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TMI Blog2021 (3) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition - Decided in favour of assessee. - Shri Bhavnesh Saini, Judicial Member And Shri B.R.R Kumar, Accountant Member For the Assessee : Shri S.K. Tulsiyan, Advocate For the Revenue : Shri N.K. Bansal, Sr. D.R. ORDER PER BHAVNESH SAINI, J.M. This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-1, New Delhi, Dated 25.07.2013, for the A.Y. 2008-2009, on the following grounds : 1. The order of Ld. CIT (A) is not correct in law and facts. 2. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 4,96,00,000/- made by AO on account of unexplained share premium and Share Capital received by assessee from M/s Taranga Vyapar Pvt. Ltd., UDIT Vyapar Private Limited, Remo Engineering Works Pvt. Ltd., Mysol Engineering Pvt. Ltd., Twenty First Century (India) Ltd., as the assessee failed in proving the creditworthiness of the investors and the genuineness of the transactions. M/s Taranga Vyapar Pvt. Ltd does not have any significant funds of its own for investment in the unlisted company like the assessee company. 3. On the facts and circumstances of the case the Ld. CIT(A) has erred in law deleting the addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Kolkata of ₹ 4,96,00,000/-. The details as per the table are given below : S. No. Name of the Share Holder Address Amount (Share Capital + Share Premium) 1. M/s. Taranga Vyapar Pvt. Ltd., 10, Clive Row, 1st Floor, Kolkata-700002 96,00,000/- 2. UDIT Vyapar Private Limited 10, Clive Row, 1st Floor, Kolkata-700002 98,00,000/- 3. Remo Engineering Works P. Ltd., 10-B, Sikdarpara, Kolkata 700 007 94,00,000/- 4. Mysol Engineering Pvt. Ltd., 207, Maharshi Devendra Road, Kolkata 700 007 98,00,000/- 5. Twenty First Century (India) Limited 1, Crooked Lane, 1st Floor, Room No.107, Kolkata-700069. 1,10,00,000/- ₹ 4,96,00,000/- 3.2. The assessee was asked to furnish the details of the amounts received and evidences in support of identity and creditworthiness of the lender and also genuineness of the transactions. The assessee submitted copies of the bank accounts, confirmations and income tax returns, acknowledgments and copies of the annual reports of the Investors. The A.O. noted that all the Investor Companies have shown meager income in their return of income. However, the A.O. on perusal of the balance-sheet of the Investors found their main source of fund as under : 1. M/s. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai, in response to which, report was received on 20.12.2001. The DDIT (Inv.), Mumbai deputed an Inspector of Income Tax Department to serve the same. But, according to the report, no such company was found at the given address, therefore, summons could not be served upon them. The A.O, therefore, noted that their addresses are not verifiable, therefore, creditworthiness of the Investors is not established and genuineness of the transaction I s also in doubt. The A.O. accordingly made addition of ₹ 4,84,00,000/- on account of unexplained share capital/ premium. 3.6. The assessee challenged the addition before the Ld. CIT(A) and detailed written submissions of the assessee is reproduced in the appellate order in which the assessee submitted that it has filed copies of the confirmations, income tax returns, bank accounts and audited accounts of the Investors on which no enquiry have been made by the A.O. The amounts have been received through banking channel and parties have confirmed the transactions with the assessee. All are assessed to Income Tax and have sufficient funds to make investment in assessee company. The onus upon assessee have been discharged to prove identi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been carried out in a systematic manner to establish the real facts. Mere assertion that these companies do not have adequate income, or that their resources also mainly consist of share premium received, or simply the fact that these entities could not be located at the given address, are not sufficient to bring the entire share capital under the tax net. All the entities are live in govt. records, at least one company was traced at the given address, and response was received to postal summons from all five companies in Kolkata. In these circumstances, and also the fact that no evidence was found in the search conducted on Bhushan group to indicate any laundering of money as share capital of the appellant, it cannot be held that the share capital raised is not genuine. As the appellant has discharged the primary onus of establishing the transactions and the source of the share capital raised, there has to be conclusive proof for the revenue to reach this conclusion. In the absence of any such evidence, the addition made cannot be legally sustained and is deleted. 4. In the result, the appeal is allowed. 4. The Ld. D.R. relied upon the Order of the A.O. and submitted that A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n deposited in their accounts. No evidence of any unaccounted commission was found. No suspicious money trail linking the assessee were found. The A.O. has not considered the sources available with the Investor companies to make investment in assessee company. The A.O. did not doubt the identity of any of the Investor companies and merely suspected the creditworthiness of the Investors without any reasons. The Ld. CIT(A) remanded the matter to the A.O. to get necessary verification done with respect to Kolkata parties. As per the report M/s. Twenty First Century (India) Ltd., was found to have shifted to a new address and the said party was traced at that address, therefore, its identity and existence is proved. In support of the remaining parties it is reported that these companies could not be traced at the given address, but, the postal summons issued under section 131 of the I.T. Act were served at the given address which have been responded by the parties also. Therefore, the report of Kolkata Income Tax Department has no value. The A.O. did not bring any evidence on record to controvert the documentary evidences furnished by the assessee. Whatever enquiry was conducted at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were either non-existent or lacked creditworthiness. It is in these circumstances, Supreme Court held that the onus to establish identity of the investor companies was not discharged by the assessee. The aforesaid decision is, therefore, clearly distinguishable on facts of the present case. 23. Therefore, on a thorough consideration of the matter, we are of the view that the first appellate authority had returned a clear finding of fact that assessee had discharged its onus of proving identity of the creditors, genuineness of the transactions and credit-worthiness of the creditors which finding of fact stood affirmed by the Tribunal. There is, thus, concurrent findings of fact by the two lower appellate authorities. Appellant has not been able to show any perversity in the aforesaid findings of fact by the authorities below. 24. Under these circumstances, we find no error or infirmity in the view taken by the Tribunal. No question of law, much less any substantial question of law, arises from the order of the Tribunal. Consequently, the appeal is dismissed. However, there shall be no order as to cost. 5.2. Learned Counsel for the Assessee submitted that the assessee s case is full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paratus or have reported meager income does not ipso facto mean that Investors have no creditworthiness. In support of this contention, he has relied upon Judgment of Hon ble Bombay High Court in the case of Ami Industries Ltd., (supra). He has submitted that assessee is not required to prove the source of the source and that when A.O. did not doubt the documentary evidences produced by the assessee, the addition was rightly deleted by the Ld. CIT(A). 6. We have considered the rival submissions and perused the material on record. It is not in dispute that assessee filed original return of income wherein all the particulars of investment made by Investor companies of Kolkata and Mumbai have been disclosed to the Revenue Department. The case of assessee was centralized with the case of Bhushan Group of cases because in their cases it was found that this company has received share capital from different companies. However, A.O. has not mentioned any fact as to what material was recovered during the course of search in the case of Bhushan Steel Group of cases to point-out that assessee has received any bogus share capital/premium. The A.O. only on the basis of documentary evidences fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties. The A.O. admitted the creditworthiness of the Kolkata parties in the assessment order itself and reply under section 131 were filed at the remand proceedings before the Ld. CIT(A) in which the Investors have confirmed of the transactions with the assessee. The A.O. did not make any enquiry from the income tax record of any of the Investor companies. It is well settled Law that A.O. cannot ask the assessee to prove the source of the source. We reply upon the Judgment of Hon ble Delhi High Court in the case of CIT vs., Dwarakadhish Investment P. Ltd., [2011] 330 ITR 298 [Del.] [HC}, Judgment of Hon ble Gujarat High Court in the case of Rohini Builders 256 ITR 360 (Guj.), Judgment of Hon ble Allahabad High Court in the case of Zafar Ahmad Co. 30 taxmann.com 269 [All.] [HC]. Considering the above evidences and material on record, it is clear that A.O. did not make any enquiry on the documentary evidences filed by the assessee and did not doubt the documentary evidences, therefore, initial onus upon assessee to prove creditworthiness and genuineness of the transaction have been discharged by the assessee. In support of the above findings, we rely upon the following decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble Apex Court in the case of Lovely Exports Pvt. Ltd. (supra) and Judgment 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. 6.6. 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. 6.7. Decision of Hon ble jurisdictional High Court in the case of Divine Leasing Finance Ltd., 299 ITR 268, in which it was held as under : No adverse infe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to prove the source of source . The assessee-company was engaged in the business of financing and trading of shares. For the assessment year 2001-02 on scrutiny of accounts, the Assessing Officer found an addition of ₹ 71,75,000 in the share capital 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 mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax, Orissa vs., Orissa Corporation P. Ltd., [1986] 159 ITR 78 (SC) in which it was held as follows : Held, that in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the respondent, 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 creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, 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 such arose. The High Court was right in refusing to state a case. 6.14. The Hon ble Madhya Pradesh High Court in the case of PCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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