TaxTMI 
TaxTMI 
2022 (7) TMI 433
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....mstances of the case and in law the Ld. CIT (A) erred in conforming the initiation of the reassessment proceedings under section 143 (3) r.w.s 147 of the income tax act. 2. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in conforming the view of the ld. AO in creating reasons to believed escaped assessment u/s 147. 3. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the order passed under section 143 (3) r.w.s 147 by the ld. AO which was against the principal of natural justice and barred in law. 4. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the addition of Rs 41,00,000 received on account of share capital and share premium treating the same as unexplained cash credit under section 68 of the income tax act 1961. 5. The Ld. Commissioner of Income tax 49 initiated penalty proceedings under section 234B, 234C, 234D of the Income Tax Act 1961. 6. The Ld. CIT(A) erred in confirming the invoking of penalty proceedings under section 271(1)(C) of the income Tax Act 1961. 7. The assessee craves leave to add further grounds....
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....ted his statement on 16/10/2014. Therefore, there is no tangible material available with the learned AO for reopening of assessment. Further, learned AO has also relied on "some reliable sources" and therefore information is vague. b. On the merits, assessee submitted share application forms, bank statements, share certificate counter foils, statement of source of funds of the investors, board resolutions of the investors, audit report along with balance sheet of investors, return of income filed by the investors, certificate of incorporation along with memorandum and articles of association as well as company Master data of the investors. In case of some of the investors who are registered nonbanking financial companies with the reserve Bank of India, there certificate of registration as nonbanking financial company was also submitted. On the basis of above submissions, assessee submitted that reopening of the assessment is bad and even otherwise assessee has established initial onus u/s 68 of the income tax act and therefore assessee has shown identity and creditworthiness of the depositors as well as genuineness of above issue of share capital. 05. The learned AO rej....
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....esh Agrawal is the tangible material and the return of income filed originally by the assessee was accepted without scrutiny. He relied upon the decision of the honourable Supreme Court in the case of Raymond woolen Mills Ltd versus ITO as well as ACIT versus Rajesh Jhaveri stockbrokers private limited to confirm the reopening. 07. With respect to merits of the case, he accepted that statement-recorded u/s 133A does not have any evidentiary value unless it is act by credible evidence. Despite this, he held that when AO issued notices u/s 133 (6) of the assessee to the investor, it was returned back by the postal authorities. When confronted, assessee obtained all those confirmation of the parties and submitted before the AO, but as those parties have not independently responded to the notice issued by the AO, he confirmed the action of the assessing officer of making addition u/s 68 of the act. He also confirmed the action of the AO for the reasons recorded in paragraph number 9.1 of the assessment order. Thus, he confirmed the addition on merits. 08. Assessee, aggrieved with the order of the learned CIT - A has preferred this appeal. The learned authorised representative fir....
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....se private limited have been considered and addition is deleted. He referred to paper book page number 87 - 88. c. With respect to Shagun merchants private limited he submitted that though this party is not covered by any of the above decisions of the facts are identical. He referred to the decision of the coordinate bench in assessee's own case for assessment year 2010 - 11 wherein the depositor Moto cab finance private limited and Deepa Holdings private limited were also considered and addition with respect to these two parties were deleted. With respect to Shagun merchants private limited he submitted that identical facts and circumstances exists and similar details were submitted. He referred to page number 218 - 253 of the paper book to show that there is not a difference of even slightest amount in the facts, therefore the issue decided by the coordinate bench in all these 6 decisions including all the decisions in the case of sister concerns as well as in case of the assessee squarely applies to this party also. d. Therefore, issue involved in this appeal is squarely covered in favour of the assessee by the above six decisions of the coordinate bench render....
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....). Therefore, we hold that there is a tangible material available with the assessing officer to form a reason to believe that the income of the assessee has escaped assessment. Accordingly, ground numbers 1 - 3 of the appeal are dismissed. 016. Ground number 4 of the appeal is with respect to the addition of Rs. 41 lakhs received on account of share capital and share premium treating the same as an unexplained cash credit u/s 68 of the income tax act by the learned AO and confirmed by the learned CIT - A. We find that on identcals facts and circusmastaces of the case for various years all these shareholder companies are shareholders in different group companies where the ld Ao has made addition u/s 68 o the Income tax Act in the hands of group companies. When the matter reached the coordinate benches all the addition with respect to these parties were deleted as under :- Sr No Assessee ITA No & Date and AY Shareholders 1 Shiv shakti Enclaves Pvt Ltd 629/M/2019 dated 4/6/2021 AY 2010-11 Deep Hodings Limited & Motcab Finance Limited 2 Binni Builders Limitd 1321/M/2021 28/4/2022 Ay 2009-10 Deepa Holdings Limited and Motocab Finance P Ltd 3 ....
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....Mumbai the assessee has issued 92,000 equity shares of Rs. 10/- each paid up at a premium of Rs. 90 per share. The A.O has observed that the assessee company derives interest and rental income. The A.O. required the assessee to submit the details in respect of share application, allotment and premium collected. The A.O found that the investors who have made an application for allotment of shares are related to one of the group concern. Whereas the A.O has relied on the statement of Mr. Rajesh Agarwal who is associate of Lotus Group and has received the share application money from various Kolkata based companies. The A.O on perusal of the facts, is of the opinion that the assessee is associated with Mr. Rajesh Agarwal in availing accommodation entries in the guise of share application money. The assessee has received the share application money along with premium from the existing share holders referred at page 3 Para 3.1.5 of the order as under: "3.1.5 On perusal of the details filed during the assessment proceedings it is seen that the following entities had been allotted share during the year; Shri Shiv Shakti Enclave Pvt Ltd., Mumbai Priyamada Finvest Pvt Ltd,....
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....e CIT(A) has gone through the activities of the investor companies and formed an opinion that the investor companies could not make the investment in the assessee company. Finally CIT(A) having dealt on the catena of judicial decisions has observed that the assessee company cannot substantiate its claim and confirmed the addition u/s 68 of the Act and granted relief in other grounds of appeal and partly allowed the assessee appeal. Aggrieved by the order, the assessee has filed an appeal before the Honble Tribunal. 5.At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in not considering the various aspects of investments and the assessee has filed the financial details in respect of these companies which cannot be overlooked. The Ld.AR referred to the paper book and demonstrated the submissions made before the CIT(A).The Ld.AR mentioned that the assessee has submitted the details/evidences in respect of the five shareholder companies to satisfy the identity, creditworthiness and genuineness of the transaction and substantiated with share application form, copy of bank statement, copy of share certificate, copy of Board resolution, copy of audit report and....
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....nancial statements were dealt and the findings are that the investors companies have a positive net worth and only a small percentage of investments were deployed which cannot be disputed. We considered it appropriate to refer the Hon'ble Tribunal observations at page 11 as under: " The investor companies have positive net worth and only invested 1.6% and 1.2% of their net worth. The assessee submitted Form of application of shares, Photocopy of the cheque receipt towards the share application, photo copy of the bank deposit slip reflecting the deposit of the above cheque, extract of Bank Statement of all subscribers duly highlighting the entries of share money and premium money given by them to the appellant company along with copy of board resolution, resolving the decision of investment into appellant company. To prove the ITA No. 629/Mum/2019 Shri Shiv Shakti Enclave Pvt Ltd., Mumbai genuineness of the transaction the assessee produced the confirmation, bank statement, financial of the lender. Nothing came into noticed that the transaction were found bogus. Retracted statement of Shri Rajesh Agarwal was not liable to be relied upon the unless corroborated by the su....
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....g addition u/s 68 as enumerated by us in the opening paragraphs. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 8.1 Upon careful consideration, the facts that emerges are that the assessee has issued 20.70 Lacs shares to as many as 11 corporate entities during the year as tabulated in para 5.3 above. As evident from documents on record, these shares were issued at face value of Rs.10/- per share. The Share Capital of the assessee increased by Rs.207 Lacs during the year under consideration. In the light of settled legal position as enumerated by us in the opening paragraphs, it is quite evident that the primary onus was on assessee to prove the fulfilment of three ingredients of Sec. 68 viz. (i) identity of the investor; (ii) creditworthiness of the investors; & (iii) genuineness of the transactions. 8.2 To demonstrate fulfillment of these ingredients, the assessee had during the course of assessment proceedings as well as appellate proceedings, furnished following broad documentary evidences with respect to all the 11 entities: - (i) Share Application Form (ii) Copy of Cheque (iii) Copy of Cheque Deposit Slip....
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....riminating material is shown to have been found during the course of survey proceedings. 8.4 We also find that learned CIT(A) has gone by irrelevant considerations to confirm the impugned additions. The object clause of the investor would have no relevance vis-à-vis proposed additions in the hands of the assessee u/s 68. It is trite law that no additions could be made merely on the basis of suspicion, conjectures or surmises. 8.5 The Ld. DR has relied upon the case of Hon'ble Supreme Court in Sumati Dayal Vs CIT (80 Taxman 89) & Durga Prasad More (82 ITR 540 26/08/1971). No doubt that the revenue authorities were not required to put blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the documents produced before them. However, we find that no such inquiries have been made by the authorities except for the allegations that the share capital was bogus in nature. Nothing was brought on record that to substantiate the fact that the assessee's unaccounted money was routed in the books in the garb of share capital. 8.6 The entirety of facts and circumstance....
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....unds certificate (vii) Copy of Audit Report along with financial statements of the investor entity (viii) Copy of ITR acknowledgement of the investor entity (ix) Copy of PAN Card (x) Copy of Certificate of incorporation of investor entity (xi) Memorandum & Articles of Association of investor entity (xi) Company Master Data showing status as active (xii) Copy of Board Resolution (xiv) Copy of RBI certificate of registration Upon perusal of these documents, it could be said that the primary onus as casted on the assessee in terms of the requirement of Section 68, was duly fulfilled and the onus was on revenue to controvert the evidences furnished by the assessee. However, we find that nothing has been brought on record by the revenue to substantiate the fact that the assessee's unaccounted money was routed in the books in the garb of share capital. It is trite law that no addition could be made merely on the basis of allegation, suspicion, conjectures or surmises. Upon perusal of assessee's written submissions as placed on record, another pertinent fact to be noted is that all the 16 investor entities has....
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....rders of the coordinate bench in the case of assessee and Group companies emanating out of same facts , we allow ground no 4 of the appeal. 019. Ground No 5 to 7 are consequential, premature, or general, hence dismissed. 020. In the result appeal of the assessee is partly allowed. Order pronounced in the open court on 07.07.2022. ============= Document 1 Sr.No Total Name and No of Money Money Address share received received money allotted as share as share received premium 1 M/s Anmol 26000 260000 2340000 2600000 commerce Pvt Ltd., Kol kata 2 M/s 25000 250000 2250000 2500000 Document 2 N Name Net wor th of o. in ves tor sh ar e of Amo un t of Sh are cap it al of Inv es tor en tit ies in Reserves of ves tor ent it ies cap it al inves tor inves ted en tit y 1 Limeligh t 15,0 0,0 00 16,8 5,00 0 3,01,30,8 06 3,18,15,8 06 De al co m P Ltd Cl ass ic 5,0 0,00 0 6,5 1,800 2,70,49,0 45 2,77,00,8 15 2 Comm otr ade P Ltd 3 Divya Prakash 25,0 0,0 00 34,6 8,5 3,145 Suppliers P vt Ltd 4 Gol dy 3,11,65,1....