DEPUTY COMMISSIONER OF INCOME TAX, KOLKATA V. .SALASAR FINANCIAL ADVISORY SERVICES PVT. LTD., KOLKATA

ITA 1926/KOL/2024

AI Insights

The case involves the Deputy Commissioner of Income Tax (DCIT), Kolkata, as the appellant, and Salasar Financial Advisory Services Pvt. Ltd., as the respondent. The dispute centered on the addition of Rs.2,95,00,000 as income from unexplained sources, which the Assessing Officer had treated as such during the assessment year 2012-13. The Commissioner of Income Tax (Appeals) deleted this addition, leading to the revenue's appeal before the Tribunal. The Tribunal examined the procedural and substantive aspects of the case, including the adequacy of the evidence provided by the assessee and the actions of the Assessing Officer.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 298969 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. Orissa Corporation Pvt. Ltd., ITO vs Cygnus Developers (I) P Ltd, PCIT Vs. Naina Distributors Pvt. Ltd., Crystal Networks Pvt. Ltd. vs CIT, PCIT Vs. Sreeleathers, PCIT vs. NRA Iron & Steel (P) Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Question of law; Unexplained cash credit; Onus to prove; Source of fund; Bogus
• Section: 143(3); 250; 131; 133(6)

Judgement Text

"आयकर अपीलीय अिधकरण, कोलकाता पीठ ‘C’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Rajesh Kumar, Accountant Member I.T.A. No.1926/Kol/2024 Assessment Year: 2012-13 DCIT, Kolkata .………. Appellant vs. Salasar Financial Advisory Services Pvt. Ltd. ……..… Respondent 53A, Mirza Ghalib Street (4th Floor), Kolkata-700016. (PAN: AANCS0249R) Appearances by: Shri Subhro Das, Addl. CIT, Sr. DR appeared on behalf of the Appellant Shri Miraj D. Shah, AR appeared on behalf of the Respondent Date of concluding the hearing: 25/11/2024 Date of pronouncing the order: 17/12/2024 आदेश / ORDER Per Sanjay Garg, Judicial Member : The captioned appeal has been preferred by the revenue against the order dated 09.07.2024 for Assessment Year (AY) 2012-13 of the Ld. Commissioner of Income Tax (Appeals), Kolkata -21 [hereinafter referred to as the “Ld. CIT(A)”] passed u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”). 2. This appeal of the revenue is time barred by five days. However, no petition for condonation of delay has been filed. However, considering the shortness of the delay period, the delay in filing the present appeal is hereby condoned and the appeal is taken up for adjudication. 3. Revenue in this appeal is aggrieved by the action of the Ld. CIT(A) in deleting the addition of Rs.2,95,00,000/- made by the Assessing 2 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 Officer (in short “AO”) by treating the share application money received by the assessee as income of the assessee from unexplained sources. 4. We have heard the rival contentions and gone through the records. In this case, the AO during the assessment proceedings noted that the assessee had claimed to have received share capital to the tune of Rs.2,95,00,000/- during the financial year (FY) under consideration. On being asked to explain in this respect, the assessee filed the requisite details and documents to prove the identity and creditworthiness of the share subscribers and genuineness of the transactions. However, the AO without pointing out any defect or discrepancy in the evidences furnished by the assessee, issued summons u/s. 131 of the Act to the directors of the assessee company for their personal deposition. However, the directors of the assessee company did not appear for personal deposition. Thereafter, the AO by way of a small and cryptic order held that the assessee had failed to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction. He, accordingly, made the impugned addition treating the said share application money as income of the assessee from undisclosed sources. 5. Being aggrieved by the said order of the AO, the assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A), however, vide impugned order deleted the addition so made by the AO. Being aggrieved by the said order of the Ld. CIT(A), the revenue is now in appeal before us. 6. As noted above, the order of the AO is a small and cryptic order, wherein there is no mention even of the name of the share subscriber companies what to say of about any discussion about the other details and documents including the financials of the subscriber companies furnished by the assessee to prove the identity and creditworthiness of 3 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 the said share subscriber companies. There is absolutely no discussion in the assessment order relating to the evidence and details furnished by the assessee to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction. 7. Ld. Counsel for the assessee has brought our attention to the relevant part of the impugned order of the Ld. CIT(A), to show that the Ld. CIT(A) has thoroughly examined the facts and evidences on the file and passed a detailed and exhaustive order on the issue under consideration. We note that the Ld. CIT(A) has noted the name of the share subscriber companies and the amount of investment made by them in the assessee company, which is reproduced in a chart at page 7 of the impugned order of the Ld. CIT(A), which, for ready reference is extracted as under: Sl. No. Name of the Share Applicant concern PAN No. of shares Face Value & Premium charged Amount in Rs. 1. Ambaa Securities Pvt. Ltd. AACCA8251G 9000 Rs.10/- face value and share premium of Rs.190/ share Rs.18,00,000/- 2. Ritesh Enclave Pvt. Ltd. AADCR6228H 31500 Rs.10/- face value and share premium of Rs.190/ share Rs.63,00,000/- 3. Ritesh Nirman Pvt. Ltd. AADCR6227J 74000 Rs.10/- face value and share premium of Rs.190/ share Rs.1,48,00,000/- 4. Ritesh Projects Pvt. Ltd. AADCR6224M 17500 Rs.10/- face value Rs.35,00,000/- 4 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 and share premium of Rs.190/ share 5. Ritesh Vinimay Pvt. Ltd. AADCR6258D 15500 Rs.10/- face value and share premium of Rs.190/ share Rs.31,00,000/- Total 1,47,500 Rs.2,95,00,000/- 8. The Ld. CIT(A) has further noted that the assessee during the assessment proceedings had duly filed the complete details of names and addresses of the five share subscriber companies, their PAN along with copies of relevant documents such as audited Balance Sheet, Profit & Loss Accounts along with schedules forming part of such Balance Sheet and P&L Account. Copies of bank statements of the assessee as well as the bank statement of share applicant companies for the relevant period were also supplied and even the immediate source of all the share applicant companies from which the investments were made, were also provided. It was also demonstrated by the assessee before the Ld. CIT(A) that in the immediate preceding assessment year, the assessee had issued 672100 shares of the face value of Rs. 10/- per share and at premium of Rs.190/- per share. However, the AO did not raise any doubt about the charge of such share premium in the earlier assessment year. The Ld. CIT(A) noted that in the circumstances, charging of the premium at the same rate for the year under consideration could not be placed under doubt. The Ld. CIT(A) has further noted that all the share subscribers had duly responded to the notices issued u/s. 133(6) of the Act and furnished required details and confirmations. However, the AO did not discuss any of the details and documents furnished either by the 5 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 assessee or by the share subscribers. He further noted that the AO had failed to make the requisite enquiries in this case. Therefore, the Ld. CIT(A) himself proceeded to make the requisite enquiries. The Ld. CIT(A), apart from noting the name of the share subscriber companies and the amount invested by them along with their PAN, has also reproduced a list of directors of the shareholder companies, the detail of which has been given at page 9 of the impugned order, which is extracted as under: Sl. No. Share Holder company name Directors as on 31st March, 2012 1. Ambaa Securities Pvt. Ltd Ravi Kumar Newatia, Ritesh Newatia 2. Ritesh Enclave Pvt. Ltd. Rajendra Kumar Newatia, Arun Kumar Agarwal 3. Ritesh Nirman Pvt. Ltd. Rajendra Kumar Newatia, Arun Kumar Agarwal 4. Ritesh Projects Pvt. Ltd. Ravi Kumar Newatia, Ritesh Newatia 5. Ritesh Vinimay Pvt. Ltd. Rajendra Kumar Newatia, Arun Kumar Agarwal 9. The Ld. CIT(A) noted that the directors of the share subscriber companies were closely related and that the share subscriber companies were closely held concerns, that were interested in the affairs of the assessee concern. That the share subscriber companies were regular income tax assessees and have been filing their income tax return regularly and no adverse finding has been recorded by the AO in the assessment orders of the said concerns. He, therefore, held that the identity of the share subscriber companies could not be placed under doubt. 9.1. Regarding creditworthiness of the share subscriber companies, the Ld. CIT(A) has duly noted that the said share subscriber companies were having sufficient creditworthiness. He also noted that the said share subscriber companies were also having high business turnover and that even the share subscriber companies had also furnished their source of funds along with copy of bank statements. The Ld. CIT(A) has also 6 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 reproduced a chart relating to the financial worth, turnover and investment of the share subscriber companies in the assessee concern. The relevant chart is reproduced hereunder for the purpose of ready reference: Sl. No. Company Name Net Worth as on 31st March 2012 Turnover as on 31st March 2012 Investment made in the Assessee company during FY 2011-12 1. Ambaa Securities Pvt. Ltd. Rs. 10,64,89,710.91 Rs.59,72,911/- Rs.18,00,000/- 2. Ritesh Enclave Pvt. Ltd. Rs 14,82,05,485.22 Rs.1,10,30,433/- Rs.63,00,000/- 3. Ritesh Nirman Pvt. Ltd. Rs 13,48,25,960.13 Rs.99,79,342/- Rs.1,48,00,000/- 4. Ritesh Projects Pvt. Ltd. Rs 11,66,59,890.46 Rs.1,46,71,605/- Rs.35,00,000/- 5. Ritesh Vinimay Pvt. Ltd. Rs 6,09,27,413.30 Rs.33,82,795/- Rs.31,00,000/- 9.2. Regarding the genuineness of the transaction, the Ld. CIT(A) noted from the various details and documents furnished by the assessee that the genuineness of the transaction could not be doubted. 10. The Ld. CIT(A), thereafter, has relied upon various decisions given by the Hon’ble High courts including that of the Hon’ble jurisdictional Calcutta High Court and held that the AO was not justified in making the impugned additions. 10.1. So far as the non-appearance of the directors of the assessee company before the AO was concerned, the Ld. CIT(A) had placed reliance upon the decision of the jurisdictional Calcutta High Court in the case of PCIT Vs. Naina Distributors Pvt. Ltd. in ITAT/113/2023, IA No. GA/1/2023 dated 28.06.2023, wherein the Hon’ble Jurisdictional Calcutta High Court has held that, wherein the assessee had furnished requisite details and documents including PAN of the investors, copy of the share application form, bank statement etc. and even the share 7 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 subscribers had duly responded to the notices issued u/s. 133(6) of the Act and duly furnished their bank statement and source of investments including audited financial statements, then, merely because the directors were not produced, that itself cannot be a ground for addition u/s. 68 of the Act. The Ld. CIT(A), in this respect has also referred to the decision of the Hon’ble Calcutta High Court in the case of Crystal Networks Pvt. Ltd. 353 ITR 171 (Cal). The Ld. CIT(A) has also referred to the decision of the jurisdictional High Court in the case of PCIT Vs. Sreeleathers (2022) 143 taxmann.com 435, wherein the similar view has been taken. 11. We note that the Ld. CIT(A) has passed a detailed and exhaustive order, wherein, the Ld. CIT(A) has taken note of the factual aspects including financials of the assessee as well as share subscriber companies. The AO, in this case, has miserably failed to point out any defect or discrepancy in the documents furnished by the assessee and has not discussed even minimum details, even the name of the share subscriber companies, what to say of the nature of transaction etc. On the other hand, the Ld. CIT(A) has thoroughly discussed all the factual aspects of the case. 12. We note that the facts and the issue involved in this case otherwise are covered by the following various decisions of the Hon’ble Supreme Court, Hon’ble High Courts and the orders of the Coordinate Benches of the Tribunal: a) The Hon’ble Apex Court in the case of CIT vs. Orissa Corporation Pvt. Ltd. (supra), under identical circumstances, has held as follows:- “In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged 8 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise.” {emphasis ours} b) The ITAT Kolkata Bench in ITO vs Cygnus Developers (I) P Ltd in ITA No. 282/Kol/2012 dated 2.3.2016, held as follows: 9. We have considered the rival submissions., We are of the view that order of CIT(A) does not call for any interference. It may be seen from the grounds of appeal raised by the Revenue that the Revenue disputed only the proof of identity of the shareholder. In this regard it is seen that for A Y.2004-05 Shree Shyam Trexim Pvt. Ltd., was assessed by ITO, Ward- 9(4), Kolkata and the order of assessment u/s/143(3) dated 25.01.2006 is placed in the paper book. Similarly Navalco Commodities Pvt. Ltd., was assessed to tax u/s 143(3) for A Y.2005-06 by ITO, Ward- 9(4), Kolkata by order dated 20.03.2007. Similarly Jewellock Trexim Pvt. Ltd was assessed to tax for A Y.2005-06 by the very same ITO- Ward- 9(3), Kolkata assessing the Assessee. In the light of the above factual position which is not disputed by the Revenue, it cannot be said that the identity of the share applicants remained not proved by the assessee. The decision of the Hon'ble Allahabad High Court as well as ITA T Kolkata Bench on which reliance was placed by the learned counsel for the assessee also supports the view that for non production of directors of the investor company for examination by the AO it cannot be held that the identity of a limited company has not been established. For the reasons given above we uphold the order of CIT(A) and dismiss the appeal of the Revenue. \" c) Further the co-ordinate bench in the case of ITO vs. Forceful Estates Pvt. Ltd. in ITA No. 2558/Kol/2018; Assessment Year 2012-13, order dt. 08/02/2023, and for necessary reference, the facts and findings of the Tribunal read as follows:- “5. The ld. counsel has further invited our attention to the impugned order of the CIT(A) to submit that the ld. CIT(A) has categorically noted that the assessee during the year had raised share capital including share premium 9 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 amounting to Rs.7,60,00,000/- from six share subscribers. The Assessing Officer had issued notices u/s 133(6) of the Act to the share applicants and in response, they all confirmed the transactions and furnished details/documents as called for including source of fund in their hands. The ld. CIT(A) has considered the evidences and details on record and found that the assessee has been able to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction. The relevant part of the order, for the purpose of ready reference, is reproduced as under: “5. Conclusion: Ground No.1 & 2 I have considered the order of the A.O as well as the submission of the appellant. I have also considered the judicial decisions relied upon by the appellant. The facts of the case have already been discussed as above. It is observed that in the year under consideration the appellant company had raised share capital of Rs.7,60,00,000/-from 6 parties. In the course of the assessment proceedings, to verify the receipt of share capital, the AO issued notices u/s.133(6) to all the 6 share applicants and in response, they all confirmed the transactions submitted the details/document in respect of the subscription of shares of the appellant. In the course of the appellate proceedings, the appellant filed copy of each of the assessment orders passed in all the 6 cases of the shareholders for that year in which the share subscription amount has been received by the assessee company. Besides, the income-tax return filing acknowledgment, Audited Balance and sheets as on 31.03.2012, relevant bank, copy of the notices issued u/s 133(6) to the shareholders and reply thereof were also submitted. It is observed form the details & documents furnished by the appellant that in the cases of 2 share holders, namely 1) M/s Alfort Merchants Private Limited, 2) M/s Sharekhan Merchants Private Limited, the Assessment Orders u/s 143(3) for Lne AY 2012-13 were passed u/s. 143(3) without taking any adverse view. Therefore, it can be assumed that the respective Assessing Officers have all verified the accounts and therefore any amount that is credited from these two companies to the assessee company is fully explained. The assessment in the case of the other 4 share holders, namely, 1) M/s. Dhanamrit Commercial Private Limited, 2) M/s Jealous Commercial Private Limited, 3) M/s Mutual Merchants Private Limited, 4) Winsom Vanijya Private Limited were also passed u/s.143(3) where additions u/s 68 & u/s.14A of the Act were made. Therefore, the entire capital of all the above mentioned share holders had been added in its hands u/s 68 of the I.T. Act Thus, once an amount is already taxed, whatever investment is being made out of it in the assessee company can be treated as explained and the Same cannot be taxed again. Further, it is apparent from the records that the notices u/s.133 (6) issued to the shareholders were served on the their respective address by the postal authorities and in response, they confirmed 10 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 the transactions and also submitted the details of the source of funds for making investment. Hence, the identity & creditworthiness of the shareholders are not in doubt. Further, all the share application money was received through banking channels. Therefore, the issue for my consideration now is -whether the share capital of Rs.7,60,00,000/- raised during the year by the appellant can be treated as unexplained cash credit u/s. 68 of the I.T Act or not. When the identity & creditworthiness of the shareholders have been clearly established because all of them were scrutinized u/s 143(3) and thus the source of the share capital and the share premium are clearly established and the transactions have all taken place through banking channels, merely for failure of the directors of the assessee and the shareholders to appear before AO in person in response to the summons issued to them u/s.131 of the Act, the addition cannot be in my considered opinion, unjustified. Where the corpus becomes technically explained in the eyes of law, how can, the credits arising out of the same corpus can be viewed as unexplained u/s 68 of the IT Act. In view of the facts & circumstances of the case it is held that the addition of Rs.7,60,00,000/- for the share capital raised by the appellant from 6 share applicants as unexplained cash credit u/s 68 of the Act was not justified and the same is directed to be deleted. The appeal of the assessee company on Grounds No.1 & 2 are treated as allowed. Ground no. 3 is general in nature, which does not require adjudication. 6. In the result, the appeal of the assessee is treated as allowed.” 6. A perusal of the above concluding part of the order of the CIT(A) reveals that the ld. CIT(A) has not only taken note of the accounts of the share subscribers but also, noted that all the six share subscribers were assessed u/s 143(3) of the Act. Out of which, no additions were made in case of two share subscribers. However, in the case of other four share subscribers, the additions were made regarding their source of income. Now, it is settled law, once the addition has been made in the hands of the share subscribers, the investments by which share subscribers in the hands of the other company whose shares have been subscribed stood explained then no additions in such a case would be warranted in the hands of the assessee company as it would amount to double additions of the same amount. Even if the said addition stand confirmed in the appeal or stand deleted, in both the instances, the investment in the hands of the assessee company will stand proved. Reliance has been placed in this respect on the decision of the Coordinate Kolkata bench of the Tribunal in the case in the case of DCIT vs. M/s Maa Amba Towers Ltd. in ITA No.1381/Kol/2015 vide order dated 12.10.2018. 11 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 The aforesaid decision has been further relied upon by the coordinate Kolkata bench of the Tribunal in the case of “Steelex India (P) Ltd vs. ITO, Ward-3(2), Kolkata” I.T.A. No.2666/Kol/2019 decided vide order dated 09.09. 2022. 7. Further, a perusal of the Assessment order would reveal that the AO has duly acknowledged the receipt of the relevant documents/evidences not only from the assessee, but also from the subscriber companies. However, he insisted for personal appearance of the directors of the subscriber companies without even going through and discussing about the discrepancies, if any, in the documents furnished by the assessee as well as by the share subscriber companies to prove the identity and creditworthiness of the subscribers and the genuineness of the transaction. The AO has not pointed out in the Assessment Order as to what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. The Assessee in this case, as noted above, explained about the identity, creditworthiness and financials etc. of each of the share subscriber company individually. However, we note that in the assessment order that the AO has not even mentioned the names of the share subscriber companies and even has not mentioned a word as to which of the share subscriber company or the corresponding transaction thereof was not genuine and on what grounds. The AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. The Ld. Counsel for the assessee has rightly placed reliance upon the decision of the Hon’ble Bombay High Court in the case of PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd. reported in (2017) 84 taxman.com 58 (Bom) wherein the Hon’ble High Court has held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of “Crystal networks (P) Ltd. vs CIT” (supra) has held as under: “We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the 12 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding.” 8. As the ld. CIT(A), in this case, has not only duly examined the facts and explanation as furnished by the assessee but also has given a categorical finding that the identity and creditworthiness of the share subscribers and genuineness of the transaction stood established. 9. The ld. DR could not point out any distinct facts warranting our interference in the order of the CIT(A). 10. In view of the above, we accordingly upheld the order of the CIT(A). The appeal of the revenue is, therefore, dismissed.” d) Our view is further fortified by the judgment of the Jurisdictional Calcutta High Court in the case of Principal CIT vs. Sreeleathers reported in [2022] 448 ITR 332 (Cal) has held as follows: “Section 68 of the Income-tax Act, of 1961, deals with cash credits. It states that 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 assessee of that previous year. The crucial words in the provision are “the assessee offers no explanation\". This would mean that the assessee offers no proper, reasonable and acceptable explanation as regards the amount credited in the books maintained by the assessee. No doubt the Act places the burden of proof on the taxpayer. However, this is only the initial burden. In cases where the assessee offers an explanation to the credit by placing evidence regarding the identity of the investor or lender along with their confirmations, the assessee has discharged the initial burden and, therefore, the burden shifts on the Assessing Officer to examine the source of the credit to be justified in referring to section 68 of the Act. After the Assessing Officer puts the assessee on notice and the assessee submits the explanation concerning the cash credit, the Assessing Officer should consider it objectively before he decides to accept or reject it. Where the assessee furnishes full details regarding the creditors, it is up to the Department to pursue the matter further to locate those creditors and examine their creditworthiness. While drawing 13 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 the inference, it cannot be assumed in the absence of any material that there have been some illegalities in the assessee’s transaction. Held, dismissing the appeal, that the allegations against the assessee were in respect of thirteen transactions. The Assessing Officer issued a show- cause notice only in respect of one of the lenders. The assessee responded to the show-cause notice and submitted the reply. The documents annexed to the reply were classified under three categories namely: to establish the identity of the lender, to prove the genuineness of the transactions and to establish the creditworthiness of the lender. The Assessing Officer had brushed aside these documents and in a very casual manner had stated that merely filing the permanent account number details, and balance sheet did not absolve the assessee from his responsibility of proving the nature of the transaction. There was no discussion by the Assessing Officer on the correctness of the stand taken by the assessee. Thus, going by the records placed by the assessee, it could be safely held that the assessee had discharged his initial burden and the burden shifted onto the Assessing Officer to enquire further into the matter which he failed to do. In more than one place the Assessing Officer used the expression \"money laundering\". Such usage was uncalled for as the allegation of money laundering is a very serious allegation and the effect of a case of money laundering under the relevant Act is markedly different. The order passed by the Assessing Officer was utterly perverse and had been rightly set aside by the Commissioner (Appeals). The Tribunal had rightly deleted the additions under section 68.” 12. Our views further fortified by the decision of the Hon’ble jurisdictional Calcutta High Court in the case of Pr. CIT Vs. M/s. Naina Distributors Pvt. Ltd., ITAT 113/2023, IA No. GA/1/2023 dated 28.06.2023, wherein the Hon’ble Calcutta High Court has held as under: “After carefully considering the findings recorded by the Commissioner of Income Tax, (Appeals) 7 Kolkata (CITA) in his order dated 21.09.2020 and the findings recorded by the learned Tribunal we find that the entire matter is fully factual. The learned Tribunal has independently examined as to the genuinity of the transaction in the matter of raising share capital and the Tribunal noted that even during the assessment proceedings, the assessee has furnished all details in respect of the share capital and share premium raised by the assessee besides the details of the investors by their submission dated 9.6.2014 in reply to the notice issued by the Assessing Officer under Section 142 of the Act dated 5.5.2014. The Tribunal also noted that the assessee had produced all documents, disclosed the names and addresses and PAN Numbers of the investors, copies of the share allotment advice, copies of the share application form, bank statement, statement giving details of share application, money receipt during the year, copy of Form No.2 evidencing return of allotment 14 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 and copy of Form No.5 for increase in various capital. Further the assessing officer has issued notice to the investors under Section 133(6) on 11.06.2014 for carrying out independent verification of the transaction and those investors duly responded to those notice and filed the requisite details such as the number of shares subscribed, ledger account, bank statement, explanation for source of funds, income tax returns and audited financial statements and also assessment order framed under Section 143(3) of the Act in all the cases. The Tribunal further noted that in spite of such being the factual position, the only reason for making the addition in the hands of the assessee the director of the assessee company did not respond to the summons issued by the assessing officer under Section 131 of the Act. The correctness of this was also considered by the learned Tribunal and it was held that non-appearance of the director cannot be made a ground for addition in the hands of the assessee under Section 68 of the Act when other evidence relating to the raising of share capital qua the share subscriber were available on record as furnished by the assessee and also cross verified by the assessing officer pursuant to the enquiry conducted in response to the notices issued under Section 133(6) of the Act. The learned Tribunal also referred to the decision of this Court in the case of Crystal Networks Pvt. Ltd. Vs. CIT. reported in 353 ITR 171 (CAL). Thus we find that there is no question of law much less substantial question of law arising for consideration in this appeal. Accordingly, the appeal fails and is dismissed”. 13. So far as the reliance of the Ld. DR on the decision of the Hon’ble Supreme Court in the case of “PCIT v/s NRA Iron & Steel (P) Ltd.” (supra) is concerned, we note that the Hon’ble Supreme Court in the said case has taken note of the observations made by the Supreme Court in the “the land mark case of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laying down the proposition that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that 15 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source.” 14. Thereafter the Hon’ble Supreme court summed up the principles, which emerged after deliberating upon various case laws, as under: “11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit- worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act.” 15. The Hon’ble Supreme Court, thus, has held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same. However, as noted above, the Assessing Officer in this case has not made any independent enquiry to verify the genuineness of the transactions. The assessee having furnished all the details and documents before the Assessing Officer and the Assessing Officer has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon 16 ITA Nos. 1926/Kol/2024 Salasar Financial Advisory Services Pvt. Ltd. AY 2012-13 the Assessing Officer to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, even applying the ratio laid down by the Hon’ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd. (supra), impugned additions are not warranted in this case. 16. In view of the above discussion, we do not find any reason to interfere with the order of the Ld. CIT(A) and, therefore, the same is accordingly upheld. 17. In the result, appeal of the revenue is dismissed. Order is pronounced in the open court on 17.12.2024. Sd/- Sd/- [Rajesh Kumar] [Sanjay Garg] लेखा सद˟/Accountant Member Ɋाियक सद˟/Judicial Member Dated: 17.12.2024. JD Sr. P.S Copy of the order forwarded to: 1. Appellant – DCIT 2. Respondent – Salasar Financial Advisory Services Pvt. Ltd. 3. CIT(A), Kolkata-21. 4. Pr. CIT 5. CIT(DR), "