PRIDE HOUSING & CONSTRUCTION PRIVATE LTD.,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX,

आदेश / ORDER

PER VIKAS AWASTHY, JM

This appeal by assessee is directed against the order of Commissioner of Income Tax (Appeals)-13, Pune dated 15.12.2015 for the assessment year 2009-10.

2 ITA No.288 /PUN/2016 A.Y.2009-10

u/s.132 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) was

conducted in the case of Pride Group on 07.09.2011. The assessee is one of

the Group companies. During the course of search proceedings, certain

documents were found and seized indicating receipt of share application

money by Pride group of companies from various alleged fictitious and non

genuine companies. The Assessing Officer on the basis of statement of one

Shri Jagadish Purohit and Shri Pradeep Gupta held that the assessee has

also received share application money from such shell companies engaged in

providing paper transactions. The Assessing Officer held that the assessee

has failed to discharge the liability of proving creditworthiness and

genuineness of the transactions and the investing companies. Consequently,

the Assessing Officer made addition of Rs.75,00,000/- by treating the same

as unexplained cash credit. The Assessing Officer further made addition of

Rs.56,250/- u/s.69C of the Act in respect of commission paid Shri Jagdish

Purohit, entry provider for arranging share application money transactions.

r.w.s. 143(3) of the Act, the assessee filed appeal before the Commissioner of

Income Tax (Appeals). The Commissioner of Income Tax (Appeals) confirmed

the addition made by Assessing Officer and dismissed the appeal of assessee.

Now, the assessee is in second appeal before the Tribunal assailing the

findings of CIT(A) in confirming additions of Rs.75,00,000/- u/s.68 of the Act

and addition of Rs.56,250/- u/s.69C of the Act on account of unexplained

expenditure.

the additions have been made primarily on the basis of statements of Shri

3 ITA No.288 /PUN/2016 A.Y.2009-10

Pradeep Gupta, Chartered Accountant and Shri Jagadish Purohit, entry

provider. The ld. AR pointed that statement of Shri Jagadish Purohit was

recorded u/s.131 of the Act on 19.10.2011 and the same is at page 19 to 27

of the paper book. In reply to Question No. 7 of the statement, Shri Jagadish

Purohit has given list of 34 companies which were controlled and managed by

him. However, assessee has not received share application money from any of

the companies mentioned in the statement of Shri Jagadish Purohit. The

statement of Shri Pradeep Gupta was recorded on 19.10.2011. In response to

Question No. 6, Shri Pradeep Gupta has given the name of 38 companies

wherein he was instrumental in incorporating the said companies on the

instruction of Shri Jagadish Purohit. The ld. AR submitted that none of the

companies listed by the Shri Pradeep Gupta, have applied for shares in the

assessee company. The assessee has received share application money from

three companies namely:

i) Khera Moter Finance Pvt. Ltd. (PAN No.AAAFK8628A)

ii) Roseberry Mercantile Pvt. Ltd. (PAN No.AABCR3485J)

iii) Sitaram Investment Limited. (PAN No.AACCS4036P)

Thus, the assessee has not received share application money from any

of the companies mentioned by either Shri Jagadish Purohit or Shri Pradeep

Gupta.

4.1 The ld. AR pointed that none of the three companies who have applied

for shares of the assessee are shell companies. All the three companies are

conducting their business regularly. The information from official website of

‘Ministry of Corporate Affairs’ would show that these companies have

regularly filed return under the provisions of the Companies Act and are

active. The Authorities below have failed to take into consideration the fact

4 ITA No.288 /PUN/2016 A.Y.2009-10

that assessee has received share application money from the afore-mentioned

three companies only and these companies do not figure in the list of

companies mentioned by Shri Jagadish Purohit and Shri Pradeep Gupta. The

Assessing Officer made addition merely on the basis of statement of Shri

Pradeep Gupta and Shri Jagadish Purohit. The First Appellate authority in

mechanical manner has upheld the findings of Assessing Officer. The ld. AR

fairly admitted that during First Appellate proceedings, it was not brought to

the notice of Commissioner of Income Tax (Appeals) that the share application

money was received by the assessee from afore-mentioned three companies

and the Assessing Officer has failed to take note of this fact though in

submissions before Assessing Officer, this fact was highlighted.

assessee for the first time has pointed before the Tribunal that the assessee

has received share application money from the three companies which are not

part of the list of companies mentioned by Shri Jagadish Purohit or Shri

Pradeep Gupta in their respective statements. The ld. DR submitted that the

genuineness and creditworthiness of these companies is required to be

verified. Therefore, the matter may be remitted to the file of Assessing Officer

for conducting further enquiries.

and have perused the orders of Authorities below. The assessee has raised as

many as 15 grounds in appeal. The ld. AR of the assessee has stated at the

Bar that he is not pressing ground No.1. Accordingly, the same is dismissed

as ‘not pressed’.

5 ITA No.288 /PUN/2016 A.Y.2009-10

Rs.75,00,000/- u/s.68 of the Act made by Assessing Officer in respect of

share application money allegedly received from shell companies. The

assessee purportedly received share application money from three companies’

i.e. :

i) Khera Moter Finance Pvt. Ltd. (PAN No.AAAFK8628A)

ii) Roseberry Mercantile Pvt. Ltd. (PAN No.AABCR3485J); and

iii) Sitaram Investment Limited. (PAN No.AACCS4036P).

A perusal of the assessment order shows that the Assessing Officer has

made addition of Rs.75,00,000/- by raising doubt over the genuineness of the

investing companies. The Assessing Officer has based his findings on the

statements of Shri Jagadish Purohit and Shri Pradeep Gupta. Shri Jagadish

Purohit in his statement recorded u/s. 131 of the Act while replying to

Question No.7 has given list of 34 companies which were controlled and

managed by him. Shri Pradeep Gupta in his statement has admitted that he

has incorporated the companies on the instruction of Shri Jagadish Purohit

and has given the list of 38 companies. However, we find that in the given list,

the name of the three companies from which the assessee has received share

application money is not mentioned. Though in the written submissions filed

before the Assessing Officer, name of the three companies from whom the

assessee is stated to have received share application money were mentioned

but the Assessing Officer has not taken cognizance of the same. During First

Appellate proceedings, the assessee has not brought this fact to the notice of

Commissioner of Income Tax (Appeals). Thus, we are of considered view, this

issue needs re-visit to the file of Assessing Officer to ascertain the correct

facts and to verify genuineness and creditworthiness of the investing

companies and the veracity of the transactions between the said companies

6 ITA No.288 /PUN/2016 A.Y.2009-10

and the assessee. The Assessing Officer while deciding the issue de-novo shall

grant reasonable opportunity of hearing to the assessee in accordance with

law. Thus, in view of the above, findings of Commissioner of Income Tax

(Appeals) on this issue are set aside and grounds Nos. 2 to 13 of the appeal

are allowed for statistical purposes.

u/s.69C of the Act. The Assessing Officer made addition in respect of

commission paid to Shri Jagadish Purohit for allegedly providing book entries

for share application money. We find that the addition is consequential to the

ground Nos.2 to 13 of the appeal. Therefore, we deem it appropriate to remit

the issue raised in ground No.14 of the appeal to the file of Assessing Officer

for re-adjudication along with the main issue (supra). Accordingly, ground

No.14 raised in appeal by assessee is also allowed for statistical purpose.

hence, requires no adjudication.

purposes.

Order pronounced on Friday, the 26th day of October, 2018.

Sd/- Sd/- R. S. SYAL VIKAS AWASTHY VICE-PRESIDENT JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 26th October, 2018 SB

7 ITA No.288 /PUN/2016 A.Y.2009-10

आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-13, Pune. 4. The CIT (Central), Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.