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TMI Blog2022 (11) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... the summons issued to the investors. In our considered view non compliance to summons issued u/s 131or non appearance of the directors of the subscribing companies before the AO can not be basis for making addition as the assessee has filed all the necessary documents before the authorities below proving the identities , creditworthiness of the investors and genuineness of the transactions. The case of the assessee is squarely covered by the decisions of Hon ble Calcutta High Court in the case of Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] , wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. As the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides all the four investors have also furnished complete detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y but furnished all the details proving the identity and creditworthiness of the investors and genuineness of the transactions. The Ld. CIT(A) also noted that summons were issued to the director of the assessee company Shri Manoj Jain who appeared before the AO and his statement was recorded u/s 131 of the Act. The AO made addition on the ground that the directors of the investor companies did not appear before the him in response to summons issued u/s 131 of the Act and accordingly held that the assessee has failed to discharge its onus of proving genuineness of the transactions and also identity and creditworthiness of the share holders. The Ld. CIT(A) also noted that though the summons u/s 131 of the Act were issued to all the four share holders however instead of personally appearing before the AO , they furnished the details/information sought by the AO comprising of copies of ITRs, PANs, Audited balance sheets, bank statements etc. before the AO. The Ld. CIT(A) recorded a finding a fact that upon examination of these documents furnished by the shareholders it is found that the subscribing company have substantial own funds in the form of share capital and share premium and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were benamidars of the assesses. In the impugned order the AO has also referred to the alleged modus operand! adopted by the paper companies where the monies, are routed from one company to another in the form of subscription to share capital. I however find that the AO himself did not carry out any enquiry or investigation to prove his hypothesis that the unaccounted cash was rotated through four to five layers, save except in the assessment carder, the AO himself, did not, bring on record even a single specific instance to establish that anyone out of four share subscribers, had rotated unaccounted funds belonging to the assessee through four-five layers. Save except surmising on the alleged money laundering activity,, the AO himself did precious little to prove his hypothesis that the assessee was engaged in money laundering. Apart from being an arm- chair critic the AO-himself did not undertake any worthwhile enquiry or investigation which in any manner proved that the entries in the bank statements were not real but make belief. While framing the assessment, the AO acts both as an Investigator as well as adjudicator of the facts as well as law. In his role of an investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proving creditworthiness of the share subscribers and the genuineness of the transactions. I therefore hold that the AO was not Justified in making the impugned addition of Rs.2,7100,000/- u/s 68 of the Act for which the same is hereby directed to be deleted. These grounds are -allowed. 5. In the result, the appeal of the appellant is treated as allowed. 5. After hearing the rival submissions and perusing the material on record including impugned order of Ld. CIT(A), we find that in this case the assessee has raised Rs. Rs.2,71,00,000/- by issuing 1,35,500 equity shares of face value of Rs. 10/- each at a premium of Rs. 190/-. We note that before the AO the assessee has duly filed all the evidences comprising ITRs, PANs, Balance Sheets, confirmations of the investors along with their bank statements. We also note that the AO issued summons to the assessee as well as the four corporate investors however one of the directors of the assessee company appeared before the AO and his statement was recorded while other four investors did not comply with the summons. We note that all the four investors filed the details as sought by the AO proving their identity and creditworth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Cal ) wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact that summon issued were returned un-served or no body complied with them is of little significance to prove the genuineness of the transactions and identity and creditworthiness of the creditors. The relevant portion of the decision is extracted below: We find considerable force of the submissions of the learned Counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the Ld. CIT(A) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see relied on the order of Ld. CIT(A) and further drew our attention to the decision of Hon ble Allahabad High Court in the case of CIT vs. Raj Kumar Agarwal vide ITA No. 179/2008 dated 17.11.2009 wherein the Hon ble Allahabad High Court took a view that non-production of the director of a Public Limited Company which is regularly assessed to Income tax having PAN, on the ground that the identity of the investor is not proved cannot be sustained. Attention was also to the similar ruling of the ITAT Kolkata bench in the case of ITO vs. Devinder Singh Shant in ITA No. 208/Kol/2009 vide order dated 17.04.2009. 9. We have considered the rival submissions. We are of the view that order of Ld. CIT(A) does not call for any interference. It may be seen from the grounds of appeal raised by the revenue that the revenue disputed only the proof of identity of share holder. In this regard it is seen that for AY 2004-05 Shree Shyam Trexim Pvt. Ltd. was assessed by ITO, Ward-9(4), Kolkata and the order of assessment u/s 143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd. was assessed to tax u/s 143(3) for AY 2005-06 by ITO, Ward-9(4), Kolkata by orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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