TaxTMI 
TaxTMI 
2024 (10) TMI 1836
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....essee has received share capital of Rs. 23 lakhs each, which was added by the learned assessing officer under section 68 of the income tax act in reopened assessment proceedings. 3. Brief facts of the case shows that assessee is a company engaged in real estate development, filed its return of income on 17/9/2010 declaring total income of Rs. 30,550/-. This return was processed under section 143 (1) of the income tax act 1961 on 14/4/2011. 4. Subsequently notice under section 148 was issued on 24/3/2015 recording the reasons that the DGIT (investigation) Mumbai vide letter dated 7/7/2014 has provided information regarding beneficiaries of the accommodation entry provided by an accommodation entry provider unearthed during search action carried out on 1/10/2013 wherein the assessee was found to be a beneficiary of obtaining loan of Rs. 23 lakhs each from 2 companies namely casper Enterprises private limited and Duke business private limited. These two companies have provided an accommodation entry to the assessee thus there is an escapement of income of the assessee. 5. In response to the notice issued, assessee submitted a letter dated 28/3/2015 and 23/4/2015 stating the o....
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....nding and corroborative details and found that the above increase in share capital of Rs. 46 lakhs, the assessee has failed to discharge the onus. Accordingly, the above sum has been added to the total income of the assessee under section 68 of the act and consequently the amount of 1.5% of the above share capital in the form of unaccounted commission expenditure was also added to the total income. 11. Accordingly, the total taxable income of the assessee was determined at Rs. 4,699,550 as per assessment order dated 28/3/2016 passed under section 143 (3) read with section 147 of the act. 12. Assessee aggrieved with the same preferred an appeal before the learned CIT - A the learned CIT - A confirmed the addition holding that the above accommodation entry provider Mr Praveen Kumar Jain has confirmed that these are the entities who have provided loan to the assessee and these are accommodation entries. Assessee also filed certain additional evidence before him which were forwarded to the learned assessing officer and after obtaining the remand report same are admitted the additional evidence were with respect to the genuineness of the above transaction in the form of permanent ....
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....anent account number in tax jurisdiction etc of the investor companies, income tax return of the companies and directors report,audit report and balance sheet of the investor companies. Further the assessee also submitted the company master data downloaded from the website of the government of India wherein the company name, identification number, date of incorporation, registered address, email ID and name of directors is mentioned. With respect to the genuineness of the transaction assessee submitted that assessee has received the share application money through banking channel and the funds were received through account payee cheques. The assessee has also submitted the bank statement and other documents which were submitted before the learned assessing officer to prove the genuineness of the transaction. All the investor companies also confirmed the above investment before the learned assessing officer. With respect to the creditworthiness of the parties it was submitted that in case of Casper Enterprises private limited wherein the amount of Rs. 23 lakhs were received has a share capital of 46 lakhs, reserve, and surplus of Rs 119 lakhs, and investment in the company is merely....
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....d the addition on identical facts was deleted. He further referred to the decision of coordinate bench in ITA number 193 and 233/M/2024 assessment year 2010- 11 and 2012- 13 wherein both these investors were also there and identically the addition was made which was deleted by the coordinate bench. He further referred to the decision of the Sharda lapse private limited in ITA number 1680/M/2020 wherein duke business private limited was one of the entities which is also the shareholder of the assessee company and the addition identically made by the learned assessing officer was deleted by the coordinate bench. 17 Therefore, it was submitted that both these companies' shareholders are already considered by the ITAT in series of decisions wherein both the above companies are held to be credit of the transactions with them and transactions with them held to be genuine and therefore this issue is squarely covered in favour of the assessee. 18. The learned departmental representative vehemently supported the orders of the learned lower authorities and submitted that the case of the assessee was reopened based on the information received by the investigation wing that during the co....
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....nd creditworthiness of the above parties as well as the genuineness of the transaction assessee submitted the complete address of the shareholders and their permanent account numbers. Assessee also submitted the income tax jurisdiction of those companies along with the income tax return filed by these investor companies. Assessee produced the share application made by the above investor company; allotment made through allotment advice issued by the assessee to show that the investment is in the form of share capital. To prove the creditworthiness, assessee submitted the directors report, audit report, profit and loss account and balance sheet of the investor companies along with the copies of the bank statement and the confirmation of the investor. To show the sources of the funds, assessee submitted that it has received total payment of Rs. 23 lakhs from each of the above company for which the share capital is issued at the face value only. These investors have their own share capital and reserves and surplus. It was submitted that in case of Casper Enterprises private limited to whom shares at the face value of Rs. 23 Lacs were issued has share capital of Rs. 4,611,500 and reserv....
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....he above investment as share capital invested by the two companies in the assessee wherein assessee as well as the investors have confirmed the transaction. In the books of account of the assessee the amount is shown as share capital and in the books of the investor same is shown as an investment in the assessee company. With respect to the source of the funds, the assessee has produced the bank account of the investor company along with the audited annual accounts and income tax return. The funds have been invested in the assessee company by the investors through account payee cheque. Therefore, the assessee has also explained the source of the funds. Thus assessee has explained the nature and source of the credit in the books of account of the assessee. 24. The learned CIT - A questioned that how these companies have such a huge reserve and surplus, these answer could not have been provided by the assessee because assessee is not required to prove the source of source of the cash credit and share capital for the impugned assessment year. The only onus cast upon the assessee is to show the identity, creditworthiness of the investor as well as the genuineness of the transaction.....
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....ced overwhelming evidence before him which remained uninvestigated by the learned AO. 28. It is the claim of the learned authorised representative that in case of both these investor companies, the matters have reached to the coordinate benches, where these companies have made investment in other companies and addition in those other companies were made under section 68 of the act on the similar basis, were deleted by the coordinate benches holding that the assessee has proven the identity and creditworthiness of the investor as well as the genuineness of the transaction. First such case was put before us in case of Bharati lifestyle private limited in ITA number 2416/M/2021 for assessment year 2014 - 15 wherein based on the decision of the coordinate bench in case of Nisarg life space llp ITA number 629/M/2020 dated 11 June 2021, where, the identical addition was deleted as per paragraph number 15 of that decision wherein Caspar Enterprises private limited was one of the party and the same accommodation entry provider was also involved. Further in case of Shri Lakshmi estate private limited in ITA number 6557/M/2017 for assessment year 2013 - 14 as per order dated 3/5/2019 wher....