TMI Blog2018 (1) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A)-8, Mumbai and it relates to the assessment year 2007- 08. The revenue is aggrieved by the decision of Ld CIT(A) in deleting the addition of ₹ 41.00 lakhs relating to Share application money made by the AO u/s 68 of the Act. 2. The assessee is doing real estate business. The revenue carried out search operations in the case of a person named Shri Praveen Kumar Jain and it was revealed that he and his group of companies were providing accommodation entries in the form of bogus investment, share application money etc. It was noticed that the assessee has received from the companies belonging to Praveen Kumar Jain, share application money to the tune of ₹ 41.00 lakhs a detailed below:- Name of share holders Amount Rs. M/s. Khush Hindustan Entertainment Ltd. 11,00,000/- M/s. Alka Diamond Industries Ltd. 10,00,000/- M/s. Javda India Impex Ltd. 5,00,000/- M/s. Yash-V-Jewelers Ltd. 5,00,000/- M/s. Vanguard Jewels Ltd. 5,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marized above and the relevant case laws pertaining to the issues to be decided. 5.1 Ground Nos. 1 2 5.1.1 These grounds of appeal pertains to addition of Rs. 41,00,000/- u/s. 68 being share application/share premium received by the appellant from the following parties : Name of share holders Amount Rs. M/s. Khush Hindustan Entertainment Ltd. 11,00,000/- M/s. Alka Diamond Industries Ltd. 10,00,000/- M/s. Javda India Impex Ltd. 5,00,000/- M/s. Yash-V-Jewelers Ltd. 5,00,000/- M/s. Vanguard Jewels Ltd. 5,00,000/- M/s. Hema Trading Co. Pvt. Ltd. 5,00,000/- Total 41,00,000/- 5.1.2 According to the Assessing Officer the share applicants were not engaged in genuine business activities. At para 11 of his order, the Assessing Officer has referred to one Shri Praveen Kumar Jain as one of the leading entry providers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. In the recent case of Green Infra Ltd. v. ITO [TS-420- ITAT-2013(Mum)] Hon'ble ITAT Mumbai held that if the genuineness and identity of the depositor is established and the transaction was carried out through banking channels, the transaction cannot be taxed under section 68 of the Act. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of the shareholders whether they want to subscribe to shares at such a premium or not. In the absence of any restriction from any law in force, the revenue cannot question the charging of premium. In the instant case, the Assessing Officer has expressed doubts as to why anyone would want to pay heavy premium to a company like the appellant. This approach is not supported by the decision of Hon'ble ITAT. 5.1.4 The Hon'ble Supreme Court in case of C/7 v. P. Mohanakala [2007] 291 ITR 278/161 Taxman 169 held that the expression assessee offers no explanation means where the assessee offers no proper, reasonable and acceptable explanation as regards the sum found credited in the books maintained by the assessee. It further held that the opinion of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the subject has been illustrated in a number of decisions prior to 1968. Hon. Supreme Court, in Kale Khan Mohd. Man if Vs. CIT (supra), pointed out that the onus on the assessee has to be understood with reference to the facts of each case and proper inference drawn from the facts. The law after Section 68 is not different. If the prima facie inference on the fact is that the assessee's explanation is probable, the onus will shift to the Revenue. In this case, the appellant had shown the impugned amount as share application/premium. The evidences are not disputed by the AO. Thus, prima facie, the explanation of the appellant is probable. The AO has not shown anything that can dispute the fact of share application/premium into appellant's books, from an identifiable source, through banking channels. 5.1.7 The law does not expect the impossible on the part of the tax payer as was pointed out in Life Insurance Corporation of India vs. CIT (1996) 219 ITR 410 (SC), although pronounced in a different context. All that matters is that the explanation is prima facie reasonable. If it is so, it cannot be rejected on mere surmises. It was so held in CIT vs. Bedi Co. Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases by merely relying on statements of third parties recorded under survey proceedings, was not sustainable. 5.1.11 The Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise (2015) 281 CTR 0241 have held: 'Not allowing assessee to cross-examine witnesses by Adjudicating authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which make impugned order 'nullity as it amounted to violation of principles of natural justice . 5.1.12 The Assessing Officer has acknowledged the above mentioned letter dated 19/03/2015 24/03/2015 whereby details and evidences were submitted by the appellant. He has not disputed them nor has he mentioned them in the assessment order. In the context of the body of unchallenged documentary evidence and details submitted by the appellant, the same could not be rejected merely on the ground that there were no responses to notices u/s. 133(6), more so, when the Assessing Officer has accepted other aspects of the audited accounts of the appellant. 5.1.13 In Balaji Textile Industries (P.) Ltd. v. ITO (1994) 49 ITD 177 (Mum.)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged its onus by placing complete evidences on record, and if at all some discrepancy was noted in the accounts of shareholder company, then addition could be made in the hands of the shareholder only and not in the assessee company. In support of its claim, the assessee relied upon judgment of Hon'ble Supreme Court in the case ofCIT vs Lovely Exports P Ltd 216 CTR 195. But the assessing officer was not satisfied with the submissions of the assessee, he pointed out some discrepancy in the balance sheet of M/s. Buniyaad Chemicals Ltd. and treated amount of shares capital as unexplained cash credit u/s 68 of the Act, and added same to the income of the assessee. But before doing so, the AO neither provided opportunity of cross examination of his witness, as was demanded by the assessee, nor he brought on record any other adverse material to controvert the evidences placed on record by the assessee. It is worth noting here that the AO had made direct inquiries with M/s Buniyaad Chemicals u/s 133(6), in response to which confirmation was filed by the said company. But Ld. AO preferred to rely upon the 'statement' of Mr. Mukesh Choksi and disregarded all the evidences filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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