TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 1637
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.... assessee was originally completed on 19th March 2004, determining total income of Rs. 19,71,20,510. The assessment order so passed was challenged before the learned Commissioner (Appeals), however, learned Commissioner (Appeals) having confirmed the assessment, assessee went in further appeal before the Tribunal and the Tribunal, vide order dated 2nd August 2007, set aside the matter back to the file of the Assessing Officer for re-adjudicating the issue in the light of the additional evidence filed by the assessee before the learned Commissioner (Appeals). The major addition made in the original assessment, disputed by the assessee was unexplained cash credit of Rs. 27,44,42,000. In the original assessment, the Assessing Officer noticing that there was increase in share capital of Rs. 27,44,42,000, called upon the assessee to explain the same. The assessee was asked to furnish details of shares issued along with share application form for allotment of shares to shareholders along with the income tax details. The Assessing Officer pointing out various shortcomings and discrepancies in the information submitted by the assessee, treated share application money received by the assess....
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....tisfactorily explained by proper documentary evidence, the deeming fiction created u/s 68 of I.T. Act will be invited." 4. On the basis of the aforesaid reasoning, the Assessing Officer ultimately held that the share capital introduced by the assessee amounting to Rs. 27,44,42,000 as unexplained cash credit in terms of section 68 of the Act and added back to the income of the assessee for the year under consideration. Being aggrieved of such addition, assessee challenged the same in an appeal before the learned Commissioner (Appeals). 5. In the course of hearing of appeal before the first appellate authority, the assessee made detailed submissions and also produced supporting evidence to justify its claim. On the basis of submissions made and evidences produced, the learned Commissioner (Appeals) called for a remand report from the Assessing Officer. On the direction of the learned Commissioner (Appeals), the Assessing Officer after examining the issue submitted two remand reports dated 4th January 2010 and 19th May 2010. After perusing the remand reports submitted by the Assessing Officer in the light of submissions made by the assessee and materials available on record, the....
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....tworthiness have not be proved except two local share applicants. He submitted, the Assessing Officer also could not verify the creditworthiness of the share applicants as none of them appeared in response to the summons issued under section 133 and assessee also did not produce the shareholders before the Assessing Officer. Learned Departmental Representative submitted, in spite of the fact that the share application money was received in crossed cheque through proper banking channel but that itself does not prove the genuineness of the transaction unless the creditworthiness of the share applicants are proved. The learned Departmental Representative submitted, merely because the assessee has obtained confirmation letters and transactions are through banking channel it is not enough to prove the genuineness and creditworthiness of the credit appearing in the books of account. He submitted, the primary onus is on the assessee to prove all the ingredients of the cash credit. In this context, the learned Departmental Representative referring to the proviso to section 68 of the Act inserted by Finance Act, 2012 w.e.f. 1st April 2013, submitted as per the amended provisions of section ....
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.... outstation shareholders are concerned, the learned Authorised Representative submitted, since they were staying outside, they could not have come in response to the summons issued unless the Assessing Officer follows the due procedure of law by applying the provisions of Code of Civil Procedure (CPC). He submitted, as per the CPC, by providing for their travel and other related expenses for appearing as witness. He submitted, the Assessing Officer otherwise could have got them examined through jurisdictional Assessing Officers by issuing commission as their income tax particulars were filed with the Assessing Officer. Learned Authorised Representative submitted, as the Assessing Officer has not followed the due process of law, he cannot blame the assessee for non-production / non- appearance of the shareholders. The learned Authorised Representative referring to the remand report of the Assessing Officer submitted, the Assessing Officer after examining the documentary evidences brought on record has given a categorical finding in the remand report that the increase in share capital is a genuine transaction. Learned Authorised Representative submitted, that being the observation of....
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....also applied our mind to the decisions relied upon by the learned Counsels of both the parties. It is evident from the impugned assessment order, the share capital amounting to Rs. 27,44,42,000, was treated as unexplained cash credit primarily on the allegation that the assessee failed to furnish the bank details and income tax assessment details of the share applicants and as a result, the creditworthiness of the share applicants could not be verified. However, it is evident, in the course of hearing of appeal before the first appellate authority assessee submitted list containing details of investors who had invested in shares along with their address and amount of investment. Further, assessee had also submitted share application forms of all the investors. It is also emerging from the fact on record, shares were allotted to the share applicants and copies of the share allotment return filed by the assessee before the Registrar of Companies was also submitted before the Assessing Officer. Besides, assessee also submitted income tax assessment particulars along with the PAN of all the shareholders before the Assessing Officer along with their bank statements and who also confirme....
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....and when it is proved that the summons were also served on them, only because they did not appear before the Assessing Officer, it cannot be held that their creditworthiness have not been proved. It is not disputed that all the share applicants, except two, are staying outside the State. Therefore, if they did not respond to the summons issued by the Assessing Officer under section 131, the assessee cannot do anything as they are not in the control of the assessee. On the contrary, the Assessing Officer under section 131 has enough power to enforce their attendance. Further, if the Assessing Officer was of the opinion that the creditworthiness of the share applicants can only be verified by examining them, he could have exercised the power conferred upon him under section 131 to enforce attendance of the witness as he has the plenary powers of a civil Court under the CPC while trying a suit. In fact, the Assessing Officer could have examined the concerned persons by issuing commission through jurisdictional Assessing Officer as the assessee not only provided the PAN of the share applicants but also their income tax assessment particulars. As could be seen, in the remand report the ....
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....offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 10. On a plain reading of the amended provisions of section 68, it appears, to remove the ambiguity arising out of creditors appearing in the books of account relating to share application money, share capital, share premium, etc., the provision of section was amended so as to bring these investments on par with loans, advances, etc. Though, it may be a fact that the Tribunal, Kolkata Bench, in the decision relied upon by learned Departmental Representative has held the amendment to be clarificatory in nature, hence, will apply retrospectively, ho....
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.... upholding the order of the learned Commissioner (Appeals) on the issue, we dismiss the ground raised by the Department. 11. In the result, Department's appeal is dismissed. Cross Objection No. 163/Mum./2011 Assessee in the aforesaid cross objection has raised two grounds. 12. In ground no.1, assessee has challenged the decision of the learned Commissioner (Appeals) in sustaining the addition to the extent of Rs. 20 lakh standing in the name of Gayatri Devi and Rs. 1.99 crore in the name of Shri Ramkumar Goel. 13. As could be seen from the order of the learned Commissioner (Appeals), during the remand proceeding, the summons issued to Gayatri Devi returned un-served and in case of Shri Ramkumar Goel, though, the summons were served but he neither responded to summons nor the assessee could file any confirmation letter from the said party in support of the investment made by him. As far as Gayatri Devi is concerned, the assessee, though, stated before the Assessing Officer that she had in the meanwhile expired but no further details with regard to her legal heirs was furnished by the assessee. The learned Commissioner (Appeals), considering the fact that the assessee ....
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.... deduction of Rs. 87,18,140 on account of payment of brokerage and commission to following parties called upon the assessee to furnish necessary details to justify its claim:- Vikalp Exports Pvt. Ltd. Rs. 24,20,990 Swaran Exports Pvt. Ltd. Rs. 62,97,150 19. In response to the query raised by the Assessing Officer, the assessee furnishing necessary details of the concerned parties like PAN and account copies as well as invoices raised by them and audited balance sheet and Profit & Loss account of those two companies submitted that not only the assessee has made payment through account payee cheques towards brokerage and commission to the concerned parties, but they have also included the amount received by them in the return of income filed by them. The Assessing Officer, however, did not find merit in the submissions of the assessee and disallow the deduction claimed. Being aggrieved of the disallowance, the assessee challenged the same before the learned Commissioner (Appeals). 20. In the course of appellate proceedings, the learned Commissioner (Appeals) directed the Assessing Officer to examine the issue again. As observed by the learned Commissioner (Appeals),....