TMI Blog2021 (5) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... g and Finance Ltd and Shilpi Cable Technologies, the AO cannot justify the addition in the hands of the assessee company. As mentioned elsewhere, any addition which deserved to be made should have been made in the hands of the share applicants who have shown their source of source as sale of shares of these companies or alleged accommodation entries. Whether the assessee has discharged the burden cast upon it by the provisions of section 68 of the Act or not is purely a question of fact and has to be decided on the facts of each case and, therefore, no judicial decision has been considered on the peculiar facts of the case in hand. Additions made by the AO on the basis of general observations and without drawing any adverse inference in the hands of the individual taxpayers [share applicants] such additions based on surmises and conjectures cannot be sustained. - Decided in favour of assessee. - ITA No. 7653/DEL/2019, ITA No. 9451/DEL/2019 - - - Dated:- 26-4-2021 - Shri Bhavnesh Saini, Judicial Member, And Shri N.K. Billaiya Accountant Member For the Assessee : Shri Govil Upadhyaya, CA For the Revenue : Shri H.K. Choudhary, CIT(DR), Shri Prakash Dubey, Sr. DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to prove the identity, genuineness and credit worthiness of the subscribers. The requisite details were submitted by the assessee. The list of shareholders to whom shares were allotted during the year is as under: 8. The AO examined the details of each share applicant. The AO further examined the source of the source and summarized his findings as under: 11. Without prejudice to conclusion drawn in the above paras, few facts are being reiterated below to understand the complete picture:- 1. All the individuals having meagre gross total income have huge exempt income from the non-genuine sources, including entry operators like S.K. Jain(specifically barred by the Enforcement Directorate), penny stock. 2. Shares of four independent or non-related parties which were partly paid, are forfeited in the subsequent Assessment Year, i.e., 2017-18. These dubious entries show that the assesse never had the genuine intention to raise the share capital/premium, but to show the channels differently in different Assessment years. 3. Summonses were issued to these investor companies but nobody from their side turned up in compliance to the summons. Even though it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of many of the intermediaries in the bank channel are closed and dormant which further clears the intention of their existence, i.e., to channelize the unaccounted funds through layers 5. Bank statement of these investor companies show that, money came from some third party into their account, which remain unexplained in absence of any cooperation from the investor companies, and immediately the money was transferred to the account of the assessee company. 6. Modus operandi of all these investor companies is strikingly identical 7. Moreover, director and addresses of these investor companies are also related and appointed by the director of the investee companies and individuals (As explained in company chart attached and the family tree). 8. Moreover, Sh. Dinesh Gupta who is the Director of the assessee company and has been stated to be the real managing director of all other group companies could not produce himself against the summons issued to the investor parties in the capacity of principal officer of these parties and could not provide sufficient documentary evidence to prove the source of this money; leave aside discharging the onus of producing other d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. On careful perusal of the aforementioned documents, we are of the considered view that the assessee has not only proved the source of share capital and share premium received by it, but has also proved the nature and source of funds in the hands of shareholders. We find that the AO has not pointed out any discrepancy in the documentary evidences filed by the assessee in support of its claim but has made general observations in respect of entry provider of some SK Jain group. In our considered opinion, once the assessee has established the source and source of the source , and if the source is not able to explain or give plausible explanation of its source , then, the addition should be made in the hands of that person and not in the hands of the assessee company, as prima facie, the assessee company has discharged its burden of proof. 16. Further, we find that Shri Anand Gupta, HUF and Shri Sanchit Gupta, whose additions have been confirmed by the CIT[A], these two share applicants have shown their respective source of source, sale consideration resulting into capital gain on sale of shares of Shital Leasing and Finance Ltd which, according to the Assessing Officer, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium of ₹ 490/- per share as the same is supported by the valuation report as per the I.T. Rules. By disbelieving the source of source being long term capital gain from the sale consideration of shares of Shital Leasing and Finance Ltd and Shilpi Cable Technologies, the AO cannot justify the addition in the hands of the assessee company. As mentioned elsewhere, any addition which deserved to be made should have been made in the hands of the share applicants who have shown their source of source as sale of shares of these companies or alleged accommodation entries. Whether the assessee has discharged the burden cast upon it by the provisions of section 68 of the Act or not is purely a question of fact and has to be decided on the facts of each case and, therefore, no judicial decision has been considered on the peculiar facts of the case in hand. 22. Considering the evidences brought on record, we are of the considered view that the additions made by the AO on the basis of general observations and without drawing any adverse inference in the hands of the individual taxpayers [share applicants] such additions based on surmises and conjectures cannot be sustained. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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