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TMI Blog2018 (8) TMI 2079X X X X Extracts X X X X X X X X Extracts X X X X ..... to noticed that the CIT(A) has wrongly allowed the claim of the assessee. The facts are not distinguishable at this stage also. Therefore, taking into account of all the facts and circumstances mentioned above, we are of the view that the finding of the CIT(A) is quite correct which is not liable to be disturbed at this appellate stage. Accordingly, we affirmed the finding of the CIT(A) on this issue and decide this issue in favour of the assessee against the revenue. - I.T.A. No. 6006/Mum/2016 - - - Dated:- 3-8-2018 - SHRI G. S. PANNU, AM AND SHRI AMARJIT SINGH, JM For the Revenue : Shri Ram Tiwari (Sr. AR) For the Assessee : Shri Ajay R. Singh ORDER PER AMARJIT SINGH, JM: The revenue has filed the present appeal against the order dated 29.07.2016 passed by the Commissioner of Income Tax (Appeals)-20, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the AY. 2009-10. 2. The revenue has raised the following grounds: - 1. On the facts and circumstance of the case and in law, whether the Ld CIT (A) erred in holding that the credit worth mess of the share applicants was established in as much as the term creditworthiness implies a reput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to explain the identity of the person, genuineness of transaction and creditworthiness of the person in respect of share capital and share premium money. Thereafter, the amount to the tune of ₹ 2,25,00,000/- was added to the income of the assessee u/s 68 of the I.T. Act, 1961. The total income of the assessee was assessed to the tune of ₹ 2,43,04,980/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us. ISSUE NO. 1:- 4. Under this issue the revenue has challenged the addition of ₹ 2,25,00,000/- raised by AO in view of the provision of Section 68 of the Act. The Ld. Representative of the revenue has argued that the CIT(A) has wrongly deleted the addition specifically in the circumstances when the identity and genuineness and creditworthiness of the transaction of the said three companies have not been proved on record, therefore, in the said circumstances, the finding of the CIT(A) is wrong against law and facts and is liable to be set aside. On the other hand, the Ld. Representative of the assessee has strongly relied upon the order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id by them on the income so earned. In the light of observations of the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd. reported in 216 CTR 295, the onus on the appellant has been duly discharged. The peculiar facts of the case may have caused suspicion in the mind of the A,O. but there is no evidence or other material to hold that the appellant had routed its own money. 6.5 On an analysis of the facts on records, it is seen that the share application money and share premium of Rs, 2,25,00,000/- has come from three companies. It is noted that these companies are existing companies and had confirmed that they had contributed to the share capital of the assessee company. The next aspect is their creditworthiness. The assessee has filed copy of PAN card, bank statement, balance sheet and P L account, Share Application Form, Board Resolution empowering the applicant companies to invest in the assessee company. It emerges out from the record that the investing companies had recorded the investments in appellant company in their books of accounts which were duly audited during the relevant financial year. Thus, the companies had demonstrated these balances in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subscription to share capital Share Application form along with Board resolution. Copy of bank statement reflecting the share application money Copy of financial statement for FY 2008-09 Copy of ITR V for A.Y. 2009-10 Confirmation letter Sidh Housing Development Company Limited Letter of acceptance for subscription to share capital. Share application form along with Board resolution. Confirmation letter. ITR acknowledgment for A.Y2009-10 Audited financial statements for the year ended 31.03.2009. Copy of relevant bank statement highlighting the transaction Ganeshwar Trading Letter of acceptance for subscription to Finance Co. Ltd. share capital. Share application form along with board resolution. Confirmation letter ITR acknowledgment for AY 2009-10 Audited financial statements for the year ended 31.03.2009. Copy of relevant bank sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e genuineness of transaction; and (c) the creditworthiness of shareholders. 12. In case the investor/shareholder is an Individual, some documents will have to be filed or the said shareholder will have to be produced before the Assessing Officer lo prove his identity If the creditor/subscriber is a company, then the details in the form of registered address or PAN identity, etc., can be furnished. 13' The genuineness of the transaction is to be demonstrated by showing that the assesses had, in fact, received money from the said shareholder and it came from the coffers of that very shareholder. The Division Bench held that when the money is received by cheque and is transmitted through banking or other indisputable channels, the genuineness of transaction would be proved. Other documents showing the genuineness of transaction could be copies of the shareholder s register, share application forms, share transfer register, etc. 14 As far as creditworthiness or financial strength of the creditor/subscriber concerned, that can be proved by producing the bank statement of the creditor/subscriber showing that it had sufficient balance in its accounts to enable it to sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the financial worth of the subscribers. Further the initial burden on the assessee would be somewhat heavy m case the assessee is a private limited company where the shareholders are family friends/close acquaintances, etc. It is because of the reason that m such circumstance, the assessee cannot feign ignorance about the status of these parties. 6.7 The judgment of the Supreme Court in the case of CIT v. P, Mohanakala [2007] 291 ITR 278 is also relevant on the facts of the case. In that case, the assessee had received foreign gifts from one common donor. The payments were made to them by instruments issued by foreign banks and credited to the respective accounts of the assessee by negotiations through bank in India. The evidence indicated that the donor was to receive suitable compensation from the assessee. The Assessing Officer held that the gifts though apparent were not real and accordingly treated all those amounts which were credited in the books of account of the assessee, as their income applying section 68 of the Act. The assessee did not contend that even if their explanation was not satisfactory the amounts were not of the nature of income. The Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd source of the sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz, the receipt of money. The burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature. The burden is on the ^o take the plea that even if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature. 6.8 It is also of relevance to point out that in CIT vs Stellar Investment Ltd, [1991] 195 ITR 287 (Delhi) where the increase in subscribed capital of the respondent-company accepted by the Income-tax Officer and rejected by the Commissioner of Income-tax on the ground that a detailed investigation was required regarding the genuineness of subscribers to share capital, as there was a device of converting black money by issuing shares with the help of formation of an investment which was reversed by the Tribunal, the Delhi High Court held that even if it be assumed that the subscribers to the increased share capital were not genuine, unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir names and addresses, income tax file number^ their creditworthiness, share application forms and share holders'1 register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec.68 and the retied open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assesses and also the link between self-confessed accommodation added to its income. Since I am satisfied that (he assesses has furnished inaccurate particulars of its income, penalty proceedings under section 271(1)(c) are being initiated separately. The facts of Nova Promoters and finlease (P) Ltd. (supra) fail in the former category and that is why this Court decided in favour of the revenue in that case However, the facts of the present case are cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Audited financial statements for the year ended 31.03.2009. Copy of relevant bank statement highlighting the transaction Company Limited. (iii) Ganeshwar Trading Letter of acceptance for subscription to share capital. Share application form along with board resolution. Confirmation letter ITR acknowledgment for AY 2009-10 Audited financial statements for the year ended 31.03.2009. Copy of relevant bank statement highlighting the transaction. 6. The CIT(A) was of the view that the assessee as well as the three companies whose shares have been purchased by the assessee have proved the identity, genuineness and creditworthiness of transaction. The assessee has produced the PAN number, Bank Account, Balance-Sheet, Copy of return Statement of bank account of all parties confirmation letter etc. Whether these documents are false and fabricated are not on record. A further enquiry is required to be done to falsify the claim of assessee in connection with the said three pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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