TaxTMI 
TaxTMI 
2024 (4) TMI 97
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....lso assailed the aforesaid order of the ITSC and to the extent that relief was accorded to the assessee, including grant of immunity from prosecution. 2. The present writ petitions constitute the second round of litigation since the application for settlement had initially come to be disposed of by the ITSC in terms of an order dated 31 July 2013. The aforesaid order was assailed before this Court by way of W.P.(C) 929/2015 which came to be allowed by way of an order dated 06 May 2016, whereby the Court quashed and set aside the order passed by the ITSC and required it to examine the issues emanating from the infusion of unexplained share capital and the deductions liable to be accorded in terms of Section 80 IC of the Act. 3. We deem it apposite to extract the order dated 06 May 2016 which is reproduced hereinbelow:- "1. The challenge in this petition is to an order dated 31st July, 2013 passed by the Income Tax Settlement Commission ("ITSC") where the income of the Petitioner for the Block Period 2004-05 to 2010-11 has been computed under Section 245D(4) of the Income Tax Act, 1961 ('Act'). Inter alia, in determining the taxable income for the aforementioned block per....
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....hat event no tax liability would be outstanding. Although the impugned order does not record the above submission, the Court is of the view that the letter dated 18th March, 2013 referred to above was a critical document which ought to have been taken note of by the ITSC while deciding the two issues referred to therein. 9. Consequently, the impugned order dated 31st July, 2013 of the ITSC as regards the above two issues is hereby set aside and the said two issues viz., introduction of unaccounted money as chare capital and claiming of deduction under Section 80IC are remanded to the ITSC for a fresh adjudication in accordance with law. In particular the ITSC shall take into account the letter dated 13th July, 2013 written by the Principal Commissioner Additional Bench ITSC to the Commissioner of Income Tax Central. 10. The matter shall be listed before the ITSC on 12th July, 2016 for further proceedings in light of the above directions. 11. The writ petition is disposed of in the above terms with no order as to costs. 12. Order dasti to the parties." 4. Upon the matter being taken up afresh, the ITSC took note of the judgment rendered in the writ petition including the re....
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..... - - 25,00,000/- 6. M/s Abhipra Capital Ltd. - 55,00,000/- 55,00,000/- 7. M/s Balaji Enterprises (Sh. Rajiv Kumar) - 3,22,00,000/- 3,22,00,000/- 8. M/s Sai Enterprises (Jugal Kishore Gupta) - 3,60,00,000/- 3,60,00,000/- 9. Shri Ram Bindal - 80,00,000/- 80,00,000/- 10. Total 15,37,00,000/- 19,29,56,950/- 34,66,56,950/- 8. It appears that during the course of proceedings, the petitioner-assessee in terms of its letter dated 13 February 2017 had asserted that the amount of INR 34,66,56,950/- was in respect of share capital infusion and as per the details and explanations submitted, the said amount was duly verifiable. It, however, asserted that the inclusion of share capital aggregating to INR 16,32,96,950/- and representing investments made by M/s Himalayan Fincon Pvt. Ltd., M/s Jindal Dal Mill Pvt. Ltd., M/s Adarsh Foods Products Pvt. Ltd., M/s Abhipra Capital Ltd. and Sh. Hari Ram Bindal cannot be verified since the records pertaining to Assessment Years [AY] 2004-05 to 2010-11 were very old and a majority of them had been destroyed in the course of a cloud burst in Himachal Pradesh. Expressing its inability to substantiate its claim regarding genu....
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....en no immediate cash was deposited in the bank account for issuing cheque for share capital. Shri Sanjeev Sabarwal, Sr. Advocate sought to explain the said discrepancies by stating that total cash deposited during the period is much more than the amount of cheques issued for the share capital and he urged the Bench to take a practical view of the situation in the given circumstances of the case where matching each cash entry with cheque entries was not possible. The Pr. CIT(Central)-1, New Delhi who was present during the hearing, did not raise any serious objections to the explanation given by the AR of the applicant and asked the Bench to take decision on its own wisdom. We have considered rival submissions and contentions on this issue. It is an admitted fact that majority of the transactions in regard to share capital raised by the applicant company from the two subscribers have been verified by the Pr. CIT who has not raised any serious objections to the minor aberrations found during the verification of the claim of the applicant on this issue. In view of the aforesaid position, it is held that applicant's claim in regard to share capital amounting to Rs. 6,82,00,000/- ....
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....tment in share capital made by M/s. Amit Goods and Supplier Pvt. Ltd. Dealing with the particulars pertaining to the aforenoted party, the ITSC held as follows: - "We have considered the arguments and submissions made by both the sides. It has not been disputed that enquiry letter u/s 133(6) of the IT Act issued to the share subscriber was not complied with. Details of bank account or copies of bank statements were also not furnished to the AO for necessary verification of the claim. The applicant cannot simply get away by not furnishing the requisite details for verification of its claim to the AO. The arguments of the applicant that the amount of share capital has already been assessed as income of the subscriber i.e. M/s Amit Goods & Suppliers Pvt. ltd. is rather tenuous. We also note that the share capital has been introduced by the said subscriber in A.Y. 2008-09 and A.Y. 2009-10 whereas the assessment of M/s Amit Goods & Suppliers Pvt. ltd. for A.Y. 2008-09 has been completed on returned income of Rs. 30,584/. Even for the sake of arguments, the said contention is accepted then the source of share capital amounting to Rs. 4,82,00,000/- introduced during A.Y. 2008-09 remains....
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.... Advocate submitted that verification of claim regarding substantial expansion was done by the Assessing Officer and in his report dated 10.07.2013 addressed to the Secretary, ITSC, Additional Bench-1, New Delhi, he had observed that the total purchases found to be bogus is Rs. 45,07,88,913/- out of total purchases verified at Rs. 49,69,38,519/- as against which the total cost of plant and machinery shown by the applicant is at Rs. 23,14,33,683/- as on 31.03.2009 and Rs. 58,13,01,563/- as on 31.03.2009. He further stated that as the purchase of material for acquisition of plant and machinery to the extent of Rs. 45,07,88,913/- has remained unverified and therefore, becomes bogus and infructuous. The assessee's claim for deduction u/s 80IC becomes also unvalid due to this reason as provisions of section 80IC stipulates that deduction u/s 80IC can only be claimed if substantial expansion has been made by way of addition of new plant and machinery. Shri Sanjeev Sabarwal, Sr. Advocate, pointed out that unverified purchases to the tune of Rs. 45,07,88,913/- as certified by the Assessing Officer include purchases of Rs. 28,71,90,800/- taken erroneously instead of correct purchase amo....
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....ant from 15000 TPA as on 06.01.2003 to 84000 TPA as on 24.03.2005. As per this certificate the investment in plant and machinery is shown at Rs. 319.94 lakhs as on 06.01.2003 and Rs. 536.70 lakhs as on 24.03.2005 which corroborate the applicant's claim that substantial expansion had taken place in the unit. 17. The Pr. CIT(Central)-1, New Delhi was permitted enquiries u/s 245D(3) of the I.T. Act vide order dated 26.07.2016. The Pr. CIT furnished his report vide letter dated 29.11.2016. We have perused the Pr. CIT's report on this issue. As per this report the Department has furnished a list of 691 bills of plant and machinery amounting to Rs. 36.77 crores, out of which, an amount of Rs. .34 crores relates to such bills where the following narration has been given:- "Reply not received/returned" /"reply received but not confirmed with evidence". Thus, the Pr. CIT has concluded that investment amounting to Rs. 36.34 crores out of total investment of Rs. 36.77 crores has not been verified which amounts to 99% of the total bills relating to the expansion remained unverified and therefore, the applicant is not eligible for claim of deduction u/s 80IC of the I.T. Act. We ....
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....05, it shall be eligible to claim deduction u/s 80IC of the IT Act up to A.Y. 2013-14 only." 16. While holding in favour of the petitioner-assessee insofar as the claim for deductions under Section 80IC of the Act and the investments made towards substantial expansion of an existing unit, it took into consideration the fact that in the reports which were submitted to it, no tangible material or evidence had been gathered and which may have cast a doubt on the claim as raised. It further significantly found that the assessments for AYs' 2006-07 to 2008-09 in the case of the petitioner- assessee had been completed under Section 143(3) of the Act. The ITSC holds that a perusal of those orders would establish that its claim for Section 80IC benefits had been elaborately examined and allowed by the Assessing Officer [AO] in each of those AYs'. It also took into consideration the certificate issued by the Director of Industries. On an overall conspectus of the aforesaid, it came to conclude that the petitioner-assessee would be entitled and eligible to claim deductions under Section 80 IC of the Act albeit up to AY 2013-14. 17. Insofar as the aforesaid aspect is concerned, we find that....
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....ee. 22. That only leaves us to examine the contention of Mr. Rai and Mr. Gupta, learned counsels appearing for the respondents-Department, who vehemently contended that the amount which was surrendered by the petitioner-assessee and details whereof appear in para 11 of the impugned order would be liable to be added in terms of Section 68 of the Act, and in any case, would not constitute part of the gross total income of the assessee which could constitute subject matter of consideration under Section 80IC of the Act. According to learned counsels, since the source of the surrendered income remained unverified, the same would be liable to be treated as income derived otherwise than from the business of an undertaking or enterprise, as covered under Section 80 IC and therefore, the claim for benefits has been rightly negated. 23. It must at the outset be noted that the petitioner-assessee had before the ITSC alluded to certain insurmountable circumstances which had constrained it to surrender that part of the income. The respondents have not relied upon any material which may have tended to indicate that the share capital investments were not made in connection with the business of....