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TMI Blog2025 (2) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... tant assessment year the assessee has issued equity shares thereby raising share capital/share premium amounting to Rs. 15,81,84,000/-. The AO for independent verification of transactions also issued notices u/s 133(6) to the subscribers and also issued summons u/s 131 of the Act to the director of the assessee company. The notices issued u/s 133(6) were duly replied by the subscribers by furnishing all the details and information along with evidences as called for by the AO. Shri Govind Garg appeared on 24.02.2015 before the AO in compliance summons u/s 131 of the Act but his statement was not recorded as is evident from the letter dated 10.03.2015 filed before the AO. Finally, the ld. AO made the addition of Rs. 15,81,84,000/-/-after rejecting the contentions of the assessee by treating the share capital / share premium as unexplained cash credit on the ground that summons issued u/s 131 of the Act were not complied with besides making other additions. 04. In the appellate proceedings, the ld. CIT (A) allow the appeal of the assessee by giving a very comprehensive finding that the assessee has prove the identity, creditworthiness of the subscribers and the genuineness of the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company. In defense of his argument he relied on the following decisions: i. CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); ii. CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); iii. Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); iv. ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and v. Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020. vi. PCIT Vs. M/s Maniya Comfin Pvt. Ltd. ITAT/271/2023, IA No. GA/1/2023 vii. PCIT Vs. M/s Sitka Mercantile Pvt. Ltd. ITAT/68/2024, IA No. GA/2/2024 viii. PCIT Vs. M/s Hirak Vyaapar Pvt. Ltd. ITAT/242/2023, IA No.GA/1/2023 ix. PCIT Vs. M/s Snowwhite Infrastructure Pvt. Ltd. ITAT/108/2024, IA No.: GA/2/2024 x. PCIT Vs. Outcome Buildcom Pvt. Ltd. ITAT/3/2024 IA No: GA/1/1024 06. The Ld. D.R strongly controverted and opposed the arguments as put forth by the Ld. A.R by submitting that the share application money was received by the assessee from various subscribers who were not having any creditworthiness. Besides the ld DR stated that the enquiries and investigation could not be carried out by the AO when the directors of the assessee company did not appear personally in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. M/s Hirak Vyaapar Pvt. Ltd. (Supra), iv) PCIT Vs. M/s Snowwhite Infrastructure Pvt. Ltd. (Supra) and v) PCIT Vs. Outcome Buildcom Pvt. Ltd. (Supra). 08. The Hon'ble Calcutta High Court in the case of M/s Sitka Mercantile Pvt. Ltd. (supra) held that no addition can be made where the assessee has filed all the material/ evidences for the authorizes below hence, all the above additions were deleted.Finally the ld. CIT (A) allowed the appeal of the assessee by holding that the mere non-appearance/ production of directors of assessee company before the ld. AO cannot be a ground for making the addition u/s 68 of the Act. We find support from the decision of Hon'ble Supreme Court in the case of Orissa Corporation Ltd. (supra) "That in this case the respondent 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 assessee's. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. Taking inspiration from the Supreme Court observation we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Ld. CIT(A). We also foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 011. Similar ratio has been laid down by the Hon'ble Mumbai High Court in the case of CIT Vs. Orchid Industries (P) Ltd (supra) 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. 012. The facts of the assessee are squarely covered by the above decisions, wherein it has been held that addition u/s 68 of the Act cannot be made merely on the ground of non-compliance to summon issued u/s 131 of the Act when the assessee and subscribers have filed all the evidences. Pertinent to mention that the AO has not submitted the remand report before the ld. CIT(A) despite repeated reminders. Considering all these facts and circumstances, we do not find any infirmity in the appellate order and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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