M/S KAMAL RAYON PVT. LTD.,SURAT vs. ITO, WARD 1(1)(3), SURAT

आदेश /O R D E R

PER O. P. MEENA, ACCOUTANT MEMBER: 1. This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-1, Surat (‘CIT(A)’ for short) dated 20.02.2018 for the AY 2012-13

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 2 of 24

which in turn has arisen from the order dated 20.03.2015

passed by the Income-tax Officer, Ward-1(1)(3), Surat (in short

the AO) under section 143(3) of the Income Tax Act, 1961 (for

short ‘the Act’).

“1) Ground No.1 states that the learned CIT(A) has erred in circumstances of the case by confirming addition of Rs.1,44,15,000/- u/s. 68 without considering the submission in spite of the fact that the appellant has properly adhered to every notice and directions of learned AO and has fully co-operated during the assessment proceedings as also remand proceedings to convincingly and evidentially prove the genuineness of the investors, books of accounts and transactions of the appellant company.

2) Ground No.2 states that the learned CIT(A) has erred in law and facts of the case by confirming the action of AO of considering share investment made by individual shareholders in the appellant company as income of the appellant on the false basis that the creditworthiness and genuineness of transaction in respect of all the investors is not established. Sir, as per various jurisdictional judgements, share capital cannot be added to the income of the appellant if the appellant has provided full information of identity of the share investors along with their genuineness and capacity and also complied all legal formalities and accordingly, the AO as well as the CIT(A) have completely erred in fact and in law on this respect.

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 3 of 24

3) Ground No.3 states that the learned CIT(A) has erred in law and facts by relying on irrelevant case laws while passing his order since the facts of the appellant are completely different and unlike the quoted cases where the identity of the investors was not established, in the case of the appellant, the identity, capacity and confirmation of investors, all are clearly established on record. All the investors are IT assesses themselves and the transactions are all done through bank accounts. There are no cash deposits in the bank accounts corresponding to the investments and the AO has not brought on record a single evidence to prove that the investors are not genuine or that cash has been returned to the investors against the amount invested by them through bank. Moreover, the investors have stated on oath that they have invested the amounts.

4) Ground No.4 stated that the learned CIT(A) has erred in law and on facts by confirming the action of the AO in disallowing share investment amount as unexplained cash credit u/s. 68 of the Act which is not in line with accounting standards or business practice since the same can never be part of taxable income.

5) Ground No.5 states that the learned CIT(A) has erred in law and on facts in confirming the action of AO on assumption that investor parties are not genuine parties without appreciating that almost all investor parties have personally attended before the AO, either during the assessment proceedings or subsequently when summons issued u/s. 131 of the Act and have confirmed that they have invested in the appellant company. Further, they have also provided their copies of ITR Acknowledgements, PAN card, computation of Tax, Balance sheets, bank passbooks / statements etc. and which were duly acknowledged but which have been conveniently omitted to be mentioned by the CIT(A) in his order. Further learned

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 4 of 24

CIT(A) failed to rebut appellant’s counter reply submitted in response to remand report submitted by learned AO. Accordingly, the learned CIT(A) framed order with prejudicial mind.

6) Ground No.6 states that the learned CIT(A) has erred in law and facts of the case in confirming the action of AO of deliberately omitting to record the facts as stated by the investors in the statements recorded u/s. 131 of the Act and during further enquiry made u/s. 250(4) of the Act.

7) Ground No.7 states that the learned CIT(A) has erred in law and facts of the case in even confirming the action of AO of additions for share investments received from the promoter family members also even though the identity, genuineness and capacity of all the family members was established beyond doubt.”

against confirmation of addition of Rs.1,44,15,000/- made on

account of share capital u/s.68 of the Act. Hence, these are

being considered together.

authorities are that the assessee has received share application

money of Rs.1,44,15,000/- from 13 parties as detailed in the

table below :

Sr. No. Name of Investor Amount (Rs.) 1 Chandulal Bhikhabhai Parekh 600000 2 Asmitaben Dipakbhai Rajpara 450000

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 5 of 24

3 Rekhaben Bharatbhai Gajera 450000 4 Mamtaben Jaysukhbhai Sheladiya 450000 5 Pinal Chandulal Parekh 600000 6 Naynaben Bharatbhai Tagadiya 500000 7 Vaishaliben Mukeshbhai Malani 500000 8 Madhvi Hitesh Shah 410000 9 Nilam Diam (Himmatbhai K. Savlia) 550000 10 Sejalben Vishlbhai Gondaliya 415000 11 Vallabhbhai Manjibhai Savaliya 575000 12 Sunitaben Nareshbhai Savaliya 450000 13 Jayshriben Bharatbhai Kachhadiya 350000 14 Shilpaben Tusharbhai Sojitra 300000 15 Nitaben Nareshbhai Savaliya 425000 16 Amitbhai Jagdishbhai Shah 400000 17 Alkaben Jerambhai Limbasiya 325000 18 Dayaben Ghanshyambhai Malani 250000 19 Urmilaben Shaileshbhai Shah 400000 20 Bina Jaysukhbhai Kachhadiya 375000 21 Paritaben Vipulbhai Limbani 360000 22 Vijaykumar Himmatbhai Sawaliya 265000 23 Hasmukh Raj J Ramani HUF 300000 24 Narendra S Rajpara HUF 350000 25 Milan Saree (Prop. Sudhir Kumar 1140000 Baral) 26 Kamal Agency (knp) (Prop. Jitendra 290000 Jain) 27 Pawankumar Jain (HUF) 285000 28 Sandeep Agency (Prop. Sandeep Jain) 190000 29 Vidya Kant Shukla 145000 30 Harakchand Jain (HUF) (Meera 640000 Traders) 31 Kamal Fabrics (Jitendra Jain -HUF) 1725000 Total: 14415000

genuineness of the transaction, notices u/s. 133(6) of the Act

was issued to various parties. However, following six parties

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 6 of 24

viz. (1) Smt. Urmilaben Shaileshbhai Shah (4 lac share capital

money)(Rs.1.72 lacs), (2) Smt. Shilpaben Tusharbhai Sojitra (3

lac share capital money)( 1.83 lacs income ) (3) Smt. Mamtaben

Jaysukhbhai Sheladiya (Rs.4 lacs share application money and

Rs.1.83 lacs income) (4) Smt. Vaishaliben Mukeshbhai Malani

(Rs.5 lacs share application money and Rs.1.76 lacs income)

(5) Nilam Diam (Himmatbhai K. Savlia) (Rs.5.5 lacs share

application money and Rs.1.76 lacs income)(6) Vijaykumar

Himmatbhai Sawaliya (Rs.2.65 lacs share application money

and Rs.1.55 lacs income) have not submitted any reply.

Therefore, the assessee was asked to produce these parties.

However, the assessee could not produce these parties before

the A.O. but file copy of acknowledgment of their return of

income, computation of income, balance sheet, profit and loss

account, capital account and bank account statement. On

verification of these documents, the A.O. noted that the bank

account shows that same amount was deposited just one day

before the issuance of cheque for investment with the assessee

company. Therefore, the A.O. treated the same as unexplained

as the creditworthiness and genuineness of transaction was not

proved.

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 7 of 24

the ten parties out of which summons could not be served in

the case of Shri Hasmukhraj J. Ramani (HUF). However,

remaining nine parties have appeared before the A.O. and their

statement was recorded u/s. 131 of the Act, wherein eight

women have stated that they were not aware of any investment

made in the shares. Therefore, considering the details from

computation of income, balance sheet, profit and loss account

capital account, bank account, the A.O. held that the same is

not acceptable as the bank account shows deposit before

issuance of cheques in investment. Therefore, the A.O. treated

the investment made by the parties as unexplained.

which are at Kanpur to whom notice u/s. 133(6) of Act was

issued. In response to which they have submitted the copies of

return of income, balance sheet and bank account. However,

the A.O. noted that the details / documents shows that they

haver made huge investment with the assessee company but

the creditworthiness was not proved, hence treated as

unexplained.

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have not submitted the details / documents called for u/s.

133(6) of the Act hence, their identity, creditworthiness and

genuineness of transaction is not proved. Considering these

facts, the A.O. treated the amount of Rs.1,44,15,000/- as

unexplained cash credit u/s.68 of the Act and added the same

to the total income of the assessee.

CIT(A) wherein the detailed submissions were made before the

CIT(A). The assessee has submitted the copy of minutes of

meeting of Board of Director, identity, creditworthiness and

genuineness of the transaction. Further, the application of

share application form was confirmed on 01.01.2012,

12.01.2012 and 08.02.2012 and copies of application was duly

submitted before the CIT(A), it was also claimed that all the

investors with the appellant company are friends and relatives.

The issue of share and premium are backed by valuation report

duly qualified chartered accountant and all the requirement

were submitted before (ROC). Further, the auditors of the

company have certified the authenticity of the transactions by

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signing on the audit report, it was further submitted that the

appellant delivered the share certificate and there is no share

certificate. The brief AGM and shareholders concerning AGM-9

was submitted. Further, with reference to notice

dtd.04.08.2017 issued by the CIT (A)-I u/s. 250(4) out of

remaining 22 shareholders, 18 investors were appeared before

the ITO, Ward.1 (3) who had recorded the statement u/s. 131

of the Act. Further, the amount invested in appellant company

is investment of all the 22 investors. The A.O. has also

furnished remand report in respect of 18 persons of genuine

party which is reproduced by the A.O. in the para 6.1.11 of

appellate order of the CIT (A). However, the CIT (A) was of the

view that 18 investors appeared for examination did not

produce the required document i.e. copy of three years return

of income and complete bank statement of last three years.

The bank account reflecting that money was credited in his

account on the same day or next day through transfer

/withdrawal / RTGs transfer. Therefore, onus lies u/s. 68 has

not been discharged, therefore, CIT (A) observed that all the

papers are manufactured at the behest of the appellant and no

real transaction. Therefore, CIT(A) held that it is the case of

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providing accommodation entry. The CIT (A) observed that the

amount claimed to be received by the appellant do not in any

way appear to be genuine share capital. They are nothing but

arranged affairs being pre-ordained series of transactions and

tax evasion device where money laundering transactions have

been camouflaged as share capital. Hence, no credence can be

placed on the copies of various documents filed to support such

claim of share capital contribution and accordingly addition

made by the A.O. is confirmed.

Tribunal. The learned counsel for the assessee submitted that

the assessee’s company was established in 2008 and carried on

business of manufacturing, buying, selling, importing and

exporting and dealing in textiles, cotton, silk art silk, rayon,

nylon, synthetic fibers, staple fibers, polyester, worsted, wool,

hemp and other fiber materials, yarn cloth, linen rayon and

other goods or merchandise whether textile felted, netted or

looped. The assessee company has submitted acknowledgment

of copy of return of income, balance sheet, capital account,

bank statement, share application amount for all the 31

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 11 of 24

investors before the A.O. and during the assessment

proceedings as well as in the appellate proceedings. During the

course of assessment proceedings, the A.O. has issued

summons to ten parties out of which nine have appeared before

him and their statement have been recorded. Out of 22 parties,

remaining 18 parties were appeared before the A.O. during the

remand proceedings and their statements were duly recorded

by the A. O. Thus, the facts remains that almost of the

investors have appeared before the AO and have confirmed the

investment. Thus, their identity, capacity and genuineness of

the transaction is established. The statement on oath was

recorded which with evidences in support of the transaction.

The A.O. has issued summons to nine persons who have not

only appeared during the assessment proceedings but this

statement on oath has been recorded. With regard to the

remaining 22 persons, summons to 18 persons served and they

have appeared. Thus, 27 out of 31 persons appeared before the

A.O. and their statement was recorded u/s. 131 of the Act.

However, remaining four investors could not produce before the

A.O. As Shri Chandulal Bhikhabhai Parekh has unfortunately

passed away, Shri Chandulal Parekh could not attended along

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with bank statement before the A.O. and other investors Smita

D. Rajpara appeared before A.O. with her three months old sick

child. However, her statement was not recorded by the AO

inspite of request, since the officer preoccupied with other some

other work. (4) Investor Sejal Shah, Gondaliya had shifted to

Amroli and it was practically impossible for her to appear

before the ITO in Surat, as her relative would not permit the

same. However, the learned counsel for the assessee submitted

that all the persons have replied to the notice issued u/s.

133(6) and filed copy of acknowledgement of return of income

along with computation of income of A.Y.2012-13, copy of

balance sheet, profit and loss account, capital account and

relevant bank statement and share certificate letter. The

learned counsel further cited copy of statement on oath

recorded from the persons who appeared before the A.O. which

were placed in the paper book of the assessee. The learned A.R.

also rely the form of application, share certificate, and in some

cases Aadhar card of the parties concerned. It was further

submitted that numerous judicial pronouncement issued to

share at premium within law and acceptable and no doubt. It

was further contended that there is no cash deposit in the bank

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 13 of 24

account of the investor before issue of cheque to the assessee

company. Therefore, it was contended that creditworthiness

and genuineness of transaction has been proved by various

documents and by appearing before the A.O. in person.

Therefore, the A.O. was not justified in making the addition

u/s.68 of the Act. The learned A.R. further placed reliance in

the case of DCIT Vs Rohini Builders, [2002] -256 ITR 306

(Gujarat) wherein it was held that the Tribunal deleted the

addition u/s. 68 accepting the genuineness of loan which were

received and repaid by the assessee by account payee cheques

establish the creditworthiness by giving their complete address,

GIR No, PAN along with copies of assessment order where

appeal u/s. 250A was dismissed. The SLP filed by the

Department against the said decision is also dismissed by

Hon’ble. S.C. reported in [2002] 254-ITR (SC) 275. The learned

counsel further placed reliance in the case of CIT vs. Ranchhod

Jivanbhai Nakhava, [2012] [21 Taxmann.com 159] (Guj.)(HC)

wherein the Hon’ble Court has held that where the lenders are

assessed to income tax, assessee who is PAN have been

disclosed. The assessee has further proved genuineness of the

transaction when such fact from Income-tax return of lenders

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is established. The learned counsel further cited number of

case laws CIT Vs. Value Capital Services Pvt. Ltd. [221 CTR

0511] emphasize in which it was observed that once addition of

which material which would prima facie burden of the assessee

of shareholder, genuineness of the transactions and

creditworthiness of shareholder, thereafter, in the case

discharge for its number of credit evidence support to make for

the assessee and fasten assessee which such liability u/s. 68 of

the Act. The A.O. failed to carry logical end by further

investigation, addition u/s.68 was not established.

Representative submitted that turnover of the investor was not

up to the mark and they have very low income. Share

applicants have open their bank account, particular period.

Though the persons are friends and relatives of the assessee

company. The learned SR.DR referred the page 21 to 31 of the

appellate order wherein the reply of the assessee remand report

has been reproduced and submitted that the share applicants

were not having sufficient income and therefore, their

creditworthiness and genuineness of person is not proved.

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 15 of 24

Hence, the A.O. and CIT (A) were justified in making the

addition u/s. 68 of the Act.

submitted that the CIT (A) has not considered the remand

report and not produce the reply of the assessee filed by the

assessee while page No. 31 to 50 submitted of paper book

submitted by the assessee. Further, only seven persons have

open bank account with Akhandanand Co.op. Bank Ltd. out of

22 investors and that too is merely seven account, there is no

logic as to why bank in Katargam, Varachha area and the

bank accounts are open only by the KYC facility by the RBI. It

was contended that identity is proved this account would be

taken against the shareholders no against the assessee. The

assessee company has proved the source of investor and all the

investment paid by account payee cheque. The learned counsel

placing reliance in the case of Metachem Industries 245 ITR

0160(MP) and Sarogi Credit Corporation vs. CIT [103 ITR 0344]

(Patna) and Lovely Exports Pvt. Ltd. 216 CTR 0195 (SC)

wherein it was held that identity of shareholder for credit this

not account can be made in the case of the assessee

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considering in the hands of investor. The learned counsel

further cited the decision in the case of CIT vs. Steller

Investment Ltd. [ 251 ITR 0263 ] (SC) , CIT vs. Lovely Exports

Pvt. Ltd. [216 CTR 0195 ] (SC) and Hindustan Inks & Resins

Ltd. vs. Deputy Commissioner of Income-tax [ 60 DTR 0018 ]

(Guj) (HC) wherein it was observed the learned counsel further

placed reliance in the case of CIT Vs. Himatsu Bimet Ltd. [12

taxmann.com 87] (Guj)(HC) wherein the assessee has filed

confirmation from all share applicants, details of share, full

address, PAN No. and tax jurisdiction of depositors- Further,

the Tribunal noted that all the payments were received by

cheques and were credited in bank account of assessee; share

application forms contained all details of depositors, their

confirmations were clear with all addresses and that they were

on departmental records as taxpayers. 13. The learned counsel for the assessee further, relied on the

decision of Hon`ble Supreme Court has dismissed the SLP

against the order of Delhi High Court order in the case of Pr.

CIT v. Hi- Tech Residency Pvt. Ltd. [2018] 96 taxmann.com 402

((Delhi) in the case of Pr. CIT -4 v. Hi-Tech Residency (P) Ltd.

reported in [2018] 96 taxmann.com 403 (SC) of which head

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 17 of 24

note reads as follows :Section 68 of the Income-tax Act,

1961 - Cash credit (Share capital) - Assessment year 2009-

10 - Section 68 addition was made in hands of assessee on

ground that assessee company was not able to produce

any of director, shareholders or principal officer of

companies to whom shares were allotted and lenders from

whom unsecured loans was taken - High Court deleted

said addition holding that assessee had discharged its

onus of establishing identity, genuineness and

creditworthiness of both investors as well as lenders -

Whether, on facts, SLP against said order was to be

dismissed - Held, yes [Paras 4 to 6] [In favour of assessee] 14. In aforesaid factual background, Tribunal was of view

that assessee had sufficiently discharged its burden of

explaining source of share application money; accordingly, it

deleted impugned addition whether on facts, impugned order of

Tribunal did not suffer from any legal infirmity so as to warrant

interference held, Yes. Therefore, it was contended that the

order of the A.O. may be set aside and the addition may be

deleted.

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submissions and perused the material available on record. We

find that out of 31 investors, 27 investors appeared before the

A.O. and their statement u/s. 131 of the Act has been duly

recorded by the A.O. during the course of assessment / remand

proceedings. The remaining four investors could not attended

as one of the investor has died and his son preoccupied.

Further, one investor being lady has shifted to Amreli and one

investor Asmita D. Rajpara claimed to have appeared before the

A.O. on 04.09.2017 with her three months sick child. However,

her statement could not be recorded, as the A.O. was to be

occupied with some other work. Thus, four investors could not

be attended before the A.O. for aforesaid reasons. Since, 271

investors have attended and filed copy of acknowledgement of

return of income, computation of income, balance, their bank

account, share application form, therefore, their identity has

been duly established. The A.O. has also not doubted on their

creditworthiness, but doubted on genuineness of transactions,

we find that the income disclosed by the investors in their

return of income was between the ranges of Rs.1.52 to Rs.2

lacs. It is further noticed that all the investment by the

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concerned parties has been made by account payee cheque and

there is no cash deposit before issue of cheque in their bank

account. The assessee has established that it has taken money

by way of account payee cheque from the share applicant who

are all income tax assesses, whose PAN have been disclosed

and the transactions of investment of share application money

has been disclosed in their Income-tax return. These

investments have been duly appeared before the Assessing

Officer and furnished documentary evidences then the A.O. in

question has no justification to disbelieve the transaction

reflected by the share applicant. Therefore, we are of the view

that the A.O. has disproved the entire share applicant, merely,

on presumption basis that we find share applications are

friends and relatives of the assessee have appeared before the

AO and their statement o oath u/s.131 of the Act was recorded.

In some of the cases, source of explanation by the assessee as

replied furnished during the remand proceedings. Therefore,

identity of the share applicant has been established then there

is no case of the A.O. that the assessee has failed to prove

source of such investment, the same cannot be added in the

case of the assessee as held in Gujarat High Court in the case

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 20 of 24

of Hindustan Inks & Resins Ltd. Vs. DCIT wherein it was 7,8

and 9 as under :

“From the concurrent findings recorded by the authorities below, it is apparent that none of the parties have recorded any findings to the effect that the identity of the depositors had not been established by the assessee. The case of the respondent is that the assessee has failed to explain the source of such cash as well as creditworthiness of the depositors. It is not the case of the Revenue that the subscribers are bogus. The case of the Revenue is that the source of such cash as well as creditworthiness of the depositors has not been explained. In the circumstances, the Department is free to proceed to reopen the individual assessments of the depositors named by the assessee, however, under no circumstances, can the amount of share capital be regarded as the undisclosed income of the assessee. The Tribunal was therefore not justified in confirming the addition of Rs.4,30,760 on account of unexplained cash credits in the case of the assessee.- CIT vs. Lovely Exports (P) Ltd. (2008) , 216 CTR (SC) 195: (2008) 6 DTR (SC) 308; CIT VS. Steller Investment Ltd. (1991) 99 CTR (Del) 40: (1991) 192 ITR 287 (Del) and CIT vs. Steller Investment Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC) relied on.” 16. We further find support from the order of Hon’ble Gujarat

High Court in the case of CIT vs. Himatsu Bimet Ltd. (supra)

wherein it was held that Similarly, the Hon’ble M.P. High Court

– CIT vs. STL Extrusion Pvt. Ltd. [333 ITR 0269] has held that

where the assessee’s age address, date of filing of application,

number of share, are made as a table then there are no

justification for making the addition u/s. 68 of the Act.

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Similarly, Hon’ble Delhi High Court – CIT vs. Kamdhenu Steel

& Alloys Ltd. & Ors. [ 361 ITR 0220 ] (supra) has held that one

adequate material is given, which is prima facie discharge the

burden of identity of the shareholder, genuineness of the

transaction and creditworthiness in such evidence is to be

discarded it has created evidence, the Revenue is supported to

make through probe before it could nail the assessee and

fasten the assessee with such liability u/s. 68, A.O. failed to

carry out his suspicion to logical conclusion by further

investigation, addition u/s.68 and therefore addition u/s.68 is

not sustainable. In the present case, the assessee has

furnished all the documentary evidence in form of return, copy

of capital account, bank statement, concerned identity and

investor even appeared in person before the AO, therefore, the

A.O. cannot discard these evidences without making further

investigation to establish that it was a created evidence. In

case of Sarogi Credit Corporation vs. CIT [ 103 ITR 0344 ]

(Patna) (HC) it was held that once the identity of third party

credit established before the ITO and the creditors have pledged

their oath that they have the advanced the amount in question

to the assessee, the burden immediately shifts on to the

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department to show as to why the assessee’s case could not be

accepted and as to why it must be held that the entry, though

purporting to be in the name of a third party, still represented

the income of the assessee from a suppressed sources.

H Enterprise [2016] [72 taxmann.com 87] held all relevant

details customers who came booking advance. He could have

paid to the assessee builder if some of them did not

nongenuine. Similarly, the learned counsel CIT Vs. Rohini

Builders (supra) of which SLP has also been dismissed it was

question of law where that Tribunal having deleted the addition

u/s. 68 of the Act by accepting genuineness of the loan and

was received and repaid by the assessee by account payee

cheque establish the identity of creditworthiness, complete

address, GIT No. / PAN, confirmation along with copy of

assessment order available.

SLP against the order of Delhi High Court order in the case of

Pr. CIT v. Hi- Tech Residency Pvt. Ltd. [2018] 96 taxmann.com

402 ((Delhi) in the case of Pr. CIT -4 v. Hi-Tech Residency (P)

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 23 of 24

Ltd. reported in [2018] 96 taxmann.com 403 (SC) of which

head note reads as follows :Sectio

n 68 of the Income-tax Act, 1961 - Cash credit (Share

capital) - Assessment year 2009-10 - Section 68 addition

was made in hands of assessee on ground that assessee

company was not able to produce any of director,

shareholders or principal officer of companies to whom

shares were allotted and lenders from whom unsecured

loans was taken - High Court deleted said addition

holding that assessee had discharged its onus of

establishing identity, genuineness and creditworthiness of

both investors as well as lenders - Whether, on facts, SLP

against said order was to be dismissed - Held, yes [Paras 4

to 6] [In favour of assessee]

furnished by the assessee and transaction account payee

cheque and investors have been appeared before the A.O. and

whose complete address, copy of acknowledgement of return

and balance sheet have been filed and the transactions

reflected in the balance sheet, therefore, the addition made by

M/s. Kamal Rayon Pvt. Ltd. Vs ITO, Ward.1((1)(3)/I.T.A. No. 161/SRT/2018/12-13 Page 24 of 24

the A.O. is not sustainable in law in the light of above documentary evidences and where the assessee has provided all the details of investors and who have personally appeared before the A.O. the addition made was not justified in law. In the circumstances, we are of the considered opinion that the addition of Rs.1,44,15,000/- is not sustainable in law and same is directed to be deleted. Accordingly, all the above grounds of appeal of the assessee are allowed.

Sd/- Sd/- (सी.एम.गग� /C.M. GARG) (ओ.पी.मीना/O.P.MEENA) �या�यकसद�यतथा/JUDICIAL MEMBER लेखासद�यकेसम� /ACCOUNTANT MEMBER सुरत/ Surat, �दनांक Dated: 4th October,2018/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat