TaxTMI 
TaxTMI 
2023 (10) TMI 1373
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....me Tax Act, 1961 is against the provisions of the law as neither any search was conducted on the company nor any Panchnama was prepared in the name of the company. 3. That on the facts and in the circumstances of the case, the Order of assessment passed under Section 153A of the Act is wholly illegal and without jurisdiction as no search had been conducted under Section 132 of the Act in any of the business premises of the appellant - company. 4. That the learned CIT(A) has wrongly upheld addition of Rs. 10,00,000/-received from Sh. Behari Lal Desh Raj without any justification. 5. That the learned CIT(A) has wrongly upheld addition of Rs. 40,00,000/-received from Om Prakash & Sons without any justification. 6. That the learned CIT(A) has wrongly upheld addition of Rs. 17,00,000/-received from Sh. Baldev Singh without any justification. 7. That the learned CIT(A) has wrongly upheld addition of Rs. 10,00,000/-received from M/s Dharma Wires Private Limited without any justification. 8. That the learned CIT (A) has wrongly upheld addition of Rs. 77,00,000/-u/s 68 of the Act on surmises and conjectures. 9. That the learned ....
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....s without jurisdiction. 6.3 Additional Ground No.3 before the CIT(A) was that the additions made in the assessment order were not based on any corroborative and relevant incriminating material stated to have been unearthed during the course of search by the AO, though no search had taken place and, therefore, the order of assessment was wholly illegal and without jurisdiction, in view of the judgement in case of "Commissioner of Income Tax (Central)-III Vs Kabul Chawla", [2016] 380 ITR 573 (Del)/[2015] 281 CTR 45 (Del). 6.4 Additional Ground No.6 was to the effect that the AO had framed the assessment u/s 153A of the Act in undue haste, in a mechanical manner and without application of mind, as evidenced by the documentary evidence on record exchanged between the AO and the ADIT (Investigation), Mohali. 7. Apropos Ground No.2 and Additional Ground Nos. 1,2 and 6, raised before him, the ld. CIT(A) observed that the assessee had contended in these grounds that no search was conducted on it and no Panchnama was prepared in its name; and that the assessee had submitted that the order passed u/s 153A was illegal and without jurisdiction, since no search had been conducted u/s 1....
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....been noted that in terms of the provisions of Section 153A(1)(b), the AO was required to assess/re-assess the total income in the year under consideration; that it has been held by the Hon'ble Kerala High Court in the case of "CIT Vs K.P. Ummerthat" that when a notice u/s 153A is issued, it enables the Department to carry out assessment/reassessment with respect to six immediate prior years and this does not require any incriminating material referred during search relating to those prior years in which there is no time left on the date of search for an assessment u/s 143(3); that the same view has been upheld by the Hon'ble Allahabad High Court in the case of "Rajkumar Arora", 367 ITR 517 (All), the Hon'ble Kerala High Court in the case of "C.N. Gopakumar Vs CIT", (2016) 75 taxmann.com 215 (Ker) and the Hon'ble Allahabad High Court in the case of "CIT Vs Kesarwani Zerda Bhandar", ITA No. 270/2014; and that keeping in view the provisions of the Act and the ratio of the decisions mentioned, it had been observed that the AO was having jurisdiction to assess the income of the assessee on the basis of the material available at the time of assessment and he was not to re....
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.... u/s 153A of the Act, as the warrant of authorization u/s 132(1) was executed in the name of the company on 16.02.2018, at SCO No. 80-81, 4th Floor, Sector 17-C, Chandigarh. 11. It has been contended on behalf of the assessee company that the AO has observed that during the search & seizure operation conducted on the Punjab Sand Mining Group of Cases on 16.02.2018, it had been found that M/s TJR Properties Pvt. Ltd. and M/s Evershine Resorts Pvt. Ltd., on whom, search had been conducted at SCO Nos. 80-81, 4th Floor, Sector 17-C, Chandigarh, on 16.02.2018, were shell companies and existed only on paper and had no profit earning apparatus of their own as such, because these companies were not carrying on any kind of business activity, whatsoever. 11.1 It may be noted at this juncture that vide Ground No.4 raised by the assessee before the ld. CIT(A), the assessee contended that the AO had wrongly declared the assessee company as a shell company, without application of his own mind. In the impugned order, the ld. CIT(A) has disposed of the said Ground No.4 taken before him alongwith Ground Nos. 7 & 8, which are against the addition of Rs.4,82,00,000/- and, again, another additio....
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....ore, that, the addition of Rs.4,82,00,000/- had been made by the AO on account of unexplained credits in the books of account u/s 68 of the Act. 13. The ld. CIT(A) observed that the assessee had submitted during the proceedings before him that credits amounting to Rs.4,82,00,000/- were received in its bank account maintained with the Bank of Maharashtra during the year under consideration; that it had been contended that all the credits were received from genuine persons and the assessee had furnished necessary documentary evidence in respect of each credit entry as confirmation/affidavit, bank account statement, ledger account and Income Tax Return of such persons; that it had been submitted that all these documents had also been furnished before the AO during the assessment proceedings and it had also been acknowledged by the AO in the assessment order; that it had been contended that assessment in the case of Shri Trilokinath Singla, from whom, credit had been received in the bank account, was also completed by the same AO and no addition on account of this transaction had been made; that it had also been submitted that the AO was satisfied with the bank accounts and a Deviat....
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....ted in his statement that he was not maintaining any company or business which requires upkeep and maintenance of books of account; that thus, Shri Sant Ram Sharma was not aware of any such company in the name of M/s Evershine Rersorts Pvt. Ltd., as mentioned by the AO in para 8.1 of the assessment order; that on going through the said statement of Shri Sant Ram Sharma, as reproduced by the AO in the assessment order, it had been observed that the Authorized Officer had put question No.11 to Shri Sant Ram Sharma in respect of maintenance of books of account in his own individual capacity, as evident from the word "apni", which means "own". 15. The ld. CIT(A) observed that there is no definition of "shell company" given under the provisions of Income Tax Act or the Companies Act; that every case needs to be examined on merits as per the peculiar facts and circumstances, to draw such an inference and consequences out of the same, as per the provisions of the Income Tax Act; that in order to decide the merits of the addition made by the AO on account of unexplained bank credits u/s 68 of the Act, it is required to examine the source and nature of the credits received by the assesse....
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....observed that in view of the analysis made by him and looking into the factual matrix of the case, it had been observed that the assessee had explained the credits of Rs.4.05 Cr received in the bank account during the year under consideration, by furnishing necessary documentary evidences in support of the identity and credit worthiness of the persons and the genuineness of the transaction; that thus, the assessee had discharged its primary onus as required u/s 68 of the Act by furnishing names and addresses of the depositors, copies of their bank account statements reflecting transactions taking place through banking channels, their confirmations alongwith acknowledgement of their ITRs containing PANs and their assessment particulars; that all these documents had also been furnished before the AO during assessment proceedings; that although the AO had admitted having received the said documents during the assessment proceedings, he did not take them into consideration while making the addition; that the AO had recorded in his order that the assessee could not explain the purpose and utilization of such credits; that the AO had failed to take cognizance of the fact and addition u/s....
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.... 8 taken before him (wrongly mentioned as Ground Nos. 5 & 6 at page 123, para 9.6 of the impugned order and additional Ground No.4, whereas the original Ground No.4, though deliberated upon, as discussed above, was stated to be "not separately adjudicated since quantum addition has been adjudicated." 17.3 On behalf of the assessee, it has been contended that apropos issue of shell company, the Assessing Officer observed that during the search and seizure operation under section 132(1) of the Income Tax Act, conducted on the Punjab Sand Mining Group of cases on 16.02.2018, it had been found that M/s TJR Properties Private Limited and M/s Evershine Resorts Private Limited, on whom, search had been conducted at SCO Nos. 80-81, Fourth Floor, Sector 17C, Chandigarh, on 16.02.2018, were shell companies and existed only on paper and had no profit earning apparatus of their own as such, because these companies were not carrying on any kind of business activities whatsoever; that the AO, in para 4 of his order dated 29.12.2019, contends that during the search and seizure operation u/s 132(1), it was found that the appellant company is a shell company and has no profit earning apparatus a....
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.... that the Assessing Officer was satisfied with the replies submitted by the company in response to various questionnaires issued by the AO during the assessment proceedings and he did not ask any query about the status of the company as shell or genuine company during the whole assessment proceeding; that the AO was fully satisfied with the status of the company as a genuine company upto 27.12.2019 ( the date of the ADIT's Reply to the AO's Deviation Note) and also the creditworthiness and genuinity of all the credit entries in the bank statements after verification of books of account, statements of its directors and documents or evidences submitted by the appellant and, accordingly, he sent a Deviation Note (APB-48-350) to the Deputy Director of Investigation (ADIT), Mohali on 26.12.2019 vide letter No. 1733, dated 24.12.2019 calling for no addition at all with the observation "amounts have been credited in the bank accounts of the companies from known sources, which has been duly accounted for by the assessee companies in their respective books of account and shown in their audit report as well as ITR filed in due course on regular basis." The Deviation Note as scanned and repro....
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....also admitted (Deviation Note-para 4/last) that after going through the replies of the assessee company, he was satisfied that the amounts have been credited in the bank account of the assessee company from known sources, which have been duly accounted for by the assessee company in their books of account and shown in their audit report as well as ITR filed in due course on regular basis; that further, no question/explanation regarding the status/genuinity of the company was ever asked during the assessment proceedings and simply by distorting the statements of the Directors, i.e., Sh. Jagdish Gupta and Sh. Sant Ram Sharma and following the dictat of the third party in the Deviation Note, the company was declared as a Shell Company. 17.6 Reliance has been placed on the judgment of the Hon'ble Delhi High Court in the case of 'PCIT vs Agson Global Pvt. Ltd.', dated 20.01.2022, wherein it was held that- "4.2 What is of some significance is that a deviation report dated 20-12-2018 was prepared by the AO, which was, markedly different from the assessment orders passed by him. This aspect of the matter has been adverted to at great length by the Tribunal in the impugned o....
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....that were bogus transactions, is something which obtained strength from the fact that stock worth Rs. 450 crores, was found short, although the same stood recorded in the books of accounts. In sum, the conclusion reached was that the books of accounts were not genuine and were liable to be rejected under section 145(3) of the Act and thereafter a gross profit rate had to be estimated on a reasonable basis keeping in mind the prevailing market trend. 4.6 As regards cash deposits made by the assessee during the demonetization period; against a proposal to add Rs. 180.53 crores, as suggested by the Investigation Wing, for the reasons given in the deviation report, the amount was pared down to Rs. 99.04 crores. Thus, the suggested addition on this score to the total income of the assessee concerning AY 2017-2018 was restricted to Rs. 99.04 crores. 11.5 That being the position, the Tribunal concluded that the assessee had been able to prove the identity of the investors, their creditworthiness and genuineness, which are the ingredients of section 68 of the Act. The relevant observations made in paragraph 86 by the Tribunal read as follows : "86. Considering th....
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....ere concerned i.e., AYs 2015- 2016, 20162017 and 2017-2018, it was, as per the Tribunal, apparent that the assessee had purchased goods, which were in value less than the sum for which they were sold. Therefore, as held by the A.O. in the deviation report, if the purported bogus purchases were to be disallowed then necessarily the sales shown in the assessee's regular books of accounts would also have to be excluded which would result in the assessee's income falling below the returned/declared income. In this regard, the Tribunal recorded that for the AYs 2012-2013 to 2017-2018, the total sales recorded by the assessee was Rs. 36,20,60,89,783/-, as against purchases made from the same very parties amounting to Rs. 36,02,14,17,848/-. Resultantly, for the said period, the assessee had shown a profit of Rs. 18,46,71,935/-. 15.8 According to us, the observations made by the Tribunal are pure findings of fact, which cannot be interdicted by us in appeal. The inconsistency in the approach adopted by the A.O., while preparing the deviation report and framing the assessment order with regard to purported bogus purchases is an aspect, which cannot be ignored and has been c....
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....Rs. 1,00,00,000/- was sold through registered sale deeds and advance tax of Rs. 17,00,000/- was paid; that capital gain tax was paid by the company during AYs 2018-19 and 2019-20 on the sale of the balance land, as per the terms of agreement to sell, which was executed on 20/03/2012; that the assessee company reduced the advance of Rs. 40 lakhs received from Sh. Mohit Bhardwaj in A.Y 2012-13 and A.Y 2013-14 from the cost of land in A.Y 2018-19 and A.Y 2019-20 to calculate the Capital Gains Tax. 17.11 It has been submitted that further, there is no definition of 'Shell Company', either under the Income Tax Act, or under the Companies Act; that a detailed note on 'Shell Company' has been submitted with the AO and Id CIT(A) (Page 199-204 of Paperbook). 17.12 The AR contends that since its incorporation, the assessee company is regularly preparing its Profit and Loss Account as well as its Balance Sheet, and it has also been getting its accounts audited regularly; and that this company is a legal entity and it is operating like any other genuine company. 17.13 It has further been stated in the Note filed, that even the Registrar of Companies and the MCA have id....
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....M/s Evershine Resorts Private Limited was not a shell company and the Assessing Officer had been satisfied that all transactions were through banking channels only and had agreed that these transactions were absolutely genuine transactions; that also, the AO had accepted that these transactions stood duly accounted for in the books of account of the company; that the Assessing Officer had himself proposed no addition of these credits in the case of the company, in the Deviation Note sent by him to the Deputy Director of Income Tax (Investigation), Mohali, on 16.12.2019; that this fact stands established beyond any shadow of doubt, by the fact that the said Deviation Note was prepared by the Assessing Officer on 24.12.2019 and was sent to the Deputy Director of Income Tax (Investigation), Mohali, on 26.12.2019, at 6.00 PM, vide letter No. 1733, in the case of M/s Evershine Resorts Private Limited; that in the Deviation Note, the Assessing Officer had categorically admitted that there was no document or reasoning supplied to him by the Investigation Wing of the Department, due to which, the credit entries in the bank accounts of the assessee company could be treated as unexplained; t....
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....132 (1) was conducted at the business premises of M/s Kansal Singla and Associates, Chandigarh; and that during the course of search in the business premises of M/s Kansal Singla & Associates, regular books of account, along with bank statements of the company, i.e., M/s Evershine Resorts Private Limited, were found from the premises of the said M/s Kansal Singla & Associates mentioned on page 357 of the appraisal report (page 198 of the paper book). 17.19 It has been stated that as submitted, during the course of search in the business premises of M/s Kansal Singla & Associates, regular books of account along with bank statements of the appellant company were found and copies of all these books of account were taken on CD by the department as per Panchnama of M/s Kansal Singla & Associates; that the books of account were also examined by the AO before sending Deviation Note dated 24.12.2019 to the Investigation Wing, as per the contents of his letter dated 24.12.2019 (page 348-350 of the paper book); and that the unauthorized dictate of the ADIT Investigation is at Pages 351-353 of the paper book. 17.20 It has been contended that the books of account were also submitted befo....
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....cies, it is seen that in the Search Warrant, which has been reproduced hereinabove, the name of the assessee company has been clearly mentioned. This being so, the ld. CIT(A) is correct in observing, at page 127 of the impugned order, that the Warrant of Authorization u/s 132(1) of the Act was issued in the name of the assessee on 16.02.2018. It was in view of this, that the ld. CIT(A) held the AO to be justified in initiating assessment proceedings u/s 153A of the Act, since the assessee was covered under the provisions of Section 132(1). 25. The ld. Counsel for the assessee has not been able to controvert the above factual position, which is patent on record. Therefore, finding no merit therein, Ground Nos. 2 and 3 raised by the assessee before us are rejected. 26. Coming to Ground No.4, while examining the identity and credit worthiness of the persons from whom the amounts were received by the assessee and also the genuineness of the transactions, the ld. CIT(A) observed that as per the credit entries appearing in the bank account of the assessee, an amount of Rs.10 lacs had been received by the assessee from Bihari Lal Deshraj. It was noted that the assessee had furnished....
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....ari Lal Deshraj, the lender. As per the copy of account of the party, the amount is shown to have been received by the assessee on 13.11.2016. It was repaid on 24.03.2017. The bank account is at APB 64-70. The Balance Sheet and ITR is at APB 55-63. Besides, in the Deviation Note, on 24.12.2019, the AO has clearly mentioned that all the documents in support of the deposit had been received and they had been found to be from known sources and duly recorded in the books of the respective parties. This specific observation of the AO has nowhere been met by the ld. CIT(A). We find that despite the Deviation Note, it was only on the basis of the reiteration of the Appraisal Report by the DDIT on 27.12.2019, that the AO made the addition which has been confirmed by the ld. CIT(A). 30. In "S.R. Cold Storage" (supra), the Hon'ble Allahabad High Court has held that the quasi-judicial function provided under the Income Tax Act cannot be given a complete go-bye, rendering the participation of the assessee in proceedings u/s 148 or 148A or 147 of the Income Tax Act to be a mere empty formality, creating liability on assessees only on the basis of the data fed in the database/portal of th....
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....ention at pages 58, 90, 99 and 119 of the CIT(A)'s order. The ld. counsel has submitted that the ld. CIT(A) confirmed the addition without providing the assessee any opportunity to submit the ITR of the lender and that therefore, the assessee now seeks to file, as additional evidence, copy of ITR-V of Shri Rahul Kakkar, Proprietor of M/s Om Prakash & Sons, for assessment year 2017-18 (APB-73), copy of computation of Shri Rahul Kakkar (Proprietor of M/s Om Prakash & Sons), for assessment year 2017-18 (APB 74) and copy of audited Balance Sheet of M/s Om Prakash & Sons as on 31.03.2017 (APB 75-77). It has been submitted that confirmation of copy of account of the assessee company in the books of M/s Om Prakash & Sons for assessment year 2017-18 (APB 71), copy of account of M/s Om Prakash & Sons in the books of the assessee company, for assessment year 2017-18 (APB 72), and copy of Account Statement of M/s Om Prakash & Sons, for assessment year 2017-18 (Paper Book 78-79) had also been filed before the CIT(A). 32.2 It has been contended that the assessee company filed written submissions alongwith all the annexures before the ld. CIT(A) on 21.03.2020; that it took the ld. CIT(A) thre....
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....ter was received from the DDIT (Investigation) (ADIT), Mohali, that the additions were made by the AO. So far as regards the ld. CIT(A), he confirmed the addition of Rs. 40 lacs by merely stating that the assessee had failed to furnish the copy of ITR of the lender. At the same time, the ld. CIT(A) did not deem it appropriate to make any observation about the aforesaid documents placed on record before him by the assessee. 34.1 Under the circumstances, we allow the copy of ITR-V of Shri Rohit Kakkar, Proprietor of M/s Om Prakash & Sons, for assessment year 2017-18 (copy at APB 73), copy of computation of the said Shri Rahul Kakkar, for assessment year 2017-18 (copy at APB 74) and copy of audited Balance Sheet of M/s Om Prakash & Sons, as on 31.03.2017 (copy at APB 75-77), as additional evidence. Infact, all this evidence undisputedly is already available on the record of the Department. Examination of such evidence is necessary for the just and proper decision of the issue at hand. Further, the Department has not opposed such admission of additional evidence. 35. From all the documents as above, the contention raised on behalf of the assessee is found to be correct. The amoun....
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....0,99 and 119 of the CIT(A)'s order), dated 21.03.2020, that documents were submitted before the CIT(A) as well. It has been contended that it took a period of three years for the ld. CIT(A) to notice that one page of the bank account statement of Shri Baldev Singh was missing; that the assessee had filed copies of affidavit, ITR-V, confirmation and copy of account alongwith the bank account statement of Shri Baldev Singh, in order to prove his credit worthiness and genuinity; that however, one page from the bank statement of Shri Baldev Singh got misplaced from the reply submitted before the ld. CIT(A); that however, the ld. CIT(A), rather than asking the assessee company to provide the said page of the bank statement again, or to issue a Show Cause in this regard, wrongly upheld the addition of Rs.17 lacs, ignoring all the other documentary evidences submitted by the assessee. Attention has been drawn to all the said documents filed before the authorities below, copies whereof have been filed in the assessment proceedings, requesting the same to be admitted as additional evidence, since the ld. CIT(A), as per the assessee, did not provide opportunity to submit the complete bank ac....
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.... both the taxing authorities alongwith all the other documents, such as ITR, copy of account, bank statement and confirmation; that while confirming the addition, the ld. CIT(A) merely made a vague observation that the assessee had not been able to establish the genuineness and credit worthiness; that as to how this was so, no reason, much less any cogent reason, has been given by the ld. CIT(A) in the impugned order; that the CIT(A) did not even ask the assessee to submit any other specific document to prove the credit worthiness and went on to merely confirm the addition without any basis. It has been contended that all the abovesaid documents have been filed at pages 88 to 112 and 377 of the APB. These documents are; Confirmation on copy of account of M/s Evershine Resorts Private Limited in the books of M/s Dharma Wires Private Limited for AY 2017-18 (paperbook page 88); Copy of account of M/s Dharma Wires Private Limited in the books of M/s Evershine Resorts Private Limited for AY 2017-18 (paperbook page 89); Copy of ITR-V of M/s Dharma Wires Private Limited for AY 2017-18 (paperbook page 90); Copy of bank account statement of M/s Dharma Wires Private Limited for AY 201718 (pa....
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....nces as per the balance sheet of the lender company, we find the loan to be genuine, as stand disclosed in the audited balance sheet of the lender company. Further, it has remained undisputed that the funds were advanced from the routine operational bank account of the lender company, providing a clear trail/movement and thereby lending legitimacy to the transaction. The audited balance sheet of M/s Dharma Wires Pvt. Ltd., as on 31.03.2017, has not been disputed to be forming a part of the records of the Department. 37.5 It is also seen that no doubt about either the credit worthiness of the lender, or the genuineness of the transaction, is evincible, either from the assessment order, or from the order passed by the ld. CIT(A) and not only this, no doubt with regard thereto stands raised, in as much as no enquiry/investigation was initiated by either of the authorities below. Moreover, it also stands irrefuted that the advance was returned by the assessee company to the lender in the next year, through banking channels. 37.6 From the above, the irascible conclusion is that the addition was but as a result of non-application of mind by the AO, rather on the mere dictat of a th....
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.... fag end of the assessment proceedings; that though she was not authorized to do so, the DDIT (Investigation), Mohali, without jurisdiction and without application of mind, rejected the said Deviation Note in less than 12 hours; that the Deviation Note was rejected by observing that the assessee company is a shell company and issuing a dictat to the AO, based on the Appraisal Report, vide letter No. 1763, dated 27.12.2019; that the ADIT (Investigation), Mohali, rejected the AO's proposal/Deviation Note for not proposing the additions, inspite of the ample, reliable and cogent documentary evidence produced by the assessee company on the record before the AO, and directed the AO to make additions by assigning flimsy reasons, as if it was her, i.e., the ADIT, and not the AO, who was the assessing authority, giving reference to CBDT Instruction No.FTS/194840/12 dated 20.11.2012, exceeding her powers in rejecting the Deviation Note. It has been contended that despite the Deviation Note issued by him, on the dictat of the ADIT (Investigation), Mohali, the AO, on part satisfaction, declared the assessee company as a shell company and made addition of all the credit entries in the bank acc....
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.... that during the search, copies of all the books of account so found were taken by the Department on CD, as per Panchnama (APB 344-347) of M/s Kansal Singla and Associates, Chandigarh; that the books of account were also examined by the AO before he sent his Deviation Note dated 24.12.2019 to the Investigation Wing, as per the contents of his letter (APB 348-350) dated 24.12.2019; and that the books of account were also submitted before the ACIT by the assessee during the remand proceedings, as available at APB 369. 38.6 It has been contended that by producing before the AO, all the said documentary evidences, in support of the credit worthiness of the lenders and the genuineness of the transactions, thereby, the assessee's onus stood amply discharged and shifted on to the AO, which onus of the AO was never discharged by the AO and the additions of all the credit entries in the bank account of the assessee company were made merely on bland, bald and specious pleas, without even mentioning the documentary evidences so filed by the assessee, what to talk of discussing the merits of such voluminous documentary evidence. It has been contended that thus, it is amply clear that no....
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....een incorporated with him by Shri Triloki Nath Singla, Chartered Accountant; that he had again submitted that he was not aware of any RTGS entries reflected in this bank statement; that similarly, in the case of M/s Evershine Resorts Pvt. Ltd. also, Shri Jagdish Rai Gupta had been confronted with the bank account statement of M/s Evershine Resorts Pvt. Ltd., that here also, Shri Jagdish Rai Gupta had not been able to furnish any explanation regarding the debit and credit entries reflected in the bank statement and he had simply denied any knowledge of the banking transactions of this company; and that in this case also, Shri Jagdish Rai Gupta had submitted that M/s Evershine Resorts Pvt. Ltd. had also been created by Shri Triloki Nath Singla and that he himself had never issued or received any cheque on behalf of the this company. 39.1 The ld. DR has contended that likewise, the AO also recorded that Shri Sant Ram Sharma, one of the Directors in M/s Evershine Resorts Pvt. Ltd., was also covered in this search action and his statement on oath was also taken during the search; that therein, he was specifically asked to furnish details of the companies/businesses maintained by him ....
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....th regard to the statement recorded on oath during the search, of Shri Sant Ram Sharma, Director, observed that the relevant Question No.11 put to Shri Sant Ram Sharma in respect of maintenance of books of account, was with regard to maintenance of such books of account in his own individual capacity, and not that of the company, as evident from the use of the word "apni". 39.5 The ld. CIT(A) observed that there is no definition of shell company given either under the provisions of the Income Tax Act, 1961, or those of the Companies Act, 1956 or those of the Companies Act, 2013, and that to arrive at the conclusion of a company being a shell company, the facts of each case are required to be examined independently, on merits, as per the provisions of the Income Tax Act. It was observed that in order to decide the merit of the addition made by the AO on account of unexplained bank credits u/s 68 of the Act, it was required to examine the source and nature of the credits received by the assessee, in accordance with the provisions of Section 68 of the Act. It was observed that thus, it was required to examine the identity and credit worthiness of the lenders and the genuineness of ....
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....ived in the bank account, or if the explanation offered is not found satisfactory by the AO. It was observed that in the case at hand, the assessee has duly furnished its explanation in respect of the bank credits received during the year under consideration alongwith necessary documentary evidences, by explaining the source and nature of the same. It was observed that if the AO was not satisfied with the explanation of the assessee in respect of the source and nature of the credits received, he should have recorded such dissatisfaction in the assessment order by conducting further examination of the documents, or by conducting further enquiries and, thus, he should have shifted the onus back on to the assessee; that however, no adverse finding had been recorded in the assessment order in respect of the documentary evidences furnished by the assessee in support of the bank credits of Rs.4,05,00,000/-. It was observed that the submissions and documents furnished by the assessee during the appellate proceedings had also been forwarded to the AO for remand report; that in the Remand Report also, the AO had not even discussed the documentary evidences furnished by the assessee in suppo....
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.... (APB 20) dated 07.10.2019, at point No.12, the AO had mentioned that the books of account and other documents were seized during the search. The assessee company submitted the books of account before the AO vide letter dated 21.01.2022, as is available at APB 113. The same were also seized in the hard disk, as mentioned in the Panchnama. Therefore, it cannot be said that books of account and other documents were not produced. The issue of the company not being a shell company has been deliberated upon, in extenso, in the preceding paragraphs. 40.3 However, it has not been disputed that the bills and vouchers of the expenses claimed had not been produced. Therefore, the addition made is hereby sustained. Ground No.9 is rejected. 41. Apropos Ground No.10, the ld. CIT(A) enhanced the income of the assessee company by an amount of Rs.40 lacs. While doing so, ld. CIT(A) observed that an Agreement to Sell was entered into on 20.03.2012, with Shri Mohit Bhardwaj, for the sale of land measuring 10 bighas and 3 biswas, situated at Pinjore, Panchkula, for a consideration of Rs. 3.80 Cr. The ld. CIT(A) found that the Sale Agreement with Shri Mohit Bhardwaj could not be executed within ....
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.... has been contended that the said advance of Rs.40 lacs assessed to be paid in assessment year 2012-13, when the stipulated period expired on 19.03.2013. It has been stated that the land was finally transferred during the Financial Year 2018-19. It has been contended that during assessment year 2017-18, i.e. the year under consideration, neither the time period under the original Agreement expired, nor was the final Sale Deed executed, and as such, there was no justification to tax the amount on the basis of a wrong entry posted in assessment year 2017-18. It has been contended that entries in books of account cannot determine the taxation, as per the settled law, as income tax is to be charged as per the applicable provisions of law and not on the basis of entries in the books of account. Reliance in this regard has been placed on "Kedar Nath Jute Manufacturing Co. Ltd.", 82 ITR 363 (S.C). It has been contended that the land was finally transferred in Financial Years 2017-18 and 2018-19, to Shri Manoj Kumar and capital gain on transfer of this land was declared in assessment years 2018-19 and 2019-20. It has been contended that the land was sold for Rs.2,43,75,000/- during assessm....
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....sue, we find that as patent on record, as per the Agreement to Sell dated 20.03.2012, the last date of registration has been fixed as 19.03.2013. As per the recital in the Agreement to Sell, failure to execute the Sale Deed, was to result in forfeiture of the advance of Rs.40 lacs. Remarkably, the ld. CIT(A) has not made mention in the impugned order about the date of execution having been extended beyond the date originally fixed, i.e., 19.03.2013. The assessee has maintained that the advance of Rs.40 lacs was included in the sale consideration, as receipt, in assessment year 2018-19. This has nowhere been disputed on behalf of the Department. Further, it also remains unchallenged that in the year under consideration, i.e., assessment year 2017-18, no sale of the land in question took place. As such, the Agreement to Sell dated 20.03.2012 ceased to exist on 19.03.2013, the date fixed for execution. As per the express provisions made in the Agreement to Sell, the deemed date of forfeiture is 19.03.2013 and not beyond the same. As noted, there has been given no extension of the Agreement to Sell. The date of 19.03.2013 does not fall in the year under consideration, i.e., assessment ....
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....explained cash credit u/s 68 of the Act as the assessee did not establish its genuineness during the course of assessment proceedings? ii) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) is right in partly allowing the appeal of the assessee by holding that identity and creditworthiness of the persons from whom such credits were received, were proved, and genuineness of the transaction was also established even though the purpose of such credit was not explained? iii) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in allowing the appeal of the assessee on the issue of credit entries even when all three limbs of section 68 was not proved / established as the assessee itself is a shell company? 47. The deletion of the addition to the extent of Rs.4,05,00,000/- has been discussed by us while dealing with the assessee's appeal in ITA 33/CHD/2023. The ld. DR has contended that while wrongly deleting the addition to this extent, the ld. CIT(A) has erred in not appreciating that this amount was to be considered as unexplained cash credit, as the assessee did not establish its genuin....
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....on shell companies, claiming three lists, i.e., Confirmed List (16537), Derived List (16739) and Suspect List (80670), ordered by SFIO. The AO claimed that the names of such companies were removed from the Register by the Registrar of Companies. It has been contended on behalf of the assessee, and not rebutted by the Department before us, that the name of the assessee did not figure in any of these lists, as the assessee is an active company and none of the Directors of this company have been barred. Also, the AO had not issued any Show Cause Notice to the assessee as to why the assessee company should not be treated as a shell company. 49. In view of the above, finding no merit whatsoever in the grounds raised by the Department, these grounds are rejected. 50. Accordingly, the Department's appeal is dismissed. 51. As such, the assessee's appeal in ITA 33/CHD/2023 is partly allowed, whereas, the Department's appeal in ITA 146/CHD/2023 is dismissed. ITA No.739/Chd/2022 52. ITA No. 739/CHD/2022 is assessee's appeal against the order dated 30.11.2022 passed by the CIT(A)-3, Gurgaon pertaining to 2013-14, taking the following Grounds of appeal:- 1. That ....
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....ssing Officer observed that the balance sheet of the Assessee tallied at Rs. 1,04,00,000/- as on 31.3.2013, wherein issued capital had been shown at Rs. 1,00,000/-. The Assessing Officer observed that Assessee company had not shown any Revenue receipt or expenses during the year, and that however, the Assessee company had shown losses of Rs. 12,98,969/- during the year, in its ITR. The Assessing Officer observed that since the Assessee company had not taken out any business activity during the year under consideration and had failed to produce the bills and vouchers of the expenses claimed by it, the genuineness of the expenses claimed did not stand proved. The Assessing Officer observed that further, the Assessee company had failed to produce its books of account for verification and examination. The A.O. observed that furthermore, the Assessee company had been found to be a shell company managed and controlled by Shri T.N. Singha, having no genuine regular business. The Assessing Officer, on considering these facts, disallowed the losses of Rs. 12,98,669/- claimed by the Assessee in its Profit & Loss account and ITR. 60. The A.O. observed that further, the bank account stateme....
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....siness activity whatsoever. The Assessing Officer observed that further, the books of account of the Assessee company had not been produced for verification. On these facts, the Assessing Officer held the amount of Rs. 48 lacs credited in the bank account of the Assessee company during the year under consideration, to be the unexplained cash credit of the Assessee company within the meaning of section 68 of the Act and added the same to the income of the Assessee company. 61. Before the ld. CIT(A), the Assessee raised Ground No. 5 against the disallowance of loss of Rs. 12,98,969/- and Ground Nos. 6 and 7 challenging the addition of Rs. 48 lacs made u/s 69 of the Act. Further, the Assessee also raised before the ld. CIT(A), an Additional Ground No.4, which was to the effect "...... that the additions made in the hands of the appellant - company on the basis of its bank entries, regarding which entries sufficient and credible information including the source by way of evidence had been placed on the assessment records for discharging its burden, are not sustainable in law as no inquiry has been undertaken by the Assessing Officer and / or any material brought on record establishi....
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.... the Companies Act, 2013. The ld. CIT(A) observed that every case needs to be examined on merits as per the peculiar facts and circumstances to draw such an inference and consequences out of the same, as per the provisions of the Income Tax Act. The ld. CIT(A) examined the source and nature of the credits received by the Assessee in terms of the conditions laid down in the provisions of section 68 of the Act. The ld. CIT(A) observed that the documentary evidence furnished by the Assessee during the assessment proceedings, had been examined independently by him in the light of the findings of the Assessing Officer, as recorded in the assessment order, as well as the remand report. The ld. CIT(A) observed that it was noted that the amount of Rs. 20,00,000/- had been received by the Assessee from Shri Mohit Bhardwaj on account of advance for land vide Nos. 3232 dated 24.12.2012, in its bank account on 26.12.2012 and that the same was also corroborated from the copy of the cheque furnished and the bank account statement. The ld. CIT(A) observed that further, the Assessee had shown the earnest money received in the balance sheet as on 31.3.2013, as received from Shri Mohit Bharadwaj und....
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....the purpose of computation of Long Term Capital Gain. The ld. CIT(A) observed that the Assessee had purchased 10 bighas and 3 biswas of land during the F.Y. 2008-09, for Rs. 1,11,73,376/-; and that on that basis, the cost of land sold worked out to Rs. 13,34,134/-, on a proportionate basis. The ld. CIT(A) observed that accordingly, Long Term Capital Gain on this transaction should have been worked out by taking the cost of land at Rs. 13,34,134/-, instead of Rs. 28,00,000/-. The ld. CIT(A) observed that on this basis, the Long Term Capital Gain from the sale of the land was being computed at Rs. 2,11,350/-; and that, therefore, the taxable income from deposits of Rs. 28,00,000/- in the bank account of the Assessee worked out at Rs. 2,11,250/-. 64. In the above manner, the addition of Rs. 48,00,000/- made by the Assessing Officer was restricted by the ld. CIT(A) to Rs. 2,11,250/-. The ld. CIT(A) further observed that the Long Term Capital Gain of Rs. 12,98,969/- was not being allowed to be carried forward. 65. The ld. Counsel for the Assessee has contended that the Assessing Officer has wrongly stated that the sale of land has not been shown by the Assessee in its Income Tax r....
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....969/- and made further addition of Long Term Capital Gain of Rs. 2,11,250/-. The ld. Counsel for the Assessee has submitted that in violation of the provisions of section 251(1), the ld. CIT(A) did not provide any reasonable opportunity to the Assessee to show cause against the enhancement and it has been contended that though the ld. CIT(A) has accepted the sale of land as sale of long term assets eligible for Long Term Capital Gain or loss, he exceeded his power by reducing the cost of the asset sold, for calculation of the capital gain / loss from the sale of part of land during the year, without providing any reasonable opportunity to the Assessee before enhancement of liability / assessment and wrongly reduced the Long Term Capital Loss, claimed in the return at Rs. 12,98,969/-, to Rs. 2,11,250/-. 67. On the other hand, the ld. DR has placed strong reliance on the impugned order. It has been contended that since the Assessee had purchased 10 bighas and 3 biswas of land during the F.Y. 2008-09 for Rs. 1,11,73,376/-, and it had taken the cost of land at Rs. 28,00,000/- for the purpose of computing Long Term Capital Gain, on a proportionate basis, the cost of the land sold, i.....
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....round No. 5. 70. Accordingly, the appeal of the Assessee in ITA No. 739/Chd/2022, for assessment year 2013-14 is partly allowed. 71. In the result, the appeal of the Assessee in ITA Nos. 33/Chd/2023 and 739/Chd/2022 are partly allowed, whereas the appeal of the Department in ITA No.146/Chd/2023 is dismissed. Order pronounced in the Open Court on 31.10.2023. ============= Document 1 8 GOVERNMENT OF INDIA. INCOME TAX DEPARTMENT Office of the Asstt. Commissioner of Income Tax, Central Circle-2, Room No. G-02, C.R Building, Sector 17-E, Chandigarh E-Mail- chandigarh deft conincometax.gov.in No. ACIT/CC-2/CHD/2019-20/1733-1735 The Dy. Director of Income Tax (Inv.), Mohali Sir/Madam, 2. Phone: 0172-2701548 Dated: 24.12.2019 Sub: Clarification on the issue mentioned in the appraisal report of Punjab Sand Mining Auction group of cases ses (DOS-16.02.2018) - M/s TJR Properties Pvt. Ltd. and Mys Evershine Resorts Pvt. Ltd. Regarding Please refer to the above cited subject. J In this connection, it is submitted that a search and seizure operation u/s 1321) of the Act was carried out by your office on 16.0....
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....ence. After going through the replies of the assessee companies, it is observed that the amounts have been credited in the bank accounts of these companies from known sources, which has duly been accounted for by the assessee companies in their respective books of accounts and shown in their audit report as well as ITR filed in due course on regular basis 5 as Further, detailed arotes dated 23.12.2019 have been submitted by these companies. These notes are enclosed herewith Annexure T3, and E3 for your kind perusal and reference. 6. You are therefore requested to kindly go through the replies as well as detailed notes submitted by these companies vis-Ã -vis Observation of the Investigation Wing in its appraisal report regarding these companies as mentioned here in above. It is further, requested that if you have any contrary facts and version to the above discussion, so that credit entries may be treated as unexplained, the same may please be brought to the notice of this office as early as possible, as the matter is getting time barred on. 31.12.2019. Encl.: As above. Yours faithfully, (Pankaj Jain) ....
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....PIT The Deputy/Asstt. Director of Income Tax The Deputy/Asstt. Commissioner of Income Tax The Income-Tax Officer Amit kermar JACET, Marich. "Quistia 270 Sil gang ITO Parveen kermal DIDIT, Lalit Bish DOIT hai for Some Achiam's box"; Whereas Information has been laid before me and on the consideration: thereot, i have reason to believe that - A summous under sub-section (1) of section 37 of the Indian Income-Tax Act, 1922 or under sub-section (1) of Section 131 of the Income Tax Act, 1961, or a notice under sub-section (4) of section 22 of the Indian fucome-Tax Act, 1922, or under sub-section (1) of section 142 of the Income-Tax Act, 1961, was issued by the Addl./Joint Director/Commissioner, Deputy/Asstt. Director/Commissioner/Income-Tax Officer..............do (Name of the person) on (date) to produce, or cause to be produced, books of accounts or other documents specified in the relevant summons or notice and he has ommitted or failed to produce. or cause to be produced, such books of accounts or other documents as required by such summons or motico A summons under sub-section (1) of section 37 of the Ind....
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....r/Commissioner(Income Tax Officer)- Commissioner, al To enter and search the said building/place/vessel/vehicle/aircraft; Deputy/Asstt. b) To search any person who has got out of, or is about to get into, or is in building/place/vessel/vehicle/aircraft if you have reason to suspect that such person has secreted about his person any such books of accounts, other documents, money, bullion, jewellery or other valuable article or thing: To place identification marks on such books of accounts and documents as may be found in the course of search and as you may consider relevant to or useful for the proceedings aforesaid and to make a list thereof together with particulars of the identification marks; To examine such books of accounts and documents and make, or cause to be made, copies or extracts from such books of accounts and documents; e) To seize any such books of accounts, documents, money, bullion or jewellery or other valiable articles or thing found a result of such search and take possession thereof, To make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing: g) To convey such books ....