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TMI Blog2022 (12) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... WARD 6(1), Kolkata as unaccounted income u/s 68 of the appellant assessee company from Share Capital and Share Premium raised. 3. That on the facts and circumstances of the case, the Ld. CIT(A) erred in confirming addition of Rs. 1,05,00,000/- u/s 68 of the Income Tax Act in respect of Increase in Share Capital by issuing shares at a premium by the appellant company and holding that the same are not genuine. 4. That on the facts and circumstances of the case, the Ld. CIT(A) erred in confirming addition of Rs. 1,05,00,000/-, made u/s 68 of the Income Tax Act 1961 without appreciating the facts that the appellant has proved the identity and creditworthiness of the subscribers and genuineness of transactions. 5. That the appellant craves leave to add or amend any grounds of appeal." 3. Brief facts of the case are that the assessee, a private limited company, declared loss of Rs.137/- in the e-return filed 05.03.2013. The case was selected for scrutiny through CASS followed by serving of notices u/s 143(2) and 142(1) of the Act. In the course of assessment proceedings, the ld. A.O noticed that the assessee company issued share capital of Rs. 2,05,000/- at a share premium of Rs.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of money was credited, in the books of the assessee and the assessee could not prove the genuineness of these credits as well as the creditworthiness of the creditor. Hence in our informed view the addition has rightly been made by the A.O. Accordingly, the appeal of the appellant is hereby dismissed as the factual matrix is more or less similar. IV. The Assessing Officer is directed to verify the correct figure regarding the amount of share capital. He has added the share capital of Rs.2,05,000/- however, the appellant has stated that the correct figure should actually be taken as Rs.1,05,000/-." 5. Aggrieved, the assessee is now in appeal before this Tribunal challenging the addition of Rs.1,05,00,000/- made u/s 68 of the Act for unexplained share capital and share premium. The ld. Counsel for the assessee apart from referring to the written submissions filed before the ld. CIT(A), remand report dated 28.03.2017, various details including income tax return, audited balance sheet, bank statement of the investor companies, further stated that the directors of the assessee company and investing companies have replied. All the evidences to prove the identity and creditworthines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75000/- 2500000/- Total 1,05,00,000/- 8. We further observe that assessee filed complete details to explain the alleged sum. The ld. AO also issued summons to director of assessee company as well as investor companies. In most of the cases, written submissions were filed by the summoned parties directly to the AO. The ld. AO mainly observed that most of the investing companies are in the initial years of operation, having no business activity, showing normal income/loss and are basically investment companies. Further, the Ld. AO has heavily relied in the decision of M/s Bisakha Sales Pvt. Ltd. (supra). So far as reliance placed by the ld. AO on the decision of this Tribunal in the case of M/s Bisakha Sales Pvt. Ltd. (supra) is concerned, we do not find any merit as the facts of M/s Bisakha Sales Pvt. Ltd. (supra) are distinguishable to the facts of the present case. In the case of M/s Bisakha Sales Pvt. Ltd. (supra), the issue under challenge was revisionary order framed u/s 263 of the Act, wherein, it was alleged that the ld. AO has not made proper enquiries. However, in the case of the assessee, the scrutiny proceedings were carried out u/s 143(3) of the Act, complete details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these details have not been found to be incorrect or fabricated. It is also evident that the investing company had sufficient funds in the form of share capital and security premium to explain the alleged investment in the assessee company. 11. We further notice that the ld. CIT(A) called for remand report under Rule 46A of the Income Tax Rules which was received vide letter dated 28.03.2017 and the relevant observations of the ld. AO in this remand report are extracted below: "On the basis of information as provided Notices u/s 133 (6) issued on 31.12.2014 to 4 investor companies by post. Compliance received during the period of 27.02.2015 to 17.03.2015. In the course of assessment proceeding Summon u/s 131 issued on 10.02.2015 to two directors of M/s Devghar Suppliers Private Limited by post, In response of Summon Sri Saurab Dhanuka, one of the director of assessee company filed written declaration about quantity of authorized equity shares, issue of 205000 number of shares at Rs. (205000 10395000) = 10500000/- and receipt of payment there from with supporting documents and requested - "since I am out of Kolkata I would request you to kindly allow me time to appear before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited in the bank accounts maintained by the investor companies. All the companies are regularly filing returns with the Registrar of Companies. Books of account are regularly maintained and duly audited. Companies had sufficient funds and decision of investment was made by Board of Directors. The ld. AO has also stated that statement of the director was verified from information contained in paper-book in respective assessment. Further, it is observed by the ld. AO that transactions and credit of capital including premium are found in order and there is no deficiency in supporting evidence. The remand report of ld. AO is loud and clear that the source of share capital and share premium of Rs.1,05,00,000/- has been successfully explained to the best possible extent by the assessee furnishing all evidences and none of them were found to be incorrect and no defect has been pointed out. Under the given facts and circumstances of the case, we fail to find any justification in the finding of ld. CIT(A) confirming the action of the AO making addition u/s 68 of the Act. Our view is further supported by following judicial pronouncements: "i) CIT vs. Gagandeep Infrastructure (P) Ltd. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n all these cases, the Department had alleged that the share application monies were received from persons who were 'entry operators' and the monies received by way of share application was nothing but was routing of unaccounted money of assessee in the form of subscription to share capital. However, in the assessments made the AOs had not brought on record any material or evidence to substantiate such finding. Accordingly, on appeal the appellate authorities had deleted the additions made u/s 68 of the Act. iv) DCIT vs. Rohini Builders 127 Taxman 523 observed that the assessee had discharged its onus of proving the identity of creditors by giving their complete addresses, permanent accounts number and copies of assessment orders. It was further observed that the assessee had also proved capacity of creditors by showing that amounts were received by account payee cheques. The High Court held that only on the ground that some of the creditors could not be served with notice u/s 131 or they failed to appear before Assessing Officer the loans could not be treated as non-genuine and therefore upheld the order of the Tribunal deleting the addition u/s 68 of the I.T. Act 1961. v) CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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