TaxTMI 
TaxTMI 
2023 (4) TMI 692
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....in considering the share capital and share premium received from various parties of Rs 10, 60, 50,000/- as unexplained cash credit. 3. That the entire addition by the AO is based on mere suspicious and without any material evidence on record and hence liable to be deleted. 4. That the addition made by AO is based on a pre-determined and biased mind-set and based on pure guess, surmises and conjecture which does not hold good in law. 5. That the assessment has been made without appreciating the documents and explanation produced before the AO and without affording reasonable opportunity to the assessee. 6. That the Ld. Assessing Officer was not justified in making addition on account of share capital as same was verified & certified by him in earlier years in detailed assessment. 7. That the addition made by Ld. Assessing Officer and upheld by Ld. the Commissioner of Income Tax (Appeal) are liable to be set aside. 8. That the appellant may add, alter, delete, withdraw or modify any of the ground at the time of hearing of the matter with the leave of the Hon'ble ITAT." 3. Brief facts of the case as culled out from the records a....
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....bunal in the case of ITO vs. Mainak Suppliers Pvt. Ltd. in ITA No.38/Kol/2021 order dated 28.12.2022 wherein also the facts of the case are almost identical and Hon'ble Tribunal decided in favour of the assessee holding that since the assessee has discharged its onus to prove the identity and creditworthiness of the share subscriber companies and the genuineness of the transaction, addition cannot be sustained merely for non-appearance to the notice issued u/s 133(6) of the Act. 7. On the other hand, ld. D/R vehemently argued supporting the orders of both the lower authorities and stated that all the alleged share subscribers are companies with no regular business activity and are in the nature of accommodation entries/jama-kharchi companies and did not have sufficient creditworthiness to invest the alleged sum in the assessee company. 8. We have heard rival contentions and perused the records placed before us. The addition u/s 68 of the Act at Rs. 10,60,50,000/- is in dispute before us. Before us, ld. Counsel for the assessee has referred to the following documents pertaining to various share subscribers which form part of the paperbook dated 30.01.2023 and the index of ....
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....34/- 15,00,000/- 2 Daffodil Complex Pvt. Ltd. 84,90,000/- 7,55,10,000/- 15,00,000/- 3 Kaberi Tie-up Pvt. Ltd. 1,08,40,000/- 9,66,60,000/- 29,00,000/- 4 Kashab Tie-up Pvt. Ltd. 75,30,000/- 6,68,70,662/- 9,50,000/- 5 Oxide Tie-up Pvt. Ltd. 1,73,15,000/- 15,49,35,000/- 1,49,50,000/- 6 Pinpoint Tie-up Pvt. Ltd. 1,16,30,000/- 10,37,70,000/- 1,02,00,000/- 7 Sarathi Vyapaar Pvt. Ltd. 1,16,95,000/- 10,43,56,764/- 1,29,00,000/- 8 Shivangan Dealers Pvt. Ltd. 1,08,20,000/- 9,64,80,479/- 19,00,000/- 9 Tanishque Tradelink Pvt. Ltd. 91,70,000/- 8,16,30,000/- 96,00,000/- 10 Tista Vanijyua Pvt. Ltd. 1,06,25,000/- 9,47,27,418/- 1,12,00,000/- 11 Trishna Vanijya Pvt. Ltd. 1,73,00,000/- 9,66,00,000/- 1,14,00,000/- 12 Outlook Dealcom Pvt. Ltd. 1,41,20,000/- 11,61,80,000/- 1,18,50,000/- 13 Shivangan Goods Pvt....
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....ged to income-tax as the income of the assessee of that previous year: [Provided that] where the assessee is a company (not being a company in which the 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 aforesaid has been found to be satisfactory: [Provided further] that nothing contained in the first proviso [or second proviso] shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 13. So far as the first proviso to Section 68 of the Act as mentioned above are concerned which specifically deals with the share application money, share capital and share premium,....
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....en in case the notices/summons were not served he ought to have taken the details of directors from the Ministry of Corporate Affairs and also should have taken out necessary details from the income tax database based on the PAN submitted by the assessee. Since no such exercises have been carried out, the assessee cannot be fastened with the addition and tax liability. 15. Recently, this Tribunal in the case of Mainak Suppliers Pvt. Ltd. (supra) has adjudicated similar set of facts and circumstances wherein the assessment proceedings were carried out under the directions of ld. CIT(A) u/s 263 of the Act and the issue was also the same i.e. unexplained share application money and share premium and this Tribunal after considering the facts of the case and the documents filed by the assessee and those being regularly assessed to tax, decided in favour of the assessee observing as follows: "9. We have heard the rival contentions and gone through the material placed on record. Admittedly, it is a fact on record that notices u/s. 133(6) of the Act were issued by Ld. AO to all the sixteen share subscriber companies and all of them had duly replied directly to the ld. AO, along....
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.... 10. We also take note of the fact that all the share subscriber companies have filed their return of income with the department which have been either processed u/s. 143(1) of the Act for which intimations have been issued or have been assessed u/s. 143(3) or 147 on substantive basis, for which the respective intimation/assessment orders are placed on record in the paper book. We also take note of the fact that all the sixteen share subscriber companies have responded to the notice issued u/s. 133(6) of the Act and Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the share subscribing companies. These evidences furnished by them have been neither controverted by the Ld. AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him. Ld. AO has simply added the amount of share capital and share premium on the ground that assessee has not produced the directors/shareholders. Ld. AO has ignored the reply given in response to notice issued u/s. 133(6) of the Act which are on record under duly acknowledged seal and stamp of his good office. From the perusal of the order of Ld.....
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....r audited accounts filed with the income tax authorities in relation to their own income tax assessments and the sources of such funds are also explained by each of the share applicants in their replies addressed to the AO. However, the AO had not brought these indisputable facts on record but acted on his whims and fancies. It is observed that the burden which la on the appellant, in relation to section 68 of the Act, has been duly discharged by it and nothing further remains to be proved by it on the issue. Hence, I am inclined to accept the arguments tendered by the AR of the appellant in this respect. In view of the above, I have no hesitation to hold that the impugned addition made by invoking the provisions of s. 68 by the AO is not justified in the circumstances and accordingly, direct him to delete such addition of Rs.21,08,00,000/- made on this account. Thus, these grounds of the appeal are allowed." 10.2. Further, we note that ld. CIT(A) has taken into consideration the creditworthiness of all the sixteen subscriber companies by going through the records and the net worth of each of them (refer the details tabulated above). It is also noted that all the investing....
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....uld be safely held that the assessee has discharged his initial burden and the burden shifts on the assessing officer to enquire further into the matter which he failed to do. In more than one place the assessing officer used the expression "money laundering." We find such usage to be uncalled for as the allegations of money laundering is a very serious allegations and the effect of a case of money laundering under the relevant Act is markedly different. Therefore, the assessing officer should have desisted from using such expression when it was never the case that there was any allegations of money laundering. Paragraph 5.4 and 5.5 of the assessment order are all personal perception and opinion of the assessing officer which needs to be ITAT 18 OF 2022 ignored. Much reliance was placed on the statement of Shri Ashish Kumar Agarwal, which statement has been extracted in full in the assessment order and it cannot be disputed that there is no allegation against the assessee company in the said statement. There is no evidence brought on record by the assessing officer to connect the said entry operator with the loan transaction done by the assessee. Therefore, the statement is of litt....
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....e CIT(A). The tribunal apart from taking into consideration, the legal effect of the statement of Ashish Kumar Agarwal also took note of the fact that the notices which were issued by the assessing officer under Section 133 (6) of the Act to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the assessing officer and there is no discussion on this aspect. Thus, we find that the tribunal rightly dismissed the appeal filed by the revenue." 11. In respect of reliance placed by the revenue on the decision of Hon'ble Supreme Court in the case of PCIT vs. NRA Iron & Steel Pvt. Ltd. 412 ITR 161 (SC), we note that Hon'ble Supreme Court in para 8.2 of the said decision has made the following observations: "8.2 As per settled law, the initial onus is on the Assessee to establish by cogent evidence the genuineness of the transaction, and credit-worthiness of the investors under Section 68 of the Act. The assessee is expected to establish to the satisfaction of the Assessing Officer CIT v. Precis....
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....on is genuine, or these are bogus entries of namelenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act." 11.3. Hon'ble Supreme Court, thus, held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then, AO is duty bound to conduct an independent enquiry to verify the same. However, as noted above, ld. AO in this case has not made any independent enquiry to verify the genuineness of the transactions. Assessee, having furnished all the details and documents before the ld. AO and the ld. AO has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged its initial burden casted upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuin....