TMI Blog2022 (1) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... any real money. The addition having been made only on the strength of some notings found in some file extracted from the computer of Shri Rohtash, clearly establish that the provisions of section 69A of the Act do not apply - there is no mention of the assessee's name in the impugned document. The Assessing Officer has simply assumed that the reference to the impugned amount is in relation to the assessee. In our understanding, no addition can be made on the basis of presumptions and surmises. Assuming, yet not accepting that the amounts were received by the assessee, the same were returned back on the very same date as per Exhibit 85 of the paper book. Even on this count, addition is uncalled for - Decided in favour of assessee. Unexplained share application money received from non-genuine parties - CIT-A deleted the addition - HELD THAT:- The assessee has established the identity of the share applicants by the KYC particulars forwarded by the assessee's bankers to RBI. Further, the bank has informed the RBI that it has received the proceeds from NRI in the form of inward remittances certificate for each amount received. RBI has noted that the assessee has followed du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atever amount is credited into the bank accounts gets debited the same day or the next day and every other day and the bank account is left with almost identical minimum balance. After analyzing the bank statements and the modus operandi adopted by the assessee, he held that these bank accounts are in the nature of merely providing inlet and outlet to and from various sources. These funds are infused mostly through bank accounts of companies of different names having bank accounts in the same branch and these bank accounts from which funds are credited into the Kolkata companies further resemble that of a layering channel. Moreover, although the money was received through banking channels, but, did not reflect the actual genuine business activities. The AO, despite his heavy workload of time barring matters in the month of March, 2016, decided to go to Kolkata to make field inquiries and recorded the statements of some of the persons. After confronting the same to the assessee and rejecting the various explanations given by the assessee and relying on various decisions, the AO held that the amount of ₹ 6 crores that has been introduced as sale of shares from these parties is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in proportion to the turnover of these companies with M/s. Amrapali Group for FY 2012-13 appearing in the documents. After recording the following details, the AO proposed an addition of ₹ 1,14,75,000/- in the hands of the assessee company and, accordingly, issued a show cause notice asking the assessee to explain as to why cash received should not be added to the total income of the assessee:- 5. Rejecting the various explanations given by the assessee, the AO made addition of ₹ 1,14,75,000/- to the total income of the assessee. 6. The AO, however, noted that the assessee in his reply to the question asking to file details of share application money received, has stated that it has received share application money to the tune of ₹ 13,01,395/- from Mr. Hemand Vinkatramani Lalith Raj, M/s. Sneha Santosh Tirodkar, Mr. Digvijay Singh and Smt. Deepa Subramaniam. He, therefore, asked the assessee to submit its reply to prove the identity and credit worthiness of the share applicants and genuineness of the transactions. In absence of any proper explanation to his satisfaction, the AO, relying on various decisions, made addition of ₹ 13,01,395/- to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of alleged cash received from Amrapali group of companies by the Mauria group of companies/individuals as per account found in the e-mail of Sh. Rohtash Kumar sent to Sh. Akhil Kumar Sureka, and added by the AO in the hand of the Mauria group companies/individuals on proportionate basis. The AO, has observed that the cash payments from Amrapali group are related to M/s. Mauria Udyog Ltd, M/s. Bihariji Ispat Udyog Ltd. and M/s. Jyotindra Steel Tubes Ltd. and made additions in the hands of these three companies in proportion to their turnover. The facts of the matter are similar to that of the assessment order in the case of M/s. Bihariji Ispat Udyog Ltd. for AY 2013-14 and the observations of the AO at paras-5 to 5.18 are verbatim the same as that of M/s. Bihariji Ispat Udyog Ltd. for AY 2013-14. The impugned addition being based on the seized document found from the residence of Sh. Rohtash Kumar being .xls file extracted from path c:\outlook.pst\sent seized as Annx.-A2/P-17 which is an e-mail sent by Sh. Rohtash Kumar from his e-mail ID. rohtash@mauria.com to Sh. Navneet Kumar Sureka (navneet@mauria.com) and Sh. Akhil Kumar Sureka (akhil@mauria.com) on 12.07.2013 at 4:15 PM, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that considered by me in the case of appellant for AY 2010-11 in A. No. 299/16-17 vide my order dt. 18.04.2017 at paras-4.4 to 4.4.2 wherein the facts related to the receipt of the entire share application money of ₹ 8,10,00,000/- has been considered and the addition of ₹ 7,96,98,605/- was deleted by me. The amount of ₹ 13,01,395/- have been received during the year from the same persons as difference in the amount paid by them in the year relevant to AY 2010-11 arising due to foreign exchange fluctuation and having held the share application money received from them as genuine in AY 2010-11 the addition made on this account in this year is also deleted 10. Aggrieved with such order of the CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds:- 1. The order of Ld. CIT (A) is not correct in law and on facts. 2. On the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 6,00,00,000/- made by AO on account of Unexplained Share Application Money. 3. On the facts circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 1,14,75,000/- made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case, made addition of ₹ 6 crores on account of sale proceeds of shares received by invoking the provisions of section 68 of the IT Act on the ground that the existence of the parties at the given address is not verifiable. According to the AO, the assessee has created a paper trail to prove the genuineness of the transaction and a close examination of the documents show that the companies through whom money is being routed are only dormant companies with nil business activities. Since the assessee failed to discharge the onus cast on it by proving the identity and credit worthiness of the persons and the genuineness of the transaction, the AO held that the assessee has introduced its own cash in the garb of sale of shares. We find, the ld. CIT(A) deleted the addition, the reasons of which have already been given in the preceding paragraphs. We do not find any infirmity in the order of the CIT(A) on this issue. We find, the ld. CIT(A), while deleting the addition, has relied on his decision for AY 2013-14 in the case of Maurya Udyog Ltd., which is the sister concern of the assessee wherein similar additions were also made by the AO on account of sale of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order it is apparent that the initial purchase of shares by MUL from NCPL LMPL and source thereof have not been questioned by the AO and have apparently been accepted by the AO, and even if it is considered that the sale transactions were bogus and the sale proceeds represent unaccounted income of the appellant in keeping with AO's conclusion one has to consider as to what happened to the funds invested by the appellant for purchase of these shares initially which are accepted as explained by the AO since there is no adverse finding in this regard in the assessment order, and therefore even if the sale is bogus only the difference of sale proceeds and the initial initial investment could be unexplained. On the other hand the above details indicate that MUL purchased the shares of NCPL LMPL on 01.03.2013 which were sold to PCPL, DMPL SHPL within a short time between 02.03.2013 to 09.03.2013 thus suggestive of trading transactions for short term profit. From the audited accounts of MUL it is observed that out of the total revenue receipts of ₹ 893,22,65,662/- receipts from trading in shares have been shown at ₹ 529,17,12,498/- (as against ₹ 895,97,98,703/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ariji Ispat Udyog Ltd. - ₹ 57,15,000/-; and Jotindra Steel Tubes Ltd., i.e., the assessee - ₹ 1,14,75,000/-. 20. He submitted that the proportionate disallowance in the hands of the two companies, namely, Maurya Udyog Ltd. and Bihariji Ispat Udyog Ltd., has been deleted by the CIT(A) and on appeal by the Revenue, the Tribunal, vide ITA No. 6660/Del/2016, order dated 29.11.2018 in the case of Maurya Udyog Ltd., has deleted the addition. So far as the addition made in the hands of Bihariji Ispat Udyog Ltd., is concerned, the appeal filed by the Revenue was dismissed on account of low tax effect vide ITA No. 5570/Del/2016, order dated 02.08.2018, copy of which is placed at pages 684-686 of the paper book. He accordingly submitted that the issue stands squarely covered in favour of the assessee by the decision of the Tribunal in the case of Maurya Udyog Ltd. 21. We have heard the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the AO, in para 6.7 of the assessment order, observed that cash payment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere received by the assessee, the same were returned back on the very same date as per Exhibit 85 of the paper book. Even on this count, addition is uncalled for. 12. In the result, the appeal filed by the Revenue is dismissed. 22. Since the facts of the instant case are identical to the facts of the case decided by the Tribunal in the case of Maurya Udyog Ltd. (supra), therefore, respectfully following the decision of the Tribunal, we do not find any infirmity in the order of the CIT(A). Accordingly, the same is upheld and the ground raised by the Revenue is dismissed. 23. Ground No. 4 relates to the order of the CIT(A) deleting the addition of ₹ 13,01,395/- on account of unexplained share application money received from non-genuine parties. 24. The ld. DR heavily relied on the order of the AO. He submitted that the assessee failed to substantiate with evidence to the satisfaction of the AO regarding the identity and credit worthiness of the share applicants and genuineness of the transaction. He submitted that the ld. CIT(A), without considering the facts narrated by the AO has deleted the addition which is not justified. He accordingly submitted that the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition, the same does not call for any interference. He accordingly submitted that the ground raised by the Revenue should be dismissed. 27. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the AO, in the instant case, made an addition of ₹ 13,01,395/- being share application money received from Mr. Hemand Vinkatramani Lalith Raj, M/s. Sneha Santosh Tirodkar, Mr. Digvijay Singh and Smt. Deepa Subramaniam on the ground that the assessee failed to prove the identity and credit worthiness of the share applicants and the genuineness of the transaction. We find, the ld. CIT(A) deleted the addition the reasons of which have already been reproduced in the preceding paragraphs. We do not find any infirmity in the order of the CIT(A) on this issue. He has given a categorical finding that in the assessment year 2010-11, the assessee had received an amount of ₹ 7,90,98,605/- out of the share application money of ₹ 8,10,00,000/- which was deleted by him. The balance amount of ₹ 13,01, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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