9911796707
TMI Blog2014 (1) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... n assigned for making such ad hoc disallowance by the Assessing Officer - the company is a juristic person, no disallowance of personal nature can be made in the case of a company – Decided against Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the proof for the same will be submitted within 7 days. No details of share application money amounting to Rs. 1,29,50,000/- and share premium account Rs. 1,88,35,000/- has also been furnished though specific query was raised in this regard. With regard to bank statements it was submitted that all the copies of bank statement as obtained from the banks were submitted. It was further stated that for rest of the period i.e. 4/04, 7/04, 12/04 and 4/05 there were no transaction effected by the assessee and as such bank has not supplied such statements. The assessee has also not supplied the list of sundry creditors i.e. name, address, PAN and amount etc. In view of these facts the director and the AR were specifically asked to furnish all these details on 9.8.2007. However, no compliance was made on that date. Therefore, on 9.10.2007 a letter was issued requiring the assessee's compliance on 9 points for which the case was fixed on 1 7.10.2007. 4. On 17.10.2007 Shri Shanker Singh, ITP, attended and stated that since the fatherin-law of the director suffered from a heart attack, the required details could not he produced on that date. Therefore, on his request the case was adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available. 5. In view of the above facts, vide letter dated 20.11.2007 the assessee was confronted with this fact and asked to produce the above persons for examination. The compliance was required on 27.11.2007. The assessee was also requested to make compliance to the notice u/s 142(1) dated 9.10.2007 on the above date. It was clearly mentioned in that letter that it was the last and final opportunity and in case of non-compliance adverse inference will be drawn. However, on 27.11,2007 no compliance was made. 6. Thereafter, the Assessing Officer mentioned about each and every notice u/s 133(6) issued to 14 share applicants, wherein it was stated that either they have refused to accept the notice or no such person was available at the address or no reply was given by any of the four persons mentioned at serial nos. 3 to 6 at page 3 of his assessment order. 7. In the case of Pramila Investment, the Assessing Officer observed that the assessee has shown share application money of Rs. 1,29,50,000/- out of Rs.95,000/- received during the year. In this regard, the assessee was required to prove the identity and credit worthiness of depositors and also genuineness of transaction with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey during the year. In addition to it, the assessee had shown to have received sundry credit of Rs.2,88,45,925/-. The Assessing Officer asked the assessee to establish identity and credit worthiness of loan creditors. The Assessing Officer further observed that the assessee never produced any details of sundry creditors appearing in its books of accounts. The assessee was asked to produce the loan creditors for verification. However, the assessee neither produced loan creditors nor appeared in the office of the Assessing Officer for filing any details as required by him. In these circumstances, to verify the genuineness of the loans appearing in its accounts, the Assessing Officer issued summons to following parties :- 1. Rajendra Fincom Ltd. 2. Rajendra Bafna 3. Rajkumar 4. Jitendra Porwal 5. Ramchandra. The Assessing Officer further observed that in response to summons, none of the above parties appeared in his office. On verifying the letter dated 26.12.2007 which was adjournment application for grant of adjournment of 2/3 days by Rajendra Bafna, Rajkumar Choudhary and Pradeep Bafna, the Assessing Officer observed that all these letters were received through speed pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income on 31.3. 2006 showing income of Rs. 1,12,471/-. During the course of assessment proceedings, no books of accounts were produced by the assessee. However, on perusal of balance sheet the AO observed that the assessee received Rs. 1,47,50,000/- as share application money during the year under consideration. The assessee also received Rs. 3,97,48,900/- as sundry credit. The AO, therefore, called upon the assessee to establish the identity, credit worthiness and genuineness of the loan creditors in reply to which the assessee filed confirmation letters and income tax returns of the share applicants but it did not produce the bank account of these persons. The AO also required the assessee to produce the loan creditors but it failed to do so. The AO, therefore, issued summons to the following share applicants for appearing before him :- 1. Shri Parasmal Jain 2. Shri Mahesh Sethi 3. Shri Pradeep Agrawal 4. Ms Sunita Khatod 5. Smt. Shyamabai Rathore 6. Smt. Sangeeta Rathore 7. However, none of the above persons appeared before the AO. The AO, therefore, served upon the assessee a notice calling upon it to explain as to why the amount of Rs. 1,47,50,000/- re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs.95 lacs was correctly added u/s 68 being unexplained amount. During the appellate proceedings the assessee was asked to establish the genuineness of the money received under share application and also required to submit evidence of personal relations of promoters and directors of the company with the persons from whom share application money was received, as private companies cannot collect share application money from general people. The CIT(A) observed that no admissible evidence could be produced. He also observed that the Assessing Officer in his report dated 2.7.2008 enclosed as Annexure-2 of his order has made detailed discussion in respect of financial position of the company and made mention that during the assessment proceedings the assessee did not produce the depositors and prove the genuineness of transaction. The CIT(A) also observed that investigation wing of the department recorded statement of Shri Rameshchand Khatod (Jain) son of Shri Mangilalji aged 48 years on 16.4.2009 wherein CIT(A) quoted the answer given by him in question nos. 6, 7, 13, 19 and 22. In reply to question no. 6 he stated that he was receiving Rs. 50,000/- from two companies, namely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnish information regarding current address of the share holders and also as to which share holders are common in these companies and also what investment or transaction has been made by these companies in each other. The CIT(A) prepared Annexure 3 which is part of his appellate order wherein it was observed that there are about 40 share holders who have also invested in M/s Money Penny Fincom Limited. Besides, M/s Pramila Investment has also made investment in M/s Money Penny Fincom Ltd. and Money Penny Fincom Ltd. has taken shares of 52000 in the assessee company (Pramila Investment). It was further found that these companies are maintained by one person i.e. Ramesh Chandra Khatod who was basically an entry provider as per his own statement. Thereafter, the CIT(A) analysed the facts of all these companies in the light of principle laid down by the Hon'ble Supreme Court in Durgaprasad More; 82 ITR 540, Sumati Dayal; 214 ITR 801 and P. Mohan Kala; 291 ITR 78. After giving detailed finding, the CIT(A) further fortified the order of the Assessing Officer and held that all these companies are paper companies and that transactions done by these companies are not genuine. However, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creditor company (Lunkad Group) but they could not produce the Director of Lunkad Group to substantiate the contents of affidavit as well as confirmation so filed. The CIT(A) has deleted the addition on the plea of double addition by stating that confirming addition in the hands of assessee company in respect of loans received by it amounts to double addition. In this regard, there is a direct decision of Hon'ble Supreme Court in the case of ITO Vs. CH Atchaiah, 218 ITR 239, wherein it was observed that no option has been given under the 1961 Act, and it has been specifically provided that tax has to be levied on right person notwithstanding the fact that the amount has already been added in the hands of some other person. Meaning thereby addition should be made in the hands of the right person and the same cannot be deleted only on the plea that the same amount has been added in the hands of some other person. It was observed by the Supreme Court that there is no option under the 1961 Act, unlike the one given under 1922 Act and the AO must tax the right person and right person only. By "right person" is meant the person, who is liable to be taxed according to the law with respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the facts of the instant case are different from the case of Narmada Extrusion (supra) as relied on by the CIT(A). In the case of Narmada Extrusion (supra), the addition made by the Assessing Officer on account of unsecured loan was deleted by the CIT(A) on the plea that the addition has already been made in the hands of cash creditor, therefore, no addition was warranted in the hands of Narmada Extrusion (supra). In the appeal filed by the department against the order of the CIT(A), the Tribunal held that since Narmada Extrusion (supra) was the beneficiary of the loan amount and using the loan amount in respect of which genuineness of transaction and credit worthiness of loan creditor was not established, accordingly, it was held that the addition was to be made in the hands of Narmada Extrusion (supra) which is a beneficiary not-with-standing the fact that the amount has already been added in the hands of the loan creditor. However, the facts of the instant case are quite different wherein addition has been upheld by CIT(A) in the hands of the assessee company insofar as all the three ingredients i.e. identity, genuineness and credit worthiness are not proved. Accordingly, CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M.P. assessee has tried to prove genuineness of transaction by furnishing confirmation, copy of bank account and acknowledgement of return. It has also furnished various decision in support of its contentions. But it is evident from the investigation made by ACIT 5(1), Indore that both these company are not existing companies in the real sense. These companies are paper companies only and exist nowhere and were used to give accommodation entries to various parties who want to launder their unaccounted money in the guise of share application or unsecured loan or long term capital gain. The assessee is a closely held Pvt. Ltd. Company in which public is not substantially interested. Thus as per section 68 onus was upon the assessee to establish depositor's identity, creditworthiness and genuineness of transaction. Assessee in its written submission stated that company has received share application money of Rs. 40,00,000/- from Hindustan Continental Ltd. 19, Shubh Kamna Apartment, Gul Bazar, Jabalpur. As per the report of the ACIT 5(1), Indore, it is clear that no such company exist at the given address. The creditworthiness of the company has also not been established in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge and possession of the income tax return of the company. Our attention was invited to the details of "capital work in progress" and licence capacity of HCL Limited by arguing that the existence and credit worthiness of HCL is established since it is having share capital of Rs. 8.09 crores. During hearing before us, the Ld. Counsel for assessee Mr. Choudhary, invited our attention to deposit of cash in bank account of M/s Sahayata Marketing and transfer thereof through account payee cheque to the bank account of M/s Sunil Shares Stocks Private Limited and thereafter to the ultimate beneficiary. It was submitted that the transactions of cash transfer and deposition of cash has nothing to do with the assessee. A strong plea was raised by the Ld. Counsel for assessee that identity of share applicants is established which was strongly denied by the learned CIT DR. At this stage, a query was raised by the Bench as to whether the assessee is in a position to produce before this Bench any of the Directors or the employees of these companies? The Ld. Counsel for assessee conveniently contended that the assessee cannot be put to adverse burden meaning thereby that the assessee was not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies on the basis of some documents. Leave it apart, as mentioned above, the Ld. Counsel for assessee, in reply to a specific query regarding production of any of the directors or the employees of the share applicants before the Bench, the assessee did not comply with the directions of the Bench, therefore, to this limited extent, we are of the view that these share applicants are nonexistent and their identity is not proved. It is pertinent to mention here that there is a difference between a private and public limited company as in a private limited company, the public at large is not subscribing the shares as the shares are allotted to close relatives, friends and other known persons who are having faith in the subscribing company on personal relations whereas there is an invitation to the public at large by a public limited company and not necessarily having personal relations and in that case, the individual relations are normally found to be non-existent. In view of these facts, the share applicants are known to the assessee company, being private limited company, and there should be no difficulty to produce them or their representative to enable the Assessing Officer to ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scharged by assessee, the Income Tax authorities have made enquiries and had communicated the result of the enquiry to the assessee and required the assessee to produce the subscribers who provided such credit, in order to establish its case. But the assessee did not do so. On this basis addition made by the A.O. u/s 68 of I.T. Act was confirmed." Identically, the Hon'ble Calcutta High Court in the case of Hindustan Tea Trading Company Limited; 182 CTR 585 at page 23 (para 21) where the identity of 12 persons who were not found at the addresses it was held that identity is not established. On the issue of onus, it was held that "principle regarding onus is laid down u/s 68 whereby once a reasonable enquiry is made, then the Assessing Officer can do no further except arriving at a conclusion. When such conclusion is communicated to assessee, onus shifts on the assessee. Likewise, Hon'ble jurisdictional High Court in the case of M/s Rathi Finlease Limited; 215 CTR 429 at page 28 when company is not found at the given address against the summons issued by the Assessing Officer observed as under - "The assessee tried to explain the genuineness of the credit on the basis of letters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Private Limited (supra) the Hon'ble'ble Delhi HighCourt in para 4 observed as under :- "Reference to section 68 of the IT Act is conspicuous by its absence, the Stellar Investment Limited ratio cannot be stressed to the extent that it partakes as a reflection on section 68, when the inquiry pertained only to section 263." 25. In view of the facts narrated above and the judicial pronouncements discussed hereinabove, it can be said that the assessee did not discharge the onus cast upon it by the provisions of the Act. We tend to reproduce section 68 of the Act :- "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." If the aforesaid provision of the Act is analysed, it speaks about cash credits and the sum found credited in the books of an assessee and the assessee offers no explanation about the nature and source thereof or the explanation is not found sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision like Addl. CIT v. Bahri Brothers; 154 ITR 244 (Pat) holding that identity of creditors is not relevant for cheque transactions but at the same time it is not sacrosanct as was held in Nemichand Kothari vs. CIT; 264 ITR 254 (Gau). In the case of Shri Barkha Synthetics Limited vs. ACIT; 155 Taxman 289 the Hon'ble Rajasthan High Court held that where the matter concerns money receipts by way of share application from the investors through banking channel, the assessee has to prove the existence of the person in whose name the share application is received. Once the existence of the investor is proved, it is not further the burden of the assessee to prove whether that person itself has invested the money or so me other person has made investment in the name of that person. The burden then shifts to the revenue to establish that such investment has come from the assessee company itself. 26. Once the receipt of the confirmation letter from the creditor is proved and the identity and existence of the investor has not been disputed, no addition on account of share application money in the name of such investor can be made in the hands of the assessee. In the case of CIT v. Divine L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this controversy because the facts of the present appeals are distinguishable from the facts of Lovely Exports Private Limited. Hon'ble Delhi High Court in a latter decision in CIT v. Oasis Hospitalities Private Limited (2011) 333 ITR 119 held as under :- " We are of the view that ratio laid down in Steller Investment Ltd. (2001) 251 ITR 263 is applicable only in those cases where the assessee is a limited company and the shares were quoted in the stock exchange. But whenever the issue is subscribed without quoting it on the stock exchange by a limited or private limited company, the presumption is very strong against the assessee that subscription is available only to the closely connected persons of the assessee. Once the inference is against the assessee that the issue is subscribed by its closely connected person, the onus is upon the assessee to prove the identity of the subscribers and their creditworthiness." 27. There is another perception to look into the decision of the Hon'ble Apex Court in the case of Lovely Exports Private Limited wherein the Hon'ble Apex Court held that if the share application money is received by the assessee from alleged bogus share holders, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the facts of the present appeals because identity of share applicant itself was not proved. The principle laid down in the case of M/s Rathi Finlease Limited was recently affirmed by Hon'ble jurisdictional High Court in the case of STL Extrusions, it has become binding precedent on the Tribunal especially when the decision of the Hon'ble Apex Court in the case of Lovely Exports was very much available. Hon'ble jurisdictional High Court while coming to a particular conclusion followed the decision of the Hon'ble Karnataka High Court in CIT v. ASK Brothers Limited (2011) 333 ITR 333 and duly considered the decision from the Hon'ble Apex Court in CIT v. Lovely Exports Private Limited and Steller Investment Limited (supra). In another latest decision in CIT v. Oasis Hospitalities Private Limited, UP Bone Mills India Limited and Vijay Power Generators Limited, etc. (2011) 333 ITR 119 (Del), identically held that identity and credit worthiness of share applicants was not proved, therefore, the addition u/s 68 of the Act was justified. While coming to the aforesaid decision the Hon'ble Delhi High Court considered the following decisions :- 1. Bhola Shankar Cold Storage P. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of the subscribers of the shares but also their bank accounts and the permanent account numbers issued by the Incometax Department. Super added to all this was the fact that the amount received by the company was all by way of cheques. This material was, in the opinion of the Tribunal, sufficient to discharge the onus that lay upon the assessee." The Hon'ble High Court took note of many other judgments of many other High Courts and on analysis of those judgments, formulated the following propositions which emerge as under (Divine Leasing & Finance Limited; 299 ITR page 282 (Del):- "In this analysis, a distillation of the precedents yields the following propositions of law in the context of section 68 of the Income Tax Act. The assessee has to prima facie prove- The identity of the creditor/subscriber The genuineness of the transaction, namely, whether it has been transmitted through banking or other undisputable channels The credit worthiness or financial strength of the creditor/subscriber If relevant details of address or PAN, identity of the creditor/subscriber are furnished to the department along with copies of the share holders' register, share applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to desiring parties in the garb of loan or share capital. Not only that, the shares of Hindustan Continental were claimed to be traded by Sunil Shares & Stock Limited, M/s Jai Share Fin Limited and others through manipulation giving rise to artificial height so as to enable certain parties to reintroduce their black money as huge capital gain. It was claimed that in those case also the cash was deposited first in certain account and thereafter the funds were transferred to the share brokers involved in the manipulation and then ultimately to the accounts of the party concerned as sale proceeds of shares. It was also submitted that SEBI has even penalised Hindustan Continental Private Limited and Sunil Shares & Stock Private Limited. This assertion of the learned Commissioner of Income Tax was not controverted by the assessee but merely argued that the money was transacted through banking channel and in view of the decision in the case of Lovely exports their individual accounts can be reopened. However, as mentioned earlier, the existence of these share subscribers/share applicants was not found existent, therefore, where is the question of reopening their individual assessments. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the identity itself has not been established, there is no justification to apply the ratio laid down by the Hon'ble Supreme Court in the case of Lovely Exports (supra). 34. The Hon'ble jurisdictional High Court in the case of Rathi Finlease (supra) has clearly laid down the proposition with respect to circumstances wherein the identity is established in case the share applicants are companies. It was held that even filing of confirmation of share applicants by the assessee will not serve the purpose of establishing the identity insofar as the inquiry conducted by the Assessing Officer and the letter issued by the Assessing Officer were returned unserved by the postal department with the remark that the addressees are not existing at the given addresses which clearly establishes that either the share applicants are non-existent or if exist, then merely exist on papers and not in real sense, therefore, their identity is not proved. With all respect, within the territorial jurisdiction of Madhya Pradesh, we are bound to follow the proposition of law laid down by the Hon'ble jurisdictional High Court, which was further confirmed by Hon'ble High Court in the case of STL Extrusion ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applicants. The ld. CIT(A) has got co-terminus powers to do what the Assessing Officer has failed to do. Proceedigns before ld. CIT(A) is also extension of assessment proceedings in addition to the appellate proceedings. However, inspite of full opportunity the assessee failed to rebut the contents of the report which indicated that no shareholders exist in the name of the companies so provided by the assessee. Even though, the report relied by the Assessing Officer was in respect of another assessee but the fact remains that the inquiry was in the case of same share subscribers i.e. M/s. Hindustan Continental Ltd. & M/s. Optimates Textiles Ind. Ltd. Under these circumstances, the inquiry conducted in respect of M/s. Hindustan Continental Ltd. & M/s. Optimates Textiles Ind. Ltd. which are common applicants in the case of all the assessees before us, could not be said to be a relevant and not concerning to the assessee in the instant cases. 36. Even if the cases relied upon by the ld. Counsel for the assessee, as mentioned/cited/discussed in the preceding paras of this order like Divine Leasing & Finance Limited, Dwarkadheesh Investment Private Limited, Gangor Investment Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal filed by the revenue was dismissed, whereas in the present appeal the matter was investigated by the Assessing Officer and even the Inspector of the department who was directed by the Assessing Officer to know the whereabouts reported that the share subscribing companies are non-existent and the addressees given of four places were also found to be fictitious. The summons/notices issued by the department were also returned unserved by the postal department with the remark that no such companies are existing at the given addresses, therefore, in the present appeals, the identity of share holders was not proved at any stage, consequently, the decision in the case of Shri Kela Prakashan Private Limited is not applicable being on different findings, therefore, may not help the assessee. Likewise, the Hon'ble Karnatka High Court in the case of CIT vs. Arunananda Textiles Private Limited (2011) 333 ITR 116 dealt with identical issue and that too after considering the decision in the case of Lovely Exports Private Limited and Steller Investment Limited. The Hon'ble Court held as under :- "It is not for the assessee to place material before the Assessing Officer in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to produce these persons who had introduced the share capital in the company. The assessee was also asked to furnish cheque numbers/draft numbers for payment of share application money along with the names of the drawee bank and branch of the bank. However, no details were furnished despite various opportunities. The assessee could not even identify the entries in the bank account regarding the receipts of the share application money nor could he produce the relevant ledger for verifying the receipts, according to the Assessing Officer. Ultimately, the assessee produced five persons whose statements were recorded. The assessee did not cross examine these persons. They did not furnish any proof of their identity in the form of ration card, election card or passport despite request by the Assessing Officer. The Assessing Officer after analysing the statements of these persons observed that these five persons were small agriculturists and had no means to make investment in the company." 38. In these circumstances, the entire receipt of Rs.25,23,500/- in respect of these five persons was treated as unexplained investment and made the addition u/s 68 of the Act. 39. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue is subscribed by its closely connected persons, the onus is upon the assessee to prove the identity (sic. Identification) of the subscribers and their credit worthiness. Their Lordships of the Hon'ble Calcutta High Court in the case of Bhola Shankar Cold Storage P. Ltd. v. Joint CIT (2004) 270 ITR 487 have examined the judgment of the apex court in the case of Steller Investment Ltd. and that of the Hon'ble Delhi High Court in the case of Sophia Finance Ltd (1994) 205 ITR 98 and have held that in the case of Steller Investment Ltd. the ratio laid down by the Full Bench of the Delhi High Court was not overruled and it still holds the field. Whenever the issue was subscribed by closely connected persons of the assessee and the assessee has failed to prove the identity and creditworthiness the addition under section 68 can be made in the hands of the assessee. In the instant case, the assessee could not place any evidence on record to prove the identity and the creditworthiness of the so-called subscribers and the Assessing Officer was justified in treating this investment as unexplained and made the addition under section 68 of the Income Tax Act. We, therefore, find no infirmit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant casae, no such documents are filed and no steps taken by the assessee which could establish the aforesaid three ingredients. Additional evidence in the form of bank statement, etc. is given but the assessee has not done anything to prove these bank accounts. On this evidence produced by the assessee remand report was called for and the Assessing Officer in his remand report dated December 23, 2003 submitted as under :- " None of the 6 alleged shareholders produced any documents in support of their identity. The fact was intimated to the assessee vide order sheet entries dated June 13, 2002 and March 17, 2003 . They are not assessed to tax. They have not produced any documentary evidence showing that they are capable of saving/investing any amount at all. If the persons producved are not carrying relevant documents to establish their identity, creditworthiness at the time of recording of the statements and furnishing photo copy of some documents after a gap of substantial period, it is not possible to verify its correctness unless the concerned persons are produced with necessary documentary evidence (in original) in support of their identity and creditworthiness. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these decisions were rendered after the pronouncements of decisions from Hon'ble Apex Court in Lovely Exports Private Limited (supra). As discussed in other paras of this order, so far as the decision in the case of M/s STL Extrusion vs. DCIT (2010) 15 ITJ 872 (I.T.A.T., Indore) is concerned, that decision was rendered by the Bench on the facts that since the assessee proved the identity of the investors, therefore, it was held that no addition can be made in the hands of the assessee company whereas in the present appeals, the existence/identity of share subscribers was not proved, consequently, these judicial pronouncements rather helps the revenue and not the assessee. 41. Even otherwise, if the ratio laid down by the Hon'ble Apex Court in the case of Lovely Exports Private Limited, while dismissing the Special Leave Petition, it is clear that the initial burden is upon the assessee to prove the identity of share subscribers and once the identity is proved, in case of bogus investment, addition can be made in their individual capacity and not in the case of the company. However, in the present appeals even the identity of such share holders is not proved as we have discussed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan taken by the assessee from Hindustan Continental Limited and addition as cash credit u/s 68. The ld. Counsel for the assessee, Mr. Hitesh Chimnani, contended that the learned Assessing Officer/the learned Commissioner of Income Tax (Appeals) have gone stray in passing lengthy orders discussing about capital gains on shares of M/s Hindustan Continental and the investment of the same company in fixed assets and capital work in progress. The financial position of M/s Hindustan Continental was highlighted before us by further submitting that the lender company is a quoted public limited company, the loan amount was advanced by account payee cheque and returned with interest. It was contended that the identity, capacity and genuineness of the transaction were fulfilled by the lender company, M/s Hindustan Continental Limited. The next ground relates to disallowance of interest of Rs.42,658/- paid on the said amount of loan of Rs. 10 lacs which was argued to be consequential. The ld. Counsel for the assessee relied upon the decision in Metchem Industries; 245 ITR 160 (MP); 225 ITR 640 (MP), Kalani Industries, 119 TTJ 140 (Del) and 245 DTR 281 (Del). On the other hand, the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
