TaxTMI 
TaxTMI 
2022 (11) TMI 911
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....re duly issued and served upon the assessee. The AO had issued notice u/s 142(1) along with questionnaire calling upon the assessee to furnish the various details/information which were filed before the AO during the course of hearing. The AO on the basis of said details observed that the assessee had received during the year share application money of Rs. 20,20,00,000/- from three companies which are as under: Sl. No. Name of the applicants Amount received in Rs. 1. Iota Software & services (P) Ltd 2,22,00,000/- 2. Paras Ispat Ltd. 11,70,00,000/- 3. Parashnath Re-Rolling Mills Ltd. 6,28,00,000/- Total 20,20,00,000/- Thereafter the AO issued letter calling upon the assessee to furnish the further details such as the bank statements, books of accounts of the assessee, profit and loss accounts, balance sheets, returns of income of the investors and also the profit and loss accounts, balance sheets, returns of income of all the directors of the investor companies. The AO also required the assessee to present for cross-examination for the purpose of verification of these transactions. Thereafter the AO observed on the basis of docu....
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....ted Rs. 2,22.00.000/- in the appellant company. From the detailssubmitted, I find that the directors of the appellant company i.e. Mr. Anil Kumar Jain and Mr. Vipin Kumar Jain were alsothe directors of the applicant company. Thus, both the companies belonged to the same group having common directors. Also, I find that appellant company was also holding 5.49% of the shares in the applicant company resulting in the cross holding of shares. This company was incorporated on 16.12.1999 and was having company identification number U72200WB1999PTC090772. On examination, the Audited accounts available at the paper book at page 30-37, it was seen that the company was having a paid up capital with free reserves and surplus of Rs. 12,95,11,213/- as on 31/03/2012. On examination, the ITR Acknowledgement and the copy of PAN Card submitted in the paper book it was seen that the company duly filed its return of income before ITO Ward 2(3), Kolkata and was having PAN AAACI8312G. Also, I find that the share application was made through proper banking channel. The copy of the bank statement of the Company is duly available in the paper book. The details of source of funds from which this co....
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....ing company identification number U27109WB2005PTC102703. On examination, the Audited accounts available at the paper book at page 148-159, it was seen that.,the company was having a paid up capital with free reserves and surplus of Rs. 19,35,28,972/- as on 31/03/2012. On examination, the ITR Acknowledgement and the copy of PAN Card submitted in the paper book it was seen that the company duly filed its return of income before ITO Ward 9(3), Kolkata and was having PAN AADCP611 ID. Also, I find that the share application was made through proper banking channel. The copy of the bank statement of the Company is duly available in the paper book. The details of source of funds- from which this company had made the share application are also available from a perusal of the bank statement and other documents filed in the paper book. On perusal of the submission, I also find that the reason behind the share capital raised by the appellant as explained is the expansion of business undertaken by the appellant. It has been brought on record that business of the appellant has increased remarkably -in the year concerned. The turnover of the appellant has been increased by Rs. 362,36,32,....
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....g channels and the applicants were having sufficient owned funds to make investments in the appellant company. Also, on going through the Master details of the companies on the MCA site, it was noticed that all the companies are active as on date. Thus, the identity as well as the creditworthiness of the applicants has been duly proved by the appellant. The A.O. has not dealt with the objections raised by the appellant in their merit but has rejected such objections summarily. The A.O. has not been able to find any discrepancy in the details filed by the appellant. The evidences filed by the appellant have not been found to be false or incorrect. Also, the appellant company is a renowned manufacturing company, the money was raised was to fund the projects undertaken by the appellant company. Thus, the reason behind raising the share application money has also been explained by the appellant company. Thus, the genuineness of the transaction has also been proved by the appellant company. Therefore, all the 3 ingredients of section 68, i.e. identity, genuineness and creditworthiness have been duly established by the appellant company. I further find that it ....
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....cts of the present case, both the nature & source of the share application received was fully explained by the appellant. The appellant had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. It has been established that all the share applicants are income tax appellant's regularly assessed to tax. The transaction are made through proper banking channel as evident from the bank statements filed by the appellant. For proving the identity of share applicants, the appellant furnished the name, address, PAN of share applicants together with the copies of balance sheets and Income Tax Returns. Thus, the appellant has given all the documentary evidences to prove the 3 ingredients of section 68, i.e. identity & creditworthiness of the applicants and genuineness of the transaction. I find that there is nothing on record or any adverse finding of the AO other than generalized allegations that the impugned transaction entered by the appellant is bogus or unexplained. There is no direct evidence or cogent material was brought on record by the assessing officer to implicate the appellant. The Assessing Officer did not/choose not to make....
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....t and the AO has not made any adverse comment on the documents filed. All the adverse inferences drawn are basically figment of his mind and are not backed by material on record or facts of the case. The addition made by the AO is in a routine manner on assumptions and surmises whereas the comment offered by the appellant against the findings of remand report clearly established all the ingredients as discussed. Therefore, on analyzing of the facts as well as the evidence produced by the appellant, I find that the Assessing officer has not brought any material on record to controvert the fact duly established by the supporting evidences. The inability of the AO to verify the explanation offered by the appellant is not a valid ground to reject the explanation. Reliance in this regard is placed on the decision of the Hon'ble Madras High Court in the case of S Hastimal vs. CIT reported in 49 ITR 263(Mad). The appellant is entitled to have evidence produced to be considered and an inference to be drawn therefrom. The rejection of an explanation of the appellant by ignoring to consider important pieces of evidence is an error of law. Reliance in this regard is placed on the....
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....details thereof have been given at page no. 2 of the assessment order in para 4. The Ld. D.R. submitted that the assessee has not furnished the necessary evidences proving authenticity, genuineness and creditworthiness of the investors and therefore the AO has rightly added the same u/s 68 of the Act by citing various reasons such as transactions being sham and bogus , assessee not having regular business transactions or regular acquaintances with the investors and assessee not presenting himself for cross-examination nor the assessee is proving that the funds were received from these investor companies. The ld. D.R. submitted that though the remand report which was called by the Ld. CIT(A) from AO and reproduced in the page no. 36 of appellate order however the said report is too sketchy as AO did not discuss anything about his examination of evidences/details furnished by the assessee during the course of remand proceedings. Thus the AO in the remand proceedings has failed to discharge his duties cast upon him by Act. The Ld. D.R. referred to page no. 48 of the appellate order by Ld. CIT(A) and submitted that the documents which were produced before the Ld. CIT(A) were not availa....
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....all these details were duly placed before the AO during the assessment proceedings. The Ld. A.R submitted by drawing our attention to para 3.4 of the appellate order wherein the share holdings of the assessee company in the investors company were given and contended that the AO has overlooked all the facts and his conclusion was wrong and based merely on surmises and conjectures without appreciating the facts available on record before him. The Ld. A.R. then referred to page 7 of the appellate order in para 4 wherein the Ld. CIT(A) reproduced the reply to the remand report filed by the assessee. The Ld. A.R. submitted that this remand report was called for by the Ld. CIT(A) on various issues and evidences on which the AO was holding the some wrong notion and then the Ld. A.R. referred to page 36 of Ld. CIT(A)'s order wherein the Ld. CIT(A) has reproduced remand report and in para 1 in the remand report the AO has stated that all the evidences referred in the paper book from Sl. No. 1 to 161 are not additional evidences meaning thereby that all these evidences before the AO. Referring the documents/evidences as filed by the assessee in respect of share capital , the Ld. A.R. also su....