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TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 867
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....sioner Income Tax (Appeals) in First Appeal bearing No.18/16-17 and other connected appeals, and dismissed all the six appeal of the revenue. 4. Facts of the case are that the search, seizure and survey operations under section 132/133A of the Income Tax Act, 1961 (herein after referred as 'the Act') were conducted on 17.12.2013, along with other concerns / group companies of the assessee company having its PAN No.AAGCA5346J at various residential and business premises and a notice under Section 153A of the Act was issued to the assessee on 23.9.2015 by the assessing officer where-after in response to the said notice, the assessee (M/s. Chain House International (P) Ltd, New Delhi). filed its returns on 5.10.2015 declaring its total income of Rs. 1,03,12,520. 5. During the course of search, it has been revealed that the assessee has received an unsecured loan of Rs. 30.00 Crores from M/s. Bharat Securities Pvt. Ltd. (herein after referred as 'BSPL') who shown to have got a bogus share applciation money and premium of Rs. 55.00 Crores from 5 entry providing companies viz. M/s. Aadhaar Ventures India Ltd (Rs.40.75 Crores), Emporis Project ltd (Rs.3.00 Crores), D....
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....ed by the investigation wing, the company consented to cross examine the witnesses and later on letter was issued by the department for cancelling the cross examination and also required him to produce the Directors of the investors company. During the assessment proceedings the assessing officer issued notice under Section 133(6) of the Act to all the investor companies and also their Directors separately requiring them to furnish their books of accounts, balance sheets, profit and loss accounts, copy of bank statement and also the details of all the investments including the source made by them in the share capital of BSPL. All the investor companies, except Dhanus Technologies Ltd, complied with the notices. All of them confirmed the investment made in the assessee company and in support thereof furnished the relevant supporting documents including the ledger Account of BSPL in their books of accounts, copy of ITRs, bank statements and also explained their source of investments. 7. M/s. Dhanus Technologies Ltd. was under liquidation vide order of the Madras High Court dated 26.11.2013. The Assessing Officer made necessary enquiries from the Official Liquidator, appointed by t....
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.... that all documents etc found during the course of search are to be presumed as correct and genuine and also such documents belong to the person in whose custody these were recovered. Regarding reliance on the statements the assessee company very vociferously stated that no reliance should be placed on such statements for various reasons such as statements were recorded behind the back of the assessee company, recorded during the search of others and also recorded much prior to the date of search on the assessee company. During such search BSPL was not in picture at all and such persons have never referred the name of BSPL. The submission of the assessee company that no reliance should be placed on such statements or at-least unless the opportunity of cross examination was provided. The assessee company had also explained that the assessing officer had completely failed to bring even iota of evidence on record to prove any generation of unaccounted money and also transfer of such money in exchange of share capital. 10. During the course of search on the assessee company no incriminating material whatsoever proving any accommodation entry was unearthed. Finally the assessee compa....
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....pany and not by the Directors in their individual capacity. It is only the books of accounts and the balance sheets which speak itself. Besides, in this letter itself it was informed that the assessee company was not clothed with the power under Section 131 of the Act, which is enjoyed by the revenue and the assessee company did not succeed except that it had able to produce only the Direcotr of Aadhaar Ventures India Ltd. So far as the other Directors are concerned the assessee company was making request right from beginning that the assessing officer may kindly issue summons under Section 131 of the Act to such Directors and then record their statements and allow cross examination to the assessee company but the assessing officer did not gave any attention to the same and never took any action on the said request of the assessee company. 12. While passing the assessment order under Section 143(3) read with Section 153C of the Act, the assessing officer did not agree with the evidences filed and treated the amount of Rs. 55 Crore as income of the assessee company under Section 68 of the Act on the basis of statement / evidence of various persons, which were recorded behind the ....
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....ish Chandrakant Shah (SCS). He also denied to provide any chart containing certain entries to the officers who had recorded his statement at his residence on 18.12.2013. he also denied of any acquaintance with BSPL or any of its Directors. He also denied to have received any cash from BSPL or from any other person on its behalf. He also denied his earlier statement and stated that the same was recorded under fear and misrepresentation. He was extensively cross examined by the assessing company. 15. Mr. Chandan Kumar Singh, an employee of Shrish Chandrakant Shah (SCS) appeared and his statement was recorded by the appellate authority (A). He stated that he was working as computer operator with Shrish Chandrakant Shah. He stated that Shrish Chandrakant Shah was engaged in the business of providing financial services and data hub services to different parties. He also stated that Shrish Chandrakant Shah was not engaged in business of providing RTGS against receipt of cash. He also stated that Shri Kumar Raichand Madan was also taking consultancy services for his companies from Shrish Chandrakant Shah. He also denied to have arranged staff for Shrish Chandrakant Shah. It was stated ....
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....eceived or collected any cash from anybody in exchange of RTGS made to BSPL for subscribing share capital. He further stated that the earlier affidavit was filed under fear and pressure. 17. Shri Kumar Raichand Madan, Director of Dhanus Technologies Ltd in the statement, stated that his company had made investment in 6500 equity shares of BSPL for Rs. 9.75 crores in Assessment Year 2012-13. The share price was based on share valuation report and on mutual consent. He produced audited balance sheet of the company as on 31.12.2011 reflecting the investment made in BSPL. He also stated that his company was engaged in the business of telecom, BPO and flee track prior to going into liquidation. On being asked by appellate authority, he stated that there are two main concerns of Shri Naresh Kumar. One is situated at Chandni Chowk, Kucha Majajan, Delhi under the name of Rohtak Chain Co. and the other is situated at first floor of Bank Street, Karol Bagh under the name of Chain House. He also stated that all the decision including the decision of making investment in BSPL was taken by the Board of company. He denied to have any connection or knowledge of Shri Sawan Kumar Jajoo. He also ....
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....SPL by both of his companies. He also produced book of accounts of both the companies. The investment made was found duly recorded in the books of accounts which were examined by the CIT(A). he also provided bank accounts of his companies and categorically explained the source of investments. The turnover of his company Yantra Natural Resources Ltd was Rs. 91.94 crores in the AY 2012-13. He also stated that the shares were subscribed on the basis of valuation report and mutual decision. He also denied that his companies were managed by Shrish Chandrakant Shah (SCS). SCS was simply a consultant. He further stated that his company was not engaged in any accommodation entry business. He did not know Sawant Kumar Jajoo. He further stated that his companies had always complied with the enquiries made by investigation wing, Delhi or by AO, Central Circle - 18, New Delhi in connection with the transactions with BSPL and always confirmed the fact of investment made in BSPL and submitted the relevant documentary evidence. He further stated that the earlier affidavit was filed under Pressure. The assessing officer after receipt of the order of the statement of the aforesaid witnesses did not....
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....y unaccounted cash and transfer of such cash for the purpose of obtaining accommodation entries. In the absence of any evidence of such cash transfer, the AO was unjustified in holding that the appellant company had routed back its own unaccounted cash. In this connection it would be also relevant to state that during the process of examining these investor companies I have found that there is no transfer of cash from the appellant company to these investor companies or to anybody else for this purpose. I hold that there is no generation of cash outside the books of account and also there is no transfer of any such cash by te appellant company to anyone else and, therefore, I old that there is no accommodation entry and the share capital received is genuine." 21. The appellate authority (A) held that the assessee company was not connected with the money trial and the assessee company was only concern with the source of share capital which stands proved. The appellate authority also examined the issue of share capital and held as under :- "I find that the position in the prsent case is otherwise. All the five companies have produced the books of accounts. There is an aud....
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..... The AO also required him to send certain documents. Consequently copy of resolution, shareholding pattern, copy of share certificate, copy of MOU, copy of arbitration award, copy of due diligence report, copy of share valuation report and legal notice were sent by his company vide letter dated 18.3.2016. The AO never disgreed with the contents of objection was that Somabhai was not a director of the company at the time of making investment in Bharat Securities. Now two other directors of the same company namely Shri Jils Raichand Madan and Shri Omprakash Anandilal Khandelwal appeared before me and their statements were recorded. Both of them were directors of Aadhaar Ventures at the time of making the investment in Bharat Secuirties. Their statements have already been discussed in the earlier para and to avoid any repetition I simply want to reiterate that the present statements given by both the directors of Aadhaar Ventures before me are totally confirmatory and corroborative to the earlier statement of Somanbhai Sunderbahai Meena Recorded by the AO during the assessment proceedings. 24. The appellate authority found that in the case of the appellant company summons under Se....
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....been genuinely received and genuinely reinvested. I am also satisfied with identity, creditworthiness of the investors, and genuineness of the transactions. Therefore, I am satisfied that the condition u/s 68 stands satisfied. Hence the conclusion of the AO is rejected." 26. On the allegation of the assessing officer regarding appointment of dummy directors, the appellate authority held the following :- "The appellant company had argued without prejudice to the merits of the conclusion, that any statement recorded in the search of others without providing opportunity of cross examination cannot be used in the assessment of the appellant company while making the assessment. In any case for that matter, I have myself recorded the statement of the persons who all have deviated from there earlier statements which were stated to be recorded under fear and misrepresentation. During examination the books of account were also produced by the concerned directors. They satisfactorily explained and replied all the queries raised by me regarding the business activities of their respective companies, explained the investment made in the appellant company and also explained the sourc....
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....ived at by the AO." 28. In respect of finding of the assessing officer that Sawan Kumar Jajoo (Jajoo) had acted as broker for arranging accommodation entries for BSPL through the companies controlled by Shrish Chandrakant Shah (SCS), the appellate authority has held as under :- "The AO had relied on the statement of Sawan Kumar Jajoo recorded by Mumbai Directorate at his residence u/s 131 on 18.12.2013 and also recorded at the office of the Income Tax, Mumbai on 23.12.2013. The statements were recorded at the back of the appellant. Cross examination was not allowed to the appellant company. It is pertinent to note here that the appellant was very keen to cross examine the persons. This keenness if provide by the fact that on 18.09.2014 when the opportunity of cross examination of SCS and Jajoo was offered to the appellant, the director Naresh Kumar reached at the designated placed at Mumbai on time to cross examines the witnesses. However, the department has withdrawn such opportunity. This opportunity was never provided to the appellant despite repeated requests during the assessment proceedings. I hold that reliance on statements without cross examination is against t....
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....arlier. I cannot reject the statement recorded by me mainly for three reasons such as earlier SCS never stated or referred the name of Bharat Securities (P) Ltd. and secondly Bharat Securities was not in picture at all during those statements and finally SCS denied for providing any accommodation entries to Bharat Securities. I disagree with the conclusion drawn by the AO and, therefore, reject the same." 31. On the allegation of the assessing officer that from the bank trail it is established that the funds were layered mainly through the companies controlled by SCS, after considering the facts of the case and rival submissions the CIT (A) held as under :- 'The AO has not found either the source or the source of the source as vague or untrue. The AO has not examined these companies from where RTGS has arisen. The amount of RTGS had come on surface in the books of accounts somewhere else and these entities have not been proved bogus or non-existent. But in any case it is settled law that the appellant have to prove the source of investment received. It is not supposed to go beyond that and explain further in this matter. Additionally SCS in his statement has denied ....
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....or subscribe to the viewpoint of earlier or present director. What is necessary is the share application money recorded in the books of accounts. Hence the conclusion drawn by the AO is rejected." 34. On the allegation of the assessing officer that Naresh Kumar could not give replies to the queries related to share capital and share premium and only made excuses on one or other pretext, the appellate authority held as under :- "In my opinion reliance should be placed on reality, actuality and what is found recorded in the books of accounts. The recorded material in the books of accounts would be acceptable. In my view there can be several reasons for no immediate reference of the investors and if found recorded the non- reference should not be given any weightage. What is necessary is the evidence. I have gone through the statement recorded and I find that whatever he has stated has been found to be true, correct and genuine. Infact the statement recording officer narrated the names of five companies and enquired about these companies. Immediately the reply given was that these are the five companies which have invested funds in Bharat Securities (P) Ltd. I do not expec....
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....eject this conclusion of the Assessing Officer." 36. In respect of allegation that the appellant company and its group companies could not have commented such a heavy premium and, therefore, had introduced its own unaccounted funds generated over the years in the name of the premium, the appellate authority has held as under :- "The Assessing Officer has suspicion in his mind that the group has introduced its own unaccounted money generate over the year and the same was introduced in the group companies in the form of share capital. It would also be in fitness of things to report that appellant company had come into existence only in the FY 2010-11. The Assessing Officer was not justified in holding that unaccounted income was generated over the year. On a minute analysis of the conclusion drawn by the Assessing Officer I had reached to a conclusion that the Assessing Officer is refereeing to group companies. It means the unaccounted money was earned and paid by others and not by the appellant, if the version of the Assessing Officer is relied upon the addition made by in here in this case would automatically go out of reckoning. There cannot be any addition if the unac....
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....or companies or to anybody else as commission. Even if the provision of sec.69C is invited the addition would go out of the assessment since the expenditure has not been proved. Nothing has been brought on record by the Assessing Officer to prove that the appellant company had made such expenditure. This is besides my findings of no accommodation entries received by the appellant company. Hence I do not agree with the conclusion of the Assessing Officer." 38. The appellate authority gave a detailed finding on each and every issue and held that there was no validity basis of making any addition either on substantive basis or protection basis and directed the assessing officer that addition of Rs. 55.00 Crores be deleted. Addition made on account of payment of alleged commission was also directed to be deleted. 39. Being aggrieved by the finding recorded by the learned appellate authority, the revenue has filed six appeals before the ITAT on the ground that the examination of Shrish Chandrakant Shah (SCS), Chandan Kumar Singh and others has established that all the five companies are listed companies from whom the assessee has obtained share application money were named lender ....
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.... that as the assessee discharge its onus as per mandate of section 68 of the Act. which could not be controverted by the Assessing Officer in any manner right from assessing order to remand report to submitted to the Ld. CIT(A). Thus, we are unable to see any mistake, ambiguity, perversity or any valid reason to interfere with the conclusion drawn by the first appellate authority. 122. In the light of above discussion, we held that the AO was not justified in making addition of Rs. 30 crores by treating the share application money received by the asessee as unexplained cash credit under section 68 of the Act. Therefore, we are in agreement with the findings of ld. CIT(A) in deleting the same, as there was no case for making such addition either on protective basis or on substantive basis. Since, we have held that the assessee company has genuinely received share application money, therefore, question of payment of any commission does not arise and therefore, we find no infirmity in the order of CIT(A) accordingly, her findings are upheld. Accordingly, all the grounds of appeal of Revenue are dismissed. Revenue appeal in I.T.A. No.599/Del/2017/A.Y.2013- 14 in Bhara....
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....see had genuinely received share application money. The assessee BSPL is a Non Banking Finance Company (NBFC) duly registered with RBI. It has invested these funds in the group companies in the normal course of its business. We find that no infirmity in making investments in group companies by the assessee BSPL as unsecured loan. Therefore, the said amount of Rs. 17 crores advanced to M/s Rohtak Chain Co. Pvt. Ltd. and Rs. 8 crores advanced to M/s Chain House International Pvt. Ltd. are also deleted by the Ld. CIT(A). Accordingly, we uphold the findings and conclusion drawn by the Ld. CIT(A) and consequently appeals of revenue in the cases of above two companies are therefore, dismissed. Revenue appeal in I.T.A. No. 584/Del/2017/A.Y. 2013- 14 in M/s Rohtak Chain Co. Pvt.Ltd. 126. By ground No. 1 and 2, the revenue has challenged the deletion total additions of Rs. 17,85,00,000/- on account of unsecured loan amounting to Rs. 17 Crore and on account of alleged commission amounting to Rs. 85 lacs on substantive basis and protective addition in the case of M/s Bharat Securities Pvt. Ltd. 127. The brief facts are that M/s Bharat Securities Pvt. Ltd. has received Rs. 25....
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....s. 8.40 crores (including commission) advanced to M/s. Chain House International Pvt. Ltd. is also deleted by the CIT(A). Accordingly, we are unable to see any valid reason to interfere with the findings we upheld the same and therefore, the appeal of revenue in the case M/s Rohtak Chain Co. Pvt.Ltd. in deleting of addition of Rs. 17.85 crores and M/s. Chain House International Pvt. Ltd. deleting addition of Rs. 8.40 crores are dismissed. Revenue appeal in I.T.A. No. 596/Del/2017/A.Y. 2012- 13 in the case of Chain House International Pvt. Ltd. 129. By Ground No. 1 and 2, the revenue has challenged the deletion total additions of Rs. 31,50,00,000/- being share capital amounting to Rs. 30 crores and Rs. 1.50 crore alleged commission on substantive and protective basis in the case of M/s Bharat Securities Pvt. Ltd. 130. The brief facts are that the assessee has received Rs. 30 crores as share application money from M/s Bharat Securities Pvt. Ltd. during the year assessment year 2012-13 and the AO treated the same as income under section 68 of the Act and further added a sum of Rs. 1.50 crores as unexplained amount spent on account of commission for ....
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....old the findings of ld. CIT(A) of deletion of addition of Rs. 31.50 crores including commission payments of Rs. 1.50 crores on the basis of our findings as given in I.T.A. No. 598/Del/2017 for A.Y. 2012-13 in the case of M/s. Bharat Securities Pvt. Ltd. order dated 26.12.2017. Therefore, the substantive addition deleted by the CIT(A) is confirmed in the case of the assessee and appeal of revenue on this ground for the assessment year 2012-13 is therefore, dismissed. Revenue appeal in I.T.A. No. 597/Del/2017/A.Y. 2013- 14 132. By Ground No. 1 and 2, the revenue has challenged the deletion total additions of Rs. 8,40,00,000/- (on account of unsecured loan amounting to Rs. 8 crores and alleged commission payments of Rs. 40 lakhs). 133. The brief facts are that the M/s. Bharat Securities Pvt. Ltd. a sister concern of the assessee has received Rs. 25 crores as share application money from Aadhar Ventures India Ltd./ Parraneta Industries Ltd. During the year assessment year 2013-14. The AO and the CIT(A) have given their findings in A.Y. 2013-14, which are same as given in A.Y. 2012-13. According to the AO, the share application money received from Aadhar Ventu....
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....s Objection No. 65/Del/2017 A.Y. 13-14 in case of M/s Rohtak Chain Co. Pvt. Ltd. and Cross Objection No. 67 & 68/Del/2017 in the case of M/s Chain House International Pvt. Ltd. for A.Y. 2012-13 & 13-14. 135. From bare perusal of Cross Objection, we find that in the Ground No. 1 to 6 and 9 in Cross Objection No. 77/Del/2017/A.Y. 12-13 and in CO. No. 78/Del/2017/A.Y. 13-14 in the case of M/s. Bharat Securities Pvt. Ltd. by the assessee are relates to validity of search by which the assessee wants us to examine the validity of search and seizure operation. It is well settled position that this Tribunal has no jurisdiction to examine the validity of search and seizure operation, hence, these Cross Objection of respective assessee's are dismissed being misconceived and out of the ambit of powers of the Tribunal. 136. So far as remaining ground No. 7, 8 and 10 to 24 in Cross Objection No. 77/Del/2017/A.Y. 12-13 and Ground No. 7, 8, 10 to 23 in CO. No. 78/Del/2017/A.Y. 13-14 in the case of M/s. Bharat Securities Pvt. Ltd. are concerned in these Cross Objection, the assessee is challenging the dismissal of legal grounds which were dismissed by the CIT(A) in first appeal a....
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....ed by the appellate authority and all the appeals were dismissed by the ITAT. 43. Shri Dubey, learned counsel for the appellant - revenue has drawn our attention to the detailed findings recorded by the ITAT and submitted that the learned ITAT was not justified in affirming the decision of the appellate authority and deleting the addition made by the assessing officer. He submits that it is necessary for the assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof includes proof of identity of his creditor; capacity of such creditor to advance the money and genuineness of the transaction. He submits that these things must be proved prima facie by the assessee and only after the assessee has adduced the evidence to establish the prima facie the aforesaid, the onus shifts on the department. 44. He also submits that in the present case, the assessee establishes only the identity of the creditor and nothing more whereas the assessee has to prima facie prove the genuineness of the transaction, namely whether it has been transmitted through banking or other indisputable channels. The creditworthiness or financial strength of t....
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....evelopers Pvt. Ltd. (07.01.2013 - DELHC) MANU/DE/0037/2013, Commissioner of Income Tax V/s. Rathi Finlease Ltd. (11.10.2007) - MPHC) : MANU /MP/0588/2007, Commissioner of Income Tax V/s. Kundan Investment Ltd, (20.03.2003) - CALHC) : MANU /WB/0060/2003, Sreilekha Banerjee & Ors. V/s. Commissioner of Income Tax, Bihar & Orissa (27.03.1963 - SC : MANU/SC/0101/1963 and Kale Khan Mohammad Hanif V/s. Commissioner of Income Tax, Madhya Pradesh & Bhopal (08.02.1963 - SC) : MANU/SC/0292/1963 and prayed that all these appeals be allowed. 47. Per contra, Shri Sumit Nema, learned Senior counsel has submitted that the present batch of appeals filed by the Revenue under Section 260-A of the Act does not involve any substantial questions/s of law. All the questions are purely in the realm of text and the first appellate authority vide order dated 1.11.2016 and second appellate authority vide impugned order dated 27.12.2017 have given a detailed finding in favour of the assessee after scrutinizing the facts and documents placed on record at the time of hearing in a form of consolidated paper book and as such no substantial question of law arises in regard to the issue of addition on account of....
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....s Ltd and M/s. L.N. Industries Ltd (formarly known as L.N. Polyster Ltd) came to the conclusion that the assessee company having receipt share application money through bank channel and furnished complete details of bank statements, copy of accounts and complied with notices issued and the directors of the subscriber company also appeared with books of accounts before the appellate authority and confirmed the investment made by them with the assessee company, therefore, the identity and creditworthiness of investor and genuineness of transaction of the share applicant has been proved in the light of the ratio laid down by the M.P. High Court, Delhi High Court and the Hon'ble Supreme Court and were of the opinion that the onus cast upon the assessee as provided under Section 68 of the Act has been duly discharged by the assessee the identity of the share subscriber, creditworthiness and genuineness of the transaction is not to be doubted. The learned ITAT considered the case of the each company in great detail in para 85 to 110 of the impugned order and recorded its finding. The aforesaid finding of fact recorded by the ITAT are based on the material available on record which is....
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....not justified at all in the circumstances of the case. Whether the assessee company charged a higher premium or not, should not have been the subject matter of the enquiry in the first instance. Instead, the issue was whether the amount invested by the share applicants were from legitimate sources. The objective of Section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed on 31.12.2007, the investigation report which was specifically called from the concerned department in Kolkata was available but not discussed by the AO. Had he cared to do so, the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants' particulars were available with the AO in the form of balance sheets income tax returns, PAN details etc. While arriving at the conclusion that he did, the AO did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium....
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....nto because the aforesaid factual possession has not been disputed by the parties. 17. As the Apex court has considered the law in Lovely Exports (P.) Ltd's case (supra) and in view of law laid down by the Apex Court we find that the substantial questions framed in these appeals do not arise for our consideration. Accordingly, all these appeals are dismissed with no order as to costs." 59. In Santosh Hazari V/s. Purushottam Tiwari (2001) 3 SCC 179, the Supreme Court has observed that :- "A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be substantial, a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, in so far as the rights of the parties before it are concerned. To be a question of law involving in the case there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decisi....
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.... "The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact-finding authority. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a finding of act reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the findings of fact reached by the Tribunal and to give an answer in law to the question of law that is before it." 20. Accordingly, we hold that the High Court was not justified in upsetting a finding of fact arrived at by the Tribunal, particularly in the absence of a substantial question of law being framed in this regard. Therefore, we set aside the conclusion arrived at by the High Court on this question and restore the view of the Tribunal and answer the question in favour of the Assessee and against the Revenue. 62. The questi....
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....rtain bank statements which disclosed facially that the amounts were infused in cash at the relevant time before the shares were subscribed to or the credits were given. Those suspicious circumstances at the same time could not have been the conclusive factor in this case." 65. In the matter of Commissioner of Income-tax-VIII V/s. SVP Builders (I) Ltd., (2016) 67 taxmann.com 5 (Delhi), the Delhi High court in para 23 to 25 has observed the following :- "23. Coming to the core issue concer9ing the identity, creditworthiness and genuineness of the investor companies, it is seen that as far as the Table I investor were concerned, only 9 were searched and in their cases, the ITAT on a very detailed examination was satisfied that they not only existed, but that the Assessees had discharged the primary onus of proving their creditworthiness and genuineness. They had responded to the summons issued to them. Directors of 14 of these companies appeared before the AO and produced their books of accounts. 24. As regards Table-III companies, notices were issued under Section 131 of the Act to which many of them responded confirming having made investments. The Assessee had....
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....rsons. That is why the order of the First Appellate Authority was upheld. It did not suffer from any legal infirmity. 16. We also agree with the Tribunal, and particularly when it proceeded to analyze the transactions and the issue in an overall manner. It did not agree with the Assessing Officer but with the First Appellate Authority because there was overwhelming documentary evidence on record to support the conclusion of the First Appellate Authority." 67. In the matter of CIT V/s. Dolphin Canpack Ltd., (2006) 283 ITR 190 (Delhi), the Delhi High court has observed the following :- "7. There is no dispute with the proposition stated in the above passage. An Income-tax Officer is indeed entitled to examine the truthfulness of the explanation. In cases where the credit entry relates to the issue of share capital, the Income-tax Officer is also entitled to examine whether the alleged shareholders do in fact exist or not. Such an inquiry was conducted by the Assessing Officer in the present case. In the course of the said inquiry, the assessed had disclosed to the Assessing Officer not only the names and the particulars of the subscribers of the shares but also t....
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....f learned counsel for the Revenue. There is a clear finding of fact by the Tribunal that the legal expenses incurred by the Assessee were for protecting its business and that the expenses were incurred after 18th November, 1994. There is no reason to reverse this finding of fact particularly since nothing has been shown to us to conclude that the finding of fact was perverse in any manner whatsoever. That apart, if the finding of fact arrived at by the Tribunal were to be set aside, a specific question regarding a perverse finding of fact ought to have been framed by the High Court. The Revenue did not seek the framing of any such question. In this regard, reference may be made to K. Ravindranathan Nair V/s. CIT [3] wherein it was observed: "The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact-finding authority. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no....
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.... finding by dismissing the appeal of the revenue and also dismissed the cross objection of the assessee for the assessment year 2010-11. In this appeal also the ITAT considered each and every ground and reproduced the findings recorded by the appellate authority and thereafter given its own finding in para 24 to 48. 72. M/s. Sonata Investment Ltd presently known as REL Utility Engineers Ltd was incorporated with Registrar of Companies, Bombay on 17.6.2003 vide Incorporation No.U45200MH2003PL 140946. The company is registered under Section 45-IA of Reserve Bank of India Act, 1934 as a Non-Banking Financial Company, having registration No.N-13.01757 and is permitted to carry out NBFC activities and adheres to all the prudential norms prescribed by RBI for "Systematically Important NBFC". That "Systematically Important NBFC" is a NBFC not accepting / holdings public deposits and having total assets of Rs. 100 crores and above as shown in the last Audited Balance Sheet. The aforesaid company is primarily engaged in dealing in financing activities by way of investment in equity shares of reputed company and the company is also engaged in lending business in the nature of short term l....
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....ment made. (iv). Thereafter, the case was centralised with AO, Central Circle-18, New Delhi. (v). The AO issued various questionnaires dated 12.10.2015, 13.10.2015 and 02.11.2015 (questionnaires dated 13.10.2015 and 2.11.2015 are exactly same and identical to the assessee company. (vi) On 5.11.2015 the assessing officer made enquiries from Sonata Investment Ltd. by way of notice under Section 133(6) dated 5.11.2015. (vii) On 16.12.2015 the assessing officer received the reply from Sonata Investment Ltd. vide their letter dated 15.12.2015 confirming the subscription of share capital of Rs. 37.80 crore (inclusive of share premium) by way of banking channels. Copy of notices under Section 133(6) dated 5.11.2015 and reply from Sonata Investment Ltd dated 15.12.2015 are available at pages 11 to 14 of order of the CIT(A)." 74. The ITAT examined the identity and creditworthiness of the investor / share applicant and genuineness of the transaction and given the following finding in para 25 23, 41, 42, 43, 44, 45 and 46 which reads as under :- "25. We find that M/s. Sonata Investment Ltd. presently known as REL Utility Engineers Ltd. the subsc....
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....bcriber showing RTGS to the assessee company. Therefore, genuineness of transaction is also not to be doubted. Further, the subscription of Rs. 37.80 crores is made out of funds acquired from Reliance Group Company to whom the investor company belonged and the subscriber company had sufficient funds to make investment and made investment of Rs. 740 crores in shares of M/s. Reliance Industries Ltd. and Rs. 641 crores in M/s. Reliance communication Ltd. Thus, we find that the investor company had sufficient funds at its disposal, all transaction are through banking channel. We cannot ignore this vital factum that during the course of search and seizure operation or during post search enquiries no fact was brought in light that the investor or its earlier sources deposited any cash prior to transmitting the amount to the amount to the assessee company. Neither it is a case of the AO that the assessee generated unaccounted cash which was given to the investors for making alleged investment in shares. Hence, creditworthiness of the subscriber is also established. 23. Further, the assessee has filed copy of the share application forms (PB-333-334, 1204 to 1210, 1395, 1787, 2436)....
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....the decision of Hon'ble Jurisdictional High Court as referred above, no addition can be made under section 68 of the Act. There is no finding of the AO that any point or stage of investigation regarding source of funds he caught any instance of cash deposit by the Investor / share applicant or of its sources account. 42. We further note that decision of the Hon'ble Apex Court in the case of CIT V. Lovely Exports (P) Ltd. [2008] 319 ITR (St.) 5 (SC) [2008] 216 CTR (SC) / 18 ITJ 717 (SC) is relevant on this issue. The Hon'ble Apex Court has held that "if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income of the assessee. 43. If the totality of facts and the ratio of judicial pronouncements as discussed hereinabove, are analyzed, we are of the considered opinion that the onus primarily cast upon the assessee, as provided under section 68 of the Act, has been duly discharged by the assessee as the identity of the sha....