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TMI Blog2020 (3) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... uments were filed then the identity of the share applicant companies stand proved. The assessee also produced the bank statements and the AO has not even pointed out that the funds transferred from the bank account of these companies are actual money of the assessee routed through these companies. Therefore, the creditworthiness and genuineness of the transactions is also proved by producing all these documentary evidences. Further out of 06 companies to whom the shares were issued at a premium of ₹ 490/- per share, the AO has accepted the transaction of receipt of share premium from remaining 03 companies which itself demolishes the case of the AO that the assessee company does not carry the worth of such a premium of ₹ 490/- per share. Once the assessee has discharged its primary onus by filing the documentary evidences, proving the identity and creditworthiness of these companies as well as transactions then the burden is shifted on the AO to bring the material on record to controvert the documentary evidences filed by the assessee Documentary evidences filed by the assessee clearly discharges the onus casted on the assessee company and therefore, in the absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in the business of Hotels Resorts. The assessee filed its return of income on 30-03-2013 declaring total income of ₹ 88,350/-. During the course of scrutiny assessment, the AO issued notice u/s 142(1) of the Act alongwith questionnaire calling for information / details / documents from the assessee regarding the share applications received by the assessee. In response, the assessee filed requisite details as well as confirmations of the investors to whom shares were allotted by the assessee. The AO noted that the assessee has issued 1.00 lac shares of face value of ₹ 10/- at par to each of the promoters of the assessee company namely Ms.Shruti Agarwal, Ms.Kanika Agarwal and Shri Kapil Agarwal whereas other shares were issued to outside entities of persons at a premium of ₹ 490/- per share. After initial details filed by the assessee, the AO then referred to the information received from the Investigation Wing, Mumbai regarding the search and seizure action and statement of Shri Praveen Kumar Jain recorded on 1-10-2013 and again issued a show cause notice to the assessee. In response, the assessee filed all the details which includes bank statements of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not carry such a huge premium of ₹ 490/- per share. The ld. DR thus contended that on one hand the assessee issued the shares at par to the promoters whereas at the same time the share were issued to these three companies at a premium of ₹ 490/- per share. The ld. DR further contended that neither the assessee's financial conditions support the premium of such a huge amount nor the applicant companies are having any real business to support their creditworthiness. The AO issued notice u/s 133(6) which was received back unsrved with the remarks Not Known . This clearly shows that these companies were not in existence but only paper companies. The ld. DR relied on the order of the AO and submitted that retraction of Shri Praveen Kumar Jain cannot be accepted as it was made without giving supporting material that retraction is correct statement and earlier statement was not a correct statement. The ld. DR further contended that ld. CIT(A) has held that the statement cannot be relied on without giving opportunity of cross examination to the assessee disregarding the decision of Hon'ble Jurisdictional High Court in the case of Rameshwar Lal Mali vs CIT , 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (supra). The ld.AR of the assessee relied on the decision of Hon'ble Madhya Pradesh High Court in the case of Pr. CIT (1), Indore vs Chain House International Pvt. Ltd (2018( 98 taxmann.com 47 (M.P.) and submitted that Hon'ble High Court has discussed this issued exhaustively and held that issuing the shares at a premium was a commercial decision and prerogative of the Directors of a company to decide the premium amount. It is the wisdom of the shareholders whether they want to subscribe the shares at such a premium or not. The Revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of Board of Directors to assume role of ascertaining how much is a reasonable premium having regard to the circumstances of case. The ld.AR of the assessee relied on the judgment of Hon'ble Delhi High Court in the case of CIT vs Anshika Consultants (P) Ltd. (2015) 62 taxmann.com 192 (Del). The ld.AR of the assessee then refereed to the decision of this Tribunal dated 24-04-2018 in the case of Shivalik Kinema Pvt. Ltd vs DCIT (ITA No.400/JP/2016 for the Assessment Year 20101- 11) and submitted that the addition made by the AO on the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils as to when such notice was issued. Only a passing reference has been made in respect of the notice issued u/s 133(6) of the Act. Without going into the controversy of issuance of notice u/s 133(6) of the Act, we note that the AO has allegedly called for the information in the said letter/notice issued u/s 133(6) as under:- 1. Copy of ledger a/c of M/s. Shefali Hotels Resorts Pvt. Ltd for the F.Y. 2011-12 relevant to A.Y. 2012-13 as appearing in your books of accounts. 2. Copy of Income Tax Return filed by you for the A.Y. 2012-13 alongwith copy of balance sheet. 3. Copy of your Bank Statement for the F.Y. 2011-12. Thus it is clear that the AO called for the information from these companies which include the copy of ledger account, copy of income tax returns filed for the Assessment Year 2012-13 alongwith copy of balance sheet and copy of bank statement for the F.Y. 2011-12. It is pertinent to note that all these documents were otherwise filed by the assessee before the AO alongwith confirmations of these investor companies. Thus the requisite information was already produced before the AO, however, the alleged letter/ notice u/s 133(6) was received back unserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has received share application money and genuineness of the transactions:- ` a. Confirmation of the directors of the Applicant companies confirming the investment made by their companies into the equity shares of the appellant in the A.Y. 2012-13 alongwith relevant details. b. Copy of share Application Form duly signed by the Applicant companies received by the appellant in the A.Y. 2012-13 alongwith their covering letter. c. Copy of the relevant period of the Bank statement of the appellant companies showing the amount of cheque/RTGS remitted to the appellant towards share application money. d. Copy of the Board Resolution of the applicant companies authorizing specific director of each of such applicant company to make an investment into the equity shares of the appellant of the specific amount in the A.Y. 2012-13. e. Copy of Income Tax Return acknowledgement of each of the appellant companies. f. Copy of share allotment letter issued by the appellant to each of such applicant companies. Thus all these documentary evidences filed by the assessee clearly discharges the onus casted on the assessee company and therefore, in the absence of any contrary mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s considered this issue at paras 18 to 24 as under:- 18. It was further submitted that in respect of the above three companies, the assessee has furnished the following documents to establish the identity, genuineness of the transaction and the creditworthiness of these entities: Name, address and PAN no. Shares applied/allotted Share Capital Evidences produced before the AO M/s Zenith Automotive P. Ltd. 106, Palco House, T-10, Main Patel Road, Patel Nagar, New Delhi-110008 PAN No. AAACZ0283B 20,000 ₹ 10,00,000/- Copy of share application money, confirmation, bank statement, balance sheet, ROC return. M/s Aasheesh Cap. Services P. Ltd. Royal palace, G-55, Laxmi Marg, Vikas Nagar, New Delhi- 110092 PAN No. AAACA6633N 20,000 ₹ 10,00,000/- Copy of share application money, confirmation, bank statement balance sheet, ROC return. M/s Ultimate IT Solution U-23, Arvind Nagar, Ghonda, Delhi-53, PAN no. AAACU9005G 20,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 175 176/JP/15 and 179/JP/15 and CO No. 15 16/JP/15 and 19/JP/15 order dated 22.06.2016 Anchal Fintrade Pvt. Ltd. Vs. ITO in ITA No. 131/JP/16 for A.Y. 05- 06. M/s Choice Buildstate Private limited vs ITO in ITA No. 431/JP/2016 dated 28.03.2018 21. In case of M/s Choice Buildestate Private limited vs ITO (supra), we have recently examined an identical matter and we find that our findings therein applies equally in the instant case. The relevant findings are reproduced as under: 10. Now, coming to the merits of addition of ₹ 35 lacs made by the AO under section 68 of the Act. On careful examination of material available on record, we find that it is a case where the AO has relied blindly on information supplied by the Investigation Wing Mumbai without carrying out any further examination of documents submitted during the course of assessment proceedings and independent investigation of these investor companies. As we have noted above, the information so received from the Investigation Wing, Mumbai and after due examination thereof, the AO has formed a prima facie view and a reason to believe that the income has escaped assessment and has thus assumed jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd seizure operations in case of Praveen Jain group. In these situations, the Courts have held that the Assessing Officer cannot sit back with folded hands and then come forward to merely reject the explanation so made, without carrying out any verification or enquiry into the material placed before him by the assessee. If the Assessing Officer harbours any doubts of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the Company. We therefore agree with the contentions of the ld AR that in absence of any falsity which have been found in the documents so submitted by the assessee company to prove the identity, creditworthiness and genuineness of the share transaction, these documents cannot be summarily rejected as has been done by the AO in the instant case. Further, we find that there is no action taken by the AO in terms of calling information from these companies under section 133(6) and/or issuing summons to directors of these companies under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time, the fact remains that inspite of non-compliance of these notices and non-appearance which cannot be a sole basis for disallowance, the AO has to give a specific finding and record his satisfaction regarding non-acceptance of documents so submitted by the assessee. We are therefore of the view that that in absence of any falsity which have been found in the documents so submitted by the assessee company to prove the identity, creditworthiness and genuineness of the share transaction and any satisfaction to that effect recorded by the AO, these documents cannot be summarily rejected as has been done by the AO in the instant case. 24. In light of above discussions and in the entirety of facts and circumstances of the case, we don t find any basis for making the addition under section 68 of the Act. In the result, ground no.2 taken by the assessee company is allowed. Thus the addition made by the AO based on the statement of alleged entry provider which was recorded by the Investigation Wing, Mumbai was not found sustainable when the assessee produced all the documentary evidences to discharge its onus to prove the transaction. The Hon'ble Madhya Pradesh High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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