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TMI Blog2023 (9) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... w in deleting the addition of Rs. 45 crores made by the Assessing Officer under Section 68 of the Income Tax Act, 1961? (2) Whether the order of the Income Tax Appellate Tribunal is vitiated on account of a perverse interpretation of the facts of the case?" 2. To adjudicate this appeal, the following broad facts are required to be noticed. 2.1 In Financial Year (FY) 1999-2000, relevant to Assessment Year (AY) 2000-01, the respondent/assessee had received Rs. 45 crores by way of private placement from five (5) companies towards share capital and share premium account. 2.2 The investor companies had bought shares bearing a face value of Rs. 10/- at a premium of Rs. 90/- per share. Thus, out of Rs. 45 crores, Rs. 4.50 crores was received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shuklamber Exports Ltd. [serial number 1], Sukaram Marketing Ltd. [serial number 4] and Sheetal Exports Ltd [serial number 5]. The details concerning these investments made by the respondent/assessee are set out hereafter: S.No. Name/Address of Share Applicant No, of Shares Purchased Amount Invested 1. Shuklamber Exports Ltd, 10159, Padam Singh Road, Karol Bagh, New Delhi-110005 30,000 Rs 30,09,000/- 4. Sukaram Marketing Ltd, 5, Russel Street, Kolkata-700 071 15,55,000 Rs. 15,55,50,000/- 5. Sheetal Exports Ltd, 9 Ezra Street, Kolkata, 700 001 9,67,000 Rs 9,67,00,000/- 3.1 Thus, out of the total investment of Rs. 45 crores, the respondent/assessee had invested Rs. 25,52,50,000/- in the three (3) companies referred to above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 5.1 The triple test evolved by the Courts concerns the following: establishment of the identity and the creditworthiness of the creditor, and the creditworthiness as also the genuineness of the transaction. 6. Given this position, the AO made an addition of Rs. 45 crores under Section 68 of the Act to the income declared by the respondent/assessee as, according to him, the said amount constituted unexplained cash credit. 7. Being aggrieved, the respondent/assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"]. 8. The CIT(A) via order dated 18.03.2004 confirmed the order passed by the AO. It is important to note that, although, the CIT(A) concluded that the identity of the investors was establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, as also their Income Tax receipts and Income Tax account number. In response to the summons u/s 131, they had appeared before the AO of the assessee company. However, for reasons best known to him, the AO did not record their statements. The Assessee also furnished copies of the replies filed by the applicant companies in response to the query of the AO. As per these replies also, these companies had furnished, at all stages of the asstt. proceedings, the relevant documentary evidence, as required. These companies, according to the assessee, and as per the record produced, are companies incorporated under the Companies Act, 1956. They have been regularly filing their returns of income under the Income Tax Act. Also, they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if it was to be assumed that subscribers increased share capital were not genuine, under no circumstances could the amount of share capital be regarded as the undisclosed income of the assessee." [Emphasis is ours] 11. In our view, the conclusion reached by the Tribunal that the respondent/assessee proved the nature and source of the investment made in its share capital and towards share premium, was founded, if not fully, substantially, on the submission made on behalf of the respondent/assessee that information sought via notices issued under Section 133(6) of the Act had been furnished and that although in response to the summons issued under Section 131 of the Act, the concerned persons had appeared before the AO, their statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had discharged its onus. 15. As indicated right at the beginning of our narration, out of Rs. 45 crores invested in the respondent/assessee, Rs. 25,52,50,000/- was reinvested by the respondent/assessee in three (3) out of the five companies, i.e., in Shuklamber Exports Ltd., Sukaram Marketing Ltd. and Sheetal Exports Ltd.,i.e., nearly the entire amount was repaid. 16. The Tribunal somehow did not deem it fit to inquire as to why more than 50% of the amount raised by the respondent/assessee was invested by it in the three companies referred to hereinabove. 17. The Tribunal, as a matter of fact, did not inquire into the financials of investor companies and, therefore, according to us, the test of creditworthiness was also not met in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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