M/S TAYANI HOLDINGS PVT LTD,MUMBAI vs. ITO WARD 8(3)(1), MUMBAI

Assessee by Ms. Sanjukta Samantara Revenue by Shri Sunil Agawane, Sr. DR Date of Hearing 30.01.2025 Date of Pronouncement 11.02.2025 आदेश / ORDER

PER SANDEEP GOSAIN, JM:

1. Addition u/s. 68 alleged unexplained credit on Capital account - Share Application Money - Rs. 18,25,000/- i) The Id. CIT(A) erred in confirming the addition u/s 68 on account of share application money without appreciating that the 2 M/s. Tayani Holdings Pvt Ltd, Mumbai funds raised were genuine where Appellant had duly discharged its primary onus and the parties having responded to the notices u/s.133(6); the deemed addition u/s. 68 out of Capital Account is uncalled for and the same may be deleted. ii) Without prejudice to above, as the parties are not related parties within the meaning of Section 40A(2)(b) the addition is uncalled for and the same may be deleted.

2. Levy of penal interest u/s. 234A, 234B and 234C The Appellant, on merits, denies its liability to penal interest.

2. The only effective ground raised by the assessee is with regard to challenging the orders of Ld. CIT(A) in confirming the additions U/s 68 of the Act on account of share application money received by the assessee .

3. In this regard Ld. AR appearing on behalf of assessee, reiterated the same arguments as were raised by her before the revenue authorities and also relied upon her written submissions. The contents of which are reproduced here in below 4.1. The Appellant, is a Pvt Ltd. Co It operates as a holding parent Co. to raise funds for its entire use by its subsidiary Co and it was on the lookout for capital funding from its parties [who are not parties within the meaning of of Sec 40(A)(2)(b)]. 4.2 In pursuance to its efforts, it succeeded to raise the capital funds from four following parties by way of shares application money.

3 M/s. Tayani Holdings Pvt Ltd, Mumbai Parties Names AMT 133(6) confirmations PAN notice Pages

1. Narshi Mulji Shah HUF- Rs.9,50,000/-, Yes- 21, AACHN6126L II Kalpana K. Gala Rs.4,25,000/-, Yes- 23 AJZPG1080E III Gunvanti V. Gala Rs.3,00,000/-, Yes- 22 ABJPG3211H VI Form metal press P. Ltd Rs.1,50,000/-, Yes- 20 AAACF0676J Total Rs. 18,25,000/- Asst. Order Pg. 2 4.3 To three parties; shares at par were allotted in subsequent years, ROC returns filed by one party and to last party its share application money is reflecting in Balance Sheet as pending action.

4.4 The Appellant wholeheartedly and with utmost co-operation had attempted to discharge its primary onus except it failed to produce the parties to whom the Assessing Officer's had issued notices u/s. 133(6) and the parties had responded directly to the Assessing Officer. All except one are not related parties.

4.5 Sequence of Events as to Return and Assessment (A.Y 2015- 16)

1. Original Return - Filed on 17.10.2016 Declared income Rs NIL 2. Intimation u/s. 143(1)- Accepting the Return 3 Notice u/s 143(2)- Issued on 13.07.2017

4.6 As immediate sources had been provided and all are bank entries, explanation needs to be appreciated. Kindly appreciate the merits we rely upon:

159 ITR 78 (SC) CIT Vs. Orissa Corporation Ltd. 256 ITR 360 (Guj) Dy. CIT Vs. Rohini Builders 4 M/s. Tayani Holdings Pvt Ltd, Mumbai CIT vs Gagandeep Infrastructure Pvt. Ltd. 317 ITR 218 (BOM)

Parties being unknown parties and having all assessed to tax and having directly replied to the Assessing Officer, source of the source are explained by the Appellant.

If further doubt raised on the funding parties, the Assessing Officer can or should proceed against those parties to whom doubts are raised about their credentials.

As held in:

(2023) 156 taxmann.com 432 (Guj) Pr. CIT vs. Siyaram Metals Udyog Pvt. Ltd. Held, proviso of Sec. 68 could not invoked more particularly when addition was made on account of share application money investors whose identity, creditworthiness and genuineness was proved by assessee.

The above view again supported by (2023) 154 taxmann.com 593 (Kar.) Pr. CIT vs. Khayati Industries Pvt. Ltd. 5 GROUND NO. 1 Addition u/s. 68 Rs.18,25,000/- 5.1 Share application money raised from 4 parties Primary onus discharged.

Parties Names AMT 133(6) confirmations PAN notice Pages

P/B page No. 20-33 Sec. 133(6) notices sent -parties replied directly to the Assessing Officer. Parties could not be produced which was beyond the control of the Appellant, On the impossibility of performance we rely upon.

(1996) 56 ITD164 (Hyd) Asst. CIT Vs. Jindal irrigation System Ltd. Impossibility of performance Held, "Law does not compel the person to do the impossible when the obligation is implied by law, impossibility of performance is a good excuse"

No parties are related within the meaning of Sec.40(A)(2)(b).

5.3 Shares were allotted to three parties in later years and to one party, the amount was shown in Balance Sheet pending adjustment. Case Analysis 10 Chart explaining allotment 36-37 5.4 The Appellant discharged its primary onus cast u/s 68 with the source, identity, and creditworthiness of transactions. 20-33 Subsequent years balances accepted in Capital A/c. with the allotment of shares to three parties.

6 Per the A/O: Asst. Order Page11-12 Para 3.3 Assessee has taken bogus shares application money form 4 parties for Rs. 18,25,000/- In counter:

6 M/s. Tayani Holdings Pvt Ltd, Mumbai The Assesse has raised genuine share application money for Rs. 18,25,000/- from four parties who are existing with there identity and the transactions are genuine.

Primary onus discharged and parties had responded directly to Assessing Officer against notices u/s 133(6)

Hence addition of unexplained cash credit u/s. 68 in the hand of Appellant is not justified.

8.1 Genuine share capital funds by way of shares application money were raised against which the Appellant had duly discharged its primary onus. All parties are existing and they regularly file their Returns under the Income-tax Act, 1961, Parties are not related within the meaning of Sec.40A(2)(b)

PAN numbers with addresses provided. All parties replied directly against notices u/s. 133(6). Confirmation and ITR copies, Bank statements provided.

Everything ignored by lower authorities. 20-33 8.2 Payments given by share applicants are all by cheques. Returns are regularly filed with the