TMI Blog2021 (4) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee company and AIPL has common directors) is unacceptable - CIT-A deleted the addition - HELD THAT:- As assessee has submitted all the necessary documents required to satisfy the extant provisions of section 68. The required documents as noted above in the order of learned CIT(A) and submission of the assessee's counsel were available before the assessing officer also. The said party is a group concern and it has also confirmed the transaction. Furthermore we note that assessee company has received the share capital including premium from the same group company that is AIPL, from whom it has also received loan of ₹ 1.18 crores. AO is not doubting the capacity of AIPL in granting the loan but is doubting the capacity to give the share capital. The amended provisions of section 68 of the Act providing satisfaction of the assessing officer regarding explanation from the party from whom the credit is received as per proviso to section 68 of the Act was inserted by Finance Act, 2012 with effect from 1/4/2013. The same is not applicable for this assessment year. As regards the issue of justification of share premium that is also not applicable for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... havna Pandey 49% M/s. Everglades Minerals Reserve Pvt. Ltd. Suyash Pandey 50% Bhavna Pandey 50% The Assessing Officer observed that both Suyash Pandey and Bhavna Pandey held more than 20% voting power in the payer Company (AIPL) and more than 20% in the payee company (assessee). The Assessing Officer was of the view that the loan of ₹ 1,18,00,000/- advanced by AIPL to the assessee-company fell within the meaning of dividend as per Section 2(22)(e) of the Act because both Shri Suyash Panday and Mrs. Bhavna Panday held more than 10% of voting rights in the payer company and more than 20% in the payee company i.e. the assessee company. The AO asked the assessee why the transaction should not be brought under the purview of section 2(22)(e) of the Act. In the course of the assessment proceedings, the assessee was called upon to show-cause why the sum of ₹ 1,18,00,000/- should not be treated as deemed dividend. In response to appellant submitted that the assessee did not hold any shares in AIPL and AIPL held 80% shares in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from AIPL. The course of the assessment proceedings, notice under section 133(6) of the Act was issued to AIPL calling for details pertaining to its transactions with the assessee. In its reply, AIPL confirmed having invested the sum of ₹ 2 crore in shares in the appellant company. As regards the source, AIPL submitted that the source was accumulated reserve surplus of the company. The Assessing Officer observed that the onus to establish the identity of the person from whom the money was received, his capacity to pay the money and the genuineness of the transaction was on the assessee. The AO observed that in this case though the identity of AIPL was established, its capacity to pay the sum was not established by the assessee. The AO observed as under: 5.4 AIPL is a company which has a turnover of merely ₹ 37.90 lakhs in the current year (A.Y. 2010-11), while reporting a turnover of only ₹ 13.14 lakhs in the earlier year (A.Y. 2009-10), Further, in the current year, the company has made a profit of only ₹ 2.68 lakhs, while incurring a loss of ₹ 8.72 lakhs in the earlier year. In fact, the actual financials of the company cannot be ascertained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Return, Balance Sheet, Profit And Loss A/c. and Directors Report of AIPL of A.Y. 2007-08 to A.Y. 2010-11 c) Copies of ROC Returns of AIPL for A.Y. 2008-09 to A.Y. 2011-12 d) Copies of ROC Returns of the appellant for A.Y. 2008-09 to A.Y. 2011-12 He noted that assessee has pleaded that AO did not call for these documents specifically hence assessee did not have the opportunity to submit the same before assessing officer. The learned CIT(A) noted that these documents were sent to the AO as required under rule 46A of the Act but despite several reminders the assessing officer did not comment upon the additional evidence. Hence, learned CIT(A) proceeded to decide the issue as under:- I find from para 5.2 of the assessment order that in the course of the assessment proceedings. AIPL had confirmed the transaction. I also find from the additional evidence that AIPL has been regularly filing its return of income and also ROC return. I find that in the Balance Sheet of AIPL as at 31.03.2010 that a sum of ₹ 2,00,00.000/- has been shown as Investment in Subsidiary Company . I also find that during the relevant previous year, after the issue 40,000 shares, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 M/s. Anyushka Investments Private Limited 08/08/1996 AACCA8423E 40,000 4,00,000 1,96,00,000 2,00,00,000 Grand Total 40,000 4,00,000 1,96,00,000 2,00,00,000 a. During the assessment proceedings, the AO asked the Appellant to give the certain information/explanations as stated in the notice dated February 19, 2016 (refer page No. 12 to 20 of PB-II). In response to the said notices, the Appellant has filed the following information/documents during the assessment proceedings vide letters dated March 30, 2016 (refer page No. 1 to 4 of PB-I). b. Company's Master Data like company name, Company Identification Number (CIN), date of incorporation, registered address, e-mail ID, etc. of Investor's companies downloaded from www.mca.gov.in c. Name, Address, PAN, Income-tax Jurisdiction, etc. of the Investor's companies; d. Certificate of Incorporation of the Investor's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s; iv. Certificate of Incorporation of the Investor's companies; v. Form of application for equity shares filled by the Investor's companies, vi. Copies of Allotment Advices given by the Appellant to the Investor's companies; vii. Copy of Director Report, Audit Report and Balance Sheet of the Investor's b. The company's Master Data, Income Tax Jurisdiction details and financials of the Investor's companies proved the identity as well as financial capacity i.e. creditworthiness of the Investor's companies. Hence, the aforesaid document has proved the identity of the shareholders. ii) As regards the Genuineness of the transaction; The Appellant has received the share application money through proper banking channels as the funds were received through account payee cheques. Please see bank statements filed with the AO. The Appellant submit that the bank statement and other documents submitted before the AO proved the genuineness of the transactions. (Refer PB-II page No. 22-28). iii) As regards creditworthiness of the shareholders; The financials of the Investor's companies proved the identity as well as fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant has discharged its onus of proving the identity of the parties, genuineness of the transactions and the creditworthiness of the shareholder. Therefore, the Appellant humbly submit that the addition made under section 68 of the Act be deleted. 15. Thereafter learned counsel of the assessee placed reliance upon a catena of case laws and pleaded that the learned CIT(A) order deserves to be upheld. Per contra, learned Departmental Representative relied upon the Assessing Officer's order. 16. Upon careful consideration we note that assessee has submitted all the necessary documents required to satisfy the extant provisions of section 68. The required documents as noted above in the order of learned CIT(A) and submission of the assessee's counsel were available before the assessing officer also. The said party is a group concern and it has also confirmed the transaction. Furthermore we note that assessee company has received the share capital including premium from the same group company that is AIPL, from whom it has also received loan of ₹ 1.18 crores. The assessing officer is not doubting the capacity of AIPL in granting the loan but is doubting the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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