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Income Tax Officer, Ward-6(3), New Delhi Room No. 185, C.R. Bldg., New Delhi Vs. M/s Mayur Resorts Pvt Ltd., 49, Arakashan Road, Pahar Ganj, New Delhi - 55
November, 20th 2015
                                                              ITA NO. 1160/Del/2013

                         DELHI BENCH "E", NEW DELHI
                      I.T.A. No. 1160/DEL/2013
                              A.Y. 2007-08
WARD-6(3), NEW DELHI                       49, ARAKASHAN ROAD,
ROOM NO. 185, C.R. BLDG.,                  PAHAR GANJ,
NEW DELHI                                  NEW DELHI - 55
                                           (PAN: AAACM0922G)
(APPELLANT)                                       (RESPONDENT)

           Department by                 :   Sh. P. Dam Kanunjna, Sr. DR
            Assessee by                  :   Sh. Ved Jain, Adv.

                           Date of Hearing : 17-11- 2015
                           Date of Order : 18-      2015



      The Revenue has filed this appeal against the Order dated 31.12.2012
passed by the Ld. CIT(A)-IX, New Delhi on the following grounds:-

      1. The order of the Ld. CIT(A) is erroneous and contrary to facts and law.
      2. 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. 59,00,000/- made
         u/s. 68 as all the 17 shares applicants failed to establish
         creditworthiness and genuineness of transactions.
      3. On the facts and in the circumstances of the case and in law, the Ld.
         CIT(A) failed to appreciate that the onus of establishing the

                                                              ITA NO. 1160/Del/2013

         creditworthiness of creditors and genuineness of transaction was on
         assessee which the assessee failed to discharge.
      4. On the facts and in the circumstances of the case and in law, the Ld.
         CIT(A) erred in not considering      the recent landmark judgment of
         Jurisdictional High Court in the case of Nova Promoters and Finlease
         Pvt Ltd. (2012) 342 ITR 169 in which the Hon'ble Delhi High Court has
         interpreted   the judgment of Hon'ble Apex court given in Lovely
      5. The appellant craves leave to add, to alter, or amend on the ground
         of at the appeal raised above at the time of hearing.

2.    The brief facts of the case are that the assessee filed the return of income
for the AY 2007-08 on 25.10.2007 declaring income of Rs. 2,50,220/- and
the same was processed u/s. 143(1) of the Act. Subsequently, the case was
selected for scrutiny and statutory notice u/s. 143(2) was issued and duly served
upon the assessee. The assessment was completed u/s. 143(3) vide order dated
24.12.2009 by the AO at an income of Rs. 61,50,220/- making an addition of
Rs. 59,00,000/- u/s. 68 of the I.T. Act.

3.    Aggrieved by the assessment order, Assessee appealed before the Ld.
CIT(A), who vide impugned order dated 31.12.2012 has partly allowed the
appeal of the Assessee.

4.    Against the order dated 31.12.2012 passed by the Ld. First Appellate
Authority, Revenue is in appeal before the Tribunal.

5.    Ld. DR relied upon the order passed by the AO and reiterated the
contentions raised in the grounds of appeal. He stated that the AO has asked
the assessee to furnish the requisite information to establish the genuineness of

                                                               ITA NO. 1160/Del/2013

receipts of share application money and establish the genuineness thereof and
creditworthiness and identity of the share holders. In response to the same,
assessee filed some information. The AO examined the same and found that the
money deposited in the Bank Account of the share applicant and later on
issuance of cheque to the assessee company were originated from the assessee
company and the socalled alleged share applicants are benami persons of the
company.       He further submitted that Ld. CIT(A) has wrongly       deleted the
addition in dispute, without examining the genuineness of the transaction,
creditworthiness and identity of the share applicants and therefore, requested
that the order passed by the Ld. CIT(A) may be cancelled and the assessment
order may be upheld.

6.    On the contrary, Ld. Counsel of the Assessee relied upon the order of the
Ld. CIT(A). In support of the impugned order, he has also filed the Synopsis in
which he has narrated the facts of the case supported            with the various
decisions rendered by the Hon'ble Jurisdictional High Court. He further stated
that the issue is squarely covered in favour of the assessee by the decision of the
Hon'ble Jurisdictional High Court passed in the case of PR. CIT vs. Rakam Money
Matters Pvt. Ltd. 2015 (10) TMI 2057 ­ Delhi High Court decided vide ITA No.
778 of 2015 dated 13.10.2015. He has filed the copy of the said judgment with
the advance copy of the Ld. DR.

7.    We have heard both the parties and perused the records, especially the
orders passed by the Revenue Authorities alongwith Synopsis filed by the
Assessee's counsel and the judgment dated 13.10.2015 passed by the Hon'ble
Jurisdictional High Court in the case of PR. CIT vs. Rakam Money Matters Pvt.
Ltd. (Supra). The relevant portion of the said judgment is reproduced below for
the sake of convenience.

                                                       ITA NO. 1160/Del/2013

"13. It is not in dispute that extensive material was produced by the
      assessee in the present case to prove the identity, genuineness and
      creditworthiness of the     companies who had subscribed to its
      shares.    Among the materials produced were the Income Tax
      Returns and the PAN card details of the eight companies. Even if
      the Directors of these companies did not respond to the summons
      issued by the AO, it was not impossible for the AO to make proper
      enquiries to ascertain the genuineness of these entities and satisfy
      himself of their creditworthiness. As pointed out by the CIT(A), the
      AO failed to make any effort in that direction. He did not take to
      the logical end the half-hearted attempt at getting the Directors to
      appear before him. He did not even seek the assistance of the AOs
      of the concerned companies whose ITRs and PAN card copies had
      been produced.

14.   The view taken by the CIT(A) that the AO failed to come up with the
      material to disprove what had been produced by the assessee is
      certainly a plausible view in the facts and circumstances of the
      case. Likewise, the view taken by the ITAT concurring with the
      CIT(A) on facts cannot be said to be perverse.

15.   The decisions cited by Mr. Sahni turn on their own facts. As far as
      the broad principles governing the law under section 68 of the Act
      is concerned, the Court is satisfied that the order of the CIT(A) as
      confirmed by the ITAT suffers from no legal infirmity. No substantial
      question of law arises.

16.   The Appeal is dismissed."

                                                               ITA NO. 1160/Del/2013

7.1   After going through the aforesaid judgment of the Hon'ble High Court as
well as the impugend order passed by the Ld. First Appellate Authority, we are
of the considered view that Ld. CIT(A) has rightly deleted the addition in dispute,
because the assessee has furnished all necessary documentary evidence for
substantiating the claim in dispute.   For the sake of conveinence, the relevant
observations of the Ld. CIT(A) at pages 6 to 8 vide para no. 5.1.3 to 5.1.4 is
reproduced below:-

      "5.1.3 The appellant has furnished the following:

      a.     Name, address, PAN, acknowledgement of IT Return, Cheque
      number through which the payment was received, Copy of bank account,
      copy of driving license/ration card, share application form and signed
      confirmation of all the investors to the AO during the assessment

      b.     Copies of income tax returns along with computation and balance
      sheets of all the investors filed by them for the AIY. 2006-07 before your
      good self. Perusal cash in hand as on 31.03.2006 to deposited the same
      in their respective bank accounts. Copies of all the above mentioned
      documents have also been submitted for the AIY. 2008-09, 2009-10,
      2010-11 and 2011-12 before your good self which proves that the investors
      are genuine people, existing and doing gainful vocations.

      c.     All the investors, in response to notice u/s. 133(6) issued by the AO
      to verify the genuineness of transactions, have responded with
      confirmation of account, copy of bank statement, proof of filing returns of
      income and a sworn affidavit affirming the investments made by them with
      the appellant company."

                                                           ITA NO. 1160/Del/2013

5.1.4 The appellant has relied on the legal prepositions as laid out in the
following cases:-

1.    In case of Commissioner of Income Tax Vs. Dolphin Can Pack Ltd

[2006] 283 ITR 190 (Delhi) Delhi High Court inter-alia held that: "Where
the credit entry relates to the issue of the share capital, the ITO is entitled
to examine whether the alleged shareholders do in fact exist or not. In the
course of said enquiry, "The assessee had disclosed to the Assessing
Officer not only the names and the particulars of the subscribers of the
shares but also their bank accounts and the permanent account numbers
issued by the Income Tax Department. Superadded to all this was the fact
that the amount received by the company was all by way of cheques.
That materials was, in the opinion of the Tribunal, sufficient to discharge
the onus that lay upon the assess."

2.    In another case of Commissioner of Income-Tax vs. Gangour
Investrpent Ltd [2009] 179 Taxman 1 (Delhi) Delhi High Court. Inter-alia
hela as under: "The revenue can make addition under section 68 only if
the assessee is unable to explain the credits appearing in its books of
account. In the instant case, the assessee had filed subscription form of
each of the investors. The said subscription forms contained details, which
set out not only the identity of the subscriber, but also gave information
with respect to their addresses as well as PANs. During the course of
scrutiny, the Assessing Officer had also asked for and was supplied with a
copy of the statement of the bank accounts of subscribers. The payments
were made by way of a cReque. Finding of fact in respect of those
ingredients had been returned both by the Commissioner (Appeals) as
well as the Tribunal. In those circumstances, it could be said that the

                                                          ITA NO. 1160/Del/2013

assessee had discharged its onus in respect of the veracity of

3.    CIT vs. Steller Investment Ltd. [1991] 59 Taxman 568 (Delhi) Delhi
High Court Inter-alia held as under:

"Even if it be assumed that the subscribers to the increased share capital
were not genuine, nevertheless, under no circumstances can the amount of
share capital be regarded as on undisclosed income of the assessee. It
may be that there are same bogus shareholders in whose name the shares
had been issued and the money may have been provided by some other
persons. If the assessment of the persons, who are alleged to have really
advanced the money, is sought to be reopened, that whould have made
some sense but we fail to understand as to how this amount of increased
share capital can be assessed in the hands of the company itself"

4.    In case of CIT vs. Divine Leasing & Finance Ltd [2007] 158 Taxman
440 (Delhi) the High Court observe inter alia that:

"The assessee has to prima facie prove (1) the identity of the subscriber; (2)
genuineness of the transaction, namely: whether such transaction has
been transmitted through banking or other undisputed channels; (3)
creditworthiness of the subscriber; (4) if relevant details of the address,
PAN identity of the creditor/subscriber are furnished to the department
along with the copies of share application form ets., it would constitute
acceptable proof or acceptable explanation by the assessee."

5.      Commissioner of Income Tax vs. Oasis Hospitalities (P) Ltd. (2011)
238 CTR (Del) 402: (2011) 333 ITR 119

                                                                ITA NO. 1160/Del/2013

       6.       Commissioner of Income Tax vs. Dwarkadhish Investment(P) Ltd.
       (211) 239 CTR (Del) 478: (2011) 330 ITR 298."

7.2 From the above, we find that the Ld. CIT(A) has deleted the addition in
dispute on the basis of the aforesaid documentary evidences as well as the
decisions renderred by the Hon'ble Jurisidctional High Court. We further find
that the issue in dispute is also squarely covered by the judgment of the Hon'ble
Jurisdictional High Court dated 13.10.2015 passed in the case of PR. CIT vs.
Rakam Money Matters Pvt. Ltd. 2015 (10) TMI 2057, as referred above. In view
of the above, we do not find any infirmity in the order of the Ld. CIT(A), hence,
we uphold the impugend order on the issue in dispute and dismiss the Apppeal
filed by the Revenue.

8.     In the result, the Appeal filed by the Revenue stands dismissed.

       Order pronounced in the Open Court on 18/11/2015.

     Sd/-                                                          Sd/-
[PRASHANT MAHARISHI]                                              SIDHU]
                                                            [H.S. SIDHU]
ACCOUNTANT MEMBER                                        JUDICIAL MEMBER
Date: 18-11-2015
Copy forwarded to: -
1.     Appellant     2.    Respondent 3.      CIT   4.      CIT (A) 5.    DR, ITAT

                                 TRUE COPY                        By Order,

                                                                Assistant Registrar

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