TaxTMI 
TaxTMI 
2025 (1) TMI 756
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....return of income as nil on 06.09.2013, declaring total loss of Rs.14,487/-/-. The return was processed u/s 143(1) of the Act on 07.03.2014, accepting the return of 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.1,48,00,000/- and accordingly, notice u/s 148 of the Act on 22.09.2017. The assessee complied with said notice by filing return of income on 15.09.3028. Thereafter, the statutory notices u/s 143(2) & 142(1) of the Act were issued, along with questionnaire and were duly served upon the assessee. They were replied from time to time furnishing the details called for by the ld. Assessing Officer. The assessee noted that the assessee has issued equity shares capital to four parties on face value of Rs.10 each thereby raising a sum of Rs.1,48,00,000/-. The ld. AO has given the details of these companies in the assessment order itself. According to the ld. AO, during search and pre-search operation, some information was collected that the assessee who is related to Saraogi Group has availed some bogus accommodation entries in the form of share capital. The assessee filed....
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.... Nil 13,00,000/- Berhampur Finance & Leasing Ltd. 5,00,000 Rs.10/- Nil 50,00,000/- Pilot Barter Ltd. 7,30,000 Rs.10/- Nil 73,00,000/- Swift Barter Pvt. Ltd 1,20,000 Rs.10/- Nil 12,00,000/- Total 1,48,00,000/- 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 share holder 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 acknowledgement, relevant bank statements showing receipt of such share capital, copies of audited accounts of the share applicants, share application forms etc were submitted before the AO by the appellant. On perusal....
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....raised from M/s Berhampur Finance & Leasing Ltd. The AO in his assessment order, has accepted the entire 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 Directors of these three share subscriber companies did not appear in response to the notices u/s 131. On the above point appellant submitted the rejoinder to the remand report. From the rejoinder, following points were noted with regard to the said ground: (a) During Assessment proceedings the appellant submitted following details to prove the genuineness of the transaction, identity & creditworthiness of the shareholders: (i) share applica....
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....tements to establish that the transactions through banking channel. In view of these discussions, I find that since the share subscriber companies are active on ROC records and have been filing their ITR`s regularly, 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 or any evidence to substantiate his allegation that it was the unaccounted money of the appellant which was brought back in the form of share capital. I find that in the assessment order, there is singular absence of any enquiry conducted by the AO regarding the creditworthiness of the share applicant companies as well as genuineness of the transactions. Similarly, since the share applicant companies regularly filed their Income Tax Returns which were duly processed u/s 143(1), their identity cannot be placed under doubt, especially owing to the fact that the Dep....
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....e 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 he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the AO and he cannot go into the realm of suspicion." The Hon'ble Jurisdictional High Court in the case of CIT VS. Dataware Private Ltd. [ITAT No. 263 of 2011 dated 21.09.2011] while examining the issue of addition of share application money received by the assessee therein u/s 68 of the Act, held that after getting the PAN number and getting the information that t....
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....ction 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 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 lear....