TMI Blog2018 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld CIT (A) deleting the addition u/s 68 of the act of ₹ 1,94,00,000/- from 8 companies whose creditworthiness and genuineness of the transaction of issue of shares at a high premium and restore the order of the ld AO. - decided in favour of revenue Addition on account of commission paid on accommodation entries from undisclosed sources - Held that:- As the accommodation entries are taken from Mr Tarun Goyal, CA, who has confirmed the rates of accommodation entries, we find no infirmity in the order of the ld AO in making addition on that basis where the assessee could not prove that no such expenditure is incurred. Accordingly, addition of ₹ 97,000/- of unaccounted expenditure is also confirmed. Ground No 2 of the appeal is allowed. - ITA No. 4867/Del/2011 - - - Dated:- 28-9-2018 - Shri Kuldip Singh, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Revenue : Shri S.K. Tewari, Sr. DR For the Assessee : None ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the revenue against the order of the ld CIT(A)-XII, New Delhi dated 24.08.2011 for the Assessment Year 2008-09, raising following effective two gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO further stated that the signature of Tarun Goyal, Shri Pramod Kumar, Harpreet Singh and Ritu Saxsena on the affidavits submitted by the assessee, did not match with the signatures of those persons on the statement recorded by the investigation wing on oath. It was further stated that the affidavits were also executed on stamp paper purchased on 13.03.2007 but those stamp papers were used on 28.10.2010 after a gap of almost 3 years. It was further stated that one Notarized Officers on 28.10.2010 also signs all these affidavits. The ld AO further informed that Shri Tarun Goyal, a chartered accountant, is an accommodation entry provider and is not doing any real business. It was further mentioned that Shri Pramod Kumar, is a peon, Shri Harprit Singh is accountant and Ms. Ritu Saxsena is the receptionist of Shri Tarun Goyal. They are the directors of these companies . The ld AO further noted that in the statement of Shri Tarun Goyal all these persons were found to be accomplice of Shri Tarun Goyal in providing accommodation entries in the form of share capital and in various other forms. Assessee did not respond to this notice also and summons was not complied. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee vide submissions dt. 10/11/2010, has relied on the judgments of Hon'ble SC In case of CIT vs Lovely Exports (P) Ltd (2008) 6 DTR (SC) 308 and the jurisdictional HC in CIT vs Dwarkadhish Investment (P) Ltd (2008) 2 DTR (Del) 7 (107 TAXMANN 321) CIT vs Winstral Petrochemicals (P) Ltd (2010) 233 CTR (Del) 392. In the case of CIT v. Divine Leasing Finance Ltd. [20071 158 Taxman 440 (Delhi), it has been held that In the case of a public issue, the company concerned cannot be expected to know every detail pertaining .to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make available to the Assessing Officer for his perusal' all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbours doubts of the legitimacy of any subscription, he is empowered, nay duty bound, to carryout thorough investigations. But if the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. [2007] 158 Taxman 440 (Delhi), the shareholders had not denied the fact that they had contributed to the share capital of the company. In the case of the assessee company, the shareholders have admitted the fact that they are mere name lenders and the actual money belongs to the appellant. The appellant is a private limited company and not a public limited company. In the case of private limited company, it is the company which approached the parties to subscribe to its share capital. Unlikely in the case of public limited company, where there is an offer to the general public to subscribe and the company is nto aware of the whereabouts of the share holders. In a private to subscribe and the company is not aware of the whereabouts of the share holders. In a priate Limited company, the directors of the companies personally have a close contract with the share holders. According to section 3 of the Evidence Act, a fact is said to be proved when, after considering the matters before it the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies were providing accommodation entries. When the alleged shareholders have denied subscribing to share capital, neither the identity not the creditworthiness of the share holders can be said to have been established in this case. Therefore, the ratio of the judgement in the cases of CIT Vs. Lovely Exports Pvt. Ltd.. CIT vs Dwarkadhish Investment (P) Ltd (2008) 2 DTR (Del) 7 (167 TAXMANN 321) and CIT v. Divine Leasing Finance Ltd. [2007] 158 Taxman 440 (Delhi), is not applicable in the case of the assessee cov. Thereafter, summons u/s 131 dated 12/11/2010 were issued to the parties as mentioned at S.no. 1 to 8 below requiring the persons who had signed the affidavits on 28/10/2010. on stamp papers of ₹ 10/-. as mentioned in the table below, to attend this office personally on 23/11/2010 with the following: 1) Statement of account of M/s Sohail Financials Ltd., for the period 01/04/2007 to 31/03/2008 (pertaining to AY 2008-09). 2) Personal identification and Nature of transactions with M/s Sohail Financials Ltd. 3) Your signatures duly verified by your bank and your original Photo Identification Card. 4) The assessee company M/s Sohail Financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 24,00,000 3 M/s Thar steels Pvt. Ltd. 203, Dhaka Chambers 2069/39. Naiwala Karol Bagh New Delhi110005 Tarun Goyal 4,60,000 18,40,000 23,00,000 4 M/s Sai Baba Fin vest f Pvt. Ltd. 13/34, W.E.A. IVth floor Main Arya Samaj Road Karol Bagh New Delhi-110005 Pramod Kumar 1,60,000 6,40,000 8,00,000 5 M/s Bhavani Portfolio Pvt. Ltd. 13/34, W.E.A. IVth floor Main Arya Samaj Road Karol Bagh New Delhi-110005 Ritu Saxena 4,00,000 1,60,000 2,00,000 6 M/s Rishabh Shoes- Private Ltd. 13/34, W.E.A. IVth floor Main Arya Samaj Road Karol Bagh New Delhi-110005 Pramod Kumar 4,00,000 1,60,000 2,00,000 7 M/s Taurus Iron Steel Co. Pvt. Ltd. 13/34, W.E.A. IVth floor Main Arya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - dc - 2 M/s Campari Fiscal Services Pvt. Ltd. DELHI 16AA 23/02/2008 - do - - do - - do - - do M/s Campari Fiscal es Pvt. Ltd. DELHI 09AA 22/03/2007 - do - - do - - do - - do - 3 M/s Thar steels Pvt. Ltd. DELHI 14AA 04/01/2008 - do - - do - - do - - do iM/s Thar steels Pvt. Ltd. DELHI 10AA 566633 16/06/2007 - do - - do - - do - - do -. 4. !M/s Sai Baba Finvest ! Pvt. Ltd. DELHI 12 AA 04/10/2007 - do - - do - - do - - do M/s Bhavani Portfolio Pvt. Ltd. DELHI 12AA 10/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues and also for transporting and exchanging cash and cheques in order to provide accommodation entries . At the time of search on 15/09/2008, the statement of Sh. Tarun Goyal was recorded on oath. As per his statement, he has accepted that he provides accommodation entries and his various companies are used for this purpose. Sh. Tarun Goyal has also described the modus operandi for providing accommodation entries. At the time of search on 15/09/2008, the statement on oath of the employees present at the premises of Shri Tarun Goyal were recorded. These include Sh. Pramod Kumar, his peon, Sh. Harpreet Singh, Accountant. In their statements they stated that they were mere employees of Sh. Tarun Goya: and they were signing various documents related to many companies at his behest, as and vjhen asked by Sh. Tarun Goyal. Ms. Ritu Saxena, former receptionists, in her statements recorded on oath, has stated that various bank accounts were opened in her name by Sh. Tarun Goyal, who himself operated these accounts and deposited cash in them. As such, she could not refuse the same as she was mere employee. All the passbooks, cheque-books, various important documents were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2008-2009 dt. 15/10/2010 and the show cause dt. 15/10/2010, you were required to produce all the individuals and the directors / principal officers of the companies / firms, alongwith all the documents and to prove their identity, creditworthiness and genuineness of the transactions. The details filed by you on 10/11/2010 show that you have received the share capital and share premium amounting to ₹ 1,94,00,000/- from the following parties: to. Name Address Affidavit Signed by Share Capital Shares Premium Total (Rs.) 1 M/S Tejasvi Investment Pvt. Ltd. 13/34, W.E.A IVth Floor Karol Bagh New Delhi110005 Tarun Goyal 4,80,000 19,20,000 24,00,000 2 M/s Campari Fiscal Services Pvt. Ltd. 13/34, W.E.A IVth Floor Karol Bagh New Delhi110005 Pramod Kumar 4,80,000 19,20,000 24,00,000 3 M/s T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Naiwala Karol Bagh, New Delhi Tarun Goyal 8. M/s. DU Securities (P) Ltd AACCD0002E 203, Dhaka Chambers 2069/ 39, Naiwala Karol Bagh, New Delhi Harpreet Singh There has been no compliance to the other summons u/s 131, issued to the companies mentioned at S.no. 1, 2, 4, 5, 6 7, which have not been received back unserved. In view of the above, you are required to produce all the individuals and the directors / principal officers of the companies / firms, alongwith all the documents to prove their identity, creditworthiness and genuineness of the transactions. In case the you are not able to substantiate your claim, the amount received as share application will be treated as your undisclosed income, being unexplained cash credits u/s 68 of the Income-tax Act, 1961 and the share capital raised by you amounting to ₹ 1,94,00,000/- would be added to your income. In case you wish to appear in person or make a written submission or have anything else to state, you may do so on that date. Notices u/s 143(2) 14271) fixing the case for 30/11/2010 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch on 15/09/2Q08, the statement of Sh. Tarun Goyal was recorded on oath. As per his statement, he has accepted that he provides accommodation entries and his various companies are used for this purpose, Sh'. Tarun Goyal has also described the modus operand! for providing accommodation entries. At the time of search on 15/09/2008, the statement on oath of the employees present at the premises of Shri Tarun Goyal were recorded. These include Sh. Pramod Kumar, his peon. Sh. Harpreet Singh. Accountant. In their statements they stated that they were mere employees of Sh. Tarun Goyal and they were signing various documents related to many companies at his behest, as and when asked by Sh. Tarun Goyal. Ms. Ritu Saxena. former receptionist, in her statement recorded on oath, has stated that various bank accounts were opened in her name by Sh. Tarun Goyal, who himself operated these accounts and deposited cash in them. As such, she could not refuse the same as she was mere employee. All the passbooks, cheque-books, various important documents were in his total control. 4. In response to summons u/s 131. dt. 16/11/2010. neither anv reply was submitted nor any adjourn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee cov. Till date the assessee company has not produced any of the above individuals or any of the directors / principal officers of the above companies, alongwith all the documents requisitioned for cross examination. The assessee company has also not been able to prove the creditworthiness of the above share applicants and genuineness of the transactions. The above shows that the assessee company has nothing to say in the matter. As the assessee company has also not been able to substantiate its claim, therefore the above amount received is treated as undisclosed income, being unexplained cash credits u/s 68 of the Income-tax Act. 1961 and the amount of ₹ 1.94.00.000/- is hereby added to the income. Therefore, the addition to share capital and share premium account by the company i.e. the total capital addition of ₹ 1,94,00,000/- is hereby added to the income of the assessee company. In view of the facts mentioned above, I am satisfied that the assessee has concealed its income and furnished inaccurate particulars of income. Therefore, penalty proceedings under section 271(l)(c) of the Income Tax Act, 1961 are being initiated separately. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by various courts below:- Hindustan Link Resins Ltd. Vs Deputy Commissioner of Income Tax (HC) (Guj.) (2011) 60 DTR 18 it is held that:- ...Income - Cash credit - Share application money - None of the authorities have recorded any findings to the effect that the identity of the depositors had not been established by the assesee - Case of the Revenue is that the assessee has failed to explain the source of such cash as well as creditworthiness of the depositors -Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of asessee company - However, under no circumstances, can the amount of share capital be regarded as the undisclosed income of the assessee. Commissioner of Income Tax-lV Vs M/s Dwarkadhish Capital (P) Ltd. Delhi High Court IT A No. 911/2010 In any matter, the onus of proof is not a static one. Though in section 68 proceedings, the initial burden of proof lies on the assessee yet once he proves the identity of the creditors/share application by either furnishing their PAN number or Income tax assessment number and shows the genuineness of transaction by showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unexplained share application money for 3. In the appeal by the Revenue, the Tribunal found that the facts of the case were no different from those in the case of the group company of the present assessee namely M/s Dwarikadhish Financial Services. In the said case the Tribunal had deleted the addition made by the Assessing Officer on account of unexplained share application money. The said decision was upheld by this Court in its order in CIT Vs Dwarkadhish Financial Services {2005} 148 Taxman 54. 4. That apart, the Tribunal again examined the documents giving the details of each of the application. It noted that? The above documents were available on the file of the AO? Accordingly it dismissed the Revenue s appeals. Learned counsel for the revenue sought to distinguish this Courts decision in the case of the group of the assessee on 'the ground that the facts there were different. However, we find, that the findings of the C1T(A) as extracted hereinabove are sufficient to show that the additions made by the Assessing Officer were not justified. The reasoning and conclusions arrived at concurrently by the C1T(A) and the Tribunal suffer from no perversity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whose names are great the AO, then the Department is free to proceed to reopen their individual be regarded as undisclosed income of Commissioner of Income Tax Vs Value Capital Services (P) Ltd. (2009) 221 CTR (Del) 511 : (2008) 307 ITR 334 Income-cash credit-share application money-CIT(A) accepted the existence of the application - it is very difficult for the assessee to show the creditworthiness of strangers-Revenue has not sjiown that the application did not have the means to make the investment and that such investment actually emanated from the coffers of the assessee company - Addition rightly deleted by the Tribunal - No substantial question of law arises. With regard to the addition of ₹ 97,000/- on account of commission which was disallowed is also being deleted as 1 have held that the share capital of ₹ 1,94,00,000/- cannot be taxed in the hands of company. Hence total addition of ₹ 1,94,97,000/- is deleted. [underline supplied by us} 6. The main reason for deleting the addition was that the assessee has filed confirmation letters, copies of the share application form, registration no and date of incorporation of the applicant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about identity, creditworthiness of shareholders as well as genuineness of the transactions. 20. Now, when we go to the order of the Tribunal in the present case, we notice that the Tribunal has merely reproduced the order of the Commissioner of Income-tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its co-ordinate Bench in the case of MAF Academy P. Ltd., a decision which has been overturned by the Delhi High Court, vide its judgment in CIT v. MAF Academy P. Ltd. [2014] 206 DLT 277 ; [2014] 361 !TR 35% (Delhi)). In the impugned order it is accepted that the assessee was unable to produce directors and principal officers of the six shareholder companies and also the fact that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer has observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. 21. In view of the aforesaid discussion, we feel that the matter requires an order of remit to the Tribunal for fresh adjudication keeping in view the aforesaid case law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er show the link between the entry providers and the assesseecompany, but the Assessing Officer bad aiso provided the statements of Mukesh Gupta and Rajan Jassal to the assessee in compliance with the rules of natural justice. Out of the 22 companies whose names figured in the information given by them to the investigation wing, 15 companies had provided the so-called share subscription monies to the assessee. There was thus specific involvement of the assesseecompany in the modus operandi followed by Mukesh Gupta and Rajan Jassal. Thus, on crucial factual aspects the present case stands on a completely different footing from the case of Oasis Hospitalities (P.) Ltd. (supra). 42. In the light of the above discussion, we are unable to uphold the order of the Tribunal confirming the deletion of the addition of ₹ 1,18,50,000 made under section 68 of the Act as well as the consequential addition of ₹ 2,96,250. We accordingly answer the substantial questions of law in the negative and in favour of the department. The assessee shall pay costs which we assess at ₹ 30,000/-. 5. CIT Vs Ultra Modern Exports (P.) Ltd (40 taxmann.com 458, 220 Taxman 165) (Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee commenced its business and immediately sought to infuse share capital at a premium ranging between ₹ 90-190 per share and was able to garner a colossal amount of ₹ 4.34 Crores. this Court is of the opinion that the CIT (Appeals) and the IT AT fell into error in holding that AO could not have added back the said amount under Section 68. The question of law consequently is answered in favour of the Revenue and against the assessee. 6. Konark Structural Engineering (P.) Ltd. Vs DCIT T20181 90 taxmann.com 56 (Bombay) where Hon ble Bombay High Court held that where assessee-company received certain amount as share capital from various shareholders, in view of fact that summons served to shareholders under section 131 were uns.erved with remark that addressees were not available, and, moreover, those shareholders were first time assessees and were not earning enough income to make deposits in question, impugned addition made by AO under sec. 68, was to be confirmed 7, Prem Castings (P.) Ltd. Vs CIT f20171 88 taxmann.com 189 (Allahabad) where Hon ble Allahabad High Court held that where assessee company had received share capital from variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. 10 CIT Vs Empire Builtech (P.) Ltd (366 ITR 110) where Hon ble Delhi High Court held that u/s 68 it is not sufficient for ssessee to merely disclose address and identities of shareholders; it has to show genuineness of such individuals or entitles. 11 CIT Vs Focus Exports (P.) Ltd (51 taxmann.com 46 (Delhi)/r20151 228 Taxman 88) where Hon ble Delhi High Court held that where in respect of share application money, assessee failed to provide complete address and PAN of certain share applicants whereas in case of some of share applicants, there were transactions of deposits and immediate withdrawals of money from bank, impugned addition made under section 68 was to be confirmed 10 PCIT Vs Bikram Singh HTA No.55/20171 (Delhi) where Hon ble Delhi High Court held that even if a transaction of loan is made through cheque, it cannot be presumed to be genuine in the absence of any agreement, security and interest payment. Mere submission of PAN Card of creditor does not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finance. The assessee being a private limited company cannot invite the public for subscription of its shares as prohibited by the provisions of the companies act. Therefore, it is apparent that Assessee Company has accepted the share application or allotted share of this company only to the known persons/ entities of the promoters of the company or to the existing shareholders. They cannot be wanderers. The appellant company has also not demonstrated before us the outstanding capabilities or the business of the assessee company, which can command the huge premium. Before the ld CIT (A) or before the ld AO the assessee could not show the business model to justify the premium of such a huge amount. Assessee also could not produce the directors of the new allot tees companies before the ld AO. Therefore, it is apparent that assessee company or its directors do not know are not acquaintances of the assessee company. Further, the investigation of the Income tax department elaborately discussed by the ld AO shows that shares are allotted to the companies owned and controlled by Shri Tarun Goyal, CA, who is an accommodation entry provider. The directors of the applicant company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank, it does not show the bank account number of the assessee. It cannot be said that same is available in cheque because it has already been encashed and not in the posseeeisn of the assessee as well as the shareholders. It goes back to the bank. Even the branch details are also not available. Therefore share application forms are not showing any details which can lead for verification of the necessary ingredient u/s 68 of the act. b. Relevance of submission of Permanent Account Number Permanent Account number is allotted by Income Tax Department if any company assessee submits the details such as name, address, nature of business et. along with the certificate of incorporation issued by the Registrar of Companies. On such application, the income tax department allots the same. The relevant form is form is 49 A of The income Tax Rules 1962. Even the name of the directors is also not required o be given by applicant. It is to be submitted to Registrar of companies and not to Income tax Department. Therefore, only evidence that is submitted by the company is the certificate of incorporation. Even the address of the company is also to be taken from that document submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identity, creditworthiness and genuineness of the depositor u/s 68 of the act. d. Relevance of producing certificate of incorporation or website data of MCA Hon'ble Delhi High court in 367 ITR 306 with respect to the certificate of incorporation and Permanent Account number as under:- 14. Certificate of incorporation, PAN etc. are relevant for purchase of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor. It is in this context, the Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) had observed- Now we shall proceed to examine the validity of those grounds that appealed to the learned judges. It is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make selfserving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntered in to by the banking channel are genuine. No such provision was found by us in The Income Tax Act too. Equally, we also could not find any provision of the law either under the Income Tax Act or under any other law that when the cash is deposited in the bank account of depositors shareholders the transactions become non genuine. Both the propositions cannot be looked in to isolation but should be seen coupled with other circumstances of the whole transactions. It is also equally important that cash is routed through many bank accounts by the entry operators to build the bank balance in the parties and then brought in to the banking transactions in the books of the depositor companies. Therefore generally the cash is never deposited in the bank account of the shell companies but are routed through various other accounts . Shell companies also credit the bank balance by selling of investments in other beneficiary companies to another shell company and generate bank balance through banking channel in their bank accounts. Therefore it is necessary to prove genuineness of the transactions, sources of the money in the bank account of the depositor with the business of the investor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company was shown to us. It is simply a fa ade to introduce unaccounted money in the garb of share capital. 14. Further apparently the shareholder/ share applicants in the assessee company are alleged to be bogus. This allegation of the ld AO was based on various statements of the directors of the company who provided share application. On this allegation, there is stoic and deafening silence by the assessee before the assessing officer. None of them was produced after repeated opportunities and summons by the ld AO. This proves that the evidences collected by the ld AO stares at the face of the assessee company that shareholders are shell companies. Therefore higher burden lies in the case of the assessee private limited company to establish the creditworthiness of the shareholders and genuineness of the transaction of issue of share at a premium. Assessee miserably failed to do so. Hon Gujarat High court held in case of Pravinkumar M Sanghvi V ITO 404 ITR 601 that When the assessee has maintained stoic silence on being told about these lenders being alleged to be shell entities, it cannot be believed that these are genuine business transactions. 15. Now we come to vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case before us falls in the second category of cases noted in para no. 13 by Hon Delhi high court in 367 ITR 306. 17. Further, the ld CIT (A) has held that assessee is not supposed to prove the source of the source of the funds. In the present case even the source of the original funds is also not shown from which bank account the funds have come and what is the nature of the funds available with the share applicants. Assessee neither furnished the bank account statement nor the Income tax Return of those shareholders. 18. Further with respect to the various affidavits rejected by the ld AO , the Hon Delhi High court in case of CIT v. Nova Promoters and Finlease P. Ltd. [2012] 342 ITR 169 (Delhi) has held as under :- 26. In the light of the above facts, the evidentiary value of the affidavits is open to serious doubts. The Indore Bench of the Madhya Pradesh High Court in the case of Smt. Gunwantibai Ratilal v. CIT [1984] 146 ITR 140 (MP) explained the judgment of the Supreme Court in the case of Mehta Parikh and Co. v. CIT [1956] 30 ITR 181 (SC) and held that the said decision cannot be considered to have laid down the proposition that unless the deponents of the aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n these circumstances, we are of the view that complete opportunity was granted to the assessee at all times, but assessee does not want to avail it for reason best known to it. 20. We also draw support from decision of Honourable Delhi High court in 342 ITR 169 where in it has been held that :- 32. The Tribunal also erred in law in holding that the Assessing Officer ought to have proved that the monies emanated from the coffers of the assessee-company and came back as share capital. Section 68 permits the Assessing Officer to add the credit appearing in the books of account of the assessee if the latter offers no explanation regarding the nature and source of the credit or the explanation offered is not satisfactory. It places no duty upon him to point to the source from which the money was received by the assessee. In A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) this argument advanced by the assessee was rejected by the Supreme Court. Venkatarama Aiyar J., speaking for the court, observed as under (at page 810) : Now, the contention of the appellant is that assuming that he had failed to establish the case put forward by him, it does not follow as a matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scharged the duty. The statements refer to the practice of taking cash and issuing cheques in the guise of subscription to share capital, for a consideration in the form of commission. As already pointed out, the names of several companies which figured in the statements given by the above persons to the Investigation Wing also figured as share applicants subscribing to the shares of the assessee-company. These constitute materials upon which one could reasonably come to the conclusion that the monies emanated from the coffers of the assessee-company. The Tribunal, apart from adopting an erroneous legal approach, also failed to keep in view the material that was relied upon by the Assessing Officer. The Commissioner of Income-tax (Appeals) also fell into the same error. If such material had been kept in view, the Tribunal could not have failed to draw the appropriate inference. 39. The ratio of a decision is to be understood and appreciated in the background of the facts of that case. So understood, it will be seen that where the complete particulars of the share applicants such as their names and addresses, Income-tax file numbers, their creditworthiness, share application fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Lovely exports P Ltd (Supra). The hon. High court in 367 ITR 306 has considered the above h decision and held as under :- 16. In the said case, the Division Bench had also examined the decision of the Supreme Court in Lovely Exports (P.) Ltd. (supra) and other cases in which the assessee had succeeded. It was noticed that in the case of Lovely Exports (P.) Ltd. affidavits/confirmations of shareholders were filed and income tax record numbers of the shareholders were made available, but the Assessing Officer, who had sufficient time, failed to carry out inquiry and examination. reference was made to the observations in Divine Leasing (supra) to the effect that there cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment as share capital must be firmly excoriated by the Revenue, but when there is preponderance of evidence to show absence of culpability, the assessee should not be harassed by the Revenue. A delicate balance must be maintained between the two interests. In Divine Leasing (supra), the following proposition was elucidated:- In this analysis, a distillation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly hold that the assessee cannot plead that they had received money, but could do nothing more and it was for the Assessing Officer to enforce shareholders' attendance in spite of the fact that the shareholders were missing and not available. Their reluctance and hiding may reflect on the genuineness of the transaction and creditworthiness of the creditor. It would be also incorrect to universally state that an Inspector must be sent to verify the shareholders/subscribers at the available addresses, though this might be required in some cases. Similarly, it would be incorrect to state that the Assessing Officer should ascertain and get addresses from the Registrar of Companies' website or search for the addresses of shareholders themselves. Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank account, when circumstances requires that there should be some more evidence of positive nature to show that the subscribers had made genuine investment or had, acted as angel investors after due diligence or for personal reasons. The final conclusion must be pragmatic and practical, which takes into account holistic vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us is a private limited company, which is, by law, prohibited from offering its securities for subscription by general public. It cannot, therefore, be really open to the assessee to say that we have no clue about who the subscribers to the share capital are; these cannot be rank outsiders or walk in subscribers- as perhaps in the cases of public limited companies. Yet, all that the company has to offer, to establish genuineness of transactions of subscribing to the shares, are the bank statements. The assessee is not able to produce the brains behind these companies and the documents with respect to the their financials either. As for the other documents, these documents have to be there for issuance of share capital anyway- genuine subscription or not so genuine subscription. Genuineness of a transaction cannot be demonstrated on the basis of these documents. The assessee has not been able to produce the principal officers of these entities, but then, given the way the facts about these entities have unfolded, the reasons for the limitations of the assessee are not difficult to seek. As per decisions of this Tribunal filed by the assessee on his own, these entities, as indee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts or debits and credits are ₹ 15,00,0000 and ₹ 10,00,000 respectively. As regards the other bank account of Geefcee in ABN Amro Bank is concerned, the situation is no better. On 3rd June, i.e. opening day of this bank statement, there is a credit balance of ₹ 5,742.32. On June 9, there are deposits of ₹ 20,10,000 and, on the same day, a payment of ₹ 20,15,000 is made leaving a balance of less than ₹ 1,000. On 11th June, there are deposits of ₹ 10,00,000 and on the same day, there is a payment of ₹ 10,00,000. On 16th June again, it is the same story but the amount is now ₹ 20,00,000. On other dates in the ABN Amro Bank statement, as given to us, is the same story. What do we conclude from these statements? The overnight balance in the bank accounts are of small amounts and the payments made from these accounts are almost at the time of making payment are transferred from other sources, for which no explanation is available. This is typical of a situation in which the bank accounts are used as a conduit to launder the ill gotten money. It is impossible for even a layman, leave aside Members of this specialized Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and de hors the milieu we cannot impart eternal vernal value to the decisions, exalting the precedents into a prison house of bigotry, regardless of the varying circumstances and myriad developments. Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting the matters which may lurk in the dark . Genuineness of transactions thus cannot be decided on the basis of inferences drawn from the judicial precedents in the cases in which genuineness did come up for examination in a very limited perspective and in the times when shell entities were virtually non-existent. As the things stand now, genuineness of transactions is to be examined in the light of the prevailing ground realities, and that is precisely what we have done. We are of the considered view that there is nothing to establish genuineness of the share subscription transactions on the facts of this case. The assessee does not know anything about these companies or these persons. The assessee has no documents about their financial activities or their balance sheets. The assessee is a private limited company and these entities could not have therefore been rank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake the things clear and beyond any doubt, is enacted with respect to a particular point of time and a particular consequence is envisaged by the provision, interpretation of the law or treaty will invariably be inclined to draw to the inference that no such consequence was envisaged by the legislature or the treaty prior to the amendment coming into force. That is a common and fairly well accepted approach. There is, however, a rider. The rider is that even on the first principles and in a situation in which a binding judicial precedent or judicial analysis of the preamendment legal has already come to the same conclusions, as indicated by the specific amendment as a measure of abundant caution, such a kill effect is ruled out. That precisely is the situation before us. In such cases, the impact of amendment remains confined to the areas on which either (i) on the areas on which, with the help of pre- amendment provisions, the judicial conclusions are at variance with the conclusions arrived at with the help of amendment; or (ii) such areas have remained intact from the judicial precedent. Viewed thus, merely because there is a specific amendment to Section 68 with effect from 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the finding that the said amounts are income of the appellant from other sources is not based on evidence. In the present case assessee before lower authorities could not rebut the relationship of the assessee, a private limited company with Shri Tarun Goyal and his accomplices in making investment at such a huge premium. The surrounding circumstances and test of Human probabilities also shows that there is no reason to invest those companies in the shares of the assessee company at such a huge premium. Therefore the ratio laid down by the Hon Supreme court squarely applies in the case of assessee. 27. Based on above, we are of the opinion that the ld CIT (A) has deleted the addition based on irrelevant documents, which does not prove the identity, creditworthiness, and genuineness of the shareholders/transactions. Therefore in view of above facts we reverse the order of the ld CIT (A) deleting the addition u/s 68 of the act of ₹ 1,94,00,000/- from 8 companies whose creditworthiness and genuineness of the transaction of issue of shares at a high premium and restore the order of the ld AO. Accordingly ground no 1 of the appeal of the ld AO is allowed. 28. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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