TMI Blog2019 (8) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... lication received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 - Decided in favour of assessee. - I.T.A. No. 2060/Kol/2017 And I.T.A. No. 2097/Kol/2017 - - - Dated:- 9-8-2019 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For the Assessee : Shri A. K. Tibrewal, FCA And Shri Amit Agarwal, Advocate For the Revenue : Shri Robin Choudhury, Addl. CIT, Sr. DR, ORDER PER SHRI A. T. VARKEY, JM: These are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or persons from whom share application money has been received and shares allotted subsequently during this assessment year. However, according to AO, the assessee failed to produce any of the directors on the stipulated date and time. Thereafter, the AO issued summons to the director of the assessee company Shri Shyamal Kumar Dutta u/s. 131 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) on 26.02.2015 and also to the director/principal officer of the assessee company. However, according to the AO, there was no compliance to the summons issued by him. However, the AO acknowledges that certain statements and documents were furnished before him. The AO further noticed that Shri Bhim Prasad, director also submitted certain documents belatedly on 17.03.2015 citing that he was suffering from illness. The AO noticed that despite summons being issued to director/principal officer of the assessee company any one of directors could have appeared before him other than Shri Bhim Prasad who was suffering from illness. The AO thereafter noticed that he issued final show cause notice on 12.03.2015 and that the assessee furnished a reply on 20.03.2015. Thereafter, the AO fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce any of the directors of the share subscribing companies, so the AO after taking note of the faults specified in pages 2 and 3 of the assessment order has rightly made the addition where as the Ld. CIT(A) has deleted ₹ 1.5 cr. even without exercising his co-terminous powers to summon the directors of the share subscribing companies which action of the Ld. CIT(A) needs to be interdicted and pleads for reversal of the order by sustaining addition of ₹ 1.5 cr. 4. Per contra, the Ld. AR drew our attention to the bulky paper book which contains Volume I, 155 pages, Volume II, 156 to 308 pages and case law paper book, to show the fact that the assessee had filed all the documents substantiating the identity, creditworthiness and genuineness of the transaction. However, the AO without finding any fault with the same has drawn adverse inference because the assessee failed to produce the share subscribing company s directors before him. According to Ld. AR, out of eight (8) share subscribing companies, five (5) of the very same share subscribing companies were allotted shares by the assessee company during the next assessment year i.e. AY 2013-14 also; and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mukesh Life Style Pvt. Ltd., (ii) M/s. Navkar Barter Pvt. Ltd., (iii) M/s. Faithful Vinimay Pvt. Ltd., (iv) M/s. Ashwini Vinimay Pvt. Ltd. and (v) M/s. Prospect Tie-up Pvt. Ltd. are common share subscribers for both this AYs 2012-13 and AY 2013-14 and the AO has framed the scrutiny assessment u/s. 143(3) for AY 2013- 14 in which he has accepted the share allotted to these five companies meaning thereby in the subsequent AY 2013-14 the AO has accepted the identity, creditworthiness and genuineness of the share transaction between the assessee company and these five companies which had subscribed in this assessment year share capital and share premium to the tune of ₹ 1.50 cr. Taking into consideration this fact, the Ld. CIT(A) ordered deletion of share capital plus share premium given by these five share subscribers and gave relief of ₹ 1.50 cr. which needs no interference because the AO himself in the scrutiny assessment in the subsequent assessment years was satisfied with the identity, creditworthiness and genuineness of these five share subscribers so, the Ld. CIT(A) has rightly deleted ₹ 1.50 cr. and we find no reason to interfere in the order of the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the paper book. We also note that the certificate explaining the source of funds is found placed at pages 138 to 142 of the paper book. We also note that M/s. Fantassy Distributors Pvt. Ltd. had investible funds to the tune of ₹ 2.93 cr. as on 31.03.2012 which is evident from page 148 of the paper book (share capital of ₹ 15,65,000 + Reserve Surplus of ₹ 2,78,07,180 thus total of ₹ 2,93,72,180) whereas this company has subscribed to share capital of ₹ 10 lakhs plus share premium of ₹ 20 lakhs totalling to ₹ 30 lakhs , which shows that it had invested only very less amount when it has got sufficient own funds. (ii) Coming to next subscribing company M/s. Jaguar Housing Pvt. Ltd., we note from a perusal of the paper book pages 198 to 199 which is a letter written by M/s. Jaguar Housing Pvt. Ltd. to the AO pursuant to the notice u/s. 133(6) of the Act. From a perusal of pages 200 and 201 shown the application form filed by M/s. Jaguar Housing Pvt. Ltd. with the assessee company for allotment of shares. The income tax return acknowledgment of M/s. Jaguar Housing Pvt. Ltd. is found placed at page 207 of the paper book, from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,654/- whereas this company has invested only ₹ 10 lacs as share capital and ₹ 20 lacs as share premium which shows that it had enough own fund to invest in this company. Thus, we note that by producing the ITR, bank statement, PAN details of the share subscribing companies the assessee has proven their identity, the transactions have taken place through banking channel which shows the genuineness of the transaction. The creditworthiness has already been found to be there with both the three share subscribing companies, therefore, the assessee has discharged that the onus casted upon it to prove the identity, creditworthiness and genuineness of the transaction the AO has not found the documents furnished as aforesaid to be sham or fabricated merely because the directors did not appear has no ground to disbelieve/brush aside the documents produced before him and to draw adverse inference as held by the Hon ble Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. 7. Before we advert to the additions u/s. 68 of the Act, we note that the assessee had filed paper book pages from 1 to 308 (volume 1 II) to prove the identity, creditworthiness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atically 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. 10. 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 money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). In arriving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 68 indicate that section 68 does not authorize the Revenue Department to make inquiry into the source(s) of the credit and/or sub-creditor. The language employed by section 68 cannot be read to impose such limitations on the powers of the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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 subcreditor 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 the sub- creditors, for, these aspects may not be within the special knowledge of the assessee. ********** ... If a creditor has, by any undisclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is concerned, he has established the identity of the creditors, namely, Nemichand Nahata 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 was neither direct nor circumstantial evidence on record that the said loan amounts actually bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing 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. 14. 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. Commissioner of Income-tax 353 ITR 171 wherein ..... 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 Incometax (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-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing officer 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. 16. Our attention was also drawn to the decision of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital/premium of ₹ 24,00,000/- received from the investors was not liable to be treated under Section 68 as unexplained credits and it should not be taxed in the hands of the appellant company. As indicated earlier, the Tribunal below dismissed the appeal filed by the Revenue. After hearing the learned counsel for the appellant and after going through the decision of the Supreme Court in the case of Cl. T. vs. M/s. Lovely Exports Pvt. Ltd. [supra], 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. 18. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability could not be foisted on the company. The concerned shareholders would have to explain the source of their fund. The learned Commissioner on considering the submissions of the, respective parties and considering the materials, found that the Assessing Officer had applied the provisions of Section 68 of the Income Tax Act arbitrarily and illegally and in any case without giving the assessee adequate opportunity of representation and/or hearing. Learned Tribunal agreed with the factual findings of the learned Commissioner and accordingly the learned Tribunal dismissed the appeal of the Revenue and affirmed the decision of the learned Commissioner. Mr. Dutta appearing on behalf of the petitioners cited judgment of the Division Bench of this Court in Commissioner of Income Tax Vs. Ruby Traders and 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 judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion money were received by the assessee by way of account payee cheques and the assessee also disclosed the complete list of shareholders with their complete addresses and GIR Numbers for the relevant assessment years in which share application was contributed. It further appears that all the payments were made by the applicants by account payee cheques. It appears from the Assessing Officers order that his grievance was that the assessee was not willing to produce the parties who had allegedly advanced the fund. In our opinion, both the Commissioner of Income-tax (Appeals) and the Tribunal below were justified in holding that after disclosure of the full particulars indicated above, the initial onus of the assessee was shifted and it was the duty of the Assessing Officer to enquire whether those particulars were correct or not and if the Assessing Officer was of the view that the particulars supplied were insufficient to 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 applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining source of funds 70-71 90-91 113-117 161 180-182 4. Income Tax Return acknowledgment 73 93 119 163 184 5. Bank Statements 74 94-95 120 164 185 6. Audited Accounts 75-79 96-99 121-124 165-170 186-191 7. Details of investment as appearing in audited accounts showing investment in Assessee company 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 238 8. Memorandum Articles of Association 151-155 216-220 239-243 21. From the aforesaid chart we note that the assessee has discharged its onus casted upon it to prove the identity, creditworthiness and genuineness of the transaction. Since we have already discussed about the creditworthiness of the three assessee companies namely M/s. Fantasy Distributors Pvt. Ltd., M/s. Jaguar Housing Pvt. Ltd. and M/s. Sanskriti Housing Pvt. Ltd. pertaining to the assessee s appeal, we would like to see the creditworthiness of the remaining five share subscribers which are involved in the revenue s appeal in the following manner: i) In respect of M/s. Mukesh Lifestyle pvt. Ltd., on perusal of the Balance Sheet as at 31.03.2012 placed at paper book page 77 reveals that it had a share capital of ₹ 33,65,000/- and Reserve Surplus of ₹ 2,25,68,054/- totaling to ₹ 2,59,33,054/- and whereas it has invested share capital of only ₹ 10 lacs and share premium of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, (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. 23. As noted from the judicial precedents cited above, where any sum is found credited in the books of an assessee then there is a duty casted upon the assessee to explain the nature and source of credit found in his books. In the instant case, the credit is in the form of receipt of share capital with premium from share applicants. The nature of receipt towards share capital is seen from the entries passed in the respective balance sheets of the companies as share capital and investments. In respect of source of credit, the assessee has to prove the three necessary ingredients i.e. identity of share applicants, genuineness of transactions and creditworthiness of share applicants. For proving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 prove the existence of the shareholders and for which the assessee had discharged the onus of proving their existence and also the source of share application money received. 3.4. 1. We also find that the impugned issue is also covered by the decision of Hon'ble Calcutta High Court in the case of CIT vs Roseberry Mercantile (P) Ltd in GA No. 3296 of 2010 ITAT No. 241 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 No. of share applicants along with their balance sheet. The Learned CITA also observed that the assessee in its reply to show cause notice before the Learned AO had requested him to use his power and authority for the physical appearance of the shareholders which was not exercised by the Learned AO. Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 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 CITA on the decision of the Hon'ble Apex Court in the case of CIT vs Lovelv Exports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dismissed. (c) The Ld. ITAT Kolkata in ITA No.1061/Ko1/2012 in the case of ITO Wd.3(2) Kol, vs. M/s. Steel Emporium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... ineness of transactions. It is observed that all the three share applicant companies i.e. M/s. Shree Shyam Trexim Pvt. Ltd., M/s Navalco Commodities Pvt. Ltd. and M/s. Jewellock Trexim Pvt. Ltd. had filed their 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. Jewellock Trexim 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 Shyam Trexim 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icants 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 directors 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. 25. 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the decision of the Supreme Court in the case of CIT Vs Lovely Exports Pvt Ltd (319 ITR 5). Accordingly the addition made under Section 68 on account of share application was deleted. 26. We would like to reproduce the Hon'ble High Court order in CIT vs. Gangeshwari Metal P.Ltd. in ITA no. 597/2012 judgement dated 21.1.2013, the Hon'ble High Court after considering the decisions in the case of Nova Promoters and Finlease Pvt. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly falls in the category where there is lack of enquiry on the part of the A. O. as in the case of Ganjeshwari Metals (supra). b) In the case of Finlease Pvt Ltd. 342 ITR 169 (supra) in ITA 232/2012 judgement dt. 22.11.2012 at para 6 to 8/ it was held as follows. 6. This Court has considered the submissions of the parties. In this case the discussion by the Commissioner 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, invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case, both the nature source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on AO's record. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. Therefore, as far as Revenue Appeal is concerned, we do not want to interfere in the impugned order of Ld. CIT(A) which is confirmed and consequently the appeal of Revenue is dismissed and as far as appeal of assessee is concerned we set-aside the order of Ld CIT(A) and is inclined to allow the same. 30. In the result, the appeal of the revenue is dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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