TMI Blog2020 (4) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Apex Court in NRA s case (supra) on the contrary supports the case of assessee. In the present case, undisputedly, the enquiry conducted by the AO has not unearthed anything negative so as to disbelieve the evidences furnished by the assessee in support of genuineness, identity and credit worthiness of the shareholders directors. Under the circumstances, we are of the considered view that the order of the Ld CIT (A) is correct and needs no interference. Accordingly we dismiss the grounds raised by revenue by upholding the order of Ld CIT (A). - Decided against revenue. - ITA No.1365/Del/2009 - - - Dated:- 10-1-2020 - Shri Sudhanshu Srivastava, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Tarandeep Singh, Advocate For the Department : Ms. Nidhi Srivastava, CIT(DR) ORDER PER SUDHANSHU SRIVASTAVA, JM: This appeal has been filed by the Revenue being aggrieved by order dated 15th January, 2009 passed by the Ld. Commissioner of Income Tax (Appeals)-XVII, New Delhi {CIT (A)} for Assessment Year 2005-06. 2.0 Brief facts of the case are that during the year under consideration the assessee company was enga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- 08.03.2005 15,89,429/- Dhruv Chowdhrie 26.07.2004 1,06,16,800/- 19.01.2005 1,74,48,000/- 18.02.2005 1,95,34,500/- 24.02.2005 1,52,56,500/- 03.03.2005 1,01,55,600/- Bhanu Chowdhrie 26.04.2004 1,06,15,877/- 27.08.2004 1,00,00,000/- 03.09.2004 1,00,00,000/- 04.11.2004 17,467,179/- 07.12.2004 86,58,520/- 19.01.2005 1,09,05,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard by concluding as under: The assessee company could not prove the creditworthiness of the persons advancing share application money to it. Therefore, the provisions of section 68 is clearly attracted in this case. In various judicial pronouncement the provisions of section 68 has been explained and it has been held that for justifying any credits in books of account, the assessee must prove identity, capacity of the creditors and genuineness of creditors. In this context the decision reported in 131 Taxman 391 (2003), 49 ITR 112 (SC), 50 ITR 1 (SC), 98 ITR 337 (SC), 161 Taxman 169 (SC), 53 ITR 623 (SC) and 34 ITR 807 (SC) are relied upon and the ratio of judgements in those cases are applicable to the facts of the case under assessment. Under the circumstances these 4 credits amounting to ₹ 38,31,03,071/- found unexplained and treated as undisclosed income of the assessee company for the year under consideration u/s 68. Accordingly the same is included in total income of the assessee. Net addition ₹ 38,33,03,071/-. 2.4 Being aggrieved by the addition made above, the assessee filed an appeal before the Ld. CIT (A). During the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Finlay Corporation Ltd. 2003 (ID4) GJX-0021 TDEL and Saraswati Holding Corpn. Vs. DDIT Circle 2(2), International Taxation, New Delhi 2007- (ID3)-GJX-0243-TDEL by ITAT Delhi, the same cannot be added u/s 68 in the hands of company. There is forcer in the argument of the ld. AR specifically in the light of few recent decisions of jurisdictional High Court in the cases of M/s Divine Leasing Finance Ltd. 299 ITR 268 and Lovely Exports (P) Ltd. as well as the order of Hon ble Apex Court in the case of M/s Lovely Export (P) Ltd. 216 ITR 195 wherein the Supreme Court has held that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO than the Department is free to reopen their assessments in accordance with law . This decision was delivered while dismissing the special leave petition of the Department. Further, in another recent decision the jurisdictional Delhi High Court in the case of M/s Value Capital Services (P) Ltd. has held that there is an additional burden cast on the Revenue to prove that the investment made by the share applicants actually emanated from the coffers of the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration. The Ld. CIT(DR) relied upon the judgment of the Hon ble Apex Court in its recent judgement in the case of ACIT vs. NRA Iron Steel Pvt. Ltd. reported in 412 ITR 161 (SC). It was stated by the Ld. CIT(DR) that although the identity and genuineness of the transaction is not in dispute, however, the assessee has not been able to negate the objections raised by the AO that creditworthiness of the directors has not been substantiated. 4.0 Per contra Ld. AR, Shri Tarandeep Singh, vehemently supported the findings recorded in the impugned order. It was submitted by the Ld. AR that during the course of assessment proceedings, following documents/evidences were furnished by the assessee in order to substantiate the identity, genuineness and creditworthiness of the Shareholder Directors: Confirmation received from directors stating that the amount invested by them as share application money has been made out of income earned outside India and brought into India through banking channels. Vide letter dated 22nd June 2007 copies of Foreign Inward Remittance Certificate were submitted. Permanent Account Numbers of the Directors were also provided in t ..... 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 M/S Pondy Metal and Rolling Mill (HC) (iii) Order dated 8th January 2008 passed by Hon ble Supreme Court in case of CIT vs M/S Pondy Metal Rolling Mills (P.) Ltd. in SLP No. 12860 of 2007 (iv) Finlay Corporation Ltd reported in 86 ITD 626 (Del.) (v) Saraswati Holding Corpn. In. vs DDIT reported in 111 TTJ 334 (Del.) 5.0 We have heard the rival submissions and have also considered the material available on record. We find considerable merit in the submissions advanced by the Ld. AR. The AO has not doubted the genuineness of FIRCs furnished by the assessee. Share Capital has been remitted through modus recognized by the RBI. Moreover source of money received is undisputedly from abroad. The AO has not conducted any independent enquiry to doubt or disbelieve the evidences submitted by the assessee during the course of assessment proceedings. The sole independent enquiry conducted was by issuing notices u/s 148 to the Directors. Even those proceedings resulted in substantial compliance. Coordinate bench of the Tribunal vide order dated 6th March, 2017 reported in 55 ITR (Trib.) 681 (Del) has, after considering the facts in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re would be no further burden on the revenue to show that the income is from any particular source. 8.3 With respect to the issue of genuineness of transaction, it is for the assessee to prove by cogent and credible evidence, that the investments made in share capital are genuine borrowings, since the facts are exclusively within the assessee's knowledge. The Delhi High Court in CIT v. Oasis Hospitalities (P.) Ltd. [2011] 9 taxmann.com 179/198 Taxman 247/333 ITR 119, held that: The initial onus is upon the assessee to establish three things necessary to obviate the mischief of Section 68. Those are: (i) identity of the investors; (ii) their creditworthiness/investments; and (iii) genuineness of the transaction. Only when these three ingredients are established prima facie, the department is required to undertake further exercise. It has been held that merely proving the identity of the investors does not discharge the onus of the assessee, if the capacity or credit-worthiness has not been established. In Shankar Ghosh v. ITO [1985] 13 ITD 440 (Cal.), the assessee failed to prove the financial capacity of the person from whom he had allegedly taken the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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