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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 05.07.2023 for the AY 2012-13.
The only issued raised by the Revenue is against the deletion of addition of ₹3,55,65,468/- as made by the ld. AO u/s 68 of the Act towards unexplained cash credit being share capital/ share premium.
The facts in brief are that the assessee filed the return of income showing total income at ₹18,400/-. Thereafter the case of the assessee was selected for scrutiny under CASS and statutory notices were duly issued and served upon the assessee. The assessee filed before the ld. AO the computation of income, audited financial
The assessee preferred the appeal before the ld. CIT (A), who allowed the appeal of the assessee. The ld. CIT (A) after taking into consideration the contentions/ submissions of the assessee deleted the addition by observing and holding as under:-
“5. Decision: The appellant in its ground of appeal has assailed the AO in making the assessment under section 144 without allowing the assessee any reasonable opportunity of being heard and in adding Rs. 3,54,76000/- as unexplained cash credit u/s 68of the Act. Further the assessee assailed the AO in making disallowance of Rs. 88,648/- under section 14A read with Rule 8D when neither expense was incurred for earning any exempt income nor any satisfaction was recorded having regard to the accounts of the assessee before making such disallowance. The AO relied on the decision of the ITAT in case of Bisakha Sales Pvt. Ltd. vs CIT-II, Kolkata in and proceeded to add the share premium u/s 68of the Act. 5.1 The appellant in its submission submitted that the assessment proceedings were started at the fag-end of the assessment year when the proceedings were getting barred by limitation. The appellant submitted that it had complied with all the requisite information required by the AO for completion of the 6. Ld. Counsel for the assessee vehemently submitted before the bench that the order passed by the Ld. CIT(A) is cogent , reasoned and passed after taking into account the facts record and various decisions given by different judicial forum. The Ld. AR ,while referring to the evidences filed by the assessee as well as by the subscribers, submitted that the assessee as well as the subscribers have filed all the evidences proving the identity and creditworthiness of the subscribers as well as genuineness of the transactions. The Ld. AR referred to the replies filed in response to summons u/s. 131 of the Act and submitted that the AO has not pointed out any defect or deficiency in these evidences, which abundantly proved the three conditions of section 68 of the Act. The Ld. AR stated that where the assessee has filed all the evidences qua the subscribers consisting of names and addresses, PANs, audited accounts, bank statements etc. and AO has not carried out any further verification, then the addition cannot make the addition merely on the ground that there was no (i) CIT Vs. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (SC); (ii) CIT Vs. Orchid Industries Ltd. 397 ITR 136 (Bom); (iii) Crystal Networks Pvt. Ltd. Vs. CIT 353 ITR 171 (Kol); (iv) ITO Vs. M/s. Cygnus Developers India Pvt. Ltd.(ITA No. 282/Kol/2012) and (v) Joy Consolidated Pvt. Ltd. Vs. ITO (ITA No. 547/Kol/2020.
7. After hearing the rival contentions and perusing the material on record, we find that the assessee has furnished before the AO as well as the Ld. CIT(A) all the evidences qua raising the share capital/ share premium during the year comprising the proofs of PAN cards, list of directors with share holders with DIN, copies of ITRs, copies of bank statements with full narration as to credit and debit entries, source of funds in the hands of investors etc. We note that assessee during the year has issued equity shares of face value of Rs.10/- each at a premium of ₹490/- to various subscribers from whom the assessee has received Rs. 3,54,76,000/-.We find that though the assessee company/investors did not comply with summon u/s 131 by producing the director / principal officer/ individual of the share subscribing companies however, we note that they have filed all the details before the AO. We note that the AO has not done any verification on the evidences furnished by the assessee as well as by the share subscribers independently and has not pointed any defect of any kind whatsoever. We note that the AO has only harped on the fact that the directors did not turn up on the date and time giving for personal deposition. Besides the AO has harped on the fact that these “That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so- called alleged creditors. In those circumstances, the respondent could not do “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 creditworthiness. As rightly pointed out by the learned counsel that the Ld. CIT(A) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi 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 note. When it was found by the Ld. CIT(A) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact findings. Indeed the Tribunal did not really touch the aforesaid fact finding of the Ld. CIT(A) 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 463, the Supreme Court has observed as follows: “The Income-Tax Appellate Tribunals 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 records its findings on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law.”
“8. We have heard the submissions of the learned D.R, who relied on the order of AO. The learned counsel for the assessee relied on the order of Ld. CIT(A) and further drew our attention to the decision of Hon’ble Allahabad High Court in the case of CIT vs. Raj Kumar Agarwal vide dated 17.11.2009 wherein the Hon’ble Allahabad High Court took a view that non- production of the director of a Public Limited Company which is regularly assessed to Income tax having PAN, on the ground that the identity of the investor is not proved cannot be sustained. Attention was also to the similar ruling of the ITAT Kolkata bench in the case of ITO vs. Devinder Singh Shant in vide order dated 17.04.2009.
We have considered the rival submissions. We are of the view that order of Ld. CIT(A) does not call for any interference. It may be seen from the grounds of appeal
raised by the revenue that the revenue disputed only the proof of identity of share holder. In this regard it is seen that for AY 2004
05. Shree Shyam Trexim Pvt. Ltd. was assessed by ITO, Ward-9(4), Kolkata and the order of assessment u/s 143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd. was assessed to tax u/s 143(3) for AY 2005-06 by ITO, Ward-9(4), Kolkata by order dated 20.03.2007. Similarly Jewellock Trexim Pvt. Ltd. was assessed to tax for AY 2005-06 by the very same ITO, Ward-9(3), Kolkata assessing the assessee. In the light of the above factual position which is not disputed by the revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. The decision of the Hon’ble Allahabad High Court as well as ITAT, Kolkata Bench on which reliance was placed by the learned counsel for the assessee also supports the view that for non-production of directors of the investor company
11. In the instant case before us also, the assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but AO has not commented on these evidences filed by the assessee. Besides the investors have also furnished complete details/evidences before the AO which proved the identity, creditworthiness of investors and genuineness of the transactions. Under these facts and circumstances and considering underlying facts in the light of ratio laid down in the decisions as discussed above , we are inclined to uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 31.12.2024.