TMI Blog2019 (2) TMI 2072X X X X Extracts X X X X X X X X Extracts X X X X ..... st to be applied for such companies, in our considered opinion is not the same as that which is to be applied in case of a jamakharchi company or a company on paper which has net worth and no transactions or real asset base. The creditworthiness of these share applicant companies is not in doubt. As far as the identity of these share applicant companies are concerned, the assessee has furnished the following details before the Assessing Officer in case of each of these companies as Share applications, ITR Acknowledgements, Audited Financial Statements, Relevant bank details and Allotment advices It is well settled that merely because the directors of the share applicant companies did not appear before the Assessing Officer, the addition could not be made - We find that the revenue has not brought out any evidence to controvert the findings of the ld. CIT(A). We find no infirmity in the order of the ld. CIT(A) and uphold the same. - Decided against revenue. - I.T.A. No. 1705/Kol/2016 - - - Dated:- 28-2-2019 - Sri J. Sudhakar Reddy, Accountant Member Sri S.S. Viswanethra Ravi, Judicial Member For the Assessee : Shri Manish Tiwari, A/R For the Revenue : Shri Saur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on the 1st proviso to Section 68 of the Act and submitted that this proviso is applicable from the Assessment Year 2013-14 and not to the impugned Assessment Year 2012-13. e) That the assessee has proved the identity and creditworthiness of the share applicant companies and genuineness of the transactions. 3. Aggrieved the revenue is before us. 4. The ld. D/R, submitted that the share premium charged is excessive and this proves that the transaction is not a genuine transaction. He relies on the order of the Assessing Officer. 5. The ld. Counsel for the assessee, on the other hand submits that the assessee is not a paper company and it is a transport company having substantial turnover, hence substantial investment was made in its equity shares. He submitted that each of the share applicant companies have furnished copy of their PAN, copy of income-tax return filed by them, copy of the annual accounts, copy of audited financial statements, copy of bank account showing the transaction, source of source etc. He filed a paper book running into 322 pages and took this Bench through the evidences filed by each of these companies in support of his contentions. 6. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000 0.01 Pushpanjali Carriers Pvt Ltd 31,43,95,270 17,00,000 0.01 Khushboo Complex Pvt. Ltd. 96,60,85,930 20,00,000 0.01 Top Class Logistics Pvt.Ltd. 12,31,03,460 5,00,000 0.01 Esquire Enclave Pvt. Ltd. 1,00,03,07,030 7,00,000 0.01 Rootstar Merchandise Pvt. Ltd. 40,36,11,376 14,00,000 0.01 Sampark Advisory Services Pvt. Ltd. 50,61,95,580 5,00,000 0.01 Truthful Suppliers Pvt. Ltd. 18,31,02,852 5,00,000 0.01 7.2. A perusal of the above demonstrates that the creditworthiness of these share applicant companies is not in doubt. As far as the identity of these share applicant companies are concerned, the assessee has furnished the following details before the Assessing Officer in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they did not exist and the transactions were an eyewash only for bringing its black money into circulation without paying any tax to the revenue. Each of the share subscribers are regularly assessed to income tax; and the investments made by each of them are duly and fully reflected in their audited books of accounts as well as their income tax return. The appellant had duly filed its return of total income u/s 139(1) of the Act in respect of the AY 2012-13. In the course of assessment proceedings, the appellant in response to the requisitions made by the AO, from time to time, produced its audited books of accounts, filed copies of its audited annual accounts including various details and other documents as desired by the.AO. The details and documents so produced and filed with the AO included, inter alia, full details of each of the sixteen share applicants, who had subscribed to the aggregate share capital as well as share premium money raised by the appellant during the assessment year under appeal. The AO, on receipt of the aforesaid details from the appellant, issued summons u/s 131 in the name of the director of the appellant company calling for personal attendance as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de Pvt Ltd 31,91,03,635 12,00,000 0.01 Turtle Commercial Pvt. Ltd. 12,81,63,994 10,00,000 0.01 Sanskar Commodeal Pvt Ltd 43,51,10,402 25,00,000 0.01 Carwin T racom Pvt Ltd 6,39,35,337 15,00,000 0.02 Rose Commodities Pvt Ltd 5,91,80,109 15,00,000 0.03 Vatsalya Steels Pvt Ltd 4,12,02,466 5,00,00 0.01 Bhagwat Kripa Trading Pvt Ltd 12,63,04,443 6,00,000 0.01 Pushpanjali Carriers Pvt Ltd 31,43,95,270 17,00,000 0.01 Khushboo Complex Pvt. Ltd. 96,60,85,930 20,00,000 0.01 Top Class Logistics Pvt.Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition made under such pretext deserves to be deleted. 5.5. I find from AO's observations in the assessment order that documents file on record to prove identity, genuineness and creditworthiness have not been acted upon merely on the ground that the director of the appellant company and the subscriber company failed to appeal personally before AO and no proper reason has been explained for their non-appearance. I fully agree with the arguments of the Ld. AR that nonappearance of the Directors of the appellant company or subscriber companies cannot be a valid ground to ignore the documents available on record. I also agree that the provisions of Section 68 of the Act do not suggest any essential relation of the directors of shareholder companies. 5.6 in this respect it is relevant to refer to the decision of jurisdictional High Court in the case of CIT vs. Sagun Commercial (P) Ltd. (ITA No. 54 of 2001 dated 17.02.2011) wherein it was held as under: After hearing the learned advocate for the appellant and after going through the materials on record, we are at one with the Tribunal below as well as the Commissioner of Income-tax (Appeals) that the approach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was observed as under :- It appears from record that the assessee company during the relevant assessment year under appeal raised its share capital by way of receiving share application money against 1,64,000 equity shares aggregating to Rs. 82,00,000/- from 8 different parties. The Assessing Officer, however, treated the share application money of Rs. 45,00,000/- received from five different persons as unexplained cash credit in the hands of the assessee. According to the Assessing Officer, those parties had the same addresses as that of the assessee and they had no fixed assets and utilized their capitals in share application of the assessee company. The Assessing Officer, therefore, was of the view that the money ultimately went to the beneficiary through these companies and there, was no advertisement even published by the assessee company inviting share application and no Registrar was engaged for such raising of share capital. Being dissatisfied the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), however, set aside the said order of assessment and came to the conclusion that all the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the facts and circumstances of the case, I find substance in the arguments of the AR that the appellant has made its case that the identity of the share applicants are established beyond doubt and an enquiries made by the AO there is no. adverse finding reached on this aspect. Admittedly, all the share applicants are existing assessees under the Act and that same of them were subject to scrutiny assessment during the same period which establishes the identity and authenticity of the share applicants. About the genuineness of the transactions there is neither any adverse finding in the assessment order nor which is subversive to. the facts brought an record by the appellant during the course of assessment proceeding. The creditworthiness of the share applicants as regards their subscription to. the share capital is proved by submission of their return, audited annual accounts, their bank statement and replies to summons u/s 131 of the Act as depicted in the foregoing. The net worth of such subscribers is in excess of the amount invested by each of them as explained hereinabove. The addition made by A.O. is based an extraneous parameters not germane far deciding the issue. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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