TMI Blog2023 (2) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee's own sister concern/group companies having mostly common directors and thus, establishing creditworthiness and genuinity of investments, additions under section 68 had been rightly been deleted. Appeal of assessee allowed. - I.T.A No.2655/Kol/2019 - - - Dated:- 30-11-2022 - Shri Sanjay Garg, Judicial Member and Dr. Manish Borad, Accountant Member For the Appellant : Shri A. K. Tulsyan, FCA For the Respondent : Shri Amal Sudhir Kamat, CIT-DR ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 28.11.2019 of the Commissioner of Income Tax (Appeals)-11, Kolkata (hereinafter referred to as the CIT(A) ) passed u/s 250 of the Income Tax Act (hereinafter referred to as the Act ). The assessee in this appeal has taken the following grounds of appeal: 1. That the Ld. CIT(A) was wrong in confirming the addition of a sum of Rs.14,63,00,000/- u/s 68 of the Act being the share capital share premium money received during the year from the share applicants without appreciating the fact that the details and documents provided to him were fully examined. Further, all the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, the said fact has been refuted by the ld. AR stating that all the details as required by the AO were submitted before him and that even the directors were also produced before him but the ld. AO refused to record their statement, and, with a biased mind, passed the impugned assessment order. Further, the ld. CIT(A) in para no. 8 of the impugned order has observed that since the ld. AO had not brought any relevant fact on record, therefore, he himself proceeded to undertake the fact-finding exercise. He, accordingly, asked the assessee to furnish the details of the directors of the assessee company, the names of companies in which they are substantially interested, the details of companies/entities who have invested in the assessee company, their returns of income, financial statement along with copies of memorandum of association, bank account statements of the accounts from which the cheques were issued for investment in the assessee company and the basis, formula or method which was followed in ascertaining the value of the shares and deciding the rate at which premium was to be issued. The ld. CIT(A) examined the details furnished by the assessee, however, concluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Gopal Krishna Lodha Relative of Gopal Kumar Agarwala b. Manoj Kumar Agarwal Brother In Law of Gopal Kumar Agarwala 5. M/s. Mubarak Cosmetics Pvt. Ltd. a. Rajiv Dalmia Nephew of Gopal Kumar Agarwala b. Urmila Devi Agarwal Wife of Gopal Kumar Agarwala 4.1. The Ld. Counsel, further, took us through the written submissions filed before the ld. CIT(A), details of the appellant company which included its audited financial statement, income tax return, bank statement and the documents of investor companies placed in the paperbook. He submitted that the share applicants were having sufficient net owned funds for making investments in the assessee company. The details of the net owned funds of the applicants and the investments made by them were explained as under: Sl.No. Name of the company Net Worth of Applicant Investment made by them in assessee 1. M/s. GainwellTextrade Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate is also enclosed for the kind perusal of your honours. c) Pawapuri Mercantile Pvt. Ltd .-This company was incorporated on 21.01.1994 and was having company identification number U51909WB1994PTC061532. This company duly filed its return of income before ITO Ward 1(2), Kolkata and was having PAN AABCP5142N. This company was having a paid up capital with free reserves and surplus of Rs.18,24,24,141/- as on 31/03/2012. The copy of the bank statement of the Company is duly available in the paper book. The company is a Active Compliant and has made a regular compliances as evident from the master details available at the Ministry of Corporate Affairs website. Companies Balance Sheet along with the return filing Acknowledgment as on the current date is also enclosed for the kind perusal of your honours. d) HIL Engineering Pvt. Ltd .-This company was incorporated on 21.08.1991 and was having company identification number U65921WB1991PTC052785. This company duly filed its return of income before ITO Ward 5(4), Kolkata and was having PAN AAACH6729E. This company was having a paid up capital with free reserves and surplus of Rs.20,65,33,137/- as on 31/03/2012. The copy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Documents of the share applicants to show their identity, credit worthiness also the genuineness of the transactions 7 M/S. GAINWELL TEXTRADE PVT. LTD. (Share Applicant) 7.1 Copy of Company Master data 7.2 Copy of PAN CARD 7.3 Copy of Ledger Account of M/s. Baba Strip TubesLtd. in the books of M/s. GainwellTextrade Pvt. Ltd evidencing share application money paid to M/s. Baba Strip Tubes Ltd. on different dates during the F.Y. 2011-12. 7.4 Copy of relevant page of Bank Statement 7.5 Copy of Affidavit before the Notary Public Kolkata relating to share application money 7.6 Copy of Source of Fund towards payment made to M/s. Baba Strips Tubes Pvt. Ltd. (Name changed to M/s. BST Infratech Ltd.) 7.7 Copy of ITR Acknowledgement for A.Y. 2011-12 7.8 Copy of Audited Accounts for the F.Y. 2010-11 7.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copy of relevant page of Bank Statement 9.5 Copy of Affidavit before the Notary Public Kolkata relating to share application money 9.6 Copy of Source of Fund towards payment made to M/s. BST Infratech Ltd 9.7 Copy of ITR Acknowledgement for A.Y. 2011-12 9.8 Copy of Audited Accounts for the F.Y. 2010-11 9.9 Copy of ITR Acknowledgement for A.Y. 2012-13 9.10 Copy of Audited Accounts for the F.Y. 2011-12 9.11 Copy of ITR Acknowledgement and Computation for A.Y. 2013-14 9.12 Copy of Audited Accounts for the F.Y. 2012-13 9.13 Copy of Memorandum and Articles of Association 10 M/S. HIL ENGINEERING PVT. LTD. (Share Applicant) 10.1 Copy of Company Master data 10.2 Copy of PAN CARD 10.3 Copy of Ledger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13-14 11.12 Copy of Audited Accounts for the F.Y. 2012-13 11.13 Copy of Memorandum and Articles of Association 11.14 Copy of ITR Acknowledgement for A.Y. 2012-13 11.15 Copy of Audited Accounts for the F.Y. 2011-12 11.16 Copy of relevant page of Bank Statement 4.4 The Ld. Counsel has further submitted that the justification for raising the share capital and share premium from group companies was also furnished before the lower authorities, which is given as under: 1.4 Before entering into the merits of the case and travelling through the discussion to prove the identity and creditworthiness of the investors as well as genuineness of the transactions, it is pertinent to understand that why at all such huge capital was required by the assessee at the impugned point of time and also how such huge capital was used by the assessee company for its business? 1.4.1 The answer to above questions was itself available in the financial statement of the assessee which the AO did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm loans for utilization in its business in addition to the issue of shares for raising capital. Therefore, issue of shares and raising capital from body corporate is just a way of funding its business activities and it should not be seen in isolation. 5. After considering the above details, which have also been reproduced in the impugned order of the CIT(A), we note that the Assessee has proved the identity of the share subscribers. The share applicants are the Group companies of the assessee company and they are body corporate, registered with the ROC and they were available at the given address. The share applicants have furnished copy of PAN and are registered with ROC having CIN. All the data s of such companies are available with Income Tax Department ROC. They are also assessed to Income Tax regularly. In respect of genuineness of the transaction the ld. Counsel has established that the share application money was received through proper banking channels; the share holders had sufficient fund for the purpose of investment the investments are reflected in their books of account and Bank accounts of the shareholders confirmed the transactions. All are share holders ..... X X X X Extracts X X X X X X X X Extracts X X X X
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