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TMI Blog2015 (4) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... d the identity of the 16 share-subscribers, their creditworthiness and genuineness of the share transactions with documentary evidence as per law. Also that the assessee explained and substantiated the nature and source of credits found credited in the books of account during the relevant financial year. In absence of rebuttal of these material findings of the Learned CIT(Appeals) by the Revenue, we do not find reason to interfere with the First Appellate Order in this regard. - Decided in favour of assessee. For addition as unexplained expenditure being commission @ 25 paise per 100 rupees paid for arranging entries of ₹ 3,85,00,000/-. Since this addition is consequential to the addition of ₹ 3,85,00,000/- being the accommodation entry, same is directed to be deleted as the main addition of ₹ 3,85,00,000/- has already been directed to be deleted - Decided in favour of assessee. - ITA No. 535/Del/2009, Cross Obj. No. 28/Del/2009 - - - Dated:- 31-3-2015 - Shri I. C. Sudhir And Shri. Pramod Kumar,JJ. For the Petitioner : Shri P. Damkaunjma, Sr. DR For the Respondent : Shri Ved Jain, CA ORDER Per I. C. Sudhir: Judicial Member ITA No.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e share applications were made by way of public issues. f) the finding of facts recorded by the A.O. the investigation wing of the department that the assessee indulged in a notorious practice of resorting to accommodation entries in order to evade payment of legitimate tax. g) that the A.O. is duty bound u/s. 68 to enquire into the creditworthiness, identity of the creditors genuineness of the transactions. The CIT(A) has erred in ignoring such findings recorded by the A.O. in the assessment order. 2. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. The facts in brief are that the assessee company is engaged in trading of various types of glasses. On 10.08.2006, survey proceedings under sec. 133A of the Income-tax Act, 1961 were conducted by the DIT(Inv.) at the premises of the assessee which resulted in disclosure of a sum of ₹ 3.85 crores which was received by the assessee as a share application money from various concerns. Notice under sec. 148 was issued and assessment was framed under sec. 147/143(3) of the Income-tax Act, 1961 on 17.12.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are copies of audited balance sheet with audit report for the years ending 31.3.2000, acknowledgment of return of income with computation of income for the year, statements of Mr. Arvind Kumar Gupta during the course of survey operation, sworn retraction statement by Arvind Kumar Gupta dated 31.8.2006, Board s Resolution adopting retraction statement of Mr. Gupta dated 31.4.2006, statements of departments witnesses, Shri Mukesh Gupta, Rajan Jassal and Surender Pal Singh, letters of different dates commenting upon the statements of the above persons submitted before the Assessing Officer, several correspondences with the department, latest confirmation of the transactions from the shareholders and statements of share capital from the companies along with supporting documents proving identity, creditworthiness and genuineness of the transactions. 7. We find that the assessee had filed return declaring the income of ₹ 11,59,090 which was processed under sec. 143(1) of the Act. Survey under sec. 133A of the Act was conducted by the Investigation Wing of the Department wherein director of the assessee company offered ₹ 3.85 crores for taxation in the hands of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such shareholders in any of the meetings held of the company could have been ascertained. The Assessing Officer noted that it may be true that in the case of a public issues, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintained and make available to the Assessing Officer for his perusal all the information contained in the statutory share application documents. In the case of private placement, the legal regime would not be the same. The Assessing Officer has ultimately made the addition under sec. 68 of the Act with this finding that the assessee has failed to satisfactorily explain the real identity, creditworthiness and genuineness of persons in whose names sums were found credited in the books of account. 9. The Learned CIT(Appeals) has discussed the cases of assessee as well as of the Assessing Officer on the issues and has deleted the additions vide concluding para No.50 of the First Appellate Order. For a ready reference the said para No 50 of the First Appellate Order is being reproduced hereunder: 50. I have considered the rival contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts or any incriminating document or material that is found or any excess cash, inventory or other valuables may have been found so as to suggest any undisclosed income or undisclosed source of income or unexplained nature of share capital. There is no nexus between the additions of ₹ 3.85 crores and survey material that could support the addition. Therefore, the addition is made not on basis of any evidence during survey but on the basis of statement of Arvin Kumar Gupta recorded during the course of survey. 4. Arvin Kumar Gupta on the basis of whose statement the addition of ₹ 3.85 crores is made has specifically admitted at question number 18 and 21 of the statement that details and , genuineness of the share capital is as per the share holders register and there is no incriminating material during survey to disregard the above replies. Also, it is noted that the very basis of question no. 22 that cheques are 'accommodating entries in lieu of cash deposits with them in any of their accounts' and there is no material or bank statement of any account produced on record either during surveyor assessment to justify that question number 22 was factual and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search / survey operations or thereafter while framing the relevant assessment orders. Therefore, the statement of Arvin Kumar Gupta and which in this case is also been found to be forcefully retracted later on by assessee would not have much evidentiary value in quasijudicial proceedings since not corroborated with material finding and documentary evidences either found during surveyor even brought on record later during assessment proceedings to indicate or support that assessee had undisclosed or unexplained income or assessee own funds have been rerouted to its own coffers in the form of share capital in the name of non-existing or fictitious entities or unidentifiable legal entities. These essential ingredients are lacking in the instant case. On the contrary the assessee has filed detailed particulars and documents of the 16 shareholders to corroborate the submissions and highlight the identity and creditworthiness of shareholders and genuineness of share subscription transaction as tabulated hereunder:- I have noted from above that all the share holders are incorporated and registered with the concerned registrar of companies, under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rohini Builders 254 ITR (st) 275 (SC) that it is not the business of the assessee to find out source of money of his creditors or genuineness of their transactions in case the AO was not satisfied with the cash amount deposited by those alleged creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by treating the cash deposits in their bank accounts as unexplained investments of those creditors under s. 69. The assessee had furnished complete details of the creditors along with their GIR numbers and the PAN numbers, as well as the confirmations with the copies of the assessment orders of the individual creditors. The cash credits could not be said to be non-genuine on the ground that the summons that had been issued to some of the creditors could not be served or they failed to appear before the AO. The assessee has discharged his onus. In Nemi Chand Kothari 264 ITR 254 (Gau) it was held that where assessee had given full particulars of the creditors and the credited amounts were paid by creditors by account payees cheque and the assessee has established the identity of creditors, genuineness of transaction and cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussed the issue in detail and has incorporated the case of the Assessing Officer and of the assessee meeting out the objections raised by the Assessing Officer justifying the additions which runs in page nos. 1 to 42 of the First Appellate Order. In his findings, in para No. 50 which also runs in seven pages, the Learned CIT(Appeals) has met out the every important aspect of the case satisfying the ingredients of sec. 68 of the Act to justify the deletion of the addition. He noted that the share capital of ₹ 3.85 crores raised from sixteen companies is duly accounted for as share capital in the books of account duly disclosed as share capital in the audited balance sheet filed along with the return of income for the assessment year under consideration before the date of survey. S/Shri Mukesh Gupta, Surender Pal Singh and Rajan Jassal in their statements has not named the assessee company as hawala operator and they have not denied the investment in the assessee company. He noted that the statement of the above parties cannot be the basis to make the additions in assessments especially when assessee has shown that contents of the said statements are doubtful and distinguishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT(Appeals) has noted further that all the shareholders are incorporated and registered with the concerned registar of companies under the Companies Act, 1956 and are allotted company identification number by the ROC, Ministry of Corporate Affairs, Government of India after they having completed necessary formalities and their status shown is active. He noted further that all the shareholders are income-tax assessees and are assessed to tax under jurisdiction of different Assessing Officers. The genuineness of the share subscription transaction is verifiable from I.T. Records, bank statements of the subscribers and all the share holders share application form, board s resulation etc. Besides, the shareholders have confirmed the share money transaction which were produced before the Assessing Officer. At the conclusion of the paragraph, the Learned CIT(Appeals) has directed the Assessing Officer to delete the addition on the basis that the assessee has established the identity of the 16 share-subscribers, their creditworthiness and genuineness of the share transactions with documentary evidence as per law. Also that the assessee explained and substantiated the nature and sour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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