TaxTMI 
TaxTMI 
2018 (4) TMI 1417
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.... assessment proceedings, the Assessing Officer observed that the assessee, during the impugned assessment year, has received share capital of Rs. 3,10,00,000/- and share premium of Rs. 2,79,00,000/- on account of issue of Rs. 31,00,000 shares from the following 15 investors :- S.No. Name & address of shareholder 1. Amarsaria Impex Limited now k/a Shine Gold Builders Ltd., E-10B, Jawahar Park, Laxmi Nagar, Delhi-110092. 2. Logitura Solutions Pvt. Ltd. 127, Hari Nagar, Ashram, New Delhi-14. 3. Chahat Estate Agents Pvt. Ltd., A-20/102, Sector-7, Rohini, Delhi. 4. Fabrika Industries (India) Ltd., 127, Hari Nagar Ashram, New Delhi-14. 5. Shivalik Myco Foods & Industries Ltd., 2822, Gali No.-18, Circular Road, Kailash Nagar, Delhi-31. 6. Nakoda Ji Buildwell Ltd., H-23, Vikas Marg, Laxmi Nagar, Delhi-110092. 7. S.S. Finvest (India) Pvt. Ltd., F-15, G.K. Bhagat Shopping Complex, Flat No.-4, 1st Floor, Mansarover Garden, New Delhi-15. 8. Chinu Press & Parkashan Pvt. Ltd., E-10B, Jawahar Park Laxmi Nagar, Delhi- 110092. 9. Express DSA Services Pvt. Ltd., 402-404, 4th Floor, 73-74, Sheetla House, Nehru Place, New Delhi-110017. 10. S.K. Fashions, 58, Shim....
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....tter u/s 133(6) which could prove the identity, genuineness and creditworthiness of the investors. On 28.03.2013, the AR of the assessee attended and expressed his inability to produce and personally present the attendance of these Principal Officers/Directors. The Assessing Officer, therefore, doubted the identity and creditworthiness of the investor companies who have invested in shares of the assessee company and the genuineness of the transactions in terms of the provisions of section 68 of the I.T. Act. Relying on the decision of the Hon'ble Delhi High Court in the case of CIT vs. N.R. Portfolio P. Ltd. vide ITA No.134/2012 order dated 21.12.2012, the Assessing Officer, invoking the provisions of section 68 of the I.T. Act, 1961 made addition of Rs. 3,10,00,000/- to the total income of the assessee. 7. Before the ld. CIT(A), the assessee filed all the details giving the name and address of the company, copy of the income-tax return, auditor's report, the balance sheet, bank statement, share application form, Board resolution and copy of PAN Card etc. in case of all the 15 companies/concerns as additional evidences. Ld. CIT(A) called for a remand report from the Assessing Offi....
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....ment was recorded by the AO. Furthermore, return of income for the relevant year was filed by the Co. declaring income of Rs. 1344/- only. Bank Account revealed the fact that on the day, amount was contributed by way of share capital, smaller amounts were received from Chahat Estates, Fabrica (India) Ltd, Pride Realtech (Pvt.) Ltd who are also contributors to the share capital. A further analysis of Balance Sheet of this Co. revealed that out of reserves of Rs. 25,07,140/-, the Co. had share premium of Rs. 25 lacs. Thus the contribution of share capital of the appellant Co. was having a huge share premium account. All these facts clearly establish the fact that the creditworthiness of Logitura Solutions (P) Ltd. could not be proved and hence the addition of Rs. 25 lacs made by the AO on this account is hereby sustained. (c) Chahat Estate Agents Pvt. Ltd. A-20-102, Sector-7, Rohini, Delhi :- The appellant filed copy of ITR, bank statement, Auditors' Report and Balance Sheet, Share Application Form, Bank Resolution, Memorandum of Association and PAN Card. Though the confirmation was filed, by the appellant, remand report reveals the fact that the Inspector attached with the A....
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....ted copy of ITR, Bank Statement, Balance Sheet, Share Application Form, Board Resolution and PAN Card. However, on account of of appellant's inability to produce the Director/Principal Officer of the said Co. before the AO and Inspector's Report as per which the Co. was not locatable at the address mentioned by the appellant i.e., H-23, Vikas Marg, Laxmi Nagar, Delhi, I hold that solely on the basis of neutral documentary evidence, the identity of the share subscriber could not be established. This results in sustaining the addition of Rs. 25 lacs made by the AO on account of his alleged capital contribution. (g) S.S. Finvest (India) Pvt. Ltd., F-15, G.K. Bhagat Shopping Complex, Flat No.-4, 1st Floor, Mansarover Garden, New Delh15:- The appellant submitted copy of ITR, Bank Statement, Balance Sheet, Share Application Form, Board Resolution, Memorandum of Association and PAN Card, Shri Naved Ahmed, one of the Directors appeared before the AO and his statement was recorded. As per his statement, S.S. Finvest (India) Pvt. Ltd. had invested an amount of Rs. 25 lacs in the appellant company. However, he could not explain the source of such investment, which leads us to an e....
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....solution, Memorandum of Association and PAN Card during appellate/remand proceedings. The Inspector could not locate the Co. either at the old address i.e. 325, Vishal Tower, District Centre, Janakpuri, New Delhi-58 or at the new address i.e. 3rd Floor, Old Rajinder Nagar Market, Delhi-60. In addition, the appellant could not produce the Director/Principal Officer of the Co. Thus, these facts make it evident that the identity of First Hi fin Ltd. could not be established. Thus, on the basis of aforesaid facts, the addition of Rs. 28 lacs made on this account is hereby upheld. (j) Pride Real Tech Pvt. Ltd., 1/411, Gali Rajan Kalan, Mori Gate, Delhi-06 :- This Company contributed an amount of Rs. 13 lacs to the share capital of the appellant. During appellate proceedings, the learned counsel gave a number of documents relating to Pride Realtech (P) Ltd. These include Bank Statement, Auditors' Report, Balance Sheet, Share Application For, Memorandum of Association, Board Resolution and PAN Card. The appellant could produce Shri Jasbir Singh Grover, one of the Directors of the Co. When asked about the investment made in the appellant Co, Shri Grover submitted that it had made i....
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....duce Shri Kuldeep Thakur, one of the Directors of the Co. who confirmed having made investment but could not substantiate the source of such investment. Since the appellant satisfied the 'identity' test, it was examined whether the creditworthiness of share subscribed could be established. For that purpose, the return of income was perused as per which the appellant had declared an income of Rs. 8000 only during the year under consideration. No details of inventories/stock were provided by the Co. Another feature running through all the balance sheets examined, i.e. the huge share premium received by various companies was also evident here. All these facts lead to the conclusion that creditworthiness of share subscriber and genuineness of transaction could not be established. Hence, the addition was rightly made by the AO. (m) Vardhaman Sales Pvt. Ltd., A-64, Temple Colony, Samaypur, Delhi-110042 :- As per the appellant, the company contributed Rs. 25 lacs to the share capital of the appellant. In this case, even the confirmation could not be received from the company as letter sent to the company came back un-delivered. Apart from this, the appellant could not produce ....
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....he Bench to their respective balance sheets and submitted that they have adequate capital and free reserves to invest in the shares of the assessee company. 13. He submitted that the assessee has produced all the relevant documents/details during the remand proceedings to establish the identity and creditworthiness of the investor companies and genuineness of the transactions. Therefore, addition could not have been made u/s 68 by the Assessing Officer and sustained by the ld. CIT(A). He submitted that in certain cases where the directors have appeared before the Assessing Officer during the remand proceedings, the ld. CIT(A) sustained the addition on the ground that the return of income filed by the investor companies show very meager income and therefore the company does not have any capacity to invest and in certain cases the directors could not substantiate the source of investment. He submitted that when the Balance Sheets of the respective companies show huge capital and free reserve and the directors have appeared before the Assessing Officer in the remand proceedings and confirmed to have invested in the shares of the assessee company the ld. CIT(A) without appreciating th....
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.... as to reach them because all relevant details and particulars were given by assessee to Assessing Officer. Referring to the above decision, he submitted that in that case, assessee has received share application money from shareholders. The assessee had provided the details of the name and address of the shareholders, their PAN, GIR numbers, cheque number, name of the bank. The Assessing Officer did nothing except issue summons which were returned with the remark 'not traceable'. The Assessing Officer ought to have found out their details through PAN cards, Bank Account details or from the banker so as to reach the shareholder since all the relevant material details and particulars were given by the assessee to the Assessing Officer. The appeal filed by the Revenue was accordingly dismissed. 18. Referring to the decision of the Hon'ble Delhi High Court in the case of Dwarkadheesh Investment reported in 330 ITR 298, he submitted that the Hon'ble High Court in the said decision has held that if the company establishes the identity of the subscriber, then burden shifts to the Department unless and until any evidence to show that funding was done by the company. 18.1 Referring t....
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....areholders giving full name, addresses, details of payment made by cheque (cheque No., and name of bank also), confirmations from all the shareholders giving complete particulars in the form of address, cheque numbers and the name of bank , PAN and place of assessment, copies of bank statements showing deposit of all these receipts, the assessee had discharged its primary onus as per law of proving the identity of all the shareholders. It was for the AO to put forth some adverse material in case he was not satisfied with the claim of the assessee. The AO should have brought such material on top of the table with an opportunity of rebuttal and/ or cross examination to the opposite party. The Court relied on the ruling in Lovely Exports case (SC). 20. Referring to the decision of Jaipur Bench of the Tribunal in the case of Bharti Syntex Ltd. vs. DCIT reported in (2011) 137 ITJ 82, he submitted that the Jaipur Bench of the Tribunal in the said decision has held that where amounts were received by cheque, the corporate share applicants are assessed to tax, confirmations with copies of share certificates, bank statement, memorandum of articles, copy of share application money, audited ....
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....he sides, perused the orders of the Assessing Officer and ld. CIT(A) and Paper Book filed on behalf of the assessee. We have also considered the various decisions relied on by both the sides. We find the assessee in the instant case has received share capital of Rs. 31,00,000/- share premium of Rs. 2,79,00,000/- from 15 companies/concerns, the details of which are already given in the preceding paragraphs. Since the assessee failed to prove before the Assessing Officer regarding the identity and creditworthiness of the share applicants and the genuineness of the transactions, the Assessing Officer, invoking the provisions of section 68 made addition of Rs. 3,10,00,000/- to the total income of the assessee. We find the assessee before the ld. CIT(A) filed certain additional evidences, which were admitted by the ld. CIT(A). The ld. CIT(A) called for a remand report from the Assessing Officer. After obtaining the remand report from the Assessing Officer, ld. CIT(A) deleted the share capital and share premium received from Express DSA Services Pvt. Ltd. at Rs. 28,00,000/- and S.K. Fashions at Rs. 5,00,000/- and sustained addition of Rs. 2,79,00,000/- in the case of remaining 13 compani....
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....sessee had sufficient share capital and share premium through reserves in its Balance Sheet, merely because the company has shown meager income, the same cannot be a ground to disbelieve the capacity to invest an amount of Rs. 7,00,000/- in the assessee company. We, therefore, set-aside the order of the ld. CIT(A) and direct the Assessing Officer to allow the investment of Rs. 7,00,000/- by Truth Tradex (P) Ltd. 30. So far as Fabrika Industries is concerned, we find the assessee had filed the relevant documents and the director of the said company appeared before the Assessing Officer and confirmed to have made the investment. However, the ld. CIT(A) rejected the claim of the assessee on the ground that such director could not explain the source of investment. A perusal of the Balance Sheet of the above company, copy of which is placed at page 117 and 119 of the Paper Book shows that the share capital, share premium and reserves and surplus show an amount of Rs. 1.42 crores which was standing at Rs. 1.14 crores at the beginning of the year. Therefore, the investor company has sufficient funds to investment in the assessee company. Since the director of assessee company appeared be....
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....Thus, in view of the above discussion, the investment in the share of the assessee company by the above five companies whose directors appeared before the Assessing Officer and whose statements were recorded and full details were filed substantiating the identity and creditworthiness of the investor companies and the genuineness of the transactions, cannot be doubted merely because companies have meager income or that the directors could not categorically answer the question of the Assessing Officer. The same in our opinion under the facts and circumstances of the case cannot be a ground to disbelieve the investment. Thus, the addition sustained by the ld. CIT(A) in the case of the above five companies amounting to Rs. 1,00,00,000/- is deleted. 33. Now coming to the remaining companies are concerned, we find the ld. CIT(A) sustained the addition basically on the ground that although full details were filed however, the Principal Officers of the above companies could not be produced before the Assessing Officer for recording their statements and the companies are showing meager income. As mentioned earlier, income in case of a concern cannot be the basis to disbelieve the creditwor....