Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 637 - AT - Income TaxAssessment u/s 153A - Addition u/s 68 - bogus share capital and premium received - whether the investigation made by the investigation wing subsequent to the post search operation amounts to incriminating material? - HELD THAT:- No materials or income found during search but AO relied completely on the information forwarded by the investigation wing post search and he refers to few slips of papers being alleged seized materials where the capital fund transfers are written and which are to be split and distributed into group companies. These alleged seized papers were not referred to anywhere in the assessment order and further we enquired with the Ld. DR, whether the above said seized papers exist in the assessment records. He, after verification submitted before us that no such papers exist. Considering the above facts on record, we do not see any No reason to treat the assessment valid for the AY 2009-10 to 2012-13 since these were not abated at the time of search. By respectfully relying on the various decisions of the various courts on the subject of incriminating material, we hold that the assessment made by the assessing officer under section 143(3) r.w.s 153A without any incriminating material is bad in law and accordingly no addition could be made thereon for the receipt of share capital and share premium. AYs 2013-14 and 2014-15 the assessee had submitted sufficient information before tax authorities that the sister companies have sufficient funds to make investments. The sister concerns having less or meagre income is of no relevance for the purpose of making investment in the assessee company. What is relevant is the availability of cash flow with the sister concerns to make investments in the assessee company. There is no requirement in the statute to make investment in another concern only out of income earned during the year. From the perusal of the audited financials of M/s. Patni Holdings Pvt. Ltd., it is found that the net owned funds as on 31.3.2013 and 31.3.2012 was ₹ 9.15 crores which is very much sufficient to make investment of ₹ 3.50 crores in assessee company in A.Y. 2013-14. Similarly from the perusal of the audited financials of M/s. SMDS Trading Pvt. Ltd., it is found that the net owned funds as on 31.3.2013 and 31.3.2012 was ₹ 15 crores which is very much sufficient to make investment of ₹ 1.36 crores in assessee company in A.Y. 2013-14 and ₹ 25 lakhs in A.Y. 2014-15. Therefore, in our considered view, the assessee has also proved the credit worthiness. Genuineness of the transaction - There is no involvement of cash anywhere in this transaction and all the transactions are routed only through bank. The tax authorities have not brought on record any evidence to prove otherwise. We observe from the record that the AO merely relied on the inspector report as per which all the companies are in one address and return of income are filed in different places than the registered office. It is brought to our notice that the companies are operated from 71, Canning Street and 3, Mango Lane, Kolkata are address of whole complex which consist of several floors where several offices are situated. Merely because the returns are filed from a different location other than the registered office, as alleged by the AO, the same cannot be the reason to draw adverse inference on the genuineness of the transactions. Therefore, in our considered view, the assessee has complied and proved the onus rest on them. The oral report of the inspector also cannot be relied on for deciding the genuineness unless there is proper evidence on record. Therefore, in our considered view, the additions made by the AO is on the basis of unsubstantiated facts. Therefore, we direct AO to delete the additions made u/s. 68 of the Act. Addition with respect to cash estimate on account of scrap sale - We noticed that AO applied presumption and assumptions to bring cash components in the scrap sale of all the units even though nothing was found during search in other units, which are part of search operation. In our considered view, the AO and CIT(A) has sustained the addition merely on assumptions without their any evidence to show that assessee has not declared the cash sales in all the units. Therefore, we are directing AO to sustain the addition made only on the scrap sales recorded in the Abu Road unit only for the AYs 2014-15 and 2015-16. Accordingly, the grounds raised by the assessee are partly allowed.
|