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TMI Blog2021 (2) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition in respect of 26 creditors with reference to the present Departmental Appeal. - Decided in favour of assessee. - ITA.No.5163/Del./2016 - - - Dated:- 17-2-2021 - Shri Bhavnesh Saini, Judicial Member And Shri B.R.R. Kumar, Accountant Member For the Revenue : Shri H.K. Chaudhary, CIT-DR For the Assessee : Shri Ashwani Kumar, C.A. ORDER PER BHAVNESH SAINI, J.M. This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-29, New Delhi, Dated 30.06.2016, for the A.Y. 2010-2011, challenging the Order of the Ld. CIT(A) in deleting the addition of ₹ 11,30,50,000/- out of total addition of ₹ 15 crores under section 68 of the I.T. Act, 1961. 2. We have heard the Learned Representatives of both the parties through video conferencing and perused the material on record. 3. Brief facts of the case are that assessee submitted return of income on 28.09.2010 declaring income of ₹ 25,74,26,310/- which was processed under section 143(1) of the Income Tax Act, 1961. A search seizure operation under section 132 of the Act was carried out on 10.12.2012 in the case of the assessee, wherein various premises of the assessee wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorporated in the impugned order. The assessee submitted before the Ld. CIT(A) that the reasons putforth by the A.O. for rejecting the evidence and material on record can be summarized as follows : The financials/income of the investors does not justify their credibility to make such huge investments; Explanation of bank account of investors shows that funds were credited in their accounts immediately before the chegue payment was made to assessee towards share application; The consecutive credit debit entries appearing in the bank statements of the investors clearly indicate that it is not a genuine investor and is just a conduit to transfer funds from one source to other destination; The Assessee has failed to prove genuineness of transactions of receipt of funds as share capital/premium as mere documents were submitted of which correctness was questionable; The explanation furnished even with documents was not found satisfactory in view of all the reasons discussed at length which prove that receipt of funds by assessee from investors was not normal and against human probabilities; Even if legally correct, the whole chain of transactions is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions have also been confirmed by the Investors. There is no material available on record to prove or even remotely suggest that share application money received actually emanated from the assessee company. All the transactions are independent and were carried out through normal banking channel and have been confirmed by the Investors. No direct or indirect or substantial evidence have been brought on record to dispute the genuineness of the transaction in the matter. It was also submitted that since all the Investors are assessed to tax and have confirmed transaction with assessee and they have also confirmed nature of the transaction with assessee along with their source, therefore, assessee has proved genuineness of the transaction in the matter also. There is no evidence to prove that Investor is just a conduit to transfer funds. No incriminating material was found during the course of search so as to prove that assessee received any bogus investment on account of share capital/premium. Therefore, Doctrine of Human Probability would not be applicable in the case of the assessee. In support of his contention, assessee relied upon Judgment of the Hon ble Delhi High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee reiterated the submissions made before the Ld. CIT(A) and submitted that whatever addition has been confirmed by the Ld. CIT(A), assessee has opted to settle the matter in VIVAD SE VISHWAS SCHEME, 2020 and assessee s appeal has been withdrawn separately. Learned Counsel for the Assessee submitted that as regards the remaining Investors, in the cases of Individual and HUF assessee furnished their confirmations, bank statements and ITR and wherever balance-sheet have been prepared by the Investor Companies, their balance-sheets have also been filed which shows their worth to make investment in assessee company. Copies of the same are filed in the paper book. He has also filed copy of the documents filed with the Registrar of Companies regarding the allotment of shares. He has, therefore, submitted that assessee has proved identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. The A.O. did not make any investigation on the documentary evidences filed by the assessee and without any reasons or cause rejected the explanation of assessee which have been correctly considered by the Ld. CIT(A) for deleting the addition. The A.O. cannot ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng channel. It is well settled Law that A.O. cannot ask the assessee to prove source of the source. We rely upon the following decisions : 1. Dwarkadhish Investment P. Ltd., [2011] 330 ITR 298 (Del.) (HC) 2. Rohini Builders 256 ITR 360 (Guj). 3. Zafar Ahmed Co. 30 taxman.com 269 (All.) 6.1. Therefore, initial onus upon the assessee to prove identity of the Investors, their creditworthiness and genuineness of the transaction have been discharged by the assessee. The A.O. has, however, did not bring any evidence on record to discredit the documentary evidences filed by the assessee to invoke Section 68 of the I.T. Act, 1961 or to prove that the share capital/premium money came from the coffers of the assessee. The Ld. CIT(A) considered the issue in detail and found the explanation of assessee to be correct for the purpose of deleting the part addition. The Ld. CIT(A) was, therefore, justified in holding that assessee proved identity of the remaining Investors, their creditworthiness and genuineness of the transaction in the matter. We rely upon the following decisions. 6.2. CIT vs. Fair Investment Ltd., 357 ITR 146 in which it was held that A.O. did not summon invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) and judgement of Delhi High Court in the case of CIT vs Divine Leasing Finance Ltd. [2008] 299 ITR 268. The ITAT confirmed the opinion of the Ld.CIT(A). Hon ble High Court in view of the above findings noted that the assessee had provided several documents that could have showed light into whether truly the transactions were genuine. The assessee provided details of share applicants i.e. copy of the PAN, Assessment particulars, mode of amount invested through banking channel, copy of resolution and copies of the balance sheet. The AO failed to conduct any scrutiny of the document, the departmental appeal was accordingly dismissed. 6.7. Decision of the Hon ble Supreme Court in the case of Earth Metal Electric Pvt. Ltd., vs. CIT dated 30th July, 2010 in SLP.No.21073 of 1999, in which it was held as under : We have examined the position, we find that the shareholders are genuine parties. They are not bogus and fictitious therefore, the impugned order is set aside. 6.8. Decision of Hon ble M.P. High Court in the case of CIT vs. Peoples General Hospital Ltd., (2013) 356 ITR 65, in which it was held as under : Dismissing the appeals, that if the assessee had re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal of the assessee. The Assessing Officer sought an explanation of the assessee about this addition in the share capital. The assessee offered a detailed explanation. However, according to the Assessing Officer, the assessee failed to explain the addition of share application money from five of its subscribers. Accordingly, the Assessing Officer made an addition of ₹ 35,50,000/- with the aid of section 68 of the Act, 1961 on account of unexplained cash credits appearing in the books of the assessee. However, in appeal, the Commissioner of Income-tax (Appeals) deleted the addition on the ground that the assessee had proved the existence of the shareholders and the genuineness of the transaction. The Income-tax Appellate Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) as it was also of the opinion that the assessee had been able to prove the identity of the share applicants and the share application money had been received by way of account payee cheques. On appeal to the High Court: Held, dismissing the appeals, that the deletion of addition was justified. 6.10. Decision of Hon ble jurisdictional High Court in the case of CIT vs. WinstralPetroche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not make any further enquiry on the documents filed by the assessee and also did not make any inquiry from the Investors directly or indirectly. The A.O. thus, failed to conduct scrutiny of the documents at assessment stage and merely suspected the transaction between the Investors and the assessee. The A.O. has also not brought any evidence on record that even if the share applicants did not have the means to make the investments, the investments made by them actually emanated from the coffers of the assessee so as to enable it to be treated as undisclosed income of the assessee. Considering the totality of the facts and circumstances of the case, it is clearly proved that assessee discharged its initial onus to prove the identity of the Investors, their creditworthiness and genuineness of the transaction in the matter. The Ld. CIT(A), therefore, rightly deleted the part addition in respect of 26 creditors with reference to the present Departmental Appeal. The decisions relied upon by the Ld. D.R. are distinguishable on facts because in these cases assessee failed to prove the creditworthiness of the creditors. However, in the present case of the assessee, assessee has been able t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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