TaxTMI 
TaxTMI 
2016 (2) TMI 742
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.... 'Act'). 2. The only issue to be decided in this appeal is as to whether an addition could be made u/s 68 of the Act in the hands of the assessee company with regard to receipt of equity share capital , preference share capital and preference share application money totaling to Rs. 60,00,000/- during the year in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is a public limited company incorporated on 2.1.2007 and accordingly the Asst Year 2007-08 is the first year of assessee and is engaged in the business of poultry farming and other allied business. During the asst year under appeal, the assessee raised the following share capital :- a) 100000 Equity shares of Rs. 10 each from totally s....
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....e assessee had received sum of Rs. 25,00,000/- from 837 persons in cash to whom preference shares were allotted by the assessee. On obtaining the details of the names and addresses of the share applicants, the Learned AO sought to obtain information u/s 133(6) of the Act from Bishnupada Sarkar, Nirmal Patra, Lipika Pati and Nagendra Nath Pramanik. He found that the reply was received from Nagendra Nath Pramanik stating that he had subscribed to preference share capital to the tune of Rs. 10,000/- with the assessee company but did not produce any evidence regarding the source of fund. In respect of Bishnupada Sarkar, Nirmal Patra and Lipika Pati, the notices were returned unserved by the postal department. The assessee furnished copies of co....
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....ess of transactions and brought the advance towards preference share capital as unexplained cash credit u/s 68 of the Act. 4. On first appeal, the assessee stated that all the details of share applicants have been produced before the Learned AO. The assessee stated that it is engaged in agro based industry and almost all the share subscribers are residing in rural areas and having agricultural income and are agriculturists who do not have taxable income. The assessee further stated in response to notices u/s 133(6) of the Act, share applicants who received the notices in time, replied to the Learned AO confirming the contributions made by them, towards equity or preference share capital or advance towards preference share capital. In some ....
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....d that the Learned AO has added the entire share capital and advance preference share capital by issuing letters to only few of the share subscribers out of the large number of them. The Learned CIT(A) duly appreciated the contentions of the assessee and also relied on the decision of Hon'ble Apex Court in the case of CIT vs Lovely Exports Pvt Ltd reported in 216 CTR 195 (SC) and accordingly deleted the additions u/s 68 of the Act. Aggrieved, the revenue is in appeal before us on the following grounds:- "1. On the facts and in the circumstances of the case ld. CIT(A) has erred in deleting the addition of Rs. 10/- lakh on account of share capital though genuineness and creditworthiness of transactions could not be proved by the assessee. ....
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....nce placed by the Learned CITA on the decision of the Hon'ble Apex Court in the case of CIT vs Lovely Exports (P) Ltd reported in (2008) 216 CTR 195 (SC) is very well founded, wherein, it has been very clearly held that the only obligation of the company receiving the share application money is to prove the existence of the shareholders and for which the assessee had discharged the onus of proving their existence and also the source of share application money received. 6.1. We also find that the impugned issue is also covered by the decision of Hon'ble Calcutta High Court in the case of CIT vs Roseberry Mercantile (P) Ltd in GA No. 3296 of 2010 ITAT No. 241 of 2010 dated 10.1.2011, wherein the questions raised before their lordships and de....