Latest - TMI e-Newsletter
New User/ Regiser
2022 (9) TMI 978 - Income Tax
Reopening of assessment u/s 147 - Addition u/s 68 - unexplained share capital - HELD THAT:- As there is an information received by learned AO about the share capital received by the assessee at a huge premium which does not support the financial of the assessee, the return of income of the assessee was examined, which did not show any financials to support the above share capital, the funds have been diverted from the assessee to Sahara group, the income of the assessee is meager and therefore all these reasons clearly established that the learned assessing officer has ‘reason to believe’ that income of the assessee has escaped the assessment. The requisite notices have been duly served on the assessee. The assessee has chosen not to respond to them. Therefore, we do not find any infirmity in the order of the learned assessing officer in assuming jurisdiction u/s 147 of the income tax act. The learned assessing officer has a tangible material, return of income of the assessee was not picked up for scrutiny, the return of income was examined before the issue of notices, belief entertained by the assessee is of a reasonable person and therefore, reopening is upheld. No infirmity is found in the order of the learned CIT – A in confirming the same. Therefore, ground numbers 1 – 4 of the appeal are dismissed.
Addition u/s 68 - The companies are registered in Mumbai, but their bank accounts were operated from Lucknow. This coincidence is further corroborated from the fact that now the assessee in form number 36 has given its address which is also at Sahara India point. The company does not have any net worth but amount advanced to Sahara group. Therefore, it is a clear ploy to transfer the money to Sahara group through this shell companies. The information mentioned in the email column of form number 36 is also irrelevant.
Form number 36 is also not verified by the managing director of the company. The form number 35 is signed by one person and form number 36 is signed by different person but there is no certification that any of them is the director of the company or managing director of the company authorised to sign return of income u/s 140 of the act. Even the interest of the assessee is also very clear that it wants to get the amount of the addition confirmed in the hands of this assessee, therefore, the real beneficiary of the money is not at all touched.
The confirmation of addition in the hands of this company will allow the real beneficiary of the above sum go Scott free. Accordingly, we set-aside the addition added in the hands of the assessee u/s 68 of the Income Tax Act as unexplained share capital, back to the file of the learned assessing officer with a direction to the AO to issue enquiry letter to the banker of these company i.e. ICICI bank, Lucknow to find out who operated this account, the necessary summons to the director of this company as well as the company who received the above sum should also be issued and they must be examined before making addition in the hands of this assessee or deleting the addition.
AO is further directed to intimate/initiate if the transaction leads to any violation of the Prohibition of Benami transaction act, 1988. After all these examination, the assessee is directed to show the identity and creditworthiness of the persons who invested money into the assessee, the summons would also be issued to the investor in this company to examine the genuineness of the transaction. If on examination, the learned assessing officer reaches at a conclusion that there is a bigger financial fraud committed by the assessee, the respective authorities are also required to be intimated. Accordingly, ground number 5 and 6 of the appeal are set-aside to the file of the learned assessing officer with above direction.
Appeal of the assessee is partly allowed.