AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 346
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.... 2. Whether on the facts and in' the circumstances of the case, Ld. CITCA) was justified in deleting the addition of Rs. 1,60,00,000/- made by the A.O. where no personal attendance was made by any director of the share allottee companies during the course of assessment proceedings and as such identity & creditworthiness of the creditors and genuineness of the transactions could not be verified. 3. The principles which has been laid down by the Hon'ble Supreme Court in the case of Pro CIT(Central] -1, Kolkata vs NRA Iron & Steel Pvt. Ltd. ( 412 ITR 161) suggests that lithe assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee". In the facts and under the circumstances of the case, the assessee company has failed to do so other than submission of mere statements of various kinds. Thus, the decision of the Ld. CIT(A) is erroneous in holding that the raised share capital was not the assessee's own income. 4. The principles which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT(C....
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....ssessee has received share application money amounting to Rs. 1,60,00,000/- against issue of 40,000 shares having face value of Rs. 10/- per share with a premium of Rs. 190/- per share. Ld. AO sought details and explanations on this amount of share capital from the assessee and issued summon u/s. 131 of the Act to the directors of the assessee. Ld. AO noted that none appeared before him. Not convinced by the details and documentary evidence placed on record, Ld. AO by applying the test of human probability, made the addition of the said amount of Rs. 1,60,00,000/- as unexplained cash credit u/s. 68 of the Act. Aggrieved, assessee went in appeal before the Ld. CIT(A), who after elaborately dealing with the facts of the case on all the three aspects of section 68 of the Act in respect of identity, creditworthiness of the share subscribing companies and also the genuineness of the transactions, deleted the addition so made. Aggrieved, Revenue is now in appeal before the Tribunal. 4. Before us, Shri Rajeeva Kumar, Advocate represented the assessee and Shri Vijay Kumar, Addl. CIT represented the department. 5. Before us, Ld. Sr. DR placed reliance on the order of the ld. AO. He al....
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....ome tax returns were processed u/s. 143(1) of the Act by the department, copy of their respective intimations are placed on record in the paper book. In the case of Grow Fast Realtors Pvt. Ltd., assessment was completed u/s. 143(3) of the Act for AY 2012-13 vide order dated 02.06.2014. It was thus emphasized that identity of all the nine share subscribers is well established before the Department and is beyond any doubt. 6.4. To establish the creditworthiness of these nine share subscribing companies, details relating to their net-worth and the investment made by them in the assessee were furnished along with their respective bank statement and audited financial statements. The details of sufficiency for net-worth to make investment in the share capital of the assessee is tabulated as under : 6.5. Ld. Counsel thus submitted that the above table, unequivocally testifies and proves that the subscribers had sufficient own fund for making investment in the share capital of the assessee. 6.6. It was further submitted on the aspect of genuineness of the transactions that the amounts were invested by the subscribers through proper banking channel which is duly reflected in the re....
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....f assessments/intimations issued by the department for all the share subscribers, which testifies the identity of these nine share subscribers. 7.1. From the perusal of the paper book and the documents placed therein, it is seen that all the share applicants are (i) income tax assessees, (ii) they are filing their income tax returns, (iii) share application form and allotment letter is available on record, (iv) share application money was made by account payee cheques, (v) details of the bank accounts belonging to share applicants and their bank statements, (vi) in none of the transactions there are any deposit of cash before issuing cheques to the assessee, (vii) all the share applicants are having substantial creditworthiness represented by their capital and reserves. 7.2. We also take note of the elaborate and well reasoned findings and decisions arrived at by the Ld. CIT(A) by taking into consideration all the details and documents placed on record. The relevant findings and decisions from para 5.8 are extracted as under: "5.8. Basically the law requires documentary evidences on record in dealing with the issue of authenticity. It is not the case of the AO that n....
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....rein it was held as follows: "After hearing the learned advocate for the appellant and after going through the materials on record, we are at one with the Tribunal below as well as the Commissioner of Income-tax (Appeals) that the approach of the Assessing Officer cannot be supported. Merely because those applicants were not placed before the Assessing Officer, such fact could not justify disbelief of the explanation offered by the assessee when details of Permanent Account Nos. payment details of shareholding and other bank transactions relating to those payments were placed before the Assessing Officer. It appears that the Tribunal below has recorded specifically that the Assessing Officer totally failed to consider those documentary evidence produced by the assessee in arriving at such conclusion. We, therefore, find no reason to interfere with the decision passed by the Commissioner of Income-tax (Appeals) and the Tribunal below and answer the questions formulated by the Division Bench in the affirmative and against the Revenue. The appeal is, thus, dismissed." 7.4. Before arriving at our finding, we refer to the following judicial precedents to buttress our o....
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..... The inbuilt safeguard provided in section 68 cannot be ignored by the Assessing Authority at his sweet will. The Assessing Authority can add the share capital as undisclosed income if no explanation is offered by the assessee. But since the details/explanations were offered, it was incumbent on the Assessing Authority to examine the same and arrive at a cogent conclusion. Assessing Officer having failed to discharge such obligation the addition is not sustainable in law.., case of CIT vs. Lovely Exports Ltd. (2008) 216 CTR 195 (SC) that where share application money." 7.5. In the course of assessment proceeding, Ld. AO directed the assessee to produce the director of the assessee and also the directors of the subscriber companies along with relevant documentary evidence and details which was not complied with in full. Ld. Counsel submitted that mere non-appearance of directors of subscriber companies is no basis for invoking provisions of section 68 of the act for which he placed reliance on the decision of Hon'ble Supreme Court in the case of CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) wherein it was held as under: "In this case the assessee had giv....
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....f section 68 of the Act has been brought in by Finance Act 2012 w.e.f. 01.04.2013 as per which "where an assessee is a company (not being a company in which public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory unless: a) the person being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited and b) such explanation in the opinion of the Assessing Officer has been found to be satisfactory." Since the instant appeal pertains to assessment year 2012-13, and the said amendment brought in by Finance Act 2012 is effective from 01.04.2013, it is not applicable on the case before us. Even otherwise, it is not in dispute that the assessee has filed all the relevant documents of the share subscriber companies and further, in order to prove the source of source, copies of bank statements, audited balance sheets of all the nine subscriber companies are placed on record. 10. As far as the....
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....ri Pratisthan (P) Ltd (Share Applicant) SI Particulars of documents 1. 2. (1) Copy of share application (II) (LES) (iv) (v) 3. M/s. Uniworth Builders (P) Ltd (Share Applicant) Confirmation of subscription of 7,000 shares & source of fund Relevant copy of bank statements Income Tax Return Filing Acknowledgement for the AY: 2012-13 Audited Accounts for the year ended 31.03.2012 Page A-R 1 2 3 4 5-10 (i) Copy of share application (!!!) Confirmation of subscription of 7,500 shares & source of fund Relevant copy of bank statements 11 12 13 (v) (iv) Income Tax Return Filing Acknowledgement for the AY: 2012-13 Audited Accounts for the year ended 31.03.2012 4. M/s. Priority Suppliers Pvt Ltd (Share Applicant) (i) Copy of share application (ii) (iii) Confirmation of subscription of 8,000 shares & source of fund Relevant copy of bank statements (iv) (v) 5. Income Tax Return Filing Acknowledgement for the AY: 2012-13 Audited Accounts for the year ended 31.03.2012 M/s. Federal Agency Pvt Ltd (Share Applicant) (i) Copy of share application (II) ....