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TMI Blog2021 (9) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Investor companies and furnishing of all the details as required by AO to establish the identity, creditworthiness and genuineness of the transaction, the impugned assessment order as passed by the learned AO is absolutely erroneous. As the amended provisions of section 68, is not applicable to the assessee company under consideration, as the assessee`s, assessment year is 2012-13, therefore the assessee under consideration need not to prove source of the source. We find that the assessee had given the complete details about the share applicants clearly establishing their identity, creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries from the assessing officers of the concerned share applicants for which every details were very much made available to him by the assessee - Decided in favour of assessee. - ITA No. 118/SRT/2018 - - - Dated:- 31-8-2021 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rasesh Shah, CA For the Revenue : Ms Anupama Singhla, Sr. DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing table depicts a bird's eye view of the receipts by the assessee towards share capital and share premium. Name of Investor Address of Investor No. of Shares Face value per share Premium Per Share Total face value Total Share Premium Total Amount paid N1RDESH TRADING PVT.LTD. 23A,N.S.Road,Kolkata- 700001,(W.B) 20000 10 90 200000 1800000 2000000 RENU FINPROP PRIVATE LIMITED 2/L/Tollygunge Circular Road,Ko1kata- 700033(WB) 35000 10 90 350000 3150000 3500000 SNEHA RESIDENCY PVT.LTD 31/33,Rameshwar Malia,Lst By Lane,2 nd Floor, Howrah,Kolkata- 711101(WB) 25000 10 90 250000 2250000 2500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the transactions, an enquiry was got conducted by the AO in respect of the above four investor companies. The AO found on making bank inquiries related to the investor companies that cash deposits have been made at the third layer of banking transactions and also transfer of funds have been made by known entry operators running various shell companies. The inquiries revealed that these investors companies were not having any income /or extremely low income and therefore did not have creditworthiness to make the investment. The assessee company was directed in the show cause notice to produce the investors before the AO on 09.03.2015 for examination but no compliance was made and the investors were not produced. The AO had provided several opportunities to the assessee company for producing the investors but no compliance was made. The AO on the analysis of the bank account found that these investor companies were not carrying out any actual business activity. The AO held that the amount of investment of ₹ 1,00,00,000/- in form of share capital/share premium was in form of cash credit and therefore, AO made an addition of ₹ 1,00,00,000/-u/s 68 of the Act. 5. Aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Nirdesh Trading Pvt.Ltd. ₹ 20,00,000/- 2. Renu Finprop Pvt.Ltd ₹ 35,00,000/- 3. Sneha Residency Pvt. Ltd. ₹ 25,00,000/- 4. Sushmita Distributers Pvt. Ltd. ₹ 20,00,000/- Total ₹ 1,00,00,000 /- The share premium of ₹ 90/- has been received from four companies based at Kolkata. The assessing officer made addition because assessee company has failed to prove the identity, creditworthiness and the genuineness of the transactions. On appeal, ld CIT(A) has confirmed the action of the assessing officer and therefore now the assessee is in appeal before us. We note that according to section 68 of the Income Tax Act, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding premium. In response to this, the assessee company furnished detailed reply along with the following documentary evidences, to discharge the primary onus cast under section 68 of the Act: (i) Name of the Investor companies; (ii) Address of the Investor companies; (iii) PAN of the Investor companies; (iv) Number of shares allotted; (v) Value of shares allotted; (vi) Share application form as filed by the Investor companies (vii) Confirmation of the Investor companies having made the investment explaining the source of making the investment; (viii) Copy of Income Tax Return of the Investor companies; (ix) Audited annual accounts of the Investor companies; (x) Bank Statement of the Investor companies; (xi) Affidavit of the directors of the Investor companies confirming the investments made by them and also explaining the business prudence by which they made the investments. Learned Counsel for the assessee states before the Bench that by submitting these plethora documents, the assessee company has discharged the primary onus cast under section 68 of the Act to prove the identity, creditworthiness and genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee company, with the details of source of funds. (iv) Copy of share certificate received. Therefore, we note that Assessing Officer has himself called for the above details from the Investor companies, to satisfy himself as regards the identity of the Investors, the genuineness of the transactions, as also the creditworthiness of the Investors. Thus, we note that assessee company has discharged its onus to prove the share capital by establishing the identity of the shareholders, the genuineness of the transactions and even the creditworthiness of the shareholders. We note that assessing officer has not even an iota of evidence to hold that the share capital is non-genuine since in the inquiry carried out by him the share capital has been found to be genuine and the findings in the assessment order are not relevant as they are pertaining to some other assessee and not to the assessee under consideration. Therefore, we note that despite of complete compliance made by the Investor companies and furnishing of all the details as required by the learned AO to establish the identity, creditworthiness and genuineness of the transaction, the impugned assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). In arriving at this conclusion, the Hon'ble Court has further stressed the presence of word may in section 68. Relevant observations at pages 369 and 370 of this report are reproduced hereunder:- Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as nongenuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will ..... X X X X Extracts X X X X X X X X Extracts X X X X
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