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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI N. K. BILLAIYA & SHRI YOGESH KUMAR U.S.
This appeal is filed by the assesseefor assessment year 2012-13against the order of the ld. Commissioner of Income Tax (Appeals)–33, New Delhi [hereinafter referred to CIT (Appeals), dated 02.05.2017.
M/s. Metashine Industries, ND.
The assessee has raised the following substantive grounds of appeal :-
“1. That the action of the Hon’ble Commissioner of Income Tax (Appeals)-33, New Delhi by confirming the action of Assessing Officer regarding addition under Section68 for amount of Rs. 1,50,00,000/- received as Share Capital is unjust, arbitrary and against the natural law and justice.
2. That the action of the Hon’ble Commissioner of Income Tax (Appeals)-33, New Delhi by confirming the action of Assessing Officer regarding disallowance of ROC fees for enhancement of Authorized Share Capital of the appellant company amounting to Rs. 1,31,600/- during the course of running business activities of the company is unjust, arbitrary and against the natural law and justice.”
Brief facts of the case are that, the assessment order came to be passed on 25/03/2005 u/s 143(3) of the Act by making addition of Rs. 1,50,00,000/- received as share capital by the assessee treating the same as unexplained cash credit u/s 68 of the Act. Further an amount of Rs 1,31,600/- has been disallowed u/s 37(1) of the Act. Further, a sum of Rs. 2,5,66/- claimed as expenditure on account of interest and penalty paid has been added back to the total incomeand computed the incomeof the assessee at Rs. 1,87,91,936/- as against the return income of Rs. 36,57,770/-.
As against the assessment order dated 25/03/2015, the assessee has filed an Appeal before the CIT(A). The Ld.CIT(A) vide order dated 02/05/2017 dismissed the Appeal by confirming the additions made by the Ld. A.O.
M/s. Metashine Industries, ND.
Aggrieved by the order dated 02/05/2017, the assessee has preferred the present Appeal on the grounds mentioned above. When the case called, neither the assessee nor his representative werepresent. It is found that neither the assessee nor its representative were present on the previous occasion also. Therefore, we find that the assessee is not interested to proceed with the present Appeal, therefore we are compelled to decide the appeal after hearing the Ld. DR and verifying the material on record.
The Ld. A.O. while making the additions specifically observed that the assessee has not filed any concrete evidence or justification to prove the identity, creditworthiness and genuineness of the transaction entered with the Companies from which the shares have been purchased by the assessee. Further, the assessee has not furnished any requisite details called by the A.O., the assessee has also not filed any document to verify the identity, creditworthiness and genuineness of the transaction of the share capital money claim to have been received by the assessee from Smt. Veena Jindal. Therefore, the Ld. A.O found that the assessee Company had taken accommodation entry from Veena Jindal by routingits own accounted money. The Ld.CIT(A) while confirming the addition has also elaborately consider the above aspects which are reproduced hereunder: - “ 4.6.7. From the balance sheet of M/s RTK Industries (India) Pvt. Ltd. it is noted that on 31/03/2012 an outstanding balance of Rs. 1,50,01,000/- is shown receivable from Mrs.' VeenaJindal.
4.6.8. From the bank account of Mrs. Veena Jindal in Allahabad bank it is noted that on 04/01/2012 Rs. 1,05,00,500/- was received and on the same day a bankers check of Rs. 1,05,00,055/- was got made in favour of M/s Metashine Industries. Further, from her bank account in Punjab National Bank it is noted that a sum of M/s. Metashine Industries, ND.
Rs. 45,00,500/- was received on 04/01/2012 out of which Rs.45 lakh was transferred to M/s Metashine Industries on the same day. It is also noted that these are few of the substantial entries in these bank accounts.
4.6.9. From the above observations it is clear that exact amount of money was received in the bank accounts of Mrs Veena Jindal just before the advancing of the alleged share application money to the appellant. Mrs Veena Jindal has no sources of income or accumulated savings from which she will generate the capacity to pay such a huge amount.
4.6.10. It is also noted from the balance sheet of M/s R.T.K. Industries (India) Pvt. Ltd. that the company has outstanding receivables amounting to Rs.7,69,18,915/- from Mr. Kusarga Jindal (son of Mrs. Veena Jindal) and, Rs.1,40,13,000/- from Mr. Vijandra Nath Gupta included in total short time loans and advances amounting to Rs. 12.59 crore which have increased from 1.7 crore on 31.03.11. On the other hand trade payables as on 01.03.12 include Rs.3.1 crore (IT Pvt. Ltd.), Rs.3.24 crore (Paramount Industries), Rs.3.29 crore (Unvika Industries), Rs.1.54 crore (Kashvi Metals) Rs. 1.02 crore (Manraj Enterprises) etc. The trade payables have increased from Rs.79.82 lakhs as on 31.03.12 to Rs.14.17 crore on 31/03/2012. Interestingly, the trade payable in respect of the present appellant have also increased from zero to 1.65 crore during this period.
4.6.11. What is visible here is that R. T. K. Industries has given loan to Ms. Veena Jidnal who in turn applied for the shares of the appellant company. The appellant company has anadvance
M/s. Metashine Industries, ND. receivable from M/s R.T.K. Industries. Son of Mrs. Veena Jindal (Shri Kusagra Jindal) also owes Rs. 7.7 crore to M/s R.T.K. Industries. Clearly, these transaction have something which is not visible to naked-eye.
4.6.12. As Mrs. Veena Jindal did not comply with the summons issued by the Assessing Officer and the counsel of the appellant cited grounds of health for her non appearance (item no 4 of Para 4.2.1 above), in order to ascertain the creditworthiness and capacity to pay of Mrs. Veena Jindal & the genuineness of the transaction, a video call was made to Mrs. Veena Jindal on 13.04.17 at 12:10 PM. The call was facilitated by her son Mr. Kusharg Jindal. She appeared to be frail and informed that there is a hairline fracture in L-2 of her spine and she is not able to move much. On inquiry about the investment in the appellant company she stated that about one or one and a half crore were given to the company of her sister’s son. She also stated that the company of her sister’s son deals in gold. She further stated that the money is given on loan and is supposed to come back but has not come back yet. She also stated that she received the money from the company of her son and invested in the appellant company through shares. She further stated that she is a housewife, has no source of income and does not know much about it.
4.6.13. After considering every submission of the appellant in the above paragraphs with due application of mind, I hold that the decision of the Assessing officer is arrived at by proper application of mind and after making the necessary enquiries and giving sufficient opportunity to the appellant to present his case. I further hold that the conclusion drawn by the Assessing .Officer is in accordance with M/s. Metashine Industries, ND. law and consistent with judicial pronouncements by higher authorities. In the facts and circumstances of the case, reaching the other conclusion was not possible for the Assessing Officer.
The above said approach of the Ld.CIT (A) by upholding the addition made by the Ld. A.O is found to be well reasoned, and the same is based on the finding and appreciating the facts. Therefore, in our opinion the same requires no interference. Moreover, the assessee remained absent and not produced any material contrary to the findings of the lower authorities. Thus, the Ground No. 1 raised by the assessee is liable to be dismissed.
In so far as, Ground No. 2 is concerned,the Ld. A.O has asked the assessee to furnish details for expenses claimed by the assessee in respect of ROC expenses including professional fees paid in increasing authorized share capital. Based on the details filed by the assessee Company, it is notices that an amount of Rs. 1,31,600/- has been incurred on account of ROC fees and balance amount of Rs. 5,900/- pertain to expenses incurred on account of professional fees. Since, the expenditure made towards increase of authorized share capital i.e. ROC expenses is of capital in nature, an amount of Rs. 1,31,600/- has been disallowed u/s 31(1) of the Act which has been upheld by the Ld.CIT(A). It is well settled law that the said expenditure must be capitalexpenditure on the ground that the fees paid to the Registrar for expansion of the capital base of the Company is directly related to the extension of the capital base of the Company asheld Punjab State Industrial Development Corporation Ltd. Vs. CIT225ITR792(SC):140 CTR(SC)594 and Broke Bond India Ltd. Vs. CIT 225 ITR 798 (S.C):140 ITR (S.C) 598.
M/s. Metashine Industries, ND.
Therefore, we do not find merit in the Assessee’s Grounds of Appeal No. 2. Accordingly, we dismiss the Ground No. 2.
In the result, the Appeal filed by the assessee is dismissed.
Order pronounced in the open court on :10/08/2022.