TaxTMI 
TaxTMI 
2022 (1) TMI 641
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.... order of the ld.AO who had made addition of Rs. 15,99,60,041/- on account of notional gain arising out of the foreign exchange fluctuation relying on the decision of the Hon'ble Apex Court in the case CIT vs. Woodward Governor India Pvt Limited in 312 ITR 254 wherein the facts are not identical. 3) The Ld. CIT (A) has erred in upholding the order of the ld.AO who had made addition of Rs. 61,95,95,194/- by holding that the business of the assessee has not commenced operation accordingly the expense has to be capitalised. 4) The Ld. CIT (A) has erred in upholding the order of the ld.AO who had made additions towards interest charged U/s. 234A, B and C of the Act. 3. The assessee has also raised an additional ground in its appeal stating that" "The Ld. CIT (A)-8, Hyderabad has erred both in law and on facts in not condoning the delay in filing the appeal U/s. 249(3) of the Act." 4. Since, this is a legal ground raised by the assessee following the decision of the Hon'ble Apex Court in the case NTPC vs. CIT reported in 229 ITR 383, we hereby admit the ground raised by the assessee. 5. The Revenue has raised three grounds in its appeal however, the c....
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....ts." 8. The assessee had further stated before the ld. CIT (A) that the relevant assessment order was served in the hands of the guard who was guarding the premises of the assessee on 26/04/2013 just before the closure of the factory premises. Therefore, there was no one in the factory premises to intimate the concerned person. Only during the month of August 2013, it came to the knowledge of the concerned officers of the assessee company about the order passed by the Ld.CIT(A) and thereafter immediately the appeal was preferred. Reliance was placed in the decision rendered by the Hon'ble Apex Court in the case Collector, Land Acquisition vs. MST. Katiji and Others reported in 167 ITR 471 (SC) and the decision rendered by the Hon'ble Karnataka High Court in the case KTK Forest Development Corporation vs. ACIT (TDS) reported in 196 Taxmann 445. Hence it was prayed that the delay in filing the appeal was due to reasonable cause which is beyond the control of the assessee and therefore the delay in filing the appeal may be condoned. However, the Ld. CIT (A) denied to condone the delay without appreciating the facts by stating that the assessee and its representatives failed to repr....
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....edantic approach. The doctrine must be applied in a rational, common sense and pragmatic manner. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the sae treatment and the law is administered in an even-handed manner. There is no warrant for according a step-motherly treatment when the State is the applicant praying for condonation of delay. "When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay." Hon'ble Karnataka High Court in the case Karnataka Forest Development Corporation vs. ACIT (TDS) reported in 196 Taxmann 445 has held as under: "The affidavit filed in support of the application for the condonation of delay disclosed that, after the order was passed by the Commissioner (Appeals), there was a change of managing director. Though the chartered accountant of the company opined that it was a fit case for appeal and prepared the requisite papers and even sent them to the managing director fo....
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.... the Tribunal which was not condoned by the Hon'ble High Court is required to be condoned as the assessee had no knowledge about passing of the Tribunal order dated 29/12/2003 until it was confronted with auction notice in June, 2008 issued by competent authority immediately upon which the assessee filed appeal before the Hon'ble High Court." The Hon'ble Supreme Court in the case Improvement Trust vs, Ujagar Singh & Others (2010) reported in 6 SCC 786 it was held that: "Unless malafide intention exists in the conduct of the party then generally as a normal rule, delay should be condoned. In the legal arena an attention should always be made to allow the matter to be contested on merits rather than to throw it on such technicalities." The Hon'ble Madras High Court in the case of Vijayeswari Textiles Ltd vs. CIT reported in 256 ITR 560 held that: "6. We, therefore, hold that the Tribunal was in error in not condoning the delay and that it was also in error in holding that the additional bonus of three per cent could not be claimed as expenditure under section 37 of the Act. 7. Matters relating to condonation of delay are indeed discretionary and are n....
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....ad refuted the condonation plea before the Ld. CIT (A) nor did he object to the disposal of the appeal on merits in his remand report. Hence, this decision relied by the Ld. DR has no merits. Further, in none of the decisions cited by the Ld. DR it has been held that, if the appellate authority had decided the appeal on merits, even after refusing to condone the delay, then the findings of the appellate authority are non-est in the eye of law. Moreover, all the judgments cited by the Ld. DR are factually distinguishable from the facts of the case of the assessee and it has no application to the case of the assessee. 12. For the above stated reasons, we hereby condone the delay of 125 days in filing the appeal before the Ld. CIT (A) and proceed to adjudicate the grounds raised by the assessee on merits. Accordingly, the grounds raised by the Revenue are devoid of merits and therefore appeal of the Revenue does not survive. Consequently, the additional ground raised by the assessee is allowed. 13. The brief facts of the case are that the assessee is a Limited Company engaged in the business of manufacturing steel, filed its return of income for the AY 2010-11 on 31/11/2011 admi....
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....g Co. Pvt. Ltd, No.6(4), Raghava Chari Road, Bellary. (ii) M/s. Tubular Rivets (P) Ltd., Flat No.22; Parijatha Apartments, Race Course Road, Bangalore. (iii) M/s. Kireeti Power Corporation Pvt Ltd., Plot No.1121; S.No. 403/1; Road No. 54, Jubilee Hills, Hyderabad. (iv) Lakshmi Aruna Oxygen Pvt. Ltd., Plot No. 1121, S.No. 403/1; Road No. 54, Jubilee Hills, Hyderabad-500 034. (v) Mudita Properties Pvt Ltd, Flat No.22; Parijatha Apartments, Race Course Road, Bangalore. (vi) Sri G. Janardhana Reddy, Shok Nagar, Havambhavi, Bellary - 583 101. (vii) Smt. G. Lakshmi Aruna, Ashok Nagar, Havambhavi, Bellary, 583101. (viii) M/s. GJR Holding International Ltd., 5; Athol Street, Douglas, Isle of Man. The Ld. AR shall also submit the above-mentioned particulars within a week before the Ld. DR. 2. The Ld. DR is hereby directed to verify the genuineness of the assessment order and details furnished by the Ld. AR and submit a report on the same from the Revenue before the Bench. The above information is called for because the Ld. AR has submitted before the Bench that all the above-mentioned companies' income were ass....
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....ct. From the balance sheet filed by the assessee, the Ld. AO observed that the assessee company had received aggregate amount of Rs. 311,88,97,970/- towards share subscription from various parties as detailed herein below: Sl no Name of the shareholder No. of shares Amount received upto 31/3/2010 (Rs.) Amount received upto 31/3/2009 (Rs.) 1. M/s. Obulapuram Mining Co. Pvt. Ltd, No.6(4), Raghava Chari Road, Bellary 102,07,15,960 1020,07,15,960 479,52,00,000 2. M/s. Tubular Rivets (P) Ltd., Flat No.22; Parijatha Apartments, Race Course Road, Bangalore. 80,000 8,00,000 8,00,000 3 M/s. Kireeti Power Corporation Pvt Ltd., Plot No.1121; S.No. 403/1; Road No. 54, Jubilee Hills, Hyderabad. 9,24,20,000 92,42,00,000 8,00,000 4 Lakshmi Aruna Oxygen Pvt. Ltd., Plot No. 1121, S.No. 403/1; Road No. 54, Jubilee Hills, Hyderabad-500 034. 8,23,20,000 82,32,00,000 8,00,000 5 Mudita Properties Pvt Ltd, Flat No.22; Parijatha Apartments, Race Course Road, Bangalore. 80,000 8,00,000 8,00,000 6 Sri G. Janardhana Reddy, Shok Nagar, Havambhavi, Bellary - 583 101. 1,95,80,000 7,08,00,000 7,08,00,000 ....
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....ted 8/11/2016 "3. During the course of remand proceedings, the assessee submitted certain information based on which a remand report was submitted by my predecessor on 17/03/2015. However, in the light of the information available on record, a revised remand report is being submitted for your kind perusal as under: (i) Share application money brought to tax U/s. 68. During the scrutiny proceedings, the A.O. noticed that the assessee had received Rs. 311,88,97,970/- being share subscription during the year from various parties. The assessee was asked to prove the genuineness of the transactions along with creditworthiness of sources in the hands of the subscribers. However, there was no response from the assessee. The A.O. then issued letters to the share subscribers U/s. 131 of the IT Act to ascertain the genuineness of the transactions. All the letters were returned unserved except in the case of M/s. Obulapuram Mining Co. Pvt Ltd., which also did not respond to the summons. As the genuineness of the transaction was not proved, the same was added to the income returned u/s. 68 of the Act. ............. ............. 4. During t....
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....12,50,00,000 7 Smt. G. Lakshmi Aruna, 2,50,80,000 25,08,00,000 12,58,00,000 ----- 12,50,00,000 8 M/s GJR Holding Internatio nal Ltd. 4,89,09,836 48,90,98,360 Nil 48,90,98,360 ----- Total 128,91,85,796 1289,18,57,960 499,50,00,000 477,80,60,000 311,88,97,960 5 It will be apparent that amounts brought to tax is in respect of five shareholders out of eight shareholders: Sr. No. Name of shareh older No. of shares (pages of Paper Book) Amount received upto 31.3.2010 as share capital (Rs.) (pages of Paper Book) (A) Amount received upto 31.3.2009 as share capital (Rs.) (B) Share application money pending allotment as on 31.3.2009 (Rs.) (C) Total (D) = (A-B-C) (pages of Paper Book) 1 M/s Obulapuram Mining Co. (P) Ltd. 102,07,15,960 (151) 1020,71,59,600 (151) 479,52,00,000 296,80,61,640 244,38,97,960 2 M/s Kireeti Power Corporation (P) Ltd. 9,24,20,000 92,42,00,000 (209) 8,00,000 65,64,00,000 26,70,00,000 3 Lakshmi Aruna Oxygen (P) Ltd. 8,23,20,000 82,32,00,000 (228) 8,00,000 66,44,00,000 15,80,00,000 4 Sri G. Janard hana Re....
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....s 143(3)/144 of the Act for Assessment year 2010-11 in the case of M/s Kireeti Power Corporation (P) Ltd. (pages 219-221 of Paper Book) Suman Malik Deputy Commissioner of Income Tax Cirlce-2(1), Hyderabad 3 Lakshmi Aruna Oxygen (P) Ltd. Address: Plot No. 1121, S. No. 403/1, Road No. 54, Jubilee Hills Hyderabad Hyderabad TG No. of shares: 82320000 PAN No. AABCL3634K 15,80,00,000 66,52,00000 i) Copy of balance sheet alongwith its schedules for the financial year 2009- 10 relevant to assessment year 2010-11 in the case of M/s Lakshmi Aruna Oxygen (P) Ltd (pages 223-234 of Paper Book) ii) Copy of order of assessment dated 20.3.2013 u/s 144 of the Act for Assessment year 2010-11 in the case of M/s Lakshmi Aruna Oxygen (P) Ltd. (pages 372-376 of Paper Book) A.Sridhar Income Tax Officer Ward-16(1). Hyderabad 4 Sri G. Janardhana Reddy Address: No. 8, Ashok Nagar, Havambhavi, Shriguppa Road, Bellary-583101 No. of shares: 19580000 PAN No. AFBPR9737D Ward: DCIT, Central Circle, 1(3), Bangalore 12,50,00,000 12,50,00,000 i) Copy of acknowledgment of return of income dated 13.10.2010 alongwith computation of income for the financial year 2009- 10 relevant to a....
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....rb the earlier finding of the erstwhile AO. The Ld. CIT (A) relying on the second remand of the Ld. AO confirmed the addition made by the Ld. AO in his ex-parte order. 20. The Ld. AR submitted before us that the order of the Ld. CIT (A) is perverse for the reason that he did not consider the first remand report dated 17/3/2015 wherein the Ld. AO had accepted the genuineness of the transaction and accordingly reported that the cash credit in the books of the assessee is prima facie explained. The Ld. AR further submitted that when there was no change in facts and circumstances of the case, it was not necessary for the Ld. CIT (A) to demand for a second remand report. The Ld. AR vehemently argued by stating that the Ld. CIT (A) had failed to examine the documents available with the Revenue before arriving at his conclusion. It was further submitted that the action of the Ld. CIT (A) was vindictive in nature because there was no reasons stated by the Ld. CIT (A) for rejecting the first remand report. The Ld. AR further cited the paper book produced before us wherein the IT Acknowledgements, financial statements, PAN etc., of the investors were enclosed in order to substantiate the ....
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....rivate Limited 8. M/s. GJR Holding International Ltd As can be seen from the assessment record, notice U/s. 143(2) dated 30/08/2011 was issued and served on the assessee on 10/09/2011. A notice U/s. 142(1) was issued on 04 -07 2012 for which, there was no response from the assessee. This was followed by a fresh notice' u/s.142(1), along with the detailed clarification. In response to this notice, the assessee sought adjournment and the case was adjourned accordingly to 06-09-2012. The assessee again sought adjournment to 2nd week of October, 2012 which was granted. Further, a notice u/s.143(2) was issued on 05-10-2012 fixing the hearing on 22-10-2012. The said notice was returned unserved by the postal authorities with the remark 'addressee left'. This clearly shows that the tax payer despite opportunities, did not utilize the same. Despite the above, the Assessing Officer in all sense of fairness took it upon himself by Issuing notice u/s.131 of the I.T. Act to the eight shareholders requesting them to prove their identity, creditworthiness and genuineness of the transaction. As mentioned in the assessment order, all the letters / notices were r....
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....sseessee was asked to prove the genuineness of the transactions along with creditworthiness of sources in the hands of the subscribers. However, there was no response from the assessee. The AO issued letters to the share subscribers u / s. 131 of the IT Act to ascertain the genuineness of the transactions. All the letters were returned unserved except in the case of M/s. Obulapuram Minding Co. Pvt. Ltd. which also did not respond. It is further submitted that the Ld.CIT(A) has also given opportunity to the assessee to submit objections/comments on remand report. There was no response from the assessee. (i) M/s. Obulapuram Mining Co. Pvt. Ltd. (PAN: AAACO5753D): The assessee has produced return of income filed for the Assessment Year 2010-11 at page 148-16] of the paper book. Assessment order passed under section 143(3) of the Act under section 143(3) of the I.T.Act for Assessment Year 2010-11 is produced at page 162 to 184. On perusal of the said documents it is seen that the balance sheet of the investor assessee reflects investments of Rs.I02,071.60 lakhs at. Page No. 151 of Paper book. The assessment order for A.Y.2010-11 would not reflect the issue regarding i....
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....ction of investing in shares of M/s. Brahmani Industries, therefore, the entire investment worked out in the assessment order is liable to be taxed. Hence, it is very clear that the precondition for proving the transaction be as per law has not fulfilled. Therefore, the addition may kindly be sustained. [vi] Sri G. Janardhana Reddy (PAN - AFBPR9737D) : The balance sheet of the investor assessee reflects investment of Rs. 1,010,697,098/-. The breakup of investment is provided in Schedule 5 (Page No.293 of Paper Book), wherein, it was shown at S1. No.9 'Investment in Shares BIL' of Rs. 12,50,00,000/ -. The assessment has been completed under section 153C rws 144 of the Act, 1961 on 31-03-2013 by the DCIT, Central Circle-1(3), Bangalore. However, the burden is on the assessee to establish identity and creditworthiness of the investor and genuineness of the transaction. The mere production of the accounts and assessment orders of the investor company, would not amount. to discharge burden imposed on the assessee as held by the various High Courts and the Hon'ble Supreme Court. (vii) Smt. G. Lakshmi Aruna (PAN - AFJPA6974P) : The balance s....
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.... made by the Assessing Officer is upheld and ground No.3 is dismissed. Therefore, it is once again humbly submitted that once the appeal fails at the threshold level, the Ld.CIT(Appeal) ought not to have proceeded with the adjudication on merits of issues. Therefore, it is once again humbly reiterated that the same may kindly be sustained as the tax payer repeatedly chosen not to avail opportunities before the Assessing Officer and subsequently before the Ld.CIT(Appeal) also. Therefore, the same may kindly be sustained. 5) Submitted for kind perusal of Ld. Commissioner of Income Tax (DR)-I, A-Bench, Hyderabad to be placed before Hon'ble Bench for favourable consideration. Yours faithfully, Sd/- [P. SRINIVAS] Dy. Commissioner of Income Tax, Circle-1(1), Hyderabad. 22. The Ld. AR further submitted that the Ld. AO neither examined the assessee nor examined the records available with the Revenue while framing the third remand report. The Ld. AR further submitted that the Ld. Revenue Authorities till this date has not stated the reason for rejecting the first remand report of the Ld. AO. The Ld. AR further submitted that the assessee has filed paper b....
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....00 consists of the assessment order U/s. 143(3) r.w.s 144C(13) of the Act for the AY 2009-10 by the DCIT, Central Circle-1(3), Bangalore wherein entity's income of Rs. 491,38,96,684/- is accepted and further addition is also made. (vii) Page No.202 consists of the CIN No. of the entity viz., U13209KA2001PTC029707. 2. Kireeti Power Corporation Pvt Ltd: (i) This company/entity has invested Rs. 92,42,00,000/- (page no.209 of the paper book) towards allotment of equity share in the assessee company hence, it is a associate company of the assessee company. (ii) The Ld. AR's submission that the Directors of the associate company and the assessee company are the same is not disputed. (iii) Page No. 204 to 218 of the paper book contains the audited balance sheet and statement of accounts from which it is evident that the entity has equity share capital and reserves & surplus aggregating to Rs. 75,72,31,920/- and in page no. 210 the entity has declared profit before tax of Rs. 89,53,549/-. (iv) Page No. 219 to 221 consists of the assessment order U/s. 143(3) r.w.s 144 of the Act of the entity for the AY 2010-11 dated 31/3/2013 by the DCI....
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....unts from which it is evident that Shri G. Janardhana Reddy has capital of Rs. 112,55,35,986/-. (iv) Page No.295 to 371 consists of the assessment order U/s. 153C r.w.s 144 of the Act of the Shri G. Janardhana Reddy for the AY 2010-11, dated 31/3/2013 by the DCIT, Central Circle-1(3), Bangalore wherein his returned income was accepted at Rs. 33,22,21,230/- and further several high-pitched additions were made. 5. Smt. G. Lakshmi Aruna : (i) Smt. G. Lakshmi Aruna has invested Rs. 12,50,00,000/- (paper book page no. 243) towards allotment of equity share in the assessee company during the relevant assessment year and the overall aggregate investment in equity shares is Rs, 39,63,25,600/- (ii) The Ld. AR's submission that Smt. G. Lakshmi Aruna is a promotor of the assessee company is not disputed. (iii) Page No. 236 of the paper book contains the acknowledgement for filing the Return of income for the AY 2010-11 wherein Smt. G. Lakshmi Aruna has returned Gross Total Income of Rs. 23,48,11,430/- and the PAN of Smt. G. Lakshmi Aruna is stated as AFJPA 5974 P. Page No. 237 consists of computation statement of Smt. G. Lakshmi Aruna wherein the t....
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....port dated 8/11/2006 had stated that "the concerned Directors of the group were in judicial custody and for such reason the summons and notices issued upon them were returned unserved" itself justifies the reason that the entities could not cooperate during the assessment proceedings. It also establishes the fact that the relevant individuals managing the affairs of the assessee company were not in receipt of the notices sent by the Revenue Authorities during the course of assessment proceedings. Further, before us the Ld. DR could not state any reason as to why the first remand report of the Ld. AO was rejected. 25. From the above facts it is evident that the assessee has established the genuineness of the transaction with cogent evidence which are forming part of the paper book. The Ld. Revenue Authorities could not draw any adverse inference from the documents filed by the assessee company in its paper book. Hence the assessee has satisfied the initial onus cast upon it to establish the identity of the investors, the creditworthiness of the investors and the genuineness of the transactions. The Ld. DR has also argued stating that the onus lies upon the assessee to substantiat....
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....s of the return of income, balance sheet and other particulars filed before the Ld. Revenue Authorities, the Ld. AO has not brought out any substantial material on record to dispute that the documentary evidence placed by the assessee on record is not genuine. In the third remand reported dated 31/8/2021 the Ld. AO had made only three effective common comments with respect to our directions recorded in the order sheet dated 11/6/2021 ie., to verify the genuineness of the assessment order regarding the five relevant share applicants M/s. Obulapuram Mining Co. Pvt Ltd., M/s. Kireeti Power Corporation Pvt Ltd., M/s. Lakshmi Aruna Oxygen Pvt ltd., Shri G. Janardhan Reddy and Smt. G. Lakshmi Aruna. These three comments made by the Ld. AO in his third remand report are (i) the assessment order does not reflect the investment (ii) the burden is on the assessee to establish the identity and creditworthiness of the investor and the genuineness of the transaction (iii) the mere production of the accounts and assessment order of the investor company would not amount to discharge of burden imposed on the assessee as held by various higher judiciary. In the case of the assessee, the assessee ha....
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.... vs. Orchid Industries Limited Pvt Ltd (397 ITR 136) wherein it was held that: "6. The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the assessee has also produced the entire record regarding issuance of shares ie allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of accounts. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the assessee. The judgment in case of Gagandeep Infrastructure (P) Ltd., (supra) would be applicable in the facts and circumstances of the present case. SLP filed against the decision of the Hon'ble High Court was dismissed by the Hon'ble Supreme Court"....
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....sessee were to unknown or complete strangers. The assessee has demonstrated that it was in need of funds for its business and accordingly it had sought equity investment from its group entities/holding company/promoter-individuals. From the above facts it is obvious that the Ld.AO of the shareholders have examined the sources of income of these shareholders U/S 143(3) of the Act and have not drawn any adverse inferences. The income-tax assessment orders passed U/S 143 (3) of the Act in the matters of these shareholders show that the Ld.AOs of the shareholders did not doubt their bona fide existence or the genuineness of their transaction with the assessee. Hence, in our considered view, all the three ingredients set out in Section 68 of the Act had been met by the assessee. 30. Further, we are of the view that the decisions cited by the Ld. CIT (A) and those cited by the ld. AR, the facts are not identical with the facts of the assessee as discussed herein below. (i) CIT vs. NR Portfolio Pvt Ltd reported in 263 CTR 456:- In this case the assessee has only furnished PAN and no other documents. (ii) Nova Promoters and Finlease Pvt Ltd reported in 342 ITR 169:- Th....
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....nr ( 7 SCC 372); State of UP vs. Sudhir Kumar Singh and Ors (CA No. 3498/2020); Tuticorin Alkali Chemicals & Fertilizers Ltd vs. CIT ( 93 Taxmann 502); CIT vs. Woodward Governor India (P) Ltd (312 ITR 254); PCIT vs. I-Ven Interactive Ltd (418 ITR 662); PCIT vs. NRA Iron & Steel (P) Ltd (412 ITR 161); NRA Iron & Steel (P) Ltd vs. PCIT 273 Taxman 14; Kale Khan Mohammed Hanif vs. CIT (50 ITR 1); Roshan Hatti vs. CIT (107 ITR 938); CIT vs. P. Mohankala ( 291 ITR 278) and CIT vs. N.R. Portfolio (P) Ltd (42 Taxmann.com 339). 31. To sum up, Section 68 of the Act provides that, if any sum found credited in the year in respect of which the assessee fails to explain the nature and source, shall be assessed as its undisclosed income. In the facts of the present case, we find that both the nature & source of the share application received during the year stands fully explained by the assessee. The PAN details audited financial statements, Income Tax acknowledgments and their respective assessment orders passed U/S 143(3) of the Act have been placed on record. The assessee had discharged its onus to prove the identity, creditworthiness, and genuineness of the shareholders. We find that, the ....