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J.J. Development Pvt. Ltd. Versus I.T.O., Ward-12 (3) , Kolkata

2016 (5) TMI 539 - ITAT KOLKATA

Addition u/s 68 being share capital - Held that:- In this present case, regarding M/s. Ramsay International, any sanctity cannot be attached to the documents filed before the AO as on certified. The said Ramsay International Ltd. neither filed any valid documents before the 1st appellate authority nor before us in support of its contention. Therefore, we are of the view that the view expressed by the AO and CIT(A) about the creditworthiness and genuineness of transaction between assessee and M/s .....

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oj Kumar Jhunjhunwala was established and identity of the M/s Ramsay International Ltd was not established. Regarding proving their creditworthiness or the genuineness of the transaction as they were not availed an opportunity given by the ITAT, Kolkata and pursuant to which, the proceedings under Section 131 of the Act. In enquiry by his inspector, AO found that one of the share applicants not existed at the given address. That both the share applicants did not choose to appear before the AO an .....

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peals)-XII, Kolkata for the assessment year 2003-04 framed under section 143(2)/254/251/143(3) of I. T. Act. 2. The assessee raised the following grounds before the Tribunal as under: 1. That the C.I.T.(A)-XII has erred, both on the facts and in law, in dismissing the ground No.1 of the appeal before him as to legality of assessment. 2. That the C.I.T.(A)-XII has further erred, like-wise, in dismissing the ground No.2 as to addition of ₹ 18,02,000/- being share capital raised during the ye .....

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allowed partly of the assessee s appeal. Against which, the Revenue filed its appeal in ITA 2105/Kol/2006 and assessee filed its appeal in 126/Kol/2007 and C.O. 6/Kol/2007 before this Tribunal. The Tribunal in its consolidated order dated 16.11.2007 at page 10 of paper book partly allowed the Revenue s appeal and dismissed the Cross Objection of the assessee. In respect of Revenue s appeal in ITA 2105/Kol/2006, the ITAT, Kolkata bench while allowing the relief to the assessee to an extent of &# .....

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the file of A.o. to decide genuineness of share applicants to the extent of ₹ 18,02,000/-. Needless to say that the assessee should be given opportunity to explain its case before the A.O. The assessee should produce all the relevant details and documents in support of the genuineness of the above share applicants before the A.O. We hold accordingly and accept the ground of revenue partly for statistical purposes. 4. From above, it is clear that the ITAT, Kolkata opined that in respect of .....

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and as to whether assessee availed the opportunity granted by the ITAT, Kolkata in producing the relevant details and documents in support of its case before the AO. 6. The AO has given effect to the order of ITAT supra on 27.12.2007 and as there was no compliance from assessee and issued a notice on 03.04.2009 under section 142(1) of the Act intimating the date of hearing 14.4.2009 to assessee. The AO issued another notice on 17.6.2010 under section 142(1) of the Act fixing the hearing date on .....

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₹ 8,02,000/- respectively. To be clear and for better understanding of the procedure initiated by the AO in giving effect to the ITAT s order supra and to verify the identity, creditworthiness and genuineness of the transaction under section 131 of the Act, the relevant portion of the AO s order is reproduced herein below: The following observations are made in this case: a) Several opportunities, as detailed above, have been provided to the assessee. When the actual verification process .....

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record that this office did not pursue for the demand raised in order dt. 27.12.2007 and provided opportunity to the assessee by issuing notice u/s 142(1) in pursuance to order of the Hon'ble ITAT, Kolkata. It has been seen that the issue of share application money of ₹ 18,02,000/- is not subject matter of appeal before the Hon'ble High Court at Calcutta and the assessee was informed accordingly vide letter dt. 05.12.2011 that this office is not in receipt of any order other than o .....

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/s. Saroj Kumar Jhunjhunwala (HUF) is a related concern to the assessee and Sri Mrinal Kanti Goswami, who has claimed to be Authorized Representative of M/s. Saroj Kumar Jhunjhunwala (HUF), is also Authorized Representative of the assessee and submitted authorization in respect of the assessee. He failed to comply in the case of the assessee but tried to represent the case of M/s. Saroj Kumar Jhunjhunwala (HUF) without furnishing of authorization. c) In respect of M/s. Saroj Kumar Jhunjhunwala ( .....

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h proof of allotment/application. 5. To furnish source of such investment in M/s. J. J. Development Pvt . Ltd." It is specifically mentioned in the Summons u/s 131 that personal attendance is required. But no personal attendance was made. The photocopies enclosed with the submission made have not been certified. No authorization has been submitted while furnishing the papers and letters, where the claim of the assessee is supported. Therefore, these cannot be treated as valid evidences. An .....

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tions shown, It has been claimed that Karta of the HUF is out of station but it has not been specified where he is at present or his expected date of return. No documentary evidence has been submitted in support of his claim. The term "out of station" is commonly used by the persons to avoid the proceeding and in this case the Karta did the same job carefully for the purpose of avoidance of the proceeding, thinking that giving an explanation for such huge cash transactions would be dif .....

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ence to prove your position in the company. 3. Computation, audited accounts, Tax Audit Report including all schedules, I. T. filing receipt, Bank statement for A. Y. 2003-04 (F. Y. 2002-03), 4. List of Directors as on 31.03.2003. 5. To furnish details of share application/allotment made in M/s. J. J. Development Pvt. Ltd. during A. Y. 2003-04 alongwith proof of allotment/application. 6. To furnish source of such investment in M/s. J. J. Development Pvt . Ltd." It is specifically mentioned .....

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,533/-, including doubtful Loans of ₹ 90,000/- and Advances of ₹ 12,79,510/- (considered good) and ₹ 57,48,166/- (considered doubtful) but no schedule has been enclosed for such heads. Therefore, it is not known under which head it is shown. Also it is not known how application made for allotment of shares can be categorized under the head "Loans and Advances". In this case also, it has not been established beyond doubt that there was creditworthiness and genuineness .....

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f the Act. 8. Ld. CIT(A) in first appeal has observed that the assessee has not produced any details and required documents to substantiate the transaction and creditworthiness of said two entities above. Accordingly, confirmed the AO s order in respect of addition of share application amount ₹ 18,02,000/-. 9. In second appeal before us, that the Ld.AR submi tted that the assessee is not prosecuting ground no.1 and prayed that it may be treated as not pressed and therefore it is dismissed .....

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thiness and genuineness of the transactions. Moreover, the entities who paid share capital money were not appeared before the AO under summons proceedings and they filed only documents which are not certified. Further, in spite of giving many opportunities the assessee failed to discharge its onus under section 68 of the Act and relied on the orders of the AO and CIT(A) and prayed to dismiss the appeal of the assessee. 10. Heard both, perused the relevant material available on record and conside .....

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ng with some documents which are stated to be photo copies as not certified. It appears from the record, as it was mentioned by the AO, that the assessee did not cooperate and avoided to participate in the assessment proceedings, is, indeed true . The ITAT, Kolkata has accorded an opportunity to the assessee to produce all the relevant materials in support of the genuineness of share applicants. Therefore, duty is cast upon the assessee to produce all details to substantiate its case. The assess .....

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cept filing reply to summons placed at page no.44 where the details of Saroj Kumar Jhunjhunwala were filed through A.R. But, said person did not appear before the AO except stating that he is out of station. 10.2 Section 68 of the Income Tax Act, which reads as follows: Where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and sources thereof or the explanation offered by him is not in the option of th .....

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present case AO issued notices u/s. 131 for the examination of share applicants and for verification of their books of account and certain other documents, but, however, none of the two entities were present before the AO and even the address of M/s Ramsay International Ltd not traceable at the given addressee. We noticed in section 68 of the Act, authorises the Respondent Revenue to make inquiry into the sources of the creditors also and there is no limitations as such on the process of the A. .....

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notice, the AR representing Saroj Kumar Jhunjhunwala filed reply to section 131 summons at page 44 of paper book where it is observed that the sources of income were shown in cash, where the computation of income at page 45 of paper book for assessment year 2003-04 shows the total gross income of ₹ 55,160/- and whereas the share application money for assessment year 2003-04 stated to have transferred as in page 44 of the paper book from R.S. Malani Pvt. Ltd. does not reflect in the comput .....

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e. creditworthiness and genuineness of transaction is very much doubtful. The AO at page 5 of his assessment order observed that no personnel attendance was made and no valid documents regarding share application money were produced . Thus, the AO is right in doubting the creditworthiness and genuineness of the transaction. The section 68 of the Act reads as when an explanation is given by the assessee and then it is for the respondent Revenue to be satisfied whether the said explanation is corr .....

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. Ramsay International Ltd. is existed as on that address. According to AO on behalf of said Ramsay International Ltd. also filed some documents which are not certified by any person concerning said Ramay International Ltd. When the said documents were produced for an examination before the competent authority discharging duties in accordance with law, the documents relied on shall meet requisite qualification as prescribed by the law. In this present case, regarding M/s. Ramsay International, a .....

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