BOMBAY HIGH COURT - PR. CIT PANJI VS M/S. PARADISE INLAND SHIPPING PVT. LTD.

TAX APPEAL NO. 66 OF 2016
10TH APRIL, 2017

Core Fact of the Case:…… Learned Counsel appearing for the Appellant has pointed out that the main ground on which the Assessing Officer has made the assessment under Section 147 of the Income Tax Act, is that shares which were purchased are by fictitious Companies which are not existing. It is further pointed out that the Appellants-Revenue had recorded statements of two persons one from Calcutta and the other from Delhi to show that such Companies were not existing nor the addresses mentioned disclosed any existence of the Company. Learned Counsel further pointed out that the CIT Appeals has erroneously relied upon the documents produced by the Respondents overlooking the statement of the said two persons which clearly proved otherwise…………

In this connection, the Respondents in support of their stand about the genuineness of the transaction entered into with such Companies has produced voluminous documents which, inter alia, have been noted at Para 3 of the Judgment of the CIT Appeals which reads thus :

“The assessment is completed without rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows :
1. Sony Financial Services Ltd. - CINU74899DL1995PLC068362-Date of Registration 09/05/1995
a) Memorandum of Association and Article of Association
b) Certificate of Incorporation
c) Certificate of Commencement of Business
d) Acknowledgment of the Return of Income AY 08-09
e) Affidavit of the Director confirming the investment
f) Application for allotment of shares
g) Photocopy of the share certificate
h) Audited account and Directors report thereon including balance sheet, Profit and Loss Account and schedules for the year ended 31.03.2009
i) Audited account and Directors report thereon including balance sheet, Profit and Loss Account and schedules for the year ended 31.03.2010
j) The Bank Statement highlighting receipt of the amount by way of RTGS.
k) Banks certificate certifying the receipt of the amount through Banking channels.”

The Appellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse.

Summarised Judgment :….. We find no infirmity in the findings arrived at by the ITAT as well as CIT Appeals on the contentions raised by the Appellants-Revenue in the present case and, as such, the question of interference by this Court in the present proceedings under Section 260A of the Income Tax Act would not at all be justified. Apart from that, as rightly pointed out by the learned Counsel appearing for the Respondents, the CIT Appeals had also noted that proceedings under Section 147 of the Income Tax Act cannot lead to re-verification of the records. These findings of the CIT Appeals have not been assailed before the Income Tax Appellate Court.

In such circumstances, we find that there is no case made out by the Appellants-Revenue for any interference in the impugned Orders passed by the Courts below. Hence, the Appeal stands rejected.

Analysis: In case of JSM also all the documents regarding share applicant companies were furnished to satisfy the existence of share applicant companies. Here also the issue is, the Ld. A. O. has not looked in to the facts that, how the share applicant companies have been assessed.