TaxTMI 
TaxTMI 
2020 (11) TMI 447
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....estors nor the genuineness of the transaction is proved. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 4. The facts in brief are that the assessee filed the return of income on 15.10.2010 declaring an income of Rs. 10,38,75,710/- and book profit under section 115JB of the Act at Rs. 10,97,76,007/-. The return was processed under section 143(1) of the Act. Thereafter, the case of the assessee was selected for scrutiny and statutory notices were duly issued and served upon the assessee. The assessee is engaged in the business of construction and engineering. During the course of assessment proceedings, the AO observed that during the year, the assessee has raised share capital to the tune of Rs. 4,83,50,000/- comprising 9,67,000 equity shares issued of face value of Rs. 10/- each at a premium of Rs. 40/-. Accordingly, a notice under section 142(1) dated 16.07.2012 was issued to the assessee calling upon to furnish the various details concerning the said transactions. The assessee filed before ....
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....rify these annexures. The copy of the commission was also forwarded to the assessee and on 13.02.2013 a letter was issued to the assessee company informing about the non compliance of summon issued by DDIT, Investigation wing, Kolkata. Thereafter, the DDIT (Inv.) Wing, Kolkata forwarded its report on 08.03.2003. In the said report, the DDIT (Inv.) Wing Kolkata stated that 7 parties had same address whereas six companies were not existing. Thereafter, the said fact was brought to the notice of the assessee that shareholders have not complied with the summon issued on the date of compliance and they failed to appear in person despite their personal presence being asked by DDIT (Inv.) Wing Kolkata. It was also stated that investors did not appear, however, filed all the replies on single day on 04.03.2013 which were incomplete and were in the same format. Thereafter, the AO asked the assessee to furnish certain details hence original shareholder register , original share application money forms, proofs of dispatch of notice of annual general meeting of shareholders for financial year 2009-10 & 2010-11 and proofs of dispatch of share certificates to the shareholders and entries in the ....
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....xistence and where about or the companies namely M/s Mehandipura Trade link Pvt. Ltd., M/s Abharani Vinmay Pvt. Ltd., Vedik Tie-up Pvt. Ltd., M/s Sthir Laxmi Merchant Pvt. Ltd., Tremmel Trading Pvt. Ltd., M/s Mubarak Lubricant Pvt. Ltd., M/s Giltedge Vincom Pvt. Ltd. having their registered office at 85, Netaji Subhash Road, Kolkata. As per record of the Inspector none of the above companies found to be existing at Ibeir given address as per report of the Inspector. It was further stated by DI in his report that in the case of M/s Vanraj Merchant Pvt. Ltd., M/s Devraj Merchant Pvt. Ltd., M/s Mapple Merchant Pvt. Ltd. having their registered office at ISA, Ramakanta Bose Street Kolkata and M/s Montex Commercial Pvt. Ltd. having registered office at 66, Nalini Sheth Road, Kolkata, M/s Bachi Finance Pvt. Ltd. having registered office at ISA, Ramakanta Bose Street, Kolkata, M/s Rameshwar Investment Advisory Pvt. Ltd. having registered office at 18, Sir Harirarn Goenka Street, Burrabazar, Kolkata, the summons were issued on 22.02.2013 and 04.02.2013 but no reply was received. The report of the DDIT(Inv.) Unit Kolkata received on 22.03.2013 and was communicated to the A/R of the....
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....s the share holders had complied with the notice of the DDIT and submitted the reply alongwith the relevant documents on 04.03.2013 and some of them resubmitted the documents on 11.03.2013 and the AO has confirmed this facts in the assessment order in para 4.8. 3.7 According to the A/R of the appellant the Apex Court has decided this issue in the following cases i. CIT vs. Divine Leasing & Finance Ltd. (2008) 299 ITR 268 (Del) ii. CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR195 (SC) In the case of Lovely Exports (P) Ltd. the Apex Court held to the extent that the AO is free to proceed to reopen the individual assessments of the bogus share holders but the share application money cannot be regarded as undisclosed income of the assessee company. The head note is being reproduced:- "Income-Cash credit-Share application money- If the share application money is received by the assessee company from alleged bogus shareholder whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as - undisclosed income of assessee company" 3.8 T....
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....such company". Whereas in the present case, the identity of the two companies which are sister companies stood established. Furthermore, this is not a case of mere furnishing of copies of bank accounts of the subscribers. But, in the present case, as noted by the Commissioner of Income-tax (Appeals) the assessee had filed the income-tax returns of the subscriber companies as also their bank statements and balance sheets in addition to the confirmation letters from the said two companies. A copy of the Form No. 2 filed by the assessee with the Registrar of Companies regarding the allotment of shares to the said two companies had also been furnished. It is in this backdrop that the Commissioner of Income-tax (Appeals) had concluded that the assessee had been able to prove its case and that the Assessing Officer could not shift the burden back onto the Assessee Company without the Assessing Officer producing any tangible material to doubt the veracity of the documents furnished by the assessee. The Income Tax Appellate Tribunal concurred with the views taken by the Commissioner of Income-tax (Appeals)." Moreover, the A/R of the appellant has pointed out in the written submiss....
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.... order of the Hon'ble Madras High Court in the case of CIT vs. Pranav Foundation Ltd. (2014) 90 CCH 0021 the relevant part of the findings of the Hon'ble High Court is as under:- "'2. Can the amount of share money be regarded as undisclosed income under s.68 of the IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given go the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. There is no case for the Revenue that the applicants for the shares were bogus. In our opinion, the additions were rightly deleted by the CIT (A). No interference is called for." 2.4. Aggrieved by the said order, the present appeal is filed raising the substantial question of law, referred supra. 3. We have heard the learned Senior Standing Counsel appearing for the appellant and perused the order passed by the Tribunal and the authorities below. 4. Before adverting to the merits of the case,....
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....rce of the income." 3.13 The A/R of the appellant has also relied on the order of the Delhi Bench of the Hon'ble IT AT in the case of ACIT vs. Divine (India) Infrastructure Pvt. Ltd. (2014) 42 CCH 0022 in which it has been held that merely because the share holders has not been produced but the assessee has furnished detailed, PAN, Addresses, ITR etc. before the AO then the onus shifts on the AO to disprove claim of the assessee by establishing that evidence filed by the assessee was false. Keeping in view the facts that the appellant filed sufficient evidence before the AO to discharge the primary onus during the course of assessment proceedings and the case of the assessee is covered by various judgments of Hon'ble Supreme Court and various High Courts, the grounds of appeal No. 1 is treated as allowed and the AO is directed to delete the addition of Rs. 48350000/- on account of alleged unexplained cash credit u/s 68. 4. The grounds of appeal no.2 relating to initiation of penalty proceedings u/s 271(l)(c) is premature as no penalty has been imposed. 5. In the result, the appeal is allowed." 7. The Ld. D.R. submitted before the Bench....
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.... ld AR submitted that while issuing shares a valuation report was got prepared as per DCF method a copy of which is attached at page No.51 to 63. The Ld. A.R. stated that all the parties replied to the notices issued by DDIT (Inv.) Wing Kolkata. The Ld. A.R. also drew our attention to page No.48 of the paper book which contains the details of source of incomes of the investor companies in the assessee company and the Ld. A.R. stated that the said investors have full creditworthiness to invest in the assessee company. The Ld. A.R. submitted that all these investors have submitted copies of bank statements evidencing the payments through banking channels, copies of the balance sheets showing that those investors have sufficient resources on their own and also the copies of ITRs etc. Therefore, the case laws relied upon by the Ld. D.R. are distinguishable and are not applicable to the case of the assessee. The Ld. A.R. submitted that the report of DDIT (Inv.) Wing Kolkata is not correct as the same is against the facts on record. Therefore, all the three ingredients were duly satisfied in the case of these investors and the addition under section 68 is unwarranted and may be delete....
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....of Hon'ble jurisdictional Bombay High Court in the case of Pr. CIT vs. M/s. Ami Industries India Pvt. Ltd. (supra) wherein a similar issue has been decided in favour of the assessee. The relevant paras are reproduced for the sake of ready reference. "21. From the above, it is seen that identity of the creditors were not in doubt. Assessee had furnished PAN, copies of the income tax returns of the creditors as well as copy of bank accounts of the three creditors in which the share application money was deposited in order to prove genuineness of the transactions. In so far credit worthiness of the creditors were concerned, Tribunal recorded that bank accounts of the creditors showed that the creditors had funds to make payments for share application money and in this regard, resolutions were also passed by the Board of Directors of the three creditors. Though, assessee was not required to prove source of the source, nonetheless, Tribunal took the view that Assessing Officer had made enquiries through the Investigation wing of the department at Kolkata and collected all the materials which proved source of the source. 22. In NRA Iron & Steel (P) Ltd (supra),....
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....s :- (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board." 12. Quite clearly, "ordinarily" the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble jurisdictional High Court in the case of Shi....
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....limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure...". The term 'force majeure' has been defin....