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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 ..... 323 - SUPREME COURT] impugned additions are not warranted in this case. Appeal of the revenue is dismissed. - Shri Sanjay Garg, Judicial Member And Shri Rajesh Kumar, Accountant Member For the Appellant : Shri Subhro Das, Addl. CIT, Sr. DR For the Respondent : Shri Miraj D. Shah, AR ORDER PER SANJAY GARG, JUDICIAL MEMBER : The captioned appeal has been preferred by the revenue against the order dated 09.07.2024 for Assessment Year (AY) 2012-13 of the Ld. Commissioner of Income Tax (Appeals), Kolkata -21 [hereinafter referred to as the Ld. CIT(A) ] passed u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. This appeal of the revenue is time barred by five days. However, no petition for condonation of delay has been filed. However, considering the shortness of the delay period, the delay in filing the present appeal is hereby condoned and the appeal is taken up for adjudication. 3. Revenue in this appeal is aggrieved by the action of the Ld. CIT(A) in deleting the addition of Rs. 2,95,00,000/- made by the Assessing Officer (in short AO ) by treating the share application money received by the assessee as income of the assessee from unexplained sources. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them in the assessee company, which is reproduced in a chart at page 7 of the impugned order of the Ld. CIT(A), which, for ready reference is extracted as under: Sl. No. Name of the Share Applicant concern PAN No. of shares Face Value Premium charged Amount in Rs. 1. Ambaa Securities Pvt. Ltd. AACCA8251G 9000 Rs.10/- face value and share premium of Rs. 190/ share Rs.18,00,000/- 2. Ritesh Enclave Pvt. Ltd. AADCR6228H 31500 Rs.10/- face value and share premium of Rs. 190/ share Rs.63,00,000/- 3. Ritesh Nirman Pvt. Ltd. AADCR6227J 74000 Rs.10/- face value and share premium of Rs. 190/ share Rs.1,48,00,000/- 4. Ritesh Projects Pvt. Ltd. AADCR6224M 17500 Rs.10/- face value and share premium of Rs. 190/ share Rs.35,00,000/- 5. Ritesh Vinimay Pvt. Ltd. AADCR6258D 15500 Rs.10/- face value and share premium of Rs. 190/ share Rs.31,00,000/- Total 1,47,500 Rs.2,95,00,000/- 8. The Ld. CIT(A) has further noted that the assessee during the assessment proceedings had duly filed the complete details of names and addresses 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the said concerns. He, therefore, held that the identity of the share subscriber companies could not be placed under doubt. 9.1. Regarding creditworthiness of the share subscriber companies, the Ld. CIT(A) has duly noted that the said share subscriber companies were having sufficient creditworthiness. He also noted that the said share subscriber companies were also having high business turnover and that even the share subscriber companies had also furnished their source of funds along with copy of bank statements. The Ld. CIT(A) has also reproduced a chart relating to the financial worth, turnover and investment of the share subscriber companies in the assessee concern. The relevant chart is reproduced hereunder for the purpose of ready reference: Sl. No. Company Name Net Worth as on 31 st March 2012 Turnover as on 31st March 2012 Investment made in the Assessee company during FY 2011-12 1. Ambaa Securities Pvt. Ltd. Rs. 10,64,89,710.91 Rs.59,72,911/- Rs.18,00,000/- 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following various decisions of the Hon ble Supreme Court, Hon ble High Courts and the orders of the Coordinate Benches of the Tribunal: a) The Hon ble Apex Court in the case of CIT vs. Orissa Corporation Pvt. Ltd. (supra), under identical circumstances, has held as follows:- In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, 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 evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record and found that the assessee has been able to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction. The relevant part of the order, for the purpose of ready reference, is reproduced as under: 5. Conclusion: Ground No.1 2 I have considered the order of the A.O as well as the submission of the appellant. I have also considered the judicial decisions relied upon by the appellant. The facts of the case have already been discussed as above. It is observed that in the year under consideration the appellant company had raised share capital of Rs. 7,60,00,000/-from 6 parties. In the course of the assessment proceedings, to verify the receipt of share capital, the AO issued notices u/s.133(6) to all the 6 share applicants and in response, they all confirmed the transactions submitted the details/document in respect of the subscription of shares of the appellant. In the course 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 filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, the addition cannot be in my considered opinion, unjustified. Where the corpus becomes technically explained in the eyes of law, how can, the credits arising out of the same corpus can be viewed as unexplained u/s 68 of the IT Act. In view of the facts circumstances of the case it is held that the addition of Rs. 7,60,00,000/- for the share capital raised by the appellant from 6 share applicants as unexplained cash credit u/s 68 of the Act was not justified and the same is directed to be deleted. The appeal of the assessee company on Grounds No.1 2 are treated as allowed. Ground no. 3 is general in nature, which does not require adjudication. 6. In the result, the appeal of the assessee is treated as allowed. 6. A perusal of the above concluding part of the order of the CIT(A) reveals that the ld. CIT(A) has not only taken note of the accounts of the share subscribers but also, noted that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. The Ld. Counsel for the assessee has rightly placed reliance upon the decision of the Hon ble Bombay High Court in the case of PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd. reported in (2017) 84 taxman.com 58 (Bom) wherein the Hon ble High Court has held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of Crystal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the investor or lender along with their confirmations, the assessee has discharged the initial burden and, therefore, the burden shifts on the Assessing Officer to examine the source of the credit 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 concerning the cash credit, the Assessing Officer should consider it objectively before he decides to accept or reject it. Where the assessee furnishes full details regarding the creditors, it is up to the Department to pursue the matter further to locate those creditors and examine their creditworthiness. While drawing the inference, it cannot be assumed in the absence of any material that there have been some illegalities in the assessee s transaction. Held, dismissing the appeal, that the allegations against the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving 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, explanation for source of funds, income tax returns and audited financial statements and also assessment order framed under Section 143(3) of the Act in all the cases. The Tribunal further noted that in spite of such being the factual position, the only reason for making the addition in the hands of the assessee the director of the assessee company did not respond to the summons issued 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. 15. The Hon ble Supreme Court, thus, has held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same. However, as noted above, the Assessing Officer in this case has not made any independent enquiry to verify the genuineness of the transactions. The assessee having furnished all the details and documents before the Assessing Officer and the Assessing Officer 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 initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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