SILKINA COMMODEAL PVT. LTD. ,KOLKATA vs. ITO,WARD-3(3), KOLKATA. , KOLKATA

Present for: Appellant by : Shri Siddarth Agarwal, Advocate Respondent by : Shri B. K. Singh, JCIT, Sr. DR Date of Hearing : 22.01.2024 Date of Pronouncement : 06.03.2024 O R D E R

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

Silkina Commodeal Pvt. Ltd. AY 2011 -12 Notice u/s. 148 of the Act dated 07.03.2018 was issued and served on the assessee after recording the reasons to believe for the same. Copy of reasons to believe are placed at pages 21 and 22 of the paper book filed by the assessee. From the perusal of the said reasons to believe it is noted that information was received from the DIT (Inv.), Kolkata that assessee had suspicious bank transactions with Jamakharchi companies. It is noted by the Ld. AO that assessee had received Rs.50,00,000/- from one fictitious shell company namely M/s. Suniyojit Agency Pvt. Ltd. on different dates by selling the shares of the following companies: a) Vineet Processing Pvt. Ltd. Rs. 30,00,000/- b) Skylark Marketing Pvt. Ltd. Rs. 10,00,000/- c) SMS Tradways Pvt. Ltd. Rs. 10,00,000/- Total Rs. 50,00,000/- 3.1. According to Ld. AO, no explanation was given by directors of such fictitious company regarding cash deposit which does not commensurate with their known source of income or transaction. Accordingly the Ld. AO formed the reason to believe that undisclosed income of assessee was routed through such fictitious jamakharchi companies, to bring into books of account of the assessee an income of assessee which has escaped assessment u/s. 147 of the Act. 3.2. Assessee was asked to file its explanation who according to the Ld. AO failed to explain the nature of transaction. Ld. AO noted in the impugned assessment order that assessee failed to furnish the complete details of the aforesaid fictitious jamakharchi companies from whom Rs.50,00,000/- was received by it during the year under consideration. Hence, the identity and creditworthiness of the shareholders and genuineness of the transaction could not be verified. He thus, completed the assessment and the entire amount of money Silkina Commodeal Pvt. Ltd. AY 2011 -12 received on account of issue of shares along with the quantum of premium paid for issue of shares was added as unexplained cash credit. The total income was assessed at Rs.51,33,260/-. Aggrieved, assessee went in appeal before the Ld. CIT(A) contesting both on the legal issues as well as on the merits of the case.

Silkina Commodeal Pvt. Ltd. AY 2011 -12 "9. From the facts and circumstances of the case, submissions made by the parties and case law cited in this case, we are of the considered view that no ground is made out to interfere into the order passed by Ld. CIT(A) for the following reasons: i) that in the instant case, A.O. has merely acted upon information supplied by DIT (Inv.) and has not preferred to analyze the previous returns filed by the assessee to make out if he has already disclosed the purchase of shares in question. ii) that from the perusal of copies of assessment proceedings initiated u/s 147 read with section 143(3) of the Act, pertaining to Assessment Year 2003-04 lying at pages 45-46 of the ledger book, in ledger account showing purchase of shares qua the Assessment Year 2003-04 lying at page 34 which have never been disputed by the A.O, it is abundantly clear that the assessee had purchased the shares in Assessment Year 2003-04. iii) that when the assessee has sold the shares for Rs.25,10,000/- undisputedly purchased by him in Assessment Year 2003-04, no adverse inference can be drawn against him ... " iii(a) The Coordinate Bench of ITAT Delhi also relied upon previous precedents set in regard the issue involved relating to the assessee M/s. Srishti Fincap Pvt. Ltd. " ... vii) In I.T.O. Vs Jatin Investment Pvt. Ltd. (supra), it is held that when the assessee purchased the shares in earlier year which were shown as investment in the books of account and reflected in the balance sheet then the assessee sold certain investments and accounted for the profit or loss, the provisions of Section 68 of the Act were not applicable. viii) Similarly, Hon'ble Jurisdictional High Court in the case cited as CIT Vs Vishal Holding and Capital Pvt. Ltd. vide order dated 9th August, 2010 upheld the order dated 30.07.2009 of the ITAT in 1. TA. No. 1788/Del/2007 for the Assessment Year 2000-2001 wherein the order of the Ld. CIT(A) making the similar deletion was upheld by observing in para 6 as under:- "We are of the view that the assessee had produced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd., and had been maintaining books of account as per Companies Act. The assessee had also demonstrated the purchase and sale of shares over a period of time as seen from the balance sheet. In our opinion, the Assessing Officer has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim. Consequently the addition made by the Assessing Officer cannot be sustained." iii(b) The Coordinate Delhi Bench of the ITAT in the case of ITO v. Jatin Investment Pvt. Ltd. in & 4326/Kol/(2009 order dated 27.05.2015 held as follows :- "11. In his rival submissions, the Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee was having investment in shares etc. which were duly shown on the Silkina Commodeal Pvt. Ltd. AY 2011 -12 asset aside of the balance sheet, out of those investments some were sold and few new were purchased and if there was any gain on the sale the same was offered for taxation. It was further submitted that in earlier year 13 4325 & 4326/Del/2009 under similar circumstances, the case was reopened u/s 147 of the Act and the addition made by the AO was deleted by the I.T.A.T. It was further submitted that the assessee sold the shares which were earlier purchased in different years and duly shown in the balance sheet of the respective years and that the assessee had shown the sale proceeds in the books of accounts, the investments were reduced after making the sales. It was contended that there was no obligation under the law that the assessee was required to prove the source of payee. It was further contended that the AO had not rejected the books of accounts and the purchases were duly accepted so there was no reason to doubt the sales. It was submitted that the case of the assessee is squarely covered by the decision of this bench of the Tribunal in the case of ITO vs. M/s Vishal Holding and Capital Pvt. Ltd. in order dated 17.07.2009 which has been upheld by the Hon'ble Jurisdictional High Court as reported in (2011) 200 Taxman 186 (Delhi). It was further, submitted that the issue is also covered by the order of the ITAT, Delhi Bench in the case of ITO vs. Goodwill Cresec Pvt. Ltd. in ITA No. 4151/Del./2010 order dated 25.01.2012. Reliance was also placed on the following cases laws :- "1. CIT vs. Sh. Udit Narain Aggarwal, ITA No. 560 of 2009, dt. 12.12.2012 2. CITvs. Sudeep Goenka, ITA No. 468 of 2009, dt. 3.01.2013.

3. CIT vs. Anirudh Narain Aggarwal, ITA No. 195 of 2010, dt. 16.01.2013." It was pointed out that the same issue has been decided by the lTAT in assessee's own case in I. T. A. T No. 1584/Del./2009 for the A. Y. 2002-03 vide order dated 13.11.2009, in assessee's favour (copy of the order was furnished which is placed on record) 12. We have considered the submissions of both the parties and gone through the material available on the record. In the present case, it is noticed that the assessee purchased the shares in earlier years which were shown as investment in the books of accounts and reflected in the "Asset Side" of the "Balance Sheet", out of those investments (copy which is placed at page no. 23 and 24 of the assessee's paper book), the assessee sold certain investments and accounted for the profit/loss and offered the same for taxation. In the present case, the amount in question was neither a loan or the deposit, it was also not on account of share application money, the said amount was on account of sale of investment therefore the provisions of Section 68 of the Act were not applicable and the AO was not justified in making the addition. In our opinion, the Ld. CIT(A) rightly deleted the addition made by the AO.

iv). The Hon’ble Delhi High Court in the case of Principal C.I. T. v. Jatin Investment Pvt. Ltd. 12017] TMI 342 (Delhi) affirmed the Silkina Commodeal Pvt. Ltd. AY 2011 -12 decision of the Delhi ITAT (supra) in favour of the assessee and held as follows :-

"4. The ITAT agreed with the conclusions of the CIT (A) upon its independent examination of the record. It also discounted the Revenue's submissions that the investment shown in the book of accounts and reflected as assets in the side of the balance sheet, should have been properly treated and that in the absence of such treatment Section 68 applies. The ITAT rejected this contention and held - based upon the principles enunciated in CIT v. Vishal Holding & Capital Pvt. Ltd. (order of this Court dated 9.8.2010) that the invocation of Section'68 in the circumstances is unwarranted.

6. The ITAT in our opinion quite correctly appreciated the law and its application by the first appellate authority, i.e., CIT(A). Having regard to the facts and the nature of the analysis based upon the decisions of this Court, as well as the reliance on various decisions with respect to the true nature of section 68, we are of the opinion that no question of law arises; the appeals are accordingly dismissed.” v). In the case of Nemi Chand Kothari v. CIT [2004] 136 Taxman 213 [2003] 264 ITR 254, the Hon'ble Guwahati High Court has thrown light on another aspect touching the issue of onus on assessee under section 68, by holding that the same should be decided by taking into consideration the provision of section 106 of the Evidence Act which says that a person can be required to prove only such facts which are in his knowledge. The Hon'ble Court in the said case held that, once it is found that an assessee has actually taken money from depositor/lender who has been fully identified, the assessee/borrower cannot be called upon to explain, much less prove the affairs of such third party, which he is not even supposed to know or about which he cannot be held to be accredited with any knowledge. In this view, the Hon'ble Court has laid down that section 68 of Income-tax Act, should be read along with section 106 of Evidence Act.

Silkina Commodeal Pvt. Ltd. AY 2011 -12 5. After considering the submissions made by the assessee, Ld. CIT(A) observed, “the conclusion of Ld. AO that share subscriber company was a shell company having no business and creditworthiness for purchasing the share of the appellant company for Rs.50,00,000/-.” Aggrieved, assessee is in appeal before the Tribunal.