TaxTMI 
TaxTMI 
2018 (4) TMI 18
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....ransaction, the Assessing officer, based on name and address details of the investor companies based out of Kolkata, as provided by the assessee during the course of assessment proceedings, issued a commission u/s 131(1)(d) of IT Act was issued to the DDIT, Unit-3, Kolkata. The DDIT thereafter submitted a report as under:- "A commission u/s 131(1)(d) is received from you in the case of M/s Dhanlaxmi Equipments Private Limited. Summons were issued to the assessee by dak for personal appearance and to verify the identity, genuineness and creditworthiness of the transactions. In response to the summons nobody appeared to prove the identity or genuineness of the shareholder companies. Then ITI was deputed to verify the physical existence of the companies. ITI submitted that none of the companies are existing at given address and no Books of accounts are maintained at the given address. Further on the basis of earlier search and surveys done, it is gathered that the given addresses of the companies are known as jamakharchi/paper companies addresses which are used for providing accommodation entry. As nobody appeared, the identity, genuineness and creditworthiness of the directors and ....
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.... of the ld. CIT(A) which are contained at Para 5.3, page 29 to 33 of his order which are reproduced as under:- "....On careful consideration of all relevant facts discussed above, it may be noted that there is no dispute on the fact that in respect of all the 20 companies who have subscribed for share capital, the appellant company has furnished their confirmation, evidence of their address, PAN, balance sheet, copies of Income Tax Returns as also bank statements from where payment was made. It is also fact that the A.O. has not brought on record any adverse material which may indicate any falsity in respect of the documents submitted by the appellant company in respect of share holders companies. The A.O. made a reference to the DDIT, Kolkata for verification of identity of these share holder companies, credit worthiness of these companies and genuineness of the transactions. It is fact that summons were issued by the DDIT to the share holder companies for personal presence on 05.03.2013 and as per the appellant in compliance of summons representatives of these share holder companies appeared before the DDIT on 05.03.2013 and also submitted necessary documents in respect of shar....
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....all the 20 share holder companies submitted documents in support of their existence and identity, credit worthiness and genuineness by way of bank statements etc. but the DDIT, Kolkata without examining the same and without pointing out any falsity in such documents, simply forwarded these documents to the A.O. It is further noted that even the A.O. has not pointed out any falsity in such documents and simply relying on the report of the Inspector, made such addition of Rs. 1.7 Crores in the hands of the appellant company. It is also fact that out of 20 share holder companies, 14 share holder companies were already existing share holders of the appellant company and in respect of these 14 share holder companies (S. No. 1 to 14), while completing the scrutiny assessment for A.Y. 2008-09 detailed inquiries were made and the investment by way of share capital was found to be correct. In this background it may be mentioned that the PAN, complete address, confirmation, copies of ITR of these share holders companies definitely proved the identity of these share holder companies. Further the balance sheet and the bank statements of share holder companies further proved the credit worthine....
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....ilar issue as under: "Shareholder companies having admitted to have subscribed to the share capital of the assessee company and accounted for the source of funds in their books of accounts which is not shown to be incorrect or false, no case is made out for making addition under s. 68 in the absence of any evidence to show that the share capital represented accommodation entries". Keeping in view the facts and circumstances discussed above as also placing reliance on various case laws relied upon by the appellant including decision of Hon'ble Apex Court in the case of Lovely Exports(supra) and decisions of Jurisdictional High Court(supra) on the similar issue, the addition of Rs. 1.7 Crores made by the A.O. u/s 68 of IT Act is deleted. The ground of appeal is allowed." 6. During the course of hearing, the ld. AR submitted that firstly, out of the 20 companies, from whom share capital amounting to Rs. 170 lacs, was received during the relevant previous year, 14 companies (S.No. 1 to 14 in the table below) were existing shareholders of the assessee company to whom shares were allotted/share application money received in AY 2008-09 and the transactions were accepted as genuine and ....
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....nistry of Company Affairs). The department has also issued them PAN and these investing companies are regularly assessed to tax. Thus the onus, on the part of the assessee company, stood fully discharged. As against the above, action of the Id. AO was solely based on the non- conclusive, scanty and unsupported report of DDIT Kolkata. Nothing was brought on record by the Id. AO to shift the burden again on the assessee company. 8. It was further submitted that there is no evidence, direct or indirect, to show that the money so received actually belonged to the assessee company. Nowhere the ld. AO has suggested that the money infused by different parties had actually flown from the assessee company. In absence of this finding, no addition can be made to the income of the assessee company merely on suspicion. Similar ratio was laid down by the Hon'ble Jurisdictional High Court in the case of Shumal Mines Private Limited (Income Tax Appeal No. 96/15), vide its order dated 03.05.2016. Since the identities of the Companies investing money was duly established by the assessee company, the ld. AO at best could have assessed such amount the hands of those companies. 9. It was further subm....
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....ssee company, on facts, is completely distinguishable from those cases where on account or search/survey, incriminating documents have been unearthed by the department to establish non genuineness of the transaction or cases where companies/individuals have themselves admitted of providing entries. 15. It was further submitted that in respect of the cross examination of the Inspector, solely on the basis of whose report additions were made by the ld. AO, reliance is placed on the recent judgment dated 2.09.2015 of the Hon'ble Supreme Court in the case of Andaman Timber Industries Civil Appeal No. 4228 of 2006 in which it was held that "not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected.... 16. Finally, it was submitted that the case of the assessee is covered by the judgment of the Hon'ble Rajasthan High Court in assessee's own case for AY 2008-09, wherein Hon'ble Rajasthan High Court has dismis....
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....irming the transaction, PAN number, complete addresses of creditors, copy of balance sheet, ITR for AY 2008-09, bank statement and form No. 18. The assessee had discharged its onus by providing the requisite evidences to prove the identity, genuineness and creditworthiness of the cash creditors. The ld. Assessing Officer herself had accepted the remaining cash creditors to the tune of Rs. 3.95 crores explained on the basis of similar evidences produced by the assessee as genuine. The loan/share capitals were received from the private limited companies. They also are filing return under the company's law and all information is available on MCA website. The ADIT report was not conclusive to held that the cash creditors were not genuine. It is not required under the law to prove the source of source u/s 68 of the Act, Primary burden lies on the assessee has been discharged by filing the requisite evidences before the Assessing Officer and shifted on the Assessing Officer to disprove the cash creditor's transactions are not genuine or bogus. The share application money was received by the appellant and subsequently returned though banking channel. In case of 7 companies, the notices we....
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....ir confirmation, copy of their income tax returns, copy of their balance sheet and bank statements through which the cheque payment has been made. Further, the ld CIT(A) has returned a finding that the balance sheet and bank statement of these companies prove the credit worthiness of making further investment during the year. There is nothing on record which controvert the said findings of the ld CIT(A). In light of the same, we confirm the findings of the ld CIT(A) and set-aside the order of the AO in respect of these 14 companies who are existing shareholders and have made fresh investment during the year. 20. In respect of remaining 6 companies, we find that the assessee company has again furnished complete particulars of all these companies in terms of name, address, PAN no., copy of their confirmation, copy of their income tax returns, copy of their balance sheet and bank statements through which the cheque payment has been made. We find that these documents have been submitted before the DDIT, Kolkatta who has not examined these documents and merely forwarded these documents to the AO. Therefore, in absence of such examination, even the prima facie view of the DDIT, Kolkatta....