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TMI Blog2016 (5) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... cash creditors were not genuine. It is not required under the law to prove the source of source U/s 68 of the Act. Primary burden lies on the assessee has been discharged by filing the requisite evidences before the Assessing Officer and shifted on the Assessing Officer to disprove the cash creditors’ transactions are not genuine or bogus. The share application money was received by the appellant and subsequently returned though banking channel. In case of 7 companies, the notices were served on it on given addresses. There is no evidence directly or indirectly with the Assessing Officer that the assessee had routed undisclosed money in the guise of share application money or loan. The ld DR’s argument have also not convinced us that these parties were in accommodation entries in form of loan and share application money after charging certain commission as such no survey/search has been carried out on the creditors to prove that these companies are habitual to provide loan/share application money even there is no evidence with the ld DR for making such allegation during the course of written submissions - Decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... n/share capital as per Assessing Officer is as under:- Companies which are not traceable: S.No. Name of the concerns Postal remarks by ADIT Amount Receipt in Dhanlaxmi 1. M/s Rajdeep Marchandise Pvt. Ltd., 6, Waterloo Street, Kolkata. Not known ₹ 25,00,000/- 2. M/s Pushpak Advisory Pvt. Ltd., 28, Vivekanand Road, Kolkata -Do- ₹ 9,00,000/- 3. Divine Tie Up Pvt. Ltd., 14A, Madhu Roy Lane, Kolkata-700006 No such company Divine Tie Up Ltd. in this address 14A Madhu Roy Lane, Kolkata-6, hence not known ₹ 45,00,000/- 4. M/s Lake View Vinimoy Pvt. Ltd., 13, Mother Tala Lane, Howrah-711106 Not Known ₹ 4,50,000/- 5. M/s Shibpujan Agencies Pvt. Ltd., 50B, Gariahat Road, Ground Floor, Kolkata 700019 Left ₹ 13,50,000/- 6. Nischay Distributors Pvt. Ltd., 13, Mothr Tala Lane, Howrah-711106 Not Known ₹ 22,50,000/- 7. Ujjal Vanijya Pvt. Ltd. 13, Mother Tala Lane, Howrah-711106 Do ₹ 9,00,000/- 8. M/s Pandhmukhi Commodies Pvt. Ltd., Tollygune House Street, Emergency Police Line, Block-4, R.No. 33, Kolkata-33 Do ₹ 4,50,000/- 9. Gaylord Merchandise Pvt. Ltd., 6, Waterloo Street, Kolkata-700069. Could not be served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, during the relevant period. Here, it is also relevant to mentioned that as per the provisions of Sec. 68 of the Act, to prove the genuineness of any cash credit, the assessee has to prove three vital aspects .i.e. identity, capacity of creditors and the genuineness of such transaction. The above views have been expressed in the various decisions, including in the cases of Rajshree Synthetic Pvt. Ltd (256 ITR 331) (Raj) and Aravali Trading Co. (220 CTR 622)(Raj). Accordingly, while deciding the present appellate proceeding, the above crucial guidelines were also applied to appreciate and understand the intricacies involved in the above rival stands of the AO and Ld. AR, viz. the issue under consideration. Based on the above aspects, my issues wise findings and conclusion are being discussed as under:- 2.3.1. Unsecured Loans: - From the assessment order, it can be seen that the appellant has received total loans of ₹ 80 lacs, from the following parties - a. M/s. Rajdeep Merchandise P. Ltd. ₹ 80 lacs b. M/s. Gayload Merchandise P. Ltd. ₹ 30 lacs c. Garu Kripa Projects P. Ltd. ₹ 25 lacs ₹ 135 lacs As per the ADI's above report, the summo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the light of the above deliberation, it is concluded that the AO was not justified in treating the loans of ₹ 80 lacs from the above three parties, simply on the basis of general observation/findings of the ADI (Inv.) Kolkota, whereas the documentary evidences submitted in this regard, suggest otherwise, as such. 2.3.2 Share Capital/Application Money In this regard the total share capital/share application money of ₹ 1.36 crores received from 11 entities were considered as unproved, u/s. 68 of the IT Act, for various reasons and grounds by the AO, mainly based on the findings given in the ADI report, as discussed above. The gist's of the above stands of the AO are as under:- i. In seven cases, the notices could not be served by the ADI, Kolkota, either through the postal method or through the Ward-lnspector, therefore, the same have been treated as deemed income of the appellant, u/s. 68 of the Act of the AO. The details in this regard are as under:- i. M/s. Pushpak Advisory P. Ltd Rs.9,00,000/- ii. Divine Tie Up P. Ltd. ₹ 45,00,000/- iii. M/s. Lake View Vinimoy.P.. Ltd ₹ 4,50,000/- iv. M/s. Shipujan Agencies P. Ltd. Rs.13,50,000/- v. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be a valid ground to make the addition of such share capital investment in the hands of the appellant company, u/s. 68 of the IT Act. In another recent judgment of Hon'ble Delhi High court, given in the case of Dwarkdhish Investment Pvt. Ltd. (330 ITR 298) having the similar issue under consideration, the court has held that though in Sec. 68 proceedings the initial burden of proof lies on the assessee, yet once he proves the identity of the creditors/share applicants by either furnishing their PAN or income tax assessment number and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft; then the onus of proof would shift to the revenue and just because the creditors/share applicants could not be found at the address given, it would not give the revenue the right to invoke Sec. 68 as revenue has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the source of source. As in the instant case, the tribunal has confirmed the order of the CIT (A) of deleting the impugned addition, while holding that the assessee has been able to prove the identity of the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchestrated and are lacked of validity in the facts and circumstances of the assessee. All the companies had been indulging in providing accommodation entries to various parties in lieu of the commission charges. It was also found that they used to receive cash equivalent to the share application money from the interested party, which were deposited in the bank accounts and cheques/DDs of equal amount have been issued as a share application money to such party concerned on given addresses. No such companies were found. The assessee failed to produce the Directors of such companies for further verification to examine the genuineness of such investments U/s 68 of the Act for onus. The ld DR further relied on the decision in the case of CIT Vs. Kishori Lal Santosh Lal 216 ITR 9 (Raj.). The case laws cited by the assessee i.e. Sophia Finance Ltd. 205 ITR 98 and Steller Investment Ltd. (supra) are not squarely applicable. The Hon'ble Supreme Court decision in the case lf CIT Vs. Lovely Exports is also not applicable as the Hon'ble Supreme Court has dismissed the SLP on the ground that there is no law point involved, the matter ready to actual aspect. He further relied on the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d lent money. All the parties are private limited company duly regulated by the stringent provisions of the Companies Act, 2013 and their complete details could be verified from the MAC website. The department has also issued them PAN. These companies are regularly assessed to tax. Thus, the onus, on the part of the assessee company, stood fully discharged. The ld Assessing Officer had solely taken decision on the basis of interim report of ADIT, Kolkata. Nothing was brought on record by the Assessing Officer to shift the burden on the assessee company. The ld AR has further submitted that the following companies had been served notices by the income tax department, which is reproduced as under:- S.No Name of Company Address PB 1. M/s Rajdeed Merchandise Pvt.Ltd. 6, Waterloo Street, Kolkata -700069 266-267 2. Divine Tie Up Pvt.Ltd. 25B, Raja Raj Ballav Street, Ground Floor,Kolkata -700003 266 3. M/s Lake view VinimoyPvt.Ltd. 202, Jessore Road, Shyam Lake Garden, Block - B, Shop No.5, Kolkata -700089 266 4. M/s Shivpujan Agencies Pvt. Ltd. 3, Raja Debendra Narayan Deb Lane, Kolkata - 700005 266 5. M/s Panchmukhi Commodities Pvt.Ltd. 4B, Gopi Bose Lane, Kolka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation about the nature and source of such sum. The factual background of the creditor is to be understood and has held by the Hon'ble Supreme Court in Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC). He further relied on the decision of Hon'ble ITAT-A Bench Mumbai in the case of Superline Construction Private Limited ITA No. 3644/Mum/2014 wherein it has been held that such receipts cannot be regarded as the undisclosed income of the assessee company and in case the department has information about the alleged bogus shareholders, then the department should proceed to reopen the individual assessments of the investors. Therefore, he prayed to confirm the order of the ld CIT(A). 6. We have heard the rival contentions of both the parties and perused the materials available on record. The ld Assessing Officer during the course of assessment proceedings, noticed that the assessee has shown deposits, fresh capital of ₹ 6,11,50,000/- in different form i.e. unsecured loan, reserve and surplus and share capital money. The ld Assessing Officer verified the information submitted by the assessee through ADIT, Kolkata, who had sent interim report, which was received on 14/12/2 ..... 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