ACIT Vs Surya Global Steel Tubes Ltd (ITAT Delhi)
ITAT Delhi held that provisions of section 68 of the Income Tax Act are not attracted as the investment by the investor companies is duly explained. Further, identity, genuineness of transactions and creditworthiness of investor companies duly proved.
Facts- The AO primarily based on the statements of Sh. Babu Lal Banka (Entry Operator) and the Directors of the investor companies) and many others held, relying on the enquires and the information gathered by the Inspector, that the entities were not existing at the address mentioned and the assessee Surya Global Steel Tubes Ltd had not produce the Directors for examination but only filed all the documentary evidences.
Having gone through the entire Assessment Order, we find that the addition has been made solely based on the statements of the individuals and report of the Inspector with regard to absence of company at the addresses mentioned.
Aggrieved, the assessee filed appeal before the ld. CIT(A) who deleted the addition made by the AO. Affronted by the order of the ld. CIT(A) deleting the addition, the Revenue filed appeal before the Tribunal.
Conclusion- It is clear that the source of investment made against the share capital/ premium/ warrants, stands explained, as appellant and investor companies, have substantiated the same by furnishing evidences and proved the Identity, genuineness of transactions and creditworthiness of investor companies. In view of these facts and circumstances, we are of the considered opinion that provisions of section 68 of the Act, are not attracted in the case of appellant, as investment by investor companies, is considered as explained. Therefore, in these facts and circumstances, we decline to interfere with the order of the ld. CIT(A).
FULL TEXT OF THE ORDER OF ITAT DELHI
The present appeals filed by the Revenue and Cross Objections filed by the assessee are directed against the orders of the ld. CIT(A)-30, New Delhi dated 24.06.2016. Since, the issue involved in all the appeals are similar, they were heard together and being adjudicated by a common order.
2. The revenue has raised the following grounds of appeal in ITA No. 4778/Del/2016:
“1. On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in deleting the addition of Rs. 5,50,00,000/- made by AO on account of unexplained cash credit u/s 68 of the IT Act.
2. On the facts & in the circumstances of the case, the Ld. CIT(A) has failed to appreciate that the director of the investor companies produced for examination could not explain the credit of Rs. 5.5 crore in the books of the investee companies nor could he produce any material evidence to counter the statements recorded on oath of the entry operator involved and the erstwhile directors of investor companies.
3. On the facts & in the circumstances of the case, the Ld. CIT(A) has failed to appreciate that the affidavits stated to be furnished by the erstwhile directors of Investor Companies and the entry operator based at Kolkata wherein they retracted their earlier statements recorded on oath during the search and post search proceedings were furnished at the fag end of the assessment proceedings i.e. on 30.03.2015 and that no effort was made by said directors and entry operator to do the same earlier inspite there being ample time and opportunity available for the same.
4. On the facts & in the circumstances of the case, the Ld. CIT(A) has failed to appreciate that the entry operator has time and again admitted that he has provided accommodation entries to the willing beneficiaries by charging commission and accepted it as his nature of business in case of many of the companies of the group searched and that the statements given by him on oath on repeated occasions carry more weight than a retraction at the fag end of assessment proceedings i.e. on 30.03.2015.
5. On the facts & in the circumstances of the case, the Ld. CIT(A) has failed to appreciate that notice u/s 148 was issued after recording reasons u/s 147 of the Act and following procedure of law. The objection raised by Assessee Company against the reasons recorded u/s 147 during assessment proceedings was duly disposed off during the assessment proceedings.”
3. A search and seizure action u/s 132 took place on 30.10.2012 on Surya Roshni Group. The assessments in the case of Surya Global Steel Tubes Ltd. were completed u/s 147/143(3) whereas the assessments in the case of Surya Roshni Ltd. was conducted u/s 153A. The assessee received share application money from the following entities:
1. Sahaj Tie-Up Pvt. Ltd. (A.Y. 2010-11)
2. Clitoria Vanijya Pvt. Ltd. (A.Y. 2013-14)
3. Punarvasu Tie-up Pvt. Ltd. (A.Y. 2013-14)
4. Sagnik Vyapaar Pvt. Ltd. (A.Y. 2013-14)
5. Dicord Commodeal Pvt. Ltd. (A.Y. 2010-11)
6. Zatco Vyapar Pvt. Ltd. (A.Y. 2012-13)
7. Sadabahar Trade Comm Pvt. Ltd. (A.Y. 2012-13)
8. M. Graphics Pvt. Ltd. (A.Y. 2012-13)
4. We have perused the entire Assessment Orders passed for all the years. The reasons given by the AO for making the addition on account of share capital are common.
5. The AO primarily based on the statements of Sh. Babu Lal Banka (Entry Operator), Sh. Santosh Kumar Shah (Entry Operator) and the Directors of the investor companies Sh. Sanjay Shah (Former Director), Sh. Sanjay Kumar Dugar (Current Director), Sh. Sanjay Mittal (Current Director), Sh. Rakesh Kumar (Current Director), Sh. Manohar Lal Nangalia (Former Director), Sh. Vijay Gopal Gupta (Current Director), Sh. Sanjeev Dixit (Current Director). Sh. Surender Prasad, (Former Director), Sh. Manoj Lakhani (Former Director), Sh. Kumar Gaurav (Current Director), Sh. Somvanshi Manoj (Current Director), Sh. Naveen (Current Director), Sh. R. P. Aggarwal (Former Director), Sh. Raj Kumar Jain (Former Director), Sh. Sanjeev Kumar Jain, (Former Director), Sh. S. K. Hait (Current Director), Sh. Deepak Kumar (Former Director), Sh. Pankaj Bansal (Current Director), Sh. Mukesh Tripathi (Current Director) held, relying on the enquires and the information gathered by the Inspector, that the entities were not existing at the address mentioned and the assessee did not produce the Directors for examination but only filed all the documentary evidences.
6. Having gone through the entire Assessment Order, we find that the addition has been made solely based on the statements of the individuals and report of the Inspector with regard to absence of company at the addresses mentioned.
7. Aggrieved, the assessee filed appeal before the ld. CIT(A) who deleted the addition made by the AO.
8. Affronted by the order of the ld. CIT(A) deleting the addition, the Revenue filed appeal before the Tribunal.
9. During the arguments before us, the ld. DR, Sh. H. K. Choudhary vehemently argued relying on the Assessment Order and the report of the investigation.
10. The ld. DR argued that the documents filed by the assessee did not prove the genuineness of the transactions and creditworthiness of the investors. It was argued that the assessee did not comply to the directions of the Assessing Officer to produce the principle officer of the investor company for examination and such production of the persons was necessary as the evidence gathered at the time of search indicated that the transactions are not genuine. With regard to the company M/s Surya Roshini Ltd., the pleadings of the assessee that the assessee company is a listed company and all the process of raising funds were monitored by the Stock Exchange cannot be accepted. The ld. DR argued that since the funds have been raised by private placement through closely held private companies situated at Kolkata, there is every evidence that the share capital raised was bogus. The ld. DR further relied on the statements of Sh. Sanjay Kumar Dugar, and Sh. Shyam Sunder Sharma who are the present Directors for the subscriber companies who stated that they were not aware of the difference between warrants and shares. The ld. DR argued that the affidavits furnished by the subscriber company at the fag end of the assessment proceedings cannot be given any credence. The ld. DR also argued that the Principal Officer of the assessee company was confronted with regard to the statements given by the old Directors and entry operators wherein they have admitted that the investor companies are paper companies and accommodation entries were provided after charging a commission.
11. To conclude, the reliance of the revenue was on,
