TaxTMI 
TaxTMI 
2021 (4) TMI 162
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....lsiyan, Adv., Ashwani Kumar, CA, Bhoomija Verma, Adv., Aditya Kumar, CA and Bhavesh Jindal, CA Respondent by: Ms. Sunita Singh, CIT-D.R. ORDER SHRI AMIT SHUKLA, J. The aforesaid bunch of 22 appeals relating to above named 16 assessees pertain to quantum of assessment passed u/s 143(3) for the assessment years 2012-13 and 2013-14 arising out of 9 separate impugned appellate orders. The issues involved in all the 22 appeals are arising out of identical set of facts and are inextricable interconnected with each other and common issue is permeating in all the appeals with similar additions. Brief Background of the case 2. The above named assessee-companies are essentially controlled and managed by the promoters of the erstwhile company, M/s Bhushan Steel Ltd., now known as TATA Steel Ltd. (TSL) after the acquisition of BSL by Bamnipal Steel Ltd. which is a wholly owned subsidiary of TATA Steel Ltd on 18th May, 2018 under the Insolvency and Bankruptcy Code, 2016. In nutshell the primary addition in all the appeals pertain to additions u/s.68 on the credits in the form of share capital/share premium and/ or loan and advances appearing in the books of assessee companies ....
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.... Capital - section 68 27.03.2015 2012-13 143(3) 73,50,00,000 24.09.2012 2,70,000/- 5. Jingle Bells Aluminium Pvt. Ltd. - Share Capital - section 68 27.03.2015 2012-13 143(3) 62,00,00,000 26.09.2012 3,167/- 6. Kasper Information Technology Pvt. Ltd. - Share Capital - section 68 16.03.2015 2012-13 143(3) 46,00,00,000 27.09.2012 1,738/- 7. Kasper Information Technology Pvt. Ltd. - Share Capital - section 68 28.03.2016 2013-14 143(3) 16,00,00,000 22.09.2013 2,47,050/- 8. Landsky Real Estate Pvt. Ltd. -Share Capital - section 68 Advances - section 68 31.03.2015 2013-14 143(3) 16,00,00,000 2,60,00,000 22.09.2013 2,48,450/- 9. Sintex Consumer Electronics Pvt. Ltd. - Share Capital (including bonus shares of Rs. 18,22,80,000/-) - section 68 25.03.2015 2012-13 143(3) 78,22,80,000 26.09.2012 4,026/- 10. Starlight Consumer Electronic Pvt. Ltd. -Share Capital - section 68 -Current Liabilities - section 68 24.03.2015 2012-13 143(3) 32,25,00,000 30,18,00,000 22.09.2012 5,340/- 11. Stylish Construction Pvt....
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....nd circumstances. In majority of the cases the addition made u/s.68 and 69C by the Assessing Officer have been deleted by CIT(A) primarily on the ground that assessee has discharged the onus of establishing the requisite ingredients u/s.68 and after examining the fund flow statement as to how the money has originated from Bhushan Energy Ltd and gone back to same company. In certain cases additions have been confirmed by the ld. CIT(A) mainly relying upon the reasoning given by the Assessing Officer. In tabular form the additions confirmed and deleted by the ld. CIT (A) in all the appeals are as under: Sl. No Name of the Assessee & nature of addition made by the Ld. A.O A.Y Asst. Order u/s Quantum of Addition Confirmatio n (C) or Deletion (D) by the Ld. C.I.T (A) Appeal before the Hon'ble ITAT filed by Revenue (R) or Assessee(A) 1. Angel Cement Pvt. Ltd. -Share Capital - sec 68 -Current liabilities (payables) - sec 68 2012-13 143(3) 66,00,00,000 54,70,00,000 Deleted (D) D R R 2. Delight Resorts Pvt. Ltd. -Share Capital - section 68 -Advance - section 68 -50% disallowance of employee benefit expenses 2012-13 ....
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.... R 16. Supreme Placement Services Pvt. Ltd. - Share capital (including bonus shares of Rs. 12.43 crores) - section 68 2012-13 143(3) 72,43,00,000 D R3 17. Globus Realinfra Pvt. Ltd. (Sur Buildcon) - Share Capital (including bonus shares of Rs. 17,09,40,000/-) - sec 68 2012-13 143(3) 98,49,40,000 D R 18. Globus Realinfra Pvt. Ltd. (Sur Buildcon) - Share Capital - section 68 - Unsecured loans - section 68 2013-14 143(3) 5,60,00,000 2,95,00,000 C4 C A A 19. Track Casting India Pvt. Ltd. -Share Capital - section 68 -Unexplained expenses (alleged commission expenses) - sec 69C 2012-13 143(3) 31,00,00,000 7,75,000 D D R Not challenged TOTAL 10,68,85,85,409 4. Thus, out of total addition of Rs. 10,65,22,85,409/- made u/ss. 68, 69C & 14A in the cases of the Assessees herein, additions aggregating to Rs. 10,22,02,85,409/- have been deleted from the first appellate stage. The additions to the extent deleted by the Id. C.I.T (A)s have been contested in appeal before the Hon'ble ITAT by the Department. The co....
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....the Assessee & ITA No A.Y GROUNDS TAKEN BY THE ASSESSEE BEFORE THE HON'BLE ITAT Ground challenging the upholding of addition u/s 68 on account of Share Capital/ Share Premium and/or Loans & Advances Other Grounds 1 Globus Realinfra Pvt. Ltd. (Sur Buildcon) [ITA NO. 2920/DEL/2017] 2013-14 Ground 2: Ld. C.I.T(A) was not justified in upholding addition of Rs. Rs. 8.555 crores (comprising of share application money amounting to Rs. 5.6 crorse and Unsecured Loans of Rs. 2.995 crores) received from various parties by resorting to section 68 on the ground that the appellant company had allegedly failed to discharge its onus as mandated by the said section Ground 1: Ld. C.I.T(A) was not justified in passing the order exparte order on the basis of material available on records without giving the Appellant a reasonable opportunity of being heard 2. Jawahar Credit & Holdings Pvt. Ltd. (Cross appeal) [ITA NO. 5398/DEL/2019] 2012-13 N.A. As per the Revised Grounds of Appeal filed on 19.10.2020 Ground 1: The Ld. C.I.T.(A)-05, New Delhi while correctly deleting the addition of Rs. 73,50,00,000/- made by the Ld. A.O. u/s 6....
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....out issuing a prior show cause notice as mandated u/s 251(2) of the Act for providing a reasonable opportunity to the Appellant of showing cause against such enhancement, thus resulting in gross violation of principles of natural justice. 4. Kasper Information Technology Pvt. Ltd. [ITA NO. 357/DEL/ 2019] 2012-13 N.A. As per the Revised Grounds of Appeal filed on 19.10.2020 Ground 1: The Ld. C.I.T.(A)-05, New Delhi while correctly deleting the addition of Rs. 46,00,00,000/- made by the Ld. A.O. u/s 68, erred in making fresh addition of Rs. 92,00,000/- to the income of the Appellant Company on account of alleged charges received by the Appellant Company @ 2% for providing facility to route the impugned transaction of Rs. 46,00,00,000/- purely on the basis of surmises and conjectures although the same is not backed by any substantive or tangible evidence on record. Ground 2: That the Ld. C.I.T.(A)-05, New Delhi acted beyond jurisdiction in enhancing income of the Appellant u/s 251(1)(a) of the Income-tax Act, 1961 (the 'Act') by introducing and assessing new source of income to the extent of Rs. 92,00,000/- beyond the record (i.e. the return of income and as....
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....unt of issue of bonus shares(3 cases). iii) Assessee's Ground challenging the fresh addition (enhancement) made by the Ld. C.I.T (A)on account of alleged commission income @ 2% for providing facility to route the impugned financial transactions without introducing new source of income beyond record without issuing prior show cause notice u/s 251(2) - challenged by the Assessee in the cases of Jingle Bells Aluminium Pvt. Ltd. (A.Y. 2012-13), Kasper Information Technology Pvt. Ltd. (A.Y. 2012-13) and Jawahar Credit & Holding Pvt. Ltd. (A.Y. 2012-13). iv) Department's Ground challenging the order of the Ld. C.I.T(A)restricting addition to Rs. 5 lacs from an addition of Rs. 23,32,813/- made by the A.O u/s 14A of the I.T. Act, 1961 read with Rule 8D of the I.T. Rules, 1962 - challenged by the Department in the case of Stylish Construction Pvt. Ltd. for A.Y. 2012-13. v) Department's Ground challenging the alleged admission of additional evidence by the Ld. C.I.T(A) without giving opportunity to the Ld. A.O in violation of Rule 46A of the I.T. Rules, 1962 - challenged by the Department in the cases of Angel Cement Pvt. Ltd. (A.Y. 2012-13), Delight Resorts Pvt. L....
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....tion letters and their bank statements highlighting the relevant entries. In order to verify the genuineness of the transaction, the Assessing Officer sent u/s. 133(6) dated 09.01.2015 from the subscriber company, namely, Bhushan Finance Pvt. Ltd. and NRA Iron and Steel Pvt. Ltd. and asked to furnish the following details:- 1. Copy of Bank Statement from where funds have been given to above assessee company (JCHPL). 2. Source of funds raised for making investment in the above company, (JCHPL). Please provide complete chain details of funds received in your bank account giving Name/Address/PAN of the person from whom the said funds have been received. 3. Name of the person, who offered the shares of the company on behalf of JCHPL. Also submit offer prospects in this regard. Also provide justification of buying the share premium supporting with documentary evidences. 4. Name of the person (Mediator) through whom the deal was negotiated for making investments in share/share application money. 5. Copy of application form in respect of share application money paid to JCHPL. 6. Copy of acknowledgement of receipt share application Form....
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.... issues such as the economic outlook, future business plans etc and the same should be considered as genuine reasons. Such decisions and activities are invariable based on intangible perceptions and thought processes and not based on any nuts and bolts, any physical genuine reasons. The decision of the Investor Companies to invest in the shares at a premium Mm based on the thought process, and ground realities prevailing at that, point of time. Moreover as already discussed above there are/were no specific guidelines/rectification/stipulations as to the manner of calculation of premium in the case of an unlisted company. As such it becomes the prerogative of the Board of Directors of a investor company to decide the premium which it can command and the wisdom of an investor as to whether he would be willing to pay the same. In the given case the calculation of premium which the Assessee Company could command was based on its future plans and the expected inflows therefrom with facts and projections were found to be acceptable to the investors and accordingly no adverse view can be arrived at with regard to the same." 10. The Assessing Officer further asked the assessee company t....
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....has not done any business activity and the major part of the turnover derived from the dividend and miscellaneous income. He has also analyzed the books profit of the assessee company before issue of share on premium as on 31.03.2011 which was as under: A. Equity 1. Share Holder's funds (in Rs.) Share Capital 88000000 Reserves Reserve and Surplus 172746598 Total 260746598 No. of shares 10150000 Value per share 25.68 per share 2. Profit /Loss of the company Profit/Loss A.Y. 2011-12 114440 A.Y. 2012-13 (820515) 11. Thus, from the above he deduced his inference in the following manner:- The assessee company has very nominal business profit. It is only common sense that past performance should be given suitable weight age for the valuation of a company and its shares but the same has been totally ignored in the instant case. Furthermore, no correspondence or any documentary evidence has been brought on record in the assesses company replies submitted in the course of the assessment proceedings to justify the so called bright future prospects of the company which would enhance the profitabil....
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....e appellant company. The appellant expressed their inability to produce the directors of the investor companies or the individuals. It is also seen by the AO that the amount has been received by the investors, just before subscribing the shares in the appellant company. The subscribers did not have their own creditworthiness as in most of the cases the amount has been received on transfer and there is hardly any business activity by those investors. 7.1 It is observed by the AO that the appellant company is showing very nominal income having limited resources and reserves, therefore, such high premium is not justified. The origin of funds to the subscribers/investors is not clear and there is no economical/logical explanation for the transactions. Accordingly, the AO held that it is unexplained being a sham transaction in the guise of capital introduction, without the tax payments. Accordingly, after relying upon various case laws, this addition was made, invoking provisions of section 68 of the Act. 7.2 It is contended by the appellant that it has provided all the documents of the investors such as audited account, copy of ITR, confirmation, bank account and othe....
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....ity u/s 68 unless a causal connection between the cash deposit in the bank and the assessee is established. The Hon'ble Delhi High Court in the case of ClT vs. Nova Promotors and Finlease (P) Ltd. has held that the AO is duty bound to investigate the creditworthiness of the creditor and genuineness of the transaction. Where the complete particulars of the share applications are furnished to the AO and the AO has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false, then no addition can be made in the hands of the company u/s 68. 7.5 However, it is observed in this case that the appellant could not justify the immediate payment towards investment in shares for the funds received from investors and similarly the amount has been invested by appellant company in various investments made in shares immediately after receiving the share capital. The appellant could not produce the directors of few investor companies, who have heavily invested in the appellant company for no cogent reason. It is also observed from the assessment order of all such persons that they are not carrying out any worthwhile activities no....
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....other companies, as soon as it is received and the assets in the balance sheet is shown in the form of investment in shares for the share application money and premium thereon received. The appellant has also not given any cogent reasoning for the fund flow shown by the AO in his report. 7.9 Therefore, looking to the facts and circumstances of this case where basic requirement to justify the identity, creditworthiness and genuineness of transaction has been prima facie established but looking to the fact and analysis as narrated above, these transactions are found to be for routing finances of M/s Bhushan Steel Ltd. and other persons, through appellant Company and it is just paper company where appellant is not the ultimate beneficiary because it has further passed on those funds to various companies as shown in the flow chart. 7.10 In view of above, it is to be stated that as per the practice and also seen in various cases, the said person (in this case appellant) charges the amount to provide such entries which is generally 2% of the total transactions. Therefore, considering that the appellant has been providing the facility to route these financial transaction....
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....r to trade of an entry operator. Thus amount received can be termed as 'bogus accommodation entry' received by assessee (Page - 7, Para - 3.7 - AO's order). List of case laws relied upon by the A.O * CIT V NR Portfolio Pvt Ltd. * CIT V Nova Promoters and Finlease Pvt Ltd. * Kale Khan Mohd. Hanif V CIT. * CIT V Lachhman Das Oswal * Nanak Chandra Laxman Dass V CIT (1982) 140 ITR 151 (All.) * R Dalmia V CIT (1976) 113 ITR 522 (Del.) * CIT V Debi Prasad Vishwanath Prasad (1968) 72 ITR 194 (SC) * CIT V Hero Cycles Pvt Ltd. * CIT V Stepwell Industries Ltd and Others. * SumatiDayal V CIT (1995) 214 ITR 801 (SC) * CGT V Dr. George Kuruvilla (1969) 74 ITR 328 (SC) * CIT V Joseph John (1967) 67 ITR 74 (SC) * RB Seth Champa Lal Swarup V CIT (1965) 60 ITR 493 (SC) * CIT V R Venkataswamy Naidu (1956) 29 ITR 529 (SC) * Sreelekha Banerjee V CIT (1963) 49 ITR 112 (SC) * AnrajNarainDass V CIT (1951) 20 ITR 562 (Punj.) * A.D. Jayaveerapandia Nadar V CIT (1964) 54 ITR 401 (Mad.) * Shankar Industries V CIT (1978) 114 ITR 689 (Cal.) ....
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....2013) 354 ITR 282 (Delhi) * CIT V Kamdhenu Steel and Alloys Ltd and Others. 206 taxmann 254 Delhi * CIT V Gangeshwari Metals Pvt Ltd (2013) 30 taxmann.com 328 * CIT V Oasis Hospitalities (2011) 333 ITR 119 (Delhi) * ITO V Neelkanth Finbuild ITA No. 2821/Del/2009 dated 01/04/2015 * ITO V NC Cables Ltd 4122/Del/2009 * ITO V Rakam Money Matters P. Ltd 2821/Del/2011 * ACIT V Kisko Castings Pvt Ltd * CIT V Fair Finvest Ltd * CIT V Expo Globe India Ltd. 2. Delight Resorts Pvt. Ltd. -Revenue's Appeal 2012-13 (i) Section 68: Share Capital (SC) - 10 Crores Advance received - 66.56 crore (ii) Adhoc Disallowa nce (50% of employee benefit and other expenses) - Rs. 5.22 lacs *That the address mentioned by assessee in letter dated September 5, 2014 as "F-1- 200/13, Sec-13A, Vaishali, Ghaziabad, Uttar Pradesh - 201010", notices sent at this address U/s 142(1), 143(2) and again 142(1) in the month of November, 2014 received back un-served with postal remarks "unclaimed", "unclaimed" and "no such person" respectively (Page - 2 - AO's order) *No explanation submitted with regard to followin....
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....ed money without paying any taxes (Page 9 - AO's Order). There is no presumption that a cash credit is genuine merely because a payment was made by cheque. Assessing authority shall accept cash credit only if the transaction is true and genuine (Page 10 - AO's Order). * If the liability shown in the account is found to be bogus and there is no plausible and reasonable explanation by the assessee, the amount can certainly be added to income of the assessee (Page 10 - AO's Order) Regarding expenses claimed and disallowed *No evidence furnished in support of expenses claimed as employee benefit and other expenses amounting to Rs. 3.79 lakhs and Rs. 6.22 lakhs being unverifiable expenses (Page - 11 - AO's Order) Case laws relied upon by A.O: * CIT-II V MAF Academy Pvt Ltd (2014) 42 taxmann.com 377 (Delhi) * Nova Promoters &Finlease, Delhi High Court * N. R. Portfolio (P) Ltd [2014] 42 taxmann.com 339 (Delhi HC) * V.I.S.P. (P) Ltd. V Commissioner Of Income- Tax 265 ITR 202 (MP HC) Regarding addition on account share capital received: * Replies filed by appellant stands corroborated by replies in response to notice U/s 133(6) of....
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....ther inquiry to suggest that creditors do not have creditworthiness or transactions are not genuine (Page - 32, Table Para - 4.1 - CIT(A)'s Order). * Ratios of judicial precedents discussed in previous ground (Share capital) are equally applicable to this ground of appeal. Therefore addition deleted. (Page - 32, Table Para - 4.1 - CIT(A)'s Order) Related to addition on employees benefit expenses and other expenses: The details produced during appellate proceedings shows that expenditure is incurred for the business of the company and bear a close and intimate nexus with the business of the company (Page - 33, Table Para - 5 - CIT(A)'s Order). Major portion of expenditure incurred for complying with statutory formalities and compliances necessary for operation of company. Therefore AO is directed to deleted the disallowance (Page - 33, Table Para - 5 - CIT(A)'s Order) Case laws relied upon by CIT(A) * CIT V Lovely Exports 317 ITR 218 (SC) * CIT V Fair Finvest Ltd * CIT V Kamdhenu Steel and Alloys Ltd 361 ITR 220 (Del. HC) * CIT V Vrindavan Farms (P) Ltd ITA NO. 71/2015 (Del. HC) * CIT V Rakam Money Matters ITA No. 778/ 2....
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....) * CIT V Kerala Road Lines (1986) 162 ITR 669 (Ker.) * Nova Promoters &Finlease * CIT V Nipun Builders & Developers [2013] 350 ITR 407 (Delhi) * The ICG of transactions have been established from the fact that both companies are having the closing balance of the R&S of Rs. 261 crore (Janitor) and Rs. 65 crore (Bhisham) as on 31.03.2013. (Page 19, Para 3.4 - CIT(A)'s order) * Shri Dinesh Kumar Aggarwal, Director, M/s Janitor Infra attended the proceedings before CIT(A) dated June 29, 2017 and furnished the new address, explained the adjustment of advance towards purchase of shares, filed copy of accounts, order U/s 143(3) and also explained the opening balance of Reserves and Surplus being Rs. 261 crores (Page 18, Para 3.2) * Shri Rakesh Mehta, Director, Bhisham Energy, attended the proceedings before CIT(A), furnished the new address, explained the adjustment of advance towards purchase of shares in subsequent year, filed copy of accounts and also explained the opening balance of Reserves and Surplus being Rs. 65 crores (Page 19, Para 3.3 * There are no cash deposits in the bank account of lenders, advances given are out of reserves....
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....rket unable to verify, conclusion leading this transaction to be a sham transaction is that money received again invested in form of share capital (Page 8, Para 3.8 - AO's order) *Assessee did not explain case even after so many opportunities (Page 8, Para 3.8 - AO's order) * The onus is on the assessee to prove the ICG of the transactions. The assessee has failed to discharge its onus(Page 10, Para 3.9.1 - AO's Order). *The assessee has also failed to submit the documents related to credits in the books(Page 13, Para 3.9,7 - AO's order). * Merely filing some papers in support of transaction cannot be termed as genuine transaction(Page 13, Para 3.9,7 - AO's order). Case laws relied upon by the A.O * McDowell & Co Ltd. [1985] 154 ITR 148 * Workmen of Associated Rubber Industry Ltd V Associated Rubber Industry Ltd [1986] 157 ITR 77 (SC) * CIT V Durga Prasad More 82 ITR 540 (SC) * Bombay Oil Industries Ltd V DCIT [2000] 82 ITD 626 * CIT V Sree Meenakshi Mills Ltd 63 ITR 609 * CIT V Precision Finance Ltd (1994) 208 ITR 405 * Bharati Pvt Ltd V CIT W.B. (1978) 111 ITR 991 * CIT V Frostair (P) Ltd ITA N....
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.... CIT(A) has deleted addition of Rs. 73.5 crores and made addition of Rs. 1.74 crores @ 2 percent for routing these transactions of having been providing a fluid mechanism from one company to another. (Page - 37, Para 7.10 - CIT(A)'s order) 5. Jingle Bells Aluminium Pvt Ltd Revenue's & Assessee's Appeal 2012-13 Section 68 Share capital/share premium Rs. 62 crores * No replied received from parties mentioned at Para 3.3(Page 3 - AO's order) * Replies received from 5 out of 7 parties, incomplete replies received for 6-7 points out of 11 points asked, replies received in same pattern, even print outs are same. So genuineness of transactions are doubtful (Para 3.7/ 3.7.1, Page 6 - AO's order) * Speed post booked from Delhi but registered office in Punjab and Chandigarh (Para 3.7.2 - Page 6 - AO's order) * It shows that assessee itself replied to notices sent U/s 133(6), IG is dubious (Para 3.7.3 - Page 7 - AO's order) Registered offices of investor companies are located in different cities but are having their banks operated from Delhi just to facilitate assessee (Para 3.7.4, Page 7 - AO's order) * Summons were issued to directors of Impe....
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....* Though the documentation is complete in respect of investor companies, the findings of the AO that non availability of investor companies at the given address, inability to produce directors, no net worth, no justification for such a high premium, transferring of funds of Bushan Steel to various companies, shows that investor and appellant company are nothing but a creation of paper companies.(Page 39 - Para 7.8 - CIT(A)'s order) * CIT(A) has observed that neither the appellant company nor the investors are ultimate beneficiary of the transactions but there is routing of funds from Bhushan Steel Ltd. The funds received are given to other companies as soon as they are received. * The basis requirement to justify ICG of transaction has prima facie been established (Page - 39, Para 7.10 - CIT(A)'s order) * Looking to the fact and analysis, these transactions are found to be routing finances of Bhushan Steel and these are just paper companies where appellant company is not the ultimate beneficiary (Page - 39, Para 7.10 - CIT(A)'s order) * Considering the companies are paper companies and appellant has been providing facility to route these transactions, the 2% of total am....
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....ed to credits in the books - assessee provided various addresses of alleged contributors of share application only to mislead dept. (Para 4(A)(vi) -AO's order) * Differentiated Lovely Exports (SC) on ground that it is not having binding effect under\ Article 141 of the constitution of India - summary dismissal by SC without laying any law is not declaration of law. For this relied upon S. Shanmugavel Nadar. V State of Tamil Nadu [2003] 263 ITR 658 (SC) Case laws relied upon by the A.O * Kale Khan Mohammad Hanif V CIT (1963) 50 ITR 1 (SC) * CIT V Lachhman Das Oswal (1980) 126 ITR 446 (P&H) * CIT V Hero Cycles Ltd&Ors (1997) 228 ITR 463 (SC) * CIT V Stepwell Industries Limited &Ors (1997) 228 ITR 171 (SC) * SumatiDayal V CIT (1976) 113 ITR 522 (Del). * R Dalmia V CIT (1976) 113 ITR 522 (Delhi) * CIT V Devi Prasad Vishwanath Prasad (1968) 72 ITR 194 (SC) * Sreelekha Banerjee V CIT (1963) 49 ITR 112 (SC) * Roshan Di Hatti V CIT (1977) 107 ITR 938 (SC) * CIT V Kerala Roadlines Corp. (1986) 162 ITR 669 (Ker.) * Active Traders Pvt Ltd [1995] 214 ITR 583 (Cal.) * Sri Krishna V ....
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....s further passed on funds to other companies. (Para 7.3 & 7.8, page 23 & 24) * CIT(A) deleted addition of Rs. 46 crores and made addition of Rs. 92 lakhs @ 2 percent as undisclosed income received by the appellant for routing these transactions of having been providing a fluid mechanism from one company to another. Addition enhanced by Rs. 92 lakhs for routing transactions. (Para 7.9 & 7.10, page 24) Case laws relied upon by the CIT(A) * CIT vs. Lovely Exports Pvt. Ltd. 299 ITR 268 * CIT vs. Kamdhenu Steel and Alloys Ltd. 206 Taxman 254 * CIT vs. Nova Promoters and Finlease (P) Ltd. (Delhi HC) 7. Kaspers Information Technology Pvt Ltd Assessee's Appeal 2013-14 Section 68 Share capital/ share premium Rs. 16 crores * The assessee company has not discharged its onus to prove genuineness and creditworthiness of transactions.(Para 4.5.1, Page 5 - AO's order). * The assessee company has failed to produce the directors of the investor company and to prove the identity of the investor company.(Para 4.6.1, Para 5- AO's order). * The assessee has not done any business activity during the year under assessment and not received....
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.... * CIT V Sree Meenakshi Mills Ltd 63 ITR 609 * CIT V Frostair (P) Ltd ITA No. 183 0f 2002 and 1638 of 2006 * CIT V Youth Construction (P) Ltd 44 taxmann 364 * Bombay Oil Industries Ltd V DCIT [2000] 82 ITD 626 * Mancherial cement V Income Tax Officer ITA No. 115/Hyd/2012 * Nipun Builders and Developers Pvt Ltd (Delhi HC) ITA No. 120/2012 * Nova Promoters &Finlease Ltd (P) Ltd [2012] 206 Taxman 207 * CIT V Precision Finance Pvt Ltd (1994) 208 ITR 405 * In a detailed discussion in assessment order AO has correctly held that amount of Rs. 16 crores in undisclosed income of the appellant. (Para 4, Page 32 - CIT(A)'s order) * AO has discussed in detail the reasons for addition of Rs. 16 crores.(Para 4, Page 32 - CIT(A)'s order) * The AO has discussed that the appellant has failed to establish ICG of the transaction. (Para 4, Page 32 - CIT(A)'s order). * The submissions filed by the appellant have been considered and not found to be tenable and the case laws cited by the appellant are distinguishable in facts.(Para 4, Page 32 - CIT(A)'s order) * Reply U/s 133(6) not received (Para 4.2.3.1, Page....
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....nt assessment years also. i.e, AY 2014-15 & AY 2015-16(Page - 4, Para 4.12). * The assessee has ignored the valuation criteria of past performance for valuation of the company(Page - 4, Para 4.12). * The registered office of the investor companies (Winfiled and Quadrel) are located in Dilshad Garden and West Vinod Nagar (situated in east Delhi) but they have sent the part replies from RK Puram post office and pattern of both the replies are same. They may have been sent by a common person. Therefore, genuineness is doubtful.(Page 3, Para 4.4, 4.5 - AO's Order). * The assessee has failed to prove the ICG of the transaction(Page - 9, Para 5.4 - AO's Order). * The assessee has brought nothing on record to justify its bright future prospect to increase profitability and ultimately increasing its valuation(Page - 4, Para 4.12). * Transaction between assessee company and its investor is unusual in nature and character. * The money that comes to the bank account of entry operators seldom rests for a day and immediately finds its destination. The beneficiary who gets such money does not give back any dividend or share of profit or inter....
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....ly Exports [216 CTR 195] and Gourdin Herbals India Ltd ITA No. 665/2009 dated Sep 17, 2009 Case laws relied upon by the CIT(A) * NR Portfolio Pvt Ltd [96 DTR 0281 (Delhi)] * CIT V Nova Promoters & Finlease (P) Ltd [ITA No. 342 of 2011] * GKN Driveshafts (India) Ltd. V ITO (259 ITR 19) (SC) * Navodaya Castle [56 taxmann.com 18 (SC)] (distinguishing Lovely exports) * CIT V Sophia Finance Ltd 205 ITR 98 (Del.) (F.B.) * Titan Securities Ltd [357 ITR 184 (Del)] * MAF Academy Pvt Ltd [361 ITR 02858 (Delhi)] * Tarika Properties Investment Pvt Ltd [221 Taxman 0014 (Del) ] * Nova Promoters and Finlease Pvt Ltd (2012) 342 ITR 169 (Delhi) * Globus Securities and Finance PVt Ltd [224 Taxman 237 (Delhi) ] * Focus Exports Pvt Ltd [111 DTR 0012 (Del) ] * Rathi Finlease Ltd (215 CTR 429 MP) * Empire Buildtech Pvt Ltd [366 ITR 110 (Delhi)] * Onassis Axles Private Limited [364 ITR 53 (Delhi)] * Kundan Investment Ltd (263 ITR 626) (Cal) * Korlay Trading Co. Ltd (232 ITR 820 (Cal)) * SumatiDayal (214 ITR 801 (SC)) * Power Drugs Ltd. (245 C....
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.... * It is not the case of Ld.AO that any person hasgiven any statement ormade any allegationagainst these companies(Page 23 - CIT(A)'s order). * The reasons given by AOare generic in nature andnot backed by anyconcrete evidence. (Page23 - CIT(A)'s order) * No cash deposit in thebank accounts of investorcompanies for makinginvestment in theappellant company (Page23 4- CIT(A)'s order). * The appellant companyhas allotted shares forthe application moneyreceived by it (Page 24 -CIT(A)'s order). * Depositors have givenconfirmation, providedtheir income tax returnsentire amount receivedthrough normal bankingchannels (Page 23/24 -CIT(A)'s order). The appellant hasestablished the ICG of thetransactions.(Page 27 -CIT(A)'s order). * Onus cast upon theappellant with regardduties enjoined by virtueof cash credit standsfulfilled and discharged,cannot be said thatappellant failed todischargecreditworthiness andgenuineness (Page 24 -CIT(A)'s order). * No adverse inference iswarranted or sustainable(Page 24 - CIT(A)'s order). * The shares issued asbonus shares have notbrought any inflow ofincome which is nothingbut the credit in thebooks of accounts of thecompany, therefor....
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....hannel does not substantiate the genuineness of transaction.(Page 6 - AO's order) * Since the payments were transferred to other companies as and when they were received, the creditworthiness of the investor does not in any way get established. The bank accounts of all the investors are in same branch, no profit making apparatus, no business. * It seems it is just an accommodation entry just to evade tax. (page 5 - AO's order). * Amount has been received through private placement, which means contributors were personally known to assessee. Since the existence of the investors could not be proved, there is no question of taking cognizance of the such non-existent person, meaning thereby money actually belonged to assessee itself and fraudulently routed through bank account of investors. (Page 6 - AO's order) * Regarding the other current liabilities, the assessee has failed to bring the directors of the eight companies from whom money received shown as other liability, to explain the nature of the current liabilities. (Page 12 - AO' order) * As it can be seen from the BS and P&L account of the assessee that these are not trade liabilities.(Page 12 - AO' order) Case....
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....32/43 - Cit(A) order) * Onus cast upon the appellant with regard duties enjoined by virtue of cash credit stands fulfilled and discharged, cannot be said that appellant failed to discharge creditworthiness and genuineness (Page 32/44 - CIT(A)'s order) * No adverse inference is warranted or sustainable (Page 32/44 - CIT(A)'s order). There is no denial at any stage of assessment proceedings by any of the subscriber of share capital of having deposited money in the appellant company (Page 43 - CIT(A)'s order) * The appellant has established the ICG of the transactions.(Page 47 - CIT(A)'s order) * CIT has made analysis of the judgment in the case of "Nova Promoters & Finlease (P) Ltd (342 ITR 169 (Del))" and has reached a conclusion that appellant through various documents submitted to establish ICG, it would constitute acceptable proof or acceptable explanation by the assessed. (Page XX - CIT(A)'s order) Case laws relied upon by the CIT(A) * MOD Creation Pvt Ltd V ITO [(2013) 354 ITR 282 (Delhi)] * CIT V Kamdhenu Steel & Alloys Ltd & Others [(2012) 206 taxman 254 (Delhi)] * CIT V Gangeshwari Metals P. Ltd * ITO V Neelkanth Finbuild IT....
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....efore it is assessee's own money(Para (a), Page 4/5 - AO's order) * No explanation offered as to why these companies agreed to invest in assessees' company when there is no scope for making an exit out of the investment (Page 5 - AO's order). The assessee company neither has not shown any remarkable performance nor has any assets, therefore transaction cannot be genuine (Page 6 - AO's order) * Assessee failed to bring directors of the investors (page 10 - AO's order). The subscribers did not have creditworthiness as money in their bank accounts seldom rests for a day and finds its destination, no profit making apparatus, no business activity (Page 4 - AO's order) * Merely that the transaction was conducted through proper banking channel does not substantiate the genuineness of transaction. * Since the payments were transferred to other companies as and when they were received, the creditworthiness of the investor does not in any way get established. The assessee company has not explained the nature of other liabilities. It is seen that above liabilities are not trade liabilities. The facts in regard to other liabilities are same as that of share capital which has been d....
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....stained only if backed by concrete evidence. (Page 33/34/43/44 - CIT(A)'s order) * Appellant has allotted shares for share application money received by it (Page 34 - CIT(A)'s order). * CIT(A) quoted that the Ld. AO has relied upon the judgment of Divine leasing but failed to bring forth on record any positive evidence that shareholders were either benamidars/ fictitious. (Page 40 - CIT(A)'s order) * The judgment of Stellar Investment clearly lays down that the provision of Section 68 would be applicable only when shares have been issued in the name of non-existing persons, which is not the situation in the instant case (Page 40 - CIT(A)'s order) * Documents submitted establish that money came from depositor's account and nowhere connected with appellant company (Page 45 - CIT(A)'s order). No cash deposits into bank accounts of the investors for purchase of shares (Page 33 - CIT(A)'s order). * No circumstances to suggest that transactions are not genuine and that onus cast upon it has not been discharged. (Page 30 - CIT(A)'s order). CIT(A) has made analysis of the creditworthiness of investors. No comments made but figures showing handsome creditworthiness (Page 33 -....
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....5) 57 taxmann.com 28 (Delhi)] * CIT V Lakhani Marketing [(2014) 49 taxmann.com 257 (P&H)] * CIT V Shivam Motors Pvt Ltd [(2015) 55 taxmann.com 262 (Allahabad) 12. Sukhna Real Estate Pvt Ltd Revenue's Appeal 2012-13 Section 68 Share capital/ share premium - Rs. Rs. 80.634 crores * The assessee failed to discharge its onus. In such a case the source and nature of transaction need to be proved beyond doubt. (Page 7 - AO's order). * Basis the inspector's report none of the parties (investor) existed at the given address (Page 2 - AO's order) * Notice U/s 133(6) returned undelivered with remarks "none existed"(Page 3 - AO's order) * Verification of bank statement revealed that companies received funds back to back (Page 3 - AO's order) * After few days of local enquiry, confirmation of all parties received through speed post in the office of AO.(Page 2 - AO's order) * Summons U/s 131 remain un-complied "(Page 3 - AO's order) * Assessee offered no explanation about as to why these investors agreed to invest when there is no scope for making an exit out of investment. (Page 5- AO's order) * Also not explained that wh....
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....ge 27 - CIT(A)'s order) * The provisions of section 68 would be applicable only when shares have been issued in the name of non-existing person which is not the situation in the instant case. * No denial by any of the subscribers of the appellant company's share capital that they did not invest their money into it. * The AO did not bring any documentary evidence to establish the live link/nexus between the material available with the department and the amount received by the appellant. * Entire amount received through normal banking channels (Page 30 - CIT(A)'s order). * Parties involved have confirmed of having deposited their money in the appellant company (Page 30 - CIT(A)'s order) * No iota of evidence to prove that money emanated from coffers of appellant company. Any conclusion can be sustained only if backed by concrete evidence (Page 30 - CIT(A)'s order) * Provisions of section 68 not applicable in case of bonus shares (Page 30 - CIT(A)'s order). The shares issued as bonus shares have not brought any income which is nothing but the credit in the books of accounts of the company, therefore when no sum has been credited, addition cannot be made U/s 68....
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....ature of transaction need to be proved beyond doubt. (Pagse - 7, AO's order). Case laws relied upon by the A.O * Nova Promoters &Finlease (P) Ltd (342 ITR 169 (Del)) * CIT V Nipun Builders & Developers [2013] 350 ITR 407 (Del) * CIT V N.R. Portfolio PVt Ltd (ITA No. 1018 & 1019 of 2011) * Kale Khan Mohammad Hanif V CIT [1963] 50 ITR 1 (SC) * CIT V Oasis Hospitalities 333 ITR 119 (Delhi) 2011 * Roshan Di Hatti [1977] 107 ITR (SC) * CIT V Kariary Trading Co Ltd (1998) 232 ITR 820 * SumatiDayal V CIT 214 ITR 801 * CIT V R. N. Dalmia 207 ITR 89 * CIT(A) has made analysis of creditworthiness, for making investment (Page 29/30, Table - CIT(A)'s order) * No adverse material brought by AO to reject the explanations and evidences (Page 30 - CIT(A)'s order). * Neither any person has given any statement nor made an allegation against the company (Page 30 - CIT(A)'s order). * No cash deposits in the bank accounts of investors (Page 30 - CIT(A)'s order). * Reasons given by AO are generic and not backed by any concrete evidence (Page 30 - CIT(A)'s order) * Entire amount received through banking ....
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....ssee as to why these parties which are related to the assessee agreed to invest in assessee which is unlisted and thus there is no scope to exit out of the investment. * Person should have some sign of identification other than merely on paper. These signs could be place of work, staff members, actual transaction, recognition in eye of public, sign board etc. Actual identity and business does not get proved by these passive documents when infact no actual or passive business is beingcarried on. * Assessee failed to produce person to verify claim, failed to prove nature and source of transaction. * The assessee failed to discharge its onus. In such a case the source and nature of transaction need to be proved beyond doubt. Case laws relied upon by the A.O * Nipun Builders & Developers * Nova Promoters &Finlease * Kamal Motors V CIT 131 taxman 155 (Raj) * CIT V Oasis Hospitalities 333 ITR 119 (Delhi) 2011 * CIT V Ruby Traders &exporters Ltd. (2004) 263 ITR 300 (Cal.) * M/s Rajshree Synthetics (P) Ltd V CIT (2003) 131 Taxmann 391 (Raj) * CIT V Sophia Finance Ltd * Appellant has discharged onus u/s 68 No adve....
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....d. * The assessee failed to discharge its onus. In such a case the source and nature of transaction need to be proved beyond doubt.(Page 8 - AO's order). * Since the assessee was well aware of the fact of bogus credits in its books, it has chosen not to subject itself investigation/ enquiry conducted by the department.(Page 8 - AO's order) * The assessee offered no explanation as to why these parties agreed to invest in an unlisted company when there is no scope for making an exit out of investment.(Page 6 - AO's order) * Not explained why share application money was returned to parties and shares were not allotted.(Page 6 - AO's order) * The intent of the assessee is to avoid furnishing details and then take plea that addition has been made without making inquiries from person's who advanced money .(Page 6 - AO's order). * A clear period of two months allowed to assessee to furnish details but it did not submit (Page 6 - AO's order). The assessee has failed to produce the directors of the investor companies. (Page 8 - AO's order) Case laws relied upon by the A.O * Nova Promoters &Finlease (P) Ltd (342 ITR 169 (Del)) * CIT V Nipun Builders & D....
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.... [(2012) 342 ITR 169 (Delhi)] * Roshan Di Hatti * Nipun Builders & Developers 16. Supreme Placement Pvt Ltd Revenue's Appeal 2012-13 Section 68 Share capital/ share premium Rs. 72.43 crores (includes bonus of 12.43 cr) * In some cases the confirmation received in response to notice U/s 133(6) along with bank statement shows that assessee has received the amount and back to back transferred the amount to other parties (Page 3 - AO's order) As per the inspector's report no such party existed at the given address (Page ¾, table- AO's order) * Assessee offered no explanation as to why the companies agreed to invest in an unlisted company when there is no scope for making an exit out of investment (Page 7 - AO's order) * It has not explained why share application money was returned and shares were not allotted (Page 7 - AO's order) * The approach of assessee from shying away from filing necessary documents suggest that these are nothing but accommodation entries (Page 7 - AO's order) * The entire intent is to avoid furnishing details and then take a plea that additions made without conducting inquiries from persons from ....
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....9 - CIT(A)'s order). The amount of issue of bonus shares does not represent any fresh credit but only a transfer entry representing capitalization of reserves ans surplus and is not hit by section 68 of the Act.(Page 40 - CIT(A) order) Case laws relied upon by the CIT(A) * MOD Creation Pvt Ltd V ITO [(2013) 354 ITR 282 (Delhi)] * CIT V Kamdhenu Steel &Alloys Ltd & Others [(2012) 206 taxman 254 (Delhi) * CIT V Gangeshwari Metals Pvt Ltd (2013) 30 taxmann.com 328 * ITO V NC Cable ITA No. 4122/Del/2009, ITAT Delhi Bench * CIT V Oasis Hospitalities P. Ltd [(2011) 333 ITR 119 (Delhi)] * ITO V Rakam Money Matters P Ltd 2821/Del/2011 ACIT V Kisco castings Pvt Ltd 34 taxmann.com 37 * CIT V Fair Fivest Ltd [2014] 44 taxmann.com 356 (Delhi) * CIT V Expo Globe India Ltd [2014] 51 taxmann.com 208 (Delhi) * ITO V Neelkanth Finbuild Ltd ITA No. 2821/Del/2009 * CIT V Lovely Exports [2008] 216 CTR 195 (SC) Differentiated the following case laws: * Nova Promoters &Finlease (P) Ltd (342 ITR 169 (Del)) * Roshan Di Hatti [1977] 107 ITR (SC) * CIT V Nipun Builders & Developers [201....
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....ot bring any adverse material on record to reject the explanations submitted by the appellant. * Rather it's not the case of AO that any person has given any statement or made any allegation against these companies. (Page 32 - CIT(A)'s order). * The reasons given by AO are generic in nature and no backed by any concrete evidence.(Page 32 - CIT(A)'s order) * Various parties involved has positively confirmed/ affirmed the fact of having deposited their money into appellant company (Page 33 - CIT(A)'s order). * The entire amount has been received through normal banking channels which transaction has not been disputed, repudiated or challenged in any manner (Page 32 - CIT(A)'s order). * No evidence to prove that funds received generated from appellant company. Any conclusion can be sustained only if backed by concrete evidence (Page 33 - CIT(a)'s order) * Provisions of section 68 are not applicable on bonus shares, as the no amount is received in case of bonus shares (Page 33 - CIT(a)'s order) * Appellant company has allotted shares for the share capital and share application money received by it (Page 33 - CIT(A)'s order). * There was no cash deposit into the b....
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....urpose of making the same (Page - 13 - AO's order) * There is a chain of companies from which the fund flows from one company to another without establishing the actual source of investment. It is a clear case of tax avoidance under garb of tax planning (Page - 16/17 - AO's order) * Despite bringing it to knowledge of assessee that summons have not been complied with and it is duty of assessee to explain source of source to authenticate claim and purpose of making advances, assessee failed to discharge its onus to establish source of source (Page - 13 - Ao's order). Summons issued U/s 131 remained un-complied (Page 13 - AO's Order) * Investors have common practice like paper companies who raise loan from companies who in turn have no income generating capacity or established source (Page - 11, Para (i) - AO's Order)The assessee failed to prove the source of source. * The assessee failed to discharge its onus cast upon it U/s 68 to prove genuineness of transactions and creditworthiness of person who has given credit to the assessee. * The amount introduced by the assessee under the garb of share capital and unsecured loan is the undisclosed income of the assessee with....
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....oan also(Page - 4, Para - 7 - CIT(A)'s Order). Case laws relied upon by the CIT(A): * Nakoda Fashion Pvt Ltd, ITA No. 1716/AHD/2012, ITAT Ahmedabad Bench [Relying Upon N. Tarika Properties Investment (2014) 51 taxmann.com 387 (SC), Empire Biotech P Ltd 361 ITR 258 (Del)] * Nova Promoters and Finlease Pvt Ltd 342 ITR 169 (Del. HC) 19. Track Casting India Pvt Ltd. Revenue's Appeal 2012-13 Section 68 Share Capital & Share Premium Rs. 31 crores Section 69C Rs. 7.75 lakhs U/s 69Con account of alleged unexplained commission expenses * Little compliance or no compliance made to notices issued U/s 142(1) (Page1, Para 4- AOs' Order. Details filed letter dated July 10, 2014 and July 25, 2014 and August 26, 2014 and Dec 15, 2014 (Page - 2, Para - 4.4, 4.5 - AO's Order) * To avoid to prove the genuineness and the creditworthiness of investor companies, assessee intentionally avoiding furnishing details on time and producing directors of investor companies by seeking adjournments time and again and not attending hearings (Page - 7, Para 5.12 - AO'a order). * Assessee failed to bring difference in rate of shares issued to four companies (....
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....(A)'s order). * AO has brought nothing on record to establish that the applicant routed its own money in the form of share application(Page - 22, Para 8 - CIT(A)'s order) * The addition made separately on account of commission payment of Rs. 7.75 lakh is also deleted. (Page - 22, Para 8 - CIT(A)'s order) 16. In sums and substance the reasons given in the appeals where the respective ld. CIT (As) have deleted the additions u/s.68 are as under: • That the basic requirement to justify identity, creditworthiness and genuineness (ICG} of the transactions in the case of the Assessee ore prima facie established. Relevant documents were furnished by the Assessee The Assessee filed copies of confirmation, bonk statements, P&L A/c, Balance Sheet, Assessment Orders of the investors/lenders to establish source of funds in the hands of investor/lender companies. • That the A.O has not brought any adverse material to reject the explanations and evidences submitted by the Assessee except alleging the non-compliance of notices issued 131 and 133(6) in case of certain investors. • That neither the Assessee nor the investor companies ore ultimate benef....
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....€¢ That the investor companies are all assessed to tax in their respective jurisdictions. • That the judgment of Stellar is applicable only where shares are issued in the names of non-existing persons, which is not the situation in the instant case. • That without proof of having introduced untaxed money by promoters or dubious antecedents, adverse view cannot be taken. • That the provisions of Section 68 are not applicable for bonus shares since the amount in question does not represent any fresh credit but only a transfer entry representing capitalization of reserves and surplus and is not hit by Section 68. 17. Further ld. CIT (A) in three cases have confirmed the addition, which can be summarized in the following manner: • That the Assessee failed to establish the identity and creditworthiness of the investors/lenders and the genuineness of the transactions. • That few investors/lenders did not reply to notices u/s. 133(6) or attend summons u/s.131. • That few share applicants and lender companies have same address and common directors. • That there was no reason why the appellant ....
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....nd so forth. He submitted that in cases of most of these companies, assessment has been completed u/s.143(3) or u/s 147 by the Assessing Officer, which were also subject matter of appellate proceedings whereby most of the additions have been deleted or the appeals are pending either before ld. CIT(A) or Tribunal. Thus same additions have been made in the hands of the investor companies also leading to double addition. To demonstrate the same he has filed a detailed chart in each and every investor company. He submitted that all the assessee-company as well as the investors/lenders are part of group of companies belonging to the Bhushan Group and the family members of the directors. He pointed out that from the details filed in the paper books as well as before the authorities below, it can be seen that the same stream of funds permeating to the group companies in the form of share capital/premium or loan and advances have been repeatedly treated as unaccounted/undisclosed fund of multiple companies assessed on individual basis which has resulted into multiple addition into same stream of funds in the hands of multiple assessee's including all the assessees herein. By way of an exam....
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.... which additions u/s 68 have already been made in the hands of Jawahar Credit & Holdings Pvt. Ltd.) into M/s. Super Star Agency Pvt Ltd. (at SI. No. IS) has also been added u/s 68 in the hands of the latter company, once again treating the same as representing the undisclosed funds belonging to the latter. Thus there is a complete lack of parity and understanding by the Revenue with respect to actual ownership of the impugned funds because same stream of funds have been added in the hands of multiple assessees. 20. In addition to the documentary evidences furnished before the lower authorities, Ld. Counsel has also filed a complete fund flow in the form of flow chart depicting the complete movement of the fund in case of each of the assessee company from where the funds have started /generated to the ultimate destination of the fund. The fund flow statement has been duly supported by the relevant bank statement which was filed before the authorities below to demonstrate every link of the flow chart. From the said fund flow statement, he pointed out that the funds representing the impugned credits in the form of share capital/share premium or loan and advances do not belong to....
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....ssessees herein are placed at different levels of the chain wherein one group company serves as an investor/lender in the next group company in the chain that goes so on and so forth, v. That the Assessees have merely acted as conduit mechanism for investing funds of BEL into other group companies and the said funds have ultimately gone back to BEL. vi. The same stream of accounted funds of BEL flowing through these Group Companies have been repeatedly treated as the unaccounted/undisclosed funds of multiple group companies (assessed on an individual basis) resulting in multiple additions of the same stream of accounted funds of BEL in the hands of several Assessees; vii. That there is no influx of any unaccounted funds/income belonging to the Assessee companies in the chain as incorrectly alleged by the A.Os. Therefore, the nature and source of the impugned credits stand fully explained in the cases of all the AssesseeCompanies herein ruling out the applicability of the rigors of section 68. 22. Ld. Counsel submitted that, it is pertinent to note here that the factum of routing of accounted funds of BSL (through its subsidiary company, BEL) via the....
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....e furnished following documents before the Assessing Officer and CIT(A):- (i) Names, addresses and PAN details of the parties, (ii) Confirmation of parties (iii) Bank Statements (iv) Income Tax Returns of the parties for the impugned A.Y. (v) Assessment orders of the parties. (vi) Audited Accounts of the parties of the year under consideration. 25. Thereafter, he relied upon catena of judgment and submitted that here in all these cases the requisite ingredient of Section 68 in cases of all the assessees stand discharged which are as under: A. The identities of the investors/lenders are established from multiple facts and evidences on record viz. i. The investors/subscribers are companies duly incorporated under the provisions of the Companies Act, 1956 having separate legal entities and the status of "Artificial Legal Persons". The statutory records available with the Registrar of Companies clearly point to the companies being in existence. ii. The identity and existence of the companies are also substantiated by the following documents filed before the lower authorities. (a) Confi....
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....some of the investor companies did not have their own profit making apparatus which cannot be sole reasons to sustain additions u/s 68. The Ld. A.Os have not brought anything on record to disprove/refute the genuineness of the evidences furnished by the Assessees herein. The Ld. A.Os have failed to prove that the impugned credits despite appearing in the names of other entities still represents income from suppressed/undisclosed sources of the Assessees herein before nailing the Assessees and fastening the Assessees with impugned liabilities u/s.68. The fund flow statements showing the ultimate source of funds (being the unaccounted funds of BEL) with respect to the transactions impugned in the case of each of the Assessees herein filed in PB-20 further corroborate/strengthen the Assessees' averment that the impugned funds do not represent income from undisclosed source of any of the Assessees herein. 27. In most of the cases, the Assessing Officer has sought to justify the addition relying on the fact that notices u/s.133(6) sent to some of the parties have returned unserved and assessee has failed to produce the directors of the parties. In this regard Ld. Counsel submitted th....
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.....Y.2012-13 143(3) 1)Rs. 78,22,80,000 Share Capital deleted ITAT (Assessee herein at Sl. No. 9 of the captioned matters in the index supra) C.I.T(A) A.Y.2012-13 147 1)Rs. 3,90,00,000 Advance Rececived NA 2) Rs. 3,90,000 Commission Expense (3.9 Cr @ 1%) Venus Recruiter Pvt.Ltd. Rs. 30,00,00,000 A.Y.2012-13 147 1) Rs. 10,00,00,000 Unexplained Credit NA C.I.T(A) 2) Rs. 30,00,000 Commission Expense( 10Cr @3%) Supreme Placement Services Pvt. Ltd. Rs. 15,00,00,000 A.Y.2012-13 143(3) Rs. 72,43,00,000 Share Capital deleted ITAT (Assessee herein at Sl. No. 16) C.I.T(A) Janitor Infrastructure Pvt. Ltd Rs. 15,00,00,000 A.Y.2012-13 147 Rs. 36,00,00,000 Share Capital converted partly to fully NA Sintex Consumer Electronics Pvt. Ltd B) Share Capital Partly Paid Up:- Rs. 2,00,00,000 A.Y.2012-13 143(3) Rs. 78,22,80,000 Share Capital deleted ITAT (Assessee herein at Sl. No. 9) C.I.T(A) A.Y.2012-13 147 1)Rs. 3,90,00,000 Advance Rececived NA 2) Rs. 3,90,000 Commission Expense ( 3.9 Cr @ 1%) Delight Resorts Pvt.Ltd. A.Y. 2012-13:- ....
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....nbsp; A) Share Capital:- Jingle Bells Aluminium Pvt.Ltd. Rs. 4,55,70,000 (bonus) A.Y.2012-13 143(3) Rs. 62,00,00,000 Share Capital Fresh Addition on account of alleged commission income ITAT (Assessee herein at Sl. No. 5) Angel Cement Pvt.Ltd. Rs. 4,37,10,000 (bonus) A.Y.2012-13 143(3) Rs. 120,70,00,000 Share Capital Deleted ITAT (Assessee herein at Sl. No. 1) Frozen Iron & Steel Pvt.Ltd. Rs. 9,00,00,000 A.Y.2012-13 147 Rs. 1,00,00,000 Alleged Accomodations Entries NA C.I.T(A) Reinforce Recruiter Pvt.Ltd. Rs. 9,00,00,000 A.Y.2012-13 147 Rs. 4,50,00,000 Current Liabilities - Unexplained credit u/s 68 NA C.I.T(A) STARLIGHT CONSUME R ELECTRONI C PRIVATE LIMITED 1. A.Y. 2012-13:- A) Share Capital Fully piad up GLOBUS REALINFRA PVT LTD Rs. 15,00,00,000 A.Y. 2012-13 143(3) Rs. 98,49,40,000 Share capital Deleted ITAT (Assessee herein at Sl. No. 17) TREMEND OUS MINING & MINERALS PRIVATE LIMITED Rs. 15,00,00,000 A.Y. 2012-13 147 Rs. 25,00,00,000 Share Capital NA....
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....e herein at Sl. No. 4) Sunlight Tour & Travel Pvt.Ltd. A.Y. 2012-13:- A) Share Capital:- Sukhna Real Estate Pvt.Ltd. Rs. 5,46,84,000 (bonus) A.Y.2012-13 143(3) Rs. 80,63,40,000 Share Capital Deleted ITAT (Assessee herein at Sl. No. 12) Navayuga Consultancy Pvt.Ltd Rs. 5,46,84,000 (bonus) A.Y.2012-13 147 Rs. 15,00,00,000 Share Capital NA C.I.T(A) Delight Resorts Pvt.Ltd. Rs. 1,08,00,000 (bonus) A.Y.2012-13 143(3) 1. Rs. 10,00,00,000 2. Rs. 66,56,47,519 3. Rs. 5,22,890 Share Capital Advance Received Unverifiable Expenses Deleted ITAT (Assessee herein at Sl. No. 2) Janitor Infrastructure Pvt.Ltd. Rs. 20,00,00,000 A.Y.2012-13 147 Rs. 36,00,00,000 Share Capital converted partly to fully NA C.I.T(A) SUPER STAR AGENCY PRIVATE LIMITED A.Y. 2012-13:- A) Share Capital Fully paid up: BNR INFOTECH PRIVATE LIMITED Rs. 5,00,00,000 A.Y. 2012-13 153C r.w.s 153A Rs. 1,00,00,000 Sale of share NA C....
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..... 10,00,00,000 A.Y. 2012-13 143(3) Rs. 73,50,00,000 Share Capital Addition u/s 68 deleted - Fresh Addition on account of alleged commission income ITAT (Assessee herein at Sl. No. 4) 29. Under these facts, the identity and existence as well as source of the credit and the creditworthiness stand fully discharged in cases of all the assessee-companies. The Department cannot blow hot and cold for making similar additions in the hands of the investor/lender company u/s.68 on the same amount and then again treating it to be bogus credit entry or unaccounted money of the assessee company. 30. Apart from that, he submitted that the assesseecompanies have furnished the bank statements of the investor/lender companies which prove beyond doubt that the investors/lenders had adequate funds for making the impugned investments/deposits in the assessee-companies. Further, the Assessee(s) have also filed the audited accounts of the investor/lender companies which clearly depict that such investors/lenders had sufficient net worth (i.e. share capital plus reserves & surplus) and/or bor....
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....f the creditor/investor. (ii) The burden of the assessees to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor/investor. (iii) The creditor's/investor's creditworthiness has to be judged, vis-a-vis, the transactions, which have taken place between the assessee and the creditor/investor, and it is not the business of the assessee to find out the source of money of his creditor/investor or of the genuineness of the transaction, which took place between the creditor/investor and sub-creditor and/or creditworthiness of the sub-creditors. (iv) It is not the burden of the assessee to prove that the money advanced/invested by the creditor/investor is properly taxed. (v) Once the assessee establishes that the assessee has received the impugned amount from the creditor/investor by way of cheques, the assessee must be taken to have proved that the creditors/investors had the creditworthiness to advance the loans/share capital. Thereafter, the burden shifts to the A.O. to prove the contrary. (vi) On fail....
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....the documentary evidences filed by the Assessees. As held In the cases cited above, before fastening any liability upon the Assessees u/s 68, the A.Os were required to show by bringing on record tangible material that the amounts received as share capital/loans from the investors/lenders actually emanated from the coffers of the Assessees or represented the undisclosed income of the Assessees. 33. Though the proviso to Section 68 inserted by Finance Act, 2012 w.e.f. 01.04.2013 casting the additional onus on the assessee of proving the source of the source raising the share subscription cannot be held to be retrospective which has been held by Hon'ble Bombay High Court in the case of CIT vs. M/s. Gagandeep Infrastructure Pvt. Ltd. (2017) 80 taxmann.com 272 (Bombay) wherein it was observed and held as under: "...(e) We find that the proviso to Section 68 of the Act has been introduced by the finance Act 2012 with effect from 1st April, 2013. Thus, it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the....
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....d- Rs. 37.70 crores: (i) Rs. 3.70 crores (ii) Rs. 34 crores (i) Bhisham Energy Ltd. (ii) Janitor Infrastructure Pvt. Ltd. (i) Confirmation/ ITR/ Bank statement/ Audited Accounts (ii) Confirmation/ ITR/ Bank statement/ Audited Accounts/ Asst. Order PB-3B Pgs. 1-14 Pgs. 15-30 Kasper Information Technology Pvt. Ltd. A.Y. 2013-14 Share Capital - Rs. 16 crores (i) Rs. 8 crores (ii) Rs. 8 crores (i) Landsky Real Estate Pvt. Ltd. (ii) Quadrel Infrastructure Pvt. Ltd. (i) Confirmation/ ITR/ Bank statement/ Audited Accounts/ Asst. Order 143(3) (ii) Confirmation/ ITR/ Bank statement/ Audited Accounts/ Asst. Order 143(3) PB-7B Pgs. 1-24 Pgs. 25-39 Landsky Real Estates Pvt. Ltd. A.Y. 2013-14 A. Share Capital - 16 crores (i) Rs. 8 crores (ii) Rs. 8 crores B. Current Liabilities -Other payables (i) Rs. 1.30 crores (ii) Rs. 1.30 crores (i) Winfields Iron & Steel Pvt. Ltd. (ii) Quadrel Infrastructure Pvt. Ltd. (i) Cantabile Minerals & Minings Pvt. Ltd. (ii) Angel Cement Pvt. Ltd. (i) Confirmation/ ITR/ Bank statement/ Audited Accounts/ Asst. Order 143(3) (ii) Confirmation/ ITR/ Bank statement/ ....
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....ase may be) are duly incorporated bodies and are assessed to tax. They do exist and the details of their names, PAN and ITR acknowledgment, bank statements and assessment orders have been duly filed with the Ld. A.O. (v) Several investor/lender companies are also Assessees herein which once again proves their identity and existence. (vi) The investments made by the investors/lenders in the Assessee companies have been duly confirmed by the investors/lenders and their confirmations have been placed on record. (vii) The subscribers to the share capitals did subscribe to the share capital of the Assessee-companies and shares were duly allotted to them in most of the cases. (viii) There is no denial at any stage of the assessment proceedings by any of the investors/lenders of having deposited money in the Assessee-Companies. (ix) The impugned amounts have been received through undisputed banking channels. (x) There is no cash deposit in the bank account of the parties from whom the impugned amounts by way of share capital/ share premium/loans have been received. (xi) The documents submitted by the Assessee(s) establish that....
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....the impugned additions are generic in nature and not backed by any concrete evidence. 36. On the issue of share premium, he submitted that it has been added by the Assessing Officer u/s.68 of the Hon'ble Delhi High Court in the case of Pr. CIT vs. A.R. Leasing Pvt. Ltd. in ITA No. 361/2017 Dated: 03.07.2017 wherein it was held that if the A.O. disregards the documents furnished by the assessee to discharge onus u/s. 68 and comes to the conclusion that transaction of receiving money as share capital was not a genuine one primarily because the premium charged by the Assessee was much higher than the prevalent market trend, the action of the A.O was not tenable unless the A.O had brought on record some material to show that confirmation and other evidence placed by the Assessee was not genuine, he could not have simply discarded the documents produced by the Assessee. Since the provisions of sec 56(2)(viib) of the Act is introduced w.e.f from 01.04.2013 cannot be applied retrospectively. Reliance was placed on decision of Hon'ble Bombay High Court in the case of CIT Vs Green Infra Limited ITA No. 1162 of 2014 Dt: 16.01.2017 and CIT vs. M/s. Gagandeep Infrastructure Pvt. Ltd. (P....
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....,000 D The deletion of addition u/s 68 to the extent of bonus issue has not been contested by the Department. PB-9A, page 10 5. Sunlight Tours & Travel Pvt. Ltd.: Share Capital (including bonus shares of 12,01,68,000)- section 68 2012-13 52,01,68,000 12,01,68,000 D The deletion of addition u/s 68 to the extent of bonus issue has not been contested by the Department. PB-14A, page 11 6. Supreme Placement Services Pvt. Ltd. Share capital (including bonus shares of Rs. 12.43 crores) - section 68 2012-13 72,43,00,000 12,43,00,000 D The deletion of addition u/s 68 to the extent of bonus issue has not been contested by the Department. PB-16A, page 10 38. In all these cases, the ld. CIT(A) has held that Section 68 is not applicable on increase in share capital on account of issue of bonus shares. The amount representing bonus share does not represent group of any sum in the books of account of the assessee it merely denotes a transfer entry representing the capitalization on reserve and surplus and not any fresh credit in the books of the assessee and therefore it is not hit of Section 68. Regarding grounds challenged the fr....
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....e cases has opined that the Assessees have not availed any accommodation entries but have merely provided facility to route the funds from Bhushan Steel Ltd. in lieu for an estimated commission income of 2%. Thus, the Ld. C.I.T(A) has implied a role reversal of the Assessees herein - whereas the A.Os have alleged that the Assessees herein are the recipients of accommodation entries, the Ld. C.I.T(A) has treated them as entry providers/ jamakharchi companies', providing facility to route transactions in lieu of commission income. The orders of the Ld. C.I.T(A) in the said three cases to the extent the same assess fresh sources of income (being the alleged commission income @ 2% for providing facility to route funds) have been challenged by the Assessees above named in their respective appeals filed before this Hon'ble ITAT. 41. The relevant observations of the Ld. C.I.T (A) in these three cases are reproduced hereunder for the sake of ready reference: Name of the Assessee A.Y Findings of the Ld. C.I.T (A) Jawahar Credit & Holding (P) Ltd. 2012-13 "7.8 As stated earlier, there is no worth/reserves of the appellant company nor any business carried out, the investo....
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....rying out any visible business activity, therefore, this is nothing but routing of its funds by the Bhushan Steel Ltd. where neither the seven investor companies nor the appellant company are ultimate beneficiary. The funds received were given to other companies, as soon as it is received and the assets in the balance sheet is shown in the form of investment in shares for the share application money and premium thereon received. The appellant has also not given any cogent reasoning for the fund flow shown by the A.O in his report. 7.10 Therefore, looking to the facts and circumstances of this case where basic requirement to justify the identity, creditworthiness and genuineness of the transaction has been prima facie established but looking to the fact and analysis as narrated above, these transactions are found to be for routing finances of M/s. Bhushan Steel Ltd., through these companies and therefore these companies are just paper companies where appellant is not the ultimate beneficiary because it has further passed on those funds to five companies as shown in the flow chart. 7.11 In view of above, it is to be stated that as per the practice and also seen in various cases....
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....pellant) charges the amount to provide such entries which is generally 2% of the total transactions. Therefore, considering that the appellant has been providing the facility to route these financial transactions, the 2% of the total amount is treated as undisclosed income of the appellant, not shown in its return of income. This comes to Rs. 92,00,000/-. 7.11 Since the details have been duly provided with respect to the referred companies and the additions are out of the ambit of provisions of section 68 of the Act due to the reason that these investor companies are held to be just a paper company or conduit in the case of other investors for providing entries and routing the finances, therefore, the addition to the extent of Rs. 92,00,000/- is sustained for charges received in providing such entries, not disclosed by the appellant. For the balance amount, the appellant gets a relief." 42. Therefore, the Ld. C.I.T (A) in the above three cases has categorically admitted that the respective Assessees have prima facie established the necessary ingredients of section 68, viz., identity, creditworthiness and the genuineness of the impugned transactions and therefore the additions....
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....ission income for providing facility to route the funds of another group company does not arise. The impugned additions have been made by the Ld. C.I.T(A) solely on the basis of surmises, conjectures, suspicion and on the basis of what he deems to be a prevalent practice in the market and not on the strength of any tangible material or evidence on record. Thus, in light of the settled and trite position of Law, i.e., suspicion however strong can't take the place of proof, as has been laid down in the judgments of the Hon'ble Apex Court in Lalchand Bhagat Ambica Ram vs. CIT reported in (1959) 37 ITR 288 (SC), Umacharan Shaw reported in 37 ITR 271 and Omar Salay Mohamed Sait reported in 37 ITR 151, he urged that the impugned additions on account of alleged commission income are unsustainable in the eyes of law and as such may kindly be deleted. 45. Lastly regarding Revenue's appeal challenging the restriction of addition of Rs. 23,32,813/- made by the Assessing Officer u/s.14A read with Rule 8D to Rs. 5 lac in the case of Stylish Construction Pvt. Ltd. for Assessment Year 2012-13 for which the following grounds of appeal has been raised by the Revenue:- "5. On the facts a....
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....ccount for the impugned A.Y. 2012-13. It was stated that apart from the indirect expenses enlisted above, all the remaining expenses debited in the P&L A/c are directly related to the business of supply of manpower and have no nexus whatsoever, either directly or indirectly to the earning of dividend income by the Assessee-company. 47. In the course of the assessment proceedings, the Assessee was required by the Ld. A.O to file details of the expenditure incurred for earning the exempt dividend income and also to explain as to why no disallowance was warranted u/s 14A of the Act. In response thereto, the Assessee submitted that it had made a suo-moto disallowance of Rs. 2,23,660/- u/s 14A of the Act in its return of income in connection with the dividend income of Rs. 9,94,717/- earned by it during A.Y. 2012-13. The Ld. A.O, however, in the assessment framed u/s 143(3) of the Act made an additional disallowance of Rs. 23,32,813/- u/s 14A of the Act r.w. rule 8D(2)(iii) of the Income-tax Rules, 1962 over and above Rs. 2,23,660/- already disallowed by the Assessee Company in its return of income. The said disallowance was computed by the A.O. by purportedly applying the method pre....
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.... of expenditure incurred in relation to exempt income. 49. On appeal before the first appellate authority, the Ld. C.I.T(A) restricted the additions made by the Ld. A.O to Rs. 5 lacs holding that the amount of disallowance u/s 14A cannot in any case exceed the exempt income, i.e., the dividend income of Rs. 9,94,717/- in the instant case. Therefore, for the sake of substantive justice, the Ld. C.I.T(A) found it reasonable and justified to restrict the disallowance u/s 14A r.w. Rule 8D to Rs. 5 lacs. The balance addition of Rs. 18,32,813/- was thus deleted by the Ld. C.I.T(A). The order of the Ld. C.I.T(A) to the aforesaid extent has been agitated in appeal by the Department before the Hon'ble ITAT. 50. Thus, Ld. Counsel submitted that without any satisfaction recorded by the Assessing Officer that the claim made by the assessee is not correct, he could not have proceeded to invoke the provisions of Rule 8D. 51. Regarding Revenue's appeal challenging alleged admission of additional evidence by the C.I.T(A) without giving opportunity to the A.O in violation of Rule 46A of the IncomeTax Rules,1962 in the cases of Angel Cement Pvt. Ltd. (A.Y. 2012-13), Delight Resorts Pvt. Ltd....
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....uce the directors of the investor companies. One of the most important ingredients to discharge the onus was to prove the creditworthiness of the investor company, which here in this case Assessing Officer has amply demonstrated that investor companies had hardly carried out any business operation and in their income tax returns, the income shown was negligible and none of these had that kind of book value so as to justify such a higher share premium. These companies were nothing but dummy and paper companies and conduit to give accommodation entry. The perusal of the bank statement revealed that they are receiving funds from various other companies and transferring the fund to other companies and they were acting like a conduit which normal happens in accommodation entries. 54. In so far as the contention of the ld. counsel that there has been rotation of funds from Bhushan Energy Ltd. to other group companies in the form of loan and advances given to the various companies who in turn have subscribed shares and paid share premium and the same money again has been routed back to Bhushan Energy Ltd., can only be proved from fund flow statement which was not there before the Asses....
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.... not exist', 'left', 'address not found'. • That the Assessee failed to produce directors of investor companies. • That the amounts were received through private placements. Since the contributors were personally known to the Assessee, the Assessee must be aware of the whereabouts. The corporate veil needs to be lifted. • That the Assessee failed to submit documents related to credits in the books. • That simply furnishing PAN or Assessment particulars/address was not enough. • That there was insufficient balance in bank accounts; that cheques issued to Assessee were cleared by way of receipt of transfer entry from another associate concern. • That the creditworthiness of investors was not established due to the reason that all the investor companies have nominal/meager income. That most of the Investor companies have no profit-making apparatus, no business activity. • That insofar as the advances and loans were concerned, no interest was paid, the purpose of advance was missing, huge fund transactions implied dummy transactions. • That the anus u/s. 68 cannot....
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.... Balance Sheet, Assessment Orders of the investors/lenders to establish source of funds in the hands of investor/lender companies. • That the A.O has not brought any adverse material to reject the explanations and evidences submitted by the Assessee except alleging the non-compliance of notices issued 131 and 133(6) in case of certain investors. • That neither the Assessee nor the investor companies are ultimate beneficiaries but there is routing of funds from Bhushan Steel Ltd. and/or Bhushan Energy Ltd. [specifically held so in 3 cases viz. Jawahar Credit & Holdings Pvt. Ltd. (A.Y. 2012-13), Jingle Bells Aluminium Pvt. Ltd. (A.Y. 2012-13) and Kasper Information Technology Pvt. Ltd. (A.Y. 2012-13)]  That nothing is mentioned in the assessment order regarding any statement of any person providing entry to the Assessee.  That there is no denial at any stage of assessment proceedings by any of the subscribers of share capital of having deposited money in the Assessee company. • That replies to notices issued u/s 133(6) were received from several investor companies. • That no material has been brought on record by the....
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....ers and the genuineness of the transactions. • That few investors/lenders did not reply to notices u/s 133(6) or attend summons u/s 131. • That few share applicants and lender companies have same address and common directors. • That there was no reason why the appellant could not produce principal officers/directors of companies when the entire money came from the same group and the appellant also belonged to the same group. The pattern of money movement raised suspicion of accommodation entries, page 4, para 7 of C.I.T(A)'s order in the case of Globus Realinfra Pvt. Ltd. (A.Y. 2013-14). 58. Since the additions have been made by invoking the deeming provision of Section 68, the same for sake of ready reference is reproduced as under: "68. Cash credits.--Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." Subsequently,....
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....entities as has happened in the instant case. For section 68 to apply, the receipts should essentially be of income nature. As per trite law, section 68 cannot be made applicable to capital receipts. 60. Thus, what is to be examined is whether, the onus to prove the identity and creditworthiness of the creditors and genuineness of the transaction stands established or not, firstly, with regard to the documentary evidences filed to substantiate the explanation; and secondly, whether Assessing Officer has brought anything on record to rebut the explanation and evidences filed by the assessee or here is any prior information that all the transaction is colourable. 61. The ld. CIT-DR relying upon the order of the Assessing Officer had contended that the assessees herein has availed accommodation entries wherein they have introduced the unaccounted/undisclosed fund into their books of account in the garb of share capital and or loan and advances. However, there is not an iota of material by way of any inquiry or information from Investigation Wing that, firstly, above named assessee companies have been found to be beneficiary of accommodation entry in any search or survey in the c....
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....act here in this case are that in all the cases Subscribers/ Lenders Companies for the relevant assessment year scrutiny assessments have been done u/s 143(3) or the cases have been reopened u/s.147 and thereafter assessments have been completed wherein in some cases exactly on the same amount additions have been made. Thus, in many instances there are double additions on the same amount. Ergo in view of these facts and evidences, the identity of the investors' stands established. 62. In so far as genuineness of the transaction is concerned, the funds have been received through banking channels and bank statement of all the investors/lenders company have been filed which prove conclusively that the assessee companies had received the funds from the said investors, who in turn have received money from the same group companies; and they have not only corroborated this fact in their confirmation along with copies of income tax return but also from their audited balance sheets filed alongwith their Income Tax Returns. 63. Again, in so far as the creditworthiness is concerned, these companies have made investments through banking channels duly reflected in the bank statement and h....
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....money of the assessee companies which has been routed through them or it is their unaccounted money which has been invested in the assessee company. In absence of any such finding or material, no adverse inference can be drawn in the case of the assessee companies. Thus, the identity and the creditworthiness of the investor/subscriber company stands fully established and so also the genuineness of the transaction. 64. Now coming to the arguments raised on behalf of the Revenue that in some of the case notices u/s 133(6) has not been served or responded and directors of the lender companies were not produced. First of all, it was only in few cases that notices were not responded to and in majority of cases they were duly responded. But be that as may be, where notices have not been served or not responded to, then also in the present cases their identity cannot be disputed, because in all the cases assessments have been done under scrutiny proceedings u/ss. 143(3) or 147; and in most of the cases appeals are also pending. Hence this factor, itself will not vitiate the case of the assessees. Similarly, even if directors were not produced, then there is no legal obligation on the a....
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....hich remand report was also called for which has been dealt and incorporated in the appellate order by the ld. CIT (A) also especially in the case of M/s. Jawahar Credit and Holding Pvt. Ltd. vs. ITO, Ward-13(3), New Delhi for Assessment Year 2012-13 in ITA No.5398/Del/2019. Thus, it is not a new plea which has been raised by the assessee counsel before us for the first time, albeit now it has been presented in detail manner in case of each and every assessee company which is evident from the annexures hereto of this order. Therefore, these fund flow statements duly supported by bank statement of other lender companies which are already part of record, even if it is reckoned as additional evidence, but they do not require Revenue-examination by the Assessing Officer which has been pleaded by the ld. CIT DR before us. 67. Thus, it is quite evident that in various chains of links and the flow of the funds, nowhere there are any unaccounted funds of any of the lender companies or if any of the assessee companies which can be said to have been introduced either by the assessee company or by the lender company. The source of the source has been proved at all levels, right from origin....
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....ptive addition in the hands of the assessee company. This is in gross violation of the provisions of the Act but also the principles of natural justice. The Act provides that before enhancing any income Ld. CIT (A) is required to give opportunity to the assessee. These additions have neither been disclosed in the return of income nor have been considered by the Assessing Officer in the assessment order and therefore, making such addition of new source of income is beyond the scope of enhancement by the ld. CIT (A). Hon'ble Jurisdictional High in the case of CIT vs. Union Tyres, (1999) 240 ITR 556 (Del) has observed and held as under: "The first appellate authority is invested with very wide powers under s. 251(1)(a) and once an assessment order is brought before the authority, his competence is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance and ranges over the whole assessment to correct the A.O not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by the A.O and determined in the course of assessment. However, there is a solitary but ....
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....t includes not only taxing an income but also holding that a particular income is not taxable. (iii) That, therefore, the C.I.T.(A) can tax the income which the A.O had, expressly or by clear implication, considered and held to be not taxable - irrespective of the question whether the income falls under a head with regard to which an appeal has or has not been preferred. However, the C.I.T.(A) cannot tax an item of income, the taxability of which had not been considered at all by the A.O. 71. Thus, such an addition made by the ld. CIT (A) is definitely beyond the scope of jurisdiction conferred upon the ld. CIT(A) on u/s.251 by introducing new source of income and that without giving any reasonable cause against enhancement. 72. Even otherwise also, since all the assessees are essentially group companies and the common management under one control, the question of any hypothetical charge of any commission income for providing facility to route the funds of any group company does not arise. The entire addition is based on surmises and presumption, because, the ld. CIT (A)'s reasoning is based practice prevalent in the market sans any tangible material or inquiry or ev....