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TMI Blog2019 (2) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017, ITA No. 3948/Mum/2017 - - - Dated:- 8-2-2019 - Sri Mahavir Singh, JM And Sri Rajesh Kumar, AM For the Appellant : Shri Prakash Jotwani, AR For the Respondent : Shri Padma Ram Mirdha, DR ORDER PER MAHAVIR SINGH, JM: These cross appeals of assessee and Revenue are arising out of the order of Commissioner of Income Tax (Appeals)-10, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-10/ITO-5(1)(1)/90/2015-16 vide order dated 20.02.2017. The Assessment was framed by the Income Tax Officer, ward-5(1)(1), Mumbai (in short ITO / AO ) for the A.Y. 2007-08 vide order dated 27.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The first issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by AO of share capital receipt of ₹ 2.04 crores added by the AO as unexplained under section 68 of the Act. For this Revenue has raised the following five grounds: - 1. On the facts circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of ₹ 204 lacs u/s 68 of the Income-tax Act on account of non-genuine share capital. 2. On the facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,00,000 7. Lexus Infotech Ltd. 34,50,000 8. Kush Hindustan Entertainment Ltd. 32,00,000 Total 2,04,00,000 4. The AO noted that during the course of search and seizure operation conducted by the DIT (Investigation), Mumbai on the Pravin Kumar Jain group of cases, it was noted that Pravin Kumar Jain was providing accommodation entries in exchange of certain commission. The AO noted that such statement was given by the Pravin Kumar Jain under oath under section 132(4) of the Act. In view of the above information, the AO asked the assessee to submit the details on share receipt along with confirmation and proof in support the identity, creditworthiness and genuineness of transaction. The assessee submitted the entire details before the AO but AO did not accept the assessee s explanation. He noted that the identity of the share applicant could not be established as the assessee could not produce these parties for examination. Therefore, the AO added the entire share capital introduced during the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity and creditworthiness of the persons, and the genuineness of the transaction in the form of PAN cards, IT return copies, bank statements, confirmations, affidavits, audited accounts etc. and claimed that it has discharged its onus. The Id.AR has further argued that the transaction has taken place through banking channels, therefore the genuineness of loan need not be doubted. He claims that the excessive reliance on the statements given by a third party i.e. key persons of Praveen Jain group, is not proper even without giving the appellant a chance to cross-examine them who have given such adverse statements, especially when he has not mentioned the name of the appellant company. He further argued that the addition was made without providing the appellant the corroborative evidence in the possession of the AO to prove that the appellant has paid cash, against the receipt of cheque On the other hand the AO has believed that these documents submitted before him were engineered to explain bogus loans since those who involve in bogus transactions in an organized way are meticulous in arranging these make-believe documents. He further believed that the office bearers/key person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re application money of ₹ 2,04,00,000/-/ When these shares were sold on par without charging any premium there is a little scope for doubting the genuineness of the transaction. 5.2.5 In view of the about discussion, I hold that the appellant has proved identity and creditworthiness of the creditors and genuineness of the transaction as required under section 68 of the Act. Therefore, the share capital taken by the appellant from the above 8 parties at face value cannot be treated as unexplained. I accordingly, direct the AO to withdraw the addition made under section 68 of the Act. The ground is allowed. Aggrieved, now Revenue is in appeal before Tribunal. 6. Before us, the learned Sr. Departmental Representative argued that the identity of the share applicant could not be established before the AO as the assessee could not produce these parties for examination. He also argued that the share capital introduced during the year amounting to ₹ 2.04 crores is bogus, in view of the fact that Shri Pravin Kumar Jain during the course of search under section 132 of the Act admitted providing accommodation entries and all these 8 concerns are run, controlled and op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account. 6. The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case. 8. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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