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TMI Blog2019 (1) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... t of each of the companies mentioned above. Therefore, there cannot be any doubt about the identity of the company. The amounts have been received from investing company have Come through banking channel which are duly reflected in the Balance sheet of the assessee company. Therefore, there cannot be any doubt about the genuineness of the transaction. So far as credit worthiness is concerned the investing company is regularly assessed to income tax and they are disclosing substantial income. Even these transactions are disclosed in the audited accounts filed along with the return of income. As the facts are identical to AY 2007-08 and the reason recorded by CIT(A) while deleting the addition in AY 2007-08 are also exactly identical. In such circumstances, we have already confirmed the order of CIT(A) deleting the addition and hence, following the earlier years order as decided above, we delete the addition. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... atic racket of converting unaccounted income into purported share capital was deleted which caused loss to the Nation by depriving the revenue on its unaccounted income. 4. Briefly stated facts are that the assessee is a Private Limited Company engaged in the business of Investments, Loans & Advances. Assessee-company invested in shares and securities for a long term perspective and gives loans and advances. It is the main investment company of the Vardhman Group engaged in the business of Builders and Developers for more than 35 years and has substantial stake in the flagship company of the Group. The valuation of the company is derived from the underlying assets being equity of its flagship company. It was claimed by the assessee that it is neither a shell company nor a beneficiary of the accommodation entries. The Original return of income was filed by the assessee on 22.10.2007 for the AY 2007-08. This return was processed under section 143(1) of the Act. Subsequently, the AO issued notice under section 148 of the Act, dated 26.03.2014. The AO for issuing notice under section 148 of the Act recorded the following reasons: - "it is seen from the records that M/s Alka Diamond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t earned. The book value of the shares of the assessee company is nominal and meagre figure. However, the above said parties have claimed to have subscribed to the shares of the assessee company at a huge premium of ₹ 290/-. The high share premium valued is totally unjustified in the light of the above facts. No prudent investor would invest in such a company and that too at a huge premium. Further stating that the assessee company is part of another group and therefore the claim that premium charged is justified is not acceptable simply because the investors have claimed to have applied for shares of assessee company and not any other company. And as per financial statements of the assessee company the share premium charged is totally unjustified. And from the balance sheet it is seen that the assessee company has merely used these so called funds to give advances to other companies being its own group companies. The assessee company has no justification to provide for charging such a huge premium for its shares. Another glaring fact is that the share application money is claimed to have been received in March 2007 and the assessee has stated that shares were allotted in Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Ld. Assessing Officer has only referred the general statement of Mr. Praveen Jain given during the course of search who had not specified as to which company is non-existing company and which one has given accommodation entry. It is to be also noted that in response to the notice under section 133(6), M/s Alka Diamond Industries Ltd. had furnished all the evidences by letter dated 30.01.2015 submitting the complete set of income tax return of AY 2007-08, copy of Ledger Account confirming the investments, cop of its bank account revealing the investments and clarification regarding source of investments. The Ld. Assessing Officer has admitted the veracity of such evidences, as she has not rebutted it with contrary evidence. Further, she has not refuted the explanation of the investor company with any contrary evidence. She has only disallowed the claim on the ground that shareholding pattern of this company was not submitted and share application was not with regard to public issue. Obviously, at the time of recording reason, the Assessing Officer was not having any "tangible material or reliable evidence" for processing for making escapement assessment in a case where scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 542 (Bom) and German Remedies Ltd. vs. DCIT (2006) 287 ITR 494 (Bom). Motilal R. Todi Vs. ACIT 7(3), ITA No. 2910/Mum/2013 and Shaft Broadcast Pvt. Ltd. vs. ACIT 9(3), ITA No. 1819/Mum/2012, order dated 17.04.2013. thus, the Ground No. 1 is allowed." 6. The CIT(A) even allowed the claim of assessee on merits vide Para 3.5 and 3.6 as under: - "3.5. As regards merit of the case related to addition u/s 68, it is pertinent to mention that in response to the notice u/s.133(6), as mentioned earlier, investor companies have furnished all the necessary evidences hence, nothing was left for the Appellant to explain with further evidence to the Assessing Officer. It is also to be noted that after receipt of various evidences from the investors, Ld. Assessing Officer has not brought on record any contrary evidences, hence, addition could not be made on suspicion or presumption disrespecting the evidences on record. It is to be reiterated that the learned Assessing Officer, has during the course of the assessment proceeding, issued notices uls.133(6) of the Act to the parties and they have confirmed the transactions made with the Appellant. No incriminating materials from any of the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on the basis of doubt she has made addition. There is no reference of specific statement that Mr. Pravin Jain that he has admitted that these companies are benami companies, nor is there any specific clarification about bogus share money of them Therefore, only on the basis of general statement, no such addition could be made. The Hon'ble ITAT in the case of Shaft Broadcast Pvt. Ltd. vs. ACIT, ITA No. 1819/Mum/2012, order dated 17/04/2013 has held that merely on the basis of general statement of such person, no addition could be made in the case of such assessee." Aggrieved, now Revenue is in second appeal before Tribunal. 7. Before us, the learned Sr. Departmental Representative relied on the assessment order and for re-opening of assessment he relied on the reasons recorded by AO as noted above. On the other hand, the learned Counsel for the assessee relied on the order of CIT(A) on both i.e. quashing of re-opening as well as on merits. 8. We have heard rival contentions and gone through the facts and circumstances of the case. We have noticed from the assessment order that the AO has issued notice under section 133(6) of the Act to the above mentioned share applicants to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except the Alka Diamond Industries Ltd. Thus, it is evident that despite the fact that share applicant have responded to the notice issue under section 133(6) of the Act and details filed along with relevant documents for establishing identity of the parties and genuineness of transaction. We also noted that the AO was excessively influenced by the information received from DDIT, Investigation Wing, Mumbai regarding search action conducted in the case of one Shri Praveen Kumar Jain and his group and the statement recorded of Shri Praveen Kumar Jain. The AO has not independently proved that the share application money is bogus and not travelled through bank account. It is a fact that these companies are duly registered under the Companies Act, 1956 and still active except one company i.e. Navlakha Agrex Pvt. Ltd., which is Amalgamated. The assessee as before us also filed the following details: - (i) The details of share applicants inter alia the name and addresses of the share applicants; (ii) PAN of share applicants; (iii) The copy of bank statement of the appellant of the banking account in which the account payee cheques received from share applicants were deposited and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has erred in confirming the action of Ld. A. 0. in making an ad-hoc addition of ₹ 1,75,000/- on account of alleged estimated unexplained expenditure u/s 69C of the Income Tax Act at the rate of 5% of the amount of addition made as alleged unexplained cash credit u/s 68 of the Act." 11. The brief facts relating to the issue are already enumerated in ITA No. 3986/Mum/2017 for AY 2007-08 above. Fort this year, the assessee received a sum of ₹ 35 lacs as share application money from Alka Diamond Industries Limited and the AO reopened the assessment on the basis of information received from DGIT (Investigation), Mumbai, in consequent to search conducted in the case of Praveen kumar Jain Group of Cases, wherein it is revealed that the assessee company is one of the beneficiaries who has availed accommodation entry from Alka Diamond Industries Limited. The AO added the entire 35 lacs and also estimated the commission / brokerage paid to these entry providers at the rate of 5% and there be also made addition of ₹ 1.75 laks apart from unexplained cash credit of share application money at ₹ 35 lacs. Aggrieved, assessee preferred the appeal before CIT(A). The CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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