TaxTMI 
TaxTMI 
2023 (4) TMI 74
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..../s.56(2)(viib) of the I.T. Act, 1961. 3. That the assessee craves to add, amend or delete any of the above grounds of appeal during the course of hearing. 4. The above grounds are without prejudice to each other." 2. Succinctly stated, the assessee company which was incorporated way back on 07.08.2009 for carrying on the business of manufacturing, casting, rolling & dealing in Iron & steel products had yet not commenced its commercial operations during the year under consideration before us. The return of income for AY 2015-16 was filed by the assessee company on 21.09.2015, declaring its income from business under other operating revenue of Rs.19,570/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee company had during the year under consideration, inter alia, received share application money from M/s. Aayush Steelco Pvt. Ltd., a Kolkata based company, as under: S. No. Name of the Applicant PAN No. of shares allotted Total application money invested (in Rs.) 1. Aayush Steelco Pvt. Ltd., 120, Lenin Sarani, 5th Floo....
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....s to verify the source, creditworthiness and genuineness of its transaction with the assessee company, but the latter had merely filed paper submissions with the Central Receiving Section and despite specific directions had evaded personal appearance. Also, it was intimated by the DDIT (Inv.), Unit 2(3), Kolkata that as per the departmental database of entry operators and their shell companies it was gathered that M/s. Abharani Vinimay Pvt. Ltd., i.e., one of the shareholder of aforementioned investor company, viz. M/s. Aayush Steelco Pvt. Ltd. was being managed and controlled by Shri Jitendra Mishra, an infamous Kolkata based entry operator. On being confronted with the aforesaid report of the DDIT ( Inv.), Unit 2(3), Kolkata, it was stated by the assessee that M/s. Abharani Vinimay Pvt. Ltd. held a minimal share holding of 14000 shares (7% of the entire share holding) which worked out to an amount of Rs.10.23 lacs in terms of the company's net worth. Also, in his attempt to distance the aforesaid investor company, viz. M/s. Aayush Steelco Pvt. Ltd. from the above-mentioned shareholder i.e., M/s. Abharani Vinimay Pvt. Ltd., it was submitted by the assessee that the investor compan....
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....ew that the excess amount of Rs.15/- per share received by the assessee company was liable to assessed as its income from other sources u/s.56(2)(viib) of the Act. Accordingly, the A.O on the basis of his aforesaid deliberations made a further addition of Rs.75,000/- (5000 shares x Rs.15/- per share) and vide his order passed u/s.143(3) dated 26.12.2017 determined the income of the assessee company at Rs.35,44,170/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). On a perusal of the order of the CIT(Appeals), it transpires that though he was initially convinced that the assessee had established the identity and explained the source of investment made by the investor company, but thereafter by adopting a self-contradictory view he had drawn adverse inferences qua the identity and creditworthiness of the investor company, for the reason, viz. (i) that the directors of the assessee company despite specific directions had neither personally appeared before the DDIT (Inv.)- Unit 2(3), Kolkata; or before him.; (ii) that Shri Jitendra Mishra, an infamous entry operator of Kolkata in his statement recorded u/s.131 of the Act had stated that he had, inter ....
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....or company from its capital account with M/s. Sri Balaji Iron & Steel Traders. In order to fortify his aforesaid contention the Ld. AR had taken us through the copy of the capital account of the investor company, viz. Aayush Steelco Pvt. Ltd. (as a partner) as appeared in the books of account of M/s. Sri Balaji Iron & Steel Traders, Page 31 of APB. Also, our attention was drawn towards copy of the bank account of M/s. Shree Balaji Iron & Steel Traders, Page 36 of APB, wherein, payment of an amount of Rs.34.50 lac in favour of the investor company, viz. M/s. Aayush Steelco Pvt. Ltd. was reflected. Our attention was also drawn by the Ld. AR towards the copy of the bank account of the investor company, viz. M/s. Aayush Steelco Pvt. Ltd., Page 45 of APB wherein receipt of an amount of Rs.34.50 lac by investor company from M/s. Sri Balaji Iron & Steel Traders on 10.06.2014 a/w. the payment of the said amount on the very same date to the assessee company, viz. M/s Chhattisgarh Metaliks and Alloys Pvt. Ltd. was clearly reflected. It was stated by the Ld. AR that though the aforesaid documents were very much there before the lower authorities, however, they had either not considered the sa....
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....was submitted by the Ld. AR that even otherwise as the A.O had called upon the assessee company to produce the directors at the fag end of the assessment proceedings, therefore, necessary compliance on account of paucity of time could not be made. It was submitted by the Ld. AR that as the assessee company had placed on record the PAN a/w copies of the returns of income of the investor company, therefore, its identity was clearly established. As regards the genuineness of the transaction in question, it was submitted by the Ld. AR that as the amount of share application money was received through banking channels, therefore, the same stood duly established. On the basis of his aforesaid contentions, it was submitted by the Ld. AR that now when the identity and creditworthiness of the share applicant company, viz. M/s. Aayush Steelco Pvt. Ltd. a/w. genuineness of the transaction had been proved to the hilt by the assessee, therefore, neither the adverse inferences nor the treating of the amount of share application money as an unexplained cash credit u/s.68 of the Act could be sustained. 9. Adverting to the addition of Rs.75,000/- made by the A.O u/s. 56(2)(viib) of the Act, it was....
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....ces the investment made by it towards share application money a/w. source thereof, which, for the sake of clarity is culled out as under: Account Number Name Holding status Customer ID 200013977831 Aayush Steel Co Private Limited Primary holder 10208539 Product Description current account-Indus Blue Branch Address: Vishakhapatnam CDR Hospital, A 3 Raja Complex, Walter Main Road, Vishakhapatnam, Andhra Pradesh-530002 Statement period : 01 June-2014 to 30-June-2014 Statement Frequency : Monthly Average monthly balance required : Rs.5000/- SMS Alert No. Branch MICR Code : 530234001 Branch IFSC Code : INDB0000581 Nomination Registered : No. Date Particulars Chq. No./Ref. No. Withdrawal Deposit Bala....
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.... department had failed to lead any iota of evidence which would persuade us to conclude that it was the unaccounted money of the assessee company which was routed back to its coffers in the garb of share application money through the investor company, viz. M/s. Aayush Steelco Pvt. Ltd. Considering the aforesaid duly substantiated explanation of the assessee as regards the source of investment of share application money made by the investor company, viz. M/s. Aayush Steelco Pvt. Ltd., we are of the considered view that the onus cast upon the assessee company for proving the nature and source of the share application money a/w the additional burden cast upon it as per the "first proviso" to section 68 of the Act, stands duly discharged. Accordingly, not being able to persuade ourselves to subscribe to the view taken by the lower authorities who had dubbed the share application money of Rs.34.49 lac received by the assessee company as an unexplained cash credit u/s.68 of the Act, we herein set- aside the order of the CIT(Appeals) and vacate the said addition. Thus, the Ground of appeal No.1 raised by the assessee is allowed in terms of our aforesaid observations. 13. We shall now adv....