TaxTMI 
TaxTMI 
2022 (1) TMI 486
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....he Assessing Officer)in issuing notice under section 153 A of the Act. The appellants contend that on the facts and in the circumstance of the case and in law, the notice issued under section 153A is ab initiovoid inasmuch as the jurisdictional conditions for the issue of the said notice have not .been complied with and consequently, the assessment framed is bad in law and needs to be quashed. The appellants further, contend that on the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the Assessing Officer in assuming jurisdiction and framing the assessment order under section 153 A of the Act. 2. The Assessing Officer and the appropriate authority under section 153D erred in not properly complying with the provisions of section 153D of the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the Assessing Officer and the appropriate authority under section 153D ought to have appropriately complied with the provisions of section 153D of the Act and having not so complied, the entire assessment proceedings are bad in law and thus, the impugned assessment o....
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....on Reference to seized material: yes/No Date of filing of original return Nimbus Projects Ltd. 2010-11 Unsecured loan 34,00,000 No 20.09.2010 2011-12 Unsecured loan 1,50,00,000 No 23.09.2011 2012-13 Unsecured loan 20,90,00,000 No 28.09.2012 2013-14 Share premium 25,50,00,000 No 25.09.2013 2014-15 Share premium 21,00,00,000 No 30.09.2014 Nimbus Multicommodities Brokers Pvt. Ltd. 2012-13 Share premium 2,00,00,000 No 19.09.2012 Bipin Agarwal 2012-13 Unsecured loans 2,50,00,000 No 08.09.2012 7. According to the provisions of Section 143(2), no notice shall be served on the assessee after expiry of 6 months from the end of the F.Y. in which the return is furnished the time limit for issue of notice for the A.Y. 2014-15 stands expired. 8. At the outset, it was argued by the ld. AR that no incriminating material belonging to the assessee was found and seized during the course of search & seizure operations u/s 132 of the IT Act on Nimbus Group. He relied on the arguments taken before th....
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.... Officer. (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Hon'ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. (58 taxmann.com 78) wherein it has been held as under: "31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. The Special Bench in that regard held as under: "48. The provision under section 153A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the year in which search etc. has been initiated. Thereafter he has to assess or reassess the total income of these six years. It is oblig....
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....arch. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merge into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is what is the scope of assessment or reass....
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....ction. This fact can be verified form the assessment order, wherein the Assessing Officer had not mentioned anything about the incriminating documents seized during the course of search action. The addition has been made merely on the basis of so called investigation report received from Kolkata. In spite of extensive search proceedings carried out at the premises of the appellant, no incriminating evidence whatsoever was found. 10. It was further argued that now a well decided judicial principal that the assessments made under section 153A without any incriminating material being found during the search action are not in accordance with law and the consequential result is that the return/original assessments which have acquired finality are to be reiterated. Therefore, it is submitted that the additions made by the AO otherwise than on the basis of incriminating evidences found during the course of search are bad in law and deserve to be deleted. 11. In the light of the above arguments, we have perused the order of the ld. CIT(A). 8. Discussion & decision on legal Grounds of these cases by the Ld. CIT(A): 8.1 Ground nos. 1 & 2 for all the assessment years pertain to le....
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.... i. CIT vs. Kabul Chawla [2016] 380 ITR 573/(2015) 234 Taxman 300/61 taxmann.com 412 (Delhi), ii. CIT vs. Continental Warehousing Corpn. (Nhava Sheva) Ltd. [2015] 374 ITR 645/232 Taxman 270/58 taxmann.com 78 (Bom.), iii. Principal CIT vs. Kurele Paper Mills (P.) Ltd. [2016] 380 ITR 571 (Delhi), iv. CIT vs. Lancy Constructions [2016] 383 ITR 168/237 Taxman 728/66 taxmann.com 264 (Kar.) v. CIT vs. ST Francies Clay Decor Tiles [2016] 240 Taxman 168/70 taxmann.com 234 (Ker.) and vi. CIT vs. PromyKuriakose [2016] 386 ITR 597 (Ker.) Further, in the case of CIT Vs. Raj Kumar Arora [2014] 52 taxmann.com 172 (Allahabad/2014) 367 ITR 517 (Allahabad)- Hon'ble Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during search operation but also with regard to material available at time of original assessment. Similarly, in the case of CIT Vs. Kesarwani Zarda Bhandar Sahson Alld. ITA No. 270 of 2014 (Allahabad), Hon'ble Allahabad High Court held that Assessing Officer has power to reassess returns of assessee not only for undisclosed income found during sear....
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.... & Supply Pvt. Ltd. A.Y. Amount Nature Received from 2010-11 34,00,000 Unsecured Loan Kaypee Mercantile Pvt. Ltd. 2011-12 1,50,00,000 Unsecured Loan Cindy Goods & Supply Pvt. Ltd. 2012-13 20,90,00,000 Unsecured Loan Cindy Goods & Supply Pvt. Ltd. ITA No. 925/Del/2021 for A.Y. 2010-11 Kaypee Mercantile Pvt. Ltd.: 14. With regard to Kaypee Mercantile Pvt. Ltd., the revenue alleged that before remitting the funds to the assessee, the lender received funds of similar amounts. The lender had no capacity to lend the money since no sufficient balance is being maintained by the lender in its bank statement. Further, the assessee and lender has been asked to explain the source of funds received by the lender which is thereafter given to the assessee, no details were furnished. The revenue further held that these companies are paper companies of known accommodation entry operations. The revenue also relied on the letter of the Deputy Director (Inv.), Unit-II, Kolkata in response to the commission issued u/s 131(1)(d) dated 14.10.2015. Hence, the identity, creditworthiness and the genuineness of the source of funds could not be explaine....
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....f Bank Statement of appellant • Copy of ITRs, Balance Sheet and Profit and loss statement of the lender • Copy of Inter Corporate Deposit Agreement between appellant and M/s KMPL • Reply to notice issued u/s 133(6) of the Act filed by M/s KMPL • Copy of Bank statement of the lender disclosing source of loan • Confirmation of accounts of appellant in books of lender etc. 20. Thus, it was argued that it is clearly evident that the assessee has discharged its onus of proving the requirements of Section 68 of the I.T. Act i.e. identity of party, genuineness of the transaction and creditworthiness of the party by providing extensive evidences. It was further argued that the observation of the revenue that the lender M/s KMPL was being operated by a certain person namely, Mr. Deepak Patawari who was an entry operator is wrong on facts. The AO has not brought anything on record to explain as how such a conclusion was drawn. It was argued that Mr. Deepak Patawari was neither a Director nor a Shareholder in the company. The revenue authorities merely stated that it became evident from the "database" and no reference has bee....
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....2009 of Rs. 16,00,000/- and Rs. 18,00,000/- on 31.07.2009 as ICD bearing interest of 9%. The same has been repaid on 07.01.2014 along with the interest agreed upon. The date of search in the group was conducted on 26.08.2015. Having examined the receipt of loan independently disregarding the date of search, we find that the assessee discharge the onus, proved the receipt and repayment of the loan received along with the interest and the same is also been brought before the Assessing Officer during the assessment proceedings. Hence, the reasons given by the revenue authorities for treating the loan amount u/s 68 is factually and legally not valid. Hence, we hereby direct the addition made be obliterated. 24. In the result, the appeal in ITA 925/Del/2021 for A.Y. 2010-11 is allowed. ITA No. 926/Del/2021 for A.Y. 2011-12 ITA No. 927/Del/2021 for A.Y. 2012-13 Cindy Goods & Supply Pvt. Ltd.: 25. With regard to unsecured loan received from Cindy Goods & Supply Pvt. Ltd., the assessee was asked by the AO vide letter dated 22.09.2017 to furnish the confirmed copy of account, bank statement and copies of ITRs, balance sheet and profit & loss account. In response to the letter....
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.... in the form of unsecured loans. 3. Hence, it is clear that the assessee group had received funds from these entities is nothing but just a pass through entity whose main work is to provide accommodation entries to Nimbus group. Therefore, on tracing out the source to source of funds, it has been found that the funds have come from another entity. In the written submission dated 17.11.2017, the assessee submitted that ITR and confirmation and bank statement has been filed and the transactions are bonafide. 27. Further, during the assessment proceedings the, assessee was given an opportunity to furnish its comments on the enquiry report of the investigation unit, Kolkata which was filed on 22.12.2017. Further vide letter, dated 19.12.2017, the assessee was asked to produce the directors/ principal officer of the company for examination on oath. During the statement, it was again reiterated that the details have already been filed and the transactions within the ITTL- Nimbus group for companies are bona-fide and genuine. 28. Since, the company does not have any physical set up at the given address, the address given is only a postal address and the same address is used....
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....l the 5 (five) companies has been noticed. It was found that few computers were placed in that room indicating that some accounts were being maintained there. However, no business activity was visible as to be carried out at that place. It was, however, reported by the employee of that office Mr. Vivek Sharma that all the said 5 (five) companies are having their registered office at that address. Thereafter, summonses in the case of all the said companies were served at that address." 33. The report also indicates that summons was served on 19.10.2015. 34. The ld. CIT(A) held that the total income in the ITR for the relevant assessment year of the lender company was too low for the A.Y. 2011-12 and Rs. 140,89,252/- for the A.Y. 2012-13 and since the credits preceded the debits in the bank account on the same dates, the creditworthiness of the lender cannot be considered as genuine. The ld. CIT(A) has relied on the judgments of various Courts which are as under: • B.R. Petrochem (P.) Ltd. Vs. ITO 81 taxmann.com 424 (Madras) • Rick Lunsford Trade & Investment Ltd Vs. CIT 2016-TIOL-207-SC-IT • Navodava Castle Pvt. Ltd. Vs. CIT 230 Taxman 26....
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....he orders of the revenue authorities. 40. We have gone through the order of the Co-ordinate Bench of ITAT in ITA No. 929 & 930/Del/2019 in the case of Nimbus India Ltd. Vs. DCIT for the A.Y. 2013-14 and A.Y. 2014-15. 41. The relevant points with regard to examination of genuineness of Cindy Goods & Supply Pvt. Ltd. by the Tribunal in the above said order is as under: • Para 5 - The AO noted that the company was M/s Cindy Goods & Supply Pvt. Ltd. is concerned, he noted that the said company was incorporated on 21st March, 1995 with its registered office at Kolkata. This company is controlled and managed by the directors Mr. Madan Gopal Sharma and Mr. Virendra Tripathy who holds substantial shares in M/s Bonanza Vanijya Pvt. Ltd. and M/s Brijdham Merchandise Pvt. Ltd., having 49.96% shares each. These directors are also the directors in various other companies based in Kolkata. He noted that in the impugned assessment year, this company has declared income of Rs. 11,146/- from business and profession. Its authorized share capital is Rs. 4.51 crores and reserves and surplus is Rs. 4,50,40,000/-. It has received an amount of Rs. 34,37,25,000/- as share premium. From ....
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....the attention of the Bench to the paper book page 182 which is the copy of notice dated 21.11.2017 issued by the AO u/s 133(6) to M/s Cindy Goods & Supply Pvt. Ltd. Referring to page 183 to 243, the ld. Counsel for the assessee drew the attention of the Bench to the submission of the said company in response to notice u/s 133(6). Referring to page 244 to 246 of the paper book, he drew the attention of the Bench to the copy of the statement of Mr. Vipul Kumar, Director of M/s Cindy Goods & Supply Pvt. Ltd., whose statement was recorded by the AO u/s 131 of the IT Act wherein he has admitted to have invested in the assessee company. Referring to page 165 to 167 of the paper book, he drew the attention of the Bench to the order passed u/s 143(3) in the case of M/s Cindy Goods & Supply Pvt. Ltd., wherein the AO has considered the investment made by the said company at Rs. 38,20,21,000/- as on 01.04.2010 and 36,92,01,000/- as on 31.03.2011 for computing the disallowance u/s 14A of the Act r.w. Rule 8D of the IT Rules. Referring to various pages of the paper book, he submitted that this company has shown continuous profit which is Rs. 1,40,89,252/- for A.Y. 2012-13, Rs. 75,37,804/- for A....
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....y. It is also his submission that in the preceding and subsequent assessment years, such share capital at high premium has been accepted by the AO in the order passed u/s 153A/143(3) and no adverse view has been taken. Further, it is also his submission that such non-cumulative non-participating optionally convertible redeemable preference shares were redeemed to the investor companies in the F.Y. 2014-15 much before the search and, therefore, under the facts and circumstances of the case no addition is called for. • Para 28 - A perusal of the submission filed by the assessee which has been reproduced at para 19 of this order shows that the AO, in the order passed u/s 143(3) has accepted an amount of Rs. 3,50,00,000/- received by the assessee from M/s Cindy Goods & Supply Pvt. Ltd. towards share capital and share premium and no addition has been made. ....Therefore, the allegation of the AO that these companies are paper companies without doing any business and these companies are existing only for being used by different accommodation entry operators to facilitate accommodation entries in different forms to various beneficiary groups is factually incorrect in view of ....
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....rivate limited company in corporate on 19.01.1995 and registered at ROC Kolkata. The earlier Directors were Sh. Ramesh Kumar and Sh. Ranjan Kumar whereas the present Directors are Sh. Vipin Kumar, Sh. Madan Gopal Sharma, Sh. Anshul Mittal and Sh. Virendera Tripathi. The AO held that the investor company was found to have received monies in the form of share capital and share premium received mainly from M/s Strong Vinimay Pvt. Ltd. and M/s Murlidhar Dealcom Pvt. Ltd. 46. With regard to Pabla Leasing Finance Pvt. Ltd., the AO held that the investor company received monies mainly from M/s Fling Management Consultant Pvt. Ltd. and M/s Orient Commodeal Pvt. Ltd. which are having same address and common Directors. The AO further held that the statement of Sh. Amit Bagri has been recorded by the Investigation Unit Kolkata wherein Sh. Amit Bagri admitted that these companies have been used for providing entries to the various beneficiary companies on the commission basis. The AO held that during the post search proceedings, the statement of Sh. Anshul Mittal was recorded on 20.10.2015 wherein Sh. Anshul Mittal admitted that he is a dummy Director of several company from which the loans....
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....eness of such transactions and creditworthiness of such investor parties shall lie on the assessee, failure to do which would convince the revenue authorities to make adverse inference that ail these purported share capital/premium investments are sham and nothing but accommodation entries. ii. Further, it cannot be believed that investors invest their crores of rupees in a non-listed company without any return and the recipient company even does not have the particulars/contact details, of such investors. Further, creditworthiness of investors is not proved since the source of funds with company purported investors remains highly suspicious. Moreover the assessee company also failed to produce even a single document in respect of due diligence and valuation report to justify the premium to support his contention. Also, there is no reason to believe that the assessee is not able to trace the investors for personal deposition since had the investor been genuine; they would have been in contact of the assessee. Further, during the assessment proceedings the, assessee was given an opportunity to furnish its comments on the /enquiry report of the investigation unit, K....
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....ld that since the facts of every case are different in many respects including the statement given by the concern persons who have managed the entries and also since the issue has not reached finality as yet, the decisions of the case has been taken based on the judgments of the various Hon'ble Courts. 52. The relevant portion of the order of the ld. CIT(A) on this aspect is as under: "10.1 Ground no. 3 to 5 pertain to addition of Rs. 28,50,00,000/- & Rs. 21,00,00,000/- for A.Y. 2013-14 & A.Y. 2014-15 respectively on account of issue of 8% non- cumulative preference share, as per following table: S. No. Name of the Creditor A.Y. 2013-14 A.Y. 2014-15 Share Capital @ Rs. 10/- per share Share premium @ Rs. 40/- per share Share Capital @ Rs. 10/- per share Share premium @ Rs. 40/- per share 1. M/s Pabla leasing & Finance Pvt. Ltd. 2,00,00,000 8,00,00,000 3,30,00,000 13,20,00,000 2. M/s Girl Financial Services Pvt. Ltd. 3,70,00,000 14,80,00,000 90,00,000 3,60,00,000 Total 5,70,00,000 22,80,00,000 4,20,00,000 16,80,00,000 Grand Total Rs. 28,50,00,000 (5,70,....
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.... Kolkata. The revenant report as submitted by the DDIT(lnv.), unit-2(2), Kolkata, has already been scanned and reproduced in preceding paras. 10.4 Careful perusal of the enquiry reports notes the following relevant observations: i) Alleged creditor entities do not exist on the given addresses. All the alleged entities are operating from single room in a building at Kolkata with only a computer and table. There were no evidence of any business activities being carried by these alleged creditor entities. ii) Alleged creditor companies are identified paper companies of known accommodation entry operators. iii) Statement of entry operators have been recorded on oath to evidence that, these alleged entities are carrying on the business of providing accommodation entries on commission basis in relation to share premium/share capital/non-cumulative preference share/unsecured loans. iv) Principal Officer or the director to whom summons u/s 131 of the Act were issued on the known address of the alleged creditor entities, they did not attend in response to summons. 10.5 Further, during the post search investigations, statement of Shri Ans....
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....ence shares are fictitious and concocted. 10.7 Further, undersigned has noticed that the credit capacity of the share applicants also stands unsubstantiated. The following table shows the total credits by the creditors in the form of share capital/premium, and their income disclosed in the ITR: S. No. Name of the Creditors Total credits (including share capital/ premium) Total income disclosed in ITR AY 2013-14 AY 2014-15 AY 2013-14 AY 2014-15 1. M/s Pabla leasing & Finance Pvt. Ltd. 10,00,00,000 16,50,00,000 30,85,542 Nil 2. M/s Giri Financial Services Pvt. Ltd. 18,50,00,000 4,50,00,000 3,39,176 9,16,779 From the above table, it is evident that the entities advancing huge money to appellant company are having very meager income to substantiate such huge share capital/premium. For example, M/s Girl Financial Services Pvt. Ltd., having income of only 9,00,000/- odd has advanced huge sum in the form of preference share of Rs. 4,500, 000/-, which appears to be beyond human probability. The case of other creditor is no different, as could be evidenced from the above mentioned table. Thus, ....
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....3 50,00,000 02.03.2013 25,00,000 22. -do- 02.03.2013 25,00,000 02.03.2013 25,00,000 23. -do- 02.03.2013 25,00,000 05.03.2013 35,00,000 24. -do- 05.03.2013 35,00,000 08.03.2013 10,00,000 25. -do- 08.03.2013 15,00,000 08.03.2013 5,00,000 26. -do- 02.04.2013 1,00,00,000 20.03.2013 80,00,000 27. -do- 02.04.2013 65,00,000 20.03.2013 80,00,000 28. -do- 02.04.2013 1,00,00,000 20.03 2013 25,00,000 29. -do- 02.04.2013 1,00,00,000 30.03.2013 50,00,000 30. -do- 02.04.2013 1,00,00,000 30.03.2013 50,00,000 31. -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 32 -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 33 -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 34. -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 35. -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 36. -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 37. -do- 03.04.2013 1,20,00,000 02.04.2013 50,00,000 38. -do- 03.04.2013 1,0....
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....-do- 09.03.2013 25,00,000 11.03.2013 30,00,000 72. -do- 11.03.2013 25,00,000 12.03.2013 30,00,000 73. -do- 12.03.2013 25,00,000 12.03.2013 20,00,000 74. -do- 12.03.2013 25,00,000 13.03.2013 25,00,000 75. -do- 12.03.2013 50,00,000 13.03.2013 25,00,000 76. -do- 12.03.2013 25,00,000 13.03.2013 20,00,000 77. -do- 13.03.2013 25,00,000 13.03.2013 30,00,000 78. -do- 13.03.2013 25,00,000 14.03.2013 25,00,000 79. -do- 14.03.2013 25,00,000 18.03.2013 40,00,000 80. -do- 14.03.2013 25,00,000 18,03.2013 40,00,000 81. -do- 14.03.2013 25,00,000 19.03.2013 30,00,000 82. -do- 14.03.2013 25,00,000 19,03.2013 40,00,000 83. -do- 15.03.2013 25,00,000 20.03.2013 30,00,000 84. -do- 19.03.2013 30,00,000 20.03.2013 40,00,000 85. -do- 19.03.2013 25,00,000 20.03.2013 30,00,000 86. -do- 19.03.2013 25,00,000 21.03.2013 35,00,000 87. -do- 20.03.2013 35,00,000 21.03.2013 35,00,000 88. -do- 20.03.2013 35,00....
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.... 35,00,000 26.03.2013 35,00,000 122. -do- 02.04.2013 35,00,000 26.03.2013 35,00,000 123. -do- 02.04.2013 35,00,000 26.03.2013 25,00,000 124. -do- 02.04.2013 35,00,000 26.03.2013 40,00,000 125. -do- 02.04.2013 35,00,000 02.04.2013 25,00,000 126. -do- 02.04.2013 35,00,000 02.04.2013 25,00,000 127. -do- 03,04.2013 35,00:000 02.04.2013 25,00,000 128. -do- 03.04.2013 30,00,000 02.04.2013 25,00,000 129. -do- 03.04.2013 30,00,000 04.04.2013 50,00,000 130. -do- 05.04.2013 35,00,000 10.04.2013 40,00,000 131. -do- 05.04.2013 20,00,000 10.04.2013 25,00,000 132. -do- 11.04.2013 35,00,000 23,00,00,000/- Thus, the evidence submitted by the appellant does not inspire the confidence regarding credit capacity of the creditors and genuineness of the transactions, especially considering the fact that, lenders have disclosed meager income in their returns and each credit of unsecured loans to the appellant company is preceded ....
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....ed to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.]" The present facts of the case are squarely covered by the provisions of law' mentioned here-in-above, wherein it was imperative for the appellant to simultaneously prove the identity and creditworthiness of the creditors along with the genuineness of transaction. In the instant facts of the case, appellant has miserably failed to prove genuineness of the transaction and creditworthiness of the creditors. Hence, addition made by Assessing Officer is perfectly justified. 10.9 It is also an established law that mere filing of confirmation letter and the ITR copies are not enough to prove the credit capacity of the creditor. Hon'ble Kolkata High Court: in the case of CIT Vs Korlav Trading Company Ltd.(Cal.) 232 ITR 280 and CIT Vs Precision Finance P. Ltd. (Cal.) 208 ITR 465 have observed and held that mere filing of confirmation and transaction through the banking channel is not enough to prove the genuineness of cash credit and it can be assessed. Further, Hon'ble Apex Court in the case of Shri Roshan D. Haiti Vs CIT (SC) 107 ....
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....thiness of said creditors as well." Hon'ble Madras High Court in the case of B.R. Petrochem (P.) Ltd. Vs ITO [2017] 81 taxmann.com 424 (Madras) has observed and held that, "where assessee received share capital from various contributors, in view of fact that those contributors were persons of insignificant means and their creditworthiness to have made contributions had not been established, impugned addition made by authorities below in respect of amount in question under section 68 was to be confirmed." Further, Hon'ble Supreme Court while dismissing the SLP of the assessee in the case of Rick Lunsford Trade & Investment Ltd Vs CIT 2016 TIOL-207-SC-IT has held that, "it is open to the Revenue Department to make addition on account of alleged share capital u/s 68, where the assessee company has failed to show genuineness of its shareholders." Also, Hon'ble Apex Court in the case of Navodaya Castle Pvt. Ltd. Vs CIT [2015] 230 Taxman 268 (SC) observed during dismissal of SLP of the appellant that, "High Court ruling that certificate of incorporation, PAN etc., are not sufficient for purpose of identification of subscriber company when there is material to show that subscr....
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....ed in providing accommodation entries are liable to be taxed u/s 68 of the Act: i) CIT vs. Nova Promoters & Finlease (P) Ltd. 342 ITR 169 [Delhi] 2013. ii) CIT vs. D.K. Garg [2017] 84 taxmann.com 257 [Delhi] 10.11 The AR of the appellant has submitted that the AO did not allow assessee to make the cross examination of the persons on whose statement Ld. AO relied for making the assessment against the assessee even after specific request of the assessee which is against the principle of natural justice, hence the assessment made is bad in law. In this regard it is observed that ail the material facts, which have been used against the assessee, have been provided to the appellant, therefore the plea of the appellant that non providing the opportunity of cross examination, vitiates the income escaping assessment proceedings has not been found correct. 10.12 On the issue of cross examination, it is noticed that al l the documents were shown to the appellant. Therefore, no separate opportunity to further cross examine is required to be given to the appellant. Further, Hon'ble Supreme Court, in the well-known Dhakeswari Cotton Mi l ls (26 ITR 775 at....
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....rated judicial pronouncements, it is concluded that appellant company has miserably failed to prove the vital ingredients of creditworthiness of the creditors and genuineness of the transaction. Therefore, undersigned finds no reason to interfere with the addition made by Assessing Officer, u/s 68 of the Act. The same is therefore, confirmed and ground of appeal of the appellant is dismissed for A.Y. 2013- 14 & A.Y. 2014-15." 53. Aggrieved with the order of the ld. CIT(A) the assessee fi led appeal before the ITAT. 54. During the hearing, at the outset, the ld. AR brought to our notice that the identity, genuineness and creditworthiness of the investors namely, Giri Financial Services Pvt. Ltd. & Pabla Leasing & Finance Pvt. Ltd. has been widely examined in detail during the proceedings before the Tribunal in the case of Nimbus India Ltd. for the A.Y. 2013-14 and relied on the order of the Co-ordinate Bench of ITAT. 55. On the other hand, the ld. DR strongly supported the orders of the revenue authorities. 56. We have gone through the order of the Co-ordinate Bench of ITAT in ITA No. 929 & 930/Del/2019 in the case of Nimbus India Ltd. Vs. DCIT for the A.Y. 2013-14 and A....
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.... the transaction. Referring to paper book page 254, he submitted that Giri Financial Services (P) Ltd., is registered with RBI as a NBFC w.e.f. 16.02.2001. He submitted that in response to notice u/s 133(6), the director of the company Mr. Anshul Mittal had appeared and fi led relevant document and he had confirmed to have invested in the assessee company. He submitted that in the A.Y. 2015-16, the AO, in the order ITA Nos.929 & 930/Del/2019 passed u/s 153A/143(3) has accepted a sum of Rs. 11.34 crores towards share capital and share premium in the assessee company and no adverse view has been taken. Further, the investor company is showing continuous substantial income and, therefore, no addition is called for u/s 68 of the Act when the assessee has proved the three ingredients of section 68 of the IT Act, 1961. • Para 26 - We have heard the rival arguments made by both the sides, perused the orders of the AO, CIT(A) and the paper book fi led on behalf of the assessee. We have also considered the various decisions ci ted before us. We find the AO, in the instant case, made addition of Rs. 29,50,00,000/- to the total income of the assessee being the amount of Rs. 14,50....
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.... without doing any business and these companies are existing only for being used by different accommodation entry operators to facilitate accommodation entries in different forms to various beneficiary groups is factually incorrect in view of the orders passed in case of these investor companies in preceding and subsequent years. 58. We find that the Co-ordinate Bench of the ITAT has considered the identity of the companies and found that Giri Financial Services Pvt. Ltd. to have been incorporated in the year 1995, the amounts have been accepted as genuine during the assessments completed u/s 143(3), the returned income range from Rs. 53.9 lacs, Rs. 9.16 lacs, Rs. 148 lacs for the A.Y. 2013-14, A.Y. 2014-15 and A.Y. 2015-16 respectively in the case of Giri Financial Services Pvt. Ltd. and in the case of Pabla Leasing & Finance Pvt. Ltd. Rs. 30.85 lacs for the A.Y. 2013-14, Rs.(-) 52.22 lacs for A.Y. 2014-15 and Rs. 93.18 lacs for A.Y. 2015-16 which undisputedly proves that the investor companies cannot be considered as a accommodation entry provider/paper company. The company has duly responded to notices issued u/s 133(6) to the revenue authorities. Further, Shri Virendra Tripa....