9911796707
TMI Blog2015 (9) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. B.C. Purohit & Co. (searched on 12.04.2005) it was noticed that some entries from the bogus entities being run by these racketeers had gone to Soni Hospital Ltd., Jaipur. In order to verify these entries and confront this party about the non-genuineness of these entries a limited purpose survey was conducted u/s 133A by the Investigation Wing at the office premises of its hospital located at Sector-5, Vidhyadhar Nagar, Jaipur on 03.05.2005 with the authorization issued by the Addl. Director of Income-tax (Inv.), Jaipur. 2.1. The AO further observed that during the course of survey operation when the books of accounts and returns of income of M/s. Soni Hospital Ltd., Jaipur were verified it was found that share application money was shown as received by this company from certain entities being operated by M/s. B.C. Purohit & Co. Group. The Managing Director of the assessee company Dr. Bimal Rai Soni was confronted with the findings of non-genuineness of these parties from whom loans were shown in the books of accounts of his company. However, Shri Bimal Rai Soni did not accept that the transactions relating to receipt of share application money etc. in his company from the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e limited companies which have been floated by this group to provide the accommodation entries. In these companies the share capital is built up in the name of the large number of Bogus individuals whose income tax files are being maintained by the entry operators. The returns of income of these companies are being filed as finance and investment companies. One or two partnership firms have also been used for this purpose. The Middlemen : These are the persons who act as contact persons between the Entry Operators and the Beneficiaries. They are chartered accountants, tax advocates or finance brokers or persons dealing in shares. Generally the beneficiaries even do not know the Entry Operators. The giving of cash and receiving of cheques may be done through these middlemen only. In the registers seized from the residence of the Purohit Family at Kamal Apartment, Jaipur names of about 14-15 such middlemen are mentioned. Some important persons of this group like Pawan Purohit s/o Kripa Shankar Sharma in their statements have also identified some such middlemen also. 2.4. The AO further observed that these Entry Operators are maintaining the income tax files of a large number of bog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2,00,000/- 12. K.K. Petrochem (P) Ltd., A-94, Nandpuri, Hawa Sarak, Jaipur. Rs. 8,00,000/- 13. Kotputli Investment (P) Ltd. S-64, Agarsen Tower, Vidhyadhar Nagar, Jaipur Rs. 11,50,000/- 14. Padam Bearing India Ltd., F-105, Time Square, Vidhyadhar Nagar, Jaipur. Rs. 5,00,000/- 15. Ram Prasad Acharya, 28, Nehru Nagar, Jaipur. Rs. 2,00,000/- 16. Sushila Capfin (P) Ltd., M-9, New Market, Khasa Kothi Circle, Jaipur. Rs. 6,50,000/- 17. Govind Ram 71, Baba Harish Chandra Marg, Jaipur. Rs. 1,50,000/- 18. Mahendra Kumar Bissa 4, Patel Nagar, Ajmer Road, Jaipur. Rs. 1,50,000/- 19. Om Prakash Agarwal, 3/757, Malviya Nagar, Jaipur. Rs. 1,50,000/- Total : Rs. 79,00,000/- The AO gave show cause notice on this issue and required the assessee to prove the genuineness of share application money of Rs. 79,00,000/- and also requested to produce the relevant parties for examination. Further it was also proposed to add on the basis of evidences collected during the course of search in case of B.C. Purohit Group. 2.6. The assessee submitted vide letter dated 03.12.2007 that there is no basis for treating the amount received from the said partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i'"Bksa esa ist 20 ij Rattangarh, Ganpati, Annushree, Bengal, Bhavika, Arpan, Agro, Art line fy[ksa gSaA ;g lkjh dEifu;k Jh ckypUn iqjksfgr ,oa muds ifjokj dh gS ftuds uke Øe'k% Rattangarh Finlease Pvt. Ltd., Ganpati Film, Producers Pvt. Ltd. Anushree Finlease Pvt. Ltd., Arpan Agro Pvt. Ltd., Artline Finvest Pvt. Ltd. gSaA rFkk vU; i'"Bksa ij Hkh ;gh uke repeat gq, gSA buds vykok i'"B 21 ij Thar, Jaitara, Great dk ftØ gSa ;s Hkh Jh ckypUn iqjksfgr ,oa muds ifjokj dh dEifu;k gSA ftuds uke Øe'k% Thar Finance Pvt. Ltd., Jaitara Movies Pvt. Ltd. , oe Great Eastern Movies Pvt. Ltd. gSA bu lkjh dEifu;ksa ds Bank Accounts ls fofHkUu ikfVZ;ksa dks tks entries nh xbZ gS ;g mudh detail gS rFkk buesa 5,00,000/- dks 5]000-00 rFkk blh izdkj 3]00]000@& dks 3]000-00 fy[kk x;k gS rFkk ckdh Entries Hkh blh izdkj gSaA bu i'"Bksa ij fy[kh xbZ Detail ds vuqlkj lksuh gkfLiVy] t;iqj ftls bu i'"Bksa ij lksuh gkfLiVy fy[kk gS] ujs'k dqekj eukst dqekj 'kkfiax lsUVj] dksVk ftls buesa NKMK fy[kk gS] foØekfnR; dksyksukbtlZ izk-fy-t;iqj ftls foØekfnR; fy[kk gS ,oa vU; dks tSls Royal Shelter Pvt. Ltd. Jaipur dks Entries Jh ckypUn iqjksfgr dh mijksDr deifu;ksa ds Bank Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur, 49, Patel Nagar, Ajmer Road, Jaipur and 50, Patel Nagar, Ajmer Road, Jaipur. The AO further observed that on enquiry by the Investigation Wing, it was found that these were plots only having a common boundary wall owned by Purohit Family and no office of any company was there and no individual resided there. 2.8. It was further observed that on account of enquiry by the Investigation Wing and statements of various persons recorded during the course of investigation in search operation, M/s. Ajay Fourwheels Pvt. Ltd. surrendered the accommodation entries from B.C. Purohit Group / Kripa Shankar Sharma as its undisclosed income in the names of the following companies/individuals (included in the list of Rs. 79,00,000/- as mentioned above. 1. M/s. Bequeen Textiles Pvt. Ltd. 2. M/s. Sushil Capfin Pvt. Ltd. 3. M/s. K.K. Petrochem Pvt. Ltd. 4. M/s. Padam Bearing India Pvt. Ltd. 5. Govind Ram Similarly, M/s. Bansal Oil Mills Pvt. Ltd. admitted to have taken accommodation entries in the names of M/s. Kotputli Investments Pvt. Ltd. and M/s. Padam Bearing India Pvt. Ltd. M/s. Jamboo Finvest Pvt. Ltd. admitted to have taken accommodation entry in the name of M/s. Kotputli Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, through its letter dated 26.12.2007 the assessee stated that the amount was received through banking channel and the companies are registered with ROC and the companies are genuine entities. Since the assessee was failed to satisfy the AO to prove the genuineness of the transaction of share application money of Rs. 20,00,000/-, he treated this money to have been invested out of undisclosed income of the assessee itself as accommodation entries. Therefore, he made addition of Rs. 20,00,000/- in the income of the assessee. 3. Being aggrieved by the order of AO, assessee carried the matter before ld. CIT (A) who has allowed the appeal by observing as under :- "3.1. I have duly considered the submissions of the appellant. I find that in the present case, the appellant had filed the subscription forms from each of the investors. The said subscription form contained complete details, which disclosed not only the identity of the subscribers, but also their complete address along with PAN. Therefore the appellant had been able to discharge its onus in respect of the veracity of the transactions. The AO has alleged that documentary evidences were not filed by the assessee company bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same bank. It was not the case of the Revenue that such accounts were bogus or operated by the assessee. It was also not the case of the Revenue that either of the share applicants was a benami of the assessee. Therefore the reasons given by the Assessing Officer were to be rejected." 3.1. He relied on the order of ITAT Delhi in the case of Sky High Properties Pvt. Ltd. vs. ITO, 258 ITR AT 098. The onus is on the assessee to prove difference between an ordinary cash credit and credit by way of share capital. He placed reliance on the following decisions :- M/s. Sky High Properties Pvt. Ltd. vs. ITO 258 ITR AT 098 (ITAT Delhi) M/s. A-One Housing Complex Ltd. 299 ITR AT 327 (Delhi) - On burden of prove in case of share capital through Public Issue is lighter. CIT vs. Value Capital Services Pvt. Ltd. 307 ITR 334 (Delhi High Court) - On investment made by the shareholder, actually emanated from the coffers of the assessee. CIT vs. Orbital Communication (P) Ltd. 327 ITR 560 (Delhi High Court) - followed the decision of Hon'ble Supreme Court in case of CIT vs. Lovely Export Pvt. Ltd. (319 ITR (St.) 5 for the proposition that in case of share application money, where the persons are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial statements of both the companies for the year ending 31.03.2008 which proved beyond doubt that the said companies had sufficient resources to invest in the share capital of the appellant company. (2) M/s. Labh Tronics Overseas Pvt. Ltd. and M/s. Shashi Sales & Marketing Pvt. Ltd. had now shifted to A-4/181, Sector No. 17, Rohini, New Delhi 110 085. (3) Photocopies of the Balance Sheets of both the companies as on 31.03.2006 along with copies of respective ITR-V for the A.Y. 2006-07. (4) Photocopy of the Balance Sheet as on 31.03.2008 and the Profit & Loss Account for the year ending 31.03.2008 of M/s. Lexus Infotech Ltd. along with photocopy of acknowledgement of Return (now known as Traingular Infocom Ltd.) along with copy of PAN Card thereof. These additional evidences were forwarded to ACIT, Circle-5, Jaipur vide letter dated 04.02.2011 for examination. The remand report was due by 15.02.2011. However, till passing of the order by ld. CIT (A), the AO had not submitted the remand report. The ld. CIT (A) concluded that ld. AO had failed to make further enquiry as desired from him. In absence of remand report, the ld. CIT (A) decided the appeal on the basis of evidences fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntity of the creditor. The addition made by the AO under section 68 is justified. 4.3. The Hon'ble Delhi High Court in case of CIT vs. Youth Construction Pvt. Ltd. (2013) 357 ITR 97 (Del.) has confirmed the share capital under section 68 on the ground of creditworthiness and genuineness has not been proved by the assessee, wherein Lovely Export (supra) decision had been followed by the Hon'ble Delhi High Court. The ld. D/R further has drawn our attention on recent decision of Hon'ble Supreme Court in the case of N. Tarika Property Invest (P) Ltd. vs. CIT, (2014) 51 Taxmann.com 387 (SC) and argued that identical issue decided by the Hon'ble Supreme Court recently in the above case wherein share application money was subscribed through bank account cheque before depositing cash in respect to shareholders bank account. Therefore, AO was justified in making the addition on account of share application money under section 68 of the IT Act. It is further held by the Hon'ble Supreme Court that PAN blindly cannot be accepted as a proof for identity of individuals as it is generally issued without ascertaining the active nature of business activities. Therefore, the ld. D/R requested to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther, Hon'ble Allahabad High Court in case of CIT vs. Vacmet Packaging (India) Pvt. Ltd., (2014) 367 ITR 217 (All.) held that assessee had filed documentary evidence consisting of share application forms, copies of bank accounts of the share applicants, copies of the income-tax returns of the share allottees, balance sheets and copies of share allotment certificates and of the Board's Resolution of the share applicants, and on that basis the Hon'ble High Court held that variation of the transaction had been established by calling the documents and assessee has discharged its onus establishing the identity, creditworthiness and genuineness of the transaction. Therefore, he requested to uphold the order of ld. CIT (A). 5. We have heard rival contentions and perused the material on record. There was a search on M/s. B.C. Purohit & Co. on 12.04.2005 and detailed investigation was made by the Department on the basis of evidence collected. During the course of search, it was found that assessee was providing entries in form of gift, loans, share application money, share investment and long term capital gain in shares not only to the assessee but other cases also. On the basis of this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved by the appellant under section 68 of the Act. The Hon'ble Gujarat High Court decision in the case of Blessing Construction (supra) which has been confirmed by Hon'ble Supreme Court in SLP vide order dated 13.09.2013, wherein the creditworthiness in case of cash creditor is to be proved by the assessee. Recently Hon'ble Delhi High Court in case of CIT vs. T. S. Krishna Kumar & Co. Ltd., 370 ITR 163 has held that under section 68 the identity, genuineness and creditworthiness of the cash creditor is to be proved by the appellant. Repaying the loan through account payee cheque is not a conclusive evidence. The case law referred by the ld. D/R of Hon'ble Supreme Court in case of N. Tarika Properlty Invest (P) Ltd. (supra) is squarely applicable in case of assessee. Now, after considering the Hon'ble Supreme Court decision in case of Lovely Exports (supra), we have come to the conclusion that in case of share capital, the creditworthiness along with genuineness of transaction, identity of person is also required to be proved by the assessee. Accordingly we reverse the order of ld. CIT (A). 6. In the result, appeal of the revenue is allowed. Order pronounced in the open court on ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
