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TMI Blog2024 (8) TMI 1533X X X X Extracts X X X X X X X X Extracts X X X X ..... make investment in the assessee.
From the perusal of the paper book and the documents placed therein, it is vivid that all the share applicants are (i) income tax assessees, (ii) they are filing their income tax returns, (iii) share application form and allotment letter is available on record, (iv) share application money was made by account payee cheques, (v) details of the bank accounts belonging to share applicants and their bank statements, (vi) in none of the transactions there are any deposit of cash before issuing cheques to the assessee, (vii) all the share applicants are having substantial creditworthiness represented by their capital and reserves, (viii) details relating to 'source of source' also placed on record by the subscribers.
We find that assessee has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions towards sum received during the impugned year. Accordingly, we set aside the order of the ld. CIT (A) and delete the addition made towards share capital and share premium u/s. 68. Accordingly, grounds taken by the assessee in this respect are allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the assessee was selected for scrutiny under CASS followed by statutory notices issued under section 143(2) and 142(1) of the Act. In response to the notices, Ld. AR of the assessee appeared time to time before the AO. During the assessment proceedings, the Ld. AO issued notices under section 133(6) of the Act to the assessee and reply against the said notices were received. Similarly, the Ld. AO issued summon under section 131 of the Act to the Director of the assessee-company to appear before him requisiting to file his submission by producing and justify the following points: (a) Proof of your photo identity/PAN card. (b) List of companies where you were directors/shareholders from the A.Y. 2008-09 till date with dates of appointments thereto with your DIN. (c) Proof of acknowledgment of filing your personal IT Return, copies of accounts Proof of your address (d) Copy of bank statement of your company reflecting the all transaction during the period 01.04.2011 to 31.03.2012 with complete narration & source of fund. (e) Produce the directors of investors' company along with their proof of photo identity and copy of bank statement of their company reflecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mons were issue u/s 131 of the Act on the Director of the assessee which even though were not applied in terms of personal attendance but assessee had responded by making all the necessary details and documents which had been acknowledged by Ld. AO. The Ld. AR stated that the AO had failed to exercise the provision prescribed u/s 131 of the Act for summoning the Director of the investee company and instructed the Director of the assessee-company to produce the director of the investee company before him for their deposition is against the spirit of law of the land. Therefore, alleged addition made by the AO is not correct and liable to be set aside by this Tribunal. 6. The Ld. Counsel also submitted that mere non-appearance of director is no bass of invoking the provision of Section 68 of the Act for which he placed reliance on the decision of Hon'ble Supreme Court in the case of CIT V. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) wherein it was held as under: "In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2011-12 Present ROC Master Data (Active) 92-103 Do 9 Documents of M/s Panghat Dealtrade Pvt. Ltd. Audited financial statements for FY 2011-12 Present ROC Master Data (Active) 104-115 Do 10 Documents of M/s Sakambhari Financial Consultancy Pvt. Ltd. Audited financial statements for FY 2011-12 Present ROC Master Data (Active) 1 16-130 Do 11 Documents of M/s Labhdhan Vanijya Pvt. Ltd Audited financial statements for FY 2011-12 Present ROC Master Data (Active) 131-145 Do 12 Documents of M/s Hemlata Holdings Pvt. Ltd. Audited financial statements for FY 2011-12 Present ROC Master Data (Active) 146-157 Do Do 13 Documents of M/s Mangalkamna Suppliers Pvt. Ltd. Audited financial statements for FY 2011-12 Present ROC Master Data (Active) 158-171 Do 14 Documents of M/s Lovely Tradelink Pvt. Ltd. Audited financial statements for FY 2011-12 Present ROC Master Data (Active) 172-182 Do 15 Documents of M/s Manju Real Estate Consultants Pvt. Ltd. Audited financial statements for FY 2011-12 Present ROC Master Data (Active) 183-193 Do 16 Documents of M/s Pitambari Tie Up Pvt. Ltd. Audited financial statements for FY 2011-12 Present ROC Master Data ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33(6) and its reply filed before AO along with enclosures consisting: Details of Source of Fund Share Allotment Advice Share Application Form PAN Card Bank Statement highlighting the payment made for purchase of shares ITR Acknowledgement for Asst yr 2012-13 Computation of Income Audited Financial Statements for FY 2011-12 Present ROC Master Data (Active) Do 28 Documents of M/s Aprajita Tie up Pvt Ltd Notice u/s 133(6) and its reply filed before AO along with enclosures consisting: Details of Source of Fund Share Allotment Advice PAN Card Share Application Form Bank Statement highlighting the payment made for purchase of shares ITR Acknowledgement for Asst yr 2012-13 Computation of Income Audited Financial Statements for FY 2011-12 Present ROC Master Data (Active) 368-388 Do 29 Documents of M/s Aprajita Tie up Pvt Ltd Notice u/s 133(6) and its reply filed before AO along with enclosures consisting: Share Application Form Share Allotment Advice Voter ID Card of Director Details of Source of Fund Bank Statement highlighting the payment made for purchase of shares List of Equity Shareholders ITR Acknowledgement for Asst yr 2012-13 Computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the amount of share capital and premium. The documents furnished are to be prima facie considered as correct unless evidence is brought on record to falsify the claim made therein. 11. On the three basic ingredients for any cash credit viz., identity, creditworthiness of the subscribers and the genuineness of the transactions, Ld. Counsel submitted that all of these are fulfilled. In this respect he submitted as under: (1) On identity: All the shareholders are regular income tax assessees and have filed their income tax returns. Ld. Counsel thus emphasized that identity of all the share subscribers is well established and cannot be doubted. Further, he submitted that company subscribers are body corporate registered under the Companies Act, 1956. (ii) On creditworthiness: To establish the creditworthiness of the subscribers, details relating to source of fund in the hands of these shareholders represented by their respective net worth were furnished along with their respective bank statements and audited financial statements. The details furnished by the assessee in this respect are reproduced in the table below: S. No. Name of the shareholders Equity Shares Share Cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 245,000 250,000 82,250 822,500 27,377,500 28,200,000 12. It was thus, submitted that the above table containing details on "source of source" unequivocally testifies and proves that the subscribers had sufficient fund for making investment in the share capital of the assessee. 13. On genuineness of the transaction: It was submitted that the amounts were invested by the subscribers through proper banking channel which is duly reflected in the respective financial statements of the subscribers. Since the investments reflected in their respective financial statements have been duly reported in their respective returns with the Department are thus genuine and transaction cannot be doubted. 14. Per contra, ld. Sr. DR placed reliance on the order of the authorities below and submitted that assessee's own income has been infused in the guise of share capital through the allottee companies by layering the transactions to make appear a non-genuine transaction as a genuine one 15. We have heard the rival contentions and gone through the material placed on record. We note that Ld. AO without even going through and discussing the details submitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has simply added the amount of share capital and share premium on the ground that assessee has not produced its directors. Thus, going by the records placed by the assessee of all the share subscribing companies, it can be safely held that the assessee has discharged its initial burden and the burden shifted on the Ld. AO to enquire further into the matter which he failed to do so. It is also noted from their audited financial statement and chart extracted above that all the investing companies have sufficient own funds available with them to make investment in the assessee. 17. From the perusal of the paper book and the documents placed therein, it is vivid that all the share applicants are (i) income tax assessees, (ii) they are filing their income tax returns, (iii) share application form and allotment letter is available on record, (iv) share application money was made by account payee cheques, (v) details of the bank accounts belonging to share applicants and their bank statements, (vi) in none of the transactions there are any deposit of cash before issuing cheques to the assessee, (vii) all the share applicants are having substantial creditworthiness represented by thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement "not traceable". The Assessing Officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the Assessing Officer. In the above circumstances, the view taken by the Tribunal could not be faulted. No substantial question of law was involved in the appeal.'' iv) Decision of Hon'ble Madras High Court in the case of Pranav foundations Ltd. (2015) 229 Taxman 58 (Mad) is also referred wherein it was held as under: "In view of the fact that all the four parties, who are subscribers of the shares, are limited companies and enquiries were made and received from the four companies and all the companies accepted their investment. Thus, the assessee has cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share subscribing companies and the genuineness of the transactions towards sum of Rs. 2,76,50,000/- received during the impugned year. Accordingly, considering these facts and in the light of the judicial precedence referred above, we set aside the order of the ld. CIT (A) and delete the addition made towards share capital and share premium u/s. 68 of the Act. Accordingly, grounds taken by the assessee in this respect are allowed. 22. Since on the merits of the case, we have deleted the addition made by the Ld. AO in terms of our observations and findings recorded above, the legal issue raised by the assessee in this appeal on the jurisdiction of TRO to make the impugned assessment is rendered as a mere academic exercise. Accordingly, we desist ourselves from indulging into such an exercise. Ld. Counsel for the assessee has made a detailed written submission on the legal issue which is placed on record. Ld. CIT, DR in the course of hearing had also submitted that he be given an opportunity to make a submission on the legal issue in case it is being adjudicated upon which in the present case is not warranted. Accordingly, grounds taken by the assessee in this respect are not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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