TMI Blog2022 (10) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee but simply cited certain case laws even without pointing out as to how these case laws were applicable to the facts and circumstances of this case. The order of the CIT(A) is a non-speaking order. By simply reproducing the contents of the case laws without discussing about their application on the facts of the case, in our view, would not make the order of the ld. CIT(A) justifiable speaking order and hence, the same is not sustainable as per law. No justification on the part of the lower authorities in making the impugned additions and the same are accordingly ordered to be deleted. - Appeal of assessee allowed. - I. T. A No. 2269/Kol/2019 - - - Dated:- 12-10-2022 - Shri Sanjay Garg , Judicial Member And Dr. Manish Borad , Accountant Member Shri Sunil Surana , FCA , appeared on behalf of the appellant Shri Vijay Kumar , Addl. CIT - DR , appeared on behalf of the Respondent ORDER Per Sanjay Garg , Judicial Member : The present appeal has been preferred by the assessee against the order dated 20.08.2019 of the Commissioner of Income Tax (Appeals)-17, Kolkata [hereinafter as CIT(A) ] passed u/s 250 of the Income Tax Act (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint. The AO added the same in the assessment made u/s 143(3) only on the ground that the shareholders did not appear personally in response to notice u/s 131 nor assessee could produce the shareholders. However the shareholders duly complied with the summons by filing their reply- vide paper book page 148-160. 3. Shareholders had substantial Net worth in comparison to investment made by way of share subscription In appellant company as depicted in their balance sheet- OyesterCommotrade Pvt Ltd having net worth of more than 1.42 crores Vide paper book page 38, Skyhigh Minerals Pvt Ltd having net worth of more than 2.47 crores vide paper book page 47, Mahalaxmi Promotion Pvt. Ltd having networth of more than 7.98 crores vide paper book page 56, Niknar Commodities Pvt Ltd having networth of more than 5.09 crores Vide paper book page 68, R.R.Coal Agencies Pvt Ltd having networth of more than 12 crores vide paper book page 80, Rosemary Dealcom Pvt Ltd having networth of more than 1.87 crores vide paper book page 91 and Newtown Mercantile Pvt Ltd having networth of more than 12.79 crores vide paper book page 100. 4. Three share applicants assessed u/s 143(3) on substantive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... videncing their identity, and creditworthiness and that even source of investment was also provided. He has further submitted that the subscribing companies were having adequate reserves and surpluses to invest in the assessee company. Further, that all these subscribers were income tax assessees and further that all the investor companies were duly incorporated with the Registrar of Companies. That there were no paper companies involved in the transactions. The Ld. Counsel has also invited our attention to the assessment orders passed u/s 143(3) of the share subscriber companies. That, however, the AO instead of examining the relevant documents, insisted for the personal presence of the directors of the subscribers which was not in the hands of the assessee. He therefore, has submitted that the identity and creditworthiness of these companies was duly established. He has further submitted that the AO could not point out any defect or discrepancy in the evidences/documents submitted by the assessee to prove the identity and creditworthiness of the subscribers and genuineness of the transaction. He has further submitted that instead of pointing out any defect or discrepancy in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not even mentioned the names of the share subscriber companies and even has not mentioned a word as to which of the share subscriber company or the corresponding transaction thereof was not genuine and on what grounds. The AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. The Ld. Counsel for the assessee has rightly placed reliance upon the decision of the Hon ble Bombay High Court in the case of PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd. reported in (2017) 84 taxman.com 58 (Bom) wherein the Hon ble High Court has held that once the assessee has produced documentary ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Pvt. Ltd., Liberal Infrastructure Pvt. Ltd., Darshan Enclave Pvt. Ltd., Snow Fall Impex Pvt. Ltd. involving corresponding sums of ₹27,60,000/-, ₹55,20,000/-, ₹82,80,000/- in case of third and fourth and ₹48,30,000/- in last entity's case; respectively totalling to ₹3,01,00,000/-. Case file suggests that the assessee has placed on record their income tax acknowledgement of the impugned assessment year 2012- 13, directors' report alongwith audited financial statements, explanation regarding source of investments, bank statements, share application forms and board's resolution(s) followed by their respective regular assessment orders pertaining to very assessment year u/s. 143(3) of the Act. Their Assessing Officer(s) made u/s 68 unexplained cash credits additions of share premium amounting to ₹67,03,00,000, ₹44,85,00,000/-, ₹24,42,00,000/- ₹21,70,00,000/- in case of first four entities and accepted similar credits of ₹20,45,00,000/- to be genuine satisfying all parameters of identity, genuineness and creditworthiness. It can therefore be safely assumed that all these additions sums forming subject-matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere would be no further burden on the revenue to show that the income is from any particular source. Further, in para 9 of the said decision, the hon ble Supreme Court has observed as under: 9. The Judgments cited hold that the Assessing Officer ought to conduct an independent enquiry to verify the genuineness of the credit entries. In the present case, the Assessing Officer made an independent and detailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports revealed that the share-holders were either non-existent, or lacked credit-worthiness. There after the Hon ble Supreme Court summed up the principles which emerged after deliberating upon various case laws as under: 11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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