AI Drafter 
TaxTMI 
TaxTMI 
2019 (3) TMI 1194
X X X X Extracts X X X X
X X X X Extracts X X X X
....rounds be set aside and that of the Assessing Officer be restored. 3. The Appellant craves leave to add, amend or alter all or any of the grounds of appeal which may be necessary." 3. The facts in brief are that a search/survey action under section 132/133A of the Act was conducted at the residential and business premises of Shri Pravin Kumar Jain on 01.10.2013 by the Investigation Wing. During the course of search and post investigation it was found that Shri Pravin Kumar Jain along with various group companies was engaged in the business of providing accommodation entries through cheques against the cash from the said entities. The assessee was also found to have indulged and availed the said bogus entries by way of subscription of share capital on premium from two entities namely M/s. Duke Business Pvt. Ltd. and M/s. Vanguard Jewels Ltd. of Rs. 1,00,00,000/- each. Thus the investigation wing passed on the said information to the AO and it is in this background the re-assessment proceedings were initiated and inquiries were conducted. During the re-assessment proceedings the AO issued notice under section 133(6) of the Act to the said entities in order to verify the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....turns of income. The parties have responded to the notices u/s 133(6). The appellant has explained that in case of M/s Duke Business Pvt. Ltd. and Vanguard Jewels Ltd. , the loss is on account of foreign exchange losses incurred during the year. The appellant has filed detailed explanation of source of funds of investor and contended that they have genuine business activity. The appellant has submitted that notices were served on the investors in all cases, Therefore it cannot be said that the parties did not exist at their addresses. Documentary-evidences were already filed by the appellant earlier in the assessment proceedings. Confirmation letters with PAN and address, bank statements of applicants, Income Tax return acknowledgement, audited accounts balance sheet and P & L account and copy of share application form of the investor companies have been filed before the assessing officer and also in the appellate proceedings. 19. I do not find any merit in the contention of the appellant that the investment being a share capital is a capital receipt and therefore cannot be considered as income in the hands of the appellant. The credits fall within the scope of section 68 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n an opportunity to put together appellant specific evidence justifying the addition. 23. It can be seen from the observation of the Assessing Officer that he has only referred to the information related to the outcome of search in the case of Shri Pravin Kumar Jain Group who were allegedly providing accommodation entries but the Ld. Assessing Officer has failed to demonstrate any such specific evidence that the appellant has in reality obtained any accommodation entries. There is no direct specific mention of the appellant by the director or key persons of the investor companies. There is no evidence of cash deposits linked to the investors. The assessing officer did not bring specific incriminating evidence linking the investor to the appellant. The only link is that the investors have invested in appellant company. That the appellant has given cash to the investors in lieu of entry is merely alleged but not demonstrated. Opportunity for cross examination is not provided to the appellant. Papers/evidence found in the search action raises presumption but the same is available in the case of person searched but not in the case of third parties unless proved and corroborate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....source of income of the said alleged creditors to find out whether they are creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the Respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence". Reliance is also placed on the following decisions: i. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Value Capital Services P.Ltd. (2008) 307 ITR 334 (Delhi). ii. Hon'ble Punjab and Haryana High Court in the case of Commissioner of Income Tax v/s. GP International Ltd. (2010) 325 ITR 25 (P&H). iii. Hon'ble Madras High Court in the case of Commissioner of Income Tax v/s. Electro Polychem Ltd (2007) 294 ITR 661 (Mad). iv. Hon'ble Rajasthan High Court in case of Commissioner of Income Tax v/s. AKJ Granites P.Ltd. (2008) 301 ITR 298 (Raj.) v. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Oasis Hospitalities (Pvt.) Ltd. (2011) 51....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e cancel the entire addition made and confirmed by the lower authorities here also. The above decision of JTAT also related to Mr.Mukesh Choksi's case of investment in share application money. On perusal of above case it is clear that if a bogus shareholder has invested the money and if appellant receives such money as share application money and appellant during assessment proceedings provides the details like name ^address of the corporate entity, PAN No., ROC No., then JTAT held that this may be referred to the concerned A. O. for proceeding against such bogus shareholders instead of adding the amount u/s. 68 of the I.T. Act in the name of the company." 25. It is noted that no specific incriminating material linking investor to the appellant or showing the investment to be bogus is provided. Also opportunity for cross examination also was not provided to the appellant. The assessing officer has not been able to bring on record any direct or corroborative evidence that the share application money received is unexplained as covered u/s 68 even after opportunity was given in the remand proceedings. The original statement of Shri Praveen Jain does not name the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the facts in detail and after only considering all the facts on record and furnishing the evidences adduced before the Ld. CIT(A) decided the issue in favour of the assessee. 6. The Ld. D.R., on the other hand, relied heavily on the order of AO and prayed before the Bench that though the issue has been decided by the co-ordinate bench of the Tribunal with identical facts in favour of the assessee in ITA No.5954/M/2016 & ors. but the facts remain that Shri Pravin Kumar Jain and his associate concerns were engaged in providing accommodation entries by accepting cash from the beneficiaries and providing cheque entries in return on commission basis and therefore the order of Ld. CIT(A) should be reversed and that of the AO should be restored. 7. We have heard the rival submissions of both the parties and perused the material on record including the impugned order and decision cited by the Ld. A.R. The facts in brief are that the assessee has raised share capital at a premium from two companies namely M/s. Duke Business Pvt. Ltd. and M/s. Vanguard Jewels Ltd. of Rs. 1 crore each which was added by the AO under section 68 of the Act by treating the assessee as beneficiary of bogus ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tatements to prove identity, genuineness of transactions and creditworthiness of the parties. The assessee also furnished evidences to prove that the parties have responded to the notices issued u/s 133(6) by AO by filing various details. The assessee also filed bank statements to prove that the said unsecured loans have been repaid in the subsequent financial years. Therefore, we are of the view that there is no reason for the AO to doubt the genuineness of transactions despite furnishing necessary evidences including their financial statements, bank statements and IT returns. 6. The AO has made addition u/s 68 of the Act, on the ground that the unsecured loans are bogus accommodation entries provided by Shri Pravinkumar Jain through his hawala companies. The provisions of section 68 deal with cases where any sum found credited in the books of account of the assessee in any financial year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, then sum so credited may be charged to income-tax as the income of the assessee of that previous year. A plain reading of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ically observed that the Proviso to section 68 has been inserted by the Finance Act, 2012 wef 01-04- 2013 is applicable from AY 2013-14 onwards. The Court further observed that the Parliament did not introduce the proviso to section 68 with retrospective effect nor does the Proviso introduced states that it was introduced for removal of doubts. Therefore, it is not open to give retrospective effect. The relevant portion of the order of High Court is extracted below:- "The proviso to section 68 has been introduced by the Finance Act, 2012 with effect from 1-4-2013. Thus, it would be effective only from the assessment year 2013-14 onwards and not for the subject assessment year. In fact, before the Tribunal, it was not even the case of the Revenue that section 68 as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1-42013 was its normal meaning. The Parliament did not introduced to proviso of section 68, with retrospective effect nor does the proviso to introduced states that it was introduced 'for removal of doubts' or that it is 'declaratory'. Therefore, it is not open....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e judgment in case of Gagandeep Infrastructure (P) Ltd (supra) would be applicable in the facts and circumstances of the present case." 9. The assessee has also relied upo the decision of Hon'ble Supreme Court in the case of CIT vs Lovely Exports Pvt Ltd (2008) 216 CTR 195 (SC). The Hon'ble Apex Court while deleting the addition made u/s 68 observed that if the share application money is received by the assessee company 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, but this amount of share application money cannot be regarded as undisclosed income u/s 68 of the Income-tax Act, 1961. 10. Coming to the case laws relied upon by the Ld.DR. The Ld.DR relied upon the decision of Hon'ble Delhi High Court in the case of Principal CIT vs Bikram Singh in ITA No.55/Del/2017 dated 25-03-2017. We have gone through the case law relied by the Ld.DR in the light of facts of the present case and find that the facts of case before Hon'ble Delhi High Court are entirely different from facts of the present case. The Hon'ble Delhi High Court, has ....