TMI Blog2013 (2) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... I HIGH COURT] it was held that there was additional burden on the department to show that even if the share-applicants did not have means to make investments, the investments made by them actually emanated from the coffers of the assessee – In this case no such evidence was brought to prove that the assessee’s unaccounted money routed through M/s. Deevee Commercial Ltd. or any cash was deposited in the share applicant’s bank account prior to issuance of cheque for share application. Transaction was by account payee cheque. PAN details of the share applicant were provided ,therefore, the onus cast on the assessee u/s. 68 of the Act, was duly discharged – when all the ingredients contained in Sec. 68 of the Act are fulfilled, there is hardly any scope to invoke that section alleging introduction of unexplained fund by way of share application – As decided in CIT vs. M/s. Lovely Exports (P) Ltd[2008 (1) TMI 575 - SUPREME COURT OF INDIA] no addition on account of unexplained cash credit is warranted in the case of the assessee on the given facts and circumstances. Further assessee filed a copy of Memorandum and Articles of Association of the assessee-company along with details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount received from M/s. Deevee Commercial Ltd. should not be treated as its unaccounted money. The assessee filed its reply in respect of letter dated 05/12/2008 on 10/12/2008 and in respect of letter dated 08/12/2008 on 23/12/2008. The Ld. A.O. completed the assessment u/s. 143(3) of the Act on 22/12/2008 with the finding that no explanation was given in reply to letter dated 08/12/2008, although he has not pointed out or discussed any specific defect or adverse inference to the explanation filed on 10/12/2008. The Ld. A.O. determined the total income at Rs.2,61,99,915/- as against returned by the assessee at Rs.30,26,414/- and thereby made an addition of Rs.2.31 crores u/s. 68 of the Act as assessee s unexplained cash credit holding that M/s. Deevee Commercial Ltd. is a paper company who used to channelise unaccounted money into regular books by way of share application money. 3. The assessee preferred appeal before the Ld. C.I.T.(A) and submitted that the basis of Ld. A.O. s allegation was the statements recorded in course of search operation u/s. 132(1) of the Act from few persons. According to those statements found recorded in the assessment order, Sri Sandeep Sharma a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the share applicant M/s. Deevee Commercial Ltd. is known. Details of the share applicant including PAN were submitted during assessment proceedings. The transaction was through account payee cheque, which remained uncontroverted by the ld. A.O. even in his remand report. (b) As regards creditworthiness also, there is no imputation in the assessment order that M/s. Deevee Commercial Ltd. was hard up for funds. The submission of the assessee that the share application money was received through account payee cheque out of the fund belonging to the share applicant and this was not contradicted by the ld. A.O. in the assessment order or even in his remand report as the assessment order is also silent about the enquiries into the sources of funds of the said share applicant. (c) The main basis of the ld. A.O. was the statements recorded u/s. 132(4) of the Act from several persons on 28/3/2008 and the questions therein all pertained to the relationship of these persons to a group of concerns of which one is the share applicant. One of the deponents Sri Sandeep Sharma was having full knowledge about the group activities and the assessment order does not mention the fate of enquiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the assessee-company or its Directors and as such reliance on their alleged statement misconstrues about the genuine transaction. He further submitted that the share applicant was identified and the transaction was through banking channel having fund to invest in share application. The ld. A.O. has not recorded any finding that the share applicant was short of fund to apply for shares of the assessee-company. He submitted that the assessee has established not only the identity and creditworthiness of the shareapplicant but also the genuineness of the transaction and in such circumstances, addition made u/s. 68 of the Act as assessee s unaccounted money is uncalled for. The ld. C.I.T.(A) has rightly deleted the addition which should be upheld. In support of his submissions, the ld. counsel placed reliance, inter alia, on the following decisions :- CIT vs. Active Traders (P). Ltd. [214 ITR 583 (Cal)] CIT vs. Dolphin Canpack Ltd. [283 ITR 190 (Del)] CIT vs. Electro Polychem Ltd. [294 ITR 661 (Mad)] CIT vs. Lovely Exports Pvt. Ltd. [216 CTR 195 (SC)] 7. We have heard the rival contentions of the parties and perused the orders of the authorities below and evidences on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce could be brought on record by the department to the contrary. 7.1. The Hon ble Rajasthan High Court has held in the case of Barkha Synthetics Ltd. vs. ACIT [2005] 197 CTR 432 (Raj.) that the principle relating to burden of proof concerning assessee is that whether the matter concerns the money receipts by way of share application from investors, through banking channels, assessee has to prove existence of persons in whose name the share application is received. Once the existence of investor is proved, it is no further burden of the assessee to prove whether that person itself has invested the said money or some person made investment in the name of that person. The burden then shifts on revenue to establish that such investment has come from assessee-company itself. Hon ble Apex Court in the case of CIT vs. Daulat Rant Rawatmuli [87 ITR 349 (SC)] has held that onus to prove that the apparent is not the real is on the person who claims it to be so. Therefore, the onus is on the department to prove that the share application money subscribed to the share capital of the assessee-company by the above named share applicant is not the money of the share applicant but of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lovely Exports (P) Ltd. (supra). 7.4. In view of above facts and the decisions cited supra, we are of the considered view that there is no infirmity in the order of the ld. C.I.T.(A) in deleting the addition Rs. 2.31 crores made by the ld. A.O. u/s. 68 of the Act. Hence, we uphold his order and dismiss grounds No. 1 2 of the grounds of appeal taken by the department. 8. The only other ground, i.e. ground No.3, in this departmental reads as under :- 3. That Ld. CIT(A) erred on facts and circumstances of the case and in holding that transaction in shares of M/s. Himadri Chemicals Ltd. and M/s. Indo-Tech Transformer Ltd. on which profit of Rs.30,26,411/- has been earned, are not part of business activity although the assessee did not utilize its own surplus fund to transact in above shares. 9. The assessee submitted that the assessee is an investment company since its incorporation in 1992. Further, it has not done any trading in shares for various years nor has the company held shares as stock-in-trade in past. The assessee has been investing in shares and accounted for the same as its investment in its balance sheet and the gain out of transactions of such investments is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm capital gain. This ground of appeal is, therefore, allowed and the A.O. is, therefore, directed to treat this receipt as short term capital gain. 11. At the time of hearing before us, the ld. Departmental Representative relied on the order of ld. A.O. On the other hand, the learned counsel for the assessee supported the order of the ld. C.I.T.(A). On requisition from the Bench, the assessee also filed a copy of Memorandum and Articles of Association of the assessee-company along with details of Demat Account. There is no dispute to the fact that the assessee purchased shares of M/s. Himadri Chemicals and M/s. Indo Tech Ltd. out of the share application money received from M/s. Deevee Commercial Ltd. Therefore, at the relevant point of time, the source of fund of the assessee was the share application money received from M/s. Deevee Commercial Ltd. Further, in his remand report also the ld. A.O. could not controvert the above position. It was also not the ld. A.O. s stand that in past the assessee has been indulging in share trading business. In this view of the matter, we find no infirmity in the order of the ld. C.I.T.(A) in allowing the claim of the assessee. That being so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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