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TMI Blog2019 (12) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... stments in the assessee- company. 3. Briefly stated, the facts of the case are that the assessee filed its return of income for the assessment year (AY) 2012-13 on 21.08.2012 declaring total income of Rs. Nil. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee had received share premium of Rs. 35,00,00,000/- from one party viz. M/s Prime Properties Pvt. Ltd. From the bank statements of M/s Prime Properties Pvt. Ltd filed by the assessee, the AO observed that there were certain credits which were followed by equivalent debits in the bank statements, leaving a meagre balance at the end of the year. The AO has reproduced those details in the assessment order, which read as under : Date Value Date Withdrawals Deposits Balance (Rs.) 08.12.2011 08.12.2011 0 830 223226.80 cr. 22.12.2011 22.12.2011 0 1650000000 1650223226.80 cr. 22.12.2011 22.12.2011 950000000 0 700223226.80 cr. 22.12.2011 22.12.2011 700000000 0 223226.80 cr. 23.12.2011 23.12.2011 0 350000000 350223226.80 cr. 23.12.2011 23.12.2011 350000000 0 223226.80 cr. 23.12.2011 23:12.2011 100000 0 123226.80 cr. 26.12.2011 26.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring to the decision of the Hon'ble Delhi High Court in the case of CIT v. Value Capital Services P. Ltd. 307 ITR 334 (Del), wherein it is held that unless the Department is able to show that the amount received towards share capital actually emanated from the coffers of the assessee-company, no addition can be made in the hands of the assessee u/s 68 of the Act, the Ld. CIT(A) deleted the addition of Rs. 35,00,00,000/-. 5. Before us, the Ld. Departmental Representatives (DRs) rely on the decision in PCIT v. NRA Iron & Steel (P.) Ltd. (2019)103 taxmann.com 48 (SC); CIT v. Youth Construction (P.) Ltd. (2014) 44 taxmann.com 364 (Delhi); CIT v. Independent Media Pvt. Ltd. (ITA No. 456/2011) by Delhi High Court; Rajmandir Estates (P.) Ltd. v. PCIT (2016) 386 ITR 162 (Cal); Pragati Financial Management (P.) Ltd. v. CIT (2017) 394 ITR 27 (Cal) and M/s Gaurav Pigments Pvt. Ltd. v. CIT (ITA No. 61/LUC/2000) by ITAT Lucknow. Referring to the above decisions, the Ld. DRs submit that the source of source can be examined. 6. On the other hand, the Ld. counsel for the assessee relies on the decision in the case of Pr. CIT v. Aditya Birla Telecom Ltd. (2019) 105 taxmann.com 206 (Bombay) and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. We are unable to uphold the view of the Tribunal that it is incumbent upon the Assessing Officer, on the facts and circumstances of the case, to establish with the help of material on record that the share monies had come or emanated from the assessee's coffers. Section 68 of the Act casts no such burden upon the Assessing Officer. This aspect has been considered more than 50 years back by the Supreme Court in the case of A. Govindarajulu Mudaliar v. CIT, (1958) 34 ITR 807 where precisely the same argument was advanced before the Supreme Court on behalf assessee. The argument was rejected by the Court. Venkatarama Iyer, J. speaking for the Court observed as under (page 810 of the report): - '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 of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the income was derived and why it should be treated as concealed income. In the absence of such evidence, it is argued, the finding is erroneous. We are unable to agree. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation adduced by the assessee with regard to the identity and creditworthiness of the subscriber-companies and the genuineness of the transactions is not acceptable for valid reasons which must be clearly spelt out. He will not, however, be under any duty to further show or establish that the monies emanated from the coffers of the assessee company. To place such a burden on him, an impossible one at that, would be quite contrary to the judgments of the Supreme Court cited above. We may only state that the Assessing Officer shall act in accordance with law. The directions of the Tribunal, quoted above are modified to this extent." In Rajmandir Estates (P.) Ltd. (supra), the Hon'ble Calcutta High Court held that the submission that the source of source is not a relevant inquiry does not appear to be correct. Again the Hon'ble Calcutta High Court in the case of Pragati Financial Management (P.) Ltd. (supra) held that source of source can be relevant inquiry. In Gaurav Pigments Pvt. Ltd. (supra), the Tribunal, referring to the judgment of the Hon'ble Supreme Court in the case of CIT v. Biju Patnaik (1986) 160 ITR 674 (SC) held that source of source is also required to be estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "8. In its decision, the Tribunal noted that the investment made by P5AHIML was done registering itself with SEBI and after obtaining necessary approvals from Ministry of Finance. The application made to the Ministry of Finance contained full details of the investment, the background of the transaction, the terms of the agreement, identity of the investor and the investor group. The Tribunal noted that P5AHIML was an investment arm of Providence Equity Partners and the Tribunal had perused the financial statements which disclosed the flow of funds in the said P5AHIML. The Tribunal further recorded that while making such investment, the investor not only looks for dividend or interest but also expects return on such investment as capital appreciation, when the investment finally gets converted into equity shares. The Tribunal found that this was the reason why P5AHIML had made the investment in assessee company. In the opinion of the Tribunal merely because there were multiple entities involved in such investment process, would not enable the Assessing Officer to draw an adverse inference on the financial capacity of P5AHIML. The Tribunal noted that during the assessment, the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10/- each at a premium of Rs. 990/- per share aggregating to Rs. 35,00,00,000/- to Prime Properties Pvt. Ltd. on 19.01.2012. The AO has mentioned in the assessment order, the bank statement of M/s Prime Properties Pvt. Ltd. We produce below the said bank statement (A/c No. 000405002748 with ICICI Bank) : Date Value Date Particulars Location Chq. No. Withdrawals Deposits Balance (Rs.) 01.12.2011 B/F RPC Mumbai 0.00 0.00 3,22,898.80 Cr 03.12.2011 03.12.2011 Arjan Lal 010204 BOI RPC Mumbai 0.00 2,316.00 3,25,214.80Cr 05.12.2011 05.12.2011 BIL/0002733588 04/IDTAX/63904 8105122011 Nariman Point 20,285.00 0.00 3,04,929.80Cr 07.12.2011 07.12.2011 Kalpatru Heritage Coop Premis Nariman Point 756779 1,00,000.00 0.00 2,04,929.80Cr 07.12.2011 07.12.2011 BIL/0002740358 16/DTAX/63903 4007121108 Nariman Point 1,522.00 0.00 2,03,407.80Cr 08.12.2011 08.12.2011 Narbheram 710369 BOB RPC Mumbai 0.00 3,950.00 2,07,357.80Cr 08.12.2011 08.12.2011 Jaico Book H 000051 BOB RPC Mumbai 0.00 10,759.00 2,18,116.80Cr 08.12.2011 08.12.2011 Jaico ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is seen that on 08.12.2011 there is a balance of Rs. 2,23,226.80. On 22.12.2011 there is a deposit of Rs. 1,65,00,00,000/- in the above account. On the same date there is withdrawal of Rs. 95,00,00,000/- and Rs. 70,00,00,000/-, thus leaving same balance of Rs. 2,23,226.80. On 23.12.2011 there is a deposit of Rs. 35,00,00,000/-. On the same date there is withdrawal of the above amount of Rs. 35,00,00,000/-, leaving the same balance of Rs. 2,23,226.80. Similar pattern we find in the bank account of the assessee-company, (A/c No. 000405100292 with ICICI Bank) which is as under : Date Value Date Particulars Location Chq. No. Withdrawals Deposits Balance (Rs.) 01.12.2011 B/F Mumbai Vakola 0.00 0.00 0.00 22.12.2011 22.12.2011 TRFR From : Kalpatru Mumbai Vakola 0.00 30,00,00,000.00 30,00,00,000.00 Cr 22.12.2011 22.12.2011 TRFR To : Kiah Properties Mumbai Vakola 636926 30,00,00,000.00 0.00 0.00 23.12.2011 23.12.2011 TRFR From : Prime Backway Reclamation 0.00 35,00,00,000.00 35,00,00,000.00 Cr 23.12.2011 23.12.2011 TRFR To : Kalpatru Backway Reclamation 636927 35,00,00,000.00 0.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act." 7.3 As mentioned earlier, there are deposit and withdrawal of the same amounts, leaving meagre balance in the account of M/s Prime Properties Pvt. Ltd. and no balance in the accounts of the assessee-company. Therefore, relying on the ratio laid down by the Hon'ble Supreme Court in NRA Iron & Steel (P.) Ltd. (supra), we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make an order afresh, after giving reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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