ITO, WARD - 12(1), KOLKATA , KOLKATA vs. M/S. CALCUTTA CARBIDE PVT. LTD., , KOLKATA

आदेश /O R D E R PER S.S.Godara, Judicial Member:-

Heard both the parties. Case file perused.

ITO Wd-12(1), Kol. Vs. M/s Calcuta Carbide Pvt. Ltd. Page 3 3.3 From assessment order your Ld. self will notice that AO has to say nothing as to above documents filed. AO is not correct in saying that director of the investor Co. Shri Manoj Kumar Bhalotia is a director in both companies and paragraph No. 4 AO admits that Shri M. Bhalotia appeared and his deposition was taken. He directly jumped upon the decision in Bisakha Sales Pvt. Ltd. vs. CIT in which relate to section 263 of the I.T. Act, 1961.

“Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad Bench {"Tribunal" for short} raising the following substantial question for our consideration : "Whether Appellate Tribunal has erred in law and on facts in deleting the addition made by the Assessing Officer on account of Rs. 9,99,99,900/= as per the provision of Section 68 of the Income-tax Act, without properly appreciating the facts of case and the material brought on record ?"

ITO Wd-12(1), Kol. Vs. M/s Calcuta Carbide Pvt. Ltd. Page 4

C/TAXAP/1180/2018 ORDER The issue pertains to the share application money received by the respondent-assessee-company. The Assessing Officer added a sum of Rs. 9.99 Crores [rounded off] in the hands of the assessee with the aid of Section 68 of the Income- tax Act, 1961 ["the Act" for short]. CIT [A] deleted such addition primarily on the ground that the assessee had established the source, genuineness of the transactions and the creditworthiness of the investors. In further detailed consideration, the Tribunal confirmed the view of CIT [A], making the following observations :- "I have carefully considered the facts of the case, the assessment order and the written submission of the appellant. The appellant has received an amount of Rs. 9,99,99,900/- on account of share capital and share premium from M/s. General Capital and Holding Co. Pvt. Ltd, Ahmedabad during the year. The AO held that the creditworthiness and the genuineness of the transaction were not proved by the appellant and accordingly made the addition under Section 68 of the Act for the above amount. The appellant has submitted that all three ingredients such as, credit worthiness, genuineness and the identity of the share applicant have been proved and therefore, the addition should not have been made by the AO. C/TAXAP/1180/2018 ORDER During the course of appellate proceedings, the assessment records were also obtained from AO and the same have also been examined by me to ascertain the facts correctly. The share applicant company M/s. General Capital has been duly confirmed the fact of making investment in the appellate company. The amounts have been received through banking channel. The same are duly reflected in the annual accounts of that company. The extracts of the bank statement which have been filed before me during the course of appellate proceedings as well as before the AO clearly show that there are no cash deposits as mentioned by the AO in the assessment order. The observation of the AO that the cash has been deposited and subsequently cheques were issued is factually incorrect. The director of the company also attended before AO and confirmed the fact. It is also noted that both the companies, that is the appellant company as well as the share applicant are managed by the same group of persons. Honourable High Court of Gujarat has consistently held that if the assessee has given sufficient proof in respect of the share application, no addition can be made in the hands of the assessee. If the AO has any doubt about the source of the share applicant further investigation can be made in the hands of the share applicant, but not in the case of the appellant. ." C/TAXAP/1180/2018 ORDER It can thus be seen that the entire issue is based on appreciation of material on record. CIT [A] and the Tribunal concurrently came to the conclusion that the assessee had discharges its basic onus. The investors have confirmed the transactions. Such transactions were carried out through the banking channel. The director of the investing company had also appeared before the Assessing Officer and also confirmed the transactions. The CIT [A] and the Tribunal also did not confirm the Assessing Officer's finding that the assessee failed to establish the creditworthiness or genuineness of the transactions. No question of law arises. Tax Appeal is dismissed.”

We hold in this factual and legal backdrop that the CIT(A) has rightly deleted impugned unexplained cash credits addition qua share capital/premium coming from assessee’s existing stake-holder entity having common director. The Revenue’s instant former substantive grievance is declined.

ITO Wd-12(1), Kol. Vs. M/s Calcuta Carbide Pvt. Ltd. Page 5

4. Next comes section 14A r.w. Rule 8D disallowance of Rs.6,09,826/-. Suffice to say, the assessee has not derived any exempt income in the impugned assessment years. Hon’ble jurisdictional high court’s in CIT vs. M/s Ashika Global Securities Ltd. GA 2122 of 2014 held that the impugned disallowance even does not apply in absence of exempted income. The Revenue’s latter substantive ground fails for this precise reason.