RONIT CAPITAL MANAGEMENT LTD., MUMBAI V. ITO 4 (2)(1), MUMBAI

ITA 6679/MUM/2019

AI Insights

The case involves M/s Ronit Capital Management Ltd., which appealed against the order of the CIT(A) confirming the addition of Rs. 10,43,77,000 to its income for the assessment year 2012-13. The addition was initially made by the Assessing Officer under section 144 of the Income Tax Act, 1961, due to non-compliance by the assessee in providing necessary details during the assessment proceedings. The CIT(A) upheld the addition after analyzing the share applicants' details, concluding that they were shell companies with interconnections and suspicious financial activities. The Tribunal dismissed the appeal, agreeing with the CIT(A)'s findings and noting the assessee's failure to discharge the burden of proof under section 68 of the Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123328 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-05-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 24-10-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI AMIT SHUKLA (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 6679/MUM/2019 Assessment Year: 2012-13 M/s Ronit Capital Management Ltd., 233, Shreeji Industrial Estate, Subhash Road, Jogeshwari (East), Mumbai-400060. Vs. ITO-4(2)(1), 644, Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN No. AAACH 9239 D Appellant Respondent Assessee by : None Revenue by : Mr. T. Shankar, CIT-DR Date of Hearing : 07/09/2022 Date of pronouncement : 07/09/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against the order dated 23.08.2019 passed by the Ld. Commissioner of Income-tax (Appeals)-9, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds: 1. On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in confirming the action of the A.O. and sustaining the addition to the extent of Rs.10,43,77,000/ and that too without appreciating the facts and circumstances of the case fully and properly. 2. 2. On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in confirming the action of the A.O. and sustaining t ₹10,43,77,000/ proper opportunity of being heard in the matter. 2. Briefly stated, the facts of the case are that during the year under consideration, the assessee introduced money into company’s accounts by way of share application of money. proceedings, despite sufficient opportunity of being to the assessee, no compliance was made by the assessee and therefore assessment as best judgment assessment in terms of section 144 of the Income tax Act, 1961 (in short ‘the Act’) after making various additions including addition of application money. M/s Ronit Capital Management Ltd. On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in confirming the action of the A.O. and sustaining the addition to the extent of Rs.10,43,77,000/ and that too without appreciating the facts and circumstances of the case fully and properly. 2. On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in confirming the action of the A.O. and sustaining the addition to the extent of 10,43,77,000/- and that too without even giving full and proper opportunity of being heard in the matter. Briefly stated, the facts of the case are that during the year under consideration, the assessee introduced money into company’s unts by way of share application of money. During assessment despite sufficient opportunity of being o compliance was made by the assessee and assessment order was passed by the Ld. Assessing Officer as best judgment assessment in terms of section 144 of the Income tax Act, 1961 (in short ‘the Act’) after making various additions including addition of ₹11,50,00,000/- for unexplained share M/s Ronit Capital Management Ltd. ITA No. 6679/M/2019 2 On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in confirming the action of the A.O. and sustaining the addition to the extent of Rs.10,43,77,000/- and that too without appreciating the facts and 2. On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in confirming the action of the he extent of and that too without even giving full and Briefly stated, the facts of the case are that during the year under consideration, the assessee introduced money into company’s During assessment heard provided o compliance was made by the assessee and by the Ld. Assessing Officer as best judgment assessment in terms of section 144 of the Income- tax Act, 1961 (in short ‘the Act’) after making various additions for unexplained share 3. On further appeal, the Ld. CIT(A) restric extent of ₹10,43,77,000/ received during the year under consideration. The Ld. CIT(A) in his detailed finding has analyzed each and every share applicant on the three ingredient of section creditworthiness and genuineness of the transaction. After analyzing the Ld. CIT(A) in para 4.4. as under: “4.4.26 To summarise, the companies/entities from whom the appellant received the share a consideration, were having various traits of shell companies. There were fund transfers in most of the cases from the other shell companies) on the dates, immediately preceding to the dates of payments of share application to the a of these companies/entities. All of these companies/entities were having thick interconnections with each other, which are evident from the fact of having common auditors, frequent financial transactions with each other and h traits, features and facts are anomalous and defy the pattern of probable human transactions are conducted. All M/s Ronit Capital Management Ltd. On further appeal, the Ld. CIT(A) restricted the addition to the 10,43,77,000/- i.e. the amount of share application money received during the year under consideration. The Ld. CIT(A) in his detailed finding has analyzed each and every share applicant on the three ingredient of section 68 of the Act i.e. identity, creditworthiness and genuineness of the transaction. After analyzing the Ld. CIT(A) in para 4.4.26 of the order has summarized To summarise, the companies/entities from whom the appellant received the share application monies, under consideration, were having various traits of shell companies. There were fund transfers in most of the cases from the other shell companies) on the dates, immediately preceding to the dates of payments of share application to the appellant, in the bank accounts of these companies/entities. All of these companies/entities were having thick interconnections with each other, which are evident from the fact of having common auditors, frequent financial transactions with each other and having common directors. All these features and facts are anomalous and defy the pattern of probable human behaviour and the ways in which normal business transactions are conducted. All of these evidences taken together M/s Ronit Capital Management Ltd. ITA No. 6679/M/2019 3 ted the addition to the i.e. the amount of share application money received during the year under consideration. The Ld. CIT(A) in his detailed finding has analyzed each and every share applicant on the 68 of the Act i.e. identity, creditworthiness and genuineness of the transaction. After 26 of the order has summarized To summarise, the companies/entities from whom the pplication monies, under consideration, were having various traits of shell companies. There were fund transfers in most of the cases from the other shell companies) on the dates, immediately preceding to the dates of ppellant, in the bank accounts of these companies/entities. All of these companies/entities were having thick interconnections with each other, which are evident from the fact of having common auditors, frequent financial aving common directors. All these features and facts are anomalous and defy the pattern of behaviour and the ways in which normal business of these evidences taken together weigh heavily against the ge creditworthiness of the nine parties who made the payments of application monies to the appellant. The only reasonable conclusions which can be drawn about these transactions genuine transacti transacting party is not established. 3.1 The appeal was none attended on behalf of the assessee despite notifying for the hearing dated 07.09.2022 has retu comments ‘address left’. In the circumstances, we proceeded to hear ex-parte qua the assessee as assessee is not interested in prosecuting its appeal. 4. We have heard the Ld. Departmental Representative (DR) and perused the relevant ma has failed to discharge his onus in terms of section 68 of the Act. In view of detailed finding of the Ld. CIT(A) on the statement of affairs of the share applicant he has arrived at conclusion M/s Ronit Capital Management Ltd. weigh heavily against the genuineness of the transactions and creditworthiness of the nine parties who made the payments of application monies to the appellant. The only reasonable conclusions drawn about these transactions is that, these were not genuine transactions and the creditworthiness of the nine transacting party is not established.” was fixed after hearing, since 17.0.2021 none attended on behalf of the assessee despite notifying for the hearing dated 07.09.2022 has returned back with the comments ‘address left’. In the circumstances, we proceeded to hear qua the assessee as assessee is not interested in prosecuting its appeal. We have heard the Ld. Departmental Representative (DR) and perused the relevant material on record. We find that the assessee has failed to discharge his onus in terms of section 68 of the Act. In view of detailed finding of the Ld. CIT(A) on the statement of affairs the share applicant, their bank accounts and other transactions conclusion that all the 9 share applicant fails on M/s Ronit Capital Management Ltd. ITA No. 6679/M/2019 4 transactions and creditworthiness of the nine parties who made the payments of share application monies to the appellant. The only reasonable conclusions is that, these were not and the creditworthiness of the nine after hearing, since 17.0.2021 however, none attended on behalf of the assessee despite notifying. The notice rned back with the comments ‘address left’. In the circumstances, we proceeded to hear qua the assessee as assessee is not interested in We have heard the Ld. Departmental Representative (DR) and terial on record. We find that the assessee has failed to discharge his onus in terms of section 68 of the Act. In view of detailed finding of the Ld. CIT(A) on the statement of affairs their bank accounts and other transactions, that all the 9 share applicant fails on account of creditworthiness and genuineness of the transaction. order of Ld. CIT(A) on the issue which has not been rebutted before us, therefore, error in the order of the Ld. CIT(A) on the issue accordingly, we uphold the same. The grounds raised by the assessee are accordingly dismissed. 5. In the result, the appeal filed by the assessee is dismissed. Order pronounc Sd/- (AMIT SHUKLA JUDICIAL MEMBER Mumbai; Dated: 07/09/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// M/s Ronit Capital Management Ltd. account of creditworthiness and genuineness of the transaction. order of Ld. CIT(A) on the issue-in-dispute is a reasoned order, which has not been rebutted before us, therefore, we do error in the order of the Ld. CIT(A) on the issue we uphold the same. The grounds raised by the assessee are accordingly dismissed. In the result, the appeal filed by the assessee is dismissed. ounced in the open Court in 07/09 Sd/ AMIT SHUKLA) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai M/s Ronit Capital Management Ltd. ITA No. 6679/M/2019 5 account of creditworthiness and genuineness of the transaction. The dispute is a reasoned order, we do not find any error in the order of the Ld. CIT(A) on the issue-in-dispute and we uphold the same. The grounds raised by the In the result, the appeal filed by the assessee is dismissed. /09/2022. Sd/- OM PRAKASH KANT) MEMBER (Sr. Private Secretary) ITAT, Mumbai