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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
This appeal of Revenue is arising out of the order of the Commissioner of Income Tax (Appeals)]-8, Mumbai [in short CIT(A)], in appeal No. CIT(A)-8/IT-240/15-16 vide dated 31.01.2017. The Assessment was framed by the Income Tax Officer, Ward 3(2)(1), Mumbai (in short ITO/ AO) for the A.Y. 2012-13 vide order dated 26.03.2015 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by the AO under section 68 of the Act on account of receipt of share application money and share premium amounting to ₹ 1 crore by treating the same as unexplained credit. For this Revenue has raised the following three effective grounds: -
"1. Whether on the facts and circumstances and in law, the Ld. CIT(A) was right in deleting the addition of ₹ 1,00,00,000/- made under section 68 of the I.T. Act, 1961 on account of receipt of share application money and share premium without appreciating the fact that the assessee had failed to establish the genuineness and creditworthiness of the investment made by the share applicants.
2. Whether on the facts and circumstances and in law, the Ld. CIT(A) was right in deleting the addition of ₹ 1,00,00,000/- made under section 68 of the IT Act, 1961 on account of receipt of share application money and share premium without appreciating the fact that specific information was received from DGIT(Inv)., Mumbai that the alleged parties belonging to Pravin Jain group had confessed to providing accommodation entries without conducting any business activity and that the assessee was one of the beneficiary of such accommodation entries.
3. Whether on the facts and circumstances and in law, the Ld. CIT(A) was right in deleting
3 | P a g e Rs. 1,00,00,000/- made under section 68 of the I.T. Act, 1961 on account of receipt of share application money and share premium without appreciating the fact that the assessee has failed to justify the issue price of shares and premium received."
Brief facts are that the assessee’s sources of income during the year are interest on trade loan and profits of investments on units. The AO during the assessment proceedings noted that the assessee company is one of the beneficiaries of the accommodation entries received in the nature of bogus investment/ share application money/ share premium amounting to ₹ 1 crore received during the Financial Year 2011-12 relevant to Assessment Year 2012-13 as under: -
Name of the concern controlled & Amount of payment (₹) Date of payment managed by Mr. Pravin Kumar Jain Javda India Impex Ltd. 1,00,00,000 19.3.2011 4. The AO further noted this fact that assessee has received this accommodation entry of unsecured loan of ₹ 1 crores during the FY 2011-12 vide Para 8 as under "8. It is seen from the balance sheet as on for the year ended 31.03.2012 that the assessee company has obtained ₹ 1,00,00,000/- for share premium. Taking into consideration of the antecedent of M/s Java India Impex Ltd. and the intimation received from the CBI, ACB the undersigned is fully convinced that the assessee has availed bogus accommodation entries to introduce its own funds generated through undisclosed income in the name of unsecured
4 | P a g e 1,00,00,000/- during the financial year 2011-12. Investigation carried out by the CBI, ACB has also established prima facie that unsecured loan appearing in the books of accounts of the assessee company are not genuine share premium but are bogus accommodation entries. Therefore, the assessee has not offered any satisfactory explanation in respect of the entries made by it and hence the sum credited by the assessee are charged to income tax as income of the assessee of the previous year. "
According to AO, this fact came to light during the search and seizure action carried out in the case of Pravin Kumar Jain Group of cases on 01.10.2013. He noted that the evidence collected and statement recorded of various persons including Mr. Pravin Jain proves the modus operandi of providing accommodation entry. He noted that even Shri Pravin Kumar Jain admitted giving accommodation entry in the nature of bogus investment, bogus unsecured loans, share application money/ share premium etc. to various concerns. The AO noted the assessee has obtained accommodation entry from Javda India Impex Ltd which is controlled and managed by Mr. Pravin Kumar Jain amounting to ₹ 1 crores. The AO required the assessee to explain the source and assessee before AO filed the following details: -
Return of income and the Financial statements for the year ended 31 March 2012,
5 | P a g e Copy of share application letter dated 19.03.2012 received from Javda India Impex Ltd.
Copy of conformation given by Javda towards subscription of preference shares;
Copy of minutes of Board meeting of Javda passing resolution towards investment in preference shares
Original confirmation received from Javda confirming the transaction;
Copy of bank statement of Bharat co-op Bank highlighting the payment made for subscription of shares
Copy of bank statement highlighting the receipt of proceeds.
Copy of Form 5 and 2 filed with Registrar of Companies.
But the AO was not convinced and he treated this amount as bogus and accordingly added under section 68 of the Act. Aggrieved, assessee preferred the appeal before CIT(A).
The CIT(A) after going through the submissions and the details that neither Shri Pravin Kumar Jain nor the company who has provided share application money/share premium i.e. Javada India Impex Ltd. have denied giving these amount to the assessee. Even, no cross examination was provided by the AO i.e. the statement of third party Shri Pravin
6 | P a g e Kumar Jain to the assessee before making any addition. Even there is no allegation that Pravin Kumar Jain has made a direct statement that the assessee received bogus capital from Javada India Impex Ltd towards share capital as accommodation entry. The assessee has filed sufficient evidences in the shape of return of income and financial statements, copy of share application, letters dated 19.03.2012 received from Javada India Impex Ltd. confirmation given by Javada India Impex Ltd. for subscription of shares, Minutes of board meeting of Javada India Impex Ltd. passing a resolution towards investment in shares, conformation of transaction copy of bank statement of Bharat Co-op Bank highlighting the payment made for subscription of shares, copy of From No. 5 and 2 filled with Registrar of Companies. In view of these evidences and on examination of facts in detail, the CIT(A) deleted the addition. Aggrieved, now Revenue is in appeal before Tribunal.
We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the first of all this credit has been received by assessee from Javada India Impex Ltd. on 19.03.2011 i.e. during the FY 2010-11 relevant to AY 2011-12 and not during the year under consideration i.e. 2012-13. It means that this share application/ share premium added by the AO under section 68 is actually received by assessee in AY 2011-12 and not in AY 2012-13. It means that addition, if at all, can only be made in AY 2011-12 and not in AY 2012-13. This addition has to be deleted only on the sole ground.
However, we noted that even on merits, the assessee has filed complete details as noted above. Further, neither the AO nor the investigating authorities of Income Tax Department have pointed out that Shri Pravin Kumar Jain in his statement recorded on 01.10.2013 has admitted that the assessee has received the amount from Javada India Impex Ltd. is bogus. Even the alleged statement of Shri Pravin Kumar 7 | P a g e Jain was never confronted to the assessee. The assessee has filed complete details in respect of the identity of the credit, genuineness of transaction, capacity of the person giving credit to assessee i.e. creditworthiness of the credit. The assessee has filed confirmation, bank records from where this amount was received by assessee and resolution of the company for providing this share application money. We noted that the AO has not tried to examine these evidences at all and straightway made addition. In the absence of anything, we are of the view that the CIT(A) has rightly deleted the addition and we confirm the same.
In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 21.08.2019.