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M/s. Sriman Sai Securities Investment Finance Limited, Jagtial v/s The Deputy Commissioner of Income Tax, Karimnagar


Company & Directors' Information:- S R G SECURITIES FINANCE LTD. [Active] CIN = L67120RJ1995PLC009631

Company & Directors' Information:- K F L FINANCE AND SECURITIES LIMITED [Active] CIN = U74899DL1995PLC067969

Company & Directors' Information:- O D FINANCE AND INVESTMENT PRIVATE LIMITED [Active] CIN = U65100DL1992PTC049848

Company & Directors' Information:- P V T INVESTMENT LIMITED [Amalgamated] CIN = U74899DL1988PLC121600

Company & Directors' Information:- O D FINANCE AND INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1992PTC049848

Company & Directors' Information:- P V T INVESTMENT LTD [Not available for efiling] CIN = U67120PB1988PLC008068

Company & Directors' Information:- S T INVESTMENT PRIVATE LIMITED [Amalgamated] CIN = U65993WB1990PTC050032

Company & Directors' Information:- H. L. INVESTMENT COMPANY LIMITED [Amalgamated] CIN = U65990WB1975PLC128186

Company & Directors' Information:- B P N INVESTMENT AND FINANCE LIMITED [Active] CIN = U65910MP2007PLC020010

Company & Directors' Information:- K S M SECURITIES AND FINANCE PRIVATE LIMITED [Active] CIN = U67120MH1995PTC092535

Company & Directors' Information:- M M INVESTMENT PRIVATE LIMITED [Converted to LLP] CIN = U65921CT2008PTC020533

Company & Directors' Information:- G. N. G. INVESTMENT LIMITED [Active] CIN = U65910GJ1981PLC004128

Company & Directors' Information:- A S G S INVESTMENT PRIVATE LIMITED [Active] CIN = U74120DL2008PTC173938

Company & Directors' Information:- M F I FINANCE AND INVESTMENT PRIVATE LIMITED [Active] CIN = U65910KA2005PTC036263

Company & Directors' Information:- A F I FINANCE & INVESTMENT LIMITED [Strike Off] CIN = U65923WB2003PLC097328

Company & Directors' Information:- G L INVESTMENT PVT LTD [Active] CIN = U65993WB1991PTC051072

Company & Directors' Information:- Y P FINANCE AND SECURITIES PRIVATE LIMITED [Active] CIN = U74140DL1995PTC072469

Company & Directors' Information:- C & C INVESTMENT LTD [Active] CIN = U67120AS1976PLC001654

Company & Directors' Information:- S M S INVESTMENT CORPORATION PRIVATE LIMITED [Active] CIN = U74899DL1963PTC003988

Company & Directors' Information:- V R V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120WB1985PTC039793

Company & Directors' Information:- S P INVESTMENT PVT LTD [Active] CIN = U70109WB1961PTC025099

Company & Directors' Information:- L D K FINANCE AND INVESTMENT PRIVATE LIMITED [Active] CIN = U65921DL1996PTC081013

Company & Directors' Information:- R H INVESTMENT PRIVATE LIMITED [Active] CIN = U99999MH1978PTC020633

Company & Directors' Information:- T N B INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1986PTC025590

Company & Directors' Information:- A R S INVESTMENT PVT LTD [Active] CIN = U65993WB1990PTC048513

Company & Directors' Information:- V P INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015714

Company & Directors' Information:- S M D INVESTMENT LIMITED [Strike Off] CIN = U65993TN1995PLC033139

Company & Directors' Information:- G R D INVESTMENT PVT LTD [Amalgamated] CIN = U67120WB1980PTC032727

Company & Directors' Information:- C AND N INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015710

Company & Directors' Information:- R INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993TZ1988PTC002181

Company & Directors' Information:- H N G L INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1995PTC066774

Company & Directors' Information:- K M S INVESTMENT PRIVATE LIMITED [Active] CIN = U67120UP1993PTC015287

Company & Directors' Information:- S A D SECURITIES AND INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U67120DL1996PTC076037

Company & Directors' Information:- U M INVESTMENT PVT LTD [Active] CIN = U70101WB1979PTC032160

Company & Directors' Information:- A S T INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U67120DL1996PTC082812

Company & Directors' Information:- B N E INVESTMENT LTD [Not available for efiling] CIN = U67120WB1974PLC029360

Company & Directors' Information:- K S J INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U74899DL1994PTC061335

Company & Directors' Information:- M G FINANCE AND INVESTMENT LIMITED [Strike Off] CIN = U67120UP1992PLC014845

Company & Directors' Information:- V P SECURITIES AND INVESTMENT PRIVATE LIMITED [Active] CIN = U65910GJ1994PTC022905

Company & Directors' Information:- S N B FINANCE & INVESTMENT PVT LTD [Active] CIN = U01100WB1995PTC075944

Company & Directors' Information:- P T INVESTMENT PVT LTD [Strike Off] CIN = U65999WB1995PTC067065

Company & Directors' Information:- K. S. R. INVESTMENT LIMITED [Strike Off] CIN = U65992UP1988PLC010253

Company & Directors' Information:- THE INVESTMENT & FINANCE CO LTD [Strike Off] CIN = U65991WB1896PLC001116

Company & Directors' Information:- J T INVESTMENT PVT LTD [Strike Off] CIN = U65923WB1979PTC032344

Company & Directors' Information:- R K INVESTMENT LTD [Strike Off] CIN = U65993WB1969PLC027398

Company & Directors' Information:- N M G C INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U74899DL1982PTC014603

Company & Directors' Information:- S P INVESTMENT AND FINANCE COMPANY PRIVATE LIMITED [Strike Off] CIN = U65990MH1998PTC116516

Company & Directors' Information:- M AND M FINANCE AND INVESTMENT PVT. LTD. [Strike Off] CIN = U65910UP1994PTC017345

Company & Directors' Information:- M S H FINANCE & INVESTMENT LIMITED [Strike Off] CIN = U65921WB1997PLC085377

Company & Directors' Information:- K A S FINANCE & INVESTMENT LIMITED [Strike Off] CIN = U67120TZ2015PLC021226

Company & Directors' Information:- SRIMAN FINANCE PRIVATE LIMITED [Strike Off] CIN = U65921TZ1986PTC001830

Company & Directors' Information:- T M INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028172

Company & Directors' Information:- S. A. F. INVESTMENT LIMITED [Active] CIN = U67120DL1997PLC088611

Company & Directors' Information:- H K (INVESTMENT) COMPANY PRIVATE LIMITED [Active] CIN = U65990GJ1950PTC000511

Company & Directors' Information:- P N INVESTMENT PRIVATE LIMITED [Under Liquidation] CIN = U65910GJ1988PTC010715

Company & Directors' Information:- K. C. FINANCE AND INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U67120JK1983PTC000589

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Under Liquidation] CIN = U65993KL1942PLC000449

Company & Directors' Information:- B R S FINANCE AND INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U74899DL1981PTC012845

Company & Directors' Information:- S R M INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC031888

Company & Directors' Information:- A TO Z INVESTMENT PVT LTD [Dissolved] CIN = U67120WB1988PTC044464

Company & Directors' Information:- R J INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1976PTC018954

Company & Directors' Information:- B N K INVESTMENT CO PVT LTD [Active] CIN = U65993WB1971PTC028169

Company & Directors' Information:- A D INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028170

Company & Directors' Information:- R K S K FINANCE AND INVESTMENT COMPANY LIMITED [Strike Off] CIN = U65910UP1994PLC016853

Company & Directors' Information:- S. K. M. FINANCE AND INVESTMENT COMPANY LIMITED [Strike Off] CIN = U65910UP1994PLC016971

Company & Directors' Information:- G S M FINANCE AND INVESTMENT PVT LIMITED [Strike Off] CIN = U65921PB1993PTC013037

Company & Directors' Information:- T D INVESTMENT CO PVT LTD [Strike Off] CIN = U65921CH1987PTC007637

Company & Directors' Information:- S U FINANCE AND INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65910UP1994PTC016878

Company & Directors' Information:- C G K INVESTMENT P LTD [Strike Off] CIN = U65910AP1986PTC006088

Company & Directors' Information:- L D INVESTMENT COMPANY PVT LTD [Strike Off] CIN = U65921HP1988PTC008425

Company & Directors' Information:- G K INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001919

Company & Directors' Information:- G V INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001920

Company & Directors' Information:- B C K H INVESTMENT CO PVT LTD [Active] CIN = U67120MH1982PTC026819

Company & Directors' Information:- H V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1997PTC107686

Company & Directors' Information:- M L INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC032180

Company & Directors' Information:- S & G INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U65100DL2012PTC244271

Company & Directors' Information:- D M P FINANCE AND INVESTMENT PRIVATE LIMITED [Active] CIN = U67190GJ2020PTC117201

Company & Directors' Information:- K T FINANCE AND INVESTMENT INDIA LTD [Strike Off] CIN = U65921PB1988PLC008869

Company & Directors' Information:- S B INVESTMENT PVT LTD [Liquidated] CIN = U99999RJ1959PTC001090

Company & Directors' Information:- R AND P INVESTMENT PVT LTD [Strike Off] CIN = U67120PB1995PTC016124

Company & Directors' Information:- E R FINANCE AND INVESTMENT PVT LTD [Strike Off] CIN = U65921PB1988PTC008492

Company & Directors' Information:- N M K SECURITIES & FINANCE LIMITED [Strike Off] CIN = U67120TN1996PLC036296

Company & Directors' Information:- G M S FINANCE AND INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65900DL1983PTC015133

Company & Directors' Information:- M H K FINANCE AND INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U65993UP1983PTC005968

Company & Directors' Information:- M M B INVESTMENT PRIVATE LIMITED [Active] CIN = U65993RJ1996PTC012698

Company & Directors' Information:- M G A INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U99999MH1980PTC022406

Company & Directors' Information:- D S N INVESTMENT PVT LTD [Strike Off] CIN = U65993TG1988PTC008554

Company & Directors' Information:- INVESTMENT & FINANCE CORPN. PRIVATE LIMITED [Amalgamated] CIN = U65991TN1943PTC000926

Company & Directors' Information:- V. I INVESTMENT PVT LTD [Strike Off] CIN = U67120HR1988PTC030206

Company & Directors' Information:- R J P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993GJ1981PTC004678

Company & Directors' Information:- D D P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65910GJ1981PTC004695

Company & Directors' Information:- C J P INVESTMENT PVT LTD [Strike Off] CIN = U99999GJ1981PTC004662

Company & Directors' Information:- M P INVESTMENT CO PRIVATE LIMITED [Under Process of Striking Off] CIN = U65993KA1974PTC002646

Company & Directors' Information:- INVESTMENT COMPANY PRIVATE LIMITED [Dissolved] CIN = U65990KL1946PTC000461

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Not available for efiling] CIN = U99999MH1943PLC007730

    I.T.T.A. No. 137 of 2005

    Decided On, 20 December 2017

    At, In the High Court of Judicature at Hyderabad

    By, THE HONOURABLE MR. JUSTICE C.V. NAGARJUNA REDDY & THE HONOURABLE MR. JUSTICE M.S.K. JAISWAL

    For the Appellant: A.V. Krishna Kaundinya, Advocate. For the Respondent: K. Mamata, Advocate.



Judgment Text

C.V. Nagarjuna Reddy, J.

1. The assessee, being unsuccessful before both the lower appellate fora, filed this appeal by raising the following substantial question of law:

"Whether on the facts and circumstances of the case the Hon'ble Income Tax Appellate Tribunal is right in sustaining the order of the CIT (Appeals) who confirmed the order of the assessing authority treating the entire share capital of the assessee/appellant as its income without conducting any enquiry in that regard."

One of the two issues decided against the assessee, in respect of which this appeal is field, is whether the Assessing Officer (for short, 'A.O.') was correct in treating the sum of Rs.48,58,000/- as the assessee's income from undisclosed sources. The assessee has taken the stand before the A.O. that the said money was collected through share capital from 464 persons. The A.O. has given the assessee an opportunity of submitting books of accounts, vouchers and confirmation letters of the purported shareholders. Despite having been given as many as 16 opportunities, the assessee did not file any of those documents except giving a list of the purported shareholders. In such circumstances, the A.O. has computed the income treating the said amount as the income from undisclosed sources. This decision of the A.O. was unsuccessfully challenged by the appellant before the Commissioner of Income Tax (Appeals-II), Hyderabad, as well as before the Income Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad (for short, 'the Tribunal').

2. At the hearing, Sri A.V.A.Siva Kartikeya, learned counsel for the appellant, has submitted that it is the duty and obligation of the A.O. to hold necessary inquiry before coming to a conclusion on the nature of the amount. In support of his submission, he has placed reliance on the judgment of Delhi High Court in Commissioner of Income Tax Vs. Stellar Investment Limited [(1991) 192 ITR 287 (Del.)] and also the order dated 20-07-2000 of the Supreme Court confirming the said decision. Learned counsel has also referred to and relied on the judgment of a Division Bench of this Court in Commissioner of Income Tax Vs. LANCO Industries Limited [(2000) 242 ITR 357 (AP)].

3. Opposing the above submissions, Ms. M.Lalitha, learned counsel, representing Ms. K.Mamata, learned senior standing counsel appearing for Income Tax Department, has submitted that under Section 68 of the Income Tax Act, 1961 (for short, 'the Act'), the initial burden lies on the assessee to satisfy the A.O. that the amount found as cash credit is not chargeable to income tax as the income of the assessee of the previous year and that notwithstanding a number of opportunities presented to the assessee by the A.O., the former failed to avail such opportunities and produce any material whatsoever to satisfy the A.O. in that regard. She has also submitted that except furnishing the names of the persons who allegedly contributed to the share capital, not even their addressees have been furnished and no attempt whatsoever was made by the assessee to secure statements of the said persons. She has further submitted that the assessee has not filed any books of accounts or vouchers proving the receipt of money from the said 464 persons in support of his plea that the amount was collected from them towards share capital. She has relied on the judgments of Calcutta High Court in Hindusthan Tea Trading Company Limited Vs. Commissioner of Income Tax [(2003) 263 ITR 289 (Calcutta)] and also the Jaipur Bench of Rajasthan High Court in Commissioner of Income Tax Vs. ARL Infratech Limited [(2017) 394 ITR 383 (Raj.)].

4. We have carefully considered the respective submissions of learned counsel for both parties and perused the record.

5. Section 68 of the Act, as it stood before provisos were added, reads as follows:

"Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year."

It is evident from the said provision, where assessee offers no explanation about the nature and source of the cash credit or the explanation offered by him is not, in the opinion of the A.O., satisfactory, such cash credit is liable to be charged to income tax as the income of the assessee of the previous year. As concurrently found by all the fora below including the A.O., a number of opportunities were given to the assessee to substantiate its stand that the amount was collected towards allotment of shares to third parties. Except submitting a list of the persons from whom share capital was allegedly collected, no other material, such as books of accounts, vouchers, receipts or bank statements etc., was produced. A perusal of the list during hearing shows that except in a very few cases, even door numbers of the persons shown in the list have not been furnished. In Hindusthan Tea Trading Company Limited (3rd supra), the High Court of Calcutta held that the extent of the power of the A.O. while considering the material produced by the assessee is very wide and that the A.O. is empowered to lift the corporate veil and examine the real nature of the transaction and in the process, it may exercise its power of examining the material and it may require the assessee to produce further material if so required. The Court further held that the process of enquiry is such that the assessee has to offer the explanation and produce the material in support of such explanation and that only in such case, the onus shifts to the Revenue to scrutinize the material and form an opinion on the basis thereof. No doubt, the High Court of Delhi in Stellar Investment Limited (1st supra) observed that even assuming that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. We find from this order that no reference to Section 68 of the Act or discussion thereon has been undertaken. Though the Supreme Court has dismissed the civil appeal filed against the said order, no ratio as such has been laid down therein. In LANCO Industries Limited (2nd supra), a Division Bench of this Court held that if the ostensible shareholders failed to explain the means of investment, that should have been treated as unexplained income in their hands and in order to add it to the income of the assessee, there must be a further finding that in fact the shareholders were mere name-lenders and the money allegedly invested by them really belonged to the directors of the assessee company. The Court further held that in the absence of a finding that the persons to whom the share certificates were issued on receipt of consideration as per the book entries were in fact dummies or stooges of the directors of the assessee company, the same cannot be treated as unaccounted income of the assessee. In that case, the assessee produced relevant material such as confirmation letters from the shareholders and all other relevant material and the

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A.O. termed the material as stereotyped without rendering a finding that the shareholders were mere name-lenders. 6. In the light of the provisions of Section 68 of the Act and the legal position referred to above, we are of the opinion that the assessee has failed to discharge its initial burden to prove that the money of Rs.48,58,000/- was collected through share capital. Therefore, the A.O. is wholly justified in rejecting the stand of the assessee and treating the sum of Rs.48,58,000/- as the income from undisclosed sources and accordingly charging the same to tax. Both the lower appellate fora and in our view rightly confirmed the order of the A.O. 7. For the aforementioned reasons, the question of law framed by the assessee is held against it. The appeal is accordingly dismissed.
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