TaxTMI 
TaxTMI 
2021 (5) TMI 156
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...., Ld. CIT(A) erred in confirming the passing assessment order without providing opportunity to rebut the material relied by Ld Assessing Officer during the reassessment proceedings examination which is against the principal of natural justice and hence the said order is liable to be quashed. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming addition in respect of the Share Capital of Rs. 4,03,50,000/- as unexplained cash credit u/s. 68 of the Income Tax Act, 1961 without corroborative evidences. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not permitting of business loss of Rs. 1,19,291/- 6. On the facts and circumstances of case and in law, Ld. CIT(A) erred in confirming initiation of penalty proceeding u/s.274 r.w.s 271 (1) (c) of Income Tax Act 1961. 7. On the facts and circumstances of the case and law the Ld. CIT (A) erred in set-asiding for fresh calculations of interest under section 234A, 234B and 234C of the Income Tax Act, 1961. As evident, the assessee is aggrieved by confirmation of certain addition of unexplained cash credit u/s 68. In ground nos. 1 to....
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....e alleged to be bogus in nature. The shares of face value of Rs. 10/- each were stated to be issued at premium of Rs. 90/- per share to 16 entities during the year as detailed in para 3.1.5 of the assessment order. 4.2 During the course of survey u/s 133A on 09/10/2014, Shri Rajesh Agarwal, an associate of the assessee group, in his statement under oath u/s 131, made admission of sum of Rs. 11.13 Crores as undisclosed income of the group. However, the said statement was retracted immediately on 16/10/2014 by submitting an affidavit that the statements were extracted by applying undue influence without there being any incriminating evidences on record. 4.3 The findings of search operations revealed that entities of Shri Rajesh Agarwal received unsecured loan / share application money of around 30 Crores from various Kolkata based parties. Shri Rajesh Agarwal was stated to be director of around 28 entities including that of assessee. The assessee is stated to have received total sum of Rs. 403.50 Lacs from 16 entities during this year as detailed in para 3.1.5 of the assessment order. The notices issued u/s 133(6) to all these entities to confirm the transactions remained un-se....
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....caped assessment in the hands of the assessee. Accordingly, the legal grounds challenging reassessment proceedings were dismissed. The reasons that triggered reassessment proceedings have already been extracted in para 6.0 of the impugned order and we have also perused the same. 5.3 On merits, the assessee assailed the quantum addition by way of elaborate submissions which have been extracted in para 7.1 of the impugned order. The assessee drew attention to the documents submitted by the assessee with respect to each of investor entities to establish their identity, creditworthiness and genuineness of the transactions in terms of requirements of Section 68. It was submitted that each and every shareholder confirmed the stated transactions and therefore, findings rendered by Ld.AO run contrary to the provisions of Sec. 68. The assessee maintained that by submitting these details, it had discharged the primary onus of proving the stated transactions. All the investor entities had sufficient funds to invest in the assessee company. Reliance was placed on catena of judicial pronouncements to support the said submissions. These have already been tabulated in assessee's submissions as....
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....This also is incorrect as the AO had in-depth information not only about the 16 companies which have invested in the assessee company but also about the 67 companies which have invested in the said 16 companies. The AO had made exhaustive enquiry and analysis before reaching to this conclusion. The Learned Counsel has also alleged that the Third Party Unilateral Act cannot be the basis of addition but the addition, in this case, has been made not on the basis of Third Party Unilateral Act but on the basis of the assessee's own admission supported by other corroborative evidences. In the light of these facts and circumstances, the addition made by the AO is confirmed. The grounds of appeal are dismissed. Aggrieved the assessee is in further appeal before us. Our findings and Adjudication 6. Upon careful consideration, as rightly pointed out by Ld. AR, the issue is squarely covered in assessee's favor by the earlier decision of coordinate bench of this Tribunal in assessee's own case for AYs 2009- 10 & 2010-11, ITA Nos.625 & 626/Mum/2019 common order dated 04/12/2020. In the said order, the bench has relied upon another decision of Tribunal rendered in the case of assess....
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....f cheque, cheques deposit slips, copy of assessee's bank statement, copy of share certificates, copy of source of funds, copy of board resolution, certificate of incorporation, copy of Memorandum of Association (MOU) etc. with respect to 11 investor entities. However, the same would not prove the genuineness of the transactions. It was observed that investor entities did not have any genuine business activity which was evident from the fact that main object of the investor entities contained all activity possible and would indicate the mala-fide intentions of the assessee. Any genuine company with a real motive of doing business would have a concrete object to be followed. Further, there was no justification for Kolkata based entities to make investment in Mumbai based entity and that too, at a premium of Rs. 90/- per share. At para 7.6, it was noted that all the entities purchased the shares of the assessee at premium of Rs. 90/-per share but they exited at face value of Rs. 10/- per share. Further, the retraction would not have any relevance in the light of decision of Mumbai Tribunal in Hiralal Maganlal and Co V/s DCIT (97 TTJ 377). The case laws being relied upon by the assesse....
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.... issued at face value of Rs. 10/- per share. The Share Capital of the assessee increased by Rs. 207 Lacs during the year under consideration. In the light of settled legal position as enumerated by us in the opening paragraphs, it is quite evident that the primary onus was on assessee to prove the fulfilment of three ingredients of Sec. 68 viz. (i) identity of the investor; (ii) creditworthiness of the investors; & (iii) genuineness of the transactions. 8.2 To demonstrate fulfillment of these ingredients, the assessee had during the course of assessment proceedings as well as appellate proceedings, furnished following broad documentary evidences with respect to all the 11 entities: - (i) Share Application Form (ii) Copy of Cheque (iii) Copy of Cheque Deposit Slip (iv) Copy of investor's Bank Statement (v) Copy of Share Certificate Counterfoil (vi) Copy of Audit Report along with financial statements of the investor entity (vii) Copy of ITR acknowledgement of the investor entity (viii) Copy of Certificate of incorporation of investor entity (ix) Memorandum & Articles of Association of investor ....
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....erusal of all these documentary evidences, it could safely be concluded that the assessee had successfully discharged the onus casted upon him u/s 68 and the onus was on revenue to rebut assessee's evidences. 8.3 Proceeding further, we find that the sole basis of making impugned addition is the statement of one of the directors as recorded during the course of survey proceedings u/s 133A. However, this statement has been retracted within a span of 7 days. It is settled law that statements recorded during the course of survey proceedings would not have much evidentiary value unless the same are backed by credible evidences. This position has been settled by Hon'ble Supreme Court in the case of CIT V/s S.Khader Khan & Sons (25 Taxmann.com 413). The CBDT instructions No. F.No.286/98/2013-IT (Inv. II) dated 18/12/2014 also discourages confessional statements without any credible evidences. No incriminating material is shown to have been found during the course of survey proceedings. 8.4 We also find that learned CIT(A) has gone by irrelevant considerations to confirm the impugned additions. The object clause of the investor entities would have no relevance vis-à....
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....of the Investor (ii) Creditworthiness of the investor (iii) Genuineness of the transactions. The assessee has furnished the address, PAN, Certificate of incorporation, MOA & AOA of the subscribers who subscribe the shares. To prove the credit-worthiness the assessee has given the certificate source of fund, Balance sheet, Profit & Loss Account and Return of income of share applicants. The assessee has submitted the following data for the assessment year 2009-10 and 2010-11. ......... The investor companies have positive net worth and only invested 1.6% and 1.2% of their net worth. The assessee submitted Form of application of shares, Photocopy of the cheque receipt towards the share application, photo copy of the bank deposit slip reflecting the deposit of the above cheque, extract of Bank Statement of all subscribers duly highlighting the entries of share money and premium money given by them to the appellant company along with copy of board resolution, resolving the decision of investment into appellant company. To prove the genuineness of the transaction the assessee produced the confirmation, bank statement, financial of the lender. Nothing came into noticed t....
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....td Yes No No 10. Rajlaxmi Dealcom P. Ltd No Yes Yes 11. Rexnox Trexim P Ltd. Yes Yes Yes 12. Vanila Tieup P Ltd No Yes No *MDIL - Assessee (Moongipa Dev. & Inf. Ltd.) **BBPL - Sister Concern of the assessee (M/s Bini Builders Pvt. Ltd.) Regarding remaining 4 entities i.e. (i) M/s Beaulah Enterprises Pvt. Ltd.; (ii) M/s Bestway Hire Purchase Pvt.Ltd.; (iii) M/s Pee Dee Financial Services Ltd.; (iv) M/s Reality Barter Pvt. Ltd., we find that the assessee had furnished similar sufficient documentary evidences as follows: - (i) Share Application Form (ii) Copy of Cheque (iii) Copy of Cheque Deposit Slip (iv) Copy of investor's Bank Statement (v) Copy of Share Certificate Counterfoil (vI) Copy of source of funds certificate (vii) Copy of Audit Report along with financial statements of the investor entity (viii) Copy of ITR acknowledgement of the investor entity (ix) Copy of PAN Card (x) Copy of Certificate of incorporation of investor entity (xi) Memorandum & Articles of Association of investor entity (x....