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2016 (5) TMI 854 - ITAT DELHI

2016 (5) TMI 854 - ITAT DELHI - [2016] 48 ITR (Trib) 555 - 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 f .....

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al 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 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 & .....

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M/s Kiwi Foods India Pvt. Ltd., New Delhi, the appeals for 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 .....

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tmental appeal, the only effective ground raised reads as under: 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 contribut .....

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edings were not abated but were already completed. Thus all 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 .....

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sment order, not involving any fresh investigation into facts, 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 .....

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ib) CIT Vs Ashok Leyland Ltd. (2001) 25) ITR 452 (Mad.) Orissa 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( .....

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Ltd. Vs CIT (1998) 229 ITR 383 (supra) wherein it has been 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 dedu .....

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bunal should not be prevented from considering questions of 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 la .....

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r Group of cases on 31.07.2008 and certain documents belonging 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 Part .....

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any, documents relating to buy back of shares of M/s Kiwi Food 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. L .....

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Services Ltd. 10000 1000000 11. Kiwi Foods Pvt. Ltd. BSA Fincap 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 .....

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td. 2003-04 (-) 35966/- 6. M/s Mahanivesh India P. Ltd. 2003-04 (-) 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, .....

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r as to wherefrom he got the money to invest nor the shareholder 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 Comp .....

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the appellant company, their credit-worthiness stands proved. 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 Comp .....

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hen the department was free to proceed to reopen their individual 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. (200 .....

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106 Taxman 224 (Delhi) CIT Vs. Makhni & Tyagi Pvt. Ltd. (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. P .....

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he year. It was further submitted that as far as the assessee 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 do .....

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the funds were invested in the assessee company by those shareholders 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 genuinene .....

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gned order as under: ii) The appellant has filed information 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 be .....

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inance Ltd. (supra) etc cited in the above preceding paragraphs 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 .....

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iled upto 2009 28/12/01 2 Satelite Markcon PVT. Ltd Rite Pack, ₹ 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 ti .....

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l other companies as a part of their regular investment business. 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 e .....

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balance amount of ₹ 23,00,000/- is confirmed. 21. Now 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 we .....

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ra 37(vii) of the said judgment wherein it has been held as 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 .....

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own hands and not in the hands of the assessee company and 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 th .....

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tional ground raised by the assessee first time before the 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 .....

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in view the aforesaid facts, we are of the opinion that the 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 dire .....

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grave;-vis assessment year 2005-06, the issues in these appeals 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 .....

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Thus, the notice issued without fulfilling the conditions laid 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 as .....

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