AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 904
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....se the CIT(A) erred in overlooking the facts that the creditworthiness and the genuineness of the transactions has not been established by the appellant. There are evidence to the contrary produced by the department which establishes that the investors did not have the income earning apparatus and hence did not have creditworthiness. 3. On the facts and in the circumstances of the case the CIT(A) erred in deleting the additions of Rs.18488252/- made on account of suppression of production based on the lower yield declared by the assessee and hence corresponding unrecorded sale thereof. 4. On the facts and in the circumstances of the case the CIT(A) erred in overlooking the investigation of facts and evidences on record to establish suppression of production by the assessee. 5. The CIT (A) has erred in passing the appellate order wherein he has acted in a perverse manner while passing the order which has been made in haste without giving reasonable opportunity to the AO to give his submissions on the issues." On the other hand the assessee as a cross-objector has raised the following grounds:- "1. On the facts and in the circumstances of the case, the Learned A.O is not....
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....placing on record supporting documentary evidences had duly discharged the onus that was cast upon it as regards the amount of Rs.1.50 crore that was received from its in-house company, viz. M/s Mahalaxmi Technocast Ltd., thus, accepted its claim to the said extent. However, the A.O was not inclined to accept the claim of the assessee that it had raised genuine amount of share application money of Rs.9.40 crore from M/s. Calidora Traders Pvt. Ltd. It was observed by the A.O that in the course of search and seizure proceedings the search officials had looked for documents in the form of statutory records of the assessee company, viz. minutes of meeting register, share holders register, counter foils of issued share-certificates etc. which were required to be maintained at the registered office of the assessee company, but neither of the said documents were found. Also, the persons who were present at the registered office premises of the assesssee company also could not provide satisfactory explanation as regards non-availability of the aforesaid documents/registers in their statements which was recorded on oath. Apart from that, it was observed by the A.O that the duly filled in sh....
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....credit u/s. 68 of the Act. In reply, it was submitted by the assessee that as it had placed on record complete details of the aforesaid share applicant a/w. supporting documentary evidences, viz. name and address, copy of PAN card, certificate of incorporation, memorandum of association, article of association, audited financial statement, income-tax return, bank statement (out of which share application money was paid), share application form and details of payment receipts, therefore, the primary onus that was cast upon it was duly discharged. However, the A.O was not inclined to accept the aforesaid explanation of the assessee. It was observed by the A.O that the aforesaid share applicant did not have its own profit-making apparatus and was not involved in any business activities but was merely involved in rotating of the money which was channelized through its banking accounts. The A.O, thus, was of the view that the bank accounts of the share applicant company did neither reveal its creditworthiness nor proved the genuineness of the transaction under consideration. Also the A.O was of the view that the investor company during the year under consideration was not in receipt of ....
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....on (in MT) Total Iron Ore consumed (in MT) Total power consumed (in Kwh) Iron Ore per unit of production Yield% Power consumed per unit of production (kwh/MT) 2005-06 993.55 9407.955 10205.945 16361.777 1130760 1.603 62.38 110.79 2006-07 1395.91 8111.000 7161.090 12552.437 1464586 1.753 57.05 204.52 2007-08 2233.18 12161.650 11905.710 24618.000 1733240 2.068 48.36 145.58 2008-09 2855.16 19275.940 19211.220 34092.025 2252064 1.775 56.35 117.23 2009-10 5055.75 34627.070 35719.110 59520.02 3026780 1.666 60.01 84.74 2010-11 7610.07 41312.930 42983.600 77831.978 4779000 1.811 55.23 111.18 Total 20143.62 127186.68 224976.24 1486430 The A.O holding a conviction that the quantitative production of sponge iron would be proportionate to the consumption of Iron Ore and coal, thus, inter alia, for the year under consideration worked out the month wise details, as under: Month Sponge Iron Production ( in MT) Iron Ore Consumption (in MT) Yield % April, 09 2342.880 3944.940 0.59 May, 09 1764.930 3122.....
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....v 0.47 2009-10 Mar 0.62 Aug 0.56 Feb 0.74 Sep 0.53 2010-11 Apr 0.61 May 0.54 Jun 0.64 Oct 0.48 It was, thus, observed by the A.O that consumption of Iron Ore per unit of production was as high as 64% in April, 2008 and as low as 41% in January, 2009. Similarly, the consumption of coal was very high in February 2010 i.e. 0.74 and as low as 0.47 in the month of November, 2009. It was observed by the A.O that yield shown in different years under consideration also varied over the years, as under: Financial Year Yield of Sponge Iron (in %) 2005-06 62.38 2006-07 57.05 2007-08 48.36 2008-09 56.35 2009-10 60.01 2010-11 55.23 The A.O was of the view that the aforesaid variances suggested that the books of account of the assessee company did not reveal the true and correct picture of its business affairs. Also, the A.O in order to support his aforesaid conviction that the assessee had suppressed its yield relied on the fact that in the course of search proceedings excess stock of Rs.6,28,24,704/- was found. Considering the aforesaid facts the A.O held the books of account of the assessee as unreliable, and conclude....
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....eeting register, shareholders register, counter foils of issued share certificates etc. were not found at the registered office of the assessee company, but a perusal of the statements recorded u/s.132(4) of the Act, nowhere revealed that any official of the search team had in the course of the said proceedings had visited the registered office of the assessee company. Also, it was observed by the CIT(Appeals) that the statement of the other persons belonging to the group companies also did not reveal that the assessee company had not maintained any statutory records/registers. It was also observed by the CIT(Appeals) that the A.O had merely on the basis of an unsubstantiated allegation claimed that the aforesaid statutory records of the assessee company were not found in the course of the search proceedings at the registered office premises of the assessee company. The CIT(Appeals) was of the view that it was not the case of the department that the search team had visited the registered office premises of the assessee company and had specifically queried about the statutory records which latter had failed to produce or had expressed its inability to produce, or had admitted of not....
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....t of share application/capital money but had also explained the source of source by placing on record assessment order in the case of its subscriber company, viz. M/s. Calidora Traders Pvt. Ltd. The CIT(Appeals) further observed that as the assessee in order to substantiate the authenticity of the aforesaid transaction of receipt of share application money from the aforesaid subscriber company viz. M/s. Calidora Traders Pvt. Ltd. had placed on record clinching documentary evidences, viz. confirmation a/w. duly notarized affidavit, copies of share application form, audited financial statement, copies of return of income and bank statement of the aforesaid investor company, therefore, there was no justification for the A.O to have summarily rejected the same and drawn adverse inferences as regards the authenticity of the claim of the assessee of having received genuine share application money from the aforesaid party without placing on record any material proving to the contrary. 9. Rebutting the adverse inferences that were drawn by the A.O as regards the assessee's claim of having received genuine share application money from the aforesaid investor, for the reason that notice whic....
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....id amount of share application money. Also, it was noticed by him that contents of the affidavit filed by the share subscriber company had also not been disputed by the A.O. Accordingly, the CIT(Appeals) found favour with the claim of the assessee company that now when the identity, creditworthiness of the share applicant, and also the genuineness of the transaction had been proved to the hilt on the basis of clinching documentary evidences, which had not been disproved or dislodged by the A.O, therefore, there was no justification on his part in treating the aforesaid amount of Rs.9.40 crore as unexplained cash credit u/s.68 of the Act. On the basis of his aforesaid deliberations the CIT(Appeals) vacated the addition of Rs.9.40 crores made by the A.O u/s.68 of the Act. 10. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 11. 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. 12. We have....
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....ng with the facts involved in the respective cases had drawn adverse inferences by alleging that the inflow of the share application money in the hands of the assessee company was to be viewed in the perspective of money laundering through share capital route in which unaccounted money was being routed back to its books of account without payment of due tax. On the aforesaid basis, it was observed by the A.O that the inflow of the funds in the garb of share application money was in fact a managed affair in connivance with the Kolkata based shareholder companies. In order to buttress his aforesaid generalized adverse inferences the A.O had observed that the unavailability of the statutory records of the assessee company in the course of the search proceedings at its registered office or any other premises in the occupation of its group entities supported the fact that the assessee company had not raised any genuine share application money from the investor company. On a perusal of the aforesaid observation of the A.O, it transpires that he instead of placing on record any clinching material which would have otherwise dislodged and disproved the assessee's claim of having raised genu....
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....d by the department could have been drawn. Also, we concur with the view taken by the CIT(Appeals) that now when the assessee had duly discharged the onus that was cast upon it as regards proving the nature and source of the credit appearing in its books of account, i.e. share application money of Rs. 9.40 crore that was received from the investor company by placing on record supporting documentary evidences, viz. name and address, PAN details, certificate of incorporation, memorandum of association, article of association, audited financial statement, income-tax return, bank statement (out of which share application money was paid), share application form and details of receipt of amount through banking channels, therefore, the A.O could not have drawn adverse inferences as regards the authenticity of the said transaction without dislodging the aforesaid claim of the assessee on the basis of any such material which would have irrefutably proved to the contrary. 15. As regards the observation of the A.O that during the course of search proceeding the statutory records of the assessee company, viz. minutes of meeting register, shareholders register, counter foils of issued share ce....
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....the assessee that Ms. Jaswinder Kaur Mission (supra) had in her statement recorded u/s.132(4) on 21.06.2011 specifically shown the members register, share certificates and counter foils of the assessee company to the search officials fortifies the aforesaid claim of the ld. A.R that the requisite documents/registers were duly maintained by the assessee at its registered office. We, thus, in terms of our aforesaid observations uphold the view taken by the CIT(Appeals) who had rightly vacated the adverse inferences drawn by the A.O as regards the alleged non-maintenance of members register, share certificates and counter foils of share certificates allotted by the assessee company. 17. Accordingly, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(Appeals) who in our considered view had rightly vacated the unsubstantiated adverse inferences that were drawn in the thin air by the A.O as regards the genuineness and authenticity of the assessee's claim of receipt of share application money of Rs.9.40 crore, therefore, uphold his order to the said extent. Thus, the Grounds of appeal No.1 & 2 raised by the revenue are dismissed in terms of our afore....
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.... of yield of sponge iron production for the year under consideration. 20. Be that as it may, we are of the considered view that now when the A.O himself had worked out the sponge iron yield in the case of the assessee at 60.02% i.e. higher than the average yield in the iron ore industry of 60% which was adopted by him as a yardstick, and thus, had not drawn any adverse inferences in so far the year under consideration i.e period relevant to A.Y 2010-11 is concerned, which can safely be gathered from the chart at Page 37 to 39 of the assessment order, therefore, the very basis of the controversy leading to the impugned addition of Rs.1,84,88,252/- in itself falls to ground. We, thus, in terms of our aforesaid observations are of the considered view that now when the very basis of the grievance of the revenue raised vide Ground of appeal No.3 before us is based on misconceived facts, thus, the same would not survive. We may herein observe that not only both the lower authorities had failed to take cognizance of the aforesaid serious infirmity and had allowed it to perpetuate as such, but what is incomprehensible and rather strange is that even in the course of the proceedings before....