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TMI Blog2015 (8) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee’s compilation. From the above documents, it is clear that the companies who applied for the shares of the assessee were inexistence, those were assessed to tax and filing their regular return of income. The share application money was drawn from their respective bank account and deposited in the bank account of the assessee. Both the companies applied the shares in proper form, the shares were allotted and information was given to the Registrar of Companies after allotment of the shares on the basis of resolution of Board of Directors, therefore, the transaction was genuine. In the present case, the assessee discharged the onus cast upon it to prove the identity and creditworthiness of the share applicant and genuineness of the transaction. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. - Decided in favour of assessee. Addition of adhoc basis towards out car running & maintenance expenses and out of depreciation of the cars - Held that:- In the present case, it is an admitted fact that the assessee maintained the books of accounts which were duly audited and no discrepancy was pointed out in those books of accounts which had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable, incorrect, unwarranted and uncalled for. 7. That the Appellant may take any other Ground or Grounds at the time of hearing of Appeal with the kind permission of the learned ITAT. 3. Ground Nos. 3, 5, 6 7 are general in nature so do not require any comments on our part. 4. Vide Ground No. 1 the grievance of the assessee relates to the confirmation of addition of ₹ 1,90,00,000/-made by the AO u/s 68 of the Income Tax Act, 1961 (hereinafter referred to as the Act) on account of share capital. 5. Facts related to this issue in brief are that the assessee filed the return of income through e-filing on 22.09.2010, declaring an income of ₹ 30,77,084/-. Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed that the assessee had received share application money from M/s Shalini Holdings Ltd. to the tune of ₹ 1,70,00,000/- and from M/s Apoorva Leasing Finance and Investment Co. Ltd. of ₹ 20,00,000/- as per following details: M/s Shalini Holdings Ltd. Rs.30,00,000/- Vide Ch. No.240580 Axis Bank, Karol Bagh, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the above light the identity, creditworthiness, and mode of transaction stands proved as per law. 7. The AO observed that the assessee only relied upon the PAN No. for the identity of the share application money subscribers, Balance Sheet and account payee cheques for capacity and genuineness of the aforesaid parties. He further observed that he had completed an assessment of M/s Parsandi Biotech Park Pvt. Ltd., Shastri Nagar, Meerut wherein share capital of ₹ 1,00,00,000/-subscribed by M/s Shalini Holdings Ltd. was held to be bogus. The AO observed that on enquiry, it was found that none of the Directors was available on the given address of the aforesaid companies and both were also not functioning and that the neighbours were also not aware of these companies. The AO extracted the following tabular matrix in respect of both the companies: S. No. Name of Company Returned income (In Rs.) Paid up capital (In Rs.) Share premium capital (In Rs.) Investment made in the assessee co. (In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the following: 1. As per investigation by I.T. Department the above named companies have been proved to be engaged in money lending business and the main entry operator is Virendra Kumar Jain. 2. Company was not available at the given addresses, means company is not verifiable at the given address. 3. Bank account, copy of ITR, balance sheet etc. of the above-named companies is not filed by assessee company to prove the creditworthiness and genuineness of the transactions. 4. Assessee company is not a public limited co. and not offered its share to general public and it is not clear as to how investment companies contacted to assessee company for investment in shares. 9. The AO accordingly made the addition of ₹ 1,90,00,000/- u/s 68 of the Act. The reliance was placed on the following case laws: Sumati Dayal 214 ITR 801 (SC) Macdowell Co. 154 ITR 148 (SC) Azadi Bachao Andolan 263 ITR 706 (SC) Avarsale Automation Ltd. 266 ITR 178 (Kar.) Nivedan Vanijya Niyojan Ltd. 263 ITR 623 (Cal) Gyan Chand Anil Kumar 251 ITR 559 (MP) Hindustan Tea Trading Co. Ltd. 263 ITR 289 (Cal) Sophia Finance Ltd. 205 ITR 95 (Del) (FB) Ram Lal Aggarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case with M/s Nova Promoters and Finlease Pvt. Ltd. 11. The reliance was placed on the following case laws: CIT Vs Lovely Export (P) Ltd. (2008) 216 CTR 195 (SC) Jaya Securities Ltd. Vs CIT (2008) 166 Taxman 7 (All) CIT Vs AKJ Granites (P) Ltd. (2008) 301 ITR 298 (Raj.) CIT(A) Vs Value Capital Services P. Ltd. (2008) 307 ITR 334 (Del) CIT Vs Stellar Investment Co. Ltd. (1991) 192 ITR 287 (Del) CIT Vs First Point Finance Ltd. (2006) 286 ITR 477 (Raj.) CIT Vs Electro Polychem Ltd. (2007) 294 ITR 661 (Mad.) Showveek Finance and Investment Pvt. Ltd. Vs CIT (2005) 6 MTC 951 (ITAT, LKO) JCIT(OSD) Vs Yuvraj Construction and Leasing India Ltd. (2007) 10 MTC 271 (ITAT, LKO) Uma Polymers (P) Ltd. Vs DCIT (2006) 100 ITD 1 (Jodh) Indradhan Agro Products Ltd. Vs DCIT (2004) 89 TTJ 1958 (Del) DCIT Vs Arjun Cold Storage and Gen. Mills (P) Ltd. (2009) 13 MTC 1001 (ITAT, Del) Barkha Synthetics Ltd. Vs ACIT (2005) 197 CTR 432 (Raj.) Aravali Trading Co. Vs ITO (2010) 187 Taxman 338 (Raj.) Murlidhar Lahorimal Vs CIT 280 ITR 512 (Guj.) CIT Vs Daulatram Rawatmal (1973) 87 ITR 349 (SC) India Rice Mill Vs CIT (1996) 218 ITR 508 (All) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn, opening a bank account and maintaining site/information on Internet/site/ROC. The ld. CIT(A) also observed that furnishing of PAN is not a barometer of unassailable identity of a person giving him immunity from any probe and that the allotment of PAN is not sacrosanct and adequate parameter of identity and it needs to be strengthened and correlated with credible creditworthiness. The ld. CIT(A) was of the view that the facts of the assessee case are akin to the facts of CIT Vs Nova Promoters and Finlease Pvt. Ltd. rather than that of CIT Vs Gangeshwari Metals Pvt. Ltd. reported at 2013(1) TMI 624 (Del) relied by the assessee. The ld. CIT(A) further observed that the fact that the ACIT, Central Circle-23, New Delhi has accepted returned income of entry providers does not help the case of the assessee. He also observed that the transactions of the assessee with entry providers were not real transactions but only paper transactions for which the conduit companies had earned commission income. Therefore, accepting the returned income of commission, the assessee in hands of the entry providers only strengthens the conclusion that the assessee had not been able to discharge the onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Leasing Finance Investment Pvt. Ltd. and ₹ 1.70 crores by M/s Shalini Holdings Ltd. The said fact was overlooked by the AO who simply mentioned the income declared by those companies but ignored this fact that the share capital was paid by both the companies out of their capital and not out of their income. As regards to the report of the Income Tax Inspector, the ld. Counsel for the assessee submitted that the said report had neither been provided nor confronted to the assessee and no such report had been enclosed by the AO with the assessment order. Therefore, the observations of the AO were without any basis and the cases relied by him had no application to the facts of the assessee. It was further stated that the assessee company is a closely held public limited company and has fulfilled all the provisions prescribed to issue share capital under the Companies Act and filed its return of allotment of shares in Form No. 2, copies of which is placed at pages 182 to 188 of the paper book. It was further stated that the reliance placed by the ld. CIT(A) in the case of M/s Nova Promoters Finlease Ltd. was misplaced. It was contented that the share applicant were registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. u/s 153C/153A is placed at page nos. 123 124 of the assessee s compilation and in the case of M/s Shalini Holdings Ltd., the similar documents are placed at page nos. 121 122 of the assessee s paper book which clearly established the identity of both the parties. The aforesaid parties applied in proper application form for allotment of the shares of the assessee company, copies of which are placed at page nos. 126 and 147 to 152 in the case of M/s Apoorva Leasing Finance Investment Pvt. Ltd. and M/s Shalini Holdings Ltd. respectively. The amount was paid to the assessee through account payee cheque/RTGS which is reflected in their respective bank account statement, copies of which are placed at page nos. 127 and 153 to 156 in the case of M/s Apoorva Leasing Finance Investment Pvt. Ltd. and M/s Shalini Holdings Ld. respectively. Both the above said parties were having worth ₹ 119,85 crores and ₹ 124.87 crores respectively, which is evident from their respective balance sheets, copies of which are placed at page nos. 136 to 141 and 165 to 181 in the case of M/s Apoorva Leasing Finance Investment Pvt. Ltd. and M/s Shalini Holdings Ltd. respectively. After r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence was warranted having regard to the facts of this case. This was a pure finding of fact. Section 68 was not applicable. 20. We are of the confirmed view that the ratio laid down in the aforesaid referred to cases is squarely applicable to the facts of the present case because the assessee furnished the PAN No. and copy of Income Tax Return of the share applicants to prove their identity and filed the copy of their balance sheets to prove the creditworthiness, share application money was received through banking channel and after allotment of the shares the information was furnished to the Registrar of Companies. Therefore, the transaction was genuine. In the present case, the assessee discharged the onus cast upon it to prove the identity and creditworthiness of the share applicant and genuineness of the transaction. Therefore, the addition made by the AO and sustained by the ld. CIT(A) was not justified. Accordingly, the same is deleted. 21. The next issue vide Ground No. 2 relates to the sustenance of addition of ₹ 5,00,000/- an adhoc basis towards out of car running maintenance expenses and ₹ 46,532/- out of depreciation of the cars. 22. Facts relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing adverse has been noticed and as such, the trading results are accepted. (iv) That all the vehicle expense are fully vouched, audited and supported. Than any kind of addition based on any kind of presumption or assumption based on some self cooked formulas and calculations are not correct, true and match with the records. (v) That under these circumstances when the books of accounts are fully vouched, and no discrepancy has been pointed out by the Ld. Assessing Officer. Than this adhoc addition of ₹ 5,00,000/- in vehicle running expenses based on self cooked assumptions is totally unjust, uncalled for and needs to be deleted in full. (vi) That the Ld. Assessing Officer has forgotten that this is the case of a Limited Company and any addition without pointing out any discrepancy in books of accounts/Vouchers is not tenable in the eyes of the Law and the depreciation so disallowed by him also needs to be deleted in full. (vii) Now looking to the various facts and the contradiction in the order of ld. Assessing Officer the addition of ₹ 5,00,000/- in Vehicle Expenses and ₹ 46,532/- in depreciation needs to be deleted. 24. The ld. CIT(A) after con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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