TaxTMI 
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TaxTMI 
2019 (5) TMI 1893
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....e Learned Assessing Officer and partly confirming the additions made by concluding that incriminating material was found during the course of search in respect of GSD Trading & Financial Services Pvt. Ltd. 2. On the facts & circumstances of the case the appellant prays that, during the course of search no incrementing material is found or seized in connection with the investment in share capital of the company by GSD Trading & Financial Services Pvt. Ltd. The conclusion of Learned Commr. of Income Tax (Appeals) that in respect of GSD Trading & Financial Services Pvt. Ltd. incriminating material was found is erroneous and contrary to the facts of the case. 3. On the facts & circumstances of the case the appellant prays that in the order passed by Ld. Commr. of Income Tax (Appeals) that there is a reference to incriminating material found during the course of search in respect of the transaction of investment by GSD Trading & Financial Services Pvt. Ltd., is bad in law. In view of this the appellant prays that the order passed by Ld. Commr. of Income Tax (Appeals) by invoking the provisions of Section 153A and confirming the additions made of Rs. 7,91,00,0007- is not justified an....
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....ell as genuineness of the transactions. The Ld. Commr. of Income Tax (Appeals) has ignored the evidences, proof and the material produced before him. The appellant prays that addition made by the Ld. Commr. of Income Tax (Appeals), amounting to Rs. 7,91,00,000/-, based on such erroneous conclusion may be deleted. 9. On the facts & circumstances of the case the appellant prays that the appellant with the evidences and explanation has established the identity, credit worthiness and genuineness of the transactions and the claim of the appellant may be accepted and addition made by the Ld. Commr. of Income Tax (Appeals) by invoking the provisions of Section 68, amounting to Rs. 7,91,00,000/- may be deleted. 10. On the facts & circumstances of the case the appellant prays that the amount received towards share capital is in the nature of capital receipt and the provisions of Section 68 cannot be invoked while computing the total income of the appellant. The appellant prays that the addition made by the Ld. Commr. of Income Tax (Appeals) by invoking the provisions of Section 68 amounting to Rs. 7,91,00,000/- may be deleted. 11. The Ld. Commr. of Income Tax (Appeals) has erred in co....
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....remises of the assessee situated at B/47, Shakti Dhara Society Colony Road, Bapu Nagar, Ahmedabad. The search commenced on 28.01.2015 which was finally concluded on 27.03.2015. Thereafter, notice under section 153A of the Act was issued on 28.07.2016 which was served on the assessee on 05.08.2016. The assessee complied with the said notice by filing a return of income on 26.08.2016 declaring an income of Rs. 20,853/- which was similar to the income declared in the return filed under section 139(1) of the Act. During the course of search, no incriminating material with regard to issue of share capital or investors was found or seized as is clear from the copies of panchnamas placed at page Nos.20-21 and 22-25 of the paper book respectively. In these panchnamas there was no reference to finding of any material relating to share capital/investors and on page No.24 there is a reference to certain loose papers. However, none of them were incriminating and relating to the issue of share capital. The AO on the basis of search operation observed that assessee had issued the share capital consisting of 24,18,400 equity shares of face value of Rs. 10/- at Rs. 115/- to 16 parties. The AO als....
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....sessments. The AO did not deal with this issue in the assessment order. Besides the AO has not issued a single notice or letter to any of the 16 parties during 153A proceedings. The AO after taking into consideration the submissions and replies of the assessee found the same to be not acceptable. According to the AO, the assessee has failed to prove the genuineness and creditworthiness of 16 parties from whom the assessee had raised Rs. 30,23,00,000/- by way of share capital and share premium, the details whereof are given on page No.14 to 17 of the assessment order. According to the AO the assessee has failed to prove as to how the shares were issued at a premium of Rs. 115/- per share when the company was not having any substantial business to justify the charging of premium and ultimately the entire amount of Rs. 30,23,00,000/- was added to the income of the assessee as unexplained cash credit under section 68 of the Act by framing assessment under section 143(3) read with section 153A vide order dated 27.12.2016. 5. In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by deleting the addition to the tune of Rs. 22,32,00,000/- by holding that t....
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....se of search operation, no incriminating material relating to the share capital / share premium raised from various parties were found / seized. The Appellant Company had been categorical in stating that during the course of search no document was found indicating the non-genuine nature of the share capital / share premium. To buttress this argument, the copies of the Panchnama dated 28'" January, 2015 had also been filed by the Appellant company, which are placed at Page 254 to 256 of the Paper Book (Part-1) filed during the course of the appellate proceedings. 19.2 I have gone through the various Panchnamas drawn in the name of the Appellant Company, list of the books of accounts and other material seized during the course of the search operation. I am constrained to note that there is no reference to the share capital/share premium in any of the said seized documents. This particular observation is further reinforced by the fact that even in the showcause notice dated 23.11.2016 issued by the Assessing Officer, during the course of proceedings u/s. 153A of the Act, there is no reference to any seized material in relation to the issuance of shares. Even the assessment order....
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....on titled "Paper Book of Case Laws" containing Pages 1 to 259. The details of the case laws relied upon by the Appellant company are tabulated, as under:- Sr. No. Case Law Citation Courts Page No. 1. Ameeta Mehra Vs Additional Director of Income-tax 395 ITR 185(2017) Delhi High Court 1-13 2. Anil Mahavir Gupta V/s Asst. Commissioner of Income-tax 182 TTJ 265 (2017) Mumbai ITAT 14-39 3. Balasore Alloys Lts. V/s Asst. Commissioner of Income-tax ITA No.1166/621/667/ Mum/2015 Mumbai ITAT 40-56 4. Commissioner Of Income-tax-II, Thane Vs continental Warehousing Corporation (Nhava Sheva) Ltd. 374 ITR 645 Bombay High court 57-84 5. M/s Dalwala Securities Ltd. V/s Dy. Commissioner of Income-tax ITA no. 5932 to 5934/M/2009 Mumbai ITAT 85-99 6. Commissioner of Income-tax-20 Vs Shri Deepak Kumar Agarwal IT A no. 1709 of 2014(2017) Bombay High court 100-115 7 PCIT Vs Desai Construction Private Limited 387 ITR 552 (2017) Gujrat High Court 116-122 8. Gurinaer singh Bawa VsAsst. Commr, Of Income 150ITD40 Mumbai ITAT 123-129 9. Jai Lokenath Oil Extractions (P) Ltd Vs Deputy Commr. Of Income-tax, Central Circle - XXVII, Kol....
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....r that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this subsection pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate". 20.4 Further, in Para 65.5 of the CBDT Circular No. 7/2003 dated 05.09.2003 giving explanatory notes on the provisions relating to direct taxes in the Finance Act, 2003, the CBDT has clarified as under:- "65.5 The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years vending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. It is clarified that the anneal revision or rectification proceedings pending on the date of initiation of search under section 132 or requisition shall not abate. Save as otherwise provided in the proposed section 153A, section 153B and section 153C, all other provisions of this Act....
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....n other words pending proceedings will not be proceeded with thereafter. 20.8 It has been categorically observed in the above mentioned judgment that only the pending proceedings, as on the date of search shall abate meaning thereby that the completed proceedings attains finality. 20.9 The next question which needs to be answered is - What is the scope of assessment/ reassessment under the provisions of section 153Aof the Act for the assessments/reassessments which have abated and those which have attained finality ? 20.10 The use of the phrase 'so far as may be'in section 153A{l)(a) implies that all the provisions of the Act as contained under Chapter XIV prescribing the procedure for assessment or under any other Chapter of the Act with respect to the return of income filed U/s. 139 shall be applicable to the returns filed pursuant to notice issued U/s. 153A/153C of the Act. The applicability of those provisions which are inconsistent with the provisions of section 153A are restricted by the use of the phrase 'so far as may be'. 20.11 As such, for the assessments proceedings which are abated, the AO gets all the powers prescribed under the law, as if the a....
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....ed assessment/ reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending against finalised assessment/reassessments would not abate. iii. Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A, the assessments/reassessments finalised for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A(1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A(1)." 20.15 A similar view has been taken by the Hon'ble Bombay High Court (Nagpur Bench) in case of Murli Agro Products Ltd Vs. CIT 49 Taxman.com 172in ITA No 36 of 2009, wherein it has been held that on initiation of proceedings U/s. 153A, it is only the assessment proceedings that are pending on the date of conducting search U/s. 132 or making requisition U/s. 132A of the Act that stand abated and not the assessments already finalized. The relevant excerpts of the judgment are reproduced hereunder:- "9. What Section 153A contemplates is t....
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....12-2000 and search was conducted thereafter on 3-12- 2003. Therefore, in the facts of the present case, initiation of proceedings under Section 153A would not affect the assessment finalized on 29-12- 2000. 12. Once it is held that the assessment finalized on 29.12.2000 has attained finality, then the deduction allowed under section 80HHC of the Income-tax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143(3) of the IT. Act could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. 13. In the present case, there is nothing on record to suggest that any material was unearthed during the search or during the 153A proceedings which would show that the relief under Section 80 HHC was erroneous. In such a case, the A.O. while passing the assessmen....
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....ble Ahmedabad Tribunal in the case of Meghmani Organics Ltd. vs. DCIT (129 TTJ 255)[2010], has held that where there are no pending assessments as on the date of the search then the completed assessment shall rule the field and the income assessed there under cannot be disturbed. 20.20 The Visakhapatnam Bench of the Tribunal, in the case of KGR Exports vs. JCIT (ITA No. 494/V/2007), has held as under :- "Since section 153A overrides provisions of section 147 and 148, can it be the intention of the legislature to give enormous powers on the Assessing Officer for opening a completed assessment time and again? In our opinion, the legal restrictions and conditions prescribed for reopening the assessment still applies to the cases reopened u/s 153A. The intention of the legislature could not have been otherwise lest it should lead to unnecessary harassment upon the assessees. Though the completed assessments can be reopened under Section 153, the issues which have already been concluded in the earlier assessments should not be subject matter of reassessment unless some incriminating material concerning those issues were found during the course of search. Otherwise, in the concluded ....
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....210) has after considering the decision of All Cargo Global Logistics Ltd. held, as under:- "In view of provisions of section 153A, in respect of assessment years for which original assessments have already been completed on date of search, total income shall be determined by restricting additions only to those which flow from incriminating material found during course of search; So far as assessments pending on date of search are concerned, those assessments would abate in terms of second proviso to section 153A(1) and total income shall be computed afresh uninfluenced by fact whether or not there is any incriminating material found in course of search." 20.23 The Hon'ble Delhi High Court in the case of CIT vs. RRJ Securities [2016] 380 ITR 612, has clearly held that in the absence of any incriminating material, the concluded assessments could not be interfered U/s. 153A of the Act. In the facts of that case, it was held that the documents seized have no reference to the income of the assessee for relevant assessment year and, thus, the AO has no jurisdiction to make the re-assessment U/s. 153A. 20.24 The Hon'ble Delhi High Court in the case of Pr. CIT vs. Laia Jain ....
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....ddition can be made for a particular assessment year without there being an incriminating material that relates to the said assessment year which would justify such an addition. The Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax, Central IT, New Delhi Vs. Meeta Gutgutia [2018] 96 taxmann.com 468 (SC) has dismissed the SLP in the case and thus upheld the decision of Hon'ble Delhi High Court that invocation of section 153A to re-open concluded assessments of assessment years earlier to year of search was not justified in absence of incriminating material found during search qua each such earlier assessment year. 20.29 The Memorandum explaining the provisions of Finance Bill 2003, stated I that the then existing provisions contained in Chapter XIVB relating to block assessment prescribing single assessment of undisclosed income for block period, were introduced for avoidance of disputes, early finalization of such, assessments and reduction in multiplicity of proceedings. However, there were parallel proceedings carried on namely regular assessment proceedings as well as block assessments for undisclosed income resulting into multiplicity of procee....
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....he above observations of the AO clearly reveals that the AO had in his possession only the statement of Shri Rajesh Daftary and that also in relation to one of the share allottee company namely, M/s GSD Trading & Financial Services Pvt. Ltd.. Though the statement of Shri Rajesh Daftary relate to only one of the share subscriber, namely M/s GSD Trading & Financial Services Pvt. Ltd., but the A.O. had generalized the statement to all the share subscribers and held the entire share capital to be bogus in the proceedings u/s 153A of the Act. 21.2 Thus, the AO had without bringing any material on record concluded in a vague and generalized manner in Para 3.6 of the assessment order passed u/s 153A of the Act that the entire share capital is in the nature of accommodation entries, which is both factually and legally wrong. I am of the considered opinion that these conclusions drawn by the AO are purely based on conjectures and surmises and are not based on any cogent material or tangible evidence on record. 21.3 Another vague and unsubstantiated observation made by the AO is that the investing companies need not be directly owned by such accommodation entry providers, as many a times....
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....reference may be made to the judgment in the case of Narendra Singh v. State ofMP, 2004 SCC 1893. 21.7 It is well settled proposition of law that the court should safeguard itself against the danger of basing its conclusions on suspicions, howsoever strong they may be. It is equally well settled that the Courts decision must rest not upon suspicion but upon legal grounds established by legal testimony. Mere suspicion, however strong, cannot take the place of proof. Reliance is placed upon State v. Gulzari Lal Tandon AIR 1979 S.C. 1382 and JA, Naidu v. State of Maharashtra AIR 1979 S.C, 1537. 21.8 The above stated principles of the Indian Evidence Act are equally applicable and have been applied with full force in Income-tax proceedings. The Hon'ble Supreme Court in Chuharmal v. CIT [1988] 172-ITR-250 stated:- "what was meant by saying that the Evidence Act did not apply to proceedings under the Income-tax Act, 1961, was that the rigour of the rules of evidence contained in the evidence Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of the Evidence Act in proceedings before them, they were prevented f....
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....n all income. But the Act does not provide that whatever is received by a person must be regarded as income liable to tax. In all cases, in which a receipt is sought to be taxed as income, the burden lies upon the department to prove that it is within the taxing provision. Where however a receipt is of the nature of income, the burden of proving that it is not taxable, because it falls within an exemption provided by the Act, lies upon the assessee'. No Confession / Surrender of Income 22.0 A survey has been conducted on M/s GSD Trading & Financial Services Pvt. Ltd. and statement of Rajesh Daftary was recorded on 28.01.2015. Though the AO had relied very heavily on the statement of Shri Rajesh Daftary, but a perusal of the statement of Shri Rajesh Daftary reveals that there is no confession in the said statement for providing any accommodation entry to the Appellant Company. Thus, according to the Appellant Company, the contention of the AO in the assessment order that Shri Rajesh Daftary had provided accommodation entries is factually incorrect. 22.1 I have also noted that as per the data from the ROC website, it is clear that Shri. Rajesh Daftary was appointed as director on....
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....s Account alongwith schedules etc. The Financials of all the subscribers reflected the investment made by them in the Appellant Company. The Appellant Company had also submitted that all the payments were made through banking channels. Further, it was stated that there were no cash deposits appearing in the bank statements of the share subscribers, immediately before the payments had been made to the Appellant Company. Further, the parties have substantial net worth, taxable income and high bank balances. 23.2 To summarize, it was stated that by submitting the above documentation, the Appellant Company had discharged its onus to prove the identity and credit worthiness of the subscribers and genuineness of the transaction in the proceedings u/s 153A of the Act. Therefore, it was submitted by the Appellant Company that no addition u/s 68 of the Act is warranted. 23.3 The above submissions made in the proceedings u/s 153A of the Act before the AO were also made by the Appellant Company during the course of the appellate proceedings before the undersigned. No Investigation / Enquiries conducted by AO u/s 153A of the Act 24.0 The Appellant Company had also contended that if th....
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....to issue summons to parties u/s 131 of the Act or could have called for information u/s 133(6) of the Act. Instead of doing these exercises, the AO had passed the order with a pre-determined mind set and made the addition of the entire share capital without making any enquiries. 24.5 The Hon. Supreme Court in the case of CIT v. Orissa Corporation P. Ltd. 159 JTR 78 had held, as under:- "Held, that in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices u/s 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they -were creditworthy. There was no effort made to pursue the so called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable ....
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....Rajesh Daftary for all the share subscribers. Analysis of the Statement of Shri Raiesh Daftary 26.0 The Appellant Company had contended that the only ground on which the Assessing Officer had made the addition of the entire share capital is the statement of one Mr. Rajesh Daftary recorded u/s. 131(1A) of the Act on 28th January, 2015 at Rajkot. It had also been contended that in the statement of Mr. Rajesh Daftary, there was not a single piece of evidence to prove that the entire share application money received by the Appellant Company was not genuine. Further, it is contended that Mr. Rajesh Daftary had never admitted that he is engaged in the business of providing accommodation entries. 26.1 It is also stated by the Appellant Company that Mr. Rajesh Daftary has clearly stated in reply to Q.No.27 that the transaction of investment in M/s GSD Trading & Financial Services Pvt. Ltd., was done by Mr, Prakash Baghrecha, who was the director of the Appellant Company, at the relevant point of time. It had been contended by the Appellant Company that statement of Mr. Rajesh Daftary does not have any evidentiary value, as he was not the Director of the appellant company at the time....
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..... Self and ila Rajesh Daftary Selt and Wife 3. GSD Trading & Financial Services Pvt. Ltd. Self, ila R. Daftary Self and Wife 4. Arihant Software Pvt. Ltd. Self Self 5. Arihant Enterprise Self Self 6. Ami Investment Ila R. Daftary wife 7. Rajesh J. Daftary HUF Karta Self Q.3 Please mention the name of business concerns which are controlled by you. Ans. The only concerns controlled by me or my family members are as under: Sr. No. Name of Business Concern Name of the Family member Relation 1. D.S. Integrated Finsec Pvt. Ltd. Self and ila Rajesh Daftary, and Ami Rajesh Daftary Wife and Daughter 2. Samvedn Builders Pvt. Ltd. Self and ila Rajesh Daftary Selt and Wife 3. GSD Trading & Financial Services Pvt. Ltd. Self, ila R. Daftary Self and Wife 4. Arihant Software Pvt. Ltd. Self Self 5. Arihant Enterprise Self Self 6. Ami Investment Ila R. Daftary wife 7. Rajesh J. Daftary HUF Karta Self 26.5 As per the reply to Q. No, 2 & 3, it is evident that out of the abovementioned several entities, there is only one company, namely M/s GSD Trading & Financial Services Pvt. Ltd., which had subscribed to the share capital....
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....ing run from the above business premise: (1) M/s. D.S. integrated Finsec Pvt. Ltd. (2) M/s. GSD Trading & Financial Services Pvt. Ltd. (3) M/s. Samvedna Builders Pvt. Ltd. (4) M/s. Arihant Software Pvt. Ltd. (5) M/s. Arihant Enterprise, Prop. RajeshbhaiJ. Daftary (6)M/s. Amee Investment, Prop. Ilaben Rajeshbhai Daftary Recording of the statement is adjourned for lunch break. Recording of the statement resumed on 28-01-2015 at 3:30 P.M." 26.6 A perusal of the reply to Q. No. 6 & 7 of above statement reveals that M/s GSD Trading & Financial Services Pvt. Ltd., had been purchased by Mr. Rajesh Daftary through a party from Ahmedabad. The Question No. 24, 25 and 26 are directly related to the appellant company and being important are reproduced along-with the relevant replies, hereunder.:- "Q.24 Please furnish details of investment by your company in Geetanjali Space Pvt Ltd. Ans. Sir, I do not have complete details at the moment. Though the company M/s. GSD Trading & Financial Services Pvt ltd had investment was mad when I was not director of the company. This investment was sold in the financial year 2010-11. At that time also, Sh. Prakash Bagrecha was the director o....
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.....2010 Geetanjali Space Pvt Ltd 5000000 23.03.2010 Daffodil Commotrade Pvt Ltd 5000000 23.03.2010 Geetanjali Space Pvt Ltd 4450000 25.03.2010 Damodar Tie up Pvt ltd 4000000 25.03.2010 Geetanjali Space Pvt Ltd 3000000 29.03.2010 Damodar Tie Up PvtLtd 4900000 29.03.2010 Geetanjali Space Pvt Ltd 2100000 29.03.2010 Damodar Tie Up Pvt Ltd 10100000 31.03.2010 Geetanjali Space Pvt Ltd 5000000 23.02.2010 Jasmine Vintrade Ltd 9790000 23.02.2010 Geetanjali Space Pvt Ltd 4350000 Please go through the same and explain the above entries. Ans. Sir, This transaction was done when Mr. Prakash Bagrecha was director of the company and when he controlled affairs of the company. I will contact Mr. Prakash Bagrecha and submit the required details in this Plater". 26.7 In reply to the query on investment made by M/s GSD Trading & Financial Services Pvt. Ltd. in the Appellant Company, it is clearly stated by Shri. Rajesh Daftary that he does not have the complete details. In fact, Shri. Rajesh Daftary had failed to submit any d....
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....o scrutinize the documents. 26.11 In the case of Dayawanti through'Smt Sunita Gupta &Anr Vs. CIT &Anr. (2016) 290 CTR 0361 (Del) : (2016) 143 DTR 0209 (Del) : (2017) 390 ITR 0496 (Delhi), the HonTDle Delhi High Court had held that when statements were made under oath and were part of record and continued to be so, their probative value is undeniable; hence assessee's argument that they could not be acted upon or given any weight is insubstantial and meritless. The relevant portion of the said judgment is reproduced hereunder:- "20. The lynchpin of the assessee's submissions on this aspect is also that the statements were not recorded during the search but later and that they cannot be considered of any value. This court is un-persuaded with the submission. The search was conducted on 22-03-2006. Various materials: documents, agreements, invoices and statements in the form of accounts and calculations were seized. On 18 April 2006 and 3 May 2006, the assessee's sons (including one of the appellants, Abhay Gupta) recorded statements under oath; the assessee too made her statement under oath, admitting that though returns were filed ostensibly on her behalf, she wa....
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....s examined thoroughly in the original assessment proceedings by calling upon the assessee to submit the various details such as share application form, bank statements, ITRs, confirmations, PANs and financial statements which were duly submitted before the AO and AO after examining all these details and also after carrying out independent verifications by issuing notice under section 133(6) of the Act to 16 parties framed the assessment by accepting the share capital/share premium as genuine. The Ld. A.R. also referred to the reply filed by the M/s. GSD Trading and Financial Services Pvt. Ltd. a copy of which is filed at page No.15 of the paper book. The Ld. A.R. submitted that the identity, genuineness and creditworthiness of the said investor stood examined by the AO in the original assessment proceedings which culminated in framing the order under section 143(3) of the Act dated 18.03.2013. The Ld. A.R. submitted that on the date of search the assessment has already attained finality and thus has not abated on the date of search. Therefore, any addition to be made in the assessment framed under section 143(3) read with section 153A of the Act has to be on the basis of incriminat....
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....sh Daftary can not have any evidentiary value so far as the investment by M/s. GSD Trading and Financial Services Pvt. Ltd. is concerned. The Ld. Counsel thereafter referred to the question No.26 in which a chart showing investments in the assessee company is tabulated which includes date of investments, corresponding receipt in Kotak Mahindra Bank and investment amount etc. The Ld. A.R. specifically referred to page No.66 of the paper book which contains the details of investments made by M/s. GSD Trading and Financial Services Pvt. Ltd. and the said payment details with the investment chart provided in the statement in question No.26. The Ld. Counsel contended that there is nothing in the statement of Shri Rajesh Daftary which could be construed as incriminating material found during the course of search. The Ld. Counsel drew the attention to the Bench to page No.64 to 83 the documents in the form of application for allotment of equity shares, payment details, copies of bank statements, audited annual accounts, memorandum of article of association and ITR of M/s. GSD Trading and Financial Services Pvt. Ltd. and also the details of the bank account from where the payments were mad....
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....s had taken place on 28.02.2010 and 31.03.2010. The Ld. D.R. stressed upon the statement of Shri Rajesh Daftary who denied to have any knowledge of the investments made by the M/s. GSD Trading and Financial Services Pvt. Ltd. in the assessee company by citing the reason that he was not a director or shareholder on the date of investment. The Ld. D.R. relied heavily on the order of authorities below to emphasize his arguments that the statement of Shri Rajesh Daftary was a sufficient and incriminating material and justifying the addition in the hands of the assessee. Finally, the Ld. D.R. submitted before the Bench that order of Ld. CIT(A) deserved to be affirmed on the issue of upholding of Rs. 7,91,00,000/- addition qua investment by M/s. GSD Trading and Financial Services Pvt. Ltd. as the same is based upon incriminating material and the appeal of the assessee deserves dismissal. 9. We have heard the rival submissions of both the parties and perused the material on record including the impugned order and decisions cited by the Ld. A.R. The undisputed facts are that during the year the assessee raised share capital of Rs. 30,23,00,000/- comprising Rs. 2,41,84,000/- towards share ....
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....n of the Hon'ble Bombay High Court in the case of CIT vs. Continental Warehouse Corporation Ltd. 374 ITR 645 and Murali Agro Products Ltd. Vs. CIT 49 taxmann.com 172 Nagpur Bench. However, the Ld. CIT(A) sustained the addition to the extent of Rs. 7,91,00,000/- by holding that the statement of Shri Rajesh Daftary which is only in respect of investment made by one shareholder M/s. GSD Trading and Financial Services Pvt. Ltd. treated as incriminating material on the ground that he has failed to submit any plausible explanation about the investment made in the assessee company and no documentary evidence was furnished by the said person in relation to the investment made by M/s. GSD Trading and Financial Services Pvt. Ltd. We observe that investigation wing of the department conducted a survey operation on M/s. GSD Trading and Financial Services Pvt. Ltd. and during the course of such survey a detailed statement of Shri Rajesh Daftary was recorded in relation to the investment made by M/s. GSD Trading and Financial Services Pvt. Ltd. under section 131(IA) of the Act on 28.01.2015. We have carefully perused the statement of Shri Rajesh Daftary and find that nowhere Shri Rajesh Daftary ....
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....he proof, documents and evidences in respect of said investment in the original assessment proceedings as well as the proceedings under section 153A of the Act in the form of share application, bank statement, audited financial statement and memorandum and article of association, ITRs, name of the bank from where the payments were made. The said investments were duly reflected in the books of GSD Trading and Financial Services Pvt. And were also shown in the schedule of investments forming part of the Balance Sheet as on 31.3.2010. Ltd The AO also verified the said transactions by issuing notice under section 133(6) of the Act to the said party which was replied by the investor confirming the investment and by filing all the necessary details and thus the AO accepted the genuineness and creditworthiness of the transactions in the original assessment proceedings. We find merit in the submissions of the Ld. A.R. that amendment in section 68 covering the share capital is applicable from A.Y. 2013-14 and is not applicable to the year under consideration. The case of the assessee is supported by the various decisions of the Hon'ble Bombay High Court in the case of Pr. CIT Vs Apeak Infot....
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.... Pvt. Ltd. (2015) 56 taxmann.com 206 Delhi, ITO Exim vs. Finlease Pvt. Ltd. 4778/Del/2013 A.Y. 2006-07 order dated 08.03.2019, P.R. Securities Ltd. vs. DCIT in ITA No.4978/Del/2014 A.Y. 2005-06 order dated 23.08.2018. Finally, the Ld. D.R. prayed before the Bench that since the assessee has failed to prove the genuineness and creditworthiness of the investors and thus the order of Ld. CIT(A) may to be set aside and order of AO may kindly be restored. 14. The Ld. A.R., on the other hand, submitted that the Ld. CIT(A) deleted the addition on jurisdictional and legal issue under section 153A of the Act on the ground that no addition could be made in respect of share capital De hors the incriminating material found during the course of search. The Ld. A.R. submitted that this legal aspect/jurisdictional issue has not been challenged by the Department so far as investments made by 15 investors are concerned qua absence of incriminating material during search. The Ld. A.R. submitted that once it is established that there is no incriminating material no addition can be made while passing the order under section 153A of the Act and nothing would survive thereafter and therefore the ground....
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....ess and creditworthiness of the shareholder if the assessee has given names and addresses of the shareholder to the AO. The assessee relied upon the following decisions in defense of his arguments:- "1. SLP rejected by Supreme Court on Lovely Exports Pvt. Ltd. 319 ITR 5 299 ITR 268 2. SLP rejected by Supreme Court on Chain House International (P) Ltd. 103 taxmann.com 435 & 98 taxmann.com 47 3. Principal Commissioner of Income Tax, Panji v/s Paradise Inland Shipping (P.) Ltd 84 Taxmann.com 58 4. Commr. Of Income tax v/s Creative World Telefilms Ltd. 333 ITR 100 5. Commr. Of Income tax v/s Oasis Hospitalities Private Limited 333 ITR 119 6. Commr. Of Income tax v/s Gangour Investment Ltd. 335 ITR 359 7. Commr. Of Income tax v/s Siri Ram Syal Hydro Power Private Limited 196Taxman 441 8. Comrnr. Of Income tax v/s HLT Finance Pvt. Ltd. 12 Taxmann.com 247 9. Commr, Of Income Tax, Central-Ill Vs Anshika Consultants (P) Ltd. 62 Taxmann.com 192 10.Commr. of Income tax v/s STL Extrusion P. Ltd. 333 ITR 269 11. Commr. Of Income tax v/s GP International Limited 325 ITR 25 12. Asst. Commr. Of Income tax v/s Venkateshwar Ispat (P) Ltd 319 ITR 393 13. Commr. Of Income Tax Vs Fair finv....