TaxTMI 
TaxTMI 
2024 (1) TMI 63
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....ces of the case, Ld CIT(A) ought to have upheld the order of the Assessing Officer. (c) It is, therefore, prayed that the order of Ld CIT(A) may be set aside and that of the Assessing Officer be restored. (d) The appellant craves leave to add, alter and/or to amend all or any of the ground before the final hearing of the appeal. 3. The only issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition of Rs. 14 crores made under section 68 of the Act on account of credit of preference share capital. 4. The facts in brief are that the assessee in the present case, a private company, is holding strategic investments in subsidiaries and associate companies as well as providing consultancy and other services to the group companies. The assessee during the year allotted 1.4 crore convertible preference shares @ Rs. 10 each to M/s Capaxo Logistics Pvt Ltd (hereafter CLPL) and the proceeds from impugned allotment of preference shares were utilized for making investment in or extending loans to subsidiary group companies. The AO found that the investing company was showing very meager income in the last three assessment years and the profit d....
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....fore the Assessing Officer during the assessment proceedings. I find that the income tax returns, financial statements & Form 26AS of accounting years 2015-16, 2016-17 & 2017-18 relevant to assessment years 2016-17, 2017- 18 & 2018-19 and statement of bank account No.00060340023388 maintained with HDFC Bank of M/s.Capaxo Logistics Private Limited have adequately established the identity of the investor, M/s.Capaxo Logistics Private Limited. Further, the balance sheet of A.Y.2018-19 shows that M/s.Capaxo Logistics Private Limited has own fund at Rs. 14.70 crores. As per P & L a/c, total receipts credited comprises of 62,61,149/-from sales of services and Rs. 1,56,87,018/- of interest receipts. Form 26AS exhibits receipts subjected to TDS u/s.194A,194IB & 194J from 17 parties. Going by the above, I find merit in the contention of appellant that, the investor company, viz., M/s.Capaxo Logistics Private Limited is credit worthy. 6.2.4 Further, it is seen from the perusal of the statements of bank account, M/s.Capaхо Logistics Private Limited, has transactions of varying amounts of loans given and received at interval of time throughout the accounting year relevant ....
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....een done in this case. It is not understood or elaborated in the assessment order under what context the Assessing Officer stated in Para 5, page 6 of the assessment order, that "..........during the course of Video Conferencing, the AR of the assessee explained the issues regarding identity. genuineness and credit worthiness of the transactions. The same has been considered but found partially true." 6.2.5 In this regard, recently in the case of Principal Commissioner of Income-tax vs. Gopal Heritage (P.) Ltd. [2021] 133 taxmann.com 173 (Gujarat), [2022] 284 Taxman, 406, the Hon'ble Gujarat High Court in its order dated 13.09.2021 adjudicated the following substantial questions of law raised in the aforesaid appeal as under: "(A) Whether the Appellate Tribunal has erred in law on facts in deleting the addition of Rs. 3,25,29,000/- made under section 68 of the Act on account of unexplained cash credit in the nature of unsecured loan received from three entities, namely, Shaan Leisure Ltd., GSM Infra Projects Ltd. and Manibhadra Tradelink Pvt. Ltd.? (B) Whether the Appellate Tribunal has erred in not appreciating that mere factum of filing return of in....
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.... the depositor company had duly recorded the deposits/loans given to the appellant in its books of accounts out of its own funds or borrowed funds, no addition in the hands of the appellant is permissible so far as the transactions are recorded in the books of depositor company. 4.3 It relied on the judgment of the Apex Court in case of CIT v. Orissa Corpn. (P.) Ltd . [1986] 25 Taxman 80F/159 ITR 78 to hold that once the appellant duly discharges the primary onus cast upon it by making available the details and copies of supporting documents in the form of conformation, copy of bank account and return of income, it is for the Assessing Officer then to make further inquires through issuing summons and notices under section 133(6) to the depositors for further verification, which in the instant case, has not been done and for which the appellant could not be held responsible. In case of every person and entity, it has gone into these details and accordingly allowed the appeal of the appellant. 4.4 The ITAT on detailed representation of this, concluded thus: - "11. A perusal of the finding of the ld. CIT(A) extracted (supra) it would reveal that the ld. CIT(A) has ex....
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....tion contemplation was under section 68 of the IT Act which provides that any sum found credited in the books of account of an assessee maintained for any previous year and if the assessee does not offer any explanation about the nature and source thereof or even when explanation is given and the Assessing Officer (AO) is dissatisfied, the sum shown credited in the accounts can be questioned by him. All the ingredients contemplated under section 68 have been duly satisfied on the aspect of identity of the creditors, genuineness of the transactions and their creditworthiness. 6. We see no reason to entertain this Tax Appeal which is in limine dismissed." 6.2.6 Taking into consideration the facts of the case and the documents on record as discussed in the foregoing paras and placing reliance on the decision held in the case law cited above in Para 6.2.5, in my considered opinion the addition of 14 crores made under section 68 of the Income Tax Act is not sustainable. I, therefore, direct the Assessing Officer to delete the addition of 14 crores made under section 68. Accordingly, ground 2 is allowed. 6. The learned DR before us submitted that there was not enough credit w....
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....the case of CIT vs. P. Mohanakala reported in 291 ITR 278 while dealing with scope of provision of the section 68 of the Act held that "the opinion of the AO that the explanation furnished by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion ." In other words, once the assessee submits primary evidence with regard to identity and credit worthiness of creditor and the genuineness of the transaction, the onus shifts on the AO to consider the material provided and make independent inquiry in order to find out genuineness of the evidence or bring material contrary to the fact explained by the assessee. The AO cannot reject the primary evidence furnished by the assessee without appreciating the facts available on record or without bringing contrary material to from the belief that primary document or explanation furnished by the assessee is not satisfactory. 8.1 Undeniably, the assessee during the asse....
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....arned DR before us has contended that transaction of preference share capital is circular in nature. As such the learned DR contended that the investor company for making investment in the assessee company received fund from M/s Tradebulls Securities Pvt Ltd (hereafter TSPL) and the assessee company after receiving amount of preference share capital transferred the same to the TSPL. In other words, TSPL gives fund of Rs. 14 Crores to CLPL which CLPL transferred to assessee company and finally assessee transferred the same to TSPL. Thus, the fund reached from where it was originated. In this regard, we have perused the financial statements of CLPL placed on pages 147 to 196 of the paper book and the ledger copy of CLPL in the books of TSPL. From the above, we note that the CLPL in earlier years had extended loans & advances to the TSPL, and the outstanding opening balance of such loans & advances was of Rs. 16.2 crores. During the year under consideration certain amounts of loans & advances received back on various dates including the amount of Rs. 14 crores on 22-09-2017 which was transferred to assessee company on the same day. Similarly, there were also fresh loans & advances ext....