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TMI Blog2021 (6) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO to delete the addition made u/s.68. Appeal of the assessee is allowed. - ITA No. 917/Chd/2016 - - - Dated:- 14-6-2021 - Annapurna Gupta, Member (A) And R.L. Negi, Member (J) For the Appellant : S.K. Mukhi, Adv. For the Respondents : Ashok Khanna, Addl. CIT ORDER Per R. L. Negi, Judicial Member The captioned appeal has been preferred by the assessee against the order dated 17.06.2016 passed by the Learned Commissioner of Income Tax (Appeals)-2 [for short the CIT(A)], Ludhiana u/s. 250(6) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for the assessment year 2012-13, whereby the Ld. CIT(A) has dismissed the appeal filed by the assessee against the assessment order passed under section 143(3) of the Act. 2. Brief facts of the case emanating from the record and pleadings of the parties are that the assessee company engaged in the business of manufacturing of pre-structured engineering goods, filed its return of income for the assessment year under consideration declaring total income of ₹ 31,50,165/- Since the case was selected for scrutiny, AO issued notices u/s. 143(2) and 1442(1) of the Act. In response thereof, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom M/S Simplex Trading and Agencies Ltd., which is illegal, unjustified, erroneous, perverse and against the facts of the present case and judicial pronouncements. 3. That the Ld. CIT(A) is not justified in concurring with the finding of ld. AO and thereby confirming the addition of ₹ 15,00,000/- u/s. 68 of the Income Tax Act, 1961 in respect of Share Application money received from M/S Zinnia Sales P Ltd., which is illegal, unjustified, erroneous, perverse and against the facts of the present case and judicial pronouncements. 4. That the Ld. CIT(A) is not justified in concurring with the finding of ld. AO and thereby confirming the addition of ₹ 15,00,000/- u/s. 68 of the Income Tax Act, 1961 in respect of Share Application money received from M/S Daisy Supplies P Ltd., which is illegal, unjustified, erroneous, perverse and against the facts of the present case and judicial pronouncements. 5. Without prejudice to above the confirmation of impugned addition by the CIT(A) is highly excessive and thus uncalled for. 5. Before us the Ld. Counsel for the assessee submitted that the Ld. CIT(A) has affirmed the action of the AO without considering the evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e certificate to prove the identity and creditworthiness and the genuineness of the transaction. 9. Ld. Counsel further pointed out that the revenue from the operation of the said company during the assessment year 2012-13 was 206.08 Lacs and the net worth of the company was ₹ 1379.70 which comes to only 1.03% of the current assets of the company. The Ld. Counsel further submitted that the assessee has filed the confirmation issued by Zinnia Sales Pvt. Ltd. and also submitted the financial status of the said company along with balance sheet and return filed by the assessee. The Ld. Counsel accordingly contended that since the assessee has established identity and creditworthiness of the said company and genuineness of the transaction by submitting the aforesaid details and explanations, the Ld. CIT(A) has wrongly confirmed the action of the A.O. and confirmed the addition u/s. 68 of the Act. 10. As regards the amount of ₹ 15,00,000/- received from M/s. Daisy Suppliers Pvt. Ltd. the Ld. Counsel submitted that the said amount was received on 10/04/2012 through three cheques towards share application money. In this case also shares were not allotted during the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR further submitted that the Hon'ble P H in the case of Smt. Shanta Devi Vs. CIT [1998] 171 ITR 532 (P H) and the Hon'ble Delhi High Court in the case of CIT Vs. Oasis Hospitalities Pvt. Ltd. (2011) 333 ITR 119, have held that the initial onus is upon the assessee to establish the entity of the investor, their creditworthiness and genuineness of the transactions. Since the assessee has failed to discharge the primary onus in this case the Ld. CIT(A) has rightly confirmed the action of the A.O. Further the Ld. DR submitted that in the case of CIT Vs. N.P. Portfolio Ltd. in ITA No. 134/2012, the Hon'ble Delhi High Court has held that if on verification the A.O. fails to contact the share applicant or the information becomes unverifiable the onus shifts back to the assessee and consequences may be an action under section 68 of the Act. On the basis of the aforesaid submissions and the case laws relied upon by the Ld. CIT(A), the Ld. CDR submitted that there is no infirmity in the impugned order to interfere with. Therefore, the appeal of the assessee may be dismissed. 14. We have heard the rival submissions of the parties and perused the material on record including t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g evidence to reject the facts and figures mentioned in the detail based on the financials of the said companies. 16. Under section 68 of the Act AO has jurisdiction to make addition where any sum is found credited in the bank account of the assessee and the assessee offers no explanation about nature and source thereof or explanation offered by him is not in the opinion of the A.O. satisfactory. 17. In the present case, the assessee has furnished the Annual return, Corporate Information/BSE, Intimation regarding shifting of office, PAN Card, Income Tax Jurisdiction details of the assessee, ROC status as per Income Tax Department, Name designation and addresses of the directors, Statement of bank account, Income Tax Return for the assessment year 2015-16, share certificate etc. The details pertaining to M/s. Simplex Trading and agencies are available at pages 1 to 40 of the Fist paper book submitted by the assessee. Similarly, the details pertaining to M/s. Zinnia Sales Pvt. Ltd. are available at pages 45 to 61 of the paper Book and the documents and details relating to M/s. Daisy Suppliers Pvt. Ltd. are available at Pages 62 to 77 of the paper book. The copy of order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. 2017 81 Taxmann.com 269 (Delhi) 387 ITR 636 (Delhi) the Hon'ble Delhi High Court has held that where the assessee had provided permanent account Nos. Bank details and affidavits of directors of share applicant companies, addition u/s. 68 of the Act is not justified merely because of failure of directors to physically present themselves before the AO. 21. The Hon'ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd. 2017 80 taxmann.com 272 (Bom.) has held that where the assessee company has established identity genuineness and capacity of the subscribers, the action of AO cannot make addition of the share application money to the income of the assessee. However, the AO can reopen the assessment of such shareholders and proceed in accordance with the law. It was further held that proviso to section 68 introduced by Finance Act 2012 w.e.f. 01.04.2013 would not have retrospective effect. 22. In the present case, the assessee has furnished each and every detail of the share applicant companies in response to the queries raised by the AO during the assessment proceedings and even during the appellate proceedings. In our considered view the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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