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Commissioner Of Income Tax (central) -III Versus Anshika Consultants Pvt. Ltd., Flex International Pvt. Ltd., Anant Overseas Pvt. Ltd., Apoorva Extrusion Pvt. Ltd., Anshika Investment Pvt. Ltd., AR. Leasing pvt. Ltd.

2015 (4) TMI 842 - DELHI HIGH COURT

Addition under Section 68 - addition set aside concurrently by the CIT (Appeals) and the ITAT - Held that:- The objective of Section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed on 31.12.2007, the investigation report which was specifically called from the concerned department in Kolkata was availabl .....

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re of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee’s account to the share applicants’ account. As held concurrently by the CIT (Appeals) and the ITAT, these conclusions were clearly baseless and false. This Court is constrained to observe that the AO utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents. - Decided in favour of assessee. - ITA 4 .....

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60,000/- under Section 68 of the Income Tax Act, 1961 (hereinafter referred to as the Act ). This was set aside concurrently by the CIT (Appeals) and the ITAT. 2. During the relevant Assessment Year (AY) 2006-07, the assessee had issued shares at a premium ranging from ₹24000-39000 to applicants which were companies. In the course of assessment proceedings, the AO had sought, details in particular of such share applicants. The assessee had provided the various details of such share applica .....

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ed on the record, the AO added back the sum of ₹12,78,60,000/-. Before the CIT (Appeals) - to whom the assessee preferred an appeal, it was contended that all necessary documents to establish the identity of the share applicants, their creditworthiness and genuineness of the transaction had been placed on record. In these circumstances, the AO could not have on the basis of suspicion fuelled by the higher premium claimed by the assessee and the lack of response of the notices issued, added .....

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in the facts and circumstances regarding the issue of the share capital and treated the same as a sham transaction. The share capital amounting to ₹ 12,78,60,000/- was assessed as income of the appellant u/s 68 'of the Act. 3. After noticing the relevant case law on Section 68 of the Act, the CIT(Appeals) concluded as follows: 9. In the light of aforesaid judicial precedents, it is held that the appellant had received share capital from 3 companies who are regularly assessed to tax, th .....

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The taxes are paid by them on the income so earned by them. The Principal Officers from the companies attended before the ADIT, Investigation in Kolkata and submitted that the investment in the appellant company has been made from the realisation of sale of earlier investments held by the companies. In the light of observations of the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd. reported in 216 CTR 295, the onus on the appellant has been duly discharged. Further, the .....

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of the totality of facts and circumstances and judicial precedents as discussed, the addition of ₹ 12,78,60,000/- made by the A.O. is deleted. 4. The ITAT by the impugned order affirmed the findings of the CIT (Appeals). Importantly, the ITAT also took note of an investigation report dated 17.12.2007 made available to the revenue authorities by the investigation wing of the Kolkata Income Tax Department. The report specifically looked into the allegations to determine whether the share app .....

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Manush Marketing Pvt. Ltd. did so with the amount received from loan debtors outstanding as on 31.3.2005. The companies produced share certificates, a few photocopies of which are enclosed. The Directors of the Companies stated, in their depositions that the companies still hold the shares. Photocopies of the statements are enclosed. 5. The ITAT also noted that the balance sheets of the investors showed that the share applicants were possessed of considerable means and had been existing for a lo .....

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the investors. It emerges out from the record that in the case of Manush Marketing Pvt Ltd., there were sundry debtors of ₹1187,50,000 as on 31.3.2005. According to the assessee, these were realized by the said investors and invested a sum of ₹129,75,000 in A.R. Leasing Pvt. Ltd. Similarly, other investments are made in the other companies. In the case of Shri Mahabir Management Services, it is demonstrated that this concern had investment of ₹ 1186,00,080 as on 31.3.2005.It h .....

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arned DIT has also verified this aspect and did not report any particular irregularity. The next issue is about the genuineness of the transaction. The assessee has produced the details of bank account. All the share application money have been issued through baking channel. The ADIT, Calcutta has pointed out that these companies were still holding the share i.e. on December 2007. During the course of hearing, we enquired about the present status of these companies as well as position of investm .....

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is holding 37210 shares. Though these details were not before the Assessing Officer and could not be because this in the shareholding pattern as on 31.3.20 13, these were referred by the assessee, in response to query and only for the purpose that these share applicant companies are not only proper entities. They are in existence. 6. The onus cast upon the assessee under Section 68 of the Act to satisfy the department about the true identity of an investor, its creditworthiness and genuineness o .....

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