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ITO, Ward13 (4) , New Delhi Versus OPG Leasing & Finance P. Ltd.,

2016 (3) TMI 206 - ITAT DELHI

Addition u/s 68 on account of share application money received by the assessee - issue of notice u/s 133(6) came back un-served - Held that:- Notice u/s 133(6) is issued by the AO could not be served on the share applicants and Inspector’s report also shows that this companies do not exists at the given address, we are of the view that no fault can be found against the assessee for this. Instead of the assessee has persuaded these companies to file confirmation independently along with all the r .....

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are dubious. Instead, Ld AO walked on the path shown by the assessee to issue notice u/s 133(6) of the Act. Ld AO found there is meager balance in the bank account of that company after issue of the cheques of share application to the assessee. It is not the case of the AO that money that has been deposited with the assessee company which is not properly explained. We failed to understand how the remaining meager bank balance in the bank account of share applicants can affect the transaction ent .....

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oner of Income-tax (Appeals) for deleting the addition made u/s 68 of the Act - Decided in favour of assessee - ITA No. 3982/Del/2010 - Dated:- 25-1-2016 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Appellant : Sh. V.K. Tulshiyan, CA For The Revenue : Sh.P. Dam Kanujna, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue directed against deletion of addition made u/s 68 of the Income Tax Act, 1961 by the ld. CIT (A)-XVI .....

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e of Lovely Exports (P) Ltd. 216 CTR 199 (SC) cannot be extended to a situation where a mechanism has been formed to introduce unaccounted money in the books of accounts with the help of accommodation entry providers which has been exposed by deep and detailed investigation carried out by the Investigation Wing of the Department. 3. That on the facts and circumstances of the case and in law the Ld. CIT(A) failed to appreciate the facts that the assessee company failed to prove physical identity .....

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sessee of ₹ 58,00,000/- . 4. The brief facts of the case are that the assessee is private ltd company and during the year the assessee has received share application money of ₹ 58 lacs from the following companies: 1. Warsi Overseas (P) Ltd. 5,00,000/- 2. Muktkeshi Home Products (P) Ltd. 5,00,000/- 3. RMK Car Helpline (P) Ltd. 5,00,000/- 4. Milap Automotive (P) Ltd. 5,00,000/- 5, Peals Infosoft (P) Ltd. 3,00,000/- 6. G. T. Infotech (P) Ltd. 3,00,000/- 7. eDynamics Solutions (P) Ltd. .....

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of those parties. Further the assessee also submitted the print out of the data obtained by them from the web-site of the Registrar of Companies to prove their identity and existence. Therefore the assessee contended that it has established the identity, creditworthiness and genuineness of the share application of ₹ 58,00,000/-. Assessee requested AO to issue notice u/s 133(6) of the Income Tax Act for summoning the parties and seeking their presence. During the course of assessment procee .....

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on and he further observed that there are immediate transfer entries preceding the issue of cheques. AO was also of the view that share allotment made to this company according to form No.2 submitted to the ROC on 02.10.2008, further Form No.2 was submitted to the ROC on 29.12.2008. This shows that the share applicants money was kept as it is by the assessee for more than 3 years. 5. Against the order of the AO the assessee preferred an appeal before the learned Commissioner of Income-tax (Appea .....

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the conformation regarding share application money along with necessary documents directly to the AO. Regarding the notice un-serviced as well as the Inspector s Report the assessee could not be found fault with. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals) revenue is in appeal before us. 6. It was contended by the ld DR before us that the learned Commissioner of Income-tax (Appeals) has relied on the orders of the Hon ble Supreme Court in the case of Lovely Export .....

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bank statement. After showing us all these documents it was submitted that the assessee has fully discharged its onus cast upon it u/s 68 of the Act. Though notice u/s 133(6) came back un-serviced the assessee persuaded and in turn those parties filed their confirmation before the AO independently. After that there is no enquiry made by the AO. Hence in the above circumstances the addition u/s 68 cannot be made. Further the assessee advanced his argument and submitted that the decision of the H .....

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was duly explained before AO submitting complete details with respect to the Certificate of Incorporation of the applicants money, confirmation of those share applicants showing their Permanent Account No and where they are assessed, bank statement of share applicants showing the issue of cheques to the company, income tax return of the share applicants and balance sheet of the share applicants. This shows that the assessee has completely discharge its onus cast u/s 68 of the Act to prove the i .....

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chase of shares, copy of share application forms, copy of Bank statements, copy of Income-tax returns, copy of audited Balance Sheet and Profit & Loss account, copy of certificate of incorporation, copy of share certificates and copy of ROC website showing the name of the above companies etc. in support of its claim at the assessment stage. It is argued by the Id. AR that in the above background, the assessee had discharged its onus of establishing the identity and credit worthiness of the s .....

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nt. Perusal of the impugned assessment order shows that the above objections were also raised by the Id. AR before the AO during the assessment proceeding. It had also been argued before the AO that the material collected at the back of the assessee cannot be used against the assessee unless opportunity of cross-examination is provided. As per the assessment order, the AO issued notices u/s 133(6) to the investor companies which came back unserved and as per the Inspector's report such compa .....

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are alleged to be bogus. The Id. AR has accordingly argued that the said addition of ₹ 58,00,000/- u/s 68 is illegal. The Id. AR has relied upon a plethora of case laws in support of his claim. On careful consideration of the matter, the above contention of the Id. AR is found to be factually correct. 6.1. Further, I find that apart from the case laws relied upon by the Id. AR, the established legal position on the subject under consideration as adopted in a large number of case laws is a .....

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ne so, the appellant in the instant case has discharged the onus cast upon it. Beyond this, for the charge of unexplained cash credit to stick, the onus lies on the AO to disprove the claim of the assessee by establishing that the evidence filed by the assessee was false and by bringing new material on record and failure to do so would vitiate the addition made on this count. Reference in this regard can be made the decisions in the case of CIT v. Orissa Corporation Pvt. Ltd. 158 ITR 78 (SC) and .....

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invocation of the powers u/s 68, such satisfaction must be derived from relevant factors on the basis of proper inquiry by the AO and such inquiry must be reasonable and just. 6.1.3 It is also settled law that it is mandatory for the AO to confront the assessee with any material collected by the AO at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said ma .....

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ase of NP. Garodia (order dated 13.01.2009 of Hon'ble P & H High Court in ITA no. 808 of 2008) and in the case of Brij Pal Sharma (order dated 17.02.2009 in ITA no. 685 of 2008 of Hon'ble P & H High Court) it was held that where the assessee provides identity and details pertaining to the lenders/creditors and is unable to produce them and requests the AO to issue summons u/s 131 for their attendance, it is the duty of the AO to issue such summons, failing which the addition woul .....

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ong as the fact that he had made the advance and was capable of making the advance are established. It was held by the Hon'ble Madras High Court in Hastimal (S) v. CIT (1963) 49 ITR 273 that after a lapse of decade, the assessee should not be placed upon the rack and called upon to explain not merely the origin and source of a capital contribution, but also the origin of origin and source of the source. 6.1.6. Further, I find that the Apex Court in CIT v Lovely Exports (P) Ltd. (2008) 216 CT .....

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ce Ltd. (SLP no. CC 37572008 arising out of ITA no. 53/2005 of the High Court of Delhi), CIT (Kolkata) v. M/s Shipra Retailers (P) Ltd. (SLP no. CC 451/2008 arising out of ITA no. 576/2004 of the High Court of Calcutta), CIT v. Pondy Metal & Rolling Mills (P) Ltd. (SLP no. CC 12860/2007 arising out of ITA no. 788/2006 of the High Court of Delhi) and CIT v. General Exports Ltd. (SLP no. 21349/2007 arising out of ITA no. 880/2006 of the High Court of Delhi) . Following the aforesaid decision o .....

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observed that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the assessing officer, then the department can always proceed against them and if necessary reopen their individual assessments. In the case in hand, it is not disputed that the assessee has given the details of name and address of the shareholders, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the .....

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the above circumstances, the view taken by the Tribunal cannot be faulted. No substantial question of law is involved in the appeal. In the result, the appeal is dismissed in liminni with no order as to costs." Similar decision has also been taken by the Hon'ble Chhattisgarh High Court in ACIT v Venkateswar Ispat Pvt. Ltd. (2009) 319 ITR 393. 9. Further Though notice u/s 133(6) is issued by the AO could not be served on the share applicants and Inspector s report also shows that this co .....

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proceeded to make inquiries with the assessing officers of those share applicant companies and should also have used extensive powers granted to him u/s 131 of the Act when there was an information available that these companies are dubious. Instead, Ld AO walked on the path shown by the assessee to issue notice u/s 133(6) of the Act. Ld AO found there is meager balance in the bank account of that company after issue of the cheques of share application to the assessee. It is not the case of the .....

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