AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 75
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....The facts and circumstances of the case and in taw. the CIT(A) has erred In deleting the addition of Rs. 3,25.00,000/- as unexplained cash credit u/s 68 of the I.T. Act on account of share capital & share premium, without appreciating the fad that the onus was on the assesses not only to furnish the details of the parties but also to prove the creditworthiness of the parties and the genuineness of the transactions. 3. The appellant prays that the order of CIT(A) on the above ground be set aside and that of Assessing Officer be restored. 4. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 2. Briefly stated, the assessee company which is engaged in the business of manufacturing and trading of jewellery and incidental labour job work had e-filed its return of income for A.Y. 2010-11 on 21.09.2010, declaring a total income of Rs. 44,25,593/-. The return of income filed by the assessee was processed as such u/s 143(1) of the Act. Subsequently, the case of the assessee was reopened u/s 147 of the Act for examining the increase in its share capital during the year. Accordingly, notice u/s 148 of the Act was issued to the assessee c....
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....directed to submit the copies of the bank statements of the aforementioned shareholders pertaining to the year under consideration, as well as justify the share premium of Rs. 240/- in the backdrop of the face value of the share of Rs. 10/-. Further, the assessee was directed to submit the copies of the share application forms received from the shareholders alongwith any other documents that were submitted by them. In compliance thereto, the assessee vide its letter dated 05.12.2016 furnished certain details, viz. (i) copies of incorporation certificate of three companies (out of the aforementioned four shareholding companies); (ii) copies of memorandum of association and articles of association of the aforesaid four shareholding companies; and (iii) copies of the relevant bank statements of the aforementioned four shareholding companies. As the assessee had failed to produce the shareholders, therefore, it was once again directed by the A.O to do the needful. Also, the assessee was confronted with the fact that the certificate as regards the valuation of its shares that was filed in the course of the proceedings had no explanation as regards the basis of valuation of shares; basis....
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.... the assessee company at Rs. 3,95,64,810/-. 4. On appeal, the assessee drawing support from the documents that were filed in the course of the assessment proceedings, viz. (i) copy of companies data from MCA website (including their names, addresses and director information); (ii) copy of form filed with ROC for allotment of shares and balance sheets of investors; (iii) copy of Board Resolution: (iv) copy of share application money ledger account ; (v) copy of the valuation certificate of the shares of te assessee company; (vi) copy of incorporation certificate, memorandum and articles of association of the shareholder companies; and (vii) copy of relevant pages of Bank statements highlighting the transactions under consideration, therein submitted that the A.O had wrongly held the amount of share capital and share premium aggregating to Rs. 3.5 crore as an unexplained cash credit u/s 68 of the Act. Apart from that, the assessee in order to substantiate to the hilt the identity, creditworthiness and genuineness of the amount of share application money received from the aforementioned four shareholder companies therein furnished before the CIT(A) the following documents as 'additio....
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....iling at the relevant point of time, it was even otherwise under no obligation to prove the source of the source in respect of share application money received by it. In support of his aforesaid claim the assessee had relied on a host of judicial pronouncements. It was the claim of the assessee that now when it had given the complete details, viz. names and addresses of the respective shareholder companies, therefore, the initial onus that was cast upon it to prove the genuineness and receipt of share application money stood duly discharged. In fact, it was the claim of the assessee that the A.O. had failed to apply his mind to the documents which were furnished with him and had not analyzed the same before drawing adverse inferences as regards the genuineness of the aforesaid transactions in question. It was submitted by the assessee that it had allotted shares to all the aforementioned four shareholder companies on 12.03.2010 and had filed the 'Form 2' with the ROC on the same date. After receiving the aforesaid additional evidence, the CIT(A) called for a 'remand report' from the A.O. In compliance, the A.O submitted his remand report, dated 21.09.2018, wherein he objected to th....
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....y of the transactions under consideration was irrefutably proved to the hilt. Insofar the shareholder company, viz. Maginot Trading Company Pvt. Ld. that had not complied with the notice that was issued by the A.O u/s 133(6) was concerned, it was submitted by the assessee that as the aforesaid notice was delivered to the said investor company, therefore, the factum of its existence stood proved beyond doubt. After deliberating at length on the 'additional evidence' that was filed by the assessee in the backdrop of the 'remand report' of the A.O and the rejoinder filed by the assessee, the CIT(A) holding a conviction that the details submitted by the assessee were crucial for adjudicating the grounds raised in the appeal, therefore, admitted the same. 5. Adverting to the merits of the case, the CIT(A) taking cognizance of the documents that were filed by the assessee in the course of the assessment proceedings, as well as those that were filed before him as 'additional evidence', therein observed, that three shareholder companies (out of four shareholder companies) had in compliance to the respective notices that were issued by the A.O u/s 133(6) in the course of the remand proceed....
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....nts, viz. (i) CIT Vs. Lovely Exports (P) Ltd. (2008) 216 CTR 195 (SC); (ii) CIT Vs. Creative World Telefilms Ltd. (2011) 333 ITR 100 (Bom); (iii) CIT Vs. Gagandeep Infrastructure Pvt. Ltd. (2017) 394 ITR 680 (Bom); and (iv) CIT Vs. Steller Investments Limited. (1991) 192 ITR 287 (Del), therein observed, that the 'first proviso' to Sec. 68 of the Act, which as a pre-condition for discharge of onus by an assessee company as regards the 'nature' and 'source' of a sum consisting of share application money, share capital, share premium or any such amount by whatever name called recorded in its books of accounts, therein requires the person in whose name credit of such sum is recorded to put forth an explanation about the 'nature' and 'source' of such sum, having been introduced vide the Finance Act, 2012 w.e.f 01.04.2013 was effective only from A.Y 2013-14 onwards, and thus, was not applicable to the year under consideration i.e A.Y. 2010-11. Accordingly, it was observed by the CIT(A) that as held by the Hon'ble Supreme Court in the case of Lovely Exports Pvt. Ltd. (supra), in case, if the A.O was of the view that the share application money was received by an assessee from a bogus shar....
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....A.R that the CIT(A) after duly appreciating the facts of the case in the backdrop of the supporting documentary evidence which substantiated to the hilt the authenticity of the transactions under consideration, had rightly vacated the addition of Rs. 3.25 crores made by the A.O u/s 68 of the Act. 8. We have heard the ld. Authorized Representatives for both the parties, perused the orders of the lower authorities and the material placed on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. As observed by the CIT(A), and rightly so, the assessee had placed on record sufficient documentary evidence to substantiate the genuineness and veracity of the aforesaid transactions i.e receipt of share capital and share premium by the assessee company from the aforementioned three shareholder companies (out of four shareholding companies). Apart from that, the assessee had further supplemented the genuineness of the aforesaid transactions by placing on record 'additional evidence' in the course of the proceedings before the CIT(A). Be that as it may, we find that the aforementioned three shareholder ....
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....w had thereafter once again been reiterated by the Hon'ble High Court of Bombay in the case of CIT Vs. Creative World Telefilms Ltd. (2011) 333 ITR 100 (Bom). Apropos the 'first proviso' to Sec. 68 of the Act which as a pre-condition for discharge of onus by an assessee company as regards the 'nature' and 'source' of a sum consisting of share application money, share capital, share premium or any such amount by whatever name called recorded in its books of accounts, therein requires the person in whose name credit of such sum is recorded to put forth an explanation about the 'nature' and 'source' of such sum, as observed by the Hon'ble High Court of Bombay in the case of CIT Vs. Gagandeep Infrastructure Pvt. Ltd. (2017) 394 ITR 680 (Bom), having been introduced vide the Finance Act, 2012 w.e.f 01.04.2013 was effective only from A.Y 2013-14 onwards, thus, the same would not be applicable to the year under consideration in the case of the present assessee before us i.e A.Y. 2010-11. Accordingly, as the year in the case of the assessee before us is A.Y. 2010-11, therefore, the aforesaid 'proviso' to Sec. 68 of the Act would not be applicable. To sum up, we concur with the view taken b....