TMI Blog2017 (3) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... an opportunity to assessee to discharge its initial onus by providing the identity, creditworthiness and most importantly genuineness of the transactions as per section68 of the act. After the discharge of initial onus by assessee, the Ld. AO may conduct any enquiry that he may deem fit and proper to inquire about the veracity of the evidences/information submitted by the assessee in respect of the credit entries. Ld. AO may take all necessary steps in order to identify, examine the creditors and decide the issue on merits neatest say that adequate opportunity may be granted to the assessee to support the case. - I.T.A. No. 3122/Del/2012, I.T.A. No. 3123/Del/2012, I.T.A. No. 3124/Del/2012, I.T.A. No. 3125/Del/2012, I.T.A. No. 3126/Del/2012, I.T.A. No. 3127/Del/2012, I.T.A. No. 2998, 2999, 3000, 3001, 3002, 3003/Del/2012 - - - Dated:- 27-2-2017 - SMT. BEENA A. PILLAI, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Sh. C. S. Aggarwal, Sr. Advocate For The Department : Ms.Nirupama Kotru, CIT, DR. ORDER PER BEENA A. PILLAI, JM: 1. This is a batch of 12 appeals filed by assessee as well as revenue, relating to assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is somewhat unclear; while the Revenue is contending that the Assessee is liable to pay tax on the amount credited in its books as under Section 68 of the Act. It is also deleted the amount invested by the Assessee in shares of SVP Group companies on the ground that the Assessee is only a conduit. The AO has been influenced by the fact that several companies who had subscribed to share capital of SVP Group aggregating a sum of ₹ 85,48,50,000/- out of which shares subscribed/purchased at an aggregate value of ₹ 81,19,32,000/- had subsequently been sold/transferred to other SVP concerns/promoters for a sum of ₹ 10,38,65,200/-. Resultantly, the shareholders of SVP group had acquired shares corresponding to funds of ₹ 81,19,32,000/- infused in SVP Group of companies for an aggregate consideration of ₹ 10,38,65,200/-. Thus, acquiring hidden capital of 70,80,66,800/- without payment of corresponding taxes required to generate that wealth. This fact had led the AO to believe that all the companies that had subscribed to the share capital of core SVP Group companies and had subsequently transferred them at a fraction of the value, had acted as a conduit for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions claimed to have been entered into by it. Clearly, the ITAT has not examined the facts relating to the Assessee. The ITAT had simply proceeded on the basis of the facts obtaining in the case of Pranjul Overseas (P) Ltd. on the statement of the parties that the facts of that case were similar to the facts in the case of the Assessee. However, an examination of the documents filed before us, it does not appear that the facts in the case of Pranjul Overseas (P) Ltd., were similar to that as obtaining in the present case. While it appears that in the case of Pranjul Overseas (P) Ltd., the Assessee disputed that any search took place at its registered office, the written submissions filed by the Assessee in this case, does not indicate that any such dispute was raised. Even before us it has not been contended that no search took place at the declared registered office of the Assessee. 28. In the circumstances, we find it is necessary to remand the matter to the Tribunal to examine the facts relevant to the Assessee for determining whether an addition under Section 68A of the Act was sustainable. Needless to mention that it would also be open for the ITAT to remand the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade without any evidence by only to protect the revenue leakage, there does not arise any verification of the creditors for assessment year 2003-04 and 2004-05. 12. Accordingly appeal filed by assessee on Limited grounds remanded stands allowed and appeal filed by the revenue stands dismissed. Assessment year 2006-07 to 2009-10 13. Additions made by Ld. AO in respect of alleged unexplained credits in the bank account vis-a-vis investment made with SVP group for the assessment years 2006-07 to 2009-10 are tabulated year under: Sr. No. Particulars Assessment Years 2006-07 (Rs.) 2007-08 (Rs.) 2008-09 (Rs.) 2009-10 (Rs.) ii) Unexplained credits in the bank accounts 2,89,65,6807- 4,93,20,4987- 2,50,67,3247- 2,18,05,7337- iii) Less: Investment made with SVP Group 51,00,0007- 84,00,0007- ----- ------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n rotating undisclosed investment of beneficiaries of others. 18. We have perused arguments advanced by both sides in the light of the records placed before us. 19. Before proceeding to discuss above submissions, a brief recapitulation of legal position as regards section 68 of the Act is necessary. Under section 68 of the Act, assessee has to offer an explanation in regard to any sum credited in the books of accounts. This could be any sum whether in the form of sale proceeds or receipt of share capital money. Thereafter, Ld. AO is to enquire whether, explanation offered by assessee is satisfactory or not. Truthfulness of the assertion by assessee regarding the nature and source of credit in its books of account can be examined by Assessing Officer subsequently. Where identity and creditworthiness of depositors along with genuineness of transaction stands established and it is shown that they had in fact invested their own money in the purchase of assessee's shares, such amount received would not be charged to tax. Where no explanation at all or explanation offered is unsatisfactory, provision of section 68 may be invoked and such capital or revenue income may be taxed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vits filed by assessee are not controverter by assessin officer, they should be accepted. We have carefully considered the argument advanced by the Ld.Counsel and are not impressed with that. Had these affidavits been of the nature which discharged the initial onus cast upon the assessee to identify the creditors and also prove creditworthiness and genuineness of the transaction, we could have said that, unless these affidavits are proved contrary by Ld. AO, it would be accepted as it is. However that is not the case in the present facts before us. 23. Apart from these details the assessee has not filed any other documents which could have established genuineness, identity and creditworthiness of creditors neither have assessee produced creditors before assessing officer. Ld. Counsel has placed reliance upon CIT v. Lovely Exports P. Ltd. [2008] 216 CTR 195 (SC), wherein it has been held that, if the share application money is received by assesseecompany from alleged bogus shareholders, whose names are given to Ld. AO by assessee, then Department can proceed to reopen their individual assessments of alleged shareholders, in accordance with law. Ld. Counsel submitted that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be construed in favour of assessee whereas it supports the contentions of the revenue. Further it is held that it was in the context of public issue made by the company and not in the case of issue of shares other than public issue. 26. During the course of the arguments, Ld. Counsel had also placed heavy reliance upon decision of Hon ble Delhi High Court in the case of CIT vs. Sofia Finance Pvt. Ltd., reported in (1994) 205 ITR 98. But on perusal of judgment we observe that in the context of section 68 of the Act, Hon ble court observed as under: (i) The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels ; (3) the creditworthiness or financial strength of the creditor/subscriber'. (ii) has also been held that use of words any sum found credited in the books in section68 indicates that the section is very widely worded and the income tax officer is not precluded from making an enquiry as to the true nature and source of sum credited in the accounts books even if it is credited as receipt of share applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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