EMPORIS PROJECTS LTD.,SURAT vs. ITO, WARD-2(1)(1),, AHMEDABAD

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ITA 250/AHD/2018Status: DisposedITAT Ahmedabad17 May 2024AY 2012-13Bench: MS. SUCHITRA R. KAMBLE (Judicial Member)9 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided that the additions made under Section 68 of the Income Tax Act for share capital/premium and unsecured loans were erroneous. The CIT(A) had confirmed these additions without proper consideration of the facts and legal precedents.

What were the facts?

The assessee company, incorporated in 1995, had nominal receipts until 2011. In FY 2010-11, it engaged Sh. Shirish C. Shah to raise funds through equity warrants and preferential shares. Subsequently, during the same financial year, an application was made for funds raising.

What were the issues?

The primary issues were whether additions under Section 68 for share capital/premium and unsecured loans were justified, especially when the funds were received in earlier years and the company was alleged to be a conduit. The jurisdiction of the CIT(A) was also questioned.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: MS. SUCHITRA R. KAMBLE & SHRI MAKARAND V. MAHADEOKAR, ACCOUNTNAT MEMBER

For Appellant: Shri Mehul K. Patel, Advocate
Hearing: 08/05/2024Pronounced: 17/05/2024

PER MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER:

The present appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals)-6, Ahmedabad (hereinafter referred to as 'CIT(A)’) dated 30.11.2017, pertaining to the Assessment Year 2012-13, which has arisen from the order passed by the Assessing Officer dated 30.3.2015 under section 143(3) of the Income Tax Act, 1961(hereinafter referred to as 'the Act').

2.

The assessee has raised following grounds of appeal:-

1.

Under the facts and circumstances of the case, the appellate order passed by the Ld. CIT (A)-6, Ahmedabad is illegal being passed without any jurisdiction over the case of the appellant which was centralized with DCIT, Central Circle - 2(2), Mumbai vide order of Pr. CIT - 2, Ahmedabad on 23/09/2015 and thus, CIT(A)-48, Mumbai had jurisdiction over its case and a specific request for transfer of the same to current jurisdiction was made before the Ld. CIT(A)-6, Ahmedabad. Asst. Year : 2012-13 2

2.

That the Ld. CIT(A) grossly erred in law by violating the principle of judicial consistency as well as in facts of the case in ignoring the appellate orders in the cases of other group companies wherein similar additions under Section 68 of the Act were deleted by Ld. CIT(A)-48, Mumbai and the assessment order was set-aside by the Hon'ble ITAT, Mumbai.

3.

That the Ld. AO erred in facts of the case in making additions of share capital/ premium of Rs. 44,28,50,300/- u/s 68 of the Act which were received by the appellant during earlier years and Ld. CIT(A) grossly erred in law in confirming the said additions only on the contention that no rectification application was filed by the appellant before the Ld. AO.

4.

That the Ld. AO erred in law in making additions of share capital/ premium of Rs. 158,91,92,900/- u/s 68 of the Act in the case of the appellant company despite the irrefutable fact that the appellant company is a conduit/ paper/ shell company.

5.

The Ld. CIT(A) has grossly erred in law in confirming additions of Rs. 158,91,92,900/- u/s 68 of the Act in the case of the appellant company by differentiating the judgment of Hon'ble High Court of Delhi in the case of Pr. CIT vs Vijay Conductors India Pvt. Ltd. 2015-TIOL- 2337-HC-DEL-IT on the premises that in the said case the fact of being conduit company was evident from the order of Hon'ble ITS and no such order existed in the case of the appellant despite the fact that search and survey actions were undertaken on the basis of these allegations itself.

6.

That the Ld. AO erred in facts of the case in making additions of unsecured loans of Rs. 5,37,43,270/- u/s 68 of the Act which were received by the appellant during earlier years and Ld. CIT(A) grossly erred in law in confirming the said additions only on the contention that no rectification application was filed by the appellant before the Ld. AO.

7.

That the Ld. AO erred in law in making additions of unsecured loans of Rs. 41,51,48,270/- u/s 68 of the Act in the case of the appellant company despite the irrefutable fact that the appellant company is a conduit/ paper/ shell company.

8.

The appellant craves leave to add, alter, modify, and withdraw any ground of appeal before or during the appellate proceedings. Facts of the case:-

3.

The assessee company was incorporated on 24/03/1995 with an object to carry on the business of trading in equity shares, however, the company had Emporis Projects Ltd Vs. ITO Asst. Year : 2012-13 3

nominal receipts and income till 2011. The appellant company with a view to undertake business activities and expand itself needed funds. During the F.Y. 2010-11, Sh. Shirish C. Shah who had sound knowledge in Financial and Capital market entered into the company and proposed to raise funds for the company through various products like Convertible Equity Warrants/ Preferential issue of equity shares against the traditional fund-raising options like debt. On the basis of various presentations and explaining the huge potential of value creation, company engaged the services of Sh. Shirish C. Shah. The assessee company provided him with all the relevant documents and formalities for funds raising programme. Thereafter, during the F.Y. 2010-11 itself, an application was made to the

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