PCIT Vs Ami Industries (India) P Ltd (Bombay High Court)
Tribunal noted that Assessing Officer had referred the matter to the investigation wing of the department at Kolkata for making inquiries into the three creditors from whom share application money was received. Though report from the investigation wing was received, Tribunal noted that the same was not considered by the Assessing Officer despite mentioning of the same in the assessment order, besides not providing a copy of the same to the assessee. In the report by the investigation wing, it was mentioned that the companies were in existence and had filed income tax returns for the previous year under consideration but the Assessing Officer recorded that these creditors had very meager income as disclosed in their returns of income and therefore, doubted credit worthiness of the three creditors.
It is seen that identity of the creditors were not in doubt. Assessee had furnished PAN, copies of the income tax returns of the creditors as well as copy of bank accounts of the three creditors in which the share application money was deposited in order to prove genuineness of the transactions. In so far credit worthiness of the creditors were concerned, Tribunal recorded that bank accounts of the creditors showed that the creditors had funds to make payments for share application money and in this regard, resolutions were also passed by the Board of Directors of the three creditors. Though, assessee was not required to prove source of the source, nonetheless, Tribunal took the view that Assessing Officer had made inquiries through the investigation wing of the department at Kolkata and collected all the materials which proved source of the source.
(PCIT vs. NRA Iron & Steel 412 ITR 161 (SC) distinguished)
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. Heard Mr. Suresh Kumar, learned standing counsel, revenue for the appellant and Mr. Padvekar, learned counsel for the respondent – assessee.
2. This appeal under Section 260A of the Income Tax Act, 1961 (“the Act” for short) is preferred by the revenue against the order dated 26.8.2016 passed by the Income Tax Appellate Tribunal, Mumbai “A” Bench, Mumbai (“Tribunal” for short) in Income Tax Appeal No. 5181/Mum/2014 for the assessment year 2010-11.
3. The appeal has been preferred on the following three questions stated to be substantial questions of law:-
(i) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in directing the deletion of sum brought to tax by the Assessing Officer as unexplained income under Section 68 of the Act in respect of moneys credited in the books as share application money of Rs. 34,00,00,000/-?
(ii) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that the assessee proved identity, credit worthiness and genuineness of moneys credited in the books as share application money of Rs. 34,00,00,000/- just by submitting PAN, acknowledgment of income tax returns filed and bank statements?
(iii) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the addition of Rs.34,00,00,000/- ignoring the facts brought out by the Assessing Officer that return of the investing company shows no credit worthiness and that investing company merely transferred share application money received from other parties to assessee company?
4. From the above, it is evident that the issue involved in this appeal is the addition of share application money by the Assessing Officer to the income of the assessee under Section 68 of the Act which additions have been deleted by the first appellate authority and confirmed by the Tribunal.
5. In the assessment proceedings, Assessing Officer noted that assessee had disclosed funds from three Kolkata based companies as share application money. The details were as under:-
