TMI Blog2018 (10) TMI 1661X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant : Shri Robin Choudhury, Addl. CIT, ld. Sr.DR For the Respondent : Shri Akkal Dudhewewala, FCA, ld.AR ORDER PER SHRI A.T. VARKEY, JM This is an appeal preferred by the revenue against the order of Ld. CIT (Appeals), 4, Kolkata dated 20-05-2016 for the assessment year 2012-13. 2. The main grievance of the revenue is against the action of the ld. CIT(A) deleting the addition made by the AO u/s. 68 of the Act in respect of addition made by the AO on share subscription money received during the year. 3. Brief facts of the case are that the assessee company had filed its return of income for AY 2012-13 on 28.09.2012 showing total income of ₹ 51,76,909.-. Later, the case was selected for scrutiny and statutory notices were issued upon the assessee, which were duly complied with. From the details furnished the AO noted that the assessee company had raised capital against allotment of equity shares during the year. In this regard the AO sought details concerning correspondence made for share application, trade license/professional tax etc. of the applicant, address proof, board resolution justification of issuing shares at high premium. At Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material furnished before us. We note that the assessee has raised share capital of ₹ 5,00,00,000/- during the year under consideration. This capital was raised by way of issue of 10000 shares of ₹ 10/- each at a premium of ₹ 490/- per share. The AO added back the entire share application money raised from the share applicants during the year under consideration primarily on the premise that directors of the shareholder companies failed to appear before him. The Ld. DR appearing on behalf of the Revenue assailed the order of the Ld. CIT(A). The Ld. DR argued that mere documentary evidences were not sufficient to discharge the genuineness of the transactions and that the personal appearance of Directors of share applicants was indeed a pre-requisite to ascertain whether the three ingredients prescribed in Section 68 stood satisfied. The Ld. DR thereafter took us through the relevant documents furnished by the assessee company in their Paperbook. With regard to the identity of the share subscribers, he submitted that all the share applicants were paper companies and the fact that none of the Directors attended the summons proved their non-existence. Thereafter th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant address proofs by way of Professional Tax Enrolment Certificates/Form 18 filed by the applicants with ROC 6. The Ld. AR submitted that the details of PAN, IT Acknowledgment, professional tax enrolment certificates etc. and the Form 18 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, which further fortified the existence of share applicants at their given addresses. The Ld. AR 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 assessee company. Referring to the respective bank statements, it was further pointed out that the transactions were conducted through proper banking channel and that there were no cash deposits in any of the bank account of the share applicants. He also invited our attention to the explanation furnished by each of the share applicants regarding their source of funds. It was thus submitted that the fund flow position of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 also held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570. 8. The main plank on which the AO made the addition was because the directors of the share subscribers did not turn up before him. From the notices issued u/s 131, it is noted that each of the share subscribing company was required to furnish the following details for examination: - Details of shares of assessee applied for including number of shares, nominal price, premium and amount - Correspondence made for application of shares - Copy of Balance Sheet, Profit Loss A/c, IT Ack for FY 2011-12 - Copy of Bank Statements evidencing transaction with assessee - Source of Funds for making investments in the assessee company - Trade License/P.Tax Certificate etc. towards address proof - Cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by' treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69. 10. Undisputedly the Share Applicants in this case are the bank account holder in their respective banks in their own name and are sole owner of the credits appearing in their bank account from where they issued cheques to the assessee company. For the proposition that a Bank Account holder himself is the 'owner' of 'credits' appearing in his account (with the result that he himself is accountable to explain the source of such credits in whatever way and form, the same have emerged) support can be derived from section 4 of Bankers Book Evidence Act 1891 which reads as under:- 4. Mode of proof of entries in bankers' books Subject to the provisions of this Act, a certified copy of any entry in a bankers' book shall in all legal proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 creditworthiness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 assessee himself, when there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of cheques, the amount was deposited in their account. [6] The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case 15. Further, in the case of CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18(All.) their lordships, on the issue of discharge of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Assailing the said judgment of the learned Tribunal learned counsel for the appellant submits that Income-tax Officer did not consider the material evidence showing the creditworthiness and also other documents, viz., confirmatory statements of the persons, of having advanced cash amount as against the supply of bidis. These evidence were duly considered by the Commissioner of Income-tax (Appeals). Therefore, the failure of the person to turn up pursuant to the summons issued to any witness is immaterial when the material documents made available, should have been accepted and indeed in subsequent year the same explanation was accepted by the Income-tax Officer. He further contended that when the Tribunal has relied on the entire judgment of the Commissioner of Incometax (Appeals), therefore, it was not proper to take up some portion of the judgment of the Commissioner of Income-tax (Appeals) and to ignore the other portion of the same. The judicial propriety and fairness demands that the entire judgment both favourable and unfavourable should have been considered. By not doing so the Tribunal committed grave error in law in upsetting the judgment in the order of the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n deciding an appeal, consider with due care all the material facts and record its finding on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. 12. Taking inspiration from the Supreme Court observations we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Commissioner of Income-tax (Appeals). We also found no single word has been spared to up set the fact finding of the Commissioner of Income-tax (Appeals) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. 13. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Commissioner of Income-tax (Appeals). The appeal is allowed. 18. When a question as to the creditworthiness of a creditor is to be ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, we find no infirmity with the impugned judgment. 20. Our attention was also drawn to the decision of the Hon'ble Calcutta High Courtin the appeal of Commissioner of Income tax, Kolkata- IVVsRoseberry Mercantile (P) ltd., ITAT no. 241 of 2010 dated 10- 01-2011, wherein it was held as below: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 03,500/- to the income of the assessee company during the Assessment Year in question. The learned Commissioner of Income Tax Appeals found that there were as many as 2155 allottees, whose names, addresses and respective shares allocation had been disclosed. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee as made by the Assessing Officer. We are of the view that there is no question of law involved in this appeal far less any substantial question of law. The learned Tribunal has concurred with the learned Commissioner 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. 22. Further, 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. Leonard Commercial (P) Ltd in ITAT No. 114 of 2011 dated 13thJune, 2011 wherein the Court held as follows: The only question raised in this appeal is whether the Commissioner of Income-tax (Appeals) and the Tribunal below erred in law in deleting the addition of ₹ 8,52,000/-, ₹ 91,50,000/- and ₹ 13,00,000/- made by the Assessing Officer on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red before the AO and for that reason the addition made by the AO u/s 68 was justified. While dismissing the appeal of the Revenue, the High Court held as follows: 4. The Court finds that the exercise for determining the identity, genuineness and creditworthiness of the investors of the share capital of the Assessee as well as lenders was undertaken in an elaborate manner by the CIT (A). Comments from the AO were sought. Detailed reasons have been given by the CIT (A) to come to the conclusion that the Assessee had discharged its onus of establishing the identity, genuineness and creditworthiness of both the investors as well as the lenders. This has been concurred with by the ITAT in the impugned order which is again an extremely detailed one. 5. The concurrent factual findings of both the CIT (A) and ITAT have not been shown to be perverse by the Appellant. This is virtually the fourth stage of the litigation. 6. Question (1) is accordingly answered in the negative, i.e., in favour of the Assessee. It is noted that the SLP filed by the Revenue against this judgment has been dismissed by the Hon ble Supreme Court. 24. In the light of the aforesaid decisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - has not been doubted by the AO. 25. In respect of M/s. AnmolikTracon Pvt. Ltd., the Ld. AR drew our attention to page 100 to 122 of the paper book from where we note that this company invested a sum of ₹ 25,00,000/- in the assessee company. The share application was made by account payee cheque. This company was incorporated on 20/09/1995 and was having company identification number U5110WB1995PTC074414. This company duly filed its return of income before ITO Ward 9(1), Kolkata and was having PAN AACCA7904J. This company was having a paid up capital with free reserves and surplus of ₹ 48,37,82,527/- as on 31/03/2012 and ₹ 1,49,73,373/- as on 31/03/2011 respectively. 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 is 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 documents filed in the paper book. 26. In respect of M/s. Radiant Equity Management Private Limited, our attention was drawn by the Ld. AR to pages 123 to 154 of the paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also advanced loan of ₹ 22,16,000/- to the assessee; details of which were available in the tax audit report filed in the paper book. It is noted that that the genuineness of the receipt of loan from M/s. Aachman Marketing Pvt Ltd. and its identity creditworthiness of this applicant with regard to this loan transaction has not been doubted by the AO. 28. With regard to M/s Kotriwal Commercial Pvt Ltd, the Ld. AR drew our attention to pages 177 to 204 of the paper book wherein we note that this company invested a sum of ₹ 25,00,000/- in the assessee company. The share application was made by account payee cheque. This company is a registered Non-Banking Financial Company with the Reserve Bank of India. This company duly filed its return of income before ITO Ward 9(4), Kolkata and was having PAN AABCR4087F. This company was having a paid up capital with free reserves and surplus of ₹ 33,45,01,216/- 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 is no deposit of cash. The of source of funds from which this company had made the share application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 documents filed in the paper book. It is noted that the income-tax assessment of this company was framed by the TRO-2, Kolkata and the copy of the order passed u/s 143(3) is also available in the paper book. 31. Coming to M/s. Subhmangal Commercial Private Limited, the Ld. AR drew our attention to pages 250 to274 of the paper book wherein we note that this Company invested a sum of ₹ 25,00,000/- in the assessee company. The share application was made by account payee cheque. This company was incorporated on 20/03/2009 and was having company identification number U51909WB2009PTC134364. For the relevant year the company had turnover aggregating to ₹ 3,21,39,780/-. This company duly filed its return of income before ITO Ward 3(1), Kolkata and was having PAN AANCS1260J. This company was having a paid up capital with free reserves and surplus of ₹ 71,52,246/- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Company is duly available in the paper book. On examination of the bank statement it is taken note that there is 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 documents filed in the paper book. It is noted that the income-tax assessment of this company was framed by the ITO, Ward 9(2), Kolkata and the copy of the order passed u/s 143(3) is also available in the paper book. 34. At Pages 335 to 359 of the paper book, the details of M/s. Agastya Plastics Pvt. Ltd. is given. We note that this company invested a sum of ₹ 30,00,000/- in the assessee company. The share application was made by account payee cheque. This company was incorporated on 11/01/1995 and was having company identification number U51219WB1995PTC067328. This company duly filed its return of income before ITO Ward 1(4), Kolkata and was having PAN AACCA1521H. This company was having a paid up capital with free reserves and surplus of ₹ 3,03,79,986/- available as on 31/03/2011 which was sufficient enough to cover the cost of investment of ₹ 30,00,000/- made in the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the paper book. The Ld. AR also drew our attention to the fact that apart from investing in shares of the assessee company, the share applicant had also advanced loan of ₹ 48,69,000/- to the assessee which was repaid during the year; details of which were available in the tax audit report filed in the paper book. It is noted that that the genuineness of this loan transaction with this applicant, M/s MeghaSaree Emporium Pvt Ltd has not been doubted by the AO. 36. In respect of M/s. Rimjhim Sales Agency Pvt Ltd, our attention was drawn by the Ld. AR to pages 384 to 414 of the paper book wherein we note that this Company invested a sum of ₹ 40,00,000/- in the assessee company. The share application was made by account payee cheque. This company was incorporated on 15/10/2007 and was having company identification number U51109WB2007PTC119633. This company duly filed its return of income before ITO Ward 4(1), Kolkata and was having PAN AADCR8017Q. This company was having a paid up capital with free reserves and surplus of ₹ 9,86,35,421/- as on 31/03/2012 and ₹ 5,52,28,705/- as on 31/03/2011 respectively. The copy of the bank statement of the Company is dul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this company had made the share application are also available from a perusal of the bank statement and other documents filed in the paper book. It is noted that the income-tax assessment of this company was framed by the ITO, Ward 9(3), Kolkata and the copy of the order passed u/s 143(3) is also available in the paper book.The AO of the share applicant has categorically mentioned that he has examined and accepted the source of funds i.e. the share capital raised by the applicant during the year. 39. 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) regular income tax assessees, (ii) they are filing their return of income, (iii) the board resolutions approving the investment in the assessee company 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 share applicants have furnished declaration explaining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are applicants have confirmed the share application as well as the payments made to the assessee company, which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. 41. We find that the Hon ble Supreme Court in the case of M/s Earth Metal Electricals P Ltd vs CIT Anr. reported in 2010 (7) TMI 1137 in Civil Appeal No. 21073 / 2009 dated 30.7.2010 arising from the order of Hon ble Bombay High Court had held as under:- ORDER Delay condoned. Leave granted. Heard learned counsel on both sides. We have examined the position. We find that the shareholders are genuine parties. They are not bogus and fictitious. Therefore, the impugned order is set aside. The appeal is allowed accordingly. No order as to costs. 42. We further find that in as many as four instances, the share applicants had also advanced loans to the assessee company. The AO has indeed accepted the identity creditworthiness of these applicants in their capacity of lenders and did not doubt the genuineness of the loan transactions. In such a scenario, we do not find any reason for the AO to dispute the genuineness of the share application mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows : 1. Sony Financial Services Ltd. - CIN U74899DL1995PLC068362- Date of Registration 09/05/1995 6. On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such Companies. 7. The Appellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities below were o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following decisions of the Hon ble High Court in the cases as under : (a) In the case of Pr. CIT Vs Chain House International (P) Ltd [2018] (98 taxmann.com 47)the AO had added the share application by way of unexplained cash credits was that the assessee was unable to give any justifiable reason for issuing shares at a premium. The Hon ble Madhya Pradesh High Court did not agree with this reasoning given by the AO for making addition u/s 68, holding as under: Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by any Govt. Authority or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. [Para 52] Once the genuineness, creditworthiness and identity of investors are established, the revenue should not justifiably claim to put itself in the armchair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P.) Ltd.(supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. (f) In the above circumstances and particularly in view of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained. (c) In CIT VsAnshika Consultants Pvt Ltd (62 taxmann.com 192), the AO had added the share application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly specious plea of the AO is that none of the shareholders appeared before him. However, as discussed earlier, nothing much turned on account of their non-appearance. We find that the documents as requisitioned in the notices issued u/s 131 by the AO to examine the genuineness of the transactions, were available on his record and nothing was brought on record by the AO to disprove the same. Further, from the assessment orders passed by the different officers of the Income-tax Department in the cases of share applicants proves that they were very much in existence and regularly assessed to tax. We therefore note that the impugned addition was made by the AO without any enquiry or application of mind into the material placed before him. Inour considered view, the assessee could only furnish the relevant details to prove its primary onus. Thereafter the onus shifts to the revenue. The shifting of onus is like a pendulum clock between the assessee and the AO. Once the assessee had furnished all the relevant documentation in respect of transaction between the assessee company and share applicants, the AO could not straight away draw adverse inference about the transaction of receipt o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application had been received by the assessee from its own undisclosed sources nor any material was brought on record to show that the applicants were bogus. The Revenue was neither able to controvert the documentary evidences filed by the appellant nor prove that the share application wereingenuine or the applicants were non-creditworthy. The findings of the CIT(Appeals) were upheld by the Income-tax Appellate Tribunal. On appeal to the High Court, the Revenue placed strong reliance on the decision of another coordinate Bench of the same Court in the case of CIT Vs Novo Promoters Finlease (P) Ltd (342 ITR 169). The High Court however held that the aforesaid judgment was distinguishable from the facts of the present case. The Court observed that in that judgment the Assessing Officer had brought on record enough corroborative evidence to show that the assessee had routed unaccounted monies into its books through medium of share subscription. The share applicants had confessed that they were accommodation entry providers . The Assessing Officer in the latter case was able to prove with enough material that the share subscription was a pre-meditated plan to route unaccounted monie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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, balance4 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. The facts of Nova Promoters and Finlease (P) Ltd. (supra) fall in the former category and that is why this Court decided in favour of the revenue in that case. However, the facts of the present case are clearly distinguishable and fall in the second category and are more in line with facts of Lovely Exports (P) Ltd. (supra). There was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade 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.MaheshGarg that the income sought to be added fell within the description ofS.68 of the Income Tax Act 1961. Having regard to the entirety of facts and circumstances, the Court is satisfied that the finding of the Tribunal in this case accords with the ratio of the decision of the Supreme Court in Lovely Exports (supra). The decision in this case is based on the peculiar facts which attract the ratio of Lovely Exports (supra). Where the assessee adduces evidence in support of the share application monies, it is open to the Assessing Officer to examine it and reject it on tenable grounds. In case he wishes to rely on the report of the investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between the assessee and the alleged hawala operators, such a link was shown to be present in the case of Nova Promoters Finlease (P) Ltd. (supra) relied upon by the revenue. We are therefore not to be und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant and after going through the decision of the Supreme Court in the cases of CIT vs M/s Lovelv 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. 3.4.2. In view of the aforesaid findings and respectfully following the decision of the apex court (supra) and Jurisdictional High Court (supra), we find no infirmity in the order of the Learned CIT(A) and accordingly, the ground no.2 raised by the Revenue is dismissed. 4. The last ground to be decided in this appeal of the Revenue is as to whether the Learned CIT(A) is justified in deleting the addition u/s 68 of the Act made in respect of allotment of shares to 20 individuals for an amount of ₹ 57,00,000/- in the facts and circumstances of the case. 4.1. The brief fact of this issue is that the assessee had received share application monies from 20 individuals in the earlier year which were kept in share application money account. During the asst year under appeal, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 57 lakhs, where genuineness of the transactions and creditworthiness of the investors were not established. (b) In the case of DCIT VsR.B Horticulture Animal Projects Co. Ltdin ITA No. 632/Kol/2011 dated 13-01-2016, this Tribunal held as follows: 4.3. The Learned DR prayed for admission of the additional ground raised before us and vehemently supported the order of the Learned AO. In response to this, the Learned AR fairly conceded to admission of this additional ground and vehemently supported the order of the Learned CIT(A). 4.4. We have heard the rival submissions and perused the materials available on record including the detailed paper book filed by the assessee. We find that the additional ground raised by the assessee separately before us vide its covering letter dated 9. 12.2011 is admitted as it appears to be a genuine and bonafide error of omission on the part of the Revenue from not raising this ground in the original grounds of appeal filed along with the memorandum of appeal. Moreover, it does not require any fresh examination of facts. Hence the same is admitted herein for the sake of adjudication. 4.4. 1. We find from the details available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cases of CIT vs 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. 6.2. We find that the issue is also covered by the decision of Hon'ble Delhi High Court in the case of CIT vs Value Capital Services P Ltd reported in (2008) 307 ITR 334 (Del), wherein it was held that: In respect of amounts shown as received by the assessee towards share application money from 33 persons, the Assessing Officer required the assessee to produce all these persons. While accepting the explanation and ITA No. 632/KoI12011--C-AM M/s. R.B Horticulture 6 Animal Proj. Co. Ltd the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been served at the given address by the assessee. He served a show a cause notice dated 09.12.2011 asking for the explanation from the assessee as to how the notices u/s. 133(6) could be served to these nine companies who had different address as per ROC records. The AO was explained vide letter dated 20.12.2011 of the assessee that those companies had changed their addresses since filing of Form 2 with the Registrar. Further, it was none of the business of the assessee to question the addresses of the applicants as long as they affirm the address. The applicants were duly incorporated bodies under the Companies Act. 1956 since long. They have been regularly filing their returns of income under the Income Tax Act and are being assessed by the Revenue since long. Some of them are even registered as Non-Banking Financial Companies with Reserve bank of India. They have been filing returns regularly with Registrar of Companies and RBI since long. The letters might have been received at their old addresses because in case of change in the address, people instruct the incumbents at old addresses not to refuse the receipt of letters and receive the same. Just because, a letter was receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord to controvert the findings of the Ld. CIT(A). In view of above we find no reason to interfere in the order of the Id. CIT(A). Accordingly the ground raised by Revenue is dismissed. (d) In the case of ITO vs Cygnus Developers (I) P Ltd in ITA No. 282/Kol/2012 dated 2.3.2016, this Tribunal held as follows: 6. On appeal by the assessee the CIT(A) deleted the addition made by the AO observing as follows 6) I have considered the submission of the appellant and perused the assessment order. I have also gone through the details and documents filed by the appellant company in the course of assessment: proceedings vide letter dt. 3-10-2007. On careful consideration of the facts and in law I am of the opinion that the AO was not justified in making, the addition aggregating to ₹ 54,00,000/- u/s.68 of the Act being the amount of share application money by holding that the appellant company has failed to prove the identity, and creditworthiness of The creditors as well as the genuineness of transactions. It is observed that all the three share applicant companies i.e. M/s. Shree ShyamTrexim Pvt. Ltd., M/s Navalco Commodities Pvt. Ltd. and M/s. JewellockTrexim Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vinder Singh Shant in IT A No.20BIKo112009 vide order dated 17.04.2009. 9. We have considered the rival submissions., We are of the view that order of CIT(A) does not call for any interference. It may be seen from the grounds of appeal raised by the Revenue that the Revenue disputed only the proof of identity of the shareholder. In this regard it is seen that for A Y.2004-05 Shree ShyamTrexim Pvt. Ltd., was assessed by ITO, Ward- 9(4), Kolkata and the order of assessment u/s/143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd., was assessed to tax u/s 143(3) for A Y.2005- 06 by I TO, Ward- 9(4), Kolkata by order dated 20.03.2007. Similarly JewellockTrexim Pvt. Ltd was assessed to tax for A Y.2005-06 by the very same ITO- Ward- 9(3), Kolkata assessing the Assessee. In the light of the above factual position which is not disputed by the Revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. The decision of the Hon'ble Allahabad High Court as well as ITA T Kolkata Bench on which reliance was placed by the learned counsel for the assessee also supports the view that for non production of d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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