TaxTMI 
TaxTMI 
2024 (12) TMI 860
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....material found in search action u/s 132(1) of I.T. Act 1961 on the premises of Amarpali group in October 2012. 4. The learned CIT(A) erred in upholding the validity of notice u/s 148 of I.T. Act 1961 and dismissing the grounds challenging the validity of notice u/s 148 in the case of assessee. 5. The addition made by A.O. at Rs. 180 lacs u/s 68 of I.T. Act 1961 in respect to share capital contribution is unjustified, unwarranted and bad in law. 6. The learned A.O. erred in making addition at Rs. 180 lacs u/s 68 of I.T. Act 1961 on account of share capital at the hands of assessee. 7. The learned A.O. ought to have accepted the issue of share capital as shown in books of account and accepted in regular assessment framed u/s 143(3) of I.T. Act 1961. No addition ought to have made of same u/s 68 of I.T. Act 1961. 8. The learned CIT(A) erred in upholding the addition u/s 68 of I.T. Act 1961 by A.O. and thereby dismissing the ground of appeal of assessee. 9. The learned CIT(A) erred in not granting personal hearing as prayed in written submission at pra 8 uploaded on 21/10/2023. Order passed by CIT(A) is in violation of principles of....
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....he reason recorded for issue of notice u/s 148 of the Income Tax Act, 1961 for the A.Y. 2012-13 is given below:- "Reasons recorded for issuance of notice u/s 148 The assessee has filed the return of income for A Y 2012-13 on 28.09.2012 declaring total income of Rs. 52,08,020/-. The order u/s 143(3) was passed on 23.03.2015 and the total income was assessed at Rs. 52,08,020/- 2. As per information in hand, a search and seizure action u/s 132 of the Income Tax Act 1961 was conducted in the cases of Amrapali Group in October 2012. The said group had introduced capital of 100 crores. It was revealed that actually there was no business conducted and the said companies had dummy directors. The companies had given accommodation entries regarding share capital, share premium, bogus LTCG etc. which are controlled by Mr. Shirish Chandrakant Shah of Mumbai. A search & seizure action u/s 132 was carried out at residential and business premises of Mr. Shirish Chandrakant Shah on 13.04.2013. His statement u/s 132(4) was recorded. During the search the incriminating documents were found. It was revealed that there was a chain of transfer of funds by way of cash/RTGS/che....
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....as under: Relevant extract of the Statement of the assessee i.e. Shri Shirish C. Shah dated 13.04.2013. "Q. In your reply to Q. No.4 you have stated that you are engaged in the business of providing accommodation entries to various clients/beneficiaries against cash received from them through various modes such as subscription to share capital at high premium, booking bogus expenditures extending funds by way of loans and advances, raising capital through Long Term Capital Gain (LTCG). Please explain in detail all such modes employed by you for providing accommodation entries. Ans. Sir, The modes employed by me for providing accommodation entries against commission are as under: 1. Subscription to share capital at premium:- Sir, in such cases shares of the companies of clients/beneficiaries are subscribed at high premium by the companies floated/managed/controlled by me against the cash received from such clients/beneficiaries. The funds received from such clients/beneficiaries are rotated through various companies controlled/floated/managed by me (termed as "Chakri Ghumana" in our parlances) and ultimately introduced in the client"s/beneficiary compan....
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.... PAN No. of shares Share Capital Share Premium Total amount 1. Prabhav Industries Ltd. Chinoi Bldg. Station Road, Vadodara AAACE42___Q 25000 125000 4875000 50,00,000/- 2. Secundrabad Healthcare Ltd. S-1 Vimal, Road No.5, Jubliee Hall, Hyderabad AACCS2_____ 25000 125000 4875000 50,00,000/- From the case records it was seen that the assessee has furnished the share application forms which confirms that the bogus share allotment accommodation entries was obtained by way of preferential allotment. The shares are not applied for & also not purchased online. The above two companies are camouflage of companies managed & controlled by Mr. Shirish Shah. All the funds were arranged by Mr. Shirish Shah. The companies allowed their bank accounts with user ID and password to Shirish Shah. By using the bank accounts of various companies including even public limited companies the funds were managed and accommodation entries were provided. In view of above credible information revealed in search & seizure action u/s 132 in the case of Mr. Shirish Shah, I have reason to believe that M/s Dayal Cotspins Ltd. has t....
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....at 103 ITR 437(SC). (P- 21 to 31) (30( [Vol. - II] D) Reasons recorded are mere change of opinion. No new tangible material has comes on record. Notice issued u/s 148 is not in accordance with law. Reliance on Kelvinator of India Ltd. reported at 320 ITR 561(SC). (P- 1 to 5) (2) [Vol. - II] E) Reasons recorded indicate that notice u/s 148 has been issued on the basis of mere receipt of information received in respect to search at the premises of Shri Shirish Shah through Intra Departmental Authorities. Reasons recorded does not indicate that A.O. has made any independent enquiry before concluding that assessee is in receipt of accommodation entries by way of share capital contribution. Reasons recorded does not indicate date, year or name of person to whom any cash is given as alleged for obtaining accommodation entry. Reasons recorded does not indicate any evidence on the basis of which it is concluded that corporate entities contributing share capital are of Shri Shirish Shah. It does not refer to any enquiry made by JAO. It is settled proposition of law that notice u/s 148 cannot be issued on the basis of mere receipt of information and in the absence of any ta....
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.... reference:- "Addition of Rs. 180 lacs u/s 68 of I.T. Act 1961. A) Assessee has placed on record confirmation. Financial statements, acknowledgement of Income Tax Return and bank statement of corporate share holders. Assessee has placed reasonable evidence on record to discharge its onus to explain the contribution of share capital. Transaction of receipt of share capital is through proper banking channel. Financial statement of corporate share holders indicates substantial creditworthiness to contribute share capital. B) CIT(A) has reproduced the written submission at pages 22 to 27 partly. The complete submission as made before CIT(A) is at of CIT(A) has recorded no justification/reasons for not accepting the submission of assessee. Rejection of explanation of assessee by CIT(A) is unjustified and not in accordance with law. C) A.O. has made the addition primarily on the basis of statement of Shri Shirish Shah. The aforesaid person was examined by Income Tax Authorities in the case of Chain House International Pvt. Ltd. Attention of CIT(A) was invited to facts of Shri Shirish Shah as noted in judgment of Hon'ble High Court of Madhya Pradesh dat....
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....ol. - II] ii) (2008) 6 DTR 0308 (SC) CIT vs. Lovely Exports (P) Ltd. (P- 178 - 179) [Vol. - II] iii) Hon'ble High Court of Bombay at Goa order in Tax Appeal No.16 of 2012 in the case of Goa Sponge And Power Ltd. vide order dated 13/02/2012. (P- 180 - 181) [Vol. - II] iv) (1999) 237 ITR 0570 (SC) CIT vs. Smt. P.K. Noorjahan (P- 182 - 185) [Vol. - II] v) (2002) 256 ITR 0360 (Guj.) DCIT vs. Rohini Builders (P- 186 - 187) [Vol. - II] vi) (2007) 291 ITR 0278 (SC) CIT vs. P. Mohanakala & Ors. (P- 188 - 197) [Vol. - II] vii) (1986) 159 ITR 0078 CIT vs. Orissa Corporation (P) Ltd. (P- 197 - 203) [Vol. - II] viii) (2013) 358 ITR 0295 (SC) CIT vs. Excel Industries Ltd. (P- 204 - 212) [Vol. II] 9. The learned D.R. relied upon order of the Assessing Officer and the learned CIT(A). He submitted that detailed reasons indicated in the assessment order and in order of the learned CIT(A) clearly explain that there is no merit in the submission of assessee. The addition made by the Assessing Officer and upheld by the learned CIT(A) is correct and proper and thus learned D.R. submitted that no interference is called for in the order of....
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....ment at the hands of assessee. In the reasons recorded, it has been noted that share capital contribution of M/s. Alpha Graphic India Ltd., and ACIL Cotton Industries Ltd., at Rs. 50 lakh and Rs. 30 lakh respectively, needs thorough investigation in re-assessment proceedings. The reasons recorded clearly indicate that belief of escapement of income is primarily based on statement of Shri Shirish Shah, during search conducted at his premises. 13. The assessee in the course of re-assessment proceedings had submitted the complete details of contribution of share capital and same has been submitted before us in the Paper Book. The details submitted by the assessee to explain share capital contribution before the Assessing Officer and/or the learned CIT(A) and before us is as under:- "a) M/s. ACIL Cotton Industries Limited Audited Financial Statement P- 32 - 53 [Vol. - I] Share Application Form P- 54 [Vol. - I] Extract of Bank Account P- 55 [Vol. - I] Acknowledgement of ITR P- 56 [Vol. - I] b) M/s. Alpha Graphics India Ltd. Audited Financial Statement P- 57 - 85 [Vol. - I] Confirmation of company affirming s....
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....g the facts and evidences on record, we are of the considered view that assessee had discharged its onus to explain the share capital contribution of corporate entities. Identity, creditworthiness and genuineness of share capital contribution is established and there remains no justification to make any addition under section 68 of Act at Rs. 180 lakh as made by Assessing Officer. 15. It is noted that addition made on the basis of statement of Shri Shirish Shah, was considered in the case of Chain House International Pvt. Ltd. by the Hon'ble High Court of Madhya Pradesh in its judgment dated 07/08/2018. It has been concluded by the Hon'ble High Court that the addition made on the basis of statement of Shri Shirish Shah, is unjustified and unsustainable. The judgment of the Hon'ble High Court of Madhya Pradesh in ITA no.112/2018 in the Chain House International Pvt. Ltd. vide order dated 07/08/2018, has been upheld by dismissing the SLP by the Hon'ble Supreme Court, vide judgment dated 18/02/2019 vide SLP(C) Diary no(s).1992/2019. The aforesaid judgments are placed in Paper Book at Pages-90 to 166 [Vol. - II]. Attention was invited to the observation in the judgment of Hon'ble Ma....
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....in communication dated 19/12/2017, was not acceded to by Assessing Officer before making the addition (P- 179 of Paper Book) [Vol.-I]. The addition made is not in accordance with law considering the judgment of Hon'ble Supreme Court in Andaman Timber Industries v/s CCE, [2015] 281 CTR 241 (SC) and the Hon'ble Gujarat High Court in Heirs and L.Rs of Late Laxmanbhai S. Patel, [2010] 327 ITR 290 (Guj.). Respectfully following the same, addition made in assessee's case at Rs. 180 lakh is held to be unjustified and unsustainable. 18. It is also seen that the assessment year under consideration is assessment year 2012-13. The assessee has established identity, creditworthiness and genuineness of share capital by adducing legal evidence on record. The law laid down by the Hon'ble Jurisdictional High Court in M/s Gagandeep Infrastructure Pvt. Ltd. ITA no.1613 of 2014, vide order dated 20/03/2017, squarely applies to the facts in the assessee's case. Considering the same addition made in the case of assessee at Rs. 180 lakh is held to be unjustified and unsustainable. Various judicial precedents referred to in the submission of assessee in support of grounds no.5 to 8 reproduced hereinab....