TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 824
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....n account of share capital and share premium and further addition of Rs. 15,93,14,500/- was made u/s 68 in respect of advances received and shown under the head other liability. 3. Against such order, the assessee preferred the appeal before the Ld. CIT(A) who vide impugned order dated 20.06.2016 has allowed the appeal of the assessee and deleted the addition so made. 4. Aggrieved by the order of Ld. CIT(A), the Revenue is in appeal before the Tribunal on the strength of following grounds of appeal: "1. On the facts and in the circumstances of the case, The CIT(A) has erred in law and on facts in deleting the disallowances of Rs. 1.97,68,500/- on account of unexplained credits in the books of the assessee in the form of share capital and share premium u/s 68 of the IT Act 1961. 2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on fact in deleting the disallowances of Rs 15,93,14,500/-on account of new receipt of advance against project u/s 68 of the IT. At, 1961. 3. That the order of the CIT(A) is perverse erroneous and is not tenable on facts and in law. 4. That the grounds of appeal are without prejudice to each other. 5. That th....
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....e 6 of the assessment order, Ld. AO has tabulated the income declared by all the nine companies who gave the advances. According to this either these companies had not filed return of income or shown Nil income. The Ld. CIT-DR further submits that these companies have not engaged in the regular business activity and assessee has failed to file their complete audit report, Balance Sheet etc. therefore, their creditworthiness remained doubtful. The Ld. CIT-DR also stated that before ld. CIT(A)it was claimed by the assessee that out of total amount of Rs. 15,93,14,500/-, a sum of Rs. 5,20,74,500/- were transferred through journal entries in the accounts of these nine parties and no fresh funds were received during the year. Thus, to the extent of Rs. 5,22,74,500/- being not received during the year under appeal no addition could be made. With regard to the remaining amount of Rs. 10,70,40,000/-, the Ld. CIT(A) by admitting the additional evidences in shape to bank statements etc. of these parties, deleted the additions made. Ld. CIT-DR drew our attention to page 6 of the assessment order wherein the AO has specifically observed that no banks statement etc. were filed nor the assessee ....
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....roceedings along with evidences. Detail submission have been furnished in this regard before Ld. CIT Appeal which are reproduced at Para 5.2 Page 5-15 and the same may kindly be taken as read and relied herewith. It is submitted that all the facts with regard to the above issue has been discussed and dealt with during the course of assessment proceedings also but the assessing officer had gone into altogether different tangent and made the impugned addition just on the basis of surmises, conjectures and presumptions. All the adverse observations of the assessing officer dealt with in the following paragraph. In Para-3.1 Page 2-4 has made various adverse observations which are even not connected to the issue. Further it is not established by the assessing officer that why section 68 can be invoked in the circumstances as explained above. In nutshell the assessing officer has gone to that extent that assessee failed to prove the Identity, Creditworthiness and genuineness of the transaction of credit appearing in the books of assessee. It is also observed by Ld. AO that mere filling of PAN, Copy of ITR Etc. do not fill the obligation of discharging the onus. It is submitted th....
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....circumstances of the case as in the case of N.R. Portfolio P Ltd fresh capital has been introduced by the assessee company through banking channel in the year under consideration itself whereas in the present case of the assessee company no fresh capital/premium has been received by the assessee company. However, the same has been received through transfer/book entry which has duly been explained. Therefore, the lower authorities. Therefore, the judgement of N.R. Portfolio P Ltd is not applicable in the present case inter alia for this reason alone. The assessee is also placed reliance on the following latest judicial decisions wherein it has been held that in case of increase of share capital/premium by way of book entry, section 68 is not applicable at all. ➤ ITO Ward 1(4) Vs M/s Josan Deposits & Advances P Ltd. ITA No 2096/KoL/2017 A.Y. 2008-09. "8. We have considered the rival submissions and also perused the relevant material available on record. First of all we note that the assessee company had issued its shares during the year under consideration at premium to certain companies in lieu of the shares held by the said companies and thus there was no inflow of c....
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....ir Lordship that when the cast, did not pass at any stage and since neither the respective parties received any cash nor paid any cash, there was no real credit of cash in the cash book and the question of inclusion of the amount of the entry as unexplained cash credit could not arise. In our considered opinion, the ratio of this decision of the Hon'ble Jurisdictional High Court in the case of Jatia Investment Co. (supra) is squarely applicable in the facts of the present case and the Ld. CIT(A) was fully justified in relying on this decision for deleting the addition made by the AO u/s 68 by holding that the said provision was not applicable. We fully concur with the view of the Ld. CIT(A) and the case laws relied on by the Ld. CIT(A) to give relief to the assessee. Therefore, we are inclined not to interfere with the order of L.d. CIT(A) and confirm the order of Lil. CIT(A). 10. In the result, appeal of the revenue is dismissed." ➤ITO Ward 8(2) Vs Elative Building Solutions P Ltd. ITA No 2498/Del/2017 Α.Υ. 2012-13. "6. The AD noted that in some cases of Hon'ble High Court has held that if the AO is not satisfied with the documents filed by the a....
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.... of Smt. B. Jayalakshmi, (2018) 96 taxnmann.com 486 (Madras) held that where Commissioner (Appeals) on basis of remand report of Assessing Officer, allowed claim of assessee, revenue was not entitled to maintain an appeal before Tribunal against said order of Commissioner (Appeals). That being so, we decline to interfere in the order passed by the Id. CIT(A), his order on this issue, is hereby upheld and the grounds of appeal raised by the Revenue is dismissed. 10. In the result, the appeal of the Revenue is dismissed." In view of above circumstances, it is humbly prayed that Ld. CIT Appeal has rightly deleted the addition made by Ld. AO and may kindly be held so. 2. The next issue in the present departmental appeal is with regard to Advance against project of Rs. 15,93,14,500/- by treating it as alleged undisclosed income of the assessee under section 68 of the Act. Ld. AO has discussed this issue at Para 4 Page 4-7. Ld. CIT Appeal has dealt with this issue at Para-6 Page 18-30. Brief facts of the case are that the assessee company is engaged in the business of Real Estate. During the year under consideration the assessee company has received advances against the prope....
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....fferent, more particularly when the assessee company had discharged its onus as per section 68 of Income Tax act 1961 and proving the identity of the parties/persons, genuineness of the transaction and creditworthiness of the parties with the help of overwhelming evidences furnished during the course of assessment and appellate proceedings. Therefore, addition can't be made under section 68 of the Act. In view of above circumstances, it is humbly prayed that Ld. CIT Appeal has rightly deleted the addition made by Ld. AO and may kindly be held so." 8. Heard the Departmental Representative and perused the submission made by the assessee and the material available before us. Regarding the addition of Rs. 1,97,68,500/- made on account of issue of fresh share capital, it is seen that during the course of proceedings on the directions of the Bench on earlier occasions, assessee filed the copies of ledger accounts of various parties from where funds were transferred in the account of M/s Herry Poultries Pvt. Ltd. and M/s Paragon Overseas Pvt. Ltd. i.e. the applicant companies. From the perusal of these accounts, we find that the funds were received by the assessee in preceding year....
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.... extent of Rs. 1,97,68,500/-, stands explained and no addition can be made u/s 68 of the Act, in the year under consideration ie. A.Y. 2011-12. In view of the above facts and circumstances, I am of the considered opinion that the appellant has duly explained the source, identity and creditworthiness in relation to share capital/ share premium. Accordingly, I agree with the arguments of the appellant and findings of the A.O., are erroneous. Therefore, provisions of section 68 of the Act, are not attracted and accordingly, addition of Rs. 1,97,68,500/-, is deleted. Accordingly, ground no. 3 and 5, are hereby allowed." 9. From the perusal of the observations made by Ld. CIT(A) and after considering the copies of the ledger accounts filed by the assessee, we find that assessee has been able to demonstrate that the amounts were credited in the books of the assessee company in preceding years and there were journal entries from the account of M/s Mega Business Centres Pvt. Ltd. to the account of M/s Herry Poultries Pvt. Ltd. of Rs. 1,97,68,500/- on 10.07.2010 and from the account of M/s Ayush Portfolios Pvt. Ltd. a transfer entry of Rs. 1,00,00,000/- on 10.07.2020 to the account of ....
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....er, it is also seen that the assessee has not filed complete details like copies of audit report, balance sheet, bank statement, copies of ITR of all the companies mentioned above. Therefore the details filed by the assessee are also not complete (v) No bank statement has been submitted in respect of these companies barring a few. The reason of transfer of the said amounts on behalf of these companies has not been given. (vi) As these companies do not have any legitimate income and are not doing any business activities, they look like some paper companies acting as a conduit to provide accommodation entries to the companies which are in need of such accommodation entries. (vii) In the case of private limited companies, to lend money to a private limited company. certain legal requirements have to be met. The company which wants to lend to a private limited company has to pass a resolution in this regard. The assessee has not produced any evidence of any such resolution having been passed. (viii) It is the onus on the assessee to prove the identity, creditworthiness and genuineness of transactions of any credits appearing in the books of the assessee. Here the assessee has t....
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.... earlier years. Therefore, source of funds to the extent of Rs. 5,09,74,500/- stands explained. (c) The addition to the extent of Rs. 7,60,000/- in respect of M/s Delite Consultancy Services Pvt. Ltd. and Rs. 5,40,000/- in respect of M/s Preference Properties Pvt. Ltd., were already considered in AY 2010-11. (d) The addition to the extent of Rs. 10,70,40,000/- in the name of 3 alleged lender companies, in respect of M/s Jai Mata Realtors Pvt. Ltd., M/s Jigyasa Mercantile Pvt. Ltd. and M/s Suprabhat Buildtech Pvt. Ltd., were credited during the year under consideration. The appellant has placed on record the bank statements and other documents, in order to substantiate the identity, genuineness of the transactions and creditworthiness of the parties. Therefore, source of funds to the extent of Rs. Rs. 10,70,40,000/- stands explained. From the above, it is clear that amounts received to the extent of Rs. 5,22,74,500/, against the advances, were already credited in the books of account of the appellant, in earlier years and in the year under consideration, the same were transferred through journal entries, out of the brought forward balances as on 01.4.2010. Therefore, advance t....