TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 1467
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....ed our attention to para 2 of the impugned assessment order to submit, wherein, the Assessing Officer has noted as under: "3. In response to the aforesaid notices, Shri P. K. Ketan(FCA), Authorized Representative (A/R) of the assessee-company appeared from time to tome to explain the return and file various details and documents as per requisition u/s 142(1)." 4. The ld. counsel has further invited our attention to the impugned assessment order to submit that despite specifically noting that the assessee has furnished all the details and evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the Assessing Officer did not bother to examine the details and evidences furnished by the assessee. That the impugned addition has been made by the Assessing Officer solely on the ground that the directors of the shareholder companies did not appear before the Assessing Officer in response to the summons issued u/s 131 of the Act. 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....
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....nference merely for the reason of non-appearance of the directors of the share applicant companies. The appellant has submitted several judicial pronouncements to the effect that mere non-appearance of the share applicant is no basis for invoking provisions of Sec. 68 which includes the decision of the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corpn. (P) Ltd. [1986] 159 ITR 78 (SC) wherein the Hon'ble Supreme Court held as follows: In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had dischar....
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....ome-tax v. Bharat Securities (P.) Ltd .* [2020] 113 taxmann.com 32 (SC). In this case also the SLP of the revenue against High Court ruling that once genuineness, creditworthiness and identity of investors are established, no addition could be made as cash credit on ground that shares were issued at excess premium has been dismissed. 4.4. Further I find the share subscribers have sufficient net worth of their own to make investments as elucidated below: Name of the company Capital Reserves Net Worth Invested in Assesses company Percent age of NW Neelanchal Distributor Pvt. Ltd. 32,91,500 3,40,54,573 3,73,46,073 40,00,000 10.71 Windson Vinimay Pvt. Ltd 58,59,000 6,61,69,111 7,20,28,111 83,00,000 11.52 Subhdhristi Advisiory Pvt. Ltd 55,38,500 6,95,85,797 7,51,21,297 35,00,000 4.65 Khusi Dealer Pvt. Ltd 70,55,000 9,31,50,581 10,02,05,581 70,00,000 6.98 4.5. That, as evident from the 4 (four) share subscribers' information on record, all of them were either subjected to assessment u/s 147/ 143(3) of the Act or the returns accepted by the AO. That the profiles of the assessmen....
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....rved in the case of Bharati Cement Corporation (supra) that the test of human probabilities cannot be applied to business transactions, as they are based on cogent materials. In any case, the Ld D.R has agreed that the receipt of share premium has to be tested u/s 68 of the Act. Hence the theory of human probabilities cannot be applied in this case." Therefore, the AO has erred in invoking the test of human probabilities. 4.8. The AO has further relied upon the decision in the case of M/s Bisakha Sales Pvt Ltd. v CIT [2014] 52 taxmann.com 305 (Kolkata- Trib.). In this case, it was said that where assessee-company received share application money with huge unjustified share premium from Corporate entities, merely because said amount was received through banking channel, Assessing Officer was not justified in accepting said transactions as genuine without making proper enquiries. Apparently. The AO has not properly appreciated that decision of the Hon'ble ITAT. The Hon'ble ITAT has never held that share capital and share premium can be assessed as unexplained cash credit merely for high share premium even though the identities and creditworthiness of the sha....
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....source of cash credit in question. The assessee assessee discharged the onus by placing (i) confirmation letters of the cash creditors, (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent account numbers. It has found that the assessee's burden stood discharged and so, no addition to his total income on account of cash credit was called for. In view of this finding, we find that the Tribunal was right in reversing the order of the AAC, setting aside the assessment order." 5.3. Hon'ble jurisdictional High Court, Calcutta in the case of S.K. Bothra & Sons, HUF v. Income-tax Officer, Ward- 46(3), Kolkata 347 ITR 347 (Cal), has held as follows: "15. It is now a settled law that while considering the question whether the alleged loan taken by the assessee was a genuine transaction, the initial onus is always upon the assessee and if no explanation is given or the explanation given by the appellant is not satisfactory, the Assessing Officer can disbelieve the alleged transaction of loan. But the law is equally settled that if the initial burden is discharged by the assessee by producing sufficient materials in support of the loan tran....
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....Lovely Exports reported in 216 CTR 295 (SC), the Hon'ble Supreme Court while dismissing SLP held as under: "Can the amount of share money be regarded as undisclosed income under section 68 of the Income tax Act, 19612 We find no merit in this special leave petition for the simple reason that if the share application money is received by the assessee-Company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment." 5.6. Replying on the above decision in the case of Lovely Exports, Hon'ble jurisdictional High Court in the case of CIT v Roseberry Mercantile (P) Ltd., ITAT No. 241 of 2010 dated 10-01-2011 held as follows: "On the facts and in the circumstances of the case, Ld. CITA) ought to have upheld the assessment order as the transaction entered into by the assessee was a scheme for laundering black money into white money or accounted money and the Ld. CIT(A) ought to have held that the assessee had not established the genuineness of the transaction." It appears from the re....
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....but the only major reliance placed on his action is based on non attendance of the directors of the subscriber companies before him u/s 131 of the Act. It is no longer res integra that such non attendance should be considered as a factor which should be used by the AO in coming to an adverse conclusion against the appellant. On an overall analysis of the issue, I find that the AO has not made out his case with cogent material on record that the appellant could come under the purview of section 68 of the Act with regard to share capital as reflected in the balance sheet when there is no finding with any cogent material evidence that the same was actually bogus in nature. It is accordingly observed that creditworthiness of the share subscribers to make investment in the share capital of the appellant company cannot be a disputed matter as per material facts on record. The aforesaid facts underlined by evidences clearly prove the identity of the share applicants, their creditworthiness and source of funds, as well as the genuineness of the transactions being investments in the share capital issued by the appellant, which was subscribed to by each of them. Thus, it is proved beyond any....
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....2014], it was observed as under: "We find that the learned Tribunal has confirmed the order passed by the CIT who had overturned the order of the Assessing Officer by making the following observation: " ... We find that the identity of the 5 parties investing in the share capital is not in doubt. They are body corporates and their complete addressees are on record. This is the very first assessment in the life of the assessee company. The amounts were deposited by these 5 corporates per account payee cheques. These parties were not shareholders of the assessee company at the time when the case was reopened under section 147 or when the summons were issued to them. We find that the assessee has filed before the A.O. copies of share application forms duly signed along with the complete addresses of the investors along with their I.T. file numbers, account payee cheque numbers and the assessee's bank statements disclosing the deposits of these amounts. In these facts we find that the assessee has discharged its initial onus to prove the identity of the investors as well as their creditworthiness. It is not the case of the Revenue that the investor parties did not....
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.... has affirmed the order passed by the Commissioner of Income-tax (Appeals). After hearing Mr. Nizamuddin, learned advocate appearing on behalf of the appellant and after going through the aforesaid materials, we agree with the Tribunal below that the Assessing Officer failed to establish that the share applicants did not have the means to make investment and that such investment actually emanated from the coffers of the assessee company. The receipt of share capital money had been duly recorded in the books of the assessee company and the payment of share application money was also duly recorded in the audited account of each of the share applicants. We, thus, find that both the authorities below on the basis of the aforesaid materials on record were quite justified in deleting the aforesaid addition of Rs. 45,00,000/- done by the Assessing Officer. We are of the view that the order impugned does not suffer from any defect whatsoever and no question of substantial error of law arises justifying our interference. The appeal is, thus, summarily dismissed." 5.11 There is no evidence adduced on record to show by the A.O that the identities of the sha....
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....returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans 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. So far as the reliance of the Ld. DR on the decision of the hon'ble Supreme Court in the case of "PCIT v/s NRA Iron & Steel (P) Ltd." (supra) is concerned, 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 M....