TaxTMI 
TaxTMI 
2024 (1) TMI 602
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....ystem resources, the searching of the appeal order in ITBA system could not be done on regular basis. In other words, according to the ld. Assessing Officer, he could not keep a tap on the site for checking whether any appellate order of his jurisdiction has been uploaded or not. On due consideration of the explanation of assessee with the help of both the ld. Representatives, we are satisfied that on account of work load, the ld. Assessing Officer might have failed to keep a tag on perusal of the site day to day basis or he might have missed the uploading of the impugned order. Therefore, we condone the delay of 40 days in filing the appeal beyond the period of limitation and proceed to decide the appeal on merit. 3. The Revenue has taken three grounds of appeal. The solitary grievance of the Revenue is that ld. CIT(Appeals) has erred in deleting the addition of Rs. 3,00,00,000/-, which was treated by the ld. Assessing Officer as unexplained cash credit by disbelieving the receipt of share capital along with share premium. The ld. Assessing Officer has made the addition with the help of section 68 of the Income Tax Act. 4. Brief facts of the case are that the assessee-compan....
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....cant companies were submitted to the AO who subsequently analysed it - Irrespective of the ' successful and correct analysis' done by the AO, the balance sheets of the 4 applicant companies show sufficient strength to prove that unless proven otherwise, there is no doubt on the creditworthiness of the applicant companies. 4. The share applicant companies had redeemed their mutual funds or utilized their refunded loan or their overdraft facility to apply for the shares of the Appellant company. - thus genuineness of the source of funds were established. The AO could not bring about any evidence to substantiate his suspicion that the source of funds was some unaccounted money which was being circulated in the guise of share application money. 5. To what end does a business uses its own money or its borrowings is entirely in the domain of the business and the AO cannot step into the shoes of the company to decide what prima facie appears to be a financially illogical decision. Irrespective of how financially imprudent the business decision may appear to an external party, i.e. the Assessing Officer, it is the prerogative of the business entity to decide what to do wi....
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....through proper banking channels; the share holders had sufficient fund for the purpose of investment & the investments are reflected in their books of account and Bank accounts of the shareholders confirmed the transactions. All are share holders are regularly assessed to Income Tax. So far as the need for share subscription money and the reason for the group companies to invest in the assessee company is concerned, in this regard it has been explained by the assessee that the assessee is a manufacturing company having turnover of more than Rs. 241 Crores and huge net worth. The assessee is mainly engaged in steel industry so the future prospect is great. Also the business of the assessee is heavily expanding in terms of both turnover and asset. That the assessee was in need of funds as the assessee was expanding its operations. The facts of the case itself suggest that during the impugned point of time there was heavy increase in fixed assets also the turnover increased by 73%. To expand the business assessee needed the funds, which were generated through issue of fresh shares. Further, that the reason to invest also included strategic relation and are made by the associa....
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....erein the Hon'ble Gujarat High Court held that when full particulars, inclusive of confirmation with name, address and PAN Number, copy of income tax returns, balance sheet, profit and loss account and computation of total income in respect of all creditors/lenders were furnished and when it had been found that loans were furnished through cheques and loan account were duly reflected in balance sheet, then the Assessing Officer was not justified in making addition. 2. CIT V. Kamdhenu Steel & Alloys Ltd in [2012] 19 taxmann.com 26 (Delhi), wherein the Hon'ble Delhi High Court has held that when full particulars, inclusive of confirmation with name, address and PAN Number, copy of income tax returns, balance sheet, profit and loss account and computation of total income in respect of all creditors/lenders were furnished and when it had been found that loans were furnished through cheques and loan account were duly reflected in balance sheet, the Assessing Officer was not justified in making addition. 3. Polymers (P) ltd. vs. DCIT in 111 TTJ 112 wherein the Hon'ble Jodhpur Bench of ITAT wherein it was held that in respect of the share application money, the assessee ....
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....e shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P.) Ltd. (supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. 9. The Ld. AO has placed reliance on the decision of the Hon'ble Supreme Court in Sumati Dayal v. CIT (214 ITR 801) which is a landmark judgment for decision in cases wherein the surrounding circumstances are heavily evident and hence the true nature of a transaction has to be ascertained in the light of these surrounding circumstances. Any other conclusion would be a travesty of justice. In this instant case however, the reliance is misplaced as the AO's self congratulatory 'successful and correct' analysis falls short of proving that the apparent is probably not real. The facts of this case are positively inclined towards the Appellant, rather than the Departmen....