9911796707
TMI Blog2021 (2) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... ere covered. In response to notice under section 153A of the I.T. Act, the assessee submitted the return of income on 10.05.2014 declaring the same income. The assessee company is stated to have been engaged in the business of civil contractor. 3.1. It was observed by the A.O. that there is a substantial increase in the share capital and introduction of share premium amounting to Rs. 15 crores during the year under consideration and accordingly, the assessee was asked to submit the details to substantiate the identity of the shareholders, genuineness of the transaction and creditworthiness of the investors so as to discharge the onus and substantiate the share capital and premium thereon, as shown to have been received from 35 persons / Group. 3.2. During assessment proceedings, assessee provided various details of Investors such as copy of ITR, bank statements and confirmation etc., However, in some cases either confirmation has not been provided or ITR/bank statements not provided. The said details have been mentioned in a tabulated form for each of the Investor as incorporated in the body of the assessment order. After examination, the A.O. recorded reasons for rejection of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. * In the case of the Assessee there is enough evidence which shows that the explanation submitted about nature and source of credit is not correct." 3.4. It was explained in the written submissions that assessee has received Rs. 2.50 crores as share capital/ premium from individuals/HUFs who are either closely related to or friends/business associates of the promoters of the assessee company and a sum of Rs. 12.50 crores has been received from various companies incorporated under the provisions of Companies Act. The assessee filed complete details before A.O. in response to the query of the A.O. to prove identity of the investors, their creditworthiness and genuineness of the transaction in the matter. Therefore, initial onus upon assessee to prove genuineness of the transaction have been discharged by the assessee. It was submitted that the parties from whom share capital/ premium has been received during the year are either limited companies incorporated under the provisions of Companies Act or Individuals/HUFs. In this regard, confirmations, bank statements, income tax returns and balance-sheets wherever applicable were duly filed before A.O, copies of the same were als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Mills Pvt. Ltd., 380 ITR 571 (Del.) in which it was held that when no incriminating material or evidence related to share capital issue was found during the course of search, A.O. was not justified in invoking Section 68 of the I.T. Act. The assessee also relied upon Judgment of the Hon'ble Supreme Court in the case of CIT vs., Orissa Corporation Pvt. Ltd., 159 ITR 78 (SC), Judgment of Hon'ble Gujarat High Court in the case of CIT vs., Rohini Builders 256 ITR 360 (Guj.), Judgment of Hon'ble Gauhati High Court in the case of Nemichand Kothari vs., CIT 264 ITR 254 (Gau.), Judgments of Hon'ble Delhi High Court in the case of CIT vs., Sivadhooti Pearls Investment Ltd., 237 Taxman 104 (Del.) and MOD Creations Pvt. Ltd., vs., ITO 354 ITR 282 (Del.). The assessee also relied upon several decisions including Judgment of Hon'ble Supreme Court in the case of CIT vs., Lovely Exports Pvt. Ltd., 216 CTR 195 (SC) in support of the contention that assessee received genuine share capital/ premium. 3.5. The Ld. CIT(A) considering the explanation of assessee and material on record confirmed the addition of Rs. 3,69,50,000/- in respect of 09 Investors, however, balance of the addition in a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon Judgments as have been mentioned and referred to in the submissions of the assessee before the Ld. CIT(A). 6. We have considered the rival submissions and perused the material available on record as regards Departmental appeal. In the present case the A.O. noted that assessee has received share capital/premium from 35 Parties/Group. The assessee was directed to file the evidences to prove identity of the Investors, their creditworthiness and genuineness of the transaction. The assessee in respect of these investors filed their confirmation, PAN, ITR and bank statements and wherever applicable filed the copies of the balance-sheet of the Investor companies. The A.O. did not doubt the documentary evidences filed by assessee. No Investor was asked to appear before A.O. for recording their statements regarding genuineness of the transaction in the matter. No cash was found to have been deposited in the accounts of the Investors before making investment in assessee company. The A.O. did not make any investigation or enquiry with regard to worth of the Investors, whether they are able to make investment in assessee-company. Merely because low income have been declared in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as untrustworthy. The Appellate Authorities rightly deleted the addition. 6.3. Decision of Supreme Court in the case of CIT vs. Lovely Exports Pvt. Ltd., (2008) 216 CTR 195 in which it was held as under: "If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of assessee company." 6.4. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Kamdhenu Steel and Alloys Ltd., &Ors. 361 ITR 220 (Del.) in which it was held as under : "Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be discarded or it is proved that it has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under s.68; AO failed to carry his suspicion to logical conclusion by furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of the shareholders, no addition could be made under section 68 of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented the company's own income from undisclosed sources. It was nobody's case that the non-resident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription and that the transaction was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the investor alone was to be seen. Thus, the addition was rightly deleted. CIT v. Lovely Exports P. Ltd. [2009] 319ITR (St.) 5 (SC) applied." 6.9. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. (i) Dwarakadhish Investment P. Ltd., (ITA.No. 911 of 2010) and (ii) Dwarkadhish Capital P. Ltd., (ITA.No.913 of 2010) (2011) 330 ITR 298 (Del.) (HC), in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share application money was received by the assessee-company by way of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to the Assessing Officer. Since the applicant companies were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be non-existent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the genuineness of the transactions had been duly established by the assessee." 6.11. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Value Capital Services Pvt. Ltd., (2008) 307 ITR 334 (Del.) (HC), in which it was held as under : "Dismissing the appeal, that the additional burden was on the Department to show that even if the share applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
