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TMI Blog2018 (10) TMI 1633X X X X Extracts X X X X X X X X Extracts X X X X ..... estment and also explained the factual position vide letter dated 30.01.2015. The AO during the course of re-assessment proceedings made addition of share application money of 1 crore received from Alka Diamond Industries Ltd. simplicitor on the basis of mere statement of Shri Praveen Kumar Jain without confronting the assessee. Moreover, no further enquiry was carried out by the AO whether the amount is explained or unexplained the fact that the assessee has submitted complete details before the AO. This issue is now settled in the case of CIT vs. Orchid Industries Pvt. Ltd. (2017 (7) TMI 613 - BOMBAY HIGH COURT) wherein held as referring to voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. - decided in favour of assessee. Addition of share application money - consequently addition of adhoc expenditure on account of commission paid to obtain these bogus capital at the rate of 5% - Held that:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld CIT(A) further failed to appreciate that the circumstantial facts revealed in the search conducted at the various premises of Praveen Kumar Jain wherein this systematic racket of converting unaccounted income into purported share capital was detected which caused loss to the Nation by depriving the revenue on its unaccounted income." 3. Brief facts are that the assessee is a private limited company engaged in the business of investment loans and advances. The original return was filed by the assessee on 17.10.2007 and assessment was completed under section 143(3) dated 28.11.2009. In the return of income the assessee has filed complete audited accounts wherein the investment of shares of Alka Industries Ltd. were disclosed. The AO issue notice under section 148 of the Act on the basis that during the course of search conducted in the case of Praven Jain Group of cases, Shri Praven Jain stated under section 132(4) of the Act that he was indulging proving accommodation entries like bogus share capital etc. Now, during the course of re-assessment proceedings the AO issued notice under section 133(6) to Alka Industries Ltd. for furnishing various evidences. In response to notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming the investments, copy of its bank account revealing the investments and clarification regarding source of investments. The Ld. Assessing Officer has admitted the veracity of such evidences 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 proceeding for making escapement assessment in a case where scrutiny was already made. Thus, I find that such issue of notice u/s.148 is not sustainable in the light of decision in the case of Sound Casting Pvt. Ltd. vs. DCIT 250 CTR 119(Bom.), ACIT vs. Resham Petrotech Ltd.(2012), 136 ITD (Ahmd.), Jaishan Textile Mills Pvt. Ltd. vs. DCIT (2006) 284 ITR 542(Bom.) and German Remedies Ltd. vs. DCIT(2006) 287 ITR 494(Bom.). 3.4 In the result, the Ground No. 1 is allowed. 3.5. As regards merit of the case, it is pertinent to mention that in response to the notice u/s.133(6), as mentioned earlier, investor company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13) Further, the Hon'ble ITAT "A" Bench, Mumbai has recently on 30.11.2015 decided similar matters having identical facts as under: I) ITA No. 3645/Mum/2014: ITA 10(2)(4) vs M/s Superline Construction Pvt Ltd. ii) ITA No. 3644/Mum/2014: ITA 10(2)(4) vs M/s Sitara Properties Pvt Ltd. iii) ITA No. 3646/Mum/2014: ITA 10(2)(4) vs M/s Samsung Builder & Developer Pvt. Ltd. (iv) ITA Non. 3647/Mum/2014 ITA 10(2)(4) vs. M/s Soumya Trading & Finance Pvt. Ltd. (v) ITA No. 3648/Mum/2014 ITA 10(2)(2) VS. m/S Prarup Properties Pvt. Ltd (vi) ITA No. 3650/Mum/2014 ITA 10(2)(2) Vs. M/s Room Darshan Real Estate Pvt. Ltd. vii) ITA No. 3651/Mum/2014 ITA 10(2)(2) vs. M/s Sumangal Buuilder & Developer P. Ltd. In all the above cases the learned Assessing Officers have made additions u/ s 68 of I Tax Act for Share Application Money and Unsecured Loans received based on specific information provided by the Investigation Wing of Income Tax Department. The additions were deleted by the learned CIT(A) against which the Revenue filed Appeals before the Hon'ble ITAT, Mumbai. The Hon'ble ITAT Mumbai dismissed the Appeals filed by the Revenue following the Ratio decided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Diamond Industries Ltd. Even otherwise the assessee before the AO during the reassessment proceedings, in response to notice under section 133(6) of the Act, Alka Industries Ltd. submitted details of Income Tax return, copy of ledger account of the assessee in the books of Alka Industries Ltd., copy of bank statement showing relevant transaction, source of investment and also explained the factual position vide letter dated 30.01.2015. The AO during the course of re-assessment proceedings made addition of share application money of ₹ 1 crore received from Alka Diamond Industries Ltd. simplicitor on the basis of mere statement of Shri Praveen Kumar Jain without confronting the assessee. Moreover, no further enquiry was carried out by the AO whether the amount is explained or unexplained the fact that the assessee has submitted complete details before the AO. 6. This issue is now settled by Hon'ble Bombay High Court, in the given facts, by the decision in the case of CIT vs. Orchid Industries Pvt. Ltd. (2017) 397 ITR 136 (Bom.) wherein honorable High court has considered the decision of division Bench of Bombay High Court in the case of CIT vs. Gagandeep Infrastructure P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two grounds: - "1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the action of Ld. A. 0. in making addition of ₹ 1,62,50,000/- on account of Shares Application Money received during the year by treating it as alleged unexplained cash credit u/s 68 of the Income Tax Act that too by recording incorrect fact and findings and without observing the principle of natural justice. The learned CIT(A) has also failed to appreciate the fact that the appellant has discharged the onus cast upon it to establish the identity and creditworthiness of the share applicants and genuineness of the transactions. 2. In the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the action of Ld. A. 0. in making an ad-hoc addition of 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." 9. The facts and circumstances are already mentioned in ITA No. 3987/Mum/2017 for AY 2007-09, the above appeal, and in this year the assessee has received share application money from the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has filed the relevant pages of inventory listing the documents during the course of search us/ 132 for establishing the fact that the documents mentioned above have been seized and are in the possession of the assessing officer. The above documents are enough to establish the credibility and the genuineness of the transactions. So far as present status of the investing companies is concerned, the assessee has filed data of Company Master Data from the website of Ministry of Corporate Affairs (MCA). Such data are in respect of investing company Alka Diamond Industries Ltd. The state of the investing company as on 25.10.2017 is active. Therefore, the company is still in existence and active. The master data also discloses that Balance sheet up to 31.03.2016 has been filed in respect 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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