TMI Blog2020 (8) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof, or the explanation offered by the assessee is not, in the opinion of the AO satisfactory, then the sum so credited in the accounts may be treated as income of the assessee of that previous year. The assessee has demonstrated that it has not received any money on account of share application during this year. This statement has been proved by the assessee from the details obtained from the bank, which we have taken note of. Thus, it is to be construed that no amount in real sense has been found to be credited in the accounts of the assessee for the Asstt.Year 2013-14 and if that be so, then how an inquiry for the purpose of section 68 can be made. Therefore, there is no need to examine this evidence i.e. confirmation, capacity and genuineness of 28 applicants. - Decided in favour of assessee. - ITA No.437/Ahd/2018 - - - Dated:- 11-8-2020 - Shri Rajpal Yadav, Vice-President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri P.F.Jain, AR For the Revenue : Shri Vinod Tanwani, Sr.DR ORDER PER RAJPAL YADAV, VICE-PRESIDENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the receipt of share application pending allotment. But actually neither these cheques were presented to the bank nor were encashed before 31st March. The details to this effects were submitted before the ld.CIT(A) exhibiting the fact that these cheques ere encashed in the month of May and June, 2013. Therefore, the issue regarding genuineness of these transactions cannot be verified in the Asstt.Year 2013-14. For buttressing this contention, he relied upon the order of the ITAT, Chandigarh Bench rendered in ITA No.316/Chd/2019 in the case of Luxmi Foodgrains P.Ltd, where one of us (Judicial Member) is the author. Similarly, he relied upon the order of ITAT, Kolkatta Bench in the case of Bhagvat Marcom P.Ltd., reported in 178 ITD 684. He thereafter made reference to Hon ble Calcutta High Court in the case of Jatia Investment Co., 206 ITR 718. He has placed on record copies of these three decisions. On the strength of these details, he propounded that no real inflow of cash was materialized before 31st March, 2013, and therefore no investigation on this issue under section 68 could be made. 4. In his next fold of submissions, he has submitted that the assessee has discharged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PV7442B 5,00,000/- 10/04/2013 Confirmation, Share Application form, PAN Card, Relevant extract of Bank Statement of Canara Bank (PBP No. 47 to 51) 6. Dahyabhai P. Suthar B-1/12, Shayona City, Part-1, Ghatlodia, Ahmedabad AJBPS2388B 5,00,000/- 18/04/2013 Confirmation, Share Application form, PAN Card, ITR Ack., Relevant extract of Bank Statement of Vijaya Bank (PBP No. 52 to 57) 7. Dharmistha R. Makwana C/80/956, Shreenath Appartment, Nava wadaj, Ahmedabad AMCPM0246J 7,50,000/- 23/05/2013 Confirmation, Share Application form, PAN Card, ITR Ack., Statement of Income, Relevant extract of Bank Statement of Canara Bank (PBP No. 58 to 65) 8. Geetaben I. Patel A-1, RamKrishna Apartments, Hirawadi, Saijpur Bogha, Ahmedabad BCHPP8534L 7,50,000/- 27/05/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Khushboo Engineering and Enterprise 10,00,000/- 06/04/2013 Cheque cleared on 08/04/2013 in ICICI CC A/c No. 2451000150. 16. Mehul D. Suthar B-1/12, Shayona City, Part-1, Ghatlodia, Ahmedabad BMWPS6239J 5,00,000/- 10/04/2013 Confirmation, Share Application form, Relevant extract of Bank Statement of Vijaya Bank (PBP No. 109 to 112) 17. Neeraj J. Parikh 6, Shaswat Bungalow, Satellite, Ahmedabad AASPP5826F 12,50,000/- 08/05/2013 Share Application form, PAN Card. Cheque cleared in ICICI Bank CC A/c 2451000150 on 10/05/2013. (PBP No. 113 to 114) 18. Rachna Patel A-1, RamKrishna Apartments, Hirawadi, Saijpur Bogha, Ahmedabad CCRPP5743E 7,50,000/- 30/05/2013 Confirmation, Share Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plot No. 552, Ambica Estate, Naroda, Dehgam Road, Ahmedabad. AEEPG5636A 10,00,000/- 06/04/2013 Cheque cleared in ICICI Bank CC A/c 2451000150 on 08/04/2013. 26. Vishnubhai Gandabahai Prajapati 5,00,000/- 06/04/2013 Cheque cleared in ICICI Bank CC A/c 2451000150 on 08/04/2013. 27. Vishnu Gordhanbhai Patel 120,Soni no Vas, Village:-Ognaj, Ahmedabad AQDPP0056G 7,50,000/- 18/05/2013 Confirmation, Share Application form, PAN Card, ITR Ack., Statement of Income, Relevant extract of Bank Statement of Canara Bank (PBP No. 162 to 169) Return of allotment of shares in prescribed form No. PAS-3 as per The Companies Act, 2013 has been filed with ROC along with the details of above share applicants and the resolution of the Company, placed at paper Book Page No. 225 to 236. For verification of above documents, no inquiry was made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the accommodation entries and considering all these facts, the ITAT held that A.O. failed to carry out any inquiry for falsifying evidence submitted by the assessee in support of its explanation and therefore addition was deleted. This decision squarely applies to the facts of A.Y. 2013-14 also. 2.) NRA Iron and Steel Private Limited (2019) 412 ITR 161 (Supreme Court) In this case also the apex court referring to various decisions of High Courts has observed that A.O. ought to conduct an independent inquiry to verify the genuineness of credit entries. In the case of assessee, no such independent inquiry was made. 3.) Oasis Hospitalities Private Limited (2011) 333 ITR 119 (Delhi) ITA No. 2093 and 2095 of 2010 (Delhi High Court). In this case, the Hon ble Delhi Court has held that when assessee produced PAN, Bank Account, copies of IT Returns of share applicants , primary onus of assessee is discharged. Therefore addition not sustainable u/s 68. 4.) CIT v/s Kannan Kunhi (Supreme Court) 87 ITR 395. The Hon ble Apex Court has disapproved the addition u/s 68 because according to the Court where the explanation of the assessee was not absurd and it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cheque No. Amount His Bank Name Date of Debit in his Bank 1 Alpesh C Gajjar 401574 750,000 Synd Bank, Ghodasar 04/06/2013 2 Atul L Rathod 801964 750,000 Vijaya 04/05/2013 3 Atul L Rathod (HUF) 925073 750,000 Vijaya 27/04/2013 4 Bharat Chimanbhai Patel 000036 750,000 BOB 31/05/2013 5 Bharat Kantilal Vaidya 169573 500,000 Canara 12/04/2013 6 Dayabhai P Suthar 930648 500,000 Vijaya 20/04/2013 7 Dha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reena N Parikh 254502 1,000,000 ICICI 01/05/2013 23 Savan Dineshbhai Contractor 386522 250,000 Canara 10/04/2013 Savan Dineshbhai Contractor 386523 500,000 Canara 09/05/2013 24 Shakuntalaben V Patel 907206 750,000 Vijaya 17/05/2013 25 Shanabhai Rothod 959287 500,000 Vijaya 20/04/2013 26 Shree Shiv Enterprise 687889 1,000,000 Union Co-Op 08/04/2013 27 Vishnubhai Gandabhai Prajapati 148927 500,000 Union Co-Op 08/04/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duly considered rival submissions and gone through the record carefully. There is no dispute with regard to the fact that cheques for sale of these shares representing premium have not been encashed by the assessee. In other words, the amount has not been actually received by the assessee, and credited in its accounts. Let us take note of section 56(2)(viib) of the Act, which reads as under: 56(2)(viib) where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: 7. A perusal of this section would reveal that the expression receive employed in this clause would indicate that the assessee should have actually received the amounts, and not a notional one, because in various authoritative pronouncements it has been construed that the amounts should have been actually received. ITAT, Kolkatta Bench has considered identical aspect, and made following discussion: 6. We have considered the rival su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said sale of shares was adjusted by the NBFCs against the loan amount payable to proprietary concern. The partnership firm of M/s. Jatia Investment Co. thus received shares from the three NBFCs and also took over the loans payable by the said NBFCs to the proprietary concern. These transactions were entered into in its books of account by the partnership firm through cash book by debiting the investment in shares and crediting the loan amount of the proprietary concern. This credit appearing in the books of account of the partnership firm, M/s. Jatia Investment Co. was treated by the AO as unexplained cash credit u/s 68 and on confirmation of the same, when the matter reached to the Hon'ble Calcutta High Court, it was held by their lordship that when the cash did not pass at any stage and since the respective parties did not receive cash nor did pay any cash, there was no real credit of cash in the cash book and the question of inclusion of the amount of the entry as unexplained cash credit could not arise. In our opinion, the ratio of this decision of the Hon'ble Jurisdictional High Court in the case of Jatia Investment Co. (supra) is squarely applicable in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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