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TMI Blog2025 (3) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... on dated 30.03.2020 was received from DDIT, Investigation, Unit-7(2), Delhi wherein, it was informed that a survey action on 13.12.2018 under section 133A of the Income Tax Act, 1961 (hereinafter "the Act") was carried out on various companies of BDR groups. On examination of information available on records, it was found that the amount, which was received by the respondent/assessee (hereinafter "assessee") company during the relevant assessment year on account of share capital and security premium, has escaped assessment. Thereafter, a notice under section 148 dated 31.03.2021 was issued to the assessee and the case of assessee was assessed under section 147 read with section 143 (3) of the Act on 31.03.2022 at income of Rs. 56,10,46,945/- after making addition of Rs. 52,26,00,000/- on account of unexplained cash credits received as share capital/premium under section 68 of the Act. Aggrieved with the order under section 147/143 (3) of the Act, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) (hereinafter "the CIT (A)"), who, vide order dated 19.06.2023, deleted the addition of Rs. 52,26,00,000/- made by the Assessing Officer (hereinafter "AO"). Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order: "4...i. That the shareholder has neither produced the detailed ITR nor the net worth of the HUF. ii. Amount invested is Rs. 21,62,00,000/- whereas the returned income of the shareholder for the instant year is only Rs. 15,85,912/-. iii. That the bank statement of the shareholder shows a peculiar pattern of huge sums credited and debited throughout the year. iv. Subscriber has poor financial credentials, weak creditability and no creditworthiness and is therefore not a genuine source from which the assessee company has received funds..." 7. It is the contention of the revenue that the AO had minutely considered the fact that though an investment of Rs. 21,62,00,000/- is alleged to have been made, while the returned income of the shareholder for the relevant year was Rs. 15,85,912/- only. It was also noticed that the shareholder had neither produced the detailed Income Tax Return (hereinafter referred as "ITR") nor the net worth of the HUF. The AO also examined the financial status and concluded that the shareholder has poor financial credentials, weak creditability and no creditworthiness and is therefore not a genuine source from which the assessee company has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax Act, 1961 was issued on 16.03.2022 to all above four allottees to file relevant information regarding this transaction for verification purposes. In response of said notice one of the allottee Dinesh Gupta HUF has filed the necessary details vide reply dated 17.03.2022 but till date no reply has been filed by all other allottee namely M/s Nimit Builders Private Limited, M/s Verma Developers Private Limited and Ram Kumar Gupta HUF." 5.7 In the light of above discussion about taxability of share capital and security premium hereby we are verifying the claim of all four allottee one by one. 1. 1. 1. Dinesh Gupta HUF Mr. Dinesh Gupta, one of director and promotor of Assessee Company is Karta of Dinesh Gupta HUF. During the year under consideration HUF was allotted 13,51,250/- shares on which Rs. 21,62,00,000/- was received by company as share capital and security premium. During the assessment proceeding a notice u/s 142 (1) of the I.T. Act, 1961 was issued to Assessee requiring it to submit necessary documents related to verification of source of payment regarding share capital of Rs. 21,62,00,000/-. In response to that notice, assessee company has provided follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was not able to prove onus that was placed on it by the provisions of Section 68 to prove the identity, genuineness and creditworthiness of share applicants. This onus was not completely discharged by the assessee. 10. Learned counsel also referred to various portions of the impugned judgement of the learned ITAT as well as the CIT (A). According to him, this re-examination and re-appreciation by both the authorities was perverse and against a well-founded fact. Thus, the impugned judgement and that of the CIT (A) ought to be set aside. He also relies upon the judgement of the Hon'ble Supreme Court in Principal Commissioner of Income-Tax vs. NRA Iron and Steel Pvt. Ltd.; 2019 (412) ITR 161 (SC) to submit that the AO is duty bound to investigate creditworthiness of creditor or subscriber, verify identity and ascertain whether the transactions are genuine or bogus. It is the contention of the Revenue that the AO complied with the mandate of law and recorded findings of fact which ought not have been interfered with by both the lower authorities. 11. Per contra, Mr. Salil Aggarwal, learned senior counsel appearing for the assessee stoutly opposed the submissions an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. Thus, the three tests having been fully complied with by the assessee, the AO could not have doubted the compliance with the mandate of section 68 of the Act. 15. Having heard Mr. Sanjay Kumar learned SSC for the revenue, Mr. Salil Aggarwal learned senior counsel for the assessee, examined the records of the case and perused the impugned judgement, we are unable to agree with the contentions of the revenue. The reasons are as follows. 16. Section 68 of the Act, mandates three tests before the AO can add the investment/transaction as sum chargeable to income-tax as income of the assessee for the relevant year. Those are, (i) the creditworthiness of the creditor/shareholder/subscriber; (ii) the identity of the creditor/shareholder/subscriber; and (iii) genuineness of transactions. In case the assessee has successfully furnished the relevant documents and rendered proper explanation to the AO's satisfaction regarding the triple test, those sums may not be treated as chargeable to income-tax as income of the assessee. What would be "relevant documents" and a "proper explanation", may vary from case to case and cannot be put in a straight jacket formula, nor would it be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ID REMARKS DOCUMENTARY EVIDENCES AT PAGE NO. 776 to 905 DATE AMOUNT DATE AMOUNT 1. 29.09.2015 1,00,00,000.00 24.09.2015 69,00,000.00 REFUND OF LOAN DURING THE YEAR FROM M/S RISHI INFRATECH PVT LTD CONFIRMATION OF ACCOUNT AT PAGE NO.792 24.09.2015 25,00,000.00 REFUND OF LOAN DURING THE YEAR FROM M/S RENU PROPTECH PVT LTD CONFIRMATION OF ACCOUNT AT PAGE NO.793 28.09.2015 10,81,473.41 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801 TO 852 29.09.2015 6,99,991.50 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801 TO 852 Total 1,00,00,000.00 1,11,81,464.91 2 08.10.2015 1,20,00,000.00 30.09.2015 40,22,438.43 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT NO. PAGE 801 TO 852 01.10.2015 3,01,556.43 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801 TO 852 06.10.2015 21,17,994.62 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT NO. PAGE 801 TO 852 07.10.2015 30,00,000.00 SALE OF LISTED SHARES CONFIRMATION OF ACCOUNT AT PAGE NO.853 08.10.2015 60,00,000.00 SALE OF LISTED SHARES Total 1,20,00,000.00 1,54,41,989.48 3 09.10.2015 70,00,000.00 08.10.2015 70,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RENU PROPTECH PVT LTD CONFIRMATION OF ACCOUNT AT PAGE NO.793 12 25.1.2016 60,00,000.00 21.1.2016 60,00,000.00 LOAN RECEIVED FROM M/S RHEA DISTRIBUTI ON COMPANY (PROPRIET OR ROOP KISHORE MADAN) CONFIRMATION OF ACCOUNT, COPY OF ITR ACKNOWLED GMENT AND ASSESSMENT ORDER U/S 143 (3) OF THE ACT PAGE NO. 796-800 13 01.02.2016 80,00,000.00 01.02.2016 80,00,000.00 REFUND OF LOAN DURING THE YEAR FROM M/S BDR FINVEST PVT LTD CONFIRMATION Ut ACLXJUN 1^ AT PAGE NO. 794 14 01.02.2016 1,00,00,000.00 01.02.2016 1,00,00,000.00 REFUND OF LOAN DURING THE YEAR FROM M/S BDR FINVEST PVT LTD CONFIRMATION OF ACCOUNT AT PAGE NO.794 15 01.02.2016 1,40,00,000.00 01.02.2016 1,40,00,000.00 REFUND OF LOAN DURING THE YEAR FROM M/S NISHIT CAPINVEST PVT LTD CONFIRMATION OF ACCOUNT AT PAGE NO.795 16 02.02.2016 1,16,00,000.00 01.02.2016 1,00,00,000.00 SALE OF LISTED SHARES BROKERS CONTRACT NOTE AT PAGE NO. 801 TO 852 01.02.2016 18,00,000.00 BROKERS CONTRACT NOTE AT PAGE NO.801 TO 852 BROKERS CONTRACT NOTE AT PAGE NO.801 TO 852 Total 1,16,00,000.00 1,18,00,000.00 17 02.02.2016 1,15,00,000.00 02.02.2016 1,15,00,000.00 REFUND OF LO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2015 1,29,00,000.00 03.12.2015 1,29,00,000.00 REFUND OFADVANCE FOR PROPERTIES GIVEN DURING THE EARLIER YEARS TO M/S NISHIT INFRATECH PVT LTD CONFIRMATIO N OF ACCOUNT, BALANCE SHEET OF M/S NISHIT INFRATECH PVT LTD AT PAGE 937-944 5 05.12.2015 78,00,000.00 05.12.2015 81,00,000.00 REFUND OFADVANCE FOR PROPERTIES GIVEN DURING THE EARLIER YEARS TO M/S NISHIT INFRATECH PVT LTD 6 08.12.2015 10,00,000.00 08.12.2015 1,00,00,000.00 REFUND OFADVANCE FOR PROPERTIES GIVEN DURING THE EARLIER YEARS TO M/S NISHIT INFRATECH PVT LTD TOTAL 13,14,00,000.00 14,15,00,000.00 Ram Kumar Gupta HUF Details of immediate source of payment made to assessee company during the AY 2016-17 S.No. AMOUNT PAID IMMEDIATE SOURCE OF AMOUNT PAID REMARKS DOCUMENTARY EVIDENCES AT PAGE NO. 947 to 971 DATE AMOUNT DATE AMOUNT 1 24.09.2015 42,00,000.00 23.09.2015 86,00,000.00 SALE OF UNLISTED SHARES TO M/S SAP COMPUSOFT PVT LTD COPY OF BANK STATEMENT OF BUYER, COPY OF FORM SH-4/COPY OF ITR A.Y.2016-17 OF BUYER TOTAL AMOUNT OF RS. 2,86,63,000/- SALE CONSIDERATION SHOWN UNDER THE SCHEDULE CAPITAL GAIN IN COLUMN NO. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 10. Further the ld. AR also placed reliance on the decision of Hon'ble Calcutta High Court in the case of Prahlad Bhattacharya vs CIT reported in 386 ITR 708 (Cal) wherein it was held that it is for the revenue to bring on record contrary material to dislodge assessee's evidences. 11. From the above, it is evident that each of the shareholder had filed confirmations wherein, they have given their complete income tax particulars and have confirmed that they have made the investment from their duly accounted for and disclosed bank accounts and have also explained the nature and source of funds credited in their respective bank accounts out of which the investment was made by them in the assessee company. Each of the shareholders are duly assessed to income tax and the source of the funds invested by them in the assessee company are fully disclosed and accounted for in their own individual/ company returns of income. Hence, we have no hesitation to hold that the assessee had duly proved the nature and source of credit within the meaning section 68 of the Act together with 3 ingredients of section 68 of the Act in respect of each of shareholder thereby duly disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 1,80,91,66,250.00 Having rendered reasons on the triple test envisaged in section 68 of the Act by the CIT (A) and learned ITAT, we are not persuaded to interfere with such findings. The submissions of the revenue are unmerited. 20. We also find that the learned ITAT had relied upon the judgement of this Court in CIT vs. Divine Leasing & Finance Ltd.; 299 ITR 268 (Del), and rightly so. 21. The judgement of the Supreme Court in NRA (supra) would not enure to the benefit of the revenue for the reason that, in the present case, as noted above, the assessee has furnished not only all relevant and supporting documents but also offered proper explanation to the satisfaction of the AO. This information, though not found sufficient, but was found to be satisfying the triple test condition mandated in section 68 of the Act, both by the CIT (A) as well as the learned ITAT. While, in NRA (supra) from the facts it appears that the assessee therein not only failed to furnish the complete information but also lacked in offering proper explanation. Thus, the said judgement is distinguishable on facts. 22. For the aforesaid reasons, we are unable to persuade ourselves nor could the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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