×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
08-01-2020, Blue Lotus Designers, Section 131, 260A, 68, Tribunal Kolkata
This assessee’s appeal for assessment year 2012-13 arises against the Commissioner of Income Tax (Appeals)-16 Kolkata’s order dated 27.02.2017 passed in case No.755/CIT(A)-16/Kol/2015-16/W-7(4) involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’.
Heard both the parties. Case file perused.
2. The assessee’s sole substantive ground raised in the instant appeal reads that both the lower authorities’ have erred in law and on facts in treating its share capital / premium of ₹2,01,50,000/- as unexplained cash credits u/s 68 of the Act. The CIT(A)’s detailed discussion to this effect reads as under:-
“3 The assessee has raised 7 grounds of appeal. The issue is addition Rs.2,01,50,000/- u/s 68 of the income tax Act as unexplained cash credit. The order is passed u/s 143(3) of the Income Tax Act.
4 The AR has filed additional grounds of appeal. Same have been admitted. The crux of the grounds of appeal is that no adverse inference can be drawn on nonproduction of directors. The AO has relied upon plethora of judgments on page 5 of the assessment order. All these decisions put onus on the assessee to prove the genuineness of the transaction. Same has not been done here. Hence, these grounds are dismissed.
5 The AR has filed various documents along with the paper book The AR has argued that all the applicants are regular assessee. Copies of Bank Accounts were filed before the AO. The contention of the AO is that during the course of assessment, no compliance was made either by the company of the AR to prove the genuineness of the transaction. Summons u/s. 131 remained uncomplied. Reliance is made upon the judgment of Delhi High Court in the case of CIT vs. Nipun Builders Pvt. Ltd. 30 Taxman 292 (2013). The AO has relied upon the judgment of CIT vs. Precision Finance Pvt. Ltd. (1994) 208 ITR 465 and other various judgments.
6. Hon'ble Calcutta High Court in Ms Rajmandir Estates Pvt. LTd. Vs. PCIT, Kolkata dealt with all the judgments on this issue and came to the conclusion that the transaction was nominal rather than real. The creditworthiness of the shareholders was not proved. Each one of them received from somebody and that somebody received from a third person. Therefore, Hon'ble Calcutta High Court held that all the shareholders are mere name lenders.
7 Hence, relying upon the judgment of Hon'ble Jurisdictional High Court the addition of the AO worth Rs.2,01,50,000/- is confirmed, and the appeal of the assessee is dismissed.”
3. Learned authorized representative vehemently contended during the course of hearing that the assessee had very well discharged its primary onus of proving identity, genuineness and creditworthiness of all twenty-two investors by filing their audited accounts, income-tax return acknowledgements certificates of incorporation, bank statements and as well as “source of source” as is evident from case records running into 359 pages. He further submitted that the assessee had filed all those particulars very well during the course of assessment which have neither been dealt with nor even taken note in either of the lower proceedings. The Revenue’s case on the other hand in tune with CIT(A)’s detailed discussion is that the Assessing Officer’s u/s 131 summons remained un-complied with as per lower appellate findings under challenge. It is also emphasized that all of the assessee’s investor parties are accommodation entry providers which have been rightly treated as bogus in both the lower proceedings.
4. We have given our thoughtful consideration to rival contentions. We notice that the CIT(A)’s primary reason for affirming the Assessing Officer’s action making the impugned addition is that sec. 131 summons issued for the purpose of proving the three parameters of identity, genuineness and creditworthiness of the impugned share application / premium sum page 172 to 176 in the paper book speak otherwise. The same contain the assessment notings from 08.08.2013 to 10.07.2015. It transpires therefrom that the Assessing Officer had issued u/s 131 process to the directors on 12.02.2015 for 19.02.2015. The case then was adjourned to 24.02.2015 We notice from page 174 of the paper book to this effect that the assessee i self as well as its investors had very well replied to the Assessing Off cer’s section 131 summons. The same were duly placed on record the same before him. There is no further notings asking the assessee to file any other detailed evidence from assessing authority’s side nor it had asked the taxpayer to produce all of its investor parties in person. It therefore sufficiently emerges from the case records that neither the Assessing Off cer’s detailed discussion in his assessment order dated 26.03.2015 holding the assessee to have failed to discharging the above three parameters nor the CIT(A)’s findings that u/s 131 summons remained un-complied; are in conformity with the case records. This tribunal’s co-ordinate bench’s decision in case of Bidit Financial Management Pvt. Vs. DCIT Circle-7(1), Kolkata in ITA No.579/Kol/2017 decided on 15.03.2019 has discussed the entire legal and factual matrix of share capital whilst deciding the issue in assessee’s favour as under:-
“29. In the instant case before us, we also note that the share subscribing companies are duly assessed to income tax. The Ld AR had placed on record the copies of the assessment orders framed in the cases of several of the share subscribing companies, as noted above. It therefore cannot be disputed that the share subscribing companies are not in existence. From the assessment orders, it is noted that the share subscribing companies are duly assessed to income tax and their income tax particulars together with the copies of respective income tax returns with their balance sheets are already on record. We also find that the Ld. CIT(A) had categorically stated that the scrutiny assessments were framed on the share subscribing companies for the Asst Year 2012-13 which shows their existence is genuine and transactions carried out by them were the subject matter of examination by the income tax department in scrutiny proceedings. This fact has not been controverted by the Revenue before us.
30. We may gainfully refer to the judgment in the case of Pr. CIT Vs Paradise Inland Shipping (P) Ltd (84 taxmann.com 58) wherein the Bombay High Court had deleted similar addition on similar set of facts made on account of unexplained cash credits and the SLP filed by the Revenue against the judgment has been dismissed by the Hon’ble Supreme Court. The relevant extracts of the judgment is as follows:
“5. We have given our thoughtful considerations to the rival contentions of the learned Counsel and we have also gone through the records. The basic contention of the learned Counsel appearing for the Appellants revolves upon the stand taken by the Appellants whether the shareholders who have invested in the shares of the Respondents are fictitious or not. In this connection, the Respondents in support of their stand about the genuineness of the transaction entered into with such Companies has produced voluminous documents which, inter alia, have been noted at Para 3 of the Judgment of the CIT Appeals which reads thus :
"The assessment is completed wi hout rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows :
1. Sony Financial Services Ltd. - CIN U74899DL1995PLC068362- Date of Registration 09/05/1995
6.On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such Companies.
7. The Appellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot re-appreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration.