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TMI Blog2020 (11) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... T MUMBAI] referring to details proved that the share applicant money received is genuine and explained in the absence of any contrary material brought in by Revenue. Hence, we are of the view that the CIT(A) has rightly quashed the reassessment and also deleted the addition on merits - Decided in favour of assessee. - ITA No.7658/M/2019 (Assessment Year: 2012-13) - - - Dated:- 11-9-2020 - SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER Assessee by: Shri Vimal Punamiya, A.R. Revenue by: Shri Rajeev Harit, D.R. ORDER Per Rajesh Kumar, Accountant Member: The present appeal has been preferred by the assessee against the order dated 31.10.2019 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13. 2. The grounds raised by the assessee are as under: 1. Addition u/s. 68. of the I.T. Act of ₹ 7,50,00,000/- by treating the Share Application Money as Unexplained Cash Credit just relying upon third party statement even though no incriminating documents/materials were found during the course of Search Action/Proceedings and not even relying upon the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the decision of the co-ordinate bench of the Tribunal in assessee s sister concern s cases in (i) Diwali Mercantile (P) Ltd. (formerly known as Diwali Capital and Finance Ltd.) ITA No.2091/M/2018 and ITA No.3896/M/2017 A.Y. 2008-09 and 2007-08 respectively vide order dated 10.01.2019. (ii) ITO vs. Diwali Developers Pvt. Ltd. in ITA No.4723/M/2016 A.Y. 2012-13 order dated 13.04.2018 and (iii) DCIT vs. Blue Stock Investment Pvt. Ltd. ITA No.3987/M/2017 and ITA No.2090/M/2018 for A.Y. 2007-08 and 2008-09 dated 10.01.2019 wherein the similar issue has been decided in favour of the assessee on merits. The ld AR therefore prayed that the present appeal of the assessee may be allowed on merits. 4. We would first adjudicate the issue on merits which is claimed to be covered by the decision of the coordinate bench in assessee s sister concern s cases. The issue raised in ground No.1b is against the confirmation of addition of ₹ 7,50,00,000/- by Ld. CIT(A) as made by the AO on account of share application money being unexplained cash credit by relying upon the third party statement despite there being no incriminating document/material found in the course of search and not referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applicants, PAN, Copies of bank statements of the assessee, Copies of Audited Balance Sheets and Profit Loss Accounts of the share applicants, copies of Share Allotment Letters, copies of the share certificates, company master data, copies of bank statements of the investors evidencing the payments made to the assessee and Copy of Form no.2 filed with ROC etc. The Assessment u/s. 143 (3) r.w.s 153A of the Act was completed on 22.12.2016 determining total income at ₹ 7,49,57,930/- after making the addition of ₹ 7,50,00,000/- u/s. 68 of the Income Tax Act, 1961, towards the Share Application money. During the year under consideration, the assessee had received equity share application money from the following Investor companies. Sr. N Name Address of the Applicant Pan No. No. of Shares Allotted Mode of Receipt Total payment received Share Cap @ ₹ 10/- each Share Prem @ ₹ 290/- each Share Capital of Investor's companies 1 Javda India Impex Ltd. AAACA7065L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,500,000 150,000 4,350,000 27,928,610 12 Ansh Merchandise Pvt. Ltd. AABCN8176E 15,000 Cheque 4,500,000 150,000 4,350,000 4,815,000 13 Kush Hindustan Entertainment Ltd. AACCK3597M 15,000 Cheque 4,500,000 150,000 4,350,000 31,750,000 14 Josh Trading Pvt. Ltd. AACCJ4233H 15,000 Cheque 4,500,000 150,000 4,350,000 5,000,000 15 Viraj Mercantile Pvt. Ltd. AADCV3852H 15,000 Cheque 4.500,000 150,000 4,350,000 8,000,000 TOTAL 250,000 75,000,000 2,600,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... House, Mumbai - 400 004. During the reassessment proceedings, the AO asked the assessee to furnish certain information/explanations of the investors. In response to the same, the assessee duly filed the following information / documents during the assessment proceedings: a. Name, Address, PAN, Income-tax Jurisdiction, etc. of the Investor companies b. Copies of acknowledgement of the ITRS of the Investor companies c. copies of forms of application for equity shares filled by the Investor companies d. Copies of allotment advices given by the assessee to the Investor companies e. Copies of Director Report, Audit Report, Profit Loss Account and Balance Sheet of the Investor companies f. Copies of bank statement/Confirmations of the Investor companies showing amount paid to the assessee; g. Copy of Form No. 2 filed with Registrar of Company towards allotment of shares In order to prove creditworthiness assessee filed details showing financial strength of the investor companies which are reproduced as under: Sr. No. Name of the Investor Company * Share Capital Rs. * Reserves And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,561,645 12,376,645 4,500,000 36.36% 13 Kush Hindustan Entertainment Ltd. 31,750,000 9,051,953 40,801,953 4,500,000 1 1 .03% 14 Josh Trading Pvt. Ltd. 5,000,000 (12,278,087) (7,278,087) 4,500,000 -61 .83% 15 Viraj Mercantile Pvt. Ltd. 8,000,000 (9,102,222) (1,102,222) 4,500,000 -408.27% 257,011,610 (30,208,877) 226,802,733 75,000,000 33.07% During the assessment proceedings, Ld. AO issued notices u/s 133(6) of the Act to all 15 share applicants asking for details with regard to share capital which were not responded by 10 parties and in five cases the notices were not served. The assessee also submitted further details like details of directors, shareholding pattern an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are regular assessees and that year on year, they file income tax returns. v) Copies of Audited Balance sheet and Profit Loss Account of the share applicants to prove their creditworthiness. vi) Copies of Share Allotment Letters issued by the Appellant to the share applicants along with copies of the share certificate issued by the Appellant on allotment of shares against the share application money to prove that the shares have been allotted and issued. 9. These details submitted by the share applicants are also mentioned in the assessment order. We will find from the notice that the details submitted before the AO are sufficient enough to establish the identity of the share applicants and the genuineness of the transaction and creditworthiness of the parties. We are of the view that the assessee has duly discharged the primary onus casted upon it under the law to prove the identity of the share applicants and genuineness of the transactions. All the share applicants are registered with ROC (Registrar of companies) and they are assessed to income tax as the case of the assessee, which is main investment company of the Group. The only premise of the AO for making addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hiness; and (ix) The copies of share allotment and share certificate issued by the appellant on allotment of shares against the share applicant money to prove that the shares have been allotted and issued. These details proved that the share applicant money received is genuine and explained in the absence of any contrary material brought in by Revenue. Hence, we are of the view that the CIT(A) has rightly quashed the reassessment and also deleted the addition on merits. We confirm the order of CIT(A). This appeal of Revenue is dismissed on both the issues. 8. Since the facts before us are materially same vis a vis the case as decided by the co-ordinate bench of the Tribunal in cases of the sister concerns, we therefore, respectfully following the same set aside the order of Ld. CIT(A) on this issue and direct the AO to delete the addition of ₹ 7,50,00,000/-. Since we have allowed the appeal of the assessee on merit, therefore, we are not considering it necessary to decide ground No.1(a) where the assessee has raised legal issue that addition made without any incriminating material is without jurisdiction. 9. In the result, the appeal of the assessee is partly al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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