TMI Blog2018 (4) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... Per S. S. Godara, Judicial Member This Revenue s appeal for assessment year 2010-11 arises against the CIT(A) - VIII, Ahmedabad s order dated 24.10.2013, in case no. CIT(A)- VIII/DCIT/Cir.4/19/13-14, reversing Assessing Officer s action making Section 68 addition of ₹ 9,99,99,900/- in the nature of share capital/share premium received from M/s. General Capital and Holding Company Pvt. Ltd., in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short the Act . Heard both the parties. Case records perused. 2. We notice at the outset that the CIT(A) has deleted the abovestated addition of share application/premium after taking into consideration assessee s submissions made during the course of lower appellate proceedings as follows: 2.2 Appellant's submission :- The relevant extracts from the submission of the appellant are reproduced here under:- The one and only ground of appeal effectively is with regard to the addition of ₹ 9,99,99,900/- u/s. 68 of the Income Tax Act. The Assessing Officer on Page-3 of the Assessment Order has reproduced the facts wherein the assessee submitted complete details as called for by the Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch, 2010 is enclosed from Page 8 to 45. (2) The assessee had been assessed to Income Tax continuously and till Asst. Year 2009-10 there has been no addition whatsoever like this. For this Asst.Year 2010-11 the Assessing Officer after issuing notice u/s. 143(2) and 142(1) issued show cause notice and thereafter summons for inquiries in the investing company. Copies of which are enclosed as per Page 46 to 69. (3) As stated above, the Principal Officer of said investing company General Capital and Holding Company Pvt. Ltd. appeared and filed copy of accounts in his books of accounts and copy of bank statement of the said company. Copy as filed before the Assessing Officer are enclosed herewith from Page 70 to 79. The investing Company General Capital and Holding Company Pvt Ltd has also submitted the Confirmation of Account , Audited Accounts , Income Tax Returns and copy of PAN card of all the shareholders of investing Company vide letter dated 18.03.2013 submitted on 20.03.2013. Copy of the said letter is enclosed as per page 80. (4) The assessee also encloses copy of account of the said company in the books of the appellant company and also the copy of the bank sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Capital and Holding Company Pvt. Ltd., appeared in person and confirmed the investment given by cheque and explained the source by showing bank statement. (ii) High Court of Delhi in the case of CIT vs. N.R. Portfolio (P) Ltd. 29 Taxmann.com 291 (Delhi) In this case the assessee company was a share broker and claimed that during the year if received certain amount from seven share applicants. On investigation if was found that the share applications were received on 18-2-2004 but shares were sent to parties only on 15-6-2004. Despite issue of summons u/s. 131 parties did not attend. The assessee had not shown any transactions in stock and assessee's bank account showed large amount of cash deposits and withdrawals. On facts the addition is sustained by the High Court. As against this in appellant's case the Investing company immediately appeared without Summons and showed all the deposits and credits in bank account. Not a single cash deposit or cash withdrawal. The Assessing Officer is totally wrong in mentioning that there are cash withdrawals. In fact the source of fund, identify, genuineness and creditworthiness were proved by the Investing Company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did not give. Before C.I.T. (Appeals) assessee filed copies of ration cards, affidavits and papers of alleged creditors . In remand report the Assessing Officer stated that these documents were not sufficient to prove genuineness and creditworthiness. However, CIT (Appeals) deleted the addition. Held the deletion of addition by CIT(Appeals) is not justified as identify of loan creditors and capacity to advance were never proved. In appellant's case the appellant is a listed Public Company and had received more than ₹ 54.67 crores as Public Issue. The Investing company, who had given ₹ 9,99,99,900/- had shown all evidences of genuineness and creditworthiness which could not be disproved by the Assessing Officer. (vii) High Court of Calcutta in the case of CIT vs. Precision Finance (P) Ltd. 208 ITR 465 (Cal) Huge cash creditors were found in accounts of assessee being a loan- financing company. Assessee gave only Income Tax PA No. and File No. of creditors. Tribunal deleted the addition on the ground that identify of creditors were proved. High Court held that Tribunal has failed to fake in to account all the three ingredients, namely; identif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear. The AO held that the creditworthiness and the genuineness of the transaction were not proved by the appellant and accordingly made the addition under section 68 of the Act for the above amount. The appellant has submitted that- all the three ingredients such as, credit worthiness, genuineness and the identity of the share applicant have been proved and therefore, the addition should not have been made by the AO. During the course of appellate proceedings, the assessment records were also obtained from AO and the same have also been examined by me to ascertain the facts correctly. The share applicant company, M/s General Capital has been duly confirmed the fact of making investment in the appellant company. The amounts have been received through banking channel. The same are duly reflected in the annual accounts of that company. The extracts of the bank statement which have been filed before me during the course of appellate proceedings as well as before the AO clearly show that there are no cash deposits as mentioned by the AO in the assessment order. The observation of the AO that the cash has been deposited and subsequently cheque were issued is factually incorrect. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rden of explaining source of the share application money; accordingly, it deleted impugned addition - Whether, on facts, impugned order of Tribunal did not suffer from any legal infirmity so as to warrant interference - Held, yes, In favour of assessee 3. CIT vs. Ambuja Ginning Pressing and Oil Co. (P.) Ltd. [2011] 332 ITR 434 (GUJ) Section 68 of the Income-tax Act, 1961 - Cash Credits - Assessment year 1998-99 - Whether where assessee received share capital and deposits from its shareholders and had established identity and creditworthiness of shareholder and depositors by furnishing complete particulars of payments like cheque numbers and date, extract of bank passbooks, explanation of credits appearing in bank passbook, it could be said that assessee had proved genuineness of transaction warranting no addition under section 68 - Held, yes [In favour of assessee] . In view of the above factual circumstances and the above mentioned judgements of honourable Gujarat High Court, it is held that the appellant Company has clearly explained the source of share application money received by it during the year. No addition on account of the fact that the share applicant mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as hon ble apex court s judgments in Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) is also referred to in support of the Revenue s sole substantive ground seeking to revive the impugned addition. 4. Learned Authorized Representative on the other hand places strong reliance upon the CIT(A) s above extracted findings deleting the impugned addition. His case is that the assessee has duly proved all three components of identity, genuineness and creditworthiness of the share application/premium in question to have come from the group entity hereinabove alongwith all of its necessary details. He then seeks to affirm the lower appellate findings deleting the impugned addition. 5. We have given our thoughtful consideration to rival submissions. There is no dispute that the sole issue between the parties is about correctness of the impugned Section 68 addition of ₹ 9,99,99,900/- as made in the course of assessment and deleted in the lower appellate proceedings. The Revenue s case is that the Assessing Officer had rightly disputed the genuineness / creditworthiness element in the said sum which is contested at the assessee s beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g M/s. General Capital and Holding Company Pvt. Ltd. to have first deposited cash sums followed by its reinvestment in assessee s share holding. The Revenue has failed to indicate any such material. 6. Ms. Vasundhra Upmanyu at this stage reiterates the above case law in Revenue s favour (supra). We find that the above co-ordinate bench s decision in Nakoda Fashion Pvt. Ltd. (supra) deals with case wherein the investor company(ies) had turned out to be shell entity without any genuineness/creditworthiness. Latter two case laws in Sumati Dayal and Durga Prasad More (supra) settle the law regarding genuineness of an explanation in light of human probability and appreciation of relevant details on record. The Revenue fails to indicate any mis- appreciation of evidence at the CIT(A) s behest during the course of lower appellate proceedings. We rather find that the CIT(A) s directions to the Assessing Officer to pass the relevant information to assessee s group concerns Assessing Officer sufficiently protect Revenue s interest so far as the impugned addition is concerned. Learned CIT.D.R s. further reliance on all the case laws discussed in assessment order is also without any signifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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