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TMI Blog2016 (2) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting the addition of Rs. 1,30,00,000/- made u/s 68 of the Act in respect of unexplained credits introduced in the garb of share application money/share capital and share premium shown to have been received from six corporate entities. 4. On the facts and circumstances of the case and. in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 95,00,000/- made u/s 68 of the Act in respect of unexplained credits introduced in the garb of unsecured loans shown to have been received from three corporate entities. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 15,00,000/- made u/s 68 in respect of unexplained earnest money shown to have been received from two parties, by accepting the additional evidence without providing any opportunity to the AO. 6. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 9,50,000/- made u/s 68 in respect of unexplained cash deposit in Bank account by accepting the additional evidence without providing any opportunity to the AO. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e findings of the Ld. CIT(A) as under:- "5. I have gone through the above submissions of the appellant and considered the facts and evidences available on record. I have also perused the AO's order and have considered the case laws relied upon both by the AO as well as by the appellant. 5.2 It is an established prepositions that whenever there is a cash credit in the assessee's books of account, the onus is on the assessee to prove the three things namely, identity, creditworthiness and genuineness. If the assessee fails on any of these parameters the AO is bound to add such cash credit to the Income of the assessee. 5.3 In the facts of the case in hand it is seen that the appellant who is engaged in the business of real estate had during the year allotted 1,30,000 shares and collected Rs. 1,30,00,000 from the following 6 corporate entities: 1 MIs Zircon Exim Pvt. Ltd. Rs. 25,00,000 2 MIs Charminar Imp ex Pvt. Ltd. Rs. 20,00,000 3 MIs KPM Exim Pvt. Ltd. Rs. 20,00,000 4 MIs Rishikesh Trexim Pvt. Ltd. Rs. 20,00,000 5 MIs Dinanath Scrap Dealer Pvt. Ltd. Rs. 20,00,000 6 MIs OPA Distributors Pvt. Ltd. Rs. 25,00,000 During the course of assessment proceeding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the summons were issued by the AO and all the 6 entities did responded to these summons proves the fact that these entities are in existence and thus I hold that the identity of the shareholders is proved. 5.5 With regard to the creditworthiness and genuineness of the transaction, it is observed that the Balance sheet of all the 6 corporates were on record and were available with the AO. From the perusal of same it is seen that all the 6 corporates had sufficient assets and they had substantial investments in shares of different companies, of which around 20% of investments only is invested in the appellant company as will be evident from bellow mentioned table. Name of company Total of balance sheet as at 31.3.2009 Total Investment in equity shares as on shares in Total Investment in equity shares in assessee Zircon Exim Pvt. Ltd. 1,63,06,883.57 1,36,50,000 25,00,000 Charminar Impex Pvt. Ltd. 1,26,92,851.53 1,25,00,000 20,00,000 KPM Exim Pvt. Ltd. 98,05,010.58 80,15,000 20,00,000 Rishikesh Trexim Pvt. Ltd. 2,00,11,754.91 1,90,00,000 20,00,000 Dinanath Scrap Dealer (P) Ltd. 1,77,77,052.00 1,74,95,000 20,00,000 OPA Distributors Pvt. Ltd. 1,76,65,024 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant has duly explained the said credit entries in the form of various documentary evidences. The said documentary evidence contained details, which set out not only the identity of the subscribers, but also gave information, with respect to their address, as well as, PAN, Assessment particulars etc. Based on these facts, the Hon'ble Delhi Court dismissed the appeal of revenue. 5.9 In yet another decision as to the correctness of treating share application money on par with cash credit, the Hon'ble Delhi High Court in CIT vs. Value Capital Services P. Ltd. (2008) 307 ITR 334 (Delhi) found after referring to the two of the decisions of the Delhi High Court on the subject that in respect of share capital amounts, they cannot be assessed in the hands of the company, unless the Department is able to show that the amount received towards share capital actually emanated from the coffers of the assessee company. 5.10 From the facts of the appellant's case, I find that the appellant has discharged its onus by giving the complete details viz address copy of ITR, bank statement, balance sheet etc. Even, when the appellant expressed his inability to produce the principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. As far as credit worthiness or financial strength of the creditors/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers, showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharge the onus caste upon him. Thereafter, it is for the assessing officer to scrutinize the same and in case he nurtures any doubt about the veracity of these documents, to probe the matter further. However, to discredit the documents produced by the assessee on the aspects, there had to be some cogent reasons and materials for the assessing officer and he cannot go into the realm of suspicion. 5.13 In view of the factual position as well as the judicial pronouncement on the subject, discussed above, I am of the considered view that the appellant has discharged the onus of establishing the bona-fides of the transactions and the AO was not justified in ignoring various evidences provided to him by the appellant. Nothing adverse has been brought on record by the AO to establish that the amount of share capital money of Rs. 1,30,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence collected by the AO which could prove otherwise. Accordingly, the AO is not justified in treating the amount of share capital money received by the appellant as its undisclosed income. In view of our aforesaid discussion, I delete the addition of Rs. 1,30,00,000 made by the AO under Section 68 of the Income Tax Act, 1961." 7.2 We note that during the hearing, Ld. DR filed a copy of judgment dated 27.1.2014 in the case of CIT vs. Empir Buildtech Pvt. Ltd. of the Hon'ble High Court of Delhi wherien the Appeal of the Revenue was partly allowed and stated that the issue of deletion in dispute in the present case u/s. 68 of the I.T. Act is squarely covered by the aforesaid judgment of the High Court dated 27.1.2014, hence, he requested that the action of deletion in dispute by the Ld. CIT(A) may be cancelled and addition made by the AO may be restored. 7.3 On the contrary, Ld. Counsel for the assessee has stated that during the course of assessment proceedings, the assessee had furnished the confirmations with supporting documents in respect of all the six companies. Vide letter dt.22.11.2011 (page 11), the assessee had stated to the Id. A.O. that (i) all the six compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) and even before us. Therefore, we find no infirmity in the impugned order passed by the Ld. CIT(A), hence, we uphold the same by rejecting the ground no. 3 raised by the Revenue. 8. With regard to issue raised in ground no. 4 relating to deletion of addition of Rs. 95,00,000/- made u/s. 68 of the Act in respect of unexplained credits introduced in the garb of unsecured loans shown to have been received from three corporate entities is concerned, we find that Ld. CIT(A) has elaborately discussed/given the findings on the issue in dispute vide para no. 7 to 7.7 from pages 27 to 30 of the impugned order. For the sake of convenience, we are reproducing the findings of the Ld. CIT(A) as under:- "7. I have gone through the above submission of the appellant and have considered the facts and evidences available on record and have perused the AO's order and the case laws relied upon by the appellant. 7.1 As discussed earlier in this order, the primary onus is always on the assessee to prove the identity, creditworthiness and genuineness of the transaction the persons, from whom the assessee obtains the cash credit. Only when the assessee fails on his part to satisfy any of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuineness and creditworthiness of its creditor. Therefore it was the task of the AO to make the enquiries by issuing summons or deputing inspector etc. or other and external or internal sources etc. before coming to the conclusion that the 3 corporate entities "Nere sham and bogus, which I am afraid AO has not done. It is not the case of the AO that payments have not been received through account payee's cheque, therefore when AO was having the full address and appellant was not having any control over the squared up creditors, the onus was on the AO to call for the respective details from them, if there was any doubt about the identity and creditworthiness of the creditors. Though the bank statement of other 2 parties were filed during the appellate proceeding but as discussed the AO's case is not that payment is received in cash, but his case is that the 3 corporate entities who have given among as cash creditor are sham and bogus. 7.6 From the Income Tax details as well as balance sheet and other evidence of these 3 corporate entities, I find that all the corporate entities are assessed to tax in Delhi, their PAN number and Income Tax return are available on record. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of the aforesaid discussions, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), because the Ld. CIT(A) has rightly held that when the assessee had provided the AO with the latest address of the squared up cash creditor (as the assessee had no such control on them therefore they were unable to produce before the AO and no further enquiries have been done of any kind by the AO) Ld. CIT(A) found that even the basic step i.e. summons or query letter were not issued, to these cash creditor and not an iota of evidence has been collected and brought on record which indicates or prove that the cash credit money was assessee's own money, in such an event, he rightly held that AO is not correct in holding the Rs. 95,00,000 received from 3 corporate entities mentioned above are bogus, sham and they are engaged in providing accommodation entry. Therefore, we find no infirmity in the impugned order passed by the Ld. CIT(A), hence, we uphold the same by rejecting the ground no. 4 raised by the Revenue. 9. With regard to issue raised in ground no. 5 relating to deletion of addition of Rs. 15,00,000/- made u/s. 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 15,00,000 on account of earnest Money, particularly when the property which was reflected as part of the inventory as on 31.03.2009 and the same is sold in the subsequent year for Rs. 35,00,000 and profit on the same has duly been reflected in and profit and loss account for assessment year 2010-11. Hence the addition of Rs. 15,00,000 made on account of earnest money was rightly deleted. Therefore, we find no infirmity in the impugned order passed by the Ld. CIT(A), hence, we uphold the same by rejecting the ground no. 5 raised by the Revenue. 10. With regard to issue raised in ground no. 6 relating to deletion of addition of Rs. 9,50,000/- made u/s. 68 in respect of unexplained cash deposit in Bank account by accepting the additional evidence without providing any opportunity to the AO. On this issue , Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. 10.1 On the contrary, Ld. Counsel for the Assessee relied upon the order of the Ld. CIT(A) and stated that the same may be upheld. In support of his contention, he submitted that during the year assessee had sold one of its property (forming part of its stock in trade) for R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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