TaxTMI 
TaxTMI 
2021 (3) TMI 52
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....d facts are identical. Therefore, the Order in 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....
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..... 13500 1,35,000 (Rs. 10 per share) 25,65,000 (Rs. 190 per share) 30.03.2009 13. Vibgyor Vinimay P. Ltd., 9/12, Lal Bazar Street, Block E, 2nd Floor, Kolkata - 700 001. 25000 2,50,000 (Rs. 10 per share) 47,50,000 (Rs. 190 per share) 30.03.2009 14. Giriraj Tradecom P. Ltd., 1/A, Grant Lane, 1^st 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 trans....
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....ed by him. 4.5. Apart from, during the course of search operation in Brahmaputra Group of cases carried-out at the premises A-7, Mahipalpur, New Delhi, the following incriminating documents were, inter alia, seized by the party BA5 as under: 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 da....
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....hat ADIT (Inv.), Kolkata has submitted its report Dated 28.02.2011 intimating that 48 parties were operating at Kolkata which are merely paper companies and they have no actual business activities. During the assessment proceedings a letter Dated 29.01.2013 was sent to ADIT (Inv.), Kolkata 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....
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....75-76 is the reply before A.O. in which the same facts have been explained that the Investors have been made compliance to the notice under section 133(6) of the I.T. Act, 1961. In case of 02 parties notice was sent at the wrong address and assessee later on provided correct address as per reply. 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 fix....
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....notice issued by the A.O. Copes of the replies are filed in the paper book. Merely because Investors have shown NIL income or meagre income is not a relevant consideration because the net worth of the shareholder shall have to be considered and seen by the authorities below. In support of this contention, the Learned Counsel for the 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 identi....
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.... 1. PCIT vs., NDR Promoters Pvt. Ltd., [2019] 2019-TIOL-172-HC-Del-IT-Delhi High Court. 2. PCIT vs., NRA Iron & Steel (P.) Ltd., [2019] 103 taxmann.com 48 (SC). 3. Prem Castings (P.) Ltd., vs., CIT [2017] 88 taxmann.com 189 (Allahabad). 4. CIT vs., MAF Academy (P.) Ltd., 361 ITR 258. 5. CIT vs., Navodaya Castle Pvt. Ltd., [2014] 367 ITR 306 (Del.) 6. Konark Structural Engineering (P.) Ltd., vs., DCIT [2018] 96 taxmann.com 255 (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 & Inves....
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.... of the assessee of February have been considered in January. The assessee also explained before the A.O. that in the case of 02 Investor Companies their address were incorrect in the notices issued under section 133(6) of the Act and correct addresses were supplied later on. Therefore, no fault could be found with the explanation of assessee. The assessee produced 02 Directors of the Investor Companies who have also confirmed their transaction with the assessee company in their statements recorded by the A.O. The A.O. later on did not fix any other date for 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....
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....referred to by the Assessing Officer in the assessment order have been used by the Assessing Officer in multiple cases of the group including the assessee without pointing out as to how the said documents were incriminating to the assessee or the same belong to the assessee. It is further submitted that two such cases of the group are Brahmaputra Finlease (P) Ltd. for A.Y. 2007-07 and M/s. Brahmaputra Realtors (P) Ltd. (A.Y. 2007-08) where also similar additions were made on the basis of the very same documents. The matter in those cases travelled upto the Tribunal and the identical 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. ....
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....ing entry of Rs. 5 lakhs in the name of M.L. Aggarwal. It also shows 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 ....
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....During the course of search and post search investigation, the assessees of this group have not been able to explain the above entries satisfactorily. 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 anothe....
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.....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." 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." 24. Similarly, in t....
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.... is available on record, the addition cannot be sustained and since as the documents neither belong to nor pertain to the assessee thereon by applying the principle laid down by the Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla, 380 ITR 573, the bench held that no addition could be sustained. 6. We have perused the record. The assessment order reads that the Ld. AO placed reliance on five documents and also the statement of one Shri Sampath Sharma, Director, to reach the conclusion that the assessee obtained accommodation entries. On a careful perusal of the description of the documents given in this matter with the documents relied upon in the case of Brahmputras Finlease Co. (supra), we find that they are identical as demonstrated below: Reference to documents in the case of M/s Brahmputra Finlease P. Ltd. ITA No.3332/Del/2017 Reference to documents 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 ....
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....s. 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 investigation, the assessees of this group have not been able to explain the above entries satisfactorily. 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." 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 ....
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....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 the case of Best Infrastructure (I) P. Ltd (supra). In such facts and circumstances, respectfully following the decision of the Hon'ble Delhi High Court in the case of best infrastructure (India) private limited (supra), we do not have any hesitation to hold that the statement under section 132(4) of Sh. Sampat Sharma cannot be treated as incriminating material found during the course of search. In the result, we hold that addition of share capital in the year under consideration has been made without relying on any incriminating material found during the course of search. 9. On a consideration of the entire material in the light of the law laid down in the case of CIT vs. Kabul Chawla reported in 380 ITR 573, the coordinate Bench of this tribunal 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 ....
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....lated to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in t....
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.... from the premises of one assessee, it can be used against another assessee either under section 153C or under section 148 of the Act depending on material belonging to or pertaining to that another assessee but it cannot be termed as material found during the course of the search of another assessee for making addition under section 153A of the Act. If any material impounded during the course the survey at the premises of one assessee and found to be belonging to or related to another assessee, then action may be taken in terms of section 148 of the Act depending on the material found but that material cannot be treated as part of the search carried out at the premises of the another assessee. Further, the Assessing Officer in the impugned order has not brought on record what was incriminating in the said material impounded from the premises of Sh. M.L. Agrawal. In view of our discussion, we reject the above contentions of the Ld. CIT(DR) that any incriminating material qua the addition was found during the course of the search action under section 132 of the Act. 4.10 Another argument, made by the Ld. CIT(DR) in support of her claim of incriminating material was....
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....n 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 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 incrimin....
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....al and share premium. Another Director, Sh. Harjit Singh in his statement also concurred with the statement of Sh. Anu Aggarwal. In the case, the learned CIT-(A) held that evidence does not mean only documentary evidence and the statement under section 132(4) of the Act is an important evidence collected as a result of search and seizure operation and thus, the addition of share capital was based on evidence gathered during the search. However, the Tribunal held that no incriminating material for each of the assessment year other than the year of search, to justify the assumption of jurisdiction under section 153A of the Act. The Hon'ble High Court, after considering the arguments of both parties on the issue whether statement under section 132(4) of the Act constitute incriminating material, held as under: "38. Fifthly, statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax Vs. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta Vs. CIT (supra) wh....
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....ound during the course of search. The Hon'ble High Court also cited the decision of CIT Vs. Sh. Ramdas Motor Transport, (1999) 238 ITR 177 of Hon'ble Andhra Pradesh High Court, where it is explained that in case no unaccounted documents or incriminating material is found, the powers under section 132(4) of the Act cannot be invoked. 4.18 Further, as far as the decision of the Hon'ble Supreme Court in the case of Video Master (supra), is concerned, we agree with the argument of the Ld. counsel that in said case certain other materials like loose papers and vouchers were found which corroborated the statement and in those circumstances it was held that it could not be said that addition was based on no evidence. The relevant finding of the Hon'ble Supreme Court is reproduced as under: "3. In the second round, the assessment order dated March 29, 2000, gave detailed reasons for arriving at the conclusion that the figures stated in the statement recorded were corroborated, in particular, by various loose sheets found at the premises of the assessee as well as vouchers, some of which related to the two films in question. In an appeal filed to the Tribunal, the Tribunal....
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....er consideration has been made without relying on any incriminating material found during the course of search. 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." 26. Since, the facts of the present case are identical to the facts involved in the aforesaid referred to cases belonging to the same group and even the search took place simultaneously and the AO relied upon the similar five documents and the statements while making the additions. We, therefore, by respectfully following the aforesaid referred to orders in the case of the various assessees belonging to the same group delete the impugned addition. 27. The facts involved in other two assessment years i.e. 2007-08 and 2008-09 in ITA Nos. 3336 & 3337/Del/2017 are similar to the facts involved in ITA No. 3335/Del/2017 for the assessment year 2006-07 which we have already disposed off in the....
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....." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating 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, ....
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....annot be termed as material found during the course of the search of another assessee for making addition under section 153A of the Act. If any material impounded during the course the survey at the premises of one assessee and found to be belonging to or related to another assessee, then action may be taken in terms of section 148 of the Act depending on the material found but that material cannot be treated as part of the search carried out at the premises of the another assessee. Further, the Assessing Officer in the impugned order has not brought on record what was incriminating in the said material impounded from the premises of Sh. M.L. Agrawal. In view of our discussion, we reject the above contentions of the Ld. CIT(DR) that any incriminating material qua the addition was found during the course of the search action under section 132 of the Act. 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 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....
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....tra 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. 4.12 The next argument of the Ld. CIT(DR) is that the statement recorded under section 132(4) of the A....
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....ence and the statement under section 132(4) of the Act is an important evidence collected as a result of search and seizure operation and thus, the addition of share capital was based on evidence gathered during the search. However, the Tribunal held that no incriminating material for each of the assessment year other than the year of search, to justify the assumption of jurisdiction under section 153A of the Act. The Hon'ble High Court, after considering the arguments of both parties on the issue whether statement under section 132(4) of the Act constitute incriminating material, held as under: "38. Fifthly, statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax Vs. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta Vs. CIT (supra) where the admission by the Assessees themselves 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 pr....
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.... material is found, the powers under section 132(4) of the Act cannot be invoked. 4.18 Further, as far as the decision of the Hon'ble Supreme Court in the case of Video Master (supra), is concerned, we agree with the argument of the Ld. counsel that in said case certain other materials like loose papers and vouchers were found which corroborated the statement and in those circumstances it was held that it could not be said that addition was based on no evidence. The relevant finding of the Hon'ble Supreme Court is reproduced as under: "3. In the second round, the assessment order dated March 29, 2000, gave detailed reasons for arriving at the conclusion that the figures stated in the statement recorded were corroborated, in particular, by various loose sheets found at the premises of the assessee as well as vouchers, some of which related to the two films in question. In an appeal filed to the Tribunal, the Tribunal framed three issues, two of which were unnecessary for the reason that the statement recorded on August 25, 1995, was said to be relevant but not conclusive. Therefore, whether the statement was made under duress and whether it was re....
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....ial, 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." 7.3. Order of ITAT, Delhi A-Bench, New Delhi in the case of Brahmaputra Holdings (P) Ltd., New Delhi vs., DCIT, Central Circle-17, New Delhi (supra), in paras 6 to 7 held as under : 6. We have considered the rival submissions and have gone through the entire material available on record including the decisions cited. A perusal of the assessment order reveals that the Assessing Officer while invoking the provisions of section 153C and issuing notice under that section to the assessee, has considered the following documents found as a result of search at the premises of Brahmaputra group of cases, belonging to the assessee: i) Page No. 23 of Annexure A-6 (a diary relating to FY 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....
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....sment 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 date of noting is 04.06.2008. iv. Page 1 of Annexure A-10 - it contains a hand written ex....
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....s, this contention of Ld. CIT(A) is also rejected. Further, the ld. Authorities below have also referred to the statements recorded of Shri Sampat Sharma against the assessee. The same statements were also read against M/s. Brahmaputra Finlease (P) Ltd. (supra), where, the Tribunal after relying on various decisions has held as under : "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 the case of Best Infrastructure (I) P. Ltd (supra). In such facts and circumstances, respectfully following the decision of the Hon'ble Delhi High Court in the case of best infrastructure (India) private limited (supra), we do not have any hesitation to hold that the statement under section 132(4) of Sh. Sampat Sharma cannot....
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.... the company, he had no knowledge of the shares purchased by the investor companies. 15. We find that vide reply filed on 22.02.2013, the assessee has furnished confirmation of accounts, bank statements, income tax returns and audited balance sheet of the investor company, Memorandum and Articles of Association, list of directors and master data of the investor company as appearing the Registrar of Companies, Kolkata, share allotment advice, certified true copy of the Resolution of Investee Company passed by the board of directors of the company and copy of the resolution passed by the board of directors of investor company and copy of assessment orders of the investor company were also filed. 16. Vide reply dated 19.03.2013, the assessee once again filed all the documents requisitioned by the Assessing Officer. In the case of Finvest Pvt Limited, since on the earlier occasion, confirmation could not be filed, the assessee filed copy of the assessment order u/s 143(3) of the Act for A.Y 2006-07. 17. In so far as the share certificates are concerned, it was explained clearly that the appellant company had issued share certificates to all the share applican....
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....Ltd 23. The net worth of these companies are as under: i) M/S BASUKINATH VANIJA (P) LTD Address : 1A, GRANT LANE, 1st FLOOR, KOLKATA 700012 No. of shares : 25,000 PAN: AADCB2084K Sr. No. Cheque No./ RTGS Date Amount (Rs) i) RTGS 30.03.2009 50,00,000 TOTAL 50,00,000 Return Filed on : 25.09.2009 Auditors of Company: Debabrata & Associates Net Worth of the company : Particulars As on 31.03.2009 As on 31.03.2008 Shareholders Fund Share capital______________ 53,86,200 42,82,200 Reserve & Surplus 10,09,29,025 7,99,52,678 Total 10,63,15,225 8,42,34,878 Application of Funds Current Assets Loans & advances Stock of shares 8,25,30,300 7,85,85,000 Cash and bank balance 1,65,3549 4,23,164 Loans & Advances 2,20,50,007 54,43,063 Less: Current Liabilities & Provisions Liabilities 4,500 1,03,500 Provisions 5,545 2,19,965 Total 10,045 3,23,465 Net Current Assets 10,62,23,811 8,41,27,762 M....
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....7,000 1,61,47,000 Cash and bank balance 1,39,2625 49,280 Loans & Advances 1,28,70,884 57,45,237 Other Current Assets 10,70,0361 1,05,00,361 Less: Current Liabilities & Provisions Liabilities 2,005 2,003 Provisions 3,98,709 3,98,341 Total 4,00,714 4,00,344 Net Current Assets 1,68,92,0156 3,20,41,533 Deferred Revenue Expenditure 1,03,400 31,200 Preliminary Expenses 5,700 6,650 16,90,29,256 3,20,79,383 M/S TOPLINE FINVEST (PI LTD Address : 107C TODI CHAMBER 2, LAL BAZAAR STREET, KOLKATA, WEST BENGAL 700001 No. of shares : 25,000 PAN: AAACT9954B Payments made Via Sr. No. Cheque No./ RTGS Date Amount (Rs) 0 RTGS 30.03.2009 50,00,000 TOTAL 50,00,000 Return filed on 24.09.2009 Auditors of Company: Pawan Mauna & C o Particulars As on 31.03.2009 As on 31.03.2008 Shareholders Fund Share capital 2,29,31,000 1,60,93,500 Reserve & Surplus 22,78,93,579 9,79,58,325 Total 25,08,24,579 11,40....
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....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 well. The entire share capital has been subscribed through banking channels and there was no material found during the search which proves that the money came from the coffers of the appellant company. Financial statements of each share holder company exceeds its net worth, thereby establishing the credit worthiness of the share applicant companies to make investment in shares of the applicant company. Further, each share holder has independently confirmed their investment in response to notices u/s 133(6) of the Act. 28. In our considered opinion, suspicion can be no basis to make addition. Moreover, the Revenue in the case of shareholder companies has accepted their independent identity, source of income and carrying on business of investments and disinvestments. Therefore, the ratio laid down by the Hon....
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....cuments 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 the beginning that the underlying facts in issues in A.Y 2010-11 are identical to those of A.Y 2009-10, for the sake of completeness we will extract the networth of share applicant companies for A.Y 2010-11 as under: SI. No. Name and address of the Company No. of Shares Nominal value of share (Rs.) Premium paid per share (Rs.) Dated of allotment 1. M/s Kokila Exports Pvt. Ltd., 9/12, Lai Bazar Street, Block E-, 2nd floor, Kolkata-700 001 12,500 1,25,000 (Rs. 10 per share) 23,75,000 (Rs. 190 per share) 30.03.2009 2. M/s Abhilasha Exports Pvt. Ltd.,Saklat Palace, Kolkata-72 25,000 2,50,000 (Rs. 10 per share) 47,50,000 (Rs. 190 per share) 30.03.2009 3. M/s Ambika Vimcom Pvt. Ltd.,1, Mahindra Na....
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....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 Expenditure To the extent not written off or adjusted 5,320.20 7,093.60 Deferred Revenue Expenditure 65,400 87,200 Profit & Loss Account 24,100.57 26,174.74 Total 11,33,00,000 11,33,00,000 M S SAHAJ TIE UP PRIVATE LIMITED Address: D/12, Lai Bazar Street, Block E, 2nd Floor Kolkata-700001 No of Shares: 10,000 PAN No. AAECR1291D Pavments made Via Sr. No. Cheque No./ RTGS Date Amount (Rs) i) RTGS 05.09.2009 20,00,000 &nbs....
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....& 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 16,00,06,379 Miscellaneous Expenditure Preliminary Exp....
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....isions Net Current Assets 559,937.50 501 176,511,242.15 80,936 Miscellaneous Expenditure (To the extent not written off or adjusted) Preliminary 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,....
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....,000 Share capital Reserve & Surplus 735,347,864.15 Total 750 ,847 ,864.15 Application of Funds Current Assets Loans & advances Stock-in-trade 654,810,000 Sundry Debtors 36,594,799 Cash & Bank Balances 21,964,900.15 Loans & Advances 191,811,281 Total 905 ,180980.15 Less: Current Liabilities & Provisions 154,499,796 Net Current Assets 750 ,681 ,184.15 Miscellaneous Expenditure (To the extent not written off or adjusted) _____________________ Preliminary Expenses 166,680 Profit & Loss Account Total 750 ,847 ,864.15 M/S PUSHPANJALI COMMQ TRADE 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....
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....ribunal in Group/Assessee's cases in favour of the assessee based on identical facts. 7.6. Apart from above Judgments, it is well settled Law that assessee need not to prove the source of the source. We rely upon Judgments of the Hon'ble Delhi High Court in the case of (1) Dwarakadhish Investment P. Ltd., [2011] 330 ITR 298 (Del.); (2) Rohini Builders. 256 ITR 360 (Guj.) and (3) Zafar Ahmed & Co., 30 Taxmann.com 269 (Alld.). We also rely upon the following decisions. 7.7. CIT vs. Fair Investment Ltd., 357 ITR 146 in which it was held that A.O. did not summon investors and did not make efforts. There is no finding that material disclosed was untrustworthy. The Appellate Authorities rightly deleted the addition. 7.8. Decision of Supreme Court in the case of CIT vs. Lovely Exports Pvt. Ltd., (2008) 216 CTR 195 in which it was held as under: "If the share application money is received by the assessee company from alleged bogus shareholders, 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." 7.9. Decision of Hon'bl....
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....rtmental appeal was accordingly dismissed. 7.12. Decision of the Hon'ble Supreme Court in the case of Earth Metal Electric Pvt. Ltd., vs. CIT dated 30th July, 2010 in SLP.No.21073 of 1999, in which it was held as under : "We have examined the position, we find that the shareholders are genuine parties. They are not bogus and fictitious therefore, the impugned order is set aside." 7.13. Decision of Hon'ble jurisdictional High Court in the case of Divine Leasing & Finance Ltd., 299 ITR 268, in which it was held as under : "No adverse inference should be drawn if shareholders failed to respond to the notice by A.O. 7.14. Decision of Hon'ble M.P. High Court in the case of CIT vs. Peoples General Hospital Ltd., (2013) 356 ITR 65, in which it was held as under : "Dismissing the appeals, that if the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 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 t....
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....sing Officer made an addition of Rs. 35,50,000/- with the aid of section 68 of the Act, 1961 on account of unexplained cash credits appearing in the books of the assessee. However, in appeal, the Commissioner of Income-tax (Appeals) deleted the addition on the ground that the assessee had proved the existence of the shareholders and the genuineness of the transaction. The Income-tax Appellate Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) as it was also of the opinion that the assessee had been able to prove the identity of the share applicants and the share application money had been received by way of account payee cheques. On appeal to the High Court: Held, dismissing the appeals, that the deletion of addition was justified." 7.16. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. WinstralPetrochemicals P. Ltd., 330 ITR 603, in which it was held as under : "Dismissing the appeal, that it had not been disputed that the share application money was received by the assessee-company by way of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to t....
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....also been considered in the Group cases as above and did not find in favour of the Revenue because the assessee has been able to prove creditworthiness of the creditors and genuineness of the transaction. Therefore, the decisions relied upon by the Ld. D.R. would not support the case of the Revenue. Considering the totality of the facts and circumstances of the case and above discussion, we are of the view that entire addition made by the authorities below of Rs. 6.7 crores is wholly unjustified and is liable to be set aside. In view of the above, we set aside the Orders of the authorities below and delete the entire addition of Rs. 6.7 crores. All the grounds raised by the assessee are allowed. 8. In the result, appeal of the Assessee allowed. ITA.No.3339/Del./2017 - A.Y. 2010-2011 : 9. On Ground Nos.1 and 2, assessee challenged the addition of Rs. 9.60 crores on account of share capital/ premium received from 19 Investor Companies. The Learned Representatives of both the parties submitted that the issue is identical as have been considered in A.Y. 2009-2010. The documentary evidences are also same. They have, therefore, submitted that the Order in A.Y. 2009-2010 may be f....
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.... not be taxed as deemed dividend under section 2(22)(e) of the I.T. Act, 1961. He has relied upon Judgment of Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs., Bharat Hotels Ltd., 410 ITR 417 (Del.) and Judgment of Hon'ble Bombay High Court in the case of Commissioner of Income Tax vs., Parle Plastics Ltd., 332 ITR 63 (Bom.) in which it was held that when money lending is part of business of assessee company, the amount lend-out by the Company cannot be taxed as deemed dividend. He has filed the details of assessment for the A.Ys. 2009-2010 and 2010-2011 to declare that total assets of the assessee company and loans and advances given in those years which would show that the percentage of the total assets deployed in total loans and advances are 35.90% and 42.26% respectively in A.Ys. 2009-2010 and 2010-2011. He has also filed details of interest received which is substantially high as against the total profit received by the assessee. He has, therefore, submitted that no addition could be made against the assessee. 13. On the other hand, Ld. D.R. relied upon the Orders of the authorities below. 14. We have considered the rival submissions. In the case o....