9911796707
TMI Blog2014 (10) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... y Shri Anupam Nagalia and thus there could have been no justification to hold, that the said sum of Rs. 50,000/- received from Shri Anupam Nagalia, in respect of which shares issued to Shri Deepak Gupta could be held to be unexplained credit in the hands of the assessee company. 2. That the learned Commissioner of Income Tax (Appeals) has further erred both on facts and in law, in upholding the disallowance of Rs. 9,88,377/- debited by the assessee under the head "purchase account on account of mutation expenses". 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there could have been no valid justification to hold, that the assessee had failed to establish the source of expenses incurred and debited as mutation expenses. 2.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the expenses on mutation had been incurred by the company M/s Vatika limited and the assessee had paid a cost of registration of land purchased 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribution from Shri Deepak Gupta. In ground NO.2, the appellant has challenged the addition sustained of Rs. 9,88,377/-, debited by it under the head purchase account on account of mutation expenses". In respect of ITA No. 1213/Del/2013 It is an appeal filed by the revenue wherein the revenue has challenged the deletion of the two sums namely: (i) Rs. 50,000/- being the sum received by way of share capital from Shri Anupam Nagalia; (ii) Rs. 10,41,000/- on account of alleged unexplained cash deposit in the bank account of the assessee. 4. Firstly, taking up the assessee's appeal, i.e. ITA No. 1186/Del/2013, it is submitted that, in the appeal filed by the assessee the first ground pertains to an addition of Rs. 50,000/- which represents sum received as share capital. In this case, the assessee had issued 5000 shares in the name of Shri Deepak Gupta and the aforesaid sum was credited in the books against the issue 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n included in the total income of the assessee as unexplained credit. an the contrary, instead of the aforesaid sum, all what has been brought to tax by the learned A.O. was the amount of Rs. 1,00,000/- despite the fact, the credit was of Rs. 10,10,000/- and was through a cheque. Since the aforesaid sum of Rs. 10,10,000/- had been received by the assessee from Shri Anupam Nagalia who had advanced Rs. 9,10,000/- as loan to the assessee company, the said sum was credited to the loan account of Shri Anupam Nagalia (see page 70) and was debited to bank account; whereas Rs. 1,00,000/- was appropriated towards the share capital, being the contribution made by Shri Anupam Nagalia on his own behalf and on behalf of above shareholder namely Shri Deepak Gupta. To support the source of credit of Rs. 10,10,000/- assessee had filed before the learned A.O. 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 Rs. 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to the aforesaid, the appellant submits that, if the identity of Shri Deepak Gupta is held as not proved, then there was no company and no assessment could be made on the company. The assessee submits that, it being an undisputed position that, assessee is a company and there being no adverse finding by the learned A.O. in his order that the assessee has failed to establish the identity of the shareholder, learned CIT(A) could not have without giving an opportunity concluded that assessee has failed to establish the identity of Shri Deepak Gupta. 12. The assessee however without prejudice to the aforesaid submissions that, Shri Anupam Nagalia has identified Shri Deepak Gupta and otherwise too, his identity established from the following documents on record. (i) Memorandum 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 Rs. 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. Perusa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 1,09,60,937.00 40,000.00 124 03.10.2005 2,18,72,000.00 80,000.00 125 03.10.2005 81,92,750.00 30,000.00 126 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 Rs. 17,63,03,759/- has been credited and the said credit represents Rs. 14,12,97,149/- towards cost of land which includes Rs. 9,87,377/- as mutation expenses. Further to the aforesaid sum of Rs. 14,12,97,149/- a further sum of Rs. 3,50,00,000/- had been paid as a loan besides incurring the preliminary expenses of Rs. 6,610/- as is tabulated below: Detail of Vatika limited 1. Land Purchased Rs. 14,12,97,149/G 2. Cheque paid to assessee Rs. 3,50,00,000/- 3. Preliminary expenses incurred Rs. 4,810/- Rs. 200/- Rs. 1,600/- Rs. 6,610/G Due on 31.03.2006 Rs. 17,63,03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 respondent assessee submits that for the reasons stated by the learned CIT(A) in his order in respect of the two sums, he has correctly deleted the aforesaid sums. The respondent further submits that while deleting the addition made of Rs. 10,41,000/-, the learned CIT (A) has noted that source of the credits in the books of the account of the assessee is out of cash withdrawn from the bank on 04.05.2005 and 07.05.2005 and was thereafter in the books of the assessee was shown as cash in hand. It is an admitted fact that there are no adverse observation made in respect of the correctness and completeness of the books of account maintained by the assessee. In view thereof it is submitted that when assessee re-deposited the same out of the cash balance, then he clearly erred in holding that credits are unexplained. In fact in so doing, he has merely stated that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer. Even before the CIT(A), the assessee has not furnished the confirmation of two shareholders in whose account Rs. 50,000/- each was credited but, on the other hand, the assessee's explanation is that the assessee had received a cheque of Rs. 10,10,000/- on 2.5.2005 from Shri Anupam Nagalia and out of this Rs. 10,10,000/-, a sum of Rs. 1,00,000/- was credited to the share capital account in the name of two persons Shri Anupam Nagalia and Shri Deepak Gupta. Balance Rs. 9,10,000/- was credited to the loan account of the assessee. That when cheque of Rs. 10,10,000/- was received from Anupam Nagalia, why and on what basis it was credited at three different places? She also stated that the books of account were never produced before the Assessing Officer either during original assessment proceedings or the remand proceedings so that the contention of assessee can be verified. The assessee also did not produce confirmation from shareholders. 5.1 With regard to cash deposit of Rs. 10,41,000/- in the bank account, she submitted that the only explanation given by the assessee is that the amount is deposited out of earlier cash withdrawn from the bank. Here again, there is a ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before us. With regard to share capital of Rs. 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, IT particulars of subscribers." 6.1 In response to this, the reply furnished by the assessee reads as under:- "The assessee company was incorporated 15-04-2005 under the Companies Act, 1956 with a share capital of Rs. 1,00,000/- other than initial share capital of Rs. 1,00,000/- no further Equity Share Capital was raised during the year under consideration." 6.2 From the above, it is evident that the assessee has not given any details with regard to the share capital of Rs. 1 lakh, not even the name of the shareholder and the confirmation of the shareholder. Before the CIT(A), the assessee explained that it had received the sum of Rs. 10,10,000/- by cheque from Shri Anupam Nagalia, out of which, Rs. 50,000/- is credited to the share capital account of Shri Anupam Nagalia, Rs. 50,000/- to the share capital account of Shri Deepak Gupta and balance Rs. 9,10,000/- in the loan account. Except this explanation, no confirmation from anybody w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (Appeals)-VI, New Delhi" 6.3 From the above, it is seen that before the CIT(A), the assessee agreed that he will produce the books of account and supporting evidence for verification before the Assessing Officer and therefore, the CIT(A) directed the Assessing Officer to call for the relevant vouchers and books of account for verification. The DR has produced the photocopy of the order sheet dated 1.11.2010 in which Assessing Officer has recorded that the books of account and vouchers not produced. Considering the totality of these facts, we agree with the submission of the learned DR that the entire matter needs complete relook and re-examination by the Assessing Officer. We, therefore, set aside the orders of the authorities below on all the points raised either in Revenue's appeal or in assessee's appeal and restore the matter to the file of the Assessing Officer to be readjudicated afresh in accordance with law. We also direct the assessee to produce the books of account and all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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