TaxTMI 
TaxTMI 
TaxTMI 
2024 (4) TMI 594
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....t page no. 2 of the assessment order. The assessee issued during the financial year 9900 equity shares at face value of Rs. 10/- each at premium of Rs. 1990/- per equity share. The details/information filed before the AO comprised copies of audited financial statements, ITR, PAN, ledger accounts and bank statements of the assessee besides filing copies of balance sheets, bank statements, audited accounts/ reports, certificates of incorporation, share application forms, share allotment letters, copies of share certificate, assessment orders u/s 143(3) of the Act(of five subscribers) , source of source certificates (of five subscribers)of the subscribers vide letter dated 15.01.2015. The AO issued summons u/s 131 of the Act directing the Assessee to produce the directors of the subscribing companies. The said notice was duly complied with by the directors of the assessee company submitting all the documents as called for but the directors of the subscribing companies did not attend personally. Pertinent to state that the AO has not issued any summons u/s 131 or notices u/s 133(6) of the Act to individual subscribers. Finally the AO, rejecting the contentions of the assessee, added th....
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....summons by producing the directors of the subscribing compaies and thus the transactions of share capital/share premium were not genuine for the reasons of huge share premium on the equity shares allotted. The Ld. CIT(A) has affirmed the order of AO for the same reasons. In our opinion when the assessee has filed all the evidences as desired by the AO ,then the assessee is presumed to have discharged the onus cast upon it and the onus shifts to the revenue to conduct an enquiry on this evidences and record findings as to how the investment/money received by the assessee are covered u/s 68 of the Act. However in the present case, we note that no such enquiry was conducted into the evidences filed by the assessee and the addition was made simply for the reason that there was no compliance of summons issued u/s 131 to the directors of the assessee for enquiry and to produce the directors of the subscribing companies. In our opinion, there is no substantive ground for making the impugned addition and non production of directors of subscribing companies cannot be a justification for addition u/s 68 of the Act. We also note that the assessee has filed all the details/evidences/ informati....
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....ng company due to which investment could not be verified cannot be a ground for making addition in the hands of the assessee. The Ld. CIT(A) has upheld the order of AO simply reiterating the finding of the AO that principals/directors of the subscribers were not produced and source was not explained. However both the authorities have failed to point out any defects in the documents/evidences furnished by the assessee and simply relied on the theory principal officers/ directors of the assessee company were not produced. In our opinion, the addition is based upon conjecture and surmises and not on the records which were available before the authorities below. Moreover the addition cannot be made on the basis of that principal officer/ director of the company were not produced. The case of the assessee finds support from the decision of Co-ordinate Bench in the case of ITO vs. Naina Distributors Pvt. Ltd. in ITA NO. 651/Kol/2020 for AY 2012-13 dated 04.01.2023. The operative part is reproduced as under: 5. After hearing the rival contentions and perusing the material on record, we observe that the assessee has raised a share capital of Rs. 4,67,50,000/- by issuing equity share of f....
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....nt framed u/s 143(3)/147/144 of the Act in all the cases of investors were also furnished before both the authorities below and copies of assessment order were also enclosed in the PB as stated hereinabove. Considering these facts, we do not find any infirmity in the order of Ld. CIT(A) which is otherwise a very reasoned and speaking order passed after discussing various factual details about each and every subscribers in para 4.6 such their source of investments, creditworthiness , etc. In our opinion, non-production of directors of the investors cannot be a ground for making addition in the hands of assessee u/s 68 of the Act when the other evidences relating to the raising share capital and also qua the share subscribers are available on record as furnished by the assessee and also the cross-verification done by the AO on the basis of notices issued u/s 133(6) as discussed above. 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(Supra) wherein it has held that where all the evidences were filed by the assessee proving the identity and creditworthiness of the loan transactions , the fact ....
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.... 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. (supra) 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. Raj Kumar Agarwal vide ITA No. 179/2008 dated 17.11.2009 where....
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....derlying facts in the light of ratio laid down in the decisions as discussed above , we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue. 5.1. Similarly the Hon'ble Calcutta High Court in the case of PCIT vs. Naina Distributors Pvt. Ltd. has decided the issue in favour of the assessee by holding that mere non-production of director cannot be the ground for making any addition in the hands of assessee u/s 68 of the Act. The operative part is reproduced as under: "After carefully considering the findings recorded by the Commissioner of Income Tax, (Appeals) 7 Kolkata (CITA) in his order dated 21.09.2020 and the findings recorded by the learned Tribunal we find that the entire matter is fully factual. The learned Tribunal has independently examined as to the genuinity of the transaction in the matter of raising share capital and the Tribunal noted that even during the assessment proceedings, the assessee has furnished all details in respect of the share capital and share premium raised by the assessee besides the details of the investors by their submission dated 9.6.2014 in reply to the notice issued by the Assessing Officer under Section 142....
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....23 IA No. GA/1/2023 dated 28.06.2023. The Hon'ble Calcutta High Court has held as under: "After carefully considering the findings recorded by the Commissioner of Income Tax, (Appeals) 7 Kolkata (CITA) in his order dated 21.09.2020 and the findings recorded by the learned Tribunal we find that the entire matter is fully factual. The learned Tribunal has independently examined as to the genuinity of the transaction in the matter of raising share capital and the Tribunal noted that even during the assessment proceedings, the assessee has furnished all details in respect of the share capital and share premium raised by the assessee besides the details of the investors by their submission dated 9.6.2014 in reply to the notice issued by the Assessing Officer under Section 142 of the Act dated 5.5.2014. The Tribunal also noted that the assessee had produced all documents, disclosed the names and addresses and PAN Numbers of the investors, copies of the share allotment advice, copies of the share application form, bank statement, statement giving details of share application, money receipt during the year, copy of Form No. 2 evidencing return of allotment and copy of Form No. 5 for incr....