TaxTMI 
TaxTMI 
2025 (5) TMI 105
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.... the assessee has raised share capital of Rs. 6,21,40,500/- along with share premium of Rs. 110,28,34,500/- aggregating to Rs. 116,49,75,000/ -. The above said amounts have been received from 35 subscribers out of which 28 subscribers were from Kolkatta and the remaining 7 subscribers were from Mumbai. All the share subscribers are private limited companies. 2.1. Out of 7 subscribers from Mumbai, the AO examined the details furnished by the assessee in respect of following four companies :- (a) Newtown Mercantiles P Ltd (b) Intellect Tradelink P Ltd (c) Clubside Dealcom P Ltd (d) Momentum Agency P Ltd. The AO noticed that three companies mentioned above had common directors and common auditor. There were cross holding and cross investment of funds. He also noticed that these companies have declared losses. The AO issued notices u/s 133(6) of the Act, but they were returned un-served with the remarks "left", "unclaimed", "Not known" etc. The AO has also observed that the inspector of income tax also could not find these companies in the given addresses. 2.2. Out of 28 Kolkata based subscribers, the AO issued commission u/s 131(1)(d) of th....
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....see fails to prove the nature and source of cash credits. "Nature of cash credit" would mean that the assessee is required to show that it is not of revenue nature. In order to prove the sources, the assessee should discharge initial burden to prove the cash credits placed upon his shoulders of the assessee u/s 68 of the Act, i.e .., the assessee is required to prove three main ingredients, viz., the identity of the creditor, the genuineness of the transactions and the credit worthiness of the creditor. If the assessee discharges the initial burden, then the burden would shift to the shoulders of the assessing officer, i.e., it is the responsibility of the AO to disprove the claim of the assessee by bringing evidences on record. 5. We shall now examine the facts prevailing in the present case. We noticed that the assessee has received share capital & share premium from 35 persons, which consisted of 7 from Mumbai and 28 from Kolkatta. We noticed that the AO analysed the details of four subscribers located in Mumbai. The AO issued commission for examining 18 subscriber companies located in Kolkata. It is pertinent to note that the AO has not given the name of those 18 companies f....
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.... From the time line stated above, it can be noticed that the assessment proceedings were effectively conducted between 1 19-03-2015 and 31.3.2015, even though the second 142(1) was issued on 23.02.2015. It is also the allegation of the assessee that the assessment order would not have left the hands of the AO on 31.3.2015, being the limitation day. However, the Ld A.R submitted that this contention of the assessee may be left open. In any case, the above said time lime would show that the AO has not properly and effectively examined the documents furnished by the assessee to discharge the burden placed upon its shoulders. He has made the impugned addition on the basis of examination of only four subscribers, which proves that the AO has mostly relied upon the report given by the Investigation wing in respect of alleged accommodation entry providers. 9. Be that as it may, we notice all the 35 share subscribers are private limited companies only. The Ld A.R submitted that the assessee has furnished following documents in respect of each of the 35 subscribers :- (a) PAN number of subscriber companies. (b) Master data/Certificate of incorporation He submitted t....
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....to support this view. In the case of CIT vs. Value Capital Services (P) Ltd (2008) 307 ITR 334 (Delhi), it has been held that the additional burden is on the revenue to show that even if the share applicants did not have means to make the investment and the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. (b) In the case of CIT vs. Dwarkadhish Investment (P) Ltd (2010)(194 Taxman 43)(Delhi), it has been held as under :- "In a case where assessee proves identity of creditors/share applicants by either furnishing their PAN numbers or income tax assessment numbers and shows genuineness of transaction by showing money in his books either by account payee cheque or draft or by any other mode, then onus of proof would shift to revenue and just because creditors/ share applicants could not be found at address given, it would not give revenue right to invoke sec. 68." (c) In the assessment order, the AO has also observed that these creditors did not respond to the notices issued u/s 133(6) of the Act. The co-ordinate bench of Delhi Tribunal has held in the case o....
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....o question of law as such arises." In our view, the above said decision of Hon'ble Supreme Court will apply to the facts of the present case. 13. We noticed that the assessment was effectively conducted for a few days only. Hence, there was no proper enquiry conducted by the AO and it appears that the AO was mainly guided by the report of the investigation wing with regard to the paper companies providing accommodation entries. The question that arises is whether the Assessing Officer could have made addition under section 68 of the Act by relying upon report of investigation wing or the statement given by the alleged accommodation entry providers. It is opposite to refer to the decision rendered by the Coordinate Bench in the case of M/s. Moraj Realty Pvt. Ltd. (ITA No.708 & 709/Mum/2019 dated 08-12-2020), wherein the decision was rendered by following the decisions rendered by Hon'ble Bombay High Court. It was held as under :- "17. Moreover, except for relying on the statement of VVB the Assessing Officer has not done any inquiry himself except for referring to a notice issued under section 133(6) in A.Y. 2009-10 only. The learned counsel of the assessee ha....
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....gandeep Infrastructure Put. Ltd. (supra) has held as under :- We find that the proviso to Section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1^st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre proviso Section 68 of the Act laid down by the Courts namely the ....
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....rived at by the Settlement Commission which was not disturbed by High Court in its writ-jurisdiction. In the present case the person who have subscribed to the share and paid share premium have admittedly made statement on oath before the Assessing Officer as recorded by the Tribunal. No finding in this case has been given by the Authorities that shareholder/share applicants were unidentifiable or bogus. High Court find that the impugned order of the Tribunal upheld the view of the CIT(A) to hold that share premium is capital receipt and therefore, cannot be taxed as Income. This conclusion was reached by the impugned order following the decision of this Court in Vodafone India Services Pvt. Ltd. (supra) and of the Apex Court in M/s G.S. Homes and Hotel P. Ltd. (supra). In both the above cases the Court has held that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income. It was further pertinent to note that the definition of income as provided under Section 2(24) of the Act at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. Th....
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.... of the learned Counsel and we have also gone through the records. The basic contention of the learned Counsel appearing for the Appellants revolves upon the stand taken by the Appellants whether the shareholders who have invested in the shares of the Respondents are fictitious or not. In this connection, the Respondents in support of their stand about the genuineness of the transaction entered into with such Companies has produced voluminous documents which, inter alia, have been noted at Para 3 of the Judgment of the CIT Appeals which reads thus : "The assessment is completed without rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows : 1. Sony Financial Services Ltd. - CIN U74899DL1995PLC068362- Date of Registration 09/05/1995 (a) Memorandum of Association and Article of Association (b) Certificate of Incorporation (c) Certificate of Commencement of Business (d) Acknowledgment of the Return of Income AY 08-09 (e) Affidavit of the Director confirming the investment (f) Application for allotment of shares (g) Photocopy of th....
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....1 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the 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 anything further. In the premises, if the Tribunal came to the conclusion that the assessee has 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 is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." 9. This Court in the Judgments relied upon by the learned Counsel appearing for the Respondents, have come to the conclusion that once the Assessee has produced documentary evidence to establish the existence of such Companies, the burden would shift on the Revenue-Appellants herein to establish their case. In the present case, the Appellants are seeking to rely upon the statements recorded of two persons who have admittedly not been subjected to cross examination. ....
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....ATE LIMITED AAKCA2151R 20,95,400 9,53,05,094 9,74.00,494 50,00,000 5 13 . ARROWSPACE CONSTRUCTION CONSULTANTS PRIVATE LIMITED AAKCA2263L 20,93,800 9,37,08,413 9,58.00,213 30,00 000 3.13 5 ARYADEEP ISPAT PRIVATE LIMITED AAKCA2391P 22.01,650 10.15.47.923 10,37,49,573 1,95,00,000 18 80 ASHYANA STEEL PRIVATE LIMITED AAKCA2386E 21,55,925 11.17 91 274 11 39,47,199 47,00.000 4.12 7 CHAMPION ADVISORY PRIVATE LIMITED MAECC6553B 50,50.050 24,98,00,258 25,48,50,316 2,48,00,000 9.73 CHINAR FINVEST PRIVATE LIMITED AACCC12268 27,14.11,743 71,68.05.824 98,82,17,567 7.67 50.000 7.77 9 CLAUDIA SALES PRIVATE LIMITED AAECC7094H 22.52,100 15,19,33.970 15.41,91,070 35,00,000 227 10 CLUBSIDE DEALCOM PRIVATE LIMITED AABCC0191L 73,83.000 51,25,46,697 51,99,29,697 7.74.00.000 14.89 11 DEER GOLD CREATION TRADERS PRIVATE AADCD6890P 24,87.000 8,77.92,238 9,02,79,238 20,00.000 222 12 EXCELLENCE AVIATION ACADEMY PRIVATE AABCB7932L 8.82.25,000 13 FINE RETALORS PRIVATE LIMITED AABCF8067N 20,89,400 8.93.11,101 9,14,00,501 19,00.000 2.09 14 GRACEFUL COMMERCIAL PRIVATE LIMITED AAECG3570E 16.80,128 18.35.48.190 18.51.28.318 7,00,000 0.38 15 HEAVEN COMMOSALES PRIVATE LIMITED AA....