TMI Blog2018 (9) TMI 1753X X X X Extracts X X X X X X X X Extracts X X X X ..... at the share application money received by the company is bogus, the revenue is free to take appropriate action in the hands of the shareholders. But having explained the source and established the identity, the revenue is not permitted to make addition in the hands of the company. - Decided in favour of assessee - I.T.A. No. 292 /Viz/2017 - - - Dated:- 26-9-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri Deba Kumar Sonowal, DR For The Respondent : Shri G.V.N.Hari, AR ORDER PER D.S. SUNDER SINGH, Accountant Member: This appeal is filed by the revenue against the order of the Commissioner of Income Tax(Appeals) [CIT(A)], Vijayawada vide I.T.A.No.33/CIT(A)/VJA/2015-16 dated 30.06.2016 for the assessment year 2012-13. 2. All the grounds of appeal except ground No.2 are related to the addition made by the AO relating to the share application money u/s 68 of the Income Tax Act, 1961 (hereinafter called as Act ). 3. Ground No.2 is related to the admission of additional evidence for not giving opportunity to the AO as required under Rule 46A of Income Tax Rules. During the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . During the appeal hearing, the Ld.DR submitted that scrutiny of the share applications and the confirmations reveals that there was no clear postal address and the assessee has not furnished details requisitioned by the AO. Since the assessee has failed to furnish the details it was argued that the AO has rightly made the addition in the hands of the company. The Ld DR further argued that if the assessee fails to prove the genuineness, identity and credit worthiness of the shareholders, the AO has right to enquire into the details of the share application money received by the company and make the addition, if the share application received by the company proved to be bogus. Since, in the instant case, the confirmation letters furnished by the assessee are incomplete with regard to address and the sources the Ld.DR argued that the AO has rightly made the addition and relied on the decision of the Hon ble Delhi High Court in the case of CIT Vs. NR Portfolio Pvt. Ltd in ITA No.1019/2011 dated 22.12.2013, Hon ble High Court of Calcutta in the case of Commissioner of Income-Tax, Kolkata-II Vs. Trinetra Commerce Trade (P) Ltd. [2016] 75 taxmann.com 70 (Calcutta), Hon ble Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration, the assessee had accepted the share application money from 35 share applicants to the extent of ₹ 5,40,00,000/- and allotted the shares to all the shareholders and furnished the Sl.No. and distinctive number of shares issued. The Ld.CIT(A) in his order stated the above fact and observed that by the end of 31.03.2014, the entire share application money pending allotment was allotted and filed copy of Form No.2 before the Registrar of Companies and confirmed the allotment of shares. The copy of Form No.2 was also furnished before the Ld.CIT(A). During the assessment proceedings, the AO directed the assessee to submit the share applications as well as the confirmations and the same was furnished by the assessee. Though the AO stated that the details furnished on 24.03.2015, there was no material to show that the AO had called for the said details earlier which the assessee has not complied with. Therefore, the submission of details on 24.03.2015 cannot be taken as ground for not making the enquiries which required to be made by the AO with regard to the genuineness, credit worthiness and identity of the share applicants. Since the assessee has compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived accommodation entries for the share application money through entry operators. The assessee company is very much in existence and had furnished all the details requisitioned by the AO. Therefore, the case laws relied upon by the Ld.DR in the case of NR Portfolio is no way helpful to the revenue and the facts are distinguishable and are not applicable in the assessee s case. 8.2. The Ld.DR also relied on the decision of Riddhi Promoters(P) Ltd of Hon ble Delhi High Court supra and the facts of the case of Riddhi Promoters are that the assessee was unable to explain the identity, genuineness, credit worthiness of the persons who made the investment. In the instant case, in the case of the assessee, the assessee had furnished the details of the share applicants and also confirmations from the share applicants. Having established the identity, explained the sources and the shares are being allotted, the case law relied upon by the Ld.DR is distinguishable and has no application in the assessee s case. 8.3. In the case of CIT Vs. Novodaya Castles (P) Ltd., the case is with regard to share application money received through entry operators. The share application money was rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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