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TMI Blog2017 (1) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 7 companies based merely on their balance sheet entries despite the fact that these companies were used as conduit by Sh. SK Jain / Sh. Vinay Jain for providing accommodation entry. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The brief facts of the case are that assessment was reopened on the basis of investigation report received from ADIT, Unit VI(2), wherein it was informed that Sh. Surendra Kumar Jain and Sh. Virendera Kumar Jain and companies controlled by them are engaged in providing accommodation entries. On the basis of said information, the assessment was reopened u/s. 147 of the I.T. Act and notice u/s. 148 of the I.T. Act was issued on 17.4.2013. In response to the said notice, assessee filed a letter dated 6.6.2013 stating that return filed u/s. 139 of the Act declaring NIL income may be treated as return filed in response to notice u/s. 148 of the I.T. Act. Assessment u/s. 143(3) read with Section 147 of the Act was made on 30.3.2015 determining total income at Rs. 40,00,000/-. The addition of Rs. 40,00,000/- was made on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of Inspector's enquiry report added Rs. 40,00,000/- as unexplained cash credit in the hands of the appellant u/s 68 of the I.T. Act. The appellant filed submissions during the course of re-assessment proceedings and the details of share application money received from the above mentioned six companies. It is also mentioned by the appellant that it had filed confirmation from the said companies, their Permanent Account Number, copy of the return of income filed by investor companies, details of the cheque and the bank statement of the appellant as well as the companies from whom share application money was received. The appellant further stated that money was received through banking channels and which was duly verified by the Assessing Officer. AR also stated that copies of share application form were furnished before the Assessing Officer along with the allotment of shares and Form No.2 filed with the Registrar of Companies. The appellant has submitted that the Assessing Officer has to examine the evidences furnished by the appellant and he has to arrive at his own conclusion The in-builts safeguard provided in Section 68 cannot be ignored by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electrodes Ltd. 329 ITR 271 wherein it is held that merely because assessee company fails to produce the Director of the shareholders companies cannot be ground for making additions in respect of share capital. The AR further relied upon the decision of Hon'ble Delhi High Court in the case of CIT Vs. Fair Invest Ltd. wherein it is held that where AO fails to conduct enquiries and deal with the matter in depth after the affidavit / confirmation along with bank accounts were filed, then the assessment order cannot be sustained. The appellant further submitted that during the year appellant has also received share application money from M/s Trimurti Vinmay Pvt. Ltd. Rs. 5,00,000/-, Shyam Infratech Pvt. Ltd. Rs. 5,00,000/-, Trustworthy Viniyog Pvt. Ltd. Rs. 5,00,000/- and Deshbandu Suppliers Pvt. Ltd. Rs. 5,00,000/-. All the above four companies are assessed to tax and appellant had furnished their confirmation, Permanent Account Number, bank statements, copy of the return of income and details of cheque no. through whom share application money was received. The appellant also filed copies of the share application form before Assessing Officer and details of the share allotment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received. The appellant also filed copies of the share application form before Assessing Officer and details of the share allotment and form no.2 filed with ROC with reference to allotment of shares. The AR submitted that Assessing Officer did not call for any information from the said four parties and no summons uls 131 were issued. The appellant has fully established the nature of the entries and furnished evidence in support of the share application money received. Despite these facts, the Assessing Officer has made addition in respect of all the share application money received during the year. All these companies have submitted confirmation, to whomsoever it may concern, receipt of the share application money, copies of the bank statements wherefrom money was received by the appellant, copies of the return of income filed by all the companies with the Department, copies of the balance sheet of the companies to prove the identity, creditworthiness and genuineness of the transaction. On going through the details filed by Zenith Automotive Pvt. Ltd., it is seen that this company is assessed to tax and has filed its return of income for AY. 2010-11 and the money has been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,15,750/- vide Schedule 4 of the Balance Sheet. On verification of the details filed by M/s Shri Shyam Infratech Pvt. Ltd, it is seen that this company has filed copy of share application form, confirmation, copy at return of income for A Y. 2010-11, copy of bank account maintained with Kotak Mahindra Bank, Salt Lake Branch wherefrom the money of Rs. 5,00,000/- was transferred on 21.04.2009. On verification of the balance sheet of the said company, it is seen that this company has got share capital of Rs. 1 0,52,500/- and reserve and surplus of Rs. 1,82,13,865/-. It has shown investment of Rs. 1,87,00,000/- in its balance sheet. On verification of the details filed by M/s Trustworthy Viniyog Pvt. Ltd., it is seen that it has filed copy of share application form, ~py of confirmation, copy of the return of income filed by it for A.Y. 2010-11 and copy of the bank statement maintained with ING Vysya Bank wherefrom money of Rs. 5,00,000/- was received by the appellant company on 22.04.2009. On going through the balance sheet of the said company it is seen that this company has got share capital of Rs. 73,88,100/- and reserve and surplus of Rs. 13,85,15,456/-. It has shown investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try alleged to have been received by the appellant. There is no statement with reference to these companies that they were providing accommodation entries. There was no cash deposit found in the bank accounts of these companies. Therefore, the addition made by the Assessing Officer on the basis of simply a letter received from Investigation Wing cannot be treated as accommodation entry and the addition cannot be sustained on the basis of such letter without bringing adverse materials on records. The appellant has furnished all necessary documents to prove the genuineness of the transactions and creditworthiness of the investor company before Assessing Officer. Hence, the addition made by the Assessing Officer uls 68 of the I.T. Act of Rs. 40,00,000/- is deleted. The appellant has relied upon following judicial pronouncements in support of its contention wherein the share application money has been held to be genuine wherein it is held that if the appellant has filed copy of the confirmations, bank statements, copy of the return of income of the investor companies then in such cases share application money received is found to be genuine and no addition can be made in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys Ltd. reported at 19taxrnann.corn 26 (2012) (Delhi) It was held "Where assessee had given particulars of registration of investing / applicant companies, confirmation from share applicants; bank account details; and had shown payment through account payee cheques etc., it could be said that the assessee had discharges its initial onus and just because some of creditors I share applicants could not be found at address given, it would not give revenue a right to invoke section 68 without any additional material to support such a move". In the case of appellant also particulars of share applicant companies like balance sheet, confirmation, bank statement, copy of the return of income were filed, therefore, the appellant has discharged its onus. Hence, ratio of this judgment is square applicable in the case of appellant. e) ITAT Chandigarh, ACIT v. Kisco Castings Pvt. Ltd. reported at 34 taxrnann.corn 37 (Copy Enclosed) (Pages 132/144). It was held "Where Assessing Officer had failed to bring on record any relevant and credible material to neutralize documentary evidences filed by assessee, impugned addition was to be deleted" In the case of appellant also the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee received share application money during relevant assessment year - Assessing Officer held that assessee had not given satisfactory explanation and included entire amount under section 68 - On appeal, assessee furnished income-tax returns, balance sheets, ROC particulars and bank account statements of shareholders - Commissioner (Appeals) considering said materials held that share application money or source of share application money had been satisfactorily explained and deleted addition - Tribunal confirmed order of Commissioner (Appeals) - Whether entire issue being purely factual, no interference was called for with Tribunal's order - Held, yes [Para 7] [In favour of assessee)" In the case of appellant the appellant has furnished income-tax returns, balance sheets, ROC particulars and bank account statements of shareholders and share application money and source of share application money had been satisfactorily explained and addition has been deleted. The ratio of the above judgment is squarely applicable to the appellant's case. The appellant has also relied upon the Delhi High Court judgment in the case of CIT Vs. Victor Electrodes Ltd. 329 ITR 271 to subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuine and no addition can be made in the case of recipient of share application money. I further find that assessee has filed confirmation of the transactions of share application money, copies of the balance sheets, copy of share application money to prove the genuineness of the transactions. However, on the other hand, the AO has not brought any credible evidence to contradict the information filed by the assessee, therefore, the issue in dispute is squarely covered by the following cases of which the ld. CIT(A) discussed in his impugned order : (a) ITO Vs. Neelkanth Finbuild Ltd. ITA No. 2821/0el/2009 dated 01/4/2015 (b) ITAT Delhi, ITO v . N.C. Cables Ltd. ITA No. 4122/0ell2009 dated 2210.2014 (c) ITAT Delhi, ITO v. Rakam Money Matters P. Ltd. ITA No.2821/De1/2011 dated 16.10.2014 (d) High Court of Delhi, CIT v. Kamdhenu Steel and Alloys Ltd. reported at 19taxrnann.corn 26 (2012) (Delhi) (e) ITAT Chandigarh, ACIT v. Kisco Castings Pvt. Ltd. reported at 34 taxrnann.corn 37 (Copy Enclosed) (Pages 132/144). (f) CIT Vs. Fair Finvest ltd. [2014) 44 taxmann.com 356 (Delhi) High Court of Delhi (g) Commissioner of Income-tax v. Expo Globe India Ltd. [2014] 51 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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