TaxTMI 
TaxTMI 
2021 (10) TMI 457
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....Account Statements of the applications was not sufficient to discharge the onus. 3. The Ld. CIT(A) has erred in accepting the creditworthiness and genuineness of transactions merely on the basis that transaction were through banking channel or by account payee instruments but it did not reflect their actual genuine business activities. 4. The Ld. CIT(A) did not notice that the share subscribers did not have its own profit making apparatus. It merely rotated money, which was coming through the bank accounts. The bank accounts did not reflect their creditworthiness of transaction. 5. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 2. The facts, in brief, are that Assessee Company is engaged in the business of buying and selling of wide range of footwear and in the year under consideration assessee has not started its business operations. The AO noted that assessee has raised the share capital of Rs. 13,52,625/- by issuing fresh 240525 equity shares out of which 30000 equity shares at par @Rs. 10/- each to Shri Surender Kumar Saraf a....
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....e company has submitted during the assessment proceedings that they have received and issued 210525 equity shares of Rs. 5/- paid up and share premium @ 90/- per share was charged. 6. Ld. AO deduced that no actual transaction of share capital has taken place and only the accommodation entry has been taken by the assessee, as assessee is claiming issue of 210525 equity shares of Rs. 5/-whereas M/s. Omexpo Enterprises Pvt. Ltd. has claimed 2,00,000 equity shares of Rs. 10/-. However, a total amount in both the cases is Rs. 2,00,00,000/-. Ld. AO accepted the share capital of Rs. 3,00,000/- received from the Directors of Company on the ground that they had credit worthiness for making such an investment. On examination of bank statement of M/s. Omexpo Enterprises Pvt. Ltd. AO noted that there are receipts of funds from some source and entries shows a pattern of continuous receipt of funds from different companies which is followed by transfer of same amount of funds to another set of companies. Therefore, he deduced that it can only be conduit to give entries to different companies. He has also issued summon u/s 131 for personal deposition of the Director of M/s. Omexpo Enterprise. ....
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....ment from where funds have been given. (By M/s Omexpo Enterprises Pvt. Ltd.) • Copy of 1TR, Audit Report with annexure, Balance Sheet, Profit & Loss and Computation of the income for A.Y. 12-13. (By M/s Omexpo Enterprises Pvt. Ltd.) • Copy of Share Certificate. (By M/s Omexpo Enterprises Pvt. Ltd.) • Authorized representative attended the office along with authorized board resolution. 3. Notice U/s 131 18.02.2015 - • Directors have not been presented. • Reasons submitted 1) Director was not available due to the reason that he was out of town authorized representative attended and filed board resolution. 4. Show Cause Notice 02.03.2015 - - 5. Final Show Cause Notice 16.03.2015 - • AR of the Assessee Company and Sh. Surender Kumar Saraf one of the directors of the company attended and filed reply. 6. Assessment Order Passed dated 26.03.2015 - • Ld. AO made the addition of Rs. 2,00,00,000 on account of unexplained credit u/s 68 of the Act by contending that: i. The Appellant has failed to prove the identity, genuineness and creditworthi....
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....veals that it had sufficient sources of funds to invest in the appellant company, as evident from the table below:- S. No. Name of the Share Applicant Share Capital as per Balance Sheet (Rs.) Reserves as per Balance Sheet (Rs.) Total Investments (Rs.) Investment in the appellant company (Rs.) 1. M/s. Omexpo Enterprises Pvt. Ltd. 28,56,250 27,11,31,946 38,27,61,000 2 Crore 4.2.3 As regards the genuineness of the transactions, since the share capital/ share premium was paid for vide banking channel and there was no deposit of cash in the bank account of the share subscriber prior to issue of funds by it to the appellant company, this aspect also stands proved. As regards the mismatch between the number of shares of the appellant company subscribed to by M/s. Omexpo Enterprises Pvt. Ltd. - as mentioned by the appellant company and as mentioned by M/s. Omexpo Enterprises Pvt. Ltd. in its replies to the A.O., it has been submitted that there may have been typographical error in the reply of the share subscriber. The details of the shares are stated to be as under, in support of which the appellant has furnished copies of the share certificate....
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....d upon by the Assessing Officer are not applicable to the facts of the appellant's case. For instance in the cases of M/s Nipun Builders and Developers Pvt. Ltd. (30 Taxmann.com 292) (Del.) as well as M/s N.R. Portfolio Pvt. Ltd. (42 Taxmann.com 339) (Del.), the Assessing Officer was in possession of adverse information from the Investigation Wing about the two companies being beneficiaries of accommodation entry providers and further in the case of Nipun Builders and Developers Pvt. Ltd. (supra) the assessee had merely furnished copies of the bank statements of the share subscribers and no positive evidence to show the nature and source of resources of the share subscribers. In the case of the appellant, there is no adverse information from the Investigation Wing regarding the appellant company being a beneficiary of entry providers and in order to prove the creditworthiness of the share subscriber, it not only produced copy of its bank statement but copy of its I.T. Return and final accounts as well, wherein, as per discussion in para 4.2.2 above, it was having huge share capital and reserves for investment in the appellant and other companies. Accordingly, I hereby direct the as....
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....ebsite showing that the company is live working company. Thereafter, the AO himself carried out inquiry from the said parties and notice u/s 133(6) was sent asking for various details to corroborate the stand of the assessee. In response, the said company replied to the said notices and in fact two times reply was sent, i.e., vide letter dated 19.1.2015 and 5.3.2015. The party not only confirmed the said transaction but also explained the source of investment alongwith the set of documents as mentioned in the assessment order itself as well as in the impugned appellate order. The bank statement furnished by the said company reflected a transfer of Rs. 1,00,00,000/- of each on two occasions from its bank account with the Axis Bank to the bank account of the assessee on 10.8.2011. The company also stated that it assessed to tax income tax and duly reflected the said investment in the balance sheet. Ld. CIT (A) has also noticed that this company had sufficient source of funds in the form of share capital and reserves as per balance sheet. The figure of which has been incorporated above. Out of the said funds the investment which has been made in the assessee company was Rs. 2,00,00,00....