TMI Blog2017 (6) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing grounds of appeal: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A] is bad, both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred in passing the order without giving assessee an opportunity of being heard in violation of principle of natural justice. 3 (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts ad in law, in confirming the addition of ₹ 42,50,000/- made by the AO as income from undisclosed sources under Section 68. (ii) That the above said addition has been confirmed despite the same being made ignoring the material and evidences brought on record by the appellant in support of his contention and by indulging in surmises and conjecture, (iii) That the above addition was made despite the assessee bringing al! the material and evidences on record to prove the identity of the shareholders. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts ad in law, in confirming the above additions despite the same being made in clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Capital) 5. Onyx Exim Sales Pvt. Ltd. ₹ 300000 6. Hopewin Admark Consultancy ₹ 300000 Service Pvt. Ltd. 7. Umeshneh Securities Pvt. Ltd. ₹ 500000 (Share Capital) 8. Kiran Bansal ₹ 150000 9. Subhash Gupta ₹ 150000 10. Vishal Aggarwal ₹ 200000 11. Amit Kurnar Singh ₹ 150000 12. S.H. Mallick ₹ 200000 13. Shiwani Softech Ltd. ₹ 400000 14. Rubal Chemical Pvt. Ltd. ₹ 500000 (Share Capital) 3. Ld. AO accordingly issue notice under section 143(2) of the Act on 05.10.2011, alongwith notice unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 at 11:30 AM. The inspector while this report dated 20.12.2011 reported as under: As per direction of ACIT, Central circle 21, New Delhi, I visited the above addresses on 19/12/11 for service of the above notices. I found that no such company/person existed at the addresses mentioned above. 6. Ld. AO further gave another opportunity to assessee on 22.12.2011 which was intimated vide office letter dated 21.12.2011 to produce all authorised persons of company/directors for cross examination before Ld. AO on 23.12.2011 to justify their identity, creditworthiness, genuineness and their existence. However, on 23.12.2011 assessee filed same submission as was filed vide its letter dated 14.11.2011, without there being any new information. 7. Based on which Ld. AO recorded its observation from documents submitted by assessee and made addition of ₹ 1,32,40,090/- in the hands of assessee. 8. Aggrieved by order of Ld. AO assessee preferred an appeal before Ld. CIT(A), who confirmed addition made by Ld. AO. 9. Aggrieved by order of Ld. CIT(A) assessee is in appeal before us now. 10. Ld. AR submitted before us that assessee has provided necessary documents/evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 12.08.2015; decision of Delhi ITAT in the case of ITO vs. Softline Creations Pvt.Ltd in ITA No. 744/del/2012 dated 10/02/15 which been upheld by Hon ble Delhi High Court in the case of ITA No. 504/2016 vide order dated 31.08.2016 13. He has also placed reliance upon following decisions which has been filed before us at the time of hearing: decision of Hon ble Delhi High Court CIT vs SMC share Brokers Ltd., Reported in (2007) 288 ITR 345 CIT vs Oasis Hospitalities Pvt.Ltd., is and UP Bone Mills India Ltd reported in (2011 333 ITR 119; Shivank Udyog Ltd vs ITO reported in (2011) (10) TMI 667; ITO vs Tubecon India Ltd reported in 2015 (11) TMI 292 IT versus Neelkanth Finbuild Pvt.Ltd., in ITA No. 1932/del/2009 wide order dated 01.04.2015 14. The sum and substance of the above decisions, relied upon by assessee are that, if assessee produced sufficient documentation discharging its initial onus of showing genuineness and creditworthiness of share applicants, it was incumbent upon assessing officer to have undertaken some enquiry and investigation before coming to a conclusion on issue of creditworthiness. He also can vast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s details like, their bank statement for financial year 2000-01, books of accounts for assessment year 2001- 02, copy of share certificates allotted by assessee, source of investment etc. She submitted that Ld. AO even during original assessment proceedings had deputed an inspector to visit given addresses of alleged creditors, who had reported that these parties were not available at address given by assessee. 18. Ld. CIT(DR) submitted that assessee had a gain submitted records of these alleged creditors as per ROC, and had requested to issue fresh summons at new addresses found therein. In view of request by assessee an inspector was again deputed to serve summons to parties. But it was informed that none of parties were available at given addresses, as well by the inspector. Ld. AO then informed assessee regarding same vide order sheet entry dated 14.12.2007 wherein assessee submitted that as these companies are avoiding and not cooperating to Department to receive summons sent through inspector, notice under section 131 of the Act may be served through registered post. 19. Ld. CIT DR submitted that all these prove that assessee was never personally interested in providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maa Shakumbhari Stone Crushers Pvt.Ltd M/s Welcome Coir Industries Ltd., M/s Shimmer Marketing Pvt.Ltd M/s Hopewin Adark and consultancy Pvt.Ltd M/s Suma finance and investments Pvt.Ltd M/s Onyx exempt and sales Pvt.Ltd M/s Umesh securities Pvt.Ltd M/s rubal Chemicals Pvt.Ltd Ms Kiran Bansal Sh. Vishal Agarwal Sh. Amit Kumar Singh Sh. SH Mallick Sh. Subhash Gupta 25. Let us examine the directions passed by this Tribunal vide order dated 16.04.2010 in respect of 14 alleged creditors. Ld. AR vehemently argued that assessing officer has not followed directions of this Tribunal. For the sake of convenience relevant portion of order is reproduced herein below: 30. Coming to the addition on account of unexplained share capital/share application money received from 12 parties (names of 12 parties have already been given in para 5 of our order) in respect of which the AO received information from the Investigation Wing that they were engaged in the business of providing accommodation entries, we find that the AO had issued summons u/s. 131 to 10 parties out of 12 parties with a view to examine and verify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present case, the AO has not merely relied upon the information received from the Investigation Wing, but has also tried to find out whether the share applicants actually exist or not or whether they are engaged in the business of providing accommodation entries to the present assessee. It is beyond the AO s control to prove that the money actually emanated from the coffers of the assessee company, unless concerned share applicants are examined by him. Therefore, in the present case, merely on the basis of certain documents submitted by the assessee in respect of 12 parties, it cannot be proved and established that the share applicants are in existence and it is a normal transaction of raising share capital money from the alleged share applicants. However, at the same time it is true that information received from the Investigation Wing is also not sufficient to prove and establish that the alleged share capital or share application money has actually emanated from the coffers of the present assessee company. In order to decide this issue as to whether the share capital or share application money received from twelve parties referred to in the report of Investigation Wing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... New Delhi, in the case of ITO vs. Omega Biotech Ltd. (supra), which was referred to by the ld. DR. In that case of Omega Biotech Ltd. (supra), the issue regarding share capital received from 5 companies in respect of which the AO has received information from the Investigation Wing that those 5 companies were not carrying on actual business, but were engaged in the business of providing accommodation entries, has been restored back by the Tribunal to the file of the AO to decide the matter afresh in as much as the summons issued u/s. 131 of the Act by the AO to those parties could not be served upon them as these parties were not found available at the addresses given. It is, thus, clear that the facts of that case is identical to the facts of the present case, in so far as the 12 parties are concerned, in respect of which an identical information has been received from Investigation Wi ng that these 12 parties were not carrying on actual business but were engaged in the business of providing accommodation entries, and during the course of assessment proceedings summons issued u/s 131 of the Act, to the ten parties out of twelve parties, and to other two parties, could not be serve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding creditworthiness and genuinety tea of transactions. Tribunal further records therein that in order to decide this issue as to whether share capital or share application money received from 14 parties referred to in report of investigation wing is unaccounted money of assessee or any other person, it is necessary to make further enquiry and verification by examining concerned parties as well as by taking into account other surrounding circumstances evidences. To our understanding it is on this background that this Tribunal had remanded issue back to assessing officer to make such further enquiries and investigation as he may think fit and proper. 27. Now when we refer to assessment order passed by Ld. AO under section 256 of the Act, we observe that assessing officer had initiated investigation by issuing notice to assessee to produce the alleged creditors before him, alongwith requisites details as called for. 28. We therefore, do not agree with argument advanced by Ld. AR that this Tribunal vide order dated 16.04.2010 had shifted entire onus of proving creditworthiness and genuinety of transaction upon assessing officer. It is clear from above referred paragraphs th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments. 32. The next document at page 46 is return of income filed by this applicant for assessment year 1999-2000(but not for A. Y:2001-02) is without PAN number and neither is there any indication of application being made for obtaining same. The return shows there is a carry forward loss amounting to ₹ 1,38,63,160/- which shows that this company did not have any business during previous year relevant to assessment year 1999-2000. The next document is the master data obtained from website Ministry of Corporate Affairs which shows that company was incorporated on 20.12.89 and that last AGM conducted by this company was on 29.09.2009 for approving balance sheet dated 31.03.2009. The next document is annual return of company filed on the basis of balance sheet drawn on 31.03.2009 at page 49 to 69 of paper book. The directors report placed at page 70 further shows that this company was suffering loss of ₹ 2,210/- as compared to previous year loss of ₹ 7,960/-. In the audited report balance sheet and profit and loss placed at pages 76 to 78 shows that there are huge losses. 33. None of the documents submitted pertains to applicant s position for assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record which could prove any business activity being carried out by this alleged applicant. The form is submitted are incomplete without having full information in respect of the alleged applicant. 3. Suma finance and investment Ltd: 37. The share application form placed at page 107 and dated where this applicant has applied for 20,000 equity shares of ₹ 10/- each at an aggregate value of ₹ 2 Lacs. The signatory details are not available. The payment has been made by way of cheque issued from bank of Punjab on 18.05.2000. The bank statement placed at page 109 of paper book pertains to a period from 15.04.2000 to 18.05.2000 and opening balance as of 15th April is nil. Moneys have been deposited and have been withdrawn simultaneously. Page 110 of paper book is acknowledgement of return of income for assessment years 1999-2000, (not for 2001-02) which has not been stamped to prove that it has been filed. The income declared by alleged applicant under the head profit from business is only ₹ 16,910/- and has shown some speculation loss. Page 111 of paper book is the master details of the applicant obtained from the website of Ministry of corporate affairs, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010 along with respective Annual Returns. At page 164 Balance sheet as on 31.03.2011. None of Balance sheet is coupled with Profit and Loss account for relevant years. 42. In the instant case assessee has not produced relevant information pertaining to assessment year 2001-02 to establish identity, creditworthiness and genuineness of transaction. There is no single document that has been placed on record which could prove any business activity being carried out by this alleged applicant. 5. M/s. Hopwin Admark Consultancy Services Ltd. 43. Page 172 is share application form. Page 175 is acknowledgment of Return of Income for assessment year 2000-01, which shows PAN number, as applied for. The income declared is ₹ 41,645/- from business and profession. This is followed by master details obtained from web site of Ministry of Corporate Affairs. The Directors Report for year ended 31.03.2011 mentions that applicant has made profit of ₹ 281/- from gross receipt of ₹ 3500/- during year. There is balancesheet for year ended 31.03.2011 placed at page 182 to 186 of paper book, which reveals that there has been no business activity that has been carried on by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining to assessment year 2001-02 to establish identity, creditworthiness and genuineness of transaction. There is no single document that has been placed on record which could prove any business activity being carried out by this alleged applicant. 7. M/s. Maa Shakumbhari Stone Crushers Pvt.Ltd.,. 48. Page 208 is share application form. M/s. Maa Shakumbhari Stone Crushers Pvt. Ltd., has applied for 30,000 equity shares of assessee worth ₹ 10/- share aggregating to ₹ 3 lakh. The applicant has paid money by way of cheuqe drawn from Federal Bank. Page 210 of paper book is bank statement from 01.03.2001 to 31.03.2001 of applicant wherein there is a pattern of deposit and withdrawal of money. Page 211 is acknowledgement of return of income filed for assessment year 2000-2001 which does not have PAN numbers being a new case. The address mentioned in the share application form and return of income are different, which does not tally with address mentioned on bank statement. The signatory to share application forms as well as a return of income are different and does not reveal name, capacity in which return of income has been signed. 49. In the instant case assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Corporate Affairs, wherein date of incorporation has been shown to be 14.02.2000. Audited accounts for year ending 31.03.2010 placed at page 288- 296, does not have profit and loss account of applicant which could bring out true and correct picture of affairs of applicant. Audited accounts for year ending 31.03.2011 has been placed from page 301-311 wherein profit and loss account has been annexed and reveals that income for year ended 31.03.2011 was only ₹ 45,000/- whereas income for year ended 31.03.2010 was ₹ 6800/-. In the instant case assessee has not produced relevant information pertaining to assessment year 2001-02 to establish identity, Creditworthiness and genuineness of the transaction. 10. Rubal Chemicals Pvt.Ltd. 56. This company has applied for 50,000 equity shares of assessee of ₹ 10/- each aggregating to ₹ 5 lakh and payment has been made by cheque drawn on Punjab National Bank. The copy of application of share is placed at page 312 of paper book along with copy of cheque at page 313, of current account No. 5290 placed at page 314-315 which is for a period of 30.03.2000 to 04.05.2000. Page 316 contains acknowledgement of return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters. In the return of income filed by applicant placed at page 360, shows that applicant was having income from house property at ₹ 49,500 and income from business or profession at ₹ 7,342 for assessment year 2000-2001. There is no document that has been placed in paper book which could prove credibility of this applicant and genuinely of transaction. 12. Subash Gupta 59. Page 61 is share application form submitted by this applicant for allotment of 15,000 equity shares of ₹ 10/- each aggregating to ₹ 1,50,000/-. The payment has been issued by way of cheque drawn on Federal Bank Ltd., is placed at page 362 of paper book. Page 363 is bank statement for the period 01.03.2001 to 30.03.2001 wherein there is a sequence of deposit and withdrawal of money at consecutive dates. Page 364 is a ration card of applicant issued on 10.09.1998 and page 365 is copy of return filed by this applicant for assessment year 2000-2001 which shows that applicant was earning salary income amounting to ₹ 20,000 during year. There is no document that has been placed in the paper book which could prove credibility of this applicant and the genuinely of the transaction d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for period 24.03.2001 to 27.03.2001 wherein a pattern of deposit and withdrawal has been observed. Page 380 ration card of brother of this applicant wherein applicant s name has been mentioned. Return of income for assessment year 2000- 01 has been placed at page 381 of paper book wherein salary income has been shown amounting to ₹ 40,000/- only and income from other sources at ₹ 13,282. It is also observed that this applicant has been found to be directors and many of companies mentioned herein being alleged share applicants of assessee. 64. There is no document that has been placed in paper book which could prove credibility of this applicant and genuinely of the transaction. 65. On analysis of all above alleged applicants who have alleged to have invested money with assessee, has been found to be non-genuine. None of documents filed before assessing officer during remand proceedings pertained to assessment year 2001-02, and filing of such documents cannot in any manner discharged initial onus cast upon assessee under section 68 of the Act. Even during original assessment proceedings assessee did not provide with correct details like confirmations, personally pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer to be satisfied that true nature of receipt is that of capital. Merely, because company chooses to show receipt of money as capital, it does not preclude Income-Tax Officer from going into question whether this is actually so. Section 68 would clearly empower him to do so. Where, therefore, assessee represents that it has issued shares on the receipt of share application money then amount so received would be credited in the books of account of the company. The Income-Tax Officer would be entitled to enquire, and it would indeed be his duty to do so, whether the alleged shareholders do in fact exist or not. If the shareholders exist then, possibly, no further enquiry need be made. But if the Income-Tax Officer finds that alleged shareholders 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 (emphasis added) 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 income of assessee. The onus of satisfactorily explaining such credits remains on per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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