TMI Blog2023 (1) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2023 - Shri Rajesh Kumar , Accountant Member And Shri Sonjoy Sarma , Judicial Member For the Appellant : Shri A. K. Tibriwal , FCA Shri Amit Agarwal , Advocate For the Respondent : Smt. Ranu Biswas , Addl. CIT DR ORDER Per Rajesh Kumar , AM : These are the appeals preferred by the assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-5, Kolkata (hereinafter referred to as the Ld. CIT(A) ] dated 01.11.2018 and 04.12.2018 for the AYs2012-13 2013-14. 2. First of all we shall adjudicate ITA No. 151/Kol/2019 for AY 2012-13. 3. The only issue raised by the assessee in the various grounds of appeal is against the order of Ld. CIT(A) upholding the addition of Rs. 56,00,000/- as made by the AO u/s 68 of the Act as unexplained cash credit in respect of share capital and share premium. 4. Facts in brief are that the assessee filed return of income on 26.09.2013. Thereafter the case of the assessee was selected for scrutiny and statutory notices were duly issued and served on the assessee. The AO observed that during the year, the assessee has issued 560 equity shares at face value of Rs 10/- and premium of Rs. 9,990/- from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave responded to the notices issued u/s 133(6) of the Act by the AO and filed all the details/evidences as called for by the AO the copies whereof are attached at page 53 to 176. We note that the AO has discussed a general modus operandi how the layering companies are operating and doing transactions in their bank accounts without commenting on the evidences filed by the assessee or by the investors. The AO simply made addition on the ground that the summons issued u/s 131 neither complied with by the assessee nor by the investor companies. The Ld. CIT(A) simply affirmed the order of AO that due to non-production of directors and assessee pursuant to summons issued u/s 131 the identity, creditworthiness of the investors and genuineness of the transactions could not be verified. We observe that the AO has not commented on the evidences filed by the assessee as well as by the investors. In our considered opinion the addition cannot be made for the reason that there was not compliance to summons issued u/s 131 of the Act when all the evidences and documents relating the share capital and the investors were available on records which were filed by the assessee as well as by the investo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of Crystal networks (P) Ltd. vs CIT (supra) has held as under: We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned 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 creditworthiness. As rightly pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the impugned additions to be accepted as genuine in respective investors entities' end as the source of the amount(s) in issue totalling to ₹3,01,00,000/-. Learned Departmental Representative fails to dispute that the same very amount cannot be added twice in payees and recipients' hands u/s 68 of the Act. We therefore see no reason to accept Revenue's instant former substantive ground. We affirm CIT(A)'s findings under challenge qua the instant former issue. 6.2. The aforesaid decision has been further relied upon by the coordinate Kolkata bench of the Tribunal in the case of Steelex Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions. The field reports revealed that the shareholders were either non-existent, or lacked credit-worthiness. Thereafter 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 investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imply 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. 10. In view of the above discussion we do not find justification on the part of the lower authorities in making the impugned additions and the same are accordingly ordered to be deleted. 11. The appeal of the assessee stands allowed. ii) Decision of Co-ordinate Bench of Kolkata in the case of ITO vs. M/s Anvil Electricals Pvt. Ltd. in ITA No. 133/Kol/2022 for AY 2013-14. The Co-ordinate Bench has held as under: 7. Having heard the rival contentions and perusing the material on record including the appellate order and remand report of the AO, we note that the assessee has produced all the evidences before the AO in the assessment proceedings as well as before Ld. CIT(A) in the appellate proceedings. The AO added this amount as unexplained cash credit reasoning that summon issued u/s 131 of the Act to the director of the assessee company remained uncomplied with whereas the AO has not pointed any defect or deficien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as relied by the ld AR and stated hereinabove namely Tradelink Carrying (P) Ltd Vs ITO (Supra), PCIT Vs Himachal Fibres (Supra) SLP against which was dismissed by the Hon ble Apex Court and CIT Vs. Nishan Indo Commerce Ltd (Supra). We, therefore, respectfully following the ratio as laid down in the above decisions ,uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue. iii) Decision of Co-ordinate Bench of Kolkata in the case of ITO vs. Sitka Mercantile in ITA No. 232/Kol/2021 for AY 2009-10 dated 10.11.2022. The Co-ordinate Bench has held as under: 10. We have heard the rival submissions and perused the material on record including the appellate order and various documents filed in the paper book from page nos. 58 to 705 comprising share application forms and allotment of shares, bank statements, IT acknowledgments, audited financial statements, explanation qua the source of funds. We observe from the records before us and also from the appellate order that the assessee has furnished all the details/evidences qua the share applicants furnishing the names and addresses, PAN cards, share application forms, share allotment advices, confirmations, audited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore we uphold the same by dismissing the appeal of the revenue. iv) Decision of Co-ordinate Bench of Kolkata in the case of M/s Lalbaba Seamless Tubes Pvt. Ltd vs. DCIT in ITA No. 2641/KOl/2019 for AY 2012-13 dated 21.10.2019. The Co-ordinate Bench has held as under: 8. We note that share subscribers have also filed sworn affidavits confirming the said investments and source of investments copies whereof have been filed at page 109 to 113. We further note that all the companies are active and have invested the money out of their own resources as is apparent from the details filed by the assessee as comprised in from page 58 to 67 of PB. It is also undisputed that a survey was conducted on Shri K.M. Naita who controlled the M/s Clubside Dealcom Pvt. Ltd. and during survey it was revealed that the said company was providing accommodation entries. However the said fact was never brought to the notice of the assessee during the assessment proceedings of the assessee. We also note that Mr. Sushil Kumar Naita has given a sworn affidavit a copy of which is filed at page 110 of PBstating that no accommodation entry was ever provided to the assessee. We note that said affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and records its findings on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 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 revenue. 9. Similar ratio has been laid down by the Hon ble Mumbai High Court in the case of CIT Vs Orchid Industries (P) Ltd 397 ITR 136 by holding that provisions of section 68 of the Act cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN ,financial and bank statements showing share application money . 10. In the instant case before us als ..... X X X X Extracts X X X X X X X X Extracts X X X X
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