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TMI Blog2022 (7) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... in conforming the initiation of the reassessment proceedings under section 143 (3) r.w.s 147 of the income tax act. 2. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in conforming the view of the ld. AO in creating reasons to believed escaped assessment u/s 147. 3. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the order passed under section 143 (3) r.w.s 147 by the ld. AO which was against the principal of natural justice and barred in law. 4. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the addition of Rs 41,00,000 received on account of share capital and share premium treating the same as unexplained cash credit under section 68 of the income tax act 1961. 5. The Ld. Commissioner of Income tax 49 initiated penalty proceedings under section 234B, 234C, 234D of the Income Tax Act 1961. 6. The Ld. CIT(A) erred in confirming the invoking of penalty proceedings under section 271(1)(C) of the income Tax Act 1961. 7. The assessee craves leave to add further grounds or to amend or alter the existing grounds of appeals on or before the date of hearing." 03. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also relied on "some reliable sources" and therefore information is vague. b. On the merits, assessee submitted share application forms, bank statements, share certificate counter foils, statement of source of funds of the investors, board resolutions of the investors, audit report along with balance sheet of investors, return of income filed by the investors, certificate of incorporation along with memorandum and articles of association as well as company Master data of the investors. In case of some of the investors who are registered nonbanking financial companies with the reserve Bank of India, there certificate of registration as nonbanking financial company was also submitted. On the basis of above submissions, assessee submitted that reopening of the assessment is bad and even otherwise assessee has established initial onus u/s 68 of the income tax act and therefore assessee has shown identity and creditworthiness of the depositors as well as genuineness of above 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 unac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able Supreme Court in the case of Raymond woolen Mills Ltd versus ITO as well as ACIT versus Rajesh Jhaveri stockbrokers private limited to confirm the reopening. 07. With respect to merits of the case, he accepted that statement-recorded u/s 133A does not have any evidentiary value unless it is act by credible evidence. Despite this, he held that when AO issued notices u/s 133 (6) of the assessee to the investor, it was returned back by the postal authorities. When confronted, assessee obtained all those confirmation of the parties and submitted before the AO, but as those parties have not independently responded to the notice issued by the AO, he confirmed the action of the assessing officer of making addition u/s 68 of the act. He also confirmed the action of the AO for the reasons recorded in paragraph number 9.1 of the assessment order. Thus, he confirmed the addition on merits. 08. Assessee, aggrieved with the order of the learned CIT - 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 provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h this party is not covered by any of the above decisions of the facts are identical. He referred to the decision of the coordinate bench in assessee's own case for assessment year 2010 - 11 wherein the depositor Moto cab finance private limited and Deepa Holdings private limited were also considered and addition with respect to these two parties were deleted. With respect to Shagun merchants private limited he submitted that identical facts and circumstances exists and similar details were submitted. He referred to page number 218 - 253 of the paper book to show that there is not a difference of even slightest amount in the facts, therefore the issue decided by the coordinate bench in all these 6 decisions including all the decisions in the case of sister concerns as well as in case of the assessee squarely applies to this party also. d. Therefore, issue involved in this appeal is squarely covered in favour of the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appeal are dismissed. 016. Ground number 4 of the appeal is with respect to the addition of Rs. 41 lakhs received on account of share capital and share premium treating the same as an unexplained cash credit u/s 68 of the income tax act by the learned AO and confirmed by the learned CIT - A. We find that on identcals facts and circusmastaces of the case for various years all these shareholder companies are shareholders in different group companies where the ld Ao has made addition u/s 68 o the Income tax Act in the hands of group companies. When the matter reached the coordinate benches all the addition with respect to these parties were deleted as under :- Sr No Assessee ITA No & Date and AY Shareholders 1 Shiv shakti Enclaves Pvt Ltd 629/M/2019 dated 4/6/2021 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of share application, allotment and premium collected. The A.O found that the investors who have made an application for allotment of shares are related to one of the group concern. Whereas the A.O has relied on the statement of Mr. Rajesh Agarwal who is associate of Lotus Group and has received the share application money from various Kolkata based companies. The A.O on perusal of the facts, is of the opinion that the assessee is associated with Mr. Rajesh Agarwal in availing accommodation entries in the guise of share application 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot substantiate its claim and confirmed the addition u/s 68 of the Act and granted relief in other grounds of appeal and partly allowed the assessee appeal. Aggrieved by the order, the assessee has filed an appeal before the Honble Tribunal. 5.At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in not considering the various aspects of investments and the assessee has filed the financial details in respect of these companies which cannot be overlooked. The Ld.AR referred to the paper book 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he investor companies have positive net worth and only invested 1.6% and 1.2% of their net worth. The assessee submitted Form of application of shares, Photocopy of the cheque receipt towards the share application, photo copy of the bank deposit slip reflecting the deposit of the above cheque, extract of Bank Statement of all subscribers duly highlighting the entries of share money and premium money given by them to the appellant company along with copy of board resolution, resolving the decision of investment 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. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res were issued at face value of Rs.10/- per share. The Share Capital of the assessee increased by Rs.207 Lacs during the year under consideration. In the light of settled legal position as enumerated by us in the opening paragraphs, it is quite evident that the primary onus was on assessee to prove the fulfilment of three ingredients of Sec. 68 viz. (i) identity of the investor; (ii) creditworthiness of the investors; & (iii) genuineness of the transactions. 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or surmises. 8.5 The Ld. DR has relied upon the case of Hon'ble Supreme Court in Sumati Dayal Vs CIT (80 Taxman 89) & Durga Prasad More (82 ITR 540 26/08/1971). No doubt that the revenue authorities were not required to put blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the documents produced before them. However, we find that no such inquiries 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 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the primary onus as casted on the assessee in terms of the requirement of Section 68, was duly fulfilled and the onus was on revenue to controvert the evidences furnished by the assessee. However, we find that nothing has been brought on record by the revenue to substantiate the fact that the assessee's unaccounted money was routed in the books in the garb of share capital. It 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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