TMI Blog2018 (4) TMI 1561X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd., on substantive basis u/s 69 of the Act. It is in this factual matrix of the case that the ld CIT(A) deleted the protective additions made u/s 68 in the case on hand. Respectfully following the decision of the Hon’ble Apex Court in the case of Lovely Exports Pvt. Ltd., (2008 (1) TMI 575 - SUPREME COURT OF INDIA) which was followed by the jurisdictional High Court in the case of CIT Vs. Arunananda Textile Pvt. Ltd., (2010 (3) TMI 724 - KARNATAKA HIGH COURT), the addition made by the AO in respect of share application money on protective basis as unexplained cash credits u/s 68 of the Act and deleted by the ld CIT(A) in the impugned order cannot be treated as unexplained cash credits in the hands of the assessee. Consequently, the grounds (i) and (ii) raised by Revenue are dismissed. - I.T.A. No.1112/Bang/2015 - - - Dated:- 10-4-2018 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER For the Appellant : Shri K.V. Arvind, Standing Counsel for Dept. For the Respondent : Shri K.R. Pradeep, C.A. ORDER Per Shri Jason P Boaz, A.M. This appeal by Revenue is directed against the order of Commissioner of Income Tax (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y issue of notice under section 148 of the Act. The assessee filed objection and the same was disposed off. 3. The examination and verification found that M/s. BPO Finance and Investments Private Limited and M/s. Panchamukhi Properties Private Limited were shell companies without any fixed assets or business activities for several years and only involved in fund transfer acting as conduit to plough unaccounted money back into the assessee company. It was also found that the substantial amount have been shifted from Karnataka. Show cause notice was issued to the assessee for treating as unexplained income. Shri Dinesh Kumar Singhi and Mrs Snehalatha Singhi are the only two shareholders of M/s. BPO Finance and Investments Private Limited and M/s. Panchamukhi Properties Private Limited. 4. The assessee relied on the submissions made in the case of Dinesh Kumar Singhi for the Assessment Year 2010 11. The Assessing Officer also adopted the reasons assigned in the case of Sri Dinesh Kumar Singhi for the Assessment Year 2010 11. The detailed submissions made in the case of Sri Dinesh Kumar Singhi for the Assessment Year 2010-11 is adopted and the same is extracted below for convenie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion money and the directors of the companies. The assessee failed to provide details of the companies and the directors. Summons issued to the assessee did not yield any result. Despite the assessee and his wife being 100% shareholders of the above two companies, the same was not revealed at any point of investigation. The post-search investigation revealed 100% shares being owned by the assessee and his wife. vii. The enquiries conducted by the revenue regarding genuiness of the about two companies has resulted as under: a) companies are not located in the address given b) Companies were not existing at the registered address for mission to ROC. c) No directors of the companies were available at the given address. d) No books of accounts found at the address. e) No director of the companies appeared during course of survey proceedings. f) From the balance sheets obtained from the ROC about two companies revealed that companies do not have any fixed assets, no business activities for number of years and are involved only in fund transfer. viii. On the basis of the above material the companies BPO and the PPPL were considered as shell entities with no indep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during 8th to 12th April 2010 and the amounts received by way of cheque in the bank accounts of BMM Ispat Ltd on 13/4/2010. This clearly indicates that the assessee own cash has been routed back to family owned four companies through BPO and PPP L and other associate companies in the form of share application money. xii. The notices issued to BPO and PPPL and to the parties who have sold shares to the assessee and his wife were returned by postal authorities unserved. The above aspect would clearly demonstrate the dubious nature of the purchase of shares by the assessee and his wife. The assessee was issued show cause notice proposing to treat share application money paid into four companies belonging to the assessee s group to be treated as money introduced by the assessee. The assessee merely submitted that the entire transaction is taken place through cheque and at arms length price. xiii. The Assessing Officer considering the entire transaction treated 60% of share application money in BPO and PPPL as unaccounted investment by the assessee under section 69 of the Act. xiv. The Assessing Officer was correct in looking at the real transaction with respect to the share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. Subject to result of appeal in the case of Sri Dinesh Kumar Singhi and Mrs Snehalatha Singhi for the Assessment Year 2010 11 pending before this Hon ble Tribunal, it is prayed to confirm the addition. 4.2 Per contra, the ld AR for the assessee contended that the addition of ₹ 18 Crores should not have been made in this case either on protective or substantive basis and in this regard filed written submissions which are as under : The assessee for the above assessment year filed its return of income on 15.10.2010 admitting loss of ₹ 44,679/-. Notice u/s 143(2) was issued on 06.09.2011 and subsequent notices u/s 142(1) were issued and the assessee company appeared from time to time and furnished the details called for. The assessee has submitted all the details sought for and clarified on the issues raised in the notices. The assessing officer has completed the assessment u/s 143(3) by making arbitrary addition of ₹ 18 Crore as unexplained cash credit on protective basis. The reason given by the AO in page 5 of the assessment order is as under: The total share application money introduced is ₹ 18.00 crores. In the present case the onus of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are application/share capital should be considered in the hands of the shareholder and not in the hands of the recipient. In view of the above, the department appeal may kindly be dismissed in the interest of justice. 4.3.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited. From the appraisal of the records before us, it emerges that the assessee received share application money from two companies ₹ 8 Crores from M/s BPO Finance Investment Pvt. Ltd., Kolkata and ₹ 10.00 Crores from M/s Panchmukhi Properties Pvt. Ltd., Kolkata, totaling to ₹ 18.00 Crores routed through normal banking channels. Investigations by the Departments authorities below reveal that Shri Dinesh Kumar Singhi and Snehalatha Singhi are owners and 100% share holders of the aforesaid two companies who introduced the share application money in the assessee company and it was in this context that the investments in the assessee company and its 4 group companies i.e M/s BMM, M/s BMM Cements Ltd., M/s Ranjitpura Infrastructure Pvt. Ltd., and M/s Singhi Holdings Pvt. Ltd., was brought to tax in the hands o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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