TaxTMI 
TaxTMI 
2023 (12) TMI 584
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....ubscriber for examination by the AO. 3. "On the facts and circumstances of the case and in law, the Ld. CIT (A) failed to appreciate the fact that Shri Pravin Kumar Jain was indulged in issuing bogus accommodation entries in different forms including share capital." 4. "On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition u / s . 68 on account of non-genuine share capital and premium received through the entities engaged in providing accommodation entries on commission basis on the basis of documentary evidence such as PAN, IT return, confirmation, Bank Statement etc without considering the facts that subscriber was a paper company and not a genuine investor." 5. "On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition u/s 68 on account of non-genuine share capital with premium received through the entities engaged in providing accommodation entries on the basis of documentary evidence such as PAN, IT return, confirmation, Bank Statement etc without considering the ratio of the decision of Supreme Court in the case of Sumati Dayal and Modowell relied upon by the....
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.... 2006-07 Nakshatra businesss P. Ltd(Hema Trading. Co. P. Ltd) Absolute Buildings Co. Pvt Ltd. AAGCA3853L 2. 2006-07 OliveOverseas P. Ltd (Realgold Tr.P.Ltd) Absolute Buildings Co. Pvt. Ltd. AAGCA3853L 3. 2006-07 Kush Hindustan Entertainment Ltd Absolute Buildings Co. Pvt. Ltd. AAGCA3853L 4 2006-07 Alka Diamond Industries Ltd. Absolute Buildings Co. Pvt. Ltd. AAGCA3853L 5. 2006-07 Javda India Impex Ltd Absolute Buildings Co. Pvt. Ltd. AAGCA3853L 6 2006-07 Lexus Infotech Ltd Absolute Buildings Co. Pvt. Ltd. AAGCA3853L 7 2006-07 Vangaud Jewels Ltd Absolute Buildings Co. Pvt. Ltd. AAGCA3853L 8 2006-07 Yash V- Jewels Ltd Absolute Buildings Co. Pvt. Ltd. AAGCA3853L Amount of investment Date of payment Name of the Praveen Kumar Jain bank through which transaction made Ban Branch 25,00,000/- 24/04/2006 Canara Bank Khetwadi, Mumbai 25, 00, 000/- 24/04/2006 Canara Bank Khetwadi, Mumbai 25, 00, 000/- 24/04/2006 Canara Bank Khetwadi, Mumbai 25, 00, 000/- 24/04/2006 Canara Bank Khetwadi, Mumbai 25, 00, 000/- ....
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....al Shroff 1,00,00,000/- 15/11/2006 Mr. Kunal Shroff 1,00,00, 000/- 16/11/2006 Mr Kunal Shroff 1,00,00,000/- 17/11/2006 Mr. Kunal Shroff 90,00,000/- 7. Out of the above, the allotment of preference shares to Mr. Kunal Shroff for sums aggregating to Rs. 3.90 Crores have been accepted by the ld. AO. The ld. AO in order to verify the genuineness of these parties had issued notice u/s. 133(6), however, notices from seven parties returned back and out of which three parties related to Shri Praveenn Kumar Jain. The details of compliance notice have been mentioned in the assessment order at page 4. Thereafter, assessee was asked to produce parties which according to ld. AO, assessee failed to produce the parties. He then referred to the information received from DGIT (Investigation) Mumbai and the findings of DGIT which has been reproduced in detail from pages 5-6 of the assessment order. Thereafter, ld. AO based on this information and that the parties have not responded to the notice u/s. 133(6) had added the sum of Rs. 2 Crores from the preference shares allotted to companies belonging to Shri Praveen Kumar Jain u/s. 68. Apart from that he has also added....
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....dition, not allowing the appellant to cross-examine such information/persons and not providing sufficient time to furnish details. ix) the AO cannot make any disallowances on the basis of not discharging burden of proof to be discharged by the appellant in view of the amendment to section 68 for the year under consideration since this amendment is effective from 1st April 2013 and applicable from A.Y 2013-14. [56(2)(viib). x) if the AO finds that the share investment is proved non-genuine, the addition needs to be made in the hands of the subscriber but not in the hands of the appellant company. Reliance was placed on the decisions of the Honorable Supreme Court in the case of Divine Leasing and Finance Ltd 299 ITR 268 and Lovely Exports P Ltd. 216 CTR 195. 8. The ld. CIT(A) held that in so far as share premium is concerned, same is not taxable in view of the judgment of the Hon'ble High Court in the case of Vodafone India Services Pvt. Ltd reported in [2014] 368 ITR 1 (Bombay) and held that the premium received is a capital receipt which is not taxable as income and the amendment has been brought in the statute by the Finance Act 2012, when it has become taxab....
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....ade by certain parties to whom notices u/s 133(6) were issued and replies were received without giving any justification for doing so Such type of prejudice should have been avoided. Lastly, the AO has given excessive reliance to the statements given by Praveen Jain group disregarding the positive evidence available with regard to the replies received in response to notices issued by the AO u/s 133(6) of the Act. 5.2.5. In view of the above discussion, I hold that the appellant has submitted all the evidences to prove their identity and creditworthiness of the parties and genuineness of the transaction. Therefore, the disallowance made by the AO under section 68 is held not proper The ground is allowed 9. Before us, ld. DR referred to various observations of the Assessing Officer and submitted that here in this case, first of all 8 of the entities who subscribed to preference shares belong to Shri Praveen Kumar Jain group which were established entry operator and not only that, even the notices sent through post to the companies u/s. 133(6) remain uncomplied with. Further, assessee did not provide any detail or supporting documents to prove the identity, genuin....
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....ge. Thus, he submitted that it cannot be said that these companies are mere paper companies or bogus. The details as submitted are as under:- Sr. No Name of the Party Status of Company MCA Details in Paperbook Profit before Tax 133(6) 133(6) Status Date of allotment Redeem on Alleged to be Praveen Jain Group Heina Trading Company Private Limited y Active 266 8,74,231 Yes Left Out 31/01/2007 20.02.2009 Yes 2 Real Gold Trading Private Limited Active 9,01,383 Yes Left Out 31/01/2007 20.09.2009 Yes 3 Yash V Jewels Limited Active 274 8,92,825 Yes Left Out 31/01/2007 27.01.2009 Yes 4 Alka Diamond Industries Limited Active 262 7,04,781 Yes Replied 31/01/2007 12.01.2009 Yes 5 Kush Hindustan Entertainment Limited Active 269 9,41,041 Yes Replied 31/01/2007 12.01.2009 Yes fi Lexus Infolech Limited (TRIANGULAR 1NFOCOM LIMITED) Under Voluntary Liquidation 9,74,381 Yes Replied 31/01/2007 27.01.2009 Yes i Vanpuard Jewels Limited Active 272 5,55,237 Yes....
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.....Y. 2005-06 Amount in F.Y. 2006-07 Year-on-Year Growth (in %) 1 Equity Share Capital 1,75,92,000.00 1,96,37,000.00 11,62 2 Reserves & Surplus 2,25,989.00 29,85,501.00 1,221.08 3 Sales / Revenue from Operations 3,80,510.00 12,47,900.00 227.95 4 Profit Before Tax 1,78,018.00 9,01,383.00 406.34 5 Profit After Tax 1,06,018.00 7,13,358.00 572.86 Stocknet Internationa! Ltd. Sr. No. Financial / Business Parameters Amount in F.Y. 2005-06 Amount in F.Y. 2006-07 Year-on-Year Growth (in %) 1 Equity Share Capital 5,50,03,500.00 5,50,03,500.00 - 2 Reserves & Surplus 4,06,51,657.00 4,05,72,235.00 -0.20 3 Sales / Revenue from Operations NA NA NA 4 Profit Before Tax NA NA NA 5 Profit After Tax NA NA NA Alka Diamond Industries Ltd. Sr. No. Financial / Business Parameters Amount in F.Y. 2005-06 Amount in F.Y. 2006-07 Year-on-Year Growth (in %) I Equity Share Capital NA NA NA 2 Reserves & Surplus NA NA NA 3 Sales / Revenue from Operations -2,63,647.00 30,44,659.00 1,2....
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....ferred to before us and the details we had sought for from the records. Here one very important fact is that it is not a case of share application money simplicitor, albeit, assessee had issued optionally convertible non-cumulative preference shares at face value of Rs. 10/- and premium of Rs. 90/- to 15 parties. All these shares have been redeemed within two years after the date of issuance. Out of these 15 parties, the maximum amount of preference shares allotted to one person namely Mr. Kunal Shroff for sums aggregating to Rs. 3.90 Crores which have been accepted. However, for the balance amount of Rs. 4,75,00,000/- received from 14 parties have been added u/s. 68. Here, in this case the date of issuance of preference shares was 31/01/2007 and all the shares were redeemed between November 2008 to February 2009. The re-assessment proceedings conducted almost after six years after the money was returned to the investors' alongwith the premium. Nowhere, ld. Assessing Officer has pointed out that at the time when the preference shares were allotted and same has been redeemed by all the parties much before the reopening, was purely a paper transaction or have been found to be non-gen....