TaxTMI 
TaxTMI 
2018 (12) TMI 972
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....re premium applied for and allotted by the assessee company. On appeal, the ld. First Appellate Authority, confirmed the addition. 2.1. Aggrieved the revenue is in appeal before us on the following grounds:- "1. For that the order of the Ld. CIT (A) is arbitrary, illegal and bad in law. 2. For that the Ld. CI.T(A) erred in deciding the appeal exparte without allowing the appellant any proper opportunity of being. 3. For that the Ld. C.I.T(A) erred in disposing of the appeal exparte and confirming the order of the AO even without consulting the assessment records with reference to the grounds taken in the Memo of appeal from which it would have been apparent that the assessee duly filed all the evidences including PAN, copy of acknowledgement of filing of the return by the shareholders, copy of agreement for investment purchase and allotment made by the appellant in consideration thereof, copy of balance sheets, evidence of identity and source of source which were also verified by Issuing notice u/s.133(6). 4. For that the Ld. CIT(A) erred in confirming the order of AO when it is apparent from assessment records that there is no unexplained cas....
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.... to the Income tax Officer. These are placed from pages 81 to 171 of the paper book filed by the assessee. 6. On these facts, we find that the issue in question which is to be adjudicated is whether the addition can be made u/s 68 of the Act be made where there was allotment of shares other than by way of cash i.e. for consideration for purchase of shares of another company. This issue is covered by the order of the 'C' Bench of the Kolkata Tribunal in the case of ITO vs. M/s. Anand Enterprises Ltd., ITA No. 1614/Kol/2016 & C.O. No.56/Kol/2016; dt. 26/09/2018, wherein it has been held as follows:- "4. We have heard the rival submissions. At the outset, we find that the assessee had not raised any share capital by receipt of cash consideration in the instant case. The shares were issued for consideration other than cash in lieu of assessee company making investment in shares in some other company. Effectively, the assessee purchased certain shares from the aforesaid six shareholders and instead of paying cash to them, assessee company issued shares in its own company to those shareholders. Hence the assessee had made investments in shares of another company for which con....
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....aid' . Hence if certain shares were donated by a person, then the same would not fall eligible for deduction u/s 80G of the Act. We also find that the Hon'ble Jurisdictional High Court in the case of Jatia Investment Company (Co.) vs. CIT reported in 206 ITR 718 (Cal) also supports the case of the assessee herein, wherein it was held as under: "It is finally emphasised by learned counsel for the assessee that the ultimate result is that the firm becomes a debtor to GB and Co. and the three non-financial companies of the group got discharged. Learned counsel also emphasised that, at the worst, it can be said that the assessee-firm has received valuable assets being the said shares of the equivalent value of the debt taken over by it from the companies, i.e., Rs. 11.20 lakhs. Therefore, the question of cash credit does not come in, there being no actual passing or receipt of cash. In other words, the transactions are mere book entries. It was contended that the fact that the entries passed through the cash book could not detract from or efface the essential nature of the entries. It was also urged that the entries were passed through the cash book s....
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....dy extracted the observation of the Income- tax Officer in paragraph 14 of his assessment order. The Income- tax Officer has clearly opined that all the respective parties did not receive cash nor did pay cash as none had any cash for the purpose. The only point in the assessment order is that the entries not involving the passing of cash should not have found a place in the cash book, but in the ledger account through journal entries. There is another self- contradiction in the Income-tax Officer's finding that, if there was no real cash entry on the credit side of the cash book, but merely a notional or fictitious cash entry, as admitted by him, there is no real credit of cash to its cash book ; the question of inclusion of the amount of the entry as unexplained cash credit cannot arise. One of the grounds of the Tribunal for disbelieving the assessee's case is that the adjustment entries were made by notional cash entries with a view to bringing down the debt-and-capital ratio, i.e., that while being discharged of the debt the said companies also jettisoned their assets, i.e., the shares held by them of equivalent sum without achieving the avowed purpos....