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Income Tax Appellate Tribunal, DELHI BENCHES: ‘A’, NEW DELHI
Before: SHRI G.D. AGRAWAL & SMT. BEENA A PILLAI
(Appellant) (Respondent) Assessee by : Smt. Prelata Bansal, Sr. Adv. Shri Pranshu Singhal, CA Revenue by : Shri Sridhar Dora, Sr. DR Date of Hearing : 05/12/2018 Date of Pronouncement: 11/12/2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against order dated 13/04/18 passed by Ld. CIT (A)-2, New Delhi for assessment year 2009-10 on following grounds of appeal:
1. “That the Ld.CIT(A) has erred in law and on facts in confirming the order passed by the Assessing Officer making addition of Rs. 50,90,000/- to the income of assessee.
2. That the Ld. CIT(A) has erred in confirming the addition of Rs. 50 lakhs made by the Assessing Officer u/s 68 of the Act ignoring the material produced by the assessee and the evidences directly produced by the shareholder companies M/s Virgin Capital Services Pvt. Ltd. and M/s Mani Mala Delhi Properties Pvt. Ltd. in pursuance to notices u/s 133(6) of the Act. 1
3. That the Ld. CIT(A) and the Assessing Officer have erred in law and on facts in holding that the assessee had not established genuineness of the share capital of Rs. 50 lakh subscribed by M/s Virgin Capital Services Pvt. Ltd. and M/s Mani Mala Delhi Properties Pvt. Ltd.
4. That the Ld.CIT(A) has erred in holding that the transactions entered into by the assessee allotting share capital to the two companies were sham. 5. That the Ld. Assessing Officer and the CIT(A) have not brought any material on record, independent of the information received from the Investigation Wing, to prove that the amount subscribed by way of share capital by the two companies was undisclosed income of the assessee. 6. That the assessee had discharged the burden laid down upon him u/s 68 of the Act by adducing the evidence before the AO as required by him. Even the share subscribers had directly adduced the evidences before the AO as per his direction. Hence, the burden was shifted on the Department to prove that the share capital issued by the assessee to the two companies were not genuine. Mere information from the Investigation is not sufficient to make addition to the income of assessee u/s 68 of the Act. 7. That the order passed by the CIT(A) is perverse when he ignored the material fact that the assessee was not confronted with the investigation carried out by the Investigation Wing or was given an opportunity to cross examine the persons whose statements were recorded by the Investigation Wing. 8. That the Ld.CIT(A) has erred in law and on facts in confirming the addition of Rs. 90,000/- made by the AO on account of unexplained investment in the form of expenditure @1.8% of Rs. 50,000/-. 9. That the Ld. CIT(A) has arbitrarily confirmed the order passed by AO on surmises and conjectures ignoring all the material produced by the assessee as well as share subscribers. Hence the order passed by CIT(A) is perverse in law and on facts. 10. That the appellant seeks leave to add, amend, alter, abandon or substitute any of the above grounds during the hearing of the appeal.”
Brief facts of the case are as under: Assessee filed its return of income on 31/03/10 declaring total income of Rs.3,19,610/-, which was processed under section 143(1) of the Act. Thereafter on 16/03/16, Ld.AO issued notice under section 148 of the Act, requiring assessee to file return for assessment year 2009-10. Reasons recorded for reopening were provided to assessee. Subsequently, assessee vide letter dated 28/06/16 requested Ld.AO to treat the return originally filed under section 139 as return filed, pursuant to notice under section 148 of the Act. Assessee also filed objections for reopening.
During reassessment proceedings, Ld.AO observed that subsequent to processing of return of income originally filed by assessee under section 143(1) of the Act, information was received from Investigation Wing on 12/03/13, wherein, documents were seized pursuant to search at S.K. Jain Group. Seized materials revealed that, accommodation entries in form of share capital/premium/loan during financial year 2008-09, were received by assessee amounting to Rs.50 Lacs from two companies by name Virgin Capital Services Pvt. Ltd., and Mani Mala Delhi Pro Pvt. Ltd., amounting to Rs.35 Lacs and Rs.15 lakhs respectively. It is observed that Ld.AO issued notices under section 133(6) to said companies, who had alleged to have invested to share capital of assessee. 3.1 Be that as it may, Ld. AO called for details from assessee in relation to entries alleged to be share capital in hands of assessee. Assessee filed its objections in respect of reassessment, and requested Ld. AO to provide copies of confirmations filed by 3 creditor companyies. The Ld. AO while dealing with other objections, rejected such request of assessee, by observing that only those documents which would be used against assessee could be provided. 3.2 Thereafter, Ld. AO proceeded to discuss upon the information received from investigation wing having regard to the evidences seized from SK Jain group. The Ld. AO again show cause assessee to explain credit within the meaning of section 68 and to establish identity, creditworthiness and most importantly genuineness of transactions. Assessee in reply filed its copies of accounts pertaining to financial year under consideration, bank statements, income tax returns, justification of share premium received and the nature of transaction.
Ld.AO upon perusal of details filed by assessee, was of opinion that, assessee has failed to discharge burden of proof under section 68 of the Act, by not supplying any details pertaining to alleged 2 companies, who have found to have invested alleged share capital with assessee. He, thus, made addition under section 68 of the Act in the hands of assessee to the extent of Rs. 50 Lacs being credited in the books of account of assessee.
Aggrieved by order of Ld. AO assessee preferred appeal before the Ld. CIT (A). Who confirmed the order of Ld. AO.
Aggrieved by the order of Ld. CIT (A) assessee is in appeal before us now.
Ld. Counsel submits that, during first appellate proceedings, assessee obtained by way of RTI application, confirmations filed by creditor companies. She submitted that, 4 Assessing Officer did not consider and verify confirmation letters filed by creditor companies, wherein, they have confirmed money having deposited with assessee towards share application. Referring to pages 25-45 of paper book, Ld. Counsel submitted that, all details have been filed by creditors before Ld. AO in response to notice issued under section 133(6) of the Act.
Ld. Counsel submitted that assessee has thus discharged onus cast under section 68 of the Act and, addition made by Ld. AO u/s 68 is not justified.
On contrary, Ld. Sr. DR submitted that all details relied upon by Ld. Counsel for assessee has been obtained by assessing officer by issuance of notice under section 133(6) of the Act. She submitted, it is surprising that assessee having accepted share application money from these creditors, do not possess any details, that could establish their identity, creditworthiness and most importantly genuineness of transaction.
We have perused submissions advanced by both sides in light of records placed before us. 10.1 Documents relied upon by Ld. Counsel placed in paper book referred to herein above, has admittedly not been considered by Ld.AO. It is observed that, these documents were available with Assessing Officer during assessment proceedings. Even Ld. CIT(A) failed to consider the same. At this juncture, we are not in a position to accept argument of Ld. Counsel that, mandate under section 68 stands discharged by assessee with confirmations having received from creditor companies by Ld.AO. Section 68 requires assessee to furnish all necessary details regarding credit entries in books of accounts and to establish 5 identity, creditworthiness and most importantly genuineness of transaction before Ld.AO during assessment proceedings Assessee has failed to furnish anyevidence/proof in relation to the creditor companies. Further in our considered opinion, Ld.AO should have considered confirmations and evidences received from alleged creditors during assessment proceedings.
We are, therefore, inclined to set aside this issue back to Ld.AO for de novo consideration, in light of confirmations/evidences received from creditor companies, as per law. Assessing officer is to take all necessary steps to verify such details, and to call for any other details that may be required for purposes of verifying credit entries in books of account of assessee. Assessee is directed to place before Ld.AO, all necessary details/documents as called for, and to file all any such evidences that may be required in order to establish its claim. Needless to say that if with the help of these evidences and any investigation undertaken by Ld.AO, alleged credit entries stands explained as per law, no addition is to be made in the hands of assessee. Accordingly the grounds raised by assessee stands allowed for statistical purposes. In the result appeal filed by assessee stands allowed. Order pronounced in the open court on 11/12/2018