TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 329
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....f appeal is 6,86,33,798/-. 3. Under the facts and circumstances of the case, Id. Assessing Authority and ld. First Appellate Authority has grossly erred in making addition of 20,19,23,500/- u/s 68 of the Act which is highly injudicious, unwarranted, against the facts of the case and bad at law as no cash credit either in the year under consideration or in any of the earlier years had ever been received by the assessee & the same were issued against the investment received by the assessee which do not tantamount to cash credit for the purpose of section 68 of the Act. 4. Under the facts and circumstances of the case, reference to Section 197(c) of the Finance Act, 2016 made by the Id. Assessing Authority and Id. First Appellate Authority is grossly misplaced and bad at law as the said section has no application in the case under consideration. 5. Under the facts and circumstances of the case, Id. Assessing Authority and ld. First Appellate Authority has grossly erred in alleging that the assessee has failed to establish the identity & creditworthiness of the shareholders and genuineness of the transaction of allotment of shares. 6. Under the facts and circumstances of the ca....
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.... The said shares were Issued for consideration other than cash and no funds whatsoever in cash or in the Bank A/c of the assessee were received. Consideration received against the issue of shares was primarily investments from the said shareholders. In other words, the said shares were issued in exchange of shares of other companies and no cash consideration was received for the issue of the same. The detail of shareholders to whom the assessee company issued the said shares alongwith the detail of respective investments received from them is being enclosed herewith on page no. 1 of this paper book. ii. For the aforesaid transaction of exchange of shares, agreements were also entered into by the assessee company with the respective share applicants on 28.03.2009. Copy of the said agreements is being enclosed herewith on page no. 2 to 21 of this paper book. iii. The assessee filed its return of income for A.Y. 2014-15 on 20.02.2016 at Nil income as the company did not have any income during the relevant year. Copy of the said Income Tax Return alongwith the Financial Statements of the assessee company for the year under consideration are being enclosed herewith on page no. 259 t....
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....ling of Hon. Supreme Court in the case of CIT vs. Sun Engineering Works Pvt. Ltd., [1992] 64 Taxman 442 (SC) wherein the Hon. Bench construed the provisions of sec. 147 of the Act referring to its heading. The relevant findings of the Hon. Bench are being reproduced hereunder for the sake of ready reference: "13. To answer this question it is necessary to first extract the provisions of sections 147 and 148 (as they existed of the relevant time). Section 147 read thus: "147. Income escaping assessment.- (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax officer has in consequence of Information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provi....
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....ditworthiness of the parties against whom the amount in question has been credited. Moreover, the assessee cannot be granted benefits of its own defaults which it committed." 23. The aforesaid findings of the Id. A.O. are grossly erroneous, based on surmise & conjectures and bad at law as explained hereunder:- i. Firstly, the findings of the Id. A.O. that the assessee has failed to establish that money in the form of share capital and share premium was received in the F.Y. 2008-09 are grossly erroneous as the assessee has repeatedly explained and submitted before the Id. A.O. that the shares were issue against investment received and no money was ever received for the said allotment of shares. ii. Secondly, the Id. A.O. has alleged that the assessee failed to provide the bank statement for the year 2008-09 to 2014-15 to prove that the money was actually received in these years. In this regards, as submitted above it is hereby again submitted that the assessee company issued its shares against investment in shares of other companies received by it from the share applicants. In other words, shares were exchanged for shares and no consideration in money was ever received by the ....
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....ted during the F.Y. 2010-11 by the shareholders for transfer of shares of the assessee company held by them to M/s Lichchavi Construction & Engineering Pvt. Ltd. Copy of the said share transfer forms are being enclosed herewith on page no. 266 to 272 of this paper book. From the perusal of these share transfer forms it is clearly evident that the shares allotted by the assessee company to its shareholders were subsequently in the next year i.e. F.Y. 2010-11 transferred by them to M/s Lichchavi Construction & Engineering Pvt. Ltd. Now once it is established that the shares of the assessee company were transferred in F.Y. 2010-11 then by no stretch of imagination it can be concluded that these shares were issued & allotted by the assessee company in the year under consideration i.e. F.Y. 2013-14. v. Moreover, to substantiate the aforesaid transfer to shares, reference of your goodself is drawn to the annual return in Form 208 filed with ROC by the assessee company for F.Y. 2010- 11 wherein it the said transaction of transfer of shares is duly reflected. vi. Further, in this regards, copy of financial statements of the said company M/s Lichchavi Construction & Engineering Pvt. Ltd....
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....he assessee in order to substantiate the issue of shares during the F.Y. 2008-09 had duly submitted the Audited Financial Statements for the year ended 31.03.2009 & returns filed with ROC for the F.Y. 2008-09. Copy of the same is being enclosed herewith on page no. 259 to 265 & 22 to 57 respectively of this paper book.. 30. Further, it is hereby submitted that once the assessee has claimed that the credits pertains to a particular year and has also substantiated the same with documentary evidences, however, the Id. A.O. alleges these credits to be of other year then the onus is on the A.O. to prove that the credits pertains to the year as claimed by him. The Id. A.O. cannot allege the credits to be of the year other than claimed by the assessee on the basis of his whims & fancies, he has to brought sufficient evidence on record to substantiate his claim. However, in the case under consideration, no evidence whatsoever has been brought on record by the Id. A.O. to substantiate that the aforesaid credits pertains to A.Y. 2014-15. The Id. A.O. had merely alleged that the said credits pertain to A.Y. 2014-15 which is based on surmise & conjectures without any evidence whatsoever. .......
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....he assessee, he has just estimated the expenditure and added the same to the income of the assessee. 35. Further, it is hereby submitted that under the provisions of sec. 69C of the Act, the anus is on the revenue to prove that the assessee has actually incurred any expenditure and it also has to substantiate the same with cogent material. In case, the revenue is not able to discharge the onus casted on it, addition u/s 69C of the Act cannot be made. 36. In this regards, reliance is placed on the following judicial precedents:- i. Ruling of Hon. ITAT Delhi in the case of ACIT vs. Kishan Lal Jewels Pvt. Ltd., ITA No. 229/Del/2011 wherein it was held as under- "6.6 On a careful consideration, I find that the provisions of Section 69C may be invoked only in situations where the assessing officer finds that any expenditure has actually been incurred by some assessee and for which he/she does not have any satisfactory explanation. The Hon'ble Delhi High Court in the cases of CIT VS Lubetech 301 ITR 175(Delhi) and CIT vs. Ved Prakash Choudhary 305 ITR 245 (Delhi) has held that it has first to be established by corroborative evidence that an expenditure has been incurred and o....
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....n the onus gets shifted on the assessee to give explanation proving the nature and source of the expenditure to the satisfaction of the Assessing Officer. Since the Revenue did not discharge its onus we therefore, set aside the order of CIT(A) and delete the addition of Rs. 3 lac made on account of low drawings. Thus, ground No. 1 stands allowed. iii. Ruling of Hon. ITAT Ahmedabad in the case of Kiritsinh Vakhatsinh Gohil vs. ITO, ITA No. 1340/Ahd/2009 wherein it was held as under- "8... In our opinion under section 69C, no addition can be made until and unless the Assessing Officer first discharges his onus and prove that the assessee has incurred the expenditure, once the Assessing Officer discharges the onus, the onus gets shifted on the assessee to offer an explanation about the source of such expenditure as is apparent from the Assessing Officer, the Assessing Officer has not discharged the onus as is expected from him and laid down under section 69C. Under these circumstances we did not have any other alternate except to delete the addition. Thus, ground No. 2 is allowed." Under the aforesaid facts and circumstances of the case and in light of the judicial precedents ci....
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....t has received shares of other company in lieu of allotment of these shares. The AO during the assessment proceedings for the AY 2014-15 i.e. year under consideration noticed that though the assessee has claimed to have received such huge share money during the FY 2008-09 but has filed its first return of income for the FY 2014-15 and after detailed discussion held that the assessee has failed to establish that money in the form of share capital and share premium was received in FY 2008- 09 as claimed and has failed to prove the genuineness of the transactions in terms of section 68 of the Act. As mentioned in the assessment order, the AO noticed that the assessee has shown share capital of Rs. 9,97,000/- and share premium of Rs. 20,09,28,500/- as per balance sheet as on 31/03/2014 and didn't provide any details of share holders in spite of repeated notices. After detailed discussion AO made addition of Rs. 20,19,23,500/- under section 68 of the Act and further holding that the assessee has received accommodation entries of above said amount by paying commission to entry providers at the rate of 2% of accommodation entries, added Rs. 40,38,740/- under section 69C of the Act. 8....