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TMI Blog2018 (12) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. - ITA No. 1141/Kol/2017 - - - Dated:- 9-11-2018 - Sri J. Sudhakar Reddy, Accountant Member Sri S.S. Viswanethra Ravi, Judicial Member For the Assessee : Shri S.M. Surana, Advocate For the Revenue : Shri Goulen Hangshing, Sr. D/R. ORDER PER J. SUDHAKAR REDDY, AM :- This appeal filed by the revenue is directed against the order of the Learned Commissioner of Income Tax (Appeals)-9, Kolkata, (hereinafter the Ld. CIT(A) ), dt. 28/02/2017, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the Act ), relating to Assessment Year 2012-13. 2. The assessee is a company and is engaged in the business of investments. It filed its return of income for the Assessment Year 2012-13 on 31/03/2012, declaring Nil income. The Assessing Officer completed the assessment u/s 143(3) of the Act, on 20th March, 2015, making addition of ₹ 40,24,70,000/-, u/s 68 of the Act, on the ground that the assessee has not substantiated the genuineness of fresh share capital and share premium applied for and allotted by the assessee company. On appeal, the ld. First Appellate Authority, confirmed the addition. 2.1. Aggrieved the revenue is in appeal before us on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an ex-parte order. 5. The facts in this case are not in dispute and the issue in question is a legal issue. Hence we dispose off the appeal on merits. We find that the assessee has filed before the Assessing Officer, details of share capital raised during the Financial Year 2012-13 along with Form No. 3 and list of allottees of shares. He filed the details giving the names of the share applicants, addresses, PAN Nos., number of shares issued, amount adjusted against share capital, amount adjusted against share premium and the total amount adjusted. 25,39,997 number of shares were raised during the year. Out of this for the Financial Year 2012-13 only 3,00,000 shares were issued for consideration in cash and 22,39,997 number of shares were issued for consideration other than cash. Notices u/s 133(6) of the Act, were issued by the Assessing Officer, to all the share applicants. These were duly replied by them, enclosing therewith with all the requisite information, directly to the Income tax Officer. These are placed from pages 81 to 171 of the paper book filed by the assessee. 6. On these facts, we find that the issue in question which is to be adjudicated is whether the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed entities. Measures taken by the AO in the course of the assessment proceeding falls much short of what is required to be done in such case laws, which have evolved on this issue, call for concerted actions on the part of the AO pinpointing utilization of unexplained/unaccounted/untaxed money and the players and the beneficiaries effectively using the weblike scheme to plunder black money. For example introduction and use of black money in the present case may be at a different point of time and in different hands. The AO's action in the present case cannot be upheld in law. I, therefore, delete the additions and grounds of appeal Nos. 3 4 are allowed. 4.1. We find that the Hon'ble Allahabad High Court in the case of CIT vs. Sohanlal Singhania reported in 235 ITR 616 (All) had held in the context of allowability of donation as deduction u/s 80G of the Act that the expression 'any sum paid' used in the said section denotes ' sum of money paid' . Hence if certain shares were donated by a person, then the same would not fall eligible for deduction u/s 80G of the Act. We also find that the Hon'ble Jurisdictional High Court in the case of Jatia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt entries are not made through the cash book. It is an accepted principle of accounting that book adjustments and the entries in effecting them are made by journal entries and not cash entries. He urged that the purported motive of the entries being the reduction of loans of the three limited companies does not explain the whole matter, because the entries are cash entries. The fact remains that, at every stage, the parties showed the payments and receipts of cash even when there was no cash available for such entries. This quite justifies the addition as sustained by the Tribunal. We have perused the assessment order carefully. We find that cash did not pass at any stage though entries were made in the cash book showing payments and receipts ; but since the entries made a complete round, no passing of cash was necessary for the purpose of making the entries. That there was no passing of cash is also admitted by the Income- tax Officer himself. We have already extracted the observation of the Income- tax Officer in paragraph 14 of his assessment order. The Income- tax Officer has clearly opined that all the respective parties did not receive cash nor did pay cash as none ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the ld. AO with regard to number of shares; value thereon invested by the assessee company. We also find that the Co-ordinate Bench decision of Pune Tribunal in the case of Kantilal and Bros. vs. ACIT reported in 52 ITD 412 (Pune Trib.) also supports the case of the assessee. 4.3. In view of the aforesaid observations, in the facts and circumstances of the case and respectfully following the aforesaid judicial precedents relied upon hereinabove, we hold that the ld. AO had erroneously invoked the provisions of section 68 of the Act to the facts of the instant case, which, in our considered opinion, are not at all applicable herein. This is a simple case of acquiring shares of certain companies from certain shareholders without paying any cash consideration and instead the consideration was settled through issuance of shares to the respective parties. Moreover, in the balance sheet of the assessee company in the schedule to share capital, it is very clearly mentioned by way of note that the fresh share capital was raised during the year for consideration other than cash. Hence we hold that provision of section 68 of the Act are not applicable in the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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