TMI Blog2021 (10) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the CIT(A) that the amount received by the assessee company as share capital and share premium from the aforementioned three shareholder companies could not have been assessed as an unexplained cash credit u/s 68 - Decided in favour of assessee. - ITA No.468/MUM/2019 (Assessment Year: 2010-11) - - - Dated:- 30-7-2021 - SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) Assessee by : Shri Mani Jain, A.R Revenue by : Shri T.S. Khalsa, D.R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-21, Mumbai, dated 04.10.2018, which in turn arises from the order passed by the A.O u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 (for short Act ), dated 28.12.2016 for A.Y 2010-11. The revenue has assailed the impugned order on the following grounds before us: 1. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of ₹ 3,25,00,000/- as unexplained cash credit u/s 68 of the I.T. Act on account of share capita! share premium, without appreciating the fact that the assessee could not corroborate its claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished by the assessee, it was gathered by the A.O that the assessee had raised share capital and share premium for 1,40,000 equity shares from the following shareholders: Sr. No. Name address of the person Address of the assessee No. of equity shares Share Capital [with premium @ ₹ 240/- each] (Rs.) 1. Maginot Trading co. Private Limited Unit No.2, 3 4, Kapoor Compound, Opp. Laxmi Compound, Shelar Bhiwandi, Thane 421302. 10000 2500000 2. Colourshop Trading Co. Private Limited 1st Floor, John Robert Compound, Sewri Fort Road, Sewri (East), Mumbai 400 015 50000 12500000 3. Induja Traders Private Limited 203, Sidat Mansion, Building No. 17/17A, 2nd Marine Street, Mumbai 400 002 40000 10000000 4. Vanquish Investment Leasing Private Limited A-104, Rajumng- II, Shiv Vallabh Cross Road, Ashokvan, Dahi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of their statements on oath u/s 131 of the Act, the A.O was of the view that the assessee had failed to prove the identity and creditworthiness of the aforementioned four shareholders, as well as the genuineness of the transactions of receipt of equity share capital and share premium from them. It was further observed by the A.O that neither the assessee company nor any of the shareholders had produced the original share application forms before him. Insofar the explanation of the assessee that though it had taken the share application forms (confirmations) from the parties at the time of issuance of shares, however, due to shifting of its office the related files had got misplaced, the same did not find favor with the A.O. Apart from that, it was observed by the A.O that the assessee had not only failed to produce any of the documents in original, but had not even filed the copies of the returns of income of the aforesaid four shareholder companies for the year under consideration i.e A.Y. 2010-11. Backed by his aforesaid observations, the AO was of the view that the assessee had failed to justify the huge sum of share premium of ₹ 240/- per share that was claimed to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, the same, however, merely supported the transactions under consideration. Elaborating the reasons for not furnishing the aforesaid documents in the course of the proceedings before the A.O, it was submitted by the assessee that the same had occasioned, for the reason, that the aforesaid shareholder companies had not cooperated and had told the assessee that the requisite details will be furnished by them directly with the A.O, as and when the same were called for by him. As regards the doubts that were drawn by the A.O qua the share premium of ₹ 240/- per share that was raised by the assessee, it was therein submitted by the assessee that as the same was duly supported by the valuation certificate issued by an independent authority who had taken all the factors into consideration before issuing the same, therefore, its genuineness could not be challenged. Insofar the observation of the A.O that the assessee despite specific directions had failed to produce the aforementioned four shareholder companies, it was submitted by the assessee before the CIT(A) that though it had furnished all the requisite details in relation to the share capital and share premium, and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h certain details, viz. share allotment letters, bank statements, and justification of the high share premium etc. As is discernible from the order of the CIT(A), we find that except for one shareholder company, viz. M/s Maginot Trading company Limited, the remaining three shareholder companies, viz. M/s Colourshop Trading Pvt. Ltd.; M/s Vanquish Investment and Leasing Pvt. Ltd.; and M/s Induja Traders Pvt. Ltd. had complied with the notices that were issued by the A.O u/s 133(6) of the Act and had furnished the requisite documents that were called for by him, viz. (i). justification for high premium; (ii) confirmation and application for shares; (iii) bank statements showing transactions with the assessee; (iv) share allotment certificate; (v) valuation report of M/s S.K. Patodia Associates, C.A; (vi) returns of income; and (vii) audit reports. On a perusal of the details filed by the aforementioned three shareholders, it was observed by the A.O that except for the share allotment certificate; and the valuation report of shares, all the other documents had already been submitted by the assessee with the CIT(A). It was, however, observed by the A.O in his remand report that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A), that as stated by the assessee the submission of the copies of the documents would not change the fact that the transactions took place specifically when the same were evidenced by the bank statements and the audited financials of both the investors and the investee company, and were duly recorded in their respective books of accounts. It was further observed by the CIT(A) that the three shareholder companies had in the course of the remand proceedings duly confirmed the transactions under consideration by responding to the notices that were issued to them by the A.O u/s 133(6) of the Act, which proved the identity, genuineness and creditworthiness qua the transactions under consideration. Also, it was observed by the CIT(A), that as stated by the assessee, in case the aforementioned investors companies could not be produced, then, the A.O could have summoned them in exercise of the powers that were vested with him u/s 131 of the Act, which however, he had failed to do. Also, cognizance was taken by the CIT(A) of the fact that the valuation report was issued by an independent chartered account and the same supported the share premium of ₹ 240/- per share that was receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said investors companies in the course of the remand proceedings, therefore, the amounts received from them towards share capital and share premium could not be held as an unexplained cash credit u/s 68 of the Act. Accordingly, the CIT(A) in the totality of the aforesaid facts, observed, that insofar the amount of share capital and share premium that was received by the assessee from the aforementioned three shareholding companies (out of four shareholding companies), viz. (i) M/s Colourshop Pvt. Ltd.; (ii) M/s Vanquish Investment and Leasing Pvt. Ltd.; and (iii) M/s Induja Traders Pvt. Ltd. was concerned, the same could not be held as an unexplained cash credit u/s 68 of the Act. At the same time, the CIT(A) taking cognizance of the fact that one of the shareholding company, viz. M/s Maginot Trading Company Pvt. Ltd. had not complied with the notice that was issued by the A.O u/s 133(6) in the course of the remand proceedings, thus, held the amount received from the said party as an unexplained cash credit u/s 68 of the Act. Accordingly, the CIT(A) vacated the addition to the extent of ₹ 3.25 crore and partly allowed the appeal. 6. The revenue being aggrieved with the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the additional evidence U/rule 46A by the CIT(A), however, we find sufficient justification on the part of the CIT(A) in admitting the same. Be that as it may, the said issue had not been assailed by the revenue before us. In our considered view, in the totality of the facts involved in the case before us, it can safely be gathered beyond any scope of doubt that the assessee had duly discharged the onus that was cast upon it as regards proving the authenticity of the transactions of receipt of share capital and share premium from the aforementioned three shareholder companies under consideration. Nothing is either discernible from the record nor produced before us by the ld. D.R in the course of the hearing of the present appeal which could persuade us to take a view to the contrary. Accordingly, we are of the considered view that the CIT(A) had rightly concluded that the amount of share capital and share premium aggregating to an amount of ₹ 3.25 crores that was received by the assessee from the aforementioned three shareholder companies could not have been held as an unexplained cash credit u/s 68 of the Act. Alternatively, as observed by the CIT(A), and rightly so, ..... 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