TaxTMI 
TaxTMI 
2019 (9) TMI 44
X X X X Extracts X X X X
X X X X Extracts X X X X
....revity, a ground of appeal filed by the revenue in ITA No. 903/Mum/2018 is reproduced as under:- 1. "Whether on the facts and circumstances of the case and in Saw, the CIT(A) was justified in deleting the addition of Rs. 9,80,00,000/- made by the Assessing Officer ignoring the fact that the AO has rightly considered statement admitted by Shri Kamal Khetan and Shri Vikash Sankhlech u/s 131 was an credible and admissible in the eyes of law? 2. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of Rs. 9,80,00,000/- made by the Assessing Officer ignoring the fact that statement made u/s 131 givers by Shri Kamal Khetan retracted after long gap of more than 2 years, making inordinate delay of 2 thus deserves to be rejected as the same was an afterthought on the part of the Assessee ? 3. The appellant prays that the order of the CIT(A) on the stove grounds be set aside and that of the Assessing Officer be restored.- 4. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary. 3. The assessee has, taken more or less common grounds, in their respective cross objections. Theref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rged and collected amounting to Rs. 9,80,00,000/-. Thereafter, the AO, in order to verify, the genuineness of transactions and establish the fact, whether the assessee company commends such huge premium, issued notice 133(6) of the Income Tax Act, 1961, to the Bank of Rajasthan (Now ICICI Bank Ltd.) for the purpose of ascertaining details of transactions for financial year 2008-09. The AO has also issued notices u/s 133(6) of the Act, to various other parties with whom, the assessee company has entered into transactions, during the relevant period. However, most of the notices returned un-served with a remark 'left' or 'not known'. Thereafter, the AO deputed Inspector of his office to examine where about of the bank address of Bank of Rajasthan and the Inspector visited the premises and noticed that Bank of Rajasthan has been taken over by the ICICI Bank Ltd. Accordingly, a letter was issued to the Principal Officer of ICICI Bank, calling for information u/s.133(6) of the Act, in respect of bank statement for the period from 01/04/2008 to 31/03/2015, for which the bank has replied that the bank statement, for the above period cannot be furnished, because the number of accounts fur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies carries huge reserves and surplus of Rs. 46.06 crores, but said companies have been taken over by Sunteck group through SK Infrastructure Pvt.Ltd. at face value of Rs. 1 crore. He, further analyzed financial statement of the assessee company and come to the conclusion that although, the assessee has issued shares at huge premium, but on perusal of its financial statement, the financial of the company does not support such huge valuation of shares, which is evident from the fact that it has earned 'nil' income from operations and also declared net loss of Rs. 24,676 for the year under consideration. Therefore, he opined that the assessee has failed to prove, credit found in the form of share capital and share premium received from allotment of shares by discharging its onus cast upon u/s 68 of the I.T.Act, 1961, in order to prove identity, genuineness of transactions and credit worthiness of the parties and accordingly, by relied upon various judicial precedents, including the decision of Hon'ble Supreme Court in the case of Suamati Dayal vs CIT (995) 2014 ITR 801 and also decision of Hon'ble Delhi High Court in the case of CIT vs Nova promoters & Finlease Pvt.Ltd. (2012) 18 tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ant findings of the ld. CIT(A) are as under:- 8.0 I have gone through the assessment order, the appellant's submission and other materials on record. 8.1 The main thrust of the appellant's arguments is that the A.O. has not applied his mind and has mechanically reopened, the assessment for A.Y.2009-10. In this regard, it has been noted that the A.O. has received credible information from DIT (I & CI),regarding the receipt of huge amount of share premium, which according to the A.O. was prima-facie not justifiable. 8.2 It is pertinent to note that no scrutiny assessment was done in the case of the appellant company and the case was just processed u/s 143(1) of the Act. In view of this, there was hardly any information on record, which could have explained the huge quantum of share premium introduced during the year under consideration. The A.O, has also noted that the appellant is a new company and barely had the financial strength to support the quantum of share premium, as has been received. 8.3 It is a matter of record that the copy of [he reasons recorded for reopening the assessment u/s 147 of the Act were duly provided 10 the appellant company. During the cours....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so that it was held by the Hon'ble Supreme Court in Claggett Brachi Co.Ltd. vs CIT 177 ITR 409 (SC) that an information obtained during assessment proceedings of a subsequent year can also validate the proceedings initiated u/s 147 for earlier year. Similarly, Hon'ble Bombay High Court in the case of Anusandhan Investments Ltd. vs. M.R.Singh, DCIT, 287 ITR 482 held that a notice issued u/s. 148 based on assessment of subsequent assessment year is valid even if the appeal is pending for such assessment. 8.8 Further, it is the duty of the assesse to disclose full and true materials to the A.O. but for which the AO, could initiate the reassessment proceedings. It has been held by the Hon'ble Supreme Court in Shri Krishna P. Ltd. 221 ITR 538, 549 that every disclosure is not and cannot be Treated to be a true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. The Hon'ble Supreme Court held that a partial disclosure may very often be a misleading one. Therefore, what is required is a full and true disclosure of all material facts necessary for making assessment for that year. 8.9 The Hon'ble Supreme Court in the ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'failure to fully and truly disclose material facts' also relate to the stage of the assessment proceeding, the second stage. There can be omission and failure on the part, of the assessee to disclose fully and truly material facts during- the course of the assessment proceedings. This can happen when the assessee does not disclose or furnish to the AO complete and correct information and details it is required and under an obligation to disclose. Burden is on the. assesses to make full and the true disclosure". 8.14 Further, in the case of Piaggio Vehicles P. ltd. YS. DCIT 290 ITR 377 (Bom), the Hon'ble jurisdictional High Court held that in a case of reopening after 4 years subsequent 10 scrutiny assessments, contradiction was discovered between Tax Audit report and Return of income, it was a case of omission and /or failure on the part of its income. It is also held by Hon'ble Supreme Court that facts which could have been found by the ITO by further probing arc covered under failure to disclose fully and truly all material facts. 8.15 In the case of Coca Cola India Vs. ACIT &Or& (2009)221 CTR 0225 : (2009) 17 DTR 0066 : (2009) 309 ITR 0194 ; (2009) 177 TAXMAN 01....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder of TPO- Raymond Woollen Mills Ltd, vs. ITO &Ors. (1999) 152 CTR (SC) 418 ; (1999) 236 ITR 34 (SC) and Phool Chand Bajrang Lal vs. ITO (1993) 203 ITR 456 (SC): AIR 1993 SC 2390 relied upon. (Paras 46, 47, 50&51) 8.16 In view of the above binding precedents of the Hon'ble Supreme Court, 1 am of the view that t he AO had valid reasons to initiate reassessment proceedings which were duly recorded and communicated to the appellant. 8.17 Thus, there is no denying of the fact that the A.O had in his possession, credible information, which prima facie led to the formation of a belief that income has escaped assessment in the case of the appellant company. Therefore, in my considered opinion, reopening of assessment was in accordance with the provisions of section 147 of the Income Tax Act. Accordingly, this Ground of Appeal NO.1 of the appellant company is dismissed. 9. Insofar as, additions made towards share capital u/s 68 of the Income Tax Act, 1961, the ld. CIT(A) after considering relevant submission of the assessee and also by relied upon plethora of judgments, including the decision of Hon'ble Supreme Court in case of Lovely Exports Pvt. Ltd. Vs. CIT, 216 CTR 195, held....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M/s Bell Fabrics Pvl. Ltd.& M/s Gandhar Yarn Pvt. Ltd, It is also a fact that in the A.Y. 2009-10, Shri Kainal Khetan was nm connected / related even with the holding company namely, M/s Akshunya Energy Private Limited, Shri Kamal Khetan was neither a shareholder nor a director in the 5 companies or it's holding company in the A.Y. 2009-10. It was only in A.Y. 2012-13 that Shri Kamal Khetan of Sunteck Group has taken over M/s AkshunyaEnergy Private limited through M/s Eskay Infrastructure Private Ltd ( a concern of Sunteck Group) 12.19 In view of these circumstances, it is factually incorrect to adversely interpret the statements of Shri Kamal Khetan & Shri Vikas Sanklecha, which are not relevant for the current assessment year i.e. A.Y. 2009-10. It is pertinent to note that neither Shri Kamal Khetan nor Shri Vikas Sankleeha, had any locus-standi in A.Y. 2009-10, in relation 10 the impugned j companies. In fact, in all the statements recorded of Shri Kamal Khetan& Shri Vikas Sanklecha are referring to events, which have happened after the current assessment year under consideration. 12.20 The above observations are further reinforced from the fact that Shri Kamal Khetan h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urther verification or enquiries were done by the A.O. on the documentation of shareholders / investors provided by the Appellant. Thus, the Appellant Company has duly discharged the onus for proving the identity, genuineness and creditworthiness of the various investors. 12.24 As regards the valuation of the shares of the appellant company is concerned, it has been submitted that valuation is a consideration for the investor and not for the Revenue, especially in the light of the fact that the provisions of section 56(2)(viib) were introduced in the statue w.e.f. 01.04.2013 and have not been given retrospective effect. Thus, as per the Appellant, the provisions of section 56(2)(viib) are applicable from the A.Y, 2013-14 and onwards. Accordingly, it has been submitted that the A.Q, ought to have considered the law as it was in force during A-Y.2009- 10. It has also been emphasized, during the appellate proceedings that even the first proviso appended 10 section 68 of the Act, which requires the investor also, to satisfactory explain the nature and source of the credits was inserted w.e.f 01.04.2013 i.e. from A.Y, 2013-14 and hence the same is not applicable for the present assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nted the assessee's own income from undisclosed sources, as the assessee had furnished relevant details of the subscribers and the shares were allotted as per the rules of stock exchange." 12.28 Apart from the above two decisions, the Appellant Company has also relied on many other decisions in support of its contention that no such addition could have been made by the assessing officer in the light of the fact that statue was amended with the proviso appended to section 68 w.e.f. A.Y.2013-14 and it WAS not a retrospective amendment. 12. 29 Another objection of the A.O. contained in the assessment order is that the bank of the appellant company has failed to provide the bank statement of the appellant company, which was requisitioned under section 133(6) of The Act. As far as the issue of bank statement is concerned, the appellant company has supplied the same to the A.O., during the course of assessment proceedings, itself. In fact the A.O. has made observations in the assessment order based on the bank statements provided by the appellant company. Hence, no adverse inference can be drawn by the A.O. on this issue. 12.30 The A.O. has erred in relying on the statements of Shr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowing reasons: * Ld. A.O. made addition without bringing material on records which is bad in taw. * Mr Paras Ponval was not partner and employee of this firm and hence the addition is bad in laws. * There should sufficient and adequate material on records for making any addition. * During the assessment year there was not purchases and sales of properly and assesses profit & Loss account shows very clearly that there was not deaf in immovable property during the year. * The statement given by Paras Porwal is retreated by him on 26 July 2013 and he said retraction confirmed on 29-04-2014 vide affidavit. * The Ld. A.O did not bring any calculation and supporting evidences on records that how to derived this amount and how to earn this income from assessee. * Addition made on a statement which was retreated by party cannot concluded as reliable evidences. 6.2 I have gone through the assessment order and the submissions of the appellant. I find that the addition of Rs. 28,60,00,000/- was made solely on the basis of the statement of Shri Paras Porwal. The appellant has contested the addition on the ground that Shri Paras Porwal is not connected with the firm (appellant)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itors in person when the AO called upon the assessee to produce them personally for examination, therefore, it is very clear that identity of the parties is in doubt. As regards genuineness of transaction and creditworthiness of parties, the AO has brought out clear facts to the effect that the assessee could not discharge its onus in respect of creditworthiness. Although, the subscribers have filed their acknowledgment of income tax return, but profit declared for the year under consideration is either nil or negligible when compared to the huge amount of share capital invested in the assessee company. The CIT(A) without appreciating these facts, simply deleted additions made by the AO towards share capital and premium u/s 68 of the Income Tax Act, 1961. In this regard, he relied upon the decision of Hon'ble Supreme Court in the case of Konark Structural Engineers Pvt Ltd vs. DCIT (2018) 257 Taxmann.com 262(SC). 12. The learned AR for the assessee submitted that the ld. CIT(A) had rightly deleted the additions made by the Assessing Officer towards share capital amounting to Rs. 9,80,00,000/- u/s. 68 of the I.T.Act, 1961, because the assessee has discharged primary onus of proving....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... identity, genuineness of transaction and credit worthiness of the parties, then the Assessing Officer can proceed to re-open the assessment of the creditors, but sum so received from the creditors cannot be regarded as undisclosed income of the assessee. The assessee has further relied upon the following judicial precedents: a) CIT vs. Green Infra Ltd (2017) 292 CTR 233(Bombay) b) CIT vs. Gagandeep Infrastructure Pvt Ltd.(2017) 394 ITR 680(Bombay) c) CIT vs. Goa Sponge and Power Ltd Tax Appeal No. 16 of 2012 (Bombay High Court) d) CIT vs. Creative World Telefilms Ltd 333 ITR 100 (Bom- High Court) e) CIT vs. Lovely Exports (P) Ltd 216 CTR 195 (SC) f) CIT vs. Steller Investment Ltd 251ITR 263 (SC) g) SDB Estate Pvt Ltd vs. ITO ITA No.584/M/2015 h) CIT vs. Expo Globe India Ltd 361 ITR(0147 (Del-High Court) i) CIT vs. Victory Spinning Mills Ltd (2014) 90 CCH 55 (Mad -High Court) j) CIT vs. Dwarkadhish Investment (P) Ltd (2011) 330 ITR 298 (Del-High Court) k) CIT vs. Nishan Indo Commerce Ltd 101 DTR 0413 (Cal - High Court) l) CIT v. Vacmet Packaging (India) Pvt Ltd (2014) 88 CCH 065 (All-HC) m) CIT vs. Gangeshwari Metal Pvt Ltd (2014) 361 ITR 10 (Del-High Cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he transactions of investments and share capital in the above mentioned five companies. He, further stated that transactions of investments and share capital were handled by the old management and hence, he was not in a position to offer any comments on the admission made by the old management, in respect of share capital and share premium. In the said statement, in reply to question No.11, shri Kamal Khetan, once again stated that he was unaware as to the basis on which, shri Vikas Sankhlecha has stated that these five companies are Shell Company. He had also asked for cross-examination of shri Vikas Sankhlecha for the facts mentioned in his statement. 14. The Ld. AO has made additions towards share capital and share premium, on the ground that although, the assesee has filed various details to prove identity, genuineness of transactions and creditworthiness of the parties but, on perusal of details filed by the assessee, it was noticed that the assessee has failed to establish transactions between the parties are genuine in nature and also the subscriber to the share capital are having capacity to explain huge investments in assessee company. According to the AO, mere furnishing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m, one has to see, whether the assessee has discharged its initial onus cast upon u/s 68 of the I.T.Act, 1961 or not. In this case, the assesee has filed various details, including share application form, copy of declaration, board resolution, bank statement of Investor Company, PAN card, acknowledgment of return of income, financial statement of Investor Company, form No. 2 for allotment of equity shares and bank statement reflecting, the amount received through banking channels. Once, the assessee has discharged its initial onus by filing various details, then the onus shift to the AO to carry out further verification, in the light of evidences filed by the assessee to ascertain true nature of transactions between the parties before, he come to the conclusion that the transactions between the parties are genuine or not. In this case although, the AO has issued 133(6) notices to the parties, no further enquiry has been conducted, including issue of summons u/s 131. No doubt, none of the investors companies have responded to 133(6) notices issued by the AO, but fact of the matter is when, assessee has filed complete set of documents, including name and address of the parties, it i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court in the case of Kishanchand Chellaram vs CIT 1980 125 ITR 713 (SC), where it was held that when, third party information is relied upon to draw an adverse inference against the assessee, the same needs to be provided and also opportunity of cross examination shall be given, if such opportunity is availed by the assessee. The Hon'ble Supreme Court in the case of Andaman Timber Industries Ltd Vs CCE, Kolkata II in Appeal No 4228 of 2006 has vide order dated 02.09.2015 had also upheld a similar legal position and held that not allowing the assessee to cross-examine the witnesses by the adjudicating the authority, though the statements and those witnesses were made the basis of the impugned order is a serious flaw, which makes the order nullity in, as much as, it amount to violation of principle of natural justice, because of which, the assessee was adversely affected. Therefore, on this count also the additions made by the AO cannot be sustained. 16. Coming to the other aspect of the issue, the AO has invoked the provisions of section 56(2)(viib) of the I.T. Act, 1961. We find that the said provision has been inserted by Finance Act, 2012 w.e.f 10.04.2013, where it provides tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stion. Even otherwise, assuming for a moment above provisions are applicable for the year under consideration, in order to apply said amended provisions, the AO has to prove that the assessee has not proved capacity of the investors and also not offered any justification for issue of shares at premium. In this case, from the facts on record, it is clear that the assessee has proved identity and genuineness of the transactions by filing necessary evidences. The assessee has filed valuation report from registered valuer as per which the share price of the company is over and above premium charged by the assessee. Therefore, we are of the considered view that provisions of section 56(2)(viib) has no application. 17. Coming to the case laws relied upon by the assessee. The assessee has relied upon plethora of judgements, including the decision of Hon'ble Supreme Court in the case of CIT vs Lovely Exports Pvt Ltd (2008) 216 CTR 195 (SC). In the case laws relied upon by the assessee, the issue has been dealt as under:- CIT vs. Goa Sponge and Power Ltd (13/02/2012) Tax Appeal No. 16 of 2012 (High Court-Bombay) "Once the authorities have got all the details, including the name and ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eller Investment Ltd (2001) 251 ITR 263 (SC) (civil appeal) "That the increase in subscribed capital of the respondent company could not be a device of converting black money into white with the help of formation of an investment company, on the round that, even if it be assumed that the subscribers to the increased capital were not genuine, tinder no circumstances could the amount of share capital be regarded as un disclosed income, an appeal was taken by the Department to the Supreme Court. The Supreme Court dismissed the appeal holding that the Tribunal had come to a conclusion on facts and no interference was called for." CIT vs. Nav Bharat Duolex Ltd (2013) 35 Taxmann.com289 (All- High Court) "We have considered the arguments of the counsel for the parties. CIT(A) found that five companies subscribing the equity shares amounting to Rs. 25,00.000/- were identified and they had submitted their bank statements, cash extracts and returns filing receipts. As such identity of the share applicant companies and purchase of share had been proved by the assessee. Supreme Court in the cases of CIT v. Steller Investments Ltd. [2001] 251 ITR 263 and Lovely Exports case (supra), has h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. A bald assertion by the Assessing Officer that the credits were a circular route adopted by the assessee to plough back its own undisclosed income into its accounts, could be of n o avail. The Revenue was required to prove this allegation. An allegation by itself which is based on assumption will not pass muster in law. The Revenue would be required to bridge the gap between the suspicions and proof in order to bring home this allegation. The Tribunal without adverting to the principle laid stress on the fact that despite opportunities, the assessee and/or the creditors had not proved the genuineness of the transaction. Based on this it construed the intentions of the assessee as being mala fide. The Tribunal ought to have analysed the material rather than be burdened by the fact that some of the creditors had chosen not to make a personal appearance before the Assessing Officer. If the Assessing Officer had any doubt about the material placed on record, which was largely bank statements of the creditors and their income-tax returns, it could gather the necessary information from the sources to which the information was attributable......If it had any doubts with regard to their....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wn income from undisclosed sources. It was nobody's case that the non resident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription an d that the transaction was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the investor alone was to be seen. Thus, the addition was rightly deleted." CIT vs. Shree Rama Multi Tech Ltd (2013) 34 Taxmann.com177 (Guj-HC) "It is noted that Commissioner (Appeals) as well as the Tribunal have duly considered issue and having found complete details of the receipts of share application money, along with the form names and addresses, PAN and other requisite details, they found complete absence of the grounds noted for invoking the provision of section 68. Moreover, both rightly had applied the decision of CIT vs. Lovely Exports (P) Ltd to the case of the assessee. Therefore, no reason was found in absence of any illegality much l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ron & Steel P. Ltd. and held that the facts of the case before the Hon'ble Supreme Court are entirely different, where on the basis of facts of that case Hon'ble Supreme Court came to the conclusion that mere furnishing of certain documents is not sufficient enough and what is relevant is all three ingredients, i.e. identity, genuineness of transactions and creditworthiness of the parties should be proved beyond doubt. We find that in the case before the Hon'ble Supreme Court the parties never responded to 133(6) notices. The AO has carried out inquiries by issuing notices u/s. 133(6), for which none of the companies have replied. None of the companies produced bank statements to establish source of funds for making such huge investments in shares, even though they were declaring a very meagre income in the return. None of the investors appeared before the AO, but merely sent response through Dak. In this case, from the facts on record, it is clear that the assessee has filed complete set of documents, but the AO neither carried out any investigation nor issued notices u/s. 133(6) or summons u/s. 131(1) to examine the veracity of documents furnished by the assessee. Unless, the AO ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....regarded the evidences submitted on record before him both by the assessee as well as by the loan creditors directly to him. The written submissions filed by the ld DR in this regard is repetition of various contentions already available on record by the lower authorities, apart from placing reliance on certain decisions. We find that both the aforesaid loan additions were confirmed by the ld CITA by placing reliance on the decision taken by his predecessor in Asst Year 2012-13. We find that this tribunal in assessee's own case for the Asst Year 2012-13 in ITA No. 5954/Mum/2016 dated 29.12.2017 in respect of loan transactions of entities controlled by Shri Pravin Kumar Jain and others had elaborately dealt this issue and held as under:- "5. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The AO made addition towards unsecured loans received from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd on the basis of information received from Investigation Wing which revealed that the assessee is the beneficiary of bogus accommodation entries provided by Shri Praveenkumar Jain through his bogus companies.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rthiness of the creditors. Once the assessee discharges initial burden placed upon him, then the burden todis prove the said claim shifts upon the AO. In this case, the assessee has discharged his onus cast u/s 68 by filing identity of the creditors, genuineness of transactions and creditworthiness of the parties which is evident from the fact that the assessee has furnished financial statements of the creditors wherein the said transaction has been disclosed in the relevant financial years. We further notice that the assessee also filed financial statements of the creditors which are enclosed in paper book filed. On perusal of the financial statements filed by the assessee, we find that both the companies are active in the website of Ministry of Corporate Affairs. This fact has been further supported by the letter of AO wherein the AO has accepted that both companies, viz. Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd are active in MCA website. We further notice that both the companies have filed financial statements for the year ending 31-03- 2006. Therefore, we are of the considered view that the assessee has discharged its initial burden cast u/s 68 by filing identi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the section 68 laid down by the Court namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on fact it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders, i.e., they are bogus. The Apex Court in a case in this context to the preamended section 68 has held that where the revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Incometax Officer to proceed by reopening the assessment of such shareholder and assessing them to tax in accordance with law. It does not entitle the revenue to add the same to the assessee's income as unexplained cash credit." [Para 3] 8. The assessee has also relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs Archid Industries Pvt Ltd in ITA No1433/Mum/2014 dated 5th July, 2017. The Hon'ble Bombay High Court, after considering relevant facts and also by following judgement in the case of CIT vs Gagandeep Infrastructure Pvt Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of their identity and the fact that the amounts have been transferred through cheque payment does not by itself mean that the transactions are genuine. In this case, the assessee has furnished all evidences and also the parties personally responded to the notices M/s Shree Laxmi Developers issued by the AO u/s 133(6) by filing various details, therefore, case law relied upon by the Ld.DR cannot be applicable to the facts of the present case. 11. In this view of the matter and considering the ratio of the case laws discussed above, we are of the considered view that the assessee has discharged identity, genuineness of transactions and creditworthiness of the parties. Therefore, there is no reason for the AO to make addition towards loan u/s 68 of the Act. Hence, we direct the AO to delete addition made towards loans alongwith interest u/s 68 of the Act. 8.1. We find that the ld DR vehemently placed reliance on the recent decision of Hon'ble Supreme Court in the case of PCIT vs NRA Iron & Steel Pvt Ltd arising out of SLP(Civil) No. 29855 of 2018 dated 5.3.2019 in support of contentions of the revenue on the impugned issue. In this regard, we find that the facts before the Hon'ble....
X X X X Extracts X X X X
X X X X Extracts X X X X
....racity of the evidences filed on record before him by the assessee as well as by the loan creditors in response to notice u/s 133(6) of the Act. Moreover, all the loan creditors had duly furnished their respective bank statements proving the immediate source of credit for them to justify that they had sufficient creditworthiness to advance loan to the assessee company. From the perusal of the balance sheet of all investor companies, all the loan creditors had sufficient own funds in their kitty which prove their creditworthiness to advance loan to the assessee company. As has been stated hereinabove, the most excruciating point of difference in facts vis a vis the facts of the case before the Hon'ble Supreme Court supra that the investor companies had not even furnished their bank statements to prove their immediate source of credit for making investment in share application monies of NRA Iron & Steel Pvt Ltd. From the bank statements furnished by the loan creditors in the case of the assessee herein, we find that there were no cash deposits in the bank accounts of the lenders prior to issuance of loan to the assessee company. In the case before the Hon'ble Supreme Court, the AO in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsecured loan and had duly satisfied the three necessary ingredients of section 68 of the Act viz, the identity of the loan creditors , creditworthiness of loan creditors and genuineness of loan transactions. Hence we direct the ld AO to delete the addition made in the sums of Rs. 50 lacs and Rs. 25 lacs towards unsecured loan u/s 68 of the Act. Accordingly, the Grounds 1 to 6 raised by the assessee are allowed." 19. In the case of PCIT vs. Hi-Tech Residency Pvt. Ltd. (2018) 257 Taxman 335, Hon'ble Supreme Court has considered identical issue and held that where an assessee company had discharged the onus of establishing identity, genuineness of transaction and creditworthiness of investors, no additions could be made u/s. 68 of the I.T. Act, 1961. We, further, noted that although the Apex Court has not expressed any opinion, because of dismissal of SLP filed by the assessee, the fact of the matter is that this issue has been considered by the Hon'ble Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd (supra), where the issue has been thoroughly examined in the light of provisions of section 68 of the Act, and held that if the share application money is received by the as....