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TMI Blog2015 (5) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... vestors in the shares of the assessee company are not in dispute and the investment were made through their bank accounts is also established from their bank statements as well as their audited financial statements. The Honourable Supreme Court in the case of CIT versus Lovely Exports (P) Ltd.S.L.P. (CIVIL)[2008 (1) TMI 575 - SUPREME COURT OF INDIA] wherein held that if the share application money is received by the assessee-company from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessments in accordance with law. Thus addition made in the instant case cannot be sustained. - Decided in favour of assessee. - ITA No. 75/Ahd/2011 - - - Dated:- 29-4-2015 - Shri N. S. Saini And Shri Kul Bharat,JJ. For the Petitioner : Shri Asseem Thakkar, AR For the Respondent : Shri M.K. Singh, Sr.DR ORDER Per N. S. Saini, Accountant Member: This is an appeal filed by the assessee against the order of the Commissioner of Income-Tax-VII, Ahmedabad dated 02.11.2010. 2. The sole ground of appeal taken by the assessee reads under: 1. The ld.CIT(A) has erred in confirming the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) which he paid before issue of cheques. In fact our company has not purchased or invested any amount as a share capital either on premium or otherwise in M/s Jay Durga Trade Link (P) Ltd. The transaction was made for earning one percent of total investment 'claimed as share premium by M/s Jay Durga Trade link (P) Ltd. 5. The AO further observed that Shri Desai Pintoo Motibhai, director of Step Securities (P) Ltd. in his statement recorded under section 131 of the Act on 22.9.2009 on oath has stated that he has signed the confirmation dated 13.8.2009 on the instruction of Shri Samir P. Shah, director of Step Securities (P) Ltd.. He further stated that as per his knowledge, Step Securities (P) Ltd. has not purchased any shares with premium of Jay Durga Trade Link (P) Ltd. 6. In order to examine the veracity of statement made by Shri Desai Pintoo Motibhai, summons under section 131 of the Act was issued to Shri Samir P. Shah and his statement was recorded under oath on 23.9.200. He, inter alia, in his reply to question regarding investment made by the company stated that he was not aware, but Shri Bharatbhai Manubhai Shah resident of A/2/53, Arjun Tower, Ghatlodiya, Ahmeda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 proposing to consider Share Capital Share Premium amount collected by the Company as Cash Credit u/s 68 which is totally arbitrary, illegal and against the principle of natural justice on the following proposition. First of all, we had already furnished Xerox copies of Share Application Forms received by the Company from M/s Ankush Finstrock Ltd, M/s Marrot Stock Holding Pvt Ltd and M/s Step Securities Pvt Ltd vide out submission dated 24.06.2009. Thereafter we had also submitted Bank Statements of these companies reflecting the cheques issued for subscribing the shares in the Company and also their Income Tax Return copy for said Financial Year. We are also submitting copy of Balance Sheet of M/s Ankush Finstock Ltd in which investment of 20 Lacs made by them in our company is shown as Long Term Investment in Schedule-5 of the Balance Sheet, out of 166.25 lacs of investments made by the company in various companies. Further we had also filed Minutes of the meeting in which shares are allotted and members register with our submission dated 24.06.2009. Thus we had already proved the identity of the subscriber of shares, the genuineness of the transaction namely it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have not invested any fund in the assessee company as share capital on premium. All the so called investor companies were being managed by one person Sh Bharat Martubhai Shah who has accepted the fact. The assessee company its self laundered its unaccounted fund by introducing the same via so called investor's bank accounts which is evident from the perusal of bank accounts of the investors. (c) As regards to the contention of the assessee company that all so called investors had confirmed the investment. The confirmation of accounts was provided by the assessee company. In the subsequent stage of investigation, the fact that these were accommodation entries has become clear from the statements of so called investors recorded u/s 131 of the act, the so called investors have accepted having given accommodation entries to the assessee by providing their bank accounts to launder unaccounted fund of the assessee on receipt of consideration. (d) As regards to the decision of the Hon 'able Apex court, the facts are totally different from the case under consideration as in this case the so called investors have denied having invested any amount in the assessee company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oad resemblance to another case is not at all decisive. Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. The path of justice must be clear of obstruction which could impede it. The observations of the Court must be read in the context in which they appear to have been stated. The assessee has placed reliance on the above decisions without discussing, as to how, the factual situation of the present case fits in the factsituation of the cases relied upon. Same is the position here in this case. The Ld. Counsel has placed reliance on the decisions without discussing, as to how, the factual situation of the present case fits in the fact-situation of the cases relied upon. 7.4 In view of the detailed discussions held above, I am of the considered opinion that the additions made by the A.O. is justified and therefore confirmed. As such the addition of ₹ 32.50 lakhs is confirmed. 12. Before us, the AR of the assessee contended that the assessee has discharged its burden regarding identity of the persons, genuineness of the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO had drawn inferences, made presumptions, relied on surmises and thus made unsustainable additions. 15. It was further submitted that in the bank statement submitted by Ankush Finstock Ltd. did not show any cash deposit in their bank account from which such cheque issued for investment. Further, there was no commission income shown in the books of Ankush Finstock Ltd. nor commission expenses shown in the books of the assessee s company. 16. It was further submitted that according to the AO, the company was newly incorporated and has no asset to charge premium on shares was also not tenable since the issuing of shares at a premium does not necessary to have some assets with the company or there is no definite guidelines for issue of shares at premium but it depends on promoters background and future of the company s working etc. The AO has assumed that the assessee has laundered its own unaccounted funds was also not true for the same reasons. It was further submitted that the AO has stated that the investment made by the assessee-company in the form of loans and advances to M/s.Navkar Reality Pvt. Ltd., and M/s.Aakar Infrastructure Pvt.Ltd. are associated with the promot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has held that the opinion of the AO is required to be formed objectively with reference to the material available on record, and only by saying that the explanation of the assessee is unsatisfactory, it does not automatically result in deeming amount of cash credit as assessee s income. 21. He further submitted that the Hon ble Gujarat High Court in the case of DCIT Vs. Rohini Builders Vs. DCIT, reported in 256 ITR 360 (Guj) has held that the Tribunal found that the assessee had discharged the initial onus lies on it in terms of section 68 by providing identity of the creditors, by giving their complete address, GIR numbers, PAN and copies of assessment orders, wherever readily available with it, and also proved capacity creditors by showing that the amounts were received by the assessee account payee cheques drawn on bank accounts of the creditors, and that the assessee is not accepted to prove the genuineness of cash deposits in the bank account of these creditors, because under the law, the assessee can be asked to prove the source of credits in its books of accounts, but not the source of source. Thus, taking into consideration totality of the facts of the case, and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ldings Pvt. Ltd. made addition of share capital and share premium aggregating to ₹ 32.50 lakhs as cash credit. 26. Before us the authorised representative of the assessee filed a copy of balance sheet of M/s Ankush Finstock Ltd. and pointed out there from that they have duly shown their investment of ₹ 20 lakhs made in the shares of the assessee company. Similarly the authorised representative from the audited accounts of Marrot Stock Holdings Pvt. Ltd. and Step Securities Pvt. Ltd. pointed out there from that they have also shown therein their investment of ₹ 10 lakhs and ₹ 2.50 lakhs respectively in the shares of the assessee company. The authorised representative of the assessee pointed out from the bank statement of Ankush Finstock Ltd. placed at paper book page number 74 that the investment of ₹ 20 lakhs made by Ankush Finstock Ltd. in the assessee company is duly entered therein. He also pointed out from the bank statement of Marrot Stock Holdings Pvt. Ltd. and Step Securities Pvt. Ltd. placed at page numbers 43 and 24 respectively that their investment of ₹ 10 lakhs and ₹ 2.50 lakhs was also evidenced from their bank statements. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances in which cheque was issued to the assessee company, and the circumstances in which the investment in the shares of the assessee-company was reflected in their audited accounts. In the circumstances, in our considered view, the testimony of Shri Pankaj Manubhai Shah cannot be held to be reliable and the same is merely un-substantive statement. Similarly, we find that the recorded statement of Shri Desai Pintoo Motibhai, director of Step Securities P. Ltd. could not explain the circumstances in which the cheque was issued to the assessee-company and the circumstances in which the investment in the shares of the assessee-company was reflected in their audited accounts. In the circumstances, in our considered view, the testimony of Shri Desai Pintoo Motibhai cannot be held to be reliable, and the same is merely an un-substantive statement. Thus the statement of the director of Ankush Finstock Ltd. was not at all reliable and therefore on the basis of such unreliable statement the fact revealed by documentary evidences on record cannot be ignored. 29. In reply the departmental representative supported the orders of the lower authorities. 30. We find that in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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