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2015 (9) TMI 136 - ITAT JAIPURUnexplained share application money - accommodation entry in the garb of share capital - CIT(A) deleted the addition - Held that:- There was a search on M/s. B.C. Purohit & Co. on 12.04.2005 and detailed investigation was made by the Department on the basis of evidence collected. During the course of search, it was found that assessee was providing entries in form of gift, loans, share application money, share investment and long term capital gain in shares not only to the assessee but other cases also. On the basis of this search, the assessee was also covered under section 133A of the IT Act in survey proceedings on 03.05.2005 to confront these evidences. As per Annexure-A3 seized from residence of Shri Bal Chand Purohit situated at G-1/103, Kamal Apartments, Bani Park, Jaipur during the course of search revealed that there was an entry of cheque and cash received from various parties. There are number of companies with the details of entries provided with amount. The name of the assessee company also figured on these pages and the modus operandi admitted by Shri Kripa Shankar Sharma in his statement recorded on 12.04.2005 that cash was received from the entry receiver parties and cheques were issued through various companies opened by Shri Bal Chand Purohit Group. He categorically admitted on 21.09.2004 that he received ₹ 6,00,000/- in cash from M/s. Soni Hospital and on 22.09.2004 two entries of ₹ 3,00,000/- each were given to M/s. Soni Hospital which were routed through M/s. Artline Finvest Pvt. Ltd. and M/s. Arpan Agro Pvt. Ltd. Similar other details were also found in seized material. The companies were managed by Shri Kripa Shankar Sharma for providing accommodation entries and he was getting commission by providing accommodation entries. It is further found fact that Shri Sunil Verma, a peon, has been shown as Director in number of companies who had also admitted on 26.04.2005 that these companies did not have any business but providing entries by receiving cash from the beneficiaries and after depositing in the bank account of these companies, cheques are issued to the beneficiaries. Some of the companies’ addresses were found on vacant plots. This group not only providing accommodation entries to the assessee but other persons also. The AO issued notices under section 133(6) of the IT Act for verification but notices were received back with postal remarks “ no such party exists at the given address”, in case of share capital of ₹ 20,00,000/-. The ld. CIT (A) followed the decision in case of M/s. Lovely Exports (2008 (1) TMI 575 - SUPREME COURT OF INDIA). But recently Hon’ble Bombay High Court in the case of M/s. Major Metals Ltd. Vs. UOI, (2012 (4) TMI 227 - BOMBAY HIGH COURT) by following Supreme Court decision in the case of Lovely Exports (supra) has held that creditworthiness and financial standing of the cash creditor is to be proved by the appellant under section 68 of the Act. The Hon’ble Gujarat High Court decision in the case of Blessing Construction (2013 (10) TMI 154 - GUJARAT HIGH COURT) which has been confirmed by Hon’ble Supreme Court in SLP vide [2015 (9) TMI 55 - SUPREME COURT OF INDIA] wherein the creditworthiness in case of cash creditor is to be proved by the assessee. Recently Hon’ble Delhi High Court in case of CIT vs. T. S. Krishna Kumar & Co. Ltd., [2014 (9) TMI 703 - DELHI HIGH COURT] has held that under section 68 the identity, genuineness and creditworthiness of the cash creditor is to be proved by the appellant. Repaying the loan through account payee cheque is not a conclusive evidence. The case law referred by the ld. D/R of Hon’ble Supreme Court in case of N. Tarika Properlty Invest (P) Ltd. (2015 (9) TMI 54 - SUPREME COURT OF INDIA) is squarely applicable in case of assessee. Now, after considering the Hon’ble Supreme Court decision in case of Lovely Exports (supra), we have come to the conclusion that in case of share capital, the creditworthiness along with genuineness of transaction, identity of person is also required to be proved by the assessee. Accordingly we reverse the order of ld. CIT (A). - Decided in favour of revenue.
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