TMI Blog2022 (9) TMI 1571X X X X Extracts X X X X X X X X Extracts X X X X ..... r company i.e. M/s. Lovely Suppliers Pvt. Ltd. (supra) had made the payment towards share capital and share premium to the assesee company, it was observed by the CIT(Appeals) that the aforesaid share subscriber had during the year under consideration sold its investments and in lieu thereof was in receipt of money from various other companies. As rightly concluded by the CIT(Appeals) that as the assessee by placing on record substantial documentary evidence had proved to the hilt the genuineness of the transaction, therefore, the A.O without carrying out any enquiry could not have justifiably drawn adverse inferences as regards the authenticity of the transaction in question. Accordingly, drawing support from the judgement of CIT Vs. Lovely Exports (P) Ltd. [ 2008 (1) TMI 575 - SC ORDER] and Venkateshwar Ispat (P) Ltd. [ 2009 (5) TMI 290 - CHHATTISGARH HIGH COURT] , it was observed by the CIT(Appeals) that now when the investment made by the share subscriber company, viz. M/s. Lovely Suppliers Pvt. Ltd. was duly reflected in the latter s audited financial statement for the year under consideration, therefore, there was no justification on the part of the A.O in dislodging the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on points of law and facts circumstances of the case, the Ld. CIT(A) was justified in giving a finding which is contrary to the ratio of the decisions of ITAT, Kolkata 'B' Bench in the case of M/s SubhlakshmiVanijya (P) Ltd. Vs CIT-1, Kolkata in ITA No. 1104/Ko1/2014 and other cases dated 30.07.2015? 6. Whether on points of law and facts circumstances of the case, the Ld. CIT(A) was justified in giving a finding which is contrary to the ratio of the decision of Hon'ble ITAT, Kolkata Bench in the case of M/s Bisakha Sales (P) Ltd. Vs CIT-II, Kolkata [ITA No.1493/Kolkata/2013]? 7. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) was justified in deleting the disallowance of Rs.2,52,049/- made by the AO u/s 14A of the Act r.w.r. 8D of the I.T. Rules without considering the extent provisions of section 14A(3) of the I.T. Act, 1961.? 8. Whether on points of law and on facts circumstances of the case, the Ld. CIT(A) has erred in deleting the addition made u/s 14A, when clause (3) of the Section 14A of the Act clearly prescribes that provision of section 14A(2) shall also apply in relation to case where any assessee claims that no expenditure has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law and on facts circumstances of the case, the ITAT was justified in confirming the order of Ld. CIT(A) has erred by giving a finding which is contrary to the evidence on record, as the Ld. CIT(A) has accepted the creditworthiness of the entities investing in the share capital and share premiums of the assessee company as genuine, a finding which is factually incorrect, thereby rendering the decision, which is perverse? 15. Whether on points of law and facts circumstances of the case, the Id. CIT(A) was justified in giving a decision in favour of the assessee and against the revenue though there is no nexus between the conclusion of fact and primary fact upon which conclusion is based? 16. The order of is erroneous both in law and on facts . 17. Any other ground that may be adduced at the time of hearing . 2. Succinctly stated, the assesee company which is engaged in the business of manufacturing of HB wire, HBG wire, Standard Wire Grooved Rubber sole plates, had filed its return of income for the assessment year 2014-15 on 30.09.2014, declaring an income of Rs.6,97,400/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted money through a maze of such transactions, concluded, that as the assessee had failed to come forth with any explanation about the nature and source of the credits that were appearing in the form of share capital of M/s. Lovely Suppliers Pvt. Ltd. (supra), therefore, having failed to discharge the onus that was cast upon it as regards proving the nature and source of the aforesaid receipt, the same, thus was to be held as an unexplained cash credit u/s.68 of the Act. The A.O while observing as herein above, was of the view that the fact that the transactions in question were carried out through cheques would cannot be taken as sacrosanct for proving the genuineness of the credits in question. Also, it was observed by him that a mere filing of PAN details of the share applicant would also not assist the assessee to prove the genuineness of the cash credit in question. It was further observed by the A.O that as there were no business credentials of the aforesaid company, viz. Lovely Suppliers Pvt. Ltd.(supra), therefore, it could not be ascertained that the latter had infused funds in the form of share capital and share premium with the assessee company. Accordingly, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h fact could safely be gathered from a perusal of its bank statement that was filed before the A.O. On the basis of his aforesaid contentions, it was the claim of the assessee that as it had in the course of the assessment proceedings duly established the identity and creditworthiness of the share applicant, as well as the genuineness of the transaction of having received the amount of share capital and share premium in question, therefore, there was no justification on the part of the A.O in dubbing the amount in question as unexplained cash credit u/s.68 of the Act. 5. Considering the facts as were pressed by the assessee before him, the CIT(Appeals) was of the view that though the assessee had in the course of the assessment proceeding duly furnished with the A.O supporting documentary evidences to substantiate the authenticity of the transaction of having received share capital and share premium from the aforementioned company, viz. M/s. Lovely Suppliers Pvt. Ltd. (supra), but he had rejected the same without giving any reason for doing so. It was further observed by the CIT(Appeals) that though the assessee had furnished documents such as PAN, balance sheet, ROC details, bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to substantiate its claim of having received genuine share capital and share premium from the aforesaid share subscriber, had discharged the onus that was cast upon it, thus, in absence of any notice having been issued by the A.O u/ss. 133(6) or 131 of the Act, no adverse inferences could have been summarily drawn by him as regards the authenticity of the transaction in question. Apart from that, it was observed by the CIT(Appeals) that not only the A.O had failed to carry out any enquiry, but had also grossly erred in law and the facts of the case in not making available to the assessee any material which he intended to use for drawing of adverse inferences against it. It was, thus, observed by the CIT(Appeals) that as the A.O had by relying on certain documents at the back of the assessee drawn adverse inferences in the latter s hand, therefore, the same pursuant to the judgment of the Hon ble Supreme Court in the case of Andaman Timber, 281 CTR 241 (SC) in the light of the basic tenements of the principles of natural justice could not be sustained. It was observed by the CIT(Appeals) that now when the assessee had discharged the primary onus that was cast upon it by placing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, drawing support from the judgement of the Hon ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd. 216 CTR 195 and that of the Hon ble High Court of Chhattisgarh in the case of ACIT Vs. Venkateshwar Ispat (P) Ltd., 319 ITR 393, it was observed by the CIT(Appeals) that now when the investment made by the share subscriber company, viz. M/s. Lovely Suppliers Pvt. Ltd. (supra) was duly reflected in the latter s audited financial statement for the year under consideration, therefore, there was no justification on the part of the A.O in dislodging the claim of the assessee of having raised genuine amount of share capital and share premium from the aforesaid party without placing on record any material which would prove otherwise. Accordingly, the CIT(Appeals) on the basis of his aforesaid observation vacated the addition made by the A.O by treating the share capital and share premium received by the assessee company from the aforesaid share subscriber company, viz. M/s. Lovely Suppliers Pvt. Ltd. (supra) as unexplained cash credit u/s.68 of the Act. 7. Adverting to the disallowance u/s.14A of the Act, The CIT(Appeals) was of the view that as the assessee company during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received share capital and share premium from the said share subscriber, therefore, the primary onus that was cast upon it to prove the authenticity of the aforesaid transaction in question was duly discharged. As observed by the CIT(Appeals) and, rightly so, the A.O could not have summarily dislodged the aforesaid duly substantiated claim of the assessee of having received share capital and share premium from the aforementioned share subscriber company i.e without placing on record any such material which would irrefutably prove otherwise. Our aforesaid view is duly fortified by the Judgment of the Hon ble High Court of Chhattisgarh in the case of Pawan Kumar Agrawal Vs. ITO, Ward-2(2), Bilaspur. In the aforesaid judgment, it was observed by the Hon ble High Court that once the assessee has discharged its onus by placing on record supporting documentary evidences, then the A.O is bound to issue notice u/s. 133(6) or 131 of the Act, failing which no adverse inferences qua the authenticity of the transaction in question could be drawn on its part. As a matter of fact, we find there is no whisper of any such material or evidence which would dislodge the aforesaid claim of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mium from the said share subscriber, therefore, in absence of any material proving to the contrary having been placed by the A.O, there was no justification on his part in dubbing the amount in question as an unexplained cash credit u/s.68 of the Act. We, thus, in terms of our aforesaid observations finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the addition of Rs.2,93,80,000/- made by the A.O u/s.68 of the Act, upheld his order. Thus, the Grounds of appeal No. (s) 1 to 6 raised by the revenue are dismissed in terms of our aforesaid observations. 13. We shall now advert to the grievance of the Revenue that the CIT(Appeals) had erred in law and facts of the case in vacating the disallowance made by the A.O u/s.14A r.w.r. 8D(2)(iii) of Rs.2,52,049/-. As stated by the Ld. AR, and rightly so, as the assessee company during the year under consideration had not received any exempt dividend income, therefore, no disallowance u/s.14A of the Act was called for in its hand. Our aforesaid view is fortified by the judgment of the Hon ble Supreme Court in the case of CIT Vs. Chettinad Logistics Pvt. Ltd. (2018) 257 Taxmann 2 (SC) and also of the Hon ble High ..... 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