TMI Blog2012 (12) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... aneja, Shri Tarun Respondent by: Shri R.I.S. Gill, CIT (DR) ORDER PER G.D. AGRAWAL, VICE PRESIDENT In this appeal filed by the assessee, following grounds were raised: 1. That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the action of ld. AO in making an aggregate addition of Rs.1,38,00,000/- on account of share capital received from 13 parties as mentioned in page 42-43 the assessment order under section 68 of the Act. 2. That in any case and in view of the matter action of the ld. CIT(A) in confirming the action of ld. AO in making addition of Rs. 1,38,00,000/- on account of share capital received u/s 68 that too by recording incorrect facts and findings and without confronting the entire adverse material used against the assessee and without providing the opportunity of cross examinai8tonn and without granting adequate opportunity of hearing is illegal, unjustified, and contrary to law and facts, beyond jurisdiction and deserves to be quashed. 3. That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in making enhancement to the assessed inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order dated 22nd January 2009 passed u/s 154 of the I.T. Act, deleted the addition as well as enhancement made by him in the original order. 3. The revenue, aggrieved with the order of the CIT(A) passed u/s 154, filed appeal before the ITAT vide ITA No. 1247/D/2009. 4. The ITAT, vide order dated 16.2.2009 in ITA No. 216/D/2008, dismissed the assessee s appeal as infructuous, because in the order passed u/s 154, the CIT(A) had already allowed the appeal of the assessee. The revenue s appeal, against the order passed u/s 154 by the CIT(A), was disposed of by the ITAT on 29.1.2010 vide ITA No. 1247/D/2009 in which the ITAT allowed the revenue s appeal. Thereafter, the assessee has filed a Miscellaneous Application in ITA No. 216/D/2008 and the ITAT vide order dated 25.2.2011 in MA No. 122/Del/2010 recalled its order dated 16.2.2009. Accordingly, the appeal in ITA No. 216/Del/2008 was fixed for hearing before us. 5. At the time of hearing before us, it is stated by the learned counsel that the assessee has furnished the confirmation of all the shareholders, their Permanent Account Nos., share application form, their bank account etc. before the AO. The AO made verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the addition made for the unexplained share capital was deleted. He also referred to the assessment order and stated that if only the assessment order is read, it will prove that the identity of each and every shareholder was established. At page 2 of the assessment order, the AO has given the details of share capital furnished by the assessee which shows complete address of the shareholder, their Permanent Account Number as well as the Ward where they are assessed. Thereafter, the AO has discussed the case of each and every shareholder from which it would be evident that the AO made verification from the shareholder u/s 133(6) of the I.T. Act. The shareholder replied affirming the investment made by them in the share capital of the assessee company. They also furnished the copy of share application forms, allotment letter and the copy of balance sheet, Profit and Loss account for the Asstt. Year 2004-05. The AO of the assessee also had written a letter to the AO of the shareholder. There also positive reply was received. He also made verification from the bank. Thus, when all the shareholders are assessed to tax, they have affirmed investment in share capital, the amount has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plantation Pvt. Ltd. 20000 AAACB4662J 2(4) Delhi 18. M/s Xylophone Commercial P. Ltd., New Delhi 10000 AAACX0009K 18(4) Delhi 19. M/s Blossom Advertisers P. Ltd., New Delhi 10000 AABCB5113B 3(1) Delhi 20. M/s KVK Multi Fact Projects Ltd., New Delhi 25000 AABCK9270G 5(1) Delhi 21. M/s Svam Online Com Ltd., New Delhi 30000 AAHCS5119G 7(4) Delhi 22. M/s Prepaid Legal Services India Ltd., New Delhi 5000 AACCP5821F 14(3) Delhi 23. M/s Classic Global Finance Capital Ltd. 30000 AACCC0344E Range VII Ludhiana 24. M/s Mewat Zinc Ltd. 20000 AAACM6502E 6(4) Delhi 8.1 From the above, it is evident that the names and addresses of the shareholders, number of shares allotted, their Permanent Account Nos. and the AO with whom they are assessed were available with the AO. The details furnished by the assessee and the inquiries conducted by the AO are mentioned in detail in respect of each and every shareholder which is running from page no. 3 to 30 of the assessment order. However, for the sake of brevity, we will mention the details narrated by the AO in respect of first shareholder i.e. M/s Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter Dear Sir, We would like to thank you for your interest in our Company and we would like to inform you that the company has allotted 15000 (Fifteen thousand only) fully paid up equity shares of Rs.100/- each at par on 15.3.2004. The details are as under:- Regd. Folio No. Certificate No. Distinctive From To No. of Shares 121 171 311869 316868 5000 121 178 316869 321868 5000 121 179 321869 326868 5000 Original Share Certificate will be sent shortly. Kindly acknowledge the same. Thanking you, Yours faithfully, For GOEL DIE CAST LTD. Sd/- (DIRECTOR) Similar letters have been sent to all the share allottees by the assessee. However, no date has been mentioned on which this letter is purportedly written. The reference is to 15th of March, when shares have been allotted. It further says that original share certificate will be sent shortly. That means, no share certificate was sent on 15.3.2004 by the assessee company to any of the so-called shareholders. 1.2 A letter dated 1st November, 2006 was written to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by hand, instead of sending it by post. The party has given copy of share certificate purportedly issued on 15th March, 2004 and purportedly received by the party on 18th of March. That means, when letter was issued on 19.6.2006 for copy of share certificate, the party was having the share certificate in its possession. However, there is no explanation as to why the copy of share certificate was not sent earlier in response to letter dt. 19.6.2006. This party has also submitted its balance sheet. It shows that during the year it sold its building and there was no immovable property with the company as at 31.3.2004. The Schedule of current liabilities and provisions and expenditure on administration and general overheads are as under:- Current liabilities Provisions As on 31.03.2004 Shri Satguru Deviji 5.25 Ganges Resorts Ltd. - Provision for NPA - Provision for Taxation 13550/- Deferred tax liability 4413 /- Audit fee payable 13800/- Director salary payable 30000/- It is interesting that there are no sundry creditors in the current liabilities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erested feature was reflected. The letter has come through courier. The courier shows the origin of letter at Karol Bagh, New Delhi and destination Rohtak, though the envelope says that the letter is purportedly sent from Rishikesh. These circumstances discussed above clearly point towards the undeniable conclusion that the party does not have creditworthiness, but has been used by the assessee to take accommodation entries to route its own money as share capital. 8.2 From the above, it is evident that the AO called for the information u/s 133(6) from the shareholder namely M/s Tek Hire Purchase Leasing Pvt. Ltd. In reply, they furnished a copy of share application form, allotment letter, copy of the balance sheet and Profit Loss account for Asstt. Year 2004-05. The AO also issued summons u/s 131(1)(d) to the AO of M/s Tek Hire Purchase, in response to which also the AO of M/s Tek Hire Purchase supplied the information as asked for. The AO verified the balance sheet and found that the balance sheet of M/s Tek Hire Purchase shows availability of funds of Rs. 29,20,655/- , out of which a sum of Rs. 15 lakh was invested as share capital in the assessee company. The AO doubted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere also, it is affirmed that the said shareholders have invested the money in the share capital of the assessee company. The Profit Loss account and balance sheet of the shareholders are produced, bank accounts are also produced. In view of these facts, we hold that the assessee has duly discharged the burden of proving the share capital which lay upon it. On these facts, the decision of Hon ble Apex Court in the case of Lovely Export, the decision of Hon ble Jurisdictional High Court in the case of CIT vs Oasis Hospitalities (P) Ltd. 2010 (DHC); CIT vs Dwarkadhish Investments(P) Ltd. 2010 and CIT vs Winstral Petrochemicals (P) Ltd. 2011 (DHC) 330 ITR 603 and the decision of the ITAT in assessee s own case for AY 2003-04 would be squarely applicable. Respectfully following the same, we delete the addition of Rs. 1,38,00,000 made by the AO on account of unexplained share capital u/s 68 of the IT Act. We also delete the enhancement of Rs. 94,00,000 made by the CIT(A) for unexplained share capital. 9. The only other ground is with regard to charging of interest u/s 234B. The same is consequential. The AO is directed to recompute the interest, if any, after giving effect to our or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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