AI Insights
The case revolves around the appeal by the Deputy Commissioner of Income Tax against Tanishque Tradelink Pvt. Ltd., concerning the addition made under Section 68 of the Income Tax Act, 1961, for the Assessment Year 2008-09. The primary issue was the alleged unexplained share capital and share premium amounting to Rs.9,07,00,000. The Assessing Officer had initially made the addition based on the suspicion that the transactions were bogus. However, the CIT(A) reversed this decision after examining the detailed documentary evidence provided by the assessee, which included the financial statements, tax returns, and other relevant documents of the share applicants. The Tribunal, after considering the submissions and the precedents cited, upheld the CIT(A)'s decision, emphasizing that the revenue had not conducted a thorough investigation and had relied on conjectures.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 132570 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 1 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-03-2023
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
17-01-2023
Assessment Year
2008-2009
Appeal Filed On
31-01-2021
Judgement Text
| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI SANJAY GARG, HON’BLE JUDICIAL MEMBER & DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Deputy Commissioner of Income Tax, Central Circle-3(4), Kolkata Vs Tanishque Tradelink Pvt. Ltd. Bhabatarini Apartment G.T. Road, Room No. 602 Howrah - 711201 [PAN : AACCT7512R] अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Shri A.K. Tibrewal, FCA Revenue by : Shri Biswanath Das, CIT D/R सुनवाई कᳱ तारीख/Date of Hearing : 18/01/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 16/03/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The present appeal is directed at the instance of the revenue against the order of the learned Commissioner of Income Tax (Appeals)-6, Kolkata (hereinafter the “ld. CIT(A)”) dated 24/09/2020, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), for Assessment Year 2008-09. 2. The revenue has raised the following grounds of appeal:- “1. That on facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in allowing the bogus share capital raised in the books of the assessee without appreciating the fact that the assessee failed to discharge its primary onus to prove and establish the identity and creditworthiness of the investor companies and genuineness of the transaction. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in ignoring that the identity and creditworthiness of the shareholders and even the genuineness of the transactions remained unexplained. 3. That on facts and in the circumstances of the case, the Ld. CIT(A) has erred in not invoking his powers u/s. 250(4) of the I.T. Act, 1961 in directing the Assessing Officer to make further enquiry and report the results of the I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 2 same to him when he was himself convinced that the A.O. had not conducted any enquiry along the lines he was required to do. 4. That on facts and in the circumstances of the case, the Ld. CIT(A) has erred in not invoking his powers u/s. 250(4) of the I.T. Act, 1961 to make such enquiries as he deems fit when he was convinced that the A.O. had not conducted any enquiry along the lines that the Commissioner of Income Tax,Kolkata-2 had directed him to. 5. That the appellant craves leave to add, delete, alter, modify or take new grounds of appeal in the course of appeal proceedings.” 3. Brief facts of the case are that the assessee is a private limited company engaged in the business of trading and investment in shares. It filed its return of income for the Assessment Year 2008-09 on 31/03/2009 declaring total income of Rs.730/-. Subsequently, the assessment was reopened by issuing notice u/s 148 of the Act and assessment completed u/s 147 read with Section 143(3) of the Act determining the total income of the assessee at Rs.31,926/-. This assessment order u/s 147/143(3) of the Act was examined by ld. Pr. CIT invoking the provisions of Section 263 of the Act and in the order u/s 263 dt. 26/03/2013, ld. Assessing Officer was directed to carry out the assessment proceedings afresh after examining the genuineness and source of share capital by conducting independent enquiry not through the assessee and also to examine the directors as well as change in the directorship and also to examine the source of realization from the liquidation of the assets shown in the balance sheet. In compliance thereto, ld. Assessing Officer carried out the assessment proceedings u/s 143(3)/263/147 of the Act. Notice u/s 133(6) were issued to which most of the replies were received directly from the share holders. All the other documentary evidence to explain the share capital of Rs.90,70,000/- and share premium charged @ Rs.90/- on the face value of Rs.10/-, total amounting to Rs.8,16,30,000/- were filed. The ld. Assessing Officer without pointing out any defect in these details made a general observation that all I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 3 these companies are not having real business and the transactions carried out by them are bogus in nature and accordingly, confirmed the addition u/s 68 of the Act at Rs.9,07,00,000/- coupled with the disallowance u/s 14A of the Act at Rs.52,174/-. Income assessed at Rs.9,08,52,900/-. 3.1. Aggrieved the assessee preferred appeal before the ld. CIT(A) and with the strength of documentary evidence as well as placing reliance on plethora of decisions contended that all the share applicants had sufficient net worth to subscribe to the share capital and share premium of the assessee company, all the share applicants are duly assessed to tax and have also passed through scrutiny proceedings by the respective jurisdictional Assessing Officer. It was also submitted that, the ld. Assessing Officer assessed the share application money as unexplained cash credit merely disbelieving evidence adduced and without bringing any adverse material on record. The ld. CIT(A) after going through the details filed by the assessee came to a conclusion that whatever details the ld. Assessing Officer has called from the Assessing Officer has been duly supplied and ld. Assessing Officer had carried out the assessment proceedings on the directions given in the order u/s 263 of the Act and the assessee has successfully explained the source of share capital and share premium and thus do not call for any addition u/s 68 of the Act. 4. Aggrieved, revenue is now in appeal before this Tribunal. 5. Apart from raising the grounds challenging the addition deleted by the ld. CIT(A), the revenue has also raised a ground that even in case ld. Assessing Officer has not conducted sufficient enquiry as directed by the ld. Pr. CIT in the order u/s 263 of the Act, the ld. CIT(A) had sufficient powers u/s 250(4) of the Act to make such enquiry as he deemed fit, in case he was not convinced with the enquiries carried out by the ld. Assessing Officer. I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 4 The ld. Counsel for the assessee submitted that all the alleged share applicant companies are jamakharchi and shell companies not having regular business activities and are just used as conduit for routing of funds so as to provide bogus accommodation entries in the form of share capital and share premium. He further submitted that all the alleged share application companies have meagre income and no fixed assets so as to justify the regular business activity being carried out. 6. On the other hand, the ld. Counsel for the assessee firstly took us through the written submissions filed before the ld. CIT(A), thereafter relied upon the findings of the ld. CIT(A). Further, the ld. Counsel for the assessee referring to the paper book submitted that all the alleged share applicants have directly replied to the Assessing Officer to the notices issued u/s 133(6) of the Act and have also enclosed the ITR, documents of Ministry of Corporate Affairs, audited financial statements, bank statements. Reference was also made to the net worth of each of the share applicants appearing in the audited financial statements justifying the source of investments made in the assessee company. Reliance was placed on the following decisions:- i. Shah Tracom Pvt. Ltd. vs. ITO, M.A. No. 1/Kol/2021 [A/o ITA No. 1857/Kol/2010] ii. ITO vs. Goodpoint Commodeal Pvt. Ltd. in ITA No. 1204/Kol/2015 iii. Ninestar Merchants Pvt. Ltd. vs. ITO iv. ITO vs. M/s. Asixline Investment Consultants Pvt. Ltd. in ITA No.408/Kol/2017 v. ITO vs. M/s. Happy Structure Pvt. Ltd. in ITA No. 1977/Kol/2016 vi. ITO vs. M/s. RKB Services Pvt. Ltd. in ITA No. 1530/Kol/2019 I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 5 vii. M/s. Satyam Smertex Pvt. Ltd. vs. DCIT in ITA No. 2445/Kol/2019 viii. M/s. Aastha Vincom Pvt. Ltd. ITA No. 123/Kol/2015 (dated 26.08.2022) ix. PCIT vs. Himachal Fibres Ltd. {2018] 98 taxmann.com 173 (SC) x. PCIT vs. Himachal Fibres Ltd. [2018] 98 taxmann.com 172 (Delhi) 7. We have heard rival contentions, perused the material available on record and the case-laws cited by both the sides. 8. The revenue is aggrieved with the finding of the ld. CIT(A) deleting the addition made by the ld. Assessing Officer u/s 68 of the Act at Rs.9,08,00,000/- towards unexplained share capital and share premium. We notice that the assessee company was incorporated during the year under appeal. Initial capital of Rs.1,00,000/- was received from the promoter directors Mr. Kingshuk Talukder and Mr. Debarshi Das at Rs.50,000/- each. Further share capital of Rs. 90,70,000/- was raised by issuing 90,70,000 shares at a face value of Rs.10/- each at a premium of Rs.90/- per share which were subscribed by eleven (11) share applicant companies and a chart has been filed by the assessee before the lower authorities depicting the net worth in the audited balance sheet at the time of making the investment. The chart is reproduced for ready reference:- SN Name of the Party PAN No. Amt of invt. Net worth as per B/s. 1 ADBHUT VINIMAY PVT. LTD. AAGCA5343P 9,00,000 6,19,01,914 2 FANTOM SALES PVT. LTD. AAACF9955G 73,00,000 7,47,51,472 3 FRANKDEAL COMMERCIAL P LTD. AABCF0294Q 34,00,000 10,86,34,358 4. JAIBALASUR TRADING PVT. LTD. AABCJ7540G 30,00,000 9,07,02,002 I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 6 5 LILY VANIJYA PVT. LTD. AABCL3503F 1,35,50,000 12,89,50,607 6 NILGIRI TIE-UP PVT. LTD. AACCN4975G 1,22,00,000 11,28,01,385 7 NIPPON SERVICES & HOLDINGS P. LTD. AABCN0390G 1,00,000 43,13,45,710 8 SHIVANAND MERCHANTS P. LTD. AAKCS7744J 1,02,50,000 9,71,00,298 9 SNOWDROP TIE-UP PVT. LTD. AALCS1461Q 1,35,00,000 13,69,50,000 10 CYNOSURE DEALERS PVT. LTD. AADCC2651D 1,20,00,000 8,52,00,460 11 MINIMART TIE-UP PVT. LTD. AAFCM1788H 1,45,00,000 15,20,30,000 9,07,00,000 1,48,03,68,206 9. We further notice that the case of the assessee was reopened by issuing notice u/s 148 of the Act and reassessment proceedings were carried out and no additions were made towards the alleged share capital and share premium by the ld. Assessing Officer in the order dt. 18/06/2010. The records of this reassessment proceedings were part of the revisionary proceedings carried out u/s 263 of the Act and the ld. Pr. CIT directed to carry out the assessment proceeding afresh by giving the following directions:- “i) Examine the genuineness and source of share capital, not on a test check basis, but in respect of each and every shareholder by conducting independent enquiry not through the assessee. The bank account for the entire period should be examined in the course of verification to find out the money trail of the share capital. ii) Further the AO should examine the directors as well as examine the circumstances which necessitated the change in directorship if applicable. He should examine them on oath to verify their credentials as director and reach a logical conclusion regarding the controlling interest. I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 7 iii) The AO is directed to examine the source of realization from the liquidation of the assets shown in the balance sheet after the change of Directors, if any. After conducting the inquiries and verification as directed above, the AO should pass a speaking order, providing adequate opportunity of being heard to the assessee." 10. In compliance to the directions given u/s 263 of the Act, ld. Assessing Officer issued notice u/s 133(6) of the Act to various shareholders to file the replies directly, to which there was necessary compliance. Alleged share applicants filed the reply directly to ld. Assessing Officer enclosing therewith the bank statement, audited financial statements, identity proof and relevant record of Ministry of Corporate Affairs, so as to prove the identity, creditworthiness and genuineness of the transactions. Further, ld. Assessing Officer mainly questioned the business activity of these shareholders noticing that they have meagre income, poor turnover and no regular business activity. Though the details filed by the assessee as well as the shareholders duly depicted that all these companies had sufficient net worth and investments in loans and advances and other current assets and investment companies working under the objectives provided under the memorandum and article of association. Further, we notice that ld. CIT(A) while dealing with the issue raised by the assessee challenging the addition u/s 68 of the Act called for a remand report which was received vide letter dt. 08/09/2017 and 17/01/2018. After perusing the contents of the remand report, details filed by the assessee, the ld. CIT(A) dealt with this issue observing as follows:- “5. GROUND NO. 1: Factual matrix I have gone through the Assessment Order, Grounds of Appeal and submissions of the assessee. From the record, it is noted that I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 8 The assessee company raised share capital amounting Rs. 9,07,00,000/- by way of issuing 9,07,000 equity shares having a face value of Rs. 10/- each. The shares were issued at premium of Rs. 90/- aggregating to Rs. 9,07,00,000/-. These 9,07,000 shares were allotted to 11 share-holders and regarding this allotment, Form- 2 was filed by the assessee company before ROC. It is also noted that during the year under consideration, the assessee company also made an investment to the tune of Rs. 9,07,00,000/-. This investment was made by utilizing the funds received from the issue of shares. During the course of Assessment proceedings, Books of Accounts, Bank Statement in original were produced and examined by the AO. The assessee also produced other details/ documents etc. The AO issued notice u/s. 133(6) of the I. T. Act, 1961 to the share- holders and all the share-holders made due compliance in respect of notice issued u/s. 133(6) of the I.T. Act, 1961. Finally, the AO issued summons u/s. 131 of the I. T. Act, 1961 to the erstwhile Directors/Principal officers of the assessee company. However, these directors sought adjournment which was not granted by the AO. On the basis of non-attendance of the Directors the Assessing Officer opined that the assessee has failed to prove the identity, creditworthiness and genuineness of the transaction. Presumptions made by the AO: The entities who replied in response to the notices issued u/s. 133(6) are conduit companies. assessee company had oriented its own money and routed it through the investor companies in the garb of share capital and share premium. Finally, the AO concluded that the sum credited in the Books of Accounts of the assessee of Rs. 9.07 crores from these eleven shareholders and Rs. 1,00,000/- initial share capital is bogus. The AO charged Rs. 9.07 crores from these eleven share-holders and Rs. 1,00,000/- initial share capital from the promoter directors to Income Tax being income of the assessee company for A.Y. 2008-09 u/s 68 of the I.T. Act, 1961. The AO also made disallowances u/s. 14A of the I.T. Act, 1961 even though no income was earned which could have been claimed as exempt. The AO did so by way of referring to Board Circular No. 5/2014 dated 11.12.2014. DECISION : In this case, the assessment was completed u/s. 147 read with section 143(3). However, the said assessment was set aside by the Ld. CIT, Kolkata -2 u/s. 263 on 26.03.2013 with certain specific direction to the AO which have also I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 9 been mentioned by the AO in the assessment order also. As per the directions given by the ld. CIT-2, Kolkata the AO was to examine the genuineness and source of share capital in respect of each and every share holder : By conducting independent enquiry not through the assessee. The bank account for the entire period was to be examined in the form of verification to find out the money trail of the share capital. The AO was supposed to examine the Directors as well as examine the circumstances which necessitated the change in the Directorship if applicable, and Verify the credential as Directors, and Recheck logical conclusion regarding the controlling interest. The AO was also directed to check the source of realization from the liquidation of asset from the Balance Sheet after change of Directors. Finally, after conducting all these enquiries and verification the AO was supposed to pass a speaking order providing adequate opportunities of being heard to the assessee. Now, let us examine what AO has done in this case. a) The AO did not conduct any independent enquiry in respect of any share holder other than issuing 133(6) notices. b) These share-holders were already examined under previous proceedings when order under section 147 read with section 143 (3) was passed. c) The reply received against notice u/s. 133(6) was not examined at all and was kept on record. d) No adverse comments have been made by the AO regarding the information supplied by the investors into the company to the AO. e) The AO did not seek bank details either directly from the bank or from these share holders for the entire period. f) No money trail of the share capital has envisaged by the Ld. CIT, Kolkata - 2 was made by the AO. g) The AO was supposed to examine the Directors and the circumstances which necessitated the change in Directorship, however, the AO tried to examine the erstwhile Directors without examining the Current Directors of the company. h) The AO did not verify the credential of the current Directors. i) The AO did not examine what necessitated the change in the directorship. j) The ld. CIT-2, Kolkata envisaged in the order issued u/s. 263 that the AO must reach to a logical conclusion regarding controlling interest, however, nothing was done by the AO to find out the controlling interest in the assesse company. k) The AO was directed to examine the source of realization from the liquidation of assets shown in the Balance Sheet after the change of Directors, however, absolutely nothing was done by the AO in that direction. l) Finally, the Ld. CIT, Kolkata - 2 directed that AO (after conducting the enquiries and verification) would pass a speaking order and that too after giving adequate opportunity of being heard to the assessee. However AO did not follow this direction also - I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 10 From the above, it is noted that none of the directions of the Ld. CIT - 2, Kolkata were followed by the AO. 1. No independent enquiry was made to find out the antecedent of the Investors or share-holders of the assesse company. 2. No bank accounts pertaining to investor companies were called for or examined by the AO independently. 3. No money trail was established. 4. The current Directors were never examined instead summons were issued to the erstwhile Directors. 5. The credentials of current Directors were never found out, 6. The most important aspect about a conduit company or shell company is that controlling interest does not remain either with the Board of Directors or with the Share holders. It centres around certain entities which control all these shell companies. Instead of clear cut Direction from the Ld. CIT-2, Kolkata to find out the controlling interest of the assesse company, absolutely no effort was made by the AO to find out the controlling interest of the assessee company. The AO was directed to examine the source of realization from the liquidation of assets shown in the Balance Sheet after the change of Directors. The Assessment Order and the proceedings are absolutely silent about this vital matter which is the key to use the shell companies for money laundering. Following the law of natural justice, the Ld. CIT-2, Kolkata had directed the AO to conduct independent enquiry and verification and provide adequate opportunity of being heard to the assessee meaning thereby the AO would collect material information, after conducting certain enquiries and verification and then confront the assessee company with the material and then pass a speaking order which would be based on the material facts, enquiry and verification process. It is seen that instead of doing that the Assessment Order is full of conjectures and surmises and repetition of order passed under section 263 of the I.Tax Act. The assessment order contains 8 pages and the description of each page is given as under : 1st Page Background of the case is given. 2nd & 3rd Page : Excerpts of the order u/s. 263 have been given. 4th Page Directions of the Ld. CIT-2, Kolkata have been given which were absolutely not followed by the AO. 5th Page Only proceedings have been illustrated without giving details of enquiries or verification made by the AO and outcome of such enquiry. 6th Page also contains wild allegation made by the AO without any basis. The AO has stated that information received in compliance of notice issued u/s. 133(6) showed that all these companies are conduit companies popularly known as name lenders. No basis or murmuring is there in the Assessment Order as to how this conclusion has been arrived at. On Page 6 it is interesting that the AO has repeated the remark made by the Ld. CIT which is as under: "There has been a specific observation made by the Ld. PCIT Kolkata II as contained in the order u/s. 263 of the I. T. Act, 1961 that: I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 11 The AO seems to have missed the larger picture and unwittingly has ended up giving a certificate of genuineness of share capital by passing the impugned order. This by itself establishes that such orders are erroneous and prejudicial to the interest of the Revenue administration." 7th Page is merely computation of disallowance to be made u/s. 14A even after giving a categorical finding that the assessee has not earned any exempt income whatsoever. 8th Page is merely computation of total income and tax payable thereof. From the above, it is clear that the AO has not carried out any of the Directions given in the order u/s. 263 and made additions in a superficial manner without any factual background and basis. In contrast the relevant information was already provided by the assesse on two occasions, once at the time of reassessment and second time during the present assessment. The information were to be verified by the AO. It is trite law that an assessment has to be based on materials on records. Even if the AO disbelieves the evidences adduced by the assessee, in the absence of any contrary material on record no addition can be made. AO assessed the share application money as unexplained cash credit merely disbelieving evidences adduced and without bringing any adverse material on record. As such the addition made by the Ld. AO is merely based upon surmises and conjectures. It is further noted that even Assessments have been completed in the case of these share holder entities which are as under ; Name of the share holder PAN Assessment completed u/s. Jurisdictional AO Adbhut Vinimay Pvt. Ltd. AAGCA5343P 143(3)/A.Y. 2007-08 and also 147 for A.Y. 2011-12 Ward 1(1) Fantom Sales Pvt. Ltd. AAACF9955G Name changed to Kanishka Jewelers & Bullions Pvt. Ltd. 147 for A.Y. 2017-18 Ward 6(3) Frankdeal Commercial Pvt. Ltd. AABCF0294Q 143(3) for A.Y. 2007- 08 Ward 9 (2) Jai Balasur Trading Pvt. Ltd. AABCJ7540G 115WE(3) FOR A.Y. 2007-08 Ward 9(3) Lily Vanijya Pvt. Ltd. AABCL3503F 147 for A.Y. 2012-13 Ward 6(3) Nilgiri Tie Up Pvt. Ltd. AACCN4875G 147 for A.Y. 2012-13 Ward 6(3) Nippon Service & Holdings Pvt. AABCN0390G 147 for A.Y. 2011-12 Ward 6(3) I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 12 Ltd. Shivananda Merchants Pvt. Ltd. AAKCS7744J 147 for A.Y. 2013-14 Ward 6(3) Snowdrop Tie up Pvt. Ltd. AALCS1461Q 143(3)/263/147/143(3) for A.Y. 2008-09 Ward9(4) Cynosure Dealers Pvt. Ltd. AADCC2651D 143(3)/263/147/143(3) for A.Y. 2008-09 Ward 6(1) Minimart Tie Up Pvt. Ltd. AAFCM1788H 147 for A.Y. 2011-12 Ward 6(3) Kingshuk Talukdar ACMPT9755B Individual Promoter/Director Ward44(4) Debarshi Das ACMPD7865D Individual Promoter/Director Ward44(4) Therefore, the legal question involved at this juncture is whether the additions in such situation can be sustained. The answer is in the negative. This view is supported by following decisions : Principal Commissioner of Income Tax v. Himachal Fibers Ltd. [2018] 98 taxmann.com 173 (SC) Where in course of appellate proceedings, High Court set aside addition made by AO under section 68 in respect of share application money by holding that identity of share applicants was clearly revealed but Assessing Officer did not conduct any further enquiry except resting his conclusions on surmises, SLP filed against said order was to be dismissed. Commissioner of Income Tax Central-II, Kol. v. Shyam Sel Ltd. [2017] 80 taxmann.com 241 (Calcutta) Assessment years 2000-01 and 2001-02 being in a hurry to complete assessment, had no time to scrutinize shareholders' details submitted by assessee, it could not be said that assessee failed to discharge his burden to prove genuineness of transaction of receiving share application money and creditworthiness of share applicants. S.K. Bothra & Sons, HUF v. Income-tax Officer, Ward-46(3), Kolkata [2011] 15 taxmann.com 298 (Calcutta) Where assessee had produced loan confirmation certificates signed by creditors, disclosing their permanent account numbers and address, loans taken by assessee could not be held to be not genuine without giving further opportunity to assessee to explain information on basis of which such conclusion was arrived at. Commissioner of Income-tax v. Sidhi Vinayak Metcon Ltd. [2019] 106 taxmann.com 2 (Jharkhand) Where AO made addition to assesse's income in respect of share application money on ground that identity of share applicants remained I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 13 unverified, in view of fact that amount in question had been received by cheque, there was a need for Assessing Officer to issue notices to drawers of those cheques and, in absence of any such notice issued by Assessing Officer, impugned addition was to be deleted Principal Commissioner of Income-tax v. N.C. Cables Ltd.* [2017] 88 taxmann.com 649 (Delhi) Assessment year 2001-02 - Where assessee had furnished large amount of materials in form of documents to evidence genuineness of identity and transactions as well as creditworthiness of share applicants and other creditors and Assessing Officer did not conduct appropriate enquiry to conclude that share infusion and advances received were from bogus entities, no addition could be made on that account by invoking section 68. Commissioner of Income-tax, Agra v. Surendra Chand Bansal* [2014] 42 taxmann.com 201 (Allahabad) Where Assessing Officer added certain amount to assessee's taxable income as unexplained cash credit, in view of fact that in respect of amount advanced creditor had given his confirmatory letter along with PAN but Assessing Officer failed to make proper enquiries, impugned addition deserved to be deleted. Commissioner of Income-tax II v. Kamdhenu Steel & Alloys Ltd. [2012] 19 taxmann.com 26 (Delhi) Assessment year 2004-05 – Whether once adequate evidence/material is given, which would prima facie discharge burden of assessee in proving identity of shareholders, genuineness of transaction and creditworthiness of shareholder, thereafter in case such evidence is to be discarded or it is proved that it is ‘created’ evidence, revenue is supposed to make thorough investigation before it could nail assesse and fasten assessee with a liability under sections 68 and 69 - Held, yes - Whether where assessee had given particulars of registration of investing/applicant companies; confirmation from share applicants; bank accounts details; and had shown payment through account payee cheques, etc., it could be said that assessee had discharged its initial onus and just because some of creditors/share applicants could not be found at address given, it would not give revenue a right to invoke section 68 without any additional material to support such a move - Held, yes Creations (P.) Ltd. V. Income-tax Officer [2011] 13 taxmann.com 114 (Delhi) Assessment year 2002-03 During relevant assessment year, assessee- company had raised unsecured loans from five persons who were its directors and shareholders Payments were made through banking channels - During assessment proceedings, assessee furnished income- tax returns and bank statements of said creditors along with their affidavits stating therein source of funds which were used in lending amounts to assessee - Assessing Officer, however, held that both, I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 14 genuineness of transactions as also creditworthiness of creditors remained unexplained and added amount of aforesaid credits to assessee's income - Whether, on facts, assessee had discharged initial onus placed on it and if revenue still had a doubt with regard to genuineness of transactions in issue or as regards creditworthiness of creditors, it would have had to discharge onus which had shifted on to it - Held, yes - Whether no such exercise having been undertaken by revenue authorities, addition under section 68 in hands of assessee was unjustified - Held, yes Commissioner of Income-tax v. Arunananda Textiles (P.) Ltd. [2011] 15 taxmann.com 226 (Karnataka) Assessment year 1996-97 - Whether where assessee-company received certain amount from shareholders and, in support of said transactions assessee gave addresses of shareholders and their identity was not in dispute, in such a situation it was not for assessee-company to establish but it was for department to enquire with investors about their capacity to invest amount in shares - Held, yes Whether, therefore, impugned addition made by Assessing Officer to assessee's taxable income under section 68 without making aforesaid enquiry was not sustainable." In view of above factual and legal pronouncements, the ground is Allowed.” 11. From perusal of the finding of the ld. CIT(A) as well as the decisions referred therein and the factual matrix of the case, we notice that the ld. Assessing Officer carried out the assessment proceedings as per the directions given u/s 263 of the Act and called for all the details from the share applicants directly. The assessee discharged its primary onus by firstly filing the details and secondly all these details were filed directly to the Assessing Officer by all the share applicants. So far as the promoter directors of the assessee company are concerned, they have only invested Rs.50,000/- each and were not summoned/questioned by the Assessing Officer and all the remaining eleven shareholders (list extracted above), had sufficient net worth for making the alleged investment in the share capital and share premium of the assessee company. The ld. Assessing Officer failed to consider the fact that all the shareholder companies are regularly I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 15 assessed to tax and most of them have passed through scrutiny proceedings u/s 143(3) / 147 of the Act, which proves the identity of the share subscribers and the genuineness of the transactions which are carried out through banking channels and of course the creditworthiness has been proved beyond doubt on the basis of net worth of the assessee company existing as on the date of making investment in the share capital of the assessee company. Though plethora of judgments and decisions have been referred to by the ld. CIT(A) in the impugned order as well as decisions referred by the ld. Counsel for the assessee, we would like to take note of the findings of this Tribunal in the case of M/s. Happy Structure Pvt. Ltd. (supra), dealing with the similar issue and similar facts and the same reads as follows:- “5. Rival contentions heard. On a careful consideration on the facts and circumstances of the case, perusing the papers on record and orders of the authorities below as well as case laws cited, we hold as follows. 6. In this case, there are two share applicant companies, these are M/s Aggressive Vincom Pvt. Ltd. and M/s Flabby Sales Pvt. Ltd. The documents that they have furnished are as follows: A. Aggressive Vincom Pvt. Ltd. (i) Copy of reply to the AO in response to notice u/s 133(6) (ii) Copy of IT Acknowledgment for the relevant A.Y 2012-13 (iii) Copy of the Annual Financial Statements for the year ended on 31.03.2012 (iv) Copy of the Letter of Confirmation along with Bank Statement evidencing the source of funds out of which monies were paid to the assessee (v) Copy of the Board Resolution consenting to invest in the assessee company along with PAN Card (vi) Copy of the Share Application Form Acknowledgment (vii) Copy of the Share Allotment Letter (viii) Copy of the share certificates issued by the assessee company to the share subscriber (ix) Copy of PAN Card B. Flabby Sales Pvt. Ltd (i) Copy of reply to the AO in response to notice u/s 133(6) (ii) Copy of IT Acknowledgment for the relevant AY 2012-13 (iii) Copy of the Annual Financial Statements for the year ended 31.03.2012 (iv) Copy of the Letter of Confirmation along with Bank Statement evidencing the source of funds out of which monies were paid to the assessee I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 16 (v) Copy of the Board Resolution consenting to invest in the assessee company along with PAN Card (vi) Copy of the Share Application Form Acknowledgment (vii) Copy of the Share Allotment Letter (viii) Copy of the share certificates issued by the assessee company to the share subscriber ix) Copy of PAN Card 7. The assessee also furnished copy of the assessment orders passed u/s 143(3) of the Act on 26.03.2015 in the case of Aggressive Vincom Pvt. Ltd. by ITO, Wd- 1(1), Kolkata bringing to tax the share capital and share premium allotted during the year. Similarly, in the case of Flabby Sales Pvt. Ltd., the assessment order passed u/s 143(3) dated 10.03.2015 by ITO,Ward-2(2), Kolkata has been filed wherein the entire share application money received by the assessee including share premium was brought to tax u/s 68 of the Act. The question is whether under such circumstances, i.e. when the share applicant companies have been taxed on the source of funds in their accounts then an addition can be made u/s 68 of the Act. 8. This Bench of the Tribunal under similar circumstances, in the case of DCIT vs. M/s. Maa Amba Towers Ltd.; ITA No.1381/Kol/2015; Assessment Year 2012-13, order dt. 12 th October, 2018, had held as follows:- “3. Mr. Choudhury vehemently contends during the course of hearing that the Assessing Officer had rightly made the impugned addition since the taxpayer had failed to prove identity, genuineness and creditworthiness of the share premium money. He terms the impugned share subscription premium ₹690/- per share having face value of ₹10/- each as highly exorbitant. Case laws Sumati Dayal vs. CIT(1995) 214 ITR 801 (SC) and CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) is further quoted during the course of hearing that the relevant evidence submitted during the course of assessment has to be considered as per the human probabilities by removing all blinkers. Our attention is thereafter invited to the relevant nuances of such share subscription routing involving multiple layers to plough back unaccounted monies back to the books. We find no merit in the Revenue's instant grievance in the light of relevant facts on record. There is no dispute about the assessee's having declared its share subscription premium from M/s Agrani Credit & Finvest Pvt. Ltd., Crown Mansion Pvt. Ltd., Liberal Infrastructure Pvt. Ltd., Darshan Enclave Pvt. Ltd., Snow Fall Impex Pvt. Ltd. involving corresponding sums of ₹27,60,000/-, ₹55,20,000/-, ₹82,80,000/- in case of third and fourth and ₹48,30,000/- in last entity's case; respectively totalling to ₹3,01,00,000/-. Case file suggests that the assessee has placed on record their income tax acknowledgement of the impugned assessment year 2012- 13, directors' report along with audited financial statements, explanation regarding source of investments, bank statements, share application forms and board's resolution(s) followed by their respective regular assessment orders pertaining to very assessment year u/s. 143(3) of the Act. Their Assessing Officer(s) made u/s 68 unexplained cash credits additions of share premium amounting to ₹67,03,00,000, ₹44,85,00,000/-, ₹24,42,00,000/- & ₹21,70,00,000/- in case of first four entities and accepted similar credits of ₹20,45,00,000/- to be genuine satisfying all parameters of identity, genuineness and creditworthiness. It can therefore be safely assumed that all these additions sums forming subject-matter of the impugned additions to be I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 17 accepted as genuine in respective investors entities' end as the source of the amount(s) in issue totalling to ₹3,01,00,000/-. Learned Departmental Representative fails to dispute that the same very amount cannot be added twice in payees and recipients' hands u/s 68 of the Act. We therefore see no reason to accept Revenue's instant former substantive ground. We affirm CIT(A)'s findings under challenge qua the instant former issue.” 9. This Bench of the Tribunal under similar circumstances, in the case of M/s C.P. Re-Rollers Ltd. vs. DCIT.; ITA No.1811/Kol/2017; Assessment Year 2013-14, order dt. 03.04.2019, had held as follows:- “46. We find that the Hon’ble Supreme Court in the case of M/s Earth Metal Electricals P Ltd vs CIT & Anr. reported in 2010 (7) TMI 1137 in Civil Appeal No. 21073 / 2009 dated 30.7.2010 arising from the order of Hon’ble Bombay High Court had held as under:- ORDER Delay condoned. Leave granted. Heard learned counsel on both sides. We have examined the position. We find that the shareholders are genuine parties. They are not bogus and fictitious. Therefore, the impugned order is set aside. The appeal is allowed accordingly. No order as to costs. 47. In the instant case before us, we also note that the share subscribing companies are duly assessed to income tax. The Ld AR had placed on record the copies of the assessment orders framed in the cases of the share subscribing companies, as noted above. It therefore cannot be disputed that the share subscribing companies are not in existence. From the assessment orders, it is noted that the share subscribing companies are duly assessed to income tax and their income tax particulars together with the copies of respective income tax returns with their balance sheets are already on record. We also find that the Ld. CIT(A) had categorically stated that the scrutiny assessments were framed on the share subscribing companies for the Asst Year 2010-11 which shows their existence is genuine and transactions carried out by them were the subject matter of examination by the income tax department in scrutiny proceedings. This fact has not been controverted by the Revenue before us. 48. We may gainfully refer to the judgment in the case of Pr. CIT Vs Paradise Inland Shipping (P) Ltd (84 taxmann.com 58) wherein the Bombay High Court had deleted similar addition on similar set of facts made on account of unexplained cash credits and the SLP filed by the Revenue against the judgment has been dismissed by the Hon’ble Supreme Court. The relevant extracts of the judgment is as follows: “5. We have given our thoughtful considerations to the rival contentions of the learned Counsel and we have also gone through the records. The basic contention of the learned Counsel appearing for the Appellants revolves upon the stand taken by the Appellants whether the shareholders who have invested in the shares of the Respondents are fictitious or not. In this connection, the Respondents in support of their stand about the genuineness of the transaction entered into with such Companies has produced voluminous documents which, inter alia, have been noted at Para 3 of the Judgment of the CIT Appeals which reads thus : I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 18 "The assessment is completed without rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows : 1. Sony Financial Services Ltd. - CIN U74899DL1995PLC068362- Date of Registration 09/05/1995 6. On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such Companies. 7. The Appellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot reappreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration. 49. We also find that the Hon’ble Apex Court recently in the case of Principal CIT vs Vaishnodevi Refoils & Solvex reported in (2018) 96 taxmann.com 469 (SC) wherein the SLP of the Revenue has been dismissed by the Hon’ble Apex Court. The brief facts of that case were that the addition u/s 68 of the Act was made by the Assessing Officer in respect of capital contributed by the partner of the firm. The Hon’ble Gujarat High Court noted that when the concerned partner had confirmed before the Assessing Officer about his fact of making capital contribution in the firm and that the said investment is also reflected in his individual books of accounts, then no addition could be made u/s 68 of the Act. The decision of Hon’ble Gujarat High Court is reported in (2018) 89 taxmann.com 80 (Guj HC) . The SLP of the revenue against this judgment was dismissed by the Hon’ble Supreme Court. 50. We may gainfully refer to the following decisions of the Hon’ble High Court in the cases as under: (a) In the case of Pr. CIT Vs Chain House International (P) Ltd [2018] (98 taxmann.com 47)the AO had added the share application by way of unexplained cash credits was that the assessee was unable to give any justifiable reason for issuing shares at a premium. The Hon’ble Madhya Pradesh High Court did not agree with this reasoning given by the AO for making addition u/s 68, holding as under: I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 19 “Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by any Govt. Authority or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. [Para 52] Once the genuineness, creditworthiness and identity of investors are established, the revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of ascertaining how much is a reasonable premium having regard to the circumstances of the case. [Para 53] There is no dispute about the receipt of funds through banking channel nor there is any dispute about the identity, creditworthiness and genuineness of the investors and, therefore, the same has been established beyond any doubt and there should not have been any question or dispute about premium paid by the investors; therefore, unless there is a limitation put by the law on the amount of premium, the transaction should not be questioned merely because the assessing authority thinks that the investor could have managed by paying a lesser amount as Share Premium as a prudent businessman. The test of prudence by substituting its own view in place of the businessman's has not been approved by the Supreme Court. [Para 54]” (b) In the case of CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 the Revenue contended that the fact that the shares were issued at high premium raised suspicion on the genuineness of the transactions. While dismissing this plea raised by the Revenue, the Hon’ble Bombay High Court held as under: (e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre-proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 20 Lovely Exports (P.) Ltd.(supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. (f) In the above circumstances and particularly in view of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained. (c) In CIT Vs Anshika Consultants Pvt Ltd (62 taxmann.com 192), the AO had added the share application monies treating it to be their unaccounted monies routed though accommodation entries since the shares were issued at a high premium. The Hon’ble Delhi High Court did not agree with this contention put forth by the Revenue, by observing as under: “Whether the assessee-company charged a higher premium or not, should not have been the subject matter of the enquiry in the first instance. Instead, the issue was whether the amount invested by the share applicants were from legitimate sources. The objective of section 68 is to avoid inclusion of amount which are suspect. Therefore, the emphasis on genuineness of all the three aspects, identity, creditworthiness and the transaction. What is disquieting in the present case is when the assessment was completed, the investigation report which was specifically called from the concerned department was available but not discussed by the Assessing Officer. Had he cared to do so, the identity of the investors, the genuineness of the transaction and the creditworthiness of the share applicants would have been apparent. Even otherwise, the share applicants' particulars were available with the Assessing Officer in the form of balance sheets income-tax returns, PAN details etc. While arriving at the conclusion that he did, the Assessing Officer did not consider it worthwhile to make any further enquiry but based his order on the high nature of the premium and certain features which appeared to be suspect, to determine that the amount had been routed from the assessee's account to the share applicants' account. As held concurrently by the Commissioner (Appeals) and the Tribunal, these conclusions were clearly baseless and false. This Court is constrained to observe that the Assessing Officer utterly failed to comply with his duty considers all the materials on record, ignoring specifically the most crucial documents.” 51. We also rely on the following judgments of the Coordinate Bench of ITAT Kolkata, where based on same facts, and identical and common grounds and coordinate Bench deleted the addition: (1) M/s Jagannath Banwarilal Texofabs Pvt Ltd, in ITA No. 1762/Kol/2016, For A.Y. 2012- 13, order dated 26.10.2018. (2) M/s Wiz-Tech Solutions Pvt Ltd, in ITA No.1162/kol/2015,for A.Y. 2012-13, order dated 14.06.2018. 52. To conclude, 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 I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 21 shall be assessed as its undisclosed income. In the facts of the present case, both the nature & source of the share application received was fully explained by the assessee. We note that the share application money and share premium money which were received by the assessee company from the two share applicant companies viz: M/s. Prism Vintrade Private Limited, and M/s. Gannet-Vintrade Private Limited, during the period December, 2012 to March, 2013 had already been suffered disallowance under section 68 of the Act. As these two share applicant companies invested the same money in the assessee company, therefore, no further disallowance is warranted in the hands of the assessee company. Once taxed income cannot be taxed again. In the case of third company, M/s Haven Vincom Pvt. Ltd, the assessment, pertaining to the AY. 2010-11 was not revised by the Department. That is, M/s Haven Vincom Pvt. Ltd has raised share capital and share premium which has not been treated by the Department as cash credit under section 68 of the Act and has not been disallowed by the assessing officer in the assessment of M/s Haven Vincom Pvt. Ltd ( vide assessment order-paper book pg.173) . We note that M/s Haven Vincom Pvt. Ltd has utilized the same money ( which it received by raising share capital/premium and not disallowed by AO, u/s 68) to purchase the share capital and share premium in the assessee company (M/s C.P. RE Rollers Ltd) therefore it should not be disallowed under section 68 of the Act, in the hands of the assessee company, as the Department itself accepted genuine money in the hands of M/s Haven Vincom Pvt. Ltd. Hence, in the case of M/s Haven Vincom Pvt. Ltd, the identity, creditworthiness and genuineness have been proved beyond doubt. In case of Sushma Chawala for share application of Rs.4,22,500/- and share premium of Rs. Rs.4,22,500/-, the ld Counsel explained the identity, creditworthiness and genuineness therefore no disallowance can be made. Besides, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the these three share applicants by submitting the following documents and evidences: 1) Return of ROC, that is, form No. 2 submitted before R.O.C. 2) PAN Number copies of each share subscriber. 3) Copy of Balance Sheet, Profit and loss account of all share applicant companies. 4) Details of investments sold by all share applicant companies. 5).Transaction with the assessee was duly highlighted in the bank statement 6). Explanation along with evidence of source of source of the funds of the share applicant Companies. 7). Audited Accounts of the share holders. 8) Relevant address proofs / Form filed by the share applicants with ROC. 9). Income Tax Return of share applicant companies. 10) Copy of the Bank Statement of Share applicant companies where from the amount was debited. 11) Copies of Bank statement of the assessee company where the share application money and premium were credited. 12). Cheque Number, the amounts subscribed by shareholders along with the name of bank its branch address and the number of shares allotted to them with face value on the date of allotment. 13) Common Director of the share applicant companies ( who is director in assessee company as well as share applicant companies) appeared before the assessing officer in response to notice u/s 131 of the Income Tax Act and submitted documents and evidences before the AO. I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 22 Thus, all above documents that is, the PAN details, bank account statements, audited financial statements, balance sheet, profit and loss account, Income Tax acknowledgments, and ROC statements etc were placed on AO's record. One of the directors of share applicant companies appeared before the AO in response to summon u/s131 of the Act and explained the genuineness of three share applicants. Therefore, considering this factual position and precedents relied on the subject, as noted above, we delete the addition made by the assessing officer U/s 68 of the Act to the tune of Rs.17,49,95,000/- 53. In the result, the appeal of the assessee is allowed.” 10. Applying the proposition of law laid down in the above referred cases to the facts of this case and keeping in view the fact for the share applicant company have been assessed to tax u/s 143(3) of the Act and the source of money in question was brought to tax in their hands, we uphold the order of the ld. CIT(A) that no additions can be made in the case of the assessee company. 11. Coming to the argument arise to the Ld. D/R that the share premium received was excessive, we find that no query has been done by the Assessing Officer in this regard. As regards the decision of Trenetra Commerce & Trade(P) Ltd. (supra), we find that the facts are totally different. In that case, out of 40 shareholders, 38 of them could not be found and two of them stated that they had no connection with the company and that they never applied for any shares and they were drivers by profession and they had not given any money. It was a case where identity and creditworthiness was not proved. The transactions were proved to be not genuine. In the case on hand both the companies have proved their identity and have confirmed the transactions and have disclosed the sources and the revenue has assessed the same in their hands. Further in the case of Trenetra Commerce & Trade(P) Ltd. (supra), Mr. K.P. Kedia has stated that he had filed the return of income reflecting undisclosed income of 7.10 crores on compulsion. This is not the fact in the case on hand. Thus, the facts of the present case are different from the facts on the case of Trenetra Commerce & Trade(P) Ltd. On the other hand, the decisions relied upon by the ld. Counsel for the assessee are applicable to the case on hand, as both the share-holder companies have been assessed tax u/s 143(3) of the Act and in this scrutiny assessment the source of fund had been brought to tax. Thus, we uphold the order of the ld. CIT(A) and dismiss the appeal of the revenue. 12. Similar is the view taken by the ITAT, Kolkata Bench of the Tribunal in the case of Satyam Smertex Pvt. Ltd. (supra). Thus, considering the facts and circumstances of the case, complete documentary evidence filed by the assessee in which no specific error has been pointed out by the ld. Assessing Officer, all the enquiries conducted have come to a logical and positive end I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 23 by replies by the share applicants to the summons issued u/s 133(6) of the Act and also considering the fact that the assessee has proved the identity and creditworthiness of the share applicants and genuineness of the transactions and also following the decisions referred hereinabove, taking consistent view that under such similar facts and circumstances, addition u/s 68 of the Act is uncalled for, we confirm the findings of the ld. CIT(A) and dismiss Ground Nos. 1 & 2 raised by the revenue. 13. As far as Ground No. 3 & 4 are concerned that the ld. CIT(A) erred in not invoking his powers /s 250(4) of the Act, we fail to find any merit as the ld. CIT(A) has called for remand report which was received on two occasions and has duly considered the observations made by the revenue authorities in such remand report before arriving at the finding that the ld. Assessing Officer was not justified in making addition u/s 68 of the Act. Accordingly, Ground Nos. 3 & 4 are dismissed. 14. In the result, appeal of the revenue is dismissed. Order pronounced in the Court on 16 th March, 2023 at Kolkata. Sd/- Sd/- (SANJAY GARG) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 16/03/2023 *SC SrPs I.T.A. No. 17/Kol/2021 Assessment Year: 2008-09 Tanishque Tradelink Pvt. Ltd. 24 आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाईल /Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata
Other Referred Cases
Shah Tracom Pvt. Ltd. vs. ITO, ITO vs. Goodpoint Commodeal Pvt. Ltd., Ninestar Merchants Pvt. Ltd. vs. ITO, ITO vs. M/s. Asixline Investment Consultants Pvt. Ltd., ITO vs. M/s. Happy Structure Pvt. Ltd., ITO vs. M/s. RKB Services Pvt. Ltd., M/s. Satyam Smertex Pvt. Ltd. vs. DCIT, M/s. Aastha Vincom Pvt. Ltd., PCIT vs. Himachal Fibres Ltd., PCIT vs. Himachal Fibres Ltd., M/s. Jagannath Banwarilal Texofabs Pvt Ltd, M/s. Wiz-Tech Solutions Pvt Ltd, M/s. Happy Structure Pvt. Ltd., M/s. C.P. Re-Rollers Ltd., M/s. Trenetra Commerce & Trade(P) Ltd., M/s. Anshika Consultants Pvt Ltd, M/s. Chain House International (P) Ltd, M/s. Gagandeep Infrastructure (P.) Ltd., M/s. Sidhi Vinayak Metcon Ltd., M/s. N.C. Cables Ltd., M/s. Surendra Chand Bansal, M/s. Kamdhenu Steel & Alloys Ltd., M/s. Creations (P.) Ltd., M/s. Arunananda Textiles (P.) Ltd.
Laws Referred To
Income Tax Act, 1961
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