TaxTMI 
TaxTMI 
2019 (8) TMI 1333
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....um addition; respectively. 2. They invite our attention to the CIT(A)'s detailed discussion on the above sole issue as under:- "4.2 I have considered the issue in the assessment order framed by the AO in light of the arguments made by the appellant. The short issue for my consideration is that whether the share application monies along with premium in the aggregate of Rs. 3,25,50,OOOI- disclosed by the appellant invite the mischief of the provisions of s. 68 of the Act or not. The provisions of s. 58 of the Act deal with cash credit which reads as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous 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. Assessing Officer, satisfactory. the sum so credited may be charged to income-tax as the income of the assessee of that previous year. " 4.3 According to this section, if identity, creditworthiness of the creditor and genuineness of the transaction is not proved or the explanation offered by the assessee is not, in the opinion of the Assessing Officer, satisfactory, t....
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....nancial statements which In my humble opinion proves their identities. Further, each of the share applicants accepted the fact that they had subscribed to the shares issued by the appellant company and that such transactions were duly reflected in their respective books of accounts, as well as in their Balance Sheets. These facts, in my opinion, clearly prove the genuineness of the transactions. 4.5 Further the Hon'ble Supreme Court in CIT vs. Lovely Exports Ltd. (2008) 216 CTR 195 (SC) wherein has held as under: "2 Can the amount of share money be regarded as undisclosed Income under section 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the shere 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" In other words, It is observed that if share application money is received by an assessee from subscribers. whose names are given to the AO, are allegedly bogus then the Revenue is free to proceed to reopen their individual assessments in ....
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....t the identity of this company. CAPACITY- It is seen from the Balance Sheet of this company that its share capital plus reserve is Rs. 4,92,71,316/-. The turnover of this share applicant is Rs. 19,05,01,4071- and the disclosed net profit of this applicant is Rs. 46,76,3621- Entire share capital has been subscribed by family members of the director as well as M/s S.C.Ghosh Realtors (P) Ltd which is known group concern of assessee group. In view of money coming from relatives & group concern, the capacity of the share applicant is also established. GENUINENESS- AO has not brought on record any evidence which can lead to doubt regarding genuineness of the transaction other than the fact that the share application money has been received in cash. However there is no bar in law in receiving the share application money in cash. Therefore there is nothing on record to doubt genuineness of the transaction. Apart from above, I find from the audited accounts of the applicant that it had sufficient capital and reserves to advance this sum of money to the appellant and hence, the creditworthiness of the share applicants is beyond any controversy. Thus the applicant&#....
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....ceived in cash. However there is no bar in law in receiving the share application money in cash. Therefore there is nothing on record to doubt genuineness of the transaction. Therefore the addition U/s 68 of Rs. 5,00,000/- relatable to this shareholder is directed to be deleted. Ranisati Tardelink Pvt. Ltd. This shareholder paid Rs. 35,00,000/- towards share application money with premium through cash and confirmed such investment with all necessary documents in response to notice U/s 133(6). The relevant documents are verifiable from paper book submitted in course of appeal. AO. has considered such receipt as unexplained cash credit U/s 68 on the ground that the amount was paid in cash and that the company had not declared any income in the current year. In fact it declared losses from business & profession. I have examined the contention of Ld. A/R on the adverse comments made by AG. The share applicant explained the source of investment as out of liquidation of current investment as evident from Note 4 of the audited financial statement. Moreover, the capital including reserves aggregates to Rs. 5,28,46,299/- out of which inv....
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....A/R contesting the adverse inference made by AG. I have also examined Income Tax Return acknowledgement, computation of income, balance Sheet, copy of cash book etc of all the eight individual share applicants. It appears on such examination that all the eight individual filed their return in ITR 4 which proves that all of them are having their individual business activities. The Balance Sheet shows substantial capital of their own. According to LT. Return acknowledgement copy relevant to A.Y. 2012-13 the share applicants declared total income after claiming deduction under chapter VI A as noted against each. Name of share applicants Total income declared Opening capital Sukumar Ghosh 11,04,060/- 1,19,80,792/- Joya Ghosh 3,14,250/- 33,56,428/- Manju Ghosh 3,08,480/- 35,73,907/- Mili Ghosh 3,54,270/- 39,77,550/- Dipa Ghosh 3,53,950/- 76,70,974/- Bimala Bala Ghosh 3,35,950/- 59,60,125/- Sikha Ghosh 2,44,500/- 51,92,709/- Gaurav Ghosh 1,70,230/- 9,38,195/- I find that the AO has not doubted the existence of any business by these individuals. Further the AO's observation that the cash....
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....cribe to the shares. Further she is not filing any wealth tax return {which would be the case if we assume that she would be owner of jewellry of around 500 grams (considering her family status). Looking into circumstances of the case t am of the opinion that cash in hand with her during the F.Y. 2011-12 would be estimated at Rs. 10 lakhs. The balance amount of subscription amount i.e. Rs. 25 laksh (-) Rs. 10 lakhs i.e. Rs. 15 lakhs may be added in the hands of the assessee company as unexplained cash credit under section 68. Therefore the addition made by the Assessing Officer on this account is partly upheld. ii) Similar is the position in the case of Manju Ghosh, MiIi Ghosh, Deepa Ghosh,Bimla Bala Ghosh c..lld Shikha Ghosh. Therefore following logic given in the case of Jaya Ghosh after giving allowance of Rs. 10 lakhs as cash in hand. The balance amount of addition under section 68 is hereby confirmed. iii) In case of Gaurav Ghosh the subscription of shares in hand is only Rs. 5 lakhs. Considering his income of last 3 years as given in the table the entire amount of cash in hand seems to be probable and therefore is being allowed. iv....
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....ies (supra). They are also assessed in the same jurisdiction. We notice in these backdrop of facts that hon'ble Gujarat high court's decision in Tax Appeal No.118 of 2018 PCIT vs. Gyscoal Alleys Ltd. decided on 01.10.2018 upholds the tribunal's order deleting similar addition in case of such related parties as under:- "(PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad Bench {"Tribunal" for short} raising the following substantial question for our consideration : "Whether Appellate Tribunal has erred in law and on facts in deleting the addition made by the Assessing Officer on account of Rs. 9,99,99,900/= as per the provision of Section 68 of the Income-tax Act, without properly appreciating the facts of case and the material brought on record ?" The issue pertains to the share application money received by the respondent-assessee-company. The Assessing Officer added a sum of Rs. 9.99 Crores [rounded off] in the hands of the assessee with the aid of Section 68 of the Income-tax Act, 1961 ["the Act" for short]. CIT [A] deleted such addition primarily on the ground tha....
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....re issue is based on appreciation of material on record. CIT [A] and the Tribunal concurrently came to the conclusion that the assessee had discharges its basic onus. The investors have confirmed the transactions. Such transactions were carried out through the banking channel. The director of the investing company had also appeared before the Assessing Officer and also confirmed the transactions. The CIT [A] and the Tribunal also did not confirm the Assessing Officer's finding that the assessee failed to establish the creditworthiness or genuineness of the transactions." We proceed further to notice that factual position is no different herein as well, wherein the assessee has produced oral or documentary evidence. Learned departmental representative at this stage submits that there is no justification for assessee's extra-ordinary exorbitant premium in case of investor parties having meagre source of income. We find no merit in Revenue's stand since there is no evidence on record which could suggest that any of the assessee's eleven investor had been having any dubious transactions in their accounts. Hon'ble Gujarat high court's yet another decision of Puspuk Bullion....