TaxTMI 
TaxTMI 
2019 (6) TMI 1651
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....1,250/- as unexplained cash credit u/s. 68 of the Income-tax Act, 1961 (hereinafter referred to as the "Act") and added to the total income of the assessee for AY 2012-13. Aggrieved, the assessee preferred appeal before the Ld. CIT(A) who was pleased to confirm the action of AO. Aggrieved, the assessee is before us. 3. We have heard rival submissions and carefully perused the material available on record. Assailing the order of the Ld. CIT(A), the Ld. AR contested that in the assessee company nine (9) share holders which are corporate entities invested and their identity, genuineness and creditworthiness was duly proved by documents filed by the share subscribers / assessee company pursuant to the statutory notices issued by the AO. However, the AO as well as Ld. CIT(A) has brushed aside all the evidences and has drawn adverse view against the assessee which is legally unsustainable and want us to delete the addition. Per contra the Ld. DR has submitted that Ld. CIT(A) has rightly upheld the order of AO by relying on various decisions of the Hon'ble Supreme Court's and Hon'ble High Courts. 4. He also submitted that assessee failed to discharge the onus casted upon him in simi....
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....itworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soleless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take decisions, controls and manage them." 5. The Hon'ble Delhi High Court in CIT vs. Navodaya Castles Pvt. Ltd. (2014) 367 ITR 306 (Del) held that share capital in case of a closely held company is required to be examined by the AO in terms of the sec.68 and the failure of the assessee to satisfy the AO calls for an addition u/s.68. The said decision of the High Court has been upheld by the Hon'ble Supreme Court as reported in Navodaya Castles Pvt. Ltd. vs. CIT (2015) 230 Taxmann 268 (SC). 6. The Hon'ble Jurisdictional High Court in CIT vs. Active Traders Pvt. Ltd. has held that the Assessing Officer in the assessment of a company has jurisdiction to ask for information from the shareholders regarding the source of investment made in the company. Their lordships observed that - "if a cash credit is shown by the company in its books of accounts and if the source cannot be explained properly the ITO may assess the su....
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....nowledgement of filing of Income Tax Return of shareholders, (ii) The statement of source of funds, (iii) Audited financial statements, (iv) Copies of relevant bank statements in respect of accounts from which share application monies were paid, (v) PAN, address of share subscribers for the year ended 31.03.2012. (vi) Copy of the return allotment in Form 2 evidencing the allotment of shares to the four share applicants, (vii) Certificate of incorporation of share applicants, (viii) Share allotment letters issued to them. 11. We note that the share subscriber companies were regularly assessed to tax and the payments were made through the bank accounts and pursuant to the notice issued by the AO u/s. 133(6) and 131 of the Act to all the four share subscribers, the notices were served and the share subscribers furnished the requisite documentary evidence as requisitioned by the AO. The share applicants have furnished their audited financial statements and income tax acknowledgment for filing of return for AY 2012-13. Thus, the identity of share subscribers is proved. From the bank statement of the share subscribers it w....
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....2016 & 2273/Kol/2016 order dated 26.10.2018. ii) ITO Vs. Savera Towers Pvt. Ltd. ITA No. 2275/Kol/2016 order dated 05.12.2018. iii) ITO Vs. BSNL Commercial Pvt. Ltd. ITA No.686/Kol/2017 order dated 22.11.2018. iv) ITO Vs. Tanish Dealers Pvt. Ltd. ITA No. 1636/Kol/2016 order dated 07.12.2018. v) ITO Vs. Dreamz Met Construction Projects Pvt. Ltd. ITA No. 2047/Kol/2016 order dated 07.12.2018 13. The Ld. AR drew our attention to the 1st case of Trend Infra Developers Pvt. Ltd., (supra), which according to Ld. AR was a group of company wherein also the same kind of addition was made after accepting the share capital and adding the share premium. According to Ld. AR, share premium cannot be added in the hands of the assessee u/s. 68 of the Act since the proviso was inserted u/s 68 of the Act only from AY 2013-14 and similar additions made only on share premium was directed to be deleted and which action has been upheld by the Hon'ble Bombay High Court in Pr. CIT Vs. Apeak Infotech reported in 88 Taxman.com 695 dated 08.06.2017 The Ld. AR drew our attention to page 7 of the case law paper book and drew our attention to the order passed by the Tribuna....
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....the case of Novo Promoters and Finelease Pvt. Ltd. reported in 342 ITR 169 (Del) vehemently relied upon by the ld. DR before us, is not applicable in the instant case, as in the facts before the Hon'ble Delhi High Court, the notices u/s 133(6) have not been duly complied with. Hence the decision rendered by the Hon'ble Delhi High Court in the case referred to supra is not applicable to the facts of the instant case and is factually distinghuishable. 3.3.1. We find that the reliance placed by the ld. AR in the decision of Hon'ble Bombay High Court in Pr. CIT vs. Apeak Infotech reported in 88 Taxmann.com 695 dt 08.06.2017 wherein the question raised before the Hon'ble Bombay High Court are as under: "A. Whether on the facts and circumstances of the case and in law, the Tribunal was correct to uphold the decision on Commissioner of Income Tax (Appeals) that the share premium received by the assessee-company cannot be taxed under Section 68 of the Act ignoring the ratio laid down by this Court in its decision reported in the case of Major Metals Ltd. vs. Union of India [2013] 359 ITR 450 (Bom)? B. Whether on the facts and circumstances of the case and in law,....
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....ikely that the Revenue may have taken an informed decision not to urge the issue of section 68 of the Act before the Tribunal. (d) We may also point out that decision of this court in Major Metals Ltd. v. Union of India [2012] 19 taxmann.com 176/207 Taxman 185/[2013] 359 ITR 450 Bom. proceeded on its own facts to uphold the invocation of section 68 of the Act by the Settlement Commission. In the above case, the Settlement Commission arrived at a finding of fact that the subscribers to shares of the assesseeâEUR"company were not creditworthy inasmuch as they did not have financial standing which would enable them to make an investment of Rs. 6,00,00,000 at premium at Rs. 990 per share. It was this finding of the fact arrived at by the Settlement Commission which was not disturbed by this court in its writ jurisdiction. In the present case the person who have subscribed to the share and paid share premium have admittedly made statement on oath before the Assessing Officer as recorded by the Tribunal. No finding in this case has been given by the authorities that shareholder/share applicants were unidentifiable or bogus. (e) In the above view Question No. A is ....
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....had rightly granted relief to the assessee in the peculiar facts and circumstances of the case, which in our considered opinion, does not require any interference. Accordingly, grounds raised by the revenue are dismissed." "41. We are inclined to agree with the CIT(Appeals), and consequently with ITAT, to the extent of their conclusion that the assessee herein had come up with some proof of identity of some of the entries in question. But, from this inference, or form the fact that the transactions were through banking channels, it does not necessarily following that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established. 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT(Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the fact of the allegations of t....