TMI Blog2023 (1) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... ment : Shri Ashok B Koli, CIT-DR For the Assessee : Shri Dharmesh Shah, CA ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by the revenue are directed against the separate orders of learned Commissioner of Income Tax (Appeals), Valsad (in short, the ld. CIT(A)) both dated 27/03/2018 for the Assessment year (AY) 2015-16. In both these appeals, the revenue has raised certain common grounds of appeal. Facts in both these years are almost similar, except various of additions on account of share capital therefore, with the consent of parties, both these appeals were clubbed, heard together and are being decided by this consolidated order to avoid the conflicting decision. For appreciation of facts, the appeal being ITA No. 422/Srt/2018 for the A.Y. 2015-16 is treated as a lead case . In this appeal, the revenue has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs. 4,53,66,799/- on account of addition to share capital U/s 68 of the I.T. Act. 2. It is, therefore, prayed that the order of the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No. Name of the person Address Shares issued during the year No. of Shares Value (Rs) 1. Sandeep Tandon ABAPT6796P Flat No. 48, Bldg No. 3, Patrakar Hsg. Soc Near BKC Bandra East, Mumbai 1,980,000 19,800,000 2. Vimal Jain ABOPJ 6483 B 91B, Mittal Tower, B Wing, 210, Nariman Point, Mumbai-400021 2,000 20,000 3. Shankar Narayan 2,000 20,000 4. Yogesh Banthia AIUPB3135B 502/3, Palm House, 16 Mughal Lane, Mahim West, Mumbai-16 2,000 20,000 5. Jignesh Shah ANAPS5419E B-064, Ameya Apartment, Nariman Road, Vile Parle (E), Mumbai 2,000 20,000 6. Quant Employee Welfare Foundation Private Limited AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cannot be assessed as a cash credit if the assessee has discharged its initial onus and that if complete details of name, address, PAN no. of investors were provided and other details like share application and genuineness of transactions is proved, no addition under Section 68 of the Act is justified. The assessee also stated that the addition cannot be made merely on the assumption and presumption on suspicion basis. 5. The ld. CIT(A) after considering the contents of assessment order and the detailed written submissions, noted that the Assessing Officer while passing the assessment order held that the assessee did not file copy of bank statement and other details, copy of full address, bank statement and other details, thus the amount of Rs. 4.53 crores were added as unexplained credit. In the appellate proceedings, the assessee has contended that the assessment order was completed in hurriedly manner and without providing sufficient opportunity. All explanation and documentary evidences were also filed in appellate proceedings, so the submission of assessee was forwarded to Assessing Officer for filing his remand report. The Assessing Officer filed his remand report dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd., the Assessing Officer reported that copy of acknowledgment of return, audit report and audited account and banking statement was furnished. Cash flow explaining the source was not submitted. The Assessing officer was asked to examine the source of deposit in the bank account of Quant Capital Holding P. Ltd. during remand proceedings. The assessee explained that these are intercorporate deposit, received from group companies. The Assessing officer reported that the supporting evidence in the form of bank statement of other parties from whom the funds were received, not furnished. Therefore, in absence of these details, source of funds could not be verified. The Assessing Officer reported that identity of persons to be established, genuineness of transactions to be proved and creditworthiness of persons giving funds has to be proved. All these conditions are to be fulfilled simultaneously. The assessee failed to prove the creditworthiness of such investor. For investors No. 3,4,5,6 and 7, no details were submitted except ITR. 6. The copy of remand report of assessing officer was provided to the assessee for filing their response/rejoinder. The assessee filed their response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d which was used for investment in preference share of assessee company, which was not considered by the Assessing Officer. In fact, total increase in share capital during the year was Rs. 26.99 crores, however, the Assessing Officer has made ad hoc addition of Rs. 4.53 crore only without giving any reason in a hurriedly manner, which is not understandable. On the basis of such submission, the assessee submitted that they have been able to prove the identity, genuineness and creditworthiness of investment in share. 8. The ld. CIT(A) noted that the Assessing Officer also made an addition of Rs. 179.32 crores on account of repayment of unsecured loan which was also the subject matter of remand report. The Assessing Officer while furnishing his remand report, reported that the entries appearing in the bank statement with respect to repayment of loan have been verified. The entries were cross verified with the entries appearing in the bank statement of loan creditor and are found to be in order. 9. The ld. CIT(A) after considering the contents of assessment order, submission of assessee, remand report furnished by the Assessing Officer and the rejoinder thereto by the assessee, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank statement of Sandeep Tandon. Considering such fact, the investment in share capital of investment company, the ld. CIT(A) held that there is no case for making addition of Rs. 4.53 crores as unexplained cash credit. The Assessing Officer verified the issue in remand proceedings and doubted regarding fund availability in the hands of Sandeep Tandon, which is unfounded for the reasons that his income in the current assessment year is Rs. 11.41 crores. On such observation, the ld. CIT(A) deleted the addition of Rs. 4.53 crores as well. Aggrieved by the order of ld. CIT(A), the revenue has filed the present appeal before the Tribunal. 11. We have heard the submission of learned Commissioner of Income Tax- Departmental Representative (ld. CIT-DR) for the revenue and the learned Authorised Representative (ld. AR) of the assessee. The ld. CITDR for the revenue supported the order of Assessing Officer. The ld. CITDR for the revenue submits that during the assessment, the Assessing Officer called details regarding increase in the share capital of assessee. During the assessment only a list containing names of persons, who have invested in the share of assessee company were furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT-DR for the revenue prayed to restore the addition made by Assessing Officer. In alternative and without prejudice submission, the ld. CIT-DR for the revenue prayed to restore the issue of addition of share capital to the file of Assessing Officer to examine the issue afresh. 12. On the other hand, the ld. AR of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee submits that while passing the assessment order on 15/12/2017, the Assessing Officer made two major additions (i) addition under Section 68 on account of unexplained share capital received for Rs. 4.53 crores and (ii) addition under Section 68 on account of unexplained repayment of loan of Rs. 179.32 crores. The ld. AR for the assessee submits that the assessee received share capital against the equity share capital from Sandeep Tandon of Rs. 1.98 crore against allotment of share of 19.80 lacs @ Rs. 10 per share. The assessee also received small amount of Rs. 20,000/- each for allotment of 2000 shares to (i) Vimal Jain, (ii) Shankar Narayan (iii) Yogesh Banthia, (iv) Jignesh Shah and (v) Quant Employee Welfare Foundation Private Limited. The assessee also received preference share capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of other party from whom funds were received by the said investor. With respect to other five investors, who had invested only Rs. 20,000/- each, the Assessing Officer stated that the assessee did not file any document other than ITR in case of Yogesh Banthia. 13. The ld. AR of the assessee repeated that he is unaware as to how the Assessing Officer has arrived on the figure of Rs. 4.53 crores as share capital and made addition of such amount. In fact, during the assessment, the Assessing Officer issued notice dated 07/12/2017, copy of which is filed at page No. 19-20 of the paper book mentioning that there is addition in the assessees share capital during this year of Rs. 26.99 crores. However, the Assessing Officer asked the assessee to show cause as to why Rs. 4.53 crores should not be added. The assessee repeatedly requested for such break up it was never submitted by the Assessing Officer either to assessee or to ld. CIT(A). Again while filing appeal before Tribunal, the Assessing Officer has challenged the addition of Rs. 4.53 crores only, which is absolutely incorrect. The real transaction of share capital is of Rs. 26.99 crores. Such narration of fact by Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tune of Rs. 22.32 crores. Thus, the capacity of said investor is far beyond the amount invested by them in share capital of assessee company. The ld. AR for the assessee further reiterated that the other remaining five investor entities, the amount is very small, the Assessing Officer has not brought any adverse evidence against them, nor investigated the facts. Their names and addresses were furnished no notice or summons were issued to them for verification of facts. The ITR of one investor Yogesh Banthia is already on record. 14. On the issue of source of source relating to the share capital, the ld. AR submits that he has also filed evidence pertaining to source of source showing the details of share application money received from various parties and source of source thereof. The ld. AR of the assessee furnished following details during the hearing of appeal: Sr. No. Name of Investor Party Amount Received Date of receipt Immediate source of investor party Amount received Date of receipt Page No. of Pbk 1. Sand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial activities of Rs. 24.19 crores, net profit shown by the company is Rs. 7.60 cores during A.Y. 2015-16. Thus, the capacity of said company for making payment to the investor, out of which investor had paid fund to the company cannot be doubted. The bank statement clearly shows that no cash is deposited in the accounts before making payment. Thus, the assessee undisputedly proved the identity, creditworthiness and genuineness of transaction with source of source . The ld. AR for the assessee by referring the addition of loan transactions would submit that the Assessing Officer made addition on account of loan transaction as well. The loan transaction included loan from Quant Broking Pvt. Ltd. During the appellate proceedings, the assessee filed voluminous evidences with respect to both the nature of transactions. During the course of remand proceedings, all evidences were duly examined by the Assessing Officer and reported that all evidences in respect of loan transaction were found in order. Based on such finding in the remand report, the ld. CIT(A) deleted the addition of such loan transaction. Such addition is not challenged by the revenue while filing the present appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and unless there are any direct evidence brought on record by Assessing Officer, no addition can be made on account of share capital under Section 68 of the Act. To support such submission, the ld. AR of the assessee relied upon the following case laws: (a) Abhijavala Developers (P) Ltd. Vs ITO 187 ITD 222 (Mum) (b) Tradelink Carrying (P) Ltd. Vs ITO 181 ITD 408 (Kol) (c) PCIT Vs Ami Industries (India) P Ltd. 424 ITR 219 (Bom) (d) CIT Vs Orissa Corporation P Ltd. 159 ITR 78 (SC) (e) PCIT Vs Jalaram Enterprises Co. P. Ltd. ITA No. 671 of 2017 (Bom) dated 07/06/2019 (f) DCIT Vs Rohini Builders 256 ITR 360 (Guj) (g) Pankaj Enka Pvt. Ltd. Vs DCIT ITA No. 816/Ahd/2017. 18. On the basis of aforesaid submission, the ld. AR of the assessee submits that the ld. CIT(A) on appreciation of facts, rightly deleted the addition and prayed to uphold the order of ld. CIT(A) and be dismissed the appeal of revenue. 19. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We have also gone through the voluminous evidence filed by assessee to support their contention. We have also deliberated on var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) also accepted the contention of the assessee that there is no figure like Rs. 4.53 crores in the balance sheet against the share capital. The assessee explained the source of investment of Rs. 1.98 crore by Sandeep Tandon out of his total income of current assessment year of Rs. 11.41 crores shown in the return of income. Before us, the ld AR for the assessee vehemently submitted that he has filed copy of computation of income of Sandeep Tandon showing total income of Rs. 4.32 crores, copy of ITR of Archana Tandon, copy of bank statement in joint name of Archana Tandon and Sandeep Tandon showing payment of share capital of Rs. 1.98 crore. Before us, the ld AR for assessee also furnished details of return of income of Sandeep Tandon for A.Y. 2015-16, 2014-15 and 2013-14 showing that he has earned long term capital gain, dividend aggregating to Rs. 6.98 crores in A.Y. 2015-16. Copy of assessment order in A.Y. 2014-15 and 2015-16 are also filed. On perusal of return of income and from computation of income of Sandeep Tandon, we find that he has shown income of Rs. 4.32 Crore and also earned exempted long term capital gain, dividend aggregating to Rs. 6.98 crores, total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of investor (Preference Share) Quant Capital Holdings Pvt. Ltd. Amount 2,50,00,000 7,50,00,000 15,00,00,000 Date of receipt of share capital 23/05/2014 02/06/2014 05/06/2014 Particulars Funds were received from Quant Broking Private Limited Names of source of source 5,00,00,000 7,50,00,000 15,00,00,000 22. On perusal of financial of Quant Broking Private Limited, we find that this entity has total revenue income from braking activity and profit from trading activity in shares, securities and derivatives aggregating of Rs. 24.98 Crore. Further, this entity has also interest income from financing activity of Rs. 24.19 Crore. The net profit shown by this entity is of Rs. 7.60 Crore during AY 2015-16. All these financial statement are filed at page no. 147 to 176 of the paper book. On the basis of the above mentioned evidence, we find that creditworthy of the investor cannot be doubted. 23. We also find that in the present case, the assessee furnished all such details of the lenders/ depositors. We further find that there is no allega ..... X X X X Extracts X X X X X X X X Extracts X X X X
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