2023 (2) TMI 453

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..... That on the facts and circumstances of the case, the Ld. CIT(A) erred to consider that the assessing officer (hereinafter referred to as 'the AO) has not provided any cogent reason before recording his dissatisfaction to the explanation or documents provided to him regarding the sum credited in the books of accounts as share capital and share premium. 3. That on the facts and circumstances of the case, the Ld. CIT(A) erred to take into consideration that non-appearance of shareholders before the AO in itself cannot lead to dissatisfaction on identity of such shareholders as conferred by the AO when all the details for their identity including permanent account numbers were filed with the AO. 4. That in the impugned order, the Ld. CIT(A) erred to note, duly appreciate and appropriately take into consideration reasonable and acceptable evidences on record and has made observations which are contrary to the facts of the case. 5. That on the facts and circumstances of the case, the Ld. CIT(A) erred to take into consideration that the first proviso to section 68 of the Act was applicable from AY 2013-14 and cannot be applied retrospectively to AY 2012-13....

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.... assessee preferred an appeal before the Ld. CIT(A). During the course of appellate proceeding, it was stated that the director of the assessee as well as subscribing companies had filed necessary details of PANs, ITRs copies, audited balance sheets, copies of allotment advice letters, details of cheques through which payments were made besides proving the source of the fund received by the subscribing companies. The Ld. CIT(A) confirmed the order of AO by referring to the judgment of Hon'ble Supreme Court in the case of PCIT vs. NRA Iron & Steel Pvt. Ltd. confirmed the findings of the Ld. AO by observing and holding as under: "After careful consideration of the submission of the appellant, the relevant assessment records, various judicial decisions including that of the Apex Court & Jurisdictional High Court and ITAT, it has to be held that the appellant could not established the genuineness of the transaction and creditworthiness of the shareholders. The addition of Rs. 1,71,00,000/- u/s. 68 of the IT Act, is therefore confirmed. The appeal on these grounds fails and is therefore dismissed. In the result, the appeal is treated as dismissed." 4. Dissatisfied with t....

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....-12 from 8 different companies. At the time of hearing before the Ld. CIT(A), assessee had filed certain facts vide its submissions which is being extracted mentioned below for the sake of ready reference: "The A.O. framed order of assessment s. 143(3) of the Act on 03.03.2015 and after discussing facts and making observations he has made an addition of Rs. 1,71,00,000/- to the income returned. Though there are-carious Grounds taken by the appellant but the issue for adjudication by your Honour relates to the correctness of the addition of Rs. 1,71,00,000/- made by the, 4.0. to the income returned. It is observed by the A.O. that in response to the proceedings for assessment with reference to Notices u/s. 143(2) and u/s. 142(1) appearance was made by the AR of the appellant who appeared from time to time and explained the return with reference to the details/documents filed. The A.O. has observed that Notices u/s. 131 were issued and sent to shareholders asking them to personally appear to verify the identity and creditworthiness of the shareholders and genuineness of the transaction made by them with the appellant company. The AO has observed that none appeared and show c....

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.... copy duly attached, audited Balance Sheet and Xerox of PAN Card and ITR, copy of allotment, advise letter with distinctive number, total aim paid by cheques and date and source of fund used by the share subscribing companies. The A.O. proceeds to observe that the identity and creditworthiness of shareholders and genuineness of the transaction could not be verified and, therefore the AO proceeding on this observation has made addition of Rs. 1,71,00,000/-. The replies to the notice u/s. 133(6) of the Act issued by the A.O. to the share subscribers are record with the A.O. and it has to be proceeded with as a fact that no discrepancy been found by the A.O. with regard to the replies submitted by the share subscribers. The A.O. has accepted fact that the share subscribers are on record with the Income Tax Deptt. and that they file their Income Tax Returns, they maintain Bank account funds have moved from their Bank A/c to the Bank A/c of the appellant. These are very vital evidences which have not been assailed or controverted by the A.O. and, therefore it is the submission of the appellant that the A.O. erred in adding the amount of Rs. 1,71,00,000/- as the income of the ap....

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....onduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source." 8.1. Further, in para 9 of the said decision, the Hon'ble Supreme Court has observed as under: "9. The Judgments cited hold that the Assessing Officer ought to conduct an independent enquiry to verify the genuineness of the credit entries. In the present case, the Assessing Officer made an independent and detailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports revealed that the share-holders were either non-existent, or lacked credit-worthiness." 8.2. Thereafter the Hon'ble Supreme Court summed up the principles which emerged after deliberating upon various case laws as under: "11. The principle....

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.... Finance Act 2012 that the assessee company receiving share capital and share premium are required to prove the source of source to the satisfaction of the Ld. AO has been inserted w.e.f. 01.04.2013 and the same is not applicable in the case of assessee for assessment year 2012-13 and since the assessee has filed sufficient details to our satisfaction to prove the identity, genuineness and creditworthiness of the transaction, we are not in concurrence both the findings of the Ld. CIT(A). Our view is further supported by judicial pronouncements: i) CIT vs. Gagandeep Infrastructure (P) Ltd. 80 taxmann.com 272 (Bombay) wherein it was held by High Court that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to pr....