9911796707
TMI Blog2019 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... examination of the person, who gave the statement, when such opportunity has been availed by the person against whom, such statements are used. The Hon ble Supreme Court in the case of Andaman Timber Industries Ltd Vs CCE, Kolkata II [ 2015 (10) TMI 442 - SUPREME COURT] had also upheld a similar legal position and held that not allowing the assessee to cross-examine the witnesses by the adjudicating the authority, though the statements and those witnesses were made the basis of the impugned order is a serious flaw, which makes the order nullity in, as much as, it amount to violation of principle of natural justice, because of which, the assessee was adversely affected. Therefore, on this count also the additions made by the AO cannot be sustained. Additions by invoking the provisions of section 56(2)(viib) - We find that the said provision has been inserted by Finance Act, 2012 w.e.f 10.04.2013, where it provides that where a closely held company issues its shares at a price which is more than its fair market value, then amount received in excess of fair market value will be charged to tax in the hands of the company as income from other sources. On perusal of amendments brought o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case as well as in Law, the Learned CIT(A) has erred in confirming the action of Learned Assessing in reopening the assessment u/s.147 of the Income Tax Act, 1961, without considering the facts and circumstances of the case. 4. The brief facts of the case are that the assessee company is engaged in the business of financing and investment activities and trading in fabrics and cloths, filed its return of income for AY 2009-10 on 28/09/2009 declaring total loss at ₹ 17,814/-. Thereafter, the case has been reopened u/s 147 of the Act, 1961, for reasons recorded, as per which, income chargeable to tax had been escaped assessment within the meaning of section 147 of the I.T.Act, 1961, on account of receipt of share capital by issue of shares at huge premium of ₹ 464/- per equity shares having face value of ₹ 10/- per share. The reasons, further stated that information received from the office of DIT(I & CI) by the ITO, Ward 1(1), Kalyan regarding huge premium received by the assesee company. Therefore, the AO had reason to believe that income chargeable to tax had been escaped assessment, on account of issue of shares to various parties. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count statements for the period from 01/04/2008 to 31/03/2015, for which, the assesee has filed complete set of documents, including bank statement for the relevant period. Further, the AO issued summons to the promoter of Sunteck group shri Kamal Khetan and recorded his statement of oath u/s 131 of the I.T.Act, 1961, in respect of investments and share premium collected from various parties and such statement has been reproduced at page no. 7 to 16 of assessment order. 6. The AO, after considering relevant submissions of the assessee and also taken note of survey conducted, in the case of Suntech group u/s 133A of the I.T.Act, 1961, on 15/10/2013, came to the conclusion that although, assessee claims to have furnished various details to prove identity, genuineness of transactions and credit worthiness of the parties from whom, share capital along with premium has been collected, but said submissions cannot be accepted for the reasons that the assesse has failed to prove that statement recorded ,during the course of the survey u/s 133A of the Act, was under duress coercion. The AO, further, observed that the assessee retracted from his statement, without filing any affidavit befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T.Act, 1961 and accordingly, made additions of ₹ 9,00,00,000/- u/s 68 of the I.T.Act, 1961. 7. Aggrieved, by the assessment order, the assessee preferred an appeal before the ld. CIT(A). Before, the ld. CIT(A), the assessee had challenged reopening of assessment on the ground that the AO has reopened assessment on mechanical manner on the basis of information received from DIT(I&CI), without application of his mind on the issue in light of return filed by the assessee. The assessee had also taken another leg of arguments to contest reopening assessment that the AO had reopened assessment without there being any fresh tangible materials in his possession which is evident from the fact that the reasons recorded for reopening of assessment talks about return of income, which was accepted earlier. Therefore, in absence of tangible materials, reopening is bad in law whether or not original assessment was made u/s 143(3) of the Income Tax Act, 1961. In this regard, he relied upon plethora of judicial precedents. As regards, addition towards share capital u/s 68 of the Act, the assessee had filed elaborate written submission which has been reproduced at para 7 on pages 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction has been duly disposed of by The A.O., vide his office fetter dated 16.08.2016. Thus, the A.O. has meticulously followed the due procedure for re-opening of the assessment u/s 147 of the Act, which can't be faulted with. 8.4 The section 147 of the Act authorizes and permits, the Assessing Officer to assess or reassess income chargeable to tax, if he has reason to believe that income for any assessment year has escaped assessment. The word 'reasons' in the phrase "reason to believe" means cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of tilt1 Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. 8.5 At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. It further held that the sufficiency or correctness of the material is not a thing to be considered at this stage. 8.10 The present case is also not one of change of opinion. The question of change of opinion arises, when the AO forms an opinion and decides not to make an addition and holds that the appellant was correct in his stand. 8.11 The Supreme Court in Malegaon Electricity Co. (P) Ltd. vs. CIT (1970) 78 ITR 466 (SC) has observed, as under : If is true that if the ITO had made, some investi0aiionf particularly if He had looked into the previous assessment records, he would have been able to find out what the written down value of the assets sold was and consequently he would have been able to find out the price in excess of their written down value realized by the assessee. It can be said that the ITO if he had been diligent could have got all the necessary information from his records. But that is not the same thing as saying that the assessee had placed before the ITO truly and fully all material facts necessary of the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aneous or absurd reasons are recorded by the AO, R was further held by the Hon'ble Court that whether or not the material should be finally taken into account for reassessment is a separate matter, which has to be dealt with during the course of reassessment proceedings. The relevant portion of the judgment in this regard is reproduced as under: - "Objection of counsel for petitioner is two fold :- (a) Reference to inapplicable provision of s. 92 as it stood prior lo amendment w.e.f. 1st April, 2002 and (b) irrelevance of order of the TPO under Chapter X passed in respect of a subsequent assessment year. Applicability of s. 147 requires formation of opinion that income escaped assessment. The said provision is not if! arty manner controlled by s. 92 nor there is any limit to consideration of any material having nexus with the opinion on the issue of escapement of assessment of income, interference with the notice for reassessment is called for only where extraneous or absurd reasons are made the basis [or opinion pro/wring to reassess. Apart from the fact that the AO has given other reasons, it cannot be held that the material relied upon by the AO for proposing reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f parties, but it was the AO who had failed to investigate the case properly, to rebutte details filed by the assessee to come to the conclusion that the credit in form of share capital is unexplained credit within the meaning of section 68 of the Income Tax Act, 1961. The CIT(A) had also discussed the issue in light of decision of Hon'ble Supreme Court in case of Kishinchand Chellaram vs CIT, 125 ITR 713, and Andaman Timber Industries Ltd vs CCE,(2015) 62 Taxmann.com 3(SC) and held that the AO had used third party information in contravention of principles natural justice, without furnishing said information to the assessee for its rebuttal, and thus, violated principles of natural justice, consequently additions cannot be sustained. The relevant findings of the ld. CIT(A) are as under. 12.16 A perusal of the various statements of Shri Kamal Khetan, reveals that he has categorically denied any knowledge- about the transaction of investments and share capital in [he above mentioned five companies, which were taken over through the holding company namely M/s Akshunya Energy Private Limited. Shri Khetan in his statements has admitted that M/S Eskay Infrastructure Pvt. Lid. had inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repetition, it is stated that Shri Kamal Khetan has made a disclosure of ₹ 47.6 Crore relevant to A.Y. 2010-11, A.Y, 201243 & A.Y. 2013-14. 12.21 Further, the AO, has without bringing on record any material evidence held that the Impugned 5 companies including the appellant are shell companies. During the course of the appellate proceedings, the appellant has filed the details of these companies downloaded from the site, of Ministry of Corporate affairs showing that in the case of all the impugned 5 companies, accounts have been filed till 31.03.2017. Further, the status of all the companies in the ROC Data has been shown as '"Active". On the basis of the information supplied by the Appellant, which is in public domain, I have noted that all the 5 companies are still active companies and are filing their returns with ROC on regular basis. During [he course of The appellate proceedings, it was also argued that none of these companies are shell companies, as their names don't find mention in the list of such companies maintained by SEBI, IT or any other Regulatory authority. 12.22 The Appellant has further submitted that during the course of the reassessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t are concerned, the Appellant Company has stated that due to time lag certain persons might have left the place and for this no responsibility ca be fastened on the appellant. It has been stated that the appellant has furnished the following details to the A.O., regarding the receipt of share premium:- 1. Share application form 2. Copy of declaration 3. Board resolution 4. Bank statement of investor company 5. PAN card 6. Acknowledgement of Return of income 7. Financial statement of investor company 8. Form NO.2 for Allotment 9. Bank statement reflecting the amount receive d through banking channel 12.26 The appellant company has contended that by furnishing the above mentioned details regarding the investors, the appellant has duly discharged the initial onus cast on it. After this stage, the onus shifts on the A.G. to show as to how the explanation furnished by appellant is not satisfactory in his opinion. In this regard, the appellant has also relied on the judgment of jurisdictional High Court of Bombay ID the case of C1T vs. Gagandeep Infrastructure Pvt. Ltd, 394 ITK 680, the relevant portion of which is reproduced hereunder:- " Proviso to section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 of the Act, for the current year under consideration. The A.O. has failed to appreciate that the statements of Shri Kamal Khetan& Shri Vikas Sanklecha relate to events, which have happened subsequent to the current assessment year under consideration. The A.O. has also ignored the fact that Shri Kamal Khetan has not made any disclosure of income for the current assessment year under consideration, in any of his statement recorded by the Department. In his statements recorded by the. Department, Shri Kamal Khetan has stated that he is unaware about the introduction of the share premium, as it was handled by the old management. Even the statement recorded of Shri Vikas Saaklecha refers lo events, which have happened in the subsequent assessment years. Thus, the reliance of the AO on the statements of Shri Kamal Khetan& Shri Vikas Sanklecha for making the addition in the current year under consideration, is misplaced and contrary to material facts on record. 12.31 In fact, for making a case of addition u/s 68 of the Act for the current year under consideration, the A.O. should have examined & rebutted the voluminous details of shareholders furnished by the Appellant Company, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Paras Porwal has no locus standi as far as the affairs of the appellant is concerned. The Assessing Officer on the other hand claimed that appellant is part of, what the AO called, the Om Shanti Group. The AO further contended that Shri Paras Porwal is CMD of "Om Shanti Group" and therefore, this statement made by Shri Paras Porwal was binding on the appellant. 6.3 The contention of the Assessing Officer is grossly wrong. The Income Tax Act does not recognize the concept of Group. Therefore, the contention of the AO that the appellant belongs to the Om Shanti Group is not a valid around for making the addition. Consequently, the contention of the AO that this statement of Shri Paras Porwal is binding on the appellant is without any basis whatsoever. I agree with the contention of the appellant that Shri Paras Porwal has no locus standi as far as it (the appellant) is concerned and, therefore,t he addition made on the basis of the statement of shri Paras Porwal is not sustainable. I, therefore, delete the addition of ₹ 28,60,00,000/- made by the AO. In the result, the first ground of appeal is allowed." 12.33 In view of the facts and circumstances, discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuineness of transaction and creditworthiness of parties. The AR further submitted that although the Assessing Officer has accepted identity of the subscribers, but he has disputed credit worthiness of the subscribers on the basis of financial statements without carrying out further enquiries either by issue of notice u/s. 133(6) or summons u/s 131 to ascertain true nature of transactions between the parties. On the other hand, the assessee has discharged its initial onus by filing enormous documents, including confirmation from the parties where they have categorically stated that investments in assessee company is genuine transaction and has been routed through banking channels. The assessee has also filed complete details about identity of the subscribers including their PAN, address etc. The assessee has also filed income tax acknowledgment of the subscribers along with financial statement and bank statements. The Assessing Officer never disputed fact that the assessee has filed necessary documents in order to prove identity of the subscribers and genuineness of the transactions. Once, the assessee discharges initial burden placed upon him, then the onus shifts to the assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Venkateshwar Ispat Pvt Ltd (2010) 319 ITR 393 (Chhatisgarh-High Court) o) CIT vs. Nav Bharat Duplex Ltd (2013) 35 Taxmann.com 289 (All-High Court) p) CIT vs. Samir Bio-Tech Pvt Ltd (2010) 325 ITR 294 (Del- High Court) q) Mod Creations Pvt Ltd vs. ITO (2011) 354 ITR 282 (Del- High Court) r) CIT vs. Jay Dee Securities & Finance Ltd 32 Taxmann.com 91 (All-High Court) s) Jaya Securities Ltd vs. CIT (2008) 166 Taxman 7 (All- High Court) (SLP filed by dept dismissed) 13. We have heard both the parties, perused the material available on record and gone through orders of the authorities below. The facts borne out from record are that the assesee and other four companies are subsidiaries of M/s Akshunya Energy Pvt.Ltd,. In the F.Y. 2008-09 relevant A.Y.2009-10, the assesee had issued 190000 equity shares at a premium of ₹ 464/- per share, amounting to ₹ 9,00,00,000/-. The holding company namely M/s Akshunya Energy Pvt.Ltd. was later on taken over by M/s Eskay infrastructure Development Pvt.Ltd., a Sunteck group company. On 15/10/2013 a survey u/s 133A of the I.T.Act, 1961 was conducted in Sunteck group of companies. During the course of survey, statement u/s 131 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing confirmation letters from the parties along with their PAN Number and ITR acknowledgement is not sufficient enough to discharge ,the onus cast upon u/s 68 of the I.T.Act, 1961 and what is relevant is to discharge the true identity of the investors. Although, the assessee has filed certain documents, including PAN number and ITR acknowledgement and financial statements along with bank statement of subscribers, but when, it comes to genuineness of transactions and creditworthiness of the parties, except filing financial statements, no other evidences has been filed to prove that share capital received from subscribers is genuine in nature, which is supported by necessary evidences. The AO has also taken support from the findings recorded, during the course of survey and statement recorded from certain persons, including shri Kamal Khetan and shri Vikas Sanklecha to come to the conclusion that the assessee has entered into an arranged transactions with certain companies, in order to convert its own unaccounted income in the form of share capital, which is evident from the fact that the assessee has issued share capital with a huge premium of ₹ 480 per share, even though, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, it is for the AO to carry out further investigation by exercising all possible options available to him, but non attendance of parties in response to 133(6) cannot be attributed to the assessee, because due to time lag certain persons might have left the place and for this no responsibility can be fastened upon the assessee. In this case, the assessee done what best it could do and filed, whatever information available with it, in order to satisfy the AO. In case, the AO is not satisfied with documents furnished by the assessee, then he is free to carry out his own investigations by exercising powers conferred u/s 131 or u/s 133(6) of the I.T.Act, 1961. In this case, the AO, except issue of 133(6) notices nothing has been done to find out, the nature of transactions between the parties. Therefore, we are of the considered view that when, assessee has filed complete details to prove identity, genuineness of transactions and creditworthiness of the parties, then there is no reason for the AO to came to the conclusion that share capital and share premium is unexplained only for the reason that during the survey proceedings, the director of the company had admitted that those five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides that where a closely held company issues its shares at a price which is more than its fair market value, then amount received in excess of fair market value will be charged to tax in the hands of the company as income from other sources. We, further noted that the provisions of section 56(2)(viib) was inserted by Finance Act,2012 w.e.f. 1.04.2013 is applicable from A.Y. 2013-14 onwards. In fact, a similar amendment has been made in section 68 by insertion of a proviso by the Finance At 2012 w.e.f. 01.04.2013 as per which the assessee company (not being a company in which public are substantially interested) and sums so credited consists of share application money, share capital , share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless the person being, a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited and such explanation in the opinion of the AO aforesaid has been found to be satisfactory. On perusal of amendments brought out by Finance Act 2012, w.e.f. 01.04.2013 to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he name and addresses of the shareholders, their PAN/GIR number, so also the name of the Bank from which the alleged investors received money as share application, then, it cannot be termed as "bogus". The controversy is covered by the judgements rendered b y the Hon'ble Supreme Court in the case of Lovely Exports Pvt Ltd, vs. CIT, (2008) 216 CTR (SC) 195, as also by this Court in CIT vs. Creative World Tele films Ltd, (2011) 333 ITR 100 (Bom). In such circumstances, we are of the view that the Tribunal's finding that there is no justification in the addition made under Section 68 of the Income Tax Act,, 1961 neither suffers from any perversity nor gives rise to any substantial question of law." CIT vs. Creative World Tele films Ltd (2011) 333 ITR 100 (Born- High Court) "The question sought to be raised in the appeal was also raised before the Tribunal and the Tribunal was pleased to follow the judgment of the apex Court in the case of CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195. wherein the apex Court observed that if the share application money is received by the assessee-company from alleged bogus shareholders, w hose names are given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investments Ltd. [2001] 251 ITR 263 and Lovely Exports case (supra), has held that the identity of the shareholder alone is required to be proved, in case of the capital contributed by the shareholders. Accordingly CIT(A) and the Tribunal has not committed any illegality in allowing the appeal of the assessee. We do not find any illegality in the judgment of the CIT(A) and the Tribunal." CIT vs. JayDee Securities & Finance Ltd (2013) 32 Taxmann.com91 (All-High Court) "The Tribunal recorded findings that the assessee had produced the return of income filed by the relevant shareholders who had paid share application money. The assessee had also produced the confirmation of share holders indicating the details of addresses, PAN and particulars of cheques through which the amount was paid towards the share application money. The Tribunal thereafter relied upon the judgment of the Supreme Court in CIT V. Lovely Exports (P.) Ltd wherein it was held that if the assessee produces the names, addresses, PAN details of the share holders then the onus on the assessee to prove the source of share application money stands discharged. If the Assessing Authority was not satisfied wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the sources to which the information was attributable......If it had any doubts with regard to their creditworthiness, the Revenue could always bring the sum in question to tax in the hands of the creditors or sub- creditors." CIT vs. Al Anam Agro Foods (P.) Ltd (2013) 38 Taxmann.corn 375 (All-High Court) Tribunal, however, held that since identity of share holders stood proved on record, amount of share application money could not be added to income of assessee. According to Tribunal, in such a case amount could be taxed in hands of persons who had invested" CIT vs. Dwarkadhish Investment (P) Ltd (2011) 330 ITR 298 (Del- High Court) "Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68- Revenue has all the power and wherewithal to trace any person-Moreover, it is settled law that the assessee need not to prove the 'source of source'- In the instant case, the Tribunal has confirmed the order of the CIT(A) deleting the impugned addition holding that the assessee has been able to prove the identity of the share applicants and the share application money has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad applied the decision of CIT vs. Lovely Exports (P) Ltd to the case of the assessee. Therefore, no reason was found in absence of any illegality much less any perversity too to interfere with the order of the both these authorities, who had concurrently held the due details having been proved. The assessee company had presented the necessary worth proof bef ore both the authorities and it was not expected by the assesseecompany to further prove the source of the deceased." CIT vs. Nikunj Eximp Enterprises (P.) Ltd (2013) 35 Taxmann.com384 (Bom) "Whether merely because suppliers had not appeared before Assessing Officer or Commissioner (Appeals), it could not be concluded that purchases were not made by assessee - Held, Yes.... Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were in fact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the respondent- assessee" CIT vs. Samir Bio- Tech Pvt Ltd (2010) 325 ITR 294 (De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O neither carried out any investigation nor issued notices u/s. 133(6) or summons u/s. 131(1) to examine the veracity of documents furnished by the assessee. Unless, the AO carried out further investigations to ascertain true nature of transactions, he cannot come to the conclusion merely on the basis of documents submitted by the assessee. Therefore, after considering relevant facts, the co- ordinate Bench came to the conclusion that decision rendered by Hon'ble Supreme Court in the case of NRA Iron & Steel Pvt. Ltd. (supra) has no application, where the AO has not carried out any inquiries. The relevant findings of the Tribunal re as under: "8. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee had borrowed loans from the aforesaid loan creditors and had duly repaid the same in subsequent years by account payee cheques, for which evidences are already on record before us. It is also not in dispute that the assessee had paid interest on the aforesaid loans which had been allowed as a deduction by the lower authorities. We are unable to persuade ourselves as to how the interest portion on loan alone could be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved from Investigation Wing which revealed that the assessee is the beneficiary of bogus accommodation entries provided by Shri Praveenkumar Jain through his bogus companies. The AO has made additions u/s 68 of the Income-tax Act, 1961 on the ground that though the assessee has furnished necessary evidences to prove identity of the parties, but failed to establish genuineness of transactions and creditworthiness of parties in the backdrop of clear findings of Investigation Wing that those companies are hawala companies involved in providing M/s Shree Laxmi Developers accommodation entries. The AO has brought out facts in the light of statement of Shri Pravinkumar Jain deposed before the Investigation Wing to make addition. Except this, there is no contrary evidence in the possession of the AO to disprove the loan transactions from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd. On the other hand, the assessee has furished various details including confirmation letters from the parties, their bank statements alongwith their financial statements to prove identity, genuineness of transactions and creditworthiness of the parties. The assessee also furnished evidences to prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial statements for the year ending 31-03- 2006. Therefore, we are of the considered view that the assessee has discharged its initial burden cast u/s 68 by filing identity, genuineness of transaction and creditworthiness of the parties. Once, the assessee has discharged its initial burden, the burden shifts to the AO to prove otherwise. In this case, the AO made addition only on the basis M/s Shree Laxmi Developers of information received from Investigation Wing, but not based on any evidence to disprove the loan transaction from above companies are ingenuine. Therefore, we are of the view that there is no reason for the AO to treat loans from above 2 companies as unexplained credits u/s 68 of the Act. 7. Coming to the case laws relied upon by the assessee, the assessee has relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs Gagandeep Infrastructure Pvt Ltd (2017) 394 ITR 680 (Bom). We have gone through the case laws relied upon by the assessee in the light of the facts of the present case and find that the Hon'ble High Court categorically observed that the Proviso to section 68 has been inserted by the Finance Act, 2012 wef 01-04- 2013 is appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2014 dated 5th July, 2017. The Hon'ble Bombay High Court, after considering relevant facts and also by following judgement in the case of CIT vs Gagandeep Infrastructure Pvt Ltd (supra) held as under:_ 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 share 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 M/s Shree Laxmi Developers be applicable in the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt Ltd arising out of SLP(Civil) No. 29855 of 2018 dated 5.3.2019 in support of contentions of the revenue on the impugned issue. In this regard, we find that the facts before the Hon'ble Supreme Court are clearly distinguishable on the following grounds:- a) In Para 3.6. of the said judgement of Hon'ble Supreme Court, it was mentioned that the entire share capital had been received by the assessee through normal banking channels by account payee cheques / demand drafts, and produced documents such as income tax return acknowledgements to establish identity and genuineness of the transaction. It was submitted that, there was no cause to take recourse to section 68 of the Act, and that the onus on the Assessee Company stood fully discharged. b) In Para 3.7. of the said judgement of Hon'ble Supreme Court, it was mentioned that the AO had issued summons to the representatives of the investor companies. Despite the summons having been served, nobody appeared on behalf of any of the investor companies. The Department only received submissions through dak, which created a doubt about the identity of the investor companies. c) In Para 3.8. of the said judgement of Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in, we find that there were no cash deposits in the bank accounts of the lenders prior to issuance of loan to the assessee company. In the case before the Hon'ble Supreme Court, the AO in that case had made field enquiries at Mumbai, Kolkata and Guwahati where those investor companies were stated to be situated to examine their identity and credentials and the result of such enquiry had been summarized hereinabove. Whereas in the instant case before us, no such enquiries were conducted by the ld AO to doubt the veracity of the details and evidences filed by the loan creditors in response to notice u/s 133(6) of the Act directly before him. In the instant case before us, all the notices u/s 133(6) of the Act were duly served on all the aforesaid loan creditors and all of them had independently filed their replies directly before the ld AO. The bank statements were also duly furnished by the loan creditors to prove that they had sufficient creditworthiness to advance loan to the assessee company and since all the transactions were routed through regular banking channels by account payee cheques and in view of the fact that there were no cash deposits prior to issuance of loan to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovely Exports (P) Ltd (supra), where the issue has been thoroughly examined in the light of provisions of section 68 of the Act, and held that if the share application money is received by the assessee company from alleged bogus share holders, whose names are given to the AO, then the department is free to proceed to reopen their assessment in accordance with law, but sum received from share holders cannot be regarded as undisclosed income of the assessee. 20. In this view of the matter and considering the facts and circumstances of this case and also taking into consideration various case laws as discussed hereinabove, we are of the considered view that the assessee has discharged its initial onus to prove identity, genuineness of transactions and creditworthiness of the parties by filing various documents. The AO, without carrying out further inquiries in order to ascertain the claim of the assessee, jumped into conclusion on the basis of financial statements of the subscribers that none of them had enough source of income to establish creditworthiness. Therefore, we are of the view that the AO was erred in making additions towards share capital u/s 68 of the Income Tax Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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