TMI Blog2023 (4) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 68 not applicable. Further the assessee submitted the confirmation, bank statement, Return of Income and Allotment Advice, etc. before the A.O. We also see from record that Shri Chintan N. Shah has appeared before the A.O. in response to the summons issued and also explained his source of investment in the share capital of the assessee company which was from the commission received from his brother in law in Dubai. Shri Harshal K. Shah who is the director in M/s. Akhil Retail Pvt. Ltd. and M/s. Shvansh Estate Pvt. Ltd. submitted the copy of the confirmation bank account and Profit and Loss account and balance sheet, in response to the summons issued by the A.O. Shri Harshal K. Shah submitted the share application money details through bank transactions and the loan taken from M/s. India Infraspace and M/s. Shree Ghantakarna Rolling Mills Pvt. Ltd. which is reflecting in the balance sheet. Thus primary onus that lay on the assessee to establish the identity, genuineness and creditworthiness of the assessee is being proved beyond doubt by the assessee. Further the assessee also proved source of source of the investment made by the three parties. The Ld. A.O. could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med about the source of investment. By filing confirmation bank statement copy of the Income Tax Return, share application form and Allotment Advice by the assessee company. One Mr. Harshal K. Shah is one of the Director of M/s. Akhil Retail India Pvt. Ltd. and M/s. Shivansh Estates Pvt. Ltd. who have invested Rs. 1.25 crores each and clarified that the source of investment is loan taken from M/s. India Infra Space and M/s. Ghantakarna Rolling Mills Pvt. Ltd. Mr. Harshal K. Shah also produced copy of the confirmation, bank statements copy of the Income Tax Return, Annual Return of the companies, Share application form board resolution and Allotment Advice from the assessee company both were M/s. Akhil Retail India Pvt. Ltd. and M/s. Shivansh Estates Pvt. Ltd. However the Assessing officer has not satisfied with the explanation offered by the assessee but only in the case of M/s. Lesha Agro Foods Pvt. Ltd. which is a group company of Promoter of this assessee company who had invested 187.50 lacs in the share capital of the assessee company by borrowing from Directors Relatives and Intercorporate loans aggregating to Rs. 188.10 lacs. The Assessing Officer accepted the above investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Share applied 1 ,65,000/- 50,000/- 50,000/- Share allotted 1 ,65,000/- 50,000/- 50,000/- Amount paid 3,30,00,000/- 1 ,25,0007- 1 ,25,000/- Date of allotment 12/04/12 25/10/2012 25/10/2012 Dmat No. 1 2033300 00569730 1 2023000- 01003301 IN301983- 10698252 5.7. The appellant has submitted confirmation, bank statement, return of income of Shri Chintan N. Shah. Shri Chintan N. Shah has applied for preferential allotment of share and payment was made through his bank account No. 20191011000245 on 11/04/2012. In response to summon issued by the Assessing Officer, Shri Chintan N. Shah has appeared and has stated that source of his money to invest in the share capital of the appellant company was from the commission received from his brother in law Shri D. N. Shah in Dubai, Shri Shah has stated in his stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l: 1. The Ld. CIT(A) has erred in law and on facts in deleting the addition made u/s 68 of the IT Act 1.1 The Ld. CIT(A) has erred in law and on facts in deleting the impugned additions without taking into consideration the statements recorded u/s 131 of IT Act. 1.2 The Ld. CIT(A) has grossly erred in law and on facts in by giving relief to the assessee on the ground that it was a listed company, ignoring the law that provisions of Section 68 of the Act applied to one and all. 1.3 The Ld. CIT(A) has erred in law and on facts by not appreciating that the creditworthiness of the persons who had allegedly contributed to the share capital, which was not established is an essential ingredient of Section 68 of IT Act. Reference is made to the decision of the Hon'ble Kolkata High Court in the case of CIT vs Precision Finance Pvt. Ltd (208 ITR 465). 1.4 The Ld. CIT(A) has erred in law and on facts by not appreciating that mere allotment of shares did not prove the genuineness of the transaction, which is an essential ingredient of Section 68 of IT Act. 1.5 The Ld. CIT(A) has erred in law and on facts by mechanically relying on the decision of the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 6.1. The Ld. A.R. also filed before us following case Laws in support of its arguments: (i) ACIT vs. Kraft Laminate (ii) Darshan Enterprise vs. Addl/Joint/Deputy/ACIT/ITO (iii) CIT vs. Ranchhod Jivabhai Nakhava 6.2. The Ld. A.R. also further clarified sale of the above shares by the three parties as follows: 1. It is stated that the Share holding held by Shri Chintan Shah was sold by him during the period 08.07.2016 to 14.07.2016. 2. It is stated that the Share holding held by Akhil Retail Pvt. Ltd. was sold by the said company during the period 17.10.2014 to 05.08.2015. 3. It is stated that the Share holding held by Shivaansh Estates Pvt. Ltd. was sold by the said company during the period 15.07.2015 to 14.08.2015. 6.3. Thus reiterating the submissions made before the Lower Authorities. Ld. Counsel pleaded that there is no merits in the grounds raised by the Revenue and therefore the same is liable to be dismissed. 7. We have given our thoughtful consideration and perused the materials available on record. First of all, the grounds raised by the Revenue are general and argumentative in nature without specific about the deletion made by the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is held as follows: The learned DR has also contended that a very small amount of income was declared by all the loan creditors in their returns of income and going by this pattern, the genuineness of the loans become doubtful as rightly held by the Assessing Officer. However, this aspect of the matter alone, in our opinion, cannot disprove the unsecured loans in question received by the assessee; the genuineness of which was duly established by the assessee by filing the confirmation letters, PANs, Income-Tax Returns, bank statements etc. of the concerned loan creditors as rightly held by the learned CIT(A) by relying on the decision of Hon'ble jurisdictional High Court in the case of Ranchhod Jivabhai Nakhava (supra) and Rohini Builders (supra). The primary onus that lay on the assessee to establish the identity and capacity of the concerned loan creditors as well as the genuineness of the relevant loan transactions was duly discharged by the assessee and in the absence of any evidence brought on record by the Assessing Officer to prove to the contrary, the unsecured loans cannot be treated as unexplained cash credits under Section 68 of the Act and the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount. So far as the responsibility of the assessee-firm is concerned, it is satisfactorily discharged. Whether that individual person is an income tax payer or not or from where he has brought this money is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purposes of income tax. It is open to the Assessing Officer to take appropriate action under Section 69 of the Act against the person who has not been able to explain the investment. 7.4. The Jurisdictional High Court in the case of CIT vs. Ranchhod Jivabhai Nakhava [2012] 21 taxmann.com 159 held as follows: 15. In our view, once the assessee has established that he has taken money by way of accounts payee cheques from the lenders who are all income tax assessees whose PAN have been disclosed, the initial burden under Section 68 of the Act was discharged. It further appears that the assessee had also produced confirmation letters given by those lenders. 16. Once the Assessing Officer gets hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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