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TMI Blog2023 (2) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) erred to consider that the assessing officer (hereinafter referred to as 'the AO) has not provided any cogent reason before recording his dissatisfaction to the explanation or documents provided to him regarding the sum credited in the books of accounts as share capital and share premium. 3. That on the facts and circumstances of the case, the Ld. CIT(A) erred to take into consideration that non-appearance of shareholders before the AO in itself cannot lead to dissatisfaction on identity of such shareholders as conferred by the AO when all the details for their identity including permanent account numbers were filed with the AO. 4. That in the impugned order, the Ld. CIT(A) erred to note, duly appreciate and appropriately take into consideration reasonable and acceptable evidences on record and has made observations which are contrary to the facts of the case. 5. That on the facts and circumstances of the case, the Ld. CIT(A) erred to take into consideration that the first proviso to section 68 of the Act was applicable from AY 2013-14 and cannot be applied retrospectively to AY 2012-13. 6. Without prejudice to the above, the Ld. CIT(A) erred to confirm that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was stated that the director of the assessee as well as subscribing companies had filed necessary details of PANs, ITRs copies, audited balance sheets, copies of allotment advice letters, details of cheques through which payments were made besides proving the source of the fund received by the subscribing companies. The Ld. CIT(A) confirmed the order of AO by referring to the judgment of Hon'ble Supreme Court in the case of PCIT vs. NRA Iron & Steel Pvt. Ltd. confirmed the findings of the Ld. AO by observing and holding as under: "After careful consideration of the submission of the appellant, the relevant assessment records, various judicial decisions including that of the Apex Court & Jurisdictional High Court and ITAT, it has to be held that the appellant could not established the genuineness of the transaction and creditworthiness of the shareholders. The addition of Rs. 1,71,00,000/- u/s. 68 of the IT Act, is therefore confirmed. The appeal on these grounds fails and is therefore dismissed. In the result, the appeal is treated as dismissed." 4. Dissatisfied with the above order, assessee is in appeal before the Tribunal. At the time of hearing Ld. counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts vide its submissions which is being extracted mentioned below for the sake of ready reference: "The A.O. framed order of assessment s. 143(3) of the Act on 03.03.2015 and after discussing facts and making observations he has made an addition of Rs. 1,71,00,000/- to the income returned. Though there are-carious Grounds taken by the appellant but the issue for adjudication by your Honour relates to the correctness of the addition of Rs. 1,71,00,000/- made by the, 4.0. to the income returned. It is observed by the A.O. that in response to the proceedings for assessment with reference to Notices u/s. 143(2) and u/s. 142(1) appearance was made by the AR of the appellant who appeared from time to time and explained the return with reference to the details/documents filed. The A.O. has observed that Notices u/s. 131 were issued and sent to shareholders asking them to personally appear to verify the identity and creditworthiness of the shareholders and genuineness of the transaction made by them with the appellant company. The AO has observed that none appeared and show cause Notice was issued to the appellant to produce all the shareholders with evidences as to why the transaction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subscribing companies. The A.O. proceeds to observe that the identity and creditworthiness of shareholders and genuineness of the transaction could not be verified and, therefore the AO proceeding on this observation has made addition of Rs. 1,71,00,000/-. The replies to the notice u/s. 133(6) of the Act issued by the A.O. to the share subscribers are record with the A.O. and it has to be proceeded with as a fact that no discrepancy been found by the A.O. with regard to the replies submitted by the share subscribers. The A.O. has accepted fact that the share subscribers are on record with the Income Tax Deptt. and that they file their Income Tax Returns, they maintain Bank account funds have moved from their Bank A/c to the Bank A/c of the appellant. These are very vital evidences which have not been assailed or controverted by the A.O. and, therefore it is the submission of the appellant that the A.O. erred in adding the amount of Rs. 1,71,00,000/- as the income of the appellant." 7. From perusal of the above details, which are also placed before us in the paper-book and the facts narrated above including the details filed by the assessee i.e. bank accounts, income tax returns, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, and there would be no further burden on the revenue to show that the income is from any particular source." 8.1. Further, in para 9 of the said decision, the Hon'ble Supreme Court has observed as under: "9. The Judgments cited hold that the Assessing Officer ought to conduct an independent enquiry to verify the genuineness of the credit entries. In the present case, the Assessing Officer made an independent and detailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports revealed that the share-holders were either non-existent, or lacked credit-worthiness." 8.2. Thereafter the Hon'ble Supreme Court summed up the principles which emerged after deliberating upon various case laws as under: "11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient details to our satisfaction to prove the identity, genuineness and creditworthiness of the transaction, we are not in concurrence both the findings of the Ld. CIT(A). Our view is further supported by judicial pronouncements: i) CIT vs. Gagandeep Infrastructure (P) Ltd. 80 taxmann.com 272 (Bombay) wherein it was held by High Court that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 131 or they failed to appear before Assessing Officer the loans could not be treated as non-genuine and therefore upheld the order of the Tribunal deleting the addition u/s. 68 of the I.T. Act 1961. v) CIT vs. Orissa Corpn (P) Ltd. 159 ITR 78 where the Court held that "In this case the assessee 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 assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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