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TMI Blog2020 (12) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... ated:- 3-12-2020 - Shri P. M. Jagtap, Vice-President And Shri A. T. Varkey, JM For the Appellant : Shri Imokaba Jamir, CIT For the Respondent : Shri S. M. Surana, Advocate ORDER PER SHRI A.T. VARKEY, JM: This is an appeal preferred by the revenue against the order of Ld. CIT(A)- 14, Kolkata dated 30.06.2017 for 2008-09. 2. First of all we note that Revenue s appeal is delayed by 5 days and the Revenue has filed the condonation application. After going through the reasons given in the condonation application, we are inclined to condone the delay and proceed to hear the appeal of the Revenue. The sole ground of the revenue is against the action of the ld. CIT(A) in deleting the addition of share capital including premium amounting to ₹ 92.50 crores made by Assessing Officer u/s 68 of the Income Tax Act, 1961 (hereinafter referred to the Act ). 3. The facts in brief are that the assessee filed its return of income showing total income of ₹ 15,542/-. The return was processed u/s 143(1) of the Act. However, later the assessment was reopened u/s 147 of the Act and the A.O noted the assessee had raised the share capital of ₹ 92.50 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 had any cash for the purpose. The only point in the assessment order is that the entries not involving the passing of cash should not have found a place in the cash book, but in the ledger account through journal entries. There is another self contradiction in the Income Tax Officer s finding that, if there was no real cash entry on the credit side of the cash book, but merely a notional or fictitious cash entry, as admitted by him, there is no real credit of cash to its cash book; the question of inclusion of the amount of the entry as unexplained cash credit cannot arise. One of the grounds of the Tribunal for disbelieving the assessee s case is that the adjustment entries were made by notional cash entries to a view to bringing down the debt and capital ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney introduced in cash or by cheque. Moreover by purchasing the shares of allottee companies and issuing its own shares against such purchase, the assessee is not enriched by any fresh introduction of any cash or sum to be utilized for its business purposes or for any other purpose. The purchase and issue of shares was only an adjustment entry and was negated by each other. In view of the above and in view of peculiar facts of the case as stated above, I have no alternative but to delete the addition made by the Assessing Officer. Though I have decided the issue (a) in favour of the appellant but it will be relevant to discuss issue (b) for proper adjudication of this matter. There is no dispute that the appellant issues its own shares against purchase of shares of the share allottee companies. In that situation, question arises with regard to the share transferred by the share allottee companies with regard to their genuineness. Such shares held by the share allottee companies were either genuine or perhaps were not genuine. If, for the sake of arguments, it is held that those shares were genuine then the contribution made by those companies by transferring their shares to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant in order to discharge the initial onus lying upon it filed evidences in support of the identities and creditworthiness of the shareholders and genuineness of the transactions. It was submitted that no defect whatsoever was brought on record by the Income Tax Officer to prove that such evidences were not reliable. It was submitted that the allegation of the Income Tax Officer that the shareholders have introduced their unaccounted cash in the garb of share capital is also against the facts on record since no money or sum was received as share capital. It is on record that the shares of assessee company have been allotted against purchase of shares by adjustment, therefore, the allegation of the A.O that there was introduction of unaccounted cash is contrary to the facts of the case as no sum has been received by the appellant. I find force in the submissions of the appellant that since no sum of money has been received by the appellant, no addition can be made u/s 68 as unexplained cash credit. The contention of the appellant is supported by a number of judgments cited above. In view of the above addition on account of share capital u/s 68 is deleted. Since I have deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the decision of Ld. CIT(A) and uphold the A.O s action and confirm the addition. 7. Per contra, the learned counsel for the assessee Shri S. M. Surana supporting the impugned action of Ld. CIT(A) submitted that the shares at premium were issued by the assessee company during the year under consideration to other companies in lieu of the shares held by the said companies and since no cash was involved in these transactions, section 68 of the Act was not applicable as rightly held by the Ld. CIT(A) by relying on the decision of Hon ble Calcutta High Court in the case of Jatia Investment Co.(supra). According to him, the ratio of the said decision of the Hon ble jurisdictional High Court is squarely applicable to the facts of the present case and distinction sought to be made by the learned CIT DR is incorrect. He also drew our attention to the case law Paper Book where he has compiled sixteen (16) case laws of Hon ble Supreme Court, Hon ble High Courts and Tribunals for supporting the action of Ld. CIT(A) and coming to the merits he also drew our attention to the Paper Book and submitted that the same were filed before the AO as well as before the Ld. CIT(A) were sufficient to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the three NBFCs had taken loans from proprietary concern belonging to the same group. Since the said loans were required to be liquidated as per the RBI guidelines and there was no cash available with the NBFCs to repay the loans, the shares held by the three NBFCs were transferred to a partnership firm namely Jatia Investment Co., and the amount receivable against the said sale of shares was adjusted by the NBFCs against the loan amount payable to proprietary concern. The partnership firm of M/s. Jatia Investment Co. thus received shares from the three NBFCs and also took over the loans payable by the said NBFCs to the proprietary concern. These transactions were entered into in its books of account by the partnership firm through cash book by debiting the investment in shares and crediting the loan amount of the proprietary concern. This credit appearing in the books of account of the partnership firm, M/s. Jatia Investment Co. was treated by the AO as unexplained cash credit u/s 68 of the Act. And subsequently when the matter reached the Hon ble Calcutta High Court, it was held by their Lordship that when the cash did not pass at any stage and since neither the respective parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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