TMI Blog2017 (12) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... s 13 share premium paying applicants. We repeat that this is not the assessee's case of having not being afforded adequate opportunity of hearing in the instant consequential proceedings. The same factual position continued in the three remand proceedings as well wherein it would file only photocopy of the confirmations in some of the cases. All the above 13 parties seem to be based in Ahmedabad only. The assessee still could not produce even one of the 13 parties in question We notice from the case record that all the above photocopy confirmations are dated September 1, 1995 i.e. well before this Tribunal's remand direction dated June 12, 2009. Rather the same is well before the Commissioner of Income-tax (Appeals)'s former order dated September 14, 2005 (supra). All this reflects the assessee's lack of explanation despite getting its matter remanded back to the Assessing Officer. We further observe that the assessee's act and conduct in not being able to file even a single original confirmation and its subsequent action in submitting all 4 photocopies of the same date indicates a very serious genuineness issue. - Decided in favour of revenue - I.T.A. No. 1679/Ahd/2014 - - - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of its relevant vouchers in order to get the expenditure in question verified from the field authorities. 3. The assessee filed I.T.A. No. 2253/Ahd/2005 before this Tribunal. The co-ordinate Bench remitted the said first round litigation back to the Assessing Officer in its order dated June 12, 2009 reading as under : 16. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. In the instant case, the Assessing Officer completed the assessment under section 144 of the Income-tax Act, 1961 due to failure of the assessee to furnish the required details. The assessee explained before the Assessing Officer that all its books of account and vouchers, etc., were kept in the factory premises which was sealed by the bank and, therefore, requested for keeping the assessment proceedings in abeyance till the release of the books of account. However, the Assessing Officer completed the assessment because of the time limit available in the statute was going to be barred for passing the order. In the assessment so made, the Assessing Officer made an addition by estimating the net profit at the rate 4.94 per cent. whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restore the issue to the file of the Assessing Officer. The Assessing Officer is directed to reframe the assessment on all the above issues in accordance with law, after proper verification and after allowing sufficient opportunity of hearing to the asses see. All the above stated grounds are allowed for statistical purposes. 4. The Assessing Officer took up consequential proceedings. He appears to have issued under section 143(2) notices dated September 2, 2009, June 29, 2010, July 6, 2010 and July 28, 2010 to the assessee. Shri Patel (supra) appears this time on November 1, 2010. The Assessing Officer then issued section 144 notice dated November 19, 2010. The assessee replied the same on November 25, 2010 pleading therein that learned. The City Civil Court, Ahmedabad had sealed its premises in its order dated August 22, 2007. All of its books were claimed to be lying in the said sealed premises. The Assessing Officer therefore reiterated his earlier addition in the second round of assessment as well finalised on December 7, 2010. 5. The assessee instituted its latter lower appeal on January 19, 2011. It filed the following documents before the Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of depreciation. 2. The assessee's premises were sealed vide order dated August 22, 2007 whereas the original assessment order was passed on March 2, 2005 therefore the contention that 'assessee was in a peculiar condition as the company's premises were sealed' is not correct and cannot be acceded to. 3. As regards fall in the net profit the assessee accepts that it is due to increased interest cost and claim of depreciation. (A) Increased interest cost The assessee has not produced any evidence to show that -the amount borrowed has been used for the purpose of business -the increase in interest expenditure was justified and as per the provisions of the Act. The expenditure on 'interest to others' increased from 'nil' in the assessment year 2001-02 to ₹ 78.13 lakhs in the assessment year 2002-03. The assessee has not submitted any evidence to justify the said expenditure. Furthermore the sales of the assessee has increased by approximately 33 per cent. over the previous year whereas the interest expense has increased by 200 per cent. Thus there is abnormal increase in expenses and in view of the above the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime, i.e., well before June 12, 2009. There is hardly any quarrel that the said clinching observation has attained finality. The assessee never made any attempt to get the same modified in any manner whatsoever. It rather chose to adopt total non-co-operation in consequential round of assessment. It claimed before the Assessing Officer that the learned city civil court had sealed its factory premises vide order dated August 22, 2007 despite the fact that the learned co-ordinate Bench had just made the above contrary observation. There is no material in the instant case file indicating as to how and in what circumstances the assessee has come to be in possession of the impugned additional evidence (supra) claiming interest expenditure and deprecation in the impugned assessment year for the first time over and above its corresponding expenditure in the previous assessment year. We repeat that we are in the second consequential round of proceedings. This Tribunal had already accepted the assessee's plea of availability of record. It fails to justify its total non-co-operation in the Assessing Officer's consequential proceeding resulting in the second ex parte assessment as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows its profit and loss accounts indicating interest outgo of ₹ 12,950,103 at page 3. Pages 4-5 are its schedules annexed to and forming part of accounts. We however find that there is no evidence available in all the abovestated material ; item-wise indicating bills and vouchers of relevant fixed asset purchases. Nor does the entire above evidence highlight the crucial nexus between the assessee's so-called secured loans to have been actually utilised in purchase of the above fixed assets only. We wish to repeat that we are in second round of proceedings. Much water has flown down the bridge since the impugned assessment year 2002-03. There is no possibility for the lower authorities to verify this crucial fact at the instant belated stage which has involved two assessment orders, three remand reports and two Commissioner of Income-tax (Appeals)'s order along with this Tribunal's remand order. We therefore see no reason to accept the assessee's instant plea on merit as well seeking to delete the impugned net profit addition of ₹ 79,85,090. 12. Next comes the assessee's challenge to the Commissioner of Income-tax (Appeals)'s order that his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional evidence. He further observed that the assessee's balance- sheet on the one hand had stated receipt of these amounts between April 1, 2001 to March 31, 2002 whereas its chart in additional evidence revealed the relevant dates between February to March 2001 to the contrary. He therefore confirmed the impugned addition. It has already come on record that this Tribunal's earlier order (supra) sent back the case to the Assessing Officer. The assessee admittedly to choose to adopt non-co-operation in the second round of assessment as well. It rather raised a total false plea that its relevant books were not available in view of the learned city civil court's order sealing its premises (supra). The Assessing Officer therefore reiterated the impugned addition in his consequential assessment order. 15. We proceed further to notice that the assessee filed its additional evidence/submissions in the second round of lower appellate proceedings in the nature of share premium applicant's name, cheque No., bank's branch, date, amount and permanent account number etc. on October 7, 2011. The Assessing Officer's first remand report (supra) rejected the said explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shalibhadra Steel Pvt. Ltd. 10,00,000 1,00,000 9,00,000 Chandra Vadan M. Patel 65,00,000 6,50,000 58,50,000 Unity Pipes Pvt. Ltd. 2,00,00,000 20,00,000 1,80,00,000 Kamlaben M. Patel 15,00,000 1,50,000 13,50,000 Manilal A. Patel 50,00,000 5,00,000 45,00,000 Total 5,90,00,000 59,00,000 5,31,00,000 17. The assessee thereafter refers to the paper book pages 90 onwards comprising of share applications indicating it to have received share premium of ₹ 90 per share from the above parties through banking channel followed by their permanent account number details and confirmations. The assessee's case therefore is the lower authorities ought not to have made the impugned addition in its hands. Case law CIT v. Pragati Co-operative Bank Ltd. [2005] 278 ITR 170 (Guj) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me factual position continued in the three remand proceedings as well wherein it would file only photocopy of the confirmations in some of the cases. All the above 13 parties seem to be based in Ahmedabad only. The assessee still could not produce even one of the 13 parties in question. We notice from the case record that all the above photocopy confirmations are dated September 1, 1995 i.e. well before this Tribunal's remand direction dated June 12, 2009. Rather the same is well before the Commissioner of Income-tax (Appeals)'s former order dated September 14, 2005 (supra). All this reflects the assessee's lack of explanation despite getting its matter remanded back to the Assessing Officer. We further observe that the assessee's act and conduct in not being able to file even a single original confirmation and its subsequent action in submitting all 4 photocopies of the same date indicates a very serious genuineness issue. We observe therefore that the assessee has not made any effort in discharging its initial onus so as to satisfy the basic factors of identity, capacity, genuineness and creditworthiness of the 13 parties in question who have paid it a very hefty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of innings afforded to the assessee. We bear in mind that there can be no straitjacket formula for determining share premium which depends upon current strength and future potential of an enterprise. The assessee's act and conduct herein in having received such a high share premium purportedly towards share capital and premium in showing continuing inability to furnish the requisite information citing subsequent financial difficulties leading to its premises being seized therefore does not inspire confidence. The above explanation supporting non-production of evidence despite the Tribunal's clearcut observations is highly unpalpable and improbable. We find that an SMC bench recent decision in Pavankumar M. Sanghvi v. ITO I.T.A. No. 2447/ Ahd/2016 decided on May 17, 2017 ; [2017] 59 ITR (Trib) 389 (Ahd) very well emphasis significance of genuineness with reference to section 68 addition as under (page 400) : . . . I am not inclined to believe that these are genuine business transactions. As I do so, I am reminded of the hon'ble Supreme Court's observation, in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 (SC), to the effect that 'science has not y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents'. As a final fact finding authority, this Tribunal cannot be superficial in its assessment of genuineness of a transaction, and this call is to be taken not only in the light of the face value of the documents sighted before the Tribunal but also in the light of all the surrounding circumstances, preponderance of human probabilities and ground realties. Genuineness is a matter of perception but essentially a call on genuineness of a transaction is to be taken in the light of well settled legal principles. There may be difference in subjective perception on such issues, on the same set of facts, but that cannot be a reason enough for the fact finding authorities to avoid taking subjective calls on these aspects, and remain confined to the findings on the basis of irrefutable evidences. The hon'ble Supreme Court has, in the case of Durga Prasad More (supra), observed that 'human minds may differ as to the reliability of a piece of evidence but in that sphere the decision of the final fact finding authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, the alleged loan trans actions of the assessee cannot be held to be genuine on the peculiar facts and circumstances of this case. As the genuineness of transactions stands rejected, it is not really necessary to deal with other aspects of the matter. We accordingly express our respectful agreement with the above reasoning herein as well to conclude that the assessee has miserably failed in proving genuineness of its share premium in question. 22. The assessee further contends that it had received a part of the above share premium in preceding assessment year and not in the impugned assessment year so as to be added under section 68 of the Act. We find no substance in the instant plea as well. There is no material on record revealing the assessee to have proved genuineness of the impugned sums even in preceding assessment year. Or that the assessing authority had ever conducted any inquiry in this regard. We therefore are of the opinion that the instant plea without any other substantive evidence proving genuineness does not inspire acceptance on mere technical reasons. We further quote section 153(6) clauses (i) and (ii) read with Explanation 2 thereto to conclude tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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