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TMI Blog2019 (9) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 9,79,02,000/- was examined by the Assessing Officer. In this regard, he noted, at the outset, that the assessee-company had no track record or asset base and apparently with no visible future prospect, it had received high premium per share which defied all commercial and financial prudence and logic. During the course of the examination, summons under section 131 were issued by the Assessing Officer to the Directors of the assessee-company as well as to the Directors of the investor companies. None, however, appeared in response to the said summons for examination before the Assessing Officer. Nevertheless, certain details and documents were furnished on perusal of which, the Assessing Officer recorded his findings as under:- (i) All the Companies were in their initial years of operation; (ii) They were basically investment companies, (iii) Income tax returns filed by them showed a nominal income/loss; (iv) There was hardly any business activity carried on by these companies; (v) Investor-companies received share capital with huge premium, which in turn was invested in the assesseecompany as well as similar other companies. On the basis of the above findings reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various judgments as mentioned in the assessment order. However AO's action in making addition U/S 68 by relying upon the decisions is totally misplaced. The facts of the cases, as cited by the AO in his order are totally different with the facts of the appellant. In those cases, as referred by the AO, the assessee had received monies by cheque/draft and allotted shares, whereas in the case under consideration, no money was received through banking channel by the appellant. There is 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 AO failed to appreciate the fact that there was no sum credited in the books of account of the appellate and no money was received. The assessee had allotted its shares against the discharge of debts by journal entries in books. The AO failed to verify the facts of the case. The shares were allotted against the acquisition of investments under the agreements. The copies these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 68 was deleted by him by relying on the decision of the Hon'ble Calcutta High Court in the case of Jatia Investment Company (supra). He contended that the case of Jatia Investment Co. (supra) decided by the Hon'ble Calcutta High Court and relied upon by the ld. CIT(Appeals) in his impugned order to give relief to the assessee is distinguishable on facts. He also contended that the following judicial pronouncements, on the other hand, are in favour of the Revenue on this issue:- (i) Smt. Rekha Krishna Raj -vs.- ITO [261 CTR 79]; (ii) ITO -vs.- Blessings Commercial Pvt. Limited [91 taxmann.com 176 (Kolkata-Trib.); (iii) Vimal Organics Limited -vs.- CIT [297 CTR 549 (Allahabad)]. The ld. D.R. also contended that none had appeared on behalf of the assessee during the course of assessment proceedings and in the written submission filed by the assessee, it was nowhere specifically pointed out that the amount of share capital and share premium in question was not received by the assessee in cash or by cheque. He invited our attention to the assessment order passed by the Assessing Officer to show that the Assessing Officer in the absence of such specific case made out by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra) relied upon by the ld. D.R., the assessee had received cheques for a sum of Rs. 15,00,000/- and entries in this regard were made in the books of account of the assessee for having received the said amount by way of unsecured loans from various persons. In these facts of the said case, it was held by the Hon'ble Allahabad High Court that "sum found credited in the books of account of the assessee" included within its fold, the entry either by way of cash or by cheques irrespective of the encashment of the cheques and the essential conditions for applicability of section 68 stood fulfilled. Both these cases cited by the ld. D.R. thus involved different facts and the same, therefore, are not applicable in the present context, where we are considering the applicability of section 68 to the transactions which do not involve any cash and there is no credit to the Cash Account. 7. As regards the third case of Smt. Rekha Krishna Raj (supra) relied upon by the ld. D.R., Section 68 was held to be applicable by the Hon'ble Karnataka High Court even to an unexplained credit representing value of supplies made by suppliers on credit. While arriving at this conclusion, it was held by The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in favour of the assessee and respectfully following the same, we hold that section 68 is not applicable when the relevant transactions do not involve any cash and there is no credit to the Cash Account. We, therefore, hold that section 68 has no application to the transactions which does not involve cash and where there is no credit to cash account. 8. The next question that arises for our consideration in the context of present case is whether the transactions in question of issue of share capital with premium by the assessee-company involved any cash or not. In this regard, it is observed that even though the ld. CIT(Appeals) in his impugned order has recorded a finding of fact that no money was received through banking channel by the assessee and there was no cash transaction in the case of the assessee as the shares were issued against the shares of another companies, there was no such finding recorded by the Assessing Officer in the assessment order. As rightly pointed out by the ld. D.R., no such case, in fact, was specifically made out by the assessee before the Assessing Officer challenging the applicability of section 68 on the ground that the relevant transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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