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TMI Blog2021 (3) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus. - Decided against revenue. - ITA No. 426/CTK/2018 - - - Dated:- 14-12-2020 - C. M. Garg , Member ( J ) And L. P. Sahu , Member ( A ) For the Appellant : M. K. Gautam , CIT DR For the Respondents : Rima Dhawan , FCA ORDER L.P. Sahu, Member (A) This is an appeal filed by the Revenue against the order dated 28.09.2018, passed by the CIT(A)-1, Bhubaneswar for the assessment year 2014-2015, on the following grounds of appeal :- 1. The order of the Ld. CIT(A) is erroneous both on facts and in law. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) is not justified in deleting the addition of ₹ 3,18,50,000/- made u/s. 68 of the IT. Act, 1961 on account of 'unexplained share premium' claimed to have been received from M/s. Sakambari Consultancy Pvt. Ltd. when the assessee failed to prove the creditworthiness of M/s. Sakambari Consultancy Pvt. Ltd. 3. The appellant craves to alter, amend or add any other ground that may be considered necessary in course of the appeal proceedings. 2. Brief facts of the case are that the assessee being a Private Limited Company incorporated in India was engaged in the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 which was accepted by the CIT(A) and called for the remand report from the AO and the AO submitted his remand report, which has been incorporated by the CIT(A) in his order. The CIT(A) after considering the documents and remand report etc. allowed the appeal of the assessee. 4. Aggrieved from the order of CIT(A) regarding deletion of addition made by the AO, the Revenue is in appeal before the Income Tax Appellate Tribunal. 5. Ld. CIT DR relied on the order of AO and submitted that when the assessee failed to prove the creditworthiness of M/s. Sakambari Consultancy Pvt. Ltd. deleting the addition by the CIT(A) of ₹ 3,18,50,000/- made u/s. 68 of the I.T. Act, 1961 on account of 'unexplained share premium' claimed to have been received from M/s. Sakambari Consultancy Pvt. Ltd. is not justified. It was further contended by the ld. CITDR that assessee did not prove the genuineness of the share holder, it's credit worthiness even after giving number of opportunities of being heard during the course of assessment. Therefore, the AO has rightly made addition u/s. 68 of the Act. Accordingly, ld. CITDR submitted that the order of AO deserves to be upheld. In suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing to the assessee and keeping our observations and above entries in mind. The assessing officer will act in accordance with law. Since we have merely set aside the assessment it cannot be termed as enhancement of income. All the facts mentioned above emerge from the record and paper book filed by the assessee itself. 6. Reliance was also placed by the ld. CITDR on the decision of Hon'ble Karnataka High court in the case of Fidelity Business Services India (P) Ltd. [2018] 95 taxmann.com 253 (Karnataka) and drew our attention to 1st para of the held portion of the above decision. Relevant portion of the judgment of the Hon'ble High Court reads as under :- The directions of the Tribunal for holding an inquiry into the matter by the assessing authority into the aspect of fair market price of the shares bought back by the assessee from its major shareholding Mauritius Holding Company is not beyond the jurisdiction of the Tribunal and the said remand direction of the Tribunal to hold such an enquiry not only falls within the ambit and scope of the 'subject matter' of the appeal filed by the assessee by which he claimed that the remittance by the assessee-comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2013 30,00,000.00 14.01.2013 30,00,000.00 25.02.2013 20,00,000.00 25.02.2013 22,00,000.00 Kotak Mahindra Bank A/c No. 04932010000350 02.03.2013 30,00,000.00 04.03.2013 27,00,000.00 05.03.2013 25,00,000.00 05.03.2013 14,00,000.00 14.03.2013 20,00,000.00 14.03.2013 24,00,000.00 15.03.2013 17,00,000.00 24.04.2013 15,00,000.00 3,64,00,000.00 M/s. Sakambhari Financial Consultancy Pvt. Ltd., being the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld CIT(A) considered all the relevant materials produced before him. He found that M/s. Sakambari Financial Consultancy Pvt. Ltd., who had provided the share application money is assessed to income tax and filing its return of income regularly since inception and also the amount of share application money is routed through banking channel. From the bank statements and audited financial statements, it is also evident that M/s. Sakambari Financial Consultancy Pvt. Ltd., has sufficient funds to investments in the assessee company. In view of above, ld CIT(A) opined that the three ingredients are established in view of section 58 of the Act. Another aspect has been considered by the ld CIT(A) is that out of total share receipt of ₹ 3,64,00,000/-, the AO has accepted the investment of ₹ 54,50,000/- as face value of 4,55,000 number of shares @ 10/- per share. Therefore, it cannot be doubted the genuineness of the transaction in part without any good reason. The ld CIT(A) relying on various judicial pronouncements on this issue has deleted the addition of ₹ 3,18,50,000/-. Submission of the assessee. It is submitted that the ld. CIT(A) called for a rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action to the Assessing Officer with evidence. 2. The Hon'ble Supreme Court in the case of Commissioner Of Income-Tax, vs. Orissa Corporation (P) Ltd. [1986] 159 ITR 78 (SC), held as follows:- In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was ₹ 55,50,000 and not ₹ 1,11,50,000 as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount is to be taken at ₹ 55,50,000. The assessee has further 10 ITA No. 1812/Kol/2016 Assessment Year: 2012-13 M/s. Goodluck Merchants P. Ltd. tries to explain the source of this amount of ₹ 55,50,000 by furnishing copies of share application money, balance sheet, etc. of the parties mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly considered and found not acceptable. This entry remains unexplained in the hands of the assessee as has been arrived by the Investigation wing of the department. As such entries of ₹ 55,50,000 received by the assessee are treated as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . GA No. 3296 of 2010 ITAT No. 241 of 2010 dated 10.1.2011, wherein the questions raised before their lordships and decision rendered thereon is as under:-- On the facts and in the circumstances of the case, Ld. CIT(A) ought to have upheld the assessment order as the transaction entered into by the assessee was a scheme for laundering black money into white money or accounted money and the Ld. CIT(A) ought to have held that the assessee had not established the genuineness of the transaction. Held: After hearing the learned counsel for the appellant and after going through the decision of the Supreme Court in the case of CIT v. M/s. Lovely Exports Pvt. Ltd., we are at one with the tribunal below that the point involved in this appeal is covered by the said Supreme Court decision in favour of the assessee and thus, no substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed. 8. The Hon'ble Andhra Pradesh High Court in the case CIT vs. Lanco Industries Ltd. [2000] 242 ITR 357 (Andhra Pradesh), held as follows:- Moreover, we fail to see how merely by reason of unsatisfactory explanation relating to the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al judicial pronouncements deleted the addition made by the AO u/s. 68 of the Act, the order of the CIT(A) may be confirmed. In addition to the above written submissions, ld. AR also relied on the decision of the coordinate bench of the Tribunal in the case of M/s. Savera Towers Pvt. Ltd. ITA No. 2275/Kol/2016. 9. After considering the submissions of the both the sides and perusing the entire material available on record as well as the orders of authorities below, we find that the AO made addition u/s. 68 of the Act on account of unexplained share premium as the assessee could not prove the genuineness and creditworthiness of the shareholders. During the course of appellate proceedings, on production of all the required documentary evidences by the assessee which are necessary to prove the genuineness of the impugned transaction, the CIT(A) called for the remand report to which the assessee has also submitted his reply. After considering the submissions of the assessee, remand report of the AO and the reply of the assessee to the remand report, the CIT(A) found that the consideration of the AO is entirely based on suspicion and not on evidence. Even no evidence whatsoever h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of ₹ 3,18,50,000/- during the FYs 2012-13 and 2013-14. From the voluminous documents filed by the assessee before the AO at the time of remand proceeding, the identity M/s. Sakambari Financial Consultancy (P) Ltd. its creditworthiness and the genuineness of the transaction, being the three ingredients to be proved in the case of cash credits appears to be well established. 4.8 In the remand report, the AO mentioned about certain facts at para 3 which are found not to be very relevant so far as the identity and creditworthiness of M/s. Sakambari Financial Consultancy (P) Ltd. are concerned. The AO has mentioned that one of the investors of M/s. Sakambari Financial Consultancy (P) Ltd. namely M/s. Merfin Consultants (P) Ltd. holding 38,900 of shares is a shell company engaged in providing accommodation entries as per the statement of its director Sri Akash Agarwal. The AO has also mentioned in the above para of his report that Dhuper family which controls the affairs of the assessee company are also controlling the affairs of M/s. Samboodhan Projects (P) Ltd. which owns 99.9% of the shares of M/s. Sakambari Financial Consultancy (P) Ltd. However, these facts by themselv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has doubted the genuineness of the share premium receipt in the remand report, but has not brought any evidence on record to show that the share premium was not actually paid by the investor company and the assessee has channelized its own unaccounted money in the garb of share premium. In the case of M/s. Gagandeep Infrastructure (P) Ltd. (2017)'80 Taxmann.com 272 (Bom.), the Hon'ble Bombay High Court while dealing with a similar case has held that relying on the decision of the Hon'ble Apex Court in the case of Lovely Export (P) Ltd. (2008) 216 CTR 195 that if the receipt of large amount of share premium gives rise to suspicion on the genuineness of the shareholders whose identities have been established, the Revenue should proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It is further held in this case that the Revenue is not entitled to add the same in the hands of the assessee as income from unexplained cash credit. 4.12 It appears that the AO considers M/s. Sakambari Financial Consultancy (P) Ltd. as a shell company existing only on paper and, therefore, the investment made by it in the form of share p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shifts to the Revenue to establish their case and that reliance on statements of 3rd parties, who have not been subjected to cross examination is not permissible. Thus, the case laws relied on by the ld. CITDR are not applicable to the present case, whereas the reliance placed by the ld. AR of the assessee on the decision of coordinate bench of the Tribunal in the case of M/s. Savera Towers Pvt. Ltd. (supra) is accepted because once the receipt of share capital has been accepted as genuine within the purview of Section 68 of the Act, there is no reason for the AO to doubt the share premium component received from the very same shareholders as bogus. The relevant observations of the Tribunal in the said order are as under :- 6. We have heard the rival submissions. The facts stated hereinabove remain undisputed before us by either of the parties and hence the same are not reiterated for the sake of brevity. At the outset, we find that the assessee had received share capital of ₹ 54,200/- from 4 corporate entities and ₹ 2,70,45,800/- from the very same shareholders towards share premium. The share capital received by the assessee has been duly accepted by the ld. AO wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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