TaxTMI 
TaxTMI 
2019 (2) TMI 2129
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.... for the captioned assessment years. 2. At the outset of hearing, both the parties fairly agreed that the grounds raised and the facts & issues involved in all these appeals are identical to those involved in ITA No. 6319/Del/2018 barring the difference in the amounts of the share capital and/ unsecured loans and therefore, the decision in ITA No. 6319/Del/2018 would equally be applicable in all the above group cases. Accordingly, all these appeals were heard together and are being disposed of by this consolidated order in order to avoid repetition of facts and for the sake of convenience and brevity. We, therefore, take up the appeal no.: ITA 6319/DEL/2018 first in the case of ACCIL Corporation Pvt. Ltd. for A.Y. 2012-13. The grounds raised in this appeal read as under : 1. "On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals)[CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by the learned AO u/s 153A is bad and liable to be quashed a....
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....sactions. (ii) That the addition has been confirmed without pointing out any defect in the evidences filed by the assessee. 10. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the addition made by the AO are on the basis of extraneous considerations grossly indulging into conjectures and surmises. 11. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition made by the AO despite the fact that the above addition was made on the basis of the material collected at the back of the assessee without giving it an opportunity to rebut the same. 12. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the order was passed relying on the inspector's report which was never confronted to the assessee. 13. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition despite the fact that the AO has passed the order relying on the ....
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....as not come from any outside companies. In this regard the Ld. AR took us through the assessment order where the assessing officer has quoted the statements of the various employees recorded during the search, on the basis of which the Assessing Officer has drawn adverse inference against the assessee company. It was further contended that as per these statements, the employees, who happen to be directors of various group companies, have stated that they do not know anything about those companies but the fact remains that these are group/ associate companies and the money in these group/ associate companies is not that of the employees. It is not the case where the assessee company is contending that these companies are not group/associate companies and as such it is not in a position to explain the transactions entered into by these companies. The assessee company all along has contended that these are group/associate companies and the entire shareholding in these group companies belongs to the group/associate and no money has been subscribed by any of the employees or the directors whose statement has been used against the assessee. It was a structure of the group and the entire ....
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....e source of money to demonstrate that it is the money within the group and no unaccounted money or cash has come in the form of share capital. The Ld. AR during the course of the hearing tried to justify complete trail of the money which has come to it as share capital from the group companies and tried to substantiate the same with the bank statements of each of the group companies. It was further contended that there is no adverse statement by anyone or so called entry operators that there is any exchange of cash in lieu of cheque. 4.3. It was next contended that the facts of the present case are entirely different and hence the various case laws referred and relied upon by the AO and the CIT(A) are not applicable as in those cases the share capital had come from outside sources. These persons were either not available and have even confessed of providing accommodation entries in lieu of cash which is not the case here. 4.4. The Ld. AR further submitted that in this case search has taken place on 10.12.2015. On this date, the assessment for the year under consideration stood completed and hence, has not abated. Since, the assessment has not abated no addition can be made in....
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....o not really exist, as well as at the registered addresses of ACCIL group companies. 3) The following characteristics, among others, of companies promoted by the Directors of ACCIL Group were found during the course of search operation. (i). It was found that there are large number of companies, controlled and managed by the same management but have no apparent business and neither do they exist at their given registered addresses. Many of such companies have directors from the family of ACCIL promoters and employees of ACCIL group. (ii). It was also found that such companies were registered at the addresses of the Chartered Accountants of ACCIL group companies, the addresses of the employees of such companies, bogus addresses which do not really exist, as well as at the registered addresses of ACCIL group companies. (iii). Most of these addresses have been found nonexistent. A few addresses which could were located are one or two room rented accommodation and a security guard is deputed there to receive the DAK. No fixed assets, books of accounts, working employees of these shell companies were found. (iv). Share certificates of these c....
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....ompanies. This finding, collectively considered, are in itself sufficient incriminating material found during the search operation. This incriminating material has been confronted with Mr. Vikas Aggarwal during assessment proceedings to which he could not give any satisfactory reply. These points, inter alia, has been discussed in detail in the point number 8 of assessment orders passed by the undersigned. With regard to the point of incriminating evidence, the Ld. CIT(A) has also concurred with the points made by the AO by clearly bringing the following in his orders which is as below: In fact, the statements themselves constitute evidence, This evidence in the form of statements (detailing the wrong doing of the appellant), has come forth out of search action u/s 132 of the Act. The evidence as detailed by the AO is sufficient incriminating material. Evidence can be both documentary as well as oral. Section 3 of the Indian Evidence Act, 187 lays down that evidence means and includes all statements which the court permits or requires to be made before it by witnesses, in relation to maters of the fat under enquiry, and such statements are oral evidence. Documents....
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....-believe paper work to camouflage the bogus nature of the transactions is to be treated as unexplained credit u/s 68. 2. Prem Castings (P.) Ltd. vs. CIT [2007] 88 taxmann.com 189 (Allahabad) (copy Enclosed) Where Hon'ble Allahabad High Court held that additions u/s 68 warrant being sustained where the identities & creditworthiness of investors in the assessee company are not established by the assessee & are also proved incorrect by the Department's Assessee Information System. In such circumstances, assessee cannot resist the additions on grounds that it did not have opportunity to cross-examine relevant witnesses. An assessee company cannot hide behind the shell of a corporate entity to feign ignorance regarding the identity of any person who invests in its share capital. Prem Casting (P.) Ltd. Vs. CIT 2018-TIOL-274-SC-IT (Copy Enclosed) Where Hon'ble Supreme Court held as follows: "We do not find any merit in this petition. The Special Leave Petition is accordingly dismissed." 3. CIT Vs. MAF Academy (P.) Ltd. (361 ITR 258) (Copy Enclosed) Where Hon'ble Delhi High Court held that where assessee, a private limited comp....
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....sessing Officer has observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. 21. In view of the aforesaid discussion, we fell that the matter requires an order of remit to the Tribunal for fresh adjudication keeping in view the aforesaid case law." Navodaya Castle Pvt. Ltd. Vs. CIT (2015-TIOL-314-SC-IT)(Copy Enclosed) SLP of assessee dismissed by Hon'ble Supreme Court. 5. Konark Structural Engineering (P.) Ltd. Vs. DCIT[2018] 96 taxmann.com 255 (SC) (Copy Enclosed) Where assessee-company received certain amount as share capital from various shareholders, in view of fact that summons to shareholders under section 131 could not be served as addresses were not available, and, moreover, those shareholders were first time assessee and were not earning enough income to make deposits in question, addition made by Assessing Officer under section 68 was to be confirmed; SLP dismissed. Konark Structural Engineering (P.) Ltd. Vs. DCIT[2018] 90 taxmann.com 56 (Bombay) (Copy Enclosed) Where Hon'ble Bombay High Court held that where assessee-company received certain....
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.... the Tribunal of the assessment proceedings in any detail in order to demonstrate that the assessee has discharged its onus to prove not only the identity of the share applicants, but also their creditworthiness and the genuineness of the transactions. No attempt was made by the Tribunal to scratch the surface and probe the documentary evidence in some depth, in the light of the conduct of the assessee and other surrounding circumstances in order to see whether the assessee has discharged its onus under Section 68. With respect, it appears to us that there has only been a mechanical reference to the case law on the subject without any serious appraisal of the facts and circumstances of the case. 13. We, therefore, answer the substantial question of law framed by us in the negative, in favour of the revenue and against the assessee. The appeal of the revenue is allowed with no order as to costs." 10. CIT Vs. Nova Promoters & Finlease (P) Ltd. (18 taxmann.com 217, 206 Taxman 207, 342 ITR 169, 252 CTR 187) (Copy Enclosed) Where Hon'ble Delhi High Court held that amount received by assessee from accommodation entry provides in garb of share application money,....
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....d parties/applicants had disclosed very meager income. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. This discussion itself would reveal that even though the share applicants could not be accessed through notices, the assessee was in a position to obtain documents from them. While there can be no doubt that in Lovely Exports (P) Ltd. (supra), the Court indicated the rule of "shifting onus" i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic burden stood discharged by furnishing relevant and material particulars, at the same time, that judgment cannot be said to limit the inference that can be logically and legitimately drawn by the Revenue in the natural course of assessment proceedings. The information that assessee furnishes would have to be credible and at the same time verifiable. In this case, 5 share applicants could not be served as the notices were returned unserved. In the backdrop of this circumstances, the assessee's ability to secure documents such as income tax returns of the share applicants as well as bank account particulars would it....
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.... 13. CIT Vs. NR Portfolio Pvt.Ltd. [2014] 42 taxmann.com 339 (Delhi)/[2014] 222 Taxman 157 (Delhi)(MAG)/[2014] 264 CTR 258 (Delhi) (Copy Enclosed) Where Hon'ble Delhi High Court held that if AO doubts the documents produced by assessee, the onus shifts on assessee to further substantiate the facts or produce the share applicant in proceeding. It was held as follows:- "30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding the attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and m....
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....share capital u/s 68, where the assessee company has failed to show genuineness of its shareholders." 6. We have heard the rival submissions and have gone through the entire material available on record including the orders of the authorities below and case laws cited by both the parties before us. Now, we proceed to decide the appeal ground-wise. 7. Grounds Nos. 1 & 14 are general in nature and need no specific adjudication. Grounds Nos. 2 to 5 & 7 are not pressed and are dismissed as such. 8. Grounds Nos. 8 to 13 are on the issue of addition of Rs. 46,75,95,000/- on account of the share capital. The assessing officer in the assessment order has held that the share capital received by the assessee company is unaccounted income and the assessee has failed to discharge its onus under section 68 of the Act. The CIT(A) has confirmed the finding of the AO. As against this the contention of the assessee is that the share capital received by it is not the unaccounted income but is fully accounted money and routed through the group companies. It is the contention of the assessee company that it has led all the evidences to discharge its onus under section 68 of the Act. Thus, it ....
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....0 17,073,000 5 Inventive Bio Energy Solutions Private Limited (Now Merged with TTJ Impex Private Limited) 80,000 31/12/2011 12,000,000 17/11/2011 6,000,000 Artys Infrastructure Pvt Ltd 17/11/2011 6,500,000 Asian Colour Coated Ispat Limited 16/11/2011 - 18/11/2011 6,000,000 5,500,000 6 Locus Infrastructure Private Limited 294,500 31/12/2011 44,175,000 10/08/2010 39,000,000 Logas Impex Pvt Ltd 06/08/2010 20,000,000 Karan Overseas 05/08/2010 4,000,000 Ajanta Traders 05/08/2010 3,200,000 Shree Krishna Traders 06/08/2010 4,650,000 Shree Krishna Traders 3,350,000 Balaji Investments 4,400,000 Coral Impex Pvt Ltd 09/08/2010 9,900,000 Shree Balaji Enterprises 06/08/2010 7,000,000 Shree Krishna Traders 06/08/2010 2,860,000 Jingle Consultancy Pvt Ltd 8,400,000 TTJ Impex Private Ltd 18/05/2010 5,000,000 Karan Overseas 05/08/2010 3,400,000 ....
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....2011 8,000,000 Vardhman Trading Company 24/09/2011 2,000,000 Olive Sales Pvt Ltd 27/09/2011 5,900,000 27/09/2011 7,000,000 Ambey Traders 23/09/2011 1,200,000 Rahul Garg 24/09/2011 837,500 Beta Metals & alloy Pvt Ltd 27/09/2011 5,100,000 Asian Colour Coated Ispat Limited 26/09/2011 15,075,000 17/11/2011 6,500,000 Olive Sales Pvt Ltd 17/11/2011 6,500,000 17/11/2011 7,000,000 Beta Metals & alloy Pvt Ltd 7,000,000 Asian Colour Coated Ispat Limited 16/11/2011 15,000,000 17/11/2011 8,000,000 Beta Metals & alloy Pvt Ltd 8,000,000 17/11/2011 7,500,000 Olive Sales Pvt Ltd 7,500,000 21/11/2011 8,000,000 BDPL Investment Pvt Ltd 18/11/2011 3,500,000 Olive Sales Pvt Ltd 21/11/2011 4,500,000 31/03/2012 09/03/2012 5,500,000 Vatsal Infraprojects Pvt Ltd 09/03/2012 6,000,000 ACCIL Corporation Limited 09/03/2012 10,000,....
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.... 3,700,000 Bhagirath Trading Company 05/08/2010 3,700,000 Coral Impex Pvt Ltd 20,000,000 Asian Colour Coated Ispat Limited 31/03/2010 10,000,000 Beta Metals & alloy Pvt Ltd 18/05/2010 5,500,000 TTJ Impex Private Ltd 4,500,000 Shree Ambey Portfolios 06/08/2010 7,900,000 HD Realtors Pvt Ltd 07/05/2010 1,648,315 Jingle Consultancy Pvt Ltd 20,000,000 Bhagirath Trading Company 05/08/2010 2,000,000 Shree Ambey Portfolos 06/08/2010 7,000,000 Ajanta Traders 7,000,000 Ajanta Traders 4,000,000 10/08/2010 21,500,00 0 Logas Impex Pvt Ltd 09/08/2010 21,850,000 Shree Krishna Traders 09/08/2010 7,154,000 Om Trading Company 7,196,000 Shree Ambey Portfolios 7,700,000 20/06/2011 5,600,000 Shree Gopal Enterprises 20/06/2011 2,100,000 3,500,000 14 Sanchi Infratech Private Limited (Now Merged with Rhone Associates Private Limited) 90,000 18/02/2012 13,500,000 05/01/....
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.... where one company has advanced money to another company which in turn has advanced money to another company and such another company has advanced money to the company where the money was originated. Thus, it is a circulation of the money within the various entities where complete trail right from origin till the end is available with the assessee. All these transactions are verifiable from the bank statements of the respective companies. Thus, the contention of the Ld. AR that the money received by it is not any unaccounted money seems to be justified. The Ld. DR also could not point out any error or flaw in the submission advanced by the Ld. AR explaining step by step the movement of the money from one entity to another entity. All are transfer entries through bank accounts and there is no cash deposit as stated by the ld. AR on the basis of evidences produced before us. It has been the contention of the assessee company that all these transactions are within the group/associate company. This fact has been taken note of by the Assessing Officer also in para 6.4.2 of the assessment order where he has quoted the reply dated 05.12.2017 as under: "It is worth mention that Mr....
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....h have been relied upon by the Assessing Officer to draw adverse inference against the assessee, we are of the view that it has never been the stand of the assessee that these are not group/associate companies. In fact assessee has all along stated that these are transactions within the group/associate companies. We have also gone through the statement of each of these employees/directors. Ongoing through the same, we find that no one has alleged that the money which is deposited in the bank account of the company is unaccounted money or the source which is dubious. There is no allegation coming out in these statements that any transaction outside the books of accounts have been carried out or any cash transactions have been carried out. In these statements, the main allegation coming out is that these directors were not aware whether they are directors. The issue before the Assessing Officer was the source of the share capital received by the assessee company. For finding out the source, one has to go to the trail of the money received by way of share capital. In case the source is not traceable or the source is such for which there is no satisfactory explanation, the AO will be j....
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.... capital, and has argued for deletion of the addition, however, taking into consideration the entire facts, we are of the view that in the interest of justice it will be appropriate to restore the matter back to the file of Assessing Officer for carrying out proper verification at his end. Accordingly, we remit this issue to the Assessing Officer to verify the trail of the money received by the assessee by way of share capital with the direction to make the assessment order afresh on this issue after making proper verification regarding the trail of the money received by the assessee by way of speaking order in accordance with law. In case, the trail of money, as explained by assessee, is found verifiable from the evidences furnished by the assessee, the contentions of the assessee shall be considered to have met the ingredients of section 68 of the Act. Accordingly, grounds nos. 8 to 13 deserve to be allowed for statistical purposes. 15. As regards ground No. 13, the contention of the Ld. AR is that in the absence of any incriminating material the addition per se are unsustainable. As against this the contention of the Ld. DR is that from the assessment order it is not evident ....