9911796707
TMI Blog2025 (1) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee files its original return of income u/s 139 of the Act on 27.09.2013, declaring total loss of Rs. 8,33,753/-. The return was processed u/s 143(1) of the Act on 07.03.2014, accepting the returned income. The case of the assessee was reopened u/s 147 of the Act, after the AO received information that assessee is a beneficiary of bogus share capital of Rs. 1,50,00,000/- and accordingly, notice u/s 148 of the Act was issued on 14.03.2019, which the assessee complied with by filing return of income on 20.04.2019. Thereafter, the statutory notices u/s 143(2) & 142(1) of the Act, along with questionnaires were issued and duly served upon the assessee. The assessee replied to the said notices, from time to time by furnishing the details as called for by the ld. Assessing Officer. The assessee issued share capital to three concerns on face value of Rs. 10/- each thereby raising a sum of Rs. 1,50,00,000/-. ld. AO has given the details of these companies in the assessment order itself. According to the ld. AO, during search and post -search operation, some information were collected that the assessee who was related to Saraogi Group has availed some bogus accommodation entries i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Company No. of shares Face Value Share Premium Share Capital Raised in Rs. Dynamic Sarees P Ltd. 7,20,000 Rs.10/- Nil 72,00,000/- Berhampur Finance Leasing & Ltd. 6,70,000 Rs.10/- Nil 67,00,000/- Pilot Barter Ltd. 1,10,000 Rs.10/- Nil 11,00,000/- Total 1,50,00,000/- It is evident that the shares were issued at par and no premium was charged. The appellant in his submission has stated that the share application money was received through proper banking channels, and that the shareholder companies had sufficient fund in their books of account for the purpose of investment & the investments are reflected in their books of account. The appellant has submitted the Bank account statements of the shareholders to confirm that the transactions were made through banking channels. In the course of assessment proceedings details of share capital raised i.e., name & address of the share applicants, no of shares allotted and amount along with Form No- 2 filed with ROC, ITR acknowledgement, relevant bank statements showing receipt of such share capital, copies of audited accounts of the share applicants, share application forms etc were subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs u/s 147 based upon the information received from ADIT(Inv) Unit-3(4) towards receipt of share capital to the tune of Rs. 2,10,00,000/-. Out of the said amount, an amount of Rs. 50 Lakhs was raised from M/s Berhampur Finance & Leasing Ltd. The AO in his assessment order, has accepted the share capital received from M/s Berhampur Finance & Leasing Ltd. and has not made any addition towards the same. Owing to all these reasons, a Remand Report was called for from the present Assessing Officer for her comments. However, it is observed from the Remand Report submitted by the AO, no discussion was made by the AO with regards to any further enquiries conducted in this regard especially in view of the contentions raised by the appellant. The contentions raised by the appellant has therefore not been controverted by the AO. In the said remand report, the AO has only reiterated that during the course of assessment proceedings Directors of these three share subscriber companies did not appear in response to the notices u/s 131. On the above point appellant submitted the rejoinder to the remand report. From the rejoinder, following points were noted with regard to the said ground: (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditworthiness, appellant submitted Books of accounts of three share subscriber companies showing fund position held with them, which has already been discussed earlier in this order. In support of Genuineness of Transaction, appellant submitted Bank statements to establish that the transactions through banking channel. In view of these discussions, I find that since all the share subscriber companies are active on ROC records and filing their ITR`s, the identity of these companies cannot be placed under doubt. Similarly no comments has been made by the AO regarding the sufficient funds available with the share applicant companies before investment and since the bank statements were placed before the AO, the respective fund inflow of these companies, has also not been doubted by the AO. The AO has also not been able to bring forth any fund flow statement or any evidence to substantiate his allegation that it was the unaccounted money of the appellant which was brought back in the form of share capital. I find that in the assessment order, there is singular absence of any enquiry conducted by the AO regarding the creditworthiness of the share applicant companies as well as ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the identity of the investor along with relevant documentary evidences such as relevant bank statements, share certificates etc, 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. The relevant part is being reproduced : "As far as creditworthiness or financial strength of the credit/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. This judgment further holds that once these documents are produced, the assessee would have satisfactorily discharge the onus cast upon him. Thereafter, it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the AO and he cannot go into the realm of suspicion." The Hon'ble Jurisdictional High Court in the case of CIT VS. Dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent giving details of share application, money receipt during the year, copy of Form No.2 evidencing return of allotment and copy of Form No.5 for increase in various capital. Further the assessing officer has issued notice to the investors under Section 133(6) on 11.06.2014 for carrying out independent verification of the transaction and those investors duly responded to those notice and filed the requisite details such as the number of shares subscribed, ledger account, bank statement, explanation for source of funds, income tax returns and audited financial statements and also assessment order framed under Section 143(3) of the Act in all the cases. The Tribunal further noted that in spite of such being the factual position, the only reason for making the addition in the hands of the assessee the director of the assessee company did not respond to the summons issued by the assessing officer under Section 131 of the Act. The correctness of this was also considered by the learned Tribunal and it was held that non appearance of the director cannot be made a ground for addition in the hands of the assessee under Section 68 of the Act when other evidence relating to the raising of sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Jurisdictional High Court in case of CIT Vs. Data ware private Ltd. [ITA no. 263 of 2011 dated 21.09.2011] and in case of PCIT Vs. Naina Distributors Pvt. Ld. in ITAT/112/2023, IA No. Ga/1/2023 dated 28.06.2023, allowed the appeal of the assessee. In the case of Dataware Private Limited (supra), the Hon'ble High Court has held that where the assessee has given PAN No. and other information along with name of creditors, the ld. AO should enquire from the AO of the creditors about the creditworthiness, genuineness of the transactions and whether such transaction has been accepted by the Assessing Officer in the case of the Creditors but instead of adopting such course, the Assessing Officer himself could not brand the creditors as unworthy of credence. The Hon'ble Court further held that so long as it is not established that that return submitted by the creditor/subscriber has been rejected by its AO, the AO of the assessee is bound to accept the same as genuine when the identity of creditor and genuineness of the transactions through account payee cheque has been established. Similarly, in the case of PCIT Vs. Naina Distributors Pvt. Ltd. in ITAT/113/2023, IA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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