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TMI Blog2014 (11) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... now in appeal before us and has raised following ground: "1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 85,89,500/- made on account of unexplained cash credit u/s. 68." 4. During the course of assessment proceeding, A.O. noticed that assessee had introduced capital by way of share application money and share capital. Assessee was asked to furnish complete details of increase in share capital during the year and sources of the same. On the basis of information furnished by the assessee, A.O. noticed that assessee had claimed to have received share application money of Rs. 50,58,500/- from 299 individuals in cash and company had also allotted shares of Rs. 35,31,000/- to 207 individuals. Assessee was asked to prove the identity, creditworthiness and genuineness of the transaction with supporting proof and evidences. Out of the list of persons from whom assessee had stated to have received share application money, A.O. issued summons to 10 individuals selected on random basis out of which only 4 persons complied with summons and attended the office. The statements of 4 persons were recorded u/s. 131 of the Act, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought out any evidence to show that these workers have been planted by the appellant company and entire transactions have been coloured as submitted by him in the remand report. c) During the remand proceedings, 20 individuals out of 25 were summoned, appeared before the A.O. and they confirmed having applied for shares in the appellant company. The A.O. has not commented adversely. d) No adverse inference should be drawn from this fact that Shri Naishadh Desai, being a prominent labour leader, is also involved in the affairs of the company to protect the interest of the workers. Nothing has been brought on the record by the A.O. to suggest that Shri Desai is controlling the appellant Company. e) Hon'ble Supreme Court in case of Lovely Exports P. Ltd., (216-CTR-195) (6-DTR-308) has held that even if the shareholders are bogus, no addition can be made in the hands of the company. But in this case, names, addresses, affidavits and sources have already been submitted to the revenue. f) Hon'ble Delhi Bench of Tribunal in case of Arun Industries Limited [19-DTR 465] held that even if the share application money is received by the assesses company from bogus share holders, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 1996 and the State Government was directed to grant exemption from power cut and other benefits. However, the rehabilitation scheme through MDTLI failed and thereafter, a fresh attempt was made by Majur Mahajan Mandal Labour Union and it incorporated Yarn Industrial Co-op. Society Ltd. (YICS) where the workers of NCSM deposited the amounts received by them on retrenchment as share application money and which was also reflected in the Balance Sheet of YICS. To start the sick unit, YICS applied to National Co-op. Development Council (NCDC) which did not materialize. Therefore, YICS approached the banks for finance but the banks were reluctant to grant finance to a co-op. Society. Therefore, Himalaya Cotton Yarn Pvt. Ltd. was incorporated in 2004. Since, the operations were to be carried out in Himalaya Cotton Yarn Pvt. Ltd., YICS at its general meeting resolved to transfer the share application money received by it from workers to Himalaya Cotton Yarn Pvt. Ltd. the assessee, for which necessary resolution was passed. Pursuant to the resolution, YICS transferred share application money received from 337 workers received by it aggregating to Rs. 56,15,000/- to the assessee. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the workers was reflected. Ld. A.R. also placed on record the details of amount received and pointed to the table which showed the amount and date of receipt of money in YICS and the date and amount of the transfer of money from YICS to the assessee, the number of shares allotted and the amount of share capital. He also pointed to page 1 of the paper book which contained a table wherein it was shown that out of total amount of Rs. 85,89,500/- which was received by assessee from 506 workers, assessee had filed affidavits in case of 391 workers and the amount aggregated to Rs. 66,92,500/-. Only in case of 115 workers where the amount aggregated Rs. 18,97,000/-. Assessee could not file the affidavits but it included the sum of Rs. 11,17,500/- which was received through YICS. Ld. A.R., therefore, submitted that since the case of the assessee has also to be seen in the light of the fact that the present case was a very rare instance where instead of liquidating the company, but by a bold & innovative effort the unit was started by the workers. He therefore submitted that assessee has fully discharged the onus and he, thus supported the order of CIT(A). 9. We have heard the rival submis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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