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2018 (10) TMI 732

Admission of additional evidences - Additions u/s 68 - share capital and share premium - creditworthiness and genuineness of the transaction. - assessee-company filed documentary evidences of each of the shareholder - Held that:- The delay in filing the additional ground is of no consequence because when appeal is filed within the period of limitation, the additional ground could be raised at any time during the pendency of the appeal before the Tribunal. The decisions relied upon by the Ld. D.R. would not support the case of the Revenue. Considering the totality of the facts and circumstances of the case and above discussion, we admit the additional ground of appeal for the purpose of deciding the matter in issue. Since this issue goes to the root of the matter and authorities below has no occasion to examine the correctness of the additional ground raised by the assessee-company for the first time before the Tribunal, therefore, we are of the view that the additional ground should be set aside to the file of A.O. for deciding the same in accordance with law. - Once legal ground is restored to the file of A.O. for adjudication as per Law, therefore, this issue on merit shall a .....

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roduced by any introducer. The account opening forms were not properly filled-up. The A.O, therefore, found it to be dubious. The A.O. also noted that funds have moved from one company to another company and finally went into a company which is not part of this web of companies. The A.O. in order to investigate further, deputed the Inspector to identify the addresses and business addresses/activities of the shareholders companies, who has filed enquiry report dated 21.12.2010 mentioning the local inspection done by him that the five of the shareholder companies were not functioning from the property in question at the time of his inspection. The Inspector did not find any share Register/Share Transfer Certificate at the time of his visit. The assessee could not produce any of the single shareholder out of 555 shareholders during the assessment proceedings. The A.O. examined Shri S.K. Jain, Director of the assessee-company under section 131 of the I.T. Act on 23.12.2010, his statement is reproduced in the assessment order. The A.O. after examining the issue concluded that the share capital, share premium received by the assessee are nothing but sham transaction to give legal colour .....

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decision of the Hon ble Delhi High Court in the case of CIT vs. Kamdhenu Steel and Alloys Ltd., 19 taxman.com 26, CIT vs. Oasis Hospitalities (P) Ltd., 198 Taxman 247 (Del.), CIT vs. Winstral Petrochemicals Pvt. Ltd., 10 Taxman.com 137 and CIT vs. Dwaradheesh Investment Pvt. Ltd., 194 Taxman 42. It was submitted that assessee-company is NBFC and is engaged in the business of investments, giving loans and advances and thereby earning interest, dividend and profit on sale of shares. The assessee-company has earned exempt income of ₹ 590/- only. Therefore, disallowance more than the exempt income is wholly unjustified. 6. The A.O. filed the remand report before Ld. CIT(A) in which facts stated in the assessment order have been reiterated. It is also submitted in the remand report that summons under section 131 were issued to all the corporate shareholders. Directors of the shareholder companies were present and their statements have been recorded on oath who have also submitted copies of their balance-sheet for A.Y. 2008-2009, bank statement, confirmation of the account and their assessment orders under section 143(3) of the I.T. Act. 7. The assessee-company in the rejoinder re .....

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for the Assessee submitted that it is purely a legal ground and also placed on record copy of the assessment order dated 28.03.2013 under section 153C/153A of the I.T. Act, 1961, for the A.Y. 2008-2009 in the case of assessee-company. He has submitted that only one assessment is to be framed. Proceedings under section 153C shall have to be done on the basis of the incriminating material. The assessment order under section 153C are prevailed over the assessment order under section 143(3). The procedure for assessment under section 153A or 153C is same. The order under section 153C in the case of assessee- company is final. So, it will supersede the impugned order under section 143(3). Learned Counsel for the Assessee relied upon decision of the Hon ble Delhi High Court in the case of CIT vs. Anil Kumar Bhatia (2013) 352 ITR 493 (Del.) in which in paras 20 to 23, it was held as under : 20. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the s .....

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en the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub section (1) of Section 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the total income_ of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the six assessment years preceding the assessment year relevant to the year in which the search took place there is only one determination of the total income, it has been provided in the second proviso of sub Section (1) of Section 153A that any proceedings for assessment or reassessment of the assessee wh .....

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for all the six years and compute the total income of the assessee, including the undisclosed income, notwithstanding that the assessee filed returns before the date of search which stood processed under Section 143(1)(a). The other reason given by the Tribunal in the same paragraph of its order that no material was found during the search is factually unsustainable since the entire case and arguments before the departmental authorities as well as the Tribunal had proceeded on the basis that the document embodying the transaction with Mohini Sharma was recovered from the assessee. While summarizing the contentions of the assessee in Paragraph 5 of its order, the Tribunal itself has referred to the contention that no document much less incriminating material was found during the search of the assessee_s premises, except one unsigned undertaking for loan. Again in Paragraph 10 of its order, while dealing with the assessee_s contention against the addition of ₹ 1,50,000/- being unexplained loan given to Mohini Sharma, the Tribunal has stated that it has analyzed "the subject document carefully, recovered from search" suggesting that the document was recovered during t .....

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assessee-company or any assessment under section 153A/153C of the I.T. Act. Any subsequent search or subsequent assessment cannot invalidate the assessment order in dispute. The additional ground of appeal was not raised before Ld. CIT(A). Therefore, there is no justification to raise the same now. He has submitted that Ld. CIT(A) passed the order on 29.11.2013 after the assessment order under section 153C dated 28.03.2013 was passed. But, assessee- company did not raise any such question before Ld. CIT(A). If the A.O. did not take addition of ₹ 100 crores in assessment order under section 153C, it would not mean such addition is deleted. The assessments under section 153A and 153C are totally different. Completed assessment cannot be touched upon in the regular assessment proceedings. The Ld. D.R. relied upon decision of Hon ble Bombay High Court in the case of Ultratech Cement Ltd., vs., Addl. CIT (2017) 298 CTR 437 (Bom.) and decision of Hon ble Supreme Court in the case of Addl. CIT vs. Gurjargravures (P.) Ltd., (1978) 111 ITR 1 (SC). 13. We have considered the rival submissions and perused the material available on record. In this case, the A.O. passed the impugned asses .....

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assess the total income taking note of undisclosed income, if any, unearthed during the course of search. Therefore, no multiple assessment orders shall have to be passed . The findings in the case of CIT vs. Anil Kumar Bhatia (supra) prima facie support the additional ground of appeal raised by the assessee-company. 14. The Hon ble Punjab & Haryana High Court in the case of VMT Spinning Co. Ltd., vs. CIT & Another (2016) 389 ITR 326 (P & H) considering the Judgment of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd., (supra) held as under : Held, that the Tribunal could decide the appeal on a ground neither taken in the memorandum of appeal nor by seeking its leave. The only requirement was that the Tribunal could not results its decision on any other ground unless the party who might be affected had sufficient opportunity of being heard on that ground. Therefore, the Tribunal ought to have exercised its discretion in view of the fact that the assessee intended raising only a legal argument without reference to any disputed questions of fact: Since there were no additional evidence required for the decision on the new ground raised by the assessee a .....

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e Orders of the authorities below and restore the additional ground of appeal to the file of A.O. with a direction to decide the additional ground of appeal strictly in accordance with law, by giving reasonable, sufficient opportunity of being heard to the assessee. 17. As regards the merit of the addition is concerned under section 68 of the I.T. Act, we are of the view that since additional ground is legal in nature so admitted above, therefore, merit shall be decided by the A.O. after deciding the legal question. Both the parties have extensively argued on merit of the addition also. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that assessee-company is a Public Limited NBFC Company. All documentary evidences were filed before the authorities below. Assessee is a listed company with Delhi Stock Exchange and registered with RBI. Investors were summoned by the A.O. Report from the Bank under section 133(6) was not confronted to the assessee-company. The report of the Inspector was also not confronted to the assessee-company. The bank details called for under section 133(6) were also not confronted to the assessee-compan .....

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he has given justification for issuing shares at premium. The SEBI guidelines were filed in the paper book to justify the same. But the authorities below have not examined or probed the explanation of assessee-company in this regard. The assessee- company submitted several documentary evidences of the investor companies to show their identity, creditworthiness and genuineness of the transaction in the matter, to the authorities below. However, the authorities below have not examined the documentary evidences in detail in the impugned orders. The report of the Inspector giving adverse comment against the investors have not been confronted to the assessee-company. Unless such report is confronted to the assessee-company, the same would not be admissible in evidence against the assessee-company. The report obtained from the Bank under section 133(6) was also not confronted to the assessee-company. The statements of the Directors recorded at the remand proceedings supporting the claim of assessee-company have not been provided to the assessee- company. They have also produced documentary evidences before A.O. in support of the explanation which have not been discussed in detail in the .....

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