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TMI Blog2023 (1) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... -), M/s Nortex Realty Pvt. Ltd. (Rs. 4,33,00,000/-), M/s Poddar Udyog Ltd. (Rs. 2,19,00,000/-) and M/s Hope Enterprises Pvt. Ltd.( 20,00,000/- in respect of share application money received during the year.) 2. "That on the fact and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 9,16,20,000/-made by the Assessing Officer where no personal attendance was made by any director of the share allottee companies during the course of assessment proceedings/remand proceeding and as such identity & creditworthiness of the share applicants and genuineness of transactions could not be verified." 3. "That on the facts and the circumstances of the case, the Ld. CIT(A) has erred in overlooking the principles which has been laid down by the Hon'ble Supreme Court in the case of Pr.CIT(Central)-1, Delhi Vs. NRA Iron & Steel Pvt. Ltd. (412 ITR 161), which suggests that the assessee is under a legal obligation to prove the receipt of share capital premium to the satisfaction of the A.O., failure of which, would justify addition of the said amount to the income of the assessee." 4. "That on the facts and the circumstances of the case, the Ld. CIT(A) has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer added a sum of Rs. 15,13,78,500/- on account of share capital issued by the assessee company. The addition was made as no compliance was made during the course of assessment proceedings. 4. Being aggrieved by the said order of the Assessing Officer, the assessee preferred appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee furnished the necessary details for proving the identity, creditworthiness of the share subscribers and genuineness of the transactions. The ld. CIT(A) forwarded the said details to the ld. Assessing Officer for his remand report. The Assessing Officer examined the details and documents furnished by the assessee and sent the remand report , the relevant part of this is reproduced as under: "Result emanated from Remand Proceeding: At the outset to discuss this issue, the undersigned is inclined to draw kind attention of the appellate authority towards other long-term liabilities as per the audited books of accounts. From Para No.5 and 5.1 of the audited books of accounts, it is observed that a sum of Rs. 5,97,58,500/- and Rs. 422800600/- had been shown as other long-term liabilities as 31.03.2011 and 31.03.2012 respectively. Fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the recording of the statement. Furthermore, from the submission as made during remand proceeding source to source of the investment could not be verified. In this regard, reliance is placed upon the latest order dtd. 05.03.2019 of the Hon'ble Apex Court in the case of Pr. CIT (Central)-1 vs. NRA Iron and Steel Pvt. Ltd. [SLP(Civil) No. 29855 of 2018] wherein it has been held that the assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors and creditworthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the A.O, so as to discharge the primary onus. Here in this instant case, had the companies, being the subsidiary/group entities, with whom the assessee-company has claimed to have had regular transactions, had any real existence, the assessee would have produced them in person which could have proved the authenticity of the transactions. Furthermore, as aforementioned the subscribing parties have merely made paper submission viz. Audited books of account, copy of ITR, bank statement etc. from where source to source of the alleged transaction in the gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts of the assessee in different years and if any addition has to be made, it has to be made in respective financial year. In my considered view, the above assertions of the AO show that the AO made the addition under a belief that the sum of Rs. 15.13 Crores was received by the appellant in the year under consideration which in the present facts of the case is incorrect. This was evident from the annual financial statement of the assessee. In view of above facts let us examine whether any addition under section 68 for unexplained credits could be made in assessment year 2012-13 especially when the credit entries were made in earlier financial years. In my considered view the Answer is no. This view is supported by following judicial decisions: M/s Styntensia Network Security India Put Ltd Vs ITO 11(2)(1) ITA No.2927/Mum/2017 wherein it has been held that no addition u/s 68 is called for where adjustment is made against opening balance brought forward from earlier years, that is to say, if no sum of money is found credited in the books in the year under consideration then no addition is warranted in the year under consideration, in the said decision, the Hon'ble ITAT Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. Rs. 2,00,00,000 Total Rs. 9,16,20,000/- From the above it can also be seen that all these persons are group entities and money has been received by the appellant on earlier occasion also and their creditworthiness and identity has been accepted by the A.O under the earlier years and no question have been raised against the share application money given by them. During the course of appellate proceedings, the AO was given an opportunity to examine the documentary evidences submitted by the appellant in respect of these entities. In the remand proceedings, the AO has accepted the following: i) Summons u/s. 131 of the I. T. Act, 1961 were issued to the share applicants and they were all served, ii) All the entities against whom summons were served have responded and furnished replies, iii) The reply Constitute documentary evidences regarding the share application money, iv) Physical appearance was not made, v) Source of source of the investment made could not be verified in remand proceedings, vi) Reference of decision of Hon'ble Apex Court in the case of NRA Iron and Steel Pvt. Ltd. was made, vii) Finally, it is stated that if the share applicants ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet of all the shareholders were submitted. The Issue was remanded to the AO for his Comments on the submissions. The AO in the remand report examined the submissions. He has nowhere denied or controverted the submissions made by the assessee. The AO has accepted the facts that it is observed that all the corporate and HUF entities barring Fort Projects Put Ltd are group/ subsidiary company of Iris Health Services Ltd. The AO has also not adversely commented on the identity of the shareholders, their creditworthiness and the genuinity of the transactions. The AC has, however, stated that the directors did not appear for personal examination. The assessee has countered this argument by submitting that it is nowhere the requirement of sec. 68 that the directors should personally appear when there is no dispute about the identity, creditworthiness and genuinity of the transactions. The issue is squarely covered by the Judgement of the Hon'ble Calcutta ITAT in the case of Cygnus Developers Put Ltd and Devendra Kumar Sant, a copy of the said decisions has already been filed before your honour. The other reason for not accepting the investment is that the source of source was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up by the AO as it was not required under the act either as far as A.Y. 2012-13 is concerned. Furthermore, the above judgment of Hon'ble Bombay High Court has been followed in various subsequent decisions by Hon'ble jurisdictional ITAT. Finally, it is not clear that when identity, creditworthiness and genuineness of the transactions have been accepted from the same person/entity in earlier years why the same is being challenged in the year under consideration and that too when the creditworthiness of these entities has shown much more improvement in terms of Return of Income showing substantial income which have been filed by them. In view of the above, I am of the considered opinion that the additions made by the A.O amounting Rs. 9,16,20,000/- cannot be sustained and therefore, I direct the A.O to delete the same. Therefore, this ground is allowed." 6. Being aggrieved by the said order of the CIT(A), the Revenue has come in appeal before us. 7. We have heard the rival contentions and gone through the record. During the earlier hearings, the counsel for the assessee had produced on record the observations of the Assessing Officer that no director of the share subscriber c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal as well as the Assessing Officer to make a report regarding the veracity of the remand report which is reproduced from page 18 to 20 of the impugned CIT (Appeals) order. The case is adjourned to 28/03/2022." A perusal of this order would indicate that a doubt was raised in the remand report submitted by the Assessing Officer and reproduced in the impugned order. Therefore, it is necessary to ascertain the original copy of the remand report. Faced with this situation, the above direction was given to the revenue. However, it could not be complied with. On the request of the ld. CIT D/R, we adjourn the hearing to 08.08.2022. Copy of this order sheet to be supplied to the administrative CIT having jurisdiction over the Assessing Officer for ensuring the compliance." On the date of hearing i.e. 24.11.22, the ld. DR has come along with the assessment records. He has submitted that there was no copy of the statement recorded u/s 131 in the assessment records. However, he has fairly admitted that the assessment records were not properly maintained at all. There were no file orders after 23.09.2015; whereas, the statement u/s 131 was recorded on 21.12.2017; there was no ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that merely because the directors did not appear before the Assessing Officer, that itself, was not sufficient enough to hold that the entire transaction was bogus. The ld. CIT(A) considered the relevant documents on record and also considering that the share subscriber companies were having sufficient net worth to invest in the assessee company has deleted the addition so made by the Assessing Officer. 9. The ld. counsel for the assessee has further submitted that even the only contention raised by the Assessing Officer in the remand report stands rebutted by the aforesaid evidence of copy of statement recorded u/s 131 of the Act of the director of the assessee company and managing director of M/s Poddar Udyog Ltd. namely Sri Pavan Kumar Poddar on 21.12.17. That even in respect of the said statement recorded, the Assessing Officer has neither recorded any adverse comment nor could draw any adverse inference in relation to the transaction/share application money received by the assessee. The ld. counsel for the assessee has further submitted that even otherwise, there was no doubt / suspicion raised by the Assessing Officer either about the identity or of the creditworthin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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