TaxTMI 
TaxTMI 
2018 (4) TMI 564
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellant's submission :- The relevant extracts from the submission of the appellant are reproduced here under:- "The one and only ground of appeal effectively is with regard to the addition of Rs. 9,99,99,900/- u/s. 68 of the Income Tax Act. The Assessing Officer on Page-3 of the Assessment Order has reproduced the facts wherein the assessee submitted complete details as called for by the Assessing Officer. In Para-3.3 the learned Assessing Officer wanted to verify the Share capital contributed/invested by one General Capital and Holding Company Pvt. Ltd. to the tune of Rs. 9,99,99,900/-. The Assessing Officer therefore, issued a summons u/s. 131 and in response to the same Shri Viral Shah appeared before the Assessing Officer and produced original bank statement of General Capital and Holding Company Pvt. Ltd. from which he has issued the cheques for subscribing to the capital of the Company. Inspite of The fact that there are no cash deposit stated in the said bank statement, bank account or for that matter whatsoever in the books of accounts of the said Company, the Assessing Officer absolutely incorrectly mentioned that he has noticed regularity, a pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any General Capital and Holding Company Pvt Ltd has also submitted the Confirmation of Account , Audited Accounts , Income Tax Returns and copy of PAN card of all the shareholders of investing Company vide letter dated 18.03.2013 submitted on 20.03.2013. Copy of the said letter is enclosed as per page 80. (4) The assessee also encloses copy of account of the said company in the books of the appellant company and also the copy of the bank statement of the appellant company wherein the share investment of Rs. 9,99,99,900/- received from the said company clearly proving that they were received by account payee cheques as per Page 81 to 88. Copy of bank statements, Confirmation of Account and Pan card of the shareholders of the said investing company General Capital and Holding company Pvt ltd is enclosed as per page 89 to 119. (5) The appellant has to submit that the investing company is still holding the shares of Assesseee Company. We are attaching herewith the copy of the Demat Holding Statement dated 04.09.2013. of the investing company i.e General capital and Holding Pvt Ltd as per page no 120 to 122. (6) Thus the appellant has to submit that the said p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....posits and withdrawals. On facts the addition is sustained by the High Court. As against this in appellant's case the Investing company immediately appeared without Summons and showed all the deposits and credits in bank account. Not a single cash deposit or cash withdrawal. The Assessing Officer is totally wrong in mentioning that there are cash withdrawals. In fact the source of fund, identify, genuineness and creditworthiness were proved by the Investing Company. (iii) High Court of Calcutta in the case of CIT vs. Ruby Traders & Exporters Ltd. 263 ITR 300 (Cal) Here the Assessing Officer disbelieved the genuineness of the subscription received by the assessee. In course of inquiry, nothing was disclosed about identity of the subscribers. Addition made u/s. 68, which Tribunal deleted on the ground that amounts were received by Account Payee cheques. High Court confirmed the addition on the ground that identify of the subscriber and genuineness did not get proved. In appellant's case identity, genuineness and creditworthiness are proved beyond doubt. (iv) ITAT Delhi Bench "C" in the case of ACIT vs. Rajeev Tandon- 108 ITD 560 (D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss which could not be disproved by the Assessing Officer. (vii) High Court of Calcutta in the case of CIT vs. Precision Finance (P) Ltd. 208 ITR 465 (Cal) Huge cash creditors were found in accounts of assessee being a loan- financing company. Assessee gave only Income Tax PA No. and File No. of creditors. Tribunal deleted the addition on the ground that identify of creditors were proved. High Court held that Tribunal has failed to fake in to account all the three ingredients, namely; identify, genuineness and creditworthiness. In appellant's case, as stated above a/I the three ingredients are proved and the Assessing Officer has disregarded the same and wrong/y interpreted that there Is a pattern and methodology of infusing cash In to the account and within a short while afterward withdrawing them to pay for the shares to the appellant's company. These are absolutely incorrect and untrue statements of the Assessing Officer as can be seen from the bank statement of General Capital and Holding Pvt. Ltd., copies of which are filed. Copies of decisions are enclosed as per Page 123 to 145. SUBMISSION: It is therefore submitte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l has been duly confirmed the fact of making investment in the appellant company. The amounts have been received through banking channel. The same are duly reflected in the annual accounts of that company. The extracts of the bank statement which have been filed before me during the course of appellate proceedings as well as before the AO clearly show that there are no cash deposits as mentioned by the AO in the assessment order. The observation of the AO that the cash has been deposited and subsequently cheque were issued is factually incorrect. The director of the company also attended before AO and confirmed the fact. It is also noted that both the companies, that is the appellant company as well as the share applicant are managed by the same group of persons. Honourable High Court of Gujarat has consistently held that if the assessee has given sufficient proof in respect of the share application no addition can be made in the hands of the assessee. If the AO has any doubt about the source of the share applicant further investigation can be made in the hands of the share applicant but not in the case of the appellant. The following recent decisions on the issue are wort....
X X X X Extracts X X X X
X X X X Extracts X X X X
....culars of payments like cheque numbers and date, extract of bank passbooks, explanation of credits appearing in bank passbook, it could be said that assessee had proved genuineness of transaction warranting no addition under section 68 - Held, yes [In favour of assessee]". In view of the above factual circumstances and the above mentioned judgements of honourable Gujarat High Court, it is held that the appellant Company has clearly explained the source of share application money received by it during the year. No addition on account of the fact that the share applicant money had no employees and was being managed from the residential premises can be made as it has sufficiently shown that it has made investment. If the AO had any doubts about the source of income of the share applicant company he could have made further enquiries in respect of that company, in case the same was assessed with him, or by passing the information to the AO, in case it was not assessed with him. It appears that the share applicant company is not assessed to tax with the present A.O. therefore, he is directed to pass this information to the AO of the share applicant company for further examinatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alongwith all of its necessary details. He then seeks to affirm the lower appellate findings deleting the impugned addition. 5. We have given our thoughtful consideration to rival submissions. There is no dispute that the sole issue between the parties is about correctness of the impugned Section 68 addition of Rs. 9,99,99,900/- as made in the course of assessment and deleted in the lower appellate proceedings. The Revenue's case is that the Assessing Officer had rightly disputed the genuineness / creditworthiness element in the said sum which is contested at the assessee's behest. We proceed in this backdrop of facts to notice first of all that the identity of the investor entity M/s. General Capital and Holding Company Pvt. Ltd. (supra) is not in dispute. And also that both the assessee and the said investor entity are group concerns having common Directors. The first component of identity therefore vis-à-vis Section 68 of the Act duly stands satisfied. It is evident thereafter that the assessee's relevant paper books forming part of record before us contain all necessary details of its copy of certificate of incorporation alongwith listing notification/circular o....