9911796707
TMI Blog2017 (3) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld.Counsel and Ld. CIT. DR, agreed that such enquiries can only be conducted at the level of Ld. AO. Therefore we set aside the issue for examination of cash credits either as share capital and premium or as sale of shares from back to the file of Ld. AO. The Ld. AO shall 1st grant an opportunity to assessee to discharge its initial onus by providing the identity, creditworthiness and most importantly genuineness of the transactions as per section68 of the act. After the discharge of initial onus by assessee, the Ld. AO may conduct any enquiry that he may deem fit and proper to inquire about the veracity of the evidences/information submitted by the assessee in respect of the credit entries. Ld. AO may take all necessary steps in order to identify, examine the creditors and decide the issue on merits neatest say that adequate opportunity may be granted to the assessee to support the case. X X X X Extracts X X X X X X X X Extracts X X X X ..... enue is somewhat unclear; while the Revenue is contending that the Assessee is liable to pay tax on the amount credited in its books as under Section 68 of the Act. It is also deleted the amount invested by the Assessee in shares of SVP Group companies on the ground that the Assessee is only a conduit. The AO has been influenced by the fact that several companies who had subscribed to share capital of SVP Group aggregating a sum of ₹ 85,48,50,000/- out of which shares subscribed/purchased at an aggregate value of ₹ 81,19,32,000/- had subsequently been sold/transferred to other SVP concerns/promoters for a sum of ₹ 10,38,65,200/-. Resultantly, the shareholders of SVP group had acquired shares corresponding to funds of ₹ 81,19,32,000/- infused in SVP Group of companies for an aggregate consideration of ₹ 10,38,65,200/-. Thus, acquiring hidden capital of 70,80,66,800/- without payment of corresponding taxes required to generate that wealth. This fact had led the AO to believe that all the companies that had subscribed to the share capital of core SVP Group companies and had subsequently transferred them at a fraction of the value, had acted as a conduit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions claimed to have been entered into by it. Clearly, the ITAT has not examined the facts relating to the Assessee. The ITAT had simply proceeded on the basis of the facts obtaining in the case of Pranjul Overseas (P) Ltd. on the statement of the parties that the facts of that case were similar to the facts in the case of the Assessee. However, an examination of the documents filed before us, it does not appear that the facts in the case of Pranjul Overseas (P) Ltd., were similar to that as obtaining in the present case. While it appears that in the case of Pranjul Overseas (P) Ltd., the Assessee disputed that any search took place at its registered office, the written submissions filed by the Assessee in this case, does not indicate that any such dispute was raised. Even before us it has not been contended that no search took place at the declared registered office of the Assessee. 28. In the circumstances, we find it is necessary to remand the matter to the Tribunal to examine the facts relevant to the Assessee for determining whether an addition under Section 68A of the Act was sustainable. Needless to mention that it would also be open for the ITAT to remand the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by only to protect the revenue leakage, there does not arise any verification of the creditors for assessment year 2003-04 and 2004-05. 12. Accordingly appeal filed by assessee on Limited grounds remanded stands allowed and appeal filed by the revenue stands dismissed. Assessment year 2006-07 to 2009-10 13. Additions made by Ld. AO in respect of alleged unexplained credits in the bank account vis-a-vis investment made with SVP group for the assessment years 2006-07 to 2009-10 are tabulated year under: Sr. No. Particulars Assessment Years 2006-07 (Rs.) 2007-08 (Rs.) 2008-09 (Rs.) 2009-10 (Rs.) ii) Unexplained credits in the bank accounts 2,89,65,6807- 4,93,20,4987- 2,50,67,3247- 2,18,05,7337- iii) Less: Investment made with SVP Group 51,00,0007- 84,00,0007- ----- ------ Addition u/s 68 of the Act 2,38,70,8277- 4,09,43,5897- 2,50,67,3247- 2,18,05,7337- 14. Ld. Counsel for assessee submitted that as issues involved are common to all assessment years under consideration, arguments advanced are to be applied to assessment years 2006-07 to 2009-10. He submitted that in appeals filed by assessee for these years, ground No. 2 needs to be adjudicated, in the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt of share capital money. Thereafter, Ld. AO is to enquire whether, explanation offered by assessee is satisfactory or not. Truthfulness of the assertion by assessee regarding the nature and source of credit in its books of account can be examined by Assessing Officer subsequently. Where identity and creditworthiness of depositors along with genuineness of transaction stands established and it is shown that they had in fact invested their own money in the purchase of assessee's shares, such amount received would not be charged to tax. Where no explanation at all or explanation offered is unsatisfactory, provision of section 68 may be invoked and such capital or revenue income may be taxed in the hands of the assessee. 20. The entire controversy in present appeals revolves around addition made under section 68 of the Act, where assessee either offers no explanation for the credit entries in the books of accounts, or explanation offered by it, is found to be unsatisfactory. In cases where identity of creditors has been established by assessee along with explanation about credit entries and genuineness of transaction, as to the nature of transaction, leading to such credit entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is not the case in the present facts before us. 23. Apart from these details the assessee has not filed any other documents which could have established genuineness, identity and creditworthiness of creditors neither have assessee produced creditors before assessing officer. Ld. Counsel has placed reliance upon CIT v. Lovely Exports P. Ltd. [2008] 216 CTR 195 (SC), wherein it has been held that, if the share application money is received by assesseecompany from alleged bogus shareholders, whose names are given to Ld. AO by assessee, then Department can proceed to reopen their individual assessments of alleged shareholders, in accordance with law. Ld. Counsel submitted that assessee therein had submitted affidavits of creditors, and thus initial onus has been discharged. He submitted that assessing officer thereafter should have verified all the necessary facts. He submitted that there was no material before Ld. AO to allege that share applicants were bogus. 24. We have carefully perused the decision of Hon'ble Delhi High Court in the case of CIT vs. Lovely Exports (supra). Hon'ble court has held as under: "18. In this analysis, a distillation of the proceedings yield the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 of the Act, Hon'ble court observed as under: (i) The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels ; (3) the creditworthiness or financial strength of the creditor/subscriber'. (ii) has also been held that use of words "any sum found credited in the books" in section68 indicates that the section is very widely worded and the income tax officer is not precluded from making an enquiry as to the true nature and source of sum credited in the accounts books even if it is credited as receipt of share application money. Hon'ble Court has further held that if an amount is credited as capital receipt, then it could not be taxed but it is for the income tax officer to be satisfied that the true nature of the receipt is that of capital. Merely because the company chooses to show the receipt of money as capital, it does not preclude the income tax officer from going into the question whether it is actually so. 27. In the facts of present case before, it has been argued by Ld. Counsel that monies credited into books of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
