9911796707
Advanced Search 
TMI Blog2018 (4) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... raj Vijayavargia is a genuine transaction of sale of shares as against the stand of the Assessing Officer who holds the view that the said sale of shares is a sham transaction and entries made in the books of account of the as ses see company and the two group sister companies, transfer of shares, registration of shares, board of directors resolution, etc are colourable arrangements designed to camouflage the sham transaction as genuine. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the true nature of the transaction and the subs tance of the case and in bel ieving the f raudulent arrangements made by the assessee to show the transaction as genuine. 4. The appel lant craves leave to add, amend al ter or delete any grounds of appeal." 3. The only effective issue in the various grounds of appeal by the revenue is against the deletion of addition by the Ld. CIT(A) as made by the AO under section 68 being the unexplained cash credit. Ground Nos.2 & 3 are in support of ground No.1 and are being dealt with accordingly. 4. The brief facts are that assessee filed return on 27.06.06 declaring income of Rs. 3,79,387/- which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO and the written submissions made by the AR of the appellant and there is merit in the above arguments of the appellant. 4.3. It is not the case of the AO that the source of the credit in the books of accounts of the appellant company is not proved. The transaction of the sales of the shares of M/s. Sharda Cornpro Pvt. Ltd. and M/s. Silvershine Impex India Pvt. Ltd. to Shri Giriraj Vijayvargia is a matter of record. The sale and purchase of the shares in question of the above two companies to Shri Giriraj Vijayvargia is a normal sale transaction which is a par t of sales for the period and properly accounted for in the books of accounts of the appellant company for the period under consideration. This is an important fact which has been not taken into consideration by the AC. 4.4. There are many other vital factors which the AC has not taken into account while treating the transaction of these sale of shares as sham transaction. It is an admitted fact that the seller of the shares i.e the appellant company, has accepted having sold the shares and the purchaser of the shares Shri Giriraj Vijayvargia has accepted of having made the payment of Rs . 50 lakhs through cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hine Impex India Pvt. Ltd. were allotted and transferred in the name of Shri Giriraj Vijayvargia. These facts are not only duly recorded by the above companies in their books of accounts but also on record with the Registrar of the Companies in the annual returns filed by the above companies for all the subsequent years since A.Y. 2006-07. In addition to the above, the AR of the appellant has also placed on record copy of the board resolution passed in the Board meeting of the above two companies dated: 04/12/2005 and 20/12/2005 confirming the transfer of the 9900 and 800 shares of the above companies in the name of Shri Giriraj Vijayvargia (placed at pages 35 and 36 of the paperbook). Further, the AR has also placed on record the share transfer certificate forms duly signed by Shri Giriraj Vijayvargia for the transfer of the shares of the above companies (placed at pages 37 to 39 of the paperbook). The money paid by Shri Giriraj Vijayvargia for the purchase of the shares in question amounting to Rs. 50 lakhs was credited to the bank account of the appellant company on 28/11/2005 in their bank account no. 3739002100011616 maintained with Punjab National Bank, M.G. Road Branch, Than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be brushed aside summarily without going into the merits of these documents. Before rejecting these documents, the onus l ies on the AO to prove, by placing contrary documentary evidences on record, that the evidences placed on record by the appellant are false. In the absence of proving the same to be bogus or false, no contrary view can be taken on these documents on the basis of presumptions and surmises. It is also a matter of record that even as on date, the shares in question are in the name of Shri Giriraj Vi jayvargia in the shareholders register as well in the records of the Registrar of the Companies. 4.8. While deciding the issue at hand, the AO simply proceeded to rely on the report of the assessing of f icer of Mumbai, which was as a result of investigation carried out by the investigation uni t in respect of some other par ties. The outcome of investigation car ried out in the case of some other par ty and the conclusion drawn, cannot be applied ipso facto to al l other cases without carrying out independent investigation relating to the appellant company. Simply relying on above repor t, the AO has concluded that the transaction of purchase / sale of the shares is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect deal of the sale of shares with the purchaser and there was no need for the contract note. There is a merit in the above argument of the appel lant because if the transaction is through any broker, then the contract note is written. But here, the appellant company i tself is in the business of trading of shares and has entered into the transaction in question directly with the purchaser and hence, there was no need for such a contract note and the transaction can be carried out directly between the par ties to the transaction. 4.12. In view of the facts and circumstances explained above, in my considered opinion, the action of the AO adding back an amount of Rs. 50 Iakhs to the income of the appellant company u/s. 68 as unexplained investment, is not in order. The transaction of the sale purchase of shares of M/s. Sharda Cornpro Pvt. Ltd. and M/s. Si lvershine lmpex India Pvt. Ltd. between the appel lant company and Shri Giriraj Vi jayvargia is a transaction of sale of shares, which has been properly accounted for in the books of accounts of the appel lant for the period under consideration. The evidences placed on record l ike crediting of the money paid by Shri Gir iraj V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the redemption value was one crore. The Ld. A.R. submitted that these shares were issued by said two companies at a premium were merely to save the stamp duty. The Ld. A.R. submitted that these shares were sold to Shri Giriraj Vijayvargia for a consideration of Rs. 50 lakhs and the assessee incurred loss in the said transaction. The Ld. Counsel for the assessee vehemently submitted before us that the copies of statement of Shri Giriraj Vijayvargia were not provided to the assessee till date except the extract in the assessment order. There was no opportunity of cross examinations of Shri Giriraj Vijayvargia was ever granted to the assessee by the AO. The Ld. A.R. submitted that even if Shri Giriraj Vijayvargia gave a statement during the course of search in which the name of the assessee was clearly mentioned but that has no legal sanctity if assessee is not given the copy of statement and not allowed cross examination of the said person. As regards the high premium, the Ld. A.R. submitted that the shares were to be deemed at a premium and premium collected was to be repaid to the investor and thus tried to justify the premium in terms of redemption of the said shares. As rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modation entries given by Shri Giriraj Vijayvargia. After perusing the order of Ld. CIT(A), we find that each and every aspect has been touched upon on which the AO has relied while making the addition. A detailed and comprehensive findings has been given by Ld. CIT(A) as is reproduced as above and finally the Ld. CIT(A) deleted the addition by holding that the conclusion of the AO treating the transaction as sham was not proved on the basis of evidences on record and thus the Ld. CIT(A) narrated the said conclusion as derived on the basis of assumptions and surmises. The Ld. CIT(A) also noted that assessee was not provided a copy of statement nor any cross examination was allowed to the assessee. Under these circumstances, we are of the view that Ld. CIT(A) has taken into account each aspect of the matter of investments in preference shares and sales thereof into account and only after noticing the infirmities and defects in the investigation/enquiry by the AO,a conclusion was reached by the Ld. CIT(A) in the appellate order which is correct and deserved to be upheld. Accordingly, we uphold the order of Ld. CIT(A) by dismissing the appeal of the Revenue. Order pronounced in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
