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2022 (4) TMI 1507
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.... case of the assessee was also covered in the search u/s 132(1) of the IT Act. During the course of search carried out at different premises of M.M. Aggarwal group, documents, data storage devices, etc. belonging to the assessee were found and seized. 2.1. The A.O. during the course of assessment proceedings noted that the assessee company has received share capital and share premium of Rs.4,87,99,855/- including share premium of Rs.4,61,62,025/- on account of issue of 263783 equity shares of Rs.10/- each at a premium of Rs.175/-. 3. The AO noted that during the course of pre search enquiries, it was gathered that the assessee group had received substantial amount of share capital and share premium from various non descript and shell companies which did not have any factual identity and, creditworthiness. It was also gathered that the investment by such entities with the assessee group was mainly in the form of share capital which was subscribed at an abnormally high premium which lacked genuineness on their part to have agreed to subscribe at such premium without having received any return either in the form of dividends or appreciation in the value of their investment till ....
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....s MSG Finance Pvt. Ltd for the F.Y. 2010- 11, aggregating to Rs. 12,13,36,000/-. 8. The AO, in order to verify the issue called for the bank statements of some of the investor companies for his examination. He observed from the bank statements that these are back to back transactions of same amount i.e., credit and debit of the same amount on the same date/following dates with no other deposits and transactions. According to the AO, no investor was produced by the assessee group which clearly shows that the assessee failed to furnish any documentary evidence regarding the existence of such investors. According to him, mere filing of confirmations from parties does not discharge the onus cast on the assessee. Further, according to him, it cannot be believed that investors invest their crores of rupees in a non-listed company without any return and the recipient company even does not have the particulars/contact details of such investors. The AO also observed that the credit worthiness of the investors is not proved since the source of funds with these purported investors remained highly suspicious. Rejecting the various explanations given by the assessee and relying on various de....
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....like - credit worthiness, identities and genuineness of transaction. Further AO has made such addition stating that the income declared by the investor companies over the years is negligible. The bank statements of the investor filed by the Ld. AR clearly indicates the availability of funds in his hands. The observation of the AO is against the material on record because the investor is not a company but an individual. Further, even the AO himself has admitted in para 4.22 of the assessment order that the investor is a salaried employee. iii. The AO has also referred to the statements of Sh. Pradeep Kumar Shastri and Sh. Varinder Pal Singh Kandhari but these statements pertain to M/s Indogulf Infrastructure & Investment Pvt. Ltd. and M/s MSG Finance India Pvt. Ltd. and hence, are not relevant in the case of the appellant. The investor, Sh. Tar an Pal Singh Kandhari is one of the promoter director of the appellant company. During AY 2015-16, Sh. Taran Pal Singh Kandhari has drawn salary amounting to Rs. 24,00,000/- from appellant company itself. Source of investment is as under:- S. No. Particulars Amount(Rs.) 1 Unsecured Loan (Details are as under) 4,78,0....
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....brought any material on record to disprove the contents of these documents filed before AO. iv. As regards the valuation of shares at a premium of Rs. 175/-, the Ld. AR submitted the valuation report from M/s H. S.& Associates, Chartered Accountants, wherein value of shares is calculated at Rs. 185/- per shares on the basis of net worth per the book value as per audited accounts. Therefore, basis above referred valuation report and the audited accounts, the premium of Rs. 175/- per share is found justified as per rule 11UA. Extracts of valuation report filed by the ld. AR is reproduced hereunder: iv. Respectfully following the above judgments, which are on similar factual matrix, it can be reasonably inferred that no specific corroborative evidence has been brought on record by Assessing Officer to prove that the equity subscription is an accommodation entry. Besides, appellant has also discharged its onus and submitted all the documentary evidence in respect of the investment. Even the AO has mentioned in the assessment order that all the necessary documents have been filed by the assessee. He has also not brought any material on record to disprov....
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....hat the ld.CIT(A) without any valid reason has deleted the addition which is not justified under the facts and circumstances of the case. Relying on various decisions he submitted that the order of the ld.CIT(A) be reversed and the order of the AO be restored. In his alternate contention, he submitted that the matter may be remanded back to the file of the AO. 12. The ld. Counsel for the assessee, on the other hand, heavily relied on the order of the CIT(A). He submitted that during the period under consideration, the assessee company issued 263783 equity shares of face value of Rs.10/- each at a premium of Rs.175/- per share to Shri Taran Pal Singh Kandhari, one of the shareholders and raised share capital amounting to Rs.4,87,9,855/- including the share premium of Rs.4,61,62,025/-. He submitted that during the course of assessment proceedings, the assessee, in order to prove the identity and credit worthiness of the investor and the genuineness of the transaction, had filed the following details:- a. Form PAS-3 filed before ROC b. Confirmation from the investor c. Statements of bank account of the investor showing payments towards share application m....
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.... ii) Confirmation from lenders; iii) Bank statements of lenders showing payment towards loan; iv) Copy of PAN Card of lenders; & v) Copy of Acknowledgement of income tax return filed for the AY 2015-16 by lenders along with the copy of Audited financial statements for the year ended 31-03-2015. 16. He submitted that M /s SE Finvest Pvt. Ltd., had declared revenue from operations at Rs.212.38 lakhs besides other income of Rs.53.90 lakhs. The company had net worth of Rs. 3892.34 lacs as on 31.03.2015. So far as M/s Glacier Communication Pvt. Ltd., is concerned, this sub creditor is having revenue from operations of Rs. 136.10 lacs besides other income of Rs. 127.27 lacs which includes Rs.126.62 lacs by way of interest on loan during AY 2015- 16. In fact, as on 31.03.2015, the company is having loans and advances of Rs. 1715.05 lacs and net worth of Rs. 2251.85 lacs. 17. So far as M/s Glacier Tradex Pvt. Ltd., is concerned, this sub creditor is having revenue from operations of Rs. 50.10 lacs besides other income of Rs. 29.30 lacs which includes 28.56 lacs by way of interest on loan during AY 2015-16. In fact, as on 31.03.2015, the company is hav....
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....ssessee has not only explained the source, but, source of the source by giving all possible details of the sub creditors including their bank statements, turnover, income etc., and the bank statements of the investor as well as sub creditors were filed before the AO which clearly indicates the availability of funds in their hands, the addition made by the AO is not justified. He submitted that the ld.CIT(A) after considering the various details has deleted the addition and, therefore, the same should be upheld. 25. So far as the observation of the AO at para 4.12 of assessment order that no investor has been produced by the assessee group is concerned, he submitted that the assessee was never asked to produce any investor. This issue has been created for the first time in the assessment order itself. Since there is only one investor, who is a shareholder, therefore, there could not be any reference to "No Investor". The finding of the AO indicates that there are many investors and none was produced. He submitted that the investor being promoter, could have been easily produced had the AO asked for the same. Referring to the assessment order, he submitted that the AO nowhere has ....
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....IT vs., M/s. Pranidhi Holdings Pvt. Ltd., 2018-TIOL-622-HCDEL- IT. 3. CIT vs., Ganeshwari Metals Pvt. Ltd., 2013-TiOL-96-HC-Del-IT. 4. CIT vs., Kamdhenu Steel & Alloys Ltd., 2012-TIOL-236-HC-Del.- IT. 5. CIT vs., Oasis Hospitalities Pvt. Ltd., 2011-TIOL-69-HC-Del.-IT 6. CIT vs., Pratham Projects & Finlease Ltd., ITA.638/2010 Delhi High Court. 7. CIT vs., Winstral Petrochemicals Pvt. Ltd., [2010] 41 DTR 139 (Del.) 8. Jindal ITF Ltd., vs., DCIT [TS-506-ITAT-2020 (Del.)] 9. ITO vs., Computer Home Information Plus Pvt. Ltd., ITA.No.5680/Del./2016 dt.24/05/2019. 10. Prabhatam Investment Pvt. Ltd., vs., ACIT 2017-TIOL-714-ITATDel. 11. ITO vs., R.B. Horticulture & Animal Projects Co. Ltd., 2016- TIOL-510-ITAT-Kol. 12. DCIT vs., Nirmal Minda 2018-TIOL-731-ITAT-Del. 28. We have heard the rival arguments made by both sides, perused the orders of the AO and 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 assessee in the instant case has issued 263783 equity shares of Rs.10/- each at a premium of Rs.175/- per share to....
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....find the assessee while explaining the capacity of loan creditors who had given unsecured loan of Rs.4,78,00,000/- to Mr. Taranpal Singh Kandhari had filed the following details : i) Extracts from MCA ii) Confirmation from lenders iii) Bank statements of lenders showing payment towards loan iv) Copy of PAN Card of lenders v) Copy of Acknowledgement of income tax return filed for the AY 2015-16 by lenders along with the copy of Audited financial statements for the year ended 31- 03-2015. 29.3. A perusal of the details filed by the assessee in the paper book in respect of the above 08 parties who had extended unsecured loan of Rs.4,78,00,000/- shows that they have sufficient capacity to extend the loan to Mr. Taranpal Singh Kandhari who in turn had invested in the shares of the assessee company. There is no evidence on record to show that the funds of the assessee company has gone to these persons which in turn had come back to the assessee company. 29.4. Secondly, the A.O. has referred to the statements of Shri Pradeep Kumar Shastri and Shri Varindar Pal Singh Kandhari. However, these statements pertain to M/s. Indogulf Infrastructu....
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....e 11UA on the basis of book value of the assets and liabilities as appearing in audited accounts of the appellant has been determined at Rs.185 per share and the assessee has also raised its share capital at a value of Rs.185 per share including premium. Therefore, from perusal of the valuation report and audited accounts of the appellant, it is very clear that the issue price of shares is justified. 29.8. We find the Hon'ble Delhi High Court in the case of PCIT Vs M/s Pranidhi Holdings Pvt Ltd., 2018-T10L-622-HC-DEL-IT held that if initial burden of proof stood discharged by assessee and the AO fails to comment upon relevant documents produced before the FAA during appellate proceedings, addition under section 68 of the I.T. Act, 1961 cannot be sustained. 29.9. We find the Hon'ble Delhi High Court in the case of CIT vs. Ganeshwari Metals Pvt. Ltd., 2013-TIOL-96-HC-DEL-IT held as under: "3...In response to the query with regard to the said sum of Rs.55.5 lakhs, the respondent/ assessee had furnished various documents in support of the share application money received by it. Those documents included: - (i) Complete names and addresses of the share applicants ....
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....is to be demonstrated by showing that the assessee had, in fact, received money from the said shareholder and it came from the coffers from that very shareholder. When the money is received by cheque and is transmitted through banking or other indisputable channels, genuineness of transaction would be proved. Other documents showing the genuineness of transaction could be the copies of the shareholders register, share application forms, share transfer register, etc; As far as creditworthiness or financial strength of the credit/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharged the onus cast upon him. Thereafter, it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the AO and he cannot go into the realm of susp....
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....the amount of share application money to the income of the assessee." 29.14. We find the Hon'ble Delhi High Court in the case of DCIT Vs Nirmal Minda; 2018-TIOL-731-ITAT-DEL held as under : "9.6. We are, thus, of the opinion that unless any evidence is brought on record justifying that it was the assessee who had made any such investment, the addition is unsustainable in law. It is well settled rule of law that suspicion howsoever strong cannot par take the character of evidence. We, thus, find no infirmity in the order of Ld. CIT(A) who has deleted the addition and we endorse the findings of the conclusion of the AO that the assessee had made the investment/paid cash to M/s Pioneer Finvest Ltd." 29.15. In view of our discussion above, we find no infirmity in the order of the Ld. CIT(A) in deleting the addition. We, therefore, uphold the same and the grounds raised by the Revenue are dismissed. 30. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 29.04.2022. ============= Document 1 CA H.S. & ASSOCIATES Chartered Accountants H.O. 14, 2 Floor, Arjun Nagar, Safdarjung Enclave, New Delhi-29 ....