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Judgment
The present appeal has been filed by the Revenue against the order of ld. CIT(A)-XVI, New Delhi dated 31.03.2011.
Following grounds have been raised by the Revenue:
“1. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the addition of Rs.3,00,00,000/- made by the A.O. u/s 68 of the I.T. Act, 1961 on account of undisclosed income which has been introduced in the garb of share capital/share premium from M/s Bhavani Portfolio Pvt. Ltd. and M/s Thar Steels P. Ltd., entry operator companies, being operated by Shri Tarun Goyal, an entry operator identified by the Investigation Wing of the Department. Ld. CIT(A) has not appreciated the fact that the assessee has failed to establish the physical identity and creditworthiness of concerned parties and genuineness of transactions in terms of section 68 of the Income-tax Act, 1961.
That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that the judgment of the Hon’ble Supreme Court in the case of Lovely Exports (P) Ltd. 216 CTR 199 (SC) cannot be extended to a situation where a mechanism has been formed to introduce unaccounted money in the books of accounts with the help of accommodation entry providers which has been exposed by deep and detailed investigation carried out by the Investigation Wing of the Department. Moreover, the facts in the present case are distinguishable from the above cited case in so far as that the assessee could not produce any of the principal officers/directors of companies for examination whereas in the case cited above the A.O. never asked the assessee company to produce any of the share applicants for cross examination.
That on the facts and circumstances of the case and in law the Ld. CIT(A) erred in ignoring the fact that the directors of the share applicant companies were the employees of Sh. Tarun Goyal, who worked in his office as peons, receptionists etc. These facts were revealed during the search proceedings made on 15.09.2008, which was also admitted by Sh. Tarun Goyal that he provided accommodation entries and his various companies were used for this purpose.”
Facts taken from the order of the ld. CIT(A)
The assessee filed return of income on 16.09.2008 declaring income of Rs.11,540/-. The case was selected for scrutiny after getting the approval of CCIT, Delhi-V and first notice u/s 143(2) of the Income Tax Act, 1961 dated 25.09.2009 was issued and duly served upon the assessee.
Undisclosed Income:
The assessee during the year received share capital and share application money from the following companies:
Name
Amount
M/ s Bhavani Portfolio Pvt. Ltd.
2,00,00 ,000
Thar Steels Pvt. Ltd.
1,00,00 ,000
Total
3,00,00 ,000
During the course of assessment proceedings, the AO asked the assessee to prove identity, genuineness and creditworthiness of the above said companies. In response, the assessee filed confirmations with the copies of the bank statements of all entities.
The assessing officer was not satisfied as in his opinion the aforesaid details were not enough to discharge the onus on the assessee. As per the assessing officer, the addresses of the alleged shareholders were same as the address where a search operation under section 132 of the Income Tax Act conducted by the Investigation Wing of the Income Tax Department.
In view of this the transaction was prima facie under doubt and accordingly the A.O. felt that it was the duty of the appellant to discharge its onus more convincingly so that genuineness of the transaction claimed could be proved without any doubt. Accordingly, the Assessing Officer asked the appellant to file further information which was submitted by the appellant vide its letter dated 23.12.2010. The Assessing Officer was not satisfied and accordingly asked the assessee company to produce the directors of the shareholder companies. On failure of the appellant to produce the directors of the shareholder companies the Assessing Officer held that the appellant had failed to prove all the three ingredients of Section 68 i.e. identity, creditworthiness and genuineness and made addition of Rs.3,00,00,000/-.
The authorized representative filed a detailed submission before the ld. CIT(A) which is as under:
“During the year under consideration the appellant received an amount of Rs.3,00,00,000/- on account of Share Application Money. Out of the same an amount of Rs. 50,00,000/- was received on account of share capital and Rs. 2,50,00,000/- on account of share premium. The Id. AO had some doubts with respect to the genuineness of the said transactions of the appellant with M/s Bhawani Portfolio Pvt. Ltd. & M/s Thar Steels Pvt. Ltd.
In order to satisfy the Id. AO and in order to prove the genuineness of the said transactions the appellant produced share application forms, confirmations, affidavits, balance sheets, PAN details etc. related to various parties, before him. The Id. AO disbelieving the explanations filed by the appellant with respect to the said parties added the amount received from them to the gross total income of the appellant by invoking the provisions of section 68 of the Act by stating that the appellant could not establish the genuineness of the transactions. The addition has been made by the AO on account of following parties:-
Name
Amount
M/ s Bhavani Portfolio Pvt. Ltd.
2,00,00 ,000
Thar Steels Pvt. Ltd.
1,00,00 ,000
Total
3,00,00 ,000
In order to prove the genuineness of the transaction and to establish the identity and creditworthiness of the parties from whom the appellant had received share capital/application money the appellant produced various details before the Id. AO vide its various letters. Now the question before your honour is that whether on the basis of material produced before the Id. A.O., which has also been placed on record in the form of paper book before you, the appellant was able to discharge its onus to prove the transactions to be genuine. Your honour will appreciate that the appellant had produced the following details with regard to every transaction related to the receipt of share capital/application money.
i. The copy of ledger account of share application in the books of assessee.
ii. The copy of bank statement of the account in which the money was received.
iii. Copy of ledger account of share capital i.e. in which the money was transferred after allotment.
iv. Copy of Balance Sheet and Profit & Loss A/c depicting the same.
v. Copy of complete list of share holders i.e. old as well as new.
vi. Share application forms received from all parties.
vii. Copy of Form No. 2 i.e. return of allotment filed before the Registrar of Companies.
viii. Copy of Annual Return filed before the Registrar Of Companies.
The assessee has also obtained the following documents from the concerned parties to prove their identity and genuineness of the transactions which was submitted before the Id. AO.
a. Acknowledgements of Returns of Income.
b. Balance sheets & Profit and Loss A/cs
c. Affidavits from the Directors along with confirmations d. PAN Details
e. Copy of Board Resolutions passed at their Board Meetings
f. Copy of PAN cards
g. Confirmations from the parties
h. Copies of share application forms
i. Copies of bank statements of the said parties
j. Confirmation of receipt of shares
k. Copies of Memorandum and Articles of Association
l. CIN details
Copies of all these documents assessee wise are enclosed in the paper book for your kind perusal. Your honour it is important to state here that the Id. AO in his order has also agreed to the submission of above stated documents. He in his order has stated as under:
“Vide letter dated 23-12-2010 he filed the following documents:-
a. Photocopy of PAN of assessee company
b. Copy of the Memorandum and Article of Association of the assessee company
c. Copy of return of the assessee company for the A Y 2008-2009
d. Copy of Share capital account in assessee’s books
e. Copy of Form 2 dated 1-2-2008 and 31-3-2008
f. Copy of Annual return of the assessee company as per Company Act
g. List of shareholders of the assessee company as on 31-3-2008
h. Details of increase in capital claimed to have been increased during the year
i. Copy of bank statement of the assessee company
j. In respect of Bhavani Portfolio P Ltd:- Copy of ack. Of AY 2009-10 return, copy of annual return 2008, Auditors report as on 31-3-2007, copy of undated and unsigned share application form, Photo-copy of undated confirmation, affidavit, resolution signed by Ritu Saxena who admitted that she is only signing the papers etc. on the direction of Tarun Goyal, an entry operator and copy of bank statement and copy of cheques
k. In respect of Thar Steels P Ltd.:- copy of PAN, certificate of incorporation, M/A and A/A, Annual report 2008, Auditors report as on 31-3-2007, Photo-copy of undated confirmation, affidavit, resolution, bank statement and cheque.
Besides the aforesaid details the assessee company has taken the plea on the following case laws:-
I. CIT V/s Stellar Investment Ltd. (2001) 251ITR 263 (SC)
II. CIT V/s Sophia Finance Ltd. (1993) 205 ITR 98 (Del) (FB)
III. CIT V/s Achal Investments Ltd. (2004) 268 ITR 211 (Del)
IV. CIT V/s Lovely Exports P Ltd. (2008) 216 ITR 195 (SC)
V. CIT V/s Value Capital Services P Ltd. 207 ITR 334
VI. CIT V/s Dwarkadhish Investment P Ltd. ITA 911/2010 and ITA 913/2010”
Thus your honour the Id. AO by writing as stated above has confirmed the filing of the documents as stated by the appellant. Your honour after having got the above mentioned details, the Id. AO was still not satisfied. It is beyond the imagination of the appellant, what more could have satisfied the Id. AO if not, the details already produced before him.
Your honour will endorse that to prove the genuineness of any transaction to detach it from the scope of section 68 of the Act it is necessary to prove the identity & creditworthiness of creditor and the genuineness of the transaction. Considering various developments in recent past with regard to share application/ capital money received it has been specifically held by the Hon’ble Supreme Court that if any assessee has been able to prove the identity of the contributor it shall be deemed to have discharged its onus to detach the transaction from the purview of section 68 of the Act.
In this regard your honours attention is drawn to the decision in the case of CIT vs. Lovely Exports Pvt. Ltd. [2008] 216 CTR 195 (SC) where it has been specifically stated: “Can the amount of share money be regarded as undisclosed income under s. 68 of IT Act, 1961 ? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment.”
Your honour it is essential to state here that the assessee filed following details to establish the identity of its share applicants:
a. Acknowledgements of Returns of Income.
b. Balance sheets & Profit and Loss A/cs
c. Affidavits from the Directors along with confirmation d. PAN Details
e. Copies of Board Resolutions passed at their Board Meetings
f. Copies of PAN cards
g. Confirmations from the parties
h. Copies of share application forms
i. Copies of bank statements of the said parties
j. Confirmations of receipt of shares
k. Copies of Memorandum and Articles of Association
l. CIN details
Your honour will also endorse that by filing confirmations, bank statements & proof of filling income tax return, the appellant has duly discharged his onus of proving the identity, genuineness and credit worthiness of the share applicants. The case of the appellant is also squarely covered by the judgement of the Apex Court in the case of Commissioner of Income Tax vs. Steller Investment Ltd. (2001) 251 ITR 263 (SC), where it was held that:
“Even if the subscribers to the increased share capital of assessee company were not genuine, the amount could not be regarded as undisclosed income of the assessee company; Tribunal having cancelled CTT’s order under section 263 whereby the assessment was set aside on the ground that A. O had accepted the genuineness of share capital without making enquiries, no question of law arises.”
This judgement was delivered affirming the earlier judgement of Delhi High Court in the case of Commissioner of Income Tax vs. Sophia Finance Ltd. (1993) 205 ITR 98 (Del)(FB), which was referred in the case of Steller Investments (supra) as follows:
“Attention is invited to the Full Bench decision of the Delhi High Court in Commissioner of Income Tax vs. Sophia Finance Ltd. vs. (1993) 113 CTR (Del)(FB) 472 : (1994) 205 ITR 98 (Del)(FB) to which matter had been referred doubting the decision in Steller Investments case and the Full Bench observed:
“What is clear, however, is that section 68 clearly permits an ITO to make enquires with regard to the nature and sources of any or all the sums credited in the books of account of the company irrespective of the nomenclature of the source indicated by the assessee. In other words, the truthfulness of the assertion of the assessee regarding the nature and the source of the credit in its books of account can be gone into by the ITO. In the case of Steller Investment Ltd. the ITO had accepted the increased subscribed share capital. Section 68 of the Act was not referred to and the observations in the said judgement cannot mean that the ITO cannot or should not go into the question as to whether the alleged shareholders are identified and it is established that they have invested money in the purchase of shares then the amount received by the company would be regarded as capital receipt and to that extent the observations in the case of Steller Investment are correct but if, on the other hand, the assessee offers no explanation at all or the explanation offered is not a satisfactory explanation, section 68 empowers the ITO to treat such a sum as income of the assessee which is liable to be taxed in the previous year in which the entry is made in the books of account of the assessee.”
Relying on the above judgement of the Apex Court a recent judgement of the jurisdictional Delhi Court in the case of CIT vs Achal Investments Ltd. (204) 268 ITR 211 (Del) has passed an order which stales as under:
“We are not required to examine the matter in detail as we are of the opinion that the Tribunal has allowed the appeal of the assessee following its judgement delivered in Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) (192 ITR 287(Del) decided on 16th April, 1991. In that case, the subscribed capital of the respondent company had been increased and the ITO accepted the increase and assessed the company. The CIT, in revision, set aside the order of assessment, being of the view that there had been a device of converting black money into white by issuing shares with the help of formation of an investment company, and that the A.O. did not make any enquires with regard to the genuineness of the subscribers to the share capital. While confirming the decision of the Tribunal, the Division Bench held as under:
‘It is evident that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons. If the assessment of the persons who are alleged to have really advanced the money is sought to be reopened, that would have made some sense but we fail to understand as to how this amount of increased share capital can be assessed in the hands of the company itself.’
The ratio of all the above judgments is that even if the A.O. could not verify the identity, credit worthiness & genuineness of the above applicants, no addition in the hands of the company could be made. However, in the present case as the assessee has discharged its primary onus of proving the identity, genuineness & credit worthiness of the share applicants, no addition can be made on the basis of material collected at the back of the assessee.
Your honour will endorse that in the present case the assessee has discharged its liability by producing all material which it could do to discharge its onus. Now the Id. AO without appreciating the material produced by the assessee and on the basis of his whims and fancies reached a conclusion that the money received from M/s Bhawani Portfolio Pvt. Ltd. & M/s Thar Steels Pvt. Ltd. was assessee’s own money. The appellant is unable to understand that how can an addition be made in its hand without there being any evidence against it.
Your honour it is surprising to see that the Id. AO has formed his belief without even realizing that he did not have a single fact against the assessee. Had that been the same it would have formed part of the order passed by him. He has not stated what special information did he receive, what was the investigation made by the investigation wing, on what basis the investigation wing included the name of the appellant in its report (if any), what was the allegation against the assessee, what was the source of information based on which an inquiry was made, if there was any statement recorded who was that person, why was his statement recorded, why was he trusted, was he the director of the company on who’s behalf he passed a statement, whether he took the name of the assessee company and claimed that he had done some business with it, whether any opportunity was given to the assessee to cross examine that person, what was the source which led to a conclusion that the money deposited in accounts of some other entities emanated from the coffers of the appellant. All these questions remain unanswered and thus invalidate the allegations of the assessing officer and thus make the addition void ab-initio.
Your honour the Id. AO has written a long story stating that there was one person Mr. Tarun Goyal who was running various companies from his premises and indulged in providing accommodation entries. The assessing officer has written a long story and each and every whereabouts of that person. At one stage these findings of the Id. AG clearly establish the identity of the said person whereas on the other hand he states that the assessee has not been able to prove the identity of the share applicant. Further the AO has not been able to prove that the money which came to the assessee emanated from its own coffers. Your honour all the material used by the assessing officer has been collected at the back of the assessee and the assessee has never been confronted with the same.
Your honour the Id. AO during the course of assessment proceedings had raised various queries regarding the genuineness of transaction done by the assessee. He has also challenged the quantum of premium received. In this respect at first it is to mention that the amount of premium is the sole discretion of the investor. A company which issues shares at a premium does so based on its future potential. It is important to mention here that M/s Reliance Power brought its public issue few years back at a premium of Rs.990/- whereas its share is in a real bad shape and has not yet started any business activity. Thus charging and paying of premium is best blown to the investor and assessing officer as an outside authority cannot comment on the genuineness of the same. Further to prove the genuineness of the transaction the appellant produced following documents before the Id. AO:
i. The copy of ledger account of share application in the books of assessee.
ii. The copy of bank statement of the account in which the money was received.
iii. Copy of ledger account of share capital i.e. in which the money was transferred after allotment.
iv. Copy of Balance Sheets and Profit & Loss A/cs depicting the same.
v. Copy of complete list of share holders i.e. old as well as new.
vi. Share application forms received from all parties.
vii. Copy of Form No. 2 i.e. return of allotment filed before the Registrar of Companies
viii. viii Copy of Annual Return filed before the Registrar Of Companies
Your honour will endorse that in order to make any addition under the provisions of section 68 of the Act if the assessee has discharged its preliminary onus of proving any transaction being genuine the onus shifts upon the revenue to prove that the particulars with regard to any transaction which he doubts are not duly furnished or precisely the exact finding what made him believe which forced him to take an adverse action against the assessee.
With regard to share capital/ application money received if the assessee has disclosed all particulars like identity, creditworthiness and genuineness of the transaction it is the duty of the Id. AO to support his disbelief against various claims made by the assessee by giving some finding against it. The Id. AO has to conduct some inquiry to support his claim with regard to a transaction being ingenuine if names/'addresses/PAN details/income tax returns of various creditors have been produced before him. In case the assessee is not able to produce any of the creditors it becomes duty for Id. AO to issue notices u/s 131 of the Act and call the concerned parties for examination before taking any adverse inference against the assessee.
In the appellant’s case, the Id. AO did not bother to conduct any inquiry. He has not done inquiry with regard to the share application money received by the appellant. He has not bothered to enquire from any party about the genuineness of the transaction in spite of having every detail including PAN and other income tax details with him.
Your honour in various judgments delivered by number of High Courts it has been held that after having received all details from the assessee if the assessing officer has not gone beyond issuing notices u/s 131 of the Act to the concerned parties (i.e. he has not conducted any inquiry except issuing the notices) he cannot reach a conclusion that the credits appearing in the books of the assessee are fake. In the case of the appellant the AO has though issued notices under section 131 of the Act (which were duly served) to all five share applicants but has not gone beyond that inspite of having all powers vested in him given by the Income Tax Act, 1961.
In the case of CIT vs. Divine Leasing & Finance Ltd. 299 ITR 268 (Del) it has been held:
“Thus, the question is whether in the present case, the AO had material to conclude that the share applicants in questions did not exist. It is seen that the assessee company has furnished the necessary details such as PAN No./Income- tax Ward No./ration card of the share applicants and some of them are assessed to tax. The share application money has been received through banking channel. In some cases, the confirmations/affidavits of share applicants containing the above details were also filed. It is seen that the AO did not carry out any inquiry into the income tax record of the persons who have given the PAN No./Ward No. in order to ascertain the non-existence of the share applicants in question. The AO has neither controverted nor disproved the material filed by the assessee. In the case of CIT Vs. Makhni and Tyagi (P) Ltd. reported in 267 ITR 433(Del), the jurisdictional High Court has held that when the documentary evidence was placed on record to prove the identity of all the shareholders including their PAN/GIR numbers and filing of other documentary evidence in the form of ration cards etc. which had neither been controverted nor disapproved by the AO, no interference was called for. The Tribunal was justified in deleting the addition. The AO proceeded to make the impugned addition on the ground that in some cases some summons issued were returned unserved and in some case summons though served but there was no compliance. In this connection, it may be mentioned that in the case of CIT Vs. Orissa Corpn., 159 ITR 78, the Hon’ble Court has held that when the assessee borrows the loan and if an assessee gives names and address of the creditors, who are assessed to tax and full particulars is furnished then the assessee has discharged the duty. If the Revenue merely issues summons u/s 131 and does not pursue the matter further, the assessee does not become responsible for the same even if the creditors do not appear. Addition cannot be made u/s 68.”
Your honour, in the decision of the Supreme Court in C.I. T. vs. Orissa Corporation Pvt. Ltd., [1986] 159 ITR 78 (SC), it was held
“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 income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises.”
In the case of Sumati Dayal v. CIT-Bangalore [1995J 214 ITR 801 (SC) a succinct yet complete précis on the essentials of income-tax liability can be discerned from these words,
"In all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if the receipt is in the nature of income, the burden of proving that it is not taxable because it falls within the exemption provided by the Act lies upon the assessee. This decision is adequate authority for the proposition that by virtue of Section 68 of the IT Act the assessee is obliged to establish that amounts credited in the accounts do not represent its income; in that case the assessee's version that she had won them through betting on horse racing in two consecutive years did not attract credibility. The Apex Court had followed its earlier decision, namely, Orissa Corporation wherein it had held that since the assessee had given the names and addresses of the creditors, all of whom were income-tax assesses, the failure of the creditors to respond to the Department's notices would not justify an adverse inference being drawn against the assesses. The Court also kept in perspective the fact that the documentation had also been produced by the assessee. It is obvious that the Supreme Court considered that in these circumstances the onus of proof had been discharged by the assessee. It is also palpable that the Supreme Court was of the further opinion that the Department had not discharged the burden of proof that had shifted to it, since it did nothing more than issue notices under Section 131 of the IT Act. Therefore, the Department ought to have made efforts to pursue these notices/creditors to determine their creditworthiness. These observations sound the death-knell for the contentions raised on behalf of the Department in the present batch of Appeals.”
Also your honour will appreciate that the Id. AO has given all findings just to make his case but he has no where been able to find out a single hint on the basis of which it could be proved that the money which has come to the assessee was his own money or in legal merely the origin and source of cash credit but the origin of the origin and source of the source as well.
Your honour the legally settled position is well known to everyone, which clearly states that to what extent an assessee is liable to prove the genuineness of the credits appearing in its books of accounts. It is abundantly clear that the onus upon any assessee is to prove the source of any transaction and he cannot be compelled to prove the source of the source. In the appellant’s case the appellant has proved the genuineness of the transaction by producing every document related to the source of the credits, rather it has also to a great extent proved the source of the source by enclosing various details of the parties.
Your honour here is a case where the appellant has not only discharged its primary onus but has also discharged its onus beyond any doubt. As per the provision of Section 68 of the Act,, the appellant is required to offer explanation about the nature and source of the share application money to the satisfaction of the AO. The satisfaction of the AO has to be not arbitrary but on the basis of prudence. The appellant has taken share application money from M/s Bhawani Portfolio Pvt. Ltd. & M/s Thar Steels Pvt. Ltd. The said companies are existing entities and are being duly assessed to income tax (as confirmed by AO himself). It is not a case of vanishing company where the identity is in doubt and, as such, the identity of the creditor is well established. As regards creditworthiness, the fact that these companies are carrying on business is not in doubt. They are maintaining regular books of account as well as bank accounts. The money has come to the appellant from regular bank accounts of the said companies. All these transactions are part of the regular business activity of the said companies. Both the companies have shown the name of the assessee company in the schedule of investments. The AO has got no basis to take an adverse inference. Your honour will appreciate that this adverse inference cannot be drawn by the AO from any logic. Thus the action of Id. AO in this case is void and liable to be quashed.
Your honour as regards the adverse inference drawn by the AO that the assessee has failed to produce the creditor, it is submitted that the AO probably is not aware of the settled position of law on this issue. The Supreme Court in the case of CIT vs Orissa Corporation (P) Ltd., 159 ITR 78 has clearly held that in case the creditor does not appear in response to summon issued under Section 131, no adverse inference can be drawn. The AO did not do anything to call the concerned person. He shifted the burden on the assessee by asking the assessee to produce the Principal Officers. He has not issued any notice u/s 131 or 133(6). The action of the AO in not pursuing the matter when the AR appeared before him and gave all particulars of the said party clearly shows that he accepted the explanation given by the AR. Not only that, the assessee made all efforts to produce the Principal Officers and also made a request to the AO to enforce the attendance of such persons but drew adverse inference against the appellant company. In this case the AO has given a go by to all the settled principles of law and has made the addition in an arbitrary manner without there being any material even to doubt the transaction.
Your honour will endorse that it is very surprising to note that what else could the appellant have produced before the Id. A.O. to satisfy him with the genuineness of the transaction undertaken by it. It is also essential to mention here the judgment delivered by Honorable Delhi High Court in the case of CIT vs. Value Capital Services Pvt. Ltd. 307 ITR 334 wherein it was specifically held as under in the form of a very short order: “The Assessee had received an amount of Rs. 51 lakhs as share application money from 33 persons. The Assessing Officer required the Assessee to produce all these persons. It appears that some of them did appear. The Assessing Officer accepted the explanation and the statement given by three of these persons but found that the response from the others was either not available or was inadequate. On this basis, the Assessing Officer added an amount of Rs.46 lakhs pertaining to 30 of the persons to the income to the Assessee. In appeal, the Commissioner of Income Tax (Appeals) [CIT(A)j upheld the view taken by the Assessing Officer.
In further appeal, the Tribunal noted that the CIT(A) had noted the fact that the Assessee had produced the income tax returns, share application forms, confirmations, PAN letters, ration cards and/or bank statements in respect of all the share applicants. The CIT (A) had accepted the existence of the applicants but did not accept the genuineness of the transaction, subject matter of the inquiry.
While setting aside the order of the CIT(A), the Tribunal relied upon two decisions of this Court, namely, Commissioner of Income Tax v. Stellar Investment Ltd., [1991] 192 ITR 287 and a Full Bench decision in Commissioner of Income Tax v. Sophia Finance Ltd., [1994] 205 ITR 98. Several other decisions have been rendered by this Court following the above two decisions. The principle that has been laid down by the various decisions rendered by this Court from time to time is that if the existence of the applicant is proved, normally no further inquiry> is necessary.
Learned counsel for the Revenue submits that the creditworthiness of the applicants can nevertheless be examined by the Assessing Officer. It is quite obvious that is very difficult for the Assessee to show the creditworthiness of strangers. If the Revenue has any doubt with regard to their ability to make the investment, their returns may be re-opened by the department.
In any case, what is clinching is the additional burden on the Revenue. It must show that even if the applicant does not have the means to make the investment, the investment made by the applicant actually emanated from the coffers of the Assessee so as to enable it to be treated as the undisclosed income of the Assessee. This has not been shown insofar as the present case is concerned and that has been noted by the Tribunal also.
Under the circumstances, we are of the view that the Tribunal has not committed any error in deleting the addition.”
Also your honour in the case of CIT vs. Divine Leasing and Finance Ltd. 299 ITR 268 it was specifically held:
“the department would not be justified in drawing adverse inference only because the creditor/subscriber fails or neglects to respond to its notices.”
Also there is a direct judgment of the Hyderabad Tribunal delivered in the case of Bhagwan Das Sharda vs CIT 82 TTJ 982 where on similar facts it has been held that the lender an income tax assessee confirmed the loan but could not be produced. The addition based on non-production of lender will be unjustified because cash was deposited in the bank prior to the issue of cheque to the assessee.
Your honour the Id AO has cited various judicial pronouncements in his favor. He has quoted certain observations made by various courts in those judgments. But he has failed to realize that what he has quoted has not actually been held by the courts at many places, but has been written to reach conclusion, or the same has been quoted somewhere in the judgments as mere reference. Outcomes of almost all judgments are in consonance with the facts of the case of the assessee.
Your honour in this regard it is also to mention that the appellant has fully cooperated with the department. The appellant provided all details with regard to parties from whom it had accepted share application/ capital money. Your honour only issue which disturbs the assessee is that every time the Id. AO has made some finding that has been done by him on some estimates based on his own whims and fancies. The Id. AO has not been able to give a single concrete finding which could be held against the assessee in disallowing various claims made by it. Your honour will endorse that here it is not the case that the appellant did not cooperate with the department in providing various details to prove the genuineness of the transaction. The appellant produced all possible documents before him. Having filed all the details the assessee discharged its onus of proving the transaction being genuine.
Now it was the duty of the revenue to prove with some evidence that the genuineness of the transaction was not established by the assessee. But surprisingly the Id. AO did not discharge his onus properly as the same can be made out by reading the relevant portion of the assessment order hand-in-hand with the recent decision given by the Delhi High Court which clearly says that it is the duty of revenue to prove that the money deposited in the account of some other party emanated from the coffers of the assessee. Thus it is very clear that the Id. AO has failed to discharge his liability and in order to just make an addition he has ignored the provisions of law and various judicial pronouncements in this regard and made the addition with closed eyes which is untenable in the eyes of law and t hus liable to be deleted.
Your honour it is interesting to see that the Id. AO has very easily drawn a conclusion that the money received by the assessee from the share applicants was its own money. He has grossly neglected the fact that the books of the appellant company were duly audited by a Chartered Accountant who did not give any adverse finding with regard to the genuineness of its claim. Also there is no proof which comes out from the books of the assessee which shows that money received by it from its share applicants emanated from its own coffers. The most important thing to be seen here is that the transaction took nothing out of the Company's coffers, and put nothing into the shareholders' pockets and thus on what basis the Id. AO doubted the genuineness of the transaction is beyond the imagination of the assessee.
Your honour a very recent judgment of Honorable Delhi High Court delivered in the case of CIT vs. Dwarkadhish Investment (P) Ltd. ITA 911/2010 and IT A 913/2010 (Copy enclosed) has specifically held that the appellant having produced details to establish identity of the share applicants, no addition can be made on account of share capital.
Your honour further in a recent case of Sarthak Securities Co. (P) Ltd. vs ITO 329 ITR 110 (Delhi) the issuance of notice u/s 148 for making addition u/s 68 was held bad in law stating as under:
“In the case at hand, as is evincible, the assessing officer was aware of the existence of four companies with whom the assessee had entered into transaction. Both the orders clearly exposit that the assessing officer was made aware of the situation by the investigation wing and there is no mention that these companies are fictitious companies. Neither the reasons in the initial notice nor the communication providing reasons remotely indicate independent application of mind. True it is, at that stage, it is not necessary to have the established fact of escapement of income but what is necessary is that there is relevant material on which a reasonable person could have formed the requisite belief. To elaborate, the conclusive proof is not germane at this stage but the formation of belief must be on the base or foundation or platform of prudence which a reasonable person is required to apply. As is manifest from the perusal of the supply of reasons and the order of rejection of objections, the names of the companies were available with the authority. Their existence is not disputed. What is mentioned is that these companies were used as conduits. In that view of the matter, the principle laid down in Lovely Exports (P) Ltd. (supra) gets squarely attracted. The same has not been referred to while passing the order of rejection. The assessee in his objections had clearly stated that the companies had bank accounts and payments were made to the assessee company through banking channel. The identity of the companies was not disputed. Under these circumstances, it would not be appropriate to require the assessee to go through the entire gamut of proceedings. It is totally unwarranted.”
The ld. DR submitted his arguments which are as under:
“Sub: Written Submission in the above case- reg.
In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to addition made u/s 68 of I.T. Act:
PCIT Vs. NRA Iron & Steel Pvt. Ltd. (SC) dated 05.03.2019: Where Hon’ble Apex Court held that the practice of conversion of un-accounted money through cloak of Share Capital/Premium must be subjected to careful scrutiny especially in private placement of shares. Filing primary evidence is not sufficient. The onus to establish credit worthiness of the investor companies is on the assessee. The Assessee is under legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee.
Hon’ble Delhi High Court Judgement dated 17.01.2019 in case of NDR Promoters Pvt. Ltd., ITA No. 49/2018 where the addition of share capital u/s 68 has been upheld where the investors were found to be paper companies during search on other parties. It was held by the Hon’ble Court that a case involving make-believe paper work to camouflage the bogus nature of the transactions is to be treated as unexplained credit u/s 68.
ITO(Exemptions) vs. M/s Synergy Finlease Pvt. Ltd., ITA no. 4778/Del/2013, order dated 08.03.2019, where Hon’ble ITAT, Delhi has held that share capital/premium introduced through paper companies is liable for addition u/s 68 of the Act.
Prem Castings (P.) Ltd. Vs CIT [2017] 88 taxmann.com 189 (Allahabad) where Hon’ble Allahabad High Court held that additions u/s 68 warrant being sustained where the identities & creditworthiness of investors in the assessee company are not established by the assessee & are also proved incorrect by the Department's Assessee Information System. In such circumstances, assessee cannot resist the additions on grounds that it did not have opportunity to cross-examine relevant witnesses. An assessee company cannot hide behind the shell of a corporate entity to feign ignorance regarding the identity of any person who invests in its share capital.
Prem Castings (P.) Ltd. Vs CIT 2018-TIQL-274-SC-1T where Hon’ble Supreme Court held as follows:
“We do not find any merit in this petition. The Special Leave Petition is accordingly dismissed.”
CIT Vs Navodaya Castle Pvt. Ltd. (2014) 367 ITR 306 (Del) where Hon’ble Delhi High Court accepted that since the assessee was unable to produce the directors and the principal officers of the six shareholder companies and also that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer had observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions.
"20. Now, when we go to the order of the Tribunal in the present case, we notice that the Tribunal has merely reproduced the order of the Commissioner of Income-tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its co-ordinate Bench in the case of MAF Academy P. Ltd., a decision which has been overturned by the Delhi High Court, vide its judgment in CIT v. MAF Academy P. Ltd. [2014] 206 DLT 277 ; [2014] 361 ITR 258 (Delhi)). In the impugned order it is accepted that the assessee was unable to produce directors and principal officers of the six shareholder companies and also the fact that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer has observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions.
In view of the aforesaid discussion, we feel that the matter requires an order of remit to the Tribunal for fresh adjudication keeping in view the aforesaid case law."
Navodava Castle Pvt. Ltd. Vs CIT (2015-TIQL-314-SC-IT) SLP of assessee dismissed by Hon’ble Supreme Court
Konark Structural Engineering (P.) Ltd. Vs DCIT [2018] 96 taxmann.com 255 (SC) where assessee-company received certain amount as share capital from various shareholders, in view of fact that summons to shareholders under section 131 could not be served as addresses were not available, and, moreover, those shareholders were first time assessees and were not earning enough income to make deposits in question, addition made by Assessing Officer under section 68 was to be confirmed; SLP dismissed.
Konark Structural Engineering (P.) Ltd. Vs DCIT [2018] 90 taxmann.com 56 (Bombay) where Hon’ble Bombay High Court held that where assessee-company received certain amount as share capital from various shareholders, in view of fact that summons served to shareholders under section 131 were unserved with remark that addressees were not available, and, moreover, those shareholders were first time assessees and were not earning enough income to make deposits in question, impugned addition made by AO under sec. 68, was to be confirmed,
DRB Exports (P.) Ltd. Vs CIT [2018] 93 taxmann.com 490 (Calcutta) where Hon’ble Calcutta High Court held that where AO made addition under section 68 in respect of increase in share capital of assessee-company, in view of fact that addresses of most of purported shareholders were identical and they could not be traced out despite notice issued under section 131, Tribunal was justified in confirming impugned addition
CIT Vs Nipun Builders & Developers (P.) Ltd (30 taxmann.com 292, 214 Taxman 429, 350 ITR 407. 256 CTR 34) where Hon’ble Delhi High Court held that where assessee failed to prove identity and capacity of subscriber companies to pay share application money, amount so received was liable to be taxed under section 68. It was held as follows:
“12. A perusal of the order of the Tribunal shows that it has gone on the basis of the documents submitted by the assessee before the AO and has held that in the light of those documents, it can be said that the assessee has established the identity of the parties. It has further been observed that the report of the investigation wing cannot conclusively prove that the assessee’s own monies were brought back in the form of share application money. /4s noted in the earlier paragraph, it is not the burden of the AO to prove that connection. There has been no examination by the Tribunal of the assessment proceedings in any detail in order to demonstrate that the assessee has discharged its onus to prove not only the identity of the share applicants, but also their creditworthiness and the genuineness of the transactions. No attempt was made by the Tribunal to scratch the surface and probe the documentary evidence in some depth, in the light of the conduct of the assessee and other surrounding circumstances in order to see whether the assessee has discharged its onus under Section 68. With respect, it appears to us that there has only been a mechanical reference to the case-law on the subject without any serious appraisal of the facts and circumstances of the case.
We, therefore, answer the substantial guestion of law framed by us in the negative, in favour of the revenue and against the assessee. The appeal of the revenue is allowed with no order as to costs.”
CIT Vs Nova Promoters & FinSease (P) Ltd (18 taxmann.com 217, 206 Taxman 207, 342 ITR 169. 252 CTR 187) where Hon’ble Delhi High Court held that amount received by assessee from accommodation entry providers in garb of share application money, was to be added to its taxable income under section 68. It was held as follows:
“41. In the case before us, not only did the material before the Assessing Officer show the link between the entry providers and the assessee-company, but the Assessing Officer had also provided the statements of Mukesh Gupta and Rajan Jassal to the assessee in compliance with the rules of natural justice. Out of the 22 companies whose names figured in the information given by them to the investigation wing, 15 companies had provided the so-called "share subscription monies" to the assessee. There was thus specific involvement of the assessee-company in the modus operandi followed by Mukesh Gupta and Rajan Jassal. Thus, on crucial factual aspects the present case stands on a completely different footing from the case of Oasis Hospitalities (P.) Ltd. (supra).
In the light of the above discussion, we are unable to uphold the order of the Tribunal confirming the deletion of the addition of Rs. 1,18,50,000 made under section 68 of the Act as well as the consequential addition of Rs. 2,96,250. We accordingly answer the substantial questions of law in the negative and in favour of the department. The assessee shall pay costs which we assess at Rs. 30,000/-.”
CIT Vs Ultra Modern Exports (P.) Ltd (40 taxmann.com 458, 220 Taxman 165) where Hon’ble Delhi High Court held that where in order to ascertain genuineness of assessee's claim relating to receipt of share application money, Assessing Officer sent notices to share applicants which returned unserved, however, assessee still managed to secure documents such as their income tax returns as well as bank account particulars, in such circumstances, Assessing Officer was justified in drawing adverse inference and adding amount in question to assessee's taxable income under section 68. It was held as follows:
“9. As noticed previously, the CIT (A) was of the opinion that the assessee had discharged the basic onus which was cast upon it after considering the ruling in Lovely Exports (P.) Ltd.'s case (supra). The material and the records in this case show that notice issued to the 5 of the share applicants were returned unserved. The particulars of returns made available by the assessee and taken into consideration in paragraph 3.4 by the AO in this case would show that the said parties/applicants had disclosed very meager income. The AO also noticed that before issuing cheques to the assessee, huge amounts were transferred in the accounts of said share applicants. This discussion itself would reveal that even though the share applicants could not be accessed through notices, the assessee was in a position to obtain documents from them. While there can be no doubt that in Lovely Exports (P.) Ltd. (supra), the Court indicated the rule of "shifting onus" i.e. the responsibility of the Revenue to prove that Section 68 could be invoked once the basic burden stood discharged by furnishing relevant and material particulars, at the same time, that judgment cannot be said to limit the inferences that can be logically and legitimately drawn by the Revenue in the natural course of assessment proceedings. The information that assessee furnishes would have to be credible and at the same time verifiable. In this case, 5 share applicants could not be served as the notices were returned unserved. In the backdrop of this circumstance, the assessee's ability to secure documents such as income tax returns of the share applicants as well as bank account particulars would itself give rise to a circumstance which the AO in this case proceeded to draw inferences from. Having regard to the totality of the facts, i.e., that the assessee commenced its business and immediately sought to infuse share capital at a premium ranging between Rs. 90-190 per share and was able to garner a colossal amount of Rs. 4.34 Crores, this Court is of the opinion that the CIT (Appeals) and the IT AT fell into error in holding that AO could not have added back the said amount under Section 68. The question of law consequently is answered in favour of the Revenue and against the assessee.”
CIT Vs Frostair (P.) Ltd (26 taxmann.com 11, 210 Taxman 221) where Hon’ble Delhi High Court held that where details furnished by assessee about share applicants were incorrect, addition under section 68 was proper. It was held as follows:
12 The application of the ratio of every decision by a quasi-judicial body like the ITAT has to be nuanced, and contextual. Thus, while the findings in Divine Leasing, Oasis International or even Lovely Exports might be preceded by a general discussion of the correct approach to be adopted by the AO, in a given case where additions are sought to be made on account of share application moneys not found to be genuine, the basic facts of the case cannot be lost sight of. On a proper application of the ratio in Oasis - and subsequently, the Division Bench ruling in CIT v. Nova Promoters & Finlease (P) Ltd [2012] 206 Taxman 207/ 18 taxmann.com 217 (Delhi) it is evident that the AO took into account - if we may say so, in exhaustive detail, after a painstaking examination of the records after two or three layers of scrutiny- all the materials and held that the claim that the amounts claimed to be received on account of share applications were not based on genuine transactions. The CIT (A) upheld that order, after calling for a remand report. In these circumstances, the conclusion of the Tribunal, that the assessee had discharged its onus, appears to be based on a superficial understanding of the law, and an uninformed one about the overall facts and circumstances of the case.
In view of the above reasons, the questions of law in these appeals are answered in favour of the revenue. The orders of the Assessing Officer are restored. The appeals are to succeed and are therefore allowed.”
CIT Vs N.R. Portfolio Pvt. Ltd. [2014[ 42 taxmann.com 339 (Delhi)/r20141 222 Taxman 157 (Delhi)(MAG)/[2014] 264 CTR 258 (Delhi) where Hon’ble Delhi High Court held that if AO doubts the documents produced by assessee, the onus shifts on assessee to further substantiate the facts or produce the share applicant in proceeding. It was held as follows:
“30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, controls and manage them.”
CIT Vs Empire Builtech (P.) Ltd (366 ITR 110)
where Hon’ble Delhi High Court held that u/s 68 it is not sufficient for assessee to merely disclose address and identities of shareholders; it has to show genuineness of such individuals or entities.
CIT Vs Focus Exports (P.) Ltd (51 taxmann.com 46 (Delhi)/r20151 228 Taxman 881 where Hon’ble Delhi High Court held that where in respect of share application money, assessee failed to provide complete address and PAN of certain share applicants whereas in case of some of share applicants, there were transactions of deposits and immediate withdrawals of money from bank, impugned addition made under section 68 was to be confirmed.
PCIT Vs Bikram Singh FITA No.55/2017] (Delhi) where Hon’ble Delhi High Court held that even if a transaction of loan is made through cheque, it cannot be presumed to be genuine in the absence of any agreement, security and interest payment. Mere submission of PAN Card of creditor does not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were through the banking channel, does not establish the genuineness of transactions. Loan entries are generally masked to pump in black money into banking channels and such practices continue to plague Indian economy.
Rick Lunsford Trade & Investment Ltd Vs CIT F20161 385 ITR 399 (Cat)
The assessee did not produce books of account or bank accounts or shareholders’ register. Eight out of fifty six persons from shareholders’ list provided by assessee denied subscription. Remaining notices returned with endorsement ’’not known”. Hon’ble Calcutta High Court held that unexplained share application money was rightly treated as assessee’s income.
Rick Lunsford Trade & Investment Ltd Vs CIT f2016-TIOL-2Q7-SC-ITI (Supreme Court)
where Hon’ble Supreme Court dismissed SLP upholding that it is open to the Revenue Department to make addition on account of alleged share capital u/s 68, where the assessee company has failed to show genuineness of its shareholders.”
Sd/-
(Rinku Singh)
Addl. Commissioner of income Tax(Sr. DR)
E-Bench, ITAT, New Delhi
The ld. CIT(A) adjudicated as under:
“3.1 I have considered the submissions made by the appellant, the assessment order and perused the evidences filed by the appellant’s AR. The issue in this case is the share capital of Rs.3,00,00,000/- received by the appellant company during the year. Admittedly this share capital has been received from two companies. The appellant in this regard has filed confirmations, copies of bank statements and Memoranda & Articles and other details to prove the existence of these companies. Based on these documents and evidences it is established that both the shareholder companies are in existence. On going through the assessment order I notice that the assessing officer is relying on the three parameters of Section 68 i.e. identity, creditworthiness and genuineness of the transactions. The issue of share capital has been settled in various judicial pronouncements. In my opinion the latest judgment of the Delhi High Court in the case of CIT vs. Oasis Hospitalities Pvt. Ltd. dated 31st January, 2011 has dealt with the issue at length and after examining the various judgments has settled certain parameters to decide an issue like this. After analyzing the provisions of the Companies Act and Section 68 of the I T Act, the judgments delivered in the cases of CIT vs. Divine Leasing & Finance Ltd. 299 ITR 268 (Dei), CIT vs. Sophia Finance Ltd. (1994) 205 ITR 98 (Del) (FB), CIT vs. Dolphin Canpack Ltd. 283 ITR 190, CIT vs. Lovely Exports Pvt. Ltd. 216 CTR 195 the Hon’ble Court held that the initial burden is upon an assessee to explain the nature and source of share application money received by it. The Court further observed that in case the investor/shareholder is an individual some documents will have to be filed or the said shareholder will have to be produced before the assessing officer to prove his identity. If the creditor/subscriber is a company then the details in the form of resolution or PAN identity, etc can be furnished. As regards the genuineness of the transaction, it has been held that when the money is received by cheque and is transacted through banking or other undisputable channel, the genuineness of the transaction would be proved. Other documents showing the genuineness of the transaction could be copies of the shareholders’ register, share application forms, share transfer register, etc. As far as creditworthiness or the financial strength of the creditor or subscriber is concerned that can be proved by producing bank statement of the creditor / subscriber showing that it had sufficient balance in its account to enable it to subscribe to the share capital. Once these documents are produced the assessee would have satisfactorily discharged the onus placed upon him. Thereafter it is for the assessing officer to scrutinize the same and in case he has 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 aspect, there has to be some reason and material for the assessing officer and he cannot go into the realm of suspicion. After analyzing the above facts, the Court referred to the judgment of the Delhi High Court in the case of CIT vs. Creative World Telefilms Ltd. and held that once documents like PAN or bank account details were given by the assessee the onus shifts upon the assessing officer and it is upto him to reach the shareholders and the assessing officer cannot burden the assessee merely on the ground that summons issued to the investors were returned. Thereafter the Court referred to the judgment of Delhi High Court in the case of CIT vs Value Capital Services (P) Ltd. 307 ITR 334 (Delhi) whereby it was observed that additional burden was on the department to show that even if the applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee to enable it to be treated as the undisclosed income of the assessee. After laying down the above principles, the Court dismissed the appeal filed by the Revenue where the applicants were companies despite the fact that the assessing officer had received information from the Investigation Wing that these investor companies were not carrying on any real business activity and were engaged in the business of providing accommodation entries.
Now applying the above judgment to the facts of this case, it is an admitted fact that all the shareholders are companies. The appellant has filed sufficient documents e.g. copies of PAN Cards, bank statements, CINs, etc. to establish their identity. It is not the case of the assessing officer that these companies have not been incorporated. The copies of the bank statements of the share subscribers wherein the transactions are reflected as well as their balance sheets showing investment in the appellant company on their assets’ sides establish the creditworthiness of the parties while the genuineness of the transactions are borne out by the fact that the transactions were through banking channels. On going through the assessment order, it is seen that the assessing officer has not been able to rebut or find any discrepancy about the documents submitted by the appellant. If that be the case the assessing officer cannot make addition under Section 68 in the hands of the appellant company. The appellant company has been able to prove its case and in case the appellant has failed to produce the shareholders as held by the jurisdictional High Court in the case cited above, the assessing officer cannot shift the burden on the appellant company. It is a case where the appellant has been able to meet the requirements to justify its case. The appellate, by providing the details as narrated in the submissions filed by it and as annexed in the paper book attached with the submissions, has clearly established the identity and creditworthiness of the shareholders and the genuineness of the transactions. Accordingly, I hereby direct the assessing officer to delete the addition of Rs. 3,00,00,000/. These grounds of appeal are allowed accordingly.”
Having heard arguments of both the parties and after going through the entire contents of the paper book and after perusing the facts on record, we do not find any strength in the ratio given by the ld. CIT(A), hence, owing to the absence of the pertinent facts, we deem it proper to remand the matter to the file of the Assessing Officer to inquire into the issue afresh and pass a speaking order after affording due opportunity to the assessee.
In the result, the appeal of the assessee is Revenue for statistical purpose.