TaxTMI 
TaxTMI 
2018 (4) TMI 1417
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.... total income of Rs. 18,96,750/-. During the course of 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, 1^st Floor, Mansarover Garden, New Delhi-15. 8. Chinu Press & Parkashan Pvt. Ltd., E-10B, Jawahar Park Laxmi Nagar, Delhi- 1....
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....nducted local enquiries of these companies/concerns. However, it was reported that none of these companies were found to be at the address given. He came to the conclusion that these confirmations were not complete as desired vide letter 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 re....
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....tity of the subscriber Co. ,by producing the Director of the Co. in addition to the documents submitted during remand proceedings. As regards its creditworthiness, the Director of the Co., Shri Raj Kumar, could not explain the source of investment, when his statement 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 f....
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....ar Road, Kailash Nagar, Delhi, I hold that the identity of the Co. is not established. Hence, the addition of Rs. 25 lacs made by the AO on account of capital contribution by the said Co. is hereby upheld. (f) Nakoda Ji Buildwell Ltd. H-23, Vikas Marg, Laxmi Nagar, Delhi- 110092. The appellant submitted 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, M....
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....d not be established resulting in upholding of addition of Rs. 25 lacs made by the AO. (i) First Hi Fin Ltd., 325, Vishal Tower, District Centre, Janakpuri, New Delhi-58 :- The company contributed 28 lacs to the, share capital of the appellant. The appellant submitted copy of Auditors' Report, Balance Sheet, Share Application Money, Board Resolution, 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 doc....
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....1/411, Gali Rajan Kalan, Mori Gate, Delhi-110006 :- The Company is said to have contributed an amount of Rs. 7 lacs to the appellant company by way of share capital. The appellant submitted copy of ITR, Bank Statement, Balance Sheet, Auditors Report, Share Application Form, Board Resolution, Memorandum of Association and PAN Card during the course of remand proceedings. The appellant could also produce 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 establis....
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....rores inclusive of present investment S.S. Finvestment (India) Pvt. Ltd. 1.10 crores 1.02 crores inclusive of present investment Chinu Press & Parkashan Pvt. Ltd. 9.91 crores 8.24 crore inclusive of present investment First Hi Fin Ltd. 12.25 crores 12.07 crores inclusive of present investment Pride Real Tech Pvt. Ltd. 1.22 crores 99.3 Laksh inclusive of present investment 12. So far as the other companies/concerns are concerned, he drew the attention of the 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....
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....cision has held that where assessee company has produced PAN or ITRs of all share applicants and share application money was paid by account payee cheque, no addition could be made in the hands of the assessee. 17. Referring to the decision of the Hon'ble Bombay High Court in the case of CIT vs. Creative World Telefilms Ltd., he submitted that the Hon'ble High Court in the said decision has held that the Assessing Officer should have found out details of shareholder through PAN Cards, Bank Account, etc. so 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 pa....
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....preted the financial statements of the investor companies and sustained the addition on account of investment made by the companies which is not proper. He accordingly submitted that the addition sustained by the ld. CIT(A) should be fully deleted. 19. Referring to the decision of the Delhi High Court in the case of Rock Fort Metal & Minerals Ltd. reported in (2011) 198 Taxman 497, he submitted that the Hon'ble High Court in the said decision has held that where the appellant company submitted list of all the shareholders 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 ....
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....ned, he submitted that those directors could not explain the source of such investments. Further, the companies are having meager income as per the income-tax returns filed. Therefore, ld. CIT(A) was fully justified in sustaining the addition of Rs. 2,77,00,000/- out of Rs. 3,10,00,000/- made by the Assessing Officer. He also relied on the decision of Nipur Builders reported in 358 ITR 40, Nova Promoter reported in 342 ITR 169 and N.R. Portfolio reported in 204 ITR 45. 24. We have considered the rival arguments made by both the 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....
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.... the addition on the ground that the director could not substantiate the source of such investment and the assessee has shown meager income. A perusal of the Balance Sheet of the assessee shows that the investor company has paid up share capital of Rs. 2,00,000/- and share application money pending allotment of Rs. 75,50,000/-. Similarly, assessee has shown an amount of Rs. 90,00,000/- under the head reserves or surplus. Thus, the total share capital and share premium through reserves amounting to Rs. 1,67,50,000/-. Therefore, when the assessee 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. C....
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....ssing Officer and director of the assessee company appeared during the remand proceedings. A perusal of the Balance Sheet of the company, copy of which is placed at page 99 of the Paper Book, shows that the share capital and reserves stood at Rs. 55,26,240/- at the beginning of the year which has gone up to Rs. 1,05,57,140/- at the end of the year. Therefore, merely because the company has declared meager income, the same, in our opinion, cannot be a ground to disbelieve the investment of Rs. 25,00,000/- towards shares in the assessee company. 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 sustai....