ITO, WARD-6(1), KOLKATA vs. M/S DANIEL COMMODITIES PVT. LTD., KOLKATA

आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal by the revenue and the corresponding cross objections by the assessee have been preferred against the order dated 08.09.2020 of the Commissioner of Income Tax (Appeals)-7, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd

C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd

C.O. 4/Kol/2023 : -

5. At the outset, the ld. counsel for the assessee has submitted that in this case, the reopening of the assessment u/s 147 r.w.s. 148 of the Act was bad in law for want of jurisdiction to the Assessing Officer to reopen the assessment in the absence of approval of the competent authority u/s 151 of the Act, therefore, the subsequent order passed by the CIT, Kolkata-II u/s 263 of the Act setting aside assessment order passed u/s 147 of the Act for de-novo assessment was not sustainable as the order passed by the Assessing Officer u/s 147 of the Act, itself, was non-est. The ld. counsel, therefore, has submitted that the subsequent proceedings in relation to order passed u/s 147 of the Act being bad in law and were to be treated as non-est. That, under the circumstances, the additions made by the Assessing Officer were not sustainable in the collateral proceedings to the order passed u/s 147 of the Act. The ld. counsel in this respect has made the following written submissions relying upon the various case laws:

C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd “In this case the original notice u/s 148 of the Act was issued without any approval u/s 151 of the Act and therefore the said notice and the proceedings are bad in law and thus all the subsequent proceedings based on such notice is also bad in law. It is established that the reopening u/s 148 of the Act in this case was bad in law and thus the said reopening and the consequential assessment order was bad in law. Once the assessment order is found to be bad in law and without jurisdiction, it is settled law that the jurisdiction can be challenged at any stage/proceedings and even that it can be raised before the Hon’bie Apex Court for the first time. In this case, the primary proceedings is the AO’s action of re-opening the assessment by issuance of notice u/s 148 of the Act which was an action without jurisdiction for the reasons stated in above paragraphs. So the action of AO can be challenged in collateral proceedings u/s 263 of the Act as held by the Tribunal in which several decision of Hon’ble Supreme Court has been taken note and relied on the following decision of the Tribunal as under:

(a) In the case of KESHAB NARAYAN BANERJEE VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER [1999] 238 ITR 694, 156 CTR 109, 101 TAXMANN 512 the Hon’ble Calcutta High Court: We have, therefore, no hesitation in holding that the service by registered post of the notices allegedly sent to the appellant writ applicant, resulting in the passing of the order under section 147 of the Act was not properly effected or accomplished. Since, admittedly, the service of such notices was a necessary pre- requisite, a condition precedent for passing of the orders under section 147 of the Act, we also have no hesitation in holding that such orders were bad in law, and, therefore, the proceedings under section 263 of the Act, admittedly, originating from such orders could not be initiated against the appellants. The service of such notices, therefore, not having taken place, the Commissioner of Income-tax was not in law justified to invoke his jurisdiction under section 263 of the Act. On an overall consideration, therefore, we do not find ourselves in agreement with the view taken by the learned single judge that the notice under section 147/148 of the Income-tax Act was properly served by registered post. We set aside such finding of the learned single judge and because the entire basis of the operative part of the judgment of the learned single judge proceeded on the premises of due service of the registered cover, contents being subject to proof, such basis having been knocked out, nothing survives in so far as the operative part of the judgment under appeal is concerned. The judgment under appeal, therefore, is set C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd aside in so far as the operative part is concerned. The appeal accordingly is allowed, but without any order as to costs. b) In the case of Supersonic Technologies (P) Ltd. vs. PCIT in dated 10.12.2018 (ITAT-Delhi) ITA No. 3009 to 3012 /Del/2017

6.1. ………..It is well settled Law that assessee can challenge the validity of the re-assessment proceedings in the collateral proceedings (relating to examination of validity of Order passed) under section 263 of the I.T. Act. We rely upon the Order of ITAT, Mumbai Bench in the case of Westlife Development Ltd., vs. PCIT 49 ITR (Tribu.) 406 in which it was held “allowing the appeal (i) that jurisdiction aspect of the Order passed in the primary proceedings can be examined in collateral proceedings also. Thus, the assessee could be permitted to challenge the validity of the Order passed under section 263 on the ground that the assessment order was non-est.

Since the reassessment order itself is bad in law, therefore, Learned Counsel for the Assessee, rightly contended that the same cannot be revised under section 263 of the I.T. Act. Only valid re-assessment order can be revised under section 263 of the I.T. Act. On this ground itself the proceedings under section 263 of the I.T. Act are bad in law and liable to be quashed. We, accordingly, set aside the Order of Ld. Pr. CIT passed under section 263 of the I.T. Act and quash the same. c) In the case of M/s CharbhujaMarmo (India) (P) Ltd. vs. PCIT in dated 31.12.2019 (ITAT, Delhi)

“6. We have considered the rival submissions. It is well settled Law that since reassessment proceedings are invalid and bad in law, therefore, such proceedings could not be revised under section 263 of the I. T. Act. It is also well settled Law that validity of the re- assessment proceedings are to be judged on the basis of the reasons recorded for reopening of the assessment.’’ He further placed reliance upon the following judgments: - “ M/s Westlife Development Ltd. vs. PCIT in dated24.06.2016 (ITAT, Mumbai) - Krishna Kumar Sarafvs. CIT in ITA No. 4562/Del/2011 dated 24.09.2015 C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd (ITAT, Delhi) - M/s Classic Flour & Food Processing (P) Ltd. vs. CIT in ITA No. 764 to 766/Kol/2014 dated 05.04.2017 (ITAT, Koikata)” d) In the case of the Lucknow Bench of ITAT in the case of Inder Kumar Bachani (HUF) vs ITO 99 ITD 621 (Luck) and ITAT Mumbai ‘ G ‘ Bench in the case of M/s. Westlife Development Ltd. Vs Principal C.l.T. in ITA No.688/Mum/2016. In both the decisions a view has been taken by the Tribunal that when an Assessment order passed u/s 147 of the Act was without jurisdiction, the Ld. PCIT cannot invoke the jurisdiction u/s 263 of the Act against such void or non-est order. In the second decision cited the Mumbai bench of the Tribunal has specifically framed the following questions “ 1. Whether the assessee can challenge the validity of an assessment order during the appellate proceedings pertaining to examination of validity of order passed u/s 263? 2. Whether the impugned assessment order passed u/s 143(3) dated 24-10-2013 was valid in the eyes of law or a nullity as has been claimed by the assessee? 3. If the impugned assessment order passed u/s 143(3) was illegal or nullity in the eyes of law, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s 263 to revise the non est assessment order?” On question no. 1 and 3 which is relevant to the present case the Mumbai bench of the Tribunal in the aforesaid case of M/s Westlife Development Ltd. (supra) has taken the view that when the original assessment proceedings are null and void in the eyes of law for want of assumption of jurisdiction, then such validity can be challenged even in collateral proceedings. We note that the Mumbai bench took the view that the proceedings before AO u/s 147 of the Act are primary proceedings and proceedings before Ld PCIT u/s 263 of the Act are collateral proceedings and in such collateral proceedings, the validity of initiation of the re- opening u/s 147 of the Act can be challenged. The Mumbai bench of the Tribunal in this regard has placed reliance on several decisions, the main decision being that of the Hon’ble Supreme Court in the case of Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117 wherein the Hon’ble Supreme Court observed as follows C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd

It is a fundamental principle well-established that a decree passed by ‘ a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject- matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties.

The Mumbai bench of the Ld ITAT made a reference to another decision of the Hon’ble Supreme Court in the case of Sushil Kumar Mehta vs Gobind Ram Bohra, (1990) 1 SCC 193 and the decisions in the case of Indian Bank vs Manilal Govindji Khona (2015) 3 SCC 712. The Mumbai bench also held that if order of assessment passed u/s 147 of the Act was nullity in the eyes of law then that order cannot be revised by invoking powers u/s 263 of the Act by CIT. The Mumbai Bench has in this regard placed reliance on the decision of Delhi bench of the Tribunal in the case of Krishna Kumar Saraf vs CIT in order dated 24.09.2015 wherein it was held as follows “ 17. There is no quarrel with the proposition advanced by Id. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee.

18. However, u/s 263 the Id. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice U/S 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon’ble Madras High Court in the case of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter., C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd

19. While exercising powers u/s 263 Id. Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If Id. Commissioner revises such an assessment order, then it would imply extending/granting fresh limitation for passing fresh assessment order. It is settled law that by the action of the authorities the limitation cannot be extended. Because the provisions of limitation are provided in the same

20. In view of above discussion ground no. 3 is allowed and revision order passed u/s 263 is quashed."

(e) In the case of CONCORD INFRA PROJECTS PVT. LTD. VERSUS PRINCIPAL COMMISSIONER OF INCOME TAX-3, KOLKATA, IT A. No. 174/Kol/2021, dated- October 13, 2021 the Ld ITAT Kolkata following the above decisions quashed the order u/s 263 of the Act by holding as follows:

16. From a perusal of the aforesaid reasons it is evident that the jurisdictional fact/information on which the AO has based his reason to believe escapement of income was that the department received an authentic information that huge value of deposits were made in the bank account of one company called M/s. Miracle and thereafter the money was transferred to some third party account and that further investigation had revealed that large amount of money was routed to the assesses company i.e. M/s. Concord Infra Projects Pvt. Ltd. According to the Ld. AR, this foundational fact on the basis of which the AO had based his “reason to believe escapement of income is factually wrong/erroneous since the foundation fact has been found to be absent, which fact is evident from the factual findings of the Ld. PCIT in the impugned order wherein he has made a specific finding of fact in his conclusion recorded at page 40 of the impugned order wherein he concludes in his own words “in conclusion the relevant fact which Constitute the present case are that the alleged large transaction of M/s. Miracle have not been reached directly/indirectly to the assessee company as C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd evident from bank account of the assessee company nor through share subscriber companies (shareholders) to whom the assessee company has allotted shares." Therefore, according to the Ld. AR, this finding of fact by the Ld. Pr. CIT clearly reveals that the deposits in the bank account of M/s. Miracle has not been routed to the assessee company which assertion of the Ld. A.R. could not be rebutted/contradicted by the Ld. CITDR. So Ergo, we note that the foundation on which the reason to believe escapement of income by the AO to issue notice u/s. 148 of the Act on 17.03.2017 itself was on wrong assumption of fact as is evident from the finding of fact by the Ld. PCIT that no money from M/s Miracle has been routed to the assessee company directly or indirectly whereas the foundation fact on the basis of which reopened the assessment as is evident from the reasons recorded (supra) was that high value of money was deposited in the bank account of M/s Miracle which in-turn has been routed to the assessee through third party in the form of share subscription to the tune of Rs. 8.34 crores which fact was found by Ld. PCIT to be absent. So, the AO’s belief of escapement of income was on wrong assumption of facts and so invocation of reopening jurisdiction by issue of notice u/s 148 of the Act is bad in law and, therefore, the consequent re-assessment order dated 29.12.2017 of the AO is a nullity and, therefore, the order of the Ld. Pr. CIT to interfere in the order of the AO dated 29.12.2017 u/s. 144/147 of the Act is also a nullity and, therefore, the action of the Ld. Pr. CIT to invoke his jurisdiction u/s. 263 of the Act itself was without jurisdiction. Ergo, we hold the impugned order as null in the eyes of law, so we quash it."

(f) Since the assessment order passed under section 147/143(3) was itself illegal and void, Id. CIT(A) was having no justification to invoke jurisdiction under section 263 against such void or non est order. In the case of Paul John, Delicious Cashew Co. v. ITO [2005] 94 ITD 131, the Cochin Bench of the ITAT had considered the similar matter and has observed as under:

9. Section 263 empowers the Commissioner to call for the records and examined of any person and on examining if he C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd forms an opinion that the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interest of revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such orders thereon as the circumstances of the case justify, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. From the above it is very clear that first of all the order passed by the Assessing Officer should be erroneous and also it should be prejudicial to the interest of revenue. If the order is not erroneous, even if it is prejudicial to the interest of revenue, the Commissioner has no revisionary power. If the Assessing Officer has no jurisdiction to pass an order, it is not an order at all. It is null and void. In the instant case it is very clear that on the basis of the policy decision taken by the Board, the Assessing Officer’s power is taken away to reopen the assessment under Section 147. If the Assessing Officer has no power, the Commissioner also has no power.

2. We therefore submit that for the reasons as stated hereinabove, the order and the notice were bad in law and hence the same be quashed.

6. The ld. DR, on the other hand, has submitted that the reopening of the assessment in this case was done by the Assessing Officer at the instance of the assessee itself as the assessee has written a letter to the Assessing Officer that it had failed to offer Rs.35,650/- on account of profit on share dealing. That the assessee at this stage was not entitled to agitate about the validity of the assessment order passed u/s 147 of the Act.

7. We have considered the rival submissions and have also gone through the record. So far as the contention of the ld. Counsel for the assessee, that the defect in jurisdiction of the Assessing Officer to reopen the assessment and thereby the very validity of the base C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd assessment order u/s 147 of the Act can be agitated in the collateral proceedings also, the issue is no more res integra in the light of the various case laws relied upon by the Ld. counsel of the assessee as mentioned in his submissions, as noted above. The issue is squarely covered by the various case laws/decisions: i) M/s Westlife Development Ltd vs Pr.CIT (2016) 49 ITR 406 (Mum Trib) ii) Valiant Glass Works vs. ACIT ITA 1612/Mum/2013 dated 27.07.2016 iii) Steel Strips Ltd vs ACIT (1995) 53 ITR 553 (Chd Trib) iv) P V Doshi vs CIT (1978) 113 ITR 0022 (Guj HC) v) CIT vs Income Tax Appellate Tribunal & Ors (2012) 78 DTR 113 (Del HC) vi) Mavany Brothers vs CIT Tax Appeal No. 8 of 2007 dated 17.04.2015 7.1 The of the Coordinate Mumbai Bench of the Tribunal in the case of Valiant Glass Works Pvt. Ltd. vs. ACIT in dated 27.07.2016 (incidentally the author being the Judicial Member herein), wherein, the Coordinate Bench after deliberating upon various case laws, has observed as under:

“So far as the issue as to whether the assessee could raise the plea before the AO during the fresh assessment proceedings u/s 153A of the Act pursuant to the direction of the learned CIT given in the revision order passed u/s 263 of the Act regarding the validity of initiation of the reopening proceedings u/s 147 of the Act is concerned, we find that various Courts of Law have been unanimous on the proposition that jurisdictional aspect of an order passed in a primary proceedings can be examined in the collateral proceedings also. The validity of an assessment order can be challenged during the appellate proceedings pertaining to examination of validity of the order passed u/s 263 of the Act.

C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd

11. In a recent decision in the case of the case of “M/s Westlife Development Ltd Vs. Principal Commissioner of Income Tax” [ITA No.688/Mum/2016 decided vide order dated 10-06-2016, the co-ordinate bench of this Tribunal has thoroughly examined the issue as to whether if the initiation of the primary proceedings is invalid without jurisdiction but, the same has not been agitated by way of any appeal or otherwise and thereafter on the basis of those primary proceedings, certain secondary proceedings such as reopening of the assessment u/s 147 of the Act or revision of the assessment u/s 263 of the Act is done, in such circumstances, whether the assessee has a right to challenge the very validity of the primary proceedings in an appeal filed against any order passed in such subsequent/collateral proceedings. The Tribunal has discussed various case laws in this respect. The relevant part of the findings of the Tribunal is reproduced hereunder:- “3. During the course of hearing, the Ld. counsel of the assessee inter-alia stated that in this case the impugned order passed u/s 263 is bad in law on the jurisdictional ground, that is to say that the original assessment order passed u/s 143(3) dated 2440-2013 which has been sought to be revised by the Id.CIT was a nullity in the eyes of law, and therefore an order, which was a nullity in the eyes of law had no existence in the eyes of law and, therefore, the same could not have been revised by the Ld.CIT, thereby giving fresh life to the proceedings which had no legal existence in the eyes of law. In this regard, it has been further explained by the Id. counsel that the original assessment was framed u/s 143(3) upon an erstwhile company, viz. M/s 'Westpoint Leisureparks Pvt Ltd' (hereinafter called WLPL), which had already got amalgamated into another company namely M/s 'Westlife Development Ltd' (hereinafter called WDL) and therefore, on the date of framing of the assessment order, WLPL was not in existence. It was further submitted that this fact was brought to the knowledge of the Assessing Officer; despite that, the Assessing Officer framed the assessment upon a non-existing entity. It was submitted by him that framing of an assessment upon a company which has already been amalgamated by way of an order of the High Court is nullity in the eyes of law and in support of his arguments he placed reliance upon the following judgments:

1. 1. Judgment of Delhi High Court in the case of Spice Infotainment Ltd. Vs. Commissioner of Service Tax in ITA 475 & 476 of 2011, dated 03.08.2011 2. CIT v. Dimension Apparels P. Ltd. [370 ITR 288 (Del)] 3. I. K. Agencies P. Ltd. v CIT [347 ITR 664 (Cal)] 4. CIT v Express Newspapers Ltd. [40 ITR 38 (Mad)] Judgment of Delhi High Court in the case of CIT v Micra India P.

5. Ltd. (2015) 57 Taxmann.com 163 (Del) 6. Order of the Tribunal Mumbai Bench, in the case of Instant C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd Holdings Ltd. ACIT in 4748/Mum/2011 order dated 09.03.2016.

7. Order of the Tribunal Kolkata Bench, in the case of Emerald Company Ltd in ITA no. 428/Ko1/2015 order dated 13.01.2016 8. Judgment of Karnataka High Court in the case of CIT v Intel Techno India P. Ltd. (2015) 57 Taxmann.com 159 (Kar) 9. Order of the Tribunal Kolkata Bench, in the case of Gestener (India) ACIT in 1TA no. 275/Ko1/2007 "

8. Challenging the jurisdictional defects of assessment order for assailing the jurisdictional validity of the revision order passed u/s 263: The first issue that arises for our consideration is - whether the assessee can challenge the jurisdictional validity of order passed u/s 143(3) in the appellate proceedings taken up for challenging the order passed u/s 263? If we analyse the nature of both of these proceedings, which are under consideration before us, we find that the original assessment proceedings can be classified in a way as 'primary proceedings'. These are, in effect, basic / foundational proceedings and akin to a platform upon which any subsequent proceedings connected therewith can rest upon. The proceedings initiated u/s 263 seeking to revise the original assessment order is off shoot of the primary proceedings and therefore, these may be termed as 'collateral proceedings' in the legal framework. The issue that arises here is whether any illegality/invalidity in the order passed in the 'primary proceedings' can be set up in the 'collateral proceedings' and if yes, then of what nature? 8.1. We have analysed this issue carefully. There is no doubt that after passing of the original assessment order, the primary (i.e. original proceedings) had come to an end and attained finality and, therefore, outcome of the same cannot be disturbed, and therefore, the original assessment order framed to conclude the primary proceedings had also attained finality and it also cannot be disturbed at the instance of the assessee, except as permitted under the law and by following the due process of law. Under these circumstances, it can be said that effect of the original assessment order cannot be erased or modified subsequently. In other words, whatever tax liability had been determined in the original assessment order that had already become final and that cannot be sought to be disturbed by the assessee. But, the issue that arises here is that if the original assessment order is illegal in terms of its jurisdiction or if the same is null & void in the eyes of law on any jurisdictional grounds, then, whether it can give rise to initiation of further proceedings and whether such subsequent proceedings would be valid under the law as contained in Income Tax Act? It has been vehemently argued before us that the subsequent proceedings (i.e. collateral proceedings) derive strength only from the order passed in the original proceedings (i.e. primary proceedings). Thus, if order passed in the original proceedings is itself illegal, then that cannot give rise to valid revision proceedings. Therefore, as per law, the validity of the order passed in the primary (original) proceedings should be allowed to be examined even at the subsequent stages, only for the limited purpose of examining C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd whether the collateral (subsequent) proceedings have been initiated on a valid legal platform or not and for examining the validity of assumption of jurisdiction to initiate the collateral proceedings. If it is not so allowed, then, it may so happen that though order passed in the original proceedings was illegal and thus order passed in the subsequent proceedings in turn would also be illegal, but in absence of a remedy to contest the same, it may give rise to an 'enforceable' tax liability without authority of law. Therefore, the Courts have taken this view that jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs. 8.2. In a matter that came up before Hon'ble Supreme Court in the case of Kiran Singh & Ors. v. Chaman Paswan & Ors., [1955] 1 5CR 117 the facts were that the appellant in that case had undervalued the suit at Rs.2,950 and laid it in the court of the Subordinate Judge, Monghyr for recovery of possession of the suit lands and mesne profits. The suit was dismissed and on appeal it was confirmed. In the second appeal in the High Court the Registry raised the objection as to valuation under Section 11. The value of the appeal was fixed at Rs.9,980. A contention then was raised by the plaintiff in the High Court that on account of the valuation fixed by the High Court the appeal against the decree of the court of the Subordinate Judge did not lie to the District Court, but to the High Court and on that account the decree of the District Court was a nullity. Alternatively, it was contended that it caused prejudice to the appellant. In considering that contention at page 121, a four Judge Bench of Hon'ble Supreme Court speaking through Vankatarama Ayyar, J. held that: “it is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties." 8.3. This judgment was subsequently followed by Hon'ble Supreme Court in the landmark case of Sushil Kumar Mehta vs Gobind Ram Bohra, (1990) 1 SCC 193, wherein an issue arose whether a decree can be challenged at the stage of execution and whether a decree which remained uncontested operates as res-judicata qua the parties affected by it. Hon'ble apex court, taking support from aforesaid judgment, observed as under: "In the light of this position in law the question for determination is C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd whether the impugned decree of the Civil Court can be assailed by the appellant in execution. It is already held that it is the Controller under the Act that has exclusive jurisdiction to order ejectment of a tenant from a building in the urban area leased out by the landlord. Thereby the Civil Court inherently lacks jurisdiction to entertain the suit and pass a decree of ejectment. Therefore, though the decree was passed and the jurisdiction of the Court was gone into in issue Nos. 4 and 5 at the ex-parte trial, the decree there-under is a nullity, and does not bind the appellant. Therefore, it does not operate as a res judicata. The Courts below have committed grave error of law in holding that the decree in the suit operated as res judicata and the appellant cannot raise the same point once again at the execution." 8.4. Similar view has been taken by Hon'ble Supreme Court by following aforesaid judgments recently in the case of Indian Bank vs Manual Govindji Khona reported in 2015 (3) SCC 712. Further, similar view was emphasized by Hon'ble Bombay High Court (GOA Bench) in the case of Mavany Brothers vs CIT (Tax Appeal No 8 of 2007) in its order dt 17th April, 2015 wherein it was held that an issue of jurisdiction can be raised at any time even in appeal or execution. 8.5. The aforesaid principles, enunciated by the Apex Court in the case of Kiran Singh & Ors. v. Chaman Paswan & Ors, supra were reiterated by the Apex Court in the cases of Superintendent of Taxes vs Onkarmal Nathmal Trust (AIR 1975 SC 2065) and Dasa Muni Reddy v. Appa Rao (AIR 1974 SC 2089). In the first of these decisions it was pointed out that revenue statutes protect the public on the one hand and confer power upon the State on the other, and the fetter on the jurisdiction is one meant to protect the public on the broader ground of public policy and, therefore, jurisdiction to assess or reassess a person can never be waived or created by consent. This decision shows that the basic principle recognized in Kiran Singh (supra) is applicable even to revenue statutes such as the Income Tax Act. Dasa Muni Reddy (supra) is a judgment where the principle of 'coram non judice' was applied to rent control law. It was held that neither the rule of estoppel nor the principle of res ludicata can confer the Court jurisdiction where none exists. Here also the principle that was put into operation was that jurisdiction cannot be conferred by consent or agreement where it did not exist, nor can the lack of jurisdiction be waived. 8.6. These judgments were subsequently noticed by Hon'ble Gujarat High Court in the case of P. V. Doshi 113 ITR 22(Gujrat). This case arose under the Income Tax Act with reference to the provisions of Section 147 dealing with re- assessment. The facts were that the assessment was sought to be reopened under Section 147 and notice under section 148 was issued. Validity of C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd reopening was not challenged upto Tribunal and additions were challenged on merits only. The Tribunal restored the matter to the Assessing Officer with some directions to reexamine the issue on merits. When the matter came back to the assessing officer the assessee specifically raised the point of jurisdiction to reopen the assessment, contending that the notice of reopening was prompted by a mere change of opinion. The AO rejected plea of the assessee but the AAC accepted this ground and also held the reassessment to be bad in law on jurisdictional ground. Against the order of the AAC the Revenue went in appeal before the Tribunal and specifically raised the plea that the question of jurisdiction to reopen the assessment having been expressly given up by the assessee in the appeal against the reassessment order in the first round, the assessee was debarred from raising that point again before the AAC and the AAC was equally wrong in permitting the assessee to raise that point which had become final in the first round and in adjudicating upon the same. The plea of the Revenue impressed the Tribunal which took the view that after its earlier order in the first round of proceedings the matter attained finality with regard to the point of jurisdiction which was given up before the AAC and not agitated further and that in the remand proceedings what was open before the Assessing Officer was only the question whether the addition was justified on merits and the point regarding the jurisdictional aspect was not open before the Assessing Officer. According to the Tribunal, the assessee having raised the point in the first round and having given it up could not revive it in the second round of proceedings where the issue was limited to the merits of the additions. In this view, the Tribunal accepted the Revenues plea. The assessee thereafter carried order of the Tribunal in reference before the Gujarat High Court. The High Court after considering various judgments of the Supreme Court on the point of jurisdiction to reopen the assessment and also after specifically discussing the judgment of the Supreme Court in Onkarmal Nathmal Trust (supra) and Dasa Muni Reddy (supra) held that the Tribunal was in error in holding that the question of jurisdiction became final when it passed the earlier remand order. It was held that neither the question of res judicata nor the rule of estoppel could be invoked where the jurisdiction of an authority was under challenge. According to Hon'ble Gujarat High Court, the rule of res judicata cannot be invoked where the question involved is the competence of the Court to assume jurisdiction, either pecuniary or territorial or over the subject matter of the dispute. Hon'ble High Court further held that since neither consent nor waiver can confer jurisdiction upon the Assessing Officer where it did not exist, no importance could be attached to the fact that the assessee, in the first round of proceedings, expressly gave up the plea against the erroneous assumption of jurisdiction by the assessing authority. According to the Hon'ble Court, the "finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd never have any finality or conclusiveness. If the original order is without jurisdiction, it would be only a nullity confirmed in further appeals'. In this view of the matter, Hon'ble High Court finally answered the reference in favour of the assessee. 8.7. It is further noted that many of these judgments were discussed and followed by the co-ordinate bench of the Tribunal in the case of Indian Farmers Fertilizers Co-operative Ltd vs KIT 105 lTD 33 (Del), wherein a similar issue had arisen. In this case, the issue raised before the bench was whether it is open to the assessee, not having appealed against the reassessment order, to set up or canvass its correctness in collateral proceedings taken for rectification thereof u/s 154. The bench minutely analysed law in this regard and applying the principle of 'coram non judice' and following aforesaid judgments of the supreme court, it was held that if an assessee seeks to challenge the reassessment proceedings as being without jurisdiction, when action for rectification is sought to be taken on the assumption of the validity of the reassessment order, then the assessee has to step in and protect its interests and the liberty to question even the validity of the reassessment proceedings ought to be given to it......." (emphasis supplied) 8.8. Similar view was taken in another decision of the Tribunal in the case of Dhiraj Suri vs ACIT 98 lTD 87 (Del). In the said case, appeal was filed by the assessee before the Tribunal against the levy of penalty. In the appeal challenging the penalty order, the assessee challenged the validity of block assessment order which had determined the tax liability of the assessee on the basis of which penalty was levied subsequently. The revenue objected with respect to the ground of the assessee raising jurisdictional issues of assessment proceedings in the appeal against the penalty order. After analysing the legal position, as clarified by Hon'ble Gujrat High Court in the case of P.V. Doshi, supra and Hon'ble Bombay High Court in the case of Jainaravan Babulal vs CIT. 170 ITR 399, the bench held as that if the block assessment itself is without jurisdiction then there is no question of levy of any penalty u/s. 158BFA(2) and therefore it is open to the assessee to set up the question of validity of the assessment in the appeal against the levy of penalty. 8.9. We also derive support from another judgement of Hon'ble Bombay High Court in the case of Inventors Industrial Corporation Ltd vs CIT 194 ITR 548 (Bombay) wherein it was held that assessee was entitled to challenge the jurisdiction of the AO to initiate re-assessment proceedings before the CIT(A) in the second round of proceedings, even though he had not raised it in earlier proceedings before the Assessing Officer or in the earlier appeal. 8.10. Thus, on the basis of aforesaid discussion we can safely hold that as per law, the assessee should be permitted to challenge the validity of order passed C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd u/s 263 on the ground that the impugned assessment order was non est and we hold accordingly.”

The Tribunal further in para 10 & 11 of the order has observed as under: “10. If the impugned assessment order passed u/s 143(3) was illegal or nullity in the eyes of law, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s 263 to revise the non est assessment order: Having decided the aforesaid two issues, the next issue that is to be decided by us is about the validity of order passed u/s 263 by the Ld. CIT seeking to revise the assessment order which was nullity in the eyes of law. 10.1. We have discussed in detail in earlier part of our order that an invalid order cannot give birth to legally valid proceedings. It is further noticed by us that some of the judgments relied upon by the Ld. Counsel have already addressed this issue. This issue has also been decided by the co-ordinate bench (Delhi Bench of Tribunal) in the case of Krishna Kumar Saraf vs CIT (supra). The relevant part of the order is reproduced below: "17. There is no quarrel with the proposition advanced by Id. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee.

12. A perusal of the above order reveals that various Courts of Law including the Hon’ble Supreme Court has held that a defect of jurisdiction whether its pecuniary or territorial or whether it is a subject- matter of the action, strikes at the very validity of the Court to pass any decree and such a defect cannot be cured even by consent of the parties. That a decree passed by a Court without jurisdiction is a nullity and that its invalidity can be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. That the issue of jurisdiction can be raised at any stage even in appellate or execution stage. Neither the Rule of Estoppels nor the Principle of res-judicata can confer the jurisdiction where none exists. The facts in the case of P. B. Doshi (supra) are very much relevant wherein re-assessment proceedings were initiated against assessee and an addition was made to his income. Before AAC, contention about validity of notice for re-assessment was given up by the assessee and on merits appeal was dismissed. On further appeal, Tribunal remanded matter to file of ITO with direction to on re-examine witness and then complete assessment. ITO on remand completed assessment and again made addition. On appeal, assessee re-agitated point of validity of re-assessment proceedings on ground that there was mere change of opinion. AAC found that no reasons were recorded by ITO before issuing notice for re-assessment and, therefore, held that ITO had no jurisdiction to re-open assessment. Tribunal held that in restoring case to file of ITO by earlier order, only point left open was in respect of addition of on merits and that legal or jurisdictional aspect whether re-assessment proceedings were legally initiated was not kept open; It also held that even though this point went to root of jurisdiction and was pure question of law, C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd merely because point was initially raised and not pressed when matter was taken up before AAC, it could be waived and it could not be reagitated ; The the Hon’ble Gujarat High Court reversing the order of the Tribunal held that if the jurisdiction cannot be conferred by consent, there would be no question of waiver, acquiescence or estoppel or the bar of res judicata being attracted because the order in such cases would lack inherent jurisdiction unless the conditions precedent are fulfilled and it would be a void order or a nullity. The above decision of the Hon’ble Gujrat High Court has also been followed by the co-ordinate bench of the Tribunal in the case of “Indian Farmers Fertilizers Co- operative Ltd vs KIT” ( Supra) as discussed above. Even, the Tribunal in the case or Dhiraj Suri (supra) in an appeal against the penalty order has held that if the assessment order was without jurisdiction, there was no question of levy of penalty, therefore, it was open to the assessee to set up the question of validity of the assessment in the appeal against levy of penalty. The Hon’ble Bombay High Court in the case of investors Industrial Corporation (supra) has held that the assessee was entitled to challenge the jurisdiction of the AO to initiate reopening of assessment proceedings before the CIT (A) in the second round of proceedings even though it has not raised the same before earlier proceedings before the AO or in the earlier appeal.

13. In the light of various case laws as cited above, the proposition that is coming out is that the jurisdiction or the legality of the proceedings can be agitated in a subsequent proceedings or even in a collateral proceedings or an execution proceedings also. If, the original order is illegal or without jurisdiction, the subsequent or collateral proceedings arisen out of such orders or proceedings, cannot be held to be valid. “

8.1 The ld. counsel has further referred to the application moved by the assessee dated 21.11.2022 to the Income Tax department for getting copy of the approval from the competent authority obtained by the Assessing Officer u/s 151 of the Act. The reply dated 28.11.2022 to the said letter given by the Assessing Officer has been placed at page 283 of the paper-book, wherein, the concerned Assessing Officer/ITO- 6(1), Kolkata has replied “Approval from competent authority obtained C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd u/s 151 of the Income Tax Act: Not readily available from the record”. The ld. counsel referring to the aforesaid facts on the file has submitted that reopening of the assessment in this case was done without taking approval of the competent authority u/s 151 of the Act. He, therefore, has submitted that the reassessment order passed by the Assessing Officer u/s 147 of the Act was without jurisdiction and, therefore, the same was non-est. He has submitted that the subsequent revision order passed by the ld. PCIT u/s 263 of the Act and the consequent order passed by the Assessing Officer u/s 143(3) r.w.s sec. 263 of the Act were therefore, bad in law and therefore, the addition made in the subsequent orders which were non-est in the eyes of law has no legal sanctity.

11. At this stage, the ld. Counsel for the assessee has raised another legal ground that even otherwise, the exercise of revision jurisdiction by the Ld. PCIT u/s 263 of the Act, was also bad in law, therefore, the consequential order passed u/s 143(3) r.w. sec. 263 of the Act, was also not sustainable in the eyes of law. The ld. counsel for the assessee has submitted that, in this case, the return of income was filed on 25.08.2009 which was processed u/s 143(1) of the Act. The last date to issue notice u/s 143(2) of the Act was 30.09.2010. Thereafter, the assessment was reopened and the reassessment order u/s 147 of the Act was passed on 09.02.2012. The only issue in the reopened assessment proceedings was relating to the escapement of income of Rs.35,645/- earned as profit on share dealing. The Assessing officer, accordingly assessed the income of the assessee by adding the amount of Rs.35,645/. The issue relating to the receipt share application money by the assessee or to say relating to the verification of the subscriptions made by the share applicants was not the subject matter of reassessment proceedings u/s 147 of the Act. The ld. Counsel, in this respect, has submitted that ld. PCIT could not have exercised his revision jurisdiction in respect of order passed u/s 147 of the Act C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd wherein the aforesaid issue of share subscriptions was not the subject matter of reassessment and that therefore, the revision order passed by the PCIT u/s 263 of the Act was bad in law. That the Ld. PCIT could have exercised revision jurisdiction in respect of original assessment order and not in respect of order passed u/s 147 of the Act. He has further contended that the revision order passed u/s 263 was, otherwise, time-barred. He in this respect has placed reliance on the decision of the Hon’ble Supreme Court in the case of ‘CIT vs. Alagendran Finance Ltd. [2007] 293 ITR 1(SC)’, wherein, the Hon’ble Supreme Court has categorically held that where the Commissioner has sought to revise only that part of the assessment order, the subject- matter of which had nothing to do with that item of income, in such a case, doctrine of merger did not apply and that the period of limitation would commence from the date of original assessment and not from the reassessment since the latter had not anything to do with the said item of income.

11.1 We note that in the case in hand also the assessment was reopened on a particular issue of the escapement of income of Rs.35,645/- earned by the assessee as profit on share dealing. The Assessing Officer examined that particular issue and made addition in respect of the said profits earned by the assessee. The issue relating to any other transaction i.e. share application money received by the assessee, was not the subject matter of the reassessment proceedings. Since, the issue of share application money on which the ld. PCIT has sought to revise the order was not the subject matter of the reassessment order, therefore, in the light of the decision of the Hon’ble Supreme Court in the case of ‘CIT vs. Alagendran Finance Ltd. (supra), it cannot be said that the reassessment order passed by the Assessing C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd Officer was erroneous, therefore, the revision jurisdiction exercised by the ld. PCIT, in this case, cannot be held to be justified. In view of the discussion, since, the revision order passed by the Ld. PCIT u/s 263 of the Act was without jurisdiction, therefore the consequential assessment order passed by the Assessing Officer u/s 143(3) r.w.s. 263 of the Act was also not sustainable. The assessee succeeds on this legal ground also.

13.1 Before the CIT(A), the assessee furnished the relevant details and evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, whereupon, the ld. CIT(A) forwarded the said details and evidences to the Assessing Officer C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd and called for the remand report from the Assessing Officer in this respect. During the assessment proceedings, the Assessing Officer issued notices not only u/s 133(6) of the Act but also u/s 131 of the Act which were duly complied with by the assessee and the share subscribers. All the directors of the share subscribing companies appeared before the Assessing Officer in compliance of the summons issued u/s 131 of the Act and their statements were duly recorded by the Assessing Officer. The Assessing Officer thereafter furnished the remand report to the CIT(A), however concluding that the assessee company rotated its undisclosed money layering through different body corporates in different structured web to obfuscate inquiry. In reply to the said remand report, the assessee filed its submissions which were also considered by the CIT(A). The ld. CIT(A), after considering the remand report as well as submissions of the assessee, deleted the addition, so made by the Assessing Officer, observing as under:

4.2. I have considered the issue in the assessment order framed by the AO in light of the arguments made by the appellant. The short issue for my consideration is that whether the ‘share application monies’ in the sum of Rs. 10,61,00,000/- disclosed by the appellant invite the mischief of the provisions of Section 68 of the Act or not. The provision of Section 68 of the Act deals with cash credit which 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 assesses of that previous year.

According to this section, if identity, creditworthiness of the creditor and genuineness of the transaction is not proved and the explanation offered by the assesses is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as income of the assessee of that previous year. In other words, providing of an opportunity is inherently encompassed within the second limb of the provisions. Admittedly, the AO has never considered the explanations C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd and evidences filed by the appellant in terms of s, 68 of the Act. The AR argued that the powers of the AO u/s 68 is not an absolute one. It is subject to his satisfaction where explanation/ evidences and clarifications are offered. The satisfaction with regard to explanation is in effect an in-built safeguard In section 68 protecting the interest of the' assessee. it provides for an opportunity to the assessee to explain the nature and source of toe fund, it was pointed out by the A.R that no opportunity was provided1 to the appellant to meet the action conceived in this reject The AO did not find any discrepancies in any of the documentary evidences furnished by the appellant and toe 9 corporate share applicants. 4.3. After considering the arguments of AR and after going through the evidences filed on record ft is observed that toe addition was made with the predetermined mindset that share application monies received by the appellant is not genuine as identity and creditworthiness of toe shareholders were bogus in nature as they did not exist For better appreciation of facts, it is relevant to consider that during the previous year 2903-09 relevant to fee assessment year ,2009-10,, toe impugned year the appellant had raised share capital including share premium in the aggregate sum of Rs.10,61,00,000/- by issuing 1,00,000 equity shares at par to toe subscriber of the Memorandum and 10,60,000 equity shares of toe face value of T1/~ each at a premium of W9f- per share. It is found that 9 corporate shareholders subscribed to the aforesaid share capital raised by toe appellant and all payments were made by each of them through account payee cheques drawn on their respective bankers. Each of the subscriber companies is regularly assessed to income tax and assessed u/s 143(3) of toe Act for the relevant assessment year: and the investments made by each of them are duly and fully reflected in their audited books of accounts as well as their respective income tax return. The appellant filed its return of total income u/s 139(1) of the Act in respect of the assessment year 2009-10 on 25.08.2009 declaring loss of Rs. 2,2025/-. The said return was accepted and processed by the AO u/s 143(1) of the said Act Subsequently, the AO issued a notice u/s 148 of the Income Tax Art, 1961 requiring the appellant to file a fresh return of its total income for the assessment year under appeal, on the ground that the income assessable to tax of the appellant, for the said year, had escaped assessment within the meaning of sec. 147 of the said Act. In compliance with such notice, the appellant wrote a letter requesting the AO to treat the return originally filed on 25.08.2009 as having been filed in response to the said notice issued u/s. 148 of the Act In the course of the said proceedings u/s 147 of the Art, the appellant in response to the requisitions made by the AO, from time to time, produced its audited books of accounts, filed copies of its audited annual accounts including various details and other documents as desired by toe AO. The details and documents so produced and filed with the AO included, inter alas C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd full details of each of the 9 share applicant companies, which had subscribed to toe aggregate share capital in the sum of Rs. 10,81,00,000/- raised by the appellant during the assessment year under appeal. The AO on receipt of the aforesaid details from the appellant, issued notices u/s 133(6) of the Act to file all the share applicants, who had subscribed to the share capital raised by the appellant; and on being satisfied with the replies received in response thereto by him from such share applicants, he had accepted toe genuineness of the said share capital and accordingly, the AO framed the assessment order u/s. 143(3)/147 of the Act on 09/02/2012 and computed toe total income of toe appellant in the sum of Rs. 38,045/- in respect of toe assessment year under appeal. Subsequently, the Ld. C.I.T., Kolkata-II, Kolkata was of the opinion that the assessment so framed u/s. 143(3)/147 of the Income Tax Act, 1961 is erroneous and prejudicial to the interest of the revenue and an order dated 05/03/2014 was passed u/s. 263 of the Act setting aside the said assessment order dated 09/02/2012 with toe direction as under: i) Examine the genuineness and source of sham capital [not on a test check basis, but in respect of each and every shareholder by conducting independent enquiry not through the assessee. The bank account for the entire period should be examined in the course of verification to find out the money trial of the share capital ii) Further the AO. should examine the directors as well as examine toe circumstances which necessitated the change in directorship if applicable. He should examine them, on oath to verify their credentials as director and reach a logical conclusion regarding the controlling interest, iii) The A.O, is directed examine the source of realization from the liquidation of assets shown in the balance sheet after the change of Directors; the main grievance of the appellant was that the AO has not provided adequate opportunity to the appellant the matter was sent back to the AO for sending a remand report after making necessary enquiries. The remand report dated 02.07.2019 was received and the copy of same was forwarded to toe appellant for is comment The reply of appellant was also received on 19/08/2019 and was placed an record remand proceedings took- steps to frame the fresh assessment order in respect of the assessment year under appeal It is observed that that the AO had issued notices u/s 133(8) of the Act, to each of toe share subscribers again. Such notices were duty served upon the respective share applicants at their respective addresses on the records of the appellant Service of such notices u/s. 133(8) and u/s 131 of the Act to each of the share applicants at their C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd respective known addresses proves their respective identifies, ft is observed that each of the share applicants are registered under the Companies Act, 1958 and are on the records of Registrar of Companies functioning under Ministry of Corporate Affairs, Government of India. In fact, each of the share applicants has responded to tire statutory notices issued to them u/s 133(8) and appeared personally in compliance to summon u/s131 of the Act In their respective replies, toe share applicants had disclosed, inter alia, their Permanent Account Numbers along with the acknowledgment- of their return of income and furnished audit report and financial statements which in my opinion proves their identities to the hilt. Even the AG has accepted the identities of these share applicants. It is also observed that each of the share applicants maintained bank accounts; and copies of their respective bank accounts from which they made payments to toe appellant for subscribing to the shares issued to them, was filed by each of them before the AO. Further, each of toe share applicants accepted the fact that they had subscribed to the shares issued by the appellant; and that such transactions were duly reflected in their respective books of accounts, as well as in their audited Balance Sheets, These facts, in my opinion, clearly prove the genuineness of the transactions. At page 5 of the remand report toe AG acknowledges the fact that toe summons u/s 131 were issued to all the share applicants and all such share applicants appeared before the AO and their Statements were recorded by tire AO, The AO further admits that all the documents as called for were received by him. The AO also stated that he has conducted verification of source of source of share investors companies also. In the conclusions drawn by the AO at page 6 of the remand report, file AO accepted the identities of all the share applicants since all the directors appeared before him. The AO also admitted that the directors of the share applicant companies and source of such investor companies belong to the same family and he produced the family tree to prove that funds were coming from the same companies with common family members, however, the AO was not satisfied with the credentials of the directors and concluded that the bank accounts were used just to rotate funds through related companies throughout the year without doing any effective business. Finally at page 7 of remand report the AO concluded that the assesses company rotated is undisclosed money layering through different body corporates in different structured web to obfuscate inquiry. 4.4. In the rebuttal to remand report, the AR of the appellant company reiterated file same submissions and stated that compliance u/s 133(6) as well as appearance u/s 131 has been C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd done by the director of the appellant company as well as file directors of all the 9 share applicant companies, the 9 share applicant companies were duly assessed either u/s 143(3) or u/s 143(1) of the Act for the relevant assessment year and by the own assertions of AO the money has come from related entities, thus the nature and source of moneys received are duly explained and no addition u/s 88 could have been made by the AO. 4.5. After considering the remand report and replies of the AR of the appellant it is also observed that each of file share applicants explained' the source of funds, from which they made payments- to the appellant for subscribing to the share capital, These facts borne on record by the share applicants, in my opinion, clearly prove their respective source of funds, and their capacity for making such payments and accordingly, the criteria of their creditworthiness is proved. The AO has not found any defect and/or deficiency in the source of funds explained by the share applicants through their replies to the statutory notices Issued u/s. 133(8) of the Act to them. It is also observed that every share applicant in their respective replies to the statutory notices issued u/s. 133(6) of the Act,, furnished copies of their income tax acknowledgments evidencing filing of income tax returns by each of them, copies of their audited accounts including Balance Sheets wherein such investments made by each of them in file subscription of share capital issued by the appellant are duly reflected as also copies of their bank statements for the relevant period from which such subscription monies were paid by them respectively and copy of the allotment advise received by them from file appellant in respect of shares allotted to them. The return of allotment as well as the annual return for the relevant year filed by the appellant with the Registrar of Companies, Ministry of Corporate Affairs, further proves file fact of allotment of shares to the share applicants. It is further observed that in course of remand proceedings all the directors appeared before the AO in compliance to summons u/s 131 and their statements were duly recorded by the A.O the onus cast upon toe appellant u/s 68 of toe Act stood duly discharged. It is further observed that the net worth of the each of the sham applicants, as disclosed in their audited Balance Sheets, far exceeded the amount of investments made by them in the shares of the appellant. It is observed that funds held on account of shareholders disclosed in the balance sheets of Adonis Suppliers Pvt. Ltd. is in a sum of Rs. 10,00,99,137/- as on the 31.03.2009 and only a sum of Rs.1,60,00,000/- was invested as share application money with the appellant, Baisakhi Agencies Pvt, ltd, is in a sum of Rs. 10,00,94,300/- as on the 31.03.2009 and only a sum of Rs. 1,80,00,000/- was invested as share application C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd money with the appellant Daniel Merchants Pvt. Ltd, is in a sum of Rs. 10,00,98,345/- as on the 31.03.2009 and only a sum of Rs.,60,00,000/- was invested as share application money with the appellant, Mahananda Vinimay Pvt Lid, is in a sum of Rs. 10,00,99,875/- as on the 31.03.2008 and only a sum of Rs. 1,60,00,000/- was invested as share application money with the appellant, Omega Commo trade Pvt Ltd. is in a sum of Rs. 10,00,98,135/- as on the 31.03.2008 and only a sum of Rs. 1,20,00,000/-was invested as share application money with the appellant Promise Suppliers Pvt. Ltd. is in a sum of Rs. 10,00,99,187/- as on the 31.03.2009 and only a sum of 1,60,00,000/- was invested as share application money with the appellant, Sargam Suppliers Pvt Ltd. is in a sum of 110,00,96,595/- as on the 31.03.2009 and only a sum of Rs. 60,00,000/- was invested as share application money with the appellant, Srijan Retailers Pvt. Ltd. is in a sum of Rs. 10,00,99,540/- as on the 31.03.2009 and only a sum of Rs. 1,20,00,000/- was invested as share application money with the appellant, Sumeru Dealers Pvt Ltd. is in a sum of Rs. 10,00,99,885/- as on the 31.03.2009 and only a sum of 160,00,000/- was invested as share application money with the appellant. It is accordingly observed that these facts adequately prove their credit worthiness to make investment in the share capital of the appellant company. The aforesaid facts underlined by evidences clearly prove the identity of the share applicants, their capacity and source of funds of the share applicants, as well as the genuineness of the transaction in relation to the share capital issued by the appellant, which was subscribed by each of them. Thus, it is proved beyond any or dispute that the share applicants are actually found to have subscribed to the share capital issued by the appellant, in the impugned previous year relevant to the assessment year under appeal, as dearly evident not only from their respective books of accounts, but also from their audited accounts filed with the income tax authorities in relation to their own income tax assessments, and the sources of such funds are also explained by each of the share applicants in their replies addressed to the AO. However, the AO had not brought these indisputable facts on record but acted on his whims and fancies. It is observed that the burden which lay on the appellant, in relation to s. 68 of the Act, has been duly discharged by it and netting further remains to be proved by it on the issue. 4.6. to this respect it is relevant to refer to the decision of the Jurisdictional High Court In the case of CIT vs Sagun Commercial P. Ltd. [ITA NO, 54 of 2001 dated 17.02.2011 wherein it was held as under - C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd “After hearing the learned advocate for the appellant and after going through the materials on record, we are at one with the Tribunal below as well as Hie Commissioner of Income-tax (Appeals) Mat the approach of the Assessing Officer cannot be supported. Merely because those applicants were not placed before the Assessing Officer,'' such fact could not justify disbelief of the explanation offered by the assesses when details of Permanent Account Nos. payment details of shareholding and other bank transactions relating to those payments were placed before the Assessing Officer. It appears Mat the Tribunal below has recorded specifically that the Assessing Officer totally failed to consider those documentary evidence produced by the assessee in arriving at such conclusion. We, therefore, find no reason to interfere with the decision passed by the - Commissioner of Income-tax (Appeals) and the Tribunal below and answer the question formulated by the Division Bench m the affirmative and against the Revenue. The appeal is, thus, dismissed.” Further, the Hon’ble Jurisdictional High Court in the case of CIT vs. Gayatri Portfolio Fund Pvt. Ltd. [ITA No. 664 of 2004 dated 25.08.2014], it was observed as under: We find that the. Learned Tribunal has confirmed the order passed by the CIT who had overturned the order of the Assessing Officer by making the following observation: "...We find that the identity of the 5 parties investing in the share capital is not in doubt They are body corporates and their complete addressees are on record. This is the very first assessment in the life of the assesses company. The amounts were deposited by these 5 corporates per account payee cheques. These parties were not shareholders of the assesses company at the time when the case was reopened under section 147 or when the summons were issued to them. We find that the assesses has filed before the A O. copies of share application forms duty signed along with the complete addresses of the investors along with their IT. Me numbers, account payee cheque numbers and the assesse's bank statements disclosing the deposits of these amounts. In these facts we find that the assesses has discharged its initial onus to prom the identity of the investors as well as their. creditworthiness. It is not the case of the Revenue that C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd the investor parties did not exist or that the money was not invested by them through banking channels.” Having found such, the Tribunal had relied on the judgement in Hindusthan Tea Trading Co. Ltd. v, CIT(Cali): 263 ITR 289 (Cal) to uphold the order of the CIT. In view of the findings above note, no substantial question of law arises and therefore, the appeal and the application am dismissed.” Again, the Hon’ble Jurisdictional High Court In the case of CIT vs. Sanchati Projects P. Ltd. ITAT 140 of 2011 dated 08.06.2011] it was observed as under: - “It appears from record that the assesses company during the relevant assessment year under appeal raised Ms share capital by way of receiving share application money against 1,64,000 equity shams aggregating to Rs.82,00,000/- from 8 different parties. The Assessing Officer, however, treated the share application money of Rs.45,00,000/- received from five different persons as unexplained cash credit the hands of the assesses. According to the Assessing Officer; those parties had the same addresses as that of the assessee and they had m fixed assets and utilised their capitals hi share application of toe assessee company. The Assessing Officer; 'therefore, was of the view that the money ultimately went to the beneficiary through these companies and there was no advertisement even published by the assessee company inviting sham application and no Registrar was engaged for such raising of sham capital. Being dissatisfied the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), however, set aside the said order of assessment and came to the conclusion that all the sham applicant/companies were assessed to the tax and their PAN and acknowledgement of IT. returns along with their audited balance sheets, bank statements showing transactions etc. were made available to the Assessing Officer. It was pointed out that there was no legal bar of more than one company being registered at the same address and, thus, according to the Commissioner of Income- tax (Appeals), the doubt raised by the Assessing Officer C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd about all those companies at the same address did not hold good. Being dissatisfied; the Revenue preferred an appeal before the Tribunal below and by the order impugned herein, the said Tribunal has affirmed the order passed by the Commissioner of Income-tax (Appeals), After hearing Mr. Nizamuddin, learned advocate appearing on behalf of the appellant and after going through the. aforesaid materials, we agree with the Tribunal below that the Assessing Officer failed to establish that the share applicants did not ham the means to make investment and that such investment actually emanated from the coffers of the assessee company. The receipt of sham capital money had been duly recorded in the books of the assessee company and the payment of share application money was also duly recorded in the audited account of each of the sham applicants. We, thus, find that both the authorities below on the basis of toe aforesaid materials on record were quite justified in deleting the aforesaid addition of Rs.45,00,000/- done by the Assessing Officer, we are of the view that the order, impugned does not suffer from any defect whatsoever and no question of substantial error, of law arises justifying our interference. The appeal is, thus, summarily dismissed. ” There is no evidence on record to show that the identities of the share applicants are not proved and/or that the introduction of share capital by them was not genuine and/or fits source of investment was not fully explained to the satisfaction of the AO. Further, the Hon-ble Jurisdictional High Court in the case of CIT vs. Dataware Private Ltd. [ITAT No, 263 of 2011 dated 21.09.2011] wherein while examining the issue of addition of share application money received by the assessee company therein u/s. 68 of the Act, the Hon’ble Jurisdictional High Court held that 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. The C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd Hon’ble High Court further held that so long as it is not established that the return submitted by the creditor (subscriber shareholder) has been rejected by its Assessing Officer, the Assessing Officer of fie 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. In the present case also, no evidence was adduced on record that the investments made with the appellant in the shape of share application monies disclosed in the returns of the share applicants were rejected by their respective Assessing Authorities and accordingly, the issue is set to rest by the decision of the jurisdictional High Court on the issue.

5. In this respect, the A/R relied on plethora of decision of various High Courts i) CIT vs. Kamdhenu Steels and Alloys Ltd. [2014] 361 ITR 220 (Del); ii) CIT vs. Gangeshwari Metal Pvt. Ltd. [2014] 361 ITR 10( Del); iii) CIT vs. Aradhana Textiles Pvt. Ltd. [2011] 333 ITR 116 (Kar); iv) CIT vs. Oasis Hospitalities Pvt. Ltd. [2011] 333 ITR 119 (Del); which were rendered on the facts and circumstances identical to those of the appellant in the instant appeal. The Ld. A.R placed reliance upon the decision of Jurisdictional Tribunal in the case of 1. Baba Bhootnath Trade & Commerce Ltd. bearing dated 05/04.2019; 2. Savitri Share & Securities Pvt. Ltd. bearing ITA No. 1703/Kol/2016 dated 01/05/2019. For better appreciation, the relevant observation of the Hon’ble Karnataka High Court in the case of CIT vs. STL Extrusion P Ltd. [2011] 333 ITR 269 (Kar) is reproduced as under: “The assessee having duly furnished the names, age, address, date of filing the application of share, number of shares of each subscriber there was no justification for the Assessing Officer for making the impugned addition because once the existence of the investors/share subscribers was proved, onus shift to the revenue to establish that either the share applicants were bogus or the impugned money belonged to the assessee itself.” 5.1. The instant case is also supported by the decision of Hon’ble Madras High Court in the case of CIT vs. Creative World Telefilms Pvt. Ltd. [2011] 333 ITR 100 (Bom), wherein their Lordship have held as under: “In the case in hand, it was not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement 'not traceable'. The Assessing Officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the Assessing Officer. In the above circumstances, the view taken by the Tribunal could not be faulted. No substantial question of law was involved in the appeal.” 5.2 The instant case is supported by the decision of Hon’ble Madras High Court in the case of CIT vs. Pranav Foundations Ltd. [2015] 229 Taxman 58 (Mad) wherein their Lordship have held as under: “In view of the fact that all the four parties, who are subscribers of the shares, are limited companies and enquiries were made and received from the four companies and all the companies accepted their investment. Thus, the assessee has categorically established the nature and source of the said sum and discharged the onus that lies on it in terms of section 68. When the nature and source of the amount so invested is known, it cannot be said to undisclosed income. Therefore, the addition of such subscriptions as unexplained credit under section 68 is unwarranted.” 5.3 The instant case is further supported by the decision of Hon’ble Allahabad High Court in the case of CIT vs. Vacmet Packaging (India) (P) Ltd. [2014] 367 ITR 217 (All), wherein their Lordship have held as under: “That apart, as regards genuineness of the transaction, the view which has been taken by the Tribunal is at least a possible view to take on the basis of the material on the record. The assessee undoubtedly had to discharge the onus of establishing the identity and creditworthiness of the applicant companies and of the genuineness of the transaction. In this regard, both the Commissioner (Appeals) and the Tribunal had noted that the assessee had established all the three aspects by producing, during the course of the assessment, necessary documentary material C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd such as the share application forms, copies of bank accounts, income tax returns and balance sheets. The view which was taken by the Commissioner (Appeals) and which was sustained by the Tribunal would thus have to be regarded as being, at least, a possible view to take in the circumstances of the case. In the present case the assessee had discharged the onus of establishing the identity, creditworthiness and genuineness of the transactions which had formed the basis of the addition that was made under section 68. Ultimately, whether the documentary materials which had been produced by the assessee were sufficient to displace the onus is a matter to be decided upon the facts of each case. Both the Commissioner (Appeals) and the Tribunal having held that the assessee had duly discharged the onus, no substantial question of law would arise.” 5.4. The instant case is further supported by the decision of Hon’ble Gujarat High Court in the case of CIT vs. Namastey Chemicals (P) Ltd., [2013] 217 TAXMAN 25 (Guj) wherein their Lordship have held as under: “Where in respect of share application money received by assessee, it was apparent from records that large number of subscribers had responded to letters issued by Assessing Officer and submitted their affidavits, Tribunal was justified in deleting impugned addition made in respect of said amount.”

6. The initial doubts stressed in the reasoning of the , AO in the instant case is based on the premise of “non-appearance by the Directors” of the appellant in response to summons issued u/s.131 of the said Act In this respect, it is observed that there is no ground to draw any adverse inference against the appellant, in relation to the provisions contained in sec. 68 of the said Act since the appellant had adduced alt possible evidence in support of the share capital raised by it and all the 9 share applicants appeared before the AO in course of remand proceedings and their statements were recorded by the AO hence there was nothing more for directors to state in that respect the genuineness of the entire share transactions. 6.1. It is also a fact that during the previous year relevant to the assessment year 2009-10, toe appellant had received share C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd application monies from 9 share applicants. In course of assessment proceedings, all foe share applicants provided evidence by proving their identity and creditworthiness and also the genuineness of the transactions and accordingly, the same was accepted by the AO in the assessment order framed u/s. 143(3) and 143(1) of the Act In respect of all the 9 share applicants. Therefore, following the rule of consistency as enunciated in the case of Radhasoami Satsang vs. CIT [Supra] the appellant is liable to succeed on this score also.

7. Therefore, considering the totality of toe facts and circumstances of the case, I find substance in the argument of the AR that the appellant has made its case that the identity of toe share applicants are established beyond doubt and on enquiries made by toe AO there is no adverse finding reached in this aspect. The fact that all the share applicants are existing tax assessees and were assessed either u/s 143(3) or u/s 143(1) of the Act for the relevant assessment year establish the identity and authenticity of toe share applicants. About the genuineness of the transactions there is neither any adverse finding in the assessment order nor which is subversive to the facts brought on record by the appellant during the course of assessment proceeding. The creditworthiness of toe share applicants as regards their subscription to the share capital is proved by submission of their return, audited annual accounts, their bank statement and replies to notice u/s. 133(6) of the Act and personal appearance u/s 131 of the Act The net worth of such subscribers are in excess of the amount invested by each of them as explained hereinabove. The addition made by AO is based on extraneous parameters not germane for deciding the issue. The AO had not dealt with the issue judiciously and consistently with the evidence adduced during the course of the assessment proceedings by the appellant and the replies of the share applicants in respect of the share capital to warrant the inference that such share application monies received is unaccounted cash credit. There is no material brought on record to that effect and wild speculation of this genre cannot be passed off as gospel truth. Hence, I am inclined to accept the arguments tendered by the A/R of the appellant in this respect. In view of the above, I have no hesitation to hold that the impugned addition made by invoking the provisions of Section 68 by the AO is not justified in the C.O. 4/Kol/2023 Assessment Year: 2009-10 M/s Daniel Commodities Pvt. Ltd circumstances and accordingly direct him to delete such addition of Rs.10,00,00,000/- made on this amount.”