TaxTMI 
TaxTMI 
2025 (6) TMI 1613
X X X X Extracts X X X X
X X X X Extracts X X X X
....hare applicant has not been proved, thus primary onus on the assessee company to prove the creditworthiness of the share applicant. Ld. CIT(A) also ignored the facts that the share applicant has meager income of Rs. 10,650/- during the year whereas the share applicant has advanced the share application money of Rs. 2,02,83,000/-. " ITA No.480/ Ahd/2020 - Asst. Year 2010-11 1. "On the facts and in the circumstances of the case and in law, whether the Ld. CIT(Appeals) erred in deleting the addition on account of share application money of Rs. 1,88,33,760/- without considering the facts that creditworthiness of the share applicant has not been proved, thus primary onus on the assessee company to prove the creditworthiness of the share applicant. Ld. CIT(A) also ignored the facts that the share applicant has meager income of Rs. 78,710/- during the year whereas the share applicant has advanced the share application money of Rs. 1,88,33,760/-" ITA No.590/ Ahd/2020 - Asst. Year 2013-14 1. "On the facts and in the circumstances of the case and in law, whether the CIT(A) has erred in quashing the notice u/s 148 of the Act issued by the Assessing Officer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2010-11, initially no regular assessment/ scrutiny assessment was made in the case of the assessee; that accordingly, there was no challenge to the validity of the re-assessment proceedings in these two years. In the third year, before us i.e. Asst. Year 2013-14, the assessee had been subjected to scrutiny assessment initially and order passed under section 143(3) of the Act; that subsequently, the impugned re-assessment proceedings were resorted to, the legality of which was challenged before the ld.CIT(A). The ld.counsel for the assessee contended that the ld. CIT(A) in first two years deleted the addition on merits, finding the assessee to have discharged its primary onus of proving the genuineness of the transaction; that in the third year i.e. Asst. Year 2013-14, he held the proceedings under section 147 itself to be invalid, and accordingly, set aside the order passed by the AO. It is, in this background, it was contended that the Revenue has filed the present appeal before us. 7. The ld.counsel for the assessee stated that since the share applicant in all three years is the same, the explanation of the assessee regarding the share application is also the same, and the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....credit-worthiness of the share applicant. The assessee stated that entire money was paid by the share applicant through banking channel. The AO, however, noted from the bank account of "MMJ" that immediately before the issuance of cheques for investment in the assessee-company there were credits of the same or higher amounts in the bank account of "MMJ". The data in this regard is tabulated at page no.4 and 5 of his order. He noted that some of the amounts were deposited in cash. Accordingly, show cause notice was issued to the assesse as to why the entire share application money be not added to the income of the assessee under section 68 of the Act, in the absence of satisfactory explanation for the source of the same. The assessee submitted response, which contained the details of the share application money received from "MMJ", the person from whom the amounts were received by "MMJ" along with copies of bank entries of "MMJ". The AO however held that since the assessee had not explained the nature or purpose of the amounts given by various persons to "MMJ", credit-worthiness of "MMJ" had not been established. He also noted from the financial statement of the assessee-company tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ablish the credit-worthiness of investor company stood discharged. 15. The ld.counsel for the assessee, on the other hand, pointed out that the assessee had duly demonstrated credit-worthiness of the depositor, Shri "MMJ", by demonstrating that all investments by him were made through banking channels, and all details of the credit entries in his bank account were also furnished to the AO. He pointed out that this fact was also noted by the AO in his order wherein the details of all credits in the bank account of "MMJ" were noted to be furnished by the assessee. He contended, therefore, that the assessee had proved the credit-worthiness of Shri "MMJ" and had also gone extra length of proving the source of source also; that, therefore, the order of the ld.CIT(A) holding that the assessee has discharged its primary onus of proving the genuineness of the transaction needs to be confirmed. 16. Having heard contentions of both the parties, we do not find any merit in the contentions of the ld.DR that the assessee had failed to discharge its primary onus of proving the genuineness of share application money received during the impugned year. The finding of fact, recorded by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Considering the same, we agree with the ld. CIT(A) that the assessee had established all the ingredients, which were necessary to prove the genuineness of the share application money received in terms of section 68 of the Act. We agree with the ld. CIT(A) that the assessee had provided the identity of the investors(PAN,ITR filed), genuineness of the transaction(transaction shown to be done through banking channels, confirmation of the share applicant filed), as also credit-worthiness of the same by filing even details of persons who had advanced money to the investor for making the investment in the assessee-company. We completely agree with the ld.CIT(A) that the assessee had discharged the primary onus cast on it, by filing the required document and explanation before the AO. 19. The ld.CIT(A), we find, thereafter, notes that the assessee having so discharged its onus, it was thereafter for the AO to have conducted further inquiries before holding the assessee's explanation as unsatisfactory, and finding no such inquiry had been done by the AO, accordingly, he went on to delete the addition made under section 68 of the Act. His finding in this regard are at page 19 of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issed by the Hon'ble Supreme Court. In view of this, the learned AR requested to delete the addition made by the AO. I have gone through the decision of the Hon'ble High Court and found that the ratio is applicable to the facts of the case and the appellant deserves relief. - 20. We are in complete agreement with the ld. CIT(A) in this regard also. The assessee having discharged primary onus by filing all necessary documents, the onus thereafter shifted to the Department, who needed to carry out further inquiry before arriving at any conclusion or finding with regard to the explanation furnished by the assessee being unsatisfactory, and having failed to do so, therefore, the ld. CIT(A), we hold, has rightly held that the explanation of the assessee cannot be said to be unsatisfactory for the purpose of invoking section 68 of the Act. 21. The case of the Revenue of the credit worthiness of the share applicant not being established is we find, incorrect. The assessee having demonstrated the fact of the share applicant having made investment through banking channels and having even provided details of the source from where the share applicant made the advance by giving d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case, and applying correctly the proposition of law to it. The grounds raised by the Revenue are accordingly dismissed. 26. The appeal of the Revenue is dismissed. 27. ITA No.480/Ahd/2020 - Asst. Year 2010-11 28. The issue raised in the above appeal is reflected in the following solitary ground: 1. "On the facts and in the circumstances of the case and in law, whether the Ld. CIT(Appeals) erred in deleting the addition on account of share application money of Rs. 1,88,33,760/- without considering the facts that creditworthiness of the share applicant has not been proved, thus primary onus on the assessee company to prove the creditworthiness of the share applicant. Ld. CIT(A) also ignored the facts that the share applicant has meager income of Rs. 78,710/- during the year whereas the share applicant has advanced the share application money of Rs. 1,88,33,760/-" 29. As stated hereinabove, the above ground is identical to the sole ground raised by the Revenue for Asst. Year 2009-10, with the only difference being the quantum involved. Accordingly, following our decision in the Revenue's case for Asst. Year 2009-10, we reject this ground of appeal and dismi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and examine all notices issued, explanation alongwith supporting evidence filed before the AO during the original scrutiny assessment. Para-2 of the show cause notice dated 18.03.2016 suggests that AO has examined preliminary explanation wrt huge share premium but he remained dissatisfied. He issued notice u/s. 133(6) to one of the largest investor namely Shri Mandhatasinhji Jadeja calling from him a copy of his bank statement of HDFC, Rajkot branch, alongwith a copy of ITR. Para-3 of the said show cause notice clearly mentions that cash has been deposited prior to issue of cheque to the company for investment in share. Para-3 also reads that creditworthiness of Shri Mandhatasinhji Jadeja is not proved as his income reflected in ITR is Rs. 34,798/- for assessment year under consideration. Accordingly, AO show caused the appellant company as to why sec.68 is not attracted in this case. Appellant submitted reply stating that share application was received from Shri Mandhatasinhji Jadeja who is one of the promoter Director of the company. Appellant filed confirmation letter, copy of ITR, bank statement of Shri Mandhatasinhji Jadeja, a certificate from govt. approved valuer justifyin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of appellate proceedings, Ld.AR cited various judgments of the jurisdictional High Courts/Tribunals and also various notable decisions of the Supreme Court. His main argument revolves around AO's jurisdiction to reopen the case on the basis of "change of opinion". From the copies of explanation, reply and evidence filed before the AO during the assessment proceedings, it is seen that case was selected for scrutiny for verification of share application money and share premium. AO has called for requisite information by issuing notice u/s. 133(6) of the Act from the investor i.e. Shri Mandhatasinhji Jadeja. i find that AO had examined the same bank statement and found cash deposit proximate to the date of transfer of fund to the applicant company for share application money and share premium. From the record, it is also clear that AO show caused the appellant on 18.03.2016 to explain the sources of fund which was rebutted by the appellant alongwith supporting evidence. From the date of issue of show cause notice dated 18.03.2016 to the date of passing assessment order u/s 143(3) dated 30.03.2016, AO had 12 days time to act upon the information supplied by the appellant. However....