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TMI Blog2022 (1) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... erference. Hence, the appeal preferred by Revenue dismissed. - I.T.A. No. 302/Ahd/2019 And I.T.A. No. 303/Ahd/2019 - - - Dated:- 23-11-2021 - Shri Pradip Kumar Kedia, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Revenue : Shri Alok Kumar, Sr. DR For the Assessee : Shri Mehul K. Patel, AR ORDER PER Ms. MADHUMITA ROY - JM: Both the appeals filed by the Revenue are directed against the orders both dated 17.12.2018 passed by the Ld. CIT(A)-11, Ahmedabad arising out of the orders both dated 31.03.2015 passed by the Ld. DCIT, Central Circle-1(1), Ahmedabad under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to the Act ) for the Assessment Year (A.Y.) 2012-13 whereby and whereunder the addition made by the Ld. AO on account of share capital and share premium has been deleted. ITA No. 302/Ahd/2019(A.Y. 2012-13):- 2. The appellant company is engaged in the business of financing and share trading. It also carries out investment activities in shares and securities. The company registered with RBI as NBFC filed its return of income on 29.09.2012 declaring total loss at Rs. (-) 7,89,937/-. The appellant company h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share application money, unsecured loans, long term capital gains, short term capital gains wherein cash was received by him from various clients against which he provides accommodation entries. Further that, he has created an infrastructure of 212 companies which are used for layering of funds and purchase and sale of shares as claimed to have been found from such N. Navkar Sheet. Relying upon the seized document and the statement of various directors of different companies as mentioned above finally the Ld. AO came to a conclusion that all the companies from whom the assessee had received share capital with premium are paper companies having no business activities, controlled and managed by Shri Shah and used by him for providing accommodation entries. The fact that payments were received through cheques and banking channel and the party filed confirmation failed to satisfy the AO s doubt in regard to the creditworthiness and genuineness of the transaction. Thus, the share capital with premium of ₹ 1,89,10,000/- received in the books of accounts of the assessee from three companies namely Sanguine Media Ltd., Specialty Paper Ltd. and Yantra Natural Resources Ltd. (Ganesh S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credits are dummy directors and name lenders as directed by an employee of Shri Shah as per the declaration and/or affidavit filed by those directors. 7. On the basis of the statement of Shri Shah recorded under Section 131 of the Act on 13.01.2014 and in view of the admissions and declaration of the directors as aforesaid the assessee was directed to discharge the onus as per provision of Section 68 of the Act to prove the creditworthiness of the parties, genuineness of the transaction in which the assessee has received credits to the tune of ₹ 12,29,45,000/-. 8. The assessee claimed to have discharged the primary onus cast on it under Section 68 of the Act by submitting the confirmations, copy of account, PAN of the parties who have invested in the assessee company through banking channels. However, the Revenue was of the view that the assessee failed to discharge the onus with regard to funds received in its accounts for the following reasons as it appears from the order passed by the Ld. AO: The funds received in the assessee company as share capital/premium have been paid by Shri Chandrakant Shah s (SCS) companies against receipt of cash/other credits that has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the three companies in question as on the date is ACTIVE as per the records of the Ministry of Corporate Affairs. Therefore, the investor companies cannot be held to be as paper/shell companies as observed by the Ld. AO. Another important factor, as it reveals from the records, that the N Navkar Sheet as seized during the search does not bare any entry and/or noting in the columns of Paid or Received against the transactions of the assessee company alleged to has been found and noted in the said sheet on 28.03.2012. This particular fact was also brought to the notice of the Ld. AO while filing written notes of submission by the assessee which we find has not been taken care of in its proper perspective. The initial/primary burden cast upon the assessee under Section 68 of the Act as regards the identity of the shareholder has been meted out by the assessee by submitting PAN Card, registered address of the respective companies, company master data from the website of MCA and details downloaded from the website of BSE. The document being the bank statement, confirmation and audited accounts of the respective company showing investment in share/capital premium of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year 2011-12 as unsecured loan which was transferred to the assessee company and again ₹ 8 Crores during the financial year 2012-13 as unsecured loan were transferred to the assessee-company and further during financial year 2012-13 and ₹ 17 Crores was transferred as unsecured loan to company RCCPL During the investigation, it was allegedly found that commission at the rate of 5 per cent had been charged by the aforesaid 5 entry providers companies for providing accommodation entries, therefore, commission of ₹ 1.50 Crores (5 per cent of ₹ 30 Crores) for the financial year 2011-12 and ₹ 1.25 Crores (5 per cent of ₹ 25 Crores) for financial year 2012-13 was added to the total income on the assessee company for infusion of accommodation entries as unexplained expenditure. Held - The Tribunal after due examination of the order of Commissioner (A) and the documents on record insofar as identity creditworthiness, genuineness of transaction of Aadhaar ventures, Dhanush Technologies, Emporis Projects and L.N. Industries (formerly known as L.N. Polyster) came to the conclusion that the assessee company having received share application mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not merit acceptance for the reasons such as earlier statements were recorded behind the back of the assessee and also behind the back of the AO. No opportunity of cross examination was allowed despite specific and repeated requests. The earlier statements were recorded much before the search on the appellant company. BSPL was not in the picture and was not an issue during these statements. In such statements none had named BSPL and heid that the statement recorded by the CIT (Appeals) are more authentic in all respect and held as under :- I examined this issue in detail and found that there is no evidence to prove, firstly generation of unaccounted cash and transfer of such cash to others for obtaining accommodation entries. I have also found that during the course of search at the appellant company and also on its associate companies and residence of the directors when every corner of the house was searched, not a single paper, evidence or record was unearthed by the search team which support the allegation of generation of any unaccounted cash and transfer of such cash for the purpose of obtaining accommodation entries. In the absence of any evidence of such cash transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am satisfied that the condition u/s 68 stands satisfied. Hence the conclusion of the AO is rejected. 26. On the allegation of the assessing officer regarding appointment of dummy directors, the appellate authority held the following:- The appellant company had argued without prejudice to the merits of the conclusion, that any statement recorded in the search of others without providing opportunity of cross examination cannot be used in the assessment of the appellant company while making the assessment. In any case for that matter, I have myself recorded the statement of the persons who all have deviated from there earlier statements which were stated to be recorded under fear and misrepresentation. During examination the books of account were also produced by the concerned directors. They satisfactorily explained and replied all the queries raised by me regarding the business activities of their respective companies, explained the investment made in the appellant company and also explained the source thereof. They were found to be fully acquainted with the directors of the investee company. They also explained about the business premises and activities of the associate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt companies in his office premises. He has stated that he was providing data hub services and financial consultancy services to different companies. He has also given the reasons for earlier statement. I am unable to rely on the statement recorded earlier. I cannot reject the statement recorded by me mainly for three reasons such as earlier SCS never stated or referred the name of Bharat Securities (P) Ltd. and secondly Bharat Securities was not in picture at all during those statements and finally SCS denied for providing any accommodation entries to Bharat Securities. I disagree with the conclusion drawn by the AO and, therefore, reject the same. 31. On the allegation of the assessing officer that from the bank trail it is established that the funds were layered mainly through the companies controlled by SCS, after considering the facts of the case and rival submissions the CIT (A) held as under :- 'The AO has not found either the source or the source of the source as vague or untrue The AO has not examined these companies from where RTGS has arisen. The amount of RTGS had come on surface in the books of account somewhere else and these entities have not been prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe to shares at such a premium or not and, moreover, the section 68 does not envisages any law on share premium it only requirement is to identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants which has been discharged by the respondent authority and the same has been accepted by the appellate authorities; thus, the same cannot be reconsidered in these appeals as it is a pure question of fact. 13. Further that though it was requested by the assessee for providing cross-examination of Shri Shirish Chandrakant Shah and Shri Rajesh Jhaveri statement of whom were relied upon while drawing adverse inference on the case of the assessee such request has not been acceded to as it reveals from the order passed by the Ld. AO. It was though opined by the Ld. AO that the issue involved has not been decided merely on the basis of statement given by SCS and others but is decided mainly on the basis of various evidences found during the course of search on SCS. On the other hand, we find that the said AO admitted that SCS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany's case and facts of the above decision are identical and therefore respectfully following the above decision of Hon'ble High Court of Madhya Pradesh, I hold that the addition on account of share capital/premium received by the appellant company while considering the same as in the nature of accommodation entries received from the companies alleged to be managed and controlled by SCS is not justified. I have also perused and considered the following decisions of various courts relied upon by the appellant company wherein the addition made by lower authorities for share capital and share premium u/s. 68 of the Act considering the same as in the nature of accommodation entries have been deleted. Since in the appellant company's case also, the addition has been made considering the share capital/premium as accommodation entries, the same is not sustainable on facts and in law. ITO v. Iraisaa Hotels (P.) Ltd.[2018] 97 taxmann.com 623 (Mumbai - Trib.) ACIT v. Shyam Indus Power Solutions (P.) Ltd. [2018] 90 taxmann.com 424 (Delhi - Trib.) ACIT v. Swiftsol (I) (P.) Ltd [2018] 95 taxmann.com 286 (Nagpur - Trib.) Pavitra Realcon (P.) Ltd. v. ACIT [2017] 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dislodge the same However, except for relying on a third-party statement, which was never confronted to the assessee, there is no other material to support the conclusion that the said transactions were unexplained cash credit. No opportunity of cross-examination was ever provided to the assessee and in fact, no further investigations were done by Ld. AO to support his conclusion. Therefore, additions could not be sustained in the eyes of law. 6. As rightly noted by Ld. CIT(A), in terms of the decision of Hon'ble Bombay High Court in CIT V/s Gagandeep Infrastructure P. Ltd. (ITA No. 1613 of 2014 dated 20/03/2016), proviso to Sec.68 requiring assessee to prove the source of source was applicable only from AY 2013-14 onwards only and therefore, the assessee could not be obligated to prove the source of source for AY 2010-11. We concur with the reliance of Ld. CIT(A) on this binding judicial precedent for the said proposition. 7. Proceeding further, we find that the assessee was saddled with similar additions in AY 2012-13 but the same were deleted by Ld. CIT(A). Upon further appeal to Tribunal, the appellate order was set aside and Ld.AO was directed to reframe the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and hence, dismissed. ITA No. 4559/Mum/2017 CO No. 306/Mum/2018, AY2011-12 9. As stated earlier, facts are pari-materia the same in this year. The assessee has been saddled with similar additions, being share premium received from certain entities allegedly being controlled by Shri Shirish Chandrakant Shah. The assessment has been framed on similar lines. The Ld. CIT(A) deleted the same, inter-alia, by observing that Id. AO did not establish any connection of Shri Shirish Chandrakant Shah with the listed entities and the additions were merely on the basis of third-party statement. As against this, the assessee had established the identity, creditworthiness and genuineness of the share application by furnishing complete details and documentary evidences which is also evident from similar documents placed before us in the paper-book for this year. Aggrieved, the revenue in in further appeal before us. The assessee has filed similar cross-objections which is merely supportive of impugned order. 10. Since the facts are pari-matena the same, our adjudication for AY 2010-11 shall mutatis-mutandis apply to this year also. The impugned M/s. Amirashmi Finstock Private L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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