TMI Blog2018 (10) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer has not given any reason as to why he is not able to accept the same. If at all the creditworthiness of the directors is not proved, then an addition can be made only in their hands and not in the hands of the company as held by the Hon’ble A.P. High Court in the case of Lanco Industries Ltd. (1999 (12) TMI 45 - ANDHRA PRADESH HIGH COURT). No contrary evidence to controvert the evidence produced by the assessee, is brought on record. Simply because the directors/shareholders did not present themselves before the Assessing Officer, an addition u/s 68 cannot be made. - Decided in favour of assessee - ITA No. 1647/Kol/2016 - - - Dated:- 28-9-2018 - Sri J. Sudhakar Reddy, Accountant Member And Sri S.S. Viswanethra Ravi, Judicial Member For The Assessee : Shri Manish Tiwari, FCA For The Revenue : Shri S. Dasgupta, Addl. CIT, D/R. ORDER Per J. Sudhakar Reddy, AM :- This is an appeal filed by the revenue directed against the order of the Commissioner of Income Tax (Appeals) - 4 Kolkata, (hereinafter the Ld. CIT(A) ), dt. 10/06/2016, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the Act ), relating to Assessment Year 2012-13. 2. Facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Investment Consultants Pvt. Ltd. 10,000 10/- 40/- 5,00,000/- The source of Investment is not properly explained To cross examine the genuineness, creditworthiness and identity of the shareholders notice u/s 133(6) of the I. T. Act was issued to all the above four shareholders in the address provided by the assessee in his submission. Summons u/s 131 was is used to Sri Sanjay Kumar Khemka, the signatory director for personal appearance along with to produce the investors/investors director along with the requisitioned documents. But in response to this Sri Sanjay Kumar Khemka the director of the assessee company had only filed the requisite documents which are seen and placed on file. It is seen that the director thwarted the process of furthering the investigation as neither the director of assessee company nor the subscriber company director appeared and also no proper reason has been explained for their non-appearance. In the absence of personal appearance of the director of the assessee company as well as the director of the subscriber company, the genuineness and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies which have subscribed for the shares of the assessee company are also active companies. They are not paper companies. This is clear from the financial statements filed by them. In case of Dhanraksha Investment Consultants Pvt. Ltd., the assets are about ₹ 47.20 Lakhs and the investment in the assessee company is about ₹ 5 Lakhs. In the case of Dynamo Infrastructures Pvt. Ltd., the assets are to the extent of ₹ 2,44,57,638/- and the investment in the assessee company is around ₹ 88 Lakhs/-. In the case of Jai Hind Promoters Pvt. Ltd., the total assets are to the tune of ₹ 2,18,34,717/-, and the investment of the assessee company is around ₹ 1,25,00,000/-. In the case of Ninachal Barter Pvt. Ltd., the total assets are ₹ 2,32,26,565/- and the investment in the assessee company is around ₹ 46.20 Lakhs/-. As brought out by the ld. CIT(A), all these companies have given replies to the statutory notice u/s 133(6) of the Act. They have furnished copies of the income tax acknowledgements evidencing filing of the return of income by each one of them. Copy of the audited books of accounts including balance sheet, wherein such investments a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as the assessee company, belong to the same group of companies, with a common director Mr. Sanjay Kumar Khemka. When all the information as required by law, is given, an addition cannot be made solely on the ground that the directors failed to appear in response to summons issued u/s 131 of the Act. The Hon ble Supreme Court in the case of Commissioner of Income Tax vs. Orissa Corporation Pvt. Ltd. 159 ITR 78 SC and the Hon ble Bombay High Court in the case of Commissioner of Income Tax v. Orchid Industries Pvt. Ltd. 397 ITR 136, have held that an addition cannot be made simply because a person has not appeared in compliance to notice u/s 131of the Act, when all the other requirements of the notices u/s 133(6) of the Act, has been complied with. Similar are the decision of this Bench of the Tribunal in the case of Income Tax Officer vs. Wiz-Tech Solutions Pvt. Ltd., ITA No.1162/Kol/2015 and Hon ble Jurisdictional High Court in the case of Pr. CIT-1 vs. M/s. Steel Emporium Ltd., GA No. 3275 of 2016 in ITAT 354 of 2016. This Bench of the Tribunal under identical circumstances, discussed the issue at length, in the case of Five Star Vanijya Pvt. Ltd v. Deputy Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orissa Corporation (P) Ltd [1986] 159 ITR 78 (SC), held as follows:- In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise. 6.3. Recently, the Hon ble Jurisdictional High Court in the case of ld. Pr. CIT-1, Kolkata vs. M/s. Steel E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived the share application money for allotment of its share. It was stated that the actual amount received was ₹ 55,50,000 and not ₹ 1,11,50,000 as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount is to be taken at ₹ 55,50,000. The assessee has further tries to explain the source of this amount of ₹ 55,50,000 by furnishing copies of share application money, balance sheet, etc. of the parties mentioned above and asserted that the question of addition in the income of the assessee does not arise. This explanation of the assessee has been duly considered and found not acceptable. This entry remains unexplained in the hands of the assessee as has been arrived by the Investigation wing of the department. As such entries of ₹ 55,50,000 received by the assessee are treated as an unexplained cash credit in the hands of the assessee and added to its income. Since I am satisfied that the assessee has furnished inaccurate particulars of its income, penalty proceedings under Section 271(1)(c ) are being initiated separately. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereon is as under:- On the facts and in the circumstances of the case, Ld. CIT(A) ought to have upheld the assessment order as the transaction entered into by the assessee was a scheme for laundering black money into white money or accounted money and the Ld. CIT(A) ought to have held that the assessee had not established the genuineness of the transaction. Held After hearing the learned counsel for the appellant and after going through the decision of the Supreme Court in the case of CIT v. M/s Lovely Exports Pvt Ltd, we are at one with the tribunal below that the point involved in this appeal is covered by the said Supreme Court decision in favour of the assessee and thus, no substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed. 6.8. The Hon ble Andhra Pradesh High Court in the case CIT vs. Lanco Industries Ltd. [2000] 242 ITR 357 (Andhra Pradesh), held as follows:- Moreover, we fail to see how merely by reason of unsatisfactory explanation relating to the source of investment by the shareholders, the money invested on shares should be treated as income of the assessee. If the ostens ..... X X X X Extracts X X X X X X X X Extracts X X X X
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