M/s. Richgold Finance & Securities Ltd, Ahmedabad V. The ITO, Ward-3(1)(3), Ahmedabad

ITA 421/AHD/2020

AI Insights

The case involves M/s. Richgold Finance & Securities Ltd., which appealed against the order of the CIT(A) sustaining the additions of Rs. 46,80,000 as unaccounted income for the Assessment Year 2010-11. The additions were initially made by the Assessing Officer following a search operation that revealed the company had invested in entities providing accommodation entries. The assessee contended that these investments were recorded in their audited books and were from legitimate sources. However, both the CIT(A) and the Tribunal found the explanations provided by the assessee unsatisfactory, leading to the dismissal of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299974 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 29-01-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 20-07-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 147; 69; 148; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . No .4 21 /A h d / 20 20 ( A s se ss m e nt Y e a r : 20 10- 1 1 ) M/ s . R i ch g o ld F in a n ce & Sec ur it ie s Ltd . , B - 2 0 4, Pa r i s k ar - I I , N r. K ho kh r a C ir c l e, A h m e d ab ad - 3 8 00 08 V s . I T O War d - 3 ( 1) ( 3 ) , A h me da ba d [P AN N o.A A CC R 7 9 8 0D] (Appellant) .. (Respondent) Appellant by : None Respondent by: Shri Ramesh Kumar, JCIT D a t e of H ea r i ng 30.01.2023 D a t e of P r o no u n ce me nt 10.02.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals)-9, Ahmedabad on 18.09.2019 for A.Y. 2010-11. 2. The grounds of appeal raised by the assessee are as under: “1.1 That on the facts and in the circumstances of the case and as per law, learned CIT (Appeals) erred in sustaining additions of Rs. 46,80,000 made on the ground of unaccounted income of the appellant company. 1.2 That learned CIT (Appeals) failed to consider the fact that investments under consideration were duly disclosed in the audited books of accounts. Additions of Rs. 46,80,000, on the ground of undisclosed income is therefore not sustainable as per law and as per settled legal propositions. 1.3 That learned CIT (Appeals) further erred by not considering the fact that provisions of section 69 is applicable only when investments are not recorded in the books of accounts. In the instant case, investments are duly recorded in the books of accounts. Hence, no additions were called for on the ground of unexplained investments. 1.4 That the learned CIT (Appeals) was ought to have considered the fact that appellant was not ultimate beneficiary of so called accommodation entry and accordingly no additions were called for as per law and as per settled legal propositions on the issue. 2. That appellant craves for leave to add, amend, alter and/or delete any of the grounds aforesaid as and when it is necessary to do so.” ITA No. 421/Ahd/2020 M/s. Richgold Finance & Securities Ltd. vs. ITO Asst.Year–2010-11 - 2 - 3. Assessee is a limited company and engaged in the investment business out of funds available with it. Notice under Section 148 was issued to the assessee on 31.03.2017 requesting to file its return of income for A.Y. 2010-11 within 30 days from the received of the said notice. The response to the notice the assessee filed return of income on 03.10.2017 showing income at Rs. 24,650/- as per the original return income filed by the assessee on 31.03.2012. The assessee called for reasons for assuming jurisdiction under Section 147 of the Act through letter dated 31.11.2017. The Assessing Officer providing the reasons for reopening of the assessment and assuming jurisdiction under Section 147 of the Act Income Tax Act, 1961. The reason for reopening was that during the year under consideration the assessee company invested in various companies which were engaged in providing accommodation entries. The Assessing Officer issued show-cause notice dated 10.11.2017 for which the assessee did not file any reply. The Assessing Officer observed that a search under Section 132 of the Act was conducted in group cases of Barter Group of Ahmedabad on 04.12.2014 and subsequent dates. During the course of search from various premises incriminating evidences indicating that the funds received in the said company in form of share capital was not genuine. The Assessing Officer made addition of Rs. 46,80,000/- towards bogus accommodation entry under Section 69 of the Act. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. There is a delay of 247 days in filing the present appeal before the Tribunal for which the assessee has filed condonation of delay application ITA No. 421/Ahd/2020 M/s. Richgold Finance & Securities Ltd. vs. ITO Asst.Year–2010-11 - 3 - thereby stating that the ex-employee of the assessee who was looking after accounts did not inform the order passes by the CIT(A) and therefore, there was a delay in filing the appeal. The assessee has given the details related to the delay which appears to be genuine and hence delay is condoned. 6. At the time of hearing none appeared on behalf of the assessee despite giving notices. There is no new address filed by the assessee and the last notice issued by the registry return back. Therefore, we are proceeding on the basis of the submissions made by the assessee during the assessment proceedings as well as before the CIT(A) which are reproduced in order of the CIT(A). 7. The Ld. D.R. submitted that the CIT(A) has rightly confirm the addition as the assessee could establish the companies from whom the funds have been received by the assessee. In fact, the identity of allottees were also not established and in respect of evidences of accommodation entires for share capital in other year and / or other companies were also not given during the assessment proceedings. Thus, the Ld. D.R. submitted that there is no need to interfere with the findings of the CIT(A) and the appeal may be dismissed. 8. Heard Ld. D.R. and perused all the relevant material available on record. It is pertinent to note that except for filing return of income on 30.10.2017 during the assessment proceedings the assessee has not filed any details or any response to the notices issued to the assessee. Before the CIT(A) the assessee submitted that reasons provided by the Assessing Officer clearly set out that the Assessing Officer had no information about ITA No. 421/Ahd/2020 M/s. Richgold Finance & Securities Ltd. vs. ITO Asst.Year–2010-11 - 4 - the escapements of income by the assessee company for the year under consideration. The assessee has submitted that investments made by the assessee amongst the application of funds and not source of funds. Application of funds were made from the capital of the company, however, the assessee company was listed company earlier in the year 1996 and it has old capital since the year 1996. Thus, the assessee submitted before the CIT(A) no new source was generated for the investment in the Barter Group of companies and the assessee is maintaining books of accounts, audited the said books of accounts regularly. The assessee further submitted before the CIT(A) that the assessee company had out of its own fund available made his investment in various companies through share capital and it is exactly the same amount that is of Rs. 46,80,000/- for the Assessing Officer has made addition and therefore the said investment and the funds available to the assessee was explained to the CIT(A) for which the CIT(A) has not taken cognizance of the same. The CIT(A) in Para 5.2 has given its finding thereby stating that / observing that the Barter Group had floated several companies so as to receive the share capital in these companies and providing accommodation entries to those beneficiaries who wanted their unaccounted money has to be brought in their books through accommodation entries. In fact, the names of 13 companies reveal in respect of providing the accommodation entries in the garb of unsecured loans share application money. The CIT(A) further observed that the appellant company made investment in the company name M/s. Subodhsagar Share & Services Pvt. Ltd. which collected total sum of Rs. 20,81,40,530/- from various companies including the assessee company. Since the assessee company did not provide any satisfactory explanation for ITA No. 421/Ahd/2020 M/s. Richgold Finance & Securities Ltd. vs. ITO Asst.Year–2010-11 - 5 - the investment of Rs. 46,80,000/- made in the form of share application money the Assessing Officer has rightly made addition. The assessee has only given the details of M/s. Subodhsagar Share & Services Pvt. Ltd. that also in the tabular form and not exactly how the funds owned by the assessee. Therefore, the CIT(A) was right in confirm the addition. Hence, appeal of the assessee is dismissed. 9. In result, the appeal of the assessee is dismissed. This Order pronounced in Open Court on 10/02/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 10/02/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 08.02.2023 2. Date on which the type draft is placed before the Dictating Member 08.02.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .02.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .02.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 10 .02.2023 7. Date on which the file goes to the Bench Clerk 10 .02.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................