TaxTMI 
TaxTMI 
2024 (8) TMI 541
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....omoters & 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 genuineness of the transaction, even after being provided ample opportunity. 5. That the Ld.....
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.... 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, copies of ITRs and bank statement of the shareholders. 6. In the course of appellate proceedings before the Ld.CIT(A) the assessee in so far as the addition of Rs. 2,19,91,020/- was concerned submitted that all the ....
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....ences 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 report of the AO, wherein the AO accepted that the share applicants have sufficient balances in the accounts to apply for shares and all the transactions have done through the banking channels. Therefore, the Ld. Counsel for the assessee submits that the Ld.CIT(A) has rightly deleted the ....
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....es 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 shareholders have deposed in their statements giving the sources for investments in the assessee company. If at all if the AO had any doubts for the creditworthiness of the shareholders he could have proceeded against the shareholders. 15. We find that the Hon'ble Allahabad High Court in the case of C....
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....ty 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 relevant shareholders who had paid share application money and had also produced confirmation of shareholders indicating details of addresses, PANs and particulars of cheques through which amount was paid towards share application money, Tribunal was justified in treating deposits in shape of share application money as genuine - Held, yes [Paras 6 & 7....
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....d 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 account to apply for shares and all the transactions have been done through banking channel". We observe that the Ld.CIT(A) on examining the information filed by the assessee in the form of confirmation, ITR, Bank statements, PAN details and also since there was no adverse material in the course of search to prove that the share application money is bogus and also following the decisions of the Jurisdict....
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....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 in the order of the Ld.CIT(A) in deleting the ad hoc disallowance made by the AO in support of unverifiable vouchers. This ground of Revenue is rejected. 25. Now we take up the appeal of the Assessee for the AY 2009- 10. The only issue in the appeal of the Assessee is in respect of the addition of Rs. 22,02,620/- made by the AO u/s 68 of the Act in respect of the share application money which was sustained by the ....
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....r 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. Arunananda Textiles Pvt. Ltd. 333 ITR 116 (Kar) 5. CIT Vs. Jay Dee Securities & Finance Ltd. 350 ITR 220 (All) 6. CIT Vs. Misra Preservers Pvt. Ltd. 350 ITR 222 (All) 29. Ld. Counsel further submits that in the following cases it was held that once the identity is established it is for the department to prove with evidences that funding was done by the assessee company itself. Ld. Counsel submits that it was held that once the assessee has identified the ....