TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 59
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....and his brother Shri Virender Jain, certain incriminating documents were found and seized. These documents include date-wise hand-written cheque books and cash hooks maintained by Shri S.K. Jain and his brother over a long period of time. In these cheque books and cash books details of cheque provided to the beneficiaries companies/ entities/persons and receipt of cash by them and beneficiaries were recorded. During the course of post search investigation, it has been evidently established accommodation entries to various beneficiary companies/entities/persons through cheques through a number of paper and dummy companies in lieu of cash. These dummy companies were controlled by Shri Surender Kumar Jain and brothers. It was found from the list that assessee has obtained accommodation entry of Rs. 40 lakhs in assessment year under appeal. Therefore, assessment was reopened under section 148 of the I.T. Act. The assessee was directed to file return of income, to which, assessee submitted that original return filed may be treated as return filed in response to notice under section 148 of the I.T. Act. The assessee do not file any objection to the reopening of the assessment. The A.O. a....
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....ply to the notice under section 133(6) of the I.T. Act. One of the Director of the Investor company M/s. Finage Leasing & Finance (India) Ltd., was produced before A.O. who have confirmed the transaction with the assessee-company and investment made by them. The A.O. did not make any further enquiry on the same, therefore, no addition should be made against the assessee-company. The assessee-company filed the balance-sheet of both the investors to show that M/s. Singhal Securities Pvt. Ltd., has availability of funds of Rs. 10,49,97,-000/- and have other assets as well. In the case of M/s. Finage Leasing & Finance (India) Ltd., they have availability of the funds of Rs. 14,57,42,032/- along with other assets. It was, therefore, submitted that assessee- company proved identity of the investors, their creditworthiness and genuineness of the transactions. Large number of case law were relied upon in support of the above contention. The case law relied upon by the A.O. were distinguishable on facts. The Ld. CIT(A), however, did not accept the contention of the assessee-company and dismissed the appeal of the assessee- company. 4. I have heard the learned Representatives of both the pa....
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....en done, so no adverse view could have been drawn, In this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants, thereafter the onus shifted to AO to disprove the documents furnished by assessee and in my view it cannot be brushed aside by the AO to draw the adverse view which here in present facts cannot be countenanced. Therefore addition of Rs. 25,45,000 made by AO and sustained by Ld CIT(A) are hereby deleted. 7. In the result, the appeal of the assessee is allowed." 6. On the other hand, Ld. D.R. relied upon the orders of the authorities below. 7. I have considered the rival submissions and also written submissions filed by the assessee-company and case laws relied upon in the written submissions would be considered in this order. It is an admitted fact that during the assessment year under appeal, assessee-company has received Rs. 40 lakhs from the two investor companies mentioned above. The assessee-company has filed details of their net worth supported by their balance-sheet which shows that M/s. Singhal Securities Pvt. Ltd., was having availability of the funds of Rs. 10,49,97,000/- and in....
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....e company." 7.3. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Kamdhenu Steel and Alloys Ltd., & Ors. 361 ITR 220 (Del.) in which it was held as under : "Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be discarded or it is proved that it has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under s.68; AO failed to carry his suspicion to logical conclusion by further investigation and therefore addition under s.68 was not sustainable." 7.4. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Vrindavan Farms Pvt. Ltd., etc. ITA.No.71 of 2015 dated 12th August, 2015 (Del.), in which it was held as under : "The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their return of income. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the documents subm....
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....epresented the company's own income from undisclosed sources. It was nobody's case that the nonresident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription and that the transaction was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the investor alone was to be seen. Thus, the addition was rightly deleted. CIT v. Lovely Exports P. Ltd. [2009] 319ITR (St.) 5 (SC) applied." 7.9. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. (i) Dwarakadhish Investment P. Ltd., (ITA.No. 911 of 2010) and (ii) Dwarkadhish Capital P. Ltd., (ITA.No.913 of 2010) (2011) 330 ITR 298 (Del.) (HC), in which it was held as under : "In any matter, the onus of proof is not a static one. Though in section 68 of the Income Tax Act, 1961, the initial burden of proof lies on the assesses yet once he proves the identity of the creditors/share applicants by either f....
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.... were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be non-existent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the genuineness of the transactions had been duly established by the assessee." 7.11. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Value Capital Services Pvt. Ltd., (2008) 307 ITR 334 (Del.) (HC), in which it was held as under : "Dismissing the appeal, that the additional burden was on the Department to show that even if the share applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. No substantial question of law arose." 7.12. The decisions relied upon by the Learned Counsel for the Assessee above squarely apply to the facts and circumstances of the case. Since the investor companies have confirmed the transaction ....