TMI Blog2014 (10) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... e cash book from which the AO may verify whether the cash withdrawn two and half months back is available - The assessee is a company which is in the business of real estate – revenue rightly pointed out that it needs to be verified whether no expenditure is incurred by the assessee company during the two and half month period. Similarly, with regard to mutation expenses, no vouchers for the expenses are submitted. The only explanation of the assessee is that the payment has been made by M/s Vatika Limited and the expenses were incurred for identification of land, inspection thereof, searching of registrar's record, expenses incurred on reports from advocates, brokerages etc. - Now, if a third party is debiting some account in the name of the assessee, the third party would certainly give the details to the assessee to whom they have made the payment and for which purpose - No such vouchers/details or evidence are produced before the AO either in original assessment proceedings or in remand proceedings despite assurance given to CIT(A) - before the CIT(A), the assessee agreed that he will produce the books of account and supporting evidence for verification before the AO and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased including mutation expenses through M/s Vatika limited who had duly recorded such payments in its accounts, and was duly confirmed by M/s Vatika limited. It is therefore prayed, the addition and disallowance sustained by the Commissioner of Income Tax (Appeals) aggregating to ₹ 10,37,377/-, which ought to have been deleted by the Commissioner of Income Tax (Appeals) be directed to be deleted and altogether and the appeal be allowed. 3. The grounds raised in the Revenue's appeal read as under:- 1. Whether the Ld. CIT(A) has erred on facts in law in deleting the addition made on account of unexplained source of share capital of ₹ 50,000/- introduced of Sh. Anupam Nagelia ignoring the fact that- (a) The assessee failed to give any details regarding names, address or income-tax assessment particulars of share subscribers despite having been specifically asked to do so. (b) The assessee failed to furnish confirmation from the purported share applicants. 2. Whether the Ld. CIT(A) has erred on facts and in law in deleting the addition of ₹ 10.41 lakhs made on account of unexplained cash deposited in bank account ignoring the fact that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of such share capital but was paid on his behalf by Shri Anupan Nagalia and was duly confirmed (see page 68 of the paper book). It is submitted that, assessee had led evidence to establish that, shares were issued and the aforesaid amount was received against the issue of the share capital. The assessee company was incorporated on 15.04.2005, with a share capital of ₹ 1,00,000/- only. The aforesaid share capital was contributed by those shareholders, who were promoter shareholders. 5. The learned A.O. had made the addition of the said sum when he held that the source of the cash of ₹ 1,00,000/- has not been explained by the assessee company. In fact, in making such an observation the learned A.O. failed to comprehend that, no such inference could have been drawn by him without calling upon the assessee to produce evidence in support of the share capital. In view thereof, learned A.O. having made the addition, and assessee disputed the said addition before the CIT (A) and submitted that, said sum represents share capital contributed by the shareholders. It was explained that the aforesaid contribution was received from Shri Anupam Nagalia through banking channel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a copy of the confirmation as well as copy of the bank account of Shri Anupam Nagalia. (see page 70 . page 95) 9. It is thus evident there could have been no valid basis whatsoever to have held that ₹ 1,00,000/- being the credit to the share capital is an unexplained cash deposit on which finding, the learned A.O. has made an addition of ₹ 1,00,000/- It is thus submitted, that the learned A.O. had erred in making the addition of ₹ 1,00,000/- and the CIT(A) has erred while deleting addition of ₹ 50,000/- as explained still sustained an addition of ₹ 50,000/- which sum represents contribution towards share capital against the issue of shares in the name of Shri Deepak Gupta. It is submitted that, the assessee has not received nor there is any other credit of ₹ 50,000/- and that too, in cash as a sum allegedly received from Shri Deepak Gupta. Despite the aforesaid fact, the learned CIT (A) has sustained the addition of ₹ 50,000/- representing share capital in respect of shares allotted to Shri Deepak Gupta. It is submitted with respect that, there is contradiction in terms. The source of ₹ 10,10,000/- is Shri Anupam Nagalia, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Articles of Association (Page 71 - 94) (ii) Certificate of incorporation showing that on the basis of the aforesaid memorandum company has been incorporated. 13. Now, in respect of the addition made by the learned A.O. and sustained by CIT (A) of ₹ 9,87,377/- the assessee submits that, the aforesaid addition has been made without any basis. The said addition is totally illogical and is fanciful. Perusal of the annual accounts i.e. profit and loss account (see page 5) reflects that, in the instant year assessee had incurred an expenditure of ₹ 14,12,97,149/- towards the cost of trading assets and the same was reflected as closing stock (see page 6). The learned A.O. has not disputed either the cost incurred or the value of closing stock, despite the same, he has made addition by observing in his order in para 3 as under: Mutation expenses: From the purchase account of land, it is seen that this account also includes the mutation expenses of ₹ 9,87,377/-.The assessee company was asked to explain the sources of the mutation expenses Gwhether the expenses were paid in cash or through cheque. But, the assessee company has failed to explain the sources o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.10.2005 17,92,650.00 9,800.00 127 07.10.2005 1,35,41,237.00 49,852.00 128 10.10.2005 53,01,100.00 19,550.00 129 24.10.2005 90,67,750.00 33,000.00 130 25.10.2005 67,94,600.00 25,100.00 131 28.10.2005 5,01,625.00 2,775.00 132 28.10.2005 19,93,500.00 36,000.00 133 18.11.2005 23,23,850.00 12,600.00 134 Total 9,87,377.00 15. It would further be seen that, as per the ledger account of M/s Vatika Limited in the books of assessee, a sum of ₹ 17,63,03,759/- has been credited and the said credit represents ₹ 14,12,97,149/- towards cost of land which incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y arbitrary. Even otherwise, it is submitted, since no claim of deduction has been claimed, no addition could be held to be tenable in law as the same is against the principles of accountancy and computation of income under law. It is submitted that, assuming and for the sake of an argument, though disputed that, no expenditure was incurred as has been assumed then it is not known under which of the provision of Income Tax Act, such amount could be added to the income, when no such expenses have been claimed, as a deduction. Without prejudice to the aforesaid and in the alternative it is submitted, the fact that the expenditure has been incurred cannot be disputed, which expenditure had been incurred by M/s Vatika Limited on behalf of the assessee which is duly debited in the books of M/s Vatika Limited in the account of the assessee, who is collaborator of the assessee. Thus the addition made and sustained by the CIT (A) is highly illegal, arbitrary, without application of mind, in disregard of the basic principles of the account as well as the statutory provision of the Income Tax Act. 18. In respect of the departmental appeal i.e. ITA No.: 1213/Del/2013 18.1 That the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on fact and in law. 4.1 Ld. Counsel of the assessee has also filed the Paper Book from pages No. 1 to 157 containing the various documents and details filed during the proceedings before the lower authorities. 5. On the other hand, learned DR has argued at length. She also filed a paper book from page 1 to 68 containing the assessment record of the Assessing Officer and relevant documents. She submitted that during the course of assessment proceedings, the Assessing Officer asked the assessee to submit the details of equity share capital for the new share capital introduced during the year alongwith confirmations and income tax particulars of subscribers. In response to which, the assessee only stated that the company was incorporated with the share capital of ₹ 1 lakh. No further explanation/evidence with regard to the share capital of ₹ 1 lakh was furnished before the Assessing Officer. Even before the CIT(A), the assessee has not furnished the confirmation of two shareholders in whose account ₹ 50,000/- each was credited but, on the other hand, the assessee's explanation is that the assessee had received a cheque of ₹ 10,10,000/- on 2.5.2005 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the remand proceedings. She referred to the letter of the CIT(A) which is at page 6 of the department's paper book wherein the CIT(A) has mentioned that the AR has submitted before the CIT(A) that the assessee is ready to offer cooperation in examination of additional evidence. On that basis, the CIT(A) asked the Assessing Officer to call for the relevant vouchers and the books of account for verification and then submit another remand report. She referred to the order sheet entry dated 1.11.2010 and pointed out that the books of account and vouchers not produced. She, therefore, submitted that either the order of the Assessing Officer may be restored i.e. all the additions made by the Assessing Officer should be sustained or alternatively, the matter may be sent back to the file of the Assessing Officer for re-examination. 6. We have carefully considered the submissions of both the sides and perused relevant material placed before us. With regard to share capital of ₹ 1 lakh, the query raised by the Assessing Officer reads as under:- Furnish the details of the equity share capital for the new shares capitals introduced during this year along with confirmations, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or evidence are produced before the Assessing Officer either in original assessment proceedings or in remand proceedings despite assurance given to CIT(A). The CIT(A) wrote a letter to the Assessing Officer dated 15.8.2010, copy of which is at page 6 of the department's paper book. It reads as under:- The Income-tax Officer, Ward 3(1), New Delhi. Sub : Application under rule 46A(1) for production of additional evidence befreo CIT(Appeals) in the case of M/s Buzz Estates Pvt.Ltd. A.Y. 2006-07 - reg. Please refer to the subject cited above. In your remand report, you have raised the issue that in the absence of supporting vouchers and books of accounts, comments cannot be offered on the additional evidence. In his rejoinder, the AR has submitted that he is ready to offer cooperation in examination of additional evidence. For ascertaining the factual position, you are requested to examine the documents filed by the appellant. In this regard, you may call for the relevant vouchers and books of accounts for verification. Your report must reach this office within one month of receipt of this letter. Sd/- (Geetmala Mohananey) Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
