DCIT v. Acro Exports Trade (P) Ltd.

SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2019 TaxPub(DT) 5838 (Mum-Trib)

INCOME TAX ACT, 1961

Section 68

When, assessee had filed complete details to prove identity, genuineness of transactions and creditworthiness of the parties, then there was no reason for the AO to come to the conclusion that share capital and share premium was unexplained only for the reason that during the survey proceedings, the director of the company had admitted that those five companies were shell companies ignoring the fact that such admission has been retracted.

Income from undisclosed sources - Addition under section 68 - Alleged share application money along with premium remained unexplained being constituted by shell company -

During the course of assessment proceedings, AO noticed that assessee had issued 2,10,000 equity shares at a face value of Rs. 10 per share with a premium of Rs. 460 per share. The assessee was asked to furnish justification for share premium charged. AO had issued notices under section 133(6), to various other parties. However, most of the notices returned un served with a remark 'left' or 'not known'. AO concluded that assessee had failed to prove that statement recorded, during the course of the survey under section 133A, was under duress and coercion. The AO, further, observed that the assessee and other five companies were shell companies promoted, for the purpose of conversion of unaccounted income of Sunteck group, in the form of share capital and share premium CIT(A) held that the AO had used third party information in contravention of principles of natural justice, thus, violated principles of natural justice, consequently additions cannot be sustained.Held: In this case, the AO, except issue of 133(6) notices had done nothing to find out the nature of transactions between the parties. When assessee had filed complete details to prove identity, genuineness of transactions and creditworthiness of the parties, then there was no reason for the AO to come to the conclusion that share capital and share premium was unexplained only for the reason that during the survey proceedings, the director of the company had admitted that those five companies were shell companies ignoring the fact that such admission has been retracted by filing affidavit along with letter explaining reasons for such admission during survey proceedings. AO had denied the opportunity of cross-examination and also not furnished copies of statement recorded from V.S. ex-director. Statements/information and also to provide an opportunity of cross-examination of V. S. Therefore, on this count also the additions made by the AO cannot be sustained. Assessee had discharged its initial onus to prove identity, genuineness of transactions and creditworthiness of the parties by filing various documents.

Followed:Andaman Timber Industries Ltd. v. CCE Appeal No. 4228 of 2006] : 2015 TaxPub(DT) 5186 (SC). Relied:Kishanchand Chellaram v. CIT 1980 125 ITR 713 (SC) : 1980 TaxPub(DT) 1130 (SC), CIT v. Green Infra Ltd. (2017) 292 CTR 233(Bom) : 2017 TaxPub(DT) 0640 (Bom-HC), CIT v. Gagandeep Infrastructure Pvt. Ltd .(2017) 394 ITR 680 (Bom) : 2017 TaxPub(DT) 1238 (Bom-HC), CIT v. Goa Sponge and Power Ltd. TA.l No. 16 of 2012 (Bom-HC), CIT v. Creative World Telefilms Ltd. (2011) 333 ITR 100 (Bom) : 2011 TaxPub(DT) 96 (Bom-HC), CIT v. Lovely Exports (P) Ltd. (2009) 216 CTR 195 (SC) : 2009 TaxPub(DT) 261 (SC), CIT v. Steller Investment Ltd. (2001) 251 ITR 263 (SC) : 2001 TaxPub(DT) 507 (SC), SDB Estate Pvt. Ltd. v. ITO [ITA No. 584/M/2015] : 2019 TaxPub(DT) 0334 (Mum-Trib), CIT v. Expo Globe India Ltd. (2014) 361 ITR 147 (Del-HC) : 2014 TaxPub(DT) 716 (Del-HC), CIT v. Victory Spinning Mills Ltd. (2014) 90 CCH 55 (Mad -HC), CIT v. Dwarkadhish Investment (P) Ltd. (2011) 330 ITR 298 (Del-HC) : 2011 TaxPub(DT) 0374 (Del-HC), CIT v. Nishan Indo Commerce Ltd. (2014) 101 DTR 0413 (Cal -HC) : 2014 TaxPub(DT) 1934 (Cal-HC), CIT v. Vacmet Packaging (India) Pvt. Ltd. (2014) 88 CCH 65 (All-HC), CIT v. Gangeshwari Metal Pvt. Ltd. (2014) 361 ITR 10 (Del-HC) : 2013 TaxPub(DT) 1319 (Del-HC), Asstt. CIT v. Venkateshwar Ispat Pvt. Ltd. (2010) 319 ITR 393 (Chhatisgarh-HC) : 2009 TaxPub(DT) 1706 (Chhattisgarh-HC), CIT v. Nav Bharat Duplex Ltd. (2013) 35 Taxmann.com 289 (All-HC) : 2014 TaxPub(DT) 729 (All-HC), CIT v. Samir Bio-Tech Pvt. Ltd. (2010) 325 ITR 294 (Del-HC) : 2010 TaxPub(DT) 270 (Del-HC), Mod Creations Pvt. Ltd. v. ITO (2011) 354 ITR 282 (Del-HC) : 2012 TaxPub(DT) 3314 (Del-HC), CIT v. Jay Dee Securities & Finance Ltd. (2013) 32 Taxmann.com 91 (All-HC) : 2013 TaxPub(DT) 347 (All-HC), Jaya Securities Ltd. v. CIT (2008) 166 Taxman 7 (All-HC) : 2008 TaxPub(DT) 677 (All-HC) and Pr. CIT v. Hi-Tech Residency Pvt. Ltd. (2018) 257 Taxman 335 (SC) : 2018 TaxPub(DT) 5047 (SC).