TaxTMI 
TaxTMI 
TaxTMI 
2017 (9) TMI 1974
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....000/-, both aggregating to Rs. 3.96 crores. A further sum of Rs. 9.96 crores was received towards share application of 19,92,000 shares pending allotment. The aggregate amount received by the assessee during the year was Rs. 13.92 crores (Rs. 3.96 crores + Rs. 9.96 crores). 3. Before the Assessing Officer assessee furnished all the details to prove the identity, creditworthiness and genuineness of the transaction. The Assessing Officer noticed that the Additional DIT (Investigation), Kolkata has conducted an inquiry and recorded statement from a person named Mr. Kishan Kumar Verma, son of Shri Vijay Kumar Verma and in the statement so taken, he had admitted that he had lent his individual bank account as well as bank account of his proprietary concern to a person named Shri Pawan Kumar Agarwal, son of Shri O.P. Agarwal and Shri N.K.Nahata for a commission of Rs. 100/- per lakh of rupees. He also submitted that similar transactions were entered with Shri Murari Agarwal. Subsequently, statement of Shri Pawal Agarwal who was former Director of M/s. Mrugiya Electronic Industries P. Ltd. was recorded. In his statement he denied the ownership of the cash but admitted that cheques receiv....
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....on and surmises. He noticed that identical addition made by the assessing officer in the sister concerns of the assessee named Gibs Computers Ltd (ITA No.1715 & 3858/M/09), Chat Computers Ltd (ITA No.3859/M/09) and Netscape Software Ltd (ITA No.3852/M/09) has been deleted by ITAT. The Ld CIT(A) also extracted the relevant observations made by ITAT in the order dated 25.1.2012 passed in the case of Gibs Computers Ltd in ITA Nos. 1715 and 3858/M/09. Accordingly he deleted the impugned addition made by the AO. 8. The Ld D.R placed heavy reliance on the order passed by the AO, whereas the Ld A.R strongly supported the order passed by Ld CIT(A). 9. We notice that in the case of Gibs Computers Ltd (supra), the co-ordinate bench had followed the decision rendered by another bench in the case of Netscape Software Ltd. We also notice that another division bench has passed a detailed order in the case of Netscape Software Ltd in ITA No.3852/Mum/2009 and the Tribunal, vide its order dated 19.10.2011 has deleted identical addition by following the decision rendered by the Tribunal in the case of Chat Computers Ltd (ITA No.3859/Mum/2009 relating to AY 2006- 07. It may be noticed that the asse....
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....ncealment of income. The Assessing Officer, during the course of assessment proceedings asked the assessee to produce the said directors for cross examination. It is evident from the letter of the Assessing Officer dated 01.10.2008 as well as dated 16.9.2008 that the Assessing Officer did not summon these directors to be present in the office of the Assessing Officer for the purpose of cross examination by the assessee; but on the contrary, the assessee was asked to produce these directors for cross examination purpose. This is a gross violation of principles of natural justice when the Assessing Officer asked the assessee to produce the directors for availing opportunity of cross examination. The Assessing Officer relied upon the statement of the directors of the investing company recorded during the investigation proceedings by the ADIT(Inv) Unit 1, Kolkata. Instead of ensuring the presence of these persons for giving opportunity to the assessee to cross examine, the Assessing Officer asked the assessee to produce them, which in our considered opinion is an absolute unjust and opposite to the rule of law and what procedure demands. Therefore, there is a total denial of opportunit....
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.... the documentary evidence contradicts the statements of the directors recorded by the investigation unit of the department then such statements alone cannot be taken as the basis much less a good or proper basis for any addition. 6.5 It is settled proposition of law that the statement recorded during the course of investigation without corroborative evidence has no evidentiary value. It is pertinent to mention that the statements recorded in this case are not under search or survey or assessment proceedings therefore the same cannot be used against the assesse without following the due process of corroboration and cross examination. Even otherwise, the statement without cross examination and corroborative evidence cannot be used against the assessee. 6.6 As pointed out by the ld AR of the assessee the credibility of the statements is also not free from doubt as it appears that all the statements are prepared by the department in an identical fashion and manner before those were got signed on different dates. It is apparent that certain identical mistakes are appearing in those statements allegedly recorded on different dates. For example:- Question no. 4:- Does you company ....
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....ounts to denial of opportunity and would be fatal to the proceedings. The Hon'ble Delhi High Court has observed in para 7 as under: "7. In view of the foregoing circumstances, we feel that no interference with the impugned order is called for. The Tribunal has correctly understood the law and applied it to the facts of the case. Once there is a violation of the principles of natural justice in as much as seized material is not provided to an assessee nor is cross-examination of the person on whose statement the Assessing Officer relies upon, granted, then, such deficiencies would amount to a denial of opportunity and, consequently, would be fatal to the proceedings. Following the approach adopted by us in SMC Share Brokers Ltd. (supra), we see no reason to interfere with the impugned order. No substantial question of law arises for our consideration." 8. Similarly, in the latest decision, the Hon'ble Delhi High Court in the case of Oasis Hospitalities P Ltd (supra), after considering all the relevant decisions on the issue including the decision of the Hon'ble Supreme Court in the case of Lovely Exports P Ltd (supra), decision of the Full Bench of the Hon'ble Delhi High Court....
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....) [2011] 333 ITR 100. The relevant portion of this order is reproduced below: "In the case in hand, it is not disputed that the assessee had given the details of name and address of the shareholder, their PA/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement 'not traceable'. In our considered view, the Assessing Officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the Assessing Officer. In the above circumstances, the view taken by the Tribunal cannot be faulted. No substantial question of law is involved in the appeal. In the result, the appeal is dismissed in limine with no order as to costs." (emphasis supplied) 16 The court thus clearly held that once documents like PAN card, bank account details or details from the bankers were given by the assessee, onus shifts u....
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.... etc. It is because of the reason that in such circumstance, the assessee cannot feign ignorance about the status of these parties. 21 We may also usefully refer to the judgment of the Supreme Court in the case of CIT v. P. Mohanakala [2007] 291 ITR 278. In that case, the assessee had received foreign gifts from one common donor. The payments were made to them by instruments issued by foreign banks and credited to the respective accounts of the assessees by negotiations through bank in India. The evidence indicated that the donor was to receive suitable compensation from the assessees. The Assessing Officer held that the gifts though apparent were not real and accordingly treated all those amounts which were credited in the books of account of the assessee, as their income applying section 68 of the Act. The assessee did not contend that even if their explanation was not satisfactory the amounts were not of the nature of income. The Commissioner of Income-tax (Appeals) confirmed the assessment. On further appeal, there was a difference of opinion between the two Members of the Appellate Tribunal and the matter was referred to the Vice President who concurred with the findings an....
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....n be held against the assessee that it was a receipt of an income nature. The burden is on the assessee to take the plea that even if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature. 22 We would like to refer to another judgment of the Division Bench of this court in the case of CIT v. Value Capital Services P. Ltd. [2008] 307 ITR 334. The court in that case held that the additional burden was on the Department to show that even if share applicants did not have the means to make investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. In theabsence of such findings, addition could not be made in the income of the assessee under section 68 of the Act. 23 It is also of relevance to point out that in CIT v. Stellar Investment Ltd. [1991] 192 ITR 287 (Delhi) where the increase in subscribed capital of the respondent-company accepted by the Income-tax Officer and rejected by the Commissioner of Income-tax on the ground that a detaile....
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....The Tribunal while confirming the aforesaid view of the Commissioner of Income-tax (Appeals) has summarized the discussion as under: "9. We have carefully considered the rival submissions in the light of the material placed before us. The necessary details were filed by the assessee with the Assessing Officer to show the identity of the person who had applied for the shares. The shares also been allotted to respective persons in respect of which intimation was given to the Registrar of Companies and necessary evidence has also been placed on record in the paper book which found place at pages 23 and 24 of the paper book. The assessee also had placed on record the evidence as well as copy of income-tax returns of the share applicants. Keeping in view all these evidence it cannot be held that the assessee did not establish the identity of the share applicants. If it is so, then the law as pronounced by the hon'ble Supreme Court in the case of CIT v. Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5 is clear that if the share application money is received by the assessee-company from alleged bogus shareholders whose names are given to the Assessing Officer, then the Department is f....
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.... the preferential share of the assessee company, whereas, this fact was not found to be correct from the record and the revenue also took a stand that the cash was not directly given to the investing companies but routed through various levels. When it was found by the investigating unit as well as recorded by the AO that the fund in the bank account of the investing companies was deposited through a/c payee cheques than it is apparent that the statements of the directors are in total contradiction of the facts emerged from the record as well as stand of the revenue. Hence the said statements do not support the case of the revenue and the reliance place by the AO on such statements is highly misplaced and improper. When the stand of the revenue is in total contraction of the material on record then in view of the latest decision of the Hon'ble Delhi High Court in the case of Oasis Hospitalities P Ltd (supra), we are of the considered opinion that the issue can be decided on merit and need not to be remand to the record of the AO because at the time of the order for the AY 2005- 06, the coordinate Bench of the Tribunal was not having the benefit of the decision of the Hon'ble Delhi ....
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....puters (supra) to be insufficient to hold that the credits in question were unexplained. We are therefore of the view that the addition of Rs. 27,61,50,000/- being the share capital received by the Assessee during the previous year for which allotment of shares were made and the share application money received pending allotment of Rs. 6,42,00,000 cannot be treated as unexplained and the addition made in this regard is directed to be deleted." 10. The co-ordinate bench has also considered the documents furnished by the assessee and held that the assessee has discharged the initial burden placed upon it. 11. The assessee has furnished written submissions and therein furnished the details of evidences furnished by it in order to discharge the initial burden of proof placed upon it. For the sake of convenience, we extract below the relevant submissions made by the assessee:- (1) Jaishree Commotrade Pvt. Ltd. - This company has made an application for 2,54,000 equity shares and paid a sum of Rs. 1,27,00,000 by four demand drafts. An amount of Rs. 7,00,000 has been paid by demand draft dated 28th July, 2005 vide draft no 1318 drawn on HDFC Bank, Burra Bazar branch, Kolkata and three....
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....ity shares and paid a sum of Rs. 1,73,00,000 by four demand drafts. An amount of Rs. 1,00,00,000 has been paid by two demand drafts of Rs. 50,00,000 each dated 25th July, 2005 vide draft nos 415573 and 415033 drawn on ABN Amro Bank, Kolkata branch and a draft of Rs. 23,00,000, dated 13th September, 2005 bearing draft no 753159 drawn on ABN Amro Bank, Kolkata. The company is assessed to Incometax under P.A.No AABCP8I86E. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing the directors of the company to make investments, certificate of incorporation of company, memorandum and articles of association of company, director's report, balance sheet and profit and loss account as on 31st March, 2006. The share capital and reserves of the company are Rs. 1,04,97,000 and Rs. 6,49,8 1,300 respectively and loans and advances are Rs. 4,64,28,428. (5) Yulan Marketing Pvt. Ltd. - This company has made an application for 4,00,000 equity shares and paid a sum of Rs. 2,00,00,000 by four demand drafts drawn on The South Indian Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by demand draft dated 25th Jul....
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....ch dated 13th September, 2005. The company is assessed to Income-tax under P.A.No AABCC10I4C. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri S. Shethi and Sri B.K Patni, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss account. The share capital and reserves of the company are Rs. 2,66,70,000 and Rs. 15,99,85,439.63 respectively and loans and advances are Rs. 8 8,78,748. (8) Ventex Trade Pvt. Ltd. - This company has made an application for 2,98,000 equity shares and paid a sum of Rs I ,49,00,000 by three demand drafts drawn on The South Indian Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by demand draft dated 25th July, 2005 vide draft no 242334, draft of Rs. 59,00,000, dated 14h September, 2005 bearing draft no 825675, and draft of Rs. 40,00,000 dated 30th December, 2005 bearing draft no 825688. The company is assessed to Income-tax under P.A.No AAACV9866A. The share applicant ....
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....ny, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss account as on 31st March, 2006. The share capital and reserves of the company as on March, 2006 are Rs. 1,61,54,610 and Rs. 12,01,96,702.16 respectively and loans and advances are Rs. 75,19, 100. (11) Tuticorin Trexim Pvt. Ltd. - This company has made an application for 1,70,000 equity shares and paid a sum of Rs. 85,00,000 by demand draft drawn on UTI, 4,CliveRoad Branch, Kolkata. The sum of Rs. 85,00,000 has been paid by demand draft dated 28th July, 2005 vide draft no 315171. The company is assessed to Income-tax under P.A.No AAACT9539J. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Shri Pramod Sharma and Shri Koda Malia, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company and acknowledgement evidencing filing of return of income. (12) Snehdeep Impex Pvt. Ltd. - This company has made an application for 50,000 equity shares and paid a sum of Rs. 25,00,000 by demand draft drawn on HDFC B....
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....raft no 529671, and two demand drafts of Rs. 25,00,000 each dated Rd December, 2005 vide draft nos 529676 and 529677. The company is assessed to Income-tax under P.A.No AAACD9089K. The share applicant along with share application form has submitted profit and loss account as on 3 1 St March, 2006. The share capital and reserves of the company as on 31" March, 2006 are Rs. 1,63,72,000 and Rs. 12,37,46,150.64 respectively and loans and advances are Rs. 98,47,796. (16) Cube Tralin Pvt. Ltd. - This company has made an application for 1,00,000 equity shares and paid a sum of Rs. 50,00,000 by a demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by demand draft dated 26th November,, 2005 vide draft no 789943. The company is stated to have assessed to Income-tax under P.A.No AABCC0768M. The share applicant along with share application form has submitted profit and loss account as on 3 1St March, 2006. The share capital and reserves of the company as on 3 1St March, 2006 are Rs. 2,20,00,000 and Rs. 2,19,72,000 respectively and loans and advances are Rs. 77,16,897. (17) Apsara Trex Pvt. Ltd. - This company has made an application for 2,00,000 equity shar....
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....of income. (21) Clara Vypaar Pvt. Ltd. - This company has made an application for 20,000 equity shares and paid a sum of Rs. 10,00,000 by demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 10,00,000 has been paid by demand draft dated 29th November, 2005 vide draft no 829467. The company is assessed to Income-tax under P.A.No AACCC582E. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Mr. Sanjay Kr. Jha and Mr. Rakesh Kr. Mishra, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company and acknowledgement evidencing filing of return of income. (22) Eco Rubber Products Pvt. Ltd. - This company has made an application for 20,600 equity shares and paid a sum of Rs. 10,00,000 by demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 10,00,000 has been paid by demand draft dated 29th November, 2005 vide draft no 956975. The company is assessed to Income-tax under P.A.No AABCE0703E. The share applicant along with share application form has submitted extract of the board minutes containing board resol....
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....along with share application form has submitted profit and loss account as on 31st March, 2006. The share capital and reserves of the company as on 31st March, 2006 are Rs. 1,83,82,000 and Rs. 11,77,20,000 and loans and advances are Rs. 86,48,348. (26) Wimper Trading & Dist. Pvt. Ltd. - This company has made an application for 1,00,000 equity shares and paid a sum of Rs. 50,00,000 by two demand drafts drawn on ABN Amro Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by two demand drafts of Rs. 40,00,000 and Rs. 10,00,000 dated 291h November, 2005 vide draft nos 108763 and 108764 respectively. The company is assessed to Income-tax under P.A.No AAACW3 11 8N. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement of evidencing filing of return of income, profit and loss account as on 31st March, 2006. The share capital and reserves of the company as on 31st March, 2006 are Rs. 41,20,000 and Rs. 3,61,90,678.19 respectively and loans and advanc....
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....thorizing Sri Ashok Kumar Agarwal and Sri Gautam Ghosh, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, profit and loss account as on 31st March, 2006. The share capital and reserves of the company as on 31st March, 2006 are Rs. 27,50,000 and Rs. 5,03,56,34 1 respectively and loans and advances are Rs. 63,18,075. (30) Kiran Tools & Machineries Pvt. Ltd. - This company has made an application for 30,000 equity shares and paid a sum of Rs. 15,00,000 by demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 15,00,000 has been paid by demand draft dated 2' December, 2005 vide draft no 265600. The company is stated assessed to Income-tax under P.A.No AABCK4140R. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Ajay Kumar Jajoo and Sri Kunal Gupta, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income filed, profit and loss account as on 31st March, 2006. ....
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....ities Pvt. Ltd. - This company has made an application for 60,000 equity shares and paid a sum of Rs. 30,00,000 by two demand drafts drawn on HDFC Bank, G.C.Avenue Branch, The sum of Rs. 30,00,000 has been paid by two demand drafts of Rs. 15,00,000 each dated 12th January, 2006 vide draft nos 264492 and 264493.. The company is assessed to Income-tax under P.A.No AAECS0629N. The share applicant alongwith share application form has submitted extract of the board minutes containing board resolution authorizing Sri Ramesh Agarwal the Director of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, profit and loss account as on 31st March, 2006. The share capital and reserves of the company as on 31" March, 2006 are Rs. 1,03,23,000 and Rs. 59,95,66,266.99 respectively and loans and advances are Rs. 1,15,92,178. (35) Dico Transport Corporation Ltd. - This company has made an application for 1,00,000 equity shares and paid a sum of Rs. 50,00,000 by two demand drafts drawn on ABN Amro Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by two demand drafts of Rs....
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....n 31" March, 2006 are Rs. 1,78,23,000 and Rs. 10,09,11,293.12 respectively and loans and advances are Rs. 1,31,60,657. (38) Plus Jet Finvest Pvt. Ltd. - This company has made an application for 1,00,000 equity shares and paid a sum of Rs. 50,00,000 by two demand drafts drawn on ABN Amro Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by two demand drafts of Rs. 25,00,000 each dated 13th January, 2006 vide draft nos 388760 and 388761. The company is assessed to Income-tax under P.A.No AABCP9939M. The share applicant along with share application form has submitted extract of the board minutes contaning board resolution authorizing Sri R. P. Agarwal and Mr R.K.Sharma, directors of the company to make investments, certificate of incorporation of company, memorandum and articles of association of company, acknowledgement evidencing filing of return of income, profit and loss account as on 31st March, 2006. The share caprtal and reserves of the company as on 31st March, 2006 are Rs. 1,73,50,000 and Rs. 13,21,09,537.50 respectively and loans and advances are Rs. 2,59,39,647. (39) Rup) Tradecornm Pvt. Ltd. - This company has made an application for 80,000 equity shares and paid a....