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Income Tax Officer, Ward 11 (2) , Kolkata Versus M/s. R.B Horticulture and Animal Projects Co. Ltd

2016 (2) TMI 742 - ITAT KOLKATA

Addition u/s 68 - receipt of equity share capital , preference share capital and preference share application money - Held that:- We find that the assessee had given the complete details about the share applicants clearly establishing their identity , creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries from the assessing officers of the concerned share applicants for which every details w .....

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ir existence and also the source of share application money received. - Decided against revenue - ITA No. 632/Kol/2011 A.Y: 2007-08 - Dated:- 20-1-2016 - Shri M.Balaganesh, Accountant Member, and Shri S.S.Viswanethra Ravi, Judicial Member For The Appellant: Shri Pinaki Mukherjee, JCIT, ld.DR For The Respondent: None appeared ORDER SHRI M.BALAGANESH, AM This appeal of the revenue arises out of the order of the Learned CIT (A),XII, Kolkata in Appeal No. 816/XII(2)/09-10 dated 22-02-2011 for the as .....

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e. 3. The brief facts of this issue is that the assessee is a public limited company incorporated on 2.1.2007 and accordingly the Asst Year 2007-08 is the first year of assessee and is engaged in the business of poultry farming and other allied business. During the asst year under appeal, the assessee raised the following share capital :- a) 100000 Equity shares of ₹ 10 each from totally seven persons - Rs.10,00,000 b) 25000 Redeemable Preference Shares of ₹ 100 each from 837 persons .....

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in Form No.2 was duly filed with the Registrar of Companies. Certain share applicants were also produced before the Learned AO together with their respective identity and address proof. Equity Share Capital - ₹ 10,00,000/- The Learned AO observed that the shares were allotted to Sri Ranjit Kr. Baidya (Managing Director) , Sri Sujit Baidya (Director), Ms. Swapna Baidya, Kaushik Baidya, Dipayan Roy, Chandana Baidya and Alakesh Sardar totaling to ₹ 10,00,000/-. The Learned AO called for .....

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res were allotted by the assessee. On obtaining the details of the names and addresses of the share applicants, the Learned AO sought to obtain information u/s 133(6) of the Act from Bishnupada Sarkar, Nirmal Patra, Lipika Pati and Nagendra Nath Pramanik. He found that the reply was received from Nagendra Nath Pramanik stating that he had subscribed to preference share capital to the tune of ₹ 10,000/- with the assessee company but did not produce any evidence regarding the source of fund. .....

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ctions. The Learned AO accordingly observed that the assessee had not proved the identity and creditworthiness of share applicants and had not established the genuineness of transactions and hence the monies received by the assessee company in the guise of subscription of preference share capital is to be treated as unexplained cash credit u/s 68 of the Act. Advance Preference Share Capital - ₹ 25,00,000/- The Learned AO observed that the assessee had received sum of ₹ 25,00,000/- fr .....

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ital. The Learned AO accordingly observed that the assessee had not proved the identity and creditworthiness of share applicants and had not established the genuineness of transactions and brought the advance towards preference share capital as unexplained cash credit u/s 68 of the Act. 4. On first appeal, the assessee stated that all the details of share applicants have been produced before the Learned AO. The assessee stated that it is engaged in agro based industry and almost all the share su .....

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ch cases, the confirmations were filed by the assessee before the Learned AO. The share applicants also confirmed that the sources of funds are from their agricultural activities. In some cases, the parties were living in remote villages in Sunderbans area and hence the postal department had returned the notices unserved. Certain parties like Sri Nirmal Patra, Sukdev Das, Bhupal Joddar, Manoranjan Monda, Bishnupada Sarkar and Niranjan Sarkar came personally to meet the Learned AO and submitted t .....

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t year. The assessee has complied with the legal formalities by filing Form 2 and Form 5 to Registrar of Companies which were also produced before the Learned AO. The copies of voter ID cards and share certificates were also enclosed before the Learned AO to establish the existence of share applicants. The cash flow statements of share applicants were also produced before the Learned AO. The Learned CIT(A) found that the Learned AO has added the entire share capital and advance preference share .....

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deleting the addition of ₹ 10/- lakh on account of share capital though genuineness and creditworthiness of transactions could not be proved by the assessee. 2. ld. CIT(A) erred in deleting additions of ₹ 25 lakh towards redeemable preference share and ₹ 25 lakh advance against preference share without appreciating the merits of the case as well as not examining the identity, genuineness and creditworthiness. 3. Ld. CIT(A) erred in appreciating the feasibility of receiving such .....

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e is disposed off based on the arguments of the Learned DR and written submissions and paper book already available on record. The facts stated in the Learned CIT(A) were not controverted by the Learned DR before us. We find that the assessee had given the complete details about the share applicants clearly establishing their identity , creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries .....

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and for which the assessee had discharged the onus of proving their existence and also the source of share application money received. 6.1. We also find that the impugned issue is also covered by the decision of Hon ble Calcutta High Court in the case of CIT vs Roseberry Mercantile (P) Ltd in GA No. 3296 of 2010 ITAT No. 241 of 2010 dated 10.1.2011, wherein the questions raised before their lordships and decision rendered thereon is as under:- On the facts and in the circumstances of the case, .....

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e point involved in this appeal is covered by the said Supreme Court decision in favour of the assessee and thus, no substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed. 6.2. We find that the issue is also covered by the decision of Hon ble Delhi High Court in the case of CIT vs Value Capital Services P Ltd reported in (2008) 307 ITR 334 (Del) , wherein it was held that : In respect of amounts shown as received by the assessee towards sh .....

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