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TMI Blog2023 (2) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... orthiness of the share subscribing companies and the genuineness of the transactions. Accordingly, considering these facts and in the light of the judicial precedents referred above, we find no reason to interfere with the fact-based findings given by the Ld. CIT(A) and uphold his decision to delete the addition made by the Ld. AO towards share capital and share premium u/s. 68 of the Act. Accordingly, grounds taken by the revenue in this respect are dismissed. - ITA No. 38/Kol/2021 - - - Dated:- 28-12-2022 - SHRI SONJOYSARMA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER For the Appellant : Shri HukumaSema, CIT For the Respondent : Shri Miraj D. Shah, AR ORDER PER GIRISH AGRAWAL , ACCOUNTANT MEMBER : This appeal filed by the revenue is against the order of CIT(A)-7, Kolkata vide Appeal No. 307/CIT(A)-7/Ward-9(1)/Kol/14-15 dated 08.09.2020 passed against the assessment order by ITO, Ward-9(1), Kolkata u/s. 143(3) r.w.s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the Act ), dated 29.03.2014. 2. Revenue has taken as many as nine grounds, all of which are against granting of relief by the Ld. CIT(A) to the assessee on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and resorted to making addition of the entire share application money along with share premium, totalling to ₹ 21,08,00,000/- on the sole ground that compliance u/s. 131 by the directors of the assessee and share applicant companies was not done by way of their personal appearance before the Ld. AO. He thus made the addition of share capital and share premium as unexplained income of the assessee u/s. 68 of the Act. 4. Aggrieved, assessee went in appeal before the Ld. CIT(A), who, after elaborate factual exercise, took into consideration all the documentary evidence and details placed on record for the sixteen share subscriber companies. Ld. CIT(A) also recorded the factual findings in respect of net worth of the subscriber companies and also about their compliance to the notice issued u/s. 133(6) of the Act. By considering all these, Ld. CIT(A) deleted the addition so made by the Ld. AO. Aggrieved, revenue is now in appeal before the Tribunal. 5. Before us Shri Hukuma Sema, Ld. CIT appeared for the revenue and Shri Miraj D. Shah, AR appeared for the assessee. 6. Ld. CIT, DR before us submitted that Ld. CIT-III, Kolkata had set aside the assessment completed u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO as is evident from the copies of the same placed in the paper book. (iv) Ld. Counsel also explained the source from which the funds were raised by the respective sixteen share applicant companies, for the purpose of acquiring shares of the assessee. Details of source of funds (source of source) are given in the reply to notices issued u/s. 133(6) of the Act by each of the share applicant company. (v) It was also submitted that audited Balance Sheet of each of the share applicant companies reflected the amount of investment made by them in the assessee as against their respective net worth, the details of net worth of each of the share applicant company and the percentage of their respective net worth utilized as investment in the share capital of the assessee, which was furnished before the Ld. AO, is tabulated as under: (vi) Details of share applicants were also submitted which included their respective CIN(Company Identification Number) issued by the Ministry of Company Affairs, PAN (Permanent Account Number) issued by the Income Tax Department and their corporate addresses, which are tabulated as under: ( vii ) It was also pointed that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished before the Ld. AO. Ld. Counsel also submitted that the investment made by each of the sixteen share applicant companies has been duly reflected in their audited financial statements and disclosed in their respective income tax returns. Ld. Counsel further pointed to the fact that in the course of assessment proceedings u/s. 147 of the Act, assessee had furnished all the documentary evidence and details as desired by the Ld. AO, who on being satisfied with the replies received from the assessee as well as from the share applicant companies against notices u/s. 133(6) of the Act, accepted the impugned share capital and share premium and completed the assessment without making addition on this account. 8.2. Ld. Counsel further submitted, the very fact that notices u/s. 133(6) of the Act were served on the share applicant companies and were replied back with all the required documents and details, evidently establishes their identities. Further, they are all registered companies under the Companies Act, 1956 and are active companies on the MCA portal. He also referred to the copies of bank accounts of the respective share applicant companies to demonstrate the genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Assessing Officer. It appears that the Tribunal below has recorded specifically that the Assessing Officer totally failed to consider those documentary evidence produced by the assessee in arriving at such conclusion. We, therefore, find no reason to interfere with the decision passed by the Commissioner of Income-tax (Appeals) and the Tribunal below and answer the questions formulated by the Division Bench in the affirmative and against the Revenue. The appeal is, thus, dismissed. 8.5. Reliance was also placed on the decision of Hon'ble Madras High Court in the case of CIT vs. Creative World Telefilms P. Ltd. [2011] 333 ITR 100 (Mad.) wherein it was held as under: In the case in hand, it was not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement not traceable . The Assessing Officer ought to have found out their detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law as such could arise. The High Court was, therefore, right in refusing to refer the questions sought for. Decision of the High Court affirmed. 8.8. Ld. Counsel submitted that instead of pointing out any defect or discrepancy in the evidence and the details furnished by the assessee, Ld. AO drew adverse inference merely only on the basis that the directors of the subscriber companies did not appear personally before him. In this respect he placed reliance on the decision of Hon'ble Jurisdictional High Court of Calcutta in the case of Crystal Networks Pvt. Ltd. vs. CIT (2013) 35 taxmann.com 432 (Cal). 9. We have heard the rival contentions and gone through the material placed on record. Admittedly, it is a fact on record that notices u/s. 133(6) of the Act were issued by Ld. AO to all the sixteen share subscriber companies and all of them had duly replied directly to the Ld. AO, along with relevant documents and details. Copies of the replies duly acknowledged under seal and stamp of the office of the Ld. AO are placed on record. We note that Ld. AO without even going through and discussing these details submitted by the sixteen subscriber companies, insisted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the respective intimation/assessment orders are placed on record in the paper book. We also take note of the fact that all the sixteen share subscriber companies have responded to the notice issued u/s. 133(6) of the Act and Ld. AO has not bothered to discuss or point out any defect or deficiency in the documents furnished by the share subscribing companies. These evidences furnished by them have been neither controverted by the Ld. AO during the assessment proceedings nor anything substantive brought on record to justify the addition made by him. Ld. AO has simply added the amount of share capital and share premium on the ground that assessee has not produced the directors/shareholders. Ld. AO has ignored the reply given in response to notice issued u/s. 133(6) of the Act which are on record under duly acknowledged seal and stamp of his good office. From the perusal of the order of Ld. CIT(A), we note that Ld. CIT(A) has perused the evidence in the nature of documents and details and on their examination has deleted the addition made by the Ld. AO. Thus, going by the records placed by the assessee and by all the share subscribing companies in response to notices issued u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his whims and fancies. It is observed that the burden which la on the appellant, in relation to section 68 of the Act, has been duly discharged by it and nothing further remains to be proved by it on the issue. Hence, I am inclined to accept the arguments tendered by the AR of the appellant in this respect. In view of the above, I have no hesitation to hold that the impugned addition made by invoking the provisions of s. 68 by the AO is not justified in the circumstances and accordingly, direct him to delete such addition of Rs. 21,08,00,000/- made on this account. Thus, these grounds of the appeal are allowed. 10.2. Further, we note that Ld. CIT(A) has taken into consideration the creditworthiness of all the sixteen subscriber companies by going through the records and the net worth of each of them (refer the details tabulated above). It is also noted that all the investing companies have substantial own funds available with them to make investment in the assessee. In this respect, all the investing companies have also explained their source of funds in their reply to notices issued u/s. 133(6) of the Act. 10.3. From the perusal of the paper book and the replies filed by s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ITAT 18 OF 2022 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 assessing officer ignored the settled legal principle and in spite of the assessee having offered the explanation with regard to the loan transaction, no finding has been recorded as regards the satisfaction on the explanation offered by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions 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. 11. In respect of reliance placed by the revenue on the decision of Hon'ble Supreme Court in the case of PCIT vs. NRA Iron Steel Pvt. Ltd. 412 ITR 161 (SC), we note that Hon'ble Supreme Court in para 8.2 of the said decision has made the following observations: 8.2 As per settled law, the initial onus is on the Assessee to establish by cogent evidence the genuineness of the transaction, and credit-worthiness of the investors under Section 68 of the Act. The assessee is expected to establish to the satisfaction of the Assessing Officer CIT v. Precision Finance (P) Ltd. [1995) 82 Taxman 31/[1994] 208 ITR 465 (Cal.): Proof of Identity of the creditors; Capacity of creditors to advance money; and Genuineness of transaction This Court in the land mark case of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 11.3. Hon'ble Supreme Court, thus, held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then, AO is duty bound to conduct an independent enquiry to verify the same. However, as noted above, Ld. AO in this case has not made any independent enquiry to verify the genuineness of the transactions. Assessee, having furnished all the details and documents before the Ld. AO and the Ld. AO has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged its initial burden casted upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, it shifted on the Ld. AO to examine the evidences furnished and even make independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee by confronting with the same to the assessee. In view of this, the aforesaid decision of the Hon'ble Supreme Court in the case of PCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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