TaxTMI 
TaxTMI 
2018 (11) TMI 1320
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....civil work. The return of income for the Asst Year 2012-13 was filed by the assessee company on 30.9.2012 declaring total income of Rs. 30,97,180/-. The ld AO observed that during the year under appeal, the assessee had allotted paid up share capital to the tune of Rs. 86,00,000/-. The details of the same are as under:- 3.1. The assessee explained that it had received unsecured loans from all the aforesaid parties and that some of the parties had lent monies to the assessee in the earlier year and the same was carried over as opening balance during the year under appeal. On these loans, the assessee had paid interest up to the date of conversion of unsecured loans into equity share capital at face value. It was submitted that the interest paid on such unsecured loans was allowed as deduction by the ld AO in the earlier year. The details of the unsecured loans received and amounts converted into share capital together with details of interest paid duly subjected to deduction of tax at source are as under:- Name Balance at 31.03.2011 Addition Converted into Share Capital Interest TDS Closing balance as at 31.03.20112 Balasaria Holdings (P) Ltd. 9,41,974.50 6,00,000.00 15,....
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....vity and the taxable income for the Asst Year 2012-13 are substantially low. Later the ld AO issued summons u/s 131 of the Act to the director of the assessee company with a direction to produce the share subscribers and to prove the three ingredients of section 68 of the Act viz . identity of the creditors / shareholders , creditworthiness of the creditors / shareholders and genuineness of transactions, which, in the opinion of the ld AO , remain uncomplied with. The ld AO finally observed that due to complete noncompliance to the summons from the part of the assessee, the entire credit in the form of share capital along with premium raised by the assessee to the tune of Rs. 86,00,000/- during the year under consideration was to be treated as unexplained cash credit u/s 68 of the Act. 5. The ld CITA obtained remand reports from the ld AO wherein the ld AO observed that no fresh documents were furnished by the assessee and all the documents furnished in the remand proceedings were already on record before the file of the ld AO while framing the original assessment itself. Accordingly, the ld AO in the remand report vehemently supported the original assessment order and the additio....
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....e unsecured loans were converted into equity share capital at par during the year to the tune of Rs. 86,00,000/-. There is no share premium as wrongly stated by the ld AO in his order. Either way, there cannot be any addition towards the opening balance of unsecured loans by invoking the provisions of section 68 of the Act in the year under appeal. We find that the reliance placed by the ld AR on the decision of Hon'ble Karnataka High Court in the case of CIT vs Sridev Enterprises reported in 192 ITR 165 (Kar). We find that the reliance placed on the decision of Hon'ble Gujarat High Court in the case of DCIT vs Rohini Builders reported in 256 ITR 360 (Guj) is very well founded. We also find that the Hon'ble Jurisdictional High Court in the case of CIT vs J.J.Development (P) Ltd reported in 2016 (6) TMI 804 - Calcutta High Court in ITA No. 519/2008 dated 16.6.2016 had adjudicated the very same issue under dispute before us. The questions raised before the Hon'ble Jurisidictional High Court are as under:- (a) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding out of Rs. 95,00,000/-, Rs. 76,98,000/- constituted of ol....
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....ot also the fact that consent was not obtained. She drew our attention to paragraph 2 of the impugned judgement, wherein the learned Tribunal has recorded as follows : "The A.O. sent notices under section 133(6) to the above persons and notices were served on the persons except M/s Ramsay International and a letter sent by registered post to M/s Ramsay International also returned unserved. All the other share applicants confirmed that they had applied for the shares of the company." It is submitted that just because one of the applicants of the shares chose to go back on his commitment, the issuance of shares in his favour cannot become bad. But that, in any case, is a matter of dispute between the assessee and M/s Ramsay International with which the revenue is not concerned. We have considered the submissions advanced by Ms.Banerjee and are of the opinion that there is some force in her submission. In that view of the matter, we are of the opinion that question (c ) is not germane for the purpose of deciding the applicability of section 68. We are not called upon to decide the matter between the assesee and Ramsay International. Any observation if passed by us may adversely ....
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....18 had held that no addition could be made for the opening balance i.e amounts brought forward from earlier years by observing as under:- "3.3. We have heard the ld DR. We find that the ld CITA had given a finding that on examination of books and records, the unsecured loans of Rs. 31,58,367/- were only brought forward from earlier assessment years by the assessee and that the same were not received during the year under appeal. This fact remain uncontroverted by the ld DR before us. Hence the provisions of section 68 of the Act cannot be applied at all for the year under appeal before us. Hence we hold that the ld CITA had rightly deleted the addition thereon which does not require any interference. Accordingly, the Ground No. 1 raised by the revenue is dismissed." 6.4. At the cost of repetition, we would like to state that the interest paid on unsecured loans to all the loan creditors till the date of conversion of part of the amounts of the same into equity share capital were duly allowed as deduction by the ld AO. Hence there is no scope for treating the loan creditors / shareholders as ingenuine. We hold that the assesee had furnished all the required documents to prove tha....