9911796707
TMI Blog2023 (7) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... n this case remained unproved." 3. Briefly stated, the assessee filed return of income declaring loss of Rs.47,55,183/- for Assessment Year 2015-16 in question. The return filed by the assessee was subjected to scrutiny assessment. In the course of the scrutiny assessment, the Assessing Officer inter alia noted that the assessee-company has allotted preference share capital of Rs.52,77,760/- to various shareholders during the year and collected a premium of Rs.13,72,21,760/- thereon. The list of impugned share capital allotted during the year to various parties is tabulated hereunder: Particulars No. of shares Nominal amount per share Premium per share Share capital Share premium Total Swapan Mahal Builders Pvt. Ltd. 3,70,370 10 260 37,03,700 9,62,96,200 9,99,99,900 Pleasant Vyapaar P. Ltd. 83,333 10 260 8,33,330 2,16,66,580 2,24,99,910 Independent Infra Projects Pvt. Ltd. 18,518 10 260 1,85,180 ,48,14,680, 49,99,860 Siyona Construction Pvt. Ltd. 37,037 10 260 3,70,370 96,29,620 99,99,990 Sumitra Builders & Developers Pvt. Ltd. 18,518 10 260 1,85,180 48,14,680 49,99,860 Capital Introduced During the year 5,27,776 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "7. I have perused the submissions of the appellant and the order of the AO. 1ne relevant facts are that the appellant company has received a sum of Rs.14,24,99,520/- as share capital including the share premium during the year. A show cause notice for adding the entire amount was issued by the A0 on 22.10.2017 (refer to para 3 of the assessment order). The appellant submitted its reply on 26.12.2017 and the same has been reproduced from page 3 to page 7 of the assessment order. A perusal of the reply of the appellant as reproduced in the assessment order reveals that the appellant has not only furnished the complete details of the entities from whom the share capital has been received but also the source of the source of the entire funds received by the appellant company. In total the entire share capital have been received from five companies and the chart of the same is available at page 7 of the assessment order. The AO has accepted the contention of the appellant in respect of four companies (totaling Rs. 11,99,99,610/-) and has added an amount of Rs.2,24,99,910/- pertaining to the amount of share capital / premium received from M/s Pleasant Vyapaar P Ltd. (PVPL). The basic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnual accounts, and the sources of their funds for investing in the appellant company. Thus, the ultimate source of money was also there on the record. The evidences as required under section 68 were produced by way of evidence filed by the appellant and the evidence filed by the share holders of the appellant. 2.2 It may kindly be seen that effective hearing on the issue of the evidence regarding share capital started on 22.12.2017 and the appellant was given time only up to 26.12.2016. In this short period the appellant filed sufficient evidence to discharge the onus cast on it by providing the identity and capacity of the subscribers and genuineness of the transactions, which were carried out through banking channels. However, against the tenor of voluminous evidence filed by the appellant and its shareholders, the Id. A.O. made unwarranted and huge addition of Rs.2,24,99,910/-. It is submitted that thought the time allowed to the appellant was grossly insufficient, yet the appellant supplied all the evidence in its possession and its shareholders (investors) and filed sufficient eyidence to prove genuineness of capital. The lack of adequate opportunity amounts to the viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umed facts which are nonexistent on record and having quoted the contents of the various cases and judgments in the order made an addition by holding that the Share Capital /Premium amounting to Rs. 2,24,99,910/- received from M/s. Pleasant Vyapar Pvt. Ltd is bogus. 3.5 The onus on assessee under proviso to section 68 will be similar to the onus under the main provision. This stands discharged in the case of appellant on filing of the details of the source of source by the shareholders of the appellant. The entire details of the share applicants i.e M/s. Pleasant Vyapar Private limited were made available to the ld. AO by the appellant. These included the: - 1. The company has been registered with the Registrar of Companies vide CIN - U51109WB1994PTC062056 on 03.03.1994 2. Confirmation of Accounts. 3. Income Tax Return. 4. Return of Allotment (PAS 3) filed with Registrar of Company 5. Bank Statements 6. PAN. 7. Annual accounts for the 3 years. 8. Source of Funds. 9.Source of Source. The AO asked the assessee to file confirmation and other documents of the share applicants in order to prove identity, creditworthiness and genuineness of the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The annual accounts for the 3 years of M/s Pleasant Vyapar Put. Ltd 3. The registered office of M/s Pleasant Vyapar Pvt. Ltd is in Kolkatta. Hence, not considering all these submission & documents and ignoring the above stated facts, simply non-filing of confirmation of M/s Dhoomketu without specifically seeking it either U/S 133(6) or U/s 131(1) and making high pitched addition is really harsh on appellant. However, in terms of the decision Supreme Court discussed above, this onus stands restricted to furnishing the name and the address of the companies which are the source of the source. This has already been done. Accordingly, it is requested that the addition made by the A.0. may be deleted. 3.6 It has been submitted earlier that there are some errors, contradictions etc. in the assessment order, which shows that the order was passed without properly applying mind to the facts of the case and with a pre-disposed mind. These are briefly discussed there under: - I. It is stated that no details furnished in respect of Pleasant VyaparPt Ltd. but its sources of fund have been mentioned (Pg. no. 8) II. that the confirmation from Ms Dhoomketu Pvt Ltd. the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis that the summons issued us 131 by the AO remained uncomplied. 11. The reply of the appellant on this particular issue during the course of assessment proceedings has also been reproduced in the assessment order itself at page 5 of the order and the same is reproduced below for the sake of clarity: 5. In the case of Pleasant Vyapaar Private Limited, it is clear from the chart itself that the amount invested Rs. 225 Lacs is received by the investor company from Dhoomketu Marketing Put. Ltd. and ultimate source of the Dhoomketu is the amount received from the maturity of Fixed Deposits of Rs.224 lacs on 26/08/2014. Please find attached herewith the bank statement and balance sheet of Dhoomketu which shows that the source of the funds is maturity from Fixed deposits. Please also find attached herewith the balance sheet of Pleasant Vyaapar for last three years which clearly proves the creditworthiness of the investor company. You have given in you show cause notice that this company does not exist on the address (D-15, Basement, Pamposh Enclave, GK Part-1, New Delhi) given by us. In this regard we submit that there is a small office on this address which is maintained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(6) have been replied to by PVPL. These emails are also placed on record. Besides this a perusal of the assessment order itself reveals that the entire details of the funds received not only by PVPL but also the source of the source have been furnished before the AO and the same is evident from the chart reproduced by the AO on page 8 of the assessment order. Similar submissions have been made before me and I find that the appellant has furnished not only the complete financial records of pVPl but also the source of the funds received by PVPL from M/s Dhoomketu Pvt. Ltd. The funds received by PVPL from M/s Dhoomketu Pvt. Ltd. is on account of the maturity of an FDR amounting to Rs.2.25 Cr. and the same has been transferred to PVPL and from the same funds the share capital-has been advanced to the appellant company. This fact has also been reproduced by the AO at page 8 of the assessment order (refer to the chart on page 8 of the assessment order. 14. In addition to all these facts it is pertinent to mention that the following details have been furnished by the appellant before me as well as before the AO during the course of assessment proceedings. 1. The company Registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 and of Rs. 25.47 crores on 31.03.2014. It can be observed from the audited financial statement of M/ Pleasant Vyaapar Pvt. Ltd. that it has cash & bank balance of Rs. Approx. 240 lacs (as per schedule 8 of financial statement). The company is in existence since long and filing its tax return with the department regularly and getting assessed every year. All the document in support of the above has already placed before the ld. AO and your honour with detailed written submission filed on 19.02.2018." 17. I find that all the three parameters pertaining to the creditworthiness, genuineness and identity have been adequately proved by the appellant company. The source of the source has also been furnished by the appellant company and the same is emanating from an FD. It is not one of those cases where the source of the source leads to a cash deposit and thus become doubtful. It is also not the case of an established entry operator providing entries in lieu of cash receipts. The bank account of the appellant company as well as the company from whom (PVPL) have also been furnished and nothing suspicious is noticed therein. The source of the source, emanating from the redeeming of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself. (ii) the assessment order is marred with major controversies. (a) It is stated in the assessment order that no details were furnished in respect of PVPL but the source of fund has been mentioned at page no.8 of the assessment order itself. (b) The claim of the Assessing Officer that the confirmation from Dhoomketu Pvt. Ltd., i.e., company which has extended funds to PVPL for subscription in the assessee company has not been furnished is wholly unjustified as such confirmation was never asked by the Assessing Officer. (c) The allegation in the inspector's report that the company was not found at the address is a result of perfunctory enquiry. The inspector report is based on some enquiries at a local address instead of registered address. (d) The Assessing Officer omitted to take into account that in response to notice issued under Section 133(6) to PVPL by e-mail, PVPL has given all the information called for under Section 133(6) through e-mail. The replies were also sent by courier which was received by the office of the Assessing Officer on 04.12.2017. The Assessing Officer has not taken cognizance of such facts while forming an adverse opinion. (e) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the identity, creditworthiness and genuineness of the transaction in relation to preference share capital infused in the company along with premium associated thereon. Consequently, the Assessing Officer has treated the receipt towards share capital and share premium is at Rs.2,24,99,910/- received from PVPL as unexplained credit with the aid of Section 68 of the Act. In the first appeal, the CIT(A) however reversed the action of the Assessing Officer after detailed examination of nuances of the factual matrix. 12. The controversy involved is essentially factual in nature. Thus to address the issue, we proceed to examine the facts involved in objective manner and appreciate these facts in the light of the various judicial precedents holding the field. To being with, it is noticed that the assessee has claimed that as many as five investors have subscribed to the share capital to the assessee during the year at the identical share premium as tabulated in earlier paragraphs. 12. The Assessing Officer has accepted the subscription in respect of four investors but however has disputed the subscription in relation to one investor namely, PVPL. It is an admitted position that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the existence of the shareholder/subscriber is fully identifiable and unequivocally proved by direct evidences, the creditworthiness of the subscriber is justifiable by formidable evidences and the genuineness of the transaction carried out through banking channel and return of allotment for subscription of shares have been filed before the competent authority, the dispute raised by the Revenue appears inexplicable. The substantial net worth enjoyed both by the subscriber as well as the source of source also provides sound basis to infer the bona fides of the transaction and fortifies the plea of the assessee. We also bear in mind that the assessee is being quizzed on the affairs of the investor company where its access is limited. Besides, there is nothing on record to show that any unaccounted funds have found its way in the affairs of the assessee company in the shape of such subscription. The onus rest on the Revenue in this regard which remains to be tested. The suspicion entertained on bona fides has not been carried out to any logical end. The Assessing Officer has attempted to implicate the assessee mainly on two grounds namely, inspector report which shows that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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