TaxTMI 
TaxTMI 
2017 (3) TMI 1566
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....evident that this is second round of proceedings qua the abovestated sole issue in tribunal. The assessee company manufactures iron & steel items like beams, channels, rounds and angles etc. It received promoter quota contribution of Rs. 1,07,35,900/- from 189 applicants in assessment year 1996-97. The Assessing Officer sought to know about details, confirmations, PANs, source of money received in abovestated share applications. The assessee appears to have produced photocopies of the said 189 applicants followed by confirmation letters, PANs as well as income tax assessment particulars pertaining to eighteen parties qua share capital of Rs. 60.43lacs. It further placed on record 26 applicants' confirmations involving share capital amount of Rs. 16,82,900/- without any proof of identity as well as genuineness/creditworthiness thereof. It however did not file any evidence of the remaining 145 parties involving share capital of Rs. 30,10,000/-. These parties' particulars revealed the following details: i) Cheques drawn on the Gujarat State Co.op. Bank Ltd., Ahmedabad Sr. No. Name Cheque No. date. Amount. 01 Ganapatbhai A Patel 689702 ....
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....patbhai M. Patel 689773 28.6.95 25000 At Nana Ankevaliya, SNR Ghanpatbhai Patel 689774 28.6.95 25000 At Nana Ankevaliya, SNR Prahladbhai M. Patel 689775 28.6.95 25000 At Nana Ankevaliya, SNR Baldevbhai G. Patel 689776 28.6.95 25000 At Nana Ankevaliya, SNR Hargovindbhai C. Patel 689777 28.6.95 25000 At Nana Ankevaliya, SNR Total 800000 ii) State Bank of India Name Cheque No. Date Amt. Rs. Address Mansingh Jumbhai Solanki 271459 19.1.96 49000 P.O. Hadala T.A.Limbdi Surendranagar. ubhai Jembhai Solanki 271460 19.1.96 49000 P.O. Hadala Dist.A'bad Dhanduka. vantsig Khumansing 271461 19.1.96 49000 T.A. Dhanduka, Dist.A'bad P.O. Hadala. ansingh Jembhai Solanki 271462 19.1.96 28000 ----do----- ubhai Jembhai Solanki 271463 19.1.96 25000 T.A. Dhanduka, Dist.A'bad. bhaybhai L. Badaresh 562111 15.11.95 35000 Mohankunj Hatkeshwar Mahadev. bhubhai L. Patel 562112 15.11.95 15000 Mohankunj Soc. Ha....
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....es had obtained demand drafts in view of cash payments in assessee's name, relevant twelve application slips' signatures incorporated differed from those in share application forms as well as the fact that one person Shri Rameshbhai had put in his signatures on eight of them. The Assessing Officer took cognizance of the fact that the said 32 applications had also not been submitted. He thus inferred that only one person had handed over total amount to the above stated banker for preparing demand drafts in different names. He further noticed the fact that the assessee's above applicant had been residing in different parts of state whereas they had got prepared their demand drafts at Wadhawan city branch of the Surendranagar District Cooperative bank only on specific day and time well in order to submit share applications in question. 5. The Assessing Officer thereafter prepared three categories of assessee's 189 share applicants. First one pertained to 18 share applicants involving a sum of Rs. 60.43lacs hereinabove whose all the relevant details stood duly filed. He accepted assessee's explanation since supported by relevant PAN and income tax assessment details. He however invo....
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....l bench of Delhi High Court in the case of Sofia Finance Ltd. reported in 205 ITR 98 and the decision of the Hon'ble Supreme Court in the case of CIT vs. Stellar Investment Ltd. Reported in 164 CTR 287. Most respectfully following the decision of the Hon'ble Supreme Court in the case of CIT vs. Stellar Investment Ltd. (supra). In which it has been held by the hon'ble Supreme Court while affirming the decision of the Delhi High Court in the case of same assessee that, inter-alia, even if the subscribers to the share capital of the company are not found to be genuine, the amount could not be regarded as undisclosed income of the assessee company. Accordingly, the additions of Rs. 46,92,900/- and Rs. 2,80,17,600/- made u/s. 68 of Income-tax Act, 1961 for assessment years 1996-97 and 1997-98 respectively on account of unexplained share capital is deleted." 8. The Revenue filed its appeals ITA Nos. 1557 & 1559/Ahd/2001 before this tribunal. A co-ordinate bench in its common order dated 15.02.2008 restored the issue back to the Assessing Officer on the ground that the assessee had submitted the relevant details only in course of proceedings before the CIT(A) for the first time so far ....
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....e CIT(A) regarding the list of shareholders up to allotment appearing at pages 1 to 178 of the paper book. These details were filed for the first time before the CIT(A). On this basis the Tribunal observed that since the verification of these documents are required to adjudicate the issues, in the interest of justice and fair play to both the parties, the assessment orders were set aside and direction was given to the Assessing Officer to make fresh assessments after considering all the submissions as well as the documents which the assessee may submit before him. 5. The very premises or foundation on the basis of which the Tribunal has passed the order, seems to be erroneous, as the list of shareholders up to allotment appearing at pages 1 to 178 of the paper book was filed before the AO and it was not filed before the CIT(A) for the first time. These details were very much before the AO and he has passed the order considering the said details. Hence the Tribunal has erred in making this observation and after making such observations, set aside the assessment. Normally the Court would not have interfered in the order setting aside the assessment. However, looking to the f....
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....sessee, in accordance with law and in accordance with the Hon'ble Apex Court's decisions The High Court has referred to the decisions in the cases of Commissioner of Income-tax Vs. Steller Investment Ltd, (2001) 251 ITR 263 and the Commissioner of Income- tax v. M/S. Lovely Export (Pvt.) Limited passed by the Apex Court on 11-1-2008 in Special Leave to Appeal (C) No. 11993 of 2007. 11.1. It is seen that CIT(A) I, Ahmadabad deciding the original appeal has held in his order dated 3-4-2001 as under- "It is seen from the records available that the identity and existence of the various shareholders are proved and is also not disputed by the Assessing officer. The assessing officer has not made out any case to support the addition except observing that the appellant has not proved the genuineness of the shareholders and their capacity to bring the amount for applying in the shares of the company. It is a/so not the A.O.'s case that the appellant has earned such huge income during the year in question to enable the company to invest such funds in the share capital in name of benamidars especially considering the fact that no business activity has been carried out by ....
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....atters relating to the share application money, irrespective of any consideration to the fact that the company was a new company in those years, which had not even commenced the manufacturing activity. There appears to be an approach of 'erring on the safe side' on the part of the A.O. 11.3. Although the assessments were set aside by the ITAT in the year 2008, it would appear from the assessment order that the hearing in this case was taken up only in the second half of 2009 and the assessments were to be finalized before 31- 12-2009. Against this background, the following remarks of the A.O. about the socalled random verification of the shareholders are not justifiable in the facts and circumstances of the case. It is seen that the AO has not made his case of bogus creditors as he has not enquired the creditors and come to the conclusion without any concrete findings. It can be- said that the AO has. not made the desired effort to enquire the creditors as directed by the higher appellate authorities. The AO has also not discussed and also not applied/discussed the decision of Apex Court in the case of CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195, which ....
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....pendency of assessee's Tax Appeals, their lordships did not reverse the above assessments. Hon'ble jurisdictional high court rather directed the CIT(A) to decide assessee's appeals preferred against the consequential assessments in question. We thus observe that the consequential assessment in question stand very well validated even in hon'ble jurisdictional high court's order. 13. The next contention raised between the parties is on merits. Learned counsel representing assessee strongly supports CIT(A)'s common order under challenge deleting the addition in question of unexplained share application money. We deem it appropriate to re-assimilate relevant facts. The assessee has declared to have received share application money in question from total 189 applicants in former assessment year. There is no dispute about 18 of them qua share application amount of Rs. 60.43 lacs as all the relevant details of these 18 parties in the nature of PAN nos. and assessment records stood very well proved. The dispute in the instant case rather pertains to the remaining 171 share applicants. It has come on record that the assessee has failed to file their relevant details in both rounds of ass....