TMI Blog2022 (11) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... worthiness of the loan transactions, the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. Assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has commented on these evidences filed by the assessee. Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the decisions as discussed above, we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue. - I.T.A. No. 711/Kol/2019 - - - Dated:- 2-11-2022 - Shri Sanjay Garg , Judicial Member And Shri Rajesh Kumar , Accountant Member For the Appellant : Manish Tiwari , FCA For the Respondents : Ranu Biswas , Addl. CIT - DR ORDER Per Rajesh Kumar , AM This is the appeal preferred by the revenue against the order of the Commissioner of Income Tax(Appeals)-7, Kolkata [hereinafter referred to as 'Ld. CIT(A)'] dated 09.01.2019 for the assessment year 2012-13. 2. The grounds raised by the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the appellant as share capital including share premium invites the mischief of section 68 of the Act or not. I find from the audited accounts of the appellant that it is engaged in the business of trading in iron steel since its incorporation in 2005. I find that in course of assessment proceedings the AO sought details of share capital raised by the appellant. The appellant furnished details of such share holders. The AO then issued summon u/s. 131 of the Act to all the 9 shareholders. In compliance thereto all the 9 shareholders filed their replies before the AO. However none of the shareholder appeared before the AO in compliance to summon issued u/s. 131 of the Act. The addition was made by the AO as there was no personal compliance to summon u/s. 131 of the Act by the shareholders as well as by the appellant company. According to the AO because of non compliance of directors of the subscriber companies in person the nature and source of share capital raised by the appellant were in doubt. I find that in response to notices issued by the AO, the appellant has furnished the details of share capital which included share application forms, Board resolution for making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king order cannot be sustained in any manner as per law. I find that the identities of these individuals are established by the PAN issued to them by the Department and the Bank accounts opened in their names. The creditworthiness is established from the fact that they have adequate capital balances with them and the genuineness is established from the fact that the entire transactions were through banking channel. Therefore in my considered view, the appellant has discharged its initial onus cast upon it vis- -vis section 68 of the Act and in view of the fact that the AO has failed to discharge his part of the onus in rebutting the claim of the appellant, the addition of Rs. 15,00,000/- stands to no merit and therefore is hereby directed to be deleted.. Remaining share capital of Rs. 3,00,00,000/- was raised from the following shareholders and are dealt with accordingly: The AR drew my attention to pages 33 to 188 of the paper book from where I find that complete details of shareholders were furnished before the AO. On perusal of replies filed by all the 9 shareholders I find that the following evidences were filed before the AO as follows: (a) Income Tax Return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the appellant's case. The shareholders have confirmed the transactions in response to summon u/s. 131 of the Act which are duly corroborated with their respective bank statements and all the payments are by account payee cheque and no cash is found to have been deposited immediately before issuing the cheque to the appellant thus the genuineness is also proved. Accordingly all the three conditions to explain the nature and source of money u/s. 68 of the Act is proved by the appellant. All the evidences were before the AO and the onus cast upon the appellant was shifted to the AO to disprove the materials before him. Even the justification for share premium charged was before the AO but the AO did not do anything apart from issuing summons to the shareholders. He treated the entire sum of ₹ 3,00,00,000/- as unexplained cash credit u/s. 68 of the Act only on the pretext that the directors of the shareholder companies did not turn up before him. I find that the reliance placed by the AR upon the decision of Hon'ble Apex court in the case of Orissa Corporation Ltd. reported in 159 ITR 78 Hon'ble Gujarat High Court in the case of DCIT vs. Rohini Builders reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he necessary evidences as called for but only objection was that the summon issued u/s. 131 to the directors of the investor companies were not complied with. The Ld. A.R. submitted that the appellate order was passed after detailed analysis and examination of all the evidences and a factual findings of facts have been recorded by the Ld. CIT(A) to the effect that the genuineness of the transactions and creditworthiness of the parties were fully proved. The Ld. A.R thus heavily relied on the order of Ld. CIT(A) and case laws as referred in the appellate order and submitted that the appellate order may be affirmed by dismissing the appeal of the assessee. 8. Having heard the rival submissions and perusing the material on record, we note that Ld. CIT(A) has carried out a detailed examination/enquiry of the evidences by the assessee before him and it is only after detailed analysis into various aspects such as genuineness of the transactions and creditworthiness of the investors, the addition was ordered to be deleted. Moreover, we note that the AO had made the addition merely on the ground that the shares were issued at a very high premium without any justification. In our opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness. As rightly pointed out by the learned counsel that the Ld. CIT(A) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi 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 note. When it was found by the Ld. CIT(A) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact findings. Indeed the Tribunal did not really touch the aforesaid fact finding of the Ld. CIT(A) 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 463, the Supreme Court has observed as follows: The Income-Tax Appellate Tribunals performs a judicial function under the Indian Income-tax Act. It is invested with authority to determine finally all questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal raised by the revenue that the revenue disputed only the proof of identity of share holder. In this regard it is seen that for AY 2004-05 Shree Shyam Trexim Pvt. Ltd. was assessed by ITO, Ward-9(4), Kolkata and the order of assessment u/s. 143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd. was assessed to tax u/s. 143(3) for AY 2005-06 by ITO, Ward-9(4), Kolkata by order dated 20.03.2007. Similarly Jewellock Trexim Pvt. Ltd. was assessed to tax for AY 2005-06 by the very same ITO, Ward-9(3), Kolkata assessing the assessee. In the light of the above factual position which is not disputed by the revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. The decision of the Hon'ble Allahabad High Court as well as ITAT, 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 Ld. CIT(A) and dismiss the appeal of the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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