Case Law Details
Global Ship Trade P. Ltd Vs ITO (ITAT Ahmedabad)
In the case of Global Ship Trade P. Ltd Vs ITO, the appeal was filed by the assessee against the order passed by the Ld. Pr. Commissioner of Income Tax-XX, Ahmedabad, dated 24.03.204, pertaining to Assessment Year 2005-06. The appeal primarily concerned the addition of Rs.4,45,17,089/- to the income of the assessee, which was made under section 143(3) r.w.s. 147 by invoking section 69A of the Income Tax Act, 1961.
The background of the case reveals that a survey action under section 133A of the Act was conducted on M/s VMS Industries, Ahmedabad, followed by a survey on the assessee and M/s Softouch Cosmetic Marketing P. Ltd. Bhavnagar. During these surveys, it was found that the assessee had received Rs.4,45,17,089/- from the bank account of M/s. J.D. Steel and its associate firms during the relevant year, which was not reflected in its income tax return. Consequently, the case of the assessee was reopened, and the amount received was added to its income as unexplained cash credits.
Before the appellate authority, the assessee contended that the funds received were merely routed through it to the ultimate beneficiary, M/s. VMS Industries. It was argued that the Department was fully aware of this arrangement, as evidenced by the investigation conducted on M/s. VMS Industries and the information collected during the survey. The assessee provided circumstantial evidence to demonstrate that it was only an intermediary in the transfer of funds and that the ultimate beneficiary was M/s. VMS Industries.
Additionally, the assessee pointed out the improbability of its involvement as a beneficiary, considering it had incurred losses on the shares purchased at a high premium and sold at a much lower price. Furthermore, it was revealed that the director of the assessee-company had admitted to the modus operandi of the transactions, wherein funds were routed through the assessee for the benefit of M/s. VMS Industries.
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