TaxTMI 
TaxTMI 
TaxTMI 
2020 (8) TMI 714
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.... of Rs. 73, 016/- as on 29/3/2011; that during the scrutiny, learned Assessing Officer noticed that the assessee company received share application money to the tune of Rs. 4, 86, 45, 500/- and issued shares having face value of Rs. 10/- at a premium of Rs. 475/- per share from three entities, namely, M/s, KamakhyaBuildcon Pvt. Ltd to the tune of Rs. 92, 15, 000/-; M/s Amethest Developers Pvt. Ltd to the tune of Rs. 1, 94, 00, 000/- and M/s Muskan Buildtech Private Limited to the tune of Rs. 2, 00, 30, 500/-; that in order to verify the genuineness of the transaction, and the credit worthiness of these entities, learned Assessing Officer conducted enquiries by issuance of notices under section 133(6) of the Act and summons under section 131 of the Act and also required the assessee to produce the documents; that the summons issued to the parties were returned unserved, but the parties replied in response to the notices issued under section 133(6) of the Act; and that the Ld. AR of the assessee assured the learned Assessing Officer on 25/3/2013 that if time was granted the Directors of the investor companies will be produced, but since it was a time barring assessment, learned Asses....
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.... Rs. 56, 471/- on account of the amount paid as ROC Sh. for increase in authorised share capital. 5. Assessee preferred appeal before the Ld. CIT(A). Ld. CIT(A) held that since no business activities are carried out by the assessee company and the assessee company could not earn any income from many of its source of income or any business activities carried by it, the share application money brought by the above investor companies cannot be considered as assessee's own money earned by it by any source and, therefore, the provisions of section 68 of the Act cannot be invoked as far as share application money brought by these entities. He further held that merely because the investor companies did not respond to the summons issued or that the assessee failed to produce these parties, it cannot be a ground to make addition in the hands of the assessee company and more particularly when the assessee company had yet to start its business. According to the Ld. CIT(A), the investor companies are being assessed to tax and therefore, the learned Assessing Officer could have made necessary enquiries from their respective Assessing Officers. In respect of the cash deposits in the bank accou....
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....mpanies was either loss or negligible as could be gathered the returns of income and in respect of the M/s Amethest Developers Pvt. Ltd one Mr Chandan Chaurasi was the Director as per the return of income but theshare application shows the Director as Mr Shailendra Kumar Dwivedi, in respect of M/s Muskon Buildtech Pvt. Ltd Jaikishan was the director as per the return of income, but as per share application and confirmation letter it was one Jeet Ram whereas SK Dwivedi was shown to be the Director in respect of M/s KamakhyaBuildcon Pvt. Ltd also. He further submitted that the factor which missed the attention of the Ld. CIT(A) is that there are cash deposits in the bank statements of the investor companies. 8. He submitted that the decisions of the Hon'ble Apex Court in the case of PCIT vs. NRA Iron and Steel (P) Ltd (2019) for 12 ITR 161 (SC) and the decisions of the Hon'ble jurisdictional High Court in the cases of PCIT vs. NDR Promoters Pvt. Ltd. (2019) 410 ITR 379 (Delhi), CIT vs. NR Portfolio Private Limited (2014) 42 taxmann.com 339 (Delhi), CIT vs. Nova Promoters &Finlease (P) Ltd. 18 taxmann.com 217 etc., are applicable to the facts of the case. 9. Per contra, Ld. AR place....
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....cial assets which could justify the issue of shares at such huge premium or that there were certain cash transactions immediately before the investment by the investor companies in their bank accounts. 11. All these things created a doubt in the mind of the learned Assessing Officer. Learned Assessing officer, therefore, issued notice under section 133(6) of the Act to the investor companies in the addresses provided by the assessee, but none appeared on their behalf on the dates of hearing. The assessee, however, despite the fact of the notices are sent to the share applicants returned unserved, managed to secure the documents such as their income tax returns as well as bank account particulars etc. Both the learned Assessing Officer and the Ld. CIT(A) noted in the orders that on 25/3/2013 the Ld. AR volunteered to produce the Directors of the investor companies if at least one week's time is granted. It does not seem from the impugned order that before the Ld. CIT(A) any such proposal was made to produce the Directors of the investor companies. 12. When huge amounts are invested in the assessee company, the summons and notice under section 131 of the Act and section 133(6) of t....
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....grounds, which according to him are conspicuously absent, in this case. He recorded the fact that since the assessee company had not started any business from the date of its inception and did not have any assets of considerable net worth, the genuineness of the transaction has to be tested from the point of view of the investor company, and, therefore, he thought it necessary to secure the presence of the Directors of the investor company for verification of their creditworthiness and genuineness of the transaction. Assessee furnishing the addresses of such investor companies to which the summons or notice under section 131 of the Act and section 133(6) of the Act were issued, but returned with the endorsement that such entities were not to be found in such addresses. 15. Assessee does not plead that after investing the huge amounts in crores of rupees, the investors disappeared into thin air. Assessee could managed to get the documentary evidence from the investors relating to their financial capacity and bank statements etc. Further, assessee volunteered to produce the Directors of the investor companies before the learned Assessing Officer, but did not propose any such move be....
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....nce in discharge of their onus to prove the identity of the investee? etc. 17. When the learned Assessing Officer felt it necessary to look at the things beyond the pale of papers, it is incumbent upon the assessee to cooperate with the learned Assessing Officer in dispelling the doubts, which the circumstances raised in the mind of the learned Assessing Officer. The way of acquaintance of these share applicant entities with the affairs of the assessee company, the facts that motivated these entities to purchase the shares of the assessee company at a huge premium, particularly when the assessee did not commence the business and does not possess any assets of considerable net worth, the measures of security for such investment obtained by such entities, the modus operandi of the agreement between the assessee and such entities - all these things will have to be get clarified, not by papers, but by examination of the persons who run and manage these entities. 18. Orders of the authorities below reveal that the assessee has not complied with the requirements of the learned Assessing Officer in the exercise of forming satisfaction as to the creditworthiness of the share applicants o....