TaxTMI 
TaxTMI 
2024 (11) TMI 227
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....43(2) and 142(1) of the Act. The ld. AO called for various information about the registration certificate of RBI, bank statement, audited financial statement, etc. to which reply was furnished. Ld. DR observed that assessee has issued equity shares and has received share capital of Rs.4,60,000/- and security premium of Rs.2,25,40,000/-. The ld. AO thereafter examined the financials of the assessee company for past many years and taking note of the low revenue and meagre profits came to a conclusion that considering the financial statements, assessee cannot raise share capital with such huge share premium. Thereafter, the ld. AO examined the transactions in light of section 68 of the Act and was of the view that assessee could not explain the nature and source of alleged sum to his satisfaction and he concluded the assessment by making addition u/s 68 of the Act at Rs.2,30,00,000/- and also made minor addition u/s 14A of the Act at Rs.1010 and assessed the income at Rs.2,29,68,322/-. 3. Aggrieved assessee preferred the appeal before the ld. CIT (A) challenging the addition made u/s 68 of the Act and again filed various documents and evidences to prove the identity and creditworthin....
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....n verification, the information becomes unproven or patently false or unsatisfactory or unverifiable, the onus shifts back to the assessee. Therefore, there is no gainsaying that the applicants were required to obey the summon, and present himself before the Ld. AO for examination and verification of the documents. The details available reflect certain paperwork and documentation, and that however such documentation does not lead credence to the genuineness, creditworthiness and identity of the persons. It is therefore observed that the companies that have subscribed to the shares of Assessee Company on substantial premium do not have the capacity or the financial standing to do so. During the course of assessment proceedings, the identity, capacity and the genuineness of the transaction has not been established by the appellant. Therefore, on preponderance of probabilities the contention of the assessee company regarding share capital and premium cannot be accepted." 4. After going through the above finding, the ld. CIT (A) has referred to plethora of decisions and has dismissed the assessee's appeal. Now, the assessee is in appeal before this Tribunal. 5. The ld. Counsel for th....
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....reations Pvt. Ltd. PAN AAQCs8409Q 4, Raja Woodmount Street, Kolkata-700 001 2,000 20,000 9,80,000 10,00,000 8. Subham Commotrade Pvt. Ltd. Pan AAOCS3790C 10, Kirron Shankar Roy Road, Kolkata-7000001 3,000 30,000 14,70,000 15,00,000 9. Maco Distributors Pvt. Ltd. PAN AAHCMR128P 10, Kirron Shankar Roy Road, Kolkata-7000001 2,000 20,000 9,80,000 10,00,000 10. Devkripa Agency Pvt. Ltd. PAN: AAECD0988P 3, Amartolla Street, 1st Floor, Kolkata-700 001 3,000 30,000 14,70,000 15,00,000 11. Navtech Agency Pvt. Ltd. PAN AADCN8661N 3, Amartolla Street, 1st Floor, Kolkata-700 001 3,000 30,000 14,70,000 15,00,000 12. Duplex Vinimay Pvt. Ltd. PAN AADCD0933H 4, Synagogue Street, 4th Floor, R.No. 401, Kolkata-700 001 1800 18,000 8,82,000 9,00,000 13. Prayash Dealcom Pvt. Ltd. PAN: AAGCP3894C 40, Weston Street, 3rd Floor, Kolkata-700 013 2200 22,000 10,78,000 11,00,000 Total 46,000 4,60,000 2,25,40,000 2,26,00,000 8. We note that the assessee is a NBFC, holds registration certificate issued by Reserve Bank of India bearing no.B0504173 dated 10th April, 2001. The companies which are registered with NBFC are required to make compliance to various r....
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....y an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and creditworthiness, then the AO must conduct 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. 10. Thereafter the Hon'ble Supreme court summed up the principles, which emerged after deliberating upon various case laws, as under: "11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the creditworthiness of the creditor/subscriber, verify the i....
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....; (i) Uniworth Marketing Pvt. Ltd. Copy of reply to notice u/s 133(6) -- 27 -- Copy of IT Acknowledgement -- 28 -- Audited Financial Statement 29 38 Copy of Share application -- 39 -- Copy of allotment advice -- 40 -- Copy of relevant bank statement -- 41 -- (ii) Lochan Distributors Marketing Pvt. Ltd. Copy of reply to notice u/s 133(6) -- 42 -- Copy of IT Acknowledgement -- 43 -- Audited Financial Statement 44 -- 52 Copy of Share application 53 -- 54 Copy of allotment advice 55 -- 56 Copy of relevant bank statement 57 -- 58 Copy of assessment order u/s 144 for A.Y. 12-13 58A -- 58K (iii) Amaresh Trading Pvt. Ltd. Copy of reply to notice u/s 133(6) -- 59 -- Copy of IT Acknowledgement -- 60 -- Audited Financial Statement 61 -- 69 Copy of Share application -- 70 -- Copy of allotment advice -- 71 -- Copy of relevant bank statement -- 72 -- (iv) Blackcherry Marketing P....
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.... Copy of allotment advice 172 Copy of relevant bank statement 173 Copy of assessment order u/s 144 for A.Y. 12-13 173A -- 173D (x) Devkripa Agency Pvt. Ltd. Copy of reply to notice u/s 133(6) 174 Copy of IT Acknowledgement 175 Audited Financial Statement 176 187 Copy of Share application 188 Copy of allotment advice 189 Copy of relevant bank statement 190 Copy of assessment order u/s 144 for A.Y. 12-13 190A 190E (xi) Navtech Aency Pvt. Ltd. Copy of reply to notice u/s 133(6) 191 Copy of IT Acknowledgement 192 Audited Financial Statement 193 205 Copy of Share application 206 Copy of allotment advice 207 Copy of relevant bank statement 208 Copy of assessment order u/s 144 for A.Y. 12-13 208A 208D (xii) Duplex Vinimay Pvt. Ltd. &n....
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....the transactions is also proved because these companies have sufficient net worth to make the investment and they have applied in a NBFC company for better returns. Once, the assessee has discharged his primary onus, the burden of proof shifts on to Revenue authority and observations of Ld. AO that they are not satisfied with these details will not serve the purpose. At some part of the assessment order the ld. AO has even observed that the assessee had filed submissions and some voluminous paper work which was of no use other than to increase the volume of the assessment report of the assessee company. 14. We fail to find any justification in such observation of the ld. Assessing Officer. Rather than mentioning the documents as voluminous paper work, he/ she should have move ahead to examine the correctness of those documents and should have discussed the same in the assessment order. General observation that the ld. AO is not satisfied with the documents filed by the assessee cannot meet the requirement of law. We on perusal audited the balance sheet of the alleged share applicant companies notice that they have sufficient net worth in the form of share capital and accumulated r....
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....ce. It may be seen from the grounds of appeal raised by the Revenue that the Revenue disputed only the proof of identity of the shareholder. In this regard it is seen that for A Y.2004-05 Shree Shyam Trexim Pvt. Ltd., was assessed by ITO, Ward- 9(4), Kolkata and the order of assessment u/s/143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd., was assessed to tax u/s 143(3) for A Y. 2005-06 by I TO, Ward- 9(4), Kolkata by order dated 20.03.2007. Similarly Jewellock Trexim Pvt. Ltd was assessed to tax for A Y. 2005-06 by the very same ITO- Ward- 9(3), Kolkata assessing the Assessee. In the light of the above factual position which is not disputed by the Revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. The decision of the Hon'ble Allahabad High Court as well as ITA T Kolkata Bench on which reliance was placed by the learned counsel for the assessee also supports the view that for non production of directors of the investor company for examination by the AO it cannot be held that the identity of a limited company has not been established. For the reasons given above we uphold the order ....
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....mited, 2) M/s Sharekhan Merchants Private Limited, the Assessment Orders u/s 143(3) for Lne AY 2012-13 were passed u/s. 143(3) without taking any adverse view. Therefore, it can be assumed that the respective Assessing Officers have all verified the accounts and therefore any amount that is credited from these two companies to the assessee company is fully explained. The assessment in the case of the other 4 share holders, namely, 1) M/s. Dhanamrit Commercial Private Limited, 2) M/s Jealous Commercial Private Limited, 3) M/s Mutual Merchants Private Limited, 4) Winsom Vanijya Private Limited were also passed u/s.143(3) where additions u/s 68 & u/s. 14A of the Act were made. Therefore, the entire capital of all the above mentioned share holders had been added in its hands u/s 68 of the I.T. Act Thus, once an amount is already taxed, whatever investment is being made out of it in the assessee company can be treated as explained and the Same cannot be taxed again. Further, it is apparent from the records that the notices u/s. 133 (6) issued to the shareholders were served on the their respective address by the postal authorities and in response, they confirmed the transactions and als....
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....of the same amount. Even if the said addition stand confirmed in the appeal or stand deleted, in both the instances, the investment in the hands of the assessee company will stand proved. Reliance has been placed in this respect on the decision of the Coordinate Kolkata bench of the Tribunal in the case in the case of DCIT vs. M/s Maa Amba Towers Ltd. in ITA No.1381/Kol/2015 vide order dated 12.10.2018. The aforesaid decision has been further relied upon by the coordinate Kolkata bench of the Tribunal in the case of "Steelex India (P) Ltd vs. ITO, Ward-3(2), Kolkata"I.T.A. No.2666/Kol/2019 decided vide order dated 09.09. 2022. 7. Further, a perusal of the Assessment order would reveal that the AO has duly acknowledged the receipt of the relevant documents/evidences not only from the assessee, but also from the subscriber companies. However, he insisted for personal appearance of the directors of the subscriber companies without even going through and discussing about the discrepancies, if any, in the documents furnished by the assessee as well as by the share subscriber companies to prove the identity and creditworthiness of the subscribers and the genuineness of the transaction.....
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.... and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding." 8. As the ld. CIT(A), in this case, has not only duly examined the facts and explanation as furnished by the assessee but also has given a categorical finding that the identity and creditworthiness of the share subscribers and genuineness of the transaction stood established. 9. The ld. DR could not point out any distinct facts warranting our interference in the order of the CIT(A). 10. In view of the above, we accordingly upheld the order of the CIT(A). The appeal of the revenue is, therefore, dismissed. 14(b). Our views are further fortified by the judgment of the Jurisdictional Calcutta High Court in the case of Principal CIT vs. Sreeleathers reported in [2022] 448 ITR 332 (Cal) ha....