TaxTMI 
TaxTMI 
2015 (10) TMI 1756
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....ed. Accordingly, details were filed and from perusal of ledger share application money submitted by the assessee, it was noted by the AO that the assessee company has shown Rs. 75,00,000/- as opening balance as on 01.04.2009, whereas rest of amount i.e. Rs. 1,60,00,000/- has been received by the assessee company during the year under consideration from the following share holder companies: Sl.No. Name of shareholding companies No of shares allotted during F.Y.2009-10 Share Capital invested Share Premium invested. 1. M/s Artline Vinimay (P) Ltd. 1, Mahendra Nath Roy Bye Lane, Howrah. West Bengal 711101 15,000 Rs.1,00,000/ Rs.13,50,000/- 2. M/s Biraja Dealers [P) Ltd, 1,'Mahendra Nath Roy Bye. Lane, Howrah, .West Bengal-711101 10,000 Rs.1,50,000/- Rs.9,00,000/- 3. M/s Deesha Tie-up (P) Ltd.. 1, Raj Ballav Saha Lane, Howrali, West Bengal- 711101 15,000 Rs.1,50,000/- Rs.13,50,000/ 4. M/s Kathleen Vyapaar (P] Ltd., 1, Raj Ballav Saha Lane, Howrah, West Bengal-711101 15,000 Rs.1,50,000/- Rs.13,50,000/- 5. M/s.Kokila Exports (P) Ltd., 9/12, Lal Bazar Street, Block-E, 2n" Floor, Kolkata, West Bengal-70000 15,000 Rs.1,50,000/- Rs.13,50,000/- 6. M/s Midnig....
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....nus squarely lies on the assessee company to substantiate that these companies have actually invested the funds as tabulated above. 4. The assessee has consequently filed the copy of ITR, PAN and copy of bank accounts of the shareholders. However, for independent verification about alleged shareholders the AO issued letter u/s 133(6) of the Act to all these companies requiring them to furnish complete details of share purchase mode of payment, copy of bank account and PAN/assessment particulars. In respect of three companies i.e. (i) M/s Topline Finvest (P) Ltd. (ii) M/s MA Hire Purchase (P) Ltd. Kolkata (iii) M/s RMB Finance Company Ltd., Kolkata, the letters were returned by postal department marked as "address not known" or "addresses moved". In rest of the cases, neither replies have been received nor were letters returned back by postal authorities. The AO therefore, confronted these facts to the assessee and asked him to prove the identity, creditworthiness and genuineness of transaction. After confrontation of this fact to the AR of the assessee, replies from Kolkata started coming from the same places from where letters were returned unserved by postal department. The AO f....
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....s not discharged the onus which let upon it therefore, the shareholders are not genuine and he accordingly made the addition of Rs. 1,60,00,000/- as unexplained credit u/s 68 of the Act. The relevant observation of the Assessing Officer is extracted as under:- "8. Thus from above facts and circumstances, it is evident that the'onus was not discharged by the assessee in as much as the identity of the creditors remained un-established. Moreover, almost all the above transactions have been made on the same day or following day establish conclusively that the transaction suffers from irrationality and are colourful. The above alleged shareholder companies had not done any business activities during the year but investments in shares have been made- in lakhs. Therefore, the creditworthiness of the alleged shareholder companies could not be proved by the assessee company during the course of assessment proceedings. From report of DIT(Inv.), Kolkata, it is also apparent that these companies are non-existent companies and the assessee company has routed its money through such companies by making accommodation entries at Kolkata and then subscribed its own shares so as to give it a ....
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.... these investors before investing in shares of the company has been produced on record. The initial onus is upon the assessee to establish three things necessary to obviate the mischief of Section 68 of the Act. These are (i) Identity of investors; (ii) their creditworthiness/investments and (iii) genuineness of the transaction. In view of the above facts as discussed above, it is very clear that the assessee company has failed to establish the identity, genuineness and creditworthiness of the alleged shareholder companies and they are in fact non- existent paper companies. These shareholders have not been proved by the assessee company to company lo be genuine. Therefore, the entire credits appearing in the accounts of the assessee during the year under consideration in the shape of alleged investment from above ten shareholding companies at Rs. 1,60,00,000/-are treated as unexplained credit u/s 68 of the I.T. Act and accordingly added towards the income of the assessee. Penalty proceedings under u/s 271(l)(c) is being initiated on this issue." 6. The assessee has preferred an appeal before the CIT(A) with a plea that proper opportunity was not afforded to the assessee. He has ....
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....date of incorporation, authorized and paid up capital b. Confirmation cum application form for equity shares of M/s. Ansh Intermediate Services Pvt. Ltd. c. Minutes of Board Meeting dated 23.11.1998 d. ITR Acknowledgement for AY 2008-09 e. Company Master Data as downloaded dated 29.03.2013 from site of MCA Portal (Ministry of Corporate Affairs) . i . f. List of Directors as downloaded dated 29.03.2013 from site of MCA Portal g. Reply u/ s 133(6) ot.i.T. Act, IVbl belore 11 U-l^ h. Bank statement of Current Account No.191010200006606 with Axis Bank, Mansha Bari, P 249, Lake Town, Block B, Kolkata- 700089 reflecting withdrawal i.- Directors Report to share holders for the year ending 31.03.2010 j. Auditors Report, dated. 25.08.2010 by V.M.D. & Associates, Chartered Accountants, Kolkata. k. Balance Sheet and Profit and Loss Account and Annexures/Schedules for the year ending 31.03.2010 .l. Memorandum and Articles of Association . m. Certificate of Registration with Reserve Bank of India No. B.05.05854 dated 14.10.2003 n. Reply to notice u/s 131 from DDFT (Inv.), Kolkata including explanation for the source of investment dated 25,03.2013 Similar details have....
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....0,00,000 The source of fund was out of share sale money received from Prime Commodeal Pvt. Ltd. of Rs.6,00,000/- vide cheque no.139459 dated 21.05.2009, share sale money received fromSpandan Vanijya Pvt. Ltd. of Rs.3,00,000/- vide cheque no.255938 dated 21.05.2009, share sale money received from Vibgyor Vinimay Pvt. Ltd. of Rs.1,00,000/- vide cheque no.258660 dated 21.05.2009 and loan refund from Crown Infrastructures Pvt. Ltd. of Rs.10,00,000/- vide cheque no.281303 dated 29.05.2009. 8. M/s Ranisati Stockist (P) -Ltd., 10000 10,00,000 The source of fund was out of share sale money received from Pearl Dealer Pvt. Ltd. of Rs.20,00,000/- vide cheque no.172063 dated 21.01.2010, Ranisati Stockist Pvt. Ltd. has amalgamated with M/s Motorex Finance pvt. Ltd. as per the order passed by the Hon'ble Calcutta High Court 9. M/s Topline Finvest (P) Ltd.. 35000 5,00,000 The amount of such share investment was as under: Cheque no./dated Nature of receipts Party Amount 281860/25.05.2009 Share Sale Vidhata Housing Pvt. Ltd. 15,00,000/- 256370/25.05.2009 Share Sale Riddhi Siddhi Deacom Pvt. Ltd. 5,00,000/- 271697....
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....ssed c. They are holding valid .bank accounts. d. The notices issued to these companies by the AO u/s 133(6) have been duly complied with. e. The summons issued u/s 131 by the ADIT(Inv.), Kolkata have duly been served on the share applicant companies at their registered offices and complied with. In view of above the AO is not justified in observing that the identity of the company is not established. The shareholding companies filed their balance sheets, bank statements and also explained the source of fund invested as share capital by providing details of deposit/ credit entries in the bank account just before the amount was transferred to the appellant company which proves their credit worthiness. Also the transactions have been made through normal banking channels. and statements of the bank accounts of the share applicants have been duly filed before the AO. The conclusion of the AO that the amount credited in the bank account was routed as share investment the next day through RTGS/ cheques to give it a legal character is not justified as the inference drawn by the AO is not based on any material evidence. The appellant company has fully discharged the onus in respect....
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....gned order passed by Tribunal did not require any interference - Held, yes [Para 9] e. CIT v. Vacmet Packaging India Private Limited [2014] 367 ITR 217 (All.) The Assessing Officer, in the course of an order of assessment under section 153A of the Income Tax Act, 1961, made an addition under section 68 an amount ofRs.8.50 crores which was received by the assessee as share application money from a company. The Commissioner (Appeal) deleted the addition which was primarily based on a black diary impounded during the course of an income-tax survey. This was confirmed by the Tribunal. The Tribunal observed that the assessee had filed documentary evidence in order to prove the. genuineness of the share application money consisting of; (i) share application forms; (ii) copies of bank accounts of the share applicants; (Hi) copies of the income tax returns of the share allottees; (iv) balance sheets and; (v) copies of share allotment certificates and of the board's resolution of the share applicants. The identity of the applicants was held to be established by the production of copies of their PAN cards and -certificates of registration with the Registrar of Companies. Their finan....
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....6 relates to charging of interest u/s 234A, 234B, 234C and 234D of the Act. Charging of interest is mandatory but the AO is directed to allow consequential relief. Ground no. 7 relates to initiation of penalty proceedings u/s 271(l)(c) of the Act. The same, being premature is dismissed. 6. In the result, the appeal is partly allowed as discussed above. 7. Aggrieved the Revenue has placed reliance upon the order of the AO whereas the Ld. Counsel for the assessee has contended that the assessee has placed all relevant evidence to prove the genuineness of transaction, identity and creditworthiness of the shareholders. Under these circumstances, the investment in shares should not be doubted. He has also placed reliance in support of his contention of the Judgment of the Hon'ble Apex Court in the case of CIT Vs. Jaydeep Securities and Finance Ltd. reported in 350 ITR 220 (All.), CIT Vs. Misra Preservers (P.) Ltd. reported in 350 ITR 222 (All.). 8. Having carefully examined the orders of the lower authorities and in the light of rival submission, we find that during the course of assessment proceeding, complete details were not available with the Assessing Officer and ....