AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 1007
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....captioned appeals are inextricably interlinked or in fact interwoven, therefore, the same are being taken up and disposed off by way of a consolidated order. 2. We shall first take up the appeal filed by the revenue in IT(SS)A No.02/RPR/2022 for assessment year 2012-13, wherein the revenue has assailed the impugned order on the following grounds of appeal: "1 "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition of Rs.10,59,00,000/- made by the AO on account of unexplained cash credit u/s.68 of the Income-tax Act, 1961?" 2. "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition made u/s.68 of Income-tax Act, 1961 by plainly accepting the plea of the assessee ignoring the fact that identity, creditworthiness and genuineness of the transactions could not be proved by the assessee". 3. "Whether on the facts and in law, the Ld. CIT(A) is right in holding that the additions were made in non-abated assessment year i.e. A.Y.2012-13 and in absence of any incriminating material and is not justified as per provision of section 153A of the Act? 4. "Whether on the facts and in the circumstan....
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....at the share application money infused in the appellant company is not genuine and it is not justified to held the investor companies as dummy entities and the investments made by these companies are non-genuine even the directors of the share applicant companies have accepted in his statements that they have provided accommodation entries to the company in lieu of commission." 9. Whether on the facts and in law, the Ld. CIT(A) is right in deleting the addition of Rs.1,64,71,430/- made by the AO on account of cessation of liability u/s.41(1)(a) of the Income-tax Act, 1961 accepting the evidences of the assessee which was not produced before the AO knowing the fact that when assessment order passed u/s. 143(3) of the Act the liability was outstanding and payments were made later on". 10. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law in accepting fresh evidence/grounds in respect of addition made on account of cessation of liability u/s.41(1)(a) of the Income-tax Act, 1961 in complete disregard to rule 46A as condition prescribed under clause (a)-(d) of rule 46A(1) of IT rules 1964 were not satisfied." 3. S....
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.... 10 6 2,10,00,000 2013-14 1,26,80,000 10 0 12,68,00,000 25,37,00,000 25,37,00,000 Referring to the share allottees from whom share capital/premium was received by the assessee company for the aforesaid three years i.e. F.Y.2011- 12 to 2013-14 the A.O culled out the year wise details, as under: List of Allottees on 30.03.2012 : Sl. No. Name of Occupation Address residence/registered office Number of shares 1. Adhunik Delmark Pvt. Ltd. 11, Bysack Street, Kolkata-07 3750 2. Machinamastik Dealer (P) Ltd. 14, Rupchand Raoy Street, Kolkata-07 25000 3. Gajmush Tralink Pvt. Ltd. 6, N.G. Basak Road, Block-1st, Phase-II, Kolkata-080 2500 4. Anchal Credit Capital Pvt. Ltd. P-33, Mission Row Extension, 2^nd Floor, Kolkata-013 20000 5. Bakratunda Distributors Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2^nd floor, Kolkata 22500 6. Bhumika Tracom Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2^ndfloor, Kolkata 22500 7. Brotex Sales Pvt. Ltd. 63, Radha Bazar Street Kolkata 1250 8. Chakra Deal Trade Pvt. Ltd. 105, Cotton Street, Kolkata ....
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....eet, Kolkata 125000 2000000 Total 1312500 21000000 List of Allottees on 31.03.2014 : Sl. No Name of Occupation Address residence/registered office Number of shares Total amount paid 1. Extent Vinimay Pvt. Ltd. 63, Radha Bazar Street, Kolkata-01 12680000 126800000 On an analysis of the returns of income of some of the aforementioned paper companies which had claimed to have invested towards share capital/premium with the assessee company, it was observed by the A.O that the said investors clearly lacked creditworthiness which would justify the investments that were claimed by them to have been made with the assessee company, as under: S.No. Name of bogus shareholders PAN Income shown during F.Yr. 2009-10 (Rs.) Income shown during F.Yr. 2010-11 (Rs.) Income shown during F.Yr. 2011-12 (Rs.) Income shown during F.Yr. 2012-13 (Rs.) Income shown during F.Yr. 2013-14 Income shown during F.Yr. 2014-15 Income shown during F.Yr. 2015-16 1. Exten Vinimay Pvt. Ltd. AACCE4578J 13828 8568 12385 12240 0 2. Manali Tradecom Pvt. Ltd. AAGCM9089E ....
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....er any sign board or post box etc. of the companies nor was anyone aware about them at their respective addresses. In sum and substance, it was reported by the Inspectors of Income Tax that the investor companies were not found existing at their respective addresses. Considering the aforesaid facts, it was observed by the A.O that the investor companies were bogus/sham companies which were merely existing on paper and engaged in the business of providing accommodation entries. In order to verify the correct factual position the A.O issued a commission u/s.131(1)(d) of the Act on 23.11.2016 and 31.01.2017 to the Investigation Wing, Kolkata. After carrying out necessary verifications the DDIT(Inv.), Admn., Kolkata forwarded to the A.O the reports of the Inspectors of Income Tax attached to his office, wherein, they had stated that the investor companies in question were not found available at their respective addresses. 7. Considering the aforesaid facts the A.O held a strong conviction that there was no justification as to why the companies based at Kolkata would have invested substantial amounts with the assessee company, i.e an unrelated entity which neither had any past perfor....
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....Also, the A.O called for similar details as regards the loans/advances which the assessee company had claimed to have received during the aforesaid period. As the assessee failed to effectively comply to the summons issued u/s.131 of the Act dated 29.10.2018, therefore, the A.O proceeded with the enquiries and downloaded the annual reports of the investor companies. On a perusal of the details gathered by the A.O from the downloaded extracts of the annual reports of the investor companies, it was observed by him, viz. (i). that all the investor companies were located in Kolkata with a common address in certain cases; (ii). that even the companies whose address was other than that of Kolkata had their origin in Kolkata; (iii). that there were common directors in multiple companies; (iv). that the directors of the assessee company were also in certain instances directors of the investor companies, which, thus, revealed a circuitous nature of set up; (v). that some of the directors were either operators or were being controlled by some operator; (vi) shareholders of the investor companies typically had the same pattern as that of paper companies, viz. low share capital, high reserves ....
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.... of the Act. In sum and substance, the A.O was of the view that even in a case of an unabated assessment addition could be made despite absence of any incriminating material found and seized during the course of search proceedings. Apart from that, the A.O was of the view that the statement of Shri Ashok Jain, director of the assessee company recorded u/s.132(4) of the Act in itself was to be construed as an evidence which would justify the additions made while framing of the assessment u/s.153A of the Act. Controverting the subsequent retraction by Shri Ashok Jain (supra) of his statement recorded u/s. 132(4) of the Act, the A.O was of the view that as the said retraction which was made after two years (approx.) lacked any supporting basis and was only a result of an afterthought, thus, no cognizance of the same could be drawn. The A.O was of the view that though the assessments in the case of the assessee company for A.Y. 2012-13 and A.Y. 2013-14 had earlier been framed u/s.143(3) of the Act, but the new facts which had emerged consequent to the search operation necessitated visiting the concluded assessments and making of necessary additions. 9. Also, it was observed by the A....
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....of the investor companies had duly discharged the onus that was cast upon it u/s.68 of the Act as regards proving the authenticity of its claim of having received genuine share capital/ premium from the said companies, the A.O was of the view that the assessee had adopted a colourable device to camouflage the real transactions. Adverting to the provisions of Section 68 of the Act, it was observed by the A.O that the amendment that was therein made available by way of insertion of a "proviso" vide the Finance Act, 2012 w.e.f. 01.04.2013, which therein obligated the closely held companies to explain the 'nature' and 'source' of the sum credited in the form of share application money, share premium or share capital was applicable retrospectively. In support of his aforesaid conviction the A.O had relied on the order of the ITAT, Kolkata in the case of Subhalakshi Vanijya Pvt. Ltd., 60 taxmann.com 60 (Kol.). On the basis of his aforesaid deliberation the A.O was of the view that the assessee company had failed to discharge the onus that was cast upon it u/s. 68 of the Act i.e proving the nature and source of the amounts which were claimed to have been received as share capital/premium ....
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....company from M/s. Extent Vinimay Pvt. Ltd. were sourced from the realisation of its investments, which in turn were funded out of its duly explained share capital of Rs.17.69 crore (supra), therefore, the identity, creditworthiness and genuineness of the transaction of having received the aforementioned sums from the said investor was proved beyond doubt. However, the aforesaid claim of the assessee did not find favour with the A.O, who was of the view that though the assessment in the case of the investor company, viz. M/s. Extent Vinimay Pvt. Ltd. was framed vide order passed u/s.143(3) r.w.s. 263 dated 20.12.2016 for A.Y.2011-12 but the issue of money laundering and infusion of unaccounted money in the books of accounts of the assessee company in the guise of share capital/premium was detected during the course of search proceedings conducted in its case just prior to framing of the aforesaid assessment. On the basis of his aforesaid observations the A.O declined the claim of the assessee company that the source of the investment made by the aforesaid investor, viz. Extent Vinimay Pvt. Ltd. was out of its duly explained sources. Also, the A.O negated the aforesaid claim of the a....
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....ed by the A.O that after the aforesaid well scripted investment transaction no balance would be left in the bank account of the investor company. Further, it was observed by the A.O that the nature of transactions in the bank account did not reveal that any business was being carried out by the investor company. On a whole, it was observed by the A.O that the bank accounts of the investor companies revealed the characteristics of a paper/shell company. It was further observed by the A.O that neither of the investors prior to making of substantial investments with the assessee company had either carried out any feasibility study or physical verification (not even paper correspondence) or valuation of the net worth of the assessee company. Apart from that, it was observed by the A.O that the investor companies who were stated to have held substantial stake in the assessee company had never participated in its management. Also, it was observed by him that no revenue by way of dividend was being earned by the investor companies on their investment made in the assessee company. On the basis of his aforesaid observations the A.O was of the view that the same clearly revealed that the inv....
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.....w.s. 143(3), dated 26.12.2018, it was the claim of the assessee company, viz. (i). that the A.O had wrongly made the additions qua the unabated assessments of the assessee company despite the fact that no incriminating material was found in the course of search proceedings; (ii) that even otherwise on merits the A.O had erred in making addition(s) without any incriminating material having been found from the residential/business premises of the assessee company during the year under consideration; (iii) that the A.O had erred in making addition(s) merely on the basis of statements of third parties that were recorded by the Investigating Wing without providing any opportunity of cross-examination to the assessee company; (iv) the A.O had erred in making additions merely on the basis of the retracted statement of Shri Ashok Jain, director of the assessee company; and (v) the A.O had erred in not considering the documentary evidences that were filed by the assessee company in order to support the identity and creditworthiness of the investor company as well as the genuineness of the transactions in question. 15. Apropos the claim of the assessee company that in absence of any incr....
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....roceedings. On the basis of his aforesaid deliberations, the CIT(Appeals) was of the view that as no incriminating material was found during the course of search proceedings, therefore, no addition could have validly been made as regards the unabated assessment of the assessee company for the year under consideration. The CIT(Appeals) in support of his aforesaid conviction that no addition could be made in case of an unabated assessment in the absence of any incriminating material relating to the year having been found and seized in the course of search and seizure proceedings u/s. 132 of the Act, relied on the following judicial pronouncements : (i) Pr.CIT-2 Vs. Meeta Gutgutia, 82 taxman.com 287(Delhi). (ii) CIT Vs. Kabul Chawla (2016) 380 ITR 573 (Del.) (iii) DCIT Vs. Mahalaxmi Technocast Ltd, Raipur, ITA Nos. 256 to 259/RPR/2014 dated 25.10.2021 (iv) Rawal Das Jaswani Vs. ACIT, (2015) 43 CCH 606 (Raipur) (v) DCIT (Central) Vs. Abhishek Steel Industries Ltd., ITA Nos. 250 to 255/RPR/2014, dated 25.10.2021. Considering the facts involved in the case of the assessee company r.w the aforesaid settled position of law, the CIT(Appeals) w....
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....d for drawing of adverse inferences without providing any opportunity to the assessee to crossexamine the said persons. It was observed by the CIT(Appeals) that there was a blatant violation of the principles of natural justice on the part of the A.O in relying upon the third party statements without affording of any opportunity to the assessee company to cross-examine the said persons. In support of his aforesaid conviction the CIT(Appeals) relied on the judgment of the Hon'ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, Civil Appeal No.248 of 2006 and a host of other judicial pronouncements. 18. Adverting to the contention of the assessee that the A.O had gravely erred in law in making the impugned addition simply on the basis of the statement of Shri Ashok Jain (supra) that was recorded u/s.132(4) of the Act, which, though had thereafter been retracted by him, it was observed by the CIT(Appeals) that a perusal of the assessment order revealed that the A.O had solely relied on the statement of the aforementioned person without making any reference to any positive and incriminating document found and seized during ....
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....ne statement of Shri. Ashok Jain (supra). Accordingly, the CIT(Appeals) after relying on a plethora of judicial pronouncements, observed, that there was no justification for the A.O to have made the impugned additions merely on the basis of the statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act i.e. without relating the undisclosed income to the seized books of account, documents, money, bullion, jewellery or other valuable article or thing. Also, it was observed by the CIT(Appeals) that as held by the Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Best Infrastructure (India) Pvt. Ltd. (2017) 397 ITR 82 (Del.) the statement recorded u/s.132(4) of the Act could not be construed as an incriminating material for vesting with the A.O jurisdiction u/s.153A of the Act for making of additions by acting upon the same. Considering the facts involved in the case in light of the settled position of law, the CIT(Appeals) was of the view that there was no justification for the A.O to have made the impugned addition merely on the basis of statement of Shri Ashok Jain (supra), which had already been retracted by him at a later stage, and the said additions ought to have b....
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....e sustained. 20. Adverting to the claim of the assessee that the A.O had erred in not considering the substantial documentary evidence that was filed by the assessee company to substantiate the identity and creditworthiness of the investor companies and also, the genuineness of the transactions of receipt of share capital/premium from them, we find that the CIT(Appeals) had found favor with the said claim of the assessee. The CIT(Appeals) observed that the assessee had filed before the A.O as well as before him the copies of PAN nos., bank account statements, audited balance sheets, profit & loss accounts, memorandum of association, articles of association, certificate of incorporation and confirmations of all the investor companies. Adverting to the creditworthiness of the investor companies, the CIT(Appeals) after deliberating at length on their financials, i.e., audited financial statements a/w. audit reports for the year under consideration i.e. upto 31.03.2012, and considering the substantial amount of share capital and reserves & surplus as were available with the respective investor companies as on 31.03.2012, observed, that the said investor companies had substantial fun....
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....ies. The CIT(Appeals) was of the view that now when the notice(s) issued u/s.133(6) were not only served at the respective addresses of the investor companies but were also duly complied with by them, therefore, the field enquiry reports filed by the Inspectors of Income Tax did not hold the ground anymore. On the basis of his aforesaid observations, the CIT(Appeals) was of the view that there was no justification for the A.O to have held the investor companies as dummy entities and investments so made by them with the assessee company as non-genuine. On a perusal of the order of the CIT(Appeals), we find that he had distinguished all the judicial pronouncements that were relied upon by the A.O for justifying the adverse inferences that were drawn by him as regards the share capital/premium that was received by the assessee company from the respective investors. 22. Adverting to the addition of Rs.1,64,71,430/- made by the A.O u/s.41(1)(a) of the Act, it was observed by the CIT(Appeals) that the same was an addition that was made by the A.O while framing of the original assessment u/s.143(3) of the Act dated 31.03.2015. Elaborating on the facts leading to the aforesaid addition,....
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....43(3) of the Act, dated 26.12.2018; and (ii) sustainability of the additions made by the A.O on merits of the case, therein, allowed the appeal of the assessee company. 24. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 25. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 26. As the revenue has, inter alia, assailed the order of the CIT(Appeals) on the ground that he had erred in observing that as no incriminating material relating to the year under consideration was found and seized during the course of the search proceedings conducted u/s.132 of the Act from the residential/business premises of the assessee company, therefore, no addition as regards the unabated assessment of the assessee company for the year under consideration i.e. A.Y.2012-13 was liable to be made, therefore, we shall first deal with the said issue. 27. On a perusal of the orders of the lower authoritie....
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....pany in the course of the search proceedings, therein, deal with the claim of the Ld. AR that no addition as regards the unabated assessment of the assessee company for the said year could have been made. Before proceeding any further, we have to first adjudicate as to whether or not the assessment for the year under consideration i.e. A.Y.2012-13 was pending on the date of search proceedings i.e on 19.09.2016. On a careful perusal of the records, we find that the original assessment in the case of the assessee company was framed by the A.O u/s.143(3) dated 31.03.2015, Page 1309 of APB and accordingly, on the date on which search and seizure proceedings were conducted u/s.132 of the Act i.e. on 19.06.2016 no assessment or reassessment proceedings were pending. To sum up, it is a case of an unabated assessment for the year under consideration i.e. A.Y.2012-13. 29. Considering the fact that no incriminating material was found and seized from the residential/business premises of the assessee company and, the assessment for the year under consideration was unabated, we shall now deal with the claim of the Ld. AR that no addition could have been made in the hands of the assessee comp....
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....to be exercised routinely, as the same could only be exercised if search reveals any incriminating material. For the sake of clarity the relevant observation of the Hon'ble High Court approving the view taken by the "Special Bench" of the ITAT, Mumbai are culled out as under: "a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search." (B). CIT Vs. Kabul Chawla, (2016) 380 ITR 573 ( Delhi) :- 31. In the aforesaid case, it was observed by the Hon'ble High Court of Delhi that in a case where no assessment or reassessment was pending on the date of search, then in the absence of any incriminating material having been une....
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....r Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." (C). Pr. CIT Vs. Meeta Gutgutia, (2017) 395 ITR 526 ( Delhi) 32. In the aforesaid case, the Hon'ble High Court of Delhi while disapproving the contention of the revenue, which in turn was based on an earlier decision of a co-ordinate Bench of the Court in the case of Smt. Dayawanti Gupta Vs. CIT (2016) 390 ITR 496 (Del), had observed, that in absence of any incriminating material unearthed during the course of search proceedings no addition could be made in respect of an unabated assessment of the assessee. In sum and substance, it was observed by the Hon'ble High Court that the provi....
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.... aforesaid recent order, the Hon'ble High Court of Delhi had reiterated its earlier view taken in the cases of Kabul Chawla (supra) and Meeta Gutgutia (supra), and had held that in absence of any incriminating material found during the course of search conducted u/s.132 of the Act, and time limit for issuing notice u/s.143(2) of the Act having elapsed for the year under consideration, the A.O could not have made any addition to the returned income of the assessee while framing of the assessment u/s.153A of the Act. The Hon'ble High Court, inter alia, relying on its earlier order passed in the case of Pr. CIT Vs. Bhadani Financiers Pvt. Ltd.(2022) 447 ITR 305 (Delhi), had observed, that no addition qua a non-abated assessment of the assessee could be made in absence of any incriminating document or material found and seized in the course of search proceedings, observing as under: "Even, this court in Pr. CIT Vs. Bhadani Financiers Pvt. Ltd. (2022) 447 ITR 305 ( Delhi); 2021 SCC OnLine Del 4430 has held that where the assessment of the respondents had attained finality prior to the date of search and no incriminating documents or material had been found and seized at the tim....
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....-(iv), 2014 (8) TMI 387:- 35. In the aforesaid case, as certain incriminating material was unearthed during the course of search proceedings, therefore, the facts involved in the said case are distinguishable as against those involved in the present case of the assessee before us. It may herein be observed that the Hon'ble High Court in its subsequent order passed in the case of Kabul Chawla (supra), while taking a contrary view had categorically referred to the aforesaid distinguishing feature that was involved in the case of Filatex India Pvt. Ltd. (supra). Also, it was observed by the Hon'ble High Court that in its aforesaid order it was not so held that an addition can be validly made to the concluded assessment framed prior to the initiation of search proceedings even in absence of any incriminating material unearthed during the course of search proceedings. 36. Apropos the judgment of the Hon'ble High Court of Allahabad in the case of CIT Vs. Raj Kumar Arora (2014) 367 ITR 517 (Allahabad) and that of the Hon'ble High Court of Kerala in the case of E.N Gopakumar Vs. CIT (2016) 390 ITR 431 (Kerala) are concerned, we find that as stated by the ld. D.R, and, rightly so, the....
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....of our aforesaid observations. 38. Apropos the contention of the Ld. Departmental Representative (for short 'DR') that the statement of Shri. Ashok Jain (supra) recorded during the course of search proceedings u/s.132(4) of the Act, wherein, he had admitted undisclosed income in the hands of the assessee company was to be construed as an incriminating material on the basis of which the A.O had assumed jurisdiction to make additions while framing the assessment vide his order passed u/s.153A r.w.s. 143(3) dated 26.12.2016 qua the unabated assessment for the year under consideration i.e. A.Y.2012-13, we are afraid that the same does not find favour with us. As the statement of Shri. Ashok Jain (supra) recorded u/s.132(4) of the Act on a standalone basis cannot be construed as an incriminating material, therefore, the same in our considered view could by no means have conferred jurisdiction with the A.O to make additions while framing of assessment u/s.153A r.w.s. 143(3) of the Act as regards the unabated assessment of the assessee company for the year under consideration i.e A.Y 2012-13. Our aforesaid conviction is fortified by the judgments of the Hon'ble High Court of Delhi in t....
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.... Abhishek Chokhani that were recorded u/s.131 of the Act by the DDIT (Inv.), Unit-1(2), Kolkata and ADIT (Inv.), Unit-2(3), Kolkata on 10.04.2015 and 09.12.2014, respectively, it was observed by the A.O that both the said persons had in their statements admitted that they were involved in providing accommodation entries through various paper/shell companies. Also, the aforesaid persons had in their statements elaborated upon the modus-operandi that was adopted by them to carry out the nefarious activity of providing accommodation entries. Further, the A.O had with him details of 111 paper/shell companies which were being operated by one of the aforesaid hawala operator, viz., Shri Abhishek Chokhani (supra). As the A.O had sought to draw adverse inferences by relying on the statements of the aforementioned persons, therefore, the assessee company in its reply to the "Show cause" notice ("SCN") had requested him for copies of the statements of both the aforesaid individuals a/w. an opportunity to cross-examine them but the said request of the assessee was not acceded to by the A.O, and neither the copies of the aforesaid statements were provided to the assessee nor their cross-examin....
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.... drawing adverse inferences in the hands of the assessee. We, thus, on the basis of our aforesaid observations finding no infirmity in the aforesaid view taken by the CIT(Appeals) who had rightly vacated the adverse inferences which were drawn by the A.O on the basis of standalone unsubstantiated statements of third parties recorded by the Investigating Wing, uphold the same. At the same time, we concur with the CIT(Appeals) that there was no justification for the A.O to have pressed into service the statements of the aforesaid third parties for drawing adverse inferences in the hands of the assessee company without making available their statements, and facilitating a cross-examination of the aforesaid persons. Thus, the Ground of appeal No.5 raised by the revenue is dismissed in terms of our aforesaid observations. 45. We shall now deal with the grievance of the revenue that the CIT(Appeals) had erred in law and facts of the case in accepting the unsubstantiated retraction of the statement record u/s 132(4) of the Act by Shri. Ashok Jain, director of the assessee company. 46. After hearing the ld. Authorized Representatives of both the parties, we find that the grievance of....
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....tful consideration to the aforesaid issue in hand, we find no infirmity in the view taken by the CIT(Appeals). As observed by the CIT(Appeals), and, rightly so, the A.O in absence of any corroborative material was not justified in drawing adverse inferences on the basis of the standalone statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act, which too had thereafter been retracted by him. As no incriminating material or document was found and seized in the course of search proceedings, therefore, in our considered view it was all the more obligatory for the A.O to have proved that the disclosure made by Shri Ashok Jain (supra) in his statement recorded u/s 132(4), in fact, represented the undisclosed income of the assessee company. We, thus, find no infirmity in the view taken by the CIT(Appeals) that the A.O in light of retraction by Shri. Ashok Jain (supra) of his statement recorded u/s.132(4) of the Act ought to have supported the additions made by him while framing the assessment on the basis of independent material/evidence. In fact, we concur with the CIT(Appeals) that the A.O ought to have led evidence which would have supported the fact that the income disclos....
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....their low returned income and referring to their financials, inferred, that they were just paper/shell companies which had raised funds by way of share capital/premium from another set of nonexisting companies. In support of his aforesaid conviction that the assessee company had in the guise of share capital/premium received accommodation entries from the aforesaid paper/shell companies, we find that though the A.O had attempted de-layering the source of deposits in the bank accounts of the investor companies, Page 39 to 43 of the assessment order, but we are afraid that he could not bring his aforesaid exercise to any such logical end from where it could be inferred beyond doubt that the investor companies had merely facilitated laundering of the unaccounted money of the assessee company. On the contrary, we find that the supporting documentary evidence, viz. PAN, copies of account statements, audited balance sheets, profit and loss accounts, memorandum of association, articles of association, certificate of incorporation and confirmations of the respective investor companies filed by the assessee company had not been disproved or dislodged in any way by the A.O. Also, we may here....
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.... erred in not considering the documentary evidences filed in support of creditworthiness of the investor and genuineness of the transactions:- Appellant before the AO as well as before me has filed details of PAN, copies of bank account statement, audited balance sheet, profit and loss statement, memorandum & articles of association, certificate of incorporation and confirmations of investor. The brief details of the investor company are as under:- * M/s Adhunik Delmark Pvt Ltd (PAN-AAICA6810F) [ in short ADPL]:- Regarding the identity of the company, the appellant submitted that originally, the ADPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 12.07.2010 vide registration No. U51101WB201OPTC151194. The ADPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the EVPL is situated at 11, Bysack Street, Kolkata, West Bengal-700007. Regarding the genuineness of the transaction, the appellant submitted that all th....
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....ant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 117 and certificate No 126 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of MCDPL along with Auditors' Report, in respect of the financial year ended 31g March 2012. On perusal of the same it was found that MCDPL as on 31.03.2012 has share capital of Rs.1,44,900/- and reserves & surplus of Rs.4,48,50,005/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s Gaimukh Tradelink Pvt Ltd (PAN-AAECG0071C) [in short GTPL] :- Regarding the identity of the company, the appellant submitted that originally, the GTPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 09.11.2010 vide registration No. U51909WB2010PTC154547. The GTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered offi....
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....Certificate' with reg. Folio No 119 and certificate No 128 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of ACCPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that ACCPL as on 31.03.2011 has share capital of Rs. 89,15,500/- and reserves & surplus of Rs. 2,17,08,973/-. Likewise, as on 31-03-2012, MTPL has share capital of Rs. 2,52,83,870/-and reserves & surplus of Rs. 20,55,95,532/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s Bakratund Distributers Pvt Ltd (PAN-AAECB7046E) [in short BDPL]:- Regarding the identity of the company, the appellant submitted that originally, the BDPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal. The BDPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the BDPL is sit....
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....posited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 121 and certificate No 130 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of BTPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that BTPL as on 31.03.2012 has share capital of Rs. 6,71,250/- and reserves & surplus of Rs. 3,40,70,887/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s Brotex Sales Pvt Ltd (PAN-AAECB1921E) [in short BSPL]:- Regarding the identity of the company, the appellant submitted that originally, the BSPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 20.07.2010 vide registration No. U51101WB201OPTC151190. The BSPL was incorporated with the objects contained in its Memorandum of Association, un....
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....ns by the appellant with CDTPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of CDTPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 123 and certificate No 132 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of CDTPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that CDTPL as on 31.03.2011 has share capital of Rs.21,93,020/- and reserves & surplus of Rs.10,25,68,537/-. Similarly, a son 31.03.2012 has share capital of Rs.21,93,020/- and reserves & surplus of Rs.10,25,75,701/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s Contra Vaniiva Pvt Ltd (PAN-AADCC9936D) [in short CVPL]:- ....
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.... with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the DMSPL is situated at 54, Munshi Saddaruddin lane, 2nd floor, Kolkata, West Bengal-700007. The DMSPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with DMSPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of DMSPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 125 and certificate No 134 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of DMSPL along with Auditors' Report, in respect of the financial y....
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....registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 14.12.2010 vide registration No. U51909WB201OPTC155767. The MTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. Initially, the registered office of the MTPL was situated at 105, Cotton bazaar, Kolkata, West Bengal-700007, however, as current registered office as per MCA record is at 119, Cotton Street, 2nd Floor, Burra Bazar, Kolkata-700007. The MTPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with MTPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of MTPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. Af....
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....f Rs. 4,22,76,486/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s Mogra Dealcom Pvt Ltd (PAN-AAHCM5396D) [in short MDPL]:- Regarding the identity of the company, the appellant submitted that originally, the MDPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 22.11.2011 vide registration No. U51909WB2011PTC169709. The MDPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the MDPL was situated at 54, Munshi Saddaruddin lane, 2nd Floor, Kolkata-700007. The MDPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with MDPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support ....
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....s share capital of Rs. 6,79,750/- and reserves & surplus of Rs. 3,57,62,351/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s. Origin Vinimay Pvt Ltd (PAN-AABCO3297P) [in short OVPL]:- Regarding the identity of the company, the appellant submitted that originally, the OVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 12.07.2010 vide registration No. U51909WB2010PTC151178. The OVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the OVPL was situated at 11, Bysack Street, Kolkata- 700007. The OVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with OVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in....
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....rder to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of PDPL along with Auditors' Report, in respect of the financial year ended 31% March 2012. On perusal of the same it was found that PDPL as on 31.03.2012 has share capital of Rs. 6,51,500/- and reserves & surplus of Rs. 3,01,40,228/-. Thus, the investor has sufficient funds to make investment In equity shares of appellant company. * M/s Plazma Tradecom Pvt Ltd (PAN-AAFCP7150C) [in short PTPL]:- Regarding the identity of the Company, the appellant submitted that originally, the PTPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 18.11.2020 vide registration No. U5 1909WB2010PTC 154503. The PTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the PTPL is situated at 11, Bysack Street, Kolkata- 700007. The PTPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA),....
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....stor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 134 and certificate No 143 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of QAPL along with Auditors' Report, in respect of the financial year ended 31% March 2012. On perusal of the same it was found that QAPL as on 31.03.2012 has share capital of Rs. 6,36,500/- and reserves & surplus of Rs. 2,71,55,107/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s Ratangiri Vanijya Pvt Ltd (PAN-AAFCR0238R)[in short RVPL]:- Regarding the identity of the company, the appellant submitted that originally, the RVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 26.11.2010 vide registration No. U51909WB2010PTC 155078. The RVPL was incorporated with the objects contained in its Mem....
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....nt payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of RWVPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 136 and certificate No 145 on 10.04.2012. In order to prove credit worthiness of the Investor, the appellant has filed copies of audited financial statements of RWVPL along with Auditors' Report, in respect of the financial] year ended 31st March 2012. On perusal of the same it was found that RWVPL as on 31.03.2011 has Share capital of Rs. 2,18,96,350/- and reserves & surplus of Rs. 35,92,65,844/-. Likewise as on 31.03.2012 has share capital of Rs.2,18,96,350/- and reserves & surplus of Rs. 35,92,67,493/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s - Roseberry Dealmark Pvt. Ltd (PAN-AAFCR5550C) [in short RDPL):- Regarding the identity of the company, the appellant Submi....
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....d functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with STPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of STPL. On perusal of bank account Statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 138 and certificate No 147 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of STPL along with Auditors' Report, in respect of the financial year ended 31* March 2011. On perusal of the same it was found that RDPL as on 31.03.2011 has share capital of Rs. 29,28,000/- and reserves & surplus of Rs. 13,85,76,649/- . Thus, the investor has sufficient funds to make investment in equity shares of appell....
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....WB2010PTC151193. The SSPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the SSPL is situated at 11, Bysack Street, Kolkata- 700007. The SSPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with SSPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of SSPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 140 and certificate No 149 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of SSPL along with Auditors' Report, in respect of the financi....
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....company. * M/s Sunaina Tei-up Pvt Ltd (PAN-AAQCS4058K) [in short STPL]:- Regarding the identity of the company, the appellant submitted that originally, the STPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 28.09.2011 Vide Registration No U74999WB2011PTC168228. The STPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the STPL is situated at 54, Munshi Saddaruddin Lane, 2nd floor, Kolkata-700007. The STPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with STPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of STPL. On perusal of bank account statement of the investor company n....
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....1.03.2012 has share capital of Rs. 31,30,010/- and reserves & surplus of Rs. 14,84,73,620/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s Yash Commosales Pvt Ltd (PAN-AAACY4188L) [in short YCPL]:- Regarding the identity of the company, the appellant submitted that originally, the YCPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 13.04.2010 Vide Registration No U51909WB2010PTC145155. The YCPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the YCPL is situated at 4, GC Avenue, 1st Floor, Kolkata-700013. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with YCPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of YCPL. On perusal of bank account statem....
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....ZDPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that ZDPL as on 31.03.2011 has share capital of Rs. 23,07,000/- and reserves & surplus of Rs. 10,81,46,314/-. Likewise as on 31.03.2012 has share capital of Rs. 23,07,000/- and reserves & surplus of Rs. 10,79,30,106/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. * M/s Atlantic Merchants Pvt Ltd (PAN-AAICA3843L) [in short AMPL]:- Regarding the identity of the company, the appellant submitted that originally, the AMPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 10.04.2010 Vide Registration No U51909WB2010PTC145091. The AMPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the AMPL is situated at 4, GC Avenue, 1st floor, Kolkata-700001. Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the ....
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....appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 147 and certificate No 156 on 10.04.2012. In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of PDPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that PDPL as on 31.03.2011 has share capital of Rs. 3,77,45,000/- and reserves & surplus of Rs. 71,60,04,018/-. Likewise as on 31.03.2012 has share capital of Rs. 3,77,45,000/- and reserves & surplus of Rs. 71,61,42,461/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company." Also, the CIT(Appeals) had thereafter supported his observations by plethora of case laws, Page 121 to 123 of CIT(Appeals)'s order. 52. Having given a thoughtful consideration to the aforesaid issue in hand, we concur with the view taken by the CIT(Appeals) that now when the assessee company on the basis of clinching documentary evidence which had not been dislodged or disproved by the A.O by placing on record any document/material proving....
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.... 153A r.w.s 143(3), dated 26.12.2018, the CIT(Appeals) was of the view that the A.O while framing the assessment vide his order passed u/s.153A r.w.s. 143(3) of the Act instead of verifying as to whether or not the liability in question was outstanding on the date of his order, had however, summarily repeated the said addition. On a perusal of the evidence on record, it was observed by the CIT(Appeals) that the assessee company had during the F.Y 2012-13 to F.Y 205-16 discharged its major liability of Rs.1,62,17,000/- (out of Rs. 1,64,71,430/-) towards M/s. Pragmatic Builders Pvt. Ltd., as under: Accordingly, it was observed by the CIT(Appeals) that the outstanding liability of the assessee company towards the aforementioned contractor, viz. M/s. Pragmatic Builders Pvt. Ltd was scaled down to an amount of Rs.2,54,430/- as on 18.05.2016. On the basis of his aforesaid deliberations, the CIT(Appeals) being of the view that there was no justification on the part of the A.O to have sustained the addition of Rs.1,64,71,430/- u/s.41(1)(a) of the Act, thus vacated the same. 57. We have given a thoughtful consideration to the aforesaid issue in hand and find no infirmity in the view t....
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....assailed the impugned order on the following grounds of appeal before us: "1 "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition of Rs.2,10,00,000/- made by the AO on account of unexplained cash credit u/s.68 of the Income-tax Act, 1961?" 2. "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition made u/s.68 of Income-tax Act, 1961 by plainly accepting the plea of the assessee ignoring the fact that identity, creditworthiness and genuineness of the transactions could not be proved by the assessee". 3. "Whether on the facts and in law, the Ld. CIT(A) is right in holding that the additions were made in non-abated assessment year i.e. A.Y.2013-14 and in absence of any incriminating material and is not justified as per provision of section 153A of the Act? 4. "Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in ignoring decision of Hon'ble High Court of Kerala in the case of E.N gopakumar Vs CIT [2016 75 taxmann.com 215 (Kerala)], where in it is held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) of IT Ac....
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....ements that they have provided accommodation entries to the company in lieu of commission." 9. "Whether on the facts and in law, the Ld. CIT(A) is right in deleting the addition of Rs.49,00,000/- made by the AO on account of unexplained cash credit u/s.68 of the Income-tax Act, 1961 ignoring the fact that the agreements were on a plain paper and no documents provided in support of genuineness of agreement by the assessee and whether CIT(A) is justified in shifting the burden to AO when the assessee could not discharge is primary onus to establish the genuineness of transaction." 10. "Whether on the facts and in law, the Ld. CIT(A) is justified in plainly replying upon assessee submission and in deleting the ad-hoc addition of Rs.10,68,271/- and Rs.76,280/- made by the AO on account of labour charged and travelling & other expenses ignoring the fact that these expenses have been incurred by the assessee in cash which is not fully verifiable due to lack of genuineness of transaction?" 60. Succinctly stated, the assessee company had filed its return of income for A.Y.2013-14 on 29.09.2013, declaring an income of Rs.32,00,390/-. Original assessment was framed by th....
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....Representative of both the parties were in consensus that majority of the issues involved in the present appeal on the basis of which the order of the CIT(Appeals) had been assailed before us, remained the same, as were there before us in the appeal filed by the revenue for the immediately preceding year i.e A.Y 2012-13 in IT(SS)A No.2/RPR/2022 for A.Y.2012-13. 67. As the revenue has, inter alia, assailed the order of the CIT(Appeals) on the ground that he had erred in vacating the additions made by the A.O u/s. 153A r.w.s. 143(3) dated 26.12.2018, for the reason that in absence of any incriminating material having been found and seized in the course of the search proceedings, no addition could have been made in respect of unabated assessment of the assessee company for the year under consideration i.e.A.Y.2013-14, we shall thus first deal with the same. 68. On a careful perusal of the record it transpires that the assessee company had filed its original return of income u/s.139(1) of the Act on 29.09.2013, declaring an income of Rs.32,00,390/-. Search and seizure operations u/s.132 of the Act were conducted on the assessee company on 19.09.2016. On the date of the aforesaid ....
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.... made by the A.O u/s.68 of the Act. 71. As is discernible from the assessment order the assessee company during the year under consideration had received share capital/premium of Rs.2.10 crore from two share applicant companies, as under: Name of the company No. of share Allotted Share capital Share premium Total M/s. Manali Tradecom Pvt. Ltd 1,25,000 Rs.12,50,000 Rs.6,50,000 Rs.20,00,000 Extent Vinimay Pvt. Ltd. 11,87,500 Rs.1,18,75,000 Rs.71,25,000 Rs.1,90,00,000 Total Rs.2,10,00,000 (A) M/s. Manali Tradecom Pvt. Ltd. : Rs. 20 lac 72. On the basis of verifications carried out by the A.O in the course of original assessment that was framed u/s.143(3) of the Act dated 28.03.2016, it was observed by him that as the aforesaid investor company while framing of the assessment in the case of the assessee for the A.Y. 2012- 13 was not found to be physically existing, therefore, for the said reason the share capital/premium that was claimed by the assessee to have been received from the said concern was added back by him as an unexplained cash credit u/s.68 of the Act. On the basis of his aforesaid observations the A.O held the a....
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....r as per current records was shifted to 119, Cotton Street, 2nd floor, Burra Bazar, Kolkata- 700 007. Also, it was observed by the CIT(Appeals) that the investor company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India was an active and functional company. Regarding the genuineness of the transaction of receipt of share capital/premium by the assessee company from the aforesaid investor company, it was observed by the CIT(Appeals) that all of the said transactions had taken place through account payees cheques and none of them was made in cash. Also, it was observed by the CIT(Appeals) that a perusal of the bank account of the investor company did not reveal any cash deposits either before or after the transfer of funds to the assessee company. As regards the creditworthiness of the aforesaid investor company, it was observed by the CIT(Appeals) that a perusal of its financial statements both as on 31.03.2012 and 31.03.2013 revealed that it had sufficient funds to make the investment in question. In fact, it was observed by the CIT(Appeals) that the investment made by the aforesaid investor was out of the advance of an amount of Rs. 20 lac....
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....ne, the AO has no locus to treat the same as bogus and nongenuine and that to in absence of any positive documents in support of his allegation." On the basis of his aforesaid observations the CIT(Appeals) held the investment made by the aforesaid investor company as genuine, and thus, vacated the addition of Rs.20 lac made by the A.O u/s.68 of the Act. 76. We have given a thoughtful consideration to the view taken by the lower authorities as regards the amount of Rs.20 lac which the assessee company had claimed to have received as share capital/premium from the aforementioned investor company, viz. M/s. Manali Tradecom Pvt. Ltd. As observed by the CIT(Appeals) the aforementioned investor company was an active and functional company as per the records of MCA, a fact which was even otherwise proved on the basis of compliances made by the said company to the notice issued by the A.O u/s.133(6) of the Act. Also, it was observed by the CIT(Appeals) that the aforesaid investor company as per its audited financial statements had substantial financial means to make investment in question with the assessee company. Considering the aforesaid facts, we are of a strong conviction that t....
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....ocumentary evidence, viz. copies of audited financial statements a/w. auditor's report, copies of bank statement, memorandum of association, articles of Association and copies of return of income. On a perusal of the bank statement of the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd., it was observed by the CIT(Appeals) that no cash was found deposited before and after transfer of funds towards investment made by the aforesaid investor with the assessee company. Also, it was observed by the CIT(Appeals) that the assessee company after receipt of share capital/premium had issued Equity Share Certificates with Folio No.148 and Certificate No.157 on 15.04.2013 to the investor company. Further, the CIT(Appeals) referring to the audited financial statements observed that the aforesaid investor company on 31.03.2012 had a share capital of Rs.36.39 lac and reserves & surplus of Rs.17,34,26,476/-. On 31.03.2013, the said investor company had share capital of Rs.36.39 lac and reserves & surplus of Rs.17,34,35,034/-. Considering the aforesaid facts, the CIT(Appeals) was of the view that the investor company had sufficient funds available with it to make investment in the equ....
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....e hands of the assessee company. For the sake of clarity the relevant observations of the CIT(Appeals) as r egards the investment made by the aforesaid company, viz. M/s. Extent Vinimay Pvt. Ltd are culled out as under: * M/s. Extent Vinimay Pvt. Ltd (PAN-AACE4578J) [ in short EVPL]:- Regarding the identity of the company, the appellant submitted that originally, the MTPL was incorporated as a Private limited company duly registered under the erstwhile Companies Act, 1956 under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 12.07.2010 vide registration No. U51101WB2010PTC151202. The EVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. Initially, the registered office of the EVPL was situated at 63, Radha Bazar Street, Kolkata, West Bengal- 700001, but subsequently, w.e.f. 15.05.2018, the registered office of the company got shifted to a new place situated at 201, 2nd floor, Lal Ganga Shopping Mall, GE Road, Raipur-492001. The EVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government ....
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....urn of income, computation of income, audited financial statement, PAN, memorandum of association, articles of association and confirmation of the aforementioned investor company duly discharged the primary onus that was cast upon it as regards proving the identity and creditworthiness of the investor company as well as genuineness of the transaction of receipt of share capital/premium of Rs. 1.90 crore (supra) from it, therefore, there was no justification for the A.O to have summarily disregarded the same and dubbed the investment as an unexplained cash credit u/s.68 of the Act. We may herein observe that the due compliance of the notice u/s.133(6) of the Act issued by the A.O to the aforementioned investor company further adduces the factum of authenticity of the transaction in question. We further find that as regards the adverse inferences that were drawn by the A.O regarding the nonavailability of the aforementioned company at its address, it is the claim of the assessee that the same had occasioned due to the change in the address of the investor company. Elaborating on his aforesaid claim, it was submitted by the ld. A.R that the address of the aforementioned investor compa....
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....M/s Extent Vinimay Pvt. Ltd. was out of the realization proceeds of its investments, which in turn were sourced out of, viz. (i) share capital : Rs.35.39 lac; and (ii) share premium : Rs.17.34 crore that were reflected in its books of account for the year ended 31.03.2011, and the same pursuant to the order passed by the Pr.CIT-2, Kolkata u/s.263 of the Act dated 28.03.2016 had been looked into by the A.O vide his order passed u/s.143(3) r.w.s. 263 dated 20.12.2016 and was found to be in order, therefore, there was no locus standi for the A.O of the present assessee company to have dubbed the investment made by the said investor company out of its duly disclosed fund as an unexplained cash credit u/s. 68 of the Act. Elaborating on the aforesaid view taken by the CIT(Appeals), we shall briefly cull out the facts leading to the same, as under: Date Particulars 02.11.2011 Return of income filed by M/s. Extent Vinimay Pvt. Ltd for A.Y.2011-12 with ITO, Ward-5(3), Kolkata 17.03.2014 Original assessment framed u/s.143(3) of the Act dated 17.03.2014 by the ITO, Ward-5(3), Kolkata 28.03.2016 Order u/s.263 of the Act passed by the Pr. CIT-2, Kolkata holding the order....
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.... the basis of which the assessee company had claimed that the investment made by the aforesaid investor company, viz. M/s Extent Vinimay Pvt Ltd. towards share capital/premium with it during the year under consideration i.e A.Y.2013-14 and for the immediately two succeeding years, were out of realization of the investments of the said investor company, which, in turn were sourced out of its duly disclosed source of Rs.17.71 crore (approx.) [i.e share capital : Rs.36.39 lac (+) reserves & surplus : Rs.17.34 crore] that had been looked into and accepted by the A.O i.e ITO, Ward12(2), Kolkata in the case of the said investor company, viz. M/s Extent Vinimay Pvt. Ltd. vide his order passed u/s. 143(3) r.w.s. 263, dated 20.12.2016 for A.Y 2011-12, as under: M/s. Extent Vinimay Pvt. Ltd Details of share investment as on 31.03.2011 31.03.2012 31.03.2013 31.03.2014 31.03.2015 Total investment, loan, cash and bank balance excluding given to Lalganga Builders Pvt. Ltd. D=A+B+C 1771 2026 1587 313 110 Realisation of Investment, loan, cash and bank E 439 (2026-1587) 1274 (1587-313) 203 (313-110) Investment....
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....imay Pvt. Ltd had jacked up from Rs.17.71 crore (supra) in F.Y 2010-11 to Rs.20.26 crore in F.Y 2011- 12, therefore, the claim of the assessee company that the source of investments made with it by the aforesaid investor, viz. M/s Extent Vinimay Pvt. Ltd. out of its disclosed sources have to be restricted to the extent of Rs.17.71 crore (supra), i.e, as was accepted by the ITO, Ward 12(2), Kolkata while framing the assessment in the latter's case u/s.143(3) r.w.s. 263 of the Act, dated 20.12.2016, and thus, would not be available as regards the jacked up figure of Rs.20.26 crore (supra). 86. In terms of our aforesaid observations, the claim of the assessee company that as the total investments/loans & advances of the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd had reduced from Rs.20.26 crore on 31.03.2012 to Rs.15.87 crore on 31.03.2013, therefore the investment of Rs.1.90 crore (supra) made by the said investor with the assessee company towards share capital/premium during the year under consideration i.e. A.Y.2013-14 could safely be held to have been sourced out of realization of the duly disclosed investments/loan & advances of Rs.4.39 crore [Rs.20.26 crore ....
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.... the onus as was cast upon it as regards proving the identity and creditworthiness of the investor company, as well as the genuineness of the transaction of having received share capital/premium of Rs.1.90 crore from the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd, therefore, the same could not have been summarily dislodged by the A.O without placing on record any material proving to the contrary. We, thus, in terms of our aforesaid observation uphold the order of the CIT(Appeals) who in our considered view had rightly vacated the addition of Rs.1.90 crore (supra) made by the A.O u/s.68 of the Act. Thus, the Grounds of appeal No.(s) 1, 2 & 8 raised by the revenue are dismissed in terms of our aforesaid observations. 88. We shall now deal with the grievance of the revenue that the CIT(Appeals) had erred in deleting an addition of Rs. 49 lac that was made by the A.O u/s.68 of the Act. 89. As transpires on the basis of the facts as are discernible from the orders of the lower authorities, the assessee company had claimed to have received cash amounting to Rs.49 lac from 5 different parties as advance towards sale of shops located at Lal Ganga Mall, Raipur, as u....
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.... and was liable to be struck down. The CIT(Appeals) relied on the judgment of the Hon'ble High Court of Chhattisgarh in the case of Pawan Kumar Agrawal, Tax Case No.24 of 2011 dated 04.04.2017, wherein, the Hon'ble High Court in the case before them had while approving the view taken by the CIT(Appeals), observed, that as the A.O while making the addition u/s.68 of the Act had failed to press into service either of the necessary course of actions/enquiries contemplated in Section 131 or Section 133(6) of the Act, therefore, the addition so made by him could not be sustained. 91. We have given a thoughtful consideration to the aforesaid issue in hand in the backdrop of the contentions advanced by the ld. authorized representative of both the parties. Admittedly, as the A.O had while disbelieving the explanation of the assessee as regards the nature and source of the cash deposits of Rs.49 lac (supra) in its books of account had neither carried out any verifications on his own nor dislodged the claim of the assessee on the basis of any material proving to the contrary, therefore, the CIT(Appeals), in our considered view, had rightly vacated the aforesaid impugned addition that was....
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....eyance & car expenses. 94. On appeal, it was observed by CIT(Appeals) that the A.O had made the aforesaid ad-hoc disallowances without pointing out any specific defect in the claim for deduction of expenses as was raised by the assessee company in its profit & loss account. Also, it was observed by the CIT(Appeals) that no disallowance of any part of labour expenses was made in the earlier year despite the fact that the claim of expenses in the preceding year was on the higher side. Further, the CIT(Appeals) considering the fact that the A.O had failed to point out a single instance of expenditure which was not supported by voucher/bill or was found to be non-genuine or personal in nature, was thus of the view that the aforesaid claim for deduction of expenses could not have been summarily disallowed by the A.O. The CIT(Appeals) was further of the view that no ad-hoc disallowance could be sustained in absence of pointing out of any specific defect by the A.O. Considering the aforesaid facts the CIT(Appeals) vacated the disallowance of Rs.10,68,271/- out of labour expenses and Rs.76,280/- out of telephone expenses, travelling expenses and conveyance expenses. 95. We have given....
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....urt of Kerala in the case of E.N gopakumar Vs CIT [2016 75 taxmann.com 215 (Kerala)], where in it is held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) of IT Act can be concluded against interest of assessee including making addition even without any incriminating material being available against assessee in search u/s.132 on basis of which, notice was issued to the assessee u/s.153A(1)(a) of the Act" 5. "Whether on the facts and in law, the Ld. CIT(A) is justified in ignoring the fact that third parties are directors of the investor companies who have already accepted in his statement they provided the accommodation entries to the company in lieu of commission and in completely ignoring the evidentiary value of these statements? 6. "Whether on the facts and in law, the Ld. CIT(A) is right that AO ought to have made additions on the basis of incriminating material and not on the basis of statement of the appellant which had already been retracted by the appellant at later stage knowing the fact of evidentiary value of statement recorded u/s.132(4) of the Act and while retracting from the statement given earlier, the assesse....
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....company had duly substantiated the genuineness of the transaction of having received share capital/premium from the aforementioned investor company on the basis of supporting documentary evidence, thus, was of the view, that the A.O without placing on record any documentary evidence which would have proved to the contrary could not have justifiably dislodged its claim of having received genuine share capital/premium from the aforesaid share subscriber, viz. M/s. Extent Vinimay Pvt. Ltd. Not only the CIT(Appeals) observed that the aforementioned investor company, viz. M/s. Extent Vinimay Pvt. Ltd was an active and a functional company as per records and data of the Ministry of Corporate Affairs (MCA), Government of India, and was an existing entity which was registered under the Companies Act, 1956 on 12.07.2010, but he also took note of the fact that all its transactions with the assessee company were through A/c payee cheques and none of the transaction had taken place in the form of cash. Apart from that, it was observed by the CIT(Appeals) that a perusal of the bank account of M/s. Extent Vinimay Pvt. Ltd, revealed that no cash was deposited either before or after transfer of th....
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.... consideration. As observed by the CIT(Appeals), and, rightly so, as the assessee company had duly established the identity and creditworthiness of the investor company and the genuineness of the transaction of having received share capital/premium of Rs.12.68 crore (supra) from M/s. Extent Vinimay Pvt. Ltd,, therefore, finding no infirmity in the view taken by him, we uphold the same. 102. Also, we concur with the view taken by the CIT(Appeals), that now when the A.O while framing the assessment in the case of the investor company i.e M/s. Extent Vinimay Pvt. Ltd u/s. 263 r.w.s. 143(3) of the Act, dated 20.12.2016 for A.Y.2011-12 had accepted the investments that were received by it towards share capital/premium, therefore, to the extent the investment made during the year under consideration i.e A.Y 2014-15 by the said investor company, viz. M/s. Extent Vinimay Pvt. Ltd. towards share capital/premium with the assessee company were sourced from the realization/rotation of the said investments which had been held by the ITOWard 12(2), Kolkata as genuine while framing of assessment u/s 143(3) r.w.s 263, dated 20.12.2016 in the case of the aforesaid investor company, the A.O in th....
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....ent/loans which had been held to be genuine in the hands of the investor company i.e M/s. Extent Vinimay Pvt. Ltd for A.Y.2011-12 could by no means be held as unexplained cash credit u/s.68 of the Act in the hands of the assessee company. We, thus, in terms of our aforesaid observations uphold the view taken by the CIT(Appeals) on the said count. Thus, the Ground of appeals No(s) 1, 2 & 8 raised by the revenue are dismissed in terms of our aforesaid observations. 104. As the revenue has assailed the order of the CIT(Appeals) on the ground that he had erred in vacating the addition made by the A.O u/s. 153A r.w.s. 143(3) dated 26.12.2018, for the reason that in absence of any incriminating material having been found and seized in the course of the search proceedings, no addition could have been made in respect of the unabated assessment of the assessee company for the year under consideration i.e.A.Y.2014-15, we shall now deal with the same. 105. On a careful perusal of the record it transpires that the assessee company had filed its original return of income u/s.139(1) of the Act on 19.01.2016, declaring an income of Rs.45,71,220/-. Search and seizure operations u/s.132 of th....
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.... addition of Rs.2,03,00,000/- made by the AO on account of unexplained cash credit u/s.69A of the Income-tax Act, 1961?" 2. "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition made u/s.69A of Income-tax Act, 1961 by plainly accepting the plea of the assessee ignoring the fact that identity, creditworthiness and genuineness of the transactions could not be proved by the assessee". 3. "Whether on the facts and in law, the Ld. CIT(A) is right in holding that the additions were made in non-abated assessment year i.e. A.Y.2015-16 and in absence of any incriminating material and is not justified as per provision of section 153A of the Act? 4. "Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in ignoring decision of Hon'ble High Court of Kerala in the case of E.N gopakumar Vs CIT [2016 75 taxmann.com 215 (Kerala)], where in it is held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) of IT Act can be concluded against interest of assessee including making addition even without any incriminating material being available against assessee in search u/s.....
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....e CIT (Appeals) had erred in law and facts of the case in vacating the addition of Rs.2.03 crore made by the A.O u/s.69A of the Act. 110. Succinctly stated, the assessee had claimed to have received an amount of Rs.2.03 crore during the year under consideration as an unsecured loan from M/s. Extent Vinimay Pvt. Ltd. As the A.O was of the view that the assessee had not received any genuine loan from the aforementioned concern, viz. M/s. Extent Vinimay Pvt. Ltd but had routed back his own unaccounted money in the garb of the said loan transaction, therefore, he held the same as the unexplained money of the assessee company u/s.69A of the Act. 111. On appeal, the CIT(Appeals) after deliberating at length on the multifacet contentions that were advanced by the assessee company to impress upon him that it had raised genuine loan from the aforementioned lender, viz. M/s. Extent Vinimay Pvt. Ltd, therein, vacated the impugned addition. 112. We have given a thoughtful consideration and find that the issue of investments made by the aforementioned concern, viz. M/s. Extent Vinimay Pvt. Ltd is perpetuating in the case of the assessee company over the years i.e A.Y. 2013-14 to A.Y. 2....
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....hen the ITO- Ward 12(2), Kolkata while framing the assessment in the case of the investor company i.e M/s. Extent Vinimay Pvt. Ltd, vide his order passed u/s. 143(3) r.w.s 263, dated 20.12.2016 for A.Y.2011-12 had accepted the investments that were received by it as share capital/premium, therefore, to the extent the investment made by the said investor company, viz. M/s. Extent Vinimay Pvt. Ltd. with the assessee company during the year under consideration i.e A.Y 2015-16, could be shown to have been sourced from the realization of the investments which had been held by the revenue as genuine in the case of the said investor company in A.Y 2011- 12, the A.O in the case of the present assessee company would have no locus standi to hold the investment to the said extent as bogus/sham. 115. We shall now on the basis of the details as had been filed by the assessee before us, deal with the issue as to what extent the loan advanced by M/s. Extent Vinimay Pvt. Ltd. during the year under consideration i.e. A.Y.2015-16 could be held to have been sourced from the share capital/premium/loans, as had been proved to be genuine in the hands of the said lender by it's A.O i.e ITO - Ward 12(2....
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....dismissed in terms of our aforesaid observations. 116. Now we shall deal with the grievance of the revenue that the CIT(Appeals) had erred in law and facts of the case in vacating the addition made by the A.O u/s.69A of the Act, for the reason that in absence of any incriminating material relating to the year under consideration, i.e, A.Y 2015-6 having been found and seized during the course of search proceedings conducted on the assessee, no addition could have been made in respect of unabated assessment for the said year. 117. On a perusal of the order of the CIT(Appeals), it transpires that he had held that as the assessment in the case of the assessee company for the year under consideration i.e A.Y.2015-16 was unabated on the date of search that was conducted on 19.09.2016, therefore, in absence of any incriminating material having been found and seized during the course of search proceedings, no addition could have been made while framing of the assessment u/s 153A r.w.s 143(3), dated 26.12.2018. Admittedly, as observed by us hereinabove while disposing off the appeal in IT(SS)A No.2/RPR/2022 for A.Y.2012-13, Para 27, no incriminating material was found and seized durin....
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....e there in IT(SS)A No.2/RPR/2022 for A.Y.2012-13, therefore, on the same terms we finding no infirmity in the view taken by the CIT(Appeals), thus, uphold the same. Thus, the Grounds of appeal No. (s) 5 to 7 raised by the revenue are dismissed in terms of our aforesaid observations. 120. In the result, appeal of the revenue in IT(SS)A No.05/RPR/2022 for A.Y.2015-16 is partly allowed in terms of our aforesaid observations. 121. Resultantly, all the appeals of the revenue for A.Y 2012-13 to A.Y 2014-15 in ITA Nos. 02 to 04/RPR/2022 are dismissed, while for that for A.Y 2015-16 in ITA No. 05/RPR/2022 is partly allowed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. ============= Document 1 LAL GANGA BUILDERS PVT LTD SHARE CAPITAL ADDITION YEAR WISE 2009-2010 109420000 109420000 2009-2010 2010-2011 109420000 109420000 2010-2011 F.Y. SHARE ADDITION TOTAL CAPITAL OF SHARE OPENING CAPITAL FY. RESERVE & PROFIT SURPLUS(O PENING) ADDITION OF SECURITY PREMIUM TOTAL TOTAL ADDITION DURING THE FY 101292815 104....