TMI Blog2017 (1) TMI 1685X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, considering the factual position and the judgments cited by ld. AR, we are of the view that the additions made by the AO u/s.153A and confirmed by the ld. CIT(A) needs to be deleted. Therefore, we delete the addition. Addition u/s.68 (cash credit) on account of share application money/share capital - HELD THAT:- There is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the judgments of the ITAT and Hon ble High Courts. AR pointed out that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person and later on he reiterated the statement by filing the affidavit. The share applicants have submitted the required document and evidences. The addition made by the AO u/s.68 is without any basis and without any incriminating material. The assessee has proved the identity, creditworthiness and genuineness of the transactions. Therefore, considering the factual position and the case law cited by ld. AR, we are of the view that the addition made by the AO u/s.68 and confirmed by the ld. CIT(A) needs to be deleted. - Assessee appeal allowed. - IT(SS)A No.47/K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions and further considering the fact that the entry operator himself filed a letter of his affirmation of providing entries to the assessee company through his companies made for this purpose, the entire share capital and share application money received from entry operator s company to the assessee company is added back to the total income of assessee company. This way, the Assessing Officer made addition under section 68 Cash Credit on account of Share Capital/Share Application Money received by sister concerns/group companies. 4. Aggrieved from the order of the Assessing Officer, the assessee filed an appeal before the ld CIT (A), who has confirmed the addition made by the Assessing Officer, observing the followings: 5. I have considered the submission of the appellant and perused the assessment order. On careful consideration of the facts, I am not inclined to agree with the submission of the appellant that there were no new facts or material or evidence in consequence to the search by virtue of which the AO could have made an addition of a regular item declared in the original return of income. On perusal of the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd all of them were operating from the premise surveyed u/s 133A of the Act. It was stated by Shri Chhaparia that through these companies he had been providing accommodation entries to MSP Steel Group of companies. He gave name of 17 companies of MSP Group to whom he had provided the accommodation entries. The name of the assessee company also appeared in the said list of companies. During the course of assessment proceedings it was observed by the AO that in the year under consideration the assessee company had received share capital of Rs.I0,00,000/- from M/s Shivarpan Mercantile Pvt. Ltd. The said company was controlled by Shri Naresh Chhaparia as per the list of companies given by him in the statement. From the assessment order it appears that the assessee company asked the AO to allow an opportunity of crossexamination of Shri Naresh Chhaparia. Therefore, the AO issued summon u/s 131 of the Act in the name of Shri Chhaparia for recording statement and simultaneously the letter was also issued to the assessee company. However, on the given date and time Shri Naresh Chhaparia did not appear before the AO. Under the circumstances, the AO asked the assessee to produce Shri Naresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Hence, following my orders in the case of appellant company for the A.Y. 2007-08 and 2008-09, for the year under consideration the addition of ₹ 10,00,000/- made by the AO u/s 68 of the Act is confirmed. The ground no. 2 is dismissed. 5.Not being satisfied with the order of ld.CIT(A),the assessee is in further appeal before us and has taken the following grounds of appeal :- 1) That the Ld.CIT(A) erred in holding that under the provisions of sec. 153A of the Income Tax Act, 1961, the AO is empowered to reassess the income for the completed assessment even in the cases where nothing incriminating was found in the course of search. Sec.153A neither empowers the AO to re-assess income of the completed assessment without any seized material or asset to that effect nor does it allow the AO to review the assessment already completed. As such, the additions made in the order u/s153A and confirmed by the Ld.CIT(A) is bad in law and need to be deleted. 2) That under the facts circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of ₹ 10,00,000/-, being the share application money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officers during the survey operation which continued from afternoon of 07.10.2010 to after midnight of 07.10.2010. I was completely exhausted, tensed and had lost my mental balance under the continuous pressure from the Income Tax Authorities. 8. That in the course of the survey, the Authorised Officer and other survey teams threatened me that if I did not sign on oath the recorded statement prepared by the survey team then survey will be converted to search and I would face continuous harassment from the Income Tax Authorities and the same would be extended to my relatives, associates and persons having any type of business transactions with my company or with me. 9. That, the survey team continuously mentally tortured and threatened me and not allowed me to consult with my Chartered Accountant, family members or friends. 10. That, under such exhaustion, tension, depression psychological fear, I signed the statement recorded by the Authorised Officer where it has been mentioned that my group companies have provided accommodation entries against which I earned a commission, which is completely wrong. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se proceedings were not pending on the date of search to get themselves abated. We find that the Co-ordinate Bench of this tribunal in the case of Rahee Track Technologies Pvt Ltd vs DCIT in IT(SS)A Nos. 08 to 13/Kol/2015 dated 7.10.2016 had elaborately dealt with this issue by duly considering the decisions of Hon ble Delhi High Court in the case of Kabul Chawla and Hon ble Jurisdictional High Court in the case of Salasar Stock Broking Ltd , among other decisions had held as below:- 2.11. We find that the provisions of section 132 of the Act relied upon by the ld DR would be relevant only for the purpose of conducting the search action and initiating proceedings u/s 153A of the Act. Once the proceedings u/s 153A of the Act are initiated, which are special proceedings, the legislature in its wisdom bifurcates differential treatments for abated assessments and unabated assessments. At the cost of repetition, we state that in respect of abated assessments (i.e pending proceedings on the date of search) , fresh assessments are to be framed by the ld AO u/s 153A of the Act which would have a bearing on the determination of total income by considering all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in agreement with the views expressed by the Karnataka High Court that incriminating material is a pre-requisite before power could have been exercised under section 153C read with section 153A. 9. In the case before us, the assessing officer has made disallowances of the expenditure, which were already disclosed, for one reason or the other. But such disallowances were not contemplated by the provisions contained under section 153C read with section 153A. The disallowances made by the assessing officer were upheld by the CIT(A) but the learned Tribunal deleted those disallowances. iv) M/s Howrah Gases Limited, IT(SS)A No.26 27/Kol/2015, order dated 18.11.2016 : 5. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the impugned disallowance of ₹ 41,14,917/- under section 40(a)(ia) was made by the Assessing Officer in the assessment originally completed under section 143(3) vide an order dated 31.12.2007, which had already become final before the search and seizure action took place in the case of the assessee on 06.10.2010. the said assessment thus di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the order of ADIT and only that Pay Order was seized. It is not the case that the Bank account was not disclosed. Except the Bank account, no other assets, documents or material were brought to our knowledge by the ld. D.R., which has been found or seized by the Department, so that it could be regarded to be the incriminating material in respect of the share capital and the share premium as well as the disallowance of the expenses in respect of which the addition has been made in the assessment completed under section 153A. Since there was no incriminating material found in the course of the search and brought to our knowledge by the ld. D.R. in respect of the share capital and share premium, therefore, we are of the view that no addition on this account can be made in the case of the assessee in each of the assessment years. vi) Shanti Kumar Surana, (2015) CCH 0241 Kol Trib : In view of the facts in entirety and the legal principles enunciated by Hon'ble Bombay High Court in the case of Continental Warehousing Corporation (NhavaSheva) Ltd., supra, of Hon'ble Allahabad High Court in the case of Shaila Agarwal, supra and Mumbai Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his affidavit. The Assessing officer may assess the income of concluded assessments under section 143(3) and under section 143 (1)/147. 9. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the judgments of jurisdictional ITAT and Hon ble High Courts. Ld. AR has pointed out that no incriminating documents was found either during survey or during search procedure. The statement of Shri Naresh Kumar Chhaparia should not be relied on, because he is a double speaking person. The assessment proceedings were completed before the date of search. Besides, the time limit to issue notice u/s.143(2) was also expired. In order to initiate assessment proceedings u/s.153A, there should be a new or incriminating document. The assessment which is already completed u/s.143(3)/143(1)should not be reopened. Therefore, considering the scheme of Section 132 and Section 153A, we are of the view that there should be some new document/incriminating document to invoke the provisions of Section 153A. Ld. DR for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also relied on the following judgments :- i) Zimkele Commodeal Pvt. Ltd., ITA No.959/Kol/2011, dated 24.08.2016 : 7.7. We find that the issue is also covered by another Jurisdictional High Court decision in the case of CIT vsMitul Krishna Kapoor in ITA No. 333 of 2009 dated 9.6.2016) wherein the question raised and the decision rendered thereon are reproduced below:- Whether on the facts and in the circumstances of the case the Learned Tribunal is justified in law in confirming the order of C.I.T.(Appeals) in deleting the addition of ₹ 33,90,000/- and ₹ 72,57,686/- made under Section 68 of the Income Tax Act, 1961? Addition of a sum of ₹ 33.90 lakhs was made on the basis that the assessee had allegedly taken loan from the corpus fund, which the assessee has denied. The assessing officer proceeded to add this sum of ₹ 33.90 under section 68. C.I.T.(A) has clearly held that there is no knowledge as to what the corpus fund is. The C.I.T. also opined that there was no material on the basis of which the aforesaid addition could be made and on that basis the C.I.T. de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment, amount, name, address, income tax returns, PA No. of share applicants along with their balance sheet. The Learned CITA also observed that the assessee in its reply to show cause notice before the Learned AO had requested him to use his power and authority for the physical appearance of the shareholders which was not exercised by the Learned AO. Instead the Learned AO continued to insist on the assessee to produce the shareholders before him. He ultimately concluded that the assessee had duly discharged its onus of providing complete details of the shareholders and in any case, no addition could be made u/s 68 of the Act in the asst year under appeal as no share application monies were received during the asst year under appeal. Aggrieved, the revenue is in appeal before us by filing the following ground:- That in the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made u/s 68 in respect of the allotment of shares to 20 numbers of individual investors for an amount of ₹ 57 lakhs, where genuineness of the transactions and creditworthiness of the investors were not established. 4.3. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5111010006717 of M/s. Bright Impex Agencies Pvt. Ltd in pages 29-32 of the assessee's paper book, PAN details of M/s. Bright Impex Agencies Pvt. Ltd in page 33 of the assessee's paper book and copy of ld. AO's Remand report in pages 35-36 of the assessee's paper book. On perusal of the aforesaid papers, we find that the lending company, M/s. Bright Impex Agencies Pvt. Ltd has got paid up capital of ₹ 3,25,85,000/- as on 31-03-2008 and Reserves Surplus of ₹ 26,87,67,396/- as on 31-03-2008. We also find that the said lending company, M/s. Bright Impex Agencies Pvt. Ltd is a registered Non Banking Financial Company (NBFC) engaged in the business of granting of loans and advances and had indeed derived interest income of ₹ 1,70,95,047/- from money lending business during the financial year 2007-08. We also find from the bank statement of lending company i.e M/s. Bright Impex Agencies Pvt. Ltd, that there are several high value transactions with different persons through out the year. It is not the case of the ld.AO that the cash was deposited in the bank account of the loan creditor immediately before issuing the cheques to the assessee. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y using his statutory powers vested on him and provided to him in the statute. We find that the facts of the case clearly proved that the assessee had completely discharged his onus by filing all the documentary evidences in support of the loan transaction from M/s. Bright Impex Agencies Pvt. Ltd in terms of section 68 of the Act. Hence, it is fully covered by the decision of the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corporation reported in 159 ITR 78(SC). The facts before the Hon'ble SC and the facts of the case before us are exactly similar. Hence, the addition made on this count u/s. 68 of the Act based on mere surmises and suspicion is hereby deleted. This ground of revenue's appeal is also dismissed. iv) Harshwardhan Gems Pvt. Ltd., ITA No.1070/Kol/2010, order dated 03.02.2016: 6. In the instant case also facts and circumstances are identical as the assessed has prima facie proved the identity of the share subscriber, the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels, the creditworthiness or financial strength of the share subscriber. The releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hiness and genuineness of the transactions of the receipt of share application money from M/S.Kalisaran Properties (P) Ltd. We, therefore, hold that the addition made by the AO and sustained by CIT(A)should be deleted. vi) Kunj Alloys Pvt. Ltd., ITA No.239/CTK/2007, order dtd. 27.11.2015 : 9. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. D.R. has relied on the order of the Assessing officer in support of the Revenue's case on this issue, the ld. Counsel for the assessee has pointed out that the total amount of ₹ 19.26 crores was raised towards shares by the assessee- Company as well as other group Companies including the amount in question during the assessment years 2001-02 to 2007-08. He has submitted that pursuant to the search conducted in the case of all these group Companies including the assessee-Company, the entire amount of share capital raised was verified by the Assessing Officer and the same was accepted and no addition under section 68was made by him after having found that the identity and capacity of the concerned creditors as well as genuineness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the judgments of the ITAT and Hon ble High Courts. The Ld. AR pointed out that statement of Shri Naresh Kumar Chhaparia should not be relied on because he was a double speaking person and later on he reiterated the statement by filing the affidavit. The share applicants have submitted the required document and evidences. The addition made by the AO u/s.68 is without any basis and without any incriminating material. The assessee has proved the identity, creditworthiness and genuineness of the transactions. Therefore, considering the factual position and the case law cited by ld. AR, we are of the view that the addition made by the AO u/s.68 and confirmed by the ld. CIT(A) needs to be deleted. Accordingly, we delete the addition. 13.In the result, appeals filed by the assessee [IT(SS)A No. 47,49,50,51,52,54,55,94,95,96/Kol/2015.] on this ground are allowed. Order pronounced in the open court on this 06/01/2017. - - TaxTMI - TMITax - Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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