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M/s Rite Pack Industries Pvt. Ltd. Versus Deputy Commissioner of Income Tax, Central Circle-25, New Delhi and M/s Kiwi Foods India Pvt. Ltd. Versus Deputy Commissioner of Income Tax, Central Circle-5, New Delhi

2016 (5) TMI 854 - ITAT DELHI

Addition for the amounts received against allotment of the share capital - Held that:- In the present case, the ld. CIT(A) observed that nothing was apparent from the assessment order that any adverse material existed in the assessment folder for the relevant period, on the other hand, claim of the ld. DR is that the additions were made by the AO on the basis of the documents found during the search. Thus, there is contradiction in the facts. On merit also the ld. CIT(A) without bringing on reco .....

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expeditiously in accordance with law after providing due and reasonable opportunity of being heard to both the parties. The assessee is also directed to co-operate and not to seek any unwarranted or undue adjournment. - ITA Nos. 3053/Del/2012 and 2611/Del/2013, ITA No. 3553/Del/2012, ITA Nos. 2610, 2613 to 2616/Del/2013 - Dated:- 13-4-2016 - Sh. N. K. Saini, AM And Sh. Sudhanshu Srivastava, JM For The Assessee : Sh. Vinod Kr. Bindal & Sanjeev Bindal, CAs For The Revenue : Sh. R. B. Meena, CI .....

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the assessment years 2004-05 to 2006-07, 2008-09 & 2009-10 are directed against the separate orders each dated 25.03.2013 of the ld. CIT(A)- XXXI, New Delhi. 3. The issues involved in these appeal are common and the appeals were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity. 4. First we will deal with the Cross appeals for the assessment year 2005-06. In the assessee s appeal following grounds have been raised: 1. The learne .....

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nder: On the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the addition of ₹ 85,00,000/- out of total addition of ₹ 1,08,00,000/- made by the Assessing Officer u/s 68 of the IT Act, 1961 on account of unexplained share capital without appreciating the fact that the assessee failed to prove the genuineness of transaction as well as the identity and creditworthiness of the person who contributed the share capital. 6. The assessee moved an application .....

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the additions so made in the assessment order should be deleted following the Special Bench decision dated 6.7.2012 in the case of All Cargo Global Logistics Ltd. in appeals no. ITA/5018-5022/M/10. 7. The assessee also moved another application dated 18.02.2014 for admission of the following additional ground: The CIT(A) erred in law and on facts in confirming issuance of notice u/s 153C to the appellant ignoring the fact that no assets, incriminating material and documents belonging to the app .....

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ts, so these deserve to be admitted. The reliance was placed on the following case laws: ACIT Vs Bhagwati Printers (P) Ltd. (2006) 102 TTJ 480 (Del) National Thermal Power Co. Ltd. Vs CIT (1998) 229 ITR 383 (SC) DCIT Vs Turquoise Investment & Finance Ltd. (2006) 154 Taxman 80 (MP) Kanoi Industries (P.) Ltd. Vs DCIT (2006) 100 ITD 462 (Kol.) West Bengal State Electricity Board Vs DCIT (2005) 278 ITR 218 (Cal) Uma Polymers (P) Ltd. Vs DCIT (2006) 101 TTJ (JD) ™ 124 Datamatics Ltd. Vs ACI .....

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ssa Cement Ltd. Vs CIT (2001) 117 Taxman 625/250 ITR 856 (Del) Eicher Motors Ltd. Vs DCIT (2004) 82 TTJ (Ind.) 61 9. During the course of hearing the ld. Counsel for the assessee reiterated the contents of the aforesaid applications and requested to admit the additional grounds. 10. In his rival submissions the ld. DR objected for the admission of the additional grounds and submitted that these grounds were not raised before the ld. CIT(A), therefore, these should not be admitted. 11. We have co .....

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held as under: The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assessee correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should .....

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law arising in assessment proceedings, although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) is too narrow a view to take of the powers of the Tribunal. It has further been held that: Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment .....

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ing to the assessee were also seized. The AO thereafter issued a notice u/s 153C of the Act on 18.12.2009, in response the assessee furnished the return of income declaring an income of ₹ 1,080/- on 13.01.2010. 13. During the course of assessment proceedings, the AO noticed that the assessee had allotted 2,16,000 shares of ₹ 10/- each at a premium of ₹ 40/- per shares to the following companies: Sl. No. Name of the Party No. of Shares Amount Received in (Rs.) 1. M/s Reenu Finca .....

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ood India Pvt. Ltd. and M/s Rite Pack India Pvt. Ltd. i.e. the assessee, were found and seized as Annexure A-1 to A-5 and those documents for the transfer and buy back of shares of those companies were lying blank which were summarized by the AO as under: Sl. No. Name of the Beneficiary Company Subscriber Company No. of Shares Amount paid by subscriber company 1 Kiwi Foods Pvt. Ltd. Marrass Ind. Pvt. Ltd. 5000 500000 2. Kiwi Foods Pvt. Ltd. Core Capital Services Ltd. 5000 500000 3. Kiwi Foods Pv .....

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ncap Pvt. Ltd. 5000 500000 95,00,000/- 14. The AO also noticed that Sh. Rajender Aggarwal during the post search proceedings was confronted with those documents and he vide letter dated 12.09.2008, addressed to the Dy. Director of Income Tax (Inv.), Unit- II(1), New Delhi, submitted that he bought back shares from those companies by paying cash amount over and above the value recorded in his books of accounts. The AO, therefore, inferred that the assessee group was in the practice of introducing .....

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3-04 (-) 3340/- 15. On the basis of the aforesaid detail, the AO held that all the above companies did not have any creditworthiness of giving such huge amounts to the assessee company, thus, the creditworthiness of those persons was not established and that the genuineness of the transactions with abovementioned persons within the meaning of Section 68 of the Act had not been proved. He, therefore, treated the amount of ₹ 1,08,00,000/- received from those companies as unexplained cash cre .....

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older is obliged to give such information to the company. There is no provision under any of the two above Acts to ask for the balance sheets of the shareholders. However, the details regarding those investors as per list attached were very well placed on the record of the assessing officer during the course of the assessment proceedings and if so desired, she could have called for further information from the office of Registrar of Companies or the shareholders directly. Further PANs of such in .....

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d. The amounts were received through banking channel and therefore genuineness of the transactions also stands proved. Since all of them are incorporated bodies or individuals their identity is also beyond doubt. Nothing more could be available with the appellant as all these details are taken at the time of receiving share application money or allotment. No such information is given by the shareholders thereafter. d. u/s 68A of the Companies Act no person can apply shares of any company under a .....

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vidual assessments in accordance with law, but it could not be regarded as undisclosed income of the assessee in any manner. The reliance was placed on the following case laws: CIT Vs Lovely Exports Pvt. Ltd. (2008) 216 CTR (SC) 195 CIT Vs Divine Leasing & Finance Lid. (2008) TIOL 118 (SC) IT CIT Vs Steller Investment Ltd. (2001) 251 ITR 263 (SC) CIT Vs Sophia Finance Ltd. (1994) 205 ITR 98 (Del)(FB) CIT Vs Glocom Impex (P) Ltd. (2006) 157 Taxman 303 (Del) CIT Vs. Dolphin Canpack Ltd. (2006) .....

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. (2004) 187 CTR (Del.) 550 Mod Creations (P) Ltd. Vs. ITO [2011] 13 taxmann.com 114 (Delhi) CIT Vs Orissa Corporation Ltd (1986) 159 ITR 78 (SC) 18. It was contended that if the assessee had furnished the evidences regarding the share capital allotted to the share applicants and the department alleges otherwise then onus lies on the department to prove the same. The reliance was placed on the following case laws: CIT Vs Bedi & Co. Pvt. Ltd. (1998) 230 ITR 580 (SC) CIT Vs Daulat Ram Rawatmul .....

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ee company was concerned, it received money against the shares allotted by it to the shareholders and whether the same were given by the director or the shareholders was not its concern, rather availability of such documents absolved the assessee company altogether and proved that the assessee received the share capital amounts from the independent sources and the said shareholders amongst them transferred those shares. Thus, the said documents did not have any relevance to the matter in hand an .....

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hareholders only and no money of the assessee in any manner was invested, otherwise the said director would not have disclosed the purchase in his hands, rather he would have admitted the same as undisclosed investment by the assessee or his own money in the assessee. It was further submitted that the assessee placed all possible documentary evidences on record to substantiate the identity and creditworthiness of the lender and genuineness of transaction. Thereafter, the onus shifted on the AO t .....

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n as mentioned herein to support its claim of the share capital investment as required u/s 68 of the Act. The amounts were received by the appellant undisputedly through the account payee cheques. It is also not the case of the assessing officer that the search in the year 2008 after the above investment in share capital at the premises of the appellant yielded any evidence to show that the appellant gave any cash or allowed any other benefit to the said investors or anybody else against the sai .....

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aphs as none of the reasons to give ruling in favour of the department by the Court exists here. Further on perusal of the information down loaded from the official website of the Ministry of Corporate Affairs, Government of India, which is in public domain and it has been found that as per chart submitted by the appellant the following two companies have not filed their audited annual accounts for the period after the year 2008/09 with the ROC as per the information available on the portal of t .....

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ck, ₹ 13 Lacs in AY2005-06 Annual accounts filed upto 2003 28/12/01 Thus activities of these two companies cannot be considered beyond doubt and thus the action of the assessing officer is confirmed. iii) As regard the other companies, their regular information is available on the portal of the MCA and the same shows not only their creditworthiness to make investment in the equity capital of the appellant company at the relevant time but also reflects that they are regular in their busines .....

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iness. The own available funds of these investors companies were sufficiently large and much more than the investments made by them in the appellant company. There is no findings on record from the assessing officer that these investors are not regular in filing their income tax returns despite that the income tax assessment particulars of these investors were on his record. Therefore, their existence are established. Besides, they had enough resources to make the impugned investments in the rel .....

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the department is in appeal against the relief allowed to the assessee and against the sustenance of addition assessee is in appeal. At the first instance, the ld. Counsel for the assessee argued on the legal issues raised vide the additional grounds and submitted that no incriminating material was found during the course of search and Sh. Rajender Aggarwal, Director of the company admitted that shares allotted to different companies were bought by him and not by the company. He also surrendere .....

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under: vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 22. However, on query from the Bench, the ld. Counsel for the assessee admitted that the additional .....

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that the shares transactions were bogus, therefore, the addition was rightly made by the AO u/s 68 of the Act. It was further submitted that the additions were made by the AO on the basis of the documents found during the course of search, so it cannot be said that incriminating material was not found at the time of search. It was further submitted that the facts of the case of CIT Vs Kabul Chawla (supra) relied by the ld. Counsel for the assessee is distinguishable from the facts because of the .....

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ITAT is a legal ground but the same was not raised before the ld. CIT(A), so he has no occasion to deal with this ground. It is also an admitted fact that the judgment of the Hon ble Jurisdictional High Court in the case of CIT Vs Kabul Chawla (supra) relied by the ld. Counsel for the assessee was also not available to the ld. CIT(A) while deciding the appeal of the assessee. In the present case, the ld. CIT(A) observed that nothing was apparent from the assessment order that any adverse materia .....

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e issues under consideration require a fresh adjudication. As the principles of natural justice demand that opportunity is to be given to both the parties, we, therefore, deem it appropriate to set aside these issues raised vide additional grounds to the file of the ld. CIT(A) to be adjudicated expeditiously in accordance with law after providing due and reasonable opportunity of being heard to both the parties. The assessee is also directed to co-operate and not to seek any unwarranted or undue .....

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eals are also set aside to the file of the ld. CIT(A) to be adjudicated alongwith the appeal for the assessment year 2005-06. 26. In the case of M/s Kiwi Foods India Pvt. Ltd., the common grounds have been raised. For the sake of convenience, the grounds raised for the assessment year 2004-05 are reproduced as under: 1. The CIT(A) erred in law and on facts in confirming issuance of notice u/s 153C to the appellant ignoring the fact that no assets and documents belonging to the appellant company .....

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aid down by the law is invalid and the assessment made on the basis of an invalid notice should be cancelled. 3. The CIT(A) erred in law and on facts in confirming the addition of ₹ 20,00,000/- for the amounts received against allotment of the share capital during the relevant period due to irrelevant reasons. Thus the addition must be deleted. 4. The CIT(A) erred in law and on facts to confirm that the additions in the impugned assessment order passed u/s 153A are perverse and illegal bec .....

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