DCIT Vs Sanverwala Jewellers Pvt Ltd (ITAT Indore)
In this case Assessing Officer merely doubted the investment made by the share applicants for the reason that they did not submit any proof regarding agricultural activities done by them. It is therefore quite evident that the Assessing Officer himself accepted the identity of the share applicants and genuineness of the transactions as entered into with them. In view of these facts, we are of the view that the assessee company satisfactorily discharged the primary onus as cast upon it under section 68 of the Income-Tax Act, 1961 by establishing the identity and creditworthiness of the share applicants and genuineness of the transactions as entered into with them and therefore, addition made by the Assessing Officer on account of share application money received from remaining share applicants was neither legal nor proper and was rightly deleted by the Ld CIT(A).
FULL TEXT OF THE ORDER OF ITAT INDORE
The above captioned appeal filed at the instance of the Revenue for Assessment Year 2012-13 is directed against the orders of Ld. Commissioner of Income Tax(Appeals)-II (in short ‘Ld. CIT], Indore dated 15.01.2018 which are arising out of the order passed u/s 143(3) of the Income Tax Act 1961 ( in short the ‘Act’) dated 30.03.2015 framed by ACIT-5(1) Indore.
2. Ground nos.1 to 3 relates to deletion of addition of Rs.3,17,39,640/- u/s 68 of the I.T. Act as made by the Assessing Officer to the total income of the assessee company in respect of increase in the share capital.
3. Brief facts as culled out from the records are that the assessee filed e-return of income declaring total income at Rs.42,50,050/- on 29.9.2012. While going through the audited tax report and annexures thereof, the Assessing Officer noted that the assessee had received share capital and share premium money of Rs.3,35,39,640/- during the year under consideration. Accordingly, the Assessing Officer asked the assessee to furnish the relevant information. In response, the assessee furnished the list of share applicants and the Assessing Officer issued summons u/s 131 to the share applicants. The Assessing Officer noted that some of them appeared in office on various dates and statement on oath was recorded. The Assessing Officer noted that some share applicants denied to have been allotted or have purchased the shares of the assessee company. Ultimately, the Assessing Officer made the addition of Rs.3,17,39,640/- u/s 68 of the I.T. Act to the total income of the assessee company in respect of increase in the share capital.
4. Being aggrieved, the assessee challenged the action of the Assessing Officer before the ld. CIT(A). The ld. CIT(A) summarized the breakup of the share capital and having gone through the facts, submissions and judicial pronouncements thereof deleted the addition. The relevant discussion made by ld. CIT(A) is reproduced hereunder:
“The assessee company had issued share capital of Rs 30,39,640/- to Shri Surendra Soni in lieu of transfer of his running business to the assessee company. The assessee company in consideration of business assets issued shares and therefore the Assessing Officer was not justified in adding the same to the total income of the appellant. The business assets as transferred from Shri Surendra Soni was duly considered by the assessing officer as genuine. In such a situation, there was no reason for AO to disbelieve the share capital as issued to him. I hereby direct the assessing officer to delete the addition of Rs 30,39,640/- as made to the total income of the appellant.
4.1.2.1] The appellant company also received share capital of Rs 2,87,00,000/- from the thirty-one share applicants, most of the share applicants personally appeared before the assessing officer and their statement was also recorded on oath. In the statement as recorded before the assessing officer, all the share applicant duly accepted that they have invested amount in the share capital of the appellant company and also explained the source of investment made in the share capital. In the shareholder- wise chart as prepared by the appellant, it has discussed entire documents as filed by them and also giving reference of the statement as recorded, the said chart so prepared is reproduced as under:-
