TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 707
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....ted company engaged in the business of wholesale trading of textile fabrics. During the year under consideration the assessee had received share application money of Rs. 4,00,00,000/- from the following shareholders as under:- Aadhar Ventures (I) Ltd - Rs. 10,00,000 Speciality Papers Ltd - Rs. 1,90,00,000 Twenty First Century (I) Ltd - Rs. 2,00,00,000 ---------------------- Rs. 4,00,00,000 3.1. We find that the ld AO had relied on the information received from the Investigation wing and alleged that the said companies are controlled and operated by Shri Shirish C Shah who has indulged in providing accommodation entries through the said entities without entering into actual transactions. The ld AO therefore asked the assessee to justify the share application money received during the year under consideration together with its premium and show caused as to how the assessee satisfies the three necessary ingredients of section 68 of the Act. In response thereto, the assessee submitted that - (a) M/s Aadhar Ventures (I) Ltd had invested a sum of Rs. 10 lakhs in assessee company as against issuance of 12500 fully paid up equity shares at face va....
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....h the payment details and its mode , thereby proving the genuineness of the transactions. The said confirmation duly contained the address of the investor company together with its PAN. g) Copy of acknowledgement of filing of return of income for the Asst Years 2011-12 and 2012-13 of Aadhar Ventures (I) Ltd. This proves the identity of the investor company. h) Copy of Certificate issued by the Registrar of Companies (ROC) for effecting the name change of the investor company from Prraneta Industries Ltd to Aadhar Ventures India Ltd. Twenty First Century India Limited a) Copy of PAN Card proving the identity of the investor company. b) Copy of share application form filled by Twenty First Century India Ltd clearly proving the genuineness of the transaction that they had approached the assessee company in the routine manner. c) Copy of Board Resolution passed in the Board of Directors meeting of Twenty First Century India Ltd for making investment in the shares of assessee company herein. d) Copy of acknowledgement of filing of return of income for the Asst Year 2012-13 of Twenty First Century India Ltd. This proves the identity of the investor company. e) Copy of Bank Statem....
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.... year under consideration to the tune of Rs. 35.83 crores. This proves the fact that the said investor company is having sufficient creditworthiness to make investment in share capital and premium in the assessee company to the extent of Rs. 1.90 crores. 3.3. By filing the aforesaid details, the assessee had duly discharged the initial onus cast on it in terms of section 68 of the Act by duly proving the three necessary ingredients of section 68 of the Act. Further, we find that the ld AO sought to verify the veracity of the aforesaid documents by issuing notices u/s 133(6) of the Act to the aforesaid investor companies, by seeking for various details, which were duly responded directly by those investor companies before the ld AO. In addition thereto, the ld AO even issued summons u/s 131 of the Act to those parties calling for certain details, which were also directly responded by the parties before the ld AO. We find that the investor companies, in response to the summons issued u/s 131 of the Act had not appeared in person before the ld AO, but had duly filed the necessary documents that were called for by the ld AO. Since the parties failed to appear in person before the ld A....
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....es only. We find that the investor companies are widely held public limited companies wherein financial institutions / clearing houses are shareholders, apart from the promoters holding. It is highly improbable to conclude that the financial institutions / clearing houses etc would resort to making investment in equity shares in the company which is only engaged in providing accommodation entries. Hence the observations of the ld AO could be safely concluded as factually erroneous. We find that the investor companies had filed confirmation of the fact of having made investment in share capital and share premium of the assessee company. We are unable to persuade ourselves to accept to the contentions of the ld AO by merely placing reliance on the statement recorded u/s 132(4) of the Act from Shri Shirish C Shah during the course of his search and seizure operation, for framing the addition u/s 68 of the Act in the hands of the assessee company herein. We find that the investor companies on their side had duly submitted that they are not controlled and operated by Shri Shirish C Shah and the decision to invest in share capital with premium of the assessee company was taken by their r....