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2019 (9) TMI 380

..... as per the Assessing Officer as well. - HELD THAT:- No merit in Revenue’s instant arguments. It has come on record that this assessee before us had filed all the details of the exempt share applicant during the course of assessment. The Assessing Officer had not issued any process either sec. 131 or sec. 133(6) of the Act to assessee’s investor(s). We therefore quote hon’ble apex court’s landmark decision in CIT vs. Orissa Corporation Pvt. Ltd. [1986 (3) TMI 3 - SUPREME COURT] that an assessee can only file all of its supportive documents in favour of its claim proving genuineness and creditworthiness of the investor parties. We further reiterate that there is also no denial to the CIT(A)’s clinching finding that the department has itself accepted all other transactions in Mr. Lyngdoh’s case. Since the assessee before us has already discharged its onus before the Assessing Officer. The mere fact that its investor is an exempt assessee u/s 10(36) does not give the impugned share application money the colour of unexplained cash credits - confirm the CIT(A)’s action deleting the impugned unexplained share application money - Decided in favour .....

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..... ssment year-wise). This former taxpayer s two more appeal(s) ITA Nos. 93- 94/Gau/2017 for assessment year(s) 2009-10 to 2010-11 are directed against the very CIT(A) s order of the same date in case Nos.Guwa-178/179/2015-16 (assessment year-wise); respectively. Latter assessee s two appeal(s) ItA Nos.39-40/Gaua/2017 for assessment year(s) 2006-07 & 2008-09 arise from the CIT(A)-Shillong s separate orders all dated 20.10.2016 passed in case No.Shill-25/24/2014-15. Relevant proceedings in all these assessment year(s) are u/s 143(3) r.w.s. 153A r,.w,s 147 of the Income Tax Act, 1961; in short the Act . We have heard these appeal(s) together since involving identical issues. Case file(s) perused. 2. Learned senior counsel states at bar that the first assessee M/s SMS Smelters Ltd. no more wishes to press for its four appeals ITA No..93- 96/Gau/2017. The Revenue has not raised any objection. These four assessee s appeal(s) are dismissed as withdrawn therefore. 3. We now advert to Revenue s appeal(s) ITA No.91, 69, 76 and 77/Gau/2017 for assessment year(s) 2006-07, 2007-08, 2012-13 & 2013-14; respectively in first assessee s case. 4. Coming to assessment year 2006-07, we find that .....

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..... yngdoh and all the transactions were through cheques and, therefore, there cannot be any doubt about the share application money received from Mr. C.N. Lyngdoh. However, the confirmation from Mr. C.N. Lyngdoh could not be submitted at the time of assessment. The appellant has, therefore, made a prayer under Rule 46A of the Income Tax Rules, 1962. The assessing officer in his remand report has also not objected to the admission of any fresh or additional evidence if it is considered to be relevant for disposal of the issue. Considering the facts and circumstances of the case, I admit the additional evidence as prayed for by the appellant. 5.3 As far as the legal contention raised by the appellant is concerned, I find that at the time when the appellant's case was re-opened u/s.147 of the Income Tax Act, 1961 as well as when the assessment was made u/s.143(3)/147 of the Income Tax Act, 1961 on 31.03.2013, the judgment of the Hon'ble Apex Court in the case of M/s. Meghalaya Steels Ltd (supra) was not available to the Assessing Officer. Therefore, in my view there was no bar for the Assessing Officer in making addition on any other issue apart from the issue of transport subsid .....

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..... exempt share applicant during the course of assessment. The Assessing Officer had not issued any process either sec. 131 or sec. 133(6) of the Act to assessee s investor(s). We therefore quote hon ble apex court s landmark decision in CIT vs. Orissa Corporation Pvt. Ltd. (2001) 159 ITR 78 (SC) that an assessee can only file all of its supportive documents in favour of its claim proving genuineness and creditworthiness of the investor parties. We further reiterate that there is also no denial to the CIT(A) s clinching finding that the department has itself accepted all other transactions in Mr. Lyngdoh s case. 6. Mr. Singh at this stage quotes hon be apex court s very recent decision in Pr.CIT vs. NRA Iron & Steel Co. (2019) 412 ITR 161 (SC) restoring similar addition made by the Assessing Officer treating the concerned taxpayer s share application money as unexplained cash credits. We find that the said decision does not apply in the facts of the instant case since the assessee before us has already discharged its onus before the Assessing Officer. The mere fact that its investor is an exempt assessee u/s 110(36) does not give the impugned share application money the colour of .....

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..... tal Warehousing Corpn. (Ngava Sheva) Ltd. (2015) 374 ITR 645 (Bom.) (iii) Marigold Merchandise Pvt. Ltd. V/s. D.C.I.T. (2014)164 TTJ 448 (Delhi "F" Bench) (iv) Jai Steel (India) V/s. A.C.I.T. (2013) 259 CTR 281 (Rajasthan) (v) A.C.I.T. Vs. Pratibha Industries Ltd. (2013) 141 I.T.D. 151 (Mumbai) (vi) A.C.I.T. Vs. Kamal Kumar S. Agarwal (2010) 133 TTJ 818 (Nagpur) (vii) C.I.T. Vs. Kabul Chawla (2016) 380 I.T.R. 573 (Del.) (viii) Jaipuria Infrastructure Developers (P) Ltd. V/s. A.C.I.T. I.T.A. Nos. 5522 & 5523/Del/2015 decided by Hon'ble ITAT, Delhi Bench "B", Delhi on 27-06- 2016 (ix) Principal C.I.T. Vs. Kurele Paper Mills (P) Ltd. (2016) 380 I.T.R. 571 (Delhi) (SLP filed by the Department against this judgment dismissed (2016) 380 I.T.R. St.64) It is further submitted by the appellant that no incriminating document/material relating to the share capital/share premium was found and/or seized in the case of the appellant. The Assessing Officer has neither referred to nor relied upon any such document while making the assessment. 5.4 As far as merits of the case is concerned, the appellant has submitted the following documents with a prayer under Rule 46A o .....

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..... x AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other postsearch material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of s .....

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..... t; Consequently, it was held that the AO was not justified in invoking Section 68 of the Act for the purposes of making additions on account of share capital. 3. As far as the above facts are concerned, there is nothing shown to the court to persuade and hold that the above factual determination is perverse. Consequently, after considering all the facts and circumstances of the case, the Court is of the opinion that no substantial question of law arises in the impugned order of the ITAT which requires examination. 4.The appeal is, accordingly, dismissed." Hon'ble Supreme Court has dismissed the special leave petition filed by the Department against this judgment as reported at (2016) 380 I.T.R. (St.) 64. 5.8 In the case of Jaipuria Infrastructure Developers (P) Ltd. V/s. ACIT (I.T.A. Nos. 5522 & 5523/Del/2015) which was decided by Hon'ble ITAT, Bench "B" Delhi on 27-06-2016, Hon'ble Tribunal has held as follows:- "21. However, in the backdrop of aforesaid undisputed facts discussed in the preceding paras and law laid down by Hon'ble jurisdictional High Court in the case cited as Kabul Chawla (supra), we are of the considered view that complet .....

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..... ed upon by Hon'ble jurisdictional High Court in the case cited as Filatex India Ltd. Vs. CIT-IV - (2014) 49 Taxman.com 465 (Delhi) which has been distinguished in the Kabul Chawla (supra) on the ground that in the said case, there was some material unearthed during the search whereas in the instant case there is admittedly no incriminating material unearthed during the search to proceed u/s 153A. In view of what has been discussed above, we are of the considered view that without entering into the merits of this case, addition made in both the cases u/s 153A read with section 143(3) is not sustainable in the eyes of law, hence deleted. Consequently, both the appeals filed by the assessee are hereby, allowed." 5.9 An analysis of the above case laws relied upon by the appellant clearly show that the completed assessments i.e. the non-abated assessments can be tinkered with only on the basis of any incriminating material found during the course of search and not otherwise. In view of what has been discussed above, I am of the considered view that the additions of ₹ 6,69,71,870/-, ₹ 11,95,78,050/- and ₹ 7,24,50,080/- made on account of share capital, share pr .....

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..... ; Articles of Association, audited balance sheets and copy of return of allotment. A perusal of the bank statements filed by the appellant show that all the transaction have taken place through banking channels. On examination of these details/documents, I do not find any reason to doubt the identity of the share holders, their credit worthiness and the genuineness of the transactions. It is settled law that once an assessee provides details regarding identity of the share applicants/holders, their permanent account numbers, bank details, balance sheets, A/D receipt in support of filing of income tax returns, copies of Memorandum & Articles of Association etc., the share application money/capital cannot be treated as unexplained in the hands of the assessee. This view has been taken in the following cases: (i) Principal CIT. V/s. Soft-line Creations Pvt. Ltd. (2016) 387 ITR 636 (Delhi) (ii) C.I.T. V/s. Kamdhenu Stel & Alloys Ltd. (2014) 361 ITR 220 (Delhi) (iii) C.I.T. V/s. Lovely Exports Pvt. Ltd. (2009) 319 ITR (St.) 5 (S.C.) (iv) C.I.T. V/s. Sameer Bio-Tech Pvt. Ltd. (2010) 325 ITR 294 (Delhi) (v) C.I.T. V/s. Five Vision Promoters Pvt. Ltd. (2016) 380 ITR 289 (Delhi) (vi .....

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..... assessee s undisclosed income. The CIT(A) s detailed discussion qua the instant identical issue reads as under:- 7.1 Before me the appellant vide its written submission dated 02.02.2016 has contended as follows: "5. Ground No.5 (Addition on account of alleged undisclosed expenditure ₹ 1,34,40,000/-): (i) While making the assessment the Assessing Officer has added an amount of ₹ 1,34,40,000/- in the total income of the appellant on account of alleged unexplained expenditure. (ii) The relevant facts are that in the course of search & seizure operations conducted at the office cum factory premises of appellant at lekhi Village, Nahadagun, Arunachal Pradesh, books of accounts marked., as "HD-4" (hard drive) was seized vide annexure "A" to the panchnarna dated 07.12.2012. The aforesaid seized material marked as "HD-4" contained a tally account named "SSI" containing balance sheet and profit and loss account for the F.Y. 2011-11 In the aforesaid seized material a debit entry of ₹ 1,34,40,000/- was claimed a expenditure which according to the Assessing Officer did not appear in any of the disclosed account of the group. He .....

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..... it of the set off of ₹ 76,00,000/- to the appellant against the addition of Rs,1,34,40,000/-. The appellant thus gets relief of ₹ 76,00,000/- and the balance addition of ₹ 54,40,000/- is sustained. This ground of appeal is, therefore, partly allowed. 10. We find no substance in Revenue s instant grievance as the purpose of telescoping is to avoid double addition qua the very income in the hands of taxpayer as held by the hon ble apex court s landmark decision in Anantharam Veerasinghaiah and Co. vs. CIT (1980) 123 ITR 457 (SC). Coupled with this, the assessee s disclosure of its twin undisclosed income(s) stands accepted by the department itself. We conclude in these facts denied of the impugned telescoping benefit to the assessee would amount to a double addition. More so when its book treatment thereof under business income head has attained finality. These two Revenue s appeals ITA No.76 & 77/Gau/2017 fail accordingly. 11. Same order to follow in latter assessee JUD Cement Ltd s two appeals ITA No.39-40/Gau/2017 challenging correctness of both the lower authorities action adding similar share application money(ies) of ₹ 20 lac and ₹ 36 lac; asse .....

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