TaxTMI 
TaxTMI 
2014 (8) TMI 310
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the grounds of appeal before or during the course of the hearing of the appeal." 3. At the time of hearing before us, it is submitted by the learned CIT-DR that during the accounting year relevant to assessment year under consideration, the assessee had received f2.50 crores from the following six companies in the form of share capital and share premium :- Sl.No. Name of the company Amount-Rs. 1. Beetal Plantation P.Ltd. 30,00,000 2. M/s Integrator Consultants P.Ltd. 50,00,000 3. M/s Pargati Portfolio Foods P.Ltd. 70,00,000 4. M/s Pragati Foods P.Ltd. 30,00,000 5. M/s Tone Financial Services P.Ltd. 50,00,000 6. M/s Unit Commercial P.Ltd. 20,00,000 Total 2,50,00,000 4. The enquiries conducted by the Assessing Officer in the aforesaid companies reveal that all these companies were not doing any real business but were engaged in the business of providing accommodation entries. There was negligible profit shown by these companies. However, in the balance sheet, they have shown huge share premium reserve on one side and investment in unquoted shares on the other side. On the enquiries conducted through....
X X X X Extracts X X X X
X X X X Extracts X X X X
....December, 2011. Thus, the time of only five days was allowed to furnish necessary evidence with regard to share capital/share premium. The assessee furnished the reply on 19th December, 2011 in which the assessee filed the copy of share application form, copy of income tax return of the shareholder, copy of bank account and cheque number through which share application money was received, copy of share certificate issued by the assessee company for shares allotted to those shareholders and copy of annual return in Form-2 filed with the Registrar of Companies. Thereafter, the Assessing Officer, without allowing any further opportunity, disbelieved the assessee's explanation with regard to share capital/share premium and made the addition of Rs. 2.50 crores. Thus, it is evident that the Assessing Officer allowed merely five days' time to furnish necessary details which, by no stretch of imagination, can be said to be adequate opportunity of being heard and producing necessary evidence. Considering these facts, learned CIT(A) rightly admitted the additional evidence. He, therefore, submitted that the order of learned CIT(A) should be sustained and the Revenue's appeal may ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tries. The assessee has also filed the copy of balance sheet of these companies which indicated that these companies are having substantial capital and have invested in the shares of various companies. Therefore, we are of the opinion that evidence on record placed by the assessee which is not controverted by the Revenue establishes that all the six companies which invested in the shares of the assessee company are genuine companies. 9. The second point made by the Assessing Officer was that these shareholder companies were having negligible profit but in the balance sheet, they have shown huge share premium reserve. However, this aspect needs to be examined in the case of those companies and not in the case of the assessee company. As we have already mentioned, all these companies are separately assessed to income tax, they have filed their income tax returns alongwith their balance sheet which indicated their share capital as well as share premium. That merely because they have substantial share capital or substantial share premium, would be no ground to doubt either their identity or their creditworthiness. On the other hand, substantial share capital/share premium would only....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the [Assessing Officer] has been allowed a reasonable opportunity-- (a) to examine the evidence or document or to cross- examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the [Assessing Officer]) under clause (a) of sub-section (1) of section 251....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as allowed by the Assessing Officer. On these facts, in our opinion, the CIT(A) rightly admitted the additional evidence with the following finding:- "In my humble view, the time of 5 days given to the appellant was too short and having said that, I find that the documents filed during the appellate proceedings are not in the nature of any additional evidence per se rather they are of the nature of supporting evidences, they are taken on record and are admitted as evidences. The issue of genuineness, creditworthiness and identity of shareholders is decided keeping in light these documents also." 14. In view of the above, ground No.2 of the Revenue's appeal has no merit and the same is rejected. 15. Now, we come to the main question, i.e., whether the assessee has been able to discharge the onus of proving the credit of Rs. 2.50 crores in the form of share capital/share premium. Admittedly, the onus is upon the assessee to discharge this onus and to discharge the onus, the assessee is required to prove the identity of the shareholder, creditworthiness of the shareholder and the genuineness of the transaction. Let us examine the facts of the assessee's case so as to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on. 9.5 Integrator Consultants P. Ltd. (Rs. 50,00,000) On going through the paper book, it is seen that the amount has been received by cheque from the bank account of Integrator Consultants P. Ltd. and there are no cash deposit in this bank account before applying for shares in the appellant company. This money has been paid out of the money received by it from different entities. The details about such entities, its identity, income tax particulars have also been filed by the appellant. It is further seen that, Integrator Consultants P. Ltd. is a income tax assessee and the Balance Sheet shows the net worth of Rs. 15.94 crore and a sum of Rs. 50,00,000 has been shown as investment in the name of the appellant company. Further, the AO in the remand report dated 27.08.2012 has not controverted any of these facts. The AO in the assessment order has referred to the enquiries conducted in the case of a few companies but the assessment order is totally silent as to what enquiries have been made on the strength of which he came to the conclusion that the investment made by Integrator Consultants P. Ltd. is not a genuine transaction. On the contrary, I find that the appellant has p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lant company has explained its source as well as the source of its shareholder, therefore, in view of the above discussion appellant company has established the identity, creditworthiness and genuineness of the transaction. 9.7 Pragati Foods Pvt. ltd. (Rs. 30,00,000) A sum of Rs. 30,00,000 has been received from the bank account of Pragati Foods Pvt. Ltd. and I notice that there are no immediate cash deposit in this bank account before applying for shares of appellant company and this money has been paid out of the money received by the shareholder company from Bonanza Portfolio (P) Ltd. Further, it is seen that Pragati Foods Pvt. Ltd. is also assessed to income tax and its assessment for the year 2005-06 has been completed under section 143(3) of the Act vide order dated 14th December, 2007 and there is no adverse finding or comment regarding its financials. The Balance Sheet and Profit and Loss Account of the Pragati Foods Pvt. Ltd. shows assets of Rs. 11.38 crore and sales and purchase of Rs. 4.22 crore and Rs. 48 lacs respectively and a sum of Rs. 30,OO,OOO has been shown as investment in the name of the appellant company. Further, the AO in the assessment order has re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plained its source as well as the source of its shareholder, therefore, in view of the above discussion appellant company has established the identity, creditworthiness and genuineness of the transaction. 9.9 Unit Commercial P. Ltd. (Rs. 20,00,000) On going through the paper book I find that the money has been received from bank account of Unit Commercial Pvt. Ltd. maintained with Oriental Bank of Commerce, Darya Ganj, New Delhi and there is no deposit in cash in this bank account before applying for shares in the appellant company and payment has been made out of the money received by the shareholder company from Precious Commercial Pvt. Ltd. It is also seen that Unit Commercial Pvt. Ltd. is assessed to income tax and so is the case of the company from whom credit has been received in their bank account during the year under consideration. Further, in the Balance Sheet of Tone Financial Services (P) Ltd. that they have shows net worth of more than Rs. 26.4 crore and sales and purchases of Rs. 4.96 crores and Rs. 1.99 crores respectively and a sum of Rs. 20,00,000 has been shown as investment in the name of the appellant company. No adverse inference has been drawn against....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he copy of share application form submitted by those companies before the Assessing Officer. Copy of the share application form shows the name and address of the company who applied for shares, number of shares applied, amount, date and cheque number by which payment is made, name of the bank on which cheque was drawn and the permanent account number of the company. No discrepancy in any of these details is pointed out. 17. All the shareholder companies are assessed to income tax and the acknowledgements of filing of their income tax returns by those companies were furnished. That the balance sheet of all those companies were furnished and the balance sheet shows substantial share capital and reserve of the relevant companies. It would be appropriate to give the details of the share capital and reserve of the companies and the amount invested by those companies in the shares of the assessee which is as under:- Sl. No. Name of the Company Share Capital and Amount invested Reserves & Surplus with the assesse company 1. M/s Beetal Plantation P.Ltd. 8,98,80,569 30,00,000 2. M/s Integrator Consultants P.Ltd. 15,94,31,726 50,00,000 3. M/s Pargati Portfolio Food....
X X X X Extracts X X X X
X X X X Extracts X X X X
....asis of mere presumption and suspicion without properly appreciating the evidences on record. In view of the above, we entirely agree with the above finding of the learned CIT(A). 19. Before we part with the matter, we would like to mention that the learned CIT(A) while giving relief has also relied upon the decision of Hon'ble Apex Court in the case of CIT, Orissa Vs. Orissa Corporation P.Ltd. - [1986] 159 ITR 78. That in the said case, in the accounts of the assessee company, there was credit in the name of three individuals. The assessee produced before the Assessing Officer the letter of confirmation of the creditor, the discharged hundis and gave the income tax particulars of those creditors. Since the assessee was unable to produce the creditors before the Income Tax Officer, on the assessee's request, summons were issued under Section 131 of the Income-tax Act. However, the summons were returned unserved by the postal authorities with the remark "left". Therefore, the Assessing Officer made the addition of Rs. 1,50,000/- for unexplained credit. On appeal, the Tribunal deleted the addition on the ground that the assessee had discharged the onus to prove the credit.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on is brought to our knowledge. In view of the above, we, respectfully relying upon the above decision of Hon'ble Apex Court as well as the facts of the assessee's case as discussed earlier, find no justification to interfere with the order of learned CIT(A). The same is sustained and Revenue's appeal is dismissed. Cross-objection No.1/Del/2014 :- 21. In the cross-objection, the assessee has raised the following grounds:- "1. On the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in rejecting the contention of the assessee that the proceedings initiated under Section 153A and order passed by the learned Assessing Officer (AO) under Section 153A/143(3) is without jurisdiction. 2. On the facts and circumstances of the case, Ld. Commissioner of Income Tax (Appeals) [CIT(A)] has erred both on facts & in law in rejecting the contention of the assessee that the order passed by the learned AO under Section 153A is bad and liable to be quashed as the same has been framed consequent to a search which itself was unlawful and invalid in the eye of law. 3. On the facts and circumstances of the ca....