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TMI Blog2022 (4) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was assessment framed in case of all three parties for the year under consideration where additions were made. This fact cannot be brushed aside merely on the ground that the investor were not produced by the assessee during the assessment proceedings. It was the revenue which wanted to verify the investors. For this purpose, lot of powers were available with the revenue such as issuing notice under Section 131 of the Act for inviting the personal attendance of the parties. But the AO has not exercised such power in the given facts and circumstances. Thus we are of the opinion that, though the transactions of the share application money received by the assessee received without proper share application form or written correspondence may raise doubt but in either of the case, once application money is returned back, which has been established based on the documentary evidence, the credit entries cannot be looked into in isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, we hold that there is no infirmity in the order of the Ld. CIT-A. Hence, the ground of appeal of the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident from the search carried out in ITD. 3.2 The assessee with respect to two parties namely Shri Rameshji Gobarji Thakor bearing PAN AESPT-3446-H and Shri Vinod Kumar J. Sharma bearing PAN ALLPS-0605-F has not furnished the complete address and therefore it was not possible to conduct the enquiry in order to find out the genuineness of the transactions. 3.3 The aforesaid parties have made investment in the company without having any written documents/correspondence/ confirmation and share application form. In such kind of huge transactions, the oral understanding between the parties as claimed by the assessee is not tenable. As such no prudent investor make the investment of such magnitude in the company without proper documents and carrying out due diligence. It was also seen that the assessee has given a loan of ₹10 crores in the month of February 2009 to Shri Rameshji Gobarji Thakor and Shri Vinod Kumar J. Sharma which it has received back. Even, for this transaction the assessee has not made any documents in writing which implies that the loan was advanced without any due diligence. 3.4 The authorized share capital and subscribed capital on the balance sheet da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of section 68 of the Act. 3.9 The above facts were also brought to the notice of the assessee and to this effect summon was also issued upon it but failed to make necessary compliance. 3.10 The AO also found that there were certain land transactions deals carried out by the JP Iscon group. As such the group has sold its own lands to certain parties including Smt Hansaben at the nominal value which were again re-acquired by the group from the same persons at the much higher value. The consideration paid by the group was received back by it through the involvement of various persons by layering the funds in different companies. Indeed, there were huge amount of capital gain in the hands of the other parties but none of them has offered to tax such capital gain. Accordingly, it was alleged by the AO that the group has adopted the modus operandi to avoid the payment of tax by indulging in certain fictitious transactions of land deals. 3.11 On enquiry from the bank, it was found out that the KYC norms were not complied with by the parties as discussed above in the bank account. Furthermore, the group including the assessee was maintaining the bank account in same branch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditworthiness and genuineness of the investors in respect of share application money has not been proved and made addition u/s. 68 of the I. T. Act, 1961 in the total income. 4.3.1. Appellant has submitted the rebuttal of observation made by Assessing Officer in the assessment order during course of the appellate proceedings. Appellant has contended that if has discharged complete onus as required u/s. 68 of the I. T. Act, 1961 in respect of share application money received during the year which was also returned back in the subsequent year on non allotment of share. The appellant has contended that it has submitted details of name, pan and address of all investors, copy of annual accounts of appellant company, bank statement, ledger account for F. Y. 2009-10 2010-11. Appellant has stated that it was a part of Iscon Group which is one of leading group in the real estate market of Gujarat and has a immense goodwill. Appellant submitted that the share applicants showed interest in providing the requisite share application money as the appellant company was coming up with proposal of public issue for proposed business project requiring huge investment, guaranting a sound retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court in the case CIT v. Victor Electrodes Ltd. [2012] 20 taxmann.com 680/[2010] 329 ITR \ 271. Appellant has contended that share application money received has been returned back in the subsequent year, and therefore, as per the decision of jurisdictional! High Court in the case of CIT, Rajkot Vs. Aayachi Chandrashekhor Narsangji [2014] 42 taxmann.corn 251 (Gujarat), the genuineness of the transaction cannot be doubted. The appellant has also relied upon decision of Hon'bie Supreme Court in the case Commissioner of Income Tax Vs. Lovely Exports Pvt. Ltd. in which the Hon'bie Court has held that prior to amendment to proviso to section 68 w.e.f. A. Y. 2013-14, no addition of share application money could be made in the case of company and any addition of share application money is to be made in the hands of share applicants. 4.4. The Assessing Officer has held that identity of share applicants could not be proved mainly for the reason that appellant has not submitted complete address in respect of Shri Vinodkumar Sharma and Shri Rameshbhai Thakor and appellant did not produce the share applicants. However, it is seen that appellant has given the pan, name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the hands of Shri Rameshji G. Thakor. In the case of Shri Vinodkumar Sharma, the appellant has explained the source of shore application money of ₹ 4,00,00,000/- from Arnbe Trade Corp. Pvt. Ltd. which was finally traced from the source of Ms. Hansaben Manilal Patel. The Assessing Officer of Shri Rarneshji G. Thakor i.e. ITO, Wd. 2[2)[5], Ahmedabad in the assessment order dated 20/11/2017 has made the addition of ₹ 8,00,00,000/- of the bank credit in the hands of Shri Vinodbhai J. Sharma. In view of the above, the capacity of the share applicants are established. 4.6. As regard to genuineness of the transactions, the share application money have been received from banking channel and there is no cash element involved in any transaction. Appellant company has submitted the purpose for which share application money was received, which was returned back by cheque in the subsequent year as the project could not come up. As the transactions are through banking channel and share application money received has been returned back in the subsequent year, the genuineness is established. The Honourable Gujarat High Court in the case of CIT, Surat - 1 Vs. Shree-1 Vs. Shree Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars was not enough. 7.1 Now first we proceed to understand the identity of the party. The identity of the party refers existence of such party which can be proven based on evidences. As such the identity of a party can be established by furnishing the name, address and PAN detail, bank details, ITR etc. 7.2 The next stage comes to verify the genuineness of the transaction. Genuineness of transaction refers what has been asserted is true and authentic. A genuine transaction must be proved to be genuine in all respect not merely on a piece of a paper. The documentary evidences should not a mask to cover the actual transaction or designed in way to present the transaction as true but same is not. Genuineness of transaction can be proved by submitting confirmation of the party along details of mode of transaction but merely showing transaction carried out through banking channel is not sufficient. As such the same should also be proven by circumstantial surrounding evidences as held by the Hon ble supreme court in case of Durga Prasad More reported in 82 ITR 540 and in case of Smt. Sumati Dayal reported in 214 ITR 801. 7.3 The last stage comes to verify the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived by the assessee was refunded to the parties. It implies that the assessee was not the beneficiary of the amount received by it as alleged by the AO. Though the share application money has been repaid by the assessee in the subsequent year, but it is difficult to hold that the assessee was the ultimate beneficiary of the impugned amount. Thus, we can assume that the impugned transaction was the genuine transactions between the assessee and the parties. 7.9 It is also pertinent to note that the learned CIT (A) has given categorical finding that there was assessment framed in case of all three parties for the year under consideration where additions were made. This fact cannot be brushed aside merely on the ground that the investor were not produced by the assessee during the assessment proceedings. It was the revenue which wanted to verify the investors. For this purpose, lot of powers were available with the revenue such as issuing notice under Section 131 of the Act for inviting the personal attendance of the parties. But the AO has not exercised such power in the given facts and circumstances. We also feel pertinent to refer the judgment of the Hon ble Gujarat high court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) erred in deleting the addition made by the AO for ₹ 10 crores, treating the same as unexplained cash credit under section 68 of the Act. 9. The assessee during the year received ₹ 5 crores each from Shri Rameshbhai Thakor and Shri Vinod Sahrma and claimed that the same was represent loan and advances given in earlier occasion. However the AO treated the same as unexplained cash credit under section 68 of the Act by observing as under: The assessee has received a sum of ₹ 10 crores from Rameshbhai Thakor and Vinod Sharrna during the year. The assessee has not brought any confirmation / agreement to show that the receipts are in respect of loan given earlier. Further, even as per the assessee's own submission referred earlier, no due diligence was done in respect ot\ such persons. Thus, it is not known how the assessee's claim of loan having been given earlier and that too without interest can be believed. The facts are similar to the earlier issue in respect of share application receipts and in view of the above discussion, the sum of ₹ 10 crores is added as unexplained receipt to the income of the assessee and brought to tax. 10. Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crimpers [2018] 95 Taxman.com 323 (Gujarat) relying upon decision in the case of CIT Vs. Aayach Chandrashekhar Narsangi (supra), where repayment of loan has been made in subsequent year, has held the transaction to be genuine. In the present case, it is not the loan received during the year, but the payment of loan received back from Shri Rameshbhai Thakor and Shri Vinodbha Sharma of the loan given in the preceding year. Therefore, addition u/s. 68 of the I.T Act, 1961 of loan received back is uncalled for and unjustified. In view of the above, the addition made by the A.O is deleted. The ground of appeal is accordingly allowed. 11. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 12. The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained therein which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 13. On the contrary the learned AR before us vehemently supported the order of the ld. CIT-A. 14. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2017 in the case of the Respondent Company. The issue of notice u/s. 148 of the I.T. Act, 1961 in the case of Respondent Company by the Ld. AO is wrong and bad in law as much as for initiating proceedings u/s. 147, the AO is wholly and merely relied upon the information received from DDIT Inv. Unit- 1(3), Ahmedabad. 2. The Respondent humbly submits that in absence of any tangible material brought on record for recording of the reasons for reopening of the case, the notice issued u/s.148 of the Act for reopening of the case is unjustified and bad in law and the reassessment framed by the AO u/s.143(3) r.w.s.147 of the Act merely borrowed satisfaction is unjustified and bad in law in view of the various judicial pronouncements relied upon by the Respondent. 3. The Ld. CIT(A) has correctly on facts and under the law after considering the details and evidences placed on record by the Respondent as well as settled legal position held that in Para 4.4 of the appellate order that it is seen that appellant has given the PAN, Name and Address of the share applicants. The bank details and complete address is also evident from the inquiry made from the bank by the Investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an received back from Shri Rameshbhai Thakor and Shri Vinodbhai Sharma of the loan given in the preceding year. Therefore, addition u/s.68 of the I.T.Act, 1961 of loan received back is uncalled for and unjustified and the Ld. CIT(A) following the judicial pronouncement of the Hon ble Gujarat High Court in the case of Ayachi Chandrashekhar Narsamgji (2014) 42 taxmann.com 251 has rightly deleted the addition made by the AO under section 68 of the I.T. Act, 1961 of ₹ 10,00,00,000/-. 6. The Respondent craves right to add, amend, alter, modify, substitute, delete or modify all or any of the above grounds of cross objection. 16. The assessee in ground Nos. 1 and 2 of its objection challenged the validity of the notice issued under section 148 and assessment framed under section 143(3) r.w.s. 147 of the Act. 16.1 At the outset we note that the issue raised by the Revenue on merit in its appeal bearing ITA No. 1264/AHD/2019 has been dismissed by us. The impugned CO is arising against the appeal filed by the revenue wherein the validity of the assessment framed under section 143 3 read with section 147 of the Act was challenged. As the revenue is appeal has been dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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