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TMI Blog2021 (6) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. Therefore, we confirm the order of ld CIT(A) in deleting the addition - Decided against revenue. - ITA No.1485/AHD/2017 - - - Dated:- 27-5-2021 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rasesh Shah, CA For the Revenue : Shri O.P. Vaishnav, CIT(DR) ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the Revenue, pertaining to the Assessment Year (AY) 2012-13, is directed against the order passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to House, Office No.311, 3 rd Floor, Mumbai- 400002 70000 10 90 700000 6300000 7000000 SEASON MULTITRADE PVT.LTD 545, Kalbadevi Road, Bharat Photo House, Office No.311, 3 rd Floor, Mumbai- 400002 124000 10 90 1240000 11160000 12400000 VIRGO MERCANTILE PVT.LTD 545, Kalbadevi Road, Bharat Photo House, Office No.311, 3 rd Floor, Mumbai 37000 10 90 370000 3330000 3700000 MILI COMODITIES PVT. LTD A-07, Rajsheela ,539 Kalbadevi Road,Mumbai 400002 60000 10 90 600000 5400000 6000000 LONA MERCANTILE PVT.LTD A-07, Rajsheela ,539 Kalbadevi Road,Mumbai 400002 89000 10 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned company with details of sources of funds. (iv) Copy of share certificate received by you. Notices u/s 133(6) of the IT Act was issued to all the above stated investors . 3. Assessing officer has received the response from the share applicant companies (Investors). Details relating to service of notices u/s 133(6) and gist of responses from the said investors is depicted in the following table: Name of Investor Whether notice u/s 133(6) served or not Whether reply to notice u/s 133(6) received or not FRANK MERCANTILE PVT.LTD Served Yes SEASON MULTITRADE PVT.LTD Served Yes VIRGO MERCANTILE PVT.LTD Served Yes Ml LI COMODITIES PVT. LTD Unserved NA LONA MERCANTILE PVT.LTD Unserved NA MASCOT MULTITRADE PVT. LTD Served Yes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,24,000 1,24,00,000 3 Virgo Mercantile P. Ltd. 37,000 37,00,000 4 Mili Commodities P. Ltd. 60,000 60,00,000 5 Lona Mercantile P. Ltd. 89,000 89,00,000 6 Mascot Mutitrade P. Ltd. 20,000 20,00,000 7 Coral Multitrade P. Ltd. 10,000 10,00,000 8 Delight Landcorn P. Ltd. 40,000 40,00,000 Total 4,50,000 4,50,00,000 Learned DR contends that during the assessment stage notices u/s 133 (6) of the Act have been sent by assessing officer, to the eight share applicant companies, as per addresses given by the assessee and the said notices were not served on two share applicant companies. The ld DR pointed out that ld CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 68 of the Income Tax Act. On the contrary, the ld AO has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidences/documents in support of its claim, they cannot be brushed aside based on surmises. Shri Rasesh Shah, also pointed out, as evident from the assessment order, ( vide page 5 of AO), that Id assessing officer issued notices u/s 133 (6) to all the eight share-applicants. The Id AO mentioned that, in case of two share applicants, the notices u/s 133(6) were not served, and in other six cases of share applicants, the notices were served and they have also responded to the said notices, by filing necessary details. The ld Counsel states that subsequently the said two share - holders too complied with the notices, by filing details on 27. 03. 2015. This way, ld Counsel claimed that assessee company has discharged his onus to prove the three ingredient of section 68 of the Act viz: identity, creditworthiness and genuineness of the transactions. Ld. Counsel also submits that in the hands of the share subscribing companies assessment has been framed under section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (Bom), held that amendment to section 68 is prospective and applicable only from assessment year 2013-14. With this background, now we shall proceed to examine in the assessee`s case under consideration, whether assessee company has discharged his onus to prove, prima facie, the identity, creditworthiness and genuineness of the share capital and share premium received by it from share subscribers companies. 7. Before us, the assessee-company has submitted the bank statements of ICICI bank account no.624605064230 (PB page no.31-38). The assessee submitted bank book of ICICI Bank A/c No. 624605064230 (vide PB page no.39-45). Assessee also submitted the board resolution passed by it for issuing shares which is placed at paper book page no.46-48 of assessee`s paper book. The assessee company filed the board resolution issuing shares at premium, which is placed at paper book page 49-50. The assessee-company filed Form no.3, return of allotment of shares, filed with the Registrar of companies vide paper book 51-58. Assessee company filed member s register (vide PB No.59-66). These are the documents and evidences submitted by the assessee-company (share capital receiver compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Annual Report along with Audited financial Statements (Pb.178-198), Share Certificates (Pb.200), Board Resolution (Pb.201), Relevant Bank Statement (Pb.202-203), Relevant Bank Book (Pb.204). (6)In respect of share Applicant Company,Coral Multitrade Pvt. Ltd. Assessment Order passed u/s. 143(3) for A.Y. 2012-13 (Pb.205-207), Acknowledgment of return of income (Pb.208), Annual Report along with Audited financial statements (Pb.209-227), Share Application Form (Pb.228), Share Certificates (Pb.229), Board Resolution (Pb.230), Relevant Bank Statement (Pb.231-232), Relevant Bank Book (Pb.233) (7)In respect of share Applicant Company, Mascot Mulitrade Pvt. Ltd. Assessment Order passed u/s. 143(3) for A.Y. 2012-13 (Pb.234-236), Acknowledgment of return of income (Pb. 237), Annual Report along with Audited financial statements (Pb.238-258), Share Application Form (Pb.259), Share Certificates (Pb.260), Board Resolution (Pb.261), Relevant Bank Statement (PB.262-263), Relevant Bank Book (PB.264) (8)In respect of share Applicant Company, Lona Merchantile Pvt. Ltd. Acknowledgement of return of income (Pb.265), Annual report along with audited financial state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld CIT(A) noticed that assessing officer has not discussed any of these (above listed details) in the assessment order. The Id AO has not made any adverse finding in any of these documents even, though all the details were furnished by the appellant before him. The AO ought to have examined all these details and refuted / rejected them, with a cogent adverse findings and discernable line of reasoning, in order to arrive at a conclusion and to make the addition u/s 68 of the Income Tax Act. On the contrary, the AO has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. As evident from the assessment order, (vide page 5) the Id assessing officer issued notices u/s 133 (6) to all the eight share applicants. The Id AO mentions that, case of two share applicants, the notices u/s 133 (6) were not served, and these six cases of share applicants, the notices were served and they have responded to the said notices, by filing necessary details. On being confronted with this issue, the assessee asked f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the share-applicants is a very small part (2.5 % to 8%) of its total investment in equity shares, in view of the facts summarized in the table, the conclusion of the Id assessing officer about 'creditworthiness is devoid to any merits. The next observation made by the ld AO is that, premium is unjustified. It is noticed that the share are issued @₹ 100/- per share (F V 10 + premium ₹ 90). Before the ld AO, the assessee - company filed calculation of Book value as per net worth method, calculated from the Audited balance sheet as on 01.04.2011. The Id assessing officer has not found any defect in this nor has be given any contrary finding. It is seen from the balance sheet that, as on 31.03. 2011, the net worth of the assessee - company is ₹ 4.51 crores, and the number of shares is 4.6 lakhs, which works out to ₹ 98.05 per share. In view of this, the assessee is practically not charging any premium, over and above its book value. Hence, the observation of the Id assessing officer is without any factual basis. The Id AO also observed that, the assessee-company was not doing any business activity during the year. The Id AO has mistaken in this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble jurisdictional High Court Gujarat: (i)CITv/s Ranchhod Jivabhai Nakhawa ITA No. 50/2011,(Guj) (ii) CIT v/s Ujala Dyeing and Printing Mills (P) Ld, 328 ITR 0437 (Guj) 14. Our view is fortified by the judgment of the Hon`ble Gujarat High Court in the case of CIT v/s Himatsu Bimet Ltd, 12 Taxmann.com87. (H C of Guj), wherein it was held as follows: 4. As can be seen from the impugned order of the Tribunal, the Tribunal has recorded that the respondent-assessee had filed confirmations from all share applicants with details of share capital paid which contained details such as full addresses, permanent account numbers and tax jurisdiction of the depositors. The Tribunal further recorded that all payments were received by cheques and were credited in the bank account of the respondent; the share application forms contained all details of the depositors; their confirmations were clear with all addresses; and that they were on the departmental records as tax-payers. In the aforesaid factual background, the Tribunal was of the view that the respondent had sufficiently discharged its burden of explaining the same. The Tribunal further observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no infirmity can be found in the impugned order of the Tribunal in holding that the assessee had discharged its burden. Whether burden has been discharged or not is a question of fact. 7. In the light of the aforesaid, it cannot be said that the impugned order of the Tribunal suffers from any legal infirmity so as to warrant interference. In absence of any substantial question of law, the appeal is dismissed. 15. On the identical facts, the Coordinate Bench of ITAT Ahmedabad in the case of Rohini Builders V. Deputy Commissioner of Income-Tax, 117 TAXMAN 25 (AMD.) (MAG.), held as follows: ...the assessee had discharged the initial onus which lay on it in terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR Numbers/Permanent Account Numbers and the copies of assessment orders wherever readily available. It had also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee was not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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