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TMI Blog2019 (2) TMI 2072X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. It has fixed assets worth Rs.62,36,839/-. It is in the business of transport. Hence the test to be applied for such companies, in our considered opinion is not the same as that which is to be applied in case of a jamakharchi company or a company on paper which has net worth and no transactions or real asset base. The creditworthiness of these share applicant companies is not in doubt. As far as the identity of these share applicant companies are concerned, the assessee has furnished the following details before the Assessing Officer in case of each of these companies as Share applications, ITR Acknowledgements, Audited Financial Statements, Relevant bank details and Allotment advices It is well settled that merely because the directors of the share applicant companies did not appear before the Assessing Officer, the addition could not be made - We find that the revenue has not brought out any evidence to controvert the findings of the ld. CIT(A). We find no infirmity in the order of the ld. CIT(A) and uphold the same. - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... , he relied on the 1st proviso to Section 68 of the Act and submitted that this proviso is applicable from the Assessment Year 2013-14 and not to the impugned Assessment Year 2012-13. e) That the assessee has proved the identity and creditworthiness of the share applicant companies and genuineness of the transactions. 3. Aggrieved the revenue is before us. 4. The ld. D/R, submitted that the share premium charged is excessive and this proves that the transaction is not a genuine transaction. He relies on the order of the Assessing Officer. 5. The ld. Counsel for the assessee, on the other hand submits that the assessee is not a paper company and it is a transport company having substantial turnover, hence substantial investment was made in its equity shares. He submitted that each of the share applicant companies have furnished copy of their PAN, copy of income-tax return filed by them, copy of the annual accounts, copy of audited financial statements, copy of bank account showing the transaction, source of source etc. He filed a paper book running into 322 pages and took this Bench through the evidences filed by each of these companies in support of his contentions. 6. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has furnished the following details before the Assessing Officer in case of each of these companies:- a) Share applications b) ITR Acknowledgements c) Audited Financial Statements d) Relevant bank details e) Allotment advices 8. It is well settled that merely because the directors of the share applicant companies did not appear before the Assessing Officer, the addition could not be made. After a detailed discussion of the submission and arguments of the assessee the ld. CIT(A) at para 5.1 to 5.8 of his order held as follows:- "5.1. I have considered the issue involved in the light of the arguments made by the appellant. I have also gone through the assessment order. The issue involved is whether the share application money with share premium aggregating to Rs.1,76,00,000/- received by the appellant invites the mischief of Section 68 of the Act or not. I have carefully perused the observations / findings recorded in assessment order where entire amount received towards allotment of 35200 equity shares of Rs.10/- each with premium of Rs.490/- was considered as unexplained cash credit u/s 68 of the Act. 5.2. The factual position emerging from audited account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... director of the appellant company calling for personal attendance as well as furnishing documents specified therein. The various documents called for were furnished as admitted by A.O. in the order. But the director of the company could not appear in person. The said summons required, production of directors of all sixteen subscriber companies. I agree with the arguments of Ld. A/R that Directors have no power to compel the directors of shareholder companies to appear before the AO of Assessee Company. I find that entire share capital with premium i.e. Rs.1,76,00,000/- has been considered as unexplained cash credit u/s 68 merely on the ground that the directors failed to appear in person in response to summons u/s 131. 5.4 It is also observed that every share applicant in their respective replies to the summons u/s 131 of the Act furnished copies of their income tax acknowledgments evidencing filing of income tax returns by each of them, copies of their audited accounts including Balance Sheets wherein such investments made by each of them in the subscription of share capital issued by the appellant are duly reflected as also copies of their bank statements for the relevant per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the appellant, in the impugned previous year relevant to the assessment year under appeal, as clearly evident not only from their respective books of accounts, but also from their audited accounts filed with the income tax authorities in relation to their own income tax assessments, and the sources of such funds are also explained by each of the share applicants in their replies addressed to the AO. However, the AO had not brought these indisputable facts on record but acted on his whims and fancies. It is observed that the burden which lay on the appellant. in relation to s. 68 of the Act, has been duly discharged by it and nothing further remains to be proved by it on the issue. I further find that another reason for drawing adverse inference by AO appears to be hefty share premium received by the appellant company from the shareholders. I have already held that 1st proviso of section 68 is applicable for AY 2013-14 and premium factor is not applicable here. I hold that the other observations are based on suspicion and surmise and hence cannot be given any credence. Since the conditions precedent for discharging of burden under the provisions of s. 68 of the Act are met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservation: "......We find that the identity of the 5 parties investing in the share capital is not in doubt. They are body corporate and their complete addresses are on record. This is the very first assessment in the fife of the assessee company. The amounts were deposited by these 5 corporates per account payee cheques. These parties were not shareholders of the assessee company at the time when the case was reopened under section 147 or when the summons were issued to them. We find that the assessee has filed before the A. O. copies of share application forms duly signed along with the complete addresses of the investors along with their I. T. file numbers, account payee cheque numbers and the assessee's bank statements disclosing the deposits of these amounts. In these facts we find that the assessee has discharged its initial onus to prove the identity of the investors as well their creditworthiness. It is not the case of the Revenue that the investor parties did not exist or that the money was not invested by them through banking channels." Again, the Hon'ble Jurisdictional High Court in the case of CIT vs. Sanchati Projects (P) Ltd. [ITAT 140 of 2011 dated 08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of share application money was also duly recorded in the audited account of each of the share applicants. We, thus, find that both the authorities below on the basis of the aforesaid materials on record were quite justified in deleting the aforesaid addition of Rs. 45,00, 000/- done by the Assessing Officer. We are of the view that the order impugned does not suffer from any defect whatsoever and question of substantial error of law arises justifying our interference. The appeal is, thus, summarily dismissed. " 5.7 Further this decision of the Han'ble Delhi High Court was approved by the Hon'ble Supreme Court in CIT vs. Lavely Exparts Ltd. (2008) 216 CTR 195 (SC) wherein it was held as under: "2. Can the amount of share money be regarded as undisclosed income under section 68 of I. T. Act, 1961? We find no merit in this Soeciel Leave Petition for the Simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law." "5.8 Therefore, considering the totality of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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