TaxTMI 
TaxTMI 
2015 (12) TMI 1862
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..... 10 each at a premium of Rs. 990/- aggregating to Rs. 1,000 per shares. The share premium earned from such issued of Rs. 4,74,21,000/- and share capital was Rs. 4,79,000/- Total share capital and share premium was received at Rs. 4,79,00,000/-. The assessee has issued the fresh shares to following companies:- LIST OF NEW SHAREHOLDERS IN THE YEAR 2008-2009 Sr. No. Name Address Number @ Share Capital Share Premium 1 Mihir Agencies Pvt. Ltd. Block-H, Shri Sadashiv CHS Ltd. 6th Road, Shantacruz (E) Mumbai-400055 2000 10 20000 1980000 2 Sumukh Commercial (P) Ltd. (Formaly Known as Captown Marcantile Co. Pvt.Ltd.) Chamber No.06, BIG Three Building, 1st Merine Street, Mumbai-400002 1000 10 10000 990000 3 Buniyad Chemical Ltd. Block-H, Shri Sadashiv CHS Ltd. 6th Road, Shantacruz (E), Mumbai-400055 2000 10 20000 1980000 4 Luxer Properties Pvt. Ltd. C-104, Rahul Appt., S.V.Road, Andheri (W) Mumbai-400058 1500 10 15000 1485000 5 Suresh Rathod Consultant Pvt. Ltd. C-104, Rahul Appt., S.V.Road, Andheri (W) Mumbai-400058 2500 10 25000 2475000 6 Elderadd Properti....
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....yaji Ganj, Vadodara - 390005 1000 10 10000 990000 22 Alpha Graphic India Ltd. B7/403, Natraj Township Part-2, Parsuram Nagar, Society Road, Sayaji Ganj, Vadodara - 390005 500 10 5000 495000 23 Mangal Murti Infrareal (P) Ltd. (formally known as convent housing finance limited) 241, Apollo Tower, M. G. Road, Indore 1000 10 10000 990000 24 Naman Equipments and Constructions (India) Pvt. Ltd. (Formally known as Mewar Equipments Pvt. Ltd.) 115, Diamond Trade Centre, 3-4, Diamond Colony, New Palasia, Indore (M.P.) 452008 500 10 5000 495000 25 Kinescope India Pvt. Ltd. Shop No.220, Labh Chambers, Station Road, Aurangabad (MH) 1500 10 15000 1485000 26 Bolplanst Ltd. 5/856, Kamla Appt. Second Floor, Gahishere, Mahidarpura, Ghasheri, Surat - 395009 2300 10 23000 2277000 27 Galaxy Devcom Pvt.. Ltd. Ganesh Bhawan Chawadi Bazar, Lashkar, Gwalior (M.P.) 2500 10 25000 2475000 28 Roll Gold Industries Ltd. 15, Vidhya Sagar Appt., 18, Mahavir Nagar, Indore (M.P.) 1500 10 15000 1485000 Survey u/s 133A of I....
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....ment proceedings were taken up in the case of the assessee after two years of the survey, therefore, retraction without any notice to the department is not valid and as per law. .... 4.1.1.2 In this context it would also be necessary to mention that it is a settled law that the onus heavily lies upon the assessee to furnish necessary details/evidences to establish followings ingredients to establish that the credit appearing in the books of accounts is genuine. Since assessee has not disclosed the amount admitted during the survey on account of share capital introduced during the year, detailed investigation were made to find out the genuineness of the share capital and share premium. In this regard information u/s 133(6) is called for in the case of assessee, who has secured share capital and share premium of Rs. 4.79 crores from aforesaid companies. Commission u/s 131 (1)(d) was issued to Addl. DIT (Inv.) Unit-I, Mumbai and Addl. DIT (Inv.) Unit-III, New Delhi and Addl. DIT, Vadodara on 12-09-2011 to make independent enquiry in respect of aforesaid companies whom assessee has received the share capital during the year. Letter sent u/s 133(6) is returned back unserved ....
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....their balance sheet are showing the fact. These companies are taking huge premium for their share capital but, their sources are a subject matter of investigation. In recent years investigation wing as well as field officers have come across cases, where companies registered mainly in Kalkatta as also Mumbai, Delhi and Surat are providing accommodation entries to Indore based, as also other companies in India. The purpose of accommodation is mainly to launder monies by introducing in into the main stream economy. At times, such companies also issue bills to entities so, that they can claim bogus expenses and reduced taxable profits. During the course of assessment proceeding when this fact brought in to the notice of the assesse, it has persuade the matter with the so called companies, whose letter returned back unserved and asked them to file the information u/s 133(6). Mr. Rajiv Bansal C.A. also appeared alongwith Mr. S.N.Agrawal, C.A. on behalf of the Delhi companies namely Surbhi Networking and Broad Casting Pvt. Ltd., Star Vision Media Pvt. Ltd. Happening Motorors, Acumen Binders Pvt. Ltd., Startrans Logistic Pvt. Ltd., Uniword Barter Card Pvt. Ltd. And Shri Balaji Sai Nath....
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....pecifically asked as to how the company M/s. Swift Intermedia Convergence Ltd. of Indore came in your contact and why the shares of unlisted company were taken on premium. In reply to this he informed that the company M/s. Swift Intermedia Convergence Ltd. of Indore is known to him through a friend Mr. Atul Jain who is a C.A. in Indore and investment of Rs. 20,00,000/- was made in the 2000 shares of the company of the face value of Rs. 10 each. Thus Rs. 20,000/- are share application money and Rs. 19,80,000/- as share premium were paid in the year 2009 from the fund of the company M/s. Shyam Shares and Securities Pvt. Ltd. incorporate in the year 2009. No satisfactory and convincing reply was given as to why shares of unlisted company were taken on premium. The only reason given was that M/s. Swift Intermedia Convergence Ltd. of Indore is a media company and having bright future. Moreover, he could not tell the sources of the fund of the company making investment of huge some in unlisted co. that to on premium. No reference was given as to whether he had consulted any merchant or valuer he was not in a position to tell the value of the share of the company M/s. Swift Inter....
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....ssessee company. That in the statement they have categorically explained the source of amount invested in the share application/ share capital of the assessee company. That in the report also the authorized officer also accepted the receipt of dividend by these companies from the assessee company. Hence, the genuineness of the amount of share application money or share capital as received from these two companies stand proved. That in the case of the share application money/ share capital, if the assessee has proved the identity of the share holders and they have accepted the investment made in the share application/ share capital of the assessee company. In that case, no addition is to be made in the case of the assessee company but if the assessing officer is not satisfied with the source of investment made in the share application money by those share holders. In that case, necessary addition is to be made in the case of these share holders but not in the case of the assessee company. That in view of the above, the amount of share application money as received from Bhagirathi Industries Limited and Sayam Shares & Securities P Limited of Rs. 20,00,000/- each totaling to Rs.....
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....arged." In the case of M/s Bhagirathi Industries Ltd and M/s Sayam Shares & Securities Pvt. Ltd., directors of both these companies were appealred before the authorised officers and accepted the investement of Rs. 20,00,000/- each made by them in the share application money of the assessee company. Thus, share application money of Rs. 40,00,000/- received from these companies treated as explained. The submission of the assessee is considered. It is evident from the report of Investigation Unit, Delhi that most of the companies are not existing at the given address and Mr. Arun Jain who has made the investment in the capacity of the director of M/s Shyam Shares Securities failed to explain the source of the funds from where he has made the investment of Rs. 20,00,000/- in the company M/s Swift Intermedia Convergence Ltd. of Indore. He could not give the satisfactory reply why he has invested in Indore company on such a high premium. Similarly, networth of the Bhagirathi Industries Ltd. is evident from the above chart. This company has shown net profit Rs. 3,625/- and having share capital of Rs. 40,79,290/-. On the basis of the balance sheet and profitability creditworthiness o....
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....plication money of the above company. The assessee had filed complete details as to justify the genuineness of the share application money. The identity of the share holders also stand established from the survey proceeding U/s 133A of the Income Tax Act and subsequent statement of the director. That in the case of the present assessee, all these share holders still holds shares of the assessee company. The assessee company had also declared dividend and paid legitimate tax due on it. The amount of dividend so declared also credited in the bank account of all the above share holders. Hence,there is no justification for making any addition in respect of share application money as received from first five companies. That the DDIT in her report referred the search & seizure action U/s 132 of the Income Tax Act in respect of last two companies. That statement of Shri Mukesh Choksi was recorded on 25-11-2009 wherein he has mainly accepted his involvement in the arrangement of Long term/ short term capital gain on sale of shares. That statement of Jayesh Krishnaraj Sampat was also recorded on 14-05-2010 wherein he has explained that he has managed certain affairs.That in reply t....
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....al gain, Bogus bill and Share application / share capital. Hence, the contention of the assessee not found acceptable. These companies are being run by the C. A's for the purpose of bogus share capital introduction, bogus gain and bogus commission etc. the creditworthiness and the genuineness of the transaction is doubtful. Report is also received from ADIT, Baroda on 08.12.2011. Relevant portion of the report is reproduced as under:- "In this regard, it is stated that as per ITD data based information, it is found that Alpha Graphic India Ltd. B7/403, Natraj township Part-2, Parsuram Nagar Society, Siyaganj, Baroda is assessed with the ITO, Wd 1(1), Ahmedabad, whereas Acil Cotton Industries Pvt. Ltd., B7/404, Natraj Township Part-2, Parsuram Nagar Society, Siyaganj, baroda is assessed with the DCIT, Surendranagar. However, on the basis of the territorial, which rested with this office, summon notices dated 19.10.2011 were issued by this office in the case of' Alpha Graphic India Ltd, Baroda and Acil Cotton Industries Pvt. Ltd. Baroda, calling for relevant information and to appear before this office on 25.10.2011. Nobody attended in response to the abo....
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....to justify the investment made by the said company in the share application / share capital of the assessee company has duly filed. The amount of investment in share of the assessee company was reflected under the head of Loans & Advances as explained to us. Copy of relevant certificate as demanded from the share holder is to be filed within two to three days. That on perusal of the Balance sheet as on 31.03.2010, you will find that the amount of investment was increased substantially as compared to that of 31.03.2009. Hence, the amount as received by the assessee was properly included in the figure of Loans & advances. That as regard investment made by M/s Alpha Graphics India Limited is concerned. On perusal of the Balance sheet as on 31.03.2009 as attached with the report as received from the ADIT (Inv), Baroda, the name of the assessee company was duly reflected in the list of investment. The said company has invested , an amount of Rs. 500000/- in the share application money/ share capital of the assessee company. That in view of the, the amount of share application money as received of Rs. 15,00,000/- from these two companies Assessee vide his letter dated 20-12-2011....
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....documents as to justify the identity of the share holder in that case if the assessing officer has any doubt about the source of share application money in that case the assessing officer is free to take action against the persons who have contributed the same but in no case the same is to be added to the income of the assessee. In the backdrop of above facts, it is apparent that the aforesaid concerns had provided only the accommodation entries to the assessee and the transactions of the share capital were not genuine. Assessee has also admitted its undisclosed investment in share capital during the survey and retracted the same without giving any plausible reasons. The persons who have provided bogus capital introduction to the assessee themselves have admitted before Investigation Unit, that they used to provide accommodation entries by opening various bank accounts & receiving cash from the parties, genuineness of transaction could not claimed to be proved. Only furnishing informations i.e. copy of Return, Roc detail, bank a/c etc. could not make the transaction genuine. Similarly when companies did not find at the given address after making independent enquiry by the depart....
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....(6) of the Act by her, she held that the entire share application money is unexplained and accordingly she added the same under section 68 of the Act to the appellant's income keeping reliance on various decisions as stated in para of this order. She mainly kept her reliance on a jurisdictional ITAT decision in the case of M/s Agrawal Coal Corporation Ltd.(supra). 5.9 However after taking note of all the facts and submission available on record and also after taking note of appellant's case in the entirety, I find that the A.O. was not correct and justified in her decision as she did not took note of the facts and the submission made by the appellant correctly. I find that the appellant company has made a detailed submission with documents and also submission in the form of statutory compliance made by either the appellant or such share holders, which clearly suggests that these companies who made the investment in the appellant company in the form of share application money were in existence. Such documents and details, which were filed by the appellant company before the A.O. and also were subsequently filed in the appellant proceedings established the appellant contenti....
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....o be from Delhi, the enquiry conducted by investigation wing, Delhi find statement recorded of the two directors by the wing in the case of namely M/s Bhagirathi Industries Ltd. and M/s Sayam Shares & Securities Pvt. Ltd. In such statement the directors of these companies have asserted positively in making the investment in the appellant company. Even I find that once the A.O. confronted the appellant's A/R with the report of the investigation wing, Delhi dated 09/12/2011, the appellant's A/R submitted that consequent to that an authorized representative of all such share applicant from Delhi and valid power of attorney holder CA Shri Rajiv Bansal of appellant personally attended the office of the A.O. and filed complete set of paper to justify the identity of share holders and also genuineness of the transaction. Even the appellant's A/R also submitted that the A.O. received reply from such companies in respect to notice issued u/s 133(6) of the Act, which she did not took note of the same of such compliances, which clearly establishes the identity of such parties. Even I find that the report from investigation wing, Baroda was also not speaking the half truth as the A.O. conclude....
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....me that the transaction of share application money in the case of the appellant is justified and genuine. 5.11 Even I find that the appellant had filed affidavits in respect of all the share applicant during the course of the assessment proceedings and also in the appellant proceedings, content of which was not controverted by the A.O. In these notarised affidavits the share applicants categorically confirmed that they had made investment in shares of the appellant company. Thus Hence, content of these affidavit has to be accepted as it was as held by the Hon'ble Apex Court in the case of Mehta Parikh & Co as reported in 30 ITR 181 and also followed by the Hon'ble Jurisdictional ITAT and Hon'ble jurisdictional High Court in the case of STL Extrusions P Limited [333 ITR 269]. Even I find that when the appellant had received the amount of share application money through account payee cheques, specific PAN No. of the investing company has also been provided by the appellant with other documents as discussed in aforesaid para of this order. The identity of the share holders, genuineness of the transactions and creditworthiness of the shareholders stand proved. My view further ....
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....judicious conclusion. I find that the AO acted merely on presumption and ignoring the reply as received in response to the letter as issued u/s 133(6) of the Act, statement of the some of the director of the investing company under 131(1)(d) proceeding and affidavit as filed by the appellant company. Even I find that the facts of case of M/s Agrawal Coal Corporation Limited [Supra] and other decision as relied by the AO are distinguishable on the facts of the present case. After perusal of facts of the case I find that on the contrary the decision of the Hon'ble jurisdictional Tribunal in the case of M/s Agrawal Coal Corporation Limited [Supra] support the case of the appellant. In that decision Hon'ble Tribunal has held to prove the identity of the share applicant company which in the present appeal in hand has been proved by the appellant company with the ample documents, dividend and Bonus as declared in periodical intervals. Thus, I find the decision of the Hon'ble Jurisdictional ITAT in the case of M/s Agrawal Coal Corporation Limited on the contrary support the case of the appellant. The order decisions as relied by the AO in her order are on general principle and clear....
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....ssment order have provided the information. The department has carried out the investigation by Investigation Wing across of the India where the co. is registered at Calcutta, Mumbai, Delhi and Surat and the Assessing Officer was of the view that they were all providing accommodation entry. In some of the cases, the co. has filed some of the information and in one case, the director of Shyam Securities wherein the statement was recorded and from his statement, the Assessing Officer was of the view that the assessee has not proved by providing the information like balance-sheet and profitability of the co. was not proved. Similarly, in case of some of the companies, the informationthey have accepted that they have provided entry, therefore, Assessing Officer was of the view that assessee has proved genuineness and creditworthiness of share premium received by the assessee co. But Assessing Officer was of the view that person who has provided bogus capital introduced to the assessee has admitted that they used to provide accommodation entry by operative various accounts and receiving cash from the parties and Assessing Officer was of the view that copy of return roc and bank account ....
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....led revised return hence, the additional income as declared during the course was retracted immediately. The assessee during the course of assessment proceeding vide its letter dt 13-09-2011 has categorically explained the reason for non- filing of the revised return and retraction of addition income itself. The said letter is on record with the assessing officer. That in the present case when the assessee company had not revised its return and the said fact was very well in the notice of the assessing officer hence, additional income was not accepted by the assessee in this case. The assessing officer in the assessment order on the basis of certain decisions , though not applicable on the facts of the case of the assessee,has added the additional income merely on the basis of statement as recorded during the course of survey. The facts of the decisions as relied by the assessing officer were on different facts the same are discussed hereunder:- Dr S C Gupta vs CIT reported in 248 ITR 782 [All] The assessee in that decision has not explained the reason for denial of the additional income declared during the course of survey and put extra burden on the AO. However,....
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....he course of appellate proceeding counter the decisions as referred by the assessing officer. The decisions as relied upon by the assessee are as under:- [i] ITO vs Vijay Kumar Kesar reported in 327 ITR 497. [ii] M Narayanan & Bros vs ACIT reported in 339 ITR 192. [iii] M/s Rank Shipping Agency P Limited [Appeal No ITA No 5946/ Mum/ 2008 dt 21-11-2012]. [iv] ACIT vs Lakshmi Float Glass Limited [ITA No 535/ Del/ 2009 dt 31.03.2005] [v] Paul Mathews & Sons vs CIT as reported in 263 ITR 101. That from the judicial pronouncements reported at Paul Mathews & Sons 263 ITR 10 1 (Ker); Ashok Manilal Thakkar 279 ITR (AT) 143 (Ahm), Mukund V. Kapadia 82 ITD 489 (Mum.), Hyundai Engineering Co. Ltd ITA no. 3006/D/2003' (Del) it is clear that Income tax authorities have no jurisdiction to record sworn statement u/s, 133A of the Act during the course of survey. Since the authority had no jurisdiction to administer oath and record swam statement so statement u/s, 133A(3) in the absence of any supporting material has no evidentiary value and could be said to be useful or relevant to assessment proceedings only when there was material on record to ....
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....ions as relied, it is submitted that the assessing officer was not justified in adding the amount of share application money to the income of the assessee merely on the basis of statement of as recorded during the course of survey even when the assessee has properly discharged onus lying on it by furnishing the ample documents as to justify the identity, genuineness and creditworthiness of the share holders. That it is settled position of law, in the case of share application money/ share capital, the assessee has to prove the identity of the share holders only. The decisions as referred in the assessment order are not applicable on the facts of the present case. The decision of the Hon'ble Chattisgarh High Court in the case of ITO vs Vijay Kumar Kesar reported in 327 ITR 497 has held that confession made by the assessee during survey proceedings is not conclusive and it is open to the assessee to establish that the same was not true and correct by filing the cogent evidence. Hon'ble High Court also referred the decision as relied by the assessing officer in the case of Dr S C Gupta vs CIT. Accordingly, addition made on the basis of statement of director of the assessee company as ....
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....AAACW3541K 30,00,000 12. Acumen Paper Binder Pvt.Ltd. 109,Vakil Chamber, Gali No.1, Shakarpur, Delhi AAACA2172J 20,00,000 13. Bhagirathi Industries Ltd. 201,Malhotra Complex 2nd Floor, Chawla Gali, Shakarpur,Delhi AAACB2254N 20,00,000 14. Happening Motors Pvt.Ltd. S-205,Kanishka Complex, Saini Enclave Delhi AAACH4607F 20,00,000 15. Starvision Media P Limited D-25A, First Floor, Laxmi Nagar, Delhi AAKCS8003N 20,00,000 16. Startrans Logistics Pvt. Ltd. S-205,Kanishka Complex, Saini Enclave Delhi AAJCS0491H 20,00,000 17. Sayam Shares & Securities Pvt.Ltd. 201,Malhotra Complex 2nd Floor, Chawla Gali, Shakarpur, Delhi AALCS9567N 20,00,000 18. Shree Balaji Sainath Builders Pvt.Ltd. B-1058, Shastri Nagar, Karol Bagh, New Delhi AAJCS7086E 15,00,000 19. Surbhi Networking & Broadcasting Pvt.Ltd.(Formally Known as R.J. Fabtex Pvt.Ltd.) A-115, Ground Floor, Vakil Chamber, Shakarpur, Delhi AADCR3947D 40,00,000 20. Uniword Bartercard P Limited D-25A, First Floor, Laxmi Nagar, Delhi AAACU9640D 9,....
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....sessee. That few of the share holders were appeared before the Assessing officer and submitted their reply in detailed. However, the assessing officer added the entire amount of share application money as received by the assessee as its income. The assessee during the course of assessment proceeding had filed the sufficient documents as to justify the identity, genuineness and creditworthiness of the share application money as received by it. However, the assessing officer ignored the said submission and added the entire amount of share application money as income of the assessee. The assessee has also declared interim dividend and final dividend, detail of the same is as under:- S.No Interim/ Final Dividend Date of declaration % of Dividend 1 Interim Dividend 03.11.2009 12.50 2 Final Dividend 25.10.2010 17.50 The assessee in addition to the dividend, the assessee company also declared bonus shares on dated 30th March'2012 in the ratio of 1:10 i.e one share for every 10 shares held by the share holders. Copy of return of allotment as filed with the Registrar of Companies for allotment of Bonus share is also enclosed for your ready refere....
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....ved. The report as received in response to the commission dt 12-09-2011 from the Investigation wing of the Mumbai was defective and not proper. The AO issued commission on 12-09-2011. However, no fresh inquiry was made by the Investigation wing but simply on the basis of information available in their possession , report was prepared and submitted to the Assessing officer. Statement of Shri Kamal Kishore Rathi as recorded on 22-10-2010 mainly in respect of Long term capital gain, statement of Shri Mukesh Choksi as recorded on 25-11-2009, on 11-12-2009 and on 03-02-2010 and statement of Shri Jayesh Sampat as recorded on 14-05-2010 were referred in the report as submitted by the AO. That in all their statement name of the assessee company was not referred. In the case of the assessee, affidavit from all the above companies were taken even after the date of statement as referred by the Investigation wing:- S.No Name of the Companies Name of the Director Date of Affidavit 1 Winfotech Systems P Limited Manish Rathi 24-08-2011 2 Luxer Properties P Limited Manish Rathi 24-08-2011 3 Suresh Rathod Consultants P Limited Manish Rathi 24-08-20....
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.... in case of above companies in most of the cases letter as issued U/s 133(6) of the Income Tax Act was served to these companies, replies were also received by the Assessing officer directly either in receipt of the letter u/s 133(6) of the Income Tax Act or on request of the assessee. However, the assessing officer issued commission to the Investigation wing, Delhi. That inspector of wing visited to serve summon to these companies, summon to Bhagirathi Industries Limited and Sayam Shares & Securities P Limited were served and statement of directors of both the companies were recorded. However, copy of the said statement was not provided to the assessee. It was informed by the directors of these companies that they have personally appeared before the authorized officer and categorically accepted about the investment made by them in the share capital of the assessee company. The Assessing officer himself on inner Page No 15 of the order has stated that Shri Arun Jain director of M/s Sayam Securities Limited was personally appeared before the authorised officer and accepted about the investment made in the shares of the assessee company. The assessee in its reply as reproduced on inn....
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....made by these companies in the share application money/ share capital of the assessee company. Documents as filed by Shri Rajiv Bansal are enclosed for your kind reference. That authority letter in favour of Shri Bansal as executed on stamp paper is also enclosed with these documents. That from the personal presence of CA Shri Rajiv Bansal, the identity of the share holder company stand proved. The assessing officer added an amount of Rs. 15,00,000/- to the income of the assessee in respect of the following two companies on the basis of report as received from the Investigation wing of the Vadodara:- S.No Name of the share holder Amount (Rs ) 1 ACIL Cotton Industries P Ltd [ Formerly known as Adeshwar Cotton Industries Limited ] 10,00,000 2 Alpha Graphic India Limited 5,00,000 15,00,000 The letter as issued U/s 133(6) of the Income Tax Act was duly served upon the share applicant and reply for the same was also filed by the investor companies. That in commission proceeding balance sheet and assessment details were obtained and provided by the investigation wing in its report. Hence, identity of both these companies stand prove....
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....Ganesh Bhawan, Chwadi Bazaar Gwalior AAECM8933D 25,00,000 10 Nimbus Stock Invest Limited ( Formally known as Rolledgold Industries Limited 207,Akansha Trade Centre ,156 Kanchanbagh Indore AADCR4275J 15,00,000 1,45,00,000 The assessee during the course of assessment proceeding filed complete detail as to justify the genuineness of the share application received by it by filing ample documents. The assessing officer simply rejected the submission of the assessee and added the entire amount of share application money to the income of the assessee which in any case was not correct. That Hon'ble Indore Bench of ITAT in the case of M/s Agrawal Coal Corporation , as discussed by the AO, has categorically held that if the identities of the share holders stand proved. In that case, no addition is to be made to the income of the assessee. In the present case, the assessee had proved the identity of the share holders by filing the PAN No and providing the bank details of the share holders. Hence, the assessing officer was not justified in adding the amount of share application money as received by it from all the shar....
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.... 3 CIT vs N R Portfolio (P) Ltd 42 taxmann.com 339 [ Delhi] 4 Gayathri Associates 41 taxmann.com 526 [ AP 5 CIT vs Focus Exports (P) Ltd 51 taxmann.com 46 [Delhi] 6 CIT vs P Mohankala 291 ITR 278 [SC] 7 CIT vs MAF Academy (P) Ltd 42 taxmann.com 377 [Delhi] 8 Subhlakshmi Vanijya (P) Ltd 60 taxmann.com 60 [ Kolkata] 9 Agrawal Coal Corporation (P) Ltd 19 taxmann.com 209 [ Indore] 10 CIT vs Nova Promoters & finlease [P] Ltd 342 ITR 169 [Delhi] That as regard share premium of Rs. 990/- Per share is concern, the assessee company is a big player in the Media segment and engaged in the Print and Boarding business. The assessee company was incorporated on 05-04-1989 and therefore having more than 20 years experience of this line of business. The assessee company declared total income in its books of account prior to depreciation was of Rs. 9995881/- as on 31.03.2008 and the same was increased to Rs. 12489838/- as on 31.03.2009. That considering the long standing in the business and huge profit the amount of share premium is duly justifiable. That in case of private limited company the amount of share premium is mutual....
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....e Co. Pvt Limited ) Chamber No.06, Big Three Building, 1st Marine Street Mumbai-400002 AACCC7400M 10,00,000 3. Buniyad Chemical Limited Block-H, Shri Sadashiv CHS Limited 6th Road Shantacruz (E) Mumbai -400055 AABCB6954G 20,00,000 4. Luxer Properties Pvt. Limited C-104, Rahul Apt., S.V Road, Andheri (W) Mumbai -400058 AAACL1462A 20,00,000 5. Suresh Rathod Consultants P Limited 312,Kalbadevi Road, IIIrd loor,Room No.1, Near Swdeshi Market Kalba Devi Mumbai AAFCS5844Q 25,00,000 6. Elderado Properties P Limited 312,Kalbadevi Road, IIIrd Floor,Room No.1, Near Swdeshi Market Kalba Devi Mumbai AAACE1957F 10,00,000 7. Ecro Artisans P Limited 312,Kalbadevi Road, IIIrd Floor,Room No.1, Near Swdeshi Market Kalba Devi Mumbai AAACE8119M 15,00,000 8. Pursuit Securities Limited 312,Kalbadevi Road, IIIrd Floor,Room No.1, Near Swdeshi Market Kalba Devi Mumbai AAACP3800E 22,00,000 9. Tribhuvan Housing Limited 23,Jalaram Society Chamunda Circle Boriwali (W) Mumbai -40001 AAACT7299M 10,00,000 10. Millenium Cybertech limited 38,Ganga Viahar,3rd Floor Rokandia Lane Borivalie,(W) Mu....
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....Limited (Formally known as Rolledgold Industries Limited 207,Akansha Trade Centre ,156 Kanchanbagh Indore AADCR4275J 15,00,000 47900000 The Assessing Officerwanted to verify the share premium amount received by the assessee are by way of share premium earned from the above companies. The assessee co. had issued 47900 equity shares of 10 each at premium of 990 aggregating to 1000 per share, thus, the assessee has received the share capital and share premium at Rs. 4.79 crores. The Assessing Officer wanted to verify the identity, genuineness and creditworthiness of the creditors u/s 68 of the I.T. Act. The assessee has filed the return of income prior to date of survey and wherein the assessee co. has declaring the total income of Rs. 9835850 on 3.9.2009. There was income-tax survey executed at business premises of the assessee on 8.10.2009. During the course of survey proceedings, one of the directors Mr. Rajesh Jain statement was recorded wherein he agreed to pay the tax on amount of share application money received by assessee co. during the year under consideration. The assessee stated that assessee will file the revised r....
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....ally conferred on the authorised officer only under Section 132(4) of the IT Act in the course of any search or seizure. Thus, the IT Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas Section 133A does not empower any ITO to examine any person on oath. Thus, in contra-distinction to the power under Section 133A, Section 132(4)of the IT Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the IT Act. On the other hand, whatever statement recorded under Section 133A of the IT Act is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn in statement which alone has the evidentiary value as contemplated under law. Therefore, there is much force in the argument of the learned counsel for the appellant that the statement, elicited during the survey operation has no evidentiary value and the ITO was well aware of this. From the judicial pronouncements reported at Paul Mathews & Sons 263 ITR 10 1 (Ker); Ashok Ma....
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....in this case, the assessee has given the statement only but after the statement, assessee has retracted from the statement, therefore, he has not filed the revised return, therefore, we are of the view that the assessee is justified in not filing revised return and we are deciding the appeal on merit. The Ld CIT DR during the course of hearing before the Hon'ble bench placed reliance on the statement of the assessee as recorded during the course of assessment and also referred the following decisions:- S.No Reference of Decision Citation of decision 1 Zikrullah Chaudhary ITA No 669/PN/2012 dt 18-02-2014 2 Mahesh B Shah vs ACIT 103 Taxman 91[ Ker] 3 Western Automobiles (India) vs CIT 112 ITR 1048 [ Bom] Pune Bench of ITAT in the case of Zikrullah Chaudhary [ Appeal No ITA No 669/PN/ 2012 dt 18-02-2014] , a search u/s 132 of the Act was executed on 24-10-2007. That no surrendered was made in search proceeding. However, the assessee during the course of assessment proceeding surrendered long term capital gain as his additional income and disputed the same in appeal. In the present case the assessee by not filing the revised return of total inc....
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....ported in 327 ITR 497 has held that confession made by the assessee during survey proceedings is not conclusive and it is open to the assessee to establish that the same was not true and correct by filing the cogent evidence. Hon'ble High Court also referred the decision as relied by the assessing officer in the case of Dr S C Gupta vs CIT. Accordingly, addition made on the basis of statement of director of the assessee company as recorded during the course of survey is not binding and cannot be sole basis of addition to the income of the assessee. On merit, the Assessing Officer has on page 10 & 12 of the assessment order, has discussed the factual part of all the companies from whom the share application was received by the assessee. Out of 28 companies, the notice was not served to ten companies. In respect of 12 companies, the notices were served but the reply was not received. In respect of remaining companies, the reply was received. The assessing officer later-on issued commission to the Mumbai, Delhi and Baroda offices asked to investigate the genuineness of the share application money as received by the assessee even when in most of the cases letter issued u/s 133(6)....
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....unt (Rs) 1 Winfotech Systems P Limited 3000000 2 Luxer Properties P Limited 1500000 3 Suresh Rathod Consultants P Limited 2500000 4 Elderadd Properties P Limited 1000000 5 Ecro Artisons P Limited 1500000 6 Mihir Agencies P Limited 2000000 7 Buniyad Chemicals Limited 2000000 13500000 The letter as issued u/s 133(6) of the Income Tax Act was duly served upon the above companies. Reply to the said letter was also received wherein it was pointed out that due to search in their premises, entire record of the investor companies were lying with the Income Tax department. That reply as filed in response to the letter issued u/s 133(6) of the Income Tax Act and also from search action of the Income Tax department, the identity of the share holders company stand proved. The report as received in response to the commission dt 12-09-2011 from the Investigation wing of the Mumbai was defective and not proper. The AO issued commission on 12-09-2011. However, no fresh inquiry was made by the Investigation wing but simply on the basis of information available in their possession, report was prepared and sub....
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....y either in receipt of the letter u/s 133(6) of the Income Tax Act or on request of the assessee. However, the assessing officer issued commission to the Investigation wing, Delhi. That inspector of wing visited to serve summon to these companies, summon to Bhagirathi Industries Limited and Sayam Shares & Securities P Limited were served and statement of directors of both the companies were recorded. However, copy of the said statement was not provided to the assessee. It was informed by the directors of these companies that they have personally appeared before the authorized officer and categorically accepted about the investment made by them in the share capital of the assessee company. The Assessing officer himself on inner Page No 15 of the order has stated that Shri Arun Jain director of M/s Sayam Securities Limited was personally appeared before the authorised officer and accepted about the investment made in the shares of the assessee company. The assessee in its reply as reproduced on inner Page No 18of the assessment order in Para 2.1.1 has stated that director of M/s Bhagirathi Industries Limited and M/s Sayam Shares & Securites P Limited were appeared to which the assess....
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....ur of Shri Bansal as executed on stamp paper is also enclosed with these documents. That from the personal presence of CA Shri Rajiv Bansal, the identity of the share holder company stand proved. In view of the above, the assessing officer was not correct in adding the entire amount of share application money of Rs. 18400000/- to the income of the assessee by ignoring the detailed submissions and documents as filed during the course of the assessment proceeding , reply as received u/s 133(6) and statement as recorded U/s 131 of the Income Tax Act, therefore, ld. CIT(A) has deleted the addition and our interference is not called for. The assessing officer added an amount of Rs. 15,00,000/- to the income of the assessee in respect of the following two companies on the basis of report as received from the Investigation wing of the Vadodara:- S.No Name of the share holder Amount (Rs ) 1 ACIL Cotton Industries P Ltd [ Formerly known as Adeshwar Cotton Industries Limited ] 10,00,000 2 Alpha Graphic India Limited 5,00,000 15,00,000 The letter as issued U/s 133(6) of the Income Tax Act was duly served upon the share applicant and r....
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....d Shop No.220, Labh Chambers, Station Road Aurangabad M.S. AABCK0527E 15,00,000 8 Volplast Limited 5/856,Kamla Apt. Second Floor , Ghasheri Surat-395009 AABCV8410D 23,00,000 9 Galaxy Devcom Pvt Limited Ganesh Bhawan, Chwadi Bazaar Gwalior AAECM8933D 25,00,000 10 Nimbus Stock Invest Limited ( Formally known as Rolledgold Industries Limited 207,Akansha Trade Centre ,156 Kanchanbagh Indore AADCR4275J 15,00,000 1,45,00,000 The assessee during the course of assessment proceeding filed complete detail as to justify the genuineness of the share application received by it by filing ample documents. The assessing officer simply rejected the submission of the assessee and added the entire amount of share application money to the income of the assessee which in any case was not correct. Hon'ble Apex Court in the case of Lovely exports P Limited as reported in 11 ITJ 357 has held that:- "2. Can the amount of share money be regarded as undisclosed income under s. 68 ofIT Act, 1961? We find no merit in this Special Leave Petition for the simple reasonthat if the share....
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....sclosed sources. The similar view hasbeen taken by the other High Courts. As the Apex Court has considered the law in Lovely Exports (supra) and in view of law laid downby the Apex Court, we find that the substantial questions framed in these appeals do not arise forour consideration. Accordingly, all these appeals are dismissed with no order as to costs. Hon'ble Delhi High Court vide order dt 21-01-2013 in the case of GANGESHWARI METAL PVT LTD [ Appeal No ITA No 597/2012] has discussed the similar issue in detail and after considering the decision in the case of Nova Promoters P Limited has held that :- "Mr. Sabharwal, appearing on behalf of the revenue/ appellant sought to place reliance on a Division Bench decision of this Court in CIT v. Nova Promoters and Finlease (P) Ltd.: (2012) 342 ITR 169 (Del.). However, on going through the said decision in Nova Promoters and Finlease (P) Ltd. (supra) we find that the facts are clearly distinguishable. In fact, in Nova Promoters and Finlease (P) Ltd. (supra) itself this Court has observed, in the context of Lovely Exports (P) Ltd. (supra), as under: - "The ratio of a decision is to be understood and appreciated in....
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....a view to the contrary. (emphasis supplied) As can be seen from the above extract, two types of cases have been indicated. One in which the assessing officer carries out the exercise which is required in law and the other in which the assessing officer "sits back with folded hands till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category. Here the assessing officer, after noting the facts, merely rejected the same. This would be apparent from the observations of the assessing officer in the assessment order to the following effect: - "Investigation made by the Investigation Wing of the Department clearly showed that this was nothing but a sham transaction of accommodation entry. The assessee was asked to explain as to why the said amount of 1,11,50,000/- may not be added to its income. In response, the assessee has submitted that there is no such credit in the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was 55,....
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.... (a) The identity of the shareholder can be proved by either (if individual) producing him before the AO or by way of documents, registered address, PAN etc; (b) The genuineness of the transaction can be shown from the fact that the money has been received from the shareholder. If the money is received by cheque and is transmitted through banking or other indisputable channels, the genuineness of transaction would be proved. Other documents showing the genuineness of transaction could be the copies of the shareholders register, share application forms, share transfer register, etc; (c) The creditworthiness or financial strength of the creditor / subscriber can be proved by producing the bank statement of the creditors / subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharge the onus cast upon him. The AO can discredit the documents produced by the assessee with cogent reasons and materials but not on the realm of suspicion; (ii) If the assessee has produced documents like PAN Card, bank account details or details ....
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....the investigation report which was specifically called from the concerned department in Kolkata was available but not discussed by the AO. Had he cared to do so, the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants' particulars were available with the AO in the form of balance sheets income tax returns, PAN details etc. While arriving at the conclusion that he did, the AO did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee's account to the share applicants' account. As held concurrently by the CIT (Appeals) and the ITAT, these conclusions were clearly baseless and false. This Court is constrained to observe that the AO utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents. We place these observations on the record and direct a copy of the judgment to be furnished to the concerned income tax authorities for appropria....
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....wala entry in dispute, the ld. CIT(A) observed that the Assessing Officer was not able to brought anything on record that it was assessee's own money which was rooted in the form of share application money and has rightly deleted the same." In the case of CIT vs Korlay Trading Co Limited as reported in 232 ITR 820, Hon'ble Calcutta High Court observed that in case of unsecured loan mere providing of PA No was not sufficient. In that case the assessee utterly failed to furnish even confirmation letter.In the present appeal, the matter in dispute is not unsecured loan but share capital and it was categorically held that the assessee need to prove the identity of the share holders only. The assessee in present case not only filed confirmation letter but ample documents as to discharged the onus lying on the assessee. Hence, decision of the Hon'ble Calcutta High court are distinguishable on the fact of the present case. In case of N Tarika Property Investment (P) Ltd , Hon'ble Delhi High court as reported in 40 taxmann.com 525 and by the Hon'ble Apex court as reported in 51 taxmann.com 387 has observed that the bank account as provided was forged and fabricated bank account. ....
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.... in hand, the assessee company has explained the correct nature of transactions though the same was not accepted by the Assessing officer but by the Ld CIT[A]. Since, the assessee company has filed ample documents to support its claim. Hence, rather decision of the Hon'ble Apex Court support the case of the assessee company. In the case of MAF Academy (P) Limited as reported in 42 taxmann.com 377, Hon'ble Delhi High Court on the basis of its finding in the case of N R Portfolio [P] Limited [ Supra] reached to a conclusion that the assessee has failed to provide the identity, genuineness and creditworthiness of the share application money.In the present case as stated the assessee has extend its full co-operation and also filed ample documents as to prove the ingredients of provision of section 68 of the Act. The share of the assessee company still in possession of the share holders and dividend and bonus was declared by the assessee company. Hence, fact of the case of MAF Academy (P) Limited was distinguishable with the fact of the present case of the assessee. In the case of Subhlakshmi Vanijya ( P) Ltd as reported in 60 taxmann.com 60 , Hon'ble Kolkata Bench observed that i....
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.... Gangeshwari Metal P. Ltd. Dated 21.1.2013 and also after taking note of a decision of Apex Court in the case of Kishan Chand Chellaram vs. CIT, 125 ITR 713. Therefore, ld. CIT(A) has deleted the addition and our interference is not required. We also get support from the decision of ITAT, Indore Bench in the case of STL Extrusion (P) Limited vide order dated 10.05.2010 being ITA no.(SS) 259, 260 /Ind/2008 after considering the judgement of Hon'ble MP High Court in the case of Rathi Finlease Ltd. reported in 215 CTR 429 (MP) held as under:- Page 7 " In the present appeal, since the assessee has discharged its onus by proving the identity of subscribers and even otherwise had any suspicion still remained in his mind, nothing prevented him to initiate action as per the provisions of the Act. The existence of subscriber to share application is not in doubt as the assessee duly furnished their names, age, address, date of filing the application, number of shares for which respective applications were made, amount given and the source of income of the applicant. In view of these facts, we are of the considered opinion that there is no justification for making the impugned additi....
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....we have to see only in respect of the establishment of the identity of the investor. The Delhi High Court also in Divine Leasing & Finance Ltd. (supra), considering the similar question held that the assessee Company having received subscriptions to the public/rights issue through banking channels and furnished complete details of the shareholders, no addition could be made under section 68 in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represented company's own income from undisclosed sources. The similar view has been taken by the other High Courts. 17. As the Apex Court has considered the law in Lovely Exports (supra) and in view of law laid down by the Apex Court, we find that the substantial questions framed in these appeals do not arise for our consideration. Accordingly, all these appeals are dismissed with no order as to costs. Hon'ble Apex Court in the case of Lovely exports P Limited as reported in 11 ITJ 357 has held that:- "2. Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961? We find no merit in ....
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.... is by the Revenue challenging the order of learned Commissioner of Income Tax(Appeals)-II, Indore, dated 31.5.2013. 3.2 Following grounds have been raised by the Revenue: "Ld. CIT(A) has erred in deleting the additions of Rs. 1,75,00,000/- and Rs. 2,00,00,000/- totaling to Rs. 3,75,00,000/- made by the Ld. A.O. u/s 68 on account of share application money received by the assessee company." 3.3 The short facts of the case are as under: "The assessee company is a limited company engaged in the business of Manufacturing of HDPE/PP Woven Sacks/Fabric. It has filed its return of total income for the year under consideration on 29.09.2009 declaring total income at Rs. 37,23,060/- u/s 28 to 44 D of the Income Tax Act and Rs. 1,90,60,610/- u/s 115JB of the Income Tax Act along with its Audited accounts. The case of the Assessee company was selected for scrutiny and assessment order U/s 143(3) was passed assessing total Income of Rs. 4,14,23,060/-. The assessing officer while framing the assessment order had added the following amount to the Total income of the appellant:- S.No Nature of addition Amount (Rs) 1 U/s 68 in respect of Share Capital Rec....
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....o failed to collect any information from his counterpart about the genuineness of the investment made by these share holders. The AO also failed to point out cash deposited if any in the bank account of any of these share holders companies directly or failed to refer to any other account in which cash was deposited by these companies. The appellant during the course of assessment proceeding provided complete details which also includes share application money form, confirmation, affidavit, bank statement, income tax return and audited balance sheet, memorandum and article of association etc. The AO could have forwarded these information to the assessing officer where the share holders company are regularly assessed to tax and obtained factual report where the investment was shown by these companies in the name of the appellant company were reflected in their books of account or not but the AO failed to do the basic exercise. As regard investment on premium is concerned, the same is depending upon the various factor and it was mutually decided by the appellant company and the share applicant. It is worth noting that Shri Purshottam Agarwal, father of one of the director Shri Praveen....
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....s the Hon'ble High Court held that primary onus was discharged by assessee by producing PAN, bank account details copies of income tax returns of share applicants etc. Hon'ble Gujarat High court in the case of Ranchod Jivabhai Kanhava reported on 21 taxmann.com 159 also defines the procedures for making addition u/s 68 wherein it was categorically mentioned by the Hon'ble Court that the assessing officer of the appellant company must refer the matter to the assessing officer of the share holders company and on receipt of the negative finding the same was. made available to the assessee for his comments and proceed accordingly but in the present case, the AO utterly failed to examine the issue in right prospect and merely on account of non- service of the letter u/s 133(6) of the Act, taken a negative note which in my considered opinion was not justifiable. I am therefore of the opinion that the AO was not justified in ignoring the documents as filed by the appellant which prima facie proved the identity and genuineness of the share application money. The addition for Rs. 1,75,00,000/- made by the AO is therefore not maintainable and hereby deleted. . 4.1] The A....
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....cordingly, statements of Shri Mukesh Choksi and Shfi Jayesh Sampat as recorded behind the back of the appellant cannot be validly used against appellant as the principal of natural justice is not satisfied. For this proposition reliance is placed on the decision of apex court in case of Kishan Chand Chelaram 125 ITR 713 (SC). The; appellant had filed copy of share application form, confirmation letter, copy of bank account of the share holders, memorandum and article of association and Income Tax return. The AO also failed to refer the matter to the assessing officer where such share applicants .are regularly assessed to tax. The Appellant also relied on the decision of the Hon'ble Mumbai Bench in the case of Mrs Rasila N Gada [ Appeal No ITA No 1773/Mum/ 2010 dt 08-08-2012 ], in that case on the basis of statement of Shri Mukesh Choksi, the amount of long term capital gain was assessed as non- genuine and added to the income of that assessee. However, Hon'ble Bench while deciding the appeal referring the other decisions observed that the AO had not afforded opputnituniy of cross examination of Shri Mukesh Choksi to the appellant and also noted that name of the appellant wa....
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....n as gospel truth when name of assessee does not appear in statement as held in case of Excellence Town Planning P. Ltd. [appeal no. ITA No. 871/Del/2010 dated 25.02.2012], Oasis Hospitalities P. Ltd. 333 ITR 119 (Del) and Gangeshwari Metal P. Ltd. ITA No. 597/2012 dated 21/01/2013 reported in 84 CCIT 037.The appellant accordingly get relief of Rs. 2,00,00,000/-. 4.2] In ground No 2 of the present appeal, the appellant has challenged the addition of Rs. 2,00,000/- made on account of alleged expenses as incurred for arranging the share capital of Rs. 2,00,00,000/- from seven companies of Shri Mukesri Choksi. The said addition was made by the AO on mere; presumption which in any case is not sustainable, I therefore direct the AO to delete the addition so made to the income of the appellant company." 3.5 The Ld CIT DR during the course of hearing before the Bench argued that share premium of Rs. 90/- Per share was received by the assessee. The ld. DR submitted before us that in this case, the statement of Mr. Jayesh Sampat was recorded and Jayant Sampat has admitted that assessee has introduced his own unaccounted cash through 7 companies and paid comiission @30 paise to 1....
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....ce u/s 133(6) to the said parties. However, the Ld. A.O. had not issued the same.That Investment of Rs. 50,00,000/- ,Rs. 75,00,000/- and Rs. 50,00,000/- were made in the share capital of the assessee company by M/s Doldrum Investment & Finance Limited, M/s Sidh Housing Development Co. Ltd. and M/s Gyaneshwar Trading & finance Co. Ltd.The assessee during the course of assessment proceeding and also before the Ld. CIT(A) the assessee had filed complete documents to justify the identity and genuineness of the amount received by it from said party. Copies of the same are also filed before the Hon'ble Bench on page 141 to 413 of the paperbook. Company wise details of documents are filed on following pages:- S.No. Name of Share Applicant Amount Pages of Added u/s 68 paper book 01. M/s Doldrum Investment & Finance P. Ltd. 50,00,000 141 to 197 02. M/s Sidh Housing Development Co. Ltd. (Name changed to Bhadrawati Ispat & Energy Ltd.) 75,00,000 208 to 304 03. M/s Gyaneshwar Trading & Finance Co. Ltd. (Name changed to Bhadrawati Steel & Urja Ltd.) 50,00,000 314 to 413 ....
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.... 6 Memorandum and Article of Association has also been provided 7 Detail as furnished by the assessee was found correct and proper. The documents as filed by the assessee not found wrong or fabricated. Thus the assessee through its Chartered Accountants had filed sufficient documents as to justify the identity of the shareholders and genuineness of the share application money received from the share applicants however the A.O did not relied upon the documents filed during the course of assessment proceeding and added the same to the income of the assessee. Mumbai Bench of ITAT in the case of ACIT vs Krishna Sheet Processors P Limited [ Appeal No ITA No 546/ Mum/ 2013 dt 30-06-2015 for the Asst Year 2009-10 ]. That in view of the above it is submitted that addition of Rs. 1,75,00,000/- in respect of Share Capital Received by the assessee company from the above three parties as made by the assessing officer u/s 68 of the Income Tax Act was not correct and assessee has properly discharged the onus lying on him . The same has therefore rightly been deleted by the Ld. CIT(A). The Assessing officer has further added an amount of Rs. 2,00,00,000/- received from following Seve....
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.... Infoway Ltd. 25,00,000 746 to 868 Total Addition 2,00,00,000 That in companies where notices u/s 133(6) were issued by the A.O. but they were returned unserved, the assessee has produced the Authorized Representative of the Company before A.O. In rest of the case the notice issued u/s 133(6) of the Income Tax Act were duly served and replied by the Share Applicants. The said thing also proves the Identity and capacity of the share applicants.The entire amount of share application money was received by the assessee through an account payee cheques. Confirmation letter have also been filed. Share application form were also filed notice u/s 133(6) has also been served or where it has not been served the Authorized representative has appeared personally before the Ld. A.O. Thus there is no reason to disbelieve on the amount of share application money as received by the assessee. Merely because the Directors of the Applicants companies have stated in the statement recorded that they are involved in providing certain accommodation entries in LTCG and STCG etc. it cannot be presumed they have provided accommodation entry to the appellant also in the for....
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....llected in the case of the assessee. Hence, the assessing officer was not justified in adding the entire amount of share capital to the income of the assessee merely on the basis of report of the Addl DIT(Investigation ), Mumbai.The assessing officer while passing the assessment order, totally ignored the facts of the present case. The assessee during the course of assessment proceeding and in reply during the appellate proceeding has submitted that:- S.No Nature of documents 1 The assessee had received the amount of share application money through an account payee cheques 2 Copy of Bank account of the shareholders company has also been filed 3 PAN No of all the companies have been provided 4 Copy of affidavit of the some of the directors of the shareholders companies have been filed 5 Memorandum and Article of Association 6 Balance Sheet of all the companies have been filed 7 Income Tax Returns of all the Companies have been filed The assessee has also filed a chart of the share capital as received by the assessee company in the year under consideration with the following information is enclosed:- S.No Part....
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....eflected which also includes the amount of investment made by those companies in the shares of the assessee company. Breakup of the same is as under:- S.No Name of the Companies Investment in the unquoted equity shares shown by the shareholder company Investment in the equity shares of the assessee company was made 1 Dolddrum Investment & Finance P Limited 24,05,62,507 50,00,000 2 M/s Sidh Housing Development Co Limited 45,83,90,000 75,00,000 [Now known as BhadrawatiIspat& Energy Ltd] 3 M/s Gyaneshwar Trading & Finance Ltd 48,08,55,000 50,00,000 [Now known as M/s Bhadrawati Steel &Urja Ltd] The Assessing Officer observed ath the bank statements of these investors show very petty credit balances in the bank accounts and only at the time of issue of cheque to the assessee the balances get populated by deposit if equal amount. However, the amount as credited in the bank statement is through cheques. The shareholders companies planned their affairs in such a manner that their fund....
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....utually by the share applicant and the assessee company depending upon the various factors. In the present case, Shri Purshottm Agrawal, father of one of the director Shri Pravin Agrawal, himself applied shares at a same premium on which these were allotted to the other share applicant. The turnover and the profit of the assessee company for the year ended on 31.03.2007, 31.03.2008 and 31.03.2009 are as under:- S.No Particulars 31.03.2007 31.03.2008 31.03.2009 1 Turnover 41,01,01,607 48,80,12,857 52,14,26,045 2 Profit 1,95,06,994 2,02,78,267 1,89,96,279 3 EPS 5.15 5.35 5.01 4 Share Capital & Reserve 14,77,76,366 15,70,29,868 22,18,58,472 5 Book value per share Rs. 39/- Rs. 41/- Rs. 51/- ACIT vs M/s Krishna Sheet Processors P limited [ Appeal No ITA No 546/ Mum/ 2013 dt 30-06-2015]. CIT (Central)-III v/s Anshika Consultants P Limited [Appeal N....
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....RTMENTAL APPEAL That in the said ground of appeal the department has challenged addition of Rs. 2,00,000/- alleged to have been made by the assessee in respect of expenses incurred @ 1 % for arranging the alleged accommodation entry in respect of Share Capital received by it of Rs. 2,00,00,000/- u/s 69C of the Income Tax Act. It is submitted that the said addition has been made u/s 69C notionally without any proof and purely on surmises and conjectures by alleging that the assessee must have incurred about 1% of expenses towards the share application and share premium money received by it of Rs. 2,00,00,000. The Ld. A.O. has discussed the issue related to addition made u/s 69C on page 10 para 2.13 of the Assessment Order. It seems that said addition was made by the Assessing officer on the basis of statement recorded by the Income Tax department in search proceedings at Mumbai at Choksi Group of companies inspite of the fact that they have not committed any such fact in the case of assessee and assessee has also not confronted any of the above persons in respect of the such charge. The said addition was made purely on presumptions and conjectures and without any basis.The Ld.....
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....r identity and genuineness of the amount received from the party. Assessee has filed the set of papers which include income-tax returns, balance-sheet for the year under appeal. The assessee has filed the income-tax returns on regular basis and proved the identity of shareholders and genuineness of share capital. Before Assessing Officer, one Shri Sunil Kumawat, CA appeared for three companies before Assessing Officer and he has filed confiamtion letters, photocopies of income-tax returns, balance-sheet and bank statement of the company. The ld. CIT(A) considering the share application money received by the assessee has deleted the addition. The Ld. Assessing officer has further added an amount of Rs. 2,00,00,000/- received from following Seven (7) companies as Share Application money by relying upon the statements of the Directors/ Authorized person recorded by DDIT (Inv). Mumbai during the search actions carried out at their premises. S.No. Name of Share Applicant Amount Added u/s 68 01 M/s Buniyad Chemical Ltd. AABCB6954G 50,00,000 02. M/s Alpha Chemie Trade Agencies P. Ltd. AADCA9890L 25,00,000 03. M/s Gold Star Finvest P. Ltd. ....
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....he share applicants.The entire amount of share application money was received by the assessee through an account payee cheques. Confirmation letter have also been filed. Share application form were also filed notice u/s 133(6) has also been served or where it has not been served the Authorized representative has appeared personally before the Ld. A.O. Thus there is no reason to disbelieve on the amount of share application money as received by the assessee. Merely because the Directors of the Applicants companies have stated in the statement recorded that they are involved in providing certain accommodation entries in LTCG and STCG etc. it cannot be presumed they have provided accommodation entry to the appellant also in the form of Share Application Money.The Ld. A.O. had provided Copy of Statement of Shri Kamal Kishore Rathi ,Shri Shri Mukesh Chowksi and Shri Jayesh Sampat to the assessee for its comments. The assessee at the time of assessment proceedings itself has clarified the position that it has not received any Share Application Money from any of the Companies belonging to Shri Kamlal Kishore Rathi. Thus his statement has not relevant for making any addition in its ha....
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....eceived the amount of share application money through an account payee cheques 2 Copy of Bank account of the shareholders company has also been filed 3 PAN No of all the companies have been provided 4 Copy of affidavit of the some of the directors of the shareholders companies have been filed 5 Memorandum and Article of Association 6 Balance Sheet of all the companies have been filed 7 Income Tax Returns of all the Companies have been filed 3.13 The assessee has also filed a chart of the share capital as received by the assessee company in the year under consideration with the following information:- S.No Particulars 1 PA No of the share applicant 2 No of shares allotted 3 Breakup of share capital and Share premium 4 Folio No of the shareholder 5 Certificate No 6 Distinctive Nos of the share certificate Copy of return of allotment as filed with the registrar of companies wherein the names of all the share applicants had duly been reflected. Therefore, we are of the view that ld. CIT(A) is justified in his action and our interference is not required. We also get support from the dec....
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....the identity of the person providing share application money is established then the burden was not on the assessee to prove the creditworthiness of the said person. However, the department can proceed against the said Company in accordance with law. The position of the present case is identical. It is not the case of any of the parties that M/s Alliance Industries Limited, Sharjah is a bogus company or a non-existent company and the amount which was subscribed by the said Company by way of share subscription was in fact the money of the respondent assessee. In the present case, the assessee had established the identity of investor who had provided the share subscription and it was established that the transaction was genuine though as per contention of the respondent the creditworthiness of the creditor was also established. In the present case, in the light of the judgment of Lovely Exports (P) Ltd., we have to see only in respect of the establishment of the identity of the investor. The Delhi High Court also in Divine Leasing & Finance Ltd. (supra), considering the similar question held that the assessee Company having received subscriptions to the public/rights issue through ba....
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.... far as the decision from Hon'ble jurisdictional High Court in the case of CIT vs. Rathi Finlease Limited (2008) 215 CTR (MP) 249 is concerned, in that case, despite several opportunities, the assessee was unable to provided confirmations from the concerned parties, therefore, the Hon'ble Court reached to a particular conclusion, whereas in the present appeals, the identity of share applicants, namely, M/s. Shrilal Traders Private Limited, M/s Lakeview Vinimay Private Limited, M/s Saharsh Suppliers Private Limited and M/s Ambitions Tie Up Private Limited was established, therefore, in view of the decision from Hon'ble Apex Court in the case of Lovely Exports Private Limited (supra), this judicial decision from Hon'ble High Court may not help the revenue. 6. So far as the argument of the learned Sr. DR and the objections / observations of the learned Assessing Officer/learned Commissioner of Income Tax (Appeals) that these are paper companies only, the contention raised on behalf of the assessee is that the net worth (as on 31.3.2007) of such share subscribers is Rs. 317.31 lacs, Rs. 424.58 lacs, Rs. 385.71 lacs and Rs. 289.01 lacs. We are not going on the i....
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....orthiness or financial strength of the creditor/subscriber can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharge the onus cast upon him. The AO can discredit the documents produced by the assessee with cogent reasons and materials but not on the realm of suspicion; (ii) If the assessee has produced documents like PAN Card, bank account details or details from the bankers the onus shifts upon the AO and it is for him to reach the shareholders and the AO cannot burden the assessee merely on the ground that summons issued to the investors were returned back with the endorsement "not traceable" (v) There is an additional burden on the Department to show that even if share applicants did not have the means to make investment, the investment made by them 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 absence of such finding, addition cannot be made u/s 68 in the hands the assessee....
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....thorities into the activities of such "entry providers". The existence with the Assessing Officer of material showing that the share subscriptions were collected as part of a premeditated plan - a smokescreen - conceived and executed with the connivance or involvement of the assessee excludes the applicability of the ratio. In our understanding, the ratio is attracted to a case where it is a simple question of whether the assessee has discharged the burden placed upon him under sec.68 to prove and establish the identity and creditworthiness of the share applicant and the genuineness of the transaction. In such a case, the Assessing Officer cannot sit back with folded hands till the assessee exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the material placed before him. The case before us does not fall under this category and it would be a travesty of truth and justice to express a view to the contrary. As can be seen from the above extract, two types of cases have been indicated. One in which the assessing officer carries out the exercise which is required in law ....
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....s a clear lack of inquiry on the part of the assessing officer once the assessee had furnished all the material which we have already referred to above. In such an eventuality no addition can be made under section 68 of the Act. Consequently, the question is answered in the negative. The decision of the Tribunal is correct in law. The appeal is dismissed." Hon'ble Delhi High Court in the case of CIT (Central)-III vs Anshika Consultants P Limited [ Appeal No ITA 467/ 2014 dt 16-04-2015 ] has held that Whether the assessee company charged a higher premium or not, should not have been the subject matter of the enquiry in the first instance. Instead, the issue was whether the amount invested by the share applicants were from legitimate sources. The objective of Section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed on 31.12.2007, the investigation report which was specifically called from the concerned department in Kolkata was available but not discussed by the AO. Had he cared to do so, ....
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....tegorically held that the assessee need to prove the identity of the share holders only. The assessee in present case not only filed confirmation letter but ample documents as to discharged the onus lying on the assessee. Hence, decision of the Hon'ble Calcutta High court are distinguishable on the fact of the present case. In case of N Tarika Property Investment (P) Ltd , Hon'ble Delhi High court as reported in 40 taxmann.com 525 and by the Hon'ble Apex court as reported in 51 taxmann.com 387 has observed that the bank account as provided was forged and fabricated bank account. In the present appeal in hand the assessee has provided copy of bank statement, PA No and various other documents and the assessing officer failed to pointed out any defects in these documents. Hence, the facts of the case of N tarika Property Investment [P] Ltd is distinguishable with the facts of the present appeal in hand. In case of CIT vs N R Portoflio (P ) Limited as reported in 42 taxmann.com 339, Hon'ble High Court has observed that mere providing the PA No by the appellant and not co-operated with the assessing officer in the assessment proceeding. In the present appeal, the assessee company ....
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.... has extend its full co-operation and also filed ample documents as to prove the ingredients of provision of section 68 of the Act. The share of the assessee company was not buy back by the assessee company but the transactions were executed between the share holders in the previous year relevant to the Asst Year 2006-07. Hence, fact of the case of MAF Academy (P) Limited was distinguishable with the fact of the present case of the assessee. In the case of Subhlakshmi Vanijya ( P) Ltd as reported in 60 taxmann.com 60 , Hon'ble Kolkata Bench observed that insertion of the proviso to section 68 was retrospective in nature.That proviso to section 68 of the Income Tax Act was inserted by the Finance Act 2012 w.e.f 01-04-2013. Since, the date of applicability was clearly mentioned with this amendment, Hence, the said insertion of the proviso have prospective applicability. That Hon'ble Mumbai Bench of ITAT in the case of Veedhata Tower P Limited [ ITA No 7070/ Mum/ 2014 ] dt 21-01-2015 has discussed the issue of share application money in detail and held that the assessee prior to the amendment by the Finance Act, 2012 need to prove only identity of the share holders and the assessee....