TMI Blog2019 (1) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... h Mr. Dushyant Sarna, Advocate. Respondent Through: Mr. Ved Jain, Mr. Kislaya Parashar and Ms. Umang Luthra, Advocates. SANJIV KHANNA, J. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 ( Act , for short), in the case of NDR Promoters Pvt. Ltd. relates to Assessment Year 2008-09 and arises from the order dated 3rd March, 2019 passed by the Income Tax Appellate Tribunal ( Tribunal , for short). 2. The appeal was admitted for hearing vide order dated 17th January, 2018 on the following substantial question of law:- Whether the ITAT fell into error in upholding the deletion directed by the CIT (A) in respect of the amount of ₹ 1,51,50,000/- brought to tax under Section 68 of the Income Tax Act, 1961, in the circumstances of the case ? 3. It is an undisputed position that during the Assessment Year 2008-09, the respondent-assessee had received money in the form of share capital/share premium as per the following details:- S.No. Name Address of company from whom claim of share capital/share premium made Value of shares at Par (as claimed) Share Premium (as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion entries. These evidences and details collected and ascertained during the course of search under Section 132 of the Act conducted by the Investigation Wing in the case of Tarun Goyal, had revealed that the registered office of 90 companies was located at 13/34, Main Arya Samaj Road, Karol Bagh and their former office was at 203, Dhaka Chambers, 2069/39, Naiwala, Karol Bagh, New Delhi. These companies were not carrying on any genuine business activities. Directors of these companies were employees of Tarun Goyal, who were working as peons, receptionists etc. Entries in the books were bogus. Modus operandi in such cases is well known, money is circulated by first depositing cash in the bank account of one such company, and thereupon it is transferred/circulated within the group companies before cheque is issued to the beneficiary. 5. The Assessing Officer had asked the respondent-assessee to produce Directors of the shareholder companies for examination after recording:- (i) most of the directors in their statement recorded by the Investigation Wing had admitted that they had signed documents/papers on direction of Tarun Goyal. (ii) shares of face value of ₹ 10/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete list of shareholders, old and new. (vi) Annual return filed before the Registrar of Companies. (vii) Copy of Form No.2 i.e., return of allotment filed before the Registrar of Companies. (viii) Affidavits of Directors of the shareholder companies along with PAN details, copy of PAN cards, Board Resolutions, confirmations from the parties, share application forms, bank account statements of the shareholder companies, Memorandum and Articles of Association, confirmation of receipt of shares from M/s Bhawani Portfolio and CIN details of M/s Bhavani Portfolio. 8. The Assessing Officer made an addition of ₹ 1,51,50,000/- as unexplained cash after referring to the factual matrix including failure to produce Directors of the shareholder companies so that they could be examined on oath. He observed that no prudent businessman would invest in the shares of the respondent-assessee at five times the face value of shares. There was sufficient evidence to indicate and infer that beneficiaries i.e. the respondent-assessee had introduced income from undisclosed sources into their business in the garb of share capital/share premium. 9. The addition was deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary, no evidence has been brought on record by the Assessing Officer to prove that share application money emanated from the coffers of the assessees. It is also pertinent to note here that in response to the notices issued under section 133(6) of the Act by the Assessing Officer were responded by the share applicants. Merely because the assessee, as directed by the Assessing Officer, could not produce any of the share applicants, cannot be a reason for doubting the genuineness of the transactions. This view is well supported by the decisions of the Hon'ble jurisdictional High Court of Delhi in the cases of CIT Vs. Rakam Money Matters Pvt. Ltd. (supra) and CIT Vs. Victor Electrodes (supra), relevant extract thereof, are respectively reproduced hereunder :- CIT Vs. Rakam Money Matters Pvt. Ltd, : 12. A perusal of the order of the AO shows that its foundation is the report of the DIT (Investigation). Admittedly, the Assessee was not confronted with that material in the course of the reassessment proceedings. The Assessee was also not confronted with the statements recorded in the course of the investigation. Once that material is kept aside then the scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 68 of the Act on account of the alleged unexplained share application money. The same is upheld. The grounds questioning the action of the Id. CIT (Appeals) in this regard are thus rejected. 11. Issue of bogus share capital in the form of accommodation entries has been subject matter of several decisions of this Court and we would like to refer to decision in Commissioner of Income Tax Vs. Navodaya Castles Pvt. Ltd. [2014] 367 ITR 306 , wherein the earlier judgments were classified into two separate categories observing as under:- 11. We have heard the Senior Standing counsel for the Revenue, who has relied upon decisions of the Delhi High Court in Commissioner of Income Tax Vs. Nova Promoters and Finlease (P) Ltd. [2012] 342 ITR 169 (Delhi), Commissioner of Income Tax Vs. N.R. Portfolio Pvt. Ltd., 206 (2014) DLT 97 (DB) (Del) and Commissioner of Income Tax-II Vs. MAF Academy P. Ltd., 206 (2014) DLT 277 (DB) (Del). The aforesaid decisions mentioned above refer to the earlier decisions of Delhi High Court in Commissioner of Income Tax Vs. Sophia Finance Ltd., [1994] 205 ITR 98 (FB)(Delhi), CIT Vs. Divine Leasing and Finance Limited [2008] 299 ITR 268 (De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed to examine the validity of those grounds that appealed to the learned judges. It is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking 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. 15. Summarizing the legal position in Nova Promoters and Finlease (P) Ltd.(supra), and highlighting the legal effect of section 68 of the Act, the Division Bench has held as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 68 recognizes the aforesaid legal position. The view taken by the Tribunal on the duty cast on the Assessing Officer by section 68 is contrary to the law laid down by the Supreme Court in the judgment cited above. Even if one were to hold, albeit erroneously and without being aware of the legal position adumbrated above, that the Assessing Officer is bound to show that the source of the unaccounted monies was the coffers of the assessee, we are inclined to think that in the facts of the present case such proof has been brought out by the Assessing Officer. The statements of Mukesh Gupta and Rajan Jassal, the entry providers, explaining their modus operandi to help assessee s having unaccounted monies convert the same into accounted monies affords sufficient material on the basis of which the Assessing Officer can be said to have discharged the duty. The statements refer to the practice of taking cash and issuing cheques in the guise of subscription to share capital, for a consideration in the form of commission. As already pointed out, names of several companies which figured in the statements given by the above persons to the investigation wing also figured as share- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the statement of auditors, the employees of Sh Tarun Goyal were directors of the companies run by them, also they could not ascertain the so called share capital subscribed by Sh Tarun Goyal as documentary proof of the same was lacking. v. During the course of search, all the passbooks, cheque books, PAN Cards etc. were always in possession of Sh Tarun Goyal. On his directions all the employees signed all the documents. vi. All the bank account opening forms appear to be in the handwriting of Sh Tarun Goyal. vii. All the books of accounts of all the companies have been retrieved from the computers/laptop of Sh Tarun Goyal. viii. Sh Tarun Goyal has given letters for the release of bank accounts of companies put under restraints after search. No such application was received from so called directors of the companies. ix. Sh Tarun Goyal appears in all the scrutiny assessments as well as appeals of his companies himself before various income' tax authorities. From verification carried out in respective wards/ circles where the above mentioned companies are assessed, it is' evident that Sh Tarun Goyal is appearing in all the income tax proceedings on b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
