IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES “G” : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
ITA.No.2106/Del./2013
Assessment Year 2003-2004
Shri Shyam Sunder
Infrastructure (P) Ltd.,
[Formerly known as M/s. The Income Tax Officer,
Shalom Exim (P) Ltd.,
and then as Mamram
Developers P. Ltd.,] G-18 vs. Ward – 8 (3),
& 19, Mamram Majesty New Delhi.
Mall Plot, Road No.43,
Guru Harkishan Marg,
Pitampura, Delhi – 034
PAN AAHCS2266E
(Appellant) (Respondent)
For Assessee : Shri Vinod Kumar Bindal, CA
For Revenue : Shri Prakash Dubey, Sr. DR
Date of Hearing : 12.05.2021
Date of Pronouncement : 19.05.2021
ORDER
PER BHAVNESH SAINI, J.M.
This appeal by Assessee has been directed
against the Order of the Ld. CIT(A)-XI, New Delhi, Dated
31.01.2013, for the A.Y. 2003-2004.
2
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
2. We have heard the Learned Representatives of
both the parties and perused the material on record.
3. Briefly the facts of the case are that in this case
original return of income was filed on 30.05.2003 declaring
income of Rs.14,156/-. Subsequently, notice under section
148 was issued on 22.03.2010 after recording the reasons
that assessee has been beneficiary of accommodation
entries being provided by certain entry operators and
received unexplained credits in its bank account during the
assessment year under appeal. The assessee was requested
to file return of income under section 148 of the I.T. Act. In
response to the same, the assessee filed letter Dated
21.04.2010 that original return filed on 30.05.2003 may be
treated as return filed in response to notice issued under
section 148 of the I.T. Act. The assessee asked for copy of
the reasons recorded under section 148 of the I.T. Act which
have been supplied. The A.O. asked the assessee to give
details of the shareholders from whom share application
was received during assessment year under appeal. The
3
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
assessee submitted before A.O. that it has received share
capital/premium money totalling to Rs.98 lakhs from 14
parties mentioned at Pages 1 and 2 of the assessment order.
The assessee furnished share application form, affidavit,
copy of the return of income and copy of the bank account
of all the share applicants. However, the summons issued
under section 131 of the I.T. Act returned un-served. The
assessee was asked to produce the Principal Officers of the
share applicants, however, assessee failed to produce the
same. The A.O, therefore, made addition of Rs.98 lakhs
under section 68 of the I.T. Act, 1961. The A.O. also made
addition of Rs.1,96,000/- on account of commission paid by
assessee @ 2%. The A.O. completed the assessment under
section 144/147 of the I.T. Act, 1961, Dated 30.12.2010.
3.1. The assessee challenged the reopening of the
assessment as well as additions on merit before the Ld.
CIT(A), however, the appeal of assessee has been dismissed
vide impugned Order.
4
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
4. The assessee filed the present appeal in which 04
issues were raised i.e., (1) Jurisdiction of the A.O. to pass
the re-assessment order; (2) Re-assessment proceedings
under section 147/148 of the I.T. Act to be void abinitio; (3)
Addition of Rs.98 lakhs on account of share capital / share
application money under section 68 of the I.T. Act and (4)
Addition of Rs.1,96,000/- on account of Commission on
different grounds of appeal.
4.1. The appeal was initially heard with regard to the
jurisdiction of the A.O. and the appeal was decided by the
ITAT, Delhi Bench vide Order Dated 22.11.2013. The gist of
the details are mentioned in this Order of the Tribunal in
which it is briefly noted that assessee was incorporated as
M/s. Shalom Exim (P) Ltd., which was later on changed to
Mamram Developers P. Ltd., and PAN was also changed.
The intimation about name change was given to the A.O.
and request was also made to the Ld. CIT to transfer the
record to the concerned A.O. It was also noted in the Order
that ultimately name was also changed to Shri Shyam
5
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
Sunder Infrastructure (P) Ltd., [Present Assessee]. The
Tribunal considering the change in name of assessee, PAN
and jurisdiction of the different Assessing Officer’s held that
the assessment order passed by the A.O. is without
jurisdiction and not sustainable in the eye of Law and the
assessment order was quashed vide Order Dated
22.11.2013. The other remaining grounds in the appeal
were not decided.
4.2. The Revenue challenged the Order of the Tribunal
Dated 22.11.2013 before the Hon’ble Delhi High Court in
Income Tax Appeal.No.236/2014. The Hon’ble Delhi High
Court considering the issue in the light of Section 124(3)(a)
of the I.T. Act held that the conditions of Section has been
overlooked by the ITAT, therefore, the Order of the Tribunal
was set aside and issue was answered in favour of the
Revenue. The matter was remitted for consideration on
merits of the appeal before ITAT vide Judgment Dated
04.02.2015.
6
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
4.3. The assessee being dissatisfied with the
Judgment of Hon’ble Delhi High Court preferred SLP against
the Judgment of the Hon’ble Delhi High Court Dated
04.02.2015 in which notice was issued. Ultimately, the
assessee filed an I.A.No.31031/2021 in Civil Appeal
No.5105/2015 and submitted before the Hon’ble Supreme
Court that assessee does not want to proceed with this
appeal. The appeal of assessee was accordingly dismissed as
withdrawn vide Order Dated 09.04.2021. Copy of the
Judgment is placed on record by the Learned Counsel for
the Assessee.
4.4. In the background of the above facts, Learned
Representatives of both the parties submitted that the
appeal of the assessee may be decided on merits barring the
issue of jurisdiction of the A.O. which has already been
decided by the Hon’ble Delhi High Court.
4.5. Considering the above facts, it is clear that the
issues which are to be decided now are mainly two i.e., (1)
Challenge to the re-assessment proceedings under section
7
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
147/148 of the I.T. Act and (2) Addition of Rs.98 lakhs
under section 68 of the I.T. Act with addition of Rs.1.96
lakhs on account of Commission. We proceed to decide both
the issues as under :
ISSUE No.1 - [Challenge to re-assessment proceedings
under section 147/148 of the I.T. Act, 1961] :
5. The assessee raised several grounds before the
Ld. CIT(A) to challenge the reopening of the assessment
under section 148 of the I.T. Act. The assessee submitted
that notice4 issued under section 148 is illegal and void
abinitio and that there were no reason to believe that the
petitioner’s income has escaped assessment which is must
for assuming lawful jurisdiction under section 148 of the
I.T. Act, 1961 and that reopening is barred before A.O. has
not himself formed any belief as to the escapement of
income, but, has merely acted upon the direction of the
Investigation Wing. Notice under section 148 have been
issued on general statement and is vague and as such
reopening of the assessment is illegal and unjustified and is
8
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
liable to be quashed. The Ld. CIT(A), however, decided that
when A.O. has reason to believe that income has escaped
assessment, therefore, initiation of re-assessment
proceedings is valid. The Ld. CIT(A), accordingly, dismissed
this ground of appeal of assessee.
5.1. The assessee on Ground No.6 has raised the
following ground :
“6. The CIT(A) erred in law and on facts by not
considering that the reasons to belief recorded by
the ITO, Ward-8(1), New Delhi were not bonafide
as the same had many infirmities and were just
stereotyped without application of mind.”
5.2. Learned Counsel for the Assessee referred to the
reasons recorded for reopening of the assessment Dated
17.03.2010 copy of which is filed at PB-1/page-18 which
reads as under :
“17.03.2010 : Reasons for issue of notice u/s 148 in the case of
M/s. Shalom Exim Pvt. Ltd., New Delhi A.Y. 2003-04.
9
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
Information has been received from DIT (Inv.) New Delhi
that M/s. Shalomi Exim Pvt. Ltd., New Delhi has been
beneficiary of accommodation entries being provided by
certain entry operators. On the basis of the information chart
forwarded by the DIT (Inv.), New Delhi it is seen that the
assessee is involved in the following bogus transactions
detailed in the chart forwarded by the DIT (Inv.) New Delhi.
Beneficiary Name M/s. Shalom Exim Pvt. Ltd.,
Beneficiary Bank Name ICICI Bank
Beneficiary Bank Branch Pitampura D.P. Block
Value of entry taken Rs.1,47,00,000/-
Instrument No. by which --
entry taken
7.3.03, 18.3.03, 24.3.03,
Date on which entry taken 6.3.03, 08.3.03, 10.3.03,
11.03.03, 12.3.03, 21.3.03,
22.3.03.
K.R. Fincap P. Ltd., Transpan
Financial Services, Shriniwas
Leasing Finance, Basant
Agency P. Ltd., Changia
Name of account holder of Steels P. Ltd., Chintpurni
Credits, Division Trading P.
entry giving account. Ltd., Right Choice Const. P.
Ltd., Sekhawati Finance P.
Ltd., Ganga Infin P. Ltd.,
Nishant Finvest P. Ltd., Sober
Associates P. Ltd., Sparrow
Marketing P. Ltd., Particular
Manage Finlease P. Ltd.,
Bank of entry given bank SBBJ, SBP
10
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
Account No. entry giving 26422, 24625, 24657,
account. 24645, 50104, 50058,
50105, 50124, 50111,
50122, 50080, 60061,
50083, 50050
I have therefore reason to believe that an amount of
Rs.1,47,000/- has escaped assessment within the meaning
of section 147 of the Income Tax Act, 1961.
Since 4 years have since been elapsed, the facts are
submitted for your kind perusal and approval of the Addl./Jt.
CIT, Range-8, New Delhi as per section 151(2) of the Income
Tax Act, 1961 for issuance of notice u/s. 148 of the Income
Tax Act.
Sd/- J.S. Nagar,
Income Tax Officer,
Ward 8 (1), New Delhi.
Jt. CIT, R-8, New Delhi.”
5.3. He has submitted that the A.O. in the above
reasons has mentioned name of the beneficiary as “M/s.
Shalom Exim Pvt. Ltd.,” and value of the entry taken as
Rs.1,47,00,000/-. He has submitted that A.O. has recorded
11
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
both incorrect facts in the reasons. He has submitted that
the assessee company was incorporated in the name of M/s.
Shalom Exim Pvt. Ltd., vide Certificate of Incorporation
Dated 27.02.2003. Copy of the Incorporation Certificate is
filed along with the written submissions. Later on the name
of M/s. Shalom Exim Pvt. Ltd., was changed to M/s.
Mamram Developers P. Ltd., vide fresh Certificate of
Incorporation Dated 03.11.2003 copy of which is filed along
with the written submissions and w.e.f. 26.11.2009 the
name of M/s. Mamram Developers P. Ltd., was changed to
Shri Shyam Sunder Infrastructure (P) Ltd., [Present
Assessee]. Copy of the Certificate of Incorporation is also
furnished along with the written submissions. He has
submitted that in the first round of proceedings before the
Tribunal these facts were highlighted to show that the
intimation of change of name was even notified to the A.O.
way back in November, 2003. Therefore, A.O. has
mentioned name of beneficiary as M/s. Shalom Exim Pvt.
Ltd., incorrectly without verifying the facts and ultimately,
12
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
A.O. made addition of Rs.98 lakhs only in the re-assessment
order, but, made wrong facts in the reasons by noting that
entry was taken of Rs.1,47,00,000/-. He has, therefore,
submitted that A.O. recorded wrong and incorrect facts in
the reasons for reopening of the assessment. The A.O. was
having no reason to believe that income chargeable to tax
has escaped assessment and merely relied upon the report
of the Investigation Wing. No name of entry provider have
been mentioned in the reasons. The assessee also filed
objections to the reopening of the assessment which have
not been considered in proper perspective, copy of which is
filed in the PB. The A.O. has not applied his mind to the
information so received from Investigation Wing, therefore,
reopening of the assessment is illegal and bad in Law and
liable to be quashed.
6. On the other hand, the Ld. D.R. relied upon the
Orders of the authorities below and submitted that original
name of the assessee is M/s. Shalom Exim Pvt. Ltd.,
therefore, A.O. recorded correct name in the reasons
13
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
recorded for reopening of the assessment. The A.O. received
information from Investigation Wing that assessee has
received entry of Rs.1,47,00,000/-, therefore, A.O. recorded
correct facts in the reasons for reopening of the assessment.
7. We have considered the rival submissions as well
as taken into consideration written submissions filed by
assessee and considered the material available on record. It
is well settled law that validity of the reopening of the
assessment is to be determined with reference to the
reasons recorded for reopening of the assessment. Learned
Counsel for the Assessee filed copy of the reasons recorded
for reopening of the assessment at Page-18 of PB-1 which is
reproduced above. The Hon’ble Punjab & Haryana High
Court in the case of CIT vs., Atlas Cycle Industries [1989]
180 ITR 319 held as under :
“Held, (i) that the Tribunal was right in cancelling
the reassessment as both the grounds on which
the reassessment notice was issued were not
14
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
found to exist, and, therefore, the Income-tax
Officer did not get jurisdiction to make the
reassessment.”
7.1. The Hon’ble Delhi High Court in the case of Pr.
CIT vs., SNG Developers Ltd., [2018] 404 ITR 312 (Del.) in
which it was held as under :
“Held, dismissing the appeal, that the reasons
recorded by the Assessing Officer for reopening the
assessment under section 147, issuing a notice
under section 148 did not meet the statutory
conditions. As already held by the Appellate
Tribunal, there was a repetition of at least five
accommodation entries and the total amount
constituting the so-called accommodation entries
would therefore, not work out to Rs.95,65,510. It
was unacceptable that the Assessing Officer
persisted with his "belief" that the amount had
escaped assessment not only at the stage of
15
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
rejecting the assessee’s objections but also in the
reassessment proceedings, where he proceeded to
add the entire amount to the income of the
assessee. Therefore there was non-application of
mind on the part of the Assessing Officer. The
Appellate Tribunal was justified in confirming the
order of the Commissioner (Appeals) and holding
that the reopening of the assessment was bad in
law.”
7.2. The Hon’ble Delhi High Court in the case of
Shamshad Khan vs., ACIT [2017] 395 ITR 265 (Del.) in
which it was held as under :
“Held, allowing the petition, that the form for
recording the reasons for initiating the proceedings
under section 148 of the Act for obtaining approval
of the Commissioner itself proceeded on the
erroneous basis that the quantum of income which
had escaped assessment was Rs.28,75,000
16
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
whereas the assessee had filed returns showing
income of merely Rs.20,56,145 and it was on this
basis that the Additional Commissioner and the
Commissioner granted their approval for reopening
the assessment. Even though the assessee
highlighted this fundamental error at the initiation
of the case by stating that his income was
mentioned as Rs.20,56,145 instead of
Rs.69,71,191, this was summarily rejected stating
that it was a clerical mistake and that the latter
figure would be treated as his income. If the
correct income i.e. Rs.69,71,191 was put before
the Commissioner at the time of seeking his
approval, he might have taken a different view.
There was nothing on record to show that the
clerical mistake of substituting Rs.20,56,145 for
Rs.69,71,191 was ever brought to the notice of the
Commissioner either before or after approval or
sanction under section 151(1) of the Act. The
17
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
initiation of the case for reopening of the
assessment was erroneous and without
application of mind especially since the Assessing
Officer had not examined the return filed, which
would have revealed that the assessee had filed
regular returns, had sufficient opening balance in
his account and the withdrawals therefrom
substantiated the donation made. Therefore, the
reopening of the assessment was unsustainable in
law and the notice issued under section 147 of the
Act was to be quashed.”
7.3. The Hon’ble Bombay High Court in the case of
Siemens Information Systems Ltd., vs., ACIT & Others
[2007] 293 ITR 548 (Bom.) held as under :
“The petitioner had several EOU/STP units
engaged in the business of export of software. In
response to the notice for reopening the
assessment for the assessment year 1999-2000,
18
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
the petitioner, objecting to the issuance of the
notice, stated that the reasons furnished by the
authority had quoted the provisions of section 10A
as amended by the Finance Act, 2000, with effect
from the assessment year 2001-02 and as such
could not have been made applicable to the
assessment year 1999-2000 and the notice had
been issued under the mistaken belief about the
correct position of law. However, opportunity to
show cause was given to the petitioner as to why
the loss claimed should not be disallowed to be
carried forward. On a writ petition :
Held, allowing the petition, (i) that it would be
clear from the reasons given that the authority
proceeded on the presumption that the law
applicable was the law after the amendment and
not the law in respect of which the petitioner had
filed the return for the year 1999-2000. This by
itself clearly demonstrated that there was total
19
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
non-application of mind on the part of the authority
and consequently, the notice based on that reason
would amount to non-application of mind.
(ii) That the income derived by the
assessee from an industrial undertaking to which
section 10A applies could not be included in the
total income of the assessee. Therefore, the
petitioner was right in filing the return by
excluding the income in terms of section 10A.”
7.4. The crux of the above Judgments had been that,
in case, incorrect, wrong and non-existing reasons are
recorded by the A.O. for reopening of the assessment and
that A.O. failed to verify the information received from
Investigation Wing, the reopening of the assessment would
be unjustified and is liable to be quashed. The ITAT, F-
Bench, New Delhi in the case of Shri Pankaj Sapra, New
Delhi vs., ITO, Ward-23(2), New Delhi in ITA.No.5747/
Del./2018 vide Order Dated 22.11.2009 on identical facts
20
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
quashed the reopening of the assessment in para-9 which
reads as under :
“9. We have heard both the parties and perused all
the materials available on record. The issue
relating to proceedings initiated u/s 148
whether the same is valid or not, has already
been decided in assessee’s own case for A.Y.
2007-08 by the Tribunal. The Tribunal held as
under :
“8. I have considered the rival
submissions made by both the sides and
perused the orders of the authority below. I
find the AO on the basis of the information
received from the investigation wing of the
Department that the assessee has made
cash deposit of Rs.4,97,452/- reopened the
assessment by issuing notice under section
148 and thereafter made addition of
21
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
Rs.4,97,452/- to the total income of the
assessee by invoking the provisions of
Section 68 of the I.T. Act, 1961. I find the
learned CIT(A) upheld the action of the AO,
the reasons of which have already been
reproduced in the preceding paragraph. It
is the submission of the learned counsel for
the assessee that there is complete non
application of mind of the AO while
recording the reasons and he has not
verified the facts properly and the
reopening was made on the basis of report
of the investigation wing. Further the
deposits in the bank accounts are fully
explained and therefore no addition is
called for.
9. I find force in the above
arguments advanced by the learned
counsel for the assessee. A perusal of the
22
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
notice issued under section 148 shows that
the notice has been issued in a very casual
manner, Clause 3 of the notice reads as
under :-
“Notice under section 148 of the Income Tax Act, 1961.
3. This notice is being issued after obtaining
the necessary satisfaction of the
commissioner of Income Tax…/the Central
Board of Direct Taxes. ”
10. Similarly, a perusal of the bank
account maintained with Vijaya Bank
account no. 004427, copy of which has been
placed at page no. 25 and 26 of the paper
book, shows that an amount of
Rs.2,50,000/- was by way of clearing of
Cheque No.719443 and not cash deposit. If
the same is excluded from the total deposits
made during the year from the two bank
23
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
accounts then there is no such cash deposit
of Rs.4,97,452/ - in the two bank accounts
maintained by the assessee. Therefore, I find
force in the argument of learned counsel for
the assessee that the reasons recorded are
either vague reasons or not based on
ITA.No.4253/Del./2018 & ITA.No.4254/Del.
/2018 6 any application of mind. In any
case, the assessee has explained the source
of each deposit made both in cash as well as
in cheque and therefore, even on merit also
no addition is called for. I, therefore, set
aside the order of the learned CIT(A) and
direct the AO to delete the addition. The
ground raised by the assessee is allowed. ”
7.5. Learned Counsel for the Assessee has placed on
record copy of the Incorporation Certificate of the assessee
company at the initial stage in the year 2003 when it was
registered as M/s. Shalom Exim (P) Ltd., which was later on
24
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
changed to M/s. Mamram Developers P. Ltd., in the year
2003 itself and thereafter in the year 2009 it was changed to
Shri Shyam Sunder Infrastructure (P) Ltd., [Present
Assessee]. An intimation was given to the A.O. about change
in the name of the assessee. Despite all these material on
record before A.O, A.O. has mentioned the name of non-
existing assessee i.e., M/s. Shalom Exim (P) Ltd., in the
reasons Dated 17.03.2010 recorded for reopening of the
assessment, that beneficiary is non-existing company. The
name of the present assessee is nowhere mentioned. The
A.O. has also wrongly recorded that assessee has received
entry of Rs.1,47,00,000/- and made deposit in ICICI Bank
despite no such amount was found deposited in the Bank
A/c of the assessee and ultimately addition is made of Rs.98
lakhs only. The A.O, thus, recorded wrong, incorrect and
non-existing reasons in the reasons recorded for reopening
of the assessment and has merely relied upon the report of
Investigation Wing without any verification. The information
received by the A.O. is vague and do not lead to formation of
25
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
belief that any income chargeable to tax has escaped
assessment. In these circumstances, it was the duty of the
A.O. to verify the facts before coming into the conclusion
that there is an escapement of income on account of credit
entries received in the Bank A/c of the assessee. The A.O.
even did not verify the information received from the
Investigation Wing and even did not verify the name of the
assessee. Thus, the A.O. recorded incorrect and wrong
reasons for reopening of the assessment and did not apply
his mind to the facts of the case before recording reasons for
reopening of the assessment. Even the Sanctioning
Authority has not applied his mind to the conclusion drawn
by the A.O. based on specific material on record which
clearly reveal that reasons recorded by the A.O. are wrong,
incorrect and based on no evidence. It is, therefore, clear
case of non-application of mind by the A.O. at the time of
recording reasons for reopening of the assessment. We also
rely upon following decisions in support of our conclusion.
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
7.6. In the case of Pr. CIT vs., RMG Polyvinyl (I) Ltd.,
[2017] 396 ITR 5 (Del.) the Hon’ble Delhi High Court held as
under :
“Where information was received from
investigation wing that assessee was beneficiary
of accommodation entries but no further inquiry
was undertaken by Assessing Officer, said
information could not be said to be tangible
material per se and, thus, reassessment on said
basis was not justified.”
7.7. In the case of Pr. CIT vs., Meenakshi Overseas
(P) Ltd., 395 ITR 677 (Del.), the Hon’ble Delhi High Court
held as under :
"Reassessment notice condition precedent
recording of reasons to believe that income has
escaped assessment mere reproduction of
investigation report in reasons recorded absence of
link between tangible material and formation of
ceding illegal Income Tax Act, 1961, Sec.147, 148"
27
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
7.8. In the case of Pr. CIT vs., G And G Pharma India
Ltd., [2016] 384 ITR 147 (Del.), the Hon’ble Delhi High
Court held as under :
“Reassessment condition precedent application of
mind by assessing officer to materials prior to
forming reason to believe income has escaped
assessment - No independent application of mind
to information received from Directorate of
Investigation and no prima facie opinion formed-
reassessment order invalid”.
7.9. In the case of Sarthak Securities Co. (P) Ltd., 329
ITR 110 (Del.), the Hon’ble Delhi High Court held as under :
[“No independent application of mind by the
Assessing officer but acting under information
from Inv. Wing - Notice U/s. 147 to be quashed”.
7.10. Considering the totality of the facts and
circumstances of the case and in the light of material on
record, we are of the view that reopening of the assessment
28
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
is illegal and bad in Law and is liable to be quashed. We,
accordingly, set aside the Orders of the authorities below
and quash the reopening of the assessment. Resultantly, all
additions stand deleted. This issue is decided in favour of
the Assessee.
ISSUE No.2 – [Addition of Rs.98 lakhs on account of share
capital/premium under section 68 of the I.T. Act, 1961 and
addition of Rs.1,96,000/- on account of Commission].
8. Learned Counsel for the Assessee submitted that
A.Y. 2003-04 under appeal is the first year of incorporation
of the assessee company as the assessee company was
originally incorporated on 27.02.2003 in the name of M/s.
Shalom Exim (P) Ltd., In assessment year under appeal,
assessee company has received share application money
from different applicants as mentioned in the impugned
Orders of Rs.98 lakhs. The details of the same are also given
in the paper book. The A.O. has mentioned in the
assessment order that assessee has furnished Share
29
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
Application Form, Affidavits, copy of the return of income
and copy of the Bank A/cs of all the share applicants,
copies of which are also filed in the paper book. These
details have not been considered by the authorities below in
proper perspective. Learned Counsel for the Assessee has
furnished a chart in the written submissions to show that
all the documentary evidences mentioned above along with
the balance-sheet of the Investors have been filed before the
authorities below and copies of the same are filed in the
paper book as well. The details would also show net worth
of the Investors which were far more than the amount
invested in assessee company. He has submitted that since
it was the initial year of the assessee and assessee is
incorporated on 27.02.2003 only i.e., at the end of the
financial year, therefore, assessee would not have earned
the amount of Rs.98 lakhs as unaccounted income.
Therefore, on this reason only the addition is liable to be
deleted. He has submitted that the A.O. issued summons
under section 131 of the I.T. Act after lapse of 7 to 8 years
30
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
and also directed the assessee to produce the Principal
Officers of the share applicants after gap of 7 to 8 years,
therefore, assessee was not in a position to produce the
Principal Officers of the Investors. The assessee has made a
request to the A.O. to issue summons under section 131 of
the I.T. Act to the Investors vide letter Dated 16.12.2010
[PB-5/Page-841]. But, the Investors were not summoned on
the request of the assessee and they were not produced,
therefore, there is no fault of the assessee in production of
the Investors at the assessment proceedings. He has
submitted that the matter was remanded by the Ld. CIT(A)
to the A.O. and the A.O. issued notice Dated 9/13.01.2012
[PB-5/Page-864] to the assessee to produce the Directors /
Principal Officers of the Investor Companies. The assessee
in reply submitted the details of current address and PAN of
these companies, copies of which are filed at PB-5/pages
865-867. Then the A.O. issued notice under section 133(6)
of the I.T. Act, 1961 Dated 09.02.2012 to the share
applicant companies. Copies of the replies in respect of the
31
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
same from the share applicant companies are filed at PB-
5/Pages 878 to 1047. The Investors have also filed
documentary evidences duly confirming the investment in
assessee company. Therefore, non-service of the summons
or absence of parties before A.O. could not be attributable to
the assessee and no addition could be made against the
assessee. he has submitted that this cannot be alone reason
for making addition against the assessee. Learned Counsel
for the Assessee relied upon the following decisions :
1. CIT vs., Divine Leasing & Finance Ltd., 299 ITR 268
[Delhi-HC]
2. CIT vs., Creative World Telefilms Limited [2011] 15
taxmann.com 183 [Bombay].
3. Pr. CIT vs., Softline Creations (P) Ltd., [2016] 387 ITR
636 [Delhi-HC]
4. CIT vs., Victor Electrodes Limited [2010] 329 ITR 271
[Delhi-HC].
5. Pr. CIT vs., Rakam Money Matters Pvt. Ltd.,
ITA.No.778/2015 [Delhi]HC].
6. CIT vs., Orchid Industries (P.) Ltd., [2017] 88
taxmann.com 502 (Bom.).
7. CIT vs., Vrindavan Farms (P) Ltd., ITA.No.72/2015
Dated 12.08.2015 [Delhi-HC].
8. CIT vs., Oasis Hospitalities Pvt. Ltd., 198
taxmann.com 247 [Delhi-HC].
32
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
8.1. Learned Counsel for the Assessee, therefore,
submitted that no addition could be made on account of
unexplained share capital because the initial onus upon the
assessee has been discharged. He has submitted that there
is no evidence on record to prove that assessee paid any
commission to any party. Therefore, there were no
justification to make any addition of Rs.1,96,000/-.
9. On the other hand, Ld. D.R. relied upon the
Orders of the authorities below and submitted that assessee
failed to produce Directors of the Investor Companies before
A.O, therefore, addition have been rightly made and
confirmed by the Ld. CIT(A).
10. We have considered the rival submissions and
perused the material on record. It is not in dispute that
assessee filed all the documentary evidences before the
authorities below in respect of explaining the genuine share
application money received from the Investor Companies.
The assessee filed copies of the Share Application Forms,
Affidavits, Board Resolution, Confirmations, Copy of Income
33
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
Tax Returns, Balance-Sheet and Profit & Loss A/c, Bank
Statements, Certificates of Incorporation, PAN and
Jurisdiction of the A.O. in respect of the Share Applicant
Companies. Copies of the same are also filed in the PB. All
the Investors have confirmed making investment in assessee
company. The bank statements of the Investors shows that
they are having sufficient balances with them to make
investment in assessee company. All are assessed to tax and
are Incorporated Companies. Their balance-sheets shows
that they have net worth to make investment in assessee
company. The Investors have made investments in small
amounts of Rs.4.5 lakhs to Rs.9 lakhs only in assessee
company and the net worth of the Investor Companies are
in several lakhs. The details of the same are mentioned in
the written submissions of the assessee. The documentary
evidences filed by the assessee have not been doubted by
the A.O. The A.O. did not accept the explanation of assessee
because the summons issued under section 131 of the I.T.
Act were returned un-served and that assessee failed to
34
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
produce the Directors/Principal Officers of the Share
Applicant Companies before A.O. The assessee has however,
made a request to the A.O. before conclusion of the
assessment proceedings on Dated 16.12.2010 to issue
summons again to the Investor Companies under section
131 of the I.T. Act, but, no efforts have been made in this
regard. The Hon’ble Madhya Pradesh High Court in the case
of CIT vs., Ramesh Chand Shukla in MAIT No.71/2003
decided on Dated 01.04.2005 held that “it is now well
settled that where the assessee requests the A.O. to issue
summons, to enforce attendance of the Creditors to establish
the genuineness and capacity of the creditor, it is the duty of
the A.O. to enforce attendance by issuing summons. If the
A.O. does not choose to issue summons and examine the
creditors, he cannot, subsequently, treat the loans standing
in the name of such creditors as non-genuine; nor add the
amount thereof to the assessee’s income.”
10.1. The Hon’ble Allahabad High Court in the case of
Mannalal Muralidhar 79 ITR 540 held that “A.O. should
35
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
assist the assessee by exercising the power to enable the
assessee to produce evidences, otherwise, assessment
would vitiate.” Learned Counsel for the Assessee has
referred to PB-5/Page-864 when the matter was remanded
by the Ld. CIT(A) to the A.O. in this regard, A.O. issued
letter to the assessee to produce the Directors/Principal
Officers of these Investor Companies. The assessee
submitted Current Address and PAN of these Companies on
which A.O. issued notice under section 133(6) of the I.T. Act
on Dated 09.02.2012 to the Share Applicant Companies and
in turn, the Investor Companies have confirmed the
transactions with the assessee and confirmed investment
made by them supported by the documentary evidences.
Therefore, their non-production before the A.O. would not
be a ground to make the addition against the assessee.
Since the initial onus to prove genuine credits received by
assessee from the Investor Companies have been duly
discharged by the assessee and no material have been
produced by the A.O. to rebut the documentary evidences
36
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
filed by the assessee, therefore, there were no reason for the
authorities below to make any addition against the
assessee. In support of our contention, we rely upon the
following decisions.
10.2. Decision of Hon’ble jurisdictional High Court in
the case of CIT vs. Kamdhenu Steel and Alloys Ltd., &Ors.
361 ITR 220 (Del.) in which it was held as under :
“Once adequate evidence/material is given, which
would prima facie discharge the burden of the
assessee in proving the identity of shareholders,
genuineness of the transaction and
creditworthiness of the shareholders, thereafter in
case such evidence is to be discarded or it is
proved that it has “created” evidence, the Revenue
is supposed to make thorough probe before it could
nail the assessee and fasten the assessee with
such a liability under s.68; AO failed to carry his
suspicion to logical conclusion by further
37
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
investigation and therefore addition under s.68
was not sustainable.”
10.3. Decision of Hon’ble jurisdictional High Court in
the case of CIT vs. Vrindavan Farms Pvt. Ltd., etc. ITA.No.71
of 2015 dated 12th August, 2015 (Del.), in which it was held
as under :
“The sole basis for the Revenue to doubt their
creditworthiness was the low income as reflected
in their return of income. It was observed by the
ITAT that the AO had not undertaken any
investigation of the veracity of the documents
submitted by the assessee, the departmental
appeal was dismissed by the Hon’ble High Court.
10.4. Decision of jurisdictional High Court in the case
of CIT vs. Laxman Industrial Resources Pvt. Ltd.,
ITA.No.169 of 2017 dated 14th March, 2017, in which it was
held as under :
38
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
“The CIT(A) took note of the material filed by the
assessee and provided opportunity to the AO in
Remand proceedings. The AO merely objected to
the material furnished but did not undertake any
verification. The CIT(A) deleted the addition by
relying upon the decision of the Hon’ble Apex Court
in the case of Lovely Exports Pvt.Ltd. (supra) and
judgment of Delhi High Court in the case of CIT vs
Divine Leasing & Finance Ltd. [2008] 299 ITR 268.
The ITAT confirmed the opinion of the Ld.CIT(A).
Hon’ble High Court in view of the above findings
noted that the assessee had provided several
documents that could have showed light into
whether truly the transactions were genuine. The
assessee provided details of share applicants i.e.
copy of the PAN, Assessment particulars, mode of
amount invested through banking channel, copy of
resolution and copies of the balance sheet. The AO
39
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
failed to conduct any scrutiny of the document, the
departmental appeal was accordingly dismissed.
10.5. Decision of the Hon’ble Supreme Court in the
case of Earth Metal Electric Pvt. Ltd., vs. CIT dated 30th
July, 2010 in SLP.No.21073 of 1999, in which it was held as
under :
“We have examined the position, we find that the
shareholders are genuine parties. They are not
bogus and fictitious therefore, the impugned order
is set aside.”
10.6. Decision of Hon’ble jurisdictional High Court in
the case of Divine Leasing & Finance Ltd., 299 ITR 268, in
which it was held as under :
“No adverse inference should be drawn if
shareholders failed to respond to the notice by
A.O.
40
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
10.7. Decision of Hon’ble M.P. High Court in the case of
CIT vs. Peoples General Hospital Ltd., (2013) 356 ITR 65, in
which it was held as under :
“Dismissing the appeals, that if the assessee had
received subscriptions to the public or rights issue
through banking channels and furnished complete
details of the shareholders, no addition could be
made under section 68 of the Income-tax Act,
1961, in the absence of any positive material or
evidence to indicate that the shareholders were
benamidars or fictitious persons or that any part of
the share capital represented the company's own
income from undisclosed sources. It was nobody's
case that the non-resident Indian company was a
bogus or non-existent company or that the amount
subscribed by the company by way of share
subscription was in fact the money of the
assessee. The assessee had established the
identity of the investor who had provided the
41
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
share subscription and that the transaction was
genuine. Though the assessee's contention was
that the creditworthiness of the creditor was also
established, in this case, the establishment of the
identity of the investor alone was to be seen. Thus,
the addition was rightly deleted. CIT v. Lovely
Exports P. Ltd. [2009] 319ITR (St.) 5 (SC) applied.”
10.8. Decision of Hon’ble jurisdictional High Court in
the case of CIT vs. (i) Dwarakadhish Investment P. Ltd.,
(ITA.No. 911 of 2010) and (ii) Dwarkadhish Capital P. Ltd.,
(ITA.No.913 of 2010) (2011) 330 ITR 298 (Del.) (HC), in
which it was held as under :
“In any matter, the onus of proof is not a static
one. Though in section 68 of the Income Tax Act,
1961, the initial burden of proof lies on the
assesses yet once he proves the identity of the
creditors/share applicants by either furnishing
their PAN number or income-tax assessment
42
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
number and shows the genuineness of transaction
by showing money in his books either by account
payee cheque or by draft or by any other mode,
then the onus of proof would shift to the Revenue.
Just because the creditors/share applicants could
not be found at the address given, it would not
give the Revenue the right to invoke section 68.
One must not lose sight of the fact that it is the
Revenue which has all the power and wherewithal
to trace any person. Moreover, it is settled law that
the assessee need not to prove the "source of
source". The assessee-company was engaged in
the business of financing and trading of shares.
For the assessment year 2001-02 on scrutiny of
accounts, the Assessing Officer found an addition
of Rs.71,75,000 in the share capital of the
assessee. The Assessing Officer sought an
explanation of the assessee about this addition in
the share capital. The assessee offered a detailed
43
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
explanation. However, according to the Assessing
Officer, the assessee failed to explain the addition
of share application money from five of its
subscribers. Accordingly, the Assessing Officer
made an addition of Rs.35,50,000/- with the aid
of section 68 of the Act, 1961 on account of
unexplained cash credits appearing in the books of
the assessee. However, in appeal, the
Commissioner of Income-tax (Appeals) deleted the
addition on the ground that the assessee had
proved the existence of the shareholders and the
genuineness of the transaction. The Income-tax
Appellate Tribunal confirmed the order of the
Commissioner of Income-tax (Appeals) as it was
also of the opinion that the assessee had been
able to prove the identity of the share applicants
and the share application money had been
received by way of account payee cheques. On
appeal to the High Court: Held, dismissing the
44
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
appeals, that the deletion of addition was
justified.”
10.9. Decision of Hon’ble jurisdictional High Court in
the case of CIT vs. Winstral Petrochemicals P. Ltd., 330 ITR
603, in which it was held as under :
“Dismissing the appeal, that it had not been
disputed that the share application money was
received by the assessee-company by way of
account payee cheques, through normal banking
channels. Admittedly, copies of application for
allotment of shares were also provided to the
Assessing Officer. Since the applicant companies
were duly incorporated, were issued PAN cards
and had bank accounts from which money was
transferred to the assessee by way of account
payee cheques, they could not be said to be non-
existent, even if they, after submitting the share
applications had changed their addresses or had
45
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
stopped functioning. Therefore, the Commissioner
(Appeals) and the Tribunal were justified in
holding that the genuineness of the transactions
had been duly established by the assessee.”
10.10. Decision of Hon’ble jurisdictional High Court in
the case of CIT vs. Value Capital Services Pvt. Ltd., (2008)
307 ITR 334 (Del.) (HC), in which it was held as under :
“Dismissing the appeal, that the additional burden
was on the Department to show that even if the
share applicants did not have the means to make
the investment, the investment made by them
actually emanated from the coffers of the assessee
so as to enable it to be treated as the undisclosed
income of the assessee. No substantial question
of law arose.”
10.11. Judgment of Hon’ble Supreme Court in the case
of Commissioner of Income Tax, Orissa vs., Orissa
46
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
Corporation P. Ltd., [1986] 159 ITR 78 (SC) in which it was
held as follows :
“Held, that in this case the respondent had given
the names and addresses of the alleged creditors.
It was in the knowledge of the Revenue that the
said creditors were income-tax assessees. Their
index numbers were in the file of the Revenue. The
Revenue, apart from issuing notices under section
131 at the instance of the respondent, did not
pursue the matter further. The Revenue did not
examine the source of income of the said alleged
creditors to find out whether they were
creditworthy. There was no effort made to pursue
the so-called alleged creditors. In those
circumstances, the respondent could not do
anything further. In the premises, if the Tribunal
came to the conclusion that the respondent had
discharged the burden that lay on it, then it could
not be said that such a conclusion was
47
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
unreasonable or perverse or based on no evidence.
If the conclusion was based on some evidence on
which a conclusion could be arrived at, no question
of law as such arose. The High Court was right in
refusing to state a case.”
10.12. It is also an admitted fact that originally assessee
company was incorporated on 27.02.2003 and the financial
year ended on 31.03.2003 relevant to assessment year
2003-2004 under appeal. It is difficult to believe that during
a period of about one month assessee would have earned
such a huge unaccounted money of Rs.98 lakhs. Since it is
the first year of the business and Incorporation of the
Assessee-Company and share application money is received
at the end of the financial year after Incorporation of the
Assessee-Company, therefore, there were no justification to
held that assessee received unexplained share application
money. The Hon’ble Supreme Court in the case of CIT vs.,
Bharat Engineering And Construction Co. [1972] 83 ITR 187
[SC) held as under :
48
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
“The assessee, an engineering-construction company,
commenced its business in May, 1943. In its accounts
there were several cash credit entries in the first year of
its business totalling Rs.2,50,000. Though the
explanation regarding the cash credit entries was found
to be false, the Appellate Tribunal held that these cash
credits could not represent the income or profits of the
assessee as they were all made very soon after the
company commenced its activities :
Held, that the inference drawn from the facts proved
was a question of fact and the Tribunal’s finding on that
question was final. A construction company took time to
earn profits and it could not have earned a huge profit
within a few days after the commencement of its
business. Hence, it was reasonable to assume that the
cash credit entries represented capital receipts though
for one reason or another the assessee had not come
out with the true story as regards the source of the
receipts.
49
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
Decision of Allahabad High Court affirmed.”
10.13. Considering the facts of the case in the light of
material on record, it is clear that assessee produced
sufficient documentary evidences before A.O. to prove
ingredients of Section 68 of the I.T. Act, 1961. The Investors
have directly confirmed making investment in assessee
company in reply to the notice under section 133(6) of the
I.T. Act, 1961 at the appellate stage. Therefore, the assessee
has discharged its initial onus to prove the identity of the
Investor Companies, their creditworthiness and
genuineness of the transaction. No evidence have been
brought on record by the A.O. if assessee paid any
commission to any person of RS.1,96,000/-. Therefore,
there is no justification to make both the additions against
the assessee. In view of the above discussion, we set aside
the Orders of the authorities below and delete both the
additions of Rs.98 lakhs and Rs.1.96 lakhs under
consideration. This issue is decided in favour of the
assessee.
11. 50
ITA.No.2106/Del./2013 Shri Shyam Sunder
Infrastructure (P) Ltd., [Formerly known as
M/s. Shalom Exim (P) Ltd., and then as
Mamram Developers P. Ltd.,] Delhi.
In the result, appeal of the Assessee allowed.
Order pronounced in the open Court.
Sd/- Sd/-
(N.K. BILLAIYA) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated May, 2021
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT ‘G’ Bench, Delhi
6. Guard File.
// BY Order //
Assistant Registrar : ITAT Delhi Benches :
Delhi.
|
