M/S CHANDAN CREDITS LTD., CHENNAI V. ACIT, CENTRAL CIRCLE-2(3), CHENNAI

ITA 70/CHNY/2022

AI Insights

This case involves multiple appeals by different assessees against the orders of the CIT(A) confirming the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The main issue was the addition of investments made in the share capital of SBQ Steels Ltd. as unexplained income. The Assessing Officer had conducted a search and found that the investments were made out of the sale proceeds of shares from alleged shell companies in Kolkata, which were providing accommodation entries on a commission basis. The CIT(A) upheld these additions, leading to the appeals before the Income Tax Appellate Tribunal, Chennai.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 128471 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-11-2022
• Assessment Year: misc
• Appeal Filed On: 27-12-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 68

Judgement Text

आयकर अपीलȣय अͬधकरण,‘बी’ Ûयायपीठ,चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.: 70/CHNY/2022 & 736/CHNY/2020 िनधाᭅरण वषᭅ/Assessment Years: 2013-14 & 2014 – 15 Chandan Credits Ltd., No.6/13, North Avenue, Kesavaperumalpuram, Chennai – 600 028. PAN : AAACC 6074D Vs. The ACIT, Central Circle - 2(3), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) & आयकर अपील सं./ITA Nos.:71/CHNY/2022 & 735/CHNY/2020 िनधाᭅरण वषᭅ/Assessment Years: 2013 – 2014 & 2014-15 Gugnani Leasing & Hire Purchase Pvt. Ltd., No.6/13, North Avenue, Kesavaperumalpuram, Chennai – 600 028. PAN : AAACG 5972C Vs. The ACIT, Central Circle - 2(3), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) & आयकर अपील सं./ITA Nos.: 128 & 129/CHNY/2022 िनधाᭅरण वषᭅ/Assessment Years: 2012-13 & 2013-14 Growell Hire & Purchase Finance Ltd., No.6/13, North Avenue, Kesavaperumalpuram, Chennai – 600 028. PAN : AAACG 4983H Vs. The ACIT, Central Circle - 2(3), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) - 2 - ITA Nos.70-72, 128 & 129/Chny/2022 735 & 736/Chny/2020 & 3080/Chny/2019 & आयकर अपील सं./ITA No.: 3080/CHNY/2019 िनधाᭅरण वषᭅ/Assessment Year: 2011-12 Shantananda Steels Pvt. Ltd., 403, Thiruvottiyur High Road, Thiruvottiyur, Chennai – 600 019. PAN : AAACS 5070K Vs. The Income Tax Officer, Ward - 6(2), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) & आयकर अपील सं./ITA No.: 72/CHNY/2022 िनधाᭅरण वषᭅ/Assessment Year: 2013-14 Ojasvi Motor Finance Pvt. Ltd., No.6/13, North Avenue, Kesavaperumalpuram, Chennai – 600 028. PAN : AAACO 2343M Vs. The Income Tax Officer, Ward - 6(2), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri B. Ramakrishnan, FCA ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri Guru Bashyam, CIT स ु नवाई कȧ तारȣख/Date of Hearing : 15.11.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 25.11.2022 आदेश /O R D E R PER MAHAVIR SINGH, VP: These 8 appeals by the 5 different assessees are arising out of different orders of the CIT(A)-18 / CIT(A)-19 / CIT(A)-15, Chennai - 3 - ITA Nos.70-72, 128 & 129/Chny/2022 735 & 736/Chny/2020 & 3080/Chny/2019 of different dates. The assessments were framed by the ACIT, Central Circle 2(3), Chennai u/s.143(3) of the Income Tax Act, 1961, (hereinafter ‘the Act’) vide orders of different dates. Since the issue is common in all these appeals, they are heard together and are disposed off by this common order. 2. At the outset, it is noticed that the appeal filed by the assessees in ITA No.735/Chny/2020 & ITA No.736/Chny/2020 are barred by limitation by 140 days. The orders of CIT(A) dated 30.01.2020 was received by assessees on 30.01.2020 as per Form 36. The appeals have to be filed on or before 01.04.2020 but were filed only on 20.08.2020. The ld. AR for the assessees stated that the delay was due to Covid-19 pandemic and nationwide lockdown imposed by the Central Government from 25.03.2020. We noted that the Hon’ble Supreme Court in Miscellaneous Application No.665 of 2021 vide order dated 23.03.2020 has given directions that the delay are to be condoned during this period 15.03.2020 to 14.03.2021 and they have condoned the delay up to 28.02.2022 in Miscellaneous Application No.21 of 2022 vide order dated 10.01.2022. In term of the directions of Hon’ble Supreme Court, we condone the delay in filing of these appeals by assessees and admit the appeals for adjudication. - 4 - ITA Nos.70-72, 128 & 129/Chny/2022 735 & 736/Chny/2020 & 3080/Chny/2019 3. The only common issue in these appeals of assessees is that the assessees had challenged the addition of investment made in share capital of SBQ Steels Ltd., by AO as unexplained income u/s.68 of the Act:- Assessee Appeal No. Assessment year Addition made by AO as unexplained income u/s 68 Chandan Credits Ltd. 70/CHNY/2022 2013-14 5,00,000/- 735/CHNY/2020 2014-15 1,30,000/- Gugnani Leasing & Hire Purchase Pvt. Ltd. 71/CHNY/2022 2013-14 10,00,000/- 736/CHNY/2020 2014-15 3,40,000/- Growell Hire & Purchase Finance Ltd. 128/CHNY/2022 2012-13 4,59,960/- 129/CHNY/2022 2013-14 10,00,000/- Shantananda Steels Pvt. Ltd. 3080/CHNY/2019 2011-12 3,50,50,000/- Ojasvi Motor Finance Pvt. Ltd. 72/CHNY/2022 2013-14 17,92,33,000/- 4. We have heard rival contentions and gone through facts and circumstances of the case. We noted a search action u/s.132 of the Act was carried out in the case of assessees and its group companies, in connection with the search in the case of other concerns of Kolkata companies on 26.09.2012. The AO noted that the assessees have made investments in share capital of its group companies i.e., SBQ Steels Ltd., and RKKR Steels Ltd., out of the alleged claim of sale proceeds of its share investments. The AO after considering the enquiry conducted by the investigation wing and that these investments are out of sale proceeds of alleged share from - 5 - ITA Nos.70-72, 128 & 129/Chny/2022 735 & 736/Chny/2020 & 3080/Chny/2019 shell companies of Kolkata, providing accommodation entries on commission basis, the AO noting the following facts confirmed the addition:- (i) The assessee did not have the share capital and share premium. Their existence was not proved beyond doubt. (ii) The assessee did not have the capacity to command share premium as it did not have any asset backing of any king and income of scale. (iii) The existence of share investments were not proved beyond doubt. Hence, the claimed sale proceeds are receipts originated from unknown sources. The only evidences were photo copies of self-made computer printed invoices whose genuineness was not proved. (iv) The erstwhile Directors were never produced before this office. No contact particulars, communication details were furnished. Hence, these so called Directors are only name lenders who could not be traced. (v) The assessee as well as its group companies did not explain how they came to know each other. Only vague replies were furnished. Hence, genuineness of the claimed business transactions, was not proved. (vi) Further No capital gains were ever offered. If these companies were really dealing in share investments, particularly as unquoted equities were not exempt from tax, the requisite evidences to prove the cost as well as sale price valuations must have been kept. Lack of them only point to the fact such activities were not carried out in reality. (vii) Complete financial documents for earlier years (beyond A.Y:2007-08) were not furnished to evidence the scale of the activities of the assessee and other similar companies. (viii) The alleged share holder companies as well as companies whose share investments were statedly held were all un-listed companies based at Kolkata and many share the same address. Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of the AO. Aggrieved, assessees came in appeal before the Tribunal. - 6 - ITA Nos.70-72, 128 & 129/Chny/2022 735 & 736/Chny/2020 & 3080/Chny/2019 5. Now before us, nothing was produced to prove that the investments in shares of SBQ Steels Ltd., by the assessees are out of the explained investment. Since the assessees could not produce anything before us, we dismiss this issue of the assessees and the orders of the lower authorities are confirmed. 6. In the result, the appeals filed by the assessees in ITA Nos.70, 71, 72, 128 & 129/CHNY/2022, ITA Nos. 735 & 736/CHNY/2020 and ITA No.3080/CHNY/2019 are dismissed. Order pronounced in the open court on 25 th November, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 25 th November, 2022 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ )अपील(/CIT(A) 4. आयकर आयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.