TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1617
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....he A.O. wherein the addition made in this assessment by the A.O. is beyond the scope of second proviso to section 153A(1) and therefore bad in law. 3. Without prejudice to above: On the fact and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O., wherein the A.O. has erred in using the reports of investigation conducted behind the back of the assessee by not providing the same during the course of assessment proceeding which is against the principle of natural justice. Any order passed in violation of principle of natural justice is void ab-initio. 4. On the fact and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O., wherein the A.O. has erred in making the addition on account of share capital received by using the statement of third person who are not at all related to the assessee company or shareholder of the asses se company. Thus the addition made by the A.O. and sustained the same by the CIT(A), on the basis of statement of non related parties is unjustified, unwarranted and uncalled for. 5. On the fact and in the circumstances of the case, the CIT(A) has ....
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.... 4. On the fact and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O., wherein the A.O. has erred in making the addition on account of share capital received by using the statement of third person who are not at all related to the assessee company or shareholder of the asses se company. Thus the addition made by the A.O. and sustained the same by the CIT(A), on the basis of statement of non related parties is unjustified, unwarranted and uncalled for. 5. On the fact and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O., wherein the A.O. has erred in not providing the opportunity of cross examination of the persons whose statement was relied upon. By not providing the opportunity of cross examination, the A.O. has violated the principle of natural justice and any order passed in violation of principle of natural justice is void ab-initio. 6. On the facts and in the circumstances of the case, the CIT(A) has erred in sustaining the order of the A.O. wherein the Ld. Assessing Officer has erred in making addition of Rs. 6,40,50,000/- on account of share application money u/s 68. The a....
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.... Ld AO during the post search assessment proceedings submitted on 13.11.2018, the same is extracted as under :- TO, The Assistant Commissioner of Income Tax, 12.11.2018 Central Circle- 11, Raipur (C.G.) Dear Madam, Reg : Name: Agrawal lnfrabuild Pvt. Ltd. Address: 1st Floor, V.R. Plaza, Link Road, Bilaspur PAN: AAFCA6636C Ref: Notice u/s 142(1) r.w.s. 153A/143(2) dated 23.01.2017 for A. Y. 2011- 12 to 2017-18. Sub: Written Submission. In continuation to our earlier written submissions and in response to the queries raised in Part B query letter dated 11.10.2018, the assessee submits as under for your kind consideration :- 1. The assessee company has disclosed income of Rs. 17.26 Crores for the A. Y. 2011-12 to 2016-17 in a statement dated 12.02.2017 rendered u/s 132(4) of Income Tax Act 1961, during the course of search. The assessee has voluntarily estimated his net total income from business at the rate of 10% of turnover for A. Y. 2011-12 to 2016-17. For A. Y. 2017-18, since the financial year was not ended, the assessee has agreed to pay the tax at the rate of 10% on turnover. Detail of additional income of....
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....es, the assessee company has decided to Voluntarily offer the lump sum profit on contract receipts at the rate of 10% in all the years and accordingly the assessee has paid the taxes on the income voluntarily offered during the course of search. Further, it is again to bring in notice of your nonor that a search & seizure operation was conducted on the assessee in F.Y. 2009-10 and the profit at the rate of 8% on the same line of business in assesse's own case from A.Y. 2004-05 to 2010-11 was estimated by the Hon'ble Settlement Commtsston, Kolkata to which the assesseeas well as revenue department has also accepted whereas in years under consideration the assessee has offered the profit rate of 10% as against 8% duly accepted by department in earlier years. 4. That in the query letter your honor has mentioned that the assessee company has received share capital & premium of Rs. 1,55,22,000/- in A. Y. 2013-14 & Rs.6,40,50,000/- in A.Y.2014-15. In this regard it is to submit before your honor that the said fact is an incorrect fact. The assessee company has not received share capital from Artline Fiscal Services in A. Y. 2013-14 & 2014-15. 4....
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....share capital through shell company namely Artline Fiscal Services (P) Ltd is solely based on the statement recorded on oath during survey u/s 133A of Mr. Binod Kumar Agrawal on 2.02.2015 and subsequently on 8.02.2017. It is important to notice here that the statement recorded on 2.02.2015 was during the survey u/s 133A conducted on Gitabali Merchants (P) Ltd and Glorious Holdings (P) Ltd. Neither the assessee not Artline Fiscal Services (P) ltd is connected with those companies. NOW, it is important to mention here that the statements recorded during the course of survey proceedings cannot be Used as evidence since section 133A does not empower any IT authority to examine any person on oath. In this connection we also rely in the case CIT Vs. S. Khader Khan Son reported in 352 ITR 480 where the Hon'ble Supreme Court has held that: "Section 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition". 4.4 Without prejudice to above, it is further to submit before your honor that Mr. Binod Kumar Agrawal is h....
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.... Rs. 14.67 Crore in A. Y. 2007-08 & of Rs. 7 Crore in A. Y. 2009-10. In the assessment proceedings of Artline Fiscal Services (P) Ltd the share capital received in the respective years has been added back to the total income of Artline Fiscal Services (P) Ltd by treating it as the income of Artline Capital Services (P) Ltd. copy of assessment order for both the years is enclosed herewith. A-2. Once the source has been taxed in the hands of the investors and the same capital has been utilized in making the investment in the assessee company, addition cannot be made in the hands of the assessee otherwise it will tantamount to double taxation which is against the principal of natural justice. 4.8 Further, even otherwise also, the statements of the so called person namely Mr. Binod Kumar Agrawal recorded in Kolkata cannot be used against the assessee since it has been recorded behind the back of the assessee. It is therefore requested to your honor to provide the copy of full statement of Mr. Binod Kumar Agrawal, on which your honor is relying and it is also requested to your honor to provide us the opportunity to cross examine Mr. Binod Kumar Agrawal. ....
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....o Rs. 7,95,72,000/- was issued to AFSPL during the AY 2015-16. It is pertinent that, the assessee company has received unsecured loan for Rs. 1,30,50,000/- Rs. 4,25,00,000/- and Rs. 6,40,50,000/- from AFSPL in AY 2012-13, 2013-14 and 2014-15 respectively, in total the unsecured received loan was for Rs. 11,96,00,000/-. The share capital issued in AY 2014-15 for Rs. 7,95,72,000/- was by utilising the said unsecured loans received from AFSPL in earlier 3 AY's, remaining unsecured loan was repaid by the assessee company to AFSPL. From the records it is also evident that interest on loan was paid and TDS was duly deducted by the assessee company. Interest income was duly declared by the AFSPL in its ITR for the relevant years and the benefit of the TDS have been claimed. 3. The addition was made on the basis of statement of Mr. Binod Kumar Agarwal, recorded on oath during survey u/s 133A on 02.02.2015 and 08.02.2017. It is to be noted that the survey u/s 133A was conducted on Gitabali Marchents (P) Ltd. and Glorious Holdings (P) Ltd. were not connected with either assessee company or Artline Fiscal Services (P) Ltd., moreover, proceedings under survey u/s 133A cannot be us....
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....the assessee to provide the opportunity to cross examine Mr. Vinod Kumar Agrawal, the same was not provided with. Thus, the addition imposed was against the principle of natural justice. 13. It is also submitted that the assessment years 2011-2012 to 2015-2016 are unabated assessments and any addition made for those years could be made only on the basis of any incriminating material unearthed during the search and seizure proceedings u/s.132 of the Act. Since no incriminating material were impounded relating to the transaction with Artline Fiscal Services (P) Ltd, therefore, no addition can be made on this account. 14. With the aforesaid arguments, ld. AR of the assessee prayed that the addition made by the ld. AR and sustained by the ld. CIT(A) are unjustified, unwarranted, uncalled for, the same deserves to be deleted and the assessments for both the years under consideration be set aside. 15. On the other hand, ld. Sr. DR submitted that the ld. AO has rightly made the addition based on the material available which was found during the search and seizure proceedings u/s.132 of the Act. Ld. Sr. DR drew our attention to page 17 of the assessment order wherein question No.9....
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....the judgment of Hon'ble Kolkata High Court in the case of Rajmandir Estate Pvt. Ltd. (2016) reported in 70 Taxmann.com 124 (Cal) and the judgment of IT AT, 'D' Bench, Mumbai in ITA no.l835/Mum/2014 dated 24.8.2016 in the case of Royal Rich Developers Pvt. Ltd. are also relied upon. In view of above facts, I am of the considered view that this is not sufficient to discharge the onus cast on the appellant as contemplated u/s.68 of the Act just giving addresses and PAN of the companies concerned when the AO has doubted the credit worthiness/capacity of the company having meager means and known sources of income to have invested huge amount in lending. The genuineness of the transactions were also doubted by the AO wherein the lenders did not have any business/project in hand and is merely a persons of meager means, as it is brought on record that these lenders are persons of meager means declaring nominal income and his Balance Sheet/statement of affairs revealed that he have otherwise insignificant assets other than investment in the appellant. Section 68 of the Act cast onus on the appellant to satisfy the ingredients of Section 68 to establish the identity and creditwor....
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....ender was having nominal income. This company is having very insignificant amount of income for the period under consideration and hence their creditworthiness is also not established. The M.P. High Court held in the case of CIT v. Rathi Finlease Ltd wherein considering the judgment of Hon'ble Supreme Court in the case of CIT v Steller Investment and the judgment of Hon'ble Supreme Court in the case of Lovely Export Ltd., Hon'ble High Court has held that each and every transaction of share application money involving application of provisions of section 68 in matter of contribution of share application/share capital and whether this onus on the assessee has 'peen discharged or not has to be appreciated on totality of evidences available on record and surrounding facts and circumstances of the case. The creditworthiness or genuineness of transactions depends on whether the parties are related or known to each manner or mode by which parties purpose for which payment/investment was made, etc. Certificate of incorporation of company, payment by banking channel, etc. cannot in all cases tantamount to satisfactory discharge of onus. The lender does not having cr....
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....al strength to lend such huge sum and if there is no explanation a sto their relationship with the assessee, no collateral security and no agreement the transactions have to be treated as bogus unexplained credits .. 4. Share Capital and Loan - Assessee not able to establish identity of investor - Merely filing PAN, IT returns, Certificate of incorporation, Balance Sheet etc. do not establish the identy - Share Capital and Loan - "HCL" and "OTIL" had subscribed in shares of assessee company - In some cases, "HCL" and "OTIL" had given loans to assessee company - AO required assessee to prove transaction - Assessee furnished various documents to prove the transaction - On inquiry, the companies were found to be non-existent - Noticed issued to them were returned unserved - HELD - Assessee is not able to establish identity of investors - Merely filing PAN, IT returns, Certification of incorporation, Balance Sheet etc. do not establish the identity of subscribers or produce them - Addition u/s. 68 shall be made. Agrawal Coal Corporation P. Ltd. v. Addl. : CIT (2011) 18ITJ 717 (Trib. - Indore) : (2012) 135 ITD 270: (2011)142 TTJ 409: (2012) 13ITR(T) 531 . 5. The facts ....
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....e assessee's paper book. On perusal of year wise capital and share premium details as submitted by the assessee referred herein above, it is discernible that Artline Fiscal Services (P) Ltd has opening share capital including share premium of Rs. 7,36,50,000/-, further during financial year 2006-2007, they have raised a share capital of Rs. 14,67,50,000/- and again during financial year 2008-2009 have raised a share capital of Rs. 7,01,00,000/-. In aggregate the share capital of the Artline Fiscal Services (P) Ltd becomes Rs.29.05 lakhs and this amount of share capital thereafter remains at the same level till assessment year 2014-2015. On perusal of page 76 of the paper book (2nd) of assessee company which is the schedule of investment in the final audited accounts of Artline Fiscal Services (P) Ltd, showing an investment in share capital of the assessee company for Rs.7,95,72,000/- during the financial year 2014-2015 relevant to assessment year 2015-2016, this substantiate the fact which the Ld AR is harping on that the share capital was issued in AY 2015-16, since, the figure of share capital issued by the assessee company to Artline Fiscal Services (P) Ltd. for AY 2014-15 (....
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.... assessee. 21. We do also find a relevance of the judgment in the case of PCIT Vs Sree Leathers (2022) 114 CCH 0180 (Cal. HC), Hon'ble Kolkata High Court in this case has dealt with an addition u/s 68 and has quoted a decision of Hon'ble Supreme Court in the case of CIT Vs. Daulatram Rawat Mull, (1973) 87 ITR 349 (SC), where in it has been concluded that: "It is not enough for the assessing officer to brushed aside the explanation offered by the assessee but he should record reasons in writing as to why documents which were filed by the assessee along with the reply does not got to establish the identity of the lender or prove the genuineness of the transaction or establish the creditworthiness of the lender." 22. Hon'ble Jurisdictional High Court of Chhattisgarh in the case of ACIT vs. Venkateshwar Ispat (P) Ltd. reported in 319 ITR 393(Chhatisgarh), which was referred by the coordinate bench of ITAT, Raipur in the case of Shree Radhey Infralogistics India Pvt. Ltd in ITA 51, 52 & 56/Raipur/2017 dated 16.04.2018 also, held that "in respect of Share application money, department is free to proceed to reopen shareholder's individual assessments in acco....
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.... Dynamic Engineers Infratrack Pvt. Ltd. 25,00,000 25,00,000 Efficient Commodities Pvt. Ltd. 4,50,000 4,50,000 Essdee Distributors Pvt. Ltd. 40,00,000 40,00,000 Exclusive Dealers Pvt. Ltd. 50,00,000 50,00,000 Fine Wood Products Pvt Ltd 12,00,000 12,00,000 12,00,000 Ganga Carriers Pvt. Ltd. 10,00,000 10,00,000 Git Textile Manufacturing Limited 25,00,000 25,00,000 25,00,000 Glamdorf Trade & Agency Pvt. Ltd. 5,00,000 5,00,000 Govind Hotels & Inns Pvt. Ltd! 8,00,000 8,00,000 Harrison Trexim Pvt. Ltd. 15,00,000 15,00,000 Highlight Managment Pvt. Ltd. 50,00,000 50,00,000 JDS Apperals Pvt. Ltd. 35,00,000 35,00,000 35,00,000 Kalakriti Art Pvt. Ltd. 70,00,000 70,00,000 10,00,000 Kalakriti Creative Arts Pvt. Ltd. 15,00,000 15,00,000 Kiran Multitrade Pvt. Ltd. 10,00,000 10,00,000 . Mahalaxmi Enamels Pvt. Ltd. 15,00,000 15,00,000 15,00,000 Megha Bidyut Pvt.Ltd. 10,00,000 10,00,000 M P Mica Enterprises Pvt. Ltd. 9,00,000 9,00,000 9,00,000 Nirjhar Financial Advisory Pvt. Ltd. 92,50,000 92,50,000 5,00,000 Parasnath Trading Pvt. Ltd. 5,00,000 5,00,000 5,00,000 Raj Laxmi Multitrade Pvt.Ltd. 5,00,000 5,00,000 Resonance Marketing Pvt.Ltd. ....