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TMI Blog2022 (12) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... re also paid through bank RTGS and all parties in response to notices issued u/s 133(6) confirmed the investments. CIT(A) misconstrued the facts in respect of two investors as stated above and wrongly noted the investments were taken two times in the table and this has attributed to the difference of Rs. 33,00,000/-.Therefore we find that the addition partly confirmed by the CIT(A) is without any basis. We have even examined the balance-sheet of both the investors placed in the paper book and found that the investments shown by the parties at sr. 3 was Rs. 55,00,000/- whereas investments at Sr. 4 5 was Rs. 30,00,000/- which was taken double the amount by taking the investment amount of Rs. 30,00,000/- two times at sr. 4 and 5. Considering these facts, we hold that even on merit that the addition was wrongly sustained by the Ld. CIT(A) upon wrong appreciation of facts on record. Accordingly the appeal of the assessee is allowed. Unexplained cash credit u/s 68 - HELD THAT:- We are of the considered view that addition cannot be made on the ground that the investors were not personally produced or did not comply with the summons, when the evidences qua the transactions were file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal of the assessee was dismissed by the first appellate authority by observing and holding as under: 6. Decision in Appeal: 6.1. The matter has been considered. The assessment order, written submission of the appellant and related judicial rulings on the subject matter has been carefully perused. 6.2 Grounds of appeal 1-9 challenge the legality of the notice issued u/s 148 and the reassessment completed under section 147 of the Act. The appellant has stated that the notice is a defective notice which is issued without any application of mind as the same was issued in a printed format without striking off the irrelevant portions of the said notice and that the reasons recorded by the Assessing Officer does not satisfy the requirements of Section 147 of the Act. The assessment order has been perused and it is seen that the reason for reopening is on the basis of information received from the Investigation wing, Kolkata as per which the appellant has been mentioned by name as being a beneficiary of accommodation entries and in receipt of huge amounts in its bank account. On the basis of this information the AO had reason to believe that income had escaped assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary documents were filed before the AO as called for in respect of all the investors. Finally the AO noted that due to non compliance of the part of the shareholders the identity and creditworthiness of the shareholders and genuineness of the transactions of issues of share capital could not be verified thereby making an addition of Rs. 2,57,00,000/- to the income of the assessee. Thus, we note that the issue has been examined by the AO in the original assessment proceedings and an addition of Rs. 2,57,00,000/- was made to the income of the assesse as stated above. Thereafter the case has been reopened after the period of four years from the end of relevant assessment year without there being any whisper in the reasons as to how the income has escaped due to non disclosure of material fact either in the return of income or during the assessment proceedings. In other words, the reopening can only be made by the AO u/s 147 of the Act under first proviso which states that the reopening can only be made after a period of four years if there is a failure on the part of the assessee to materially disclose any information which has resulted into escapement of income either in the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 4 5 1. Excel Financial Consultants Pvt. Ltd. Rs. 60,00,000/- Rs. 77,00,000/- 2. Jagmangal Vanijya Pvt. Ltd. Rs. 40,00,000/- Rs. 40,00,000/- 3. Amtek Financial Consultants Pvt. Ltd. Rs. 58,00,000/- Rs. 55,00,000/- Rs. 3,00,000/- 4. ARS Financial Consultants Pvt. Ltd. Rs. 30,00,000/- Rs. 30,00,000/- 5. ARS Financial Consultants Pvt. Ltd . Rs. 30,00,000/- Rs. 30,00,000/- 6. Zircon Infracon Pvt. Ltd. Rs. 55,00,000/- Rs. 55,00,000/- Total Rs. 2,73,00,000/- Rs. 2,57,00,000/- R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company and asked to appear with certain details as mentioned in para 3 of the assessment order at page no.1. The director of the assessee company Shri Ajay Agarwal appeared before the AO on 17.03.2015 and his statement was recorded. Mr. Ajay Agarwal stated that M/s Zircon International Pvt. Ltd. is a group company and he is director on that company also. However he failed to produce the directors of the other share holding companies nonetheless the assessee filed before the AO, the details of share capital and share premium as required by the AO comprising with names, addresses, PANs, bank statements, confirmations etc. The AO has also issued notices u/s 133(6) to the investors which were duly responded by the shareholders. The AO treated the share capital and share premium of Rs. 2,57,00,000/- as unexplained cash credit on the ground that the assessee has failed to produce the share subscribers and therefore the identity and creditworthiness of the shareholders and genuineness of the transactions could not be verified. 10. In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by observing and holding as under: 6.3 It is seen the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital and share premium could not be verified and remained unexplained. The Ld. CIT(A) simply confirmed the order of the AO without giving any reasoned findings. We have perused the facts as placed before us and find that in respect of each share subscribers the assessee has produced ITR, audited accounts, share application form, share allotted letter, bank statement, certificate of incorporation, memorandum of article, reply filed in response to notice u/s 133(6) of the Act and even some cases source of source was also filed. Thus we note that the transactions of increase in shares are adequately explained. We also note that in some cases, even the assessment framed in the case of share subscribers were also filed before the AO. The ground for addition was nonproduction of share subscribers before the AO without commenting on the evidences filed by the assessee investors/share subscribers u/s 133(6) of the Act. In our considered view, the addition cannot be made merely on the ground that the share subscribers were not produced before the AO when all the evidences qua the said transactions were available on record. The case of the assessee finds support from the decisions which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 had accepted the claim of the appellant-assessee having acted as Commission Agent in respect of the same articles which were brought by the sellers to the Arhatdaars in the Mandi for sale. b) In the case of H.R. Mehta vs. ACIT, Mumbai in ITA No. 58 of 2001 dated 30.06.2016,the Hon ble Bombay High Court has held as under: 11. We have therefore proceeded to hear and decide the matter unassisted by the revenue. In the course of his submissions Mr. Tralshawala had pressed into service inter alia the decision of the Calcutta High Court in Mather and Platt (India) Ltd. (supra) and submitted that merely because a person is not found at an address after several years it cannot be held that he is non-existent and that the assessee had discharged his primary onus by identifying the source of the amount paid. The Court observed that once the primary onus is discharged, the onus shifted to the revenue to verify genuineness of the transaction. In the present case no such effort was made by the revenue. We find that in Hastimal (supra) the Madras High Court observed that after a lapse of several years the assessee should not be placed upon the rack and called upon to explain not onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial burden and the burden shifts on the assessing officer to enquire further into the matter which he failed to do. In more than one place the assessing officer used the expression money laundering. We find such usage to be uncalled for asthe allegations of money laundering is a very serious allegations and the effect of a case of money laundering under the relevant Act is markedly different. Therefore, the assessing officer should have desisted from using such expression when it was never the case that there was any allegations of money laundering. Paragraph 5.4 and 5.5 of the assessment order are all personal perception and opinion of the assessing officer which needs to be ignored. Much reliance was placed on the statement of Shri Ashish Kumar Agarwal, which statement has been extracted in full in the assessment order and it cannot be disputed that there is no allegation against the assessee company in the said statement. There is no evidence brought on record by the assessing officer to connect the said entry operator with the loan transaction done by the assessee. Therefore, the statement is of little avail and could not have been the basis for making allegations. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Ashish Kumar Agarwal also took note of the fact that the notices which were issued by the assessing officer under Section 133 (6) of the Act to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the assessing officer and there is no discussion on this aspect. Thus, we find that the tribunal rightly dismissed the appeal filed by the revenue. d) In the case of M/s Diagnostics vs. CIT Anr in ITA No. 153 of 2004 dated 04.03.2011, the Hon ble Calcutta High Court has held as under: After hearing Mr. Sen, the learned advocate appearing on behalf of the appellant, and Mr. Agarwal, the learned advocate appearing on behalf of the Revenue and after going through the materials on record, we agree with the Tribunal below that so far as the purchases from M/s Soma Enterprises and M/s Imprint s-N-Trade were concerned, the alleged payments being made in cash and the amount involved being Rs. 50,675/- and Rs. 1,00,737/- respectively during the relevant Assessment year and at the same time, the appellate h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance. 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 received as against the future sale of the product of the assessee or not. When it was found by the Commissioner of Income-tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 464, the Supreme Court has observed as follows : The Income-tax Appellate Tribunal 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 record its finding on all the contentions raised by the assessee and the Commissioner, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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