TaxTMI 
TaxTMI 
2014 (1) TMI 1767
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.... had PAN; was regularly filing returns of income and assessed; had bank account and remitted through banking channel; had confirmed independently to the learned Assessing Officer and had provided relevant material; was issued share certificates whereby identity, genuineness and credit worthiness was fully established. 1.1. That the learned lower authorities erred in drawing adverse inference on account of filing of nil income return by the shareholder and I.P. address. 1.2. That summons having been also served by the Assistant Commissioner of Income-tax, New Delhi, non-appearance could not be used adversely against the appellant. 2. That the learned lower authorities grossly erred in holding remittance of Rs. 10 Lacs by M/s. Sky Web (India) Ltd., Delhi for share application as unexplained and income u/s. 68 of the appellant Company, when the applicant Company was incorporated on 6.8.1997, is in existence till date; had PAN; was regularly filing returns of income and assessed; had bank account and remitted through banking channel; had confirmed independently to the learned Assessing Officer and had provided relevant material; was issued share certificates whereby identity, genu....
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....e as well as the owner admitting rented to Shri Rajneesh Jain. 5. That the learned lower authorities grossly erred in holding remittance of Rs. 25 Lacs by M/s. Natraj Agrotech Pvt.Ltd., Delhi for share application, as unexplained and incomeu/s.68of the appellant Company, when the applicant Company was incorporated on 24.9.2008, is in existence till date; had PAN; was regularly filing returns of income and assessed; had bank account and remitted through banking channel; had confirmed independently to the learned Assessing Officer and had provided relevant material; was issued share certificates whereby identity, genuineness and creditworthiness was fully established. 5.1. That the learned lower authorities erred in drawing adverse inference on account of filing of nil income return by the shareholder and I.P. address, audit report not filed despite service on the shareholder, etc. 5.2 That the learned lower authorities erred in drawing adverse inference on account of summons sent by the Assistant Commissioner of Income-tax, New Delhi remaining unserved with the remarks "left". It clearly shows the shareholder existed. 6. That the learned lower authorities grossly erred in holding....
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....g passed special resolution, took decision to allot, allotted, issued certificates and filed requisite forms to the Registrar of Companies in-accordance with law. No default was noticed. 8.1. That the learned Commissioner of Income-tax(Appeals) erred in holding against, for non-pursuance production of the principal officers of the 7 companies, when their identity was established and when the said companies independently responded and confirmed the share application money and the allotment. 8.2. That the learned Commissioner of Income-tax(Appeals) erred in drawing inference on the basis of part of the cross- examination of Shri Pramod Jain, declaring his affidavit as unbelievable self serving statement and ignoring the material document. 8.3. That the learned Commissioner of Income-tax(Appeals) grossly erred in holding the impugned share application money of Rs. 2.5 Crores as unexplained income of the appellant company when admittedly by no indiscriminating document or record or material was found in survey; the Revenue failed to find any undisclosed income or source of additional income of the appellant company and utterly failed to prove "assessee's own money" as required b....
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....ated to addition on account of disallowance of share application money is involved in this case and all the grounds in respect of the same and sole issue . The facts apropos to the impugned issue are that survey u/s 133A of the Act was carried out in the business premises of M/s. ARL Infratech Ltd., Jaipur on 18-07-2011. The assessee company is engaged in the business of manufacturing of AC Pressures Pipes and AC Sheets Shri GRP Pipes. During the course of survey, the statement of Shri Pramod Jain, director of the company, was recorded. In answer to Question No. 15 and 16,, he stated that the assessee received bogus share application money of Rs. 2.50 crores from seven companies during the financial year 2008-09. All these details of the money received as share application money are as under:- S.N. Name and address of applicant Company IT PAN company Registration Amount Rs. Date 1. M/s. Interior Soft Solution (P) Ltd. 2087/7B-3, Gali No. 11, Prem Nagar, New Delhi-11008 U72200DL2009 PTC 186854 AAC10197H 25 lacs 20-03-2009 2. M/s. Radha Madav Agrotech (P) Ltd. B- 65/156, Gali No. 5, Guru Nanak Pura, Delhi-110092 U0140....
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....s. Hence, as requested the so called statements of Shri Pramod Jain is no material and deserves to be excluded from assessment record of the asssessee company. 2.1 That if still your honour want to rely upon the so called statement of Shri Pramod Jain, you are very kindly requested to produce Shri Pramod Jain for our cross examination. We submit any statement recorded on the back of the assessee cannot be used against the assessee. Such user shall be in violation of principles of natural justice. 3. That in the said reply dated 29/08/2011 vide para-6, it has been stated:(i)the assessee company received share application money from the stated companies by account payee cheque; (ii) each one of the said company is duly registered under the Companies Act and maintain regular and proper books of account duly audited by Statutory Auditors; (iii)each one of the applicant has remitted share application money voluntarily by cheque duly collected by the assessee company through its bank account;(iv)each one of the applicant is an existing income tax assessee and holds permanent account number ; and (v) the assessee company has been given to understand that each one of the applicant compa....
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.... the burden that lay on it. 6.1 That in similar circumstance , the Hon'ble Rajasthan High Court, the Jurisdictional High Court, in the following case dismissed appeal of the Revenue. (i) CIT v. Shree Barkha Synthetics Ltd. (2004) 270 ITR 477(Raj.)- In the said case 6 out of 7 companies had furnished GIR/PAN and confirmations about their investments. Regarding individual investors, 9 out of 10 had confirmed the fact of making investments in the shares of the assessee and they were income tax assesses and the mode of receipt had been through banking channels. It applied the case of Orissa Corporation (P) Limited (supra). (ii) Shree Barkha Synthetics Ltd. v/s Asstt. CIT (2006) 283 ITR 377 (Rajasthan)- If the transactions are made through banking channels and once the existence of persons by name in the share applications in whose name the shares have been issued is shown, the assessee company cannot be held responsible to prove whether that person himself has invested the said money or some other person had made investment in the nature of that person. The burden then shifts on the Revenue to establish that such investment has come from the assessee company itself. It followe....
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...., the assessee went in appeal in first appeal and the ld. CIT(A) also followed the suit and confirmed this addition. 2.4 Before us, both the parties have reiterated their earlier stands. 2.5 Before, we proceed to decide the issue on merits, we would like to discuss the scheme of the Act and precedents on the issue involved in this appeal as under:- ''In cases where share application money is found recorded in the books of an assessee which may represent credit in the books and the share applicant is identified, that amount cannot be added in the assessee's hands u/s 68 of the Act. The Hon'ble Rajasthan High Court has repeatedly reiterated the above legal position. These cases are: (i) CIT vs. Shree Barkha Synthetics Ltd. 182 CTR 175 (Raj.) (ii) Barkha Synthetics Ltd. vs. ACIT (2005), 197 CTR 432 (Raj. In coming to the above conclusion, the Hon'ble Jurisdictional High Court has considered at length the relevant decisions on the issue like CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 = 251 ITR 263 (SC) which has confirmed the decision of Hon'ble Delhi High Court reported in (1992) 192 ITR 287. The Hon'ble Court has gone to the extent of st....