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Judgment
PER MAHAVIR SINGH, VP:
These appeals by the assessee as well as revenue are emanating from the respective orders of the Ld. Commissioner of Income Tax (Appeals-30), New Delhi. Assessments were framed by the DCIT, CC-31, New Delhi, u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as “Act”) relevant to assessment years 2014-15, 2016-17 & 2017-18 respectively. Since these appeals are inter-connected, thus the same were heard together and disposed of by this common order for the sake of convenience, by dealing with first Assessee’s ITA No. 1096/Del/2024 (A.Y. 2014-15) wherein, the following solitary ground has been raised:-
“That on the facts and circumstances of the case and in law, the CIT(A) was not justified in sustaining the addition of Rs. 81,00,000/-made u/s. 68 of the I.T. Act by the Assessing Officer on account of share capital received from M/s Growfast Realtors Pvt. Ltd. without considering the fact that the appellant during the course of assessment proceedings had filed all the documentary evidences to prove the identity, creditworthiness and genuineness of the party but the Assessing Officer had neither considered the same nor made any independent enquiry and solely relied upon the findings given by the Investigation Wing.”
The brief facts of the case are that a search and seizure operation u/s. 132 of the Act was conducted at various business and residential premises of NV group on 20.4.2017. Thereafter, the assessee company was subjected to reopening proceedings under section 147 by issuance of notice u/s. 148 dated 30.3.2021. As per reasons recorded, the assessee company was found to be one of the beneficiaries of unaccounted income amounting to Rs. 2,31,00,000/- on account of unsecured loans from M/s Growfast Realtors Pvt. Ltd. and M/s Mohit Minerals Pvt. Ltd. The Assessing officer made the addition of 81,00,000/- received from M/s Growfast Reaslors Pvt. Ltd. against which the Assessee preferred the appeal before the CIT(A), who vide his impugned order dated 10.1.2024 sustained the addition by dismissing the assessee’s appeal. Aggrieved, assessee is in appeal before the Tribunal.
We have heard the rival submissions and gone through the facts and circumstances of the case. Before us, Ld. AR for the assessee submitted that the during the course of assessment proceedings the assessee submitted all the requisite documents/evidences with regard to M/s Growfast Realtors Pvt. Ltd viz. copy of ledger accounts, bank statements, confirmation of accounts, income tax return for the year under consideration and all the requisite papers which are also enclosed with the Assessee’s Paper Book pages 54 to 66. Assessee also produced the copy of assessment orders of M/s Growfast Realtors Pvt. Ltd. at page n no. 122 to 126 of the Assessee’s Paper Book. However, it was the contention of the Assessee’s AR that AO did not consider any of the documents that were filed during the assessment proceedings and made the addition. However, during the hearing, Assessee’s AR has filed the source of source funds in the following tabulated form in order to explain the transaction and to prove the genuineness of funds received by the assessee during the year under consideration. Ld. DR relied upon the orders of the authorities below. We have perused the relevant documentary evidences filed in the shape of paper book by the Assessee’s AR before us and found that M/s Growfast Reasltors P Ltd. from its PNB A/c No. 00071131004311 on 18.2.2014 and 07.03.2014 has made the payments to the assessee viz. NV Distilleries (UK) Pvt. Ltd. amounting to Rs. 21,00,000/- and Rs. 60,00,000/- respectively, which proves the source of source of transaction and its genuineness, thus, we delete the addition in dispute and allow the ground raised by the assessee.
In the result, the ITA No. 1096/Del/2024 (AY 2014-15) is allowed in the aforesaid terms.
Revenue’s ITA No. 1396/Del/2023 (AY 2016-17)
This appeal filed by the Revenue against the order of the Ld. CIT(A-30), Delhi on the following grounds:-
1.Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of unexplained credits amounting to Rs. 29,50,000/- received from shell company, M/s Growfast Reasltors Pvt. Ltd. even when the assessee failed to prove the identity and creditworthiness of the lender and to establish the genuineness of the transaction.
2.Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in concluding that the assessee did not receive funds fro Growfast Realtors Private Limited considering only the opening and closing balance of the entity as submitted by the assessee, without examining the bank statement or confirmation of accounts of Growfast Realtors Pvt. Ltd. Repayment of loan does not absolve the assessee from accommodation entry in form of loan and also, it is the common modus operandi of the beneficiary entities to clean up its account by repaying loan back to bogus entity.
3.Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of unexplained credits amounting to Rs. 1,77,09,000/- being share capital and the addition of Rs. 23,55,29,700/- being the share premium received from Hillview Marketing Pvt. Ltd. even when the assessee failed to explain the creditworthiness of source of funds of Hillview Marketing Private Limited and to establish the genuineness of the transaction.
4.Considering the facts and circumstances of the case it is pertinent to apprise the Hon’ble ITAT that the relied upon base order u/s. 148 in case of Hill View Marketing has been set aside u/s. 263 and a reused order u/s. 147 r.w.s. 263 has been passed. So, the reliance of the Ld. CIT(A) on the original order holds in this case or not?
5.Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in ignoring the statement of Shri Ashok Jain u/s. 132(4), promoter of NV Group, recorded on oath u/s. 132(4) dated 22.4.2017 (copy enclosed), wherein he admitted that unaccounted income of NV group was routed back into books of group companies through RCI Industries and Technologies Pvt. Ltd. (holding company of RCI World Trade Links DMCC), an entity controlled by entry operator Shri Akash Khandelwal.
6.Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in not considering that Shri Sudershan Rawat, the Director of Hillview Marketing Pvt. Ltd., is an employee of NV Distilleries Ltd. one of the operating companies of NV group, and his role is to receive cash belonging to NV group of companies and handing over cash to different persons including entry operator (in his statement recorded on oath u/s. 132(4) dated 20.4.2017, Shri Sudershan Rawat admitted that he made cash payments to Shri Akash Khandelwal (an established entry operator) on directions from key persons of NV group.
7.Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in law by ignoring the decision of Hon’ble Delhi High Court in the case of Smt. Dayawanti Through Smt. Sunita Gupta (legal heir) vs. Commissioner of Income Tax (2016) 75 taxmann.com 308 (Delhi), confirmed on 24.4.2023 by the Hon’ble Apex Court tagged with Abhisar Buildwell (P) Ltd. wherein it was held that statements recorded under section 132(4) of the Income Tax Act, clearly relevant and admissible as evidence. In this case, Shri Ashok Jain in his statement u/s. 132(4), admitted that unaccounted income of NV group was routed back into books of group companies through RCI Industries and Technologies Pvt. Ltd. (holding company of RCI World Trade Links DMCC).
8.Whether in the facts and circumstances of the case, the CIT(A) erred in law and on facts in deleting the addition of unexplained commission expense amounting to Rs. 69,64,058/-.
9.Whether in the facts and circumstances of the case, the Ld. CIT(A) has erred in facts in concluding the addition of share premium was made u/s. 68 of the Income Tax Act, 1961 whereas addition was made u/s. 56(2)(viib) in the assessment order.
10.The order of the Ld. CIT(A) is perverse, erroneous and is not tenable on facts and in law.
The brief facts of the case are that AO assessed the income of the assessee at Rs. 26,31,23,269/-, as against the returned loss at Rs. 29,489/-, after making the addition of Rs. 25,32,38,700/- on account of share application money u/s. 68 of the Act; Rs. 29,50,000/- on account of unsecured loans u/s. 68 of the Act and Rs. 59,64,058/- on account of undisclosed commission @2.75% on the alleged share application money amounting to Rs. 25,32,38,700/-. Against the above action of the Assessee, assessee preferred the appeal before the Ld. CIT(A) who vide his impugned order has allowed the appeal of the assessee. Aggrieved, Revenue is in appeal before the Tribunal.
At the time of hearing Ld. CIT(DR) reiterated the contentions raised in the aforesaid grounds of appeal and relied upon the order of the Assessing Officer.
Per contra, ld. AR for the assessee relied upon the order of the Ld. CIT(A) and submitted that he has passed a well-reasoned order, which does not need any interference.
We have heard the rival contentions and gone through the facts and circumstances of the case. We find that Ld. CIT(A) has passed his order on the issues in dispute by observing as under:-
“10.Ground No.5:- In this ground, the appellant challenged the addition made by the Assessing Officer amounting to Rs.29,50,000/-allegedly received as unsecured loan from M/s. Growfast Realtors Pvt. Ltd. during the year under The Assessing Officer has observed in the Assessment Order that the appellant has received unsecured loan of Rs.29,50,000/- in the Assessment Year 2016-17 from M/s. Growfast Realtors Pvt. Ltd. which was one of the accommodation entry providing company through which unaccounted income of NV Group was routed in the form of share capital and premium. This fact was also admitted by Shri Ashok Jain (main promoter and Director of the group) in his statement u/s. 132(4) of the Act recorded on 22.04.2017. The appellant in his written submission has stated that no unsecured loan was received from M/s. Growfast Realtors Pvt. Ltd. during the year under consideration. Therefore, the inference drawn by the Assessing Officer is factually incorrect.
10.1The observations of the Assessing Officer and the submission of the appellant has been carefully perused. The appellant submitted during the assessment proceedings as well as during the appellate proceedings that no unsecured loan was received by it from M/s. Growfast Realtors Pvt. Ltd. during the year under consideration and therefore, the addition was not based on correct facts. The appellant submitted the details of unsecured loan status of the company as on 31.03.2016 and 31.03.2015 which is reproduced as under:-
S.No. Name of the lender Amount as on 31.03.2016 Amount as on 31.03.2015 Received/ (Payment) dr. the assessment year 1. Growfast Realtors Pvt. Ltd. 27,15,22,250/- 30,06,22,500/- (2,91,00,000/-) 2. Parmeshwar Merchandise (P) Ltd. 70,26,90,000/- 70,25,90,000/- - 3. Varun Jain 1,71,60,000 - 1,71,60,000 Total (as per audited balance sheet) 99,13,72,500 100,33,12,500/- -- 10.2The Assessing Officer in the notice u/s. 142(1) dated 09.11.2019 showcaused the appellant seeking the explanation of the appellant on the unsecured loan received by it in the A.Y. 2016-17 from M/s. Growfast Realtors Pvt. Ltd. 1ne appellant rebutted the allegation of the Assessing Officer vide its letter dated 09.12.2019, which is also reproduced in the body of the Assessment Order, Stating that no unsecured loan was received by the appellant from M/s. Growfast Realtors Pvt. Ltd. during the year. The AO did not counter the submission of the appellant in his Assessment Order and has not brought any counter evidence on record but proceeded with the addition of Rs.29,50,000/- u/s. 68 of the Income Tax Act.
10.3On perusal of the submission of the appellant as tabulated above, it is noted that the appellant did not receive any unsecured loan from M/s Growfast Realtors Pvt. Ltd. during the year under consideration instead it had made payment of Rs. 2,91,00,000/-. Accordingly, I find that the addition made by the AO u/s. 68 is not based on correct facts. As the addition u/s. 68 can be made only in respect of the credit entries made in the books of the appellant during the year under consideration, the addition made by the Assessing Officer is not sustainable and is hence, deleted. This ground of appeal is allowed.
11.Ground No.6:- In this ground, the appellant challenged the addition made by the Assessing Officer amounting to Rs.25,32,38,700 /- u/s. 68 of the Act on account of share capital received by the appellant company from M/s. Hillview Marketing Pvt. Ltd. which is one of the group entity of NV Group. The Assessing Officer has observed in the Assessment Order that the appellant has received share capital and share premium from M/ s. Hillview Marketing Pvt. Ltd. amounting to capital Rs. 1,77,09,000/- and share premium amounting to Rs.23,55,29,700/-).
11.1The Assessing Officer has observed in the Assessment Order that Shri Ashok Jain, Promoter and Director of the NV Group had admitted in his statement u/s. 132(4) of the Income Tax Act that unaccounted income of the group has been brought back in the books of the group companies in the form of share capital and premium. The Assessing Officer further noted that the appellant Rs.25,32,38,700/- which could not be explained by the appellant during the appellate proceedings.
11.2The appellant in its written submission has stated that the share capital has been received by the appellant company from M/s. Hillview Marketing Pvt. Ltd. which is one of the NV Group company and that the appellant has submitted all the necessary documents to prove the identity, genuineness and creditworthiness of the investor company during the assessment proceedings. The appellant further submitted that one of the ground taken by the Assessing Officer for the adverse finding against the appellant was that the share certificates and blank signed transfer deed of the investor company was found in the premises under control of the assessee company. However, no documents pertaining to the investor company i.e. M/s. Hillview Marketing Pvt. Ltd. which is one of the group company was found during the search operation. Therefore, the observation of the Assessing Officer in this regard is factually incorrect.
11.3The appellant also submitted that the statement of Shri Ashok Jain recorded u/s. 132(4) of the Act was retracted on 10.07.2017, therefore, it has no credence. The appellant also submitted that even if the statement given by Shri Ashok Jain is relied upon it could be observed that in response to question No. 14 of his statement he had stated that the capital received by M/s. Hillview Marketing Pvt. Ltd. from RCI World Trade Link, Dubai during the A.Y. 2016-17 of Rs.36.06 crores at premium of Rs.440.80 per share was genuine and it was as per guidelines of RBI and FEMA. Therefore, even if the statement of Shri Ashok Jain is relied upon the alleged share capital received by the assessee company from M/s. Hillview Marketing Pvt. Ltd. was genuine.
I1.4 The appellant further submitted that the valuation report justifying the premium of the share capital received by the appellant company was filed before the Assessing Officer vide its reply dated 24.12.2019 but the same was not considered in the Assessment Order passed on 30.12.2019. The Assessing Officer did not find any mistake with the valuation of shares of the company and has simply rejected. The appellant further submitted vide its written submission dated 04.05.2022 that the issue of addition of Rs.25,32, 38,700/- made on account of share capital received by the appellant company from group entity M/s. Hillview Marketing Pvt. Ltd. was matter of investigation in the proceedings u/s. 148 of the Income Tax Act and the Assessing Officer, DCIT, Central Circle-31, New Delhi had investigated and accepted the funds received by M/s. Hillview Marketing Pvt. Ltd. from RCI World Trade Link. Thus, the source of the funds received in the books of M/s. Hillview Marketing Pvt. Ltd. has been found genuine. Therefore, same cannot be treated non-genuine when it is invested subsequently. No addition can thus be made in the hands of the appellant company on account of share capital and premium received from M/s. Hillview Marketing Pvt. Ltd.
11.5The observations of the Assessing Officer and the submission of the appellant. It is noted that Shri Ashok Jain in his 132(4) dated 22.04.2017 had admitted the routing of appellant were carefully perused. It is noted that Shri Ashok Jain in his statement u/s. 132(4) dated 22.4.2017 had admitted the routing of unaccounted income of the group in the books of appellant in form share capital/share premium from below mentioned investors:-
F.Y. Name of the share holders Base Rate (per share) Premium rate (per share) Share capital account (including premium) 2011-12 Apoorva Leasing and Investment Co. Ltd. 10 150 32,00,00,000/- 2014-15 Parmeshwar Merchandise Pvt. Ltd. 10 145 39,74,97,900/- Total 86,55,07,500/- Shri Ashok Jain did not mention about the accommodation received in the books of appellant company through M/s. Hillview Marketing Pvt. Ltd. in A.Y. 2016-17, therefore, statement of Shri Ashok Jain cannot be treated incriminating in the case of appellant in the impugned year in respect of share capital received from M/s Hillview Marketing Pvt. Ltd. There is no allegation finding on record that M/s Hillview Marketing Pvt. Ltd. is a conduit or shell /accommodation entry providing company.
11.6Further, on perusal of the confirmation of accounts of M/s. Hillview Marketing Pvt. Ltd. in the books of the appellant company submitted by the appellant, it is noted that the appellant had received Rs.35,93,00,000/- during the year under consideration against which Rs. 17,70,900/- shares were issued for Rs. 25,32,38,700/- and the balance amount was returned back to the investor company.
11.7On perusal of the bank statement of M/s. Hillview Marketing Pvt. Ltd., it is further noted that the funds have been received in the bank account of M/s. Hillview Marketing Pvt. Ltd. immediately before the transfer of same to the appellant company. The appellant has submitted that the source of funds in the books of M/s. Hillview Marketing Pvt. Ltd. is the FDI amounting to Rs.36,06,40,000/-received from M/s. RCI World Trade Link, Dubai. The funds received in the books of M/s. Hillview Marketing Pvt. Ltd. have been subject matter of assessment u/s. 148 of the Act. The reasons for re-opening of the case u/s. 147/148 along with the Assessment Order u/s. 148/143(3) submitted by the appellant been carefully perused. Assessing Officer assessed M/s. Hillview Marketing Pvt. Ltd., the investor Company, at returned income and no adverse remarks has been recorded in order u/s. 148/143(3) dated 30.03.2022 in respect of funds received by it from M/s. RCI World Trade Link, Dubai. Therefore, share capital/share premium which has been received by the appellant company from Marketing Pvt. Ltd. cannot be treated as unexplained. Hence, no addition can be sustained in the hands of the appellant company.
12.Ground No.7:- In this ground, the appellant has challenged the addition of Rs.69,64,058/- made in the Assessment Order as commission payments @2.75% for arranging share capital and unsecured loans of Rs.25,32,38,700/ - and Rs.29,50,000/-. Since, the above referred quantum additions have been deleted on merit, the commission expenditure estimated on them cannot be sustained. Accordingly, addition of Rs.69,64,058/- u/s 69C is deleted.”
After carefully perusing the aforesaid findings of the Ld. CIT(A), we find that as far as deletion of addition of Rs. 29,50,000/- received from shell company, M/s Growfast Reasltors Pvt. Ltd. is concerned, it is noted that during the proceedings before the lower authorities, it was the contention of the assessee that no unsecured loan was received by it from M/s Growfast Realtors Pvt. Ltd. during the year under consideration and therefore, the addition was not based on correct facts. Before the Ld. CIT(A), the assessee submitted the details of unsecured loan status of the company as on 31.3.2016 and 31.3.2015 as mentioned in para 10.1 of the appellate order at page nos. 53-54, which shows that the assessee did not receive any unsecured loan from M/s Growfast Realtors Pvt. Ltd. during the year under consideration instead it had made repayment of Rs. 2,91,00,000/-. Thus, the addition was rightly deleted by the Ld. CIT(A), hence, we uphold the action of the Ld. CIT(A) on this issue and reject the ground raised by the Revenue.
As regards deletion of addition of Rs. 25,32,38,700/- on account of share capital received by the assessee company from M/s Hillview Marketing Pvt. Ltd. is concerned, it is observed that noted that Shri Ashok Jain in his statement u/s. 132(4) dated 22.04.2017 had admitted the routing of unaccounted income of the group in the books of appellant in form share capital/share premium. Shri Ashok Jain did not mention about the accommodation received in the books of assessee company through M/s. Hillview Marketing Pvt. Ltd. in A.Y. 2016-17, therefore, statement of Shri Ashok Jain cannot be treated incriminating in the case of assessee in the impugned year in respect of share capital received from M/s Hillview Marketing Pvt. Ltd. There is no allegation finding on record that M/s Hillview Marketing Pvt. Ltd. is a conduit or shell /accommodation entry providing company. Further, on perusal of the confirmation of accounts of M/s. Hillview Marketing Pvt. Ltd. in the books of the assessee company submitted by the assessee, it is noted that the assessee had received Rs.35,93,00,000/- during the year under consideration against which Rs. 17,70,900/- shares were issued for Rs. 25,32,38,700/- and the balance amount was returned back to the investor company. On perusal of the bank statement of M/s. Hillview Marketing Pvt. Ltd., it is further noted that the funds have been received in the bank account of M/s. Hillview Marketing Pvt. Ltd. immediately before the transfer of same to the appellant company. The assessee has submitted that the source of funds in the books of M/s. Hillview Marketing Pvt. Ltd. is the FDI amounting to Rs.36,06,40,000/- received from M/s. RCI World Trade Link, Dubai. The funds received in the books of M/s. Hillview Marketing Pvt. Ltd. have been subject matter of assessment u/s. 148 of the Act. Assessing Officer assessed M/s. Hillview Marketing Pvt. Ltd., the investor Company, at returned income and no adverse remarks has been recorded in order u/s. 148/143(3) dated 30.03.2022 in respect of funds received by it from M/s. RCI World Trade Link, Dubai. Therefore, share capital/share premium which has been received by the assessee company from Hillview Marketing Pvt. Ltd. cannot be treated as unexplained. It is noted that during the course of appellate proceedings, the assessee has duly furnished the source of source of the impugned share capital received from M/s Hillview Marketing Pvt. Ltd. as required by Section 68 of the Act and the same has been duly examined by the CIT(A). Further, Ld. AR for the assessee submitted that the Coordinate Bench of the Tribunal in an appeal preferred by the investor company i.e. M/s Hillview in ITA No. 1321/Del/2024 against the revision order u/s. 263 vide its order dated 20.2.2026 has quashed the revisionary order passed u/s. 263 of the PCIT. He further submitted that once the revisionary order passed u/s. 263 in the aces of the investor company has been quashed by the Tribunal by holding that the order passed by the AO was not erroneous, the original order passed by the AO u/s. 147 of the Act in the case of the investor company would prevail wherein the AO has accepted the identity, genuineness and creditworthiness of the share capital received by the investor company and thus no addition can be made on account of share capital received by the assessee company. Hence, Ld. CIT(A) has rightly held that no addition can be sustained in the hands of the appellant company, which does not need any interference, and thus we uphold the same and reject the ground raised by the revenue.
In so far as deletion of addition of Rs. 69,64,058/- made on account of commission payments @2.75% for arranging share capital and unsecured loans o FRs. 25,32,38,700 is concerned, since we have already upheld action of the Ld. CIT(A) on the deletion of additions of Rs. 25,32,38,700/- and Rs. 29,50,000/- in the preceding paragraphs of this order, the commission expenditure estimated on them is not sustainable, hence, Ld. CIT(A) has rightly deleted the same and therefore, we affirm the action of the Ld. CIT(A) on this issue and reject the ground raised by the Revenue.
Assessee’s ITA NO. 1196/DEL/2023 (AY 2017-18)
Brief facts of the case are that a search and seizure operation was carried out on, the business premises of NV group of companies and the residential premises of their Directors on 20.4.2017. Pursuant to the search action notices u/s. 153A of the Act were issued by the AO requiring the assessee to file its return of income for the relevant assessment year, which was duly filed by the assessee company. The copy of the original return of income filed by the assessee for the relevant assessment year as on 28.10.2017 declaring total income of Rs. 1,09,69,490/-alongwith the copy of audited balance sheet for the relevant assessment year. Further, the copy of e-return filed in response to notice u/s. 153A of the Act on 09.03.2019 declaring income of Rs. 1,06,69,490/-. The AO passed the order u/s. 153A of the Act vide order dated 31.12.2019 wherein income of the assessee has been assessed at income Rs. 3,46,39,490/, against the returned income of Rs. 1,09,69,490/-, after making addition on account of share application money/share capital/ share premium received by the assessee company during the year u/s. 68 of the Act from Om Energy Limited amounting to Rs. 1,69,00,000/- and from Growfast Realtors Pvt. Ltd. amounting to Rs. 67,70,000/- thus totaling to Rs. 2,36,70,000/-. Against the said action, assessee preferred the appeal before the Ld. CIT(A), who vide his impugned order dated 17.3.2023 has dismissed the appeal of the assessee by holding that the investor companies namely Om Energy Limited and Growfast Realtors Pvt. Ltd. are accommodation entry providing companies and the companies do not have any creditworthiness, genuineness and identity and also observed that assessee failed produce the details of director of the investor companies. Aggrieved, assessee is in appeal before us.
During the course of hearing, Ld. AR for the assessee submitted that assessee company had furnished all necessary details with regard to proving identity, creditworthiness and genuineness of the investor company namely Om Energy Ltd viz. He drew our attention towards page no. 87 of the Assessee’s Paper Book which is a copy of confirmation of accounts from Om Energy Ltd, page no. 88 is a copy of statement of account of Om Energy Ltd. for the period of 29.06.2016 to 31.03.2017, page no. 89-98 are the copy of Independent Auditor's Report as on 26.08.2017 of the investor company. He further submitted that Delhi Tribunal in the case of M/s Enn Vee Holding Pvt. Ltd. v DCIT, Central Circle New Delhi (ITA No. 1195/D/2023 AY2016-2017) upheld and verified the identity of Om Energy Ltd. from whom the assessee has received the money, by holding as under:-
"With regard to M/s Om Energy Ltd., the allegations of the Revenue cannot be upheld owing to the orders passed in the case of M/s Om Energy Ltd. in scrutiny proceedings u/s 143(3) for various years wherein additions and disallowances have also been made. The company has been proved to be in existence, assessments were completed, additions made and the source of funds to this company are not disputed but the share capital contributed by this company to the assessee company has been disputed by the Revenue. Such flip-flop by the Revenue cannot be affirmed."
He further submitted that during the assessment proceedings as well as the appellate proceedings, the assessee company had pointed out that the shares were not issued on premium during the year under consideration and were issued on face value, hence the application of Rule 11UA (2) of the Income Tax Rules 1962 was not applicable. During the course of hearing, Ld. AR has filed a chart of source of source of transactions viz. detail of payment made by NV Distilleries Pvt. Ltd. from PNB A/c No. 4196002100009640 showing that assessee has received payment of Rs. 50,00,000/-; Rs. 40,00,000/-; Rs. 29,00,000/-; Rs. 30,00,000/-, Rs. 20,00,000/- thus, totaling to Rs. 1,69,00,000/-. In view of above, it is established that assessee company had furnished all necessary details with regard to proving identity, creditworthiness and genuineness of the investor company namely Om Energy Ltd, hence, addition made on account of share application received from Om Energy Limited is not sustainable thus, the same is deleted.
Similarly, it is submitted that the assessee company had also furnished all necessary details with regard to proving identity, creditworthiness and genuineness of the investor company namely Growfast Realtors Pvt. Ltd. For this, he drew our attention towards page no. 99 of the Paper Book which is a copy of confirmation of accounts from Growfast Realtors Pvt. Ltd.; page no. 100 is a copy of statement of account of Growfast Realtors Pvt. Ltd., page no. 101 is a copy of return of income acknowledgement, page no. 102-110 are the copies independent Auditor's Report of Growfast Realtors Pvt. Ltd. He further submitted that during the assessment proceedings as well as the appellate proceedings, the assessee company had pointed out that the shares were not issued on premium during the year under consideration and were issued on face value, hence the application of Rule 11UA (2) of the Income Tax Rules 1962 was not applicable. He further submitted that the statement of Mr Ashok Jain that was recorded during the search proceedings was retracted vide letter dated 10.07.2017 was considered valid by the Delhi Tribunal in the case of M/s Enn Vee Holding Pvt. Ltd. v DCIT, Central Circle New Delhi (ITA No. 1195/D/2023 AY 2016-2017) for the sake of convenience, the operating para is reproduced as under:-
"The said statement of Mr. Ashok Jain dated 22.04.2017 recorded u/s 132(4/ which was re/ied upon by the AO for ho/ding that assessee company had received unaccounted money in his entities through bogus share capita! has been retracted vide letter dated 10.07.2017 on account of the various reasons mentioned in the letter. Hence, cannot be re/ied upon to draw any inference as per settled law. The assessee company had filed written submission du/y explaining the reasons for retraction of the alleged statement of Mr. Ashok Jain at the time of search along with the copy of retraction letter. The explanation to the retraction letter reads that, examination of the statement of Sh. Ashok Jain would confirm the fact that the said statement has been recorded in the absence of any corroborating material. The admission made by him about the share capital being bogus is not corroborated by any other material/evidence. Further, the retraction letter dated 10.07.2017 highlights the factual inconsistencies and infirmities in the statement of Sh. Ashok Jain and brings out the reasons for retraction of the earlier statement in great detail. From an examination of statement of Sh. Ashok Jain, it is apparent that the said statement with regard to receipt of share capita! has been recorded in the absence of any material much less incriminating material.”
He further drew our attention towards the Delhi Tribunal decision in the case of Shanta Blankets Pvt Ltd. v ITO [2024] 162 taxmann.com 97 (Delhi-Trib) wherein, it has been opined that when the assessee submits documents to prove identity, creditworthiness and genuineness of the investor company, it is the duty of the AO to make necessary investigation and formalities to disregard the authenticity of the documents furnished by the assessee during the proceedings. The Tribunal also opined that without bringing any material or making enquiry the department cannot sit idle by not accepting the documents provided by the assessee during the course of proceedings and simply conclude against the assessee. From the above, it is clear that assessee company had provided all necessary documents to prove the identity, creditworthiness and genuineness of the investor company. The AO in the assessment order stated a general conclusion with regard to the documents submitted for proving identity, creditworthiness and genuineness of the company and did not conclude with documents provided. During the course of hearing, Ld. AR has filed a chart of source of source of transactions viz. detail of payment made by Growfast Realtors from PNB A/c No. 4196002100009640 showing that assessee has received payment of Rs. 51,50,000/-; Rs. 4,20,000/-; Rs. 12,00,000/- thus totaling to Rs. 67,70,000/-. Furthermore, during the first appellate proceedings the Ld. CIT (A) also gave a general finding on the investor companies and did not regard the authenticity of the documents that were provided by the assessee company. Thus, the addition confirmed on the basis of application money/share capital/share premium received by the assessee company from shell companies namely Growfast Realtors Pvt. Ltd. held as unexplained u/s 68 of the Act stands bad in law. In view of above, it is established that assessee company had furnished all necessary details with regard to proving identity, creditworthiness and genuineness of the investor company namely Growfast Realtors Pvt. Ltd., hence, addition made on account of share application received from Growfast Realtors Pvt. Ltd. is not sustainable thus, the same is also deleted. Resultantly, the appeal of the assessee is allowed.
In the result, both the assessee’s appeals are allowed and Revenue’s appeal is dismissed in the aforesaid manner.