TMI Blog2018 (12) TMI 1409X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 400/- out of which share amount of ₹ 75/- and premium amount of ₹ 300/- has been received by the company during the year as share application money. The assessee has issued 230000 shares out of which 56800 shares have been issued to the five parties in question. Assessee during the course of assessment proceedings u/s 143(3) as well as during the course of proceedings u/s 147 of the Act filed various documents in order to prove the identity and credit worthiness of the parties as well as the genuineness of the transactions by filing documents such as financial statements of the parties, bank statements of the parties, income-tax returns of the parties, PAN nos. of the parties, confirmation of accounts and master data of the companies as per the ROC records. The Assessing Officer has not pointed out any discrepancy in the documents so filed and not made any further enquiries and simply made the addition on the basis of the report of the Investigation Wing of the Department. It is the settled proposition of law that addition u/s 68 of the Act cannot be made when the assessee has discharged the initial onus cast on it by furnishing necessary documents to prove t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es so obtained by the assessee from the following companies:- Sl.No. Name of the Parties Amount 1. M/s Karishma Industries Ltd. 51,00,000/- 2. M/s StellerInvestment Ltd. 51,00,000/- 3. M/s Graph Financial Services Pvt. Ltd. 30,00,000/- 4. M/s Lovely Securities Pvt. Ltd. 40,50,000/- 5. M/s Hillridge Investment Ltd. 40,50,000/- 3. The assessee filed bank accounts, Memorandum and Articles of Association and the PANs of the above companies to prove the identity, genuineness and credit worthiness of the transactions. The assessee also filed the confirmation letters of the above parties. 4. However, the Assessing Officer was not satisfied with the explanation given by the assessee. He observed that the funds were transferred to these companies from M/s Gainwell Portfolio out of the two accounts maintained by the said company with Kotak Mahindra Bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized during the search u/s 132 of the IT Act, the assessment proceedings could have been initiated u/s 153C of the IT Act. The ld.CIT(A) further held that since all the details with regard to share application received by the assessee were on record of the Assessing Officer during the course of proceedings u/s 143(3) of the IT Act, therefore, the reassessment proceedings initiated after a period of four years were barred by limitation. So far as the ground relating to non-disposal of the objections by the assessee by passing a speaking order is concerned, he decided the same against the assessee. 6.1 Aggrieved with such order of the CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds:- 1. Whether on the facts and circumstances of the case in law, the Ld CIT(A) has erred in holding that the initiation of reassessment proceedings u/s 147 of the Income Tax Act, 1961 instead of u/s 153C of the Income Tax Act, 1961 is bad in law and liable to quashed? 2. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 2,13,00,000/- made by the AO u/s 68 of the I.T. Act, 1961 despite ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer u/s 68 of the IT Act, on merit has also quashed the reassessment proceedings on two counts, i.e., (i) the Assessing Officer should have initiated the proceedings u/s 153C of the IT Act and not u/s 147 of the IT Act; and (ii) the reassessment proceedings initiated u/s 147 of the Act are barred by limitation. The relevant observations of the CIT(A) at para 3.1 onwards read as under:- 3.1 I have considered the facts of the case of the appellant and submissions made by the AR of the appellant before me. 3.2 The case of the appellant has already assessed under section 143(3) of the Act by the then AO at returned loss after examining all the details /documents / explanation filed by the appellant during the course of assessment proceedings. The AO also examined the details / documents /explanation furnished by the appellant in respect of share application money received during the financial year under consideration. The AO issued notice under section 148 for reassessment proceeding under section 147 of the Act for the assessment year 2005 - 06 which is barred by limitation i.e. after the expiry of four years from the end of the relevant assessment year by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature. 10. Even otherwise on merit also, we find the ld.CIT(A) while deleting the addition made by the Assessing Officer has observed as under:- 4.1 I have considered the facts of the case of the appellant and submissions made by the AR of the appellant before me. 4.2 The brief fact of the case is that a search seizure operation under section 132 of the Income tax Act, 1961 was carried out in the case of SK Jain group of companies on 14/09/2010 and certain documents / annexures were seized from which it has been revealed that the appellant has received share application money from five companies of ₹ 2,13,00,000/- during the financial year 2004 - 05. The appellant has received total share application money of ₹ 9,27,00,000/- i.e.( 2,47,200 preference shares @ of ₹ 75 each and premium of ₹ 300/- per share) from the share applicants during the financial year under consideration out of which ₹ 2,13,00,000/- were received from 5 companies who were alleged to be accommodation entry providers. The appellant company issued 2,30,000 preference shares to 23 companies which inter alia includes 56,800 preference shares issued to the said 5 alleged acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and then the AO should embarked upon further inquiry. If the Assessing Officer(s) did not care to discharge the onus which was laid down, the assessee cannot be fastened with liability under section 68 of the Income tax Act, 1961 even in case some information has been received from Investigation wing etc. The Appellant has relied on the decision of jurisdictional Hon ble High Court in the case of Commissioner of Income-tax v Gangeshwari Metal Private Limited [2013] 214 Taxman 423. The appellant also furnished decisions rendered by jurisdictional as well non-jurisdictional High Court / ITAT. The relevant portion of citation of the case of Commissioner of Income-tax v Gangeshwari Metal Private Limited [2013] 214 Taxman 423 which have been relied by the assessee is as under: 9 As can be seen from the above extract, two types of cases have been indicated. One in which the assessing officer carries out the exercise which is required in law and the other in which the assessing officer sits back with folded hands till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consequently, the question is answered in the negative. The decision of the Tribunal is correct in law. The appeal is dismissed. The appellant submitted copies of relevant seized documents as per allegation of AO in the assessment order which is considered carefully. (A-36/Page-6, A-38/10, 11, 12, 33, 34, 35 pages) and back side of Page-7 of A-37, which is placed in record. In these seized records, no cash deposit/return is written anywhere. In my considered view, the ratio of the case of Commissioner of Income-tax v Gangeshwari Metal Private Limited [2013] 214 Taxman 423 in which two types of cases have been indicated one in which the assessing officer carries out the exercise which is required in law and the other in which the assessing officer 'sits back with folded hands' till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. In the first type of cases ratio of CIT v. Nova Promoters Finlease (P) Ltd. [2012] 342 ITR 169 (HC - Delhi) is applicable and addition made by the AO is sustainable while in other type of case ratio of CIT v. Divine Leasing Finance Ltd./Lovely E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, confirmation of accounts and master data of the companies as per the ROC records. The Assessing Officer has not pointed out any discrepancy in the documents so filed and not made any further enquiries and simply made the addition on the basis of the report of the Investigation Wing of the Department. We find, while the Assessing Officer has accepted the share application and share premium in case of others, he doubted the premium at which the shares have been issued to the above five parties only. It is not the case of the Assessing Officer that he has issued any notices u/s 133(6) of the Act to the parties which were returned back unserved or that the shareholder companies are not available. The Assessing Officer, after going through the evidences furnished by the assessee sat with folded hands and did not make any effort and not made any independent enquiry and made the addition only by relying on the report of the Investigation Wing. It is the settled proposition of law that addition u/s 68 of the Act cannot be made when the assessee has discharged the initial onus cast on it by furnishing necessary documents to prove the identity and credit worthiness of the share applican ..... X X X X Extracts X X X X X X X X Extracts X X X X
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