TaxTMI 
TaxTMI 
2022 (9) TMI 1571
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....y ignoring the facts as brought on record by the AO that the assessee company failed to prove the genuineness and creditworthiness of the investor company as per the parameters of the legal provisions u/s. 68 of the Act?" 3. Whether on points of law and on points of facts & circumstances of the case, the Ld. CIT(A) having concurrent powers of the AO u/s 250(4) of the Act, was justified in deleting the addition of Rs. 2,93,80,000/- made by the AO in the absence of satisfaction of parameters prescribed u/s 68 of the Act?" 4. "Whether on points of law and on points of facts & circumstances of the case, Ld. CIT(A) was justified in giving a finding which is contrary to the ratio of the decision of Hon'ble Supreme Court in the case of M/s Rajmandir Estates Pvt. Ltd. vs PCIT-III, Kolkata (SLP No. 22566-22567 dt. 09.01.2017?" 5. "Whether on points of law and facts & circumstances of the case, the Ld. CIT(A) was justified in giving a finding which is contrary to the ratio of the decisions of ITAT, Kolkata 'B' Bench in the case of M/s SubhlakshmiVanijya (P) Ltd. Vs CIT-1, Kolkata in ITA No. 1104/Ko1/2014 and other cases dated 30.07.2015?" 6. "W....
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....d in the cases of (i) Sira Industries & Holding Pvt. Ltd. (2012) 54 SOT 49(Chen), (ii) Technopark Advisory Pvt. Ltd (2012) 50 SOT 31(Del), (iii) Relaxo Footwear Ltd (2012) 50 SOT 102 (Del) and (iv) India Infrastructure Developers Ltd (2009) 121 ITD 315 (Del)? 12. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition by ignoring the circular no. 05/2014 dated 11.02.2014 issued by CBDT wherein it has been clarified that the disallowance u/s 14A is applicable even where taxpayer in particular year has not earned any exempt income? 13. "Whether on points of law and facts & circumstances of the case, the Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on record that there is no direct nexus between the borrowed funds and investment in shares, which is factually and legally incorrect, thereby rendering the decision which is perverse?" 14. "Whether on points of law and on facts & circumstances of the case, the ITAT was justified in confirming the order of Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepte....
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....ted multilayered investigations which had revealed laundering of funds in the garb of sham transactions that were carried across the country in the recent past. It was observed by the A.O that the aforesaid shell companies were artificially structured with no business activities and their bank accounts revealed the identical trend of deposit of money towards share capital and premium, which thereafter would be immediately transferred as loans. On the basis of his aforesaid observations, the A.O was of the view that the only rationale behind the aforesaid transactions was to route unaccounted money through the façade of operator run companies in the garb of loan transactions. Ostensibly, the A.O after deliberating at length on the modus-operandi that was adopted by shell companies to launder ill-gotten money in the form of share capital/premium and loans, as well as referring to the multilayered investigations that were conducted by the Income Tax Department over the year across the country, which revealed routing of unaccounted money through a maze of such transactions, concluded, that as the assessee had failed to come forth with any explanation about the nature and source ....
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....n his aforesaid contention, it was submitted by the assessee that in the course of the assessment proceedings it had filed before the A.O complete details of the share applicant, viz. name, address, PAN, details of cheques through which the payment was received, copy of acknowledgement of income tax return of the share applicant company a/w. its audited annual report, copy of bank statement in which amount was received by the assessee company and copy of bank statement of the share applicant company, viz. M/s. Lovely Suppliers Pvt. Ltd. (supra). Also, it was stated by the assessee that the complete details of number of shares which were thereafter allotted to the aforesaid share applicant company a/w. transaction number etc. were also filed with the A.O. It was further submitted by the assessee that the source of investment made by the share applicant company, viz. M/s. Lovely Suppliers Pvt. Ltd. (supra) were the funds which were received by it through banking channels from certain other companies on sale of its investments, which fact could safely be gathered from a perusal of its bank statement that was filed before the A.O. On the basis of his aforesaid contentions, it was the c....
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.... by the CIT(Appeals), the A.O had failed to place on record any such material which would evidence laundering of the assessee's unaccounted money through paper companies in the garb of the amount received from the aforesaid share subscriber company i.e. M/s. Lovely Suppliers Pvt. Ltd. (supra). Rebutting the adverse inferences drawn by the A.O as regards the authenticity of the transaction in question; it was observed by the CIT(Appeals) that the substantial documentary evidence that were filed by the assessee in support thereof i.e. share application form, bank statement of the share applicant company, PAN, return of income a/w. audited accounts of the share applicant company, memorandum of association, article of association, therein duly proved the same. Considering the aforesaid facts, the CIT(Appeals) drawing support from the judgment of the Hon'ble High Court of Chhattisgarh in the case of Pawan Kumar Agrawal Vs. ITO, Ward 2(2), Bilaspur, concluded that as the assessee by furnishing the aforesaid supporting documentary evidence to substantiate its claim of having received genuine share capital and share premium from the aforesaid share subscriber, had discharged the onus that ....
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....h an amount of Rs.34 lacs was channelized on 08.04.2013 as share application money to the assessee company. Also, it was observed by the CIT(Appeals) that other sums were also paid by the share subscriber company, viz. M/s. Lovely Suppliers Pvt. Ltd. (supra) to the assessee company out of the sale proceeds of its investment. It was observed by the CIT(Appeals) that as the case of the assessee investor company, viz. M/s. Lovely Suppliers Pvt. Ltd. (supra) for the year under consideration i.e. A.Y. 2014-15 was subjected to scrutiny assessment u/s.143(3), dated 08.02.2017, therefore, the said fact duly substantiated the authenticity of the transaction in question. On the basis of the aforesaid facts, it was concluded by the CIT(Appeals) that as the assessee by placing on record substantial documentary evidence had proved to the hilt the genuineness of the transaction, therefore, the A.O without carrying out any enquiry could not have justifiably drawn adverse inferences as regards the authenticity of the transaction in question. Accordingly, drawing support from the judgement of the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd. 216 CTR 195 and that of the Hon'bl....
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.... from M/s. Lovely Suppliers Pvt. Ltd. as an unexplained cash credit u/s.68 of the Act. In sum and substance, we would not hesitate to observe that the A.O had utterly failed in pointing out as to on what basis the asesssee's claim of having received the amount of share capital and share premium from the aforementioned share subscriber was to be dubbed as an unexplained cash credit u/s.68 of the Act. 11. Be that as it may, we find substance in the view taken by the CIT(Appeals) that now when the assessee in the course of the assessment proceedings had by placing on record substantial documentary evidence, viz. share application form, bank statement of the share applicant company, PAN, return of income a/w. audited accounts of the share applicant company, memorandum of association, article of association, details of registration of the share applicants, balance sheet etc., had duly substantiated the identity and creditworthiness of the share subscriber viz. M/s. Lovely Suppliers Pvt. Ltd., as well as established the genuineness of the transaction of having received share capital and share premium from the said share subscriber, therefore, the primary onus that was cast upon it to ....
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....tion towards share capital and share premium from M/s. Lovely Suppliers Pvt. Ltd., which is irrefutably evidenced on the basis of the material placed on record by the assessee in the course of the assessment proceedings, as well as evidenced by the fact that the said investment is duly reflected in the audited financial statement of the aforesaid investor company, then, in case the A.O had any doubt it was open to him to have made addition of the said amount in the hands of such share subscriber company. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of Lovely Exports (P) Ltd. (supra) and that of the Hon'ble High Court of Chhattisgarh in the case of Venkateshwar Ispat (P) Ltd. (supra). Accordingly, on the basis of our aforesaid observations, we are of the considered view that as the assessee before us had by placing on record substantial documentary evidence proved to the hilt the identity and creditworthiness of the share applicant, as well as the genuineness of its claim of having received share capital and share premium from the said share subscriber, therefore, in absence of any material proving to the contrary having been placed by the....