TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 1146
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.... issued and served upon the assessee. The AO issued questionnaires along with notice u/s 142(1) of the Act calling upon the assessee to furnish various details/evidences which were duly filed by the assessee before the AO. The AO also issued summon u/s 131 of the Act to the directors of the assessee company to appear personally and produce directors of subscribing investor companies in order to verify identity and creditworthiness of the investors and genuineness of the transactions. However there was no compliance. The AO observed that the assessee has failed to prove identity and creditworthiness of the investors and genuineness of the transactions. The AO also noted that the assessee company was not having sufficient business justifying the issue of equity shares at a very high premium. Finally, the AO added entire amount of Rs. 3,00,00,000/-consisting of Rs. 2,70,00,000/- on account of share premium and Rs. 30,00,000/- qua share capital to the income of the assesse u/s 68 of the Act as unexplained cash credit. 4. In the appellate proceedings, the Ld. CIT(A) called for a remand report from the AO on various issues/evidences. In the remand report the AO noted that the assessee h....
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....he appellant have also not been found to be false or incorrect. Therefore, all the 3 ingredients of section 68 i.e. the identity and creditworthiness of the applicants and the genuineness of the transaction has been duly proved by the appellant I further find that it has been time and again reiterated by various courts that if the appellant has_ proved the ingredients of the section by proper and satisfactory documentary evidences, the burden shifts on the revenue to prove the transaction entered by the appellant to be ingenuine. In this regard, I would like to place reliance on decision of Hon'ble Supreme Court in the case of PCIT vs Paradise Inland Shipping (P.) Ltd. in 93 taxman.com 84 dated 23.04.2018, wherein it has been held as under: "Section 68, read with section 147, of the Income-tax Act, 1961 - Cash credit (Share capital) - Assessing Officer initiated reassessment proceedings in case of assesses on ground that its shares Were purchased by fictitious companies -Assesses filed a petition challenging validity of said proceedings - High Court noted that assessee had produced voluminous documents from public offices which maintained records of those companies ....
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....d credit? Creditworthiness and genuineness of transaction?, Addition? Assessee-company was carrying on business ofinvestment and financing? During relevant A.Y. assesses company issued 6,12,000 equity shares of Rs. 10/- each for cash at par by issue of prospectus for total issue amount of Rs,61,20,000 ? However, as on 31st March, 1991 allotment money of Rs.9,16,500/- was in arrears and accordingly paid up share capital of company was increased by Rs.52,03,500/- in A, Y. 1991-92? In previous A. Y, i.e. 1990-91 also assesses company had increased its share capital by issuing shares amounting to Rs.40,80,000? During assessment assesses company filed details of 2,153 shareholders along with their addressees, number of shares allotted etc.? AO caused enquiries by test check to be conducted, and on basis of report of Income Tax Inspector held that investment by shareholders of assesses company was not genuine and claim of assesses to allot shares to public was false? AO was of view that increase in share capital was nothing but introduction of assessee's own undisclosed funds/income into books of accounts of assessee-company? AO accordingly treated investment as unexplained credit u/....
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....ssed supra. Accordingly all the three conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. With outdoing so, the addition made by the AO and confirmed by Ld C1T(A) are based on conjectures and surmises, so their impugned action cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. Therefore, we do allow the appeal of assessee and direct deletion of addition of Rs. 16 cr. under section 68 of the Act." Besides the above relied case laws, there are plethora of case laws affirming that if the appellant has discharged its onus by proving the identity, genuineness and creditworthiness of the transaction, by producing sufficient and satisfactory documentary evidences, fee burden shifts on the revenue to counter and prove fee transaction be ingenuine. In the instant case, the AO in the remand report has accepted the documents submitted by the appellant and has not found any defect in them. Also, he gave a favourable finding feat all fee complianc....
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....t the issue may kindly be restored to the file of AO for carrying of fresh verification and for framing assessment de-novo and afresh on the basis of fresh verification. 6. Per Contra, the Ld. A.R. strongly relied on the order of Ld. CIT(A) by submitting that the Ld. CIT(A) has called for a remand report during the course of appellate proceedings which were on the evidences filed before him which were duly examined by the AO in the remand proceedings and no adverse inference was drawn by the AO after examination of these evidences. The Ld. A.R. submitted that in the original assessment proceedings no defect was pointed out in the evidences/details filed by the assessee qua the said investments/ receipt from subscription of equity shares at a premium. The only point for making addition was that there was noncompliance by the Director of the assessee of the summons issued u/s 131 of the Act which required the assessee to appear personally and also produce the directors of investing companies. The Ld. A.R submitted that the Ld. CIT(A) has only relied on the remand report filed by the AO and therefore there is no infirmity in the order of Ld. CIT(A) who has examined all these details/....
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.... 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. Ambition Agencies Pvt. Ltd. (supra),wherein the Hon'ble Court has held that where thein the appellate proceedings, the Ld. CIT(A) after calling remand report from the AO on th....