TaxTMI 
TaxTMI 
2018 (2) TMI 1149
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....ient to prove the creditworthiness of the said investgor. iii. On the facts and in the circumstances and in law, the Ld CIT(A) erred in not appreciating the fact that the burden of proof to establish that the investor had means & capacity to make such huge investment was not discharged at all by the assessee." iv. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in placing reliance on the judgment of Supreme Court in the case of Lovely Exports Pvt Ltd (216 ITR 195) (SC) without appreciating that the facts involved in this case cited supra are not applicable to the facts of the case of the assessee and are clearly distinguishable." v. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 6,64,32,810/- made u/s 68 of thel.T. Act towards share application money shown to have been received by the assessee company ignoring the ratio laid down by the juridictional Bombay High Court in the case of Major Metals Ltd. Vs. UOI (Writ Petition No. 397 of 2011, Order dated February 22, 2012). vi. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred i....
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....he money which has been substantiated both by assessee company and the statutory government body i.e. RBI and the nature of receipt is share application money and the source of the receipt is Ms. Rashna Fali Press and the assessee company has offered complete explanation of the nature and source of the transaction by providing identity of the transaction like inward remittance certificate, allotment of shares and name and address of the person including her PAN from whom the said credits have been received. That the assessee also relied on various judicial pronouncements namely CIT vs. Lovely Exports Pvt. Ltd. (SC) (216 CTR 195), CIT vs. M/s. Stellar Investments Company Ltd. (251 ITR 263) (SC), CIT v/s P. Mohankala (2007) 291 ITR 278 (SC) and also various other rulings of various High Courts and the Apex Court and stated that an analysis of the various judgement goes to show that assessee's burden is restricted to establish the existence of the share holders and not the capacity/ability. 5. Subsequently, the Assessing Officer asked the assessee to give the details of business activities of Ms. Rashna Press, her bank statement from which the funds have b....
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....ove are kept in juxtaposition, it is clear that the initial burden is upon the assessee to explain the nature and source of share application money received by the assessee. In order to discharge its burden, the assessee is required to prove The identity of the share holder, The nature and genuineness of the transaction, and the Creditworthiness of the Share applicant and the burden to prove credit worthiness is heavier in case the share application money is received by the Private limited Company. 7.0 To summarize the case Ms. Rashna Fall Press is a non-resident Indian residing in Dubai and has advanced an amount of Rs. 6,64,32,910/- by way of share application money to the assessee company. In this case the assessee has only submitted a copy of acknowledgment of filing return of income for AY 2010-11 of Ms.Rashna Fali Press wherein she has shown to have earned a meager income of Rs. 5,03,220/- which is not in proportion to the money advanced by way of share application. The copies of her Capital a/c, Balance Sheet, bank statement etc were not submitted. Besides this, the assessee has not filed any details/evidence as to her activities in Dubai and her source of inco....
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....orthiness of the creditor. 8. In view of the above facts and discussion, it is clear that the assessee has not discharged its onus to prove that the sum credited in its books of account amounting to Rs. 6,64,32,910/- towards share application money, as the burden to prove the same was on the assessee and the explanation offered by the assessee is not satisfactory as discussed above and therefore the sum credited in the books of accounts amounting to Rs. 6,64,32,910/- is added to the total income u/s 68 of the I.T. Act. 7. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) noted that the assessee has submitted additional evidence which were admitted and sent back to the Assessing Officer for verification. The assessee's rejoinder on the remand report of the Assessing Officer was also obtained by the ld. Commissioner of Income Tax (Appeals). The ld. Commissioner of Income Tax (Appeals) noted that in the additional evidence, the assessee has submitted a statement from a CA firm in UAE. The ld. Commissioner of Income Tax (Appeals) was of the opinion that there is no requirement of submitting balance sheet and profit and loss account in UAE. Hence, t....
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....ompany has received share application money of Rs. 6.64 crores from Ms. Rashna Fali Press, UAE based NRI. The Indian address of the said person is in Colaba, Mumbai. The address abroad as noted by the Assessing Officer in her confirmation letter was of PO Box at Dubai. In correspondence with R.B.I. the address shown was Taj Palace Hotel, Apt 1054, Al Rigga Road, P.O. Box 4221, Deira Dubai. Thus, the Assessing Officer has found that there is no proper evidence as to the permanent address of the resident/office of Ms. Rachna Fall Press in Dubai. The above detail duly corroborates the finding of the Assessing Officer in this regard. Furthermore, the return of income of Ms. Rachna Fall Press shows a meager income of Rs. 5,03,220/-. This meager income by no stretch of imagination justifies her creditworthiness to grant advance of Rs. 6.64 crores for share application money. No capital account, balance sheet, bank statement, etc. has been submitted in support of her creditworthiness. The assessee before the Assessing Officer has clearly stated that there is no requirement for proving the creditworthiness of the said person ....
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.... financial accounts/balance sheet which could have given undeniable evidence of her creditworthiness. The assessee has also not furnished the bank statement of said person. Reluctance on the part of the assessee and the said person to give proper evidence of the creditworthiness and also the failure to submit the copy of the bank statement clearly proves that the assessee has not discharged the onus of proving the creditworthiness. It is clear that the said Ms. Rashna Fali Press has not given proper details to justify the creditworthiness to grant the said advance of Rs. 6.64 crores. 14. The decision of Hon'ble Apex Court in the case of Lovely Exports (supra) relied upon by the ld. Counsel of the assessee and the ld. Commissioner of Income Tax (Appeals) was rendered on the totally different facts. Those were cases of corporate Indian entities granting share application, which is not at all the case here. The decision of Hon'ble Apex Court in the case of CIT vs. Smt. P. K. Noorjahan [1999] 237 ITR 570 (SC) relied upon by the ld. Commissioner of Income Tax (Appeals) is also not applicable. The said case law by no stretch of imagination lays down that the Assessing ....