Income-tax Officer-3(2)(1), Mumbai v. LOQ Warehousing Pvt. Ltd
[Citation -2019-LL-0821-145]

Citation 2019-LL-0821-145
Appellant Name Income-tax Officer-3(2)(1), Mumbai
Respondent Name LOQ Warehousing Pvt. Ltd.
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 21/08/2019
Assessment Year 2012-13
Judgment View Judgment
Keyword Tags satisfactory explanation • share application money • assessment proceedings • sufficient evidences • search and seizure • undisclosed income • preference shares • modus operandi • unsecured loan • bogus capital
Bot Summary: Whether on the facts and circumstances and in law, the Ld. CIT(A) was right in deleting the addition of 1,00,00,000/- made under section 68 of the I.T. Act, 1961 on account of receipt of share application money and share premium without appreciating the fact that the assessee had failed to establish the genuineness and creditworthiness of the investment made by the share applicants. Whether on the facts and circumstances and in law, the Ld. CIT(A) was right in deleting 3Page I T A N o. 2 9 7 0 / MU M / 2 0 1 7 the addition of Rs. 1,00,00,000/- made under section 68 of the I.T. Act, 1961 on account of receipt of share application money and share premium without appreciating the fact that the assessee has failed to justify the issue price of shares and premium received. The AO during the assessment proceedings noted that the assessee company is one of the beneficiaries of the accommodation entries received in the nature of bogus investment/ share application money/ share premium amounting to 1 crore received during the Financial Year 2011-12 relevant to Assessment Year 2012-13 as under: - Name of the concern controlled Amount of payment Date of payment managed by Mr. Pravin Kumar Jain Javda India Impex Ltd. 1,00,00,000 19.3.2011 4. The assessee has not offered any satisfactory explanation in respect of the entries made by it and hence the sum credited by the assessee are charged to income tax as income of the assessee of the previous year. The AO required the assessee to explain the source and assessee before AO filed the following details: - Return of income and the Financial statements for the year ended 31 March 2012, 5Page I T A N o. 2 9 7 0 / MU M / 2 0 1 7 Copy of share application letter dated 19.03.2012 received from Javda India Impex Ltd. Copy of conformation given by Javda towards subscription of preference shares; Copy of minutes of Board meeting of Javda passing resolution towards investment in preference shares Original confirmation received from Javda confirming the transaction; Copy of bank statement of Bharat co-op Bank highlighting the payment made for subscription of shares Copy of bank statement highlighting the receipt of proceeds. Even there is no allegation that Pravin Kumar Jain has made a direct statement that the assessee received bogus capital from Javada India Impex Ltd towards share capital as accommodation entry. The assessee has filed sufficient evidences in the shape of return of income and financial statements, copy of share application, letters dated 19.03.2012 received from Javada India Impex Ltd. confirmation given by Javada India Impex Ltd. for subscription of shares, Minutes of board meeting of Javada India Impex Ltd. passing a resolution towards investment in shares, conformation of transaction copy of bank statement of Bharat Co-op Bank highlighting the payment made for subscription of shares, copy of From No. 5 and 2 filled with Registrar of Companies.


IN INCOME TAX APPELLATE TRIBUNAL BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM ITA No. 2970/Mum/2017 (Assessment Year 2012-13) Income Tax Officer -3(2)(1) LOQW are housing Pvt. Ltd. Room No. 673, 6th Floor, 72-73, Nariman Bhawan, Vs. Aayakar Bhavan, M.K. Road, Nariman Point, Mumbai-400 020 Mumbai-400 021 (Appellant) (Respondent) . PAN No. AABCL4791R / Appellant by : Shri Satishchandra Rajore, DR Respondent by : Shri Nitesh Joshi, AR / Date of hearing: 06.08.2019 Date of pronouncement : 21.08.2019 ORDER , PER MAHAVIR SINGH, JM: This appeal of Revenue is arising out of order of Commissioner of Income Tax (Appeals)]-8, Mumbai [in short CIT(A)], in appeal No. CIT(A)-8/IT-240/15-16 vide dated 31.01.2017. Assessment was framed by Income Tax Officer, Ward 3(2)(1), Mumbai (in short ITO/ AO) for A.Y. 2012-13 vide order dated 26.03.2015 under section 143(3) of Income-tax Act, 1961 (hereinafter Act ). ITA N o . 2970 / MUM / 2017 2. only issue in this appeal of Revenue is against order of CIT(A) deleting addition made by AO under section 68 of Act on account of receipt of share application money and share premium amounting to 1 crore by treating same as unexplained credit. For this Revenue has raised following three effective grounds: - "1. Whether on facts and circumstances and in law, Ld. CIT(A) was right in deleting addition of 1,00,00,000/- made under section 68 of I.T. Act, 1961 on account of receipt of share application money and share premium without appreciating fact that assessee had failed to establish genuineness and creditworthiness of investment made by share applicants. 2. Whether on facts and circumstances and in law, Ld. CIT(A) was right in deleting addition of 1,00,00,000/- made under section 68 of IT Act, 1961 on account of receipt of share application money and share premium without appreciating fact that specific information was received from DGIT(Inv)., Mumbai that alleged parties belonging to Pravin Jain group had confessed to providing accommodation entries without conducting any business activity and that assessee was one of beneficiary of such accommodation entries. 3. Whether on facts and circumstances and in law, Ld. CIT(A) was right in deleting 3|Page I T N o . 2 9 7 0 / MU M / 2 0 1 7 addition of Rs. 1,00,00,000/- made under section 68 of I.T. Act, 1961 on account of receipt of share application money and share premium without appreciating fact that assessee has failed to justify issue price of shares and premium received." 3. Brief facts are that assessee s sources of income during year are interest on trade loan and profits of investments on units. AO during assessment proceedings noted that assessee company is one of beneficiaries of accommodation entries received in nature of bogus investment/ share application money/ share premium amounting to 1 crore received during Financial Year 2011-12 relevant to Assessment Year 2012-13 as under: - Name of concern controlled & Amount of payment ( ) Date of payment managed by Mr. Pravin Kumar Jain Javda India Impex Ltd. 1,00,00,000 19.3.2011 4. AO further noted this fact that assessee has received this accommodation entry of unsecured loan of 1 crores during FY 2011-12 vide Para 8 as under "8. It is seen from balance sheet as on for year ended 31.03.2012 that assessee company has obtained 1,00,00,000/- for share premium. Taking into consideration of antecedent of M/s Java India Impex Ltd. and intimation received from CBI, ACB undersigned is fully convinced that assessee has availed bogus accommodation entries to introduce its own funds generated through undisclosed income in name of unsecured 4|Page I T N o . 2 9 7 0 / MU M / 2 0 1 7 loans of 1,00,00,000/- during financial year 2011-12. Investigation carried out by CBI, ACB has also established prima facie that unsecured loan appearing in books of accounts of assessee company are not genuine share premium but are bogus accommodation entries. Therefore, assessee has not offered any satisfactory explanation in respect of entries made by it and hence sum credited by assessee are charged to income tax as income of assessee of previous year. " 5. According to AO, this fact came to light during search and seizure action carried out in case of Pravin Kumar Jain Group of cases on 01.10.2013. He noted that evidence collected and statement recorded of various persons including Mr. Pravin Jain proves modus operandi of providing accommodation entry. He noted that even Shri Pravin Kumar Jain admitted giving accommodation entry in nature of bogus investment, bogus unsecured loans, share application money/ share premium etc. to various concerns. AO noted assessee has obtained accommodation entry from Javda India Impex Ltd which is controlled and managed by Mr. Pravin Kumar Jain amounting to 1 crores. AO required assessee to explain source and assessee before AO filed following details: - Return of income and Financial statements for year ended 31 March 2012, 5|Page I T N o . 2 9 7 0 / MU M / 2 0 1 7 Copy of share application letter dated 19.03.2012 received from Javda India Impex Ltd. Copy of conformation given by Javda towards subscription of preference shares; Copy of minutes of Board meeting of Javda passing resolution towards investment in preference shares Original confirmation received from Javda confirming transaction; Copy of bank statement of Bharat co-op Bank highlighting payment made for subscription of shares Copy of bank statement highlighting receipt of proceeds. Copy of Form 5 and 2 filed with Registrar of Companies. 6. But AO was not convinced and he treated this amount as bogus and accordingly added under section 68 of Act. Aggrieved, assessee preferred appeal before CIT(A). 7. CIT(A) after going through submissions and details that neither Shri Pravin Kumar Jain nor company who has provided share application money/share premium i.e. Javada India Impex Ltd. have denied giving these amount to assessee. Even, no cross examination was provided by AO i.e. statement of third party Shri Pravin 6|Page I T N o . 2 9 7 0 / MU M / 2 0 1 7 Kumar Jain to assessee before making any addition. Even there is no allegation that Pravin Kumar Jain has made direct statement that assessee received bogus capital from Javada India Impex Ltd towards share capital as accommodation entry. assessee has filed sufficient evidences in shape of return of income and financial statements, copy of share application, letters dated 19.03.2012 received from Javada India Impex Ltd. confirmation given by Javada India Impex Ltd. for subscription of shares, Minutes of board meeting of Javada India Impex Ltd. passing resolution towards investment in shares, conformation of transaction copy of bank statement of Bharat Co-op Bank highlighting payment made for subscription of shares, copy of From No. 5 and 2 filled with Registrar of Companies. In view of these evidences and on examination of facts in detail, CIT(A) deleted addition. Aggrieved, now Revenue is in appeal before Tribunal. 8. We have heard rival contentions and gone through facts and circumstances of case. We noted that first of all this credit has been received by assessee from Javada India Impex Ltd. on 19.03.2011 i.e. during FY 2010-11 relevant to AY 2011-12 and not during year under consideration i.e. 2012-13. It means that this share application/ share premium added by AO under section 68 is actually received by assessee in AY 2011-12 and not in AY 2012-13. It means that addition, if at all, can only be made in AY 2011-12 and not in AY 2012-13. This addition has to be deleted only on sole ground. 9. However, we noted that even on merits, assessee has filed complete details as noted above. Further, neither AO nor investigating authorities of Income Tax Department have pointed out that Shri Pravin Kumar Jain in his statement recorded on 01.10.2013 has admitted that assessee has received amount from Javada India Impex Ltd. is bogus. Even alleged statement of Shri Pravin Kumar ITA No . 2970 / MUM / 2017 Jain was never confronted to assessee. assessee has filed complete details in respect of identity of credit, genuineness of transaction, capacity of person giving credit to assessee i.e. creditworthiness of credit. assessee has filed confirmation, bank records from where this amount was received by assessee and resolution of company for providing this share application money. We noted that AO has not tried to examine these evidences at all and straightway made addition. In absence of anything, we are of view that CIT(A) has rightly deleted addition and we confirm same. 10. In result, appeal of Revenue is dismissed. Order pronounced in open court on 21.08.2019. Sd/- Sd/- MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai, Dated: 21.08.2019 , Sudip Sarkar, Sr.PS /Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A) 4. CIT 5. , DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy (Asstt. Registrar) , ITAT, Mumbai Income-tax Officer-3(2)(1), Mumbai v. LOQ Warehousing Pvt. Ltd
Report Error