×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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This appeal preferred by the revenue is against the order of Ld. CIT(A)-2, Kolkata dated 30.06.2015 for AY 2012-13.
2. The main grievance of the revenue is against the action of the Ld. CIT(A) in deleting the addition made u/s. 68 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) though the creditworthiness of the shareholders and genuineness of the transaction could not be explained.
3. Brief facts of the case are that the AO noted that during this assessment year the assessee company has raised capital of Rs.21,07,55,000/- including share premium / share application by issuing shares to different concerns with higher premium. According to him, the premium collected by the assessee does not stand the test of reasoning and defies all principles of preponderance of probability and thereafter, referring to the decision of the Hon’ble Supreme Court in Sumati Dayal Vs. CIT 214 ITR 801 and CIT Vs. Durga Prasad More 82 ITR 540 the AO drew adverse inference against the assessee, though the AO acknowledges that the assessee company remained ready with the papers like Memorandum & Articles of Association, Form 2 and 5 etc. filed with Registrar of Companies for raising share capital and issuance, share application by the allottee companies, share allotment advices, PAN Card, Form 18 etc. in support of the registered address of the assessee company and allottees companies as well and resolution book in support of Board meetings held, bank statement of both assessee company and the allottee companies etc. However, the AO noted that none [director’s] appeared before him despite notice u/s. 142(1) of the Act. According to AO, the show cause notice along with summons issued to the share subscribers were returned by the postal authorities with the remark ‘insufficient address’ goes on to show that the assessee failed to prove the identity, creditworthiness and genuineness of the transaction so he made an addition of Rs.21,07,55,000/-. Aggrieved, the assessee is in appeal before the Ld. CIT(A), who deleted the same. Aggrieved, the revenue is before us.
4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the Ld. CIT DR vehemently assailing the action of the Ld. CIT(A) has reiterated the contentions raised by the AO to justify the addition made against the assessee. According to Ld. CIT, DR, the share applicants in this case have common shareholding funds which have been again and again invested and passed through several different private limited companies. According to him, both receiving company of the share application money and investment made by other limited companies have been done through chain of transactions of share allottee companies, assessee company as investee companies and, therefore, this is nothing but accommodation entries and pointed out to page 41 of the paper book to show that the share applicant no. 4,15,679 to show that the share applicants for huge share premium which has been passed on to the assessee and these share applicants have meager returned income. Thus, according to Ld. CIT, DR, the creditworthiness has not been proved of the share applicants in this case. Therefore, he wants us to reverse the order or the Ld. CIT(A) and uphold the order of the AO.
5. On the other hand, the Ld. AR brought to our notice that there are four share applicants in this case and that they have their own Capital and Reserve which are far more than what they have invested in assessee company which can be discerned from a perusal of the chart below :
The Ld. AR drew our att ntion to another important fact that all the aforesaid share subscribers were assessed u/s. 143(3) of the Act (Scrutiny) by their respective AOs for the AY 2012-13 and drew our attention to page 60 of the paper book wherein we find the assessment order passed u/s. 143(3) of the Act dated 31.03.2015 in the case of M/s. Pushpmala Suppliers Pvt. Ltd. by ITO, Ward-5(2), Kolkata; likewise our attention was drawn to page 82 of the paper book wherein we find the assessment order passed u/s. 143(3) of M/s. Surakshit Merchants Pvt. Ltd. for AY 2012-13 dated 30.03.2015 by ITO, Ward-13(4), Kolkata; likewise our attention was drawn to page 102 of paper book wherein we note the assessment order u/s. 143(3) of the Act dated 28.10.2014 for AY 2012-13 in the case of M/s. Vindyavasini Agency Pvt. Ltd. passed by the AO, Ward 9(2), Kolkata. Thus, we find three out of four subscribers were assessed u/s. 143(3) of the Act for AY 2012-13. The assessment order in respect of M/s Omkara Dealer Pvt. Ltd. dated 29.02.2016 passed u/s. 143(3) of the Act for AY 2013-14 was handed-over to us during hearing wherein we note the scrutiny assessment has been passed by ITO, Ward-6(3), Kolkata. Thus, we find all the four share subscribers have been assessed by the Department and that too u/s. 143(3) of the Act. Thus, there can be no dispute in respect to the identity of the share applicants. Coming to the genuineness of the transactions, we note that the assessee has filed in respect of all the aforesaid subscribers audited Balance Sheet with audit report, P&L Account as on 31.03.2012 and the payments have been made through banking channel. In order to prove the creditworthiness of the share scribers, the assessee has placed its Balance Sheet from which we note that –