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TMI Blog2025 (1) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... and share premium totaling to Rs. 4,78,50,000/- and this Tribunal decided in favour of the assessee deleting the addition made u/s. 68 of the Act. 3. The revenue challenged the order of this Tribunal before the Hon'ble jurisdictional High Court and Hon'ble Court vide order dated 10.04.2024 set aside the order of this Tribunal and remanded the matter to this Tribunal to take a fresh decision on merits and in accordance with law and pass a reasoned order. The finding of the Hon'ble court reads as under: "We have heard Mr. Tilak Mitra, learned standing Counsel appearing with Mr. Prithu Dudhoria, learned Advocate for the appellant revenue and Ms. Sutapa Roy Chowdhury, learned Counsel appearing for the respondent. The Assessing Officer while completing the assessment under Section 143(3) of the Act by order dated 24th March, 2015 held that the assessee has failed to prove anyone of the three ingredients which are required to be proved under Section 68 of the Act. Several decisions were referred to and the Assessing Officer concludes that there was no documents produced by the assessee to substantiate their claim. This order was affirmed by the Commissioner of Income Tax (Appeals)- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subscriber company. This finding recorded by the Assessing Officer as affirmed by the CIT(A), if required to be set aside by the learned Tribunal, reasons have to be assigned. Therefore, we find that the conclusion arrived at by the learned Tribunal in paragraph 11 is insufficient to support its ultimate conclusion in allowing the assessee's appeal. Therefore, we are of the view that the matter has to be remanded back to the Tribunal for fresh consideration. Accordingly, the appeal is allowed. The order passed by the learned Tribunal is set aside and the matter is remanded to the Tribunal to take a fresh decision on merits and in accordance with law and pass a reasoned order. Consequently, substantial questions of law are left open. The stay application GA 2 of 2024 stands disposed of. Considering the fact that the assessment is of the year 2012-13 and the assessment order was passed on 24.3.2013 pursuant to a direction issued under section 263 of the Act, we request the learned Tribunal to give some precedence to the matter so that the appeal can be disposed of at the earliest. When this appeal was heard earlier, since the learned Counsel for the respondent assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt also shows that no major business activity is carried out and the work of the assessee company its activity and reputation in the market does not justify such a huge premium. Accordingly, Ld. AO concluded the assessment making the addition u/s. 68 of the Act at Rs. 4,78,50,000/-. 6. Aggrieved, assessee preferred appeal before the Ld. CIT(A) but failed to succeed as the view taken by the Ld. AO was confirmed by Ld. CIT(A) making reference to various decisions mainly in the case of Blessings Commercial Pvt. Ltd. ITA No. 271/Kol/2014 dated 28.06.2017 and that of PCIT Vs. NDR Promoters Pvt. Ltd., ITA No. 49/ 2018 dated 17.01.2019. Aggrieved, assessee is now in appeal before this Tribunal. 7. Ld. Counsel for the assessee made twofold arguments, firstly submitted that sufficient documents and evidence have been putforth in reply to each of the alleged share applicant to prove their identity, creditworthiness and genuineness of the transaction and submitted that all the share applicants are income tax assessees and have replied to notice u/s. 133(6) of the Act. Director of the assessee company has appeared before the AO from time to time in response to the notice u/s. 133 (6) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified considering the financials of the company. Lastly, making reference to various judgments, he stated that assessee failed to establish identity and creditworthiness of the share applicants and genuineness of the transaction. 10. We have heard rival contentions and perused the material placed before us. We find that assessee is aggrieved with the finding of the Ld. CIT(A) confirming the addition made u/s. 68 of the Act for the unexplained share capital and share premium received from five share applicants. We notice that assessee issued 10000 equity shares at Rs. 10/- and 2,38,750 equity shares at Rs. 200/- per share comprising of share premium of Rs. 190/- and face value of Rs. 10/- each. This fact has been examined from the audited financial statement but the details of 10000 equity share issued at Rs. 10/- are not emanating from the records but the details of share applicants subscribing 2,38,750 equity shares is as under: Sl. No. Name of Subscribers of Share capital No. of share allotted Total amount 1. Swastik Polyplast Pvt. Ltd. 76,500 1,53,00,000.00 2. UP Account law Services Pvt. Ltd. 75,000 1,50,00,000.00 3. UP Agro Fard & Export Pvt. Ltd. 78,000 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the land mark judgment of Kale Khan Mohammad Hanif Vs. CIT (1963) 50 ITR 1 (SC) and Roshan-Di-Hatti Vs. CIT (1977) 107 ITR 938 laid down the proposition that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and creditworthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source. Thereafter the Hon'ble Supreme court summed up the principles, which emerged after deliberating upon various case laws, as under: "11. The principles which emerge where sums of money are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onse to notice u/s 133(6) of the Act the company had confirmed the transaction and provided the following documents. (i) Confirmation: In response to notice u/s 133(6) of the Act this company has confirmed the transaction with the appellant company. (ii) Acknowledgement of Return filed (iii) Audited Balance Sheet, Profit and Loss Account and annexure to the financial statement (iv) PAN number The above documents are filed in Paper Book in Sl. No. 5, Pages 47 to 59 D. Mukta Commosale Pvt. Ltd In response to notice u/s 133(6) of the Act the company had confirmed the transaction and provided the following documents. (i) Confirmation: In response to notice u/s 133(6) of the Act this company has confirmed the transaction with the appellant company. (ii) Acknowledgement of Return filed (iii) Audited Balance Sheet, Profit and Loss Account and annexure to the financial statement (iv) PAN number The above documents are filed in Paper Book in Sl. No. 6, Pages 60 to 72 E. Baisakhi Commercial Pvt. Ltd In response to notice u/s 133(6) of the Act the company had confirmed the transaction and provided the following documents. (i) Confirmation: In response to notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m & Export Pvt. Ltd. which has invested Rs. 1.56 Cr. in the equity share of the assessee company was available with the funds to the tune of Rs. 10.45 Cr. in its Balance Sheet. Mukta Commosale Pvt. Ltd. has invested only Rs. 5 lakh in the equity of assessee but is having its own interest free funds of approx Rs. 5.70 Cr. Baisakhi Commercial Pvt. Ltd. has only invested Rs. 50 lakh but is having substantial reserves of share capital approx Rs. 5.10 Cr. Last in the row is of One Stop Commosale Pvt. Ltd. which apart from having any regular business activity also has share capital and reserve and surplus as on 31.03.2012 at Rs. 6.70 Cr. but it has made a small investment of Rs. 13 lakhs in the assessee. 13(c). All the above details clearly show that sufficient funds were available with the alleged share applicants to make the investments in equity of assessee company. We would like to make reference to the observation of Hon'ble Bombay High Court in the case of Ami Industries (India) Pvt. Ltd. (ITA 1231 of 2017) wherein the Hon'ble Court has observed that it was not necessary that share application money should be invested out of taxable income only. We, therefore, considering the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act, of 1961, deals with cash credits. It states that where any sum is found credited in the books 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. The crucial words in the provision are "the assessee offers no explanation". This would mean that the assessee offers no proper, reasonable and acceptable explanation as regards the amount credited in the books maintained by the assessee. No doubt the Act places the burden of proof on the taxpayer. However, this is only the initial burden. In cases where the assessee offers an explanation to the credit by placing evidence regarding the identity of the investor or lender along with their confirmations, the assessee has discharged the initial burden and, therefore, the burden shifts on the Assessing Officer to examine the source of the credit to be justified in referring to section 68 of the Act. After the Assessing Officer puts the assessee on notice and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, there was no justification of invoking sec. 68 of the Act on the given transaction of receiving alleged share capital and share premium. 17. Though we are satisfied with the first fold argument and have deleted the impugned addition but for academic purpose, we would also like to deal with the second fold of the contention of the Ld. Counsel for the assessee, wherein it has been claimed that the alleged share applicants have themselves been scrutinized u/s. 143(3) of the Act for AY 2012-13 and subjected to the addition and the details of the same is mentioned below: l. No. Name of subscribers of share capital Share application money received (Rs.) Reply of the share applicant enclosed in paper book-1 Amount added in the assessment order Order placed at page no. of paper book-2 1. Swastik Polyplast Pvt. Ltd. 1,53,00,000 21-33 2,80,00,000 161-167 2. UP Agro Far & Export Pvt. Ltd. 1,56,00,000 47-59 1,80,00,000 157-160 3. Mukta Commosale Pvt. Ltd. 5,00,000 60-72 5,76,10,000 168-176 4. Baisakhi Commercial Pvt. Ltd. 50,000 73-86 5,19,00,000 153-156 5. One Stop Commosale Pvt. Ltd. 13,00,000 87-102 40,00,000 149-152 18. From going through the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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