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ITO, Ward 1, Mandi Gobindgarh Versus Mandi Alloys (P) Ltd.

2015 (11) TMI 1703 - ITAT CHANDIGARH

Re-opening of the assessment - addition under section 68 - Held that:- The assessee at the original assessment stage filed all the documentary evidences before Assessing Officer with regard to proving identity of the share applicants, their credit worthiness and genuineness of the transaction in the matter. No business/manufacturing activities have been carried out by the assessee during the year under consideration. The Assessing Officer accepted the returned income by showing interest income a .....

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222/Chd/2015, CO No. 11/Chd/2015 - Dated:- 27-11-2015 - Bhavnesh Saini (Judicial Member) And Annapurna Mehrotra (Accountant Member) For the Department : Sushil Verman For the Respondent : Sudhir Sehgal ORDER Bhavnesh Saini (Judicial Member) The departmental appeal as well as Cross Objection by assessee are directed against the order of ld. CIT(Appeals) Patiala dated 16.12.2014 for assessment year 2005-06. 2. The department has filed the appeal on the following grounds : 1. In the facts and circu .....

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eting the addition of ₹ 94,00,000/-, particularly when the Department is already in appeal before the Hon'ble High Court against the said decision, which is pending for adjudication. 3. In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not following the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Nova Promoters & Finlease Pvt. Ltd. reported at 342 ITR 369. 3. The assessee in the Cross Objection has challenged the order of ld. .....

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was providing accommodation entries. The Assessing Officer noted that assessee company i.e. M/s Mandi Alloys Pvt. Ltd. has introduced ₹ 15 lacs as share application money from two companies owned by Shri Tarun Goyal i.e. M/s Geefcee Finance Ltd. ₹ 10 lacs, M/s Tejasvi Investigation Pvt. Ltd. ₹ 5 lacs (total ₹ 15 lacs). On the basis of this information, Assessing Officer reopened the assessment under section 147 of the Income Tax Act. The Assessing Officer, at the assessm .....

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assessee failed to substantiate the genuineness of the transactions in respect of 8 persons/entities in a sum of ₹ 94 lacs and finally concluded that ₹ 94 lacs introduced on share capital by 8 persons/entitles are not genuine transactions. The addition of same was made against the assessee. 5. The assessee challenged re-opening of the assessment before ld. CIT(Appeals) and it was submitted that there was no material available with the Assessing Officer to have reasons to believe for .....

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et etc. were produced. The assessee, therefore, explained that assessee entered into the genuine transactions. The Department solely relied upon statement of Shri Tarun Goyal, however, he was not produced for cross-examination on behalf of the assessee, therefore, his statement can not be read in evidence against the assessee. The assessee relied upon several decisions of different High Courts in support of the contention that assessee entered into genuine transactions of share application and r .....

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Co. 83 ITR 187 on the proposition that when there were no manufacturing activities conducted by us in assessment year under appeal, there cannot be any addition in the hands of the assessee. 6. The submissions of the assessee in detail have been reproduced in the order of the ld. CIT(Appeals) which is forwarded to the Assessing Officer for his comments. The Assessing Officer, more or less reiterated the same facts. 7. The ld. CIT(Appeals), considering the material on record found that assessee h .....

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s of the transaction has been proved by assessee by proving the transaction through banking channels. The ld. CIT(Appeals), therefore, accepted the contention of the assessee that identity of the shareholder, their credit worthiness and genuineness of the transactions have been proved by assessee not only at the original assessment stage but also at the re-assessment proceedings. It was noted that Assessing Officer without any reasons and without any specific allegation or document against the a .....

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ot be regarded as undisclosed income under section 68 of the Act . The ld. CIT(Appeals) also followed the order of ITAT Chandigarh Bench in the case of M/s Kisco Casting Pvt. Ltd. in ITA 685/2011 (supra) and noted that fact regarding the entries pertaining to Shri Tarul Goyal are exactly the same and therefore, issue is covered in favour of the assessee. The ld. CIT(Appeals) reproduced the order of the Tribunal in the case of M/s Kisco Casting Pvt. Ltd. in the appellate order and found that the .....

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The appeal of the assessee was, therefore, partly allowed. 9. The ld. DR relied upon order of the Assessing Officer and contended that addition on merit has been wrongly deleted by the ld. CIT(Appeals) and relied upon order of Delhi High Court in the case of CIT V Navodaya Castles (P) Ltd.50 Taxman.com 110 and decision of Hon'ble Supreme Court in the case of Navodaya Castles (P) Ltd. V CIT 56 Taxman.com 18 in which SLP filed by assessee has been dismissed. 10. On the other hand, ld. counsel .....

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rder of ITAT Chandigarh Bench in the case of M/s Kisco Casting (P) Ltd. (supra). The ld. counsel for the assessee referred to PB-6 which is Director s Report in which it was mentioned that project starts its production on 02.05.2005 . PB-15 is Profit & Loss Account filed with the return of income to show that assessee was having only interest income of ₹ 9,522/- which was declared in the return of income. PB-25 is original assessment order for assessment year 2005-06 under appeal under .....

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no opportunity was allowed to assessee to cross-examine Shri Tarun Goyal. He has submitted that recently ITAT Chandigarh Bench in the case of M/s Kundles Loh Udyog V ITO in ITA 133/2010 vide order vide order dated 21.10.2015 following the decision of the Hon'ble Supreme Court in the case of Bharat Engineering & Construction Co. 83 ITR 187 deleted the addition under section 68 of the Act. Copy of the order is placed on record. The ld. counsel for the assessee, therefore, submitted that si .....

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ing activities have been carried out by the assessee during the year under consideration. The Assessing Officer accepted the returned income by showing interest income at ₹ 9,522/-. Same evidences were furnished before Assessing Officer for reassessment proceedings and assessee relied upon decision of Supreme Court in the case of Lovely Exports Pvt. Ltd. (supra) as well as order of ITAT Chandigarh Bench in the case of M/s Kisco Casting P. Ltd. These orders have been reproduced in the impug .....

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of Lovely Exports Pvt. Ltd.(supra) as well as decision of ITAT Chandigarh Bench in the case of M/s Kisco Casting P.Ltd. 12. Hon'ble Madhya Pradesh High Court in the case of Agarwal Warehousing & Leasing Ltd. Vs CIT 257 ITR 235 held as under : The orders passed by the Tribunal are binding on all the Revenue authorities functioning under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities Should be followed unr .....

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d, that the Commissioner of Income-tax (Appeals) not only committed judicial impropriety but also erred in law in refusing to follow the order of the Appellate Tribunal. The Members of the Tribunal who decided the appeal upholding the view taken by the Commissioner of Income-tax (Appeals) also did not observe due procedure. 13. During the course of arguments, no different facts have been pointed out, therefore, ld. CIT(Appeals) was justified in holding that on identical facts, the ITAT Chandigar .....

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