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ITO, Ward 13 (4) , New Delhi Versus M/s. Om Machines (P) Ltd.

2015 (7) TMI 153 - ITAT DELHI

Addition u/s 68 - unexplained share capital /share premium - CIT(A) deleted the addition - Held that:- Respectfully following the ratio laid down in the case of Nova Promoters And Finlease (P) Ltd. (2012 (2) TMI 194 - DELHI HIGH COURT ), we hold that Ld. CIT(A) is not justified in deleting the addition of R.30 lacs in as much as the respondent assessee had failed to establish conclusively three essential ingredients ‘identity, genuineness and creditworthiness’ of share applicants. Further, Ld. C .....

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from which money was received by the assessee company before making addition u/s 68. Therefore, we are unable to uphold the order of CIT(Appeals) and hereby confirm the addition made by A.O. - Decided in favour of revenue.

- I.T.A. No. 5779/Del/2012 - Dated:- 25-6-2015 - Shri I. C. Sudhir And Shri Inturi Rama Rao,JJ. For the Appellant : Shri P. Dum Kanunjana, Sr. DR For the Respondent : Shri Rajesh Jain, FCA ORDER Per Inturi Rama Rao, AM: This is an appeal filed by Revenue for the As .....

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icants is not proved by the mere filing of some papers. 2. Whether on the facts & in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of ₹ 30,00,000/- u/s 68 of the Act appreciating the fact that the details filed by the assessee were not enough to prove the creditworthiness in view of the fact that no substantive evidence was produced to show that any business was being carried out by the alleged shareholders or the sources of deposit in the banks existi .....

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utiny assessment. Finally, the assessment was completed u/s 143(3) vide order dated 21.12.2010 at a total income of ₹ 30,01,856/-. The disparity between the returned and assessed income was on account of addition of share application money received from the following companies treating it as undisclosed income u/s 68 of the Act. S.No. Name and address of company from whom claim of share capital/share premium made Value of shares at par (as claimed) Share premium (as claimed) Total share ho .....

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essment proceedings, the respondent assessee company was called upon to prove the identity, genuineness and creditworthiness of above share applicants. The A.O. doubted the genuineness of these transactions as he received information form Investigation wing of the Department that the business premises of the above companies is the same as the address of the company belonging to one Shri Tarun Goyal who is alleged to be engaged in the business of providing accommodation entries and those three co .....

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all the share applicants are corporate assessees, which are duly incorporated under the provisions of Companies Act, 1956 and assessed to income tax and they filed copies of their return of income and furnished particulars of PAN. The submissions made by the respondent assessee company did not find favour with the A.O. The A.O. held that receipt of share application money from those companies is a device for converting black money into white through entry providers and hence, A.O. made addition .....

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ely Exports Pvt. Ltd. 216 CTR 195 and Hon'ble Delhi High Court s decision in the case of CIT Vs Value Capital Services Pvt. Ltd. 307 ITR 334. Aggrieved by this order, Revenue has come in the present appeal before us. 5. It was argued by Ld. D.R. that Ld. CIT(A) has failed to properly appreciate the evidence gathered by the Department against the assessee and he further argued that merely by filing copies of share application forms and confirmation letters do not establish conclusively that t .....

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mitted that the assessee company had discharged its onus that was lying upon it and therefore, no addition was warranted. 7. We have heard rival submissions and perused the material placed on record. The identical issue was considered by Hon ble Jurisdictional High Court in the case of CIT Vs Nova Prompters and Finlease (P) Ltd. 342 ITR 169 (Del.). After considering submissions made therein, Hon'ble High Court held as under: So understood, it will be seen that where the complete particulars .....

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the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed "accommodation entry providers", whose business it is to help assessees bring into their books of account their unaccounted monies through the medium of sh .....

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d plan - a smokescreen - conceived and executed with the connivance or involvement of the assessee excludes the applicability of the ratio. In our understanding, the ratio is attracted to a case where it is a simple question of whether the assessee has discharged the burden placed upon him under sec.68 to prove and establish the identity and creditworthiness of the share applicant and the genuineness of the transaction. In such a case, the Assessing Officer cannot sit back with folded hands till .....

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n enquiry into the particulars about the creditors furnished by the assessee, including their income-tax file numbers. 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 ass .....

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1) 333 ITR 119. We have given utmost consideration to the judgment. It disposes of several appeals in the case of different assessees. Except the case of CIT v Oasis Hospitalities P Ltd. (ITA Nos.2093 & 2095/2010), the other cases fall under the category of Orissa Corporation (supra). However, in the case of Oasis Hospitalities P Ltd., there is reference to information received by the Assessing Officer from the investigation wing of the revenue on the basis of which it was found that six inv .....

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es were cleared. However, the parties were not produced in spite of specific direction of the AO instead of taking opportunities in this behalf. Since the socalled Directors of these companies were not produced on this ground coupled with the outcome of the detailed inquiry made by the Investigating Wing of the Department, the AO made the addition. This addition could not be sustained as the primary onus was discharged by the Assessee by producing PAN number, bank account, copies of income tax r .....

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tements were recorded by the Investigating Wing." These quoted observations clearly distinguish the present case from CIT v Oasis Hospitalities P Ltd. (supra). Except for discussing the modus operandi of the entry operators generally, the Assessing Officer in that case had not shown whether any link between them and the assessee existed. No enquiry had been made in this regard. Further, the assessee had not been confronted with the material collected by the investigation wing or was given a .....

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gation wing, 15 companies had provided the so-called "share subscription monies" to the assessee. There was thus specific involvement of the assessee-company in the modus operandi followed by Mukesh Gupta and Rajan Jassal. Thus, on crucial factual aspects the present case stands on a completely different footing from the case of CIT v Oasis Hospitalities P. Ltd. (supra). 42. In the light of the above discussion, we are unable to uphold the order of the Tribunal confirming the deletion .....

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of R.30 lacs in as much as the respondent assessee had failed to establish conclusively three essential ingredients identity, genuineness and creditworthiness of share applicants. Further, Ld. CIT(A) had also failed to notice that the respondent assessee company failed to produce the Directors of share applicants before the A.O. As held by Hon'ble Jurisdictional High Court in the case of Nova Promoters and Finlease (P) Ltd. that the ratio laid down by Hon'ble Supreme Court in the case of .....

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