M/S SHREENATH HOLDINGS PVT. LTD.,HOWRAH vs. I.T.O.,WARD-5(1), KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA [Before Shri J. Sudhakar Reddy, Hon’ble Accountant Member] I.T.A. No. 2390/Kol/2019 Assessment Year: 2012-13 M/s. Shreenath Holding Pvt. Ltd…………...……………....……..…………..………………....……Appellant 33/34, Ramlal Mukherjee Lane 2nd Floor Room No. 2D Howrah - 711106 [PAN: AADCS 5887 P] Vs. Income Tax Officer, Ward-5(1), Kolkata…………………………..............….....….…......Respondent Appearances by: Shri Sunil Surana, A/R, appeared on behalf of the assessee. Shri Jayanta Khanra, JCIT, Sr. D/R, appearing on behalf of the Revenue Date of concluding the hearing : February 24th, 2020 Date of pronouncing the order : February 26th, 2020 O R D E R Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) – 2, Kolkata, (hereinafter the “ld.CIT(A)”), passed u/s. 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 17/10/2019, for the Assessment Year 2012-13. 2. The assessee is a company and is engaged in the business of trading and distribution of goods. It filed its return of income on 16/08/2012 declaring total income of Rs.15,500/-. During the year, the assessee raised share capital including premium amounting to Rs.1,13,55,000/-. The Assessing Officer conducted enquiries and the assessee presented the share holders including the directors of the share holding companies before the Assessing Officer. After due enquiry, the Assessing Officer accepted the explanations of the assessee that the cash credits in the form of share capital were genuine, except in the case of M/s. Seacom Merchants, which had applied for shares. An amount of Rs. 20,00,000/- pertaining to M/s. Seacom Merchants, was added.

2.1. The case of the assessee is that M/s. Seacom Merchants is assessed to tax and the very same amount of Rs.20,00,000/- has been brought to tax in the hands of M/s. Seacom Merchants in the same Assessment Year by the Department i.e. 2012-13.

I.T.A. No. 2390/Kol/2019 Assessment Year: 2012-13 M/s. Shreenath Holding Pvt. Ltd

Copy of the assessment order passed u/s 144 r.w.s. 147 of the Act, dt. 28/12/2019, is assessment order passed u/s 144 r.w.s. 147 of the Act, dt. 28/12/2019, is assessment order passed u/s 144 r.w.s. 147 of the Act, dt. 28/12/2019, is filed before us. A perusal of this order led before us. A perusal of this order demonstrates that the transaction of demonstrates that the transaction of Rs.20,00,000/- with M/s. with M/s. Shreenath Holdings Pvt. Ltd. was assessed as the Shreenath Holdings Pvt. Ltd. was assessed as the undisclosed income of M/s. Sea undisclosed income of M/s. Seacom Merchants. On these facts, the issue is whether . On these facts, the issue is whether the same amount can be taxed once again the hands of the assessee company. the same amount can be taxed once again the hands of the assessee company. the same amount can be taxed once again the hands of the assessee company.

I.T.A. No. 2390/Kol/2019 Assessment Year: 2012-13 M/s. Shreenath Holding Pvt. Ltd

first four entities and accepted similar credits of first four entities and accepted similar credits of ₹20,45,00,000/- to be genuine to be genuine satisfying all parameters of identity, genuineness and creditworthiness. It can satisfying all parameters of identity, genuineness and creditworthiness. It can satisfying all parameters of identity, genuineness and creditworthiness. It can therefore be safely assumed that all these additions sums forming subject therefore be safely assumed that all these additions sums forming subject therefore be safely assumed that all these additions sums forming subject- matter of the impugned additions to be accepted as genuine in respective matter of the impugned additions to be accepted as genuine in respective matter of the impugned additions to be accepted as genuine in respective investors entities' end as t investors entities' end as the source of the amount(s) in issue totalling to he source of the amount(s) in issue totalling to ₹3,01,00,000/-. Learned Departmental Representative fails to dispute that the . Learned Departmental Representative fails to dispute that the . Learned Departmental Representative fails to dispute that the same very amount cannot be added twice in payees and recipients' hands u/s 68 same very amount cannot be added twice in payees and recipients' hands u/s 68 same very amount cannot be added twice in payees and recipients' hands u/s 68 of the Act. We therefore see no reason to accept Re of the Act. We therefore see no reason to accept Revenue's instant former venue's instant former substantive ground. We affirm CIT(A)'s findings under challenge qua the instant substantive ground. We affirm CIT(A)'s findings under challenge qua the instant substantive ground. We affirm CIT(A)'s findings under challenge qua the instant former issue.”

I.T.A. No. 2390/Kol/2019 Assessment Year: 2012-13 M/s. Shreenath Holding Pvt. Ltd

"The assessment is completed without rebutting the 550 page "The assessment is completed without rebutting the 550 page documents which are documents which are unflinching records of the companies. The list of documents submitted on unflinching records of the companies. The list of documents submitted on unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows : 09.03.2015 are as follows : 1. Sony Financial Services Ltd. 1. Sony Financial Services Ltd. - CIN U74899DL1995PLC068362- Date of Registration 09/05/1995 Date of Registration 09/05/1995 6. On going through the documents which have been produced which are basically 6. On going through the documents which have been produced which are basically 6. On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The from the public offices, which maintain the records of the Companies. The from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such documents also include assessment Orders for last three preceding years of such documents also include assessment Orders for last three preceding years of such Companies. 7. The Appellants have failed to explain as to how such Companies have been ellants have failed to explain as to how such Companies have been ellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are assessed though according to them such Companies are not existing and are assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the fictitious companies. Besides the documents also included the registration of the fictitious companies. Besides the documents also included the registration of the Company which discloses the regist Company which discloses the registered address of such Companies. There is no ered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents material on record produced by the Appellants which could rebut the documents material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact produced by the Respondents herein. In such circumstances, the finding of fact produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on arrived at by the authorities below which are based on documentary evidence on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants record cannot be said to be perverse. Learned Counsel appearing for the Appellants record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities was unable to point out that any of such findings arrived at by the authorities was unable to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to exami below were on the basis of misleading of evidence or failure to exami below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the material documents whilst coming to such conclusions. Under the guise of the material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the substantial question of law, this Court in an Appeal under Section 260A of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot reappreciate the evidence to come to any contrary evidence. Income Tax Act cannot reappreciate the evidence to come to any contrary evidence. Income Tax Act cannot reappreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on that the authorities have rendered the findings of facts based on that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial documents which have not been disputed, we find that there are no substantial documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration. question of law which arises in the present Appeal for consideration. 49. We also find that the Hon’ble Apex 49. We also find that the Hon’ble Apex Court recently in the case of Principal CIT vs Court recently in the case of Principal CIT vs Vaishnodevi Refoils & Solvex reported in (2018) 96 taxmann.com 469 (SC) wherein Vaishnodevi Refoils & Solvex reported in (2018) 96 taxmann.com 469 (SC) wherein Vaishnodevi Refoils & Solvex reported in (2018) 96 taxmann.com 469 (SC) wherein the SLP of the Revenue has been dismissed by the Hon’ble Apex Court. The brief the SLP of the Revenue has been dismissed by the Hon’ble Apex Court. The brief the SLP of the Revenue has been dismissed by the Hon’ble Apex Court. The brief facts of that case were that the addition u/s 68 o facts of that case were that the addition u/s 68 of the Act was made by the f the Act was made by the Assessing Officer in respect of capital contributed by the partner of the firm. The Assessing Officer in respect of capital contributed by the partner of the firm. The Assessing Officer in respect of capital contributed by the partner of the firm. The Hon’ble Gujarat High Court noted that when the concerned partner had confirmed Hon’ble Gujarat High Court noted that when the concerned partner had confirmed Hon’ble Gujarat High Court noted that when the concerned partner had confirmed before the Assessing Officer about his fact of making capital contr before the Assessing Officer about his fact of making capital contribution in the ibution in the firm and that the said investment is also reflected in his individual books of firm and that the said investment is also reflected in his individual books of firm and that the said investment is also reflected in his individual books of accounts, then no addition could be made u/s 68 of the Act. The decision of Hon’ble accounts, then no addition could be made u/s 68 of the Act. The decision of Hon’ble accounts, then no addition could be made u/s 68 of the Act. The decision of Hon’ble Gujarat High Court is reported in (2018) 89 taxmann.com 80 (Guj HC) . The SLP Gujarat High Court is reported in (2018) 89 taxmann.com 80 (Guj HC) . The SLP Gujarat High Court is reported in (2018) 89 taxmann.com 80 (Guj HC) . The SLP of the revenue against this judgment was dismissed by the Hon’ble Supreme Court. the revenue against this judgment was dismissed by the Hon’ble Supreme Court. the revenue against this judgment was dismissed by the Hon’ble Supreme Court. 50. We may gainfully refer to the following decisions of the Hon’ble High Court in 50. We may gainfully refer to the following decisions of the Hon’ble High Court in 50. We may gainfully refer to the following decisions of the Hon’ble High Court in the cases as under: the cases as under: (a) In the case of Pr. CIT Vs Chain House International (P) Ltd [201 (a) In the case of Pr. CIT Vs Chain House International (P) Ltd [201 (a) In the case of Pr. CIT Vs Chain House International (P) Ltd [2018] (98 taxmann.com 47)the AO had added the share application by way of unexplained taxmann.com 47)the AO had added the share application by way of unexplained taxmann.com 47)the AO had added the share application by way of unexplained cash credits was that the assessee was unable to give any justifiable reason for cash credits was that the assessee was unable to give any justifiable reason for cash credits was that the assessee was unable to give any justifiable reason for issuing shares at a premium. The Hon’ble Madhya Pradesh High Court did not issuing shares at a premium. The Hon’ble Madhya Pradesh High Court did not issuing shares at a premium. The Hon’ble Madhya Pradesh High Court did not agree with this reasoning given by the AO for making addition u/s 68, holding as easoning given by the AO for making addition u/s 68, holding as easoning given by the AO for making addition u/s 68, holding as under: “Issuing the share at a premium was a commercial decision. It is the prerogative of “Issuing the share at a premium was a commercial decision. It is the prerogative of “Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the the Board of Directors of a company to decide the premium amount and it is the the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholde wisdom of shareholder whether they want to subscribe the shares at such a r whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to premium or not. This was a mutual decision between both the companies. In day to premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by any Govt. Authority or unless day market, unless and until, the rates is fixed by any Govt. Authority or unless day market, unless and until, the rates is fixed by any Govt. Authority or unless

I.T.A. No. 2390/Kol/2019 Assessment Year: 2012-13 M/s. Shreenath Holding Pvt. Ltd

there is any restriction on the amount there is any restriction on the amount of share premium under any law, the price of of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. [Para the shares is decided on the mutual understanding of the parties concerned. [Para the shares is decided on the mutual understanding of the parties concerned. [Para 52] Once the genuineness, creditworthiness and identity of investors are established, Once the genuineness, creditworthiness and identity of investors are established, Once the genuineness, creditworthiness and identity of investors are established, the revenue should not justifiably claim the revenue should not justifiably claim to put itself in the armchair of a to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of businessman or in the position of the Board of Directors and assume the role of businessman or in the position of the Board of Directors and assume the role of ascertaining how much is a reasonable premium having regard to the ascertaining how much is a reasonable premium having regard to the ascertaining how much is a reasonable premium having regard to the circumstances of the case. [Para 53] circumstances of the case. [Para 53] There is no dispute about the recei There is no dispute about the receipt of funds through banking channel nor there is pt of funds through banking channel nor there is any dispute about the identity, creditworthiness and genuineness of the investors any dispute about the identity, creditworthiness and genuineness of the investors any dispute about the identity, creditworthiness and genuineness of the investors and, therefore, the same has been established beyond any doubt and there should and, therefore, the same has been established beyond any doubt and there should and, therefore, the same has been established beyond any doubt and there should not have been any question or dispute about p not have been any question or dispute about premium paid by the investors; remium paid by the investors; therefore, unless there is a limitation put by the law on the amount of premium, the therefore, unless there is a limitation put by the law on the amount of premium, the therefore, unless there is a limitation put by the law on the amount of premium, the transaction should not be questioned merely because the assessing authority thinks transaction should not be questioned merely because the assessing authority thinks transaction should not be questioned merely because the assessing authority thinks that the investor could have managed by paying a lesser am that the investor could have managed by paying a lesser amount as Share Premium ount as Share Premium as a prudent businessman. The test of prudence by substituting its own view in as a prudent businessman. The test of prudence by substituting its own view in as a prudent businessman. The test of prudence by substituting its own view in place of the businessman's has not been approved by the Supreme Court. [Para 54]” place of the businessman's has not been approved by the Supreme Court. [Para 54]” place of the businessman's has not been approved by the Supreme Court. [Para 54]” (b) In the case of CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 (b) In the case of CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com taxmann.com 272/247 Taxman 245/394 ITR 680 the Revenue contended that the fact that the 272/247 Taxman 245/394 ITR 680 the Revenue contended that the fact that the 272/247 Taxman 245/394 ITR 680 the Revenue contended that the fact that the shares were issued at high premium raised suspicion on the genuineness of the shares were issued at high premium raised suspicion on the genuineness of the shares were issued at high premium raised suspicion on the genuineness of the transactions. While dismissing this plea raised by the Revenue, the Hon’ble Bombay transactions. While dismissing this plea raised by the Revenue, the Hon’ble Bombay transactions. While dismissing this plea raised by the Revenue, the Hon’ble Bombay High Court held as under: urt held as under: (e) We find that the proviso to section 68 of the Act has been introduced by the (e) We find that the proviso to section 68 of the Act has been introduced by the (e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013 from the Assessment Year 2013-14 onwards and not for the subject Assess 14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Year. In fact, before the Tribunal, it was not even the case of the Revenue that Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood Section 68 of the Act as in force during the subject years has to be read/understood Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its as though the proviso added subsequently effective only from 1st April, 2013 was its as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the normal meaning. The Parliament did not introduce to proviso to Section 68 of the normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was Act with retrospective effect nor does the proviso so introduced states that it was Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not introduced "for removal of doubts" or that it is "declaratory". Therefore it is not introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of give it retrospective effect, by proceeding on the basis that the addition of give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the the proviso to Section 68 of the Act is immaterial and does not change the the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the interpretation of Section 68 of the Act both before and after the adding of the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view o proviso. In any view of the matter the three essential tests while confirming the pre f the matter the three essential tests while confirming the pre- proviso Section 68 of the Act laid down by the Courts namely the genuineness of the proviso Section 68 of the Act laid down by the Courts namely the genuineness of the proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the transaction, identity and the capacity of the investor have all been examined by the transaction, identity and the capacity of the investor have all been examined by the impugned order of the T impugned order of the Tribunal and on facts it was found satisfied. Further it was a ribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium submission on behalf of the Revenue that such large amount of share premium submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovel bogus. The Apex Court in Lovely Exports (P.) Ltd.(supra) in the context to the pre y Exports (P.) Ltd.(supra) in the context to the pre- amended Section 68 of the Act has held that where the Revenue urges that the amended Section 68 of the Act has held that where the Revenue urges that the amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders amount of share application money has been received from bogus shareholders amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed b then it is for the Income Tax Officer to proceed by reopening the assessment of such y reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle shareholders and assessing them to tax in accordance with law. It does not entitle shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. the Revenue to add the same to the assessee's income as unexplained cash credit. the Revenue to add the same to the assessee's income as unexplained cash credit. (f) In the above circumstances and particularly in view (f) In the above circumstances and particularly in view of the concurrent finding of of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained. not give rise to any substantial question of law. Thus not entertained.

I.T.A. No. 2390/Kol/2019 Assessment Year: 2012-13 M/s. Shreenath Holding Pvt. Ltd

(c) In CIT Vs Anshika Consultants Pvt Ltd (62 taxmann.com 192), the AO (c) In CIT Vs Anshika Consultants Pvt Ltd (62 taxmann.com 192), the AO (c) In CIT Vs Anshika Consultants Pvt Ltd (62 taxmann.com 192), the AO had added the share application monies treating it to be their unaccounted monies routed the share application monies treating it to be their unaccounted monies routed the share application monies treating it to be their unaccounted monies routed though accommodation entries since the shares were issued at a high premium. though accommodation entries since the shares were issued at a high premium. though accommodation entries since the shares were issued at a high premium. The Hon’ble Delhi High Court did not agree with this contention put forth by the The Hon’ble Delhi High Court did not agree with this contention put forth by the The Hon’ble Delhi High Court did not agree with this contention put forth by the Revenue, by observing as under: by observing as under: “Whether the assessee “Whether the assessee-company charged a higher premium or not, should not have company charged a higher premium or not, should not have been the subject matter of the enquiry in the first instance. Instead, the issue was been the subject matter of the enquiry in the first instance. Instead, the issue was been the subject matter of the enquiry in the first instance. Instead, the issue was whether the amount invested by the share applicants were from whether the amount invested by the share applicants were from legitimate sources. legitimate sources. The objective of section 68 is to avoid inclusion of amount which are suspect. The objective of section 68 is to avoid inclusion of amount which are suspect. The objective of section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, Therefore, the emphasis on genuineness of all the three aspects, identity, Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is creditworthiness and the transaction. What is disquieting in the present case is creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed, the investigation report which was hen the assessment was completed, the investigation report which was hen the assessment was completed, the investigation report which was specifically called from the concerned department was available but not discussed specifically called from the concerned department was available but not discussed specifically called from the concerned department was available but not discussed by the Assessing Officer. Had he cared to do so, the identity of the investors, the by the Assessing Officer. Had he cared to do so, the identity of the investors, the by the Assessing Officer. Had he cared to do so, the identity of the investors, the genuineness of the tr genuineness of the transaction and the creditworthiness of the share applicants ansaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants' particulars were would have been apparent. Even otherwise, the share applicants' particulars were would have been apparent. Even otherwise, the share applicants' particulars were available with the Assessing Officer in the form of balance sheets income available with the Assessing Officer in the form of balance sheets income available with the Assessing Officer in the form of balance sheets income-tax returns, PAN details etc. While arrivi returns, PAN details etc. While arriving at the conclusion that he did, the Assessing ng at the conclusion that he did, the Assessing Officer did not consider it worthwhile to make any further enquiry but based his Officer did not consider it worthwhile to make any further enquiry but based his Officer did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be order on the high nature of the premium and certain features which appeared to be order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had bee suspect, to determine that the amount had been routed from the assessee's account n routed from the assessee's account to the share applicants' account. As held concurrently by the Commissioner to the share applicants' account. As held concurrently by the Commissioner to the share applicants' account. As held concurrently by the Commissioner (Appeals) and the Tribunal, these conclusions were clearly baseless and false. This (Appeals) and the Tribunal, these conclusions were clearly baseless and false. This (Appeals) and the Tribunal, these conclusions were clearly baseless and false. This Court is constrained to observe that the Assessing Officer u Court is constrained to observe that the Assessing Officer utterly failed to comply tterly failed to comply with his duty considers all the materials on record, ignoring specifically the most with his duty considers all the materials on record, ignoring specifically the most with his duty considers all the materials on record, ignoring specifically the most crucial documents.” crucial documents.” 51. We also rely on the following judgments of the Coordinate Bench of ITAT 51. We also rely on the following judgments of the Coordinate Bench of ITAT 51. We also rely on the following judgments of the Coordinate Bench of ITAT Kolkata, where based on same facts, and identical a Kolkata, where based on same facts, and identical and common grounds and nd common grounds and coordinate Bench deleted the addition: coordinate Bench deleted the addition: (1) M/s Jagannath Banwarilal Texofabs Pvt Ltd, in ITA No. 1762/Kol/2016, For A.Y. (1) M/s Jagannath Banwarilal Texofabs Pvt Ltd, in ITA No. 1762/Kol/2016, For A.Y. (1) M/s Jagannath Banwarilal Texofabs Pvt Ltd, in ITA No. 1762/Kol/2016, For A.Y. 2012- 13, order dated 26.10.2018. 13, order dated 26.10.2018. (2) M/s Wiz-Tech Solutions Pvt Ltd, in ITA No.1162/kol/2015,for A.Y. 2012 Tech Solutions Pvt Ltd, in ITA No.1162/kol/2015,for A.Y. 2012 Tech Solutions Pvt Ltd, in ITA No.1162/kol/2015,for A.Y. 2012-13, order dated 14.06.2018. order dated 14.06.2018. 52. To conclude, Section 68 of the Act provides that if any sum found credited in the 52. To conclude, Section 68 of the Act provides that if any sum found credited in the 52. To conclude, Section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be year in respect of which the assessee fails to explain the nature and source shall be year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the assessed as its undisclosed income. In the facts of the present case, both the nature present case, both the nature & source of the share application received was fully explained by the assessee. We & source of the share application received was fully explained by the assessee. We & source of the share application received was fully explained by the assessee. We note that the share application money and share premium money which were note that the share application money and share premium money which were note that the share application money and share premium money which were received by the assessee company from the two share applicant compani received by the assessee company from the two share applicant compani received by the assessee company from the two share applicant companies viz: M/s. Prism Vintrade Private Limited, and M/s. Gannet Prism Vintrade Private Limited, and M/s. Gannet-Vintrade Private Limited, during Vintrade Private Limited, during the period December, 2012 to March, 2013 had already been suffered disallowance the period December, 2012 to March, 2013 had already been suffered disallowance the period December, 2012 to March, 2013 had already been suffered disallowance under section 68 of the Act. As these two share applicant companies invested the under section 68 of the Act. As these two share applicant companies invested the under section 68 of the Act. As these two share applicant companies invested the same money in the assessee company, therefore, no further disallowance is ame money in the assessee company, therefore, no further disallowance is ame money in the assessee company, therefore, no further disallowance is warranted in the hands of the assessee company. Once taxed income cannot be warranted in the hands of the assessee company. Once taxed income cannot be warranted in the hands of the assessee company. Once taxed income cannot be taxed again. In the case of third company, M/s Haven Vincom Pvt. Ltd, the assessment, In the case of third company, M/s Haven Vincom Pvt. Ltd, the assessment, In the case of third company, M/s Haven Vincom Pvt. Ltd, the assessment, pertaining to the A pertaining to the AY. 2010-11 was not revised by the Department. That is, M/s 11 was not revised by the Department. That is, M/s Haven Vincom Pvt. Ltd has raised share capital and share premium which has not Haven Vincom Pvt. Ltd has raised share capital and share premium which has not Haven Vincom Pvt. Ltd has raised share capital and share premium which has not been treated by the Department as cash credit under section 68 of the Act and has been treated by the Department as cash credit under section 68 of the Act and has been treated by the Department as cash credit under section 68 of the Act and has not been disallowed by the assessing not been disallowed by the assessing officer in the assessment of M/s Haven Vincom officer in the assessment of M/s Haven Vincom

I.T.A. No. 2390/Kol/2019 Assessment Year: 2012-13 M/s. Shreenath Holding Pvt. Ltd

Pvt. Ltd ( vide assessment order Pvt. Ltd ( vide assessment order-paper book pg.173) . We note that M/s Haven paper book pg.173) . We note that M/s Haven Vincom Pvt. Ltd has utilized the same money ( which it received by raising share Vincom Pvt. Ltd has utilized the same money ( which it received by raising share Vincom Pvt. Ltd has utilized the same money ( which it received by raising share capital/premium and not disallowed by AO, u/s 68) t capital/premium and not disallowed by AO, u/s 68) to purchase the share capital o purchase the share capital and share premium in the assessee company (M/s C.P. RE Rollers Ltd) therefore it and share premium in the assessee company (M/s C.P. RE Rollers Ltd) therefore it and share premium in the assessee company (M/s C.P. RE Rollers Ltd) therefore it should not be disallowed under section 68 of the Act, in the hands of the assessee should not be disallowed under section 68 of the Act, in the hands of the assessee should not be disallowed under section 68 of the Act, in the hands of the assessee company, as the Department itself accepted genuine money in the company, as the Department itself accepted genuine money in the hands of M/s hands of M/s Haven Vincom Pvt. Ltd. Hence, in the case of M/s Haven Vincom Pvt. Ltd, the Haven Vincom Pvt. Ltd. Hence, in the case of M/s Haven Vincom Pvt. Ltd, the Haven Vincom Pvt. Ltd. Hence, in the case of M/s Haven Vincom Pvt. Ltd, the identity, creditworthiness and genuineness have been proved beyond doubt. In case identity, creditworthiness and genuineness have been proved beyond doubt. In case identity, creditworthiness and genuineness have been proved beyond doubt. In case of Sushma Chawala for share application of Rs.4,22,500/ of Sushma Chawala for share application of Rs.4,22,500/- and share premium of Rs. and share premium of Rs. Rs.4,22,500/-, the ld Counsel explained the identity, creditworthiness and , the ld Counsel explained the identity, creditworthiness and , the ld Counsel explained the identity, creditworthiness and genuineness therefore no disallowance can be made. Besides, the assessee had genuineness therefore no disallowance can be made. Besides, the assessee had genuineness therefore no disallowance can be made. Besides, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the discharged its onus to prove the identity, creditworthiness and genuineness of the discharged its onus to prove the identity, creditworthiness and genuineness of the these three share appli these three share applicants by submitting the following documents and evidences: cants by submitting the following documents and evidences: 1) Return of ROC, that is, form No. 2 submitted before R.O.C. 1) Return of ROC, that is, form No. 2 submitted before R.O.C. 2) PAN Number copies of each share subscriber. 2) PAN Number copies of each share subscriber. 3) Copy of Balance Sheet, Profit and loss account of all share applicant companies. 3) Copy of Balance Sheet, Profit and loss account of all share applicant companies. 3) Copy of Balance Sheet, Profit and loss account of all share applicant companies. 4) Details of investments sold by all share applicant companies. 4) Details of investments sold by all share applicant companies. 5).Transaction with the assessee was duly highlighted in the bank statement 5).Transaction with the assessee was duly highlighted in the bank statement 5).Transaction with the assessee was duly highlighted in the bank statement 6). Explanation along with evidence of source of source of the funds of the share 6). Explanation along with evidence of source of source of the funds of the share 6). Explanation along with evidence of source of source of the funds of the share applicant Companies. applicant Companies. 7). Audited Accounts of the share holders. ted Accounts of the share holders. 8) Relevant address proofs / Form filed by the share applicants with ROC. 8) Relevant address proofs / Form filed by the share applicants with ROC. 8) Relevant address proofs / Form filed by the share applicants with ROC. 9). Income Tax Return of share applicant companies. 9). Income Tax Return of share applicant companies. 10) Copy of the Bank Statement of Share applicant companies where from the 10) Copy of the Bank Statement of Share applicant companies where from the 10) Copy of the Bank Statement of Share applicant companies where from the amount was debite amount was debited. 11) Copies of Bank statement of the assessee company where d. 11) Copies of Bank statement of the assessee company where the share application money and premium were credited. the share application money and premium were credited. 12). Cheque Number, the amounts subscribed by shareholders along with the name 12). Cheque Number, the amounts subscribed by shareholders along with the name 12). Cheque Number, the amounts subscribed by shareholders along with the name of bank its branch address and the number of shares allotte of bank its branch address and the number of shares allotted to them with face d to them with face value on the date of allotment. value on the date of allotment. 13) Common Director of the share applicant companies ( who is director in assessee 13) Common Director of the share applicant companies ( who is director in assessee 13) Common Director of the share applicant companies ( who is director in assessee company as well as share applicant companies) appeared before the assessing company as well as share applicant companies) appeared before the assessing company as well as share applicant companies) appeared before the assessing officer in response to notice u/s 131 of the officer in response to notice u/s 131 of the Income Tax Act and submitted Income Tax Act and submitted documents and evidences before the AO. documents and evidences before the AO. Thus, all above documents that is, the PAN details, bank account statements, Thus, all above documents that is, the PAN details, bank account statements, Thus, all above documents that is, the PAN details, bank account statements, audited financial statements, balance sheet, profit and loss account, Income Tax audited financial statements, balance sheet, profit and loss account, Income Tax audited financial statements, balance sheet, profit and loss account, Income Tax acknowledgments, and ROC statements etc were placed on AO's record. One of the acknowledgments, and ROC statements etc were placed on AO's record. One of the acknowledgments, and ROC statements etc were placed on AO's record. One of the directors of share directors of share applicant companies appeared before the AO in response to applicant companies appeared before the AO in response to summon u/s131 of the Act and explained the genuineness of three share applicants. summon u/s131 of the Act and explained the genuineness of three share applicants. summon u/s131 of the Act and explained the genuineness of three share applicants. Therefore, considering this factual position and precedents relied on the subject, as Therefore, considering this factual position and precedents relied on the subject, as Therefore, considering this factual position and precedents relied on the subject, as noted above, we delete the add noted above, we delete the addition made by the assessing officer U/s 68 of the Act ition made by the assessing officer U/s 68 of the Act to the tune of Rs.17,49,95,000/ to the tune of Rs.17,49,95,000/- 53. In the result, the appeal of the assessee is allowed.” 53. In the result, the appeal of the assessee is allowed.”

Applying the proposition of law laid down in the above referred cases to Applying the proposition of law laid down in the above referred cases to Applying the proposition of law laid down in the above referred cases to 10. the facts of this case and keeping in view the fact for the share applicant company the facts of this case and keeping in view the fact for the share applicant company the facts of this case and keeping in view the fact for the share applicant company have been assessed to tax u/s 143(3) of the Act and the source of money in have been assessed to tax u/s 143(3) of the Act and the source of money in have been assessed to tax u/s 143(3) of the Act and the source of money in question was brought to question was brought to tax in their hands, we uphold the order of the ld. CIT(A) tax in their hands, we uphold the order of the ld. CIT(A) that no additions can be made in the case of the assessee company. that no additions can be made in the case of the assessee company.

I.T.A. No. 2390/Kol/2019 Assessment Year: 2012-13 M/s. Shreenath Holding Pvt. Ltd

Kolkata, the Kolkata, the 26th day of February, 2020. Sd/- [J. Sudhakar Reddy] Accountant Member Member Dated : 26.02.2020 {SC SPS} Copy of the order forwarded to: opy of the order forwarded to: 1. M/s. Shreenath Holding Pvt. Ltd M/s. Shreenath Holding Pvt. Ltd 33/34, Ramlal Mukherjee Lane 33/34, Ramlal Mukherjee Lane 2nd Floor Room No. 2D Howrah - 711106 2. Income Tax Officer, Ward-5(1), Kolkata 5(1), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.