TaxTMI 
TaxTMI 
2025 (7) TMI 1685
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....n expired as per date of order of NFAC, Delhi (i.e. 02.10.2023]. Due to the following reasons delay for filing 2nd appeal has been made for the A.Y. 2008 09. (i) On 05.09.2023: Appeal Order downloaded from ITBA portal. (ii) On 29.09.2023: Assessment record received from WRITER. (iii) On 04.10.2023: ASR send to o/o PCIT-2, Kolkata through Proper Channel. (iv) On 13.10.2023: ASR send to o/o PCIT-2, Kolkata from o/o JCIT, Range- 5, Kolkata. (v) On 31.10.2023: Certificates for filing appeal u/s 253 of the IT Act has been received from o/o PCIT-2, Kolkata. Kindly condone the said delay for filing 2nd Appeal." 1.2. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the Revenue had a reasonable and sufficient cause and was prevented from filing the instant appeal within statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal: "1. Whether on the facts and in the circumstances of the case and in law, the Ld. NFAC, Nev Delhi was justified in del....
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....the case and in law, the Ld. NFAC, New Delhi is failed to appreciate the principle which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT(Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) wherein it is suggested that if the enquirers and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the IT Act. In the facts of the case, Ld. NFAC, New Delhi completely ignored this aspect, thus he has erred in giving relief to the assessee. 6. Whether on the facts of the present case, clearly the Assessee Company failed to discharge the onus required under Section 68 of the Act, the Assessing Officer was justified in adding back the amounts to the income of the assessee and Ld. NFAC, New Delhi has erred in allowing relief to the assessee. 7. The appellant craves to add, alter, amend, delete or substitute any of the grounds on and/or take additional grounds before or at any time of hearing of this appeal." 3. Brief f....
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....AO noted that the assessee company was incorporated with a capital of Rs.1 Lakh and had raised share capital amounting to Rs.1,53,20,000/- by issuing 15,32,000 equity shares having face value of Rs.10/- at a premium of Rs.90/- per share by private placement amounting to Rs.13,78,80,000/-. There were 17 shareholders as per Form No. 2 filed before the ROC and investment to the tune of Rs.15,32,00,000/- was also observed from the Balance Sheet furnished for the assessment year under consideration. Perusal of the records revealed that the assessee company utilized funds received from the issue of shares in making the said investment. During the course of hearing, the Ld. AR produced the books of account viz. cash book, bank statement etc., which were examined by the Ld. AO and to verify the justification of the share capital and share premium received and the identity, creditworthiness and genuineness of the 17 alleged shareholders, summons u/s 131 of the Act were issued to the Principal Officers (being the then directors) of the assessee company but none of them appeared. Therefore, as per the Ld. AO, the identity, creditworthiness and genuineness of the 17 shareholders remained unexp....
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....(1), Mumbai in ITA No. 1562/MUM/2015 for AY 2010-11 order dated 04.11.2016 and (b) Delhi in the case of Phool Singh vs. ACIT in ITA No. 2901/Del/2014 for AY 2010-11 order dated 11.04.2017. The Ld. CIT(A) held that the assessee had discharged the onus of filing requisite details to substantiate the genuineness of the transaction and creditworthiness of the persons paying for equity share capital and deleted the addition of Rs.15,33,00,000/-. The addition of Rs.47,599/- on account of disallowance u/s 14A of the Act was however confirmed and the appeal was partly allowed. Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before this Tribunal. 5. Ground no. 1 is regarding the absence of identity of the creditors, genuineness and creditworthiness of the entire transactions. In Ground no. 2 it is mentioned that no personal attendance was made by any of the directors of the share allottee companies during the course of assessment proceedings and as such identity and creditworthiness of the creditors and genuineness of the transactions could not be verified. In Ground no. 3 the revenue has relied upon the decision of Hon'ble Supreme Court in the case of PC....
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....ssessee has not been able to dislodge the factual findings recorded by the Commissioner (Appeals) that the share application money was received from independent legal entities. By way of illustration if the case of GTPL is taken, it is found that they have invested Rs. 8.10 crores in the assessee-company. The said company receives a total of Rs. 1.65 crores on 1-6-2011 and 2-6-2011 from eight private limited companies/entities. Out of the said amount Rs. 1.50 crores was remitted to the assessee's bank account on 2-6-2011 by three cheques of Rs. 50 lakhs each. The balance remained at Rs. 15.09 lakhs. On 2-6-2011, an amount of Rs. 38 lakhs was remitted to the account by a private limited company and the balance rose to Rs. 53.09 lakhs out of this an amount of Rs. 50 lakhs was remitted to the assessee-account on the same day. On 4-6-2011, DSPL deposited another sum of Rs. 60 lakhs of which Rs. 50 lakhs was remitted to the assessee on 6-6-2011. On 6-6-2011 HGPL transferred a sum of Rs. 10 lakhs to this account by taking a closing balance to Rs. 23.08 lakhs. On the same day an amount of Rs. 20 lakhs was remitted to the assessee-account. On 6-6-2011 DSPL transferred Rs. 25 lakhs Rs. 38 l....
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....ts act as 'highway' in the 'journey of money' on a rotation and laundry trial from one entity to another and by this way these bank accounts create a façade of documentary evidence for clean money in the form of account payee cheques for any kind of accommodation entries. [Para 29] ■ The Commissioner (Appeals) did not stop with the above findings but proceeded to analyse the data which was made available in the form of return of income, bank statements etc. and found that the investors have purchased the shares of the assessee at a premium and all have shown similar characteristics, the revenue from operations are either nil or are negligible; the returns are either of loss or of insignificant income below taxable limit; they have been issued shares at very high premium without having earned any revenue from business operations; they have invested on shares at very high premium in companies who also have not earned anything from business operations; their balance sheet shows that even though they do not earn anything, they invite huge investments in their accounts and this money is used to make further investments at high premiums in other companies and they h....
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.... in the manner it ought to have done. Therefore, the findings rendered by the Tribunal are perverse. It was argued by the assessee that there is no material to show 'round tripping' of funds; there is no finding that the money which has come to the assessee is ill-gotten money and that the Commissioner (Appeals) did not examine how the money came to the investors and failed to note that the company had requisite share capital resource. Various documents which were placed before the tribunal in the form of a paper book was submitted to the court for its perusal. [Para 30] ■ It is viewed that it is not required to show that the money which came to the assessee is ill-gotten and what is required to be seen is whether the transaction was genuine. It may be true that the identity of the investor company has been established as they are registered with the Registrar of Companies and they are regularly assessed to income-tax. Assuming without admitting that at the relevant point of time when the investor-companies invested in the assessee-company by purchasing shares at high premium, they had sufficient funds in the bank accounts, the question would be as to whether this by....
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.... is the director of MCPL, an investor company. Therefore, on a deeper scrutiny of the factual position would show that the investor company did not have a genuine creditworthiness and consequently the transaction has to be held to be not genuine. Whether or not the onus is discharged depends on facts of each case as well as it depends on whether the two parties are related or known to each other; the manner or mode by which the parties approach each other, the quantum of money, the object and purpose for which payment/investment was made. As held earlier certificate of incorporation of the companies, payment by banking channel etc. cannot tantamount to satisfactory discharge of onus and the facts of the case on hand speaks for itself as it is obvious. Thus, the principle of Preponderance of Probabilities applies with full force to the case on hand which leads to the irresistible conclusion that the finding rendered by the Commissioner (Appeals) is legal and valid. [Para 34] ■ It is noted that the Tribunal has made certain observations as regards the future prospects of the assessee company as they are a steel industry and that their fixed assets and also the turnover....
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....e/prudent man would apply to arrive at a conclusion. On facts it is convinced to hold that the assessee has not established the capacity of the investors to advance moneys for purchase of above shares at a high premium. The creditworthiness of those investors companies is questionable and the explanation offered by the assessee, at any stretch of imagination cannot be construed to be a satisfactory explanation of the nature of the source. The assessee has miserably failed to establish genuineness of the transaction by cogent and credible evidence and that the investments made in its share capital were genuine. As noted above merely proving the identity of the investors does not discharge the onus on the assessee if the capacity or the creditworthiness has not been established. [Para 37] ■ In the light of the above discussion, it is held that the assessee has failed to discharge legal obligation to prove the genuineness of the transaction and the creditworthiness of the investor which has shown to be so by a 'round tripping' of funds. For all the above reasons, the revenue succeeds. [Para 38] ■ In the result the appeal is allowed, the order passed by th....