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TMI Blog2025 (1) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... uineness of the party such as PAN, financial and bank statements showing share application money. Crystal Networks Pvt. Ltd. [ 2010 (7) TMI 841 - KOLKATA HIGH COURT] 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. Assessee appeal allowed. - Shri Rajesh Kumar, AM And Shri Pradip Kumar Choubey, JM For the Assessee : Shri Sunil Surana, AR For the Revenue : Shri Pradip Kumar Biswas, DR ORDER PER RAJESH KUMAR, AM: This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the Ld. CIT(A) ] dated 05.07.2023 for the AY 2012-13. 02. The only issued raised by the Revenue is against the deletion of addition of ₹ 3,55,65,468/- as made by the ld. AO u/s 68 of the Act towards unexplained cash credit being share capital/ share premium. 03. The facts in brief are that the assessee filed the return of income showing total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation required by the AO for completion of the assessment proceedings. The appellant submitted that it had filed the confirmation letters along with the PAN, the financial statements and acknowledgement of filing of the return of the subscribers, along with the bank statement highlighting the source of investment by the shareholder there by discharging the onus cast on it to prove the source, identity, creditworthiness and genuineness of the transactions. The AO in total disregard of the submission did not accept its submission and added the share premium u/s 68 of the Act relying on the order of Hon ble ITAT in the case of M/s Bisakha Sales Pvt. Ltd., without appreciating the facts of that case and the facts of the appellants case and also when the there is a plethora of cases supporting the contention of the appellant. 5.2 The submission of the appellant is examined. The AO in the assessment order u/s 144 of the Act noted that in response to the notice u/s 142(1) of the Act the AR of the appellant filed reply giving details of the allottees and the copies of their return. The AO further noted that summons u/s 131 (1) of the Act were issued for personal hearing to all the sharehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed asset schedule to achieve the requirement of processing/manufacturing activity. The assessee claims to have incurred job work expenses of Rs. 3.02 crore which amounts to 1.28 % of the turnover. The payment towards job work charges were paid mainly to four job work contractors situated in Gandhidham, Gujarat. The Assessing Officer and CIT(A) has rejected the job work expenses claimed by the assessee on the ground that notice issued under section 133(6) and thereafter summons issued under section 131 to the contractors have remained uncomplied with, by such contractors. In this regard, it is the case of the assessee that the payments to job work providers have been subjected to TDS provisions and the job work income is correspondingly reflected in the respective return of income filed by the contractors which is placed on record. Besides, the necessity of incurring expenses is also demonstrated circumstantially; viz. (i) acquisition of fixed assets and increase in Gross block by a nearly triple (ii) process activity translating in corresponding increase in turnover. Furthermore, the income tax return filed by the contractors establishes the identity of job work service provider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the assessee is closed in the subsequent years and the money lent by the banks to the assessee were declared as nonperforming assets (NPA) in September 2016 by the Punjab National Bank. Hence, all the assets were securitized on behalf of the bank under SARFAESI Act 2002 and thereafter mostly auctioned to realize the dues. The company is not doing business anymore and is rendered without any staff, financial records and other support and backup. Hence, a fresh round of inquiry on demonstrable facts will not serve any useful purpose. The assessee asserts that on the face of speaking documents, it is difficult to visualize a different position emerging from such belated enquiry, if permitted, after lapse of considerable time and the closure of the business of the assessee. A reference was made to the judgment of the Hon'ble Supreme Court in Union of India v. CITI Bank N.A. [2022] 141 taxmann.com 409/174 SCL 165 among others. 8.3 The reasons broadly condensed in the preceding paragraphs justifies the plea of the assessee. The assessee has successfully demonstrated the incurring of job work expenses on the basis of clinching evidences, both direct and circumstantial. No adve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide and the addition/disallowance on account job-work charges are reversed and cancelled. 10. In the result, the appeal of the Assessee is allowed. 5.4 The addition in the instant case had been made by the AO on non-compliance of notice u/s 131(1) of the Act by the shareholder, even when the relevant details had been filed by the appellant in the course of the assessment proceedings and also at the appellate stage. The AO had not controverted the submission made by the appellant therefore following the Hon ble ITAT-Delhi the addition made by the AO for non-compliance by the shareholders is unsustainable. The addition made is accordingly deleted. The ground of appeal is allowed. 5.5 The other ground of appeal relating to disallowance u/s 14A of the Act amounting to Rs. 88468/-. The appellant in its submission submitted that there was no exempt income earned claimed by the appellant. The submission is considered, the assessment order is perused. The AO has mechanically proceeded to calculate expenditure u/s 14A of the Act. without recording reasons and pointing out the exempt income claimed by the appellant. The judicial decisions are clear that where there is no exempt income earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld AR thus heavily defended the appellate order by relying on the following decisions: (i) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); (ii) CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); (iv) ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and (v) Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020. 07. After hearing the rival contentions and perusing the material on record, we find that the assessee has furnished before the AO as well as the Ld. CIT(A) all the evidences qua raising the share capital/ share premium during the year comprising the proofs of PAN cards, list of directors with share holders with DIN, copies of ITRs, copies of bank statements with full narration as to credit and debit entries, source of funds in the hands of investors etc. We note that assessee during the year has issued equity shares of face value of Rs. 10/- each at a premium of ₹ 490/- to various subscribers from whom the assessee has received Rs. 3,54,76,000/-.We find that though the assessee company/investors did not comply with summon u/s 131 by producing the director / principal offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent, 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 creditworthy. There was no effort made to pursue the so called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. I f the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case. 08. The case of the assessee is also 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Ld. CIT(A). We also found no single word has been spared 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. 09. 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 nonproduction of the director of a Public Limited Company which is regularly assessed to Income tax having PAN, on the ground that the identit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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