TMI Blog2019 (12) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the Assessing Officer - Ground raised by the assessee is allowed for statistical purposes Addition u/s 68 - Unesecured cash credits - HELD THAT:- Such stress has been given by the ld. DR and also adverse inference has been drawn by the Assessing Officer that in the subsequent year the sister concern of the assessee has bought back the shares at ₹ 5/- in order to hold that the transaction during the year is bogus or non-genuine. First of all, under the deeming provision what is required to be seen whether the credit appearing in the books of account during the financial year, the assessee has been able to discharge the onus regarding the nature and source of credit or not. Here in this case, the nature of credit is share application money and the source has found to be satisfactorily explained by the assessee as held by Ld. CIT (A). Thus, the onus cast upon the assessee has been fully discharged. Secondly, if a share at a face value of ₹ 10/- and premium of ₹ 90/- has been bought back at ₹ 5/- then Assessing Officer has all the powers under the Act to examine the issue in the year in which transaction has taken place and there he can draw any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings, the Assessing Officer noted that assessee has carried out F O / derivative transactions in shares in this year. The assessee has earned derivative profits of ₹ 2,20,000/- and loss of ₹ 52,32,337/- and accordingly net derivative loss of ₹ 50,12,337/- was claimed in the P L account. In response to the show cause notice, assessee has filed copy of bills and contract notes issued by a broker, M/s. Tushar Commodities Pvt. Ltd. Ld. Assessing Officer has sent notice u/s. 133(6) dated 09.12.2012 to the said broker at the address mentioned in the bill. However, the said notice returned back unserved. Thereafter, he sent notice u/s.133(6) to NCDEX, in response to which following information was provided: This has reference to your letter ref. To/Ward-15(4)/2013- 14/1004 dated December 2013 requesting the Exchange (NCDEX) to provide trading information sought by you pertaining to M/s Rose Wood Buildwell (P) Ltd. (PAN: AACCR9241D) for the financial year 2010-11 (01.04.2010 to 31.03.2011). With reference to points 1 2 of your letter, we verified the Exchange records and on verification, it is observed that, M/s Tushar Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on perusal of the relevant findings given in the impugned orders as well as material referred to before us, we find that assessee had carried out F O/derivative transaction in shares during the year from which it has earned deliberative profit of ₹ 2,20,000/- and also claimed to have incurred loss of ₹ 52,32,337/-. Accordingly, net of derivative loss of ₹ 50,12,337/- was claimed. Though, the notice sent by the Assessing Officer u/s. 133(6) had come back unserved, however as claimed by the assessee, the fact that the notice could not be served to the broker was not informed during the course of assessment proceedings nor any effort was made to send further notice to call upon the broker even at the appellate stage. The documentary evidences filed by the authorities below though shows that certain transactions have been undertaken from the broker, M/s. Tushar Commodities Pvt. Ltd. for which the bills and the contract notes were submitted along with details of banking transaction. The inquiry by the Assessing Officer though revealed that M/s. Tushar Commodities Pvt. Ltd. was registered with exchange, but the said broker has not traded during in the exchange for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Zoom Developers SEZ (Indore) Pvt. Ltd. 1,00,000 10,00,000 90,00,000 1,00,00,000 4 Rangoli Buildtech Pvt. Ltd. 1,00,000 10,00,000 90,00,000 1,00,00,000 Total 3,50,000 35,00,000/- 3,15,00,000 3,50,00,000 11. Thus, the face value of the share at ₹ 10/- each was issued at a premium of ₹ 90/- per share. Ld. Assessing Officer though noted that assessee had filed copy of confirmation, copy of ITR and bank statement in respect of New International Stainless Pipe Company Ltd., but no ITR and bank statement was filed in respect of Zoom Developers SEZ (Indore) Pvt. Ltd. In respect of one party, M/s. Rangoli Buildtech Pvt. Ltd. again no bank st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies (either from the said M/s New International Stainless Pipe Co. Ltd or from the bank of M/s New International Stainless Pipe Co. Ltd) at the back of the assessee. (ii) During the course of assessment proceedings, the Ld. A.O. had not informed the assessee that the notice u/s 133(6) issued by the Ld. A.O. to the said M/s New International Stainless Pipe Co. Ltd had returned unserved. (iii) On taking inspection of the assessment folder, the assessee had noted that the notice u/s 133(6) issued by the Id. A. O. to the said M/s New International Stainless Pipe Co. Ltd had not returned unserved. (iv) During the course of assessment proceedings, the Id. A.O. had not asked the assessee to provide latest address of the said M/s New International Stainless Pipe Co. Ltd. (v) Since the assessee had not been asked to provide latest address of the said M/s New International Stainless Pipe Co. Ltd., question of providing any other address did not arise. (vi) After getting the bank statement of the said M/s. New International Stainless Pipe Co. Ltd. from the Nainital Bank Ltd., the Id. A.O. had not sought clari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. (ii) During the course of assessment proceedings, the ld. Assessing Officer had not informed the assessee that the notice u/s. 133(6) dated 23.01.2014 issued by the ld. Assessing Officer to the said M/s. Zoom Developers SEZ (Indore) Pvt. Ltd. had returned unserved. (iii) During the course of assessment proceedings, the ld. A.O. had not asked the assessee to provide the latest address of the said M/s Zoom Developers SEZ (Indore) Pvt. Ltd. (iv) Since the assessee had not been asked to provide the latest address of the said M/s Zoom Developers SEZ (Indore) Pvt. Ltd., question of providing the latest address did not arise. (v) The Ld. A.O. had called for the bank statement of the said M/s Zoom Developers SEZ (Indore) Pvt. Ltd. from The Naintal Bank Ltd. (vi) After getting the bank statement of the said M/s Zoom Developers SEZ (Indore) Pvt. Ltd. from the Nainital Bank Ltd., the ld. A.O. had not sought clarification regarding the source of the investment made by the said M/s Zoom Developers SEZ (Indore) Pvt. Ltd. in the shares of the assessee. 4. M/s. Rangoli Buildtech Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 50 lacs pertaining to New International Stainless Pipe Co. Ltd. it has been alleged by the appellant that notice u/s 133(6) of the I.T. Act has not returned unserved. (II) In the case of the addition of ₹ 1 crore pertaining to M/s Automobile Component (India) Pvt. Ltd., enquiry was done by issuing notice u/s. 133(6) of the I.T. Act, but it is found that it has not reached the hands of Said M/s Automobile Component (India) Pvt. Ltd. In this regard of order sheet entries of assessment records has been perused and it is found that vide order sheet entry dated 13/1/2014 all the details with regard to share applicants has been called for which has been provided. The details have been produced before the undersigned in the form of paper book pertaining to the four share applicants as under :- I New International Stainless Pipe Company Ltd( ₹ 50,00,000/-) Appl ication form Confirmation ITR for 2011-12 Balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nius Traders P. Ltd. Photocopy of cheque of ₹ 28,00,000/- issued by Arrow Charter P. Ltd. RITGS Advice for ₹ 4,70,00,000/- from Ajay Aggarwal (HUF) IV Rangoli Buildtech Pvt. Ltd. (₹ 1,00,00,000/-) Application form Confirmation ITR for 2011-12 Annual Audited Accounts Notice u/s.133(6) dated 21.11.2013 issued by learned AO Letter dated 3.12.2013 from Rangoli Buildtech Pvt. Ltd. Ledger a/c of assessee Bank statement Assessment order dated 28.03.2011 passed u/s.153C/143(3) for A.Y. 2011-12 From the above submission of the appellant it is apparent that appellant has filed in all the four share applicant s cases as under: (i) Confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 114 - 116 of the order. 14. He further analyzed the each and every transaction and the bank details of the parties and after giving detailed finding held that the addition of ₹ 3,50,00,000/- cannot be made because not only the transaction were genuine but also the identity and creditworthiness of the parties had also stood established in the light of the facts and material on record. 15. Before us, ld. Sr. D.R. after referring to the various observations made by the Assessing Officer submitted that one peculiar fact which has been brought on record by the Assessing Officer is that a share which has been subscribed by four parties at a face value of ₹ 10/- and premium of ₹ 90/- per share has been sold back in the subsequent year at ₹ 9/- and it has been brought by the assessee through its sister concern wherein the Directors were common. This factum itself goes to prove that it is against the human probability. He strongly referred and relied upon the decision of Hon ble Delhi High Court in the case of PCIT vs. NDR Promoters P. Ltd., (2019) 410 ITR 379 (Del.) and judgment of Hon ble Supreme Court in the case of PCIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies to appear before him with regard to each and every subscribing companies. The Ld. CIT (A) has examined the relevant credit entries appearing in the bank account and also the balance-sheets of these companies and found that these companies have paid the money from their disclosed sources duly reflected in the books of account. 17. The finding of fact given by Ld. CIT (A) qua each company is summarized hereunder. In the case of New International Stainless Pipe Co. Ltd., Ld. CIT (A) has noted that amount of ₹ 50 lac which was given to the assessee was appearing in the balance-sheet and also there were enough credit balance available with the said company at the time of issuance of cheque. Similar transaction was reflected in the balance sheet and the bank statement of the Automobile Company India Ltd. and Zoom Developers SEZ (Indore) Pvt. Ltd. also. In the case of M/s. Rangoli Buildtech Pvt. Ltd. notice issued u/s. 133(6) were duly complied with and it was confirmed that amount has been paid from their own sources alongwith the documentary evidences. Once the assessee had furnished all the primary documents to prove the nature and source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet of the Assessing Officer (photocopy is placed on record). From these facts, it is amply clear that the Assessing Officer did not carry out the exercise required under the law. Hon ble Delhi High Court in the case of Gangeshwari Metal Pvt. Ltd 361 ITR 10, after taking into consideration its earlier decision in the case of Nova Promoters and Finlease Pvt. Ltd. 342 ITR 169, held that where the Assessing Officer without carrying out the exercise required in law reject the claim, no addition can be made u/s 68 in the hands of the company allotting shares. I am of the considered view that on the facts of the appellant s case, addition u/s 68 is not at all justifiable. 19. The aforesaid finding of the Ld. CIT (A) in absence of any rebuttal or contrary material on record which could have been revealed through inquiry made by the Assessing Officer to dislodge the finding cannot be tinkered with. 20. Much stress has been given by the ld. DR and also adverse inference has been drawn by the Assessing Officer that in the subsequent year the sister concern of the assessee has bought back the shares at ₹ 5/- in order to hold that the transaction du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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