TaxTMI 
TaxTMI 
2017 (11) TMI 1546
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....The CIT(A) vide order dated 21st May 2014, after examination of the assessee's explanation and evidences deleted the above addition. 3. Aggrieved by the order of the CIT(A), the Revenue is in appeal before us and has raised the following grounds of appeal: "1. On the facts and the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,15,00,000/- made on account of unexplained share application money by ignoring the fact that the assessee has failed to conclusively prove the genuineness of the transactions before the AO. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 4. It was contended by the learned DR that CIT(A) was not justified in deleting the addition made by the Assessing Officer. It was submitted that the learned AO has given a detailed reasoning for making these additions under Section 68 of the Income Tax Act. It is a case where share capital has been received by the company from the person who do not have much income. In the absence of substantial income, AO was justified in drawing adverse inference agains....
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....tatement of Mr. Jitendra Yadav was also recorded by the AO during the course of assessment placed at PB. Pg. 223-227, where Mr. Jitendra Yadav has confirmed of having given the above said amount to the assessee company. Thus, there was a direct confirmation by the shareholder / Director before the AO along with the source of source. Further, assessment of Mr. Jitendra Yadav of the year under consideration has been completed under Section 143(3) vide order dated 28th march 2013 placed at PB. Pg. 219-221 and no adverse inference has been drawn in respect of the investment made by Mr. Jitendra Yadav in the assessee company. 7. In respect of sum of Rs. 1,50,00,000/- from Anjaney Steels Pvt. Ltd. for which addition has been made in the hands of the assessee company, it was submitted that this is a group company. This company has contributed Rs. 9,22,31,000/- to the assessee company as is evident from page 106 of the Paper Book. The total investment by this company in the assessee company was of Rs. 11,44,31,000/-. This investment has been shown by this company in its balance sheet as is appearing at PB. Pg. 118. The amount has been paid through the bank account which is at page 123. Th....
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....with documentary evidences despite the fact that the assessee is not required to prove source of source. Reliance was placed on the recent judgment of ITAT Delhi in the case of Craftpac Containers P Ltd Vs ITO ITA No. 547/Del/2017 dated 28.8.2017 where in it has been held that : "The addition cannot be made in the hands of the assessee for not proving the source of source of investment and the assessee is not required to prove that the sub creditor had the creditworthiness of making the investment. 10. In the case of Nemi Chand Kothari Vs. CIT 264 ITR 254, the Hon'ble High Court held as under:- "Keeping in view the above position of law, when we turn to the factual matrix of the present case, we find that so far as the appellant is concerned, he has established the identity of the creditors, namely, Nemichand Nahata and Sons (HUF) and Pawan Kumar Agarwalla. The appellant had also shown, in accordance with the burden, which rested on him under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors aforementioned. In fact, the fact that the assessee had received the said amounts by way of cheques was not in dis....
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....ntry, though purporting to be in the name of the third party, still represented the income of the assessee from a suppressed source. And, in order to arrive at such a conclusion, even the department has to be in possession of sufficient and adequate materials. The Income Tax Officer's rejection, not of the explanation of the assessee, but of the explanation regarding the source of income of the depositors, could not by itself lead to any inference regarding the non-genuine or fictitious character of the entries in the assessee's book of account". 12. In view of the above judicial pronouncements, the grounds raised by the appellant company are allowed." 10. The learned AR, further placed reliance on the following judgements in support of its contention: i. CIT vs. Shiv Dhooti Pearls & Investments Ltd. (ITA No. 429/2003 dated 21.12.2015) ii. CIT vs. Real Time Marketing (P) Ltd. 306 ITR 35 (Del.) iii. Commissioner of Income-tax Versus Diamond Products Ltd.2008 (9) TMI 943 - DELHI HIGH COURT iv. Addl. CIT Bihar vs Hanuman Agarwal (1985) 151 ITR 151 (Patna High Court) v. Jalan Timber vs CIT (1997) 223 ITR 11 (Gauhati H.C.) 11. It was submitted that in view of the above f....
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.... into consideration the entire circumstances of the case, we are satisfied that there was no material on which the ITO could come to the conclusion that the firm was not genuine. There were many surmises and conjectures, and the conclusion was the result of suspicion which could not take the place of proof in these matters. The result was that the order of the Tribunal was reversed." 13. The learned AR further placed reliance on the following judgments: "1. Pr. CIT vs. Rakam Money Matter Pvt. Ltd. in ITA No. 778/2015 dated 13.10.2015 - Delhi HC "13. It is not in dispute that extensive material was produced by the Assessee in the present case to prove the identity, genuineness and creditworthiness of the companies who had subscribed to its shares. Among the materials produced were the Income Tax Returns and the PAN card details of the eight companies. Even if the Directors of these companies did not respond to the summons issued by the AO, it was not impossible for the AO to make proper enquiries to ascertain the genuineness of these entities and satisfy himself of their creditworthiness. As pointed out by the CIT(A), the AO failed to make any effort in that direction. He....
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....t and it will be open to the Revenue to move against the share applicants in accordance with law. 5. In the facts and circumstances of the present appeals, the Court is satisfied that no substantial question of law arises. The appeals are dismissed. 4. ITAT Delhi in the case of ITO v. Softline Creations (P.) Ltd. in ITA No. 744/Del/2012 dated 10.02.2015, which has been further upheld by the Hon'ble Jurisdictional High Court in ITA No. 504/2016 dated 31.08.2016 5. CIT vs. Gangeshwari Metal (P) Ltd. (2014) 361 ITR 10 (Del) 6. M/s Best Infrastructure (India) Pvt. Ltd. in ITA No. 1705/Del/2014 dated 31.05.2016 7. Prabhatam Investment Pvt. Ltd. v. ACIT in ITA No. 2525/Del/2015 dated 17.04.2017. 8. DCIT vs. G.S. Controls (P) Ltd. in ITA No. 1560/Del/2010 - Delhi ITAT 14. It was contended that the CIT(A) has thoroughly examined the issue. Starting from Page 3 para 4 to Page 25 the CIT(A) has quoted the submission of the assessee company. In Para 4.2 on Page 26 the CIT(A) has given a finding of facts that it is not a case of funds from outside unknown parties and all the parties concerned are related to each other. In Para 4.3 he has further recorded a finding that the addit....
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....2-123, and the ledger account at page 124-127 of the Paper book, it is noticed that this money has been paid by the shareholder company to the assessee company out of the money received by it from Anjani Steels Ltd. M/s Anjani Steels Ltd. is being assessed to Income tax and as per the ITR placed at PB. Pg. 128, it has declared an income for the year under consideration of Rs. 17,24,07,574/-. As per the Balance Sheet of the Anjani Steels Ltd. it has a turnover of 284.73 crore during the year. The bank account of this Anjani Steels Ltd. has also been placed at PB. Pg. 123-147 from where this payment has been made to the shareholder company. The Balance Sheet of the shareholder company also shows investment in the assessee company. All these are part of the record. We are of the view that with these documents on record there can't be any doubt about the credibility and the genuineness of the transactions. The important point to be noted is that both M/s Anjani Steels Ltd. and M/s Anjaney Steels Pvt. Ltd. are Group Companies and money from Anjani Steels Ltd. has flown to assessee company through Anjaney Steels Pvt. Ltd. Thus, no adverse inference can be drawn on routing of the funds th....
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.... also filed the bank account of the company namely Bhumiputra (India) Ltd. from where the director has received the funds. Further, it has filed the audited Balance Sheet of Bhumiputra (India) Ltd. Mr. Jitendra Yadav has appeared before the AO in response to summon issued under Section 131 and has confirmed the above transactions. The assessment of Mr. Jitendra Yadav of this very assessment year has been completed at an income of Rs. 56,17,881/- as per the order passed under Section 143(3). Considering the above facts we are of the view that the assessee has discharged its onus under Section 68 and AO was not justified in drawing adverse inference against the assessee. 19. We are of the view that the AO in this case got carried away on account of the fact that assessee company has received Share Capital during the year and there are rotation of cheques from one company to another company, ignoring the fact that these were transactions within the Group Companies and assessee has not only explained the immediate source but also source of source. As rightly contended by the learned AR, this is not a case of accommodation entries. There is no adverse material or statement by anyone ab....