TaxTMI 
TaxTMI 
2021 (2) TMI 735
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....ee, wherein various premises of the assessee were covered. In response to notice under section 153A of the I.T. Act, the assessee submitted the return of income on 10.05.2014 declaring the same income. The assessee company is stated to have been engaged in the business of civil contractor. 3.1. It was observed by the A.O. that there is a substantial increase in the share capital and introduction of share premium amounting to Rs. 15 crores during the year under consideration and accordingly, the assessee was asked to submit the details to substantiate the identity of the shareholders, genuineness of the transaction and creditworthiness of the investors so as to discharge the onus and substantiate the share capital and premium thereon, as shown to have been received from 35 persons / Group. 3.2. During assessment proceedings, assessee provided various details of Investors such as copy of ITR, bank statements and confirmation etc., However, in some cases either confirmation has not been provided or ITR/bank statements not provided. The said details have been mentioned in a tabulated form for each of the Investor as incorporated in the body of the assessment order. After examinat....
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.... human probabilities; • Even if legally correct, the whole chain of transactions is not logically justifiable. • In the case of the Assessee there is enough evidence which shows that the explanation submitted about nature and source of credit is not correct." 3.4. It was explained in the written submissions that assessee has received Rs. 2.50 crores as share capital/ premium from individuals/HUFs who are either closely related to or friends/business associates of the promoters of the assessee company and a sum of Rs. 12.50 crores has been received from various companies incorporated under the provisions of Companies Act. The assessee filed complete details before A.O. in response to the query of the A.O. to prove identity of the investors, their creditworthiness and genuineness of the transaction in the matter. Therefore, initial onus upon assessee to prove genuineness of the transaction have been discharged by the assessee. It was submitted that the parties from whom share capital/ premium has been received during the year are either limited companies incorporated under the provisions of Companies Act or Individuals/HUFs. In this regard, confirmations,....
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..... In support of his contention, assessee relied upon Judgment of the Hon'ble Delhi High Court in the case of Pr. CIT vs., Kurele Paper Mills Pvt. Ltd., 380 ITR 571 (Del.) in which it was held that when no incriminating material or evidence related to share capital issue was found during the course of search, A.O. was not justified in invoking Section 68 of the I.T. Act. The assessee also relied upon Judgment of the Hon'ble Supreme Court in the case of CIT vs., Orissa Corporation Pvt. Ltd., 159 ITR 78 (SC), Judgment of Hon'ble Gujarat High Court in the case of CIT vs., Rohini Builders 256 ITR 360 (Guj.), Judgment of Hon'ble Gauhati High Court in the case of Nemichand Kothari vs., CIT 264 ITR 254 (Gau.), Judgments of Hon'ble Delhi High Court in the case of CIT vs., Sivadhooti Pearls Investment Ltd., 237 Taxman 104 (Del.) and MOD Creations Pvt. Ltd., vs., ITO 354 ITR 282 (Del.). The assessee also relied upon several decisions including Judgment of Hon'ble Supreme Court in the case of CIT vs., Lovely Exports Pvt. Ltd., 216 CTR 195 (SC) in support of the contention that assessee received genuine share capital/ premium. 3.5. The Ld. CIT(A) considering the explanation of assessee and m....
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....orrectly considered by the Ld. CIT(A) for deleting the addition. The A.O. cannot ask the assessee to prove the source of the source. He has relied upon Judgments as have been mentioned and referred to in the submissions of the assessee before the Ld. CIT(A). 6. We have considered the rival submissions and perused the material available on record as regards Departmental appeal. In the present case the A.O. noted that assessee has received share capital/premium from 35 Parties/Group. The assessee was directed to file the evidences to prove identity of the Investors, their creditworthiness and genuineness of the transaction. The assessee in respect of these investors filed their confirmation, PAN, ITR and bank statements and wherever applicable filed the copies of the balance-sheet of the Investor companies. The A.O. did not doubt the documentary evidences filed by assessee. No Investor was asked to appear before A.O. for recording their statements regarding genuineness of the transaction in the matter. No cash was found to have been deposited in the accounts of the Investors before making investment in assessee company. The A.O. did not make any investigation or enquiry with regar....
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.... 6.2. CIT vs. Fair Investment Ltd., 357 ITR 146 in which it was held that A.O. did not summon investors and did not make efforts. There is no finding that material disclosed was untrustworthy. The Appellate Authorities rightly deleted the addition. 6.3. Decision of Supreme Court in the case of CIT vs. Lovely Exports Pvt. Ltd., (2008) 216 CTR 195 in which it was held as under: "If the share 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, but it cannot be regarded as undisclosed income of assessee company." 6.4. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Kamdhenu Steel and Alloys Ltd., &Ors. 361 ITR 220 (Del.) in which it was held as under : "Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be discarded or it is proved that it has "created" evidence, the Reve....
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....Hospital Ltd., (2013) 356 ITR 65, in which it was held as under : "Dismissing the appeals, that if the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented the company's own income from undisclosed sources. It was nobody's case that the non-resident Indian company was a bogus or non-existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription and that the transaction was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the investor alone was to be seen. Thus, the addition was rightly deleted. CIT v. Lovely Exports P. Ltd. [2009] 319ITR (St.) 5 (SC) applied."....
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....eletion of addition was justified." 6.10. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. WinstralPetrochemicals P. Ltd., 330 ITR 603, in which it was held as under : "Dismissing the appeal, that it had not been disputed that the share application money was received by the assessee-company by way of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to the Assessing Officer. Since the applicant companies were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be non-existent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the genuineness of the transactions had been duly established by the assessee." 6.11. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Value Capital Services Pvt. Ltd., (2008) 307 ITR 334 (Del.) (HC), in which it was held as under : "Dismissing the appeal,....
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....e cases assessee failed to prove the creditworthiness of the creditors. However, in the present case of the assessee, assessee has been able to prove creditworthiness of the Investors and genuineness of the transaction in the matter relevant to Department Appeal. We, therefore, do not find any infirmity in the Order of the Ld. CIT(A) in deleting the part addition of Rs. 11,30,50,000/- . The Departmental Appeal fails and is dismissed. 7. In the result, appeal of the Departmental dismissed. Order pronounced in the open Court. ============= Document 1 8.1 A perusal of the submissions reveals that payments have been given by the investors through banking channels. It is also seen that no cash introduction in the accounts of such share holders has been made. Confirmation has been provided in various cases alongwith the copy of ITR for the relevant assessment years. It is also observed that sufficient funds were available in the accounts of such investors on the date of application for share capital in the appellant company. 8.2 It is also seen that no further investigation has been made by the AO to prove conclusively by gathering evidence that these i....
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....m the depositors and reflection of same in the books of accounts etc. It is observed that in present case the appellant has provided such details, however in some of the cases either no details provided or only part details provided. 8.5 Out of total 35 number of investors/ group as reproduced earlier, in the following cases, income tax return, copy of bank account or confirmation/PAN of investor has not been submitted by the appellant before AO to prove the identity, creditworthiness and genuineness of transactions. S.No. Name of investor 1. Surender Kumar Singla and others. (HUF) 2. Sunil Kumar Singla Address: No shares of Total amount invested 279A, Yamunal applied for 50,000 50,00,000 Enclave, Panipat 279A, Enclave, Panipat Yamuna 25,000 25,00,000 3. Avtar Gupta & others. F-33, Panchsheel 50,000 Enclave, Zirakpur 50,00,000 4. Bal kishan Singla (HUF) 25,000 25,00,000 ganon has bee Documents enclosed/Remarks 20,00,000 Confirmation and ITR provided, no bank details provided to show the genuineness of transaction and creditworthiness Only confirmati....