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Income Tax Appellate Tribunal, KOLKATA BENCH ‘B’, KOLKATA
Before: Dr. Manish Borad & Shri Sonjoy Sarma]
ORDER
Per Sonjoy Sarma, JM:
The instant appeal is preferred by the revenue against the order of ld. CIT(A)-21, Kolkata dated 10.05.2023. The revenue has raised the following grounds of appeal:
“1. That on the facts and in circumstances of the case, the ld. CIT(A) while deleting the addition made u/s 68 of the Act has erred to totally ignore the facts that assessee failed to discharge its onus to establish identity, creditworthiness and genuineness of the transaction in respect of money received through the cash trail of found.
That on the facts and circumstances of the case, the ld. CIT(A) while deleting the addition of Rs. 2,65,00,000/- has erred in ignoring the facts of the case that departmental inspectors could not serve the notice to the buyer parties due to non existence of the companies.
The appellant craves the right to add, alter, amend or withdraw any ground or grounds of appeal
before or at the time of hearing of the case.”
2. Brief facts of the case are that the assessee filed its return of income for the A.Y. 2011-12 by declaring income of Rs. 21,021/-. Subsequently, the case of the assessee was reopened u/s 148 of the I.T. Act and consequent to that the notice u/s 148 of the Act was issued to the assessee company. The ld. AO in continuance
Tulsyan And Sons Pvt. Ltd. of further proceeding issued notices u/s 143(2) and 142(1) of the Act and in response to the notices, the AR of the assessee appeared before the AO from time to time and furnished necessary documents as asked for. During the assessment proceeding, the ld. AO noticed that assessee company had received an amount of Rs. 2,35,00,000/- and Rs. 30,00,000/- from Shivshakti Communication & Investment Pvt. Ltd. and Carnation Tradelink Pvt. Ltd. respectively. Further, he observed that the alleged funds are received from shell companies and added the aforesaid sum as undisclosed income in the hands of assessee u/s 68 of the Act.
3. Dissatisfied with the above order, assessee went into appeal before the ld. CIT(A) where the ld. CIT(A) allow the appeal of the assessee on the issue of disallowance of Rs. 2,65,00,000/- u/s 68 in the hands of assessee setting aside the order of ld. AO.
Feeling aggrieved by the above order, revenue is in appeal before this Tribunal. At the time of hearing, ld. DR contended that the ld. CIT(A) erred in deleting the addition made by the AO u/s 68 of the Act without looking into the facts of the case where the assessee had failed to discharge its onus to establish identity & creditworthiness of cash creditors and genuineness of the transaction in respect of alleged sum received by the assessee during the assessment year in question. Also the departmental inspectors could not serve the notice to the parties due to non existence of the companies and therefore prayed before the bench
Tulsyan And Sons Pvt. Ltd. to sustain the order of AO by setting aside the impugned order passed by the ld. CIT(A).
4. (a) On the other hand, ld. AR contended that the alleged sum received from the Shivshakti Communication & Investment Pvt. Ltd. and Carnation Tradelink Pvt. Ltd. is not in the nature of unsecured loan as has been alleged by the ld. DR as well as ld. AO while framing the assessment. Therefore, suspicion on the part of ld. AO while framing the assessment against the assessee was not correct and the ld. CIT(A) has rightly deleted the alleged sum in the hands of assessee. The ld. AR further contended that assessee has actually sold out equity shares of various companies held by it to M/s. Shivshakti Communication & Investment Pvt. Ltd. and Carnation Tradelink Pvt. Ltd. and realizing the sale proceeds of Rs. 2,65,00,000/- from the alleged parties. In this connection, the assessee furnished the relevant copies of ledger, bank statement, MCA records and financial statement of the purchaser in order to prove that the alleged sum represented sale consideration of equity shares sold by the assessee. Even while passing the order, the ld. CIT(A) called a remand report in this regard from the AO in which the ld. AO also stated that sum of Rs. 2,65,00,000/- from the alleged companies represented sale proceeds of investment held by assessee company and further stated that the alleged investment sold during the year were purchased in earlier years. Therefore, the alleged addition made by the AO only on the facts that these entities had not responded to the enquiry made by the AO u/s Tulsyan And Sons Pvt. Ltd. 133(6) of the Act was not correct. The ld. AR also relied on the finding of Co-ordinate Delhi Bench given in the case of Srishti Fincap Pvt. Ltd. vs DCIT in dated 07.10.2015, wherein Co-ordinate Bench held as under: "...that the issue in controversy is squarely covered by the judgements: Vishal Holding and Capital Pvt. Ltd. and Jatin Investment Pvt. Ltd. (supra) as the assessee in the instant case has purchased the shares to the tune of Rs. 25, 10,000/- in the Assessment Year 2003-04 and then credited the receipt on account of sale of shares to the tune of Rs. 25,10,000/- to its P & L account, which has already been declared and considered as its income by the appellant /assessee. So Ld. CIT(A) has legally and rightly deleted the addition of Rs.25, 10,000/- vide impugned order.
5. Therefore, he prayed before the bench by stating that the ld. CIT(A) has rightly deleted the addition of Rs. 2,65,00,000/- as made in the hands of assessee. Therefore, the instant appeal filed by the revenue may be dismissed and no need to interfere in the order passed by the ld. CIT(A).
6. We after hearing the rival submission of the parties and have perused the material available on record notice that the alleged sum of Rs. 2,65,00,000/- received by the assessee company represented sale consideration received from sale of its investment held by the assessee company from earlier year. The ld. CIT(A) also has given its finding in his order in the following manner: “11. The Assessing Officer perused the information supplied by the investigation wing and having formed the belief that income chargeable to tax had escaped assessment, cannot be stated to have acted mechanically. Further, mere fact that assessee had asked for certain information from the Assessing Officer, which at this stage was not supplied, would not invalidate the reasons recorded by the Assessing Officer in issuing the impugned notice. 12. In case of Pr. CIT v. Gokul Ceramics[2016] 71 taxmann.com 341/241 Taxman 1 in division bench of Gujarat High Court had in somewhat similar circumstances observed as under: 9. It can thus be seen that the entire material collected by the DGCEI during the search, which included incriminating documents and other such relevant materials, was alongwith report and show-cause notice placed at the disposal of the Assessing Officer. These materials prima Tulsyan And Sons Pvt. Ltd. facie suggested suppression of sale consideration of the tiles manufactured by the assessee to evade excise duty. On the basis of such material, the Assessing Officer also formed a belief that income chargeable to tax had also escaped assessment. When thus the Assessing officer had such material available with him which he perused, considered, applied his mind and recorded the finding of belief that income chargeable to tax had escaped assessment, the reopening could not and should not have been declared as invalid, on the ground that he proceeded on the show-cause notice issued by the Excise Department which had yet not culminated into final order. At this stage the Assessing Officer was not required to hold conclusively that additions invariably be made. He truly had to form a bona fide belief that income had escaped assessment. In this context, we may refer to various decisions cited by the counsel for The Revenue.
In case of Central Provinces Manganese Ore Co. Ltd. v. Income Tax Officer, Nagpur (supra) the Supreme Court noted that in case of the assessee which had an office in London, this Customs authority had come to know that the assessee had declared very low price in respect of the consignment of Manganese exported by them out of India After due inquiries and investigations, the Customs authorities found that the assessee was systematically under- voicing the value of Manganese as compared with the prevailing market price. The Income Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had undervoiced goods during export. Under such circumstances, upholding the validity of the notice for reopening the Supreme Court held and observed as under: "So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied."
In case of Income Tax Officer v. Purushottam Das Bangur (supra) after completion of assessment in case of the assessee, the Assessing Officer received letter from Directorate of Investigation giving detailed particulars collected from Bombay Stock Exchange which revealed earning of share and price of share increased during period in question and quotation appearing at Calcutta Stock Exchange was as a result of lated transaction. On the basis of such information, the Assessing Officer issued notice for reopening of the assessment. The question, therefore, arose whether the information contained in the letter of Directorate of Investigation could be said to be definite information and the Assessing Officer could act upon such information for taking action under Section 147(b) of the Act. In such background, the Supreme Court observed as under: "12. Ms. Gauri Rastogi, the learned counsel appearing for the respondents, has urged that the letter of Shri Bagai was received by the Income tax Officer on March 26, 1974 and on the very next day, that is, on March 27, 1974, he issued the impugned notice under Section 147(b) of the Act and that he did not have conducted any inquiry or investigation into the information Tulsyan And Sons Pvt. Ltd. sent by Shri Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri Bagai does not mean that the Income Tax Officer did not apply his mind to the information contained in the said letter of Shri Bagai. On the basis of the said facts and information contained in the said letter, the Income Tax officer, without any further investigation, could have formed the opinion that there was reason to believe that the income of the assessee chargeable to tax had escaped assessment. The High Court, in our opinion, was in error in proceeding on the basis that it could not be said that the Income Tax Officer had in his possession information on the basis of which he could have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned judgment of the High Court. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the Writ Petitions filed by the respondents are dismissed. No order as to costs."
In case of Income Tax Officer v. Selected Dalurband Coal Co. Pvt. Ltd. (supra), the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of coal raised. Upholding the validity of re-opening of assessment, the Supreme Court held and observed as under: "After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9, 1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated in the letter are true or not is not the concern at this stage. It may be well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have not to go on we don not and we ought not to express any opinion on the merits."
13. In case of A.G.R. Investment Ltd. v. Additional Commissioner of Income Tax and anr. (supra), a Division Bench of Delhi High Court considered the validity of reopening of assessment where the notice was based on information received from Directorate of investigation that the assessee was beneficiary of bogus accommodation entries. The Court while upholding the validity of reopening observed that sufficiency of reason cannot be considered in a writ petition. It was observed as under:
Tulsyan And Sons Pvt. Ltd. "23 The present factual canvas has to be scrutinized on the touchstone of the aforesaid enunciation of law. It is worth noting that the learned counsel for the petitioner has submitted with immense vehemence that the petitioner had entered into correspondence to have the documents but the assessing officer treated them as objections and made a communication. However, on a scrutiny of the order, it is perceivable that the authority has passed the order dealing with the objections in a very careful and studied manner. He has taken note of the fact that transactions involving Rs. 27 lakhs mentioned in the table in Annexure P-2 constitute fresh information in respect of the assessee as a beneficiary of bogus accommodation entries provided to it and represents the undisclosed income. The assessing officer has referred to the subsequent information and adverted to the concept of true and full disclosure of facts. It is also noticeable that there was specific information received from the office of the DIT (INV-V) as regards the transactions entered into by the assessee company with number of concerns which had made accommodation entries and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal (supra), Bombay Pharma Products (supra) and Anant Kumar Saharia (supra), the Court, in exercise of jurisdiction under Article 226 of the Constitution of India pertaining to sufficiency of reasons for formation of the belief. cannot interfere. The same is not to be judged at that stage. In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is not applicable to the factual matrix in the case at hand. In the case of Sarthak Securities Co. Pvt. Ltd. (supra), the Division Bench had noted that certain companies were used as conduits but the assessee had, at the stage of original assessment, furnished the names of the companies with which it had entered into transactions and the assessing officer was made aware of the situation and further the reason recorded does not indicate application of mind. That apart, the existence of the companies was not disputed and the companies had bank accounts and payments were made to the assessee company through the banking channel. Regard being had to the aforesaid fact situation, this Court had interfered. Thus, the said decision is also distinguishable on the factual score."
14. Learned Single Judge of Madras High Court in case of Sterlite Industries (India) Ltd. v. Assistant Commissioner of Income Tax reported in MANU/TN/0471/2008MANU/TN/0471/2008 : [2008] 302 ITR 275 (Mad) upheld the notice for reopening which was based on information from enforcement directorate showing possible inflation of purchases made by the assessee.
The decisions cited before us do not involve controversy as we are examining in this petition. In the case of Chhugamal Rajpal (supra) as noted, the Supreme Court held the re- opening of assessment invalid upon finding that the Assessing Officer had not set out any reasons for coming to the conclusion that it was a fit case for issuing notice under Section 148 of the Act. In case of Amar Jewellers Ltd. (supra) the Gujarat High Court was examining the validity of re-opening of assessment in a case where original assessment was carried out under Tulsyan And Sons Pvt. Ltd. Section 153 (A) of the Act, pursuant to search carried out by the Revenue Authorities. Further, the conclusions of the Court were based on facts of that case. Lastly, this Court in case Shodiman Investments (P.) Ltd. (supra) was examining the revenue's income tax appeal against the judgment of the Tribunal holding that the re-opening of assessment was bad in law.
In the result, petition is dismissed. All contentions on merits of the petitioner however kept open. In view of the above therefore, the AO is noted to have fulfilled the conditions precedent for reopening the assessment and thus the AO's action of reopening of assessment u/s 147 is held to be valid. Accordingly, Ground Nos. 1 to 7 are dismissed. Ground 8 and 9 I have considered the submissions filed by the appellant in the light of the findings of the AO in the assessment order and the remand report. I have also gone through the material placed on record. The AO in his assessment order had noted that the assessee had received a sum of Rs.2,65,00,000/- from M/s Shivshakti Communication & Investment Private Limited and M/s Carnation Tradelink Private Limited, which according to him, had emanated out of the bank account of Mr. Surendra Agarwal. Since the enquiries made by the AO from these entities did not yield any fruitful results, the AO concluded that the identity, genuineness and creditworthiness of these payers remained unsubstantiated and therefore he added the sum of Rs.2,65,00,000/- by way of unexplained cash credit u/s 68 of the Act. The assessee has submitted that the monies received from M/s Shivshakti Communication & Investment Private Limited and M/s Carnation Tradelink Private Limited did not represent any unsecured loan received from them and therefore the premise on which the AO suspected these sums to be in the nature of accommodation entries was incorrect. The assessee pointed out that they had sold equity shares of various companies held by way of investments to M/s Shivshakti Communication & Investment Private Limited and M/s Carnation Tradelink Private Limited, and had therefore realized the sale proceeds of Rs 2.65 crore from these parties. The assessee furnished the relevant ledgers, bank statements, MCA records, financial statements of purchasers etc. and therefore contended that the identity, creditworthiness and genuineness of the transaction stood substantiated. Accordingly, the assessee has claimed that the impugned addition be deleted. The AO, after making verifications, in the remand proceedings, is noted to have confirmed that the sum of Rs.2,65,00,000/- received from M/s Shivshakti Communication & Investment Private Limited and M/s Carnation Tradelink Private Limited was not in the nature of 'unsecured loan' but represented proceeds received on sale of investments. The AO has noted that the assessee had submitted the copies of sale invoices and the details of investments sold. The AO also observed that the investments sold during the year were brought forward from the earlier year/s which was verifiable from the financial statements of the assessee. The AO has also stated that the purchasers held valid PAN & CIN and that both of them were engaged in the business of money-lending and making investment. However, since these entities had not responded to the enquiries made by the AO u/s 133(6) of the Act, the AO stated that the identity, genuineness & creditworthiness of these two parties remained unverified.
Tulsyan And Sons Pvt. Ltd. The assessee in their rebuttal/rejoinder is noted to have pointed out that the AO had accepted in his remand report that the receipt of the impugned sum was on account of sale proceeds of investments. The AO also verified that the investments sold were shown in the balance sheet of F.Y. 2010-11 of the appellant in Schedule-4 of the Balance Sheet. According to the assessee, only because the purchasers did not respond to the notices which have been issued after more than 12 years post the transaction, cannot be reason to doubt the genuineness of the same. Having considered the above, it is noted that the admitted fact is that the assessee had sold shares held by way of 'investments' during the/year to M/s Shivshakti Communication & Investment Private Limited and M/s Carnation Tradelink Private Limited for Rs.2,35,00,000/- and Rs.30,00,000/- respectively. It is therefore, in any case, not the receipt of 'unsecured loan' as alleged by the AO. It is noted that the purchase of investments in earlier years, its cost of acquisition and source of funds is not in dispute in the present case. It is also an admitted position that proceeds from sale of shares to the aforementioned entities were received through proper bank channel, and are duly accounted for in the books of accounts. The appellant has rightly pointed out that after netting of the cost of acquisition from sale consideration, the net taxable capital gain was NIL in terms of Section 45 of the Act. It is therefore not a case that the sale proceeds were not considered for income-tax purposes. Also, the AO has noted that both the buyer companies are having valid CIN & PAN and are engaged in the business of holding investments and financing. Hence, the identity stands substantiated. The assessee has furnished the relevant financial statements of both the parties from which it is evident that each of the two had sufficient net-worth to acquire the investments from the assessee. Accordingly, the creditworthiness also cannot be said to be in doubt. It is also noted that both the purchasers, M/s Shivshakti Communication & Investment Private Limited and M/s Carnation Tradelink Private Limited are not an associate or related party of the assessee and therefore any connivance etc. also cannot be presumed in the present case. It is also noted that the AO, both, in original assessment as well as remand proceedings was not able to bring on record any material or evidence, which in any manner showed that the sum deposited in the bank account of Mr. Surendra Agarwal represented the unaccounted monies of the assessee. Merely because a certain person had deposited cash in his bank account which after multiple payments through proper banking channel had reached the purchaser of shares which was utilized by it to pay for the sale consideration to the assessee, cannot be viewed adversely in the assessee's income tax assessment, especially when the transactions were duly accounted for in the books and considered for income-tax purposes. In that view of the matter, the genuineness of the transaction also appears to be proved. It is clearly an admitted position that the transactions in question involved receipt of proceeds on sale of investments. It was not a case where any share subscription monies were raised which may lead to an inference that the appellant would have a continued relationship or link with the shareholder / share subscriber nor were the monies received by way of loans/ borrowings which would result in the creation of creditor-debtor relationship on a long term basis. Unlike in such cases where share application monies are raised and/or unsecured loan is received; the appellant cannot be expected to continue maintaining a relationship and be informed about the whereabouts of the persons to whom it had sold investments on one occasion and that too after more than 8 to 10 years after the impugned transaction. At the point of sale of investments, the sale bill/invoice was issued, physical share certificates were Tulsyan And Sons Pvt. Ltd. handed over and the payment was received. Apart from the foregoing, no other act was performed either by the seller or the purchaser. It is purely a case of two unrelated parties, a buyer and a seller, who conducted a trading transaction and the considerations were exchanged at the same time. The transactions involving sale of investments in FY 2011-12 is noted to be a one-off transactions with such persons with the AO not bringing on record any evidence of a continues relationship of the appellant with these parties. It appears to be a case of two unrelated parties buyer and a seller, who conducted a trade and the considerations were exchanged at the same time. Accordingly, I find merit in the plea of the appellant that there is no existing or to be continuing relationship, with the purchasers and therefore the appellant cannot be reasonably expected to continue to be in touch and be informed about the whereabouts of these bodies corporate. For the reasons set out in the foregoing therefore the appellant submits that no adverse inference could be drawn against it for mere non-service of summons upon the purchaser of investments. I find that a similar issue was considered by the Hon'ble ITAT, Delhi in the case of Jatin Investment Pvt Ltd (ITA No. 4325/Kol/2009) dated 27.05.2015 involving similar facts as involved in the present case. In the decided case the assessee has sold unlisted shares and received consideration of Rs.93,45,000/-. The case of the assessee was reopened u/s 147 on the alleged belief that the proceeds were received by way of accommodation entries. In the course of assessment the AO issued summons u/s 131 to all purchasers which remained un-served or were not complied with. The AO accordingly added the entire sale proceeds by way of unexplained cash credit u/s 68 of the Act. On appeal the Tribunal noted the following facts: "The nature of assessee company's main objects is basically investments and accordingly it has made purchase and sales in shares. Details of all transactions was filed before the ITO. In this, all shares purchased and sold are enlisted with the name of parties, address, cheque no/bank name and amount. These all transactions are duly recorded in the books of accounts. Balance sheet copy as on 31/03/2003 with previous year figures is attached. It shows investments as on 31/03/2002 at Rs. 1,45,01,800/- and at 1,63,78,774.77 as on 31/03/2003. It means that some of the investments have been disposed off and some new investments have been made in this year. The surplus on sale has been shown as income in P&L a/c and assessed as declared by the ITO.” On these facts the Tribunal observed that the credits appearing in bank statements did not pertain to share application monies or loans which could be brought within the purview of Section 68 of the Act. According to Tribunal the proceeds received on sale of shares is taxable receipt against which the cost of acquisition paid by the assessee is deductible and the net gain/loss is taxable in the hands of the assessee. The Tribunal thus held that such sale proceeds received on sale of investments was akin to sale proceeds received on sale of goods which cannot be subject to the rigors of Section 68 in as much as it would amount to taxing the same sum twice. The Tribunal accordingly deleted the impugned addition. The relevant extracts of the decision is as follows: "The money listed in asst. order is out these aggregate to Rs. 93,45,000/- encashed by sale for which entry to entry details were filed before the ITO. So, these deposits are neither loan nor share application money as alleged mindlessly by the ITO in his order. Sec 68 is focused on loans and shares capital. It does not include sale proceeds of goods. When opening stock and Tulsyan And Sons Pvt. Ltd. new acquisition of goods stands accepted and closing stock at the year end is also accepted, the sale proceeds can not be doubted where the payment received is by cheque from tax paying entity. The third party might not appear for confirmation, the ITO had other sources of direct verification. The one asset has converted into other shape and no new deposit is there in this year. It is important to mention that an income/receipt can be brought to tax only once. Law do not provide for tax twice on a transaction. When sale proceeds of these shares appear in credit side, being offered as income, the same once again can not be brought to tax as income from undisclosed sources. What the ITO has done is double taxation of same receipt- once as sale of investments and again as income from undisclosed sources. This is not correct/justified.
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. The above findings of the Hon'ble ITAT Delhi have since been affirmed by the Hon'ble Delhi High Court reported in dated 18.01.2017. It is noted that the Hon'ble ITAT, Delhi in their subsequent decision in the case of Srishti Fincap Pvt Ltd Vs DCIT (ITA No. 2264/Del/2013) dated 07.10.2015 also expressed by the same view by observing as follows: "...that the issue in controversy is squarely covered by the judgements: Vishal Holding and Capital Pvt. Ltd. and Jatin Investment Pvt. Ltd. (supra) as the assessee in the instant case has purchased the shares to the tune of Rs. 25, 10,000/- in the Assessment Year 2003-04 and then credited the receipt on account of sale of shares to the tune of Rs. 25,10,000/- to its P & L account, which has already been declared and considered as its income by the appellant /assessee. So Ld. CIT(A) has legally and rightly deleted the addition of Rs.25, 10,000/- vide impugned order.
11. As a sequel to the discussion made in the preceding paragraphs and in view of the ratio of judgement in the case of Vishal Holding and Capital Pvt. Ltd. (supra), we are of the opinion that when the assessee has proved to have purchased the shares of Rs.25, 10,000/- in the preceding assessment year duly shown in the balance sheet and then sold the same and shown an amount of Rs. 25, 10,000/- as sale proceeds of the share as income, the provisions contained in Section 68 of the Act are not attracted and holding the same as income would tantamount to double taxation which is not permissible under law and as such, the Ld. CIT(A) has rightly deleted the addition made by the A.O. Consequently, no ground to interfere in the impugned order, the appeal of Revenue is hereby dismissed.
Tulsyan And Sons Pvt. Ltd. It has been brought to my notice that the Hon'ble ITAT, Kolkata has also decided a similar issue in the case of Abdhut Vinimay Pvt Ltd Vs ITO (ITA No. 2404/Kol/2017) dated 24.10.2018. In the decided case the assessee had sold investments from which it received proceeds of Rs.62,50,000/-. In the course of assessment the AO tried to make enquiries u/s 131 from the purchasers but the summons were unserved. The AO accordingly disbelieved the genuineness of the transactions and added the proceeds received by the appellant u/s 68 of the Act. On appeal the Tribunal deleted the impugned addition by observing as under: "4. We, therefore, considering the totality of the facts do not see any valid ground to interfere with the findings of the Ld. CIT(A). Accordingly, we do not see any merit in this appeal of the department. In ITA no. 4326/Del./2009 of the assessment year 2004-05 identical issue having similar facts is involved, the only difference is in the amount of addition which was deleted by the Ld. CIT(A). Therefore, our findings given in former part of this order, in respect of assessment year 2003-04, shall apply mutatis mutandis for assessment year 2004-05,"
7. The Hon'ble Delhi High Court in the case of Principal C.I.T. vs Jatin Investment Pvt. Ltd. [2017] TMI 342 (Delhi) 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.
Learned counsel for the Revenue reiterated the grounds cited in some of the contentions made before the ITAT. Learned counsel especially emphasized on the submission that the incorrect reflection of the receipts in the balance sheet belied the true nature of the receipts as a justification for the application of Section 68.
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"
8. Applying the proposition of law laid down in the case law to the facts of the case, we delete the addition made u/s 68 of the Act for the reasons cited above. I find that the appellant has produced copies of his audited balance sheet for the immediately preceding AY - AY 2010-11. The impugned shares are duly reflected in this balance sheet. Over and above this evidence of the ownership of the said shares, during appeal, the appellant was also asked u/s. 250(4) to produce further independent evidence that the said shares sold in this year had indeed been purchased in the preceding years. In response, the appellant has submitted copies of Form 20B under Companies Act of the companies whose shares were sold during the impugned year and the sale of which is at the heart of the present controversy. These documents have been obtained by the appellant from the MCA records and show that Tulsyan And Sons Pvt. Ltd. the name of the appellant company appears in the list of shareholders of the companies the sale of whose shares is presently under dispute. These records indicate that the appellant company’s name appeared in the list of shareholders of these companies from as early as 31.3.2006 and 31.3.2007 onwards in the official and statutory records of the concerned companies. Since this information is part of the public records, there cannot be any disputing the fact that the appellant had been holding the shares of the said companies, the sale of those shares is presently under dispute, for several years, without there being any adverse observations made by the department. I find that no effort had been made to make any enquiries from the MCA database of the said companies or even from the appellant’s own balance sheets of the immediately preceding assessment years. Once it has been established that these shares were purchased by the appellant several years ago and had been reflected in the appellant’s balance sheet for several years, then it is difficult to see how the consideration received by the appellant through banking channels, upon sale of these very instruments (whose actual existence has not been doubted) can be considered to be the appellant’s own unaccounted money by treating these sales as bogus. Relying respectfully upon the above judicial precedents and for the reasons discussed in preceding paragraphs, the impugned addition of Rs.2,65,00,000/- made by the AO u/s 68 of the Act cannot be held to be legally sustainable and is therefore directed to be deleted. These grounds are therefore allowed.”
On perusal of the detailed finding of fact by ld. CIT(A) and also examining the facts of the case in light of the decision of Co- ordinate Bench Delhi in the case of Srishti Fincap Pvt. Ltd. (supra), we find that that the alleged sum of Rs. 2.65 crore is not of the nature of unsecured loan or share capital/share premium but it is the sale consideration received during the year from sale of investments in the form of equity shares held by the assessee for more than a year and these were duly appearing in the audited financial statement of the preceding financial year 2009- 10 and the balance of investments held in the equity shares were brought forward from preceding financial year to the year under appeal and the alleged sum is on account of sale of such investments. Therefore, since the investments in the equity shares were made in the preceding year and sources such investment is not in dispute before us and such investments
Tulsyan And Sons Pvt. Ltd. have been liquidated during the year provisions of section 68 of the Act cannot be invoked. We, thus, fail to find any infirmity in the finding of ld. CIT(A) deleting the addition made by the assessing officer. Thus, ground no. 1 & 2 raised by the revenue are dismissed.
Ground no. 3 being general in nature need not required to be adjudicated.
In the result, the appeal of the revenue is dismissed.