TaxTMI 
TaxTMI 
2024 (12) TMI 1385
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....e by the Assessing Officer (in short "AO") by treating the share application money received by the assessee as income of the assessee from unexplained sources. 4. We have heard the rival contentions and gone through the records. In this case, the AO during the assessment proceedings noted that the assessee had claimed to have received share capital to the tune of Rs. 2,95,00,000/- during the financial year (FY) under consideration. On being asked to explain in this respect, the assessee filed the requisite details and documents to prove the identity and creditworthiness of the share subscribers and genuineness of the transactions. However, the AO without pointing out any defect or discrepancy in the evidences furnished by the assessee, issued summons u/s. 131 of the Act to the directors of the assessee company for their personal deposition. However, the directors of the assessee company did not appear for personal deposition. Thereafter, the AO by way of a small and cryptic order held that the assessee had failed to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction. He, accordingly, made the impugned addition treating the said sh....
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.... 8. The Ld. CIT(A) has further noted that the assessee during the assessment proceedings had duly filed the complete details of names and addresses of the five share subscriber companies, their PAN along with copies of relevant documents such as audited Balance Sheet, Profit & Loss Accounts along with schedules forming part of such Balance Sheet and P&L Account. Copies of bank statements of the assessee as well as the bank statement of share applicant companies for the relevant period were also supplied and even the immediate source of all the share applicant companies from which the investments were made, were also provided. It was also demonstrated by the assessee before the Ld. CIT(A) that in the immediate preceding assessment year, the assessee had issued 672100 shares of the face value of Rs. 10/- per share and at premium of Rs. 190/- per share. However, the AO did not raise any doubt about the charge of such share premium in the earlier assessment year. The Ld. CIT(A) noted that in the circumstances, charging of the premium at the same rate for the year under consideration could not be placed under doubt. The Ld. CIT(A) has further noted that all the share subscribers had dul....
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....st March 2012 Turnover as on 31st March 2012 Investment made in the Assessee company during FY 2011-12 1. Ambaa Securities Pvt. Ltd. Rs. 10,64,89,710.91 Rs.59,72,911/- Rs.18,00,000/- 2. Ritesh Enclave Pvt. Ltd. Rs 14,82,05,485.22 Rs.1,10,30,433/- Rs.63,00,000/- 3. Ritesh Nirman Pvt. Ltd. Rs 13,48,25,960.13 Rs.99,79,342/- Rs.1,48,00,000/- 4. Ritesh Projects Pvt. Ltd. Rs 11,66,59,890.46 Rs.1,46,71,605/- Rs.35,00,000/- 5. Ritesh Vinimay Pvt. Ltd. Rs 6,09,27,413.30 Rs.33,82,795/- Rs.31,00,000/- 9.2. Regarding the genuineness of the transaction, the Ld. CIT(A) noted from the various details and documents furnished by the assessee that the genuineness of the transaction could not be doubted. 10. The Ld. CIT(A), thereafter, has relied upon various decisions given by the Hon'ble High courts including that of the Hon'ble jurisdictional Calcutta High Court and held that the AO was not justified in making the impugned additions. 10.1. So far as the non-appearance of the directors of the assessee company before the AO was concerned, the Ld. CIT(A) had placed reliance upon the decision of the jurisdictiona....
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....e said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise." {emphasis ours} b) The ITAT Kolkata Bench in ITO vs Cygnus Developers (I) P Ltd in ITA No. 282/Kol/2012 dated 2.3.2016, held as follows: 9. We have considered the rival submissions., We are of the view that order of CIT(A) does not call for any interference. It may be seen from the grounds of appeal raised by the Revenue that the Revenue disputed only the proof of identity of the shareholder. In this regard it is seen that for A Y.2004-05 Shree Shyam Trexim Pvt. Ltd., was assessed by ITO, Ward- 9(4), Kolkata and the order of assessment u/s/143(3) dated 25.01.2006 is placed ....
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....m 6 parties. In the course of the assessment proceedings, to verify the receipt of share capital, the AO issued notices u/s.133(6) to all the 6 share applicants and in response, they all confirmed the transactions submitted the details/document in respect of the subscription of shares of the appellant. In the course of the appellate proceedings, the appellant filed copy of each of the assessment orders passed in all the 6 cases of the shareholders for that year in which the share subscription amount has been received by the assessee company. Besides, the income-tax return filing acknowledgment, Audited Balance and sheets as on 31.03.2012, relevant bank, copy of the notices issued u/s 133(6) to the shareholders and reply thereof were also submitted. It is observed form the details & documents furnished by the appellant that in the cases of 2 share holders, namely 1) M/s Alfort Merchants Private Limited, 2) M/s Sharekhan Merchants Private Limited, the Assessment Orders u/s 143(3) for Lne AY 2012-13 were passed u/s. 143(3) without taking any adverse view. Therefore, it can be assumed that the respective Assessing Officers have all verified the accounts and therefore any amoun....
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....allowed. Ground no. 3 is general in nature, which does not require adjudication. 6. In the result, the appeal of the assessee is treated as allowed." 6. A perusal of the above concluding part of the order of the CIT(A) reveals that the ld. CIT(A) has not only taken note of the accounts of the share subscribers but also, noted that all the six share subscribers were assessed u/s 143(3) of the Act. Out of which, no additions were made in case of two share subscribers. However, in the case of other four share subscribers, the additions were made regarding their source of income. Now, it is settled law, once the addition has been made in the hands of the share subscribers, the investments by which share subscribers in the hands of the other company whose shares have been subscribed stood explained then no additions in such a case would be warranted in the hands of the assessee company as it would amount to double additions of the same amount. Even if the said addition stand confirmed in the appeal or stand deleted, in both the instances, the investment in the hands of the assessee company will stand proved. Reliance has been placed in this respect on....
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....of PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd. reported in (2017) 84 taxman.com 58 (Bom) wherein the Hon'ble High Court has held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of "Crystal networks (P) Ltd. vs CIT" (supra) has held as under: "We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the ....
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....pt or reject it. Where the assessee furnishes full details regarding the creditors, it is up to the Department to pursue the matter further to locate those creditors and examine their creditworthiness. While drawing the inference, it cannot be assumed in the absence of any material that there have been some illegalities in the assessee's transaction. Held, dismissing the appeal, that the allegations against the assessee were in respect of thirteen transactions. The Assessing Officer issued a show-cause notice only in respect of one of the lenders. The assessee responded to the show-cause notice and submitted the reply. The documents annexed to the reply were classified under three categories namely: to establish the identity of the lender, to prove the genuineness of the transactions and to establish the creditworthiness of the lender. The Assessing Officer had brushed aside these documents and in a very casual manner had stated that merely filing the permanent account number details, and balance sheet did not absolve the assessee from his responsibility of proving the nature of the transaction. There was no discussion by the Assessing Officer on the correctness of the sta....
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....f shares subscribed, ledger account, bank statement, explanation for source of funds, income tax returns and audited financial statements and also assessment order framed under Section 143(3) of the Act in all the cases. The Tribunal further noted that in spite of such being the factual position, the only reason for making the addition in the hands of the assessee the director of the assessee company did not respond to the summons issued by the assessing officer under Section 131 of the Act. The correctness of this was also considered by the learned Tribunal and it was held that non-appearance of the director cannot be made a ground for addition in the hands of the assessee under Section 68 of the Act when other evidence relating to the raising of share capital qua the share subscriber were available on record as furnished by the assessee and also cross verified by the assessing officer pursuant to the enquiry conducted in response to the notices issued under Section 133(6) of the Act. The learned Tribunal also referred to the decision of this Court in the case of Crystal Networks Pvt. Ltd. Vs. CIT. reported in 353 ITR 171 (CAL). Thus we find that there is no question of l....