TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 364
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....nufacturing and trading of transformers. The assessee filed its return of income on 30/09/2008 declaring total income of Rs. 6,34,790/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). All the grounds of the revenue are against deleting the addition of Rs. 2.16 crores made U/s 68 of the Act considering the affidavits and not discharging the burden casted on the assessee. The ld Assessing Officer observed that the assessee had introduced fresh cash capital of Rs. 6,11,50,000/- in three different heads, Rs. 80,00,000/- as unsecured loan, Rs. 2,25,00,000/- in Reserve and Surplus and Rs. 3,06,50,000/- as share application money. A letter was sent to ADIT(Inv.), Unit-3(III), Kolkata to verify the source of cash capital introduction in the case of assessee during the F.Y. 2007-08. The ld Assessing Officer got the interim report from ADIT, Kolkata, which was received on 14/12/2010 in the office. According to the report in nine cases, copies were returned back. Departmental Inspectors were deputed to ascertain the existence of 9 concerns. They were also could not ascertain the existence of these companies at their respective given addresses. The notices ....
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....t is clear from the report sent by the ADIT that as per new addresses provided by the ACIT, Circle-7, Jaipur inquiry were also made by deputing departmental inspectors to verify the existence of the concerns but they could not find out any business activities done by these concerns. So she held that there is a reason to add back whole amount received from 9 companies, which are not traceable. She further held that in case of some companies, investment fund was unexplained. The creditworthiness of the creditors had not been proved. She also considered the case laws cited by the assessee but which were found distinguishable. Accordingly, the ld Assessing Officer made addition of Rs. 2.16 crores U/s 68 of the Act. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing as under:- "2.3. I have carefully examined contents of the 'Interim Report' dated 14/12/2010, of ADI (Inv.) Kolkata, which has formed the sole basis of the given by the AO in the impugned assessment order, viz. the issues under consideration and also the detailed counter submissions made by the Ld. AR in this regard. From ....
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....rations should be considered as proper and genuine u/s. 68 of the IT Act. In the light of the above factual and legal positions, I tent to agree with the Ld. AR that as far as appellant is concerned they have discharge their legal obligation u/s. 68 by filing all the possible evidences and statutory documents, as discussed above. The AO has simply followed the 'Interim Report' of the ADI, which itself is found of non conclusive and half cooked in nature, being not a final report as such. Moreover,- the non availability aspect, i.r.o,, to cash creditors is concerned, in my opinion the ADI report is not very clear about the exact reason and the follow-up action taken in this regard, specially when theses parties are not only assessed to tax but filed the returns for the relevant period also. In the light of the voluminous documentary evidences, it would be rather difficult to understand and appreciate the findings given by the ADI in this regard. Moreover in the case of M/s. -Garu Kripa Projects P. Ltd., since the concerned person as appeared and submitted the relevant documents and confirm the loans transaction, in the light of settled legal position they are not supported to exp....
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...., the appellant has submitted confirmations, affidavits, PAN No., copy of relevant returns of income, bank statements of relevant period and complete address of such companies alongwith the R.O.C. papers also. Here the ratios upheld by various courts, including the Hon'ble Supreme Court in the case of M/s. Lovely Export Pvt. Ltd. 216 CTR 195 and M/s. Stellar Investment Ltd. 251 ITR 463, are found quite relevant and applicable, as found dealt with the issue, similar to the present appellate proceedings also. In the above decision, the Hon'ble Apex Court has categorically held that even if the share application money has been received from so- called bogus share holders, whose identity have been given and proved, under no circumstances such share capital can be regarded as undisclosed income of the company. In the present case the appellant has given sufficient documentary evidences in the form of confirmation, affidavit, PAN No., copy of return of income, R.O.C. paper showing existence and addresses of investing company etc., to establish the identity and genuineness of such companies, as such. In the light of the above decisions and also such voluminous and statutory evidences s....
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....lant also, it is evident that the AO has failed to make out any reasonable and proper case u/s. 68 of the Act towards share capital money and cash credits received by the appellant, by refuting the documentary evidences submitted in these regards. On the other hand, it is felt that the AO has also simply rejected the voluminous supporting evidences of the appellant in a cryptic and summary manner in the impugned assessment order, which cannot be upheld, under the given circumstances. Accordingly the entire addition of Rs. 2.16 crores made u/s. 68 of IT Act is hereby deleted. Consequently this ground of appeal is upheld. 4. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer and argued that the assessee had not proved the identity, genuineness and creditworthiness of the creditors. The ld Assessing Officer had enquired through ADIT, Kolkata and came to conclusion that loan transaction had not proved as per the provisions of Section 68 of the Act. The ld CIT(A) had deleted the addition without satisfying all three basic ingredients i.e. identity, capacity and genuineness of the transaction. He simply relied on the decision o....
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.... Ors. Vs. CIT (SC) 49 ITR 112 xii. CIT Vs. Precision Finance P. Ltd. (Cal) 208 ITR 465 xiii. K.C.N. Chandrasekhar Vs. ACIT (ITAT, Bang) 66 TTJ 355 xiv. CIT Vs. United Commercial & Industrial Co. (P) Ltd. (Cal) 187 ITR 596. xv. CIT Vs. Sophia Finance Limited (Del) 205 ITR 98 xvi. CIT Vs. Active Traders P. Ltd. (Cal) 214 ITR 583 xvii CIT Vs. Nivedan Vaniya Niyojan Ltd. (Cal) 263 ITR 623 xviii. CIT Vs. Bhagwati Jewels Ltd. (Del) 201 ITR 461 xix. CIT Vs. Rathi Finlease Ltd. (MP) 215 CTR 429 xx. ACIT Vs. Dhanlaxmi Steel Re-rolling Mills (ITAT, Hyd) 57 ITD 361. xxi. Pradip Kumar Loyalka Vs. ITO (ITAT, Pat-TM) 63 ITD 87. Therefore, order of the Assessing Officer may please be confirmed. 5. At the outset, the ld AR of the assessee has reiterated the arguments made before the ld CIT(A). The ld Assessing Officer accepted the share capital receipt from all the parties to be genuine. However, he did not accept the corresponding share premium amount to be genuine. The details are as under:- Image No. 1 Share application money received by the assessee company through proper channel amounting to Rs. 10 lacs, which was subsequently returned back through banking channel. He ....
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....cmet Packaging (India) (P) Ltd. (2014) 367 ITR 217 (All). (ii) CIT Vs Pranav Foundations Ltd. (2014) 51 Taxmann.com 198 (Mad). (iii) CIT Vs Vrindavan Farms (P) Ltd. ITA No. 71/2015 Delhi High Court. (iv) CIT Vs Som Tobacco India Ltd. (2014) 42 taxmann.com 310 (All). (v) Fair Finvest Ltd. (2013) 357 ITR 146 (Delhi). (vi) CIT Vs Morani Automotives (P) Ltd. (2014) 264 CTR 86 (Raj.) (vii) CIT Vs First Point Finance Ltd. (2006) 286 ITR 477 (Raj.). (viii) CIT Vs Supertech Diamond Tools (P) Ltd. (2014) 44 taxmann.com 460 (Raj). (ix) M/s Bells Paper Board (P) Ltd. ITA No. 575/JP/2011, M/s Misty Meadows (P) Ltd. ITA No. 422/JP/2012. (x) Shree Markha Synthetics Ltd. (2006) 155 Taxman 289 (Raj.) 5.1 The ld AR further argued that when the identity has been established by the assessee, there is no need to establish the source of money infused by the creditors, for which he relied on the following decisions: (i) KanhaialalJangid v Asst. CIT (2008) 217 CTR (Raj) 354. (ii) Aravali Trading Co v ITO (2008) 220CTR (Raj) 622 (iii) Labh Chand Bohra v ITO (2010) 189 Taxman 141 (Raj) (iv) CIT vs. Jay Dee Securities & Finance Ltd.(2013) 350 ITR 220 (ALL.) It is further argued t....