TaxTMI 
TaxTMI 
2016 (3) TMI 1373
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....essee filed return of income on 1.3.2004 declaring a total 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 ....
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....f share holders. d) Share allotment letters e) Copy of Form no.2 i.e. return of allotment of share in ROC 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 h....
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....llation of the precedents yields the following proposition of law in the context of section 68 of the Income Tax Act. The Assessee has to prima facie prove (1) the identity of the creditor/subscriber; (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/su....
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....ation money is received by the assessee company from alleged bogus shareholders whose names are given to the AO. Further the Hon'ble Supreme Court has categorically held that the Revenue is free to proceed to reopen the individual 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 as....
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....t. Simple argument or allegation of manipulation is not sufficient without proper evidence." 18. In view of the above facts and circumstances and available legal position, the share application money/share capital to the extent of Rs. 40,00,000/- stands explained. 19. Since the main addition is deleted, there is no case for addition of Rs. 1,00,000/- towards alleged commission payment." 7. After going through the aforesaid detailed finding given by the Ld. CIT(A) and the precedents relied upon by him in his impugned order on the additions in dispute, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A) on the deletion of additions in dispute, hence, we uphold the same and dismiss the ground no. 1 raised by the Revenue in its Appeal. 8. In the result, the Revenue's Appeal stands dismissed. Order pronounced in the Open Court on 04/03/2016. ============= Document 1 S. Name & Address N. Share capital (Rs.) Chanakya Finvest Pvt. Ltd. 5,00,000 2 13 4 5 Remarks 5/1, Clive Row, 3rd Floor Kolkata West Bengal-70000! PCB Consultant Pvt. Ltd. 301, 5,00,000 ....