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09-04-2019, M.A. Projects, Section 132, 153A, 139, Tribunal Delhi

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2 months 1 week ago #9109 by amit
Section - 132, 153A, 139, 68, 131
Order Date - 09-04-2019
Favouring - Revenue
Court - Tribunal Delhi
Appellant - DCIT
Respondent - M.A. Projects (P) Ltd.
Justice - BHAVNESH SAINI JM & O.P. KANT AM
Citation - 419Taxpundit144
Appeal No. - ITA No.303/Del/2014
Asstt. Year - 2009-10

Order

PER : O.P. KANT, A.M.:

This appeal by the Revenue is directed against order dated 13/11/2013, passed by the Ld. Commissioner of Income-tax (Appeals)-1, New Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2009-10, raising following grounds:

1. The Commissioner of Income Tax (Appeal) erred in law and on facts in deleting the addition of Rs.2,65,00,000/- u/s 68 of the Act w.r.t. procurement of accommodation entries through share application money from nondescript companies.

2. The Commissioner of Income Tax (Appeal) erred in law and on facts in deleting an addition of Rs.1,32,000/- made by the AO w.r.t. commission paid @ 5% for procurement of accommodation entries through share application money from non-descript companies.

3. The Commissioner of Income Tax (Appeal) erred in admitting additional evidence under Rule 46A.

4. (a)The order of the CIT(A) is erroneous and not tenable in law and on facts. (b)The appellant craves leave to add, alter or amend any/all the grounds of appeal before or during the course of the hearing of the appeal.

2. Briefly stated facts of the case are that consequent to search and seizure operation under section 132 of the Income-tax Act, 1961 (in short ‘the Act’) carried out at the premises of the assessee company on 30/06/2009, notice under section 153A of the Act was issued on 13/04/2010. In response the assessee submitted that return of income filed originally as per the provisions of section 139 of the Act for the year under consideration, might be treated as return filed in response to notice under section 153A of the Act. Subsequently, statutory notices were issued and assessment proceedings were commenced. The Assessing Officer observed receipt of share application money of Rs.2,65,00,000/- from nine (9) private limited companies other than the promoter’s/ directors of the company. In the assessment completed under section 143(3) read with section 153A of the Act, the Assessing Officer held the said share application money of Rs.2,65,00,000/- as accommodation entry and accordingly made addition under section 68 of the Act as unexplained cash credit. The Assessing Officer also estimated commission paid by the assessee at the rate of 0.5% of the amount of accommodation entry for obtaining the accommodation entries. On further appeal, the Ld. CIT(A) after considering the additional evidences filed by the assessee, deleted the addition. Aggrieved, the Revenue is in appeal before the Tribunal raising grounds as reproduced above.

3. Before us, the Ld. DR submitted that the assessee failed to produce the Directors of the share applicant companies before the Assessing Officer in assessment proceedings as well as in remand proceedings. She submitted that in view of no business activities carried out by the assessee company, the share premium of Rs.90 per share was not justified and no genuine investor would invest in such a company at such a high premium. She referred to the paper book filed by the assessee and submitted that in the bank statement of the share applicants, money has been deposited and same has been withdrawn within a small period leaving a nominal balance in their bank accounts, which indicates that no worthwhile activities were carried out by those share applicant companies except providing of accommodation entries. She submitted that the huge investment in the shares of the assessee company despite very small amount of income shown by the share applicant companies in their regular return of income, defy the financial rational. According to the Ld. DR, the assessee has failed to explain creditworthiness of the share applicant companies and also failed to explain genuineness of the transactions. In support of her contention, she relied on the decision of the Hon’ble Supreme Court in the case of Principal CIT(Central)-1 Vs. NRA Iron and Steel Private Limited arising out of SLP(Civil) No.29855 of 2018. She also relied on the decision of the coordinate bench of the Tribunal in the case of M/s Synergy Finlease Private Limited in ITA No. 4778/Del/2013 for assessment year 2006-07

4. On the other hand, the Ld. counsel of the assessee filed paper book containing pages 1 to 130 and relied on the order of the Ld. CIT(A).

5. We have heard the rival submissions and perused the relevant material on record. In the instant case, the assessee invited share applications from nine private limited companies. The share applicant companies invested/paid Rs 100 per share which included share premium of Rs.90 for each share. The list of share applicant companies along with their address and the amount invested is reproduced as under:

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