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2016 (11) TMI 387

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..... to be admitted and adjudicated on merits in order to advance substantial justice and we admit these additional evidences filed by the assessee vide page 43-148/paper book-II . However, the contentions of the assessee and the additional evidences so filed by the assessee need verification by the authorities below and hence we are of the considered view that in order to identify and assess the real income of the assessee and to advance substantial justice, the matter/issue under this appeal need to be set aside and restored to the file of the ld. CIT(A) for de-novo determination of the issue on merits - Decided in favour of assessee for statistical purpose. - I.T.A. No. 7481 / Mum/ 2013 - - - Dated:- 22-9-2016 - Shri Mahavir Singh, Judicial Member And Shri Ramit Kochar, Accountant Member Assessee by : Dr. K. Shivaram Revenue by : Ms. Kusum Bansal ORDER Per Ramit Kochar, Accountant Member This appeal, filed by the assessee company, being ITA No. 7481/Mum/2013, is directed against the appellate order dated 25th September, 2013 passed by learned Commissioner of Income Tax (Appeals)- 1, Thane (hereinafter called the CIT(A) ), for the assessment year 2010-11, t .....

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..... rores represents machinery, tools , equipments etc. transferred from Alvi Tech Services which stands represented in the capital balance of Shri Krishanand Trivedi, proprietor of M/s Alvi Tech Services. In nutshell, the A.O. observed that the assessee has claimed that what has been transferred is the accumulated capital balance of M/s Alvi Tech Services along with personal capital of Shri Krihnanand Trivedi. The assessee submitted the capital account of Shri Krishnannand Trivedi which is as under:- To drawing 375,000.00 By balance B/d 5,33,01,281.48 To balance c/d 5,37,21,502.84 By Net Profit 668,366.36 By FDR Interest 126,855.00 . 54,096,502.84 ============ .. 54,096,502.84 ============ The assessee claimed that the above is the personal capital balance of Shri Krishnanand Trivedi. The assessee has further stated that the capital 'balance of Shri .....

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..... 2009-10 4,97,500/- 2010-11 4,97,500/- 2011-12 4,97,500/- Further from the return of income filed by Shri Krishanand Trivedi, it was observed by the AO that capital balance shown by Shri Krishnanand Trivedi as Prop. of Alvi Tech Services are very less. Capital balance shown by Shri Krishanand Trivedi as prop of Alvi Tech Services is as under:- F.Y. A.Y. Opening capital balance in Rs. Income of the year in Rs. Drawing in Rs. Closing capital balance in Rs. 2001-02 2002-03 1,08,970/- 85,571/- 50,875/- 1,43,666/- 2002-03 2003-04 1,93,666/- 1,48,149/- 71,196/- 2,70,619/- 2003-04 2004-05 2,70,619/- 1,79,077/- 1,18,403/- 3,31,293/- 2004-05 2005-06 .....

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..... and Trivedi was not having enough salary to substantiate such a capital balance and the income disclosed in the return of income by Shri Krishnanand Trivedi is very less as compared to the capital balance. The assessee was asked to explain as to how such a huge capital has been built up and also asked to explain the source of the said capital. The assessee, in reply has filed capital account for the period 1990 to 2005 claiming to be personal capital account of Shri Krishnanand Trivedi whereby he has received ₹ 75 lakhs as share from family settlement in the financial year ended 31- 03-2000 and also receipt of ₹ 18.75 lacs and ₹ 31.87 lacs as capital received from Sh. Alok K. Trivedi and Sh. Rajkumar K Trivedi. The A.O. observed that the assessee has not submitted any documentary proof in support of the income credited to the capital account. It was also observed that the assessee has credited professional fees during the year 1990 to 2000 while in fact during that time the assessee was working with Indian till 1994 and thereafter with other companies. Similarly , no evidence was brought on record regarding the receipt of family settlement nor there was evidence w .....

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..... ich he had inherited from his father which is around 10 hectare and value of land is ₹ 10 crores for which the assessee filed land records before the learned CIT(A). Thus, the assessee contended before the learned CIT(A) that the addition to capital account of Mr Krishnanand Trivedi found stood explained. The ld. CIT(A), however, rejected the claim of the assessee on the ground that the assessee was not able to substantiate the claim of introduction of share capital/share application money to the tune of ₹ 3,19,35,000/- during the previous year relevant to the assessment year whereby the built up capital in the capital account of Shri Krishnanand Trivedi has also been found to be factually incorrect as compared to the return of income filed by the assessee with the Revenue. The assessee failed to prove the creditworthiness of Sh Krishnanand Trivedi , nor the assessee was able to prove the genuineness of the transactions regarding addition of machinery , equipment, tool etc.. The ld. CIT (A), therefore held that the A.O. has rightly treated the credits on account of share capital/share application money to the tune of ₹ 3,19,35,000/- in assessee s books of accou .....

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..... . There are additional evidences filed for the first time before the Tribunal which are part of the paper book-II/pages 43-148. The ld. Counsel further requested that the matter may be remanded back to the CIT(A) for verification of all these additional evidences and claim of the assessee may be adjudicated on merits. He submitted that the addition u/s 68 of the Act is not sustainable as there are in-fact no cash credits to the tune of ₹ 3.15 crores which is supported by affidavit filed as additional evidence of Mr K.N.Trivedi along with re-casted audited financial statements. The revised audited accounts are also duly filed with the government authorities (which are placed in page No. 65 to 68 of the paper book) i.e. Ministry of Corporate Affairs and receipted challans are enclosed as additional evidence filed before the Tribunal. The Resolution is also placed on record vide paper book-II/ page 69 to 72 enabling the assessee to recast and revise its financial statements. 8. The ld. D.R. relied on the order of the ld. CIT(A) and submitted that the matter can be remanded to the file of the ld. CIT(A). 9. We have considered the rival contentions and also perused the mater .....

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..... vised and re-casted audited accounts for the financial year 2009-10 are placed as additional evidences page 47-64/paper book-II. Copies of Resolutions along with forms filed with Ministry of Corporate affairs for filing revised and re-casted audited accounts for financial year 2009-10 along with paid challans are enclosed in paper book-II/page 65-68. The copy of notice of Extra-ordinary General Meeting(EGM) , Board Resolutions and Resolutions passed at EGM are also filed as additional evidences before the Tribunal. Sanction letters from Bank of Baroda is also filed as additional evidences to substantiate that the loans/limits were enhanced by the bank in favour of the assessee company which was made possible only because the assessee manipulated its accounts to show higher share capital/share application money to the tune of ₹ 3.15 crores which was fictitious entry. It is also submitted that no such machinery, tools and equipments were held by the proprietor of Alvi Tech Services which was introduced in the assessee company and it was all bogus/fictitious entries. The assessee has admitted that these share capital/share application money raised by the assessee to the tune of .....

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