ACIT, NEW DELHI vs. M/S. DHOOT INFRASTRUCTURE PROJECTS LTD., GURGAON
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the assessee had successfully discharged the onus under Section 68 by establishing the identity, genuineness of the transaction, and capacity of the investors. The Tribunal found that the transactions were through banking channels and reflected in bank statements.
What were the facts?
The Assessing Officer made an addition of Rs. 5.75 crores on account of share premium received by the assessee, doubting the genuineness and capacity of the investors. The assessee provided declarations, allotment letters, bank statements, and financial statements of the share applicants.
What were the issues?
Whether the assessee discharged the onus under Section 68 of the Income Tax Act, 1961, to prove the identity, genuineness, and capacity of share premium recipients.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS ASTHA CHANDRA
Heard together (4 matters)
Read from the judgment's own cause title. This page is filed under one of them.
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
The above captioned two separate appeals by the Revenue and cross objections by the assessee are preferred against two separate orders of the ld. CIT(A) – 3, New Delhi dated 19.12.2011 & 20.12.2011 pertaining to Assessment Years 2007-08 & 2008-09 respectively.
Since underlying facts in the issues are identical in the captioned appeals, they were heard together and are disposed of by this common order for the sake of convenience and brevity.
Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules.
Briefly stated, the facts of the case are that search and seizure operation was carried out at the premises of the assessee on 25.09.2008 and accordingly, statutory notices were issued and served upon the assessee, in response to which, the assessee filed its return of income.
During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has received share premium of Rs. 8.10 crores from the following parties :
Aarpee Commercial Co Pvt Ltd-Premium 69,30,000 2. Carnex vinimay Pvt Ld - Premium 88,20,000 3. C G Securities (P) Ltd - Premium 45,00,000 4. Gangotri Syntex (P) Ltd - Premium 45,00,000 5. Ganpati Riverside(P) Ltd - Premium 45,00,000 6. Jineshwar Trade (P) Ltd - Premium 76,50,000 7. Maxxon Trading & Finvest (P) Ltd - 72,00,000 - 8. Navoday Mercentils (P) Ltd - Premium 85,50,000 9. Oasis Synetx- Premium 49.50,000 10 PKC Credit (P) Ltd - Premium 45,00,000 . 11 Ravlon Commodities (P) Ltd - Premium 45,00,000 . 12 Stupendors(P) Ltd - Premium 76,50,000 . Trincas Agency & Credit (P) Ltd - 67,50,000 13 Premium . Total 8,10,00,000
To verify the genuineness of the aforementioned credits, the Assessing Officer issued a questionnaire asking the assessee to furnish the following:
“a. Return of income, balance sheets and 3CD report of all the companies on whose behalf share premium has been shown in the books of accounts. b. Complete bank accounts of all these companies for the period 1-04- 2006 to 31-03-2009. c. Detail of shares allotted to these companies specifying the number of shares allotted. d. Enquiry of this office has revealed that these are non existence companies. As entries. As the amount has been introduced in your books of accounts so u/s 68 of Income Tax Act, 1961 the onus lies on you to prove that these are not sham companies but real entities. In this regard you are required to produce the Managing Directors of these companies in this office so as to verify the genuineness of the entity on whose behalf share premium has been introduced in the books of account.”
The assessee filed a detailed reply alongwith the required documents. The Assessing Officer further made enquiry by issuing notice u/s 133(6) of the Act to the aforementioned companies but received reply from five companies and accepted the transaction with these five companies but in respect of other companies, the Assessing Officer was of the opinion that these companies do not have sufficient funds for making the impugned investment in the share purchase of the assessee and proceeded to complete assessment by making an addition of Rs. 5.75 crores u/s 68 of the Act in respect of share premium.
The assessee carried the matter before the ld. CIT(A) and vehemently contended that the assessee has successfully discharged the onus cast upon it by provisions of section 68 of the Act by establishing the identity, genuineness of the transaction and capacity of the investors.
After considering the facts and submissions and after examining the documentary evidences, the ld. CIT(A) was convinced with the claim of the assessee and directed the Assessing Officer to delete the impugned addition.
We have given thoughtful consideration to the orders of the authorities below. We have also carefully verified the evidences brought on record in respect of credit entry. We find that the assessee has furnished declaration, allotment letter, bank statements and financial statements of the share applicants.
We find that each and every share applicant has confirmed the transaction by submitting reply to the information called for u/s 133(6) of the Act to the Deputy Commissioner of Income Tax, Central Circle–1.
In our considered opinion, it is the prerogative of the Directors to decide the share premium amount and wisdom of the applicants whether to purchase shares at such premium or not.
All that the Assessing Officer can examine for the impugned A.Y is credit in light of provisions of section 68 of the Act, for which the assessee is required to prove the identity, genuineness of the transaction and capacity. Evidences on record show that the identity has been established beyond doubt, share application transactions are through banking channel, entries duly reflected in the bank statement thereby justifying the genuineness of the transaction.
In so far as capacity is concerned, the following chart speaks for itself:
Considering the demonstrative evidences, we are of the Considering the demonstrative evidences, we are of the Considering the demonstrative evidences, we are of the considered view that the assessee has considered view that the assessee has successfully discharged the onus successfully discharged the onus cast upon it by provisions of section 68 of the Act. Therefore, we cast upon it by provisions of section 68 of the Act. Therefore, we cast upon it by provisions of section 68 of the Act. Therefore, we decline to interfere with the findings of the ld. CIT(A). decline to interfere with the findings of the ld. CIT(A).
Appeals of the Revenue are accordingly dismissed. Appeals of the Revenue are accordingly dismissed.
Since the cross objections are not pressed, the same are also dismissed.
Before parting, the chart explaining the credit worthiness in is as under:
Investment Share Cash and Loan taken Etc Name of the company Reserves & bank by the surplus capital balance company Irrincas Agency & Credit Pvt 246,565,000 240,409,793 9,700,000 NIL 1,026,781 Ltd
PKC Credit Pvt. Ltd. 167,657,424 166,961,737 8,200,000 NIL 1,120,879
Maxxon Trading & Finvest 193,875,190 196,070,917 10,000,000 NIL 2,563,479
Pvt. Ltd. NIL Navoday Mercantile Pvt. Ltd 4,69,50,0000 370,319,371 19,500,000 215,306
Aarpee Commercial Co. Pvt 499,694,500 488125944 17,500,000 NIL 15342 Ltd - ~comel :.
In the result, the appeals of the Revenue in & 932/DEL/2012 as well as the cross objections of the assessee in CO Nos. 150 & 151/DEL/2019 are dismissed.
The order is pronounced in the open court on 17.11.2023 in the presence of both the rival representatives.
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