TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 867
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.... 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), Dhanus Technologies Ltd. (Rs.9.75 Crores), L.N. ....
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....ed 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 the Madras High Court, who after conducting the enqu....
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....ch 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 company filed voluminous material in the form of evidences and....
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.... 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 back of the assessee company. 13. The assessing officer on t....
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....ontaining 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 that during search on SCS no physical books of accounts of other co....
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....o 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 stated that it is not correct to say that he was supplying any dummy di....
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.... 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 raise any objection on the contents of their statements and accepted all t....
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....ries. 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 audit reports. All the investors have appeared personally. The books of accounts were examined thorough....
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....py 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 Section 131 and notice under Section 133(6) were duly served and complied with. The investor companies have confirm....
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....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 source thereof. They were found to be fully acquainted with the directors of the investee company. They also explained about the business premises and....
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....ries 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 the settled principle of natural justice. The appellant had argued that under these circumstances I against the appellant. Under these circumstances I summoned Sawa....
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.... 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 for being involved in any entry providing business. In view thereof, the conclusion drawn by the AO is devoid of any merit and hence rejected.' 32. On the conclusion that the entry prov....
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.... 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 expect what more is required. The appellant company had also explained before me that the statement of Naresh Kumar was recorded continuously for about 17-18 hours and continued even after mid-night and yet he replied to t....
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.... 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 unaccounted income or surplus is earned by any other company. The Assessing Officer himself is of the opinion that the appellant has not earned any unaccounted income since he has aassessed this amount in the hand of the appellant company ....
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....ve 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 and mere accommodation entries provider on commission basis. The Directors of these companies were not found on given address nor appeared before the assessing officer. Therefore, the assessee has failed to discharge his onus cast upon him under Se....
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.... 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 Bharat Securities Pvt. Ltd. 123. By Ground No. 1 and 2, the revenue has challenged the deletion total additions of Rs. 26,25,00,000/- comprising of addition of Rs. 25 crore received as share capital & share premium through accommodation entries and addition of Rs. 1.25 Cror....
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....sessee 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 crores as ahre application money from Aadhar Ventures India Ltd. during the year under consideration. 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. Since, accordingly to the AO the share application money received from Aadhar Ventures India Ltd. are not ....
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....ition 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 acquiring such accommodation entries of Rs. 30 crores. After doing so, the AO had further held that this amount of Rs. 31.50 crores was taxable in the hands of the assessee substantive basis in the hands of the assessee and protective basis in the case of M/s. Bharat Securities Pvt. Ltd. since such amount has been received from said company. In tur....
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....ase 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 Ventures India Ltd. are not genuine hence, the AO has made addition of Rs. 25 crores under section 68 and also estimated the commission amount of Rs. 1.25 crores spent for acquiring accommodation entry. Thus, the AO made total addition of Rs. 26.25 crores on this account by treating it as accommodation entry and commission paid thereof. Thereafter, the AO held that the amount of....
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.... 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 and Ground No. 7, 8 and 11 to 21 in Co. No. 77/Del/2017 and Ground No. 7, 8, 11 to 20 in Co. No. 78/Del/2017 relating to merits of addition which and are covered by Revenue appeal wherein we have dismissed the revenue appeal. However, we may point out that the learned counsel for the assessee did not place any arguments during hearing before us; hence, we presume that the assessee is not serious about ....
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....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 the creditor, the onus would not stand dismiss if the creditor / subscriber denies or repudiates the transaction setup by the assessee nor should the assessing officer take such repudiation at face value and construe it, without more, against the assesse. He further submitted that the Directors or persons behind the companies making the investment in their shares were not related or known to them. It is highly impl....
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.... 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 share capital and share premium and Rs. 1.50 Crore as alleged expenditure of commission for such share capital. Concurrent finding of fact cannot be reiterated as question of law and prays for dismissal of the appeals. 48. In the case of Andman Timber Industries V/s. Commissioner of Central Excise, 2015 (3) STD 805 (SC) wherein, it has been held that not allowing the assessee to cross examine the witness is serious fl....
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.... 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 a finding based on appreciation of evidence on record. 52. Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by a....
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....entity, 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 and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee's account to the share applicants' account. As held concurrently by the CIT (Appeals) and the ITAT, these conclusions were clearly baseless and false. This Court is constrained to observe that the AO utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial docume....
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....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 decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling....
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....nding 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 question raised by the revenue in regard to issuing the share at a premium is purely a question of fact. It is a prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe to shares at such a premium or not and moreover the section 68 does not envisages any law on share premium it only requirement is to identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants which same has b....
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....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 been asked by the CIT (A) to produce 7 directors of the Table III companies. 6 directors appeared and their statements were recorded. They had confirmed that they had subscribed to the share capital of the Assessee. These directors had not only produced the books of accounts but showed that the source of investment was duly recorded therein. The Revenue on the other hand did not produce any further evidence to dispute the above evidence produced by the Assessee. 25. As far as Table II shareholders were concerned, if the Revenue was of the ....
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....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 their bank accounts and the permanent account numbers issued by the Income-lax Department. Superadded to all this was the fact that the amount received by the company was all by way of cheques. This material was, in the opinion of the Tribunal, sufficient to discharge the onus that lay upon the assessed. This is evident from the passage extracted from the order passed by the Tribunal earlier. In the absence of any perversity in the view taken by the Tribunal or anything to establish conclusively that the finding regarding the genuineness of the subscribers and the transactio....
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....nue 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 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 t....
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....mpany, 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 loan to eligible borrowers. The Company has its own address where all the notices issued either by Investigation Wing, Delhi or by AO were duly served and complied with confirming the investment in assessee company. The company has its own Bank Account which could be opened or continued only on proving the necessary KYC norms to the Bank. The investor company is assessed to tax and has been allotted permanent account number vide PAN AACCR7266A. The investor company had been assessed under Section 143(3) for the relevant assessment year 2010-11 and assessed at Rs. 30.03 crore audit paid tax on Book Profit of Rs. ....
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....um) 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 subscriber company had made investment in share application money at Rs. 37.80 crores out of which it had received Rs. 37.30 crores from top Industrial house of the country namely Reliance Infra. The investor company enjoyed Rs. 3979 crores net worth as on 31.3.2010. Therefore the said subscriber had sufficient fund to make investment. We support our view by relying decision of Hon'ble Delhi High court in the case of Goodview Trading Pvt. Ltd. 77 taxmann.com 204 (Delhi) wherein it was held that no addition can be made where there is a sufficient net worth of the investor company. Similarly we find that there was no incriminating documents found during search hence, no ad....
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.... 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), copy of share allotment letter (PB-370) copy of ITR acknowledgment (PB460-462), Balance sheet (PB-311 to 368), copy of bank statement of investor company (PB-306-310) copy of Memorandum of Association and Articles (PB-323 to 957) copy of Form No.2 filed with ROC (PB-323), copy of resolution passed by the Board (PB323), and reply to notice issued under section 133(6) by the AO duly served on the investor company furnished by said company (PB159-160 Refer Page No.11-12 of assessment order) Reply to notice u/s.133(6) submitted to the AO by investor company (PB161- 218) and Page No.12 to 14 of assessment order). These evidences brought on record proves that the identity, creditw....
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....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 share subscribers, creditworthiness and genuineness of the transaction is not to be doubted or it can be said that the same has been proved / explained by the assessee. Now, the onus has reverted back upon the Revenue to prove otherwise which has not been discharged by the AO before making additions under section 68 of the Act. 44. The Ld. AO merely relied upon the suspicion and statement recorded from Shri Naresh Kumar during night considering it vague and whereas the inquiries made under section 133(6) were duly complied with by the investor company / The AO was expected to disprove the claim of the assessee with the help of evidence, if any, received from the investigation wing, as has been clai....