TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 1862
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....to Rs. 1,000 per shares. The share premium earned from such issued of Rs. 4,74,21,000/- and share capital was Rs. 4,79,000/- Total share capital and share premium was received at Rs. 4,79,00,000/-. The assessee has issued the fresh shares to following companies:- LIST OF NEW SHAREHOLDERS IN THE YEAR 2008-2009 Sr. No. Name Address Number @ Share Capital Share Premium 1 Mihir Agencies Pvt. Ltd. Block-H, Shri Sadashiv CHS Ltd. 6th Road, Shantacruz (E) Mumbai-400055 2000 10 20000 1980000 2 Sumukh Commercial (P) Ltd. (Formaly Known as Captown Marcantile Co. Pvt.Ltd.) Chamber No.06, BIG Three Building, 1st Merine Street, Mumbai-400002 1000 10 10000 990000 3 Buniyad Chemical Ltd. Block-H, Shri Sadashiv CHS Ltd. 6th Road, Shantacruz (E), Mumbai-400055 2000 10 20000 1980000 4 Luxer Properties Pvt. Ltd. C-104, Rahul Appt., S.V.Road, Andheri (W) Mumbai-400058 1500 10 15000 1485000 5 Suresh Rathod Consultant Pvt. Ltd. C-104, Rahul Appt., S.V.Road, Andheri (W) Mumbai-400058 2500 10 25000 2475000 6 Elderadd Properties Pvt. Ltd. C-104, Rahul Appt., S.V.Road, Andheri (W), Mumbai-400058 1000 10 10000 990000 7 Ecro Artisons Pvt. Ltd. 26/28, Nirnay....
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....00 10 10000 990000 24 Naman Equipments and Constructions (India) Pvt. Ltd. (Formally known as Mewar Equipments Pvt. Ltd.) 115, Diamond Trade Centre, 3-4, Diamond Colony, New Palasia, Indore (M.P.) 452008 500 10 5000 495000 25 Kinescope India Pvt. Ltd. Shop No.220, Labh Chambers, Station Road, Aurangabad (MH) 1500 10 15000 1485000 26 Bolplanst Ltd. 5/856, Kamla Appt. Second Floor, Gahishere, Mahidarpura, Ghasheri, Surat - 395009 2300 10 23000 2277000 27 Galaxy Devcom Pvt.. Ltd. Ganesh Bhawan Chawadi Bazar, Lashkar, Gwalior (M.P.) 2500 10 25000 2475000 28 Roll Gold Industries Ltd. 15, Vidhya Sagar Appt., 18, Mahavir Nagar, Indore (M.P.) 1500 10 15000 1485000 Survey u/s 133A of I.T. Act, 1961 conducted on the business premises of assessee on 08-10-2009. During the course of survey statement of Shri Rajesh Jain, Director of M/s. Swift Intermedia Convergence Ltd. And Kanika Digitals Prints Pvt. Ltd. Recorded on oath on 08.10.2009, in which he has disclosed entire share capital and share premium received during the year amounting to Rs. 4,79,00,000/- as undisclosed income for the A. Yr. 2009-10. Later on assessee has not revised t....
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.... Since assessee has not disclosed the amount admitted during the survey on account of share capital introduced during the year, detailed investigation were made to find out the genuineness of the share capital and share premium. In this regard information u/s 133(6) is called for in the case of assessee, who has secured share capital and share premium of Rs. 4.79 crores from aforesaid companies. Commission u/s 131 (1)(d) was issued to Addl. DIT (Inv.) Unit-I, Mumbai and Addl. DIT (Inv.) Unit-III, New Delhi and Addl. DIT, Vadodara on 12-09-2011 to make independent enquiry in respect of aforesaid companies whom assessee has received the share capital during the year. Letter sent u/s 133(6) is returned back unserved in the following cases: 1. Rol Gold Industries Ltd., Indore 2. Winfotech System Pvt. Ltd., Mumbai 3. Luxer Properties Pvt. Ltd., Mumbai 4. Suresh Rathore Consultant Pvt. Ltd., Mumbai 5. Elederado Properties Pvt. Ltd., Mumbai 6. Ecro Artisons Pvt. Ltd., Mumbai 7. Star Vision Media Pvt. Ltd., Delhi; 8. Uniward Barter Pvt. Ltd., Delhi 9. Magal Murti Infrareal Pvt. Ltd., Indore 10. Pursuit Securities Ltd., Mumbai No information was received in respect o....
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....n this fact brought in to the notice of the assesse, it has persuade the matter with the so called companies, whose letter returned back unserved and asked them to file the information u/s 133(6). Mr. Rajiv Bansal C.A. also appeared alongwith Mr. S.N.Agrawal, C.A. on behalf of the Delhi companies namely Surbhi Networking and Broad Casting Pvt. Ltd., Star Vision Media Pvt. Ltd. Happening Motorors, Acumen Binders Pvt. Ltd., Startrans Logistic Pvt. Ltd., Uniword Barter Card Pvt. Ltd. And Shri Balaji Sai Nath Pvt. Ltd. He has filed the application for shares, ROC details and copy of Bank account and Memorandum & Article of Association in respect of these companies and also filed a copy of return for the A.Y. 2010-11 of R.J. Fabtex Pvt. Ltd. Now known as Surbhi Networking and Broad Casting Pvt. Ltd. As claimed by the assessee and Uniword Barter Card Pvt. Ltd. Startrans Logistics Pvt. Ltd., Acumen Paper Binders Pvt. Ltd. and Happening Motors Pvt. Ltd. but no evidence has been brought on record in support of change in the name of the company R. J. Febtax Pvt. Ltd. Copy of returns are furnished for A.Y. 2010-11 that is not relevant for the year under consideration. Meanwhile report from A....
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....as to why shares of unlisted company were taken on premium. The only reason given was that M/s. Swift Intermedia Convergence Ltd. of Indore is a media company and having bright future. Moreover, he could not tell the sources of the fund of the company making investment of huge some in unlisted co. that to on premium. No reference was given as to whether he had consulted any merchant or valuer he was not in a position to tell the value of the share of the company M/s. Swift Intermedia Convergence Ltd. of Indore as on 31-03-2009 and 31-03-2011. The another surprising fact is that a company incorporated in the year 2009 receipt share application money in the same year details of which could not be given by the director of the company and invest in another unlisted company in the year 2009 again the shake of share application money and share premium." Copy of report as received from Delhi Investigation wing in respect of Nine companies were provided to the assessee for its comment. The assessee vide its letter dt. 20-12-2011 filed detailed reply, the relevant paras of the same is reproduced as under:- That you have provided report as received from the Income Tax officer (Inv), Un....
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....lication money by those share holders. In that case, necessary addition is to be made in the case of these share holders but not in the case of the assessee company. That in view of the above, the amount of share application money as received from Bhagirathi Industries Limited and Sayam Shares & Securities P Limited of Rs. 20,00,000/- each totaling to Rs. 40,00,000/- requires to be accepted as genuine. That as regard share application money as received from all other seven companies are concerned. The authorized officer on the basis of report of his inspector reached to a conclusion that these companies does not found exist on the given addresses. That on perusal of the inspector report, it is noticed that the said summon was not affixed on the given premises. Signature and address of two independent witnesses as required was also not obtained. The letter as issued U/s 133(6) of the Income Tax Act was duly served on these shareholders. Replies from these shareholders have also been received directly in your office. Thus, probably at the time of visit of the inspector, may be the authorized person of these companies may not found available on the given address. That as far as Sig....
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....sted in Indore company on such a high premium. Similarly, networth of the Bhagirathi Industries Ltd. is evident from the above chart. This company has shown net profit Rs. 3,625/- and having share capital of Rs. 40,79,290/-. On the basis of the balance sheet and profitability creditworthiness of the company is not proved and moreover, investment is not appearing in the name of M/s Swift Intermedia Convergence Ltd. of Indore in the balance sheet. Report from Addl. DIT, Mumbai was received on 21.10.2011, copy of the report is provided to the assessee. Relevant portion of the report is reproduced as under:- Investigation wing, Mumbai has recorded the statement of Mr. Mukesh Choksi working in the capacity of director M/s Mahasagar Securities Pvt. Ltd. and other companies at Block No. H, Shri Sadashiv CHS, 6th Road, Santa Cruz (East), Mumbai during the course of search u/s 132 of the Income tax Act, 1961 on 25.11.2009. In case of seven companies, Mumbai investigation wing submitted its report wherein reference of the survey and search action on the premises of Shri Kamal Kishore Rathi and Shri Mukesh Choksi was given and stated that both these persons have accepted to involved in pro....
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....e arrangement of Long term/ short term capital gain on sale of shares. That statement of Jayesh Krishnaraj Sampat was also recorded on 14-05-2010 wherein he has explained that he has managed certain affairs.That in reply to the question No 11, he has explained the mode of investment in the share application money for short period of 6 months and again buy back at much lower rate. That in the present case in hand, the share capital as issued still hold by these share holders. The assessee had also declared dividend which was also credited in the bank account of these share holders. Hence, the modus operandi as explained by Shri Sampat not applicable in the case of the assessee company. That in the case of investment in the share application money by M/s Buniyad Chemicals Limited and M/s Mihir Agencies P Limited, the assessee had obtained affidavit duly signed by Shri Jayesh Sampat duly notarized in the year 2011. That search U/s 132 was executed in the year 2009 in the case of these companies. Hence, identity of these share holders stand proved. That these companies still holds share of the assessee company and dividend as declared was also credited in their bank account. Hence, ....
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....lpha Graphic India Ltd, Baroda and Acil Cotton Industries Pvt. Ltd. Baroda, calling for relevant information and to appear before this office on 25.10.2011. Nobody attended in response to the above mentioned summons. Separate inquiry was conducted through inspector of this office, wherein it is stated that the offices remain closed. One of' the offices has already been rented. The mobile number of the accountant of the company was gathered and he was asked to produced the directors of the company in the office of the ADIT (Inv), Baroda, alongwith copy of balance sheet, P&L account, directors report and share transaction details. However, no one appeared and one of the staff related to the accountant submitted the copy of Annual Report of these companies. On perusal of the Annual Report for F. Y. 2008-09 it is evident that no investment in the name of' Swift Intermedia Convergence Ltd. is visible in the schedule of the balance sheet of Adeshwar Cotton Industries Ltd. (Acil). The copy of the annual report of these companies are enclosed herewith for kind perusal and necessary action at your end." Copy of report as received from Vadodara Investigation wing for two companies....
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....sessee company. That in view of the, the amount of share application money as received of Rs. 15,00,000/- from these two companies Assessee vide his letter dated 20-12-2011 further submitted as under:- That in the present case, the assessee had filed complete details as to justify the geniuneness of the share application money. That in respect of the shsraholders assessee had filed sufficient documents in form of share application money, bank statement and Affidavit, Memorandum, Article of Association, ROC details and PAN details as to justify the identity, geniuneness and creditworthiness. Hence the entire amount of share application money is treated as explained. The amount of Share capital as received by the assessee is legal and proper. For this reason, revised return was not filed by the assessee company. The assessee had received share application money of Rs. 15,00,000/- from m/S Neema Investment P Limited, Indore. In this respect you have asked the assessee to explain as to why not be treated as non-geniune. In this respect, it is submitted that the assessee had received share application money from the said company through an account payee cheque, necessary documents....
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....nk a/c etc. could not make the transaction genuine. Similarly when companies did not find at the given address after making independent enquiry by the department, their identity could not be treated as established. Hence, considering the entire facts I treat the introduction of share capital of Rs. 4,79,00,000/- as unexplained u/s 68 of the I.T. Act. Thus, considering the all the facts discussed above, I hold share application money of Rs. 4,79,00,000/- claimed to have been received in the name of concern(s) appearing at serial no. 1 to 28 as unexplained and hence the same is added to the total income of the assessee u/s 68 of the I.T. Act. I am satisfied that the assessee had concealed the correct particulars of its income and furnished inaccurate particulars of its income within the meaning of the provisions of section 271(1) (c) of the I.T. Act. Therefore, the penalty proceedings u/s 271(1) (c) of the I.T. Act are separately being initiated on this point." 1.4 Matter carried to ld. CIT(A), who deleted the addition observing as under: "5.8 I have considered the A.O.'s order as well as the appellant's A/R submission. I have also taken note of various documents filed by the app....
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....d by the appellant company before the A.O. and also were subsequently filed in the appellant proceedings established the appellant contention of proving the identity of such share applicant i.e. Share Application form, Copy of board resolution as passed by the share holder company, Name and address change certificate from ROC if any (in case of share applicant), Master details of ROC, PAN detail, Copy of Bank Statement of the shareholder, Copy of Memorandum and Article of Association, Balance Sheet & Copy of affidavit as signed by the director of the share holder company. Further to that, I am also not in agreement with A.O.'s this proposition that the appellant was bound by its declaration as it was made in the survey proceedings. My this view gets support from a recent decision of Hon'ble Chattisgarh High Court in the case of ITO vs. Vijay Kumar reported in 327 ITR 497 & Hon'ble Madras High Court decision in the case of M. Nayayanan & Bros vs. ACIT reported in 339 ITR 192. Even I also find that the A.O. reliance to the reports of investigation wing also lack of correctness in her decision, as it is evident from the appellant's submission that the investigation in Mumbai did not m....
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....tity of such parties. Even I find that the report from investigation wing, Baroda was also not speaking the half truth as the A.O. concluded such share application unexplained merely on this presumption that the name of the appellant company was not appearing in the balance sheet of such share applicant whereas the appellant's claim that the appellant's name was appearing in the schedule of balance sheet and also in another company the consolidated amount were shown in the balance sheet and if the company not shown the name of the appellant in the balance sheet it will not amount to unexplained when the existence of the said company is proven is assessed to tax on specific PAN and also making investment in the form of share application with the company through account payee cheque. Even it is evident with the appellant's submission both company i.e. ACIL cotton Industries Pvt. Ltd. (Formerly known as Adeshwar Cotton Industries Ltd.) and Alpha Graphic India Ltd. are assessed to income tax with specific PAN with two different A.O. which has been asserted by the investigation wing in its report. Even in the case of remaining other share applicant the appellant has duly filed detailed ....
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....of the share holders, genuineness of the transactions and creditworthiness of the shareholders stand proved. My view further supported by the decision of the Hon'ble Delhi High Court in the case of Oasis Hospitalities (P) Ltd [Supra], Rock Fort Metal & Mineral [Supra], Winstral Petrochemicals (P) Ltd [Supra], Gangour Investment Ltd [Supra] and Tulip Finance Ltd [Supra]. Even I find that the AO was not correct in doubting the identity of the share holders company merely for the reason that letter as issued u/s 133(6) of the Income Tax Act was returned unserved and inspector in his report in the commission proceeding not found proper addresses of the share holders companies. The appellant has provided the specific PA No of the share applicant and the amount of the share application money were received through an account payee cheque. The AO was not of the opinion that PA No as provided by the appellant was wrong. I find that if the AO has any doubt about the identity, genuineness and credit worthiness of the share application money. In that case, he could have referred the matter to his counter part where the shareholder is regularly assessed to tax and of then AO was not satisfied i....
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....ort the case of the appellant. The order decisions as relied by the AO in her order are on general principle and clearly distinguishable on the facts of the present case. I also find that the appellant had filed ample documents as to justify the identity of the share holders, genuineness of the transaction and creditworthiness of the share holders which includes Bank account, PA No , Share application form and affidavit of the share applicant. The appellant has properly discharged onus lying on it. My view find support from the decisions of the Hon'ble Apex Court in the case of Lovely Exports P Limited [Supra], decision of the Hon'ble Jurisdictional High Court in the case of STL Extrusions P Limited [Supra] and Hon'ble ITAT, Indore Bench in the case of M/s Rajshree Finsec P Limited [Supra]. 5.12 Thus taking note of all the afore-stated facts and submission and appreciation of the facts of the A.O.'s order as well as appellant's A/R submission and also after taking note of decision of Apex Court in the case of Lovely Exports Pvt. Ltd. reported in 216 CTR 195 and the decision of Hon'ble Delhi High Court in the case Gangeshwari Metal Pvt. Ltd. dated 21/01/2013 and also after taking ....
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....ceiving cash from the parties and Assessing Officer was of the view that copy of return roc and bank account cannot make transaction genuine. The ld. CIT(A) has,without any justification,ignored the decision in the case of M/s. Agrawal Coal Corporation. The ld. DR submitted that the ld. CIT(A) has wrongly relied upon the decision of Delhi High Court in the case of Oasis Hospitality and judgment of Lovely Export is wrongly relied on by the ld. CIT(A) and order of the Assessing Officer may be upheld. 1.6 The AR of the assessee has filed the written submission, which reads as under: " The assessee in the present case assessee company had filed its return of total income for the A.Y. 2009-10 on 30-09-2009 declaring total income at Rs. 9835850/-. Income Tax survey was executed at the business premises of the assessee on 08-10- 2009 i.e. after the filing of the return of total income for the A.Y. 2009-10. That during the course of survey proceeding statement of one of the director of the company Shri Rajesh Jain was recorded by the Income tax Department wherein he has agreed to pay tax on the amount of share application money received by the assessee company during the year un....
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....me declared during the course of survey and put extra burden on the AO. However, in the present case under appeal, the assessee has properly explained the source of share application money as received and credited in its books of account. Hence, the said decision is not applicable on the facts of the present case.The assessee has retracted the said declaration immediately by not filing the revised return as committed during the course of survey. That all other decisions as relied by the AO was with reference to the statement as recorded during the course of search and not with reference to the survey as executed u/s 133A of the Income Tax Act. The reference of all the decisions as referred are as under:- 1 Manmohan Singh Vig vs DCIT 006 SOT 018(Mumbai) Statement u/s 132(4)- Not applicable in the case of survey and also distinguishable on the facts of the case 2 Ramjas Nawal vs CIT 131 Taxman 525 (Raj) Statement u/s 132(4)- Not applicable in the case of survey and also distinguishable on the facts of the case 3 ACIT VS Jagat Explosives 098 ITD 050(Jd Bench) [TM] Facts of that case were totality distinguishable. Hence, the said decision is not applicabl....
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.... be made. Thus, it could not be said solely on the basis of statement during survey and without any supporting material any income was assessable as lawful income. The aforesaid trite law is also reiterated by CBDT at CBDT circular no. F.No.286/2/2003-IT (Inv.II) Dated 10th March 2003 in the following words "Instances have come to the notice of the board where assessee have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income, which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statements during the course of search and seizure and survey operations no attempt should be made to obtain confessions as to the undisclosed income. Any action ....
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.... of the assessee. Thus, the order of the Ld CIT[A] approving the contention of the assessee requires to be maintained/ approved. SYNOPSIS ON MERIT OF THE APPEAL That on merit of the case, the assessing officer has added the entire amount of share application money even when the assessee has provided ample documents as to justify the identity and genuineness of the share application money. List of such investors has been given on Page Nos 2 & 3 of the assessment order as passed u/s 143(3) of the Income Tax Act. The assessee in the year under consideration has received share application money of Rs. 47900000/- from the following parties:- S.No Name of the Company Address PAN No Amount (Rs) 1. Mihir Agencies Pvt. Ltd Block-H Shri Sadashiv CHS Ltd, 6th road Shantacruz (E) Mumbai -400055 AABCH7898H 20,00,000 2. Sumukh Commercial Pvt Limited (Formerly known as Cape Town Mercantile Co. Pvt Limited ) Chamber No.06, Big Three Building, 1st Marine Street Mumbai-400002 AACCC7400M 10,00,000 3. Buniyad Chemical Limited Block-H, Shri Sadashiv CHS Limited 6th Road Shantacruz (E) Mumbai -400055 AABCB6954G 20,00,000 4. Luxer Properties Pvt. Limited C-104, Rahul Apt., S.V ....
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....Ganj Vadodadra -39005 AABCA8299H 5,00,000 23 Mangal Murti Infrareal P Limited 241,Apollo Tower, M.G.Road Indore AAACC6705H 10,00,000 24 Naman Equipments and Constructions (India ) Pvt Limited Formarly Known as Housing Finance Limited 115, Diamond Trade Centre, New Palasia Indore AABCM1733A 5,00,000 25. Kinescope India Pvt limited Shop No.220, Labh Chambers, Station Road Aurangabad M.S. AABCK0527E 15,00,000 26 Volplast Limited 5/856,Kamla Apt. Second Floor , Ghasheri Surat-395009 AABCV8410D 23,00,000 27 Galaxy Devcom Pvt Limited Ganesh Bhawan, Chwadi Bazaar Gwalior AAECM8933D 25,00,000 28 Nimbus Stock Invest Limited ( Formally known as Rolledgold Industries Limited 207,Akansha Trade Centre ,156 Kanchanbagh Indore AADCR4275J 15,00,000 47900000 The assessing officer on Page Nos 11 and 12 of the assessment order has discussed about the factual part of all the companies from whom share application money were actually received by the assessee. The assessing officer on Page No 11 also list out the Name of ten companies to whom notice U/s 133(6) was issued but not served to the assessee. The assessing officer on Page Nos 11 ....
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....t of the share holders company also been provided as far as possible 5 Copy of affidavit as signed by the director has also been provided 6 Memorandum and Article of Association has also been provided 7 Detail as furnished by the assessee was found correct and proper. The documents as filed by the assessee not found wrong or fabricated. 8 The share of the assessee company still lying in possession of these share holder 9 Dividend was declared and duly credited in the bank account of the share holders and debited in the bank account of the assessee company 10 1(One) Bonus shares were allotted to the share holders having 10( Ten) shares of the assessee company The assessing officer simply on the basis of presumption added the amount of share application money to the income of the assessee. The assessing officer in the case of following seven companies, the amount of share application money was added to the income of the assessee based on the report of the Investigation wing of the Mumbai:- S.No Name of the Company Amount (Rs) 1 Winfotech Systems P Limited 3000000 2 Luxer Properties P Limited 1500000 3 Suresh Rathod Consultants P Limited 2500000 4 Elderadd ....
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.... 26/ Ahd/ 2012 dt 28-08-2014 for the Asst Year 2008-09]. Mumbai Bench of ITAT in the case of M/s SDB Estate Private Limited vs ITO [ Appeal No ITA No 584/ M/ 2015 dt 15-04-2015 ] for the Asst Year 2008-09. That even otherwise in any case, statement recorded behind and back of the assessee cannot be relied in the case of the assessee until and unless opportunity of being heard was given to the assessee as held by the Hon'ble Apex Court in the case of Kishan Chand Chellaram vs CIT as reported in 125 ITR 713. The Ld CIT[A] vide his order dt 22-03-2013 has discussed the said issue in detail in Paras 5.8 to 5.12 of his order on inner Page Nos 38 to 44 of the order. That in view of the above, the addition of Rs. 13500000/- made to the income of the assessee in respect of seven companies of Mumbai without making any independent inquiry was wrong, the same now requires to be deleted in full. The assessing officer has added an amount of Rs. 18400000/- to the income of the assessee in respect of amount received from the following companies:- S.No Name of the Company PAN No Amount 1 Acumen Paper Binder Pvt.Ltd. AAACA2172J 2000000 2 Bhagirathi Industries Ltd. AAACB2254N 200000....
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....n wing of the delhi and added the entire amount of share capital as received from all the nine companies of delhi as non- genuine. That on perusal of the inspector report, it is noticed that the said summon was not affixed on the given premises. Signature and address of two independent witnesses as required was also not obtained. The letter as issued U/s 133(6) of the Income Tax Act was duly served on these shareholders. Replies from these shareholders have also been received directly in the office of the assessing officer. Thus, probably at the time of visit of the inspector, may be the authorized person of these companies may not found available on the given address. That as far as Sign Board is concerned. In this respect it is clarified that most of these companies being the finance and investment companies deal with the close and associate persons and not with the general public at large. For this reason they need not requires to display their sign board on their premises. + The assessee vide its letter dt 28-11-2011 has provided new changed address of the following two companies:- S.No Name of the Company 1 M/s Uniword Barter Card P Limited 2 M/s Star vision Media P L....
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.... Assessing officer merely on the basis of report of the Investigation wing was not correct by ignoring the documents as field by the assessee. The assessing officer in the case of following companies simply added the amount to the income of the assessee even when the assessee had filed complete details as to justify the amount of share application money:- S.No Name of the Company Address PAN No Amount (Rs) 1. Sumukh Commercial Pvt Limited (Formerly known as Cape Town Mercantile Co. Pvt Limited ) Chamber No.06, Big Three Building, 1st Marine Street Mumbai-400002 AACCC7400M 10,00,000 2. Pursuit Securities Limited 312,Kalbadevi Road, IIIrd Floor,Room No.1, Near Swdeshi Market Kalba Devi Mumbai AAACP3800E 22,00,000 3 Tribhuvan Housing Limited 23,Jalaram Society Chamunda Circle Boriwali (W) Mumbai 40001 AAACT7299M 10,00,000 4 Millenium Cybertech limited 38,Ganga Viahar,3rd Floor Rokandia Lane Borivalie,(W) Mumabai-400092 AABCMB8712D 10,00,000 5 Mangal Murti Infrareal P Limited 241,Apollo Tower, M.G.Road Indore AAACC6705H 10,00,000 6 Naman Equipments and Constructions (India ) Pvt Limited Formarly Known as Housing Finance Limited&n....
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.... Finlease Ltd. reported in 215 CTR 429 (MP). That the above order of ITAT Indore bench has also been confirmed by the Hon'ble M.P. High Court in the case of CIT V/s STL Extrusion (P) Ltd reported in 53 DTR 97(2011). That ITAT, Indore Bench in the case of M/s Rajshree Finsec P Ltd [Appeal No 545/ Ind/2010 dt 06-02-2012 for the Asst Year 2007-08 ]. That ITAT, Indore Bench, Indore vide its order dt 28-03-2012 in the case of M/s Mittal Appliances Limited for the Asst Year 2004-05. That Jodhpur Bench of ITAT in the case of ACIT vs M/s Supertech Diamond Tools P Ltd [ Appeal No ITA No 211/ Jodh/ 2009 dt 19-01-2012 for the Asst Year 2004-05 ]. That ITAT Delhi Bench in the case of M/s Excellance Town Planner P Limited [ Appeal No ITA No 871/Del/ 2010 dt 25-05-2012 for the Asst Year 2003-04]. That GANGESHWARI METAL PVT LTD [ Appeal No ITA No 597/2012]. That CIT Vs. Oasis Hospitalities (P) Ltd reported in 333 ITR 119 (2011). COUNTER SUBMISSION ON THE ARGUMENTS OF THE LD CIT DR The Ld CIT DR during the course of hearing before the Hon'ble Bench argued that share premium of Rs. 90/- Per share was received by the assessee. The Ld CIT DR also referred the blank transfer deed of the share....
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.... applicant as found during the course of survey. The assessing officer himself after being satisfied not taking any cognizance for the same. Since, by the time of assessment proceeding these transfer deed was not used by the assessee and therefore after the date of Annual General Meeting , old date transfer deed has no legal value. GROUND No 2 of Department's Appeal The department in this ground of appeal has challenged the Rule 46A of the Income Tax Rules. That during the course of hearing also they have failed to pin point about the additional evidence filed before the Ld CIT[A]. Since, all the documents as referred by the Ld CIT[A] has already been filed before the Ld Assessing Officer. That in view of the above, the present ground of appeal as taken by the department is factually not correct." 1.7 We have heard rival contentions of both parties. Looking to the facts and circumstances of the parties, the admitted facts in this case are as under: The assessee in the year under consideration has received share application money of Rs. 47900000/- from the following parties:- S.No Name of the Company Address PAN No Amount (Rs) 1. Mihir Agencies Pvt. Ltd Bl....
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....hamber, Shakarpur, Delhi AADCR3947D 40,00,000 20. Uniword Bartercard P Limited D-25A, First Floor, Laxmi Nagar, Delhi AAACU9640D 9,00,000 21 ACIL Cotton Industries Pvt Limited (Formarly Known as Adeshwar Cotton Industries Limited) 87/404, Natraj Township Part-2 Parsuram Nagar, society Road Sayaji Ganj Vadodadra -39005 AABCA7788F 10,00,000 22 Alpha Graphic India Limited B7/403, Natraj Township Part-2 Parsuram Nagar, society Road Sayaji Ganj Vadodadra -39005 AABCA8299H 5,00,000 23 Mangal Murti Infrareal P Limited 241,Apollo Tower, M.G.Road Indore AAACC6705H 10,00,000 24 Naman Equipments and Constructions (India ) Pvt Limited Formarly Known as Housing Finance Limited 115, Diamond Trade Centre, New Palasia Indore AABCM1733A 5,00,000 25. Kinescope India Pvt limited Shop No.220, Labh Chambers, Station Road Aurangabad M.S. AABCK0527E 15,00,000 26 Volplast Limited 5/856,Kamla Apt. Second Floor , Ghasheri Surat-395009 AABCV8410D 23,00,000 27 Galaxy Devcom Pvt Limited Ganesh Bhawan, Chwadi Bazaar Gwalior AAECM8933D 25,00,000 28 Nimbus Stock Invest Limited (Formally known as Rolledgold Industries Limited 207,Akansha Trade Centre ,156 Kanchanb....
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....t the same was not true and correct by filing the cogent evidence. Hon'ble Madras High Court in the case of M Narayanan & Bros vs ACIT reported in 339 ITR 192 has held that even in the case of statement as recorded during the course of search as recorded u/s 132(4) of the Income Tax act - That once the assessee had explained his statement as incorrect in the context of the material produced by him, the Tribunal was not justified in its conclusion that the statement made by the assessee clothed the assessment with legality. Hon'ble Kerala Hgh Court in the case of Paul Mathews & Sons vs CIT as reported in 263 ITR 101 has held in para 11 has held:- " 11.....Section 133A(3)(iii) enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding under the Act. Section 133Ahowever, enables the IT authority only to record any statement of any person which may be useful, but does not authorize for taking any sworn in statement. On the other hand, we find that such a power to examine a person on oath is specifically conferred on the authorised officer only under Section 132(4) of the IT Act in the course of any search or seizure. Thus, th....
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.... survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income, which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statements during the course of search and seizure and survey operations no attempt should be made to obtain confessions as to the undisclosed income. Any action on the contrary shall be viewed adversely." From the above, decisions of Hon'ble various High Courts, we are of the view that as per the Kerala High Court, the survey party is entitled to record the statement of any person, may be useful for relevant to any proceedings under the Act. We also find support from the Hon'ble Chhatisgarh High Court wherein it is held that assessee during the survey proceedings, any confession made by him is not conclusive and it is open the assessee to establish that same was not true and correct by filing cogent evidence. We find that in this case, the assessee has given the statement only but after the statement, assessee has retracted from the statement, therefore, he has not filed ....
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.... with the ample documents. Hence, on the contrary the said decision support the contention of the assessee. Ld. CIT(A) vide order dt 22-03-2013 in Para 5.6 on inner Page No 10 of the appellate order has dealt with the said issue in detail and uphold the contention of the assessee. The assessing officer was not justified in adding the amount of share application money to the income of the assessee merely on the basis of statement of as recorded during the course of survey even when the assessee has properly discharged onus lying on it by furnishing the ample documents as to justify the identity, genuineness and creditworthiness of the share holders. That it is settled position of law, in the case of share application money/ share capital, the assessee has to prove the identity of the share holders only. The decisions as referred in the assessment order are not applicable on the facts of the present case. The decision of the Hon'ble Chattisgarh High Court in the case of ITO vs Vijay Kumar Kesar reported in 327 ITR 497 has held that confession made by the assessee during survey proceedings is not conclusive and it is open to the assessee to establish that the same was not true and c....
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....ance sheet of the share holders company also been provided as far as possible 5 Copy of affidavit as signed by the director has also been provided 6 Memorandum and Article of Association has also been provided 7 Detail as furnished by the assessee was found correct and proper. The documents as filed by the assessee not found wrong or fabricated. 8 The share of the assessee company still lying in possession of these share holder 9 Dividend was declared and duly credited in the bank account of the share holders and debited in the bank account of the assessee company 10 1(One) Bonus shares were allotted to the share holders having 10( Ten) shares of the assessee company The assessing officer in the case of following seven companies, the amount of share application money was added to the income of the assessee based on the report of the Investigation wing of the Mumbai:- S.No Name of the Company Amount (Rs) 1 Winfotech Systems P Limited 3000000 2 Luxer Properties P Limited 1500000 3 Suresh Rathod Consultants P Limited 2500000 4 Elderadd Properties P Limited 1000000 5 Ecro Artisons P Limited 1500000 6 Mihir Agencies P Limited 2000000 7 Buniyad Chemica....
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....2 Bhagirathi Industries Ltd. AAACB2254N 2000000 3 Happening Motors Pvt.Ltd. AAACH4607F 2000000 4 Starvision Media Pvt.Ltd. AAKCS8003N 2000000 5 Startrans Logistics Pvt. Ltd. AAJCS0491H 2000000 6 Sayam Shares & Securities Pvt.Ltd. AALCS9567N 2000000 7 Shree Balaji Sainath Builders Pvt.Ltd. AAJCS7086E 1500000 8 Surbhi Networking & Broadcasting Pvt.Ltd.(Formally Known as R.J. Fabtex Pvt.Ltd.) AADCR3947D 4000000 9 Uniword Bartercard Pvt.Ltd. AAACU9640D 900000 18400000 In case of above companies in most of the cases letter as issued U/s 133(6) of the Income Tax Act was served to these companies, replies were also received by the Assessing officer directly either in receipt of the letter u/s 133(6) of the Income Tax Act or on request of the assessee. However, the assessing officer issued commission to the Investigation wing, Delhi. That inspector of wing visited to serve summon to these companies, summon to Bhagirathi Industries Limited and Sayam Shares & Securities P Limited were served and statement of directors of both the companies were recorded. However, copy of the said statement was not provided to the assessee. It was infor....
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.... Limited 2 M/s Star vision Media P Limited The assessee has also requested to the Assessing officer to provide copy of reply as directly received from all the share applicants but the same was not provided. It was intimated by the most of the shareholders that they have directly file reply to the assessing officer. CA Shri Rajiv Bansal from Delhi appeared on behalf of these companies personally before the assessing officer. He has submitted entire papers as to justify theinvestment made by these companies in the share application money/ share capital of the assessee company. Documents as filed by Shri Rajiv Bansal are enclosed for your kind reference. That authority letter in favour of Shri Bansal as executed on stamp paper is also enclosed with these documents. That from the personal presence of CA Shri Rajiv Bansal, the identity of the share holder company stand proved. In view of the above, the assessing officer was not correct in adding the entire amount of share application money of Rs. 18400000/- to the income of the assessee by ignoring the detailed submissions and documents as filed during the course of the assessment proceeding , reply as received u/s 133(6) and statem....
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.... AAACP3800E 22,00,000 3 Tribhuvan Housing Limited 23,Jalaram Society Chamunda Circle Boriwali (W) Mumbai 40001 AAACT7299M 10,00,000 4 Millenium Cybertech limited 38,Ganga Viahar,3rd Floor Rokandia Lane Borivalie,(W) Mumabai-400092 AABCMB8712D 10,00,000 5 Mangal Murti Infrareal P Limited 241,Apollo Tower, M.G.Road Indore AAACC6705H 10,00,000 6 Naman Equipments and Constructions (India ) Pvt Limited Formarly Known as Housing Finance Limited 115, Diamond Trade Centre, New Palasia Indore AABCM1733A 5,00,000 7 Kinescope India Pvt limited Shop No.220, Labh Chambers, Station Road Aurangabad M.S. AABCK0527E 15,00,000 8 Volplast Limited 5/856,Kamla Apt. Second Floor , Ghasheri Surat-395009 AABCV8410D 23,00,000 9 Galaxy Devcom Pvt Limited Ganesh Bhawan, Chwadi Bazaar Gwalior AAECM8933D 25,00,000 10 Nimbus Stock Invest Limited ( Formally known as Rolledgold Industries Limited 207,Akansha Trade Centre ,156 Kanchanbagh Indore AADCR4275J 15,00,000 1,45,00,000 The assessee during the course of assessment proceeding filed complete detail as to justify the genuineness of the share ap....
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....tor. The Delhi High Court also in Divine Leasing & Finance Ltd. (supra),considering the similar question held that the assessee Company having received subscriptions tothe public/rights issue through banking channels and furnished complete details of theshareholders, no addition could be made under section 68 in the absence of any positive material orevidence to indicate that the shareholders were benamidars or fictitious persons or that any part ofthe share capital represented company's own income from undisclosed sources. The similar view hasbeen taken by the other High Courts. As the Apex Court has considered the law in Lovely Exports (supra) and in view of law laid downby the Apex Court, we find that the substantial questions framed in these appeals do not arise forour consideration. Accordingly, all these appeals are dismissed with no order as to costs. Hon'ble Delhi High Court vide order dt 21-01-2013 in the case of GANGESHWARI METAL PVT LTD [ Appeal No ITA No 597/2012] has discussed the similar issue in detail and after considering the decision in the case of Nova Promoters P Limited has held that :- "Mr. Sabharwal, appearing on behalf of the revenue/ appellant sough....
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....stablish the identity and creditworthiness of the share applicant and the genuineness of the transaction. In such a case, the Assessing Officer cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. The case before us does not fall under this category and it would be a travesty of truth and justice to express a view to the contrary. (emphasis supplied) As can be seen from the above extract, two types of cases have been indicated. One in which the assessing officer carries out the exercise which is required in law and the other in which the assessing officer "sits back with folded hands till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category. Here the assessing officer, after noting the facts, merely rejected the same. This would be apparent from the observations of the assessing officer in the assessment order to the following effect: - "Investigation made by t....
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.... assessee is not able to give satisfactory explanation as to the "nature and source" of a sum found credited in his books, the sum may be treated as the "undisclosed income" of the assessee. The initial burden is on the assessee to explain the "nature and source" of the credit and to do so, the assessee is required to prove (a) Identity of the shareholder (b) Genuineness of transaction and (c) credit worthiness of shareholders; (a) The identity of the shareholder can be proved by either (if individual) producing him before the AO or by way of documents, registered address, PAN etc; (b) The genuineness of the transaction can be shown from the fact that the money has been received from the shareholder. If the money is received by cheque and is transmitted through banking or other indisputable channels, the genuineness of transaction would be proved. Other documents showing the genuineness of transaction could be the copies of the shareholders register, share application forms, share transfer register, etc; (c) The creditworthiness or financial strength of the creditor / subscriber can be proved by producing the bank statement of the creditors / subscribers showing that it....
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.... instance. Instead, the issue was whether the amount invested by the share applicants were from legitimate sources. The objective of Section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed on 31.12.2007, the investigation report which was specifically called from the concerned department in Kolkata was available but not discussed by the AO. Had he cared to do so, the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants' particulars were available with the AO in the form of balance sheets income tax returns, PAN details etc. While arriving at the conclusion that he did, the AO did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee's account to the share applicants' account. As held concurrently by the C....
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....nsaction regarding share application money received by it was genuine transaction and the same were not accommodation entries. He did not find any evidence collected by the AO which could prove otherwise and deleted the additions in dispute. As regard to the addition of Rs. 12,500/- made on account of commission which was presumed to have been allowed by the assessee for obtaining the Hawala entry in dispute, the ld. CIT(A) observed that the Assessing Officer was not able to brought anything on record that it was assessee's own money which was rooted in the form of share application money and has rightly deleted the same." In the case of CIT vs Korlay Trading Co Limited as reported in 232 ITR 820, Hon'ble Calcutta High Court observed that in case of unsecured loan mere providing of PA No was not sufficient. In that case the assessee utterly failed to furnish even confirmation letter.In the present appeal, the matter in dispute is not unsecured loan but share capital and it was categorically held that the assessee need to prove the identity of the share holders only. The assessee in present case not only filed confirmation letter but ample documents as to discharged the onus ly....
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.... In case of CIT vs P Mohankala as reported in 291 ITR 278, Hon'ble Apex Court has analysis the provision of section 68 of the Income Tax Act and observed that explanation of the assessee not accepted by the assessing does not tantamount to income of the assessee. In that case the Ld CIT[A] and Hon'ble ITAT also approved the order of the Assessing officer.In the present appeal in hand, the assessee company has explained the correct nature of transactions though the same was not accepted by the Assessing officer but by the Ld CIT[A]. Since, the assessee company has filed ample documents to support its claim. Hence, rather decision of the Hon'ble Apex Court support the case of the assessee company. In the case of MAF Academy (P) Limited as reported in 42 taxmann.com 377, Hon'ble Delhi High Court on the basis of its finding in the case of N R Portfolio [P] Limited [ Supra] reached to a conclusion that the assessee has failed to provide the identity, genuineness and creditworthiness of the share application money.In the present case as stated the assessee has extend its full co-operation and also filed ample documents as to prove the ingredients of provision of section 68 of the Act. T....
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....applicant, the bonus shares were also issued by the assessee company and the entire share applicant still possessed the share of the assessee company. We are of the view that the ld. CIT(A) in his order has relied upon the decision Hon'ble Supreme Court in the case of Lovely Export P. Ltd., 216 CTR 195 and the decision of Hon'ble Delhi High Court in the case of Gangeshwari Metal P. Ltd. Dated 21.1.2013 and also after taking note of a decision of Apex Court in the case of Kishan Chand Chellaram vs. CIT, 125 ITR 713. Therefore, ld. CIT(A) has deleted the addition and our interference is not required. We also get support from the decision of ITAT, Indore Bench in the case of STL Extrusion (P) Limited vide order dated 10.05.2010 being ITA no.(SS) 259, 260 /Ind/2008 after considering the judgement of Hon'ble MP High Court in the case of Rathi Finlease Ltd. reported in 215 CTR 429 (MP) held as under:- Page 7 " In the present appeal, since the assessee has discharged its onus by proving the identity of subscribers and even otherwise had any suspicion still remained in his mind, nothing prevented him to initiate action as per the provisions of the Act. The existence of subscriber to....
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.... present case, the assessee had established the identity of investor who had provided the share subscription and it was established that the transaction was genuine though as per contention of the respondent the creditworthiness of the creditor was also established. In the present case, in the light of the judgment of Lovely Exports (P) Ltd., we have to see only in respect of the establishment of the identity of the investor. The Delhi High Court also in Divine Leasing & Finance Ltd. (supra), considering the similar question held that the assessee Company having received subscriptions to the public/rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented company's own income from undisclosed sources. The similar view has been taken by the other High Courts. 17. As the Apex Court has considered the law in Lovely Exports (supra) and in view of law laid down by the Apex Court, we find that the substantial questions framed in these app....
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....ntermedia Convergence Ltd. We find that matter is covered by the finding recorded above in the case of Swift Intermedia Convergence Ltd., therefore, following the same, departmental appeal in the case of Kanika Digital Prints P. Ltd. is also dismissed. ITA No.543/Ind/2013 (Ad-Menum Packaging Ltd.) 3.1 This appeal is by the Revenue challenging the order of learned Commissioner of Income Tax(Appeals)-II, Indore, dated 31.5.2013. 3.2 Following grounds have been raised by the Revenue: "Ld. CIT(A) has erred in deleting the additions of Rs. 1,75,00,000/- and Rs. 2,00,00,000/- totaling to Rs. 3,75,00,000/- made by the Ld. A.O. u/s 68 on account of share application money received by the assessee company." 3.3 The short facts of the case are as under: "The assessee company is a limited company engaged in the business of Manufacturing of HDPE/PP Woven Sacks/Fabric. It has filed its return of total income for the year under consideration on 29.09.2009 declaring total income at Rs. 37,23,060/- u/s 28 to 44 D of the Income Tax Act and Rs. 1,90,60,610/- u/s 115JB of the Income Tax Act along with its Audited accounts. The case of the Assessee company was selected for scrutiny and assess....
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....n regularly. Copies of income tax return were filed before the AO and also in the appellate proceeding. No adverse finding about the income and investment was recorded by the assessing officer where the share holders are regularly assessed. The AO also failed to collect any information from his counterpart about the genuineness of the investment made by these share holders. The AO also failed to point out cash deposited if any in the bank account of any of these share holders companies directly or failed to refer to any other account in which cash was deposited by these companies. The appellant during the course of assessment proceeding provided complete details which also includes share application money form, confirmation, affidavit, bank statement, income tax return and audited balance sheet, memorandum and article of association etc. The AO could have forwarded these information to the assessing officer where the share holders company are regularly assessed to tax and obtained factual report where the investment was shown by these companies in the name of the appellant company were reflected in their books of account or not but the AO failed to do the basic exercise. As regard ....
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....cable on the facts of the present case because in that case directors of said companies were not produced^ and there was adverse finding regarding such share holders by investigation wing, yet the addition of share application could not be sustained as the Hon'ble High Court held that primary onus was discharged by assessee by producing PAN, bank account details copies of income tax returns of share applicants etc. Hon'ble Gujarat High court in the case of Ranchod Jivabhai Kanhava reported on 21 taxmann.com 159 also defines the procedures for making addition u/s 68 wherein it was categorically mentioned by the Hon'ble Court that the assessing officer of the appellant company must refer the matter to the assessing officer of the share holders company and on receipt of the negative finding the same was. made available to the assessee for his comments and proceed accordingly but in the present case, the AO utterly failed to examine the issue in right prospect and merely on account of non- service of the letter u/s 133(6) of the Act, taken a negative note which in my considered opinion was not justifiable. I am therefore of the opinion that the AO was not justified in ignor....
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....corded which in my view is not the correct approach. It is also settled position of law that ho statement can be used against the assessee;-until and unless an opportunity for cross examination was allowed. Accordingly, statements of Shri Mukesh Choksi and Shfi Jayesh Sampat as recorded behind the back of the appellant cannot be validly used against appellant as the principal of natural justice is not satisfied. For this proposition reliance is placed on the decision of apex court in case of Kishan Chand Chelaram 125 ITR 713 (SC). The; appellant had filed copy of share application form, confirmation letter, copy of bank account of the share holders, memorandum and article of association and Income Tax return. The AO also failed to refer the matter to the assessing officer where such share applicants .are regularly assessed to tax. The Appellant also relied on the decision of the Hon'ble Mumbai Bench in the case of Mrs Rasila N Gada [ Appeal No ITA No 1773/Mum/ 2010 dt 08-08-2012 ], in that case on the basis of statement of Shri Mukesh Choksi, the amount of long term capital gain was assessed as non- genuine and added to the income of that assessee. However, Hon'ble Bench wh....
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....o the income of the appellant. I therefore direct the AO to delete the addition so made to the income of the appellant because without any further examination by AO finding of investigation wing cannot be taken as gospel truth when name of assessee does not appear in statement as held in case of Excellence Town Planning P. Ltd. [appeal no. ITA No. 871/Del/2010 dated 25.02.2012], Oasis Hospitalities P. Ltd. 333 ITR 119 (Del) and Gangeshwari Metal P. Ltd. ITA No. 597/2012 dated 21/01/2013 reported in 84 CCIT 037.The appellant accordingly get relief of Rs. 2,00,00,000/-. 4.2] In ground No 2 of the present appeal, the appellant has challenged the addition of Rs. 2,00,000/- made on account of alleged expenses as incurred for arranging the share capital of Rs. 2,00,00,000/- from seven companies of Shri Mukesri Choksi. The said addition was made by the AO on mere; presumption which in any case is not sustainable, I therefore direct the AO to delete the addition so made to the income of the appellant company." 3.5 The Ld CIT DR during the course of hearing before the Bench argued that share premium of Rs. 90/- Per share was received by the assessee. The ld. DR submitted before us that i....
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....at name of the said companies and postal address both have been changed hence it was requested to the AO. to issue fresh notice u/s 133(6) to the said parties. However, the Ld. A.O. had not issued the same.That Investment of Rs. 50,00,000/- ,Rs. 75,00,000/- and Rs. 50,00,000/- were made in the share capital of the assessee company by M/s Doldrum Investment & Finance Limited, M/s Sidh Housing Development Co. Ltd. and M/s Gyaneshwar Trading & finance Co. Ltd.The assessee during the course of assessment proceeding and also before the Ld. CIT(A) the assessee had filed complete documents to justify the identity and genuineness of the amount received by it from said party. Copies of the same are also filed before the Hon'ble Bench on page 141 to 413 of the paperbook. Company wise details of documents are filed on following pages:- S.No. Name of Share Applicant Amount Pages of Added u/s 68 paper book 01. M/s Doldrum Investment & Finance P. Ltd. 50,00,000 141 to 197 02. M/s Sidh Housing Development Co. Ltd. (Name changed to Bhadrawati Ispat & Energy Ltd.) 75,00,000 208 to 304 03. M/s Gyaneshwar Trading & Finance Co. Ltd. (Name change....
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....y the director has also been provided 6 Memorandum and Article of Association has also been provided 7 Detail as furnished by the assessee was found correct and proper. The documents as filed by the assessee not found wrong or fabricated. Thus the assessee through its Chartered Accountants had filed sufficient documents as to justify the identity of the shareholders and genuineness of the share application money received from the share applicants however the A.O did not relied upon the documents filed during the course of assessment proceeding and added the same to the income of the assessee. Mumbai Bench of ITAT in the case of ACIT vs Krishna Sheet Processors P Limited [ Appeal No ITA No 546/ Mum/ 2013 dt 30-06-2015 for the Asst Year 2009-10 ]. That in view of the above it is submitted that addition of Rs. 1,75,00,000/- in respect of Share Capital Received by the assessee company from the above three parties as made by the assessing officer u/s 68 of the Income Tax Act was not correct and assessee has properly discharged the onus lying on him . The same has therefore rightly been deleted by the Ld. CIT(A). The Assessing officer has further added an amount of Rs. 2,00,00,000/-....
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....issued by the A.O. but they were returned unserved, the assessee has produced the Authorized Representative of the Company before A.O. In rest of the case the notice issued u/s 133(6) of the Income Tax Act were duly served and replied by the Share Applicants. The said thing also proves the Identity and capacity of the share applicants.The entire amount of share application money was received by the assessee through an account payee cheques. Confirmation letter have also been filed. Share application form were also filed notice u/s 133(6) has also been served or where it has not been served the Authorized representative has appeared personally before the Ld. A.O. Thus there is no reason to disbelieve on the amount of share application money as received by the assessee. Merely because the Directors of the Applicants companies have stated in the statement recorded that they are involved in providing certain accommodation entries in LTCG and STCG etc. it cannot be presumed they have provided accommodation entry to the appellant also in the form of Share Application Money. The Ld. A.O. had provided Copy of Statement of Shri Kamal Kishore Rathi ,Shri Shri Mukesh Chowksi and Shri Jayesh S....
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.... the assessee merely on the basis of report of the Addl DIT(Investigation ), Mumbai.The assessing officer while passing the assessment order, totally ignored the facts of the present case. The assessee during the course of assessment proceeding and in reply during the appellate proceeding has submitted that:- S.No Nature of documents 1 The assessee had received the amount of share application money through an account payee cheques 2 Copy of Bank account of the shareholders company has also been filed 3 PAN No of all the companies have been provided 4 Copy of affidavit of the some of the directors of the shareholders companies have been filed 5 Memorandum and Article of Association 6 Balance Sheet of all the companies have been filed 7 Income Tax Returns of all the Companies have been filed The assessee has also filed a chart of the share capital as received by the assessee company in the year under consideration with the following information is enclosed:- S.No Particulars 1 PA No of the share applicant 2 No of shares allotted 3 Breakup of share capital and Share premium 4 Folio No of the shareholder 5 Certificate No 6 Distinctive No....
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.... company Investment in the equity shares of the assessee company was made 1 Dolddrum Investment & Finance P Limited 24,05,62,507 50,00,000 2 M/s Sidh Housing Development Co Limited 45,83,90,000 75,00,000 [Now known as BhadrawatiIspat& Energy Ltd] 3 M/s Gyaneshwar Trading & Finance Ltd 48,08,55,000 50,00,000 [Now known as M/s Bhadrawati Steel &Urja Ltd] The Assessing Officer observed ath the bank statements of these investors show very petty credit balances in the bank accounts and only at the time of issue of cheque to the assessee the balances get populated by deposit if equal amount. However, the amount as credited in the bank statement is through cheques. The shareholders companies planned their affairs in such a manner that their funds not kept idle in their bank account. Hence, nothing wrong was done in it. That no cash were deposited, prior to issuance of the cheques to the assessee company. The Assessing Officer observed that the income tax return of the share applicant show very negligible or nil income in majority of the cases. Howeve....
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....ars 31.03.2007 31.03.2008 31.03.2009 1 Turnover 41,01,01,607 48,80,12,857 52,14,26,045 2 Profit 1,95,06,994 2,02,78,267 1,89,96,279 3 EPS 5.15 5.35 5.01 4 Share Capital & Reserve 14,77,76,366 15,70,29,868 22,18,58,472 5 Book value per share Rs. 39/- Rs. 41/- Rs. 51/- ACIT vs M/s Krishna Sheet Processors P limited [ Appeal No ITA No 546/ Mum/ 2013 dt 30-06-2015]. CIT (Central)-III v/s Anshika Consultants P Limited [Appeal No ITA 467/ 2014 dt 16-04-2015 ]. It is submitted that the assessee had filed sufficient documents as to justify the identity of the shareholders and genuineness of the transactions. The amounts of share application money/ share capital were received through account payee cheques. That, if for any reason the assessing officer's was not satisfied with the source of amount invested by these share-holders in that case, necessary addition should have been made in the case of the share-holders but in no case any addition is justified in the ca....
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....e premium money received by it of Rs. 2,00,00,000. The Ld. A.O. has discussed the issue related to addition made u/s 69C on page 10 para 2.13 of the Assessment Order. It seems that said addition was made by the Assessing officer on the basis of statement recorded by the Income Tax department in search proceedings at Mumbai at Choksi Group of companies inspite of the fact that they have not committed any such fact in the case of assessee and assessee has also not confronted any of the above persons in respect of the such charge. The said addition was made purely on presumptions and conjectures and without any basis.The Ld. CIT(A) has discussed the said issue on page 51 and 52 inm para 4.2 of his order. The Ld. CIT(A) has deleted the said addition by observing that said addition was made by the Ld. A.O. purely on presumption. That in view of the above it is submitted that addition of Rs. 2,00,000/- made by the Assessing officer on his own theory is patently wrong and has rightly been deleted by the Ld. CIT(A). That addition of Rs. 2,00,000/- made to the income of the assessee was in consequence to the addition to the income of the assessee on account of share application. Thus, Hon'....
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....of Rs. 2,00,00,000/- received from following Seven (7) companies as Share Application money by relying upon the statements of the Directors/ Authorized person recorded by DDIT (Inv). Mumbai during the search actions carried out at their premises. S.No. Name of Share Applicant Amount Added u/s 68 01 M/s Buniyad Chemical Ltd. AABCB6954G 50,00,000 02. M/s Alpha Chemie Trade Agencies P. Ltd. AADCA9890L 25,00,000 03. M/s Gold Star Finvest P. Ltd. AAACG3432H 25,00,000 04. M/s Mahasagar Securities P. Ltd. AABCR1593B 25,00,000 05. M/s Mihir Agencies P. Ltd. AABCH7898H 25,00,000 06. M/s Alliance Intermediateries& Network P. Ltd. AACCA9750E 25,00,000 07. M/s Talent Infoway Ltd. AACCT9444L 25,00,000 Total 2,00,00,000 3.10 The assessee during the course of Assessment proceedings had filed complete details in respect of Share Application Money received from all the said parties Including the following:- S.No. Particulars 1 Balance Sheet & Profit & Loss Account 2 Copy of PAN Card 3 Acknowledgment of Income Tax Return 4 Copy of its Bank Account duly reflecting the Share Application money received from said companies. 5 Copy of ....
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....sh Sampat to the assessee for its comments. The assessee at the time of assessment proceedings itself has clarified the position that it has not received any Share Application Money from any of the Companies belonging to Shri Kamlal Kishore Rathi. Thus his statement has not relevant for making any addition in its hands.Shri Mukesh Choksi also his statement also has nowhere committed that he has given any accommodation entry to the assessee company. Thus no addition is justifiable on the basis of his statement. Likewise Shri Jayesh Sampat has also in his statements has nowhere mentioned to have entered inthe case of ACIT Vs M/s Krishna Sheet Processors P limited [ Appeal to any bogus transaction with the assessee.The Assessing officer issued commission in favour of Addl DIT [Investigation] ,Mumbai. The report was also received from the investigation wing Mumbai. On the basis of that report, the assessing officer added entire amount of share capital to the income of the assessee. The report as received in response to the commission in the year 2011 from the Investigation wing of the Mumbai was defective and not proper. The AO issued commission in the year 2011. However....
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....iled with the registrar of companies wherein the names of all the share applicants had duly been reflected. Therefore, we are of the view that ld. CIT(A) is justified in his action and our interference is not required. We also get support from the decision of ITAT, Indore Bench in the case of STL Extrusion (P) Limited vide order dated 10.05.2010 being ITA no.(SS) 259, 260/Ind/2008 after considering the judgement of Hon'ble MP High Court in the case of Rathi Finlease Ltd. reported in 215 CTR 429 (MP) held as under:- Page 7 " In the present appeal, since the assessee has discharged its onus by proving the identity of subscribers and even otherwise had any suspicion still remained in his mind, nothing prevented him to initiate action as per the provisions of the Act. The existence of subscriber to share application is not in doubt as the assessee duly furnished their names, age, address, date of filing the application, number of shares for which respective applications were made, amount given and the source of income of the applicant. In view of these facts, we are of the considered opinion that there is no justification for making the impugned addition because once the existence o....
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....t of the identity of the investor. The Delhi High Court also in Divine Leasing & Finance Ltd. (supra), considering the similar question held that the assessee Company having received subscriptions to the public/rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented company's own income from undisclosed sources. The similar view has been taken by the other High Courts. 17. As the Apex Court has considered the law in Lovely Exports (supra) and in view of law laid down by the Apex Court, we find that the substantial questions framed in these appeals do not arise for our consideration. Accordingly, all these appeals are dismissed with no order as to costs. Hon'ble Apex Court in the case of Lovely exports P Limited as reported in 11 ITJ 357 has held that:- "2. Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the....
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....ntention raised on behalf of the assessee is that the net worth (as on 31.3.2007) of such share subscribers is Rs. 317.31 lacs, Rs. 424.58 lacs, Rs. 385.71 lacs and Rs. 289.01 lacs. We are not going on the issue of worth of these share applicants because the Hon'ble Apex Court in the case of Lovely Exports Private Limited (supra) held that even if such share applicants are bogus, but their identity is proved, then no addition is warranted in the case of the assessee. So far as the decisions cited in the impugned order are concerned, in view of the decision from Hon'ble Apex Court in the case of Lovely Exports (supra), has remained for academic interest only, being on different facts, therefore, we are refraining ourselves in dealing with each and every case individually, especially in the light of the evidences, filed by the assessee, evidencing that the identity of such share applicants was very much proved by further filing of confirmation by them. 7. In view of these facts, the decision from Hon'ble Apex Court in Lovely Exports (supra) and uncontroverted fact that the summons issued to the impugned share applicants were duly received by them with further filing of ....
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....ted as the undisclosed income of the assessee. In the absence of such finding, addition cannot be made u/s 68 in the hands the assessee. (vi) The Department is free to reopen the individual assessment in case of alleged bogus shareholders in accordance with law and, thus, not remedy-less. Hon'ble Delhi High Court vide order dt 21-01-2013 in the case of GANGESHWARI METAL PVT LTD [ Appeal No ITA No 597/2012] has discussed the similar issue in detail and after considering the decision in the case of Nova Promoters P Limited has held that :- "Mr. Sabharwal, appearing on behalf of the revenue/ appellant sought to place reliance on a Division Bench decision of this Court in CIT v. Nova Promoters and Finlease (P) Ltd.: (2012) 342 ITR 169 (Del.). However, on going through the said decision in Nova Promoters and Finlease (P) Ltd. (supra) we find that the facts are clearly distinguishable. In fact, in Nova Promoters and Finlease (P) Ltd. (supra) itself this Court has observed, in the context of Lovely Exports (P) Ltd. (supra), as under: - "The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where ....
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....ave been indicated. One in which the assessing officer carries out the exercise which is required in law and the other in which the assessing officer "sits back with folded hands till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category. Here the assessing officer, after noting the facts, merely rejected the same. This would be apparent from the observations of the assessing officer in the assessment order to the following effect: - "Investigation made by the Investigation Wing of the Department clearly showed that this was nothing but a sham transaction of accommodation entry. The assessee was asked to explain as to why the said amount of Rs. 1,11,50,000/- may not be added to its income. In response, the assessee has submitted that there is no such credit in the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was Rs. 55,50,000/- and not Rs. 1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts....
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.... department in Kolkata was available but not discussed by the AO. Had he cared to do so, the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants' particulars were available with the AO in the form of balance sheets income tax returns, PAN details etc. While arriving at the conclusion that he did, the AO did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee's account to the share applicants' account. As held concurrently by the CIT (Appeals) and the ITAT, these conclusions were clearly baseless and false. This Court is constrained to observe that the AO utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents. We place these observations on the record and direct a copy of the judgment to be furnished to the concerned income tax authorities for appropriate action towards reflecting these observations suitably in service recor....
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....er in the assessment proceeding. In the present appeal, the assessee company not only provide the PA No but also provide ample documents to substantiate its claim of share application money. There was no allegation what so ever of the assessing officer about non- co-operation of the assessee during the course of assessment or appellate proceeding. Hence, the fact of the present case is distinguishable with the fact of N R Portfolio (P) Limited. In case of Gayathri Associates as reported in 41 taxmann.com 526, Hon'ble Andhra Pradesh high court has observed that except Bank account no other documents were filed before the assessing officer even no affidavit was filed.In the present appeal in hand the assessee not only the bank account but also the affidavit and various other documents were filed. Hence, onus lying on the assessee has properly been discharged. Thus, fact of the present case is distinguishable with the fact of the case of M/s Gayathri Associates. In case of CIT vs Focus Exports (P) Ltd as reported in 51 taxmann.com 46, Hon'ble Delhi high court has observed that address and PA No of the share applicant was not provided.In the present appeal in hand the appellant compa....