Asstt. CIT v. Shyam Indus Power Solutions (P.) Ltd.

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The Tax Publishers2018 TaxPub(DT) 1040 (Del-Trib) : (2018) 062 ITR (Trib) 0512 Asstt. CIT v. Shyam Indus Power Solutions (P.) Ltd. INCOME TAX ACT, 1961 --Income from undisclosed sources--Addition under section 68Share application money--Identity, creditworthiness and genuineness--Where AO alleged companies having invested in shares of assessee as paper/shell companies without making any enquiry from RoC, bankers and respective AOs, etc., however, initial onus to prove identity, creditworthiness and genuineness stood discharged on assessee's part, AO was not justified in making addition of share application money under section 68.--AO received information from investigation wing as to assessee being beneficiary of entry operators. Therefore, AO required the assessee to explain share application money received by it. Assessee furnished names and address of share applicants, their PAN and ITRs, etc., address of investor companies in share application form, bank accounts as well as the permanent account number showed another address of those companies at Kolkata, whereas assessee was showing address of New Delhi. Therefore, AO holding investors as paper/shell companies created only for providing accommodation entries, made addition under section 68.Held: AO should have either obtained complete details from MCA Website or should have issued section 133(6) query letter to Registrar of Companies for obtaining annual reports, annual returns under the Companies Act and shareholders and director's details since beginning of investor companies. Details from bankers should also have been obtained with respect to the unusual transactions as alleged by AO. AO should have intimated and coordinated with AD's of those companies about business activity or their assessment history. None of the above exercise had been carried out by AO. However, assessee had discharged initial onus cast upon it under section 68, therefore, addition made by AO was deleted. Income Tax Act, 1961 Section 68 *REFERRED :* FAVOUR : In assessee's favour. A.Y. : 2012-13 & 2013-14 IN THE ITAT, DELHI 'B' BENCH BHAVNESH SAINI, J.M. & PRASHANT MAHARISHI, A.M. Asstt. CIT v. Shyam Indus Power Solutions (P.) Ltd. IT Appeal Nos. 3223 & 3224 of 2016, CO Nos. 249 & 250 (Delhi) of 2016 A.Y. 2012-13 & 2013-14 29 January, 2018 In favour of assessee *Case Review-I:* CIT v. Nipun Builders Ltd. (2013) 350 ITR 407 (Delhi) CIT v. Nova Promoters and Finlease (P.) Ltd. (2012) 342 ITR 169 (Delhi) CIT v. NR Portfolio Pvt. Ltd. (2014) 264 CTR 258 (Delhi) CIT v. Empire Builder Pvt. Ltd. (2014) 366 ITR 110 (Delhi) CIT v. Focus Exports (P.) Ltd. [IT Appeal No. 218 of 2012, dt. 16-9-2014] CIT v. MAF Academy (P.) Ltd. (2014) 361 ITR 258 (Delhi) Navodaya Castles (P.) Ltd. v. CIT (2015) 230 Taxman 268 (SC)--Distinguished. CIT v. Laxman Industrial Resources [IT Appeal No. 169 of 2017, dt. 14-3-2017] CIT v. Oriental International Co. Pvt. Ltd. [ITA No. 9 of 2018, dt. 8-1-2018] CIT v. Gagandeep Infrastructure (P.) Ltd. (2017) 394 ITR 680 (Bom.) Pr. CIT v. Laxman Industrial Resources Ltd. [IT Appeal No. 169 of 2017, dt. 14-3-2017] Pr. CIT v. Dhanlaxmi Equipments Ltd. [IT Appeal No. 189 of 2016, dt. 23-10-2017] Pr. CIT v. AR Leasing (P.) Ltd. [IT Appeal No. 361 of 2012, dt. 3-7-2017] (Delhi) Pr. CIT v. Jatin Investments (P.) Ltd. [IT Appeal No. 43 & 44 of 2016, dt. 18-1-2017] Pr. CIT v. Oriental International Co. Ltd. [IT Appeal No. 9 of 2018, dt. 8-1-2018] Pr. CIT v. Hi Tech Residency (P.) Ltd. [IT Appeal No. 628 of 2016, dt. 7-7-2017] Pr. CIT v. Interarch Estate (P.) Ltd. [IT Appeal No. 258 of 2016, dt. 14-11-2017]--Followed. *Case Review-II:* Cheminvest Ltd. v. CIT (2015) 378 ITR 33 (Delhi) *Cases Referred to:* Cheminvest Ltd. v. CIT (2015) 378 ITR 33 (Delhi) India Bulls Financial Services Ltd. v. Dy. CIT (2017) 395 ITR 242 (Delhi) Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT (2017) 394 ITR 449 (SC) CIT v. Nova Promoters & Finance (P.) Ltd. (2012) 342 ITR 169 (Delhi) Shankar Industries v. CIT (1978) 114 ITR 689 (Cal.) CIT v. Independent Media (P.) Ltd. [IT Appeal No. 456 of 2011, dt. 20-7-2012] CIT v. Focus Exports (P.) Ltd. [IT Appeal No. 218 of 2012, dt. 16-9-2014] CIT v. NR Portfolio Pvt. Ltd. (2014) 264 CTR 258 (Delhi) CIT v. Divine Leasing (2008) 299 ITR 268 (Delhi) CIT v. Precision Finance (P.) Ltd. (1994) 208 ITR 465 (Cal.) Gayathri Associates v. ITO [I.T.T.A. No. 477 of 2013, dt. 23-10-2013] Novadaya Castles (P.) Ltd. v. CIT (2014) 367 ITR 306 (Delhi) Pr. CIT v. Laxman Industrial Resources Ltd. [IT Appeal No. 169 of 2017, dt. 14-3-2017] Harshwardahan Gems (P.) Ltd. v. ITO [IT Appeal No. 1070 (Kol.) of 2010, dt. 3-2-2016] ITO v. Roseberry Mercantile (P.) Ltd. [IT Appeal No. 2111 (Kol.) of 2009] CIT v. Orissa Corpn (P.) Ltd. (1986) 159 ITR 78 (SC) CIT v. Vrindavan Farm (P.) Ltd. [IT Appeal No. 71 of 2015, dt. 12-8-2015] CIT v. Nipun Builders & Developers (P.) Ltd. (2013) 350 ITR 407 (Delhi) CIT v. Empire Builder (P.) Ltd. (2014) 366 ITR 110 (Delhi) CIT v. MAF Academy (P.) Ltd. (2014) 361 ITR 258 (Delhi) Navodaya Castles (P.) Ltd. v. CIT (2015) 230 Taxman 268 (SC) CIT v. Oriental International Co. (P.) Ltd. [IT Appeal No. 9 of 2018, dt. 8-1-2018] CIT v. Gagandeep Infrastructure (P.) Ltd. (2017) 394 ITR 680 (Bom.) Pr. CIT v. Dhanlaxmi Equipments Ltd. [IT Appeal No. 189 of 2016, dt. 23-10-2017] Pr. CIT v. AR Leasing (P.) Ltd. [IT Appeal No. 361 of 2012, dt. 3-7-2017] Pr. CIT v. Jatin Investments (P.) Ltd. [IT Appeal No. 43 & 44 of 2016, dt. 18-1-2017] Pr. CIT v. Hi Tech Residency (P.) Ltd. [IT Appeal No. 628 of 2016, dt. 7-7-2017] Pr. CIT v. Interarch Estate (P.) Ltd. [IT Appeal No. 258 of 2016, dt. 14-11-2017] Appellant by: Rachna Singh, Advocate Respondent by: Sajjan Kumar Tulsiyan, Advocate, Nisha Rachh and Karan Kumra, CA's ORDER *Prashant Maharishi, A.M.* These are the two appeals preferred by the learned ACIT, Central Circle-17, New Delhi [The learned AO] and the cross-objections filed by the assessee against the order of the learned Commissioner (Appeals)-27, New Delhi [The Ld. CIT (A)] dated 22-3-2016 for the assessment year 2012-13 and 2013-14. 2. For assessment year 2012-13, the learned assessing officer has raised the following grounds of appeal :-- '1. The learned Commissioner (Appeals) has erred in law and on the facts in deleting the addition of Rs. 4,81,801 made by assessing officer on account of disallowance of expenses under section 14A Income Tax Act, 1961, rule 8D of the Income Tax Rules, 1962. 2. The learned Commissioner (Appeals) has erred in law and on the facts in deleting the addition of Rs. 22,92,00,000 made by assessing officer on account of unexplained cash credit under section 68 of the Income Tax Act, 1961 from Kolkata based companies. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2018 TaxPub(DT) 1040 (Del-Trib) : (2018) 062 ITR (Trib) 0512

Asstt. CIT v. Shyam Indus Power Solutions (P.) Ltd.

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68Share application money--Identity, creditworthiness and genuineness--Where AO alleged companies having invested in shares of assessee as paper/shell companies without making any enquiry from RoC, bankers and respective AOs, etc., however, initial onus to prove identity, creditworthiness and genuineness stood discharged on assessee's part, AO was not justified in making addition of share application money under section 68.--AO received information from investigation wing as to assessee being beneficiary of entry operators. Therefore, AO required the assessee to explain share application money received by it. Assessee furnished names and address of share applicants, their PAN and ITRs, etc., address of investor companies in share application form, bank accounts as well as the permanent account number showed another address of those companies at Kolkata, whereas assessee was showing address of New Delhi. Therefore, AO holding investors as paper/shell companies created only for providing accommodation entries, made addition under section 68.Held: AO should have either obtained complete details from MCA Website or should have issued section 133(6) query letter to Registrar of Companies for obtaining annual reports, annual returns under the Companies Act and shareholders and director's details since beginning of investor companies. Details from bankers should also have been obtained with respect to the unusual transactions as alleged by AO. AO should have intimated and coordinated with AD's of those companies about business activity or their assessment history. None of the above exercise had been carried out by AO. However, assessee had discharged initial onus cast upon it under section 68, therefore, addition made by AO was deleted.

Income Tax Act, 1961 Section 68

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13 & 2013-14

IN THE ITAT, DELHI 'B' BENCH

BHAVNESH SAINI, J.M. & PRASHANT MAHARISHI, A.M.

Asstt. CIT v. Shyam Indus Power Solutions (P.) Ltd.

IT Appeal Nos. 3223 & 3224 of 2016, CO Nos. 249 & 250 (Delhi) of 2016

A.Y. 2012-13 & 2013-14

29 January, 2018

In favour of assessee

Case Review-I:

CIT v. Nipun Builders Ltd. (2013) 350 ITR 407 (Delhi)

CIT v. Nova Promoters and Finlease (P.) Ltd. (2012) 342 ITR 169 (Delhi)

CIT v. NR Portfolio Pvt. Ltd. (2014) 264 CTR 258 (Delhi)

CIT v. Empire Builder Pvt. Ltd. (2014) 366 ITR 110 (Delhi)

CIT v. Focus Exports (P.) Ltd. [IT Appeal No. 218 of 2012, dt. 16-9-2014]

CIT v. MAF Academy (P.) Ltd. (2014) 361 ITR 258 (Delhi)

Navodaya Castles (P.) Ltd. v. CIT (2015) 230 Taxman 268 (SC)--Distinguished.

CIT v. Laxman Industrial Resources [IT Appeal No. 169 of 2017, dt. 14-3-2017]

CIT v. Oriental International Co. Pvt. Ltd. [ITA No. 9 of 2018, dt. 8-1-2018]

CIT v. Gagandeep Infrastructure (P.) Ltd. (2017) 394 ITR 680 (Bom.)

Pr. CIT v. Laxman Industrial Resources Ltd. [IT Appeal No. 169 of 2017, dt. 14-3-2017]

Pr. CIT v. Dhanlaxmi Equipments Ltd. [IT Appeal No. 189 of 2016, dt. 23-10-2017]

Pr. CIT v. AR Leasing (P.) Ltd. [IT Appeal No. 361 of 2012, dt. 3-7-2017] (Delhi)

Pr. CIT v. Jatin Investments (P.) Ltd. [IT Appeal No. 43 & 44 of 2016, dt. 18-1-2017]

Pr. CIT v. Oriental International Co. Ltd. [IT Appeal No. 9 of 2018, dt. 8-1-2018]

Pr. CIT v. Hi Tech Residency (P.) Ltd. [IT Appeal No. 628 of 2016, dt. 7-7-2017]

Pr. CIT v. Interarch Estate (P.) Ltd. [IT Appeal No. 258 of 2016, dt. 14-11-2017]--Followed.

Case Review-II:

Cheminvest Ltd. v. CIT (2015) 378 ITR 33 (Delhi)

Cases Referred to:

Cheminvest Ltd. v. CIT (2015) 378 ITR 33 (Delhi)

India Bulls Financial Services Ltd. v. Dy. CIT (2017) 395 ITR 242 (Delhi)

Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT (2017) 394 ITR 449 (SC)

CIT v. Nova Promoters & Finance (P.) Ltd. (2012) 342 ITR 169 (Delhi)

Shankar Industries v. CIT (1978) 114 ITR 689 (Cal.)

CIT v. Independent Media (P.) Ltd. [IT Appeal No. 456 of 2011, dt. 20-7-2012]

CIT v. Focus Exports (P.) Ltd. [IT Appeal No. 218 of 2012, dt. 16-9-2014]

CIT v. NR Portfolio Pvt. Ltd. (2014) 264 CTR 258 (Delhi)

CIT v. Divine Leasing (2008) 299 ITR 268 (Delhi)

CIT v. Precision Finance (P.) Ltd. (1994) 208 ITR 465 (Cal.)

Gayathri Associates v. ITO [I.T.T.A. No. 477 of 2013, dt. 23-10-2013]

Novadaya Castles (P.) Ltd. v. CIT (2014) 367 ITR 306 (Delhi)

Pr. CIT v. Laxman Industrial Resources Ltd. [IT Appeal No. 169 of 2017, dt. 14-3-2017]

Harshwardahan Gems (P.) Ltd. v. ITO [IT Appeal No. 1070 (Kol.) of 2010, dt. 3-2-2016]

ITO v. Roseberry Mercantile (P.) Ltd. [IT Appeal No. 2111 (Kol.) of 2009]

CIT v. Orissa Corpn (P.) Ltd. (1986) 159 ITR 78 (SC)

CIT v. Vrindavan Farm (P.) Ltd. [IT Appeal No. 71 of 2015, dt. 12-8-2015]

CIT v. Nipun Builders & Developers (P.) Ltd. (2013) 350 ITR 407 (Delhi)

CIT v. Empire Builder (P.) Ltd. (2014) 366 ITR 110 (Delhi)

CIT v. MAF Academy (P.) Ltd. (2014) 361 ITR 258 (Delhi)

Navodaya Castles (P.) Ltd. v. CIT (2015) 230 Taxman 268 (SC)

CIT v. Oriental International Co. (P.) Ltd. [IT Appeal No. 9 of 2018, dt. 8-1-2018]

CIT v. Gagandeep Infrastructure (P.) Ltd. (2017) 394 ITR 680 (Bom.)

Pr. CIT v. Dhanlaxmi Equipments Ltd. [IT Appeal No. 189 of 2016, dt. 23-10-2017]

Pr. CIT v. AR Leasing (P.) Ltd. [IT Appeal No. 361 of 2012, dt. 3-7-2017]

Pr. CIT v. Jatin Investments (P.) Ltd. [IT Appeal No. 43 & 44 of 2016, dt. 18-1-2017]

Pr. CIT v. Hi Tech Residency (P.) Ltd. [IT Appeal No. 628 of 2016, dt. 7-7-2017]

Pr. CIT v. Interarch Estate (P.) Ltd. [IT Appeal No. 258 of 2016, dt. 14-11-2017]

Appellant by: Rachna Singh, Advocate

Respondent by: Sajjan Kumar Tulsiyan, Advocate, Nisha Rachh and Karan Kumra, CA's

ORDER

Prashant Maharishi, A.M.

These are the two appeals preferred by the learned ACIT, Central Circle-17, New Delhi [The learned AO] and the cross-objections filed by the assessee against the order of the learned Commissioner (Appeals)-27, New Delhi [The Ld. CIT (A)] dated 22-3-2016 for the assessment year 2012-13 and 2013-14.

2. For assessment year 2012-13, the learned assessing officer has raised the following grounds of appeal :--

'1. The learned Commissioner (Appeals) has erred in law and on the facts in deleting the addition of Rs. 4,81,801 made by assessing officer on account of disallowance of expenses under section 14A Income Tax Act, 1961, rule 8D of the Income Tax Rules, 1962.

2. The learned Commissioner (Appeals) has erred in law and on the facts in deleting the addition of Rs. 22,92,00,000 made by assessing officer on account of unexplained cash credit under section 68 of the Income Tax Act, 1961 from Kolkata based companies.