TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 16
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of carried forward losses against the income determined for the year. 2.1 During the case of hearing, the ld.AR of the assessee has not pressed the Ground No. 1. Hence, the same is dismissed being not pressed. 3.1 In the written submission, the ld.AR of the assessee has mentioned the Ground No. 3 and 4 of the assessee as consequential. Hence, the same do not require any adjudication by us. 4.1 At the outset of the hearing, the ld.AR of the assessee vide its application dated 27-06-2018 prayed hereunder to admit the additional evidence under rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. ''1. With reference to above subject we would like submit that during the course of assessment proceedings as well as appellate proceedings due to nonavailability of time we could not submit the vital and necessary evidences in support of our claim regarding share application money received from Shri Jagjeet Singh Gabha which is bank statement. At the time of assessment proceeding the share applicant was not in India and is residing abroad. Therefore we could not produce the bank statement. Now we have obtained all the bank statement which is submitting in paper book page no. 10 &....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... evidence produced by assessee regarding loan. (v) CIT Vs. Gani Bhai Wahab Bhai 232 ITR 900 (MP) - There is no prohibition for taking additional evidence at the appellate stage, the only condition being that the Department should not be prejudiced and should be given reasonable opportunity to rebut this additional evidence. In this case, no such request was made by the representative of the Department whether they disputed this certificate or not. Therefore, there is no illegality committed by the Tribunal which accepted the certificate of 46 per cent of the yield. In this view of the matter, the additional evidence entertained by the Tribunal cannot be said to be bad. (vi) Smt. Surinder Kaur Vs. ITO (2008) 118 TTJ 710 (Luck) - Where additional evidence sought to be produced before Tribunal was a certificate relating to assessee's claim for deduction of a sum and if was relevant to decide claim of assessee, same was to be admitted for substantial cause and to enable tribunal to pass appropriate order in matter. (vii) Mascon Global Ltd. Vs. Assistant Commissioner of Income Tax (2010) 37 SOT 202 (Chennai) - Rule 29 permits the Tribunal to admit the additional evidence for a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....also seen in the previous years. These statements show that Shri Jagjit Singh urf Shri Jeetji who is also owner of Quick Forex Transfer Limited is far beyond the creditworthiness of making advance to the assessee in share capital and security premium in the year relevant to Assessment Year 2013-14. Merely proving the identity of the creditor does not discharge the onus of the assessee if the capacity of creditworthiness of the creditors is not proved. Further, the assessee company has not filed any evidence regarding his wife's income. It is also worthwhile to say that the assessing officer when starts enquiry specifically to satisfy himself of the source of such credit and if during the enquiry he is satisfied that the entries are not genuine then he has every right to add the said sum represented by such credit entry as income of the assessee. However, satisfaction must not be illusory or imaginary but must have been derived from the relevant facts and evidences and on the basis of proper enquiry of all material before him. Hence, investment made by Shri Jagjit Singh amounting to Rs. 85,23,000/- also remains unproved in context to the section 68 of the Act and becomes eligible ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Income Tax Act, 1961 determining total income at Rs. 85,23,000/- inter alia making the addition of Rs. 85,23,000/- u/s 68 of the Income Tax Act, 1961 in respect of share application money of Shri Jagjit Singh Gabha. The addition made by the Learned Assessing Officer and confirmed by the Learned CIT(A) is unjust, unlawful and illegal. The same is assailed as under: - 2. Share application money of Rs. 85,23,000/- of Shri Jagjit Singh Gabha is genuine: - It is submitted that during the course of assessment proceedings the assessee submitted that the share application money of Rs. 85,23,000/-received from Shri Jagjit Singh Gabha was genuine. It was submitted before the Learned Assessing Officer that Shri Jagjit Singh Gabha was a British Citizen. In support of this a copy of passport was submitted. Copy of which is available on paper book page number 3 to 7. This establishes the identity of share applicant. It was further submitted that Shri Jagjit Singh Gabha was operating a company as a single director name Quick Forex Transfer Ltd. The company's principle activity during the year under consideration was money transfer and exchange bureau. In support of this copies of fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncial capacity and capability is proved. The company was owned by him is engaged in the activity of money transfer and exchange bureau. It is submitted that the entire funds have come from London in the account of the assessee. Thus the assessee has discharged his onus of proving the genuineness of the share application money. In the facts and circumstances there was no case either with the Learned Assessing Officer for making the addition or with the Learned CIT(A) for confirming the same. The addition was made by the Learned Assessing Officer as he totally failed to appreciate the facts of the case. It is worthwhile to quote on the order of the Learned Assessing Officer as why he rejected the share application money received, the assessee has not filed any evidence regarding his wife 3. Provisions of section 68 are not applicable: - It is submitted that in para 5.2 the Learned Assessing Officer has referred to the provisions of section 68 and provision insured by Finance Act, 2012. As per this provision the assessee is required to offer explanation about the nature and source of the person making the share application money. This is applicable only in case the person making....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened, that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself." (emphasis supplied) The learned counsel for the appellant-revenue is not in a position to dispute the proposition aforesaid. In view of the above, we have no hesitation in upholding the objection of the learned counsel for the respondent that the question as formulated does not arise in this case because so far as the assessee company is concerned, the amount referable to the share application cannot be attributed to it; and cannot be assessed in its hands. It is submitted that the above decision of the Territorial High Court of Rajasthan is based on the Supreme Court decision cited therein. The position being so the addition deserves to be deleted. (ii) CIT Vs. Supertech Diamond Tools ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....diation at face value and construe it, without more, against the assessee; (7) the AO is duty bound to investigate the creditworthiness of the creditor/ subscriber, the genuineness of the transaction and the veracity of the repudiation. It is for Parliament to introduce legislation if the duty presently resting on the Department is thought to be too onerous. The Court ought not to twist the language of a statute to remove the burden of proof altogether from the Department even though it has the necessary wherewithal to discharge it.'' (v) CIT vs Steller Investment Ltd (2001) 251 ITR 263 (SC) :- Even if it is assumed that the subscribers to the increased capital were not genuine, under no circumstances could the amount of share capital be regarded as undisclosed income of the company u/s 68. (vi) CIT vs Lovely Exports (P) Ltd (2008) 216 CTR 195 (SC): - Even if the share application money is received by the assessee company from the alleged bogus share holders, whose names are give to the AO then the department is free to proceed to reopen their individual assessment in accordance with law but it cannot be regarded as undisclosed income of assessee company. (vii) Smilax Pharmac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is pertinent to mention that ld.AR of the assessee relied on the decision of ITAT Delhi Bench dated 12th April 2013 in the case of Russian Technology Centre (P) Ltd. vs DCIT, Circle - 13, New Delhi (ITA No.4932, 4933, 5390 & 5391/Del/2011) wherein the bench observed as under:- ''13......In our considered opinion the conflict between the provisions is only with reference to the onus and not to the issue of taxability of income. The onus is shifted under ss. 68 or 69 only with reference to the income which is otherewise taxable in the hands of non-resident under section 5(2). Therefore, the issue whether the income of non-resident is taxable or not is still to be decided with reference to the provisions of section 5(2) and the provisions of section 68 or 69 cannot enlarge the scope of section 5(2). What is not taxable under section 5(2) cannot be taxed under the provisions of section 68 or 69. Under sections 5(2), the income accruing or arising outside India is not taxable unless it is received in India. Similarly, if any income is already received outside India, the same cannot be taxed in India merely on the ground that it is brought in India by way of remittances. Reference ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... then the burden was not on the assessee to prove the creditworthiness of the said person. The position of the present case is identical. It is not the case of any of the parties that M/s. Alliance Industries Limited, Sharjah is a bogus company or a non-existent company and the amount which was subscribed by the said company by way of share subscription was in fact the money of the respondent assessee. In the present case, the assessee had established the identity of investor who had provided the share subscription and it was established that the transaction was genuine though as per contention of the respondent the creditworthiness of the creditor was also established. In the present case, in the light of the judgement of Lovely Exports (P) Ld., we have to see only in respect of the establishment of the identity of the investor. The Delhi High Court also in Divine Leasing & Finance Ltd. (supra) considering the similar question held that the assessee company having received subscription to the public/ rights through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 in the absence of any positive material or evidence to i....