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TMI Blog2019 (7) TMI 1725X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sindhu ORDER Per Shamim Yahya (AM) : These are Revenue s appeals against a common order of learned CIT(A) for A.Y. 2006-07 2010-11. 2. Issues raised in these cases are common and connected. Issue raised is that learned CIT(A) erred in deleting the addition made by the Assessing Officer u/s. 68 of the Act amounting to ₹ 10,00,000/- for A.Y. 2006-07 and ₹ 73,50,000/- for A.Y. 2010-11 on bogus share application money and share premium received as bogus accommodation entries provided by Shri Mukesh Choksi and Shri Shirish Shah respectively. A.Y. 2006-07 : 3. Brief facts are as under :- The assessee-company is engaged in the business of manufacturing and trading in gold ornaments. The return of income for the year under appeal was e-filed on 25-11-2006 declaring total income of ₹ 1,24,691/-. This case was re-opened by issuing notice u/s.148 of the Act on 26-03-2013 which has been duly served upon the assessee. 4. During the course of re-assessment proceedings, the Assessing Officer observed that the transactions shown by the assessee with M/s. Mahasagar Securities P Ltd. (Now M/s. Alag Securities Pvt.Ltd.) were sham as the said entity wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served upon the assessee after recording reasons on receipt of information from Pr.DIT(INV)-2, Mumbai vide their letter No. DIT(Inv)- 2/lnformation/SCS/2014-15 on 16-02-2015, as per which a search action was carried out by the Ahmedabad Directorate of Income tax in Mumbai at the residence and office premise of Shri Shri Shirish C. Shah and key employees and his associates on 09-04-2013 and assessee was one of the alleged beneficiaries. 8. During the course of re-assessment proceedings, Ld. AO observed and stated that the identity, creditworthiness of the lender and genuineness of the transactions are not proved, hence, an amount of ₹ 73,50,000/- credited in the books of assessee was added back to the total income of the assessee. Accordingly, the impugned re-assessment order was passed u/s. 143(3) r.w.s. 147 on 30-03-2016 determining the total income at ₹ 88,76,600/-. 9. Upon assessee s appeal learned CIT(A) noted that the assessee has given all necessary details. Placing reliance upon several case laws and also decision for A.Y. 2006-07. Learned CIT(A) himself concluded as under :- At the outset, it has been stated by the Ld.AO that the details of alKthe shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the addition under section 68 this case is liable to be deleted. 14. Up on careful consideration we note that it is the plea of the assessee that assessee has submitted all the requisite documents to establish the identity, creditworthiness and genuineness of the transaction. In this regard following submission of the learned counsel of the assessee may be gainfully referred :- To prove the Identity :- A) The appellant has submitted the addresses, PAN and certificate of incorporation of the above subscribers who have subscribed to the shares along with :- a) Company s Master Data like company name, company Identification Number (CIN), date or ,r corporation, registered address, e-mail ID, etc. of Investor's companies downloaded from www.mca.gov.in; b) Name, Address, PAN, Income-tax Jurisdiction, etc. of the Investor's companies; c) Certificate of Incorporation of the Investor's companies; d) Form of application for equity shares filled by the Investor's companies, e) Copy of Audit Report and Balance-Sheet of the Investor's companies. B) The Company's Master Data, Income-tax Jurisdiction details and financials of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n an average 0.16% of their net worth in the Appellant. Hence, the creditworthiness of the Investor's companies cannot be doubtful. 2. Further, the Appellant submit that the Company's Master Data, Income-tax Jurisdiction details and financials of the Investor's companies proved the identity as well as financial capacity i.e. creditworthiness of the investor s companies. 3. The AO treated Share capital and share premium received by the Appellant as unexplained cash credit under section 68 of the Act on the alleged ground that the Appellant has not brought on record to prove the identity, genuineness of the transactions and creditworthiness of the investors without appreciating that the Appellant has submitted the copies of director report, balance sheet, bank statements, share application forms, etc. clearly brought out the nature of the transactions, amount involved and scope of the transaction. 4. The Appellant submit that the Appellant has discharged its onus of proving the identity of the parties, genuineness of the transactions and the creditworthiness of the shareholder. Therefore, the Appellant humbly submit that the addition made under section 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the persons whose source of funds are alleged to be not genuine. PCIT Vs. Paradise Inland Shipping P. Ltd. (Bombay High Court), S. 68 Bogus share capital: Companies which invest share capital cannot be treated as bogus if they are registered and have been assessed. Once the assessee has produced documentary evidence to establish the existence of such companies, the burden shifts to the Revenue to establish their case. Reliance on statements of third parties who have not been subjected to cross examination is not permissible. Voluminous documents produced by the assessee cannot be discarded merely on the basis of statements of individuals contrary to such public documents. CIT Vs. Orchid Industries Pvt. Ltd. (Bombay High Court), S. 68 Bogus share capital: Mere fact that parties to whom the share certificates were issued and who had paid the share capital money were not traceable and did not appear before the AO in response to summons does not mean that the transaction can be treated as bogus if the documentation shows the genuineness of the transaction. CIT Vs. Gagandeep Infrastructure Pvt. Ltd. (Bombay High Court), Bogus share capital/ premium: The proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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