TaxTMI 
TaxTMI 
2017 (1) TMI 1732
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....sidering and disposing of the objections raised against the reasons recorded and as such the order passed is illegal, arbitrary & unjustified. 4. That without prejudice to above legal position, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs. 31,00.000/- made on account of share application money received by the assessee- company which is illegal, arbitrary & unjustified. 5. That the Ld. Commissioner of Income Tax (Appeals) has further erred in not considering the decision of the Apex Court and other decisions cited before her in the correct perspective in as much as it is a settled position of law that addition, if any, on account of share application money received is warranted, it is to in the hands of the person who had invested the amount and not in the hands of the receiver company and as such the addition upheld is arbitrary & unjustified. 2. We have heard Ld. Representatives of both the parties and perused the material on record. Brief facts of the c....
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.... 2 Campri Fical Service (P) Ltd 5,00,000/- 3 DU Securities Pvt Ltd. 6,00,000/- 4 Taurus Iron & Steel Co.(P) Ltd 5,00,000/- Total 21,00,000/- The assessee submitted that he has received share application money from seven companies i.e. Taurus Iron & Steel Co. Pvt. Ltd - Rs. 5,00,000/-, Thar Steel Pvt. Ltd - Rs. 5,00,000/-, Campri Fiscal Services Pvt Ltd - Rs. 500,000/-, Bhavani Portfolio Pvt Ltd - Rs. 5,00,000/-, Ritansh Developers & Financing Pvt. Ltd - Rs. 5,00,000/-, Maya Industries Ltd - Rs. 5,00,000/- and D.U. Securities Pvt. Ltd - Rs. 6,00,000/- totaling to Rs. 36 lakhs. The identity, creditworthiness and genuineness of the above companies except Ritnash Developers and Financing Pvt. Ltd could not be proved during the enquiry at the assessment stage, as the summons issued u/s 131 were returned with the remarks 'Left without address", therefore, the Assessing officer made addition of Rs. 31,00,000/- u/s 69 of the Act. 5. The assessee challenged the above addition before Ld. CIT(A) and it was submitted that the assessee furnished lis....
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....the authorities below. The Ld. Counsel for the assessee therefore submitted that Assessing officer did not have any reason to believe that income chargeable to tax have escaped assessment. The Ld. Counsel for the assessee in support of his contention relied on the following decisions:-_ i) Decision of Delhi High Court in the case of CIT Vs. Atul Jan & Smt. Vaniti Jain [2008] 299 ITR 383(Delhi) ii) Decision of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Smt. Paramjit Kaur [2009] 311 ITR 38(P&H) iii) Decision of Delhi High Court in the case of CIT Vs. Sfil Stock Broking Limited [2010] 325 ITR 285 (Delhi) iv) Decision of Delhi High Court in the case of Sarthak Securities Co. P. Ltd. [2010] 329 ITR 110 (Delhi) v) Decision of Delhi High Court in the case of Signature Hotels P. Ltd. Vs. ITO and Another [2011] 338 ITR 51(Delhi) vi) Decision of Gujarat High Court in the case Sagar Enterprises Vs. Assistant Commissioner [2002] 257 ITR 335 (Gujarat). 8. The Ld. Counsel for the assessee further submitted that assessee furnished complete details of all the share holders before the authorities below which are copy of th....
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....uineness of the transactions. Therefore, onus u/s 68 of the Act has not been discharged by the assessee. The Ld. DR relied upon the decision of the Hon'ble Delhi High Court in the case of CIT v Navodya Castels Pvt. Ltd. 367 ITR 306 (Delhi) and order of ITAT, Kolkata Bench in the case of M/s Biskha Sales Pvt Ltd, Kolkata Vs. CIT(Kol-II), Koltaka in ITA 1493/Kol./2013 dated 19.9.2014 in support of his contention that huge racket is functioning in Kolkata for supplying bogus entries, therefore, proceedings u/s 263 of the Act were initiated in this case which have been confirmed by the Tribunal. 10. We have considered the rival submissions. It is well settled law that validity of re-assessment proceedings to be determined with reference to reasons recorded u/s 148 of the I.T. Act. Copy of the reasons as supplied by the Ld. DR dated 25.3.2010 are reproduced as under:- "Name of the Assessee : M/s J.M. D. Astrological Consultancy Services (P)Ltd PAN No. : AABCJ 4419N Address : House No. 1456, Sector 4, Panchkula Assessment Year : 2008-09 The Information was received from Addl. DIT, UNIT-IV, New Delhi vide his office letter No. Addl, DIT(Inv)/Unit-IV/Beneficiaries/2008-09/7....
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...., they have started that various bank accounts were opened in their names by Sh, Tarun Goyal, who himself operated these accounts and deposited cash in them. As such, they could not refuse the same as they were mere employees. All the passbooks, cheque-books, various important documents were in his total control. f. The statements of the auditors of various companies of Sh. Tarun Goyal were recorded on oath after summons were issued to them. The auditors of various companies run by Sh. Tarun Goyal have confirmed that they had no knowledge about the directors of the companies and all the audits were done at the instructions of Sh. Tarun Goyal. One of the auditors has stated that proper records for transactions and contracts of shares, held as investment or purchased or sold could never be verified. In most cases, share certificates, shares allotment advises and/or other related documents were not available for the auditor's verification and it could not be verified/ ascertained whether the shares were actually allotted to the company and whether they were held in the name of the company. g. During the course of search, it was revealed that all the passbooks, ch....
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....ht of the above .recorded reasons. I have reason to believe that income of more than Rs. 21.00 lacs has escaped assessment for the A.Y. 2008-09 in the case of the assessee." 11. The Ld. DR relied upon copy of the letter of the Addl. DIT (Inv.) New Delhi dated 6/8 April, 2009 addressed to CIT-I Panchkula Haryana intimating that search u/s 132 was conducted in the case of Shri Tarun Goel, Chartered Accountant on 15.9.2008. He was examined by the Investigation party on the same day and his statement was recorded, copy of which is also placed on record by the Ld. DR in which he has accepted that he has provided accommodation entries to various companies by creating number of private limited companies and firms. All his employees were involved in the same to provide bogus accommodation entries. The list of beneficiaries companies were attached with this letter and request was made to CIT-I Panchkula to transmit the same information to the respective Assessing officer of his charge so that further invigilation may be carried out by them and necessary action may be initiated against these beneficiaries. In the list / annexure of this letter for assessment year 2008-09, name of the asse....
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.... in October 2008, copy of acknowledgement is filed at page 1 of the paper book and is also not disputed by the Ld. DR. The Assessing officer, therefore, recorded incorrect, irrelevant and non- existing reasons u/s 148 of the I.T. Act. The reasons, therefore, are vitiated and liable to be quashed as would not showed even prima facie case that the Assessing officer has any reason to believe that income escaped assessment. It is not discernable as to whether Assessing officer has applied his mind to the report of the DIT (Inv.) New Delhi which is sole basis of recording of reasons for reopening of the assessment and independently arrived at a belief that income has escaped assessment, therefore, Assessing officer did not get jurisdiction to make re-assessment. There is, thus, no material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The re-assessment proceeding were invalid and are liable to be quashed. 13.1 The Hon'ble Delhi High Court in the case of CIT Vs. Atul Jan & Smt. Vaniti Jain [2008] 299 ITR 383(Delhi) held as under:- "Held, dismissing the appeals, that the only information was that the assessee had tak....
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....irection given by the Additional Commissioner of Income-tax to initiate proceedings under section 148 in respect of cases pertaining to the relevant ward. The Assessing Officer referred to the information and the two directions as reasons on the basis of which he was proceeding to issue notice under section 148 . These could not be the reasons for proceeding under section 147/148 of the Act. As the first part was only an information and the second and the third parts of the reasons were mere directions, it was not at all discernible as to whether the Assessing Officer had applied his mind to the information and independently arrived at a belief that, on the basis of the material which he had before him, income had escaped assessment. There was no substantial question of law for consideration." 13.4 The Hon'ble Delhi High Court in the case of Sarthak Securities Co. P. Ltd. [2010] 329 ITR 110 (Delhi) held as under:- "Held, allowing the petition, that the formation of belief was a condition precedent as regards the escapement of the tax pertaining to the assessment year by the Assessing Officer. The Assessing Officer was required to form an opinion before he proceeded ....
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....t a pointer and did not indicate escapement of income. Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid-up capital of Rs. 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September, 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to be quashed." 13.6 The Hon'ble Gujarat High Court in the case of Sagar Enterprises v Assistant Commissioner in [2002] 257 ITR 335 (Gujarat) held as under :- "Held, that it was apparent that the fact of non- filing of the return for the assessment year 1991- 92 had weighed with the respondent for arriving at the satisfaction about the failure on the part of the assessee and escapement of assessment of income. However, the material on record showed that the return had been filed. In such circumstances, it could not be said with certainty as to which fact would have weighed with the officer concerned and once it was shown that an irrelevant fact had been taken into consideration, to wh....