ITO, WARD- 15(4), NEW DELHI vs. LOVE KUSH SECURITIES PVT. LTD., NEW DELHI

The above captioned two separate appeals by the Revenue and 2 separate cross appeals by the assessee are preferred against two separate orders of the ld. CIT(A) – 5, New Delhi dated 27.03.2019 and 29.01.2018 pertaining to Assessment Years 2012-13 and 2013-14 respectively.

Since the underlying facts in the captioned cross appeals by the assessee are same, they are disposed of by this common order for the sake of convenience and brevity.

Representatives of both the sides agreed to address the appeals on the facts of A.Y 2012-13. On such concession, representatives were heard at length. Case records carefully perused.

Briefly stated the facts of the case are that the assessee company was incorporated on 22.01.1996 and is engaged in the business to advance money, either with or without security and give credit upon terms and conditions of the company according to loan policy and carrying on the business as investment company and to acquire and hold and otherwise dealing in shares/securities.

During the year under consideration, the main source of revenue was from interest income on advances/loans. While scrutinizing the return for A.Y 2012-13, the Assessing Officer came to know that the assessee has received share application money from various applicants as the company issued 1,45,190 equity shares having face value of Rs. 10/- to 36 share holders at a premium of Rs. 990/- per share.

The Assessing Officer received information from the ADIT, (Inv), Unit – III, New Delhi that a search and seizure operation was carried on 24.01.2013 on the Samyak Group. It was informed that during the course of post search proceedings, Samyak Projects Pvt Ltd otherwise was required to furnish details in respect of the sources of funds received by it for investment purpose.

One of such applicant was the assessee under consideration. To examine the source of the assessee, the Assessing Officer issued notice u/s 133(6) of the Act to the parties from whom the assessee has received share premium amount of Rs. 14.51 crores.

The assessee filed confirmations from the parties from whom share application money has been received alongwith copy of bank details.

The Assessing Officer was of the opinion that the applicants had no credit worthiness and notices sent u/s 133(6) of the Act were returned with the remark “No such company”.

Invoking the provisions of section 68 of the Act, the Assessing Officer was convinced that the assessee has failed to discharge the onus cast upon it and made addition of Rs. 14,01,90,000/- and further added Rs. 3,21,85,000/- as share application money pending allotment.

The assessee strongly agitated the matter before the ld. CIT(A).

It was brought to the notice of the ld. CIT(A) that out of 36 parties, the Assessing Officer has issued notice to 23 parties out of which, 21 parties responded and only notices sent to 2 parties were returned unserved.

On such fact, the ld. CIT(A) asked the Assessing Officer to submit remand report.

In his remand report, the Assessing Officer stated that his predecessor had issued notice u/s 133(6) of the Act to various parties from whom share capital was received, out of which some notices were received back unserved.

It was further mentioned in the remand report that the, the then Assessing Officer relied upon the investigation report and made addition u/s 68 of the Act.

The ld. CIT(A) examined the submissions thoroughly and found that each share applicant had sufficient net worth which is evident from the following charts:

Since no confirmations were received from the two companies, namely, M/s Mahadhan Vyapar Pvt Ltd for Rs. 10 lakhs and Jackpot Vintrade Pvt Ltd for Rs. 15 lakhs, the ld. CIT(A) confirmed the addition to the extent of Rs. 25 lakhs and having satisfied himself with the claim of the assessee that it has successfully discharged the initial onus cast upon it by provisions of section 68, deleted Rs. 16,98,75,000/-.

We have carefully perused the relevant material on record.

Appeal filed by the Revenue is dismissed and since transaction with the two parties remained unconfirmed, we also decline to interfere with the findings of the ld. CIT(A).

Appeal of the assessee is dismissed.

As mentioned elsewhere, facts and basis of findings of the ld. CIT(A) for A.Y 2013-14 are similar, which can be understood from the following uncontroverted factual findings:

Therefore, for reasons given hereinabove in A.Y 2013-14 also, appeal by the Revenue and assessee are both dismissed.

To sum up, In the result, the appeals of the Revenue in :