Case Law Details
Shah Tracom Pvt. Ltd. Vs ITO (ITAT Kolkata)
Common Directors/Shareholders, Identity, Creditworthiness Proved: ITAT deletes Section 68 Addition
In a recent judgment, the Income Tax Appellate Tribunal (ITAT) Kolkata ruled in favor of Shah Tracom Pvt. Ltd. in the case against the Income Tax Officer (ITO). The case revolved around the addition made under Section 68 of the Income Tax Act, 1961, where the assessee, Shah Tracom Pvt. Ltd., was required to prove the identity, creditworthiness, and genuineness of the shareholders who had invested in the company. The Tribunal’s decision to delete the addition under Section 68 highlights important aspects of the burden of proof and the assessment of evidence in tax cases.
Detailed Analysis
The core issue in this case was whether the identity, creditworthiness, and genuineness of the shareholders of Shah Tracom Pvt. Ltd. had been satisfactorily proven. The assessee argued that the shareholders were genuine entities, and their investments were legitimate.
Background
Shah Tracom Pvt. Ltd. had received share application money from thirteen companies. During the assessment, the Assessing Officer (AO) added these amounts to the income of Shah Tracom Pvt. Ltd. under Section 68, questioning the identity and creditworthiness of the shareholders. The assessee filed an appeal, presenting several pieces of evidence and case laws to substantiate their claim.
Tribunal’s Observations
Upon reviewing the case, the Tribunal noted several errors in the original assessment:
- Non-Consideration of Assessee’s Evidence: The assessee had submitted a voluminous paper book containing evidence supporting the genuineness of the transactions and the creditworthiness of the investors. However, the Tribunal found that the Assessing Officer had not considered these documents adequately.
- Precedents and Case Laws: The assessee cited multiple judgments from the coordinate benches of the Tribunal where similar issues had been decided in favor of the assessees. These included decisions such as M/s. Shreenath Holding Pvt. Ltd. vs. ITO and M/s. Baba Bhootnath Trade & Commerce Ltd. vs. ITO. The Tribunal acknowledged these precedents, emphasizing that similar facts and circumstances should lead to similar decisions.
- Assessment Under Section 143(3): It was highlighted that assessments of eleven out of the thirteen shareholder companies were completed under Section 143(3) of the Act. This meant that the tax authorities had scrutinized these companies and found their accounts to be in order. The Tribunal agreed that this fact significantly supported the genuineness of the shareholders and their investments.
Identity and Creditworthiness
The Tribunal scrutinized the evidence presented by Shah Tracom Pvt. Ltd. This included:
- Income Tax Returns: The shareholders had filed their income tax returns, which showed their financial capacity to make the investments.
- Bank Statements: The transactions were conducted through banking channels, adding a layer of transparency and traceability.
- Corporate Records: Documents from the Registrar of Companies confirmed the existence and operational status of the shareholder companies.
The Tribunal concluded that these documents sufficiently proved the identity and creditworthiness of the shareholders. It reiterated that once the assessee discharges the initial burden of proof, the onus shifts to the revenue to bring contrary evidence. In this case, the AO had failed to provide any substantive evidence to disprove the documents submitted by the assessee.
Genuineness of Transactions
The Tribunal also examined the genuineness of the transactions. It noted that the share application money was received through proper banking channels and was recorded in the regular books of accounts. There was no evidence to suggest that these transactions were sham or fictitious. The Tribunal emphasized that mere suspicion or conjecture could not be the basis for making additions under Section 68.
Legal Precedents
The Tribunal referenced several key judgments to support its decision:
- CIT vs. Lovely Exports Pvt. Ltd.: The Supreme Court held that if the share application money is received by the assessee-company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to reopen their individual assessments in accordance with law. However, it cannot be regarded as the undisclosed income of the assessee-company.
- Pr. CIT vs. Paradise Inland Shipping (P) Ltd.: The Bombay High Court ruled that the burden of proving that a transaction is genuine lies primarily on the assessee. Once the assessee has provided sufficient evidence, the burden shifts to the revenue to disprove the claims.
Conclusion
The ITAT Kolkata’s ruling in the case of Shah Tracom Pvt. Ltd. vs. ITO is a significant judgment that underscores the importance of proper documentation and the adherence to legal precedents in tax assessments. The Tribunal’s decision to delete the addition under Section 68 was based on the comprehensive evidence provided by the assessee, which proved the identity, creditworthiness, and genuineness of the shareholders. This case serves as a reminder that tax authorities must conduct thorough investigations and consider all relevant evidence before making additions under Section 68.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
By this miscellaneous application, the assessee submits that a mistake apparent on record has crept into the order of the Tribunal dt. 25/11/2020, for the reason that none of the arguments advanced by the assessee and the case-law cited by it were considered by this Bench. It was further submitted that even the name of the Counsel, who appeared on that date, was wrongly mentioned and a cut and paste matter from some other order had been incorporated in the order of the Tribunal. He took this Bench through the voluminous paper books filed as well as the submissions and pointed out that out of 13 share applicant companies, 11 share applicant companies were assessed u/s 143(3) of the Act and under those circumstances, no addition is warranted u/s 68 of the Act for the credits received from these companies and that for this proposition, he had relied on the following of decisions of the co-ordinate bench of the Tribunal :-
c) ITO vs. M/s. Happy Structure Pvt. Ltd. in ITA No. 1977/Kol/2016; Assessment Year 2012-13, order dt. 22/05/2019
e) ITO vs. M/s. Axisline Investment Consultants Pvt. Ltd. in ITA No. 408/Kol/2017; Assessment Year 2012-13, order dt. 01/07/2019
2. He pointed out that these decisions of the co-ordinate bench had followed the judgment of the Hon’ble Bombay High Court on this issue. Thus, he submits that the order of the Tribunal be rectified by considering these cited judgments and all the evidences and other documents filed before the ITAT in the form of a paper book. On the credits received for the balance two companies, he argued that their identity and creditworthiness of the creditors and genuineness of the transactions is proved by various documents filed before the Assessing Officer and the ld. CIT(A) and also before the ITAT and that the Assessing Officer has not considered the same and hence these two additions should also be deleted. He relied on the case-law cited in the original hearing proceedings before the ITAT and prayed for relief.
The ld. D/R, submitted that the assessee had in fact filed a paper book, wherein copies of the order passed by the department u/s 143(3) of the Act, in case of various share applicant companies were filed. He also submitted that the written submissions of the assessee were unread. He could not controvert with facts, the submissions of the assessee that a mistake apparent on record has crept into the order of the Tribunal as it had not considered the submissions, documents, evidences and case-law cited by the assessee and that the order passed was a cut and paste from some order.
3. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:-
4. A perusal of the order of the Tribunal dt. 25/11/2020, demonstrates that a mistake apparent on record has crept into the impugned order of the ITAT. We have verified our records and we find that the submissions of the assessee have not been considered or reflected in the order of the Tribunal. Only a cut and paste matter setting aside the appeal of the assessee was passed. Non-consideration of the submissions of the assessee and the material on record as well as the case-law cited by the assessee during the course of hearing by the ITAT, is a mistake apparent on record. We rectify the order as follows:-
5. Para 5, 6 and 7 of the order dt. 25th November, 2020, are hereby deleted. The following paragraphs shall be read as part of that order:-
“ 5. The ld. Counsel for the assessee had submitted that in the case of following shareholder companies, the Income Tax Department had completed the assessments u/s 143(3) of the Act, these are:-
a) M/s. Green Gold Plantation & Nursery Ltd.
b) M/s. Cindrela Barter Pvt. Ltd.
c) M/s. Alert Tradelink P Ltd.
d) M/s. Discover Vincom Pvt. Ltd.
e) M/s. Lucky Dealmark P Ltd.
f) M/s. A J Suppliers Pvt. Ltd.
g) M/s. Sarbottam Alloy & Fiscal Pvt. Ltd.
h) M/s. Shreenath Holdings Pvt. Ltd.
i) M/s. Skipper Trade Centre P Ltd.
j) M/s. Skynet Vinimay Pvt. Ltd.
k) M/s. Oasis Agro Products Ltd.
This Bench of the Tribunal in the case of M/s. Shreenath Holding Pvt. Ltd. (supra) had held as follows:-
“2.1. The case of the assessee is that M/s. Seacom Merchants is assessed to tax and the very same amount of Rs.20,00,000/- has been brought to tax in the hands of M/s. Seacom Merchants in the same Assessment Year by the Department i.e. 2012-13. Copy of the assessment order passed u/s 144 r.w.s. 147 of the Act, dt. 28/12/2019, is filed before us. A perusal of this order demonstrates that the transaction of Rs.20,00,000/- with M/s. Shreenath Holdings Pvt. Ltd. was assessed as the undisclosed income of M/s. Seacom Merchants. On these facts, the issue is whether the same amount can be taxed once again the hands of the assessee company.
3. This Bench of the Tribunal in the case of ITO vs. M/s. Happy Structure Pvt. Ltd. in ITA No. 1977/Kol/2016, order dt. May 22nd, 2019, held as follows:-
“7. The assessee also furnished copy of the assessment orders passed u/s 143(3) of the Act on 26.03.2015 in the case of Aggressive Vincom Pvt. Ltd. by ITO, Wd-1(1), Kolkata bringing to tax the share capital and share premium allotted during the year. Similarly, in the case of Flabby Sales Pvt. Ltd., the assessment order passed u/s 143(3) dated 10.03.2015 by ITO,Ward-2(2), Kolkata has been filed wherein the entire share application money received by the assessee including share premium was brought to tax u/s 68 of the Act. The question is whether under such circumstances, i.e. when the share applicant companies have been taxed on the source of funds in their accounts then an addition can be made u/s 68 of the Act.
8. This Bench of the Tribunal under similar circumstances, in the case of DCIT vs. M/s. Maa Amba Towers Ltd.; ITA No.1381/Kol/2015; Assessment Year 2012-13, order dt. 12th October, 2018, had held as follows:-
“3. Mr. Choudhury vehemently contends during the course of hearing that the Assessing Officer had rightly made the impugned addition since the taxpayer had failed to prove identity, genuineness and creditworthiness of the share premium money. He terms the impugned share subscription premium ₹690/- per share having face value of ₹10/-each as highly exorbitant. Case laws Sumati Dayal vs. CIT(1995) 214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) is further quoted during the course of hearing that the relevant evidence submitted during the course of assessment has to be considered as per the human probabilities by removing all blinkers. Our attention is thereafter invited to the relevant nuances of such share subscription routing involving multiple layers to plough back unaccounted monies back to the books. We find no merit in the Revenue’s instant grievance in the light of relevant facts on record. There is no dispute about the assessee’s having declared its share subscription premium from M/s Agrani Credit & Finvest Pvt. Ltd., Crown Mansion Pvt. Ltd., Liberal Infrastructure Pvt. Ltd., Darshan Enclave Pvt. Ltd., Snow Fall Impex Pvt. Ltd. involving corresponding sums of ₹27,60,000/-, ₹55,20,000/-, ₹82,80,000/- in case of third and fourth and ₹48,30,000/- in last entity’s case; respectively totalling to ₹3,01,00,000/-. Case file suggests that the assessee has placed on record their income tax acknowledgement of the impugned assessment year 2012- 13, directors’ report along with audited financial statements, explanation regarding source of investments, bank statements, share application forms and board’s resolution(s) followed by their respective regular assessment orders pertaining to very assessment year u/s. 143(3) of the Act. Their Assessing Officer(s) made u/s 68 unexplained cash credits additions of share premium amounting to ₹67,03,00,000, ₹44,85,00,000/-, ₹24,42,00,000/- & ₹21,70,00,000/- in case of first four entities and accepted similar credits of ₹20,45,00,000/- to be genuine satisfying all parameters of identity, genuineness and creditworthiness. It can therefore be safely assumed that all these additions sums forming subject-matter of the impugned additions to be accepted as genuine in respective investors entities’ end as the source of the amount(s) in issue totalling to ₹3,01,00,000/-. Learned Departmental Representative fails to dispute that the same very amount cannot be added twice in payees and recipients’ hands u/s 68 of the Act. We therefore see no reason to accept Revenue’s instant former substantive ground. We affirm CIT(A)’s findings under challenge qua the instant former issue.”
9. This Bench of the Tribunal under similar circumstances, in the case of M/s C.P. Re-Rollers Ltd. vs. DCIT.; ITA No.1811/Kol/2017; Assessment Year 2013-14, order dt. 03.04.2019, had held as follows:-
“46. We find that the Hon’ble Supreme Court in the case of M/s Earth Metal Electricals P Ltd vs CIT & Anr. reported in 2010 (7) TMI 1137 in Civil Appeal No. 21073 / 2009 dated 30.7.2010 arising from the order of Hon’ble Bombay High Court had held as under:-
ORDER
Delay condoned.
Leave granted.
Heard learned counsel on both sides.
We have examined the position. We find that the shareholders are genuine parties. They
are not bogus and fictitious. Therefore, the impugned order is set aside.
The appeal is allowed accordingly. No order as to costs.
47. In the instant case before us, we also note that the share subscribing companies are duly assessed to income tax. The Ld AR had placed on record the copies of the assessment orders framed in the cases of the share subscribing companies, as noted above. It therefore cannot be disputed that the share subscribing companies are not in existence. From the assessment orders, it is noted that the share subscribing companies are duly assessed to income tax and their income tax particulars together with the copies of respective income tax returns with their balance sheets are already on record. We also find that the Ld. CIT(A) had categorically stated that the scrutiny assessments were framed on the share subscribing companies for the Asst Year 2010-11 which shows their existence is genuine and transactions carried out by them were the subject matter of examination by the income tax department in scrutiny proceedings. This fact has not been controverted by the Revenue before us.
48. We may gainfully refer to the judgment in the case of Pr. CIT Vs Paradise Inland Shipping (P) Ltd (84 com 58) wherein the Bombay High Court had deleted similar addition on similar set of facts made on account of unexplained cash credits and the SLP filed by the Revenue against the judgment has been dismissed by the Hon’ble Supreme Court. The relevant extracts of the judgment is as follows:
“5. We have given our thoughtful considerations to the rival contentions of the learned Counsel and we have also gone through the records. The basic contention of the learned Counsel appearing for the Appellants revolves upon the stand taken by the Appellants whether the shareholders who have invested in the shares of the Respondents are fictitious or not. In this connection, the Respondents in support of their stand about the genuineness of the transaction entered into with such Companies has produced voluminous documents which, inter alia, have been noted at Para 3 of the Judgment of the CIT Appeals which reads thus :
“The assessment is completed without rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows :
1. Sony Financial Services Ltd. – CIN U74899DL1995PLC068362-
Date of Registration 09/05/1995
6. On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such Companies.
7. The Appellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot reappreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration.
49. We also find that the Hon’ble Apex Court recently in the case of Principal CIT vs Vaishnodevi Refoils & Solvex reported in (2018) 96 com 469 (SC) wherein the SLP of the Revenue has been dismissed by the Hon’ble Apex Court. The brief facts of that case were that the addition u/s 68 of the Act was made by the Assessing Officer in respect of capital contributed by the partner of the firm. The Hon’ble Gujarat High Court noted that when the concerned partner had confirmed before the Assessing Officer about his fact of making capital contribution in the firm and that the said investment is also reflected in his individual books of accounts, then no addition could be made u/s 68 of the Act. The decision of Hon’ble Gujarat High Court is reported in (2018) 89 taxmann.com 80 (Guj HC) . The SLP of the revenue against this judgment was dismissed by the Hon’ble Supreme Court.
50. We may gainfully refer to the following decisions of the Hon’ble High Court in the cases as under:
(a) In the case of Pr. CIT Vs Chain House International (P) Ltd [2018] (98 taxmann.com 47)the AO had added the share application by way of unexplained cash credits was that the assessee was unable to give any justifiable reason for issuing shares at a premium. The Hon’ble Madhya Pradesh High Court did not agree with this reasoning given by the AO for making addition u/s 68, holding as under:
“Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by any Govt. Authority or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. [Para 52] Once the genuineness, creditworthiness and identity of investors are established, the revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of ascertaining how much is a reasonable premium having regard to the circumstances of the case. [Para 53]
There is no dispute about the receipt of funds through banking channel nor there is any dispute about the identity, creditworthiness and genuineness of the investors and, therefore, the same has been established beyond any doubt and there should not have been any question or dispute about premium paid by the investors; therefore, unless there is a limitation put by the law on the amount of premium, the transaction should not be questioned merely because the assessing authority thinks that the investor could have managed by paying a lesser amount as Share Premium as a prudent businessman. The test of prudence by substituting its own view in place of the businessman’s has not been approved by the Supreme Court. [Para 54]”
(b) In the case of CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 the Revenue contended that the fact that the shares were issued at high premium raised suspicion on the genuineness of the transactions. While dismissing this plea raised by the Revenue, the Hon’ble Bombay High Court held as under:
(e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced “for removal of doubts” or that it is “declaratory”. Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre-proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P.) Ltd.(supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee’s income as unexplained cash credit.
(f) In the above circumstances and particularly in view of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained.
(c) In CIT Vs Anshika Consultants Pvt Ltd (62 taxmann.com 192), the AO had added the share application monies treating it to be their unaccounted monies routed though accommodation entries since the shares were issued at a high premium. The Hon’ble Delhi High Court did not agree with this contention put forth by the Revenue, by observing as under:
“Whether the assessee-company charged a higher premium or not, should not have been the subject matter of the enquiry in the first instance. Instead, the issue was whether the amount invested by the share applicants were from legitimate sources. The objective of section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed, the investigation report which was specifically called from the concerned department was available but not discussed by the Assessing Officer. Had he cared to do so, the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants’ particulars were available with the Assessing Officer in the form of balance sheets income-tax returns, PAN details etc. While arriving at the conclusion that he did, the Assessing Officer did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee’s account to the share applicants’ account. As held concurrently by the Commissioner (Appeals) and the Tribunal, these conclusions were clearly baseless and false. This Court is constrained to observe that the Assessing Officer utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents.”
51. We also rely on the following judgments of the Coordinate Bench of ITAT Kolkata, where based on same facts, and identical and common grounds and coordinate Bench deleted the addition:
(1) M/s Jagannath Banwarilal Texofabs Pvt Ltd, in ITA No. 1762/Kol/2016, For A.Y. 201213, order dated 26.10.2018.
(2) M/s Wiz-Tech Solutions Pvt Ltd, in ITA No.1162/kol/2015,for A.Y. 2012-13, order dated 14.06.2018.
52. To conclude, Section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature & source of the share application received was fully explained by the assessee. We note that the share application money and share premium money which were received by the assessee company from the two share applicant companies viz: M/s. Prism Vintrade Private Limited, and M/s. Gannet-Vintrade Private Limited, during the period December, 2012 to March, 2013 had already been suffered disallowance under section 68 of the Act. As these two share applicant companies invested the same money in the assessee company, therefore, no further disallowance is warranted in the hands of the assessee company. Once taxed income cannot be taxed again.
In the case of third company, M/s Haven Vincom Pvt. Ltd, the assessment, pertaining to the AY. 2010-11 was not revised by the Department. That is, M/s Haven Vincom Pvt. Ltd has raised share capital and share premium which has not been treated by the Department as cash credit under section 68 of the Act and has not been disallowed by the assessing officer in the assessment of M/s Haven Vincom Pvt. Ltd ( vide assessment order-paper book pg.173) . We note that M/s Haven Vincom Pvt. Ltd has utilized the same money ( which it received by raising share capital/premium and not disallowed by AO, u/s 68) to purchase the share capital and share premium in the assessee company (M/s C.P. RE Rollers Ltd) therefore it should not be disallowed under section 68 of the Act, in the hands of the assessee company, as the Department itself accepted genuine money in the hands of M/s Haven Vincom Pvt. Ltd. Hence, in the case of M/s Haven Vincom Pvt. Ltd, the identity, creditworthiness and genuineness have been proved beyond doubt. In case of Sushma Chawala for share application of Rs.4,22,500/- and share premium of Rs. Rs.4,22,500/-, the ld Counsel explained the identity, creditworthiness and genuineness therefore no disallowance can be made. Besides, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the these three share applicants by submitting the following documents and evidences:
1) Return of ROC, that is, form No. 2 submitted before R.O.C.
2) PAN Number copies of each share subscriber.
3) Copy of Balance Sheet, Profit and loss account of all share applicant companies.
4) Details of investments sold by all share applicant companies. 5).Transaction with the assessee was duly highlighted in the bank statement
5) Explanation along with evidence of source of source of the funds of the share applicant Companies.
6) Audited Accounts of the share holders.
8) Relevant address proofs / Form filed by the share applicants with ROC.
9). Income Tax Return of share applicant companies.
10) Copy of the Bank Statement of Share applicant companies where from the amount was debited. 11) Copies of Bank statement of the assessee company where the share application money and premium were credited.
12). Cheque Number, the amounts subscribed by shareholders along with the name of bank its branch address and the number of shares allotted to them with face value on the date of allotment.
13) Common Director of the share applicant companies ( who is director in assessee company as well as share applicant companies) appeared before the assessing officer in response to notice u/s 131 of the Income Tax Act and submitted documents and evidences before the AO.
Thus, all above documents that is, the PAN details, bank account statements, audited financial statements, balance sheet, profit and loss account, Income Tax acknowledgments, and ROC statements etc were placed on AO’s record. One of the directors of share applicant companies appeared before the AO in response to summon u/s131 of the Act and explained the genuineness of three share applicants. Therefore, considering this factual position and precedents relied on the subject, as noted above, we delete the addition made by the assessing officer U/s 68 of the Act to the tune of Rs.17,49,95,000/-
53. In the result, the appeal of the assessee is allowed.”
10. Applying the proposition of law laid down in the above referred cases to the facts of this case and keeping in view the fact for the share applicant company have been assessed to tax u/s 143(3) of the Act and the source of money in question was brought to tax in their hands, we uphold the order of the ld. CIT(A) that no additions can be made in the case of the assessee company.
4. Respectfully following the view taken by the Co-ordinate Bench of the Tribunal, we delete this addition of Rs.20,00,000/- made u/s 68 of the Act and allow this ground of the assessee.”
6. Similar judgments have been delivered by the co-ordinate bench of the Tribunal in the following cases:-
a) M/s. Baba Bhootnath Trade & Commerce Ltd. vs. ITO in ITA No. 1494/Kol/2017; Assessment Year 2012-13, order dt. 05/04/2019
b) ITO vs. M/s. Happy Structure Pvt. Ltd. in ITA No. 1977/Kol/2016; Assessment Year 2012-13, order dt. 22/05/2019
c) M/s. Satyam Smertex Pvt. Ltd. vs. DCIT, ITA No. 2445/Kol/2019; Assessment Year 2012-13, order dt. 29/05/2020
d) ITO vs. M/s. Axisline Investment Consultants Pvt. Ltd. in ITA No. 408/Kol/2017; Assessment Year 2012-13, order dt. 01/07/2019
7. Consistent with the view taken therein, we delete the additions made u/s 68 of the Act of the amounts of share application money received from these eleven companies. In the case of M/s. Elite Vincom P. Ltd. and M/s. Misty Commercial P. Ltd., wherein assessment order were not passed u/s 143(3) of the Act, our order dt. 25/11/2019 setting aside the issues stands and only these additions relevant to M/s. Elite Vincome (P). Ltd. and M/s. Misty Commercial (P). Ltd., are set aside to the file of the Assessing Officer for fresh adjudication, in accordance with law. The Assessing Officer is directed to give adequate opportunity to the assessee and examine the documents submitted by the assessee in the case of these two entities and decide de-novo as to whether the addition can be made u/s 68 of the Act.”
8. In the result, miscellaneous application of the assessee is allowed.
Kolkata, the 25th day of February, 2021
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