TMI Blog2023 (9) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... ross examination. We can make reference to the decision of the Hon ble Supreme Court in the case of Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT ] as observed the statements, which are being used as a foundation for making any addition could not be used unless the assessee is being provided opportunity to cross examine. In these cases, the ld. Assessing Officer even not recorded the statements himself, these were recorded by some Investigating Agencies in some other proceedings in the past. This can be, at the most, information for initiating the assessment machinery in motion, but they cannot be considered conclusive in a search assessment proceeding under section 153A. Therefore, the additions in the assessments under section 153A are not sustainable. Assessment against non existent company [company merged] - assessment in the hands of the successor - Two companies have merged and the National Company Law Tribunal has amalgamated all these companies w.e.f. 01.04.2017. The assessee has demonstrated that in this year neither Bakshiram Uderam Holdings Pvt. Limited has raised any share capital money nor Narsingh Ispat Udyog Pvt. Limited. Whatever action has done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts that AO has made the additions based on the facts as all the limbs u/s 68 of the Income Tax Act, 1961, are not satisfied in this case IT(SS)A No. 37/KOL/2023 Whether on the facts and circumstances of the case, ld. CIT(A) is justified without going into merits of the case and deleting the addition u/s 68 of the Income Tax Act, 1961, of Rs. 19,14,50,000/- ignoring the facts that AO has made the additions based on the facts as all the limbs u/s 68 of the Income Tax Act, 1961, are not satisfied in this case IT(SS)A No. 38/KOL/2023 Whether on the facts and circumstances of the case, ld. CIT(A) is justified without going into merits of the case and deleting the addition u/s 68 of the Income Tax Act, 1961, of Rs. 9,99,96,000/- ignoring the facts that AO has made the additions based on the facts as all the limbs u/s 68 of the Income Tax Act, 1961, are not satisfied in this case IT(SS)A No. 39/KOL/2023 Whether on the facts and circumstances of the case, ld. CIT(A) is justified without going into merits of the case and deleting the addition u/s 68 of the Income Tax Act, 1961, of Rs. 9,71,30,000/- ignoring the facts that AO has made the additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,12,96,960/- 3. Narsingh Ispat Limited 2014-15 1,44,94,040/- 4. Narsingh Ispat Limited 2018-19 6,47,55,183/- 5. Narsingh Ispat Udyog Pvt. Limited 2013-14 6,130 6. Narsingh Ispat Udyog Pvt. Limited 2014-15 13,50,540/- 7. Bakshiram Uderam Holding Pvt. Limited 2018-19 3,28,260/- 5. The ld. Assessing Officer has issued notices under section 143(2) in the case of each assessee and thereafter issued questionnaire under section 142(4) of the Income Tax Act, 1961. The ld. Assessing Officer has observed that assessees have received share application money from various parties. The details of such share application money received by the assessee in the case of respective assessee has been tabulated by the ld. Counsel for the assessee in the written submissions filed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Investigating Agency that he was engaged in providing accommodation entries and the companies, from whom the assessee had availed the benefit of share application money, were shell companies. Therefore, the ld. Assessing Officer has considered sufficient material before disbelieving the genuineness of the share capital raised by these assessees. He relied upon the assessment orders in all these years. 9. On the other hand, ld. Counsel for the assessees has filed written submissions running into 27 pages. He took us through section 153A and thereafter explained the scope of this section and made reference to paragraph no. 10.2 of his submissions. While dealing with the position of law as canvassed by the representative, we will make reference to the submissions raised by the ld. Counsel for the assessee during the course of hearing as well as in the written submissions filed before the Tribunal. 10. We have duly considered the rival contentions and gone through the record carefully. Section 153A including the amendment effected by Finance Act, 2017 whereby 4th proviso has been included in the Statute Book has a direct bearing on the controversies. Therefore, we tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. EXPLANATION 1.-For the purposes of this sub-section, the expression relevant assessment year shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. EXPLANATION 2.-For the purposes of the fourth proviso, asset shall include immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand abate. It was further submitted that the second proviso also provides that if on the date of initiation of search or requisition under section 132 or under section 132A of the Act, any assessment/reassessment proceedings relating any assessment year falling within the period of six assessment years is pending, then the pending proceeding shall stand abated and fresh assessment of the same can be done under section 153A of the Act. It is also emphasized that if no proceeding was pending on the date of the search, then, the proceeding for that year stand concluded and such search shall have no impact on the concluded proceeding. Thus this proviso was enacted specifically to avoid two parallel proceeding of assessment of a particular year of the same person, i.e. one regular assessment proceeding under section 143(3) /147 of the Income Tax Act, vis-a-vis another assessment proceeding under section 153A of the Act. The ld. Counsel for the assessee further explained the meaning of expression abatement . This expression would mean that something is to be eliminated or suspended, defeat, nullify of pending action. Thus a plain reading of second proviso would suggest that if the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 153 A(l) will have to be mandatorily issued to the person searched requiring him to file returns for six 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 A.Y.s will have to be computed by the AOs as afresh 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 post-search 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search? 15. Hon'ble Court concurred with the decision of Hon'ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: 16. Section 153A bears the heading Assessment in case of search or requisition . It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be conne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the explanation given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs. l 1,05,51,000/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available with the Assessing Officer with respect to the sale transactions in the particular assessment year. 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed. 16. It is also pertinent to note that, in the case of Kabul Chawla (supra), the Hon ble Delhi High Court in its concluding paragraph has observed that, on the date of the search, the assessments for assessment years 2002-03, 2005-06 and 2006-07 already stood completed and the returns in these years were accepted under Section 143(1) of the Act and these acceptance of returns processed under Section 143(1) of the Act was construed by the Hon ble Delhi Court as completion of assessments and as acceptance of return, according to the Hon ble Delhi High Court, could be tinkered with if some incriminating material was found at the premises of the assessee. 17. The position of law in other decisions referred by the Id. Counsel for the assessee is identical; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfillment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No Costs . 19. In the light of above, let us consider the facts of the present appeals. The ld. Counsel for the assessee has tabulated the date of filing of the return under section 139 and the time limit available for issuance of a notice under section 143(2) to scrutinise the returns of assessee. Such details read as under:- Sr. No. Respondent-Assessee A.Y. Date of filling ITR Last date of issuing order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order. While evaluating this remand report, ld. CIT(Appeals) has observed that ld. Assessing Officer failed to pinpoint any material found during the course of search which has unearthed the receipt of share application money not disclosed in the books or in the regular returns. The assessees have received the share application money in the accounting period relevant to the assessment year but those were to be construed as accepted by the ld. Assessing Officer by not scrutinizing the return under section 143(2). The acceptance of the share application money in a constructive manner by the Revenue cannot be revisited under section 153A by again analysing that very material as if ld. Assessing Officer is passing a regular assessment. Whatever evidence the Assessing Officer has referred, it was available much prior to the date of the search. The last statement referred by him is of Mukesh Banka, which was also recorded on 30.05.2018 much prior to the search, but after that statement, no action was taken by the Revenue. Therefore, under the first limb of argument and on the strength of the Hon ble Supreme Court s decision in the case of PCIT vs.- Abhisar Buildwell Pvt. Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year . 23. In his second fold of submission, the ld. Counsel for the assessee submitted that by Finance Act, 2017, the legislature has extended the scope of section 153A. He submitted that earlier ld. Assessing Officer was empowered to make assessment or reassessment of six assessment years prior to the year of search as provided under section 153A(1) of the Act. With the help of 4th proviso of section 153A, power of making assessment or reassessment under section 153A has been extended upto earlier ten years prior to the year of search in certain specific circumstances. It was submitted by him that the proceedings for extended period can be initiated under section 153A of the Act if ld. Assessing Officer has, in his possession, books of account or other documents or evidence, which showed that the income represented in the form of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. A bare perusal of second compartment of section 153A would indicate that by way of Finance Act, 2017, the Parliament has extended the scope of section 153A and its scope has been extended from earlier six assessment years immediately preceding assessment year relevant to the previous year in which search is conducted, or requisition is made to the relevant assessment years and the definition of relevant assessment year has been provided in Explanation (1) of 4th proviso to section 153A. The relevant assessment year shall mean an assessment year proceeding the assessment year relevant to the previous year in which search is conducted or requisition is made, which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Thus the scope of this section has been extended upto ten years. The earlier assessment under section 153A could be made of search year plus six earlier years. Now it can be made search year plus nine earlier years meaning thereby the number of years would be ten. Therefore, basically this relevant assessment year is to be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment proceedings as to how he formed his opinion for assessing him under section 153A for the relevant assessment years, namely extended period of assessment years under the 4th proviso. Unless this seized material exhibiting discovery of assets having value of more than Rs. 50 lakhs is being shown to the assessee, action under section 153A could have not been initiated. 28. In the present sets of appeal, the question is whether share application money received by the assessee in the accounting year relevant to these A.Ys and shown in the books of account could be termed as undisclosed asset unearthed during the course of search. Though from the assessment order, it is not discernable what has weighed with the ld. Assessing Officer to harbour the believe for issuing the notice under section 153A, but if we make a speculation, then that is to be construed that ld. Assessing Officer has termed share application money received by the assessee duly disclosed in the regular books of account and could be scrutinised in regular assessment as undisclosed income. This is an incorrect appreciation of jurisdictional fact and on the basis of this plea, action against the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the Statute is so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted. So, it is clear enough that the income in the present case is taxable only under one law. By virtue of clause (k) to Article 37 IF of the Constitution which starts with a non-obstante clause, it would be clear that only the Sikkim Regulations on Income-tax would be applicable in the present case. Therefore, the income cannot be brought to tax any further by applying the rates of the IT Act. Hence, the entire addition made in the hands of Narsingh Ispat Ltd for AY 2012-13, being double additions is liable to be deleted. 4.2 Narsingh Ispat Ltd and Narsingh Ispat Udyog Pvt Ltd (AY 2013-14 and 2014-15) There are common shareholders in both these companies for these assessment years. The synopsis of the share application money received in these years is tabulated below: No Share Applicants Assessment Years Share Application Money received by assessee group during the year Source of share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital raised by the assessee during the year is an explained credit and no addition is warranted w.r.t the share capital raised by the assessee from this party as the source is explained. For share applicant No.8, please note that this party is a group concern of the assessee. The networth of this party as on 31-03-2013 and as on 31-03-2014 was Rs. 12.17 cr and Rs. 12.22 crores respectively which justifies the creditworthiness of the party to invest in the assessee company. Entire share application money was received through normal banking channels. This party is a regular income tax assessee. The share transactions are recorded in the books of both the parties. Hence, the identity, creditworthiness of this party and genuineness of the transactions is proven. 30. As far as A.Y. 2012-13 is concerned, it has been submitted before us that these additions were made in the regular assessment also, which was passed under section 143(3) on 04.03.2015. The second appeal against this assessment order has travelled upto the Tribunal and heard by B Bench. Therefore, in this year, we do not record any finding qua the merits of additions, because we have already quashed the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2008-09. The said sum of Rs. 14.80 cr. had already been added in the assessment order of Honesty Dealers Pvt Ltd for AY 2009-10 dated 12-032015 passed u/s 144/263/143(3)/147 of the Act. This share application money received by the party was re-invested in share capital of the assessee company in the relevant year. Since the source of share capital raised by the assessee during the year has already been taxed, adding the same again will tantamount to double addition. Refer page 159-210 of the paper book. Seaview Agencies Pvt Ltd 50,00,000 Seaview Agencies Pvt Ltd gave a loan of Rs. 5.85 cr. to Shri Anil Goyal in FY 2012-13 (AY 201314). The said loan of Rs. 5.8 5 cr. has been added in the assessment order of Anil Goyal in AY 2013-14 dated 29-12-2017, refer page 315326. Out of the said loan of Rs. 5.85 cr., a sum of Rs. 1.43 cr. was refunded back to Seaview Agencies in the same year, being FY 2012-13. This repayment of loan was reinvested in the assessee company to the tune of Rs. 50,00,000/-. Since the source of Rs. 50,00,000/- had already been taxed, adding the same again will tantamount to double addition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/143(3) of the Act dated 17-02-2011, refer page 281-282 of the paper book. This share capital received by the party was reinvested in share capital of the assessee company in the relevant year. Thus, the source of share capital raised by the assessee during the year is an explained credit and no addition is warranted w.r.t the share capital raised by the assessee from this party as the source is explained. VedantVincom Pvt Ltd 1,90,00,000 VedantVincom Pvt Ltd gave a loan of Rs. 6.28 cr. to Shri Anil Goyal in FY 2012-13 (AY 2013-14). The said loan of Rs. 6.28 cr. has been added in the assessment order of Anil Goyal in AY 201314 dated 29-12-2017, refer page 315- 326. A part of the said loan was refunded back to the party in the same year, being FY 2012-13. This repayment of loan was reinvested in the assessee company to the tune of Rs. 1,90,00,000/-. Since the source of Rs. 1,90,00,000/- had already been taxed, adding the same again will tantamount to double addition. 9,99,96,000 Narsingh Ispat Limited AY-2014-15 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SHARE APPLICANT AMOUNT IN (Rs.) SUBMISSION BEFORE AO Honesty Dealers Pvt. Ltd. 29,50,000 Share Capital of Rs. 14,80,00,000/- was raised by Honesty Dealers Pvt Ltd during FY 2008-09. The said sum of Rs. 14.80 cr. had already been added in the assessment order of Honesty Dealers Pvt Ltd for AY 2009-10 dated 12-03-2015 passed u/s 144/263/143(3)/147 of the Act. This share application money received by the party was reinvested in share capital of the assessee company in the relevant year. Since the source of share capital raised by the assessee during the year has already been taxed, adding the same again will tantamount to double addition. Refer page 77-119 of the paper book. Seaview Agencies Pvt. Ltd. 22,65,000 Seaview Agencies Pvt Ltd gave a loan of Rs. 5.85 cr. to Shri Anil Goyal in FY 2012-13 (AY 2013-14). The said loan of Rs. 5.85 cr. has been added in the assessment order of Anil Goyal in AY 2013-14 dated 29-12-2017, refer page 315-326 of paper of Narsingh Ispat Ltd. AY2013-14. Out of the said loan of Rs. 5.85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital raised by the assessee from this party as the source is explained. 1,58,00,000 Narsingh Ispat Udyog Private Limited AY-2014-15 SHARE APPLICANT AMOUNT IN (Rs.) SUBMISSION BEFORE AO Reliable Commodeal Pvt. Ltd. 1,80,00,000 Share Capital of Rs. 17,24,00,000/- was raised by this party in FY 2008-09. During reassessment proceedings of this party for AY 2009-10, the share capital raised by this party was duly examined by its learned AO and the same was accepted by him as genuine. Accordingly, no addition was made in the assessment order passed u/s 147/143(3) of the Act dated 06-08-2012, refer page 47-48 of the paper book. This share capital received by the party was reinvested in share capital of the assessee company in the relevant year. Thus, the source of share capital raised by the assessee during the year is an explained credit and no addition is warranted w.r.t the share capital raised by the assessee from this party as the source is explained. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh capital was raised during the relevant year to warrant any addition u/s 68 of the Act. The following two companies were merged with the assessee company pursuant to the Scheme of amalgamation sanctioned by the order dated 07-02-2019 of the Hon'ble National Company Law Tribunal, Kolkata Bench w.e.f. 01-04-2017. 1. Reliable Commodeal Pvt Ltd 2. Seaview Agencies Pvt Ltd The amalgamation order was received by the assessee in the month of February 2019. By that time the accounts of FY 2017-18 were already audited, therefore, the effect of the merger was incorporated in FY 2018-19, refer page 44-47 of the paper book. It was submitted that no fresh capital was raised by the assessee from these companies in the relevant year. The increase in share capital recorded in the audited accounts of FY 2018-19 was on account of the effect of amalgamation. The share capital was raised by these transferor companies much before the relevant AY 2018-19. Certificate from a practicing CA confirming that no fresh share capital was raised by the assessee from these companies is enclosed at page 42 of the paper book. 9. However, the learned AO was not satisfied with the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meters so that to attract huge amount of investment. It is hard to digest as to what prompted the assessee company to invest such huge amount without verifying financial credentials, existence, business operations and management of the companies in whose share investment is made. Therefore, it can be concluded that the investment was bogus in nature. (h) The assessee was duly given the opportunity for cross examination on 23.2.2022 and 28.12.2022. But neither the assessee nor Mukesh Banka nor Pankaj Agarwal was appeared on those days. In the light above discussion vis-a-vis the facts and circumstances in the instant case as well as the assessee s inability to discharge its own burden of proof to substantiate identity creditworthiness of party and genuineness of transaction of share application received. 32. On the other hand, ld. D.R. relied upon the order of the ld. Assessing Officer and submitted that ld. Assessing Officer has made reference to the statements of Shri Mukesh Banka recorded by the Investigating Agency of the Department as well as the statement of Shri Pankaj Aggrawal and thereafter recorded a finding that the assessee failed to fulfil the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply for shares and then give share application money. This amount received from such share holder would naturally be credited in the books of accounts of the assessee. Once the alleged share capital is credited to the accounts of the assessee, then role of section 68 would come. It is pertinent to take note of this section. It reads as under: Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the officer, satisfactory the sum so credited may be charged to income tax as the income of the assessee of that previous year. 35. A perusal of the section would indicate that basically this section contemplates three conditions required to be fulfilled by an assessee. In other words, the assessee is required to give explanation which will exhibit nature of transaction and also explain the source of such credit. The explanation should be to the satisfaction of the AO. In order to give such type of explanation which could satisfy the AO, the assessee should fulfill three ingredients viz. (a) identity of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. Both these authorities primarily went by the fact that the assessee had provided sufficient indication by way of permanent account numbers, to highlight the identity of the share applicants, as well as produced the affidavits of the directors. Furthermore, the bank details of the share applicants too had been provided. In the circumstances, it was held that the assessee had established the identity of the share applicants, the genuineness of transactions and their creditworthiness; The Assessing Officer chose to proceed no further but merely added the amounts because of the absence of the directors to physically present themselves before him. The Income-tax Appellate Tribunal has relied upon a decision of this court in CIT v. fair Finvest Ltd. [2013] 357 ITR 146 (Delhi), where in somewhat similar circumstances, it was stated as follows (page 152) : This court has considered the submissions of the parties. In this case the discussion by the Commissioner of Income-tax ITA No.3619/Ahd/2015 (Appeals) would reveal that the assessee has filed documents including certified copies issued by the Registrar of Companies in relation to the share application, affidavits of the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO particularly when the seven share applicant companies through their present Directors have now again filed fresh affidavits confirming the application and allotment of shares with respect to the total amount of Rs. 45 Lacs. It is observed that no attempt was made by the AO to summon the Directors of the share applicant companies. Moreover, it is settled law that the assessee need not prove the source of source . Accordingly it was incumbent upon the department to have enforced attendance of Shri Mahesh Garg or the erstwhile Directors of the share applicant companies and confronted them with the evidences affidavits relied upon by the appellant and thereupon given opportunity to the assessee to cross examine these applicants. 38. In the light of above, if we peruse the assessment order, then it would reveal that inspite of search the Department was unable to lay its hands on any incriminating material. The ld. Assessing Officer though tried to pass the assessment order as a regular assessment order but what he has referred is the statement of Shri Mukesh Banka only. Thereafter his observations are peripheral in nature demonstrating the credential of the share applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Udyog Pvt Ltd (AY 2018-19) No fresh capital was raised during the relevant year to warrant any addition u/s 68 of the Act. The following six (6) companies were merged with M/s BakshiramUderam Holdings Private Limited pursuant to the Scheme of amalgamation sanctioned by the order dated 09.05.2019 of the Hon'ble National Company Law Tribunal, Kolkata Bench w.e.f. 01-04-2017. i. M/s Everlite Suppliers Private Limited; ii. M/s Keynote Suppliers Private Limited; iii. M/s VedantVincom Private Limited; iv. M/s Annex Distributors Private Limited; v. M/s LakshyaTradecom Private Limited; vi. M/s Bumpur Infrastructure Private Limited. The following two companies were merged with Narsingh Ispat Udyog Pvt Ltd by the order dated 07-02-2019 of the Hon'ble National Company Law Tribunal, Kolkata Bench w.e.f. 01-04-2017 i. Reliable Commodeal Pvt Ltd ii. Seaview Agencies Pvt Ltd The amalgamation order was received by the assessee after the audit of accounts for FY 2017-18. Therefore, the effect of the merger was incorporated in FY 2018-19 in both these cases. Certificate from a practicing CA confirming that no fresh share capital w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Bakshiram Uderam Holdings Pvt. Limited w.e.f. 1st April, 2017. Whatever share application money they have raised could not be tinkered with by the ld. Assessing Officer. Once in an amalgamation petition, all these facts have been recognized and their status has been merged in Bakshiram Uderam Holdings Pvt. Limited. In other words, in the hands of the successor, this aspect cannot be enquired into after the amalgamation. For this purpose, ld. Counsel for the assessee relied upon the decision of the Hon ble Supreme Court in the case of Dalmia Power Limited (112 taxmann.com 252). Similar is the position with regard to Narsingh Ispat Udyog Pvt. Limited. Two companies have merged and the National Company Law Tribunal has amalgamated all these companies w.e.f. 01.04.2017. The assessee has demonstrated that in this year neither Bakshiram Uderam Holdings Pvt. Limited has raised any share capital money nor Narsingh Ispat Udyog Pvt. Limited. Whatever action has done in the past by their share applicants cannot be investigated in the hands of the assessee after amalgamation. Therefore, we are of the view that in view of the National Company Law Tribunal s decision on the amalgamation pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
