TaxTMI 
TaxTMI 
2021 (11) TMI 1106
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....assessment proceedings, the AO noted that the assessee company has received large share premium of Rs.9,13,50,000/- on 1015000 shares @ Rs.90/- each and equity share capital of Rs.1,02,50,000/- on 10,25,000 shares @ Rs.10/- each together totaling to Rs.10,16,00,000/-. From the various details filed by the assessee, the AO noted that the share premium/share application money have been shown to have been received from the following 19 companies 12 of which are located at Kolkata and 7 are located at Delhi and the details of which are as under:- 2.1 To examine the identity, genuineness and credit worthiness of the abovementioned companies, the AO issued notice u/s 133(6) to all the above 19 companies on 19.11.2014. However, there was no compliance to the said notices issued u/s 133(6) for which the AO held that the genuineness of the transaction could not be verified. He, therefore, again, directed the assessee to produce the parties for his examination on oath. However, no reply was received. The AO, thereafter, issued summons u/s 131(1) to M/s Direct Mercantile Company Pvt. Ltd & Legency Mercantile Pvt. Ltd calling for their attendance in this regard on 09.01.2015 along with the fo....
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....nt for A.Y. 2012-13 2013-14 2014-15 1 Swabhhumi Agency Pvt. Ltd. Yes Yes 2 Swarnim Distributor Pvt. Ltd. Yes Yes 3 Cindrella Commodeal Pvt. Ltd. Yes 4 Good Field Pvt. Ltd. Yes Yes 5 Solty Financial Consultant Pvt. Ltd. Yes Yes 6 Function Distributor Pvt. Ltd. Yes Yes 7 Helpful Vintrade Pvt. Ltd. Yes Yes Yes 8 Justify Vanija Pvt. Ltd. Yes Yes 3.1 Copies of scrutiny assessment orders in the aforesaid cases were filed before ld.CIT(A). It was accordingly argued that it cannot be said that the subscriber companies do not exist at the addresses provided. The report of the ITO (Inv.) is therefore not correct and cannot be relied upon. 3.2 So far as the objection of the AO that the subscribers were not produced in spite of opportunities provided to the assessee, it was submitted that the assessee has submitted sufficient evidence to prove the ingredients of section 68 of the I.T. Act, i.e. identity and creditworthiness of the subscriber and genuineness of transaction. Relying on various decisions including the decision of the Hon'ble Delhi High Court in the case of CIT vs. Dwarkadhish Inve....
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..../- u/s 68 of the Act in view of the following facts and circumstances of the appellant's case:- 1. As per the assessment order the appellant company had provided the required documents to the Ld. AO to establish the identity of the subscriber, confirmation, creditworthiness of the subscriber by filing copy of ITR, final accounts duly certified by the auditor, the copy of bank statement of the subscriber company. 2. The Ld. AR has submitted that all the Investing Companies were duly incorporated by due process of law under the Companies Act, 1956 and all the investing companies continue to exist on the records of the ROC as well as Income Tax department. The notices were served in most of the cases u/s 133(6). None of the investor has denied or contradicted the claim of the appellant. Most of the investors independently verified the transaction in response to notices u/s 133(6). The appellant had no legal rights over the investors to enforce their attendance before the AO. On the contrary the AO was legally competent to compel and ensure attendance of the investing companies/witnesses u/s 131 with ample authority to even coerce or penalise them if they failed to appear. Section ....
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....king the tightrope of sections 68 and 69 of the Income -Tax Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbours doubts of the legitimacy of any subscription, he is empowered, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company" Hon'ble Supreme Court endorsed the aforesaid proposition of law by rejecting the SLP stating that "We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the Assessee Company From alleged bogus shareholders, whose names are given to the AO, then theDepartment is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment". Further, Hon'ble jurisdictional High Court in the case of Gangeshwari Metal P Ltd (2013) 30 Taxmann.com 328 where in the Hon'ble Court has held that "There are two types of cases, one in which the Assessing Officer carries out the exercise which is required in law and t....
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....es on premium is not justifiable as the matter pertains to financial year 2011-12 as there was no restriction on issue of shares on premium until financial year 2011-12. Restrictions u/s 56 was placed on issue of shares on premium from AY 12- 13 onwards hence not relevant for the year under consideration. > A mere perusal of the said documents would reveal that the onus on the Appellant Company with regard to the duties enjoined upon it regarding receipt of cash credit have been fulfilled and discharged and it cannot be said that the Appellant Company had failed to establish the creditworthiness of the cash creditors and genuineness of transactions. As such no adverse inference is warranted nor justified or sustainable on the facts of the case; > The AR of the appellant has submitted that the AOs of investing companies have made assessments u/s 143(3) of the Act in majority of investing companies and nothing wrong has been found by them against those investing companies. When the assessments u/s 143(3) have been completed and everything has been found to be in order there can be no justification for suspicion on existence of the investing companies on the basis of inspector's r....
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....rt in the case of m/s Lovely Exports Pvt. Ltd. (2008) 216 CTR 195 (SC) disregarding the fact that the facts of the assessee's case are completely different from the facts of the case before the Hon'ble Apex Court." 4. "The appellant craves leave to add. Alter or amend any of the ground(s) of appeal before or during the course of hearing of the appeal," 5. The ld. DR strongly challenged the order of the CIT(A) in deleting the addition made by the AO. He submitted that the AO, after thorough analysis of the facts of the case had given a finding that the Kolkata based companies are non-existent and the assessee failed to prove the three ingredients of provisions of section 68 of the Act, i.e., identity and credit worthiness of the investor companies and the genuineness of the transaction. He submitted that the ld.CIT(A), without properly appreciating the facts, has deleted the addition which is not justified under the facts and circumstances of the case. 6. The ld. Counsel for the assessee, on the other hand, strongly supported the order of the CIT(A). He submitted that the basic reason for which the AO made the addition u/s 68 is that the shareholders were not found at th....
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....1991] 192ITR 287 (Delhi) 9. Lovely Exports (P) Ltd. [2008] 299 ITR 268 (Delhi) 10. Lovely Exports (P) Ltd. [2008] 216 CTR195 (SC) 11. A-One Housing Complex Ltd. [2008] 299 ITR (AT) 327 (Delhi) 12. CIT v. Divine Leasing & Finance Ltd. [2007] 158 Taxman 440 (Delhi) 13. CIT vs. M/s Vacmet Packaging (India) (P) Ltd. [2014] 45 taxmann.com 204 (Allahabad) 14. CIT vs. M/s Vacmet Packaging (India) (P) Ltd. [2014] 45 taxmann.com 204 (Allahabad) 15. CIT v. Apex Therm Packaging (P) Ltd. [2014] 42 taxmann.com 473 (Gujarat) 16. CIT v. Morani Automotives (P) Ltd. [2014] 45 taxmann.com 473 (Rajasthan) 17. ACIT v. Bahubali Dyes Ltd. 2015] 55 taxmann.com 357 (Delhi - Trib.) 18. CIT v. Shiv Dhooti Pearls & Investment Ltd. [2015] 64 taxmann.com 329 (Delhi) 19. CIT v. Five Vision Promoters (P) Ltd. [2016] 65 taxmann.com 71 (Delhi) 20. CIT v. SVP Builders (India) Ltd. [2016] 67 taxmann.com 5 (Delhi) 21. CIT v. Anshika Consultants (P) Ltd. [2015] 62 taxmann.com 192 (Delhi) 22. CIT v. Rama Krishna Jewellers [2014] 52 taxmann.com 23 (Delhi) 23. ITO v. Neelkanth Finbuild Ltd. [2015] 61taxmann.com 132 (Delhi - Trib.) 24. Gulshan Verma v. DCIT, [2015] 61taxmann.com 178 (Chandi....
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....the SLP filed by the Revenue as reiterated in PCIT vs. Hi-Tech Residency (P) Ltd. (2018) 96 taxmann.com 403 (SC). 6.5 He accordingly submitted that since the order of the CIT(A) is in accordance with the law and all the investor companies are assessed u/s 143(3) in the very same assessment year and the concerned AOs have verified their investments while calculating the disallowance u/s 14A on the basis of 0.5% of the average investments and this being the first year of the assessee company, no addition u/s 68 of the Act could have been made. 7. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the AO, in the instant case, made addition of Rs.10,15,00,000/- u/s 68 of the IT Act on the ground that the assessee company has received share premium of Rs.90/- each at face value of Rs.10/- on 10,15,000/- shares from 19 companies and the shareholders were not found at their respective addresses and the assessee could not produce the directors of the investor companies. We find, the ld.CIT(A) deleted the ....
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....passed the order u/s 143(3) on 25th March, 2015 and for AY 2013-14, the order u/s 143(3) was passed on 29th January, 2016, copies of which are placed at pages 54 to 57 of the paper book. In this case also the AO has considered the average investment at Rs.12,23,75,000/- while computing the disallowance u/s 14A for AY 2013-14. Similarly, we find, the AO passed the order u/s 143(3) on 26th March, 2015 for AY 2012-13 and on 29th January, 2016 for AY 2013-14 in the case of M/s Helpful Vintrade Pvt. Ltd., copies of which are placed at pages 58 to 61 of the paper book. In this case also the AO has considered the average investment at Rs.13,21,25,000/- for calculating the disallowance u/s 14A of the Act. We find, the assessee has filed the order u/s 143(3) in the case of M/s Helpful Vintrade Pvt. Ltd. for AY 2014-15 passed on 24th August, 2016, copy of which is placed at pages 62 and 63 of the paper book wherein the AO has considered the average investment at Rs.12,71,55,000/- while completing the disallowance u/s 14A. Similarly, in the case of M/s Justify Vanijya Pvt. Ltd., the AO has passed the order u/s 143(3) on 24th March, 2015 for AY 2012-13 and on 29th February, 2016 for AY 2013-14....