TaxTMI 
TaxTMI 
2022 (4) TMI 736
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....oney, treating the same as unexplained cash credit under section 68 of the Act. 3. The assessee in the year under consideration has shown share application money amounting to Rs.12.50 crores from 3 different parties, the details of the same stand as under: Name of person Amount of share application money received Date of receipt Hansaben M Patel 5,00,00,000 10.11.2009 Rameshbhai S. Thakor 3,50,00,000 22.05.2009 & 25.05.2009 Vinod Sharma 4,00,00,000 12.08.2009 Total 12,50,00,000 3.1 The AO found that as per the report of DDIT(Inv.), Unit-1(3), Ahmedabad, all the 3 persons were non-filer of income tax returns which is also evident from the search carried out in ITD. 3.2 The assessee with respect to two parties namely Shri Rameshji Gobarji Thakor bearing PAN AESPT-3446-H and Shri Vinod Kumar J. Sharma bearing PAN ALLPS-0605-F has not furnished the complete address and therefore it was not possible to conduct the enquiry in order to find out the genuineness of the transactions. 3.3 The aforesaid parties have made investment in the company without having any written documents/correspondence/ confirmation and share applicati....
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....uld transfer the same to the beneficiary which, according to the assessee, would be termed as genuine transaction. But it is not so that any transaction carried out through the banking channel is a genuine transaction. 3.8 In addition to the above, the AO also noted that besides the fact that all the parties mention above were non-filer of income tax return, the summons were issued under section 131(1A) read with section 131 of the Act to all the parties but there was no compliance. Likewise, the inspector in his report could also not raise the whereabouts of these parties. Accordingly, the assessee failed to discharge the onus imposed upon it under the provisions of section 68 of the Act. 3.9 The above facts were also brought to the notice of the assessee and to this effect summon was also issued upon it but failed to make necessary compliance. 3.10 The AO also found that there were certain land transactions deals carried out by the JP Iscon group. As such the group has sold its own lands to certain parties including Smt Hansaben at the nominal value which were again re-acquired by the group from the same persons at the much higher value. The consideration paid by the gro....
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....ame, PAN No. and Address of the investors, but the address of Shri Rameshbhai S. Thakor and Shri Vinodkumar J. Sharma are not complete. The Assessing Officer has also noted that there is no significant profit / outstanding performance of the appellant company so as any prudent investor would invest such large sum. The Assessing Officer on the bdsis of report of DDIT (Inv.), Ahmedabad hds also observed that Ms. Hansaben M. Patel has only filed return for A. Y. 2009-10 and Shri Rameshbhai G. Thakor and Shri Vinodkumar J. Sharma had not filed their return of income. The Assessing Officer based on the above observations has concluded that the identity, creditworthiness and genuineness of the investors in respect of share application money has not been proved and made addition u/s. 68 of the I. T. Act, 1961 in the total income. 4.3.1. Appellant has submitted the rebuttal of observation made by Assessing Officer in the assessment order during course of the appellate proceedings. Appellant has contended that if has discharged complete onus as required u/s. 68 of the I. T. Act, 1961 in respect of share application money received during the year which was also returned back in the ....
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....70,00,000/-. The appellant has explained the source of fund of Shri Kamal Gohil as sale of immovable property on 21/02/2009 of Rs. 8,44,69,500/-. The receipt and payments are through cheque and duly reflected in the bank account. As regard to share application money of Rs. 4,00,00,000/- received from Shri Vinodkumar Sharma, the appellant has submitted the source of fund for the share application money as fund received from Ambe Trade Car Pvt. Ltd. The receipt and payment are evident from the bank statement of Shri Vinodkumar Sharma. Appellant has contended that mere non production of share applicant does not addition u/s. 68 as held by Honourable Delhi High Court in the case CIT v. Victor Electrodes Ltd. [2012] 20 taxmann.com 680/[2010] 329 ITR \ 271. Appellant has contended that share application money received has been returned back in the subsequent year, and therefore, as per the decision of jurisdictional! High Court in the case of CIT, Rajkot Vs. Aayachi Chandrashekhor Narsangji [2014] 42 taxmann.corn 251 (Gujarat), the genuineness of the transaction cannot be doubted. The appellant has also relied upon decision of Hon'bie Supreme Court in the case Commissioner of Income ....
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.... Assessing Officer vide assessment order dated 20/09/2017 has made the addition of Rs. 33,36,89,804/- of the credit in her bank account in Indian Bank, Navrangpura Branch, Ahmedabad in the assessment order. Therefore, capacity of Ms. Hansaben M. Patel is well established. Similarly, in the case of Shri Rameshbhai Thakor, the source of fund is explained to be receipt from Shri Kamal Gohil of Rs. 2.8 crore and receipt of Rs. 70,00,000/- from Ms. Hansaben Manilal Patel. The Assessing Officer, ITO, Wd. 3, Gandhinagar vide his order dated 29/12/2017 for Assessment Year 2010-11 has assessed the credit in bank account of Rs. 27,42,50,000/- in the hands of Shri Rameshji G. Thakor. In the case of Shri Vinodkumar Sharma, the appellant has explained the source of shore application money of Rs. 4,00,00,000/- from Arnbe Trade Corp. Pvt. Ltd. which was finally traced from the source of Ms. Hansaben Manilal Patel. The Assessing Officer of Shri Rarneshji G. Thakor i.e. ITO, Wd. 2[2)[5], Ahmedabad in the assessment order dated 20/11/2017 has made the addition of Rs. 8,00,00,000/- of the bank credit in the hands of Shri Vinodbhai J. Sharma. In view of the above, the capacity of the share applicants ....
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....lenders/investor/creditor, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under Section 68 of the Act by the Hon'ble Calcutta High Court in the case of CIT Vs. Precision Finance (P) Ltd. reported in 208 ITR 465 wherein it was held as under: "It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. " 7.1 Now first we proceed to understand the identity of the party. The identity of the party refers existence of such party which can be proven based on evidences. As such the identity of a party can be established by furnishing the name, address and PAN detail, bank details, ITR etc. 7.2 The next stage comes to verify the genuineness of the transaction. Genuineness of transaction refers what has been asserted is true and authentic. A genuine transaction must be proved to be genuine in all respect not merely ....
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.... Rs. 102.93 crore. Likewise, in the case of Shri Rameshbhia Thakor and Vinod sharma, the fund was received from Smt. Hansaben Patel and Shri Kamal Gohil and sources of fund in the hand of Shri Kamal Gohil was again from sale of land property. All these transaction was carried out through banking channel and in support the assessee have submitted banks statement and copy of sale deed of land properties. Therefore, in the given facts and circumstances, the genuineness of the transaction and the creditworthiness of the parties cannot be doubted. 7.8 Be that as it may be, the undisputed fact that the amount of share application money received by the assessee was refunded to the parties. It implies that the assessee was not the beneficiary of the amount received by it as alleged by the AO. Though the share application money has been repaid by the assessee in the subsequent year, but it is difficult to hold that the assessee was the ultimate beneficiary of the impugned amount. Thus, we can assume that the impugned transaction was the genuine transactions between the assessee and the parties. 7.9 It is also pertinent to note that the learned CIT (A) has given categorical finding tha....
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....d by the assessee received without proper share application form or written correspondence may raise doubt but in either of the case, once application money is returned back, which has been established based on the documentary evidence, the credit entries cannot be looked into in isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, we hold that there is no infirmity in the order of the Ld. CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed. 8. The last issue raised by the revenue is that the learned CIT(A) erred in deleting the addition made by the AO for Rs. 10 crores, treating the same as unexplained cash credit under section 68 of the Act. 9. The assessee during the year received Rs. 5 crores each from Shri Rameshbhai Thakor and Shri Vinod Sahrma and claimed that the same was represent loan and advances given in earlier occasion. However the AO treated the same as unexplained cash credit under section 68 of the Act by observing as under: The assessee has received a sum of Rs. 10 crores from Rameshbhai Thakor and Vinod Sharrna during the year. The ass....
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....hinagar vide assessment order dated 29/12/2017 for Assessment Year 2010-11 has made the addition of the credit in bank account of Shri Rameshji G. Thakor of Rs. 27,42,50,000/-. The ITO, Wd. 2(2) (5), Ahmedabad in the assessment order dated 20/11/2017 has made the addition of Rs. 8,00,00,000/- of the bank credit in the hands of Shri Vinodbhai J. Sharma. It has already been held in the preceding ground that identity and creditworthiness of the above persons were proved by the appellant. As regard to genuineness, the Honourable Gujarat High Court in the case of CIT, Surat - 1 Vs. Shree Mahavir Crimpers [2018] 95 Taxman.com 323 (Gujarat) relying upon decision in the case of CIT Vs. Aayach Chandrashekhar Narsangi (supra), where repayment of loan has been made in subsequent year, has held the transaction to be genuine. In the present case, it is not the loan received during the year, but the payment of loan received back from Shri Rameshbhai Thakor and Shri Vinodbha Sharma of the loan given in the preceding year. Therefore, addition u/s. 68 of the I.T Act, 1961 of loan received back is uncalled for and unjustified. In view of the above, the addition made by the A.O is deleted. The ground....
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....Therefore the provision of section 68 will not be applicable on this transaction. Hence the ground of appeal of the Revenue is hereby dismissed. 14.3 In the result appeal of the Revenue is dismissed. Coming to the CO. No. 190/AHD/2019, raised by the assessee 15. The assessee has raised the following grounds of objection: All the grounds in this Cross Objections are mutually exclusive and without prejudice to each other:- 1. The Ld. CIT (A) has erred in law and on facts in confirming the action of the Ld. AO in issuing the notice u/s. 148 of the Act dated 24.03.2017 in the case of the Respondent Company. The issue of notice u/s. 148 of the I.T. Act, 1961 in the case of Respondent Company by the Ld. AO is wrong and bad in law as much as for initiating proceedings u/s. 147, the AO is wholly and merely relied upon the information received from DDIT Inv. Unit- 1(3), Ahmedabad. 2. The Respondent humbly submits that in absence of any tangible material brought on record for recording of the reasons for reopening of the case, the notice issued u/s.148 of the Act for reopening of the case is unjustified and bad in law and the reassessment framed by the AO ....
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....f the I.T. Act, 1961 of Rs. 12,50,00,000/-. 5. The Ld. CIT(A) has correctly held that " the appellant has advanced RslO,00,00,000/- to Shri Rameshbhai Thakor and Shri Vinodbhai Sharma of Rs. 5,00,00,000/- each. The appellant in order to establish identity, creditworthiness and genuineness has submitted PAN name and Address of the above parties. Appellant has submitted copy of bank account from which repayment was made. Appellant has explained even source of fund from which repayment has been made. In the present case it is not the loan received during the year, but the payment of loan received back from Shri Rameshbhai Thakor and Shri Vinodbhai Sharma of the loan given in the preceding year. Therefore, addition u/s.68 of the I.T.Act, 1961 of loan received back is uncalled for and unjustified" and the Ld. CIT(A) following the judicial pronouncement of the Hon"ble Gujarat High Court in the case of Ayachi Chandrashekhar Narsamgji (2014) 42 taxmann.com 251 has rightly deleted the addition made by the AO under section 68 of the I.T. Act, 1961 of Rs. 10,00,00,000/-. 6. The Respondent craves right to add, amend, alter, modify, substitute, delete or modify all or any of t....