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TMI Blog2020 (2) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue which has all the powers to trace any person. Addition made by the AO u/s 68 was wrong on the ground that the proviso to section 68 was added by Finance Act 2012 w.e.f. 01.04.2013 which comes in operation from A.Y 2013-14 and on this account also, the addition cannot be sustained. We have also perused the decisions relied upon by the Revenue and found the same as distinguishable on facts. We note that the ld. CIT(A) has taken all the aspects and issues into account while passing his order and, thus we do not find any infirmity or illegality in the order of ld. CIT(A). Accordingly, we uphold the same by dismissing the appeal of the Revenue. - ITA No.5820/MUM/2016 And ITA No.5133/MUM/2017 And CO No.166 & 167/Mum/2019 (A/o. ITA No.5820/Mum/2016 & ITA No.5133/Mum/2018) - - - Dated:- 28-1-2020 - Shri Rajesh Kumar, Accountant Member And Shri Amarjit Singh, Judicial Member For the Appellant : Surabhi Sharma, Sr. DR For the Respondent : Hariom Tulsiyan, Advocate ORDER PER RAJESH KUMAR, ACCOUNTANT MEMBER: The prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital of 6,00,000 equity shares out of which the assessee issued 5,60,000 equity shares at face value of ₹ 10/- at a premium of ₹ 40/- per share. These shares were allotted to 20 persons/parties/entities out of which two were the directors of the assessee company and the remaining 18 were other parties/entities. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 30.03.2014. The assessee complied with the said notice by submitting that the return filed u/s 139(1) of the Act on 30.09.2009 may be considered as return filed in response to the notice u/s 148 of the Act. Thereafter notices u/s 133(6) were issued and served on the investors during the assessment proceedings which were issued by the AO in order to verify the identity and creditworthiness of the investors and genuineness of the transactions. Notices were accepted and necessary documents were submitted by all the shareholders before the AO. The AO also noted that out of 18 shareholders, 6 shareholders were the companies which were controlled by Shri Praveen Kumar Jain. The details of shares issued are given on page 3 of the assessment order. The assessee has issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Sanjivani Enviro Protection Ltd. 25,00,000 191,09,169 5,47,150 3. Ostwal Trading (I) Pvt. Ltd. 25,00,000 161,29,100 15,52,854 4. Faststone Trading Co Pvt. Ltd. 25,00,000 134,63,322 15,45,769 5. Raghunandan Reyons Ltd. 25,00,000 4,88,40,631 132,577 6. Hema Trading Co Pvt. Ltd. 25,00,000 257,26,942 17,39,588 12. It can be seen from the observation of the Assessing Officer that he has only referred the information related to the outcome of search in the case of Shri Pravin Kumar Jain Group who were providing accommodation entries but the Ld. Assessing Officer has failed to demonstrate any such evidence that the appellant has in reality obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence . Reliance is also placed on the following decisions: i. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Value Capital Services P. Ltd. (2008) 307 ITR 334 (Delhi). ii. Hon'ble Punjab and Haryana High Court in the case of Commissioner of Income Tax v/s. GP International Ltd. (2010) 325 ITR 25 (P H). iii. Hon'ble Madras High Court in the case of Commissioner of Income Tax v/s. Electro Polychem Ltd (2007) 294 ITR 661 (Mad). iv. Hon'ble Rajasthan High Court in the case of Commissioner of Income Tax v/s. AKJ Granites P.Ltd. (2008) 301 ITR 298 (Raj.) v. Hon'ble Delhi High Court in case of Commissioner of Income Tax v/s. Oasis Hospitalities (Pvt.) Ltd. (2011) 51 DTR 74 (Dellhi). Sec.69 places the burden of proof on the tax payer to explain the nature and source of any credit found in the books. But, when assessee proves or submit the basic information like identification, genuineness of transactions and creditworthiness of the creditors, onus is discharge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as share application money and appellant during assessment proceedings provides the details like name address of the corporate entity, PAN No., ROC No., then ITAT held that this may be referred to the concerned A.O. for proceeding against such bogus shareholders instead of adding the amount u/s. 68 of the I.T. Act in the name of the company. 14. The assessing officer has not been able to bring on record any direct or corroborative evidence that the share application money received is unexplained as covered u/s 68 even after opportunity was given in the remand proceedings. The statement of Shri Praveen Jain is not shown to name the appellant specifically. In any case, it is cardinal principle of natural justice, that before conclusions are drawn against a person based on statement of a third party, he must be allowed an opportunity for cross-examination. This has not been provided. In this fact matrix, and the judicial decisions covering the scope of section 68, the addition made of ₹ 150 lakhs u/s 68 in the case of the appellant is deleted. The ground of appeal no1 is allowed. 6. The ld. DR, by relying heavily on the order of AO, argued before the Bench that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g investment made by the subscribers with the assessee, memorandum of Association of the investor companies, etc. The ld. AR submitted that notices were issued and were duly served upon the shareholders by the AO. The ld. AR submitted that instead of carrying out further investigation, the AO only based his conclusion on the fact that these six entities were belonging to Shri Praveen Kumar Jain and treated the investments by these entities as bogus by ignoring the facts that the said companies have sufficient funds to invest in assessee company. The ld. AR placed before the Bench the evidences of sources of the said alleged six investor companies. The ld. AR submitted that the assessee has filed all the necessary evidences before the AO, however the AO has relied on the statement of Shri Praveen Kumar Jain. Further the ld. AR drew attention to the Bench to the fact that the proviso has been added to section 68 of the Act by Finance Act 2012 w.e.f. 01.04.2013 which is effective from A.Y 2013-14 and therefore not applicable to the assessee company as the year involved is A.Y 2009-10. The ld. AR in defence of his arguments, relied heavily on the order of CIT vs. Lovely Expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make further investigation as has held in the case of Haresh D Mehta (supra). The Hon ble Apex Court in the case of Lovely Export (supra) has held that whereas the assessee has received application money from alleged bogus shareholders whose names are given to the AO, then the Revenue is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of the assessee. Similarly, in the recent case of Gagandeep Infrastructure Pvt. Ltd. (supra) the Hon ble Bombay High Court has adjudicated the identical issue by upholding the order of the Tribunal wherein the Hon ble Tribunal had deleted the addition made u/s 68 of the Act on account of share capital and share premium which was made by AO as unexplained cash credit. In this case, the assessee has filed list of shareholders, copy of share application for, copy of share certificates and form no.2 filed with the Registrar of Companies and also the justification for charging the premium on the basis of the future prospect of the respondent company. But by not accepting the explanation, the AO made addition u/s 68 of the Act. The Hon ble Bombay High Court by relying the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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