TMI Blog2019 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble Supreme Court in the case of Andaman Timber Industries Ltd Vs CCE, Kolkata II [ 2015 (10) TMI 442 - SUPREME COURT] 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. Additions by invoking the provisions of section 56(2)(viib) - We find that the said provision has been inserted by Finance Act, 2012 w.e.f 10.04.2013, where it provides that where a closely held company issues its shares at a price which is more than its fair market value, then amount received in excess of fair market value will be charged to tax in the hands of the company as income from other sources. On perusal of amendments brought out by Finance Act 2012, w.e.f. 01.04.2013 to the provisions of section 56(2)(viib) and section 68 it is very clear that where the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and/or add new grounds which may be necessary. 3. The assessee has raised following grounds of appeal in C.O.No. 77/Mum/2019. 1. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing in reopening the assessment u/s.147 of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 4. The brief facts of the case are that the assessee company is engaged in the business of financing and investment activities and trading in fabrics and cloths, filed its return of income for AY 2009-10 on 28/09/2009 declaring total loss at ₹ 17,814/-. Thereafter, the case has been reopened u/s 147 of the Act, 1961, for reasons recorded, as per which, income chargeable to tax had been escaped assessment within the meaning of section 147 of the I.T.Act, 1961, on account of receipt of share capital by issue of shares at huge premium of ₹ 464/- per equity shares having face value of ₹ 10/- per share. The reasons, further stated that information received from the office of DIT(I CI) by the ITO, Ward 1(1), Kalyan regarding hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove period cannot be furnished, because the number of accounts furnished in your letter does not match with bank account number begin with ICICI bank. Thereafter, the assessee was given a show-cause to produce, the complete bank account statements for the period from 01/04/2008 to 31/03/2015, for which, the assesee has filed complete set of documents, including bank statement for the relevant period. Further, the AO issued summons to the promoter of Sunteck group shri Kamal Khetan and recorded his statement of oath u/s 131 of the I.T.Act, 1961, in respect of investments and share premium collected from various parties and such statement has been reproduced at page no. 7 to 16 of assessment order. 6. The AO, after considering relevant submissions of the assessee and also taken note of survey conducted, in the case of Suntech group u/s 133A of the I.T.Act, 1961, on 15/10/2013, came to the conclusion that although, assessee claims to have furnished various details to prove identity, genuineness of transactions and credit worthiness of the parties from whom, share capital along with premium has been collected, but said submissions cannot be accepted for the reasons tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Delhi High Court in the case of CIT vs Nova promoters Finlease Pvt.Ltd. (2012) 18 taxmann.com 2017 held that the assesee has failed to conclusively prove receipt of share premium as a genuine transaction in light of provision section 68 of the I.T.Act, 1961 and accordingly, made additions of ₹ 9,00,00,000/- u/s 68 of the I.T.Act, 1961. 7. Aggrieved, by the assessment order, the assessee preferred an appeal before the ld. CIT(A). Before, the ld. CIT(A), the assessee had challenged reopening of assessment on the ground that the AO has reopened assessment on mechanical manner on the basis of information received from DIT(I CI), without application of his mind on the issue in light of return filed by the assessee. The assessee had also taken another leg of arguments to contest reopening assessment that the AO had reopened assessment without there being any fresh tangible materials in his possession which is evident from the fact that the reasons recorded for reopening of assessment talks about return of income, which was accepted earlier. Therefore, in absence of tangible materials, reopening is bad in law whether or not original assessment was made u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 course of the appellate proceedings, the appellant company has filed an objection, vide letter dated 11.08.2016 for the reopening of assessment. This objection has been duly disposed of by The A.O., vide his office fetter dated 16.08.2016. Thus, the A.O. has meticulously followed the due procedure for re-opening of the assessment u/s 147 of the Act, which can't be faulted with. 8.4 The section 147 of the Act authorizes and permits, the Assessing Officer to assess or reassess income chargeable to tax, if he has reason to believe that income for any assessment year has escaped assessment. The word reasons in the phrase reason to believe means cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case of Raymond Woollen Mills Ltd. VS. ITO 236 ITR 34, 35 (SC) has held that for determining whether initiation of reassessment proceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. It further held that the sufficiency or correctness of the material is not a thing to be considered at this stage. 8.10 The present case is also not one of change of opinion. The question of change of opinion arises, when the AO forms an opinion and decides not to make an addition and holds that the appellant was correct in his stand. 8.11 The Supreme Court in Malegaon Electricity Co. (P) Ltd. vs. CIT (1970) 78 ITR 466 (SC) has observed, as under : If is true that if the ITO had made, some investi0aiionf particularly if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 0103, the Hon'ble Punjab Haryana High Court has held that notice u/s 147 should be held as bad in law, only if extraneous or absurd reasons are recorded by the AO, R was further held by the Hon'ble Court that whether or not the material should be finally taken into account for reassessment is a separate matter, which has to be dealt with during the course of reassessment proceedings. The relevant portion of the judgment in this regard is reproduced as under: - Objection of counsel for petitioner is two fold :- (a) Reference to inapplicable provision of s. 92 as it stood prior lo amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the assessee had filed enormous details to prove identity, genuineness of transaction and creditworthiness of parties, but it was the AO who had failed to investigate the case properly, to rebutte details filed by the assessee to come to the conclusion that the credit in form of share capital is unexplained credit within the meaning of section 68 of the Income Tax Act, 1961. The CIT(A) had also discussed the issue in light of decision of Hon ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 locusstandi 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 has not made any disclosure for the A,Y. 2009-10, the current assessment year, under consideration. At the cost of repetition, it is stated that Shri Kamal Khetan has made a disclosure of ₹ 47.6 Crore relevant to A.Y. 2010-11, A.Y, 201243 A.Y. 2013-14. 12.21 Further, the AO, has without bringing on record any material evidence held that the Impugned 5 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessment year, viz. A.Y. 2009-10. 12.25 As regards the notices issued under section 133(6) of the Act are concerned, the Appellant Company has stated that due to time lag certain persons might have left the place and for this no responsibility ca be fastened on the appellant. It has been stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee 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 Shri Kamal Khetan S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the addition is not sustainable for the following 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 ₹ 28,60,00,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to discharge the onus by filing necessary evidence to prove true identity of the creditors, genuineness of the transactions and creditworthiness of the parties. In this case, although the assessee has filed number of documents to prove the identity, he could not produce creditors 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( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, nothing has been pointed out by the Assessing Officer. The learned AR further referring to various judicial precedents including the decision of Hon ble Bombay High Court in the case of CIT vs. Creative World Telefilms Ltd. (333 ITR 100) submitted that once the assessee has discharged initial onus of proving 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, as additional capital in the company, which has made him 99% owner of the company. Another statement of Shri Kamal Khetan was recorded on 16/10/2013. In response to question No.10, he confirmed that one of his group company M/s Eskay Infrastructure development Pvt.Ltd. had acquired holding company of five companies namely M/s Akshunya Energy Pvt.Ltd for a consideration of ₹ 1 crore. During the course of assessment proceedings, another statement of shri Kamal Khetan was recorded u/s 131 of the I.T.Act, 1961 on 08/11/2016. In the said statement, while replying to question No.9, he had denied any knowledge about all the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assesee offered no explanation about the nature and source, thereof or the explanations offered by the assessee, in the opinion of the AO is not satisfactory, then sum so found credited may be charged to income tax, as income of the assesse of that previous year. In order to fix any credit within the ambit of section 68 of the I.T Act, 1961, the AO has to examine three ingredients ie., identity, genuineness of transactions and creditworthiness of the parties. In this factual and legal background, if you examine, the present case in the light of various evidences filed by the assessee, in order to prove credit found in the form of share capital and share premium, 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 disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of statement of shri Vikas Sankhlecha and also opportunity for cross examination of shri Vikas Sankhlecha, the AO has denied, the opportunity of cross examination and also not furnished copies of statement recorded from shri Vikas Sankhlecha. It is a settled position of law that once, any third party information/statements is relied upon to make additions, it is the obligation of the AO to provide copies of such statements/information and also to provide an opportunity of cross examination of the person, who gave the statement, when such opportunity has been availed by the person against whom, such statements are used. This legal proposition is supported by the decision of Hon ble Supreme 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 simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amendment has been examined by the Hon ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure (P) Ltd. (2017) 394 ITR 680, where the court observed that proviso inserted to section 68 w.e.f. 01.04.2013 is considered to be prospective in nature and is applicable from A.Y. 2013-14 onwards. From the above, it is very clear that similar amendment has been made to provisions of section 56(2) by insertion of clause (viib) so as to bring share premium within the ambit of section 56(2) of the I.T Act, 1961. Since, the proviso inserted to section 68 is considered to be prospective in nature, obviously sub clause (viib) inserted to section 56(2) is also considered to be prospective and cannot be applied to the assessment year in question. 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reach the shareholders. The AO did nothing except issuing summons which were ultimately returned back with an endorsement not traceable In our considered view, the AO ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the AO. In the above circumstances, the view taken by the Tribunal cannot be faulted. CIT vs. Lovely Exports (P) Ltd (2008) 216 CTR 195 (SC) If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, 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. CIT vs. Steller 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Supreme Court, we dismiss the appeals with observations that the department is free to proceed to reopen their individual assessments of the shareholders whose names and details were given to the Assessing Officer. ACIT vs. Venkateshwarlspat Pvt Ltd (2009) 319 ITR 393 (Chhatisgarh-High Court) If the share applications are received by the assessee from alleged bogus shareholders, whose names 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 the undisclosed income of the assessee. Mod Creations Pvt Ltd vs. ITO (2013) 354 ITR 282 (Del-High Court) Held, allowing the appeal, (i) that the assessee had discharged the initial onus placed on it. In the event the Revenue still had a doubt with regard to the genuineness of the transactions in issue or as regards the creditworthiness of the creditors, it would have had to discharge the onus which had shifted on to it. A bald assertion by the Assessing Officer that the credits were a circular route adopted by the assessee to plough back its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case also, the respondent assessee has received share application money from different sub scribers. It was found that large number of subscribers had responded to the letters issued by the Assessing Officer or summons issued by him and submitted their affidavits. In some cases such replies were not received through posts. ₹ 9 lacs represented those assessees who denied having made any investment altogether. The issue thus would fall sq uarely within the ambit of the judgment of the Supreme court in the case nf Lovely Exports (supra). No error of law can be stated to have been committed by the Tribunal. Tax Appeal is therefore dismissed. CIT vs. Peoples General Hospital Ltd (2013) 356 ITR 65 (MPHigh Court) Held , dismissing the appeals , that it the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition could be made tinder section 68 of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part o f the share capital represente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribers are not in doubt. The transactions have also been undertaken through banking channels inasmuch as the application money for the shares was given through account payee cheques. The creditworthiness has also been established, as indicated by the Tribunal. The subscribers have given their complete details with regard to their tax returns and assessments. In these circumstances, the Department could not draw an adverse inference against the assessee only because the sub scribers did not initially respond to the summons. The subscribers, however, subsequently gave their confirmation letters as would be apparent from the impugned order. The identity of the subscribers stands established and it is also a fact that they have shown the said amounts in their audited balance sheets and have also filed returns before the IT authorities. The decision of the Tribunal deleting the addition cannot befaulted. 18. Coming to the case laws relied upon by the learned DR. The DR has relied upon the decision of the Hon ble Supreme Court in the case of DCIT vs. NRA Iron Steel Pvt. Ltd. (supra). We find that co-ordinate Bench of ITAT vide its order dated 03.05.2019 in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuine transactions after treating the principal portion of loan as ingenuine. We also find that the interest paid on such unsecured loans to aforesaid loan creditors have been duly subjected to deduction of tax at source. Notice issued u/s 133(6) of the Act by the ld AO had been duly replied by the concerned loan creditors directly before the ld AO and no deficiencies were noticed by the ld AO thereon. After this, the ld AO did not proceed to make further enquiry on the subject mentioned loan creditors. It is not in dispute that the assessee and the concerned loan creditors had duly filed their respective bank statements to prove the immediate source of credit for advancing loans to the assessee company, confirmation of having given loans to the assessee company, together with their income tax return acknowledgements and other requisite details called for by the ld AO in the notice u/s 133(6) of the Act. In case if the ld AO had any doubt on the veracity of the documents submitted by the loan creditors, the same could have been confronted on the said loan creditors by issuing summons u/s 131 of the Act and examine them on oath or correspondingly verify the same through the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o prove that the parties have responded to the notices issued u/s 133(6) by AO by filing various details. The assessee also filed bank statements to prove that the said unsecured loans have been repaid in the subsequent financial years. Therefore, we are of the view that there is no reason for the AO to doubt the genuineness of transactions despite furnishing necessary evidences including their financial statements, bank statements and IT returns. 6. The AO has made addition u/s 68 of the Act, on the ground that the unsecured loans are bogus accommodation entries provided by Shri Pravinkumar Jain through his hawala companies. The provisions of section 68 deal with cases where any sum found credited in the books of account of the assessee in any financial year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, then sum so credited may be charged to income-tax as the income of the assessee of that previous year. A plain reading M/s Shree Laxmi Developers of section 68 makes it clear that the initial burden of proof lies on the assessee. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nserted by the Finance Act, 2012 wef 01-04- 2013 is applicable from AY 2013-14 onwards. The Court further observed that the Parliament did not introduce the proviso to section 68with retrospective effect nor does the Proviso introduced states that it was introduced for removal of doubts. Therefore, it is not open to give retrospective effect. The relevant portion of the order of High Court is extracted below:- The proviso to section 68 has been introduced by the Finance Act, 2012 with effect from 1-4-2013. Thus, it would be effective only from the assessment year 2013-14 onwards and not for the subject assessment year. In fact, before the Tribunal, it was not even the case of the Revenue that section 68 as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1-42013 was its normal meaning. The Parliament did not introduced to proviso of section 68, with retrospective effect nor does the proviso to introduced states that it was introduced 'for removal of doubts' or that it is 'declaratory'. Therefore, it is not open to give it retrospective effect, by proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The judgment in case of Gagandeep Infrastructure (P) Ltd (supra) would M/s Shree Laxmi Developers be applicable in the facts and circumstances of the present case. 9. The assessee has also relied upo the decision of Hon'ble Supreme Court in the case of CIT vs Lovely Exports Pvt Ltd (2008) 216 CTR 195 (SC). The Hon'ble Apex Court while deleting the addition made u/s 68 observed that if the share application money is received by the assessee company from alleged bogus shareholders whose names are given to the AO, then the department is free to proceed to reopen their individual assessments in accordance with law, but this amount of share application money cannot be regarded as undisclosed income u/s 68 of the Income-tax Act, 1961. 10. Coming to the case laws relied upon by the Ld.DR. The Ld.DR relied upon the decision of Hon'ble Delhi High Court in the case of Principal CIT vs Bikram Singh in ITA No.55/Del/2017 dated 25-03-2017. We have gone through the case law relied by the Ld.DR in the light of facts of the present case and find that the facts of case before Hon'ble Delhi High Court are entirely different from facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on behalf of any of the investor companies. The Department only received submissions through dak, which created a doubt about the identity of the investor companies. c) In Para 3.8. of the said judgement of Hon ble Supreme Court, it was mentioned that the AO independently got field enquiries conducted with respect to the identity and credit-worthiness of the investor companies, and to examine the genuineness of the transaction. Enquiries were made at Mumbai, Kolkata and Guwahati where these Companies were stated to be situated. In the aforesaid case before the Hon ble Supreme Court, the result of the enquiry by the AO revealed the following:- a) Notice were duly served on certain investor companies, but no reply was received from them ; b) Some of the investor companies were found to be closed at their correct address ; c) Notice could not be served on some of the investor companies ; d) Some of the investor companies replied to notice u/s 133(6) of the Act wherein they had confirmed having made investment in share application money in NRA Iron Steel Pvt Ltd but had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the ld AO. The bank statements were also duly furnished by the loan creditors to prove that they had sufficient creditworthiness to advance loan to the assessee company and since all the transactions were routed through regular banking channels by account payee cheques and in view of the fact that there were no cash deposits prior to issuance of loan to the assessee company, the genuineness of transactions also stand clearly established. This goes to prove their identity, creditworthiness and genuineness of transactions of all the loan creditors. In this scenario, it could be safely presumed that the ld AO was apparently satisfied with the replies given thereon by the loan creditors directly before him in response to notice u/s 133(6) of the Act and hence there is no need to make any examination further. 8.2. In view of the aforesaid distinguishing features on facts of the assessee company vis a vis the facts before the Hon ble Supreme Court, we hold that the reliance placed by the ld DR on the decision of Hon ble Supreme Court supra does not come to the rescue of the revenue. 8.3. At the cost of repetition, we would lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and creditworthiness of the parties by filing various documents. The AO, without carrying out further inquiries in order to ascertain the claim of the assessee, jumped into conclusion on the basis of financial statements of the subscribers that none of them had enough source of income to establish creditworthiness. Therefore, we are of the view that the AO was erred in making additions towards share capital u/s 68 of the Income Tax Act, 1961. The learned CIT(A) after considering relevant facts and also by relied upon various case laws has rightly deleted additions made by the AO towards share capital u/s 68 of the Income Tax Act, 1961. Hence, we are inclined to uphold order of the ld. CIT(A) and direct the AO to delete the additions made towards share capital u/s. 68 of the Act. 21. In the result appeal filed by the revenue is dismissed. Co.No.77/Mum/2019 22. The assesse has filed cross objection against the order of the Ld.CIT(A) challenging the findings of Ld.CIT(A), in respect of confirming the action of the AO in reopening assessment u/s 147 of the I.T.Act, 1961. Since, we have already decided the issue of additions made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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