TaxTMI 
TaxTMI 
2018 (12) TMI 1322
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.... payments made in share capital andshare premium. 2. Whether on the facts and in the circumstances of the case, and in law the Ld. CIT(A) has erred innot following the decision by the jurisdictional High Court in the case of Raj Mandir Estate privateLimited reported in 70 Taxmann 124(cal) and approved by the Hon'ble Apex Court in the decisioncited as 2017-TIOL-13-SC-IT dated 09.01.2017. 3. That the appellant craves for leave to add, delete amend or modify any ground before or at thetime of appellate proceedings." 3. The appeal filed by the Revenue in ITA No.1755/Kol/2017, for Assessment Year 2012-13, is barred by limitation by 24 days. The Revenue moved a petition for condonation of delay in filing the appeal. We have heard both the parties on this preliminary issue and having regard to the reasons given in the affidavit, we condone the delay and admit the appeal for hearing. 4. The facts of the case may be stated briefly. The assessee company filed its return of income for Assessment Year 2012-13, showing total income at Rs.NIL. The assessee's case was selected for scrutiny u/s 143(2) of the Act and the Assessing Officer completed the assessment u/s 143(3) of the Act by ....
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....eturns show a nominal income/loss. iv) No business activity. v) Investor companies received share capital with huge premium, andwas in turn invested inthe assessee company and similar other companies as well. Therefore, the Assessing Officer noted that it was important to understand as to how the investment decisions that too at a huge premium was taken, whether the applicants did not have their ownprofit, making apparatus to invest. Also whether the transactions in the bank statements were merely for rotating money or the transactions are commensurate with the income of those companies etc. Therefore, the Assessing Officer noted that unless the assessee and applicant companies appear with all its books, bankstatements, copies of return and the income tax returns of the directors, the answers to these questions will not be found out. As to how the onus can be discharged would depend on the facts and circumstances of each case. Under the circumstances, if considered in the light of preponderance of probability and normal human behavior, the entire amount should be treated as unexplained cash credit. The Assessing Officer noted that section 68 of the Act requires the assessee to....
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....nd genuineness of the share capital and share premium received from various entities. During the assessment proceedings, the assessee only submitted the books of accounts, documents and some details before the Assessing Officer, but did not appear in person, in response to the summons u/s 131 of the Act. The director of the assessee company should have appeared before the Assessing Officer to explain the documents and details submitted before him. The assessee, during the assessment proceedings was just dumping papers and documents on the table of the Assessing Officer and this does not mean that the assessee is making compliance. If the books of accounts, documents and papers are not explained by the assessee, then Assessing Officer would not able to do complete examination of the three ingredients of the section 68 namely: identity, creditworthiness and genuineness. Therefore, Assessing Officer was right in making the disallowance u/s 68 of the Act. Apart from this, the assessee has introduced his unaccounted money by way of issuing shares at a higher premium. The assessee company does not have much track record and goodwill therefore it is not able to fetch so much premium, ther....
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....efore, considering these facts and circumstances, the addition made by the assessing officer should be upheld. 11. On the other hand, the ld. Counsel for the assessee submitted that assessee received the share application money including share premium amounting to Rs. 5,00,00,000/- from the five companies. The details of which are given below: Sl. No. Name Address Share capital @Rs.10 Share Premium @Rs.40 Amount (Rs.) 1 M/s Ganpati Hirise Pvt. Ltd. 45/D, S.N. Roy Road, Ground Floor, Behala, Kolkata - 700 038. 32,00,000/- 1,28,00,000/- 1,60,00,000/- PAN:AACCG5934A 2 M/s Gazal Textiles &Finvest Pvt. Ltd. 40, Weston Street, 3rd Floor, Kolkata-13. PAN:AABCG1486C 6,00,000/- 24,00,000/- 30,00,000/- 3 M/s Landmark Exim Pvt. Ltd. 47/1A, S.N. Roy Road, 3rd Floor, Flat No.8, Behala, Kol-38. PAN:AABCL1397D 27,00,000/- 1,08,00,000/- 1,35,00,000/- 4 M/s Procton Commerce Pvt. Ltd. 15, Bow Street, 1st Floor, P.S.-Bowbazar, Kol-12. PAN:AABCP6029N 13,00,000/- 52,00,000/- 65,00,000/- 5 M/s Sarvottam Commercial Pvt. Ltd. 203, Sarat Bose Road, 4th Floor, Tollygunge, Kol- 29. PAN:AADCS6468E 22,00,000/- 88,00,000/- ....
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.... the Act was issued to the subscribers of the share capital to which all of them made part compliance by submitting all the details asked for in the said notice and which the Assessing Officer himself has mentioned in his assessment order.In addition to this, the directors of the subscribing companies appeared before the assessing officer, who refused to record their presence due to his preoccupancy with the time barring cases. In spite of this, these investor companies filed documents, books of accounts and details as required by the Assessing Officer. But the Ld. AO without taking into cognizance the details and documents submitted,passed the assessment order making the addition ofthe entire amount to the income of the assessee, which is unjustified.Further on the observation made by the Ld. AO that the share application money receivedduring the financial year have been shown as again invested in different private limited companies.In this regard, it is submitted that the assessee is in the business of trading and investing inshares and securities. Therefore, for the purpose ofits business, the assessee had investedin shares and securities so that its business activities do not ....
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..../- 24,00,000/- 30,00,000/- 3 M/s Landmark Exim Pvt. Ltd. 47/1A, S.N. Roy Road, 3rd Floor, Flat No.8, Behala, Kol-38. PAN:AABCL1397D 27,00,000/- 1,08,00,000/- 1,35,00,000/- 4 M/s Procton Commerce Pvt. Ltd. 15, Bow Street, 1st Floor, P.S.-Bowbazar, Kol-12. PAN:AABCP6029N 13,00,000/- 52,00,000/- 65,00,000/- 5 M/s Sarvottam Commercial Pvt. Ltd. 203, Sarat Bose Road, 4th Floor, Tollygunge, Kol- 29. PAN:AADCS6468E 22,00,000/- 88,00,000/- 1,10,00,000/- Total 5,00,00,000/- From the paper book submitted by the ld counsel, where we note that the aforesaid shareholders had submitted the following relevant details as called for and had confirmed the transaction with the assessee company. The evidence which were filed before the AO, included the following details. a) Copy of Form - l8 filed with ROC as address proof and copy of PAN cardfor identity proof. b) Copy of PAN Card of the Directors. c) Copy of shareholders list for the financial year 2011-12. d) Copy of Annual Return for the FY 2009-10, 2010-11 and 2011-12. e) Copy of I.T. Return along with audited accounts for the F.Y 2009-10 onwards. f) Copy of bank statement duly sh....
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....eceipt of money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). In arriving at this conclusion, the Hon'ble Court has further stressed the presence of word "may" in section 68. Relevant observations at pages 369 and 370 of this report are reproduced hereunder:- "Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-complian....
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.... that section 68 does not authorize the Revenue Department to make inquiry into the source(s) of the credit and/or subcreditor. The language employed by section 68 cannot be read to impose such limitations on the powers of the Assessing Officer. The logical conclusion, therefore, has to be, and we hold that an inquiry under section 68 need not necessarily be kept confined by the Assessing Officer within the transactions, which took place between the assessee and his creditor, but that the same may be extended to the transactions, which have taken place between the creditor and his sub-creditor. Thus, while the Assessing Officer is under section 68, free to look into the source(s) of the creditor and/or of the sub-creditor, the burden on the assessee under section 68 is definitely limited. This limit has been imposed by section 106 of the Evidence Act which reads as follows: "Burden of proving fact especially within knowledge.-When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. " ******** What, thus, transpires from the above discussion is that white section 106 of the Evidence Act limits the onus of the assessee to the ....
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...., these aspects may not be within the special knowledge of the assessee. " ********** " ... If a creditor has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the creditor fails to satisfy as to how he had actually received the said amount and happened to keep the same in the bank, the said amount cannot be treated as income of the assessee from undisclosed source. In other words, the genuineness as well as the creditworthiness of a creditor have to be adjudged vis-a-vis the transactions, which he has with the assessee. The reason why we have formed the opinion that it is not the business of the assessee to find out the actual source or sources from where the creditor has accumulated the amount, which he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuineness of the transaction and the creditworthiness of the creditor vis-a-vis the transactions which had taken place between the assessee and the creditor and not betw....
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....tantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. Viewed from this angle, we have no hesitation in holding that in the case at hand, the Assessing Officer had failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. In the absence of any such evidence on record, the Assessing Officer could not have treated the said amounts as income derived by the appellant from undisclosed sources. The learned Tribunal seriously fell into error in treating the said amounts as income derived by the appellant from undisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness." 19. Further, in the case of CITv. S. Kamaljeet Singh [2005] 147 Taxman 18(All.) their lordships, on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, has observed and held as under:- "4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee....
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....and decision of Ld. CIT(A) upheld and the Hon'ble High Court has held that when the basic evidences are on record the mere failure of the creditor to appear cannot be basis to make addition. The court held as follows: 8. Assailing the said judgment of the learned Tribunal learned counsel for the appellant submits that Income-tax Officer did not consider the material evidence showing the creditworthiness and also other documents, viz., confirmatory statements of the persons, of having advanced cash amount as against the supply of bidis. These evidence were duly considered by the Commissioner of Income-tax (Appeals). Therefore, the failure of the person to turn up pursuant to the summons issued to any witness is immaterial when the material documents made available, should have been accepted and indeed in subsequent year the same explanation was accepted by the Income-tax Officer. He further contended that when the Tribunal has relied on the entire judgment of the Commissioner of Income-tax (Appeals), therefore, it was not proper to take up some portion of the judgment of the Commissioner of Income-tax (Appeals) and to ignore the other portion of the same. The judicial propriety an....
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....onsider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. " 11. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. 12. Taking inspiration from the Supreme Court observations we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Commissioner of Income-tax (Appeals). We also found no single word has been spared to up set the fact finding of the Commissioner of Income-tax (Appeals) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. 13. Hence, the judgment and order of the Tribunal is not sustainable. ....
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....ition for the simple reason that if the share application money is received by the assesseecompany from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. 24. Our attention was also drawn to the decision of the Hon'ble Calcutta High Court while relying on the case of Lovely Exports, in the appeal of COMISSIONER OF INCOME TAX, KOLKATA-IV Vs ROSEBERRY MERCANTILE (P) LTD., ITAT No. 241 of 2010 dated 10- 01-2011 has held: "On the facts and in the circumstances of the case, Ld. CIT(A) ought to have upheld the assessment order as the transaction entered into by the assessee was a scheme for laundering black money into white money or accounted money and the Ld. CIT (A) ought to have held that the assessee had not established the genuineness of the transaction. " It appears from the record that in the assessment proceedings it was noticed that the assessee company during the year under consideration had brought Rs. 4,00,000/- and Rs.20,00,000/- towards share capital and share premium respectively amounting to Rs.24,....
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....the assessee company and as such the addition made by the Assessing Officer under Section 68 of the Act was wrong. The learned Commissioner of Income Tax (Appeals) after hearing the department and the Assessee Company deleted the addition of Rs. 52,03,500/- to the income of the assessee company during the Assessment Year in question. The learned Commissioner of Income Tax Appeals found that there were as many as 2155 allottees, whose names, addresses and respective shares allocation had been disclosed. The Commissioner of Income Tax Appeals, further found that the Assessee Company received the applications through bankers to the issue, who had been appointed under the guidelines of the Stock Exchange and the Assessee Company had been allotted shares on the basis of allotment approved by the Stock Exchange. The Assessee Company had duly filed the return of allotment with the Registrar of Companies, giving complete particulars of the allottees. The Commissioner of Income Tax (Appeals) found that inquires had confirmed the existence of most of the shareholders at the addresses intimated to the Assessing Officer, but the Assessing Officer took the view that their investment in ....
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..... By an order dated 2nd May, 2001, this Court admitted the appeal on three questions which essentially centre around the question of whether the Appellate Commissioner erred in law in deleting the addition of Rs. 52,03,500/- to the income of the assessee as made by the Assessing Officer. We are of the view that there is no question of law involved in this appeal far less any substantial question of law. The learned Tribunal has concurred with the learned Commissioner on facts and found that there were materials to show that the assessee had disclosed the particulars of the shareholders. The factual findings cannot be interfered with, in appeal. We are of the view that once the identity and other relevant particulars of shareholders are disclosed, it is for those shareholders to explain the source of their funds and not for the assessee company to show wherefrom these shareholders obtained funds." 26. Further, our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the case of Commissioner of Income Tax vs M/s. Leonard Commercial (P) Ltd on 13 June, 2011 in ITAT NO 114 of 2011 wherein the Court held as follows: "The only question raised in this appe....
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....sions of the Hon'ble Apex and jurisdiction High court and other High Courts let us examine the present case in hand. We will examine each share subscribers totallingfive (5). The Ld. counsel took pains to bring out the relevant facts in respect of each share subscribers which will throw light as to the identity, creditworthiness and genuineness of the share subscribers, which are given below: (1). M/s. Ganpati Hirise Pvt. Ltd. Vide its letter filed on 20.03.2015 submitted the following documents:- a) Copy of Form - l8 filed with ROC as address proof and copy of PAN card for identity proof. b) Copy of PAN Card of the Directors. c) Copy of shareholders list for the financial year 2011-12. d) Copy of Annual Return for the FY 2009-10, 2010-11 and 2011-12. e) Copy of I.T. Return along with audited accounts, Balance sheet, for the F.Y 2009-10 onwards. f) Copy of bank statement duly showing the transaction. (2). M/s. Gazal Textile & Finance Pvt. Ltd, vide its letter filed on 20.03.2015 submitted the following documents: a) Copy of Form-18 filed with ROC as address proof and copy of PAN card for identity proof b) Copy of PAN card of both the Directors of the Company c....
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....opy of PAN Card for identity proof and copy of Driving License as a proof of address. b) Copy of Income Tax Return for the A.Y. 2010-11, 2011-12 & 2012-13 c) Copy of Profit & Loss Account and Balance Sheet for the F.Y. 2009-10 onwards. d) Copy of Bank Statement for the relevant period. 28. From the details as aforesaid which emerges from the paper book filed before us as well as before the lower authorities, it is vivid that all the share applicants are (i) income tax assessee's, (ii) they are filing their return of income, (iii) the share application form and allotment letter is available on record, (iv) the share application money was made by account payee cheques, (v) the details of the bank accounts belonging to the share applicants and their bank statements, (vi) in none of the transactions the AO found deposit in cash before issuing cheques to the assessee company, (vii) the applicants are having substantial creditworthiness which is represented by a capital and reserve of the respective companies. 29. As noted from the judicial precedents cited above, where any sum is found credited in the books of an assessee then there is a duty casted upon the assessee to explain ....
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....te Amount (Rs.) Particulars Date Amount (Rs.) Particulars 1 M/s Ganpati Hirise Pvt. Ltd. 25.04.11 1,60,00,000 Ch No.780813, on Syndicate Bank 25.04.11 1,73,64,400 From M/s Emami Biotech Ltd. (vide Ch No.001612) against sale of shares of Oriental Sales Agency Pvt. Ltd. --- 2 M/s Gazal Textiles &Finvest Pvt. Ltd. 26.04.11 30,00,000 Ch No.289900 on Syndicate bank 26.04.11 1,00,00,000 From M/s Lily Abasan Pvt. Ltd. (vide ch no.435197) towards share application money On 26.04.11 Rs. 1,80,85,200 From M/s Emami Biotech Ltd. (vide Ch No.001611) against sale of shares of Oriental Sales Agency Pvt. Ltd. 3 M/s Landmark Exim Pvt. Ltd. 26.04.11 1,35,00,000 Ch No.437350 on Syndicate bank 26.04.11 1,73,43,200 From M/s Emami Biotech Ltd. (vide Ch No.001607) against sale of shares of Oriental Sales Agency Pvt. Ltd. --- 4 M/s Procton Commerce Pvt. Ltd. 26.04.11 65,00,000 Ch No.923985 on Syndicate Bank 26.04.11 67,50,000 From M/s Pujam Sales & Services Pvt. Ltd. (vide Ch No.924004) towards share application money On 26.04.11 Rs. 1,81,43,200 From M/s Emami Biotech Ltd. (vide Ch No.001613) against sale of shares of Oriental Sales Agency Pvt. Ltd. ....
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....n of the company receiving the share application money is to prove the existence of the shareholders and for which the assessee had discharged the onus of proving their existence and also the source of share application money received. 3.4. 1. We also find that the impugned issue is also covered by the decision of Hon'ble Calcutta High Court in the case of CIT vs Roseberry Mercantile (P) Ltd in GA No. 3296 of 2010 ITAT No. 241 of 2010 dated 10.1.2011, wherein the- questions raised before their lordships and decision rendered thereon is as under:- "On the facts and in the circumstances of the case, Ld. CIT(A) ought to have upheld the assessment order as the transaction entered into by the assessee was a scheme for laundering black money into white money or accounted money and the Ld. CIT(A) ought to have held that the assessee had not established the genuineness of the transaction. " IT A No. 1669/KoI/2009-C-AM M/s. Global Mercantiles Pvt. Ltd 11 Held After hearing the learned counsel for the appellant and after going through the decision of the Supreme Court in the cases of CIT vs M/s Lovelv Exports Pvt Ltd, we are at one with the tribunal below that the point involved in....
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....me tax returns, PA No. of share applicants along with their balance sheet. The Learned CITA also observed that the assessee in its reply to show cause notice before the Learned AO had requested him to use his power and authority for the physical appearance of the shareholders which was not exercised by the Learned AO. Instead the Learned AO continued to insist on the assessee to produce the shareholders before him. He ultimately concluded that the assessee had duly discharged its onus of providing complete details of the shareholders and in any case, no addition could be made u/s 68 of the Act in the asst year under appeal as no share application monies were received during the asst year under appeal. Aggrieved, the Revenue is in appeal before us by filing the following ground:- "That in the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made u/s 68 in respect of the allotment of shares to 20 numbers of individual investors for an amount of Rs. 57 lakhs, where genuineness of the transactions and creditworthiness of the investors were not established." 4.3. The Learned DR prayed for admission of the additional ground raised before us and v....
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.... for which every details were very much made available to him by the assessee. We find that the reliance placed by the Learned CITA on the decision of the Hon'ble Apex Court in the case of CIT vs Lovelv Exports (p) Ltd reported in (2008) 216 CTR 195 (SC) is very well founded, wherein, it has been very clearly held that the only obligation of the company receiving the share application money is to prove the existence of the shareholders and for which the assessee had discharged the onus of proving their existence and also the source of share application money received. 6.1. We also find that the impugned issue is also covered by the decision of Hon'ble Calcutta High Court in the case of CIT vs Roseberrv Mercantile (P) Ltd in GA No. 3296 of 2010 ITAT No. 241 of 2010 dated 10.1.2011, wherein the questions raised before their lordships and decision rendered thereon is as under:- - "On the facts and in the circumstances of the case, Ld. CIT(A) ought to have upheld the assessment order as the transaction entered into by the assessee was a scheme for laundering black money into white money or accounted money and the Ld. CIT(A) ought to have held that the assessee had not estab....
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.... No.1061/Ko1/2012 in the case of ITO Wd.3(2) Kol, vs. M/s. Steel Emporium Ltd dated 05-02-2016. In this the decision the Ld. Tribunal held as follows: "10. We have heard both the rival parties and perused the materials available on record. The Ld. DR vehemently supported the order of the AO. Before us the Ld. AR submitted that the assessee raised share application money during the year from 25 applicants. The AO was furnished with the copy of Form 2 of Allotment of Shares to the Applicants as filed with the Registrar of Companies, West Bengal. On the date of receipt of Share applications from the Applicants, they furnished their addresses, which were recorded in the Register of Members. The AO observed that as per ROC records the addresses of the nine companies were different from the address as per Form filed with him. The AO issued notices u/s.133(6) to all the companies at the addresses furnished in Form 2 as filed with him, which were duly served at the given addresses. The A0 argued that the letters should not have been served at the given address by the assessee. He served a show cause notice dated 09.12.2011 asking for the explanation from the assessee as to how the notice....
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....k statements. j) Copy of Income tax acknowledgment of return filed for AY 2009- k) Copy of PAN Card. l) Details of sources of funds. m) Copy of covering letter for delivery of shares. n) Copy of master data as per ministry of Company Affairs records. o) Copy of Annual return. p) Copy of Memorandum and articles of Association. Finally the Ld. AR relied on the order of the Ld. CIT(A 10. 1 From the aforesaid discussion we find that the AO has made the addition of the share application money because all the nine companies were having the common address and the notice sent under section 133(6) was received by the single person. Accordingly, the AO opined that the assessee has used its unaccounted money in the share application transactions. However, we find that all the money received in the form of share capital is duly supported with the requisite document as discussed above. To our mind the basis on which the addition was made by the AO is not tenable. The Ld. DR also could not brought anything on record to controvert the findings of the Ld. CIT(A). In view of above we find no reason to interfere in the order of the Id. CIT(A). Accordingly the ground raised by Revenu....
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....ds of appellant company. On going through the various judicial pronouncements relied upon by the appellant, it is observed that the view taken as above is also supported by them. In view of above the AO is directed to delete the addition of Rs.54,00,000/ -. The ground Nos. 2 and 3 are allowed, " 7. Aggrieved by the order of CIT(A) the Revenue is in appeal before the Tribunal. 8. We have heard the submissions of the learned DR, who relied on the order of AO. The learned counsel for the assessee relied on the order of CIT(A) and further drew our attention to the decision of Hon'ble Allahabad High Court in the case of CIT vs Raj Kumar Agarwal vide ITA No. 179/2008, dated 17. 11.2009 wherein the Hon 'ble Allahabad High Court took a view that non production of the director of a Public Limited company which is regularly assessed to Income tax having PAN, on the ground that the identity of the investor is not proved cannot be sustained. Attention was also to the similar ruling of the ITAT Kolkata bench in the case of ITO vs Devinder Singh Shant in IT A No.20BIKo112009 vide order dated 17.04.2009. 9. We have considered the rival submissions., We are of the view that order of ....
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....ved by the assessee from its own undisclosed sources nor any material was brought on record to show that the applicants were bogus. The Revenue was neither able to controvert the documentary evidences filed by the appellant nor prove that the share application were ingenuine or the applicants were noncreditworthy. The findings of the CIT(Appeals) were upheld by the Income-tax Appellate Tribunal. On appeal to the High Court, the Revenue placed strong reliance on the decision of another coordinate Bench of the same Court in thecase of CIT Vs Novo Promoters &Finlease (P) Ltd (342 ITR 169). The High Court however held that the aforesaid judgment was distinguishable from the facts of the present case. The Court observed that in that judgment the Assessing Officer had brought on record enough corroborative evidence to show that the assessee had routed unaccounted monies into its books through medium of share subscription. The share applicants had confessed that they were "accommodation entry providers". The Assessing Officer in the latter case was able to prove with enough material that the share subscription was a pre-meditated plan to route unaccounted monies. In the present case howev....
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....s stated that the actual amount received was Rs.55,50,000/- and not Rs.1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount is to be taken at Rs.55,50,000/-. The assessee has further tries to explain the source of this amount of Rs.55,50,000/- by furnishing copies of share application money, balance sheet etc. of the parties mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly considered and found not acceptable. This entry remains unexplained in the hands of the assessee as has been arrived by the Investigation wing of the department. As such entries of Rs.550000/- received by the assessee are treated as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has furnished inaccurate particulars of its income/ penalty proceedings under Section 271(1)(c) are being initiated separately. The facts of Nova Promoters and Finlease (P) Ltd. (supra) fall in the former category an....
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....the decision of the Supreme Court in Lovely Exports (supra). The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supra). Where the assessee adduces evidence in support of the share application monies, it is open to the Assessing Officer to examine it and reject it on tenable grounds. In case he wishes to rely on the report of the investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between the assessee and the alleged hawala operators, such a link was shown to be present in the case of Nova Promoters &Finlease (P) Ltd. (supra) relied upon by the revenue. We are therefore not to be understood to convey that in all cases of share capital added under Section the ratio of Lovely Exports (supra) is attracted, irrespective of the facts, evidence and material. " 34. We note that assessee under consideration, not only has proved the source, but he has proved source of source also. Para 29 of this order contains the chart, which explains that assessee has proved source of source, which he need not to prove. In this case on hand,the assessee had discharged its onus to prove the identity, creditw....
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.... personal identity. The subscriber companies submitted every detail as mentioned in para 27 of this order. We note that during the appellate proceedings the assessee submitted some additional evidences and information which the ld. CIT(A) has sent for remand report for examination of the Assessing Officer. This clinching remand supported assessee's grievance. After getting proper remand report, the ld. CIT(A) came to the conclusion that assessee has proved identity, creditworthiness and genuineness of the transactions. We note that 'source of fund' of share applicants viz. Sarvottam Commercial Pvt. Ltd., M/s. Landmark Exim Pvt. Ltd and M/s Ganpati Hirise Pvt. Ltd, is directly from M/s. Emami Biotech Ltd. (now M/s. Emami Agrotech Ltd.) and the source of source of fund of the Share Applicants viz. M/s. Ghazal Textiles and Finance Pvt. Ltd and M/s. Procton Commerce Pvt. Ltd, is also M/s Emami Biotech Ltd. (now M/s. Emami Agrotech Ltd.), which is a highly reputed company. Therefore, assessee has even proved the source of source of share applicants in the instant case. We note that section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee....