TaxTMI 
TaxTMI 
2024 (7) TMI 1815
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....,000/- from various companies whose very existence could not be established by the assessee company nor the source of these funds"? 2. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact, that the assessee company has failed to establish the identity of its 18 shareholders"? 3. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact, that the assessee company has failed to establish the creditworthiness of its 18 shareholders"? 4. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact, that the assessee company has failed to prove the genuineness of the transactions of the funds"? 5. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact the addition being done u/s 68 for the credits to books of accounts being unexplained by the assessee and the question of the credit being of revenue or capital nature is of no consequence to the addition being made?" 3. Brief facts of the case ....
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....5. In the course of assessment, assessee furnished details of the share Applicants which included their registered office address and PAN, which is tabulated as under: 6. Ld. Assessing Officer not being convinced by the details and documentary evidence furnished by the assessee, applied the test of human probabilities and held that identity and creditworthiness of the shareholders is not proved, nor the genuineness of the transaction for introduction of share capital by the assessee is established. According to him, existence of the share subscribing companies and source of their funds for making investment in the assessee could not be established. Accordingly, he completed the assessment by making an addition of Rs. 4,90,00,000/- towards share capital and share premium raised during the year by treating it as unexplained cash credit u/s. 68 of the Act. Aggrieved, assessee went in appeal before the Ld. CIT(A) who after elaborately dealing with the facts of the case on all the three dimensions of section 68 of the Act in respect of identity and creditworthiness of the share subscribers and also the genuineness of the transactions, deleted the addition, so made. Aggrieved, Revenue....
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....Application form Share Certificate Confirmation of Account Reply to notice issued by Ld. AO u/s 131/ 133(6) IT Acknowledgement receipt of shareholder Bank statement of Shareholder Audited Balance sheet of shareholder 4.1 - 4.10 5 a) b) c) d) e) f) g) h) i) j) Fairmont Venture Pvt Limited Rs 25,00,000/- PAN card CIN Master Data (ROC) Board Resolution Share Application form Share Certificate Confirmation of Account Reply to notice issued by Ld. AO u/s 131/ 133(6) IT Acknowledgement receipt of shareholder Bank statement of Shareholder Audited Balance sheet of shareholder 5.1 - 5.13 6 a) b) c) d) e) f) g) h) i) j) HPL Multi Trade Pvt Limited Rs 30,00,000/- PAN card CIN Master Data (ROC) Board Resolution Share Application form Share Certificate Confirmation of Account Reply to notice issued by Ld. AO u/s 131/ 133(6) IT Acknowledgement receipt of shareholder Bank statement of Shareholder Audited Balance sheet of shareholder 6.1 - 6.11 7 a) b) c) d) e) f) g) h) i) j) Idor Systems and Solutions Pvt....
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....ipt of shareholder Bank statement of Shareholder Audited Balance sheet of shareholder 12.1 - 12.10 13 a) b) c) d) e) f) g) h) i) Sidh Housing Development Co. Limited Rs 25,00,000/- (Now Known as Bhadrawati Ispat & Energy Ltd) CIN Master Data (ROC) Board Resolution Share Application form Share Certificate Confirmation of Account Reply to notice issued by Ld. AO u/s 131/ 133(6) IT Acknowledgement receipt of shareholder Bank statement of Shareholder Audited Balance sheet of shareholder 13.1 - 13.10 14 a) b) c) d) e) f) g) h) i) Victory Sales Pvt Limited Rs 10,00,000/- PAN card CIN Master Data (ROC) Share Application form Share Certificate Reply to notice issued by Ld. AO u/s 131/ 133(6) Confirmation of Account IT Acknowledgement receipt of shareholder Bank statement of Shareholder Audited Balance sheet of shareholder 14.1 - 14.10 15 a) b) c) d) e) f) g) h) i) j) Yash-V Jewels Limited Rs 35,00,000/- PAN card CIN Master Data (ROC) Board Resolution Share Application form Share Certificate Reply to noti....
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....in any of the details so submitted and has simply proceeded to make addition in respect of the amount of share capital and share premium. According to him, documents furnished are to be prima facie considered as correct unless evidences brought on record to falsify the claim made therein. 9.2. On the three basic ingredients for section 68 relating to cash credit viz, identity, creditworthiness of the subscribers and the genuineness of transactions, ld. Counsel submitted that all of these are fulfilled by the assessee. In this respect he submitted as under: (i) On identity :- all the shareholders are regular income-tax as-sessees and have filed their income tax returns. Their PAN de- tails along with copy of ITRs were furnished. One of the share subscribers, i.e., Kush Hindustan Entertainment Ltd from whom a sum of Rs. 25,00,000/- had been received by the as-sessee was assessed u/s.143(3) by the Department for As- sessment Year 2011-12. Ld. Counsel thus, emphasised that identity of all the share subscribers is well established and cannot be doubted. Further, he submitted that the share sub- scribers are body corporate registered under the Companies Act. It was also submi....
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....09 Rs 30,00,000/- 9,07,52,217 13 Sidh Housing Development Co. Limited (Now Known as Bhadrawati Ispat & Energy Ltd) Kotak Mahindra Bank 15-05-2009 Rs 25,00,000/- 99,99,09,700 14 Victory Sales Pvt Limited Bank of Baroda 08-06-2009 Rs 10,00,000/- 3,35,84,724 15 Yash-V Jewels Limited Axis Bank Ltd 03-06-2009 Rs 35,00,000/- 8,83,30,744 16 Algorithmic software System Pvt Limited Deutsche Bank 15-05-2009 Rs 25,00,000/- 16,54,35,437 17 B.K. Dyeing and printing mills Pvt Limited Bank of Baroda 09-06-2009 Rs 15,00,000/- 4,66,81.407 18 Divya Infotech Pvt Limited Deutsche Bank 19-05-2009 Rs 25,00,000/- 10,14,49,004 Rs. 4,90,00,000/- (iii) On genuineness of the transaction: - it was submitted that the amounts were invested by the subscribers through proper banking channel which is duly reflected in the respective fi- nancial statements of the subscribers. Since the investments reflected in their respective financial statements have been duly reported in their respective returns with the Department, these are genuine trans....
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....rd CIN Master Data Share Application form Share Certificate Board Resolution Confirmation of Account Reply to notice issued by Ld. AO IT Acknowledgement receipt Shareholder's Bank statement Audited Balance sheet 9 Kush Hindustan Entertainment Limited PAN card CIN Master Data Share Application form Share Certificate Board Resolution Confirmation of Account Reply to notice issued by Ld. AO IT Acknowledgement receipt Shareholder's Bank statement Audited Balance sheet 10 Netformax Information Technology Pvt Limited PAN card CIN Master Data Share Application form Share Certificate Board Resolution Confirmation of Account Reply to notice issued by Ld. AO IT Acknowledgement receipt Shareholder's Bank statement Audited Balance sheet 11 Nicco Securities Pvt Limited PAN card CIN Master Data Share Application form Share Certificate Letter for Approval of Investment Confirmation of Account Reply to notice issued by Ld. AO IT Acknowledgement receipt Shareholder's Bank statement Audited Balance sheet 12 Shyam Alcohal and Chemicals Limited PAN card CIN Master Data Share Application form Share Certificate....
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....lief to the assessee. 11. From the perusal of the paper book and documents placed therein, it is noted that all the share subscribing companies are: (i) income tax assessees (ii) they are filing their income tax returns (iii) share application form and allotment letter is available on record (iv) share application money was paid by account payee cheques (v) details of the bank accounts belonging to share applicants and their bank statements were furnished (vi) in none of the transactions, there are any allegation by the ld. Assessing Officer about deposit of cash before issuing cheques to the assessee (vii) all the share subscribers are having substantial creditworthi- ness represented by their capital and reserves 12. We also take note of the elaborate and well-reasoned findings and decision arrived at, by the Ld. CIT(A) by taking into consideration all the details and documents placed on record. Relevant findings and decision in this respect is extracted as under: "6.2 On perusing of the documents, 'it is observed that appellant has received the share capital and share premium money from 18 sharehol....
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.... CIT v. Creative World Telefilms Ltd reported in 333 ITR 100 and in case of CIT vs. Nikunj Eximp Pvt Ltd reported in 35 Taxmann.com 384had decided that that mere non service and non-compliance of notice u/s 131 would not disprove the transactions, particularly when the transactions are entered through banking channel. The AO had accepted the fact that the money had been received by the appellant through banking channel by A/c payee cheques and bank statements of shareholders had been furnished on record which does not depict as sourced from immediate, cash deposit. Therefore, when all these documentary evidences are available, there seems to be no basis for making the addition u/s 68 of the Act. Even In. remand report, AO has not disproved the correctness of the documentary evidences filed during assessment proceedings and during course of remand proceedings and AO had again emphasised on partial compliance to notice u/s, 131 of the Act. It is seen that the appellant had discharged its onus by furnishing the documentary evidences stated hereinabove which had proved the identity and creditworthiness of the shareholders and genuineness of the transactions and there does not exist con....
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.... record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares ie allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case." 15. Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents of the share subscribing companies, furnished by the assessee as well as by the share subscribers directly to the ld. Assessing Officer in response to his summons/not....
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.... established the nature and source of the said sum and discharged the onus that lies on it in terms of section 68. When the nature and source of the amount so invested is known, it cannot be said to undisclosed income. Therefore, the addition of such subscriptions as unexplained credit under section 68 is unwarranted." 17. Further, reliance is placed on the decision of Hon'ble Supreme Court in the case of CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) wherein it was held as under: "In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the T....
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....LTD AABCD3991M 105, SAI SANGAM, B/H TUNGARESHIWAR SWEET MART, NAVGHAR, VASAI-401202 5 FAIRMOUNT VENTURE PVT. LTD. AABCF1538L 105, SAGAR SHOPPING CENTRE, J P ROAD, ANDHERI (W), MUMBAI - 400058 6 HPL MULTI TRADE PVT. LTD AABCH6682D A/42, HIGH RISE BLDG, L. M. ROAD, BORIVALI, MUMBAI, 7 IDORE SYSTEMS & SOLUTION PVT. LTD. AACCT7030N 402, MEHZABEEN ARCADE, 13/A, CHAKLA CROSS LANE, VADGADI, MUMBAI 8 KAPINDRA MULTITRADE PVT. LTD. AACCK9652R 001-B-65,Sector No 1,Jay Deep CHS.Ltd Mira Road [East] Thane MH 401107 9 KUSH HINDUSTAN ENTERTAINMENT LIMITED AACCK3597M CS-2. SILVER ANKLETYARI ROAD, VERSOVA, MUMBAI MH 400061 10 NETFORMEX INFORMATION TECHNOLOGY PVT. LTD. AAKCS9844D 402. MEHZABEEN ARCADE, 13/A, CHAKLA CROSS LANE, VADGADI, MUMBAI 11 NICCO SECURITIES PVT. LTD. AABCN1737D 96/98, Dhanji Street, 3rd Floor, Mumba Devi Mumbai 400002 12 NOZAKI FINANCE AND INVESTMENTS PVT. LTD. AAACN5039R UNIT NO 81, PLOT NO 14, MAROL CO-OP INDUSTRIAL ESTATE, OFF, ANDHERI-KURLA ROAD, ANDHERI (EAST) MUMBAI Mumbai City MH 400059 13 OSHIN INVESTMENT & FINANCE PVT. LTD. AAACO9051G Rajyog Apartments, Dev Chand Nagar, 60 Feet Road, Bhayander West Thane MH 421101 14 SANTOSHI MA LEASE FINANCE & INVESTMENT (I)....
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....-400012 1 Oshin Investment Finance Pvt Ltd, 500 Equity shares 25,00,000/ 99.990,200 . PAN Card "CIN Master Confirmation of ccounts PAN - AAACO9051G, Add .: - B- ,Pushpak Apt., Mumbai 2 Sidh Housing Development Co Ltd, 500 Equity 99,909,700 PAN Card ata (POP) Confirmation of Share . Board Resolutions . I.T Notice was presidently time and submitted o 23/03/201; PAN - AAKCS6606H, Balance sheet and P&L JAdd .:- Rajyog apartment 3b wyendwe road 3 Fairmont Venture 2500 Equity 201,771,929 . PAN Card 2. CIN Maste Confirmation of ccounts . I.T PAN - AABCF1538L, 25,00,000/ Receipt Board Resolutions . Reply to notice u/s 131 Receipt . Bank Spank 4. Audited Add .:- 105, Sagar gang Center, JP Mumbal - 400058 4 Kapindra Multitrade Pvt Ltd, 2500 86,714,759 -PAN Card :. . CIN Master Data (ROC) · Confirmation of Accounts PAN AACCK9652R, 25,00,000/ W Balance sheet and P&L Add .:- B-G12, CO-OP HSG Soc. Bhayander (E) 5 B. K. Dyeing & Ta 9 Mills Pvt 1500 shares 15,00,000/ 16,795,405 PAN Card . Confirmation of . I.T . Balan PAN - AABCB6959M, Balance ....