TMI Blog2021 (5) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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, confirmation of source of source and fourteen (14) share subscribers scrutiny assessments passed u/s 143(3) out of twenty one (21) share subscribers were placed on AO/Ld CIT(A)'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 were placed before the AO/Ld CIT(A) and the onus shifted to AO/Ld CIT(A) to disprove the materials placed before him. Without doing so, the addition made by the AO and sustained by Ld CIT(A) was based on conjectures and surmises, so it cannot be justified. In the facts and circumstances of the case as discussed above, no addition was sustainable under Section 68 of the Act. Therefore, the impugned order of Ld. CIT(A) is set aside and the AO is directed to delete the addition and consequently the appeal of assessee stands allowed. - I.T.A. No. 240/Kol/2020 - - - Dated:- 5-5-2021 - Shri J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific directions to AO i.e. ITO ward 1(2)/Kolkata, which we will discuss ( infra ). 6. Pursuant to the order of Ld. CIT-1, Kolkata in the re-assessment proceeding ITO ward 1(2)/Kol issued notices u/s. 142(1) of the Act on 22.09.2014, which was duly responded by the assessee. 7. Again a notice u/s 142(1) of the Act dt 17.03.2015 seeking details for next Assessment year i.e. 2010-11 was also issued by the ITO, Ward-1(2). Pursuant to the same, the assessee submitted explanations on queries raised in notice and filed documents on 24.03.2015 for AY 2009-10. 8. Thereafter, the AO issued a show cause notice on high share premium and also mentions about the non-appearance of directors of share subscribers u/s 131 of the Act, but did not seek any response from the assessee either to produce directors or to substantiate the claim on genuineness of cash credit. According to the assessee, it was not informed or intimated about the sudden change of jurisdiction from ITO ward 1(2)/Kolkata which falls under Pr. CIT-l, Kolkata to ITO ward 6(1)/Kolkata which falls under Pr. CIT-2, Kolkata. 9. According to Ld. AR, a perusal of re-assessment order it can be seen that the jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction of the assessee which was under the jurisdiction of the Pr. CIT-1, the jurisdiction of ITO, Ward-1(2) could not have been transferred to the another jurisdiction of Pr. CIT-2, since ITO, Ward- 6(1) was under Pr CIT-2, therefore, the assessment order passed by ITO, Ward-6(1) on 25.03.2015 passed u/s. 144 read with section 147/143(3) of the Act is wholly without jurisdiction and so bad in law. 14. Coming to the merits of the case, the facts brought to our notice are that the assessee had filed return of income on 07.07.2009. Later the same was processed u/s. 143(1) of the Act. Thereafter, the assessee s case was reopened u/s. 147 of the Act and after issuing notice u/s. 143(2) of the Act the AO noted that assessee during the relevant assessment year had issued share capital of ₹ 28,72,500/- (287250 number of shares at the face value of ₹ 10/- each) and share premium of ₹ 10,81,27,500/-. The AO notes that he had issued notice u/s. 133(6) of the Act to the share applicants. And thereafter the AO did not draw any adverse inference against the assessee being satisfied with the nature and source of the share capital and premium raised by the assessee during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45 days after getting the file of assessee on transfer ) passed the re-assessment order ignoring the documents furnished by assessee and share subscribers pursuant to notices issued by the earlier AO [ITO, Ward-1(2)] in the first round of scrutiny assessment. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A) the assessee filed additional evidence on 22.02.2017 as well as on 23.02.2017, since assessee neither received any notices/summons other than the SCN on 17.3.2015 from the new AO, which was duly responded on 24.3.2015 and he passed the order the very next day on 25.3.2015. Appreciating these facts, the Ld CIT(A) called for the remand report from the AO and it was filed by the AO on 19.07.2018 and 07.08.2017 which are found placed at pages 42 to 46 of the paper book. The assessee thereafter filed the rejoinder before the Ld. CIT(A) on 02.08.2019 which is found placed at page 47 to 50 of the paper book. In this case, the main grievance of the assessee is against the action of the Ld. CIT(A) in confirming the addition made by the AO u/s. 68 of the Act in respect of share capital and premium received by the assessee to the tune of ₹ 11, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted the nature and source of share transaction in question after issuing of notices to share subscribers ] and which were available in the assessment folder, and since the new AO [ITO, Ward-6(1)], made the addition hurriedly, the assessee again had filed the documents before the Ld. CIT(A), who called for remand report from AO was of the opinion that assessee had not proved the identity, creditworthiness and genuineness of the share subscribers and confirmed the addition made u/s. 68 of the Act. So, while examining the Ld. CIT(A) s action is right or erroneous, i.e, sustaining the addition section 68 of the Act [ the law as it stood in this assessment year 2009-10 ] having reproduced section 68 of the Act (supra) let us have a look at the judicial precedents on the issue in hand. 19. One of the main plank on which the AO made the addition was because of non-compliance of the directors of the share subscribers to turn up before him during re-assessment/remand proceedings. In such a case the Hon'ble Apex Court in the case of Orissa Corpn. (P) Ltd. (supra) 159 ITR 78 and following the same, the Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders [2002] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 106 of the Evidence Act which says that a person can be required to prove only such facts which are in his knowledge. The Hon'ble Court in the said case held that, once it is found that an assessee 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 sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether, which they must, then the interpretation of section 68 has to be in such a way that it does not make section 106 redundant. Hence, the harmonious construction of section 106 of the Evidence Act and section 68 of the Income- tax Act will be that though apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been. eventually, received by the assessee. It, therefore, further logically follows that the creditor's creditworthiness has to be Judged vis-a-vis the transactions, which have taken place between the assessee and the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstantial, to show that the amount which has been advanced by the sub-creditor to the creditor, had actually been received by the sub-creditor from the assessee . ********** Keeping in view the above position of law, when we turn to the factual matrix of the present case, we find that so far as the appellant is concerned, he has established the identity of the creditors, namely, 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 subcreditors had creditworthiness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfactory, the Assessing Officer can disbelieve the alleged transaction of loan. But the law is equally settled that if the initial burden is discharged by the assessee by producing sufficient materials in support of the loan transaction, the onus shifts upon the Assessing Officer and after verification, he can call for further explanation from the assessee and in the process, the onus may again shift from the Assessing Officer to assessee. 16. In the case before us, the appellant by producing the loan-confirmation-certificates signed by the creditors, disclosing their permanent account numbers and address and further indicating that the loan was taken by account payee cheques, no doubt, prima facie, discharged the initial burden and those materials disclosed by the assessee prompted the Assessing Officer to enquire through the Inspector to verify the statements. 23. 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unserved and no one came forward to prove. Therefore, it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter the creditworthiness. As rightly pointed out by the learned counsel that the Commissioner of Income-tax (Appeals) has taken the trouble of examining of all other materials and documents, viz., confirmatory statements, invoices, challans and vouchers showing supply of bidis as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued, in our view, is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or not. When it was found by the Commissioner of Income-tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this -fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself is an income tax assessee. After getting the PAN 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. 25. Our attention was also drawn to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 27. 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 APPEALNO.52 OF 2001 wherein the Court held as follows: The Assessing Officer was of the view that the increase in share capital by ₹ 52,03,500/- was nothing but the introduction of the assessee's own undisclosed funds/income into the books of accounts of the assessee company. The Assessing Officer accordingly treated the investment as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 judgment was rendered in the context of the factual background of the aforesaid case where, despite several opportunities being given to the assessee, nothing was disclosed about the identity of the shareholders. In the instant case, the assessee disclosed the identity an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts 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 applicants. In our view, in the case before us so long the Assessing Officer was unable to arrive at a finding that the particulars given by the assessee were false, there was no scope of adding those money under section 68 of the Income- tax Act and the Tribunal below rightly held that the onus was validly discharged. We, thus, find that both the authorities bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove the creditworthiness of the share subscribers, the Ld. A.R drew our attention to audited balance sheet of the share subscribing companies and contended that shareholders possess sufficient capital and reserves out of which share subscription amounts were paid through account payee cheques. So according to assessee, it has discharged the burden of proof casted up on by section 68 of the Act in respect of share capital premium it collected. And according to assessee, without finding any infirmity in the documents produced by the assessee in respect of identity, creditworthiness and genuineness of the transaction, no addition u/s 68 of the Act was warranted and the Ld CIT(A) erred in confirming it. 30. We all ready had re-produced section 68 of the Act and has gone through the judicial precedents (supra). And we note that while interfering with the first reassessment order dated 12.5.2011, the Ld CIT while exercising his revisional powers u/s 263 of the Act, had mainly found fault with the ITO ward 2(1) not to have looked in to the source of source of the share subscription, which requirement of law came in to force only after the insertion of Proviso by Finance Act 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to explain the nature and source of the credit found in assessee s book, then initial burden is on the assessee to bring material on record to show the nature and source of the credit i.e. identity, creditworthiness and genuineness of the transaction in question. And once an assessee is able to discharges the initial burden which lies upon it, then the onus shifts to the AO to disprove/rebut the material adduced by the assessee to substantiate the nature and source of the credit transaction. And if the AO is not able to disprove/rebut the evidence brought on record by the assessee to prove the nature and source of the credit entry, then section 68 of the Act cannot be used by the AO to charge the credit appearing in the books of the assessee as income for taxation. This position of law we note remains the same even after the insertion of Finance Act 2012, wherein additional requirement/burden is brought in by the Parliament in the cases of an assessee which is a corporate entity ( not being a company in which the public are substantially interested ) claims to have received share application money, share capital, share premium or any such amount, then with effect f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 12.5.2011 has accepted the share capital and premium of all twenty one (21) share holding companies. However the Ld CIT pursuant to section 263 order dated 7.3.2014 has set aside the AO s order dated 12.5.2011 and directed to frame de-novo assessment after properly verifying the identity, creditworthiness and genuineness of the share transaction. Pursuant to the Ld CIT order, the AO [ITO ward 6(1)] had stated to have issued notice u/s 142 (1) on 3.2.2015 to assessee and since according to AO there was non-compliance on the part of assessee to it, he issued show cause notice to assessee company giving last opportunity on 24.03.2015 and according to AO since no-compliance was made by assessee/share subscribers he drew adverse view against the share transaction and made an addition of RS 11,10,00,000/-. It has been pointed out by the Ld. AR that in the second round the AO has passed the order making addition within less than 45 days after issuing notice u/s 142(1), which the assessee states to have not received and the assessee received at the fag end on 17.3.2015 SCN which was duly replied on 24.3.2015 and without asking/confronting the assessee and without finding any infirmity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribers/holders cannot be doubted. 37. Coming to the creditworthiness, we not the following details which is evident from the following facts shown in the chart below: 38. So, from a perusal of the above chart, we note that the assessee and the shareholders have brought to the notice of AO CIT(A) that they (share subscribers) have enough net worth to invest in the assessee company and moreover the share subscribers have also filed the source from which they subscribed to shares of assessee ( bank statement, audited balance sheet, confirmation etc ). Thus the assessee had discharged the onus on it about the creditworthiness of the share- holders. So we note that the source of the investments i.e., source of source of share subscribers to subscribe for share premium in assessee s company as required by proviso to section 68 of the Act stands satisfied since it is clearly discernible from the bank statement confirmation filed in the PB filed. These bank statements revealed that the share capital and premium have been subscribed by them through banking channel (NEFT or cheque) which goes on to show that the assessee has discharged the onus in respect of genuineness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we note that this company was incorporated on 01/08/2008 and is having company identification number U51909WB2008PTC128132. This company is having PAN AADCC4340F. The company filed its return of income for AY 2009-10 before ITO ward 6(1), Kolkata (same ITO of the appellant). This company was having a paid up capital with free reserves and surplus of ₹ 19,94,00,376/- as on31/03/2009. We took note that the company have invested the sums of ₹ 41,00,000/- and ₹ 40,00,000 in two tranches in the appellant company. The share applications were made by account payee cheques. 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. (ii.a) The Ld. AR also took pains to draw our attention to records on the present status of this company. As per records, This company is managed by Mr. Kamal Agarwal and Mr. Ankit Todi. The business group of the company is having interest in Leasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (iv.a) The Ld. AR also took pains to draw our attention to the present status of this share subscriber. Alliance Dealcom Pvt Ltd is managed by Miss. Shashi Sonthalia, Mr. Om Prakash Sonthalia and Mr. Vandan Churiwal. The business group of the company is having interest in Biotech, Agro Based Industry, Infrastructure development and Real Estate. The registered office of the company is situated at 29, Lala Lajpat Rai Sarani, 4th Floor, Kolkata-700020. The total revenue for the year ended on 31.03.2019 is ₹ 46.15 Lac. The company s Investment in a Partnership firm as partner is ₹ 1413.00 Lac, which is also engaged in Agro business (page no. 837-864 in PB) . (v) In respect of M/s. Mashaal Suppliers Pvt. Ltd., the Ld. AR drew our attention to pages 138 to 154 of the paper book wherein we note that this company was incorpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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. (vi.a) The Ld. AR drew our attention to the present status of this company. Skylark Vincom Pvt Ltd is managed by Mr. Ramesh Kumar Agarwal and Mr. Fantush Sharma. The registered office of the company is situated at 27, Braboume Road, Kolkata-700001. The total revenue for the year ended on 31.03.2019 is ₹ 30,000. The company engaged in the Investment activities, (page no. 950-970 in PB). (vii) In respect of M/s. Hilton Exim Pvt. Ltd., the Ld. AR drew our attention to pages 176 to 188 of the paper book wherein we note that this company was incorporated on 01/08/2008 was having company identification number U51109WB2008PTC128131. The company is having PAN AACCH0780P.This company duly filed its return of income for AY 2009-10 before ITO Ward 5(4), Kolkata. This company was having a paid up capital with free reserves and surplus of ₹ 17,63,00,362/- as on 31/03/2009. This Company has invested a sum of₹ 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yadarshini Vihar, Delhi- 110092. (page no. 994-1034 in PB). (ix) In respect of M/s. RidhiSidhiVintrade Private Limited, the Ld. AR drew our attention to pages 211 to 226 of the paper book wherein we note that this company was incorporated on 08/09/2008 and is having company identification number U51909WB2008PTC129156. This Company is having PAN AAECR1123J. This company filed its return of income for AY 2009-10 before ITO Ward 9(3), Kolkata. This company was having a paid up capital with free reserves and surplus of ₹ 11,37,00,200/- as on 31/03/2009. This company have invested the sums of ₹ 49,00,000/- and ₹ 35,00,000/- in two tranches in the appellant company. The share applications were made by account payee cheques. 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. (ix.a) The Ld. AR took pains to draw our attention to the present status of this share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital with free reserves and surplus of ₹ 15,65,00,291/- as on 31/03/2009.This company has invested the sums of ₹ 30,00,000/- in the appellant company. The share application was made by account payee cheque. 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. (xi.a) The Ld. AR took pains to draw our attention to the present status of this share subscriber, Seaview Agencies Pvt Ltd is managed by Mr. Hemant Goyal and Mr. Dinesh Goyal. The company was amalgamated with Narsinghlspat Ltd on 07.02.2019 by National Company Law Tribunal, Kolkata Bench. The registered office of the amalgamated company is situated at 50, J.L. Nehru Road, 2nd Floor, Middleton Row, Kolkata-700071. The total revenue for the year ended on 31.03.2018 is ₹ 4.26 Lac. The company engaged in business activities in Investment and finance (page no. 1096-1190 in PB). (xii) Coming to M/s. Relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable from a perusal of the bank statement and other documents filed in the paper book. (xiii.a) The Ld. AR took pains to draw our attention to the present status of this share subscriber Amamath Vanijya Pvt Ltd is managed by Mr. Dinesh Kumar Mittal, Mr. Pramod Kumar Mittal, Mr. Vinod Kumar Mittal and Mr. Sanjeet Mittal. The business group of the company is having interest in Fuel. The registered office of the company is situated at 209, Bentinck Chamber, 37/A, Bentinck Street, Kolkata-700069. The total revenue for the year ended on 31.03.2019 is ₹ 275.62 Lac. The company Non-Current Assets (Tangible Assets) as on 31.03.2019 is ₹ 243 Lac. The company Current Assets (Loans Advances) as on 31.03.2019 is ₹ 324.10 Lac (page no. 1291-1323 in PB.) (xiv) Coming to M/s. Vedant Vincom Private Limited, our attention was drawn by the Ld. AR to pages 298 to 311 of the paper book wherein we note that this company was incorporated on 16/10/2008 and was having company identification number U51909WB2008PTC130020. This Company is having PAN AACCV8715E.This company duly filed its return of income for AY 2009-10 before ITO Ward 5(4), Kolkata. This company was having a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lgamated with Delta Dealers Pvt. Ltd on 04.04.2019 By National Company Law Tribunal, Kolkata Bench (page no. 1433-1545 in PB). (xvi) Coming to M/s. Marina Dealers Private Limited, our attention was drawn by the Ld. AR to pages 328 to 341 of the paper book wherein we note that this company was incorporated on 22/12/2008 and was having company identification number U51909WB2008PTC131401. This Company is having PAN AAFCM8486N. This company duly filed its return of income for AY 2009-10 before ITO Ward 4(2), Kolkata. This company was having a paid up capital with free reserves and surplus of ₹ 8,29,00,359/- as on 31/0312009. This Company has invested a sum of ₹ 45,00,000/- in the appellant company. The share application was made by account payee cheque. 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 ho 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. (xvi.a) The Ld. AR took pains to draw our attention to the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pages 362 to 376 of the paper book wherein we note that this company was incorporated on 27/08/2008 and was having company identification number U51909KA2008PTC085952. This company is having PAN AACCJ0577E. This company duly filed its return of income for AY 2009-10 before ITO Ward 6(2), Kolkata. This company was having a paid up capital with free reserves and surplus of ₹ 29,30,00,882/-as on 31/0312009. This Company has invested a sum of ₹ 49,00,000/- in the appellant company. The share application was made by account payee cheque. 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. (xviii.a) The Ld. AR took pains to draw our attention to the present status of this share subscriber. Jaguar Merchandise Pvt Ltd is summarized, the company is managed by Mr. Naresh Jhunjhuwala and Mr. Payanna Ranjan. The business group of the company is having interest in Iron Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 41,00,000/- in the appellant company. The share application was made by account payee cheque. 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. (xx.a) The Ld. AR took pains to draw our attention to the present status of this share subscriber. Land Mark Vintrade Pvt Ltd is managed by Mr. Shambhu Kumar Singh and Mr. Kaushal Kumar Agarwal. The business group of the company is having interest in plywood, electric Electronics industries. The registered office of the company is situated at 20B, British India Street, 5th Floor, Room No. 1A, Kolkata- 700069. The total revenue for the year ended on 31.03.2019 is ₹ 37.33 Lac. The company Non-Current Assets (Tangible Assets) as on 31.03.2019 is ₹ 149.78 Lac (page no. 1680-1711 in PB). (xxi) In respect of M/s. Accord Commodities Private Limited, the Ld. AR drew our attention to pages 411 to 428 of the paper book wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id documentary evidences the AO held the explanation to be unacceptable and treated the share application as unexplained cash credit thereby making addition under Section 68 of the Act. On appeal the Ld CIT(Appeals) deleted the aforesaid addition holding that the identity of the share applicants stood established beyond doubt, and all the payments were made through account payee cheques and the share applicants were regular income-tax assessees. The Ld CIT(Appeals) further held that the Revenue did not bring any evidence on record to suggest that the share 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 were ingenuine or the applicants were non-creditworthy. The findings of the Ld 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noting the facts, merely rejected the same. This would be apparent from the observations of the Assessing Officer in the assessment order to the following effect:- ''Investigation made by the Investigation Wing of the department clearly showed that this was nothing but a sham transaction of accommodation entry. The assessee was asked to explain as to why the said amount of ₹ 1,11,50,000/- may not be added to its income. In response, the assessee has submitted that there is no such credit in the books of the assessee. Rather, the assessee company has received the share application money for allotment of its share. It was stated that the actual amount received was ₹ 55,50,000/- and not ₹ 1,11,50,000/- as mentioned in the notice. The assessee has furnished details of such receipts and the contention of the assessee in respect of the amount is found correct. As such the unexplained amount 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee produced material. The least that the Assessing Officer ought to have done was to enquire into the matter by, if necessary, invoking his powers under Section 131 summoning the share applicants or directors. No effort was made in that regard. In the absence of any such finding that the material disclosed was untrustworthy or lacked credibility the Assessing Officer merely concluded on the basis of enquiry report, which collected certain facts and the statements of Mr.Mahesh Garg that the income sought to be added fell within 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 hi ..... 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