TaxTMI 
TaxTMI 
2025 (1) TMI 521
X X X X Extracts X X X X
X X X X Extracts X X X X
....ments appeal. 04. The facts in brief are that the assessee files its original return of income u/s 139 of the Act on 27.09.2013, declaring total loss of Rs. 8,33,753/-. The return was processed u/s 143(1) of the Act on 07.03.2014, accepting the returned income. The case of the assessee was reopened u/s 147 of the Act, after the AO received information that assessee is a beneficiary of bogus share capital of Rs. 1,50,00,000/- and accordingly, notice u/s 148 of the Act was issued on 14.03.2019, which the assessee complied with by filing return of income on 20.04.2019. Thereafter, the statutory notices u/s 143(2) & 142(1) of the Act, along with questionnaires were issued and duly served upon the assessee. The assessee replied to the said notices, from time to time by furnishing the details as called for by the ld. Assessing Officer. The assessee issued share capital to three concerns on face value of Rs. 10/- each thereby raising a sum of Rs. 1,50,00,000/-. ld. AO has given the details of these companies in the assessment order itself. According to the ld. AO, during search and post -search operation, some information were collected that the assessee who was related to Saraogi Grou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....00,000 shares at a face value of Rs. 10/- per share. The details are as follows: Name of Company No. of shares Face Value Share Premium Share Capital Raised in Rs. Dynamic Sarees P Ltd. 7,20,000 Rs.10/- Nil 72,00,000/- Berhampur Finance Leasing & Ltd. 6,70,000 Rs.10/- Nil 67,00,000/- Pilot Barter Ltd. 1,10,000 Rs.10/- Nil 11,00,000/- Total 1,50,00,000/- It is evident that the shares were issued at par and no premium was charged. The appellant in his submission has stated that the share application money was received through proper banking channels, and that the shareholder companies had sufficient fund in their books of account for the purpose of investment & the investments are reflected in their books of account. The appellant has submitted the Bank account statements of the shareholders to confirm that the transactions were made through banking channels. In the course of assessment proceedings details of share capital raised i.e., name & address of the share applicants, no of shares allotted and amount along with Form No- 2 filed with ROC, ITR acknowledgemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IT(a). a copy of order of Ld CIT(A) is enclosed herewith. " The said assessment order pertaining to M/s Kohinoor Sarees Pvt Ltd for A.Y: 2009-10 u/s 143(3) r.w.s 147 has been perused and it was observed that the AO had reopened the proceedings u/s 147 based upon the information received from ADIT(Inv) Unit-3(4) towards receipt of share capital to the tune of Rs. 2,10,00,000/-. Out of the said amount, an amount of Rs. 50 Lakhs was raised from M/s Berhampur Finance & Leasing Ltd. The AO in his assessment order, has accepted the share capital received from M/s Berhampur Finance & Leasing Ltd. and has not made any addition towards the same. Owing to all these reasons, a Remand Report was called for from the present Assessing Officer for her comments. However, it is observed from the Remand Report submitted by the AO, no discussion was made by the AO with regards to any further enquiries conducted in this regard especially in view of the contentions raised by the appellant. The contentions raised by the appellant has therefore not been controverted by the AO. In the said remand report, the AO has only reiterated that during the course of assessment proceedings Director....
X X X X Extracts X X X X
X X X X Extracts X X X X
....all the relevant document inter alia including the following: In support of Identity, appellant submitted Master data downloaded from ROC mentioning the three share subscriber companies as "Active" along with ITRS filed by the three share subscriber companies for the A.Y. 2012-13. In support of Creditworthiness, appellant submitted Books of accounts of three share subscriber companies showing fund position held with them, which has already been discussed earlier in this order. In support of Genuineness of Transaction, appellant submitted Bank statements to establish that the transactions through banking channel. In view of these discussions, I find that since all the share subscriber companies are active on ROC records and filing their ITR`s, the identity of these companies cannot be placed under doubt. Similarly no comments has been made by the AO regarding the sufficient funds available with the share applicant companies before investment and since the bank statements were placed before the AO, the respective fund inflow of these companies, has also not been doubted by the AO. The AO has also not been able to bring forth any fund flow statement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e AO in her Remand Report has placed reliance upon the judgement of the Hon. Delhi High Court in CIT vs Oasis Hospitalities Pvt. Ltd. The said judgement has been perused and it is observed that the Hon. Delhi Court in the said judgement is of the similar opinion that where the assessee offers an explanation to the AO by placing evidence regarding the identity of the investor along with relevant documentary evidences such as relevant bank statements, share certificates etc, the assessee has discharged the initial burden and, therefore, the burden shifts on the Assessing Officer to examine the source of the credit to be justified in referring to section 68 of the Act. The relevant part is being reproduced : "As far as creditworthiness or financial strength of the credit/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. This judgment further holds that once these documents are produced, the assessee would have satisfactorily discharge the onus cast upon him. Thereafter, it is for the AO to scrutinize the same and in case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tors by their submission dated 9.6.2014 in reply to the notice issued by the Assessing Officer under Section 142 of the Act dated 5.5.2014. The Tribunal also noted that the assessee had produced all documents, disclosed the names and addresses and PAN Numbers of the investors, copies of the share allotment advice, copies of the share application form, bank statement, statement giving details of share application, money receipt during the year, copy of Form No.2 evidencing return of allotment and copy of Form No.5 for increase in various capital. Further the assessing officer has issued notice to the investors under Section 133(6) on 11.06.2014 for carrying out independent verification of the transaction and those investors duly responded to those notice and filed the requisite details such as the number of 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. CIT (A) even called for remand report but the ld. AO did not given any finding in the remand report and merely opposed the deletion of addition. Finally, the ld. CIT (A) has noted that the assessee has filed all the evidences and the AO has not pointed out any defect or deficiency in these documents on record in the assessment proceedings as well as during remand proceedigns. The ld. CIT (A) after following the decision of Hon'ble Jurisdictional High Court in case of CIT Vs. Data ware private Ltd. [ITA no. 263 of 2011 dated 21.09.2011] and in case of PCIT Vs. Naina Distributors Pvt. Ld. in ITAT/112/2023, IA No. Ga/1/2023 dated 28.06.2023, allowed the appeal of the assessee. In the case of Dataware Private Limited (supra), the Hon'ble High Court has held that where the assessee has given PAN No. and other information along with name of creditors, the ld. AO should enquire from the AO of the creditors about the creditworthiness, genuineness of the transactions and whether such transaction has been accepted by the Assessing Officer in the case of the Creditors but instead of adopting such course, the Assessing Officer himself could not brand the creditors as unworthy of cre....