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Income Tax Appellate Tribunal, GUWAHATI BENCH, GUWAHATI
Appearances by: Department represented by : Kausik Ray, JCIT Assessee represented by : Ramesh Goenka, Advocate Date of concluding the hearing : 24.04.2025 Date of pronouncing the order : 02.05.2025
ORDER
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
1. The present appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereinafter “the Act”), passed by the Ld. Commissioner of Income Tax (Appeals), Central NER, Guwahati [hereafter the Ld. CIT(A)”] vide order dated 22.07.2024 for AY 2018-19.
1.1 It is seen that this case was selected for limited scrutiny for verifying exports/imports and share capital. During the course of assessment proceedings it is seen that the Ld. AO has recorded about the alleged failure to prove the creditworthiness and genuineness of the transaction 1.2 Before the Ld. CIT(A), the assessee filed several additional documents as new evidence for which a remand report was called from the Ld. AO. It is noteworthy that the remand report has been extensively reproduced between pages 84 to 88 of the impugned order. It is also noted with concern that instead of commenting on the new evidence the Ld. AO has merely submitted to make out a case for non-admission of the same before the Ld. CIT(A) and has not commented on the merit of the documents before him. The concluding portion from the remand report deserves to be extracted as under:
“However, it is pertinent to note that, because of huge workload and time barring assessments and penalty matters the undersigned could not devote time to examine all the facts of the case, hence the Ld. CIT(A), is requested to look into the matter of admissibility of additional evidence in an objective manner and accept evidences on merits.
1. Veracity and Merits of the additional evidences/submissions: Since, due to huge time barring assessment pendency, I have not been able to properly examine the voluminous documents furnished by the assessee, in its Paper Book. Hence, I am unable to comment on the “Veracity and Merits” of the additional submissions made by the assessee..” Thereafter, the Ld. CIT(A) has deal with at length on the fresh evidence etc. and has given the following findings:
“7.4.13. In view of my above discussion, the following conclusions can be drawn.
The entire share capital has been issued at Face Value of Rs. 10/- each and no amount of premium is involved.
The share applicants from whom share application money was received, are not outsiders but they are all either promoters of the appellant or their group companies.
3. The appellant has submitted all the requisite details of the share applicants, viz. PAN, copies of ITR Acknowledgement, Financial Statements, copies of share application forms, bank statements evidencing the share transactions, vide submissions made during the course of assessment proceedings, remand proceedings and instant appellate proceedings. Therefore, the appellant has duly discharged the primary onus cast upon it under the provisions of Section 68 of the Act. In respect of the additional burden cast upon the appellant under proviso to 2 S.M. JDB Estate (Pvt.) Ltd. section 68 of the Act, it is observed that the documents placed on record duly evidence the ‘source of source’ of the investment made by the share applicants in the appellant’s share capital, viz. PAN, copies of ITR Acknowledgement, Financial Statements, account confirmation and bank statements of the ‘source of source’ etc. It is thus noted that the sources of money from which the share applicants could subscribe in the appellant company were clearly discernible. The Appellant, has therefore duly discharged its additional burden of substantiating the ‘source of source’ of funds as per requirement of proviso to Section 68 of the Act.
Moreover, the AO has failed to bring on record, any material to prove that the share capital received by the appellant was its own unaccounted money. The AO could not point out any specific infirmity in the evidences placed on record by the appellant. In the Remand Report, the AO did not make any adverse inference in respect of the additional evidence furnished by the appellant. The Appellant was able to substantiate all its claims with proper documentary evidence.
5. The impugned addition has been made by the AO / NFAC without conducting any enquiries and without bringing any adverse material on record.
On similar facts & circumstances, the Hon’ble ITAT, Mumbai in the case of Chemicon Engineering Consultant (P.) Ltd. Vs. A.C.I.T. (2022) 142 taxmann.com 297 (Mumbai-Trib) held that where the assessee had submitted all the requisite documents necessary to substantiate the source as well as the ‘source of source’ of funds, and where no material had been brought on record by the Assessing Officer to prove the existence of any unaccounted money, share capital received by the assessee was not to be treated as Unexplained Cash Credit U/s. 68 of the Act. 7.4.14. In view of the above discussions, the share capital in the instant case cannot be treated as unexplained cash credit within the meaning of the provisions of Section 68 of the IT Act. Thus, the addition of Rs. 26,18,83,100/- made by the Assessing Officer U/s. 68 of the Income Tax Act, 1961, is hereby deleted. Ground Nos. 3, 4, 5 & 7 are therefore, allowed.
2. Aggrieved with the action of Ld. CIT(A), the Revenue is in appeal with the following grounds:
“1. That on the facts of the case as well as in law, where the Ld. CIT(A) has erred in allowing the appeal of the assessee and deleting the addition of Rs. 26,18,83,100/- by not appreciating that the addition under section 68 of the Act was made on the basis of material on record.
2. That on the facts of the case as well as in law, whether the Ld. CIT(A) has erred in allowing the appeal of the assessee and deleting the addition of Rs. 26,18,83,100/- by not taking into account the fact that the bank statements of the shareholders did not reflect that the shareholders had the requisite creditworthiness to invest in the shares of the assessee company.
3. The appellant craves the leave to add/modify/alter any or all the grounds during the course of hearing/pendency of appeal.” 2.1 Before us, the Ld. DR supported the order of Ld. AO and stated that the Ld. AO was justified in treating the share capital u/s 68 of the Act S.M. JDB Estate (Pvt.) Ltd. since the full set of facts was not before him. Per contra, the Ld. AR stated that considerable number of additional documents were filed before the Ld. CIT(A) and the Ld. AO had every opportunity to give his comments on the same. The Ld. AR further stated that since the Ld. AO chose not to comment on the additional evidence hence, the assessee could not be faulted in case the appeal was decided in his favour.
We have carefully perused the documents placed before us and have heard the rival submissions. It is seen that the Ld.AO has not chosen to comment on the additional documents (evidences) filed before the Ld. CIT(A) under the excuse of being overburdened with work. It is also seen that there is no application filed by the Ld. AO for seeking extra time for furnishing his report before the Ld. CIT(A). Thereafter, if the Ld. CIT(A) has taken a holistic view of the documents produced before him and arrived at a conclusion in favour of the assessee, then we cannot find any fault with that finding. In light of this discussion, it is held that the conclusion drawn by the Ld. CIT(A) extracted supra, are based on the documents before him and thus, his finding deserves to be upheld.
4. Before parting with this issue, it deserves to be mentioned that in this case the Ld. AO is seen to have been casual in dealing with a sensitive matter like furnishing details and comments on a huge addition representing share capital. We can only regret the action of the Ld. AO in this regard.
In the result, the Revenue’s appeal is dismissed.
Order pronounced on 02.05.2025