TMI Blog2023 (3) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER GIRISH AGRAWAL , ACCOUNTANT MEMBER : This appeal filed by the revenue is against the order of Ld. CIT(A)-7, Kolkata vide Appeal No. 224/CIT(A)-7/Ward-6(3)/Kol/15-16 dated 02.09.2020 passed against the assessment order by ITO, Ward-6(3), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ), dated 18.03.2015. 2. Grounds raised by the revenue are reproduced as under: 1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the addition of Rs. 1,60,00,000/- made by the A.O. on account of share capital and premium in the course of assessment in absence of identity of the creditors, genuineness and creditworthiness of the entire transactions. 2. Whether on the facts and in' the circumstances of the case, Ld. CITCA) was justified in deleting the addition of Rs. 1,60,00,000/- made by the A.O. where no personal attendance was made by any director of the share allottee companies during the course of assessment proceedings and as such identity creditworthiness of the creditors and genuineness of the transactions could not be verified. 3. The principles which has been laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter to AO for fresh verification. Thus, he has violated the provisions of Rule 46A of the I.T. Rules. 8. The appellant craves to add, alter, amend, delete or substitute any of the grounds and/or take additional grounds before or at any time of hearing of this appeal. 3. Brief facts of the case are that assessee filed its return of income on 22.09.2012 reporting a total income of Rs. 6,13,650/-. Case was selected for scrutiny through CASS for which statutory notices were issued and served on the assessee. Against the said notices, assessee through its Authorised Representative Shri P.K. Khaitan furnished the explanations and filed relevant documents and details. In the course of assessment, Ld. AO noted that assessee has received share application money amounting to Rs. 1,60,00,000/- against issue of 40,000 shares having face value of Rs. 10/- per share with a premium of Rs. 190/- per share. Ld. AO sought details and explanations on this amount of share capital from the assessee and issued summon u/s. 131 of the Act to the directors of the assessee. Ld. AO noted that none appeared before him. Not convinced by the details and documentary evidence placed on record, Ld. AO by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s. 133(6) of the Act is submitted, it cannot be ignored. The confirmations made in the said letter are to be prima facie considered as correct unless evidence is brought on record to falsify the claim made therein. According to him, even in the submissions including ITRs, audit reports, share application details etc. as listed above, the Ld. AO has not found fault in any of the details submitted and simply proceeded to make addition in respect of the amount of share capital and premium. 6.3. Ld. Counsel further submitted that all the shareholder companies are regular income tax assessees and had filed their income tax returns. In all the nine cases except one i.e. of Grow Fast Realtors Pvt. Ltd., their respective income tax returns were processed u/s. 143(1) of the Act by the department, copy of their respective intimations are placed on record in the paper book. In the case of Grow Fast Realtors Pvt. Ltd., assessment was completed u/s. 143(3) of the Act for AY 2012-13 vide order dated 02.06.2014. It was thus emphasized that identity of all the nine share subscribers is well established before the Department and is beyond any doubt. 6.4. To establish the creditworthiness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled for and also confirming the investigations made by them explaining the source thereof. The assessee had duly discharged the onus laid upon them u/s. 68 of the Act. 7. We have heard the rival contentions and perused the material available on record and have given our thoughtful consideration to the elaborate observations and findings given by the Ld. CIT(A) while giving relief to the assessee. At the outset, we note that notices u/s. 133(6) of the Act were issued by the Ld. AO to all the nine subscribers, who had replied giving all the details and documents required by the Ld. AO along with confirming the transaction of they making investment in the share capital of the assessee. We also take note of the undisputed fact of assessments/intimations issued by the department for all the share subscribers, which testifies the identity of these nine share subscribers. 7.1. From the perusal of the paper book and the documents placed therein, it is seen that all the share applicants are (i) income tax assessees, (ii) they are filing their income tax returns, (iii) share application form and allotment letter is available on record, (iv) share application money was made by account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share applicants in their replies addressed to the AO. However, the AO had not brought these indisputable facts on record but acted on his whims and fancies. It is observed that the burden which lay on the appellant, in relation to section 68 of the Act, has been duly discharged by it and nothing further remains to be proved by it on the issue. Since the conditions precedent for discharging of burden of proof under the provisions of section 68 of the Act is met with adequate evidence, the addition made under such pretext deserves to be deleted. In this respect it is imperative to refer to the decision of the jurisdictional High Court in the case of CIT vs. Sagun Commercial (P) Lid. [ITA No. 54 of 2001 dated 17.02.2011) wherein it was held as follows: After hearing the learned advocate for the appellant and after going through the materials on record, we are at one with the Tribunal below as well as the Commissioner of Income-tax (Appeals) that the approach of the Assessing Officer cannot be supported. Merely because those applicants were not placed before the Assessing Officer, such fact could not justify disbelief of the explanation offered by the assessee when details of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tantial question of law was involved in the appeal.'' iii) Judgment of Hon'ble Jurisdictional High Court in the case of Exoimp Resources (India) Ltd. vs. CIT (supra), wherein it was held as follows: It is incumbent upon the Assessing Authority to examine the explanation of the creditor and arrive at a conclusion as to whether the explanation was satisfactory. The conclusion arrived by the Assessing Authority is to be communicated to the assessee if such explanation is not considered satisfactory. If thereupon the assessee submits any comments or furnishes further information, in that event, the Assessing Authority has to examine the same and arrive at his own conclusion. The inbuilt safeguard provided in section 68 cannot be ignored by the Assessing Authority at his sweet will. The Assessing Authority can add the share capital as undisclosed income if no explanation is offered by the assessee. But since the details/explanations were offered, it was incumbent on the Assessing Authority to examine the same and arrive at a cogent conclusion. Assessing Officer having failed to discharge such obligation the addition is not sustainable in law.., case of CIT vs. Lov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary to prove identity, creditworthiness and genuineness of the alleged transaction, has discharged the initial burden casted upon it under the provisions of section 68 of the Act. Unless and until, the assessing authority finds any lacuna or adversity or defect in the said documents, the burden to prove remains on the Revenue authorities. In the instant case, ld. Assessing Officer failed to discharge the burden and summarily disregarded the documents filed by the assessee by merely referring to some decisions and not going into the facts of the case except referring to the price per share. 9. We further observe that provision for examining the source of source under the provisions of section 68 of the Act has been brought in by Finance Act 2012 w.e.f. 01.04.2013 as per which where an assessee is a company (not being a company in which public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory unless: a) the person being a resident in whose name such credit is recorded in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X
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