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TMI Blog2019 (4) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... ated:- 12-4-2019 - Shri Bhavnesh Saini, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Shri Jitender Chaurisa, Company Secretary For the Respondent : Smt. Rinku Singh, Sr. DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 27/01/2015 passed by the Ld. Commissioner of Income-tax (Appeals)-7, New Delhi [in short the Ld. CIT(A) ] for assessment year 2010-11 raising following grounds: 1. The CIT(A) has grossly erred on facts and in law in upholding the assessment order assessing the income at ₹ 1,23,82,730/- . The additions made by the AO and upheld by the CIT(A) are illegal, unjust and bad in law. 2. The AO CIT(A) has grossly erred on facts and in law in passing the orders without giving a sufficient and proper opportunity to the assessee to be heard. The orders are passed in violation of principles of natural justice. 3. The CIT(A) has grossly erred on facts and in law in upholding the addition of ₹ 1,15,00,000/- received by the appellant on account of share application money from three different investor companies. 4. That the CIT(A) has failed to appreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the summons returned unserved in case of 2 companies. In case of M/s Arrow Equity Private Limited though the summon did not return, however no one attended on behalf of the said company. Subsequent to the date for appearing before the Assessing Officer, documents containing Ledger Accounts of the assessee in their books, copy of bank statement of relevant period, copy of the balance sheet and profit and loss account etc. related to these companies were received in the office of the Assessing Officer. In view of the facts, the Assessing Officer, was of the opinion that the assessee has failed to discharge its onus under section 68 of the Act. The Ld. Assessing Officer relied on the decision of the Hon ble Delhi High Court in the case of CIT Vs. NR Portfolio Private Limited, (2013) 214 Taxman 0408 and CIT Vs. Nipun Builder Private Limited [2013] 350 ITR 407 and made addition. of ₹ 1,15,02,000/-. On further appeal, the Ld. CIT(A) observed as under: 6.5. Before me in appellate proceedings, the appellant stated that the companies M/'s Golden Equity (P) Ltd. and Tavishi Holdings (P) Ltd. had changed their address. It is important to note that the appellant at no point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi High Court in the case of CIT Vs. Neelkanth Ispat Udhyog Private Limited, ITA No.427/2012. 5. Delhi High Court in the case of CIT Vs. Nipun Builders Developers Private Limited, 350 ITR 407. 6. CIT Vs. NR Portfolio (P) Ltd. in ITA No. 1018/2011, dated 22.11.2013. 2.3 In view of the above judgments, the Ld. CIT(A) unheld the addition observing as under: 6.17. The appellant had received an amount of ₹ 1,15,00,000/ - in its accounts clearly a credit entry. The appellant had not produced the persons giving the loans. Thus, the identity of the person giving the credit was not proved. 6.18. The appellant during the assessment proceedings and before me also could not prove the creditworthiness of the creditors. No return of income was furnished. No bank account was produced to show the financial strength of the creditors or that the creditors had sufficient balance to give share capital. The appellant has not given details of what the source of income of the creditors is. 6.19. The genuineness of the transaction too has not been proved by the appellant. The appellant has not been able, to show that the money was actually received by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence is not sufficient. The onus to establish credit worthiness of the investor companies is on the assessee. The Assessee is under legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee. 2. Hon ble Delhi High Court Judgement dated 17.01.2019 in case of NDR Promoters Pvt. Ltd., ITA No. 49/2018) where the addition of share capital u/s 68 has been upheld where the investors were found to be paper companies during search on other parties. It was held by the Hon ble Court that a case involving makebelieve paper work to camouflage the bogus nature of the transactions is to be treated as unexplained credit u/s 68. 3. Prem Castings (P.) Ltd. Vs CIT T20171 88 taxmann.com 189 (Allahabad) where Hon ble Allahabad High Court held that additions u/s 68 warrant being sustained where the identities creditworthiness of investors in the assessee company are not established by the assessee are also proved incorrect by the Department's Assessee Information System. In such circumstances, assessee cannot resist the additions on grounds that it did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e served as addresses were not available, and, moreover, those shareholders were first time assessees and were not earning enough income to make deposits in question, addition made by Assessing Officer under section 68 was to be confirmed; SLP dismissed. Konark Structural Engineering (P.) Ltd. Vs DCIT [2018] 90 taxmam.com 56 (Bombay) where Hon ble Bombay High Court held that where assessee- company received certain amount as share capital from various shareholders, in view of fact that summons served to shareholders under section 131 were unserved with remark that addressees were not available, and, moreover, those shareholders were first time assessees and were not earning enough income to make deposits in question, impugned addition made by AO under sec. 68, was to be confirmed. 6. DRB Exports (P.) Ltd. Vs CIT T20181 93 taxmann.com 490 (Calcutta) where Hon ble Calcutta High Court held that where AO made addition under section 68 in respect of increase in share capital of assessee-company, in view of fact that addresses of most of purported shareholders were identical and they could not be traced out despite notice issued under section 131, Tribunal was justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer had also provided the statements of Mukesh Gupta and Rajan Jassal to the assessee in compliance with the rules of natural justice. Out of the 22 companies whose names figured in the information given by them to the investigation wing, 15 companies had provided the so-called share subscription monies to the assessee. There was thus specific involvement of the assessee-company in the modus operandi followed by Mukesh Gupta and Rajan Jassal. Thus, on crucial factual aspects the present case stands on a completely different footing from the case of Oasis Hospitalities (P.) Ltd. (supra). 42. In the light of the above discussion, we are unable to uphold the order of the Tribunal confirming the deletion of the addition of ₹ 1,18,50,000 made under section 68 of the Act as well as the consequential addition of ₹ 2,96,250. We accordingly answer the substantial questions of law in the negative and in favour of the department. The assessee shall pay costs which we assess at ₹ 30,000/-. 9. CIT Vs Ultra Modern Exports (P.) Ltd (40 taxmann.com 458, 220 Taxman 165) where Hon ble Delhi High Court held that where in order to ascertain genuineness of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 90-190 per share and was able to garner a colossal amount of ₹ 4.34 Crores, this Court is of the opinion that the CIT (Appeals) and the IT AT fell into error in holding that AO could not have added back the said amount under Section 68. The question of law consequently is answered in favour of the Revenue and against the assessee. 10.CIT Vs Frostair (P.) Ltd (26 taxmann.com 11. 210 Taxman 221) where Hon ble Delhi High Court held that where details furnished by assessee about share applicants were incorrect, addition under section 68 was proper. It was held as follows: 12 The application of the ratio of every decision by a quasijudicial body like the IT AT has to be nuanced, and contextual. Thus, while the findings in Divine Leasing, Oasis International or even Lovely Exports might be preceded by a general discussion of the correct approach to be adopted by the AO, in a given case where additions are sought to be made on account of share application moneys not found to be genuine, the basic facts of the case cannot be lost sight of. On a proper application of the ratio in Oasis - and subsequently, the Division Bench ruling in CIT v. Nova Promoters Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders; it has to show genuineness of such individuals or entities. 13. CIT Vs Focus Exports (P.) Ltd (51 taxmann.com 46 (Delhi)/[2015] 228 Taxman 88) where Hon ble Delhi High Court heid that where in respect of share application money, assessee failed to provide complete address and PAN of certain share applicants whereas in case of some of share applicants, there were transactions of deposits and immediate withdrawals of money from bank, impugned addition made under section 68 was to be confirmed. 13. PCIT Vs Bikram Singh HTA No.55/20171 (Delhi) where Hon ble Delhi High Court held that even if a transaction of loan is made through cheque, it cannot be presumed to be genuine in the absence of any agreement, security and interest payment. Mere submission of PAN Card of creditor does not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were through the banking channel, does not establish the genuineness of transactions. Loan entries are generally masked to pump in black money into banking channels and such practices continue to plague ..... X X X X Extracts X X X X X X X X Extracts X X X X
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