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TMI Blog2018 (11) TMI 1964X X X X Extracts X X X X X X X X Extracts X X X X ..... any. It is not the case of the Assessing Officer nor it is the case of the first appellate authority, that the appellant company has purchased cheques from the subscriber company in lieu of cash. All the transactions have been done through banking channel. Once the appellant company filed complete details before the AO then the initial onus upon the assessee company has been discharged to prove the identity of the investor. The appellant company has provided the balance sheet of the investor companies alongwith their company profiles and details with the Registrar of Companies. The subscriber companies themselves have provided the bank statements and their respective PAN details. It is not the case of the Revenue that the subscriber companies are name lenders or entry providers. Their details are available on public domain on the website of the Registrar of Companies. The Hon'ble Supreme Court in the case of CIT v. Lovely Exports (P.) Ltd. [ 2008 (1) TMI 575 - SC ORDER] has laid down the ratio that the assessee has to be merely identified as the shareholder and the initial onus u/s. 68 of the Act stands discharged on mere identification. As decided in the case of CIT v. Sophia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he identity, creditworthiness and genuineness of the share capital received. 5. The assessee furnished list of share applicants with full names and addresses. To cross verify the genuineness of the share application money received, the Assessing Officer issued notices u/s. 133(6) of the Act. Reply to all the notices were received by the Assessing Officer alongwith ledger account, bank statements and copies of Income tax returns. 6. The Assessing Officer analysed the details submitted by the share applicants in the following table: Sl. No. Name of the Assessee Share Application Money Remarks 1. Tyagi Portfolio Management Pvt. Ltd. (Earlies known as Tyagi Trading Pvt Ltd.) D-33/100, Sector-16, Rohini, New Delhi-110085 Rs. 50,00,000/- The gross receipt of the companies of Rs. 250300/-. Security premium account has Rs/-95376480/- 2. M/s Basic Portfolio Management Pvt. Ltd. (earlier known as Urvashl Transport Co. Pvt. Ltd), A-19, 202 Akshay House 2nd Floor Guru Nanak Pura, Laxmi Nagar, Delhi-110092 Rs. 50,00,000/- Rs. 40,00,000/- The gross receipt of the companies of Rs. 508356/-. Security premium account has Rs. 95666800/- 3. M/s 1-Tech Insurance Brokers Pvt. Ltd 1/119, KhichriPur Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn as Vardhan Retails Pvt. Ltd) 208, Aggarwal Chamber Veer Sarvarkar Block, Shakarpur Delhi-110092 Rs. 20,00,000/- The gross receipt of the companies of Rs. 5,70,398/-. Security Premium account has s/-I 10064000/- 15. M/s Silversmith Marketing Pvt. Ltd. 204, IV, Aggarwal Chamber Savarkar Block, Shakurpur Delhi-11009 Rs. 20,00,000/- The gross receipt of the companies of Rs. 5,51,327/-. Security premium account has Rs. 10,64,16,000/- 16. M/s S3 Infradevelopers Pvt. Ltd. J-221, Sarita Vihar New Delhi-110076 Rs. 20,00,000/- The gross receipt of the companies of Rs. 5,51,327/-. Security premium account has Rs. 10,64,16,000/- 17. M/s United Equity Pvt Ltd. Earlier known as Garg Brothers Woodcraft Pvt. Ltd, F-103, Plot No. 10, 1st Floor Chetan Complex, Central Market Surajmal Rs. 20,00,000/- The gross receipt of the companies of Rs. 5,48,943/-. Security premium account has Rs. 10,56,48,000/- 18. M/s Hare Krishna Garments Pvt. Ltd. B-4827, Gali No 112/2, Sant Nagar 1 Burari New Delhi-110084 Rs. 30,00,000/- The gross receipt of the companies of Rs. 6,21,439/-. Security premium account has Rs. 12,05;93,600/- 19. M/s Unique Finman Consultancy Pvt. Ltd. RZ-74-A, Ravi Nagar Exten. Vishnu Garden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention here that the CIT(A) himself had issued summons u/s. 131 of the Act to the share applicants, which were duly served. 11. Before we embark upon the discussion on factual aspects, it would be better to understand the provisions of section 68 of the Act which read as under: Where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 12. A plain reading of the aforesaid section shows that the initial onus is upon the assessee to establish the identity of the creditor, genuineness of the transaction and capacity of the lender. What kind of proof is to be furnished by the assessee has been considered by the Hon'ble Delhi High Court in the case of CIT v. Kamadhenu Steel Alloys Ltd. [2012] 19 taxmann.com 26/206 Taxman 254/361 ITR 220 wherein the Hon'ble High Court observed that: In case the investor/shareholder is an individual, some documents will have to be filed or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by those applicant companies in the bank, who opened the bank accounts and are the signatories, who introduced those bank accounts and the manner in which transactions were carried out and the bank accounts operated. This kind of inquiry would have given some more material to the AO to find out as to whether the assessee can be convicted with the transactions which were allegedly bogus and or companies were also bogus and were treated for namesake. We say so with more emphasis because of the reason that normally such kind of presumption against the assessee cannot be made as per the law laid down in various judgments noted above. Just because of the creditors/share applicants could not be found at the address given it would not give the Revenue a right to invoke Section 68 of the Act without any additional material to support such a move. We are reminding ourselves of the following remarks of a Division Bench of this Court in its decision dated 02.8.2010 in the case of Commissioner of Income-tax-IV v. M/s. Dwarkadhish Investment (P) Ltd. (ITA No. 911 of 2010) in the following words: Just because the creditors/share applicants could not be found at the address given, it would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ink is missing, it is difficult to fasten the assessee with such a liability. 39. We may repeat what is often said, that a delicate balance has to be maintained while walking on the tight rope of Sections 68 and 69 of the Act. On the on hand, no doubt, such kind of dubious practices are rampant, on the other hand, merely because there is an acknowledgement of such practices would not mean that in any of such cases coming before the Court, the Court has to presume that the assessee in questions as indulged in that practice. To make the assessee responsible, there has to be proper evidence. It is equally important that an innocent person cannot be fastened with liability without cogent evidence. One has to see the matter from the point of view of such companies (like the assessees herein) who invite the share application money from different sources or even public at large. It would be asking for a moon if such companies are asked to find out from each and every share applicant/subscribers to first satisfy the assessee companies about the source of their funds before investing. It is for this reason the balance is struck by catena of judgments in laying down that the Department is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applicant company portfolios include investment in other companies also. There is nothing on record to suggest that the other investments made by the share applicant companies have been treated as bogus in the hands of other companies. 20. In our considered opinion, the applicant company has successfully discharged the initial onus cast upon it by the provisions of section 68 of the Act and, therefore, no addition is called for u/s. 68 of the Act as unexplained cash credit. 21. The ld. DR has relied upon certain judicial decisions and mainly emphasized on the decision of the Hon'ble High Court of Delhi in the case of CIT v. Navodaya Castle (P.) Ltd. [2014] 50 taxmann.com 110/226 Taxman 190 (Mag.)/367 ITR 306 wherein the Hon'ble High Court has accepted that since the assessee was unable to produce the directors and the principal officers of the six shareholder companies and also that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer had observed that there were genuine concerns about the identity, creditworthiness of shareholders as well as genuineness of the transactions. 22. In our understanding of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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