TaxTMI 
TaxTMI 
2022 (11) TMI 815
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....s issued 1,35,500 equity shares at face value of Rs. 10/- each at a premium of Rs. 190/- thereby a sum of Rs. 2,71,00,000/- was from four corporate entities. Accordingly the assessee was asked to furnish the details/evidences to prove identity and creditworthiness of the investors and genuineness of the transactions. The AO also issued summons u/s 131 of the Act to the assessee as well as the investors. The Director of the assessee company appeared before the AO and statement was accordingly recorded however the another directors of the assessee company did not comply with the summons. Finally the AO after taking into account the reply/submissions of the assessee treated the amount raised during the year from allotment of shares of Rs. 2,71,00,000/- as unexplained cash credit and added the same to the income of the assessee in the assessment framed u/s 144 of the Act. 4. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee. The Ld. CIT(A) noted that though the summons were issued u/s 131 to the four investors however they did not appear personally but furnished all the details proving the identity and creditworthiness of the investors and genuineness of ....
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....ive part of ld CIT(A) order is extracted as under: "4.19. From the documents available it appeared that the share subscription amounts were received from bodies corporate who were all independently assessed to tax. The income tax assessment orders of the share subscribing companies for the AY 2012-13 proved that the IT Department had accepted the genuine existence of the respective companies and with reference to information disclosed by each of them in their respective balance sheet, the total income was assessed. If the existence of the respective share subscribers was accepted by the AOs of the IT Department for the purposes of framing assessment for AY 2012-13, then I see no reason why the AO of the appellant company could dispute their ability to invest in shares of the other companies. Moreover, I find that each shareholder had disclosed in its audited accounts sufficiently large investible funds and only fraction of such investible funds were received by the appellant in the form of share capital. On these facts it could not toe alleged that respective companies were benamidars of the assesses. In the impugned order the AO has also referred to the alleged modus operand! ad....
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....the assessee had failed to prove identity & creditworthiness of the shareholders and also failed to substantiate genuineness, if these touchstones are applied to the appellant's case then 1 find that the income-tax assessment orders passed by the Departmental Officers For AY 2012-13 showed that the identity of each of the share subscribers was accepted in their respective assessment proceedings. In the balance sheets of the respective,, share subscribers, the investments in assessee's share were recorded and each subscriber in its balance sheet had disclosed sufficiently, large investible funds. The assessee had also filed copies of the bank statements of the respective share subscribing which established that the share subscription amounts were received through banking channels The sources of making payment were also furnished and the entries In bank statements indicated that there was no deposit of cash prior: to clearance of the cheques in assessee's favour.- All these facts and documents considered Cumulatively establish that the assessee had discharged the onus of proving creditworthiness of the share subscribers and the genuineness of the transactions. I therefore hold that t....
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....ess the said issue of shares at a high premium as the amendment was brought out in the Section 56(2)(viib) by Finance Act, 2012 w.e.f 01.04.2013 and accordingly is effective from AY 2013-14. So far as non-compliance of summons u/s 131 is concerned the same cannot be the ground for making addition. We note that the assesse has received the amounts through account payee cheques and source of investments were fully explained and proved. We further note that the AO has made the addition that no compliance was made to the summons issued to the investors. In our considered view non compliance to summons issued u/s 131 of the Act or non appearance of the directors of the subscribing companies before the AO can not be basis for making addition as the assessee has filed all the necessary documents before the authorities below proving the identities , creditworthiness of the investors and genuineness of the transactions. The case of the assessee is squarely covered by the decisions of Hon'ble Calcutta High Court in the case of Crystal Networks Pvt. Ltd. vs. CIT 353 ITR 171 (Cal ) wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthi....
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....ischarge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. Taking inspiration from the Supreme Court observation we are constrained to hold in this matter that the Tribunal 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." The case of is also covered by the decision of the coordinate bench by ITO Vs M/s Cygnus Developers India Pvt. Ltd. (ITA No. 282/Kol/2012) 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. ....