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TMI Blog2021 (4) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... otice that Ld DR in her submission brought to our notice from the information contained in bank statements of the parties filed in the paper book. She brought to our notice that the amounts transferred by the parties to the assessee were received from another concern and transferred on the same day. She does not dispute the fact that all the transactions were routed through banking channel and assessee has submitted all the information which were before the assessing officer. The assessing officer should have investigated all the information and could have controverted the submissions made by the assessee or could have found the sources of the money transferred and he could have traced whether any involvement of cash deposits. It is not the case of the assessing officer that unaccounted money were transferred in the above transactions. Further we notice that she brought to notice commonness of email ID and commonness in board s resolutions passed by these companies. These commonness could be the employment of common company secretary or accountant. These evidences will not make any difference to the genuine transaction. We notice that Ld CIT(A) allowed the appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the transaction, AO issued show cause notices under section 133 (6) of the Act for furnishing the details to the addresses available on record. However, all notices were returned unserved, later assessee provided the new address of the companies to the AO and in response all the parties submitted the replies under section 133(6) of the Act. Before AO, assessee contended that no specific mention was made by Praveen Kumar Jain in his statements recorded during the course of search that the transactions of share application money given to the assessee were accommodation entries. It was also claimed that the statements was recorded at the back of the assessee which could not be treated as evidence unless confronted. It was also submitted that Praveen Kumar Jain and his associates had retracted their statements recorded during the course of search. It was submitted that confirmation of all parties including their financial statements, bank statements and affidavits of respective companies were placed on record. It was claimed that no unaccounted cash in any manner was paid by the assessee to Praveen Kumar Jain his associates in connection with these transactions. Accordingly it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Said Companies to the appellant company. The affidavit by the Directors of the said companies confirming the investment. Share Certificate issued by the Company. Return of allotment filed with registrar of company (MCA) allotting the shares. Copy of PAN Card. 5. The appellant also filed copies of its bank statements for the year ended on 31.03.2020. 6. The assessing officer has simply relied on the findings given by the DDIT (mu.) of Mumbai unit in respect of Mr. Praveen Kumar Jam without verifying any data or correctness of the same. 7. The statement of Mr. Praveen Kumarjain was of general nature and there was no specific name of the appellant company mentioned in any of the documents found during the search at premises of Mr. Praveen Kumar Jam. The AG has not brought out any facts, evidences or proof to suggest that the said companies were in questions were providing accommodation entries to the appellant. No cash was deposited in any of the company. 8. The appellant company has proved the fundamental test to establish and discharge the burden under section 68 of the Act namely (I) identity of the person, (II) Credit worthiness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l he deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained In the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. Section 68 casts the responsibility upon the Assessec to prove the following a) identity of the Creditors b) Capacity of the Creditors c) Genuineness of the Loan As regards Identity of the Creditors During the course of assessment proceedings the following details were submitted: a) Confirmation along with full name and address of the parties who have been allotted shares. b) Share application form along with Board Resolution to investment and certificate of investment made c) Copies of the PAN number of the investor d) The Income Tax Returns of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of assessment proceedings no further inquiries were made as regards alleged bogus share application money and no further statements were recorded in case of Your Appellant. Similarly, no specific questions were asked either to Mr. Praveen Kumar Jain and his associates during the entire search operation or subsequently despite the fact that the subsequently many statement in his case were recorded. No specific query was paused as regards alleged bogus loans given to Your Appellant. In fact, the allegations made, by the officer are after thoughts and only with the intention to make additions in the hands of Your Appellant. The general statement of Mr. Praveen Kumar Jam, and his associates not serve the purpose of the Assessing Officer to prove a genuine transaction Into a non genuine transaction. It Is worthwhile to note that neither Mr. Praveen Kumar Jain nor his various associates (who were directors of the lender company) have anywhere made any specific averment that the share application money given to your appellant by them were sham and bogus and cash was passed on to them by Your Appellant against the share application money so given. On the contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structure Pvt. Ltd. IDA No.2082/Del/2009 ACIT, CC-32, Mumbai Vs M/s Archieve Realty Developers Ltd ITA Nos. 6104 6105/Mum/2012 dated 18/11/2016 M/s Shree Laxmi Estate Put Ltd Vs ITO, Wd.1513)13), Mumbai. ITA No.5954/Mum/2016) dated 29/12/2017. The Mumbai Tribunal had occasion to consider the similar facts where allegation was made in respect of money received from Companies alleged to be belonged to Praveen Kumar Join. The Hon'ble Tribunal considering the judgment of Bombay High Court in case of M/s. Gagandeep Infrastructure Put. Ltd. (2017) 394 ITR 680 (Bombay) and Supreme Court decision in case of Ws Lovely Exports Put Ltd. 216 CTR 195 (SC) has held that no addition can be made in respect of addition under section 68 of the Income Tax Act in respect of Share Capital for assessment year prior to Assessment Year 2013.14 in view of the specific provision in the act. Recently in case of Commissioner of Income Tax - I Vs. MIs. Gagandeep Infrastructure PvC Ltd. (20271 80 taxmann.com 272 (Bombay) ITA No. 2613 of 2014 the Bombay High Court has held as under: We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2022 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rged his own onus while making addition u/s 68 of the Act. In view of above submissions, it is prayed that the addition of ₹ 5,47,50,000/- made by the AO should be deleted.‖ 5. Considering the submissions of the assessee in detail and Ld CIT(A) in reference to the financials of the investment companies and allowed the appeal of the assessee with the following observations: The above reproduced financials of the investor companies indicate that these investors are in regular business and there does not appear to be any doubt. Thus the credit worthiness of the investor comnics i.e. they have the capacity to invest in the share capital of the Appellant Company. In these circumstances, it is submitted by the Authorized Representative that, by no stretch of imagination it can he said that the appellant had not discharged the initial onus cast upon him to establish the identity and creditworthiness of the creditors as well as genuineness of the transactions. Therefore, the onus shifted to the AO. It is submitted that if the AO was not filed, he had the option of making inquiries from the lenders by summoning them, it is also submitted that no independent verifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition can be made without having any contrary or cogent evidences in possession. The AR relied and brought to my notice the judgments to support the appellant which are equally applicable to the appellant's case. Some of them are discussed here below:- 1. The Hon'ble Supreme Court in the case of CIT V/s Lovely Exports 6 DTR308 has held asunder: If the share application money is received by the assessee company from alleged bogus share holders who's name are given to the Assessing Officer then the depart merit is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of assessee company . It is submitted that, as per the above decision of the Hon'ble Supreme Court, though the appellant satisfactorily proved that the investment was made by the investor themselves if the AO was not satisfied with the explanation of the Appellant, he should proceed against the investors. 2. The Hon'ble Bombay High Court in the case of CIT v/s_Creative World Telefilms Ltd 333 ITR 100 has held as under: If the share application money is received by the assessee company from alleged bogus s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April. 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced 'for removal of doubts or that it is 'declaratory . Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. (ii) Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arid M/s Yash-V Jewels Ltd. are merely accommodation entries. As mentioned earlier, the Ld. Assessing Officer has acted merely on the basis of information received from the Investigation wing. The ratio laid down by Hon'ble Delhi High Cowl in CIT vs Vrindaban Farms Pvt. Ltd. squarely gives shelter to the assessee, wherein, it was held that if the identity and other details of share applicant are available, the share application money cannot be treated as undisclosed income in the hands of the company. in the present case, the assessee even has proved the source of source, therefore, the creditworthiness was also proved, consequently, no addition made u/s 68 of the Act can be said to be justified. The ratio laid down in Creative World Tele films Ltd. (supra) by Hon'ble jurisdictional High Cowl squarely comes to the rescue of the assessee. The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, genuineness of the transaction, payment through banking channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. it is also noted that in spite of repeated requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n managed by Shri Pravin Jain Group? ii) Whether On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of bogus share application money without appreciating the provisions of section 68 of the I.T. Act, 1961. Further, once it was established during search u/s 132 on Pravin Jain and Associate Concerns that the investing companies were paper entities providing accommodation entries of share application, the confirmation filed in response to notice under section 133(6) of the Act holds no ground?‖ 7. Before us, learned DR submitted her submission in the return form, which is reproduced below: Sub: Written submission in the above case: On receipt of information from the DIT(lnv), Mumbai regarding the assessee being a beneficiary of accommodation entries by way of share application monies through the Pravin Jain controlled entities, the case of the assessee was reopened, after following due process of law. The assessee had received share application monies from 5 parties: Yash V Jewels Ltd. ₹ 1.70 Cr Triangular Infocom Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n page 87 of PB, and Vangaurd Jewels Ltd on page 125 of PB, shows that they were all filed on 14/10/2010 from IP address 115.96.142.59, though the Directors, Auditors as well as the addresses of the companies are different. It is also seen that the Return of Income for Alka Diamond was also filed from the same IP address, though on 15/10/2010. This vindicates the cause of the Assessing Officer that these are entities controlled by the Pravin Jain Group. 3. Further, the bank accounts of Triangular Infocom (page 84 of PB), Vanguard Jewels Ltd (page 121 of PB), and Ansh Merchandise (page 215 of PB) are managed by the same person ie. [email protected], which is again indicative of entities controlled by a common person. 4. The Notice for AGM on page 53 of PB for Yash V Jewels, on page 91 of PB for Triangular Infocom, on page 130 of PB for Vanguard Jewels Ltd and on page 165 of PB for Alka Diamond Industries Ltd; all maintain at point no. 4 resolved , which reiterate the fact that these entities are managed by the same group. 5. Page 65 and 69 of PB show that Yash V Jewels has no opening stock, has purchased 6055.94 Cts 65.21 and sold the same for 697.03, leaving no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ert the claims of the assessee but proceeded to make the addition heavily relying on the information of investigation wing and merely on the fact that these transactions involving Shri Praveen Kumar Jain. 10. We notice that Ld DR in her submission brought to our notice from the information contained in bank statements of the parties filed in the paper book. She brought to our notice that the amounts transferred by the parties to the assessee were received from another concern and transferred on the same day. She does not dispute the fact that all the transactions were routed through banking channel and assessee has submitted all the information which were before the assessing officer. The assessing officer should have investigated all the information and could have controverted the submissions made by the assessee or could have found the sources of the money transferred and he could have traced whether any involvement of cash deposits. It is not the case of the assessing officer that unaccounted money were transferred in the above transactions. Further we notice that she brought to notice commonness of email ID and commonness in board s resolutions passed by these companies. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elter to the assessee, wherein, it was held that if the identity and other details of share applicant are available, the share application money cannot be treated as undisclosed income in the hands of the company. In the present case, the assessee even has proved the source of source, therefore, the creditworthiness was also proved, consequently, no addition made u/s 68 of the Act can be said to be justified. The ratio laid down in Creative World Telefilms Ltd. (supra) by Hon'ble jurisdictional High Court squarely comes to the rescue of the assessee. The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, genuineness of the transaction, payment through banking channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that in spite of repeated request, the Ld. Assessing Officer did not provide opportunity to cross examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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