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TMI Blog2013 (2) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 68 should be made in the hand of the assessee by piercing the corporate veil." 2. The relevant facts giving rise to the aforesaid grounds are that during assessment proceedings, the ld. A.O. found that the assessee received share application money of Rs.2.31 crores from M/s. Deevee Commercial Ltd., Kolkata. There was a search & seizure operation conducted u/s. 132 of the Act on 18/03/2008 and subsequent dates at Gouri Business Centre, Camac Street, Kolkata and in course of such operation, statements of the following persons were recorded u/s. 132(4) of the Act :- i) Sri Pritam Ghosh ii) Sri Giridhar Dhelia iii) Sri Deepak Kr. Agarwal iv) Sri Manoj Sharma v) Sri Pradeep Kr. Choudhari vi) Sri Mantosh Kr. Yadav. The Ld. A.O. forwarded the copies of the statements of Sri Pritam Ghosh, party at sl. No. (i) above vide letter dated 05/12/2008 and in respect of the remaining parties at sl. Nos. (ii) to (vi) above vide letter dated 08/12/2008 to the assessee and required it to explain as to why the amount received from M/s. Deevee Commercial Ltd. should not be treated as its unaccounted money. The assessee filed its reply in respect of letter dated 05/12/2008 on 10/12/2008 and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Centre and in the assessment order, only a small portion of each person's statement was reproduced which had direct relevance with the assessee, which the assessee is trying to state that such statement is not reliable. (b) From the statements of the above six persons, copies of which were annexed with the report, it was clear that Deevee Commercial Ltd. is nothing but a paper company/ jamakharchi company which is used to channelise unaccounted money by way of share application money. In counter reply of the said remand report, the assessee submitted its explanation in writing and the relevant portion of the same is appearing on pages 12 to 17 of the appellate order. 4. After considering the facts of the case, evidences on record, remand report of the ld. A.O. and counter reply by the assessee, the ld. C.I.T.(A) held that the conditions for invoking sec. 68 of the Act are not satisfied in this case and thus deleted the addition for the reasons as under :- (a) In this case, the identity of the share applicant M/s. Deevee Commercial Ltd. is known. Details of the share applicant including PAN were submitted during assessment proceedings. The transaction was through account payee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other hand, the learned counsel for the assessee supported the order of ld. C.I.T.(A) and made arguments in the lines as made before the ld. C.I.T.(A). He further submitted that in response to ld. A.O.'s letters dated 05/12/2008 and 08/12/2008 forwarding therewith copies of the statements obtained from several persons at the searched premises, the assessee filed its detailed explanation on 10/12/2008 and 23/12/2008 respectively, copies of which are filed in the paper book. The ld. A.O. has not pointed out any specific defect or adverse inference on the explanation filed on 10/12/2008 and without considering the explanation filed on 23/12/2008 in response to letter dated 08/12/2008 passed the assessment order on 22/12/2008 alleging nonsubmission of explanation. The learned counsel further submitted that the ld. A.O. while invoking sec. 68 of the Act mainly relied on the statements u/s. 132(4) of the Act of Sri Sandeep Sharma and Sri Pradeep Choudhari, who are in no way connected with the assessee-company or its Directors and as such reliance on their alleged statement misconstrues about the genuine transaction. He further submitted that the share applicant was identified and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was additional burden on the department to show that even if the share-applicants did not have means to make investments, the investments made by them actually emanated from the coffers of the assessee. In this case we find no such evidence being brought on record by the ld. A.O. to prove that the assessee's unaccounted money routed through M/s. Deevee Commercial Ltd. or any cash was deposited in the share applicant's bank account prior to issuance of cheque for share application. On the other hand, we observe that the transaction was by account payee cheque. PAN details of the share applicant were provided to the ld. A.O. Therefore, the onus cast on the assessee u/s. 68 of the Act, in our considered opinion, was duly discharged by it. In that view of the matter, when all the ingredients contained in Sec. 68 of the Act are fulfilled, there is hardly any scope to invoke that section alleging introduction of unexplained fund by way of share application, more so when no evidence could be brought on record by the department to the contrary. 7.1. The Hon'ble Rajasthan High Court has held in the case of Barkha Synthetics Ltd. vs. ACIT [2005] 197 CTR 432 (Raj.) that the princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely Exports (P) Ltd.(suspra) and held as under :- "Can the amount of share money be regarded as undisclosed income under s. 68 of I.T. Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the A.O., then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment." In the case of the assessee, as stated above, the assessee has furnished the details of shareholder with complete address, PAN details, cheque details showing bank name etc. Therefore, no addition on account of unexplained cash credit is warranted in the case of the assessee on the given facts and circumstances as discussed above. In view of the above, in our opinion, the action of the A.O. is contrary to the decision of Hon'ble Supreme Court in the case of CIT vs. M/s. Lovely Exports (P) Ltd. (supra). 7.4. In view of above facts and the decisions cited supra, we are of the considered view that there is no infirmity in the order of the ld. C.I.T.(A) in deleting the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind any merit in the ld. A.O.'s action in treating the surplus as business profit by observing as under :- "I am unable to appreciate the A.O.'s logic in stating that investment has to be always from surplus funds. By that token, no bank would ever be able to investment in anything. It is clearly identified by the A.O. that the source of funds for the purchase of shares is the share application money. If the appellant seeks to utilize that, I am unable to discern any penal action leviable under the Income Tax Act. The entire exercise here is concerned with the administration of the said Act only. As stated earlier, the appellant has given a submission in this regard which has not been contradicted by the A.O. in his remand report. It is also not the A.O.'s case that the appellant has indulged in business of share trading in the past. In my opinion, the facts of the case do not merit the treatment which the A.O. has given the receipt claimed by the appellant as short-term capital gain. This ground of appeal is, therefore, allowed and the A.O. is, therefore, directed to treat this receipt as short term capital gain." 11. At the time of hearing before us, the ld. Departmental Repre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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