TaxTMI 
TaxTMI 
2019 (9) TMI 45
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....,00,000/- made by the Assessing Officer ignoring the fact that statement made u/s 131 givers by Shri Kamal Khetan retracted after long gap of more than 2 years, making inordinate delay of 2 years thus deserves to be rejected as the same was an afterthought on the part of the Assessee ? 3. The appellant prays that the order of the CIT(A) on the stove grounds be set aside and that of the Assessing Officer be restored.- 4. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary. 3. The assessee has raised following grounds of appeal in C.O.No. 77/Mum/2019. 1. On the facts and circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing in reopening the assessment u/s.147 of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 4. The brief facts of the case are that the assessee company is engaged in the business of financing and investment activities and trading in fabrics and cloths, filed its return of income for AY 2009-10 on 28/09/2009 declaring total loss at Rs. 17,814/-. Thereafter, the case has been reopened u/s 147 of the Act, 1961,....
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.... the Inspector visited the premises and noticed that Bank of Rajasthan has been taken over by the ICICI Bank Ltd. Accordingly, a letter was issued to the Principal Officer of ICICI Bank, calling for information u/s.133(6) of the Act, in respect of bank statement for the period from 01/04/2008 to 31/03/2015, for which the bank has replied that the bank statement, for the above period cannot be furnished, because the number of accounts furnished in your letter does not match with bank account number begin with ICICI bank. Thereafter, the assessee was given a show-cause to produce, the complete bank account statements for the period from 01/04/2008 to 31/03/2015, for which, the assesee has filed complete set of documents, including bank statement for the relevant period. Further, the AO issued summons to the promoter of Sunteck group shri Kamal Khetan and recorded his statement of oath u/s 131 of the I.T.Act, 1961, in respect of investments and share premium collected from various parties and such statement has been reproduced at page no. 7 to 16 of assessment order. 6. The AO, after considering relevant submissions of the assessee and also taken note of survey conducted, in the case....
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....shares by discharging its onus cast upon u/s 68 of the I.T.Act, 1961, in order to prove identity, genuineness of transactions and credit worthiness of the parties and accordingly, by relied upon various judicial precedents, including the decision of Hon'ble Supreme Court in the case of Suamati Dayal vs CIT (995) 2014 ITR 801 and also decision of Hon'ble Delhi High Court in the case of CIT vs Nova promoters & Finlease Pvt.Ltd. (2012) 18 taxmann.com 2017 held that the assesee has failed to conclusively prove receipt of share premium as a genuine transaction in light of provision section 68 of the I.T.Act, 1961 and accordingly, made additions of Rs. 9,00,00,000/- u/s 68 of the I.T.Act, 1961. 7. Aggrieved, by the assessment order, the assessee preferred an appeal before the ld. CIT(A). Before, the ld. CIT(A), the assessee had challenged reopening of assessment on the ground that the AO has reopened assessment on mechanical manner on the basis of information received from DIT(I&CI), without application of his mind on the issue in light of return filed by the assessee. The assessee had also taken another leg of arguments to contest reopening assessment that the AO had reopened assessmen....
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....ould have explained the huge quantum of share premium introduced during the year under consideration. The A.O, has also noted that the appellant is a new company and barely had the financial strength to support the quantum of share premium, as has been received. 8.3 It is a matter of record that the copy of [he reasons recorded for reopening the assessment u/s 147 of the Act were duly provided 10 the appellant company. During the course of the appellate proceedings, the appellant company has filed an objection, vide letter dated 11.08.2016 for the reopening of assessment. This objection has been duly disposed of by The A.O., vide his office fetter dated 16.08.2016. Thus, the A.O. has meticulously followed the due procedure for re-opening of the assessment u/s 147 of the Act, which can't be faulted with. 8.4 The section 147 of the Act authorizes and permits, the Assessing Officer to assess or reassess income chargeable to tax, if he has reason to believe that income for any assessment year has escaped assessment. The word 'reasons' in the phrase "reason to believe" means cause or justification. If the Assessing Officer has cause or justification to know or suppose that incom....
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.... every disclosure is not and cannot be Treated to be a true and full disclosure. A disclosure may be a false one or a true one. It may be a full disclosure or it may not be. The Hon'ble Supreme Court held that a partial disclosure may very often be a misleading one. Therefore, what is required is a full and true disclosure of all material facts necessary for making assessment for that year. 8.9 The Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. VS. ITO 236 ITR 34, 35 (SC) has held that for determining whether initiation of reassessment proceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. It further held that the sufficiency or correctness of the material is not a thing to be considered at this stage. 8.10 The present case is also not one of change of opinion. The question of change of opinion arises, when the AO forms an opinion and decides not to make an addition and holds that the appellant was correct in his stand. 8.11 The Supreme Court in Malegaon Electricity Co. (P) Ltd. vs. CIT (1970) 78 ITR 466 (SC) has observed, as under : If is true that if the I....
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....ed between Tax Audit report and Return of income, it was a case of omission and /or failure on the part of its income. It is also held by Hon'ble Supreme Court that facts which could have been found by the ITO by further probing arc covered under failure to disclose fully and truly all material facts. 8.15 In the case of Coca Cola India Vs. ACIT &Or& (2009)221 CTR 0225 : (2009) 17 DTR 0066 : (2009) 309 ITR 0194 ; (2009) 177 TAXMAN 0103, the Hon'ble Punjab & Haryana High Court has held that notice u/s 147 should be held as bad in law, only if extraneous or absurd reasons are recorded by the AO, R was further held by the Hon'ble Court that whether or not the material should be finally taken into account for reassessment is a separate matter, which has to be dealt with during the course of reassessment proceedings. The relevant portion of the judgment in this regard is reproduced as under: - "Objection of counsel for petitioner is two fold :- (a) Reference to inapplicable provision of s. 92 as it stood prior lo amendment w.e.f. 1st April, 2002 and (b) irrelevance of order of the TPO under Chapter X passed in respect of a subsequent assessment year. Applicability of s. ....
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....ovisions of section 147 of the Income Tax Act. Accordingly, this Ground of Appeal NO.1 of the appellant company is dismissed. 9. Insofar as, additions made towards share capital u/s 68 of the Income Tax Act, 1961, the ld. CIT(A) after considering relevant submission of the assessee and also by relied upon plethora of judgments, including the decision of Hon'ble Supreme Court in case of Lovely Exports Pvt. Ltd. Vs. CIT, 216 CTR 195, held that the assessee had filed enormous details to prove identity, genuineness of transaction and creditworthiness of parties, but it was the AO who had failed to investigate the case properly, to rebutte details filed by the assessee to come to the conclusion that the credit in form of share capital is unexplained credit within the meaning of section 68 of the Income Tax Act, 1961. The CIT(A) had also discussed the issue in light of decision of Hon'ble Supreme Court in case of Kishinchand Chellaram vs CIT, 125 ITR 713, and Andaman Timber Industries Ltd vs CCE,(2015) 62 Taxmann.com 3(SC) and held that the AO had used third party information in contravention of principles natural justice, without furnishing said information to the assessee for its rebu....
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....10. It is pertinent to note that neither Shri Kamal Khetan nor Shri Vikas Sankleeha, had any locusstandi in A.Y. 2009-10, in relation 10 the impugned j companies. In fact, in all the statements recorded of Shri Kamal Khetan& Shri Vikas Sanklecha are referring to events, which have happened after the current assessment year under consideration. 12.20 The above observations are further reinforced from the fact that Shri Kamal Khetan has not made any disclosure for the A,Y. 2009-10, the current assessment year, under consideration. At the cost of repetition, it is stated that Shri Kamal Khetan has made a disclosure of Rs. 47.6 Crore relevant to A.Y. 2010-11, A.Y, 201243 & A.Y. 2013-14. 12.21 Further, the AO, has without bringing on record any material evidence held that the Impugned 5 companies including the appellant are shell companies. During the course of the appellate proceedings, the appellant has filed the details of these companies downloaded from the site, of Ministry of Corporate affairs showing that in the case of all the impugned 5 companies, accounts have been filed till 31.03.2017. Further, the status of all the companies in the ROC Data has been shown as '"Activ....
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....t has been submitted that the A.Q, ought to have considered the law as it was in force during A-Y.2009-10. It has also been emphasized, during the appellate proceedings that even the first proviso appended 10 section 68 of the Act, which requires the investor also, to satisfactory explain the nature and source of the credits was inserted w.e.f 01.04.2013 i.e. from A.Y, 2013-14 and hence the same is not applicable for the present assessment year, viz. A.Y. 2009-10. 12.25 As regards the notices issued under section 133(6) of the Act are concerned, the Appellant Company has stated that due to time lag certain persons might have left the place and for this no responsibility ca be fastened on the appellant. It has been stated that the appellant has furnished the following details to the A.O., regarding the receipt of share premium:- 1. Share application form 2. Copy of declaration 3. Board resolution 4. Bank statement of investor company 5. PAN card 6. Acknowledgement of Return of income 7. Financial statement of investor company 8. Form NO.2 for Allotment 9. Bank statement reflecting the amount receive d through banking channel 12.26 The appellant company has cont....
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.... 133(6) of The Act. As far as the issue of bank statement is concerned, the appellant company has supplied the same to the A.O., during the course of assessment proceedings, itself. In fact the A.O. has made observations in the assessment order based on the bank statements provided by the appellant company. Hence, no adverse inference can be drawn by the A.O. on this issue. 12.30 The A.O. has erred in relying on the statements of Shri Kamal Khetan& Shri Vikas Sanklecha for making addition on account of share premium u/s 68 of the Act, for the current year under consideration. The A.O. has failed to appreciate that the statements of Shri Kamal Khetan& Shri Vikas Sanklecha relate to events, which have happened subsequent to the current assessment year under consideration. The A.O. has also ignored the fact that Shri Kamal Khetan has not made any disclosure of income for the current assessment year under consideration, in any of his statement recorded by the Department. In his statements recorded by the. Department, Shri Kamal Khetan has stated that he is unaware about the introduction of the share premium, as it was handled by the old management. Even the statement recorded of Shri....
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.... from assessee. * Addition made on a statement which was retreated by party cannot concluded as reliable evidences. 6.2 I have gone through the assessment order and the submissions of the appellant. I find that the addition of Rs. 28,60,00,000/- was made solely on the basis of the statement of Shri Paras Porwal. The appellant has contested the addition on the ground that Shri Paras Porwal is not connected with the firm (appellant)'. As per the appellant, Shri Paras Porwal has no locus standi as far as the affairs of the appellant is concerned. The Assessing Officer on the other hand claimed that appellant is part of, what the AO called, the Om Shanti Group. The AO further contended that Shri Paras Porwal is CMD of "Om Shanti Group" and therefore, this statement made by Shri Paras Porwal was binding on the appellant. 6.3 The contention of the Assessing Officer is grossly wrong. The Income Tax Act does not recognize the concept of Group. Therefore, the contention of the AO that the appellant belongs to the Om Shanti Group is not a valid around for making the addition. Consequently, the contention of the AO that this statement of Shri Paras Porwal is binding on the appellant....
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....1. In this regard, he relied upon the decision of Hon'ble Supreme Court in the case of Konark Structural Engineers Pvt Ltd vs. DCIT (2018) 257 Taxmann.com 262(SC). 12. The learned AR for the assessee submitted that the ld. CIT(A) had rightly deleted the additions made by the Assessing Officer towards share capital amounting to Rs. 9,00,00,000/- u/s. 68 of the I.T.Act, 1961, because the assessee has discharged primary onus of proving identity, genuineness of transaction and creditworthiness of parties. The AR further submitted that although the Assessing Officer has accepted identity of the subscribers, but he has disputed credit worthiness of the subscribers on the basis of financial statements without carrying out further enquiries either by issue of notice u/s. 133(6) or summons u/s 131 to ascertain true nature of transactions between the parties. On the other hand, the assessee has discharged its initial onus by filing enormous documents, including confirmation from the parties where they have categorically stated that investments in assessee company is genuine transaction and has been routed through banking channels. The assessee has also filed complete details about identity ....
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....2015 h) CIT vs. Expo Globe India Ltd 361 ITR(0147 (Del-High Court) i) CIT vs. Victory Spinning Mills Ltd (2014) 90 CCH 55 (Mad -High Court) j) CIT vs. Dwarkadhish Investment (P) Ltd (2011) 330 ITR 298 (Del-High Court) k) CIT vs. Nishan Indo Commerce Ltd 101 DTR 0413 (Cal - High Court) l) CIT v. Vacmet Packaging (India) Pvt Ltd (2014) 88 CCH 065 (All-HC) m) CIT vs. Gangeshwari Metal Pvt Ltd (2014) 361 ITR 10 (Del-High Court) n) ACIT vs. Venkateshwar Ispat Pvt Ltd (2010) 319 ITR 393 (Chhatisgarh-High Court) o) CIT vs. Nav Bharat Duplex Ltd (2013) 35 Taxmann.com 289 (All-High Court) p) CIT vs. Samir Bio-Tech Pvt Ltd (2010) 325 ITR 294 (Del- High Court) q) Mod Creations Pvt Ltd vs. ITO (2011) 354 ITR 282 (Del- High Court) r) CIT vs. Jay Dee Securities & Finance Ltd 32 Taxmann.com 91 (All-High Court) s) Jaya Securities Ltd vs. CIT (2008) 166 Taxman 7 (All- High Court) (SLP filed by dept dismissed) 13. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. The facts borne out from record are that the assesee and other four companies are subsidiaries of M/s Akshunya Energy Pvt.Ltd,. In the F.Y. 20....
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...., the assesee has filed various details to prove identity, genuineness of transactions and creditworthiness of the parties but, on perusal of details filed by the assessee, it was noticed that the assessee has failed to establish transactions between the parties are genuine in nature and also the subscriber to the share capital are having capacity to explain huge investments in assessee company. According to the AO, mere furnishing confirmation letters from the parties along with their PAN Number and ITR acknowledgement is not sufficient enough to discharge ,the onus cast upon u/s 68 of the I.T.Act, 1961 and what is relevant is to discharge the true identity of the investors. Although, the assessee has filed certain documents, including PAN number and ITR acknowledgement and financial statements along with bank statement of subscribers, but when, it comes to genuineness of transactions and creditworthiness of the parties, except filing financial statements, no other evidences has been filed to prove that share capital received from subscribers is genuine in nature, which is supported by necessary evidences. The AO has also taken support from the findings recorded, during the course....
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....clusion that the transactions between the parties are genuine or not. In this case although, the AO has issued 133(6) notices to the parties, no further enquiry has been conducted, including issue of summons u/s 131. No doubt, none of the investors companies have responded to 133(6) notices issued by the AO, but fact of the matter is when, assessee has filed complete set of documents, including name and address of the parties, it is for the AO to carry out further investigation by exercising all possible options available to him, but non attendance of parties in response to 133(6) cannot be attributed to the assessee, because due to time lag certain persons might have left the place and for this no responsibility can be fastened upon the assessee. In this case, the assessee done what best it could do and filed, whatever information available with it, in order to satisfy the AO. In case, the AO is not satisfied with documents furnished by the assessee, then he is free to carry out his own investigations by exercising powers conferred u/s 131 or u/s 133(6) of the I.T.Act, 1961. In this case, the AO, except issue of 133(6) notices nothing has been done to find out, the nature of trans....
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....uch as, it amount to violation of principle of natural justice, because of which, the assessee was adversely affected. Therefore, on this count also the additions made by the AO cannot be sustained. 16. Coming to the other aspect of the issue, the AO has invoked the provisions of section 56(2)(viib) of the I.T. Act, 1961. We find that the said provision has been inserted by Finance Act, 2012 w.e.f 10.04.2013, where it provides that where a closely held company issues its shares at a price which is more than its fair market value, then amount received in excess of fair market value will be charged to tax in the hands of the company as income from other sources. We, further noted that the provisions of section 56(2)(viib) was inserted by Finance Act,2012 w.e.f. 1.04.2013 is applicable from A.Y. 2013-14 onwards. In fact, a similar amendment has been made in section 68 by insertion of a proviso by the Finance At 2012 w.e.f. 01.04.2013 as per which the assessee company (not being a company in which public are substantially interested) and sums so credited consists of share application money, share capital , share premium or any such amount by whatever name called, any explanation offe....
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....he assessee. The assessee has relied upon plethora of judgements, including the decision of Hon'ble Supreme Court in the case of CIT vs Lovely Exports Pvt Ltd (2008) 216 CTR 195 (SC). In the case laws relied upon by the assessee, the issue has been dealt as under:- CIT vs. Goa Sponge and Power Ltd (13/02/2012) Tax Appeal No. 16 of 2012 (High Court-Bombay) "Once the authorities have got all the details, including the name and addresses of the shareholders, their PAN/GIR number, so also the name of the Bank from which the alleged investors received money as share application, then, it cannot be termed as "bogus". The controversy is covered by the judgements rendered b y the Hon'ble Supreme Court in the case of Lovely Exports Pvt Ltd, vs. CIT, (2008) 216 CTR (SC) 195, as also by this Court in CIT vs. Creative World Tele films Ltd, (2011) 333 ITR 100 (Bom). In such circumstances, we are of the view that the Tribunal's finding that there is no justification in the addition made under Section 68 of the Income Tax Act,, 1961 neither suffers from any perversity nor gives rise to any substantial question of law." CIT vs. Creative World Tele films Ltd (2011) 333 ITR 100 (Born- ....
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....r the parties. CIT(A) found that five companies subscribing the equity shares amounting to Rs. 25,00.000/- were identified and they had submitted their bank statements, cash extracts and returns filing receipts. As such identity of the share applicant companies and purchase of share had been proved by the assessee. Supreme Court in the cases of CIT v. Steller Investments Ltd. [2001] 251 ITR 263 and Lovely Exports case (supra), has held that the identity of the shareholder alone is required to be proved, in case of the capital contributed by the shareholders. Accordingly CIT(A) and the Tribunal has not committed any illegality in allowing the appeal of the assessee. We do not find any illegality in the judgment of the CIT(A) and the Tribunal." CIT vs. JayDee Securities & Finance Ltd (2013) 32 Taxmann.com91 (All-High Court) "The Tribunal recorded findings that the assessee had produced the return of income filed by the relevant shareholders who had paid share application money. The assessee had also produced the confirmation of share holders indicating the details of addresses, PAN and particulars of cheques through which the amount was paid towards the share application money. T....
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.... than be burdened by the fact that some of the creditors had chosen not to make a personal appearance before the Assessing Officer. If the Assessing Officer had any doubt about the material placed on record, which was largely bank statements of the creditors and their income-tax returns, it could gather the necessary information from the sources to which the information was attributable......If it had any doubts with regard to their creditworthiness, the Revenue could always bring the sum in question to tax in the hands of the creditors or sub- creditors." CIT vs. Al Anam Agro Foods (P.) Ltd (2013) 38 Taxmann.corn 375 (All-High Court) Tribunal, however, held that since identity of share holders stood proved on record, amount of share application money could not be added to income of assessee. According to Tribunal, in such a case amount could be taxed in hands of persons who had invested" CIT vs. Dwarkadhish Investment (P) Ltd (2011) 330 ITR 298 (Del- High Court) "Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68- Revenue has all the power and wherewithal to trace any person-Moreover,....
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....onsidered issue and having found complete details of the receipts of share application money, along with the form names and addresses, PAN and other requisite details, they found complete absence of the grounds noted for invoking the provision of section 68. Moreover, both rightly had applied the decision of CIT vs. Lovely Exports (P) Ltd to the case of the assessee. Therefore, no reason was found in absence of any illegality much less any perversity too to interfere with the order of the both these authorities, who had concurrently held the due details having been proved. The assessee company had presented the necessary worth proof bef ore both the authorities and it was not expected by the assesseecompany to further prove the source of the deceased." CIT vs. Nikunj Eximp Enterprises (P.) Ltd (2013) 35 Taxmann.com384 (Bom) "Whether merely because suppliers had not appeared before Assessing Officer or Commissioner (Appeals), it could not be concluded that purchases were not made by assessee - Held, Yes.... Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the pur....
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....though they were declaring a very meagre income in the return. None of the investors appeared before the AO, but merely sent response through Dak. In this case, from the facts on record, it is clear that the assessee has filed complete set of documents, but the AO neither carried out any investigation nor issued notices u/s. 133(6) or summons u/s. 131(1) to examine the veracity of documents furnished by the assessee. Unless, the AO carried out further investigations to ascertain true nature of transactions, he cannot come to the conclusion merely on the basis of documents submitted by the assessee. Therefore, after considering relevant facts, the co- ordinate Bench came to the conclusion that decision rendered by Hon'ble Supreme Court in the case of NRA Iron & Steel Pvt. Ltd. (supra) has no application, where the AO has not carried out any inquiries. The relevant findings of the Tribunal re as under: "8. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee had borrowed loans from the aforesaid loan creditors and had duly repaid the same in subsequent years by account payee cheques, for which evidences are alread....
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....ard both the parties, perused the material available on record and gone through the orders of authorities below. The AO made addition towards unsecured loans received from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd on the basis of information received from Investigation Wing which revealed that the assessee is the beneficiary of bogus accommodation entries provided by Shri Praveenkumar Jain through his bogus companies. The AO has made additions u/s 68 of the Income-tax Act, 1961 on the ground that though the assessee has furnished necessary evidences to prove identity of the parties, but failed to establish genuineness of transactions and creditworthiness of parties in the backdrop of clear findings of Investigation Wing that those companies are hawala companies involved in providing M/s Shree Laxmi Developers accommodation entries. The AO has brought out facts in the light of statement of Shri Pravinkumar Jain deposed before the Investigation Wing to make addition. Except this, there is no contrary evidence in the possession of the AO to disprove the loan transactions from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd. On the other hand, the assessee has....
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....e Affairs. This fact has been further supported by the letter of AO wherein the AO has accepted that both companies, viz. Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd are active in MCA website. We further notice that both the companies have filed financial statements for the year ending 31-03- 2006. Therefore, we are of the considered view that the assessee has discharged its initial burden cast u/s 68 by filing identity, genuineness of transaction and creditworthiness of the parties. Once, the assessee has discharged its initial burden, the burden shifts to the AO to prove otherwise. In this case, the AO made addition only on the basis M/s Shree Laxmi Developers of information received from Investigation Wing, but not based on any evidence to disprove the loan transaction from above companies are ingenuine. Therefore, we are of the view that there is no reason for the AO to treat loans from above 2 companies as unexplained credits u/s 68 of the Act. 7. Coming to the case laws relied upon by the assessee, the assessee has relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs Gagandeep Infrastructure Pvt Ltd (2017) 394 ITR 680 (Bom). We have ....
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....entitle the revenue to add the same to the assessee's income as unexplained cash credit." [Para 3] 8. The assessee has also relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs Archid Industries Pvt Ltd in ITA No1433/Mum/2014 dated 5th July, 2017. The Hon'ble Bombay High Court, after considering relevant facts and also by following judgement in the case of CIT vs Gagandeep Infrastructure Pvt Ltd (supra) held as under:_ 6] The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of share i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary e....
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..... Hence, we direct the AO to delete addition made towards loans alongwith interest u/s 68 of the Act. 8.1. We find that the ld DR vehemently placed reliance on the recent decision of Hon'ble Supreme Court in the case of PCIT vs NRA Iron & Steel Pvt Ltd arising out of SLP(Civil) No. 29855 of 2018 dated 5.3.2019 in support of contentions of the revenue on the impugned issue. In this regard, we find that the facts before the Hon'ble Supreme Court are clearly distinguishable on the following grounds:- a) In Para 3.6. of the said judgement of Hon'ble Supreme Court, it was mentioned that the entire share capital had been received by the assessee through normal banking channels by account payee cheques / demand drafts, and produced documents such as income tax return acknowledgements to establish identity and genuineness of the transaction. It was submitted that, there was no cause to take recourse to section 68 of the Act, and that the onus on the Assessee Company stood fully discharged. b) In Para 3.7. of the said judgement of Hon'ble Supreme Court, it was mentioned that the AO had issued summons to the representatives of the investor companies. Despite the summons having been ser....
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.... even furnished their bank statements to prove their immediate source of credit for making investment in share application monies of NRA Iron & Steel Pvt Ltd. From the bank statements furnished by the loan creditors in the case of the assessee herein, we find that there were no cash deposits in the bank accounts of the lenders prior to issuance of loan to the assessee company. In the case before the Hon'ble Supreme Court, the AO in that case had made field enquiries at Mumbai, Kolkata and Guwahati where those investor companies were stated to be situated to examine their identity and credentials and the result of such enquiry had been summarized hereinabove. Whereas in the instant case before us, no such enquiries were conducted by the ld AO to doubt the veracity of the details and evidences filed by the loan creditors in response to notice u/s 133(6) of the Act directly before him. In the instant case before us, all the notices u/s 133(6) of the Act were duly served on all the aforesaid loan creditors and all of them had independently filed their replies directly before the ld AO. The bank statements were also duly furnished by the loan creditors to prove that they had sufficien....
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....urther, noted that although the Apex Court has not expressed any opinion, because of dismissal of SLP filed by the assessee, the fact of the matter is that this issue has been considered by the Hon'ble Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd (supra), where the issue has been thoroughly examined in the light of provisions of section 68 of the Act, and held that if the share application money is received by the assessee company from alleged bogus share holders, whose names are given to the AO, then the department is free to proceed to reopen their assessment in accordance with law, but sum received from share holders cannot be regarded as undisclosed income of the assessee. 20. In this view of the matter and considering the facts and circumstances of this case and also taking into consideration various case laws as discussed hereinabove, we are of the considered view that the assessee has discharged its initial onus to prove identity, genuineness of transactions and creditworthiness of the parties by filing various documents. The AO, without carrying out further inquiries in order to ascertain the claim of the assessee, jumped into conclusion on the basis of fina....