9911796707
TMI Blog2021 (6) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... er are by and large either not relevant or contrary to facts on record and the case laws cited by the AO are clearly distinguishable from facts of the case and do not apply in the assessee's case, ignoring the fact that the said decisions of Hon'ble Supreme Court in the case of Vijay Kumar Talwar V/s CIT (2011 330 ITR 1 SC) and CIT V/s Orissa Corpn. Pvt. Ltd. (1986 159 ITR 78) have not been considered. (ii) The Ld. CIT(A) has erred in deleting the addition of Rs. 8,20,00,000/- u/s 68 of the Act without appreciating the fact that M/s Bottomline Distributors Pvt. Ltd. had filed part details as called u/s 133(6) of the I.T.Act, 1961 to prove the creditworthiness of the transactions. (iii) The Ld. CIT(A) has erred in deleting the addition of Rs. Rs. 8,20,00,000/- u/s 68 of the Act without appreciating the fact that amount shown to have been received from M/s Bottomline Distributors Pvt. Ltd. during the year is Rs. 2,55,00,000/- and the resolution does not mention anything about share warrants of the assessee company. As evident, the revenue is aggrieved by deletion of certain addition u/s 68 as made by Ld. AO in the assessment order. 3. We have carefully heard the rival submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documentary evidences in support of issue of share warrants. Notice u/s 133(6) was also issued to M/s BDPL calling for various information. The notice was duly responded to by M/s BDPL along with certain details / documentary evidences which include the following documents:- (i) Copy of Income Tax Return Acknowledgement for AY 2011-12 (ii) Computation of Income for AY 2011-12 (iii) Audited financial statements for financial year 2010-11 (iv) Copy of Bank Statement (v) Copy of account of assessee for AY 2011-12 (vi) Copy of Board Resolution along with offer and allotment letters. 4.5 However, Ld. AO, invoking the provisions of Sec.68, opined that the assessee could not furnish complete information as called from time to time and the onus as casted upon the assessee to prove the identity as well as creditworthiness of the lender and to prove the genuineness of the transactions remained undischarged. 4.6 The documents, which in the opinion of Ld. AO could not be furnished by the assessee, would include copies of correspondence with M/s BDPL prior to issue of warrants, details of introducers of directors of M/s BDPL, details of services taken from investment banker, proo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in the eyes of law. 5.2 The relevant findings of Ld. CIT(A) were as under: - 5.1 Although the appellant has raised 6 grounds of appeal but the only effective ground is against the addition of Rs. 8,20,00,000/- u/s.68 of the I.T. Act. In the assessment order, the Ld.A.O. observed that the appellant company had shown to have issued fully convertible share warrants. After referring note No.13 under Schedule 17 to Financial Statements, the Ld. A.O. observed that appellant company had received a sum of Rs. 8,20,00,000/- being the amount of application for allotment of 8,50,000 warrants convertible within a period of 12 months from the date of allotment of warrants into 8,50,000 equity shares of Rs. 10/- each at an exercise price of Rs. 300/- per share. During the course of assessment proceedings, the A.O. called the details of warrants including name, address, amount, income tax return, Balance Sheet, Capital A/c. and bank statement in relation to the parties to whom such warrants were claimed to have been issued during the year. As mentioned in para 3 of the assessment order, all the relevant details called by the A.O. were furnished by the appellant during the course of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er were also filed by M/s. Bottomline Distributors P. Ltd. in pursuance to notice u/s.133(6). 5.3 It was submitted by the appellant that in response to notice u/s.133(6) issued by the AO to M/s. Bottomline Distributors P. Ltd. the aforesaid company made compliance with all relevant issues raised therein. According to the appellant, the issue of part compliance of notice u/s.133(6) by M/s. Bottomline Distributors P. Ltd. raised by the AO was not fair for making an unjustified addition. It was clarified that during the assessment proceedings, the AO raised the issue of part compliance in response to notice u/s. 133(6) of the Act but some of the information required had no relevance to the issue at hand. 5.4 It was brought to my notice that M/s. Bottomline Distributors P. Ltd. in response to notice u/s.133(6) furnished all relevant information. It was also stated that in view of the proximate relationship of the appellant company with M/s. Bottomline Distributors P. Ltd. as evident from the records available from the site of Ministry of Corporate Affairs, majority information sought was of no consequence. After receipt of various details once again the Ld.A.O., vide order sheet en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. supra in justifying that genuineness of the transaction does not stand proved. However I find force in the submissions of the Ld. AR that the case relied upon by the AO is not applicable to the case of the assessee as the same is distinguishable on facts as inter alia there was no adverse information about the contributor company, no incomplete details of Balance sheet of contributor company were filed, the contributor company is related to the investee company in the appeal at hand. Further still the facts clearly show that valuation of equity was to be done as per the offer letter. It is also pertinent that at no stage during assessment proceedings the AO required the appellant company to file valuation report for justifying premium as is apparent from the order sheet produced before me in appeal. 5.6. The total sum of Rs. 8,20,00,000/- was received from M/s. Bottomline Distributors P. Ltd., 23/1 Principal Khudiram Bose Road, Kolkata, West Bengal 700 006, which was incorporated under the Company's Act, 1956 vide certification of Registration No. U511909WB2008PTC128087 dated 31.07.2008. The certificate of incorporation was also enclosed as Annexure 14 of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in addition to it a notice u/s.133(6) was also issued to M/s. Bottomline Distributors which was the sole subscriber of fully convertible share warrants. In response to notice u/s.133(6), M/s. Bottomline Distributors P. Ltd. submitted copy of acknowledgements slip of return filed for A.Y.2011-12, copy of computation of income, copy of audit report and audited Balance Sheet as on 31.03.2011, copy of relevant extract of bank statement, copy of account of appellant company and copy of Board's resolution along with offer and allotment letter. The investment by said M/s Bottomline Distributors Pvt. Ltd., in share warrants of appellant company, stands justified by its capital and reserves. It is pertinent to mention here that the case of M/s. Bottomline Distributors P. Ltd. was scrutinized by the I.T.O. Wd. 7(4), Kolkata u/s.143(3) r.w.s.147 and he had accepted the Balance Sheet filed by M/s. Bottomline Distributors P. Ltd. Therefore, without giving any concrete contrary findings, the A.O. has simply disbelieved the Balance Sheet of the convertible share warrant subscriber. From the details filed it is evident that the majority share holding of Bottomline Distributors P. Ltd. is owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is suspicions and treat the subscribed capital as the undisclosed income of the company. If relevant details of address and identity of the subscribers are furnished to the department alongwith copies of the shareholders register, share application forms, share transfer register etc. it would constitute acceptable proof or explanation by the assessee. iii. In Hindustan Inks & Resins Ltd. vs. Dy. C.I.T. 60 DTR 0018 (2011) the Hon'ble Gujarat High Court has held as under: "From the concurrent findings recorded by the authorities below, it is apparent that none of the parties have recorded any findings to the effect that the identity of the depositors had not been established by the assessee. The case of the respondent is that the assessee has failed to explain the source of such cash' as well as creditworthiness of the deposits. It is not the case of the revenue that the subscribers are bogus. / the case of the revenue is that the source of such cash as well as creditworthiness of the depositors has not been explained. In the circumstances, the department is free to proceed to reopen the individual assessments of the deposits named by the assessee, however, under no circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO in respect of the impugned investment made by TT Ltd. has been rightly deleted. 5.8 I have also perused the assessment order and the written submissions filed by the appellant and the facts on record. The allegations contained in the assessment order are by and large either not relevant or contrary to facts on record. The case laws cited by the AO are clearly distinguishable from facts of the case of the appellant company and therefore do not apply and I place reliance on the decision of the Apex Court in the case of Sun Engineering Works Ltd., HH Maharajadhiraj Madhav Rao Jiwaji Rao Scindia Bahadur and Mysore State Road Transport Corporation supra. I also find, from a perusal of the order sheet, that the assessment proceedings are squarely covered by the observations of Hon'ble High Court of Delhi in the case of Gangeshwari Metals Pvt. Ltd. supra, wherein the Hon'ble High Court has held that- "As can be seen from the above extracts, two types of cases have been indicated. One in which the AO carries out the exercise which is required in law and the other in which the AO sits back with folded hands till the assessee exhausts all the evidence or material in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed u/s 143(3) r.w.s. 147 in earlier years in which it had raised share capital and premium. The return of income was duly accepted by the revenue during scrutiny assessment. The investment were sourced out of share capital and reserves of M/s BDPL and this fact remain uncontroverted before us. The transactions were duly reflected in the financial statements of the investor entity. The transactions have taken place through banking channels. After going through all these facts and evidences, we find that the onus casted upon assessee in terms of requirement of Sec.68 to prove the identity of the investor, their respective creditworthiness and the genuineness of the transactions, was duly discharged by the assessee. The onus, had thus shifted on Ld. AO, to disprove the assessee's documents and to bring on record any material to prove that assessee's own money flew back to it in the shape of share warrant application money. However, noting of that sort is available in the assessment order. 7. The documents, which in the opinion of Ld. AO could not be furnished, include correspondence with M/s BDPL prior to issue of warrants, details of introducers of directors of M/s BDPL, details o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction Pvt. Ltd. [107 Taxmann.com 84] against which revenue's Special Leave petition was dismissed by Hon'ble Supreme Court which is reported at 107 Taxmann.com 85. Similar is the position of decision of Hon'ble Delhi High Court rendered in Pr. CIT V/s Himachal Fibers Ltd. [98 Taxmann.com 72] against which revenue's Special Leave Petition was dismissed by Hon'ble Supreme Court which is reported at 98 Taxmann.com 173. Similar is the decision of Hon'ble High Court of Madhya Pradesh in Pr. CIT V/s Chain House International Pvt. Ltd. [98 Taxmann.com 47] against which revenue's Special Leave Petition has been dismissed by Hon'ble Supreme Court on 18/02/2019 which is reported at 103 Taxmann.com 435. Similar is the decision of Hon'ble Bombay High Court in Pr. CIT V/s Ami Industries (India) Pvt. Ltd. [ITA No. 1231 of 2017, dated 29/01/2020) which has been rendered after considering the principles laid down by Hon'ble Supreme Court in its recent decision titled as Pr.CIT Vs. NRA Iron & Steel Pvt. Ltd. [412 ITR 161]. 9. We find that the ratio of above decisions is applicable to the case of the assessee. The assessee had discharged the onus of proving the fulfillment of primary requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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