TaxTMI 
TaxTMI 
2018 (12) TMI 1927
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....of the department are as under: Appeal No.140/Nag/2018 For Assessment Year 2009-10 1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs. 83,94,421/- made by the AO being gross profit on bogus purchases, without going into the merits of the case. 2. On the facts and circumstances of the case and in law, the learned CIT (A) erred in holding that during assessment u/s.153A r.w.s. 143(3), it vas not open to the AO to make additions without existences of any incriminating documents found and seized during the search u/s.132(1) overlooking the crucial fact that the original return filed by the assessee was only processed u/s.143(1) and no scrutiny assessment was made earlier. 3. On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that the scope of section 153(A) is limited assessing only search related income, thereby denying revenue the opportunity of taxing other escaped income that comes to the notice of the AO. 4. On the facts and circumstances of the case and in law, the learned CIT(A) erred in limiting the scope of section 153A only to undisclos....
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....ess or reassess the total income of the six assessment years. 7. On the facts and circumstances of the case and in law, the learned CIT(A) failed to appreciate that the word incriminating is neither used in section 153A nor defined in the statute and therefore, the deletion of addition on this account is not in consonance of law. 8. On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs. 7,70,00,000/- made by the AO treating the share capital and the share premium received by the assessee as unexplained cash credit u/s.68 of the LT. Act without appreciating the fact that the assessee has failed to establish the creditworthiness of the creditors and the genuineness of the transactions to the satisfaction of the AO. 9. On the facts and circumstances of the case and in jaw, the learned CIT(A) failed to appreciate that the company from wham the share capital along with share premium was received did not have the creditworthiness to fund the share capital and premium and as such neither the creditworthiness nor the genuineness of the transaction is proved. 10. On the facts and circumstances....
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....tances of the case and in jaw, the {earned CIT(A) erred in deleting the addition of Rs. 4,15,83,500/- and Rs. 50,00,000/- made by the AO treating the share capital and the share premium received by the assessee as unexplained cash credit u/s.68 of the I.T. Act without appreciating the fact that the assessee has failed to establish the creditworthiness of the creditors and the genuineness of the transactions to the satisfaction of the AO. 8. On the facts and circumstances of the case and in law, the learned CIT(A) failed to appreciate that the company from whom the share capital along with share premium was received did not have the creditworthiness to fund the share capital and premium and as such neither the creditworthiness nor the genuineness of the transaction is proved. 9. On the facts and circumstances of the case and in law, the learned CIT(A) failed to appreciate the ground realities that the documents in the case of shell companies are always in order so that they can act as a conduit in aiding tax evasion. 10. On the facts and circumstances of the case and in law, the learned CIT(A) erred in relying on the judgment of Hon'ble Bombay High Court I....
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....., a Kotkata based company. 3. On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs. 11,50,00,000/- made by the AO treating the share capital and the share premium received by the assessee as unexplained cash credit u/s.68 of the I.T. Act without appreciating the fact that the assessee has failed to establish the creditworthiness of the creditors and the genuineness of the transactions to the satisfaction of the AQ. 4. On the facts and circumstances of the case and in law, the learned CIT{A) failed to appreciate that the company from whom the share capital aiong with share premium was received did not have the creditworthiness to fund the share capital and premium and as such neither the creditworthiness nor the genuineness of the transaction is proved. 5. On the facts and circumstances of the case and in law, the learned CIT(A) failed to appreciate the ground realities that the documents in the case of shell companies are always in order so that they can act as a conduit in aiding tax evasion. 6. On the facts and circumstances of the case and in law, the learned CIT(A) erred in dele....
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.... case and in law, the learned CIT(A) erred in holding that the valuation of stock as arrived by the AO which forms the basis of addition u/s.69 is not based on any evidence and is merely based on presumption of the AO overlooking the fact that the column in jilaba software is purchase" price to the assessee, 14. On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that the AO has disregarded the valuation done by the approved vaiuer overlooking crucial fact that no such valuation was done by the approved valuer during the relevant previous year for the AY, 2012-13. 15. On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that the action of the AO has resulted in cherry picking ignoring the fact that the AO has culled from the data recorded in Jilaba software found in External Hard Disc Drive seized during the course of action u/s.132. Appeal No. 231/Nag/2018 For Assessment Year 2013-14 1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs. 18,87,66,428/- made by the AO being unexpiained investment in closing stock, wit....
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....tion of Rs. 5,14,29,709/- made by the AO being unexplained investment in closing stock, without going into the merits of the case. 2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding the findings of the AO that the column in the Jilaba software represent purchase price of the assessee is misplaced and erroneous and without giving cogent reasons. 3. On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that the valuation of stock as arrived by the AO which forms the basis of addition u/s.69 is not based on any evidence and is merely based on presumption of the AQ overlooking the fact that the column in Jilaba software is purchase price to the assessee. 4. On the facts and circumstances of the case and in law, the learned CIT(A) erted in holding that the action of the AO has resulted in cherry picking ignoring the fact that the AO has culled from the Data recorded in Jilaba software found in External Hard Disc Drive seized during the course of action u/s.132, Assessee's Appeal Appeal No. 234/Nag/2018 For Assessment Year 2012-13 1. The Hon. CIT{A) erred in con....
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....r of the company. During the course of search, statement of shri. Pradeep Kothari, Managing Director was aIso recorded on 14-9-2014 in which, he admitted that the pen drive contains sales details and cash collections from customers. 4. Consequent to search notices u/s 153A has been issued for six assessment years immediately preceding the year in which search took place calling for return of income. In response to the notice, the assessee has filed its return of income: for assessment years 2009-10 to 2014-15 on 22.11.2016. For A.Y., 2015-16 the assessee has filed return of income under Section 139(1) on 06-10-2016. The cases were selected for scrutiny and accordingly, notice u/s 143(2) and 142(1) of the Act, were issued. In response to notices, the authorized representative of the assessee appeared and filed various details, as called for, 5. The AO, on the basis of the statement recorded by the sales tax authorities as regards the bogus purchases and certain investigation carried out by the investigation wing as regards the share application money and loans received by the assessee, came to the conclusion that the purchases were bogus and the transaction of the share applic....
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.... the AO towards unproved share capital and loans by holding that the assessee has discharged identity, genuineness of transactions and creditworthiness of parties. The CIT(A) also had deleted unexplained investments In stock by holding that all doubts raised by the AO has been adequately explained by the assessee to prove that amount mentioned in column "sale value" of the stack item is not purchase price/cost of assessee. The CIT(A) further observed that the software developer clarified the position by addressing a letter as per which the stand taken by the assessee has been confirmed. Moreover, the AO has not poined out any difference in quantity, therefore in absence of any discrepancies is quantity merely on the basis of price variation in jilaba software, that too when assessee explained such difference, addition cannot be made for unexplained investments in stock. In so far as unproved toans for assessment year 2014-15 and 2015-16, the Id. CIT(A) confirmed additions for the reason that the assessee did not satisfactorily proved identity, genuineness of transaction and credit worthiness of parties. The Id. CIT(A) also confirmed gross profit addition on alleged bogus purchases ....
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.... the Id. CIT(A) overlooked the fact that in few years the assessments have been completed u/s 143(1) and the AO neyer had an accession to consider books of account, therefore the ratio laid detyn by the jurisdictional High court in case of CIT vs. Continental Warehousing Corporation (Nava Sheva) Ltd. (2015) 374 ITR 645 and Division Bench judgement of the Hon'ble Bombay High Court in the case of CIT vs. Murli Agro Products Ltd. (2014) 49 taxmann.com 172 has no application. The Ld. CIT(A) also relied upon the decision of the ITAT Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. vs. DCIT (2012) 137 ITD 287. The Id. CIT(A) without appreciating these fact deleted addition on the ground that the assessments have been unabated and 'no addition could be made in absence of in cri minating materials. 10. The learned A.R. strongly supporting the Id, CIT(A) order submitted that the additions made by the AO for A.Y., 2009-10 to A.Y. 2012-13 in the assessments framed under Section 153A, without any reference to seized material is bad in law as the assessments for A.Y, 2009-10 to 2012-13 have been unabated/concluded on the date of search. The A.R., with reference to the ....
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....ted and was seized and inventorised as annexure B-3 which contains certain excel sheets named as reconciliation of cash. In search, six such cash reconciliation statements were seized. During search, statement of Shri Hemant Dhakate, Accountant was recorded in which he stated that each day he prepares cash reconciliation statement and hand over to director of the company. During the course of search, statement of shri. Pradeep Kothari, Managing Director was also recorded on 14-9-2014 in which, he admitted that the pen drive contains sales details and cash collections from customers. The AO has made various additions towards gross profit on alleged bogus purchaes, unproved share capital including share premium, unproved loans and advances and unexplained investments in stock, If you go through additions made by the AO, the AO has not referred to any incriminating material found as a result of search in respect of additions made towards gross profit on alleged bogus purchases and share capital. In respect of unexplained investment in stock, he had relied upon documents recovered from hidden pen drive which contains 3 to 4 days sales report generated in Jilaba software which pertains ....
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....rch Proceedings showing that the purchases made from the three parties was bogus. The appellant accordingly submitted that the assessment in the appellant's case was unabated/completed assessment and therefore any addition in the appellant's case could be made only on the basis of incriminating material found during the course of search. The appellant relied on various judicial pronouncements including one in the case of CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del), in which it has been held that: "37. On a conspectus of Section 153A(L) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 155.4 (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise, iii. Th....
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....vs. Kabul Chawla (2016)380 ITR 573 (Del), the revenue preferred Special Leave Petition before the Hon. Supreme court and the same was dismissed by the apex court which is reported in 380 ITR (St.) 4 (Sc). Hence it could be safely concluded that the decision of Hon. Delhi HC in the case of Kabul Chawla supra would have to be considered on the impugned issue. 16. The DR has drawn our attention to the Kerala High Court judgement tn the case of E.N. Gopakumar wherein the Hon. High Court has held that "The statute nowhere makes it conditional that the department has to unearth some incriminating material to conclude some method against the assessee in events where the assessment is triggered by a notice under Section 153A(1)(a) of the Act. This means that even when such notice is triggered following a search, the assessment proceedings can be concluded in any manner known to aw, including under Section 143(3) or even Section 144 of the Act. if need be, Therefore, the assessment proceedings generated by the issuance of a notice under Section 193A (1}{a) of the Act can be concluded against the interest of the assessee including making additions even without any incriminating material b....
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....bmitted copy of bills which contains complete name, address and TIN number of the parties, ledger account of parties, proof of payment through banking channel and entries in books of accounts and stock register which proves that the purchase are genuine. The AO has not pointed out any defect in the purchase bills and other evidences produced by the appellant nor has he given any findings that the payment made by appellant to the aforesaid parties through banking channel is not genuine nor the AO has brought any evidence on record to prove that the appellant has received back cash from the aforesaid parties in lieu of payment made through banking channel. The Ld. AO has not rejected appellant's books of accounts. The AO has simply relied on information supplied by sales tax authority that the so-called sellers have provided bogus bills on commission. The addition is completely based on conjecture and surmise. Further when evidence clearly proves purchases as genuine, merely because the evidence of transportation is not available in case of jewellery which could easily be carried in person, it cannot be held that there is no evidence of transportation especially when the said goo....
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....aterials in the statue. The D.R. further submitted that the moment, search is taken place, assessments for six assessment years gets reopened and the AO shall have jurisdiction to assess total income including undisclosed income on the basis of materials seized during search and on the basis of books of accounts. The Id. D R further submitted that the Id. CIT(A) overlooked the fact that in few years the assessments have been completed u/s 143(1) and the AO never had an accession to consider books of account, therefore the ratio laid down by the jurisdictional High court in case of CIT vs. Continental Warehousing Corporation (Nava Sheva) Ltd. (2015), 374 ITR 645 and Division Bench judgement of the Hon'ble Bombay High Court in the case of CIT vs. Murli Agro Products Ltd. (2014) 49 taxmann.com 172 has no application. The DR further submitted that the AO has brought out clear facts to the effect that the purported share capital transactions with TMPL is a accommodation entry which is proved from the statements of persons involved in said transactions. He, further submitted that mere furnishing of certain documents to prove identity is not sufficient to explain the credit when genui....
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....inating material found as a result of search no addition can be made in the assessment framed under Section 153A of the Act. In this regard relied upon the decision of the Hon'ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (Nava Sheva) Ltd. (2015) 374 ITR 645 and Division Bench judgement of the Hon'ble Bombay High Court in the case of CIT vs. Murli Agro Products Ltd. (2014) 49 taxmann.com 172. The assessee also relied upon the decision of the ITAT Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. vs. DCIT (2012) 137 ITD 287. The ld. AR relied upon the decision of Hon'ble Delhi High Court in case of CIT vs. Kabul Chawla (2016) 380 ITR 573 (Del). 25. We have heard both the parties, perused the material available on record and gone through the orders of the Authorities below. We have also carefully considered case laws relied upon by both counsels. In this case, the search and seizure action under Section 132 of the Act, was conducted on 10-09-2014. In search, certain documents for purchase of immovable property and ledgers of Taranya Merchandise Pvt. Ltd., were found and impounded. The CIT(A) at para 4.1.18 of Appellate O....
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....l Chawla (2016) 380 ITR 573 (Del) and the Hon'ble Gujarath High Court in the case of Pr. CIT vs. Saumya Construction Pvt. Ltd, 2016 Tax Pub (DT) 3466 (Guj- HC). In this case, search took place on 10-09-2014 and by the time the assessments for A.Y. 2009-10 to A.Y. 2011-12 have been unabated and the time limit for issue of notice under Section 143(2) has been expired, therefore, in absence of any incriminating material found as a result of search no addition can be made in the assessment framed under Section 153A of the Act. 27. A perusal of the assessment order also shows that no incriminating material was found in the case of assessee during the course of search proceedings which shows share transaction with TMPL was a accommodation entry. Since, addition made by the AO was not based on any incriminating material unearthed as a result of serach and also jurisdictional high court has held the said issue in favour of assessee and the Hon, Supreme Court has dismissed the SLP against the Delhi High Court's Judgement in the case of Kabul Chawla, we uphold the deletion of the addition made for the Assessment Years 2010-11 and 2011-12, as the Assessment of which stands unabated....
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....essee, offers no explanation or explanation offered by the assessee, in the opinion: of the AO is not satisfactory, then sum found credited may be treated as income of the assessee of that previous year. A plain reading of section 68, makes it very clear that to fix any credit within the ambit of section 68 of the Act, the AQ has to examine 3 ingredients, is identity, genuineness of transaction and creditworthiness of the parties. If the assessee proves all 3 ingredients, then the onus shifts to the AO to prove otherwise. Similarly, the Proviso inserted by the Finance Act, 2012 w.e.f. 01-04-2013 deals with the case where the sum so credited consists of share application money, share capital, share premium, by whatever name cailed and explanation offered by such assessee shall be deemed to be not satisfactory unless such person being a recipient in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited. As per the Proviso, if the assessee fails to explain the source of source of share capital or share application money, then the addition can be made towards share capital, and share application mo....
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....d audit reports to come to the conclusion that the share application form issued by the assessee are stereotyped. 32. Having considered arguments of both the sides and materials available on 'record, we do not find any merit in the reasons given by the AO to come to the conclusion that the assessee has failed to prove the genuineness of transaction and creditworthiness of the parties on the ground that the assessee has filed enormous details including their PAN details, CIN master data, reply to the notices issued u/s 133(6). The assessee also filed copies of assessment order passed u/s 143(3) by the department in respect of TMPL where the addition has been made for similar amount. The assessee also filed a certificate from a Chartered Accountant - certifying the active status of the company in the website of Ministry of Corporate Affairs. On going through various detailed filed by the assessee, we find that there is no reason for the AQ to doubt the genuineness of transactions and creditworthiness of the parties. All these evidences go to prove an undoubted fact that these companies are not paper companies and recognized with business activity. We further notice that the assess....
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....y the Hon'ble Supreme Court in the case of Lovely Exports pvt Ltd. vs. CIT, (2008) 216 CTR (SC) 193, as also by this Court in CIT vs Creative World Tele films Ltd, (2011) 333 ITR 100 (Bom). In such circumstances. we are of the view that the Tribunal's finding that there is no justification in the addition made under Section 68 of the Income Tax Act, 1961 neither suffers from any perversity nor gives rise to any substantial question of faw." CIT vs. Creative World Tele films Ltd (2011) 333 ITR 100 (Born-High Court) "The question sought to be raised in the appeal was also raised before the Tribunal and the Tribunal was pleased to follow the judgment of the apex Court in the case of CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195. wherein the apex Court observed that if the share application money is rec eived by the assessee-company from alleged bogus shareholders, whose names are given to the AO, then the Department can always proceed against them and if necessary reopen their individual assessments, in the case in hand, it is not disputed. that the assessee had given the details of name and address of the shareholder, their PANIGIR number and had also ....
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....ity in allowing the appeal of the assessee. We do not find any illegality in the judgment of the CIT(A) and the Tribunal." CIT vs. Jay Dee Securities & Finance Ltd (2013) 32 Taxmann.com 91 (All-High Court) "The Tribunal recorded findings that the assessee had produced the return of income filed by the relevant shareholders who had paid share application money. The assessee had also produced the confirmation of share holders indicating the details of addresses, PAN and particulars of cheques through which the amount was paid towards the share application money. The Tribunal thereafter relied upon the judgment of the Supreme Court in CITY. Lovely Exports (P.) Ltd wherein it was held that if the assessee produces the names, addresses, PAN details of the share holders then the onus on the assessee to prove the source of share application money stands discharged. If the Assessing Authority was not satisfied with the creditworthiness of the shareholders, it was open to the Assessing Authority to verify the same in the hands of the shareholders concerned, The Tribunal has relied upon an order of the Supreme Court in case of CIT vs. Divine Leasing & Finance Ltd. In view o....
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....Agro Foods (P.) Ltd (2013) 38 Taxmann.com 375 (ALL-High Court) Tribunal, however, held that since identity of shareholders stood proved on record, amount of shar e application money could not be added to income of assessee, According to Tribunal, in such a case amount could be taxed in hands of persons who had invested" "CIT vs, Dwarkadhish Investment (P) Ltd (2011) 330 ITR 298 (Del-High Court) "Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68- Revenue has all the power and wherewithal to trace any person- Moreover, it is settled law that the assessee need not to prove the 'source of source' In the instant case, the Tribunal has confirmed the or der of the CIT(A) deleting the impugned addition holding that the assessee has been able to prove the identity of the share applicants cand the share application money has been received by way of account payee cheques." CIT vs, Namastey Chemicals Pvt Ltd (2013) 33 Taxmann.com 271 (Guj-High Court) "In the present case also, the respondent assessee has received share application -money from different sub scr....
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....who had concurrently held the due details having been proved. The assessee company had presented the necessary worth proof before both the authorities and it was not expected by the assesseecompany to further prove the source of the deceased." If vs. Nikunj Eximp Enterprises (P.) Ltd (2013) 33 Taxmann.com 384 (Bom) "Whether merely because suppliers had not appeared before Assessing Officer or Commissioner (Appeals), it could not be concluded that purchases were not made by assessee - Held. Yes... Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were in fact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the CIT(A). one cannot conclude that the purchases were not made by the respondent-assesse" CIT vs, Samir Bio- Tech Put Ltd (2010) 325 ITR 294 (Del-High Court) "Identities of the subscribers are not in doubt, The transactions have also been undertaken through banking channels inasmuch as the application money for the shares was given through account payee cheques. The....
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....uge premium and hence confirmed addition made by the AO u/s 68 of the Act. 36. In this case, on perusal of the facts available on record, we find that the assessee has filed enormous details in respect of subscribers to the share capital and the evidences filed by the assessee categorically proves that subscribers to the share capital are companies having financial position to establish creditworthiness. Therefore, considering the facts and circumstances of the case and also relying upon the case laws discussed above, we are of the view that the AO was erred in making addition towards share capital and share premium u/s 68 of the Act. The CIT(A), after considering relevant submissions has rightly deleted the addition made by the AO towards share capital and share premium. We do not find any error or infirmity in the order of the CIT(A); hence, we are inclined to uphold the findings of the CIT(A) and dismiss the ground taken by the revenue. 37. The next issue that came up for our consideration is addition on account of closing stock u/s 69 of the Act, on the basis of difference price of gold and jewellery as per Jilaba Software and books of accounts maintained in tally softwar....
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....y software. 39. It is the contention of the assessee that, when there is no differene in quantity of closing stock as per two softwares, merely there is difference in price of certain items in Jilaba software, addition cannot be made towards unexplained investments in stock, more particularly, when assessee has explained such difference in price. The assessee also had given the brief note on the said Jilaba software and ils futures. * The Jilaba Software is created and owned by M/s Jilaba Software Services Private Limited, Chennal. * The said software was put to use from July 2010. * The main objective of purchasing the software was to track the Inventory movement from and to the counter staff to control pilferage/theft. * Assessee had maintained its Books of Accounts in the existing counting Software i.e. Tally ERP Package. * Under Jilaba, every product was allotted a barcoded "Tag Key" which ptures details of products, viz. its weight, category, labels, location of * On generation of a Sale Invoice, the copy of Invoice from Jilaba is made available to the Accounts Department for recording the Sales in books of accounts i.e.....
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....the value of stock, then it may be wrong as the is only an approximate value calculated based on the gold rate, Wastage/ making charges given at the time of tagging. While selling it, there may be a discount on wastage/making charges and also, the gold rate may change. So we cannot consider the coloum for the calculation of stock value. Apart from that, it is not calculated based on the purchase cost. So, we cannot consider it as stock value." 41. We have heard both parties, perused materials on record and gone through orders of authorities below. The AO has made addition towards uunexplained investments in stock on the basis of difference in prices of certain items of stock as per Jilaba software and as per books of accounts maintained in tally ERP software. Admittedly, there is no difference in quantity of stock as per Jilaba software and Tally ERP software. In fact it is it a case of the AO. On the other hand, the assessee had filed enough materials to prove that there is no difference in stock and also the amount mentioned in Salevalue column in Jilaba software is not purchase price of the assessee. It is also worth noting that the final result or trial balance taken out 'fr....
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....ssing Officer's opinion that "the sale value shown is constant and hence it is purchase cost in case of closing stock" and accordingly assessing officer made addition on the basis of total of Column of all items, gets contradicted by the actual data as reproduced below, i.e. there are many cases where value of the Tag Key is changing and hence cannot be construed as purchase cost. 43. Similar to above, there are numerous cases (other than instances appearing in assessment order) where value of an item is changing in different A.Y, as per the report provided by the Assessing Officer. In fact, the CIT(A), in para 4.4.29 on Page 122 of his appellate Order for Assessment Year 2012-13 has mentioned "My attention was also invited to detailed workings on pages 220 to 248 of the paper book considering various sample sizes of data including data relied by the AO in his assessment order proving that the value in columns are changing from year to year and are not constant as has been misleadingly held by the A.O." Our attention was drawn to the fact that the submission of the assessee alongwith the detailed working of all these figures were sent to the AO for remand report. However, the AO....
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....t records and the remand report sent by the AO has been considered along with various submissions of the appellant. The Assessee has given a detailed reply and working, which has been test checked by the CIT(A) and found to be correct. The CIT(A), has apprised the facts in right perspective before coming to the conclusion that the AO was erred in making addition towards difference stock u/s 69 of the Act. The DR has-not been able to point out any discrepancy during the hearing of the above appeal nor has been able to contradict the fetter submitted by the Assessee from the jilaba software company, Clearly stating that the in the Jilaba software, cannot be considered as purchase price as contended by the AO. 45. We also uphold the deletion of the addition made for the Assessment Year 2011-12, as the Assessment of which stands unabated as on date of search and no incriminating decument were found during the course of search on the basis of plethora of judgments including jurisdictional High court judgment in case of CIT vs. Continental Warehousing Corporation (Nava Sheva) Ltd. (2015) 374 ITR 645 and Division Bench judgement of the Hon'ble Bombay High Court in the case of CIT v....
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....wever, the AO was not satisfied with the above documents for the reason that the companies are Kolkata based, they have shown minimal income in their return of income and out of the four companies, three are controlled by one Shri Rajendra Bubna who has stated in his statement before investigation Wing of the department at Kolkata that he manages and controls many companies that functions as conduit for providing unaccounted funds in the garb of share capital etc. Therefore, the AO has treated these loans as bogus and made addition of Rs. 2 crore u/s 68 of the Act. 49. We have heard both the parties, perused materials on record and gone through orders of authorities below. We have also carefully considered case laws relied upon by either party. The AO has made addition towards loans u/s 68 of the Act, on the ground that the assessee has failed Lo offer any explanation with regard to the credits found to discharge its burden cast upon u/s 68, i.e. identity, genuineness and credit worthiness of parties. The provisions of section 68, deals with a case, where any sum found credited in the books of account of the assessee in the financial year in which the assessee, offers no explana....
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....the loans have been repaid during the same Financial year throngh banking channel alongwith interest after deduction of TDS%, The transaction of repayment of loan is also appearing in bank statement of both the parties. Therefore, gemuineness of transaction stands established. Next requirement under provision of section 68 is to prove the creditworthiness of the Appellant. The Appellant submitted that Bank account of creditor clearly establishes the source of investment, The Appellant submitted that the creditor companies have sufficient share capital and reserves to give loan. Even the AO in the assessment order has acknowledged that lending companies have adequate share premium. Thus, the Appellant has proved the credit worthiness of the creditor. In view of above, 1 find that the Appellant has discharged the primary burden cast upon it to prove the identity, genuineness and creditworthiness of the creditor company. 4.33 The AO has observed. that the creditor companies had shown meagre income during the year, The AO further observed that the creditor companies had issued shares with huge premium raised from various Kolkata based companies relied upon the following judgme....
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....g of shares, For the assessment year 2001-02 on scrutiny of accounts, the Assessing Officer found an addition of Rs. 71,75,000/- in the share capital of the assessee. The Assessing Officer sought an explanation of the assessee about this addition in the share capital. The assessee offered a detailed explanation. However, according to the Assessing Officer, the assessee failed to explain the addition of share application money from five of its subscribers, Accordingly, the Assessing Officer made an addition of Rs. 35,50,000/- with the aid of section 68 of the Act, 1961 an account of unexplained cash credits appearing in the books of the assessee. However, in appeal, the Commissioner of Income-tax (Appeals) deleted the addition on the ground that the assessee had proved the existence of the shareholders and the genuineness of the transaction. The Income-tax Appellate Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) as it was also of the opinion that the assessee had been able to prove the identity of the share applicants and the share application money had been received by way of account payee cheques. On appeal to the High Court: Held, dismissing the appeals,....
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.... Finance Act, 2012 shall be retrospective. However, I find that in a recently concluded judgment of the Hon'ble Bombay High Court it was held that the operation of proviso to Section 68 is to be prospective and not retrospective, The Hon'ble High Court of Bombay in Income Tax Appeal. No. 1613 of 2014 (CIT vs. Gagandeep Infrastructure Pvt. Ltd.) decided on 20/03/2017 has held the following: "(e) We find that the proviso to Section 68 of the Act has been introduced by the Finance Act 2012 with effect from Ist April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not far the subject Assessment Year. In fact, before the Tribunal. it was not even the case of the Revenue that Section 68 of the Act as in farce during the subject years has to be read! understood as though the proviso added subsequently effective only from Ist April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is 'declaratory". Therefore it is not open to give it retrospective effect, by Proceeding ....
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....t has been subjected to Tax Deducted at Source. Therefore, considering the facts, circumstances and binding judicial precedents, 1 am of the considered view that the appellant has discharged initial onus to prove identity, genuineness and creditworthiness of the loan transaction. Therefore, the AO was not justified in making an addition of Rs, 2,00,00,000/- and hence, the AO is directed to delete the same. Ground No.4 is accordingly allowed. 52. We find that the Id. CIT(A) thoroughly examined the issue in the light of facts brought out by the assessee and also various case laws brought to his knowledge before coming 'to the conclusion that the assessee has produced all the required evidences, has paid: interest, deducted TDS and repaid the loans during the same financial years and as the AO has not brought on any evidance except the said statement. Therefore, we are of the considered view that, the AO was erred in making addition towards unsecured loan u/s 68 of the Act, when all three ingredients provided in said section has been proved with necessary evidences. The Id. DR failed to bring on record any evidences to controvert the findings of Id. CIT(A). Hence, considering overa....
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....tions were recorded by the AO. (Copy Enclosed). The ITO scrutinized process of issue of 18440 equity shares of Rs. 100/- each at a premium of Rs. 9900/- per share ITO sent notice u/s 133(6) to majorshare applicants on test check basis. The ITO placed records of all repliesreceived from applicant companies. The income of the company for Asst.Year2009-10 was assessed u/s 143(3)/147 of the Income Tax Act,1961 and demand raised u/s 156 for Rs. 16790/-, The company had also been assessed u/s 143(3) for A.Y, 2010-11 vided ordered dated 31-03-2013 where no adverse facts as to the business model , business/ operational existence and head of income has been observed and recorded. This Assessment order in subsequent years after assessment u/s 147 cements the factual position of company being operational and functioning. (Copy Enclosed) The said company was introduced by a friend Shri Prihar during March 2012, he informed that company has facing problems to comply with the norms of RBI, applicable for NBFC and struggling to get its investments liquidated which are blocked since long. He also informed us about required investment and efforts to make. 54. As regards the issue of noticé....
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....g details of source of source. The assessee has furnished complete details and said information is genuine (i.e. PAN CARD, ITR, Confirmation, Bank statement) and no efforts was made by A.0 to determine the same. That Jewel India Pvt Ltd (Total 92 Lacs out of 132.87 Lacs) is a well know Kolkata based company involved in Jewellery business and it was lack of effort on the AO to enquire the same from the party through 133(6). The Identity of all the Company, was proved beyond doubt by the Evidence of the PAN card Copy, Copies of their Income Tax Returns and Copy of Order of RBI. The Genuineness of the Transaction was established from the Confirmation Letter and the Bank Statements of the Company that were filed. This established the fact that the loan was received by Cheque/RTGS from the Bank Account of the said Company. The Full set of Audited Financial Statements of the said Company was submitted on the record of Ld. A.O. This alongwith the balance sheet clearly established the loan given by the said Company to Assessee Company and their year-wise Income Track record proved the capacity of the said Company. The assessee has also Proved the Source of source, by bringing on record the....