Case Law Details

Case Name : DCIT Vs M/s Overseas Infrastructure Alliance (I) Pvt. Ltd. (ITAT Mumbai)
Appeal Number : ITA No.1470/Mum/2011
Date of Judgement/Order : 30/03/2016
Related Assessment Year : 2007-08
Courts : All ITAT (1730) ITAT Mumbai (489)

The CIT(A) has recorded a categorical finding on the basis of material placed on record to the effect that all the three conditions regarding identity, creditworthiness and genuineness of the loan creditors were duly established. Since the findings are as per material on record,so no addition u/s 68 can be made.

Facts of the Case

Facts in brief are that the assessee is engaged in the business of execution of projects in the infrastructure sector. During the course of assessment, the AO observed that during the year there was increase in share capital by Rs.14 crores and the amount had been received from following three parties:-

All-in-one Finance & investments Pvt. Ltd.-Rs.2,00,00,000/-

 

Yamuna Estate Pvt. Ltd.Rs.6,00,00,000/-
Akash Organics Pvt. Ltd.Rs.6,00,00,000/-

The AO found that in the case of All-in-One finance & Investments Pvt. Ltd. in I.T. return, the returned income was of Rs.1886/-. P&L a/c. gross receipts were Rs.36.750/- and expenditure shown was Rs.34.S64/-. At no point of time during the year bank balance was exceeding RS.50.0001-. In the case of Yamuna Estate Pvt Ltd. In I.T. Return. returned income was Rs.18,431/-. P&L a/c. gross receipts were Rs.3.60.000/- and expenditure was Rs.3,41.569/- balance in the bank a/c. had not remained even Rs.1.00.000/- for five consecutive days. Out of total transaction of Rs.6 crores transaction of Rs.30 lakhs only has been carried out through cheque and balance amount of Rs.570/- lacs has been received through Journal Entries only. In the case of Akash Organics Pvt. Ltd. as per I.T. Return. returned income was of Rs.2.052/- for the A.Y.2007-08. P&L a/c. receipts were Rs.22.000/- and expenditure shown was Rs.1 9.940/-. In the bank a/c balance remained not more than Rs.50.000/- for three consecutive days. Out of Rs.6 crores, only Rs.30 lacs had been received through cheque and balance Rs.570 lacs was transacted through J.V. In view of these facts, it was concluded that (i) All the three parties from whom such share capital has been received were merely name lenders the transaction were not genuine and these parties have no creditworthiness. (ii) All three parties had submitted confirmation on computer generated letter head having similar wordings and same font. (iii) Though in the balance sheet. all the parties had shown worth however. in effect nothing was there as duly evidenced from the bank statements where balance was not even Rs.1.00,000/- (iv) All the above three companies appeared simply or, paper. These companies do not have any business whatsoever. (v) All the three parties have shown huge increase in share capital and share premium. however, no party had paid ROC fees and majority amount was received as share premium. (vi) Out of total share capital & share premium taken of Rs.14 crores. Rs.60 lacs only has been received by cheque and balance amount was received though Book entries. Therefore, balance amount of Rs.1340 lacs was credited merely by book entries without any corresponding fund transfer. Therefore entire share capital and share premium received of Rs.14 crores was treated as Unexplained Cash credit.

Held by CIT(A)

CIT(A) deleted the addition after having the following observations :-

“8 The submission has been considered. It is stated that these three companies subscribed to .redeemable preference shares of the appellant company and simultaneously appellant has also subscribed to preference share capital of these companies. Consequently, the amount payable and receivable was squared off. It is stated that this procedure was in accordance with the provisions of Companies Act. The documents filed along with audited accounts, bank statements, I.T. returns and assessment orders shows that these companies have been assessed for several years. The identity and genuineness of the transaction is to be accepted. The addition of 14 crores is hence, deleted.”

Held by Hon’ble ITAT

From the record we found that the CIT(A) dealt with issue all the objections raised by the AO and after considering the documents placed on record, recorded a categorical finding to the effect that amount payable and receivable by the assessee was squared off which was in accordance with the provisions of Companies Act. Further finding was recorded to the effect that these companies were assessed with I.T. Department for several years. The identity and genuineness of the transaction was duly accepted. The detailed finding recorded by CIT(A) are as per material on record. Moreover the issue is also covered by the decision of the coordinate bench in the case of Sinhal Products (P) Ltd., ITA No.3852/Del/2009, dated 7-3-2012, wherein under similar facts and circumstances, the Tribunal has held that the assessee has discharged its initial onus to prove the identity, creditworthiness and genuineness of the transaction. We also found that it is not a case where department has received any information with regard to the fact that the share application were bogus entry or it is in the shape of accommodation entry. The share application is by the associate concern of the assessee which is also assessed with IT Department. Respectfully following the decision of coordinate bench vis-à-vis finding recorded by CIT(A), we do not find any reason to interfere in the order of CIT(A) resulting into deletion of addition of Rs.14 crores.

With regard to addition of Rs.1,01,39,592/- made on account of loan taken from M/s Akhil Marketing Pvt. Ltd., we found that transactions are duly recorded in the audited account of M/s Akhil Marketing Pvt. Ltd., which is also assessed to tax. We found that as on 31-3-2007 the party has shown advance of Rs.6.29 crores including to the assessee also. Rs.12.55 lakhs was payable as lease. The CIT(A) has recorded a categorical finding on the basis of material placed on record to the effect that all the three conditions regarding identity, creditworthiness and genuineness of the loan creditors were duly established. Since the findings are as per material on record, we do not find any reason to interfere in the findings so recorded by CIT(A).

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Posted Under

Category : Income Tax (20858)
Type : Judiciary (8910)
Tags : ITAT Judgments (3704) Section 68 (137)