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TMI Blog2019 (5) TMI 1748X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee are applicable to the case on hand, as both the shareholder companies have been assessed tax u/s 143(3) of the Act and in this scrutiny assessment the source of fund had been brought to tax. Thus, we uphold the order of the ld. CIT(A) and dismiss the appeal of the revenue. - I.T.A. No.1977/Kol/2016 - - - Dated:- 22-5-2019 - Sri J. Sudhakar Reddy, Accountant Member Sri S.S. Viswanethra Ravi, Judicial Member Shri Robin Choudhury, Addl. CIT, Sr. DR, appearing on behalf of the appellant. Shri M.D. Shah, AR, appearing on behalf of the Respondent. ORDER J. Sudhakar Reddy :- This appeal by the revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals)-4, Kolkata (hereinafter the ld. CIT (A) ), passed u/s 250 of the Income Tax Act, 1961 (the Act ), dated 18.07.2016 for Assessment Year 2012-13 on the following grounds: 1. On the facts and in circumstances of the ld. CIT(A) erred to allow relief on this ground on the view that the assessee had received share application monies from bodies corporate who were independently assessed to tax and the payments were received through account payee cheques and inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He submitted that each of these share applicants have replied to the Assessing Officer confirming the investment made and also filed all necessary details, copies of which are placed in the Paper Book. He argued that the assessee had discharged the burden of proof that lay on it. 4. The ld. Counsel for the assessee further submitted that in the case of M/s Aggressive Vincom Pvt. Ltd. and as well as in the case of M/s Flabby Sales Pvt. Ltd. scrutiny assessment were completed and orders were passed by the Assessing Officer u/s 143(3) of the Act, for the assessment orders 2012-13 and the amount of investment made by these companies, in the assessee company, was added in their hands and brought to tax. He filed copies of such assessment orders and argued that the identity and creditworthiness of each of these share applicants have been proved and pointed out that these share applicants have confirmed the transactions and this proves the genuineness of the transactions. He submitted that the Assessing Officer has never required the assessee to substantiate the premium charged and received on the share capital and in the absence of such an enquiry/verification, it cannot be argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 133(6) (ii) Copy of IT Acknowledgment for the relevant AY 2012-13 (iii) Copy of the Annual Financial Statements for the year ended 31.03.2012 (iv) Copy of the Letter of Confirmation along with Bank Statement evidencing the source of funds out of which monies were paid to the assessee (v) Copy of the Board Resolution consenting to invest in the assessee company along with PAN Card (vi) Copy of the Share Application Form Acknowledgment (vii) Copy of the Share Allotment Letter (viii) Copy of the share certificates issued by the assessee company to the share subscriber (ix) Copy of PAN Card 7. The assessee also furnished copy of the assessment orders passed u/s 143(3) of the Act on 26.03.2015 in the case of Aggressive Vincom Pvt. Ltd. by ITO, Wd-1(1), Kolkata bringing to tax the share capital and share premium allotted during the year. Similarly, in the case of Flabby Sales Pvt. Ltd., the assessment order passed u/s 143(3) dated 10.03.2015 by ITO,Ward-2(2), Kolkata has been filed wherein the entire share application money received by the assessee including share premium was brought to tax u/s 68 of the Act. The question is whether under such circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - in case of first four entities and accepted similar credits of ₹20,45,00,000/- to be genuine satisfying all parameters of identity, genuineness and creditworthiness. It can therefore be safely assumed that all these additions sums forming subject-matter of the impugned additions to be accepted as genuine in respective investors entities' end as the source of the amount(s) in issue totalling to ₹3,01,00,000/-. Learned Departmental Representative fails to dispute that the same very amount cannot be added twice in payees and recipients' hands u/s 68 of the Act. We therefore see no reason to accept Revenue's instant former substantive ground. We affirm CIT(A)'s findings under challenge qua the instant former issue. 9. This Bench of the Tribunal under similar circumstances, in the case of M/s C.P. Re-Rollers Ltd. vs. DCIT.; ITA No.1811/Kol/2017; Assessment Year 2013-14, order dt. 03.04.2019, had held as follows:- 46. We find that the Hon ble Supreme Court in the case of M/s Earth Metal Electricals P Ltd vs CIT Anr. reported in 2010 (7) TMI 1137 in Civil Appeal No. 21073 / 2009 dated 30.7.2010 arising from the order of Hon ble Bombay High Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows : 1. Sony Financial Services Ltd. - CIN U74899DL1995PLC068362- Date of Registration 09/05/1995 6. On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such Companies. 7. The Appellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. [Para 52] Once the genuineness, creditworthiness and identity of investors are established, the revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of ascertaining how much is a reasonable premium having regard to the circumstances of the case. [Para 53] There is no dispute about the receipt of funds through banking channel nor there is any dispute about the identity, creditworthiness and genuineness of the investors and, therefore, the same has been established beyond any doubt and there should not have been any question or dispute about premium paid by the investors; therefore, unless there is a limitation put by the law on the amount of premium, the transaction should not be questioned merely because the assessing authority thinks that the investor could have managed by paying a lesser amount as Share Premium as a prudent businessman. The test of prudence by substituting its own view in place of the businessman's has not been approved by the Supreme Court. [Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained. (c) In CIT Vs Anshika Consultants Pvt Ltd (62 taxmann.com 192), the AO had added the share application monies treating it to be their unaccounted monies routed though accommodation entries since the shares were issued at a high premium. The Hon ble Delhi High Court did not agree with this contention put forth by the Revenue, by observing as under: Whether the assessee-company charged a higher premium or not, should not have been the subject matter of the enquiry in the first instance. Instead, the issue was whether the amount invested by the share applicants were from legitimate sources. The objective of section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed, the investigation report which was specifically called from the concerned department was available but not discussed by the Assessing Officer. Had he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2010-11 was not revised by the Department. That is, M/s Haven Vincom Pvt. Ltd has raised share capital and share premium which has not been treated by the Department as cash credit under section 68 of the Act and has not been disallowed by the assessing officer in the assessment of M/s Haven Vincom Pvt. Ltd ( vide assessment order-paper book pg.173) . We note that M/s Haven Vincom Pvt. Ltd has utilized the same money ( which it received by raising share capital/premium and not disallowed by AO, u/s 68) to purchase the share capital and share premium in the assessee company (M/s C.P. RE Rollers Ltd) therefore it should not be disallowed under section 68 of the Act, in the hands of the assessee company, as the Department itself accepted genuine money in the hands of M/s Haven Vincom Pvt. Ltd. Hence, in the case of M/s Haven Vincom Pvt. Ltd, the identity, creditworthiness and genuineness have been proved beyond doubt. In case of Sushma Chawala for share application of ₹ 4,22,500/- and share premium of Rs. ₹ 4,22,500/-, the ld Counsel explained the identity, creditworthiness and genuineness therefore no disallowance can be made. Besides, the assessee had discharged its o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as brought to tax in their hands, we uphold the order of the ld. CIT(A) that no additions can be made in the case of the assessee company. 11. Coming to the argument arise to the Ld. D/R that the share premium received was excessive, we find that no query has been done by the Assessing Officer in this regard. As regards the decision of Trenetra Commerce Trade(P) Ltd. (supra), we find that the facts are totally different. In that case, out of 40 shareholders, 38 of them could not be found and two of them stated that they had no connection with the company and that they never applied for any shares and they were drivers by profession and they had not given any money. It was a case where identity and creditworthiness was not proved. The transactions were proved to be not genuine. In the case on hand both the companies have proved their identity and have confirmed the transactions and have disclosed the sources and the revenue has assessed the same in their hands. Further in the case of Trenetra Commerce Trade(P) Ltd. (supra), Mr. K.P. Kedia has stated that he had filed the return of income reflecting undisclosed income of 7.10 crores on compulsion. This is not the fact in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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