TaxTMI 
TaxTMI 
2022 (1) TMI 827
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....HNY/2017 are directed against order of learned Commissioner of Income Tax (Appeals) - 19, Chennai, dated 22.05.2017 and pertains to assessment year 2013-14. Since, facts are identical and issues are common, for the sake of convenience, these appeals are heard together and are being disposed off, by this consolidated order. 2. The Revenue has raised more or less common grounds of appeal for all assessment years. Therefore, for the sake of brevity, grounds of appeal filed for the assessment year 2007-08 in ITA No.1746/CHNY/2017 are reproduced as under:- "1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The learned CIT(A) erred in deleting the addition of Rs. 11,00,00,000/- made by the Assessing Officer towards unexplained cash credit u/s 68 of the Income Tax Act, 1961, in the assessment for A.Y 2007-08 passed u/s 113 (3) r.w.s 153A & Explanation (viii) to section 153B of the IT Act, 1961 in the case of the assessee. 2.1 The ld. CIT(A) ought to have appreciated that from the enquiry conducted at Kolkata and the documentary evidence brought on record by the Assessing Officer during the assess....
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....plication of section 263 with respect to introduction of Share capital / Share premium, held that money allegedly received on account of share application can be roped in under section 68 of the IT Act, if the source of receipt is not satisfactorily established by the assessee. 2.7 Having regard to the documentary evidence gathered during search and assessment proceedings establishing that the alleged share holders were only paper companies whose credit worthiness and the genuineness of the transactions were not established, the ld.CIT(A) ought to have confirmed the addition made by the Assessing Officer u/s.68 of the IT Act, towards unproved share capital investment in the assessment passed u/s 143(3) r.w.s. 153A & Explanation (viii) to section 153B of the IT Act, 1961 in the case of the assessee, for A.Y. 2007-08. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored." 3. The assessee has raised the following grounds of appeal in ITA No.1788/CHNY/2017:- "1. The order of the....
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....eration u/s.132 of the Income Tax Act, 1961 (hereinafter the 'Act') was conducted in the case of the assessee on 18.12.2012. During the course of search, documents belonging to the assessee company were seized. Consequent to search, notice u/s.153A of the Act, dated 13.08.2013 was issued requiring the assessee to file return of income. In response to notice, the assessee has filed a letter dated 14.07.2014 and stated that return filed u/s. 139(1) of the Act on 28.10.2007 may be treated as return filed in response to notice u/s.153A of the Act. The case has been taken up for scrutiny. During the course of assessment proceedings, the AO noticed that during the previous year relevant to assessment years 2007-08 to 2013-14, the assessee has received share capital with share premium from family members, Indian companies, mostly from Kolkata based companies and foreign companies. The yearwise details of number of shares, face value of shares and share premium received is tabulated as follows:- A.Y. Number of shares subscribed Share subscription amount received Share premium received 2007-08 22,00,000 2,20,00,000 8,80,00,000 2008-09 23,84,000 2,38,40,000 ....
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....panies controlled by Shri Praveen Agarwal at different addresses were not functioning at the given address. Similarly, companies controlled by Shri Anand Singhania and Shri Beni Prasad Lahoti were also not functioning in the given address and further, when the team of inspectors visited the given address, the premises were locked. Further, certain companies controlled by Shri Devesh Upadhyaya and Shri Uday Shankar Mahawar were also not stated to be functioning in the given address, when the Inspectors visited the place to carryout investigation. Therefore, a detailed show cause notice was issued to the assessee on 24.03.2015 & 03.03.2016 and called upon the assessee to furnish details / evidences and to produce the directors of companies invested in share capital including share premium in the assessee company to prove genuine identity of subscribers, genuineness of transaction and credit worthiness of the parties. 6. In response to show cause notice, the assessee had filed detailed written submission on 27.03.2015 and claimed that share capital received from various companies in India and Abroad and from individuals is genuine which is supported by necessary evidences including....
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....eport of (FT&TR) division of Ministry of Finance, Govt. of India, has accepted the explanation of the assessee with regard to share capital received from foreign companies. Insofar as, share capital received from companies situated at Kolkata, the ld.AO on analysis of various facts including evidences filed by the assessee to prove identity of subscribers and other evidences including bank statements opined that the assessee has failed to establish genuineness of transactions of share capital receipt from companies situated at Kolkata. The AO further noted that the assessee's inability to present itself for crossexamination or to produce directors of the investor companies is ample proof that the assessee company has indulged in routing its unaccounted money through different channels and layers provided by the accommodation entry operators with the help of employees, who act as dummy directors of Jama kharchi/shell/paper companies. The AO had discussed the issue at length in light of statements of Shri Jogendra Pradhan, director of certain companies and Shri Navneet Singhania, purported entry provider in light of financial statement of investor companies and their bank statements,....
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....re of even one of the criterion, renders the transaction as not genuine. The onus to prove the three factum is on the assessee as the facts are within the personal knowledge of the assessee. d. Mere production of incorporation details, PAN Numbers or income tax returns may not be sufficient when surrounding and attending facts predicate a cover up. The production of incorporation details, PAN numbers or income tax details may mostly indicate towards completion of paper work or documentation but genuineness, creditworthiness and identity of investment and the investors are deeper and obtrusive than mere completion of paper work or documentation. e. The fact that assessee failed to produce the Directors of Jama Kharchi / Shell /paper Companies who had invested in the form of share capital & premium even after ample time was given, shows that these were people who were completely unrelated to the assessee and as such, all the entries were merely accommodation entries. f. The equity shares of the company have been allotted at a very high premium upto Rs. 90 per share, only on the basis of Discounted Cash Flow Method and no other report has been filed to subst....
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....aragraphs, bank account statements furnished and other relevant evidences, it is seen that the above sum of Rs. 11,00,00,000/- represents sum credited in the books of the assessee and is the assessee's unaccounted money routed through channels provided by the accommodation entry operator by way of various Jama kharchi/Shell/Paper Companies utilizing regular banking modes. The assessee's contention that these are genuine transactions received from parties whose identities are genuine and that they are creditworthy does not hold good as these companies' operations have already been investigated by the Investigation Directorate, Kolkata and have been proven to be controlled and managed by the above referred individual(accommodation entry operator) with a set of employees(name lenders) acting as dummy directors, who signed on the dotted lines for a meager remuneration and are in no way connected to the actual control and management of the affairs of the company. 8. Further extracts of section 66 is reproduced as under "Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any Previous year, and the assessee offers no exp....
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....ee that he was not obliged to explain the genuineness of share capital after having furnished preliminary details about the shareholders etc., is not capable of acceptance and hence rejected. As the assessee-company failed to cumulatively prove to the satisfaction of the Assessing Officer, the identity and capacity of the shareholders along smith the genuineness of the transactions there can be no escape from section 68. Further with the insertion of proviso to section 68 by the Finance Act, 2012 with effect from 01-04-2023 empowers the Assessing Officer to examine the genuineness of the share capital in the case of a company in which public are not substantially interested. As per this proviso where any share capital etc. is credited in the case of closely held company, the explanation given by such company shall be deemed to be not satisfactory, unless the resident shareholder offers an explanation about the nature and source of such sum so credited and such explanation found to be satisfactory by the Assessing Office. The essence of this amendment is that a closely held company is required to satisfy The Assessing Officer about the share capital etc. Issued by it, in th....
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....assessee further submitted that it is a well settled principle of law by the decisions of various High Courts and Hon'ble Supreme Court, more particularly, in the case of CIT vs. Lovely Exports (P) Ltd., 216 CTR 195, that once name and address of subscriber are given to the AO then Department is free to proceed to reopen their individual assessments in accordance with law but this amount of share money cannot be regarded as undisclosed income u/s.68 of the Act. 9. The ld.CIT(A) after considering relevant submissions of the assessee and also by relying upon plethora of judicial precedents including the decisions of Hon'ble Supreme Court in the case of CIT vs. Stellar Investment Ltd., 251 ITR 263 and CIT vs. Lovely Exports (P) Ltd., supra deleted additions made by the AO towards share capital and share premium received from certain companies by holding that the assessee has discharged its onus by filing enormous evidences to prove identity, genuineness of transactions and credit worthiness of the parties. The ld.CIT (A) further observed that the assessee has been able to establish the identity of the companies investing in the share capital of the assessee company. The CIT (A) fur....
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....ers favoring the stand of the Revenue on this issue of bringing the share application money and share premium received for taxation in the hands of the recipient company. In the case of M/s.Frostair Pvt. Ltd. (46 Taxmann.com 11), the Hon'ble Delhi High Court has held that where the PAN/GIR no. of share holders was not correct and when they were not available at addresses given and when they were not filing the IT returns with concerned officers, then the addition u/s.68 and consequent initiation of penalty proceedings were justified. In the case of M/s. Hindon Forge Pvt Ltd. (25 Taxmann.com 239), the Hon'ble Allahabad High Court had noted that the method and manner adopted by the assessee had clearly established that it was playing fraudwith revenue and since genuineness of transactions were not established, there was no question of shifting burden u/s.68 on revenue and that the addition of unsecured loans to income of assessee was justified. In the case of M/s. Nova Promoters and Finlease Pvt. Ltd. (18 Taxmann.com 217), the Hon'ble Delhi High Court has held that no addition u/s.68 can be made unless the AO verifies that there was a specific involvement of assessee company in the m....
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....mpelling decisions of apex court, jurisdiction of High Court and jurisdictional ITAT on this issue, I am of the considered view that the investments made by respective share holders are liable to be taxed in the hands of respective share holders only. In view of the same, the issue is decided in favour of the assessee and the grounds of appeal are allowed. The amounts brought to taxation u/s.68 in the hands of the assessee on account of share application / share premium monies received stand deleted for all the years." 10. The ld.DR submitted that the ld.CIT(A) erred in deleting addition made by the AO towards share capital received from certain companies as unexplained cash credit u/s.68 of the Act, without appreciating the fact that enquiry conducted at Kolkata and the documentary evidences brought on record by the AO clearly showed that alleged shareholders were only paper companies whose credit worthiness and genuineness of transactions were not established by the assessee. The ld.DR further submitted that if you go by evidences filed by the assessee, there is no doubt it has to be accepted that the assessee had discharged its onus of identifying the subscribers of share cap....
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....ase. The ld.DR further referring to the decision of Hon'ble Delhi High Court in the case of Navodaya Castle (P) Ltd., report in (2014) 367 ITR 306 argued that mere furnishing of certificate of incorporation, PAN, etc., is not sufficient for the purpose of identification of subscriber company, more particularly when other material evidences show that subscriber company were paper company and not a genuine investor. The Hon'ble Kolkata High Court in the case of Rajmandir Estates Pvt. Ltd., vs. PCIT, (2016) 70 taxmann.com 124 had considered an identical issue of unexplained cash credit in light of accommodation entry provider case and held that money allegedly received on account of share application can be roped in u/s.68 of the Act, if the source of receipt is not satisfactorily established by the assessee company. The sum and substance of ratio laid down by above judgments are that mere furnishing of certain documentary evidences to prove identity, genuineness of transactions and credit worthiness is not sufficient enough to come out of the shadow of provisions of Section 68 of the Act. But, what is required to be proved is genuine identity of subscriber of share capital, genuinene....
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....with source of funds for investment in assessee's company. The evidences filed by the assessee clearly satisfy the condition prescribed u/s.68 of the Act. The assessee not only proved identity but also established credit worthiness of the parties which is evident from the fact that all subscriber companies financial statement shows source of income to explain investments made in Assessee Company which is further supported from the fact that all transfer of funds was through proper bank accounts. It is a well established legal principle of law by the decisions of various courts including the Hon'ble Supreme Court in the case of CIT vs. Stellar Investments Pvt. Ltd., supra, where it was clearly held that once alleged bogus shareholders details are provided to the AO then the AO is free to proceed to reopen the assessments of alleged bogus shareholders but sum received by the assessee cannot be treated as unexplained credit u/s.68 of the Act. In this case, although the assessee has filed various details but the AO disregarded all evidences filed by the assessee and has made additions solely on the basis of investigation report that to without confronting those reports and statements r....
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....any. It is a well settled principle of law by the decision of Hon'ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure P Ltd., 394 ITR 680, that before insertion of proviso to Section 68 of the Act by the Finance Act, 2012 w.e.f. 01.04.2013 i.e., assessment year 2013-14, the source of sources need not to be explained by the assessee. Therefore, once assessee files necessary documentary evidence to prove the availability of sources in their books of accounts to explain investments made in Assessee Company, then the assessee does not required to establish source of sources in the subscriber company. The CIT(A) after considering relevant facts and has also by following judicial precedents has rightly held that the AO has erred in making addition towards share capital including share premium u/s.68 of the Act. 11.2 The ld.AR for the assessee further referring to paper-book filed by the assessee submitted that the assessee has received major portion of share capital from M/s. Josan Deposit and Advances Pvt. Ltd., a company based at Kolkata. The AO of M/s. Josan Deposit and Advances Pvt. Ltd., has assessed the investment made by the company in the share capital of the....
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....uine in nature or which is unexplained cash credit u/s 68 of the Income-tax Act, 1961. The AO has made addition towards share capital received from certain Indian companies as unexplained cash credit u/s 68 of the Act, on the ground that the assessee has failed to establish identity of the subscriber to share capital, genuineness of transaction and creditworthiness of the parties. The AO had given various reasons to come to the conclusion that alleged subscriber to share capital are paper/Shell/Jama Karchi companies and they do not have any business activity to substantiate subscription of huge share capital to the assessee company. The sole basis for making addition is report of investigation wing, Income tax department, Kolkata. Facts borne out from records shows that the Investigation Wing of Income Tax Department, Kolkata has conducted an enquiry on various companies operating in Kolkata which are involved in providing accommodation entries to various beneficiaries. As per said investigation report, during the course of inspection conducted by the Income Tax Department, it was noticed that certain individuals have floated number of companies with a dummy directors so as to faci....
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....xplanation about the nature and source thereof or the explanation offered by the assessee, in the opinion of the AO is not satisfactory, then sum found credited may be treated as income of the assessee of that previous year. A plain reading of section 68 of the Act, makes it very clear that in order to bring any credit within the ambit of section 68 of the Act, the AO has to examine three ingredients, i.e., identity, genuineness of transaction and creditworthiness of the parties. But, as per law, under section 68, it is the assessee who is required to offer an explanation about the nature and the source of credit, for which an entry is found in his books and such explanation has to be to the satisfaction of the Assessing Officer. Therefore, it is for the assessee to explain credit with necessary evidences to the satisfaction of the Assessing Officer. Such proof includes proof of the identity of the creditor, the capacity of such creditor to advance the money and lastly, the genuineness of the transaction. Only when the assessee has proper evidence to establish prima facie the aforesaid facts, the onus shifts on to the Department. Once the source of the credit, the genuineness of th....
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....not mean, just filing certain documentary evidences, but it is establishing real identity of the creditor. Similarly, proving genuineness of transaction does not mean payment/receipt by cheque, but it is establishing real intention of the parties to enter into transactions. Likewise, real meaning of creditworthiness of creditor means, their capacity to establish source for investments. This aspect has been explained in judgments of various courts, as per which, the courts had interpreted provisions of section 68 of the Act, and its implications on the assessee as well as the Assessing Officer. The Hon'ble Supreme court in the case of CIT v. Lovely Exports P Ltd (SC) - 216 CTR 195, has very clearly held that If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessments in accordance with law but this amount of share money cannot be regarded as undisclosed income u/s.68 of the assessee company. Therefore, from the above discussion what is clear is that the assessee shall first discharge its onus by filing necessary evidences and once, th....
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....ort of Income Tax Department Kolkata and statements of certain persons recorded at the time of investigation. First up all, the AO did not refer investigation report and its contents in his assessment order and further did not share copy of said report to the assessee. Further, even in statement of certain parties, no direct or indirect reference to the assessee. Nowhere the parties stated that the assessee is one of the beneficiaries of alleged transactions. In fact, the director of Assessee Company denied meeting any of the persons from whom statements were taken by the department. If you go through statement relied upon by the AO, except a general statement of modus operandi of entry providers, there is no direct or indirect reference to Assessee Company in any of statements. From the above, it is clear that the AO totally ignored genuine documents produced before him and passed the Assessment Order on a sweeping statement without any material evidence or fact on record. The AO has merely stated modus operandi of how, the transaction took place without considering the facts of the present case. He had instead passed a general statement on the lines of suspicion and surmises with....
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.... availed by the person against whom, such statements are used. This legal proposition is supported by the decision of Hon'ble Supreme Court in the case of Kishanchand Chellaram vs CIT 1980 125 ITR 713 (SC), where it was held that when, third party information is relied upon to draw an adverse inference against the assessee, the same needs to be provided and also opportunity of cross examination shall be given, if such opportunity is availed by the assessee. The Hon'ble Supreme Court in the case of Andaman Timber Industries Ltd Vs CCE, Kolkata II in Appeal No 4228 of 2006 has vide order dated 02.09.2015 had also upheld a similar legal position and held that not allowing the assessee to cross-examine the witnesses by the adjudicating authority, though the statements and those witnesses were made the basis of the impugned order is a serious flaw, which makes the order nullity in, as much as, it amount to violation of principle of natural justice, because of which, the assessee was adversely affected. In this case, the Director of assessee Company Shri Pankaj Agarwal, in his statement recorded during the course of assessment proceedings, has categorically denied that he does not know a....
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....given address. They had filed their annul accounts with Registrar of Companies every year. As per ROC website, the companies are in active status. Further, the assessee done what best it could have done and filed, whatever information available with it, in order to satisfy the AO. Moreover shareholders are very much available for examination. In case, the AO is not satisfied with documents furnished by the assessee, then he is free to carry out his own investigations by exercising powers conferred u/s 131 or u/s 133(6) of the I.T. Act, 1961. In this case, the AO, except issue of 133(6) notices nothing has been done to find out, the nature of transactions between the parties. Therefore, we are of the considered view that when, assessee has filed complete details to prove identity, genuineness of transactions and creditworthiness of the parties, then there is no reason for the AO to came to the conclusion that share capital and share premium received from alleged shareholders is unexplained cash credit. 19. In this case, one more important fact which dismisses the allegation of the Assessing Officer is three charts submitted by the ld. AR during the course of hearing explaining th....
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....assessee, those 11 companies are having sufficient source to explain investments made in share capital of Assessee Company. Further, the assessee company has received major portion of share capital from M/s. Josan Deposit and Advances Pvt. Ltd., a company based at Kolkata. The AO of M/s. Josan Deposit and Advances Pvt. Ltd., has assessed investment made by the company in share capital of the assessee company as unexplained cash credit. M/s. Josan Deposit and Advances Pvt. Ltd., has challenged the assessment order before the appellate authorities. The ITAT, Kolkata Benches in ITA No.2096/KOL/2017 for assessment year 2008-09 has considered additions made by the AO u/s.68 of the Act and held that the assessee is a genuine company and not an entry provider and thus, deleted additions made by the AO towards unexplained cash credit u/s.68 of the Act. Similarly, the AO of M/s. Kaner Investment Ltd., has made additions towards share capital invested in assessee Company and M/s. Kaner Investment Ltd., has challenged the additions made by the AO. The ITAT, Kolkata Benches in ITA No.2095/KOL/2017 has deleted additions made by the AO. From the above, it is very clear that the assessee had furn....
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....ey is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessments in accordance with law but this amount of share money cannot be regarded as undisclosed income u/s.68 of the assessee company." Therefore, we are of the considered view that no addition can be made u/s 68 of the Income-tax Act, 1961 in respect of share capital and share application money or share premium before insertion of Proviso to section 68, if the source of source is not explained by the assessee. 22. The AO has doubted genuineness of transaction on one more ground. According to the AO, the equity shares of the company have been allotted at a very high premium up to Rs. 90 per share, only on the basis of Discounted Cash Flow Method and no other report has been filed to substantiate the basis for fixing such a high price for the equity shares of a private limited company. We have carefully considered reason given by the AO and we ourselves do not subscribe to reasons given by the AO for simple reason that, first up all the AO is not examining the issue of excess share premium charged by the ass....
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.... in the hands of the subscriber. The gist of the decision of the Hon'ble Supreme Court in this case has been as under. "The subscribed capital of the assessee company had been increase. The ITO assessed the company accepting the increase in the subscribed capital. The Commissioner concluded, in section 263 proceedings, that the ITO, did not carry out detailed investigation in as much as there was a device of converting black money by issuing shares with the help of formation of investment company. Holding that there was failure on the part of the ITO to enquire into the genuineness of subscribers of the share capital, the commissioner set aside the assessment order. The Tribunal reversed the order of the Commissioner and also rejected the reference application. On an application u/s. 256(2), the High Court held that no question of law arose from the Tribunal Order. The High Court also observed that it was evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, could the amount of share capital be regarded as undisclosed income of the assessee. It held that it might be that there were som....
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....e was reported in CIT v. Stellar Investment Ltd. (2001) 251 ITR 263. Applying the ratio laid down in the decision cited supra, we do not find any substantial question of law arises for our consideration. Accordingly, these appeals are dismissed. Consequently, M.P.No.1 of 2007 is also dismissed." 23.4. In the case of M/s.Pranav Foundations Ltd. (2014) 229 Taxmann 58, the Hon'b1e Madras High Court has passed a judgment on similar issue as under. "From the facts as enumerated above, we are of the view that the decision of the Supreme Court in Lovely Exports (P) Ltd. case, referred supra, applies on all fours to the present case, in view of the fact that all the four parties, who are subscribers of the shares, are limited companies and enquiries were made and received from the four companies and all the companies accepted their investment. Thus, the assessee has categorically established the nature and source of the said sum and discharged the onus that lies on it in terms of Section 68 of the Act. When the nature and source of the amount so invested is known, it cannot be said to be undisclosed income. Therefore, the addition of such subscriptions as unexplain....
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....applicants had appeared when summons were issued and they have accepted their investment. That apart, the names and identity of the share applicants is also available on record. When the nature and source of the amount so invested is known, it cannot be said to be undisclosed income in the hands of the Spinning Mill. Furthermore, the burden is on the Department to show that the investment made by the share applicants actually emanated from the coffers of the assessee, so as to enable it to be treated as the undisclosed income of the assessee. In the case on hand, the department except making a vague statement that the managing directors have advanced monies to the alleged share applicants, did not substantiate the same with concrete evidence. Such finding based on a priori considerations cannot be a ground to make addition towards unexplained cash credit. Therefore, the addition of such subscriptions as unexplained credit under Section 68 of the Act is unwarranted. Moreover, since the share applicants in all these cases are one and the same and they have confirmed the transactions, it cannot be treated as the unexplained investment of the managing directors of the company ....
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....he CIT(A) based upon detailed analysis concluded that the share applicants had sufficient net worth and finances to invest in the assessee's offering with the premium of Rs. 23 crores. The Tribunal also concurred with the view of the CIT(A). On appeal to the High Court: As against the AO tabular appreciation of the facts, the CIT(A) found that the net worth of the companies that had invested in the course of the share offerings of the applicant was sustained. It is quite evident from the CIT (A)'s reasoning in paragraph 4.3, that the materials clearly pointed to the share applicants' possessing substantial means to invest in the assessee's company. The AO seized certain material to say that minimal or insubstantial amounts was paid as tax by such share applicants and did not carry out a deeper analysis or rather chose to ignore it. In these circumstances, the inferences drawn by the CIT (A) are not only factual but facially accurate. Having regards to these circumstances, no question of law, least a substantial question arose." 23.8 In a recent decision, the Hon,ble High Court of Bombay in the case of M/s. Gagandeep Infrastructure Pvt Ltd.(201....
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.... give rise to any substantial question of law. Thus not entertained." 23.9 The Hon'ble Bombay High Court in the case of CIT Vs. Orchid Industries (P) Ltd. (2017) 387 ITR 136 (Bom) had considered an identical issue in light of additions made by the Assessing Officer towards share application money u/s.68 of the Income Tax Act, 1961, and after considering relevant facts has held as under:- "The Assessing Officer added certain amount as income under section 68 only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account. Held that the assessee had produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. The assessee had also produced the entire record regarding issuance of shares, i.e., allotmen....
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....pheld. [Para 15]" 23.11. The Chennai ITAT, has also considered similar issue in a host of cases. In the case of M/s.Midas Golden Distilleries Pvt.Ltd. (2009) 124 TTJ 25, the Hon'b1e ITAT has held, interalia, as under: "The assessee raised share capital and received share application money from seven persons aggregating Rs. 1394.15 lakhs. The assessee had brought on record complete identity of shareholders by providing their addresses and confirmations to the effect that they had contributed to the share capital of the assessee company. The money received were through banking channel. They all were shown to be regularly assessed to income-tax. Assessment particulars with respect to each of them were made available to the assessing authority. Two companies which had made contributions of Rs. 340 lakhs and Rs. 745 lakhs respectively were assessed with the same AO who assessed the assessee. The Assessing Authority himself had found that both these applicants in their respective accounts had disclosed investment made with the assessee. However, the share application money was treated as cash credits and added to the assessee's income. Held that dispute all the mater....
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....when there was enough materials to show subscriber is a paper company, but in the present case, the assessee has filed all possible evidences to establish the transactions in light of provisions of section 68 of the Act, and thus, in our considered view, the assessee has satisfactorily, discharged its onus to come out of shadow of section 68 of the Act. Therefore, the case laws relied upon by the Revenue cannot be applied to facts of present case. 25. Be that as it may. In a recent case of PCIT vs. Hi-Tech Residency Pvt. Ltd. (2018) 257 Taxman 335, the Hon'ble Supreme Court has considered identical issue and held that where an assessee company had discharged the onus of establishing identity, genuineness of transaction and creditworthiness of investors, no additions could be made u/s. 68 of the I.T. Act, 1961. We, further, noted that although the Apex Court has not expressed any opinion, because of dismissal of SLP filed by the Revenue, the fact of the matter is that this issue has been considered by the Hon'ble Supreme Court in the case of CIT vs. Lovely Exports (P) Ltd (supra), where the issue has been thoroughly examined in light of provisions of section 68 of the Act, and he....