TaxTMI 
TaxTMI 
2023 (7) TMI 1566
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....ts and in the circumstances of the case, Ld. CIT(A) was justified in deleting the addition of Rs 13,56,00,000/- made by the A.O. where no personal attendance was made by any director of the share allottee companies during the course of assessment proceedings and as such identity & creditworthiness of the creditors and genuineness of the transactions could not be verified. 3. The principles which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT(Central) -1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) suggests that "the assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee". In the facts and under the circumstances of the case, the assessee company has failed to do so other than submission of mere statements of various kinds. Thus, the decision of the Ld. CIT(A) is erroneous in holding that the raised share capital was not the assessee's own income. 4. The principles which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT(Central) -1, Kolkata vs NRA Iron & ....
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....ssessee to prove the identity and creditworthiness of the applicants and genuineness of the transactions. Details filed by the assessee were not sufficient to satisfy the ld. Assessing Officer and he, based on the decision of the Tribunal in the case of M/s. Bisakha Sales Pvt. Ltd. vs. CIT held that the assessee was unable to explain the source of share application money of Rs.13.56 Crores, and thus made addition u/s 68 of the Act at Rs. 13.56 Crores. Income assessed at Rs.13,56,09,200/-. 3.1. Aggrieved the assessee carried the matter in appeal before the ld. CIT(A) and filed complete details including audited financial statement, bank statement and income tax returns of the share applicants. On the strength of these documents and the settled judicial precedents, the assessee was able to satisfy ld. CIT(A), who deleted the addition u/s 68 of the Act and final finding of the ld. CIT(A), reads as under:- "4.12. There is no evidence adduced on record to show by the AO that the identities of the share applicants are not proved and/or that the subscription made by them to the share capital of the appellant was not genuine and/or the source of investment was not fully explain....
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....urities Pvt. Ltd. 2. Mindtrack Securities Pvt. Ltd. 3. Ortem Estates Pvt. Ltd. 4. Fort Conclave Pvt. Ltd. 7.1. Further we notice that the assessee has filed the following details to explain the identity and creditworthiness of the share applicants and genuineness of the transaction:- Apricot Securities Pvt. Ltd. * Reply filed before the AO in response to summons u/s 131. * Certificate explaining source of funds * copy of the bank statement highlighting the figures * copy of allotment letter * copy of the share application forms * copy of the return filing acknowledgement for Assessment Year 2012-13 * copy of the audited accounts * details of investments * copy of the assessment order u/s 144 for AY 2012-13 Mindtrack Securities Pvt. Ltd. * Mast data of the company * Reply filed before the AO in response to summons u/s 131. * Certificate explaining source of funds * copy of the bank statement highlighting the figures * copy of allotment letter * copy of the share application forms * copy of the return filing acknowledgement for Assessment Year 2012-13 * copy of the audited accounts * details of ....
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....d upon by this Tribunal in the case of M/s. Sreenath Holding Pvt. Ltd. (supra). 9. Similar view was also taken by this Tribunal in the recent decision in the case of ITO vs. Inset Commercial & Trading Co. (P). Ltd. in ITA No. 650/Kol/2020, order dt. 06/02/2023, wherein under identical circumstances, it was held as under:- "7. We have heard the rival contentions and perused the material available on record and have given our thoughtful consideration to the elaborate observations and findings given by the Ld. CIT(A) while giving relief to the assessee. At the outset, we note that notices u/s. 133(6) of the Act were issued by the Ld. AO to all the nine subscribers, who had replied giving all the details and documents required by the Ld. AO along with confirming the transaction of they making investment in the share capital of the assessee. We also take note of the undisputed fact of assessments/intimations issued by the department for all the share subscribers, which testifies the identity of these nine share subscribers. 7.1. From the perusal of the paper book and the documents place d therein, it is seen that all the share applicants are (i) income tax assessees....
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.... also from their audited accounts filed with the income tax authorities in relation to their own income tax assessments and the sources of such funds are also explained by each of the share applicants in their replies addressed to the AO. However, the AO had not brought these indisputable facts on record but acted on his whims and fancies. It is observed that the burden which lay on the appellant, in relation to section 68 of the Act, has been duly discharged by it and nothing further remains to be proved by it on the issue. Since the conditions precedent for discharging of burden of proof under the provisions of section 68 of the Act is met with adequate evidence, the addition made under such pretext deserves to be deleted. In this respect it is imperative to refer to the decision of the jurisdictional High Court in the case of CIT vs. Sagun Commercial (P) Lid. [ITA No. 54 of 2001 dated 17.02.2011) wherein it was held as follows: "After hearing the learned advocate for the appellant and after going through the materials on record, we are at one with the Tribunal below as well as the Commissioner of Income-tax (Appeals) that the approach of the Assessing Officer cannot be ....
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....s since all the relevant material details and particulars were given by the assessee to the Assessing Officer. In the above circumstances, the view taken by the Tribunal could not be faulted. No substantial question of law was involved in the appeal.'' iii) Judgment of Hon'ble Jurisdictional High Court in the case of Exoimp Resources (India) Ltd. vs. CIT (supra), wherein it was held as follows: "It is incumbent upon the Assessing Authority to examine the explanation of the creditor and arrive at a conclusion as to whether the explanation was satisfactory. The conclusion arrived by the Assessing Authority is to be communicated to the assessee if such explanation is not considered satisfactory. If thereupon the assessee submits any comments or furnishes further information, in that event, the Assessing Authority has to examine the same and arrive at his own conclusion. The inbuilt safeguard provided in section 68 cannot be ignored by the Assessing Authority at his sweet will. The Assessing Authority can add the share capital as undisclosed income if no explanation is offered by the assessee. But since the details/explanations were offered, it was incumbe....
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....d all these documents which have been placed before various statutory authorities including Registrar Of Companies, Income Tax Department and Banks. The assessee by way of filing all these documents which are necessary to prove identity, creditworthiness and genuineness of the alleged transaction, has discharged the initial burden casted upon it under the provisions of section 68 of the Act. Unless and until, the assessing authority finds any lacuna or adversity or defect in the said documents, the burden to prove remains on the Revenue authorities. In the instant case, ld. Assessing Officer failed to discharge the burden and summarily disregarded the documents filed by the assessee by merely referring to some decisions and not going into the facts of the case except referring to the price per share. 9. We further observe that provision for examining the source of source under the provisions of section 68 of the Act has been brought in by Finance Act 2012 w.e.f. 01.04.2013 as per which "where an assessee is a company (not being a company in which public are substantially interested), and the sum so credited consists of share application money, share capital, share premium ....
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....ed hereinabove by the Hon'ble Courts and also considering the facts and circumstances of the case, are of considered view that since the assessee has sufficiently explained the identity and creditworthiness of the share subscriber companies and the genuineness of the transaction of applying for the equity shares of the assessee company and since nothing contrary to the evidence filed by the assessee has been placed on record by the Revenue, except the reason that the directors of the share subscribing companies failed to appear to the notices issued u/s 133(6) of the Act, we find no reason to interfere with the meritorious finding of the CIT(A). We accordingly, dismiss the grounds raised by the revenue in this respect. 15. In the result, appeal of the revenue is dismissed." 10. The ld. D/R has relied on the judgment PCIT(Central)-1, Kolkata vs. NRA Iron & Steel Pvt. Ltd. (supra). We note that the Hon'ble Supreme Court in the said case has taken note of the observations made by the Supreme Court in the "the land mark case of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laying down the proposition that the onu....