TMI Blog2022 (7) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer to form a reason to believe that the income of the assessee has escaped assessment. Accordingly, ground numbers 1 3 of the appeal are dismissed. Addition on account of share capital and share premium treating the same as an unexplained cash credit u/s 68 - the assessee could able to substantiate its case and satisfy three ingredients being identity, creditworthiness and genuineness of the transactions - As elaborately on the net worth of these companies and percentage of the investments are comparatively lower than total net worth of the investor companies. Accordingly, set aside the order of the CIT(A) and direct the assessing officer to delete the addition and allow this ground of appeal in favour of the assessee - ITA No. 17/Mum/2022 - - - Dated:- 7-7-2022 - Shri Prashant Maharishi, AM And Ms. Kavitha Rajagopal, JM For the Assessee : Shri Vimal Punmiya, AR For the Revenue : Shri Himanshu Sharma, DR ORDER PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by the assessee namely Shiv Shakti Enclaves Pvt Ltd [the appellant/assessee] against the order passed by the Commissioner of income tax, appeal 49, Mumbai (the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 3,690,000 from various companies based out of Calcutta. One accommodation entry provider Mr. Rajesh Agrawal has received accommodation entries including the assessee for financial year 2008 09 to 2011 12. Mr. Agrawal admitted the undisclosed income of the group u/s 131 of the income tax act dated 9 October 2014. Subsequently, in response to notice u/s 148, assessee submitted a letter dated 4 April 2016 stating that return filed on 30 September 2009 May be treated as return in response to the notice. The reasons were asked for which were made available to the assessee. During the course of assessment proceedings, it was found that assessee has issued 41,000 equity shares of ₹ 10/ each at a premium of ₹ 90 per share is and accordingly, issued share capital of ₹ 41 lakhs. Details of issue of said capital is as Under; Serial number name of the company to whom shares are allotted number of shares allotted share capital at the rate of ₹ 10/ share premium at the rate of ₹ 19/ per share total amount 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of share capital. 05. The learned AO rejected the contentions of the assessee. He was of the view that when Mr. Rajesh Agarwal initially owned that the amount invested by various companies are his own unaccounted money, subsequent retraction u/s 131 of the act during the course of assessment proceedings as well as after giving the statement during the course of survey does not have any validity. The original statement given will stand. He noted that when confronted with the evidences during the course of survey Shri Agarwal admitted under oath that the entries pertaining to the issue of share capital were bogus entries acquired in lieu of cash and he has introduced his unaccounted money by booking the transactions as share application money. Immediately after the conclusion of the survey, Shri Agarwal submitted an affidavit of retraction on 8/11/2016. During the course of assessment proceedings, he confirmed that the transactions are genuine. Therefore, AO noted that such changing stand goes against the assessee. AO noted that the projects of the assessee is lying dead at the moment, there is no business receipt and still assessee got investors for making in the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A has preferred this appeal. The learned authorised representative first referred to the paper book submitted before the learned CIT A containing 253 pages wherein all the possible information with respect to all the investors were provided for. He also referred to his 27 pages of written submission challenging the reopening as well as on the merits of the addition. With respect to the reopening he submitted that the reopening was made merely to verify the transaction of premium on share application money, no reassessment proceedings can be initiated just to make an enquiry or verification, the reassessment is initiated on the information received from investigation wing and no independent enquiry has been made by the AO, reassessment has been initiated by the AO when he has reason to suspect and not reason to believe. For this proposition, he referred to the reasons recorded at page number 23 33 of the paper book. 09. On the merits of the addition, he referred to the page number 50 253 to show that complete information with respect to the identity, creditworthiness, and genuineness of the transactions are submitted. It was stated that despite availability of these overw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the above six decisions of the coordinate bench rendered in the sister concern and assessee itself on the same facts. 011. The learned departmental representative vehemently supported the order of the lower authorities. It was stated that the reopening has been correctly made by the learned assessing officer as the original return of income of the assessee was not picked up for scrutiny, subsequently the statement of the director of the group was obtained, though in survey but it is a tangible material available with the assessing officer for reopening of the assessment. 012. On the merits, he supported the orders of the lower authorities and stated that when during the course of survey it is apparent that these companies have not entered into genuine transaction with the assessee and directors have confessed that it is their own money, despite restrictions letter on, the assumption of a bogus share capital issue remains intact. 013. With respect to the several judicial precedents relied upon by the learned authorised representative, he submitted that merely because in some other case or even in the case of the assessee, addition is deleted, that does not mean that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 AY 2010-11 Deep Hodings Limited Motcab Finance Limited 2 Binni Builders Limitd 1321/M/2021 28/4/2022 Ay 2009-10 Deepa Holdings Limited and Motocab Finance P Ltd 3 Binni Builders P Ltd ITa No 630 631/M /2019 dated 12/3/2021 AY 2011-12 2012-13 Cherry Tie UP P Ltd Deepa Holdings P Ltd Hill View Hire P Ltd Mot Cab Finance Limited 4 Mongipia Development Infra Ltd 625 to 627/M/2019 Ay 2009-10 201-11 and 2011-12 Cherry Tie UP P Ltd Deepa Holdings P Ltd Hill View Hire P Ltd Mot Cab Finance Limited 017. Complete facts are recorded in ITA No 629/M/2019 Decided by the coordinate bench in case of assessee for Ay 2010-11 vide order dated 4/6/2021 , which are identical to facts in the case of assessee as well as all these orders of coordinate bench cited above , as under :- 2. The Brief facts of the case are that the assessee company is engaged in the business as builder and developers. The assessee has filed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication money. The assessee has received the share application money along with premium from the existing share holders referred at page 3 Para 3.1.5 of the order as under: 3.1.5 On perusal of the details filed during the assessment proceedings it is seen that the following entities had been allotted share during the year; Shri Shiv Shakti Enclave Pvt Ltd., Mumbai Priyamada Finvest Pvt Ltd, Kolkata 3 M/s Motacab 28500 285000 2565000 2850000 Finance Pvt Ltd, Kolkata 4 M/s Deepa 4500 45000 405000 450000 Holdings Pvt Ltd., Kolkata 5 M/s Rexnox 8000 80000 720000 800000 Trexim Pvt Ltd, Kolkata Total 92000 920000 8280000 92,00,000 3. The A.O to verify the claim of genuineness issued notice u/s 133(6) of the Act to these 5 entities and the A.O. has dealt on the facts, details, information and affidavit of the Mr Rajesh Agarwal and observed that the assessee has not established the identity, creditworthiness and genuineness of the transactions. The A.O found that no information was received from the parties in respect of notice issued u/s 133(6) of the Act. The A.O. is of opinion that the assessee company has failed to prove the identity, creditworthiness and gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok and demonstrated the submissions made before the CIT(A).The Ld.AR mentioned that the assessee has submitted the details/evidences in respect of the five shareholder companies to satisfy the identity, creditworthiness and genuineness of the transaction and substantiated with share application form, copy of bank statement, copy of share certificate, copy of Board resolution, copy of audit report and audited Balance sheet and enclosures, copy of certificate of incorporation, and Active status of company from MCA web site. The Ld. AR relied on the catena of Honble High Court and Honble Tribunal decisions. The Ld.AR emphasized that on similar and identical facts, the Hon'ble Tribunal has confirmed ITA No. 629/Mum/2019 Shri Shiv Shakti Enclave Pvt Ltd., Mumbai the genuineness, identity and creditworthiness of the investors for the same assessment year. Further the Ld.AR substantiated his arguments with paper book, judicial decisions and orders of the Hon'ble Tribunal and prayed for allowing the appeal .Contra, Ld.DR relied on the CIT(A) order. 6.We heard the rival submissions and perused the material on record. The sole crux of the disputed issue as envisaged by the Ld.AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment into appellant company. To prove the ITA No. 629/Mum/2019 Shri Shiv Shakti Enclave Pvt Ltd., Mumbai genuineness of the transaction the assessee produced the confirmation, bank statement, financial of the lender. Nothing came into noticed that the transaction were found bogus. Retracted statement of Shri Rajesh Agarwal was not liable to be relied upon the unless corroborated by the sufficient evidence on record. Moreover no opportunity of being heard was given to the assessee. However, in support of this contention, the Ld. Representative of the assessee has placed reliance upon the following law.:- 1. CIT Vs. Loverly Exports Pvt. Ltd. (2008) 216 CTR 195 (SC) 2. PCIT Vs. Himachal Fibers Ltd. (2018) 98 taxmann.com 173 (SC) 3. PCIT Vs. Bharat Securities P. Ltd. (2020) 13 taxmann.com 32 (SC) 4. PCIT Vs. Rohtak Chain Co. P. Ltd. (2019) 110 taxmann.com 59 (SC) 5. PCIT Vs. Ami Industries Pvt. Ltd. 1231 of 2017 6. CIT Vs. Gagandeep Infrastructure Pvt. Ltd. ITA. No.1613 of 2014 (Bom) 7. CIT Vs. Orchid Industries Pvt. Ltd., I. T. Appeal No. 1433 of 8. Jasamrit Constructions Pvt. Ltd. Vs. ITO, ITA. No. 1091/M/2016 ITAT Mum dated 8 Feb, 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. 8.2 To demonstrate fulfillment of these ingredients, the assessee had during the course of assessment proceedings as well as appellate proceedings, furnished following broad documentary evidences with respect to all the 11 entities: - (i) Share Application Form (ii) Copy of Cheque (iii) Copy of Cheque Deposit Slip (iv) Copy of investor's Bank Statement (v) Copy of Share Certificate Counterfoil (vi) Copy of Audit Report along with financial statements of the investor entity (vii) Copy of ITR acknowledgement of the investor entity (viii) Copy of Certificate of incorporation of investor entity (ix) Memorandum Articles of Association of investor entity (x) Company Master Data showing status as active (xi) Copy of Board Resolution The assessee's own bank statement was also placed on record which would show that all the transactions have taken through banking channels. Upon careful consideration of these documents, we find that so far as the identity of the investor entities are concerned, the same stand proved by certificate of incorporation which is held to be conclusive proof of registration of a corporate entity. The creditworthiness of the entities would stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nquiries have been made by the authorities except for the allegations that the share capital was bogus in nature. Nothing was brought on record that to substantiate the fact that the assessee's unaccounted money was routed in the books in the garb of share capital. 8.6 The entirety of facts and circumstances as enumerated hereinabove do not convince us to concur with the stand of Ld. CIT(A). The impugned additions, in our considered opinion, could not be sustained under law in the light of binding judicial pronouncements as enumerated by us in the opening paragraphs. Therefore, we delete the same. Consequently, the set-off of losses, as allowable under law, would be available to the assessee. Ground Nos. 4 stand allowed. Ground No.5 stand allowed for statistical purposes. Ground Nos. 6 to 8, being consequential in nature, would not require any specific adjudication on our part. 8.7 So far as the legal grounds are concerned, we find that the original return was processed u/s 143(1) and the only requirement in law to trigger assessment was that Ld. AO certain reasons to believe that certain income escaped assessment in the hands of the assessee. We find that Ld. AO was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is trite law that no addition could be made merely on the basis of allegation, suspicion, conjectures or surmises. Upon perusal of assessee's written submissions as placed on record, another pertinent fact to be noted is that all the 16 investor entities has sufficient net worth (shares capital + reserves surplus) to make investment in the assessee and the percentage of investment made by them in the assessee company is merely in the range of 0.47% to 5.45% of their respective net worth. 8.We find these five investors companies invested in the share capital at share premium in the assessee company referred at Sr. No. 1,2,4,5 and 8 of the chart referred at page 15 above, where the Honble Tribunal has considered the financial aspects and observed that these companies can make investments and the investments percentage range from .47% to 5.45%. Further, we find that all the five investor companies contributed the share capital and premium were subject matter of adjudication by the Hon'ble Tribunal and was treated as genuine in the above cases. We find that these five investor companies are part of the decisions of the Hon'ble Tribunal for the same assessment year. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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