TaxTMI 
TaxTMI 
2024 (5) TMI 1391
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..... Assessing Officer on account of unexplained cash credit under section 68 of the Act in respect of share capital/share premium. 4. The facts in brief are that the assessee filed its return of income on 28.08.2009 declaring total loss of Rs, 3,575/-. Thereafter the case of the assessee was reopened under section 147 of the Act and assessment under section 143(3) read with section 147 of the Act was completed vide order dated 09.02.2012 determining total income at Rs, 29,175/-. Thereafter the ld. PCIT set aside the said assessment order by passing a revisionary order under section 263 of the Act dated 04.03.2014 thereby directing the ld. Assessing Officer to frame the assessment afresh after taking into account the specific directions. In pursuant to the said revisionary order, the assessment was completed vide order dated 10.03.2015 passed under section 144/263/147/143(3) making an addition of Rs, 10,00,00,000/- as unexplained cash credit under section 68 of the Act, when the assessee failed to comply with the notices issued by the ld. Assessing Officer. 5. Again before the ld. CIT(Appeals), the assessee did not appear and the ld. 1st Appellate Authority also dismissed the appeal....
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....thing but shell companies and are engaged in providing accommodation entries. Finally after analyzing the net worth of the share subscribers in paras 9.5 & 9.6, the ld. Assessing Officer, by relying on the decision of PCIT -vs.- NRA Iron & Steel Pvt. Limited (2019) 412 ITR 161(SC), added the entire amount to the income of the assessee under section 68 of the Act as unexplained cash credit. 7. The ld. CIT(Appeals) also affirmed the order of ld. Assessing Officer by holding that the ratio laid down by the Hon'ble Apex Court in the case of CIT -vs.- Lovely Export (2008) 216 CTR 195 (SC) and various other decisions of the Hon'ble High Courts and Tribunal, which were prior to the decision of the Hon'ble Supreme Court on the issue of applicability of section 68 of the Act qua receipt of share capital/share premium in the case of PCIT -vs.- NRA Iron & Steel Pvt. Limited (2019) 412 ITR 161(SC). The ld. CIT(Appeals) observed and held that the assessee could not establish the identity and creditworthiness of the persons in the sense of financial capacity and the genuineness of the transactions to the satisfaction of the ld. Assessing Officer and consequently dismissed the appeal of the asse....
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....d on the decisions of the Hon'ble Calcutta High Court in the case of PCIT -vs.-Sreeleathers in ITAT/18/2022 in GA/02/2022 dated 14.07.2022 and CIT -vs.- Dataware Private Ltd ITAT 263 of 2011 in in GA/2856/2011 dated 21.09.2011. The ld. A.R. also submitted that the decision relied upon by the authorities below in the case of PCIT - vs.- NRA Iron & Steel Pvt. Limited (2019) 412 ITR 161(supra) has been rendered on different facts by the Hon'ble Apex Court. The ld. A.R. submitted that in this case of NRA Iron & Steel Pvt. Limited (supra), the Inspector was deputed but shareholders were not found. However, in the present case before us, the share subscribers were very much available on the given addresses and also assessed to tax and the assessments were framed. The ld. AR argued that and they have even responded to the notices issued under sections 133(6) and 131 of the Act. Finally ld. A.R. prayed that the order of ld. CIT(Appeals) may kindly be set aside and ld. Assessing Officer may be directed to delete the addition. 9. Per contra, ld. D.R. vehemently opposed to the arguments of ld. A.R. by submitting that money has been invested by the subscribers out of net worth, which is made ....
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.... assessee company as they were not having sufficient income either in the current year or in the preceding years. We note that the AO ignored the fact that these subscribers were having huge networth and have made investments out of that. The ld. AR stated that where the AO has any doubt about the lenders where the assessee has furnished all the evidences before the AO, then the matter should be looked into the hands of the creditors and not the assessee when all the subscribers are duly assessed to tax and even the assessment orders u/s 143(3) of u/s 143()1) of the Act are placed on records. The case of the assessee is supported by the decisions of the Hon'ble Calcutta High Court which are discussed as under: a) In the case of PCIT -vs.-Sree leathers(supra), the Hon'ble Court has held as under: "4. Before we examine the correctness of the order passed by the Tribunal and consider whether a substantial question of law arises for consideration in this appeal we need to take note of Section 68 of the Act. This provision deals with cash credits. It states that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers ....
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....eld by the Hon'ble Supreme Court in CIT Versus Daulat Ram Rawatmull 9, the onus of proving that the appellant was not the real was on the party who claims it to be so. Bearing the above legal principles in mind, if we examine the case on hand, it is clear that the assessing officer issued show cause notice only in respect of one of the lender M/s. Fast Glow Distributors. The assessee responded to the show cause notice and submitted the reply dated 22.12.2017.The documents annexed to the reply were classified under 3 categories namely: to establish the identity of the lender, to prove the genuineness of the transactions and to establish the creditworthiness of the lender. The assessing officer has brushed aside these documents and in a very casual manner has stated that mere filing PAN details, balance sheet does not absolve the assessee from his responsibility of proving the nature of transaction. There is no discussion by the assessing officer on the correctness of the stand taken by the assessee. Thus, going by the records placed by the assessee, it could be safely held that the assessee has discharged his initial burden and the burden shifts on the assessing officer to enquire f....
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....ly, the assessee was not issued any show cause notice in respect of other lenders. However, they are able to produce the details before the CIT(A) who had in our view rightly appreciated the facts and circumstances of the case. As pointed out earlier, the assessing officer brushed aside the explanation offered by the assessee by stating that merely filing PAN details, balance sheet does not absolve the assessee from his responsibilities of proving the nature of transactions. It is not enough for the assessing officer to say so but he should record reasons in writing as to why the documents which were filed by the assessee along with the reply dated 22.12.2017 does not go to establish the identity of the lender or prove the genuineness of the transaction or establish the creditworthiness of the lender. In the absence of any such finding, we have to hold that the order passed by the assessing officer was utterly perverse and rightly interfered by the CIT(A). The Tribunal re- appreciated the factual position and agreed with the CIT(A). The tribunal apart from taking into consideration, the legal effect of the statement of Ashish Kumar Agarwal also took note of the fact that the notice....