TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 318
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tax Act, 1961 without appreciating the fact that the addition made by the Assessing Officer was based on incriminating loose papers seized from the premises of 250, Sagar Plaza, M.P. Nagar, Zone-2, Bhopal. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in inferring that the assessing officer did not record the satisfaction before initiating the proceeding u/s 153C of the Act particularly when the assessing officer duly recorded his satisfaction before commencing the proceedings u/s 153C of the Income Tax Act 1961 and which was available on record. 3.On the facts and in the circumstance of the case, the Ld. CIT(A) erred in not appreciating that corroborative and cogent evidences were found during the course of search which clearly establish that the assessee was in receipt of share application money of which the identity, genuineness and creditworthiness could not be proved by the assessee to the satisfaction of the assessing officer during the assessment proceedings. The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date. The appeal is finally heard for disposal.). The assessee has raised following gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of assessment proceedings, Ld. Assessing Officer found that the assessee has received share application money of Rs. 2,03,50,000/- in A.Y. 2011-12. The Assessing Officer asked the assessee to explain the same. In response, the assessee filed its replies stating that it has provided all the requisite details relating to the share holders e.g. complete names and addresses, relevant documents. However, the Assessing Officer did not accept the contentions of the assessee stating that the assessee failed to offer satisfactory explanation in respect of the nature and source of the share application money credited in the books of accounts in the relevant assessment year and added Rs. 2,03,50,000/- to the income of the assessee on account of undisclosed income u/s 68 of the I.T. Act. Being aggrieved, the assessee approached the ld. CIT(A) and ld. CIT(A) quashed the assessment on legal grounds. Now, the Revenue is in appeal before this Tribunal. 3. Before us, ld. CIT-DR defended the order of the Assessing Officer and submitted that since the assessee failed to offer satisfactory explanation in respect of the nature and source of the share application money credited in the books of accoun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed. 6.10 Coming back to the facts of this case it is undisputed that, no satisfaction was recorded by the AO of searched person. The AO even in the remand report has unequivocally admitted the same and said that he was unable to trace the satisfaction note in the case record of the appellant. From verification of case records received from AO., it is definite that 'no satisfaction' was recorded by the AO. of the searched person, because it is not available with AO. as well as on the case records. Considering the aforesaid judicial view on the scope of initiation of proceedings u/s 153C and assumption of jurisdiction in the unabated cases which is consistently followed by Hon' ble MP High Court and Circular no 24/2015 issued by Board, I have no option but to respectfully follow the view, that in search cases recording of satisfaction by both the AOs. i.e. the AO of searched person and AO. of the assessee before issuing notice u/s 153C is a sinequa-non and in absence of the same proceedings u/s 153C are bad-in-low. Having decided that issue of notice cts 153C was without legal jurisdiction and consequently assessment orders passed u/s 153C r.w.s 143(3) ordered to be qua....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Vs. Kalani Brothers (Indore) Pvt Ltd - (2016) 27 ITJ 286 (lnd-Trib) (xxii) Chandrabhan Lal Chandani Vs. ACIT- J (J j, Bhopal - ITA No.IT(SS)A (xxiii) Rawal Das Jaswani vs. ACIT (2015) 43 CCH 606 (Raipur-Trib) 7.1. It has been held in the case of CIT V /s Kabul Chawla (supra) that in absence of any incriminating material, the completed assessment cannot be reopened and reassessment cannot be made. The word 'assess' in section 153A is relatable to abated proceedings and the word 'reassess' to completed assessment proceedings. Completed assessments can be interfered with by the Assessing Officer while making the assessment u/s.153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Decision of Kabul Chawla (Supra) has been followed in subsequent decisions in the cases of CIT V Is. Mahesh Kumar Gupta 2016- T10L-2994-HC-Del and CIT-9 V Is. Ram Avtar Verma in ITA No. 61/2017 & 62/2017 Dtd. 7.02.2017 and Pr.CIT vis Meeta Gutgutia in tTA ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e case of Global Realty Creations ltd & Ors Vs. DCII & Ors. Reported in (2017) 49 CCH 0454 (Del- Trib), wherein it is held as under:- Search and seizure-New scheme of assessment in search cases-Assumption of jurisdiction u/s 153C-Addition- Unexplained cash credit-Appellant-assessee company was engaged in business of lending money, securities and property and to discount, buy and sell and deals in biJJs, notes, warrant coupons and other negotiable or transferrable securities and documentsAO observed that, on perusal of ledger account of share application money filed by assessee revealed that assessee company received fresh share application money from different concerns-Accordingly, show cause notice was issued requiring it to prove identity and creditworthiness of parties as well as genuineness of those transactions and in response to same assesse filed only share application forms-AO completed assessment on account of unexplained cash credit u/s 68 vide his Order passed u/s 153C r. w.s. section 143(3)-c/T(A), vide impugned Order dismissed appeal of osseseee=Assessee claimed that, CIT(A) had erred on facts and in law in confirming assessment of appel/ant passed without satisfying....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nable in the eyes of law, hence, needs to be deleted. Also on ttie perusa! nf the assessment order undisputedlv indicates that no reference whatsoever has been made to any material found/ seized during the course of search. {Para 13.7} Assumption of jurisdiction u/s 153C on account af very compelling specific focts evidencing that documents/assets not only belonged to those person but those documents assets evidenced clear existence of undisclosed income and when AO made addition without any incriminating material found during search and seizure operation, addition would not be sustainable. Respectfully following the binding precedent on this issue, in absence of any incriminating material found during the search and seizure operation and the impunged additions being purely based on material already available on record, additions of regular nature are not sustainable in the eyes of law and hence deserves to be deleted. Hence, on this count also additions of Rs. 1,00,00,000/- Rs. 68,00,000/- and Rs. 2,03,50,000/- made in A Y 2009-10, 2010- 11 & 2011- 12 respectively are directed to be deleted. Ground of appeal # 4 of all the appeals are allowed." 6. On consideration of above ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... order of the ld. CIT(A). We confirm the order of the ld. CIT(A) on this issue. Since, the assessment itself is quashed, the ground raised in the appeal of the Revenue with regard to challenging the absence of incriminating material has now, being academic in nature, become infructuous and consequently, the grounds raised in the appeal of the Revenue stand dismissed. 8. Now, we shall take up the appeal filed by the assessee i.e. IT(SS)A No.90/Ind/2020 for the assessment year 2012-13. The appeal is time-barred by 83 days. Ld. Counsel for the assessee submitted that the delay in filing the appeal is due to country-wide lockdowns imposed by the government in wake of Covid-19 outbreak and taking cognizance of the same the government had introduced the taxation and other laws (Relaxation and Amendment of Certain Provisions) Act 2020 in order to relax/extend the statutory timelines for various compliance under various laws including the Income Tax Act 1961. Prayer was made to condone the delay. Ld. DR opposed the request. We, however, under the given facts and circumstances of the case, are satisfied with the reason giving rise to delay in filing the instant appeal. We condone the delay....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccount of undisclosed income u/s 68 of the I.T. Act. 11. We have heard rival contentions of both the parties and perused material available on record. We find that the Assessing Officer made the addition u/s. 68 in respect of the share application money received from the following persons :- S.No. Name of share applicant PAN Amount Evidences furnished 1 Chabadiya Developers Pvt Ltd F-77, B, Second Floor, Laxmi Nagar, Delhi 110092 AACCC7553R 5000000 (1) Share application form. (2) Confirmation letter from the company (3) Board Resolution (4) Receipt of share certificate (5) Affidavit of director (6) Bank statement of the company (7) Copy of Income Tax Return (8) Copy of audited final accounts (Balance sheer, P & L A/c etc.). (9) Certification of incorporation (10) Memorandum & Articles of Associations of the company. 2. R.J.Febtax Pvt Ltd 1/42, Gali No. 04, Vishwas Nagar, Delhi 110032 AADCR3947D 5000000 3. B.G.R. Fabrication 30/99A, Vishwas Nagar, Shahadara, Delhi 110032 AABCB8092K 5000000 4 Czar Hotel Pvt Ltd A-115, Bakil Chanmbers, Shakarpur, Delhi 110092. AAECC00898N 5000000 5. A.A. Ansari Plot No. 62-A, Hajrat Nizamuddin Colon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....D 25000 (1) Form No. 16 28. Minal Saxena J-167, Harshwardhan Nagar, Bhopal. BCVPS9519N 50000 (1) Form No. 16 29. Neelesh Jain A-164, Sagar Avenue, Ayodhya Bye Pass Raod, Bhopal. AIVPJ8437H 25000 (1) Form No. 16 30. Neelima Goswami C-44, Kakda Abhinav Homes Ayodhya Bye Pass Road, Bhopal. AMAPG0992R 25000 (1) Form No. 16 31. NIshi Prakash Jain H.No.42, Janakpuri colony, Ayodhya Bye Pass Road, Bhopal. AEIPJ0549P 25000 (1) Form No. 16 32. Pooja Choubey E-100/17, Shivaji Nagar, Bhopal. AYSPM3704H 25000 (1) Form No. 16 33. Prabhat Khare 26, Comfort Heritage, Ayodhya Bye Pass road, Bhopal. AWQPK6305G 25000 (1) Form No. 16 34. R.K.Gupta 175, B-Sector, Indrapuri, BHEL, Bhopal. 25000 (1) Form No. 16 35. Ranju Pal 113-A, Duregesh Vihar, J.K.Road, Bhopal. 25000 (1) Form No. 16 36. Ruchi Jain A-164, Sagar Avenue, Ayodhya Bye Pass Raod, Bhopal. 25000 (1) Form No. 16 37. Sanjeev Sharma 99, BDA Complex, (-A, Saket Nagar, Bhopal. 50000 (1) Form No. 16 38. Sharad Salunke 188-A Park No.3, Panchwati, Airport Road, Bhopal. DHFPS8538Q 25000 (1) Form No. 16 39. Sheetal Singh B-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....olutely wrong. 2 Happening Motors (P) Ltd. Baar Baar Janne par Tala Band Mila It is submitted that this does not mean that the company does not exists at the said address. It is further stated that for the said company the AO had called directly the bank statement of the company, and therefore the contention that the company does not exists is absolutely wrong. 3 White Hat IT Services (P) Ltd. No Such Person It is being submitted that the said address was the old address of the said company, the company had changed the registered Office and the appellant had no knowledge of it, that is the reason the inspector does not got any body at the said address. The new address is evident from the data downloaded from the MCA site, copy of the same is attached at page no 432 of paper book. 4 Accumen Paper Binder (P) Ltd. No such firm at such address It is submitted that the version of the inspector is not correct because MCA site which is a government record, shows that the company is active and be present at the said address, copy of the data downloaded from the MCA site, copy of the same is attached at page no 424 of paper book. It is further stated that for the said c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tatement of the company, and therefore the contention that the company does not exists is absolutely wrong. 9 Mcgrip Marketing (P) Ltd. Reply not received till date 10 Startrans Logistic (P) Ltd. Incomplete address, returned back It is being submitted that the said address was the old address of the said company, the company had changed the registered Office and the appellant had no knowledge of it, that is the reason the inspector does not got any body at the said address. The new address is evident from the data downloaded from the MCA site, copy of the same is attached at page no 431 of paper book. 11 B.G.R. Fabrication India (P) Ltd. No Such firm at such address It is being submitted that the said address was the old address of the said company, the company had changed the address and the appellant had no knowledge of it, that is the reason of such comment of the postal company. The new address is evident from the data downloaded from the MCA site, copy of the same is attached at page no 428 of paper book. 12 CZAR Hotels (P) Ltd. Reply not received till date This shows that the company existed at that place and the summons was properly delivered....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said company, the company had changed the address and the appellant had no knowledge of it, that is the reason the inspector does not got any body at the said address. The new address is evident from the data downloaded from the MCA site, copy of the same is attached at page no 425 of paper book. It is further stated that for the said company the AO had called directly the bank statement of the company, and therefore the contention that the company does not exists is absolutely wrong. 4 Accumen Paper Binder (P) Ltd. No Such company at the given address. This is a multi stories building and at all the floors nil paper binding company is available. It is submitted that the version of the inspector is not correct because MCA site which is a government record, shows that the company is active and be present at the said address, copy of the data downloaded from the MCA site, copy of the same is attached at page no 424 of paper book. It is further stated that for the said company the AO had called directly the bank statement of the company, and therefore the contention that the company does not exists is absolutely wrong. 5 Blue Star Impex (P) Ltd. No Such premises at the giv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nage its day to day affairs. In big/metro cities, the neighbors or nearby persons know the person who is the director of the company but do not know in which trade name or in which company's name, the said person is doing the business and that could be the reason that at many places the Inspector could not trace the office. It is a well established principle that the summons are issued in the name of living human being may be in the capacity of the director or individual then it could be served but if the summon issued in the case of non-living human being, then it is not possible to serve because the neighbors or nearby person does not know the trade name of the person who happens to be a director of the company. In such circumstances, the A.O. is wrong and not justified in holding that some of the share applicants did not found existed at the given address. We find that the income tax Inspector also in his report said that he visited the commercial complexes and there are many offices and shops and then he came to know from persons that there are no such companies. However, learned Counsel for the assessee submitted that the Inspector did not mention in his report that who was th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t companies filed by the assessee, clearly show the sources of their funds which were used for making investment in the share capital of the assessee. Thus, learned Counsel for the assessee submitted that entire addition u/s.68 is solely based on assumptions, presumptions, conjectures and surmises which is unjustified in view of the ratio laid down by the Hon'ble Apex Court decision of Supreme Court in the case of State of Kerala Vs. M.M. Mathew reported in (1978) 42 STC 348 (SC) wherein the Hon'ble Court held that "Strong suspicion, strange coincidence and grave doubts cannot take the place of legal proof." We find that the A.O. in his order has given the names of individual share applicants. However, the learned Counsel for the assessee explained that these persons are individual and due to fear psychosis, they were not prepared to come along the assessee before the A.O. and, therefore, at the request of the assessee, the summons were issued. The said summons were also duly served upon such persons but it appears that despite the summons, they did not appear and due to this reason, the A.O. has made the addition. But, if the person did not attend before the A.O. then the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... All these companies are assessed to tax and they are registered under the Companies Act. Return of allotment of shares in prescribed Form No. 2 to the RoC was also filed before AO as well as before CIT(A). It is further seen that the addition is based on alleged statement of PJ recorded under s. 131 behind the back of the assessee. The assessee was not even afforded any opportunity of cross-examination nor PJ was examined in the course of assessment proceedings in case of assessee nor was he examined in presence of assessee company nor was he confronted with the documents of contemporary period showing investment in shares made by those five companies through regular banking channel. Therefore, the inference drawn by AO was not correct. The CIT(A) has already taken a recourse for taking action against the respective shareholders as the AO was directed to take necessary action against the purchaser company for such investment in purchase of shares.-CIT vs. Lovely Exports (P) Ltd. (2008) 6 DTR (SC) 308, CIT vs. Divine Leasing & Finance Ltd. (2007) 207 CTR (Del) 38 : (2008) 299 ITR 268 (Del), CIT vs. Shree Barkha Synthetics Ltd. (2003) 182 CTR (Raj) 175, Barkha Synthetics Ltd. vs. As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be regarded as undisclosed income u/s.68 of the I.T. Act ? We find no merit in this special leave petition for the simple reason that if the share application money is received by the assessee company from alleged bogus share holders, whose names are given to the assessing officer, then the department is free to proceed to reopen their individual assessments in accordance with law. ' 14. Hon'ble Delhi High Court in case of CIT Vs, Value Capital Service Pvt. Ltd - 307 ITR 334 (Del) held: The court that case held that the additional burden was on the department to show that even if share applicants did not have the means to make investments, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as undisclosed income of the assessee. In the absence of such findings, addition could not be made in the income of assessee u/s.68 of the I.T. Act. 15. Hon'ble Jurisdictional MP High Court in case of CIT Vs. Peoples General Hospital Ltd. - (2013) 356 ITR 65 held: Income-Cash credit-Share application money-Genuineness of transaction and creditworthiness of creditor-Discharge of burden of proof by assessee, effect of-AO observed th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he bank a/c of the share applicants. Thus where the ROI was filed by the creditors of the assessee and was accepted by the AO and payments were through a/c payee cheques the genuineness of the transaction cannot be doubted. The revenue could not prove that the money received' by the appellant in the form of share application has come from its own sources. No evidences regarding this have been brought on record by the AO. 17. Hon'ble Delhi High Court in case of CIT Vs. Winstral Petrochemicals (P) Ltd - (2011) 330 ITR 603 (Del) held: It has not been disputed that the share application money was received by the assessee company by way of account payee cheques, through normal banking channels. It is not the case of the Revenue that the payment of share application money was not made from the bank account of the applicant companies. Admittedly, copies of application for allotment of shares were also provided to the AO. It is not the case of the Revenue that the share applications were not signed on behalf of the applicant companies and were forged documents. It is also not the case of the Revenue that the shares were not actually allotted to the companies. Therefore, the CIT(A) a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n this case, share application forms were duly produced before the AO and this is not the case of the Revenue that the AO had asked the assessee to produce shareholders' register and share transfer registers, but the assessee company had failed to do so.-CIT vs. Divine Leasing & Finance Ltd. (2007) 207 CTR (Del) 38 : (2008) 299 ITR 268 (Del) followed. (Para 10) The AO was not justified in adding the amount of share application money to the income of the assessee, merely because the applicants did not respond to the notices sent to them. If the AO so wanted, he could have found out the current address of those applicants, who, according to the report of the Inspector, were not found functioning at the address given to the AO, by summoning the directors, etc. of those companies and asking them to furnish the current address of the company. The names and addresses of directors, if not available with the assessee, could have been obtained from the office of RoC or from the banks on which the cheques were drawn. No such attempt, however, was made by the AO. In these circumstances, there is no reason found to disturb the finding of fact recorded by the Tribunal.-CIT vs. Lovely Export....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of such persons would be sensible-Tribunal, therefore, justified in setting aside revisional order and no question of law arises Cash credits-Genuineness-Share capital-Even if it be assumed that the subscribers to the increased share capital were not genuine, under no circumstances, can the amount of such capital be regarded as undisclosed income of assessee-company-If certain shareholders were bogus and money was provided by some other persons, reopening of assessment of such persons would be sensible-Tribunal, therefore, justified in setting aside revisional order and no question of law arises. 21. Hon'ble Supreme Court in case of CIT Vs. Orissa Corporation - 159 ITR 78 (SC) held: Income-Cash credit-Burden of proof-Assessee had given the names and addresses of the creditors-It was in the knowledge of the Revenue that the said creditors were income-tax assessees-Their index number was in the file of the Revenue-Revenue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the matter further-Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advanc....