TMI Blog2023 (4) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 2015-16. The assessee has assailed the impugned order on the following grounds of appeal before us: 1.That CIT Appeals-NFAC has erred in both fact and in law in confirming the penalty of Rs.10,95,149/- made by Assessing Officer u/s.271(1)(c) of the Income Tax Act, 1961. 2.That CIT Appeals- NFAC while confirming the penalty has failed to consider the that the appellant is before Hon ble ITAT on the merits of the case against the CIT(A) order rejecting the Appellant s appeal against assessment order, which is yet to be disposed off. 3. That the assessee craves to add, amend or delete any of the above grounds of appeal during the course of hearing. 4. That the above grounds are without prejudice to each other. 2. Succinctly stated, the assessee company, which is engaged in the business of trading had e-filed its return of income for A.Y.2015-16 on 20.09.2015, declaring an income of Rs.19,570/-. Subsequently, the case of the assessee was selected for limited scrutiny u/s.143(2) of the Act. 3. Assessment was, thereafter, framed by the A.O vide his order passed u/s.143(3) of the Act dated 26.12.2017, determining the income of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals). As is discernible from the records, the aforesaid investor company, viz. M/s. Aayush Steelco Pvt. Ltd. had made an investment of Rs.34.49 lac towards share application money with the assessee company. As stated by the Ld. AR, and rightly so, the aforesaid investment was sourced out of the withdrawal made by the investor company from its capital account as a partner with M/s. Sri Balaji Iron Steel Traders, Vishakhapatnam. Claim of the assessee as regards the source of its investment towards share application money is established on a conjoint perusal of the capital account of the investor company, viz. M/s. Aayush Steelco Pvt. Ltd. with M/s. Sri Balaji Iron Steel Traders, Page 31 of APB a/w. its bank account No.911030049109355 with Axis bank, Page 30-36 of APB . Confirmation of the aforesaid investor company as regards the investment made towards share application money with the assessee company a/w. source thereof had been filed by the assessee in the course of the assessment proceedings. Also, a copy of the bank account of the investor company, viz. M/s. Aayush Steelco Pvt. Ltd., Page 45 of APB clearly evidences the investment made by it towards share application money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grossly erred in law and the facts of the case in dubbing the transaction in question, i.e., receipt of duly explained share application money by the assessee company from the aforesaid investor company, viz. M/s. Aayush Steelco Pvt. Ltd. as an unexplained cash credit u/s.68 of the Act. At this stage, we may herein observe, that a perusal of the capital account of the investor company ,viz. M/s. Aayush Steelco Pvt. Ltd. reveals beyond doubt that the investment in question was made out of its opening balance of Rs.89.18 lac (supra) on 01.04.2014 as a partner with M/s Sri Balaji Iron Steel; Traders, Vishakapatnam and not on the basis of any fresh amount which was found parked in the same during the year under consideration. As regards the adverse inferences drawn by the lower authorities, for the reason that M/s. Abharani Vinimay Pvt. Ltd., a share holder of the investor company had allegedly emerged as a shell company, we are of the considered view that the same by no means would have any bearing in so far the issue in hand is concerned. As stated by the Ld. AR, and rightly so, as the investment towards the share application money is sourced from the opening balance of Rs.89.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that as the additional shares of the assessee company were issued and allotted on a pro-rata basis to the existing shareholders, i.e., based on their existing shareholding, therefore, the share holding percentage before and after allotment of the aforesaid shareholders remained the same. In sum and substance, as long as there was no disproportionate allotment of shares, i.e., shares were allotted on a pro-rata basis to the shareholders based on their existing holding, then, pursuant to allotment of the additional shares there would only be an apportionment of the value of their existing holding over a larger number of shares. The aforesaid contention of the Ld. AR is fortified by the order of the Co-ordinate Bench of the Tribunal, i.e, ITAT, Bench A , Mumbai in the case of Sudhir Menon, HUF Vs. ACIT-21(2), Bendra, Mumbai, (2014) 148 ITD 260 (Mum). Also, a similar view had been taken by the ITAT, Mumbai in its recent order passed in the case of ITO Vs. Rajeev Ratanlal Tulshyan (2021) 136 Taxman.42 (Mum). In fact, we find that the CBDT vide its Circular No.10 of 2018, dated 31.12.2018, had earlier clarified that the provisions of section 56(2)(viia) of the Act shall not be applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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