DCIT Vs Senorita Enterprises Pvt. Ltd. (ITAT Delhi)
Conclusion:
Addition under section 68 on account of high premium was unjustified as there was a clear lack of inquiry on the part of AO once assessee had furnished all the relevant material.
Held:
AO asked the reason for charging high premium @Rs.240/- per share from assessee. Assessee filed documents alongwith confirmations of shareholders, bank statement, ITR acknowledgements, balance sheets as on 31.03.2007 etc so as to justify three ingredients required u/s 68. The same were examined and found to be routine documents as filed before Investigation Wing by AO. Hence reply of the assessee was not acceptable and addition of income was made. It was held AO has proceeded entirely on the findings of the Investigation Wing and no investigation was made by him. He hsd not made any enquiry during the re-assessment proceedings. He had even not disclosed the facts on which he had treated that amount of Rs. 4.60 crores as a deemed income of the assessee. Charging of high rate of premium, even if assessee had not started its business had no bearing on the acceptance of the share application money and share premium. Only the companies which had applied for the shares and paid the premium could explain the reasons for paying so much high premium. AO has not made any enquiries from those companies. The enquiries conducted by the Investigation Wing also did not indicate any adverse findings against the assessee. After considering the whole issue, the matter was decided in assessee’s favour.
FULL TEXT OF THE ITAT JUDGMENT
The Revenue has filed this Appeal against the impugned Order dated 10.6.2015 of the Ld. CIT(A)-8, New Delhi relevant to assessment year 2007-08.
2. The grounds raised in the appeal read as under:-
i) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the AO has wrongly assumed the jurisdiction over the assessee u/s. 148 of the I.T. Act.
ii) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,60,00,000/- made by the AO u/s. 68 of the I.T. Act.
iii) The appellant craves to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of his appeal.
3. The brief facts of the case are that assessee filed its return of income declaring total income of Rs. 6,43,630/-, which was processed by the Assessing Officer u/s. 143(1) of the Income Tax Act, 1961 (in short “Act”) on 27.2.2009. AO noted in the assessment order that the Directorate of Income Tax (Investigation)-I, New Delhi vide its letter dated 19.3.2014 informed the Assessing Officer that Investigation Wing carried out enquiries in the matter of the assessee based upon three STRs in the name of Valiant Agencies, Senorita Enterprises Pvt. Ltd. And Enliven Developers Pvt. Ltd. Dated 5.3.2018, details of which, AO has reproduced in the assessment order at Page No. 2. On the basis of these STRs and upon further investigation conducted by the Investigation Wing, it was noticed that the Assessee Company had taken share capital of Rs. 465.98 lacs from Investee companies, but identity, genuineness and creditworthiness of the investors remained doubtful, in view of the various reasons mentioned by the AO in the assessment order at page no. 1 to 3. On the basis of the aforesaid information, the AO recorded the reasons u/s. 147 of the Act for reopening of the case, which the AO has reproduced in the assessment order at page no. 3-4. After obtaining the approval from the Competent Authority, AO issued notice u/s. 148 of the Act on 25.3.2014 and in response to the same, assessee filed a letter dated 28.3.2014 requested to accept the return filed by the assessee u/s. 139(1) of the Act. AO provided the reasons to the assessee and issued notice u/s. 143(2) of the I.T. Act dated 11.6.2014 and fixed the case of the assesee for hearing on 23.6.2014. On 23.6.2014 on the request of the assessee, satisfaction obtained u/s. 151(2) was provided and assessee was directed to comply with notice u/s. 143(2) on 24.6.2014. Summons u/s. 131(1) of the Act were issued to both the Directors for 24.6.2014. The notice of the same remained unattended because of which final show cause notice was served upon the assessee on 25.6.2014 directed it to appear on 26.6.2014 at 10 AM and to show cause as to why an addition of Rs. 4,65,98,000/- received from various companies as mentioned in the aforesaid notice alognwith their PAN Number be not made to the income of the assessee.
3.1 On 27.6.2014, AR of the assessee appeared and filed the objections against the notice issued u/s. 148 of the Act and furnished the reply to the final show cause notice dated 25.6.2014. He requested for inspection of the record on 24.6.2014 and further requested for copy of the satisfaction as received in proforma from Addl. Commissioner of Income Tax, Range-8, New Delhi and the counsel of the assessee was allowed inspection and also provided copy of the satisfaction obtained u/s. 151(2) of the Act. Thereafter, proceedings were adjourned for 30.6.2014 and on 27.6.2014 at about 5.00 PM Ld. Counsel for the assessee appeared and filed supplementary objections which were primarily based on the inspection of record carried out by him in the morning of the same date. On 30.6.2014 Ld. Counsel for the assessee filed a letter providing details as asked for by the order sheet entry dated 23.6.2014 and notice dated 25.6.2014. AO disposed off the objections filed by the assessee on 27.6.2014 alongwith supplementary objections on the same date i.e. 27.6.2014 as mentioned in the assessment order dated 30.6.2014 at taxguru.in page no. 6-8 and fixed the case of the assessee for hearing on 30.6.2014 at 10 AM and informed that no further adjournment would be possible. Some documents were filed by the assessee’s counsel on 30.6.2014 of share holders as on 31.3.2007 alongwith their confirmations, bank statements, ITR acknowledgements, balance sheet as on 31.3.2007 etc. so as to justify three ingredients as required u/s. 68 of the I.T. Act as identity, genuineness, creditworthiness etc. of the investors. After examining all the documentary evidences filed by the assessee and the objection filed by the assessee, the AO had made the addition of Rs. 4,60,00,000/- u/s. 68 of the Act on the basis of the details forwarded by the Investigation Wing, vide order dated 30.6.2014 passed u/s. 143(3) r.w.s. 147 of the I.T. Act, 1961. Aggrieved by the aforesaid assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 10.6.2015 has allowed the appeal of the assessee on the merit as well as on the legal ground. Against the impugned order dated 10.6.2015, assessee is in appeal before the Tribunal.
4. At the time of hearing, Ld. Sr. DR relied upon the Order of the AO and reiterated the contentions raised in the grounds of appeal. In addition to that Ld. DR has also filed the Written Submissions in which he has supported the order of the AO with the help of various case laws mentioned in the said written submission. For the sake of convenience, the three written submissions filed by the Ld. Sr. DR are reproduced as under :-
“Sub: Written Submission in the above case- reg.
The following points may kindly be taken into consideration in respect of the above mentioned proceedings:
The asessee has taken certain pleadings before the Ld. CIT(A) which are being responded to as below:
