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M/s Budhiya Marketing (P) Ltd. Versus A.C.I.T. Central Cir-XXX, Kolkata

2017 (12) TMI 300 - ITAT KOLKATA

Assessment under section 153A - Held that:- Assessing Officer was not correct in law in making the addition in the assessment made under section 153A read with section 143(3) when no incriminating material was found during the course of the search in respect of the addition made by him. We note that the search happened on 11th February, 2010 i.e. A.Y 2010-11 and it is not the case of AO that assessments under question were pending before the AO on the date of search. So, as per the decision of t .....

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. Arjun Lal Saini, AM: The captioned two appeals filed by the assessee, pertaining to Assessment Years 2004-05 and 2007-08, are directed against the orders passed by the Commissioner of Income Tax (Appeals)-21, Kolkata in Appeal No. 475 &478/CC3(2)/CIT(A)-21/14-15, dated 19.01.2015, which in turn arise out of assessment orders passed by the Assessing Officer u/s 143(3)/153A of the I.T. Act, 1961 (hereinafter referred to as the Act ), dated 30.12.2011. 2. Since these two appeals relate to the .....

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lly wrong and unjustified in dismissing the Ground Nos.1 & 2 of the appellant assessee company s appeal challenging the jurisdiction, legality and validity of (i) the arbitrary action taken against the appellant company u/s 132(1) of the I.T Act without issue and service of any search warrant on it (ii) seizure and recovery of the appellant's money lying in Axis Bank, Lake Town Branch, Kolkata (A/c No. 5906) on 11.02.2010 and (iii) the subsequent order of search assessment passed by the .....

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no prohibitory order u/s 132(3) in respect of the appellant's aforesaid bank a/c was issued and served on the appellant (iii) seizure of the said bank a/c on 11.02.2010, immediate realization of the entire money lying in that a/c and the Panchanamadt. 11.02.2010 were all made by the Department without requiring or calling for any legal presence and signature of the appellant. The non-observance of the basic formalities resulted in an invalid search which made all subsequent actions of the A. .....

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oney received during the year from parties on a totally vague and unsubstantiated ground that the appellant company was providing accommodation entries to different parties / beneficiaries completely disregarding & rejecting all the relevant materials and evidences explaining the identity & creditworthiness of the share applicants as well as the source and genuineness of the investments made by them duly furnished by the appellant. 4. For that in view of the facts and circumstances of th .....

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etitioner craves the right to put additional grounds and/or to alter/amend/modify the present grounds before or at the time of hearing. 5. Although, in this appeal, the assessee has raised a multiple grounds of appeal but at the time of hearing, the main grievance of the assessee has been confined to the issue that addition made by the Assessing Officer u/s 68 on account of cash credit at ₹ 1,20,000/- treating the share application money as bogus because identity & creditworthiness of .....

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132(1) of the Income Tax Act 1961. In the course of survey operation u/s.133A of the I.T. Act, 1961, at 1A, Grant Lane, 2nd Floor, Kolkata Cash amount of ₹ 40.50 lakhs and various papers/documents were found which pointed to a number of bank accounts being used to provide accommodation entries to a number of persons /firms and companies. It was further revealed during the course of survey/search that unaccounted cashis received from prospective beneficiaries and same was deposited in some .....

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., on 11/02/2010 in the account number 191010200005906 Axis Bank, Lake town Branch and cash of ₹ 13,87,13,704.13 lying in, was seized. The return of income was filed by the assessee on 05.10.2010 declaring total income of ₹ 4,140/- only. The assessee s case was selected for scrutiny u/s 143(2) and the Assessing Officer has completed the assessment by making addition on account of share application/share premium at ₹ 1,20,000/-. The Assessing Officer also made the addition on ac .....

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by the assessee company and also does not provide any legal and factual justification for making addition of entire share capital raised during the block period. That the search/survey carried on Sri Santosh Kumar Shah has got no connection whatsoever with the assessee company and AO has not allowed to cross-examine him with regard to any statement made by him in relation to the assessee company. There were no documents/evidence found in possession of assessee company or any of its directors du .....

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time to time, which were also scrutinized by assessing officer. Regarding money lying in the current account of the company at Axis bank, Lake Town branch, the same were recorded in the books of account and assessee and provided with all reasonable evidences as to the source of such amount. The assessee also explained to AO with regard to year wise increase in the share capital and year wise share application money stating the full details in respect of year wise increase in share capital and sh .....

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x, whose PAN have also been furnished before AO. Based on the above facts the assessee submitted before the AO that the share application money received by the assessee company for raising its share capital should not be treated as bogus and cannot legally be treated as unexplained investments. Ignoring the submissions of the assessee, the Assessing Officer made the addition and held that Sri Santosh Kumar Shah and his employee/relative, who have been sitting on the boards of several companies, .....

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e @0.55% from such transactions. His source of such funds remains unexplained. The subsequent transactions through such cash, though via banking channels, cannot be held as fair or explained. lt cannot be considered genuine, if circulated through a number of banks accounts opened with the help of unverified document.Sri Santosh Kumar Shah admitted to running a business of creating companies with artificial shareholdings. Based on the above findings, the AO made the addition of ₹ 1,20,000/- .....

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in the case of Shri Santosh Kumar Shah who was indulged in the activity of providing the accommodation entries, the search operation u/s 132 of the Act was conducted in the bank account of the assessee company on 11.02.2010 having Account Number 191010200005906 with Axis Bank, Lake Town Branch, Kolkata. The assessee has contested the action of the Assessing Officer making addition of ₹ 1,20,000/- u/s 68 of the Act on account of share application money accepted by the assessee company in t .....

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d charged commission from them. It was found by the AO that in the year under consideration the assessee company had also received share capital of ₹ 1,20,000/- in the similar fashion. It was also observed by AO that in the course of post search enquiries in the case of Shri Santosh Kumar Shah, the statement of Shri Vinod Kumar Shah, Director of the assessee company was recorded by the ADIT(Inv.), Unit-II(6), Kolkata on 10.02.2010. In his statement it was stated by Shri Vinod Kumar Shah th .....

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nd that he was the only a dummy director of the company. He stated that since presently he was not the director of Budhiya Marketing Pvt. Ltd, therefore he was unable to explain the source of cash deposited in its bank account with Axis Bank, Lake Town Branch Kolkata. However, the said company is engaged in the business of providing accommodation entries. Since, the assessee company was also indulged in the activity of providing accommodation entries and in the year under consideration it had al .....

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ngs, the assessee reiterated the submission made before the AO. The assessee contended before the CIT(A) that the Assessing Officer was not justified in making the addition of ₹ 1,20,000/- on account of share application money as in the course of assessment proceedings the assessee submitted complete details of share application money including copy of share applications, copies of relevant bank statements of share applicants, copy of PAN card of share applicants, copy of their I.T. Return .....

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itworthiness of the share applicants as well as the genuineness of the transactions. But CIT(A) ignored the submissions of the assessee, as mentioned above, and held that the AO was justified in making the addition of ₹ 1,20,000/- on account of share allocation money. The CIT(A) observed that in the course of search and post search enquiries Shri Santosh Kumar Shah had given a specific statement that the appellant company was floated by him and the directors of the company were acting on h .....

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ing accommodation entries and that the bank account in Axis Bank, Lake Town Branch was opened by him and at that time he was one of the signatory of the bank account. In view of above facts, the CIT(A) confirmed the addition made by the AO at ₹ 1,20,000/-. 8. Not being satisfied with the addition by the ld. CIT(A), the assessee is in appeal before us. The ld. Counsel for the assessee submitted before us that the assessee submitted complete details of share application money including copy .....

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re share capital received by the assessee by account payee cheques from the corporate entities and full particulars thereof were before the AO to prove the identity and creditworthiness of the share applicants as well as the genuineness of the transactions. The ld Counsel stated that under the provisions of the I.T. Act, the assessee is not required to prove the source of source. The AO has made the addition on the basis of statement of Shri Santosh Kumar Shah but he did not allow the assessee a .....

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sessee s case under consideration is squarely covered by the order of Hon ble ITAT, Kolkata in assessee s own case in ITA Nos.1545 & 1546/Kol/2012 Assessment Years 200506 & 2006-07, dated 10th July, 2015, wherein Hon ble Tribunal Kolkata held that since no incriminating material was found during the course of the search relating to the share capital and the share premium, therefore, no addition can be made while making an assessment under section 153A of the Income Tax Act. The Hon ble T .....

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he parties and perused the materials available on record, we note that the assessee submitted complete details of share application money including copy of share applications, copies of relevant bank statements of share applicants, copy of PAN card of share applicants, copy of their I.T. Returns and balance sheet. We also note that the AO had issued notices u/s 133(6) of the Act to all the persons who had subscribed to the assessee's share capital and nothing adverse was found by him. Though .....

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