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A.C.I.T., Central Circle-22, New Delhi Versus Express Earth Movers & Equipments Pvt. Ltd.

2016 (1) TMI 31 - ITAT DELHI

Addition u/s. 68 - bogus share application money/share premium received by the assessee company - CIT(A) deleted the addition - Held that:- The AO has also raised doubts on the genuineness of the share application money on the premises that it is at abnormally high premium, even where the shares of the applicant company are not listed. On this issue it is observed that such features are trigger for further investigation but the matters ends at this point & the AO is enquired to investigate the i .....

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ut the findings elaborately recorded by the ld. CIT(A). We are, therefore, of the view that the impugned order of the ld. CIT(A) does not call for any interference. Therefore, the impugned order is liable to be upheld and the appeal of the Revenue deserves to be dismissed. - Decided in favour of assessee. - ITA No. 508/Del./2012 - Dated:- 30-9-2015 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Md. Mohsin Alam, CITIDR For The Respondent : Sh. Salil K .....

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essee company. 2. In this appeal, the only issue pertains to deletion of addition of Rs.50,00,000/- made by the Assessing Officer u/s. 68 on account of bogus share application money received by the assessee. In the assessment proceedings, the AO on perusal of balance sheet found that the assessee company has received share application money to the tune of ₹ 50,00,000/- from certain companies on premium of ₹ 90/- each for per share of Rs.l 0/-, the details of which are given para 5 of .....

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, creditworthiness and genuineness of the transactions and it is a case of routing the unaccounted money through entry operators under the garb of share application money which cannot be held to be genuine share application money. He also observed that investments were arranged through Kolkata based non-existing paper companies. The assessing officer, therefore, made an addition of ₹ 50,00,0001- to the total income of assessee u/s. 68 of the IT Act. The addition was challenged before the l .....

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e appellant company in the form of the share capital. That the post search enquiries made by investigation wing of Kolkata was not confronted to the assessee during the assessment proceedings. The other argument of the assessee is that while the AO has mentioned about certain facts and proceedings conducted by the Investigation Wing of the Income Tax Department after the search as per the AO shows that the investor companies are non-genuine entities but the case of the appeal is that the result .....

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e companies are active and have filed their Balance sheets up to 31.03.10. That all these shareholder companies are having Income Tax Pan Number. It is further observed from the assessment order that the appellant company had filed confirmation, copy of ITR, share application form and copy of bank statements of the share applicant companies. The appellant in its written submission has quoted and relied on the legal proposition enunciated by Hon 'ble Delhi High Court in case of Oasis Hospital .....

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ng details of the cheque Nos. and bank accounts through which the share application has been made, c. PAN details of the investor company, d. Copy of IT returns, copy of the investor company e. Copy of bank statement of the investor company f Copy of Form No. 2 together with list of shareholders, to whom the impugned shares totaling 50,000 were allotted. g. Copy of annual return to ROC for F.Y. 2005-06 filed on 25.01.07 evidencing the fact of the names of shareholders appearing in the members re .....

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pitality Private Limited in ITA No. 2093 of 2010 (supra) and Winstral Petrochemical Pvt. Ltd. (supra) in which various earlier decisions of High court and that of the S. C. has been considered, it is observed that the appellant has discharged the initial burden placed on it to prove the identity and existence of the share applicant investor company. The fact that the share application money from the applicant have been received through banking channel further goes to substantiate the identity of .....

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e of the assessee company. On this issue another decision of Delhi High Court in case of CIT vs. Value Capital Services (307 ITR 334) is also quite relevant wherein the court inter alia observed that there is additional burden on the revenue in as much as even if the applicant does not have the means for the investment, it must show that the investment made by the applicant actually emanated from the confers of the assessee, so as to enable it to be treated as undisclosed income of the assessee. .....

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ely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber; (4) if relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders register, share application forms, share transfer register, etc. it would constitute acceptable proof or acceptable explanation by the assessee; (5) the department would not be justified i .....

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iation. " Thus, from the details filed by the assessee and referred to above it cannot be said that the identity of the subscriber is not established. The AO has observed that the Director of the share applicant companies have not been produced in person in spite of repeated requests. That thus the assessee has not fully discharged its's onus to prove the creditworthiness of the company which do not have any source of profit and are not in any actual business. On this matter, the observ .....

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s now for the AO to have enforced the attendance of the Director's concerned for making further investigation in the case. This could have been done by issuance of summons under the Act. On the issue of the initial burden of proof the observation of the jurisdictional High court in the case of Dwarkadhish Investment (supra) made in para 8 thereto is also relevant which is as under: "In any matter, the onus of proof is not a static one. Though in section 68 proceedings, the initial burde .....

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. Moreover law that the assessee need not to prove the "source of source". In view of the above discussion it is held that the appellant s case is squarely covered by the ratio of various decisions of the High court & Supreme Court discussed above. From the necessary evidences/details provided to the AO during the proceeding it is seen that the initial onus has been duly discharged by the appellant company. As discussed above, the investigation done by the AO is not sufficient/adeq .....

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