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08-11-2019, Shantananda Steels, Section 68, 133(6), 147, Tribunal Chennai

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6 months 3 weeks ago #11368 by amit
Section - 68, 133(6), 147, 148
Order Date - 08-11-2019
Favouring - Revenue
Court - Tribunal Chennai
Appellant - Shantananda Steels Private Limited
Respondent - ITO
Citation - 1119Taxpundit103
Appeal No. - ITA No.3080/Chny/2019
Asstt. Year - 2011-12



The assessee has filed this Stay Petition bearing number 302/Chny/2019 arising out of appeal in ITA No.3080/Chny/2019 for Assessment Year (ay) 2011-12 seeking stay of demand of disputed tax and interest amount aggregating to Rs.2,24,83,719/- as reflected in Stay Petition filed with Income Tax Appellate Tribunal, Chennai Benches, Chennai.

2. The back ground of the assessee’s case is that the assessee is trader in steel. The return of income originally filed by assessee with Revenue on 29.09.2011 declaring income of ` 66,170/- was processed by learned Assessing Officer u/s 143(1) of the Income-tax Act,1961 on 24.01.2012 accepting returned income. The learned Assessing Officer received letter No. F.No.1307/Kolkatta/14-15 dated 06.02.2015 from JDIT)Inv.)(Hq) O/o DGIT(Inv.), Chennai forwarding a list of paper/shell companies , dummy directors and entry operators of Kolkatta , who were providing accommodation entries. The AO observed that the assessee has received share capital from nine entry operators of Kolkatta which are mentioned in the aforesaid list, to the tune of Rs. 3.50 crores. The AO also observed that while framing assessment for ay: 2012-13 in the case of the assessee, that all the aforesaid shareholders transferred share application amount by RTGS on the same date viz. 18.05.2010. It was observed by AO that all these entit es have meager income. The enquiries were made by AO with these nine entities u/s 133(6) of the 1961 Act , wherein it was found that one person namely Mr. Kedar Nath Dutta has received envelops containing notices issued u/s 133(6) to all these entities based in Kolkatta, except in the case of one entity Arulaga Roche A.C.A.Finance Limited. The said company M/s. Arulaga Roche A.C.A.Finance Limited never replied to the notice issued by AO u/s 133(6) of the 1961 Act The AO further observed that replies to notices u/s 133(6) were posted on the same date by these entities on 14.03.2015 from GPO, Kolkatta-700001. The addressee of all these companies as mentioned in envelope was stated to be same. The handwriting on the envelops were also of the same person. This led AO to observe that these entities are operated by one person. The AO also observed from bank statements filed by these entities that in case of all these investing companies, before making investment in assessee company there were immediate credits entries of the similar amount out of which investment in shares of the assessee company were made. This led learned Assessing Officer to reopen concluded assessment u/s 147 of the 1961 Act by issuance of notice dated 09.06.2017 u/s 148 of the 1961 Act to the assessee for impugned ay 2011-12, as in the opinion of the AO income of the assessee chargeable to income-tax has escaped assessment. No assessment was originally framed by Revenue for impugned ay : 2011-12 u/s 143(2) of the 1961 Act . It is further observed by authorities below that the assessee has never paid any dividends as in the view of Revenue , when the assessee is not able to generate sufficient profits , then how investors at Kolkatta having meager incomes could have invested huge amount of Rs. 3.50 crores and that too at share premium of Rs. 900 per share as against face value of Rs. 100 per share. It is further observed by authorities below that assessee is a closely held private company and investments in such closely held companies can only be made by promoters, family members , relatives or known persons and it was not known that how these Kolkatta entry operators have made such a huge investments in share capital and share premium of assessee company. No proper reply was forthcoming from assessee, which led authorities to conclude that it is the assessee who has introduced its own unaccounted money in the garb/form of share capital and share premium to the tune of Rs 3.50 crores into the assessee company from these accommodation entry providers based in Kolkatta , which led to additions been made in the hands of the assessee by invoking provisions of Section 68 of the 1961 Act. The AO passed assessment order dated 24.12.2018 u/s 147 read with Section 143(3) of the 1961 Act , which was upheld by learned CIT(A) vide appellate order dated 20.09.2019. Thus, both the authorities below have concurrently decided the issue against the assessee. Now the assessee has filed an appeal before the Income-Tax Appellate Tribunal , Chennai in ITA No.3080/Chny/2019 for ay: 2011-12 .

The assessee has come up with this stay petition in SP 302/Chny/2019 seeking stay of outstanding income-tax and interest thereon of Rs. 2,24,83,719/-. When this stay petition was called for hearing, it was brought to our notice by learned counsel for assessee that no amount stood deposited by assessee pursuant to demand raised by authorities and the entire demand of income-tax and interest raised by the AO is still outstanding for payment. Prayers are made to stay the entire outstanding demand of income-tax and interest accrued thereon. The learned counsel for the assessee submitted that assessee is not in a position to pay any outstanding demand of income-tax and interest , as it is heading for liquidation and in any case Revenue now cannot recover any amount as the assessee does not have any resources to pay this huge liability. Thus, in nutshell the learned counsel for the assessee submitted that the assessee is facing severe financial crisis and outstanding demand be

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