TaxTMI 
TaxTMI 
2019 (2) TMI 991
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....ineness of the subscription." 2. Briefly stated, some primary facts of the case are that the assessee company, incorporated on 14.02.2006, was engaged in the business of real estate agents, dealers in land, plots, buildings etc. and also in generation of power through wind mill and agricultural activity. The return of income was filed on 28.09.2012 at an income of Rs, 66,95,817/- and after setting off of brought forward losses, the income was taken as NIL. In the assessment proceedings, the Assessing Officer noticed that the assessee had claimed to have received share capital/premium amounting to Rs. 2,69,00,000/- as follows : (i). From two Directors - 190000 shares @ Rs. 10 each Rs.19,00,000 (ii). From company having common directors 150000 shares @Rs.10 each Rs.1,50,00,000 (iii). From unrelated corporate Entities- 100000 shares of Rs. 10 each at a premium of Rs. 90/- per share, total Rs. 100/-Per share Rs.1,00,00,000 Rs.2,69,00,000 3. The Assessing Officer, after scrutiny of details, however, made an addition of Rs. 1,30,00,000 u/s 68 as bogus share capital and after setting off of brought forward losses, the assessment was ....
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.... investors. (viii). No justification for charging high premium by assessee and for investment by unknown entities at such a huge amount of shares. In order to support the aforesaid conclusion for addition u/s. 68, the Assessing Officer relied on various decisions, as incorporated in the assessment order. The assessee carried the matter in appeal before the ld. CIT(A), who after considering the submissions of the assessee, attending facts of the case, and various case laws, allowed the appeal of the assessee and deleted the impugned addition vide impugned order. Aggrieved, the Revenue is in appeal before the Tribunal. 4. We have heard the submissions of both the parties on the issue involved in this appeal and have gone through the entire material available including the orders of the authorities below and various case laws relied by both the parties and relevant provisions of law. Both the parties have filed their written synopsis, which are also considered and placed on record. 5. In the factual matrix of the present case, as narrated above and arguments of both the parties, we find that the only dispute which needs adjudication is whether the ld. CIT(A) was just....
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....ed share capital as bogus. In our considered opinion, once, all the above documentary evidences are produced, the assessee had discharged the onus cast upon him. Thereafter, it was for the Assessing Officer to examine the same and to probe the matter, if he nurtures any doubt on the veracity/authenticity of these documents, which is completely lacking in the instant case. In our opinion, in order to disbelieve the documents produced by the assessee, there should be some inquiry and cogent material on record, which too is lacking in the instant case. Hon'ble Gujrat High Court in a recent decision of PCIT vs. D&H Enterprises, (2016) 72 taxmann.com 91 (Gujrat) on such issue held as under : "7. Thus, from the facts noted hereinabove, it is evident that the assessee had produced all relevant details in its possession, namely, names, permanent account numbers, income tax returns, and bank statements of all the investors. The amounts in question had been received by way of account payee cheques. Having regard to the fact that the permanent account numbers and the income tax returns of all the investors had been furnished by the assessee, the Assessing Officer could have easily ve....
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....ction of Assessing Officer on this count has rightly been discarded by the ld. CIT(A). 09. It is not disputed that all the share applicants are companies registered under the Companies Act, they are income-tax assessees and have reflected the impugned share investments in their respective balance sheets. It is also an undisputed fact that the share application money was obtained through account payee cheques of the investing companies and were credited to the bank account of assessee. The Assessing Officer observed from the bank statements that parallel entries of deposits before issue of cheques were found. However, in our opinion, without making any enquiry in respect thereof, it is hard to state that the credit entries in the bank accounts of the investor companies, were routed through the coffers of assessee and such a presumption cannot be sustained at all, particularly, when the share subscribers have declared their investments in their respective balance sheets. 10. The next objection of the Assessing Officer regarding non-existence of investor companies is based on the Inspector's report who on spot enquiry reported about non-existence of the investor companies. The c....
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....ne through the paper book filed by the assessee and found that in most of the cases, the investor companies had sufficient internal and external funds, so as to cover the investments made with the assessee company and the AO has failed to enquire into such facts before doubting the creditworthiness of the share holders. For this view, we stand fortified by recent decision of Hon'ble jurisdictional High Court in the case of CIT v. Vrindavan Farms (P) Ltd., in ITA No. 71 of 2015 dated dated 12 August 2015, relied by the ld. AR, where, the Hon'ble court has held as under : "3. The ITAT has in the impugned order noticed that in the present case the Revenue has not doubted the identity of the share applicant. The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their Income Tax Returns. The entire details of the share applicants were made available to the AO by the assessee. This included their PAN numbers, confirmations, their bank statements, their balance sheets and profit and loss accounts and the certificate of incorporation etc. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the ....
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....Officer was not justified to doubt the creditworthiness of the investing companies merely because they have shown low income. We, therefore, observe that the ingredients of section 68 stand satisfied on the part of the assessee. 14. The ld. counsel for the assessee in support of its contentions has also relied on the following decisions : (i) CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC) (ii) ACIT v. Shyam Indus Power Solutions (P.) Ltd. [2018] 90 taxmann.com 424 (Delhi - Trib.) (iii) CIT v. Kamdhenu Steel &. Alloys Ltd. [2014] 361 ITR 220/19 taxmann.com 26 (Delhi) (iv) CIT v. Winstral Petrochemicals (P.) Ltd. [2011] 10 taxmann.com 137 (Delhi) (v) CIT vs. Gangour Investment Ltd. (2009) 18 DTR (Del) 242: (2009) 179 Taxman 1 (Del) (vi) CIT v. Kamna Medical Centre (P.) Ltd. [2013] 35 taxmann.com 470 (Allahabad) (vii) CIT v. Miq Steels (P.) Ltd. [2013] 36 taxmann.com 422 (Allahabad) (viii) CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272 (Bombay) (ix) DCIT v. RCP Infratech (P.) Ltd. [2018] 95 taxmann.com 163 (Raipur - Trib.) (x) ACIT v. Venkateshwar Ispat (P.) Ltd. ....
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.... 366 ITR 110. (ix). CIT v. Focus Exports (P) Ltd. 51 taxmann.com 46 (Del.) (x). PCIT v. Bikram Singh (ITA No. 55/2017)(Delhi) (xi). PCIT vs. NDR Promoters Pvt. Ltd. (ITA No. 49/2018)(Delhi) On going through the same, we find that in the peculiar facts and circumstances attending to the present case, as narrated above, the said decisions relied by the ld. DR are not applicable, being based on different set of facts. Most of the decisions relied by the ld. DR have also been relied by the Assessing Officer in the assessment order and the assessee in his written synopsis has given their distinguishing features as under, which stand un-rebutted on behalf of the Revenue before us : S. No Citation Facts of the case law cited Why not applicable to the appellant 1 A Govindrajula Mudaliar v. CIT [1958] 34 ITR 807 (SC) In this case assessee stated that certain amount, was gifted to him by his father and secondly, the profits earned in a partnership concern which carried on business in arrack, in which T was only a benamidar for him. Both the facts were found incorrect Facts are not even remotely similar in the present case. 2 CIT v. ....
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....ors, which included 51 companies/persons, who were operating more than 100 bank accounts in different banks/branches. Their modus operandi was to provide accommodation entries to different persons/beneficiaries. In the present case no such facts are put on record that investor companies belong to a group, or that any kind of accommodation entry was provided. Further, summons on directors of 8 companies were served and all the 11 companies had 7 CIT v. Focus made compliances. Exports P Ltd. [2014] 51 taxmann.co m 46 (Delhi) In this case address and PAN were not provided for all parties whereas in case of some of share applicants, there were transactions of deposits and immediate withdrawals of money. In the present case Id. AO accepts that the details about address and PAN were provided. Further there is no finding that there was immediate 8 Sumati withdrawal of money. Dayal v. CIT 214 ITR 801 (Cal.) In this case explanation furnished by the assessee is considered practically improbable to happen like purchasing three winning tickets consequently for earning jackpot No such improbable circumstances or happening is pointed by Ld. AO 9 CIT v. L.N. Dalm....
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....leted additions made by ITO. It was held that a question of law arose. Facts are not even remotely similar in the present case. 14 ITO v. K. Jayaramam [1987] 168 ITR 757 (Mad.) In this case it was held that where an assessee or a party before the ITO or other authorities under the Act relies in support of his claim on a will or for that matter on any other document, it is not obligatory on the authorities to accept these documents without any inquiry. The authorities are bound to go into the question as to whether they should open the document produced before them. This would necessarily imply an inquiry into the genuineness or otherwise of the document, if necessary. Facts are not even remotely similar in the present case. 15 CIT v. Neelkanth Ispat Udyog Pvt. Ltd. ITA No. 427/2012 (Delhi) In this case the amounts were given by Mukesh Gupta and his Associates, a group of entry operators. These notices were either not complied with or returned with the remark "left". Mukesh Gupta, Ranjan Jassal etc stated that they were accommodation entry providers. The amount is deposited in cash and then routed through the multiple accounts. Facts are different, there i....