TMI Blog2021 (6) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... details of introducers of directors of M/s BDPL, details of services taken from investment banker, proof of receipt of share warrant application form, proof of dispatch of notice of AGM along with postal records, proof of dispatch of share warrants and shares. However, all these documents, as rightly noted by Ld. CIT(A), were not of much relevance since the transactions were duly confirmed by the investor entity as supported by other vital documentary evidences. So far as the applicability of the provisions of Sec.56(2)(viia) is concerned, the same do not apply to the assessee since the assessee is not the recipient of any property rather it is only an issuer of share warrants only and therefore, these provisions do not apply to the assessee. As settled position of law that to avoid the rigors of Section 68, the assessee must prove the identity, creditworthiness of the lenders / investors to advance such monies and genuineness of the transactions. Once these three ingredients are shown to be fulfilled by the assessee, the primary onus casted upon him, in this regard, could be said to have been discharged and accordingly, the onus would shift upon revenue to dislodge the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been received from M/s Bottomline Distributors Pvt. Ltd. during the year is ₹ 2,55,00,000/- and the resolution does not mention anything about share warrants of the assessee company. As evident, the revenue is aggrieved by deletion of certain addition u/s 68 as made by Ld. AO in the assessment order. 3. We have carefully heard the rival submissions and perused relevant material on record including documents placed in the paperbook. The judicial pronouncements as cited during the course of hearing have duly been deliberated upon. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 4. Assessment Proceedings 4.1 The material facts are that the assessee being resident corporate assessee stated to be engaged in manufacturing and sale of liquor products was assessed u/s 143(3) on 18/03/2014 wherein it was saddled with certain additions u/s 68. The assessee was incorporated on 04/07/2008. During this year, the assessee entered into a business transfer agreement on 16/12/2010 to take over distillery business from another entity. In order to meet urgent fund requirement and to reduce the borrowings, the assessee issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to prove the identity as well as creditworthiness of the lender and to prove the genuineness of the transactions remained undischarged. 4.6 The documents, which in the opinion of Ld. AO could not be furnished by the assessee, would include copies of correspondence with M/s BDPL prior to issue of warrants, details of introducers of directors of M/s BDPL, details of services taken from investment banker, proof of receipt of share warrant application form, proof of dispatch of notice of AGM along with postal records, proof of dispatch of share warrants and shares. Regarding creditworthiness of M/s BDPL, it was observed by Ld. AO that the said entity reflected loss of ₹ 2,014/- during the year and no business income was credited in its Profit Loss Account. Regarding genuineness of the transactions, it was observed that there was no basis / method for valuation of warrant @₹ 300/- each. Further the board resolution furnished by M/s BDPL was general in nature and did not mention anything about subscription to share warrants of the assessee company. Another concern was that the assessee had negative reserves of ₹ 28.61 Lacs and therefore, there would be no justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price of ₹ 300/- per share. During the course of assessment proceedings, the A.O. called the details of warrants including name, address, amount, income tax return, Balance Sheet, Capital A/c. and bank statement in relation to the parties to whom such warrants were claimed to have been issued during the year. As mentioned in para 3 of the assessment order, all the relevant details called by the A.O. were furnished by the appellant during the course of assessment proceedings. A notice u/s.133(6) of the I.T. Act was issued by the A.O. on 28.01.2014 to M/s. Bottomlime Distributors Pvt. Ltd., 23/1; Principal Khudiram Bose Road, Kolkata, West Bengal 700 006, who was the sole subscriber of allotment of warrants into 8,50,000 equity shares, asking various details which are mentioned in para 4 of the assessment order. In para 5 of the order, the Ld. A.O. duly acknowledged the receipt of necessary details. 5.2 From the perusal of para 5 of assessment order, it is evident that in compliance to notice u/s.133(6), the said M/s. Bottomline Distributors P. Ltd. submitted the following documents: i. Copy of acknowledgement ship of return filed for A.Y.2011-12. ii. Copy of compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 5.4 It was brought to my notice that M/s. Bottomline Distributors P. Ltd. in response to notice u/s.133(6) furnished all relevant information. It was also stated that in view of the proximate relationship of the appellant company with M/s. Bottomline Distributors P. Ltd. as evident from the records available from the site of Ministry of Corporate Affairs, majority information sought was of no consequence. After receipt of various details once again the Ld.A.O., vide order sheet entry dated 06-03-2014 required the appellant company to prove the identity, creditworthiness and genuineness of the transaction relating to issuance of share warrants valuing ₹ 8,20,00,000/-. According to the Ld.A.O., the appellant company failed to prove the identity and creditworthiness of M/s. Bottomline Distributors P. Ltd. The Ld. A.O. further concluded that genuineness of transactions in the form of share warrants by the appellant company was also not proved. Therefore an addition of ₹ 8,20,00,000/- was made by the AO. u/s 68 of the I.T. Act. 5.5 During the course of appellate proceedings, a written submission was filed by the appellant which find place in para 4 of this order. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the appellant company to file valuation report for justifying premium as is apparent from the order sheet produced before me in appeal. 5.6. The total sum of ₹ 8,20,00,000/- was received from M/s. Bottomline Distributors P. Ltd., 23/1 Principal Khudiram Bose Road, Kolkata, West Bengal 700 006, which was incorporated under the Company's Act, 1956 vide certification of Registration No. U511909WB2008PTC128087 dated 31.07.2008. The certificate of incorporation was also enclosed as Annexure 14 of the written submission filed by the appellant. The above mentioned company had been allotted PAN as AADCB5979K by Income tax and is assessed at 7(4), Kolkata. A certified copy of annual return from records of ROC of M/s. Bottomline Distributors P. Ltd. showing share holding pattern was also furnished by the appellant during appellate proceedings which is attached as Annexure 16 of the submission. M/s. Bottomline Distributors P. Ltd. is regularly filing its return of income and its case for A.Y.2009-10 was selected for scrutiny and an order u/s.!43(3) / 147 of the I.T. Act was passed by the ITO 7(4), Kolkata on 05.09.2011. In support of its claim, a copy of the order is also subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by its capital and reserves. It is pertinent to mention here that the case of M/s. Bottomline Distributors P. Ltd. was scrutinized by the I.T.O. Wd. 7(4), Kolkata u/s.143(3) r.w.s.147 and he had accepted the Balance Sheet filed by M/s. Bottomline Distributors P. Ltd. Therefore, without giving any concrete contrary findings, the A.O. has simply disbelieved the Balance Sheet of the convertible share warrant subscriber. From the details filed it is evident that the majority share holding of Bottomline Distributors P. Ltd. is owned / controlled by Shri Deepak Kotari or his relative who also own / control the share holding in the appellant company. If at all there was any doubt in the mind of the Ld. A.O. regarding creditworthiness of M/s. Bottomline Distributors or genuineness of the transaction, he could have required specific details from the appellant company, which he failed to do as is evident from the order sheet filed before me in appellate proceedings. The transactions are duly reflected in the Balance Sheet and accounts of M/s. Bottomline Distributors P. Ltd. The return of income filed by M/s. Bottomline Distributors has been scrutinized by the Department u/s.143(3) / 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the depositors had not been established by the assessee. The case of the respondent is that the assessee has failed to explain the source of such cash' as well as creditworthiness of the deposits. It is not the case of the revenue that the subscribers are bogus. / the case of the revenue is that the source of such cash as well as creditworthiness of the depositors has not been explained. In the circumstances, the department is free to proceed to reopen the individual assessments of the deposits named by the assessee, however, under no circumstances, can the amount of share capital be regarded as the undisclosed income of the assessee. iv. In CIT Vs. STL Extrusion (P) Ltd. 333 ITR 269 the Hon'ble Madhya Pradesh High Court held that though it is the duty of the assessee to establish the genuineness of the credits but in the present case the assessee has duly established the identity and source of credits. The Tribunal has also held that once the identity and source of the subscribers of the shares is established no addition can be made u/s.68. The assessee having duly furnished the name, age, address, date of filing the application of shares, number of shares of each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Road Transport Corporation supra. I also find, from a perusal of the order sheet, that the assessment proceedings are squarely covered by the observations of Hon'ble High Court of Delhi in the case of Gangeshwari Metals Pvt. Ltd. supra, wherein the Hon'ble High Court has held that- As can be seen from the above extracts, two types of cases have been indicated. One in which the AO carries out the exercise which is required in law and the other in which the AO sits back with folded hands till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on presumptions. The present case falls in the latter category................. It is important to point out that the audited accounts along with Balance Sheet of M/s. Bottomline Distributors Pvt. Ltd. had been accepted by the department u/s.143(3) r.w.s.147 of the I.T. Act, 1961 and no cogent defects have been found out by Ld. A.O. during the course of assessment proceedings. Moreover, the appellant company has provided the PAN, details of income tax returns, confirmation copy of bank accounts and other necessary details in respect of subscriber of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investor, their respective creditworthiness and the genuineness of the transactions, was duly discharged by the assessee. The onus, had thus shifted on Ld. AO, to disprove the assessee s documents and to bring on record any material to prove that assessee s own money flew back to it in the shape of share warrant application money. However, noting of that sort is available in the assessment order. 7. The documents, which in the opinion of Ld. AO could not be furnished, include correspondence with M/s BDPL prior to issue of warrants, details of introducers of directors of M/s BDPL, details of services taken from investment banker, proof of receipt of share warrant application form, proof of dispatch of notice of AGM along with postal records, proof of dispatch of share warrants and shares. However, all these documents, as rightly noted by Ld. CIT(A), were not of much relevance since the transactions were duly confirmed by the investor entity as supported by other vital documentary evidences. So far as the applicability of the provisions of Sec.56(2)(viia) is concerned, the same do not apply to the assessee since the assessee is not the recipient of any property rather it is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue s Special Leave Petition has been dismissed by Hon ble Supreme Court on 18/02/2019 which is reported at 103 Taxmann.com 435. Similar is the decision of Hon ble Bombay High Court in Pr. CIT V/s Ami Industries (India) Pvt. Ltd. [ITA No. 1231 of 2017, dated 29/01/2020) which has been rendered after considering the principles laid down by Hon ble Supreme Court in its recent decision titled as Pr.CIT Vs. NRA Iron Steel Pvt. Ltd. [412 ITR 161]. 9. We find that the ratio of above decisions is applicable to the case of the assessee. The assessee had discharged the onus of proving the fulfillment of primary requirements of Section 68 and the onus was on Ld. AO to disprove the same. In the absence of any such facts on record, the impugned additions could not be sustained in the eyes of law and therefore, Ld. CIT(A) has rightly deleted the same. Finding no infirmity in the impugned order, we dismiss the appeal. Assessment Year 2012-13 10. The facts as well as issue is same in this year. An assessment was framed u/s 143(3) 28/03/2015 wherein the balance amount of Share Warrants received by the assessee from M/s BDPL was similarly added to its income u/s 68.However, upo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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