9911796707
TMI Blog2025 (5) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee has issued 2,31,000 shares of Rs. 10/- each at a premium of Rs. 90/- each to nine companies which are tabulated as under: S. No. Name of the Party Date of receipt No. of Shares Amount of Share Application money including share premium 01. Accurate Shoppers Pvt. Ltd. 24.03.2011 5,000 5,00,00/- 02. Goldline Dealters Pvt. Ltd. 22.03.2011 31,000 31,00,000/- 03. Intimate Commotrade Pvt. Ltd. 22.03.2011 29,000 29,00,000/- 04. Shivmangal Deal Comm. Pvt. Ltd. 23.03.2011 15,000 15,00,000/- 05. Shagun Commercial Pvt. Ltd. 08.03.2011 26,000 26,00,000/- 06. Surgold Dealcomm Pvt. Ltd. 28.03.2011 20,000 20,00,000/- 07. Dharmwan Merchants Pvt. Ltd. 5,000 5,00,000/- 08. Amarlaxmi Dealtrade Pvt. Ltd. 27.12.2011 50,000 50,00,000/- 09. Samrat Finvestors Pvt. Ltd. 26.12.2011 50,000 50,00,000/- TOTAL 2,31,00,000/- 3. The assessee was asked to establish the genuineness and creditworthiness of the parties. In reply to which, the assessee filed copies of the Share Application Form and Copies of relevant extracts of bank statement details of all the companies tabulated above. After examination of the financials and making enquiries t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the three ingredients of section 68 of the Act such as identity of the share applicants, genuineness of the transactions and their creditworthiness by filing their PAN, ITR, Bank Statements from where the share application money was received by the assessee. In respect to the creditworthiness, copies of the Balance Sheets of both the companies were filed wherein it is evident that they both have sufficient net worth. Ld. AR further submitted that the AO had failed to point out any defects in the details filed by the assessee. Since both the companies had replied in response to the summons issued u/s 133(6), their identity is established. He further submitted that both the companies had sufficient Reserves and surpluses to make the investment in the assessee company. The Assessing Officer on mere conjecture and surmise made the addition, therefore, the same deserves to be deleted. 6. On the other hand, ld. DR vehemently supported the orders of lower authorities and submitted that the Assessing Officer has made in-depth enquiry in the matter and after analyzing the documents filed by the assessee has accepted the share application receipt from seven companies out of nine share ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AJCA8321L- for the A.Y.2022-23. (iii) Copy of ITR- Return of income filed by M/s. Samrat Finvestors Pvt. Ltd.-AADCS4698G- for the A.Y.2022-23.". The above details were asked to ascertain whether M/s. Amarlaxmi Deal Trade P ltd & M/s. Samrat Finvestors P ltd, paid any tax, atleast, for the AY.2022-23, as they paid NIL Income tax, for the A.Y.2012-13. 5.10. The Appellant has not uploaded the above details. The Appellant on 26.10.2023, has submitted that if the IRs filed for the A.Y.2022-23, by M/s. Amarlaxmi Deal Trade Pvt. Ltd. & M/s. Samrat Finvestors Pvt. Ltd., are required, the Appellant Assessee, may be given reasonable time. 5.11. As per the direction of the Hon. Delhi High Court, this appeal has to disposed of not later than eight weeks from the order. 5.12. Therefore, after duly considering the grounds of appeal, written submissions filed during appeal proceedings, the details mentioned in the documents uploaded as a part of paper book, and the case laws relied on by the Appellant, the appeal is decided as under: 5.12.1. As per Companies Act, a Private limited Company is prohibited from offering any invitation to the public to subscribe for any share in the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e laws: (i) 82 TR 540(SC) - In the case of CIT Vs Durga Prasad More (ii) 214 TR 801(SC) - in the case of Sumati Dayal Vs CIT (iii) 154 TR 148(SC) - in the case of Mcdowell and Co.Ltd (iv) 107 ITR 938(SC) - in the case of Roshan D Hatti Vs CIT (V) 60 ITR 674- (SC) - in the case of CIT vs Biju Patnaik (vi) in the case of CIT vs Divine Leasing and Finance Ltd. (Delhi HC) (vii) 350 ITR 407(Del) in the case of CIT vs Nipun Builders & Developers (Delhi HC) Therefore, it is hereby held that the deduction claimed by the Appellant that Rs. 1,00,00,000/- on account of share application money received from M/s. Amarlaxmi Dealtrade private ltd & M/s. Samrat Finvestors private ltd, was an explained receipt/income, is devoid of merit and the addition made on this account in the assessment order passed u/s 143(3) dated 24.03.2015 by the AO-DCIT Circle 6(1) is hereby CONFIRMED. 5.14.1. It is relevant to mention here that the receipt of share application money by the Appellant - Choudhary Earth Movers Private limited - Company, from public -such as from M/S. Amarlaxmi Dealtrade Private L:td. & M/s. Samrat Finvestors Private Ltd., is against the Public Policy of the Country & Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd more intelligent analysis. 5.16. In sum, the addition made on this issue in the assessment order passed u/s 143(3) dated 24.03.2015 by the AO-DCIT Circle 6(1) is hereby CONFIRMED." 8. Before us, the assessee reiterated the same facts and argument which were made before the lower authorities. From the perusal of the details filed by the assessee show that the shareholder companies were only a paper companies having no source of income but had made substantial and huge investments in the form of share application money. The assessing officer has referred to the bank statement, financial position of the recipient and beneficiary assessee and the surrounding circumstances. The primary requirements, which should be satisfied in such cases is, identification of the creditors/shareholder, creditworthiness of creditors/shareholder and genuineness of the transaction. These three requirements must be tested not superficially but in depth having regard to the human probabilities and normal course of human conduct. 9. Supreme Court in the case of CIT vs Durga Prasad More reported in [1971] 82 ITR 540 (SC) held as under: "The taxing authorities were not required to put on blinkers whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-company and came back as share capital. Section 68 permits the Assessing Officer to add the credit appearing in the books of account of the assessee if the latter offers no explanation regarding the nature and source of the credit or if the explanation offered is not satisfactory. It places no duty upon him to point to the source from which the money was received by the assessee." 12. It is settled proposition that as per the provisions of section 68 of the IT Act, the initial burden is on the assessee to establish the genuineness of the transaction, creditworthiness and identity of the share applicant. Thus, the identity and capacity of the person to subscribe the shares has to be established by producing some cogent evidence. Similarly, the genuineness of the transaction is also required to be established from the fact that the applicant was having the capacity and creditworthiness. Since, the assessee has failed to discharge the burden cast upon it with respect to establish the creditworthiness of the share applicants nor the findings of ld. CIT(A) are controverted by placing on record some reliable material to the satisfaction of lower authorities thus, in our con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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