Zion Promoters & Developers (P) Ltd. Vs Addl. CIT (ITAT Delhi)
The investment in the share of the assessee company by the above five companies whose directors appeared before the Assessing Officer and whose statements were recorded and full details were filed substantiating the identity and creditworthiness of the investor companies and the genuineness of the transactions, cannot be doubted merely because companies have meager income or that the directors could not categorically answer the question of the Assessing Officer.
Ld. CIT(A) sustained the addition basically on the ground that although full details were filed however, the Principal Officers of the above companies could not be produced before the Assessing Officer for recording their statements and the companies are showing meager income. As mentioned earlier, income in case of a concern cannot be the basis to disbelieve the creditworthiness if it has otherwise sufficient capital and free reserves. From various details furnished by the assessee, we find although the assessee did not produce the directors of the above companies, however, their affidavits have been filed as mentioned earlier during the remand proceedings which have not been proved to be false or untrue.. The assessee had filed the copy of allotment of shares in Form-2, resolution of board of directors, certificate of incorporation, memorandum of association and PAN Card, ITR, bank statement etc to justify their identity and creditworthiness. The copy of filing of Form No.2 showing return of allotment on 25.06.2009 and 3 1.03.2010 with the Ministry of Company Affairs was also filed before the Assessing Officer.
