Case Law Details

Case Name : ITO Vs M/s. Superline Construction P. Ltd. (ITAT Mumbai)
Appeal Number : Income tax (Appeal) nos.3644 – 3648, 3650-3651 of 2014
Date of Judgement/Order : 30/11/2015
Related Assessment Year :
Courts : All ITAT (4457) ITAT Mumbai (1469)

Brief of the Case

ITAT Mumbai held In the case of ITO vs. M/s. Superline Construction P. Ltd. that the assessee had duly discharged the burden of proof, onus of proof and explained the source of share capital and advances received by established the identity, creditworthiness and genuineness of transaction by banking instruments with documentary evidences. Further the assessee substantiated the details with the documentary evidences as extracted from the website of Ministry of Corporate Affairs, Government of India before the Assessing Officer. Thus, this addition is not justified under the provisions of Section 68.

Facts of the Case

ITA No. 3645/Mum/2014

The Assessee is in the business of builder and developer. Assessment was completed under section 143(3) r.w.s. 147. During the year, the assessee received share application money to the tune of Rs.85 lakhs from eight companies out of which Rs.40 lakhs was received from three companies viz. Mihir Agencies Pvt. Ltd., Alpha Cehmie Trade Agencies Pvt. Ltd. and Talent Infoway Ltd. The stand of the assessee has been that the reasons recorded did not whisper about any tangible material which triggered re-opening u/s 147. The reassessment proceedings were initiated on the basis of information received from Directorate of Income-tax (Investigation) without recording Assessing Officer’s own satisfaction and the information was accepted in a mechanical manner.

After reopening of assessment u/s 147 Assessing Officer made addition of Rs.40 lakhs received by the assessee from various corporate entities. Addition was made by the Assessing Officer on account of bogus share application money under the provisions of Section 68.

ITA No. 3644/Mum/2014

In this case, the Assessing Officer made total addition of Rs.1,15,47,169/- under section 68 , out of this amount Rs. 85 lakhs was made in respect of share application money and remaining amount of Rs.30,47,169/- was made on account of unsecured loan. Both the aforesaid additions was deleted by CIT (A).

Contention of the Assessee

 ITA No. 3645/Mum/2014

The ld counsel of the assessee submitted that the Assessing Officer failed to appreciate that there is no documentary evidence against the assessee to support such impugned additions. It was further submitted by the assessee that the Assessing Officer failed to appreciate that the statements of any person recorded u/s 143(3) r.w.s. 147, the assesse has fully discharged the burden of proof, onus of proof and explained the source of share capital and advances received by established the identity, creditworthiness and genuineness of transaction by banking instruments with documentary evidences.

The further stand of the assessee has been that the assessee substantiated the details with the documentary evidences as extracted from the website of Ministry of Corporate Affairs, Government of India before the Assessing Officer. These facts have not been rebutted on behalf of the Revenue.

He further relied on the various case laws which were based on same facts. He relied on ITO (10(2)(3) vs. J.J. Multitrade Pvt Ltd, in ITA No.2158/Mum/2014, J-Bench & ITA No.2159/Mum/2014, M/s. SDB Estate Pvt Ltd vs. ITO-(5)(3)(2) in ITA No. 584/Mum/2015, ITO – 10(2)(1) vs. M/s. Deep Darshan Properties Pvt Ltd in ITA No. 2117/Mum/2014, ITO –10(2)(3) vs. Aajivan Computers Pvt Ltd in ITA No.2160/Mum/2014, ITO –10(2)(3) vs. Dignity Securities Trading Pvt Ltd in ITA No.2157/Mum/2014 and ITO –10(2)(1) vs. M/s. Blue Hill Properties Pvt Ltd in ITA No.2119/Mum. He also place reliance on CIT vs. M/s. Lovely Exports (Pvt) Ltd, reported in [2008] 216 CTR 195 (SC) in which it was decided that If the share application money is received by the assessee company from alleged bogus share holders who’s name are given to the AO then the department is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of assessee company.

Contention of the Revenue

 ITA No. 3645/Mum/2014

The ld counsel of the revenue submitted that the CIT (A) erred in deleting the addition made by the Assessing Officer in respect of share application money without appreciating the fact that addition was made based on specific information provided by Investigation Wing of Income Tax Department. That investor companies have issued cheques towards alleged share application money in return of cash. Assessee failed to discharge the onus cast upon it to prove the credit entries of share application money as required under statute.

Held by CIT (A)

 ITA No. 3645/Mum/2014

CIT (A) deleted the addition by following various judicial pronouncements in similar facts and circumstances.

Held by ITAT

ITA No. 3645/Mum/2014

In view of the facts and circumstances of the present case as well as considering the decisions as discussed above on the similar issue, we are not inclined to interfere with the findings of the CIT (A) who has rightly deleted the entire impugned additions of Rs.40 lakhs made by the Assessing Officer u/s 68 on account of share capital subscription received by the assessee.

ITA No. 3644/Mum/2014

With regard to addition in respect of share application money of Rs.85 lakhs is similar to the issue we decided above in case of M/s. Super Construction Pvt. Ltd. in ITA No. 3645/Mum/2014 for A.Y. 2007-08. Therefore, facts and issues being similar ,so following same reasoning we are not inclined to interfere with the findings of CIT(A) who has rightly deleted the addition of Rs.85 lakhs made by the Assessing Officer on account of share application money. The same is upheld.

With regard to addition on account of unsecured loan, we find that CIT (A), having considered the submission of assessee, has rightly deleted the addition on both accounts (i.e. Rs.85 lakhs on account of share application money and Rs.30,47,169/- on account of unsecured loan) by holding that the assessee-company had duly discharged the initial burden in respect of identity, creditworthiness and genuineness of all transactions by relying on various judicial pronouncements. Moreover, similar issue was adjudicated by him in the case of M/s. Superline Constructions Pvt. Ltd for AY 2007-08 vide appeal No.CIT(A)-22/IT-10(2)-4/IT-63/2013-14 wherein having considered all ingredient of Sec. 68 , granted relief to assessee. Thus, this addition is not justified under the provisions of Section 68.

Accordingly, all appeals of the revenue dismissed.

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Category : Income Tax (25548)
Type : Judiciary (10299)
Tags : CA Deepak Aggarwal (390) ITAT Judgments (4637) Section 68 (174)

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