TaxTMI 
TaxTMI 
2024 (4) TMI 423
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....8 on 23.10.2017, declaring the total income of Rs. 6,24,260/-. The book profit under MAT was declared of Rs. 33,22,460/-. Case of the assessee was subsequently selected for scrutiny through 'CASS', statutory notice u/s 143(2) and 142(1) of the Act a/w queries have been issued on the assessee. As the assessee has not complied with the notice, further show cause notices were issued on 22.10.2019, 20.11.2019 & 27.11.2019. Later on, the case of the assessee was transferred from I.T.O., Ward-3(1) to I.T.O., Ward-1(4), as per the provisions of sections 129 of the Act, a letter for change of incumbent and notice u/s 142(1) along with questionnaire was issued on 10.12.2019 requiring the assessee to make compliance of queries on or before 13.12.2019. In response the assessee filed written replies with details and documents, which have been duly perused and placed on record by the Ld. AO. The reasons for selection of the case of complete scrutiny were: (i). "Large share premium received during the year (verify applicability of sec. 56(2)(viib) of any other relevant section) and (ii). "Higher turnover reported in Service Tax Return as compared to ITR". 4. With regard to higher tu....
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....o generate such fund for investment in the assessee company. Though Axis Propbuild Pvt. Ltd. has share capital and reserve of Rs. 5,99,83,539/- in its balance sheet but it is same from preceding financial years. No share capital and reserve has got changed during the current financial year. In view of these facts, the creditworthiness of the shareholder and genuineness of the transactions are not established. Therefore, share application money received of Rs. 2,00,00,000/- from Axis Propbuild Pvt. Ltd. is hereby treated as unexplained credit u/s 68 read with Section 115BBE of the Income Tax Act, 1961, for the year under consideration and added to the total income of the assessee and tax is payable under Section 115BBE of Income Tax Act, 1961. 7. With the aforesaid observations, Ld. AO has treated the share application receipts of M/s Axis Propbuild Pvt. Ltd. as unexplained credit u/s 68 of the act and to make an addition of Rs. 2,00,00,000/-, to the returned income of the assessee. Aggrieved by the order of Ld. AO, the assessee has filed an appeal u/s 246A of the Act with the jurisdictional CIT(A), Raipur-1, which was subsequently migrated to National Faceless Appeals Centre (In b....
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....ut Rs. 6 crore. v) MOA and AOA of investor, PN 71 to 92 of PB. vi) Details of source of source of investment, PN 53 of PB. 2. Source of source substantiated Source of source also substantiated by the assessee. Investor company received money from Toplink Projects Pvt. Ltd. Following documents were filed to establish source of source: - i) Computation of income and acknowledgement of ITR , PN 93 & 94 of PB. ii) financial statements of investor, PN,95 to 111 of PB. Balance sheet at PN 101 of PB. Profit& loss a/c at PN 102 of PB. iii) Bank statement of investor, PN 112 & 113 of PB. No cash deposit. All the legal & cogent evidence remained undisputed. No adverse material brought on record by AO. 3. Summons u/s 131 was issued to Axis Propbuild Pvt. Ltd. Director appeared and his statement was recorded on 23.12.2019. Identity stood established. 4. Director of investor appeared before AO Director of investor company Shri Asit Bhattacharya appeared before AO. His statement was recorded which is reproduced in PN 4 to I l of assessment order. Some relevant parts of statement are as under:- - Vide answer to question no. 1 of statement (PN 4 of order), he stated being c....
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....ere from the statement of director it is coming out that the AO has enquired & doubted about creditworthiness of investor company. Director has given details of source of investment and provided all the details /documents which was asked which has not been doubted by A(). ii) Meagre/ nil income It is not the case that investor made investment out of its income. Investor had substantial net worth, which stood accepted in its own case. Nothing brought on record to dispute net worth of investor. In view of this, magnitude of income was not relevant. Reliance on: - Anjani Associates vs ITO, ITA no. 27/RPR/2018 dt. 10.08.2018, PN 176 to 185 of PB, relevant observations in PN 183 para no. 16, last 6 lines. - DCIT vs Gandhi Capital (P) Ltd. (2022) 194 ITT) 396 (Surat) - Pr. CIT vs AMI Industries (India) P. Ltd. (2020) 424 ITR 219 (Bom.), out of ITA no. 51 dt. 28.08.2()16, PN 186 to 192 of PB, relevant observations at PN 190 & 191, para no. 20. - BST Infratech Ltd. vs DCIT (2023) 199 ITT) 6 (Kol.) - Delhi High Court in case of CIT vs. Vrindavan Farms (P) Ltd. (2015) 94 CCH 329 Del.), PN 135 to 137 of P B, relevant finding at PN 136, para no. 3, 2nd to 4th line. 12. Availabi....
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....in undisputed by the revenue, the investor have confirmed having made the investment, therefore, the addition made by the Ld. AO was uncalled for and unjustified. To strengthen the contentions raised by the Ld. AR, the reliance was placed on various case laws referred to supra in para 6 of the written synopsis as extracted hereinabove. It is the submission that the allegation of the Ld. AO regarding creditworthiness of the investor company was baseless and arbitrary. Regarding meagre/nil income of the investor company, it is submitted by the Ld. AR that the investment is made from the funds available in the form of substantial net worth of the investor company, which is nothing to do with its income. The revenue failed to be brought on record any cogent evidence or material to dispute the net worth of the investor company. Regarding failure of the director of the investor company to substantiate the creditworthiness of the investor, it is the submission that Ld. AO has not offered any comment on this aspect. Ld. AR placed his reliance upon various judgments referred to supra in para 11 of the written synopsis of the hereinabove. Ld. AR further drew our attention to observations of ....
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....1 (Raj.), the Hon'ble Tribunal had recorded a finding that the identity of the creditor had been established and he had also confirmed the loan. On these facts, the Tribunal deleted the addition and the HC held that this was a finding of fact, recorded by the Tribunal which did not warrant any interference by the HC In MM Wollens v. ACIT 20 Taxation 142 (Jaipur Trib.) it was held that the identity of the creditor was established, and that the creditor also affirmed having advanced the amount and the payment was made by crossed cheque and hence the addition u/s . 68 was held uncalled for. Further, the Hon'ble Supreme Court in the cases of CIT v. Steller Investments Ltd, held that the identity of the shareholder alone is required to be proved, in case of the capital contributed by the shareholder. Keeping in mind the facts of the case as discussed above respectfully following aforementioned decisions, I am in a considerate view that the addition made to the tune of Rs. Rs. 200,00,000/- u/s 68 of the Act in the impugned assessment order is required to be deleted as the genuineness and creditworthiness of the Investor Company M/s Axis Propbuild Pvt. Ltd., genuineness of t....
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.... possesses the total share capital and reserves & surplus of approx. Rs. 6 crores. We have further perused the documents of source of source, i.e., of M/s Toplink, who had made the entire investment in the Axis. As per the financial statement of the Toplink, it is evident that there was a gross total income of Rs. 16.86 crores for the year ended on 31.03.2017 i.e., in the relevant AY 2017-18. The source of source i.e., M/s Toplink also has share capital, reserves, and surplus in aggregate of Rs. 92.81 crores, represented by inventories (shares) of Rs. 71.48 crores and short-term loans and advances to the tune of Rs. 21.61 crores. Further, it is brought to our notice by the Ld. AR that the director of Toplink, Mr. Asit Bhattacharya, is also the director of the Axis, which shows that the investor and the source investor both have sister concerns. In view of the substantial turnover in Toplink of Rs. 16.86 crore and net worth of Rs. 92.81 crore, which is also an associated company of the Axis. The only finding of the Ld. AO that the investor's share capital and reserves were not changed from the preceding year also there is insufficient income cannot be the sole reason to characterize....