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TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 156
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....as under: "5. We have heard both the parties and perused the contents of miscellaneous application filed by the assessee, in light of the decision of the Tribunal, dated 29/11/2019 in ITA No.7115/Mum/2018 and we find that the Tribunal has dismissed appeal filed by the assesee by not condoning the delay of 191 days in filing the appeal for the reasons stated in its order dated 29/11/2019. On going through, the reasons given by the Tribunal for rejection of the claim of the assessee for condonation of delay and the pleadings taken by the assessee in its miscellaneous application, we find that although, the Tribunal has accepted the fact that delay in filing appeal was due to wrong advice of counsel, but proceeded to dismiss the appeal on the sole basis of finding that it is an afterthought of the assessee, after the Ld. AO has decided to make additions, in respect of issues questioned by the Ld.CIT(A), ignoring the pleading of the assessee, in light of affidavit of Shri Nilesh Y.Jagiwala, Chartered Accountant, who attended the proceedings u/s 263 of the Act, along with certain judicial precedents, including the decision of Hon'ble Bombay High court. The said findings of the Tribuna....
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....tting aside the order passed u/s. 143(3) of the Act and in directing the Assessing Officer to pass a fresh order with respect to the following issues: (i) share application money of INR 7,25,52,000/- received from Shri Amrit Rajani; and (ii) share application money of INR 8,51,17,856/-. received from M/s. Whiz Enterprises Pvt. Ltd. 5. The Id. Pr. CIT ought to have appreciated that the Assessing Officer had already examined the aforesaid issues and it was after judiciously considering the subject-matters that a decision thereon was taken." 5. The brief facts of the case are that the Appellant is a private limited company incorporated on 01.11.2011, inter alia, with the objects of carrying on business of manufacturers, trader, dealers, distributor, and/or commission agents of chemicals, chemical compound/products etc. The Appellant filed return of income for the Assessment Year 2013-14 on 30.09.2013 declaring total income of INR 6,98,890/-. The case of the Appellant was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) on account of large deduction claim under Section 57 of the Act and large amount of share application money received against un-allott....
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....f the Act read with Clause (a) of Explanation 2 to Section 263 of the Act set aside the Assessment Order, dated 29.02.2016, with the directions to the Assessing Officer to adjudicate upon the issues afresh after giving the Appellant reasonable opportunity of being heard. The relevant extract of the aforesaid order of PCIT containing findings on three issues and the directions are as follows: Issue No.1 "2.3 On verification of assessment records, it is seen that a sum of Rs.10,21,01,857/- was introduced as share application money pending allotment in AY 2012-13 and Rs.5,55,67,999/- was introduced as share application money pending allotment in A.Y 2013-14. A perusal of Balance sheet of the assessee company for the year under consideration reveals that the assessee company has advanced a sum of Rs.11,50,23,948/- on which no interest has been charged. The assessee company has received 'Interest on Bank Deposit' of Rs.21,20,974/- and the same is shown as Interest income. under the head 'Other Income'. Thus, the entire interest payment of Rs.14,22,847/- against the Bank interest is not allowable u/s 57 of the I.T. Act as the nexus between the expenses expended and the earning of in....
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....iz Enterprise Pvt. Ltd. and on the very same day an amount of Rs. 3,600,000/- has been transferred to M/s Anika Universal Pvt. Ltd. and it had been a regular practice that whenever there is transfer to M/s Anika Universal P. Ltd. there is immediate credit before the said transaction. Thus the AO has failed to verify the source of money introduced by M/s Whiz Enterprises Pvt. Ltd. in the light of amendment to Section 68 of the I.T. Act wherein the source of sources of funds provided by a person is to be verified when the assessee has received credit." Conclusion & Directions "4. In view of the above Judgments relied upon and In the light of the amendment to section 68 of the Act, which Inserted the proviso by which the explanation offered by the assessee company shall be deemed to be non satisfactory unless the person, being a resident in whose name such credit is recorded In the books of account also offers and explanation about the nature and the source of such sum, as the source of sources of fund received by the assessee was not verified during the assessment proceedings, the assessment order is held to erroneous and prejudicial to the interest of the Revenue within the me....
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....s of INR 3,06,24,932/-, being share application money as reflected Schedule H-Loans And Advances forming part of annual accounts of Lakshmi Business Centre, Sole Proprietorship firm of AMR. Referring to the Letter, dated 01.03.2016, filed during the assessment proceedings, Ld. Authorized Representative submitted that the share application money was received during the relevant previous year from AMR and WEPL, existing shareholders of the Appellant-company, for the bona fides business purpose of building a manufacturing facility. He submitted that during the assessment proceedings the Appellant had filed share application money ledger and share application forms pertaining to share application money received from AMR & WEPL, acknowledgement of income tax return along with the computation of total income for assessment year 2013- 14 of AMR & WEPL, and the annual accounts for WEPL & Laxmi Business Centre, proprietorship firm of AMR. Further, vide letter dated 25.02.2016, the Appellant had also filed the relevant extracts of bank statements of WEPL. On the basis of the aforesaid, the Ld. Authorised Representative submitted that the Appellant had discharged the onus cast upon the Appell....
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....e by the Appellant and allowed by the AO under Section 57 of the Act. On perusal of records it is clear that sufficient inquiry/verification was conducted by the AO during the assessment proceedings. Specific query in relation to claim of deduction were raised in the notice, dated 28.01.2016, issued under Section 142(1) of the Act. The AO had asked for justification of claim for deduction under Section 57 of the Act, details/break-up of interest accrued amounting to INR 12,79,876/- along with names & address of parties, details/break-up of finance cost as well as nexus between other income of INR 21,20,974/- & finance cost of INR 79,90,682 (which included expenditure of INR 14,22,847/- claimed as deduction under Section 57 of the Act). The Appellant had, in para b), j), & m) of the letter, dated 19.02.2016, as well as vide letter, dated 01.03.2016, furnished the information and explanation/justification for claim of deduction under Section 57 of the Act. The conclusion drawn by the PCIT that "the claim of deduction has been allowed without investigating the matter or verifying the allowability of such claim" is contrary to material on record. Further, in letter dated 28.02.2016, th....
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....e notice, dated 19.02.2018, issued by PCIT provides no explanation about the source of funds used by WEPL to make payment towards share application money of INR 2,56,64,000/- to the Appellant. The Learned Authorised Representative of the Appellant vehemently argued that the Appellant had filed relevant extracts of the bank statements of WEPL during the assessment proceedings and therefore, had complied with requirements of the amended Section 68 of the Act. We find that on the examining of the bank statements submitted by the Appellant, the PCIT had pointed out that there were deposits/fund transfers immediately prior to transfer of funds to the Appellant as share application money and referred to one such instance of fund transfer from of INR 36,00,000/- credited to the account of the Appellant on 27.07.2012 in paragraph 3.3 of the impugned order. Perusal of the bank statements shows that the observations of PCIT are factually correct as there were deposit/fund transfers (including fund transfers from Anika Universal Pvt. Ltd.) credited to the bank account of the Appellant. In our view, in absence of an explanation, merely by going through the narration given in the bank statement....
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....IT (ITA No. 3909/Mum/2019) on which reliance has been placed by the Authorised Representative of the Appellant, therefore, does not advance the case of the Appellant as the case of the Appellant falls in the category of 'third possibility' as explained in Paragraph 22 of the said decision of the Tribunal, the relevant extract of which reads as under: "22. Having said that, we may also add that while in a situation in which the necessary inquiries are not conducted or necessary verifications are not done, Commissioner may indeed have the powers to invoke his powers under section 263 but that it does not necessarily follow that in all such cases the matters can be remitted back to the assessment stage for such inquiries and verifications. There can be three mutually exclusive situations with regard to exercise of powers under section 263, read with Explanation 2(a) thereto, with respect to lack of proper inquiries and verifications. The first situation could be this. Even if necessary inquiries and verifications are not made, the Commissioner can, based on the material before him, in certain cases straight away come to a conclusion that an addition to income, or disallowance from e....