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TMI Blog2019 (8) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 68 - assessee has not proved the identity and creditworthiness of the creditors and genuineness of the transactions - HELD THAT:- As during the year, the assessee allotted shares to seven parties out of which the AO made an addition in respect of three companies by stating the same to be related to Shri Pravin Kumar Jain. During the course of assessment proceedings the assessee filed all the necessary evidences in the form of share application forms, allotment returns, copy of bank statements of the investors, copy of the balance sheet of the investors, their confirmations etc. along with ITR copies. However, the AO did not carry out any further investigations to find out the truth. It is also undisputed that the corresponding investment entries were duly appearing in the respective balance sheets of these investors and were examined by the respective AOs during assessment proceedings and were accepted in the assessment framed u.s 143(3) of the Act. None of these three investors who bought share capital in the assessee company were appearing in the said statement of Shri Pravin Kumar Jain and therefore we do not find any merit in the conclusion drawn by the AO that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Overseas P Ltd AACCR4512K 2012-2013 15,00,000 9 Olive Overseas P Ltd AACCR4512K 2012-2013 30,00,000 10 Sumukh Commercial Pvt Ltd AACCC7400M 2012-2013 25,00,000 11 Sumukh Commercial Pvt Ltd AACCC7400M 2012-2013 20,00,000 12 Sumukh Commercial Pvt Ltd AACCC7400M 2012-2013 10,00,000 TOTAL 2,68,00,000 Accordingly, the AO issued show cause notice to the assessee to prove the identity and creditworthiness of the creditors and genuineness of the transactions failing which why the same should not be added to the income of the assessee which was replied by the assessee vide written submission dated 22.03.2016 wherein the assessee controverted the allegation of the AO by submitting that the statement given by Shri Pravin Kumar Jain during search stood retracted. The assessee submitted that statement of Shri Dinesh Kumar Jain a director of the assessee company recorded during survey on the assessee was also retracted. Therefore such an admissions by the director of the assessee company and Shri Pravin Kumar Jain could not be a basis for addition in the hands of the assessee as the same stood retracted. The assessee also stated that during survey as well as in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench of the Tribunal as referred to above, we observe that the identical issue was decided by the co-ordinate bench of the Tribunal in assessee's own case by deciding the issue in favour of the assessee. The operative part is reproduced as under: "8. We have heard the rival submissions of both the parties and perused the material on record including the written submissions filed by the Ld. A.R. and the Ld. D.R. along with various case laws referred and relied by both the parties. The undisputed facts are that the assessee company was formed and constituted on 15.09.2010 and it has taken over business of M/s. D.N.H Spinners a partnership firm on going concern basis. There was a survey action under section 133A of the Act on the assessee on 25.03.2014. During the course of survey a statement under section 131 of the Act was recorded of Shri Dinesh Jain on 26.03.2014 who is director of the assessee company wherein the survey team informed him that various unsecured loans taken by the assessee from seven entities controlled by Shri Pravin Kumar Jain who has admitted before the Investigation wing in the course of search proceedings that he and his associated concerns were providing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated the loan transactions as unexplained credit in the books of the assessee. On the issue that these lenders are showing low income or losses in the return of income filed, we observe that in the balance sheets the said loan advanced by the lender were duly reflected and thus there is no income in the particular year has no relevance and there were sufficient sources. Under these circumstances, we, after taking into consideration contentions m, submissions and written submissions of both the parties and after analyzing the various case laws relied upon by the rival parties , are of the view that order passed by the Ld. CIT(A) is well reasoned and there is no reasons to deviate from the findings of the ld CIT(A) and therefore same is being upheld by dismissing the appeal of the revenue." 8. Since the facts of the case before us are identical to the facts of the case as decided by the co-ordinate bench of the Tribunal in assessee's own case in which the co-ordinate bench of the Tribunal has held that the assessee has filed all the necessary evidences before the AO and AO has not carried out any further investigation to find out the truth. The bench further held that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey on 25.03.2014 stood retracted vide letter dated 14.01.2016 and therefore no addition could be made on the basis of said statement which has no legal sanctity. Further, it was also stated before the AO that the Revenue is relying on the statement of Shri Pravin Kumar Jain but neither the statement of Shri Pravin Kumar Jain has been provided to the assessee in the course of survey nor in the assessment proceedings. It was stated that the assessee also requested for cross examination of Shri Pravin Kumar Jain which was not provided. Besides, the assessee filed all the evidences before the AO qua the allotment of share capital in the form of bank statements, copies of acknowledgment of ITRs, confirmations, PAN numbers, bank statement of the investors and also of the assessee etc. However, the AO treated the share capital and share premium of ₹ 9,84,00,000/- as unexplained cash credit for the reason that the assessee has failed to prove the identity and creditworthiness of the creditors and genuineness of the transactions and thus added the same to the income of the assessee. 13. In the appellate proceedings, the Ld. CIT(A) deleted the same by observing and holding as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the A.O. had missed the crucial fact that the applicant company is regularly doing the business and has filed its tax returns on regular basis. The taxes are paid by it on the income so earned. In the light of observations of the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd. reported in 216 CTR 295, the onus on the appellant has been duly discharged. The peculiar facts of the case may have caused suspicion in the mind of the A.O. but there is no evidence or other material to hold that the appellant had routed its own money. 5.6 On an analysis of the facts on records, it is seen that the loans of ₹ 9,84,00,000/- have come from different companies. It is noted that the loan creditors are existing companies and have confirmed that they had given the loans to the assessee company. The next aspect is creditworthiness. The assessee has filed copy of PAN card, bank statement, Balance sheet and P&L account etc. of loan creditors. It emerges out from the record that the loan creditors have duly recorded the investments in their books of accounts. Thus, the loan creditors had demonstrated these balance in their balance sheets in the shape of investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there appears not much basis for any addition. 5.7 The Bombay High Court in the case of CIT v. Creative World Telefilms Ltd. (in I. T. A. No. 2182 of 2009 decided on October 12, 2009) [2011] 333 ITR 100 has held that :- The relevant portion of this order is reproduced below: "In the case in hand, it is not disputed that the assessee had given the details of name and address of the shareholder, their PA/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement 'not traceable'. In our considered view, the Assessing Officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the Assessing ' Officer. In the above circumstances, the view taken by the Tribunal cannot be faulted. No substantial question of law is involved in the appeal. In the result, the appeal is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l were in the realm of surmises, conjecture and suspicion. On appeal to the Supreme Court, the court while reversing the decision of the High Court held that the findings of the Assessing Officer, Commissioner of Income-tax (Appeals) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction as not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent findings of fact. While doing so, the legal position contained in section 68 of the Act was explained by the Supreme Court by assessing that a bare reading of section 68 of the Act suggests that (i) there has to be credit of amounts in the books Ltd. maintained by the assessee; (ii) such credit has to be a sum of money during the previous year ; and (iii) either (a) the assessee offers no explanation about the nature and source of such credits found in the books, or (b) the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifficult to sustain in appeal. The Assessing Officer has made addition on some doubts and suspicion but has not established any direct or indirect link of assessee's own money flowing out and then again received by the assessee in the form of loans. During the course of assessment proceedings, following details were filed by the assessee before the Ld. A.O.:- i) Bank statement of the lender companies ii) ITR, acknowledgement of the lender companies iii) Ledger Confirmation iv) PAN number of the lender companies v) Bank statement of the assessee company vi) Form 16A being the TDS certificate 5.10 In view of the legal position emanating from legal precedents as discussed above and having regard to the facts of the case, it is noted that when requisite documents such as PAN, Bank accounts, Balance Sheet etc. were available with the A.O., to establish that no cash transactions were involved in the bank accounts of the investing companies then without further probe to prove the contrary the addition u/s 68 in the hand of the assessee cannot be made. There is no adverse finding given, by the AO for any other lenders. Thus, in my opinion, the AO has not done anything to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e needs to be affirmed by this Hon'ble Tribunal by reversing the order of Ld. CIT(A). 15. The Ld. A.R. vehemently submitted before us that the order of the AO suffered from serious and fatal defects and infirmities for the reason that AO has passed the order on the belief that the share capital was issued to the companies connected to Shri Pravin Kumar Jain whereas as a matter of fact these companies were not related at all to either Shri Pravin Kumar Jain or his associated concerns. The Ld. A.R. drew our attention to the page No.127 to 129 of the paper book on which the statement on oath of Shri Pravin Kumar Jain is attached. The said statement contained a comprehensive and exhaustive details of various concerns/companies/entities in which Shri Pravin Kumar Jain was either director or connected by way of management and control on the said entities. However, none of the investors in the assessee company were appearing on the said list as is contained on page No.127 to 129 referred to supra. The Ld. A.R. also drew our attention to the assessment order passed in the case of M/S Alken Management and Finance Services Pvt. Ltd. one of the allottees of shares/investors under section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. A.R. also submitted that the decision of the Hon'ble Apex Court in the case of Pr. CIT vs. NRA Iron & Steel (P.) Ltd. (2019) 103 taxmann.com 48 (SC) is not applicable to the assessee's case as in this case the AO has made enquiries by issuing notices under section 133 and the parties were found to be non existent whereas in the present case the facts are totally different as of the investors were existing and were active on the ROC and income tax records and have been filing their returns regularly. Besides, the said investors have duly shown the said investments in their balance sheet which were examined by the tax authorities during the course of assessment proceedings in their respective cases and in all the three cases the assessments were framed under section 143(3) of the Act. The Ld. A.R., therefore, prayed that the order of Ld. CIT(A) is very reasoned and speaking one which has been passed after following a series of decisions including the ones as have been passed by the Hon'ble Bombay High Court and therefore the appeal filed by the Revenue deserved to be dismissed. 16. We have heard the rival submissions of both the parties and perused the material on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not applicable to the assessee as the facts are distinguishable in the case of Pr. CIT vs. NRA Iron & Steel Pvt. Ltd. (supra). The AO has issued notices under section 133(6) of the Act and the parties were non existent and did not reply whereas in the present case all these investors were existing and assessee has filed all the evidences proving the identities and creditworthiness of the investors and genuineness of the transactions but the AO did not make any further enquiries or investigations to find out the truth and relied upon the statements which stood retracted. Under these circumstances we are of the considered view that order of Ld. CIT(A) is correct and needs to be upheld. Accordingly, we dismiss the ground raised by the Revenue by upholding the order of Ld. CIT(A) on this issue. 18. The issue raised in ground No.2 & 3 is against the deletion of addition of ₹ 27,00,000/- and interest thereon by Ld. CIT(A) as made by the AO towards unexplained cash credit under section 68 of the Act. 19. The issue raised by the assessee in these grounds is identical to one as decided by us in ground No.1 & 2 of ITA No.6315/M/2017 (supra) wherein the appeal of the Revenue has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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