TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 637
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....of income for various years on 26.02.2015 and 27.02.2015 and acknowledgements submitted on 8th of June 2015 for the assessment years 2009-10 to 2014-15. The Assessee also filed a return of income for the assessment year 2015-16 on 24.09.2015. The Assessing Officer passed the assessment order dated 30.12.2016 under section 143(3) read with section 153A of the Act for the assessment year 2009-10 and 2014-15. The Assessing Officer also passed the assessment order for the assessment year 2015-16 on 30th December, 2016 under section 143(3) of the Act. 3. The Assessee submits that the findings in all the assessment orders are similar and the below mentioned findings are for the first assessment year i.e. 2009-10. 4. During the financial year 2008-09, relevant to the assessment year 2009-10, the Assessee had issued shares of face value of Rs. 10 per shares at the premium. The Assessee had, accordingly, received an amount of Rs. 8,12,00,000/- as share capital and premium during the relevant year. The Assessing Officer in the assessment order made the following additions- 5. Addition of Rs. 8,12,00,000/- as income under section 68 of the Act - the Assessing Officer treated the amount of ....
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....are shell companies. 10. The Assessing Officer, accordingly, treated the whole amount of the share capital and premium received by the Assessee as the income of the Assessee under section 68 of the Act. 11. It is pertinent to mention that the Assessing Officer notes that post such inquiries revealed that there was no cash transaction in the account of the investee company. (Page 19 of the assessment order). 12. In respect to Addition with respect to scrape sales, during the search proceedings, certain loose papers (few slips of papers) were found from 'Abu Road' one of the units of the Assessee, which showed that the Assessee had received certain consideration in cash with respect to the sale of the scrap from the Abu Road units during the financial year 2014-15. Cash book was also found in the Abu Road Unit for a part of the period for financial year 2014-15. The Assessee had already offered as income, in the return of income for the assessment year 2015-16, the amount of unaccounted cash received by the Assessee on the basis of the loose paper found during the search. 13. The Assessing Officer observed that the loose papers found during the search, showed a cash compo....
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.... unearthed during the course of search and which is having a bearing on the determination of total income as of a person. The Commissioner of Income-tax (Appeals) accordingly, held that incriminating material has been found in the case of the Assessee and, hence, the ground of the Assessee is dismissed. 17. In respect of Addition of Rs. 8,12,00,000/- under section 68 of the Act, the Commissioner of Income-tax (Appeals) confirmed the addition of Rs. 8,12,00,000/- by holding that the Assessee has not been able to establish the genuineness and credit worthiness of the companies which have invested in the share capital of the Assessee and, therefore, the addition is required to be sustained. The Commissioner of Income-tax (Appeals) in rejecting the ground of the Assessee relied on the findings given by the Assessing Officer. The Commissioner of Income-tax (Appeals) at paragraph 7.15 of the order notes that the issue is not the taint of these investee companies. The issue is of financial capacity to make investment in the Assessee. 18. Addition with respect to scrape sales, the Ld. CIT(A) partly allowed the relief to the Assessee by holding that the addition with respect to the unacco....
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....y to the settled legal position and in defiance of propositions laid down by the Hon'ble jurisdictional High Court. 6. The appellant may please be permitted to raise any additional or alternative ground on or before the hearing of appeal." 20. Assessee in all its appeals for the A.Y. 2013-14 to 2015-16 raised following identical grounds except for figures, grounds raised for the A.Y. 2013-14 are as under: "1. The orders passed by the learned lower authorities are bed in law and bad in facts. 2. The learned lower authorities have grossly erred in maxing upholding an aggregated addition of Rs. 4,86,00,000 being the amount of share subscriptions received from corporate entities without appreciating the explanation given and without appreciating the evidences furnished in support of genuineness credit worthiness and identity of the Share Subscribers. 3. The learned Assessing Officer has grossly erred in alleging that the appellant gave cash in lieu of Share Subscription received, without establishing the cash trail and without bringing any material or evidences on record to support that Consequently, impugned addition made at Rs. 4,86,00,000/on the basis of unsubstantiated....
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....re the Assessing Officer and the same were also produced during the assessment proceedings, for the years when there were scrutiny assessment. Further, there is no undisclosed income or property which was discovered during the course of the search which has any bearing on the issue of receipt of share capital and share premium by the Assessee from the investee companies in various years. 24. The Ld. AR submitted that at page 6 of the assessment order, the Assessing Officer has made reference to few slips of papers as being the alleged seized material where the capital transfer is written to be split and distributed into group companies. The Assessee submits that such alleged seized material has not been referred to anywhere in the assessment order except for making this bald allegation. It is not even stated as to what is the alleged information in those loose papers and how the said information is an incriminating material and relevant for deciding as to whether the addition can be made under section 68 of the Act with respect to share capital and share premium received by the Assessee. Further, it is not even stated as to whether the information stated in those few slips is the ....
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....Ys. 2009-10 to 2012 - 13 are liable to be deleted. 28. The Ld. AR submitted that the original assessment for the A.Y. 2009-10 was completed u/s. 143(3) wherein the issue of raising of share subscription amount was duly considered by the then Assessing Officer as per the copies of the notice dt. 27.08.2010 appearing at Page No. 28-30 of Paper Book. 29. Ld. AR submitted that coming to the Addition under section 68 is bad in law, he submitted that the Assessing Officer has erred in invoking section 68 and the Ld. CIT(A) has erred in confirming the additions under section 68 with respect to share capital and share premium received by the Assessee. The Ld. AR submitted that as the issue of jurisdiction under section 153A of the Act covers the assessment years 2009-10 to 2012-13, he submitted that the detailed submissions made here with respect to assessment year 2013-14 and 2014-15 would be equally applicable for all assessment years, including assessment years 2009 - 10 to 2012 - 13 since in those assessment years also, the documentary evidences for the receipt of the share subscription amounts clearly establish the identity, creditworthiness and genuineness thereof and primary onus ....
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....tified, considering the net worth of the Assessee. The Assessee is a fully operating Company which has turnover of more than Rs. 100 Crores each year. The book value of the shares of the Assessee itself comes to Rs. 59.60 per share when one considers the total share capital and reserve and surplus of the Assessee as at 31.03.2012. Therefore, the premium of Rs. 40/- charged by the Assessee can, by no stretch of imagination, be treated as excessive or unreasonable. 32. Therefore, the Ld. AR submitted that there is no question of doubting the genuineness of the transaction. He submitted that the credit worthiness of the investee companies also cannot be doubted as the annual accounts of these companies have been submitted at page Nos. 71-122 of the paper-book for assessment year 2013-14. The investments in the Assessee have clearly been reflected in the balance-sheets of these Companies. 33. Further, he submitted that the identity of the Company is no longer in doubt as the Ld. CIT(A) at page 7.15, page 15 of his order has stated "The issue is not the taint of these companies. The issue is their financial capacity to make an investment". The Ld. AR submitted that the Ld. CIT(A) is n....
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....e report, DDIT (Investigation) Kolkata, notes that pursuant to the summons issued to the various investee companies, the investee companies have submitted balance-sheets, profit & loss accounts, bank statements, reflecting the transactions with the Assessee in response to the summons. Therefore, it is clear that all the investee companies have complied with the summons and given the requisite details. Hence, he submitted that from the above, it is clear that the report, if at all, supports the case of the Assessee and does not, in any way, go contrary to the Assessee. therefore, he submitted that both the lower authorities were not justified in relying on the investigation wing's report to treat the share capital and share premium as unexplained cash credit under section 68 of the Act. 36. Ld. AR submitted, the Assessing Officer has further alleged that various companies are registered at single address which gives a suspicion about the company being a genuine company, for example, 389 companies are operating from 71 Canning Street, Kolkata; 157 companies are operating from 3, Mango lane, Kolkata. He submitted that the Assessing Officer has not appreciated that the addresses r....
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....s clearly explained the identity, genuineness and credit worthiness of the investee companies and, therefore, the addition made by the Assessing Officer and the Commissioner of Income-tax (Appeals) under section 68 of the Act with respect to the receipt of share capital and share premium ought to be deleted. 40. Ld. AR submitted that during the course of hearing photocopies of statements of various alleged entry operators recorded behind the back of the Assessee were supplied which were used to hold that the various jamakharchi companies based in Kolkata were used to provide accommodation entries by way of share subscription. It is submitted that even after a specific request for cross examination of these persons made, no opportunity thereof was given and therefore principle of natural justice stands altogether violated. 41. Further Ld. AR submitted that the Assessing Officer himself had never conducted any enquiry to discredit the documentary evidences submitted to discharge the primary onus laid upon the Assessee and only relied upon the report of the investigation wing which itself was made in a cryptic manner and as submitted above, is unreliable. Even the Assessee during th....
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....before that there is no involvement of any cash transactions in the form of cash deposits or otherwise, anywhere between the assessee and the group companies from whom assessee had received share capital and premium. Further we observe from the record that the investments were made by the group concerns in the assessment years under consideration. Therefore, in our considered view, the transactions are between the group companies, the requirement of sec. 68 is already proved beyond doubt for the identity and with regard to credit worthiness, we observe from the financial statements and submissions made by the both the parties that both the sister concerns viz., Patni Holdings Pvt. Ltd. and SMDS Trading Pvt. Ltd. have sufficient source of funds to make investments in the assessee company, the assessing officer completely rest his findings on the issue of earning capacity of the group companies. In our view, in order to invoke provisions of the section 68, the capacity to make investment is relevant in the form of sufficient funds in the company. In the given case, the assessee had submitted sufficient information before tax authorities that the sister companies have sufficient funds....
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.... source of source in the instant case. In the given case, it is already proved that there is no involvement of cash anywhere in this transaction and all the transactions are routed only through bank. The tax authorities have not brought on record any evidence to prove otherwise. We observe from the record that the AO merely relied on the inspector report as per which all the companies are in one address and return of income are filed in different places than the registered office. It is brought to our notice that the companies are operated from 71, Canning Street and 3, Mango Lane, Kolkata are address of whole complex which consist of several floors where several offices are situated. Merely because the returns are filed from a different location other than the registered office, as alleged by the AO, the same cannot be the reason to draw adverse inference on the genuineness of the transactions. Therefore, in our considered view, the assessee has complied and proved the onus rest on them. The oral report of the inspector also cannot be relied on for deciding the genuineness unless there is proper evidence on record. Therefore, in our considered view, the additions made by the AO is....
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....ares of face value of Rs. 10/- each at premium of Rs. 40/- per share. The assessee submits that from the balance sheet of the assessee, at page 105 of PB, premium of Rs. 40 received by the assessee is completely justified. The assessee is an operating company, having turnover of more than 100 crores. The total shareholders' fund, i.e. share capital and reserve & surplus, is Rs. 59,08,24,557/-. As stated earlier, the net asset value per share of the assessee is Rs. 59.60; whereas the assessee has issued shares at Rs. 50 per share. Hence, the premium of Rs. 40 per share, can, by no stretch of imagination, be said to be unreasonable. d). The investee companies do not have any activity or assets in the balance sheet and there are no revenues except bank interest. (Paras 14 to 16 of decision). Whereas in the given case, Patni Holdings (P) Ltd., being a very old NBFC, apart from investment in equity, has investment in land in excess of Rs. One Crore and apart from earning interest income, the company is also engaged in trading in derivatives and also has income from dealing in currency. Similarly, SMDS Trading Pvt. Ltd. has investment in land of Rs. 74 Lakhs and is also engaged in ....