TaxTMI 
TaxTMI 
2026 (7) TMI 1803
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....the Assessing Officer) in making an addition of a sum of Rs. 23,98,00,000, being amount received on allotment of preference share capital, on the ground that the share application money is not genuine and the same is treated as cash credit under section 68 of the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition under section 68 of the Act inasmuch as the provisions of the section, in terms, are not applicable to the facts of the case. The appellants further, contend that Assessing Officer erred in not following the directions of the Tribunal in their order dated 24th September, 2014; accordingly, the impugned addition requires to be deleted. The appellants further, contend that the CIT(A) ought not to have upheld the action of the Assessing Officer inasmuch as he 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. The appe....
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....ions contained in the order of the ITAT order in No ITA No. 1714/Mum/2009 dated 8/10/10. In the order the ITAT has observed that the preference shares capital received from the following companies was explained: SN Name of the Company Amount of preference share capital paid i M/s Regency Share Holding P Ltd 1,35,00,000 ii M/s Yulam Marketing P Ltd 1,05,00,000 iii M/s. Nihat Promoters & Fiscal P Ltd 1,75,00,000 iv M/s. M G Green Field P Ltd 30,00,000 v M/s. Hoogly Vinmay P Ltd 30,00,000 TOTAL 4,75,00,000 Thus as per the direction of the ITAT, the amount of Rs. 4,75,00,000/-is treated to be genuine preference share capital received by the assessee. 3. Notices u/s. 143(2)/142(1) of the Act along with detailed questionnaire were issued to the assessee on 10/12/14 and the same were served on the assessee, on the given date there was no compliance from the assessee. On 30/12/14, the assessee filed a letter stating that the details were under compilation and sought a short adjournment. On 5/1/15 another letter was filed by the assessee and it was stated that the details are under compilation and aga....
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....stated that the parties are witness of the department and not of assessee. The assessee also requested that the parties may be produced for cross examination. 4. I have carefully considered the above submissions of the assessee. The same are not tenable. The details submitted by the assessee has already been considered in the earlier assessment proceedings. As no new details/documents/evidences have been filed by the assessee in support of its claim of receipt of share capital and as the same has already been considered, the written submissions of the assessee are not acceptable. 4.1 For the year under consideration the assessee has claimed to have received an amount of Rs. 28,73,00,000/- on account of allotment of cumulative redeemable preference shares. Out of the total amount of Rs. 28,73,00,000/-, the amount of Rs. 5,74,60,000/- was claimed to be towards face value of the shares and the amount of Rs. 22,98,40,000/-was claimed to be towards share premium. This amount of Rs. 28,73,00,000/- was claimed to have been received from 37 Kolkata based companies. In this regard investigation report was received from the AddI DIT(Inv)-Unit-I, Kolkata wherein it was concl....
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....ks of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and sources thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." Even a cursory reading of the above provisions reveals that conjunction used between two words i.e. nature and source" is word "and" not "or". This speaks about the intention of legislature that the cumulative satisfaction of the both conditions is required to get rid of application of section of 68 of the Act. In the instant case, the assessee has failed to establish the nature of credit on account of loan and for this very reason the assessee squarely gets covered by the provision of section 68 of the Act. 4,4 It is held in the following judgments that the overall circumstances and human probabilities have to be taken into consideration while ascertaining the true nature of the transaction: (i) The Hon'ble ITAT, Dehi Bench in the case of DCIT vs. Smt. Phoolwati Devi (2009) 314 ITR AT 1 (Delhi) has held as under: despit....
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....te veil' test only after it is able to establish on basis facts and circumstances surrounding transaction that impugned transaction is a sham or tax avoidance. In the Instant case, the circumstances and facts of the case, evidences gathered and after analysis of accounts, it is concluded that it is a fit case to invoke principle of "piercing of corporate veil". 4.6 On the issue of Share-Application money entry racket, the Hon'ble Delhi High Court in its judgment in the case of Commissioner of Income-tax v Nova Promoters & Finlease (P.) Lid. [2012] 18 taxmann.com 217 (Delhi) was held that where share application money entry racket is unearthed, burden of proof under section 68 cannot be discharged by merely submitting documentary evidence. It was categorically held by the Hon'ble Delhi High Court that in view of the link between the entry providers and incriminating evidence, n mere filing of PAN number, acknowledgment of income-tax returns of the entry provider, bank account statement etc. was not sufficient to discharge the onus. 4.7 Reliance is also placed on the ratio laid down by the Hon'ble Supreme Court in the case of CIT vs P Mohankala 291 I....
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.... Less Set off Short Term Capital Loss for the AY 2001-02 : 63,36,956/- NIL GROSS TOTAL INCOME 23,98,00,000 3. Brief facts are that during the year under assessment, the assessee has issued cumulative redeemable preference shares amounting to Rs. 28,73,00,000/-, having face value of Rs. 5,74,60,00/- at a premium of Rs. 22,98,40,000/ -. As per facts on records, the amount was received from 37 Kolkata based companies referred to (supra), which were considered to be bogus concerns involved in the business of accommodation entries. The Ld. AO added the entire amount to the income of the assessee treating the same as unexplained cash credit u/s. 68 of the Act. Subsequently, in first round of litigation, the issue was challenged before the Ld. CIT(A), who had decided the appeal in favour of the assessee vide order dated 26.12.2012. Against the order of Ld. CIT(A), the Department had filed an appeal before the ITAT, which was adjudicated by the ITAT "E" Bench, in ITA No. 2070/Mum/2013, vide order dated 16.10.2014 and set aside the matter to the file of AO with directions to re-adjudicate the issue in light of directions in the....
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....d 21st April, 2006 vide draft no. 854057. The company is assessed to Income-tax under P.A. No AABCN5606K. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Rohit Jain and Sri Shyamsukha, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss. The capital and reserves of the company are Rs. 1,37,02,100 and Rs. 8,81,55,000 respectively and loans and advances are Rs. 1,04,34,069. 2. K.B. Combine Pvt. Ltd. This company has made an application for 600 7% Redeemable preference shares and paid a sum of Rs. 30.00.000 bu three demand drafts drawn on HDFC Bank. Kolkata, The sum of Rs. 30.00.000 has been paid bu three demand drafts of Rs. 10.00.000 each dated 25th April, 2006. 29th April, 2006 and 20th April. 2006 vide draft nos. 271578. 271600 and 271588 respectively. The company is assessed to Income-tax under P.A. No. AABCK0836G. The share applicant along with share application form has submitted ....
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.... of company, acknowledgement balance sheet profit and loss as on 31st March, 2007. The capital and reserves of the company are Rs. 2,18,00,000 and Rs. 10,63,00,000 respectively and loans and advances are 5,53,32,145 (II) 7,500 Redeemable preference shares aggregating Rs. 3,75,00,000 1. Rajesh Vinimay & Byapaar Pvt. Ltd. - This company has made an application for 1,000 7% Redeemable preference shares and paid a sum of Rs. 50,00,000 by a demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by demand draft dated 28th April, 2006 vide draft no. 775652. The company is assessed to Income-tax under P.A. No AABCR2450B. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Narendra Kumar Jain the director of the company to make investments, certificate of incorporation of company, memorandum and articles of association of company, acknowledgement endencing filing of return of income, director's report, balance sheet and profit and loss as on 31st March, 2007. The capital and reserves of the company are Rs. 2,14,30,000 and Rs. 16,59,87,639.24 respective....
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.... extract of the board minutes containing board resolution authorizing Sri G. Agarwal, Sri J. Agarwal and Sri R. K. Sharma, the directors of the company to make investments, certificate of incorporation of company, memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss. The capital and reserves of the company are Rs. 70,30,000 and Rs. 5,84,12,358 respectively and loans and addes are Rs. 65,39,836 as of 31 March, 2007. 5. Basukinath Vanijva Pvt. Ltd. * This company has made an application for 200 7% Redeemable preference shares and paid a sum of draft drawn on HDFC Bank, Kolkata. The Rs. 10,00,000 has been paid bu demand draft dated 25th April, 2006 vide draft no. 204597. The company is assessed to Income-tax under P.A. No AACCB6596R. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Ashok Kumar singh and Sri Ashim Lahiri, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company. ....
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....has YINGINE-FASURA extract of the board minutes containing board resolution Sri G. Agarwal, Sri J. Agarwal and Sri R. K. Sharma, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss as on 31" March, 2007. The capital and reserves of the company are 99,02,200 and 4,66,86,317.62 respectively and loans and advances are 4,71,78,355. 9. Sidlow Commercial Pvt Ltd. This company has made an application for 200 7% Redeemable preference shares and paid a sum of Rs. 10,00,000 by a demand draft drawn on HDFC Bank, Kolkata. The sum of Rs. 10,00,000 has been paid by demand draft Rs. 10,00,000 dated 2nd May, 2006 vide drafts no. 226070. The company is assessed to Income-tax under P.A. No AADCS8307E. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Ornprkash Agarwal, and Sri Sajjan Kumar Kheria, the directors of the company to make investments, certificate of incorporation of company memorandum and art....
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....,001000 dated 28th April, 2006 vide drafts no. 436704. The share applicant along with share application form has submitted extract of the board minutes containing board atesolforon authorizing Sri Subrat Mukherjee and Sri Rajesh Tayal, the director of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss as on 31 st March, 2007. The capital and reserves of the company are Rs. 8,20,000 and Rs. 1,72,86,622 respectively. 13. Anupam Dealers Pvt Ltd. - This company has made an application for 600 7% Redeemable preference shares and paid a sum of Rs. 30,00,000 by a demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 3 0,00,000 has been paid by demand draft Rs. 30,00,000 dated 2x May, 2006 vide drafts no. 440678. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Vijay Kumar and Mrs Sujata Shethi, the director of the company to make investments, certificate of incorporation of company memorandum and arti....
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.... to Income-tax under P.A. No AACCA5809Q. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Mr S. C. Saha the director of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss as on 31st March, 2005. The capital and reserves of the company are Rs. 54,32,000 and Rs. 4,46,29,282.19 respectively and loans and advances are Rs. 1,26,74,096.42 Ankita Finyest Pvt. Ltd. - This company has made an application for 1000 7% Redeemable preference shares and paid a sum of Rs. by four demand drafts drawn on The South Indian Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by demand drafts of Rs. 30,00,000 Rs. 9,00,000 Rs. 9,00,000, and Rs. 2,00,000 dated 29th December, 2004 and three drafts dated 14th February, 2005 vide demand draft nos. 267499, 242119, 242118 and 242120 respectively. The company is assessed to Income- tax under P.A. No AACCA1414D. The share applicant along with share application form has submitted ext....
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....ny has made an application for 800 7% Redeemable preference shares and paid a sum of Rs. 400,000 by two demand drafts drawn on ABN Amro Bank, Kolkata 3/30,000 and Rs. 25,00,000 dated 4th February, 2005 and 14th February, 2005 vide draft nos. 112835 and 155293. The company is. assessed to Income- tax under P.A. No AABCC9445K. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri S. C. Saha, the director of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss as on 31st March, 2005. The capital and reserves of the company are Rs. 1,45,02, 100 and Rs. 8,54,95,954.66 respectively and loans and advances are Rs. 1,26,42,181. (7) Devlok Marketing Pvt. Ltd. This company has made an application for 500 7% Redeemable preference shares and paid a sum of Rs. 25,00,000 by a demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 25,00,000 has been paid by demand draft dated 5th February, 2005 vide draft no. 112886. ....
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.... been paid by thirteen demand draft of Rs. 25,00,000 Rs. 1,00,00,000 Rs. 45,00,000 Rs. 1,65,00,000 Rs. 50,00,000 Rs. 50,00,000 Rs. 2,00,00,000 Rs. 40,00,000 Rs. 15,00,000 Rs. 85,00,000 Rs. 15,00,000 Rs. 95,00,000 and Rs. 15,00,000 dated 4th October, 2004, 9th November, 2004, 19 November, 2004, 23rd November, 2004, 27th November, 2004, 29th November, 2004, 3rd December, 2004, 3rd December, 2004, 7" 2004, 29th December, 2004, 31st December, 2004, 10th January, 2005 and 24th February, 2005 vide draft nos. 813544, 711519, 962762, 711525, 957322, 957436, 955129, 955065, 711532, 132965, 711544, 135210 and 187408 The company is assessed to Income-tax under P.A. No AACCG1763B. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Manish Agarwal, the director of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, director's report, balance sheet and profit and loss as on 3 1st March, 2005. The capital and reserves of the company are Rs. 2,03,00,000 and Rs. 9,78,26,046 respectively and loans and advances are Rs. 55,00,000. ....
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....i Ramawatar Lath, the director of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, balance sheet and profit and loss as on 31st March, 2005. The capital and reserves of the company are Rs. 62,52,500 and Rs. 2,37,53,3 17.58 respectively and loans and advances are Rs. 66,36,971.38 (14) Jaishree Commotrade Pvt Ltd. This company has made an application for 500 7% Redeemable preference shares and paid a sum of Rs. 25,00,000 by a demand draft drawn on The South Indian Bank, Kolkata. The sum of Rs. 25,00,000 has been paid by demand draft Rs. 25,00,000 dated 29th December, 2004 vide draft no. 267497. The company is assessed to Income-tax under P.A. No AAACJ7907N. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, director's report, balance sheet and profit and loss as on 3 1st March, 2005. The capital an....
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....tion of company, acknowledgement evidencing filing of return of income. (18) Mirases Commercial Put Ltd. This company has made an application for 1,000 7% Redeemable preference shares and paid a sum of Rs. 50,00,000 by a demand draft drawn on ICIC Bank, Kolkata. The sum of Rs. 5 0,00,000 has been paid by demand draft Rs. 50,00,000 Hated 12th February, 2005 vide drafts no. 106455. The company is assessed to Income-tax under P.A. No AADCM3247K The share applicant alafig with share application form has submitted extract of the board mintites containing board resolution authorizing Sri Ramawatar Lath, the direction of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income, director's report, INCOME.TA Balance sheet and profit and loss. The capital and reserves of the Dany are Rs. 64,68,200 and Rs. 2,36,70,181.72 respectively and toans and advances are Rs. 4,05,116.77 as of mast March, 2005. (19) Nilhat Promoters & Fiscal Pvt Ltd. This company has made an application for 500 7% Redeemable preference shares and paid a sum of Rs. 25,00,000 by a d....
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.... company are Rs. 1,59,7 1,59,75,000 and Rs. 11, 11,25,000 Spectively and loans and advances are Rs. 7,87,45,000. (22) Pentex Expo Pvt Ltd. This company has made an application for 7% Redeemable preference shares and paid a sum of Rs. 50,00,000 by a demand draft drawn on The South Indian Bank, Kolkata. The sum of Rs. 50,00,000 has been paid by demand draft Rs. 50,00,000 dated 29th December, 2004 vide drafts no. 267500. The company is assessed to Income-tax under P. A. No AABCP486IE. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Suresh Kumar Bagaria, the director of the company to make investments, certificate of incorporation of company memorandum and articles of association of company. (23) Platinum Commerce Pvt Ltd. This company has made an application for 2,600 7% Redeemable preference shares and paid a sum of Rs. 1,30,00,000 by two demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 1,30,00,000 has been paid by demand draft Rs. 80,00,000 and Rs. 50,00,000 both dated 5th February, 2005 vide draft nos. 113217 and 113216. The company is assessed to Income-tax un....
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....1,00,00,000 Rs. 85,00,000 Rs. 15,00,000 Rs. 65,00,000 Rs. 55,50,000 Rs. 4,50,000 Rs. 1,00,00,000 Rs. 40,00,000 Rs. 50,00,000 Rs. 1,20,000 Rs. 13,00,000 and Rs. 15,00,000 dated 4th October, 2004, thi October, 2004, 6th October, 2004, 20th October, 2004, 18th November, 2004, 25th November, 2004, 6th December, 2004, 29th December, 2004, 10th January, 2005, 17th January, 2005 and 23rd March, 2005 vide draft nos. 813543, 711558, 783100, 711560, 887893, 962649, 962650,711569, 963203, 957906, 711571, 132964, 132740, 135211, 960450, 711591 and 711594. The company is assessed to Income-tax under P. A. authorizing Sri Vishal Pancholi, the director of the company to make has submitted extract of the board minutes containing board resolution investments, certificate of incorporation of company memorandum and articles of association of company, director's report, balance sheet and profit and loss as on 31st March, 2005. The capital and reserves of the company are Rs. 2,13,00,000 and Rs. 8,48,00,000 respectively and loans and advances are Rs. 5,50,68,500. (27) Regency Shares & Holding Pvt. Ltd. This company has made an application for 1,580 7% Redeemable preference shares and paid a....
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....ectors report, balance sheet and profit and loss as on 31st March, 2005. The capital and reserves of the company are Rs. 85,08,700 and Rs. 3,15,55,125.76 respectively and loans and advances are Rs. 55,55,905. (30) Sukhvarsha Distributors Pvt Ltd. This company has made an application for 300 7% Redeemable preference shares and paid a sum of Rs. 15,00,000 by a demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 15,00,000 has been paid by demand draft Rs. 15,00,000 dated 141 February, 2005 vide drafts no. 113878. The company is assessed to Income-tax under P. A. No AADCS5992F. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Rajesh Kumar Jam, the director of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgement evidencing filing of return of income . (31) Techbuild Impex Pvt Ltd .- This company has made an application Jar 300 7% Redeemable preference shares and paid a sum of Rs. 15,0000 by a demand draft drawn on ABN Amro Bank, Kolkata. The sum of Rs. 15,00,000 has been paid by deman....
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....espectively. The company is assessed to Income- under P. A. No AAACV9866A. The share applicant along with share application for has submitted extract of the board minutes containing board resolution authorizing Sri Suresh Bagaria, the director of the Company make investments, certificate of incorporation of company memorandum and articles of association of company. (35) Yulan Marketing Pvt Ltd. - This company has made an application 5,00,000 by five demand drafts drawn on The South Indian Bank, Kolkata. The sum of Rs. 95,00,000 has been paid by demand draft Rs. 65,00,000, three demand draft of Rs. 9,00,000 and Rs. 3,00,000 dated 29th December, 2004 and 14th February, 2005 vide drafts no. 267503, 242126, 242127, 242128 and 242129 respectively. The company is assessed to Income- tax under P. A. No AAACYI8I IC. The share applicant along with share application form has submitted extract of the board minutes containing board resolution authorizing Sri Rohit Jain and Sri M. K. Shyamsukha, the directors of the company to make investments, certificate of incorporation of company memorandum and articles of association of company, acknowledgment evidencing filing of return of income....
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....are premium and some of such companies are part of investors in the present case. 8. Further, in assessee's own case for assessment year 2006-07, the Co- ordinate Bench of ITAT Mumbai has decided the identical issue, in ITA No. 3859/Mum/2009 dated 22.07.2011 for Ay 2006-07, wherein the share capital and premium received by the assessee company from various entities, added by the Ld. AO treating the same as unexplained cash credit u/s. 68 of the Act was deleted by the Tribunal observing that the issue of application money cannot be treated as income of the assessee company, until and unless it is proved beyond doubt that the assessee's own money has come back through some closely related applicant. Once the identity of the applicant is disclosed and found as correct, then even if the said transaction is suspected by the revenue authorities, the same cannot be treated as income of the assessee company, which is a public limited company. Accordingly, we delete the addition made by the Assessing Officer and confirmed by the Ld. CIT(A). The companies and transactions involved in the aforesaid order are as under: Sl. No. Name of the Party Shares allotted Amount Rec....
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.... in absence of any contrary material, decision or argument by the revenue. Further, regarding the companies which are not covered by the aforesaid cases, Ld. AR has furnished a chart stating therein the details of various documents furnished before the revenue authorities. To decide the fate of the companies, which also stand at the same pedestal in terms of facts and circumstances, as that of the other companies which are covered by the decision of Tribunal (referred to supra). the same is extracted as under: 12. Before proceeding any further, it would be relevant to extract the findings of Tribunal in assessee's own case for assessment year 2006-07, in ITA No. 3359/Mum/2009 (supra), wherein the identical issue was raised and decided by the Tribunal with the following observations: "5 We have considered the rival contention and perused the relevant material on record. The Assessing Officer has discussed the issue in para 4.1 to 4.4 of his order as under: "4.1 During the assessment proceedings, it has been observed that the assessee has repaid the loan to the tune of Rs. 5.51 crores by allotting preference shares to private corporate bodies. It is verified ....
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....is accounts' were made by Delhi based parties which were not known to him, Later on statement of Shri Pawan Kmar Agarwal who was former Director of M/s Mrugiya Electronics Industries P Itd recorded by the ADIT(Inv0 Unit 1 Kolkata /s 131 of the IT Act. In his statement he has denied the ownership of the cash. But at the same time he has admitted that the cheques received from Shri Kishan Kumar Verma and Shri Murari Agarwal were utilized to invest in the share application money of M/s Chat Computers P Ltd (formerly known as M/s Chitrakut Computers P Ltd). It is very much clear from the above that the assessee has mobilized the unaccounted cash by creating various ayers of which they are the ultimate beneficiary. 4.4 Similar transactions have been done by the group concerns of the assessee which are given in Annexure I which is the report of Investigation wing of the department. Wherein it is clearly established that cash was deposited in one account and after passing through various levels it has reached to the assessee company. Few such instances are covered in the report annexed herewith. 6 It is evident from the assessment order that the Assessing Officer has....
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....unity to cross examine the share4 applicants and was asked to file confirmation of the said share applicants on 30th Sept, 2008. However, no one appeared on 30th Sept 200. It is pertinent to mention here that assessee was given several opportunities by the DDIT(Inv) Unit 1(2) Kolkata to cross examine the said directors of Kolkata based companies to prove the genuineness of his stand which he ahs recorded to the ADIT(Inv). Unit IX(2) Mumbai. But, instead, assessee ahs sought adjournment every time andelmeMarsover, the onus of proving genuineness of the transaction tes on the assessee, which the assessee has tried to shift on the Assessing Officer's shoulder. 6.2 Since the investigation proceedings were not part of the assessment proceedings in the case of the assessee and even the investigation was not either u/s. 132 or u/s. 133 of the IT Act. It seems that investigation by the ADIT(Inv) Unit 1, Kolkata is preliminary investigation only to verify the suspicion of any concealment of income. The Assessing Officer, during the course of assessment proceedings asked the assessee to produce the said directors for cross examination. It is evident from the letter of the Assess....
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....assessee company routed through various levels finally reached to the assessee. Not an lota of evidence or material has been brought on record to show even, prima facie that the said amount representing application money moved from the assessee and reached to the assessee. Rather, documentary evidence on record exhibits different facts i.e. as per books of account of the assessee as well as those of investing companies together with the return of income. board resolution go to prove that the said application money was paid by the Investing company to the pointment of the preferential shoros. The Investing companies have shown the said amount as investment in their books of account. The money routed through banking channels and through account payee cheques/bank draft, undisputed given by the parties. Even, the source of the application money was found in the bank account of the investing companies not by any cash deposit; but through account payee cheques. Therefore, when all the documentary evidence contradicts the statements of the directors recorded by the investigation unit of the department then such statements alone cannot be taken as the basis much less a good or pr....
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....a (supra), the Hon'ble Delhi High Court has taken a note of the finding of the Tribunal in para 2 as under: "2. The Tribunal has confirmed the order passed by the CIT(A) which held the entire addition made by the Assessing Officer to be invalid and had deletedthesom The CINA had clearly held that the Assessing Officer nad postal the assessment order in violation of the principles of natural justice in as muer as he had neither provided copies of the seized material to the assessee nor had he allowed the assessee to cross-examine one Mr. Manoj Aggarwal on the basis of whose stalement the said addition was made. The CIT(A) also held that the entire addition deserved to be deleted, particularly so, because the transactions also stood duly reflected in his regular returns." 7.1 The Hon'ble High Court has held that once there is violation of principles of natural justice by not providing seized material to the assessee as well as cross examination of the persons on whose statements, the Assessing Officer relied upon, amounts to denial of opportunity and would be fatal to the proceedings. The Hon'ble Delhi High Court has observed in para 7 as under: ....
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....uineness of transaction could be copies of the are holders register, share application forms, share transfer register, As far as creditworthiness or financial strength of the editor/subscriber is concemed, that can be proved by producing Ahe bank statement of the creditor/subscriber showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. This judgment further holds that once these documents are produced, the assessee would have satisfactorily discharged the onus cast upon him. Thereafter, it is for the Assessing Officer to scrutinize the same and in case he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there have to be some cogent reasons and materials for the Assessing Officer and he cannot go into the realm of suspicion. 15 At this stage, we would like to refer to the judgment of the Bombay High Court in the case of CIT v. Creative World Telefilms Ltd. (in I. T. A. No. 2182 of 2009 decided on October 12, 2009) [2011] 333 ITR 100. The relevant portion of this order is reproduced below: ....
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....l of the Revenue only relying upon the statement of Sri Anil Raj Mehta, a chartered accountant." 8.1 The Hon'ble High Court further discussed the issue in paras 20 to 24 asunder: "20 The observations of the Supreme Court in the case of Lovely Exports P. Ltd. [2009] 319 ITR (St.) 5 (SC) go to suggest that the Department is free to proceed to reopen the individual assessments in the case of alleged bogus shareholders in accordance with law and. thus, not remediless. It is, thus, for the Assessing Officer to make further inquiries with regard to the status of these parties to bring on record any adverse findings regarding their creditworthiness. This would be more so where the assessee is a public limited company and has issued the share capital to the public at large, as in such cases the company cannot be expected to know every detail pertaining to the identity and the financial worth of the subscribers. Further the initial burden on the assessee would be somewhat heavy in case the assessee is a private limited company where the shareholders are family friends/close acquaintances, etc. It is because of the reason that in such circumstance, the assessee cannot f....
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....nion of the Assessing Officer, is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material on record. Application of mind is the sine qua non for forming the opinion. In cases where the explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz., the receipt of money. The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature. The burden is on the asse....
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.... the acknowledgment copy of return of the applicants etc. 10 In the case in hand, there is no dispute about the identity of the applicant companies, who had paid the application money and the source of the application money was also found in the respective bank accounts of the investing companies and there worno trace of cash delaatit in counts of the re companies, Inen, the action of the Assessing Officer under influenced of the report of the investigation wing without giving opportunity to the assessee for cross examination of the persons, is not sustainable. 11 The Assessing Officer has raised some doubts and suspicion about the movement of the money through various levels but could not establish any direct or indirect link of the said outward movement from the assessee and then again received by the assessee in the form of application money. Even the revenue has falled to bring anything on record to show movement of the alleged cash from the assessee. The Hon'ble Delhi High Court, in the case of Oasis Hospitalities P Ltd (supra) in and 34 has observed as under: 33 The Tribunal while confirming the aforesaid view of the Commissioner of Inc....
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....ddition in the hand of the assessee cannot be made. 13 As regards the order of the coordinate Bench of the Tribunal in assessee's own case for AY 2005-06, it is evident that the coordinate bench of the Tribunal was also of the view that the Assessing Officer did not fully establish his case that the money has been received by the investing companies from the assessee company. The Tribunal has observed in para 11 as under: "11. Assessee has furnished various documents in support of the contention that it has received share 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 logical and the opinion that assessee has couled own monies. As seen then the bank accounts of the said companies enclosed as on evidence it can be noticed that those companies invariably received fund by way of cheques from another source. On the basis of enquiry in few cases the A.O. was of the of nion that all the monies were from the assessee and treated them as income from unacco....
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....wed to the assessee, we are of the opinion that the sve reg tre set aside back to the file of the A.Q. to make comple enquiry and to give proper opportunity to the assessee." 13 There is no quarrel on the aspect that so far as it is possible the consistency of the view has to be maintained; however, in the case of the assessee, the Tribunal, for the AY 2005-06 has not formed any opinion or given any finding on this issue; but remanded the same to the file of the Assessing Officer for fresh adjudication. 13.1 Before us, the Id AR of the assessee has forcibly urged that in view of the decision of the Hon'ble Delhi High Court in the case of Oasis Hospitalities P Ltd (supra) as well as the decision of the Hon'ble Gujarat High Court in the case of Rajeh Babubhai Damania (supra), the issue may be decided on merits on the basis of the material available on record. 14 It is to be noted that it is not the case of any additional evidence or fresh material produced by any of the parties before us which requires examination or investigation to verify the correctness of the new facts first time brought before us. The case of the revenue is that the cash moved ....
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....hich is a public limited company. Accordingly, we delete the addition made by the Assessing Officer and confirmed by the CIT(A) on this account. However, we may clarify that our findings on the issue are based on respective rights of the parties for the other assessment years." 13. In backdrop of aforesaid facts, circumstances and various orders of Tribunal following the principles / decisions of Hon'ble Higher Courts, we are of the considered view that the issue in hand shall be decided on a consistent view adopted by the Tribunal, in the case of various entities involving therein identical issue, consisting of transitions with the same entities, which are involved herein as investors for the assessee, the addition made by Ld. AO and confirmed by Ld. CIT(A) cannot sustain, as the assessee had furnished all the necessary basic documents to prove the identity of the share applicants and the revenue was unable to brought on record any material to prove that the assessee's own money has come back through some closely held channels or related applicants. 14. We thus respectfully following the decisions of Co-ordinate Bench of Tribunal, referred to (supra), set aside the i....
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....ristna Tagare Bareet, CHEAT 2004-07 5.5 Kalkun - 200 007 NOSIL 18 15 Bolliwall Planwas PYL. LA 1000 ATT 50,06.000 2006-07 4TA, Kall Krobna Togoms Bowel N3ML M Kalas - 700 001 LIFE 2007-08 1044 SR. 36 1 19 La Document 2 n Surry Fiocom PPvt. ENL 39, Kali Krishna Tapure Street, Kab ala - 200 007 Total 150 6,8100 00 0,556Ã 18 4.30.00,000 1 1 Parisus Cummiros PvL Lit 1. Shantheuth Mellek Lane 2.40 for. Kolkata -300.000 Gas NIPL 2005-06 521 20077-408 FR # 48 00,200 1.40,50,000 LIL 2007-08 MR. 2 2 Ankh Tinvest Pui. Laa. Martin Bums Howis, 5th Floor, Roce 196. 4311, 1. ILN.Millerjor ficat, Kofos . 790 GGE 1300 40,00.000 10,00,000 30,00,000 20,00,000 NESPL 2005-06 855 SER. 1 200 SR # citas 2005-06 900 SR . 1,25,00,000 LIPL 2003-0 1048 N.9 1 1 Burather Vyspus Pre. Lad. 15A, longital fiyat, Iin Floor, Rooms No. 304, Kolima - 200 42 5525 27.00.000 33.00,500 28,00.000 60,00.000 3.06.000 13,06,500 21,00,000 43.00,000 11,00.509 KUPL 2.76,00,000 L500 25,00,000 21.06,500 13,00.000 5 5 J....