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TMI Blog2020 (2) TMI 1737X X X X Extracts X X X X X X X X Extracts X X X X ..... venue reads as follows: 1. That on the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting addition of Rs. 5,20,00,000/- received on account of alleged share capital and share premium u/s. 68 of the I.T. Act which has been made merely on the assessee's submission. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in accepting the through investigation/enquiry made by the AO during assessment proceedings before conclusively reached at the view of alleged share capital and share premium which could not be substantiated by the assessee. 3. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in violating of Rule-46A of the I.T. Rules, 1962 for remitting the same before the AO for further investigation and enquiry. 4. That on the facts and in the circumstances of the case, the Ld CIT(A) has erred in law in accepting the fact that the assessee had failed to satisfy the genuineness and authenticity of cash credit. 5. That on the facts and circumstances of the case, it is humbly requested to set aside the order of Ld.ClT(A) and restore back the assessment order passed by the AO. 6. 'Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Rs 90,00,000 The assessee had duly recorded purchases of such investment and were reflected under schedule 2.5 of the annual accounts of the assesses. The corresponding entries in the books of the share holders for sale of shares to the assessee and allotment of fresh shares of the assessee by the assessee were furnished. The AO has admitted in his order about the allotment of shares sale of investment. We refer to Para 3 page 2 of the assessment order that mentions "These share holders fund have been shown as again invested in different private limited companies. Both receiving of share application money and investing in other private limited companies have been done through chain of transactions of share allottee companies assessee company and investee companies. However, the assessing officer rejected the contention of the assessee and made addition to the tune of Rs. 5,20,00,000/-. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer observing the following: "5.1. Grounds of appeal, assessment order and submissions of the A.R. were duly con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cloud, only after the first and primary evidence of receipt of money in the books of the assessee is found. The assessee must dispel that cloud to the reasonable satisfaction of the assessing authorities. In this case, the assessee had not received or credited any money as share application, the prima evidence does not exist and in such a situation the assessee was not obliged to explain that it is not out of his undisclosed income or form the source which has evaded the tax. 7. The assessee must dispel that cloud to the reasonable satisfaction of the assessing authorities. The argument is that as the assessee had not received or credited any money as share application, the prime evidence does not exist. In a recent judgement of Hon'ble ITAT Kolkata, in case of Wellman Wacoma Ltd. vs. DCIT it is held that. "In the instant case, the credit is in the form of receipt of share capital form seven share applicants. The nature of receipt towards share capital is well established from the entries passed in the respective balance sheets of the companies as share capital and investments. Hence the nature of receipt is proved by the assessee beyond doubt. In respect of source of cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it has been held that share application money/share capital cannot be added u/s 68 if the identity, creditworthiness and genuiness of the applicants/shareholders are established. The addition of Rs. 5,20,00,000/- raised by the way of Share Capital & Share Premium U/s 68 of the I.T. Act 1961 is not justified in view of the facts and legal provisions that all the transaction in respect thereof are as per agreements entered with the applicant companies and the same are duly recorded in the books of the company as well as the subscriber entities which are verifiable form their financial statements filed in response to notices u/s. 133(6), all these shareholders are bodies corporate incorporated under the companies Act, 1956 and they are regularly filing their Income Tax returns and thus their identity is established beyond doubt, the A.O. had not conducted any enquiry nor bought any material on record to establish that the Share Capital were bogus and fictitious, that as the shares were allotted against consideration for purchase of equity shares held by these applicant companies. The AR argued that no transaction has taken place through bank and as such the provisions of section 63 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usly stated that identity, creditworthiness and genuineness of the transactions has not been proved the assessee. 5(5). The AO failed to appreciate the fact that there was no sum credited in the books of account of the appellate and no money was received. The assessee had allotted its shares against the discharge of debts by journal entries in books. The AO failed to verify the facts of the case. The shares were allotted against the acquisition of investments under the agreements. The copies of these documents were also filed during the appellate proceedings. I find that there is no real cash entry on the credit side of the cash book. The shares were issued against the share. It is merely a notional entry and there is no real credit in the cash book and bank account. The question of inclusion of the amount of the entry unexplained cash credit cannot arise. Therefore, the question of cash credit does not come in, there being no actual passing or receipt of cash. In other words, the transaction are mere book entries. The transactions showing the amount as received in cash or in kind and discharged were not actual case but only notional by journal entries. As far as the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital was raised during the year for consideration other than cash. Hence we hold that provision of section 68 of the Act are not applicable in the instant case and accordingly the entire addition deserves to be deleted which has rightly been done by the ld. CIT(A) which does not require any interference. Accordingly, grounds raised by the revenue are dismissed. 8. Respectfully following the judgment of the Co-ordinate Bench on the similar facts in the case of M/s Anand Enterprises Ltd. (supra) we note that the shares have been issued in exchange of shares therefore no any cash is involved in these transactions. Hence the provision of section 68 does not attract therefore the addition made by the Assessing Officer has rightly been deleted by the ld. CIT(A). 9. We note that during the appellate proceedings, ld CIT(A) called remand report from assessing officer. We note that in the remand report AO examined the issues and nothing adverse was reported. We note that Hon`ble High Court of Madras, in the case of Smt. B. Jayalakshmi, [2018] 96 taxmann.com 486 (Madras) held that where Commissioner (Appeals) on basis of remand report of Assessing Officer, allowed claim of assessee, revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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