TMI Blog2020 (1) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... v Revenue by: Shri Sanjay Goyal, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, The above two captioned appeals by the assessee are preferred against two separate orders of the Commissioner of Income Tax [Appeals] - 35, New Delhi dated 27.03.2017 pertaining to Assessment Years 2009-10 and 10-11. 2. The quarrel is in respect of additions made u/s 68 of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] amounting to ₹ 2.30 crores in A.Y 2009-10 and ₹ 5.15 crores in A.Y 2010-11 in respect of sums received from the shareholders as share capital and share premium. 3. Since it was agreed upon by the representatives of both the sides that the underlying facts and issues in AYs. 2009-10 and 2010-11 are identical, representatives of both the sides were heard at length on the facts of ITA No. 3333/DEL/2017 for A.Y 2009-10 and on such concession, we have considered the facts in A.Y 2009-10. 4. Having heard the representatives of both the sides at length, the case records were carefully perused and with the assistance of the ld. Counsel, we have considered the relevant material evidences brought on record in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as much as the assessee has filed copies of these companies ledger accounts appearing in the books of the assessee company duly confirmed by them whereas confirmations were required on the ledger account of the assessee in the books of the investor companies. 9. The Assessing Officer further analysed the returned income of the investor companies and found that the returned incomes were negligible to justify the amount paid by them towards purchase of shares in the appellant company. 10. A final show cause notice dated 31.01.2013 was served upon the assessee once again asking the assessee to justify the payment towards shares purchased by the five companies mentioned elsewhere. The detailed questionnaire is extracted by the Assessing Officer in the body of the assessment order. 11. The Assessing Officer further found that Shri Sampat Sharma has given a statement on oath on 28.09.2010 and the Assessing Officer was of the firm belief that in his statement, Shri Sharma had categorically admitted that he was not aware when the shares were purchased by the companies. The Assessing Officer further found that Shri Sharma had admitted that he was only a dummy director and knew n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the share applicants and at present these companies were not their share holders/members as they have sold their shares. Since the assessee had no access to the share certificates, therefore, the same could not be filed. 18. Regarding producing the shareholder companies through their directors/authorised representatives for verification of genuineness of the investment, it was explained that two directors, namely Shri Sarat Agarwal and Shri Vinay Kumar Shah were produced for verification /examination. It was further brought to the notice of the Assessing Officer that the directors waited for long hours and whole day was spent in recording the statement of only one director, namely, Shri Ajit Kumar Singh and it was requested that exact date and time may be given to produce the investor companies through their directors/authorised representatives for verification of genuineness of investment in shares by them as the directors had to come all the way from Kolkata/Howrah, 19. All these relevant parts of the reply of the assessee are exhibited at pages 61 to 68 of the paper book. 20. It appears that the Assessing Officer was heavily influenced by the statement of Shri Sampat S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s advances Stock of shares 8,25,30,300 7,85,85,000 Cash and bank balance 1,65,3549 4,23,164 Loans Advances 2,20,50,007 54,43,063 Less: Current Liabilities Provisions Liabilities 4,500 1,03,500 Provisions 5,545 2,19,965 Total 10,045 3,23,465 Net Current Assets 10,62,23,811 8,41,27,762 Miscellaneous expenditure to the extent not written i off or adjusted _____________________________________________ Deferred Revenue Expenditure 84,200 99,000 Total 10,63,15,225 8,42,34,878 115-116) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 700001 No. of shares : 25,000 PAN: AAJCS5887K Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 121780 13.08.2008 50,00,000 TOTAL 50,00,000 Return Filed on : 25.09.2009 Auditors of Company: Manabendra Bhattacharyya Co Particulars As on 31.03.2009 As on 31.03.2008 Shareholders Fund Share capital 85,02,500 16,55,000 Reserve Surplus 16,05,26,756 3,04,24,383 Total 16,90,29,256 3,20,79,383 Application of Funds Current Assets Loans advances Stock of shares 14,43,57,000 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,35,218 1220148 Loans Advances 1,95,87,189 2,08,98,545 Other Current Assets 1,31,70,875 27,00,000 Less: Current Liabilities Provisions Liabilities 2,021 2,020 Provisions 7,998 7,548 Total 10,019 9,568 Net Current Assets 25,07,89,779 11,40,40,525 Deferred Revenue Expenditure 34,800 11,300 Total 25,08,24,579 11,40,51,825 MTSlCOKILA EXPORTS PRIVATE LIMITED Address : 9/12, LAL BAZAAR STREET, KOLKATA, WEST BENGAL 700001 No. of shares : 15,000 PAN: AABCK1178G Payments made Via Sr. No. Cheque No./ RTGS Date Amount (Rs) i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed their investment in response to notices u/s 133(6) of the Act. 28. In our considered opinion, suspicion can be no basis to make addition. Moreover, the Revenue in the case of shareholder companies has accepted their independent identity, source of income and carrying on business of investments and disinvestments. Therefore, the ratio laid down by the Hon'ble Supreme Court in the case of Lovely Exports Pvt Ltd 319 ITR 5 squarely applies on the facts of the case in hand. In fact, in the case of Stellar Investments Ltd 251 ITR 263 wherein the decision of the Hon'ble High Court of Delhi in 192 ITR 287 was upheld wherein it was held that in the case of a company, even if the subscribers to the share capital are not genuine, then too, it would not be regarded as undisclosed income of the assessee company. 29. The ld. DR placed heavy reliance on the decision in the case of NRA Iron and Steel 103 Taxmann.com 48 wherein the Hon'ble Supreme Court has reversed the order of the lower authorities holding that where there was failure on the part of the assessee to establish credit worthiness of investor companies, then merely because the assessee company had filed all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. M/s Kokila Exports Pvt. Ltd., 9/12, Lai Bazar Street, Block E-, 2nd floor, Kolkata-700 001 12,500 1,25,000 (₹ 10 per share) 23,75,000 (₹ 190 per share) 30.03.2009 2. M/s Abhilasha Exports Pvt. Ltd., Saklat Palace, Kolkata-72 25,000 2,50,000 (₹ 10 per share) 47,50,000 (₹ 190 per share) 30.03.2009 3. M/s Ambika Vimcom Pvt. Ltd., 1, Mahindra Nath Roy Bye Lane, Howrah-711101 10,000 1,00,000 (₹ 10 per share) 19,00,000 (₹ 190 per share) 30.03.2009 4. M/s Deesha Tie Up Pvt. Ltd., 1, Raj Ballab Saha Lane, Howarh - 711.101 15,000 1,50,000 (₹ 10 per share) 28,50,000 (₹ 190 per share) 30.03.2009 5. M/s Madam Agencies Pvt. Ltd., 9/12, Lai Bazar Street, Block E-, 2nd floor, Kolkata-700 001 25,000 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Share capital 57,60,000 57,60,000 10,75,40,000 10,75,40,000 Total 11,33,00,000 11,33,00,000 Application of Funds Current Assets Loans advances Stock of shares 9,98,50,000 11,30,00,000 Cash and bank balance 1,84,461 1,80,531.66 Loans Advances 1,60,25,554 - Other Current Assets 1,00,000 - Less: Current Liabilities Provisions 29,54,835.77 1,000 Net Current Assets 11,32,05,179.23 11,31,79,531.66 Preliminary Expenditure To the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Revenue Expenditure 30,000 51998 Profit Loss Account 21,135.54 16,342 Total 24,63,68,263 24,63,68,263 MS SANK AT MQCHAN VINIMAY PRIVATE LIMITED Address: 9/12, Lal Bazar Street, Block E 4th Floor, Kolkata No. of Shares: 12,500 PAN No. AAECR1291D Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 894016 23.09.2009 25,00,000 TOTAL 25,00,000 Auditors of the Company: H.K. Saha Co. PARTICULARS As on 31.03.2010 As on 31.03.2009 Shareholders Fund Share capital 41,55,000 41,55,000 Reserve Surplus 77,045,000 77,045,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shareholders Fund Share capital 1,54,44,290 41,00,000 Reserve Surplus 48,51,15,879 15,60,00,000 Total 50,05,60,169 16,01,00,000 Application of Funds Current Assets Loans advances Stock of shares 40,53,48,000 14,00,00,000 Cash and bank balance 3,07,03,679 - Loans Advances 65,552 2,00,93,380 Other Current Assets 6,44,27,648 - Less: Current Liabilities Provisions 1,32,920 87,001 Net Current Assets 50,04,11,959 16,00,06,379 Miscellaneous Expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,093.60 Deferred Revenue Expenditure 65,400 87,200' Profit Loss 22,844.44 26,180.40 Total 114,300,000 114,300,000 M/S ABH1LASHA EXPORTS PRIVATE LIMITED Address: 95A C R Avenue, Kolkata, West Bengal 700073 No. of Shares: 25,000 PAN No . AAHCA5909J Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 894086 24.09.2009 50,00,000 TOTAL 50,00,000 PARTICULARS As on 31.03.2010 As on 31.03.2009 Shareholders Fund Share capital 3626,460 100,000 Reserve Surplus 172,956,542.15 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63.02' 173,300,698.60 Application of Funds Current Assets Loans advances Stock of shares 140,460,000 159,900,000 Cash Bank Balances 221,920.82 157,866 Loans Advances 32,541,982 13,127,021 Total 173,223,902.82 173,184,887 Less: Current Liabilities Provisions Liability 2,000 1,000 Provision 3,560 1,482 Total 5,560 2,482 Net Current Assets 173,218,342.82 173,182,405 Preliminary Expenditure (To the extent not written off or adjusted) 5,320.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 148,000 Deferred Revenue Expenditure Total 468,410,025.39 468,404,797.59 M/S PUSHPADANT INFRASTRUCTURE LIMITED Address: 10A, Hospital Street, 2nd Floor, Room No. 205, Kolkata, West Bengal 700072 No. of Shares : 50000 PAN No. AAFCP1441G Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 190442 25.02.2010 50,00,000 ii) 09.03.2010 50,00,000 TOTAL 100,00,000 Bank Name: Axis Bank Auditors of the Company: S. Sadhu Assciates Net Worth of the Company PARTICULARS Shareholders Fund Share capital 15,500,000 Reserve Surplus 735,347,864.15 Total 750 , 847 , 864.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,414 Less: Current Liabilities Provisions 5,874,025 501 Net Current Assets 500,052,620 80,913 Miscellaneous Expenditure (To the extent not written off or adjusted) Preliminary Expenses 142,410 15,930 Profit Loss Account 3,157 Total 500,195,030 100,000 Bank Name: Axis Bank Auditors of the Company: H.K. Saha Co. Net Worth of the Company 11 M/S KQKILA EXPORTS (PI LTD Address: 9/12, Lai Bazar Street, Block-E, 2nd Floor, Kolkata^00001 No. of Shares: 12500 PAN No. AABCK1178K Sr. No. Cheque No./ RTGS Date Amount (Rs) i) 17.04.2009 25,00,000 TOTAL 25,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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