AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 87
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.... assessee was reopened u/s 147 of the Act. The ld. AO had called for the details/evidences in respect of share capital/share premium issued by the assessee and after examining the details, the assessment was framed u/s 147/143(3) of the Act vide order dated 21.05.2010, assessing the total income at Rs. 29,490/-. Thereafter, the ld. PCIT, in exercise of the jurisdiction u/s 263 of the Act, revised the assessment dated 21.05.2010 on the ground that the ld. AO has not made any proper enquiries as regards to the source of share capital/ share premium and directed the ld. AO to frame the assessment afresh after affording a reasonable opportunity of hearing to the assessee. The ld. AO accordingly issued notice u/s 142(1) of the Act along with questionnaire and called upon the assessee to furnish the details qua the share subscribers. The ld. AO thereafter also issued notices u/s 133(6) of the Act to the share subscribers. Complying with the said notices, the share subscribers had submitted before the ld. AO, all the information comprising names, addresses, PAN Numbers, copies of audited balance sheets, profit and loss accounts, audited reports, bank accounts, etc. The ld. AO also issued ....
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....nder: Sl No. Name of the Shareholders Amount Networth 1 Accord Agencies Pvt. Ltd 27,00,000 2,41,00,000 2 Aakashdeep Vinimay Pvt. Ltd 30,00,000 12,57,00,225 3 Angel Vanjiya Pvt. Ltd 38,00,000 11,86,00,264 4 Avenue Commercial Pvt. Ltd 66,00,000 13,62,00,172 5 Brishti Vanijiya Pvt. Ltd. 25,00,000 13,84,00,287 6 Brolly Dealcom Pvt. Ltd 50,00,000 15,88,00,262 7 Canter Vyapaar Pvt. Ltd 18,00,000 14,10,00,260 8 Embassy Vyapaar Pvt. Ltd 32,00,000 14,68,00,176 9 Forward Vanjiya Pvt. Ltd 17,00,000 3,13,00,297 10 Fossils Tradelink Pvt. Ltd 29,00,000 14,24,00,198 11 Gadia Mercantile Pvt. Ltd. 10,00,000 5,47,00,499 12 Jagdamba Barter Pvt. Ltd. 51,00,000 21,04,50,266 13 Kalash Tie-Up Pvt. Ltd. 30,00,000 11,07,00,306 14 Linsey Vinimay Pvt. Ltd. 55,00,000 14,47,00,207 15 Lovely Tie-Up Pvt. Ltd. 22,00,000 14,61,00,201 16 Mangal Deep Sales Pvt. Ltd. 35,00,000 11,75,00,290 17 Matribhumi Distributors Pvt. Ltd 82,00,000 11,80,00,189 18 Minarva Vyapaar Pvt. Ltd 30,00,000 15,70,00....
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....s 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 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 th....
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....bscribers 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 predicament faced by the assessee was taken note by the learned Tribunal and it had observed that it is practically difficult that after a gap of 10 to 12 years, the assessee can call for the share subscribers who invested long time before and there is every possibility that the shareholders would have sold their equities and new shareholders would have taken their place. The learned Tribunal referred to the decision of the co-ordinate Bench in the case....
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....ed 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 the decision of this Court in Crystal Networks Pvt. Ltd. -Vs- CIT, (353) ITR 171 (Cal). The Tribunal also noted the decision of the Co-ordinate Bench in the case of ITO -Vs- M/S Cygnus Developers India Pvt. Ltd. (ITA/282/Kol/2012) wherein the factual position was also similar to that of the case of the assessee. Thus, we find that the facts have been examined by the Tribunal and the conclusion has been arrived at and therefore, no question of law, muc....
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...., the investors were found to be non-existent or "phantom" entities upon field inquiry. In the case before us, the investors are identifiable taxpayers who directly responded to notices u/s 133(6) and confirmed the transactions through banking channels. Equating "traceable investors" with "phantom entities" is a leap in logic that cannot be countenanced. Furthermore, the valuation of shares is a matter of commercial wisdom. Unless the Revenue proves a "live link" showing that the funds originated from the assessee's own coffers, the AO cannot substitute his judgment for that of the marketplace. 12. In view of the aforesaid discussion, we arrive at a definite conclusion that in a corporate assessment, documented traceability (comprising ITR acknowledgments, PAN details, and Bank Statements) through legitimate banking channels carries greater evidentiary weight than the subjective suspicion of an Assessing Officer. The "Test of Human Probability" cannot be invoked as a tool to disregard a verified and audited paper trail. We also conclude that the ratio in NRA Iron & Steel is applicable only to "phantom" or "non-existent" entities found to be non-traceable upon field inq....