TMI Blog2020 (8) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... these entities. Orders of the authorities below reveal that the assessee has not complied with the requirements of the learned Assessing Officer in the exercise of forming satisfaction as to the creditworthiness of the share applicants or the genuineness of the transaction. Mere paperwork by the assessee does not take the authorities anywhere, when the learned Assessing Officer suspected the real existence of the entities that applied and paid for share application and share premium and insisted that a higher degree of proof is required in that respect. In the circumstances of the case, in view of the decisions of the Hon ble Apex Court in the case of PCIT vs. NRA Iron and Steel (P) Ltd [ 2020 (2) TMI 273 - SC ORDER ] we are of the considered opinion that the action of the learned Assessing Officer was legal and the inference drawn by him that the assessee had routed their own money in the books of accounts through the conduit of investor companies is justified. On this premise, we agree with the Revenue and while setting aside the impugned order, restore the addition made by the learned Assessing Officer under section 68 - Decided against assessee. - ITA No.-1286/Del/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced confirmation letters, details of sources from the respective investors, copies of the audited balance sheets, bank the details, copies of their ITR and explained before the learned Assessing Officer that the assessee company was taking up projects in UK on healthcare through its group company and it would yield very high returns on investments, and therefore, the said companies invested the amounts with the use premium. 4. Learned Assessing Officer, however, was not satisfied with the evidences placed by the assessee on record. Learned Assessing Officer noticed that the assessee company had not carried out any business during the year under consideration nor in the preceding year too, and for that matter the assessee did not possess any special assets which would justify the issue of share at such use premium. Further, on verification of the bank statements of the share applicants and the details of the credit entries, ld. Assessing Officer noticed that there were some cash transactions, in other accounts where from the monies were coming to the share applicants accounts, before the share applicants invested the share capital with the assessee, and, therefore, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of the investor companies and on that ground no addition could be made in the hands of the assessee. Ld. CIT(A), therefore, directed the deletion of the addition made to the tune of ₹ 4, 86,45,500/- by the learned Assessing Officer under section 68 of the Act. Ground relating to the addition of ₹ 56,471/- was not pressed by the assessee before the Ld. CIT(A) and the Ld. CIT(A), therefore, dismissed such a ground is not pressed. 6. It is the submission of the Ld. DR that the Ld. CIT(A) while deciding the appeal in favour of the assessee ignored the findings of the learned Assessing Officer which were the outcome of extensive enquiry and investigation in respect of the investor companies; that the Ld. CIT(A) did not take into account the fact that not even the primary onus of proving the credit worthiness of the investors and genuineness of transaction was not at all discharged by the assessee, but simply placed reliance on the decisions which are favourable to the assessee. Ld. DR further argued that there is no justification of logic for the issuance of shares at a premium of ₹ 475/- per share by the assessee company in the absence of any proven track reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer no business activity was carried on by the assessee is in the assessment year under consideration or in the immediately preceding assessment year and,therefore, there is no possibility of the assessee earning such amount from any of the sources of income to be brought back into the business of the assessee. He further argued that when the assessee submitted all the relevant documents, it is for the assessing officer to make enquiries before shifting the burden to the assessee and the Ld. CIT(A) rightly considered the circumstances in their proper perspective to reach a conclusion that the addition made by the assessing officer under section 68 of the Act is not sustainable. He also placed reliance on the decision reported in CIT vs. Jalan Hard Coke Ltd (2018) 95 taxmann.com 330 in support of his argument that the addition made to the income of the assessee under section 68 of the Act in respect of the amount received as share capital on the ground that the assessee failed to produce the share applicants, is unsustainable and the assessee cannot be taxed to find out the person who had applied as shareholder. He further reiterated his reliance on the decisions relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished by the assessee were returned unserved stating that such companies are not to be found in such addresses, and the assessee managed to obtain the document evidence from the investors to be produced before the learned Assessing Officer, it cannot be said that assessee has no contact with them or that the assessee cannot produce them before the learned Assessing Officer. As a matter of fact, record reveals that on 25/3/2013 the Ld. AR volunteered to produce the Directors of the investor company if one week s time is granted. However, no such attempt was made before the Ld. CIT(A) and the Ld. CIT(A) also did not think it proper to take this aspect to its logical conclusion. 13. Ld. CIT(A) went by the premise that no business activities were carried out by the assessee till date and, therefore, the assessee company could not have and any income from any of its sources of income on any business activities carried by it so as to route the same to their own business to the content of the investor companies. Such a logic is untenable in view of the decision of the Hon ble Supreme Court in the case of CIT vs. Orissa Corporation private limited (1986) 159 ITR 78 (SC) wherein the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposal was made. It is, therefore, clear that the whereabouts of the investor companies are within the knowledge of the assessee. When such entities are not to be found in the addresses furnished by the assessee, it is incumbent upon the assessee to produce them before the learned Assessing Officer to prove their creditworthiness and genuineness of the transaction. Burden stands shifted to the assessee. 16. In the circumstances, as approved in the decisions of the Hon ble Apex Court in the case of PCIT vs. NRA Iron and Steel (P) Ltd (2019) for 12 ITR 161 (SC) and the decisions of the Hon ble jurisdictional High Court in the cases of PCIT vs. NDR Promoters Pvt. Ltd. (2019) 410 ITR 379 (Delhi), CIT vs. NR Portfolio Private Limited (2014) 42 taxmann.com 339 (Delhi), CIT vs. Nova Promoters Finlease (P) Ltd. 18 taxmann.com 217 etc.it is legitimate for the learned Assessing Officer to make investigation into the issues like - whether the two parties are related or known to each other, or mode by which parties approached each other? whether the transaction is entered into through written documentation to protect investment? whether the investor was an angel investor? what is the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paperwork by the assessee does not take the authorities anywhere, when the learned Assessing Officer suspected the real existence of the entities that applied and paid for share application and share premium and insisted that a higher degree of proof is required in that respect. 19. In the circumstances of the case, in view of thedecisions of the Hon ble Apex Court in the case of PCIT vs. NRA Iron and Steel (P) Ltd (2019) for 12 ITR 161 (SC) and the decisions of the Hon ble jurisdictional High Court in the cases of PCIT vs. NDR Promoters Pvt. Ltd. (2019) 410 ITR 379 (Delhi), CIT vs. NR Portfolio Private Limited (2014) 42 taxmann.com 339 (Delhi), CIT vs. Nova Promoters Finlease (P) Ltd. 18 taxmann.com 217 etc.we are of the considered opinion that the action of the learned Assessing Officer was legal and the inference drawn by him that the assessee had routed their own money in the books of accounts through the conduit of investor companies is justified. On this premise, we agree with the Revenue and while setting aside the impugned order, restore the addition made by the learned Assessing Officer under section 68 of the Act. Consequently, we allow the appeal of the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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