Sangita Developers Pvt.Ltd, Kolkata V. ITO,Ward-9(4). , Kolkata

ITA 175/KOL/2023

AI Insights

The case involves Sangeeta Developers Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre confirming the addition of Rs.2,32,50,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer due to the non-appearance of the directors of the share applicant companies and was upheld by the CIT(A). The Tribunal, however, found that the assessee had provided sufficient evidence to prove the identity and creditworthiness of the share applicants and the genuineness of the transactions, and that the Assessing Officer had not pointed out any specific discrepancies in the documents provided.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132518 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-05-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 02-03-2023
• Other Referred Cases: Crystal Networks P. Ltd. v. CIT, PCIT vs NRA Iron & Steel (P) Ltd., Kale Khan Mohammed Hanif v. CIT, Roshan Di Hatti v. CIT, M/s Satyam Smertexpvt. ltd. vs. DCIT, Atlantic Dealers Pvt. Ltd. vs. ITO, Forceful Estates Pvt. Ltd. vs. ITO, Manish Build Well (P.) Ltd. vs. CIT, Paradise Inland Shipping Pvt. Ltd. vs. PCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Revision of order; Principle of natural justice; Source of fund; Set aside
• Section: 131; 68; 263; 133(6); 195; 250

Judgement Text

| आयकर अपीलीय अिधकरण Ɋायपीठ, 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. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. C/o Subash Agarwal & Associates, Advocates Siddha Gibson 1, Gibson Lane Suite 213, 2 nd Floor Kolkata - 700069 [PAN: AALCS0130R] Vs Income Tax Officer, Ward-9(4), Kolkata अपीलाथŎ/ (Appellant) Ů̝ यथŎ/ (Respondent) Assessee by : Shri Siddharth Agarwal, Advocate Revenue by : Shri Vijay Kumar, Addl. CIT, Sr. D/R सुनवाई की तारीख/Date of Hearing : 25/05/2023 घोषणा की तारीख /Date of Pronouncement: 25/07/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal has been preferred by the assessee against the order of National Faceless Appeal Centre, (hereinafter referred to as “the ld. CIT(A)”), passed u/s 250 of the Income Tax Act, 1961 (hereinafter ‘the Act’) dated 13/02/2023, for Assessment Year 2012-13. 2. The assessee raised the following grounds of appeal:- “1. For that the Ld. CIT(A) was not justified in passing an exparte order without providing any reasonable opportunity of hearing. 2. For that on the facts and in the circumstances of the case, Ld. CIT(A) was not justified in confirming the addition of Rs.2,32,50,000/- made by the A.O. by treating the share capital as unexplained cash credit u/s. 68 of the Act. I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 2 3. For that the Ld. CIT(A) was not justified in confirming the action of the Ld. A.O. in treating the share capital as unexplained merely on the ground of non-appearance of the directors of the share applicant companies. 4. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.” 3. Brief facts of the case are that the assessee is a Private Limited Company engaged in the business of investment in shares. Loss of Rs.2,07,816/- was declared in the e-return filed for Assessment Year 2012-13 on 19/09/2012. Case selected for scrutiny through CASS to examine large share premium received. 3.1. During the course of assessment proceedings, the ld. Assessing Officer noticed that the assessee has received share capital and share premium of Rs.2,32,50,000/-. Various details were called for to examine the identity and creditworthiness of the share applicant and genuineness of the transactions. The assessee filed all these details on 10/03/2015 but failed to produce the investors physically. On this ground itself, the Assessing Officer came to the conclusion that the assessee has failed to prove the identity and creditworthiness of the shareholders and accordingly made addition under section 68 of the Act at Rs.2,32,50,000/-. Aggrieved the assessee preferred appeal before the ld. CIT(A) but failed to succeed. 4. The ld. CIT(A) based on the various judgements referred in the impugned order confirmed the view taken by the Assessing Officer and observed as follows:- “5.11 All these above-mentioned cases are also applicable in which the various judicial authorities have decided the cases in favour of revenue after I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 3 going through the entirety of the facts and circumstances. The case laws relied upon by the appellant have been decided with reference to the specific facts and situations present in the context of those distinct cases and cannot be made universally and squarely applicable to all cases where similar issues but in different setting of facts and accompanying circumstances are found to be involved. The proviso to section 68, added through Finance Act 2012 has made a clear cut distinction between company making private placement of shares and company raising funds through public issue of shares. The intention of the amendment was to place a higher onus on the assessee in addition to general onus of "identity, credit worthiness and genuineness". This is because it was observed that closely held companies have a special knowledge of investments made in their shares as a result of which they must be held accountable if "source of source" is not proved. So if a shareholder is not able to satisfactorily prove the source of its investment, addition can be made in the hands of assessee company and not its shareholder. The proviso thus cleared the confusion created by an earlier decision of Supreme Court in CIT Vs. Lovely Exports 216 CTR 195 in which relief was given only to public issue of shares. The decision was being erringly quoted by assesses to evade their onus of proving "source of source" even in case of private placement of shares. Even prior to this amendment, the onus was always on the assessee to prove the identity, credit-worthiness and genuineness of the entities in whose name the credit entries were appearing by way of share capital. The appellant has miserably failed on this account. 5.12 A bare reading of section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be a sum during the previous year and if the assessee offers no explanation about the nature and source of such credit or the explanation offered is not satisfactory, then the sums so credited can be treated as income of the assessee for that previous year. The expression no explanation is offered, or the explanation offered is not satisfactory puts an onus on the assessee to offer a lucid, reasonable and acceptable explanation before the Assessing Officer and thereupon the Assessing Officer should form an opinion accepting or rejecting the explanation based upon appreciation of facts/materials and other attending circumstances. In this case, the appellant has failed to discharge the onus cast upon it. Even during the course of appellate proceedings, no evidences have been furnished by the appellant to establish its case. The appellant has thus failed to prove the identity and credit- worthiness of shareholders and genuineness of the transaction with the companies from whom it has obtained share capital on ground realities. I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 4 5.13 Considering the above facts, since appellant failed to establish identity, creditworthiness and genuineness of the transaction, addition made by the AO on account of unexplained share capital at Rs. 2,32,50,000/- u/s. 68 is hereby confirmed. The grounds of appeal are dismissed.” 5. Aggrieved, the assessee is now in appeal before the Tribunal. 6. The ld. Counsel for the assessee by referring to the index of the paper book stated that the ITR Acknowledgement, computation of income and final accounts of the assessee company, source of funds of the share applicants and all other relevant details have been filed. There is an account of share application money along with the list of share applicants which has been filed. Reference was also made to the master data as on date to show that the alleged share applicants are active companies. Reference was also made to the audited financial statements to prove that sufficient funds were available with the share applicants to invest in the assessee company and they also are having regular business operations. The assessee placed reliance on the following decisions of the ITAT Kolkata, wherein the decision of the Hon’ble Calcutta High Court in the case of Crystal Networks P. Ltd. v. CIT (2013) 353 ITR 171 (Cal.)(HC), has been followed to hold that no adverse inference can be drawn due to the non-appearance of the shareholders:-  ITO vs. M/s. Tara Re-Rolling Pvt. Ltd. ITA No. 49/K/2021, order dt. 01/05/2023  Atlantic Dealers Pvt. Ltd. vs. ITO; ITA No. 530/Kol/2020; dated 08/05/2023 I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 5  ITO vs. Forceful Estates Pvt. Ltd.; ITA No. 2558/Kol/2018, order dt. 03/04/2023  ITA No. Subhavani Projects Pvt. Ltd.; ITA No. 2609/Kol/2018, order dt. 05/04/2023. The ld. D/R, on the other hand, vehemently argued supporting the orders of the lower authorities and submitted that all these investor companies are jamakharchi companies. 7. We have heard rival contentions and perused the material placed before us. 8. The assessee in the present case is aggrieved with the addition u/s 68 of the Act for unexplained share capital. We notice that the alleged sum of share capital and share premium was received from the various share applicants for which following details were called for by the assessing officer during the course of assessment and the same were duly produced:- “1. Proof of identity-Voter Card/Passport/Driving license/PAN Card 2. List of companies where you were Directors/shareholders with dates of appointment with DIN 3. Proof of acknowledgement of filing IT Return alongwith copies of accounts. 4. All bank statements explaining debit and credit entries highlighting the relevant entries with regard to share capital. 5. To produce all investors who have made investment 6. the source of funds in the hands of the investors with their respective bank statements 7. Identification of family members who are directors in the assessee company and there relationship. 8. A write-up on justification of large share premium.” I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 6 9. We further notice that the ld. Assessing Officer has duly acknowledged that all these details were filed and without indicating any discrepancy in these details the focus of the AO was only with regard to the non-appearance of the directors of the share applicant companies in view of the summons u/s 131 of the Act. We note that the assessee has discharged the primary onus cast upon it as per the provisions of section 68 of the Act and it has filed a sufficient details to prove the identity and creditworthiness of the share applicants for making investment in the assessee company and also the genuineness of the transactions which is further evidenced by the fact that the assessee company is into a regular business activity and has fixed assets to the tune of Rs.1,78,79,552/-and apart from the share capital it also has long term assets and other long-term liabilities. The assessee being a developer company has made investment in land and office and was in the process of making further expansion. All these information is available in the audited balance sheet placed before us, which thus shows that the transactions of making investment in the assessee company is genuine. Once the assessee has satisfied to the best possible extent, the nature and source of the sum as required under the provisions under section 68 of the Act and the provision to section 68 which came into effect by way of Finance Act, 2015, is applicable for 2013-14, requiring the assessee to prove the source of source, is not applicable in the case of the assessee. The burden shifts upon the assessee to first bring on record any discrepancy in the details filed by the assessee to prove that he was not satisfied with I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 7 these details for the reasons which needs to be show caused to the assessee. In absence of the same it has to be presumed that since the assessee has explained the nature of source and in other words identity and creditworthiness of the share applicants and genuineness of the transactions, provisions of section 68 of the Act will not be invoked. The assessee has placed reliance on plethora of decisions, we, however take note of the decision in the case of Atlantic Dealers Pvt. Ltd. vs. ITO (supra), wherein similar issue came up for adjudication before this Tribunal and except for no personal appearance of the directors of the assessee company/investor companies, all the details were filed to the satisfaction of the assessing officer and this Tribunal held against the revenue observing as follows:- “5. We have heard the rival contentions and gone through the record. The Ld. Counsel for the assessee has contended that in this case, the assessee had filed all evidences to prove the identity and creditworthiness of the subscribers and genuineness of the transaction including the address, PAN & Form 2 & Form 5 filed with Registrar of Companies of the share subscriber companies, their audited financial statements, acknowledgement of filing their Income Tax Return, copy of bank statement of the allottee company highlighting the payment of the entire amount of share capital . That all the transactions were done through banking channel and duly confirmed by the share subscribers. That even the notices u/s 133(6) of the Act were issued by the AO which were duly complied with by the share applicant companies and requisite documents were furnished evidencing their identity, and creditworthiness and that even source of investment was also provided. In respect of some companies, which did not respond to the notices issued u/s 133(6) of the Act, the Ld. Counsel has submitted that a request letter was written to the assessing officer requesting therein that since the assessment pertained to the Assessment Year 2009-10 after which almost 5 year , have elapsed, therefore, it was quite possible that many of the parties with whom the assessee had transactions might I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 8 have moved to other places or may not be bothering to comply with notices, if any, issued to them. That since the assessment was getting time barred on 31.03.2014, it was requested to the assessing Officer to intimate the assessee about the notices which could not be served /served but not complied with. It was further requested to afford the assessee sufficient opportunity to enable it to ensure necessary compliances as a matter of principles of natural justice. The Ld. Counsel for the assessee in this respect has relied upon the following letter dated 17.03.2014: To 17.03.2014 The Income Tax Officer Ward 9(1)/Kolkata AayakarBhawan, 5th Floor, P-7, Chowringhee Square Kolkata- 700069 Sir, In the matter of : M/s Atlantic dealers Pvt. Ltd. P. A. No. : AAHCA 5518 K Assessment Year:2009-10 Regarding : Assessment proceedings pursuant to order u/s 263 Reference : Proceedings u/s 143(3)/263 Please refer to above. We do hereby state that the necessary compliances are being made from time to time in the above case as required from us. In the meantime to expedite proceedings and to fulfil the onus lying with us to prove the identity and creditworthiness of the shareholders and genuineness of the transaction, we do hereby enclose a paper book containing (1) Company master data, (3) Details of Present Directors (3) Details of share applicants with their present addresses (4)Details of Bank Accounts (5) Copy of our Bank Statements (6) Bank Reconciliation Statements (7)Printout of Bank Book (8) Documents relating to share applicants (a) Acknowledgement of Return of Income (b) Audited Financial Statements (c) List of Investment (d) Bank Statements (e)Source of Fund (f) Master Data (g)Directors details. I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 9 We would like to state that since the assessment pertains to the Assessment Year 2009-10 after which almost 5 year, have elapsed. Therefore, it is quite possible that many of the parties with whom we had transactions may have moved to other places or may not be bothering to comply with notices, if any, issued to them. Since the assessment is getting time barred on 31.03.2014, kindly intimate us about the notices which could not be served /served but not complied with. Kindly afford us sufficient opportunity to enable us to ensure necessary compliances as a matter of principles of natural justice. Thanking you, Yours faithfully For Atlantic Dealers Pvt. Ltd. Rajesh Kumar Agarwal, FCA, A/R Enclosed: As stated The Ld. Counsel for the assessee has submitted that the assessee, otherwise, had provided all the details to the assessing officer to prove the identity and creditworthiness of the subscribers and genuineness of the transaction, as noted above. He has further submitted that the subscribing companies were having adequate reserves and surpluses to invest in the assessee company. Further, that all these subscribers were income tax assessees and further that all the investor companies were duly incorporated with the Registrar of Companies. That there were no paper companies involved in the transactions. The Ld. Counsel has further contended that the AO, however, instead of examining the relevant documents, insisted for the personal presence of the directors of the subscribers which was not in the hands of the assessee. He therefore, has submitted that the identity and creditworthiness of these companies was duly established. He has further submitted that the AO could not point out any defect or discrepancy in the evidences/documents submitted by the assessee to prove the identity and creditworthiness of the subscribers and genuineness of the transaction. He has further submitted that instead of pointing out any defect or discrepancy in the evidences and the details furnished by the assessee, the AO proceeded to take adverse inference I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 10 only on the ground that the directors of the subscriber companies did not appear personally before the AO. The ld. Counsel for the assessee in this respect has relied upon the decision of the Jurisdictional Calcutta High Court in the case of Crystal networks (P) Ltd. vs CIT (supra). The ld. Counsel has also relied upon the decision of the Co-ordinate Kolkata Bench of the tribunal in the case of ‘M/s Satyam Smertexpvt. ltd. vs. DCIT’, ITA No.2445/kol/2019 vide order dated 29.05.2020, wherein, the coordinate bench of the tribunal, while further relying upon the decision of the Hon’ble Allahabad High Court in the case of CIT vs Raj Kumar Agarwal vide ITA No.179/2008 dated 17.11.2009 has held that non production of the director of the company, which is regularly assessed to income Tax having PAN, on ground that the identity of the subscriber is not proved, cannot be sustained. 6. The ld. D/R on the other hand, has relied upon the observations made by the AO. He has further relied upon the impugned order of the ld. CIT(A). The Ld. DR has further relied upon the decision of the hon’ble Supreme Court in the case of PCIT vs NRA Iron & Steel (P) ltd. reported in [2019] 103 taxmann.com 48(SC). 7. We have considered the rival submissions of the ld. Representatives of the parties and also gone through the record. In this case a perusal of the Assessment order would reveal that the AO has duly acknowledged the receipt of the relevant documents/evidences not only from the assessee, but also from the subscriber companies. However, he insisted for personal appearance of the directors of the subscriber companies without even going through and discussing about the discrepancies, if any, in the documents furnished by the assessee as well as by the share subscriber companies to prove the identity and creditworthiness of the subscribers and the genuineness of the transaction. The AO has not pointed out in the Assessment Order as to what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. The Assessee in this case, as noted above, explained about the identity, creditworthiness and financials etc. of each of the share subscriber company individually. However, we note that in the assessment order that the AO has not even mentioned the names of the share subscriber companies and even has not mentioned a word as to which of the share subscriber company or the corresponding transaction thereof was not genuine and on what grounds. The AO, in I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 11 our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO.The Ld. Counsel for the assessee has rightly placed reliance upon the decision of the Hon’ble Bombay High Court in the case of PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd. reported in (2017) 84 taxman.com 58 (Bom) wherein the Hon’ble High Court has held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of “Crystal networks (P) Ltd. vs CIT” (supra) has held as under: “We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding.” 8. So far as the reliance of the Ld. DR on the decision of the hon’ble Supreme Court in the case of “PCIT v/s NRA Iron & Steel (P) Ltd.” I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 12 (supra) has taken note of the observations made by the Supreme Court in the “the land mark case of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laid down that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source.” Thereafter the hon’ble Supreme court summed up the principles which emerged after deliberating upon various case laws as under: “11. The principles which emerge where sums of money are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit- worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit- worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act.” The Hon’ble Supreme court, thus, has held that once the assessee has submitted the documents relating to identity, genuineness of the I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 13 transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the same. However, as noted above, the Assessing Officer in this case has not made any independent enquiry to verify the genuineness of the transactions. The assessee having furnished all the details and documents before the Assessing Officer and the Assessing Officer has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon the Assessing Officer to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, even applying the ratio laid down by the Hon’ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd., impugned additions are not warranted in this case. 9. It has to be further noted that though powers of the ld. CIT(A) are co-terminus with the AO and the ld. CIT(A) had all the plenary powers as that of the AO. The Hon’ble Delhi High Court in the case of Commissioner of Income-tax vs. Manish Build Well (P.) Ltd. reported in [2011] 16 taxmann.com 27 (Delhi) has held that the CIT(A) is statutory first appellate authority and has independent power of calling for information and examination of evidences and possesses co- terminus power of assessment apart from appellate powers. However, a perusal of the impugned order of the ld. CIT(A) shows that the ld. CIT(A) has not discussed anything about the material facts of the case. He has not pointed out any defect and discrepancy in the evidences and details furnished by the assessee but simply upheld the order of the Assessing Officer in mechanical manner. The order of the ld. CIT(A) is a non- speaking order. The same is not sustainable as per law. 10. In view of the above discussion we do not find justification on the part of the lower authorities in making the impugned additions and the same are accordingly ordered to be deleted. 11. In the result, the appeal of the assessee stands allowed.” I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 14 10. Similar view was also taken by this Tribunal in the case of ITO vs. Forceful Estates Pvt. Ltd. (supra), wherein it was held as under:- “7. Further, a perusal of the Assessment order would reveal that the AO has duly acknowledged the receipt of the relevant documents/evidences not only from the assessee, but also from the subscriber companies. However, he insisted for personal appearance of the directors of the subscriber companies without even going through and discussing about the discrepancies, if any, in the documents furnished by the assessee as well as by the share subscriber companies to prove the identity and creditworthiness of the subscribers and the genuineness of the transaction. The AO has not pointed out in the Assessment Order as to what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. The Assessee in this case, as noted above, explained about the identity, creditworthiness and financials etc. of each of the share subscriber company individually. However, we note that in the assessment order that the AO has not even mentioned the names of the share subscriber companies and even has not mentioned a word as to which of the share subscriber company or the corresponding transaction thereof was not genuine and on what grounds. The AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. The Ld. Counsel for the assessee has rightly placed reliance upon the decision of the Hon’ble Bombay High Court in the case of PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd. reported in (2017) 84 taxman.com 58 (Bom) wherein the Hon’ble High Court has held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of “Crystal networks (P) Ltd. vs CIT” (supra) has held as under: “We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 15 statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding.” 11. Respectfully following the above decisions and under the given facts and circumstances of the case, since the assessee has explained the nature and source of the alleged sum and has proved the identity and creditworthiness of the share applicants as well as the genuineness of the transactions, we are inclined to hold that no addition u/s 68 of the Act, is called for. Accordingly, the finding of the ld. CIT(A) is set aside and all the effective grounds of appeal raised by the assessee are allowed. 12. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 25 th July, 2023 at Kolkata. Sd/- Sd/- (SANJAY GARG) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 25/07/2023 *SC SrPs I.T.A. No. 175/Kol/2023 Assessment Year: 2012-13 Sangeeta Developers Pvt. Ltd. 16 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent 3. संबंिधत आयकर आयुƅ / Concerned Pr. CIT 4. आयकर आयुƅ)अपील (/ The CIT(A)- 5. िवभागीय Ůितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडŊ फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata