TaxTMI 
TaxTMI 
2021 (3) TMI 720
X X X X Extracts X X X X
X X X X Extracts X X X X
....actions. M/s Taranga Vyapar Pvt. Ltd does not have any significant funds of its own for investment in the unlisted company like the assessee company. 3. On the facts and circumstances of the case the Ld. CIT(A) has erred in law deleting the addition of Rs. 4,84,00,000/- made by AO on a/c of unexplained share premium and Share capital received by assessee from Saumitra Investment and Finance Pvt. Ltd., Viva Trade-link Pvt. Ltd., Hingora Finvest Pvt. Ltd., Doldrum Investment and Finance Pvt. Ltd. & Oshin Investment and Finance Pvt. Ltd. As the assessee failed in proving the creditworthiness of the investors as all the investors are showing nominal income." 2. We have heard the Learned Representative of both the parties and perused the material available on record. 3 The facts of the case are that assessee has filed the return of income declaring total income of Rs. 3,93,976/- on 24.09.2008. Notice under section 143(2) was issued and served upon the assessee. A search under section 132 was conducted in Bhushan Steel Group of cases on 03.03.2010. The case of assessee was centralized with this case. The assessee attended the proceedings and filed necessary details befo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee submitted copies of the bank accounts, confirmations and income tax returns, acknowledgments and copies of the annual reports of the Investors. The A.O. noted that all the Investor Companies have shown meager income in their return of income. However, the A.O. on perusal of the balance-sheet of the Investors found their main source of fund as under : 1. M/s. Taranga Vyapar Private Limited Rs. 7,36,76,300/- 2. UDIT Vyapar Private Limited Rs. 8,80,28,900/- 3. Remo Engineering Works Pvt. Ltd., Rs. 5,53,23,000/- 4. Mysol Engineering Private Limited Rs. 4,21,99,000/- 5. Twenty First Century (India) Ltd., Rs. 23,25,00,000/- + Rs. 5,00,00,000/- 3.3. The A.O. on the basis of the above observed that all the Investors are based out in Kolkata and it is beyond the limit of human reasonableness that these Companies would invest such large amount in the assessee company. All the companies invested in assessee company do not have any significant income and their source of fund is share premium and share capital. The A.O, therefore, noted that creditworthiness of the creditors have not been established and genuineness of the transacti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reproduced in the appellate order in which the assessee submitted that it has filed copies of the confirmations, income tax returns, bank accounts and audited accounts of the Investors on which no enquiry have been made by the A.O. The amounts have been received through banking channel and parties have confirmed the transactions with the assessee. All are assessed to Income Tax and have sufficient funds to make investment in assessee company. The onus upon assessee have been discharged to prove identity of the Investors, their creditworthiness and genuineness of the transactions in the matter. The A.O. cannot ask the assessee to prove source of the source. The assessee relied upon several decisions of Hon'ble Delhi High Court and Hon'ble Supreme Court in support of the contention that addition is wholly unjustified. The Ld. CIT(A) called for the remand report on the submissions of the assessee and assessee also filed rejoinder to the same. It was submitted that field enquiry was not confronted to the assessee and all the Investors are existing parties. The Ld. CIT(A) considering the material on record including the remand report etc., deleted the entire addition. The findings o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f money as share capital of the appellant, it cannot be held that the share capital raised is not genuine. As the appellant has discharged the primary onus of establishing the transactions and the source of the share capital raised, there has to be conclusive proof for the revenue to reach this conclusion. In the absence of any such evidence, the addition made cannot be legally sustained and is deleted. 4. In the result, the appeal is allowed." 4. The Ld. D.R. relied upon the Order of the A.O. and submitted that A.O. had discussed the issue in detail, but, the Ld. CIT(A) deleted the addition in a casual manner. The Ld. D.R. relied upon Judgment of the Hon'ble Supreme Court in the case of PCIT vs., NRA Iron & Steel (P.) Ltd., [2019] 103 taxmann.com 48 [SC] and submitted that the issue is covered in favour of the Revenue by the aforesaid decision because the facts in this case are identical with the facts of the assessee's case. In both the cases share capital/ premium have been taken from Kolkata and Mumbai based companies where share premium was very high. The creditors have filed their return of income showing negligible income and no explanation is offered by the Inve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enty First Century (India) Ltd., was found to have shifted to a new address and the said party was traced at that address, therefore, its identity and existence is proved. In support of the remaining parties it is reported that these companies could not be traced at the given address, but, the postal summons issued under section 131 of the I.T. Act were served at the given address which have been responded by the parties also. Therefore, the report of Kolkata Income Tax Department has no value. The A.O. did not bring any evidence on record to controvert the documentary evidences furnished by the assessee. Whatever enquiry was conducted at the back of the assessee was not confronted to the assessee and no right of cross examination have been given, therefore, such material cannot be used against the assessee. Similarly, enquiry conducted through Mumbai Investigation Officer/Inspector was not confronted to assessee, therefore, such report of Inspector cannot be read in evidence against the assessee. All the material on record clearly prove that all the parties are existing and are assessed to tax and registered with the Registrar of Companies. 5.1. Learned Counsel for the Assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ors, genuineness of the transactions and credit-worthiness of the creditors which finding of fact stood affirmed by the Tribunal. There is, thus, concurrent findings of fact by the two lower appellate authorities. Appellant has not been able to show any perversity in the aforesaid findings of fact by the authorities below. 24. Under these circumstances, we find no error or infirmity in the view taken by the Tribunal. No question of law, much less any substantial question of law, arises from the order of the Tribunal. Consequently, the appeal is dismissed. However, there shall be no order as to cost." 5.2. Learned Counsel for the Assessee submitted that the assessee's case is fully covered by Judgment of the Hon'ble Supreme Court in the case of PCIT vs., Adamine Construction (P) Ltd., 259 Taxman 131 Dated 28.09.2018 whereby the Hon'ble Supreme Court had dismissed the SLP filed by the Department against the Order Dated 12.02.2018 of Hon'ble Delhi High Court in the case of PCIT vs., Adamine Construction Pvt. Ltd., 99 taxmann.com 44. In this case the Hon'ble Delhi High Court has confirmed the Order of the Tribunal in the case of ACIT vs., Adamine Construct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsidered the rival submissions and perused the material on record. It is not in dispute that assessee filed original return of income wherein all the particulars of investment made by Investor companies of Kolkata and Mumbai have been disclosed to the Revenue Department. The case of assessee was centralized with the case of Bhushan Group of cases because in their cases it was found that this company has received share capital from different companies. However, A.O. has not mentioned any fact as to what material was recovered during the course of search in the case of Bhushan Steel Group of cases to point-out that assessee has received any bogus share capital/premium. The A.O. only on the basis of documentary evidences filed by the assessee came to know that assessee has received share capital and premium from the 10 Investor companies at Kolkata and Mumbai. The assessee produced copy of the confirmations, bank accounts, income tax returns, and annual reports of all the Investor companies before the A.O. The A.O. did not doubt any of the documentary evidences. All investments have been made by the Investor companies through banking channel and have sufficient amount in their bank a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udgment of Hon'ble Delhi High Court in the case of CIT vs., Dwarakadhish Investment P. Ltd., [2011] 330 ITR 298 [Del.] [HC}, Judgment of Hon'ble Gujarat High Court in the case of Rohini Builders 256 ITR 360 (Guj.), Judgment of Hon'ble Allahabad High Court in the case of Zafar Ahmad & Co. 30 taxmann.com 269 [All.] [HC]. Considering the above evidences and material on record, it is clear that A.O. did not make any enquiry on the documentary evidences filed by the assessee and did not doubt the documentary evidences, therefore, initial onus upon assessee to prove creditworthiness and genuineness of the transaction have been discharged by the assessee. In support of the above findings, we rely upon the following decisions. 6.1. 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. 6.2. 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 alleg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee provided details of share applicants i.e. copy of the PAN, Assessment particulars, mode of amount invested through banking channel, copy of resolution and copies of the balance sheet. The AO failed to conduct any scrutiny of the document, the departmental appeal was accordingly dismissed. 6.6. Decision of the Hon'ble Supreme Court in the case of Earth Metal Electric Pvt. Ltd., vs. CIT dated 30th July, 2010 in SLP.No.21073 of 1999, in which it was held as under : "We have examined the position, we find that the shareholders are genuine parties. They are not bogus and fictitious therefore, the impugned order is set aside." 6.7. Decision of Hon'ble jurisdictional High Court in the case of Divine Leasing & Finance Ltd., 299 ITR 268, in which it was held as under : "No adverse inference should be drawn if shareholders failed to respond to the notice by A.O. 6.8. Decision of Hon'ble M.P. High Court in the case of CIT vs. Peoples General 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 comple....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this addition in the share capital. The assessee offered a detailed explanation. However, according to the Assessing Officer, the assessee failed to explain the addition of share application money from five of its subscribers. Accordingly, the Assessing Officer made an addition of Rs. 35,50,000/- with the aid of section 68 of the Act, 1961 on account of unexplained cash credits appearing in the books of the assessee. However, in appeal, the Commissioner of Income-tax (Appeals) deleted the addition on the ground that the assessee had proved the existence of the shareholders and the genuineness of the transaction. The Income-tax Appellate Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) as it was also of the opinion that the assessee had been able to prove the identity of the share applicants and the share application money had been received by way of account payee cheques. On appeal to the High Court: Held, dismissing the appeals, that the deletion 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,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case." 6.14. The Hon'ble Madhya Pradesh High Court in the case of PCIT vs., Chain House International Pvt. Ltd., 98 taxmann.com 47 [HC] [MP] [ 408 ITR 561 [HC] [MP] ] while deciding several appeals including the appeal of the Revenue in the case of Bharat Securities Pvt. Ltd., held that "once genuineness, creditworthiness and identity of the Investors ar....