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DATE: August 10, 2018 (Date of pronouncement)
DATE: August 15, 2018 (Date of publication)
AY: 2014-15
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CITATION:
S. 68/ 56(2)(viib)/ Rule 11 UA(2)(a): Law on whether share capital/ share premium received by a Company from investors can be assessed as 'unexplained cash credit' explained in the light of judgements of the Courts and Tribunal (All imp judgements referred)

The A.O. failed to conduct scrutiny of the documents at assessment stage and merely suspected the transactions in question on the irrelevant reasons. The A.O. did not make any enquiry from the Banker of the Investor and Income Tax record of the Investor Company. The valuation report filed by the assessee support explanation of assessee that shares were issued at premium which were below the fair market value per share of Rs.1221. The assessee, thus, proved the identity of the Investor, its creditworthiness and genuineness of the transaction in the matter. No material has been produced before us to rebut the explanation of assessee. We, therefore, did not find any justification to sustain the addition

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DATE: July 19, 2018 (Date of pronouncement)
DATE: July 21, 2018 (Date of publication)
AY: 2001-02
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CITATION:
S. 32: Goodwill is an intangible asset. It falls under the expression "any other business or commercial rights of similar nature" and is eligible for depreciation u/s 32(1)(ii) of the Act. The question whether when a firm has been succeeded by a company and net assets of the firm have vested in the company, there is any transfer of goodwill in the real sense and whether the valuation of goodwill done by the assessee is erroneous has to be decided by the Division Bench

It is vivid from the discussion made supra that qua the issue of depreciation on goodwill, the authorities below have divided it into two broader compartments by holding that i) no depreciation can be legally allowed on the amount of genuine goodwill in terms of section 32 of the Act; and ii) when a firm is succeeded by a company and all its net assets vest in the company, there is no transfer of goodwill in real sense and further the valuation of goodwill done by the assessee in the instant case is fallacious

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DATE: April 20, 2018 (Date of pronouncement)
DATE: June 27, 2018 (Date of publication)
AY: 2007-08
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CITATION:
Condonation of delay (92 days): The AO was negligent in filing the remand report before the CIT(A). The same attitude has continued at the stage of filing appeal to the ITAT. The excuse that the appeal was not filed due to the AO being busy with time barring assessment is not acceptable. The AO deliberately overlooked the impugned order and did not file appeal before the Tribunal within the period of limitation. Even the authorization by Pr. CIT to file the appeal has been granted after the period of limitation. Hence sufficient cause is not shown

The same conduct of the AO continued even after passing of the impugned appellate order because the appellate order was kept pending without any action and no appeal has been filed by the Department within the period of limitation. It is simply stated in the application for condonation of delay that due to time barring assessment, the impugned order was overlooked and got barred by limitation. However, it is a fact that AO was aware that departmental appeal would be meritless. It is, therefore, clear that the AO deliberately overlooked the impugned order and did not file appeal before the Tribunal within the period of limitation. Even the authorization by Ld. Pr. CIT to file the appeal have been granted after the period of limitation to file the appeal on 07.06.2016. Therefore, no sufficient cause has been shown to explain the delay in filing the appeal before the Tribunal beyond the period of limitation

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DATE: June 19, 2018 (Date of pronouncement)
DATE: June 20, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 159/ 163/ 176: While a notice/ order on a dead person/ wound-up company is a nullity, this is subject to the condition that the department is made aware of the death/ winding-up. If the legal representative, either voluntarily or in response to a notice issued against the deceased but served upon his agent, allows the assessment proceedings to continue against the deceased/ wound-up company without any objection and lets the AO make an assessment order, it would not be open for him to take a plea at the appellate stage, as a last resort or as an afterthought, that the proceedings taken and the assessment order made against the deceased/ wound-up company are nullity. In such cases, the assessment is liable to be set-aside for a fresh assessment in accordance with law instead of its annulment

In the instant case before us, we have observed that compliance of the assessment proceeding before the Assessing Officer has been made from time to time by the persons authorized in this behalf and proceedings have not been challenged due to lack of jurisdiction. According to the available records, the validity of the jurisdiction has been challenged for first time before the Ld. DRP. In view of the above circumstances, following the finding of the Hon’ble Gujarat High Court in the case of CIT Vs. Sumantbhai C Munshaw (1981) 128 ITR 142 the assessment order should not be nullified

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DATE: March 7, 2018 (Date of pronouncement)
DATE: April 21, 2018 (Date of publication)
AY: 2014-15
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CITATION:
S. 56(2)(viia)/ Rule 11UA: The "fair market value" of shares acquired has to be determined by the taking the book values of the underlying assets and not their market values

On the plain reading of Rule 11UA, it is revealed that while valuing the shares the book value of the assets and liabilities declared by the TEPL should be taken into consideration. There is no whisper under the provision of 11UA of the Rules to refer the fair market value of the land as taken by the Assessing Officer as applicable to the year under consideration

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DATE: March 15, 2018 (Date of pronouncement)
DATE: March 24, 2018 (Date of publication)
AY: 2009-10
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CITATION:
S. 271(1)(c) Penalty: The primary burden of proof is on the Revenue to show that the assessee is guilty of concealment/ furnishing inaccurate particulars. Making an incorrect claim does not tantamount to furnishing inaccurate particulars by any stretch of imagination. Wrong claim of depreciation by crediting capital subsidy to reserves instead of reducing from actual cost/ WDV does not attract s. 271(1)(c) penalty

The expression “has concealed the particulars of income” and “has furnished inaccurate particulars of income” have not been defined either in sec. 271(l)(c) or elsewhere in the Act. One thing is certain that these two circumstances are not identical in details although they may lead to same effect, namely, keeping of a certain portion of income. The former is direct and the later may be indirect in its execution. The word “conceal” is derived from the Latin word “concolare” which implies to hide. In the present appeal, even if a excess depreciation has been claimed by the assessee on the basis of the Companies Act does not mean that the assessee had hidden something, therefore, even if a wrong claim is made, automatically, does not tantamount to furnishing inaccurate particulars. Concealment refers to a deliberate act on the part of the assessee. The primary burden of proof is on the Revenue, before a penalty is imposed u/s 271(l)(c) because by no stretch of imagination, making a incorrect claim, does not tantamount to furnishing inaccurate particulars, therefore, keeping in view the totality of facts and the judicial pronouncements, that too from the Hon’ble Apex Court, no penalty is leviable especially when there is no finding that any details supplied by the assessee in its return is erroneous or incorrect, therefore, mere making a excess claim in itself does not invite imposition of penalty u/s 271(l)(c) because the same cannot amount to furnishing inaccurate particulars

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DATE: March 8, 2018 (Date of pronouncement)
DATE: March 21, 2018 (Date of publication)
AY: 2006-07
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CITATION:
S. 143(2) Notice: The issue of a s. 143(2) notice by an AO not having jurisdiction over the assessee is irrelevant. If the proper AO does not issue the notice within the time limit, the assessment is null and void. The argument that the non-jurisdictional AO issued the s. 143(2) notice as per PAN or computerized system or internal procedure is not relevant as it violates the law

The contention of the Ld. D.R. has no merit that ITO, Ward-1(1), Faridabad was empowered to issue notice as per PAN or it was issued as per Computerized System of the Department because it is against the provisions of Law. As such the issue would be in violation of the principles of law and as such the internal procedure provided by the department would not justify the illegality committed by the ITO, Ward-1(1), Faridabad

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DATE: January 1, 2018 (Date of pronouncement)
DATE: January 9, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 68 Bogus share capital: Share application money cannot be treated as unexplained credit if the AO does not make any investigation on the documentary evidences filed by the assessee or ask for the production of the investors for examination u/s 131 or if adverse material is found during search to prove that share application money is bogus or an arranged affair of the assessee

The A.O. however, did not make any further enquiry on the documents filed by the assessee-company. The A.O. thus, failed to conduct any enquiry and scrutiny of the documents at assessment stage and merely suspected the transaction between the Investor Company and assessee-company because the Investor Company was from Kolkata. The A.O. thus, did not perform his duties at the assessment stage so as to make addition against the assessee-company. No cash was found deposited in the account of the Investor. Therefore, the totality of the facts and circumstances clearly prove that assessee-company discharged initial onus to prove identity of the Investor Company, its creditworthiness and genuineness of the transaction in the matter

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DATE: April 17, 2017 (Date of pronouncement)
DATE: May 23, 2017 (Date of publication)
AY: 2011-12
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CITATION:
S. 68 Bogus share capital: (i) The AO cannot ignore the documentation produced by the assessee to show that the investors are genuine, (ii) A s. 132(4) statement cannot be relied upon if the assessee is not give right of cross-examination, (iii) Fact that the shareholders did not respond to s. 133(6) notices does not warrant an adverse inference, (iv) Fact that the shareholders have low income does not warrant adverse inference, (v) Assessee is not required to prove source of source

The AO doubted the genuineness of the transaction because notice u/s 133(6) could not be served upon the investors and that the assessee was directed to produce both the parties by 19.03.2014. The Ld. Counsel for the assessee however, referred to Paper Book page 157 which is the reply before the AO dated 24.03.2014 in which the assessee has provided correct and updated address of the entity as per MCA website. The AO instead of issuing fresh notice u/s 133(6) at the correct address of the investor companies merely relied upon the fact that the earlier letter under the above provision has returned unserved. Since the AO did not issue fresh notice at the correct address provided by the assessee and no coercive action has been taken for the production of investors, therefore, no adverse inference could be drawn against the assessee

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