9911796707
TMI Blog2022 (2) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... ute where the assessee offers no explanation. The satisfaction with regard to the explanation is in effect an in-built safeguard in section 68 protecting the interest of the assessee. It provides for an opportunity to the assessee to explain the nature and source of the fund. Once it is explained, it is incumbent on the assessing officer to consider the same and form an opinion whether the explanation is satisfactory or not. We are of the view that in assessee`s case the three ingredients of the Section 68 are satisfied to a reasonable extent, by the assessee. That being so, we decline to interfere in the order of ld CIT(A), his order on this issue is hereby upheld and grounds of appeal raised by the Revenue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... 2800 22165200 24628000 Sunil Borda 88, Kalidas Nagar, Lambe Hanuman Road, Surat 246600 10 90 2466000 22194000 24660000 Guriben K Borda 37, Diamond Nagar, Opp.Mira Nagar, Surat 388000 10 90 3880000 34920000 38800000 Sumit Borda 37, Diamond Nagar, Opp. Mira Nagar, Surat 35000 10 90 350000 350000 3500000 Total 949880 9498800 85489200 94988000 In questionnaire vide notice dated 07.11.2014 u/s 142(1) of the Act the assessee was required to furnish details and supporting material to establish the identity, genuineness of source and creditworthiness in respect of addition to share capital and receipt of share premium during the year. The assessing officer also issued notices u/s 133(6) of the Act, to the investors who had paid share application money to the assessee-company towards share capital and share premium. Details relating to service of notices u/s 133(6) and gist of responses from the said investors is depicted in the following table: Name of investor Whether notice u/s 133(6) served or not Whether reply to notice u/s 133(6)received or not Alpesh R Borda Served Yes Ramesh K Borda Served Yes Sunil Bodra Unserved NA Gauriben K Bodra S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld DR are that during the assessment proceedings, numbers of opportunities were given to the assessee to establish the Identity, Creditworthiness of the Investors and genuineness of the transactions. The assessee could not establish the same by providing cogent evidences. During the assessment proceedings, notice u/s 133(6) of the I.T. Act were issued by speed post to all investors and reply of investors i.e. Alpesh Borda, Ramesh Borda and Sumit Borda were received. In case of Gauriben K Bodra and Sunil Bodra, no replies were received. In case of Sunil Bodra, bank statement was obtained from Axis bank, Surat from which it was found that huge sums of money have been channelized through this account to various accounts of the other contributors to share application money. In the said bank account of Shri Sunil Bodra, money were received from outside in US$ and this money had gone to bank accounts of others parties and part of this money appeared to have gone towards payments by these other persons to the assessee company as share application money. In other investors, the assessing officer has observed that when compared with the amount of share application money given, their return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, received from Director of assessee - company and his family members, therefore, identity and genuineness of the transactions should not be doubted. During the assessment stage, the assessee submitted the following documents and evidences: (1) Copies ITR, computation of income (2) Copy of passport (3) Copies of assessment order u/s 143(3) for assessment year 2010-11 (4). Audited accounts statement (P&L a/c and balance sheet) (5). Audited accounts statement (P&L a/c and balance sheet) (6). Bank a/c statements (7). Bank book (8). Contra confirmation (9). Leger account in books of individual (10). Allotment return FormNo.2 filed with ROC (11). Bank statement of NRE a/c (12). Net wroth certificate issued by Dubai based chartered accountants (13) Trade lincence issued by Govt. Of Ras ALKHAMAH Free Trade Zoen at UAWE case of Shri Sunil Bodra (14). confirmation letters (15).PAN card and address of share applicants. By submitting these plethora documents and evidences, the ld Counsel claimed that assessee has discharged his onus to prove Identity, Creditworthiness of the Investors and genuineness of the transactions. Therefore, he prays t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (prop concern of shareholder) for the year 122-129 (ix) Bank bookandbank statement of Mahi Enterprises(prop Mansukh Rupapara) being source 130-132 Sunil Bodra - Shareholder Sr.No. Nature of document page No (i) Passport issued by Indian Govt. 134-153 (ii) Trade licence issued by Government of Ras Al Khiamahk, Rak Investment Authority, Free Zone at UAE 154 (iii) Copy of bank statement (NRE a/c) of the shareholder with Axis Bank 155 (iv) Allotment return (Form No.2) filed with the ROC 156-159 (v) The net worth certificate issued by a CA at Dubai - UAE is enclosed herewith 160-162 Gauriben Bodra - Sr.No. Nature of document page No (i) Ledger a/c copy of Gauriben in the books of assessee-company. 163 (ii) Copy of bank statement (NRE a/c) of the shareholder with Axis Bank 164 (iii) The net worth certificate issued by a CA at DubaiUAE is enclosed herewith 167-168 9. We note that by submitting these above noted documents and evidences in respect of each share applicant, the assessee has proved the identity, creditworthiness and genuineness of the transactions.When a question as to the creditworthiness of a creditor is to be adjudicated and if the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enclosed Pg#----- of PB 34,00,000 34,00,000 RAMESH KARAMSINH BODRA ACHPB9356P 2,46,28,000 07/11/2011 2,46,28,000 Withdrawal from prop. Firm Soham Fabrics. The firm had taken loan from Narshi Textiles 2,46,27,900 ALNPD4095N ITR V enclosed Pg #----- of PB 2,46,28,000 2,46,27,900 SUMIT R BODRA assessing officerAPB3085J 35,00,000 O balance (cheque received in earlier year but cleared in current year) 35,00,000 Loan from Mahi Enterprise AFNPR4554K ITR V enclosed Pg #---- of PB 35,00,000 SUNIL BODRA 2,46,60,000 21/10/2011 24/10/2011 24/10/2011 04/11/2011 1,00,00,000 20,00,000 1,02,00,000 24,60,000 USD received in the NRE a/c No. 910010001320236 with Axis Bank 1,00,10,127 20,00,000 1,19,80,274 24,56,935 21/10.2011 22/10/2011 24/10/2011 04/11/2011 2,46,60,000 2,64,47,337 GAURIBEN BODRA 3,88,000 05/12/2011 3,88,00,000 USD received in the NRE a/c No. 910010001359975 with Axis Bank 3,88,05,844 5/12/2011 3,88,00,000 3,88,05,844 9,49,88,000 11. From the above chart it is clear that during the year, the assessee company has received share application money of Rs. 9,49,88,000/-,from five individuals as stated by the assessing officer (on page no. 5 of his orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dra In case of Non-resident (Dubai) i.e. Shri Sunil Bodra and Smt. Gauriben Bodra 1 Copies ITR, computation of income 1 Copy of passport 2 Copies of assessment order u/s 143(3) for assessment year 2010- 11 2 Bank statement of NRE a/c 3 Audited accounts statement (P&L a/c and balance sheet) 3 Net wroth certificate issued by Dubai based chartered accountants 4 Bank a/c statements 4 Trade lincence issued by Govt. of Ras ALKHAMAH Free Trade Zoen at UAWE case of Shri Sunil Bodra 5 Bank book 5 confirmation 6 Contra confirmation 6 Form No.2 (allotment return file with ROC (Registrar of companies) 7 Leger account in books of individual 8 Allotment return FormNo.2 filed with ROC 13. From the above chart, it can be seen that assessee has submitted enough evidences to prove three ingredients of section 68 of the Act, namelyidentity, creditworthiness and genuineness of the transactions. We also note that Assessing Officer has issued statutory notices u/s 133(6) of the Act, in the case of shareapplicants out of which four notices were served. The three resident Indian share applicants have complied with to the statutory notices u/s 133(6) of the Act. 14. In respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheue by banking channel -Whether addition made by the assessing officer could be sustained Held ' NO." 2. CIT v/s Harishbhai Raojibhai Patel ( HUF) (219 Taxman.. 125 (Mag. Guj) "Section 68 of the I T Act, 1961 - Cash Credit (Deposits) - Assessing Officer made certain addition u/s 68 on ground that assessee was unable to establish identity and creditworthiness of depositor and genuineness of transaction. ON appeal, Commissioner (Appeals) as well as Tribunal deleted addition by recording findings of fact that said amount was given by one "J" staying in UK by cheque from his NRE account and said fact had been confirmed by 'J' - Whether order passed by Tribunal could be interfered with - Held NO. (in favour of assessee ). It is also seen that Shri Sunil Bodra had invested a sum of Rs 5.15 crores in other Surat based company M/s S.V.S. Tex Fab Ltd. This amount was added u/s 68 in the hands of M/s S.V.S. Tex. O Fab P Ltd for the assessment year 2011-12. In the appeal before the Id CIT (Appeals)-2, Surat the matter was examined and the Id CIT (Appeals)-2, Surat in his order in appeal no. CAS/2/ 96/2015-16 dated 20.12.2016 has held that the investment satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; From the above, the ld CIT(A) observed that assessing officer has arrived at conclusion based on wrong facts. The conclusion is regarding shell companies/ accommodation entry providers, which are not involved in assessee's case. The share - applicants in this case are individuals and as evident from details filed are involved in business activities generating operating Revenue and incurring operating expenses. 16. We note that law regarding addition u/s 68 on account of the share application money has been laid out by the Hon'ble Supreme Court in the case of CIT v/s Lovely Exports ( 2008) 216 ITR 195 ( SC) wherein it has held that: "if share application money is received by assessee - company from alleged bogus shareholders, whose names are given to Assessing Officer, then Department is free to proceed to reopen their individual assessments in accordance with law, but this amount of share money cannot be regarded as 'undisclosed income' under section 68 of assessee -company." 17.The Hon'ble jurisdictional ITAT in the case of Pankaj Enka v/s DCIT in ITA No.816/Ahd/2013 has held that: "the assessee has discharged the primary onus to prove as genuine sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Numbers/Permanent Account Numbers and the copies of assessment orders wherever readily available. It had also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee was not expected to prove the genuineness of the cash deposited in the bank of those creditors because under law the assessee can be asked to prove the sourceof the credits in its books of account but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723" This decision of ITAT is also confirmed by Hon'ble High Court of Gujarat in the same case (CIT v/s Rohini Builders td reported in 256 ITR 360.) 20. Conclusion: We note that with effect from assessment year 2013-14 section 68 of the Act has been amended to provide that if a closely held company fails to explain the source of share capital, share premium or share application money received by it to the satisfaction of the A.O., the same shall be deemed to be the income of the company u/s 68 of the Act. The said amendment has been held to be prospective and not retrospect ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
