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TMI Blog2018 (3) TMI 1713X X X X Extracts X X X X X X X X Extracts X X X X ..... after due verification, the ld. CIT(A) has restricted the addition to 169450/- which calls for no interference. Ground is accordingly dismissed. Addition u/s. 68 - Held that:- A.O. not only added the share application money received from the three companies but has also added 2.90 crores being share application money received from Shri Rakesh Pandey. We find that Shri Rakesh Pandey who is a company director was summoned by the A.O. at the fag end of the assessment i.e. 27.03.2014. At that point of time, Shri Rakesh Pandey was in Mumbai, therefore, could not attend. But we find that the return of Shri Rajesh Pandey was also scrutinized and in his balance sheet his investment in the shares in assessee company has been accepted. We also find that in the immediately subsequent two assessment years, the investment in shares by Shri Rakesh Pandey has been accepted by the A.O. after thorough scrutiny and in those years, Shri Pandey also appeared before the A.O. Thus, it can be seen that as in the case of these share applicant companies, investment made by Shri Rakesh Pandey has also been accepted by the Assessing Officer in subsequent assessment years. Addition on account of brokerage an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claring total income at ₹ 1.04 crores. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 4. During the course of the scrutiny assessment proceedings, the A.O. found that in the immediately preceding assessment year A.Y. 2010-11, the A.O. had made disallowance u/s. 40A(3) of the Act on account of cash payments made for purchase of land as stock-in-trade/transferred to stock-in-trade. Taking a leaf out of the findings given in A.Y. 2010-11, the A.O. called for the details of purchase of land during the year under consideration. The A.O. found that during the year, the assessee has incurred an expenditure of ₹ 52.42 lacs towards purchase of land being stock-in-trade and the same read as under:- 1. Plot purchase: ₹ 50,20,000 Pramod Kedia 3,00,000 by cheque & 10,00,000 13,00,000 Diptesh Chatterjee 5,00,000 by four cheques & 13,60,000 by cash 18,60,000 Anand Swarnkar 9,56,500 by two cheques & 9,03,500 by cash 18,60,000 2. Stamp & Fees by cash ₹ 2,22,800 Total ₹ 52,42,800 5. The A.O. was of the opinion that the aforementioned purchases were hit by the provision of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the revenue by the judgment of the Hon'ble Jurisdictional High Court of Chhattisgarh (supra), we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 1 is accordingly dismissed. 11. The next grievance of the revenue relates to giving of relief of ₹ 1,16,100/-out of addition of ₹ 2,85,550/-. 12. The A.O. drawing support from the copies of the registered purchase deeds observed that expenses relating to Stamp duty and Fees were at ₹ 5,08,350/-. The same can be understood from the following chart:- Plot No. Particulars Consideration Stamp + Other Fees 1. Plot No. C-19, Saddu 4000 Sq.ft. 18,60,000.00 154400 + 15050 2. Plot No. C-19, Saddu 4000 Sq.ft. 18,60,000.00 154400 + 15050 3. Plot No. C-19, Saddu 4000 Sq.ft 13,00,000.00 154400 + 15050 50,20,000.00 5,08,350.00 13. The A.O. found that the assessee has debited only a sum of ₹ 2,22,800/- in the books of account. The A.O. was of the opinion that difference of ₹ 2,85,550/- is unexplained expenditure of the assessee and accordingly added the same. 14. Before the ld. CIT(A), the assessee furnished the details of Stamp duty which is as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish complete details of the persons from whom share capital and share premium has been received. The assessee was further directed to furnish names, address, PAN and the copy of return of income of the share applicants. 22. In its reply, the assessee explained that the share application money was received from - (i) Greenfield Commotrade Private Limited (ii) Silvershine Tradecom Private Limited (iii) Tulsi Barter Private Limited. 23. The assessee furnished the PAN details alongwith certificate incorporation/Memorandum of Association/Article of Association along with copies of audited financial statement and Income Tax Return with copy of bank statements in the case of all share applicants. The details of share application/allotment can be understood from the following chart:- Date Investor Shares Allotted Share Capital Share premium per share Share premium Total Amount 01-09-2010 Green Field Commotrade Pvt. Ltd. Kolkata 16000 1600000 400 64.00,000 80,00,000 09-09-2010 Tulsi Garter Pvt. Ltd. Kolkata 18000 1800000 400 72,00,000 90,00,000 15-09-2010 Silvershine Tradecom Pvt. Ltd., Kolkata 32000 3200000 400 1,28,00,000 1,60,00,000 04-10-2010 GreenF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per share, the same was approximately 50% of the book value of the shares and the second trench of share which was issued at ₹ 1000 per share is approximately 50% of the intrinsic value of the share. It was brought to the notice of the ld. CIT(A) that the allegation of cash deposit in the bank account of the share applicant company is not true. The assessee explained from the bank statement of the three companies that there was no cash deposited when these companies applied for the shares. It was explained that the cash deposit is only 0.73% of the total deposit. 27. After considering the facts and the submissions, the ld. CIT(A) observed that it is a settled principle of law that reason for suspicion however grave it may be cannot be a basis for holding adversity against appellant. Drawing support from various judicial decisions mentioned in his order, the ld. CIT(A) directed the A.O. to delete the addition of ₹ 8.02 crores. 28. Before us, the ld. D.R. strongly supported the findings of the A.O. and ld. Counsel for the assessee reiterated what has been stated before the lower authorities. 29. We have given a thoughtful consideration to the orders of the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Venkateshwar Ispat (P.) Ltd. [2009] 319 ITR 0393 wherein the Hon'ble High Court was seized with the following substantial question of law:- "1.1 Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the CIT(A) and whether it was justified in confirming his views in deleting the addition made by the AO on account of unexplained investment in share capital in spite of the respondent's failure to discharge the onus cast upon it as per the provisions of the law. 1.2 Whether on the facts and in the circumstances of the case, the Tribunal was justified in confirming the order of the CIT(A) in respect of the share capital ignoring the fact that no verification pertaining to its source was ever carried out in the year in which it was introduced. 1.3 Whether, on the facts and circumstances of the case, the Tribunal was justified in confirming the order of the CIT(A) deleting the addition of ignoring the fact that the said additions are backed by specific provisions of the IT Act." 33. And the Hon'ble High Court held as under:- "2. The short question for consideration of this appeal is whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely Exports (P) Ltd., the question before the Hon'ble Supreme Court was whether the amount of share money can be regarded as undisclosed income under section 68 of the Act ? Answering the above question, the Hon'ble Supreme Court has held that if the share application money is received by the assesseecompany 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 of the assessee-company. 10. Thus, in view of the binding judgment of the Hon'ble Supreme Court as also the findings recorded by the CIT(A), which have been subsequently confirmed in appeal by the Tribunal, we are of the opinion that there is no question of law, much less a substantial question of law, arising for adjudication of this appeal. The appeal is, accordingly, dismissed." 34. The impugned assessment year is A.Y. 2011-12 and the first proviso to Section 68 of the Act has been introduced by the Finance Act, 2012 with effect from 01.04.2013. Thus, it would be effective only from A.Y. 2013-14 onwards and not for the subject assessment year. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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