TaxTMI 
TaxTMI 
2025 (7) TMI 1416
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.... all the 16 companies are paper companies having meager income or loss, which were started 6 to 12 months prior to investment in M/s. Torrent Vinimay Pvt. Ltd., which is a closely held company of Uttamchand Jain and his family members. 2) On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) erred in ignoring the fact that the DDIT (Inv.), Kolkata, could not find the company, M/s. Torrent Vinimay Pvt. Ltd., at the given address, and the assessee failed to furnish the changed address of the said company, even subsequent to this. 3) On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) erred in relying on the decision of Hon'ble High Court of Madhya Pradesh, which is reported in 245 ITR 160, to state that source of source cannot be asked, whereas in the case of the assessee, the Assessing Officer made independent enquiries with regard to the concerns, which had invested in M/s Torrent Vinimay Pvt. Ltd., which is in accordance with the decision of the Hon'ble High Court. 4) Reliance is placed on the decision of Hon'ble High Court of Delhi in the case of CIT vs. Globus Securities & Finance Pvt. Ltd....
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.... he was not satisfied about the same and accordingly has treated the same as unexplained credits and held that the assessee has routed its unaccounted money in the guise of share application and share premium. The Assessing Officer accordingly made addition of Rs. 668.98 lakh to the total income of the assessee. 4. In appeal, the learned CIT(A) deleted the addition for detailed reasons indicated in appellate order. 5. The learned Departmental Representative ("the learned D.R.") placed reliance on the order of the Assessing Officer to submit that the addition is correctly made for the detailed reason indicated in assessment order. It was submitted that the assessee has not been able to explain the source of source of share capital contribution received by the assessee company during the year under consideration. It was submitted that learned CIT(A) has not correctly appreciated the facts and evidence on record and was not justified in deleting the addition made under section 68 of the Act. It was submitted that relief granted by learned CIT(A) be reversed and the order passed by the Assessing Officer be restored. 6. The gist of submission, as submitted by the learned Counse....
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....'ble Bombay High Court has concluded that prior to Asstt. Year 2013-14 law laid down by Hon'ble Apex Court in the case of Lovely Exports (P) Ltd. will be applied and thus revenue is not entitled to assess the share capital as unexplained cash credit. Reliance on: i) ITA No.1613 of 2014 in the case of M/s. Gagandeep Infrastructures vide order dated 20/03/2017. (P- 10 - 16) (14, 15) [Vol. - II] G) It is settled proposition of law that contribution to share capital is capital receipt. The shareholder is corporate shareholder assessed to income tax. Assessee has established identity, creditworthiness of share applicant and genuineness of transaction by placing legal evidences on record. No addition can be made for the same as unexplained income. Reliance on: i) (2008) 216 CTR 0195 (SC) CIT vs. Lovely Exports (P) Ltd. (P- 1 - 2) [Vol.- II] ii) (2008) 307 ITR 0334 (Delhi) CIT vs. Value Capital Services (P) Ltd. (P- 3 - 5) (4) [Vol.- II] iii) Hon'ble Bombay High Court order in ITA (L) No.2182 of 2009 in the case of M/s. Creative World Telefilms Ltd. (Earlier known as Link International Services Pvt. Ltd.) vide order dated 12/1....
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....Only addition made is in respect to Share Capital and that too not based on any incriminating material found during the course of search. Addition made not based on incriminating material unsustainable as A.O. has no jurisdiction to make such addition u/s 153C of I.T. Act 1961. Reliance on: i) Hon'ble Bombay High Court order in ITA No.923 of 2012 in the case of Bharati Vidyapeeth vide order dated11/09/2014. L) Decision of Hon'ble Delhi High Court in the case of CIT vs. Globus Securities & Finance Pvt. Ltd. relied upon by revenue is distinguishable on facts and is inapplicable to the facts in the case of assessee." 7. We have heard the arguments of rival parties in the light of the judicial precedents relied upon, perused the other material available on record and gone through the orders of the authorities below. In assessee's case, the addition has been made by the Assessing Officer at Rs. 668.98 lakh under section 68 of the Act in respect to share capital contribution including share premium received from M/s Torrent Vinimay Pvt. Ltd. The aforesaid corporate entity is one of the group concern wherein directors of company are from same family. M/s Torr....
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....e capital is through proper banking channel. On the above undisputed factual position, identity and creditworthiness of the corporate shareholder as well as genuineness of transaction of contribution of share capital contribution stands established. Before us, the Revenue is not able to show any adverse evidence on record which discredits the legal evidence on record to explain the cash credit. Even in search conducted no incriminating evidence is found in respect to contribution of share capital contribution. On the above undisputed factual position, the addition in respect to share capital contribution under section 68 of the Act is unjustified and unsustainable. 10. In assessee's case, the learned CIT(A) has considered evidences available on record and the judicial precedents of the Hon'ble Jurisdictional High Court as well as the Tribunal, Mumbai Benches, Mumbai, to conclude that the assessee has discharged its onus to explain the share capital contribution. It is thus concluded that the addition made under section 68 of the Act is unjustified and was directed to be deleted. We have perused the order of the learned CIT(A) and detailed reasons indicated therein for deletion o....
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....nce with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit." Ratio laid down by the decision of Hon'ble Jurisdictional High Court squarely applies to the facts in the case of the assessee and respectfully following the same addition made in assessee's case is held to be unjustified. The addition made by the Assessing Officer is contrary to law laid down by the Hon'ble Jurisdictional High Court referred to hereinabove. On the facts and evidences on record, the assessee has established and satisfied all the three ingredients being identity, creditworthiness and genuineness of share capital contribution to explain credit in terms of provisions of section 68 of the Act. The argument of the learned Departmental Representative that the assessee had obligation to explain source of source is unjustified and unsustainable and contrary to law laid down by Hon'ble Jurisdictional High Court and has no merit. On the above facts, share capital contribution cannot be said to be unexplained credit. 12. The decision of Hon'ble Jurisdictional High Court in Gagandeep Infrastructure (supra) has been followed by the Hon'ble Jurisdictional....
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....e Apex Court observed that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the assessing officer, then the department can always proceed against them and if necessary reopen their individual assessments. In the case in hand, it is not disputed that the assessee had given the details of name and address of the shareholder, their PA / GIR number and had also given the cheque number, name of the bank. It was expected on the part of the assessing officer to make proper investigation and reach the shareholders. The assessing officer did nothing except issuing summons which were ultimately returned back with an endorsement 'not traceable'. In our considered view, the assessing officer ought to have found out their details through PAN cards, Bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the assessing officer. In the above circumstances, the view taken by the Tribunal cannot be faulted. No substantial question of law is involved in the appeal. In the result, the appeal is dismissed in limini w....
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.... a static one. Though in s. 68 proceedings, the initial burden of proof lies on the assessee yet once he proves the identity of the creditors/share applicants by either furnishing their PAN or income-tax assessment number and shows the genuine-ness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue. Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68. One must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the „source of source‟." ix) CIT v/s Metachem, [2000] 245 ITR 160 (MP) "4. .................. If that person owns that entry, then, the burden of the assessee-firm is discharged. It is open for the AO to undertake further investigation with regard to that individual who has deposited this amount." Ratio laid down by the abovementioned judgment fully supports the submission of the assessee. Respectfully following the judgments r....
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....rthiness of the creditors were available, without any infirmity in such evidence and the explanation required under Section 68 of the Act having been discharged, Assessing Officer was not justified in making the additions. Therefore, the additions were deleted. 19. In appeal, Tribunal noted that before the Assessing Officer, assessee had submitted the following documents of the three creditors:- a) PAN number of the companies; b) Copies of Income Tax return filed by these three companies for assessment year 2010-11; c) Confirmation Letter in respect of share application money paid by them; and d) Copy of Bank Statement through which cheques were issued. 20. Tribunal noted that Assessing Officer had referred the matter to the investigation wing of the department at Kolkata for making inquiries into the three creditors from whom share application money was received. Though report from the investigation wing was received, Tribunal noted that the same was not considered by the Assessing Officer despite mentioning of the same in the assessment order, besides not providing a copy of the same to the assessee. In the report by the inves....
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.... deposited in order to prove genuineness of the transactions. In so far credit worthiness of the creditors were concerned, Tribunal recorded that bank accounts of the creditors showed that the creditors had funds to make payments for share application money and in this regard, resolutions were also passed by the Board of Directors of the three creditors. Though, assessee was not required to prove source of the source, nonetheless, Tribunal took the view that Assessing Officer had made inquiries through the investigation wing of the department at Kolkata and collected all the materials which proved source of the source. 22. In NRA Iron & Steel (P) Ltd (supra), the Assessing Officer had made independent and detailed inquiry including survey of the investor companies. The field report revealed that the shareholders were either non-existent or lacked credit-worthiness. It is in these circumstances, Supreme Court held that the onus to establish identity of the investor companies was not discharged by the assessee. The aforesaid decision is, therefore, clearly distinguishable on facts of the present case. 21. Therefore, on a thorough consideration of the matter, we are ....