TMI Blog2023 (1) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961 (in short the Act ) by ld. Commissioner of Income-tax (Appeals)-23, Kolkata [in short ld. CIT(A) ] dated 01.03.2017 which is arising out of the assessment order framed u/s 143(3) of the Act dated 16.03.2015. 2. The assessee is in appeal before this Tribunal raising the following grounds: 1. That on the facts and in the circumstances of the case, Ld. CIT(A) is wrong and unjustified in confirming the action of Assessing Officer who determined the amount of fresh share capital introduced including the premium amounting to Rs. 1,40,00,000/- as unexplained cash credit as provided in Section 68 of Income Tax Act, 1961. 2. That the appellant craves leave to add, alter, adduce or amend and ground or grounds on or before the date on hearing of the appeal. 3. Brief facts of the case as culled out from the records are that the assessee is a private limited company engaged in the business. Income of Rs. 1,79,701/- declared in the e-return filed for AY 2012-13 on 22.09.2012. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) 142(1) of the Act. During the course of assessment proceedings ld. AO noticed that during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has made addition merely relying on the case of Bisakha Sales Pvt. Ltd. (supra) but the same is not applicable in the case of the assessee since it is distinguishable on facts. It was submitted that in the case of Bisakha Sales Pvt. Ltd. (supra) Hon'ble ITAT did not go into the merits of the case and it was a case of the order passed u/s 263 of the Act against which the assessee came in appeal before Hon'ble Tribunal. However, the instant case is not of Section 263 of the Act, and detailed proceedings carried out u/s 143(3) of the Act wherein complete details were filed and proper enquiries were conducted. Therefore, the decision of this Tribunal in the case of Bisakha Sales Pvt. Ltd. (supra) is not applicable. 6. Reliance was, however, placed on the judgment of Hon'ble Supreme Court of India in the case of CIT vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 0078 (SC) in support of the contention that before discrediting the documents filed by the share applicant companies, the Department ought to have exercised its plenary powers and conduct independent enquiries with these share applicant companies and collect material evidences against the assessee and such out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Satyam Plywood Merchandise Pvt Ltd 40,00,000/- TOTAL 1,40,00,000/- 10. After the case being selected for scrutiny, ld. AO asked the assessee to explain the source of above referred sum of share capital and share application money. In response, the assessee submitted the following documents: i. Party Wise details of share capital raised during the year, ii. Form 2, Form 5 filed with ROC, iii. Memorandum and Article of Association, iv. Bank Statement for the year, v. Share Application Form, vi. Form 18 in support of registered office address of the company, vii. Audited accounts for the year, viii. Relevant Bank Statement for the year, ix. Form 18 in support of registered office address of these companies. 11. Thereafter, summons were issued to the Directors of the share subscriber companies as well as the Directors of the assessee company which were duly served upon the respective persons and the details as called for were filed which included the following: i. Photo Identity and Address Proof, ii. Narration of all deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y these Directors to ld. AO. On the basis of these facts undoubtedly the assessee has successfully discharged the onus which lay upon it by producing all the evidences for proving the identity and creditworthiness of the investors and the genuineness of the transaction. Merely non-appearance of the Directors cannot be a basis for treating the share application money as unexplained or non-genuine. We find support from the judgment of Hon'ble Gujarat High Court in the case of Rohini Builders (supra) relying on the judgment of Hon'ble Apex Court in the case of Orissa Corporation Pvt. Ltd. (supra) (relevant extract: Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation (1986) 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. Therefore we delete the addition of Rs 5,60,000/- and consequently the appeal of assessee is allowed. 36. In the result, the appeal of the assessee is allowed. 16. Similar view also taken in the case of Satyam Smertex (P.) Ltd vs DCIT reported in [2020] 117 taxmann.com (Kolkata - Trib.) pronounced on 29-05-2020 where the Hon ble jurisdictional ITAT held that: 30. To sum up section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source, it shall be assessed as its undisclosed income. In the facts of the present case, both the nature source of the share application 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 stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders were duly served notice u/s 133(6) of the Act which is sufficient to prove the identity of such shareholders. As far as the genuineness of the transaction is concerned, the same have taken place through banking channel which is traceable from the origin to the destination of such payments and further confirmed from the documents furnished before us. All these transactions are duly recorded in the respective balance sheets of the shareholder companies. Creditworthiness of the transaction is also proved from the fact that all the shareholder companies were having more than sufficient share capital and reserve and surplus fund for giving share application money. Even otherwise ld. AO has not made the addition for charging of higher share premium and has made the addition of unexplained cash credit but still charging of share premium is a commercial decision and the same can be challenged only with sufficient documentary evidence. It thus brings to a conclusion that since the assessee filed complete details of identity and creditworthiness of the share subscribers and genuineness of the transaction before ld. AO, the onus shifted to ld. AO to disprove the material placed before hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com 435(SC). iii) CIT vs. Kamdhenu Steel Alloys Limited [ITA No.972 of 2009] dated 23.12.2011 wherein the Delhi High Court in a batch of 11 appeals was required to adjudicate on the very issue of addition made by the A.O u/s 68 in respect of share application monies received by the assessees as alleged unexplained cash credit. In all these cases, the Department had alleged that the share application monies were received from persons who were entry operators and the monies received by way of share application was nothing but was routing of unaccounted money of assessee in the form of subscription to share capital. However, in the assessments made the A.Os had not brought on record any material or evidence to substantiate such finding. Accordingly, on appeal the appellate authorities had deleted the additions made u/s 68 of the Act. iv) CIT vs. Orissa Corpn (P) Ltd. 159 ITR 78 where the Court held that In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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