TMI Blog2019 (8) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no real credit of cash in the cash book and the question of inclusion of the amount of the entry as unexplained cash credit could not arise. In our opinion, the ratio of this decision of the Hon ble Jurisdictional High Court in the case of Jatia Investment Co. (supra) is squarely applicable in the facts of the present case and the Ld. CIT(A) was fully justified in deleting the addition made by the AO u/s 68 by holding that the said provision was not applicable. - the appeal of the Revenue is dismissed - I.T.A. No. 2236/Kol/2017 - - - Dated:- 31-7-2019 - Shri P.M. Jagtap, VP (KZ) And Shri S.S. Viswanethra Ravi, JM For the Assessee : Shri V.K. Jain, FCA For the Revenue : Shri A.K. Nayak, CIT (DR) ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) This appeal is preferred by the Revenue against the order of Ld. CIT(A) 2, Kolkata dated 03.08.2017 and the solitary issue involved therein relates to the deletion by the Ld. CIT(A) of the addition of ₹ 9,85,00,000/- made by the AO on account of share capital and share premium by treating the same as unexplained cash credit u/s 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards share capital raised in the facts and circumstances of the case. The AR of the appellate has submitted that there was NO receipt of money in this case, thus the prime condition of section 68 was missing. The AO had not doubted the transaction of allotment of shares against the purchase of investment; rather he had imposed the provisions of section 14A to disallow expenditures relatable to such investments. The appellant had allotted its equity shares to the companies, who have sold their investments to the appellant. There was mere journal entries in books, no cash or proceeds were received and recorded in books. The transactions were explained and the documentary evidences filed with AO. The assessee furnished the particulars mode of consideration and details of the persons who have been allotted shares during the year. The AR further has submitted that summon u/s. 131 were issued but no one appeared is rather distortion of facts. The summons were served on 3 (THREE) share applicants. The share applicants comply with statutory requirement, submitted their response by registered post to AO. The AO had issued notices for verification u/s 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the directors to appear in person does not suggest that identity, proof and genuineness of transactions furnish by the appellant Company stands disproved. The AO also placed his reliance on the cases of Govindarajuhu Mudaliar vs CIT [1958] 34 ITR 807, CIT vs Devi Prasad Viswanath Prasad (1969) 72 ITR 194 (SC) and Commissioner of Income Tax vs Independent Media (P) Ltd. (2012) 25 taxman.com 276 (Delhi). The Reliance is also being placed on the decision of jurisdictional ITAT in the case of M/s. Star Griha Pvt. Ltd. vs CIT and M/s. Bisakha Sales Pvt. Ltd. vs CIT but the facts are not relevant to the case. The facts on said cases are totally different. In those cases, the assessee had received monies by cheques/drafts and allotted shares and in this case, no money was received by the appellant. The AO has stated that in the light of the facts of the case and aforesaid exposition of the legal position, with regard to the identity and creditworthiness of the subscriber companies and the genuineness of the transaction, it can be said that assessee has introduced its own unaccounted fund in the form of share application money to legalize its own black money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash receipts, the question of cash credit does not arises. The AO has placed his reliance in the case of Star Griha Pvt. Ltd. and Bishakha Sales Pvt. Ltd, etc but the facts of these cases are not similar to the case the appellate. The basic difference is that in the case of appellate there is no cash involved on issue of share capital. Furthermore, the facts on said cases are totally different. In those cases, the assessee had received monies by cheques/drafts and allotted shares. Whereas in the case under consideration, no money was received by the appellant. Furthermore, the facts on said cases are totally different. In those cases, the assessee had received monies by cheques/ drafts and allotted shares. Whereas in the case under consideration, no money was received by the appellant. Further, I find that there has been no cash transaction in this case, the mode of consideration was shares and there was no money involved in these transactions. The appellant did not have any intention to rotate his money without paying any taxes as alleged by the AO in his order. I find that there is no real cash entry on the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no cash transaction in the case of the appellant as the shares were issued against the shares of another companies. On the basis of submissions with document, it can safely concluded that the information that the shares were issued against the shares was very much available with the AO during the assessment proceeding. The AR of the appellate vide his letter dated 25.07 .201,7 has further submitted that on the ground of appeal, that the grounds of deletion on the share capital amount, together with shares premium added u/s 68 is supported by the appellate order passed by the CIT[23], Kolkata in the case of DSR Impex Pvt. Ltd. appeal No 265/CIT(A)-23/TECH-2/2016- 17/Kol for assessment year 2012-13, Dhankamla Commosales Pvt Ltd appeal No 230/CIT[A)-23/W-6(1)2016-17 /Kol for assessment year 2012- 13 and Coolhut Marketing Pvt. Ltd. appeal No 181/CIT(A)-23/TRO- 2/2016/Kol for assessment year 2012-13. In all such cases the grounds granted are relating to on applicability of section 68 where in no sum was credited or received during the year. The facts of the cases [supra] are similar to the above appeal. The AO failed to appreciate the fact that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the share capital and share premium amount credited in the books of account of the assessee company represented cash credit u/s 68 and since the primary onus to establish the identity and the capacity of the concerned share applicants as well as to prove the genuineness of the relevant transactions was not satisfactorily discharged by the assessee, addition u/s 68 was rightly made by the AO by treating the same as unexplained cash credit. He contended that the Ld. CIT(A) however did not appreciate the facts and circumstances involved in the assessee s case and deleted the addition made by the AO u/s 68 inter alia on the ground that there being no inflow of cash, section 68 was not applicable. He contended that the reliance of the Ld. CIT(A) on the decision of Hon ble Calcutta High Court in the case of Jatia Investment Co. (supra) to come to this conclusion is clearly misplaced in as much as the facts involved in the said case before the Hon ble Calcutta High Court were entirely different. He submitted that only notional entries were found recorded in the said case and there was no real transactions involved attracting the provision of section 68. He contended that the facts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions having been established by the assessee on evidence, addition made by the AO u/s 68 was not sustainable on merit also. He, therefore, strongly supported the impugned order passed by the Ld. CIT(A) giving relief to the assessee on this issue and urged that the same deserves to the upheld. 6. We have considered the rival submissions and also perused the relevant material available on record. It is observed that its shares were issued by the assessee company during the year under consideration at premium to certain companies in lieu of the shares held by the said companies and there was thus no inflow of cash involved in these transactions. The said transactions were entered into in the books of account of the assessee company by way of journal entries and it did not involve any credit to the cash amount. The learned DR at the time of hearing has not brought anything on record to rebut or controvert this position. He however has contended by relying on the decision of Hon ble Madhya Pradesh High Court in the case of V.I.S.P. (P) Ltd. (supra) as well as the decision of Mumbai Bench of this Tribunal in the case of Panna S. Khatau (supra) that secti ..... 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