TaxTMI 
TaxTMI 
2024 (7) TMI 1608
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....e during the year had received share capital/share premium of Rs.89,65,500/- That the Assessing Officer treated the said amount as unexplained income of the assessee by way of a nonspeaking order and in a mechanical manner. That the assessee had duly furnished all the relevant details in respect of assessee company such as ITRs, PANs, copies of audited financial statement, copy of Form 5 along with receipt filed with ROC, details of source of funds relating to the identity and creditworthiness of the creditors and genuineness of the transaction. However, the Ld. Assessing Officer, without examining the said documents and without pointing out any defect, discrepancy or infirmity in the evidences furnished by the assessee made the impugned additions with a predetermined mind set. 3.1. The ld. counsel has further invited our attention to the impugned order of the CIT(A) to submit that the assessee had made detailed submissions before the CIT(A), which have also been reproduced in the impugned order. Even, during the appellate proceedings, the assessee again furnished the relevant documents to prove the identity, creditworthiness of the share-subscribers and genuineness of transacti....
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....out any defect or discrepancy in the same. 4.3. The ld. DR has, however, strongly relied upon the orders of the lower authorities. He has also filed written submissions also. 5. We have considered the rival submissions and gone through the record. We find force in the contentions raised by the Ld. Counsel for the assessee. We also note that the assessment order is short and cryptic order. There is even no mention of the name of the share subscribers in the assessment order, what to say of any details and evidences furnished by the assessee. Though, the Assessing Officer has observed in the assessment order that the addresses of the registered offices of some companies were same with common directors and further that all these facts proved the connivance of the assessee with the investor company. However, this observation of the Assessing Officer, in our view, goes in favour of the assessee rather than against it. It is generally observed that a company is always interested in its group companies and always prefer to make investment in its group companies as there is a security of the investment being common directors. The group companies not only are known to each other but a....
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....r mentioned in the impugned order that when summons were issued to the directors of the assessee company u/s 131 of the Act, neither all the directors of the assessee company nor all the investor company appeared, however, this observation of the CIT(A) is again factually wrong. There is no mention in the assessment order that any summons u/s 131 of the Act were ever issued to the assessee company either to the director of the assessee company or to the director of the investor companies. The ld. CIT(A) has not discussed any of the documents furnished by the assessee to prove their identity and even the financials of the share subscriber companies. There is no rebuttal to th4e contention that the share subscribers were having sufficient net worth to invest in the assessee company. 5.2. Though, before us, the ld. DR has filed written submissions, wherein, the ld. DR has taken upon himself the task to analyse the accounts of share subscribers, which exercise has not been done either by the Assessing Officer or by the CIT(A). The crux of the submission of the ld. DR is that the net profit of the share subscriber companies was low. He has further pointed out that a considerable amou....
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....ies and which have been further transferred to unknown beneficiaries. Neither there is any such allegation made nor the same has been substantiated in assessment order or the appellate order of the CIT(A). Even the reliance placed by the ld. DR on the decision of Hon'ble Jurisdictional High Court in the case of 'PCIT vs. Swati Bajaj & Ors' reported in [2022] 139 taxmann.com 352 (Calcutta), in our view, is misplaced as there is no reference in the case in hand as to any report of Investigation Wing. In this case, there is no record or observation of any authority that the investor companies are shell companies. In fact, nothing has been discussed specifically about any of the individual investor companies either in the assessment order or in the order of the CIT(A) in this respect. The ld. D/R has merely given a general statement that these companies are paper/shell companies but no concrete evidence is filed on record which could prove the substance in such submissions. The issue in hand can be decided only on the basis of documentary evidence available on record, which clearly states that the assessee has duly furnished the unrebutted evidence to prove the identity and cr....
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.... identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same. However, as noted above, the Assessing Officer in this case has not made any independent enquiry to verify the genuineness of the transactions. The assessee having furnished all the details and documents before the Assessing Officer and the Assessing Officer has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon the Assessing Officer to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, even applying the ratio laid down by the Hon'ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd. (supra), impugned ad....
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....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 of CIT(A) and dismiss the appeal of the Revenue. " c) Further the co-ordinate bench in the case of ITO vs. Forceful Estates Pvt. Ltd. in ITA No. 2558/Kol/2018; Assessment Year 2012-13, order dt. 08/02/2023, and for necessary reference, the facts and findings of the Tribunal read as follows:- "5. The ld. counsel has further invited our attention to the impugned order of the CIT(A) to submit that the ld. CIT(A) has categorically noted that the assessee during the year had raised share capital including share premium amounting to Rs.7,60,00,000/- from six share subscribers. The Assessing Officer had issued notices u/s 133(6) of the Act to the share applicants and in response, they all confirmed the transactions and furnished details/documents as called for including source of fund in their hands. The....
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..../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 also submitted the details of the source of funds for making investment. Hence, the identity & creditworthiness of the shareholders are not in doubt. Further, all the share application money was received through banking channels. Therefore, the issue for my consideration now is -whether the share capital of Rs.7,60,00,000/- raised during the year by the appellant can be treated as unexplained cash credit u/s. 68 of the I.T Act or not. When the identity & creditworthiness of the shareholders have been clearly established because all of them were scrutinized u/s 143(3) and thus the source of the share capital and the share premium are clearly established and the transactions have all taken place through banking channels, merely for failure of the directors of the assess....
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....ged 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. The AO has not pointed out in the Assessment Order as to what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. The Assessee in this case, as noted above, explained about the identity, creditworthiness and financials etc. of each of the share subscriber company individually. However, we note that in the assessment order that the AO has not even mentioned the names of the share subscriber companies and even has not mentioned a word as to which of the share subscriber company or the corresponding transaction thereof was not genuine and on what grounds. The AO, in our view, could have taken an adverse inference, only if, he would have pointed out t....
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.... 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." d) Our view is 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) has held as follows: "Section 68 of the Income-tax Act, of 1961, 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 no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to Income-tax as the income of the assessee of that previous year. The crucial words in the provision are "the assessee offers no explanation". This would mean that the assessee offers no proper, reasonable and acceptable explanation as regards the amount credited in the books....