TMI Blog2021 (9) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... iples of natural justice. Ground No. 1 of the Revenue s appeal is partly allowed for statistical purpose. Addition u/s 68 - Unexplained cash credit - HELD THAT:- We find merit in the contention of Assessee Company that the premium is worth by looking the orders in hand, the assets in possession and the workings of the tear results. The details of the issued capital and the confirmations were provided by the assessee to the AO. The copy of Bank Statement of the Share applicants along with ITR acknowledgments, the set of balance sheets were also forwarded to the AO. - change in the address of Investor Companies were also informed to the Assessing Officer. Thus, the assessee company had discharged the burden by proving the genuineness of the transactions by submitting the bank statements, the creditworthiness of the investors by submitting the set of balance sheets of the investor companies and also proved identity while submitting the details of their income tax acknowledges, the certificate of incorporations and the copy of addresses from the site of Ministry of Company Affairs. Merely stating that how the book value of shares was increased without any cogent evidence brought o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A KAMBLE, JM This appeal is filed by the Revenue against the order dated 11/06/2012 passed by CIT(A)-Meerut for assessment year 2009-10. 2. The grounds of appeal are as under:- Revised Grounds 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in directing the AO to give benefit of Cost Index and tax the surplus as long term capital gain on sale of shop G-6 ignoring the fact that the AO had made the addition only on a/c of difference between the Market price and alleged actual sale price shown by the assessee against which the related expense had already been claimed by the assessee and allowed by the A.O. 2. Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of ₹ 2.50,00,000/- made by the AO. u/s 68 of the IT Act, 1961 following the ration down by the Hon ble Supreme Court in the case of Lovely Exports (P) Ltd. (2008) 216-CTR-195, ignoring the fact that the identity of the alleged share holders remained unproved and the book value of the shares was ₹ 120/- only as against ₹ 5,000/- per share ? 3. Whether in the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. 4. The Assessing Officer further made addition of ₹ 2,50,00,000/- towards share capital/share premium relating to Apurva Leasing Finance Investment Company and Shalini Holdings Ltd. thereby stating that the said transaction is nothing but an arrangement and an attempt to convert unaccounted money to the assessee company under the garb of share capital and share premium as both the Companies are not available on the given address and assessee failed to establish the identity, creditworthiness and genuineness of the transitions. The addition was made u/s 68 of the Act. 5. The Assessing Officer further made addition of ₹ 72,30,000/- being undisclosed sale relating to sale of properties which are below market price. The Assessing Officer also made addition of ₹ 2,83,28,690/- relating to disallowance on account of non-deduction of tax on payments of expenditure more specifically that of development expenditure. Further, the Assessing Officer made addition of ₹ 4,15,250/- related to agricultural income and ₹ 1,48,75,000/- relating to advance from customers for which there was no specific material produced by the assessee. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insertion of Section 43CA w.e.f. 01.04.2004. Much before this, the respondent Assessee had pointed out to the AO that the Mumbai Tribunal in Inderlok Hotels Private Ltd. vs. ITO 318 ITR 234 (AT) had explicitly held that Section 50C of the Act had no application to the sale of stock in trade. The CIT(A) ought to have abided by the ratio of the decision of the Mumbai Tribunal as cited and relied upon before him by the assessee. Accordingly, therefore, it is pleaded that the directions of the CIT(A) be amended to provide relief to the Assessee on this point as per the applicable law. 9. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee submitted before the Revenue authorities that the assessee sold the shop at market price to a close relative with a guarantee that it would fetch good rent, however, it was lying vacant and the Assessing Officer applied Section 50C of the Act. The assessee transferred the said shop in the assets and not claimed it as stock year after year. The genuineness of the transaction was never doubted by the Assessing Officer, and the buyer Smt. Upasna Devi is the daughter-in- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Ltd. which belonged to the relatives of the Directors of the Assessee Company. The former had free reserves of ₹ 112.12 crores and the latter of ₹ 14.86 crores. The above named investment companies had also made similar investments in another group company of the Assessee known as Emm Vee Infrastructures India Private Ltd. In the assessment of the Emm Vee Infrastructures, similar objections had been taken by the concerned AO to the induction of share capital therein. The objections as taken in assessment were all overruled in appeal by the CIT(A) in that case. When that issue came up before the Tribunal, B Bench by way of a departmental appeal bearing No. 4178/D/2012, the Tribunal vide order dated 19.06.2017, finding no merit in the departmental appeal, dismissed the same. 11.2. The Ld. AR submitted that in the subject case, the addition has been made on the basis of gratuitous and anomalous allegations based entirely on suspicion and conjectures and on the precedent of Emm Vee Infrastructures. To discredit the valuation of shares as presented by the Assessee, the AO worked out the value of shares as per book instead of taking the value, as per the market value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pprovingly cited from the observations of the Guwahati High Court in Nemi Chand Kothari Vs. CIT (2003) 264 ITR 254(Gau). In order to be able to unravel the sinister designs of evasive and manipulative assessees, the Apex Court went by the ratio and standards enunciated in the cases of Sumati Dayal Vs. CIT (1995) 214 ITR 801 (SC) and CIT Vs. Mohankala (2007) 291 ITR 278(SC). It would thus be amply clear, on a careful reading of the judgment as a whole, that the Apex Court did not spell out any fresh test or any new mode or manner of verification of share capital u/s 68 of the Act. It is most noteworthy that in a way, the Apex Court in the said judgment stood by the mandate in the case of Lovely Exports (P) Ltd. (supra) and others which included Divine Leasing Finance Company Ltd. In this way, the order of the CIT(A) in para 7.5 is in total and complete sync with the Apex Court observations in the cited case. Further, the decision of Emm Vee Infrastructures India Private Ltd. as referred to the order of the lower authorities has subsequently been confirmed by the Tribunal for relief in that case as pointed out hereinbefore. In the circumstances, the addition as deleted by the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents at ₹ 116,95,01,200/- in 253 companies whereas the second applicant has capital and free reserves at ₹ 14,86,25,000/- and investments of ₹ 13,20,35,000/- in 21 companies. The capital and free reserves and the investments of the share applicants prove their creditworthiness. The A.O failed to see the large amounts of investments and capital structures of the share applicants and without applying his mind added the amounts received as share application u/s 68 of IT Act. In view of the above facts and various judgments cited by AR and keeping in mind of judgment of Apex court in the case of Lovely Exports Pvt. Ltd (2008) 216 CTR 195 the addition of ₹ 2,50,00,000/- is deleted. 12.1 It is pertinent to note that the assessee for want of working capital had issued 10,000 equity shares of ₹ 100 each at a premium of ₹ 4,900/- to two different companies. The breakup of issue stands of 2,000 equity shares of ₹ 100 each at a premium of ₹ 4,900/- to Appoorva Leasing Finance and Investment Pvt. Ltd. amounting to ₹ 50,00,000 and 8000 equity shares of ₹ 100 each at a premium of ₹ 4,900/- to Shalini Holdings Ltd. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vate Ltd. Vs. CIT (2009) 318 ITR 234. As of present, the law on this point is very clear, in as much as, the power so to do has been granted by the Act to the AO in terms of Section 44CA only w.e.f. 01.04.2014. He submitted that in the subject year, there was no such power with the AO to tax the difference between the circle rate and the sale value. The difference between circle rate and the sale value in the case of sale or stock in trade, circle rate as brought to tax by the AO has been rightly deleted by the CIT (A) which merits to be confirmed. 15. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Ld. DR made similar submissions to that of Ground No. 1 and the same is identical. It is further noted by us while deciding Ground No. 1 that the Assessing Officer has applied Section 50C of the Act, but the CIT(A) has not given any finding as to why the Cost Inflation Index Benefit has to be given to the assessee. Therefore, it needs verification of the entire issue. Thus, we are remanding back this issue to the file of the Assessing Officer for proper adjudication and decide the same afresh as per law. Nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny regarding the vouchers being with the parent company for their audit for obtaining the finance facilities and vice versa letter of Era Land Marks Ltd. about the returning of the vouchers. I have also considered the case law as given by the AR. The AO could not verify the entire bunch of vouchers but retained some and in the third Para of Page 19 expressed. A list of few labours have been submitted along with some signatures without any details, date or supporting record. However, every where he has stated that no details have been submitted regarding the payments or deduction of TDS. The AO further has stated in the last lines of the same para that It is further stated that at later stage if assessee established the deduction of TDS and deposit to the Central Government as per provision of I.T. Act then income of ₹ 1,65, Cr. as stated above shall be treated as Income of the assessee. The AO cannot presume the income at one stage of ₹ 14,24,669/- being 4.79% as shown by the assessee and at another stage an income of ₹ 1,65 Crore. The AO has failed to establish the correct amount of income which he wanted to be taxed as the real surplus of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. As regards to Ground No. 5, the Ld. DR relied upon the assessment order. The Ld. DR further submitted that the CIT(A) has erred in treating the income from agriculture against the income assessed under the head other sources ignoring the fact that the assessee failed to establish any activity relating to agriculture. 20. The Ld. AR submitted that Ground No. 5 is with regard to agricultural income as derived by the assessee during the year. The AO s observations in this regard are contained on page 19 of the assessment order. The CIT (A) has dealt with this issue on pages 38 to 40 of his order. The Ld. AR submits that the AO wrongly ignored the evidences furnished by the assessee for the purchase of seeds, the payment of electricity and diesel expenses for operating the tube well and tractor, the Khasra and khatauni issued by the Patwari for the crops and also the sale vouchers of the agricultural produce. No error or shortcoming has been pinpointed by the Department in the order of the CIT (A). Hence the order of the CIT (A) on this point be confirmed. 21. We have heard both the parties and perused the material available on record. It is pertinent to note that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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