TMI Blog2018 (8) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmity. A decision on the fact of ITAT can be gone into by this court only if a question has been referred to it which says that the finding of the tribunal on facts is perverse. - No substantial question of law arises - Decided against the revenue. - ITA No. 112, 110, 111, 113, 114, 115/2018 - - - Dated:- 7-8-2018 - Hon'ble Shri P.K. Jaiswal And Hon'ble Shri S.K. Awasthi, JJ. Shri V.N. Dubey, Advocate for the appellant Shri Sumit Nema, learned Senior Advocate with Shri G. Tiwari, Advocate for the respondent ORDER This order shall govern the disposal of ITA No.112/2017, ITA No.111/2017, ITA No.110/2017, ITA No.113/2017, ITA No.114/2017 and ITA No.115/2017. For the sake of convenience, the facts are borrowed from ITA. No.112/2017. 3. The present bunch of appeals have been filed by the revenue against the order dated 27.12.2017, passed by the Income Tax Appellate Tribunal, Indore Bench, Indore in ITA No.596 597 / Del / 2017, for the assessment year 2012-13 and 2013-14, whereby the learned Appellate Tribunal affirmed the order passed by the Commissioner Income Tax (Appeals) in First Appeal bearing No.18/16-17 and other connected appeals, and dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- (5% of ₹ 25 Crores) for Financial Year 2012-13 was added to the total income on the assessee company for infusion of accommodation entries as unexplained expenditure under Section 69C of the Act. 6. After the search the investigation wing issued notices under Section 131 (1A) of the Act to the investor companies and also to its Directors. The Directors and the four investor companies (except L.N. Industries Ltd) complied with the requirement as per the notices. They replied the notices accompanied with copy of balance sheets, copy of ITR Ledger Account etc. Investor companies confirmed the investment made by them in the share capital of assessee company. The investigation wing, Delhi was having some information relating to statements of Shrish Chandrakant Shah (SCS) and Sawan Kumar Jajoo (Jajoo) and who have stated that they were engaged through the web of various companies including the five companies who had contributed to the share capital of M/s. Bharat Securities (P) Ltd, in providing accommodation entries to various entities. The statements Mr. Jajoo were recorded on 18.12.2013 and 23.12.2013. On being asked by the investigation wing, the company consented to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. On 2.2.2016, the assessing officer issued show cause notice alleging therein that the assessee company received accommodation entries of ₹ 55 crores from five listed companies. In response to the show cause notice the assessee company, ie., BSPL submitted its reply dated 12.2.2016, refuting all the allegations of assessing officer and emphasised that the investor companies and their Directors had on several occasions filed confirmations and all supporting documents before the investigation wing as well as before the assessing officer confirming the investment in BSPL. The share of the investor companies were traded in Stock Exchange on regular basis. All the share applicant companies have submitted their audited balance sheets displaying the investment made by them in the share capital of BSPL. The investor companies had also furnished details of the source of capital investment. During the course of search on the assessee company Xerox copy of the share certificate, original counter foils were found and seized by the revenue. The assessee company has, therefore, relied very heavily on sub section 4A of Section 132 providing that all documents etc found during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Chandrakant Shah (SCS) and Sawan Kumar Jajoo (Jajoo). He stated that his company was not engaged in providing any accommodation entries and the investment of ₹ 40.75 crores was real, correct and genuine. He also stated that share capital was not invested in exchange of any cash. On 15.3.2016, the assessing officer issued show cause notice wherein it was informed that an adverse inference was being drawn against assessing company regarding share capital of ₹ 55 Crore. The assessing company filed its reply on 2.3.2016 and emphasized on the cross examination of the persons on whose statements the assessing officer has placed reliance against the assessing company. Copy of statement and Somabhai Sunderbhai Meena and Aadhaar Ventures India Ltd were also sought from the assessing officer, their cross examination were also demanded, however, opportunity of cross examination of such person was not granted nor copies of their statement were also given. The assessee company further stated that the assessee company can only contact the investor company who had contributed to the share capital. 11. Share capital had been contributed by the company and not by the Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cardinal principle of rule of natural justice was violated by these authorities by denying the assessee opportunity cross examine the witnesses. The appellate authority (A) exercising the powers available under Section 250(4) of the Act, summon all such persons by issuing the summons under Section 131. The appellate authority recorded the statements of the persons who appeared before her. The statement of Shrish Chandrakant Shah (SCS) was recorded by the appellate authority wherein he stated that he was not engaged in providing any accommodation entries and on the contrary he was in the business of providing consultancy services and data hub services to various companies. He was also engaged in purchase and sale of shares. He also stated that he did not know BSPL or its C.A. He disowned his earlier statement and stated that the same was recorded under fear. Sawan Kumar Jajoo (Jajoo) also appeared during the proceedings before first appellate authority and his statement was recorded by the appellate authority (A) wherein he stated that neither he had provided any accommodation entries to BSPL nor acted as a broker in any such transactions. He never introduced BSPL to Shrish Chandrak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the appellant company was found recorded and source of such investment was also explained. He stated that audited balance sheet of the company for both the years reflecting the investment made in shares of BSPL. These books of accounts were examined by CIT (A). He also stated that prior to making the investment a due diligence enquiry from a company secretary regarding BSPL was also made. He also stated that a share valuation report of shares of BSPL was provided to them. He also stated that his company subscribed 105000 shares @ of ₹ 1500/- per share in the Assessment Year 2012-13. He further stated that his company subscribed to 80,00,000 shares @ ₹ 125/- per share in the Assessment Year 2013-14 for the purpose of acquiring controlling stake in BSPL and thereby acquire control of its subsidiary company Chain House International (P) Ltd. he also stated that he knew BSPL and its Directors. He had visited their residence and also visited business premises of its sister concerns. He stated that Shrish Chandrakant Shah was their financial consultant and he did not know Shri Sawan Kumar Jajoo. His company had made genuine investment in BSPL. He also denied to have recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the factum of investment was found recorded and examined by appellate authority (A). He also explained the source of investment. He stated that his company is still holding the shares of BSPL. He also produced audited balance sheet of his company containing the details of investment made in BSPL and Naresh Kumar very well. He also stated that Shrish Chandrakant Shah (SCS) was working as a consultant of his company since 2013 and it is not correct to say that his company was controlled and managed by Shrish Chandrakant Shah (SCS) or his company was engaged in providing any accommodation entries. He never met any person namely Shri Sawan Kumar Jajoo and disassociated his company from any statement given by such person. He also submitted copy of the board resolution for subscription in the shares of BSPL and also submitted a copy of share certificate issued by BSPL and received by his company through post. 19. Shri Dhiresh Uttamchand Munver, Driector of M/s. Emporis Project Ltd. and M/s. Yantra Natural Resources Ltd. stated that he knew BSPL and its directors since 7-8 years. He also know other business entities of Naresh Kumar namely Rohtak Chain and Chain House. He also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case by ignoring the said statements. 20. After considering the entire factual scenario of the case, the appellate authority found that the earlier statements did not merit acceptance for the reasons such as earlier statements were recorded behind the back of the assessee and also behind the back of the AO. No opportunity of cross examination was allowed despite specific and repeated requests. The earlier statements were recorded much before the search on the appellant company. BSPL was not in the picture and was not an issue during these statements. In such statements none had named BSPL and held that the statement recorded by the CIT (Appeals) are more authentic in all respect and held as under :- I examined this issue in detail and found that there is no evidence to prove, firstly generation of unaccounted cash and transfer of such cash to others for obtaining accommodation entries. In have also found that during the course of search at the appellant company and also on its associate companies and residence of the directors when every corner of the house was searched, not a single paper, evidence or record was unearthed by the search team which support the all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director of major investor company namely M/s. Aadhar Ventures India Ltd which was recorded by the AO during assessment proceedings, the CIT(A) arrived to the following findings :- The appellant company had purchased one director of Aadhaar Ventures namely Shri Somabhai Sunderbhai Meena before the AO during assessment proceedings. He confirmed that his company had invested a sum of ₹ 40.75 crores in the share capital of the appellant company in FY 2011 -12 and 2012-13. he produced the books of accounts of the company and was thoroughly examined by the AO. This investment was found recorded in the books of accounts as verified by the AO. He explained the source of investments with reference to the books of accounts. Such source was then examined by the AO also obtained copies of the necessary ledger accounts with reference to the source of investments. He explained that his company was never engaged in providing accommodation entire and on the contrary was carrying on real business where the turnover runs into approx171 crores and 133 crores in FY 2011-12 and 2012-13 respectively. He also produced the bank accounts of his company with reference to the share capital invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been received through banking channel. All the five companies have their definite addresses. Notices and summons have been served and complied with. No involvement of cash has been found anywhere. Even after conducting extensive enquires from various bank accounts of the source of the investor companies up to 6-7 levels no cash deposit was found in any of the bank account of different parties. All the five companies are assessed to tax and have been allotted permanent account numbers. All of these are listed in Bombay Stock Exchange. All the five companies have produced the audited balance sheets and such Balance Sheets have declared investment made by them in the appellant company . Transfer of funds by Bharat Securities to the associate concerns is no ground for holding that the associate concerns had paid unaccounted money for acquiring any accommodation entries. Hence there is no ground for making the substantive addition in the hands of the associate concerns. It also clearly establishes that the AO himself was not sure as to who had paid the alleged unaccounted cash, if any . In view of the above facts and circumstances, I hold that the share capital has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, the director Naresh Kumar reached at the designated placed at Mumbai on time to cross examine the witnesses. However, the department has withdrawn such opportunity. This opportunity was never provided to the appellant despite repeated requests during assessment proceedings. I hold that reliance on statements without cross examination is against the settled principle of natural justice. Even otherwise SCS and others have appeared before me and admitted that SCS was not managing and controlling these companies for the purpose of providing accommodation entries. All the companies are engaged in the real business having substantial turnover, paying rent, salaries, electricity bill etc. One of the companies is also paying excise duty and sales tax. Some of the companies have taken secured loans from banks. As I understand the reference to key associates could be the employee of SCS namely Chandan Kumar Singh. In the statement recorded by me he has denied all such allegations. He has admitted that SCS was not involved in any business of providing accommodation entries and nor he has ever seen SEC Controlling these five companies. Hence I do not agree with the conclusion arrived at b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority has held as under :- I do not find myself in agreement with the AO in as much as this conclusion does not help the AO in any manner since the appellant have not received or acquired any share capital from Manish Mirgh. Infect I find that the appellant company is not concerned in any way to Manish Mirgh and nor it had received any fund from Manish Mirgh. Manish Mirgh has also in his statement not given or stated the name of the appellant company. 30. On the basis of statements of Shrish Chandrakant Shah (SCS), in respect of the allegation that Shrish Chandrakant Shah (SCS) was utilizing companies to provide accommodation entries to BSPL the appellate authority has held as under :- I have recorded the statement of SCS who had denied use of such companies for the purposes of providing accommodation entries. He had also explained the availability of books of accounts and other materials of different companies in his office premises. He has stated that he was providing data hub services and financial consultancy services to different companies. He has also given the reasons for earlier statement. I am unable to rely on the statement recorded earlier. I cannot reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion is rejected.' 33. In respect of allegation of the assessing officer that BSPL could produce only one director of Adhaar and even the director produced was not the director or associated with the company when the share application money was received, the appellate authority has held as under :- The appellant company had received the investment from the investor companies and not from the directors. The persons who was a director earlier would probably not be available on the date of summon and also the company may not be able to force him to appear before any authority. In my view the position of earlier or present director has not significance. What is important is the books of accounts and not the status of the director earlier or the present. I have also summoned Jils Raichand Madan who was a Director at the time of investment and continued to remain till date. He produced the books of accounts of the company and confirmed the investment. I have also examined the ex-director of Aadhaar Omprakash Khandelwal who was also the director at the time of investment and he also confirmed the making of investment. Therefore, I do not rely or subscribe to the viewpoint of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Purpose of investment was very well within the knowledge of the investors and they were also convinced that their investment will bring lucrative results in future. Valuation report of the shares of the appellant company was also provided to them. The value of the share determined in the valuation report was ₹ 1500/- per share. Moreover, one of the major shareholders in order to secure return on its investment insisted for some written assurance about the safety of their investment, Finally a MOU was signed between the investor, the appellant company and the promoter of the investee company. It was specifically agreed that the promoter would be bound to purchase the shares of appellant company held by Aadhaar @ ₹ 2500/- per share after the expiry of five years from the ate of allotment if Aadhaar decide to off load its holding. Even the Income Tax Act did not place any restriction on such issue of shares at premium up to the assessment year 2012-13. So far as the assessment year 2013-14 is concerned the appellant had allotted the shares as per statutory norms. I hold that the basis of share premium has been fully explained and hence I also reject this conclusion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in any of the accounts in any of the parties. Additionally there is no evidence to prove that appellant's own money is routed back to received the share capital. For all these reasons discussed above, I hold that there is no case of any addition in the hands of the appellant company either on protective basis or on substantive basis. I hold that the share capital has been genuinely received and I therefore, reject this conclusion of the Assessing Officer 37. In respect of allegation that the appellant company had paid commission to acquire the accommodation entries is also treated as unexplained expenditure made outside the books of account, the appellate authority has held as under :- The addition has been made u/s. 68 whereas such addition, if any, could be made only if anything is found credited in the books of accounts. The perusal of the conclusion would prove that nothing has been found recorded and hence the addition is rootles. The Assessing Officer does not figure out any name of the recipient, There is no evidence on record to indicate that the assessee company or anybody else on its behalf had ever paid any cash to investor companies or to anybody else a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehensions and on third party statements, without allowing the cross-examination and bringing any concrete material, the finding recorded by the assessing officer was perverse and prayed for dismissal of the appeals. 41. The ITAT after considering the issue in great detail given the following finding in para 121 to 137, which reads as under :- 121. On careful consideration of rival submissions, material documentary evidence placed on record before us and respectful thoughtful consideration of ratio of the decisions, as made in detail in above we reach to a logical conclusion that the Ld. CIT(A) rightly held that the addition made by the Assessing Officer are not sustainable as the assessee had discharge onus lay on his shoulder as the per requirement of section 68 of the Act. i.e. to establish identify and creditworthiness of the investor and genuineness of the transaction. After considering stand of the Assessing Officer and conclusion drawn by the Ld. CIT(A) in the light of facts and circumstances of the case emerged from appreciation of evidence alongwith ratio of the decision relied by the both the parties, we are of the fortified view that as the assessee discharge i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Pvt. Ltd. has advanced out of this amount ₹ 8 crores to M/s Chain House International Pvt. Ltd. and ₹ 17 crores to M/s Rohtalk Chain Co. Pvt. Ltd. hence, substantive addition was made in the case of above named two companies. 125. We have heard the rival submissions and perused the relevant material on record. We find that the CIT(A) has held the assessee has genuinely received share application money from Aadhar Ventures India Ltd. hence, for the reasons discussed above in respect of Aadhar Ventures India Ltd. in ASSESSMENT YEAR 2012-13 the addition so made was deleted. Since we have already confirmed the findings of the CIT(A) for the A.Y. 2012-13 in above paras and the facts are identical, therefore, we uphold the findings of ld. CIT(A) of deletion of addition of ₹ 26.25 crores including commission payments of ₹ 1.25 crores on the basis of our findings as given above in this order for A.Y. 2012-13. Therefore, the protective addition so made and as deleted by the CIT(A) is confirmed and appeal of revenue on this ground for the assessment year 2013-14 is therefore, dismissed. As we have held in the earlier part of this order that the assessee had g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged commission made in the case of M/s. Chain House International Pvt. Ltd. for A.Y. 2013-14. 128. We have heard the rival submissions and perused the relevant material on record. We find that the CIT(A) has held the assessee has genuinely received share application money from Aadhar Ventures India Ltd., hence, for the reasons discussed in this order as above in respect of Aadhar Ventures India Ltd., hence, the addition so made was deleted. Since we have confirmed the deletion of addition by the CIT(A) for the A.Y. 2012-13 and A.Y. 2013-14 in above paras and facts are identical, therefore, we uphold the findings of ld. CIT(A) of deletion of addition of ₹ 26.25 crores including commission payments of ₹ 1.25 crores on the basis of our findings as given above in this order. Therefore, the protective addition so deleted by the CIT(A) is confirmed and appeal of revenue on this ground for the assessment year 2013- 14 is therefore, dismissed. As we have, in the earlier part of this order, held that the assessee had genuinely received share application money, RBI/ SBFC Point therefore, the addition of said amount of ₹ 17.85 crores (including commission) as advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany and therefore, this amount of ₹ 30 crores was added on substantive basis in the case of the assessee and protective basis in the case of M/s. Bharat Securities Pvt. Ltd. The CIT(A) had deleted the addition by holding that said share application money was genuinely received by M/s. Bharat Securities Pvt. Ltd. consequently, the addition made in the case of the assessee was also deleted. The revenue is in appeal before us. 131. We have heard the rival submissions and perused the relevant material on record. We find that the CIT(A) has held the assessee has genuinely received share application money from M/s. Bharat Securities Pvt. Ltd. who had received it as share capital from five listed companies namely Aadhar Ventures Pvt. Ltd. Dhanus Technologies Ltd., M/s Emporis Projects Ltd., M/s. Yantra Natural Resources Ltd. and M/s L N Industries Ltd., hence, for the reasons discussed in the case of M/s. Bharat Securities Pvt. Ltd. the addition so made was deleted. The Revenue had filed appeal against the order of CIT(A) in the case of M/s. Bharat Securities Pvt. Ltd. before this Tribunal and by the earlier part of this order we have dismissed appeal of the Revenue by confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n substantive basis was also deleted. The revenue had filed this appeal before Tribunal. 134. We have heard the rival submissions and perused the relevant material on record. We find that the CIT(A) has held that M/s. Bharat Securities Pvt. Ltd. genuinely received share application money from Aadhar Ventures India Ltd., hence for the reasons discussed in appeal in the case of M/s. Bharat Securities Pvt. Ltd., the addition made were deleted. The Revenue had filed appeal in the case of M/s. Bharat Securities Pvt. Ltd., which has been decided by us confirming the findings of the CIT(A) for the A.Y. 2012-13 in above paras of this order and for A.Y. 2013-14. Since facts are identical, therefore, we uphold the findings of ld. CIT(A) of deletion of addition of ₹ 8.40 crores including commission payments of ₹ 0.40 crores on the basis of our findings as given in I.T.A. No. 598 599/Del/2017 for A.Y. 2012-13 2013-14 in the case of M/s. Bharat Securities Pvt. Ltd. in this order as above. Therefore, the substantive addition deleted by the CIT(A) is confirmed in the case of the assessee and appeal of revenue on this ground for the assessment year 2013-14 is therefore, dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly Cross Objection No. 77 78/Del/2017 in the cases of M/s. Bharat Securities Pvt. Ltd. Cross Objection No. 65/Del/2017 for A.Y. 2013- 14 in the case of M/s. Rohtak Chain Co. Pvt. Ltd. and Cross Objection No. 67 68/Del/2017 in the case of Chain House International Pvt. Ltd. for ASSESSMENT YEAR 2012-13 and 2013-14 are also dismissed. Finally, all the five (5) appeals of the Revenue and all the five (5) Cross Objection of the assessee are dismissed for all the relevant assessment years. 42. In the case in hand, all the witnesses appeared before the appellate authority and they were examined by the Commissioner (Appeals) and their statements were recorded, an opportunity of cross-examination was given to the assessee. Their statements were found to be strongly supporting the explanation and stand of the assessing company. These statements and other relevant evidence for cross-examination, verification and comments of the assessing officer providing due opportunity to him. However, the assessing officer has not made any adverse comments on these statements except contending the same cannot he considered in favour of the assessee. The learned ITAT held that the first appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach invested substantial amounts in the assessee's shares. Most of them, barring two or three themselves are private limited companies. It was not open to the assessee, to direct the assessing officer to go to the web-site Company Law Department / Registrar of the Companies and search for the address of the share / subscribers and then communicate with them for proof of genuineness of the share subscription. That is the onus of the assessee not the assessing officer. The onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempted from taxation under the provisions of Act. 46. He has also placed reliance in the case of Shankar Industries V/s. Commissioner of Income Tax, (1978) 114 ITR 689 (CAL), Commissioner of Income Tax V/s. Divine Leasing Finance Ltd. (16.112.006 DELHC): MANU/DE/9645/2006, Commissioner of Income Tax V/s. N. Tarika Properties Investment Pvt. Ltd.(28.11.2013 DELHC) MANU/DE/4388/2013, Commissioner of Income Tax V/s. NR Portfolio Pvt. Ltd (22.11.2013 DELHC) : MANU/DE/4284/2013, Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopen their individual assessments, in accordance with law, but this allotment of share money cannot be recorded as undisclosed income under Section 68 of the Act. The M.P. High Court in the case of CIT V/s. STL Extrusion Pvt. Ltd, LAWS (MPH)-2010- 10-86 has held that where the assessee had duly furnished names, ages, address, date of filing of application of share, number of shares of each subscriber, there was no justification for assessing officer for making impugned addition and accordingly, it was deleted. The Delhi High Court in the case of CIT V/s. Divine Leasing and Finance Ltd, 2007 158 Taxman 440 (Delhi), considering the similar question held that the assessee company having received subscription to the public / right issue through bank channel and furnished complete details of the share holder, no addition could be made under Section 68 of the Act in absence of any positive evidence to indicate that the shareholders were Benami or fictitious person or that any part of the share capital represented company's own income from undisclosed income. 51. The learned ITAT after due examination of the order of CIT (Appeals) and the documents on record insofar as identity c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditworthiness and genuineness of the investors and, therefore, the same has been established beyond any doubt and there should not have been any question or dispute about premium paid by the investors therefore, unless there is a limitation put by the law on the amount of premium, the transaction should not be questioned merely because the assessing authority thinks that the investor could have managed by paying a lesser amount as Share Premium as a prudent businessman. The test of prudence by substituting its own view in place of the businessman's has not been approved by the Supreme Court in the decisions of CIT V/s. Walchand Co. Pr. Ltd. [(1967) 65 ITR 381] and J.K. Woollen Manufacturers V/s. CIT [(1969) 72 ITR 612]. 55. The question of share premium has been considered by the Delhi High Court in the case of Commissioner of Income Tax V/s. Anshika Consultants Pvt. Ltd, 2015 62 taxmann.com 192 (Delhi) wherein it was held thus :- The onus cast upon the assessee under Section 68 of the Act to satisfy the department about the true identity of an investor, its creditworthiness and genuineness of a transaction was explained by the Supreme Court in CIT Vs. Lovely Expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only to explain that this investment has been made by the particular individual and it is the responsibility of that individual to account for the investment made by him. If that person owns that entry, then the burden of the assessee-firm is discharged. It is open to the Assessing Officer to undertake further investigation with regard to that individual who has deposited this amount. So far as the responsibility of the assessee is concerned, it is satisfactorily discharged. Whether that person is an income-tax payer or not or from where he has brought this money is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purposes of income-tax. It is open to the Assessing Officer to take appropriate action under Section 69 of the Act, against the person who has not been able to explain the investment. 58. The M.P. High Court in the case of Commissioner of Income-tax, Bhopal (M.P.) V/s. Peoples General Hospital (2013) 356 ITR 65 (M.P.) has held in para 14 and 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finding of fact was perverse in any manner whatsoever. That apart, if the finding of fact arrived at by the Tribunal were to be set aside, a specific question regarding a perverse finding of fact ought to have been framed by the High Court. The Revenue did not seek the framing of any such question. In this regard, reference may be made to K. Ravindranathan Nair v. Commissioner of Income Tax[3] wherein it was observed: The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact-finding authority. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a finding of act reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the findings of fact reached by the Tribunal and to give an answer in law to the question of law that is before it. 61. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s company. The AO seized certain material to say that minimal or insubstantial amounts was paid as tax by such share applicants and did not carry out a deeper analysis or rather chose to ignore it. In these circumstances, the inferences drawn by the CIT (A) are not only factual but facially accurate. 64. In the matter of Principal Commissioner of Income- tax V/s. N.C. Cables Ltd., (2017) 88 391 ITR 11 (Delhi), the Delhi High court in para 8 has observed the following :- 8. As far as the addition is concerned, the assessee had furnished large amounts of materials in the form of documents to evidence the genuineness of the identity and the transactions as well as the creditworthiness of the parties. The AO apparently conducted the perfunctory inquiry by deputing an inspector to the premises. As is contended by the assessee, the absence of these parties, after seven or eight years, ipso facto could not have led the AO to conclude that the parties were fictitious or non-existent. The assessee had provided details of the Permanent Account Numbers (PAN) and Income Tax Returns (ITR) for the relevant years. Nothing prevented the AO from inquiring into these details in support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax-15 V/s. Haresh D. Mehta, (2017) 86 taxmann.com 22 (Bombay), the Bombay High court has observed the following :- 15. Therefore, the Tr9bunal, in concurring with the First Appellate Authority, found that the Assessing Officer had made addition under Section 68 of the Income Tax Act without any reasonable basis. The first appellate authority has analyzed the transaction with each and every creditor and assigned reasons as to why the loans have to be treated as genuine. The assessee has produced details like copy of PAN card, copy of return of income, balance sheet with all the annexures and copy of bank accounts before the Assessing Officer. It there was any doubt, the Assessing Officer should have made further investigation. Once the initial burden was discharged, the Assessing Officer had then to find out that despite production of record in relation to these parties, the version of the assessee cannot be accepted. It is in these circumstances tah the First Appellate Authority rightly stepped in. In fact, in paragraph 3.4 of the Tribunal's order, it quoted that two of the creditors not only appeared before the Assessing Officer, but had also admitted of giving loan. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, in so far as the rights of the parties before it are concerned. To be a question of law involving in the case there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis. 69. In the matter of Mangalore Ganesh Beedi Works V/s. Commissioner of Income-tax, Mysore (2015) 378 ITR 640, the Hon'ble Supreme Court court has observed the following :- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Ltd (presently known as REL Utility Engineers Ltd) and ₹ 25 Crores as share capital from BSPL during the assessment year 2012-13 and ₹ 8.00 Crores as unsecured loan from BSPL. The shares of 18,00,000 were allotted having face value of ₹ 10 at a premium of ₹ 200 per share to M/s. Sonata Investment Pvt. Ltd in assessment year 2010-11, a reliance group company. Subsequently, the said company has sold these shares to Shri Naresh Kumar, promoter of M/s. Chain House International Pvt. Ltd. The statement of Naresh Kumar, recorded by the assessing officer on 26.12.2013. Thereafter, the assessing officer called for information under Section 133(6) from M/s. Sonata Investment Pvt. Ltd vide letter dated 5.11.2015. The said company submitted its reply, stating therein that the investment was made out of borrowed funds; hence the assessing officer has held that the submissions of M/s. Sonata Investment Pvt. Ltd are not credible and made addition of ₹ 37.80 Crores on account of accommodation entries and ₹ 1.89 Crores @ 5% of ₹ 37.80 Crores as commission paid by the assessee for acquiring share application money. 71. The appeal filed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surplus of ₹ 3947.48 crore. The investor company had been assessed under Section 143(3) for the relevant assessment year 2010-11 and assessed at ₹ 30.03 crore and paid tax on book profit of ₹ 62.53 crore under Section 115J. The investor company also filed its return of income for assessment year 2010-11 declaring taxable of ₹ 24.85 crore. Income from operations and other income during the assessment year 2010-11 was amount to ₹ 217.25 crore whereas in the previous year it was ₹ 261.15 crore. The Commissioner Income Tax (Appeals) and appellate tribunal have taken into account the following facts and documents to arrive at the conclusion that the genuineness of the investigation has been proved : (i). On 17.12.2013 action under Section 132 was taken. During post search enquiries, the assessee submitted the details of share capital received by the assessee company including receipt of share capital from M/s Sonata Investment Ltd. Mumbai amounting to ₹ 37.80 crore. (ii). On 13.1.2014, the investigation wing, Delhi made necessary enquires by issue of notices under Section 133(6) to the investor company. (iii) On 11.2.2014, the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and furnished the relevant supporting document including copy of balance sheet for the financial year 2009-10 and 2010-11, details of investment made in the assessee company. We also note that premium paid was as per offer for the issue of shares. It is also seen that deal was direct and no broker was involved. We also find that the assessee had filed detailed reply through letter vide dated 23.12.2015 before the AO and copy of which was also submitted to CIT (A) explaining the identity, creditworthiness of the investors and genuineness of transaction. The CIT (A) has also reproduced this reply at Page No.14 to 24 of her appellate order. We further find that said Subscriber Company had filed copy of share allotment letter, copy of counterfoil of share certificate issued, copy of Board Resolution passed, Form No.2 filed with ROC, Memorandum of Association and Articles. The subscriber company has duly complied with the notice under section 133(6) issued by the AO. Therefore, in view of above facts and evidence brought on record, we are of the view that identity of the subscriber has been established. We further find that the entire amount was received by cheques and there is no cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch evidence or incriminating material was found during the course of search and seizure carried out on the business premises as well as residences of the directors of the company. Therefore, no addition can be made as held in the case of Kurle Paper Mills (P) Ltd. 381 ITR 571 (Del). Moreover, the ld. CIT (A) has examined the details of transaction and given at length finding regarding every aspect on the issue. Therefore, no addition on account of share application money can be made particularly when shares are allotted and transaction are through banking channel and concerned party replied to notices issued by the AO. Accordingly, identity and creditworthiness of investor companyand genuineness of transaction has been duly established. Therefore, the addition of ₹ 37.80 crores with commission of ₹ 1.89 crores made in respect of this subscriber deleted by the ld. CIT(A) is upheld. 41. In the instant case, the assessee company having received share application money through banking channel and furnished complete details of bank statements, copy of accounts and complied with notices issued, therefore, identity, creditworthiness and genuineness of transaction has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 227 ITR 900 (Guw.). The satisfaction has to be derived from the relevant facts and that to on the basis of proper enquiry by the Assessing Officer and such enquiry must be reasonable and just. 45. In the present case, the AO has not brought any evidence on record that the amounts received from M/s. Sonata Investment Ltd. presently known, as REL Utility Engineers Ltd. is merely accommodation entry. As mentioned earlier, the AO has acted merely on the basis of statement of Shri Naresh Kumar and high premium amount only. The ratio laid down by Hon'ble Madhya Pradesh High court in CIT v. Peoples General Hospital Ltd. [2013] 356 ITR 65 (MP), [2013] 216 Taxman 320(MP)/ [2013] 35 taxmann.com 444 (Madhya Pradesh) is squarely gives shelter to the assessee, wherein it was held that where the assessee establishes the identity of share applicant, burden of proving creditworthiness was not on assessee. 46. In view of the above facts, circumstances and discussion, we are of the view that if the identity and other details of share applicant are available, the share application money cannot be treated as undisclosed income in the hands of the company. In the presentcase, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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