TaxTMI 
TaxTMI 
2020 (10) TMI 614
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.... the assessee is a limited company engaged in the business of manufacturing of Texturing yarn & PP Mats. The return of income was filed on 30.09.2012 with total income of Rs. 1,73,79,788/-.Subsequently, the case was selected for scrutiny and notice u/s 143(2) and u/sec142(1) of the Act along with questioner were issued to the assessee. In response to the notice, Ld. AR of the assessee appeared from time to time and submitted the required details. The A.O on perusal of the financial statements found that the assessee during the financial year has issued shares numbering 17,93,820 of Rs. 10/- face value at a premium. The total share capital raised including the security/share premium is Rs. 14,01,51,000/-.The A.O found that the assessee has issued shares to seven companies and collected the security premium on issue of shares @ Rs. 490/- per share in respect of five entities. Whereas, to examine the genuineness of the transaction, the A.O. has called for the Audited financial statements of the investor companies. Further A.O issued notice u/s 133(6) of the Act on the investor companies. But out of the 7 notices issued, three notices returned un-served by the postal authorities wit....
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....and which was in fact filed at his insistence since he issued the notice seeking relevant information. Further, if the AO was not satisfied with what had been given to him by the appellant, he was duly bound to specify what more material he wanted the appellant asked in their submissions. This leads to the inescapable conclusion that the AO could not think of any further material to ask for and proceeded to reject the appellant's claims, relying upon the information/material, which he never even brought to the notice of the appellant for any rebuttal. The unequivocal conclusion is that all the 3 ingredients having been satisfied, the impugned loans have to be treated as explained satisfactorily and the AO was not justified in having disregarded overwhelmingly supportive evidence. No cogent material was adduced by him to show that loans were unexplained. Therefore, the impugned additions, made in the assessment order, has to fail on severe counts - (1) reliance on evidence that is totally inadequate; (2) failure to made available any incriminating material (reports, statements etc.) forming basis for action by the AO; (3) failure to give due opportunity to the appellant to cross exa....
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....he assessee of that previous year." i) From a reading of the above section, it is evident that the assessee should be able to provide satisfactory explanations about the sum found to be credited in the books of the appellant. It is a fairly settled legal position held by various decisions discussed subsequently that if the assessee proves the following things then the addition under section 68 of the Act cannot be made: * Identity of the shareholder; * Genuineness of the transaction; * Credit worthiness of the shareholder ii) The Appellant humbly submit that the Appellant has already submitted all the details required to prove the above requirements. The Appellant humble submissions are as under: I. As regards the Identity of the shareholders: a. The Appellant has filed the following information / documents during the assessment proceedings to the AO vide it's letters: i. Details of Share Application Money; ii. Copy of Ledger A/c in the books of Investor companies/parties; iii. Name, Address, PAN, Income-tax Jurisdiction, etc. of the Investor companies/parties; iv. Copy of In....
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....f Shares Applied in the Assessee Company Rs. * Share Capital Rs. * Reserves And Surplus Rs. * Total Net Worth Rs. (1) (2) (1)+(2)=(3) (4) M/s Casper Enterprises Pvt. Ltd 4611500 13247932 17859432 4500000 M/s Sumukh Commercial Pvt. Ltd 4912500 5446594 10359094 8500000 M/s Olive Overseas pvt. Ltd 19637000 8307320 27944320 3000000 Total Rs. 56162846 16000000 Total Networth in % 28.48% b) In view of the aforesaid details, the Appellant submits that the Investor companies have positive net worth and have only invested on an average 28.48% of their net worth in the Appellant. Hence, the creditworthiness of the Investor companies cannot be doubtful. * Further, the Appellant submit that the Company's Master Data, Income-tax Jurisdiction details and financials of the Investor companies proved the identity as well as financial capacity i.e. creditworthiness of the Investor companies. * The CIT(A) treated only share premium received by the Appellant as unexplained cash credit un....
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....ppellant submit that the Appellant has discharged its onus of proving the identity of the parties, genuineness of the transactions and creditworthiness of the shareholders. * Therefore, the Appellant humbly submit that the addition made under section 68 of the Act be deleted. * On the perusal of the above submission, the appellant beg to submit that it has adequately demonstrated with documentary evidences, the presence of all three stipulated elements of : * Identity of the Applicant/ Investor * Capacity of the Applicant/Investor * Genuineness of the transaction in question. Therefore, it is submitted that to consider the amount received towards share application money as Unexplained Credit u/s 68 of IT Act is misconceived and illegal. 6. Further, the A.O has made addition only on the investment companies connected to the Praveen Kumar Jain and its Group involved in the activities of providing accommodation entries. The A.O has only relied on the statement of Praveen Kumar and such statement was never confronted to the assessee nor opportunity of cross-examination was granted to the assessee. The Ld. AR emphasized that the a....
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....3745/Mum/2017. 2. ITO Vs. M/s. Agarwal Cloth Agency Pvt Ltd., ITA No. 2969/Mum/2017. 3. ITO Vs. M/s Vishwa Vyapar Trading Pvt. Ltd., ITA No. 2888/Mum/2017. 4. ITO Vs. M/s. span Venture ITA No. 4447/Mum/2017. 5. Shree Laxmi Estate P. Ltd., Vs. ITO, ITA No. 5954/Mum/2016 & 2562/Mum/2017. 6. ACIT Vs. M/s. Abani Sarbeswar Das ITA No. 193/Mum/2018 and 232/Mum/2017. 7. ITO Vs. M/s. Smt. Pratima Ashar ITA No. 105/Mum/2018. 8. ITO vs M/s. Nityanand Industries Pvt Ltd., ITA 4277 & 4278/Mum/2017. 9. ACIT Vs. Shreedham Builders ITA No. 5589/Mum/2017. 7. The Ld. AR further submitted that the assessee complied with the ingredients required under Sec. 68 of the Act and the A.O. has failed to discharge his duty as the assessee filed the entire details in respect of investors in the assessment proceedings and prayed for dismissal of the revenue appeal. 8. We heard the rival contentions and perused the material on record and the judicial decisions. The sole disputed issue arises with respect to three investor companies, where the assessee has received share application money along with share premium. The assessee has i....