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TMI Blog2017 (2) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... o floated many more companies, having same registered address. As per report Mr. Mukesh Choksi accepted that he used to give accommodation entries to various persons through his various companies. 5. During the course of scrutiny assessment AO asked about the same, assessee submitted the copies of cheques received and also the PAN details, return of income copies of the various parties which had introduced share capital in the Kalsha Builders Pvt. Ltd. The names and PAN Number of the companies introducing share capital are as follows, 1. Alliance Intermediaries Pvt. Ltd. PAN: AACCA9750E 2. Buniyad chemicals Pvt .Ltd. PAN: AABCB6954G 3. Coldstar Finvest Pvt. Ltd. PAN:. AABCG3811 B 4. Kaycee Shares Broking Pvt. Ltd. PAN: AACCJ(7839A 5. Mihir Agencies Pvt. Ltd. PAN: AAGFM0890D/ AABCH7898H 6. Alpha Chemie trade agencies Pvt. Ltd., PAN: AAGFA0609P/ AAECA6031C 6. AO stated that All six companies are part of Maha sagar securities Pvt. Ltd. i.e. owned by Mr. Mukesh Choksi, as appearing in the report received from investigation wing. This means, that assessee i.e. Kalsha Builders Pvt Ltd. has taken accommodation entry from Mr. Mukesh Choksi, in the form of share application m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. It is also an undisputed fact that transactions with these companies have been done through account payee cheque, respective bank statement have been brought on record before us. Even if we consider the statement of Shri Mukesh Choksi recorded u/s. 132(4) of the Act and also subsequently u/s. 131 of the Act, we do not find any reference to the assessee company, nowhere Shri Mukesh Choksi has said that he has arranged share capital for the assessee company. Merely because Shri Mukesh Choksi is indulged in clandestine activities would not make the transactions with the assessee company non genuine. The transactions have been done through account payee cheque and it is not a case of the Revenue authorities that prior to issuing the cheques the applicants have deposited cash in their respective bank account. The Hon'ble Supreme Court in the case of Lovely Export Pvt. Ltd. 216 C1R 195 has held that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned additions. It was further submitted by the assessee that the Assessing Officer failed to appreciate that the statements of any person recorded u/s 143(3) r.w.s. 147, the assessee-company has fully discharged the burden of proof, onus of proof and explained the source of share capital and advances received by established the identity, creditworthiness and genuineness of transaction by banking instruments with documentary evidences. The further stand of the assessee has been that the assessee company substantiated the details with the documentary evidences as extracted from the website of Ministry of Corporate Affairs, Government of India before the Assessing Officer. These facts have not been rebutted on behalf of the Revenue. 2.5 In view of the facts and circumstances of the present case as well as considering the decisions as discussed above on the similar issue, we are not inclined to interfere with the findings of the CIT(A) who has rightly deleted the entire impugned additions of Rs. 40 lakhs made by the Assessing Officer u/s 68 of the Act on account of share capital subscription received by the assessee company. 2.6 Accordingly, the appeal filed by the Revenue is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have found out their details through PAN cards, bank accounts details or from their bankers so as to reach the share holders. Thus, the view taken by the Tribunal could not be faulted. " Further Hon'ble Supreme Court in the case of Lovely Exports 6 DTR 308 (SC) has held as under: "If the share application money is received by the assessee company from alleged bogus share holders who's name are given to the AO then the department is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of assessee company." 6. Coming back to the facts of the present case, it is seen that investment in the capital share of the assessee company was made by five companies. These companies exist on the records of ROC. All these companies are assessed with the Income Tax Department, therefore, these exist on the record of Income Tax Department. The assessee company also filed before the Aa Form No.5 and 2 and PAN No. and address of all these share holders, thereby establishing identity and all these companies. Further payment was received by the assessee company through banking channels. The investment has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial and documentary evidences placed by the assessee and he could not bring anything contrary on record to negate the documentary evidences furnished by the assessee. In view of the peculiar facts and circumstances of this case, order of ld. CIT(A) is upheld. Appeal filed by the Revenue is dismissed." 19. On the other hand, learned DR relied on the order of the lower authorities and contended that there was definite information from the investigation wing of income tax department according to which assessee is in respect of accommodation entry through the companies owned by Shri Mukesh Choksi alleged to be engaged in providing accommodation entries. 20. Our attention was also invited to the statement of Shri Mukesh Chokshi, owner of all these companies, where he replied that his business was of giving accommodation entries. As per learned DR from the statement of Shri Mukesh Chokshi it is very much clear that he used to give accommodation entries only and these companies did not have any funds to introduce share capital in other concerns. 21. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also verified the documents f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 Copy of the bank statement of Alpha Chemie Trade Agencies Pvt. Ltd. with ICICI Bank Current Alc No.: 641405050145 22 Copy of the demand draft for a sum of Rs. 5 Lacs issued by ICICI Bank. 23 Copy of the certificate of incorporation of Bunivad Chemicals Ltd. 24 Copy of the PAN of the said Buniyad Chemicals Ltd., 25 Copy of the acknowledgement of furnishing of the return of income by Buniyad Chemicals Ltd. for AY 2007 - 08 26 Copy of the Resolution passed for subscription of 200 equity shares by the said Buniyad Chemicals Ltd. 27 Copies of the documents in respect of su bscri ption of 200 equity shares by Bunivad Chemicals Ltd. 28 Copy of the confirmation issued by Buniyad Chemicals Ltd. for subscription of 200 equity shares. 29 Copy of the bank statement of Buniyad Chemicals Ltd. with ICICI Bank Current Alc No.: 020905000663. 30 Copy of the demand draft for a sum of Rs. 5 Lacs issued by ICICI Bank. 31 Copy of the certificate of incorporation of Goldstar Finvest Pvt. Ltd. 32 Copy of the PAN of the said Goldstar Finvest Pvt. Ltd. 33 Copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he share valuation report of the assessee's share." 22. We had also deliberated on the judicial pronouncements relied on by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the instant case. We found that in the A.Y.2009-10 learned AO has made addition for the share application money amounting to Rs. 2,50,00,000/- received by the assessee from the following companies which were allegedly a part of Mahasagar Securities Pvt. Ltd., owned by one Mr. Mukesh Choksi who was alleged to provide accommodation entries as per inquiry conducted by the Investigation Wing in the case of Mahasagar Securities Pvt. Ltd. Name of Company No of Shares Amount Alliance Intermediaries Pvt. Ltd., 600 75,00,000 Goldstar Finvest Pvt. Ltd., 200 25,00,000 Buniyad Chemicals Pvt. Ltd., 200 25,00,000 Kayee Share Broking Pvt. Ltd., 200 75,00,000 Mihir Agencies Pvt. Ltd., 600 25,00,000 Alpha Chemie Agencies Pvt. Ltd., 200 25,00,000 2000 2,50,00,000 23. The shares were issued at face value of Rs. 100/ - and premium of Rs. 19,900 / - per share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced by the following companies owned by Mr Mukesh Choksi were deleted: i. Alliance Intermediaries Pvt Ltd ii. Kaycee Shares Broking Pvt Ltd iii. Mihir Agencies Pvt Ltd iv. Alpha Chemie Trade Agencies Pvt Ltd 31. The above parties are common applicants in the assessee's case also and have submitted all relevant details as discussed above to discharge its onus of proving the identity of share applicants, genuineness of transaction & credit worthiness of shareholders. 32. From the record we found that to establish identity of share holders, the assessee has filed following documents. a) Certificate of incorporation b) PAN Identity of the shareholder c) CIN Identity of the shareholder d) Copy of IT return filed by the shareholder 33. To substantiate genuineness of transaction, assessee has filed following documents. a) Copies of bank pay orders issued by the new shareholders towards application money and first call money. b) Copies of the share application form. c) Copies of the resolution passed by the Board of Directors to apply for allotment of shares & returns for share allotment as filed with the ROC. d) Confirmations & declaration from the sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation letter had been obtained from lender nor any other verifiable evidence in respect of loan transaction had been rued. The Hon'ble Bombay High Court held that: "17. In our view in the light of the fact that the monies were advanced apparently by the account payee cheque and was repaid vide account payee cheque the least that the revenue should have done was to grant an opportunity to the assessee to meet the case against him by providing the material sought to be used against assessee in arriving before passing the order of reassessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the reassessment and therefore renders the orders passed by the CIT (A) and the Tribunal vulnerable. In our view the assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dated 15th February, 1996 seeking an opportunity to cross examine the deponent and furnish the assessee with copies of statement and disclose material, these were denied to him. In this view of the matter we are inclined to allow the appeal on this ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided after obtaining a share valuation report from E. A. Patil & Associates, Chartered Accountants. 43. Reliance was placed by learned AR on the decision in the case of ACIT vs M/s Gagandeep Infrastructure Pvt Ltd bearing ITA No.5784/MUM/2011 ( 2014-TIOL-656-ITAT-MUM) wherein it has been held as under: "Whether no addition can be made under section 68 for huge share premium received by the assessee as it is a prerogative of the Board of Directors of the company to decide the premium amount and it is the wisdom of the share holders whether they want to subscribe to such a heavy premium and the Revenue authorities cannot question the charging of such huge premium without any bar from any legislated law of the land - Whether once the initial burden of proof as rested upon the assessee has been successfully discharged by the assessee even if it is held that excess premium has been charged, it does not become income as it is a capital receipt." 44. Now coming to the decision relied by learned CIT(A) in the case of Durga Prasad More 82 ITR 540, the facts and decision of the case of Durga Prasad More was rendered under the provisions of the erstwhile Indian Income-tax Act, 1922 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed sources. 46. After carefully going through the decision of Hon'ble Supreme Court, we found that in the case of Sumati Dayal (supra), the surrounding circumstances available were against the assessee on which the rule of human probabilities can be applied. However, in the present case, ratio of this decision cannot be applied since facts in this case are completely different from the facts of the assessee's case. Furthermore, how the said facts can be relevant for assuming that share application money received from share applicant is assessee's own money and also in this case revenue has not produced any evidence to establish the same. 47. Decision of Delhi High Court in case of Nova Promoters & Finlease (P) Ltd., 342 ITR 169 was also relied on by CIT(A). We found that the ratio of this case cannot be applied in the present case of assessee since, in the case of assessee neither any statement was given by third party to the Investigation Wing in which they have mentioned specifically that assessee was involved in the arrangement nor AO has proved specific involvement of the assessee in the arrangement of introduction of own money in the garb of share application money. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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