TMI Blog2015 (12) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Counsel, Raghvendra Singh, Junior Standing Counsel, Mr Shikhar Garg and Mr Sharad Agarwal, Advocates For the Respondent : Mr C. S. Aggarwal, Senior Advocate with Mr Prakash Kumar and Mr Rupinder Aggarwal, Advocates ORDER CM No.30897/2015 in ITA No.962/2015 CM No.30899/2015 in ITA No.963/2015 CM No.30901/2015 in ITA No.964/2015 CM No.30904/2015 in ITA No.965/2015 CM No.30906/2015 in ITA No.966/2015 1. Allowed, subject to all just exceptions. 2. The applications stand disposed of. CM No.26995/2015 in ITA No.871/2015 CM No.26997/2015 in ITA No.872/2015 CM No.26999/2015 in ITA No.873/2015 CM No.27001/2015 in ITA No.874/2015 CM No.27003/2015 in ITA No.875/2015 CM No.27005/2015 in ITA No.876/2015 CM No.27018/2015 in ITA No.883/2015 CM No.30898/2015 in ITA No.962/2015 CM No.30900/2015 in ITA No.963/2015 CM No.30902/2015 in ITA No.964/2015 CM No.30905/2015 in ITA No.965/2015 CM No.30907/2015 in ITA No.966/2015 3. For the reasons stated therein, the delay in re-filing the appeals is condoned. 4. The applications stand disposed of. ITA Nos.871/2015, 872/2015, 873/2015, 874/2015, 875/2015, 876/2015, 883/2015, 962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te development charges for inflating the cost of construction to bring down profits. 8. The further case of the Revenue was that during the pre-search enquiries it was gathered that SVP Group of companies had been receiving share capital from several companies which did not undertake any genuine business activities but acted as 'conduit channels' for converting black money into white. The broad general allegation was that in the course of the investigation undertaken by the Additional Director of Income Tax (Investigation), Ghaziabad, the SVP Group of companies did not produce the shareholders despite being served with notices for that purpose. It was alleged that the shareholders were not produced till finalization of assessment order, i.e., upto 21 months thereafter. 9. As far as SVPB is concerned it was incorporated on 28th February, 2000 under the Companies Act, 1956. SVPD was incorporated on 9th February, 1996 and SVLI on 4th February, 1994. The said Respondents are engaged in the business of real estate and are regularly assessed to tax. 10. A statement of one Mr. Vijay Kumar Jindal was recorded on 15th October 2008, one day after the search operation took pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res were found, some of which were seized. During the search one Shri Vijay Jindal gave a statement that shares were allotted at ₹ 10 per share and later on bought back at ₹ 2-3/- per share. The actual average purchase price was ₹ 1.04 per share. Thus shares that were initially issued by the SVP Group to the extent of ₹ 81.19 crores had been cheaply bought back for ₹ 10.38 crores and therefore the transactions were sham. (v) Thus the Assessee had failed to prove the identity, genuineness and creditworthiness of the said shareholders. Accordingly, the aforementioned sums shown as investments in its shares for the AYs in question were added to its income for those AYs. 12. After the Commissioner of Income Tax (Appeals) [CIT(A)] by orders dated 21st May 2012 dismissed the appeals of the Assessees, thereby sustaining the additions, the Assessees filed appeals before the ITAT. Allowing the appeals, the ITAT by its impugned order held as under: (i) The Revenue had been unable to deny the factual position that only 11 of the 20 companies in Table I had actually been searched. The material on record showed that directors of 18 companies of the 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of accounts during their respective assessment proceedings to show that they had made the investment in question. This had been accepted by the CIT (A) in their assessments by deleting the additions made of the said sums to their income by the AO concerned by holding that the additions if at all should be made in the hands of the beneficiaries. In the appeals filed in those cases, the Revenue had contended that the additions ought to have been sustained. Thus, the stand of the Revenue was contradictory and untenable. (ix) The Assessee had discharged its primary onus of proving the identity, genuineness and creditworthiness of the said shareholders. 13. In particular in para 8.7 of the impugned order, the ITAT held as under: 8.7 Having regard to the above judicial pronouncements rendered by the Hon'ble jurisdictional High Court, we now proceed to examine the evidence tendered by the four appellant companies to discharge their initial onus under section 68 of the Act. In the instant case, it is undisputed that all the 106 shareholders are corporate entries having been incorporated under the Companies Act. These shareholders are also assessed to tax. The documentar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to that urged in the appeals filed by the Revenue against the 5th company in the core group in the SVP Group of Companies, i.e., Five Vision, viz., ITA Nos.234, 235 and 236/2015. Those appeals were also directed against the same common impugned judgement dated 29th April, 2014 passed by the ITAT. This Court has by a judgement dated 27th November, 2015 dismissed the said appeals holding that the Revenue had not been able to show that there was any legal infirmity in the impugned order of the ITAT as regards the analysis of the facts and application of law in relation to Section 68 of the Act. 15. In the present appeals, a perusal of the grounds urged by the Revenue shows that they are no different from what was urged in the Revenue's appeals in the case of Five Vision, viz., that the Assessees had manipulated substantial funds movement through paper existence of the investor companies; that the CIT(A) found that common directors repeatedly appeared in the list of directors of the Assessee Companies which showed that they belonged to the same group and were manipulating their books for the purpose of introduction of unexplained cash money and creating 5-6 steps of cheque t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter with enclosures submitted by the investor companies in response to the summon u/s 131 of the Act. 17. It is pointed out that for AYs 2008-2009 and 2009-2010, the contributions of the share capital of the three Assessee was by Table-III companies in respect of which the CIT(A) observed as under: I have carefully appreciated the contentions and do admit that at least these few companies do not seem to be having connection with the majority of the conduit companies and their common directors and that their financial creditworthiness is on much better footing. 18. Additionally it is pointed out that as far as SVPB is concerned no business had commenced during AYs 2007-2008 and 2008-2009. The Profit and Loss Account of the aforesaid AYs showed that the only revenue received was interest from the banks. Therefore the allegation of charging on-money in cash and routing back of the same into the main stream in the form of share capital, etc., is incorrect. 19. The Respondents have placed before the Court charts to show the details of the investments made by the investor companies in each of them year-wise. The three companies appear to have been in existence much ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of the beneficiaries. The Revenue then filed appeals in the ITAT insisting on the additions being sustained. Thus there is no clarity in the stand of the Revenue in these cases. 23. Coming to the core issue concerning the identity, creditworthiness and genuineness of the investor companies, it is seen that as far as the Table I investors were concerned, only 9 were searched and in their cases, the ITAT on a very detailed examination was satisfied that they not only existed, but that the Assessees had discharged the primary onus of proving their creditworthiness and genuineness. They had responded to the summons issued to them. Directors of 14 of these companies appeared before the AO and produced their books of accounts. 24. As regards Table-III companies, notices were issued under Section 131 of the Act to which many of them responded confirming having made investments. The Assessees had been asked by the CIT (A) to produce 7 directors of the Table III companies. 6 directors appeared and their statements were recorded. They had confirmed that they had subscribed to the share capital of the Assessees. These directors had not only produced the books of accounts but showed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been discussed in some detail by this Court in its decision dated 27th November, 2015 in ITA No.234/2015 (CIT v. Five Vision Promoters Pvt. Ltd.). In the said decision, reference has been made to the decisions in CIT v. Lovely Exports (P) Ltd. 216 CTR 195 (SC), the decision dated 21st January 2008 of the Supreme Court in SLP (Civil) (CC) 375 of 2008 (CIT v. Divine Leasing and Finance Ltd.) and decision dated 17th September 2012 of the Supreme Court in SLP (Civil) CC 15640 of 2012 (CIT v. Kamdhenu Steel Alloys Limited). In all the above three decisions the Supreme Court had affirmed the corresponding decisions of this Court including CIT v. Divine Leasing and Finance Ltd. 299 ITR 268. Reference was also made to the decisions of this Court in CIT v. Sophia Finance Ltd. (1994) 205 ITR 98 (FB) (Del), CIT v. Dolphin Canpack Ltd. 283 ITR 190, CIT v. Kamdhenu Steel Alloys Ltd. 206 Taxman 254, Sarthak Securities Co. (P) Ltd. v. ITO 329 ITR 110, CIT v. Nipun Builders and Developers (2013) 350 ITR 407 (Del) and CIT v. N.R. Portfolio Pvt. Ltd. (2014) 206 DLT 97 (DB). 30. In sum, it was explained by this Court in CIT v. Five Vision Promoters Pvt. Ltd. (supra) that: under Section 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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