TMI Blog2018 (1) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the addition. No interference is called for in the matter - Decided in favour of assessee - ITA.No.453/Del./2016, C.O.No.96/Del./2016 And ITA.No.453/Del./2016 - - - Dated:- 1-1-2018 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The For Revenue : Ms. Rachna Singh, CIT-D.R. For The Cross-Objector : Shri Sajjan Kumar Tulsiyan, Advocate Ms. Nisha Rachh, C.A., Shri Karan Kumar, C.A. ORDER PER BHAVNESH SAINI, J.M. The Departmental appeal as well as cross objections by Assessee are directed against the order of the Ld. CIT(A)-27, New Delhi, dated 09.11.2015, for the A.Y. 2012-2013. 2. Search and seizure and survey operation under section 132/133A of the I.T. Act was conducted on 12th April, 2012 in the case of the assessee-company along with other group cases of Aryan Group at various residential and business premises. The assessee- company filed return of income declaring loss of ₹ 2,75,807. The A.O. issued notices under section 143(2) and 142(1) of the I.T. Act. The A.O. observed that during the year under consideration, the assessee-company has received fresh share application money of ₹ 10,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y relied upon several decisions in support of the contention that it has received genuine share application money. The Ld. CIT(A) considering the material on record in the light of various decisions, deleted the addition and allowed the appeal of assessee-company. His findings in paras 8 and 9 of the order are reproduced as under : 8. Findings : I have considered the written submissions of the appellant, case laws and have gone through the assessment order passed u/s 143(3) r.w.s. 153A of the Act. I have also examined the submissions of the ARs w.r.t the assessment records that were requisitioned from the AO. The Appellant had received share application money of ₹ 10,63,50,000/-. The AO has treated the entire amount of ₹ 10,63,50,000/- u/s 68 of the IT Act . He has made this addition due to reason of non submission of Audited accounts of the party for the year under consideration. In the absence of availability of audited accounts the credit worthiness of the Investors could not be said to be established. The Appellant has failed to explain the Source of the Source . And that all the above Investors were based in Kolkata. 8.1. There is no doubt tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to delete the addition. The Ld. D.R. relied upon the following decisions. ( i) CIT vs. Independent Media (P) Ltd., (2012) 25 taxmann.com 276. ( ii) CIT vs. Nipun Builders Developers (P.) Ltd., (2013) 30 taxmann.com 292. ( iii) CIT vs. Ultra Modern Exports (P.) Ltd., (2013) 40 taxmann.com 458. ( iv) CIT vs. Empire Builtech (P.) Ltd., (2014) 366 ITR 110. ( v) CIT vs. Focus Exports (P.) Ltd., (2014) 51 taxmann.com 46. 6. On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that assessee-company filed complete details before A.O. as well as filed balance sheet of the Investor Company which was examined by the Ld. CIT(A) also. The transaction was conducted through banking channel. There were no adverse material found during the course of search to prove that share application money was bogus. A.O. did not make any enquiry on the documents filed by assessee-company and even did not ask for production of the Investor. The Learned Counsel for the Assessee relied upon the decision of the Hon ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd., 159 ITR 78 and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material was found during the course of search to prove that share application money received by the assessee-company was bogus or was an arranged affair of the assessee-company. We may refer to following decisions in support of our findings. 7.1. Decision of the Hon ble Supreme Court CIT vs Lovely Exports P.Ltd. [2008] 216 CTR 0195 in which it was held as under : If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of assessee company. 7.2. Decision of Delhi High Court in the case of CIT vs Kamdhenu Steel Alloys Ltd. Ors. 361 ITR 0220 (Delhi) in which it was held as under : Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be discarded or it is proved that it has created evidence, the Revenue is supposed to make thorough pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No adverse inference should be drawn if shareholders failed to respond to the notice by A.O. 7.7. Decision of Hon ble Madhya Pradesh High Court in the case of CIT vs. Peoples General Hospital Ltd., (2013) 356 ITR 65, in which it was held as under : Dismissing the appeals, that if the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented the company's own income from undisclosed sources. It was nobody's case that the non-resident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription and that the transaction was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applicants and the share application money had been received by way of account payee cheques. On appeal to the High Court: Held, dismissing the appeals, that the deletion of addition was justified. 7.9. Decision of Hon ble Delhi High Court in the case of CIT vs. Winstral Petrochemicals P. Ltd., 330 ITR 603, in which it was held as under : Dismissing the appeal, that it had not been disputed that the share application money was received by the assessee-company by way of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to the Assessing Officer. Since the applicant companies were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be non-existent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the genuineness of the transactions had been duly established by the assessee. 7.10. Decision of Hon ble Delhi High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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