TMI Blog2024 (4) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO was merely on the basis of a preconceived notion, arbitrary, and unsustainable; therefore, the finding of CIT(A) that since the identity and creditworthiness of the investor as well as the genuineness of the transaction is duly established, therefore, in absence of any further explanation, evidence, material, or decision to dislodge such finding of the CIT(A) by the revenue, we do not find any infirmity in the said findings so as to interfere with the same. In result, Ground No. 1 of the appeal of the revenue dismissed. - Shri Ravish Sood, JM And Shri Arun Khodpia, AM For the Assessee : Shri R.B. Doshi, CA For the Revenue : Shri Satya Prakash Sharma, Sr. DR ORDER PER ARUN KHODPIA, AM: The captioned appeal is filed by the Revenue against the order of Commissioner of Income Tax (Appeals), NFAC dated 16.03.2023 for the A.Y. 2017-18, which in turn arose out of the order u/s 143(3) by Income Tax Officer, Ward-1(4), Raipur, dated 31.12.2019. 2. The Grounds of Appeal raised by the Revenue are as under: 1. On the facts and circumstances of the case whether the ld. CIT(A), NFAC was justified in deleting the addition of Rs. 2,00,00,000/- received towards share capital as unexplain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided by the assessee. Notice u/s 133(6) were issued to the investors to furnish necessary details. In response to those notices the shareholders have submitted the required documents, after examination of such documents, it is observed by the Ld. AO that one share holder namely, Axis Propbuild Pvt. Ltd., who had invested an amount of Rs. 2,00,00,000/-, was found to be without sufficient creditworthiness. To investigate further, the summons u/s 131 of the act, was issued to the director of M/s Axis propbuild Pvt. Ltd. on 20.12.2019, to appear before the Ld. AO, in response to above summon, Shri Asit Bhattacharya, Director of Axis Propbuild Pvt. Ltd., appeared before the Ld. AO on 23.12.2019 and his statements were recorded. On the basis of statements of Mr. Asit Bhattacharya, the director of Axis Propbuild Pvt. Ltd., Ld. AO has observed as under: Perusal of the above statement, the director of Axis Propbuild Pvt. Ltd. explained the purpose and the details of investment made in the assessee company, however, he failed to substantiate the creditworthiness of the shareholder company. He stated that the share holder company invested the fund which was received from Toplink Projects Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting the provisions of law, accordingly the order of Ld. CIT(A), NFAC, is liable to be set aside. 10. Contradicting the argument of Ld. Sr. DR, Ld. AR on behalf of the assessee has submitted a written synopsis, the same is extracted as under: Shree Rupanadam Steel Pvt. Ltd. AY 2017/18 ITA No. 168/RPR/2023 (Department) AO: Para no. 6, Page no. 3 - Assessee received Rs. 2,05,00,000/- as share capital and share premium from Axis Propbuild Pvt. Ltd. which was found having no creditworthiness. - Summons u/s 131 was issued to Axis Propbuild Pvt. Ltd. Director appeared and his statement was recorded on 23.12.2019. Page no. 11, para above para no. 8 Director of investor company failed to substantiate creditworthiness. Return of income doesn't show sufficient income to generate fund for investment. Though investor company has share capital reserves of Rs. 5,99,83,539/- but it is same as preceding year. Credit worthiness genuineness not accepted. CIT(A): Page no. 12 to 14 Submission of the assessee l. Documents filed before AO i) Confirmation of Axis Propbuild Pvt. Ltd. (investor company) at PN 53 of PB. Source of source also explained by investor. ii) Bank statement of investor, PN 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PN 114 to 116 of PB, relevant findings on PN 116 of PB, para no. 9. - Prabhatam Investment P. Ltd. vs ACIT (2017) 49 CCH 299 (Del., Trib.), PN 117 to 128 of PB, relevant findings on PN 126 of PB, para no. 18.5. - Pr. CIT vs Laxman Industrial Resources Ltd. (2017) 397 ITR 106 (Del.), at PN 129 to 134 of PB, relevant findings on PN 133 of P B, last para. - CIT vs Jai Kumar Bakliwal (2014) 366 ITR 217, 223 224 (Raj.). 7. Onus u/s 68 is shifting onus. No addition could be made without shifting the burden back to the assessee, on the basis of positive evidence on record. 8. No allegation of shell company. No adverse observations about the financial statements of investors. They stood accepted by the AO. No adverse finding on identity, genuineness credit worthiness. 9. In ACIT vs R. N. Navnirman Pvt. Ltd. in ITA No. 143/RPR/2018 dt. 23.09.2022, relying upon Pawan Kumar Agrawal vs ITO (Hon'ble Chhattisgarh High Court), it was held by the Tribunal that when the assessee discharged its burden, the AO could not have made addition without bringing on record any material to prove otherwise. PN 153 to 175 of PB, relevant on PN 170 171. 10. Nothing brought on record by the AO. Observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt are furnished before us in the assessee s PB. Ld. AR also substantiated by submitting the details regarding source of source such as computation of income and acknowledgment of ITR, financial statement, balance sheets, P L A/c, and bank statements showing no cash deposits. Ld. AO have examined all these documents but no dispute qua all these documents or any adverse inference have been drawn. Ld. AO also could not have brought on record any adverse material to dislodge the contentions of the assessee wherein the assessee has duly established the prerequisite elements of section 68 i.e., the creditworthiness of the investor company and the genuineness of transaction. In response to summons u/s 131 director of the investor company was appeared before the Ld. AO and statements have been recorded, therefore Identity of the investor company too, stood established. 12. According to Ld. AR, regarding the genuineness of transaction and creditworthiness of the investor which was established by the assessee by way of producing necessary documents and moreover the director of the investor company has appeared before the Ld. AO and confirmed the veracity of the transaction. It is the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as having share capital reserve of Rs. 5,99,83,539/- in its balance sheet and further the AO contested that no share capital and reserve has got changed during the current financial year, so the genuineness of the transactions are not established; which is not a valid reason to question the genuineness of the transactions. Merely saying that there was no change during the current financial year in the share capital and reserve, do not make the transaction a fake transaction. The Hon'ble High Court of Allahabad, in the case of Commissioner of Income-tax, Meerut v. Nav Bharat Duplex Ltd., held that addition u/s 68 cannot be made where assessee has identified and they had submitted their bank statements, cash extracts and returns filing receipts, identity of share applicant companies and purchase of share had been proved by assessee. In Rajshree Synthetics v. CIT (2002) 256 ITR 331 (Raj.) it was held that sec 68 of the Act empowers the AO to make enquiries if he is not satisfied with entries of cash credits The o's satisfaction to invoke sec. 68 must be derived from relevant factors on the basis of proper enquiry and collection o facts. If no proper enquiry is made, the cash c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. AO was based on the fact that the investment made by the Axis was from the funds received from M/s Toplink Project Private Limited (in short, Toplink ). It is also observed by the Ld. AO that Toplink has immediately transferred such funds to Axis. Ld. AO also observed that the returned income of the share-holder company was not sufficient. Ld. AO also recorded that the share capital and reserves of the Axis are around Rs. 6.00 crore, but the same are unchanged as in the preceding year. In terms of such facts, the creditworthiness of the shareholder and the genuineness of the transaction were doubted and finally considered not established. We have perused the documents in support of the contention raised by the assessee that the transaction was a genuine transaction. The transaction was duly confirmed by the investor, which is submitted before the Ld. AO. A copy of the same is placed before us at page 53 of the assessee s PB. We have also gone through the bank statement of the Axis available at page nos. 56 to 58 of the assessee s PB and are privy that there was no cash deposit in the said account. On perusal of the ITR acknowledgment of the Axis, it is apparent that the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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