The DCIT, Circle-4, Ahmedabad V. Gyscoal Alloys Ltd., Ahmedabad

ITA 102/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8528 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDHRA UPMANYU
• Keywords: Unexplained cash credit; Gift; Source of fund; Reasonable cause
• Section: 143(3); 142(1); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. 102/AHD/2014 (ASSES SMENT YEAR: 2010-11) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4, AHMEDABAD APPELLANT VS. GYSCOAL ALLOYS LTD., 2 ND FLOOR, MURDUAL TOWER, B/H. TIMES OF INDIA, ASHRAM ROAD, AHMEDABAD RESPONDENT PAN: AAECS6731M /BY REVENUE : SMT. VASUNDHRA UPMANYU, CIT. D .R. /BY ASSESSEE : SHRI SUNIL TALATI, A.R. /DATE OF HEARING : 22.01.2018 /DATE OF PRONOUNCEMENT : 06.04.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 A RISES AGAINST THE CIT(A) - VIII, AHMEDABADS ORDER DATED 24.10.2013, IN CASE NO. CIT(A)- VIII/DCIT/CIR.4/19/13-14, REVERSING ASSESSING OFFIC ERS ACTION MAKING SECTION 68 ADDITION OF RS.9,99,99,900/- IN THE NATURE OF SHARE CAPITAL/SHARE PREMIUM RECEIVED FROM M/S. GENERAL CAPITAL AND HOLDING COMPANY PVT. LTD., IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. HEARD BOTH THE PARTIES. CASE RECORDS PERUSED. ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 2 - 2. WE NOTICE AT THE OUTSET THAT THE CIT(A) HAS DELE TED THE ABOVESTATED ADDITION OF SHARE APPLICATION/PREMIUM AFTER TAKING INTO CONS IDERATION ASSESSEES SUBMISSIONS MADE DURING THE COURSE OF LOWER APPELLATE PROCEEDIN GS AS FOLLOWS: 2.2 APPELLANT'S SUBMISSION :- THE RELEVANT EXTRACTS FROM THE SUBMISSION O F THE APPELLANT ARE REPRODUCED HERE UNDER:- 'THE ONE AND ONLY GROUND OF APPEAL EFFECTIVELY IS W ITH REGARD TO THE ADDITION OF RS.9,99,99,900/- U/S. 68 OF THE INCOME TAX ACT. THE ASSESSING OFFICER ON PAGE-3 OF THE ASSESSMENT ORDER HAS REPRODUCED THE FACTS WHEREIN T HE ASSESSEE SUBMITTED COMPLETE DETAILS AS CALLED FOR BY THE ASSESSING OFFICER. IN PARA-3.3 THE LEARNED ASSESSING OFFICER WANTED TO VERIFY THE SHARE CAPITAL CONTRIBUTED/INVE STED BY ONE GENERAL CAPITAL AND HOLDING COMPANY PVT. LTD. TO THE TUNE OF RS.9,99,99 ,900/-. THE ASSESSING OFFICER THEREFORE, ISSUED A SUMMONS U/S. 131 AND IN RESPONS E TO THE SAME SHRI VIRAL SHAH APPEARED BEFORE THE ASSESSING OFFICER AND PRODUCED ORIGINAL BANK STATEMENT OF GENERAL CAPITAL AND HOLDING COMPANY PVT. LTD. FROM WHICH HE HAS ISSUED THE CHEQUES FOR SUBSCRIBING TO THE CAPITAL OF THE COMPANY. INSP ITE OF THE FACT THAT THERE ARE NO CASH DEPOSIT STATED IN THE SAID BANK STATEMENT, BANK ACC OUNT OR FOR THAT MATTER WHATSOEVER IN THE BOOKS OF ACCOUNTS OF THE SAID COMPANY, THE A SSESSING OFFICER ABSOLUTELY INCORRECTLY MENTIONED THAT HE HAS NOTICED REGULARIT Y, A PATTERN, IN THE METHODOLOGY OF INFUSING CASH INTO THE ACCOUNTS AND WITHIN A SHORT WHILE AFTERWARDS WITHDRAWING SUMS TO PAY FOR THE SHARES. THE SAID PRINCIPAL OFFICER S HRI VIRAL SHAH FILED AUTHENTICATED PHOTOCOPY OF THE ORIGINAL PAN CARD OF ALL SHAREHOLD ERS AND ALSO THAT OF THE COMPANY BUT THE ASSESSING OFFICER SURPRISINGLY MENTIONS ON PAGE-4 THAT THEY PRIMA FACIE ARE NOT FOUND CORRECT. . HE HAS ALSO FILED THE CONFIRMATION OF ACCOUNT, AUDITED ACCOUNTS, INCOME TAX RETURNS AND COPY OF PAN CARD OF ALL THE SHAREHOLDERS OF GENERAL CAPITAL AND HOLDING COMPANY PVT LTD. HE, THEREFORE CONCLUDE D THAT THE INVESTMENT IS AN ACCOMMODATION ENTRY, IT IS A SHAM TRANSACTION AND T HEREAFTER FROM PAGE 5 TO 8 REPRODUCING VARIOUS DECISIONS CONCLUDED THAT THE EN TIRE SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT COMPANY FROM THE SAID GEN ERAL CAPITAL AND HOLDING COMPANY PVT. LTD. IS UNEXPLAINED INASMUCH AS THE PA RTY WAS NOT IN DE-FACTOR EXISTENCE AND THUS HE ADDED THE SAME U/S. 68 OF THE INCOME TA X ACT. THE APPELLANT BEING DISSATISFIED AND AGGRIEVED BY T HE SAME, SUBMITS THE FOLLOWING: (1) THE ASSESSEE IS A PUBLIC LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT AND THE COPY OF CERTIFICATE OF INCORPORATION AND CO MMENCEMENT OF BUSINESS ARE ENCLOSED AS PER PAGE 1. THE APPELLANT ISSUED AN IPO AND ADMITTED TO DEALING ON THE NATIONAL STOCK EXCHANGE AND BOMBAY S TOCK EXCHANGE ON 27.10.2010 RAISING A CAPITAL OF RS 54.67 CRORES FRO M PUBLIC ISSUE. COPY OF THE LISTING NOTIFICATION/ CIRCULAR OF NATIONAL STOCK EX CHANGE AND BOMBAY STOCK EXCHANGE IS ENCLOSED AT PAGE 2 TO 7 AND COPY OF ANNUAL ACCOUNTS FOR THE YEAR ENDING 31 !F MARCH, 2010 IS ENCLOSED FROM PAGE 8 TO 45. (2) THE ASSESSEE HAD BEEN ASSESSED TO INCOME TAX CO NTINUOUSLY AND TILL ASST. YEAR 2009-10 THERE HAS BEEN NO ADDITION WHATSOEVER LIKE THIS. FOR THIS ASST.YEAR 2010-11 THE ASSESSING OFFICER AFTER ISSUING NOTICE U/S. 143(2) AND 142(1) ISSUED ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 3 - SHOW CAUSE NOTICE AND THEREAFTER SUMMONS FOR INQUIR IES IN THE INVESTING COMPANY. COPIES OF WHICH ARE ENCLOSED AS PER PAGE 46 TO 69. (3) AS STATED ABOVE, THE PRINCIPAL OFFICER OF SAID INVESTING COMPANY GENERAL CAPITAL AND HOLDING COMPANY PVT. LTD. APPEARED AND FILED COPY OF ACCOUNTS IN HIS BOOKS OF ACCOUNTS AND COPY OF BANK STATEMENT OF THE SAID COMPANY. COPY AS FILED BEFORE THE ASSESSING OFFICER ARE ENCLOSED HER EWITH FROM PAGE 70 TO 79. THE INVESTING COMPANY GENERAL CAPITAL AND HOLDING C OMPANY PVT LTD HAS ALSO SUBMITTED THE CONFIRMATION OF ACCOUNT , AUDITE D ACCOUNTS , INCOME TAX RETURNS AND COPY OF PAN CARD OF ALL THE SHAREHOLDER S OF INVESTING COMPANY VIDE LETTER DATED 18.03.2013 SUBMITTED ON 20.03.201 3. COPY OF THE SAID LETTER IS ENCLOSED AS PER PAGE 80. (4) THE ASSESSEE ALSO ENCLOSES COPY OF ACCOUNT OF T HE SAID COMPANY IN THE BOOKS OF THE APPELLANT COMPANY AND ALSO THE COPY OF THE BANK STATEMENT OF THE APPELLANT COMPANY WHEREIN THE SHARE INVESTMENT OF RS.9,99,99, 900/- RECEIVED FROM THE SAID COMPANY CLEARLY PROVING THAT THEY WERE RECEIVE D BY ACCOUNT PAYEE CHEQUES AS PER PAGE 81 TO 88. COPY OF BANK STATEMENTS, CONFIRMATION OF ACCOUNT AND PAN CARD OF THE SHAREHOLDERS OF THE SAI D INVESTING COMPANY GENERAL CAPITAL AND HOLDING COMPANY PVT LTD IS ENCL OSED AS PER PAGE 89 TO 119. (5) THE APPELLANT HAS TO SUBMIT THAT THE INVESTING COMPANY IS STILL HOLDING THE SHARES OF ASSESSEEE COMPANY. WE ARE ATTACHING HEREW ITH THE COPY OF THE DEMAT HOLDING STATEMENT DATED 04.09.2013. OF THE IN VESTING COMPANY I.E GENERAL CAPITAL AND HOLDING PVT LTD AS PER PAGE NO 120 TO 122. (6) THUS THE APPELLANT HAS TO SUBMIT THAT THE SAID PARTY INVESTING IN THE SHARES OF THE APPELLANT COMPANY IS ALSO A PRIVATE LIMITED COM PANY, ASSESSED TO INCOME TAX IN CIRCLE 4 WITH PAN NO AADCG1059M THE SAID COM PANY CONFIRMED BEFORE THE ASSESSING OFFICER THAT IT HAS INVESTED I N THE APPELLANT COMPANY BY ISSUING ACCOUNT PAYEE CHEQUE. THE BANK STATEMENT OF THIS COMPANY CLEARLY PROVES THAT THERE IS NO CASH DEPOSIT WHATSOEVER. TH E BANK STATEMENT OF THE APPELLANT COMPANY CLEARLY PROVES THAT THE ENTIRE AM OUNT HAS BEEN RECEIVED BY ACCOUNT PAYEE CHEQUE. (7) THE ASSESSING OFFICER HAS MADE THE ADDITIONS R ELYING ON VARIOUS DECISIONS AS STATED IN PARA-3.8 OF THE ORDER, WHICH ARE NOT AT A LL RELEVANT AND APPLICABLE TO THE FACTS OF THE CASE. THE APPELLANT IS ENCLOSING H EREWITH FULL DECISION OF ALL THE CASES CITED BY THE ASSESSING OFFICER AND SUBMITS HO W THEY ARE JUST NOT APPLICABLE. (I) HIGH COURT OF DELHI IN THE CASE OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. 342 /TR 769 (DELHI) IN THIS CASE THE ASSESSEE RECEIVED INFORMATION FROM INVESTIGATION WING THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIE S IN GARB OF SHARE APPLICATION MONIES. ON INQUIRY BY ISSUING SUMMONS TWO PERSONS, NAMELY, M AND R DID NOT APPEAR. M AND R HAD GIVEN A CCOMMODATION ENTRIES AND LATER ON BY AFFIDAVITS REFRACTED THE ST ATEMENTS. THE ASSESSING OFFICER DID NO ACCEPT THE AFFIDAVITS AND MADE THE ADDITIONS. BOTH MR. M AND R HAD APPEARED BEFORE A.D.I, AND ADM ITTED THAT THEY WERE ACTING AS ACCOMMODATION ENTRY PROVIDERS AND HA D GIVEN LIST OF 22 ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 4 - COMPANIES. IN VIEW OF THIS THE ADDITION SUSTAINED W AS CONFIRMED BY HON'BLE HIGH COURT. WHEREAS IN APPELLANT'S CASE THE DIRECTOR OF THE INV ESTING COMPANY, GENERAL CAPITAL AND HOLDING COMPANY PVT. LTD., APPE ARED IN PERSON AND CONFIRMED THE INVESTMENT GIVEN BY CHEQUE AND EX PLAINED THE SOURCE BY SHOWING BANK STATEMENT. (II) HIGH COURT OF DELHI IN THE CASE OF CIT VS. N.R. PORTFOLIO (P) LTD. 29 TAXMANN.COM 291 (DELHI) IN THIS CASE THE ASSESSEE COMPANY WAS A SHARE BROKE R AND CLAIMED THAT DURING THE YEAR IF RECEIVED CERTAIN AMOUNT FROM SEV EN SHARE APPLICANTS. ON INVESTIGATION IF WAS FOUND THAT THE SHARE APPLIC ATIONS WERE RECEIVED ON 18-2-2004 BUT SHARES WERE SENT TO PARTIES ONLY O N 15-6-2004. DESPITE ISSUE OF SUMMONS U/S. 131 PARTIES DID NOT A TTEND. THE ASSESSEE HAD NOT SHOWN ANY TRANSACTIONS IN STOCK AND ASSESSE E'S BANK ACCOUNT SHOWED LARGE AMOUNT OF CASH DEPOSITS AND WITHDRAWAL S. ON FACTS THE ADDITION IS SUSTAINED BY THE HIGH COURT. AS AGAINST THIS IN APPELLANT'S CASE THE INVESTING C OMPANY IMMEDIATELY APPEARED WITHOUT SUMMONS AND SHOWED ALL THE DEPOSIT S AND CREDITS IN BANK ACCOUNT. NOT A SINGLE CASH DEPOSIT OR CASH WIT HDRAWAL. THE ASSESSING OFFICER IS TOTALLY WRONG IN MENTIONING TH AT THERE ARE CASH WITHDRAWALS. IN FACT THE SOURCE OF FUND, IDENTIFY, GENUINENESS AND CREDITWORTHINESS WERE PROVED BY THE INVESTING COMPA NY. (III) HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. RUBY TRADERS & EXPORTERS LTD. 263 ITR 300 (CAL) HERE THE ASSESSING OFFICER DISBELIEVED THE GENUINEN ESS OF THE SUBSCRIPTION RECEIVED BY THE ASSESSEE. IN COURSE OF INQUIRY, NOTHING WAS DISCLOSED ABOUT IDENTITY OF THE SUBSCRIBERS. ADDITI ON MADE U/S. 68, WHICH TRIBUNAL DELETED ON THE GROUND THAT AMOUNTS W ERE RECEIVED BY ACCOUNT PAYEE CHEQUES. HIGH COURT CONFIRMED THE ADD ITION ON THE GROUND THAT IDENTIFY OF THE SUBSCRIBER AND GENUINEN ESS DID NOT GET PROVED. IN APPELLANT'S CASE IDENTITY, GENUINENESS AND CREDI TWORTHINESS ARE PROVED BEYOND DOUBT. (IV) ITAT DELHI BENCH 'C IN THE CASE OF ACIT VS. RAJEEV TANDON- 108 ITD 560 (DELHI). IN THIS CASE THE AMOUNT WAS RECEIVED BY THE ASSESSE E AS GIFT. THE ASSESSING OFFICER WANTED GENUINENESS AND CREDITWORT HINESS OF THE DONOUR TO MAKE SUCH BIG GIFT. BANK STATEMENT AND CO RROBORATIVE EVIDENCE OF DONOR TO PROVE CREDITWORTHINESS WAS NOT PROVED. IN ABSENCE OF ANY FINANCIAL CREDIBILITY OF THE GIFT, THE SAME WAS TREATED AS INCOME OF THE ASSESSEE. IN APPELLANT'S CASE THE APPELLANT IS A LISTED PUBLI C COMPANY AND HAD RECEIVED MORE THAN RS.54.67 CRORES AS PUBLIC ISSUE. THE INVESTING COMPANY, WHO HAD GIVEN RS.9,99,99,900/- HAD SHOWN A LL EVIDENCES OF ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 5 - GENUINENESS AND CREDITWORTHINESS WHICH COULD NOT BE DISPROVED BY THE ASSESSING OFFICER. (V) ITAT DELHI BENCH 'B' IN THE CASE OF MAGNET TRADING & CHIT FUND (P) LTD. VS. ACIT - 11 SOT 520 (DELHI) HERE THE ASSESSEE COMPANY RECEIVED RS. 11,75,000/- WHICH THE ASSESSING OFFICER ADDED AS UNEXPLAINED CASH CREDIT U/S. 68. THE COMPANY FAILED TO PROVE AND ESTABLISHED IDENTITY OF THE SUBSCRIBER, GENUINENESS AND CREDITWORTHINESS. THE ASSESSEE FAIL ED TO PROVIDE ANY INFORMATION REGARDING THE REAL OWNER OF THE SAME. A DDITION MADE BY THE ASSESSING OFFICER HELD JUSTIFIED. IN APPELLANT'S CASE THE APPELLANT IS A LISTED PUBLI C COMPANY AND HAD RECEIVED MORE THAN RS.54.67 CRORES AS PUBLIC ISSUE. THE INVESTING COMPANY, WHO HAD GIVEN RS.9,99,99,900/- HAD SHOWN A LL EVIDENCES OF GENUINENESS AND CREDITWORTHINESS WHICH COULD NOT BE DISPROVED BY THE ASSESSING OFFICER. (VI) ITAT DELHI BENCH 'A' IN THE CASE OF DCIT VS. SHRI SHYAM PULP & BOARD MILLS LTD. -17 SOT 13 (DELHI) THE ASSESSEE-COMPANY WHICH HAD RAISED FRESH UNSECUR ED LOANS, WAS ASKED TO GIVE NAMES AND ADDRESSES OF CREDITORS. THE ASSESSEE DID NOT GIVE. BEFORE C.I.T. (APPEALS) ASSESSEE FILED COPIES OF RATION CARDS, AFFIDAVITS AND PAPERS OF ALLEGED CREDITORS . IN REM AND REPORT THE ASSESSING OFFICER STATED THAT THESE DOCUMENTS WERE NOT SUFFICIENT TO PROVE GENUINENESS AND CREDITWORTHINESS. HOWEVER, CI T (APPEALS) DELETED THE ADDITION. HELD THE DELETION OF ADDITION BY CIT(APPEALS) IS NOT JUSTIFIED AS IDENTIFY OF LOAN CREDITORS AND CAP ACITY TO ADVANCE WERE NEVER PROVED. IN APPELLANT'S CASE THE APPELLANT IS A LISTED PUBLI C COMPANY AND HAD RECEIVED MORE THAN RS.54.67 CRORES AS PUBLIC ISSUE. THE INVESTING COMPANY, WHO HAD GIVEN RS.9,99,99,900/- HAD SHOWN A LL EVIDENCES OF GENUINENESS AND CREDITWORTHINESS WHICH COULD NOT BE DISPROVED BY THE ASSESSING OFFICER. (VII) HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. PRECISION FINANCE (P) LTD. 208 ITR 465 (CAL) HUGE CASH CREDITORS WERE FOUND IN ACCOUNTS OF ASSES SEE BEING A LOAN- FINANCING COMPANY. ASSESSEE GAVE ONLY INCOME TAX PA NO. AND FILE NO. OF CREDITORS. TRIBUNAL DELETED THE ADDITION ON THE GROUND THAT IDENTIFY OF CREDITORS WERE PROVED. HIGH COURT HELD THAT TRIBUNAL HAS FAILED TO FAKE IN TO ACCOUNT ALL THE THREE INGREDIE NTS, NAMELY; IDENTIFY, GENUINENESS AND CREDITWORTHINESS. IN APPELLANT'S CASE, AS STATED ABOVE A/I THE THREE INGREDIENTS ARE PROVED AND THE ASSESSING OFFICER HAS DISREGARDED THE SAME AND WRONG/Y INTERPRETED THAT THERE IS A PATTERN AND METHODOLOGY OF INFUSING CASH IN TO THE ACCOUNT AND WITHIN A SHORT WHILE AFTERWARD W ITHDRAWING THEM TO PAY FOR THE SHARES TO THE APPELLANT'S COMPANY. THES E ARE ABSOLUTELY INCORRECT AND UNTRUE STATEMENTS OF THE ASSESSING OF FICER AS CAN BE SEEN ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 6 - FROM THE BANK STATEMENT OF GENERAL CAPITAL AND HOLD ING PVT. LTD., COPIES OF WHICH ARE FILED. COPIES OF DECISIONS ARE ENCLOSED AS PER PAGE 123 TO 145. SUBMISSION: IT IS THEREFORE SUBMITTED THAT THE ASSESSING OFFICE R HAS MADE AN ADDITION, WHICH IS TOTALLY INCORRECT, ABSOLUTELY UNJUSTIFIED, ON WRONG FACTS, ON INCORRECT OBSERVATION AND FELLING UNTRUE THINGS ON PAPER. THE ASSESSEE HAS PR OVED IDENTIFY, GENUINENESS AND CREDITWORTHINESS, PARTICULARLY SO BECAUSE MR. VIRAL SHAH, WHO APPEARED ON BEHALF OF GENERAL CAPITAL & HOLDING PVT. LTD. IS MANAGING DIR ECTOR OF THE ASSESSEE COMPANY. GENERAL CAPITA/ & HOLDING PVT. LTD. HAS FILED ITS I NCOME TAX RETURNS AND BALANCE SHEETS WITH INCOME TAX AUTHORITIES AND COMPANY LAW AUTHORITIES AND THE SAME ARE FULLY APPROVED AND ACCEPTED. THE APPELLANT FINALLY RELIES ON THE VERY WELL ESTABLISHED AND ACCEPTED PRINCIPLE THAT IF THE ASSESSEE DISCHAR GES ITS ONUS AND PROVES (IN OUR CASE BEYOND DOUBT) THE IDENTITY, GENUINENESS AND CREDITW ORTHINESS, THEN ADDITION JUST CANNOT BE MADE U/S. 68 OF THE INCOME TAX ACT. (1) HIGH COURT OF GUJARAT IN THE CASE OF C/T VS. INDRAJIT SINGH SURI REPORTED IN 33 TAXMAN 281 (GUJARAT) (2) HIGH COURT OF MADHYA PRADESH IN THE CASE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD. 35 TAXMANN 444 (MP) (3) HIGH COURT OF DELHI IN THE CASE OF CIT VS. GANGESHWARI METAL (P) LTD. REPORTED IN 30 TAXMANN 328 (DELHI) (4) ITAT LUCKNOW BENCH IN THE CASE OF VISHNU JAISWAL VS. CIT REPORTED IN 23 TAXMANN 374 (LUCK)(TM) (5) ITAT MUMBAI BENCH IN THE CASE OF /TO VS. ANANT SHELTEES (P) LTD. REPORTED IN 20 TAXMANN 153 MUM) ' 2.3 DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE APPELLANT HAS RECEIVED AN AMOUNT OF RS.9,99,99,900/- ON ACCOUNT OF SHARE CAPITAL AND SH ARE PREMIUM FROM M/S GENERAL CAPITAL AND HOLDING CO. PVT. LTD, AHMEDABAD DURING THE YEAR. THE AO HELD THAT THE CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TION WERE NOT PROVED BY THE APPELLANT AND ACCORDINGLY MADE THE ADDITION UNDER S ECTION 68 OF THE ACT FOR THE ABOVE AMOUNT. THE APPELLANT HAS SUBMITTED THAT- ALL THE T HREE INGREDIENTS SUCH AS, CREDIT WORTHINESS, GENUINENESS AND THE IDENTITY OF THE SHA RE APPLICANT HAVE BEEN PROVED AND THEREFORE, THE ADDITION SHOULD NOT HAVE BEEN MADE B Y THE AO. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASS ESSMENT RECORDS WERE ALSO OBTAINED FROM AO AND THE SAME HAVE ALSO BEEN EXAMIN ED BY ME TO ASCERTAIN THE FACTS CORRECTLY. THE SHARE APPLICANT COMPANY, M/S GENERAL CAPITAL HAS BEEN DULY CONFIRMED THE FACT OF MAKING INVESTMENT IN THE APPELLANT COMP ANY. THE AMOUNTS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL. THE SAME ARE DULY REFLECTED IN THE ANNUAL ACCOUNTS OF THAT COMPANY. THE EXTRACTS OF THE BANK STATEMENT WHICH HAVE BEEN FILED BEFORE ME DURING THE COURSE OF APPELLATE PROCEEDINGS AS WELL AS BEFORE THE AO CLEARLY SHOW THAT THERE ARE NO CASH DEPOSITS AS MENTIONED BY THE AO I N THE ASSESSMENT ORDER. THE OBSERVATION OF THE AO THAT THE CASH HAS BEEN DEPOSI TED AND SUBSEQUENTLY CHEQUE WERE ISSUED IS FACTUALLY INCORRECT. THE DIRECTOR OF THE COMPANY ALSO ATTENDED BEFORE AO AND ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 7 - CONFIRMED THE FACT. IT IS ALSO NOTED THAT BOTH THE COMPANIES, THAT IS THE APPELLANT COMPANY AS WELL AS THE SHARE APPLICANT ARE MANAGED BY THE SAME GROUP OF PERSONS. HONOURABLE HIGH COURT OF GUJARAT HAS CONSISTENTLY H ELD THAT IF THE ASSESSEE HAS GIVEN SUFFICIENT PROOF IN RESPECT OF THE SHARE APPLICATION NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IF THE AO HAS ANY DOU BT ABOUT THE SOURCE OF THE SHARE APPLICANT FURTHER INVESTIGATION CAN BE MADE IN THE HANDS OF THE SHARE APPLICANT BUT NOT IN THE CASE OF THE APPELLANT. THE FOLLOWING RECENT DECISIONS ON THE ISSUE ARE WORTH MENTIONING: - '1. CIT VS. SHREE RAMA MULTI TECH LTD. [20I3] 34 TA XMANN.COM 177 (GUJARAT) SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDI T [SHARE APPLICATION MONEY]- ASSESSMENT YEAR 2005-06 - WHETHER WHERE ASSESSEE CO MPANY HAD FURNISHED COMPLETE DETAILS OF RECEIPT OF SHARE APPLICATION MONEY ALONG WITH SHARE APPLICATION FORMS, NAMES, ADDRESSES, PAN AND OTHER RELEVANT DETAILS OF SHARE APPLICANTS, SHARE APPLICATION MONEY COULD NOT BE ADDED AS CASH CREDIT UNDER SECTION 68 - HELD, YES [PARA 7][IN FAVOUR OF ASSESSEE] 2. CIT VS. HIMATSU BIMET LTD. [2011] 12 TAXMANN.COM 87 (GUJ) SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDI TS - ASSESSMENT YEAR 1997-98 - ASSESSEE WAS A COMPANY, ENGAGED IN MANUFACTURING OF BEAM/ESS STRIPS AND BEARINGS AT ITS FACTORY - IN ASSESSMENT PROCEEDINGS, ASSESSEE W AS ASKED TO GIVE DETAILS OF UNEXPLAINED SHARE APPLICATION MONEY - SINCE ASSESSE E WAS AVOIDING GIVING DETAILS WITHOUT REASONABLE CAUSE, ASSESSING OFFICER MADE AD DITION TO ASSESSEE'S INCOME BY WAY OF UNEXPLAINED SHARE APPLICATION MONEY - ON APP EAL, COMMISSIONER (APPEALS) UPHELD ORDER OF ASSESSING OFFICER - ON SECOND APPEA L. TRIBUNAL NOTICED THAT ASSESSEE HAD FILED CONFIRMATIONS FROM ALL SHARE APPLICANTS W ITH DETAILS OF SHARE CAPITAL PAID WHICH CONTAINED DETAILS SUCH AS FULL ADDRESSES, PER MANENT ACCOUNT NUMBERS AND TAX JURISDICTION OF DEPOSITORS - TRIBUNAL FURTHER NOTED THAT ALL PAYMENTS WERE RECEIVED BY CHEQUES AND WERE CREDITED IN BANK ACCOUNT OF ASSESS EE: SHARE APPLICATION FORMS CONTAINED ALL DETAILS OF DEPOSITORS; THEIR CONFIRMA TIONS WERE CLEAR WITH ALL ADDRESSES; AND THAT THEY WERE ON DEPARTMENTAL RECORDS AS TAXPA YERS - IN AFORESAID FACTUAL BACKGROUND, TRIBUNAL WAS OF VIEW THAT ASSESSEE HAD SUFFICIENTLY DISCHARGED ITS BURDEN OF EXPLAINING SOURCE OF THE SHARE APPLICATION MONEY ; ACCORDINGLY, IT DELETED IMPUGNED ADDITION - WHETHER, ON FACTS, IMPUGNED ORDER OF TRI BUNAL DID NOT SUFFER FROM ANY LEGAL INFIRMITY SO AS TO WARRANT INTERFERENCE - HELD, YES , IN FAVOUR OF ASSESSEE 3. CIT VS. AMBUJA GINNING PRESSING AND OIL CO. (P.) LTD. [2011] 332 ITR 434 (GUJ) SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDI TS - ASSESSMENT YEAR 1998-99 - WHETHER WHERE ASSESSEE RECEIVED SHARE CAPITAL AND D EPOSITS FROM ITS SHAREHOLDERS AND HAD ESTABLISHED IDENTITY AND CREDITWORTHINESS OF SH AREHOLDER AND DEPOSITORS BY FURNISHING COMPLETE PARTICULARS OF PAYMENTS LIKE CH EQUE NUMBERS AND DATE, EXTRACT OF BANK PASSBOOKS, EXPLANATION OF CREDITS APPEARING IN BANK PASSBOOK, IT COULD BE SAID THAT ASSESSEE HAD PROVED GENUINENESS OF TRANSACTION WARRANTING NO ADDITION UNDER SECTION 68 - HELD, YES [IN FAVOUR OF ASSESSEE]'. IN VIEW OF THE ABOVE FACTUAL CIRCUMSTANCES AND THE ABOVE MENTIONED JUDGEMENTS OF HONOURABLE GUJARAT HIGH COURT, IT IS HELD THAT THE APPELLANT COMPANY HAS CLEARLY EXPLAINED THE SOURCE OF SHARE APPLICATI ON MONEY RECEIVED BY IT DURING THE ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 8 - YEAR. NO ADDITION ON ACCOUNT OF THE FACT THAT THE S HARE APPLICANT MONEY HAD NO EMPLOYEES AND WAS BEING MANAGED FROM THE RESIDENTIA L PREMISES CAN BE MADE AS IT HAS SUFFICIENTLY SHOWN THAT IT HAS MADE INVESTMENT. IF THE AO HAD ANY DOUBTS ABOUT THE SOURCE OF INCOME OF THE SHARE APPLICANT COMPANY HE COULD HAVE MADE FURTHER ENQUIRIES IN RESPECT OF THAT COMPANY, IN CASE THE SAME WAS AS SESSED WITH HIM, OR BY PASSING THE INFORMATION TO THE AO, IN CASE IT WAS NOT ASSESSED WITH HIM. IT APPEARS THAT THE SHARE APPLICANT COMPANY IS NOT ASSESSED TO TAX WITH THE P RESENT A.O. THEREFORE, HE IS DIRECTED TO PASS THIS INFORMATION TO THE AO OF THE SHARE APP LICANT COMPANY FOR FURTHER EXAMINATION. THE AO HAS PLACED RELIANCE ON THE JUDGEMENTS OF HON OURABLE DELHI HIGH COURT IN VARIOUS CASES. HOWEVER, IT IS NOTED THAT THE FAC TS OF THE PRESENT CASE ARE DIFFERENT FROM THE CASES MENTIONED BY HIM. IN THE CASE OF NR PORTFOLIO PVT. LTD, SUPRA, THE SHARE APPLICANT DID NOT RESPOND TO SUMMONS BUT IN THE PRE SENT CASE THE DIRECTOR OF THE APPLICANT COMPANY ATTENDED AND GAVE THE DETAILS. IN THE CASE OF RAJEEV TANDON, SUPRA, THE ADDITION WAS UPHELD ON THE GROUND THAT NO OTHER CORROBORATIVE EVIDENCE WAS GIVEN. IN THE PRESENT CASE THE APPELLANT HAS GIVEN COPIES OF BANK ACCOUNT AS WELL AS THE AUDITED BALANCE SHEET OF THE SHARE APPLICANT COMPAN Y WHEREIN THE SHARE APPLICATION INVESTMENT HAS BEEN DULY REFLECTED. SIMILARLY THE O THER CASES ARE ALSO DIFFERENT TO THE PRESENT CASE AND ARE ACCORDINGLY RESPECTFULLY DISTI NGUISHED. IN VIEW OF THE ABOVE MENTIONED DISCUSSION THE ADDIT ION, MADE BY THE A.O IN RESPECT OF SHARE APPLICATION MONEY AND SHARE PREMIU M AMOUNTING TO RS. 9,99,99,900/- IS DIRECTED TO BE DELETED. 3. LEARNED CIT(DR) VEHEMENTLY SUBMITS DURING THE CO URSE OF HEARING THAT THE ASSESSING OFFICER HAD RIGHTLY MADE THE ADDITION IN QUESTION FOR THE REASON THAT THE SAME IS IN THE NATURE OF A SHAM TRANSACTION BEING A N ACCOMMODATION ENTRY. SHE SEEKS TO HIGHLIGHT THE FACT THAT THE GROUP INVESTOR IS A PAPER COMPANY BEING RUN FROM A HOUSE ONLY WITHOUT ANY EMPLOYEE. SHE THEN QUOTES ASSESSMENT FINDINGS THAT THE SHARE ALLOTMENTS IN QUESTION IS IN THE NATURE OF A PRIVATE PLACEMENT WHEREIN THE ASSESSEE HAS FAILED TO PROVE GENUINENESS AND CREDIT WORTHINESS SO AS TO GET OUT OF RIGOR OF SECTION 68 OF THE ACT. CASE LAW ACIT VS. NAKODA FASHION PVT. LTD. ITA NO. 1716/AHD/2012 DECIDED ON 18.08.2016 RESTORING A N ALLEGED IDENTICAL ADDITION IN CASE OF SHELL COMPANIES AS WELL AS HONBLE APEX COU RTS JUDGMENTS IN SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) IS ALSO REFERRED TO IN SUPPORT OF THE REVE NUES SOLE SUBSTANTIVE GROUND SEEKING TO REVIVE THE IMPUGNED ADDITION. 4. LEARNED AUTHORIZED REPRESENTATIVE ON THE OTHER H AND PLACES STRONG RELIANCE UPON THE CIT(A)S ABOVE EXTRACTED FINDINGS DELETING THE IMPUGNED ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 9 - ADDITION. HIS CASE IS THAT THE ASSESSEE HAS DULY P ROVED ALL THREE COMPONENTS OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE S HARE APPLICATION/PREMIUM IN QUESTION TO HAVE COME FROM THE GROUP ENTITY HEREINA BOVE ALONGWITH ALL OF ITS NECESSARY DETAILS. HE THEN SEEKS TO AFFIRM THE LOW ER APPELLATE FINDINGS DELETING THE IMPUGNED ADDITION. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL SUBMISSIONS. THERE IS NO DISPUTE THAT THE SOLE ISSUE BETWEEN THE PARTIES IS ABOUT CORRECTNESS OF THE IMPUGNED SECTION 68 ADDITION OF RS.9,99,99,900/- AS MADE IN THE COURSE OF ASSESSMENT AND DELETED IN THE LOWER APPELLATE PROCE EDINGS. THE REVENUES CASE IS THAT THE ASSESSING OFFICER HAD RIGHTLY DISPUTED THE GENUINENESS / CREDITWORTHINESS ELEMENT IN THE SAID SUM WHICH IS CONTESTED AT THE A SSESSEES BEHEST. WE PROCEED IN THIS BACKDROP OF FACTS TO NOTICE FIRST OF ALL THAT THE IDENTITY OF THE INVESTOR ENTITY M/S. GENERAL CAPITAL AND HOLDING COMPANY PVT. LTD. (SUPR A) IS NOT IN DISPUTE. AND ALSO THAT BOTH THE ASSESSEE AND THE SAID INVESTOR ENTITY ARE GROUP CONCERNS HAVING COMMON DIRECTORS. THE FIRST COMPONENT OF IDENTITY THEREFORE VIS--VIS SECTION 68 OF THE ACT DULY STANDS SATISFIED. IT IS EVIDENT TH EREAFTER THAT THE ASSESSEES RELEVANT PAPER BOOKS FORMING PART OF RECORD BEFORE US CONTAI N ALL NECESSARY DETAILS OF ITS COPY OF CERTIFICATE OF INCORPORATION ALONGWITH LIST ING NOTIFICATION/CIRCULAR OF NATIONAL STOCK EXCHANGE AND BOMBAY STOCK EXCHANGE, ITS RETURN AND COMPUTATION FOR THE IMPUGNED ASSESSMENT YEAR WITH TAX AUDIT REP ORT, AUDITORS REPORT, AUDITED ACCOUNTS, ITS REPLIES TO THE ASSESSING OFFICER DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, COPY OF LEDGER ACCOUNT OF THE INVESTOR ENTITY IN ITS BOOKS ALONGWITH BANK STATEMENT INDICATING THE MONEY IN QUESTION TO HAVE COME THROUGH BANKING CHANNEL, REPLY TO ASSESSING OFFICERS NOTICE ISSUED U/S.133(6) OF THE ACT DATED 09.01.2013 ALONGWITH NECESSARY CONSEQUENTIAL CORRES PONDENCE DATED 18.01.2013 AT PAGES 94 & 95, ITS LEDGER MAINTAINED IN INVESTOR EN TITYS BOOKS PAGE 96, BANK STATEMENT PAGE 97, SUMMONS ISSUED U/S.131(1A) TO IN VESTOR ENTITY AS WELL AS ITS DETAILS OF PAN CARD, AUDITED ACCOUNTS, INCOME TAX R ETURNS, CONFIRMATION, SHARE HOLDERS DETAILS, DEMAT STATEMENTS OF THE INVESTOR ENTITY, INSPECTORS INQUIRY REPORT, MR. VIRAL SHAHS STATEMENT (SUPRA) RECORDED DURING SCRUTINY IN SUPPORT OF THE ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 10 - IMPUGNED INVESTMENT; RESPECTIVELY, SUFFICIENTLY IND ICATE THAT THE ASSESSEE HAS BEEN ABLE TO SUPPORT ITS CASE OF HAVING RECEIVED THE INV ESTMENT IN QUESTION FROM THE GROUP ENTITY ONLY. THE REVENUES CASE IS THAT ALL THE SAID DETAILS FAILED TO PROVE GENUINENESS AND CREDITWORTHINESS ELEMENT. WE SEE N O REASON TO CONCUR WITH THIS ARGUMENT. MORE PARTICULARLY IN VIEW OF THE FACT TH AT IT IS THE ASSESSEES GROUP COMPANY HAVING COMMON DIRECTOR(S) WHO HAS MADE THE IMPUGNED INVESTMENT. LEARNED CIT(DR) AT THIS STAGE SOUGHT TO REITERATE A SSESSING OFFICERS CONCLUSION THAT THIS INVESTOR COMPANY HAS ADOPTED CASH DEPOSIT ROOT TO REINVEST THE SAME IN ASSESSEES STAKE HOLDING. WE DO NOT SEE ANY MATERI AL ON RECORD TO AGREE TO THE INSTANT PLEA. WE AFFORDED SUFFICIENT OPPORTUNITY T O THE REVENUE TO FILE ON RECORD ANY SUCH COGENT MATERIAL INDICATING M/S. GENERAL CA PITAL AND HOLDING COMPANY PVT. LTD. TO HAVE FIRST DEPOSITED CASH SUMS FOLLOWE D BY ITS REINVESTMENT IN ASSESSEES SHARE HOLDING. THE REVENUE HAS FAILED T O INDICATE ANY SUCH MATERIAL. 6. MS. VASUNDHRA UPMANYU AT THIS STAGE REITERATES T HE ABOVE CASE LAW IN REVENUES FAVOUR (SUPRA). WE FIND THAT THE ABOVE C O-ORDINATE BENCHS DECISION IN NAKODA FASHION PVT. LTD. (SUPRA) DEALS WITH CASE WH EREIN THE INVESTOR COMPANY(IES) HAD TURNED OUT TO BE SHELL ENTITY WITHOUT ANY GENUI NENESS/CREDITWORTHINESS. LATTER TWO CASE LAWS IN SUMATI DAYAL AND DURGA PRASAD MORE (SUPRA) SETTLE THE LAW REGARDING GENUINENESS OF AN EXPLANATION IN LIGHT OF HUMAN PROBABILITY AND APPRECIATION OF RELEVANT DETAILS ON RECORD. THE RE VENUE FAILS TO INDICATE ANY MIS- APPRECIATION OF EVIDENCE AT THE CIT(A)S BEHEST DUR ING THE COURSE OF LOWER APPELLATE PROCEEDINGS. WE RATHER FIND THAT THE CIT(A)S DIRE CTIONS TO THE ASSESSING OFFICER TO PASS THE RELEVANT INFORMATION TO ASSESSEES GROUP C ONCERNS ASSESSING OFFICER SUFFICIENTLY PROTECT REVENUES INTEREST SO FAR AS T HE IMPUGNED ADDITION IS CONCERNED. LEARNED CIT.D.RS. FURTHER RELIANCE ON ALL THE CASE LAWS DISCUSSED IN ASSESSMENT ORDER IS ALSO WITHOUT ANY SIGNIFICANCE SINCE THERE IS NO INSTANCE THEREIN DEALING WITH A GROUP ENTITY HAVING INVESTED IN CONCERNED ASSESSE ES STAKE HOLDING. THE SAID CASE LAW IS THEREFORE HELD TO BE NOT RELEVANT TO THE ISS UE IN HAND. WE CONCLUDE IN LIGHT OF ALL THESE FACTS AND CIRCUMSTANCES THAT THE ASSESSEE HAS BEEN ABLE TO PROVE ALL THREE COMPONENTS OF IDENTITY, GENUINENESS AND CREDITWORTH INESS OF IMPUGNED SHARE ITA NO. 102/AHD/14 [DCIT VS. GYSCOAL ALLOYS LTD. ] A.Y. 2010-11 - 11 - APPLICATION/PREMIUM AMOUNT OF RS.9,99,99,900/- TO H AVE COME FROM ITS GROUP COMPANY M/S. GENERAL CAPITAL AND HOLDING COMPANY PV T. LTD. COUPLED WITH THIS, WE MUST ALSO OBSERVE THAT IT HAS SUCCESSFULLY PRODU CED ITS COMMON DIRECTOR MR. SHAH (SUPRA) BEFORE THE ASSESSING OFFICER ALONGWITH ALL NECESSARY DETAILS AND CONFIRMATION DESPITE THE FACT THAT SUCH A PERSONAL APPEARANCE IS REQUIRED AS PER SECTION 68 (FIRST PROVISO) INSERTED BY THE FINANCE ACT, 2012 APPLICABLE W.E.F. 01.04.2013 ONLY WHEREAS WE ARE DEALING WITH ASSESSM ENT YEAR 2010-11. WE THUS AFFIRM THE CIT(A)S FINDINGS UNDER CHALLENGE. THE REVENUES SOLE SUBSTANTIVE GRIEVANCE IS ACCORDINGLY DECLINED. 7. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS T HE 06 TH DAY OF APRIL, 2018.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. G ODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 06/04/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0