TaxTMI 
TaxTMI 
2021 (12) TMI 1209
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..../HYD/2013 for A.Y.2008-09 preferred by the assessee against the revision order of the ld. Commissioner of Income Tax-II, Hyderabad u/s.263 of the Act dated 28/03/2013. 2. These appeals of the assessee pertain to ITAT Hyderabad 'B' Bench numbered as ITA No. 18/Hyd/2012 and ITA No. 790/Hyd/2013. CBDT made a request for hearing of this appeal by a Special Bench and accordingly on 14/12/2012, this matter was fixed under the caption 'Other Matters' for hearing as a Special Bench Reference. Finally, the Bench referred the matter to the President, ITAT with their comments. Finally, the Hon'ble President constituted the Special Bench vide order dated 05/03/2013. The assessee challenged the order constituting Special Bench of Hon'ble ITAT before Hon'ble Bombay High Court. Hon'ble Bombay High Court vide order dated 10/08/2015 reported as Jagati Publications Ltd., vs. President, Income Tax Appellate Tribunal and Others in (2015) 377 ITR 31 (Bom) quashed the constitution of Special Bench by observing in para 57 as under:- "57. To sum up, the president was under obligation to give hearing to the parties.. The Regular Bench had not unequivocally recommended constitution of the specia....
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....nvolves peculiar features of quid pro quo and so on and the view that the Tribunal may take in this appeal, would have its impact on the investigation being carried out by CBI and Enforcement Directorate and so on. Last but not the least, the Revenue impact on the appeal is also very huge and the matter requires in depth and exhaustive consideration. 17. In this context, we observe that most of the appeals coming before the Tribunal, involve complex facts and intricate questions of law. If we go by the argument of the Department, then every such appeal has to be decided by a special bench. In all such cases, any one of the parties to the litigation will seek resolving the issue by constituting a special bench. This would create serious impediment in the functioning of the Tribunal. Similarly, the contention of the learned Departmental Representative that a decision of the division Bench of the Income Tax Appellate Tribunal is not followed by another Bench of Income Tax Appellate Tribunal and, therefore, the appeal has to be heard by a special bench is also not correct. The decision of a Division Bench certainly has a binding effect and is generally followed by other divisi....
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....g over the decades as to the impartiality of its decisions, the Hon'ble president may constitute an appropriate Bench outside Andhra Pradesh, specifically at Head Office level, for the hearing and adjudication on this appeal. Such a step would snuff out even a slightest doubt and apprehension in the mind of any of the party to the litigation with regard to the fairness of the proceedings and the ultimate decision making process. 21. With the above comments, this proposal is forwarded to the Hon'ble Vice president, to place the same with his comments, before the Hon'ble president, for appropriate decision in the matter." (Emphasis Supplied) Based on those observations Mr. Rana submitted that when the Regular Bench stated that an 'Appropriate Bench' may be constituted outside Andhra Pradesh, it meant a 'special bench'. Mr. Mistri submitted that the Regular Bench had categorically opined that a 'special bench' is not necessary and all that it recommended was that the matter be heard outside Andhra Pradesh. 30. We have perused the observations carefully. In the context of the Act, special bench is not a term of common parla....
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....y at Hyderabad to put up the instant case files before the Hon'ble President of the Tribunal to take necessary call on the issue. It is further made clear that although the assessee has not pressed for the instant earlier hearing applications fixed on 19/03/2021, keeping in mind its regular date as 24/05/2021, it shall be very much at liberty to file for the necessary relief afresh with better particulars; if so advised, as per law. The registry is directed to ensure necessary compliance as per law. 2.4. Pursuant to this, the President, ITAT, considering the decision of Hon'ble Bombay High Court; the recommendations of the Division Bench of Hyderabad ITAT originally to hear this appeal outside Andhra Pradesh and also considering the fact that the order of Hon'ble Bombay High Court had not been stayed by Hon'ble Supreme Court, proceeded to constitute a Division Bench for disposal of the aforesaid appeal. 2.5. When this matter was called for hearing, at the outset, ld. Sr. Standing Counsel Mr. K.V. Arvind and ld. Sr. Counsel for the assessee Shri J.D.Mistry was appraised of the fact that there is SLP filed in the Supreme Court against the judgment of Hon'ble Bombay High Court. ....
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.....K.DANDAMUDI 2008-09 277776 350 15.10.2007 10,00,00,000 2. MATRIX GROUP ALPHAVILLAS PVT.LTD 2008-09 4,16,666 350 15.10.2007 150,000,000 TOTAL 4,16,666 150,000,000 ALPHA AVENUES PVT.LTD 2008-09 2,50,000 350 15.10.2007 90,000,000 2008-09 166666 350 14.02.2008 60,000,000 TOTAL 4,16,666 150,000,000 GILCHRIST INVESTMENTS PVT.LTO 2008-09 5,55,554 350 15.10.2007 199999440 2008-09 4,16,666 350 14.02.2008 149999760 2008-09 1,38,889 350 13.03.2008 50000040 TOTAL 11,11,109 39,99,99,240 GROUP TOTAL 19,44,441 69,99,99,240 3. INVESTMENTS SOURCED FROM SALE OF SHARES IN TANLA SOLUTIONS LTD. SANDESH LABS PVT.LTD 2008-09 6,66,664 350 15.10.2007 2,40,000,000 SPUME SOLUTIONS PVT.LTD 2008-09 66,666 350 13.03.2....
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....00,000 GROUP TOTAL 2,77,776 10,00,00,000 7 INVESTMENTS SORUCED FROM M/S. RAMKY GROUP TWC INFRASTRUCTURE PVT.LTD 2008-09 55,555 350 14.02.2008 2,00,00,000 ERES PROJECTS PVT.LTD 2008-09 222,222 350 13.03.2008 8,00,00,000 GROUP TOTAL 2,77,777 10,00,00,000 8. PENNAR CEMENTS GROUP PIONEER INFRASTRUCTURE HOLDING LTD. 2008-09 5,55,555 350 14.02.2008 20,00,00,000 GROUP TOTAL 5,55,555 20,00,00,000 9 BANGALORE BASED COMPANIES SHRINE FINANCE & INVESTMENTS PVT LTD 2008-09 541666 350 13.03.2008 19,50,00,000 SATABDI INVESTMENTS 2008-09 986111 350 13.03.2008 35,50,00,000 GROUP TOTAL 1527777 55,00,00,000 10 THE INDIA CEMENTS LTD. #827, ANNAI SALAI, CHENNAI 2008-09 5,55,555 350 14.02.20....
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....d and also news paper articles making various allegations against the promoters of the assessee company. These allegations are listed as under:- * Between April 1, 2007 and March 31, 2008, Shri Y.S. Jagan Mohan Reddy sold 21,42,860 shares of Sandur company at Rs. 140 each to Shri.Nimmagadda Prasad, founder-promoter of pharmaceutical company Matrix Laboratories and earned a profit of nearly Rs. 30 crore. Shri Prasad also bought 19,44,441 shares of Jagati Publications in the name of Gilchrist Investments Pvt. Ltd, Alpha Villas Pvt. Ltd., and Alpha Avenues Pvt. Ltd., at Rs. 350 a share. * Around the same time, VANPIC Ports Pvt. Ltd, a company in which Shri Nimmagadda Prasad and the Ras al-Khaimah are partners, was allotted the rights to develop Chirala, Vodarevu and Nizampatnam Port projects in Andhra Pradesh on a build-operate-transfer basis. * It is more than coincidence that those who purchased stakes in Shri Y.S. Jagan Mohan Reddy's (promoter) businesses were allotted land, projects and contracts, including special Economic Zones (SEZ) by the Andhra Pradesh government led by his father. * Shri Ayodhya Rami Reddy- the promoter of Ramky Group held....
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.... b) These valuation reports have been prepared without any due diligence and are prepared on the basis of information provided by the management of the assessee company. c) These reports have been prepared without having any scientific basis for provisions made with regard to revenues of the assessee company. d) These reports have not taken into account actual performance and balance sheet of the assessee company till the date for which valuation has been done. The assessee company had suffered huge losses in subsequent years which has resulted in eroding of the share capital which proves that the projections made in the valuation report to be unrealistic. e) The valuation reports were completely prepared based on the information furnished by the management, its key management personnel, estimated project cost reports and projections for the future years as estimated by the management and not based on any factual data. f) The ld. AO also observed that newspaper readership has substantially reduced with the commencement of many news channels in the television media and further due to increase in the usage of internet, the entire newspaper indust....
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....on director. These shareholders were having account in the same bank. (v) In respect of other shareholders based at Kolkata / Mumbai / Hyderabad, the ld. AO observed that the investor companies to whom notices were issued u/s.133(6) of the Act were returned unserved with comments "not known" / returned unclaimed. The ld. DDIT (Investigation) Unit IV(2) Kolkata vide its report dated 23/10/2009 had stated that Kolkata based companies do not operate from given addresses and are apparently bogus entities. Certain concerns had only address box facility from the owner of the premises, with no furniture, sign boards and one person, appeared to be peon. The telephone numbers had recorded messages that they were out of services or there were no existence of telephone numbers. There was no precise premises matching address of Hingora Finvest Pvt. Ltd., and the traced address belong to a person who was a mason and did not know any such company. In the case of Moon Enterprises, it had its Registered office at Rajkot and address has been changed to Mumbai. The concerned person did not remember to have made any investment in assessee company. The income earned by all these companies wer....
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....nvestors (i.e. Hingora Finvest Pvt. Ltd., and Moon Enterprises Pvt. Ltd.,) based on the enquiries conducted by ADIT, Unit IX(1), Mumbai and his report dated 28/12/2010, the ld. AO concluded that these shareholders are not genuine. 6.9. The ld AO made a general observation that assessee has failed to produce all the shareholders before him and hence, the assessee has not proved the genuineness of the transactions and creditworthiness of these investors. 6.10. The ld. AO based on the primary details furnished by the assessee proceeded to examine in detail in respect of each shareholder companies as under:- a) Artillegence Bio Innovations Ltd - Investment Amount: Rs. 50,00,000/- The ld. AO observed that based on the enquiry conducted by Kolkata Investigation Wing, this company does not exist and is a mere briefcase company. He also observed that assessee has furnished copies of Board Resolutions, Bank Account extracts, confirmation letter together with Income Tax assessment particulars of the said company. The ld. AO observed that immediately preceding the date of making investment by this shareholder in the assessee company, there were certain money transfers that had hap....
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.... of money received by the said investor company was not proved by the assessee, the ld. AO concluded that source of source was not established / proved by the assessee and hence, doubted genuineness of the transaction and the creditworthiness of the investor. f) Moon Enterprises Pvt. Ltd., Rajkot /Mumbai- Investment made Rs. 2,50,00,000/- Enquiries were carried out from ACIT, Circle - 1, Rajkot initially about this investor company. Later since, the registered office of the said company was shifted from Rajkot to Mumbai, the ld. AO caused an enquiry to be conducted by Mumbai Investigation Wing. The ld. AO observed that the enquiries revealed that the Directors of the said Investor company were not aware of having any business relationship with the assessee company. The ld. AO on perusal of the bank statements observed that the said company was having its bank account with Bank of India which showed opening bank balance of Rs. 3,60,50,718/- which money was utilised for making investment in assessee company. The ld. AO however, observed that the opening bank balance as reflected thereon, remain unverifiable and in effect concluded that assessee has not proved the source of sour....
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....ions, the ld. AO proceeded to treat the receipt of share capital and share premium of Rs. 15,00,00,000/- in total from the aforesaid eight entities as unexplained cash credit u/s.68 of the Act. 6.12. In respect of share capital and share premium received from Matrix Group of companies amounting to Rs. 70 Crores for allotment of 19,44,441 shares at a premium of Rs. 350/- per share, the ld. AO observed that as per the statement recorded u/s.131 of the Act from Shri N Prakash, Director in the Matrix Group of companies, the group companies of the shareholders in conjunction with subsidiary of Government of Ras-Al-Khaimah had been awarded with Vodarevu and Nizamapatnam ports and industrial corridor project by the Government of Andhra Pradesh under the Government to Government scheme. It was specifically replied by the Director that two of its group companies were awarded the project but not the investor companies in the assessee company. 6.13. In respect of share capital and share premium received from Aurobindo group of companies totalling to Rs. 10,00,00,000/- for allotment of 2,27,776 shares at a premium of Rs. 350/- per share, the ld. AO observed that as per the statement reco....
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.... all the shareholders (which admittedly includes the shareholders in the outsiders category also as stated hereinabove) at par value of Rs. 10 per share is reasonable and acceptable. The ld. AO made addition with respect to the investors alleged to have received benefits from the Government of Andhra Pradesh in the form of land, projects etc., had resorted to invest in shares of assessee company at a premium of Rs. 350/- per share totalling to Rs. 277,56,88,650/- and hence the said premium portion alone would become taxable as business income u/s.28(iv) of the Act in the hands of the assessee company on the ground that assessee company had derived benefits from those investors. The ld. AO also observed that the said amount can alternatively be taxed under the head 'income from other sources.'. While doing so, the ld. AO did not mention the Section under which he wishes to tax the said amount of Rs. 277,56,88,650/- under the head 'income from other sources'. 6.18. In effect, (i) The ld. AO in respect of share capital and share premium received from outside shareholders (other than promoters) observed that share premium component of Rs. 277,56,88,650/- represents benefit ....
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....evenue receipt. 8. The ld. CIT(A) categorically held that provisions of Section 28(iv) of the Act cannot be made applicable in the instant case by observing as under:- 'The provisions of said clause (iv) of Section 28 read as under: "28(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession." From the above, it may be seen that, such benefit which is to be taxed treating as income in the hands of an assessee, should arise from business or profession of that assessee. However, in the instant case, as submitted during the appeal and also noted by the AO, the appellant company commenced business operation on 24.03.2008. The receipt of said amounts towards share premium, from those other investors, were during the period prior to commencement of business in the case of the appellant company, as noticed from the chart furnished by the AO relating to the details of investment in share capital made in the case of the appellant in para 5 of the assessment order. Under these circumstances and having regard to the above provision of Section 28(iv) of the Act, the said amounts recei....
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....id payment was due to benefit derived by these parties in future through association with the key management personnel of the assessee company. By making these observations, he upheld the addition made by the ld AO in the sum of Rs. 277,56,88,650/- towards share premium component received by the assessee company from outsiders category. The ld. CIT(A) also effectively upheld the receipt of share capital portion at par value of Rs. 10 per share from all the shareholders to be reasonable and acceptable and did not proceed to make any enhancement of income in the hands of the assessee company. 8.7. The ld. CIT(A) with regard to receipt of share capital and share premium received from eight parties listed supra, observed that those parties had not responded to summons issued u/s.131 or notice u/s 133(6) of the Act and that the Investigation Wing had reported that these parties did not exist at the addresses provided; income offered by these parties in their respective income tax returns were very negligible; and that the assessee company had failed to prove the existence of these investors / identity of these shareholders since it could not produce the investor parties. The ld. CIT(....
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....He argued that all the shareholders falling in the outsider's category (i.e. other than promoters) had duly confirmed before the ld. AO the fact of making investments in assessee company at a premium of Rs. 350/- per share. All these shareholders had also duly responded to the notices u/s.133(6) of the Act by filing the requisite details directly before the ld. AO or the same were filed by the assessee, as the case may be. No adverse inferences were drawn on those documentary evidences submitted before the ld. AO. The ld. AR drew our attention to the valuation report issued by M/s. Jagadisan and Co. Chartered Accountants, wherein the valuer had categorically stated that the source of information for preparing the valuation report together with information and explanations provided to them are as under:- (a) Key Management Personnel of assessee company (b) Business plan of assessee company (c) Market assessment of news paper industry prepared by assessee company. (d) Project cost reports, Revenue and cost projections for five years beginning April 2008, cash flows, projected profit and loss account and projected balance sheet for the first five ye....
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....irst year and increase up to Rs. 107 crores by the fourth year of its operations. 9.4. The ld AR submitted that accordingly the valuer M/s. Jagadisan & Co. had valued the assessee company at Rs. 3459 Crores using Discounted Cash Flow method vide their valuation report dated 12/07/2007. He also referred to the valuation report issued by M/s. Deloitte vide report dated 16/11/2007 wherein the assessee company was valued as on 31/12/2007 in the range of Rs. 2950 to 3050 crores using discounted cash flow method. By this process, the ld AR justified the premium charged by the assessee at Rs. 350 per share which is supported by two independent valuation reports. 10. The Ld. DR at the outset argued that department had filed certain additional evidences in terms of Rule 29 of the Income Tax Appellate Tribunal Rules. In this regard, he drew the attention of this Bench to the 14 paper books filed by the department and referred to various documents thereon. He requested for admission of those additional evidences as according to him, those documents would be relevant for disposal of the impugned appeal. 11. Per contra, the ld. AR vehemently objected to the admission of additional evid....
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....plication seeking permission of this Hon'ble Tribunal to take the said additional evidence/documents by allowing this application. 4. It is submitted that these documents were not within the knowledge of the Revenue when the assessment order was framed and also at the time when the Appellate Commissioner passed the order. The documents being subsequent development having bearing on the dispute involved in the above appeal are necessary to arrive at just and correct conclusion in regard to the issues. It is further submitted that though certain documents of the State Government were dated earlier in the time of assessment and the appellate Commissioner, the same could not be accessed with due diligence exercised by the Assessing Officer. It is further submitted that as the additional documents sought to be relied on are directly relatable to the dispute before this Hon'ble Tribunal, the said documents would be necessary for decision by this Hon'ble Tribunal. 5. The entire list of documents, the brief description of the documents and the relevance of the same to the issue in appeal is stated in the tabulated form as per Annexure enclosed. The Annexure to this ap....
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....take the additional evidence/documents as per the Annexure to the application on record in the interest of justice and equity." 12.2. The Revenue filed complete details i.e. the description of the documents and relevance of the documents in brief vide a chart dated 09.08.2021. The details i.e. description of the documents and relevance of the documents as given in chart are reproduced as it is: SL No. DESCRIPTION OF THE DOCUMENT RELEVANCE OF THE DOCUMENT IN BRIEF PAGE NO. (as numbered in relevant volumes) VOLUME 1 Valuation report of Jagadisan& co dated 1.11.2006 in the case of Carmel Asia Holdings Pvt. Ltd. seized from office of Jagadisan and co by CBI authorities on 11.02.2012. In the valuation report dated 01/11/2006, M/s. Jagati Publications Pvt. Ltd. was valued between Rs. 178 Cr to Rs. 196 Cr in contradiction with later reports of contemporaneous period of very high value though there is no change in Circumstances. 1-23 I 2 Projected P & L statement of M/s. Jagati Publication Pvt. Ltd. for theperiod 2000 - 09 2012 - 2013 as per the valuation report of DeloiteTouche Tohmatsu India Pvt. Ltd figures shown by Deloitte and Jagadisan (in Sl....
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....PIIC allotting 75 acres to AurobindoPharma Ltd. at Jadcherla SEZ Application by Hetero group in the contemporaneous period requesting allotment at Rs. 7 lakhs/acre though the price fixation committee values at Rs. 15 lakh/acre 14&15 II 13 Copy of letter dated 17/11/2006 from Hetero Group to MD, APIIC requesting allotment of 75 acres land at Jadcherla SEZ Application by Hetero group in the contemporaneous period requesting allotment at Rs. 7 lakhs/acre though the price fixation committee values at Rs. 15 lakhs/acre 16-18 II 14 Copy of order sheet notings of APIIC dated 14/11/2006 indicating approval of SEZ at Jadcherla The price fixation committee and APIIC authorities recommend land value at Rs. 15 lakh/acre 19-20 II 15 Statement of Shri T.L. Ramachandran CGM(Projects), APIIC dated 12/09/2011 recorded before CBI authorities Stated the procedure of allotment, the recommendations of price fixation committee and the rate of allotment was at Rs. 7 lakhks/acre as per directions of the Chief Minister as against fixation of price at Rs. 15 lakhs/acre by APIIC. 21-26 II 16 Allotment letter dated 17/11/2006 from AurobindoPharma Ltd....
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....in payment of land cost and order sheet notings of APIIC. Noting on the letter by APIIC authorities and order sheet indicate role of CM. Though the initial allotment to Hetero Drugs Ltd indicates 50 acres, the same was revised to 75 acres while condoning the delay in payment of land cost of 50 acres. 49-53 II 25 Revised allotment letter to Hetero Drugs Ltd. dated 26/10/2007by APIIC In pursuance of Sl No 24 above. 54-56 II 26 Audit note dated 23/10/2008 indicating loss of Rs. 1.28 Cr to APIIC on account of arbitrary allotment of land at Jadcherla SEZ by taking Rs. 15 lakh/acre as cost. Note of AG(Audit) indicating loss to APIIC due to allotment at lower rate. 57-60 II 27 Letter from AurobindoPharma Ltd dated 02/11/2006 to APIIC seeking change of allotment to Trident Life Sciences to the extent of 30.33 acres. M/s Trident Life Sciences Ltd was not 100% subsidiary of AurobindoPharma Ltd. 61 II 28 Certificates dated 25/11/2006 & 24/11/2006 from AurobindoPharma Ltd certifying that Trident Life Sciences Ltd is 100% subsidiary of Aurobindo. 62 & 63 II 29 Inter office Memo and correspondence of APIIC dated 14/11/200....
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....a Cements Ltd who is investor in the assessee as well as its sister concern Bharathi Cements Ltd. 1 III 40 GOMS 94 dated 12/08/2009 issued by Govt of AP granting permission to India Cements Ltd to draw 13 Mcft water per annum fromKagna River for their plant near Tandur. 2 III 41 Letter from India Cements Ltd to EE, Irrigation seeking permission for drawing 7 lakh gallons of water more than the sanctioned 3 lakh gallons per day from Krishna River for their plant in Nalgonda District. 3&4 III 42 GOMS no: 146 dated 22/07/2008 by Govt of AP sanctioning additional drawal of 7 lakh gallons per day to India Cements Ltd from Krishna River. 5-7 III 43 Letter dated 24/03/2008 from LepakshiKnowleage Hub Pvt Ltd for allotment of land by APIIC in Ananthapur District. Shows that thousands of acres of land was acquired from public at low cost, allotted to Indu group who have practically invested no amount and did no developmental activity. Besides, the lands valued for the purpose of pledging to Financial Institutions at high value and the Government permitted pledge of the lands by the Indu group with Financial Institutions to obtain huge loans.....
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.... III 57 Statement of Shri MadhavRamachandra before CBIauthorities on 01/02/2012 & 09/03/2012 Businessman of Dubai attends 142-145 III 58 Statement of Shri MadhavRamachandra dated09/02/2012 before Metropolitan Magistrate Meeting of the CM at Dubai, expresses intention of investment in India. However, the said interest is being followed by the promoters of assessee through its key personnel and investment is insisted. He invests and States that he was cheated. He states that itis nota voluntary investment 146 & 147 III 59 Statement of DandamudiAvanindra Kumar beforeCBI authorities on 14/02/2012 and 27/03/2012 Shri Dandamudi states that he was advised by One Sridhar of JPPL to invest on the basis of valuation report of Deloitte and he invested. Subsequently he expressed that he was cheated by misrepresentation 148-152 III 60 Charge sheet filed by CBI in AurobindoPharma Ltd and Hetero Drugs Ltd dated 31/03/2012 The charge sheets demonstrate the modus operandi of collection of money by the assessee under the guise of Share Capital/Share Premium. The charge sheets also point out violations of rules and regulations of APIIC which pr....
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....x MD APIIC) dated21/01/2013 recording during penalty proceedings Demonstrates that allotment of land to the investors in the assessee was in violation rules, regulations of APIIC and recommendations of various committees of APIIC. 32-45 V 70 Statement of Shri P. Pratap Reddy (of Penna group) recorded on 10/01/2013 during penalty proceedings Demonstrates that there '5 #no business prudence by (Penna group -Pioneer Infra) in the investment in assessee 46-52 V 71 Statement of Shri N. Prakash (of Matrix-Vanpic group) recorded on 24/01/2013 recorded during penalty proceedings and scrutiny proceedings for A.Y 2010-11 Demonstrates that whatever money was received on sale of shares of sister concern of assessee (Bharathi Cements Ltd} were invested back by Matrix | group into shares of Jagatj Publications Pvt Ltd _ effectively ploughing back the money to assessee with no gain to the alleged investor, No business prudence is demonstrated in the investments in assessee. 53-65 V 72 Statement of Shri PotluriVeeraVenkataSatyaMurali Krishna Vara Prasad (PVP group) 1ecorded on23/01/2013 during penalty proceedings Fails to establish creditworthiness o....
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....nation order from government. Para 4.10 describes that terms of agreement with VANPIC were heavily loaded in favour of the company without any elbow room to the government to amend the provisions of agreement. Para 4.14 describes that out of land allotted to Aurobindo group at Jedcherla, 20.48 acres were already under illegal encroachment by the group company from 2002. Collector fixed Rs. 25 lakh/acre in such cases but alienation was at Rs. 5 lakh/acre. Para 5.1 describes that Lepakshi (Indugroup) was allotted 884.01 acre of land with a promise of generation of 1,50,000 employment but the actual figure was nil. In case of Indu Tech zone pvt. Ltd., 250 acre was allotted with projected employment of 45,000 and the actual figure was nil. Appendix B describes undue benefits to Lepakshi Knowledge Hub Pvt. Ltd. (Rs. 37.91 crore), VANPIC Projects Ltd. (Rs. 71.42 cr) 119-155 V 85 Copy of statement of Shri Navneet Kumar Singhania recorded on 28.02.2013 (who operates ChendilerTracon Pvt. Ltd. and SugamCommodeal Pvt. Ltd.) dated 28.02.2013 recorded during penalty proceedings. Described in detail the modus operandi of accommodation entries done by him and admits tha....
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....g details of payments to Shri Y S Jagan Mohan Reddy 212-215 V 94 Printout of email correspondence between Shri Vijay Sai Reddy and Shni Sanjay Mitra 216-218 V 95 Print out of SMS regarding payments made to Shri Vijay Sai Reddy 219 V 96 Share control register of Carmel Asia Holdings Pvt. Ltd. Shows that the very same investors ofthe assessee invested in Carmel at a premium of Rs. 265 and Carmel is major shareholder in the assessee. The funds of the promoters in the assessee are also provided by the same investors through Carmel Asia also at a premium showing that the effective investment by the promoters is negligible. Yet they control more than 90% shares whereas the alleged investors control minor share with huge investment. 220-221 V 97 GOMS No: 76 dated 26/02/2009 by Govt of AP granting mining license at Tandur to Penna group Benefits bestowed on Penna group who are investors in assessee including the transfer of mining lease and also grant of fresh mining leases 222 & 223 V 98 GOMS No: 25 dated 29/01/2009 permitting change of name from WalchandTandur Cement Company Ltd to PennaTandur Cement Company Ltd ....
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....Vanpic Demonstrates extraordinary benefits received by Nimmagadda group vis-a-vis similar other ports 69 & 70 VI 110 Comparison of concession agreements with Vanpic, Krishnapatnam and Gangavaram ports by Feedback Infra showing extraordinary benefits conferred on Vanpic group 71-84 VI 111 Statement of P Jagannatham recorded u/s 164 CrPC on 12/03/2012 States that Beta Avenues Pvt Ltd invested in Carmel Asia (Rs. 20 Cr) and Jagati (Rs. 70 Cr) but the investment was ultra vires because it did not permit investment in other companies. Later on at the instance of Nimmagadda Prasad, the MOA was altered. The investment made by VanpicProjects Pvt Ltd in other companies was in excess of authorized capital and reserves. This shows that the group has no adequate resources of their own to invest in assessee and were acting as conduits 85-87 VI 112 Statement of ChunduriMaruthiNagendram recorded u/s 164 of CrP dated 14.03.2012 States that Walden Properties Pvt Ltd promoted by Shri Shyamprasad Reddy (Indu/Lepakshi group) invested Rs. 20 Cr in Beta Avenues Pvt Ltd (Vanpicgroup) and this was in turn invested in Carmel Asia Holdings Pvt [Ltd (whi....
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....ronted that representative M/sCornerstone Properties Pvt Ltd stated that they invested funds by M/s Walden Properties PvtLtd (Indu group company), he stated that he does not remember. When findings in C&AG report were pointed to him, he denied any wrong doings. 1-10 VII 122 Letter from GVK Industries Ltd dated 22/01/2013 that they did not receive any officer for making investment in Jagati Publications Pvt Ltd In his statement dated 7/01/2013, Shri Vijay Sai Reddy stated that they contacted major entrepreneurs of AP for investment in the assessee and told the names of these concerns. However, all of them denied to have received any such offer. 11 VII 123 Letter from Dr Reddy's Laboratories Ltd dated 25/01/2013 that they did not receive any officer for making investment in Jagati Publications Pvt Ltd 12 VII 124 Letter from Soma Enterprises Ltd dated 23/01/2013 that they did not receive any officer for making investment in Jagati Publications Pvt Ltd. 13 VII 125 Letter from Gayatri Projects Ltd dated 22/01/2013 that they did not receive any officer for making investment in Jagati Publications Pvt Ltd. 14 VII 126 Extract o....
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.... of I. Shyam Prasad Reddy &Indu Tech Zone Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-145 XIII 136 Charge sheet filed by CBI in the case of Indu Projects Ltd. Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group. 1-117 XIV 12.3. From the above documents it is observed that there are IX categories of documents which are as follows: (i) From Sl. No.1 to 7 i.e. the valuation report of Jagdisan & Co. dated 01.11.2006 and other documents associated with the same. (ii) Various documents containing land allotments, approvals, plan approvals, noting sheets of various department etc. which are at Sl. No.8 to 54, 97 to 110 & 115 to 119. (iii) Statements of various persons recorded during penalty proceedings at Sl. No.64 to 83, 85 & 120 to 121. (iv) Copy of CAG report on allotment of land for the period 2006 to 2011 at Sl. No.84. (v) Investments made by Kolkata companies and related statements recorded during search at Sl. No.86 to 96. (vi) Various statements recorded under section 164 of Cr P C ....
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....he Ld. AO on 31.12.2010, order of Ld. CIT(A) was passed on 30.12.2011 and the CBI charge sheet was filed on 31.03.2012. Hence, he pleaded that the CBI charge sheets which are enclosed in the form of additional evidences had come to the knowledge of the Department subsequent to the completion of ld. CIT(A)'s order and hence the same are hereby filed as additional evidences. He also drew our attention to sworn statement of Shri P.N. Sudarshan from M/s Deloitte before CBI. He also referred to the section 161 statement before Police Authorities and section 164 statement before Magistrate of Shri P.N. Sudarshan which are also enclosed by way of additional evidences. Similarly, he referred to the statement dated 31.10.2011 recorded from Shri J. Prabhakar of Jagadisan &Co., Chartered Accountants before DSP, CBI. The Ld. Special Counsel for the Revenue was trying to drive home the point that the valuation reports issued by two independent professionals were back dated and the said valuation reports have been heavily relied upon by the investors for making investment in assessee company at a huge premium. He also referred to paper book 4 filed by the Revenue in the form of additional eviden....
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....d that even assuming without conceding that the valuation reports issued by the M/s. Jagdisan & Co. and M/s. Deloitte were back dated, still the date for which valuation is done would be relevant and not the date of valuation report. Both the parties had indeed deposed in their statements before CBI that the back date of valuation reports will not have any bearing as the date for which valuation is done is relevant. Hence, he argued that the additional evidences containing valuation reports which had been relied upon by the ld. Special Counsel for the Revenue is of no use for the adjudication of this appeal. 13.3. He vehemently argued that the orders of the lower authorities in more than one occasion had accepted the fact that what was received by the assessee company was only share capital and share premium. Hence, the character and nature of receipt being share capital and share premium does not change. Even the additional evidences sought to be relied upon by the ld. Special Counsel for the Revenue did not state that what was received by the assessee company was not share capital and share premium. In fact the ld. AO observed that the shareholders had over paid for the share ....
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....he ld. AR also referred to the statement recorded from Shri K. Nityanand Reddy of Aurobindo Pharma Group dated 08.01.2013 wherein in response to question No.6 on the share premium component, the said party had promptly replied and thereafter it proceeded to explain the modus operandi adopted by Aurobindo Pharma Group for making investment. 13.6. With regard to CBI charge sheet dated 09.09.2014 filed in the case of Indu Projects Ltd. contained in paper book 14 in the form of additional evidence filed by ld. Special Counsel for the Revenue, the ld. AR submitted that Mr. Jagan Mohan Reddy was not even a shareholder in assessee company and was only a director of the assessee company. He became Member of Parliament in the year 2009 and Member of Legislative Assembly (MLA) in the year 2014. Hence at the relevant time of transactions, he was not holding any public office. The ld. AR also pointed out in paper books 8, 11, 12, 13 & 14 filed in the form of additional evidences by ld. Special Counsel for the Revenue, the assessee company was not even mentioned as an accused in the CBI charge sheet. In paper book 4 containing CBI charge sheet, the assessee company was mentioned as accused N....
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....nces, if admitted, could be dealt while disposing of the main appeal itself and there is no need for passing a separate order thereon. The ld. AR vehemently argued that other than the charge sheet filed before CBI, the Revenue had not brought any supporting material to drive home the point that it has got some bearing on determination of income on the assessee company. The charge sheets filed by CBI are only allegations levelled and nothing is proved as on date. Hence, it lacks complete evidentiary value. With regard to various correspondences exchanged by various companies with government which are enclosed in paper book 3 in the form of additional evidences filed by the Revenue, they are only routine matters and routine correspondences exchange by certain corporates with government. Those correspondences have got absolutely no relevance for determination of income in the hands of the assessee company. Hence, those additional evidences are not required to be admitted. With all these observations, the ld. AR submitted that the additional evidences filed by the Revenue do not deserve to be admitted as they are absolutely irrelevant for adjudication of the appeal before us. 14. We....
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....is well settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect. 14. The next question which arises for consideration is as to whether the exercise of discretion in the instant case permitting the additional evidence by the Tribunal, is apposite? It is undisputed that Rule 29 of the Rules is akin to Order 41 Rule 27(1) of the Code of Civil Procedure. The true test in this behalf, as laid down by the Courts, is whether the Appellate Court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced. The legitimate occasion, therefore, for exercise of discretion under this ru....
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.... held as under: "2. The Tribunal has disposed of the appeal by its order of 3rd Jan., 1997, without considering the pending application under Rule 29 of the ITAT Rules, 1963, for adducing additional evidence. Obviously, that application was required to be disposed of first before the Tribunal heard the appeal on merits. The appellant also undertakes to withdraw the pending application before the Tribunal for making a reference under Section 256(1) of the IT Act for the above purpose. In view thereof, we direct that the Tribunal should first dispose of the application under Rule 29 on merits and thereafter proceed to dispose of the appeal on merits. The order dt. 3rd Jan., 1997, is, therefore, set aside and the matter is remitted to the Tribunal for disposal on merit in accordance with law. The order of the High Court is set aside as above and the appeal is disposed of accordingly. 14.4. We noted that the issue before Hon'ble Supreme Court was that the appeal was decided by the Tribunal without adjudication, whether admitted or not admitted, of the additional evidences filed in terms of Rule 29 of the Rules. But in the present case, first we are adjudicating the admissib....
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....ce sought to be produced by the revenue at the time of hearing of the appeal before it on the ground that it required investigation of facts and giving of further opportunity to the assessee. The Tribunal, therefore, refused to admit the additional evidence produced by the revenue at that stage and considered the appeal of the revenue on merits and upheld the order of the AAC and rejected the appeal of the revenue." 4......This rule is couched in negative language so far as the right of the parties to produce additional evidence before the Tribunal is concerned. It clearly says that the parties to the appeal shall not be entitled to produce additional evidence, either oral or documentary. In that view of the matter, the question of a party claiming a right to adduce additional evidence cannot arise. The Tribunal has, however, been given a power to require any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass order or for any other sufficient cause. For this purpose also, the Tribunal has to record the reasons. It is evident that in the present case the Tribunal did not think it necessary to require the production of any....
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....um under section 56 of the Act and share capital and share premium under section 68 of the Act because the entire details relating to facts and tax laws are available in the orders of the lower authorities i.e. assessment order and the order of CIT(A) and assessment records. Hence, we do not admit these additional evidences and reject the application filed by Revenue under rule 29 of the Rules. 14.9. The application filed by Revenue under rule 29 of the Rules is rejected. 15. On merits, the ld. AR also stated that the ld. AO had started the proceedings by merely relying on certain newspaper articles wherein the allegation regarding quid-pro-quo involvement in the entities which had invested in the assessee company was made. He argued that the department cannot take cognizance of these news paper articles since they are merely based on hearsay and in the nature of surmises and conjectures and cannot be construed to be key evidence in any manner to fasten any addition in the hands of the assessee company. In fact the ld. AO had even recorded statements from the Director of Matrix group, Aurobindo Pharma group and Hetero Group during the course of assessment proceedings u/s.131 ....
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....pany which is driven by managerial personnel with proper business acumen in the relevant field. Hence, the projections made in the financials which has been used for the purpose of valuation by the valuer viz.,M/s. Jagadisan and Co and M/s. Deloitte cannot be termed as unrealistic as they are strengthened and proved by actual performance. The ld. AR drew our attention to the statement of facts filed before the ld. CIT(A) wherein the assessee had submitted that the advertising revenue was not achieved by the assessee company as projected in view of the fact that the vernacular advertisement market which dropped steeply due to economic recession in the year 2008 & 2009 coupled with political instability, Telangana issue, lack of political readership in terms of the rate and volume. He also pointed out that one of the strong reasons is that the monopoly status of Eenadu newspaper was not challenged till the assessee entered the market and after the entry of the assessee, 'Eenadu' newspaper reduced their advertising tariff, which forced the assessee also to reduce the tariff, being a newcomer. This fact is also evident from the dropping profit margins of Eenadu i.e. Rs. 107.29 Crores f....
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.... of more than 10 years from the end of the assessment year under consideration. The burden of proof to show that the assessee company as alleged had such an arrangement for fastening such huge additions is on the revenue and that burden cannot be said to be discharged by merely referring to the chargesheets filed by CBI which are yet to reach finality /conclusion before the Hon'ble Special Court of CBI. 15.5. The ld AR stated that no additions can be made on the basis of charge sheets filed by CBI. In support of this proposition, he placed reliance on the co-ordinate bench decision of Chennai Tribunal in the case of ACIT vs Shri Ramcharan Tej Konidala in ITA No. 2074/Chny/2018 dated 28/04/2021. He also pointed out that Chennai Tribunal also placed reliance on the decision of Hon'ble Madras High Court in the case of CIT vs N Swamy reported in 241 ITR 363 (Mad) wherein it was held that the burden of showing that the assessee had undisclosed income is on the revenue and the burden cannot be said to be discharged by merely referring to the third party statements. 15.6. The ld AR also placed reliance on the decision of Bangalore Tribunal in the casee of Shri Ratan Babulal Lath vs ....
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....del submitted by the management. The ld. Special Counsel for the Revenue argued that the projections of the assessee company had remain unchanged between the first valuation report and the second valuation report and hence, there was no justification for the valuer M/s. Jagadisan & Co., to give higher value at Rs. 3459 Crores in his second report dated 12/07/2007. The ld. AR specifically submitted that there is a complete change in business plan from AY 2007-08 right from the numbers with regard to newspaper circulation figures between the first valuation and the second valuation report. He specifically drew our attention that in the first valuation report dated 01/11/2006, the management of the assessee company had projected sale of only six lakh copies per day in year 5, which figure had increased to Rs. 15 lakhs in the second valuation report dated 12/07/2007. This specifically shows that the entire business plan and business model has undergone a drastic change based on subsequent development. Hence, the valuation figure of the assessee company is bound to be different and have to project significant improvement. He also drew our attention to page 598 of the case law paper book....
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....t. 15.10. The ld AR also placed reliance on the decision of Hon'ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs CIT reported in 328 ITR 411 (Guj) wherein it was held that merely on the basis of admission the assessee could not have been subjected to additions unless and until some corroborative evidence was found in support of such admission. 15.11. The ld AR submitted that the documentary evidences submitted by the assessee in the instant case were not at all doubted by the lower authorities. The said documentary evidences substantiates the contention of the assessee that the issue of shares during the year under consideration was genuine. 15.12. Finally, he argued that in any case, the ld. AO and the ld. CIT(A) had categorically accepted that the nature of receipt was only share premium from these investor companies. Their only allegation is that these investor companies had paid share capital and share premium to the assessee company and that the share capital component at par value is acceptable and reasonable, but the premium component at Rs. 350/- per share was not justifiable since assessee is a nascent company. The ld. AR vehemently argued tha....
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.... Special Counsel had argued that any evidence gathered from assessee during penalty proceedings would be relevant for adjudication in quantum proceedings. The ld. AR stated that this decision is factually distinguishable with that of the assessee by stating that the ld. AO took divergent stand in quantum and penalty proceedings. Hence, the Hon'ble Supreme Court held that evidences gathered in subsequent penalty proceedings need to be considered in quantum proceedings as assessee did not furnish any details in quantum proceedings originally. Any decision rendered thereon by the Apex Court should be seen from the facts peculiar to that case and cannot be applied universally without going into the specific facts related to assessee. 15.14. The ld AR submitted that the ld CIT(A) had confirmed the addition made under the head 'income from other sources' , though no section thereon was mentioned. Even assuming that the revenue intended to apply the provisions of section 56(2)(viib) of the Act where the issue of share premium was made taxable as income by a legal fiction with effect from 01/04/2013 relevant to Asst Year 2013-14 and onwards, the ld AR submitted that the said provision c....
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....tworthiness and genuineness of the transaction is not to be doubted. The learned ITAT considered the case of the each company in great detail in paras 85 to 110 of the impugned order and recorded its finding. The aforesaid finding of fact recorded by the ITAT are based on the material available on record which is a finding based on appreciation of evidence on record. 52. Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by any Govt. Authority or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. 53. Once the genuineness, creditworthiness and identity are established, the revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of ascertaining how muc....
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.... creditworthiness or financial strength of the parties as they possessed sufficient bank balances to make investment in the assessee company. Hence the initial burden has been discharged by the assessee by submitting basic evidences proving identity, creditworthiness and genuineness of transactions and once the same is discharged, then the burden shifts to the department to prove that the said credit entry is fictitious and not genuine. This has apparently not done by the department in the instant case. The ld AR also placed reliance on the following decisions in support of its proposition, among other decisions:- a) Decision of Hon'ble Delhi High Court in the case of CIT vs Oasis Hospitalities P Ltd reported in 333 ITR 119 (Del) b) Decision of Hon'ble Delhi High Court in the case of CIT vs Kamadhenu Steel & Alloys Ltd & Ors reported in 361 ITR 220 (Del). SLP of revenue against this decision was dismissed by the Hon'ble Supreme Court in SLP No. CC 15640/2012 dated 17/09/2012. c) Decision of Hon'ble Gauhati High Court in the case of Nemi Chand Kothari vs CIT & Another reported in 264 ITR 254 (Gau) 15.17. The ld. AR argued that out of the 28 parties from....
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..../s. TWC Infrastructure Pvt. Ltd. and M/s. ERES Projects Pvt. Ltd. before the ld. AO vide letter dated 09.12.2010. 15.19. The ld. AR further submitted that the assessee has proved the identity of shareholders by furnishing the copy of PAN card of all the investor companies and copy of acknowledgement of income tax returns filed by all the investor companies. The ld. AR submitted that to prove the genuineness of the transactions, the assessee has furnished confirmations from four investor companies; copy of bank statements of all the investor companies showing amounts received by them via bank transfers and not through cash deposits and payments made to the assessee company towards share subscription; copy of Board resolutions passed in their respective hands for making investment in assessee company at a premium; the six companies mentioned in Sr. No.1-6 duly complied with the notices issued by the ld. AO wherein they had also accepted the investments made by them in the assessee company and copy of share certificates and share application forms were also submitted before the ld. AO. The ld. AR submitted that in order to prove the creditworthiness of the shareholders, the copy of....
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.... primary onus is discharged by the assessee, then the onus of proof shifts to the Revenue and just because the share applicants could not be found at the address given, it would not give the Revenue an automatic right to make an addition u/s.68 of the Act. The ld. AR also stated that one must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace any person. Reliance in support of the aforesaid propositions were placed on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., and others reported in 330 ITR 298 (Del). 15.23. The ld. AR also submitted that assessee had given the present address together with all the relevant details of each of the investor companies. Even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital and share premium be regarded as undisclosed income of the assessee. Reliance in this regard was placed on the judgement of Hon'ble Delhi High Court in the case of CIT vs. Stellar Investment Ltd., reported in 192 ITR 287 which was later affirmed by the Hon'ble Supreme C....
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....ome from other sources' falls under Chapter IV F and Section 68 also would fall under the same. Hence, he pleaded that the entire addition made on account of share premium should be viewed from the context of provisions of Section 68 of the Act and not otherwise. To counter this argument, the ld. AR objected that Section 68 does not fall under Chapter-IV F of the Act. He drew the attention of the Bench that Section 68 falls under Chapter -VI of the Income Tax Act under the heading 'AGGREGATION OF INCOME'. Hence, he argued that Section 68 would not fall under the head 'income from other sources' and it forms part of income of the assessee only by way of a deeming legal fiction. 16.2. The ld. Special Counsel for the Revenue reiterated the findings recorded by the ld. AO as well as by the ld. CIT(A) on the merits of the additions of Rs. 277.57 Crore and Rs. 15 Crores made on account of share capital and share premium. In support of the action of the lower authorities, the ld. Special Counsel for the Revenue placed reliance on the following decisions:- a. Decision of Hon'ble Supreme Court in the case of Sumati Dayal vs. CIT reported in 214 ITR 801. b. Decision of H....
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....der and additionally also placed reliance on the charge-sheets filed by the CBI before the Hon'ble Special Court of CBI in respect of certain parties. The ld. AR vehemently argued that he had already made his submissions for non-admission of additional evidences filed by the department in the instant case. Hence, any reference made by the ld. Special Counsel for the Revenue to those additional evidences should not be given any weightage as they do not fall under ambit of evidences per se as they are mere charge sheets filed by CBI which are yet to be taken cognizance by the Hon'ble CBI Court. With regard to the observations of the ld. Special Counsel for the Revenue on merits with regard to various documentary evidences submitted by the assessee, the ld. AR stated that all those points were already met by him in his arguments. With regard to the reliance placed on various decisions by the ld. Special Counsel for the Revenue, the ld. AR pointed out that there is absolutely no quarrel on the ratio laid down in various decisions of Hon'ble Supreme Court and Hon'ble Delhi High Court referred to by the ld. Special Counsel for the Revenue supra. He pleaded that what is to be seen is that....
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.... of Rs. 10/- per share is accepted and found to be reasonable and that the share premium portion received from very same investors alone has been concluded to be beyond human probabilities. He also argued that the ld. Special Counsel for the Revenue had vehemently argued that this premium component had arose to the assessee only pursuant to quid pro quo arrangement in view of the investors and their allied companies getting some benefit from the Government of Andhra Pradesh. This receipt of money based on quid pro quo arrangement in the form of share premium was treated as a benefit derived by the assessee company and hence, sought to be taxed under the provisions of Section 68 of the Act according to ld. Special Counsel for the Revenue. The ld. AR argued that one cannot have quid pro quo in Section 68 of the Act at all. The main case of the Revenue is quid pro quo and once there is quid pro quo, the entire provisions of Section 68 of the Act wholly goes. This act of quid pro quo arrangement, if any, emanates apparently only from the charge sheet filed by CBI which are merely allegations and does not have any evidentiary value. The ld. AR forcefully submitted that the ld. Special C....
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....cture Pvt. Ltd., totalling to Rs. 10 Crores in assessee company and that those two parties were provided funds by Ramky group. This is a classic case of department itself proving the source of source of the investor company. He argued that the provisions of Section 68 of the Act pre-supposes introduction of assessee's own money. When the orders of the lower authorities itself state that monies have been provided by Ramky group to the aforesaid two parties, who inturn had invested money in the assessee company, then obviously, it cannot be assessee's own money. Then the whole gamut of Section 68 of the Act vanishes. 16.7. With regard to the remaining Rs. 5 Crores received from various parties, which are subject matter of addition u/s.68 of Act, the main grievance of the Revenue seems to be that all these parties got funded by some other parties, who had quid pro quo arrangement with the assessee company. In this regard, the ld. AR placed on record, the copy of Memo of CBI Court order filed by CBI to the Hon'ble CBI Court wherein the CBI had admitted that there is absolutely no quid pro quo arrangement with the directors of the assessee company. He argued that this document comple....
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....ted elaborately hereinabove, the bench still gave the liberty to the learned special counsel for the revenue to refer to those evidences for addressing the issue in dispute. 17.1. We hold that the chargesheets filed before the Hon'ble CBI Court are nothing but mere allegations levelled on various parties involved thereon and absolutely loses the character of having any evidentiary value thereon to be used for the purpose of income tax proceedings, especially in view of the fact that those papers are even yet to be taken cognizance by the Hon'ble CBI Court and as on date, no decision has been rendered by the Hon'ble CBI Court. Hence we hold that statement recorded by the CBI cannot be held to be a good piece of evidence in the court of law unless and until some corroborative independent material is collected by making necessary enquiry by the ld. AO , which is conspicuously absent in the instant case before us. No corroborative material by conducting any independent inquiry has been brought on record by the revenue to prove that the transactions between the assessee company and the investor companies are in the nature of quid pro quo arrangement. This gets further ratified by the....
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....of the valuation reports, they had clearly defined the various parameters used by them for valuing the assessee company together with the method used for valuation after due consideration of the financial projections given by the management of the assessee company and after duly considering the market forces and the datas available in respect of competitors and others in the market. The entire parameters used in the said valuation reports have already been detailed in the facts hereinabove and hence the same are not reiterated herein for the sake of brevity. The technical specifications proposed to be utilised by the assessee company in its proposed news paper industry which had been taken due cognizance by the valuers , which are already reproduced in the arguments of ld AR hereinabove, are not disputed by the revenue before us and hence the same are not reiterated herein. 17.3.1. We find that M/s Jagadisan & Co had initially valued the assessee company on 01/11/2006 at a much lesser figure while determining the value of holding company (i.e M/s Caramel Asia) of assessee. While valuing the holding company, the valuer thought it fit to value subsidiary co. i.e assessee herein al....
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....newspaper circulation figures between the first valuation and the second valuation report given by M/s Jagadisan & Co., Chartered Accountants. In this regard, we find that in the first valuation report dated 01/11/2006, the management of the assessee company ahd projected sale of only 600000 copies per day in Year 5, which figure had increased to 1500000 copies per day in the second valuation report dated 12/07/2007. This specifically proves that the entire business plan and business model had undergone drastic change based on subsequent developments and untapped market in the news paper industry. In view of this, the valuation figure in the second valuation report is bound to have significant difference when compared to the first valuation report (where the main focus of the valuer was only to value the holding company M/s Caramel Asia and not the assessee company, being subsidiary). 17.3.4. The main grievance of the revenue is that the financial projections have been made in an unviable manner with more optimistic approach. What is to be seen is that the projections estimated in the valuation report had eventually turned out to be true or not in the subsequent actual performan....
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....ership is 133.78 lakhs per quarter which can be tabulated as under: Readership Sakshi Eenadu Andhra Jyoti Vaartha Average 48.16 60.91 22.51 6.37 Total 133.78 147.94 56.35 25.55 17.3.6. Based on the aforesaid figures, the ld. AR stated that the publication of newspaper by the assessee company has indeed reached the targeted figures within 1 ½ years whereas the rival newspaper 'Eenadu' has achieved its success in 30 years of its operation. We hold that the subsequent actual performance fully ratifies the fact that the assessee company is managed by proper key managerial personnel having both technical and business acumen in the relevant field. Hence the allegations levelled by the ld AO and ld CIT(A) in their respective orders in this regard is dismissed as baseless. 17.3.7. One more excruciating fact which requires consideration is that the ld. AO had recorded a statement on 13/12/2010 u/s 131 of the Act from Shri Nimmagadda Prakash, Director of M/s Alpha Avenues Pvt Ltd., M/s Alpha Villas Pvt Ltd , M/s Gilchrist Investments Pvt ltd , among others. In response to the specific question posed by the ld. AO to him with reg....
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....he relevant section under which the addition is sought to be made. If the same is to be considered as an addition made u/s 56(1) of the Act, then the receipt should be income. We find that the lower authorities had categorically accepted to the fact that the nature of receipt was only share capital and share premium from the investor companies. Their only allegation is that these investor companies had paid share capital and share premium to the assessee company and that the share capital component at par value is acceptable and reasonable, but the premium component at Rs. 350/- per share was not justifiable since assessee is a nascent company. We find that the ld. AO had observed that the shareholders overpaid for the share price by alleging quid-pro-quo arrangement. In our considered opinion, this allegation / objection of the revenue does not change the character of receipt being share capital and share premium. It is nobody's case that what was received from the investor companies was not share capital or share premium. It is trite law that the receipt of share capital and share premium is only the capital receipt and cannot be taxed as income in the hands of the assessee compa....
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....be brought to tax as income of the assessee company. We find that the proviso to section 68 of the Act has been inserted by the Finance Act, 2012 w.e.f. 1.4.2013 i.e. from Asst Year 2013-14 onwards. The only closest sub-section in section 56 of the Act which may be made applicable to the issue in dispute before us is section 56(2)(viib) of the Act and that is made applicable only from Asst Year 2013-14 onwards. Similarly the closest section is proviso to section 68 of the Act. The said amendments has been made effective only from Asst Year 2013-14 onwards and prospective in operation only as held by the Hon'ble Bombay High Court in the case of CIT vs Gagandeep Infrastructure (P) Ltd reported in 394 ITR 680 (Bom). 17.5.3. Though the ld. Special Counsel for the Revenue argued the case on the basis of applicability of provisions of section 68 of the Act, but that was not the section in which, the addition was sought to be made by the lower authorities. Hence it results in a situation wherein, the ld. Special Counsel for the Revenue is only trying to improve the case of the lower authorities before us, which is impermissible in law , as this tribunal does not have power of enhanceme....
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....he year under consideration. Hence a receipt , once it is not chargeable to tax at all under any of the provisions of the Act, it cannot be brought to tax under the head 'Income from other sources'. Similar addition of share capital and share premium sought to be made by the revenue u/s 56(1) of the Act (i.e income from other sources) was subject matter of adjudication by Mumbai Tribunal in the case of Green Infra Ltd vs ITO reported in 145 ITD 240 (Mum ITAT) dated 23/08/2013 wherein it was observed as under:- 10.3 A simple reading of this section show that income of every kind which is not to be excluded from the total income shall be chargeable to income tax. The emphasis is on that ' income of every kind', therefore, to tax any amount under this section, it must have some character of "income". It is a settled proposition of law that capital receipts , unless specifically taxed under any provisions of the Act , are excluded from income. The Hon'ble Supreme Court has laid down the ratio that share premium realized from the issue of shares is of capital in nature and forms part of the share capital of the company and therefore cannot be taxed as a Revenue rece....
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....e seen and examined the sources of funds. Let us see the application of funds and who are the ultimate beneficiaries of this share premium which may clear the clouds over the transaction alleged to be a sham. We find that the assessee company has invested funds in its three subsidiary companies namely (i) Green Infra Corporate Wind Ltd. (ii) Green Infra Wind Assets Ltd and (iii) Green Infra Wind Farms Ltd., wherein the assessee is holding 99.88% of share capital which means that the funds have not been diverted to an outsider. This clears the doubt about the application of funds and the credibility of the company in whom the funds have been invested. Since the assessee itself is holding 99.88% of shares and in turn the assessee company's 98% of shares are held by IDFC PE Fund-II, this entire share holding structure cannot be said to generate any transaction which could be said to be sham. 12. We have considered the grievance of the Revenue from all possible angles and by applying the provisions of Sec. 56 of the Act and at our stage we have gone to the extent of testing the transaction within the parameters of Section 68 of the Act. We could not find a single evidence ....
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.... Fund-II which is a Fund Manager of IDFC Ltd. Moreover, the contributions in IDFC Private Equity Fund-II are all by public sector undertakings. (c) Mr. Chhotaray the learned counsel for the Revenue states that the impugned order itself holds that share premium of Rs. 490/- per share defies all commercial prudence. Therefore it has to be considered to be cash credit. We find that the Tribunal has examined the case of the Revenue on the parameters of Section 68 of the Act and found on facts that it is not so hit. Therefore, Section 68 of the Act cannot be invoked. The Revenue has not been able to show in any manner the factual finding recorded by the Tribunal is perverse in any manner. (d) Thus, question no. (ii) as formulated does not give rise to any substantial question of law and thus not entertained. 17.5.6. In addition to the above, we also find that the receipt of share capital and share premium had been construed to be capital receipts not chargeable to tax by the decision of the Hon'ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd., vs. Union of India reported 368 ITR 1 (Bom). We find that this decision was accepted by the CBDT and i....
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.... the argument of the ld. AR that it is always the prerogative of the Board of Directors to decide the premium component and it is the wisdom of the shareholders whether they want to subscribe to shares at such a premium or not as long as the same is within the four corners of law. Reliance in this regard was rightly placed by the ld AR on the decision of Hon'ble Madhyapradesh High Court in the case of PCIT vs Chain House International (P) Ltd reported in 408 ITR 561 (MP), the operative portion of which is already reproduced hereinabove. Against this decision, the revenue preferred Special Leave Petition (SLP) before the Hon'ble Supreme Court and the same was dismissed in 113 taxmann.com 32 (SC). 17.5.9. Moreover, we find that the ld. AO had categorically accepted the fact of receipt of share capital portion from the investor companies to be genuine and reasonable based on the performance of the assessee company. This is not sought to be disturbed by the ld. CIT(A) in his order. This goes to prove that the assessee had indeed proved the identity of the investors, genuineness of transactions and creditworthiness of investors, by furnishing relevant supporting documentary evidences....
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....opy of Memorandum of Association and Articles of Association * Copy of Certificate of Incorporation Delton Exim Pvt. Ltd., * Copy of share application form * Copy of PAN Card * Copy of Board Resolution * Copy of Bank statement * Copy of notice of Annual General Body Meeting * Copy of Annual report with audited financials * Copy of Memorandum of Association and Articles of Association * Copy of Certificate of Incorporation Hingora Finvest Pvt. Ltd., * Copy of share application form * Copy of PAN Card * Copy of Board Resolution * Copy of Bank statement * Copy of Annual report with audited financials * Copy of Memorandum of Association and Articles of Association * Copy of Certificate of Incorporation Kirti Electro Systems Pvt. Ltd., Copy of share application form Copy of PAN Card Copy of Board Resolution Copy of Bank statement Copy of notice of Annual General Body Meeting Copy of Annual report with audited financials Copy of Memorandum of Association and....
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....person who was a mason and was not aware of existence of such company. We also find that in case of M/s. Moon Enterprises Pvt. Ltd., enquires were sought to be carried out by the Mumbai Investigation Wing and Mumbai Investigation Wing vide their report dated 28/12/2010 had stated that the said company owns 11 flats in Kandivali since 2004 and had been deriving rental income from such flats. This clearly establishes even the source for those companies which in turn had been utilised for making investment in the assessee company apart from proving the identity and genuineness of the transaction. 18.3.1. We find that the ld. AO has simply relied on the report of the Investigation Wing on the basis of which he has raised the following objections / allegations:- i. In case of Hingora Finvest Pvt. Ltd.. the address of M/s. Hingora Finvest Pvt. Ltd. is vague and there is no address which exact matches the given address. Further one premises was found which was originally purchased by one Shri Sharif Farooq Mohiuddin and later sold to Shri Alam Shaikh. Both the persons are not aware of the entity M/s. Hingora Finvest Pvt. Ltd. ii. Further in the case of M/s. Moon Enter....
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....Copy of Annual Report with Audited Statement of Accounts , Copy of Memorandum of Association & Articles of Association and Certificate of Incorporation. Therefore, merely on the basis of statement without anything more, additions cannot be made and huge tax liabilities cannot be fastened on the assessee company. We find that the law is now very well settled that it has to be appreciated while evaluating evidence, contemporaneous genuine documentary evidence has to be given precedence over unsupported and uncorroborated statement. Reliance for the aforesaid contention is placed on the judgement of the Hon'ble Bombay High Court in case of C1T vs Omprakash K Jain & Ors reported at 24 DTR 157 (Bom) has held as under: "The test of evidentiary value of the oral evidence and the documentary evidence has to be borne in mind. The AO will have to comply with the willed principle of law. Documentary evidence if genuine must prevail over she oral statement ". 18.3.4. In any case, we further find that the allegations made by the Investigation Wing in it's reports cannot be considered for making additions since these allegations or contentions have not been made by the ld. AO....
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....s. Hence, the creditworthiness of all investor companies is also proved by the assessee. All the transactions had been routed through regular banking channels. The assessee had also furnished the copy of share certificates together with the relevant share application form in respect of all the eight investor companies. Six out of eight investor companies had indeed confirmed the fact of having made investments in the assessee company at a premium of Rs. 350/- per share. In respect of Hingora Finvest Ltd., & Moon Enterprises Pvt. Ltd., as stated above, independent enquiries were carried out by Mumbai Investigation Wing. All these facts and supporting documents duly prove the genuineness of transactions also. Apart from that we find that six out of eight investor companies had sufficient net worth amounting to several crores much more than the amount of investment made by them in the assessee company. The relevant details of net worth of these six companies have already been tabulated in para 15.19 hereinabove. 18.5. In fact, even in respect of these Kolkata parties i.e. Artilligence Bio-Innovations Ltd., Kirti Electro Systems Pvt. Ltd., Delta Exim Pvt. Ltd., and Stocknet Internat....
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....jects Pvt. Ltd., and TWC Infrastructure Pvt. Ltd., from the list of 20 companies. We find that assessee had furnished all the relevant documents even with regard to these two companies by also mentioning the correct address of the companies. The very fact that the ld. AO had not chosen to exclude the physical presence of Directors of these two companies before him, itself goes to prove that the ld. AO was convinced with the documentary evidences furnished by the assessee. 18.7. Heavy reliance was placed on the decision of Mumbai Tribunal in the case of Bini Builders Pvt. Ltd., vs. DCIT in ITA Nos. 631 & 632/Mum/2019 for A.Yrs. 2011-12 & 2012-13 respectively dated 12/03/2020 wherein the various decisions quoted by the ld. Special Counsel for the Revenue were also considered. For the sake of convenience, the said order is reproduced hereinbelow. As per the provisions of section 68 of the Income-tax Act, 1961, where any sum is found credited in the assessee's books and assessee offers no explanation about the nature and source thereof or the explanation furnished is found to be unsatisfactory, the sum so credited may be charged to Income-Tax as the income of the assess....
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....ious judicial authorities in catena of judicial pronouncements. The said decision has been followed by Hon'ble Bombay High Court in the case of Gagandeep Infrastructure (P.) Ltd. (supra), & subsequently in CIT v. Orchid Industries (P.) Ltd. [2017] 88 taxmann.com 502 (Bom.). The Hon'ble Delhi High Court followed the said decision in Pr. CIT v. Adamine Construction (P.) Ltd. [107 taxmann.com 84 against which revenue's Special Leave petition was dismissed by Hon'ble Supreme Court in Pr. CIT v. Adamine construction (P.) Ltd. [2019] 107 taxmann.com 85/264 Taxman 279. Similar is the position of decision of Hon'ble Delhi High Court rendered in Pr. CIT v. Himachal Fibers Ltd. [2018] 98 taxmann.com 172 against which revenue's Special Leave Petition was dismissed by Hon'ble Supreme Court in Pr. CIT v. Himachal Fibers Ltd. [2018] 98 taxmann.com 173/259 Taxman 3. Similar is the decision of Hon'ble High Court of Madhya Pradesh in Pr. CIT v. Chain House International (P.) Ltd. [2018] 98 Taxmann.com 47 against which revenue's Special Leave Petition has recently been dismissed by Hon'ble Supreme Court on 18/02/2019 reported at Pr. CIT v. Chain House Internat....
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..... Also perused the materials on record. 13. Section 68 of the Act deals with cash credits. As per section 68, 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. Simply put, the section provides that if there is any cash credit disclosed by the assessee in his return of income for the previous year under consideration and the assessee offers no explanation for the same or if the assessee offers explanation which the Assessing Officer finds to be not satisfactory, then the said amount is to be added to the income of the assessee to be charged to income tax for the corresponding assessment year. 14. Section 68 of the Act has received considerable judicial attention through various pronouncements of the Courts. It is now well settled that under section 68 of the Act, the assessee is required to prove identity of the creditor; genuineness of the transaction;....
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....sactions by many documents, such as, share application form etc. First appellate authority also noted that there was no requirement under section 68 of the Act to explain source of source. It was not necessary that share application money should be invested out of taxable income only. It may be brought out of borrowed funds. It was further held that non-responding to notice would not ipso facto mean that the creditors had no credit worthiness. In such circumstances, the first appellate authority held that where all material evidence in support of explanation of credits in terms of identity, genuineness of the transaction and creditworthiness of the creditors were available, without any infirmity in such evidence and the explanation required under section 68 of the Act having been discharged, Assessing Officer was not justified in making the additions. Therefore, the additions were deleted. 19. In appeal, Tribunal noted that before the Assessing Officer, assessee had submitted the following documents of the three creditors: (a) PAN number of the companies; (b) Copies of Income-tax return filed by these three companies for assessment year 2010-11; ....
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....ce on record to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represent company's own income from undisclosed sources. Accordingly, no addition can be made u/s. 68 of the Act. In view of above reasoned factual finding of CIT (A) needs no interference from our side. We uphold the same." 21. From the above, it is seen that identity of the creditors were not in doubt. Assessee had furnished PAN, copies of the income tax returns of the creditors as well as copy of bank accounts of the three creditors in which the share application money was deposited in order to prove genuineness of the transactions. In so far credit worthiness of the creditors were concerned, Tribunal recorded that bank accounts of the creditors showed that the creditors had funds to make payments for share application money and in this regard, resolutions were also passed by the Board of Directors of the three creditors. Though, assessee was not required to prove source of the source, nonetheless, Tribunal took the view that Assessing Officer had made inquiries through the investigation wing of the department at Kolkata and collected a....
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....y the Hon'ble Supreme Court in 251 ITR 263 (SC). We further find that the reliance placed by the ld AR on yet another decision of Hon'ble Delhi High Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., and others reported in 330 ITR 298 (Del) also supports the case of the assessee company. 18.9. With regards to the argument of the ld. Special Counsel for the Revenue that the investors were showing meagre income in their Income Tax Returns for the assessment year under consideration, it is submitted that the assessee company has established the identity of the investor companies. It had provided evidences like confirmation letters, copies of bank statement/Income Tax Return Acknowledgements and it's own bank statement to prove the genuineness and credit-worthiness of transactions. The assessee company has given the entire details of the investor companies like their ITR Acknowledgement. PAN details, certificate of incorporation. Memorandum of Association, Articles of Association and their bank statements wherein the payments made to the assessee company are reflected. We also find that all these investor companies have sufficient net worth in their balance sheets as....
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....e against the share applicants in accordance with law." 18.10. Reliance was also rightly placed by the ld AR on the judgement of Hon'ble Bombay High Court in the case of Mr. Gaurav Triyngi Singh vs. ITO in ITA No. 1750 of 2017 dated 22.01.2020, wherein the Hon'ble Bombay High Court has held as under: "15. In view of discharge of burden by the assessee, burden shifted to the revenue; but revenue could not prove or bring any material to impeach the source of the credit. Though Mr. Waive, learned standing counsel, has pointed out that the creditor had no regular source of income to justify1 the advancement of the credit to the assessee, we arc of the view that the assessee had discharged the or, us which was on him to explain the three requirements, as noted above. It was not required for the assessee to explain the sources of the source. In other words, he was not required to explain the sources of the money provided by the creditor Smt. Savitn Thakur i.e. Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur. 16. Considering the above, we are of the view that the Tribunal was not justified in sustaining the addition of Rs. 14 lakhs to the total income of ....
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....antial question of law would arise." 18.13. In any case, the nature of receipt being share capital and share premium had not been doubted by the Revenue in the instant case. We find that the assessee duly proved the nature and source of credit being share capital and share premium as contemplated in Section 68 of the Act. The law is very well settled that the receipt of share capital and share premium would only be capital receipt and cannot be brought to tax as income of the assessee as has been held by the Hon'ble Bombay High Court in the case of Vodafone India Services Ltd., reported in 368 ITR 1, which decision has been accepted by the CBDT by not preferring further appeal to Hon'ble Supreme Court. In fact, the CBDT had also issued instruction No.2/2015 dated 29/01/2015 to all its field officers to accept the said decision of the Hon'ble Bombay High Court. In our considered opinion, the said instruction is binding on the lower authorities. 18.14. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in deleting the addition made in the sum of Rs. 15 Crores u/s.68 of the Act. Accordingly, the....
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....0,000/- comprising of 23525000 shares of Rs. 10/- each. According to ld. CIT, the ld. AO has not examined the following aspects:- 1. Genuineness of the investment by the Carmel Asia. 2. Capacity of Carmel Asia to invest a sum of Rs. 23.5 cr. in the share capital of the assessee during the previous year. 3. The AO did not examine the issue of common investors or shareholders both in Caramel Asia and tax payer. 4. The AO also did not examine the issue of quid-pro-quo arrangement by the common investor in the Carmel Asia and the assessee. The common investors had received various benefits from the Government of Andhra Pradesh and the possibility of routing investment by them cannot be ruled out and Sri YVST Sai, Addl.CIT, Range-2, Hyderabad has emphasized on this issue. 5. Mere filing of a confirmation letter from Carmel Asia does not absolve the assessee from establishing the capacity and genuineness of the transactions 21.3 The ld. CIT also observed in his order that the aspect of quid pro quo arrangement was examined by the ld. AO with reference to other investors but not with reference to Carmel Asia. The ld. CIT also observed that a....
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....). Ltd., (supra). During the course of penalty proceedings u/s.271(1)(c), the AO has recorded the sworn statements from the common investors which primafacie indicate that investments into the share capital of the assessee through the Caramel Asia could be a part of the quid pro quo arrangement. The common investors or shareholders had obtained various benefits from the Government of Andhra Pradesh. At this stage, I do not wish to draw any conclusion about the quid pro quo arrangement between the tax payer and the common investors. At this stage, the information on record reveals that the AO, at the time of passing the original assessment order did not examine the capacity and genuineness of the investment of the Caramel Asia into the share capital of the tax payer and also the quid pro quo arrangement by the common investors. The AO is hereby directed to examine these three issues mainly genuineness, capacity of the Carmel Asia and quid pro quo arrangement of common investors and beside the issue in accordance with the provisions of law. For this limited purpose, I set aside the assessment made by the AO on 31/12/2010. The AO should adhere to the principles of natural justice stri....
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.... ld. CIT u/s.263 of the Act dated 08/03/2013 is enclosed in pages 20-22 of the paper book. From the perusal of the said show-cause notice, the Tribunal in paras 6-8 thereon, the ld. CIT had observed that source of source in respect of capital received from holding company has not been verified by the ld. AO. 21.9. We find from page 65 of the paper book which contains the re-assessment framed in the hands of holding company u/s.143(3) r.w.s. 147 of the Act dated 30/03/2015 for A.Y.2007-08. The said re-assessment apparently had triggered based on the search conducted by CBI in the case of Shri Jaganmohan Reddy and his group companies on 18/08/2011 wherein certain documents were found connected to Caramel Asia (holding company) that it had received share capital and share premium from various companies at a huge premium in A.Y.2007-08. The list of those companies from whom share capital and share premium were received by Caramel Asia were listed out in the reasons recorded by the Assessing Officer assessing the holding company. We also find that in the said reasons, there is also an observation that on the basis of investigations by the CBI that companies have received certain bene....
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....he ld. AO had given the shareholding pattern of assessee company as well as its holding company together with the premium component charged in A.Y.2007-08. In the said reasons, the ld. AO finally concluded that income of Rs. 50,03,58,000/- chargeable to tax as escaped assessment in the hands of the assessee company for the A.Y. 2007-08. However, while framing the re-assessment order for the A.Y.2007-08 u/s.143(3) r.w.s. 147 of the Act on 30/03/2015 (this order is enclosed in page 114 to 116 of the paper book), the ld. AO did not make any addition and accepted the income returned by the assessee. It is pertinent to note that this re-assessment order for A.Y.2007-08 was framed on 30/03/2015 which is much after the date of filing of charge sheets by the CBI before the Hon'ble CBI Court. The CBI chargesheet filed was filed on 31/03/2012. The revision order for A.Y.2008-09 was passed by the ld. CIT u/s.263 of the Act on 28/03/2013. Despite CBI chargesheets dated 31/03/2012 and revision order of ld. CIT dated 28/03/2013 for A.Y.2008-09, the ld. AO in the re-assessment framed for A.Y.2007-08 vide his order dated 30/03/2015 had not made any addition and simply accepted the returned income ....
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....essment in the hands of Caramel Asia and not in the hands of the assessee company herein. 21.15. We further find that the ld. CIT in para 10 & 11 had held that the ld. AO had not examined the genuineness of the transactions with Caramel Asia. In this regard, we find that the ld. AO had examined the receipt of share capital at par by the assessee company from Caramel Asia (holding company) and had accepted the genuineness of the same in the assessment order. In fact, even for investors falling in the outsiders category as has been elaborately dealt by us in ITA No.18/Hyd/2012 for A.Y.2008-09 hereinabove, the allotment of shares at par has been accepted by the ld. AO to be genuine and reasonable based on the performance of the assessee company. While this is so, where is the scope for the ld. CIT to say that the ld. AO had not examined the issue on receipt of share capital at par from its holding company. This is a classic case of the ld. CIT trying to substitute his view in the place of view already taken by the ld. AO in the course of assessment proceedings. There is a categorical finding given by the ld. AO in his assessment order in several places that the receipt of share cap....
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....which decision has been accepted by the CBDT by not preferring further appeal to the Hon'ble Supreme Court. Hence, that matter has attained finality. 21.17. To sum-up, we find that the issue which is sought to be revised by the ld. CIT by invoking revision jurisdiction u/s.263 of the Act in the instant case, was already the subject matter of addition made in the hands of the Caramel Asia Holdings Ltd., (holding company of the assessee). In any case, in the scrutiny assessment order passed in the hands of the assessee company for A.Y.2008-09 u/s.143(3) of the Act dated 31/12/2010, the ld. AO had given a categorical finding on more than one occasion at several places of his order, that the receipt of share capital at par value from the promoters category (which includes the holding company i.e. Caremel Asia) and outsiders category are accepted as genuine and reasonable. This has been admittedly done by the ld. AO after considering all the relevant documents with supporting evidences furnished by the assessee company including the direct confirmations filed by those investor companies before the ld. AO in response to the notices issued u/s.133(6) or summons u/s.131 of the Act. Henc....
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....012] 341 ITR 537/194 Taxman 57 and in D.G. Housing Projects (supra). In fact the Delhi High Court in D.G. Housing Projects (supra) while so holding placed reliance upon the decision of this Court in Gabriel (India) Ltd. (supra). It is very important to note that the CIT in his order under Section 263 of the Act has recorded the fact that there has been no adequate inquiry. Thus, this is not a case of no inquiry, warranting order under Section 263 of the Act. Thus, this objection on the part of the Revenue, is also not sustainable. . 10. The Revenue placed reliance upon the decision of the Delhi High Court in D.G. Housing Projects Ltd., (supra) that as the Assessing Officer had not enquired into the source of the source of the gifts received by the Assessee, the Assessment Order is erroneous. The aforesaid decision holds that the power of Revision under Section 263 of the Act would normally be exercised in case of no enquiry and not in cases of inadequate enquiry. However, even in case of inadequate enquiry by the Assessing Officer, the order of the Assessing Officer could be erroneous in two classes of situation. The first class would be where orders passed by the Assessin....