TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 1373
X X X X Extracts X X X X
X X X X Extracts X X X X
....l of Rs. 24,68,110/-. The assessee is a company and also Non-Banking Finance Co. (NBFC) registered with RBI. During the year, the assessee company had shown receipt of share application money / share capital of Rs. 1,15,00,000/- from various companies. The AO received information from the Investigation Wing of the Department, that the companies / persons which contributed towards share application money / share capital were involved in providing accommodation entries. In view of the specific information, the AO initiated action u/s. 148 and completed the assessment on 30.12.2010 determining the total income at Rs. 65,88,106/- disbelieving a part of share application money / share capital of Rs. 40,00,000/-. 3. Aggrieved by the aforesaid order of the Assessing Officer dated 30.12.2010 passed u/s. 143(3)/147, assessee filed an appeal before the Ld. First Appellate Authority, who vide impugned Order dated 28.09.2011 had deleted the addition in dispute by partly allowing the appeal of the Assessee. 4. Aggrieved with the aforesaid finding of the Ld. CIT(A), Revenue is in appeal before the Tribunal. 5. Apropos deletion of addition of Rs. 40,00,000/- made by the AO u/s. 68 of the I.T. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... f) Confirmations from share holders g) Copy of PAN card of share holders. h) Copy of acknowledgment of Income Tax Return of share holders i) Copy of Bank Statement of share holders j) Copy of Audited Balance Sheet of share holders k) Affidavit from share holders 1) Copy of annual return of assessee filed in ROC showing the name of these applicants as share holders m) Copy of Form no. 18 filed in ROC in case of change of address of share holders. 10.1 In a nutshell the main allegation of the AO is that receipt of Share application money/share capital was an arranged affair. The other observation of the AO is that the genuineness and credit worthiness of the transaction remained unproved. On the other hand, the main contention of the AR is that the burden cast on it was discharged by providing basic details required for verification as envisaged u/ s 68. The AR further stated that principles of natural justice were not followed. ~ 10.2 It is very much pertinent to mention here that in the appellant's case scrutiny assessment u/s 143(3) was made on 28.02.2006. In the course of the said proceedings, the details of share application money / share capita....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2) the genuineness of the transaction, namely: whether it has been transmitted through banking or other indisputable channels; (3) the credit worthiness or financial strength of the creditor/subscriber; (4) if relevant details of the address of PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee; (5) the Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notice; (6) the onus would not stand discharged if the creditor/subscriber denied of repudiated the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, against the assessee; (7) the Assessing Officer is duty-bound to investigate the credit worthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation." With regard to the issue of share application money, while dismissing the SLP filed by the Department, the Hon'bl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dividual assessments of such alleged bogus shareholders. The decision of the Hon'ble jurisdictional High Court in the case of Value Capital Services Ltd. (supra) has also categorically held that there is additional burden on the Revenue to show that even if the applicant does not have the means to make the investment, but the investment made by the applicant should be shown to have emanated from the coffers of the assessee so as to enable it to be treated as undisclosed income of the assessee. It is noticed that the Revenue has not been able to specifically show that the investments had emanated from the coffers of the assessee in this case. In these circumstances, respectfully following the decision of the Hon'ble jurisdictional High Court as also Hon'ble Supreme Court referred to supra, the addition made by the AO and confirmed by the learned CIT(A) in regard to the alleged bogus shareholders represented by the increase in share capital of the assessee cannot be treated as unexplained cash credits in the hands of the assessee. Respectfully following the decision of the Hon'ble Supreme Court we direct the AO to delete the addition made under s.68. However, the Depa....