AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 619
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....Appellate Tribunal was right on facts and in law in deleting the addition of Rs. 45 crores made by the Assessing Officer under Section 68 of the Income Tax Act, 1961? (2) Whether the order of the Income Tax Appellate Tribunal is vitiated on account of a perverse interpretation of the facts of the case?" 2. To adjudicate this appeal, the following broad facts are required to be noticed. 2.1 In Financial Year (FY) 1999-2000, relevant to Assessment Year (AY) 2000-01, the respondent/assessee had received Rs. 45 crores by way of private placement from five (5) companies towards share capital and share premium account. 2.2 The investor companies had bought shares bearing a face value of Rs. 10/- at a premium of Rs. 90/- per shar....
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....d share premium, in turn invested in the share capital and share premium of three (3) out of five (5) companies. These companies were Shuklamber Exports Ltd. [serial number 1], Sukaram Marketing Ltd. [serial number 4] and Sheetal Exports Ltd [serial number 5]. The details concerning these investments made by the respondent/assessee are set out hereafter: S.No. Name/Address of Share Applicant No, of Shares Purchased Amount Invested 1. Shuklamber Exports Ltd, 10159, Padam Singh Road, Karol Bagh, New Delhi-110005 30,000 Rs 30,09,000/- 4. Sukaram Marketing Ltd, 5, Russel Street, Kolkata-700 071 15,55,000 Rs. 15,55,50,000/- 5. Sheetal Exports Ltd, 9 Ezra Street, Kolkata, 700 001 9,67,000 Rs 9,67,00....
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....n in issue had met the triple test enunciated by the Courts to enable an assessee to discharge of onus with regard to the unexplained credit entries found in the books of accounts. 5.1 The triple test evolved by the Courts concerns the following: establishment of the identity and the creditworthiness of the creditor, and the creditworthiness as also the genuineness of the transaction. 6. Given this position, the AO made an addition of Rs. 45 crores under Section 68 of the Act to the income declared by the respondent/assessee as, according to him, the said amount constituted unexplained cash credit. 7. Being aggrieved, the respondent/assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"]. 8.....
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....of them informed that the notice u/s 133(6) was duly complied with. All of them had, in pursuance to the said notice, submitted before the assessee, copies of bank account, copy of the account with the assessee, as also their Income Tax receipts and Income Tax account number. In response to the summons u/s 131, they had appeared before the AO of the assessee company. However, for reasons best known to him, the AO did not record their statements. The Assessee also furnished copies of the replies filed by the applicant companies in response to the query of the AO. As per these replies also, these companies had furnished, at all stages of the asstt. proceedings, the relevant documentary evidence, as required. These companies, according to the ....
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....stor companies, there is no reason why the addition should have been made. In the case of Stellar Investment, 251 ITR 263 (SC), the Hon'ble Supreme Court upheld the order of the Hon'ble High Court holding that even if it was to be assumed that subscribers increased share capital were not genuine, under no circumstances could the amount of share capital be regarded as the undisclosed income of the assessee." [Emphasis is ours] 11. In our view, the conclusion reached by the Tribunal that the respondent/assessee proved the nature and source of the investment made in its share capital and towards share premium, was founded, if not fully, substantially, on the submission made on behalf of the respondent/assessee that information soug....
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....wherewithal to invest monies in the respondent/assessee. Examination of creditworthiness of the investor companies was critical; without having the relevant material on record, the Tribunal could not have concluded that the respondent/assessee had discharged its onus. 15. As indicated right at the beginning of our narration, out of Rs. 45 crores invested in the respondent/assessee, Rs. 25,52,50,000/- was reinvested by the respondent/assessee in three (3) out of the five companies, i.e., in Shuklamber Exports Ltd., Sukaram Marketing Ltd. and Sheetal Exports Ltd.,i.e., nearly the entire amount was repaid. 16. The Tribunal somehow did not deem it fit to inquire as to why more than 50% of the amount raised by the respondent/assessee was i....