TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 714
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....re duly issued and served on the assessee. The AO observed that during the year, the assessee has issued 560 equity shares at face value of Rs 10/- and premium of Rs. 9,990/- from three parties namely i) Ramsons Merchants Pvt. Ltd.- 200 Shares, ii) Ramsons Marketing Pvt. Ltd.- 170 shares and iii) Parakh Vintrade Pvt. Ltd.- 190 shares. Accordingly AO called upon the assessee to file the evidences/documents pertaining to the allotment of shares providing the identity, creditworthiness and genuineness of this transactions. The assessee was also directed to produce the directors of the assessee company besides the production of the directors of the allottee companies with certain documents namely proof of identity of the directors, copies of the returns of the Directors in the individual capacity with the Balance sheets and profit and loss accounts for the last of 3 AYs., ROCs details of the said allotted companies, copy of the returns for the last three AYs of the allottee companies, bank account statements for the period 01.04.2011 to 31.03.2012, copies of the AGM meetings, books of accounts viz. cash books/bank books for the FY 2011-12. None appeared on on the appointed date and the....
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.... the Act when all the evidences and documents relating the share capital and the investors were available on records which were filed by the assessee as well as by the investors in response to notices u/s 133(6) of the Act. We note that both the authorities below have failed to pin point any mistakes or deficiency in the said documents/evidences but harped on the fact of non appearance of directors of the assessee as well as of investor companies. Under these facts and circumstance, the order of the ld CIT(A) is not correct and we are not in a position to sustain the same. The case of the assessee is supported by the following decisions: i) Decision of Co-ordinate Bench of Kolkata in the case of Mahacoal Tie-up Pvt. Ltd. vs. ITO in ITA No. 2269/Kol/2016 dated 12.10.2022. The relevant finding of the Tribunal are reproduced as under: "6. We have considered the rival submissions of the ld. representatives of the parties and also gone through the record. In this case a perusal of the Assessment order would reveal that the AO has duly acknowledged the receipt of the relevant documents/evidences not only from the assessee, but also from the subscriber companies. However, he insisted f....
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.... forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding." 6.1 Even, as pointed out by the ld. Counsel for the assessee, the share subscribers have been assessed u/s 143(3) on substantive basis. Copies of their assessment orders have been placed on the file. Even in case of the two share subscribers namely Mahalaxmi Promotion and Nikhar Commodities Pvt. Ltd, the share capital being the source of funds invested in ....
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.... decision has been further relied upon by the coordinate Kolkata bench of the Tribunal in the case of "Steelex India (P) Ltd vs. ITO, Ward-3(2), Kolkata" I.T.A. No.2666/Kol/2019 decided vide order dated 09.09. 2022. 7. The Ld. DR before us could not dispute the proposition that since the addition has been made in the hands of the subscriber company, then the same amount cannot be added twice in recipient's hands u/s 68 of the Act. 8. So far as the reliance of the Ld. DR on the decision of the hon'ble Supreme Court in the case of "PCIT v/s NRA Iron & Steel (P) Ltd." (supra) is concerned, we find that the Hon'ble Supreme Court in para 8.2 of the said decision has made the following observations: "8.2 As per settled law, the initial onus is on the Assessee to establish by cogent evidence the genuineness of the transaction, and credit-worthiness of the investors under Section 68 of the Act. The assessee is expected to establish to the satisfaction of the Assessing Officer CIT v. Precision Finance (P.) Ltd. [1995] 82 Taxman 31/[1994] 208 ITR 465 (Cal.): Proof of Identity of the creditors; Capacity of creditors to advance money;and Genuineness of transaction This Cou....
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....h a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act." 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 the Assessing Officer to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by ....
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....whereas the AO has not pointed any defect or deficiency in the evidences/details produced qua the said investments by assesse as well as by the investing companies. We also note that the AO has examined the evidences and has not drawn any adverse inference in respect of investing companies after examination of these evidences. Even during the remand proceedings the AO has not drawn any adverse inference on the basis of these evidences and details which were sent to the AO by the ld CIT(A). We note that the Ld. CIT(A) has only followed the remand report of the AO in remand proceedings while allowing the appeal besides giving own independent findings on various issues that the identity and creditworthiness of the investor companies as well as the genuineness of the transactions were duly proved after following the various decisions as cited hereinabove. Before us also the assesse has also produced volume 1 and volume 2 which ran into pg. 1 to 230 and page. No. 231 to 416 respectively comprising various evidences of these investor companies which were examined by us. The case of the assessee is squarely covered by the decision of Hon'ble Calcutta High Court in the case of PCIT vs. Amb....
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.... share allotment advices, confirmations, audited financial statements and also proof of source of source by furnishing necessary documents of the third parties. We note that even the notices issued u/s 133(6) of the Act were duly complied with by the share applicant and they furnished all the evidences as called for by the AO which proved identity and creditworthiness of the investors and genuineness of the transactions as the source of source was also proved. Even the summons issued to the director of the assessee company was complied with by the personal appearance of Shri Arvind Agarwal before the AO. We also note that all these details were also filed during the reassessment proceedings which were completed by the order dated 30.09.2011 passed u/s 147/143(3) wherein the AO made the addition on the ground that the premium is very high and the assessee has failed to produce directors of the investor companies. In our opinion, the basis of making addition completely devoid of merit and substance. Not only the assessee has proved the identity and creditworthiness of the investors and genuineness of the transactions by furnishing all the evidences which unequivocally proved all thes....
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....ded to the assessee. We note that said affidavit was available before both the authorities below but has remained uncontroverted. Mr. K.M. Naita was neither examined by the AO nor any cross-examination was afforded to the assessee. It is settled legal position that the statement given during survey cannot be used to make addition in the hands of the assessee unless the assessee was allowed to cross-examine the person who gave statement which was used against the assessee to make the addition. The case of the assessee finds support from the decision of Hon'ble Supreme Court in the case of Kishinchand Chellaram (supra) and Hon'ble Allahabad High Court in the case of CCE vs. Shyam Traders (supra). We note that the assessee has proved the source and source of source of all these investors even though the same is not required to be proved in the instant assessment year as the amendment is applicable prospectively as has been held by the Hon'ble Bombay High Court in the case of Gangadeep Infrastructure (supra). 7. 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 ....
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....and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge 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." 8. 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....