ITO Vs Cozy Footwear Pvt. Ltd. (ITAT Delhi)
Here in this case, the assessee company has received share application money from three parties. Two of them were Directors and one was a corporate entity M/s Omexpo Enterprises Pvt. Ltd. In so far as the share application money received from Directors, the AO has held the genuine transaction of the subscriber stood satisfactorily explained. In the case of share application money for sums aggregating to Rs. 2,00,00,000/- received from M/s. Omexpo Enterprises Pvt. Ltd., first of all the assessee discharged its onus by filing the copy of confirmation along with documents like, PAN, bank statement of the subscriber company, copy of income tax return alongwith audited accounts, etc., statement from the MCA website showing that the company is live working company. Thereafter, the AO himself carried out inquiry from the said parties and notice u/s 133(6) was sent asking for various details to corroborate the stand of the assessee. In response, the said company replied to the said notices and in fact two times reply was sent, i.e., vide letter dated 19.1.2015 and 5.3.2015.
The party not only confirmed the said transaction but also explained the source of investment alongwith the set of documents as mentioned in the assessment order itself as well as in the impugned appellate order. The bank statement furnished by the said company reflected a transfer of Rs. 1,00,00,000/- of each on two occasions from its bank account with the Axis Bank to the bank account of the assessee on 10.8.2011. The company also stated that it assessed to tax income tax and duly reflected the said investment in the balance sheet. Ld. CIT (A) has also noticed that this company had sufficient source of funds in the form of share capital and reserves as per balance sheet. The figure of which has been incorporated above. Out of the said funds the investment which has been made in the assessee company was Rs. 2,00,00,000/-. Apart from that, there is a categorical finding by the Ld. CIT(A) that there is no cash deposit in the bank account of share subscriber prior to issue of funds. Further, in so far as second discrepancy in the number of shares subscribed by M/s. Omexpo Enterprises Pvt. Ltd., the same was reconciled along with the share certificate filed before the Ld. CIT (A) which has been discussed in detail by him. Thus, in so far as assessee is concerned entire onus should discharge and even in the inquiry conducted by the AO, no adverse material has been found as the party has provided all the necessary details to prove the genuineness of the transaction. In these circumstances, we do not find any reason as to why the transaction has been doubted by the AO without any adverse material found during the course of inquiry conducted by the AO. Now simply because Director of the subscriber company did not appear personally that does not mean that all other documents sent by the said company which are mostly statutory records as well as the income tax records can make the transaction fictitious. Thus, we do not find any infirmity in the finding and observation of the Ld. CIT(A) while deleting the said addition.
Apart from that, as brought on record by the Ld. Counsel, the AO subsequently based on certain information emanating from search in some other case on 29.3.2012, came to the conclusion that the amount of Rs. 2,00,00,000/- is an accommodation entry and again the same amount has been added. This has been added despite noting the fact that already Ld. CIT (A) has deleted the same addition vide order dated 23.3.2017. If the same addition has been made again, then we do not find any justification for challenging the said addition in the present appeal. On this count also the ground raised by the revenue cannot be sustained. In any case on merits we have already upheld the order of the Ld. CIT (A) in deleting the addition of Rs. 2,00,00,000/-. Accordingly the appeal of the revenue is dismissed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The aforesaid appeal has been filed by the Revenue against the impugned order dated 23.3.2017, passed by Ld. CIT(A)-2, New Delhi for the quantum of assessment passed u/s 143(3) for the assessment year 2012-13 on following grounds :-
1. “The Ld. CIT(A) has erred in deleting the addition made u/s 68 of the Act amounting to Rs. 2,00,00,000/- received by the assessee company as unexplained cash credit in the garb of share application money / premium.
2. The Ld. CIT(A) has failed to proved the identity, genuineness and creditworthiness of the of the transactions as per judgement of Hon’ble Delhi High Court in case of M/s Nova Promoters and Finlease Pvt Ltd where it was held that mere filing of PAN No. acknowledgement of ITRs, Bank Account Statements of the applications was not sufficient to discharge the onus.
3. The Ld. CIT(A) has erred in accepting the creditworthiness and genuineness of transactions merely on the basis that transaction were through banking channel or by account payee instruments but it did not reflect their actual genuine business activities.
4. The Ld. CIT(A) did not notice that the share subscribers did not have its own profit making apparatus. It merely rotated money, which was coming through the bank accounts. The bank accounts did not reflect their creditworthiness of transaction.
5. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
2. The facts, in brief, are that Assessee Company is engaged in the business of buying and selling of wide range of footwear and in the year under consideration assessee has not started its business operations. The AO noted that assessee has raised the share capital of Rs. 13,52,625/- by issuing fresh 240525 equity shares out of which 30000 equity shares at par @Rs.10/- each to Shri Surender Kumar Saraf and Sh. Girjesh Saraf and the balance 210525 shares @ Rs.5/-called up were issued to M/s. Omexpo Enterprises Pvt. Ltd at a premium of Rs.90/- per share.
3. The details filed reveal that the share premium/ share application money claimed to have received from the following 03 persons/entities.
