TaxTMI 
TaxTMI 
2010 (10) TMI 1263
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.... monies do not belong to the appellants. The appellants further contend that the Assessing Officer has violated the principles of natural justice in not furnishing the various statements on oath of directors of various companies, being preference shareholders of the appellant-company before passing the impugned assessment order and the CIT(A) also did not direct the Assessing Officer to furnish the statements on oath of directors of the shareholders-companies not furnished to the appellants and as such, the order of the CIT(A) is bad in law being passed against the principles of natural justice. The CIT(A) erred in holding that adequate opportunity for cross examination of shareholders-companies has been allowed to appellants. The CIT(A) further erred in upholding the action of the Assessing Officer or relying on the reports of the directors of shareholder- companies by other officers of the Department instead of himself examining the said directors." Ground No. 2 pertains to charging of interest under section 234B, which is consequential in nature. 2. Briefly stated, the A.O. noticed that the assessee has repaid loan to the tune of Rs.28,73,00,000/....
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....d Articles of Association and also their bank statements to a large extent to indicate that the assessee has received share application money from various companies and accordingly the assessee has discharged the onus. The CIT(A), after considering the statements and after giving opportunity to the A.O. and the assessee, confirmed the addition by stating as under: - "5. I have carefully considered the above facts and do not find any merit in the contentions of the appellant. As regards, lack of opportunity allowed to cross-examine directors of various companies, as per letter of the ADIT (Inv), Unit-ix(2), Kolkata dated 9.4.2007, addressed to the XCIT(C)-IV, Mumbai, it was intimated by the Assessing Officer that in spite of repeated opportunities allowed to cross-examine, the directors of the appellant companies sought repeated adjournments. They even sent a letter dated 12.03.2007 stating that they would exercise their right of cross examination at the time of assessment. It may be stated that consequent to the search conducted in the Parekh group of which the appellant is also a part, post-search enquiries were conducted by the Investigation Wing of the Department and en....
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....hoose to stall and delay the assessment proceedings and never intended in the right earnest to cross-examine such persons, if at all it was of the view that entire investment was sacrosanct and beyond doubt. Had all such transactions were bona fide and genuine, the appellant could have conveniently obtained their denial on some or other ground, in the form of respective affidavits and statements. Moreover, respective directors would not have disowned such transactions in any circumstances, involving huge sums unless and until they had been made only a conduit for such unaccounted transactions and merely entered into accommodation entries with the appellant company. They would not have been naïve enough to disown their own investments, had everything been overboard. Therefore, the genuineness of the transaction which is also one of the ingredients of a genuine cash credit, has not been proved in any manner. In such circumstances, the addition made by the Assessing Officer by invoking the provisions of section 68 and not section 69A as incorrectly pointed out by the appellant, is fully justified. 5.2 As regards the reliance placed by the appellant on several case laws i....
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....lied on the report(s) of the officers of Investigation wing. The Assessing Officer has not for himself done any thing to bring on record any evidence to tax the amount under section 68 of the Act. Assessing Officer, being quasi judicial authority has to pass the order on the basis of his own investigation and by applying his own mind. 3. (a) All investigation reports and statements on oath of each director of the applicant company mentioned in para 4.2 not given to the appellants - refer substituted page nos. 1 to 5. Therefore should be ignored and cannot be relied upon - Kishanchand Challaram 125 ITR 713 (SC). (b( Further, there is also a mismatch in the amount of share capital raised by the appellants and mentioned in the notice and that actually received; thus, there is total non application of mind in making the impugned addition. 4. In para 4.2, the Assessing Officer mentions that directors of investor companies were summoned. Certain sworn statements of directors have been provided to the appellants. On observing the sworn statements, the following issues arise- (a) Statements recorded - covering transactions Rs.19,93,00,000/- only. Other s....
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....re, addition again cannot be made in the assessment of the appellants. If no addition is made in their assessments, then there is no reason or justification to make impugned addition." 4. The learned D.R., however, relied on the detailed orders of the A.O. and CIT(A). 5. We have considered the issue, examined the record and the arguments. It is a fact that the assessee received large amounts by way of DD's / pay orders in the month of March 2005 from the banks in kolkatta and repaid outstanding the loan in the Madhavpura Mercantile Cooperative Bank Ltd. The department enquired about the source of funds from the group companies. The assessee has received share application monies with a premium from the following parties in the month of March 2005 as under ( in Rs): - S. No. Name of the Party Shares Allotted Amount received 1 Platinum Commerce Pvt Ltd. 2800 14,000,000 2 Ankita Finvest Pvt. Ltd. 2500 2,500,000 3 Bansidhar Vyapaar Pvt. Ltd. 5520 27,600,000 4 Allworth Commodities Pvt. Ltd. 1500 7,500,000 5 Jaishree Commotrade Pvt. Ltd. 4640 23,200,000 6 Snehdeep Impex Pvt. Ltd. 3100 15,500,000 ....
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....the amount paid was Rs.,1,25,00,000/-, which was received by way of DDs. First lot of Rs.40,00,000/- was by way of pay orders dated 09.03.2005 of which four were for Rs.9,00,000/- each and 5th DD was for Rs.4,00,000/-. Balance amounts of Rs.10,00,000/- was received on 16.03.2005, Rs.30,00,000/- on 19.03.2005, Rs.20,00,000/- on 21.03.2005 and Rs.25,00,000 dated 25.03.2005. Like wise there were other companies who were stated to have applied for on more than one application. This indicates that those companies have invested on various dates as and when they have received money in their accounts, which supports Assessing Officer's observation that those companies invested the money received by them. The allegation that the assessee has paid the amount in cash and was in turn received as share premium, however, was not directly established except in the case of Mrigiya Electronics Industries Pvt. Ltd. where there seems to be enquiries with reference to the said company on the source of its money which was also examined with the assessee company as can be seen in the statement available in page nos. 715 onwards in the paper book. 7. Another aspect to be noticed was that the asses....
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....ome to the extent of Rs.11,650/- and the loss on sale of certain investments was claimed as loss. In spite of that the assessee company received substantial amounts by way of 7% cumulative redeemable preference shares to be redeemed at a premium of Rs.9,000/- per share after six years from the date of allotment, i.e. March 2011. It has received the share application money of Rs.5,74,60,000/- towards 57460 preference shares of Rs.1,000/- each and share premium of Rs.22,98,40,000/- from the above companies. All companies hailed from Kolkata and there is no share application money from any other person either from Mumbai where the company headquarters is or from any other place. Fixing the share premium also seems to be a deliberate act considering the following notes given in assessee's annual report for the year: - 5. The Company has received letter dated 4.8.2005 from Serious Fraud Investigation Office (SFIO), New Delhi requiring the Company to furnish the details mentioned therein. This is pursuant to the order of the Company Law Board passed for investigation under section 237(b) of the Companies Act, 1956. 6. The Debt Recovery Tribunal (DRT), on an applicat....
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....application money from various companies duly supported by their annual reports and Balance Sheets and evidenced in respect of cheques. The A.O. did not fully establish his argument that the monies have been received by the companies from the assessee company to its logical end, before forming the opinion that assessee has routed its own monies. As seen from the bank accounts of the said companies enclosed as an evidence it can be noticed that those companies invariably received funds by way of cheques from another source. On the basis of enquiry in few cases the A.O. was of the opinion that all the monies were from the assessee and treated them as income from unaccounted sources. It is one of the contentions of the assessee that the assessee was not given all the statements and only 15 of the 37 statements were furnished. As seen from the record this aspect is correct. As seen from the statement recorded from the companies in Kolkata, it is noticed that they have invested in various group companies of the assessee at the same point of time. This aspect also has not been examined and the issue whether the investment in those companies by the same company was accepted or not was als....