JSR FINANCIAL SERVICES PRIVATE LIMITED,FARIDABAD vs. ACIT, CIRCLE-1, FARIDABAD

This appeal in AY 2012-13 arises out of the order of the Commissioner of Income Tax (Appeals), Faridabad, [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No.10614/2018-19 dated 20.03.2020 against the order of assessment passed u/s 147/144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 20.12.2018 by the Assessing Officer, Circle-I, Faridabad, (hereinafter referred to as ‘ld. AO’).

The main crux of the grounds raised by the assessee could be summarized as under:- i) Proper opportunity of being heard not given to the assessee both by the AO as well as by the CIT(A); ii) Challenging the validity of reopening u/s 147 of the Act; and iii) Challenging the addition made in the sum of Rs.1,05,00,000/- u/s 68 of the Act in respect of share capital received.

We have heard the rival submissions and perused the material available on record. The return of income for the assessment year 2012-13 was filed by the assessee company on 29.09.2012 declaring total income at Rs.1,63,910/-. An information was received by the ld. AO vide e-mail dated 08.11.2017 from the Investigation Wing, Delhi, containing the names of certain beneficiary companies receiving cheques as share capital investment through conduit companies controlled and managed by Shri Himanshu Verma during the FY 2011-12. This information came to light during the search conducted in the hands of Shri Himanshu Verma u/s 132 of the Act. During the course of that search, the statements of Shri Himanshu Verma together with various other persons were recorded u/s 132(4) of the Act wherein it got revealed that Shri Himanshu Verma through his entities had been providing accommodation entries in the form of share capital to various companies. The e-mail received on 08.11.2017 contained the name of the assessee company also as one of the beneficiary companies. Accordingly, the assessment for the AY 2012-13 was sought to be reopened by the ld. AO u/s 147 of the Act. Notice u/s 148 of the Act was issued on 2 29.03.2018. In response thereto, no return had been filed by the assessee. The ld. AO, during the course of reassessment proceedings, sought to examine the veracity of the share capital received by it from the following persons:- Name Amount (Rs.) i. Delbella Township Pvt. Ltd. 25,00,000/- ii. Mithilanchal Investment & Finance Pvt. Ltd. 25,00,000/- iii. Shulini Realty Pvt. Ltd. 30,00,000/- iv. Vertable Township Pvt. Ltd. 25,00,000/- Total 1,05,00,000/-

As no details were furnished by the assessee before the ld. AO to prove the three ingredients of section 68 of the Act in respect of share capital received in the sum of Rs.1,05,00,000/-, the ld. AO proceeded to treat the same as unexplained cash credit u/s 68 of the Act. Even before the ld.CIT(A), none appeared before the ld.CIT(A) and the ld.CIT(A) upheld the action of the ld. AO.

Before us, the ld. AR made a statement from the bar that the address of the registered office of the company and the address of the directors were one and the same and that the directors had life threat and had to accordingly leave the said residence. Because of this, none of the notices issued by the lower authorities could be responded to by the assessee. The assessee had stopped broking activity from November, 2015. Moreover, the directors were also jailed in the year 2019. Because of these reasons beyond the control of the assessee, the notices could not be responded to. Accordingly he prayed for setting aside the entire issue to the ld. AO requesting for one more opportunity.

Considering the totality of the facts and circumstances of the case, we deem it fit and appropriate, in the interest of justice and fair play, to restore this appeal to the file of the ld. AO for denovo adjudication in accordance with the law. The assessee is at liberty to furnish various evidences in support of its contentions. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.