AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1761
X X X X Extracts X X X X
X X X X Extracts X X X X
....Without prejudice to above, as the parties are not related parties within the meaning of Section 40A(2)(b) the addition is uncalled for and the same may be deleted. 2. Levy of penal interest u/s. 234A, 234B and 234C The Appellant, on merits, denies its liability to penal interest. 3. The Appellant craves leave to add, amend or alter all or any of the above Grounds of Appeal. 2. The only effective ground raised by the assessee is with regard to challenging the orders of Ld. CIT(A) in confirming the additions U/s 68 of the Act on account of share application money received by the assessee . 3. In this regard Ld. AR appearing on behalf of assessee, reiterated the same arguments as were raised by her before the revenue authorities and also relied upon her written submissions. The contents of which are reproduced here in below 4.1. The Appellant, is a Pvt Ltd. Co It operates as a holding parent Co. to raise funds for its entire use by its subsidiary Co and it was on the lookout for capital funding from its parties [who are not parties within the meaning of of Sec 40(A)(2)(b)]. 4.2. In pursuance to its efforts, it succeeded to raise the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....again supported by (2023) 154 taxmann.com 593 (Kar.) Pr. CIT vs. Khayati Industries Pvt. Ltd. 5 GROUND NO. 1 Addition u/s. 68 Rs. 18,25,000/- 5.1 Share application money raised from 4 parties Primary onus discharged. Parties Names AMT 133(6) confirmations notice Pages PAN 1. Narshi Mulji Shah HUF Rs. 9,50,000/- Yes- 21 AACHN6126L II Kalpana K. Gala Rs. 4,25,000/- Yes- 23 AJZPG1080E III Gunvanti V. Gala Rs. 3,00,000/- Yes- 22 ABJPG3211H VI Form metal press P. Ltd Rs. 1,50,000/- Yes- 20 AAACF0676J Total Rs. 18,25,000/- On discharge of Primary Onus 20-33 5.2 On merits kindly see the i) Confirmation of parties with PAN Nos. ii) Bank Statement. iii) Parties ITR filing. iv) The parties had replied to notices u/s.133(6). P/B page No. 20-33 Sec. 133(6) notices sent -parties replied directly to the Assessing Officer. Parties could not be produced which was beyond the control of the Appellant, On the impossibility of performance we rely upon. (1996) 56 ITD164 (Hyd) Asst. CIT Vs. Jindal irrigation System Ltd. Impo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ITR copies, Bank statements provided. Everything ignored by lower authorities. 20-33 8.2 Payments given by share applicants are all by cheques. Returns are regularly filed with the Registrar of Companies wherever applicable 8.3 All parties have directly replied with their confirmations to the Assessing Officer in response to notices u/s. 133(6). All 4 Parties are existing and doing their activity till today. 8.4 Before the Assessing Officer, the Assessee had furnished: Identity of all share applicants Confirmations Income Tax Returns Details of banking channel transactions Ledger A/cs. Kindly see Paper Book 20-33 8.5 The Assessing Officer had not acted further on the direct replies given by the share applicants. Infact, shares were are allotted to three parties in later years and to one party, application money was reflecting in Balance Sheet as it is which is a known party u/s. 40A(2)(b). Burden on Revenue to establish that evidence filed by the Appellant are ingenuine. Burden on Revenue: Sir, on the burden on Revenue, we rely on the following judgments wherein the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion entries, when it was recorded behind the back of the Assessee." 9.5 As basic onus cast upon the Appellant is discharged and the parties and banks to whom notices u/s. 133(6) were sent, responded, the Appellant cannot be held responsible and the addition made by the Assessing Officer is unwarranted. 9.6 It is not the case of the Assessing Officer that the transactions are ingenuine and parties are not identified with their capacity and creditworthiness. Everything were provided by the Appellant and the parties directly replied to the Assessing Officer. Presumptions have no role in appreciating facts and evidences are on record. 9.7 As the parameters of Section 68 are duly complied with the discharge of primary onus, no addition can be made on the basis of surmises and conjunctures. No income escaped. It is on Capital A/c. Parties contributing are not known persons/entities except one within the meaning of Section 40A(2)(b). 9.8 Important Case Laws relied upon : (a) As held by the Hon'ble Supreme Court in: CIT Vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195 or 319 ITR (St) 5 (SC) Held, "if the share applicatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s proved by assessee. Similar findings observed in: (2024) 154 taxmann.com 593 (Kar.) Pr. CIT vs. Khayati Industries Pvt. Ltd. (2023)147 taxmann.com 375 (Guj) Pr. CIT vs. Ambetradecrop P. Ltd. Held, where assessee company claimed that amount recorded in account books was received towards share application money from creditors and was paid back fully and moreover account books showed source of fund and identify of party, it was open to Assessing officer to raise doubt about creditworthiness of creditor. 9.11 Book maintained by the Appellant are accepted u/s.145 without any rejection 10. In view of the above, we pray, that the addition u/s 68 may be deleted. No addition u/s. 68 is called for. 4. On the contrary, Ld. DR appearing on behalf of the department relied upon the orders passed by the revenue authorities and prayed for dismissal of the present appeal filed by the assessee. 5. I have heard the counsel for both the parties and have perused the material placed on record, judgements cited before me and the orders passed by the revenue authorities. From the records, I noticed that as per the facts of the present ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n later years and to other remaining one party, the assessee had shown in its balance sheet as application money. In this regard, a chart explaining shares allotted is also attached at page number 10 and allotment details are contained at paper book page number 36 and 37, balance sheet is attached at paper book page number 13 and schedule at paper book page 17. 11. The assessee in order to discharge his primary onus has placed on record the confirmation with PAN of all the parties along with the addresses which are at paper book page number 20 to 23, ledger account at paper book page 24 to 30 and bank statement at paper book page 31 to 33. 12. It is also observed that the parties had directly filed their respective replies to the AO in response to notices issued under section 133 (6) of the Act. 13. From the entire facts and circumstances, as discussed by me above, I am of the view that since parties were unknown except one to the assessee, but all were assessed to tax and have directly replied to AO and in case, if there was still any doubt in the mind of the AO then in that eventuality, the AO being the investigator could have proceeded against those respective parties. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the evidences are on record. 18 Since the parameters of Section 68 are duly complied with by discharging of primary onus, then in my view, no addition can be made on the basis of surmises and conjunctures. I find reliance from the decision in the case of CIT Vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195 or 319 ITR (St) 5 (SC), wherein it was held as under: "if the share application money is received by the Assessee Company from the alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to re-open their individual assessments in accordance with law, but it cannot be regarded as undisclosed income u/s. 68 in the hands of the assessee company." 19. Similar views was also expressed in 251 ITR 263 (SC) CIT vs Stellar Investment Ltd, (2013) 357 ITR 146 (Del) CIT vs Fair Finvest Ltd., wherein it was held as under: When Investigation Report on the receipt of share application money states that the Assessee is engaged in accommodation entry transactions and Assessee having filed the confirmations before the Assessing Officer and the Assessing Officer not enquiring into the matter no addition u/s. 68 ca....