Seemax Technologies Pvt. Ltd., Delhi V. ITO, Ward- 23(1), New Delhi

ITA 8707/DEL/2019

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Seemax Technologies Pvt Ltd appealed against the order of the CIT(A)-15, New Delhi, which sustained the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961, for the Assessment Year 2007-08. The additions were related to the share capital and share premium received by the assessee, which were scrutinized due to their large amounts. The Assessing Officer had initially framed the assessment under section 144 due to non-cooperation from the assessee, and later under section 68, the additions were made after the assessee failed to provide satisfactory evidence regarding the shareholders and the funds introduced. The CIT(A) partially allowed the appeal by deleting some additions but sustained others, leading to the current appeal before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300961 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 07-05-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 06-11-2019
• Other Referred Cases: 81 ITR 460
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 131; 68; 144; 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘G’ BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No. 8707/DEL/2019 [A.Y. 2012-13] Seemax Technologies Pvt Ltd Vs. The Income tax Officer 211 [Poorvi] Shalimar Bagh Ward – 23(1) Delhi New Delhi PAN: AACCS 0402 P (Applicant) (Respondent) Assessee By : Shri Ramakant, CA Department By : Ms. Yamini Gautam, Sr. DR Date of Hearing : 08.05.2023 Date of Pronouncement : 10.05.2023 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order of the ld. CIT(A)- 15, New Delhi dated 19.07.2019 pertaining to Assessment Year 2007-08. 2 2. The substantive grievances of the assessee read as under: “(1) The ld. CIT(A) has failed to take into consideration or deliver the findings on the wrongly invocation of section 144 that rendered the Assessing Officer’s order void and liable for outright quashing. (2) The ld. CIT(A) has erred in law and facts in sustaining the wrongful invocation of section 68 of the Act and additions of Rs. 45,00,000/- by ignoring the evidence and other material on record. (3) The ld. CIT(A) has erred in law and facts to uphold the validity of Inspector’s Report.” 3. Briefly stated, the facts of the case are that the assessee filed return of income on 21.03.2014 declaring total income of Rs. 4041/-. Return was selected for scrutiny assessment through CASS to examine large share premium received and accordingly, statutory notices were issued and served upon the assessee alongwith questionnaire. 4. In response to the notices, the assessee filed certain primary details through its authorized representative and some details were filed through Speed Post and after that, the assessee absented himself from assessment proceedings in spite of several opportunities given by the Assessing Officer. 3 5. On the basis of material available on record, the Assessing Officer proceeded to frame assessment u/s 144 of the Act. 6. The assessee was specifically asked to prove the identity, credit worthiness of the share holders and genuineness of the transactions in respect of fresh credit of the share capital/premium. The Assessing Officer also issued notice u/s 133(6) of the Act through Speed Post to obtain confirmations from companies who were reported to introduce share capital in the assessee company. 7. The notices were returned back unserved with the remarks “Not Exist”, or “No such Company” or “Not known”. The Assessing Officer deputed an Inspector of his Ward to serve summons u/s 131 of the Act to those companies to which notices were unserved. 8. The Inspector submitted his report as under: S. No. Name & Address of the premises Remarks 1. M/s Jolly Event Managers Pvt. Ltd B-198/2, East of Kailash, New Delhi-110 085 On visiting this premise I found that no company by this name was running/operating from there. At present, it is a residential premise. I met Mr. Rajinder Prasad who at present residing in this premise for the last three and half years and he told that he had no idea about this company M/s Jolly Evers Managers Pvt. Ltd. said 4 to be registered at this address. However, summons was served through affixture. 2. M/s Panatone Developers Pvt. Ltd. Regency House, BM- 12(west), Shalimar Bagh, New Delhi-110088 On visiting this premise I found that no company by these names were running/operating from there. The premise consists of Basement + Ground + three floors. At premise, it is a residential premise. I met Ms. Juhi, who resides at second floor and enquired about these companies. She told that Basement is closed from last 3-4 years and other floors are for residence purpose and she had no clue about any of them and that no Company by the names of M/s Panatone Developers Pvt. Ltd. and M/s Prashant Publications Pvt. Ltd. had been functioning from there. She told that the basement was used as a locker house long years ago and now it is permanently closed. She was unable to recall name of owner of locker house. Enquiry were also made through some other persons as watchman and some people residing vicinity to that premise and none of them had ever heard where about of these companies However, summons was served through affixture. 3. M/s Prashant Publications Pvt. Ltd., Regency House, BM-12(west), Shalimar Bagh New Delhi-110088 4. M/s Ace Duplications Pvt. Ltd., BU&V-24B, Shalimar Bagh, New Delhi - 110088 I visited this premise several time and found the door locked. Neither any type of display board nor any sign of business/residential activity got noticed there. However, enquiry were carried out from inhabitants residing opposite to this house i.e. house no 23B, and it was informed that this house is locked since last 3-4 yrs and no human activity ever noticed by them. They have no clue about company by the name of M/s Ace Duplications Pvt. Ltd. ever running from there. However, summons was served through affixture. 5 5. M/s Sanchi Jewels Pvt. Ltd. shop no 58-60, Sec-9, Market Rohini, Delhi-85 The given address is incomplete as Sec- 9 market. Rohini comprises of several Malls and Plaza viz. MA Mall, SG Shopping Mall, SGL Plaza, Amba Tower, Deepak Plaza, RG Complex, Vikas Surya Plaza, etc. However I tried to find out shop no. 58-60 in all malls and plaza and visited all accessible area. I also enquired about these companies from local shopkeepers None could provide any clue about these companies and no board, hoarding etc. found at any places wherever I visited. Thus summons to these companies could not be served due to incomplete and insufficient address. 6. M/s. Luckygirl Fashion Pvt. Ltd. Shop No.58, Sec-9, Market Rohini, Delhi – 85 9. All the summons remained uncomplied. Proceeding with the assessment proceedings, the Assessing Officer noticed that the assessee had paid up shares amounting to Rs. 2,34,000/- alongwith share premium of Rs. 2,83,54,987/-. Invoking the provisions of section 68 of the Act, the Assessing Officer concluded by holding that the assessee has grossly failed in discharging the burden cast upon it by provisions of section 68 of the Act and made addition of Rs. 2,85,88,987/-. 10. The assessee agitated the matter before the ld. CIT(A). It was strongly contended that out of Rs. 2,85,88,987/- added towards share capital and share premium, only a sum of Rs. 85 lakhs was actually 6 received during the year. The ld. CIT(A) called for report from the Assessing Officer who submitted the report dated 27.06.2019. 11. After considering the report and financial statement as on 31.03.2011, it was found that total share holders fund was Rs. 2.01 crores. Therefore, addition to this extent was deleted and addition of Rs. 85 lakhs was sustained which was on account of capital introduced during the year under consideration by the following parties: 1. Murari Lal 11 lakhs 2. Rajesh Kumar 11 lakhs 3. Prashant Publications Pvt Ltd 4 lakhs 4. Sanchi Jewels Pvt Ltd 5 lakhs 5. Jolly Event Managers Pvt Ltd 5 lakhs 6. Vasant Commercial Pvt Ltd 5 lakhs 7. Panatone Developers Pvt Ltd 5 lakhs 8. Lucky Girl Fashion Pvt Ltd 21 lakhs 9. Dr. Radhey Shyam 18 lakhs 12. While sustaining the aforementioned addition, the ld. CIT(A) was convinced that the assessee has grossly failed in discharging the onus cast upon it by the provisions of section 68 of the Act. 7 13. Before us, the ld. counsel for the assessee vehemently stated that on the one hand, the Assessing Officer says that the assessee has hardly any business activity and on the other hand, the Assessing Officer says that the assessee has introduced its own undisclosed fund in the garb of subscription by share holders. 14. It is the say of the ld. counsel for the assessee that the Assessing Officer has taken a contrary stand on the same set of facts and referring to the decision of the Hon'ble Bombay High Court in 81 ITR 460, the ld. counsel for the assessee stated that the Assessing Officer ought to have given a finding that the cash credit entry represents the assessee’s income from undisclosed sources. 15. The ld. counsel for the assessee further stated that in all the companies, the directors are family members and no outsider has invested money in the assessee company. The ld. counsel for the assessee further pointed out that the Assessing Officer never issued any summons and, in fact, the Inspector, in his report himself has mentioned that the notices have been served through affixture in respect of Sanchi Jewels Pvt Ltd and Lucky Girl Fashion Pvt Ltd. 8 16. Referring to the financial statements of the investor companies, the ld. counsel for the assessee stated that even if their income was meagre, but they had sufficient funds for making investment. 17. Per contra, the ld. DR strongly supported the findings of the Assessing Officer and the ld. CIT(A). The ld. DR read the relevant findings of the ld. CIT(A) at Para 4.6 of his order to buttress her submission. 18. We have carefully perused the orders of the authorities below and have given thoughtful consideration to the submissions of the ld. counsel for the assessee. In so far as Ground No. 1 is concerned, we are of the considered view that the assessee should have objected before the Assessing Officer itself by moving a rectification application as per provisions of law, pointing out that assessment should have been framed u/s 143(3) of the Act and no sec 144 of the Act. 19. Moreover, we find that though the assessee responded to the Assessing Officer 2-3 times, but thereafter, remained absent from the assessment proceedings, which prompted the Assessing Officer to 9 frame the order exparte. We do not find any merit in this ground and the same is, therefore, dismissed. 20. In so far as the addition u/s 68 is concerned, we find that the ld. CIT(A) has given a judicious finding, which is evident from the fact that he has deleted the addition represented by opening cash credit which shows due application of mind. 21. As for the addition sustained by him, we are of the considered view that the provisions of section 68 of the Act cast initial burden on the assessee to establish the identify, genuineness of the transaction, credit worthiness of the payer/depositor/lender. Unless the assessee discharges the initial burden, the Assessing Officer is not bound to call for creditor by issuing summons or call for information by issuing notice u/s 133(6) of the Act. 22. This comes later only and only when the assessee has established the three conditions of identity, genuineness of the transaction and capacity of the lender. Once the assessee has discharged the initial burden, the onus lies upon the Assessing Officer to disprove the assessee by bringing cogent material evidence on record. 10 23. In the present case, there is nothing to show that the assessee has discharged the initial burden cast upon him. Even before us, the ld. counsel for the assessee has only raised technical issues without referring to any material evidence to demonstrate that the assessee has successfully discharged the initial burden cast upon it. 24. The decisions relied upon by the ld. counsel for the assessee are not relevant on the facts before us and considering the facts in totality, we have no hesitation in holding that the assessee has grossly failed in discharging the initial burden cast upon it by provisions of section 68 of the Act. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A). 25. In the result the appeal of the assessee in ITA No. 8707/DEL/2019 is dismissed. The order is pronounced in the open court on 10.05.2023. Sd/- Sd/- [ASTHA CHANDRA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 10 th May, 2023. 11 VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order