TMI Blog2016 (2) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the inventory as on 31.03.2009 and the same is sold in the subsequent year and profit on the same has duly been reflected in and profit and loss account for assessment year 2010-11. Hence the addition made on account of earnest money was rightly deleted. - Decided against revenue Unaccounted cash deposited in bank - Held that:- As during the year the assessee sold 2 of properties, namely Property no. 11, N.K. II Indirapuram (Rs. 75,00,000) and property no. 392, Shakti Khand-III, Indirapuram (Rs.9,50,000). We find that both the property sale are duly been reflected in assessment year 2009-10. The assessee had received the sale consideration of ₹ 9,50,000 in cash and the same was shown as a source of cash being deposited in the bank account. The AO had accepted the sales of ₹ 84,50,000 declared by the assessee, in these circumstances the action of the Ld. CIT(A) in deleting the addition of ₹ 9,50,000 on account of cash deposited in the bank account was a rightful one. - Decided against revenue Addition u/s. 50C(1) - Held that:- As it is an established fact that the assessee is engaged in the real estate business, therefore, the immovable properties ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting the addition of ₹ 15,00,000/- made u/s 68 in respect of unexplained earnest money shown to have been received from two parties, by accepting the additional evidence without providing any opportunity to the AO. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 9,50,000/- made u/s 68 in respect of unexplained cash deposit in Bank account by accepting the additional evidence without providing any opportunity to the AO. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 1,96,920/- made u/s 50C(1) of the Act. 8. The appellant craves leave, to add, alter-or amend any ground of appeal raised aboverat the time of the hearing. 2. The brief facts of the case are that the Assessee Company is engaged in the business of Real Estate and also shown interest income on loans and advances given. The Assessee filed e-return declaring income of ₹ 32,73,227/- on 29.9.2009. The return was processed u/s. 143(1) and the case was selected for scrutiny. Notice u/s. 143(2) dated 27.8.2010 was issued and served upon the Assessee. Subsequent Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bound to add such cash credit to the Income of the assessee. 5.3 In the facts of the case in hand it is seen that the appellant who is engaged in the business of real estate had during the year allotted 1,30,000 shares and collected ₹ 1,30,00,000 from the following 6 corporate entities: 1 MIs Zircon Exim Pvt. Ltd. ₹ 25,00,000 2 MIs Charminar Imp ex Pvt. Ltd. ₹ 20,00,000 3 MIs KPM Exim Pvt. Ltd. ₹ 20,00,000 4 MIs Rishikesh Trexim Pvt. Ltd. ₹ 20,00,000 5 MIs Dinanath Scrap Dealer Pvt. Ltd. ₹ 20,00,000 6 MIs OPA Distributors Pvt. Ltd. ₹ 25,00,000 During the course of assessment proceeding the AO received following documents from appellant, where in appellant tried to satisfy the identity, as well as the genuineness and creditworthiness of the shareholders. (i) Copy of Certificate of Incorporation. (ii) Copy of Company Master Detail, as taken out from MCA site. (iii) Copy of ITR Acknowledgement for assessment year 2009-10 2010-11 (iv) Copy of Bank Statement, evidencing payment made to the appellant towards share allotment. (v) Copy of Confirmation (vi) Copy of Balance Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficient assets and they had substantial investments in shares of different companies, of which around 20% of investments only is invested in the appellant company as will be evident from bellow mentioned table. Name of company Total of balance sheet as at 31.3.2009 Total Investment in equity shares as on shares in Total Investment in equity shares in assessee Zircon Exim Pvt. Ltd. 1,63,06,883.57 1,36,50,000 25,00,000 Charminar Impex Pvt. Ltd. 1,26,92,851.53 1,25,00,000 20,00,000 KPM Exim Pvt. Ltd. 98,05,010.58 80,15,000 20,00,000 Rishikesh Trexim Pvt. Ltd. 2,00,11,754.91 1,90,00,000 20,00,000 Dinanath Scrap Dealer (P) Ltd. 1,77,77,052.00 1,74,95,000 20,00,000 OPA Distributors Pvt. Ltd. 1,76,65, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edits appearing in its books of accounts. In the said case the appellant has duly explained the said credit entries in the form of various documentary evidences. The said documentary evidence contained details, which set out not only the identity of the subscribers, but also gave information, with respect to their address, as well as, PAN, Assessment particulars etc. Based on these facts, the Hon'ble Delhi Court dismissed the appeal of revenue. 5.9 In yet another decision as to the correctness of treating share application money on par with cash credit, the Hon'ble Delhi High Court in CIT vs. Value Capital Services P. Ltd. (2008) 307 ITR 334 (Delhi) found after referring to the two of the decisions of the Delhi High Court on the subject that in respect of share capital amounts, they cannot be assessed in the hands of the company, unless the Department is able to show that the amount received towards share capital actually emanated from the coffers of the assessee company. 5.10 From the facts of the appellant's case, I find that the appellant has discharged its onus by giving the complete details viz address copy of ITR, bank statement, balance sheet etc. Even, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shareholders register, share application forms, share transfer registers etc. As far as credit worthiness or financial strength of the creditors/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers, showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharge the onus caste upon him. Thereafter, it is for the assessing officer to scrutinize the same and in case he nurtures any doubt about the veracity of these documents, to probe the matter further. However, to discredit the documents produced by the assessee on the aspects, there had to be some cogent reasons and materials for the assessing officer and he cannot go into the realm of suspicion. 5.13 In view of the factual position as well as the judicial pronouncement on the subject, discussed above, I am of the considered view that the appellant has discharged the onus of establishing the bona-fides of the transactions and the AO was not justified in ignoring various evidences provided to him by the appellant. Nothing adverse has been brought on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a genuine transactions and the same was not an accommodation entry. I also do not find any evidence collected by the AO which could prove otherwise. Accordingly, the AO is not justified in treating the amount of share capital money received by the appellant as its undisclosed income. In view of our aforesaid discussion, I delete the addition of ₹ 1,30,00,000 made by the AO under Section 68 of the Income Tax Act, 1961. 7.2 We note that during the hearing, Ld. DR filed a copy of judgment dated 27.1.2014 in the case of CIT vs. Empir Buildtech Pvt. Ltd. of the Hon'ble High Court of Delhi wherien the Appeal of the Revenue was partly allowed and stated that the issue of deletion in dispute in the present case u/s. 68 of the I.T. Act is squarely covered by the aforesaid judgment of the High Court dated 27.1.2014, hence, he requested that the action of deletion in dispute by the Ld. CIT(A) may be cancelled and addition made by the AO may be restored. 7.3 On the contrary, Ld. Counsel for the assessee has stated that during the course of assessment proceedings, the assessee had furnished the confirmations with supporting documents in respect of all the six companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is properly explained by the assessee during the course of assessment proceedings as well as before the Ld. CIT(A) and even before us. Therefore, we find no infirmity in the impugned order passed by the Ld. CIT(A), hence, we uphold the same by rejecting the ground no. 3 raised by the Revenue. 8. With regard to issue raised in ground no. 4 relating to deletion of addition of ₹ 95,00,000/- made u/s. 68 of the Act in respect of unexplained credits introduced in the garb of unsecured loans shown to have been received from three corporate entities is concerned, we find that Ld. CIT(A) has elaborately discussed/given the findings on the issue in dispute vide para no. 7 to 7.7 from pages 27 to 30 of the impugned order. For the sake of convenience, we are reproducing the findings of the Ld. CIT(A) as under:- 7. I have gone through the above submission of the appellant and have considered the facts and evidences available on record and have perused the AO's order and the case laws relied upon by the appellant. 7.1 As discussed earlier in this order, the primary onus is always on the assessee to prove the identity, creditworthiness and genuineness of the transaction th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax Return, and by providing the latest addresses to the AO has discharged the initial onus cast upon him to prove the identity, genuineness and creditworthiness of its creditor. Therefore it was the task of the AO to make the enquiries by issuing summons or deputing inspector etc. or other and external or internal sources etc. before coming to the conclusion that the 3 corporate entities Nere sham and bogus, which I am afraid AO has not done. It is not the case of the AO that payments have not been received through account payee's cheque, therefore when AO was having the full address and appellant was not having any control over the squared up creditors, the onus was on the AO to call for the respective details from them, if there was any doubt about the identity and creditworthiness of the creditors. Though the bank statement of other 2 parties were filed during the appellate proceeding but as discussed the AO's case is not that payment is received in cash, but his case is that the 3 corporate entities who have given among as cash creditor are sham and bogus. 7.6 From the Income Tax details as well as balance sheet and other evidence of these 3 corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inquiries from these three companies at his end by issuing summons u/s. 131 to them, while informing him that it had already repaid such loans to these three companies. He stated that the AO had neither issued summons to these three companies, nor carried out any inquiries from these three companies. Thereafter, the AO had made the addition in the hands of the Assessee. 8.3 In the background of the aforesaid discussions, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), because the Ld. CIT(A) has rightly held that when the assessee had provided the AO with the latest address of the squared up cash creditor (as the assessee had no such control on them therefore they were unable to produce before the AO and no further enquiries have been done of any kind by the AO) Ld. CIT(A) found that even the basic step i.e. summons or query letter were not issued, to these cash creditor and not an iota of evidence has been collected and brought on record which indicates or prove that the cash credit money was assessee's own money, in such an event, he rightly held that AO is not correct in holding the ₹ 95,00,000 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee had furnished the details of sale / purchase made in FY 2009-10 and also the P L A/c for the FY 2009-10. After verification, the Ld. CIT(A) had deleted the addition. 9.3 In the background of the aforesaid discussions, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), because the Ld. CIT(A) has rightly held that AO was not justified in making addition of ₹ 15,00,000 on account of earnest Money, particularly when the property which was reflected as part of the inventory as on 31.03.2009 and the same is sold in the subsequent year for ₹ 35,00,000 and profit on the same has duly been reflected in and profit and loss account for assessment year 2010-11. Hence the addition of ₹ 15,00,000 made on account of earnest money was rightly deleted. Therefore, we find no infirmity in the impugned order passed by the Ld. CIT(A), hence, we uphold the same by rejecting the ground no. 5 raised by the Revenue. 10. With regard to issue raised in ground no. 6 relating to deletion of addition of ₹ 9,50,000/- made u/s. 68 in respect of unexplained cash deposit in Bank account by accepting the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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