AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 1036
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.... admit the appeal for hearing. 3. The only issue raised by the assessee is against the order of ld. CIT (A) deleting the addition of Rs.5,53,73,000/- as made by the ld. AO in respect of share capital/ share premium by treating the same as unexplained cash credit u/s 68 of the Act. 4. The facts in brief are that the assessee filed the return of income on 30.03.2013, declaring total income at Rs.Nil. The case of the assessee was selected for scrutiny through Computer Assisted Scrutiny Selection (CASS) for the reason of receiving large share premium / share capital. The notice u/s 143(2) and 142(1) of the Act along with questionnaires were issued. The assessee complied with the said notices by filing certain details and documents along with the share applicants. The ld. AO also issued notices u/s 133(6) of the Act which were duly complied by the share subscribers. Thereafter, the ld. AO issued summon u/s 131 of the Act to the director of the share subscribing companies for personal attendance but there was no compliance of the summons u/s 131 of the Act. Finally, the ld. AO treating the shar capital / share premium received during the years of Rs.5,53,73,000/- as unexplained cas....
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....n the same. The appellant has further submitted specific submissions against all allegations of the Id. AD and has substantiated the same with relevant case laws 8.18. From fact of the case it appears that share subscriber parties are in existence. and they have their PAN identities. The Id. AO is not justified in alleging that the appellant failed to discharge its primary onus u/s 68 of the Act. The onus of an assessee is to prove the source of a transaction and not the source of source which in this case has been explained by the appellant. 8.19. As stated above, various documentary evidences placed on record was not refuted by the AO, and no adverse findings were given by the AO in the remand report, despite ample opportunity provided to the AO to comment on the documentary evidence submitted by the Appellant. Further, the assessment order has been passed in the present case by the AO due to the insufficiency/non-verification of the abovementioned documentary evidence. More particularly, upon reviewing the aforementioned documentary evidence, the identity of the creditors is confirmed through their PAN cards and Income Tax Returns (ITR) Additionally, the identi....
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....e is no cash receipt/payment in the bank accounts placed on record. Moreover, Id. AO did not allege in the assessment order that the share subscriber parties are bogus companies. 8.21. The Genuineness of share subscription made by them in the Appellant Company is established by the Appellant by submitting the share subscription form board resolution as well as bank statement of the parties. Further, it was not disputed by the AO that the share subscribers are bogus, therefore genuineness is established on the basis that transaction which has been done through banking channels only and no information/adverse material against the same has been brought on record by the Id. AO. Besides this, there is no finding by the Id. AO that the appellant has routed its unaccounted money through share subscription. The only dispute raised by Id. AO is regarding non-appearance of directors against the summons issue by him, however, the said reason alone could not be ground for sustaining the addition as no fault has been found in the various documentary evidences placed on record and duly accepted and confirmed by the parties in response to notice issued u/s 133(6) of the Act, which Ld. AO....
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....roofs/ documents/ evidences before the ld. AO qua the share applicant, however, the ld. AO treated the share capital / share premium as unexplained cash credit u/s 68 of the Act on the ground that the subscribers did not comply with the summons issued u/s 131 of the Act. We also note that the ld. AO also issued letter u/s 133(6) of the Act to all the subscriber calling for certain details, which are complied with by the subscriber by furnishing all the details/ evidences qua the investment made by them in the assessee company. We also note that during the appellate proceedings, the appellate authority has admitted the application of the assessee under Rule 46A of the IT Rules, 1962 admitting certain additional evidences which were referred to the ld. AO for remand report and the ld. AO furnished the remand report before the ld. CIT (A). We note that the assessee was confronted with the remand report and rejoinder filed by the assessee also taken into account by the ld. CIT (A) while deleting the addition. We note that the assessee filed the names, address, PAN, bank statement, ITRs, audited balance sheet and profit and loss account, confirmation certification on incorporation memor....
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.... assessee was able to discharge its initial onus of establishing the genuineness of the transactions as well. It is thus noted that the three ingredients laid down in Section 68 of the Act was met by the assessee. 5.3. It is observed that the ld. AO had laid much emphasis on the non-compliance of summons by the share subscribers to the enquiry being conducted after more than seven (7) years from the date of transactions. The ld. AR has rightly relied on the decision of the Hon'ble Calcutta High Court in the case of PCIT vs. Jealous Commercial Private Limited (308 taxman 80) wherein on similar facts, it was held that mere non-appearance of directors before the AO cannot prompt the AO to render a finding that no satisfactory explanation u/s 68 was offered by the assessee. The relevant findings are as follows: "18. In the facts and circumstances of the present case, the shareholders who applied for the shares in the assessee stands identified. The source of funds stands satisfied. The assessee reflected the entire issue and allotment of shares at a premium in its books of accounts and submitted the same contemporaneously to the statutory authority, namely, Ministry o....
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....nder Sections 147/143(3) of the Act were also placed before the Assessing Officer as well as before the learned Tribunal. Thus, it is evident that the assessee has produced all the documents before the Assessing Officer not once but twice and the authority except indicating a theory of routine entries of paper companies/shell companies, no discrepancies had been pointed out in the financials of the alleged cash creditors. Furthermore, all the share subscribers are private limited companies duly registered with the Ministry of Corporate Affairs and have been furnishing the audited financial statements in the portal of the Ministry. That apart, the share subscribers have also demonstrated that there was immediate source of funds available in the bank accounts which had been applied for making investments in the equity shares of the assessee company. One more particular important factor which was lost sight of is, that the matter pertains to the financial year 2007-08 and the scrutiny assessment was completed on 27.09.2021. After a gap of 13/14 years, after actual transactions had taken place and final assessment orders had been passed, proceedings was initiated. Thus, the pr....
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....ectors appeared pursuant to the summons but the assessing officer wrongly recorded that the Directors of the assessee company failed to appear in response to the summons issued under 131 of the Act. Furthermore, the Tribunal examined the factual position and noted that the assessee has filed evidences as called for by the assessing officer in respect of the assessee as well as the investing companies. The evidences filed comprised of income tax returns, audited balance sheet, profit and loss account, audited report, bank statement and master data in respect of each of the subscribers. Furthermore, both the parties have submitted their reply pursuant to the notice issued under Section 133(6) of the Act. After noting these facts, the Learned Tribunal held that the assessing officer as well as the CIT(A) did not cause any verification or conduct any enquiry into the evidences which were filed by the assessee and merely harped on non- compliance of the summons issued under Section 131 of the Act, which is factually incorrect. Learned Tribunal placed reliance on the decision of the Hon'ble Supreme Court in CIT -Vs- Orissa Corporation Ltd. (1986) 159 ITR 78 (SC) as well as t....
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....f PCIT vs. Jealous Commercial Private Limited (308 taxman 80) wherein on similar facts, it was held that mere non-appearance of directors before the AO cannot prompt the AO to render a finding that no satisfactory explanation u/s 68 was offered by the assessee. The relevant findings are as follows: "18. In the facts and circumstances of the present case, the shareholders who applied for the shares in the assessee stands identified. The source of funds stands satisfied. The assessee reflected the entire issue and allotment of shares at a premium in its books of accounts and submitted the same contemporaneously to the statutory authority, namely, Ministry of Corporate Affairs. 19. Before the Assessing Officer, the assessee produced all such relevant materials with regard to the transaction in question. The absence/non-appearance of the Directors of the assessee before the Assessing Officer would not prompt the Assessing Officer, to render a finding that no explanation within the meaning of Section 68 of the Act of 1961 was offered by the assessee particularly in the factual matrix of the present case. 20. In such circumstances, we do not find any substantia....