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TMI Blog2020 (11) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... iate to remit this issue of addition u/s. 68 of the Act to the file of the Assessing Office who shall issue necessary notices to the assessee company and shall make the necessary examination with respect to identity, creditworthiness and genuineness of the transaction. He shall properly examine the documents and financial statement being submitted by the assessee company and pass a speaking order - With these directions we remit this issue to the file of the Assessing Officer. Decided in favour of assessee for statistical purposes. - I.T.A. No. 1142/Mum/2017 - - - Dated:- 27-10-2020 - Shri Justice P.P. Bhatt (President) And Shri Shamim Yahya (AM) For the Assessee : Shri K. Gopal Ms. Neha Paranjape For the Department : Shri Samantha Nullamudi ORDER PER JUSTICE P.P. BHATT (PRESIDENT):- This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals) [in short learned CIT(A)] dated 7.12.2016 and pertains to A.Y. 2012-13. 2. The grounds of appeal reads as under :- 1) The Ld. C.I.T. (Appeals) erred in confirming the addition made by Ld. D.C.I.T. by on account of Share Application Money (Share Capital) holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 31.03.2015 passed under section 143(3) of the Act is bad in law and void ab initio. Hence, the same may be quashed. 5. The assessee has also moved a petition to admit additional evidence as under :- The Applicant is moving this application under rule 29 of the Income Tax Appellate Tribunal Rules, 1963 to admit the additional evidence, compiled in Paper Book at Serial Nos. 12 and 13 at Pages 294 to 299. The Applicant requests your Honours to admit the same after considering the following facts:- 1. The Applicant is a Private Limited Company, engaged in the business of wholesale trading in synthetic cloth. The Applicant filed its return of income for the relevant assessment year on 27.09.2012 declaring total income at ₹ 2,64,03,226/-. During the course of assessment proceedings, the Ld. A.O. doubted the genuineness of share application money amounting to ₹ 4,45,00,000/- received from M/s. Speciality papers Limited in the assessment years 2011-12 and 2012-13 relying on the statement of Shri Shirish Chandrakant Shah recorded under section 132(4) of the Act. The Ld. A.O. while finalizing the assessment order made the addition of ₹ 4,45,00,00/- under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal Rule, 1963 along with the affidavit of Shri Shirish Chandrakant Shah, dated 14.12.2019. The Applicant submits that this affidavit has got direct bearing on the present appeal filed before the Hon'ble Tribunal. The Applicant submits that the Hon'ble Bench has been vested with the discretion to admit the additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963. 5. The Applicant prays that your Honours may be pleased to admit the additional evidences as the same substantiates the legality of the case and this evidence go into the root of the issues. It is therefore, respectfully submitted that the aforesaid additional evidences may kindly be admitted in the interest of justice. The Appellant relies on the ratio laid by Bombay High Court Smt. Prabhavati Shah vs. CIT 231 ITR 1 (Bom) and PatnaTribunal in the case of Abhay Kumar 63 ITD 144 (Pat.)TM for admission of additional evidence. 6. The brief facts of the case are that the assessee is a company stated to be engaged in the business of wholesale trading of cloth. It is also gathered that the assessee company got converted into a limited company from Private Limited Company as on 31.01.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pounded. Evidence with regard to the fact that all the 212 companies are managed and controlled by him has also been found. The details of the evidence found during the course of search establishing the facts, which is noted by DDIT(lnv.), Unit-l(3), Ahmedabad as hereunder:- i. Details of 220 bank accounts and more than 300 Blank and signed cheque books were found. These pertain to 212 companies including 16 listed companies managed and controlled by him and used for provided accommodation entries by SCS. ii. Directors of the 212 companies have been found to be dummy and for namesake. Statements of persons who are Directors in large number of companies have been recorded; wherein they have admitted that they were mere name lenders. Notarized declarations have also been filed by a number of Directors wherein they have stated that they are only name lenders and do not know about the activities of the companies in which they are Directors. iii. PAN card, seals of the companies, records of statutory compliance etc of all these companies have been found and taken on record during the search and survey proceedings. iv. Evidence of synchronized trading to artificially raise sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e held and managed by Shri Shirish Chandrakant Shah viz. :- i. Dhanus Technologies Ltd ii. Channel Guide India Ltd. iii. Empower India Ltd. iv. Allied Computer International Asia Ltd. Shri Shirish Chandrakant Shah has admitted in his statement recorded on oath that these listed companies are used by him only for providing accommodation entries of share capital/premium, share application, unsecured loans (one time) etc. Out of the 8 companies mentioned in the list of shareholders holding more than 5% of equity shares, 4 companies are non genuine with no business activity as discussed above. M/s. Speciality Papers Ltd. has held 20,375 shares (19,750 partly paid + 625 full paid) as per assessee's books with a shareholding of 10.91%. Under this backdrop of the issue, the assessee, by virtue of notice u/s.142(1) dated 12.03.2015, was show caused as to why the entire amount of ₹ 4,45,00,000/- [19,750 X 2000 (Rs. ₹ 1975 share premium + ₹ 25 face value)] + [625 X 8000 (₹ 7900 share premium + ₹ 100 face value)] should not be considered as unaccounted and unexplained money routed back into the assessee's business through nongenuine and ill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully paid Shares to M/s Speciality Papers Ltd. in AY 2011-12 @ 8000/- per share in which Share Capital ₹ 100/- per share and Share premium ₹ 7900/- per share. 3. We have issued 19750 partly paid Shares to M/s Speciality Papers Ltd. in AY 2012-13 @ 2000/- per share in which Share Capita! ₹ 25/- per share and Share premium ₹ 1975/-per share. 4. The total comes to 20375 shares allotted to M/s Speciality Papers Ltd.. 5. The complete address of M/s Speciality Papers Ltd. is as below: 93, Dadisheth Agiary Lane, Off Kalbadevi Road, Mumbai - 400002 In this connection, we would inform you that we do not know the Shri Shirish Chandrakant Shah. We have done the genuine transaction with M/s Speciality Papers Ltd. We have received amount from M/s Speciality Papers Ltd. in our share capital and share premium account. We have already submitted you the papers related with M/s Speciality Papers Ltd.. Thus we vehemently object to your proposed action to treat this as bogus. We have genuinely received Share application through banks after verifying the identity capacity and genuineness of the investors. Thus we have discharge our onus to prove the same... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the I.T. Act and Hon'ble Supreme Court decision in the case of Sumati Dayal (supra), learned CIT(A) confirmed the addition. 11. Against this order assessee is in appeal before us. 12. We have heard both the counsel and perused the records. Learned Counsel of the assessee Shri K. Gopal referred to the additional ground being raised. He submitted that the revenue has primarily relied upon the statement of Shri S.C. Shah from the investigation wing of the Income Tax Department. That the assessee was never given opportunity to cross examine the said Shri S.C. Shah. Furthermore, he submitted that the assessee has obtained affidavit from Shri S.C. Shah in support that he has no dealing with the assessee company and that he is not engaged in providing accommodation entry. Learned counsel further submitted that the assessee has provided all the necessary evidences for the genuineness of the transactions. He further submitted that out of ₹ 4.45 crores added as bogus share capital, ₹ 50 lakhs was received in the earlier assessment year. Hence, the same can never be added u/s. 68 in the present assessment year. 13. Per contra, learned Departmental Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not doing proper business. In our considered opinion for addition u/s. 68 as undisclosed income following three ingredients have to be examined :- (i) Genuineness of the transaction (ii) Identity of the payer (iii) Creditworthiness 15. In the present case we note that the lower authorities have noted that notice u/s. 133(6) has not be responded. Learned Counsel of the assessee has submitted that the assessee was not required to produce the director of the investor company. We further note that the issue of additional evidence and additional ground are no more germane to the issue at hand as the assessee has himself produced affidavit from Shri S.C. Shah for the proposition that he is not providing accommodation entry. 16. Now the issue remains examination of the identity, creditworthiness and genuineness of the transaction. The same is not clear from the documents on record. The same is also cogently not brought out in the orders of the authorities below. Learned Counsel of the assessee submits that if the assessee is asked to produce representative/director of the investor company the same can be attempted. In the facts and circumstances of the case we deem it a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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