TaxTMI 
TaxTMI 
2025 (9) TMI 1312
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....were heard together and are being disposed of vide this common order for the sake of convenience. 2. We will first take up the appeal in ITA No.1775/Ahd/2024 & C.O. No.42/Ahd/2025 for the A.Y. 2009-10. 3. The grounds taken by the Revenue and the assessee in this appeal and the cross objection are as under:- ITA No.1775/Ahd/2024 - A.Y. 2009-10 "(i) On the facts and circumstances of the case and in law, the Ld. CITA) erred in deleting the addition of Rs. 2,99,50,000/- made under Section 68 of the I.T. Act, 1961, without appreciating the fact that the assessee failed to prove the genuineness and creditworthiness of the alleged investors with documentary evidences. (ii) On the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs. 2,99,50,000/- made under Section 68 of the I.T. Act, 1961, without considering the provisions of Section 78(2) of the Companies Act. (iii) The appellant craves leaves to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal." C.O. No.42/Ahd/2025 - A.Y. 2009-10 On Legality of the Order: 1. It is submitted that the Show Ca....
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....es right to add, alter, amend, to withdraw any or all Ground of Appeal." 4. The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2009-10 on 19.09.2009 declaring income of Rs. 43,42,910/-. The case of the assessee was reopened under Section 148 of the Act on the basis of information in respect of issue of 599000 shares of face value of Rs. 10/- at a premium of Rs. 40/- per share, thereby bringing in Rs. 2,99,50,000/- as share capital and share premium during the year. In the course of assessment, the Assessing Officer had made enquiry about the share capital received during the year but he was not satisfied about the genuineness and credit worthiness of the share capital transactions. Therefore, the entire share capital and share premium of Rs. 2,99,50,000/- was considered as unexplained and added under Section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The assessment was completed under Section 143(3) of the Act on 29.12.2016 at total income of Rs. 3,42,92,910/-. 5. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by th....
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....ed their creditworthiness. Therefore, no addition on account of share capital contribution was called for. She has also placed reliance on various other judicial decisions which are part of the paper-book filed by the assessee. 8. We have considered the rival submissions. It is found that the share capital contribution to the extent of Rs. 2,40,00,000/- was made by the following four corporate entities: - 1) Abhi Commercial & Finvest Pvt. Ltd. Rs. 40,00,000/- 2) Jeenma Business Pvt. Ltd. Rs. 25,00,000/- 3) Kalindi Tie Up Pvt. Ltd. Rs. 75,00,000/- 4) Unnati Vinimoi Pvt. Ltd. Rs. 1,00,00,000/- 8.1 The identity of the above 4 corporate entities was duly established. The Assessing Officer had doubted the credit worthiness of these companies for the reason that they had disclosed nil or negative profit in their Income-tax returns. The creditworthiness of a company cannot be judged only on the basis of income or loss as declared in their Income-tax returns. The overall availability of the funds has to be examined vis-a-vis the Balance Sheet and the availability of the funds/entries in the bank accounts. It is found that the Assessing Officer had ....
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....vt. Ltd. From the company's Balance Sheet for A.Y. 09- 10 it is clearly evident that as per Schedule 'E there are Inventories (Shares & Securities) as on 31-03-2009 to the tune of Rs. 2,16,14,136/- whereas shares of Truform Techno Products Ltd. grouped under Inventories Unquoted shares appear as Rs. 40,00,000/-. Further, from the Vijaya Bank account statement it is clearly seen that the investor company had vide cheque no. 177949 dated 24.03.2009 subscribed to Rs. 40,00,000/- of shares. At this juncture, it is also pertinent to note that this investor company was also subject to assessment proceedings u/s 147 for A.Y. 09-10 i.e. the same year as the appellant and no aspersions have been cast on the books or fund deployment of the company, as could be seen from the assessment order submitted by the appellant, which also substantiates the genuineness of accounts of the investor company. Therefore, the identity, genuineness and creditworthiness of share subscription by Abhi Commercial & Finvest Pvt. Ltd. is proved and thus doesn't warrant any addition u/s 68. 5.3.2.3.2. In respect of the company investor Jeenma Business Pvt. Ltd., the appellant had submitted the d....
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....rther, from the bank account statement of the investor in IndusInd Bank, it is clearly seen that the investor company had vide cheque no.s 161311, 161312, and 161313 dated 24.03.2009, 25.03.2009, and 30.03.2009 respectively subscribed to Rs. 75,00,000/- of shares. Therefore, the identity, genuineness and creditworthiness of share subscription by Kalindi Private Tie Up Ltd. is proved and thus doesn't warrant any addition u/s 68. 5.3.2.3.4. In respect of the company investor Unnati Vinimoy Pvt. Ltd., the appellant had submitted the details of PAN, Address, Memorandum and Articles of Association of the company investor Unnati Vinimoy Pvt. Ltd., share application form, acknowledgement copy for the share application, and the Bank account statement of the investor in Indusind Bank for the relevant period, minutes of the meeting of Board of Directors authorizing the Directors for entering into share investment transaction, copy of the income tax return for AY 2008-09 along with the audited financial statements for AY 2008-09 in respect of the investor company Unnati Vinimoy Pvt. Ltd. Further, from the bank account statement of the investor in Indusind Bank, it is clearly seen....
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....ompanies Act, the Assessing Officer had made the addition for share capital/share premium received during the year under Section 68 of the Act. There is no provision under the Act corresponding to provisions of Section 78(2) of the Companies Act which require addition in respect of share premium received by the assessee. The Assessing Officer had not invoked any charging section in the assessment order to make the addition for contravention of provisions of Section 78(2) of the Companies Act. Otherwise also, addition was made by the Assessing Officer under Section 68 of the Act, which we have already discussed earlier. 8.5 In view of the above facts and discussions, we are of the considered opinion that the Ld. CIT(A) had rightly deleted the addition of Rs. 2,99,50,000/- in respect of share capital and share premium received during the year, as the assessee had discharged its onus to establish the identity, genuineness and creditworthiness of the share applicants. Therefore, the grounds taken by the Revenue in this regard are dismissed. C.O. No.42/Ahd/2025 - A.Y. 2009-10 9. The grounds taken by the assessee in the cross objection on merits, are in support of the order of t....
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....erage of Rs. 20,49,22/- without appreciating the fact that the assessee failed to substantiate its claim before the AO. (7) The appellant craves leaves to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal." 12. The first ground pertains to addition of Rs. 1,20,00,000/- on account of share capital and share premium received in the year. 13. Shri B.P. Srivastava, Ld. Sr. DR submitted that the share application was received in this year from 4 corporate entities, out of which one Jeenma Business Pvt. Ltd. was common with A.Y. 2009-10. He submitted that the genuineness and creditworthiness of the share applicants was not established by the assessee in the course of assessment and, therefore, the Assessing Officer had rightly made the addition under Section 68 of the Act. 14. On the other hand, Ms. Kinjal Shah, Ld. AR submitted that the assessee had furnished all the relevant details to establish the identity, genuineness and creditworthiness of the share applicants and considering the evidences brought on record, the Ld. CIT(A) had rightly deleted the addition. 15. We have considered the rival submissions and also go....
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.... Balance Sheet and Profit & Loss A/c) for the relevant year ending 31.3.2012 (AY 2012-13) of the investor companies. The appellant had also established that as per audited annual accounts of the above investor company, shares of the appellant were duly accounted for in the stock summary under the head "inventory of unquoted shares". Accordingly, from the ledger accounts, bank statements and the audited accounts of these investor companies, the appellant company had also established the genuineness and creditworthiness of the share capital/share premium transactions. 5.2.3.2. I have perused the above supporting documents submitted by the appellant and had examined the merits in the appellant's contentions. Accordingly, the addition made in respect of the share application money/share premium of Rs. 1,20,00,000/- u/s 68 is adjudicated as hereunder. The appellant had clearly established the identity, genuineness and creditworthiness of the share application money/share premium transactions of Rs. 1,20,00,000/- in respect of the four investor companies, viz., Jeenma Business Pvt. Ltd., Jeenma Merchants P. Ltd., Sahal Traders P. Ltd., and Galaxy Abasan Pvt. Ltd. At this jun....
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....isions of the H'ble jurisdictional High Court of Gujarat rendered in CIT vs. Apex Therm Packaging Pvt. Ltd. [2014] 42 taxmann.com 473 (Guj.) and in CIT vs. Ranchhod Jivabhai Nakva [2012] 21 taxmann.com 159 (Guj.). Further, rellance is also placed on the decision of the H'ble jurisdictional Ahmedabad ITAT in the case of M/s. Jindal (India) Textiles V. Income Tax Officer, Ward-2(2), Surat in I.T.A No. 125/Ahd/2012. 5.2.3.5. While rendering the above decision, reliance is also placed on the following judicial pronouncements: (i) Orissa Corporation Pvt. Ltd - 159 1TR 88 (SC); (ii) Hanuman Agarwal - 151 ITR 150 (Pat.); (ii) ACIT vs. Govind Ram Agarwal - 76 ITD 120 (Cal.). In all the above cases, it has been stated by the Courts of Law that only the initial burden rests upon the appellant to prove credit entries u/s 68 of the Act. Once it is discharged by the appellant, it is for the department to prove that the cash credit actually represents suppressed income of the appellant. At this juncture, it is relevant to quote the decision of the H'ble Patna High Court in the case of Sarogi Credit Corp. v. CIT (1976) 103 ITR 344 (Pat.) wherein the h'ble High Court has h....
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....t this juncture, it is significant to mention that the H'ble jurisdictional Ahmedabad ITAT in appellant's own case for the AY 2010-11, that in respect of addition u/s 68 pertaining to share capital/share premium subscribed/invested by M/s. Jeenma Business Pvt. Ltd. in the appellant company, had ruled that the identity, genuineness and creditworthiness of M/s. Jeenma Business Pvt. Ltd. was clearly established and had adjudicated that no addition u/s 68 was warranted in the case of the appellant for the AY 2010-11. This further strengthens the proposition that the identity. genuineness and creditworthiness of one of the investor companies viz., M/s. Jeenma Business Pvt. Ltd. in this assessment year 2012-13 as well are proved beyond doubt. Accordingly, I, hereby, direct the assessing officer to delete the addition of Rs. 1,20,00,000/- made u/s 68 in respect of the share capital {share application money/share premium} received from M/s. Jeenma Business P. Ltd., Jeenma Merchants P. Ltd., Sahal Traders P. Ltd., and Galaxy Abasan Pvt. Ltd. for the AY 2012-13, and, therefore, I, hereby, allow all the grounds in this regard filed by the appellant in favour of the appellant. 15.2 ....
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....ement, copy of Income-tax return and all other evidences to establish the identity, genuineness and creditworthiness of Shri Kaushal Mohta was brought on record. Merely because Shri Kaushal Mohta had disclosed income of Rs. 9,53,204/- in his Income-tax return for the A.Y. 2012-13, this cannot be considered as valid reason to disbelieve the genuineness of the transaction. The availability of funds with Shri Kaushal Mohta to advance the loan of Rs. 1,10,97,785/- was not disproved vis-a-vis the funds available in his bank account as well as other investments as appearing in his Balance Sheet. It is found that the account of Shri Kaushal Mohta was a running account with total credit of Rs. 1,49,53,095/- and total debit of Rs. 38,55,310/- during the year. Further, the assessee had also paid interest on the loan taken from the Director on which TDS at applicable rate was also deducted. Considering the evidences as brought on record by the assessee, the Ld. CIT(A) had rightly deleted the addition of Rs. 1,10,97,785/- in respect of loan taken from Shri Kaushal Mohta. Accordingly, the order of the Ld. CIT(A) is upheld and the ground taken by the Revenue is dismissed. 21 Ground nos.4 & 5 ....