Income Tax Appellate Tribunal - Nagpur
A,C.I.T. Central Cir.- 2(1), Nagpur vs M/S Balaji Stone Crusher & Infraventure ... on 21 November, 2017
J LILA NoAS/NAG/2016 a Assessment year2d £2-13 7a 4 71 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K. BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER LT.A. No.49/NAG/2016 Assessment year:2012-13 ACLT. -- "Ye" Mjs Balaji Stone Crusher ® Infraventure | | Central Circle-2(1), | | Pvt, Ltd., 905 'B' Wing, Nagpur. Lokmat Bhawan, Wardha Road, Nagpur. _ Le PAN:AADCB 5273 C | - (Appellant) _--S_--s«d|:s«Ss| SC __ (Respondent) = "Appellant by ~ " Shri Geetesh Kumar, D.R. | | Respondent. by a a . : 4 Shri K. P, Dewani, Advocate_ | Date of hearing "20/11/2017 - _ | Date of pronouncement yy atfn/2ot? ORDER
PER P. K. BANSAL, V.P. This appeal has been filed by the Revenue against the order of the CIT(A)}-1, Nagpur dated 28/01/2016 relating to assessment year 2012-2013 by taking the following effective grounds of appeal:
") Whether on the facts and in the circumstances of the case and in law, the td) CIT(A) was right in deleting the addition made on protective basis of Rs.2,00,02,500/- being share implication money and share premium?
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deteting the addition of Rs. 2,00,02,500/- without appreciating the facts and evidences brought on the record by the AQ to prove that share application money and share premium was not genuine ?
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3. Whether on the facts and in the circumstances of the case and in jaw, the Ld. CIT(A) was justified in deleting the addition of Rs.2,00,02, 500/- ignoring the evidence found in incriminating dianes according to which cash was transferred to Mumbai through hawala operations which was received Back as share Capital and premium ?°
2. The only issue involved in this appeal relates to the addition on account of share application money and share premium. The facts of the case, in brief, are that there has been search and seizure action u/s 132 of the Income Tax Act in the office of Bhangdiya Group on 19/07/2011. During the course of the search, several incriminating documents were found and seized. From the seized material, it was noted by the Assessing Officer that item number 1-65 of Annexure-B seized from the residence of Shri Mitesh Bhangadiya are the diaries containing ledgers, daily cash books and bank books maintained by Bhangariya Group. Statement of Shri Mitesh Bhangadiya was recorded on oath on 14/09/2011, In his sworn statement recorded during the course of search action, Shri Mitesh Bhangadiya was confronted with the entries borne out from the seized diaries marked as B-1 to B-65 and to explain the contents of these diaries. The Assessing Officer, on examination of the seized documents and the information gathered from the bank statement and the balance sheet of the investor companies regarding the introduction of the share application money and share premium, under para 7 of its assessment order, noted that these investor companies. hardly have any creditworthiness. The Assessing Officer was of the view that Shri Mitesh Bhangaciya has transferred the cash and brought it back to the group companies. The Assessing Officer noted following companies invested in the share capital of the assessee company which in his view were shell companies:
LTA. No4d9/NAG/ 2016 3 ie Assessmpnt year: 2012+ 23) ae ioe! Is-No. [Shareholder's Name | [Share capital received | '| Jasol Maa Share Trading Pvt. Ltd. 40,00,500 | 2 Printage Offset Pvt. Ltd. 30,900,000 3 Urjita Commerce Pvt. Ltd. 50,01,000 id Rangoli Commerce Pvt. Ltd. 50,01 ,000 5 Prajan Trading Pvt. Ltd. ~ 30,00,000 | pFOTAL |2:00,02,500 On this basis the Assessing Officer observed that the cash balance generated by inflating sub-contractor expenses were routed through investor companies to be infused to group companies as share application money as per the seized diaries of Annexure B-T to B-65.
3. The Assessing Officer, observed that Shri Mitesh G. Bhangdiya is directly involved in the capacity of Directors or shareholders of Bhangdiya Groups of Companies. According to the Assessing Officer, over 30 crores have been laundered through bank account of shell companies. The Assessing Officer ultimately cancluded that the Bhangdiya Group has transferred its unaccounted fund to Mumbai through Hawala by mediator who has subsequently brought through cash / transfer funds / RTGS of various amount in various bank account operated and controlled through various persons. The amount has been transferred from one bank account to another after 3-4 layers of bank transaction on the same day and the amount appears as share application and share premium into Bhangdiya Group of Companies after being laundered through several clearings. The Bhangdiya Group has laundered in the case of the assessee their unaccounted money as share application money including share premium.
of Rs.2,00,062,500/- through shell companies and the sources of the said ¥ "
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VT ANOcIUINAG/2016 [ese Assessment vear2a 2-13 = ix Sate investment was from the cash balance available with the Bhangdiya Group as reflected on the receipts side of the diaries item number 1 to 65 of Annexure B. The Assessing Officer therefore, added Rs.2,00,02.500/- on protective basis in the hands of the assessee companies treating the same is bogus.
4, When the matter went before the CIT(A), the CIT{A) deleted the said addition by observing as under:
"3.0 Pave carefully considered the submissions of the AR of the appellant, the order of the AO and the material an record, 9.1 During the relevant financial year under consideration, the appellant company has received share capital to the tune of Rs.2.00 crore corporate share holders. The AR has contended that the id AO has made the detailed enquiry in respect to share application money received from various compares who have contributed towards share capital of appellate company. The appellant in the course of assessment proceedings fas submitted confirmations from investor corporate share hofders in respect of the share capital subscribed by them. The appellant contends that the investment made by such corporate share holders was duly reflected in the requiar books of account and the amounts of investment have been received through banking channel The AR has placed on record the detaits of Assessing Officers of the investor corporate entities which are assessed at Mumbat. The AR has also filed the financial statements of the corporate share holders including the PAN and ROC details. Thus the AR contends that the identity of the share holders is fully established. As regards to the seized material found in the case of Shri Mitesh Bhangdiya, the AR has contended that the same does not relate to the appellate company, therefore, 0 adverse inference can be drawn.
9.2 The AR of the appefiant has relied on the decision of Hon'ble Apex Court in the case of Lovely Exports Pvt. Ltd. reported in 216 CTR 195 (SC).
9.3 The corporate share holders aré assessed ta income-tax and have subnutted their income-tax returns with the income-tax IT A Nol9/NAU/2016 sepegid Assessiaeat year: 2012-13 ss ee Department. Therefore, according to the AR. the ratio laid down by the Hon le Apex Court ia the case of Lovely Exports Pvt Ltd is appicable to the facts of the case of the appellant. The AR further submitted that the appellant by furnishing the PAN and ROC details fas discharged the onus cast on it. The onus therefore is shifted on the revenue to prove the transactions otherwise as not bona-fide. As regards to the issue of invoking the provisions of section 68 of the Act by the AQ, the appellant has relied on the folowing decisions:
i} Appeal (1) No. 2182 of 2009 | CIF ys M/s. Creative World (High Court of Bombay} ' Telefilms tt -
i) JOS FIR 334 _ CHT vs. Vatue Capital Services " (PF) Lid.
fi} Honble Bombay High Court judgment vide order dated 13.02.2012 in the case of CIT vs Goa Songe & Power Ltd 9.4 The AR of the appellant has contended that the id AO has not brought any evidence on record to show that for contribution of share capital money. has flown form Coffers of appellant company. The AR further contended that assessment u/s. L43(3} rw.s. L53C of the Act has been completed wherein the income of the appeliant company has been computed by the id. AO as per the books of account in respect of its business activities and no defect whatsoever has been found in the books of account of the appellant which has been accepted. It is a fact emanated from the records that the books of account of the appellant have not been rejected by fe AO. Thus the contention raised by the AR that in the absence of any evidence fo the effect that money has flown from coffers of assesseé, the addition u/s. 68 cannot be made, carries substantial force. The AR of the appellant in this regard has relied on the decision of Hon ble Delhi High Court in the case of CIT vs. Valve Capital Services Pvt. Lid. reported in 307 ITR 334 (Def }. Thus the AR pleads that appellant has proved the identity, credit worthiness and genuineness of the transaction, 9.5 it is a fact as emanated from records that the AR of the appellant during the course of assessment proceedings has filed the details of share application money, including the share application forms, confirmations from the respective companies with their complete names and addresses and PANS, Board Resolutions, bank statements and income-tax returns, it is thus not disputed that the companies which have made investments with the appeliant DTA NotgyNAG 2016 UR Assussimedb year 2012-14 see ra 2
--~ a a, company in the form of share capital are assessed to tax and have fied their returns af income for the relevant year. it is atso undisputed that the share appication money in question has been received through the account payee cheques by the appellant company. Thus, so far as the investor companies are concerned, the transactions of investment have been effected by account payee cheques through the banking channefs, The AQ. however, after conducting certain inquiries it respect of investor companies, has ferred and arrived at the conclusion that the share application money invested in the appeliant company is nothing but appellant companys own unaccounted money introduced under the guise of favestment Dy the 08 compares, witch are allagediy used as route to bring back such unaccounted money.
9.6 The contention of the AR of the appellant is that the investor companies who have invested with the appeflant company are timited companies. which are registered under the Companies Act, 1956, Therefore, locating the companies is not an impossible fask; more particularly, when such companies are registered with the Registrar of Companies and have regularly filed their returns of come. it is thus not a case that the appeflant has not filed any explanation or details as regards fo the companies which have invested with the aapeliant company. in fact. the AR has provided the details of income-tax records and registration of companies, including the PANs. The ia) AO had ail the details as to the AOs of the investor companies, mspite of such details being available with AO nothing adverse has been brought on record that such companies in connivance has factitated the appellant company ta devise such colourful trarisactions.
9.7 it is seen from the records that the id. AO has drawn the inference that the share application money and the share premium introduced with the appellant company by the investor companies is bogus without bringing any adverse material on record. The id. AO thus without examination of the investments made by these investor companies had artived at the conciusion that the entire share capital Of Rs. 2,00, 00,000/- by these companies is under the garb of bringing back the unaccounted money of the appellant company. It however, is a fact as emanated from the records that the id. AO has refrained from giving any finding in respect of these companies and formed the general belief based on the seized material relating to the cash withdrawals from sub-contractors bank accounts. Therefore. the ratio laid down in the case of Honble Apex Court in Orissa Corporation Pvt, Ltd. vs, CIT 159 ITR 78 {SC} is applicable to the facts of the appellant company in as much as that in the case of fhe appetiant company the id. AO, apart trom issuing mouce iu/s, L336), did nat pursue the matter further.
28 ihe AO fas observed that before investing the funds with the appellant company, aff the investor companes have received the money in cash through several layers, which according fo the AQ, is the cash available with the appellant utilised for the purpose of introduction of bogus capital with the appeflant company through such investor companies. The AR of the appetiant Aas objected to such observation contending that the AO has not brought oul @ single instance which could show that the appellant company has deposited the cash in the bank accounts of investor COMPAHES with a motive to bring back are same in the form of share capital, fhe AQ has drawn the inference that cash balance generated b WY SLID contractor expenses were routed through investor companies to be infused in the group companies as share application money. The AO has further mentioned in para no. 7 that the Bhangdiya group has transferred its unaccounted fund to Mumbaj through Hawaila mediators which amount is alleged to have been invested with the appetant company through the OS investors. However, no such evidence of cash transfer in the name of investor COMPaHes is brought on recard.
a9 if is & fact that the AO has caused the inquiries u/s LIH6) of the Act in respect of investor companies. However, whatever material has been gathered pursuant to such inquities fas not been confronted with the appellant infact perusal of assessment order does not indicate that any adverse material has been obtained fram which anything adverse can be held as regard to contribution of shate Capital. Thus the argument of the appedant that once the appellant has furnished the names and addresses and PANS of investors, including their Income-tax records the appellant is not concerned as regards to deposits in the account of third Parties and the onus of the appetant stands duly discharged carries much substance on the facts in issue. Therefore, the reliance Placed by the AR on the decision of the Hon'ble Apex Court in the case of CIT Vs. Lovely Exports Pvt. Ltd. (2008), 216 CTR 195 is applicable fo the facts of the present appefant. wherein the Apex Court has Heid as under:
LILA No49/NAG/2016 a8 Assessnment year guy 2-13
-{ HEE F bay MI om 'Can the amount of share money be regarded as undisclosed income under 5s. 68 of 1.7. Act. 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged Bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment,"
8.40 The AR of the appellant Aas vehemently argued that the so cated chaching ewdence gathered pursuant to the inquiries conducted by the department has not been discussed in the assessment order, The AR further agitated that the id. AO has not supplied any material as evidence in the course of hearings to show that the assessee fas deposited its own money in the various assessment order. The AR further contends thet no incriminating Maternal fas been found during the investigation by the DDIT (inv) and the AO which carn show that appellant has used its own money for introduction of share capital in the name of third company investors under the garb to convert the black money into white.
R.1i in support of his contentions, the AR of the appellant Aas retied on the following judicial decisions:
"1) The Supreme Court in the case of CIT Vs. Gujarat Heavy Chemicals Lid. (256 ITR 795) fas affirmed the decision of Gujrat High Court and has held that. "CIT(A} and the Tribunal having found no justification for the addition of the amount of investment made itt the Shares af the assessee-company by another company as 25 per cent shares of the assessee were had by one group and all the companies, Indian as well as foreign, which had advanced money to the assessee towards subscription of shares had finks with the said group matter involves question of appreciation of evidence: appiication under $s. 256(2) rightly rejected. We have read the order of the High Court and heard learned counsel for the appellant. We ate satisfied that upon the facts, no interference with fhe order of the High Court is cated for. The civil anpeals are dismissed."
2) Further in the case of CIT Vs. Lovely Exports (P) Ltd. (2ié CTR 195) The Supreme Court of India has made it an established law that 'if the share application money is received PIANod/NAG/20 16 BRR Assessment year 2012-13 § by the assessee company fram alleged bogus shareholders, whose names are given to the AO. then the Department is free to proceed to reopen their individual assessments im accordance with law, but it cannot be regarded as undisclosed income of the assessee company".
3) In the case of CIT Vs. Orissa Corporation Pvt. Lid. {159 ITR 78), The Supreme Court of India has held that "The assessee had given the names and addresses of the alleged creditors. it was in the knowledge of the Revenue that the said creditors were income-tax assessees, Their index number was in the Hle of the Revenue. The Revenue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such wo coud advance the allowed foans. There was no effort made to pursue the so-called alleged creditors, In those COLT STANCES, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay an hum ther it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. if the conclusion is based on some eviderice on which a conclusion could be arrived at, no question of jaw as such arises. It cannot, therefore, be said that any question of law arose in these cases. The High Court was, therefore, right in refusing to refer the questions sought for."
4} The Supreme Court in the case of CIT Vs. Ste#ar Investment Ltd. (251 ITR 263) has held that "the decision of the tribunal was won on the facts so that no interference was called for." It was further held that "Couid it be assumed that the decision endorses the view that unexplained Share Capital could never be treated as the income of the company and that section 68 which places the responsibility on the assessee (0 prove the nature and sources of credit has no application i respect of paid-up share capital and share application money. "
5) The Catcutta High Court in case of Hindustan Tea Co.
lid Vs, CIT (263 ITR 289) has held that 'the assessee has disclosed aif the particulars available with it atong with the names & addresses of each subscriber. In such 2 case, the assessee could not have been expected to establish the 26 IA No.49/NAG/2016 7S Assessment year2012-13 she | cLpes -
genuineness of amount and the amount could not be treated the income of the company without any material to suggest any #nk between the subscribed amount and the company.
fhe AQ is not justified in treating tis as assessee's income especiaiy where particulars were given in the application and since the amouns were received by chegue. "
6) fhe Dethi High Court in the case of CIT Vs. flac investment Pvt. Lid. (287 TTR 135). after review of decision in Ci? Vs. Antarctica investment Pvt. lta (262 1TR 493) and Cit Vs, Sophia Finance Lid. (205 TTR 98), held that "where the assesseé is capable of identifying the subscriber and also place evidence of their creditworthiness by their bank staternents and afso submitted the confirmations, nothing more could be expected of the company. It follows that such amount of share capital to be assessable as that of the company, there should be something more to justify such addition. In this regard, the amount received as share capital stands on a different footing fo some extent, than any other borrowing".
4} FFIAT Chennai Bench in the case of Midas Golden Distiferies (P) Lick Vs. CIT (25 DF 337} has held that 'assessee company bought on record complete identity of Sharehoiders by providing ther addresses and confirmation to the effect that they have contributed to the share canital of the assessee. Moneys were received through banking chanriels. Alf the applicants are regularly assessed to tax and assessment particulars refating fo each of them were made available to the assessing authonty, Mere subjective opinion of the AO that the source of money with the sharehoiders or their creditworthiness is not established is not sufficient to treat the share Capital as deemed income u/s 68. Even if the applicant companies are to be treated as bogus share foiders, Revenue is free to re-open their individual assessments and bring to tax such unexplained money in their respective hands. Addition in the assessee's hand is able to be deleted."
&) = Further, the Nagour Bench of IFAT in the case of ACIT Cir-2 Vs, Kasana Foods Pvt. Ltd. (61 & 62 / Nag/ 2007) vide a joint order dated 24" July 2009 has held that, "The facts of the case of the assessee ts identical to the facts in case of Orissa Corporation (P) Lic. (Supra) Tin this case the assessee has furnished aff the particulars of share applicant including its [WA Nudd /NAG/200 6 5 eB Assessment year:2G72-13 Se a eek Pan. The AO apart from issuing notice u/s. 193(6) did not pursue the matter further. Therefore, the notice issued to the share applicant returned unserved cannot Be fhe criteria to freat the share application as unexplained cash credit in the hands of the assessee. "
The copies of ail the above judgments are enclosed Aherevath as Annexure ~ 10° 10.0 in the light of the above facts, it is evident that the appellant has placed suffiaent legal evidences on record to demonstrate the identify, creditworthiness and genuineness of contribution of share capital. Thus there remains 0 SCOpe for making addition for the same. The cam of the appellant for contribution of capital is acceptable, therefore, the protective addition made by the AO is directed to be deleted."
5. Coming to the appeal of the Revenue regarding the deletion of the addition of Rs.2,00,02,500/- which were added by the AO on protective basis being the share application money and share premium. We have heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. The Ld. DR before us relied on the order of the AO while Ld. AR relied on the order of the CIT(A) and reiterated the submissions made before the CIT(A). He also relied on the following cases:
i) (2008) 216 CTR 0195 (SO) CIT vs. Lovely Exports (P) Ltd.
ii (2008) 307 ITR 0334 (Deli) CIT vs. Vatue Capital Services (P) Lid.
LT. SoS NAG e016 ee m ° ASSESSTIETIE year 20 Zeb Sat al tee Hon bie Bombay High Court order in ITA (L) No. 2182 of 7009 in fie case of M/s. Creative Hi) Word Telefiims Lid. (farfier known as Link international Services Pvt. Lid} wde order dated 12/10/2009.
Hon bie Bombay High Court in Tax Appeal No. iv} 16 of 2012 in the case of Goa Sponge and Power itd. vide order dated 13/02/2012.
fon ble High Court of Bombay in TTA No, 1613 y) of 2014 in the case of M/s. Gagandeep infrastructure Pvt. itd. vide order dated 20/03/2017.
(2014) 368 ITR 0061 (80m.) Vodafone india Services Pvt. Ltd. vs. ACIT Hon'ble Haryana Aigh Court in ITA No. 386 of Vii} 2010 (O & M) in the case of M/S. K.C. Pipes Put. Lidl vide order dated 02/08/2016, Hon ble Bombay High Court in Writ Petition No. 3027 of 2045 in the case of Khubchandant Healthparks Pvt. itd vide order dated LOE POT.
vidi} The capies of these case laws were filed before us which we have gone through. We noted the said addition has been made by the AO on protective basis treating the following companies / individual to be the shell company investor in the assessee company in respect of amount of the share application money as enumerated here under:
Sr.No. |Shareholder's Name Share capital received 1 Jasol Maa Share Trading Pvt. Ltd. 40,00,500 2 Printage Offset Pvt. Ltd. 30,00,000 3 'Urjita Commerce Pvt. Ltd. 50,01 ,080 UTA NoGYNAG/2016 3 Asarasmenet year eo 1 2-13 te Rangoli Commerce Pyt. Lte, coon coe 5 Prajan Trading Pvt. Ltd. ,00,000 _ TOTAL
6. The AO was of the view that Bhangdiya Group has transferred its unaccounted cash at Mumbai through Hawala by the Mediator, who has thereafter introduced through cash / transfer funds / RTGS of various amount in various banks account operated and controlled through various persons. The assessee company in his view, has also to the extent the share application money was in receipt of sums out of the said funds. The AO therefore, added the said amount of Rs.2,00,02,500/- in the hands of the assessee on protective basis holding the share application money including the share premium to be bogus. The CIT(A) deleted the said CRS addition, The Ld. DR before us even though vehemently relied on the a order of the AO but could not adduce before us any cogent material or Js evidence which may prove that the share application money including the share premiurn received by the assessee is bogus. This is a settled law in view of the decision of Hon'ble Supreme Court in the case of Daulatram Rawatmal 87 ITR 349(SC) that onus is on the person who alleges that apparent is not real. The CIT(A)} in this case noted that the assessee had submitted complete details, the copy of which were also filed before us, being confirmation from shareholders, financial statement, bank statement copy of Permanent Account Number and details. of Income-Tax Return to substantiate the contribution of share capital. It is not denied that the amount was received through proper banking channel and all the corporate sharehoiders and are assessed to tay. These evidences prove that the asséssee, in our opinion, has discharged the onus which lies on him u/s. 68 LALA NndO/NAG/20L6 de! Assessinent year 20b2-14 Bees.
atime of the Income-tax Act, Section 68 as was in inexistence during the impugned assessment year lays down as under:
"Where any sum is found credited in the books Of af assessee maintained for any previous year, and the assesseé offers not explanation about the nature and source thereof or the explanation offered by him is nol, in the opinion of the Assessing Officer, satisfactory, ihe sum so credited may be charged to income-tax as the income of the assessee of that previous year"
7, From the reading of the said section, it is apparent that for making addition u/s. 68 the following conditions must be satisfied.
(a) Sum must be found credited in the books of the assessee maintained for the previous year.
(b} The assessee offers no explanation about the nature and source of such credit or the explanation offered by the assessee is not in the opinian of the AO satisfactory.
8. If both the conditions are satisfied the AQ Is empawered to charge sum $0 credited found in the books of the assessee to Income-tax and treat the same as the income of the assessee of that previous year. In this case, we noted the AO found aforesaid sum of Rs.2,00,02,500/- credited in the books of the assessee. The assessee has submitted the explanation, explaining the nature and source of such credit. The AO did not accept the explanation of the assessee merely on the basis of the assumption that the cash found recorded in the diary seized during the course of search in Bhangdiya Group has been utilized by the said Group for getting the share application money and premium from the various persons in the assessee company. The AO while rejecting the explanation of the assessee did not bring any evidence on record except relying on the seized diary that the money was sent by the assessee to the mediator at Mumbai for obtaining the share application money through Hawala. No particular evidence or the [A Ne doy NAG/20L6 Assessment year:2012 (3 amg material what toa talk of the corroborative evidence was brought on the record while rejecting the explanation af the assessee by the AO that the money brought in by the company as. share application money comes out of the money sent by the Bhangdtya Group to Mumbai. It is not denied that there had been search in the case of Bhangdiya Group on dated 19.07.2011 and during the course of the search, dianes being item number 1 to 65 Annexure -- B-1 were found which according to the AO contain the details of the receipt and the payment. The money so received represents the cash received by the Bhangdiya Group from the Group Companies by making the withdrawal from their bank account as well as cash received from sub-contractors by making withdrawal by the sub-contractors. from their bank account. It ts not denied that Bhangdiya Groups Company as well as the sub-contractor from whose bank account the cash has been withdrawn and recorded in the diary found and seized comes out of their bank account which were duly disclosed to the Income-tax Department. These bank accounts were nat undisclosed bank account. All these Group Campanies: as well as sub-contractors were assessed to Income-tax. Therefore, the source of the money shown as received in the diaries were out of the receipts of the parties which have duly been disclosed by them while filing their _Income-tax Return and has been assessed to tax while making their respective assessment by the AO. Section.68 did not, in our opinion, empower the AQ to reject each and every explanation given by the assessee. Whether the explanation is satisfactory or not depends on facts of each case. If the assessee has submitted all the evidences proving the identity, creditworthiness and genuineness of the transactions, the explanation given by the assessee cannot be regarded ta be not satisfactory. The identity of each of the party who has contributed the share application money is proved beyond doubt as all of them are assessed to tax having the Permanent Account Number, The assessee has ITA NoAG/NAG 2016 ES Assessment years2dh] 2-14 7 ataitai et, $2 gt filed details of their Income-tax Return. Not only this, we noted the assessee has submitted the details being confirmation from shareholders, their financial statements, bank statements to substantiate that they have contributed to the share capital. The share capitals have been received by the assessee company through banking channels. There had been search and seizure in the case of the Bhangdiya Group but no clinching evidence showing linkage of the parties who has contributed towards the share capital was found or brought on record except to draw an inference from the diary that the money sent to Mumbai has been used for bringing back into the company by way of share capital. In our view, since the receipt found recorded in the diary comes out of the trading receipt of those concerns Bhangdtya Group and cannot be regarded to be the undisclosed | incame of the assessee, therefore, the money utilized aut of that amount . 4, can also not be regarded to be utilized of unaccounted money of the } assessee. Na businessman will convert its tax patd money into unaccounted money and then convert into accounted money. The assessee company has received the contribution into the share capital proves the genuineness of transaction. The AO in the course of the assessment proceedings verified the transaction of the contribution of the share capital by issue of the notice u/s, 133(6). No adverse evidence obtained in such enquiry was brought on record. Even Ld. DR has also not produced any evidence in this regard which may prove that the share capital contribution réceived by the assessee company was not genuine. Since the assessee, in Gur opinion, has discharged his onus of proving identity, creditworthiness and genuineness of the transaction, the explanation given by the assessee cannot be regarded to be non satisfactory.
/ VA Nea sNAG S206 ee 35 Assessment yodr duyr2-14 ee oe Soe fs g. In our opinion, the AO just in the absence of any evidence being found was the view that the money has flown from the coffer of the assessee. We have gone through the decision in the case of CIT vs. Value Capital Services P. Ltd. 307 ITR 334 (Del). We noted in this case the Hon'ble Delhi High Court has categorically held that the additional burden was on the department to show even if the sharehalders did nat have the means to make the investment. Investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. It is not denied that the company who has invested in the share capital are limited companies duly registered under the Companies Act therefore, these companies could have been very well located. They are registered with the Registrar of Companies and have regularly filed their returns of Income. It is not a case the assessee has not filed any explanation or details as regards to the Cy companies which have contributed inte the share capital of the assessee. a 4 AS fey = Be = te te _ Vy being brought on record by the AO which may prove that these companies The assessee has filed all the details which, in our opinion, a man of 5 ordinary prudence would have filed. We did not find any adverse inference in connivance has facilitated the assessee companies to devise colourful transactions. We find force in the submission of the Ld, AR that since ail the companies who have contributed towards the share capital of the assessee are regular assessee have the Permanent Account Number. If the AO has not pursued the matter apart fram issuing the notice u/s. 133(6), in view of the decision of Hon'ble Supreme Court in the case of Odissa Corporation Pvt. Ltd. Vs CIT, 159 ITR 78 (SC), no addition can be made in the hands of the assessee. Similar view has been taken by this Tribunal in the case of ACIT CENTRAL CIR -- 2(1), Nagpur vs. MIT2 INFRAPROJECT PVT. LTD. in I.T.A.No.S5/NAG/2016 vide order dated 29/06/2017.
RA, Nod SNAG SOTA aay Assessment yeari2zOb2-13 Beets;
10. The CIT(A}, in our opinion, has passed a detailed and explicit orcer after considering the submissions of the assessee which have been reiterated before us as well as the order of the Assessing Officer and given the finding of the facts. The CIT(A) has also dealt with the various case laws which, in our opinion, support the case of the assessea.
11. This is not a fit case which warrants our interference. We accordingly confirm the order of the CIT(A) and dismiss the ground taken by the Revenue.
12. Inthe result, the appeal of the Revenue stands dismissed.
(Order was pronounced in the open court on 21/11/2017 Sd/. Sd/.
{PAWAN SINGH) { P. K. BANSAL } Judicial Member Vice President Dated:21/11/2017 *Singh Copy of the order forwarded to:
The Appellant The Respondent.
Concerned CIT The CIT{A) j D.R., of Cauand Tle ae a et income Tax Arnailate Trib bunt TP Hts / Nagpur Bench:
+ OG rm