TaxTMI 
TaxTMI 
2014 (8) TMI 519
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.... the Learned CIT(Appeals). In support of this ground, Learned DR submitted that during the course of assessment proceedings, sufficient opportunity was granted by the Assessing Officer to the assessee to establish the genuineness of the claimed share application money which the assessee did not avail. Learned CIT(Appeals) was thus not justified in entertaining the additional evidence filed by the assessee before him i.e. balance sheet of shareholder, investment declared in the name of the assessee company in the balance sheet, assessment order of shareholder company under section 143(3) of the Income-tax Act, 1961, certificate of incorporation, source of deposit in bank account of shareholder, ITR of the company/firm from where funds claimed in the bank account of the shareholder and bank account of source from where funds came. He submitted that before the Assessing Officer, the assessee was able to furnish only the documents like share application form with name, address, bank details/PAN, ITR of shareholder, bank account with name, account number and debit in the name of the assessee company. No documents were filed by the assessee before the Assessing Officer despite of opportu....
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.... submissions/evidence to prove the genuineness of the transaction, creditworthiness and identity of the shareholder who had given Rs. 4.03 crores. We concur with the findings of the Learned CIT(Appeals) that the time of two days given to the assessee was not sufficient and we also concur with the finding of the Learned CIT(Appeals) that the documents filed before the Learned CIT(Appeals) were in the nature of supporting evidence. Under these facts and circumstances, we are of the view that Learned CIT(Appeals) has rightly allowed the required admission of additional evidence by the assessee before him after affording opportunity to the Assessing Officer in this regard. Thus, there is no any violation of Rule 46A of the Income-tax Rules, 1962. The ground No.2 is accordingly rejected. 6. Ground Nos. 1 & 3: The relevant facts are that during the course of assessment proceedings under sec. 153C/143(3) of the Income-tax Act, 1961, the Assessing Officer noticed that the assessee had issued share capital to the following entities: S.No. Name of the Company Amount (In Rs.) 1. Roop Yarns P. Ltd. 25,00,000 2. Scholars Steels P. Ltd. 15,00,000 3. Royal Traders Ltd. 10,....
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....ssessee before the authorities below and their availability made before the Tribunal at the given pages of the paper book. A copy of this chart was also supplied to the Learned CIT(Appeals). Learned AR also placed reliance on the decision cited before the Learned CIT(Appeals). The copies of documents filed before the authorities below in support of the genuineness of the claimed transactions by the assessee have been made available at page Nos. 1 to 346 of the paper book. 10. Considering the above submissions, we find that Rs. 93 lacs were received in the earlier years from following three entities: i) Roop Pvt. Ltd. Rs. 25,00,000 ii) Schoolars Steels (P) Ltd. Rs. 15,00,000 iii) Innotech Distribugtors (P) Ltd. Rs. 53,00,000 Total Rs. 93,00,000 11. During the year under consideration, the assessee had received new share application money of Rs. 3.10 crores from following four corporate entities: iv) Royal Traders Ltd. Rs. 1.15 crores v) Innotech Distributors P. Ltd. Rs. 0.90 crores vi) Hunt Commercial P. Ltd. Rs. 1.00 crores vii) BMC Polymers P. Ltd. Rs. 0.05 crores Total: Rs. 3.10 crores 12. In respect of all the above six shareholders (as the en....
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.... Commerce, Darya Ganj, New Delhi and there is no deposit in cash in this bank account before applying for shares in the appellant company. Royal Traders limited has received various payments in their 9ank account (the details of which are filed in the paper book) out of which they have applied to the shares of the appellant company. It is also seen that Royal Traders limited is assessed to income tax and so is the case of all the companies from -whom credit has been received in their bank account during the year under consideration. Further, the Balance Sheet of Royal Traders shows the net worth of more than Rs. 9 crores. Royal Traders limited has been assessed to income-tax under section 143(3) for the assessment year 2008-09 vide order dated 15th November, 2010, no adverse inference has been drawn against this company in the assessment order. Further, the AD in his report dated 27.08.2012 has also not controverted any of the above facts. In the assessment order passed under Section 153C/143(3), I find that there is no specific adverse finding by the AD on the basis of which the amount received from Royal Traders limited is being considered as unexplained credit. The AD in the ....
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....ness of the transaction. 9.6 Innotech Distributors (P) Ltd. (Rs. 40,00,000) The appellant company has received a sum of Rs. 93,00,000 from Innotech Distributors (P) Ltd., of which Rs. 40,00,000 has been received during the year. On going through 'the documents filed by the appellant company it is seen that the money have been received from banking channels. The details with necessary evidences filed also explains the source from which such payments have been made. The Balance Sheet and the income tax assessment order passed under, section 143(3) for assessment year 2006-07 dated 15th December, 2008 in respect of Innotech Distributors is also filed 'an~ there is no adverse finding as regards its financials. The Balance Sheet as well as Profit and loss Account for the year under consideration of the Innotech Distributors (P) ltd. shows total assets of Rs. 5.00 crore and sales and purchases of Rs. 97.14 lacs and Rs. 1.60 crore respectively and a sum of Rs. 93,OO,000 has been shown as investment in the name of -the appellant company. The AO (n the assessment order has referred to the enquiries conducted in the case of a few companies but the assessment order is totally si....
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....e strength of which he came to the conclusion that the investment made by BMC Polymers is not a genuine transaction. All these issues were raised by the appellant in the written submissions and the AD in the remand report dated 27.08.2012 has not been able to rebut or controvert any of these facts. As the appellant .company has explained its source as well as the source of its shareholder, therefore, in view of the above discussion the appellant company has established the identity, creditworthiness and genuineness of the transaction. 9.8 Roop Yarn (P) ltd. (Rs. 25 lacs): Though the payments have been received by cheque from the bank account but it is in the preceding year. Having said that, I notice that no immediate credit of cash in the bank account ~as been there before applying for shares in appellant's company but the same is made out of the money which Roop Yarn (P) Ltd. has received from its various entities, the details of which have also been placed on record by the appellant. Further, the Balance Sheet and Profit and Loss Account of the Roop Yarn (P) Ltd. for the year under consideration shows assets of Rs. 30.04 crore and sales and purchase of Rs. 39.81 lacs an....
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....bove findings of the Learned CIT(Appeals), which has not been rebutted before us by the revenue , we come to the conclusion that in respect of all the above six shareholders, the assessee has been able to furnish on record substantial evidences to establish the identity, creditworthiness of the shareholders and genuineness of the transactions. The assessee has also gone to the extent of furnishing the source of immediate credit as well as the source of such credits in the hands of the shareholder companies. We also find that the Assessing Officer at the assessment stage and at the stage of furnishing remand report has not given any adverse finding except the general finding i.e. the amount in round figure, the Board's resolution has not been filed, all the shareholders are trading in unlisted companies etc. We also find that the Learned CIT(Appeals) while giving relief to the assessee has placed reliance on the following decisions: i) CIT vs. Orissa Corporation 159 ITR 78 (S.C); ii) CIT vs. Divine Leasing & Finance Ltd. 299 ITR 268 (S.C); iii) CIT vs. Dwarkadish Investment P. Ltd., ITA No.911 of 2010 dated 02.08.2010 (Delhi H.C.); iv) CIT vs. Lovely Exports 299 ITR 268 ....
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....ssing Officer had conducted the said inquiries and investigation probably the challenged made by the revenue would be justified. In the absence of these inquiries and non-verification of the details at the time of assessment proceedings the factual findings recorded by the Assessing Officer were incomplete and sparse. Hon'ble High Court accordingly dismissed the appeal preferred by the department. 19. Again in the case of CIT vs. Frostair Pvt. Ltd. (supra), Hon'ble Delhi High Court has been pleased to observe that the assessee is under a burden to explain the nature and source of the share application money received in a given case. For discharging this, the assessee has to establish; a) The shareholders' identity; b) Genuineness of the transactions; & c) The creditworthiness of the shareholders. It was held that if the creditor/subscriber is a company, the registered address or PAN identity, and other relevant details are to be furnished. Genuineness can also be proved by disclosing materials pointing to receipt of the share application money from the applicants. Copies of shareholders' registered address, share application form, transfer register etc. can be fu....
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....e of which the Learned AR submitted and explained that the genuineness of the claimed transactions have been well established by the evidences filed before the authorities below:- 23. Since the Learned CIT(DR) has not been able to rebut these submissions of learned AR nor the evidences filed in support, we do not find any infirmity in the first appellate order on the issue as the Learned CIT(Appeals) has passed a comprehensive and reasoned order on the issue after examining evidence relating to each of the share applicant companies to arrive at a conclusion that the assessee was able to establish the identity, creditworthiness and genuineness of the transaction. We are thus not inclined to interfere with the first appellate order in this regard. The same is upheld. Ground Nos. 1 and 3 are thus rejected. 24. In the result, the appeal is dismissed. 25. In its cross-objection, the assessee has basically questioned the validity of the notice issued under sec. 153C of the Income-tax Act, 1961 and assessment made in furtherance thereto to which the Learned CIT(Appeals) did not agree. Since we have decided the above appeal on the merits of the addition made by the Asses....