TMI Blog2018 (10) TMI 1688X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri C.M. Garg, Judicial Member And Shri O.P. Meena, Accountant Member For the Assessee : Shri Rasesh Shah - CA For the Revenue : Shri Anil Dhaka, Sr. D. R ORDER PER O. P. MEENA, ACCOUTANT MEMBER: 1. This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-1, Surat ( CIT(A) for short) dated 20.02.2018 for the AY 2012-13 which in turn has arisen from the order dated 20.03.2015 passed by the Income-tax Officer, Ward-1(1)(3), Surat (in short the AO) under section 143(3) of the Income Tax Act, 1961 (for short the Act ). 2. The Grounds raised by the assessee are as under : 1) Ground No.1 states that the learned CIT(A) has erred in circumstances of the case by confirming addition of ₹ 1,44,15,000/- u/s. 68 without considering the submission in spite of the fact that the appellant has properly adhered to every notice and directions of learned AO and has fully co-operated during the assessment proceedings as also remand proceedings to convincingly and evidentially prove the genuineness of the investors, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have confirmed that they have invested in the appellant company. Further, they have also provided their copies of ITR Acknowledgements, PAN card, computation of Tax, Balance sheets, bank passbooks / statements etc. and which were duly acknowledged but which have been conveniently omitted to be mentioned by the CIT(A) in his order. Further learned CIT(A) failed to rebut appellant s counter reply submitted in response to remand report submitted by learned AO. Accordingly, the learned CIT(A) framed order with prejudicial mind. 6) Ground No.6 states that the learned CIT(A) has erred in law and facts of the case in confirming the action of AO of deliberately omitting to record the facts as stated by the investors in the statements recorded u/s. 131 of the Act and during further enquiry made u/s. 250(4) of the Act. 7) Ground No.7 states that the learned CIT(A) has erred in law and facts of the case in even confirming the action of AO of additions for share investments received from the promoter family members also even though the identity, genuineness and capacity of all the family members was established beyond doubt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 Nitaben Nareshbhai Savaliya 425000 16 Amitbhai Jagdishbhai Shah 400000 17 Alkaben Jerambhai Limbasiya 325000 18 Dayaben Ghanshyambhai Malani 250000 19 Urmilaben Shaileshbhai Shah 400000 20 Bina Jaysukhbhai Kachhadiya 375000 21 Paritaben Vipulbhai Limbani 360000 22 Vijaykumar Himmatbhai Sawaliya 265000 23 Hasmukh Raj J Ramani HUF 300000 24 Naren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the issuance of cheque for investment with the assessee company. Therefore, the A.O. treated the same as unexplained as the creditworthiness and genuineness of transaction was not proved. 6. The A.O. further issued summons u/s. 131 of the Act to the ten parties out of which summons could not be served in the case of Shri Hasmukhraj J. Ramani (HUF). However, remaining nine parties have appeared before the A.O. and their statement was recorded u/s. 131 of the Act, wherein eight women have stated that they were not aware of any investment made in the shares. Therefore, considering the details from computation of income, balance sheet, profit and loss account capital account, bank account, the A.O. held that the same is not acceptable as the bank account shows deposit before issuance of cheques in investment. Therefore, the A.O. treated the investment made by the parties as unexplained. 7. The A.O. further noted that there are seven investors, which are at Kanpur to whom notice u/s. 133(6) of Act was issued. In response to which they have submitted the copies of return of income, balance sheet and bank account. However, the A.O. noted that the details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er /withdrawal / RTGs transfer. Therefore, onus lies u/s. 68 has not been discharged, therefore, CIT (A) observed that all the papers are manufactured at the behest of the appellant and no real transaction. Therefore, CIT(A) held that it is the case of providing accommodation entry. The CIT (A) observed that the amount claimed to be received by the appellant do not in any way appear to be genuine share capital. They are nothing but arranged affairs being pre-ordained series of transactions and tax evasion device where money laundering transactions have been camouflaged as share capital. Hence, no credence can be placed on the copies of various documents filed to support such claim of share capital contribution and accordingly addition made by the A.O. is confirmed. 10. Being aggrieved the assessee has filed this before Tribunal. The learned counsel for the assessee submitted that the assessee s company was established in 2008 and carried on business of manufacturing, buying, selling, importing and exporting and dealing in textiles, cotton, silk art silk, rayon, nylon, synthetic fibers, staple fibers, polyester, worsted, wool, hemp and other fiber materials, yarn clot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns who appeared before the A.O. which were placed in the paper book of the assessee. The learned A.R. also rely the form of application, share certificate, and in some cases Aadhar card of the parties concerned. It was further submitted that numerous judicial pronouncement issued to share at premium within law and acceptable and no doubt. It was further contended that there is no cash deposit in the bank account of the investor before issue of cheque to the assessee company. Therefore, it was contended that creditworthiness and genuineness of transaction has been proved by various documents and by appearing before the A.O. in person. Therefore, the A.O. was not justified in making the addition u/s.68 of the Act. The learned A.R. further placed reliance in the case of DCIT Vs Rohini Builders, [2002] -256 ITR 306 (Gujarat) wherein it was held that the Tribunal deleted the addition u/s. 68 accepting the genuineness of loan which were received and repaid by the assessee by account payee cheques establish the creditworthiness by giving their complete address, GIR No, PAN along with copies of assessment order where appeal u/s. 250A was dismissed. The SLP filed by the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n against the shareholders no against the assessee. The assessee company has proved the source of investor and all the investment paid by account payee cheque. The learned counsel placing reliance in the case of Metachem Industries 245 ITR 0160(MP) and Sarogi Credit Corporation vs. CIT [103 ITR 0344] (Patna) and Lovely Exports Pvt. Ltd. 216 CTR 0195 (SC) wherein it was held that identity of shareholder for credit this not account can be made in the case of the assessee considering in the hands of investor. The learned counsel further cited the decision in the case of CIT vs. Steller Investment Ltd. [ 251 ITR 0263 ] (SC) , CIT vs. Lovely Exports Pvt. Ltd. [216 CTR 0195 ] (SC) and Hindustan Inks Resins Ltd. vs. Deputy Commissioner of Income-tax [ 60 DTR 0018 ] (Guj) (HC) wherein it was observed the learned counsel further placed reliance in the case of CIT Vs. Himatsu Bimet Ltd. [12 taxmann.com 87] (Guj)(HC) wherein the assessee has filed confirmation from all share applicants, details of share, full address, PAN No. and tax jurisdiction of depositors- Further, the Tribunal noted that all the payments were received by cheques and were credited in bank account of assessee; share app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be attended before the A.O. for aforesaid reasons. Since, 271 investors have attended and filed copy of acknowledgement of return of income, computation of income, balance, their bank account, share application form, therefore, their identity has been duly established. The A.O. has also not doubted on their creditworthiness, but doubted on genuineness of transactions, we find that the income disclosed by the investors in their return of income was between the ranges of ₹ 1.52 to ₹ 2 lacs. It is further noticed that all the investment by the concerned parties has been made by account payee cheque and there is no cash deposit before issue of cheque in their bank account. The assessee has established that it has taken money by way of account payee cheque from the share applicant who are all income tax assesses, whose PAN have been disclosed and the transactions of investment of share application money has been disclosed in their Income-tax return. These investments have been duly appeared before the Assessing Officer and furnished documentary evidences then the A.O. in question has no justification to disbelieve the transaction reflected by the share applicant. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s. 68 of the Act. Similarly, Hon ble Delhi High Court CIT vs. Kamdhenu Steel Alloys Ltd. Ors. [ 361 ITR 0220 ] (supra) has held that one adequate material is given, which is prima facie discharge the burden of identity of the shareholder, genuineness of the transaction and creditworthiness in such evidence is to be discarded it has created evidence, the Revenue is supported to make through probe before it could nail the assessee and fasten the assessee with such liability u/s. 68, A.O. failed to carry out his suspicion to logical conclusion by further investigation, addition u/s.68 and therefore addition u/s.68 is not sustainable. In the present case, the assessee has furnished all the documentary evidence in form of return, copy of capital account, bank statement, concerned identity and investor even appeared in person before the AO, therefore, the A.O. cannot discard these evidences without making further investigation to establish that it was a created evidence. In case of Sarogi Credit Corporation vs. CIT [ 103 ITR 0344 ] (Patna) (HC) it was held that once the identity of third party credit established before the ITO and the creditors have pledged their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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