M/s RKB Securities Ltd., Kolkata V. I.T.O.,Ward-12(2), Kolkata

ITA 1144/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1921 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 14-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit; Bogus Share capital; Revision of order; Share purchase agreement; Source of fund; Assessment record; Prejudicial to interest; Set aside
• Section: 143(3); 142(1); 133(6); 205; 274; 43; 2(A); 13; 131; 68; 10

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.1144/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S RKB SECURITIES LTD., 19, BANAMALI GHOSH LANE, LP 114/7/1, KOLKATA-54 [ PAN NO.AABCR 1412 P ] / V/S . INCOME TAX OFFICER WARD- 12(2), AAYAKAR BHAWAN, 7 TH FLOOR, P-7, CHOWRINGHEE SQURE, KOLKTA-700 069 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.M.SURANA, ADVOCATE & SHRI ABHISHEK BANSAL, FCA /BY RESPONDENT SHRI RADHEY SHYAM, CIT-DR /DATE OF HEARING 23-10-2019 /DATE OF PRONOUNCEMENT 08-11-2019 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE PRINCIPAL COMMISSIONER OF INCOME TAX-4, KOLKATAS ORDER DATED 15.03.2019 INVOLVING PROCEEDINGS 263 OF THE INCOME TAX ACT, 1961; IN SHO RT THE ACT. HEARD BOTH THE PARTIES. THE ASSESSEES TWIN PAPER B OOK(S) CONTAINING CASE RECORDS AS WELL AS JUDICIAL PRECEDENTS RUNNING INTO 272 AND 101 PAGES; RESPECTIVELY STAND PERUSED. 2. WE ADVERT TO THE BASIC RELEVANT FACTS. THIS APPE ARS TO BE SECOND ROUND OF SEC. 263 REVISION PROCEEDINGS BETWEEN THE PARTIES. THE A SSESSEE IS AN NBFC NON BANKING ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 2 FINANCIAL COMPANY. IT FILED ITS RETURN ON 25.03.20 12 STATING TOTAL INCOME OF 7,310/-. THE ASSESSING OFFICER COMPLETED HIS REGULAR ASSESSM ENT ON 31.03.2015 ASSESSING ITS TOTAL INCOME OF 51,05,42,310/- THEREBY ADDING SHARE CAPITAL / PREMI UM OF 51,05,35,000/- AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT. THE CIT THEREAFTER INITIATED SEC. 263 REVISION PROCEEDINGS. THE SAME S TOOD CULMINATED IN HIS REVISION ORDER IN FORMER ROUND DATED 30.11.2016 HOLDING THE ABOVE STATED REGULAR ASSESSMENT AS ERRONEOUS CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE SINCE THE ASSESSING OFFICER HAD NOT VERIFIED GENUINENESS OF THE INVESTMENTS MAD E IN THE ASSESSEES SHARES AS WELL AS ITS PURCHASES OF UNQUOTED SHARES IN VARIOUS PRIV ATE LIMITED COMPANIES ALONGWITH LOANS AND ADVANCES. THE SAID FORMER REVISION ORDER DATED 30.11.2016 FORMS PART OF PAPER BOOK IN PAGES 25 TO 28. THE CIT FURTHER OBSER VED THAT THE ASSESSEE HAD DISCHARGED ITS ONUS OF PROVING IDENTITY, GENUINENES S AND CREDITWORTHINESS OF THE SHARE CAPITAL / PREMIUM INVOLVING VARYING SUMS RAISED FRO M SIX ENTITIES M/S AHALYA BUILDERS AND CONSTRUCTIONS PVT. LTD., AROMA TRADECOM PVT. LT D., BALAJI TURNKEY PROJECT SOLUTIONS PVT. LTD., COMPACT COMMODEAL PVT. LTD., G OLDEN INVESTMENT MANAGEMENT PVT. LTD. & RATNAGIRI COMMERCIAL PVT. LTD. THE CIT THEREFORE DIRECTED THE ASSESSING OFFICER TO FRAME AFRESH ASSESSMENT. 3. CASE FILE SUGGESTS THAT THE ASSESSING OFFICER TO OK UP CONSEQUENTIAL ASSESSMENT PROCEEDINGS IN ISSUE. THE ASSESSEE HAD NOT ONLY FIL ED ALL THE DOCUMENTARY EVIDENCE OF SIX FOREGOING INVESTORS ENTITIES BUT ALSO IT PRODUC ED THE CONCERNED DIRECTORS BEFORE THE ASSESSING OFFICER. WE FIND FROM THE ASSESSEES FORM ER PAPER BOOK THAT ASSESSING OFFICER ISSUED DETAILED NOTICE(S) U/S 142(1) OF THE ACT TO ALL THE SIX INVESTOR ENTITIES ON 08.12.2016 FOLLOWED BY U/S 133(6) / 131 PROCESS TO THEIR DIRECTORS WHO APPEARED AND DEPOSED IN ASSESSEES FAVOUR. THEIR STATEMENTS, ASS ESSING OFFICERS ORDER-SHEETS, ASSESSEES AGREEMENT(S)WITH THE INVESTORS ENTITIES, ITS DETAILED EXPLANATION REGARDING STATEMENT OF SHARES PURCHASED / CORRESPONDING INVES TMENTS AND JUSTIFICATION OF THE SHARE PREMIUM IN LETTER DATED 16.12.2016 STAND COMP LETED IN THE ABOVE STATED DETAILED PAPER BOOK. THE ASSESSING OFFICER OBSERVED IN HIS L ATTER ASSESSMENT ORDER DATED 20.12.2016 THAT THE ASSESSEE HAD SUCCESSFULLY PROVE D IDENTITY, GENUINENESS AND CREDITWORTHINESS OF ITS SIX INVESTORS REGARDING SHA RE APPLICATION / PREMIUM AMOUNT OF ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 3 51,05,35,000/-. IT IS THE SAID ASSESSMENT WHICH STA NDS REVISED IN THE PCITS REVISION ORDER UNDER CHALLENGE IN THE INSTANT LIS TO BE SUFFERING FROM LACK OF INQUIRY AS UNDER:- THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. T HE ASSESSEE COMPANY IS TRYING TO PROVE THAT THE IDENTITY, GENUINENESS AND CREDITWORT HINESS OF THE TRANSACTION WAS PROVED WITH THE ROC RECORDS AND BANK ACCOUNT OF THE SHARE SUBSCRIBER AND ASSESSEE COMPANY AS WELL AS CONFIRMING OF THE TRANSACTION BY THE SHARE SUBSCRIBER. CREDITWORTHINESS IS PROVED FROM THE ANNUAL REPORT A ND ITR SUBMITTED DURING THE COURSE OF RE-ASSESSMENT. AS THIS IS A JUDICIALLY SE TTLED PROPOSITION TO SATISFY THE REQUIREMENT OF SEC 68 OF THE ACT, HENCE NO FURTHER INVESTIGATION IS NEEDED IN THIS FULLY SETTLED MATTER. LD. A/R HAS STATED THAT THE ASSESSE E HAS DISCHARGED ITS OBLIGATION BY SUBMITTING THE DETAILS AS CALLED FOR THEREBY DISCHA RGED ITS PRIMARY DUTY OF PROVING THE CREDIT OF SHARE CAPITAL IN ITS BOOKS AND THE SAME W AS ALSO ALLOWED BY THE ASSESSING OFFICER. IT WOULD BE WORTHWHILE TO MENTION HERE THAT THE ASS ESSEES DUTY TO ESTABLISH THAT THE AMOUNTS OF CASH CREDIT DOES NOT CEASE BY MERELY FUR NISHING THE NAMES, ADDRESSES AND PAN PARTICULARS, OR RELYING ON ENTRIES IN A REGISTR AR OF COMPANIES WEBSITE. IT WOULD BE WORTHWHILE TO MENTION HERE THAT THE ASSESSEE COM PANY IS A PRIVATE LIMITED COMPANY, WHICH IS BARRED BY LAW TO OPT FOR GENERAL ISSUE OF SHARES THUS IT CAN BE INFERRED THAT THE SHARE APPLICANT ARE KNOWN TO IT, SINCE THEY ARE ISSUED ON PRIVATE PLACEMENT. IF THE ASSESSEE HAS ACCESS TO THE SHARE APPLICANTS PAN PARTICULARS, OR BANK ACCOUNT STATEMENT, SURELY ITS RELATIONSHIP IS CLOSER THAN ARMS LENGTH. UNDER SUCH A BACKDROP, THE ASSESSING OFFICER WAS SUPPOSED TO LOOK BEYOND THE EXTENT OF WHAT IS APPARENT. THE ENQUIRIES SHOULD HAVE BEEN CO NDUCTED MORE EXTENSIVELY BY INCLUDING THE ISSUE OF VIABILITY OF ALLEGED TRANSAC TION VIS--VIS THE FINANCIALS OF THE INVESTOR COMPANIES INTO THE SCOPE OF INVESTIGATION, BUT UNFORTUNATELY THE SAME WAS NOT DONE. 4.1 HOWEVER, ON PERUSAL OF THE ASSESSMENT RECORD, I T IS OBSERVED THAT PR. CIT-4, KOL, HAS SET ASIDE THE ORDER U/S 144/143(3) OF THE ACT F OR DE-NOVO ASSESSMENT WITH AN INTENTION TO VERIFY THE ISSUE OF SHARE CAPITAL CRED IT IN THE BOOKS OF THE ASSESSEE, WHICH WAS REMAINED UNVERIFIED FOR NON-COMPLIANCE ON THE P ART OF THE ASSESSEE COMPANY. IT IS ALSO OBSERVED THAT THOUGH RELEVANT DOCUMENTS WER E COLLECTED FROM THE SHARE SUBSCRIBERS THE SAME WERE NOT VERIFIED JUDICIOUSLY FROM THE ANGLE OF FINANCIAL CAPABILITIES OF THE SHARE SUBSCRIBERS TO INVEST IN THE SHARES AT A HIGH PREMIUM OF AN ENTITY WHICH HAS NO EXPONENTIAL BUSINESS OF WORTH M ENTIONING. FROM ABOVE IT CAN BE CONCLUDED THAT THE ASSESSING OFFICER HAS ACCEPTED A ND ALLOWED THE CLAIM FOR THE ASSESSEE WITHOUT GOING INTO EXAMINE THE AUTHENTICIT Y OF THE CLAIM BY SCRUTINIZING THE MATERIAL THAT WERE BROUGHT IN RECORD. IT IS EVIDENT THAT THE BANK ACCOUNTS OF THE SHARE SUBSCRIBER COMPANIES WERE NOT ANALYZED PROPERLY AND THE SOURCE OF THE FUND GENERATED THERE IN WAS REQUIRED TO BE LOOKED INTO W HICH WAS NOT DONE. 4.2 MOREOVER, THE ASSESSING OFFICER BEING A QUASI JUDICIARY AUTHORITY WAS SUPPOSED TO ENQUIRE INTO THE MATER JUDICIOUSLY UNDER PREVAIL ING CIRCUMSTANCES, AS THERE ARE MANY INSTANCES THROUGHOUT THE COUNTRY, ESPECIALLY I N KOLKATA REGION WHERE THE COMPANIES WERE REPORTED TO HAVE TAKEN BOGUS ACCOMMO DATION ENTRY IN THE FORM OF SHARE CAPITAL TO BRING IN THERE UNACCOUNTED MONEY. THE AO ALSO FAILED TO EXAMINE THE REASON FOR CHARGING SUCH HUGE PREMIUM. THE AO FURTH ER FAILED TO EXAMINE THE DIRECTORS ON OATH REGARDING THE GENUINENESS OF CONT ROLLING INTEREST AND ALSO NOT ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 4 EXAMINED THE BANK STATEMENT TO TRACE OUT THE MONEY TRAIL TO ASCERTAIN THE GENUINENESS OF SOURCE OF FUND INVESTED BY SHAREHOLDERS. THUS TH E IMPUGNED ORDER SUFFERS FROM LACK OF ENQUIRY MAKING THE SAME ERRONEOUS SO AS PREJUDI CIAL TO THE INTEREST OF REVENUE. 4.3 ON PERUSAL OF THE ASSESSMENT RECORD, IT IS ALSO APPARENT THAT NO ENQUIRY WAS MADE TO RULE OUT THE POSSIBILITY OF THE TRANSACTION BEIN G ILLUSIVE AND SHAM AND THE ACTIVITY BEING AN ATTEMPT TO LAUNDER BLACK UNACCOUNTED INCOM E. NO ENQUIRY HAD BEEN MADE TO ASCERTAIN WHETHER THE INVESTORS HAD SUFFICIENT INCO ME OF THEIR OWN TO ENABLE THEM TO HAVE THE CAPACITY TO MAKE IMPUGNED INVESTMENT. THE ASSESSING OFFICER HAS FAILED TO ENQUIRE INTO THE GAPING HOLES MANIFESTS IN THE-BY N OT DOING SO, THE ASSESSMENT ORDER SUFFERS FROM INFIRMITY AS ABOVE WHICH HAS MADE THE ASSESSMENT ORDER ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. 4.4 IT WOULD BE WORTHWHILE TO MENTION HERE THAT, SO ME DUMMY/SHELL COMPANIES HAD MADE IT A COMMON PRACTICE TO INTRODUCE UNACCOUNTED MONEY BY WAY OF SHARE CAPITAL WHICH RETURNS TO IN A CIRCUITOUS WAY THROUGH LAYERI NG OF BANK ACCOUNTS IN EXCHANGE OF CERTAIN COMMISSION. THE SHARE CAPITAL IS INTRODUCED BY ROTATING THE MONEY TO DUMMY COMPANIES WHICH HAVE BEEN CREATED SOLELY FOR THIS P URPOSE. THE DIRECTORS OF SUCH COMPANIES ARE MORE OFTEN THAN NOT LOW PAID EMPLOYEE S SUCH AS PEONS, DARBANS, DRIVERS OR OTHER PERSONS OF HUMBLE MEANS. THE MODUS OPERANDI FOR INTRODUCTION OF UNACCOUNTED MONEY AS SHARE CAPITAL IS THAT UNACCOUN TED CASH IS DEPOSITED IN THE BANK ACCOUNTS OF DIFFERENT PERSONS/COMPANIES. THUS, UNDE R SUCH A BACKDROP, WHEN THE ASSESSING OFFICER HAS INFORMATION THAT THE ASSESSEE HAS RAISED FUND THROUGH ISSUANCE OF SHARE CAPITAL BY ISSUING SHARES AT SUCH A HIGH P REMIUM, THIS SHOULD HAVE RAISED SUSPICION OF THE ASSESSING OFFICER IN FACT, SUCH HI GH PREMIUM IS NOT COMMANDED EVEN BY BLUE CHIP QUOTED COMPANIES. THUS THE ASSESSING O FFICER WAS EXPECTED TO MAKE INDEPENDENT ENQUIRIES TO TRACE OUT THE GENUINENESS OF THE CLAIM. UNDER SUCH A SCENARIO, THE AO IS DUTY BOUND TO CARRY OUT THROUGH & DETAILED INQUIRIES AND GO BEYOND THE LAYERS CREATED BY THE SO CALLED ENTRY OPERATORS SO THAT IT MAY BE ESTABLISHED THAT THE SHARE CAPITAL IS GENUINE. 4.5 FROM THE DISCUSSION ABOVE, IT IS EVIDENT THAT T HE FACTS, FIGURES, EVIDENCES AVAILABLE ON RECORDS TO DECIDE THE CASE ON MERITS DID NOT FIN D PLACE IN ASSESSMENT ORDER. THE AO ALSO FAILED TO EXAMINE THE VERACITY OF THE REASO N THAT WEIGHTED WITH THE INVESTORS, IN ABSENCE OF ANY HISTORY OF THE CONCERN TO GENERAT E SUBSTANTIAL RETURN ON CAPITAL TO PROMPT THEM TO PAY USUALLY HIGH SHARE PREMIUM. HOW THE SHARE PREMIUM HAS BEEN FIXED AT HIGH VALUE IS NOT FORTHCOMING. BY NOT COND UCTING ANY ENQUIRY TO ASCERTAIN AND EXAMINE THE CRUCIAL FACTS AS ABOVE, SEVERE PREJ UDICE TO REVENUE HAS BEEN CAUSED AND ALSO THE ASSESSMENT ORDER SUFFERS FROM INFIRMIT Y DUE TO LACK OF PROPER AND ADEQUATE ENQUIRY. 4.6 THUS FROM THE ABOVE FACTS, I AM OF THE OPINION THAT THE IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3)/ 263 OF THE ACT IS ERRONEOU S SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE INTERESTS OF THE REVENUE A RE NOT TO BE EQUATED TO SUPERFICIALLY EXAMINE THE INFLOW AND OUTGO OF MONEY BUT TO GO MUC H DEEPER TO UNEARTH THE TRUE COLOUR AND CONTOUR OF TRANSACTIONS. FURTHER, SHALL BE PREJUDICIAL TO THE INTEREST OF REVENUE (REVENUE ADMINISTRATION). THEREFORE THE IMP UGNED ASSESSMENT ORDER STANDS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 5 THE ASSESSING OFFICER IS REQUIRED TO CARRY OUT PROP ER EXAMINATION OF THE BOOKS OF ACCOUNT INCLUDING BANK ACCOUNTS OF ASSESSEE AS WELL AS INVESTORS AND MAKE A FRESH ASSESSEE AO IS ALSO REQUIRED TO EXAMINE THE GENUINE NESS OF SOURCE OF FUND APPEARING IN THE NOMENCLATURE OF SHARE CAPITAL INCLUDING PREM IUM AND NATURE OF TRANSACTIONS, IDENTITY OF INVESTOR AND ITS GENUINENESS. ASSESSING OFFICER IS FURTHER REQUIRED TO COMPLETE THE ASSESSMENT ON THE BASIS OF OUTCOME OF ENQUIRY. THE SUBMISSION OF THE ASSESSEE ALSO DOESNT CLARIFY THE ACTUAL INVESTIGAT ION DONE AS PER THE ABOVE POINTS RAISED IN THE ABOVE PARAS. THUS SUCH NON-CONSIDERAT ION OR OMISSION OF THAT POINT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IN TH IS REGARD IS CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 4.7 FURTHER, THE AO FAILED TO EXAMINE THE ABOVE FAC TS IN JUDICIOUS MANNER. THUS, THE IMPUGNED ASSESSMENT ORDER PASSED U/S.143(3) / 263 O F THE ACT ON SUFFERS FROM LACK OF ENQUIRY / INADEQUATE VERIFICATION, MAKING THE ORDER ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. AS REGARDS THE PLEA OF THE LD. A/R OF THE ASSESSEE COULD BE JUDICIALLY EXAMINED ONLY AFTER BRINGING ON RECORD F ULL FACTS WHICH THE AO HAS FAILED TO DO AT THE TIME OF ASSESSMENT PROCEEDINGS. 4.8 THUS DURING ASSESSMENT PROCEEDINGS, IN ADDITION TO CONDUCT ENQUIRIES FOR IDENTITY, CREDITWORTHINESS AND TRANSACTION OF SHAREHOLDER, AO HAS TO VERIFY FOLLOWING DOCUMENTS / DETAILS TO CHECK THE GENUINENESS OF TRA NSACTIONS. BUT HE DID NOT VERIFY THOSE RELEVANT DOCUMENTS AND ACCEPTED THE DOCUMENTS / DETAILS FURNISHED BY ASSESSEE AS IT WAS. A. HOW PRICES ARE SHARES DETERMINED, HOW AND WHERE NEGOTIATION HAVE BEEN DONE B. IS THERE ANY BUSINESS/PERSONAL RELATION WITH INV ESTING PARTY DIRECTLY OR INDIRECTLY. C. MINUTES OF BOARD, MEETING FOR ISSUE/SHARE APPLIC ATION. D. LASTS 3 YEARS DETAILS OF COMPANY IN FOLLOWING FO RMAT: AY PROFIT OF YOUR COMPANY EQUITY SHARES SHARE PREMIUM NET WORTH BOOK VALUE E. BASIS OF FIXING SHARE PREMIUM ALL DOCUMENTS OF M EETING/ADVICE/CONSULTANT ADVICE. F. COPY OF ALL MINUTES OF MEETING OF RELATED FINANC IAL YEAR AND COPY OF BOARD RESOLUTION. G. RESOLUTION AUTHORIZING ISSUANCE OF SHARE UNDER S ECTION 81(1A) OF COMPANIES ACT, WHEN SENT TO ROC. H. DATE OF ISSUE OF SHARE APPLICATION FORM. I. ATTENDANCE REGISTER OF AGM. ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 6 J. SHARE CERTIFICATE. K. PROOF OF COMMUNICATIONS TO SHAREHOLDERS. L. PROOF OF DISPATCH OF SHARE CERTIFICATES. M. DATE ON WHICH ISSUE WAS APPROVED BY PASSING OF S PECIAL RESOLUTION OF AGM. N. DATE OF EXECUTION OF SHARE APPLICATION FORMS. O. COPIES OF SHARE APPLICATION FORMS/LETTERS RECEIV ED AND SHARE ALLOTMENT LETTERS. 4.9. 1 ST ASSESSMENT ORDER IN THIS CASE WAS FOUND ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE BY PCIT-4, KOLKATA. HENCE PCIT-4 VIDE HI S ORDER U/S. 263 DTD. 30-11-2016 DIRECTED AO TO CONDUCT SUFFICIENT AMOUNT OF ENQUIRI ES AND FINALIZE THE ORDERED ACCORDINGLY. INTENTION OF SAID ORDER U/S. 263 OF TH E ACT WAS TO STRENGTHEN THE ASSESSMENT ORDER PASSED DTD.31.03.2015 , AS IT COULD STAND THE TEST OF JUDICIAL PROCEEDINGS. BUT SUBSEQUENT ORDER PASSED BY THE AO U/S 143(3) WAS MADE WITHOUT CONDUCTING PROPER ENQUIRIES OF TRANSACTIONS AND CRE DITWORTHINESS OF INVESTORS AO OUGHT TO HAVE. ANY ORDER PASSED SUBSEQUENT TO ORDER U/S. 263 MUST BE IN FAVOUR OF REVENUE. EITHER EARLIER ASSESSED INCOME SHOULD BE E NHANCED OR SHOULD BE SAME AS EARLIER ORDER BUT WITH ENHANCED ENQUIRIES SO THAT A DDITION SHOULD BE STRENGTHEN TO PASS IN APPELLATE PROCEEDINGS. BUT HERE THE ASSESSM ENT ORDER PASSED U/S.143(3) R.W.S. 263 WAS ERRONEOUS AS ADDITION MADE U/S. 68 ON ACCOU NT OF UNEXPLAINED SHARE CAPITAL//PREMIUM WAS ALLOWED IN FAVOUR OF THE ASSES SEE WITHOUT TAKING SUFFICIENT ENQUIRY. 5. HERE IS A CASE WHERE A PRIVATES LIMITED COMPANY HAS OBTAINED SHARE PREMIUM MUCH MORE THAN ITS SHARE VALUE. IN A RECENT JUDGMENT OF KERALA HIGH CURT [2018] 90 TAXMANN.COM 43 IT HAS BEEN HELD THAT: IN A CASE OF A COMPANY IN WHICH PUBLIC IS NOT SUBS TANTIALLY INTERESTED, ANY PREMIUM RECEIVED BY SAID COMPANY ON SALE OF SHARES, IN EXCESS OF ITS FACE VALUE, WOULD BE TREATED AS INCOME FROM OTHER SOURCE S. 5.1 ON EXCESSIVE SHARE PREMIUM IN A RECENT JUDGMENT BY MUMBAI ITAT IN CASE OF PRATIK SYNTEX (P) LTD. IT WAS HELD THAT: WHERE AO MADE ADDITION TO ASSESSEES INCOME UNDER SEC. 68 IN RESPECT OF AMOUNT RECEIVED AS SHARE CAPITAL. IN VIEW OF THE FA CT ASSESSEE COULD NOT EVEN GIVE CORRECT ADDRESS OF SHARE APPLICANT COMPANIES A ND MOREOVER SUCH COMPANIES WERE NOT IN A FINANCIAL POSITION TO SUBSC RIBE TO SHARES ISSUED AT A HUGE PREMIUM, IMPUGNED ADDITION WAS TO BE CONFIRMED . 5.2 IN THE CASE OF M/S RAJMANDIR ESTATES PVT LTD VS . CIT THE HONORABLE CALCUTTA HIGH COURT HAS CONCLUDED THE ISSUE OF SHARE CAPITAL / PR EMIUM RECEIVED FROM SUCH SHELL COMPANIES STATING AS UNDER: ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 7 A) PROMOTERS/DIRECTORS HAVE THE OBJECT OF CREATING LARGE CAPITAL BASE BY PRIVATE PLACEMENT OF SHARES TO PRIVATE LIMITED COMP ANIES, BUT IN FACT THESE COMPANIES ARE MERE PAPER COMPANIES HAVING NO REAL W ORTH. B) THE IDENTITY OF THE SHAREHOLDER COMPANY IS KNOWN BUT THE TRANSACTIONS WAS NOT GENUINE TRANSACTION. C) THE TRANSACTIONS WERE NOMINAL AND NOT REAL. THE CREDITWORTHINESS WAS NOT ESTABLISHED AS THEY DID NOT HAVE ANY FUND OF THEIR OWN. EACH OF THEM HAS RECEIVED FUND FROM SOMEBODY AND THE SAID SOMEBODY F ORM SOMEBODY. PRIMA FACIE THE SHARE HOLDERS ARE NAME LENDERS. 5.3 IN THE CASE OF COMMISSIONER OF INCOME TAX VS N.R. PROTFOLIO (P) LTD. REPORTED IN (2013) 2014 TAXMAN 408 (DELHI) HONOURABLE DELHI HIGH COURT STATED THAT: AN ASSESSEES DUTY TO ESTABLISH THAT THE AMOUNTS W HICH THE AO PROPOSES TO ADD BACK, UNDER SECTION 68 ARE PROPERLY SOURCED, DOES NOT CEASE BY MERELY FURNISHING THE NAMES, ADDRESSES AND PAN PARTICULARS , OR RELYING ON ENTRIES IN A REGISTRAR OF COMPANIES WEBSITE. ONE MUST REMEMBER T HAT IN ALL SUCH CASES, MORE OFTEN THAN NOT, THE COMPANY IS A PRIVATE ONE, AND SHARE APPLICANTS ARE KNOWN TO IT, SINCE THEY ARE ISSUED ON PRIVATE PLACE MENT, OR EVEN REQUEST BASIS. IF THE ASSESSEE HAS ACCESS TO THE SHARE APPLICANTS PAN PARTICULARS, OR BANK ACCOUNT STATEMENT, SURELY ITS RELATIONSHIP IS CLOSE R THAN ARMS LENGTH. IN THE CASE OF CLOSELY HELD COMPANIES, INVESTMENTS ARE MADE BY KNOWN PERSONS. THEREFORE, A HIGHER ONUS IS REQUIRED TO BE PLACED O N SUCH COMPANIES BESIDES THE GENERAL ONUS TO ESTABLISH IDENTITY AND CREDITWORTHI NESS OF CREDITOR AND GENUINENESS OF TRANSACTION. THIS ADDITIONAL ONUS, NEEDS TO BE PLAC ED ON SUCH COMPANIES TO ALSO PROVE THE SOURCE OF MONEY IN THE HANDS OF SHAREHOLDER OR PERSONS MAKING PAYMENT TOWARDS ISSUE OF SHARE AS BEFORE SUCH SUM IS ACCEPTED AS GE NUINE CREDIT. IF THE COMPANY FAILS TO DISCHARGE THE ADDITIONAL ONUS, THE SUM SHALL BE TREATED AS INCOME OF THE COMPANY AND ADDED TO ITS INCOME. 5.4 IN A RECENT JUDGMENT ON 05.03.2019 IN THE CASE OF PCIT(CEN)-I, DELHI VS. M/S NRA IRON & STEEL PVT. LTD., THE SUPREME COURT OF IN DIA STATED THAT THE PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE CLOAK O F SHARE CAPITAL/PREMIUM MUST BE SUBJECTED TO CAREFUL SCRUTINY. THIS WOULD BE PAR TICULARLY SO IN THE CASE OF PRIVATE PLACEMENT OF SHARES, WHERE A HIGHER ONUS IS REQUIRE D TO BE PLACED ON THE ASSESSEE SINCE THE INFORMATION IS WITHIN THE PERSONAL KNOWLE DGE OF THE ASSESSEE. THE ASSESSEE IS UNDER A LEGAL OBLIGATION TO PROVE THE RECEIPT OF SHARE CAPITAL/PREMIUM TO THE SATISFACTION OF THE AO, FAILURE OF WHICH, WOULD JUS TIFY ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. 5.4.1 IN THE SAID JUDGEMENT APEX COURT LAID DOWN TH E PRINCIPLES WHICH EMERGE WHERE SUMS OF MONEY ARE CREDITED AS SHARE CAPITAL / PREMIUM ARE: I. THE ASSESSEE IS UNDER A LEGAL OBLIGATION TO PRO VE THE GENUINENESS OF THE TRANSACTION, THE IDENTITY OF THE CREDITORS, AND CRE DITWORTHINESS OF THE INVESTORS WHO SHOULD HAVE THE FINANCIAL CAPACITY TO MAKE THE INVESTMENT IN QUESTION, TO ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 8 THE SATISFACTION OF THE ASSESSING OFFICER, SO AS TO DISCHARGE THE PRIMARY ONUS. 14 (2007) 158 TAXMAN 440 15 [2008] 307 ITR 334 23 II. THE ASSESSING OFFICER IS DUTY BOUND TO INVESTIG ATE THE CREDITWORTHINESS OF THE CREDITOR / SUBSCRIBER, VERIFY THE IDENTITY OF T HE SUBSCRIBERS, AND ASCERTAIN WHETHER THE TRANSACTION IS GENUINE, OR THESE ARE BO GUS ENTRIES OF NAME-LENDERS. III. IF THE ENQUIRIES AND INVESTIGATION IS REVEAL T HAT THE IDENTITY OF THE CREDITORS TO BE DUBIOUS OR DOUBTFUL, OR LACK CREDITWORTHINESS , THEN THE GENUINENESS OF THE TRANSACTION WOULD NOT BE ESTABLISHED. IN SUCH A CAS E, THE ASSESSEE WOULD NOT HAVE DISCHARGED THE PRIMARY ONUS CONTEMPLATED BY SE CTION 68 OF THE ACT. 6. THE POWER OF REVISION BY THE CIT U/S.263 OF THE ACT IS VERY WIDE AND IT IS IN THE NATURE OF SUPERVISORY JURISDICTION. IT IS WELL SETT LED THAT INCORRECT ASSUMPTION OF FACTS OR APPLICATION OF LAW SATISFIES THE REQUIREMENT OF LAW I.E. ORDER BEING ERRONEOUS & PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ORD ER PASSED BY THE AO WITHOUT APPLICATION OF MIND OR ORDER SHOWING APPARENT ERROR OF REASONING OR THE ORDER WHERE THE AO SIMPLY ACCEPTS WHERE THE ASSESSEE STATED IN HIS RETURN OF INCOME AND FAILS TO MAKE THE ENQUIRIES WHICH ARE CALLED FOR IN THE FACT S AND CIRCUMSTANCES OF THE CASE WILL ALSO CALL FOR INTERVENTION U/S 263 OF THE ACT BY TH E CIT/PR.CIT. I IS A TRITE LAW THAT THE DISCLOSURE OF FACTS BY THE ASSESSEE IN THE RETURN O F INCOME AND / OR IN THE COURSE OF ASSESSMENT PROCEEDINGS CANNOT GIVE IMMUNITY FROM RE VISIONAL JURISDICTION OF THE CIT / PR. CIT U/S.263. IN THIS CONTEXT, IT MAY BE MENTION ED HERE THAT IN THE CASE OF COMMISSIONER OF INCOME TAX, CENTRAL-I KOLKATA VS. M AITHAN INTERNATIONAL, IT WAS HELD BY CALCUTTA HIGH COURT [2015] 56 TAXMANN.COM 283 (C ALCUTTA) THAT IT IS NOT THE LAW THAT THE ASSESSING OFFICER OCCUP YING THE POSITION OF AN INVESTIGATOR AN ADJUDICATOR CAN DISCHARGE HIS FUNCT ION BY PERFUNCTORY OR INADEQUATE INVESTIGATION. SUCH A COURSE IS BOUND TO RESULT IN ERRONEOUS AND PREJUDICIAL ORDER. WHERE THE RELEVANT ENQUIRY WAS N OT UNDERTAKEN, AS IN THE CASE, THE ORDER IS ERRONEOUS AND PREJUDICIAL TO AND THEREFORE REVISABLE. INVESTIGATION SHOULD ALWAYS BE FAITHFUL AND FRUITFU L. UNLESS ALL FRUITFUL AREAS OR ENQUIRY ARE PURSUED THE ENQUIRY CANNOT BE SAID TO H AVE BEEN FAITHFULLY CONDUCTED. 6.1 THE HON'BLE SUPREME COURT, FURTHER, IN THE CASE OF RAMPYARI DEVI SARAOGI VS. CIT (1968) 67 ITR (SC) AND SMT. TARA DEVI AGGARWAL VS. CIT (`1973) 8B ITR 323 (SC) HAS HELD THAT IN ABSENCE OF PROPER ENQUIRIES, THE ASSESSMENT ORDER WOULD BECOME ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. 6.2 THE HON'BLE DELHI HIGH COURT IN THE CASE OF GE E VEE ENTERPRISE VS ADDL. CIT (1975) 99 ITR 375 HAS ALSO HELD AS UNDER:- THE REASON IS OBVIOUS. THE POSITION AND FUNCTION O F THE INCOME TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STAT EMENTS MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ACC EPTED BY A CIVIL COURT IN THE ABSENCE OF REBUTTAL. THE CIVIL COURT IS NEUT RAL. IT SIMPLY GIVES DECISION ON THE BASIS OF PLEADING AND EVIDENCE WHICH COMES B EFORE IT. THE INCOME TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVE STIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF RETURN WHICH IS APPARENTLY I N ORDER BUT CALLS FOR FURTHER ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 9 ENQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF F ACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF CASE ARE SUCH AS TO PROVOKE AN ENQUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES OUT OF THIS CONTEXT. IT IS BECAUSE IT IS INCUMBENT ON THE INCOME TAX OFFICE R TO FURTHER SUCH AN ENQUIRY PRUDENT THAT THE WORD ERRONEOUS IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOUS BECAUS E SUCH AN ENQUIRY HAS NOT BEEN AND NOT BECAUSE THERE IS ANYTHING WRONG WI TH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. 6.3. IN VIEW OF THE FACTS AND THE LEGAL POSITION ST ATED ABOVE, I AM OF THE VIEW THAT THE ORDER PASSED ON AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW AND WITHOUT MAKING REQUISITE INQUIRIES WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE WITHIN THE MEANING AND SCOPE OF SECTION 263 OF THE INCOME TAX ACT,1961. 6.4 THE AFORE STATED DECISIONS POSTULATE THAT WHEN THE OFFICER IS EXPECTED TO MAKE AN INQUIRY OF A PARTICULAR ITEM OF INCOME AND IF HE DO ES NOT MAKE AN INQUIRY AS EXPECTED, THAT WOULD BE GROUND FOR THE COMMISSIONER TO INTERF ERE WITH THE ORDER PASSED BY THE OFFICER SINCE SUCH AN ORDER PASSED BY THE OFFICER I S ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE (K.A. RAMASWAMY CHETTIAR V . CIT (1996) 220 ITR 657). 6.5 LEARNED. A/R HAS REFERRED TO SOME CASE LAWS IN HIS SUBMISSION, THE SAME HAS BEEN CONSIDERED. AS THEY ARE CLEARLY DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE ASSESSEE HENCE THE SAID CASE LAWS ARE NOT ACCEPTABL E. 7. IN MY CONSIDERED OPINION, THIS IS A CASES OF LAC K OF ENQUIRY ON THE PART OF THE AO. NOT COLLECTING THE FULL FACTS AND NOT TAKING ENQUIR Y TO LOGICAL END WHICH COULD ENABLE AO TO TAKE DECISION BASED ON THE TOTALITY OF FACTS MAKES THIS ORDER ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IN ACCORDANCE WITH THE EXPLANATION 2(C) BELOW SECTION 263 OF THE ACT. ACCORDINGLY, THE ISSU E IS SET ASIDE TO THE TABLE OF AO. THE AO IS DIRECTED TO PROVIDE REASONABLE OPPORTUNIT Y TO THE ASSESSEE COMPANY TO PRODUCE DOCUMENTS & EVIDENCES WHICH IT MAY CHOOSE T O RELY UPON FOR SUBSTANTIATING ITS OWN CLAIM. THE AO IS FURTHER DIRECTED TO ADJUDI CATE THE SAID ISSUE DE-NOVO AND PASS A FRESH ASSESSMENT ORDER IN ACCORDANCE WITH RE LEVANT PROVISIONS OF LAW. 4. LEARNED AUTHORIZED REPRESENTATIVE FIRST OF ALL N ARRATED ALL THE DEVELOPMENTS IN THE TWIN ROUNDS OF ASSESSMENT(S) AS WELL AS REVISIO N PROCEEDINGS. HE SUBMITTED THAT THE PCIT HEREIN HAS ERRED IN LAW AND ON FACTS IN EX ERCISING HIS REVISION JURISDICTION DESPITE THE FACT THAT THE ASSESSING OFFICER HAD ACC EPTED THE ASSESSEES SHARE APPLICATION / PREMIUM IN ISSUE TO HAVE SATISFIED AL L THE THREE PARAMETERS OF IDENTIFY, GENUINENESS AND CREDITWORTHINESS OF THE SIX INVESTO RS. HE PLACED STRONG RELIANCE ON THE CITS REVISION DIRECTIONS IN FORMER ROUND (SUPRA) T HE ASSESSEE HAD DULY DISCHARGED ITS ONUS BY FILING ALL NECESSARY EVIDENCE BEFORE ASSESS ING OFFICER CASE LAW BARIUNS CHEMICAL LTD. AND ANOTHER VS. A.J. RANA AND OTHERS (1972) SCC (1) 240 REGARDING INTERPRETATION OF THE CLINCHING STATUTORY EXPRESSIO N CONSIDERS EMPLOYED IN THE ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 10 STATUTE SEC.263 OF THE ACT, CASE LAW M/S GEMINI OILS PVT. LTD. VS. THE ITO-2(1)(4) MUMBAI ITA NO.2563/MUM/2005 DECIDED ON 31.10.2012 REGARDING NATURE AND SCOPE OF SUCH A DE NOVO ASSESSMENT IN LIGHT OF THE CITS SPECIFIC DIRECTIO NS (SUPRA) IN REVISION PROCEEDINGS; IS ALSO CITED IN SUPPORT. LEA RNED COUNSEL THEN TAKES US TO ASSESSEES LATTER PAPER BOOK CONTAINING COMPILATION OF FOLLOWING JUDICIAL PRECEDENTS:- SL. NO. CASES 1 CIT VS. SOHAN LAL SIGHANIA 235 ITR 616 (ALL) 2 JATIA INVESTMENT CO. VS. CIT 206 ITR 718 (CAL) 3 CIT VS. PANCHAM DASS JAIN 205 CTR 444 (ALL) 4 CIT VS. GODAVARI SUGAR MILLS LTD. 203 ITR 773 5 H.H. SRI RAMA VERMA VS. CIT 187 ITR 308 (SC) 6 CIT VS. GOPAL KRISHNA SINGHANIA 121 ITR 260 (ALL) 7 SARU SMELTING & REFINING CORPN. (P) LTD. VS. CIT 116 ITR 766 (ALL) 8 KANTILAL & BROS. VS. ACIT 521 ITD 412 (PUNE BENCH ) 9 ACIT, CC-15 VS. PARAS HEALTHCARE PVT.LTD. (ITA NO .2207/DEL/2012) 10 VIJAIPAT SINGHANIA VS. CIT 193 ITR 274 (SC) 11 ITO WARD-46(1) KOLKATA VS. SHRI ANUPAM NANDI (ITA NO.774/KOL/2012) 12 V.R. GLOBAL ENERGY (P) LTD. VS. ITO CORPORATE WARD- 3(4), CHENNAI (2018) TAXMANN.COM 647 (MAD) 13 ITO WARD-13(1), KOLKATA VS. ANAND ENTERPRISES LTD. NANDI (ITA NO.1614/KOL/2016 DATED 26.09.2018 14 ABA EARTHLINE COMMUNICATIONS LTD. VS. ITO WARD-1(4) , KOLKATA (ITA NO.1141/KOL/2017 DATED 09.11.2018 15 ITO WARD-10(1), KOLKATA VS. SUNGLOW DEALCOM PVT. LT D. (ITA NO.2178/KOL/2016 DATED 16.11.2018 16 ITO WARD-1(4), KOLKATA VS KANER INVESTMENTS, LTD. (ITA NO.2095/KOL/2017) DATED 23.01.2019 17 ITO WARD-5(3), KOLKATA VS. BHAGWAT MARCOM PVT. LTD. (ITA NO.2236/KOL/2017) DATED 31.07.2019 IT IS ACCORDINGLY PRAYED THAT THE PCITS REVISION O RDER UNDER CHALLENGE IS NOT SUSTAINABLE SINCE THE ASSESSING OFFICERS LATTER AS SESSMENT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE AS PER H ON'BLE APEX COURTS LANDMARK DECISION IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC). ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 11 5. LEARNED CIT-DR STRONGLY SUPPORTS THE PCITS ASSU MPTION OF REVISION JURISDICTION IN FACTS OF THE INSTANT CASE. HE SUBMI TS THAT THE FORMER ROUND OF REVISION PROCEEDINGS COULD NOT BE INTERPRETED AS GOING IN AS SESSEES FAVOUR SINCE THE PURPOSE THEREOF IS TO MAKE IT SURE THAT THE ASSESSING OFFIC ERS EARLIER ASSESSMENT IS NOT ERRONEOUS CAUSING PREJUDICE TO THE INTEREST OF REVE NUE. HE BUTTRESS THE PCITS FINDINGS UNDER CHALLENGE THAT THE ASSESSING OFFICER HAD NOT CONDUCTED THE DUE ENQUIRIES AS STIPULATED U/S 263(1) EXPLANATION TO 2(A) OF THE AC T. AND ALSO THAT THE ASSESSEES ALL SIX INVESTORS ARE NOT GENUINE SINCE THEY HAD NOT CARRIE D OUT ANY BUSINESS ACTIVITIES GOING BY THE ASSESSEES EVIDENCE ITSELF FORMING PART OF C ASE RECORD. MR. RADHEY SHYAM QUOTES VISP (P) LTD. VS. CIT (2004) 186 CTR 718 (MP ) AND HON'BLE KARNATAKA JUDGMENT SMT. REKHA KRISHNARAJ VS. THE INCOME TAX OFFICER WA RD-1 HOSPET ITA NO.811 OF 2009 DATED 13.03.2013 THAT IT IS FOR THE ASSESSEE TO PROVE GENUINENESS OF THE CASH CREDITS. OUR ATTENTION IS TIME AND AGAIN INVIT ED TO THE FACT THAT VARIOUS RECENT JUDICIAL PRECEDENTS TAKEN NOTE OF IN THE PCITS REV ISION ORDER UNDER CHALLENGE INDICATE A PARADIGM SHIFT ON THE ISSUE OF BOGUS SHARE CAPITA L / PREMIUM INVOLVING ACCOMMODATION ENTRY PROVIDERS. HE THEREFORE SEEKS T O AFFIRM THE PCITS ASSUMPTION OF REVISION JURISDICTION UNDER CHALLENGE. 6. WE HAVE HEARD RIVAL CONTENTIONS. THE ASSESSEES DETAILED PAPER BOOK(S) IN PAGES 238 TO 249 INVESTMENT AGREEMENTS WITH ALL THE SIX INVESTORS; INVOLVING VARYING SUMS; RESPECTIVELY. WE FIND THAT THE ASSESSEE AS WE LL AS ALL THE SIX PARTIES HAD SWAPPED THEIR SHARES THAN PASSING ANY CASH CREDITS IN THE R ESPECTIVE ACCOUNTS OF ALL THE SIX PARTIES. THEY HAD NOT EXCHANGED ANY CONSIDERATION S INCE THE PARTIES TRANSFERRED THEIR SHAREHOLDINGS TO EACH OTHER. THIS CLINCHING FACT HA S NOWHERE BEEN REBUTTED AT THE REVENUES BEHEST. LEARNED CIT-DRS STRONGLY CONTEN DED THAT THIS ISSUE CANNOT BE RAISED IN THE INSTANT SECOND ROUND OF REVISION PROC EEDINGS. WE FIND NO FORCE IN THE REVENUES INSTANT PLEA SINCE THE ASSESSEE HAD OBJEC TED TO THE CITS FORMER REVISION PROCEEDINGS QUA THE INSTANT LEGAL ASPECT AS IT IS EVIDENT FROM A P ERUSAL OF SAID ORDER DATED 30.11.2016 IN PAGE 26 IN THE PAPER BOOK. THE QUESTION AS TO WHETHER SUCH A SWAPPING OF SHARES INVITES UNEXPLAINED CASH CREDITS ADDITION U/S. 68 OR NOT STANDS ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 12 ANSWERED IN ASSESSEES FAVOUR IN ITO WARD-5(3) KOLKATA VS. M/S BHAGWAT MARCOM PVT. LTD. IN ITA NO.2236/KOL/2017 DECIDED ON 31.07.2019 AS UNDER:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT ITS SHARES WERE ISSUED BY THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION AT PREM IUM TO CERTAIN COMPANIES IN LIEU OF THE SHARES HELD BY THE SAID COMPANIES AND THERE WAS THUS NO INFLOW OF CASH INVOLVED IN THESE TRANSACTIONS. THE SAID TRANSACTIO NS WERE ENTERED INTO IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY BY WAY OF JOURNAL E NTRIES AND IT DID NOT INVOLVE ANY CREDIT TO THE CASH AMOUNT. THE LEARNED DR AT THE TI ME OF HEARING HAS NOT BROUGHT ANYTHING ON RECORD TO REBUT OR CONTROVERT THIS POSI TION. HE HOWEVER HAS CONTENDED BY RELYING ON THE DECISION OF HON'BLE MADHYA PRADESH H IGH COURT IN THE CASE OF V.I.S.P.(P) LTD. (SUPRA) AS WELL AS THE DECISION OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF PANNA S.KHATAU (SUPRA) THAT SECTION 68 WAS STILL APPLICABLE IN THE PRESENT CASE INVOLVING CREDIT TO THE SHARE CAPITAL AND SHAR E PREMIUM AMOUNT. IT IS HOWEVER OBSERVED THAT THE FACTS INVOLVED IN THE CASE OF V. I.S.P. (P) LTD. WERE DIFFERENT INASMUCH AS THE LIABILITY IN QUESTION IN THE SAID C ASE REPRESENTED TRADING LIABILITY OF THE ASSESSEE ACCRUING AS A RESULT OF PURCHASE MADE BY THE ASSESSEE DURING THE RELEVANT YEAR AND SINCE THE SAID LIABILITY WAS FOUN D TO BE A BOGUS LIABILITY, ADDITION MADE BY THE AO WAS HELD TO BE STAINABLE BY THE HON' BLE MADHYA PRADESH HIGH COURT 7. IN THE CASE OF PANNA S. KHATAU (SUPRA) CITED BY THE LEARNED DR, BOTH SECTION 68 AND 56(2)(VI) WERE HELD TO BE APPLICABLE BY THE TRI BUNAL BUT NO CONCRETE OR COGENT REASONS WERE GIVEN TO JUSTIFY THE APPLICABILITY OF SECTION 68 TO THE CREDITS NOT INVOLVING ANY RECEIPT OR INFLOW OF CASH IN THE RELEVANT YEAR. MOREOVER, THE VIEW TAKEN BY THE TRIBUNAL IN THE SAID CASE IS CONTRARY TO THE DECISI ON OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF JATIA INVESTMENT CO. (SUPRA) RELIED UPON BY THE LD. CIT(A) TO GIVE RELIEF TO THE ASSESSEE ON ISSUE UNDER CONSIDERATION IN THE PRESENT CASE. IN THE SAID CASE, THE THREE NBFCS HAD TAKEN LOANS FROM PROPRIETARY CONCER N BELONGING TO THE SAME GROUP. SINCE THE SAID LOANS WERE REQUIRED TO BE LIQUIDATED AS PER THE RBI GUIDELINES AND THERE WAS NO CASH AVAILABLE WITH THE NBFCS TO REPAY THE LOANS, THE SHARES HELD BY THE THREE NBFCS WERE TRANSFERRED TO A PARTNERSHIP FIRM NAMELY JAITA INVESTMENT CO. AND THE AMOUNT RECEIVABLE AGAINST THE SAID SALE OF SHAR ES AS ADJUSTED BY THE NBFCS AGAINST THE LOAN AMOUNT PAYABLE TO PROPRIETARY CONC ERN. THE PARTNERSHIP FIRM OF M/S JATIA INVESTMENT CO. THUS RECEIVED SHARES FROM THE THREE NBFCS AND ALSO TOOK OVER THE LOANS PAYABLE BY THE SAID NBFCS TO THE PROPRIET ARY CONCERN. THESE TRANSACTIONS WERE ENTERED INTO IN ITS BOOKS OF ACCOUNT BY THE PA RTNERSHIP FIRM THROUGH CASH BOOK BY DEBITING THE INVESTMENT IN SHARES AND CREDITING THE LOAN AMOUNT OF THE PROPRIETARY CONCERN. THIS CREDIT APPEARING IN THE BOOKS OF ACCO UNT OF THE PARTNERSHIP FIRM M/S JATIA INVESTMENT CO. WAS TREATED BY THE AO AS UNEXP LAINED CASH CREDIT U/S. 68 AND ON CONFIRMATION OF THE SAME, WHEN THE MATER REACHED TO THE HON'BLE CALCUTTA HIGH COURT, IT WAS HELD BY THEIR LORDSHIP THAT WHEN THE CASH DID NOT PASS AT ANY STAGE AND SINCE THE RESPECTIVE PARTIES DID NOT RECEIVE CASH N OR DID PAY ANY CASH, THERE WAS NO REAL CREDIT OF CASH IN THE CASH BOOK AND THE QUESTI ON OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDIT COULD NOT ARISE. I N OUR OPINION, THE RATIO OF THIS DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF JATIA INVESTMENT CO. (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF THE PRESENT CASE AND THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY TH E AO U/S 68 BY HOLDING THAT THE SAID PROVISION WAS NOT APPLICABLE. ITA NO.1144/KOL/2019 ASSESSMENT YEAR 2012-13 M/S RKB SECURITIES. LTD. VS ITO WD-12 (2), KOL. PAGE 13 7. WE OBSERVE IN LINE WITH THE ABOVE EXTRACTED DETA ILED DISCUSSION THAT SINCE SEC. 68 OF THE ACT IS NOT ATTRACTED IN FACTS OF THE INST ANT CASE INVOLVING SWAPPING OF SHARES OF THE PCITS ACTION ASSUMING SEC. 263 REVISION JUR ISDICTION IN SEEKING TO ADD THE ASSESSEES SHARE APPLICATION / PREMIUM AMOUNT (SUPR A) IS WE ARE OF THE VIEW THAT EVEN IF THE LATTER ASSESSMENT ACCEPTING ASSESSEES SHARE APPLICATIONS / PREMIUM IS HELD ERRONEOUS THE SAME DOES NOT CAUSE ANY PREJUDICIAL T O THE INTEREST OF THE REVENUE THEREFORE. HON'BLE APEX COURTS LANDMARK DECISION I N MALABAR INDUSTRIAL CO. LTD. (SUPRA) SETTLED THE LAW LONG BACK THAT THE CIT MUST SATISFY HIMSELF THAT THE ASSESSMENT FORMING THE SUBJECT-MATTER OF REVISION SIMULTANEOUS LY SATISFIES BOTH LIMBS OF ERRONEOUS AS WELL AS CAUSING PREJUDICE TO INTEREST OF THE REVENUE. WE THEREFORE ACCEPT ASSESSEES ARGUMENTS AND RESTORE THE ASSESSING OFFI CERS LATTER ASSESSMENT ORDER DATED 20.12.2016. THE PCITS ORDER UNDER CHALLENGE DATED 15.03.2019 STANDS REVERSED. ALL OTHER ARGUMENTS HEREINAFTER ARE RENDERED ACADEMIC. 8. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON /11/2019 SD/- SD/- ( &) (( &) (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS ) - 08/11/2019 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT 2. /RESPONDENT- 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . ((, , , /DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ ,,