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A.P. Refinery P. Ltd. Versus Additional Commissioner of Income-Tax

2016 (5) TMI 55 - ITAT CHANDIGARH

Reopening of assessment - addition u/s 68 and 69C - Held that:- Assessing Officer at the original assessment, applied his mind to the evidences and material on record including letter of the ADIT (Investigation), New Delhi and the investigation revealed that the assessee-company received genuine share capital money from these five companies. There was, thus, no fresh or tangible material within the knowledge of the Assessing Officer at the time of reopening of assessment. It is, therefore, a cas .....

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noted here that the Assessing Officer might not have received any fresh information from the Investigation Wing against the assessee because in the reasons for reopening of the assessment, the Assessing Officer has referred to the study of the assessment record of M/s. Kisco Castings Pvt. Ltd. from where it was revealed that Investigation Wing has made same reference against the assessee but there is no direct reference of receipt of any accommodation entry by the assessee-company.

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fficer has not validly assumed jurisdiction under section 148 of the Income-tax Act for reopening of the assessment in the matter. The decisions relied upon by the learned Departmental representative are not applicable to the facts and circumstances of the case. We, accordingly, set aside the reopening of the assessment and quash the impugned orders under section 147/148 of the Income-tax Act. - Decided in favour of assessee - I. T. A. No. 572/Chd/2015 - Dated:- 5-11-2015 - Bhavnesh Saini (Judic .....

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against law and facts on the file in as much he was not justified to uphold the action of the learned Assessing Officer in resorting to the provisions of section 148 of the Income-tax Act, 1961. (2) That the learned Commissioner of Income-tax (Appeals) further gravely erred in upholding the action of the learned Assessing Officer in making an addition of ₹ 3,74,00,000 received by the appellant-company as share application money/share capital/share premium as alleged unexplained cash credi .....

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der section 143(3) of the Act on December 30, 2011, at loss of ₹ 64,92,340 against returned loss of ₹ 1,50,37,116 by making additions on account of low gross profit, under valuation of closing stock, the disallowance of depreciation, disallowance of interest and disallowance of expenses, etc. (paper book 1). Subsequently, information was received from the Investigation Wing of the Income-tax Department at Delhi that the assessee-company had received accommodation entries as share app .....

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d, Ludhiana Road, Malerkotla. 2. PAN AABCA1353B 3. Assessment year 2009-10 The assessee filed its return of income on September 27, 2009, declaring nil income. The assessment was completed under section 143(3) on December 30, 2011, by the Income-tax Officer, Ward-IV(3), Malerkotla, at nil income. However, the loss to be carried forward was reduced from ₹ 1,50,37,116 to ₹ 64,92,340 as total additions/disallowances amount ing to ₹ 85,44,773 were made on various accounts. While de .....

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Wing of the Income-tax Department Delhi at 13/34 WEA Karol Bagh, New Delhi, which was the office of one Sh. Tarun Goyal, chartered accountant. It was noticed by the Investigation Wing that he had floated a number of companies for the purpose of providing accommodation entries to the desiring persons. During the study of the assessment file of M/s. Kisco Castings (P) Ltd., it was seen that the information received from the Investigation Wing at New Delhi, contains reference to the asses see-comp .....

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P) Ltd. 62,00,000 2. M/s. Taurus Iron and Steel Co. (P) Ltd. 1,05,00,000 3. M/s. Tejasvi Investments (P) Ltd. 27,00,000 4. M/s. Thar Steel (P) Ltd. 55,00,000 5. Shri Bhuwan Goyal 12,00,000 6. Smt. Anita Rani 3,00,000 7. Shri Arun Goyal 4,00,000 8. M/s. Kaveri Shilp Kala Ltd. 35,00,000 9. M/s. Rajasthan Plantation Co. Ltd. 50,00,000 10. M/s. Shalini Holdings 1,25,00,000 11. Shri Shiv Goyal 5,00,000 12. M/s. Jindal Proteins 2,62,00,000 13. Miscellaneous (share application) 11,75,000 7,61,75,000 Ou .....

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ated about 90 companies for the purpose or providing accommodation entries. (ii) None of these companies was carrying out any genuine activities and were merely being used to provide accommodation entries only. All the companies were operating from the office of Sh. Tarun Goyal at 13/34 WEA, Arya Samaj Road, Karol Bagh, New Delhi. (iii) During the period April 1, 2002, to October 31, 2008, cash to the tune of Rs. (approximate) 200 crores was deposited in the bank accounts of these companies or i .....

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admitted the above facts in their statements on oath and stated that they were signing various documents as and when asked by Sh. Tarun Goyal. For example an employee named Usha had been made director in six companies. Bank accounts had been opened in her name and even return of income in her name was filed. However, she had no knowledge about all these. Even bank accounts in fictitious names using her photo were opened regarding which also she expressed total ignorance. Similarly another emplo .....

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wn as director in five companies. She was working as receptionist in the office of Sh. Tarun Goyal and she had no knowledge that she was shown as director in any company. A bank account was opened in her name by misleading her. She has categorically denied her association with any of the companies. (vi) All the pass books, cheque books, permanent account number cards of these companies were in the possession of Sh. Tarun Goyal. All the bank account opening forms appear to be filled-in in the han .....

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un Goyal only. (ix) Sh. Tarun Goyal could not produce the directors of various companies before the Income-tax authorities. (x) Even the auditors of various companies admitted that they had no knowledge about the directors of the companies and the audits were done by them at the instructions of Sh. Tarun Goyal. Sh. Rakesh Sharma, who signed the audit reports of seven companies stated that he came to know about these companies through Sh. Tarun Goyal, he had no knowledge of the directors or share .....

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erified as to whether the shares were actually allotted to the company. Similarly, Sh. Suresh Bhatia another auditor also could not tell the names of directors of the companies audited by him. He stated that he discussed the matters regarding these companies with Sh. Tarun Goyal as the directors were not personally known to him. (xi) From all the above facts, it was more than clear that these companies were stage managed by Sh. Tarun Goyal and the only real purpose was to provide accommodation e .....

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ties P. Ltd. and M/s. Adonis Finance Ltd. were mostly used for accommodation entries. He further admitted that the total amount of accommodation entries given by him in the preceding six years was around ₹ 30-35 crores. He detailed the names of certain companies/groups which had been given accommodation entries by him. From the above facts, it is clear that the above companies had no real work or business. Their real worth is not such that they may be able to contribute such huge amounts. .....

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at [2012] 342 ITR 169 (Delhi). The observation of the hon'ble High Court are reproduced as below (page 191) : "30. The findings of the Tribunal cannot be upheld as they are based on irrelevant material or have been entered by ignoring the relevant material. The finding that the share application monies have come through account payee cheques is, at best neutral. The question required a thorough examination and not a superficial examination. If anything, in the light of the material gath .....

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y company incorporated under the Companies Act, 1956 has to comply with statutory formalities. That these companies were complying with such formalities does not add any credibility or evidentiary value. In any case, it does not ipso facto prove that the transactions are genuine. The finding that Mukesh Gupta and Rajan Jassal were involved with only 4 out of the 16 companies which advanced monies is only part of the picture. They had stated before the Investigation Wing that their operations wer .....

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norms and requirements is only one aspect, but in the present case a deeper scrutiny was required and the camouflage adopted was the primary aspect that required adjudication. This aspect has been ignored. Bona fide and genuineness of the transac tions was the issue. . . . 39. . . . 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 a .....

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the Revenue authorities into the activities of such 'entry providers'. The existence with the Assessing Officer of material showing that the share subscriptions were collected as part of a pre-meditated plan-a smokescreen-conceived and exe cuted 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 dis charged the burden placed upon him u .....

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truth and justice to express a view to the contrary." After going into the factual matrix of the case as above, the hon'ble High Court has held as below (page 199) : "43. In the case before us, not only did the material before the Assessing Officer show the link between the entry providers and the assessee-company, but the Assessing Officer had also provided the statements of Mukesh Gupta and Rajan Jassal to the assessee in compliance with the rules of natural justice. Out of the 2 .....

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of the above discussion, we are unable to uphold the order of the Tribunal confirming the deletion of the addition of ₹ 1,18,50,000 made under section 68 of the Act as well as the consequential addition of ₹ 2,96,250. We accordingly answer the substantial questions of law in the negative and in favour of the Department. The assessee shall pay costs which we assess at ₹ 30,000." The above facts have been analysed in detail and perused in the light of the decision of the ho .....

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, accordingly, issued notice under section 148 of the Income-tax Act which was duly served upon the assessee. The assessee filed return on January 22, 2013, in response to notice under section 148 of the Act declaring loss of ₹ 1,50,37,116. The Assessing Officer after giving opportunity of being heard to the assessee passed reassessment order under section 143(3)/147 dated March 11, 2014, making addition of ₹ 3,74,00,000 under section 68 of the Act as well as addition of ₹ 8,41 .....

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of the assessee-company has escaped assessment. The fact of the matter is that a sum of ₹ 3.74 crores were received from various companies allegedly belonging to the above persons which stood duly recorded in the books of account as an amount received from the said entities. The date of filing of the original return in the case of the assessee is September 27, 2009 for the assessment year under appeal. The date of search under section 132 of the Act at the residence/premises of Shri Tarun .....

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e facts of the results of search conducted at the premises of Shri Tarun Goyal and Shri Surinder Kumar Jain and Shri Virender Kumar Jain was well within the knowledge of the Department at the time of assessment completed in the case of the assessee. In fact, the search in the case of Shri Tarun Goyal Jain conducted on September 15, 2008, i.e., much before even filing of the original return of income by the assessee. Thus, reassessment proceedings are not based on any fresh material/tangible evid .....

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d Commissioner of Income-tax (Appeals), considering the material on record noted that the Assessing Officer received specific information with regard to advance of ₹ 2.49 crores in the form of share application money received from four parties, i.e., M/s. Campari Fiscal Services (P.) Ltd. (Rs. 62 lakhs), M/s. Taurus Iron and Steel Co. P. Ltd. (Rs. 1.05 crores), M/s. Tejasvi Investments (P.) Ltd. (Rs. 27 lakhs) and M/s. Thar Steel (P.) Ltd. (Rs. 55 lakhs) (total ₹ 2.49 crores). The le .....

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espect of 5 parties, i.e., 4 mentioned above and M/s. Shalini Holdings Ltd. (Rs. 1,25,00,000) and thus confirmed the addition of ₹ 3,74,00,000 as well as confirmed the consequential addition of ₹ 8,41,500 under section 69C of the Act. 8. Learned counsel for the assessee reiterated the submissions made before the authorities below. He has submitted that at the original assessment proceedings, the Assessing Officer issued query letters regarding receipt of share application money throu .....

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ies before the Assessing Officer, copy of the reply dated December 26, 2011, and December 28, 2011, are placed on record in which the assessee explained the identity of the shareholders, their creditworthiness and genuineness of the transaction. It was also explained that these companies have confirmed giving share application money to the assessee in their replies directly submitted to the Assessing Officer. The transactions were conducted through banking channel. The assessee relied upon vario .....

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return filed, bank account, permanent account number and company master details. These companies have confirmed making investment in the assessee-company in response to the notice under section 133(6) of the Act. 9. Learned counsel for the assessee also referred to paper book pages 128 to 151 which are the copies of the confirmation, bank accounts, Income-tax reports of the five investee companies which were filed before the Assessing Officer at the original assessment stage. Learned counsel for .....

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ssessee, therefore, submitted that the Assessing Officer has accepted the genuineness of the share application money received by the assessee from these five companies, therefore, it is a case of mere change of opinion later on and without bringing any material on record. He has referred to objections filed by the assessee before the Assessing Officer in reassessment proceedings (paper book page-24) challenging the reopening of the assessment in which same facts have been pleaded. The order of t .....

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yal was not on record of the Assessing Officer and whatever replies have been filed by the assessee would not disclose that everything was alright". Therefore, the objections of the assessee were rejected. Learned counsel for the assessee, therefore, submitted that the order of the Assessing Officer itself shows that the Assessing Officer at the original assessment stage examined the entire matter in issue with regard to issue of the share capital and amount received by the assessee from va .....

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decision of the Delhi High Court in the case of Swarovski India Pvt. Ltd. v. Deputy CIT [2016] 6 ITR (OL) 4 (Delhi) dated September 29, 2015, in Writ Petition No. 1772 of 2014 in which in paragraph 16, hon'ble Delhi High Court held as under (page 12) : "16. In the present case, this is exactly what has happened as queries and issues have been specifically raised and answered by the assessee in the original assessment proceedings. Thus, even though the Assessing Officer did not make any .....

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a High Court in the case of CIT v. Smt. Paramjit Kaur [2009] 311 ITR 38 (P&H) in which it was held, "When Assessing Officer failed to examine information received before recording satisfaction-income has escaped assessment-reassessment proceedings not valid". 11. Learned counsel for the assessee even on merits submitted that since the assessee filed confirmation from all the five companies along with their bank accounts, Income-tax returns and other documents and these companies in .....

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tober 1, 2015) in which the identical addition on merit has been deleted by following various judgments as well as considering the identical evidences on record. He has, therefore, submitted that even on merit, issue is covered in favour of the assessee by the aforesaid judgment of the Tribunal, copy of which is placed on record. 12. On the other hand, the learned Departmental representative relied upon the orders of the authorities below and submitted that Shri Tarun Goyal was providing accommo .....

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inlease (P) Ltd. [2012] 342 ITR 369 (Delhi) and CIT v. Navodaya Castles P. Ltd. [2014] 367 ITR 306 (Delhi). The learned Departmental representative placed on record letter dated April 6, 8, 2009, issued by the ADIT (Investigation) Unit-IV, New Delhi, to the Commissioner of Income-tax-I Ludhiana with list of beneficiaries of accommodation entries provided by Shri Tarun Goyal. 13. After considering the rival submissions, we do not find any justification to sustain the impugned orders regarding re- .....

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h Court in the case of Garden Silk Mills P. Ltd. v. Deputy CIT [1999] 237 ITR 668 (Guj) held that "however wide the scope of taking action under section 148 of the Income-tax Act, it does not confirm jurisdiction on change of the interpretation of a particular provision earlier adopted by the assessing authority. For coming to the conclusion that there has been excessive loss or depreciation allowance or that there has been under assessment or assessment at a lower rate or for applying othe .....

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d when any particular issue has been considered by the Income-tax Officer and the Commissioner of Income-tax (Appeals) and when there is no failure to disclose the facts, the reassessment proceedings are not valid. The hon'ble Supreme Court in the case of CIT v. Foramer France [2003] 264 ITR 566 (SC) held reassessment-not on basis of mere change of opinion-law same before and after amendment by Direct Tax Laws. The hon'ble Supreme Court in the case of Indian Oil Corporation v. ITO [1986] .....

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ase of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 (Delhi) [FB] holding that "the concept of change of opinion must be treated as an in-built test to check the abuse of power". The hon'ble Bombay High Court in the case of Titanor Components Ltd. v. Asst. CIT [2012] 343 ITR 183 (Bom) held as under (headnote) : "Where a reassessment is sought to be made after four years the power conferred by section 147 of the Income-tax Act, 1961, does not provide a fresh opportunity to t .....

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e entitled to proceed under section 147. Held, allowing the petition, that the Assessing Officer had not recorded the failure on the part of the petitioner to fully and truly disclose all material facts necessary for the assessment year 1997-98. What was recorded was that the petitioner had wrongly claimed certain deductions which he was not entitled to. The reassessment proceedings initiated in the year 2004 were not valid. 14. The hon'ble Delhi High Court also in the case of Swarovski Indi .....

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ed income and initiating reassessment proceedings. The Assessing Officer had thus acted only on the basis of suspicion and it could not be said that it was based on belief that the income chargeable to tax had escaped income. The Assessing Officer had to act on the basis of 'reasons to believe' and not on 'reasons to suspect'. The Tribunal rightly concluded that the Assessing Officer had failed to incorporate the material and his satisfaction for reopening the assessment and ther .....

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year 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure wa .....

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o be quashed." 16. It is not in dispute that the assessee has received share application money from many companies/parties which are recorded in the reasons for reopening of the assessment in a sum of ₹ 7.61 crores (approximately). However, the Assessing Officer in the reasons for reopening of the assessment has considered four parties, i.e., M/s. Campari Fiscal Services Pvt. Ltd., M/s. Taurus Iron and Steel Co. P. Ltd., M/s. Tejasvi Investments (P) Ltd. and M/s. Thar Steel Pvt. Co. f .....

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Officer called for the details of additions in share capital money by giving their names and complete addresses of the persons along with evidences on their identity, creditworthiness, copies of their bank statements and their sources. The assessee submitted his replies before the Assessing Officer at assessment stage in which the assessee clearly stated that the assessee has already filed copies of the confirmations of all these share applicant companies confirming giving of share application m .....

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in the assessee-company through their banking channel and the particulars have been disclosed in their return of income. The Assessing Officer called for information from all these companies directly under section 133(6) of the Income-tax Act and all these share applicant companies confirmed giving of share application money to the assessee in their replies to the notice under section 133(6) of the Income-tax Act. The Assessing Officer, thus, did not doubt the identity of the share applicants, .....

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r was satisfied with the genuineness of the share application money received by the assessee through banking channel. Thus, the same issue could not be reopened in reassessment proceedings because there is no failure on the part of the assessee to disclose all the relevant facts and material to the Assessing Officer in their return as well as at the assessment stage. The letter dated April 6/8, 2009, of the ADIT (Investigation), New Delhi, was received by the Commissioner of Income-tax-I Ludhian .....

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e Income-tax Department but this fact was not taken into consideration against the assessee because the Assessing Officer accepted the genuineness of the share application money in the case of the assessee. It may also be noted here that copies of the statements of Shri Tarun Goyal recorded on the date of search on September 15, 2008, and September 16, 2008, are filed on record in which Shri Tarun Goyal has not made any specific statement against the assessee-company for providing accommodation .....

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essee, at the stage of re-opening of the assessment, objected to the reopening of the assessment and the Assessing Officer passed the order on May 20, 2013, copy of which is filed at page 34 of the paper book in which the Assessing Officer has specifically noted that the original assessment was completed on the basis of evidences and material on record which included information called from the lender company under section 133(6) of the Income-tax Act. It would, therefore, show that the Assessin .....

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of share application money which was already examined and investigated into by the Assessing Officer at the original assessment stage. No specific material was provided by the Investigation Wing to show how the assessee has received accommodation entry from Shri Tarun Goyal. In the statement recorded on the date of survey did not indicate if the assessee received any accommodation entry from Shri Tarun Goyal. It may also be noted here that the Assessing Officer might not have received any fresh .....

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acted on suspicion against the assessee. It is a mere case of change of opinion and the Assessing Officer has not examined any material against the assessee for reopening of the assessment. The Assessing Officer was having no specific evidence or material against the assessee for reopening of the assessment. No fresh material has been brought on record to justify reopening of the assessment, therefore, the Assessing Officer has not validly assumed jurisdiction under section 148 of the Income-tax .....

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n their reply confirmed giving share application money to the assessee before the Assessing Officer clearly show that the initial burden on the assessee has been discharged to prove the identity of the share applicant companies, their creditworthiness and genuineness of the transaction in the matter. The identical issue was considered by this Bench in the case of Lotus Integrated Taxpark Ltd. v. Deputy CIT [2016] 6 ITR (Trib)-OL 9 (Chandigarh) in which in paragraphs 10 to 13, similar addition ha .....

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g the shares to the subscriber company at paid-up value and at premium have not been investigated by the Assessing Officer at assessment stage. The asses see has filed copy of the certificate of incorporation of M/s. Glacis Investment Ltd. which is a registered company in Republic of Mauritius. The learned Commissioner of Income-tax (Appeals) considering the subscriber company to be a company being legal entity held that the identity of the shareholder is proved. The assessee also filed copy of .....

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paid-up value and premium for 7,40,000 equity shares were recorded by the Reserve Bank of India in their records. The learned Departmental representative submitted that the name of M/s. Glacis Investment Ltd. is wrongly recorded in the Reserve Bank of India certificate. It appears to be typographical error and is not having much significance on the same because the assessee has issued 7,40,000 equity shares to the shareholder company which is the same and only transaction carried out between th .....

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ence under Financial Services Act have been granted to M/s. Glacis Investment Ltd. The balance-sheet of the shareholder company M/s. Glacis Investment Ltd. is also filed on record which is admitted as additional evidence which proved that the principal activity of this company is that of investment holding and was having the sufficient funds/assets to make investment in the assessee-company and that the investment made in the assessee- company have been certified in the balance-sheet. The bank s .....

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duced on record also support the contention of the assessee that the shareholder company M/s. Glacis Investment Ltd., Mauritius has made investment in assessee-company in 7,40,000 equity shares by investing ₹ 3,70,00,000. The shareholder company also filed confirmation to that effect which is supported by tax residence certificate, allotment of share certificates and global business licence granted by Republic of Mauritius and the bank statement of the assessee. (i) In the case of Lovely E .....

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ee support the fact that the assessee has received genuine share application money from the shareholder company. (ii) The Income-tax Appellate Tribunal, Indore Bench in the case of CIT v. Peoples General Hospital Ltd. in I. T. A. No. 57 of 2007 vide order dated September 28, 2007 considering the identical issue held in paras 11 to 12.2 as under : '11. We have considered the rival submissions and material on record. We have bestowed our careful consideration and do not find any justification .....

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epresenting sale proceeds or even receipt of share application money. The use of the words 'any sum found credited in the books' in section 68 indicates that the section is very widely worded and the Income tax Officer is not precluded from making an enquiry as to the true nature and source of a sum credited in the account books even if it is credited as receipt of share application money. The mere fact that the (assessee) company chooses to show the receipt of the money as capital does .....

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y need be made. But if the Income-tax Officer finds that the alleged share holders do not exist then, in effect, it would mean that there is no valid issuance of share capital. Shares cannot be issued in the name of non-existing persons. The use of the words 'may be charged' in section 68 clearly indicates that the Income-tax Officer would then have the jurisdiction, if the facts so warrant, to treat such a credit to be the income of the assessee. If the shareholders are identified and i .....

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ot; Madhya Pradesh High Court in the case of CIT v. Dhar Ispat P. Ltd. [2004] 134 Taxman 747 (MP) ; [2003] 180 CTR (MP) 491, held "section 68 is applicable in respect of share application money ; however, the question of genuineness of the entries regarding share application money is a question of fact to be decided by the assessee authority on the basis of evidence available on record". Delhi High Court in the case of CIT v. Stellar Investment Ltd. [1991] 192 ITR 287 (Delhi), held &qu .....

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. Plainly, the Tribunal came to a conclusion on facts and no interference is called for. The appeal is dismissed. No order as to costs". Delhi High Court in the case of CIT v. Dolphin Canpack Ltd. [2006] 283 ITR 190 (Delhi), held (headnote) "in its return for the assessment year 1998-99, the assessee claimed to have received share application money of ₹ 62 lakhs. The Assessing Officer rejected the explanation of the assessee and added the amount to the taxable income of the asses .....

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ribers and the genuine ness of the transactions. On that basis, it deleted the addition made by the authorities below. On appeal to the High Court : Held, dismissing the appeal, that in the absence of any perversity in the view taken by the Tribunal or anything to establish conclusively that the finding regarding the genuineness of the subscribers and the transactions suffered from any irrationality, no substantial question of law arose from the order of the Tribunal. The deletion of the amount .....

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fficer the confirmation from the creditors where full addresses, Income-tax file number, etc., were given. The Tribunal was justified in deleting the addition". Rajasthan High Court in the case of Shree Barkha Synthetics Ltd. v. Asst. CIT [2006] 283 ITR 377 (Raj), held (headnote) "if the trans actions are made through banking channels and once the existence of persons by name in the share applications in whose name the shares have been issued is shown, the assessee-company cannot be he .....

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was a result of genuine transaction. It had been noticed even in the impugned order that evidence was produced by the assessee including affidavits, copies of the share application forms, copies of the confirmation from the applicant- companies, copies of board of directors' resolution approving such transactions as well as cheque number, branch and address of the bank through which the investment was made. It was also noticed that the Assessing Officer himself had noticed in his order that .....

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the existence of the person in whose name share application is received and there is no further burden on the assessee to prove whether that person himself has invested the money or some other person has made the Investment in his name ; distinction between a public company and a private company is not very material for this purpose". Madhya Pradesh High Court in the case of CIT v. Metachem Industries [2000] 245 ITR 160 (MP), held (headnote) "once it is established that the amount has .....

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f Income-tax". The Income-tax Appellate Tribunal, Indore Bench in the case of ACIT v. Vindhya Soya Ltd., I. T. A. No. 227/IND/2004, held "in the instant case, the Commissioner of Income-tax (Appeals) in annexure of his order has mentioned details of the shareholder, their addresses, holding of agricultural land, permanent account number of some of the shareholders, amount of deposit, their occupation and evidence filed in form of confirmation letter, copy of acknowledgment receipt of s .....

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in cash, he held that the creditworthiness and genuineness of transaction was not proved. The Assessing Officer has not doubted the identity of the shareholders. From the above it appears that the Assessing Officer made the addition on surmises and conjectures. Therefore, in view of the above facts and circumstances and placing reliance on the decisions discussed (supra), we do not find any infirmity in the order of the Commissioner of Income-tax (Appeals). Hence, the appeal of the Revenue is d .....

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rough cheque was also a genuine party and creditworthy". The hon'ble Gauhati High Court in the case of Nemi Chand Koth ari v. CIT [2003] 264 ITR 254 (Gauhati), held (headnote) "that the assessee had established the identity of the creditors. The assessee had also shown, in accordance with the burden, which rested on him under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors which was not in dispute. Once the assess .....

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umstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. The Assessing Officer failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. Therefore, the Assessing Officer could not have treated the said amounts as income derived by the assessee from undisclosed sources". The hon'ble Rajasthan High Court in the ca .....

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tion". The hon'ble Delhi High Court in the recent decision in the case of CIT v. Illac Investment P. Ltd. [2006] 287 ITR 135 (Delhi), held (page 136) "the respondent-assessee had for the assessment year 1989-90 disclosed in its return sum of ₹ 4,75,000 received as share application money. The Assessing Officer added the said amount to the taxable income of the assessee under section 68 of the Income-tax Act, 1961, on the ground that the identity of the subscribers had not bee .....

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nance Ltd. [1994] 205 ITR 98 (Delhi) [FB] to hold that the respondent assessee had discharged the onus by reference to the material produced to establish the identity of the subscribers. The Tribunal has observed : 'On going through the various orders to which reference has been made by the learned counsel for the assessee, it is found that on similar facts the additions made by the Assessing Officer have been deleted. So far as the present case is concerned, the learned Commissioner of Inco .....

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n of subscribers, copies of their bank statements and copies of their assessment orders as well as the copies of their audited accounts. The findings recorded by the learned Commissioner of Income-tax (Appeals) are based on a proper appraisal of the material and we do not find any scope to interfere with the same. Consequently, the order of the learned Commissioner of Income-tax (Appeals) is upheld'. " 12. It is admitted fact that the assessee filed the confirmation letter from M/s. All .....

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he city of Gibraltar. These certificates are supported by later on by Faria and Associates Chartered Accountants. The identity of the foreign investor M/s. Alliance Industries Ltd. is therefore established beyond doubt. The Assessing Officer also did not dispute the identity and existence of the share holder M/s. Alliance Industries Ltd. The Assessing Officer also did not dispute transfer of money by M/s. Alliance Industries Ltd. to the assessee for the purchase of shares of the assessee-company .....

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dia for investment in the shareholding of the assessee-company. The assessee also filed several certificates issued time to time by the State Bank of India, Commercial Branch, Bhopal explaining therein that on several dates the foreign remittances were ordered, to be credited to the account of the assessee with the State Bank of India, by M/s. Alliance Industries Ltd. The assessee at the appellate stage filed a consolidated certificate issued by the State Bank of India, Commercial Branch, Bhopal .....

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Officer. The Standard Chartered Bank also filed certificate confirming the above position and that M/s. Alliance Industries Ltd. maintained bank account with them and the account is conducted to their satisfaction. The Assessing Officer neither at the assessment stage nor at the appellate stage disputed the genuineness of these documentary evidences and also did not make any meaningful inquiry on such evidences. State Bank of India, Bhopal confirmed the name of M/s. Alliance Industries Ltd. in t .....

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invest this much of the amount during the financial year relevant to the assessment year in question. The transfer of foreign currency from the bank account of M/s. Alliance Industries Ltd. clearly proved the creditworthiness of M/s. Alliance Industries Ltd. It is a settled law that the Income-tax authority cannot ask the assessee to prove source of the source. All the issue of the shares to M/s. Alliance Industries Ltd. have already been reported by the assessee to the Registrar of Companies. .....

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evidence on record that the share application money received by assessee from M/ s. Alliance Industries Ltd. belong to the assessee or that it was the assessee's own money which it had received in the shape of dollars from the non-resident Indian company. It is therefore not in the nature of income of the assessee because the money received was on account of share capital/share premium. The learned Commissioner of Income-tax (Appeals) has given categorical finding in the impugned order that .....

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equent assessment year 2002-03 under section 143(1). Learned counsel for the assessee also argued and made the above submission before the Tribunal as considered by the learned Commissioner of Income-tax (Appeals). During the course of arguments, the learned Departmental representative did not dispute the above facts recorded by the learned Commissioner of Income-tax (Appeals) in the impugned order and therefore it stands proved that in the earlier years the Assessing Officer did not dispute the .....

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ssioner of Income-tax-2(1), Bhopal accepting the identical submission of the assessee. Therefore, there was no justification on the part of same Assessing Officer Shri Yogendra Dubey for not accepting the credits in this year as genuine. The learned Departmental representative submitted that principle of res judicata is not applicable and the Assessing Officer is competent to make inquiry on the same facts in the subsequent year. The hon'ble Madhya Pradesh High Court in the case of CIT v. Go .....

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nt year 1972-73 as a capital gain were different from those in the assessment years 1962-63 and 1963- 64 and, as such, the finding has to be consistent. The Tribunal has, therefore, not committed any error. In this respect, we would like to set out hereinbelow an excerpt from the decision of the Orissa High Court in CIT v. Belpahar Refractories Ltd. [1981] 128 ITR 610 (Orissa) at pages 613-614". The hon'ble Punjab and Haryana High Court in the case of CIT v. Vikas Chemi Gum India [2005] .....

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of Berger Paints India Ltd. v. CIT [2004] 266 ITR 99 (SC) held "High Court-decision in the case of one assessee-Department accepting and not challenging correctness-Not open to the Department to challenge in the case of other assessees, without just cause". In view of the above facts and decisions noted, we do not find any merit in the submission of the learned Departmental representative, the same is therefore rejected. The learned Departmental represent ative also submitted that bala .....

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-resident Indian company M/s. Alliance Industries Ltd. clearly proved the case of the assessee that the share application money received by the assessee is not in the nature of income of the assessee. The assessee was also able to prove creditworthiness of M/s. Alliance Industries Ltd. This contention of the learned Departmental representative is also rejected. The learned Departmental representative also contended that the Assessing Officer raised serious doubt about the genuineness of transact .....

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nessman has taken a decision is entirely dependant upon their business needs which is not open to challenge by the Revenue therefore it was not relevant criteria to disbelieve the version of the assessee. The learned Departmental representative also submitted that non-resident Indian company was not knowing much about the assessee before making the huge investment. It appears that the learned Departmental representative forgot to note that the same non-resident Indian company had made investment .....

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ighter one and therefore such onus would stand discharged if identity of share appli cant is established-held-Yes'. This case is not applicable in favour of the Revenue because the amount is not received from close relative or friend. 12.1 On going through the above documentary evidences on records and the judicial pronouncements referred to above, it is clear neither the Assessing Officer nor the learned Departmental representative appearing for the Revenue have disputed the documentary evi .....

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g share application money is a question of fact to be decided on the basis of evidence available on record. The assessee on the basis of evidence available on record has been able to prove creditworthiness of M/s. Alliance Industries Ltd. The ratio of the decisions relied upon by learned counsel for the assessee and referred to by us in this order are squarely applicable to the facts and circumstances of this case. The assessee through the evidences on record has been able to prove the identity .....

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that the share applicants in fact exist. The creditworthiness of the shareholder is also proved because all the payments have been made through banking channel through the account payee cheque which fact could be verified from the respective bank and in fact the respective banks namely SBI, Bhopal and Standard Chartered Bank have certified the same fact. The genuineness of the transaction is not disputed. Considering the totality of facts and circumstances of the case in the light of the materia .....

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ion that the same could not support the contention of the learned Departmental representative. We may also note that the hon'ble Supreme Court in the case of CIT v. P. Mohanakala [2007] 291 ITR 278 (SC), as relied upon by the learned Departmental representative has considered the fact in which the Assessing Officer held that the gift though apparent were not real and accordingly treated all the amounts of the gift as income of the assessee under section 68 of the Income-tax Act. The assessee .....

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Supreme Court on such facts "held, reversing the decision of the High Court, that the findings of the Assessing Officer, the Commissioner (Appeals) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent findings of fact". However, the facts .....

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onfirmed by the hon'ble Madhya Pradesh High Court in the case of CIT v. Peoples General Hospital Ltd. [2013] 356 ITR 65 (MP) in which the hon'ble High Court following the decision of the hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd. (supra) held as under (headnote) : 'Held, dismissing the appeals, that if the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition co .....

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e assessee had established the identity of the investor who had provided the share subscription and that the trans action was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the investor alone was to be seen. Thus, the addition was rightly deleted.' 12. In the present case, the assessee-company had received money on allotment of shares from M/s. Glacis Investment Ltd. through .....

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