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2024 (8) TMI 541
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....82 ITR 540(SC) (ii) Commissioner of Income Tax v. Nova Promoters & Fin lease Pvt. Ltd. (2012) 18 taxmann.com 217 (Delhi). 2. That the Ld. CIT(A) has erred in law and on facts in holding the share application money of Rs. 2,19,91,020/- as genuine though it was found by AO after making detailed enquiry that either cash was deposited in bank accounts of share applicant or amount was transferred in their accounts just before the payments made by share applicants to assessee and the share applicants could not satisfactory explain the sources of credits in their bank accounts. 3. That the Ld. CIT(A) has erred in law and on facts in not making enhancement of addition made u/s 68 by Rs. 93,61,960/- as during the course of appeal proceedings, it was admitted by assessee that receipt of share application was Rs. 3,65,52,980/- as against Rs. 2,19,91,020/- taken by AO. 4. That the Ld. CIT(A) has erred in law in deleting the addition of Rs. 2,19,86,960/- by accepting the additional evidences of confirmation of Share Capital ignoring the facts that assessee had failed to furnish necessary details & evidences to prove the identity , creditworthiness and genuine....
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....sponse to the summons issued u/s 131 of the Act the shareholders appeared before AO and the AO recorded statements from the above shareholders. The shareholders furnished information before AO regarding their share application money. On perusal of the bank statement of the above shareholders the AO found that before making advances, the amounts to the assessee company the shareholders either deposited in cash or transferred amounts from some other accounts, or either sourced from sale of investment, gold ornaments, realization of loans, etc. The AO on analyzing the statements recorded and the documents placed on record by the shareholders he was of the view that the shareholders could not prove their creditworthiness to advance the share application money to the assessee. The AO, therefore, treated the share application money of Rs. 2,19,91,020/- from the above said parties as an unexplained credit u/s 68 of the Act holding that the assessee has not proved the identity, creditworthiness and genuineness of the shareholders. 5. Similarly, an addition of Rs. 2,19,86,960/- was made in respect of the share applicants where the assessee has not filed any confirmed copies of accounts, ....
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....(All.); 7. CIT Vs. Value Capital Services Pvt. Ltd. (304 ITR 334) (Del.); 8. CIT Vs. AKJ Granites Pvt. Ltd. (301 ITR 298) (Raj.); 9. CIT Vs. G.P. International Ltd. (325 ITR 25) (P&H). The Ld.CIT(A) considering the submissions of the assessee and the evidences placed on record deleted the addition of Rs. 2,19,91,020/- made by the AO. 8. Coming to the addition of Rs. 2,19,86,960/- the assessee furnished additional evidences before the ld.CIT(A) in terms of Rule 46A(1)(b) of the IT Rules. In the additional evidences the assessee furnished confirmations of the shareholders, bank statements, copies of demand draft, copies of Income tax returns, etc. The additional evidences were forward to the AO and on obtaining the remand report the Ld.CIT(A) based on the findings of the AO and the evidences furnished by the assessee deleted the addition of Rs. 2,19,86,960/-. 9. The Ld. DR strongly supported the orders of the AO. On the other hand, the Ld. Counsel for the assessee strongly placed reliance on the orders of the Ld.CIT(A). The Ld. Counsel for the assessee further submits that the ld.CIT(A) deleted the addition of Rs. 2,19,86,960/- based on the remand ....
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....ar as the addition of Rs. 2,19,91,020/- is concerned we observe from the assessment order that the AO issued summons u/s 131 of the Act to the shareholders and the shareholders appeared before the AO and their statements were also recorded, wherein the shareholders have deposed having advanced monies to the assessee company towards share application money. The shareholders have submitted the source of investments, either their own money, from out of sale of gold, jewellery, savings, loans taken from HUF, repayment of loans, etc. to prove their creditworthiness in lending the money to the assessee. However, we find that the AO records a finding that assessee has failed to prove the identity of the share applicants. We failed to understand as to how the AO came to this conclusion that the identity of the share applicants was not proved even though all the shareholders have responded to the summons u/s 131 of the Act, appeared before the AO and the AO also recorded statements from all the shareholders. In our opinion the assessee proved the identity and the genuineness of the transactions. In so far as the creditworthiness of the shareholders is concerned, we observe that all the shar....
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....res in the assessee company, it has been observed that the applicants have sufficient balance in their account to apply for shares and all the transactions have been done through banking channel". 3. That assessee filed the details in the form of confirmation, ITR, Bank statements, PAN details to prove the identity, capacity to invest and genuineness of the transaction which too have been accepted by the AO in remand proceedings. 4. That no documents were found/ seized during the search, on the basis of which proceedings under section 153C were initiated against the assessee, to suggest that share capital received by assessee company was bogus or that the assessee had paid cash in exchange of receiving the cheque. On merits of the case the various judicial pronouncements on the above facts/ issues relied upon by me also are as under: In the case of Commissioner of Income-tax v. Jay Dee Securities & Finance Ltd 350 PPR | IFIED ITR 220 Hon'ble Allahabad High Court (jurisdictional High Court) has held that Section 68 of the Income-tax Act, 1961 - Cash credits [Share application money]-Whether where assessee had produced return of income filed by....
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....al HC, have the binding force on this office. I am in respectful agreement with the Allahabad High Court and Supreme Court as stated above, and in the background of facts and law narrated above, hold that the assessing officer had wrongly made the addition and the identity, creditworthiness and transactions' genuineness should have been investigated properly in the first instance itself and had onus would have been discharged properly then, it would not have resulted in the current proceedings: Share application money u/s 68 Rs. 2,19,91,020/- Share application money u/s 68 Rs. 2,19,86,960/- Hence I delete the addition of (Rs. 2,19,91,020/- + Rs. 2,19,86,960/-)" Rs. 4,39,77,980/- 18. On perusal of the findings of the AO in the remand report, we observe that the AO had commented on the additional evidences, wherein the AO stated that "the assessee company in the form of additional evidence has filed confirmation of share application money during the appeal proceedings. From the perusal of the copy of ITR/Bank statement of all the parties who have applied for shares in the assessee company, it has been observed that the applicants have sufficient balance in their ....
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....1), wherein the coordinate bench held that when the assessee is following mercantile system of accounting and maintaining books of account the AO can reject the book results and assessed the income to his estimate or best judgment. The AO is required to point out the defects in the accounts of the assessee and seek his explanation qua the defects. It was held that if the assessee fails to explain the defects then the AO can compute the income according to his estimation. The coordinate bench held that the scheme of Act does not authorize the AO to make a disallowance according to his wishes rather it provides that he should point out the defects of the assessee. It was held that the AO nowhere indicated the total amount of expenditure claimed by the assessee and which specific voucher was not in accordance with law. It was held that AO has not pointed out as to which expenses were found to be unverifiable. With these observations the Tribunal deleted the ad hoc disallowance made by the AO. More or less the facts in hand are identical to the facts of the coordinate bench in ACIT Vs. Ganpati Enterprises Ltd. (supra). 24. In view of the above discussion, we do not see any infirmity....
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....capital to Rs. 1,31,42,820/-. However, the AO made addition of Rs. 22,02,620/- as an unexplained credit of the assessee. The Ld. Counsel submits that the assessee furnished share application forms duly signed by the investors and also the receipts for the amounts invested which proves that the assessee did receive the share application money from the shareholders and the transaction is genuine. 28. The Ld. Counsel further submits that the shareholders are all small time investors who had invested in shares of the assessee company and the amount involved is very meager as could be seen from the list of shareholders as extracted by the AO at pages 2 & 3 in the assessment order. The Ld. Counsel further submits that the AO had made addition of share capital and such a course of action is not available to the Ld. AO because the share application money cannot be added to the income of the assessee which is a limited company. Reliance was placed on the following decisions: 1. CIT Vs. Lovely Exports Pvt. Ltd. 299 ITR 2698 (Del) 2. CIT Vs. Steller Investments Ltd. 251 ITR 263 (SC) 3. CIT Vs. Victor Electrodes Ltd. 329 ITR 271 (Del) 4. CIT Vs. Arunanand....