TaxTMI 
TaxTMI 
2016 (1) TMI 31
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....eting the addition of Rs. 50,00,000/- made by the AO u/s. 68 of the Income tax Act, 1961 on account of bogus share application money/share premium received by the assessee company. 2. In this appeal, the only issue pertains to deletion of addition of Rs.50,00,000/- made by the Assessing Officer u/s. 68 on account of bogus share application money received by the assessee. In the assessment proceedings, the AO on perusal of balance sheet found that the assessee company has received share application money to the tune of Rs. 50,00,000/- from certain companies on premium of Rs. 90/- each for per share of Rs.l 0/-, the details of which are given para 5 of the assessment order. The Assessing Officer after considering the reply of show cause no....
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.... investigation wing of Kolkata was not confronted to the assessee during the assessment proceedings. The other argument of the assessee is that while the AO has mentioned about certain facts and proceedings conducted by the Investigation Wing of the Income Tax Department after the search as per the AO shows that the investor companies are non-genuine entities but the case of the appeal is that the result of these proceedings were never specifically confronted to the assessee company during the assessment proceedings. The appellant has further stated in its submissions that the action of the AO to treat these share holder companies as non-existent is arbitrary and is based on surmises and conjectures and is contradictory to the facts o....
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....ned shares totaling 50,000 were allotted. g. Copy of annual return to ROC for F.Y. 2005-06 filed on 25.01.07 evidencing the fact of the names of shareholders appearing in the members register of the appellant company. h. Present active status of the investor company as downloaded the website of Ministry of Corporate Affairs i. Copy of share certificates issued to the share applicant companies, bearing their folio no. & distinctive numbers. Thus from the above details and placing reliance on the latest decisions of jurisdictional High court in the cases of Dwarkadhish Investment P. Ltd. 2010 Indlaw Del 1969, CIT vs. Gangour Investment Ltd. 18 DTR 242 & CIT vs. Oasis Hospitality Private Limited in ITA No. 2093 of 2010 (supra) and ....
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.... in case of CIT vs. Divine Leasing and Finance Ltd (207 CTR 38), which has been quoted with approval in the case of Dwarkadhish Investment (supra) are also quite relevant viz. "In this analysis, a distillation of the precedents yields the following propositions of law in the context of s. 68 of the IT Act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber. (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber; (4) if relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders r....
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....ew of the fact that the assessee had filed on record the several documents to substantiate the fact of investment through share application money by the investor companies, it was now for the AO to have enforced the attendance of the Director's concerned for making further investigation in the case. This could have been done by issuance of summons under the Act. On the issue of the initial burden of proof the observation of the jurisdictional High court in the case of Dwarkadhish Investment (supra) made in para 8 thereto is also relevant which is as under: "In any matter, the onus of proof is not a static one. Though in section 68 proceedings, the initial burden of proof lies on the assessee yet once he proves the identity of the cre....
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....ct of abnormal premium the very basis for making addition u/s. 68 In view of all the above discussion taken in totality and respectfully following the ratio of decision of jurisdictional high court and the Hon'ble Supreme Court in CIT vs. Lovely Export P. Ltd. 216 CTR 195(supra) as also the latest judgment of Dwarkadhish Investments (P) Ltd. 2010-TIOL- 617-HS-DEL-IT, CIT vs. Gangour Investment Ltd. 18 DTR 242 (Del) & CIT vs. Oasis Hospitality Private Limited in ITA No. 2093 of 2010, the addition made for Rs. 50,00,000/- is directed to be deleted. 3. The learned DR relied upon the order of the Assessing Officer and submitted that the ld. CIT(A) is not justified in deleting the addition made by the AO in the facts and circumstances of t....