TMI Blog2019 (4) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted u/s 68 - Decided in favour of assessee. - ITA No.1038/Kol/2015 - - - Dated:- 29-3-2019 - SHRI A.T. VARKEY, JM And DR. A.L. SAINI, AM Assessee by: Shri Robin Choudhury, Addl. CIT Sr. DR Respondent by: Shri Subash Agarwal, Advocate ORDER Per Dr. A. L. Saini: The captioned appeal filed by the Revenue, pertaining to assessment year 2012-13, is directed against an order passed by the learned Commissioner of Income Tax (Appeals)-Siliguri, (in short the ld. CIT(A)], which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 30.03.2015. 2. At the outset, we note that the Revenue in the instant appeal has raised a multiple grounds of appeal, but at the time of hearing, the main grievance of the revenue has been confined to the issue that the Ld. CIT(A) was erred in facts as well as in law, in deleting the addition of ₹ 1,60,00,000/- made by the Assessing Officer under section 68 of the Income Tax Act Act,1961. 3. The brief facts qua the issue are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g companies were not coming forward with the explanations, hence the financial statement and other relevant data submitted by them in the ROC were obtained by AO. 7. After going through the above mentioned documents and evidences, the Assessing Officer, noted that the assessee company has failed to prove the identity, creditworthiness and genuineness of the share subscriber companies therefore he made an addition to the tune of ₹ 1,60,00,000/-. 8. Aggrieved by the order of the Assessing Officer the assessee carried the matter in appeal before the Ld. CIT(A) who has deleted the addition. Aggrieved, the Revenue is in appeal before us. 9. We have heard both the parties and perused the material available on record, we note that according to section 68 of the Income Tax Act, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the assessing officer, the sum so credited may be charged to income tax as the income of the assessee of that assessment year. The assessing officer may consider s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayapar (P) Ltd. ₹ 20,00,000/- (for 4,000 shares). 11. Before addressing the legal issue involved in this case, we would like to bring on record the various documents relating to the subscribers which are available in the paper book. (a). Fusion Dealtrade (P) Ltd: In response to notices u/s 133(6), this company had confirmed the transactions and provided the following documents to the assessing officer: (i)Return of income, (ii)Audited balance sheets, profit and loss account and annexures to the financial statements. (iii). Bank statements of share subscribing companies, evidencing the payment made to assessee company. (iv). Amount has been paid by account payee cheques to the assessee company to purchase the share capital and share premium. (v) ROC details (vi) Pan Number (vii) Confirmations: In response to notices u/s 133(6) of the Act, this company has confirmed the transactions with assessee company. (b). Mahamani Vinimoy (P) Ltd. In response to notices u/s 133(6), this company had confirmed the transactions and provided the following documents to the assessing officer: (i)Return of income, (ii) Audited balance sheets, profit and los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital and share premium. (v) ROC details (vi) Pan Number (vii) Confirmations: In response to notices u/s 133(6) of the Act, this company has confirmed the transactions with assessee company. (f). Dew Drops Mercantile (P) Ltd. In response to notices u/s 133(6), this company had confirmed the transactions and provided the following documents to the assessing officer: (i)Return of income, (ii)Audited balance sheets, profit and loss account and annexures to the financial statements. (iii). Bank statements of share subscribing companies, evidencing the payment made to assessee company. (iv). Amount has been paid by account payee cheques to the assessee company to purchase the share capital and share premium. (v) ROC details (vi) Pan Number (vii) Confirmations: In response to notices u/s 133(6) of the Act,this company has confirmed the transactions with assessee company. (g). Siddheswari Vayapar (P) Ltd. In response to notices u/s 133(6), this company had confirmed the transactions and provided the following documents to the assessing officer: (i)Return of income, (ii)Audited balance sheets, profit and loss account and annexures to the finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redits or make such investments. Accordingly, the AO added ₹ 1,60,00,000/- under section 68 of the Act, treating sum so received by assessee company, as cash credit. We note that all the amounts were received from share subscribers, by account payee cheques and have been confirmed by these share subscribers hence he proved the genuineness and identity of the transactions. Therefore, the ld counsel cited before us, the following judgements Viz: S Hastimal vs CIT (1963) 49 ITR 273 (Mad), Northern Bengal Jute Trading Company vs. CIT (1968) 70 ITR 407 (Cal), CIT vs Stellar Investments Ltd. (2000) 164 CTR (SC) 287 : (2001) 251 ITR 263 (SC), CIT vs Lovely Exports Pvt Ltd (2008) 216 CTR195 (SC), CIT vs Data ware Pvt Ltd, ITAT No 263 of 2011, GA No 2856 of 2011 dated 21.09.2011. The sum and substance of all these judgments are that if the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants by submitting the PAN details, bank account statements, audited financial statements, balance sheet, profit and loss account and Income Tax acknowledgments and confirmations, the addition under section 68 is not warranted. 14. We note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit and loss account and annexures to the financial statements. (iii). Bank statements of share subscribing companies, evidencing the payment made to assessee company. (iv). Amount has been paid by account payee cheques to the assessee company to purchase the share capital and share premium. (v) ROC details (vi) Pan Number (vii) Confirmations: In response to notices u/s 133(6) of the Act, this company has confirmed the transactions with assessee company. 16. The Ld. Counsel submitted that the details of PAN, IT Acknowledgment, and the ROC details furnished by the share applicants with the ROC duly proved the identity of the share subscribers. He further pointed out that in all cases the notices issued by the AO were duly served upon the share applicants through the postal authorities, and share applicants provided the confirmations, bank statements and audited accounts, which further fortified the existence of share applicants at their given addresses. The Ld. Counsel thereafter invited our attention to the respective balance sheets of the share applicants to show that each of them had sufficient funds available at their disposal to make investment in the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities. 18. Our attention was also drawn to the decision of the Hon'ble Supreme Court while dismissing SLP in the case of Lovely Exports as has been reported as judgment delivered by the CTR at 216 CTR 295: Can the amount of share money be regarded as undisclosed income under section 68 of the Income tax Act, 1961? We find no merit in this special leave petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. 19. Our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce and is dismissed. 20. Our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the case of Commissioner Of Income Tax vs M/s. Nishan Indo Commerce Ltd dated 2 December, 2013 in INCOME TAX APPEAL NO.52 OF 2001 wherein the Court held as follows: The Assessing Officer was of the view that the increase in share capital by ₹ 52,03,500/- was nothing but the introduction of the assessee's own undisclosed funds/income into the books of accounts of the assessee company. The Assessing Officer accordingly treated the investment as unexplained credit under Section 68 of the Income Tax Act and added the same to the income of the assessee. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) being the First Appellate Authority and contended that the Assessing Officer had no material to show that the share capital was the income of the assessee company and as such the addition made by the Assessing Officer under Section 68 of the Act was wrong. The learned Commissioner of Income Tax (Appeals) after hearing the department and the Assessee Company deleted the addition of ₹ 52,03,500/- to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Exporters Limited reported in 236 (2003) ITR 3000 where a Division Bench of this Court held that when Section 68 is resorted to, it is incumbent on the assessee company to prove and establish the identity of the subscribers, their credit worthiness and the genuineness of the transaction. The aforesaid judgment was rendered in the context of the factual background of the aforesaid case where, despite several opportunities being given to the assessee, nothing was disclosed about the identity of the shareholders. In the instant case, the assessee disclosed the identity and address and particulars of share allocation of the shareholders. It was also found on the facts that all the shareholders were in existence. Only nine shareholders subscribing to about 900 shares out of 6, 12,000 shares were not found available at their addresses, and that too, in course of assessment proceedings in the year 1994, i.e., almost 3 years after the allotment. By an order dated 2nd May, 2001, this Court admitted the appeal on three questions which essentially centre around the question of whether the Appellate Commissioner erred in law in deleting the addition of ₹ 52,03,500/- to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detect the real share applicants, to ask for further particulars. The Assessing Officer has not adopted either of the aforesaid courses but has simply blamed the assessee for not producing those share applicants. In our view, in the case before us so long the Assessing Officer was unable to arrive at a finding that the particulars given by the assessee were false, there was no scope of adding those money under section 68 of the Income- tax Act and the Tribunal below rightly held that the onus was validly discharged. We, thus, find that both the authorities below, on consideration of the materials on record, rightly applied the correct law which are required to be applied in the facts of the present case and, thus, we do not find any reason to interfere with the concurrent findings of fact based on materials on record. The appeal is, thus, devoid of any substance and is dismissed summarily as it does not involve any substantial question of law. 22. In the light of the aforesaid decision of the Hon ble Apex Court and jurisdictional High Court and other High Courts let us examine the present case in hand. We will examine each share subscribers. The ld. Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uineness and identity of this company has been proved beyond any doubt. 24. In respect of Natural Suppliers Pvt. Ltd., the ld. Counsel drew our attention from pages 48 to 60 of paper book, wherein the details of this company is given. We note that this company invested a sum of ₹ 19 lacs in the assessee company. The share application was made by account payee cheque. This company was incorporated under the Companies Act having proper identification number. This company duly filed its return of income before ITO, Ward-9(4), Kolkata and was having PAN No. AADCN 4238M. This company was having paid up capital with free reserve and surplus to the tune of ₹ 39,10,36,507/- as on 31.03.2012. The copy of the bank statement of the company is duly available in the paper book. On examination of the bank statement it is taken note that there was no deposit of cash. The details of source of funds from which this company had made the share application are also available from a perusal of the bank statement and other details available in the paper book. This company has sufficient fund to invest in the assessee company, therefore, the creditworthiness, genuineness and identity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y doubt. 27. In respect of Dewdrop Merchandise Pvt. Ltd., the ld. Counsel drew our attention from pages 83 to 92 of paper book, wherein the details of this company is given. We note that this company invested a sum of ₹ 25 lacs in the assessee company. The share application was made by account payee cheque. This company was incorporated under the Companies Act having proper identification number. This company duly filed its return of income before ITO, Ward-9(1), Kolkata and was having PAN No. AAACD 8961G. This company was having paid up capital with free reserve and surplus to the tune of ₹ 80,54,51,076/- as on 31.03.2012. The copy of the bank statement of the company is duly available in the paper book. On examination of the bank statement it is taken note that there was no deposit of cash. The details of source of funds from which this company had made the share application are also available from a perusal of the bank statement and other details available in the paper book. This company has sufficient fund to invest in the assessee company, therefore, the creditworthiness, genuineness and identity of this company has been proved beyond any doubt. 28. In resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax as the income of the assessee of that previous year . The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word may and not shall . Thus the un-satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570. We note that against the said decision of Hon'ble Gujarat High Court the special leave petition filed by the Revenue has also been dismissed by the Hon'ble Apex Court. 30. The main plank on which the AO made the addition was because the directors of the share subscribers did not turn up before him. In such a case the Hon'ble Apex Court in the case of Orissa Corpn. (P) Ltd. (supra) 159 ITR 78 and the Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360 /[2003] 127 Taxman 523, has held that onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually taken money from depositor/lender who has been fully identified, the assessee/borrower cannot be called upon to explain, much less prove the affairs of such third party, which he is not even supposed to know or about which he cannot be held to be accredited with any knowledge. In this view, the Hon'ble Court has laid down that section 68 of Income-tax Act, should be read along with section 106 of Evidence Act. The relevant observations at page 260 to 262, 264 and 265 of the report are reproduced herein below:- While interpreting the meaning and scope of section 68, one has to bear in mind that normally, interpretation of a statute shall be general, in nature, subject only to such exceptions as may be logically permitted by the statute itself or by some other law connected therewith or relevant thereto. Keeping in view these fundamentals of interpretation of statutes, when we read carefully the provisions of section 68, we notice nothing in section 68 to show that the scope of the inquiry under section 68 by the Revenue Department shall remain confined to the transactions, which have taken place between the assessee and the creditor nor does the wording of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 of the Income- tax Act will be that though apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been. eventually, received by the assessee. It, therefore, further logically follows that the creditor's creditworthiness has to be Judged vis-a-vis the transactions, which have taken place between the assessee and the creditor, and it is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transactions, which took between the creditor and sub-creditor and/or creditworthines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view the above position of law, when we turn to the factual matrix of the present case, we find that so far as the appellant is concerned, he has established the identity of the creditors, namely, NemichandNahata and Sons (HUF) and Pawan Kumar Agarwalla. The appellant had also shown, in accordance with the burden, which rested on him under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors aforementioned. In fact the fact that the assessee had received the said amounts by way of cheques was not in dispute. Once the assessee had established that he had received the said amounts from the creditors aforementioned by way of cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter the burden had shifted to the Assessing Officer to prove the contrary. On mere failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said loan amounts to the assessee, such failure, as a corollary, could not have been and ought not to have been, under the law, treated as the income from the undisclosed sources of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als in support of the loan transaction, the onus shifts upon the Assessing Officer and after verification, he can call for further explanation from the assessee and in the process, the onus may again shift from the Assessing Officer to assessee. 16. In the case before us, the appellant by producing the loan-confirmation-certificates signed by the creditors, disclosing their permanent account numbers and address and further indicating that the loan was taken by account payee cheques, no doubt, prima facie, discharged the initial burden and those materials disclosed by the assessee prompted the Assessing Officer to enquire through the Inspector to verify the statements. 34. In a case where the issue was whether the assessee availed cash credit as against future sale of product, the AO issued summons to the creditors who did not turn up before him, so AO disbelieved the existence of creditors and saddled the addition, which was overturned by Ld. CIT(A). However, the Tribunal reversed the decision of the Ld. CIT(A) and upheld the AO s decision, which action of Tribunal was challenged by the Hon'ble High Court, Calcutta in the case of Crystal Networks (P.) Ltd. v. Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel that the Commissioner of Income-tax (Appeals) has taken the trouble of examining of all other materials and documents, viz., confirmatory statements, invoices, challans and vouchers showing supply of bidis as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued, in our view, is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or not. When it was found by the Commissioner of Income-tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this -fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 464, the Supreme Court has observed as follows: The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act; it is invested with aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held: 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. It appears from the record that in the assessment proceedings it was noticed that the assessee company during the year under consideration had brought ₹ 4, 00, 000/- and ₹ 20,00,000/- towards share capital and share premium respectively amounting to ₹ 24,00, 000/- from four shareholders being private limited companies. The Assessing Officer on his part called for the details from the assessee and also from the share applicants and analyzed the facts and ultimately observed certain abnormal features, which were mentioned in the assessment order. The Assessing Officer, therefore, concluded that nature and source of such money was questionable and evidence produced was unsatisfactory. Consequently, the Assessing Officer invoked the provisions under Section 68/69 of the Income Tax Act and made addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner of Income Tax Appeals, further found that the Assessee Company received the applications through bankers to the issue, who had been appointed under the guidelines of the Stock Exchange and the Assessee Company had been allotted shares on the basis of allotment approved by the Stock Exchange. The Assessee Company had duly filed the return of allotment with the Registrar of Companies, giving complete particulars of the allottees. The Commissioner of Income Tax (Appeals) found that inquires had confirmed the existence of most of the shareholders at the addresses intimated to the Assessing Officer, but the Assessing Officer took the view that their investment in the Assessee Company was not genuine, on the basis of some extraneous reasons. The Commissioner of Income Tax (Appeals) took note of the observation of the Assessing Officer that enquiry conducted by the Income Tax Inspector had revealed that nine persons making applications for 900 shares were not available at the given address and rightly concluded that the total share capital issued by the Assessee Company could not be added as unexplained cash credit under 'Section 68 of the Income Tax Act. Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts and found that there were materials to show that the assessee had disclosed the particulars of the shareholders. The factual findings cannot be interfered with, in appeal. We are of the view that once the identity and other relevant particulars of shareholders are disclosed, it is for those shareholders to explain the source of their funds and not for the assessee company to show wherefrom these shareholders obtained funds. 38. From the details as aforesaid which emerges from the paper book filed before us as well as before the lower authorities, it is vivid that all the share applicants are (i) income tax assessee s, (ii) they are filing their return of income, (iii) the share application form and allotment letter is available on record, (iv) the share application money was made by account payee cheques, (v) the details of the bank accounts belonging to the share applicants and their bank statements, (vi) in none of the transactions the AO found deposit in cash before issuing cheques to the assessee company, (vii) the applicants are having substantial creditworthiness which is represented by a capital and reserve as noted above. 39. As noted from the judicial pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the decisions are as follows: (a) The Ld ITAT Kolkata. in DCIT Vs Global MercantilesPvt.Ltd in ITA No. 1669/Kol/2009 dated 13-01-2016. In this the decision the Ld. Tribunal held as follows: 3.4. We have heard the rival submissions and perused the materials available on record including the detailed paper book filed by the assessee. The facts stated hereinabove remain undisputed are not reiterated herein for the sake of brevity. We find that the assessee had given the complete details about the share applicants clearly establishing their identity, creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries from the assessing officers of the concerned share applicants for which every details were very much made available to him by the assessee. We find that the reliance placed by the Learned Ld. CIT(1) on the decision of the Hon'ble Apex Court in the case of CIT vs Lovely Exports (P) Ud reported in (2008) 216 CTR 195 (SC) is very well founded, wherein, it has been very clearly held that the only obligation of the company receiving the share application money is to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned AO asked the assessee to produce the shareholders before him. He found that the assessee did not do so but furnished copies of pay orders used for payments to the assessee company and also furnished income tax particulars and balance sheets of all the shareholders. The Learned AO on analyzing all the balance sheets observed that the shareholders have paltry income and small savings and none of them have any bank account and huge cash balances were shown in their hands out of which Pay orders were obtained. Based on this, the Learned AO concluded that these shareholders do not have creditworthiness to invest in the assessee company and brought the entire sum of ₹ 57,00,000/- to tax as unexplained cash credit u/s 68 of the Act. 4.2. On first appeal, the Learned CIT(A) observed that entire share application monies of ₹ 57,00,000/- we received during the previous year 2004-05 relevant to Asst Year 2005-06 from 20 persons and the shares were allotted to them during the asst year under appeal. He observed that the assessee had furnished details of the share applicants giving the date wise receipts, mode of payment, amount, name, address, income tax returns, PA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no scope for invoking the provisions of section 68 of the Act. Hence we hold that the order passed by the Learned CITA in this regard does not require any interference. Accordingly the ground no. 3 raised by the Revenue is dismissed. (b) The ITAT Kolkata in R.B Horticulture Animal Projects Co. Ltd, ITA No. 632/Koll2011 dated 13-01-2016. In this the decision the Ld. Tribunal held as follows: 6. We have heard the Learned DR and when the case was called on for hearing , none was present on behalf of the assessee. However, we find from the file that the assessee had filed a detailed paper book and written submissions. Hence the case is disposed off based on the arguments of the Learned DR and written submissions and paper book already available on record. The facts stated in the Learned CIT(A) were not controverted by the Learned DR before us. We find that the assessee had given the complete details about the share applicants clearly establishing their identity, creditworthiness and genuineness of transaction proved beyond doubt and had duly discharged its onus in full. Nothing prevented the Learned AO to make enquiries from the assessing officers of the concerned shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaining to 30 persons to the income of the assessee. The Commissioner (Appeals) upheld the decision of the Assessing Officer. On appeal, the Tribunal set aside the order of the Commissioner (Appeals) and deleted the additions. On further appeal: Held, dismissing the appeal, that the additional burden was on the department to show that even if the share applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. No substantial question of law arose. 6.3. We find that the argument of the Learned DR to set aside this issue to the file of the Learned AO for verification of share subscribers would not serve any purpose as the ratio decided in the above cases is that in any case, no addition could be made in the hands of the recipient assessee. In view of the aforesaid findings and respectfully following the decision of the apex court (supra), Jurisdictional High Court (supra) and Delhi High Court (supra) , we find no infirmity in the order of the Learned CIT(A) and accordingly, the grounds raised by the Revenue are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been verified. All of these companies had duly replied to notice u/s. 133(6) and confirmed the transaction with all the evidences. The AO has not raised any objection on any of the information furnished before him. The AO has not asked the respective Company applicants also to explain the alleged discrepancy in the address. The AO has not brought any material on account of record to disbelief the evidences furnished with him and treat the transaction as not genuine. The assessee submitted the following material at the time of assessment. a) Copy of share applications from the share applicants (copies enclosed) b) Copy of Form 2 filed with Registrar of Companies, West Bengal (copy enclosed) c) Copy of Form 18 about the Registered Office of the applicants for change of address subsequent to the date of allotment, i.e. 31.03.2009 (copies enclosed) d) Members register e) Share application Allotment Register f) Copy of board resolution. g) Replies from Share applicants to the notice u/s. 133(6) issued to them by the AO seeking information and documents about the sources and to examine their identity, genuineness of the transaction and their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir confirmations wherein each of them confirmed that they had applied for shares of the appellant -company. All the three companies provided- the cheque number, copy of bank statements and their PAN. It is observed that these companies also filed, copies of their return of income and financial statements for as well as copy of their assessment order u/s. 143(3) of the I. T Act for AY 2005-06. In the case of M/s. JewellockTrexim Pvt. Ltd. the assessment for AY 2005-06 was completed by the ITO Ward 9(3), Kolkata and the assessments in the case of M/s. Navalco Commodities Pvt. Ltd. and M/s. Shree ShyamTrexim Pvt. Ltd. for A. Y.2005-06 and AY.2004-05 respectively were completed by the I TO, Ward 9(4), Kolkata. Under the circumstances, I am of the opinion that the AO was not justified in holding that the share applicant companies were not in existence. The assessment orders were completed on the address as provided by the appellant company in the course of assessment proceedings. It is not known as to how the AO's inspector had reported that the aforesaid companies were not in existence at the given address. Since the appellant company had provided sufficient documentary evidences i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the investor company for examination by the AO it cannot be held that the identity of a limited company has not been established. For the reasons given above we uphold the order of CIT(A) and dismiss the appeal of the Revenue. 41. Reliance in this regard is also placed on the decision of the Delhi High Court in the case of CIT Vs Gangeshwari Metal (P) Ltd (ITA No. 597 of 2012) dated 21.01.2012. In this case the assessee had received share application money of ₹ 55.50 lacs during the year in question. The assessee filed the complete names, addresses of the share applicants, confirmatory letters from them, copies of bank statements of both the company as well as the share applicants and copies of share application forms. In spite of the aforesaid documentary evidences the AO held the explanation to be unacceptable and treated the share application as unexplained cash credit thereby making addition under Section 68 of the Incometax Act, 1961. On appeal the CIT(Appeals) deleted the aforesaid addition holding that the identity of the share applicants stood established beyond doubt, all the payments were through account payee cheques and the share applicants were regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 judgement dated 21.1.2013, the Hon'ble High Court after considering the decisions in the case of Nova Promoters and FinleasePvt. Ltd. 342 ITR 169 and judgement in the case of CIT vs. Lovely Exports 319 ITR (Sat 5)(5. C) held as follows:- As can be seen from the above extract, two types of cases have been indicated. One in which the Assessing Officer carries out the exercise which is required in law and the other in which the Assessing Officer 'sits back with folded hands' till the assessee exhausts all the evidence or material in his possession and then comes forward to merely reject the same on the presumptions. The present case falls in the latter category. Here the Assessing Officer after noting the facts, merely rejected the same. This would be apparent from the observations of the Assessing Officer in the assessment order to the following effect:- ''Investigation made by the Investigation Wing of the department clearly showed that this was nothing but a sham transaction of accommodation entry. The assessee was asked to explain as to why the said amount of ₹ 1,11,50,000/- may not be added to its income. In response, the assessee has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax (Appeals) would reveal that the assessee has filed documents including certified copies issued by the ROC in relation to the share application affidavits of the directors, form 2 filed with the ROC by such applicants confirmations by the applicant for company's shares, certificates by auditors etc. Unfortunately, the Assessing Officer chose to base himself merely on the general inference to be drawn from the reading of the investigation report and the statement of Mr. Mahes Garg. To elevate the inference which can be drawn on the basis of reading of such material into judicial conclusions would be improper, more so when the assessee produced material. The least that the Assessing Officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the Assessing Officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr.Mahesh Garg that the income sought to be added fell within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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