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TMI Blog2015 (10) TMI 2011X X X X Extracts X X X X X X X X Extracts X X X X ..... anhar Vs. CIT, (2010) 236 CIT 192), without appreciating the full facts of the case." 3. Briefly stated the facts giving rise to this appeal are that the assessee is a closely held company engaged in the manufacturing and marketing of pesticides. The assessee company filed return of income electronically on 30.09.2008 declaring total income of Rs. 17,43,930/-. During the year under consideration, the assessee company introduced share capital of Rs. 1,59,00,000/-. The case was selected for scrutiny through computer assisted selection of scrutiny (CASS) and notice u/s 143(2) of the Income-tax Act ( hereinafter referred as Act only) was issued. In pursuant to the queries raised in scrutiny proceedings by the Assessing Officer, the assessee company filed details of share capital introduced by the investors during the year with their name and address, permanent account number (PAN ) and copy of bank pass book, etc.. Further the Assessing Officer also called for information in respect of randomly selected 18 investors through notice u/s 133(6) of the Act. The notices in case of 14 investors were served through notice server and in case of balance four (4), notices were sent through spee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifference in share capital vis-a-vis refund received from the appellant company or introduction of fresh capital. Since in two share investors statements were already recorded by the Assessing officer, the CIT(A) directed the Assessing officer to examine balance 10 share investors through summon and examine their bank accounts also. The Assessing officer examined all such share investor and sent his remand report admitting the genuineness of the investors. The CIT(A) in his para 3.1.1 has reproduced the relevant part of remand report dated 23.05.2011 . 5. The Commissioner of Income-tax (Appeal) after considering all the facts and circumstances arrived at the conclusion that the disallowance of the share capital of Rs. 1,59,00,000/- invested in the assessee company was not justified. The Commissioner of Income-tax (Appeal) granted relief to the assessee and concluded his finding as under: "The facts of the case, submissions made by the appellant and remand report of the A.O. have been carefully considered. It is observed that the A.O. in his remand report dated 23-05-2011 mentioned that all share applicants as required by this office letter dated 24-04-2011 were recorded except Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther referred page 8 and 253 of the paper book of the assessee and argued that the source of investment was not fully explained by the investors as in number of cases amount of investment was more than the money received back from encashment of fixed deposit/ loans etc . He also argued that in some cases cash was deposited in the Bank account of the investor immediately before making further payment for investment in the shares of the company. 7. On the other hand, Ld. Authorized Representative (AR) of the assessee company vehemently argued that when the Assessing Officer himself in the remand report has accepted the identity, creditworthiness and genuineness of impugned the transactions and the CIT(A) has also accepted the genuineness of the shares investment, the contention of the Revenue does not hold ground. He further relied on the decision of the Income-tax Appellate Tribunal (ITAT), Agra Bench in the case of DCIT Vs. M/s Kaiser Constructions Engineers & Contractors in ITA No. 211 & 212/Agr/2012. 8. We have heard rival submissions and perused the relevant material available on record. From bare reading of impugned order its ample clear that in the remand proceedings, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Shri Dhaka cash was deposited against income from salary. 10. Ld. DR has also submitted a tabular chart showing details regarding ten share applicants to raise a doubt about their capacity and creditworthiness and submitted that in the case of D.S. Dhaka, Smt. Kusum Lata, Smt. Neelam Goel, Shri Neeraj Garg, Rajeev Kumar, there was cash deposit of Rs. 45,500, Rs. 80,000, Rs. 1.14 lakh, Rs. 1 lakh and Rs. 1.42 lakh respectively and therefore this is a case of fictitious share application money contribution. Ld. DR also pointed out that as per their statement of account, income/balance sheet filed along with their respective return of income, they have very small sources of income but they have contributed huge money, therefore, the remand report of the AO cannot be accepted as sacrosanct evidence supporting the case of the assessee. Ld. Counsel of the assessee in his rejoinder has submitted that the impugned amount of share application money is Rs. 1,59,00,000 wherein the amount of Rs. 1,06,70,000 was received by the alleged investors from their fixed deposits etc. with the assessee company and the authorities below have not raised any doubt about the source of this amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard it is submitted that summons u/s 131 of the I.T. Act 1961 were issued to all the persons mentioned in the letter captioned above. Statements of all the persons were recorded and all the persons have admitted of investments in shares of M/s Ravi Organics Limited, Muzaffarnagar. The main contents of the statements are detailed in the form of a chart as Annexure 'A'. During the recordings of statements it was noticed that some part of the amount is the outcome/income of investment made by them with M/s Ravi Organics Limited, Muzaffarnagar which has been received back by them during the year of investment in share holdings with the company. The amount was kept in the form of FD with the company some years back and the complete amount along with interest has been received back by them. In the meantime they came to know about the shares of the company and they invested the complete amount in shares. All the shareholders are existing assessee in the Income Tax Office, Muzaffarnagar and regularly filing their return of income. Copies of ITR for A.Y 2007-08 relevant to A.Y 2008-09, A.Y 2007-08, 2006-07 and A. Y 2010-11 have been obtained in respect of all the shareholders. As far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 211 & 212/Agra/2012 in respect of AY 2006-07 has been dismissed confirming the conclusion of the Tribunal favouring the assessee. The relevant operative part of the Tribunal order (supra) reads as under:- "12. As regards the addition on account of creditors, we find that the A.O. himself has accepted the document filed by the assessee containing copy of bank statement and confirmation and the A.O. did not doubt about the genuineness of those parties. The A.O. himself recorded the fact in the remand report that he has also accepted the statement of almost all the creditors recorded on 27.12.2010 except creditor for the amount of Rs. 40,998/-. When the A.O. himself accepted the genuineness of the creditors before the CIT(A) in the remand report and the CIT(A) has deleted the addition to that extent, we are of the considered view that there is no error in the order of CIT(A) in deleting the addition of Rs. 1,25,69,815/-. The Revenue has failed to point out any contrary material to the finding of CIT(A) in respect of disallowed amount as well as on account of creditors being the addition made under section 68. In the light of the fact, we confirm the order of CIT(A)." 14. We also r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.R. Leasing. Thus, the companies have sufficient balance in their balance sheets in the shape of investment as well loan and advances. These companies are existing more than 10 years. Learned DIT has also verified this aspect and did not report any particular irregularity. The next issue is about the genuineness of the transaction. The assessee has produced the details of bank account. All the share application money have been issued through baking channel. The ADIT, Calcutta has pointed out that these companies were still holding the share i.e. on December 2007. During the course of hearing, we enquired about the present status of these companies as well as position of investment. The learned counsel for the assessee has placed on record the details of shareholding pattern as on 31.3.2013, it reveals that these companies are still keeping the shares of the respondent. Shri Mahabir Management is keeping 10,000 share and Bhuvania Brothers is holding 12,590 share in M/s Anshika Consultants Pvt Ltd. Similarly, in Anant Overseas, Bhuvania Brothers is holding 12,000 shares, Star Pleat Vincom is holding 14,700 shares. In Flex International, Shri Mahabir Management Services is holdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to be furnished to the concerned income tax authorities for appropriate action towards reflecting these observations suitably in service record of the concerned AO to avoid such instances in the future. 7. For the above reasons, this Court is of the opinion that the concurrent findings of fact, as to the true identity of the share applicants, their creditworthiness and genuineness of the transaction, are based on sound reasoning and do not call for interference. No substantial question of law arises. The appeals are dismissed. 15. In view of ratio of the judgment of Hon'ble Jurisdictional High Court of Allahabad in the case of CIT vs M/s Kaiser Construction & Engineers (supra) when we analyze the facts of the present case, it is amply clear that during the remand proceedings, the AO recorded the finding that all the persons viz. share application contributors are existing assesses and their admission and contention appears to be correct. After considering remand report dated 23.5.11, as reproduced hereinabove, the CIT(A) in the first appellate proceedings while passing the impugned order held that the share applicants are identifiable persons being assessed to tax, the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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