GLOWSHINE BUILDERS & DEVELOPERS PVT LTD.,MUMBAI vs. ITO 12(2)(3), MUMBAI

This appeal is filed by assessee for assessment year 2011 – 12 against the order passed by the Commissioner of income tax (appeals) – 20, Mumbai dated 25/9/2019 wherein the appeal filed by the assessee against the assessment order passed u/s 144 read with section 147 of the income tax act, 1961 dated 24/12/2018 was dismissed. Therefore, assessee is aggrieved and has preferred this appeal.

Assessee has raised following grounds of appeal:-

The learned departmental representative vehemently supported the orders of the lower authority and say that the facts of the case are clear that assessee is merely a paper company and the money that has been raised by the assessee has gone to the Sahara group.

We have carefully considered the rival contention and perused the orders of the lower authorities. During the year the case of the assessee is reopened by receipt of information from the investigation wing that there is an ICICI bank account opened in Uttar Pradesh in the name of the company whereas the registered office of the assessee is in Mumbai, assessee does not have any business worth naming and has issued share capital of ₹ 1,822,550,440/–. As there is an information received by learned AO about the share capital received by the assessee at a huge premium which does not support the financial of the assessee, the return of income of the assessee was examined, which did not show any financials

The ground number 5 and 6 are with respect to the merits of the addition of ₹ 1,822,550,440/– u/s 68 of the Income Tax Act. The assessee also challenges that the learned CIT – A did not afford proper opportunity. We find that the learned assessing officer did not have any information about the identity, creditworthiness, and genuineness of the transaction of issue of share capital of ₹ 1,822,550,440/–. In absence of any information before the learned assessing officer, he is duty-bound to make the addition u/s 68 of the Income Tax Act. As assessee has failed to discharge its initial onus, there is no infirmity

However, we find that the amount of share capital issued by the assessee along with two other companies namely Gold star Nirman private limited and Camilla Buildcon private limited, have bank accounts with ICICI bank Ltd, Sahara India complex, Kapurthalla , Lucknow, UP. All these three companies have huge share capital subscribed to them and the money from all these three companies are transferred to the Sahara group. All these three companies are managed and controlled by the directors and persons of Sahara group. For this reason, the companies are registered in Mumbai, but their bank accounts were operated from Lucknow. This coincidence is further corroborated from the fact that now the assessee in form number 36 has given its address which is also at Sahara India point. The company does not have any net

In view of the above facts, the confirmation of addition in the hands of this company will allow the real beneficiary of the above sum go Scott free. Accordingly, we set-aside the addition of ₹ 1,822,550,440/– added in the hands of the assessee u/s 68 of the Income Tax Act as unexplained share capital, back to the file of the learned assessing officer with a direction to the AO to issue enquiry letter to the banker of these company i.e. ICICI bank, Lucknow to find out who operated this account, the necessary summons to the director of this company as well as the company who received the above sum should also be issued and they must be examined before making addition in the hands of this assessee or deleting the addition. The AO is further directed to intimate/initiate if the transaction leads to any violation of the Prohibition of Benami

The appeal of the assessee is partly allowed.