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TMI Blog2021 (6) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... n entry commission on the above amount, being 30% of Rs. 80,00,000/-. 3. The assessee craves to add, amend, alter, modify or delete any of the grounds as well as to submit additional grounds at the time of hearing of the appeal." 3. The relevant material facts, as culled out from the material on record, are as follows. During the course of assessment proceedings, the AO found that assessee had received a sum of Rs. 1,38,60,000/- towards share premium and Rs. 1,40,000/- towards share capital totaling Rs. 1,40,00,000/- from two companies during the year under consideration. In order to verify the creditworthiness and the genuineness of the transactions, the AO issued notice u/s 133(6) of the Act to the first investor company namely, M/s Surpriya Fincom Pvt. Ltd. Kolkata but partial compliance was made. They had received share capital/share premium of Rs. 80,00,000/- which included share premium of Rs. 79,20,000/- @ Rs. 990 towards share premium. The ACIT, Circle- 2(1)(1), Surat also personally visited Kolkata and found that the at the given addresses of the office premises no such company was running. The DDIT, Investigation Wing, Kolkata, u/s 131(1)(d) of the Act also conducted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, creditworthiness and genuineness of the transaction. In the assessment order the AO has only given a very cryptic finding that an accommodation entry provider at Kolkata had stated that his 4 companies have invested in M/s Empower India Ltd. No other efforts have been made by the AO to prove that the investment made by this investor company is not genuine. Neither any notice u/s 133(6) of the Act has been issued not any summons were issued to the Principal Officer/Directors of the Company. In the show cause notice also dated 13.3.2015, the AO has not confronted any facts or findings regarding the investor company namely Empower India Ltd. The AO has made the addition without giving opportunity to the assessee to proof the genuineness of the transaction from M/s Empower India Ltd. The assessee had submitted that M/s Empower India Ltd. is a public limited listed company, listed in Bombay Stock Exchange. It was contended that being a public listed company ' it is subjected to various regulations of SEBI and the company is having gross sales of Rs. 150.45 crores and Rs. 156.53 crores for A.Y. 2012- 13 and A.Y. 2011-12 respectively. Since, the AO has not made any enquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing officer may be deleted. 9. On the other hand, Ms. Anupama Singla, Learned Senior Departmental Representative (in short "the ld. Sr. DR") for the Revenue submitted that assessee-company has failed to prove the genuineness of the share premium. The share applicant company, that is, M/s. Supriya Fincom Pvt. Ltd, is only a paper company and does not have any earning. Even the assessee-company does not have sufficient profit to fetch the premium of Rs. 990/- per share, therefore the assesse has failed to prove that (as per the financial statement of the company), the company is entitled to receive the premium of Rs. 990/- per share. The Ld. DR also submitted that it is a "Jama-Kharchi" company and it provides accommodation entry in lieu of commission, therefore the assessee has failed to prove the creditworthiness, genuineness and identity, as mandated by section 68 of the Act, therefore addition made by the Assessing Officer should be sustained. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where amendment was made w.e.f. 01.04.2013 by way of insertion of proviso to Section 68 of the Act. The statement of Jivendra Mishra doesn't implicate the name of the assessee or investor company. It has been mentioned that Jivendra Mishra just used the address of Ankush Sales Pvt. Ltd. which may be in the opinion of the revenue, the entry provider company. It is to be noted that out of Rs. 80 lacs, the amount of Rs. 50 lacs was received from Ankush Sales Pvt. Ltd. on sale of the shares by Supriya Fincom Pvt. Ltd. to them. The assessee has not carried out any transaction with Ankush Sales Pvt. Ltd. So this finding is not at all relevant. Further assessee asked for cross examination of Jivendra Mishra before CIT(A). The cross examination was not provided either by assessing officer or CIT(A). The report of the Investigation Wing is also not relevant as it is not concerning assessee or the investor company. It may be concerning Ankush Sales Pvt. Ltd. or Jivendra Mishra for which assessee has no concern. Even otherwise, the report of the Investigation Wing was not furnished to the assessee during the course of assessment proceedings, appellate proceedings or under the RTI. The in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details of the bank accounts belonging to the share applicant and their bank statements, (vi) in none of the transactions the AO found deposit in cash before issuing cheques to the assessee company, (vii) the applicant is having substantial creditworthiness which is represented by a capital and reserve as noted in Balance Sheet filed by the assessee above. 14. Section 68 under which the addition has been made by the Assessing Officer reads as under: "68. Where any sum is found credited in the books 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 him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. " The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words 'shall' be charged to income-tax as the income of the assessee of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s will not be sufficient to draw and adverse inference against the assessee in the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69. 16. Further, in the case of CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18(All.) their lordships, on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, has observed and held as under:- "4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded as undisclosed income under section 68 of the Income tax Act, 1961? We find no merit in this special leave petition for the simple reason that 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. Hence, we find no infirmity with the impugned judgment." 19. To sum up, section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature and source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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