Income Tax Appellate Tribunal - Raipur
Deputy Commissioner Of Income Tax ... vs M/S Lal Ganga Builders Pvt. Ltd., Raipur on 17 February, 2023
आयकर अपील य अ धकरण यायपीठ रायपुर म।
IN THE INCOME TAX APPELLATE TRIBUNAL,
RAIPUR BENCH, RAIPUR
BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER
AND
SHRI ARUN KHODPIA, ACCOUNTANT MEMBER
IT(SS)A Nos. 02 to 05/RPR/2022
नधारण वष / Assessment Years : 2012-13 to 2015-16
The Deputy Commissioner of Income Tax
(Central Circle-1), Raipur (C.G.)
.......अपीलाथ / Appellant
बनाम / V/s.
M/s. Lal Ganga Builders Pvt. Ltd.
201-202, 2nd Floor, Lalganga
Shopping Mall, Jaistambh Chowk,
Raipur (C.G.)
PAN : AAACL9016E
...... यथ / Respondent
Assessee by : S/Shri Sumit Nema, Sr. Advocate a/b. Amit
M. Jain, Gagan Tiwari, Advocates & Shri
Bikram Jain, CA.
Revenue by : Shri Debashish Lahiri, CIT-DR
सुनवाई क तार ख / Date of Hearing : 03.01.2023
घोषणा क तार ख / Date of Pronouncement : 17.02.2023
2
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
आदे श / ORDER
PER RAVISH SOOD, JM:
The captioned appeals filed by the revenue are directed against the respective orders passed by the CIT(Appeals)-3, Bhopal, dated 31.01.2022 & 28.01.2022, which in turn arises from the consolidated order passed by the A.O under Section 153A r.w.s 143(3) of the Income-tax Act, 1961 (in short 'the Act'), dated 26.12.2018 for assessment years 2012-13 to 2015-16 AND under Section 143(3), dated 31.03.2015 and 28.03.2016 for assessment year(s) 2012-13 and 2013-14, respectively (which are subsumed in the aforesaid subsequent orders passed u/s 153A r.w.s 143(3) of the Act, dated 26.12.2018). As the issues involved in the captioned appeals are inextricably interlinked or in fact interwoven, therefore, the same are being taken up and disposed off by way of a consolidated order.
2. We shall first take up the appeal filed by the revenue in IT(SS)A No.02/RPR/2022 for assessment year 2012-13, wherein the revenue has assailed the impugned order on the following grounds of appeal:
"1 "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition of Rs.10,59,00,000/- made by the AO on account of unexplained cash credit u/s.68 of the Income-tax Act, 1961?"
2. "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition made u/s.68 of Income-tax Act, 1961 by plainly accepting the plea of the assessee ignoring the fact that identity, creditworthiness and genuineness of the transactions could not be proved by the assessee".
3
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
3. "Whether on the facts and in law, the Ld. CIT(A) is right in holding that the additions were made in non-abated assessment year i.e. A.Y.2012-13 and in absence of any incriminating material and is not justified as per provision of section 153A of the Act?
4. "Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in ignoring decision of Hon'ble High Court of Kerala in the case of E.N gopakumar Vs CIT [2016 75 taxmann.com 215 (Kerala)], where in it is held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) of IT Act can be concluded against interest of assessee including making addition even without any incriminating material being available against assessee in search u/s.132 on basis of which, notice was issued to the assessee u/s.153A(1)(a) of the Act"
5. "Whether on the facts and in law, the Ld. CIT(A) is justified in ignoring the fact that third parties are directors of the investor companies who have already accepted in his statement they provided the accommodation entries to the company in lieu of commission and in completely ignoring the evidentiary value of these statements?
6. "Whether on the facts and in law, the Ld. CIT(A) is right that AO ought to have made additions on the basis of incriminating material and not on the basis of statement of the appellant which had already been retracted by the appellant at later stage knowing the fact of evidentiary value of statement recorded u/s.132(4) of the Act and while retracting from the statement given earlier, the assessee could not produce any corroborative evidence in support of his retraction. Further, in his concluding para of the statement, the assessee agreed and gave his consent that the statement given by him are correct and put his signature."
7. In reference to the above mentioned Point 6, Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in ignoring the dictum of law pronounced in case of Bannalal Jat Construction (P) Ltd vs ACIT 106 Taxmann 128(SC)/2019 264 Taxmann 5(SC) and in ignoring that the statement recorded u/s.131 of the act has evidentiary value and the burden lays on the person who made the statement, to provide a reasoned explanation for retracting from the statement, specifically, when he himself declared in his own handwriting that the statement is made in sound state of mind and without coercion. Therefore, Ld. CIT(A) is not justified in ignoring this fact and in relying solely on assessee's retraction.
8. Whether on the facts and in law, the Ld. CIT(A) justified in holding that the AO has no locus standi to assume that the share application 4 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 money infused in the appellant company is not genuine and it is not justified to held the investor companies as dummy entities and the investments made by these companies are non-genuine even the directors of the share applicant companies have accepted in his statements that they have provided accommodation entries to the company in lieu of commission."
9. Whether on the facts and in law, the Ld. CIT(A) is right in deleting the addition of Rs.1,64,71,430/- made by the AO on account of cessation of liability u/s.41(1)(a) of the Income-tax Act, 1961 accepting the evidences of the assessee which was not produced before the AO knowing the fact that when assessment order passed u/s. 143(3) of the Act the liability was outstanding and payments were made later on".
10. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law in accepting fresh evidence/grounds in respect of addition made on account of cessation of liability u/s.41(1)(a) of the Income-tax Act, 1961 in complete disregard to rule 46A as condition prescribed under clause (a)-(d) of rule 46A(1) of IT rules 1964 were not satisfied."
3. Succinctly stated, the assessee company which is engaged in the business of real estate development and is one of the entities belonging to Lal Ganga group of companies was on 19.09.2016 subjected to search & seizure proceedings u/s.132 of the Act. Original return of income for the year under consideration i.e. A.Y.2012-13 was filed by the assessee company on 30.10.2012, declaring an income of Rs.85,93,195/-. Notice u/s.153A of the Act dated 19.07.2017 was thereafter issued to the assessee company. In compliance, the assessee filed its return of income for A.Y.2012-13 on 14.12.2017, declaring an income of Rs.86,23,200/-.
4. During the course of the assessment proceedings, it was observed by the A.O that the assessee company a/w. its other group entities had 5 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 laundered their unaccounted money and introduced the same in their books of accounts in the garb of share application money received from certain Kolkata based companies. On the basis of verifications carried out by the A.O, it was observed by him that the investor companies from whom share capital/premium was claimed to have ben received were engaged in the business of providing accommodation entries and were managed and controlled by some chartered accountants based at Kolkata. After deliberating at length on the modus-operandi that was adopted by the aforesaid investor companies, it was observed by the A.O that the assessee company and its group entities through a web of layering transactions that were carried out by availing the services of Kolkata based entry providers had routed back their ill-gotten money in the garb of share application money.
5. On a perusal of the record, it was observed by the A.O that laundering of unaccounted income in the garb of share application money through Kolkata based shell companies was the main issue that had formed the very basis for search and seizure action conducted on Lal Ganga group. It was observed by the A.O that the assessee company, viz. M/s Lal Ganga Builder Pvt. Ltd. had introduced in its books of accounts its unaccounted income aggregating to Rs.25.37 crore by giving the same a color as that of share 6 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 capital and share premium received from various Kolkata based companies, as under:
F.Y. No of shares Face value (Rs.) Premium (Rs.) Total Amount allotted (Rs.
2011-12 2,64,750 10 390 10,59,00,000
2012-13 13,12,500 10 6 2,10,00,000
2013-14 1,26,80,000 10 0 12,68,00,000
25,37,00,000 25,37,00,000
Referring to the share allottees from whom share capital/premium was received by the assessee company for the aforesaid three years i.e. F.Y.2011- 12 to 2013-14 the A.O culled out the year wise details, as under:
List of Allottees on 30.03.2012 :
Sl. No. Name of Occupation Address residence/registered office Number of shares
1. Adhunik Delmark Pvt. Ltd. 11, Bysack Street, Kolkata-07 3750
2. Machinamastik Dealer (P) 14, Rupchand Raoy Street, Kolkata-07 25000 Ltd.
3. Gajmush Tralink Pvt. Ltd. 6, N.G. Basak Road, Block-1st, Phase- 2500 II, Kolkata-080
4. Anchal Credit Capital Pvt. Ltd. P-33, Mission Row Extension, 2nd 20000 Floor, Kolkata-013
5. Bakratunda Distributors Pvt. 54, Munshi Saddaruddin Lane, 2nd 22500 Ltd. floor, Kolkata
6. Bhumika Tracom Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2nd 22500 floor, Kolkata
7. Brotex Sales Pvt. Ltd. 63, Radha Bazar Street Kolkata 1250 7 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
8. Chakra Deal Trade Pvt. Ltd. 105, Cotton Street, Kolkata 3750
9. Contra Vanijya Pvt. Ltd. 63, Radha Bazar Street Kolkata 5000
10. Dhanmuddra Suppliers Pvt. 54, Munshi Saddaruddin Lane, 2nd 18750 Ltd. floor, Kolkata
11. Fastmove V fintrade Pvt. Ltd. 105, Cotton Street, Kolkata 2500
12. Manali Tradecom Pvt. Ltd. 105, Cotton Street, Kolkata 6250
13. Manthan Vintrade Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2nd 3000 floor, Kolkata
14. Mogra Delcom Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2nd 8000 floor, Kolkata
15. Niram Vintrade Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2nd 12500 floor, Kolkata
16. Origin Vinimay Pvt. Ltd. 11, Bysack Street, Kolkata-07 1500
17. Parrot Dealers Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2nd 1250 floor, Kolkata
18. Plazma Tradecom Pvt. Ltd. 11, Bysack Street, Kolkata-07 6250
19. Queen Agency Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2nd 10000 floor, Kolkata
20. Ratnagiri Vanijya Pvt. Ltd. 4, Gensh Chandra Avenue, Kolkata 5000
21. Risewell Vintrade Pvt. Ltd. 91, Amalangshu Sen Road, 2nd Floor, 2500 Kolkata
22. Roseberry Vintrade Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2nd 3750 floor, Kolkata
23. Salasar Tradecom Pvt. Ltd. 11, Bysack Street, Kolkata-07 2500
24. Santushi Vanijya Pvt. Ltd. 11, Bysack Street, Kolkata-07 6250
25. Spring Sales Pvt. Ltd. 11, Bysack Street, Kolkata-07 6250
26. Subhbijay Agencies Pvt. Ltd. 6, N.G Basak Road, Block-1st, Phase-II, 9750 Kolkata-080 8 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
27. Sunaina Tie-Up Pvt. Ltd. 54, Munshi Saddaruddin Lane, 2nd 1500 floor, Kolkata
28. Suruchi Suppliers Pvt. Ltd. 105, Cotton Street, Kolkata 3750
29. Yash Commosale Pvt. Ltd. 4, Ganesh Chandra Avenue, Kolkata 24000
30. Zigma Dealmark Pvt. Ltd. 63, Radha Bazar Street, Kolkata 2000
31. Atiantic Merchants Pvt. Ltd. 4, Ganesh Chandra Avenue, Kolkata 3750
32. Pearl Dealers Pvt. Ltd. 7, Lyons Range, 2nd Floor, Kolkata 17500 Total 2647500 List of Allottees on 30.03.2013 :
Sl. No Name of Occupation Address Number of Total amount residence/registered shares paid office
1. Extent Vinimay Pvt. Ltd. 63, Radha Bazar 1187500 19000000 Street, Kolkata-01
2. Manali Tradecom Pvt. Ltd. 105, Cotton Street, 125000 2000000 Kolkata Total 1312500 21000000 List of Allottees on 31.03.2014 :
Sl. No Name of Occupation Address Number of Total amount residence/registered shares paid office
1. Extent Vinimay Pvt. Ltd. 63, Radha Bazar 12680000 126800000 Street, Kolkata-01 9 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 On an analysis of the returns of income of some of the aforementioned paper companies which had claimed to have invested towards share capital/premium with the assessee company, it was observed by the A.O that the said investors clearly lacked creditworthiness which would justify the investments that were claimed by them to have been made with the assessee company, as under:
S. Name of PAN Income Income Income Income Income Income Income No. bogus shown shown shown shown shown shown shown shareholders during during during during during during during F.Yr. F.Yr. F.Yr. F.Yr. F.Yr. F.Yr. F.Yr.
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
(Rs.) (Rs.) (Rs.) (Rs.)
1. Extent AACCE4578J 8568 12385 12240 0
Vinimay Pvt. 13828
Ltd.
2. Manali AAGCM9089E 2638 0 10894 20317 27890 68620
Tradecom Pvt.
Ltd.
3. Anchal Credit AACCA5455E 0 0 99690 0 4944 18980 0
Capital Pvt.
Ltd.
4. Bakratunda AAECB7046E 0 10950 22970 18320 207350
Distributors
Pvt. Ltd.
5. Bhumika AAECB7047F 0 0 3410 10310
Tradecom Pvt.
Ltd.
6. Mogra Delcom AAHCM5396D 0 0 0 0
Pvt. Ltd.
Considering the nominal returned income of the share applicants and their weak financials, the A.O observed that they clearly lacked creditworthiness to make huge investments in the form of share capital/premium in the assessee company. Also, the A.O was of the view that considering the abysmally low returned income, no dividend history and poor financial performance of the assessee company and its group entities there could be 10 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 no justification for the substantial investments that were over the years raised by them. Apart from that, it was observed by the A.O that though the bank accounts of the investor companies revealed that the payments made by them towards share capital/premium to the assessee company were routed through account payee cheques, but a close scrutiny of the said bank accounts revealed a different story, i.e., a chain of transfer transactions inter se the paper companies leaving no balance in their respective accounts. On the basis of his aforesaid observations, the A.O was of the view that the investor companies clearly lacked creditworthiness, and, it was only the unaccounted income of the assessee company which having been meticulously camouflaged as share capital/premium had found its way back to its pocket.
6. Adverting to the genuineness of the investor companies, it was observed by the A.O that the majority of such Kolkata based companies were not found at the addresses which were given in their returns filed with the Registrar of Companies (RoC). Elaborating further, it was observed by the A.O that on the basis of discreet enquiries that were carried out by the Inspectors of Income Tax, Kolkata at the behest of the DDIT (Inv.), Kolkata, it stood revealed, viz. (i) that the addresses of the investor companies as were provided by the assessee were either incorrect or were those of some chartered accountants or some other companies; and (ii) there was neither 11 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 any sign board or post box etc. of the companies nor was anyone aware about them at their respective addresses. In sum and substance, it was reported by the Inspectors of Income Tax that the investor companies were not found existing at their respective addresses. Considering the aforesaid facts, it was observed by the A.O that the investor companies were bogus/sham companies which were merely existing on paper and engaged in the business of providing accommodation entries. In order to verify the correct factual position the A.O issued a commission u/s.131(1)(d) of the Act on 23.11.2016 and 31.01.2017 to the Investigation Wing, Kolkata. After carrying out necessary verifications the DDIT(Inv.), Admn., Kolkata forwarded to the A.O the reports of the Inspectors of Income Tax attached to his office, wherein, they had stated that the investor companies in question were not found available at their respective addresses.
7. Considering the aforesaid facts the A.O held a strong conviction that there was no justification as to why the companies based at Kolkata would have invested substantial amounts with the assessee company, i.e an unrelated entity which neither had any past performance nor future plans that would have attracted investments at a substantially high premium. It was further observed by the A.O that though some of the companies of the assessee's group were either showing no business or were carrying out business at a miniscule scale but they were still in receipt of substantial 12 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 amount of share capital a/w. hefty premium from the aforementioned Kolkata based paper companies. It was observed by the A.O that Shri Ashok Jain, a key person of Lal Ganga group had in his statement recorded on oath u/s.132(4) of the Act admitted to the fact of introduction of unaccounted money in the guise of share capital/premium. Also, the A.O in order to de- layer the bank account of the assessee company i.e. A/c No.20246185979 with Allahabad Bank, Main Branch, Raipur, issued summons to the bank to provide information regarding the details of share application money and unsecured loans that were deposited in the said bank account. In compliance, the aforesaid bank, viz. Allahabad Bank (supra) provided the requisite details to the A.O. After perusing the details provided by the bank the A.O issued summons to the bank(s) from whom the amounts were transferred in the assessee's bank account, therein calling upon them to share the details of sources of deposits/credits in the bank accounts of the respective remitters i.e. the investor companies.
7.1 The A.O in order to verify the authenticity of the assessee's claim of having received genuine share capital/premium from the investor companies issued notice(s) u/s.133(6) dated 01.10.2018 to all the said share applicants, wherein they were called upon to substantiate their identity, creditworthiness and genuineness of the transactions under consideration. In compliance all the aforementioned investor companies furnished their 13 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 replies with the A.O. Further, the A.O issued summons u/s.131 of the Act to the assessee company directing it to produce documentary evidences in support of its claim of having received genuine share capital/premium from the aforementioned investor companies, viz. (i) name, address and PAN of the investors ; (ii) amounts received from the investor companies; (iii) details of the bank accounts a/w. addresses of the respective branches in which amounts were credited; and (iv) extract of ledger account a/w. share capital/premium received for the period F.Y.2010-11 to F.Y 2016-17. Also, the A.O called for similar details as regards the loans/advances which the assessee company had claimed to have received during the aforesaid period. As the assessee failed to effectively comply to the summons issued u/s.131 of the Act dated 29.10.2018, therefore, the A.O proceeded with the enquiries and downloaded the annual reports of the investor companies. On a perusal of the details gathered by the A.O from the downloaded extracts of the annual reports of the investor companies, it was observed by him, viz. (i). that all the investor companies were located in Kolkata with a common address in certain cases; (ii). that even the companies whose address was other than that of Kolkata had their origin in Kolkata; (iii). that there were common directors in multiple companies; (iv). that the directors of the assessee company were also in certain instances directors of the investor companies, which, thus, revealed a circuitous nature of set up; (v). that some of the directors were either operators or were being controlled by some 14 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 operator; (vi) shareholders of the investor companies typically had the same pattern as that of paper companies, viz. low share capital, high reserves and surplus, matching investments, low or no income, equivalent expenditure resulting in low or no profit and insignificant financials. It was also observed by the A.O that the reserves and surplus of the aforementioned investor companies would match with equivalent investments in beneficiary companies or other shell companies. Considering the nature of expenditure booked by the investor companies in their profit & loss accounts, which was very nominal and was claimed to have been incurred under limited heads, the A.O held a strong conviction that the same did not reveal a case of a going concern. Apropos the bank statements of the aforementioned investor companies, it was observed by the A.O that the same revealed transactions of receipt of funds which would immediately be transferred either on the same date or next date. On a perusal of the transactions in the bank accounts, it was observed by the A.O that apparently the only purpose of the investor companies was to transfer funds in order to facilitate routing of unaccounted money.
8. Considering the aforesaid facts/material the A.O called upon the assessee to substantiate its claim of having received genuine share capital/premium from the aforementioned Kolkata based companies which were typically shell/jamakharchi companies. Also, the assessee was put to 15 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 notice about the statement of Shri Ashok Jain, director of the assessee company, wherein he had admitted that the unaccounted money of the company was introduced in the guise of receipt of share capital/premium from investor companies. In reply, it was, inter alia, submitted by the assessee that as no incriminating documents relating to the assessee were found and seized during the course of the search proceedings, therefore, as per the clear mandate of law no addition could be made in its hands. However, the aforesaid claim of the assessee did not find favour with the A.O. The A.O drawing support from the judgment of the Hon'ble High Court of Delhi in the case of Filatex India Pvt. Ltd. Vs. CIT-(IV), 2014 (8) TMI 387 and that of the Hon'ble High Court of Allahabad in the case of CIT Vs. Sri Raj Kumar Arora (2014) 367 ITR 517 (Allahabad) was of the view that the additions in the course of proceedings u/s.153A of the Act could not be restricted or limited to the incriminating seized material even though an assessment had earlier been framed u/s.143(3) of the Act. In sum and substance, the A.O was of the view that even in a case of an unabated assessment addition could be made despite absence of any incriminating material found and seized during the course of search proceedings. Apart from that, the A.O was of the view that the statement of Shri Ashok Jain, director of the assessee company recorded u/s.132(4) of the Act in itself was to be construed as an evidence which would justify the additions made while framing of the assessment u/s.153A of the Act. Controverting the 16 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 subsequent retraction by Shri Ashok Jain (supra) of his statement recorded u/s. 132(4) of the Act, the A.O was of the view that as the said retraction which was made after two years (approx.) lacked any supporting basis and was only a result of an afterthought, thus, no cognizance of the same could be drawn. The A.O was of the view that though the assessments in the case of the assessee company for A.Y. 2012-13 and A.Y. 2013-14 had earlier been framed u/s.143(3) of the Act, but the new facts which had emerged consequent to the search operation necessitated visiting the concluded assessments and making of necessary additions.
9. Also, it was observed by the A.O that as the issue of laundering of unaccounted money of the assessee company in the guise of share capital/premium was detected just prior to the passing of the assessment order for the aforementioned years, therefore, while framing the reassessment for the aforementioned unabated years he was well within his jurisdiction to make additions on the basis of fresh information that was gathered by him. Considering the statement of Shri Ashok Jain (supra) that was recorded u/s.132(4) of the Act, the A.O was of the view that as he had disclosed and offered a sum of Rs.19 Crore as the unaccounted income of the assessee company, therefore, the concluded assessments had to be revisited so that the error that had occurred at the time of framing of the assessment may not be allowed to perpetuate. Rebutting the aforesaid 17 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 observation of the A.O, it was stated by the assessee company vide its letter dated 06.12.2018, viz. (i) that despite extensive search operations no incriminating material was found and seized which would show that it had obtained any bogus share capital; or that its undisclosed income had been routed back to its books of account in the form of share capital/premium; and (ii) that Shri Ashok Jain (supra) had though intended to disclose an amount of Rs.1.27 crore having been subjected to coercion, duress and pressure on the part of the department he was compelled to come forth with a disclosure of Rs.15.89 crore, which, however, was thereafter retracted by him on the basis of an affidavit. However, neither of the aforesaid claim of the assessee did find favour with the A.O. Rebutting the claim of the assessee that the statement of Shri Ashok Jain (supra) was recorded under pressure, it was observed by the A.O that the said statement was recorded in presence of two independent witnesses and there was nothing on record which would support the correctness of the aforesaid allegation as was levelled by the assessee. On the contrary, it was observed by the A.O that the statement of Shri Ashok Jain (supra) recorded u/s.132(4) r.w.s. 110 of the Evidence Act, 1872 carried substantial evidentiary value.
10. Controverting the claim of the assessee that it had by placing on record supporting evidence, viz. copies of returns of income, PAN nos., audited financial statements, bank statements, memorandum of 18 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 association, articles of association and confirmations of the investor companies had duly discharged the onus that was cast upon it u/s.68 of the Act as regards proving the authenticity of its claim of having received genuine share capital/ premium from the said companies, the A.O was of the view that the assessee had adopted a colourable device to camouflage the real transactions. Adverting to the provisions of Section 68 of the Act, it was observed by the A.O that the amendment that was therein made available by way of insertion of a "proviso" vide the Finance Act, 2012 w.e.f. 01.04.2013, which therein obligated the closely held companies to explain the 'nature' and 'source' of the sum credited in the form of share application money, share premium or share capital was applicable retrospectively. In support of his aforesaid conviction the A.O had relied on the order of the ITAT, Kolkata in the case of Subhalakshi Vanijya Pvt. Ltd., 60 taxmann.com 60 (Kol.). On the basis of his aforesaid deliberation the A.O was of the view that the assessee company had failed to discharge the onus that was cast upon it u/s. 68 of the Act i.e proving the nature and source of the amounts which were claimed to have been received as share capital/premium from the aforementioned investor companies. The A.O after deliberating at length on the modus-operandi that was adopted by paper/shell companies for providing accommodation entries, and referring to a catena of judicial pronouncements, was of the view that the assessee company had routed its 19 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 unaccounted money by camouflaging the same as share capital/premium received from the aforementioned paper/shell companies.
11. Apropos the claim of the assessee company that the investment made with it by M/s. Extent Vinimay Pvt. Ltd., 63, Radhabazar Street, Kolkata, viz. (i) share capital/premium of Rs. 1.90 crore and Rs. 12.68 crore in A.Y 2013-14 & A.Y 2014-15, respectively; and (ii). unsecured loans of Rs. Rs.2.03 crore and Rs. 1.15 crore in A.Y.2015-16 and A.Y.2016-17, respectively, were sourced from/made by the said investor company out of the realisation of its investments, which in turn were made out of the share capital/premium of Rs.17.69 crore that was received by the said investor company in A.Y.2011-12 and was accepted by the A.O while framing assessment in its case u/s 143(3) r.w.s 263, dated 20.12.2016, the same did not find favour with the A.O. It was the claim of the assessee company that assessment in the case of aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd. was framed u/s. 143(3) of the Act, which, thereafter, was revised by the Pr. Commissioner of Income Tax - 4, Kolkata u/s.263 of the Act, and the order passed by the A.O was set- aside with a specific direction to verify the share capital/premium that was raised by the aforementioned investor company in A.Y.2011-12. It was submitted by the assessee that the A.O in the course of the assessment that was framed while giving effect to the order passed by the Pr. Commissioner of Income Tax u/s. 263 of the Act 20 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 had carried out detailed enquiry about the authenticity of the share capital/premium of Rs.17.69 crore (supra) that was raised by the aforementioned investor company, viz. M/s. Extent Vinimay Pvt. Ltd., and had after collecting the requisite information from its share subscribers and summoning the director(s) u/s.131 of the Act, had vide his order dated 20.12.2016 held the aforesaid transactions to be genuine. On the basis of the aforesaid facts, it was claim of the assessee that now when the respective investments towards share capital/premium and loans received by the assessee company from M/s. Extent Vinimay Pvt. Ltd. were sourced from the realisation of its investments, which in turn were funded out of its duly explained share capital of Rs.17.69 crore (supra), therefore, the identity, creditworthiness and genuineness of the transaction of having received the aforementioned sums from the said investor was proved beyond doubt. However, the aforesaid claim of the assessee did not find favour with the A.O, who was of the view that though the assessment in the case of the investor company, viz. M/s. Extent Vinimay Pvt. Ltd. was framed vide order passed u/s.143(3) r.w.s. 263 dated 20.12.2016 for A.Y.2011-12 but the issue of money laundering and infusion of unaccounted money in the books of accounts of the assessee company in the guise of share capital/premium was detected during the course of search proceedings conducted in its case just prior to framing of the aforesaid assessment. On the basis of his aforesaid observations the A.O declined the claim of the assessee company 21 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 that the source of the investment made by the aforesaid investor, viz. Extent Vinimay Pvt. Ltd. was out of its duly explained sources. Also, the A.O negated the aforesaid claim of the assessee company by referring to the admission of Shri Ashok Jain (supra), who vide his statement dated 20/22.09.2016 had admitted that the unaccounted money of the assessee company was laundered in the garb of share capital/premium received from paper/shell companies. Apart from that, it was observed by the A.O that the fact that M/s. Extent Vinimay Pvt. Ltd. was a paper/Jamakharchi company that was managed and controlled by Shri Anand Sharma and Shri Janardhan Chokhani, infamous entry operators and dummy directors, was established by the Kolkata Investigating Wing. Considering the financial statements of M/s. Extent Vinimay Pvt. Ltd. a/w its peculiar share holding pattern and miniscule returned income over the years i.e. A.Y.2011-12 to A.Y.2016-17, the A.O was of the view that no genuine amount towards share capital/premium was received by the assessee company from the said investor which was just a name sake paper/jamakharchi company.
12. As regards the replies that were filed by the investor companies in compliance to notice(s) u/s 133(6) with the A.O a/w. supporting documentary evidence i.e. copies of share certificates, bank statements, evidence of subscription, copies of return of income and audited financial statements, it was observed by the A.O that the same therein revealed, viz. 22
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
(i). that the investor company had not carried out any feasibility study of the investee company; (ii). that no dividend was received; (iii). the transactions were materialized through mediators; (iv). that no due diligence was carried out by the investors prior to investment; (v) the drafting of the letters was exactly similarly worded and even the font used was the same; and (vi) exactly same information was provided in the replies filed by the investor companies. Considering the aforesaid replies filed by the investor companies, it was observed by the A.O that the same were well scripted with an active involvement of the assessee company. It was observed by the A.O that invariably the investor companies before making their respective investments were in receipt of equivalent amounts in their bank accounts. Also, it was observed by the A.O that in a case where the amount in excess of the corresponding investment was received by the investor company in its bank account, then, the remaining amount would be routed to some other beneficiary company. It was observed by the A.O that after the aforesaid well scripted investment transaction no balance would be left in the bank account of the investor company. Further, it was observed by the A.O that the nature of transactions in the bank account did not reveal that any business was being carried out by the investor company. On a whole, it was observed by the A.O that the bank accounts of the investor companies revealed the characteristics of a paper/shell company. It was further observed by the A.O that neither of the investors prior to making of 23 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 substantial investments with the assessee company had either carried out any feasibility study or physical verification (not even paper correspondence) or valuation of the net worth of the assessee company. Apart from that, it was observed by the A.O that the investor companies who were stated to have held substantial stake in the assessee company had never participated in its management. Also, it was observed by him that no revenue by way of dividend was being earned by the investor companies on their investment made in the assessee company. On the basis of his aforesaid observations the A.O was of the view that the same clearly revealed that the investor companies were shell/paper companies through whom the unaccounted money of the assessee company was routed back to its coffers.
13. Considering the non-existence and non-creditworthiness of the share applicants, non-genuineness of the transactions, surrounding circumstances and admission by Shri. Ashok Jain (supra) in his statement recorded u/s 132(4) of the Act of the undisclosed income which was introduced in the form of bogus share capital/premium, the A.O was of the view that the assessee company had failed to establish the genuineness of the transactions of receipt of genuine amounts towards share capital/premium from the aforementioned companies. On the basis of his aforesaid observations, and taking cognizance of the fact that assessments in the case of the assessee company for A.Y.2012-13 & A.Y.2013-14 had 24 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 already been framed by his predecessor vide order(s) passed u/s.143(3) of the Act, wherein the income was assessed as under:
Assessment year Additions
2012-13 (i) Addition of unexplained share
[Assessment framed application money of Rs.2.40 crore (out
u/s.143(3)] of Rs.10.59 crore)
(ii) Disallowance u/s.40A(3)of
Rs.30,000/-
(iii) Addition u/s.41(1)(a) of
Rs.1,64,71,430/-
2013-14 (i) Addition of share application money
of Rs.2.10 crore
(ii) Other additions of Rs.6,09,891/-
[Rs.49,00,000/- (+) Rs.10,68,271/- (+)
Rs.76,280/- (+) Rs.46,340/-]
, the A.O vide his consolidated order u/s. 153A r.w.s. 143(3), dated 26.12.2018 assessed its income for the captioned years i.e. A.Y.2012-13 to A.Y.2015-16, as under:
A.Y. Section Return Addition Para Assessed Round off income Discussed income 2011-12 153A/143(3) 46,38,460/- NA NA 46,38,460/- 46,38,460/-
2012-13 153A/143(3) 86,23,200/- 10,59,00,000/- 5 to 9 13,10,24,630/- 13,10,24,630/-
+30,000/-
+1,64,71,430/-
2013-14 153A/143(3) 32,46,730/- 2,10,00,000/-+ 5 to 9 3,03,37,621/- 3,03,37,620/-
49,00,000/-
+10,68,271/-
+76,280/-
+46,340/-
2014-15 153A/143(3) 45,71,220/- 12,68,00,000/- 5 to 9 13,13,71,220/- 13,13,71,220/-25
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 2015-16 153A/143(3) 79,46,000/- 2,03,00,000/- 10 2,82,46,000/- 2,82,46,000/-
14. Aggrieved, the assessee company carried the matter in appeal before the CIT(Appeals). Assailing the assessment order passed by the A.O u/s.
153A r.w.s. 143(3), dated 26.12.2018, it was the claim of the assessee company, viz. (i). that the A.O had wrongly made the additions qua the unabated assessments of the assessee company despite the fact that no incriminating material was found in the course of search proceedings; (ii) that even otherwise on merits the A.O had erred in making addition(s) without any incriminating material having been found from the residential/business premises of the assessee company during the year under consideration; (iii) that the A.O had erred in making addition(s) merely on the basis of statements of third parties that were recorded by the Investigating Wing without providing any opportunity of cross-examination to the assessee company; (iv) the A.O had erred in making additions merely on the basis of the retracted statement of Shri Ashok Jain, director of the assessee company; and (v) the A.O had erred in not considering the documentary evidences that were filed by the assessee company in order to support the identity and creditworthiness of the investor company as well as the genuineness of the transactions in question.
15. Apropos the claim of the assessee company that in absence of any incriminating material having been found and seized in the course of the 26 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 search proceedings, no addition qua the unabated assessment for the year under consideration could be made, the same after exhaustive deliberations found favour with the CIT(Appeals). On a perusal of the record, it was observed by the CIT(Appeals) that the A.O had in his order not made reference of any incriminating document relating to the assessee company that was found and seized during the course of search proceedings. It was observed by him that the A.O in his order had referred to the statement of Shri Ashok Jain, director of the assessee company that was recorded u/s.132(4) of the Act on 20/22.09.2016. It was observed by the CIT(Appeals) that though the A.O had referred to the fact that Shri. Ashok Jain (supra) in the course of his statement recorded u/s 132(4) was confronted with Page 78 of LPS-8 (a seized document), but thereafter he had given no weightage to the said document while framing the assessment. Referring to the statement of Shri Ashok Jain (supra), it was observed by the CIT(Appeals) that he had in reply to Question No.43 of his statement recorded u/s.132(4) of the Act on specifically being queried about the aforesaid seized loose paper (Page 78 - LPS-8), had stated that the same was a ledger account of share capital for the year under consideration and other details of share capital that were received over the period, i.e., F.Y.2012-13 to F.Y.2015-16. Considering the fact that the transactions mentioned in the aforesaid ledger account were duly recorded in the books of account of the assessee company, the CIT(Appeals) was of the view that the same being a part of the 27 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 books of account of the assessee could not be held to be an incriminating document. The CIT(Appeals) on the basis of his aforesaid observations was of the view that the statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act could not be treated as having been recorded on the basis of any incriminating document seized in the course of search and seizure proceedings. The CIT(Appeals) observed that not only the A.O had not drawn any support from the aforementioned seized document i.e. Page 78 - LPS-8, but even otherwise the statement of the aforementioned person recorded in the absence of any incriminating document could not be construed as an information found as a result of search and seizure proceedings. On the basis of his aforesaid deliberations, the CIT(Appeals) was of the view that as no incriminating material was found during the course of search proceedings, therefore, no addition could have validly been made as regards the unabated assessment of the assessee company for the year under consideration. The CIT(Appeals) in support of his aforesaid conviction that no addition could be made in case of an unabated assessment in the absence of any incriminating material relating to the year having been found and seized in the course of search and seizure proceedings u/s. 132 of the Act, relied on the following judicial pronouncements :
(i) Pr.CIT-2 Vs. Meeta Gutgutia, 82 taxman.com 287(Delhi).
(ii) CIT Vs. Kabul Chawla (2016) 380 ITR 573 (Del.) 28 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
(iii) DCIT Vs. Mahalaxmi Technocast Ltd, Raipur, ITA Nos. 256 to 259/RPR/2014 dated 25.10.2021
(iv) Rawal Das Jaswani Vs. ACIT, (2015) 43 CCH 606 (Raipur)
(v) DCIT (Central) Vs. Abhishek Steel Industries Ltd., ITA Nos. 250 to 255/RPR/2014, dated 25.10.2021.
Considering the facts involved in the case of the assessee company r.w the aforesaid settled position of law, the CIT(Appeals) was of the view that in the absence of any incriminating material relating to the assessee for the year under consideration having been found and seized in the course of search proceedings, there was no justification for the A.O to have made the impugned addition qua the non-abated assessment of the assesee company.
16. Apropos the grievance of the assessee company that the A.O had erred in making the impugned additions merely on the basis of statements of third parties which were recorded by the Investigating Wing, Kolkata without providing any opportunity to cross-examine the said person, it was observed by the CIT(Appeals) that the A.O had in the assessment order relied on the statements of two accommodation entry providers, viz. S/shri Sankar Kumar Khetan and Abhishek Chokhani wherein, both of them in their statement(s) recorded u/s.131 of the Act by the ADIT (Inv.)/DDIT (Inv.), Kolkata had admitted of being involved in the business of providing accommodation entries in the form of bogus bills, bogus share capital and unsecured loans etc., and had also explained at length the modus-operandi 29 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 that was adopted by them. On a perusal of the records, it was observed by the CIT(Appeals) that the assessee had requested the A.O to provide him a copy of the statements of both the aforesaid individuals a/w. an opportunity to cross-examine them. It was observed by the CIT(Appeals) that the A.O neither provided the copies of the statements of the aforementioned persons to the assessee, nor afforded any opportunity to cross-examine them in the course of the assessment proceedings. On the basis of his aforesaid observations, the CIT(Appeals) was of the view that as the A.O had recorded the statements of the aforesaid persons at the back of the assessee, and also divested it of the very right to cross-examine them, thus, he could not have pressed into service the said statements for concluding that the assessee company in the guise of share application money was in fact in receipt of accommodation entries from paper/shell companies.
17. Also, it was observed by the CIT(Appeals) that the statements of the aforementioned persons were recorded prior to the search and seizure proceedings. The CIT(Appeals) considering the aforesaid facts, was of the view, that the statements of the aforementioned third parties recorded at the back of the assessee could not have been used for drawing of adverse inferences without providing any opportunity to the assessee to cross- examine the said persons. It was observed by the CIT(Appeals) that there was a blatant violation of the principles of natural justice on the part of the 30 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 A.O in relying upon the third party statements without affording of any opportunity to the assessee company to cross-examine the said persons. In support of his aforesaid conviction the CIT(Appeals) relied on the judgment of the Hon'ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, Civil Appeal No.248 of 2006 and a host of other judicial pronouncements.
18. Adverting to the contention of the assessee that the A.O had gravely erred in law in making the impugned addition simply on the basis of the statement of Shri Ashok Jain (supra) that was recorded u/s.132(4) of the Act, which, though had thereafter been retracted by him, it was observed by the CIT(Appeals) that a perusal of the assessment order revealed that the A.O had solely relied on the statement of the aforementioned person without making any reference to any positive and incriminating document found and seized during the course of search proceedings. Apropos the seized document, viz. Page -78 - LPS-8 that was confronted to Shri Ashok Jain (supra), it was observed by the CIT(Appeals) that the latter in his reply to Question No.43 had categorically stated that the said seized document made a mention of the share capital/premium that was received by the assessee company during the F.Y.2011-12 and F.Y.2012-13 from Kolkata based companies. It was observed by the CIT(Appeals) that the aforesaid seized document, viz. Page 78 - LPS-8 was in fact an extract of the ledger account 31 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 of share capital as was appearing in the books of account of the assessee company. The CIT(Appeals) on the basis of his aforesaid observations was of the view that considering the duly accounted transactions mentioned in the seized document, viz. Page 78 - LPS-8 the same could not be brought within the meaning of an incriminating document. Also, it was observed by the CIT(Appeals) that Shri Ashok Jain (supra) in order to buy mental peace had though initially voluntarily surrendered a sum of Rs.19.05 crore in the hands of the assessee company (which included the sum of Rs.2.10 crore for A.Y.2013-14 and Rs.12.68 for A.Y.2014-15), but thereafter he had on the basis of an "affidavit", dated 24.09.2016 retracted from his statement that was recorded u/s.132(4) of the Act on 20/22.09.2016. Considering the aforesaid facts, the CIT(Appeals) was of the view that it could safely be concluded that the addition made by the A.O was not based on any incriminating material found during the course of search proceedings but was made only on the basis of the retracted statement of Shri Ashok Jain (supra) and the statements of third parties. Also, it was observed by the CIT(Appeals) that even in the course of the post search enquiry or during the assessment proceedings no irregularity was brought on record by the A.O, and the sole basis for making the impugned addition was the statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act. Relying on the judgment of the Hon'ble Supreme Court in the case of Vinod Solanki Vs. Union of India & Anr., 2008 (16) SCC 537 dated 18.12.2008 and the CBDT 32 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Instruction No. F-No.286/2/2003-IT (Inv.II) dated 10.03.2002, it was observed by the CIT(Appeals) that in the absence of any incriminating material no adverse inference could have been drawn by the A.O on the basis of the standalone statement of Shri. Ashok Jain (supra). Accordingly, the CIT(Appeals) after relying on a plethora of judicial pronouncements, observed, that there was no justification for the A.O to have made the impugned additions merely on the basis of the statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act i.e. without relating the undisclosed income to the seized books of account, documents, money, bullion, jewellery or other valuable article or thing. Also, it was observed by the CIT(Appeals) that as held by the Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Best Infrastructure (India) Pvt. Ltd. (2017) 397 ITR 82 (Del.) the statement recorded u/s.132(4) of the Act could not be construed as an incriminating material for vesting with the A.O jurisdiction u/s.153A of the Act for making of additions by acting upon the same. Considering the facts involved in the case in light of the settled position of law, the CIT(Appeals) was of the view that there was no justification for the A.O to have made the impugned addition merely on the basis of statement of Shri Ashok Jain (supra), which had already been retracted by him at a later stage, and the said additions ought to have been based on incriminating material, if any, seized during the course of search proceedings.
33
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
19. Apropos the claim of the assessee that the A.O had erred in making addition on the basis of suspicion, surmises and conjectures, i.e., without referring to any incriminating material, the CIT(Appeals) found favour with the said contention. It was observed by the CIT(Appeals) that during the course of the search proceedings conducted on the assessee company no incriminating material was found which would reveal that the assessee company was involved in procuring bogus accommodation entries in the guise of share capital/premium. In fact, it was observed by him that no incriminating material was referred to by the A.O while making the impugned additions in the hands of the assessee company. On the contrary, it was observed by the CIT(Appeals) that all the requisite details that were called for by the A.O in the course of the assessment proceedings were placed on his record by the assessee company. The CIT(Appeals) considering the fact that the A.O had drawn adverse inferences in the hands of the assessee company on the basis of statements of third parties that were recorded prior to search proceedings and the statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act a/w. the observations/findings of the Investigating Wing, was of the view that the A.O had failed in his duty in not supporting his adverse inferences by placing on record any cogent evidence which would have irrefutably evidenced that the investments made in the assessee company were in fact accommodation entries which had been camouflaged as receipt of share capital/premium from the investor 34 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 companies. The CIT(Appeals) was of the view that now when the assessee had on the basis of supporting documentary evidence discharged the onus that was cast upon it as regards proving the identity and creditworthiness of the share applicants, and also the genuineness of the transactions of having received share capital/premium from the investor companies, therefore, the impugned additions could not have been made by the A.O on the basis of suspicion, guess work and conjectures. Accordingly, the CIT(Appeals) held a conviction that as the A.O had no locus-standi to assume that the share application money received by the assessee company was not genuine, therefore, the additions so made by him could not be sustained.
20. Adverting to the claim of the assessee that the A.O had erred in not considering the substantial documentary evidence that was filed by the assessee company to substantiate the identity and creditworthiness of the investor companies and also, the genuineness of the transactions of receipt of share capital/premium from them, we find that the CIT(Appeals) had found favor with the said claim of the assessee. The CIT(Appeals) observed that the assessee had filed before the A.O as well as before him the copies of PAN nos., bank account statements, audited balance sheets, profit & loss accounts, memorandum of association, articles of association, certificate of incorporation and confirmations of all the investor companies. Adverting to the creditworthiness of the investor companies, the CIT(Appeals) after 35 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 deliberating at length on their financials, i.e., audited financial statements a/w. audit reports for the year under consideration i.e. upto 31.03.2012, and considering the substantial amount of share capital and reserves & surplus as were available with the respective investor companies as on 31.03.2012, observed, that the said investor companies had substantial funds to make investment in the equity shares of the assessee company. Accordingly, the CIT(Appeals) on the basis of his exhaustive deliberations with respect to all the investor companies and their financial statements, Page 86 to 120 of his order, observed that all the said investor companies had substantial funds available with them to make the respective investments in equity shares of the assessee company. Also, it was observed by him that the assessee company in the course of the assessment proceedings had placed on record documentary evidence to substantiate the identity and creditworthiness of the assessee company and also the genuineness of the transactions in question. Considering the fact that the A.O had failed to place on record any cogent material which would disprove the aforesaid claim of the assessee of having received genuine amount of share capital/premium from the investor companies, the CIT(Appeals) was of the view that now when the assessee had duly discharged the onus that was cast upon it, therefore, the adverse inferences that were summarily drawn by the A.O without dislodging the duly substantiated claim of the assessee company could not be sustained. The CIT(Appeals) in order to 36 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 support his aforesaid conviction had relied on a catena of judicial pronouncements. The CIT(Appeals) referring to the exercise of de-layering of funds as was taken recourse to by the A.O in the course of the assessment proceedings observed, that the requisite details as were called for by the A.O from the banks of the investor companies i.e. source of deposits in the latters bank accounts did not reveal any cash deposits which would have otherwise suggested routing of the assessee's unaccounted money in the guise of share capital/premium back to its coffers.
21. As regards the commissions which were issued by the A.O to the DDIT (Inv.), Kolkata for carrying out verification of the investor companies, it was observed by the CIT(Appeals) that though the Inspector of Income Tax so deputed had on the basis of his field enquiry submitted that only 8 investor companies out of 32 investor companies were traceable, but thereafter the notice(s) u/s.133(6) dated 01.10.2018 that were issued by the A.O to the said investor companies for verifying their identity, creditworthiness and genuineness of the transactions were duly complied with by all the said investor companies. The CIT(Appeals) was of the view that now when the notice(s) issued u/s.133(6) were not only served at the respective addresses of the investor companies but were also duly complied with by them, therefore, the field enquiry reports filed by the Inspectors of Income Tax did not hold the ground anymore. On the basis of his aforesaid observations, 37 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 the CIT(Appeals) was of the view that there was no justification for the A.O to have held the investor companies as dummy entities and investments so made by them with the assessee company as non-genuine. On a perusal of the order of the CIT(Appeals), we find that he had distinguished all the judicial pronouncements that were relied upon by the A.O for justifying the adverse inferences that were drawn by him as regards the share capital/premium that was received by the assessee company from the respective investors.
22. Adverting to the addition of Rs.1,64,71,430/- made by the A.O u/s.41(1)(a) of the Act, it was observed by the CIT(Appeals) that the same was an addition that was made by the A.O while framing of the original assessment u/s.143(3) of the Act dated 31.03.2015. Elaborating on the facts leading to the aforesaid addition, it was observed by the CIT(Appeals) that the same was with respect to an outstanding amount that was payable by the assessee company to a contractor, viz. M/s. Pragmatic Builders Pvt. Ltd. as regards certain works contracts which were executed by the latter for the period relevant to F.Y 2010-11. The CIT(Appeals) observed that the assessee company as against the amount of Rs.2,24,19,987/- that was initially due towards the aforesaid contractor in FY 2010-11 had made a part payment of Rs.65 lac (after deducting TDS) and the remaining amount of Rs.1,54,71,430/- was shown as "contract bills payable". Also, it was 38 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 observed by the CIT(Appeals) that a cheque of Rs.10 lac was returned unpaid to the assessee company and the same too was outstanding as payable during the year under consideration. As certain disputes had cropped up between the assessee company and the aforesaid contractor, therefore, no payment towards the outstanding liability was made by the assessee company during the year under consideration. The CIT(Appeals) was of the view that though the A.O had while framing the original assessment made an addition of the entire amount of Rs.1,64,71,430/- [Rs. 1,54,71,430/- (+) Rs. 10, 00,000/-] u/s.41(1)(a) of the Act, but at the time of repeating the said addition while framing the assessment vide his order passed u/s 153A r.w.s 143(3) of the Act, dated 26.12.2018, he had failed to appreciate that as the assessee company had discharged its outstanding liability to the extent of Rs.1,62,17,000/- (out of Rs. 1,64,71,430/-) over the period 07.09.2012 to 18.05.2016, therefore, there was no justification in sustaining the said addition u/s.41(1)(a) of the Act. Also, the CIT(Appeals) while concluding as hereinabove had taken cognizance of the confirmation that was filed by the contractor, viz. M/s Pragmatic Builders Pvt. Ltd., wherein the latter had duly acknowledged of having received the aforesaid payments from the assessee company. The CIT(Appeals) considering the aforesaid facts was of the view that there was no justification for the A.O in making any addition u/s.41(1)(a) of the Act, and thus, vacated the same. 39
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
23. Accordingly, the CIT(Appeals) on the basis of his exhaustive deliberations on the various facets of the case, viz. (i) validity of the jurisdiction assumed by the A.O for making of additions/disallowances vide his order passed u/s.153A r.w.s. 143(3) of the Act, dated 26.12.2018; and
(ii) sustainability of the additions made by the A.O on merits of the case, therein, allowed the appeal of the assessee company.
24. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
25. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
26. As the revenue has, inter alia, assailed the order of the CIT(Appeals) on the ground that he had erred in observing that as no incriminating material relating to the year under consideration was found and seized during the course of the search proceedings conducted u/s.132 of the Act from the residential/business premises of the assessee company, therefore, no addition as regards the unabated assessment of the assessee company for the year under consideration i.e. A.Y.2012-13 was liable to be made, therefore, we shall first deal with the said issue.
40
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
27. On a perusal of the orders of the lower authorities it transpires that there is only a reference of one seized document, viz. Page 78 - LPS-8, and a reference of that too had surfaced in Question No.43 that was raised while recording the statement of Shri Ashok Jain, director of the assessee company u/s.132(4) of the Act, Page 26 of the assessment order. On being confronted with the aforesaid seized document, viz. Page-78 - LPS-8, we find that Shri Ashok Jain had in his reply categorically stated that the same was a consolidated ledger account wherein there was a mention of the respective amounts of share capital/premium that were received by the assessee company over the period i.e. F.Y.2011-12 to F.Y.2015-16, and, the same were duly accounted for in the books of account of the assessee company. In order to verify the aforesaid factual position we may herein cull out the aforesaid seized document viz. Page-78-LPS-8, as under: 41
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 On a conjoint perusal of the contents of the aforesaid seized document, viz.
Page-78 - LPS-8 [Placed at Page 1354 of APB-Volume-V] and the "balance sheet" of the assessee company for the year under consideration i.e. A.Y.2012-13, [Page 91 of APB, Volume-I], we find that the details mentioned in the respective columns of the aforesaid seized document, viz Page-78 -
LPS-8 i.e. share capital (opening balance), the addition of share capital, details of surplus & reserves (opening balance), profit, securities premium reserves and total addition during the year matches to the last of the paisa with that recorded in its "balance sheet" for the year under consideration.
In sum and substance, as stated by Shri Ashok Jain (supra) and, rightly so, the seized document i.e. Page -78 - LPS-8 is a consolidated extract of the figures appearing in the "balance sheets" of the assessee company for the 42 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 year under consideration and those of the succeeding years. We, thus, on the basis of the aforesaid factual matrix concur with the observation of the CIT(Appeals), who had rightly observed that the aforesaid seized document, viz. Page-78 - LPS-8 being a part of the books of account of the assessee company, thus, could by no means be held to be an incriminating document.
28. We shall now in the backdrop of our aforesaid observations that no incriminating document relating to the year under consideration, i.e., A.Y. 2012-13 was found and seized from the residential/business premises of the assessee company in the course of the search proceedings, therein, deal with the claim of the Ld. AR that no addition as regards the unabated assessment of the assessee company for the said year could have been made. Before proceeding any further, we have to first adjudicate as to whether or not the assessment for the year under consideration i.e. A.Y.2012-13 was pending on the date of search proceedings i.e on 19.09.2016. On a careful perusal of the records, we find that the original assessment in the case of the assessee company was framed by the A.O u/s.143(3) dated 31.03.2015, Page 1309 of APB and accordingly, on the date on which search and seizure proceedings were conducted u/s.132 of the Act i.e. on 19.06.2016 no assessment or reassessment proceedings were pending. To sum up, it is a case of an unabated assessment for the year under consideration i.e. A.Y.2012-13.
43
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
29. Considering the fact that no incriminating material was found and seized from the residential/business premises of the assessee company and, the assessment for the year under consideration was unabated, we shall now deal with the claim of the Ld. AR that no addition could have been made in the hands of the assessee company. As per the "2nd Proviso" to Section 153A of the Act, assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in sub section (1) of Section 153A of the Act, which is, inter alia, pending on the date of initiation of the search proceedings u/s.132, shall abate. For the sake of clarity the "2nd proviso" to Section 153A of the Act is culled out as under:
"Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate."
On a careful perusal of the aforesaid statutory provision, it transpires that the same therein contemplates that where assessment or reassessment, relating to any assessment year falling within the period of six assessment years referred to in sub-section (1) of Section 153A is pending on the date of initiation of the search under section 132, the same shall abate. As such, it is only the pending proceeding that would abate, and not where there are orders of assessment or reassessment which are in force on the date of initiation of the search proceedings. To sum up, in a case where no 44 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 assessment or reassessment is pending on the date of search and seizure proceedings conducted u/s.132 of the Act, then in absence of any incriminating document found and seized during the course of said proceedings relating to the year under consideration, no addition can be made in the hands of the assessee. To sum up, the A.O in the case of an unabated assessment would in absence of incriminating document be only entitled to repeat the original assessment framed in the case of the assessee. Our aforesaid view as regards the scope and gamut of "2nd proviso" to Section 153A of the Act is supported by various judicial pronouncements that hold the ground as on date, as under:
(A) CIT Vs. Continental Ware Housing Corporation (Nhava Sheva) Ltd. (2015) 374 ITR 645 (Bom.) :-
30. In the aforesaid case, it was observed by the Hon'ble High Court of Bombay that where no incriminating material was found during the course of search proceedings, then the power u/s. 153A could not be expected to be exercised routinely, as the same could only be exercised if search reveals any incriminating material. For the sake of clarity the relevant observation of the Hon'ble High Court approving the view taken by the "Special Bench"
of the ITAT, Mumbai are culled out as under:
"a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, 45 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
(b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search."
(B). CIT Vs. Kabul Chawla, (2016) 380 ITR 573 ( Delhi) :-
31. In the aforesaid case, it was observed by the Hon'ble High Court of Delhi that in a case where no assessment or reassessment was pending on the date of search, then in the absence of any incriminating material having been unearthed during the course of search proceedings, no addition could have been made to the income of the assessee which was already assessed. For the sake of clarity the summarised observations of the Hon'ble High Court in its order are culled out as under:
"Summary of the legal position
37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place.
ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.
iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order 46 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".
iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.
vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment."
(C). Pr. CIT Vs. Meeta Gutgutia, (2017) 395 ITR 526 ( Delhi)
32. In the aforesaid case, the Hon'ble High Court of Delhi while disapproving the contention of the revenue, which in turn was based on an earlier decision of a co-ordinate Bench of the Court in the case of Smt. Dayawanti Gupta Vs. CIT (2016) 390 ITR 496 (Del), had observed, that in absence of any incriminating material unearthed during the course of search 47 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 proceedings no addition could be made in respect of an unabated assessment of the assessee. In sum and substance, it was observed by the Hon'ble High Court that the provisions of Section 153A could not be invoked to reopen the concluded assessment of an assessment year in absence of incriminating material found during the course of search proceedings relating to such year. The Hon'ble High Court after relying on a host of judicial pronouncements had approved the view taken by the Tribunal that once an assessment has attained finality for a particular year, i.e., it is not pending, then, in absence of any incriminating material gathered in the course of search proceedings for the said year no addition could be validly made in the hands of the assessee, observing as under:
"Subsequently, in Principal Commissioner of Income Tax- 1 v. Devangi alias Rupa (supra), another Bench of the Gujarat High Court reiterated the above legal position following its earlier decision in Principal Commissioner of Income Tax v. Saumya Construction P. Ltd. (supra) and of this Court in Kabul Chawla (supra). As far as Karnataka High Court is concerned, it has in CIT v. IBC Knowledge Park P. Ltd. (supra) followed the decision of this Court in Kabul Chawla (supra) and held that there had to be incriminating material qua each of the AYs in which additions were sought to be made pursuant to search and seizure operation. The Calcutta High Court in CIT-2 v. Salasar Stock Broking Ltd. (supra), too, followed the decision of this Court in Kabul Chawla (supra). In CIT v. Gurinder Singh Bawa (supra), the Bombay High Court held that:
"6...once an assessment has attained finality for a particular year, i.e., it is not pending then the same cannot be subject to tax in proceedings under section 153A of the Act. This of course would not apply if incriminating materials are gathered in the course of search or during proceedings under section 153A of the Act which are contrary to and/or not disclosed during the regular assessment proceedings."48
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Even this Court has in CIT v Mahesh Kumar Gupta (supra) and The Pr.Commissioner of Income Tax-9 v. Ram Avtar Verma (supra) followed the decision in Kabul Chawla (supra). The decision of this Court in Pr. Commissioner of Income Tax v. Kurele Paper Mills P. Ltd. (supra) which was referred to in Kabul Chawla (supra) has been affirmed by the Supreme Court by the dismissal of the Revenue's SLP on 7th December, 2015."
(D). Pr. CIT Vs. Alchemist Capital Ltd. (2022) 447 ITR 668 ( Delhi) :-
33. In the aforesaid recent order, the Hon'ble High Court of Delhi had reiterated its earlier view taken in the cases of Kabul Chawla (supra) and Meeta Gutgutia (supra), and had held that in absence of any incriminating material found during the course of search conducted u/s.132 of the Act, and time limit for issuing notice u/s.143(2) of the Act having elapsed for the year under consideration, the A.O could not have made any addition to the returned income of the assessee while framing of the assessment u/s.153A of the Act. The Hon'ble High Court, inter alia, relying on its earlier order passed in the case of Pr. CIT Vs. Bhadani Financiers Pvt. Ltd.(2022) 447 ITR 305 (Delhi), had observed, that no addition qua a non-abated assessment of the assessee could be made in absence of any incriminating document or material found and seized in the course of search proceedings, observing as under:
"Even, this court in Pr. CIT Vs. Bhadani Financiers Pvt. Ltd. (2022) 447 ITR 305 ( Delhi); 2021 SCC OnLine Del 4430 has held that where the assessment of the respondents had attained finality prior to the date of search and no incriminating documents or material had been found and seized at the time of search, no addition could be made under section 153A of the Act as the cases of the respondents were of non-abated assessment."49
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Also, we find that following the aforesaid view this Tribunal had vide its order passed in the cases of (i). Rawal Das Jaswani Vs. ACIT, (2015) 43 CCH 606 (Raipur); and (ii). DCIT (Central) Vs. Abhishek Steel Industries Ltd., ITA Nos. 250 to 255/RPR/2014, dated 25.10.2021, had held that in absence of any incriminating material having been found and seized in the course of search proceedings, no addition qua an unabated assessment can be made by the A.O while framing the assessment u/s.153A of the Act. Also, the aforesaid view that in absence of any incriminating material found and seized in the course of search proceedings no addition can be validly made in respect of an unabated assessment of the assessee u/s.153A of the Act had been approved by the various Hon'ble High Courts in the following judgments:
(i) Pr. CIT Vs. Saumya Construction Pvt. Ltd. (2016) 387 ITR 529 (Guj.)
(ii) Pr. CIT Vs. Devangi alias Rupa (2017) 394 ITR 184 (Guj.)
(iii) CIT Vs. IBC Knowledge Park Pvt. Ltd. (2016) 385 ITR 346 (Karn.)
(iv) Pr. CIT Vs. Salasar Stock Broking Ltd. (2016) TIOL-2099 HC KOL-IT
(v) CIT Vs. Gurinder Singh Bawa (2016) 386 ITR 483 (Bom.)
(vi) Pr. CIT Vs. Ram Avtar Verma (2017) 395 ITR 252 (Delhi).
(vii). CIT Vs. Lancy Constructions (2016) 383 ITR 168 (Karnataka)
(viii). Pr. CIT Vs. Kurale Paper Mills Pvt. Ltd. (2016) 380 ITR 571 (Del)
34. Apropos the three judicial pronouncements which had been pressed into service by the A.O/D.R, viz. (i). Filatex India Pvt. Ltd. Vs. CIT-(iv), 2014 50 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 (8) TMI 387; (ii) CIT Vs. Sri Raj Kumar Arora (2014) 367 ITR 517 (Allahabad); and (iii). E.N Gopakumar Vs. CIT (2016) 75 taxmann.com 215 (Kerala) for holding a view to the contrary, i.e., as per Section 153A of the Act the additions need not be restricted or limited to the incriminating material found and seized during the course of search proceedings, and the A.O is vested with the power to compute total income for six assessment years immediately preceding assessment year relevant to the previous year in which search was conducted or requisition was made, we are afraid that the same does not find favour with us for the following reasons:
(A). Filatex India Pvt. Ltd. Vs. CIT-(iv), 2014 (8) TMI 387:-
35. In the aforesaid case, as certain incriminating material was unearthed during the course of search proceedings, therefore, the facts involved in the said case are distinguishable as against those involved in the present case of the assessee before us. It may herein be observed that the Hon'ble High Court in its subsequent order passed in the case of Kabul Chawla (supra), while taking a contrary view had categorically referred to the aforesaid distinguishing feature that was involved in the case of Filatex India Pvt. Ltd.
(supra). Also, it was observed by the Hon'ble High Court that in its aforesaid order it was not so held that an addition can be validly made to the concluded assessment framed prior to the initiation of search proceedings 51 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 even in absence of any incriminating material unearthed during the course of search proceedings.
36. Apropos the judgment of the Hon'ble High Court of Allahabad in the case of CIT Vs. Raj Kumar Arora (2014) 367 ITR 517 (Allahabad) and that of the Hon'ble High Court of Kerala in the case of E.N Gopakumar Vs. CIT (2016) 390 ITR 431 (Kerala) are concerned, we find that as stated by the ld. D.R, and, rightly so, the Hon'ble High Courts in the said respective judgments have taken a view to the contrary. In the said cases, it was observe by the Hon'ble High Courts that assessment proceedings generated by the issuance of a notice u/s 153(1)(a) of the Act can be concluded against the interest of the assessee which would include making of additions even without any incriminating material being available against the assessee having surfaced in the course of the search proceedings conducted under Sec. 132 of the Act.
37. Although the Hon'ble High Court of Allahabad in the case of Raj Kumar Arora (supra) and the Hon'ble High Court of Kerala in the case of E.N Gopakumar (supra) (supra) had taken a view in favour of the revenue, but as observed by us at length hereinabove, in a plethora of judicial pronouncements the Hon'ble High Court of Delhi, High Court of Bombay, High Court of Gujarat and High Court of Karnataka in their subsequent judgments have taken a view in favour of the assessee. Admittedly, there is 52 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 neither any judgment of the Hon'ble Supreme Court or that of the Hon'ble Jurisdictional High Court on the issue in hand. We, thus, are of the considered view that now when under the aforesaid circumstances as two views as regards the interpretation of a statutory provision had surfaced, then the view adopting a construction in favour of the assessee will have to be adopted. Our aforesaid view is supported by the judgment of the Hon'ble High Court of Bombay in the case of Addl. Commissioner of Sales tax Vs. M/s Ankit International, Sales tax appeal no. 9 of 2011, dated 15.09.2011, wherein relying upon the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Vegetable Product Ltd. (1973) 88 ITR 192 (SC) and in the case of Mauri Yeast India Pvt. Ltd. Vs. State of U.P (2008) 14 VST 259 (SC) : (2008) 5 SCC 680, it was held that if two views in regard to the interpretation of a statutory provision are possible, then the court will be justified in adopting the construction which favours the assessee. Also, a similar view had been taken by the Hon'ble Apex Court in Bihar State Electricity Board And Another Vs. M/s Usha Martin Industries (1997) 5 SCC 289. We, thus, in light of the aforesaid position of law adopt the construction as regards the issue in hand in favour of the assessee company. The Grounds of appeal nos. 3 and 4 raised by the revenue are dismissed in terms of our aforesaid observations.
53
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
38. Apropos the contention of the Ld. Departmental Representative (for short 'DR') that the statement of Shri. Ashok Jain (supra) recorded during the course of search proceedings u/s.132(4) of the Act, wherein, he had admitted undisclosed income in the hands of the assessee company was to be construed as an incriminating material on the basis of which the A.O had assumed jurisdiction to make additions while framing the assessment vide his order passed u/s.153A r.w.s. 143(3) dated 26.12.2016 qua the unabated assessment for the year under consideration i.e. A.Y.2012-13, we are afraid that the same does not find favour with us. As the statement of Shri. Ashok Jain (supra) recorded u/s.132(4) of the Act on a standalone basis cannot be construed as an incriminating material, therefore, the same in our considered view could by no means have conferred jurisdiction with the A.O to make additions while framing of assessment u/s.153A r.w.s. 143(3) of the Act as regards the unabated assessment of the assessee company for the year under consideration i.e A.Y 2012-13. Our aforesaid conviction is fortified by the judgments of the Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Best Infrastructure (India) Pvt. Ltd. (2017) 397 ITR 82 (Del.) and Commissioner of Income Tax Vs. Harjeev Aggarwal (2016) 290 CTR 263 (Delhi). In the aforesaid case, it was observed by the Hon'ble High Court that a mere statement recorded during the course of search proceedings u/s.132(4) of the Act could not be considered to be an incriminating material.
54
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
39. We, thus, in terms of our aforesaid observations concur with the view taken by the CIT(Appeals) that in absence of any incriminating material having been found and seized during the course of search proceedings conducted on the assessee company u/s.132 of the Act dated 19.09.2016, no addition could have been made by the A.O in respect of the unabated assessment of the assessee company for the year under consideration i.e. A.Y.2012-13. Thus, the Grounds of appeal No.(s) 3 & 4 raised by the revenue are dismissed in terms of our aforesaid observations.
40. Although, we have upheld the view taken by the CIT(Appeals) as regards quashing of the additions made by the A.O in terms of our aforesaid observations, however, as the department in its appeal has assailed the validity of the other observations of the CIT(Appeals) on the basis of which he had, inter alia, allowed the appeal of the assessee company on merits, therefore, we shall for the sake of completeness deal with the said respective issues which emanate from the respective grounds raised before us.
41. We shall now deal with the claim of the department that the CIT(Appeals) had erred in not appreciating the statements of third parties i.e directors of the investor companies, wherein, they had in their respective state`ments admitted of having provided accommodation entries to the assessee company. It is the claim of the department that the CIT(Appeals) 55 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 had lost sight of the evidentiary value of the statements of the aforesaid third parties, which clearly proves that the assessee's unaccounted money had been routed back to its coffers in the form of share capital/premium received from paper/shell investor companies.
42. On a perusal of the orders of the lower authorities it transpires that the assessee company during the year under consideration was in receipt of share capital/premium of Rs.10.59 crore from 32 investor companies. On the basis of statements of two unrelated parties, viz. S/shri Sankar Kumar Khetan and Abhishek Chokhani that were recorded u/s.131 of the Act by the DDIT (Inv.), Unit-1(2), Kolkata and ADIT (Inv.), Unit-2(3), Kolkata on 10.04.2015 and 09.12.2014, respectively, it was observed by the A.O that both the said persons had in their statements admitted that they were involved in providing accommodation entries through various paper/shell companies. Also, the aforesaid persons had in their statements elaborated upon the modus-operandi that was adopted by them to carry out the nefarious activity of providing accommodation entries. Further, the A.O had with him details of 111 paper/shell companies which were being operated by one of the aforesaid hawala operator, viz., Shri Abhishek Chokhani (supra). As the A.O had sought to draw adverse inferences by relying on the statements of the aforementioned persons, therefore, the assessee company in its reply to the "Show cause" notice ("SCN") had requested him for copies 56 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 of the statements of both the aforesaid individuals a/w. an opportunity to cross-examine them but the said request of the assessee was not acceded to by the A.O, and neither the copies of the aforesaid statements were provided to the assessee nor their cross-examination was facilitated.
43. Considering the aforesaid facts, the CIT(Appeals) after drawing support from a host of judicial pronouncements, had observed, that the statements of the aforesaid unrelated parties that were recorded prior to the search and seizure proceedings could not have formed a standalone basis for drawing of adverse inferences in the hands of the assessee company. Apart from that, it was observed by the CIT(Appeals) that the assessee company was not in receipt of any share capital/premium from any of the companies which were stated to have been operated by the aforementioned persons. Relying on the judgment of the Hon'ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, Civil Appeal No.248 of 2006 a/w. host of other judicial pronouncements, it was observed by the CIT(Appeals) that as the statements of the aforementioned unrelated third parties were recorded at the back of the assessee without affording any opportunity to cross-examine the persons concerned, therefore, the same could not have been acted upon for drawing of adverse inferences by the A.O. On the basis of his aforesaid deliberations, the CIT(Appeals) was of the view that the impugned additions 57 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 to the extent the same were made on the basis of statements of unrelated third parties, which were neither made available to the assessee nor their cross-examination facilitated by the A.O, could have validly formed a basis for drawing of adverse inferences and making of consequential additions in the hands of the assessee company.
44. We have given a thoughtful consideration to the aforesaid observations of the CIT(Appeals), and are principally in agreement with him that de hors corroborative evidence no adverse inferences can justifiably be drawn against an assessee on the basis of standalone statement of a third party. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of Kishan Chand Chellaram Vs. CIT, (1980) 125 ITR 713 (SC). Also, we are in agreement with the CIT(Appeals) that as held by the Hon'ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II (supra), the A.O remains under a statutory obligation to make available a copy of a third party statement and also facilitate his cross-examination prior to acting upon the same and drawing adverse inferences in the hands of the assessee. We, thus, on the basis of our aforesaid observations finding no infirmity in the aforesaid view taken by the CIT(Appeals) who had rightly vacated the adverse inferences which were drawn by the A.O on the basis of standalone unsubstantiated statements of third parties recorded by the Investigating 58 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Wing, uphold the same. At the same time, we concur with the CIT(Appeals) that there was no justification for the A.O to have pressed into service the statements of the aforesaid third parties for drawing adverse inferences in the hands of the assessee company without making available their statements, and facilitating a cross-examination of the aforesaid persons. Thus, the Ground of appeal No.5 raised by the revenue is dismissed in terms of our aforesaid observations.
45. We shall now deal with the grievance of the revenue that the CIT(Appeals) had erred in law and facts of the case in accepting the unsubstantiated retraction of the statement record u/s 132(4) of the Act by Shri. Ashok Jain, director of the assessee company.
46. After hearing the ld. Authorized Representatives of both the parties, we find that the grievance of the revenue hinges around the acceptance by the CIT(Appeals) of the retraction of statement recorded u/s.132(4) of the Act by Shri Ashok Jain (supra). It is the claim of the department that the CIT(Appeals) while finding favour with the retraction of statement by Shri. Ashok Jain (supra), had failed to take cognizance of the fact that the assessee had not placed on record any such material which would have justified the said retraction.
59
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
47. On a perusal of the records, it transpires that the statement of Shri Ashok Jain, director of the assessee company was recorded u/s.132(4) of the Act on 22.09.2016. Ostensibly, Shri Ashok Jain (supra) had in his aforesaid statement came up with a surrender of a sum of Rs.19.05 crore, which included a sum of Rs.2.10 crore for A.Y 2013-14 and Rs.12.68 crore for A.Y.2014-15 in the hands of the assessee company. However, Sh. Ashok Jain (supra) had thereafter on the basis of an "affidavit" dated 24.09.2016 retracted his aforesaid statement recorded u/s.132(4) of the Act. On a perusal of the statement of Shri Ashok Jain (supra), we find that the same only makes a reference of a seized document, viz. Page 78 - LPS-8, which as observed by the CIT(Appeals), and, rightly so, is an extract of the ledger account of share capital account appearing in the books of account of the assessee company. As the contents of the aforesaid seized document, viz. Page-78 - LPS-8 was duly accounted for by the assessee company in its books of account, therefore, as held by the CIT(Appeals), and, rightly so, the same was not an incriminating material found and seized in the course of the search proceedings. Considering the fact that no incriminating material was found and seized during the course of search proceedings, the CIT(Appeals) was of the view that there was no justification for the A.O in drawing adverse inferences and making additions in the hands of the assesee company on the basis of statement of Shri Ashok Jain (supra), which too had thereafter been retracted by him. The CIT(Appeals) after 60 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 relying on a host of judicial pronouncements, Page 73 to 84 of his order, had observed, that as per the settled position of law the A.O ought to have made additions on the basis of incriminating material and could not have based the same on a standalone statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act.
48. Having given a thoughtful consideration to the aforesaid issue in hand, we find no infirmity in the view taken by the CIT(Appeals). As observed by the CIT(Appeals), and, rightly so, the A.O in absence of any corroborative material was not justified in drawing adverse inferences on the basis of the standalone statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act, which too had thereafter been retracted by him. As no incriminating material or document was found and seized in the course of search proceedings, therefore, in our considered view it was all the more obligatory for the A.O to have proved that the disclosure made by Shri Ashok Jain (supra) in his statement recorded u/s 132(4), in fact, represented the undisclosed income of the assessee company. We, thus, find no infirmity in the view taken by the CIT(Appeals) that the A.O in light of retraction by Shri. Ashok Jain (supra) of his statement recorded u/s.132(4) of the Act ought to have supported the additions made by him while framing the assessment on the basis of independent material/evidence. In fact, we concur with the CIT(Appeals) that the A.O ought to have led evidence which would have 61 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 supported the fact that the income disclosed by Shri. Ashok Jain (supra) in his statement recorded u/s 132(4) of the Act was the undisclosed income of the assessee company. Our aforesaid view is supported by the CBDT Instruction No. F-No.286/2/2003-IT (Inv. II) dated 10.03.2002, wherein the Board had emphasized that the officials in the course of search/survey operation should focus and concentrate on collection of evidence as regards income of the assessee which had either not been disclosed or is not likely to be disclosed before the Income Tax Department, and no attempt should be made to obtain confessions of undisclosed income at the time of recording of statement during the course of the aforesaid proceedings. Accordingly, on the basis of our aforesaid deliberations we uphold the view taken by the CIT(Appeals), who we find had rightly vacated the adverse inferences which were drawn by the A.O on the basis of the retracted statement of Shri Ashok Jain (supra) recorded u/s.132(4) of the Act de-hors any corroborative material supporting the same. Thus, the Grounds of appeal No.(s) 6 & 7 raised by the revenue are dismissed in terms of our aforesaid observations.
49. We shall now deal with the grievance of the revenue that the CIT(Appeals) had erred in deleting the addition of share capital/premium of Rs.10.59 crore made by the A.O u/s.68 of the Act, without considering the fact that the assessee company had failed to prove the identity and 62 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 creditworthiness of the share subscribers as well as the genuineness of the transactions as regards receipt of the aforesaid amount.
50. We have heard the ld. Authorized Representative of both the parties on the aforesaid issue under consideration and considered the orders of the lower authorities in context of the same. As is discernible from the records, the assessee company, both in the course of assessment proceedings as well as before the CIT(Appeals), had in order to drive home its claim of having received genuine share capital/premium from the respective investors, therein placed on record the copies of bank account statements, audited balance sheets, profit & loss accounts, memorandum of association, articles of association, certificate of incorporation and confirmations of the respective investor companies. Ostensibly, the A.O after referring to the complete details of the 32 investor companies, Page 4 to 6 of assessment order, had on the basis of their low returned income and referring to their financials, inferred, that they were just paper/shell companies which had raised funds by way of share capital/premium from another set of non- existing companies. In support of his aforesaid conviction that the assessee company had in the guise of share capital/premium received accommodation entries from the aforesaid paper/shell companies, we find that though the A.O had attempted de-layering the source of deposits in the bank accounts of the investor companies, Page 39 to 43 of the assessment 63 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 order, but we are afraid that he could not bring his aforesaid exercise to any such logical end from where it could be inferred beyond doubt that the investor companies had merely facilitated laundering of the unaccounted money of the assessee company. On the contrary, we find that the supporting documentary evidence, viz. PAN, copies of account statements, audited balance sheets, profit and loss accounts, memorandum of association, articles of association, certificate of incorporation and confirmations of the respective investor companies filed by the assessee company had not been disproved or dislodged in any way by the A.O. Also, we may herein observe, that though the A.O had initially observed that the Inspector(s) of Income Tax attached with the ADIT(Inv.), Kolkata and DDIT(Inv.), Kolkata had claimed that only 8 out of 32 investor companies were traceable at their respective addresses, but the very fact that the notice(s) issued by the A.O u/s.133(6) of the Act dated 01.10.2018 to all the said investor companies were not only duly served at their respective addresses but also complied with by them, therein establishes beyond doubt that the said companies were very much in existence. We, thus, on the basis of our aforesaid observations, are of a strong conviction, that though the assessee company on the basis of supporting documentary evidence had duly discharged the primary onus that was cast upon it as regards proving the identity and creditworthiness of the investor companies a/w. genuineness of the transactions of receipt of share capital/premium from 64 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 them, but the A.O, thereafter, had grossly failed to place on record any material/evidence which would belie or dislodge the aforesaid claim so canvassed by the assessee.
51. On a perusal of the order of the CIT(Appeals), we find that he had on the basis of his exhaustive deliberations as regards each of the 32 investor companies, which in turn was based on the supporting documentary evidences that were placed on record by the assessee company, viz. copies of bank account statements, audited balance sheets, profit & loss accounts, memorandum of association, articles of association, certificates of incorporation and confirmations of the respective investor companies, had concluded that the said investor companies were existing entities having substantial funds to make investments in equity shares of the assessee company. Also, it was observed by the CIT(Appeals) that no cogent evidence had been brought on record by the A.O which would negate the aforesaid claim of the assessee. Accordingly, the CIT(Appeals) on the basis of his exhaustive deliberations, had observed, that the assessee company had duly established the identity and creditworthiness of the 32 share subscriber companies, and also the genuineness of the transactions of receipt of share capital/premium from them. For the sake of clarity the exhaustive observations of the CIT(Appeals) as regards each of the respective investor companies are culled out as under:
65
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 "(e) The AO erred in not considering the documentary evidences filed in support of creditworthiness of the investor and genuineness of the transactions:-
Appellant before the AO as well as before me has filed details of PAN, copies of bank account statement, audited balance sheet, profit and loss statement, memorandum & articles of association, certificate of incorporation and confirmations of investor. The brief details of the investor company are as under:-
• M/s Adhunik Delmark Pvt Ltd (PAN-AAICA6810F) [ in short ADPL]:-
Regarding the identity of the company, the appellant submitted that originally, the ADPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 12.07.2010 vide registration No. U51101WB201OPTC151194. The ADPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the EVPL is situated at 11, Bysack Street, Kolkata, West Bengal-700007.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with ADPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of ADPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No d certificate No 125 on10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of ADPL along with Auditors' Report, in respect of the financial year ended 31st March 2011. On perusal of the same it was found that ADPL as on 31.03.2011 has share capital of Rs.19,87,000/- and reserves & surplus of Rs. 9,24,69,652/-. Further, the balance sheet mentions application of funds of Rs.9,04,15,000/- and therefore, the investor company was having funds of Rs.40,41,652/- out of which sum of Rs. 15,00,000/- was invested in appellant company. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. • M/s Maa Chinmastika Dealers Pvt Ltd (PAN-AAHCM8350R) [in short MCDPL] :-
Regarding the identity of the company, the appellant submitted that originally, the MCDPL was incorporated as a Private limited, company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West 66 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Bengal, on 27.03.2012 vide registration No. U51909WB2012PTC177870. The MCDPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the MCDPL is situated at C/s Manik Dutta, ¼ PC Road, Swiss park. Kolkata, West Bengal-700033.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with MCDPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of MCDPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 117 and certificate No 126 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of MCDPL along with Auditors' Report, in respect of the financial year ended 31g March 2012. On perusal of the same it was found that MCDPL as on 31.03.2012 has share capital of Rs.1,44,900/- and reserves & surplus of Rs.4,48,50,005/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Gaimukh Tradelink Pvt Ltd (PAN-AAECG0071C) [in short GTPL] :-
Regarding the identity of the company, the appellant submitted that originally, the GTPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 09.11.2010 vide registration No. U51909WB2010PTC154547. The GTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the GTPL is situated at 6, NG, Flat No 1E, Block-I, Basak Road, Phase-II, Kolkata, West Bengal-700080.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with GTPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of GTPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 118 and certificate No 127 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of GTPL along with Auditors' Report, in respect of the financial year ended 31st March 2012.67
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 On perusal of the same it was found that GTPL as on 31.03.2011 has share capital of Rs. 2,18,62,798/- and reserves & surplus of Rs. 35,07,91,145/-. Likewise, as on 31-03-2012, EVPL has share capital of Rs. 2,18,62,798/- and reserves & surplus of Rs. 35,07,40,038/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Anchal Credit Capital Pvt Ltd [in short ACCPL]:-
Regarding the identity of the company, the appellant submitted that originally, the ACCPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 12.08.1994 vide registration No.21-64486 of 1994. The ACCPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the ACCPL is situated at P-41, prince Street, 4th Floor, Kolkata- 700072. The said investor company is registered with RBI as a Non- banking Financial Company.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with ACCPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 119 and certificate No 128 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of ACCPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that ACCPL as on 31.03.2011 has share capital of Rs. 89,15,500/- and reserves & surplus of Rs. 2,17,08,973/-. Likewise, as on 31-03-2012, MTPL has share capital of Rs. 2,52,83,870/-and reserves & surplus of Rs. 20,55,95,532/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Bakratund Distributers Pvt Ltd (PAN-AAECB7046E) [in short BDPL]:-
Regarding the identity of the company, the appellant submitted that originally, the BDPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal. The BDPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the BDPL is situated at 54, Munshi Saddaruddin, 2nd floor, Kolkata, West Bengal-700007.68
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with BDPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of BDPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 120 and certificate No 129 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of BDPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that BDPL as on 31.03.2012 has share capital of Rs. 7,79,250/- and reserves & surplus of Rs. 5,55,47,877/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
M/s Bhumika Tracom Pvt Ltd (PAN-AAECB7047F) [in short BTPL]:-
Regarding the identity of the company, the appellant submitted that originally, the BTPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 28.09.2011 vide registration No. U74999WB2011PTC168239. The BTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the BTPL is situated at 54, Munshi Saddaruddin, 2nd floor, Kolkata, West Bengal-700007. The BTPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with BTPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of BTPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 121 and certificate No 130 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of BTPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that BTPL as on 31.03.2012 has 69 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 share capital of Rs. 6,71,250/- and reserves & surplus of Rs. 3,40,70,887/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Brotex Sales Pvt Ltd (PAN-AAECB1921E) [in short BSPL]:-
Regarding the identity of the company, the appellant submitted that originally, the BSPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 20.07.2010 vide registration No. U51101WB201OPTC151190. The BSPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the BSPL is situated at 63, Radha Bazar street, Kolkata, West Bengal-700001. The BSPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with BSPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of BSPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 122 and certificate No 131 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of BSPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that BSPL as on 31.03.2011 has share capital of Rs. 33,86,000/- and reserves & surplus of Rs. 16,10,38,269/-. Similarly as on 31.03.2012, the share capital was at Rs. 33,86,000/- and reserve and surplus of Rs. 16,08,64,085/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Chakra Deal Trade Pvt Ltd (PAN-AAECC0034B) [in short CDTPL]:-
Regarding the identity of the company, the appellant submitted that originally, the CDTPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 17.05.2010 vide registration No. U51909WB201OPTC148090. The CDTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the CDTPL is situated at 124, 70 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Aurobinda Sarani, Kolkata, West Bengal-700006. The CDTPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with CDTPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of CDTPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 123 and certificate No 132 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of CDTPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that CDTPL as on 31.03.2011 has share capital of Rs.21,93,020/- and reserves & surplus of Rs.10,25,68,537/-. Similarly, a son 31.03.2012 has share capital of Rs.21,93,020/- and reserves & surplus of Rs.10,25,75,701/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Contra Vaniiva Pvt Ltd (PAN-AADCC9936D) [in short CVPL]:-
Regarding the identity of the company, the appellant submitted that originally, the CVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 17.05.2010 vide registration No. U51909WB2010PTC148156. The CVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the CVPL, is situated at 63, Radha Bazar Street, 2nd floor, Kolkata, West Bengal-700006. The CVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with CVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of CVPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 124 and certificate No 133 on 10.04.2012.71
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of CVPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that CVPL as on 31.03.2011 has share capital of Rs. 21,99,170/- and reserves & surplus of Rs. 10,28,68,174/-. Similarly, a son 31.03.2012 has share capital of Rs. 21,99,170/- and reserves & surplus of Rs. 10,29,23,048/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Dhan Mudra Suppliers Pvt Ltd (PAN-AADCD9842P) [in short DMSPL] :-
Regarding the identity of the company, the appellant submitted that originally, the DMSPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 29.09.2011 vide registration No. U74999WB2011PTC168247. The DMSPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the DMSPL is situated at 54, Munshi Saddaruddin lane, 2nd floor, Kolkata, West Bengal-700007. The DMSPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with DMSPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of DMSPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 125 and certificate No 134 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of DMSPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that DMSPL as on 31.03.2012 has share capital of Rs. 6,56,250/- and reserves & surplus of Rs. 3,10,77,443/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Fastmove Vintrade Pvt Ltd (PAN-AABCF6231A) [in short FVPL]:-
Regarding the identity of the company, the appellant submitted that originally, the FVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the 72 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 10.11.2010 vide registration No. U51909WB2010PTC154565. The FVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the FVPL is situated at 105, Cotton Street, Kolkata, West Bengal-700007.
The FVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with FVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of FVPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 126 and certificate No 135 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of FVPL along with Auditors' Report, in respect of the financial year ended 31St March 2011. On perusal of the same it was found that FVPL as on 31.03.2011 has share capital of Rs.23,62,000/- and reserves & surplus of Rs. 11,08,43,055/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Manali Tradecom Pvt Ltd (PAN-AAGCM9089E) [in short MTPL]:-
Regarding the identity of the company, the appellant submitted that originally, the MTPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 14.12.2010 vide registration No. U51909WB201OPTC155767. The MTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated.
Initially, the registered office of the MTPL was situated at 105, Cotton bazaar, Kolkata, West Bengal-700007, however, as current registered office as per MCA record is at 119, Cotton Street, 2nd Floor, Burra Bazar, Kolkata-700007. The MTPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with MTPL had taken place through account payee cheques/ banking channels only and none 73 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of MTPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 127 and certificate No 136 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of MTPL along with Auditors' Report, in respect of the financial year ended 31St March 2012. On perusal of the same it was found that MTPL as on 31.03.2012 has share capital of Rs.26,38,000/- and reserves & surplus of Rs. 12,40,15,575/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Manthan Vintrade Pvt Ltd (PAN-AAHCM5395A) [in short MVPL] :-
Regarding the identity of the company, the appellant submitted that originally, the MVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act 1956, under the certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 22.11.2011 vide registration No. U51909WB2011PTC169712. The MVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the MVPL was situated at 54, Munshi Saddaruddin lane, 2nd Floor, Kolkata-700007. The MVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with MVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of MVPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 128 and certificate No 137 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of MVPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that MVPL as on 31.03.2012 has share capital of Rs. 7,12,500/- and reserves & surplus of Rs. 4,22,76,486/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
74
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 • M/s Mogra Dealcom Pvt Ltd (PAN-AAHCM5396D) [in short MDPL]:-
Regarding the identity of the company, the appellant submitted that originally, the MDPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 22.11.2011 vide registration No. U51909WB2011PTC169709. The MDPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the MDPL was situated at 54, Munshi Saddaruddin lane, 2nd Floor, Kolkata-700007. The MDPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with MDPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of MDPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 129 and certificate No 138 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of MDPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that MDPL as on 31.03.2012 has share capital of Rs. 6,57,250/- and reserves & surplus of Rs. 3,12,84,318/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s. Nirmal Vintrade Pvt. Ltd. (PAN-AADCN7579F) [in short NVPL]:-
Regarding the identity of the company, the appellant submitted that originally, the NVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 28.09.2011 vide registration No.US1909WB2011PTC 168227. The NVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the NVPL was situated at 54, Munshi Saddaruddin lane, 2" Floor, Kolkata-700007.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with NVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of NVPL. On perusal 75 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 130 and certificate No 139 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of NVPL along with Auditors' Report, in respect of the financial year ended 31° March 2012. On perusal of the same it was found that NVPL as on 31.03.2012 has share capital of Rs. 6,79,750/- and reserves & surplus of Rs. 3,57,62,351/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
M/s. Origin Vinimay Pvt Ltd (PAN-AABCO3297P) [in short OVPL]:-
Regarding the identity of the company, the appellant submitted that originally, the OVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 12.07.2010 vide registration No. U51909WB2010PTC151178. The OVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the OVPL was situated at 11, Bysack Street, Kolkata- 700007. The OVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with OVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in Support has filed copy of bank account statement of OVPL. On perusal of bank account Statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 131 and certificate No 140 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of OVPL along with Auditors' Report, in respect of the financial year ended 31st March 2011. On perusal of the same it was found that OVPL as on 31.03.2011 has share capital of Rs. 20,34,990/- and reserves & surplus of Rs.9,48,20,548/-. Likewise as on 31.03.2012 has share capital of Rs. 20,34,990/- and reserves & surplus of Rs. 9,48,27,433/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.76
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 M/s Parrot Dealers Pvt Ltd (PAN-AAGCP2875F) [in short PDPL|:-
Regarding the identity of the company, the appellant submitted that originally, the PDPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 22.11.2011 vide registration No. U51909WB2011PTC169711. The PDPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the PDPL is situated at 54, Munshi Saddaruddin lane, 2™ Floor, Kolkata- 700007. The PDPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with PDPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of PDPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of fund the appellant company has issued 'Equity Share Certificate' with reg. Folio No 132 and certificate No 141 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of PDPL along with Auditors' Report, in respect of the financial year ended 31% March 2012. On perusal of the same it was found that PDPL as on 31.03.2012 has share capital of Rs. 6,51,500/- and reserves & surplus of Rs. 3,01,40,228/-. Thus, the investor has sufficient funds to make investment In equity shares of appellant company.
M/s Plazma Tradecom Pvt Ltd (PAN-AAFCP7150C) [in short PTPL]:-
Regarding the identity of the Company, the appellant submitted that originally, the PTPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 18.11.2020 vide registration No. U5 1909WB2010PTC 154503. The PTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the PTPL is situated at 11, Bysack Street, Kolkata- 700007. The PTPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with PTPL had taken 77 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in Support has filed copy of bank account statement of PTPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 133 and certificate No 142 on 10.04.2012, In order to Prove credit worthiness of the investor, the appellant has filed copies of audited statements of PTPL along with Auditors' Report, in respect of the financial year ended 315' March 2012. On perusal of the same it was found that PTPL as on 31.03.2011 has share capital of Rs. 25,76,000/- and reserves & surplus of Rs. 12,13,27,118/- . Likewise as on 31.03.2012 has share capital of Rs. 25,76,000/- and reserves & surplus of Rs. 12,09,87,950/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
M/s Queens Agency Pvt Ltd (PAN-AAACQ2647N)[in short QAPL]:-
Regarding the identity of the company, the appellant submitted that originally, the QAPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 22.11.2011 vide registration No.U51909WB2011PTC169710. The QAPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the QAPL is situated at 54, Munshi Saddaruddin lane, 2nd Floor, Kolkata-700007. The QAPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with QAPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of QAPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 134 and certificate No 143 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of QAPL along with Auditors' Report, in respect of the financial year ended 31% March 2012. On perusal of the same it was found that QAPL as on 31.03.2012 has share capital of Rs. 6,36,500/- and reserves & surplus of Rs.78
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 2,71,55,107/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
M/s Ratangiri Vanijya Pvt Ltd (PAN-AAFCR0238R)[in short RVPL]:-
Regarding the identity of the company, the appellant submitted that originally, the RVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 26.11.2010 vide registration No. U51909WB2010PTC 155078. The RVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the RVPL is situated at 4, GC Avenue, 1st floor, Kolkata-700013. The RVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA) Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with RVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of RVPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 135 and certificate No 144 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of RVPL along with Auditors' Report, in respect of the financial year ended 3 1 March 2012. On perusal of the same it was found that RVPL as on 31.03.2011 has share capital of Rs. 2,14,35,875/- and reserves & surplus of Rs. 26,71,72,232/-. Likewise as on 31.03.2012 has share capital of Rs. 2,14,35,875/- and reserves & surplus of Rs. 26,71,74,346/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
M/s._Risewell Vintrade Pvt Ltd (PAN-AAFCR0237A) [in short RWVPL]:-
Regarding the identity of the company, the appellant submitted that originally, the RWVPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal. The RWVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the RWVPL is situated at 91, 2™ 79 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Floor, Amalangsu Sen Road, Kolkata-700048. The RWVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with RWVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of RWVPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 136 and certificate No 145 on 10.04.2012.
In order to prove credit worthiness of the Investor, the appellant has filed copies of audited financial statements of RWVPL along with Auditors' Report, in respect of the financial] year ended 31st March 2012. On perusal of the same it was found that RWVPL as on 31.03.2011 has Share capital of Rs. 2,18,96,350/- and reserves & surplus of Rs. 35,92,65,844/-. Likewise as on 31.03.2012 has share capital of Rs.2,18,96,350/- and reserves & surplus of Rs. 35,92,67,493/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
M/s - Roseberry Dealmark Pvt. Ltd (PAN-AAFCR5550C) [in short RDPL):-
Regarding the identity of the company, the appellant Submitted that originally, the RDPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of 'Companies, West Bengal ON 22.11.2011 Vide Registration No US1909WB2011PTC169737. The RDPL was incorporated with the objects contained in its Memorandum of Association, under Which it has got incorporated. The registered office of the RDPL is situated at 54, Munshi Saddaruddin lane, 2nd Floor, Kolkata-700007. The RDPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by Ne appellant with RDPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of RDPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 80 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 'Equity Share Certificate' with reg. Folio No 137 and certificate No 146 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of RDPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that RDPL as on 31.03.2012 has share capital of Rs. 6,55,500/- and reserves & surplus of Rs. 3,09,27,741/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
M/s Salasar Tracom Ltd (PAN-AAOCS9706J) [in short STPL]:-
Regarding the identity of the company, the appellant submitted that originally, the STPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 10.11.2020 Vide Registration No U51909WB2010PTC 154568. The STPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the STPL is situated at 11, Bysack Street, Kolkata- 700007. The STPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with STPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of STPL. On perusal of bank account Statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 138 and certificate No 147 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of STPL along with Auditors' Report, in respect of the financial year ended 31* March 2011. On perusal of the same it was found that RDPL as on 31.03.2011 has share capital of Rs. 29,28,000/- and reserves & surplus of Rs. 13,85,76,649/- . Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
M/s Santushi Vanijya Pvt Ltd (PAN-AAOCS6845E) [in short SVPL]:-
Regarding the identity of the company, the appellant submitted that originally, the SVPL was incorporated as a Private limited company, 81 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 02.07.2010 Vide Registration No U51909WB2010PTC150945. The SVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the SVPL is situated at 20, MD Road, Kolkata-700006. The SVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with SVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of SVPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 139 and certificate No 148 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of SVPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that SVPL as on 31.03.2011 has share capital of Rs. 14,54,000/- and reserves & surplus of Rs. 6,63,51,188/-. Likewise as on 31.03.2012 has share capital of Rs. 14,54,000/- and reserves & surplus of Rs. 6,63,58,503/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Spring Sales Pvt Ltd (PAN-AAOCS5474M) [in short SSPL]:-
Regarding the identity of the company, the appellant submitted that originally, the SSPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 12.07.2010 Vide Registration No U51909WB2010PTC151193. The SSPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the SSPL is situated at 11, Bysack Street, Kolkata- 700007. The SSPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with SSPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of SSPL. On perusal of bank account statement of the investor company no cash was found 82 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 140 and certificate No 149 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of SSPL along with Auditors' Report, in respect of the financial year ended 31St March 2012. On perusal of the same it was found that SSPL as on 31.03.2011 has share capital of Rs. 19,70,000/- and reserves & surplus of Rs. 9,16,36,840/-. Likewise as on 31.03.2012 has share capital of Rs. 19,70,000/- and reserves & surplus of Rs. 9,16,45,218/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Subhbiiav Agencies Pvt Ltd (PAN-AAOCS9626F) [in short SAPL]:-
Regarding the identity of the company, the appellant submitted that originally, the SAPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 09.11.2010 Vide Registration No. U51909WB2010PTC154536. The SAPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the SAPL is situated at 6, NG Basak Road, phase-ii, Block-I, 1st floor, Kolkata-700080. The SAPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with SAPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of SAPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 141 and certificate No 150 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of SAPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that SAPL as on 31.03.2011 has share capital of Rs. 2,22,80,538/- and reserves & surplus of Rs. 43,39,30,349/-. Likewise as on 31.03.2012 has share capital of Rs. 2,22,80,538/- and reserves & surplus of Rs. 43,39,35,954/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.83
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 • M/s Sunaina Tei-up Pvt Ltd (PAN-AAQCS4058K) [in short STPL]:-
Regarding the identity of the company, the appellant submitted that originally, the STPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 28.09.2011 Vide Registration No U74999WB2011PTC168228. The STPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the STPL is situated at 54, Munshi Saddaruddin Lane, 2nd floor, Kolkata-700007. The STPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with STPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of STPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 142 and certificate No 151 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of STPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that STPL as on 31.03.2012 has share capital of Rs. 6,42,500/- and reserves & surplus of Rs. 2,83,40,307/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Suruchi Suppliers Pvt Ltd (PAN-AAOCS9705M) [in short SSPL]:-
Regarding the identity of the company, the appellant submitted that originally, the SSPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 10.11.2010 Vide Registration No U51909WB2010PTC154569. The SSPL was incorporated with the objects contained in its Memorandum of sociation, under which it has got incorporated. The registered office of the SSPL is situated at 105, Cotton Street, Kolkata- 700007. The SSPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with SSPL had taken 84 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of SSPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 143 and certificate No 152 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of SSPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that SSPL as on 31.03.2012 has share capital of Rs. 31,30,010/- and reserves & surplus of Rs. 14,84,73,620/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Yash Commosales Pvt Ltd (PAN-AAACY4188L) [in short YCPL]:-
Regarding the identity of the company, the appellant submitted that originally, the YCPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 13.04.2010 Vide Registration No U51909WB2010PTC145155. The YCPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the YCPL is situated at 4, GC Avenue, 1st Floor, Kolkata-700013.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with YCPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of YCPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 144 and certificate No 153 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of YCPL along with Auditors' Report, in respect of the financial year ended 31S` March 2012. On perusal of the same it was found that YCPL as on 31.03.2011 has share capital of Rs. 2,40,41,193/- and reserves & surplus of Rs. 78,43,09,525/-. Likewise as on 31.03.2012 has share capital of Rs. 2,40,41,193/- and reserves & surplus of Rs. 78,42,45,741/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.85
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 • M/s. Ziona Dealmark Pvt Ltd (PAN-AAACZ4469P) [in short ZDPL]:-
Regarding the identity of the company, the appellant submitted that originally, the ZDPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 21.09.2010 Vide Registration No U51909WB2010PTC153237. The ZDPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the ZDPL is situated at 63, Radha Bazar Street, Kolkata-700001. The ZDPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with ZDPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of ZDPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 145 and certificate No 154 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of ZDPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that ZDPL as on 31.03.2011 has share capital of Rs. 23,07,000/- and reserves & surplus of Rs. 10,81,46,314/-. Likewise as on 31.03.2012 has share capital of Rs. 23,07,000/- and reserves & surplus of Rs. 10,79,30,106/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Atlantic Merchants Pvt Ltd (PAN-AAICA3843L) [in short AMPL]:-
Regarding the identity of the company, the appellant submitted that originally, the AMPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 10.04.2010 Vide Registration No U51909WB2010PTC145091. The AMPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the AMPL is situated at 4, GC Avenue, 1st floor, Kolkata-700001.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with AMPL had 86 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of AMPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 146 and certificate No 155 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of AMPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that AMPL as on 31.03.2011 has share capital of Rs. 2,24,57,500/- and reserves & surplus of Rs. 46,91,44,056/-. Likewise as on 31.03.2012 has share capital of Rs. 2,24,57,500/- and reserves & surplus of Rs. 46,91,59,145/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company.
• M/s Pearl Dealers Pvt Ltd (PAN-AAECP4377L) [in short PDPL]:-
Regarding the identity of the company, the appellant submitted that originally, the PDPL was incorporated as a Private limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal on 22.11.2007 Vide Registration No U51109WB2007PTC120528. The PDPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. The registered office of the PDPL is situated at 9/12, Lal Bazar Street, mercantile Building, Block B, Room No 10, Kolkata-700001. The PDPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with PDPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of PDPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 147 and certificate No 156 on 10.04.2012.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of PDPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. On perusal of the same it was found that PDPL as on 31.03.2011 has share capital of Rs. 3,77,45,000/- and reserves & surplus of Rs. 71,60,04,018/-. Likewise as on 31.03.2012 has share capital of Rs.87
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 3,77,45,000/- and reserves & surplus of Rs. 71,61,42,461/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company."
Also, the CIT(Appeals) had thereafter supported his observations by plethora of case laws, Page 121 to 123 of CIT(Appeals)'s order.
52. Having given a thoughtful consideration to the aforesaid issue in hand, we concur with the view taken by the CIT(Appeals) that now when the assessee company on the basis of clinching documentary evidence which had not been dislodged or disproved by the A.O by placing on record any document/material proving to the contrary, therein, established the identity and creditworthiness of the investor companies a/w. genuineness of the transactions of receipt of share capital/premium from them, therefore, there was no justification on the part of the A.O in summarily brushing aside the duly substantiated explanation of the assessee company and treating the amount of Rs.10.59 crore (supra) as an unexplained cash credit u/s.68 of the Act. Also, the Ld. D.R in the course of the proceedings before us had neither placed on record any such material/evidence which would disprove or dislodge the aforesaid observation of the CIT(Appeals), nor has brought to our notice any perversity in the view so arrived at by him. We, thus, finding no justifiable reason to dislodge the well-reasoned observations of the CIT(Appeals), approve the same. Thus, the Grounds of appeal No.(s) 1, 2 88 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 and 8 raised by the revenue being devoid and bereft of any merit are dismissed in terms of our aforesaid observations.
53. We shall now deal with the grievance of the revenue that the CIT(Appeals) had erred in vacating the addition of Rs.1,64,71,430/- that was made by the A.O u/s.41(1)(a) of the Act.
54. As observed by us hereinabove an amount of Rs.1,64,71,430/- (out of Rs.2,24,19,987/-) was reflected as payable by the assessee company to M/s. Pragmatic Builders Pvt. Ltd., a contractor who had executed certain works contract for the assessee company in the period relevant to A.Y 2011-12. Although, the assessee in the course of the assessment proceedings had filed copy of confirmation of the aforesaid contractor, viz. M/s. Pragmatic Builders Pvt. Ltd., but the A.O without making any enquiry had vide his order u/s 143(3), dated 31.03.2015 held the aforesaid amount as a liability which had ceased within the meaning of Section 41(1)(a) of the Act. Aggrieved, the assessee assailed the aforesaid addition made by the A.O u/s 41(1)(a) before the CIT(Appeals).
55. That pursuant to the search proceedings conducted u/s 132 of the Act on 19.09.2016, the A.O while framing the assessment vide his order passed u/s.153A r.w.s. 143(3) dated 26.12.2018 repeated the aforesaid 89 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 addition of Rs.1,64,71,430/- (supra) and, inter alia, assessed the income of the assessee company at Rs.13,10,24,630/-.
56. Consolidating the appeals filed by the assessee against the original assessment u/s 143(3), dated 31.03.2015 and u/s. 153A r.w.s 143(3), dated 26.12.2018, the CIT(Appeals) was of the view that the A.O while framing the assessment vide his order passed u/s.153A r.w.s. 143(3) of the Act instead of verifying as to whether or not the liability in question was outstanding on the date of his order, had however, summarily repeated the said addition. On a perusal of the evidence on record, it was observed by the CIT(Appeals) that the assessee company had during the F.Y 2012-13 to F.Y 205-16 discharged its major liability of Rs.1,62,17,000/- (out of Rs. 1,64,71,430/-) towards M/s. Pragmatic Builders Pvt. Ltd., as under: 90
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Accordingly, it was observed by the CIT(Appeals) that the outstanding liability of the assessee company towards the aforementioned contractor, viz. M/s. Pragmatic Builders Pvt. Ltd was scaled down to an amount of Rs.2,54,430/- as on 18.05.2016. On the basis of his aforesaid deliberations, the CIT(Appeals) being of the view that there was no justification on the part of the A.O to have sustained the addition of Rs.1,64,71,430/- u/s.41(1)(a) of the Act, thus vacated the same.
57. We have given a thoughtful consideration to the aforesaid issue in hand and find no infirmity in the view taken by the CIT(Appeals). Although, 91 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 it is the claim of the revenue that the CIT(Appeals) had in complete disregard of Rule 46A of the Income tax Rules, 1962 erred in taking cognizance of the payments aggregating to Rs.1,62,17,000/- (supra) made by the assessee company in the subsequent years, but the said claim of the revenue does not find favour with us. We, say so, for the reason that as the payments made by the assessee company vide cheques drawn on its bank account with Allahabad Bank, Branch : Raipur were very much there before the A.O while framing the assessment vide his order passed u/s.153A r.w.s 143(3) dated 26.12.2018, Page 39-40 of assessment order (as the copy of the said bank account of the assessee company was called for by the A.O u/s.133(6) of the Act), therefore, the same by no means could be held as being in the nature of an additional evidence. Also, as observed by the CIT(Appeals), as the assessee company in the course of the original assessment proceedings that had culminated vide order passed by the A.O u/s.143(3) dated 31.03.2015 had filed before him copies of confirmations of the aforementioned contractor, therefore, on the said count also we are unable to persuade ourselves to concur with the view taken by the A.O that the aforesaid liability in question was to be held as having ceased u/s.41(1)(a) of the Act. As the assessee had discharged the majority of its outstanding liability towards the aforesaid contractor, viz. M/s. Pragmatic Builders Pvt. Ltd. during F.Y.2012-13 to F.Y.2015-16 and an amount of Rs.2,54,430/- only was outstanding as payable in the running account of the aforesaid 92 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 party on 18.05.2016, therefore, in our considered view the CIT(Appeals) had rightly observed that there was no justification for the A.O to have dubbed the liability in question as a ceased liability u/s.41(1) of the Act. Accordingly, finding no infirmity in the view taken by the CIT(Appeals), we uphold his order to the extent he had vacated the addition of Rs.1,64,71,430/-. Thus, the Grounds of appeal No.(s) 9 and 10 raised by the revenue are dismissed in terms of our aforesaid observations.
58. In the result, appeal of the revenue in IT(SS)A No.2/RPR/2022 for A.Y. 2012-13 is dismissed in terms of our aforesaid observations.
IT(SS)A No.3/RPR/2022 A.Y.2013-14
59. Now we shall deal with the appeal of the revenue for A.Y.2013-14 in IT(SS)A No.3/RPR/2022, wherein the revenue has assailed the impugned order on the following grounds of appeal before us:
"1 "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition of Rs.2,10,00,000/- made by the AO on account of unexplained cash credit u/s.68 of the Income-tax Act, 1961?"
2. "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition made u/s.68 of Income-tax Act, 1961 by plainly accepting the plea of the assessee ignoring the fact that identity, creditworthiness and genuineness of the transactions could not be proved by the assessee".
3. "Whether on the facts and in law, the Ld. CIT(A) is right in holding that the additions were made in non-abated assessment year i.e. A.Y.2013-14 and in absence of any incriminating material and is not justified as per provision of section 153A of the Act? 93
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
4. "Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in ignoring decision of Hon'ble High Court of Kerala in the case of E.N gopakumar Vs CIT [2016 75 taxmann.com 215 (Kerala)], where in it is held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) of IT Act can be concluded against interest of assessee including making addition even without any incriminating material being available against assessee in search u/s.132 on basis of which, notice was issued to the assessee u/s.153A(1)(a) of the Act"
5. "Whether on the facts and in law, the Ld. CIT(A) is justified in ignoring the fact that third parties are directors of the investor companies who have already accepted in his statement they provided the accommodation entries to the company in lieu of commission and in completely ignoring the evidentiary value of these statements?
6. "Whether on the facts and in law, the Ld. CIT(A) is right that AO ought to have made additions on the basis of incriminating material and not on the basis of statement of the appellant which had already been retracted by the appellant at later stage knowing the fact of evidentiary value of statement recorded u/s.132(4) of the Act and while retracting from the statement given earlier, the assessee could not produce any corroborative evidence in support of his retraction. Further, in his concluding para of the statement, the assessee agreed and gave his consent that the statement given by him are correct and put his signature."
7. In reference to the above mentioned Point 6, Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in ignoring the dictum of law pronounced in case of Bannalal Jat Construction (P) Ltd vs ACIT 106 Taxmann 128(SC)/2019 264 Taxmann 5(SC) and in ignoring that the statement recorded u/s.131 of the act has evidentiary value and the burden lays on the person who made the statement, to provide a reasoned explanation for retracting from the statement, specifically, when he himself declared in his own handwriting that the statement is made in sound state of mind and without coercion. Therefore, Ld. CIT(A) is not justified in ignoring this fact and in relying solely on assessee's retraction.
8. Whether on the facts and in law, the Ld. CIT(A) justified in holding that the AO has no locus standi to assume that the share application money infused in the appellant company is not genuine and it is not justified to held the investor companies as dummy entities and the investments made by these companies are non-genuine even the directors of the share applicant companies have accepted in his statements that they have provided accommodation entries to the company in lieu of commission."
94
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
9. "Whether on the facts and in law, the Ld. CIT(A) is right in deleting the addition of Rs.49,00,000/- made by the AO on account of unexplained cash credit u/s.68 of the Income-tax Act, 1961 ignoring the fact that the agreements were on a plain paper and no documents provided in support of genuineness of agreement by the assessee and whether CIT(A) is justified in shifting the burden to AO when the assessee could not discharge is primary onus to establish the genuineness of transaction."
10. "Whether on the facts and in law, the Ld. CIT(A) is justified in plainly replying upon assessee submission and in deleting the ad-hoc addition of Rs.10,68,271/- and Rs.76,280/- made by the AO on account of labour charged and travelling & other expenses ignoring the fact that these expenses have been incurred by the assessee in cash which is not fully verifiable due to lack of genuineness of transaction?"
60. Succinctly stated, the assessee company had filed its return of income for A.Y.2013-14 on 29.09.2013, declaring an income of Rs.32,00,390/-.
Original assessment was framed by the A.O vide his order passed u/s.143(3) of the Act dated 28.03.2016, wherein the income of the assessee company was determined at Rs.3,02,91,280/- after, inter alia, making the following additions/disallowances:
Sr. No. Particulars Amount
1. Addition u/s.68 of the Act on account of share capital/premium received by the assessee company from following share applicant:
(i) M/s. Extent Vinimay Pvt. Ltd. Rs.19000000/- (towards allotment of 1187500 shares)
(ii) M/s. Manali Tradecom Pvt. Ltd.
(towards allotment of 125999 shares) Rs.20,00,000/-95
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
2. Addition towards unexplained cash Rs.49,00,000/-
advances
3. Ad-hoc disallowance of 10% labour Rs.10,68,271/-
charges claimed as deduction by the assessee
4. Ad-hoc disallowance of 1/5th of the Rs.76,280/-
travelling, telephone and conveyance expenses
5. Disallowance u/s.40A(3) of the Act Rs.46,340/-
61. Aggrieved, the assessee assailed the order passed by the A.O u/s 143(3), dated 28.03.2016 before the CIT(Appeals).
62. That pursuant to the search proceedings conducted u/s 132 of the Act on 19.09.2016 notice u/s. 153A of the Act was issued to the assessee company on 19.07.2017. In compliance, the assessee company had filed its return of income u/s.153A of the Act on 20.08.2017, declaring an income of Rs.32,46,730/-. Assessment was, thereafter, framed by the A.O vide his order passed u/ss. 153A/143(3) dated 26.12.2018, determining the income of the assessee company at Rs.3,03,37,621/- i.e. after reconsidering the additions which were earlier made by his predecessor vide original assessment framed u/s.143(3) dated 28.03.2016.
63. Consolidating the appeals filed by the assessee against the original assessment u/s 143(3), dated 28.03.2016 and u/s 153A r.w.s 143(3), dated 96 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 26.12.2018, the CIT(Appeals) vacated the aforesaid additions/disallowances made by the A.O.
64. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
65. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
66. At the very outset of the hearing of the appeal, the ld. Authorized Representative of both the parties were in consensus that majority of the issues involved in the present appeal on the basis of which the order of the CIT(Appeals) had been assailed before us, remained the same, as were there before us in the appeal filed by the revenue for the immediately preceding year i.e A.Y 2012-13 in IT(SS)A No.2/RPR/2022 for A.Y.2012-13.
67. As the revenue has, inter alia, assailed the order of the CIT(Appeals) on the ground that he had erred in vacating the additions made by the A.O u/s. 153A r.w.s. 143(3) dated 26.12.2018, for the reason that in absence of any incriminating material having been found and seized in the course of the search proceedings, no addition could have been made in respect of 97 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 unabated assessment of the assessee company for the year under consideration i.e.A.Y.2013-14, we shall thus first deal with the same.
68. On a careful perusal of the record it transpires that the assessee company had filed its original return of income u/s.139(1) of the Act on 29.09.2013, declaring an income of Rs.32,00,390/-. Search and seizure operations u/s.132 of the Act were conducted on the assessee company on 19.09.2016. On the date of the aforesaid search proceedings i.e. on 19.09.2016 as no assessment or reassessment proceedings were pending in the case of the assessee company, and also, the time limit for issuance of notice u/s. 143(2) of the Act for the year under consideration i.e. A.Y.2013- 14 had expired way back on 30.09.2014, therefore, as observed by the CIT(Appeals), and, rightly so, it was a case of an unabated assessment. Also, as observed by us hereinabove while disposing of the appeal filed by the revenue for the immediately preceding year i.e A.Y 2012-13 in in IT(SS)A No.02/RPR/2022 at Para 27, no incriminating material was found and seized in the course of search proceedings conducted on the assessee company. We, thus, in light of the aforesaid facts concur with the view taken by the CIT(Appeals), that as per the "2nd proviso" to Sec. 153A of the Act, in a case where no assessment or reassessment is pending on the date of search u/s. 132 of the Act, then, in absence of any incriminating material found and seized during the course of said proceedings relating to the year 98 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 under consideration i.e A.Y 2013-14, no addition could have been made in the hands of the assessee company. On the basis of our deliberations at Para 25 to 37 hereinabove, we finding no infirmity in the view taken by the CIT(Appeals) uphold the same to the said extent. Thus, the Grounds of appeal No.(s) 3 & 4 raised by the revenue are dismissed in terms of our aforesaid observations.
69. Considering the facts involved in the present case before us in the backdrop of the contentions of the ld. Authorized Representatives of both the parties, as the Grounds of appeal No.(s) 5 to 7 on the basis of which the order of the CIT(Appeals) has been assailed before us remains the same as were there in the appeal of the revenue for the immediately preceding year i.e A.Y 2012-13 in IT(SS)A No.2/RPR/2022 for A.Y.2012-13, therefore, the order therein passed shall mutatis mutandis apply for the purpose of disposing of the said issues to the extent the same had been raised by the revenue in the present appeal for A.Y 2013-14 in IT(SS)A No.3/RPR/2022 before us. Thus, the Grounds of appeal No.(s) 5 to 7 raised by the revenue are dismissed in terms of our aforesaid observations.
70. We shall now deal with the grievance of the revenue that the CIT (Appeals) had erred in law and facts of the case in vacating the addition of Rs.2.10 crore made by the A.O u/s.68 of the Act.99
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
71. As is discernible from the assessment order the assessee company during the year under consideration had received share capital/premium of Rs.2.10 crore from two share applicant companies, as under:
Name of the No. of share Share capital Share premium Total company Allotted M/s. Manali 1,25,000 Rs.12,50,000 Rs.6,50,000 Rs.20,00,000 Tradecom Pvt.
Ltd Extent Vinimay 11,87,500 Rs.1,18,75,000 Rs.71,25,000 Rs.1,90,00,000 Pvt. Ltd.
Total Rs.2,10,00,000 (A) M/s. Manali Tradecom Pvt. Ltd. : Rs. 20 lac
72. On the basis of verifications carried out by the A.O in the course of original assessment that was framed u/s.143(3) of the Act dated 28.03.2016, it was observed by him that as the aforesaid investor company while framing of the assessment in the case of the assessee for the A.Y. 2012-
13 was not found to be physically existing, therefore, for the said reason the share capital/premium that was claimed by the assessee to have been received from the said concern was added back by him as an unexplained cash credit u/s.68 of the Act. On the basis of his aforesaid observations the A.O held the amount of Rs.20 lac that was claimed by the assessee company to have been received as share capital/premium from the aforementioned investor company, viz. M/s. Manali Tradecom Pvt. Ltd. as an unexplained cash credit u/s.68 of the Act.
100
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 (B) M/s. Extent Vinimay Pvt. Ltd. : Rs.1.90 crore
73. On a perusal of the records, it was observed by the A.O that the aforesaid company had yet not started its business operations during the year under consideration. Observing, that the return of income a/w. bank statement of the aforementioned share applicant company did not support its creditworthiness, the A.O had while framing the original assessment vide his order passed u/s 143(3), dated 28.03.2016 held the amount of Rs.1.90 crore that was claimed by the assessee company to have been received as share capital/premium from the aforementioned company as an unexplained cash credit u/s.68 of the Act.
74. The A.O while framing the assessment vide his order passed u/s.153A r.w.s. 143(3), dated 26.12.2018 repeated the aforesaid additions as were made by him while framing the original assessment u/s.143(3) dated 28.03.2016.
BEFORE CIT(APPEALS) :
(A) M/s. Manali Tradecom Pvt. Ltd. : Rs. 20 lac
75. The CIT(Appeals) on an appeal filed by the assessee company deliberated at length on the documentary evidences that were filed to substantiate the identity and creditworthiness of the aforementioned share applicant i.e. M/s. Manali Tradecom Pvt. Ltd., as well as the genuineness of the transaction of receipt of share capital/premium from the said share 101 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 applicant company. Considering the certificate of incorporation granted by the Registrar of companies (ROC), West Bengal on 14.12.2010 bearing registration no. U51909WB2010PTC155767, memorandum of association, articles of association, copies of bank statement, audited financial statements of the aforesaid investor company, the CIT(Appeals) was of the view that there was no justification for the A.O in holding the investment made by the said investor company which had sufficient funds available at its disposal to make the investment in question, as an unexplained cash credit u/s.68 of the Act. Apropos the identity of the aforesaid investor company, it is was observed by the CIT(Appeals) that initially the registered office of the said company was situated at 105, Cotton bazaar, Kolkata, West Bengal-700 007, which, thereafter as per current records was shifted to 119, Cotton Street, 2nd floor, Burra Bazar, Kolkata- 700 007. Also, it was observed by the CIT(Appeals) that the investor company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India was an active and functional company. Regarding the genuineness of the transaction of receipt of share capital/premium by the assessee company from the aforesaid investor company, it was observed by the CIT(Appeals) that all of the said transactions had taken place through account payees cheques and none of them was made in cash. Also, it was observed by the CIT(Appeals) that a perusal of the bank account of the investor company did not reveal any cash deposits either before or after the transfer of funds to the assessee 102 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 company. As regards the creditworthiness of the aforesaid investor company, it was observed by the CIT(Appeals) that a perusal of its financial statements both as on 31.03.2012 and 31.03.2013 revealed that it had sufficient funds to make the investment in question. In fact, it was observed by the CIT(Appeals) that the investment made by the aforesaid investor was out of the advance of an amount of Rs. 20 lac which it had received from M/s Zigma Dealmark Pvt. Ltd. For the sake of clarity the relevant observations of the CIT(Appeals) with respect to the aforesaid investor company are culled out as under:
"M/s. Manali Tradecom Pvt. Ltd. (PAN : AAGCM9089E) [in short MTPL]:-
Regarding the identity of the company, the appellant submitted that originally, the MTPL was incorporated as a Private limited company duly registered under the erstwhile Companies Act, 1956 under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 14.12.2010 vide registration No. U51909WB2010PTC155767. The MTPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. Initially, the registered office of the MTPL was situated at 105, Cotton bazaar, Kolkata, West Bengal-700007, however, as current registered office as per MCA record is at 119, Cotton Street, 2nd Floor, Burra Bazar, Kolkata-700007. The EVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with MTPL had taken place through account payee cheques/ banking channels only and none of the tr ions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of MTPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of MTPL 103 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 along with Auditors' Report, in respect of the financial year ended 31st March 2013. On perusal of the same it was found that MTPL as on 31.03.2012 has share capital of Rs. 26,38,000/- and reserves & surplus of Rs.12,40,15,575/-. Likewise, as on 31-03-2013, MTPL has share capital of Rs. 26,38,000/- and reserves & surplus of Rs.12,40,15,575/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. The said investor company has received an advance of Rs.20,00,000/- from M/s Zigma Dealmark Pvt ltd and the same amount was invested in appellant company. Once, the source of investment has been treated as genuine, the AO has no locus to treat the same as bogus and non- genuine and that to in absence of any positive documents in support of his allegation."
On the basis of his aforesaid observations the CIT(Appeals) held the investment made by the aforesaid investor company as genuine, and thus, vacated the addition of Rs.20 lac made by the A.O u/s.68 of the Act.
76. We have given a thoughtful consideration to the view taken by the lower authorities as regards the amount of Rs.20 lac which the assessee company had claimed to have received as share capital/premium from the aforementioned investor company, viz. M/s. Manali Tradecom Pvt. Ltd. As observed by the CIT(Appeals) the aforementioned investor company was an active and functional company as per the records of MCA, a fact which was even otherwise proved on the basis of compliances made by the said company to the notice issued by the A.O u/s.133(6) of the Act. Also, it was observed by the CIT(Appeals) that the aforesaid investor company as per its audited financial statements had substantial financial means to make investment in question with the assessee company. Considering the aforesaid facts, we are of a strong conviction that the assessee company had 104 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 duly discharged the initial onus that was cast upon it as regards proving the identity and creditworthiness of the aforesaid investor company, viz. M/s Manali Tradecom Pvt. Ltd., along with the genuineness of the transaction of receipt of share capital/premium from it. Nothing has been brought on record by the A.O which would disprove or dislodge the duly substantiated claim of the assessee of having received genuine amount of share capital/premium from the aforesaid investor company. Apart from that, the Ld. DR had also failed to place on record any material which would persuade us to conclude that the observation of the CIT(Appeals) suffers from any perversity. Considering the aforesaid facts, we concur with the view taken by the CIT(Appeals) that now when the assessee had duly discharged the onus that was cast upon it as regards proving the identity and creditworthiness of the share subscriber, and the genuineness of the transaction under consideration, therefore, there was no justification for the A.O to have held the amount of Rs.20 lac that was received by the assessee company as share capital/premium from the aforesaid investor as an unexplained cash credit u/s.68 of the Act.
(B). M/s. Extent Vinimay Pvt. Ltd. : Rs.1.90 crore
77. On a perusal of the orders of the lower authorities, we find that the aforementioned investor company was duly registered with the Registrar of Companies, West Bengal (ROC) on 12.07.2010 vide registration No. 105 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 U51101WB2010PTC15102. It initially had its registered office at 63, Radha Bazar Street, Kolkata, West Bengal - 700 001, which thereafter w.e.f. 15.05.2018 was shifted to a new address i.e 201, 2nd floor, Lal Ganga Shopping Mall, G.E Road, Raipur-492 001. It was observed by the CIT(Appeals) that the aforementioned company was an active and functional company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Also, it was observed by the CIT(Appeals) that the aforesaid investor company, viz. M/s Extent Vinimay Pvt. Ltd. was assessed by the ITO, Ward-12(2), Kolkata vide his order passed u/s 263 r.w.s 143(3), dated 20.12.2016.
78. The assessee company in order to substantiate the identity and creditworthiness of the investor company as well as the and genuineness of the transaction under consideration, had filed with the lower authorities supporting documentary evidence, viz. copies of audited financial statements a/w. auditor's report, copies of bank statement, memorandum of association, articles of Association and copies of return of income. On a perusal of the bank statement of the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd., it was observed by the CIT(Appeals) that no cash was found deposited before and after transfer of funds towards investment made by the aforesaid investor with the assessee company. Also, it was observed by the CIT(Appeals) that the assessee company after receipt of 106 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 share capital/premium had issued Equity Share Certificates with Folio No.148 and Certificate No.157 on 15.04.2013 to the investor company. Further, the CIT(Appeals) referring to the audited financial statements observed that the aforesaid investor company on 31.03.2012 had a share capital of Rs.36.39 lac and reserves & surplus of Rs.17,34,26,476/-. On 31.03.2013, the said investor company had share capital of Rs.36.39 lac and reserves & surplus of Rs.17,34,35,034/-. Considering the aforesaid facts, the CIT(Appeals) was of the view that the investor company had sufficient funds available with it to make investment in the equity shares of the assessee company.
79. On a perusal of the records, it was observed by the CIT(Appeals) that the assessment order passed by the ITO-Ward 12(2), Kolkata u/s 143(3), dated 17.03.2014 in the case of the aforesaid investor company, viz. M/s Extent Vinimay Pvt. Ltd. was thereafter subjected to revision by the Pr. CIT- 2, Kolkata vide his order passed u/s 263 of the Act, dated 28.03.2016. It was observed by the CIT(Appeals) that the Pr. CIT-2, Kolkata had vide his order u/s.263 of the Act, dated 28.03.2016 while treating the order passed by the A.O u/s 143(3), dated 17.03.2014 in te case of the investor company, viz. M/s Extent Vinimay Pvt. Ltd., as erroneous in so far it was prejudicial to the interest of the revenue, had while setting-aside the said order specifically directed him to frame afresh assessment after conducting 107 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 independent, detailed and complete enquiry into the fresh subscription of share capital of Rs. 35.39 lac and share premium of Rs. 17.34 crore that was raised by the latter during the said year i.e A.Y 2011-12. It was further observed by the CIT(Appeals) that the A.O pursuant to the aforesaid directions had vide his order passed u/s.143(3) r.w.s. 263, dated 20.12.2016 verified the share capital/premium of Rs. 17.69 crore (approx.) that was raised by the aforesaid investor company, viz. M/s Extent Vinimay Pvt. Ltd. and had found the same in order. On the basis of the aforesaid facts, the CIT(Appeals) found substance in the claim of the assessee company that now when the share capital/premium received by the investor, viz. M/s Extent Vinimay Pvt. Ltd. in A.Y 2010-11 was after necessary vetting and verifications in its case by the ITO-Ward 12(2), Kolkata vide his order passed u/ss. 143(3)/263, dated 20.12.2016 found to be in order, then, the investment of Rs. 1.90 crore (supra) made by the said investor company by realizing its investments, which, in turn were sourced from the aforesaid duly explained share capital/premium of Rs. 17.69 crore (supra) could not be held as an unexplained cash credit in the hands of the assessee company. Considering the duly explained source of investment made by the aforesaid investor company, viz. M/s Extent Vinimay Pvt. Ltd., the CIT(Appeals) was of the view that there was no locus standi for the A.O of the assessee company to have held same as an unexplained cash credit u/s.68 of the Act in the hands of the assessee company. For the sake of 108 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 clarity the relevant observations of the CIT(Appeals) as r egards the investment made by the aforesaid company, viz. M/s. Extent Vinimay Pvt. Ltd are culled out as under:
M/s. Extent Vinimay Pvt. Ltd (PAN-AACE4578J) [ in short EVPL]:-
Regarding the identity of the company, the appellant submitted that originally, the MTPL was incorporated as a Private limited company duly registered under the erstwhile Companies Act, 1956 under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 12.07.2010 vide registration No. U51101WB2010PTC151202.
The EVPL was incorporated with the objects contained in its Memorandum of Association, under which it has got incorporated. Initially, the registered office of the EVPL was situated at 63, Radha Bazar Street, Kolkata, West Bengal- 700001, but subsequently, w.e.f. 15.05.2018, the registered office of the company got shifted to a new place situated at 201, 2nd floor, Lal Ganga Shopping Mall, GE Road, Raipur-492001. The EVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. Further, EVPL for AY 2011-12 has been assessed by the ITO Ward-12(2), Kolkata vide order u/s 263 r.w.s 143(3) dated 20.12.2016.
Regarding the genuineness of the transaction, the appellant submitted that all the transactions by the appellant with EVPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of EVPL. On perusal of bank account statement of the investor company no cash was found deposited before and after transferring of funds to the appellant company. After receipt of funds the appellant company has issued 'Equity Share Certificate' with reg. Folio No 148 and certificate No 157 on 15.04.2013.
In order to prove credit worthiness of the investor, the appellant has filed copies of audited financial statements of EVPL along with Auditors' Report, in respect of the financial year ended 31St March 2013. On perusal of the same it was found that EVPL as on 31.03.2012 has share capital of Rs.109
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 36,39,000/- and reserves & surplus of Rs.17,34,26,476/-. Likewise, as on 31-03-2013, EVPL has share capital of Rs. 36,39,000/- and reserves & surplus of Rs.17,34,35,034/-. Thus, the investor has sufficient funds to make investment in equity shares of appellant company. Most importantly, the case of EVPL was re-opened u/s 263 of the share capital and share premium received during A.Y.2011-12. The ld AO i.e. ITO Ward-12(2), Kolkata after verification of facts and submissions filed by ld AR of the investor company treated the share capital/premium as genuine by passing order u/s 263 r.w.s 143(3) dated 20.12.2016. The said order has been passed after the search and seizure proceedings in the case of appellant. Once, the source of investment has been treated as genuine, the AO has no locus to treat the same as bogus and non- genuine and that to in absence of any positive documents in support of his allegation."
80. We have given a thoughtful consideration to the view taken by the CIT(Appeals) as regards the investment of Rs. 1.90 crore (supra) made by the aforementioned investor company, viz. M/s. Extent Vinimay Pvt. Ltd.
with the assessee company. As observed by the CIT(Appeals), and, rightly so, as the assessee company had on the basis of supporting documentary evidence, viz. copies of return of income, computation of income, audited financial statement, PAN, memorandum of association, articles of association and confirmation of the aforementioned investor company duly discharged the primary onus that was cast upon it as regards proving the identity and creditworthiness of the investor company as well as genuineness of the transaction of receipt of share capital/premium of Rs. 1.90 crore (supra) from it, therefore, there was no justification for the A.O to have summarily disregarded the same and dubbed the investment as an unexplained cash credit u/s.68 of the Act. We may herein observe that the 110 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 due compliance of the notice u/s.133(6) of the Act issued by the A.O to the aforementioned investor company further adduces the factum of authenticity of the transaction in question. We further find that as regards the adverse inferences that were drawn by the A.O regarding the non- availability of the aforementioned company at its address, it is the claim of the assessee that the same had occasioned due to the change in the address of the investor company. Elaborating on his aforesaid claim, it was submitted by the ld. A.R that the address of the aforementioned investor company was changed from Kolkata to Raipur i.e. 201, 2nd floor, Lal Ganga Shopping Mall, G.E Road, Raipur-492 001, which though was brought to the notice of the A.O, but the latter despite being well aware of the said new address had never tried to verify the availability of the said investor company at its new address. Also, we find substance in the observation of the CIT(Appeals), that though the directors of the aforementioned investor company, viz. Smt. Rajshree Jain and Shri Pranjal Jain i.e the key persons of Lal Ganga group were also subjected to search proceedings u/s 132 of the Act, the A.O, however, despite being well aware of the said fact had in the course of the post search assessment proceedings refrained from carrying out any enquiry from them about the availability/existence of the aforementioned investor company, and had rather chosen to rely on the unsubstantiated reports of the Inspector of the Income-Tax, which, in turn were based on the verifications carried out by them at the old address of the 111 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 investor company. Considering the aforesaid facts, we concur with the view taken by the CIT(Appeals) that now when the assessee company had duly discharged the onus that was cast upon it as regards proving the authenticity of the transaction of having received genuine share capital/premium from the aforementioned investor company, viz. M/s. Extent Vinimay Pvt. Ltd, therefore, the A.O could not have remained oblivion of the said material evidence and drawn adverse inferences without placing on record any material/evidence which would have disproved the authenticity of the aforesaid claim of the assessee company. Our aforesaid view that no addition could be made merely on the basis of suspicion, guess work and surmises is supported by the judgment of the Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd Vs Commissioner of Income Tax, (1954) 22 CCH 139 (ISCC) and that of the Hon'ble High Court of Calcutta in the case of Northern Bengal Jute Trading Co. Ltd. Vs. Commissioner of Income-Tax, (1968) 70 ITR 407 (Cal). Also, the aforesaid view is supported by the order of ITAT, Mumbai in the case of Riddhi Siddhi Developers Pvt. Ltd. Vs. Deputy Commissioner of Income Tax (2021) 63 CCH 86 (Mum.)
81. Apart from that, we find substance in the observation of the CIT(Appeals) that as the investment made by the aforementioned investor company i.e M/s Extent Vinimay Pvt. Ltd. was out of the realization proceeds 112 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 of its investments, which in turn were sourced out of, viz. (i) share capital :
Rs.35.39 lac; and (ii) share premium : Rs.17.34 crore that were reflected in its books of account for the year ended 31.03.2011, and the same pursuant to the order passed by the Pr.CIT-2, Kolkata u/s.263 of the Act dated 28.03.2016 had been looked into by the A.O vide his order passed u/s.143(3) r.w.s. 263 dated 20.12.2016 and was found to be in order, therefore, there was no locus standi for the A.O of the present assessee company to have dubbed the investment made by the said investor company out of its duly disclosed fund as an unexplained cash credit u/s. 68 of the Act. Elaborating on the aforesaid view taken by the CIT(Appeals), we shall briefly cull out the facts leading to the same, as under:
Date Particulars
02.11.2011 Return of income filed by M/s. Extent Vinimay Pvt. Ltd for
A.Y.2011-12 with ITO, Ward-5(3), Kolkata
17.03.2014 Original assessment framed u/s.143(3) of the Act dated
17.03.2014 by the ITO, Ward-5(3), Kolkata
28.03.2016 Order u/s.263 of the Act passed by the Pr. CIT-2, Kolkata holding
the order passed by the A.O u/s.143(3) dated 17.03.2014 as erroneous in so far as it was prejudicial to the interest of the revenue u/s.263 of the Act for the reason that he had framed the assessee without initiating /conducting complete enquiry as regards the share capital/large share premium that was claimed by the assessee to have been received during the year viz. (i) share capital : Rs.35.39 lac ; (ii) share premium : Rs.17.34 crore and accordingly, set aside the issue to his file with the direction to pass fresh assessment order after conducting independent and detailed enquiry, Page 269 to 274 of APB.
20.12.2016 Assessment order passed by the A.O u/s.143(3) r.w.s. 263 dated 20.12.2016 wherein, he after summoning the directors of the 113 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 M/s. Extent Vinimay Pvt. Ltd u/s.131 of the Act and carrying out detailed enquiry as regards the source of share capital/premium of Rs.17.70 crore [share capital: Rs.35.39 lacs (+) Rs.17.34 crore], having found the same to be in order, was accepted by him.
82. On the basis of the aforesaid facts, we are of the considered view that now when the source out of which the aforementioned investor company, viz. M/s. Extent Vinimay Pvt. Ltd had made the investment with the assessee company towards share capital/premium in itself stands accepted by the department, therefore, as observed by the CIT(Appeals), and, rightly so, there was no locus standi with the A.O of the present assessee company to have held the investment made by the aforementioned company as an unexplained cash credit u/s. 68 of the Act in the hands of the assessee company.
83. In order to verify the aforesaid factual position and to dispel all doubts, the Ld. AR for the assessee in the course of hearing of the appeal was directed to place on record a "fund flow" chart which would reveal that the investment of Rs. 1.90 crore (supra) made by M/s. Extent Vinimay Pvt. Ltd towards share capital/premium with the assessee company during the year under consideration was sourced out of its duly disclosed funds of Rs.17.69 crore (supra). In compliance, the assessee had filed before us a consolidated "fund flow" chart a/w. copies of extract of audited financial statements and 114 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 copies of bank account of the aforementioned investor company, viz. M/s. Extent Vinimay Pvt. Ltd.
84. We, before proceeding any further, deem it fit to cull out the consolidated "fund flow" chart on the basis of which the assessee company had claimed that the investment made by the aforesaid investor company, viz. M/s Extent Vinimay Pvt Ltd. towards share capital/premium with it during the year under consideration i.e A.Y.2013-14 and for the immediately two succeeding years, were out of realization of the investments of the said investor company, which, in turn were sourced out of its duly disclosed source of Rs.17.71 crore (approx.) [i.e share capital : Rs.36.39 lac (+) reserves & surplus : Rs.17.34 crore] that had been looked into and accepted by the A.O i.e ITO, Ward12(2), Kolkata in the case of the said investor company, viz. M/s Extent Vinimay Pvt. Ltd. vide his order passed u/s. 143(3) r.w.s. 263, dated 20.12.2016 for A.Y 2011-12, as under:
M/s. Extent Vinimay Pvt. Ltd Details of share 31.03.2011 31.03.2012 31.03.2013 31.03.2014 31.03.2015 investment as on Total investment, loan, cash and bank balance excluding given to D=A+B+C 1771 2026 1587 313 110 Lalganga Builders Pvt.
Ltd.Realisation of E 439 1274 203
Investment, loan, cash (2026-1587) (1587-313) (313-110) and bank Investment made in M/s. F 190 1268 203 Lalganga Builders Pvt.
Ltd. or loan given to Lalganga Builders Pvt.
Ltd.115
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
Refer Page No. for Bank 34-37 23-33 38-39
Statement
Total loan or investment 344 1645 296
after considering the
investment or loan given
to Lal Ganga Builders
Pvt. Ltd.
Refer Page No. 10 and 13 15 and 18 19 & 22
On a careful perusal of the aforesaid "fund flow" chart filed before us, it transpires that it is the claim of the assessee company that the aggregate of the investments of the investor company, viz. M/s Extent Vinimay Pvt. Ltd.
by way of share capital/premium, loans/advances in various companies a/w cash/bank balance on 31.03.2011 was Rs. 17.71 crore [investment in shares: Rs.16.41 crore (+) loans/advances: Rs.1.28 crore (+) cash/bank balance: Rs .04 crore]. The assessee company on the basis of its consolidated "fund flow" chart, had tried to project, that the investments made with it by the aforesaid investor company i.e towards share capital/premium and loans/advances for the year under consideration i.e. A.Y.2013-14 and the succeeding two years, were out of rotation of the latter's investments/funds of Rs.17.71 crore (supra), the source of which was looked into and accepted by the ITO, Ward 12(2), Kolkata, vide his order passed in the case of the said investor company, viz. M/s. Extent Vinimay Pvt. Ltd u/s.143(3) r.w.s. 263 dated 20.12.2016.
85. We have given a thoughtful consideration and find substance in the aforesaid claim of the assessee. Now when the investments made by the 116 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd were sourced from the rotation/realization of its investments/funds of Rs.17.71 crore (supra) that had been accepted by the ITO, Ward 12(2), Kolkata vide his order passed u/s.143(3) r.w.s. 263 of the Act, dated 20.12.2016, therefore, as observed by the CIT(Appeals), and, rightly so, the A.O could not have held any part of such investment made by the said investor with the assessee company out of its said disclosed sources as an unexplained cash credit in the hands of the assessee company. At the same time, we cannot also remain oblivion of the fact, that as per the "fund flow" chart filed by the assessee company as the investments of M/s. Extent Vinimay Pvt. Ltd had jacked up from Rs.17.71 crore (supra) in F.Y 2010-11 to Rs.20.26 crore in F.Y 2011- 12, therefore, the claim of the assessee company that the source of investments made with it by the aforesaid investor, viz. M/s Extent Vinimay Pvt. Ltd. out of its disclosed sources have to be restricted to the extent of Rs.17.71 crore (supra), i.e, as was accepted by the ITO, Ward 12(2), Kolkata while framing the assessment in the latter's case u/s.143(3) r.w.s. 263 of the Act, dated 20.12.2016, and thus, would not be available as regards the jacked up figure of Rs.20.26 crore (supra).
86. In terms of our aforesaid observations, the claim of the assessee company that as the total investments/loans & advances of the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd had reduced from 117 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Rs.20.26 crore on 31.03.2012 to Rs.15.87 crore on 31.03.2013, therefore the investment of Rs.1.90 crore (supra) made by the said investor with the assessee company towards share capital/premium during the year under consideration i.e. A.Y.2013-14 could safely be held to have been sourced out of realization of the duly disclosed investments/loan & advances of Rs.4.39 crore [Rs.20.26 crore (-) Rs.15.87 crore] of the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd, cannot be accepted by us. As the investments/loans & advances of Rs.17.71 crore (supra) on 31.03.2011 in the case of the investor company, viz. M/s Extent Vinimay Pvt. Ltd. had been held by the ITO - Ward 12(2), Kolkata vide his order passed u/s.143(3) r.w.s. 263 of the Act, dated 20.12.2016 to have been made from duly disclosed/explained sources, therefore, the benefit as regards availability of the aforesaid duly disclosed/verified funds can be allowed only to the said extent. We, thus, are of the considered view, that in terms of our aforesaid observations, the claim of the assessee company that the investor, viz. M/s Extent Vinimay Pvt. Ltd. had during the year under consideration i.e A.Y 2013-14 made investment towards share capital/premium with it out of its duly disclosed funds can only be accepted to the extent of Rs.1.84 crore [Rs. 17.71 crore (minus) Rs. 15.87 crore]. Accordingly, the claim of the assessee that the investment made by the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd towards share capital/premium of Rs.1.90 crore 118 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 with it was out of rotation/realization of its duly disclosed investments of A.Y 2011-12 can only be accepted to the extent of Rs.1.84 crore (supra.).
87. Alternatively, we are of the considered view, that as observed by the CIT(Appeals), and, rightly so, as the assessee by placing on record supporting documentary evidences, viz. copies of audited financial statements, copies of bank accounts, memorandum of association, articles of association, copies of return of income etc. of the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd., had duly established the identity and creditworthiness of the said investor company, as well as the genuineness of the transaction of having received share capital/premium from the said concern, therefore, there was no justification on the part of the A.O to have held any part of the investment of Rs.1.90 crore (supra) made by the said investor company towards share capital/premium with the assessee company during the year under consideration as an unexplained cash credit u/s.68 of the Act. On the basis of our aforesaid deliberations, we concur with the view taken by the CIT(Appeals) that now when the assessee had on the basis of clinching documentary evidence duly discharged the onus as was cast upon it as regards proving the identity and creditworthiness of the investor company, as well as the genuineness of the transaction of having received share capital/premium of Rs.1.90 crore from the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd, therefore, 119 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 the same could not have been summarily dislodged by the A.O without placing on record any material proving to the contrary. We, thus, in terms of our aforesaid observation uphold the order of the CIT(Appeals) who in our considered view had rightly vacated the addition of Rs.1.90 crore (supra) made by the A.O u/s.68 of the Act. Thus, the Grounds of appeal No.(s) 1, 2 & 8 raised by the revenue are dismissed in terms of our aforesaid observations.
88. We shall now deal with the grievance of the revenue that the CIT(Appeals) had erred in deleting an addition of Rs. 49 lac that was made by the A.O u/s.68 of the Act.
89. As transpires on the basis of the facts as are discernible from the orders of the lower authorities, the assessee company had claimed to have received cash amounting to Rs.49 lac from 5 different parties as advance towards sale of shops located at Lal Ganga Mall, Raipur, as under:
S. No. Name of the party Date of Date of Amount
agreement cancellation
of agreement
1. Aarati Jain 27.04.2012 10.12.2012 1150000
2. Dilip Kothari 19.04.2012 30.03.2013 950000
3. Virendera Kumar 05.04.2012 10.12.2012 950000
Chourdia
4. Dharam Chourdia 18.06.2012 10.12.2012 900000
5. Pramila Jain 26.04.2012 10.12.2012 950000
120
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
Total 4900000
It was the claim of the assessee that as the aforesaid sale agreement was cancelled, therefore, the cash advance was returned back to the aforementioned parties. However, the aforesaid claim of the assessee did not find favor with the A.O. The A.O doubted the authenticity of the aforesaid claim of the assessee, for the reason that both the "agreements" i.e sale agreement and the cancellation agreement were executed on plain paper. Apart from that, it was observed by the A.O that no documentary evidence was filed by the assessee to substantiate its aforesaid claim. On the basis of his aforesaid observations the A.O held the entire amount of Rs.49 lac (supra) as an unexplained cash credit u/s.68 of the Act.
90. On appeal, the CIT(Appeals) after considering both the agreements i.e agreement of sale/cancellation agreement was of the view that the contents therein had been rejected by the A.O without carrying out any enquiry from the concerned parties. It was observed by him that the A.O had failed to arrive at a correct factual position by carrying out necessary enquiries from the concerned persons. The CIT(Appeals) was of the view that as the assessee by placing on record documentary evidence, had come forward with an explanation to discharge the initial onus that was cast upon it as regards proving the nature and source of the cash deposits in its books of accounts, 121 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 therefore, there was no justification on the part of the A.O to have summarily dislodged the same without placing on record any credible evidence proving to the contrary. Apart from that, the CIT(Appeals) was of the view that the manner in which the cash was introduced in the books of accounts of the assessee also did not find any mention in the body of the assessment order. The CIT(Appeals) was of the view that as the A.O had made the impugned addition u/s.68 of the Act on the basis of surmises and presumptions, thus, the same could not be sustained and was liable to be struck down. The CIT(Appeals) relied on the judgment of the Hon'ble High Court of Chhattisgarh in the case of Pawan Kumar Agrawal, Tax Case No.24 of 2011 dated 04.04.2017, wherein, the Hon'ble High Court in the case before them had while approving the view taken by the CIT(Appeals), observed, that as the A.O while making the addition u/s.68 of the Act had failed to press into service either of the necessary course of actions/enquiries contemplated in Section 131 or Section 133(6) of the Act, therefore, the addition so made by him could not be sustained.
91. We have given a thoughtful consideration to the aforesaid issue in hand in the backdrop of the contentions advanced by the ld. authorized representative of both the parties. Admittedly, as the A.O had while disbelieving the explanation of the assessee as regards the nature and source of the cash deposits of Rs.49 lac (supra) in its books of account had 122 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 neither carried out any verifications on his own nor dislodged the claim of the assessee on the basis of any material proving to the contrary, therefore, the CIT(Appeals), in our considered view, had rightly vacated the aforesaid impugned addition that was made by the A.O vide his original assessment passed u/s.143(3) dated 28.03.2016. As observed by the CIT(Appeals), and, rightly so, now when the assessee while discharging the initial onus that was cast upon it as regards proving the nature and source of the cash deposits in its books of accounts, had in support of his claim filed with the A.O copies of agreements, viz. sale agreement/cancellation agreement, therefore, there was no justification for the A.O in rejecting the same without placing on record any material disproving the authenticity of the aforesaid claim. Our aforesaid view is supported by the judgment of the Hon'ble High Court of Chhattisgarh in the case of Pawan Kumar Agrawal, Tax Case No.24 of 2011 dated 04.04.2017. In fact, we are in agreement with the CIT(Appeals) that the A.O had even failed to do the bare minimum that was required on his part, i.e, making verifications or calling for the necessary details from the aforesaid five parties with whom the assessee had claimed to have carried out the transaction in question. We, thus, on the basis of our aforesaid observations finding no infirmity in the view taken by the CIT(Appeals), uphold his order to the extent he had vacated the addition of Rs.49 lac (supra) made by the A.O. Thus, the Ground of appeal No. 9 raised by the revenue is dismissed in terms of our aforesaid observations. 123
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
92. We shall now deal with the grievance of the revenue that the CIT(Appeals) had erred in vacating the ad-hoc disallowances that were made by the A.O, viz. (i) disallowance @10% out of labour expenses:
Rs.10,68,271/-; and (ii) disallowance @20% out of telephone expenses, travelling expenses and conveyance & car expenses : Rs.76,280/-.
93. It transpires on a perusal of the orders of the lower authorities that the assessee had booked, viz. (i). labour expenses of Rs.1,06,82,714/-; (ii). travelling expenses of Rs.11,646/-; and (iii). telephone expenses of Rs.73,004/-. The A.O observing that the assessee had not maintained any proper muster roll for labour expenses and had made all the payments in cash, thus, in order to prevent any possible leakage of revenue had made an ad-hoc disallowance of Rs. 10,68,271/- out of labour expenses i.e @10% of Rs. 1,06,82,714/-. On a similar footing the A.O had worked out an ad-hoc disallowance of Rs. 76,280/- i.e @ 20% out of telephone expenses, travelling expenses and conveyance & car expenses.
94. On appeal, it was observed by CIT(Appeals) that the A.O had made the aforesaid ad-hoc disallowances without pointing out any specific defect in the claim for deduction of expenses as was raised by the assessee company in its profit & loss account. Also, it was observed by the CIT(Appeals) that no disallowance of any part of labour expenses was made in the earlier year 124 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 despite the fact that the claim of expenses in the preceding year was on the higher side. Further, the CIT(Appeals) considering the fact that the A.O had failed to point out a single instance of expenditure which was not supported by voucher/bill or was found to be non-genuine or personal in nature, was thus of the view that the aforesaid claim for deduction of expenses could not have been summarily disallowed by the A.O. The CIT(Appeals) was further of the view that no ad-hoc disallowance could be sustained in absence of pointing out of any specific defect by the A.O. Considering the aforesaid facts the CIT(Appeals) vacated the disallowance of Rs.10,68,271/- out of labour expenses and Rs.76,280/- out of telephone expenses, travelling expenses and conveyance expenses.
95. We have given a thoughtful consideration to the aforesaid issue, and find no reason to dislodge the well-reasoned observations of the CIT(Appeals). Admittedly, as the A.O while working out the disallowance had proceeded with in a whimsical manner and neither pointed out the very basis for working out the disallowance, nor referred to any such expenditure which was not supported by vouchers/bills, therefore, as observed by the CIT(Appeals), and, rightly so, no part of assessee's claim for deduction of such expenditure could have been disallowed in absence of any specific defect having been pointed out by the A.O. We, thus, in terms of our aforesaid observations uphold the order of the CIT(Appeals) to the extent 125 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 that he had vacated the respective ad-hoc disallowances that were made by the A.O while framing of the original assessment u/s.143(3) dated 28.03.2016, which, thereafter was repeated by him while framing the assessment vide his order passed u/s 153A r.w.s 143(3) of the Act, dated 26.12.2018. Thus, the Ground of appeal No.10 raised by the revenue is dismissed in terms of our aforesaid observations.
96. In the result, appeal of the revenue in IT(SS)A No.3/RPR/2022 for A.Y. 2013-14 is dismissed in terms of our aforesaid observations.
IT(SS)A No.04/RPR/2022 A.Y.2014-15
97. Now we shall deal with the appeal of the revenue for A.Y.2014-15 in IT(SS)A No.4/RPR/2022, wherein the revenue has assailed the impugned order on the following grounds of appeal:
"1 "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition of Rs.12,68,00,000/- made by the AO on account of unexplained cash credit u/s.68 of the Income-tax Act, 1961?"
2. "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition made u/s.68 of Income-tax Act, 1961 by plainly accepting the plea of the assessee ignoring the fact that identity, creditworthiness and genuineness of the transactions could not be proved by the assessee".
3. "Whether on the facts and in law, the Ld. CIT(A) is right in holding that the additions were made in non-abated assessment year i.e. A.Y.2014-15 and in absence of any incriminating material and is not justified as per provision of section 153A of the Act?
4. "Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in ignoring decision of Hon'ble High Court of 126 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Kerala in the case of E.N gopakumar Vs CIT [2016 75 taxmann.com 215 (Kerala)], where in it is held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) of IT Act can be concluded against interest of assessee including making addition even without any incriminating material being available against assessee in search u/s.132 on basis of which, notice was issued to the assessee u/s.153A(1)(a) of the Act"
5. "Whether on the facts and in law, the Ld. CIT(A) is justified in ignoring the fact that third parties are directors of the investor companies who have already accepted in his statement they provided the accommodation entries to the company in lieu of commission and in completely ignoring the evidentiary value of these statements?
6. "Whether on the facts and in law, the Ld. CIT(A) is right that AO ought to have made additions on the basis of incriminating material and not on the basis of statement of the appellant which had already been retracted by the appellant at later stage knowing the fact of evidentiary value of statement recorded u/s.132(4) of the Act and while retracting from the statement given earlier, the assessee could not produce any corroborative evidence in support of his retraction. Further, in his concluding para of the statement, the assessee agreed and gave his consent that the statement given by him are correct and put his signature."
7. In reference to the above mentioned Point 6, Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in ignoring the dictum of law pronounced in case of Bannalal Jat Construction (P) Ltd vs ACIT 106 Taxmann 128(SC)/2019 264 Taxmann 5(SC) and in ignoring that the statement recorded u/s.131 of the act has evidentiary value and the burden lays on the person who made the statement, to provide a reasoned explanation for retracting from the statement, specifically, when he himself declared in his own handwriting that the statement is made in sound state of mind and without coercion. Therefore, Ld. CIT(A) is not justified in ignoring this fact and in relying solely on assessee's retraction.
8. Whether on the facts and in law, the Ld. CIT(A) justified in holding that the AO has no locus standi to assume that the share application money infused in the appellant company is not genuine and it is not justified to held the investor companies as dummy entities and the investments made by these companies are non-genuine even the directors of the share applicant companies have accepted in his statements that they have provided accommodation entries to the company in lieu of commission."
127
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
98. We shall first deal with the grievance of the revenue that the CIT(Appeals) had erred in law and the facts of the case in vacating the addition of Rs.12.68 crore made by the A.O u/s.68 of the Act.
99. Succinctly stated, the assessee company during the year under consideration had claimed to have received share capital/premium of Rs.12.68 crore from M/s. Extent Vinimay Pvt. Ltd. For the reasons that have been looked into at length by us hereinabove, the A.O holding a conviction that the assessee company had not received genuine share capital/premium from the aforesaid investor company, viz. M/s Extent Vinimay Pvt. Ltd., but in fact had routed back its unaccounted money in the garb of the aforesaid transactions, had thus, made an addition of Rs.12.68 crore (supra) as an unexplained cash credit u/s.68 of the Act.
100. On appeal, the CIT(Appeals) holding a conviction that the assessee company had duly substantiated the genuineness of the transaction of having received share capital/premium from the aforementioned investor company on the basis of supporting documentary evidence, thus, was of the view, that the A.O without placing on record any documentary evidence which would have proved to the contrary could not have justifiably dislodged its claim of having received genuine share capital/premium from the aforesaid share subscriber, viz. M/s. Extent Vinimay Pvt. Ltd. Not only the CIT(Appeals) observed that the aforementioned investor company, viz. 128
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 M/s. Extent Vinimay Pvt. Ltd was an active and a functional company as per records and data of the Ministry of Corporate Affairs (MCA), Government of India, and was an existing entity which was registered under the Companies Act, 1956 on 12.07.2010, but he also took note of the fact that all its transactions with the assessee company were through A/c payee cheques and none of the transaction had taken place in the form of cash. Apart from that, it was observed by the CIT(Appeals) that a perusal of the bank account of M/s. Extent Vinimay Pvt. Ltd, revealed that no cash was deposited either before or after transfer of the funds in question to the assessee company. In fact, it was observed by him that in lieu of funds invested by the aforesaid investor company the assessee company had issued equity shares to M/s. Extent Vinimay Pvt. Ltd with registered Folio No.148 and Certificate No.157 on 15.04.2013. Considering the supporting documentary evidence which were filed by the assessee company, viz. copies of audited financial statements, copies of bank accounts, PAN, copies of return of income etc., the CIT(Appeals) was of the view that the financial statements of the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd, revealed beyond doubt that it had sufficient funds to make investment in the equity shares of the assessee company. Apart from that, it was observed by the CIT(Appeals) that now when the share capital/premium that was received by M/s. Extent Vinimay Pvt. Ltd had been held by the A.O while framing assessment in its case vide order passed u/s. 263 r.w.s 129 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 143(3), dated 20.12.2016 for A.Y.2011-12 as genuine, therefore, the A.O had no locus standi to treat the investment made by the investor company out of its said disclosed funds, as an unexplained cash credit u/s.68 of the Act in the hands of the assesee company. Accordingly, the CIT(Appeals) on the basis of his aforesaid observations vacated the addition of Rs.12.68 crore (supra) made by the A.O u/s.68 of the Act.
101. We have given a thoughtful consideration to the issue in hand, and find that the observation of the CIT(Appeals) as regards the addition of Rs.12.68 crore (supra) made by the A.O u/s.68 of the Act, remains the same, as were there before us in its case for the immediately preceding A.Y. i.e. 2013-14, wherein the addition of Rs.1.90 crore (supra) received from the said investor company as share capita/premium was vacated by him. As we have after extensive deliberations approved the view taken by the CIT(Appeals) on the basis of which the addition made by the A.O in A.Y.2013-14 w.r.t the investment made by the aforementioned investor company, viz. M/s. Extent Vinimay Pvt. Ltd. was vacated by us, therefore, the observations of the CIT(Appeals) to the extent relatable to the identity an creditworthiness of the aforesaid investor company, as well as the genuineness of the transaction under consideration, which stands on a similar footing, are on the same terms approved by us for the year under consideration. As observed by the CIT(Appeals), and, rightly so, as the 130 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 assessee company had duly established the identity and creditworthiness of the investor company and the genuineness of the transaction of having received share capital/premium of Rs.12.68 crore (supra) from M/s. Extent Vinimay Pvt. Ltd,, therefore, finding no infirmity in the view taken by him, we uphold the same.
102. Also, we concur with the view taken by the CIT(Appeals), that now when the A.O while framing the assessment in the case of the investor company i.e M/s. Extent Vinimay Pvt. Ltd u/s. 263 r.w.s. 143(3) of the Act, dated 20.12.2016 for A.Y.2011-12 had accepted the investments that were received by it towards share capital/premium, therefore, to the extent the investment made during the year under consideration i.e A.Y 2014-15 by the said investor company, viz. M/s. Extent Vinimay Pvt. Ltd. towards share capital/premium with the assessee company were sourced from the realization/rotation of the said investments which had been held by the ITO- Ward 12(2), Kolkata as genuine while framing of assessment u/s 143(3) r.w.s 263, dated 20.12.2016 in the case of the aforesaid investor company, the A.O in the case of the present assessee company had no locus standi to have held the investment made by the said investor to the said extent as bogus/sham.
103. We shall now on the basis of the details as had been filed by the assessee before us, deal with the issue as to what extent the investment 131 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 made by M/s. Extent Vinimay Pvt. Ltd. (supra) with the assessee company during the year under consideration i.e. A.Y.2014-15 are found to be related/sourced from the duly disclosed share capital/premium/loans as had been accepted in the hands of the said investor by the A.O i.e ITO Ward 12(2), Kolkata while framing of assessment in its case u/s.263 r.w.s. 143(3) dated 20.12.2016. Before proceeding any further, we may herein for the sake of convenience cull out the chart which had been filed by the assessee before us in its attempt to demonstrate that the investment of Rs.12.68 crore (supra) made by M/s. Extent Vinimay Pvt. Ltd, was sourced out of realization/rotation of its investments/loans of A.Y.2011-12, as under:
Details of 31.03.2011 31.03.2012 31.03.2013 31.03.2014 31.03.2015 share investment as on Total 1771 2026 1587 313 110 investment, loan, cash D=A+B+C and bank balance excluding given to Lalganga Builders Pvt.
Ltd.Realisation of E 439 1274 203
Investment, (2026-1587) (1587-313) (313-110) loan, cash and bank Investment F 190 1268 203 made in M/s. Lalganga Builders Pvt. Ltd. or loan given to Lalganga Builders Pvt. Ltd. 132
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
Refer Page 34-37 23-33 38-39
No. for Bank
Statement
Total loan or 344 1645 296
investment
after
considering
the
investment or
loan given to
Lal Ganga
Builders Pvt.
Ltd.
Refer Page 10 and 13 15 and 18 19 & 22
No.
On a perusal of the aforesaid chart, we find that there have been realization of investment/loans and cash and bank balance of Rs.12.74 crore (supra) by the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd. during the year under consideration i.e. A.Y.2014-15. On the basis of the aforesaid factual position, we concur with the view taken by the CIT(Appeals) that the investment of Rs.12.68 crore (supra) claimed by the assessee company to have been made out of realization of the investment/loans which had been held to be genuine in the hands of the investor company i.e M/s. Extent Vinimay Pvt. Ltd for A.Y.2011-12 could by no means be held as unexplained cash credit u/s.68 of the Act in the hands of the assessee company. We, thus, in terms of our aforesaid observations uphold the view taken by the CIT(Appeals) on the said count. Thus, the Ground of appeals No(s) 1, 2 & 8 raised by the revenue are dismissed in terms of our aforesaid observations.133
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
104. As the revenue has assailed the order of the CIT(Appeals) on the ground that he had erred in vacating the addition made by the A.O u/s. 153A r.w.s. 143(3) dated 26.12.2018, for the reason that in absence of any incriminating material having been found and seized in the course of the search proceedings, no addition could have been made in respect of the unabated assessment of the assessee company for the year under consideration i.e.A.Y.2014-15, we shall now deal with the same.
105. On a careful perusal of the record it transpires that the assessee company had filed its original return of income u/s.139(1) of the Act on 19.01.2016, declaring an income of Rs.45,71,220/-. Search and seizure operations u/s.132 of the Act were conducted on the assessee company on 19.09.2016. As on the date of the aforesaid search proceedings i.e. on 19.09.2016 as neither any assessment or reassessment proceedings were pending in the case of the assessee company, and also the time limit for issuance of notice u/s. 143(2) of the Act for the year under consideration i.e. A.Y.2014-15 had expired way back on 30.09.2015, therefore, as observed by the CIT(Appeals), and, rightly so, it was a case of an unabated assessment. As observed by us hereinabove while disposing of the revenue's appeal in IT(SS)A No.02/RPR/2022 for A.Y.2012-13 vide Para 27, as no incriminating material was found and seized in the course of the search proceedings, therefore, we concur with the view taken by the CIT(Appeals) that in a case 134 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 where no assessment or reassessment was pending on the date of search u/s.132 of the Act, then, in absence of any incriminating material relating to the year under consideration i.e A.Y 2014-15 having been found and seized during the course of such proceedings, no addition could have been made in the hands of the assessee company. On the basis of our deliberations in Para 25 to 37 of our present order, we finding no infirmity in the view taken by the CIT(Appeals), uphold the same to the said extent. Thus, the Grounds of appeal No.(s) 3 & 4 raised by the revenue are dismissed in terms of our aforesaid observations.
106. As the facts and issues involved in the present appeal on the basis of which the revenue has assailed the order of the CIT(Appeals) by way of Ground of appeal No.(s) 5 to 7 remains the same as were there in IT(SS)A No.2/RPR/2022 for A.Y.2012-13 in Ground of appeal No.(s) 5 to 7, therefore, the order therein passed shall mutatis-mutandis apply to the issues under consideration raised in the present appeal. Thus, the Grounds of appeal No.(s) 5 to 7 raised by the revenue are dismissed in terms of our aforesaid observations.
107. In the result, appeal of the revenue in IT(SS)A No.04/RPR/2022 for A.Y.2014-15 is dismissed in terms of our aforesaid observations.
IT(SS)A No.05/RPR/2022 A.Y.2015-16 135 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
108. Now we shall deal with the appeal of the revenue for A.Y.2015-16 in IT(SS) A No.5/RPR/2022, wherein the revenue has assailed the impugned order on the following grounds of appeal:
"1 "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition of Rs.2,03,00,000/- made by the AO on account of unexplained cash credit u/s.69A of the Income-tax Act, 1961?"
2. "Whether on the facts and in law, the Ld. CIT(A) is justified in deleting the addition made u/s.69A of Income-tax Act, 1961 by plainly accepting the plea of the assessee ignoring the fact that identity, creditworthiness and genuineness of the transactions could not be proved by the assessee".
3. "Whether on the facts and in law, the Ld. CIT(A) is right in holding that the additions were made in non-abated assessment year i.e. A.Y.2015-16 and in absence of any incriminating material and is not justified as per provision of section 153A of the Act?
4. "Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in ignoring decision of Hon'ble High Court of Kerala in the case of E.N gopakumar Vs CIT [2016 75 taxmann.com 215 (Kerala)], where in it is held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) of IT Act can be concluded against interest of assessee including making addition even without any incriminating material being available against assessee in search u/s.132 on basis of which, notice was issued to the assessee u/s.153A(1)(a) of the Act"
5. "Whether on the facts and in law, the Ld. CIT(A) is justified in ignoring the fact that third parties are directors of the investor companies who have already accepted in his statement they provided the accommodation entries to the company in lieu of commission and in completely ignoring the evidentiary value of these statements?
6. "Whether on the facts and in law, the Ld. CIT(A) is right that AO ought to have made additions on the basis of incriminating material and not on the basis of statement of the appellant which had already been retracted by the appellant at later stage knowing the fact of evidentiary value of statement recorded u/s.132(4) of the Act and while retracting from the statement given earlier, the assessee could not produce any corroborative evidence in support of his retraction. Further, in his concluding para of the statement, the assessee agreed 136 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 and gave his consent that the statement given by him are correct and put his signature."
7. In reference to the above mentioned Point 6, Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in ignoring the dictum of law pronounced in case of Bannalal Jat Construction (P) Ltd vs ACIT 106 Taxmann 128(SC)/2019 264 Taxmann 5(SC) and in ignoring that the statement recorded u/s.131 of the act has evidentiary value and the burden lays on the person who made the statement, to provide a reasoned explanation for retracting from the statement, specifically, when he himself declared in his own handwriting that the statement is made in sound state of mind and without coercion. Therefore, Ld. CIT(A) is not justified in ignoring this fact and in relying solely on assessee's retraction.
8. Whether on the facts and in law, the Ld. CIT(A) justified in holding that the AO has no locus standi to assume that the share application money infused in the appellant company is not genuine and it is not justified to held the investor companies as dummy entities and the investments made by these companies are non-genuine even the directors of the share applicant companies have accepted in his statements that they have provided accommodation entries to the company in lieu of commission."
109. We shall first deal with the grievance of the revenue that the CIT (Appeals) had erred in law and facts of the case in vacating the addition of Rs.2.03 crore made by the A.O u/s.69A of the Act.
110. Succinctly stated, the assessee had claimed to have received an amount of Rs.2.03 crore during the year under consideration as an unsecured loan from M/s. Extent Vinimay Pvt. Ltd. As the A.O was of the view that the assessee had not received any genuine loan from the aforementioned concern, viz. M/s. Extent Vinimay Pvt. Ltd but had routed back his own unaccounted money in the garb of the said loan transaction, 137 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 therefore, he held the same as the unexplained money of the assessee company u/s.69A of the Act.
111. On appeal, the CIT(Appeals) after deliberating at length on the multi- facet contentions that were advanced by the assessee company to impress upon him that it had raised genuine loan from the aforementioned lender, viz. M/s. Extent Vinimay Pvt. Ltd, therein, vacated the impugned addition.
112. We have given a thoughtful consideration and find that the issue of investments made by the aforementioned concern, viz. M/s. Extent Vinimay Pvt. Ltd is perpetuating in the case of the assessee company over the years i.e A.Y. 2013-14 to A.Y. 2015-16. As observed by us hereinabove, the CIT(Appeals) on the basis of his exhaustive deliberations as regards the identity and creditworthiness of the aforesaid investor company, and also the genuineness of the transactions under consideration, had vacated the respective additions that were made by the A.O w.r.t share capital/premium received by the assessee company from the said investor, viz. M/s Extent Vinimay Pvt. Ltd. On a perusal of the order of the CIT(Appeals) for the year under consideration, i.e A.Y 2015-16, it transpires that on a similar footing he had on the basis of his exhaustive deliberations, and after being satisfied both as regards the identity and creditworthiness of the investor company viz. M/s. Extent Vinimay Pvt. Ltd, as well as genuineness of the transaction 138 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 of having raised loan of Rs.2.03 crore from the said concern, accepted the same, Page 76 to 92 of the CIT(Appeals)'s order.
113. On a careful perusal of the observations recorded by the CIT(Appeals) a/w. our deliberations as regards the transactions which the aforementioned investor company, viz. M/s. Extent Vinimay Pvt. Ltd had carried out with the assesee company in the preceding years, we are of the considered view that no infirmity arises from the well-reasoned order of the CIT(Appeals) as regards the issue in hand. Also, we may herein observe, that the A.O had not dislodged or disproved the documentary evidence which were placed on record by the assessee company to substantiate the identity and creditworthiness of the investor company, viz. M/s. Extent Vinimay Pvt. Ltd as well as genuineness of the transaction of having received a loan of Rs.2.03 crore from the aforementioned concern during the year under consideration. Also, nothing has been brought to our notice by the Ld. DR in the course of hearing of the appeal which would persuade us to hold otherwise. Considering the fact that not only the assessee company had discharged the primary onus that was cast upon it as regards proving the authenticity of the loan transaction in question, but also the same had not been disproved or dislodged by the department by placing on record any material proving to the contrary, therefore, finding no justifiable reason to 139 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 take a view to the contrary we approve the order of the CIT(Appeals) to the said extent.
114. Also, we concur with the view taken by the CIT(Appeals) that now when the ITO- Ward 12(2), Kolkata while framing the assessment in the case of the investor company i.e M/s. Extent Vinimay Pvt. Ltd, vide his order passed u/s. 143(3) r.w.s 263, dated 20.12.2016 for A.Y.2011-12 had accepted the investments that were received by it as share capital/premium, therefore, to the extent the investment made by the said investor company, viz. M/s. Extent Vinimay Pvt. Ltd. with the assessee company during the year under consideration i.e A.Y 2015-16, could be shown to have been sourced from the realization of the investments which had been held by the revenue as genuine in the case of the said investor company in A.Y 2011- 12, the A.O in the case of the present assessee company would have no locus standi to hold the investment to the said extent as bogus/sham.
115. We shall now on the basis of the details as had been filed by the assessee before us, deal with the issue as to what extent the loan advanced by M/s. Extent Vinimay Pvt. Ltd. during the year under consideration i.e. A.Y.2015-16 could be held to have been sourced from the share capital/premium/loans, as had been proved to be genuine in the hands of the said lender by it's A.O i.e ITO - Ward 12(2), Kolkata while framing of the assessment in its case u/s. 143(3) r.w.s 263 of the Act, dated 20.12.2016. 140
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 Before proceeding any further, we may for the sake of convenience cull out the chart which had been filed by the assessee before us in its attempt to demonstrate that the loan of Rs.2.03 crore (supra) advanced by M/s. Extent Vinimay Pvt. Ltd. was sourced out of realization of its investments/loans for A.Y.2011-12, as under:
Details of share 31.03.2011 31.03.2012 31.03.2013 31.03.2014 31.03.2015 investment as on Total 1771 2026 1587 313 110 investment, loan, cash and D=A+B+C bank balance excluding given to Lalganga Builders Pvt.
Ltd.Realisation of E 439 1274 203
Investment, (2026-1587) (1587-313) (313-110) loan, cash and bank Investment F 190 1268 203 made in M/s. Lalganga Builders Pvt. Ltd. or loan given to Lalganga Builders Pvt. Ltd. Refer Page No. 34-37 23-33 38-39 for Bank Statement Total loan or 344 1645 296 investment after considering the investment or loan given to Lal Ganga Builders Pvt. Ltd. Refer Page No. 10 and 13 15 and 18 19 & 22 141
DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 We find on a perusal of the aforesaid chart that there have been a realization of investments/loans and cash and bank balance of Rs.2.03 crore by the aforesaid investor company, viz. M/s. Extent Vinimay Pvt. Ltd. during the period relevant to the year under consideration i.e. A.Y.2015-16. On the basis of the aforesaid facts, we concur with the view taken by the CIT(Appeals) that now when the loan of Rs.2.03 crore (supra) received by the assessee company from the aforesaid lender, viz. M/s Extent Vinimay Pvt.Ltd. was made out of the realization of investments/loans which had been held by the department to be genuine in the hands of the investor company i.e M/s. Extent Vinimay Pvt. Ltd. for A.Y.2011-12, then the same by no means could have been held as the assessee's unexplained money u/s.69A of the Act. We, thus, in terms of our aforesaid observations, uphold the order of the CIT(Appeals) to the extent he had vacated the addition of Rs.2.03 crore (supra) made by the A.O u/s. 69A of the Act. Thus, the Grounds of appeal No.(s) 1, 2 & 8 raised by the revenue are dismissed in terms of our aforesaid observations.
116. Now we shall deal with the grievance of the revenue that the CIT(Appeals) had erred in law and facts of the case in vacating the addition made by the A.O u/s.69A of the Act, for the reason that in absence of any incriminating material relating to the year under consideration, i.e, A.Y 142 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 2015-6 having been found and seized during the course of search proceedings conducted on the assessee, no addition could have been made in respect of unabated assessment for the said year.
117. On a perusal of the order of the CIT(Appeals), it transpires that he had held that as the assessment in the case of the assessee company for the year under consideration i.e A.Y.2015-16 was unabated on the date of search that was conducted on 19.09.2016, therefore, in absence of any incriminating material having been found and seized during the course of search proceedings, no addition could have been made while framing of the assessment u/s 153A r.w.s 143(3), dated 26.12.2018. Admittedly, as observed by us hereinabove while disposing off the appeal in IT(SS)A No.2/RPR/2022 for A.Y.2012-13, Para 27, no incriminating material was found and seized during the course of search proceedings conducted in the case of the assessee. However, we are unable to concur with the observation of CIT(Appeals) that the case of the assessee company for the year under consideration i.e. A.Y.2015-16 was unabated on the date of the search proceedings i.e. on 19.09.2016. Although, no assessment or reassessment proceedings for the year under consideration was pending in the case of the assessee company on the date on which the search proceedings were conducted, but we cannot remain oblivion of the fact that the time limit for issuance of notice u/s.143(2) of the Act for the year under consideration i.e 143 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 A.Y 2015-16 was available with the department till 30.09.2016. Our aforesaid view that in a case where time limit for issuance of notice u/s.143(2) of the Act had yet not expired then, the assessment for the said year cannot be held as an unabated assessment, is supported by the judgment of the Hon'ble High Court of Delhi in the case of Pr. CIT Vs. Best Infrastructure (India) Pvt. Ltd. (2017) 397 ITR 82 (Del.)
118. As we are of the considered view, that as the time limit for issuance of notice u/s 143(2) in the assessee's case for the year under consideration i.e A.Y 2015-16 which was available upto 30.09.2016 had yet not lapsed on the date of search, i.e 19.09.2016, therefore, we are unable to concur with the CIT(Appeals) that the assessment proceedings in the case of the assessee were to be held as unabated. We, thus, in terms of our aforesaid observation that the assessment in the case of the assessee had abated on the date on which search proceedings were conducted in its case i.e on 19.09.2016, thus, are unable to approve the aforesaid view taken by the CIT(Appeals). Accordingly, the order of the CIT(Appeals) to the said extent is set-aside and the Grounds of appeal Nos.(s) 3 & 4 raised by the revenue before us are allowed.
119. In so far the Grounds of appeal No. (s) 5 to 7 raised by the revenue in the present appeal are concerned, the said grievance of the revenue had been looked into by us at length while disposing off its appeal in the 144 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022 preceding years, specifically in IT(SS)A No.2/RPR/2022 for A.Y.2012-13 in Grounds of appeal No.(s) 5 to 7. As the facts and issues forming the very basis leading to the grievance of the revenue as had been projected before us vide Ground of appeal No.(s) 5 to 7 remains the same as were there in IT(SS)A No.2/RPR/2022 for A.Y.2012-13, therefore, on the same terms we finding no infirmity in the view taken by the CIT(Appeals), thus, uphold the same. Thus, the Grounds of appeal No. (s) 5 to 7 raised by the revenue are dismissed in terms of our aforesaid observations.
120. In the result, appeal of the revenue in IT(SS)A No.05/RPR/2022 for A.Y.2015-16 is partly allowed in terms of our aforesaid observations.
121. Resultantly, all the appeals of the revenue for A.Y 2012-13 to A.Y 2014-15 in ITA Nos. 02 to 04/RPR/2022 are dismissed, while for that for A.Y 2015-16 in ITA No. 05/RPR/2022 is partly allowed in terms of our aforesaid observations.
Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board.
Sd/- Sd/-
ARUN KHODPIA RAVISH SOOD
(ACCOUNTANT MEMBER) (JUDICIAL MEMBER)
रायपुर/ RAIPUR ; दनांक / Dated : 17th February, 2023 **##SB 145 DCIT, CC-1, Raipur Vs. M/s. Lal Ganga Builders Pvt. Ltd.
IT(SS)A Nos. 02 to 05/RPR/2022
आदे श क त ल प अ े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-3, Bhopal
4. The Pr. CIT, Central, Bhopal
5. वभागीय त न ध, आयकर अपील य अ धकरण, रायपरु बच,
रायपरु / DR, ITAT, Raipur Bench, Raipur.
6. गाड फ़ाइल / Guard File.
आदे शानुसार / BY ORDER,
// True Copy //
नजी स चव / Private Secretary
आयकर अपील य अ धकरण, रायपुर / ITAT, Raipur.