TMI Blog2015 (2) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... had deposited employer’s contribution as well as employee’ contribution towards provident fund and ESI after the due date, as prescribed under the relevant Act/ Rules but before the due date for filing the return under the Income-tax Act Held accordingly, that no disallowance could be made in view of the provisions of Section 43B as amended by the Finance Act, 2003. - Decided in favour of assessee. Addition u/s 68 - addition on account of share capital - CIT(A) deleted addition admitting additional evidence - Held that:- CIT(A) ought to have recorded a specific findings spelling out the reason and basis before admitting such evidence and considering them for adjudication. As the statutory pre-condition has not been fulfilled we set-aside the order of the ld CIT(A) as regards the addition of ₹ 223 lakhs. However on the perusal of the remand report we find that the AO also sought to lead additional evidence in the form of investigation carried out by Investigating Wing apart from seeking personal deposition of share holders. In such a scenario, it would be in the fitness of things and interest of justice that the issue in hand as regards, the addition of ₹ 223 lakhs i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e through registered post and verifying the authenticity of receipt of registered post as mentioned in the appellate order and address on which such registered post was sent by assessing officer and to whim it is served under the circumstances when it is specifically asked for by the appellant company and receipt of such notice is denied by the appellant company. 3. ld CIT(Appeals) is not justified in law and facts and circumstances of the case in holding the assessment order passed by the assessing officer as valid under the circumstances when it is passed by the assessing officer against the principal of natural justice and appreciating the correct facts of the case and without giving proper opportunity of being head. 4. Ld CIT(Appeal) is not justified in law and facts circumstances of the case in confirming the action of assessing officer in making the disallowance of ₹ 2,53,786/- under section 35D of the I.T. Act and holding the expenditure of ₹ 24,02,064/- under the various heads as capital expenditure which is otherwise allowable as revenue expenditure under section 37(1) of the I.T. Act as prayed for during the course of appellate pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier. 3. On the facts and circumstances of the case the ld CIT(A) has erred in deleting the addition of ₹ 23 lacs by the AO u/s 68, on account of share capital received from relative of a Director, by accepting fresh evidence without referring the issue to the AO, as per Rule 46A. 4. On the facts and circumstances of the case the ld CIT(A) has erred in deleting the addition of ₹ 32,30,000/- by the AO u/s 68, on account of share capital received in cash, by accepting fresh evidence with out referring the issue to the AO, as per Rule 46A. 4. Ground Nos. 3 4 of the assessee is not pressed, so dismissed. 5. Ground No. 1 2 of assessee s appeal are regarding the validity of order passed u/s 143(3) of the Income Tax Act, 1961 (herein after the Act ) without proving the valid service of notice as per proviso to Section 143(2) of the Act. 6. The undisputed facts are that the assessee company furnished the return of income on 2nd December 2003 declaring loss of ₹ 58,510/-. The AO issued notice u/s 143(2) on 15.10.2004 fixing the case for hearing on 25th October 2004. The assessee before the ld CIT(A), contended that first notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied the service of notice dated 15th October 2004, u/s 143(2) of the Act and thus contended that there was no valid assumption of jurisdiction under the Act and relied upon the case cited and reported in the case of Commissioner Of Income Tax vs Lunar Diamonds Ltd. 281 ITR 1, wherein it was held that in the absence of valid service of notice, the AO lack jurisdiction to frame an order of amendment u/s 143(3) of the Act. On the other hand, the ld DR placed on record the copy of the notice along with registered slip proving the dispatch of the said notice. 8. We have heard both the parties and have carefully perused the records and the case laws cited by both the parties. From the material placed before us, we find that the return of income was furnished on 2nd December 2003, by the assessee company. According to proviso to Section 143(2) of the Act, a notice u/s 143(2) must be issued and served upon the assessee within a period of 12 months from the end of the month in which the return of income was furnished by the assessee. According to the revenue, a notice dated 15th October, 2004 was issued and served upon the assessee within the statutory period prescribed under the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to PF and deposited late by the assessee, like-wise ground No. 1 of the revenue s appeal is regarding the deletion of addition made on account of late deposit of PF contribution by the employer u/s 43(B) of the Act. 11. The aforesaid the issue is no longer res-integra and stands covered by the ratio laid in the case of CIT Vs. Aimil Ltd. (2010) 321ITR508 , wherein it was held as under:- Where for the assessment year 2002-03 the assessee had deposited employer s contribution as well as employee contribution towards provident fund and ESI after the due date, as prescribed under the relevant Act/ Rules but before the due date for filing the return under the Income-tax Act Held accordingly, that no disallowance could be made in view of the provisions of Section 43B as amended by the Finance Act, 2003. 12. In view of the aforesaid, the disallowance made and sustained is deleted. Accordingly the ground raised by the revenue is dismissed and the ground raised by the assessee is allowed. 13. Ground Nos. 6 to 8 of assessee s appeal and ground Nos. 2 to 4 of the Revenue s appeal pertains to addition of ₹ 2,68,00,000/- u/s 68 of the Act and pertains to additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of confirmation and company s Master details as obtained from the Web-site of ROC were placed on record in respect of share by the assessee. However the ld DR supported the finding of the ld CIT(A) that the addition was based on investigation carried out by Investigation Wing wherein it was found that some of the share-holders were engaged in providing entries after charging commission. She relied on the judgment of Nova Promoters 342ITR169 (Delhi) and pointed out that few of the share-holders are common to appellant and in the afore-cited case. As regards the addition deleted by the ld CIT(A) she submitted, since the assessee had not led any evidence during the course of assessment proceedings, the ld CIT(A) ought to have sustained the addition and not admit additional evidence Under Rule 46A. Even otherwise on merits there was no justification for the ld CIT(A) to have granted part relief to the assessee as the burden of the assessee remained un-discharged. 17. We have heard both the parties and have perused the record of the case and have carefully gone through the case laws cited by both the sides. The assessee has raised share capital of ₹ 2,68,00,000/- in the year u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers along with the evidences and categorized the shareholders into four categories which included share capital allotted in the proceedings Assessment Year s of ₹ 50 lakhs. The entire evidence was sent to the AO for his comments and in the remand report the AO objected to the admission of additional evidence. He has stated in his report dated 09th January 2007 as under:- 2. Sir, the assessment for the above asstt. Year was completed u/s 143(3), after affording following opportunities to the assessee, to furnish the requisite details including the list of subscribers to share capital, their complete addresses, to prove the genuineness of the transactions and credit worthiness of the subscribers, to appear before the undersigned for personal deposition on any date which suits and convenient to the assessee. Date Details of letters/ notice sent Date fixed for Remarks 15.10.2004 Notice u/s 143(2) issued 25.10.2004 15.06.2005 Notice u/s 143(2)/ 142(1) and questionnaire issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art details which assessee liked to submit at its discretion and in such a manner that the assessing officer may not be in a position to conduct any subsequent enquiries on the basis of information what so ever furnished by the assessee during the course of asstt. Proceedings. 4. Sir, first notice in this case was issued on 15.10.2004, and a questionnaire was issued to the assessee company on 15.6.2005, but despite a number of opportunities provided to the assessee company, it did not like to furnish the requisite information, and to appear for personal deposition. Sir, in view or the above reasons, and reasons explained in detail in the asstt. Order passed by the undersigned and more particularly in Para 2.13 of the order passed, assessee does not deserve to be allowed any opportunity as per provisions of rule 46A. However, as desired Para wise comments on the submissions made by the assessee under rule 46A are submitted for your kind. 19. Further on merits of the addition, in the remand report, it was stated as under:- Increase in issued, subscribed called up and paid up capital ₹ 2,68,00,000/- : Sir, as mentioned above in para 2, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove that it does not bear the nature of income. 20. Apart from the above it was also stated as under:- 7.15 To prove the genuineness of the transaction, it is on the part of the assessee to prove the credit worthiness and existence of the subscriber at the given address. Nothing has been brought on records by the assessee, as to why the said list of the subscribers was not furnished during the course of asstt Proceedings, so that necessary enquiries could have been conducted by the A.O. to justify the genuineness of the transaction, and credit worthiness of the subscribers. Assessee has not produced any of the subscriber for personal deposition so that the genuineness of the transaction may be examined. The confirmations now filed even do not speak the mode of payment, date of payment etc. by the subscribers, and ay anything as to what is their source of income, out of which the amount has been contributed. A perusal of these confirmations reveals that these are not oven signed by the actual subscriber. A close examination of the confirmations filed of the various companies will show that these companies even do not have any telephone numbers to establish as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.5,000/- 15. Paras I nfotech Pvt. Ltd., Rs.10,00,0/-00 16. Tash i'Contractors Pvt. Ltd. Rs. 7,00,000/- 17. Polo Leasing Finance Pvt. Ltd., ₹ 10,00,000/- 18. Maestro marketing Advertising Pvt. Ltd., Rs.4,65,000/- 7.17 Sir, if your honour desire, the copy of the CD provided by the DIT (Investigation), New Delhi, can be produced before your honour, and that may be considered as an additional evidence of the Department. 7.18 Sir, Not only the above entries, but even the other entries are also not beyond doubt, in the present circumstances, when information has been received about the above named companies that these are engaged in the business of providing entries to the parties. As assessee was known this fact, that in actual majority of the share capital shown to have contributed during the year under consideration is bogus, it thought better in order to gain time that the requisite information should not be furnished to the Assessing Officer, so that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the year under consideration. Thus, in the case of only nine parties other than Ramson Drugs Ltd, the shares were allotted out of share application money received during earlier year totaling to ₹ 45 lakhs only and not ₹ 50 lakhs as claimed by the applicant. Therefore, considering the facts and circumstances of the case, an addition to the extent of ₹ 45 lakhs only on this account deserves to be deleted as the amount was credited on the books in earlier year and addition of such amount cannot be made in Assessment Year 2003-04 under consideration. Hence, addition to the extent of ₹ 45 lakhs is deleted on this account. 23. It is well settled law that credit raised in the earlier year cannot be brought to tax in any subsequent year. Therefore we do not find any infirmity in the order in this regard passed by the ld CIT(A) and we confirm it. 24. So far as the balance addition of ₹ 223 lakhs is concerned, it pertains to sum raised during the year. The entire evidence in support of the aforesaid sum was furnished as additional evidence Under/Rule 46A, admission of which evidence was objected by the AO as is noted above in the remand report. However ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
