TaxTMI 
TaxTMI 
2021 (6) TMI 1027
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.... that the allegations contained in the assessment order are by and large either not relevant or contrary to facts on record and the case laws cited by the AO are clearly distinguishable from facts of the case and do not apply in the assessee's case, ignoring the fact that the said decisions of Hon'ble Supreme Court in the case of Vijay Kumar Talwar V/s CIT (2011 330 ITR 1 SC) and CIT V/s Orissa Corpn. Pvt. Ltd. (1986 159 ITR 78) have not been considered. (ii) The Ld. CIT(A) has erred in deleting the addition of Rs. 8,20,00,000/- u/s 68 of the Act without appreciating the fact that M/s Bottomline Distributors Pvt. Ltd. had filed part details as called u/s 133(6) of the I.T.Act, 1961 to prove the creditworthiness of the transactions. (iii) The Ld. CIT(A) has erred in deleting the addition of Rs. Rs. 8,20,00,000/- u/s 68 of the Act without appreciating the fact that amount shown to have been received from M/s Bottomline Distributors Pvt. Ltd. during the year is Rs. 2,55,00,000/- and the resolution does not mention anything about share warrants of the assessee company. As evident, the revenue is aggrieved by deletion of certain addition u/s 68 as made by Ld. AO in ....
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....4.4 During assessment proceedings, the assessee was directed to furnish the requisite documentary evidences in support of issue of share warrants. Notice u/s 133(6) was also issued to M/s BDPL calling for various information. The notice was duly responded to by M/s BDPL along with certain details / documentary evidences which include the following documents:- (i) Copy of Income Tax Return Acknowledgement for AY 2011-12 (ii) Computation of Income for AY 2011-12 (iii) Audited financial statements for financial year 2010-11 (iv) Copy of Bank Statement (v) Copy of account of assessee for AY 2011-12 (vi) Copy of Board Resolution along with offer and allotment letters. 4.5 However, Ld. AO, invoking the provisions of Sec.68, opined that the assessee could not furnish complete information as called from time to time and the onus as casted upon the assessee to prove the identity as well as creditworthiness of the lender and to prove the genuineness of the transactions remained undischarged. 4.6 The documents, which in the opinion of Ld. AO could not be furnished by the assessee, would include copies of correspondence with M/s BDPL ....
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....Therefore, the onus casted on assessee in terms of requirements of Sec.68 was duly discharged and therefore, the additions could not be sustained in the eyes of law. 5.2 The relevant findings of Ld. CIT(A) were as under: - 5.1 Although the appellant has raised 6 grounds of appeal but the only effective ground is against the addition of Rs. 8,20,00,000/- u/s.68 of the I.T. Act. In the assessment order, the Ld.A.O. observed that the appellant company had shown to have issued fully convertible share warrants. After referring note No.13 under Schedule 17 to Financial Statements, the Ld. A.O. observed that appellant company had received a sum of Rs. 8,20,00,000/- being the amount of application for allotment of 8,50,000 warrants convertible within a period of 12 months from the date of allotment of warrants into 8,50,000 equity shares of Rs. 10/- each at an exercise price of Rs. 300/- per share. During the course of assessment proceedings, the A.O. called the details of warrants including name, address, amount, income tax return, Balance Sheet, Capital A/c. and bank statement in relation to the parties to whom such warrants were claimed to have been issued during the year. A....
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....ompany, iv. The investment made by M/s. Bottomline Distributors P. Ltd. in the share warrants of the appellant company are duly reflected in its audited balance Sheet, v. Copy of Board resolution, offer letter and allotment letter were also filed by M/s. Bottomline Distributors P. Ltd. in pursuance to notice u/s.133(6). 5.3 It was submitted by the appellant that in response to notice u/s.133(6) issued by the AO to M/s. Bottomline Distributors P. Ltd. the aforesaid company made compliance with all relevant issues raised therein. According to the appellant, the issue of part compliance of notice u/s.133(6) by M/s. Bottomline Distributors P. Ltd. raised by the AO was not fair for making an unjustified addition. It was clarified that during the assessment proceedings, the AO raised the issue of part compliance in response to notice u/s. 133(6) of the Act but some of the information required had no relevance to the issue at hand. 5.4 It was brought to my notice that M/s. Bottomline Distributors P. Ltd. in response to notice u/s.133(6) furnished all relevant information. It was also stated that in view of the proximate relationship of the appellant com....
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....f both the parties and transactions were carried out through cheques. Therefore, genuineness of transaction cannot be doubted and onus regarding genuineness of transactions stands discharged. The AO has placed reliance on the decision of Globus Securities & Finance Pvt. Ltd. supra in justifying that genuineness of the transaction does not stand proved. However I find force in the submissions of the Ld. AR that the case relied upon by the AO is not applicable to the case of the assessee as the same is distinguishable on facts as inter alia there was no adverse information about the contributor company, no incomplete details of Balance sheet of contributor company were filed, the contributor company is related to the investee company in the appeal at hand. Further still the facts clearly show that valuation of equity was to be done as per the offer letter. It is also pertinent that at no stage during assessment proceedings the AO required the appellant company to file valuation report for justifying premium as is apparent from the order sheet produced before me in appeal. 5.6. The total sum of Rs. 8,20,00,000/- was received from M/s. Bottomline Dis....
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....With these observations, the Ld. A.O. concluded that appellant company failed to establish the creditworthiness of M/s. Bottomline Distributors P. Ltd. In the assessment order, the Ld. A.O. had himself acknowledged that during assessment proceedings, the A.R. submitted the name and address of the company and in addition to it a notice u/s.133(6) was also issued to M/s. Bottomline Distributors which was the sole subscriber of fully convertible share warrants. In response to notice u/s.133(6), M/s. Bottomline Distributors P. Ltd. submitted copy of acknowledgements slip of return filed for A.Y.2011-12, copy of computation of income, copy of audit report and audited Balance Sheet as on 31.03.2011, copy of relevant extract of bank statement, copy of account of appellant company and copy of Board's resolution along with offer and allotment letter. The investment by said M/s Bottomline Distributors Pvt. Ltd., in share warrants of appellant company, stands justified by its capital and reserves. It is pertinent to mention here that the case of M/s. Bottomline Distributors P. Ltd. was scrutinized by the I.T.O. Wd. 7(4), Kolkata u/s.143(3) r.w.s.147 and he had accepted the Balance Sheet f....
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....hi High Court held that burden of proof can seldom be discharged to the hilt by the assessee. If the A.O. harbours doubts of the legitimacy of any subscription he is empowered, rather duty bound, to carry out thorough investigations. But if the A.O. fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company. If relevant details of address and identity of the subscribers are furnished to the department alongwith copies of the shareholders register, share application forms, share transfer register etc. it would constitute acceptable proof or explanation by the assessee. iii. In Hindustan Inks & Resins Ltd. vs. Dy. C.I.T. 60 DTR 0018 (2011) the Hon'ble Gujarat High Court has held as under: "From the concurrent findings recorded by the authorities below, it is apparent that none of the parties have recorded any findings to the effect that the identity of the depositors had not been established by the assessee. The case of the respondent is that the assessee has failed to explain the source of such cash' as well as creditworthiness of the deposits. It is....
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....ription forms of the investors, including TT Ltd., a group company, containing details and information with respect to their addresses as well as PAN, thereby establishing their identity and also supplied a copy of the statement of bank accounts of TT Ltd., it has discharged its onus in respect of the veracity of the transaction and therefore, the addition u/s.68 made by the AO in respect of the impugned investment made by TT Ltd. has been rightly deleted. 5.8 I have also perused the assessment order and the written submissions filed by the appellant and the facts on record. The allegations contained in the assessment order are by and large either not relevant or contrary to facts on record. The case laws cited by the AO are clearly distinguishable from facts of the case of the appellant company and therefore do not apply and I place reliance on the decision of the Apex Court in the case of Sun Engineering Works Ltd., HH Maharajadhiraj Madhav Rao Jiwaji Rao Scindia Bahadur and Mysore State Road Transport Corporation supra. I also find, from a perusal of the order sheet, that the assessment proceedings are squarely covered by the observations of Hon'ble High Court of De....
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....tice was duly responded to by the applicant entity along with requisite details and documents as desired by Ld. AO, which has already been enumerated by us in preceding para 4.4. The transactions were duly confirmed by M/s BDPL. It is important to note that the existence of M/s BDPL could not be doubted since it was duly registered entity having valid PAN issued by the department. In fact, it was scrutinized u/s 143(3) r.w.s. 147 in earlier years in which it had raised share capital and premium. The return of income was duly accepted by the revenue during scrutiny assessment. The investment were sourced out of share capital and reserves of M/s BDPL and this fact remain uncontroverted before us. The transactions were duly reflected in the financial statements of the investor entity. The transactions have taken place through banking channels. After going through all these facts and evidences, we find that the onus casted upon assessee in terms of requirement of Sec.68 to prove the identity of the investor, their respective creditworthiness and the genuineness of the transactions, was duly discharged by the assessee. The onus, had thus shifted on Ld. AO, to disprove the assessee's ....
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....of said decision has subsequently been followed by various judicial authorities in catena of judicial pronouncements. The said decision has been followed by Hon'ble Bombay High Court in the case of CIT Vs. Gagandeep Infrastructure Private Limited [80 Taxmann.com 272] & subsequently in CIT Vs. Orchid Industries Private Limited [88 Taxmann.com 502]. The Hon'ble Delhi High Court followed the said decision in Pr. CIT V/s Adamine Construction Pvt. Ltd. [107 Taxmann.com 84] against which revenue's Special Leave petition was dismissed by Hon'ble Supreme Court which is reported at 107 Taxmann.com 85. Similar is the position of decision of Hon'ble Delhi High Court rendered in Pr. CIT V/s Himachal Fibers Ltd. [98 Taxmann.com 72] against which revenue's Special Leave Petition was dismissed by Hon'ble Supreme Court which is reported at 98 Taxmann.com 173. Similar is the decision of Hon'ble High Court of Madhya Pradesh in Pr. CIT V/s Chain House International Pvt. Ltd. [98 Taxmann.com 47] against which revenue's Special Leave Petition has been dismissed by Hon'ble Supreme Court on 18/02/2019 which is reported at 103 Taxmann.com 435. Similar is the decision of Hon'ble Bombay High Court in Pr. CI....