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TMI Blog2025 (5) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... volves around the taxability of share application money of Rs. 2,24,00,000/- in the hands of (i) the recipient company; M/s Esteem Steel (P.) Ltd., on substantive basis and (ii) the share applicant; Sh. K. N. Shukla, on protective basis. Later on, the issue of non- recording of satisfaction note under section 153C of the Income Tax Act, 1961 (hereinafter, the 'Act') raised as additional ground in the case of M/s Esteem Steel (P.) Ltd. was admitted vide order sheet noting dated 20.05.2024. The relevant facts giving rise to these appeals are that the Income Tax Department conducted intrusive actions; i.e. Search and Survey operations under section 132 and 133A of the Act on various persons of Nitishree Group on 17.02.2006. Consequential assessment proceedings under section 153A and 153C of the Act, as the case may be, were initiated in the Group cases. The Assessing Officer (hereinafter, the 'AO') initiated the assessment proceedings under section 153C of the Act in the case of M/s Esteem Steel (P.) Ltd. and under section 153A of the Act in the case Shri K. N. Shukla. Consequential assessment of M/s Esteem Steel (P.) Ltd. of the relevant year was completed under section 153C r.w.s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requested for adjustment of taxes etc. Though Mr. Shukla has filed a letter to that extent but that cannot bring any relief to the assessee simply because the share application money has been shown in various names other than the name of Mr. Shukla in the accounts of the appellant. Further even till date the said share application money is lying with the appellant under the same head without being converted as share capital. It means no shares have been allotted to any of these persons who have said to have been contributed to the share application account. No genuine investor would be willing to keep their funds without any return on such investments or without their money being converted as share capital. All these facts basically prove one point that the amounts reflecting under share application money under various names is not explained with evidences, hence the same is to be assessed as income of the assessee from undisclosed sources under section 68 of the I. T. Act. In the course of appeal proceedings, the Ld. AR has argued that this amount cannot be assessed as a income of the assessee due to the recent decision of the Apex Court in the case of M/s Lovely Export Pvt. Ltd: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 31.12.2015 has been issued CBDT to this effect, a satisfaction note needs to be recorded in the case of the assessee by the Assessing Officer in case of the person(s) in whose case the search proceedings u/s. 132 of the Act were conducted and also by the Assessing Officer who has passed the assessment order u/s. 153C of the other person which is not subject to search, the same is absent in this case. In support of the said Additional Grounds, the Ld. Representative pointed out that the existence of the "Satisfaction Note" before making assessment u/s. 153C of the Act is mandatory and according to him the said aspect is missing in the present case. The Ld. Representative referred to an information sought by the Assessee under RTI Act, 2005 vide Application dated 12.9.2008, in response to which ACIT, СС-16, New Delhi vide reply Letter dated 23.10.2018 stated that the said information was not available in the records of the assessee in his office and that "it may be kept in another file". In this view of the matter, the Ld. Representative has sought time to justify the aforesaid Additional Grounds of Appeal. A perusal of record of proceedings reveal that vide order s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note for initiating proceedings in the hands of the appellant/company; M/s. Esteem Steel (P.) Ltd. It was argued that the Revenue had taken many adjournments for bringing the copy of the satisfaction note, if any, on the record but it failed to bring the same yet. The Ld. Counsel further drew our attention to the reply of the AO to the RTI application regarding recording of satisfaction note by the AO of the appellant company for initiating assessment proceeding under section 153C of the Act in the case of the appellant company; M/s. Esteem Steel (P.) Ltd. 7. We have heard both parties and have perused the material available on the record. We perused all the case laws relied upon. After careful consideration of material on the record and facts in entirety, we find force in the argument of the Ld. Counsel of the appellant company; M/s. Esteem Steel (P.) Ltd. We are of the considered view that the issue raised in additional ground is squarely covered by the decision of the Hon'ble Supreme Court in the case of Super Mall Pvt. Ltd. (supra) and the decision of the Hon'ble Delhi High Court in the case of Ganpati Fincap Services Pvt. Ltd. (supra). We therefore, following the reasoning gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of the surrendered letter duly signed by Shri K. N. Shukla wherein he had surrendered the said share application money of Rs. 2.24 Crores. The said surrendered letter is scanned as under: From: SHOURYA TOWERS PVT. LTD. D-44, Sector-6, Noida-201301 (U. P.) To. 31st July The Asstt. Comm. of Income Tax, 2006 Central Circle 21, New Delhi. Sub. Nitishree Group-Adjustment of income tax dues against the income surrendered and amount seized. Dear Sir, During the search proceedings u/s 132 in the case of above assesses a total surrender of Rs. 1522.98 Lacs was made as per explanation 5 to Sec 271(1)(c) read with Sec. 132(4) of the Income Tax Act, 1961. The complete details of the surrender in respect of each individual assessee are enclosed herewith. This surrender of Rs. 1522.98 Lacs was made on the condition that no penalty should be levied nor any prosecution proceedings will be initiated against any of the assessee as the disclosure / surrender is made to buy peace of mind, cooperate with the department and to avoid any litigation. The total tax along with interest due in respect of whole of the surrendered amount may kindly be intimated and adjusted against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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