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TMI Blog2024 (3) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of addition which has been noted as amount received towards issue of share capital and share premium by the assessee to the respective company from whom the amount is received as not a correct fact. Thus we hold that the reassessment proceeding initiated u/s. 147 are not in accordance with law - on the merits of the case, assessee has evidently demonstrated the nature and source of the amount received in its bank account which is against the investment held by it in the Balance sheet. Assessee appeal allowed. - Shri Sonjoy Sarma, Judicial Member And Shri Girish Agrawal, Accountant Member For the Appellant : Shri Siddarth Agarwal, Advocate For the Respondent : Shri B. K. Singh, JCIT, Sr. DR ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of Ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order No. ITBA/NFAC/S/250/2023-24/1057291238(1) dated 23.10.2023 passed against the assessment order by ITO, Ward-3(3), Kolkata u/s.147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ), dated 04.12.2018 for AY 2011-12. 2. In this appeal the issue is relating to challenging the validity of reopening of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the legal issues as well as on the merits of the case. 4. Assessee submitted before the Ld. CIT(A) that the amount received by the assessee is towards sale of investment which had been duly accounted and reported in its audited financial statement. Assessee very categorically pointed out that for AY 2011-12, the addition has been made by the Ld. AO in respect of amount of Rs. 50,00,000/- received from M/s. Sunijyoti Agency Pvt. Ltd. towards sale of share of the following three companies : a) Vineet Processing Pvt. Ltd. Rs. 30,00,000/- b) Skylark Marketing Pvt. Ltd. Rs. 10,00,000/- c) SMS Tradways Pvt. Ltd. Rs. 10,00,000/- Total Rs. 50,00,000/- 4.1. Assessee very categorically submitted that assessee company is an investment company dealing in purchase and sale of shares. It had made transaction with M/s. Sunijyoti Agency Pvt. Ltd. amounting to Rs. 50,00,000/- by selling the shares of the aforesaid three companies. According to the assessee, it is a case of sale of investment in shares held by the assessee which has been reported by it in its audited financial statement of the preceding years. Thus, the investments carried in the Balance Sheet from the earlier years were sold duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the assessee are listed as below: i) In the case of Tradelink Carrying (P.) Ltd. v. I.T.O., Ward 4(1), Kolkata [2020] 113 taxmann.com 520 (Kolkata - Trib.), it laws held that: The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words 'shall' be charged to income-tax as the income of the assessee of that previous year. The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word may and not shall . Thus the un-satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the. Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 103 Taxman 382/237 ITR 570. We note that against the said decision of Hon'ble Gujarat High Court the special leave petition filed by the Revenue has also been dismissed by the Hon'ble Apex Court. ii) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case cited as CIT Vs Vishal Holding and Capital Pvt. Ltd. vide order dated 9th August, 2010 upheld the order dated 30.07.2009 of the ITAT in 1. TA. No. 1788/Del/2007 for the Assessment Year 2000-2001 wherein the order of the Ld. CIT(A) making the similar deletion was upheld by observing in para 6 as under:- We are of the view that the assessee had produced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act. The assessee had also demonstrated the purchase and sale of shares over a period of time as seen from the balance sheet. In our opinion, the Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim. Consequently the addition made by the Assessing Officer cannot be sustained. iii(b) The Coordinate Delhi Bench of the ITAT in the case of ITO v. Jatin Investment Pvt. Ltd. in ITA No.4325 4326/Kol/(2009 order dated 27.05.2015 held as follows :- 11. In his rival submissions, the Ld. Counsel for the assessee reiter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of accounts and reflected in the Asset Side of the Balance Sheet , out of those investments (copy which is placed at page no. 23 and 24 of the assessee's paper book), the assessee sold certain investments and accounted for the profit/loss and offered the same for taxation. In the present case, the amount in question was neither a loan or the deposit, it was also not on account of share application money, the said amount was on account of sale of investment therefore the provisions of Section 68 of the Act were not applicable and the AO was not justified in making the addition. In our opinion, the Ld. CIT(A) rightly deleted the addition made by the AO. 13. On a similar issue the Hon'ble Jurisdictional High Court in the case of CIT vs. Vishal Holding and Capital Pvt. Ltd. vide order dated 9th August, 2010 upheld the order dated 30.7.2009 of the ITAT in ITA no. 1788/De1/2007 for the assessment year 2000-2001 wherein the order of the Ld. CIT(A) making the similar deletion was upheld ... iv). The Hon ble Delhi High Court in the case of Principal C.I. T. v. Jatin Investment Pvt. Ltd. 12017] TMI 342 (Delhi) affirmed the decision of the Delhi ITAT (supra) in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conclusion of Ld. AO that share subscriber company was a shell company having no business and creditworthiness for purchasing the share of the appellant company for Rs. 50,00,000/-. Aggrieved, assessee is in appeal before the Tribunal. 6. Ld. Counsel for the assessee reiterated that the reasons to believe recorded by the Ld. AO for invoking the reopening u/s. 147 are general and vague without pointing out as to the correct nature of transaction. The real and correct nature of transaction undertaken by the assessee was sale of shares held by it as investments which were duly reported and accounted in its audited financial statement giving their opening balance from the preceding years. Thus, the reasons recorded are general and vague which tantamount to conduct fishing and roving enquiries, without verifying the records of the assessee. This demonstrates non-application of mind while recording of reasons to believe on the information received from DIT (Inv.), Kolkata. 7. On the merits of the case, ld. Counsel reiterated the facts which has already been stated above and he demonstrated from the audited financial statements that the transaction undertaken by the assessee in the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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