TMI Blog2019 (2) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... tors, onus is discharged by him and if Assessing Officer disbelieve the genuineness of the same, he has to prove otherwise, merely, doubting or pointing out some discrepancy is not the foundation for discarding the genuineness of the deposit or share money or substance of the matter, held by the Hon'ble Supreme Court in the case of CIT v. Gujarat-Heavy Chemicals Ltd. (2001 (10) TMI 89 - SUPREME COURT). Question of making any addition u/s. 68 of the Act does not arise - Decided in favour of assessee. - I.T.A. No. 3060/Mum/2017 - - - Dated:- 20-12-2018 - SH. SHAMIM YAHYA, AM SH. SANDEEP GOSAIN, JM For the Appellant : Shri S. Abi Rama Karthikeyan, DR For the Respondent : Shri Neel Khandelwal, AR ORDER Per Sandeep Gosain, Judicial Member: The present Appeal filed by the revenue is against the order of Ld. CIT (Appeal) 21, Mumbai dated 17.02.17 for AY 2012-13 on the grounds mentioned herein below:- 1. Whether on the facts and in the circumstances of the case, the ld.CIT(A) erred in deleting the addition made of ₹ 5,75,00,000/-, when the assessee had failed to discharge its onus of establishing identity, genuineness and creditworthiness of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to dispose of the same by this common order. 4. We have heard the counsels for both the parties and we have also perused the material placed on record, judgment cited by the parties as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the assessee in para no.4 of its order. The operative portion is contained in para no. 4.8 to 4.16 of its order and the same is reproduced below:- 4.8. I have considered the facts on record, the assessment order, the remand report and rival contentions carefully. The appellant is an existing is an existing profit making company engaged in trading in shares and securities. There has been increase in share capital in the current year. The assessing officer has observed that shares were allotted to sister concerns, though also at premium, but at lower premium than that at which it is allotted to other third party companies. This has been viewed adversely by the assessing officer. The appellant has explained that this is on account amalgamation of three companies and shares were issued to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, there are no specific reference to the appellant company. There are no evidences to show that there is any cash trail in respect of the amounts received by the appellant company from the investors. Though the AO was specifically asked to furnish specific incriminating evidences, it is noted that the AO has not been able to pin point the specific evidences which would clearly show that the share application money has been received in lieu of cash. The fact remains that the investor companies are assessed to tax and have filed their returns of income. Notices u/s 133(6) were served on the investors except in 2 cases and even then replies were filed by all of them later, and therefore it cannot be said that the parties did not exist at their addresses. Copy of bank statement, ledger account, share application form, board resolution authorizing investments, income tax return and audited accounts of the investor companies have been filed before the assessing officer and also in the appellate proceedings. 4.13. The investment and the corresponding source of funds of investor as seen from the copy of their audited accounts for FY 2006-07 is tabulated below. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant has in reality obtained any accommodation entries. There is no direct specific mention of the appellant by the director or key persons of the investor company. There is no evidence of cash deposits linked to the investors. The assessing officer did not bring specific incriminating evidence linking the investor to the appellant. The only link is that the investors have invested in appellant company. That the appellant has given cash to the investors in lieu of entry is merely alleged but not demonstrated. Opportunity for cross examination was provided to the appellant in the remand proceedings but Shri Praveen Jain did not confirm that any accommodation entries were provided. Papers/evidence found in the search action raises presumption but the same is available in the case of person, searched but not in the case of third parties unless proved and corroborated. Similarly, retraction may be rejected as motivated, but the same can be considered only against the person who has retracted in his assessment. Such statement in the case of another person loses its sanctity unless opportunity of cross examination is granted and /or is corroborated with other evidences. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the conclusion that th.ne Respondent had discharged the burden that lay on it, then, it could not be said that such a conclusion was unreasonable or perverse or based on no evidence . Reliance is also placed on the following decisions: i. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Value Capital Services P.Ltd. (2008) 307 ITR 334 (Delhi). ii. Hon'ble Punjab and Haryana High Court in the case of Commissioner of Income Tax v/s. GP International Ltd. (2010) 325 ITR 25 (P H). iii. Hon'ble Madras High Court in the case of Commissioner of Income Tax v/s. Electro Polychem Ltd (2007)294 ITR 661 (Mad). iv. Hon'ble Rajasthan High Court in case of Commissioner of Income Tax v/s. AKJ Granites P.Lt4. (2008)301 ITR 298 (Raj.) V. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Oasis Hospitalities Pvt.) Ltd. (2011) 51 DTR 74 (Delhi). Sec. 69 places the burden of proof on the tax payer to explain the nature and source of any credit found in the books. But, when assessee proves or submit the basic information like identification, genuineness of transactions and creditworthiness of the creditors, onus is dischar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money and appellant during assessment proceedings provides the details like name address of the corporate entity, PAN No., ROC No., then ITAT held that this may be referred to the concerned A. 0. or proceeding against such bogus shareholders instead of adding -,amount u/s 68 of the IT Act in the name of the company The appellant has referred to the decision of the Hon'ble Bombay High Court in the case of M/s Green Infra Ltd. ITA 1162 of 2014. I however find that the facts in that case were somewhat different, though the question regarding high premium at which shares were issued was raised by the department. 4.16. It is noted that no specific incriminating material linking investor to the appellant or showing the investment to be bogus is provided. Also opportunity for cross examination did not advance the case of the assessing officer. The assessing officer has not been able to bring on record any direct or corroborative evidence that the share application money received is unexplained as covered u/s 68 even after opportunity was given in the remand proceedings. No statement of Shri Praveen Jain names the appellant specifically. In any case, it is cardinal principle o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A). We also considered the investment and the corresponding source of funds of investor as seen from the copy of their audited accounts for FY 2006-07, which are tabulated in para no. 4.13 of Ld. CIT(A) and the same is reproduced below. Sr. No. Name of the Shareholder Total amount invested Share Capital and reserves Profit as P L account 1 M/s. Kavya Share 86 Securities Pvt. Ltd. 30,00,000 2,24,81,101 3,86,824 2 M/s.Dev Share Trading Pvt. Ltd. 30,00,000 2,46,10,675 5,00,568 3 M/s. Prajan Trading Pvt. Ltd. 30,00,000 3,03,55,461 5,20,299 4 M/s. Arawalli Stock Broking Pvt ltd 30,00,000 1,63,90,103 4,87,875 5 M/s. Colourunion International Pvt. Ltd. 50,00,000 2,30,51,700 3,43,358 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olderswho's name are given to the Assessing Officer then the department is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of assessee company . 8. The Hon'ble Bombay High Court in the case of CIT v/s Creative World Teleflims Ltd 333 ITR 100 has held as under: If the share application money is- received by the assessee company from alleged bogus share holders who's name are given to the Assessing Officer then the department can always proceed against them and if necessary reopen their individual assessments. Held, dismissing the appeal, that there was no dispute that the assessee had given the details of names and addresses of the shareholders, their PAN/ GIR numbers and had also given the cheque numbers, name of the bankers. The Assessing Officer ought to have found out their details through PAN cards, bank reholders. Thus, the view taken by the Tribunal could not be faulted. 9. The Hon'ble Supreme Court of India in the case of CIT vs. Orissa Corporation reported in 159 ITR 78 (SC) has held as under: That in this case the respondent had given the names and addresses of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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