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TMI Blog2024 (5) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... s furnished all the evidences before the AO, then the matter should be looked into the hands of the creditors and not the assessee when all the subscribers are duly assessed to tax and even the assessment orders u/s 143(3) of u/s 143()1) of the Act are placed on records. Thus as the share subscribers have even replied to the notices issued u/s. 133(6) of the Act and also to the summons issued u/s. 131, we are inclined to hold that assessee has proved all the ingredients of section 68 of the Act by filing all the evidences and the authorities have failed to any substantive evidence or material to the contrary .Accordingly, we set aside the order of ld. CIT(Appeals) and direct the ld. Assessing Officer to delete the addition - Decided in favour of assessee. - SHRI SANJAY GARG, JUDICIAL MEMBER SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For the Appellant : Shri Miraj D. Shah, AR For the Respondent : Shri S. Datta, CIT, D.R. ORDER Per Shri Rajesh Kumar, Accountant Member:- 1. The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 22.08.2023, which is arising out of the order under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs, 1/- per share and at a premium of Rs, 99/- per share to nine parties. According to the ld. Assessing Officer, the share subscribers did not have enough amount to subscribe the shares of the assessee- company. In order to independently verify the issue, the ld. Assessing Officer also issued notices under section 133(6) of the Act to the subscribers and called upon them to furnish copies of the share applications, number of shares allotted, amount of shares, amount paid for shares, copies of ledger account with the assessee, details of source of acquisition along with copy of Bank Statements from 01.04.2008 to 31.03.2009 and copies of return, balance-sheets and annexures for the last three years. All the shareholders furnished their replies before the ld. Assessing Officer except three shareholders, namely M/s. Ankur Suppliers Pvt. Limited, Daniel Commotrade Pvt. Limited and M/s. Sumeru Retailers Pvt. Limited, who did not file the details qua the Bank statements despite being required in the notice issued under section 133(6) of the Act. The ld. Assessing Officer noted that in respect of other shareholders that for each credit entry, there was corresponding debit transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acknowledgments, audited financial accounts, share application forms, share allotment advices, Bank statements, Memorandum Articles of Associations, replies dated 31.01.2012 18.09.2021 to the notices under section 133(6), reply dated 27.02.2015 in response to notice issued under section 131 and also copies of assessment orders u/s 143(3) of the Act or copies of intimations under section 143(1) of the Act in all the cases. The ld. A.R. also referred to page no. 2 of the paper book, which contains the details of net worth of the subscribers and the amount subscribed by those investors in the share capital of the assessee-company as ratio to the networth. The ld. A.R. stated that the subscribers have huge net worth to invest in the assessee-company and the observations of the ld. Assessing Officer that these companies were either having negative income or very meagre income, did not carry any force as the investments were made out of the net worth and not out of the income of the subscribers. The ld. A.R. also submitted that where the assessee has furnished all the evidences before the ld. Assessing Officer in respect of share subscribers and the share subscribers also assessed to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments of the ld. D.R. is devoid of any merit and may be dismissed. 11. After hearing the rival contentions and perusing the relevant material placed before us, we find that the assessee has raised share capital/share premium from nine entities, the details of which were given in the assessment order in para 2.2. The 10,00,000 equity shares were issued of face value Rs, 1/- at a premium of Rs, 99/- thereby collecting money on account share capital of Rs, 10,00,000/- and on account of share premium Rs, 9,90,00,000/-. The assessee has filed copies of ITR acknowledgments, audited financial accounts, share application forms, share allotment advices, Bank statements, Memorandum Articles of Associations, replies dated 31.01.2012 18.09.2021 to the notices under section 133(6), reply dated 27.02.2015 in response to notice issued under section 131 and also copies of assessment orders u/s 143(3) of the Act or copies of intimations under section 143(1) of the Act in all subscribers, which are filed in the paper book from pages no. 159 to 563. We also note that the AO issued notices under section 133(6) of the Act to all the subscribers and were duly replied by furnishing all the details/evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en held that the assessee has discharged the initial burden and, therefore, the burden shifts on the Assessing Officer to examine the source of the credit so as to be justified in referring to Section 68 of the Act. After the Assessing Officer puts the assessee on notice and the assessee submits the explanation with regard to the cash credit, the Assessing Officer should consider the same objectively before he takes a decision to accept or reject it. In Srilekha Banerjee Ors. Versus CIT 4, it was held that if the explanation given by the assessee shows that the receipt is not of income nature, the department cannot convert good proof into no proof or otherwise unreasonably reject it. On the other hand, if the explanation is unconvincing, the same can be rejected and an inference shows that the amount represents undisclosed income either from a disclosed or an undisclosed source [CIT Versus Mohanakala (P) 5]. The explanation given by the assessee cannot be rejected arbitrarily or capriciously, without sufficient ground on suspicion or on imaginary or irrelevant grounds (Lal Mohan Krishna Lal Paul Versus CIT 6 and Anil Kumar Singh Versus CIT 7). 5. Further to be noted that where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed 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 assessee. Therefore, the assessing officer ignored the basic tenets of law before invoking his power under Section 68 of the Act. Fortunately, for the assessee, CIT(A) has done an elaborate factual exercise, took into consideration, the creditworthiness of the 13 companies the details of which were furnished by the assessee. More importantly, the CIT noted that all these companies responded to the notices issued under Section 133 (6) of the Act which fact has not been denied by the assessing officer. On going through the records and the net worth of the lender companies, the CIT has recorded the factual finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the materials on record, we are of the view that no substantial question of law is involved in this appeal. Both the Commissioner of Income Tax (Appeal) and the Tribunal below have in details considered the fact that the share application money was paid by account payee cheque, the creditor appeared before the Assessing Officer, disclosed its PAN number and also other details of the accounts but in spite of that the Assessing Officer did not enquire further from the assessing officer of the creditor but in stead, himself proceeded to consider the profit and loss account of the creditor and opined that he had some doubt about the genuineness of such account. In our opinion, in such circumstances, the Assessing officer of the assessee cannot take the burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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