DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-13, NEW DELHI, JHANDEWALAN, DELHI vs. MINDA TG RUBBER PVT LTD, IMT
PER SUDHIR KUMAR JM:
The revenuepreferred these captioned appeals, challenging the order dated 19-06-2023 passed by Learned Commissioner of Income-
Tax Appeals -28, New Delhi (in short “Ld. CIT(A)”)passed by the Assessing Officer u/s 143(3) of the Income Tax Act 1961 (in short “the Act”) dated 15-12-2017 for the A.Y. 2015-16. 2. The revenue has raised following grounds of appeal in ITA No.
2433/Del/2023 A.Y. 2015-16
1. Whether on the facts and circumstances of the case, the Ld.CIT(A) is correct in deleting the addition made u/s 68 of the I.T. Act, 1961 amounting to Rs.10,00,00,000/- by stating that the assessee has duly discharged the onus that lay upon it u/s 68 of the Act despite the fact that assessee has failed to prove the creditworthiness and genuineness of subscribers who have made investment in the assessee company.
II. Whether on the facts and in law, the Ld.CIT (A) is correct in ignoring the facts that the fund which was 3
credited in the bank account of the investor company was debited on the same day in which it was received.
III. Whether on the facts and circumstances of the case the Ld.CIT(A) is correct in observing that requisite details and evidences were filed by the assessee to prove the creditworthiness and genuineness of the subscriber, despite the fact that based on their financial statements it was held that the subscriber companies is not doing any real business.
IV. Whether on the facts and in law, the Ld. CIT(A) is correct in ignoring the facts that the creditworthiness and genuineness of the share subscribers from whom share capital was received is not proved since they were showing meager returned income with negligible income from operations.
V. Whether on the facts and in law, the Ld.CIT(A) is correct in deleting the additions made by the AO, ignoring, the judgement of the Hon'ble Apex Court in DCIT vs NRA Iron and Steel Pvt Ltd in civil appeal No. 29855 of 2018. VI. Whether on the facts and in law, the Ld.CIT(A) is correct in deleting the additions ignoring the judgement of 4
the Hon'ble Delhi High Court in the case of N.R Portfolio Pvt
Ltd (ITA No. 1018/2011), wherein it is held that the transaction through bank accounts do not reflect the creditworthiness or even the genuineness of the transaction.
VII. a)Whether on law and facts of the case the order of the Ld. CIT(A) is erroneous and not tenable in law and on facts. (b)The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.
3. The revenue has raised following grounds of appeal in ITA No. 2434/Del/2023 A.Y. 2015-16:
1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is correct in deleting the addition made u/s 68 of the I.T. Act, 1961 amounting to Rs.10,00,00,000/- by stating that the assessee has duly discharged the onus that lay upon it u/s 68 of the Act despite the fact that assessee has failed to prove the creditworthiness and genuineness of subscribers who have made investment in the assessee company.
II. Whether on the facts and in law, the Ld.CIT (A) is correct in ignoring the facts that the fund which was credited into the bank account of the investor company was debited on the same day in which it was received.
III. Whether on the facts and circumstances of the case the Ld.CIT(A) is correct in observing that requisite details and evidences were filed by the assessee to prove the creditworthiness and genuineness of the subscriber, despite the fact that based on their financial statements it was held that the subscriber companies is not doing any real business.
IV. Whether on the facts and in law, the Ld. CIT(A) is correct in ignoring the facts that the creditworthiness and genuineness of the share subscribers from whom share capital was received is not proved since they were showing meager returned income with negligible income from operations.
V. Whether on the facts and in law, the Ld.CIT(A) is correct in deleting the additions made by the AO, ignoring, the judgement of the Hon'ble Apex Court in DCIT vs NRA
Iron and Steel Pvt Ltd in civil appeal No. 29855 of 2018. 6
VI. Whether on the facts and in law, the Ld. CIT(A) is correct in deleting the additions ignoring the judgment of the Hon'ble Delhi High Court in the case of N.R Portfolio
Pvt Ltd (ITA No. 1018/2011), wherein it is held that the transaction through bank accounts do not reflect the creditworthiness or even the genuineness of the transaction.
VII. Whether on the facts and in law, the Ld. CIT(A) is correct in deleting the additions of Rs.10,00,00,000/- made by the AO on protective basis by ignoring the judgement of Hon'ble Supreme Court in the case of Lalji
Haridas Vs ITO 43 ITR 387 (SC), 1961 and Hon'ble wherein, it is held that the 'Protective Assessment'- which in law should be allowed to remain as such- till the matters attain finality by Superior Courts-High Court or Hon'ble Supreme Court.
VIII. a) Whether on law and facts of the case the order of the Ld. CIT(A) is erroneous and not tenable in law and on facts.
(b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.
4. The brief facts of the case are that the assessee company M/s Maa
Rukmani Devi Auto Limited filed its return of income for A.Y. 2015-
16 declaring income at Rs. 4,62,580/- on 30-09-2015. The return of income was processed u/s 143(1) of the Act and was taken for scrutiny.
Notice u/s 143(2) was issued on 12-04-2016 and subsequently notice u/s 142(1) of the Act with questionnaire were issued and served upon the assessee. During the period under consideration, the Assessee company has raised fresh share at face value of Rs. 100/- each of Rs.
10,00,000/- with no security premium. The assessee company has allotted such share capital to Ziwani Barter Pvt. Ltd during the period of October 2014 to March 2015. The AO vide notice dated 16-08-2017
has asked to substantiate and creditworthiness of the allotee entity and directed to the file the various documents. In the reply of the notice the assessee company has furnished the detail reply before the AO.The AO has made the addition on the protective basis in the hands of the 8
assessee Minda TG Rubber Pvt. Ltd. and substantive in the hands of the M/s. Maa Rukamini Devi Auto Private Limited.
The A.O. was not satisfied with the reply submitted by the assessee. The A.O has made the addition of Rs.10,00,00,000/- u/s 68 of the Act on account of unexplained income and on account of commission paid to entry operators Rs. 2,96,292/- total Rs. 10.02.96.292/- and penalty proceedings u/s 271(1) (c) of the Act have also been initiated. 6. Aggrieved by the order of the AO the assessee has filed the appeals before Ld.CIT(A), who vide order dated 19-06-2023 partly allowedthe appeals against which the revenue have filed these appeals before the Tribunal. The Ld. CIT(A) has observed in his order as under: 5.3 I have considered the facts of the case and the submissions of the appellant placed on record. In this case the appellant allotted 1000000 redeemable preference shares at face value and no premium is involved in this case. Out of 10.00.000 preference shares, 3,50,000 preference shares have been redeemed by the appellant company and as such sum of Rs 3,50,00,000/- have been paid to investor company.
The company Ziwani Barter Ltd is assessed to Income tax and the assessment of Ziwani Barter Pvt Ltd for A Y 2009-10 and AY 2017-18
was completed u/s 143(3) of the Income Tax Act. In the order passed in the case of Ziwani Barter Pvt Ltd for A Y 2009-10 and AY 2017-18
it has not been held that Ziwani Barter Pvt Ltd is a shell company or source of investment is not genuine.
The AO has not brought out any evidence or material that Share capital received from shareholder is not genuine. There is no allegation or evidence that collateral payment changed hands. As such there is no allegation that in lieu of investment cash have been given by the assessee. There is no allegation or evidence that the assessee has earned unaccounted income so as to pay the cash in lieu of cheque received from investors. It is not the case that onus has not been discharged by the assessee as the documents to prove the identity, creditworthiness and genuineness in respect of share capital have been submitted by assessee during the course of assessment proceeding.
The appellant and investor company submitted replies to various notices and also furnished the documents required in support of identity, creditworthiness and genuineness of share capital. It has 10
been submitted that the test of identity of the shareholders is fully met as Ziwani Barter Pvt Ltd is a Pvt Ltd company and the same require the registration from the ROC with