https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=759068 https://www.taxtmi.com/caselaws?id=759068 Addition u/s 68 - bogus share application receipts money in the hands of the assessee - assessment solely on the basis of statements of Accomodation entry proviser/sh. Pravin Kumar Jain (a third party, not related to assessee in any manner) recorded during the course of search conducted at his premises HELD THAT:- As is evident from the record that case of the assessee was reopened solely based on statement of unrelated party which was also later on retracted. Therefore, as such there is no specific information, which could prove that transactions undertaken by the assessee are of the nature of accommodation entries. It is further submitted that during the course of assessment proceedings as well as appellate proceedings assessee submitted necessary evidence regarding receipts of share application money from the above parties before the AO as well as CIT(A). The documents so submitted for all these investor companies consists of Copy of Share Application form, Copy of Board Resolution, Copy of investor company s PAN Card, Copy of Bank statement showing the payment by an account payee cheque, Income Tax return of the investor company for the year under consideration and of the previous year, copy of companies master data dated 31.03.2009 and 31.03.2015 as to show that the company are active and copy of confirmation and affidavit of the director of the investor company at the time of reassessment proceeding so as to confirm the investment made by the investor company. All this evidence so filed before the ld. AO has not been controverted including the affidavit of the director of the investor company. These evidences so filed proves the identity, credit worthiness and genuineness of the transaction. Here it is worthwhile to note that First Proviso to Section 68 wherein addition on account of Share Application Money / Share Capital can be made, stood inserted to the statue book, by Finance Act 2012, w.e.f. 01.04.2013 and therefore that addition made by ld. AO on account of Share Application Money u/s 68 for the year under consideration is not in accordance with law and it is made without considering the provision of law stood related to the year under consideration. Thus, for the year under consideration from the perusal of section 68, it is evident that assessing officer can make addition u/s 68 only under two circumstances, i.e.: (iii) Appellant does not offer any explanation about nature and source of such credit or (iv) Explanation offered by Appellant is not upto the satisfaction of Ld. AO. Here in this case as we note that the assessee provided the explanation and when the assessee provides explanation, before rejecting the same ld. AO has to record dissatisfaction as to why the explanation furnished by the assessee is not acceptable. CIT(A) has merely based on the statement of Shri Praveen Kumar Jain confirmed the addition. Without dealing with the provision of law and evidences provided by the assessee. Addition made by the ld. AO and sustained by the ld. CIT(A) is without appreciating the provision of law prevailing and the evidence placed on record by the assessee. We get support of our view from the decision of apex court in the case of M/s Lovely Exports Pvt. Ltd. [ 2008 (1) TMI 575 - SC ORDER ] Assessee has not only given the names and addresses of the shareholders but has also given their PANs. Further assessee to prove genuineness of the transaction also submitted the Share Application form, Board Resolution, ITR s, Confirmation and Affidavit from investors. On the above facts, the decision of the Hon ble Apex Court in the case of CIT V/s. Lovely Exports (P) Ltd. [ 2008 (1) TMI 575 - SC ORDER ] as well as Venkateshwar Ispat (P) Ltd. [ 2009 (5) TMI 290 - CHHATTISGARH HIGH COURT ] are squarely applicable as the assessee has filed the necessary confirmation and other particulars of shareholders and incidentally all the subscribers are Private Limited Companies and the appellant had received the application money through banking channel. Appeal of the assessee is allowed. Case-Laws Income Tax Thu, 05 Sep 2024 00:00:00 +0530