Shilpa Polypack Pvt. Ltd., Surat V. The ITO, Ward-2(1)(2)., Surat

ITA 1566/AHD/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2652 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 23-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RASESH SHAH
• Assessee Lawyers: ANUPAMA SINGLA
• Keywords: Bogus purchase; Unexplained cash credit; Unexplained investment; Accommodation entries; Onus to prove
• Section: 133(6); 13; 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ./ITA NO.1566/AHD/2017 ( [ [ / ASSESSMENT YEAR: (2012-13) (VIRTUAL COURT HEARING) SHILPA POLYPACK PVT. LTD., 410, HIRA PANNA MARKET, RING ROAD, SURAT-395002. VS. THE INCOME TAX OFFICER, WARD-2(1)(2), SURAT. ./ ./ PAN/GIR NO.: AAJCS2208L (ASSESSEE) (RESPONDENT) RESPONDENT BY : SHRI RASESH SHAH, CA ASSESSEE BY : MS ANUPAMA SINGLA, SR. DR / DATE OF HEARING : 18/05/2021 /DATE OF PRONOUNCEMENT : 11/06/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: THIS CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO THE ASSESSMENT YEAR (AY) 2012-13, IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, SURAT [IN SHORT THE LD. CIT(A)] IN APPEAL NO. CAS/2/297/2015-16 DATED 07.04.2017, WHICH IN TURN ARISE OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFER TO AS THE ACT], DATED 31.03.2015. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THE LD. CIT (A)-2, SURAT ERRED BY UPHOLDING THE ADDITION OF RS.80,00,000/- BEING SHARE CAPITAL AND SHARE PREMIUM AMOUNT RECEIVED FROM SUPRIYA FINCOM PRIVATE LIMITED ON THE BASIS OF FACTS AND LAW. 2. THE LD. CIT (A)-2, SURAT ERRED IN CONFIRMING ADDITION OF RS.24,000/- BEING ACCOMMODATION ENTRY COMMISSION ON THE ABOVE AMOUNT, BEING 30% OF RS.80,00,000/-. PAGE | 2 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. 3. THE ASSESSEE CRAVES TO ADD, AMEND, ALTER, MODIFY OR DELETE ANY OF THE GROUNDS AS WELL AS TO SUBMIT ADDITIONAL GROUNDS AT THE TIME OF HEARING OF THE APPEAL. 3. THE RELEVANT MATERIAL FACTS, AS CULLED OUT FROM THE MATERIAL ON RECORD, ARE AS FOLLOWS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT ASSESSEE HAD RECEIVED A SUM OF RS. 1,38,60,000/- TOWARDS SHARE PREMIUM AND RS.1,40,000/- TOWARDS SHARE CAPITAL TOTALING RS. 1,40,00,000/- FROM TWO COMPANIES DURING THE YEAR UNDER CONSIDERATION. IN ORDER TO VERIFY THE CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS, THE AO ISSUED NOTICE U/S 133(6) OF THE ACT TO THE FIRST INVESTOR COMPANY NAMELY, M/S SURPRIYA FINCOM PVT. LTD. KOLKATA BUT PARTIAL COMPLIANCE WAS MADE. THEY HAD RECEIVED SHARE CAPITAL/SHARE PREMIUM OF RS. 80,00,000/- WHICH INCLUDED SHARE PREMIUM OF RS. 79,20,000/- @ RS. 990 TOWARDS SHARE PREMIUM. THE ACIT, CIRCLE- 2(1)(1), SURAT ALSO PERSONALLY VISITED KOLKATA AND FOUND THAT THE AT THE GIVEN ADDRESSES OF THE OFFICE PREMISES NO SUCH COMPANY WAS RUNNING. THE DDIT, INVESTIGATION WING, KOLKATA, U/S 131(1)(D) OF THE ACT ALSO CONDUCTED INQUIRIES AND REPORTED THAT NO COMPLIANCE WAS MADE TO THE SUMMONS ISSUED U/S 131 OF THE ACT AS THE PARTY WAS NOT FOUND AT THE GIVEN ADDRESS AND THE SUMMONS COULD NOT BE SERVED. THE LOCAL INQUIRIES CONDUCTED THAT NO SUCH CONCERNS WAS RUNNING FROM THE ADDRESS FOR THE PAST 4 TO 5 YEARS FROM THE GIVEN ADDRESSES AND THE REPORT OF THE AO WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE COMPANY WAS ASKED TO PRODUCE THE INVESTOR COMPANY OF KOLKATA ALONGWITH THE BOOKS OF ACCOUNTS AS IT WAS NOT TRACEABLE AT THE GIVEN ADDRESSES. THE INQUIRIES ALSO REVEALED THAT THE KOLKATTA INVESTOR COMPANY AND ITS INTERMEDIATERIES WERE MANAGED BY THE KNOWN ENTRY OPERATOR JIVENDRA MISHRA WHO HAD BEEN SEARCHED BY INVESTIGATION WING, KOLKATA AND HAD ADMITTED ON OATH OF PROVIDING ACCOMMODATION ENTRIES IN FORM OF SHARE CAPITAL, BOGUS PURCHASES SALES ETC. THE AO ON THE ANALYSIS OF THE BANK ACCOUNT FOUND THAT THIS INVESTOR COMPANY AND ITS INTERMEDIATERIES WERE NOT CARRYING OUT ANY ACTUAL BUSINESS ACTIVITY. IN CASE OF THE OTHER INVESTOR COMPANY NAMELY, M/S EMPOWER INDIA LTD. WHICH HAS INVESTED RS. 60,00,000/-,THE AO HELD THAT ANOTHER ENTRY PROVIDER NAMELY, VISHAL BHUWANIA HAS ADMITTED THAT HE IS IN THE BUSINESS OF ACCOMMODATION ENTRY AND HIS FOUR COMPANIES ARE SHAREHOLDERS IN PAGE | 3 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. EMPOWER INDIA LTD. THE AO HELD THE INVESTMENT BY M/S EMPOWER INDIA LTD. OF RS. 60,00,000/- AS CASH CREDIT. THUS AO CONCLUDED THAT THE AMOUNT OF INVESTMENT OF RS. 1,40,00,000/- (RS.80,00,000 + RS. 60,00,000) IN FORM OF SHARE CAPITAL/SHARE PREMIUM WAS IN FORM OF CASH CREDIT AND MADE AN ADDITION U/S 68 OF THE ACT. 4. BESIDES, THE ASSESSING OFFICER ALSO MADE ADDITION ON ACCOUNT OF COMMISSION PAYMENT. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE MADE PAYMENT OF COMMISSION AT RATE OF 0.30 PAISE PER HUNDRED RUPEES TO THE ENTRY PROVIDERS (SO CALLED INVESTOR COMPANIES) WHICH AMOUNTS TO RS.42,000/- AND THE SAME WAS NOT RECORDED IN THE BOOKS OF THE ASSESSEE. HENCE, THE AMOUNT OF RS.42,000/- (AT THE RATE OF 0.30 PAISE PER HUNDRED RUPEES X RS.1,40,00,000) WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. 5. ON APPEAL, LD CIT(A) DELETED THE ADDITION OF RS. 60,00,000/- IN RESPECT OF INVESTOR, M/S EMPOWER INDIA LTD, OBSERVING AS FOLLOWS: 6.3.11 IN RESPECT OF THE INVESTMENT MADE BY THE OTHER INVESTOR COMPANY .IELY M/S EMPOWER INDIA LTD OF RS. 60,00,000/-, THE AO HAS NOT MADE ANY ENQUIRIES FROM THIS COMPANY TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. IN THE ASSESSMENT ORDER THE AO HAS ONLY GIVEN A VERY CRYPTIC FINDING THAT AN ACCOMMODATION ENTRY PROVIDER AT KOLKATA HAD STATED THAT HIS 4 COMPANIES HAVE INVESTED IN M/S EMPOWER INDIA LTD. NO OTHER EFFORTS HAVE BEEN MADE BY THE AO TO PROVE THAT THE INVESTMENT MADE BY THIS INVESTOR COMPANY IS NOT GENUINE. NEITHER ANY NOTICE U/S 133(6) OF THE ACT HAS BEEN ISSUED NOT ANY SUMMONS WERE ISSUED TO THE PRINCIPAL OFFICER/DIRECTORS OF THE COMPANY. IN THE SHOW CAUSE NOTICE ALSO DATED 13.3.2015, THE AO HAS NOT CONFRONTED ANY FACTS OR FINDINGS REGARDING THE INVESTOR COMPANY NAMELY EMPOWER INDIA LTD. THE AO HAS MADE THE ADDITION WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE TO PROOF THE GENUINENESS OF THE TRANSACTION FROM M/S EMPOWER INDIA LTD. THE ASSESSEE HAD SUBMITTED THAT M/S EMPOWER INDIA LTD. IS A PUBLIC LIMITED LISTED COMPANY, LISTED IN BOMBAY STOCK EXCHANGE. IT WAS CONTENDED THAT BEING A PUBLIC LISTED COMPANY ' IT IS SUBJECTED TO VARIOUS REGULATIONS OF SEBI AND THE COMPANY IS HAVING GROSS SALES OF RS. 150.45 CRORES AND RS. 156.53 CRORES FOR A.Y. 2012- 13 AND A.Y. 2011-12 RESPECTIVELY. SINCE, THE AO HAS NOT MADE ANY ENQUIRIES NOR CONFRONTED THE ASSESSEE AT ANY STAGE ANY ADVERSE EVIDENCES DURING THE ASSESSMENT PROCEEDINGS, THE ADDITION MADE BY THE AO U/S 68 OF RS. 6,00,000/- RECEIVED AS SHARE CAPITAL/PREMIUM FROM M/S EMPOWER INDIA LTD. CANNOT BE SUSTAINED AND IS BEING DELETED. HENCE THE GROUND OF APPEAL IS PARTLY ALLOWED.(CONFLRMED- RS.80,00,000/-;RELIEF-RS.60,00,000/-). PAGE | 4 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. 6.4.1. THE GROUNDS OF APPEAL- GROUND NO. 2 PERTAINS TO MAKING ADDITION OF RS. 42,000/- ON ACCOUNT OF PAYMENT OF COMMISSION @ 0.30% ON THE SHARE CAPITAL AND SHARE PREMIUM OF RS. 1,40,00,000/- CREDITED DURING THE YEAR. IN VIEW OF THE FINDINGS GIVEN ABOVE WHILE ADJUDICATING THE ISSUE OF SHARE CAPITAL/PREMIUM WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES FROM SURPIRYA FINCOM PVT. LTD, THE KOLKATTA BASED INVESTOR COMPANY OF RS. 80,00,000/- IN FORM OF SHARE CAPITAL/PREMIUM FROM THE VARIOUS ENTRY PROVIDERS FOR WHICH CERTAIN EXPENSES WOULD HAVE INCURRED AND HAVE BEEN RIGHTLY DISALLOWED BY THE AO OF COMMISSION PAYMENT. THE ADDITION MADE BY THE AO TO THE EXTENT OF COMMISSION PAYMENT @ 0.30% ON THE SHARE CAPITAL AND SHARE PREMIUM OF RS. 80,00,000/- /-IS UPHELD AND GROUND OF APPEAL IS PARTLY ALLOWED. 6. FROM THE ABOVE FINDINGS OF LD.CIT(A), IT IS CLEAR THAT LD CIT(A) HAS CONFIRMED THE ADDITION OF RS.80,00,000/-, IN RESPECT OF INVESTOR COMPANY NAMELY, M/S SURPRIYA FINCOM PVT. LTD. 7. AGGRIEVED BY THE ADDITION OF RS.80,00,000/-, IN RESPECT OF INVESTOR COMPANY NAMELY, M/S SURPRIYA FINCOM PVT. LTD, THE ASSESSEE IS IN APPEAL BEFORE US. 8. SHRI RASESH SHAH, LEARNED COUNSEL FOR THE ASSESSEE, BEGINS BY POINTING OUT THAT ALL THE TRANSACTIONS WERE DULY SUPPORTED BY SHARE APPLICATION FORM, ACKNOWLEDGEMENT OF RETURN OF INCOME, AUDITED FINANCIAL STATEMENTS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION (MOA) AND ARTICLE OF ASSOCIATION ( AOA) OF THE SHARE APPLICANTS. IT WAS CONTENDED LD COUNSEL THAT THE TRANSACTIONS HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS AND THE INVESTOR COMPANIES ARE REGISTERED WITH REGISTRAR OF COMPANIES (ROC) AND ARE ACTIVE COMPANIES AS PER ROC RECORDS. THEREFORE, BY FILING THESE PLETHORA OF DOCUMENTS, THE LEARNED COUNSEL CLAIMED THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS HAS BEEN PROVED BY ASSESSEE. THE LD COUNSEL ALSO RELIED ON SEVERAL CASE LAWS IN SUPPORT OF HIS CONTENTION REGARDING THE GENUINENESS OF THE SHARE CAPITAL AND PRAYED THE BENCH THAT ADDITION MADE BY THE ASSESSING OFFICER MAY BE DELETED. PAGE | 5 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. 9. ON THE OTHER HAND, MS. ANUPAMA SINGLA, LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE (IN SHORT THE LD. SR. DR) FOR THE REVENUE SUBMITTED THAT ASSESSEE-COMPANY HAS FAILED TO PROVE THE GENUINENESS OF THE SHARE PREMIUM. THE SHARE APPLICANT COMPANY, THAT IS, M/S. SUPRIYA FINCOM PVT. LTD, IS ONLY A PAPER COMPANY AND DOES NOT HAVE ANY EARNING. EVEN THE ASSESSEE-COMPANY DOES NOT HAVE SUFFICIENT PROFIT TO FETCH THE PREMIUM OF RS.990/- PER SHARE, THEREFORE THE ASSESSE HAS FAILED TO PROVE THAT (AS PER THE FINANCIAL STATEMENT OF THE COMPANY), THE COMPANY IS ENTITLED TO RECEIVE THE PREMIUM OF RS.990/- PER SHARE. THE LD. DR ALSO SUBMITTED THAT IT IS A JAMA-KHARCHI COMPANY AND IT PROVIDES ACCOMMODATION ENTRY IN LIEU OF COMMISSION, THEREFORE THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS, GENUINENESS AND IDENTITY, AS MANDATED BY SECTION 68 OF THE ACT, THEREFORE ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE SUSTAINED. 10. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSIONS PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACTS OF THE CASE INCLUDING THE FINDINGS OF THE LD. CIT(A) AND OTHER MATERIAL BROUGHT ON RECORD. WE NOTE THAT ASSESSING OFFICER HAD MADE THE ADDITION IN RESPECT OF TWO SHARES SUBSCRIBING COMPANIES WHEREIN THE ASSESSEE-COMPANY HAS TAKEN THE MONEY THROUGH BANKING CHANNELS AGAINST ALLOTMENT OF SHARES IN CASE OF EMPOWER INDIA LTD. AT RS.60,00,000/- IN CASE OF SUPRIYA FINCOM PVT. LTD. AT RS.80,00,000/-. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION IN RESPECT OF SHARE SUBSCRIBING COMPANIES, NAMELY, EMPOWER INDIA LTD. HOWEVER, THE LD. CIT(A) SUSTAINED THE ADDITION IN RESPECT OF ANOTHER SHARE SUBSCRIBING COMPANY, SUPRIYA FINCOME PVT. LTD. AT RS.80,00,000/-. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL IN RESPECT OF ADDITION SUSTAINED BY THE LD. CIT(A) AT RS.80,00,000/- WHICH IS RELATED TO SHARES SUBSCRIBING COMPANY OF M/S. SUPRIYA FINCOM PVT. LTD. 11. WE NOTE THAT IN ORDER TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SHARE CAPITAL/ SHARE PREMIUM BY FILING THE FOLLOWING DOCUMENTS BEFORE ASSESSING OFFICER: I. ACKNOWLEDGEMENT OF RETURN OF INCOME FOR AY 2012-13 PAGE | 6 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. II. AUDITED FINANCIAL STATEMENTS FOR A.Y. 2012-13 III. RELEVANT BANK STATEMENT IV. MCA MASTER DETAILS V. DETAILS OF PAYMENT TO SHILPA POLYPACK PVT. LTD. ALONG WITH EXPLANATION OF SOURCE, VI. CERTIFICATE OF REGISTRATION ISSUED BY RBI VII. DETAILS OF INVESTMENT BY SUPRIYA FINCOM PVT. LTD. VIII. PAN CARD IX. BOARD RESOLUTION X. RESOLUTION FOR SHARE ALLOTMENT. XI. RECEIPT OF SHARE ALLOTMENT XII. EXTRACT OF MEMBERS REGISTER THE LD COUNSEL ALSO SUBMITS BEFORE US THAT ASSESSEE HAS ALSO FILED THE CERTIFICATE OF COMMERCIAL TAX ( PAGE NO. 65 OF THE PAPER BOOK) PROVING THE ADDRESS OF SUPRIYA FINCOM PVT. LTD. IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER ISSUED THE NOTICE U/S133(6) ON 24.12.2014 TO SUPRIYA FINCOM PVT. LTD. WHICH HAS BEEN REPLIED BY THEM ON 01.01.2015 AND THE SAME HAS BEEN CONFIRMED BY ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE LD COUNSEL ALSO SUBMITS THAT ASSESSEE COMPANY HAS NOT ONLY PROVED SOURCE OF THE CREDIT BUT ALSO PROVED SOURCE OF THE SOURCE BY PLACING THE ABOVE EVIDENCES PARTICULARLY SOURCE OF THE PAYMENT MADE BY SUPRIYA FINCOM PVT. LTD. WHO RECEIVED THE SUM ON; SALE OF THE SHARES AND SHARE APPLICATION MONEY FROM FOUR COMPANIES. THE ASSESSEE COMPANY ACCORDINGLY, PROVED SOURCE OF THE SOURCE ALTHOUGH IT IS NOT REQUIRED TO BE PROVED AS PER UNAMENDED PROVISION OF SECTION 68 WHERE AMENDMENT WAS MADE W.E.F. 01.04.2013 BY WAY OF INSERTION OF PROVISO TO SECTION 68 OF THE ACT. THE STATEMENT OF JIVENDRA MISHRA DOESN'T IMPLICATE THE NAME OF THE ASSESSEE OR INVESTOR COMPANY. IT HAS BEEN MENTIONED THAT JIVENDRA MISHRA JUST USED THE ADDRESS OF ANKUSH SALES PVT. LTD. WHICH MAY BE IN THE OPINION OF THE REVENUE, THE ENTRY PROVIDER COMPANY. IT IS TO BE NOTED THAT OUT OF RS. 80 LACS, THE AMOUNT OF RS. 50 LACS WAS RECEIVED FROM ANKUSH SALES PVT. LTD. ON SALE OF THE SHARES BY SUPRIYA FINCOM PVT. LTD. TO THEM. THE ASSESSEE HAS NOT CARRIED OUT ANY TRANSACTION WITH PAGE | 7 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. ANKUSH SALES PVT. LTD. SO THIS FINDING IS NOT AT ALL RELEVANT. FURTHER ASSESSEE ASKED FOR CROSS EXAMINATION OF JIVENDRA MISHRA BEFORE CIT(A). THE CROSS EXAMINATION WAS NOT PROVIDED EITHER BY ASSESSING OFFICER OR CIT(A). THE REPORT OF THE INVESTIGATION WING IS ALSO NOT RELEVANT AS IT IS NOT CONCERNING ASSESSEE OR THE INVESTOR COMPANY. IT MAY BE CONCERNING ANKUSH SALES PVT. LTD. OR JIVENDRA MISHRA FOR WHICH ASSESSEE HAS NO CONCERN. EVEN OTHERWISE, THE REPORT OF THE INVESTIGATION WING WAS NOT FURNISHED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, APPELLATE PROCEEDINGS OR UNDER THE RTI. THE INVESTIGATION REPORT WAS ALSO NOT FOUND DURING INSPECTION OF FILE CARRIED OUT BY ASSESSEE. IT HAS BEEN MENTIONED THAT SHRI MANOJ SINHA, ACIT - CIRCLE - 2(1 )(1), SURAT AND INSPECTOR OF INVESTIGATION WING, KOLKATA DIDN'T FIND SUPRIYA FINCOM PVT. LTD. AS OPERATIONAL. ASSESSING OFFICER HAS NOT MENTIONED THAT THEY HAVE NOT PHYSICALLY FOUND THE COMPANY BUT IT WAS ONLY JUST REPORTED AS NON-OPERATIONAL. EVEN OTHERWISE, THE REPORT OF THE ASSESSING OFFICER WAS NOT FURNISHED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, APPELLATE PROCEEDINGS OR UNDER THE RTI. THE REPORT OF SHRI MANOJ SINHA, ACIT - CIRCLE 2(1)(1) WAS NOT PROVIDED TO THE ASSESSEE. REGARDING THE DEPOSIT OF THE EQUIVALENT AMOUNT IN THE BANK ACCOUNT OF THE INVESTOR COMPANY, IT IS SUBMITTED THAT ASSESSEE PROVED THE SOURCE OF THE SOURCE IN REGARD TO THE RECEIPT OF THE MONEY FROM SUPRIYA FINCOM PVT. LTD. 12. WE NOTE THAT ASSESSEE COMPANY SUBMITTED BEFORE US FOLLOWING DOCUMENTS: (I) ACKNOWLEDGEMENT OF RETURN OF INCOME FOR AY.2012-13 (VIDE PB.45), (II) FINANCIAL STATEMENT,BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (VIDE PB.46-56), (III) BANK STATEMENT (VIDE PB.57-58), (IV) MCA MASTER DATE (VIDE PB.59), (VII) DETAILS OF PAYMENT OF SHILPA POLYPACK PVT. LTD. WHICH EXPLAINED OF SOURCE (VIDE PB.60-63), (V) CERTIFICATE OF REGISTRATION ISSUE AGAINST RBI (VIDE PB.64), (VI) CERTIFICATE OF COMMERCIAL TAX (VIDE PB.65), (VI) DETAILS OF INVESTMENT OF SUPRIYA FINCOM PVT. LTD. (VIDE PB.66), (VII) ASSESSEE SUBMITTED XEROX COPY OF PAN CARD (VIDE PB.67), (VIII) ASSESSEE SUBMITTED BOARD RESOLUTION (VIDE PB.68-69), (IX) ASSESSEE SUBMITTED RESOLUTION OF SHARE ALLOTMENT (VIDE PB.70), (X) ASSESSEE PAGE | 8 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. SUBMITTED RECEIPT OF ALLOTMENT (VIDE PB.71-72), (XI) ASSESSEE SUBMITTED MEMBERS REGISTER (VIDE PB.73). THUS, LD COUNSEL CLAIMED THAT IN RESPECT OF THE SHARE SUBSCRIBING COMPANY M/S. SURPIYA FINCOM (SUPRA), THE ASSESSEE HAS SUBMITTED PLETHORA OF DOCUMENT, AS NOTED ABOVE TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. 13. FROM THE DETAILS AS AFORESAID WHICH EMERGES FROM THE PAPER BOOK FILED BEFORE US AS WELL AS BEFORE THE LOWER AUTHORITIES, IT IS VIVID THAT THE SHARE APPLICANT IS (I) INCOME TAX ASSESSEES, (II) IT IS FILING ITS RETURN OF INCOME, (III) THE SHARE APPLICATION FORM AND ALLOTMENT LETTER IS AVAILABLE ON RECORD, (IV) THE SHARE APPLICATION MONEY WAS MADE BY ACCOUNT PAYEE CHEQUES, (V) THE DETAILS OF THE BANK ACCOUNTS BELONGING TO THE SHARE APPLICANT AND THEIR BANK STATEMENTS, (VI) IN NONE OF THE TRANSACTIONS THE AO FOUND DEPOSIT IN CASH BEFORE ISSUING CHEQUES TO THE ASSESSEE COMPANY, (VII) THE APPLICANT IS HAVING SUBSTANTIAL CREDITWORTHINESS WHICH IS REPRESENTED BY A CAPITAL AND RESERVE AS NOTED IN BALANCE SHEET FILED BY THE ASSESSEE ABOVE. 14. SECTION 68 UNDER WHICH THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER READS AS UNDER: '68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ' THE PHRASEOLOGY OF SECTION 68 IS CLEAR. THE LEGISLATURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH CREDIT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IN THIS CASE THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS SHALL BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR'. THE SUPREME COURT WHILE INTERPRETING SIMILAR PHRASEOLOGY USED IN SECTION 69 HAS HELD THAT IN CREATING THE LEGAL FICTION THE PHRASEOLOGY EMPLOYS THE WORD 'MAY' AND NOT 'SHALL'. THUS THE PAGE | 9 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. UN-SATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS THE INCOME OF THE ASSESSEE AS HELD BY THE SUPREME COURT IN THE CASE OF CIT V. SMT. P. K. NOORJAHAN [1999] 237 ITR 570. WE NOTE THAT AGAINST THE SAID DECISION OF HON'BLE GUJARAT HIGH COURT THE SPECIAL LEAVE PETITION FILED BY THE REVENUE HAS ALSO BEEN DISMISSED BY THE HON'BLE APEX COURT. 15. THE MAIN PLANK ON WHICH THE AO MADE THE ADDITION WAS BECAUSE THE DIRECTORS OF THE SHARE SUBSCRIBERS DID NOT TURN UP BEFORE HIM. IN SUCH A CASE THE HON'BLE APEX COURT IN THE CASE OF ORISSA CORPN. (P) LTD. (SUPRA) 159 ITR 78 AND THE HON'BLE GUJARAT HIGH COURT, IN THE CASE OF DY. CIT V. ROHINI BUILDERS [2002] 256 ITR 360 [2003] 127 TAXMAN 523 , HAS HELD THAT ONUS OF THE ASSESSEE (IN WHOSE BOOKS OF ACCOUNT CREDIT APPEARS) STANDS FULLY DISCHARGED IF THE IDENTITY OF THE CREDITOR IS ESTABLISHED AND ACTUAL RECEIPT OF MONEY FROM SUCH CREDITOR IS PROVED. IN CASE, THE ASSESSING OFFICER IS DISSATISFIED ABOUT THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNTS OF THE CREDITORS, THE PROPER COURSE WOULD BE TO ASSESS SUCH CREDIT IN THE HANDS OF THE CREDITOR (AFTER MAKING DUE ENQUIRIES FROM SUCH CREDITOR). IN ARRIVING AT THIS CONCLUSION, THE HON'BLE COURT HAS FURTHER STRESSED THE PRESENCE OF WORD 'MAY' IN SECTION 68. RELEVANT OBSERVATIONS ARE REPRODUCED HEREUNDER:- 'MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COULD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE ASSESSING OFFICER, CANNOT BE A GROUND TO TREAT THE LOANS TAKEN BY THE ASSESSEE FROM THOSE CREDITORS AS NON-GENUINE IN VIEW OF THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE CASE OF ORISSA CORPORATION [1986] 159 ITR 78. IN THE SAID DECISION THE SUPREME COURT HAS OBSERVED THAT WHEN THE ASSESSEE FURNISHES NAMES AND ADDRESSES OF THE ALLEGED CREDITORS AND THE GIR NUMBERS, THE BURDEN SHIFTS TO THE DEPARTMENT TO ESTABLISH THE REVENUE'S CASE AND IN ORDER TO SUSTAIN THE ADDITION THE REVENUE HAS TO PURSUE THE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON-COMPLIANCE OF SUMMONS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE SUFFICIENT TO DRAW AND ADVERSE INFERENCE AGAINST THE ASSESSEE IN THE CASE OF SIX CREDITORS WHO APPEARED BEFORE THE ASSESSING OFFICER AND WHOSE STATEMENTS WERE RECORDED BY THE ASSESSING OFFICER, THEY HAVE ADMITTED HAVING ADVANCED LOANS TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES AND IN CASE THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CASH AMOUNT DEPOSITED BY THOSE CREDITORS IN THEIR BANK ACCOUNTS, THE PROPER COURSE WOULD HAVE BEEN TO MAKE ASSESSMENTS IN THE CASES OF THOSE CREDITORS BY TREATING THE CASH DEPOSITS IN THEIR BANK ACCOUNTS AS UNEXPLAINED INVESTMENTS OF THOSE CREDITORS UNDER SECTION 69. PAGE | 10 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. 16. FURTHER, IN THE CASE OF CIT V. S. KAMALJEET SINGH [2005] 147 TAXMAN 18(ALL.) THEIR LORDSHIPS, ON THE ISSUE OF DISCHARGE OF ASSESSEE'S ONUS IN RELATION TO A CASH CREDIT APPEARING IN HIS BOOKS OF ACCOUNT, HAS OBSERVED AND HELD AS UNDER:- '4. THE TRIBUNAL HAS RECORDED A FINDING THAT THE ASSESSEE HAS DISCHARGED THE ONUS WHICH WAS ON HIM TO EXPLAIN THE NATURE AND SOURCE OF CASH CREDIT IN QUESTION. THE ASSESSEE DISCHARGED THE ONUS BY PLACING (I) CONFIRMATION LETTERS OF THE CASH CREDITORS; (II) THEIR AFFIDAVITS; (III) THEIR FULL ADDRESSES AND GIR NUMBERS AND PERMANENT ACCOUNT NUMBERS. IT HAS FOUND THAT THE ASSESSEE'S BURDEN STOOD DISCHARGED AND SO, NO ADDITION TO HIS TOTAL INCOME ON ACCOUNT OF CASH CREDIT WAS CALLED FOR. IN VIEW OF THIS FINDING, WE FIND THAT THE TRIBUNAL WAS RIGHT IN REVERSING THE ORDER OF THE AA C, SETTING ASIDE THE ASSESSMENT ORDER. 17. WHEN A QUESTION AS TO THE CREDITWORTHINESS OF A CREDITOR IS TO BE ADJUDICATED AND IF THE CREDITOR IS AN INCOME TAX ASSESSEE, IT IS NOW WELL SETTLED BY THE DECISION OF THE CALCUTTA HIGH COURT THAT THE CREDITWORTHINESS OF THE CREDITOR CANNOT BE DISPUTED BY THE AO OF THE ASSESSEE BUT THE AO OF THE CREDITOR. IN THIS REGARDS OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE COMMISSIONER OF INCOME TAX, KOLKA TA-ILL VERSUS DATAWARE PRIVATE LIMITED ITAT NO. 263 OF 2011 DATE: 21ST SEPTEMBER, 2011 WHEREIN THE COURT HELD AS FOLLOWS: IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSING OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX ASSESSEE. AFTER GETTING THE PAN NUMBER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE ASSESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINENESS' OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFICER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NOT ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMITTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OFFICER OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENESS' OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX (APPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL-ACCEPTED PRINCIPLE WHICH ARE REQUIRED TO BE FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH THE AUTHORITIES. PAGE | 11 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. 18. OUR VIEW IS ALSO FORTIFIED BY THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS, 216 CTR 295, WHEREIN THE HON`BLE COURT HELD AS FOLLOWS: 'CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE-COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. 19. TO SUM UP, SECTION 68 OF THE ACT PROVIDES THAT IF ANY SUM FOUND CREDITED IN THE YEAR IN RESPECT OF WHICH THE ASSESSEE FAILS TO EXPLAIN THE NATURE AND SOURCE SHALL BE ASSESSED AS ITS UNDISCLOSED INCOME. IN THE FACTS OF THE PRESENT CASE, BOTH THE NATURE AND SOURCE OF THE SHARE APPLICATION RECEIVED WAS FULLY EXPLAINED BY THE ASSESSEE. THE ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLICANTS. THE PAN DETAILS, BANK ACCOUNT STATEMENTS, AUDITED FINANCIAL STATEMENTS AND INCOME TAX ACKNOWLEDGMENTS WERE PLACED ON AO'S RECORD. ACCORDINGLY ALL THE THREE CONDITIONS AS REQUIRED U/S. 68 OF THE ACT I.E. THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WAS PLACED BEFORE THE AO AND THE ONUS SHIFTED TO AO TO DISPROVE THE MATERIALS PLACED BEFORE HIM. WITHOUT DOING SO, THE ADDITION MADE BY THE AO IS BASED ON CONJECTURES AND SURMISES, CANNOT BE JUSTIFIED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, NO ADDITION WAS WARRANTED UNDER SECTION 68 OF THE ACT. THEREFORE, WE DELETE THE ADDITION OF RS. 80,00,000/- MADE BY THE ASSESSING OFFICER IN CASE OF M/S SUPRIYA FINCOM PVT. LTD. SINCE, WE HAVE DELETED THE ADDITION OF RS. 80,00,000/-, THEREFORE, THE ADDITION OF RS.24,000/-, AS MENTIONED IN GROUND NO.2 RAISED BY THE ASSESSEE, BEING ACCOMMODATION ENTRY COMMISSION ON THE ABOVE AMOUNT, (BEING 0.30% OF RS.80,00,000/-), IS CONSEQUENTIAL IN NATURE AND THEREFORE WE ALSO DELETE THE ADDITION OF RS.24,000/-. PAGE | 12 ITA NO.1566/AHD/201 7 ASSESSMENT YEAR. 2012-13 SHILPA POLYPACK PVT. LTD. 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED ORDER IS PRONOUNCED ON 11/06/2021 AT THE TIME OF VIRTUAL COURT HEARING. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER LWJR /SURAT / DATE: 11/06/2021 SAMANTA COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR/SR.PS/PS ITAT, SURAT