J.C.I.T.(OSD),CIRCLE-12(1), KOLKATA vs. M/S WERIT GLOBAL LTD., KOLKATA

ORDER 1 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Per Shri A. T. Varkey, JM:

These are appeals preferred by the Revenue for AY 2014-15, AY 2015-16 & AY 2016-17 and the assessee has filed cross-appeal for AY 2015-16against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata. We will deal with each appeal assessment year wise as under:

ITA 55/Kol/2020 [Revenue Appeal for (AY 2014-15)] 2. This is an appeal preferred by the Revenue against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata dated 21.10.2019 for AY 2014-15. Though the Revenue has raised 17 grounds, the sole issue is against the action of Ld. CIT(A) in deleting the addition of Rs.7,69,71,990/- u/s 68 of the Income Tax Act, 1961 (hereinafter the ‘Act’).

4.1 In view of the above discussions and findings, fund receives in form of share capital from Pragati Complex Advisory Pvt. Ltd. of Rs.1,24,54,900/-, Richfield Vintrade Pvt. Ltd. of Rs.1,54,58,000/-, Laxmiputra Tradecomm Pvt. Ltd. of Rs.1,59,12,300/-, Jintan Mercantile Pvt. Ltd. of Rs.1,11,15,600/-, Newzone Vintrade Pvt. Ltd. of Rs.1,11,16,190/- and Brijbhumi Commosale Pvt. Ltd. of Rs.1,09,15,000/- totalling to Rs.7,69,71,990/- is added back to total income of the assessee u/s 68 for the A.Y 2014-15.

4. Accordingly, the A.O made an addition of Rs.7,69,71,990/-.

5. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) who was pleased to delete the same. Aggrieved, the Revenue is before us.

6. Assailing the action of the Ld. CIT(A) in giving relief to the assessee company, the Ld. CIT-DR, Shri Mithilesh Kumar Jha submitted that the A.O issued notices u/s 133(6) of the Act to the aforesaid six (6) shareholders since the data of the Investigation Wing showed that these six (6) concerns out of the other companies which had applied for the allocation of shares of assessee company were shell/paper companies, therefore, he had issued notices to them specifically (i.e. the above-named six companies). And since the notices were returned back un-served by the postal authorities, the AO made another attempt to trace them, by conducting field enquiry at their respective addresses to verify the identity, genuineness of the shareholders, and since this action did not give any result about the existence of these companies in their given addresses, and since these share holders/subscribers could not place any credible evidence to prove that they were in genuine business activity by giving details of their establishment, the staff etc., he did not accept the share capital and premium supposed to have been given by them and made the addition of Rs.7,69,71,990/-. According to the Ld. CIT-DR, the Ld. CIT(A) has mistakenly drawn inferences in favour of assessee which impugned action according to the Ld. CIT-DR was not based on relevant materials; and the Ld. CIT-DR pointed out that though the Ld. CIT(A) during appellate proceedings had directed the A.O to carry out investigation by issuing section 133(6)

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 notice, pursuant to which, when the A.O had issued summons u/s 131of the Act, instead of notices u/s 133(6) as directed by him, the Ld. CIT(A) found fault with the action of the A.O and has given relief even by taking note that the share applicant companies’ directors had in fact presented themselves in the office of A.O pursuant to the summons, however the A.O was not present in the Office at that time when they came to AO’s office and so they had to leave the office without their statement being recorded by the AO. This factual assertion of the Ld. CIT(A) has been questioned by the Ld. CIT-DR, who submitted that pursuant to the directions of Ld. CIT(A), during remand proceedings the AO had issued instead of notice u/s 133(6) summons u/s 131 of the Act to all the six (6) shareholders on 04.06.2019 directing them to produce their directors along with books of account. However according to Ld. CIT-DR, pursuant to the same, none appeared before the A.O. According to him, even though the directors did not appear at the AO’s office, however they made a false averment through letter dated 25.07.2019 that they presented themselves (directors) at the office of A.O and since the A.O was absent in the office, so they had to return, which assertion according to A.O was false and this fact was conveyed by A.O to Ld.CIT(A) on 26.07.2019 itself, however according to Ld. DR, the Ld. CIT(A) did not bother to consider this fact conveyed by AO. According to the Ld. CIT-DR, the action of the Ld. CIT(A) in giving relief to the assessee were based only on the documents filed by the assessee and that too on irrelevant considerations like the share subscribers are being controlled by well known business houses etc. is on wrong assumption of facts and therefore the share capital &premium from these six companies ought not tohave been accepted by the Ld. CIT(A) and according to him, the pernicious practice of laundering back their own black-money through shell companies have been frowned upon by the Hon’ble Apex Court in several cases viz. Principal CIT vs. NRA Iron & Steel (P) Ltd reported in 103 taxmann.com 48 (SC)and the Jurisdictional High Court in several cases, and therefore, he prayed that the Ld. CIT(A)’s impugned order may be reversed and the AO’s action may be upheld or in the alternative, this issue may be set aside back to the A.O for fresh verification.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 7. Per contra, the Ld. AR of the assessee, Ms. Priyanka Salarpuria CA pointed out that the assessee had duly filed before the A.O during assessment proceedings all the documents to prima facie prove the share applicants’ identity, creditworthiness and genuineness and in that process, discharged the onus on it to prove the nature and source of the credit of share capital & premium collected by it in this assessment year. However, according to her, the A.O at the fag end when the assessment was going to get time barred, hurriedly issued notices u/s 133(6) of the Act only to fourteen (14) companies out of twenty two (22) share applicant companies from whom all the assessee had collected share capital & premium; and out of which nine (9) notices could be served and since six (6) parties could not be served because of change of address, and the AO has drawn adverse inference against these six (6) share subscribers, without awaiting for their response from them.Moreover, according to the Ld. AR, the A.O while making the addition of Rs.7.69 crores u/s 68 of the Act has not made any addition of the share capital received by the assessee from these six (6) companies[details will be discussed (infra) with the aid of charts]which means according to the Ld. AR, the A.O on one hand has accepted the share capital subscribed by these companies, however he did not accept the share premium subscribed by them and made addition u/s 68 of the Act, which action of AO according to the Ld. AR, is erroneous. According to Ld AR, the AO by accepting the share capital from these six (6) share subscribers’ the AO has conveyed his satisfaction in respect of their [six (6) share subscribers’] respective identity and creditworthiness and also the AO has accepted the genuineness of the share capital transaction from these companies with the assessee company. So, according to the Ld. AR, the AO’saction in not accepting the share premium collected by the assessee from the very same six (6) share subscribers’ is erroneous, and further when the fact was that the AO has accepted the very same premium amount collected from other sixteen (16) share subscribers, he could not have drawn adverse viewagainst this six (6) share subscribers’ only for non-service of notice in the first round and when the fact was that during the remand proceedings the summons issued by the AO to these six (6) companies were served upon them.And thereafter drew our attention to page-52 of the ,I.T.A. No.20/Kol/2019, I.T.A. No.2191/Kol/2018 & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 paper-book wherein the details of the share application money received by the assessee during the A.Y 2014-15 is given as under:

Sl Name of the Party Face Value Premium @ Share Capital No. @ 100 590 with Premium in AY 2014-15 1 Nicholsons Vanijya Pvt Ltd 7,30,000 43,07,000 50,37,000 2 GMB Finvest Pvt Ltd 4,30,000 25,37,000 29,67,000 3 Alliance Vintrade Pvt Ltd 3,10,000 18,29,000 21,39,000 4 Effervescent Commercial Pvt Ltd 7,30,000 43,07,000 50,37,000 5 Bhagwat Kripa Trading Pvt Ltd 8,20,000 48,38,000 56,58,000 6 Seaview Vincom Pvt Ltd 2,20,000 12,98,000 15,18,000 7 Dhanidhar Trading Pvt Ltd 5,85,000 34,51,500 40,36,500 8 Dreamvalley Merchants Pvt Ltd 7,80,000 46,02,000 53,82,000 9 Pragati Complex Advisory Pvt Ltd 21,11,000 1,24,54,900 1,45,65,900 10 Richfield Vintrade Pvt Ltd 26,20,000 1,54,58,000 1,80,78,000 11 Laxmiputra Tradecomm Pvt Ltd 26,97,000 1,59,12,300 1,86,09,300 12 Ramdot Suppliers Pvt Ltd 22,42,100 1,32,28,390 1,54,70,490 13 Jintan Mercantile Pvt Ltd 18,84,000 1,11,15,600 1,29,99,600 14 Needful Projects Advisory Pvt Ltd 21,84,000 1,28,85,600 1,50,69,600 15 Mangalkamana Merchants Pvt Ltd 22,67,000 1,33,75,300 1,56,42,300 16 Newzone Vintrade Pvt Ltd 18,84,100 1,11,16,190 1,30,00,290 17 Brijbhumi Commosale Pvt Ltd 18,50,000 1,09,15,000 1,27,65,000 18 Kothsons Finance & Consultancy Pvt Ltd 4,70,000 27,73,000 32,43,000 19 Bor Securities Ltd 7,50,000 44,25,000 51,75,000 20 Aarkay Tie Up Pvt Ltd 7,50,000 44,25,000 51,75,000 21 Waltaz Commodities Pvt Ltd 3,60,000 21,24,000 24,84,000 22 Ojaswini Retailers Pvt Ltd 12,60,000 74,34,000 86,94,000 TOTAL 2,79,34,200 16,48,11,780 19,27,45,980

8. According to the Ld. AR, as discussed supra, the assessee has received share capital money aggregating to Rs.19,27,45,980/- from twenty two (22) private limited companies comprising share capital of Rs.2,79,34,200/- and share premium of Rs.16,48,11,780/- by issuing shares of face value of Rs.100/- at a premium of Rs.590/- According to the Ld. AR, the A.O had issued notices u/s 133(6) to fourteen (14) companies which were served upon nine (9) companies, however it could not be served up on five (5) companies. However, he drew adverse inference against six (6) share applicant companies [ later on referred to as companies under Serial C] which are as under: Sl. Name of the Party Application Premium no. 1 Pragati Complex Advisory Pvt. Ltd 21,11,000 1,24,54,900 2 Richfield Vintrade Pvt. Ltd 26,20,000 1,54,58,000 3 LaxmiputraTradecomm Pvt. Ltd 26,97,000 1,59,12,300 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 4 Jintan Mercantile Pvt. Ltd 18,84,000 1,11,15,600 5 Newzone Vintrade Pvt. Ltd 18,84,100 1,11,16,190 6 Brijbhumi Commosale Pvt. Ltd 18,50,000 1,09,15,000 TOTAL 1,11,46,100 7,69,71,990

9. According to the Ld. AR, during appellate proceedings, the Ld. CIT(A) has called for a remand report from the AO. And the AO during the remand proceedings, had issued summons u/s 131 of the Act to principal officers of the aforesaid six companies on 04.06.2019 directing them to appear before him with books of accounts, bank statement for A.Y 2014-15. According to the Ld. AR in the remand report, the A.O had observed that none appeared before him pursuant to even the summons being served upon them. [ However, according to assessee, the directors of these companies went to AO office, but AO was not present, so they returned ]Therefore, the AO reiterated his earlier stand and treated the share premium from these six (6) companies as undisclosed cash credit of the assessee company. The Ld. AR further drew our attention to the Ld. CIT(A)’s findings that in respect of the following eight (8) companies, the A.O has accepted the allotment of shares at a premium of Rs.590/- without any verification which is hereinafter referred to as companies in Serial A: Companies under (Serial A) i) Nicholson Vanijya Pvt. Ltd. ii) Alliance Vintrade Pvt. Ltd, iii) Eitervescent Commercial Pvt. Ltd, iv) Bor Securities Pvt. Ltd, v) SeaviewVincom Pvt. Ltd, vi) Kothsons Finance & Consultancy Pvt. Ltd vii) Aarkay Tie Up Pvt. Ltd, viii) Dream Valley Merchants Pvt. Ltd.

10. According to the Ld. AR, the Ld. CIT(A) has observed that in respect of the aforesaid eight (8) companies, no notice u/s 133(6) was issued by the AO or any other enquiry was conducted by him and the share allotment by the assessee company was confirmed to be genuine by the A.O and the Ld. CIT(A) noted that the A.O did not even issue summons u/s 131 to these companies before accepting their share transaction with the assessee company.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 11. Further the Ld. AR drew our attention to the fact that the Ld. CIT(A) has noted that in respect of following companies, the A.O had accepted the allotment of shares at a premium of Rs.590/- as these companies has submitted the following documents and these companies are hereinafter referred to as companies under Serial B: i) Balance Sheet and Audited Accounts, ii) Income Tax Return, iii) Bank Statement. Companies under (Serial B) - i) Mangalkamna Merchants Pvt. Ltd, ii) Needful Projects Advisory Pvt. Ltd, iii) Ramdot Suppliers Pvt. Ltd, iv) BhagwatKripa Trading Pvt. Ltd v) Ojawswani Realtors Pvt. Ltd, vi) Waltaz Commodities Pvt. Ltd, vii) GMB Finvest Pvt. Ltd, viii Dharnidhar Trading Pvt. Ltd.

12. According to the Ld. AR, in the light of the above facts, the Ld. CIT(A) wondered as to when the assessee has filed all these details like balance sheet and audited account, income-tax return and bank statement of these share applicant companies also (i.e. six companies), then why the A.O after having accepted their identity, creditworthiness and genuineness in respect of share capital from these following six companies, didn’t accept the premium from them and made the addition. These six companies are hereinafter referred to as companies under Serial C:

Companies under(Serial C) i) Brijbhumi Commosale Pvt. Ltd ii) Newzone Vintrade Pvt. Ltd iii) Jintan Mercantile Pvt. Ltd iv) LaxmiputraTradecomm Pvt. Ltd v) Richfield Vintrade Pvt. Ltd vi) Pragati Complex Advisory Pvt. Ltd.

13. According to Ld. A.R, the Ld. CIT(A) after perusal of the remand report from the A.O noted that the only fault which the A.O could find against these companies under Serial Cwas that the field enquiry made by the Department could not trace out these companies at their respective addresses. According to the Ld. AR, other than simply saying that field enquiry could not trace out these companies, the AO has not spelled out what enquiry was conducted by him. And on the other hand, the Ld. CIT(A) has taken note that no field enquiry report was found in the assessment ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 folder/records. Therefore, the Ld. CIT(A) concluded that the A.O has not conducted any field enquiry in respect of these six companies under Serial ‘C’ against whom he made addition. And since the assessee brought to the notice of the Ld. CIT(A) that during the original proceedings, the AO could not serve notice u/s 133(6) of the Act was due to the fact that these six companies had changed their respective addresses and this fact was brought to the notice of AO during remand proceedings. However the AO despite direction from Ld. CIT(A) did not issue notice u/s 133(6) through postal authorities and instead issued summons u/s 131 of the Act which were served upon them.Therefore, according to Ld. A.R, the AO’s action of selectively choosing six (6) companies out of twenty two (22) share applicants and without conducting any field enquiry [in the absence of field enquiry report in the assessment folder as found by the Ld. CIT(A)] and when the assessee had presented the same documents as furnished for share subscribing companies at Serial ‘B’, the AO erred in not accepting the share transaction from these six (6) companies at Serial ‘C’ which action of A.O, according to Ld. A.R smacks of arbitrariness and action is bad being whimsical. Therefore, according to Ld. A.R, the Ld. CIT(A) rightly deleted the addition after distinguishing the case laws relied upon by the AO, so she does not want us to interfere in the impugned order of Ld. CIT(A).

15. On appeal the Ld. CIT(A) has deleted the addition and the issue before us is whether the action of Ld. CIT(A) is legally tenable or not. In this regard we note that the AO has made the addition u/s 68 of the Act in respect of share premium subscribed by six (6) share applicant companies shown under Serial “C”. So, first of all we have to see how the Ld. CIT(A) has dealt with the adverse view taken against the six companies at Serial C. The AO’s case is that notice & field inquiry could not trace out these share subscribers in their given addresses. However, it has been brought to our notice that notice u/s 133(6) was issued by the AO at the fag end when the limitation period for passing the assessment order was getting barred and the AO issued notices to fourteen (14)share subscribing companies and out of which nine (9) notices could be served, so the AO has drawn adverse inference against the six (6) companies which could not be served. The reasons for non-service of notice was brought to the notice of Ld. CIT(A) i.e. these six (6) share subscribers have changed the addresses and the Ld. CIT(A)has taken note of this fact, so, we concur with the Ld CIT(A) that mere non- service of notice by the postal authorities cannot be the sole basis to draw adverse inference against these six (6) companies. Moreover, the assertion of the AO that field enquiry could not trace out these companies also cannot be given much weight because ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 once these six (6) companies had changed the address, and when postal authorities cannot find them in the old address, the field enquiry to trace them in the old address will also yield the same result. Further it is noted that the Ld. CIT(A) at page 26 of his impugned order has given a finding of fact that neither he could find any order/direction given by AO to conduct any field enquiry at the address of these companies nor any field report in the assessment folder, which discovery led the Ld CIT(A) to conclude that AO made no such enquiry. In the light of the aforesaid discussion, we are of the considered opinion that only on the basis that notices/field enquiry could not find the share subscribers [at serial C]at their respective old address cannot be the sole basis to draw adverse inference against them, when the assessee was able to bring material/evidence on record that these companies had changed to a new address and when they are able to adduce evidence to establish their existence by other evidences. Further we note that the Ld. CIT(A) had given direction to AO to issue notices u/s 133(6) to these companies at their new addresses while calling for remand report and the AO had issued summons u/s 131 to these companies in their new address to produce their respective Principal Officers, and pursuant to which (after summons being served upon them) they claim to have been produced, when the AO was not present in his office, which fact also the Ld. CIT(A) has taken note of in his order at page 16 & 27. [Though this averment of assessee has been contested by the AO, however the AO has not placed any material/evidence/affidavit to support his assertion, so we cannot discount the Ld CIT(A) observation on this. And AO has not commented adversely about serving of summons to these six (6) companies] so the inference drawn is that the summons u/s 131 of the Act were served upon these share subscribers. So in the light of the facts and circumstances discussed, the AO’s action to have drawn adverse inference against these six (6) companies only on the basis of non- service /field enquiry at the fag end of assessment proceedings cannot be countenanced and therefore we agree with the Ld CIT(A) on this observation of his and for this we rely on the decision of Hon’ble Supreme Court in Orissa Corporation Pvt Ltd [159 ITR 78(SC)].

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 16. We note that in the present case, the assessee had submitted the following relevant details as called for and the evidence which were filed before the AO included the following details.

(a) Income Tax Return of the share holders (b) Audited Accounts of the share holders (c) Share Application Forms (d) Share Allotment Letters (e) Copy of the bank account of the share holders (f) Transaction with the assessee was duly highlighted in the bank statement (g) Evidences of source of source of the share holders.

17. Taking note of the aforesaid documents and for other reasons stated in the impugned order,the Ld. CIT(A) was of the opinion that assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share subscribers and deleted the addition made u/s. 68 of the Act. Before we adjudicate as to whether the Ld. CIT(A)’s action is right or erroneous, let us look at section 68 of the Act [without the proviso inserted by Finance Act 2012, w.e.f. 01.04.2013 which we will deal infra] and the judicial precedents on the issue before the proviso was inserted by the Parliament, which provisois applicable in the assessment years before us and is in respect of cases wherein the assessee’s receive Share application/capital/premium, then additional burden is casted upon it to show the source of source to the satisfaction of AO or deeming provision will come into play which we will deal later (infra).

18. Section 68 of the Act [without the proviso inserted by Finance Act 2012, which we will deal infra] under which the addition has been made by the Assessing Officer reads as under:

68. 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.

19. The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words ‘shall’ becharged to income-tax as the income of the assessee of that previous year". TheHon’ble Supreme Court while interpreting similar phraseology used in section 68 has held that in creating the legal fiction the phraseology employs the word "may" and not "shall". Thus the un-satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570.

20. The main plank on which the AO made the addition in the assessment proceedings was non-service of notice and in the remand proceedings was because the directors of the share subscribers did not turn up before him. In such a case the Hon'ble Apex Court in the case of Orissa Corpn. (P) Ltd. (supra) 159 ITR 78 and following the same, the Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360 /[2003] 127 Taxman 523 , has held that onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). In arriving at this conclusion, the Hon'ble Court has further stressed the presence of word "may" in section 68. Relevant observations at pages 369 and 370 of this report are reproduced hereunder:-

"Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference against the assessee. in the case of six creditors who appeared before the Assessing Officer and ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by' treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69.

"While interpreting the meaning and scope of section 68, one has to bear in mind that normally, interpretation of a statute shall be general, in nature, subject only to such exceptions as may be logically permitted by the statute itself or by some other law connected therewith or relevant thereto. Keeping in view these fundamentals of interpretation of statutes, when we read carefully the provisions of section 68, we notice nothing in section 68 to show that the scope of the inquiry under section 68 by the Revenue Department shall remain confined to the transactions, which have taken place between the assessee and the creditor nor does the wording of section 68 indicate that section 68 does not authorize the Revenue Department to make inquiry into the source(s) of the credit and/or sub-creditor. The language employed by section 68 cannot be read to impose such limitations on the powers of the Assessing Officer. The logical conclusion, therefore, has to be, and we hold that an inquiry under section 68 need not necessarily be kept confined by the Assessing Officer within the transactions, which took place between the assessee and his creditor, but that the same may be extended to the transactions, which have taken place between the creditor and his sub-creditor. Thus, while the Assessing Officer is under section 68, free to look into the source(s) of the creditor and/or of the sub-creditor, the burden on the assessee under section 68 is definitely limited. This limit has been imposed by section 106 of the Evidence Act which reads as follows:

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 "Burden of proving fact especially within knowledge.-When any fact is especially within the knowledge of any person, the burden) of proving that fact is upon him. " ******** What, thus, transpires from the above discussion is that white section 106 of the Evidence Act limits the onus of the assessee to the extent of his proving the source from which he has received the cash credit, section 68 gives ample freedom to the Assessing Officer to make inquiry not only into the source(s)of the creditor but also of his (creditor's) sub-creditors and prove, as a result, of such inquiry, that the money received by the assessee, in the form of loan from the creditor, though routed through the sub-creditors, actually belongs to, or was of, the assessee himself. In other words, while section 68 gives the liberty to the Assessing Officer to enquire into the source/source from where the creditor has received the money, section 106 makes the assessee liable to disclose only the source(s) from where he has himself received the credit and IT is not the burden of the assessee to prove the creditworthiness of the source(s) of the sub-creditors. If section 106 and section 68 are to stand together, which they must, then, the interpretation of section 68 are to stand together, which they must, then the interpretation of section 68 has to be in such a way that it does not make section 106 redundant. Hence, the harmonious construction of section 106 of the Evidence Act and section 68 of the Income- tax Act will be that though apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been. eventually, received by the assessee. It, therefore, further logically follows that the creditor's creditworthiness has to be Judged vis-a-vis the transactions, which have taken place between the assessee and the creditor, and it is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transactions, which took between the creditor and sub-creditor and/or creditworthiness of the sub- creditors, for, these aspects may not be within the special knowledge of the assessee. " ********** " ... If a creditor has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the creditor fails to satisfy as to how he had actually received the said amount and happened to keep the same in the bank, the said amount cannot be treated as income of the assessee from undisclosed source. In other words, the genuineness as well as the creditworthiness of a creditor have to be adjudged vis-a-vis the transactions, which he has with the assessee. The reason why we have formed the opinion that it is not the business of the assessee to find out the actual source or sources from where the creditor has accumulated the amount, which ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuineness of the transaction and the creditworthiness of the creditor vis-a-vis the transactions which had taken place between the assessee and the creditor and not between the creditor and the sub-creditors, for, it is not even required under the law for the assessee to try to find out as to what sources from where the creditor had received the amount, his special knowledge under section 106 of the Evidence Act may very well remain confined only to the transactions, which he had' with the creditor and he may not know what transaction(s) had taken place between his creditor and the sub- creditor… " ********** "In other words, though under section 68 an Assessing Officer is free to show, with the help of the inquiry conducted by him into the transactions, which have taken place between the creditor and the sub-creditor, that the transaction between the two were not genuine and that the sub-creditor had no creditworthiness, it will not necessarily mean that the loan advanced by the sub-creditor to the creditor was income of the assessee from undisclosed source unless there is evidence, direct or circumstantial, to show that the amount which has been advanced by the sub-creditor to the creditor, had actually been received by the sub-creditor from the assessee …." ********** "Keeping in view the above position of law, when we turn to the factual matrix of the present case, we find that so far as the appellant is concerned, he has established the identity of the creditors, namely, Nemichand Nahata and Sons (HUF) and Pawan Kumar Agarwalla. The appellant had also shown, in accordance with the burden, which rested on him under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors aforementioned. In fact the fact that the assessee had received the said amounts by way of cheques was not in dispute. Once the assessee had established that he had received the said amounts from the creditors aforementioned by way of cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter the burden had shifted to the Assessing Officer to prove the contrary. On mere failure on the part of the creditors to show that their sub- creditors had creditworthiness to advance the said loan amounts to the assessee, such failure, as a corollary, could not have been and ought not to have been, under the law, treated as the income from the undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. Viewed from this angle, we have no hesitation in holding that in the case at hand, the Assessing Officer had failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. In the absence of any such evidence on record, the Assessing Officer could not have treated the said amounts as income derived by the appellant from undisclosed sources. The learned Tribunal seriously fell into error in treating the said amounts as income derived by the appellant from. undisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness.”

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 22. Further, in the case of CITv. S. Kamaljeet Singh [2005] 147 Taxman 18(All.) their lordships, on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, has observed and held as under:-

4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The 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 AA C, setting aside the assessment order.

23. We also take note of the decision of the Hon'ble High Court, Calcutta in the case of S.K. Bothra & Sons, HUF v. Income-tax Officer, Ward- 46(3), Kolkata 347 ITR 347 wherein the Court 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 transaction, the onus shifts upon the Assessing Officer and after verification, he can call for further explanation from the assessee and in the process, the onus may again shift from the Assessing Officer to assessee.

16. In the case before us, the appellant by producing the loan-confirmation-certificates signed by the creditors, disclosing their permanent account numbers and address and further indicating that the loan was taken by account payee cheques, no doubt, prima facie, discharged the initial burden and those materials disclosed by the assessee prompted the Assessing Officer to enquire through the Inspector to verify the statements.”

24. In a case where the issue was whether the assessee availed cash credit as against future sale of product, the AO issued summons to the creditors who did not turn up before him, so AO disbelieved the existence of creditors and saddled the addition, which was overturned by Ld. CIT(A). However, the Tribunal reversed the decision of the Ld. CIT(A) and upheld the AO’s decision, which action of Tribunal was challenged before the Hon'ble High Court, Calcutta in the case of Crystal Networks (P.) Ltd. v. Commissioner of Income-tax 353 ITR 171 wherein the Tribunal’s decision was overturned and decision of Ld. CIT(A) upheld and the Hon’ble High Court has held that when the basic evidences are on record the mere ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 failure of the creditor to appear cannot be basis to make addition. The Hon’ble High Court held as follows:

8. Assailing the said judgment of the learned Tribunal learned counsel for the appellant submits that Income-tax Officer did not consider the material evidence showing the creditworthiness and also other documents, viz., confirmatory statements of the persons, of having advanced cash amount as against the supply of bidis. These evidence were duly considered by the Commissioner of Income-tax (Appeals). Therefore, the failure of the person to turn up pursuant to the summons issued to any witness is immaterial when the material documents made available, should have been accepted and indeed in subsequent year the same explanation was accepted by the Income-tax Officer. He further contended that when the Tribunal has relied on the entire judgment of the Commissioner of Income-tax (Appeals), therefore, it was not proper to take up some portion of the judgment of the Commissioner of Income-tax (Appeals) and to ignore the other portion of the same. The judicial propriety and fairness demands that the entire judgment both favourable and unfavourable should have been considered. By not doing so the Tribunal committed grave error in law in upsetting the judgment in the order of the Commissioner of Income-tax (Appeals).

9. In this connection he has drawn our attention to a decision of the Supreme Court in the case of Udhavdas Kewalram v. CIT [19671 66 ITR 462. In this judgment it is noticed that the Supreme Court as proposition of law held that the Tribunal must In deciding an appeal, consider with due care, all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. 10. We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment 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 the creditworthiness. As rightly pointed out by the learned counsel that the Commissioner of Income-tax (Appeals) has taken the trouble of examining of all other materials and documents, viz., confirmatory statements, invoices, challans and vouchers showing supply of bidis 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 product of the assessee or not. When it was found by the Commissioner of Income-tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this -fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 464, the Supreme Court has observed as follows: "The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act; it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. "

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 11. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity.

12. Taking inspiration from the Supreme Court observations we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Commissioner of Income-tax (Appeals). We also found no single word has been spared to up set the fact finding of the Commissioner of Income-tax (Appeals) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made.

25. When a question as to the creditworthiness of a creditor is to be adjudicated and if the creditor is an Income Tax assessee, it is now well settled by the decision of the Calcutta High Court that the creditworthiness of the creditor cannot be disputed by the AO of the assessee but the AO of the creditor. In this regards our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the CIT, Kolkata-Ill Versus DATAWARE Pvt Ltd ITAT No. 263 of 2011 Date: 21st September, 2011 wherein the Hon’ble High Court held as follows:

“In our opinion, in such circumstances, the Assessing officer of the assessee cannot take the burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness" of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness" of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities.”

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 26. Our attention was also drawn to the decision of the Hon'bleSupreme Court while dismissing SLP in the case of Lovely Exports as has been reported as judgment delivered by the CTR at 216 CTR 295:

"Can the amount of share money be regarded as undisclosed income under section 68 of the Income tax Act, 1961? 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.

27. Our attention was also drawn to the decision of the Hon'ble Calcutta High Court while relying on the case of Lovely Exports, in the appeal of CIT, Kolkata-IV Vs ROSEBERRY MERCANTILE (P) LTD., ITAT No. 241 of 2010 dated 10- 01- 2011 has held:

"On the facts and in the circumstances of the case, Ld. CIT(A) 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 record that in the assessment proceedings it was noticed that the assessee company during the year under consideration had brought Rs. 4, 00, 000/- and Rs.20,00,000/- towards share capital and share premium respectively amounting to Rs.24,00, 000/- from four shareholders being private limited companies. The Assessing Officer on his part called for the details from the assessee and also from the share applicants and analyzed the facts and ultimately observed certain abnormal features, which were mentioned in the assessment order. The Assessing Officer, therefore, concluded that nature and source of such money was questionable and evidence produced was unsatisfactory. Consequently, the Assessing Officer invoked the provisions under Section 68/69 of the Income Tax Act and made addition of Rs.24,00,000/-. On appeal the Learned CIT (A) by following the decision of the Supreme Court in the case of Cl. T. vs. M/s. Lovely Exports Pvt. Ltd., reported in (2008) 216 CTR 195 allowed the appeal by holding -that share capital/premium of Rs. 24,00,000/- received from the investors was not liable to be treated under Section 68 as unexplained credits and it should not be taxed in the hands of the appellant company. As indicated earlier, the Tribunal below dismissed the appeal filed by the Revenue. After hearing the learned counsel for the appellant and after going through the decision of the Supreme Court in the case of Cl. T. vs. M/s. Lovely Exports Pvt. Ltd. [supra], we are at one with the Tribunal below that the point involved in this appeal is covered by the said Supreme Court decision in favour of the assessee and thus, no substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed.

28. Our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the case of Commissioner Of Income Tax vs M/s. Nishan Indo Commerce Ltd 20 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 dated 2 December, 2013 in INCOME TAX APPEALNO.52 OF 2001 wherein the Court held as follows:

“The Assessing Officer was of the view that the increase in share capital by RS.52,03,500/- was nothing but the introduction of the assessee's own undisclosed funds/income into the books of accounts of the assessee company. The Assessing Officer accordingly treated the investment as unexplained credit under Section 68 of the Income Tax Act and added the same to the income of the assessee. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) being the First Appellate Authority and contended that the Assessing Officer had no material to show that the share capital was the income of the assessee company and as such the addition made by the Assessing Officer under Section 68 of the Act was wrong. The learned Commissioner of Income Tax (Appeals) after hearing the department and the Assessee Company deleted the addition of Rs. 52, 03,500/- to the income of the assessee company during the Assessment Year in question. The learned Commissioner of Income Tax Appeals found that there were as many as 2155 allottees, whose names, addresses and respective shares allocation had been disclosed. The Commissioner of Income Tax Appeals, further found that the Assessee Company received the applications through bankers to the issue, who had been appointed under the guidelines of the Stock Exchange and the Assessee Company had been allotted shares on the basis of allotment approved by the Stock Exchange. The Assessee Company had duly filed the return of allotment with the Registrar of Companies, giving complete particulars of the allottees. The Commissioner of Income Tax (Appeals) found that inquires had confirmed the existence of most of the shareholders at the addresses intimated to the Assessing Officer, but the Assessing Officer took the view that their investment in the Assessee Company was not genuine, on the basis of some extraneous reasons. The Commissioner of Income Tax (Appeals) took note of the observation of the Assessing Officer that enquiry conducted by the Income Tax Inspector had revealed that nine persons making applications for 900 shares were not available at the given address and rightly concluded that the total share capital issued by the Assessee Company could not be added as unexplained cash credit under 'Section 68 of the Income Tax Act. Moreover, if the nature and source of investment by any shareholder, in shares of the Assessee Company remained unexplained, liability could not be foisted on the company. The concerned shareholders would have to explain the source of their fund. The learned Commissioner on considering the submissions of the, respective parties and considering the materials, found that the Assessing Officer had applied the provisions of Section 68 of the Income Tax Act arbitrarily and illegally and in any case without giving the assessee adequate opportunity of representation and/or hearing. Learned Tribunal agreed with the factual findings of the learned Commissioner and accordingly the learned Tribunal dismissed the appeal of the Revenue and affirmed the decision of the learned Commissioner. Mr. Dutta appearing on behalf of the petitioners cited judgment of the Division Bench of this Court in Commissioner of Income Tax Vs. Ruby Traders and Exporters Limited reported in 236 (2003) ITR 3000 where a Division Bench of this Court held that when 21 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Section 68 is resorted to, it is incumbent on the assessee company to prove and establish the identity of the subscribers, their credit worthiness and the genuineness of the transaction. The aforesaid judgment was rendered in the context of the factual background of the aforesaid case where, despite several opportunities being given to the assessee, nothing was disclosed about the identity of the shareholders. In the instant case, the assessee disclosed the identity and address and particulars of share allocation of the shareholders. It was also found on the facts that all the shareholders were in existence. Only nine shareholders subscribing to about 900 shares out of 6, 12,000 shares were not found available at their addresses, and that too, in course of assessment proceedings in the year 1994, i.e., almost 3 years after the allotment. By an order dated 2nd May, 2001, this Court admitted the appeal on three questions which essentially centre around the question of whether the Appellate Commissioner erred in law in deleting the addition of Rs. 52, 03, 500/- to the income of the assessee as made by the Assessing Officer. We are of the view that there is no question of law involved in this appeal far less any substantial question of law. The learned Tribunal has concurred with the learned Commissioner on facts and found that there were materials to show that the assessee had disclosed the particulars of the shareholders. The factual findings cannot be interfered with, in appeal. We are of the view that once the identity and other relevant particulars of shareholders are disclosed, it is for those shareholders to explain the source of their funds and not for the assessee company to show wherefrom these shareholders obtained funds.”

29. Further, our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the case of Commissioner of Income Tax vs M/s.Leonard Commercial (P) Ltd on 13 June, 2011 in ITAT NO 114 of 2011 wherein the Court held as follows:

“The only question raised in this appeal is whether the Commissioner of Income-tax (Appeals) and the Tribunal below erred in law in deleting the addition of Rs.8,52,000/-, Rs. 91,50,000/- and Rs. 13,00,000/- made by the Assessing Officer on account of share capital, share application money and investment in HTCCL respectively. After hearing Md. Nizamuddin, learned Advocate appearing on behalf of the appellant and after going through the materials on record, we find that all such application money were received by the assessee by way of account payee cheques and the assessee also disclosed the complete list of shareholders with their complete addresses and GIR Numbers for the relevant assessment years in which share application was contributed. It further appears that all the payments were made by the applicants by account payee cheques. It appears from the Assessing Officers order that his grievance was that the assessee was not willing to produce the parties who had allegedly advanced the fund. In our opinion, both the Commissioner of Income-tax (Appeals) and the Tribunal below were justified in holding that after disclosure of the full particulars indicated above, the initial onus of the assessee was shifted and it was the duty of the Assessing Officer to enquire whether those particulars were correct or not and if the Assessing Officer was ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 of the view that the particulars supplied were insufficient to detect the real share applicants, to ask for further particulars. The Assessing Officer has not adopted either of the aforesaid courses but has simply blamed the assessee for not producing those share applicants. In our view, in the case before us so long the Assessing Officer was unable to arrive at a finding that the particulars given by the assessee were false, there was no scope of adding those money under section 68 of the Income- tax Act and the Tribunal below rightly held that the onus was validly discharged. We, thus, find that both the authorities below, on consideration of the materials on record, rightly applied the correct law which are required to be applied in the facts of the present case and, thus, we do not find any reason to interfere with the concurrent findings of fact based on materials on record. The appeal is, thus, devoid of any substance and is dismissed summarily as it does not involve any substantial question of law.

30. So, in the light of the case laws discussed, let us see whether the assessee has been able todischarge the primary onus on it to prove the nature and source of the credit found in the books of the assessee by proving the identity, creditworthiness and genuineness of the parties and the share transaction. In this respect it was brought to our notice that these share subscribing companies were regularly assessed to tax and the payments in questions were made through the bank accounts;and when called upon by the AO during assessment proceedings and also during remand proceedings,the assessee had furnished the requisite documentary evidences to prove the identity, creditworthiness and genuineness of the transaction i.e, the assessee had filed the share applicants’ Audited Financial Statements and Income-tax Acknowledgement for filing of return for A.Y 2014-15 along with the PAN details and the jurisdiction of AO under whom they are assessed and the intimation by the department accepting their respective return of income u/s 143(1) of the Act. Thus, the assessee states that it had discharged its onus to prove the identity of the share subscribers. According to assessee froma perusal of the bank statements filed it is discernible that the transactions i.e. share capital and premium were transferred through proper banking channel and according to assessee it was not the case of the A.O that there was any cash deposit prior to the issue of cheques to the assessee company. Thus the assessee claims that the genuineness of the transaction cannot be disputed. And in order to ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 prove the creditworthiness of the share subscribers, the Ld. A.R drew our attention to audited balance sheet of the share subscribing companies and contended that shareholders possess sufficient capital and reserves out of which share subscription amounts were paid through account payee cheques. So according to assessee, it has discharged the burden of proof casted by section 68 of the Act in respect of share capital & premium it collected. And according to assessee, without finding any infirmity in the documents produced by the assessee in respect of identity, creditworthiness and genuineness of the transaction, no addition u/s 68 of the Act was warranted and the Ld CIT(A) after considering and appreciating inter-alia these facts have deleted the addition.

31. Further we note that the A.O had accepted the share capital subscribed by the six corporate entities at Serial C. The Ld. A.R in this context had drawn our attention to page 52 of the paper-book (supra) wherein the details of the share capital and premium received during this assessment year i.e. AY 2014-15 from twenty two (22) parties are given and the A.O had made only addition in respect of six (6) companies, so the implied inference is that he had accepted the share capital and premium from the rest of the share subscribers i.e. sixteen (16) companies itself, when the assessee has filed the very same documents of other share-subscribers. So according to Ld. A.R, this action of AO in drawing adverse inference against six(6) companies at Serial ‘C’ is per-se is bad being arbitrary and irrational in nature when on the same set of documents, the AO accepted their share capital & premium and did not accept that of companies at Serial C which according to Ld. A.R is bad. Be that as it may be, the main submission of the assessee is that the A.O had on one hand accepted the share capital from these six (6) companies at Serial ‘C’ however did not accept the share premium of Rs.590/- per share and had added only the share premium from them to the total of Rs.7,69,71,900/- which action is erroneous because the AO by accepting share capital of Rs.1,11,46,100/- from these six (6) share applicant companies at Serial ‘C’ have accepted their respective identities, creditworthiness and genuineness of the transaction. So the question before us is whether the AO could have made the addition of share premium of Rs.590/- per share u/s 68 of the Act. In this respect we note an ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 important fact that the AO has accepted the valuation of share premium of Rs.590/- per share because he (AO) has accepted the share premium of Rs. 590/- per share from the rest of sixteen (16) share subscribers. So the action of AO to tax only the share premium of Rs. 590/- per share from the very same six (6) companies [shown under serial “C”] when the share capital from them has been accepted by him cannot be countenanced. Therefore in this facts and circumstances the share premium of Rs. 590/- per share from six (6) companies at serial ‘C’ could not have been added u/s 68 of the Act. However we will deal with it elaborately. We note that the assessee had filed documents before the AO & Ld. CIT(A) and before us to discharge the primary onus upon it to prove the identity, creditworthiness and genuineness of all the six (6) share applicants at Serial ‘C’, viz. (i) copy of ITR acknowledgement for A.Y 2014-15, (ii) copy of bank statement depicting transaction, (iii) copy of share application form, (iv) copy of share allotment letter. Despite that the A.O has drawn adverse inference against these companies because the notice u/s 133(6) could not be served upon them and the field enquiry also could not yield any result, which we have already dealt with (supra) wherein we disapproved the action of AO and upheld the action of Ld CIT(A).

32. As we noted (supra) the AO has made addition of Rs. 7,69,71,990/- i.e. share premium collected by assessee during this AY 2014-15 whereas he has accepted the share capital of Rs. 1,11,46,100/- collected by them and on appeal the Ld. CIT(A) has deleted the same and when we have to adjudicate the legality of the action of Ld. CIT(A), first of all, let us have a look at section 68 of the Act. And we note that the relevant assessment year [A.Y] before us is A.Y 2014-15 wherein we note that a Proviso has been inserted by Finance Act 2012 w.e.f. 01.04.2013 in section 68 of the Act which is applicable for this relevant AYand for ready reference relevant and applicable in this case of section 68 of the Act with the aforesaid proviso is reproduced as under:

Cash Credits Section 68. 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 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 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.

[Provided that where the assessee is a company ( not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless - (a) The person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) Such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

33. We note thateven though the Parliament has inserted by the Finance Act, 2012, w.e.f. 01.04.2013 the proviso to section 68 of the Act, we must bear in mind that there is no change or amendment in the substantive provision of section 68 of the Act wherein if any sum is found by the AO to have been credited in the books of an assessee in the relevant financial year, then when called upon by him (AO) to the assessee to explain the nature and source of the credit; and pursuant to which if the assessee fails to explain to the satisfaction of AO the nature and source of the credit, then the AO may treat the credit as income chargeable to tax. In other words, if the assessee is able to explain the nature and source of the credit to the satisfaction of AO, then AO cannot use this provision to charge the credit appearing in the books of the assessee as income for the purpose of taxation under the Act. It is settled position of law that ‘satisfaction’ contemplated in section 68 of the Act is that of a reasonable prudent person (AO) and not that of an unreasonable person. So, when the AO calls upon the assessee to explain the nature and source of the credit found in assessee’s book, then initial burden is on the assessee to bring material on record to show the nature and source of the credit i.e. identity, creditworthiness and genuineness of the transaction in question. And once an assessee is able to discharges the initial burden which liesupon it, then the onus shifts to the AO to disprove/rebut the material adduced by the assessee to substantiate the nature and source of the credit transaction. And if the AO is not able to disprove/rebut the evidence brought on record by the assessee to prove the nature and source of the credit entry, then section 68 of the Act cannot be ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 used by the AO to charge the credit appearing in the books of the assessee as income for taxation. This position of law we note remains the same even after the insertion of Finance Act 2012, wherein additional requirement/burden is brought in by the Parliament in the cases of an assessee which is a corporate entity (not being a company in which the public are substantially interested) claims to have received share application money, share capital, share premium or any such amount, then with effect from 01.04.2013, while giving the explanation to the AO regarding the nature and source of such sum credited in its books, the share subscribors has to offer the proof of ‘source of source’ of the share application money, share capital, share premium. So, we note that till AY 2012-13, the requirement of law as per section 68 of the Act was that when there is a credit entry in the books, then assessee was required to satisfy the AO in respect of the nature and source (i.e. First source from which it received) and that position of law remains in force till now also, except that after 01.04.2013 (i.e. AY 2013-14) onwards when an assessee company (not public company) if they collect share application money, share capital, share premium then an additional burden is imposed by the first proviso to bring to the notice of AO the “source of source” of the credit entry i.e. source of the share applicant which had been invested in the assessee company. In other words from AY 2013-14 onwards, in the event if an assessee company when called upon by the AO to explain the nature of the credit in its books claims that the credit entry is share application money, share capital and share premium, then the additional requirement of law as per the proviso to section 68 of the Act kicks in and share subscriber should be able to show the source from which it was able to invest in the assessee company. And if the ‘source of source’ of share application/capital/premium is shown to AO and if he is satisfied with the explanation, then the deeming provision will not apply.

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 (ii) On perusal of the paper book, it reveals that the documents are placed at page 73 to 89 of share applicant M/s. Brijbhumi Commosale Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AAECB5701C and CIN U51909WB2011PTC163205 and its Net-worth as on 31.03.2014 (in total)- share capital & reserve is to the tune of Rs. 10,20,58,974/- (PB page 78) and the investment made in the assessee-company including the share premium comes to Rs. 1,27,65,000/-. There is Share Application Form, Bank statement, ITR acknowledgement and financial statement available in the PB-page 73-89. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee- company and the transaction has happened through banking channel. Since the case pertains to AY 2014-15, the share subscribers has to show the source of its fluid for subscribing to the share capital/premium of the assesse company. From the bank statement of M/s Brijbhumi Commosale Pvt Ltd enclosed as page no 84-87 of paper book it is clear that file share subscriber has invested Rs. 1,27,65,000/- in the assessee company on various dates as follows : on 13.12.2013 Rs. 25 lakhs, on 19.12.2013 Rs. 25 lakhs, on 23.12.2013 Rs. 25 lakhs, on 27.01.2014 Rs. 15 lakhs, on 29.01.2014 Rs. 15 lakhs and on 21.02.2014 Rs. 22.65 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit . Thus the company has furnished the details of source of Fluids and has duly filed its financial statements, so the requirement of source of source is satisfied and no adverse view against this share subscriber especially in respect of share premium is warranted.

(iii) On perusal of the paper book, it reveals that the documents are placed at page 90 to 108 of share applicant M/s. Jintan Mercantile Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AACCJ6360P and CIN U51909WB2011PTC164209 and its Net-worth as on 31.03.2014 (in total)- share capital & reserve is to the tune of Rs. 15,78,77,331/- (PB page 95) and the investment made in the assessee-company including the share premium comes to Rs. ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 1,29,99,600/-. There is Share Application Form, Bank statement, ITR acknowledgement and financial statement available in the PB-page 90-108. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2014-15, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assesse company. From the bank statement of M/s. Jintan Mercantile Pvt Ltd enclosed as page no 103-106 of paper book it is clear that the share subscriber has invested Rs.1,29,99,600/- in the assesse company on various dates as follows : on 10.12.2013 Rs. 15 lakhs, on 14.12.2013 Rs. 25 lakhs, on 13.01.2014Rs. 20 lakhs, on 14.01.2014 Rs. 5 lakhs, on 17.01.2014 Rs. 20 lakhs, on 21.01.2014 Rs. 20 lakhs and on 24.01.2014 Rs. 24.996 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Thus the company has furnished the details of source of Funds and has duly filed its financial statements, so the requirement of source of source is satisfied and no adverse view against this share subscriber especially in respect of share premium is warranted.

(iv) On perusal of the paper book, it reveals that the documents are placed at page 109 to 128 of share applicant M/s. Laxmipurtra Tradecornm Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AACCL0187C and ON U51909WB2011 PTC 158663 and its Net-worth as on 31.03.2014 (in total)- share capital & reserve is to the tune of Rs. 13,30,11,167/- (PB page 115) and the investment made in the assessee-company including the share premium comes to Rs. 1,86,09,300/-. There is Share Application Form, Bank statement, ITR acknowledgement and financial statement available in the PB-page 109-128. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2014-15, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assesse company. From the bank statement of M/s. Laxmiputra Tradecomm Pvt Ltd enclosed as page no 123-126 of paper book it is clear that the share subscriber has invested Rs. 1,86,09,300/-in the assessee company on various dates as follows : on 27.02.2014 Rs. 251akhs,on28.02.2014 Rs. 25 lakhs, on 03.03.2014Rs. 65 lakhs, on 04.03.2014Rs. 30 lakhs, on 05.03.2014 Rs. 15 lakhs, on 07.03.2014 Rs. 15 lakhs and on 11.03.2014 Rs.11.093 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Thus the company has furnished the details of source of Funds and has duly filed its financial statements, so the requirement of source of source is satisfied and no adverse view against this share subscriber especially in respect of share premium is warranted.

(v) On perusal of the paper book, it reveals that the documents are placed at page 129 to 146 of share applicant M/s. Richifield Vintrade Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AAFCR3199H and ON U51909WB2011PTC163139 and its Net-worth as on 31.03.2014 (in total)- share capital & reserve is to the tune of Rs. 14,44,31,804/- (PB page 134) and the investment made in the assessee-company including the share premium comes to Rs. 1,80,78,000/-. There is Share Application Form, Bank statement, ITR acknowledgement and financial statement available in the PB-page 129-146. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2014-15, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assesse company. From the bank statement of M/s. Richifield Vintrade Pvt Ltdenclosed as page no 142-144 of ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 paper book it is clear that the share subscriber has invested Rs. 1,80,78,000/- in the assesse company on various dates as follows : on 23.12.2013Rs. 25 lakhs, on 21.02.2014 Rs. 44 lakhs, on 26.02.2014 Rs. 51.75 lakhs, on 27.02.2014 Rs. 30 lakhs and on 05.03.2014 Rs. 30 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit . Thus the company has furnished the details of source of Funds and has duly filed its financial statements, so the requirement of source of source is satisfied and no adverse view against this share subscriber especially in respect of share premium is warranted.

(vi) On perusal of the paper book, it reveals that the documents are placed at page 147 to 164 of share applicant M/s. NewzoneVin trade Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AADCN6885G and ON U51909WB2011PTC163187 and its Net-worth as on 31.03.2014 (in total)- share capital & reserve is to the tune of Rs.7,87,90,688/- (PB page 152) and the investment made in the assessee-company including the share premium comes to Rs. 1,30,00,090/-. There is Share Application Form, Bank statement, ITR acknowledgement and financial statement available in the PB-page 147-164. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2014-15, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assesse company. From the bank statement of M/s. Newzone Vintrade Pvt Ltd enclosed as page no 159-162 of paper book it is clear that the share subscriber has invested Rs. 1,30,00,290/- in the assesse company on various dates as follows : on 03.01.2014 Rs. 25 lakhs, on 06.01.2014 Rs. 25 lakhs, on 07.01.2014 Rs. 20 lakhs, on 09.01.2014 Rs. 251akhs,onl0.01.2014 Rs. 20 lakhs and on 15.01.2014 Rs. 15 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Thus the company has furnished the details of source of Funds and has duly filed its ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 financial statements, so the requirement of source of source is satisfied and no adverse view against this share subscriber especially in respect of share premium is warranted.

ITA 20/Kol/2019[Revenue’s Appeal for AY 2015-16]& ITA 2191/Kol/2019[Assessee’s Appeal for AY2015-16] 41. These are cross-appeals preferred by the Revenue and assessee respectively against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata dated 16.08.2018 for A.Y 2015-16.

43. Ground No.1 and 2 of the Revenue is against the action of the Ld. CIT(A) in deleting the disallowance of Rs.5,65,461/- u/s 56(2)(viib) of the Income Tax Act, 1961 (hereinafter the ‘Act’).

44. In respect of this ground, the A.O held as under: “Disallowance u/s. 56(2) (viib) 7.1. On perusal of the Audited Accounts for the year ended 31/03/2015 submitted by the Assessee Company, it is found that during the year under consideration, it has issued 4,95,800 Nos of Class A Equity Shares of Rs. 10- each and premium Rs. 62/- which translate to Rs. 72 per equity share. The assessee has also issued 6,65,566 Nos of Class B Equity shares of Rs.100/- face value and premium Rs.620/-. The assessee was requested to submit the FMV as per Rule 11UA w.r.t. regarding issues of shares during the year. 7.2 In response to the same, the assessee company filed copy of valuation of its Shares of A & Class B. Ongoing through the same, it is noted that the assessee company had shown book value of Class A & Class B shares of Rs. 71.92/- & Rs.719.21 respectively Therefore the excess amount received by the assessee company per share comes to Rs. 0.08/- (Rs.72.00 - Rs. 71.92) & Rs.0.79/-(Rs.720/- Rs.719.21) respectively. Therefore, as per Section 56(2)(viib) as mentioned above, the excess consideration on the issue of the shares as exceeds the book value comes to Rs.39,664/- [4,95,800 x Rs.0.08/-] & Rs.5,25,797/- [6,65,566 x Rs.0.79/-] totalling to Rs.5,65,461/- as explained above. 7.3 In view of the above, the total disallowance u/s. 56 (2)(viib) comes to Rs.5,65,461/-. The same is accordingly disallowed & added back to the total income u/s. 562)(viib) of the Income Tax Act, 1961 for the A.Y. 2015-16.”

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 45. On appeal by the assessee the Ld. CIT(A) has deleted the addition by holding as under:

I have perused the Submissions of the Assessee and the Assessment Order. The Assessee has issued shares at a price of Rs. 72/- and Rs. 720/- as against the book value of shares of Rs. 71.92/- and Rs. 719.21/: respectively. The difference between the book value and issue value is negligible, therefore, the plea of the assessee had it had approximated the issue price to the nearest rupee is acceptable, in view of the fact that to issue shares at a discount, permission of Government is required. Even in the case of purchase of immovable property at rates below the stamp duty value courts have held that variation of 5 per cent average stamp value is allowable. The Hon'ble Supreme Court in the case of G.B. Gautam v. UOI (1993) 199 ITR 530 had recognized a tolerance limit for pre-emptive purchase of property under chapter XXC at 15% of variation, even though no such band was prescribed in the statute. This ratio of The Apex Court had been followed in Rahul Construction vs. DCIT (2010) 38 DTR 19 (Pune-trib). The Hon'ble ITAT, Hyderabad took the same view in the case of ACIT vs. S. Suvarna Rekha in dated 29.10.2010, in Smt. Pravati Ramani vs. DCIT, ITA No.46/Hyd/2015, dated 13.5.2016, in DCIT vs. S. Venkat reddy, ITA No. 974/Hyd/2010, dated 9.11.2012 and many other cases. The Hon 'ble Kolkata bench of ITAT in the case of ITO vs. LGW Ltd., dated 7.10.2015 had followed the above view of the Hyderabad bench and held that section 50C should not be invoked if difference between stamp duty value and declared consideration is nominal. Again, the Jaipur bench of ITAT in the case of Sita Bai Khetan vs. ITO (2016) 181 TTJ 549 (JP), dated 27.7.201 6 has held that since the difference was within tolerable limits, which is 15% of valuation, as recognized by the Hon’ble Supreme Court in G. E. Gautam u. UOI (1993) 199 1TR 530, no addition should be made. The decision of Sita Bai Khetan has been followed by the Delhi bench of ITAT in the case of Manoj Singhal Us. DCIT, ITA NO.6023/De l/2015, dated 17.10.2016. Taking the same logic in this case where valuation price and transaction price difference is negligible, no addition can be made. In view of the above discussion the ground is Allowed.

“8.1. On perusal of the fixed assets schedule reported in the Tax Audit Report of the assessee company, it is seen that the assessee company had calculated total depreciation of Rs. 13,71,47,711/- (including additional depreciation) as per I.T. Act. 1961. During the assessment proceedings, the assessee was asked to file the details of calculation sheet of depreciation as per I.T. Act. In response to this, the assessee company filed copy of calculation sheet of depreciation on the fixed assets as per Income Tax Act, 1961. On going through the calculation of depreciation of fixed assets having depreciation rate 15%, it is seen that that the assessee had claimed depreciation on electrical installation @ 15% instead @ 10% and also claimed additional depreciation on Electrical Installation. Additional depreciation is provided only to Plant & Machinery which is engaged in manufacturing and production and not on electrical installation. Further, it is seen that, the rate of depreciation on electrical installation is 10% as per I.T. Rules, 1962. Hence, the assessee company had made excess claim of depreciation and additional depreciation of Rs. 68.87,393/- on electrical installation. The detail working of excess claim of depreciation on electrical installation is as under: SI. No. Details of Written down Additio Additions less Total Depreciation assets value on the first ns 180 than 180 days day of the days or (B) previous year more (A) 1 Electrical installation (10%) - Depreciation Electrical 8,33,82,144/- 10,87,31,419/ Rs.1,37,74,785/- at the installation(10 prescribed rate %)

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 as per Income Tax Act Assessee's Electrical Rs. 2,06,62.178/- claim installation (15%) Excess claim Rs. 68,87,393/- of depreciation As per above working notes, it is seen that the assessee had made excess claim of deprecation of Rs. 68,87,393/- 8.2 During the assessment proceedings, the assessee was asked to explain ás to why the excess claim of depreciation on electrical installation of Rs.68,87,393/- should not be disallowed. In response to the same, the A/R of the assessee company stated that the aforesaid electrical installation were categorised under the Plant & Machinery and accordingly claimed depreciation at the rate prescribed for Plant & Machinery. The contention of the A/R of the assessee is not acceptable. As per I.T. Rules, 1962 Electrical Installation has been categorised under the head Furniture & Fixture and prescribed rate of depreciation is 10%. In the I.T. Rules, 1962 assets has been categorised under the head Plant Machinery, Furniture & Fixture, Building etc. In every head, the name of the assets along with rate of depreciation is mentioned. In the head Plant & Machinery, there is no mentioning asset Electrical Installation. As Electrical Installation is categorised under the head Furniture && Fixture, the assessee company is not eligible for claiming the same under the head Plant && Machinery with rate of depreciation @15%. Moreover, additional depreciation cannot be claimed on Electrical Installation as the aforesaid assets is not utilised for Manufacturing and production of article or things. 8.3 In view of the facts above, the excess depreciation of Rs.68,87,393/- claimed by the assessee on electrical installation is now being disallowed and added back to the total income of the assessee company for the A.Y 2015-16.”

The Schedule related to electrical installation given in Tax audit report is reproduced below - Sl. Particulars Date of put On or After Total Modvat Net Addition No. to use before 30.09.2014 Claimed 30.09. 220 b) Electrical - Installations Eledrive & 15.12.2014 - 10,16,25,303 10,16,25,303 22,81,088 9,93,44,215 Autoation(M/C)-K Power Supply System 15.12.2014 44,21,570 44,21,570 2,41,720 41,79, 850 - K Lighting Plant-K 15 25.03.2015 5,90,854 5,90,854 - 5,90,854 Electrical Install-G 21.10.2014 45,14,543 45,14,543 - 45,14,543 Transformer 21.10.2014 1,01,957 1,01,957 - 1,01,957 Total (b) - - 11,12,54,227 11,12,54,227 25,22,808 10,87,31,419 From the schedule it is seen that the Electrical Installations made by the assessee are all related to plant and machinery of the assessee. Therefore, I agree with the contention of the ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 AR that electrical installation has been made in the factory premises of the assessee and would form part of plant and machinery. Therefore, the assessee has rightly claimed depreciation of 25 per cent. Therefore, the ground is allowed.

55. Ground Nos.10 to 12 of the appeal is directed against the order of the Ld. CIT(A) in deleting the addition made u/s 68 of the Act of loan liability of Rs.12.95 crores and Rs.4.50 crores and interest disallowance of Rs. 1,10,22,382/-.

56. We will first discuss the facts pertaining to addition/deletion of Rs. 12.95 crores Brief facts of the case are thatduring the year under consideration, the assessee has taken unsecured loan of Rs. 12,95,00,000/- from twenty two (22) lender companies/Parties. On a show cause notice received from the Assessing Officer to prove the loans taken, the assessee explained that the payments (loans) were received through Bank and the interest outgoing was paid to the lenders by deducting TDS andin support of the identity, creditworthiness and genuineness of the loan lenders of the unsecured loans, the assessee filed the following documents (i) copy of acknowledgement of income tax return, (ii) copy of bank statement and (iii) copy of audited financial statement of the loan creditors.The Assessing Officer taking note of statements recorded by Investigation Wing on oath of Shri Arun Nangalia on 17.09.2015, Shri Ashok Jha recorded on 02.03.2015 and Shri Vijay Kumar Gupta on 03.08.2015 noted that these were entry operators who had admitted to be providing the same through their companies viz M/s Banka Enterprise, M/s Ritman commodities, & M/s Sanwaria Marketing respectively. [AO has reproduced their respective statements in the assessment order from pages 3 to 18] So, according to the Assessing Officer, these lender companies were paper concerns and genuineness of the loan transactions were doubtful, and he issued summons under section 131, which could not be served ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 upon some of the lender Companies; in the above back ground, the AO insisted that the assessee should ensure physical presence of the loan creditors before him; and since the assessee failed to furnish the new addresses, (if there were was any change); and since he (Assessing Officer) has given sufficient time of 21 days to the assessee to produce the loan creditors before him and they failed to appear, he treated the unsecured loan of Rs.12.95 crores as undisclosed cash credit under section 68 of the Act and added the same to the total income of the assessee.Aggrieved by the aforesaid action of AO, the assessee preferred an appeal before the Ld CIT(A) who took note of the following facts as under:

“15.1. The reasons for making the addition by the AO are summarized as under: i) The nexus of three entry operators with three of such loan creditors,namely Mr. Manohar Lai Nangalia/ Mr. Arun Nangalia with BankaEnterrprises Pvt Ltd; Mr. Ashok Jha with Pitman Commodities Pvt Ltdand lastly Mr. Vijay Kumar Gupta with Sanwaria Marketing Pvt Ltd. ii) Reliance was placed on the statement(s) of entry operators obtained bythe income tax department. The statement of Mr. Ashok Jha taken underoath on 02.03.2015, Mr. Vijay Kumar Gupta on 03.08.2015 and Mr.Arun Nangalia on 17.09.2015. iii) Non- appearance of directors of 32 of such loan creditors inresponse to summons issued during the assessment proceedingsu/ s 131 of the Act. iv) Some of the sum monses sent by post were returned unserved. v) The loan creditors are having apparent signage of a JamaKharchi concerns that of no/negligible payment of taxes, no actualassets, having fake addresses and having dummy directors.

“I have perused the Submissions of the AR, the Assessment Order and the case laws on this issue. An analysis of Balance Sheet and Profit and Loss Account of all these companies does show that these companies are not shell companies and have substantial assets in their balance sheets and most of’ these companies are now controlled by one or the other reputed group of Kolkata. The assessee was asked to give evidence in support of the fact that the Jehder companies have substantial genuine .asset and other evidence of genuineness. In reply the AR downloaded the data relating to lender companies from ROC website . The gist given by the AR was cross checked by undersigned and was found to be correct. 15.4 The same is summarized below :

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 1. Ritman commodities Pvt Ltd (1) - The Company is having investment ofRs.42,87 lakhs, in Quoted shares. The company has a bank deposit of Rs.245.56 lakhs with banks. The:,company; pays tax regularly, in this year (FY 14-15) it paid tax of Rs. 4.09 Lac and in next year, it paid tax of Rs. 30.68 lac. The company is regularly lending monies to large and established corporate house. During the year FY 14.-15, it gave: ICD to Usha Breco Ltd., Kirloskar Electric Co, Ltd,, TIL Ltd. Williamson Magor & Co. Ltd, Bengal Topis Ltd, Mukand Ltd. and. so on.The company belongs to Bhaskar Rungta Group a renowned group of Kolkata. The ICD for the assessee was., arranged by renbv/ned corporate finance broker. Apparently .this, company, cant be said, to be a paper company, 2. Nirmaldeep Resources Ltd (2) - The Company is having investment in Quoted shares of Rs.39.97 lakhs. Company keeps substantial balance in bank, at the end of year it is carrying balance of Rs. 123 lacs and of Opening balance of Rs.57 lac during the year,, it also traded in units of MF of over 3 Crore, during the year. The company pays tax regularly, in FY 14-15, it paid tax of Rs.7.20 Lac and in next year, it paid tax of Rs.4.4 Lac. The company is regularly lending monies to large arid established corporate house. The company belongs to ARCH Group(in construction business). The ICD for the assessee was arranged by renonwend corporate finance broker. Apparently tins company' can’t be said to be a paper company during the assessment year.

3. Amexo Investment Pvt Ltd (3) - The Company is having investment in Quoted shares of Rs.8.68 Lakhs. The company is lending loans to large and established corporate house, such as it's loan and advance to shree Guru Carbide& Chemicals Pvt Ltd., Orissa Air Products Pvt Ltd. , Rishi Gases Pvt. Ltd. The company belongs ,to Asiatic Oxygen Group (Surajmull Nagarmull), The ICD for theassessee was arranged by renonwend corporate finance broker. Apparently this company can’t be said to be a paper company during the assessment year.

5. Park Complex Pvt Ltd (5) - The Company is having investment in Quoted shares and land. The company pays tax regularly in this year (FY 14-15) it paid tax of Rs. 3.65Lac and in next year, it paid tax of Rs. 3,571ac. The company is regularly lending monies to large and established corporate house. The company is having Fixed deposit of Rs. 40 Lac with Bank. The company belongs to Agarwal group a leading Pulse ‘and Agro Products trade house. The ICD for the assessee was arranged by renowned corporate finance broker. . In view of the above this company can’t be said to be a paper company during the assessment year.

6. Kuku Mercantile Pvt Ltd (6) - The' Company is having investment in Land & Building. The company is 'having.’ Fixed .deposit of Rs. 100 Lac with Bank. The company pays tax regularly in this year (FY 14-T5) it paid tax of Rs. 16.53 Lac and in next year, it paid tax of Rs.5.19 Lac. The company is regularly lending monies to large and established corporate house, such as Mani Square Ltd and Sunshine Niwas Pvt Ltd arid so on .The company belongs to NPE Jalan Group.’ The ICD for.the assessee ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 was arranged by' renowned, corporate finance broker. . In view of the above this Company can’t be said to be a paper company during the assessment year.

7. Banka. Enterprises. Pvt Ltd- - (7) - The company is having Tangible Fixed .Assets. The company pays-tax regularly in this year (FY 14-15) it paid tax of Rs.36..48 Lac and in next year, it paid tax of Rs.51.16 Lac. The company belongs to Rawalwasia Group. The ICD for the assessee was arranged by renowned corporate finance broker. In view of the above this company can’t be said to be a paper company during the assessment year.

9. Blackcherry Commosale Pvt Ltd (9) - The company pays tax regularly in next year 2015-16, it paid tax. of Rs.66,19 . The company is regularly lending monies to large and established corporate house. The Company is Trading in Jute having turn over of around 13 Cr. company keep balance of Rs. 107 lac in bank. The company belongs to Sarda Group having interest in jute trading and manufacturing.. The ICD for the assessee was arranged by renowned corporate finance broker. In view of the above this company can’t be said to be a paper company during the assessment year.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 13. Gulmohar Mercantiles Pvt Ltd (13) - The Company is having Fixed Assets (Rs.31.11 lakhs') & Properties. The company, pays tax regularly in. this year (FY 14- 15) it paid tax of Rs.22.88Lac and in next year, it paid tax of. Rs.49.81 Lac, The company belongs to JAYA Biscuits Group. The ICD for the assessee was arranged by renowned corporate finance broker.

14. Jagadhatri Foods Pvt Ltd (14) - The Company is having Fixed Assets. The Company is having fixed deposits with bank. The company pays tax regularly in this year (FY 14-15) it paid tax of Rs.5.99Lac and in next year, it paid tax of Rs.7.321ac. The company belongs to JAYA Biscuits Group. The ICD for the assessee was arranged by renowned corporate finance broker.

15. Jainco Projects (India )Ltd (15) - The Company; is having Fixed Assets of Rs.416 lakhs. Land holding is of Rs.75.30 lakhs. The Company is having investment in Quoted shares(Rs.56.56 lakhs) and fixed deposits with bank of Rs. 17.95 lakhs. The company belongs to Bhansali group engaged in infrastructure. The ICD for the assessee was arranged by renowned corporate finance broker.

21. Padmawati Vinimay Pvt Ltd (21) - The Company is having investment in Quoted shares of Rs.18 lakhs and Mutual funds (Rs. 68 lakhs). The company belongs to Diamond Group, a reputed large builder of Kolkata. The ICD for the assessee was arranged by renowned corporate finance broker.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 22. Park Complex Pvt. Ltd (22) - The company is having hold Fixed assets of over Rs. 500 lac. The Company is having investment in land and fixed deposit in bank of Rs.40 lakhs. The company belongs to -Agarwal group having interest in Pulse & Agro Products trading The ICD for the assessee was arranged by renowned corporate finance broker.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 parties and the Assessing Officer had asked the assessee to prove the identity, creditworthiness and genuineness of the loan transactions with these twenty two (22) parties. In pursuance of the show-cause notice, the assessee brought to the notice of the Assessing Officer that the loans have been received through banking channel and the interest outgoing was paid by the assessee after duly deducting TDS. In support of the identity, creditworthiness and genuineness of the lenders, the assessee had filed the following documents:- (i) Copy of income-tax return; (ii) Copy of bank statement; & (iii) Copy of audited financial statement of the loan creditors.

66 Additionally it was brought to our notice that Ld. CIT(A) has accepted the loan Additionally it was brought to our notice that Ld. CIT(A) has accepted the loan Additionally it was brought to our notice that Ld. CIT(A) has accepted the loan obtained from one (1) party i.e. M/s Sanwaria Marketing Pvt. Ltd. in AY 2016 obtained from one (1) party i.e. M/s Sanwaria Marketing Pvt. Ltd. in AY 2016 obtained from one (1) party i.e. M/s Sanwaria Marketing Pvt. Ltd. in AY 2016-17. From the balance 8 parties i.e. [ From the balance 8 parties i.e. [22 parties less 13 parties accepted by AO and 1 party 13 parties accepted by AO and 1 party accepted by Ld. CIT(A)] no loan was accepted by A ] no loan was accepted by AO in AY 2016-17. 17.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Promod Agarwal has transferred only twelve (12) companies not fifteen (15) companies to him, details are given at page nos. 15 and 16 of the assessment order. From the statements of Shri Arun Nangalia, we note that nowhere the name of M/s. Banka Enterprises Pvt. Ltd. or its director’s name or their relatives are found. Therefore, we wonder as to how the AO has connected Shri Nangalia with M/s. Banka Enterprises Pvt. Ltd., Therefore, the finding of the AO that M/s. Banka Enterprises Pvt. ltd. was the concern of the entry operator Shri Monoharlal Nangalia/Shri Arun Nangalia are perverse and the Ld. CIT(A) has rightly deleted the addition. And since the assessee was able to show that the assessee received Rs. 50 lacs in this assessment year and the assessee had paid interest on it after deducting TDS and the assessee has squared up the loan by repaying it in the next AY 2016-17 and the AO was pleased accept the loan from this lender company and he allowed deduction of interest expenditure in respect of M/s. Banka Enterprises Pvt. Ltd. in AY 2016-17. Thus, the AO has accepted the genuineness of the loan transaction in AY 2016-17. And we note that M/s. Banka Enterprises Pvt. Ltd. in AY 2015-16, has shown turnover of Rs 1,46,63,807/- and profit of Rs 1,10,39,740/- and income tax of Rs 36,47,866/-. Therefore, the Ld. CIT(A) has rightly deleted the addition of Rs. 50 lakhs and interest of Rs.1,02,329/- and moreover, we note that the AO has not personally summoned these entry operators before him and has recorded their statements during the assessment proceedings. If the AO had information that these entry operators have some connection with the lender companies named hereinabove, then he should have summoned them and elicited the oral testimony and other materials against the lender companies and thereafter gave opportunity to the assessee to cross examine the makers of the incriminating statement against the assessee/lender companies which AO has not done, therefore, this statement could not have been relied upon by the AO for drawing adverse inference against the loan taken from the lender companies. For that we rely upon the decision of the Hon’ble Supreme Court in the case of Andaman Timer Industries Vs. CCE reported in (2015) 281 CTR 241 (SC) wherein it has been held that “failure to give the assessee the opportunity to cross examine witness, whose statements are relied upon, results in breach of principles of Natural Justice. It is a 62 I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17 serious flaw which renders the order a nullity serious flaw which renders the order a nullity”. Further, the Hon’ble Apex Court in ”. Further, the Hon’ble Apex Court in the case of CIT Vs. Odeon Builders Pvt. ltd. (Civil Appeal No. 9604 the case of CIT Vs. Odeon Builders Pvt. ltd. (Civil Appeal No. 9604 the case of CIT Vs. Odeon Builders Pvt. ltd. (Civil Appeal No. 9604-9605 of 2018) dated 21.08.2019 held tha dated 21.08.2019 held that addition/disallowance cannot be made solely on third t addition/disallowance cannot be made solely on third party information without subjecting it to further scrutiny and denying the party information without subjecting it to further scrutiny and denying the party information without subjecting it to further scrutiny and denying the opportunity opportunity opportunity of of of cross cross cross examination examination examination of of of the the the third third third party party party renders renders renders the the the addition/disallowance bad in law. Therefore, the statement addition/disallowance bad in law. Therefore, the statements s with the legal infirmities as discussed could not have been relied infirmities as discussed could not have been relied by the AO for drawing by the AO for drawing adverse inference against the lender companies inference against the lender companies, therefore, the Ld. CIT(A) has rightly over has rightly over- turned the decision of AO on this issue turned the decision of AO on this issue. Further, before us, the details of , before us, the details of the unsecured loans taken by the assessee; and the interest given to them by the unsecured loans taken by the assessee; and the interest given to them by the unsecured loans taken by the assessee; and the interest given to them by the assessee can be seen as well as the fact that assessee company has squared up/ assessee can be seen as well as the fact that assessee company has squared up/ assessee can be seen as well as the fact that assessee company has squared up/ repaid the loan which facts are discernable from the chart below. repaid the loan which facts are discernable from the chart below.

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17 ,I.T.A. No.20/Kol/2019, I.T.A. No.2191/Kol/2018 & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 74. From a perusal of the chart (supra) we note that out of the total thirty-three (33) lender companies, which had given loans to the assessee, other than the loan taken from M/s. Richmen Barter Limited shown at item number 29, all other loan amounts have been repaid which is evident from the chart. Thus we note that all the lender companies from which all the assessee has taken loan this year and also carry forwarded loan except Rs.20,00,000/- of M/s. Richmen Barter Pvt. Limited [which does not pertain to this year and it is noted that it is the carry forwarded loan/opening loan of this year], the assessee had repaid / squared up the entire loan taken through banking channel and moreover the interest given by the assessee to these lenders are also after deduction of TDS. And as discussed all these lender companies are income tax assesses and regularly filing their respective ITR’s and in the aforesaid facts discussed, the identity and genuineness of the lenders as well as the loan cannot be doubted.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 80. Next addition the AO resorted to was in respect of Interest expense claimed by assessee to the tune of Rs 1,10,22,742/- which was paid to the lender parties which consists of parties from which loan of Rs 12.95 crores was obtained, as well as from parties to whose opening/closing balance of loan was added back and following three ( 3) parties from whom no fresh loan was obtained and opening balance was repaid in full:

Sl. Name of company CIN PAN ITR filed for No. AY 2015-16 1. PADMAVATI U51109WB2008PTC121366 AAECP5079M Yes VINIMAY PVT. LTD.

2. PNR COMPLEX PVT U45400WB2007PTCl15883 AAECP2655D Yes LTD 3. MONET SECURITIES UO1111WB1994PTC064149 AABCM7058A Yes PVT LTD Sl. Name of Net worth (Rs.) Op. balance Amount repaid Closing No. company of loan as on balance of 01.04.2014 Loan as on (Rs.) 31.03.2015 (Rs.) 1. PADMAVATI 5,59,78,767 1,00,00,000 1,00,00,000 - VINIMAY PVT. LTD.

2. PNR COMPLEX 9,36,24,266 50,00,000 50,00,000 - PVT LTD 3. MONET 55,24,81,000 1,00,00,000 ¤ 1,00,00,000 - SECURITIES PVT LTD

Sl. Name of company Interest (Rs.) TDS (Rs.) No. 1 RITMAN COMMODITIES PVT LTD 83,288 8,329 2. R.D.FANLTD 3,96,712 39,671 3. PARK COMPLEX PVT.LTD. 2,83,068 28,307 4. PAWAN PUTRA SECURITIES PVT.LTD 14,384 1,438 5. MOHIT BAKERS PYT.LTD 1,19,178 11,918 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 6. KUKU MERCANTILE PYT.LTD 1,66,028 16,602 7. JAGADHATRI FOOD LTD. 4,20,549 42,056 8. GULMOHAR MERCANTILE PVT. LTD. 3,86,302 38,630 9. CRESCENTHEMUM VYAPAAR PVT.LTD. 18,904 1,890 10. BANKA ENTERPRISES PVT.LTD 1,02,329 10,233 11. RITESH ROAD LINKS PVT.LTD. 55,479 5,548

12. S K DUDHORIA HOLDINGS PYT.LTD. 31233 3123 13. SHROFF CHEMICALS PVT. LTD 1,02,329 10,233 14. SWARAN FINANCIAL PVT.LTD. 3,42,329 34,233

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 83. We note that the Assessing Officer has added interest expenses claimed by the assessee on the un-secured loan it had takento the tune of Rs.1,10,22,742/-from thirty-one (31) lender parties (supra). Since we have already taken note that the loans have been received by the assessee and later repaid to the parties concerned through banking channel, the loan transaction is to be presumed to be genuine unless the facts noted above are found to be wrong on the basis of evidence, which is not the case of Assessing Officer or the grounds of appeal of the Revenue raised before us does not assail the same. We have already taken note of the lenders identity and creditworthiness i.e. of the twenty-two (22) lenders of this assessment year and the other eleven (11) totalling thirty-three (33) lender companies details have been discussed by the Ld. CIT(Appeals), which action we have considered and upheld the action (supra). So the question of their identity and creditworthiness cannot be doubted. So the question of disallowing interest payment on such loans on which TDS has also been duly deducted cannot be countenanced.And coming to the three(3) more parties from whom no fresh loan was obtained, we note the three parties were (i) M/s. Padmavati Vinimay Pvt. Limited, (ii) M/s PNR Complex Pvt. Limited and (iii) M/s. Monet Securities Pvt. Limited from which lender companies the assessee has taken loans of Rs.1,00,00,000/-, Rs.50,00,000/- and Rs.1,00,00,000/- respectively and we find that these loans were brought forward loans as on 01.04.2014 and which has been squared up /repaid by the assessee in this assessment year itself, which fact is evident by perusal of pages 178 to 188 of the paper book and it is noted that there was no fresh loan from these three parties and we note that the opening loan with interest due to them were repaid in this year through banking channel after duly deducting TDS. So the question of disallowing the interest given by the assessee to these three (3) parties also cannot be accepted and we are of the opinion that the Ld. CIT(Appeals) rightly deleted the same.

84. Therefore, in the facts and circumstances discussed (supra) the Ld. CIT(Appeals) has rightly deleted the addition of interest expenditure of Rs.1,10,22,742/- which does not require any interference. Therefore, we confirm the action of the Ld. CIT(Appeals) and dismiss the appeal of the Revenue. 70 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17

ITA 2191/Kol/2018(AY 2015-16) [Assessee’s Appeal]

“17.1 Following facts emerges from the Order of the AO- (a)The AO has made addition in respect of share capital raised from 14 entities. (b) Most of these entities were appearing in the share subscriber list for A.Y. 2014-15 where the summons sent to these parties Return unserved, c) None of these parties were found to be existing at the addresses given in the field enquiry made by the Department. d)Even in A.Y. 2015-16 the AO had issued summons to these 14 allottees. However, these 14 allottees did not comply with the summons u/s. 131. e)The AO also asked the assessee to produce these Directors before the AO, but the Assessee did not produce them before the A.O. f) The AO has also noted that many of the summons u/s. 131 were returned back to office and this fact was also communicated to the AR of the Assessee, but till the date of passing of the order the assessee did not furnish explanation regarding the same. Even new addresses of these concerns were not provided. 17.2 The Ld. AR in his reply before the undersigned has emphasized that all these companies are filing Income Tax Return, the share application money has been received through cheque and source of fund for the investment made by the allottees was also provided thereafter. The AR also emphasized that even though these companies did not appear in response to 131 summons yet all the details of these companies were file with the AO. The Ld. AR has quoted various case laws.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 17.3 I have perused the Submissions of the assessee and the Assessment Order. In this case - i) There was no compliance with summons u/s. 131 of the Income Tax Act and the Directors of the applicant company failed to appear personally. ii) The Inspector of the Department did not find these companies existing at the addresses. iii) The assessee did not take any step to produce these parties before the AO. iv) It is seen that the assessee has not paid any dividend to these investors even though the shares have been subscribed at huge premium. Nor are these investors belonging to any reputed business group.(unlike in case of loan taken by the assessee) v) Amongst the list of 14 companies, 7 companies are appearing in the listof 16794 shell companies published by various Government agencies. These companies are- a) Brijbhumi Commosale Pvt. ltd b) Waltaz Commodities Pvt. Ltd. c) Pragati Complex Advisory Pvt. Ltd. d) Newzone Vintrade Pvt. Ltd. e) Mangalkamana Pvt. Ltd. f) Jintan Mercantile Pvt. Ltd. g) Needful Projects Advisory Pvt. Ltd. It would be pertinent to mention that taking of share capital is different footing compared to taking of unsecured loan from possibly dubious sources. The burden of proof in case of Share capital is greater as in share capital case the assessee can’t argue. that some genuine Investor might have routed his unaccounted wealth to the assessee through shell company. 17.3 Analysis of case laws on the issue-

1. 1. In the case of Nova Promoters and Fin Lease Pvt. Ltd 342 ITR 169 Delhi, The allottee company had availed entries from professional name lenders, there was no response to Summons issued to the subscribers. The addition made was upheld.

2. In the case of Sophia Finance Ltd. [1994] 205 ITR 98/70 Taxman 69 (Delhi), hon. Court opined that section 68 is very widely worded and an Income-tax Officer is not precluded from making an enquiry as to the true nature and source thereof even if the same is credited as receipt of share application money. Mere fact that the payment was received by cheque or that the applicants were companies, borne on the file of Registrar of companies were held to be neutral facts and did not prove that the transaction was genuine.

3. Hon'ble Apex Court in the case of Navodaya Castle (P) Ltd vs CIT reported in (2015) 56 taxmann.com 18 (SC) has held that mere filing of certificate of incorporation, PAN were not sufficient for the purpose of identification of subscriber company especially when there was material to show that subscriber was a paper company and not a genuine investor.

4. Hon. Delhi High Court in the case of CIT V Empire Builtech P Ltd 361 ITR 258 (Del), has held that when Asst. Year 2009-10 assessee does not produce evidence or tries to avoid the 73 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 appearance before the Assessing authority it necessarily creates difficulties and prevents ascertainment of the truth and correct facts as the Assessing Officer is denied the advantage of the attendance or factual assertion by the assessee before him. If an assessee deliberately and intentionally fails to produce evidence before the Assessing Officer with the desire to prevent enquiry or investigation an adverse opinion should be drawn. The assessee had not discharged the initial onus to establish the identity, creditworthiness of the share applicants and the genuineness of the transactions. The additions made by the Assessing Officer were justified and sustainable.

6. In the case of CIT v. N.R. Portfolio (P.) Ltd. [2013] 214 Taxman 408/29 taxmann.com 291 (Delhi) wherein a similar addition under Section 68 in respect of receipt on account of share application money was set aside by the CIT and upheld by the Tribunal. The High Court restored the order of addition allowing the appeal of the revenue. The High court also held as follows: "This court is conscious of a view taken in some of the previous decisions that the assessee cannot be faulted if the share applicants do not respond to summons, and that the state or revenue authorities have the wherewithal to compel anyone to attend legal proceedings. However, that is merely one aspect. An assessee's duty to establish that the amounts which the AO proposes to add back, under Section 68 are properly sourced, does not cease by merely furnishing the names, addresses and PAN particulars, or relying on entries in a Registrar of Companies website. One must remember that in all such cases, more often than not, the company is a private one, and share applicants are known to it, since they are issued on private placement, or even request basis. If the assessee has access to the share applicant's PAN particulars, or bank account statement, surely its relationship is closer than arm's length. Its request to such concerns to participate in income tax proceedings, would, viewed from a pragmatic perspective, be quite strong, because the next possible step for the tax administrators could well be re-opening or such investor's proceedings. That apart, the concept of "shifting onus" does not mean that once certain facts are provided, the assessee's duties are over. If on verification, or during proceedings, the AO cannot contact the share applicants, or that the information becomes unverifiable, or there are further doubts in the pursuit of such details, the onus shifts back to the assessee. At that stage, if it falters, the consequence may well be an addition under Section 68. 17.4 In the instant case the assessee has failed to prove the identity of these 14 share capital allottees as they were not found at the addresses given, further director of these companies did not attend. The assessee could not prove the capacity of these companies to subscribe to the share capital as it could not demonstrate that these companies have some substantial tangible asset in their balance sheet. Further the genuineness of the allottees also could not be ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 established. 7 of them are appearing in the list of shell companies. None of the companies are owned or controlled by any known business group. 17.5 Assessment proceedings are in the nature of civil proceedings and additions are made on the basis of preponderance of probability. Theory of preponderance of probability mean that it is more likely that the share capital has been raised from dubious sources and it is more likely that the assessee's own money has been routed through these dubious companies. Assessment proceedings are in the nature of civil proceedings and it does not require proof beyond doubt. It is not a case of dacoity or murder where proof beyond doubt is required. In view of the facts enumerated above and case laws discussed above, I am convinced that the AO has rightly added the share capital and share premium to the total income of the assessee. Therefore, addition made by the A.O. Rs.8,94,96,000/- on account of share capital money received from companies is hereby upheld.”

Name of the Party Face value @ 100/- Premium @ Total Amount 620/- received 1. KA Vanijya Pvt Ltd 3,57,500/- 22,16,500/- 25,74,000/- 2. Ontime Securities Pvt 1,07,100/- 6,64,020/ 7,71,120/- Ltd 3. Blue Sky Sales Pvt 5,35,700/- 33,21,340/- 38,57,040/- Ltd Total 10,00,3000 62,01,860/- 72,02,160/-

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17

(i) On perusal of the paper book, it reveals that the documents are placed at (i) On perusal of the paper book, it reveals that the documents are placed at (i) On perusal of the paper book, it reveals that the documents are placed at page 170 to 190 of share applicant M/s. BrijbhumiCommosale Pvt Ltd which is a page 170 to 190 of share applicant M/s. BrijbhumiCommosale Pvt Ltd which is a page 170 to 190 of share applicant M/s. BrijbhumiCommosale Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AAECB5701C Private Limited Company, and which has Permanent Account No. AAECB5701C Private Limited Company, and which has Permanent Account No. AAECB5701C and CIN U51909WB2011PTC163205 and its Net U51909WB2011PTC163205 and its Net-worth as on 31.03.2015 (in worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs. 10,21,11,470/ share capital & reserve is to the tune of Rs. 10,21,11,470/ share capital & reserve is to the tune of Rs. 10,21,11,470/- and the investment made in the assessee assessee-company including the share premium comes to company including the share premium comes to ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Rs.66,60,000/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of BrijbhumiCommosale Pvt Ltd enclosed at page no 186-188 of paper book it is clear that the share subscriber has invested Rs. 66,60,000/- in the assessee company onvarious dates as follows : on 16.08.2014 Rs. 33.30 lakhs, on 29.01.2015 Rs. 4.30 lakhs, on 30.01.2015, Rs. 7.00 lakhs and on 03.02.2015Rs. 22 lakhs through banking channel. From perusal of bank statement itis evident that there was no cash deposit. Confirmation of its source is provided in Page 189 of Paper book.

(ii) On perusal of the paper book, it reveals that the documents are placed at page 264 to 283 of share applicant M/s. Pragati Complex Advisory Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AAGCP0516K and CIN U74140WB2011PTC162259 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs.7,58,63,413/- and the investment made in the assessee-company including the share premium comes to Rs.75,99,600/-. The payment has been made through banking channel and this share applicant has made the transaction through banking channel through cheque. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee- company and the 81 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers have to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of Pragati Complex Advisory Pvt Ltd enclosed at page no 280-281 of paper book it is clear that the share subscriber has invested Rs. 75,99,600/- in the assessee company as follows : on 16.08.2014 Rs. 37.998 lakhs and on 03.02.2015Rs. 37.998 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 282 of Paper book.

(iii) On perusal of the paper book, it reveals that the documents are placed at page 312 to 332 of share applicant M/s. RichifiieldVintrade Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AAFCR3199H and CIN U51909WB2011PTC163139 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs. 14,44,43,237/- and the investment made in the assessee-company including the share premium comes to Rs.94,32,000/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. RichifieldVintrade Pvt Ltd enclosed as page no 328-330 of paper book it is clear that the share subscriber has invested Rs. 94,32,000/- in the assessee company on various dates as follows : on 21.08.2014 Rs. 47.16 lakhs and on 29.01.2015Rs. 47.16 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 331 of Paper book.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 (iv) On perusal of the paper book, it reveals that the documents are placed at page 352 to 374 of share applicant M/s. NewzoneVintrade Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AADCN6885G and CIN U51909WB2011PTC163187 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs.7,89,82,848/- and the investment made in the assessee-company including the share premium comes to Rs.67,83,120/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers have to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. NewzoneVintrade Pvt. Ltd. enclosed as page no 370-372 of paper book it is clear that the share subscriber has invested Rs. 67,83,120/- in the assessee company on various dates as follows : on 21.08.2014 Rs. 33.9156 lakhs and on 11.03.2015 Rs. 33.9156 lakhsthrough banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 373 of Paper book.

(v) On perusal of the paper book, it reveals that the documents are placed at page 405 to 428 of share applicant M/s. LaxmipurtraTradecomm Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AACCL0187C and CIN U51909WB2011PTC158663 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs. 13,31,01,760/-and the investment made in the assessee-company including the share premium comes to Rs.97,09,200/-. There is Bank statement; ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. Laxmipurtra Tradecomm Pvt Ltd enclosed as page no 424-426 of paper book it is clear that the share subscriber has invested Rs. 97,09,200/- in the assessee company on various dates as follows : on 21.08.2014 Rs. 48.54 lakhs, on 20.01.2015 Rs. 30.00 lakhs and on 21.01.2015Rs. 18.546 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 427 of Paper book.

(vi) On perusal of the paper book, it reveals that the documents are placed at page 429 to 449 of share applicant M/s. Jintan Mercantile Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AACCJ6360P and CIN U51909WB2011PTC164209 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs. 15,78,80,606/- and the investment made in the assessee-company including the share premium comes to Rs.67,82,400/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. Jintan Mercantile Pvt Ltd enclosed as page no 445-447 of paper book it is clear that the share subscriber has invested Rs. 67,82,400/- in the assessee company on various dates as follows : on 16.08.2014Rs. 33.912 lakhs, on 20.01.2015Rs. 20.00 lakhs and on 27.01.2015Rs. 13.912 lakhs through banking channel. From perusal of bank statement ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 it is evident that there was no cash deposit. Confirmation of its source is provided in Page 448 of Paper book.

(vii) On perusal of the paper book, it reveals that the documents are placed at page 191-224 of share applicant M/s. Waltaz Commodities Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AABCW2145G and CIN U74999WB2012PTC174119 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs.39,78,13,925/- and the investment made in the assessee-company including the share premium comes to Rs.48,96,000/-. There is Bank statement, ITR acknowledgementand financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. Waltaz Commodities Pvt Ltd enclosed as page no 194-198 of paper book it is clear that the share subscriber has invested Rs. 48,96,000/- in the assessee company on various dates as follows : on 22.08.2014 Rs. 6.48 lakhs, on 25.08.2014Rs. 18.00 lakhs and on 19.01.2015Rs. 24.48 lakhsthrough banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 193 of Paper book.

(viii) On perusal of the paper book, it reveals that the documents are placed at page 284 to 311 of share applicant M/s. Ojaswini Retailers Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AABCO6308D and CIN U51909WB2012PTC175896 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs.39,52,55,411/- and the investment made in the assessee-company including the share premium comes to Rs.63,36,000/-. There is ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. Ojaswini Retailers Pvt Ltd enclosed as page no 287-290 of paper book it is clear that the share subscriber has invested Rs. 63,36,000/- in the assessee company on various dates as follows : on 22.08.2014 Rs. 22.68 lakhs, on 25.08.2014 Rs. 9.00 lakhs , on 19.01.2015 Rs. 31.66 lakhs and on 05.02.2015 Rs. 0.02 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 286 of Paper book.

(ix) On perusal of the paper book, it reveals that the documents are placed at page 375 to 404 of share applicant M/s. Martgalkarnna Merchants Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AAHCM2337E and CIN U51909WB2011PTC163124 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs. 14,84,65,406/-and the investment made in the assessee-company including the share premium comes to Rs.81,61,200/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Mangalkamna Merchants Pvt Ltd enclosed as page no 400-402 of paper book it is clear that the share subscriber has invested Rs. 81,61,200/- in the assessee company on various dates as follows : on 14.08.2014 Rs. 40.806 lakhs and on 29.01.2015 Rs. 40.806 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 403 of Paper book.

(x) On perusal of the paper book, it reveals that the documents are placed at page 469 to 488 of share applicant M/s. Needful Projects Advisory Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AADCN4461C and CIN U74999WB2010PTC153183 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs.21,93,10,572/-and the investment made in the assessee-company including the share premium comes to Rs.78,62,400/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of sWe subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. Needful Projects Advisory Pvt Ltd enclosed as page no 486 of paper book it is clear that the share subscriber has invested Rs. 78,62,400/- in the assessee company on various dates as follows : on 16.08.2014 Rs. 39.312 lakhs, on 04.02.2015 Rs. 10.00 lakhs and on 07.02.2015 Rs. 29.312 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 487 of Paper book.

(xi) On perusal of the paper book, it reveals that the documents are placed at page 489 to 504 of share applicant M/s. Ramdot Suppliers Pvt Ltd which is a Private Limited ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Company, and which has Permanent Account No. AAFCR1735B and CIN U51909WB2010PTC154877 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs. 13,29,43,509/- and the investment made in the assessee-company including the share premium comes to Rs. 80,71,920/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. Ramdot Suppliers Pvt Ltd enclosed as page no 502 of paper book it is clear that the share subscriber has invested Rs. 80,71,920/- in the assessee company on various dates as follows : on 12.08.2014 Rs. 40.359 lakhs and on 09.02.2015 Rs. 40.359 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 503 of Paper book.

(xii) On perusal of the paper book, it reveals that the documents are placed at page 225 to 263 of share applicant M/s. KA Vanijya Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AADCK9958K and CIN U52100WB2010PTC145646 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs.2,11,12,588/- and the investment made in the assessee-company including the share premium comes to Rs.25,74,000/-. There is Bank statement, ITR acknowledgement and financial statement. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. KA Vanijya Pvt Ltd enclosed as page no 260-261 of paper book it is clear that the share subscriber has invested Rs. 25,74,000/- in the assessee company on various dates as follows : on 22.08.2014 Rs. 12.87 lakhs and on 17.01.2015Rs. 12.87 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 230 of Paper book.

(xiii) On perusal of the paper book, it reveals that the documents are placed at page 333 to 351 of share applicant M/s. Ontime Securities Pvt Ltd which is a Private Limited Company, and which has Permanent Account No. AABC05525C and CIN U67120WB2011PTC168760 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs. 11,03,93,680/- and the investment made in the assessee-company including the share premium comes to Rs.7,71,120/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. Ontime Securities Pvt Ltd enclosed as page no 335-336 of paper book it is clear that the share subscriber has invested Rs. 7,71,120/- in the assessee company on various dates as follows : on 18.08.2014 Rs. 3.856 lakhs and on 10.03.2015 Rs. 3.856 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 333-334 of Paper book.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 (xiv) On perusal of the paper book, it reveals that the documents are placed at page 450 to 468 of share applicant M/s. BlueSky Sales Pvt Ltd which is a Private Limited Company, and which hasPermanent Account No. AAECB1131C and CIN U51909WB2010PTC148059 and its Net-worth as on 31.03.2015 (in total)- share capital & reserve is to the tune of Rs. 18,36,69,993/- and the investment made in the assessee-company including the share premium comes to Rs.3 8,57,040/-. There is Bank statement, ITR acknowledgement and financial statement available. This share applicant regularly filed Income Tax Return (ITR) and it has filed its Bank statement. Financial statement and source of fund of share subscriber has been duly filed. Thus we note that the assessee had duly discharged its onus to prove the identity of the share applicants by adducing PAN as well as income-tax returns. The financial statement shows that the share applicant had enough funds to invest in the assessee-company and the transaction has happened through banking channel. Since the case pertains to AY 2015-16, the share subscribers has to show the source of its fund for subscribing to the share capital/premium of the assessee company. From the bank statement of M/s. BlueSky Sales Pvt Ltd enclosed as page no 335-336 of paper book it is clear that the share subscriber has invested Rs. 38,57,040/- in the assessee company on various dates as follows : on 18.08.2014 Rs. 19.285 lakhs and on 10.03.2015 Rs. 19.285 lakhs through banking channel. From perusal of bank statement it is evident that there was no cash deposit. Confirmation of its source is provided in Page 333-334 of Paper book.

ITA 115/Kol/2020for(AY 2016-17) (Revenue’s Appeal)

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 100. This is an appeal preferred by the Revenue against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata dated 18.11.2019 for A.Y 2016- 17. Though the Revenue has raised 29 grounds of appeal, according to the Ld. CIT- DR, the main grievance of the Revenue is against the action of the Ld. CIT(A) in deleting the addition of Rs.11,40,00,000/- and disallowance of interest claimed to be paid by assessee to the lenders to the tune of Rs 31,99,351/-.

Sl. No. Name of the concern Managed & controlled by the Entry operator 1 M/s Ujjwal Cloth Marketing Pvt. Ltd. Ankit Bagri 2 M/s. Trimurti Vincom Pvt. Ltd. Pranaw Kumar Modi 3 M/s. Top Class Logistic Pvt. Ltd., Akash Agarwal 4 M/s. Sanwaria Marketing Pvt. Ltd. Vijay Kumar Gupta 5 M/s. Gonedawala Developers Pvt. Ltd. Prawesh Beria 6 M/s. Dhanviradhi Suppliers Pvt. Ltd., Shankar Khetan 7 M/s. Brijwasi Vinimay Pvt. Ltd. Jivendra Mishra 8 M/s. Anjani Tradelinks Pyt Ltd. Pranaw Modi

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 1) M/s. Ujjwal Cloth Marketing Pvt. Ltd., 2) M/s. Trimurti Vincom Pvt. Ltd., 3) M/s. Top Class Logistic Pvt. Ltd., 4) M/s. Tigerhill Vanijya Pvt. Ltd 5) M/s. Ritman Commodities Pvt. Ltd., 6) M/s. Sanwaria Marketing Pvt. Ltd., 7) M/s. Gonedawala Developers Pvt. Ltd., 8) M/s. Dhaaviradni S:ppliers Pvt. Ltd., 9) M/s. Brijwasi Vininay Pvt. Ltd. and 10) M/s. Anjani Tradelinks Pvt. Ltd.

Sl. Name of the party Amount of loan Interest paid during No. received during the F.Y.2015-16 year 1. M/s. Ujjwal Cloth Marketing Pvt. Ltd. Rs.50 lacs Rs.60,109/- 2 M/s. Trimurti Vincom Pvt. Ltd. Rs.15 lacs Rs.38,852/- 3 M/s. Top Class Logistic Pvt. Ltd., Rs.25 lacs Rs.68,306/- 4 M/s. Sanwaria Marketing Pvt. Ltd. Rs.4.5Crore Rs.5,02,740/- 5 M/s.Gonedawala Developers Pvt. Ltd. Rs.50 lacs Rs.5,95,068/- 6. M/s. Dhanviradhi Suppliers Pvt. Ltd. Rs.5 Crore Rs.18,89,344/- 7 M/s. Brijwasi Viniinay Pvt. Ltd. Rs.25 lacs Rs.14,795/- 8 M/s. Anjani Tradelinks Pvt. Ltd. Rs.25 lacs Rs.30.137/- Total Rs.11.40 Crores Rs.31,99,351/-

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 “As hardly any time was given by the AO to assessee to produce these parties before the AO therefore during the course of appellate proceedings the AO was requested vide letter dated 08/05/2019 to submit a report regarding these loan creditors. However, till 18/11/2019 no such report OR any objections have been received in this office and therefore the appeal is decided on the basis of material on record.

Paper Book

A. Ujjwal Cloth Marketing Pvt. Ltd. i) Copy of I.T. Acknowledgement For AY 2016-17 ii) Copy of the Audited Accounts for AY 2016-17 iii) Copy of the Bank Statement Depicting ICD Transactions iv) Account confirmation for FY 2015-16, 2016-17 & 2017-18 v) Company Master Data B. Trimurti Vincom Pvt. Ltd. i) Copy of I.T. Acknowledgement For AY 2016-17 ii) Copy of the Audited Accounts for AY 2016-17 iii) Copy of the Bank Statement Depicting ICD Transactions iv) Account confirmation for FY 2015-16, 2016-17 v) Company Master Data C. Top Class Logistics Pvt. Ltd. i) Copy of I.T. Acknowledgement For AY 2016-17 ii) Copy of the Audited Accounts for AY 2016-17 iii) Copy of the Bank Statement Depicting ICD Transactions iv) Account confirmation for FY 2015-16, 2016-17 & 2017-18 v) Company Master Data D. Sanwaria Marketing Pvt. Ltd. i) Copy of letter dated 13.12.2018 submitted to IT Department Directly ii) Copy of the Audited Accounts for AY 2016-17 iii) Account confirmation for FY 2015-16, 2016-17 & 2017-18 iv) Company Master Data E. Gonedawala Developers Pvt. Ltd. i) Copy of the Audited Accounts for AY 2016-17 ii) Company Master Data F. Dhanvirdhi Suppliers Pvt. Ltd. i) Copy of letter dated 27.12.2018 submitted to I T Department Directly ii) Copy of I.T. Acknowledgement For AY 2016-17 iii) Copy of the Audited Accounts for AY 2016-17 iv) Copy of the Bank Statement Depicting ICD Transactions ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 v) Account confirmation for FY 2015-16, 2016-17 & 2017-18 vi) Company Master Data vii) Copy of Form 26AS G. Brijwasi Vinimay Pvt. Ltd. i) Copy of letter dated 27.12.2018 submitted to I T Department Directly ii) Copy of I.T. Acknowledgement For AY 2016-17 iii) Copy of the Audited Accounts for AY 2016-17 iv) Copy of the Bank Statement Depicting ICD Transactions v) Account confirmation for FY 2015-16, 2016-17 & 2017-18 vi) Company Master Data vii) Copy of Form 26AS H. Anjani Tradelinks Pvt. Ltd. i) Copy of I.T. Acknowledgement For AY 2016-17 ii) Copy of the Audited Accounts for AY 2016-17 iii) Copy of the Bank Statement Depicting ICD Transactions iv) Account confirmation for FY 2015-16, 2016-17 & 2017-18 v) Company Master Data

5. Details of foreign sales commission paid during FY 2015-16

6. Few samples copies of letters of appointment given to Foreign Agents namely: a. Cogetex S.A. b. Dante Manfredi c. Elite Global Ventures Pte Ltd. d. Inteks Tekstil Sanayi Disticaret Ltd. e. Interfil S.P.A f. Lomat International HV g. MGSGC&S & LLC, DBA Seven Hills Imports h. TAC IC Distic Ltd. STI i. Weber & Heusser GMBH & Co. KG

7. Few sample copies of tax residency certificate provided by foreign agents namely: a. COGETEX SA b. DANTE MANFREDI c. INTEKS TEKSTIL SANAYI DISTICARET LTD d. INTERFIL SPA e. MAGSGC&S LLC, DBA SEVEN HILLS IMPORTS f. TAC DIS TIC LTD, STI g. H.W.H. BIENZEISLER GMBH h. PT. SILVER LINE INTERNATIONAL i. RMV OVERSEAS LTD. j. TEXIENCE

8. Details of foreign sales commission paid in prior two years

A copy of above mentioned documents was already forwarded to the AO while seeking remand report in this case. In this case there were 127 entities from whom loan amounting Rs. 37.51 crore was taken by the assessee during the year under consideration. Out of these 127 parties AO chose to verify the following eight (08) parties : i) M/s. Ujjwal Cloth Marketing Pvt. Ltd., ii) M/s. Trimurti Vincom Pvt. Ltd., iii) ' M/s. Top Class Logistic PVt. Ltd., iv) M/s. Sanwaria Marketing Pvt. Ltd., . v) M/s. Gonedawala Developers Pvt. Ltd,, vi) M/s. Dhanvridhi Suppliers Pvt. Ltd., vii) M/s. Brijwasi Vinimay Pvt. Ltd., viii) M/s. Anjani Tradelinks Pvt. Ltd. The parties were selected alleging that the entities belong to a known entry operators of Kolkata and along with the name of the company, name of the entry operator was also given. The AO has also copied statement given by these entry operators to Investigation Wing, Kolkata. On verification, it is noted that: i) The AO simply reproduced the contents of some statements recorded before the Investigation Wing Kolkata without disclosing the context and relevance. The AO has not reproduced any part of the statement in which these eight companies have been named by any of these entry operators before the Investigation Wing. - ii) The Statement copied by the AO in the Assessment Order are all pre dated to the loan transaction. iii) The AO has not recorded statement of any single operator allegedly controlling the above mentioned eight entities during the Course of assessment or used any material whereby it can be inferred that during the relevant period these entities were controlled by the alleged entry operators. iv) In case of Anjani Tradelinks Private Limited, the name in the list of jamakharchi companies/paper companies was Anjani Suppliers Private Limited however AO selected and treated Anjani Tradelinks Private Limited as jamakharchi company/paper company without assigning any reason. v) The AO issued summons u/s. 131 at fag end of the financial year when the case was about to be get barred by limitation, thereby giving-hardly any time to the assessee or the parties to whom summons u/s. 131 were issued. vi) The AO did not find any discrepancy in the documents filed before him either by the assessee or the concerned parties. vii) The AO gave an opportunity to the assessee to produce these parties on 26.12.2018. However, after one day i.e on 28.12.2018 assessment was completed.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 ix) Even during the course of appellate proceedings, an opportunity was given to the AO vide letter dated 07.05.2019 by the undersigned with a request to submit the remand report latest by 03,06.2019. However, no remand report was submitted by the AO even after six months and till the passing of this order. All the documents submitted by the assessee before the undersigned regarding these parties were already forwarded to the AO. These documents as per the claim made by the assessee were produced/ available with the AO. However, till the date of passing of this order neither any defect was pointed by the AO in the documents filed by the assessee nor any verification was made. It is also noted that the AO ignored the material on record which was submitted before the AO. The response filed by the loan creditors were completely ignored and the assessment was completed on 28.12.2018. It is noted that in some of the cases the details were submitted between 17,12.2018 to 31.12.2018. In the details filed, it is noted that none of the company appears to be a shell company. For example, Dhanvriddhi Suppliers Pvt. Ltd. is being assesseed in, the same PCIT charge and duly assesseed for Income taxes. Similarly, Sanwaria Marketing Pvt. Ltd. was found to be not a shell company by my predecessor while deciding the appeal of the assessee company for A.Y. 2015-16. The other six companies were also found to be having sufficient resources to provide loan to the assessee company. The details in this regard has already been in the appellate order. In view of the above, it is seen that the only criteria adopted by the AO seems to be the physical presence of the Directors of these donor companies rather than the strength of their Financial Statements. It is to be mentioned that the section 68 requires assessee to furnish the explanation. As per various judicial pronouncements, this explanation must satisfy the three basic criteria of identity, genuineness and creditworthiness. Once assessee explains these three ingredients before the AO, it is for AO to specify as what is lacking in the explanation given by the assessee arid make further enquiries and bring cogent material to brush aside the explanation given by the assessee and make an addition u/s. 68 of the I. T. Act, 1961. It is the prime duty of the AO to do so. In this case, verification of loan was not one of the criteria for selection of case by CASS. However, AO chose to verify the same. Even during verification, loans received from 117 parties were accepted without verifying whether these companies were having any creditworthiness or whether they are shell companies or whether transactions are genuine or not. Even the AO has not adhered to the principal of physical presence of the director in compliance to summons issued u/s. 131 of the Income Tax Act, 1961. AO had issued summons to nineteen parties u/s. 131 for verification. None of the directors of these nineteen companies barring two companies attended before the AO, however, the AO did not make any addition to the income of the assessee in respect of the nine parties as unverified debtors. In-fact in one case i.e. M/s. Laxman Suppliers Pvt. Ltd. no information whatsoever was submitted however, the AO accepted the same and no addition was made. Coming back to these eight parties, out of the eight, five parties have submitted the desired information before the AO. The information provided by these parties is in time and absolutely same as provided by the Tigerhill Vanijya Pvt..Ltd. and Ritman Commodities Pvt. Ltd. (the two parties which have been accepted by the AO as genuine). However, these details have been completely ignored without pointing out any mistake. In respect of remaining three parties also, absolutely same information has been provided but the AO preferred to ignore the same. It is to be noted that these three parties were not given any. opportunity to submit their confirmation at the time of assessment as the summons were not served on them due to wrong or inaccurate address mentioned on the summons issued by the AO u/s.

131. It is pertinent to note here that even during the course of remand proceedings, the AO has not made any efforts to issue summons on the correct address and collect desired information. It is also seen 96 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 that in one case the AO has not even opened the envelope in which the information was received. From the above, it can be seen that the addition has been made in an ad-hoc manner without considering the circumstances, factual details and marshalling the available facts on record and coming to a logical conclusions. Therefore, the additions cannot be sustained. As established above, it can be seen that addition has been made in a haphazard and in an ad hoc manner and without any basis. Therefore, the addition made by the AO are not on the basis of merit but in a whimsical manner. The assessing officer, has placed reliance on the decision of jurisdictional High Court in the case of CIT versus Precision Finance Private limited 208 ITR 463 wherein the honorable High Court has held that: "it is for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. The enquiry of the ITO revealed that either the assessee was not traceable or there was no such file...creditworthiness’’. In this case however the facts are totally different. The assessee has submitted relevant documents however no field enquiry was conducted by the AO and therefore the AO could not have concluded that the companies was not traceable. Therefore, the ratio of above-mentioned case cannot be applied to the present appeal.

3. Top Class Logistics Pvt. Ltd: Inter-Corporate Deposit of Rs.25,00,000/- was received from this loan creditor on 23.12.2015. This loan was outstanding till 31.03.2018. from copies of the enclosed account confirmations it will be noted that the assessee regularly paid interest on this ICD; year- after-year and in the Account Confirmations the loan creditor acknowledged assessee’s loan transaction as well as interest payments; made in each of the 3 Financial Years till 31.03.2018. As per the Company Master Data Regd. Office of the creditor is at Room No. 601, Narayani Building, 27, Brabourne Road, Kolkata. The loan of Rs.25,00,000/-was paid from A/c No. 6268831095 with Indian Bank, Strand Road Branch, Kolkata and copy of the Bank statement is enclosed. The said Company is regularly assesseed to tax under PAN: AADCT5726C. For the A.Y. 2016-17 Return of income was furnished on 17.10.2016 declaring total income of Rs. 18,53,276/-. For your kind perusal and record, we enclose herewith copy of audited accounts for the year ended 31.03.2016. It will be observed that the said Company’s paid up capital remained same at Rs.25,60,000/-. The Company’s net owned funds in the form of Capital 6s Reserves was Rs. 12,48,19,072/-. The Loans 6s Advances granted by the Company as on 31.03.2016 were Rs.6,61,91,843/- and investments in shares was Rs.576 Lacs. The Company’s Bank balance as on 31.03.2016 was Rs.8,14,129/-. During the F. Y. 2015-16 it had earned interest income of Rs. 62,00,121/- which inter-alia included interest of only Rs.68,306/- paid by the assessee. It will therefore be noted that besides the interest received from the assessee; M/s. Top Class Logistics Pvt. Ltd earned interest in excess of Rs.61 Lacs from other Parties and the same was accounted in the books of the creditor. 98 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17

4. Sanwaria Marketing Pvt. Ltd:

M/s. Sanwaria Marketing Pvt. Ltd was a Company with whom the appellant had transactions in the earlier year as well. The opening outstanding balance due to M/s. Sanwaria Marketing Pvt. Ltd was Rs.l Crore. M/s. Sanwaria Marketing Pvt. Ltd is having its Regd. Office at 176, Jamuna Lai Bajaj Street, Kolkata -700007. Besides it is having Administrative Office at 10/3, Acropolis, 1858/1, Rajdanga Main Road, Kolkata. Your goodself will note that the opening balance due to M/s. Sanwaria Marketing Pvt. Ltd was Rs. 1 Crore which was fully repaid on 02.04.2015. Thereafter the said Company granted following ICDs during F.Y. 2015-16: Date Amount 24.08.2015 Rs. 1,50,00,000/- 21.12.2015 Rs. 1,00,00,000/- 22.12.2015 Rs. 1,00,00,000/- 16.02.2016 Rs. 1,00,00,000/- The loan of Rs.150 Lacs accepted on 24.08.2015 was fully repaid along with interest on 18.09.2015. The loan taken on 21.12.2015 was refunded on the same date and another Cheque for Rs.1 Crore was paid by the Party on 22.12.2015. As such the entries of Rs.1 Crore appearing in the books on 21.12.2015 are in fact contra-entries and the loan of Rs.l Crore was actually taken on 22.12.2015. Loan of Rs.2 Crores taken in the month of December & February together with accrued interest of Rs.3,59,999/- remained outstanding as of 31.03.2016. The appellant submits that it has financial transactions with the said creditor even in the subsequent 2 financial years and account confirmations issued by the creditor are enclosed for your ready reference and record. It is pertinent to state that in response to Summons u/s 131 of the Act the said loan creditor had furnished the required information by sending a letter through Speed post on 13.12.2018 and copy thereof is enclosed for your ready reference and record. We also enclose herewith copy of the audited accounts of Sanwaria Marketing Pvt. Ltd for the year ended 31.03.2016. You will note there from that there was no increase in the Paid up capital of the creditor company; which remained unchanged at Rs.21,22,000/-. The Company’s net owned funds in the form of Capital & Reserves were Rs. 12,05,79,254/-. You will also note that the Company’s net profit for the F.Y. 2015-16 was Rs.80,78,899/-. The Loans & Advances granted by the Company were Rs.11,87,20,293/- as on 31.03.2016 from which the company derived interest income of Rs. 1,35,04,004/-. Such interest income inter-alia included interest paid by the assessee amounting to only Rs.5,02,750/-. Your goodself will thus note that besides the assessee M/s. Sanwaria Marketing Pvt. Ltd had earned interest of Rs.130 Lacs from various other Parties to whom it had advanced loans. Your goodself will also note that in respect of such interest income the Payers had deducted tax of Rs. 13,50,401/- which duly appeared in the Balance Sheet of the said Company. Your goodself will further note that besides the interest income the said company had also earned Long Term Capital Gain of Rs. 10,93,196/-. It may also be pertinent to submit that in the preceding year also the loan received from Sanwaria Marketing Pvt. Ltd was assesseed as cash credit u/s 68. In fact in the immediately preceding year the AO had considered the Inter-corporate deposits received from 33 Companies to be unexplained cash credit and this inter-alia included Sanwaria Marketing Pvt. Ltd. The CIT (A) after appreciating the documents 6s evidences brought on record deleted the addition made u/s 68 vide his appellate order dated 16.08.2018 in Appeal No. 14/CIT(A)-14/2017-18. Copy of the said appellate order is enclosed. You will thus note that the identity and creditworthiness of M/s. Sanwaria Marketing Pvt. Ltd was accepted by the Ld. CIT(A) in the appellant’s own case in the immediately preceding year. In the circumstances, there was no reason for the AO to doubt the Company’s transaction with the same party in A.Y. 2016-17. 99 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 5. Gonedawala Developers Pvt. Ltd: The appellant had taken loan of Rs.50,00,000/- from this creditor. Although the AO has alleged that the creditor was managed by an entry operator by the name Prawesh Beria, his statement was not quoted by the AO. The appellant submits that the AO’s allegation that the creditor was controlled by entry operator is factually incorrect in as much as the said Company belongs to Diwansons Group which is one of the reputed Jewellers of Kolkata. For your kind perusal and record, we enclose herewith the information extracted from Ministry of Corporate Affairs Website from which it will be noted that the Regd. Office of the Company is at 101, Park Street, Kolkata - 700016 where jewellery showroom of Diwansons is located. It will also be noted from the said information that Sri Arun Diwan, Sri Bimal Diwan 6s Smt. Madhu Diwan are the Directors of the creditor Company. For your kind perusal, we also enclose herewith copy of the audited Balance Sheet for the year ended 31.03.2016 from which it will be noted that during the relevant year there was no change in the paid up capital of the Company which continued to remain at Rs. 1,66,31,200/- The net owned funds including credit balance of the Profit 6s Loss A/c and Capital was Rs.8,56,27,760/-. During the relevant year the gross revenue generated by the said Company from its operations was in excess of Rs. 1333.47 Lacs and profit before tax, depreciation 6s interest was Rs.81.18 Lacs. From the Balance Sheet it would be noted that loans, advances & receivable of the loan creditor as on 31.03.2016 were Rs.57,81,670/-. The loan accepted by the appellant was fully repaid by the appellant prior to 31.03.2016 6s as such no amount was outstanding 6s due at the close of the previous year. The appellant further submits that in response to AO’s notice u/s 131 the loan creditor had directly submitted the documents requisitioned in AO’s Office and therefore it was wholly inappropriate for the AO to draw adverse inference against the appellant on the ground of non compliance. The appellant submits that the addition made u/s 68 in respect of loan taken from Gonedawala Developers Pvt. Ltd was factually incorrect.

8. Anjani Tradelinks Pvt. Ltd :

In this case loan of Rs.25,00,000/- was obtained by the appellant on 17.02.2016 and interest paid for the F.Y.2015-16 was Rs.30,137/-. This loan together with accrued interest was fully paid by the assessee in F.Y. 2017-18. Copies of the Account Confirmations for the F.Ys 2015-16 to 2017-18 are enclosed. The said loan was paid from the A/c No. 0060102000103848 and the relevant Bank Statement of the creditor is enclosed for ready reference and record. The creditor company is regularly assesseed to tax under PAN: AAJCA0590K. For the A.Y. 2016-17 it had filed its return of income on 08.10.2016. Although the Regd. Office of the assessee is presently located at 318, Hossainpur, Tiljala, Kolkata and Company’s Office was earlier located at 52, Weston Street, Bow Bazar, Kolkata. For your kind perusal and record, we enclose herewith Audited Balance Sheet of the creditor company from which it will be observed that the paid up capital of the assessee during the relevant year continued to remain at Rs.21,22,000/-. The Reserves & Surplus of the creditor was Rs.20,01,71,694/-. It had granted loans 8b advances to the extent of Rs.11,13,46,716/- and in respect of such loan interest income of Rs.66,89,772/- was credited in its Profit 8b Loss A/c which inter-alia included interest of only Rs.30,137/- received from the appellant. The appellant therefore submits that the information available clearly proves that the creditor was having sufficient funds from which interest bearing ICD was granted.

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17 From the assessment order it wil From the assessment order it will be noted that the AO refused to accept the l be noted that the AO refused to accept the genuineness of the loans taken only because there was no compliance to the notices u/s 131 genuineness of the loans taken only because there was no compliance to the notices u/s 131 genuineness of the loans taken only because there was no compliance to the notices u/s 131 of the Act. Merely because there was no response to the Summons u/s 131 could not be the of the Act. Merely because there was no response to the Summons u/s 131 could not be the of the Act. Merely because there was no response to the Summons u/s 131 could not be the reason enough for the AO to mak reason enough for the AO to make the addition u/s 68. This proposition is well laid down by e the addition u/s 68. This proposition is well laid down by the Hon’ble Supreme Court in its judgment in the case of CIT Vs Orissa Corporation Pvt. the Hon’ble Supreme Court in its judgment in the case of CIT Vs Orissa Corporation Pvt. the Hon’ble Supreme Court in its judgment in the case of CIT Vs Orissa Corporation Pvt. Ltd (159 ITR 78). Particularly in the present case the additions of Rs.4,50,00,000/ Particularly in the present case the additions of Rs.4,50,00,000/ Particularly in the present case the additions of Rs.4,50,00,000/- 8b Rs.5,00,00,000/- were made in respect of loans taken from Sanwaria Marketing Pvt. Ltd 8b re made in respect of loans taken from Sanwaria Marketing Pvt. Ltd 8b re made in respect of loans taken from Sanwaria Marketing Pvt. Ltd 8b Dhanvridhi Suppliers Pvt. Ltd respectively. It will be noted that M/s. Sanwaria Marketing Dhanvridhi Suppliers Pvt. Ltd respectively. It will be noted that M/s. Sanwaria Marketing Dhanvridhi Suppliers Pvt. Ltd respectively. It will be noted that M/s. Sanwaria Marketing Pvt. Ltd was a Company with which the Pvt. Ltd was a Company with which the assessee had regular financial transactions. The had regular financial transactions. The loan of Rs.l Crore was brought forward from earlier year which was repaid during the s.l Crore was brought forward from earlier year which was repaid during the s.l Crore was brought forward from earlier year which was repaid during the relevant year. Even though during the relevant year the relevant year. Even though during the relevant year the assessee had made new borrowings had made new borrowings of Rs.4.5 Crores; during the year itself the appellant repaid through proper banking channe of Rs.4.5 Crores; during the year itself the appellant repaid through proper banking channe of Rs.4.5 Crores; during the year itself the appellant repaid through proper banking channel sum of Rs.250 Lacs along with interest. In fact repayment of Rs.l crore on 21.12.2016 was sum of Rs.250 Lacs along with interest. In fact repayment of Rs.l crore on 21.12.2016 was sum of Rs.250 Lacs along with interest. In fact repayment of Rs.l crore on 21.12.2016 was really in the nature of contra really in the nature of contra-entry. It is further material to submit that in response to notice entry. It is further material to submit that in response to notice u/s 131 required information was submitted by the Sanwaria Marketi u/s 131 required information was submitted by the Sanwaria Marketing Pvt. Ltd through ng Pvt. Ltd through Registered Speed Post and therefore it was wholly inappropriate for the AO to claim that the Registered Speed Post and therefore it was wholly inappropriate for the AO to claim that the Registered Speed Post and therefore it was wholly inappropriate for the AO to claim that the assessee had failed to establish the genuineness of the transaction. Similarly, in the case of had failed to establish the genuineness of the transaction. Similarly, in the case of had failed to establish the genuineness of the transaction. Similarly, in the case of Dhanvridhi Suppliers Pvt. Ltd the entire loan of Dhanvridhi Suppliers Pvt. Ltd the entire loan of Rs.5 Crores was fully repaid along with Rs.5 Crores was fully repaid along with interest during F.Y. 2015 interest during F.Y. 2015-16 itself. Similarly, the loan of Rs.50 Lacs was fully repaid to 16 itself. Similarly, the loan of Rs.50 Lacs was fully repaid to Gonedawala Developers Pvt. Ltd along with interest. It was therefore wholly inappropriate Gonedawala Developers Pvt. Ltd along with interest. It was therefore wholly inappropriate Gonedawala Developers Pvt. Ltd along with interest. It was therefore wholly inappropriate for the AO to make the addition si for the AO to make the addition simply based on suspicion and conjecture. The appellant mply based on suspicion and conjecture. The appellant submits that if one scrutinizes the audited accounts of each of the loan creditor then it would submits that if one scrutinizes the audited accounts of each of the loan creditor then it would submits that if one scrutinizes the audited accounts of each of the loan creditor then it would be evident that each creditor possessed substantial resources of their own. Compared with be evident that each creditor possessed substantial resources of their own. Compared with be evident that each creditor possessed substantial resources of their own. Compared with the total investible funds available with each loan creditor, the loans advanced by them to ible funds available with each loan creditor, the loans advanced by them to ible funds available with each loan creditor, the loans advanced by them to the appellant during the year was not significant. For your perusal we are enumerating the the appellant during the year was not significant. For your perusal we are enumerating the the appellant during the year was not significant. For your perusal we are enumerating the fund position of each loan creditor and the loans advanced by them. fund position of each loan creditor and the loans advanced by them.

The comparative da The comparative data set out above will clearly establish that each of the bodies ta set out above will clearly establish that each of the bodies corporate had their own resources which were several times more than the loan advanced to corporate had their own resources which were several times more than the loan advanced to corporate had their own resources which were several times more than the loan advanced to the appellant company. It is also material to point out that each of the Company who had the appellant company. It is also material to point out that each of the Company who had the appellant company. It is also material to point out that each of the Company who had granted 1CD to the appellant; reported in the respective P/L A/c substantial interest income o the appellant; reported in the respective P/L A/c substantial interest income o the appellant; reported in the respective P/L A/c substantial interest income from the business of granting loans. Interest income as accounted by the creditors clearly from the business of granting loans. Interest income as accounted by the creditors clearly from the business of granting loans. Interest income as accounted by the creditors clearly showed that their interest earnings from Loans granted to parties other than showed that their interest earnings from Loans granted to parties other than showed that their interest earnings from Loans granted to parties other than assessee were substantially more. These facts therefore showed that these Companies were actively substantially more. These facts therefore showed that these Companies were actively substantially more. These facts therefore showed that these Companies were actively engaged in business of granting loans & earned substantial interest income. In the engaged in business of granting loans & earned substantial interest income. In the engaged in business of granting loans & earned substantial interest income. In the circumstances none of the company could be said to be shell Company. circumstances none of the company could be said to be shell Company. Following salient features emerge on this issue of unsecured loan ent features emerge on this issue of unsecured loan- i) It can be seen that most of the lender companies have substantial assets lying with It can be seen that most of the lender companies have substantial assets lying with It can be seen that most of the lender companies have substantial assets lying with them.

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 ii) These companies are controlled by reputed business houses of Kolkata, therefore, it is difficult to level them as shell companies. iii) Further, most of the lender companies have filed details before the AO in responsetosummons-1. Only the Directors did not appear before the AO but the AO should have issued personal summons to the Directors and could have enforced heir attendance which he did not do. Therefore, the assessee cannot be blamed regarding origin of some of these companies from entry operators since all these companies are controlled by genuine business groups during A.Y. 2016-17, therefore, the assessee could not have been penalized. iv) If these companies have dubious origin, the AO should have intimated the AO all the lender companies for taking appropriate action in the case of lender companies. The AO may do so now in appropriate cases) v) It is seen that all the loans have been arranged through reputed finance brokers. If the finance broker arranges money through dubious companies in that case the AO should have examined the finance broker to find out as to which how he has arranged these loans the assessee cannot be penalized if the finance broker arranges loans from some companies whose source of fund is dubious. Identity : In the instant case all the companies are registered with ROC, therefore, their identity cannot be doubted, further, all these companies have Directors from reputed business group. Therefore, identity of the lender is not in doubt. Capacity : From the analysis of Balance Sheet of these companies it is evident that these companies have substantial asset in their hands, therefore, capacity of these companies to lend money cannot be doubted. Genuineness : Since loan has come through cheque further the companies belongs to reputed business houses, therefore, genuineness of the transaction is not in doubt. In view of the above analysis I am of the opinion that the loan amount procured by the assessee is genuine. The assessee has been able to prove Identity, capacity and genuineness of the transaction, therefore, addition of the same does not hold. Therefore, Ground Nos. 5 and 6 are allowed.”

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17

I.T.A No. 55/Kol/2020,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. M/s Wearit Global Ltd. Assessment years: 2014-15,2015 15,2015-16 & 2016-17

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17

Name of Company Investible own Fresh Loan Interest TDS(Rs.) funds available as during the year (Rs) per Financials Ujjwal Cloth 14,56,93,873 50,00,000 60,109 6,011 Marketing Pvt. Ltd. ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Trimurti Vincom Pvt. 15,39,44,741 15,00,000 38,852 3,885 Ltd. Top Class Logistics 12,48,19,072 25,00,000 68,306 6,831 Pvt. Ltd. Sanwaria Marketing 12,05,79,254 4,50,00,000 5,02,740 50,275 Pvt. Ltd. Gonedawala 8,56,27,760/- 50,00,000 5,95,068 59,507 Developers Pvt. Ltd. Dhanvridhi Suppliers 31,58,92,818 5,00,00,000 18,89,344 1,88,935 Pvt. Ltd. Brijwasi Vinimay Pvt. 12,64,13,868 25,00,000 14,795 1,480 Ltd. Anjani Tradelinks 20,22,89,040 25,00,000 30,137 3,014 Pvt. Ltd. Total 127,52,60,426 11,40,00,000

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17

“The second major issue in this appeal relates to disallowance of Rs.2,57,56,247/-being Foreign Sales Commission paid to Non-resident Agents. In Para-7.1 the AO notes that from Note-28 of audited Balance Sheet he found that assessee had incurred expenditure in foreign currency on account of sales commission and as per tax audit report no tax deduction u/s 195 was made. In view of the foregoing facts, the AO held that foreign commission paid was liable for disallowance in terms of Sec. 40(a)(i) of the Act. At the outset the appellant submits that before the disallowance was made no opportunity of hearing was given by the AO. Even though AO resorted to such addition, the assessee was not given opportunity of furnishing its explanation nor the assessee was show caused as to why disallowance was factually and legally called for. Had such opportunity being given the appellant would have demonstrated before the AO that it had no liability to deduct tax u/s 195 because the commission paid to the foreign agents for procuring orders from outside India was not chargeable to tax in India as income and therefore Sec. 195 did not have any application. For your kind perusal and record we enclose herewith details of foreign sales commission paid to 22 Parties who were all residing outside India. The names and addresses of the Parties and commission paid to each of them are stated in the statement. For your kind perusal, we also enclose sample copies of the letters of appointment in terms of which the foreign agents had rendered services to the assessee for procuring export orders. We also enclose herewith sample copies of the Tax Residency Certificates issued in favour of these Agents which prove that the 121 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 Payees were foreign tax residents and not tax residents of India. It is material to submit that the AO has not brought on record any material whatsoever to prove that any part of the services were rendered by the Agents in India so as to attract tax liability in their hands in India. It is settled legal proposition that before provisions of Sec. 195 are invoked by AO he has to demonstrate that the amount paid to the Nonresident is legally chargeable to tax in India. If however the amount is held to be not chargeable to tax in India, then the assessee has no liability to deduct tax and consequently therefore no disallowance under 40(a)(i) is called for. In the present case the commission was paid to foreign agents solely for obtaining export orders from Parties located outside India. The services in connection with marketing of the Company's products and to secure orders were entirely performed outside India. The marketing services rendered by the foreign agents did not have any connection with territory of India nor any part of the services were performed in or from India. As such, the commission income entirely accrued for the services performed outside India and the commission was also paid in foreign currency outside India. In the assessment order the AO did not bring on record any material to show or prove that any income accrued or paid to foreign agents in India so as to make the same chargeable to tax in India either u/s 5 or u/s 9(I)(i) of the Income Tax Act so as to require tax deduction. In this regard your attention is drawn to recent decision of the ITAT Kolkata in the case of JCIT Vs Onprocess Technology India Pvt. Ltd. In this case the assessee, engaged in BPO services, had paid marketing support fees to U. S. Companies and the amount was disallowed on the ground that tax was not deducted at source. On appeal the CIT (A) upheld the disallowance which was deleted by the ITAT in its order dated 24.05.2018 in I.T.A. No. 1047/Kol/2016. In Para-12 the Tribunal held as follows: 12. From the foregoing discussion, we find that in the present case, the foreign payees to whom marketing support fees totaling Rs.2,96,05,045/ - was paid were engaged only in rendering services for promoting and marketing of assessee’s BPO service in USA. Save and except canvassing for customers in the foreign territories, these entities did not render any service in India nor the services performed were technical in nature. We are, therefore, of the opinion that no part of the income embedded in such payment was chargeable to tax in India so as to require deduction of tax u/s 195 of the Act. Our finding in this regard gets support from the decision of the Hon’ble Delhi High Court in the case of CIT Vs Eon Technology Pvt. Ltd 15taxman.com 391 and of the Hon’ble Madras High Court in the case of CIT Vs Faiezan Shoes Pvt. Ltd 48 taxman.com 48. We, therefore, hold that the fees of Rs.2,96,05,045/-paid by the assessee to US entities for rendering marketing and sale support services was not chargeable to tax in terms of Sec. 9(1)(i) of the Act. Thereafter in Para-21 the ITAT held as follows:- 21. For the reasons discussed in the foregoing, we are in agreement with the assessee that the payment of Rs.2,96,05,045/- made by the assessee to foreign entities towards marketing and sale support services were not chargeable to tax in India and in that view of the matter the assessee was right in, law in not deducting any tax thereon under sec. 195 of the Act. Accordingly, we hold that the impugned disallowance of Rs.2,96,05,045/ - made by the AO as well as confirmed by the Ld. CIT (A) u/s 40(a)(i) of the Act is unsustainable. Accordingly, it is directed to be deleted. This ground of appeal of assessee is allowed. Similar issue was considered by the ITAT Kolkata in yet another case of M/s. Lux Industries Ltd in ITA No. 1144 & 1145/Kol/2018 dated 27.06.2018. In. this case alsothe assessee paid foreign export commission in respect of export of its hosiery 122 ,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 products. In respect of export orders secured by the foreign agents outside India export sales commission @5% was paid on the value of export orders secured. The AO disallowed the export commission on the ground that no tax was deducted at source. The Jurisdictional ITAT relying on the decision of the Co-ordinate Bench at Ahmedabad in the case of DCIT Vs Welspun Corporation Ltd (I.T.A. No. 48/Ahd/2015) dated 31.03.2017 deleted the said disallowance. In the decided case of Ahmedabad Bench the Tribunal held as follows: “In the instant case admittedly the non-resident agents were only procuring orders abroad and following up payments with the buyers. No other services are rendered other than above. Sourcing orders abroad, for which payments have been made directly to the non-residents abroad does not involve any technical assistance or other support in respect of any technical matters the commission payments to the non- resident agents are not taxable in India, as the agents are remaining outside, services are rendered abroad and payments are also made abroad. ” In the appellant’s case also the only services provided by the foreign agents was to procure orders for the Company’s products from the Buyers located outside India. These services were performed outside India and the payments were also made to the foreign agents outside India in foreign currency. As such, in terms of the decisions of the ITAT Kolkata Benches (supra) no income chargeable to tax accrued in India and therefore assessee had no liability to deduct tax at source under 195. No disallowance u/s 40(a)(ia) was therefore called for. It may also be relevant to state that even in the preceding years the appellant had paid foreign sales commission and no disallowance was made in the assessment orders framed u/s 143(3). As such when the factual and legal position continued to be same AO was not justified in making the disallowance only in A.Y. 2016-17.

21. The Ld. CIT(A) vacated the disallowance stating that it was not in dispute that expenditure on sales commission was incurred in foreign currency for procuring orders from outside India. The only dispute is whether assessee was liable to deduct TDS from payments made u/s 195 of the Act or not. The Ld. CIT(A) noted that in support of the payments made assessee has provided letters of appoint, tax residency certificate of the agents and services were rendered overseas. The assessing Officer has brought no material on record to show that the services were rendered by these agencies in India and hence where chargeable to tax in India. The case law relied upon by the assessee in the case of JCIT Vs Omprocess Technology India Pvt Ltd ITA No. 1047/Kol/2016 Order dated 25.04.2018 wherein the Hon'ble ITAT Kolkata has held that if the income is not chargeable in India the assessee was right in law in not deducting any tax thereon u/s 195 of the I T Act 1951. The AO has failed to controvert this basic and was deleted.

23. In view of the foregoing submissions it is prayed that the order of the Ld. CIT (A) be confirmed and the appeal of the Revenue be dismissed”

,I.T.A. No.20/Kol/2019, & I.T.A. No.115/Kol/2020 M/s Wearit Global Ltd. Assessment years: 2014-15,2015-16 & 2016-17 130. In the result, the appeals of the Revenue are dismissed for AY 2014-15, AY 2015-16 and AY 2016-17. And the appeal of assessee for AY 2015-16 is allowed.

Order is pronounced in the open court on 13th April, 2021.

Sd/- Sd/- (J. Sudharkar Reddy) (A. T. Varkey) Accountant Member Judicial Member Dated: 13.04.2021 SB, Sr. PS Copy of the order forwarded to:

1. 1. Appellant- (i) DCIT, Circle-12(1), Kolkata (ii) JCIT(OSD), Circle-12(1), Kolkata Respondent – M/s Wearit Global Ltd., Crescent Tower, 5th Floor, 229, AJC 2. Bose Road, Kolkata – 700020.

3. The CIT(A)- , Kolkata (sent through e-mail) 4. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)