TaxTMI 
TaxTMI 
2015 (5) TMI 679
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....the following persons: Name of the person Share Capital Premium (a) Sh Prakash S. Bagrecha (Director) Rs.50,000/- Nil (b) Smt Reetaben J. Patel (Director) Rs.50,000/- Nil (c) Ankush Finstock Ltd. Rs.4,00,000/- Rs. 16,00,000/- (d) Marrot Stock Holding (P) Ltd. Rs.2,00,000/- Rs. 8,00,000/- (e) Step Securities P. Ltd. Rs.50,000/- Rs. 2,00,000/- TOTAL Rs.7,50,000/- Rs. 26,00,000/- 4. The AO observed that the persons at Sr.No.(a) & (b) are the promoters of the company, and the persons at (c), (d) and (e) are not related to promoters. In order to verify the identity, credit-worthiness and genuineness of the transactions made by the investors, summons u/s.131 of the Act was issued to the director of the investor companies and their statement under oath were recorded, wherein the Director of Ankush Finstock Ltd., Shri Bharatbhai Manubhai Shah has stated in his statement dated 14.9.2009 as under: "In fact as a chairman cum Managing Director of M/s Ankush Finstock Ltd wants to submit that the promoter of M/s Jay Durga Trade Link Pvt Ltd Shri Prakash S Bagrecha resident of Shahibaug of Ahmedabad each my old acquaintance and v/e know each other for 10 to 12 years he was engaged....
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....rated that there was no business connection between Marrot Stock Holding (P) Ltd. and Jay Durga Trade Link (P) Ltd. 7. The AO further observed that Shri Bharatbhai Manubhai Shah, director of Ankush Finstock Ltd. was re-summoned u/s.131 of the Act and his statement recorded on 14.10.2009, and he, inter alia confirmed that whatever stated by Shri Shri Samir P. Shah and Shri Desai Pintoo Motibhai, both directors of Step Securities (P) Ltd. and Shri Pankaj Manubhai Shah, director of Marrot Stock Holding (P) Ltd. in their statement recorded u/s.131 of the Act on 23.9.2009 and 22.9.2009 respectively, was true and he abode by the statements made by them in respect of investment in share application and share premium of Jay Durga Trade Link (P) Ltd.. The AO, therefore, opined that in view of the above facts, it was crystal clear that share capital and share premium amounting to Rs. 32.50 lakhs has not been invested by Ankush Finstock Ltd., Marrot Stock Holding (P) Ltd. and Step Securities (P) Ltd. as claimed by the assessee, and accordingly, show cause notice was issued to the assessee. 8. In reply to the show cause, the assessee vide letter dated 26.10.2009 asked for cross-examination o....
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....re and also explained the source of investment out of his company's bank a/c with UTI Bank a/c No. 003010200031189, thus, all these affirmation tallies with his confirmations given to the company. It is only after this question, his role changed duo to one or the other reason and given the statement which totally contradictory to the fact given earlier. Further as regards his denial to the confirmation given to the company in last question is also not tenable as the documentary evidence produced by him and by us support s the of investment and not otherwise." 9. The AO did not accept the explanation of the assessee for the following reasons. "(a) The assessee has alleged that statement of Shri Bharat M Shah recorded on 14.09.2009 was taken under threat and mental torturing condition, which is far from truth. An opportunity for cross examination was provided to the director of the assessee which was availed by the assessee company and in the cross examination, Shri Bharat M Shah stood by his statement recorded earlier. During the course of cross examination of Sh Bharat M Shah on 5lh November, 2009 by the director of assessee company, Sh Bharat M Shah categorily stated that wh....
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....und, its working etc. The assessee company had no assets which would invited premium of Rs. 40 on a Rs. 10/- share. The arrangement was to launder its own unaccounted funds by introducing the same in the form of interest free share and premium money." 10. Accordingly, the AO made addition of Rs. 32,50,000/- as unexplained cash credit under section 68 of the Act. 11. On appeal, The CIT(A) confirmed the action of the AO by observing as under: "I have carefully gone through the decisions relied upon by the Ld. Counsel. It was noticed on examination that except a few, all other decisions are not relevant to the facts of the case. The Ld. Counsel has not established as to how those decisions are relevant and how the same are applicable on the facts of the case. The Hon'ble Amritsar Tribunal has rightly observed in the case of Shree Balaji Alloys vs. ITO [2010] 127 TTJ 129 (Asr.) that "it is crucial to point out that the judicial precedents are to be applied with care and caution and not mechanically, as each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. It is ca....
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....ion letter from the creditor is proved and the identity and the existence of the investor has not been disputed, no addition on account of share application money in the name of such investor can be made in the assessee's hand, and for this, he relied on the decision of Hon'ble Rajasthan High Court in the case of Shree Barkha Synthetics Ltd. Vs. ACIT, (2006) 15 taxmann 289 (Raj.). 13. He further submitted that the AO being not satisfied by the submission of the aforesaid documents called each investor and recorded their statement under section 131 of the Act, and on the basis of such statement he had considered such share application money as credit and added the same to the income of the assessee. He argued that from the statement of Shri Pankaj Manubhai Shah of Marrot Stock Holding (P) Ltd., it is to be noted that when the company had made investment in the assessee-company, he has not a director, as can be seen from share application made by the company, and the list of the directors provided to the AO during the course of assessment. 14. Further, it was contended that Shri Bharatbhai Manubhai Shah of Ankush Finstock Ltd. alleged that the share application money invested by th....
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....d., 192 ITR 287 and CIT Vs. Sophia Finance Ltd., 205 ITR 98 and submitted that it has been held that if the existence of applications of share application money is proved, no further inquiry was necessary. 19. It was also argued that if the assessee has discharged prima facie onus by submitting various documents such as confirmations of accounts, share applications made by the investor, bank statement of such investors, copy of return of income for the said assessment year, and audited accounts of the investors to establish the identity of the investor and therefore, no addition can be made u/s.68 of the Act, and for this, he relied on the decisions of Hon'ble Delhi High Court in the case of CIT Vs. Illac Investment P. Ltd., reported in 287 ITR 135, CIT Vs. Antarctica Investment P. Ltd., 262 ITR 493 and CIT Vs. Sofia Finance Ltd., 205 ITR 98. It was also argued that when the initial burden has been discharged by the assessee in respect of identity of investors, and there is no presumption that the assessee is the benami owner of the investment made by the existing persons, and therefore, addition could not be made u/s.68 of the Act, and for this, the AR placed reliance on the deci....
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.... application money, but no addition for this has been made by the AO in the hands of the assessee. The facts of the case of the assessee are identical to the facts before the Hon'ble Gujarat High Court in the case of Rohini Builders (supra), and therefore, no addition on account of share application and share premium amount was warranted under section 68, as unexplained cash credits. 23. The DR, on the other hand, supported the orders of the lower authorities. 24. We have heard rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the assessee has claimed to have received share capital and share premium aggregating to Rs. 32.50 lakhs from the following three persons: Name Share Capital Premium Total Ankush Finstock Ltd. 4,00,000/- 16,00,000/- 20,00,000/- Marrot Stock Holding Pvt. Ltd. 2,00,000/- 8,00,000/- 10,00,000/- Step Securities Pvt. Ltd. 50,000 2,00,000/- 2,50,000/- Total 6,50,000 26,00,000 32,50,000/- 25. The assessing officer relying on statement of Shri Bharatbhai Manubhai Shah director of Ankush Finstock Ltd., Sri Desai Pintoo Motibhai director of Step Securities Pvt. Ltd., and Sri Pankaj Manubh....
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....was no cash deposit before issuing of cheque for making investment in the assessee company. Still further the director of Ankush Finstock Ltd. has stated in his statement that cheque was issued for earning commission of 1% but the audited accounts of Ankush Finstock Ltd. does not show any such commission income. No material could be brought on record by the Director of M/s.Ankush Finstock Ltd. to show that the claim made by him in the statement given before the AO of actually receiving of any cash from the assessee-company before the issue of cheques to the assesseecompany. Further, on examination of statement of three directors of Step Securities P. Ltd. and Marrot Stock Holdings Pvt. Ltd., it is observed that the directors have simply stated that no investment was made in the shares of the assessee-company. We find that from the bank statement of Marrot Stock Holdings Pvt. Ltd. that cheque was issued to the assessee-company and the investment in shares of the assessee-company was also appearing in the balance sheet of Marrot Stock Holdings Pvt. Ltd., we find that the recorded statement of Shri Pankaj Manubhai Shah, director of Marrot Stock Holdings Pvt. Ltd. could not explain the....