TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1008
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess of non-banking financial institution. The assessee filed its original return of income for AY 2008-09 declaring total income of Rs. 26,302/-. The appellant was carrying on the business of buying & selling of shares & advancing loans. The appellant company is holding certificate of registration u/s 45-1A issued by the Reserve Bank of India. The appellant had filed its original return of income for the A.Y. 2008-09 on 25.09.2008, declaring total income of Rs. 26,302/-. An information received from the office of the DDIT(Inv.), Aurangabad on 25.03.2015, that the appellant company M/s. Alcom Investment Pvt. Ltd. had received some share capital and share premium during F.Y. 2007-08, which was held to be unexplained. As per the Balance Sheet and share allotment details of the said company which was earlier named Garima Vanijya Pvt. Ltd., it was seen that the company had allotted 5,10,000 shares of Rs. 10 each at a premium of Rs. 40 each thereby raising total funds of Rs. 2,55,00,000/-. One of the companies namely M/s Tejasvini Vinimay Pvt. Ltd. had also invested in one of the group concerns of Jhaveri Group namely M/s. Mars Fincom Pvt. Ltd. During the search action conducted u/s 132 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tigations were carried out and it was held by the AO that the appellant had failed to discharge its onus to prove the identity and creditworthiness of purchaser / investor companies and also the genuineness of transactions with regard to 'purchase of shares' of Rs. 2,55,00,000/- received by it in the relevant year. Furthermore, it was also held that the evidences / documents and explanations offered by the appellant company w.r.t. to the sale of shares were neither bonafide nor verifiable and therefore, in no way satisfactory. In view of the above facts and circumstances, the AO was of the opinion that the appellant company had failed to offer satisfactory explanation in respect of issue of shares amounting to Rs. 2,55,00,000/-. Therefore, the order u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 was passed on 29.03.2016, assessing total income of the appellant at Rs. 2,55,26,300/- after making an addition of Rs. 2,55,00,000/- on account of unexplained cash credit u/s 68 of the Income Tax Act, 1961. Aggrieved by the order, the appellant filed appeal on 31.03.2016. The Ld. CIT(A) allowed the appeal of the assessee by giving direction to delete the addition of amount of Rs. 2,55,00....
X X X X Extracts X X X X
X X X X Extracts X X X X
....more than five years as the case under consideration relates to the relevant assessment year 2008-09. The AO after reopening of the case has passed an order u/s 143(3) read with Section 147 has held that as per the balance sheet and share allotment details, the said company which was earlier named Garima Vanijya Pvt. Ltd., it was seen that the company had allotted 510000 share of Rs. 10/- each at a premium of Rs. 40/- each. There was raising a total fund of Rs. 2,55,00,000/- and as per the order of AO the company had failed to offer satisfactory explanation in respect of issue of shares amounting to Rs. 2,55,00,000/- and assessed total income of Rs. 2,55,26,300/- after making an addition of Rs. 2,55,00,000/-. We have gone through the order of the Ld. CIT(A) and find that the assessee has challenged the order of A.O. before the Ld. CIT(A) apart from the legal grounds as well as on merit also. The Ld. CIT(A) find that the assessee had issued shares amounting to Rs. 2,55,00,000/- during AY 2008-09 to seven companies and the companies are as follows: i) Tejaswi Vinimay Pvt. Ltd. ii) Butterfly Vyapaar Pvt. Ltd. iii) Creation Vinimay Pvt. Ltd. iv) Pant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Balance Sheet as on 31-03-2008. In the case of Surya KiranTradecom Pvt. Ltd. a) Form No. 23AC, i.e. the details of the company as per the website of the ROC as on 31-03-2008. b) Financial a/cs of the investors including Balance Sheet, P & L a/c and annexures as on 31.03.2008. 8. The important question arises at this stage is that whether the assessee had furnished the required information to explain the source. We find that the Ld. CIT(A) out of seven parties as discussed above, five has submitted his reply and companies are i) Tejaswi Vinimay Pvt. Ltd. ii) Butterfly Vyapaar Pvt. Ltd.iii) Creation Vinimay Pvt. Ltd. iv) Panther Vyapaar Pvt. Ltd. v) Jinvani Commodeal Pvt. Ltd. Later on two companies that are Creation Vinimay Pvt. Ltd. and Bhartiya Commercials Pvt. Ltd. has also sent their details and information. The AO in its remand report has admitted the above facts. The Ld. CIT(A) after going over the entire facts of the case and the reply submitted that the company, has given its finding by mentioning address of the company total share allotment and value of shares which are as follows: Sr. No. Name & Address of the company PAN Total shares al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Year 2013- 14 and further that Section 68 of the Act cannot be applied in the hands of the investee company when the details of the shareholder investors are known." 10. Keeping in view the documentary evidences furnished by the assessee before the Ld. CIT(A), we do not find any infirmity in the impugned order with regard to merit of the case. Accordingly, we dismiss the revenue's appeal. 11. Now coming to the legal question raised by the assessee with regard to the reopening of case, we find that notice u/s 148 for reopening was issued on 26.03.2015 for the relevant assessment year 2008-09 i.e. after more than five years. The reason recorded by the AO as the case of the assessee is transferred from Kolkata to Aurangabad which are as follows: "The DDIT(Inv), Aurangabad had vide letter dt. 25-03-2015 submitted that the above company which has been recently centralized with this office has received some share capital and premium during F.Y. 2007-08 which may be unexplained as one of the group companies of this group has admitted and declared undisclosed income on account of unexplained share premium and hence requested to take timely action as the limitation date for r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 with effect from 1-4-1989 those conditions are given a go-by and only one condition has remained, viz., where the Assessing Officer has reason to believe that income has escaped assessment, the section confers jurisdiction to reopen the assessment. Therefore, post 1-4-1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words 'reason to believe', failing which section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion', which cannot be per se reason to reopen. One must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess, but the reassessment has to be based on fulfillment of certain preconditions and if the concept of 'change of opinion' is removed as contended on behalf of the department, then in the garb of reopening the assessment, review would take place. One must treat the concept of 'chan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IT (Investigation) that amount received by the assessee from company 'S' was nothing but accommodation entry and the assessee was the beneficiary. Held that the reason given by the assessee did not satisfy the requirements of section 147. The reasons and the information referred to were extremely scanty and vague. There was no reference to any document or statement except an annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. Further, it was apparent that the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Commissioner also acted on the same basis by mechanically giving his approval. Therefore, the proceedings under section 148 were to be quashed." 14. In the present case the AO Kolkata had on 26-03-2015 issued a notice u/s 148 after recording reasons. A portion of the reasons recorded by the Kolkata ITO is repr....