Loading judgment…
No AI summary yet for this case.
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, DELHI “F” BENCH: NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL
The present appeal is filed by Revenue against the order dated 31.05.2016 passed by Ld. Commissioner of Income Tax (A)-2, New Delhi [“Ld. CIT(A)”] in Appeal No. 80/15-16 of CIT(A)-2 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 24.03.2015 passed u/s 143(3) of the Act pertaining to assessment year 2012-13.
Brief facts of the case are that the assessee is a company and filed its return of income on 19.03.2013, declaring total income at NIL. During the course of assessment proceedings, it was found that the assessee company has issued 62,500 shares of face value of INR 10/- each at a premium of INR 790/- each which was subscribed by 13 companies totaling to INR 5.00 crores. In order to examine the creditworthiness and genuineness of the transactions, the AO has issued notices u/s 133(6) of the Act to all the companies. However, all the notices were returned unserved thereafter, notices were issued u/s 131 to the Principal Officers of the subscriber companies which were also returned unserved. The AO observed that out of 13 companies, only one company i.e. M/s. Bluebell Agencies Pvt. Ltd. had made reply wherein it is stated that it had made investment of INR 6.00 Lakhs only as against INR 31.00 Lakhs claimed by the assessee and one company namely Param Foods Pvt. Ltd. filed information u/s 133(6) of the Act on its own and claimed to have made investment of INR 25 Lakhs in the share capital of the assessee company. The AO on examining the financial results of all these companies observed that these companies had declared very small amount of income and all of them had received share capital at a high premium which were transferred to various entities as investments including the assessee. Accordingly, AO concluded that these companies are not having creditworthiness to subscribe the shares of the assessee company and therefore, made the addition u/s 68 of the Act as unexplained cash credit.
Against this order, the assessee preferred an appeal before Ld. CIT(A) who vide impugned order dated 31.05.2016 has allowed the appeal of the assessee thus, the Revenue is in appeal before the Tribunal by taking following grounds of appeal:-
1. “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 5,00,00,000/- made u/s 68 of the Income Tax Act, as the deemed Page | 2 income of the assessee, ignoring the fact that the assessee had failed to discharge its onus of establishing the identity of the creditors as well as genuineness of the transaction and credit worthiness of the creditors. 2. The appellant craves leave for the reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
Before us, Ld. Sr. DR for the Revenue appeared on behalf of the Revenue whereas none appeared on behalf of the assessee. The case is heard on the basis of material available on record and submission given by Ld. Sr.DR for the Revenue.
The main contention of Ld. Sr. DR is that the assessee has failed to prove the identity, genuineness and creditworthiness of the subscriber companies. He submits that mere furnishing the confirmations, PAN, bank account No. etc. is not sufficient to prove genuineness, more particularly, when the notices issued by AO u/s 133(6) and 131 were returned unserved thus, it could be presumed that the companies are non-existent and the papers companies. Under these circumstances the onus of proving the existence, genuineness and creditworthiness of the subscriber companies is shifted on the assessee. He further submits that Ld.CIT(A) without making any inquiry has simply accepted the submissions made by the assessee without even appreciating the facts that assessee has failed to file true and correct particulars of the subscriber companies. Ld. Sr. DR also filed a written submission wherein reliance is placed on the following case laws:- (i) Pr.CIT-6, New Delhi vs NDR Promoters Pvt. Ltd. in dated 17.01.2019 (Delhi H.C.);
(ii) CIT vs M/s. Navodaya Castles Pvt. Ltd. in dated 25.08.2014; (iii) N.R.Portfolio Pvt. Ltd. 206 (2014); (iv) CIT vs Nova Promoters & Finlease P. Ltd. [2012] 342 ITR 169 (Delhi); (v) CIT vs Nipun Builders & Developers P. Ltd. [2013] 350 ITR 407 (Delhi); (vi) Riddhi Promoters P. Ltd. vs CIT (vii) Nakoda Fashion Pvt. Ltd. in dated 18.08.2016 (Ahmedabad Trib.)
Heard the contention of Ld. Sr. DR for the Revenue and perused the material available on record. In the instant case, it is an admitted position that no replies were filed in response to notice issued u/s 133(6) of the Act to the share applicant companies as they returned unserved. Further, the notices issued u/s 131 to the Principal Officer were also returned unserved. The AO based on the bank statements of the applicant companies obtained through bank had the occasion to see the activities in the bank accounts wherein it was found that there was immediate transfer of funds before the funds were transferred to bank accounts of the assessee. The assessee has filed the financial statements of the subscriber companies alongwith confirmation, ITRs and affidavits of the applicant companies. It was observed by the AO that all these companies are having NIL or very low income as compared to the amount of investments made in the share capital of various companies and all the funds were invested in various entities including the assessee where shares were purchased by those Page | 4 companies at a high premium. It is also observed by the AO that none of the company is receiving any income in the shape of dividend etc. from such investment though all the funds were utilized in such investments. AO has made all the plausible investigation and once it is found that these companies are not having sufficient creditworthiness, the additions were made. The assessee has not discharged the burden casted upon it by producing the Principal Officer of the companies and merely filed the confirmations of these companies. Ld.CIT(A) while deleting the additions, had placed reliance on the details filed by the assessee which were already examined by the AO and no new evidences were submitted before Ld. CIT(A). The judgements which are relied upon by AO for making additions were not discussed by Ld. CIT(A) and simply stated that these judgements are distinguishable on facts.
In view of these facts, we hereby set aside the order of Ld.CIT(A) and remand the case to the file of Ld.CIT(A) with the directions to carry out necessary verification from the shares subscriber companies and pass the appropriate order in accordance with law. Needless to say that assessee would be provided with an opportunity to represent its case. With these directions, ground of appeal No. 1 taken by the Revenue is partly allowed for statistical purposes.
In the result, appeal of the Revenue is partly allowed for statistical purposes.