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TMI Blog2020 (12) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to have failed in filing the necessary details in support of the impugned share allotment money goes against the case records. Coming the Revenue s argument that the assessee had never produced any of the three investor parties, we find no merit since there was no such direction from the Assessing Officer s side to this effect. Be that as it may, we make it clear that the impugned share capital has come from the three group concerns only having the common directors/shareholders, address as well as assessment jurisdiction. We hold in view of these overwhelming facts and circumstances supporting the assessee s case that the CIT(A) has rightly deleted the impugned addition. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted. the AR has submitted all the documents relating to the share applicants to prove the 3 ingredients of section 68 i.e. the identity, creditworthiness of the applicants and genuineness of the transaction. I have examined the submission of the appellant. The documents submitted in the paper book running into pages 1-216 were also perused and examined and the following details with regard to each of the shareholders were observed. 7.2 In respect of the share applicant M/s. Almal Financiers & Consultants Pvt. Ltd., the relevant details and documents were given at page nos. 1-57 of the paper book submitted by the appellant. The applicant has invested ₹ 2,05,00,000/- in the appellant company. From the details submitted. I find that the directors of the appellant company i.e. Mr. Arun Kumar Agarwal and is also the director of the applicant company. Also, there are many shareholders of the appellant company also holding shares in this company. Thus, both the companies belonged to the same group having common directors and shareholders. This company was incorporated on 22.03.1993 and was having company identification number U65999WB1993PTC058191. On examination of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of the Company is duly available in the paper book. The details of source of funds from which this company had made the share application are also available from a perusal of the bank statement and other documents filed in the paper book. An affidavit has also been given by the director of this company affirming the investments made in the appellant company and source and mode of investments made by them in the appellant company. Also, all the above mentioned documents were claimed to be filed before the AO including the affidavit. The AO has not made any comment on the documents or the affidavit filed before him as evident from the assessment order. 7.4 In respect of the share applicant M/s. Dherar Textiles Pvt. Ltd., the relevant details and documents were given at page nos. 114-169 of the paper book submitted by the appellant. The applicant has invested ₹ 2,94,00,000/- in the appellant company. From the details submitted, I find that the directors of the appellant company i.e. Mr. Shiv Kumar Agarwal and is also the directors of the applicant company. Also, there are many shareholders of the appellant company also holding shares in this company, Thus, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, Ld. AO issued notice to the appellant Company seeking details about the shareholders of the appellant company and the reply along with all the relevant documents as required by the AO were submitted. Ld. AO himself has agreed to this fact in his assessment order (Page 2) that the replies to the notice issued to the appellant company regarding the details of the shareholders were received but without considering the documents submitted, passed the assessment order making the addition of the entire amount to the income of the appellant. The AO has not pointed out any irregularities. C) The share applicants were having sufficient net owned funds for making investments in the appellant company. The details of the net owned funds of the applicants and the investments made by them as depicted in the table below: Name of the company Net Worth of Applicant Investment made by them inappellant M/s. Almal Financiers & Consultants (P) Ltd. 19.56 Crores 2.05 Crores M/s. Set Square Holdings Pvt. Ltd. 45.89 Crores 3.51 Crores M/s.Dherar Textiles Pvt. Ltd 24.14 Crores 2.94 Crores is clearly indicate that the share applicants were having sufficient owned funds with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore issuing shares to them. Hence, the allegation made by the AO in this respect is baseless. iii] On the third issue, it is alleged that the investor has no reason to invest such huge amount in the business of the appellant. The appellant submitted that it is the wisdom of the shareholders whether they want to subscribe to such a heavy premium and it is a prerogative of the Board of Directors of a company to decide the premium amount and it. The Revenue authorities cannot question the charging of such of huge premium without any bar from any legislated law of the land. Therefore, the inference drawn by the AO is not relevant under the facts and circumstances. In this regard it is also submitted that the appellant has issued 17,00,800/- shares at ₹ 50/- per share with Face value of ₹ 10 and premium of ₹ 40/- per share. The company was incorporated on 16.09.1998 with a vision to become a leading manufacturer of Iron & Steel and has raised funds time to time as per the requirements of the company. Further. the turnover of the company is around 325 crores in the relevant year. Hence, considering the turnover as well as future prospects of the company premium dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take into cognizance the details and documents submitted in the course of assessment proceedings. The documents submitted were good enough to satisfy all the three precedents as laid down u/s. 68 of the Act with regard to the identity and credit worthiness of the share applicant. and genuineness of the transactions. The basic ingredients for any cash credit are as under:- 1) Identity:- The share applicants who are body corporate, registered with the ROC and they were available at the given address. The share applicants including individual have furnished copy of PAN and the companies are registered with ROC having CIN, therefore the identity should not be under the scanner in the instant case. 2) Genuineness & creditworthiness:- a) The share application money was received through proper banking channels. b) the shareholders had sufficient fund for the purpose of investment & the investments are reflected in their books of account and c) Bank A/c of the shareholders confirms the transactions. All the documents relating to the share transaction like their bank statements, Audited Accounts and TT Acknowledgement. etc. proving the genuineness of the transaction were duly submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction entered by the appellant is not genuine." The above extracted lower appellate discussion on facts has been followed by the CIT(A) taking note of a catena of case law to hold that the evidences placed on record had very well satisfied all the three limbs i.e. identity, creditworthiness and genuineness of the investor parties who happen to be assessee's group concerns only. This leaves the Revenue aggrieved. 5. We have given our thoughtful consideration to rival pleadings against and in support of the CIT(A)'s action deleting the impugned addition. Learned CIT-DR vehemently contended during the course of hearing that the Assessing Officer had rightly held the assessee not to have been able to produce any of the three investor concerns sufficiently indicating the same to lack genuineness/creditworthiness of the impugned share application money. We find no merit in Revenue's instant sole substantive grievance. The clinching fact, that has remained unrebutted from the Revenue side, is that the assessee had credited the impugned sum in lieu of share allotment issued to its three group concerns (supra) not only having common directors and shareholders but also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertains to the share application money received by the respondent-assessee-company. The Assessing Officer added a sum of ₹ 9.99 Crores [rounded off] in the hands of the assessee with the aid of Section 68 of the Income-tax Act, 1961 ["the Act" for short]. CIT [A] deleted such addition primarily on the ground that the assessee had established the source, genuineness of the transactions and the creditworthiness of the investors. In further detailed consideration, the Tribunal confirmed the view of CIT [A], making the following observations:- "I have carefully considered the facts of the case, the assessment order and the written submission of the appellant. The appellant has received an amount of ₹ 9,99,99,900/- on account of share capital and share premium from M/s. General Capital and Holding Co. Pvt. Ltd., Ahmedabad during the year. The AO held that the creditworthiness and the genuineness of the transaction were not proved by the appellant and accordingly made the addition under Section 68 of the Act for the above amount. The appellant has submitted that all three ingredients such as, credit worthiness, genuineness and the identity of the share applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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