TMI Blog2014 (1) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... c person, no disallowance of personal nature can be made in the case of a company – Decided against Revenue. - ITA No.350-352/Ind/2012 - - - Dated:- 31-5-2013 - Joginder Singh And R C Sharma, JJ. For the Appellants : Shri S C Jain Shri S K Jain, Adv. For the Respondent : Shri V K Karan, CIT-DR ORDER:- PER: R C Sharma These are appeals filed by the assessee against the order of CIT(A) for the assessment years 2005-06, in the matter of order passed by the Assessing Officer u/s 144/143(3) of the Income-tax Act, 1961. 2. In all the three appeals, the grounds are similar and the facts are also same, therefore, all the three appeals were heard together and are decided by this consolidated order for the sake of convenience and brevity. 3. We have perused the record and material and placed on record. In the case of Pramila Investment Finance Limited, the Assessing Officer observed as under :- The return declaring total income at Rs. 35,333/- was filed on 31.3.2006. The case was selected for scrutiny and a notice u/s 143(2) of the I.T.Act was issued on 13.3.2007 which was duly served on the assessee on 29.3.2007. In response to the said notice nobody atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that the proof for the same will be submitted within 7 days. No details of share application money amounting to Rs. 1,29,50,000/- and share premium account Rs. 1,88,35,000/- has also been furnished though specific query was raised in this regard. With regard to bank statements it was submitted that all the copies of bank statement as obtained from the banks were submitted. It was further stated that for rest of the period i.e. 4/04, 7/04, 12/04 and 4/05 there were no transaction effected by the assessee and as such bank has not supplied such statements. The assessee has also not supplied the list of sundry creditors i.e. name, address, PAN and amount etc. In view of these facts the director and the AR were specifically asked to furnish all these details on 9.8.2007. However, no compliance was made on that date. Therefore, on 9.10.2007 a letter was issued requiring the assessee's compliance on 9 points for which the case was fixed on 1 7.10.2007. 4. On 17.10.2007 Shri Shanker Singh, ITP, attended and stated that since the fatherin-law of the director suffered from a heart attack, the required details could not he produced on that date. Therefore, on his request the case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethwani, 105, Anurag Nagar, Indore - No such person available. 5. In view of the above facts, vide letter dated 20.11.2007 the assessee was confronted with this fact and asked to produce the above persons for examination. The compliance was required on 27.11.2007. The assessee was also requested to make compliance to the notice u/s 142(1) dated 9.10.2007 on the above date. It was clearly mentioned in that letter that it was the last and final opportunity and in case of non-compliance adverse inference will be drawn. However, on 27.11,2007 no compliance was made. 6. Thereafter, the Assessing Officer mentioned about each and every notice u/s 133(6) issued to 14 share applicants, wherein it was stated that either they have refused to accept the notice or no such person was available at the address or no reply was given by any of the four persons mentioned at serial nos. 3 to 6 at page 3 of his assessment order. 7. In the case of Pramila Investment, the Assessing Officer observed that the assessee has shown share application money of Rs. 1,29,50,000/- out of Rs.95,000/- received during the year. In this regard, the assessee was required to prove the identity and credit worthiness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f M/s Neema Invedstment Private Limited, the Assessing Officer observed that the assessee has received Rs. 1,78,45,000/- as share application money during the year. In addition to it, the assessee had shown to have received sundry credit of Rs.2,88,45,925/-. The Assessing Officer asked the assessee to establish identity and credit worthiness of loan creditors. The Assessing Officer further observed that the assessee never produced any details of sundry creditors appearing in its books of accounts. The assessee was asked to produce the loan creditors for verification. However, the assessee neither produced loan creditors nor appeared in the office of the Assessing Officer for filing any details as required by him. In these circumstances, to verify the genuineness of the loans appearing in its accounts, the Assessing Officer issued summons to following parties :- 1. Rajendra Fincom Ltd. 2. Rajendra Bafna 3. Rajkumar 4. Jitendra Porwal 5. Ramchandra. The Assessing Officer further observed that in response to summons, none of the above parties appeared in his office. On verifying the letter dated 26.12.2007 which was adjournment application for grant of adjou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial and placed on record in case of Money Penny Fincom P. Ltd. Brief facts of the case are that the assessee is a private limited company. The assessee filed its return of income on 31.3. 2006 showing income of Rs. 1,12,471/-. During the course of assessment proceedings, no books of accounts were produced by the assessee. However, on perusal of balance sheet the AO observed that the assessee received Rs. 1,47,50,000/- as share application money during the year under consideration. The assessee also received Rs. 3,97,48,900/- as sundry credit. The AO, therefore, called upon the assessee to establish the identity, credit worthiness and genuineness of the loan creditors in reply to which the assessee filed confirmation letters and income tax returns of the share applicants but it did not produce the bank account of these persons. The AO also required the assessee to produce the loan creditors but it failed to do so. The AO, therefore, issued summons to the following share applicants for appearing before him :- 1. Shri Parasmal Jain 2. Shri Mahesh Sethi 3. Shri Pradeep Agrawal 4. Ms Sunita Khatod 5. Smt. Shyamabai Rathore 6. Smt. Sangeeta Rathore 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), the CIT(A) observed that the assessee was asked to prove the identity, capacity and genuineness of the transaction, however, no explanation was submitted by the assessee, therefore, the amount of Rs.95 lacs was correctly added u/s 68 being unexplained amount. During the appellate proceedings the assessee was asked to establish the genuineness of the money received under share application and also required to submit evidence of personal relations of promoters and directors of the company with the persons from whom share application money was received, as private companies cannot collect share application money from general people. The CIT(A) observed that no admissible evidence could be produced. He also observed that the Assessing Officer in his report dated 2.7.2008 enclosed as Annexure-2 of his order has made detailed discussion in respect of financial position of the company and made mention that during the assessment proceedings the assessee did not produce the depositors and prove the genuineness of transaction. The CIT(A) also observed that investigation wing of the department recorded statement of Shri Rameshchand Khatod (Jain) son of Shri Mangilalji aged 48 years on 16.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Road, Indore. The CIT(A) further observed that the address of these companies is definitely a housing apartment. During the course of appellate proceedings, the CIT(A) asked to assessee to furnish information regarding current address of the share holders and also as to which share holders are common in these companies and also what investment or transaction has been made by these companies in each other. The CIT(A) prepared Annexure 3 which is part of his appellate order wherein it was observed that there are about 40 share holders who have also invested in M/s Money Penny Fincom Limited. Besides, M/s Pramila Investment has also made investment in M/s Money Penny Fincom Ltd. and Money Penny Fincom Ltd. has taken shares of 52000 in the assessee company (Pramila Investment). It was further found that these companies are maintained by one person i.e. Ramesh Chandra Khatod who was basically an entry provider as per his own statement. Thereafter, the CIT(A) analysed the facts of all these companies in the light of principle laid down by the Hon'ble Supreme Court in Durgaprasad More; 82 ITR 540, Sumati Dayal; 214 ITR 801 and P. Mohan Kala; 291 ITR 78. After giving detailed finding, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the loans become doubtful in view of the incriminating documents found during survey at Lunkad Group. Even though the assessee has filed loan confirmation alongwith affidavit of Director of the creditor company (Lunkad Group) but they could not produce the Director of Lunkad Group to substantiate the contents of affidavit as well as confirmation so filed. The CIT(A) has deleted the addition on the plea of double addition by stating that confirming addition in the hands of assessee company in respect of loans received by it amounts to double addition. In this regard, there is a direct decision of Hon'ble Supreme Court in the case of ITO Vs. CH Atchaiah, 218 ITR 239, wherein it was observed that no option has been given under the 1961 Act, and it has been specifically provided that tax has to be levied on right person notwithstanding the fact that the amount has already been added in the hands of some other person. Meaning thereby addition should be made in the hands of the right person and the same cannot be deleted only on the plea that the same amount has been added in the hands of some other person. It was observed by the Supreme Court that there is no option under the 1961 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer for disallowing interest expenses and for making addition on account of unexplained source of expenses incurred for the payment of commission on such accommodation entry. 19. We find that the facts of the instant case are different from the case of Narmada Extrusion (supra) as relied on by the CIT(A). In the case of Narmada Extrusion (supra), the addition made by the Assessing Officer on account of unsecured loan was deleted by the CIT(A) on the plea that the addition has already been made in the hands of cash creditor, therefore, no addition was warranted in the hands of Narmada Extrusion (supra). In the appeal filed by the department against the order of the CIT(A), the Tribunal held that since Narmada Extrusion (supra) was the beneficiary of the loan amount and using the loan amount in respect of which genuineness of transaction and credit worthiness of loan creditor was not established, accordingly, it was held that the addition was to be made in the hands of Narmada Extrusion (supra) which is a beneficiary not-with-standing the fact that the amount has already been added in the hands of the loan creditor. However, the facts of the instant case are quite different w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon the decision of Hon ble I.T.A.T., Indore Bench, in case of ACIT vs. Kalani Industries Ltd. the said decision was not acceptable to the department and is being contested before Hon'ble High Court of M.P. assessee has tried to prove genuineness of transaction by furnishing confirmation, copy of bank account and acknowledgement of return. It has also furnished various decision in support of its contentions. But it is evident from the investigation made by ACIT 5(1), Indore that both these company are not existing companies in the real sense. These companies are paper companies only and exist nowhere and were used to give accommodation entries to various parties who want to launder their unaccounted money in the guise of share application or unsecured loan or long term capital gain. The assessee is a closely held Pvt. Ltd. Company in which public is not substantially interested. Thus as per section 68 onus was upon the assessee to establish depositor s identity, creditworthiness and genuineness of transaction. Assessee in its written submission stated that company has received share application money of Rs. 40,00,000/- from Hindustan Continental Ltd. 19, Shubh Kamna Apa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate stage as well as before us, the Ld. Counsel for assessee has challenged the finding of ACIT on the ground that the said company is a listed company on stock exchange and the Assessing Officer was in knowledge and possession of the income tax return of the company. Our attention was invited to the details of capital work in progress and licence capacity of HCL Limited by arguing that the existence and credit worthiness of HCL is established since it is having share capital of Rs. 8.09 crores. During hearing before us, the Ld. Counsel for assessee Mr. Choudhary, invited our attention to deposit of cash in bank account of M/s Sahayata Marketing and transfer thereof through account payee cheque to the bank account of M/s Sunil Shares Stocks Private Limited and thereafter to the ultimate beneficiary. It was submitted that the transactions of cash transfer and deposition of cash has nothing to do with the assessee. A strong plea was raised by the Ld. Counsel for assessee that identity of share applicants is established which was strongly denied by the learned CIT DR. At this stage, a query was raised by the Bench as to whether the assessee is in a position to produce before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta Marketing Company neither the operators of the accounts were available at the addresses given to the bank nor the introducer. Therefore, the assessee cannot claim to have established the identity of both these companies on the basis of some documents. Leave it apart, as mentioned above, the Ld. Counsel for assessee, in reply to a specific query regarding production of any of the directors or the employees of the share applicants before the Bench, the assessee did not comply with the directions of the Bench, therefore, to this limited extent, we are of the view that these share applicants are nonexistent and their identity is not proved. It is pertinent to mention here that there is a difference between a private and public limited company as in a private limited company, the public at large is not subscribing the shares as the shares are allotted to close relatives, friends and other known persons who are having faith in the subscribing company on personal relations whereas there is an invitation to the public at large by a public limited company and not necessarily having personal relations and in that case, the individual relations are normally found to be non-existent. In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Sumati Dayal (214 ITR 801) goes against the assessee. Hon'ble Calcutta High Court in the case of Nivendan Vanijya Niyojay Limited (supra) (page 14) held as under :- After the initial onus was discharged by assessee, the Income Tax authorities have made enquiries and had communicated the result of the enquiry to the assessee and required the assessee to produce the subscribers who provided such credit, in order to establish its case. But the assessee did not do so. On this basis addition made by the A.O. u/s 68 of I.T. Act was confirmed. Identically, the Hon'ble Calcutta High Court in the case of Hindustan Tea Trading Company Limited; 182 CTR 585 at page 23 (para 21) where the identity of 12 persons who were not found at the addresses it was held that identity is not established. On the issue of onus, it was held that principle regarding onus is laid down u/s 68 whereby once a reasonable enquiry is made, then the Assessing Officer can do no further except arriving at a conclusion. When such conclusion is communicated to assessee, onus shifts on the assessee. Likewise, Hon'ble jurisdictional High Court in the case of M/s Rathi Finlease Limited; 215 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtinent to mention that while coming to a particular conclusion, the Full Bench of Delhi High Court in the case of Sophia Finance Limited (supra) duly considered the case of Stellar Investment Limited. Even in the case of M/s Lovely Exports Private Limited (supra) the Hon'ble ble Delhi HighCourt in para 4 observed as under :- Reference to section 68 of the IT Act is conspicuous by its absence, the Stellar Investment Limited ratio cannot be stressed to the extent that it partakes as a reflection on section 68, when the inquiry pertained only to section 263. 25. In view of the facts narrated above and the judicial pronouncements discussed hereinabove, it can be said that the assessee did not discharge the onus cast upon it by the provisions of the Act. We tend to reproduce section 68 of the Act :- 68. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Vishwanathprasad; 72 ITR 194 (SC). The Hon ble Apex in the case of Sumati Dayal vs. CIT; 214 ITR 801 clearly held that if the explanation of the assessee is unsatisfactory, the amount can be treated as income of the assessee. There are contrary decision like Addl. CIT v. Bahri Brothers; 154 ITR 244 (Pat) holding that identity of creditors is not relevant for cheque transactions but at the same time it is not sacrosanct as was held in Nemichand Kothari vs. CIT; 264 ITR 254 (Gau). In the case of Shri Barkha Synthetics Limited vs. ACIT; 155 Taxman 289 the Hon ble Rajasthan High Court held that where the matter concerns money receipts by way of share application from the investors through banking channel, the assessee has to prove the existence of the person in whose name the share application is received. Once the existence of the investor is proved, it is not further the burden of the assessee to prove whether that person itself has invested the money or so me other person has made investment in the name of that person. The burden then shifts to the revenue to establish that such investment has come from the assessee company itself. 26. Once the receipt of the confirmation let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existent at all the given addresses. So far as the argument of the learned CIT DR that dismissal of SLP in the case of Lovely Export, where there is no merger of order, is not an expression of judicial view nor a binding precedent. We are not going into this controversy because the facts of the present appeals are distinguishable from the facts of Lovely Exports Private Limited. Hon ble Delhi High Court in a latter decision in CIT v. Oasis Hospitalities Private Limited (2011) 333 ITR 119 held as under :- We are of the view that ratio laid down in Steller Investment Ltd. (2001) 251 ITR 263 is applicable only in those cases where the assessee is a limited company and the shares were quoted in the stock exchange. But whenever the issue is subscribed without quoting it on the stock exchange by a limited or private limited company, the presumption is very strong against the assessee that subscription is available only to the closely connected persons of the assessee. Once the inference is against the assessee that the issue is subscribed by its closely connected person, the onus is upon the assessee to prove the identity of the subscribers and their creditworthiness. 27. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdictional High Court in the case of M/s Rathi Finlease Limited that the assessee failed to discharge burden with regard to credits in its books and the existence of its creditors, consequently, addition u/s 68 was sustained. This decision is squarely applicable to the facts of the present appeals because identity of share applicant itself was not proved. The principle laid down in the case of M/s Rathi Finlease Limited was recently affirmed by Hon'ble jurisdictional High Court in the case of STL Extrusions, it has become binding precedent on the Tribunal especially when the decision of the Hon'ble Apex Court in the case of Lovely Exports was very much available. Hon'ble jurisdictional High Court while coming to a particular conclusion followed the decision of the Hon'ble Karnataka High Court in CIT v. ASK Brothers Limited (2011) 333 ITR 333 and duly considered the decision from the Hon'ble Apex Court in CIT v. Lovely Exports Private Limited and Steller Investment Limited (supra). In another latest decision in CIT v. Oasis Hospitalities Private Limited, UP Bone Mills India Limited and Vijay Power Generators Limited, etc. (2011) 333 ITR 119 (Del), identically held that identity a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share capital, the Incometax Officer is also entitled to examine whether the alleged shareholders do in fact exist or not. Such an inquiry was conducted by the Assessing Officer in the present case. In the course of the said inquiry, the assessee had disclosed to the Assessing Officer not only the names and the particulars of the subscribers of the shares but also their bank accounts and the permanent account numbers issued by the Incometax Department. Super added to all this was the fact that the amount received by the company was all by way of cheques. This material was, in the opinion of the Tribunal, sufficient to discharge the onus that lay upon the assessee. The Hon'ble High Court took note of many other judgments of many other High Courts and on analysis of those judgments, formulated the following propositions which emerge as under (Divine Leasing Finance Limited; 299 ITR page 282 (Del):- In this analysis, a distillation of the precedents yields the following propositions of law in the context of section 68 of the Income Tax Act. The assessee has to prima facie prove- The identity of the creditor/subscriber The genuineness of the transaction, name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts in the name of new concerns were opened). Thereafter, the amount was transferred in any of the account of Hindustan Continental Private Limited, Agrawal Road Carriers Private Limited and Sunil Shares Stock Limited. It was submitted that on certain occasion there is inter-transfer of funds amongst the three companies, then the cheques were issued to desiring parties in the garb of loan or share capital. Not only that, the shares of Hindustan Continental were claimed to be traded by Sunil Shares Stock Limited, M/s Jai Share Fin Limited and others through manipulation giving rise to artificial height so as to enable certain parties to reintroduce their black money as huge capital gain. It was claimed that in those case also the cash was deposited first in certain account and thereafter the funds were transferred to the share brokers involved in the manipulation and then ultimately to the accounts of the party concerned as sale proceeds of shares. It was also submitted that SEBI has even penalised Hindustan Continental Private Limited and Sunil Shares Stock Private Limited. This assertion of the learned Commissioner of Income Tax was not controverted by the assessee but mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention of the Ld. Counsel for assessee that in view of the decision of the Hon'ble Supreme Court in the case of Lovely Exports, the issue is covered in favour of the assessee, as per our considered view, the case of Lovely Exports (supra) will be applicable only after the identity of the share applicant is established. Since in the instant appeals before us, the identity itself has not been established, there is no justification to apply the ratio laid down by the Hon ble Supreme Court in the case of Lovely Exports (supra). 34. The Hon ble jurisdictional High Court in the case of Rathi Finlease (supra) has clearly laid down the proposition with respect to circumstances wherein the identity is established in case the share applicants are companies. It was held that even filing of confirmation of share applicants by the assessee will not serve the purpose of establishing the identity insofar as the inquiry conducted by the Assessing Officer and the letter issued by the Assessing Officer were returned unserved by the postal department with the remark that the addressees are not existing at the given addresses which clearly establishes that either the share applicants are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ld. AR that copy of the inquiry conducted by the Assessing Officer was furnished to the assessee only one day prior to the completion of assessment, we found that the assessee has got full opportunity to substantiate its claim and negate the report before the ld. CIT(A) but the assessee grossly failed to rebut the report regarding non-establishment of identity of share applicants. The ld. CIT(A) has got co-terminus powers to do what the Assessing Officer has failed to do. Proceedigns before ld. CIT(A) is also extension of assessment proceedings in addition to the appellate proceedings. However, inspite of full opportunity the assessee failed to rebut the contents of the report which indicated that no shareholders exist in the name of the companies so provided by the assessee. Even though, the report relied by the Assessing Officer was in respect of another assessee but the fact remains that the inquiry was in the case of same share subscribers i.e. M/s. Hindustan Continental Ltd. M/s. Optimates Textiles Ind. Ltd. Under these circumstances, the inquiry conducted in respect of M/s. Hindustan Continental Ltd. M/s. Optimates Textiles Ind. Ltd. which are common applicants in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a categorical finding that the assessee has proved the identity of the subscribers. therefore, no addition was warranted in the hands of the assessee. However, in the instant case before us, the identity of the subscribers has not been established as per our discussion detailed hereinabove. This finding of the Tribunal was affirmed by the Hon'ble High Court and, therefore, the appeal filed by the revenue was dismissed, whereas in the present appeal the matter was investigated by the Assessing Officer and even the Inspector of the department who was directed by the Assessing Officer to know the whereabouts reported that the share subscribing companies are non-existent and the addressees given of four places were also found to be fictitious. The summons/notices issued by the department were also returned unserved by the postal department with the remark that no such companies are existing at the given addresses, therefore, in the present appeals, the identity of share holders was not proved at any stage, consequently, the decision in the case of Shri Kela Prakashan Private Limited is not applicable being on different findings, therefore, may not help the assessee. Likewise, the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in these shares was ranging from Rs. 1 lakh toRs. 2.5 lakhs. In order to verify the genuineness of these transactions, the Assessing Officer issued summons to these parties which were received back either with the remarks incomplete address or in spite of best efforts the address not found or not met or no such person or not found , etc. The Assessing Officer thereafter asked the assessee to produce these persons who had introduced the share capital in the company. The assessee was also asked to furnish cheque numbers/draft numbers for payment of share application money along with the names of the drawee bank and branch of the bank. However, no details were furnished despite various opportunities. The assessee could not even identify the entries in the bank account regarding the receipts of the share application money nor could he produce the relevant ledger for verifying the receipts, according to the Assessing Officer. Ultimately, the assessee produced five persons whose statements were recorded. The assessee did not cross examine these persons. They did not furnish any proof of their identity in the form of ration card, election card or passport despite request by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also cannot make a verification of the subscribers as subscription can be done by any person. But whenever the issue is subscribed without quoting it on the stock exchange by a limited or private limited company the presumption is very strong against the assessee that subscription is available only to the closely connected persons of the assessee. Once the inference is against the assessee that the issue is subscribed by its closely connected persons, the onus is upon the assessee to prove the identity (sic. Identification) of the subscribers and their credit worthiness. Their Lordships of the Hon'ble Calcutta High Court in the case of Bhola Shankar Cold Storage P. Ltd. v. Joint CIT (2004) 270 ITR 487 have examined the judgment of the apex court in the case of Steller Investment Ltd. and that of the Hon'ble Delhi High Court in the case of Sophia Finance Ltd (1994) 205 ITR 98 and have held that in the case of Steller Investment Ltd. the ratio laid down by the Full Bench of the Delhi High Court was not overruled and it still holds the field. Whenever the issue was subscribed by closely connected persons of the assessee and the assessee has failed to prove the identity and creditwo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e initial onus is upon thye assessee to establish three things necessary to obviate the mischief of section 68 of theAct. These are : (i) the identity of investors; (ii) their creditworthiness/investments, and (iii) the genuineness of the transaction. Only when these three ingredients are established prima facie it is only then the department is required to undertake further exercise as discussed above. In the instant casae, no such documents are filed and no steps taken by the assessee which could establish the aforesaid three ingredients. Additional evidence in the form of bank statement, etc. is given but the assessee has not done anything to prove these bank accounts. On this evidence produced by the assessee remand report was called for and the Assessing Officer in his remand report dated December 23, 2003 submitted as under :- None of the 6 alleged shareholders produced any documents in support of their identity. The fact was intimated to the assessee vide order sheet entries dated June 13, 2002 and March 17, 2003 . They are not assessed to tax. They have not produced any documentary evidence showing that they are capable of saving/investing any amount at all. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussed the decisions like AKJ Granites Private Limited; 301 ITR 291 (Raj), CIT v. Arunalanda Textiles Pvt. Ltd. (2011) 333 ITR 116 (Karn.) (para 17) order dated 2nd March, 2010, CIT v. ASK Brothers (2011) 333 ITR 111 (Karn.) order dated 18th February, 2010 . In both these cases, the Hon'ble Karnataka High Court has duly discussed the decision in Lovely Exports Pvt. Ltd. and Steller Investment Ltd. (supra) meaning thereby that both these decisions were rendered after the pronouncements of decisions from Hon'ble Apex Court in Lovely Exports Private Limited (supra). As discussed in other paras of this order, so far as the decision in the case of M/s STL Extrusion vs. DCIT (2010) 15 ITJ 872 (I.T.A.T., Indore) is concerned, that decision was rendered by the Bench on the facts that since the assessee proved the identity of the investors, therefore, it was held that no addition can be made in the hands of the assessee company whereas in the present appeals, the existence/identity of share subscribers was not proved, consequently, these judicial pronouncements rather helps the revenue and not the assessee. 41. Even otherwise, if the ratio laid down by the Hon'ble Apex Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no disallowance of personal nature can be made in the case of a company. We, therefore, reverse the orders of the authorities below on this issue and allow this ground of appeal of the assessee. In the result, the appeal of the assessee is partly allowed. 43. In the case of Ad-Manum Packaging Limited (ITA No. 158/Ind/2010) for the assessment year 2004-05 the first ground relates to maintaining the addition of Rs. 10 lacs on account of loan taken by the assessee from Hindustan Continental Limited and addition as cash credit u/s 68. The ld. Counsel for the assessee, Mr. Hitesh Chimnani, contended that the learned Assessing Officer/the learned Commissioner of Income Tax (Appeals) have gone stray in passing lengthy orders discussing about capital gains on shares of M/s Hindustan Continental and the investment of the same company in fixed assets and capital work in progress. The financial position of M/s Hindustan Continental was highlighted before us by further submitting that the lender company is a quoted public limited company, the loan amount was advanced by account payee cheque and returned with interest. It was contended that the identity, capacity and genuineness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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