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TMI Blog2019 (8) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary evidence. Learned departmental representative at this stage submits that there is no justification for assessee s extra-ordinary exorbitant premium in case of investor parties having meagre source of income. We find no merit in Revenue s stand since there is no evidence on record which could suggest that any of the assessee s eleven investor had been having any dubious transactions in their accounts. Assessing Officer erred in treating the assessee s share application / premium amount as unexplained cash credits in entirety. The CIT(A) s findings restricting the same to ₹75 lac only stand reversed therefore. - Decided in favour of assessee - ITA No.1199 And 1323/Kol/2017 - - - Dated:- 28-8-2019 - Shri S.S.Godara, Judicial Member And Dr. A.L. Saini, Accountant Member For the Assessee : Shri Manish Tiwari, AR For the Revenue : Shri Mrinal Kanti Biswas, Addl. CIT-SR-DR ORDER PER S.S.GODARA, JUDICIAL MEMBER:- The assessee and Revenue have filed their instant cross-appeal in ITA No.1199/Kol/2017 and ITA No.1323/Kol/2017 for assessment year 2012-13 against the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are applicants and such notices were fully complied with by the share applicants. The AO further states that summon u/s 131 was also issued to the director of the assessee company who duly appeared before him and whose statement was recorded by the AO. The appellant had duly filed its return of total income u/s 139(1) of the Act in respect of the AY 2012-13. In the course of the assessment proceedings, the appellant in response to the requisitions made by the AO, from time to time, filed copies of its audited annual accounts including various details and other documents as desired by the AO. The details and documents so produced and filed with the AO included, inter alia, full details of each of the share applicants, who had subscribed to the aggregate shares along with share premium raised by the appellant during the assessment year under appeal 44 It is observed that the AO had issued notices u/s 133(6) of the Act, to each of the share applicants. Such notices were duly served upon the respective share subscriber at their respective addresses. Service of such notices u/s 133(6) of the Act to the share applicants at their respective known addresses proves their respective identiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was received from eleven parties out of which three are corporate entities belonging to same group and remaining eight parties are individuals as well as relatives of directors of appellant company It is also found that share application money with premium of ₹ 1,28,50,000/- paid by M/s. Darjeeling Flour Mills Pvt. Ltd. is through A/c payee cheque and for others it is by cash. In view of above, it is prudent to deal with corporate share applicants and individuals share applicants separately which is as follows: - Darjeeling Flour mills Pvt. Ltd. It appears that in response to notice U/s 133(6) the shareholder supplied all the documents as requisitioned which included, inter-alia, current Ale statement from 01.06.2011 to 10.06.2011. I have gone through the adverse comments of AO on such Bank Statement It is not proper to draw adverse inference on the plea that such bank statement is illegible and 1 or do not reflect the name of account holder or A/c Number. The AO has the options to call for the original bank statement from the shareholder and act accordingly. I have also examined the contentions of Ld. A/R as well verified paper book page 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the source of money is further explained and it is common knowledge that the Bank grants credit limit to those having creditworthiness. Thus the objections raised by AO are found to be baseless and the addition made u/s 68 of ₹ 1,28,50,000/- relatable to this shareholder is directed to be deleted. Airview Sudhir Hotels Tourism Pvt. Ltd. This shareholder paid ₹ 5,00,000/- towards share application money with premium through cash and confirmed such investment with all necessary documents in response to notice U/s 133(6). The relevant documents are verifiable from paper book submitted in course of appeal. AO has considered such receipt as unexplained cash credit U/s 68 on the ground that the amount was paid in cash and that the company had not declared any income in the current year. In fact it declared losses from business profession. I have examined the contentions of Ld. AIR on the adverse comments made by AO. The share applicant explained the source of investment as out of its accumulated fund over the year. It is to be seen that whether identity, capacity and genuineness test are met. IDENTITY- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of this company. CAPACITY- It is seen from the Balance Sheet of this company that its share capital plus reserve is ₹ 5,28,46,299/-. Entire share capital has been subscribed by Fantastic Vintrade (p) Ltd. And Airview Sudhir Hotel Tourism (P) Ltd. Which are know group concern of assessee group. In addition the company has Share application money of RS.91 lakhs which is again from another group concern M/s Darjeeling Flour Mills (p) Ltd. In view of money coming from all group concerns, the capacity of the share applicant is also established. GENUINENESS- AG has not brought on record any evidence which can lead to doubt regarding genuineness of the transaction other than the fact that the share application money has been received in cash. However there is no bar in law in receiving the share application money in cash. Therefore there is nothing on record to doubt genuineness of the transaction. Therefore the addition U/s 68 of ₹ 35,00,000/- relatable to this shareholder is directed to be deleted. 4.7 Individual share applicants The factual position emerging from the observations at ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bimala Bala Ghosh 3,35,950/- 59,60,125/- Sikha Ghosh 2,44,500/- 51,92,709/- Gaurav Ghosh 1,70,230/- 9,38,195/- I find that the AO has not doubted the existence of any business by these individuals. Further the AO's observation that the cash was not available with these share applicant's is also purely' based on suspicion. I find that these applicant have confirmed to the transaction and are separate LT Assesses. I find from the balance sheet as well as other documents filed by the share applicants in response to 133(6) notices that it would not be proper to treat the entire sum of money received by the appellant as unexplained money. I also find that the AD issued summon to the director of the appellant company. The director Mr Subroto Ghosh appeared before the AO and his statement was recorded by the AO. The AO has reproduced the extract of such statement in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500000 Sukumar Ghosh 1115790 1199525 1204056 2100000 3740250 3868488 3763255 i) Jaya Ghosh considering that she has earned income of ₹ 11,52,8011- in last 3 years and also considering that she is middle aged person and would have earned similar incomes in the past and would have saved some money. Therefore, she possession of cash in hand during F.Y. 2011-12 cant be denied. However it is unlikely that she would be having such a huge cash balance of ₹ 25 lakhs in hand to subscribe to the shares. Further she is not filing any wealth tax return {which would be the case if we assume that she would be owner of jewellry of around 500 grams ( considering her family status ). Looking into circumstances of the case t am of the opinion that cash in hand with her during the F.Y. 2011-12 would be estimated at ₹ 10 lakhs. The balance amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 165000 1000000 6,50,000 Dipa Ghosh 539654 619392 453471 2000000 100000 10,00,000 Bimla Ghosh 3145577 249890 357099 3200000 1000000 22,00,000 Sikha Ghosh 309478 362710 344496 1550000 1000000 5,50,000 Gourav Ghosh 225578 207893 246312 500000 500000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on facts in deleting the addition made by the Assessing Officer on account of ₹ 9,99,99,900/= as per the provision of Section 68 of the Income-tax Act, without properly appreciating the facts of case and the material brought on record ? The issue pertains to the share application money received by the respondent-assessee-company. The Assessing Officer added a sum of ₹ 9.99 Crores [rounded off] in the hands of the assessee with the aid of Section 68 of the Income-tax Act, 1961 [ the Act for short]. CIT [A] deleted such addition primarily on the ground that the assessee had established the source, genuineness of the transactions and the creditworthiness of the investors. In further detailed consideration, the Tribunal confirmed the view of CIT [A], making the following observations :- I have carefully considered the facts of the case, the assessment order and the written submission of the appellant. The appellant has received an amount of ₹ 9,,99,99,900/- on account of share capital and share premium from M/s. General Capital and Holding Co. Pvt. Ltd, Ahmedabad during the year. The AO held that the creditworthiness and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions. We proceed further to notice that factual position is no different herein as well, wherein the assessee has produced oral or documentary evidence. Learned departmental representative at this stage submits that there is no justification for assessee s extra-ordinary exorbitant premium in case of investor parties having meagre source of income. We find no merit in Revenue s stand since there is no evidence on record which could suggest that any of the assessee s eleven investor had been having any dubious transactions in their accounts. Hon'ble Gujarat high court s yet another decision of Puspuk Bullion Ltd. Vs. DCIT (2016) 17 taxman.com 326 (Guj) holds that mere factum of such a sizable premium does not if so facto lead to concluding that it is an instance of artificially increased sum. We also clarify here that concerned assessee s investors in the said cases were also related parties as is the fact in the present case. We take into account all the preceding factual and legal position to conclude that the Assessing Officer erred in treating the assessee s share application / premium amount of ₹3,26,50,000/- as unexpl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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