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2015 (4) TMI 755 - ITAT DELHI

2015 (4) TMI 755 - ITAT DELHI - TMI - Unexplained share application money - Ao makes addition on general basis, no detailed enquiry undertaken by him - Profits from share trading - Business income or Short term capital gain - Held that:- No inquiries were conducted by AO to find out the genuineness of the transactions and creditworthiness of the companies who had applied for the share application money in the assessee company. We find considerable merit in the argument of ld. counsel for the ass .....

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arry out any inquiry and merely made addition on general basis. The inquiry for arriving at a proper conclusion is a sine qua non and that cannot be dispensed with by making general observations. We find that the decision in the case of Goel Sons Golden Estate P. Ltd. [2013 (4) TMI 571 - DELHI HIGH COURT] is squarely applicable to the facts of the present case. Also refereed case - Fair Invest LTd. [2012 (12) TMI 170 - DELHI HIGH COURT].

Profits from share trading - The AO has categor .....

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for statistical purposes. - Decided partly in favour of revenue. - ITA no. 1560/Del/2010 - Dated:- 13-3-2015 - Shri S.V. Mehrotra And Shri Kul Bharat JJ. For the Appellant : Shri P. Das Kanunjna Sr. DR For the Respondent : Shri Ved Jain Adv. Smt. Rano Jain CA Shri Venktesh Chaurasia CA ORDER Per S.V. Mehrotra, A.M:- This appeal, preferred by the department, is directed against the order dated 22-01-2010, passed by the CIT(Appeals)-XV, New Delhi in appeal no. 587/08-09, relating to A.Y. 2006-07. .....

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IT(A) partly allowed the assessee s appeal. Being aggrieved with the order of ld. CIT(A), the department is in appeal before us and has taken following grounds of appeal: 1. On the facts and circumstances of the case and in law, the order of the CIT(A) is wrong, perverse, illegal and against the provisions of law which is liable to be set aside. 2. On the facts and circumstances, whether Ld. CIT(A) was justified on facts of the case and in law in deleting the addition of ₹ 80,00,000/- made .....

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. 4. The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. Ground no. 1 is general in nature and requires no adjudication. 4. Brief facts apropos ground no. 2 are that in course of assessment proceedings AO noticed that assessee had introduced share application money amounting to ₹ 2,40,00,000/-, including share premium of ₹ 2,16,00,000/- from as many as 26 concerns. The assessee had furnished a list of such concerns along .....

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5. The assessee in its reply pointed out that all the details along with PAN of the companies had already been furnished. The AO, however, observed that assessee had not produced the directors of the company and, therefore, taking note of the fact that the alleged companies were known entry providers observed that genuineness of the transactions had not been proved and the assessee had failed to discharge its onus in this regard. He relied on the decision of Hon ble Supreme Court in the case of .....

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plication money. i. The copy of ledger account of share application in the books of assessee. ii. The copy of bank statement along with the copy of cheques through which the money was received. iii. Copy of ledger account of share capital i.e. in which the money was transferred after allotment. iv. Copy of Balance Sheet and Profit & Loss a/c depicting the same. v. Copy of Annual Return filed with Registrar of companies which included list of share holders i.e. old as well as new. vi. Copy of .....

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d further submitted that since assessee had filed all the details it was for the AO to conduct some inquiry to support his claim with regard to a transaction being ingenuine, being names/ addresses/ PAN details/ tax returns of creditors had been produced before him. If the assessee was not able to produce any of the creditor, the AO was required to issue notice u/s 131 of the Act and call the concerned parties for examination. The assessee relied on various decisions noted in the submissions mad .....

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es of all companies. 8. Ld. CIT(A) deleted the addition, inter alia, observing as under: The AO has no where proved that documents in support of the identity of the parties have not been placed on record and they were forged documents. The AO also has not brought any evidence on record regarding the facts that the share applicants were not creditworthy or genuine, despite the fact that their PAN and copies of I.T. returns were submitted by the appellant. In view of the discussion made above the .....

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ding is entirely on different footing. 11. Ld. counsel for the assessee submitted that assessee had submitted all the details and evidences to establish the identity and creditworthiness of the share applicants and genuineness of transaction. AO had not commented upon these evidences or gave any adverse finding about the documents submitted by assessee. AO did not carry out any investigation after the assessee had submitted details about the share applicants. He submitted that it is not also the .....

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2(12) TMI 170-Delhi High court. Ld. counsel submitted that the issue is squarely covered by the decision of Hon ble Delhi High Court in the case of CIT Vs. Goel Sons Golden Estate Pvt. Ltd. (ITA no. 212/2012 - dated 11-4- 2012), wherein it has been, inter alia, held that where AO fails to conduct necessary inquiries, verification and deal with the matter in depth after the affidavit/ confirmation along with bank accounts were filed, then the assessment order cannot be sustained. 12. Ld. counsel .....

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umbers. In the same category fall cases decided by this court in Dolphin Canpack (2006) 283 ITR 190, CIT v Makhni and Tyagi P. Ltd. (2004) 267 ITR 433, CIT v Antartica Investment P. Ltd. (2003) 262 ITR 493 and CIT v Achal Investment Ltd. (2004) 268 ITR 211. To put it simply, in these cases the decision was based on the fundamental rule of law that evidence or material adduced by the assessee cannot be thrown out without any enquiry. The ratio does not extend beyond that. The boundaries of the ra .....

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3-5-2013); - CIT Vs. Goel Sons Golden Estate P Ltd. (ITA no. 212/2012 dated 11- 4-2012 (Del.); - CIT Vs. Gangeshwari Metal Pvt. Ltd. (ITA no. 597/2012 dated 21-1- 2013); - ACIT Vs. Panchanan International P Ltd. (ITA no. 50/D/2011 dated 23-11-2012); - CIT Vs. Expo Global Industrial Ltd. (ITA no. 1257/2011 dated 20-7- 2012). 14. We have considered the rival submission and perused the entire material available on record. The AO had made addition of ₹ 80 lacs out of the total share applicati .....

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ineness of the transactions and creditworthiness of the companies who had applied for the share application money in the assessee company. We find considerable merit in the argument of ld. counsel for the assessee that merely because the directors were not produced the addition could not be made in view of the decision of Hon ble Delhi High Court in the case of Victor Electrodes Ltd. (supra) and also in the case of Nova Promoters (supra) also Hon ble Delhi High Court had clearly distinguished be .....

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amp; 3 it has been observed as under: 2. Learned counsel for the appellant submits that the order passed by the Tribunal is perverse and in fact one S.H. Mallick had given a statement, which is re-produced in the assessment order saying that he had provided accommodation entries and the said statement conclusively proves that share money of' 30,00,000/- allegedly received by the respondent-assessee from 5 companies are sham and bogus transactions . 3. We have examined the said contention and .....

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necessary inquiry, verification and deal with the matter in depth specially after the affidavit/ confirmation along with the bank statements etc. were filed. In case the Assessing Officer had conducted the said enquiries and investigation probably the challenge made by the Revenue would be justified. In the absence of these inquiries and nonverification of the details at the time of assessment proceedings, the factual findings recorded by the Assessing Officer were incomplete and sparse. The imp .....

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in that when the only activity carried out by the assessee was purchase and sale of shares, why the income earned therefrom should not be considered as business income instead of income from capital gains. The AO has observed that assessee did not file any reply and, therefore, concluded that short term capital gain was to be assessed as business income. 17. Ld. CIT(A) did not accept the AO s plea for the following reasons: (a) The assessee company had distinct portfolio of shares under the cate .....

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