Psychotropics Leasing & Finance (P) Ltd. Vs ITO (ITAT Delhi)
The ld. CIT(A) appears to have stressed on the fact that the impugned share holders has shown meager income in their return of income. In our opinion, the income/losses declared by the investor companies is not a sole criterion to examine the creditworthiness of the shareholders. None of the authorities below have brought any material on record to falsify the fund flow shown in the bank statements of creditors filed by the assessee. For this view, we stand fortified by recent decision of Hon’ble jurisdictional High Court in the case of CIT v. Vrindavan Farms (P) Ltd., 2015(11) TMI 279 dated 12 August 2015, where, the Hon’ble court has held as under :
“3. The ITAT has in the impugned order noticed that in the present case the Revenue has not doubted the identity of the share applicant. The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their Income Tax Returns. The entire details of the share applicants were made available to the AO by the assessee. This included their PAN numbers, confirmations, their bank statements, their balance sheets and profit and loss accounts and the certificate of incorporation etc. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the above documents submitted to him. It has been rightly commented by the ITAT that without doubting the documents, the AO completed the assessment only on the presumption that low return of income was sufficient to doubt the creditworthiness of the share holders.”
Similar view has been taken by Hon’ble jurisdictional High Court in another decision in the case of PCIT vs. M/s. Goodview Trading Pvt. Ltd. dated 21 November, 2016 reported in 2016 (12) TMI 617 – Delhi High Court, observing as under :
It is quite evident from the CIT(A)’s reasoning in paragraph 4.3, that the materials clearly pointed to the share applicants’ possessing substantial means to invest in the assessee’s company. The AO seized certain material to say that minimal or insubstantial amounts was paid as tax by such share applicants and did not carry out a deeper analysis or rather chose to ignore it. In these circumstances, the inferences drawn by the CIT(A) are not only factual but facially accurate.
We have gone through various decisions relied by the assessee and those referred by the ld. CIT(A) and we find that in the attending facts and circumstances of the present case, as narrated above, the decisions relied by the ld. CIT(A) are found distinguishable on facts for one reason or the other.
