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TMI Blog2024 (3) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... ies as Shri Chandan Choudhury was also named in the STR by the investigation wing. We find merit in the contentions of Ld. A.R that authorities below have not carried out any investigation on the evidences furnished before them. Besides it was argued before us that the assessee was not allowed any cross-examination of Shri Chandan Choudhury and the report of the wing was relied on the back of the assessee as the piece of evidence to make the addition which is not permissible under the law. In our opinion, the order of Ld. CIT(A) sustaining the addition appears to be incorrect and consequently cannot be sustained. Thus AO directed to delete the addition - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Accordingly we restore the issue to the file of AO with the direction to give a reasonable opportunity of hearing to the assessee and decide the issue afresh. Accordingly appeal of the assessee is partly allowed for statistical purposes. ITA No. 759/Kol/2023 for AY 2010-11. 6. The only issue raised by the assessee in the various grounds of appeal is against the confirmation of addition of Rs. 55,00,000/- by the Ld. CIT(A) as made by the AO on account of unexplained cash credit u/s 68 of the act. 7. Facts in brief are that the assessee is engaged in the business of manufacturing of fertilizer, chemicals and paints and during the year filed its return of income by declaring total income of Rs. 83,88,355/-. Thereafter the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 29.03.2017 which was duly served upon the assessee. The reopening was made for the reason that the assessee has received share capital/share premium from M/s Satyatej Vyapaar Ltd. During the course of assessment proceedings, the assessee filed before the AO various evidences in order to prove genuineness of this transaction of share capital/share premium comprising c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents furnished were noted in the facts of the case hereinabove. We note that the AO has also issued summons to share subscribers however the same could not be served to the subscriber at the registered office as the same wads shifted to the new address . The AO did not carry out any further investigation despite the AO being apprised with the new address. The AO deputed the inspector to visit the subscriber's office which he could not find as is apparent from the record. The AO did not carry out any further investigation on the evidences filed by the assessee and harped on the Investigation Wing report that Shri Chandan Chowdhury, the director of Satyatej Vyapaar Pvt. Ltd. was dummy director and thus the subscriber was mainly engaged in the business of providing accommodation entries as Shri Chandan Choudhury was also named in the STR by the investigation wing. We find merit in the contentions of Ld. A.R that authorities below have not carried out any investigation on the evidences furnished before them. Besides it was argued before us that the assessee was not allowed any cross-examination of Shri Chandan Choudhury and the report of the wing was relied on the back of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int out any defects in the documents/evidences furnished by the assessee and simply relied on the theory principal officers/ directors of the assessee company were not produced. In our opinion, the addition is based upon conjecture and surmises and not on the records which were available before the authorities below. Moreover the addition cannot be made on the basis of that principal officer/ director of the company were not produced. The case of the assessee finds support from the decision of Co6 ordinate Bench in the case of ITO vs. Naina Distributors Pvt. Ltd. in ITA NO. 651/Kol/2020 for AY 2012-13 dated 04.01.2023. The operative part is reproduced as under: 5. After hearing the rival contentions and perusing the material on record, we observe that the assessee has raised a share capital of Rs. 4,67,50,000/- by issuing equity share of face value of Rs.10/- at a premium of Rs. 490/- per share. We observe that during the assessment proceedings, the assessee has furnished all the details in support of share capital and share premium raised by the assessee beside the details of the investors vide written submissions dated 9.6.2014 filed in reply to notice dated 5.5.2014 issued u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after discussing various factual details about each and every subscribers in para 4.6 such their source of investments, creditworthiness , etc. In our opinion, nonproduction of directors of the investors cannot be a ground for making addition in the hands of assessee u/s 68 of the Act when the other evidences relating to the raising share capital and also qua the share subscribers are available on record as furnished by the assessee and also the cross-verification done by the AO on the basis of notices issued u/s 133(6) as discussed above. 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. vs. CIT(Supra) 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 unserved 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to up set the fact finding of the Ld. CIT(A) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Ld. CIT(A). The appeal is allowed." The case of is also covered by the decision of the coordinate bench by ITO Vs M/s Cygnus Developers India Pvt. Ltd. (supra) the operative part whereof is extracted below: "8. We have heard the submissions of the learned D.R, who relied on the order of AO. The learned counsel for the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-production of director cannot be the ground for making any addition in the hands of assessee u/s 68 of the Act. The operative part is reproduced as under: "After carefully considering the findings recorded by the Commissioner of Income Tax, (Appeals) 7 Kolkata (CITA) in his order dated 21.09.2020 and the findings recorded by the learned Tribunal we find that the entire matter is fully factual. The learned Tribunal has independently examined as to the genuinity of the transaction in the matter of raising share capital and the Tribunal noted that even during the assessment proceedings, the assessee has furnished all details in respect of the share capital and share premium raised by the assessee besides the details of the investors by their submission dated 9.6.2014 in reply to the notice issued by the Assessing Officer under Section 142 of the Act dated 5.5.2014. The Tribunal also noted that the assessee had produced all documents, disclosed the names and addresses and PAN Numbers of the investors, copies of the share allotment advice, copies of the share application form, bank statement, statement giving details of share application, money receipt during the year, copy of Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal has independently examined as to the genuinity of the transaction in the matter of raising share capital and the Tribunal noted that even during the assessment proceedings, the assessee has furnished all details in respect of the share capital and share premium raised by the assessee besides the details of the investors by their submission dated 9.6.2014 in reply to the notice issued by the Assessing Officer under Section 142 of the Act dated 5.5.2014. The Tribunal also noted that the assessee had produced all documents, disclosed the names and addresses and PAN Numbers of the investors, copies of the share allotment advice, copies of the share application form, bank statement, statement giving details of share application, money receipt during the year, copy of Form No. 2 evidencing return of allotment and copy of Form No. 5 for increase in various capital. Further the assessing officer has issued notice to the investors under Section 133(6) on 11.06.2014 for carrying out independent verification of the transaction and those investors duly responded to those notice and filed the requisite details such as the number of shares subscribed, ledger account, bank statement, expla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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