TaxTMI 
TaxTMI 
2024 (3) TMI 610
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....he addition made by the Ld. AO as unexplained cash credit u/s. 68 of the Act though the transactions are in the nature of sale of shares, except for variance in amount of addition. 3. First we take up ITA No. 1437/Kol/2023 for AY 2010-11. In this case the brief facts of the case are that assessee filed its original return of income on 13.01.2011 reporting total income at Rs. 48,250/-. Notice u/s. 148 of the Act dated 21.03.2017 was issued and served on the assessee after recording the reasons to believe for the same. Copy of reasons to believe are placed at pages 21 and 22 of the paper book filed by the assessee. From the perusal of the said reasons to believe, it is noted that information was received from the DIT (Inv.), Kolkata that assessee had suspicious bank transactions with Jamakharchi companies. It is noted by the Ld. AO that assessee had received Rs. 35,00,000/- from one fictitious shell company namely M/s. Suniyojit Agency Pvt. Ltd. on different dates. Similarly, assessee had received Rs. 10 lakh transferred to the assessee's account from Hemlata Creation Pvt. Ltd. Another sum of Rs. 25 lakh was transferred to assessee's bank account from Shagun Shree Tradecom Pvt. Ltd.....
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....e had sold shares of Indigo Tie-up Pvt. Ltd. to Hemlata Creation Pvt. Ltd. for which an amount of Rs. 45 lakh was received by it in its bank account. Similarly, assessee sold shares of Indigo Tieup Pvt. Ltd. to Suniyojit Agencies Pvt. Ltd. amounting to Rs. 35 lakhs which was credited in its bank account. According to the assessee, it is a case of sale of investment in shares held by the assessee which were reported by it in its audited financial statement of the preceding years. Thus, the investments were carried in the Balance Sheet from the earlier years which were sold during the year to the aforesaid companies against which the amounts were received and credited into the bank account of the assessee. It is not a case of issue of shares by the assessee to these companies. It is not an amount received towards subscription of share capital and share premium from these companies as stated by the AO while making the addition. 6.1. It was submitted that the reasons to believe recorded no where specify as to on what account assessee had received the money from the companies which have been alleged to be fictitious shell companies. While drawing the reasons to believe, AO has arrived ....
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....com 520 (Kolkata - Trib.), it laws held that: "The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words 'shall' be charged to income-tax as the income of the assessee of that previous year. The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word "may" and not "shall". Thus the un-satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the. Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 103 Taxman 382/237 ITR 570. We note that against the said decision of Hon'ble Gujarat High Court the special leave petition filed by the Revenue has also been dismissed by the Hon'ble Apex Court." ii) In the case of ITO v. Goodwill Cresec Pvt. Ltd. in I.T.A. No. 4151/ Del/2010, order dated 25.01.2012, held this issue in favour o....
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.... 2010 upheld the order dated 30.07.2009 of the ITAT in 1. TA. No. 1788/Del/2007 for the Assessment Year 2000-2001 wherein the order of the Ld. CIT(A) making the similar deletion was upheld by observing in para 6 as under:- "We are of the view that the assessee had produced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act. The assessee had also demonstrated the purchase and sale of shares over a period of time as seen from the balance sheet. In our opinion, the Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim. Consequently the addition made by the Assessing Officer cannot be sustained." iii(b) The Coordinate Delhi Bench of the ITAT in the case of ITO v. Jatin Investment Pvt. Ltd. in ITA No.4325 & 4326/Kol/(2009 order dated 27.05.2015 held as follows :- "11. In his rival submissions, the Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assesse....
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....eet", out of those investments (copy which is placed at page no. 23 and 24 of the assessee's paper book), the assessee sold certain investments and accounted for the profit/loss and offered the same for taxation. In the present case, the amount in question was neither a loan or the deposit, it was also not on account of share application money, the said amount was on account of sale of investment therefore the provisions of Section 68 of the Act were not applicable and the AO was not justified in making the addition. In our opinion, the Ld. CIT(A) rightly deleted the addition made by the AO. 13. On a similar issue the Hon'ble Jurisdictional High Court in the case of CIT vs. Vishal Holding and Capital Pvt. Ltd. vide order dated 9th August, 2010 upheld the order dated 30.7.2009 of the ITAT in ITA no. 1788/De1/2007 for the assessment year 2000-2001 wherein the order of the Ld. CIT(A) making the similar deletion was upheld ... " iv). The Hon'ble Delhi High Court in the case of Principal C.I. T. v. Jatin Investment Pvt. Ltd. 12017] TMI 342 (Delhi) affirmed the decision of the Delhi ITAT (supra) in favour of the assessee and held as follows :- "4. The ITAT agreed with the co....
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.... a shell company having no business and creditworthiness for purchasing the share of the assessee is justified." Similar observation and conclusion was drawn for AY 2012-13. Aggrieved, assessee is in appeal before the Tribunal. 10. Ld. Counsel for the assessee reiterated that the reasons to believe recorded by the Ld. AO for invoking the reopening u/s. 147 are general and vague without pointing out as to the correct nature of transaction. He referred to the reasons to believe recorded for AY 2012-13, placed at page 2 to 5 of the paper book. In the concluding paragraph of the said reasons to believe, the AO has noted that "I have gone through the entire piece of information and from relevant material on record, it is found that Silkina Commodeal Pvt. Ltd. (PAN - AAECS5627C) being one of the real beneficiaries had received accommodation entries in the form of share capital/share premium, bogus unsecured loan, bogus billing etc. by the above mentioned entries, controlled and managed by Shri B. D. Agrawal. Further examination of documents, it is found that Silkina Commodeal Pvt. Ltd. has brought back its unaccounted money through the modus oprandi mentioned in the information amountin....
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....ecision namely M/s. Ganesh Ganga Vs. ITO, ITA No. 1579/Del/2019, AY 2010-11 dated 07.11.2019. The said decision has been passed by the coordinate bench by following decision of Delhi High court in the case of United Electricals Co. Pvt Ltd. Vs Commissioner of Income Tax 258 ITR 317(Del). In the said decision the hon'ble Delhi has held that approval granted by the additional commissioner u/s 151 of the Act by stating "Yes I am satisfied that it is a fit case issue of notice u/s 148 of the Act" is without application of mind by the additional commissioner of income tax . Similarly in the case of Commissioner of Income Tax Jabalpur Vs S Goyanka Lime & Chemical Ltd (2015) 56 taxmann.com 390(M.P.) , the Hon'ble Apex court has dismissed the SLP of the revenue on the same reason because the Joint Commissioner of Income Tax recorded satisfaction in mechanical manner and without application of mind. In view of the facts and circumstances as stated above and the ratio laid down in the various decision as discussed above, we are inclined to quash the reassessment proceedings. Accordingly, ground nos. 1 and 2 of the additional grounds raised by the assessee are allowed. 11. On the merits of t....