TaxTMI 
TaxTMI 
2023 (1) TMI 1468
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....s viz M/s Fort Projects Pvt. Ltd. (Rs. 2,44,20,000/-), M/s Nortex Realty Pvt. Ltd. (Rs. 4,33,00,000/-), M/s Poddar Udyog Ltd. (Rs. 2,19,00,000/-) and M/s Hope Enterprises Pvt. Ltd.( 20,00,000/- in respect of share application money received during the year.) 2. "That on the fact and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 9,16,20,000/-made by the Assessing Officer where no personal attendance was made by any director of the share allottee companies during the course of assessment proceedings/remand proceeding and as such identity & creditworthiness of the share applicants and genuineness of transactions could not be verified." 3. "That on the facts and the circumstances of the case, the Ld. CIT(A) has erred in overlooking the principles which has been laid down by the Hon'ble Supreme Court in the case of Pr.CIT(Central)-1, Delhi Vs. NRA Iron & Steel Pvt. Ltd. (412 ITR 161), which suggests that the assessee is under a legal obligation to prove the receipt of share capital premium to the satisfaction of the A.O., failure of which, would justify addition of the said amount to the income of the assessee." 4. "Th....
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....ment was completed u/s 144 of the Act determining income of Rs. 15,01,33,387/-. In the assessment, the Assessing Officer added a sum of Rs. 15,13,78,500/- on account of share capital issued by the assessee company. The addition was made as no compliance was made during the course of assessment proceedings. 4. Being aggrieved by the said order of the Assessing Officer, the assessee preferred appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee furnished the necessary details for proving the identity, creditworthiness of the share subscribers and genuineness of the transactions. The ld. CIT(A) forwarded the said details to the ld. Assessing Officer for his remand report. The Assessing Officer examined the details and documents furnished by the assessee and sent the remand report , the relevant part of this is reproduced as under: "Result emanated from Remand Proceeding: At the outset to discuss this issue, the undersigned is inclined to draw kind attention of the appellate authority towards other long-term liabilities as per the audited books of accounts. From Para No.5 and 5.1 of the audited books of accounts, it is observed that a sum of Rs. 5,97,58,500/- a....
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....ge of financial transaction of such entity but here all the corporate entities except Fort Projects Pvt. Ltd have merely deemed it fit to make a paper submission and not present themselves by way of the director of the company for the recording of the statement. Furthermore, from the submission as made during remand proceeding source to source of the investment could not be verified. In this regard, reliance is placed upon the latest order dtd. 05.03.2019 of the Hon'ble Apex Court in the case of Pr. CIT (Central)-1 vs. NRA Iron and Steel Pvt. Ltd. [SLP(Civil) No. 29855 of 2018] wherein it has been held that the assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors and creditworthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the A.O, so as to discharge the primary onus. Here in this instant case, had the companies, being the subsidiary/group entities, with whom the assessee-company has claimed to have had regular transactions, had any real existence, the assessee would have produced them in person which could have proved the authenticity of th....
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....(HUF) 1200000 12000 120000 6 Chandroday Mercantile Pvt. Ltd. 4400000 440000 440000 7 Hope Enterprises Pvt. Ltd. 300000 100000 200000 300000 Total 151378500 8315850 6822000 15137850 Shares @ Share value Authorised share 230000000 10/- 2300000000 Share issued 15137850 10/- 151378500 Share subscribed 15137850 10/- 151378500 From the above, it is clear that these amounts were credited to the books of accounts of the assessee in different years and if any addition has to be made, it has to be made in respective financial year. In my considered view, the above assertions of the AO show that the AO made the addition under a belief that the sum of Rs. 15.13 Crores was received by the appellant in the year under consideration which in the present facts of the case is incorrect. This was evident from the annual financial statement of the assessee. In view of above facts let us examine whether any addition under section 68 for unexplained credits could be made in assessment year 2012-13 especially when the credit entries were made in e....
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....received in the year under consideration. The amount received in earlier financial year amounting Rs 5.97 crores is evident from the audited balance sheet. This balance sheet was available before the assessing officer from the beginning of the assessment. Considering the same the addition made by the assessing officer amounting Rs. 5.97 crores is hereby deleted. Now Coming back to the remaining amount i.e. Rs. 9,16,20,000/-. It is noted that this amount was received from the following: i) Forte Projects Pvt. Ltd. Rs. 2,44,20,000 /- ii) Nortex Reality Ltd. Rs. 4,33,00,000/- iii) Poddar Udyog Ltd. Rs. 2,19,00,000/- iv) Hope Enterprises Pvt. Ltd. Rs. 2,00,00,000 Total Rs. 9,16,20,000/- From the above it can also be seen that all these persons are group entities and money has been received by the appellant on earlier occasion also and their creditworthiness and identity has been accepted by the A.O under the earlier years and no question have been raised against the share application money given by them. During the course of appellate proceedings, the AO was given an opportunity to examine the documentary evidences submitted by the appell....
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.... to show that the shareholders are of substantial means having immoveable properties of millions of rupees and are having substantial profits/turnover. It was also explained that the money has come from their own resources. Not only that all the shareholders were regular and very old assesses of the department and regular assessments were completed in their cases. In fact, some of the assessment orders viz. Vivek Kumar Kathotia was assessed on an income of Rs. 6 Crores in assessment year 2009-10, Poddar Udyog Ltd on an income of Rs. 73,19,289/- in assessment year 2009-10, Nortex Reality Ltd on an income over Rs. 1 Crore in assessment year 2011-12 were submitted. Sri Vivek Kumar Kathotia is the director of Fort Projects Ltd. a renowned builder of Kolkata who also built OASIS building having number of complexes. The balance sheet of all the shareholders were submitted. The Issue was remanded to the AO for his Comments on the submissions. The AO in the remand report examined the submissions. He has nowhere denied or controverted the submissions made by the assessee. The AO has accepted the facts that it is observed that all the corporate and HUF entities barring Fort Projects....
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....lier years. The AO has stated that if these entities were real then assessee would have produced them before AO has got no basis as assessment u/s. 143(3) have been framed in their cases and therefore, their identity and creditworthiness cannot be denied. AO can also not say that assessment u/s. 143(3) have been framed on fictitious entities in earlier years. ii) As far as genuineness of the transaction is concerned none of the transaction is made other than through banking channels and therefore, even genuineness of the transaction is not in question. iii) Regarding the argument that source of source cannot be verified it is noted that Hon'ble Bombay High Court in the case of CIT vs. Gangadeep Infrastructure Pvt. Ltd. 394 ITR 680 has categorically held that for A.Y. 2012-13 source of source needs not to be approved. Moreover, this exercise was never taken up by the AO as it was not required under the act either as far as A.Y. 2012-13 is concerned. Furthermore, the above judgment of Hon'ble Bombay High Court has been followed in various subsequent decisions by Hon'ble jurisdictional ITAT. Finally, it is not clear that when identity, creditworthine....
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....t appeal is directed at the instance of the Revenue against the order of the ld. Commissioner of Income Tax (Appeals), Kolkata 4, [hereinafter the ld. CIT (A)"], dt. 24/09/2020, passed u/s 250 of the Income Tax Act, 1961 (in short the Act") for the Assessment Year 2012-13. The ld. CIT D/R pointed out that the Tribunal vide order dt. 21/02/2022 has directed the Assessing Officer for production of assessment record. The office of the Departmental Representative has communicated this order to the Assessing Officer but it could not complied with. He seeks more time. The order of the Tribunal dt. 21/02/2022 reads as under: "The ld. CIT(DR) has casted some aspiration on the correctness of the remand report vis-a-vis the statement purportedly recorded of the director of assessee company by the Assessing Officer (DCIT). Therefore, we direct the Department to produce the assessment records to produce before this Tribunal as well as the Assessing Officer to make a report regarding the veracity of the remand report which is reproduced from page 18 to 20 of the impugned CIT (Appeals) order. The case is adjourned to 28/03/2022." A perusal of this order would indicate ....
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.... The ld. CIT(A) considering the entire details on record observed that all the share subscribers were group entities and that the money was also received by the appellant from them even on earlier occasions also and further that the creditworthiness and identity has been accepted by the Assessing Officer in the earlier years. The ld. CIT(A) has also taken note of the remand report, wherein, the Assessing Officer himself has observed that all the corporate and HUF entities barring Fort Projects Pvt. Ltd were group/subsidiary companies of the assessee company. Further, that the Assessing Officer had not made any adverse comment on the identity of the shareholders, their creditworthiness and genuineness of the transactions. The only contention raised by the Assessing Officer was that the directors did not appear for personal examination. Though the ld. CIT(A) after examining all the documents and relying upon the judicial decisions observed that merely because the directors did not appear before the Assessing Officer, that itself, was not sufficient enough to hold that the entire transaction was bogus. The ld. CIT(A) considered the relevant documents on record and also considering t....