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TMI Blog2024 (12) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... treating the share application money received by the assessee as income of the assessee from unexplained sources. 4. We have heard the rival contentions and gone through the records. In this case, the AO during the assessment proceedings noted that the assessee had claimed to have received share capital to the tune of Rs. 2,95,00,000/- during the financial year (FY) under consideration. On being asked to explain in this respect, the assessee filed the requisite details and documents to prove the identity and creditworthiness of the share subscribers and genuineness of the transactions. However, the AO without pointing out any defect or discrepancy in the evidences furnished by the assessee, issued summons u/s. 131 of the Act to the directors of the assessee company for their personal deposition. However, the directors of the assessee company did not appear for personal deposition. Thereafter, the AO by way of a small and cryptic order held that the assessee had failed to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction. He, accordingly, made the impugned addition treating the said share application money as income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dresses of the five share subscriber companies, their PAN along with copies of relevant documents such as audited Balance Sheet, Profit & Loss Accounts along with schedules forming part of such Balance Sheet and P&L Account. Copies of bank statements of the assessee as well as the bank statement of share applicant companies for the relevant period were also supplied and even the immediate source of all the share applicant companies from which the investments were made, were also provided. It was also demonstrated by the assessee before the Ld. CIT(A) that in the immediate preceding assessment year, the assessee had issued 672100 shares of the face value of Rs. 10/- per share and at premium of Rs. 190/- per share. However, the AO did not raise any doubt about the charge of such share premium in the earlier assessment year. The Ld. CIT(A) noted that in the circumstances, charging of the premium at the same rate for the year under consideration could not be placed under doubt. The Ld. CIT(A) has further noted that all the share subscribers had duly responded to the notices issued u/s. 133(6) of the Act and furnished required details and confirmations. However, the AO did not discuss a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- 2. Ritesh Enclave Pvt. Ltd. Rs 14,82,05,485.22 Rs.1,10,30,433/- Rs.63,00,000/- 3. Ritesh Nirman Pvt. Ltd. Rs 13,48,25,960.13 Rs.99,79,342/- Rs.1,48,00,000/- 4. Ritesh Projects Pvt. Ltd. Rs 11,66,59,890.46 Rs.1,46,71,605/- Rs.35,00,000/- 5. Ritesh Vinimay Pvt. Ltd. Rs 6,09,27,413.30 Rs.33,82,795/- Rs.31,00,000/- 9.2. Regarding the genuineness of the transaction, the Ld. CIT(A) noted from the various details and documents furnished by the assessee that the genuineness of the transaction could not be doubted. 10. The Ld. CIT(A), thereafter, has relied upon various decisions given by the Hon'ble High courts including that of the Hon'ble jurisdictional Calcutta High Court and held that the AO was not justified in making the impugned additions. 10.1. So far as the non-appearance of the directors of the assessee company before the AO was concerned, the Ld. CIT(A) had placed reliance upon the decision of the jurisdictional Calcutta High Court in the case of PCIT Vs. Naina Distributors Pvt. Ltd. in ITAT/113/2023, IA No. GA/1/2023 dated 28.06.2023, wherein the Hon'ble Jurisdictional Calcutta High Court has held that, wherein the assessee had furnished requisite deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise." {emphasis ours} b) The ITAT Kolkata Bench in ITO vs Cygnus Developers (I) P Ltd in ITA No. 282/Kol/2012 dated 2.3.2016, held as follows: 9. We have considered the rival submissions., We are of the view that order of CIT(A) does not call for any interference. It may be seen from the grounds of appeal raised by the Revenue that the Revenue disputed only the proof of identity of the shareholder. In this regard it is seen that for A Y.2004-05 Shree Shyam Trexim Pvt. Ltd., was assessed by ITO, Ward- 9(4), Kolkata and the order of assessment u/s/143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd., was assessed to tax u/s 143(3) for A Y.2005-06 by ITO, Ward- 9(4), Kolkata by order dated 20.03.2007. Similarly Jewellock Trexim Pvt. Ltd was assessed to tax for A Y.2005-06 by the very same ITO- Ward- 9(3), Kolkata asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the appellate proceedings, the appellant filed copy of each of the assessment orders passed in all the 6 cases of the shareholders for that year in which the share subscription amount has been received by the assessee company. Besides, the income-tax return filing acknowledgment, Audited Balance and sheets as on 31.03.2012, relevant bank, copy of the notices issued u/s 133(6) to the shareholders and reply thereof were also submitted. It is observed form the details & documents furnished by the appellant that in the cases of 2 share holders, namely 1) M/s Alfort Merchants Private Limited, 2) M/s Sharekhan Merchants Private Limited, the Assessment Orders u/s 143(3) for Lne AY 2012-13 were passed u/s. 143(3) without taking any adverse view. Therefore, it can be assumed that the respective Assessing Officers have all verified the accounts and therefore any amount that is credited from these two companies to the assessee company is fully explained. The assessment in the case of the other 4 share holders, namely, 1) M/s. Dhanamrit Commercial Private Limited, 2) M/s Jealous Commercial Private Limited, 3) M/s Mutual Merchants Private Limited, 4) Winsom Vanijya Private Limited were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t all the six share subscribers were assessed u/s 143(3) of the Act. Out of which, no additions were made in case of two share subscribers. However, in the case of other four share subscribers, the additions were made regarding their source of income. Now, it is settled law, once the addition has been made in the hands of the share subscribers, the investments by which share subscribers in the hands of the other company whose shares have been subscribed stood explained then no additions in such a case would be warranted in the hands of the assessee company as it would amount to double additions of the same amount. Even if the said addition stand confirmed in the appeal or stand deleted, in both the instances, the investment in the hands of the assessee company will stand proved. Reliance has been placed in this respect on the decision of the Coordinate Kolkata bench of the Tribunal in the case in the case of DCIT vs. M/s Maa Amba Towers Ltd. in ITA No.1381/Kol/2015 vide order dated 12.10.2018. The aforesaid decision has been further relied upon by the coordinate Kolkata bench of the Tribunal in the case of "Steelex India (P) Ltd vs. ITO, Ward-3(2), Kolkata" I.T.A. No.2666/Kol/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal networks (P) Ltd. vs CIT" (supra) has held as under: "We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding." 8. As the ld. CIT(A), in this case, has not only duly examined the facts and explanation as fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee were in respect of thirteen transactions. The Assessing Officer issued a show-cause notice only in respect of one of the lenders. The assessee responded to the show-cause notice and submitted the reply. The documents annexed to the reply were classified under three categories namely: to establish the identity of the lender, to prove the genuineness of the transactions and to establish the creditworthiness of the lender. The Assessing Officer had brushed aside these documents and in a very casual manner had stated that merely filing the permanent account number details, and balance sheet did not absolve the assessee from his responsibility of proving the nature of the transaction. There was no discussion by the Assessing Officer on the correctness of the stand taken by the assessee. Thus, going by the records placed by the assessee, it could be safely held that the assessee had discharged his initial burden and the burden shifted onto the Assessing Officer to enquire further into the matter which he failed to do. In more than one place the Assessing Officer used the expression "money laundering". Such usage was uncalled for as the allegation of money laundering is a very seriou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by the assessing officer under Section 131 of the Act. The correctness of this was also considered by the learned Tribunal and it was held that non-appearance of the director cannot be made a ground for addition in the hands of the assessee under Section 68 of the Act when other evidence relating to the raising of share capital qua the share subscriber were available on record as furnished by the assessee and also cross verified by the assessing officer pursuant to the enquiry conducted in response to the notices issued under Section 133(6) of the Act. The learned Tribunal also referred to the decision of this Court in the case of Crystal Networks Pvt. Ltd. Vs. CIT. reported in 353 ITR 171 (CAL). Thus we find that there is no question of law much less substantial question of law arising for consideration in this appeal. Accordingly, the appeal fails and is dismissed". 13. So far as the reliance of the Ld. DR on the decision of the Hon'ble Supreme Court in the case of "PCIT v/s NRA Iron & Steel (P) Ltd." (supra) is concerned, we note that the Hon'ble Supreme Court in the said case has taken note of the observations made by the Supreme Court in the "the land mark case of Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X
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