TaxTMI 
TaxTMI 
2020 (11) TMI 646
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....present application before this Hon'ble Bench to admit the additional grounds of appeal raised. The Appellant submits that though the additional grounds of appeal, the Appellant has raised the issue of violation of principles of natural justice which goes to the root of the proceedings. The Ld. A.O. invoked the provisions of section 68 of the Act to treat the share application money received by the Appellant as income relying on the statements of some persons. The Appellant has neither been provided with the copies of the same nor cross examination of the persons who had given the statements. The Appellant submits that this issue goes to the root of the proceedings. Hence, the additional grounds of appeal may be admitted. 2. For the abovementioned well-established proposition of the law, the Appellant strongly relies upon the following judicial pronouncements and requests your honour to admit and adjudicate the said additional ground. Sr. No. Name of judicial pronouncements Hon'ble Judicial Forum Relevant Citation 1 Jute Corpn. of India Ltd. v/s Commissioner of Income-tax Supreme Court 187ITR688 2 National Thermal Power Co. Ltd. v/s Co....
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.... Applicant being aggrieved by the assessment order preferred the appeal before the Ld.CIT (A). On appeal, the Ld. CIT (A) uphold the action of the Ld. A.O. 2. The Applicant being aggrieved by the appellate order preferred the present appeal before Hon'ble Appellate Tribunal. 3. The Applicant strongly objects to the addition made by the Ld. A.O. under section 68 of the Act and confirmed by Ld. CIT(A). The Applicant submits that the authorities below are not justified in doubting the share application money received by the Applicant from M/s. Speciality Papers Limited amounting to Rs. 4,45,00,000/-. The Applicant submits that it has provided all the details to substantiate the genuineness of the share subscription made by M/s. Speciality Papers Limited by furnishing relevant evidence which are enclosed in the paper book before Hon'ble Appellate Tribunal. The Applicant further, submits that the Ld. A.O. has acted arbitrary in making addition in the hands of the Applicant merely relying on the statement of a third party. 4. The Applicant submits that Shri Shirish Chandrakant Shah has affirmed an affidavit on 14.12.2019 at the instance of Mr. Kamal Jaj....
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..../documents viz., blank letter heads of various companies, signed cheques, bills etc. were found and seized from his premises. Shri S.C. Shah was confronted with these seized documents and his statement was recorded u/s. 132(4). In the statement recorded on oath, he accepted that he was engaged in providing accommodation entries in nature of bogus share capital etc. to prospective clients against some commission. Subsequently information to this effect was forwarded by the ACIT, Central Circle-1, Mumbai vide letter No. ACCC-1/ 2013-14 dated 16/08/2013 to the present AO , wherein it was informed that during the course of search, various documents, loose papers, books of account, etc. belonging to the present assessee, namely M/s. Jajoo Enterprises Ltd. were found and seized. The relevant seized material and a satisfaction note was forwarded to take suitable action in the case. The return of income for the year under consideration was filed on 27/09/2012 declaring total income at Rs. 2,48,98,522/-. The case was selected for scrutiny and accordingly notice u/s. 143(2) was issued on 14.10.2013 and duly served on the assessee. Further notices were issued on the assessee calling for vario....
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....ogus LTCG. This fact has been admitted under oath by him and many of the dummy directors of these companies. vii. This clearly establishes that the ultimate source of funds in the bank accounts of the companies managed and controlled by him is unaccounted cash received from the clients though it is made to appear that the same has been received as Loan or Share Capital from other companies. On a perusal of the shareholding pattern of the assessee, it is observed that the following entities/persons are having shareholding more than 5% shares in the company:- S.No. Name of the Shareholder No. of Shares held % of holding 1. Kamal Jajoo 59,650 31.95 2. Nita Jajoo 40,300 21.59 3. Kamal Jajoo HUF 34,492 18.47 4. Speciality Papers Ltd. 20,375 10.91 The total amount involved against M/s Speciality Papers Ltd, is calculated as follows: Total No. of shares : 20,375 (19,750+65) Partly paid up shares : 19,750 x 2000(Rs. 25 face value + Rs. 1975 share premium = Rs. 3,95,00,000 Fully paid up shares : 625 x 8000(Rs. 100 face value + Rs. 7900 share premium)= Rs. 50,00,000 Rs. 4,45,00,....
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....to 31.03.2012. f) Furnish the complete address of M/s Speciality Papers Ltd. Along with the aforesaid notice u/s.142(1), the assessee was also made available copies of Statement of Shri Shirish Chandrakant Shah recorded on oath u/s.132(4) of the I.T.Act, as obtained from the Investigation Wing, for cross-examination. 8. Thereafter the Assessing Officer noted the following submission of the assessee:- "In response to the aforesaid show cause, the assessee, through its submissions filed vide letter dated 19.03.2015, has filed following documents: a) Ledger account of M/s Speciality Papers Ltd. in its books for FY 2011-12. b) Bank statement reflecting the transactions and M/s Speciality Papers Ltd. c) Bank statement of M/s Speciality Papers Ltd. from their banker which shows payment entry transaction. d) ITR of M/s Speciality Papers Ltd. for AY 2011-12 & 2012-13. e) PAN card of M/s Speciality Papers Ltd. f) Balance sheet and P&L account of M/s Speciality Papers Ltd. for FY 2011- 12. g) Share application form of M/s Speciality Papers Ltd. h) Resolution of M/s Speciality Papers Lt....
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....of Rs. 4.45 crores as undisclosed income of the assessee. 10. Upon assessee's appeal learned CIT(A) referred to the submission of the assessee. Thereafter he also referred to the findings of the investigation wing of the Income Tax Department and the statement of Shri S.C. Shah. He referred extensively to the statement of Shri S.C. Shah, wherein he mentioned that some of the companies including M/s. Speciality Papers Ltd. were engaged in providing bogus share application money and also bogus unsecured loans, long term capital gains against cash received from the clients. They were not doing any business. Learned CIT(A) further mentioned that the assessee argued that he has received share application money through bank and he is not aware of any Shirish Chandrakant Shah. Learned CIT(A) rejected this contention and referred the Hon'ble Supreme Court decision in the case of Kanchwala Gems (122 TTJ 854) which held that payment through cheque alone does not determined the genuineness of the transaction and the assessee has to prove its genuineness to the satisfaction of the Assessing Officer. He noted that the assessee is being assessed to tax and has shown some turnover and some....
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....examine. Moreover, learned Departmental Representative reiterated that the said investor company has no fund of its own to utilise for share capital and share premium. That it only has fund in the shape of share premium received from other concerns. That this supports the finding of investigation wing, that it is a part of surreptitious routing of money in shape of share capital and share premium. She placed reliance upon the Hon'ble Supreme Court decision in CIT Vs. N.R. Portfolio Pvt. Ltd. Income Tax Appeal No. 1019/2011 dated 22nd November, 2013. 14. Upon careful consideration we find that this addition for share capital and share premium has been done by the Assessing Officer upon finding of the investigation wing of the Income Tax Department that assessee was receipt of bogus accommodation entries from Shri S.C. Shah Group of companies. The Assessing Officer has issued notice u/s. 133(6) to the assessee company. There was no response from the said company. However, learned Counsel of the assessee submits before us that at no point of time the assessee was asked to produce directors of the investor company. That if the same was done the assessee would have made necessary....