TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 714
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.....01.2012, reporting total income at Rs. 1,33,357/-. Notice u/s. 148 of the Act dated 07.03.2018 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. 50,00,000/- from one fictitious shell company namely M/s. Suniyojit Agency Pvt. Ltd. on different dates by selling the shares of the following companies: a) Vineet Processing Pvt. Ltd. Rs. 30,00,000/- b) Skylark Marketing Pvt. Ltd. Rs. 10,00,000/- c) SMS Tradways Pvt. Ltd. Rs. 10,00,000/- Total Rs. 50,00,000/- 3.1. According to Ld. AO, no explanation was given by directors of such fictitious company regarding cash deposit which does not commensurate with their known source of income or transaction. Accordingly the Ld. AO formed the reason to believe that undisclosed income of assessee was routed through such fictitious jamakharch....
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.... share capital and share premium from this company as stated by the AO while making the addition. 4.2. It was submitted that the reasons to believe recorded no where s as to on what account assessee had received the money from the company which has been alleged to be fictitious shell company. While drawing the reasons to believe, AO has arrived at a conclusion based on explanation not given by the directors of the said alleged company over which assessee had no control. It was claimed that the reasons recorded are vague and not proper. There is no satisfaction about the creditworthiness or otherwise of the information which has not been verified as to its correctness but has been merely accepted as truth in a mechanical manner. According to the assessee reopening was initiated solely on the basis of information received from the DIT (Inv.), Kolkata without independent application of mind by the AO on the information so received. 4.3. On the merits of the case, assessee had submitted that amounts were received through proper banking channel against sale of shares hold as investment which had been duly accounted and reported in its audited financial statements coming as opening bal....
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....it, 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. " iii). The Delhi 'G ' Bench of the Tribunal in ITA No. 2264/Del/2013 in the case of ITO vs M/s. Srishti Fincap Pvt. Ltd. Order dated 07.10.2015 held the issue in favour of the assessee as : "9. From the facts and circumstances of the case, submissions made by the parties and case law cited in this case, we are of the considered view that no ground is made out to interfere into the order passed by Ld. CIT(A) for the following reasons: i) that in the instant case, A.O. has merely acted upon information supplied by DIT (Inv.) and has not preferred to analyze the previous returns filed by the assessee to make out if he has already disclosed the purchase of shares in question. ii) that from the perusal of copies of assessment proceedings initiated u/s 147 read with section 143(3) of the Act, pertaining to Assessment Year 2003-04 lying at pages 45-46 of the ledger b....
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....t, out of those investments some were sold and few new were purchased and if there was any gain on the sale the same was offered for taxation. It was further submitted that in earlier year 13 4325 & 4326/Del/2009 under similar circumstances, the case was reopened u/s 147 of the Act and the addition made by the AO was deleted by the I.T.A.T. It was further submitted that the assessee sold the shares which were earlier purchased in different years and duly shown in the balance sheet of the respective years and that the assessee had shown the sale proceeds in the books of accounts, the investments were reduced after making the sales. It was contended that there was no obligation under the law that the assessee was required to prove the source of payee. It was further contended that the AO had not rejected the books of accounts and the purchases were duly accepted so there was no reason to doubt the sales. It was submitted that the case of the assessee is squarely covered by the decision of this bench of the Tribunal in the case of ITO vs. M/s Vishal Holding and Capital Pvt. Ltd. in ITA no. 1788/Del/2009 order dated 17.07.2009 which has been upheld by the Hon'ble Jurisdictional Hig....
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....enue's submissions that the investment shown in the book of accounts and reflected as assets in the side of the balance sheet, should have been properly treated and that in the absence of such treatment Section 68 applies. The ITAT rejected this contention and held - based upon the principles enunciated in CIT v. Vishal Holding & Capital Pvt. Ltd. (order of this Court dated 9.8.2010) that the invocation of Section'68 in the circumstances is unwarranted. 5. Learned counsel for the Revenue reiterated the grounds cited in some of the contentions made before the ITAT. Learned counsel especially emphasized on the submission that the incorrect reflection of the receipts in the balance sheet belied the true nature of the receipts as a justification for the application of Section 68 . 6. The ITAT in our opinion quite correctly appreciated the law and its application by the first appellate authority, i.e., CIT(A). Having regard to the facts and the nature of the analysis based upon the decisions of this Court, as well as the reliance on various decisions with respect to the true nature of section 68, we are of the opinion that no question of law arises; the appeals are according....
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....reported in its audited balance sheet. The addition made by the Ld. AO and confirmed by the Ld. CIT(A) is on the misconceived premise that the amount received by the assessee is towards issue of its share capital along with share premium and the company from whom the amount has been received is share subscriber. Thus, the addition made is not justified and ought to be deleted. 8. Per contra, Ld. Sr. DR placed reliance on the orders of the authorities below. Ld. DR submitted that assessee did not comply with the notice issued u/s. 142(1) nor any rebuttal was furnished against the contention of the Ld. AO and, therefore, addition has been made in the hands of the assessee. 9. We have heard the rival contentions and perused the material available on record. Admittedly, it is a fact on record that the transaction undertaken by the assessee in the year under appeal before us is in respect of sale of shares held as investment which had been duly reported in the audited financial statements giving their opening balances from the preceding years. The reasons recorded by the assessee for reopening the case do not in any way point out towards this nature of transaction. They only suggest t....