TaxTMI 
TaxTMI 
2021 (5) TMI 414
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.... case. 2. That the assessment order passed u/s 143(3)/147 of the Act and upheld by the Ld. CIT(A) is also not tenable because of invoking provisions of law contained u/s 147 of the Act, without having any of his independent satisfaction thereupon, to the information received m the Investigation Wing of the Department. 3. That the assessment order passed u/s 143(3) of the Act and upheld by the Ld. CIT(A) is wither not tenable under the law because the additions made on the basis of information received from Investigation Wing of the Department, on the basis of which reasons for reopening were recorded and the reassessment proceedings were invoked, have been deleted by Ld. CIT(A). 4. That the Ld. CIT(A) grossly erred in law in confirming the additions of Rs. 99,98,400/- out of the additions amounting to Rs. 64,66,80,000/- made by the Ld. AO u/s 68 of the Income Tax Act, 1961 despite the fact that the appellant company has discharged the burden complete in all respects as has been prescribed u/s 68 of the Income Tax Act 1961, d all evidences were produced and placed upon records. 5. That the Ld. CIT(A) grossly erred in confirming the addition of com....
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....nder section 132 of the Act in absence of any other incriminating evidence found /seized during the course of the search to substantiate addition made by the AO during the course of assessment proceedings under section 153A of the Act?. 4. The appellant craves to be allowed to add and alter any fresh ground(s) of appeal and / or delete any of the ground(s) of appeal." 4. Briefly stated facts of the case in chronological order as culled out from the orders of lower authorities are that: (i) the assessee claimed to have engaged in building and developing of Real Estate. During the year, the assessee company received investment from 80 entities in share capital of Rs. 64,66,80,000/-against subscribers of 77,800 shares having face value of Rs. 10 each at a share premium of Rs. 590/- per share. (ii) the assessee filed its return of income for the year under consideration u/s 139(1) of Income-tax Act, 1961 (in short 'the Act') on 30/03/2010, declaring income of Rs. 2,389/-. The return was processed u/s 143(1) of the Act. (iii) subsequently, on receipt of information from the Investigation Wing of Income Tax Department, Kolkata that assessee was one ....
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....share subscribers, namely, M/s Joyprit Hotels P. Ltd. and M/s. Joyprit Plastics Dealers Private Limited. The enquiry report has been reproduced in the assessment order, wherein companies were not found in existence at the address provided. (xi) the Assessing Officer supplied a copy of statement of Sri Pramod Ramden Sharma and Sh. Praveen Kumar Agrawal, wherein Sh. Pramod Ramdin Sharma admitted of using two of the share subscribers, i.e., M/s Joyprit Hotels P.Ltd. and M/s. Joyprit Plastic Dealers P. Ltd., for providing accommodation entries. The assessee, on the other hand, obtained a sworn affidavit from Sh. Pramod Ramdin Sharma and furnished in the office of the Assessing Officer on 21/12/2016. The affidavit mentioned that investment made by both those shares subscriber companies were out of disclosed sources. The Assessing Officer stated that in view of paucity of time, he could not act upon the affidavit. (xii) the Assessing Officer has reproduced statement of Sh. Pramod Ramdeen Sharma, who was Director of those companies. His statement was recorded by the Investigation Wing, Kolkata, in the year 2014. In said statement, Sh. Pramod Ramdeen Sharma admitted of wo....
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....el/2015. The assessee also challenged validity of the reassessment proceeding under section 147 of the Act in view of a specific provision under section 153C of the Act for dealing such allegations. (xv) The Learned CIT(A) considered submission of the assessee, however, rejected its contention on the validity of reassessment proceedings. The Ld. CIT(A) upheld the validity of the reasons recorded as well as upheld approval granted by the learned Pr. CIT for issue of the notice under section 148 of the Act. On the issue of the merit of the addition, the Ld. CIT(A) considered the documents filed by the assessee for discharging its onus under section 68 of the Act, which included copy of acknowledgement of the income-tax return filed by the share subscribers stating their permanent account number (PAN), relevant extract of bank statement of subscribers, company master data available with the Registrar of Companies in respect of the subscriber companies. The Ld. CIT(A) relied upon decision of the Tribunal in the case of M/s Prabhatam Investment Private Limited (supra). In view of the decisions relied upon, the Ld. CIT(A) analyzed the documents furnished by assessee in case of e....
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....nferencing facilities. The assessee filed a paper-book in two volumes (Pg- 1 to 316 and Pg. 1 to 55) through emails. 6. The Learned Counsel of the assessee challenging the validity of reassessment proceedings supported ground No. 2 of the appeal. He referred to copy of the reasons recorded for reopening available at Pg. 19-23 of PB-1 and the information on the basis of which, reasons were recorded, available at Pg. 24-29 of PB-1.He referred to money trail reported by the Investigation Wing of Kolkata in various Annexures appended to reasons recorded. According to him, the Investigation Wing reported cash deposit of Rs. 15.26 crores in 7 bank accounts maintained by six proprietary concerns (concerns listed in Annexure-C). This amount was then transferred by cheques/RTGS into bank accounts of entities i.e. proprietary concerns, listed in Annexure C-1. Thereafter, the money travelled to bank accounts of entities listed in Annexure-I. Then, money travelled further to entities listed in Annexure-S and finally the money landed in bank accounts of 21 entities i.e. the real beneficiaries, listed in Annexure B. The total money of Rs. 23.49 crores has been claimed by the Investigation Win....
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....rores from the information supplied by the Investigation Wing. 6.4 The learned Counsel also submitted that from the reasons recorded, it is evident that the Ld. AO even didn't knew as to from which entity the amount of Rs. 1.93 crores was received by the assessee company. 6.5 He also submitted that reasons recorded are based on suspicion, which is evident from the words used in reasons recorded, i.e., "it appears that assessee M/s Omkam Developers Ltd. has received bogus share capital/share premium to the tune of Rs. 1.93 Crores". He further submitted that reopening has been made on borrowed satisfaction of Investigation Wing, Kolkata without bringing on record any material fact substantiating that the assessee company was involved in the modus operandi of receipt of accommodation entries. He submitted that the Assessing Officer has just accepted the information in a mechanical manner and failed to record an independent satisfaction. 6.6 It was submitted by the Learned Counsel that Hon'ble High Court and Hon'ble ITAT has time and again held that recording of reasons after due application of mind is sine qua non for valid notice u/s 148 of the Act. Thus, he requested tha....
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.... made by Ld. AO or upheld by Ld. CIT(A).Reliance was placed on the judicial pronouncements in following cases: i. Ranbaxy Laboratories Ltd. vs. CIT, 336 ITR 136 (Delhi)(HC) ii. CIT vs. Jet Airways Limited, 331 ITR 236 (Bombay)(HC) iii. INS Finance & Investment Pvt. Ltd. vs. ITO, ITA No. 9266/Del/2019 dt. 26/10/2020 (Para 28 to 30; Page 162-163, PB) 7.4 In support of ground no. 4 of appeal, the learned Counsel submitted that the Ld. CIT(A) confirmed addition u/s 68 of the Act in respect of four (4) subscribers on the pretext that those entities had investible funds of only Rs. 1,02,500/- each. In this regard, he submitted that the assessee company had furnished audited financials of those subscribers for FY 2006-07 and couldn't furnish audited financials for FY 2008-09, however, the fact of investment made by those companies was verifiable from the perusal of bank statement and confirmation of account. 7.5 In respect of capacity to pay it was submitted that by now it has been judicially settled that it is not necessary that those funds must be own funds or out of earnings but same could also be in the nature of borrowings. (INS Finance & Investment P....
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....peal of the assessee, the Learned DR submitted that addition has been filed on the basis of lack of creditworthiness, which is evident from the information filed by the assessee itself. Regarding ground No. 5 of the appeal of the assessee, she submitted that in view of the fact of accommodation entries received which has been upheld by the learned CIT(A), the corresponding commission has been rightly upheld by the LearnedCIT(A). 8.2 With reference to the grounds raised by the Revenue in its appeal, the Learned DR relied on the order of the Assessing Officer and submitted that the action of the Learned CIT(A) in deleting the addition is not justified. She submitted that the Inspector of Income Tax Department at Kolkata could not find those two share subscriber companies, namely, M/s. Joyprit Hotels Private Limited and M/s Joyprit Plastic Dealer Pvt. Ltd. at the addresses provided by the assessee. She submitted that those entities were frequently changing their addresses even on the website of Registrar of companies in order to avoid investigation by the tax authorities. The fact of non-existence of those two parties and other parties verified in the process of notice issued under....
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....ther submitted that the Assessing Officer has relied on the statement of Sri Pramod Ramdin Sharma recorded by the Investigation Wing and no cross-examination was provided to the assessee despite being specifically asked many times during assessment proceeding. He submitted that the Ld. CIT(A) has followed binding precedent of the Tribunal in the case of Prabhatam Investment Ltd. (supra) and Hon'ble Bombay High Court in the case of Gagandep Infrastructure Ltd. (supra). 10. We have heard rival submission of the parties on the issue in dispute raised in the cross appeals. As far as ground No. 1 of the appeal of the assessee is concerned, the assessee has challenged the validity of the reassessment proceeding on the ground that approval for issue of the notice under section 148 of the Act was granted by the LearnedPr.CIT in a mechanical manner and without application of mind and, therefore, reassessment proceeding must be quashed. For adjudicating this issue, the reasons recorded by the Assessing Officer and relevant proforma of approval granted by the Pr. CIT are reproduced as under: "Reason for the belief that income has escaped assessment in the case of M/s, Omkam Develo....
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....entioned in the STR were requisitioned from the Bank and scrutinized. The 31 Bank accounts- were opened atdifferent, branches of the Development Credit Bank. The following, facts emerged from the scrutiny of Bank Accounts: I. There were 7 Bank Accounts belonging to 6 entities in which cash of Rs. 15.26 crore was deposited in the F.Y.-2008-09: The cash deposited were swiftly Transferred to other entities through Cheques/RTGS. These-6 entities are proprietorships. The detail is given as per Annexure-C. The funds from other entities through Cheques/RTGS were also received in these accounts. The details of another 21proprietorships given are STR is as per Annexure-C1. II. The find from the entities mentioned in Annexure-C and C1 were transferred to a number of entities which are mostly entities already identified as the companies controlled by the entry operators, few of them have been listed in Annexure-1. III. The fund was rotated among the entities detailed in Annexure-C, C1 and Annexure-1 IV. There were 6 Bank Accounts Belonging to 6 Companies in which funds were received from mostly entities discussed in Annexure-C, C1 and Annexure-1 and the sam....
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....ed and noticed that the share premium; of assesses was increased to Rs. 81,28,52,000/- in the relevant year from Rs. 17,69,50,000/-in the preceding year. As discussed in earlier paras, the assessee has obtained such entries through above mentioned modus-operandi, it is actually assessee's own money (cash) which was rotated through such channel. This cash was out ofhis unaccounted income. I have reasons to believe that an amount of Rs. 1.93 crores has escaped from the Assessment for the A.Y. 2009-10 which was chargeable to tax. I am also satisfied that on account of failure on the part of the assessee to I disclose truly and fully all the material facts necessary for assessment for the j above assessment year, the income chargeable to tax to the tune of Rs. 193.00 Lakh as escaped assessment with the meaning of Section 147 of the IT Act 1961 I have perused the information received from the Investigation Wing,Kolkata The Investigation Wing of the Department has sent comprehensive detail comprising inter alia the beneficiary's name, value of entry taken etc. In the aforesaid case as per record from ITD, return of income was filed on declaring Rs.....
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.... noting put up but at the same time, satisfaction has to be recorded of the given case, which can be reflected in the briefest possible manner. The Hon'ble High Court further observed that in that case the exercise appeared to have been the ritualistic and formal rather than meaningful, which is the rationale for safeguard of an approval by a high-ranking officer. Thus, in the instant case, mere mentioning of "yes' for approval, without any other evidence of application of the mind, amounts to mechanical approval by the LearnedPr.CIT. 10.2 Further in Column No. 7 of the proforma, the section for invoking reassessment has been recorded as 147(b) of the Act. During the relevant period, section 147(b) was no longer in existence. This shows that the Ld. AO has filed the Proforma in mechanically manner and Ld. CIT has also approved the same mechanically. In the case of Madhu Apartment Private Limited vs. ITO, ITA.Nos.3869 & 3870/Del./2018 wherein the Tribunal, Delhi Bench, vide order dated 01/02/2021 held as under: "7. After considering the rival submissions, we are of the view that the issue is covered by the Order of ITAT, Delhi G-Bench, Delhi in the case of VRC Township P....