TaxTMI 
TaxTMI 
2021 (3) TMI 52
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....A.Y. 2009-2010 may be followed in A.Y. 2010-2011. We, therefore, proceed to decide the appeal of assessee for the A.Y. 2009-2010 as under : ITA.No.3338/Del./2017 - A.Y. 2009-2010 : 4. The facts of the case are that original return in this case was filed on 19.02.2010 declaring income of Rs. 13,46,170/- which was processed under section 143(1) of the I.T. Act, 1961. Subsequently, a search and seizure operation under section 132 of the I.T. Act was conducted in Brahmaputra Group of cases including the assessee on 28.09.2010 and various books of account and documents including those belonging to the assessee were found and seized. Notice under section 153A was issued on 02.02.2021 requiring the assessee to file return of income. In response thereto, assessee filed letter submitting before A.O. that original return filed by it may be treated as return having been filed in response to notice under section 153A of the I.T. Act, 1961, declaring income of Rs. 13,46,170/-. The assessee produced the books of account and other documents time to time before A.O. which have been examined. 4.1. From the details submitted by the assessee and material available with the Department, it was found....
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....r share) 47,50,000 (Rs. 190 per share) 30.03.2009 14. Giriraj Tradecom P. Ltd., 1/A, Grant Lane, 1st Floor, Kolkata - 700 012. 25000 2,50,000 (Rs. 10 per share) 47,50,000 (Rs. 190 per share) 30.03.2009 4.2. Accordingly, a questionnaire Dated 31.08.2012 was issued and assessee was confronted with the result of investigation made by the Department in respect of share capital and assessee was also required to file certain details and the counter-foil of issue of share certificates and copies of the share application forms etc., The assessee was also required to produce the above shareholder companies through their Directors for verification of genuineness of the investment in shares by them in assessee company. The questionnaire is reproduced in the assessment order in which it was also brought to the notice of assessee that the Department has verified the existence of these companies, their creditworthiness of the and genuineness of the transaction by making survey under section 133A of the I.T. Act on certain shareholders above which are 07 in number and it was found that they do not exist at the given address. It was also found that they are not engaged in regular busines....
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....i. Page No. 23 of Annexure A-6 (a diary relating to F.Y. 2009-10)- on the back side of this page recording is made in the name of "Shri Shyam Trexim & Fincom P. Ltd." against which Rs. 50 lakhs is written. ii. Page No.1 of Annexure A-7 - on this page a recording of funds mentioning debit as well as credit of Rs. 25 lakhs in the name of Murari Lai Aggarwal dated 31.05.2008 and further comments of the payment of same amount by cash to Murari lal Aggarwal MLA is made. iii. The back side of the above page 1 of Annexure A-7 mentions that Sarat Aggarwal was paid with cash of Rs. 30 lakhs bring back equal amount in other form. The date of noting is 04.06.2008. iv. Page 1 of Annexure A-10 - it contains a hand written extract of cash book containing entry of Rs. 5 lakhs in the main of M.L. Aggarwal. It also shows as debit of Rs. 3 lakhs in the name of Saratj Aggarwal. The entries are for the date 28.05.2008, the date of writing of this page. v. Page No. 4 of above Annexure A-10 contains record of 30 lakhs in the name of Mr. A Singhal and M.L. Aggarwala dividing into Rs. 25 lakhs and 5 lakhs respectively. On this page the name of Sudarshan Casting P. Ltd. is also written." 4.6. Duri....
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....ta requesting to send the final report which was submitted vide letter Dated 22.03.2013 confirming non-existence of the parties. 4.8. The A.O. also noted that during the course of assessment proceedings the assessee produced Shri Ajit Kumar, Director of M/s. Motorex Finance Pvt. Ltd., Kolkata and Vinay Kumar Shah, Director of Shri Sudarshan Casting Pvt. Ltd., Kolkata and M/s. Madson Agencies Pvt. Ltd., who had invested a sum of Rs. 75 lakhs, Rs. 25 lakhs and Rs. 85 lakhs respectively as share capital/share application money with the assessee company in assessment year under appeal. The A.O. also noted that statement of these persons were recorded, but, they have not been able to explain as to whom the share certificates were sold by them and for which amount and they were unable to produce the original share certificates and bank statements etc., The A.O, therefore, noted that assessee has failed to discharge its onus to prove the identity of the share applicants, their creditworthiness of the and genuineness of the transaction. Therefore, entire share application money of Rs. 6.70 crores was treated as unexplained in the hands of the assessee under section 68 of the I.T. Act and....
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..... Learned Counsel for the Assessee submitted that A.O. was not justified in referring in the assessment order that reply of February have been considered by him in January, 2013. PB-19 onwards are the detailed evidences submitted before the authorities below as explained above along with worth of the Investor Companies to make investment in assessee company. PB-41 is reply Dated 19.03.2015 explaining each issue of creditworthiness and genuineness of the transaction of the Investors supported by documentary evidences. It was also explained that shares were actually allotted to the Investor Companies and complete details and their Certificate Nos. Etc., were also filed. Two Directors i.e., Shri Vinay Kumar Shah and Shri Ajit Kumar were produced before A.O. and their statements have been recorded in which they have confirmed the transaction with the assessee, but, later on no other data was fixed by the A.O. for producing the other Directors at the convenient time. No further examination have been done. PB-79 is the reply regarding Shri M.L. Agarwal, C.A. There is no objection raised for raising the premium amount per share in the assessment order. Learned Counsel for the Assessee su....
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....Assessee relied upon the Order of ITAT in the case of Pr. CIT vs., Goodview Trading Pvt. Ltd., in ITA.No.377/Del./2016 and Judgment of Hon'ble Delhi High Court in the case of ITO vs., N.C. Cables Ltd., 391 ITR 11 (Del.). He has also relied upon Judgment of the Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs., Vrindavan Farms (P) Ltd., in ITA.No.71/Del./2015 on the proposition that low income of the share holder is not relevant consideration. Seized document was not considered as relevant to assessment year under appeal by ITAT in Group Appeals as mentioned above. The issue of non-compliance to the notice under section 133(6) have also been considered favourably by ITAT in the Group cases as mentioned above. Learned Counsel for the Assessee also relied upon following Judgments in support of the contention that assessee proved identity of the Investors, their creditworthiness and genuineness of the transaction, therefore, initial onus upon assessee stood discharged to prove conditions of Section 68 of the I.T. Act and that assessee need not to prove source of the source. The Learned Counsel for the Assessee also relied upon the following Judicial pronouncements....
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....SC). 7. J.J. Development Pvt. Ltd., vs., CIT 2018-TIOL-395-SC-IT. 8. CIT vs., Nipun Builders & Developers (P.) Ltd., 350 ITR 407 (Del.) (HC). 9. CIT vs., Nova Promoters & Finlease (P) Ltd., 342 ITR 169 (Del.) (HC) 10. CIT vs., N.R. Portfolio Pvt. Ltd., [2014] 264 CTR 258 (Del.) 11. CIT vs., Ultra Modern Exports (P.) Ltd., 220 Taxman 165 (Del.) (HC) 12. CIT vs., Frostair (P.) Ltd., 210 Taxman 221 (Del.) (HC). 13. CIT vs., Empire Builtech (P.) Ltd., 366 ITR 110 (Del.) (HC) 14. CIT vs., Focus Exports (P.) Ltd., 228 Taxman 88 (Del.) (HC) 15. PCIT vs., Bikram Singh [2017] 399 ITR 407 (Del.) (HC) 16. Rick Lunsford Trade & Investment Ltd., vs., CIT [2016] 385 ITR 399 (Cal.) (HC) 17. Rick Lunsford Trade & Investment Ltd., vs., CIT 2016- TIOL-207-SC-IT. 7. We have considered the rival submissions and perused the material on record. It is not in dispute that whatever queries were raised by the A.O. time to time, have been replied by assessee along with documentary evidences. All the replies filed by assessee along with documentary evidences are filed in the paper book. The assessee explained each and every Investor Company. It is not in dispute that all the Investor C....
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....r recording the statements of remaining Directors of Investor Companies. The A.O. received report from the Investigation Wing at Kolkata, but, it is not clarified in the assessment order if the report of Investigation Wing, Kolkata was ever supplied to the assessee or confronted to the assessee so that assessee could rebut the same. Therefore, in the absence of any confrontation of the report of the Investigation Wing to the assessee, the same cannot be read in evidence against the assessee. Whatever the objections have been raised by the A.O. in the assessment order for disbelieving the explanation of assessee on the basis of some material found during the course of search, material found from the Chartered Accountant of the assessee, statement of Shri Sampath Sharma, Director of the assessee company etc., and low income declared by the Investor Companies have already been considered by the ITAT, Delhi Benches in Group cases on identical facts and entire addition have been deleted on merits as well as it was held that no addition could be made against the assessee because no incriminating material was found during the course of search. Therefore, all the points raised by the A.O. ....
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.... additions have been deleted by the Tribunal in both the above cases vide orders dated 29.12.2017 and 23.04.2018. It was next contended on behalf of the assessee that none of the documents/papers pointed out by the Assessing Officer in the assessment order belong to the assessee and therefore, the notice issued u/s. 153C itself is invalid. Reliance is placed on the following decisions: (i). Pr. CIT vs. Vinita Chaurasia, 394 ITR 758 (Del.) (ii). CIT vs. Arpit Land (P) Ltd., 393 ITR 276 (Bom) (iii). Canyon Financial Services Ltd. vs. ITO, 399 ITR 202 (Del) (iv). CIT vs. Renu Construction (P) Ltd., 399 ITR 262 (Del.) (v). Pepsi Foods Pvt. Ltd. vs. ITO, 367 ITR 112 (Del), SLP dismissed by Supreme Court in Appeal (c) No. 4659/2015 dated 04.12.2017 (vi). M/s. Pepsico India Holding Pvt. Ltd. vs. ACIT, 370 ITR 295 (Del) (vii). CIT vs. Lavanya Land (P) Ltd., 397 ITR 246 (Bom) 4. It was next contended that none of the documents referred to by the Assessing Officer are the material, much less incriminating material, to denote any income or share capital and share premium and therefore, the notice issued u/s. 153C is legally invalid, having been issued without any jurisdiction.....
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....isclosed income of the assessee nor any nexus with the share capital declared by the assessee. In fact, the Assessing Officer has derived inferences/presumptions on the basis of above papers found in the search without proving them as belonging to the assessee or their nature being incriminating to the assessee. Therefore, the assessment order confirmed by the ld. CIT(A) is not found fit to support, having been passed without proving the primary ingredients of section 153C of the Act. It is worthwhile to note that the very same papers, as listed above, were also taken against the other group companies, i.e., Brahmaputra Finlease (P) Ltd. and M/s. Brahmaputra Realtors (P) Ltd. for the assessment year 2007-08 and similar additions were made in those cases also based on the same search and same papers. However, the ITAT Delhi Bench in the case of Brahmaputa Finlease (P) Ltd. (ITA No. 3332/Del./2017) vide order dated 29.12.2017 has examined the same documents and deleted the addition by quashed the assessment order as under: 4.10 Another argument, made by the Ld. CIT(DR) in support of her claim of incriminating material was that the Item No.(i) mentioned on page 6 of the assessment o....
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....e capital. She only stated that said recording on the page reflected accommodation entry obtained by the 'Brahmaputra Group' and but no documentary evidence regarding the claim that the document was incriminating qua the addition, are filed. In respect of the Items No. (ii) to (v), the Ld. counsel has submitted that additions in respect of the amounts mentioned in the document has been made in the case of another company namely "M/s Brahmaputra Infrastructure Ltd" in assessment year 2009-10. This fact was not controverted by Ld. CIT(DR). Thus, we find that no incriminating material qua the addition made is found during the course of search from the premises of the assessee. Accordingly, above contention of Ld. CIT(DR) are rejected. She also submitted that during the course of search, hard disks of computers and others material were also seized which contained incriminating material. The Ld. CIT(A) failed to substantiate the claim either by the impugned assessment order or through any other documentary evidence. In the assessment order, there is no mention that any incriminating material is found in hard disk etc. Thus, this contention of Ld. CIT(A) is also rejected. Further, ....
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....relying on the decision of Hon'ble Delhi High Court in the case of Kabul Chawla and plethora of other decisions relied by the assessee, we find no justification to sustain the impugned order and the addition made against the assessee. Accordingly, the appeal of the assessee deserves to be allowed, being full of merits." 24. Similarly, in the case of M/s Brahmaputra Realtors (P) Ltd. Vs DCIT, Central Circle-17, New Delhi in ITA No. 3406/Del/2017 for the assessment year 2007-08, the relevant findings have been given in paras 3 to 9 of the order dated 23.04.2018which read as under: "3. It is the submission of the learned AR that though the learned AO made Annexures A-6, A-7 and A-10 as the basis for making the addition, he failed to substantiate how these documents are incriminating the assessee so as to make the addition in their hands. Nowhere learned AO brought on record to connect these documents to the additions under the head "share capital" and even if the authority failed to notice that the said documents go unexplained to have any nexus with the addition in dispute or to show that those relate to any accommodation entries entered by the Brahamputra group. Further, the a....
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....ocuments in the case M/s Brahmputra Realtors P. Ltd. ITA No.3406/Del/2017 "Apart from, during the course of search operation in Brahmaputra Group of cases, carried out at premises A-7, Mahipalpur, New Delhi, the following incriminating documents were inter alia seized by party BA-5 i. Page No. 23 of Annexure A-6 (a diary relating to F.Y. 2009- 10)- on the back side\ of this page recording is made in the name of "Shri Shyam Trexim & Fincom P. Ltd." against which Rs. 50 lakhs is written. ii. Page No. 1 of Annexure A-7 - on this page a recording of funds mentioning debit as well as credit of Rs. 25 lakhs in the name of Murari Lai Aggarwal dated 31.05.2008 and further comments of the payment of same amount by cash to Murari Lal Aggarwal (MLA) is made ITA No. 3332/Del/2017 iii. The back side of the above page 1 of Annexure A-7 mentions that Sarat Aggarwal was paid with cash of Rs. 30 lakhs bring back equal amount in other form. The date of noting is 04.06.2008. iv. Page 1 of Annexure A-10 - it contains a hand written extract of cash book containing entry of Rs. 5 lakhs in the main of M.L. Aggarwal. It also shows as debit of Rs. 3 lakhs in the name of Sarat Aggarwal. The entries are....
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....ed income in the guise of share capital/share application money." 7. On considering the above documents vide para 4.11, a coordinate bench of this Tribunal considered the relevance of these documents to the companies of Brahmputra group and also the incriminatory nature of these documents inasmuch as the names of Shri Shyam Trexim and Fincom P. Ltd., Shri Murari Lal Aggarwal, Shri Sarat Aggar5wal, and Shri A. Singhal are mentioned in these documents and nothing incriminating the assessee could be inferred from these documents. Relevant observations of the Tribunal are as follows: 4.11 We find that the Item No. (i) contains recording in the name of "Shri Shyam Trexim & Fincom Pvt. Ltd". The Assessing Officer has nowhere brought on record how the said recording on the page relates to the addition in question of share capital. The Ld. CIT(DR) also could not explain as how the said recording was related to the addition in question made in respect of alleged unexplained share capital. She only stated that said recording on the page reflected accommodation entry obtained by the 'Brahmaputra Group' and but no documentary evidence regarding the claim that the document was incri....
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....ibunal concluded that, - 4.20 In view of the above finding, both the conditions as completed assessment and no incriminating material, have been satisfied in the case, thus, no addition could have been made in the instant assessment year in view of the finding of the Hon'ble Delhi High Court in the case of Kabul Chawla (supra). The grounds No. 1 and 1.1 of appeal are accordingly allowed." 25. A similar view has been taken by the ITAT Delhi Bench 'A', New Delhi in the case of M/s Brahmaputra Finlease (P) Ltd. Vs DCIT, Central Circle-17, New Delhi in ITA No. 3332/Del/2017 for the assessment year 2007-08 wherein vide order dated 29.12.2017, the relevant findings have been given in paras 4.7 to 4.20 which read as under: "4.7 We have heard the rival submission and perused the relevant material on record. Main issue in dispute in the grounds raised before us is whether any addition could have been made under section 153A of the Act in the case of the assessee. In the case of Kabul Chawla (supra) relied upon by the Ld. counsel of the assessee, the Hon'ble High Court of Delhi in para-37 of the decision has summarized the legal position as under: "Summary of the legal position....
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....minating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." (emphasis supplied externally) 4.7.1 In view of the legal position summarized above, the Hon'ble High Court in para-38 of the decision held that in the case, on the date of search, if the assessment already stood completed, theb in absence of incriminating material, no addition could have been made. The relevant paragraph of the decision is reproduced as under: "Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." 4.7.2 In view of above decision, we are required to examine the two conditions. The First condition is whether for the year under consideration, the assessment stood completed before the date of search or not. The second condition is that whether any incriminating material unearthed durin....
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.... the Ld. CIT(DR) in support of her claim of incriminating material was that the Item No.(i) mentioned on page 6 of the assessment order, was incriminating in nature as it contained detail of accommodation entry. For having clarity on the issue raised by the Ld. CIT(DR), we may like to reproduce the relevant part of the assessment order as under: "Apart from, during the course of search operation in Brahmaputra Group of cases, carried out at premises A-7, Mahipalpur, New Delhi, the following incriminating documents were inter alia seized by party BA-5 i. Page No. 23 of Annexure A-6 (a diary relating to F.Y. 2009-10)- on the back side\ of this page recording is made in the name of "Shri Shyam Trexim & Fincom P. Ltd." against which Rs. 50 lakhs is written. ii. Page No. 1 of Annexure A-7 - on this page a recording of funds mentioning debit as well as credit of Rs. 25 lakhs in the name of Murari Lai Aggarwal dated 31.05.2008 and further comments of the payment of same amount by cash to Murari Lal Aggarwal (MLA) is made iii. The back side of the above page 1 of Annexure A-7 mentions that Sarat Aggarwal was paid with cash of Rs. 30 lakhs bring back equal amount in other form. The ....
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....t any incriminating material is found in hard disk etc. Thus, this contention of Ld. CIT(A) is also rejected. 4.12 The next argument of the Ld. CIT(DR) is that the statement recorded under section 132(4) of the Act of Sri Sampat Shrama is incriminating material found during the course of search. We have observed that said statement of Sh. Sampat Sharma was recorded at his residential premises during search proceeding carried out separately. In our opinion, the statement of Sh. Sampat Sharma was not recorded in search proceeding of the assessee and thus, it cannot be considered as incriminating material found during the course of the search of the assessee. 4.13 Without prejudice to our observation, we do not find any mention of any incriminating material in the statement of Sh. Sampat Shrama recorded under section 132(4) of the Act. The Ld. counsel drawn our attention to copy of the statement available on page 427 to 450 of the paper book and english translation of the same available on pages 420 to 426 of the paper book. In response to question No. 6, regarding details of the bank accounts, Sh. Sharma stated that he did not remember the bank account numbers and all the pass bo....
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....ves on critical aspects, of failure to maintained accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the assessee were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission. 39. For all the aforementioned reasons, the Court is of the view that the ITAT was fully justified in concluding that the assumption of jurisdiction under Section 153A of the Act qua the Assessee herein was not justified in law." 4.16 In the case of Harjeev Aggarwal (supra), the Hon'ble High Court observed as under: "19 In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV - B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not ....
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....5, was said to be relevant but not conclusive. Therefore, whether the statement was made under duress and whether it was retracted lawfully would have no relevance at this stage. However, the Tribunal went into these issues as well and ultimately, found that the statement could be used as evidence. Further, it examined other corroborative evidence referred to in the assessment order and arrived at a finding that the added income would be income which can be added under section 158BC for the block assessment period in question. In an appeal filed under section 260A to the Bombay High Court, the High Court found, after narrating the facts, that no substantial question of law arises. 4. We are of the view, in accordance with the view of the High Court, that no substantial question of law arises. Further, though it was vehemently argued by Shri Devansh A. Mohta, learned counsel appearing for the assessee, that this was a case both of perversity and of there being no evidence at all. We find that not only are the findings of fact recorded in some detail but that it is not possible to say that this is a case of no evidence at all inasmuch as evidence in the form of the statement made b....
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.... of M/s. Brahmaputra Finlease (P) Ltd., New Delhi vs., DCIT, Central Circle-17, New Delhi (supra), in paras 4.7 to 4.20 held as under : "4.7 We have heard the rival submission and perused the relevant material on record. Main issue in dispute in the grounds raised before us is whether any addition could have been made under section 153A of the Act in the case of the assessee. In the case of Kabul Chawla (supra) relied upon by the Ld. counsel of the assessee, the Hon'ble High Court of Delhi in para-37 of the decision has summarized the legal position as under: "Summary of the legal position 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs w....
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.... is reproduced as under: "Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." 4.7.2 In view of above decision, we are required to examine the two conditions. The First condition is whether for the year under consideration, the assessment stood completed before the date of search or not. The second condition is that whether any incriminating material unearthed during the course of the search qua the addition made, which was not already disclosed or made known in the course of original assessment. 4.8 As regard the first condition, the Ld. counsel has already referred to page 105A of the paper book, which is a copy of the assessment order passed under section 143(3) of the Act on 24/11/2009. Since in the case of the assessee search was carried out on 28/09/2010, thus, it is undisputed that assessment was completed prior to the date of search. 4.9 Now regarding the second condition, the Ld. CIT(DR) has mentioned that documents impounded from the prem....
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....ry relating to F.Y. 2009-10)- on the back side\ of this page recording is made in the name of "Shri Shyam Trexim & Fincom P. Ltd." against which Rs. 50 lakhs is written. ii. Page No. 1 of Annexure A-7 - on this page a recording of funds mentioning debit as well as credit of Rs. 25 lakhs in the name of Murari Lai Aggarwal dated 31.05.2008 and further comments of the payment of same amount by cash to Murari Lal Aggarwal (MLA) is made iii. The back side of the above page 1 of Annexure A-7 mentions that Sarat Aggarwal was paid with cash of Rs. 30 lakhs bring back equal amount in other form. The date of noting is 04.06.2008. iv. Page 1 of Annexure A-10 - it contains a hand written extract of cash book containing entry of Rs. 5 lakhs in the main of M.L. Aggarwal. It also shows as debit of Rs. 3 lakhs in the name of Sarat Aggarwal. The entries are for the date 28.05.2008, the date of writing of this page. v. Page No. 4 of above Annexure A-10 contains record of 30 lakhs in the name Mr. A Singhal and M.L. Aggarwala dividing into Rs. 25 lakhs and 5 lakhs respectively. On this page the name of Sudarshan Casting P. Ltd. is also written. During the course of search and post search inv....
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....minating material found during the course of the search of the assessee. 4.13 Without prejudice to our observation, we do not find any mention of any incriminating material in the statement of Sh. Sampat Shrama recorded under section 132(4) of the Act. The Ld. counsel drawn our attention to copy of the statement available on page 427 to 450 of the paper book and english translation of the same available on pages 420 to 426 of the paper book. In response to question No. 6, regarding details of the bank accounts, Sh. Sharma stated that he did not remember the bank account numbers and all the pass books of the accounts were kept in the office of Brahmaputra Infra Projects Ltd. In response to question No. 8, he explained where the books were kept. The documents referred in question No. 20 to 25 are admittedly not belonging to the assessee. The question No. 26 relates to investment by Sh. Sharma. On perusal of the entire statement of Sh. Sampat Shrama, we do not find any mention of any incriminating material qua the addition made. 4.14 Further, in the case of Best Infrastructure (India) Private Limited (supra) the question of law framed is as under:' "Did the ITAT fall into error ....
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.... in concluding that the assumption of jurisdiction under Section 153A of the Act qua the Assessee herein was not justified in law." 4.16 In the case of Harjeev Aggarwal (supra), the Hon'ble High Court observed as under: "19 In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV -B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The works evidence found as a result of search" would not taken within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standa....
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....High Court found, after narrating the facts, that no substantial question of law arises. 4. We are of the view, in accordance with the view of the High Court, that no substantial question of law arises. Further, though it was vehemently argued by Shri Devansh A. Mohta, learned counsel appearing for the assessee, that this was a case both of perversity and of there being no evidence at all. We find that not only are the findings of fact recorded in some detail but that it is not possible to say that this is a case of no evidence at all inasmuch as evidence in the form of the statement made by the assessee himself and other corroborative material are there on record." 4.19 We find that in the case of best infrastructure (India) private limited (supra), despite the admission of accommodation entry in statements under section 132(4) of the Act, the court held that the statement do not constitute as incriminating material. In the instant case, neither is there any statement of any accommodation entry operator claiming that any entry was not provided nor any director has admitted that assessee obtained accommodation entry. Thus, the case of the assessee is on better footing then th....
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....ws as debit of Rs. 3 lakhs in the name of Sarat Aggaral. The entries are for the date 28.05.2008, the date of writing of this page; and v) Page No. 4 of above Annexure A-10 contains record of 30 lakhs in the name of Mr. A. Singhal and M.L. Aggarwala dividing into Rs. 25 lakhs and 5 lakhs respectively. On this page the name of Sudarshan Casting P. Ltd. is also written. These documents led the Assessing Officer to doubt share capital raised by the assessee and to make addition of Rs. 10,00,000/- u/s. 68 of the Act. We find considerable substance in the contention of the assessee that the above documents neither go to suggest any undisclosed income of the assessee nor any nexus with the share capital declared by the assessee. In fact, the Assessing Officer has derived inferences/ presumptions on the basis of above papers found in the search without proving them as belonging to the assessee or their nature being incriminating to the assessee. Therefore, the assessment order confirmed by the ld. CIT(A) is not found fit to support, having been passed without proving the primary ingredients of section 153C of the Act. It is worthwhile to note that the very same papers, as listed above, ....
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....tisfactorily. Though these entries are to be dealt with in relevant cases but this also proves the fact that this group is engaged in bring back their unaccounted/ undisclosed income in the guise of share capital/share application money." 4.11. We find that the Item No. (i) contains recording in the name of "Shri Shyam Trexim & Fincom Pvt. Ltd". The Assessing Officer has nowhere brought on record how the said recording on the page relates to the addition in question of share capital. The Ld. CIT(DR) also could not explain as how the said recording was related to the addition in question made in respect of alleged unexplained share capital. She only stated that said recording on the page reflected accommodation entry obtained by the 'Brahmaputra Group' and but no documentary evidence regarding the claim that the document was incriminating qua the addition, are filed. In respect of the Items No. (ii) to (v), the Ld. counsel has submitted that additions in respect of the amounts mentioned in the document has been made in the case of another company namely "M/s Brahmaputra Infrastructure Ltd" in assessment year 2009-10. This fact was not controverted by Ld. CIT(DR). Thus, we find tha....
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....ssessment year in view of the finding of the Hon'ble Delhi High Court in the case of Kabul Chawla (supra). The grounds No. 1 and 1.1 of appeal are accordingly allowed." 7. The above decision of Tribunal was also followed by coordinate Bench in another group case, namely M/s. Brahmaputra Realtors (P) Ltd. vs. DCIT (ITA No. 3406/Del./2017) where vide order dated 23.04.2018, the addition made on account of unexplained share capital stood deleted in the identical facts and circumstances of the case. Therefore, respectfully following the above decisions of coordinate bench and there being no contrary material on record and further relying on the decision of Hon'ble Delhi High Court in the case of Kabul Chawla and plethora of other decisions relied by the assessee, we find no justification to sustain the impugned order and the addition made against the assessee. Accordingly, the appeal of the assessee deserves to be allowed, being full of merits." 7.4. Order of ITAT, Delhi A-Bench, New Delhi in the case of M/s. Brahmaputra Finlease (P) Ltd., New Delhi vs., DCIT, Central Circle-17, New Delhi (supra), in paras 13 to 37 held as under : "13. In the light of the aforestated notings/obser....
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....and time may be given to produce the investor companies through their directors/authorised representatives for verification of genuineness of investment in shares by them as the directors had to come all the way from Kolkata/Howrah, 19. All these relevant parts of the reply of the assessee are exhibited at pages 61 to 68 of the paper book. 20. It appears that the Assessing Officer was heavily influenced by the statement of Shri Sampat Sharma who admittedly accepted that he was only a dummy director and knew nothing about the share allotment to these companies. However, we find that the Assessing Officer did nothing to do to bring on record who is the ultimate beneficiary of these transactions. If Shri Sampat Sharma categorically admitted that he is a dummy director, nothing prevented the Assessing Officer to lift the corporate veil. Having failed to lift the corporate veil, we have to look at the transactions and not through the transactions. 21. Another adverse comment made by the Assessing Officer is in respect of returned income of the investor companies. In our considered opinion, substance over form should prevail. The returned income may be one of the factors, but it is....
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....70 Cash and bank balance 9,06,731 13,72,394 Loans & Advances 1,07,30,909 1,67,95,281 Other Current Assets 48,00,000 12,00,000 Less: Current Liabilities & Provisions Liabilities 4,264 4,263 Provisions 7,564 6763 Total 11,828 11,026 Net current Assets 24,01,43,311 111508019 Deferred Revenue Expenditure 38,000 16500 Total 24,01,81,311 11524519 M/S SPANDAN VAN1JA (P) LTD Address : 9/12, LAL BAZAAR STREET? BLOCK - E,2nd FLOOR KOLKATA, WEST BENGAL 700001 No. of shares : 25,000 PAN: AAJCS5887K Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 121780 13.08.2008 50,00,000 TOTAL 50,00,000 Return Filed on : 25.09.2009 Auditors of Company: Manabendra Bhattacharyya & Co Particulars As on 31.03.2009 As on 31.03.2008 Shareholders Fund Share capital 85,02,500 16,55,000 Reserve & Surplus 16,05,26,756 3,04,24,383 Total 16,90,29,256 3,20,79,383 Application of Funds Current Assets Loans & advances Stock of shares 14,43,57,000 1,61,47,000 Cash and bank balance 1,39,2625 49,2....
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.... he has established the source. 25. In our considered opinion, whether the assessee has discharged the initial burden cast upon him by provisions of section 68 of the Act or not, is purely a question of fact and the facts on record, as discussed hereinabove, clearly demonstrate that the assessee has prima facie discharged the initial onus cast upon it by provisions of section 68 of the Act. 26. As mentioned elsewhere, the Assessing Officer has observed that these share applicant companies are non-existent and this observation was based upon the report of the INV Wing, Kolkata. We fail to understand that if these share applicant companies were non-existent, then how come they were assessed to Income tax, which is evident from their assessment orders placed in the paper book. 27. It would be pertinent to mention here that the applicant's premises were searched and not a single document was found during the course of search proceedings which could suggest that the assessee has purchased cheques by way of cash from these share applicant companies. Each of the shareholders from whom share capital was raised/received are duly identifiable corporate entities and assessed to tax as w....
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....see was unable to produce the directors and principal officers of the share holder companies and there were adverse remarks in respect of the bank account, which raised doubt on the identity and credit worthiness of the share holders. As mentioned elsewhere, the assessee did produce some directors of the share applicant companies but the Assessing Officer could record statement of only one director. Thereafter, the Assessing Officer did not ask the assessee nor forced the attendance of the directors of the share applicant companies and there are no adverse findings in so far as the bank accounts are concerned. 33. Similarly, in the case of NR Portfolio Pvt Ltd 42 Taxmann.com 339, the Hon'ble High Court of Delhi observed that if the Assessing Officer doubts the documents produced by the assessee, the onus shifts on the assessee to further substantiate the facts. In the case in hand, the assessee did file net worth of all the share applicant companies and further corroborated the share transactions with master data filed with Registrar of Companies. 34. The other decisions relied upon by the ld. DR are also distinguishable on facts of the case in hand. 35. As mentioned at t....
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....mercial Pvt. Ltd.,9/12, Lai Bazar Street, Block E-, 2nd floor, Kolkata-700 001 10,000 1,00,000 (Rs. 10 per share) 19,00,000 (Rs. 190 per share) Sr. No. M/s RANISATI STOCKISTS PRIVATE LIMITED Name of Entities Amount (Rs-) 25,00,000 Address: 1A, Grant Lane Kolkat-72 No. of Shares: 12,500 PAN No. AAECR1291D Payments made Via Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 893862 23.09.2009 25,00,000 TOTAL 25,00,000 Bank Name: Syndicate Bank Ward: ITO WD 39(3)/WBG/W/139/3 Return filed on: 17.09.2010 Auditors of the Company: Pawan Maurya & Co. PARTICULARS As on 31.03.2010 As on 31.03.2009 Shareholders Fund Share capital 57,60,000 57,60,000 10,75,40,000 10,75,40,000 Total 11,33,00,000 11,33,00,000 Application of Funds Current Assets Loans & advances Stock of shares 9,98,50,000 11,30,00,000 Cash and bank balance 1,84,461 1,80,531.66 Loans & Advances 1,60,25,554 - Other Current Assets 1,00,000 - Less: Current Liabilities & Provisions 29,54,835.77 1,000 Net Current Assets 11,32,05,179.23 11,31,79,531.66 Preliminary Expendit....
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....nt Assets 8,11,20,012.23 8,10,98,039.66 Preliminarv Expenditure To the extent not written off or adjusted 5,320.20 7,093.60 Deferred Revenue Expenditure 53,400 71,200 Profit & Loss Account 21,267.57 23,666.74 Total 8,12,00,000 8,12,00,000 M/s Skylight Distributors Pvt Ltd Address 9/12, Lal Bazar Street, Block E 4th Floor, Kolkata No. of Shares: 12,500 PAN No. AAECR1291D Payments made Via Bank Name: Syndicate Bank Ward: ITO Ward 1(4) Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 197440 04.03.2010 50,00,000 TOTAL 50,00,000 Net Worth of the Company PARTICULARS As on 31.03.2010 As on 31.03.2009 Shareholders Fund Share capital 1,54,44,290 41,00,000 Reserve & Surplus 48,51,15,879 15,60,00,000 Total 50,05,60,169 16,01,00,000 Application of Funds Current Assets Loans & advances Stock of shares 40,53,48,000 14,00,00,000 Cash and bank balance 3,07,03,679 - Loans & Advances 65,552 2,00,93,380 Other Current Assets 6,44,27,648 - Less: Current Liabilities & Provisions 1,32,920 87,001 Net Current Assets 50,04,11,959 ....
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....eliminary Expenditure 71,760 15,930 Profit & Loss - 3,134 Total 176,583,002.15 100,000 M/S AMBIKA VINCOM PRIVATE LIMITED Address: 1, Mahendra Nath Roy Bye Lane, Howrah, West Bengal - 711101 No. of Shares: 10,000 PAN No. AAHCA3091P Sr. No. Cheque No./RTGS Date Amount (Rs) i) 894086 24.09.2009 20,00,000 TOTAL 20,00,000 Bank Name: Syndicate Bank Auditors of the Company: Pawan Maurya & Co. PARTICULARS As on 31.03.2010 As on 31.03.2009 Shareholders Fund Share capital 8,760,000 8,760,000 Reserve & Surplus 164,547,063.02 164,540,698.64 Total 173,307,063.02' 173,300,698.60 Application of Funds Current Assets Loans & advances Stock of shares 140,460,000 159,900,000 Cash & Bank Balances 221,920.82 157,866 Loans & Advances 32,541,982 13,127,021 Total 173,223,902.82 173,184,887 Less: Current Liabilities & Provisions Liability 2,000 1,000 Provision 3,560 1,482 Total 5,560 2,482 Net Current Assets 173,218,342.82 173,182,405 Preliminary Expenditure (To the extent not written off or adjusted) 5,320.20 7,093.60 &nb....
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....RADE PRIVATE LIMITED Address: 3 Saklat Place, Kolkata, West Bengal 700072 No. of Shares: 25000 PAN No. AAECP9727C Sr. No. Cheque No./RTGS Date Amount (Rs) i) 198364 09.03.2010 50,00,000 TOTAL 50,00,000 Shareholder Fund Share capital 10,100,000 100,000 Reserve & Surplus 490,095,030 Total 500,195,030 Application of Funds Current Assets Loans & Advances Stock-in-Trade 419,862,600 Sundry Debtors 14,911,033 Cash & Bank Balances 9,886,846.50 81,444 Loans & Advances 61,266,165.50 Total 505,926,645 81,444 Less: Current Liabilities & Provisions 5,874,025 501 Net Current Assets 500,052,620 80,913 Miscellaneous Expenditure (To the extent not written off or adjusted-- --) Preliminary Expenses 15,930 Profit & Loss Account 142,410 3,157 Total 500,195,030 100,000 Bank Name : Axis Bank Auditors of the Company : H.K. Saha & Co. Net Worth of the Company 11 M/s. Kolkata Exports (P) Ltd., Address : 9/12, Lal Bazar Street, Block-E, 2nd Floor, Kolkata - 700001. No. of Shares : 12500 PAN No. AAB....
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....se 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." 7.9. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Kamdhenu Steel and Alloys Ltd., &Ors. 361 ITR 220 (Del.) in which it was held as under : "Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be discarded or it is proved that it has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under s.68; AO failed to carry his suspicion to logical conclusion by further investigation and therefore addition under s.68 was not sustainable." 7.10. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Vrindavan Farms Pvt. Ltd., etc. ITA.No.71 of 2015 dated 12th August, 2015 (Del.), in which it was held as under : "The sole basis for the Revenue to doubt their ....
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....of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented the company's own income from undisclosed sources. It was nobody's case that the non-resident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription and that the transaction was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the investor alone was to be seen. Thus, the addition was rightly deleted. CIT v. Lovely Exports P. Ltd. [2009] 319ITR (St.) 5 (SC) applied." 7.15. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. (i) Dwarakadhish Investment P. Ltd., (ITA.No. 911 of 2010) and (ii) Dwarkadhish Capital P. Ltd., (ITA.No.913 of 2010) (2011) 330 ITR 298 (Del.) (HC), in which it was held as under : "In any matter, the onus of proof is ....
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....y of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to the Assessing Officer. Since the applicant companies were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be non-existent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the genuineness of the transactions had been duly established by the assessee." 7.17. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Value Capital Services Pvt. Ltd., (2008) 307 ITR 334 (Del.) (HC), in which it was held as under : "Dismissing the appeal, that the additional burden was on the Department to show that even if the share applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. No substantial question of law arose." 7.18....
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....The documentary evidences are also same. They have, therefore, submitted that the Order in A.Y. 2009-2010 may be followed in this assessment year as well. In view of the above, we find that the issue is same and based on identical facts, therefore, following the reasons for decision for the A.Y. 2009-2010 (supra), we set aside the Orders of the authorities below and delete the entire addition of Rs. 9.60 crores. In the result, Ground Nos.1 and 2 of the appeal of Assessee are allowed. 10. On Ground No.3, assessee challenged the addition of Rs. 20 lakhs on account of alleged deemed dividend brought to tax by invoking the provisions of Section 2(22)(e) of the I.T. Act, 1961. 11. During the search proceedings carried-out at the residence of Shri Sampat Sharma and Smt. Kavita Sharma at L-3, Mahipalpur, New Delhi, certain documents [Party- BA-6, Annexure A-1, pages 7-18] were found and seized. The said documents indicate investment of Rs. 20 lakhs in immovable property at Sarve Satyam Society, CGIIS Ltd., Plot No.12, Sector-4, Dwarka, New Delhi by Shri Sampat Kumar Sharma. During the course of assessment proceedings, it was submitted before A.O. that he has taken loan from assessee co....