TaxTMI 
TaxTMI 
2018 (10) TMI 1688
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....d has fully co-operated during the assessment proceedings as also remand proceedings to convincingly and evidentially prove the genuineness of the investors, books of accounts and transactions of the appellant company. 2) Ground No.2 states that the learned CIT(A) has erred in law and facts of the case by confirming the action of AO of considering share investment made by individual shareholders in the appellant company as income of the appellant on the false basis that the creditworthiness and genuineness of transaction in respect of all the investors is not established. Sir, as per various jurisdictional judgements, share capital cannot be added to the income of the appellant if the appellant has provided full information of identity of the share investors along with their genuineness and capacity and also complied all legal formalities and accordingly, the AO as well as the CIT(A) have completely erred in fact and in law on this respect. 3) Ground No.3 states that the learned CIT(A) has erred in law and facts by relying on irrelevant case laws while passing his order since the facts of the appellant are completely different and unlike the quoted cases where the....
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....ity, genuineness and capacity of all the family members was established beyond doubt." 3. Since all the grounds of appeal can be summarized as against confirmation of addition of Rs. 1,44,15,000/- made on account of share capital u/s.68 of the Act. Hence, these are being considered together. 4. Succinctly, facts as culled out from the orders of lower authorities are that the assessee has received share application money of Rs. 1,44,15,000/- from 13 parties as detailed in the table below : Sr. No. Name of Investor Amount (Rs.) 1 Chandulal Bhikhabhai Parekh 600000 2 Asmitaben Dipakbhai Rajpara 450000 3 Rekhaben Bharatbhai Gajera 450000 4 Mamtaben Jaysukhbhai Sheladiya 450000 5 Pinal Chandulal Parekh 600000 6 Naynaben Bharatbhai Tagadiya 500000 7 Vaishaliben Mukeshbhai Malani 500000 8 Madhvi Hitesh Shah 410000 9 Nilam Diam (Himmatbhai K. Savlia) 550000 10 Sejalben Vishlbhai Gondaliya 415000 11 Vallabhbhai Manjibhai Savaliya 575000 12 Sunitaben Nareshbhai Savaliya 450000 13 Jayshriben Bharatbhai Kachhadiya 350000 14 Shilpaben Tusharbhai Sojitra 30....
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.... case of Shri Hasmukhraj J. Ramani (HUF). However, remaining nine parties have appeared before the A.O. and their statement was recorded u/s. 131 of the Act, wherein eight women have stated that they were not aware of any investment made in the shares. Therefore, considering the details from computation of income, balance sheet, profit and loss account capital account, bank account, the A.O. held that the same is not acceptable as the bank account shows deposit before issuance of cheques in investment. Therefore, the A.O. treated the investment made by the parties as unexplained. 7. The A.O. further noted that there are seven investors, which are at Kanpur to whom notice u/s. 133(6) of Act was issued. In response to which they have submitted the copies of return of income, balance sheet and bank account. However, the A.O. noted that the details / documents shows that they haver made huge investment with the assessee company but the creditworthiness was not proved, hence treated as unexplained. 8. As far as remaining eight investors are concerned, they have not submitted the details / documents called for u/s. 133(6) of the Act hence, their identity, creditworthiness and genui....
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....genuine share capital. They are nothing but arranged affairs being pre-ordained series of transactions and tax evasion device where money laundering transactions have been camouflaged as share capital. Hence, no credence can be placed on the copies of various documents filed to support such claim of share capital contribution and accordingly addition made by the A.O. is confirmed. 10. Being aggrieved the assessee has filed this before Tribunal. The learned counsel for the assessee submitted that the assessee's company was established in 2008 and carried on business of manufacturing, buying, selling, importing and exporting and dealing in textiles, cotton, silk art silk, rayon, nylon, synthetic fibers, staple fibers, polyester, worsted, wool, hemp and other fiber materials, yarn cloth, linen rayon and other goods or merchandise whether textile felted, netted or looped. The assessee company has submitted acknowledgment of copy of return of income, balance sheet, capital account, bank statement, share application amount for all the 31 investors before the A.O. and during the assessment proceedings as well as in the appellate proceedings. During the course of assessment proceedings,....
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....tor before issue of cheque to the assessee company. Therefore, it was contended that creditworthiness and genuineness of transaction has been proved by various documents and by appearing before the A.O. in person. Therefore, the A.O. was not justified in making the addition u/s.68 of the Act. The learned A.R. further placed reliance in the case of DCIT Vs Rohini Builders, [2002] -256 ITR 306 (Gujarat) wherein it was held that the Tribunal deleted the addition u/s. 68 accepting the genuineness of loan which were received and repaid by the assessee by account payee cheques establish the creditworthiness by giving their complete address, GIR No, PAN along with copies of assessment order where appeal u/s. 250A was dismissed. The SLP filed by the Department against the said decision is also dismissed by Hon'ble. S.C. reported in [2002] 254-ITR (SC) 275. The learned counsel further placed reliance in the case of CIT vs. Ranchhod Jivanbhai Nakhava, [2012] [21 Taxmann.com 159] (Guj.)(HC) wherein the Hon'ble Court has held that where the lenders are assessed to income tax, assessee who is PAN have been disclosed. The assessee has further proved genuineness of the transaction when such fa....
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.... the hands of investor. The learned counsel further cited the decision in the case of CIT vs. Steller Investment Ltd. [ 251 ITR 0263 ] (SC) , CIT vs. Lovely Exports Pvt. Ltd. [216 CTR 0195 ] (SC) and Hindustan Inks & Resins Ltd. vs. Deputy Commissioner of Income-tax [ 60 DTR 0018 ] (Guj) (HC) wherein it was observed the learned counsel further placed reliance in the case of CIT Vs. Himatsu Bimet Ltd. [12 taxmann.com 87] (Guj)(HC) wherein the assessee has filed confirmation from all share applicants, details of share, full address, PAN No. and tax jurisdiction of depositors- Further, the Tribunal noted that all the payments were received by cheques and were credited in bank account of assessee; share application forms contained all details of depositors, their confirmations were clear with all addresses and that they were on departmental records as taxpayers. 13. The learned counsel for the assessee further, relied on the decision of Hon`ble Supreme Court has dismissed the SLP against the order of Delhi High Court order in the case of Pr. CIT v. Hi- Tech Residency Pvt. Ltd. [2018] 96 taxmann.com 402 ((Delhi) in the case of Pr. CIT -4 v. Hi-Tech Residency (P) Ltd. reported in [201....
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....e investment by the concerned parties has been made by account payee cheque and there is no cash deposit before issue of cheque in their bank account. The assessee has established that it has taken money by way of account payee cheque from the share applicant who are all income tax assesses, whose PAN have been disclosed and the transactions of investment of share application money has been disclosed in their Income-tax return. These investments have been duly appeared before the Assessing Officer and furnished documentary evidences then the A.O. in question has no justification to disbelieve the transaction reflected by the share applicant. Therefore, we are of the view that the A.O. has disproved the entire share applicant, merely, on presumption basis that we find share applications are friends and relatives of the assessee have appeared before the AO and their statement o oath u/s.131 of the Act was recorded. In some of the cases, source of explanation by the assessee as replied furnished during the remand proceedings. Therefore, identity of the share applicant has been established then there is no case of the A.O. that the assessee has failed to prove source of such investm....
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....tion, addition u/s.68 and therefore addition u/s.68 is not sustainable. In the present case, the assessee has furnished all the documentary evidence in form of return, copy of capital account, bank statement, concerned identity and investor even appeared in person before the AO, therefore, the A.O. cannot discard these evidences without making further investigation to establish that it was a created evidence. In case of Sarogi Credit Corporation vs. CIT [ 103 ITR 0344 ] (Patna) (HC) it was held that once the identity of third party credit established before the ITO and the creditors have pledged their oath that they have the advanced the amount in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted and as to why it must be held that the entry, though purporting to be in the name of a third party, still represented the income of the assessee from a suppressed sources. 17. The Hon'ble Gujarat High Court in the case of CIT vs. D & H Enterprise [2016] [72 taxmann.com 87] held all relevant details customers who came booking advance. He could have paid to the assessee builder if some of them did not n....