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SUPREME COURT OF INDIA
UDAY UMESH LALIT, INDU MALHOTRA, JJ.
Principal Commissioner of Income Tax (Central) 1 – Appellant
Versus
NRA Iron & Steel Pvt. Ltd. – Respondent
CIVIL APPEAL NO. OF 2019 (Arising out of SLP (Civil) No. 29855 of 2018)
Decided On : 05-03-2019
[1963] 50 ITR 1 (SC); [1977] 107 ITR (SC); (1992) 2 SCC 378 – Relied upon
(2008) 299 ITR 268 (Delhi); 333 ITR 119 (Delhi)(2011); (2012) 206 Taxaman 254 (Delhi); [1985] 23 TTJ (Cal.); 291 ITR 278; 410 ITR 379; [2003] 264 ITR 254 (Gau.); [2014] 42 taxmann.com 339/222 Taxman 157 (Mag.) (Delhi); (2007) 158 Taxman 440; [2008]307 ITR 334 – Cited with approval
(b) Income Tax Act, 1961 – Section 68 – practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny – Instantly, Assessing Officer held justified in adding back the amounts to Assessee’s income. (Para 14, 15)
Facts of the case:
Respondent Company – Assessee had filed the original Return of Income on 29.9.2009 declaring a total income of Rs.7,01,870. Respondent Company – Assessee had filed the original Return of Income on 29.9.2009 declaring a total income of Rs.7,01,870. The Assessee Company in its Return showed that money aggregating to Rs. 17,60,00,000/- had been received through Share Capital/Premium during the Financial Year 2009-10 from investor Companies.
The Assessee filed submissions and objections to the Notice u/S. 148. The objections were rejected. A Show Cause Notice was issued.
The A.O. held that the Assessee had failed to prove the existence of the identity of the investor companies and genuineness of the transaction.
As a consequence, the amount of Rs. 17,60,00,000/- was added back to the total income of the Assessee for the assessment year in question.
The Commissioner of Income Tax (Appeals)-I, New Delhi vide Order dated 11.04.2014 deleted the addition made by the A.O. on the ground that the Respondent had filed confirmations from the investor companies, their Income Tax Return, acknowledgments with PAN numbers, copies of their bank account to show that the entire amount had been paid through normal banking channels, and hence discharged the initial onus under Section 68 of the Act, for establishing the credibility and identity of the shareholders. This order was confirmed by ITAT.
The High Court dismissed the Appeal filed by the Revenue.
Finding of the Court:
Assessing Officer was justified in adding back the amounts to Assessee’s income.
Result: Appeal allowed.
JUDGMENT
INDU MALHOTRA, J.
Leave granted.
1. The present appeal arises out of the Judgment and Order dated 26.02.2018 passed by a division bench of the Delhi High Court in Income Tax Appeal No. 244 of 2018. The Revenue has challenged the judgment of the High Court by way of the present Appeal.
2. The issue which arises for consideration is that in a case where Share Capital/Premium is credited in the books of account of the Assessee company, the onus of proof is on the assessee to establish by cogent and reliable evidence of the identity of the investor companies, the credit-worthiness of the investors, and genuineness of the transaction, to the satisfaction of the Assessing Officer.
3. The facts of the case, briefly stated are as under : 3.1. The instant case pertains to the Assessment Year of 2009–10, for which the Respondent Company – Assessee had filed the original Return of Income on 29.9.2009 declaring a total income of Rs.7,01,870.
3.2. The Assessee filed submissions on 23.04.2012 to the Notice u/S. 148, and objections on 30.04.2012. The objections were rejected on 13.08.2012. A Show Cause Notice was issued on 13.01.2014. The Assessee filed detailed Written Submissions on 22.01.2014.
3.3. The Assessee Company in its Return showed that money aggregating to Rs. 17,60,00,000/- had been received through Share Capital/Premium during the Financial Year 2009-10 from the following companies situated at Mumbai, Kolkatta, and Guwahati:
3.4. The issue before the Assessing Officer (hereinafter referred to as “AO”) was whether the amount of Rs. 17,60,00,000/-allegedly raised by the Respondent through share capital/premium were genuine transactions or not.
3.5. The Respondent Company – Assessee was called upon to furnish details of the amounts received, and provide evidence to establish the identity of the investor companies, credit-worthiness of the creditors, and genuineness of the transaction.
3.6. The Assessee inter alia submitted that the entire Share Capital had been received by the Assessee through normal banking channels by account payee cheques/demand drafts, and produced documents such as income tax return acknowledgments to establish the identity and genuineness of the transaction. It was submitted that, there was no cause to take recourse to Section 68 of the Act, and that the onus on the Assessee Company stood fully discharged.
3.7. The AO had issued summons to the representatives of the investor companies. Despite the summons having been served, nobody appeared on behalf of any of the investor companies. The Department only received submissions through dak, which created a doubt about the identity of the investor companies.
3.8. The AO independently got field enquiries conducted with respect to the identity and credit-worthiness of the investor companies, and to examine the genuineness of the transaction. Enquiries were made at Mumbai, Kolkatta, and Guwahati where these Companies were stated to be situated.
3.9. On the basis of the detailed enquiries conducted, the A.O. held that the Assessee had failed to prove the existence of the identity of the investor companies and genuineness of the transaction.
A Notice was issued u/S. 148 of the Act to re-open the assessment on 13.04.2012 for the reasons recorded therein.
S. No.
Name of the shareholder
Amount
(A)Mumbai Based Companies
1.
Clifton Securities Pvt. Ltd.
95,00,000
2.
Lexus Infotech Ltd.
95,00,000
3.
Nicco Securities Pvt. Ltd.
95,00,000
4.
Real Gold Trading Company Pvt. Ltd.
90,00,000
5.
Hema Trading Company Pvt. Ltd.
95,00,000
6.
Eternity Multi-trade Pvt. Ltd.
90,00,000
(B)Kolkata Based Companies
1.
Neha Cassettes Pvt. Ltd.
90,00,000
2.
Warner Multimedia Ltd.
95,00,000
3.
Gopikar Supply Pvt. Ltd.
90,00,000
4.
Ganga Builders Ltd.
90,00,0
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