being run/ business conducted by the directors. In view of this she submitted that there is no infirmity in the order of the learned assessing officer or the learned CIT - A in confirming the above addition. 17. Coming to the first ground of the appeal which is against the action of the ld CIT(A) for passing an ex parte order confirmed the order of the ld AO stating that the appellant could not remain present as one of the director was suffering chronic liver disease for the past 4 to 5 years. It was stated that another director Shri P. K. Tewari i....
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....chase shows by the assessee are software for which the assessee has not produced any details about its ownership, functionary etc. the AO has proved conclusively with the suppliers are bogus. The issue is squarely covered against assessee by the decision of the Hon'ble Delhi High Court in case of Chintels India Ltd Vs. DCIT 2017-TIOL- 1366-Hon'ble High Court-DEL-IT-wherein, bogus depreciation of software was disallowed of the ld AO was confirmed. The special leave petition filed before the ld Hon'ble Supreme Court is also dismissed in 2018-TIOL-16-SC-IT. The facts on that case are identical to the facts of the case before us. In view of this, we do not find any infirmity in the order of the ld AO in disallowing the depreciation on the software. We confirm order of the ld CIT A . Accordingly, ground Nos. 7 of the appeal are dismissed. 21. Ground number 8 is with respect to the issue of share capital of INR 15.29 crores received by the assessee. Apparently during the year the assessee has received total share application money of INR 14.99 crores, share application money of INR 30 lakhs and unsecured loan of INR 8 3980000/-. The assessee was asked to prove the identity,....
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....tronics Ltd, and Sun Broadcast Limited. Inquiries during search as well as in assessment proceedings revealed that those companies could not have made any sales to the assessee company and there from to be bogus. The purchase of software was found to be from a nonbanking financial company which did not have any background or asset to deal with into such software. The companies were also found to be bogus there were glaring differences found with the documents submitted by the assessee. The claim of development of software was also found to be false. During the course of appellate proceedings also no further details were produced and no justification could be given regarding the investments made in these purchases. Therefore the learned CIT - A confirmed the above addition. We do not find any justification to interfere with the orders of the lower authorities. Accordingly ground number 11 is dismissed. 25. Accordingly ITA number 3745/del/2016 for assessment year 2006 - 07 filed by the assessee is dismissed. 26. Facts in ITA number 3746/del/2016 for assessment year 2007 - 08 are identical to the facts stated in assessment year 2006 - 07. 27. Ground number 1 - 6 of the appeal ar....
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....ssessment year 2008 - 09 by the assessee. The facts in this appeal are also identical to the facts stated by us in assessment year 2006 - 07. Therefore the respective grounds of appeal are dealt with as per reasons given by us in deciding the grounds for assessment year 2006 - 07. 35. Ground number 1 - 6 of the appeal are claiming that the principles of the natural justice have been violated. The identical grounds have been dismissed by us for assessment year 2006 - 07. Therefore for the same reason we do not find any infirmity in the orders of the lower authorities. Accordingly they are dismissed. 36. Ground number 7 and 8 are with respect to the bogus claim of the depreciation on the plant and machinery amounting to rupees 22267114/-. The assessee has failed to show the requisite detail for the claim of the depreciation. In absence of any detail filed by the assessee justifying the claim, the lower authorities have confirmed the same. Identical ground for assessment year 2006 - 0 7 and 2007 - 08 are dismissed. Thus, We find no infirmity in the order of the learned assessing officer as well as the learned CIT - N confirming the disallowance. Accordingly ground number 7 and 8 o....
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....er 7 - 8 for earlier assessment years where the assessee did not provide any information about the claim of the depreciation, qua the genuineness of the acquisition of the assets. The lower authorities have confirmed this disallowance for the reason of genuineness of the purchases and genuineness of the claim of the depreciation itself. For the reasons given by us in assessee's appeal for earlier years, we find no infirmity in the orders of the lower authorities. Accordingly ground number 7 - 9 of the appeal are dismissed. 45. Ground number 10 is with respect to the addition of INR 55 lakhs received from Lakshmi Exim private limited. The learned assessing officer made an addition u/s 68 of the income tax act as the assessee has failed to show the identity, creditworthiness and genuineness of the transaction. Before the learned CIT - A, no further information was provided and therefore the addition was confirmed. The facts are identical to the facts in the case of the assessee for earlier years where the identical addition on account of share application money was made. In view of these facts we find no infirmity in the order of the lower authorities as assessee has failed to show....