Appeal Details
Counselvise Citation
[2018] 118 COUNSELVISE.COM (IT) 9128 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 4 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-12-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2012-2013
Appeal Filed On
31-07-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S. S. GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.1755/KOL/2017 ( / ASSESSMENT YEAR: 2012-13) ITO, WARD-6(1), KOLKATA P-7, CHOWRINGHEE SQUARE, 6 TH FLOOR, KOLKATA 700 069. VS. M/S DELIGHT GRIH NIRMAN PVT. LTD. 1, R.N. MUKHERJEE ROAD, 3 RD FLOOR, ROOM NO.310, KOL-1. ./ ./PAN/GIR NO.: AACCD 2019 F (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI RABIN CHOWDHU RY, ADDL. CIT, SR. DR RESPONDENT BY : SHRI A.K. TULSIYAN, FCA / DATE OF HEARING : 27/11/2018 /DATE OF PRONOUNCEMENT : 14/12/2018 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINI NG TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST AN ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-23, KOLKATA IN APPEAL NO.219/CIT(A)-2 3/WD-6(1)/16-17, DATED 26.04.2017, WHICH IN TURN ARISES OUT OF AN ASSESSME NT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 25.03.2015. 2. THE GRIEVANCES RAISED BY THE REVENUE ARE AS FOLL OWS: 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) HAS ERRED INOVERLOOKING THE FACTS THAT THE AO DID NOT ENQUIRE INTO THE GENUINENESS OF THE TRANSACTION OF SHARECAPITAL AND SHARE PREMIUM THOROUGHLY BUT RE LIED ON EXTRANEOUS AND IRRELEVANT FACTS ANDCONSIDERATION AND FURTHER DID NOT EXAMINE MONEY TRAIL OF THE PAYMENTS MADE IN SHARE CAPITAL ANDSHARE PREMIUM. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW THE LD. CIT(A) HAS ERRED INNOT FOLLOWING THE DECISION BY THE JURISDICT IONAL HIGH COURT IN THE CASE OF RAJ MANDIR ESTATE PRIVATELIMITED REPORTED IN 70 TAXMANN 124(CAL) AND APPROVED BY THE HON'BLE APEX COURT IN THE DECISIONCITED AS 2017-TIO L-13-SC-IT DATED 09.01.2017. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 3. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE AMEND OR MODIFY ANY GROUND BEFORE OR AT THETIME OF APPELLATE PROCEEDINGS.' 3. THE APPEAL FILED BY THE REVENUE IN ITA NO.1755/K OL/2017, FOR ASSESSMENT YEAR 2012-13, IS BARRED BY LIMITATION BY 24 DAYS. T HE REVENUE MOVED A PETITION FOR CONDONATION OF DELAY IN FILING THE APPEAL. WE H AVE HEARD BOTH THE PARTIES ON THIS PRELIMINARY ISSUE AND HAVING REGARD TO THE REA SONS GIVEN IN THE AFFIDAVIT, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 4. THE FACTS OF THE CASE MAY BE STATED BRIEFLY. TH E ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13, SHOWI NG TOTAL INCOME AT RS.NIL. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S 1 43(2) OF THE ACT AND THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) OF THE ACT BY MAKING ADDITION OF RS. 5,00,00,000/-, U/S 68 OF THE ACT. F ROM THE STATEMENT OF ACCOUNTS SUBMITTED BY THE ASSESSEE COMPANY, FOR ASSESSMENT Y EAR 2012-13,IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY DUR ING THE F.Y 2011-12 ISSUED ITS SHARES TO PRIMARILY DIFFERENT PRIVATE LIMITED COMPA NIES AGAINST HIGH PREMIUM. IN ORDER TO EXAMINE THE REASONS OF HIGH PREMIUM, THE A SSESSING OFFICER SUMMONED THE DIRECTORS OF THE INVESTING COMPANIES. IN RESPON SE, INSTEAD OF APPEARING IN COMPLIANCE TO THE SUMMONS, ALL DIRECTORS OF INVESTI NG COMPANIES, FILED THE WRITTEN SUBMISSION BEFORE THE ASSESSING OFFICER. DURING THE ASSESSMENT PROCEEDINGS, NONE APPEARED BEFORE THE ASSESSING OFFICER, IN RESPONSE TO THE SUMMONS U/S 131 OF THE ACT. EVEN THE DIRECTORS OF THE ASSESSEE COMPANY DID NOT APPEAR IN RESPONSE TO THE SUMMONS ISSUED UNDER SECTION 131 OF THE ACT. 5. THE ASSESSING OFFICER NOTED THAT IT IS THE RESPO NSIBILITY OF THE ASSESSEE TO EXPLAIN THE INTRICACIES OF ITS BOOKS OF ACCOUNTS, T O PROVE ITS CLAIM FOR ISSUE OF SHARES AT HIGH PREMIUM AND ITS AFFAIRS IN RESPECT O F ITS ACCOUNTS. MERELY DUMPING PAPERS AND DOCUMENTS ON THE TABLE OF THE ASSESSING OFFICER DID NOT IN ANY WAY MEANS COMPLIANCE. THE BURDEN OF PROOF CANNOT BE SHI FTED ON THE REVENUE BY CART LOADS OF DOCUMENT UNLESS THE ASSESSEE EXPLAIN THEM BY WAY PHYSICAL APPEARANCE. THAT IS, THE DOCUMENTS SUBMITTED BY THE ASSESSEEMUS T BE EXPLAINED BY HIM. THE ASSESSING OFFICER NOTED THAT ASSESSEE COMPANY HAS R ECEIVED HUGE SHARE PREMIUM M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 WITHOUT ANY BUSINESS ACTIVITY. THEREFORE, THE ASSES SING OFFICER NOTED THAT THE ASSESSEE COMPANY WAS INCORPORATED HAVING NO VISIBLE BUSINESS ACTIVITY AND RAISED SHARE CAPITAL AND/OR PREMIUM IN ORDER TO ROUTE ITS UNDISCLOSED MONEY TO THE DESIRED END OF THE BENEFICIARY TAKING RECOURSE OF THE CORPO RATE VEIL. THE ASSESSEE COMPANY ROTATED ITS UNDISCLOSED MONEY LAYERING THROUGH DIFF ERENT BODY CORPORATE IN DIFFERENT STRUCTURED WEB TO OBFUSCATE INQUIRY. 6. THE ASSESSING OFFICER, HOWEVER, GONE THROUGH THE DOCUMENTS, BOOKS OF ACCOUNTS SUBMITTED AND NOTED THAT THE ASSESSEE COMP ANY SUBMITTED DETAILS AND RETURN OF INCOME OF DIFFERENT COMPANIES, WHICH WERE FILED BY THE INVESTOR COMPANIES IN RESPONSE TO NOTICE U/S 131 OF THE ACT , WHICH REVEALS THE FOLLOWING INFORMATION: I) THESE COMPANIES ARE IN THEIR INITIAL YEARS OF O PERATION. II) THESE COMPANIES ARE BASICALLY INVESTMENT COMPAN IES. III) INCOME TAX RETURNS SHOW A NOMINAL INCOME/LOSS. IV) NO BUSINESS ACTIVITY. V) INVESTOR COMPANIES RECEIVED SHARE CAPITAL WITH H UGE PREMIUM, ANDWAS IN TURN INVESTED INTHE ASSESSEE COMPANY AND SIMILAR OTHER C OMPANIES AS WELL. THEREFORE, THE ASSESSING OFFICER NOTED THAT IT WAS IMPORTANT TO UNDERSTAND AS TO HOW THE INVESTMENT DECISIONS THAT TOO AT A HUGE PRE MIUM WAS TAKEN, WHETHER THE APPLICANTS DID NOT HAVE THEIR OWNPROFIT, MAKING APP ARATUS TO INVEST. ALSO WHETHER THE TRANSACTIONS IN THE BANK STATEMENTS WERE MERELY FOR ROTATING MONEY OR THE TRANSACTIONS ARE COMMENSURATE WITH THE INCOME OF TH OSE COMPANIES ETC. THEREFORE, THE ASSESSING OFFICER NOTED THAT UNLESS THE ASSESSE E AND APPLICANT COMPANIES APPEAR WITH ALL ITS BOOKS, BANKSTATEMENTS, COPIES O F RETURN AND THE INCOME TAX RETURNS OF THE DIRECTORS, THE ANSWERS TO THESE QUES TIONS WILL NOT BE FOUND OUT. AS TO HOW THE ONUS CAN BE DISCHARGED WOULD DEPEND ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. UNDER THE CIRCUMSTANCES, IF CONSIDERED I N THE LIGHT OF PREPONDERANCE OF PROBABILITY AND NORMAL HUMAN BEHAVIOR, THE ENTIRE A MOUNT SHOULD BE TREATED AS M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 UNEXPLAINED CASH CREDIT. THE ASSESSING OFFICER NOTE D THAT SECTION 68 OF THE ACT REQUIRES THE ASSESSEE TO EXPLAIN THE NATURE AND SOU RCE OF THE CREDIT ENTRY. IT MEANS EXPLAINING THE SOURCE ALONE IS NOT ENOUGH. NATURE S HOULD ALSO BEEXPLAINED. UNDER SECTION 68 OF THE ACT, IF THE EXPLANATION OFFERED B Y THE ASSESSEE IS NOTSATISFACTORY, THEN THE AMOUNT MAY BE CHARGED TO INCOME-TAX. THERE FORE, IF THE ASSESSEEEXPLAINS THAT THE AMOUNT RECEIVED IS SHARE PREMIUM; BUT THER E IS ABSOLUTELY NOJUSTIFICATION FOR QUANTUM OF PREMIUM, THEN IT CAN SAFELY BE HELD THAT NATURE OF PREMIUMIS NOT PROVED AND THE CASE GETS COVERED BY SECTION 68 OF I NCOME-TAX ACT, 1961. THEREFORE, CONSIDERING THE SHARE CAPITAL CLAIMED BY THE ASSESSEE COMPANY TO HAVE BEEN ISSUED DURING THE F.Y 2011-12,WITH HIGH PREMIU M AMOUNTING TO RS. 5,00,00,000/- (SHARE CAPITAL OF RS.1,00,00,000 + P REMIUM OF RS.4,00,00,000 ) WAS TREATED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY AND THIS WAY THE ASSESSING OFFICER MADE THE ADDITIO N U/S 68 OF THE ACT TO THE TUNE OF RS. 5,00,00,000/-. 7. AGGRIEVED BY THE STAND SO TAKEN BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. TH E LD. CIT(A) HAS EXAMINED THE DOCUMENTS AND EVIDENCES SUBMITTED BY THE ASSESSEE B EFORE THE ASSESSING OFFICER. THE ASSESSEE ALSO SUBMITTED SOME ADDITIONAL DOCUMEN TS AND INFORMATION DURING THE APPELLATE PROCEEDINGS AND THE SAME WAS SENT BY THE LD. CIT(A) TO THE ASSESSING OFFICER FOR HIS EXAMINATION AND ASKED HI M TO SUBMIT THE REMAND REPORT. AFTER GETTING REMAND REPORT FROM THE ASSESSING OFFI CER, THE LD. CIT(A) NOTED THAT THERE WAS NO ADVERSE FINDING OF THE ASSESSING OFFIC ER IN THE REMAND REPORT. THE LD. CIT(A) ALSO PROVIDED AN OPPORTUNITY TO THE ASSESSEE TO REPLY THE OBSERVATIONS IN THE REMAND REPORT. AFTER GETTING REPLY FROM THE ASS ESSEE ON THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER, THE LD. CIT(A) CAME TO THE CONCLUSION THAT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTION HAS BEEN EXPLAINED BY THE ASSESSEE PROPERLY AND THEREFORE, ADDITION MA DE BY THE ASSESSING OFFICER SHOULD BE DELETED, AND ACCORDINGLY, HE DELETED THE ADDITION TO THE TUNE OF RS.5,00,00,000/-. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 8. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. 9. THE LD. DR FOR THE REVENUE, SHRI RABIN CHOUDHUR Y, SUBMITTED BEFORE THE BENCH THAT ASSESSEE HAS FAILED TO PROVE THE IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM VARIOUS ENTITIES. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE ONL Y SUBMITTED THE BOOKS OF ACCOUNTS, DOCUMENTS AND SOME DETAILS BEFORE THE ASS ESSING OFFICER, BUT DID NOT APPEAR IN PERSON, IN RESPONSE TO THE SUMMONS U/S 13 1 OF THE ACT. THE DIRECTOR OF THE ASSESSEE COMPANY SHOULD HAVE APPEARED BEFORE TH E ASSESSING OFFICER TO EXPLAIN THE DOCUMENTS AND DETAILS SUBMITTED BEFORE HIM. THE ASSESSEE, DURING THE ASSESSMENT PROCEEDINGS WAS JUST DUMPING PAPERS AND DOCUMENTS ON THE TABLE OF THE ASSESSING OFFICER AND THIS DOES NOT MEAN THAT T HE ASSESSEE IS MAKING COMPLIANCE. IF THE BOOKS OF ACCOUNTS, DOCUMENTS AND PAPERS ARE NOT EXPLAINED BY THE ASSESSEE, THEN ASSESSING OFFICER WOULD NOT ABLE TO DO COMPLETE EXAMINATION OF THE THREE INGREDIENTS OF THE SECTION 68 NAMELY: IDE NTITY, CREDITWORTHINESS AND GENUINENESS. THEREFORE, ASSESSING OFFICER WAS RIGHT IN MAKING THE DISALLOWANCE U/S 68 OF THE ACT. APART FROM THIS, THE ASSESSEE HA S INTRODUCED HIS UNACCOUNTED MONEY BY WAY OF ISSUING SHARES AT A HIGHER PREMIUM. THE ASSESSEE COMPANY DOES NOT HAVE MUCH TRACK RECORD AND GOODWILL THEREFORE I T IS NOT ABLE TO FETCH SO MUCH PREMIUM, THEREFORE, IT IS NOTHING BUT TO INTRODUCE INTO THE SYSTEM, THE UNACCOUNTED MONEY OF THE ASSESSEE COMPANY. THE LD. DR ALSO POIN TED OUT THAT THE ASSESSEE ISSUED THE SHARES ON HUGE PREMIUM TO THE ALLOTTEES. THE LD. DR THEREFORE SUBMITTED THAT ASSESSING OFFICER AFTER HAVING EXAMINED ALL TH E DETAILS HAS RIGHTLY COME TO CONCLUSION THAT THE ASSESSEE COMPANY IS IN THE INIT IAL YEAR OF OPERATION AND THE INCOME-TAX RETURN OF THE ASSESSEE COMPANY SHOWS VER Y LESS INCOME AND THERE IS NO BUSINESS ACTIVITY THEREFORE, THE ASSESSEE COMPANY R ECEIVED SHARE CAPITAL WITH HUGE PREMIUM JUST TO INTRODUCE THE UNACCOUNTED MONEY IN THE SYSTEM WITHOUT PAYING THE INCOME TAX. THEREFORE, THE FINDINGS OF THE ASSE SSING OFFICER SHOULD BE UPHELD. 10.THE LD. DR FOR THE REVENUE, SHRI RABIN CHOUDHURY , FURTHER SUBMITTED THE BENCH THAT IN THEASSESSEE`S CASE UNDER CONSIDERATIO N, THE DIRECTORS OF THE M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 6 66 6 ASSESSEES COMPANYAND THE SUBSCRIBING COMPANIES DID NOT RESPOND TO AO'S SUMMON ISSUED U/S131 OF THE ACT, AND THE ASSESSEE A LSO FAILED TO PRODUCE THEM BEFORE THE AO. THE ASSESSEE,THEREFORE, FAILED TO PR OVE THE IDENTITY, CAPACITY OF THE SO CALLED SHAREHOLDERS ALONG WITHTHE GENUINENESS OF THESE TRANSACTIONS. SHARE CAPITAL WITH HIGH PREMIUM, BEING THEISSUE, AND CONS IDERING THE PERNICIOUS PRACTICE OF CONVERSION OF UNACCOUNTEDMONEY THROUGH MASQUERAD E OF INVESTMENT IN THE SHARE CAPITAL OF A COMPANY, THE AO WAS WITHIN HISJU RISDICTION IN TREATING SUCH SHARE CAPITAL AND SHARE PREMIUM AS UNACCOUNTED CASH CREDITOF THE ASSESSEE COMPANY AND ADDING THE SAME U/S 68 OF THE ACT.THE F ACT AND CIRCUMSTANCES OF THIS CASE SHOULD BE JUDGED IN THE LIGHT OF PREPONDERANCE OF PROBABILITY AND NORMAL HUMAN BEHAVIOR, IT MAY EASILY BEINFERRED THAT THE E NTIRE TRANSACTIONS LACK SUBSTANCE AND NOTHING BUT IT IS AN ARRANGEDTRANSACT ION. ASSESSEE COMPANY THAT HAS BEEN INCORPORATED WITHOUT ANY PROVEN BUSINESS TRACK RECORD AND EARNING CAPACITY DOES NOT IN ANY WAY JUSTIFY SUCH HEFTYPREMIUM. AND THERE IS NO EXPLANATION AS TO HOW ASSESSEE COULD DEMAND SUCHPREMIUM AND AS TO WHY THE APPLICANTS PAID THE SAME.THERE IS NO COMPLIANCE BY THE ASSESSEE COMPANY AND THE SHARE APPLICANTS WHOARE CLOSELY RELATED OR KNOWN TO EACH OTHER BEING AN INVESTOR IN A PRIVATELY HELDCOMPANY. THE RELEVANT DETAILS AND CLARIFICATION REGARDING ISSUE OF SHARE CAPITAL AND ITS SOURCES CAN'T BE EXPLAINED TO THE SATISFACT ION OF THE AO UNLESS THEDIRECTORS APPEAR IN PERSON. THEREFORE, CONSIDERING THESE FACT S AND CIRCUMSTANCES, THE ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE UP HELD. 11. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT ASSESSEE RECEIVED THE SHARE APPLICATION MONEY INCLUDING SHAR E PREMIUM AMOUNTING TO RS. 5,00,00,000/- FROM THE FIVE COMPANIES. THE DETAILS OF WHICH ARE GIVEN BELOW: SL. NO. NAME ADDRESS SHARE CAPITAL @RS.10 SHARE PREMIUM @RS.40 AMOUNT (RS.) 1 M/S GANPATI HIRISE PVT. LTD. 45/D, S.N. ROY ROAD, GROUND FLOOR, BEHALA, KOLKATA - 700 038. 32,00,000/- 1,28,00,000/- 1,60,00,000/- M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 7 77 7 PAN:AACCG5934A 2 M/S GAZAL TEXTILES &FINVEST PVT. LTD. 40, WESTON STREET, 3 RD FLOOR, KOLKATA-13. PAN:AABCG1486C 6,00,000/- 24,00,000/- 30,00,000/- 3 M/S LANDMARK EXIM PVT. LTD. 47/1A, S.N. ROY ROAD, 3 RD FLOOR, FLAT NO.8, BEHALA, KOL-38. PAN:AABCL1397D 27,00,000/- 1,08,00,000/- 1,35,00,000/- 4 M/S PROCTON COMMERCE PVT. LTD. 15, BOW STREET, 1 ST FLOOR, P.S.-BOWBAZAR, KOL-12. PAN:AABCP6029N 13,00,000/- 52,00,000/- 65,00,000/- 5 M/S SARVOTTAM COMMERCIAL PVT. LTD. 203, SARAT BOSE ROAD, 4 TH FLOOR, TOLLYGUNGE, KOL- 29. PAN:AADCS6468E 22,00,000/- 88,00,000/- 1,10,00,000/- TOTAL 5,00,00,000/- THE LD. COUNSEL SUBMITTED BEFORE THE BENCH THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY, VIDE ITS LETTER DATED 25.09.2014, IN RESPONSE TO NOTICE U/S 142(1) DATED 28.07.2014, SUBMITTED INTER ALIA THE FOLLOWING DETAILS AND DOCUMENTS TO THE LD. ASSESSING OFFICER: 1. COMPLETE POSTAL ADDRESS 2. NATURE OF BUSINESS 3. DETAILS OF BANK ACCOUNTS WITH COPIES OF BANK STA TEMENTS 4. DETAILS OF DIRECTORS 5. INCOME TAX RETURN ACKNOWLEDGEMENTS OF DIRECTORS M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 8 88 8 6. COPY OF LNCOME TAX RETURN OF THE COMPANY WITH IN COME TAX RETURNACKNOWLEDGEMENT. 7 .STATEMENT SHOWING COMPUTATION OF TOTALINCOME. FURTHER, THE ASSESSEE COMPANY, IN RESPONSE TO NOTIC E U/S. 142(1) DATED 22.12.2014, VIDE ITS LETTERDATED 26.12.2014, FURNISHED INTER AL IA THE FOLLOWING DETAILS/DOCUMENTS:- L. NAME, COMPLETE ADDRESS AND PAN OF ALL THE DIRECT ORS. 2. DETAILS OF ALL BANK ACCOUNTS WITH BANK STATEMENT S. 3. DETAILS OF INVESTMENTS MADE DURING THE F.Y. 2011 -12 WITH SOURCE OF FUND. 4. DETAILS OF SHAREHOLDERS AS ON 31.03.2012 WITH NA ME AND ADDRESS. COPY OFFORM 5, FOR INCREASE IN AUTHORIZED CAPITAL AND FORM-2 FOR ALLOTMENT OFSHARES ALONG WITH LIST OF ALLOTTEES. 12. IN ORDER TO VERIFY THE GENUINENESS OF THE TRAN SACTION, THE LD AO ISSUED NOTICE U/S. 131 OF THE ACT, TOFOUR SHARE APPLICANT COMPANI ES OUT OF FIVE, NAMELY M/S. GANPATI HIRISE PVT. LTD, M/S. GAZAL TEXTILE & FINAN CE PVT. LTD, M/S. LANDMARK EXIM PVT. LTD AND M/S. SARVOTTAM COMMERCIAL PVT. LT D. IN RESPONSE TO THE SAID NOTICE ALL THE FOUR SHARE APPLICANTS FILEDITS REPLY ALONG WITH REQUISITIONED DETAILS AND DOCUMENTS THEREBY MAKING PART COMPLIANCE TO NOT ICE U/S. 131 OF THE ACT. REGARDINGPROCTON COMMERCE PVT. LTD, SINCE NO NOTICE U/S. 131 WAS SERVED ON THE SAID COMPANY,THE ASSESSEE COMPANY OBTAINED THE RELE VANT DOCUMENTS FROM THE COMPANY AND VIDE ITS LETTER, FILED ON 24.03.2015, A ND FURNISHED ALL THE REQUISITIONED DETAILS AND DOCUMENTS. THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT IT WAS THE OBSERVATION OF LD AO THAT THE DIREC TORS OF THE ASSESSEE COMPANY AS WELL AS INVESTOR COMPANIES DID NOT APPEAR IN RESPEC T OF SUMMONS U/S 131 OF THE ACT AND HENCE GENUINENESS OF THE TRANSACTION OF THE SUBSCRIBER COMPANIES WAS NOT PROVED FROM THEIR END. THE LD. COUNSEL FOR THE ASSE SSEE POINTED OUT THAT DURING COURSE OF ASSESSMENT PROCEEDINGS, THE NOTICE U/S 13 1 OF THE ACT WAS ISSUED TO THE SUBSCRIBERS OF THE SHARE CAPITAL TO WHICH ALL OF TH EM MADE PART COMPLIANCE BY M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 9 99 9 SUBMITTING ALL THE DETAILS ASKED FOR IN THE SAID NO TICE AND WHICH THE ASSESSING OFFICER HIMSELF HAS MENTIONED IN HIS ASSESSMENT ORD ER. IN ADDITION TO THIS, THE DIRECTORS OF THE SUBSCRIBING COMPANIES APPEARED BEF ORE THE ASSESSING OFFICER, WHO REFUSED TO RECORD THEIR PRESENCE DUE TO HIS PRE OCCUPANCY WITH THE TIME BARRING CASES. IN SPITE OF THIS, THESE INVESTOR COM PANIES FILED DOCUMENTS, BOOKS OF ACCOUNTS AND DETAILS AS REQUIRED BY THE AS SESSING OFFICER. BUT THE LD. AO WITHOUT TAKING INTO COGNIZANCE THE D ETAILS AND DOCUMENTS SUBMITTED,PASSED THE ASSESSMENT ORDER MAKING THE AD DITION OFTHE ENTIRE AMOUNT TO THE INCOME OF THE ASSESSEE, WHICH IS UNJUSTIFIED.FU RTHER ON THE OBSERVATION MADE BY THE LD. AO THAT THE SHARE APPLICATION MONEY RECE IVEDDURING THE FINANCIAL YEAR HAVE BEEN SHOWN AS AGAIN INVESTED IN DIFFERENT PRIV ATE LIMITED COMPANIES.IN THIS REGARD, IT IS SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING AND INVESTING INSHARES AND SECURITIES. THEREFORE, FOR THE PURPOSE OFITS BUSINESS, THE ASSESSEE HAD INVESTEDIN SHARES AND SECURITIES SO THAT ITS BUSINE SS ACTIVITIES DO NOT GET HAMPERED. FOR AN INVESTMENT COMPANY, THE SUBSTANTIAL PORTION OF ITS ASSETS, MOSTLY COMPRISES OF THE INVESTMENT MADE IN SHARES AND SECURITIES. IN THIS REGARD, IT IS ALSO SUBMITTED THAT OUT OF THESHARE APPLICATION MONEY RECEIVED TOT ALING RS. 5,00,00,000/-, DURING THE FINANCIAL YEAR, THE ASSESSEE COMPANY PURCHASED 10,76,586 (NUMBER OF SHARES) OF M/S. GRAPHITECH INDIA LTDAT RS. 4,95,22,956/-. T HUS, FROM THE ABOVE FACTS IT IS CLEAR THAT THE OBSERVATION MADE BYTHE LD. AO IS BAS ELESS. 13. THE COUNSEL ALSO SUBMITTED THAT THE AO WAS WRO NG IN SAYING THAT THE COMPANY HAD NO ASSET BASE, EVEN WHEN THE ASSESSEE C OMPANY HAS THE FOLLOWING ASSETS:- 1. LAND AT 137A, BELIAGHATA ROAD, KOLKATA, PURCHASE D AT RS.59,12,900/-IN THEFINANCIAL YEAR 2006 -07. (CURRENT MARKET VALUE O F THE LAND IS SIGNIFICANTLY HIGHERTHAN ITS BOOK VALUE) 2. OWNERSHIP OFFICE PREMISES AT ROOM NO - 310, 3 RD FLOOR, MARTIN BURN HOUSE, 1,R.N. MUKHERJEE ROAD, KOLKATA - 700001, PURCHASED AT RS.7,24,347/- IN M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 THEFINANCIAL YEAR 2010-11. (CURRENT MARKET VALUE OF THE OFFICE PREMISE IS SIGNIFICANTLYHIGHER THAN ITS BOOK VALUE). BY SUBMITTING THESE DETAILS AND DOCUMENTS, THE ASSE SSEE HAS PROVED THREE INGREDIENTS OF SECTION 68 OF THE ACT, NAMELY: IDENT ITY, CREDITWORTHINESS AND GENUINENESS ANDHENCE, THERE SHOULD NOT BE ANY ADDIT ION IN THE HAND OF THE ASSESSEE AND LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MAD E BY THE ASSESSING OFFICER, THEREFORE, ORDER OF THE LD. CIT(A) SHOULD BE UPHELD . 14. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE NOTE THAT THE LD ASSESSING OFFICER DISALLOWED THE ENTIRE SHARE APPLICATION MONEY RAISED FROM THE SHARE APPLICANTS DURING THE YEAR UNDER CONSIDERATION ON THE GROUND THAT DIRECTORS AN D SHAREHOLDER COMPANIES FAILED TO APPEAR BEFORE HIM. WE NOTE THAT DURING THE ASSES SMENT YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY RECEIVED THE SH ARE APPLICATION MONEY INCLUDING SHARE PREMIUM AMOUNTING TO RS. 5,00,00,00 0/- FROM THE FIVE COMPANIES, THE DETAILS OF WHICH ARE GIVEN BELOW: SL. NO. NAME ADDRESS SHARE CAPITAL @RS.10 SHARE PREMIUM @RS.40 AMOUNT (RS.) 1 M/S GANPATI HIRISE PVT. LTD. 45/D, S.N. ROY ROAD, GROUND FLOOR, BEHALA, KOLKATA - 700 038. PAN:AACCG5934A 32,00,000/- 1,28,00,000/- 1,60,00,000/- 2 M/S GAZAL TEXTILES &FINVEST PVT. LTD. 40, WESTON STREET, 3 RD FLOOR, KOLKATA-13. PAN:AABCG1486C 6,00,000/- 24,00,000/- 30,00,000/- 3 M/S LANDMARK EXIM PVT. LTD. 47/1A, S.N. ROY ROAD, 3 RD FLOOR, FLAT NO.8, BEHALA, KOL-38. PAN:AABCL1397D 27,00,000/- 1,08,00,000/- 1,35,00,000/- M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 4 M/S PROCTON COMMERCE PVT. LTD. 15, BOW STREET, 1 ST FLOOR, P.S.-BOWBAZAR, KOL-12. PAN:AABCP6029N 13,00,000/- 52,00,000/- 65,00,000/- 5 M/S SARVOTTAM COMMERCIAL PVT. LTD. 203, SARAT BOSE ROAD, 4 TH FLOOR, TOLLYGUNGE, KOL- 29. PAN:AADCS6468E 22,00,000/- 88,00,000/- 1,10,00,000/- TOTAL 5,00,00,000/- FROM THE PAPER BOOK SUBMITTED BY THE LD COUNSEL, WH ERE WE NOTE THAT THE AFORESAID SHAREHOLDERS HAD SUBMITTED THE FOLLOWING RELEVANT D ETAILS AS CALLED FOR AND HAD CONFIRMED THE TRANSACTION WITH THE ASSESSEE COMPANY . THE EVIDENCE WHICH WERE FILED BEFORE THE AO, INCLUDED THE FOLLOWING DETAILS . A) COPY OF FORM - L8 FILED WITH ROC AS ADDRESS PROO F AND COPY OF PAN CARDFOR IDENTITY PROOF. B) COPY OF PAN CARD OF THE DIRECTORS. C) COPY OF SHAREHOLDERS LIST FOR THE FINANCIAL YEAR 2011-12. D) COPY OF ANNUAL RETURN FOR THE FY 2009-10, 2010-1 1 AND 2011-12. E) COPY OF I.T. RETURN ALONG WITH AUDITED ACCOUNTS FOR THE F.Y 2009-10 ONWARDS. F) COPY OF BANK STATEMENT DULY SHOWING THE TRANSACT ION. G) DETAILS OF DIRECTORS H) LIST OF SHAREHOLDERS FOR THE FINANCIAL YEAR 201 1-12 I) PROFIT & LOSS ACCOUNT AND BALANCE SHEET FOR THE F.Y. 2009-10 AND 2010-11. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 12 22 2 15. TAKING NOTE OF THE AFORESAID DOCUMENTS THE LD. CIT(A) WAS OF THE OPINION THAT ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSCRIBERS AND DELETED TH E ADDITION MADE U/S. 68 OF THE ACT. BEFORE WE ADJUDICATE AS TO WHETHER THE LD. CI T(A)S ACTION IS RIGHT OR ERRONEOUS, LET US LOOK AT SECTION 68 OF THE ACT AND THE JUDICIAL PRECEDENTS ON THE ISSUE AT HAND. 16. SECTION 68 UNDER WHICH THE ADDITION HAS BEEN MA DE BY THE ASSESSING OFFICER READS AS UNDER: '68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATI ON ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OP INION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ' THE PHRASEOLOGY OF SECTION 68 IS CLEAR. THE LEGISLA TURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAI NED CASH CREDIT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IN THIS CASE THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS S HALL BECHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. T HE SUPREME COURT WHILE INTERPRETING SIMILAR PHRASEOLOGY USED IN SECTION 69 HAS HELD THAT IN CREATING THE LEGAL FICTION THE PHRASEOLOGY EMPLOYS THE WORD 'MAY ' AND NOT 'SHALL'. THUS, THE UN-SATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS THE INC OME OF THE ASSESSEE AS HELD BY THE SUPREME COURT IN THE CASE OF CIT V. SMT. P. K. NOORJAHAN [1999] 237 ITR 570. 17.THE MAIN PLANK ON WHICH THE AO MADE THE ADDITION WAS BECAUSE THE DIRECTORS OF THE SHARE SUBSCRIBERS DID NOT TURN UP BEFORE HIM . IN SUCH A CASE THE HON'BLE APEX COURT IN THE CASE OF ORISSA CORPN. (P) LTD. 15 9 ITR 78 AND THE HON'BLE GUJARAT HIGH COURT, IN THE CASE OF DY. CIT V. ROHIN I BUILDERS [2002] 256 ITR 360 [2003] 127 TAXMAN 523 , HAS HELD THAT ONUS OF THE A SSESSEE (IN WHOSE BOOKS OF ACCOUNT CREDIT APPEARS) STANDS FULLY DISCHARGED IF THE IDENTITY OF THE CREDITOR IS ESTABLISHED AND ACTUAL RECEIPT OF MONEY FROM SUCH C REDITOR IS PROVED. IN CASE, THE M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 13 33 3 ASSESSING OFFICER IS DISSATISFIED ABOUT THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNTS OF THE CREDITORS, THE PROPER COURSE WOULD BE TO ASSESS SUCH CREDIT IN THE HANDS OF THE CREDITOR (AFTER MAKING DUE ENQUIRIES F ROM SUCH CREDITOR). IN ARRIVING AT THIS CONCLUSION, THE HON'BLE COURT HAS FURTHER STRE SSED THE PRESENCE OF WORD 'MAY' IN SECTION 68. RELEVANT OBSERVATIONS AT PAGES 369 A ND 370 OF THIS REPORT ARE REPRODUCED HEREUNDER:- 'MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDI TORS COULD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE ASSESSING OFFICER, CANNOT BE A GROUND TO TREAT THE LOANS TAKEN BY THE ASSESSEE FROM THOSE CREDITORS AS NON-GENUINE IN VIEW OF THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE CA SE OF ORISSA CORPORATION [1986] 159 ITR 78. IN THE SAID DECISION THE SUPREME COURT HAS OBSERVED THAT WHEN THE ASSESSEE FURNISHES NAMES AND ADDRESSES OF THE A LLEGED CREDITORS AND THE GIR NUMBERS, THE BURDEN SHIFTS TO THE DEPARTMENT TO EST ABLISH THE REVENUE'S CASE AND IN ORDER TO SUSTAIN THE ADDITION THE REVENUE HAS TO PURSUE THE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON -COMPLIANCE OF SUMMONS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE SUFFICIENT TO DRAW AND ADVERSE INFERENCE AGAINST TH E ASSESSEE. IN THE CASE OF SIX CREDITORS WHO APPEARED BEFORE THE ASSESSING OFFICER AND WHOSE STATEMENTS WERE RECORDED BY THE ASSESSING OFFICER, THEY HAVE ADMITT ED HAVING ADVANCED LOANS TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES AND IN CASE T HE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CASH AMOUNT DEPOSITED BY THOSE C REDITORS IN THEIR BANK ACCOUNTS, THE PROPER COURSE WOULD HAVE BEEN TO MAKE ASSESSMEN TS IN THE CASES OF THOSE CREDITORS BY TREATING THE CASH DEPOSITS IN THEIR BA NK ACCOUNTS AS UNEXPLAINED INVESTMENTS OF THOSE CREDITORS UNDER SECTION 69. 18.IN THE CASE OF NEMI CHAND KOTHARI 136 TAXMAN 213 , THE HON'BLE GUAHATI HIGH COURT HASTHROWN LIGHT ON ANOTHER ASPECT TOUCHING TH E ISSUE OF ONUS ON ASSESSEE UNDER SECTION 68, BY HOLDING THAT THE SAME SHOULD B E DECIDED BY TAKING INTO CONSIDERATION THE PROVISION OF SECTION 106 OF THE E VIDENCE ACT WHICH SAYS THAT A PERSON CAN BE REQUIRED TO PROVE ONLY SUCH FACTS WHI CH ARE IN HIS KNOWLEDGE. THE HON'BLE COURT IN THE SAID CASE HELD THAT, ONCE IT I S FOUND THAT AN ASSESSEE HAS ACTUALLY TAKEN MONEY FROM DEPOSITOR/LENDER WHO HAS BEEN FULLY IDENTIFIED, THE ASSESSEE/BORROWER CANNOT BE CALLED UPON TO EXPLAIN, MUCH LESS PROVE THE AFFAIRS OF SUCH THIRD PARTY, WHICH HE IS NOT EVEN SUPPOSED TO KNOW OR ABOUT WHICH HE CANNOT BE HELD TO BE ACCREDITED WITH ANY KNOWLEDGE. IN THI S VIEW, THE HON'BLE COURT HAS LAID DOWN THAT SECTION 68 OF INCOME-TAX ACT, SHOULD BE READ ALONG WITH SECTION 106 OF EVIDENCE ACT. THE RELEVANT OBSERVATIONS AT P AGE 260 TO 262, 264 AND 265 OF THE REPORT ARE REPRODUCED HEREIN BELOW:- M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 14 44 4 'WHILE INTERPRETING THE MEANING AND SCOPE OF SECTIO N 68, ONE HAS TO BEAR IN MIND THAT NORMALLY, INTERPRETATION OF A STATUTE SHALL BE GENERAL, IN NATURE, SUBJECT ONLY TO SUCH EXCEPTIONS AS MAY BE L OGICALLY PERMITTED BY THE STATUTE ITSELF OR BY SOME OTHER LAW CONNECTED T HEREWITH OR RELEVANT THERETO. KEEPING IN VIEW THESE FUNDAMENTALS OF INTE RPRETATION OF STATUTES, WHEN WE READ CAREFULLY THE PROVISIONS OF SECTION 68 , WE NOTICE NOTHING IN SECTION 68 TO SHOW THAT THE SCOPE OF THE INQUIRY UN DER SECTION 68 BY THE REVENUE DEPARTMENT SHALL REMAIN CONFINED TO THE TRA NSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR N OR DOES THE WORDING OF SECTION 68 INDICATE THAT SECTION 68 DOES NOT AUTHOR IZE THE REVENUE DEPARTMENT TO MAKE INQUIRY INTO THE SOURCE(S) OF TH E CREDIT AND/OR SUB- CREDITOR. THE LANGUAGE EMPLOYED BY SECTION 68 CANNO T BE READ TO IMPOSE SUCH LIMITATIONS ON THE POWERS OF THE ASSESSING OFF ICER. THE LOGICAL CONCLUSION, THEREFORE, HAS TO BE, AND WE HOLD THAT AN INQUIRY UNDER SECTION 68 NEED NOT NECESSARILY BE KEPT CONFINED BY THE ASS ESSING OFFICER WITHIN THE TRANSACTIONS, WHICH TOOK PLACE BETWEEN THE ASSE SSEE AND HIS CREDITOR, BUT THAT THE SAME MAY BE EXTENDED TO THE TRANSACTIO NS, WHICH HAVE TAKEN PLACE BETWEEN THE CREDITOR AND HIS SUB-CREDITOR. TH US, WHILE THE ASSESSING OFFICER IS UNDER SECTION 68, FREE TO LOOK INTO THE SOURCE(S) OF THE CREDITOR AND/OR OF THE SUB-CREDITOR, THE BURDEN ON THE ASSES SEE UNDER SECTION 68 IS DEFINITELY LIMITED. THIS LIMIT HAS BEEN IMPOSED BY SECTION 106 OF THE EVIDENCE ACT WHICH READS AS FOLLOWS: 'BURDEN OF PROVING FACT ESPECIALLY WITHIN KNOWLEDGE .-WHEN ANY FACT IS ESPECIALLY WITHIN THE KNOWLEDGE OF ANY PERSON, THE BURDEN OF PROVING THAT FACT IS UPON HIM. ' ******** WHAT, THUS, TRANSPIRES FROM THE ABOVE DISCUSSION IS THAT WHITE SECTION 106 OF THE EVIDENCE ACT LIMITS THE ONUS OF THE ASSESSEE TO THE EXTENT OF HIS PROVING THE SOURCE FROM WHICH HE HAS RECEIVED THE C ASH CREDIT, SECTION 68 GIVES AMPLE FREEDOM TO THE ASSESSING OFFICER TO MAK E INQUIRY NOT ONLY INTO THE SOURCE(S)OF THE CREDITOR BUT ALSO OF HIS (CREDI TOR'S) SUB-CREDITORS AND PROVE, AS A RESULT, OF SUCH INQUIRY, THAT THE MONEY RECEIVED BY THE ASSESSEE, IN THE FORM OF LOAN FROM THE CREDITOR, THOUGH ROUTE D THROUGH THE SUB- CREDITORS, ACTUALLY BELONGS TO, OR WAS OF, THE ASSE SSEE HIMSELF. IN OTHER WORDS, WHILE SECTION 68 GIVES THE LIBERTY TO THE AS SESSING OFFICER TO ENQUIRE INTO THE SOURCE/SOURCE FROM WHERE THE CREDITOR HAS RECEIVED THE MONEY, SECTION 106 MAKES THE ASSESSEE LIABLE TO DISCLOSE O NLY THE SOURCE(S) FROM WHERE HE HAS HIMSELF RECEIVED THE CREDIT AND IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE SOURC E(S) OF THE SUB-CREDITORS. IF SECTION 106 AND SECTION 68 ARE TO STAND TOGETHER , WHICH THEY MUST, THEN, THE INTERPRETATION OF SECTION 68 ARE TO STAND TOGET HER, WHICH THEY MUST, THEN THE INTERPRETATION OF SECTION 68 HAS TO BE IN SUCH A WAY THAT IT DOES NOT MAKE SECTION 106 REDUNDANT. HENCE, THE HARMONIOUS C ONSTRUCTION OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF T HE INCOME- TAX ACT WILL BE THAT THOUGH APART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSESSEE MUST ESTABLISH THE GENUINENESS OF THE TRAN SACTION AS WELL AS THE CREDITWORTHINESS OF HIS CREDITOR, THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE CRED ITWORTHINESS OF THE CREDITOR MUST REMAIN CONFINED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR. WHAT FOLLOWS , AS A COROLLARY, IS THAT IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE G ENUINENESS OF THE TRANSACTIONS BETWEEN HIS CREDITOR AND SUB-CREDITORS NOR IS IT THE BURDEN OF THE ASSESSEE TO PROVE THAT THE SUB-CREDITOR HAD THE CREDITWORTHINESS TO M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 15 55 5 ADVANCE THE CASH CREDIT TO THE CREDITOR FROM WHOM T HE CASH CREDIT HAS BEEN. EVENTUALLY, RECEIVED BY THE ASSESSEE. IT, THE REFORE, FURTHER LOGICALLY FOLLOWS THAT THE CREDITOR'S CREDITWORTHINESS HAS TO BE JUDGED VIS-A-VIS THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE AS SESSEE AND THE CREDITOR, AND IT IS NOT THE BUSINESS OF THE ASSESSE E TO FIND OUT THE SOURCE OF MONEY OF HIS CREDITOR OR OF THE GENUINENESS OF THE TRANSACTIONS, WHICH TOOK BETWEEN THE CREDITOR AND SUB-CREDITOR AND/OR CREDIT WORTHINESS OF THE SUB- CREDITORS, FOR, THESE ASPECTS MAY NOT BE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. ' ********** ' ... IF A CREDITOR HAS, BY ANY UNDISCLOSED SOURCE, A PARTICULAR AMOUNT OF MONEY IN THE BANK, THERE IS NO LIMITATION UNDER THE LAW ON THE PART OF THE ASSESSEE TO OBTAIN SUCH AMOUNT OF MONEY OR PART THE REOF FROM THE CREDITOR, BY WAY OF CHEQUE IN THE FORM OF LOAN AND IN SUCH A CASE, IF THE CREDITOR FAILS TO SATISFY AS TO HOW HE HAD ACTUALLY RECEIVED THE SAID AMOUNT AND HAPPENED TO KEEP THE SAME IN THE BANK, THE SAID AMO UNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE. IN OTHER WORDS, THE GENUINENESS AS WELL AS THE CREDITWORTHINESS OF A CR EDITOR HAVE TO BE ADJUDGED VIS-A-VIS THE TRANSACTIONS, WHICH HE HAS W ITH THE ASSESSEE. THE REASON WHY WE HAVE FORMED THE OPINION THAT IT IS NO T THE BUSINESS OF THE ASSESSEE TO FIND OUT THE ACTUAL SOURCE OR SOURCES F ROM WHERE THE CREDITOR HAS ACCUMULATED THE AMOUNT, WHICH HE ADVANCES, AS L OAN, TO THE ASSESSEE IS THAT SO FAR AS AN ASSESSEE IS CONCERNED, HE HAS TO PROVE THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE CREDITOR VIS-A-VIS THE TRANSACTIONS WHICH HAD TAKEN PLACE BETWEEN THE ASSE SSEE AND THE CREDITOR AND NOT BETWEEN THE CREDITOR AND THE SUB-CREDITORS, FOR, IT IS NOT EVEN REQUIRED UNDER THE LAW FOR THE ASSESSEE TO TRY TO F IND OUT AS TO WHAT SOURCES FROM WHERE THE CREDITOR HAD RECEIVED THE AMOUNT, HI S SPECIAL KNOWLEDGE UNDER SECTION 106 OF THE EVIDENCE ACT MAY VERY WELL REMAIN CONFINED ONLY TO THE TRANSACTIONS, WHICH HE HAD' WITH THE CREDITO R AND HE MAY NOT KNOW WHAT TRANSACTION(S) HAD TAKEN PLACE BETWEEN HIS CRE DITOR AND THE SUB- CREDITOR ' ********** 'IN OTHER WORDS, THOUGH UNDER SECTION 68 AN ASSESSI NG OFFICER IS FREE TO SHOW, WITH THE HELP OF THE INQUIRY CONDUCTED BY HIM INTO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE CREDITOR AND THE SUB-CREDITOR, THAT THE TRANSACTION BETWEEN THE TWO WERE NOT GENUINE AND TH AT THE SUB-CREDITOR HAD NO CREDITWORTHINESS, IT WILL NOT NECESSARILY ME AN THAT THE LOAN ADVANCED BY THE SUB-CREDITOR TO THE CREDITOR WAS IN COME OF THE ASSESSEE FROM UNDISCLOSED SOURCE UNLESS THERE IS EVIDENCE, D IRECT OR CIRCUMSTANTIAL, TO SHOW THAT THE AMOUNT WHICH HAS BEEN ADVANCED BY THE SUB-CREDITOR TO THE CREDITOR, HAD ACTUALLY BEEN RECEIVED BY THE SUB -CREDITOR FROM THE ASSESSEE .' ********** 'KEEPING IN VIEW THE ABOVE POSITION OF LAW, WHEN WE TURN TO THE FACTUAL MATRIX OF THE PRESENT CASE, WE FIND THAT SO FAR AS THE APPELLANT IS CONCERNED, HE HAS ESTABLISHED THE IDENTITY OF THE C REDITORS, NAMELY, NEMICHANDNAHATA AND SONS (HUF) AND PAWAN KUMAR AGAR WALLA. THE M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 16 66 6 APPELLANT HAD ALSO SHOWN, IN ACCORDANCE WITH THE BU RDEN, WHICH RESTED ON HIM UNDER SECTION 106 OF THE EVIDENCE ACT, THAT THE SAID AMOUNTS HAD BEEN RECEIVED BY HIM BY WAY OF CHEQUES FROM THE CREDITOR S AFOREMENTIONED. IN FACT THE FACT THAT THE ASSESSEE HAD RECEIVED THE SA ID AMOUNTS BY WAY OF CHEQUES WAS NOT IN DISPUTE. ONCE THE ASSESSEE HAD E STABLISHED THAT HE HAD RECEIVED THE SAID AMOUNTS FROM THE CREDITORS AFOREM ENTIONED BY WAY OF CHEQUES, THE ASSESSEE MUST BE TAKEN TO HAVE PROVED THAT THE CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE LOANS. THEREAFT ER THE BURDEN HAD SHIFTED TO THE ASSESSING OFFICER TO PROVE THE CONTR ARY. ON MERE FAILURE ON THE PART OF THE CREDITORS TO SHOW THAT THEIR SUB-CR EDITORS HAD CREDITWORTHINESS TO ADVANCE THE SAID LOAN AMOUNTS T O THE ASSESSEE, SUCH FAILURE, AS A COROLLARY, COULD NOT HAVE BEEN AND OU GHT NOT TO HAVE BEEN, UNDER THE LAW, TREATED AS THE INCOME FROM THE UNDIS CLOSED SOURCES OF THE ASSESSEE HIMSELF, WHEN THERE WAS NEITHER DIRECT NOR CIRCUMSTANTIAL EVIDENCE ON RECORD THAT THE SAID LOAN AMOUNTS ACTUA LLY BELONGED TO, OR WERE OWNED BY, THE ASSESSEE. VIEWED FROM THIS ANGLE , WE HAVE NO HESITATION IN HOLDING THAT IN THE CASE AT HAND, THE ASSESSING OFFICER HAD FAILED TO SHOW THAT THE AMOUNTS, WHICH HAD COME TO THE HANDS OF THE CREDITORS FROM THE HANDS OF THE SUB-CREDITORS, HAD ACTUALLY BEEN RECEIVED BY THE SUB-CREDITORS FROM THE ASSESSEE. IN THE ABSE NCE OF ANY SUCH EVIDENCE ON RECORD, THE ASSESSING OFFICER COULD NOT HAVE TRE ATED THE SAID AMOUNTS AS INCOME DERIVED BY THE APPELLANT FROM UNDISCLOSED SOURCES. THE LEARNED TRIBUNAL SERIOUSLY FELL INTO ERROR IN TREATING THE SAID AMOUNTS AS INCOME DERIVED BY THE APPELLANT FROM UNDISCLOSED SOURCES M ERELY ON THE FAILURE OF THE SUB-CREDITORS TO PROVE THEIR CREDITWORTHINESS. 19. FURTHER, IN THE CASE OF CITV. S. KAMALJEET SING H [2005] 147 TAXMAN 18(ALL.) THEIR LORDSHIPS, ON THE ISSUE OF DISCHARGE OF ASSESSEE'S ONUS IN RELATION TO A CASH CREDIT APPEARING IN HIS BOOKS OF ACCOUNT, HAS OBSERVED AND HELD AS UNDER:- '4. THE TRIBUNAL HAS RECORDED A FINDING THAT THE AS SESSEE HAS DISCHARGED THE ONUS WHICH WAS ON HIM TO EXPLAIN THE NATURE AND SOURCE O F CASH CREDIT IN QUESTION. THE ASSESSEE DISCHARGED THE ONUS BY PLACING (I) CONFIRM ATION LETTERS OF THE CASH CREDITORS; (II) THEIR AFFIDAVITS; (III) THEIR FULL ADDRESSES AND GIR NUMBERS AND PERMANENT ACCOUNT NUMBERS. IT HAS FOUND THAT THE AS SESSEE'S BURDEN STOOD DISCHARGED AND SO, NO ADDITION TO HIS TOTAL INCOME ON ACCOUNT OF CASH CREDIT WAS CALLED FOR. IN VIEW OF THIS FINDING, WE FIND THAT T HE TRIBUNAL WAS RIGHT IN REVERSING THE ORDER OF THE AA C, SETTING ASIDE THE ASSESSMENT ORDER. 20. WEALSO TAKE NOTE OF THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF S.K. BOTHRA& SONS, HUF V. INCOME-TAX OFFICE R, WARD- 46(3), KOLKATA 347 ITR 347 WHEREIN THE COURT HELD AS FOLLOWS: 15. IT IS NOW A SETTLED LAW THAT WHILE CONSIDERING THE QUESTION WHETHER THE ALLEGED LOAN TAKEN BY THE ASSESSEE WAS A GENUINE TRANSACTIO N, THE INITIAL ONUS IS ALWAYS UPON THE ASSESSEE AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY THE APPELLANT IS NOT SATISFACTORY, THE ASSESSING OFFICE R CAN DISBELIEVE THE ALLEGED TRANSACTION OF LOAN. BUT THE LAW IS EQUALLY SETTLED THAT IF THE INITIAL BURDEN IS DISCHARGED BY THE ASSESSEE BY PRODUCING SUFFICIENT MATERIALS IN SUPPORT OF THE LOAN M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 17 77 7 TRANSACTION, THE ONUS SHIFTS UPON THE ASSESSING OFF ICER AND AFTER VERIFICATION, HE CAN CALL FOR FURTHER EXPLANATION FROM THE ASSESSEE AND IN THE PROCESS, THE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO ASSESSEE. 16. IN THE CASE BEFORE US, THE APPELLANT BY PRODUCI NG THE LOAN-CONFIRMATION- CERTIFICATES SIGNED BY THE CREDITORS, DISCLOSING TH EIR PERMANENT ACCOUNT NUMBERS AND ADDRESS AND FURTHER INDICATING THAT THE LOAN WA S TAKEN BY ACCOUNT PAYEE CHEQUES, NO DOUBT, PRIMA FACIE, DISCHARGED THE INIT IAL BURDEN AND THOSE MATERIALS DISCLOSED BY THE ASSESSEE PROMPTED THE ASSESSING OF FICER TO ENQUIRE THROUGH THE INSPECTOR TO VERIFY THE STATEMENTS. 21. IN A CASE WHERE THE ISSUE WAS WHETHER THE ASSE SSEE AVAILED CASH CREDIT AS AGAINST FUTURE SALE OF PRODUCT, THE AO ISSUED SUMMO NS TO THE CREDITORS WHO DID NOT TURN UP BEFORE HIM, SO AO DISBELIEVED THE EXISTENCE OF CREDITORS AND SADDLED THE ADDITION, WHICH WAS OVERTURNED BY LD. CIT(A). HOWE VER, THE TRIBUNAL REVERSED THE DECISION OF THE LD. CIT(A) AND UPHELD THE AOS DECISION, WHICH ACTION OF TRIBUNAL WAS CHALLENGED BY THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF CRYSTAL NETWORKS (P.) LTD. V. COMMISSIONER OF INCOME-TAX 35 3 ITR 171 WHEREIN THE TRIBUNALS DECISION WAS OVERTURNED AND DECISION OF LD. CIT(A) UPHELD AND THE HONBLE HIGH COURT HAS HELD THAT WHEN THE BASIC EV IDENCES ARE ON RECORD THE MERE FAILURE OF THE CREDITOR TO APPEAR CANNOT BE BASIS T O MAKE ADDITION. THE COURT HELD AS FOLLOWS: 8. ASSAILING THE SAID JUDGMENT OF THE LEARNED TRIBU NAL LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT INCOME-TAX OFFICER DID NOT C ONSIDER THE MATERIAL EVIDENCE SHOWING THE CREDITWORTHINESS AND ALSO OTHER DOCUMEN TS, VIZ., CONFIRMATORY STATEMENTS OF THE PERSONS, OF HAVING ADVANCED CASH AMOUNT AS AGAINST THE SUPPLY OF BIDIS. THESE EVIDENCE WERE DULY CONSIDERED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS). THEREFORE, THE FAILURE OF THE PERSON TO TURN UP PURSUANT TO THE SUMMONS ISSUED TO ANY WITNESS IS IMMATERIAL WHEN THE MATERI AL DOCUMENTS MADE AVAILABLE, SHOULD HAVE BEEN ACCEPTED AND INDEED IN SUBSEQUENT YEAR THE SAME EXPLANATION WAS ACCEPTED BY THE INCOME-TAX OFFICER. HE FURTHER CONTENDED THAT WHEN THE TRIBUNAL HAS RELIED ON THE ENTIRE JUDGMENT OF THE C OMMISSIONER OF INCOME-TAX (APPEALS), THEREFORE, IT WAS NOT PROPER TO TAKE UP SOME PORTION OF THE JUDGMENT OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND TO IGN ORE THE OTHER PORTION OF THE SAME. THE JUDICIAL PROPRIETY AND FAIRNESS DEMANDS T HAT THE ENTIRE JUDGMENT BOTH FAVOURABLE AND UNFAVOURABLE SHOULD HAVE BEEN CONSID ERED. BY NOT DOING SO THE TRIBUNAL COMMITTED GRAVE ERROR IN LAW IN UPSETTING THE JUDGMENT IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). 9. IN THIS CONNECTION HE HAS DRAWN OUR ATTENTION TO A DECISION OF THE SUPREME COURT IN THE CASE OF UDHAVDASKEWALRAM V. CIT [1967) 66 IT R 462. IN THIS JUDGMENT IT IS NOTICED THAT THE SUPREME COURT AS PROPOSITION OF LA W HELD THAT THE TRIBUNAL MUST IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE, ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL THE CONTENTIONS RAISED BY THE ASSESS EE AND THE COMMISSIONER IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 18 88 8 10. WE FIND CONSIDERABLE FORCE OF THE SUBMISSIONS O F 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 FA ILED TO PROVE THE EXISTENCE OF THE CREDITORS OR FOR THAT MATTER THE CREDITWORTHINESS. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS TAKEN THE TROUBLE OF EXAMINING OF ALL OTHER MATERIALS AND DOC UMENTS, VIZ., CONFIRMATORY STATEMENTS, INVOICES, CHALLANS AND VOUCHERS SHOWING SUPPLY OF BIDIS AS AGAINST THE ADVANCE. THEREFORE, THE ATTENDANCE OF THE WITNESSES PURSUANT TO THE SUMMONS ISSUED, IN OUR VIEW, IS NOT IMPORTANT. THE IMPORTAN T IS TO PROVE AS TO WHETHER THE SAID CASH CREDIT WAS RECEIVED AS AGAINST THE FUTURE SALE OF THE PRODUCT OF THE ASSESSEE OR NOT. WHEN IT WAS FOUND BY THE COMMISSIO NER OF INCOME-TAX (APPEALS) ON FACTS HAVING EXAMINED THE DOCUMENTS THAT THE ADV ANCE GIVEN BY THE CREDITORS HAVE BEEN ESTABLISHED THE TRIBUNAL SHOULD NOT HAVE IGNORED THIS -FACT FINDING. INDEED THE TRIBUNAL DID NOT REALLY TOUCH THE AFORES AID FACT FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AS RIGHTLY POI NTED OUT BY THE LEARNED COUNSEL. THE SUPREME COURT HAS ALREADY STATED AS TO WHAT SHOULD BE THE DUTY OF THE LEARNED TRIBUNAL TO DECIDE IN THIS SITUATION. IN TH E SAID JUDGMENT NOTED BY US AT PAGE 464, THE SUPREME COURT HAS OBSERVED AS FOLLOWS : 'THE INCOME-TAX APPELLATE TRIBUNAL PERFORMS A JUDIC IAL FUNCTION UNDER THE INDIAN INCOME-TAX ACT; IT IS INVESTED WITH AUTHORIT Y TO DETERMINE FINALLY ALL QUESTIONS OF FACT. THE TRIBUNAL MUST, IN DECIDING A N APPEAL, CONSIDER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FIND ING ON ALL THE CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. ' 11. THE TRIBUNAL MUST, IN DECIDING AN APPEAL, CONSI DER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL CONTEN TIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. IT IS ALSO RULED IN THE SAID JUDGMENT AT PAGE 465 THAT IF THE TRIBUN AL DOES NOT DISCHARGE THE DUTY IN THE MANNER AS ABOVE THEN IT SHALL BE ASSUMED THE JU DGMENT OF THE TRIBUNAL SUFFERS FROM MANIFEST INFIRMITY. 12. TAKING INSPIRATION FROM THE SUPREME COURT OBSER VATIONS WE ARE CONSTRAINED TO HOLD IN THIS MATTER THAT THE TRIBUNAL HAS NOT ADJUD ICATED UPON THE CASE OF THE ASSESSEE IN THE LIGHT OF THE EVIDENCE AS FOUND BY T HE COMMISSIONER OF INCOME-TAX (APPEALS). WE ALSO FOUND NO SINGLE WORD HAS BEEN SP ARED TO UP SET THE FACT FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT TH ERE ARE MATERIALS TO SHOW THE CASH CREDIT WAS RECEIVED FROM VARIOUS PERSONS AND S UPPLY AS AGAINST CASH CREDIT ALSO MADE. 13. HENCE, THE JUDGMENT AND ORDER OF THE TRIBUNAL I S NOT SUSTAINABLE. ACCORDINGLY, THE SAME IS SET ASIDE. WE RESTORE THE JUDGMENT AND ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). THE APPEAL IS ALLOWED. 22. WHEN A QUESTION AS TO THE CREDITWORTHINESS OF A CREDITOR IS TO BE ADJUDICATED AND IF THE CREDITOR IS AN INCOME TAX ASSESSEE, IT I S NOW WELL SETTLED BY THE DECISION OF THE CALCUTTA HIGH COURT THAT THE CREDITWORTHINES S OF THE CREDITOR CANNOT BE DISPUTED BY THE AO OF THE ASSESSEE BUT THE AO OF TH E CREDITOR. IN THIS REGARDS OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX, KOLKA TA-ILL VERSUS DATAWARE M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 1 11 19 99 9 PRIVATE LIMITED ITAT NO. 263 OF 2011 DATE: 21ST SEP TEMBER, 2011 WHEREIN THE COURT HELD AS FOLLOWS: IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSI NG OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME T AX ASSESSEE. AFTER GETTING THE PAN NUMBER AND GETTING THE INFORMATION THAT THE CRE DITOR IS ASSESSED UNDER THE ACT, THE ASSESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINENESS' OF THE TRANSACTION AND WHETH ER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFICER OF THE CREDITOR B UT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NOT ENT ER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMI TTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OF FICER OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENESSOF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN E STABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX (A PPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL-ACCEPTED PRINCIPLE WHICH AR E REQUIRED TO BE FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECO RDED BY BOTH THE AUTHORITIES. 23. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLESUPREME COURT WHILE DISMISSING SLP IN THE CASE OF LOVELY EXPORTS AS HAS BEEN REPORTED AS JUDGMENT DELIVERED BY THE CTR AT 216 CTR 295: 'CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDIS CLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MON EY IS RECEIVED BY THE ASSESSEE- COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME S ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR I NDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WI TH THE IMPUGNED JUDGMENT. 24. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT WHILE RELYING ON THE CASE OF LOVELY EXPORTS, IN THE APPEAL OF COMISSIONER OF INCOME TAX, KOLKATA-IV VS ROSEBERRY MERCANTILE (P) LTD., ITAT NO. 241 OF 2010 DATED 10- 01-2011 HAS HELD: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTERED INT O BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONEY OR ACCO UNTED MONEY AND THE LD. CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ES TABLISHED THE GENUINENESS OF THE TRANSACTION. ' IT APPEARS FROM THE RECORD THAT IN THE ASSESSMENT P ROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATIO N HAD BROUGHT RS. 4,00,000/- AND RS.20,00,000/- TOWARDS SHARE CAPITAL AND SHARE PREMIUM RESPECTIVELY AMOUNTING TO RS.24,00,000/- FROM FOUR SHAREHOLDERS BEING PRIVATE LIMITED M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 20 00 0 COMPANIES. THE ASSESSING OFFICER ON HIS PART CALLED FOR THE DETAILS FROM THE ASSESSEE AND ALSO FROM THE SHARE APPLICANTS AND ANALYZED THE FACTS AND ULTIMATELY OBSERVED CERTAIN ABNORMAL FEATURES, WHICH WERE MENTIONED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT NATURE AND SOURCE OF SUCH MONEY WAS QUESTIONABLE AND EVIDENCE PRODUCED WAS UNSATISFACTO RY. CONSEQUENTLY, THE ASSESSING OFFICER INVOKED THE PROVISIONS UNDER SECT ION 68/69 OF THE INCOME TAX ACT AND MADE ADDITION OF RS.24,00,000/-. ON APPEAL THE LEARNED CIT (A) BY FOLLOWING THE DECI SION OF THE SUPREME COURT IN THE CASE OF CLT. VS. M/S. LOVELY EXPORTS PVT. LTD., REPORTED IN (2008) 216 CTR 195 ALLOWED THE APPEAL BY HOLDING THAT SHARE CAPITAL/PR EMIUM OF RS. 24,00,000/- RECEIVED FROM THE INVESTORS WAS NOT LIABLE TO BE TR EATED UNDER SECTION 68 AS UNEXPLAINED CREDITS AND IT SHOULD NOT BE TAXED IN T HE HANDS OF THE APPELLANT COMPANY. AS INDICATED EARLIER, THE TRIBUNAL BELOW DISMISSED THE APPEAL FILED BY THE REVENUE. AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASE OF CLT. V S. M/S. LOVELY EXPORTS PVT. LTD. [SUPRA], WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FA VOUR OF THE ASSESSEE AND THUS, NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APP EAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND IS DISMISSED. 25. OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX VS M/S. N ISHAN INDO COMMERCE LTD DATED 2 DECEMBER, 2013 IN INCOME TAX APPEALNO.52 OF 2001 WHEREIN THE COURT HELD AS FOLLOWS: THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INC REASE IN SHARE CAPITAL BY RS.52,03,500/- WAS NOTHING BUT THE INTRODUCTION OF THE ASSESSEE'S OWN UNDISCLOSED FUNDS/INCOME INTO THE BOOKS OF ACCOUNTS OF THE ASSE SSEE COMPANY. THE ASSESSING OFFICER ACCORDINGLY TREATED THE INVESTMENT AS UNEXP LAINED CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT AND ADDED THE SAME TO THE INC OME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) BEING THE FIRST APPELLATE AUTHORITY A ND CONTENDED THAT THE ASSESSING OFFICER HAD NO MATERIAL TO SHOW THAT THE SHARE CAPI TAL WAS THE INCOME OF THE ASSESSEE COMPANY AND AS SUCH THE ADDITION MADE BY T HE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT WAS WRONG. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AF TER HEARING THE DEPARTMENT AND THE ASSESSEE COMPANY DELETED THE ADDITION OF RS . 52,03,500/- TO THE INCOME OF THE ASSESSEE COMPANY DURING THE ASSESSMENT YEAR IN QUESTION. THE LEARNED COMMISSIONER OF INCOME TAX APPEALS FOUND THAT THERE WERE AS MANY AS 2155 ALLOTTEES, WHOSE NAMES, ADDRESSES AND RESPECTIVE SH ARES ALLOCATION HAD BEEN DISCLOSED. THE COMMISSIONER OF INCOME TAX APPEALS, FURTHER FOU ND THAT THE ASSESSEE COMPANY RECEIVED THE APPLICATIONS THROUGH BANKERS T O THE ISSUE, WHO HAD BEEN APPOINTED UNDER THE GUIDELINES OF THE STOCK EXCHANG E AND THE ASSESSEE COMPANY HAD BEEN ALLOTTED SHARES ON THE BASIS OF ALLOTMENT APPROVED BY THE STOCK EXCHANGE. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 21 11 1 THE ASSESSEE COMPANY HAD DULY FILED THE RETURN OF A LLOTMENT WITH THE REGISTRAR OF COMPANIES, GIVING COMPLETE PARTICULARS OF THE ALLOT TEES. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT INQUIRES HAD CONFIRMED THE EXISTENCE OF MOST OF THE SHAREHOLDERS AT THE ADDRES SES INTIMATED TO THE ASSESSING OFFICER, BUT THE ASSESSING OFFICER TOOK THE VIEW TH AT THEIR INVESTMENT IN THE ASSESSEE COMPANY WAS NOT GENUINE, ON THE BASIS OF S OME EXTRANEOUS REASONS. THE COMMISSIONER OF INCOME TAX (APPEALS) TOOK NOTE OF T HE OBSERVATION OF THE ASSESSING OFFICER THAT ENQUIRY CONDUCTED BY THE INC OME TAX INSPECTOR HAD REVEALED THAT NINE PERSONS MAKING APPLICATIONS FOR 900 SHARES WERE NOT AVAILABLE AT THE GIVEN ADDRESS AND RIGHTLY CONCLUDED THAT THE TOTAL SHARE CAPITAL ISSUED BY THE ASSESSEE COMPANY COULD NOT BE ADDED AS UNEXPLAINED CASH CREDIT UNDER 'SECTION 68 OF THE INCOME TAX ACT. MOREOVER, IF THE NATURE A ND SOURCE OF INVESTMENT BY ANY SHAREHOLDER, IN SHARES OF THE ASSESSEE COMPANY REMA INED UNEXPLAINED, LIABILITY COULD NOT BE FOISTED ON THE COMPANY. THE CONCERNED SHAREHOLDERS WOULD HAVE TO EXPLAIN THE SOURCE OF THEIR FUND. THE LEARNED COMMISSIONER ON CONSIDERING THE SUBMISS IONS OF THE, RESPECTIVE PARTIES AND CONSIDERING THE MATERIALS, FOUND THAT T HE ASSESSING OFFICER HAD APPLIED THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT ARBITRARILY AND ILLEGALLY AND IN ANY CASE WITHOUT GIVING THE ASSESSEE ADEQUATE OPPOR TUNITY OF REPRESENTATION AND/OR HEARING. LEARNED TRIBUNAL AGREED WITH THE FACTUAL FINDINGS O F THE LEARNED COMMISSIONER AND ACCORDINGLY THE LEARNED TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE AND AFFIRMED THE DECISION OF THE LEARNED COMMISSIONER. MR. DUTTA APPEARING ON BEHALF OF THE PETITIONERS CI TED JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME TAX V S. RUBY TRADERS AND EXPORTERS LIMITED REPORTED IN 236 (2003) ITR 3000 W HERE A DIVISION BENCH OF THIS COURT HELD THAT WHEN SECTION 68 IS RESORTED TO, IT IS INCUMBENT ON THE ASSESSEE COMPANY TO PROVE AND ESTABLISH THE IDENTITY OF THE SUBSCRIBERS, THEIR CREDIT WORTHINESS AND THE GENUINENESS OF THE TRANSACTION. THE AFORESAID JUDGMENT WAS RENDERED IN THE CONTEXT OF THE FACTUAL BACKGROUND OF THE AFORESAID CASE WHERE, DESPITE SEVERAL OPPORTUNI TIES BEING GIVEN TO THE ASSESSEE, NOTHING WAS DISCLOSED ABOUT THE IDENTITY OF THE SHA REHOLDERS. IN THE INSTANT CASE, THE ASSESSEE DISCLOSED THE IDENTITY AND ADDRESS AND PARTICULARS OF SHARE ALLOCATION OF THE SHAREHOLDERS. IT WAS ALSO FOUND ON THE FACTS THAT ALL THE SHAREHOLDERS WERE IN EXISTENCE. ONLY NINE SHAREHOLDERS SUBSCRIBING TO AB OUT 900 SHARES OUT OF 6,12,000 SHARES WERE NOT FOUND AVAILABLE AT THEIR ADDRESSES, AND THAT TOO, IN COURSE OF ASSESSMENT PROCEEDINGS IN THE YEAR 1994, I.E., ALMO ST 3 YEARS AFTER THE ALLOTMENT. BY AN ORDER DATED 2ND MAY, 2001, THIS COURT ADMITTE D THE APPEAL ON THREE QUESTIONS WHICH ESSENTIALLY CENTRE AROUND THE QUEST ION OF WHETHER THE APPELLATE COMMISSIONER ERRED IN LAW IN DELETING THE ADDITION OF RS. 52,03,500/- TO THE INCOME OF THE ASSESSEE AS MADE BY THE ASSESSING OFF ICER. WE ARE OF THE VIEW THAT THERE IS NO QUESTION OF LAW INVOLVED IN THIS APPEAL FAR LESS ANY SUBSTANTIAL QUESTION OF LAW. THE LEARNED TRIBUNAL HAS CONCURRED WITH THE LEARNED COMMISSIONER ON FACTS AND FOUND THAT THERE WERE MATERIALS TO SHOW THAT THE AS SESSEE HAD DISCLOSED THE PARTICULARS OF THE SHAREHOLDERS. THE FACTUAL FINDIN GS CANNOT BE INTERFERED WITH, IN APPEAL. WE ARE OF THE VIEW THAT ONCE THE IDENTITY A ND OTHER RELEVANT PARTICULARS OF SHAREHOLDERS ARE DISCLOSED, IT IS FOR THOSE SHAREHO LDERS TO EXPLAIN THE SOURCE OF M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 22 22 2 THEIR FUNDS AND NOT FOR THE ASSESSEE COMPANY TO SHO W WHEREFROM THESE SHAREHOLDERS OBTAINED FUNDS. 26. FURTHER, OUR ATTENTION WAS DRAWN TO THE DECISI ON OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX VS M/S. LEONARD COMMERCIAL (P) LTD ON 13 JUNE, 2011 IN ITAT NO 114 OF 2011 WHE REIN THE COURT HELD AS FOLLOWS: THE ONLY QUESTION RAISED IN THIS APPEAL IS WHETHER THE COMMISSIONER OF INCOME- TAX (APPEALS) AND THE TRIBUNAL BELOW ERRED IN LAW I N DELETING THE ADDITION OF RS.8,52,000/-, RS. 91,50,000/- AND RS. 13,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL, SHARE APPLICATION MONE Y AND INVESTMENT IN HTCCL RESPECTIVELY. AFTER HEARING MD. NIZAMUDDIN, LEARNED ADVOCATE APPE ARING ON BEHALF OF THE APPELLANT AND AFTER GOING THROUGH THE MATERIALS ON RECORD, WE FIND THAT ALL SUCH APPLICATION MONEY WERE RECEIVED BY THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUES AND THE ASSESSEE ALSO DISCLOSED THE COMPLETE LIST O F SHAREHOLDERS WITH THEIR COMPLETE ADDRESSES AND GIR NUMBERS FOR THE RELEVANT ASSESSMENT YEARS IN WHICH SHARE APPLICATION WAS CONTRIBUTED. IT FURTHER APPEA RS THAT ALL THE PAYMENTS WERE MADE BY THE APPLICANTS BY ACCOUNT PAYEE CHEQUES. IT APPEARS FROM THE ASSESSING OFFICERS ORDER THAT H IS GRIEVANCE WAS THAT THE ASSESSEE WAS NOT WILLING TO PRODUCE THE PARTIES WHO HAD ALLEGEDLY ADVANCED THE FUND. IN OUR OPINION, BOTH THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL BELOW WERE JUSTIFIED IN HOLDING THAT AFTER DISCLOSU RE OF THE FULL PARTICULARS INDICATED ABOVE, THE INITIAL ONUS OF THE ASSESSEE WAS SHIFTED AND IT WAS THE DUTY OF THE ASSESSING OFFICER TO ENQUIRE WHETHER THOSE PARTICUL ARS WERE CORRECT OR NOT AND IF THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PART ICULARS SUPPLIED WERE INSUFFICIENT TO DETECT THE REAL SHARE APPLICANTS, TO ASK FOR FUR THER PARTICULARS. THE ASSESSING OFFICER HAS NOT ADOPTED EITHER OF THE AFORESAID COURSES BUT HAS SIMPLY BLAMED THE ASSESSEE FOR NOT PRODUCING THOSE SHARE APPLICANTS. IN OUR VIEW, IN THE CASE BEFORE US SO LONG THE ASSE SSING OFFICER WAS UNABLE TO ARRIVE AT A FINDING THAT THE PARTICULARS GIVEN BY T HE ASSESSEE WERE FALSE, THERE WAS NO SCOPE OF ADDING THOSE MONEY UNDER SECTION 68 OF THE INCOME- TAX ACT AND THE TRIBUNAL BELOW RIGHTLY HELD THAT THE ONUS WAS VALID LY DISCHARGED. WE, THUS, FIND THAT BOTH THE AUTHORITIES BELOW, ON CONSIDERATION OF THE MATERIALS ON RECORD, RIGHTLY APPLIED THE CORRECT LAW WHICH ARE R EQUIRED TO BE APPLIED IN THE FACTS OF THE PRESENT CASE AND, THUS, WE DO NOT FIND ANY R EASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT BASED ON MATERIALS ON R ECORD. THE APPEAL IS, THUS, DEVOID OF ANY SUBSTANCE AND IS DISMISSED SUMMARILY AS IT DOES NOT INVOLVE ANY SUBSTANTIAL QUESTION OF LAW. 27. IN THE LIGHT OF THE AFORESAID DECISIONS OF THE HONBLE APEX AND JURISDICTION HIGH COURT AND OTHER HIGH COURTS LET US EXAMINE THE PRESENT CASE IN HAND. WE WILL M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 23 33 3 EXAMINE EACH SHARE SUBSCRIBERS TOTALLINGFIVE (5). THE LD. COUNSEL TOOK PAINS TO BRING OUT THE RELEVANT FACTS IN RESPECT OF EACH SHA RE SUBSCRIBERS WHICH WILL THROW LIGHT AS TO THE IDENTITY, CREDITWORTHINESS AND GENU INENESS OF THE SHARE SUBSCRIBERS, WHICH ARE GIVEN BELOW: (1). M/S. GANPATI HIRISE PVT. LTD. VIDE ITS LETTER FILED ON 20.03.2015 SUBMITTED THE FOLLOWING DOCUMENTS:- A) COPY OF FORM - L8 FILED WITH ROC AS ADDRESS PROO F AND COPY OF PAN CARD FOR IDENTITY PROOF. B) COPY OF PAN CARD OF THE DIRECTORS. C) COPY OF SHAREHOLDERS LIST FOR THE FINANCIAL YEAR 2011-12. D) COPY OF ANNUAL RETURN FOR THE FY 2009-10, 2010-1 1 AND 2011-12. E) COPY OF I.T. RETURN ALONG WITH AUDITED ACCOUNTS, BALANCE SHEET, FOR THE F.Y 2009-10 ONWARDS. F) COPY OF BANK STATEMENT DULY SHOWING THE TRANSACT ION. (2). M/S. GAZAL TEXTILE & FINANCE PVT. LTD, VIDE ITS LETTER FILED ON 20.03.2015 SUBMITTED THE FOLLOWING DOCUMENTS: A) COPY OF FORM-18 FILED WITH ROC AS ADDRESS PROOF AND COPY OF PAN CARD FOR IDENTITY PROOF B) COPY OF PAN CARD OF BOTH THE DIRECTORS OF THE CO MPANY C) COPY OF ANNUAL RETURN OF THE COMPANY FROM THE FI NANCIAL YEAR 2009-10 ONWARDS D) DETAILS OF DIRECTORS E) COPY OF SHAREHOLDERS LIST AS ON 31.03.2012 F) COPY OF ITR, BALANCE SHEET AND PROFIT & LOSS ACC OUNT FOR THE A.Y. 2010-11 ONWARDS M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 24 44 4 G) COPY OF BANK STATEMENT FOR THE RELEVANT PERIOD. (3). M/S. LANDMARK EXIM PVT. LTD, VIDE ITS LETTER FILED ON 20.03.2015, SUBMITTED THE FOLLOWING DOCUMENTS:- A) COPY OF FORM INC- 22 (FORM-I8) FILED WITH ROC AS ADDRESS PROOF AND COPY OF PAN CARD FOR IDENTITY PROOF B) COPY OF PAN CARD OF THE DIRECTORS C) COPY OF I.T. RETURN ALONG WITH AUDITED ACCOUNTS, BALANCE SHEET, FOR THE F.Y. 2009-10 ONWARDS D) COPY OF BANK STATEMENT DULY SHOWING THE TRANSACT ION E) LIST OF SHAREHOLDERS LIST FOR THE FINANCIAL YEAR 2011-12 F) COPY OF ANNUAL RETURN FOR THE FY 2009-10, 2010-L 1 AND 2011-12 (4). M/S. SARVOTTAM COMMERCIAL PVT. LTD, VIDE ITS LETTER FILED ON 20.03.2015, SUBMITTED THE FOLLOWING DOCUMENTS:- A) COPY OF FORM-18 FILED WITH ROC AS ADDRESS PROOF AND COPY OF PAN CARD FOR IDENTITY PROOF. B) COPY OF ANNUAL RETURN OF THE COMPANY FROM THE FI NANCIAL YEAR 2009-10 ONWARDS. C) COPY OF LNCOME TAX RETURN FOR THE A.Y. 2010-11 A ND 2011-12 ALONG WITH PROFIT & LOSS ACCOUNT AND BALANCE SHEET FOR THE F.Y. 2009- 10 AND 2010-11. D) DETAILS OF DIRECTORS. E) COPY OF I.T. ACKNOWLEDGEMENT FOR A.Y. 2012-13 AL ONG WITH COPY OF AUDITED ACCOUNTS AND LIST OF CLOSING STOCK FOR THE FINANCIA L YEAR 2011-12. F) COPY OF SHAREHOLDING LIST AND BANK STATEMENT HIG HLIGHTING THE TRANSACTION FOR THE FINANCIAL YEAR 2011-12. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 25 55 5 (5). WITH REGARD TO M/S. PROCTON COMMERCE PVT. LTD. , SINCE NO NOTICE, U/S. 131 WAS SERVED ON THE SAID COMPANY, THE ASSESSEE COMPAN Y OBTAINED THE RELEVANT DOCUMENTS FROM THE COMPANY, VIDE ITS LETTER FILED O N 24.03.2015, AND FURNISHED THE FOLLOWING DETAILS AND DOCUMENTS:- A) COPY OF FORM-18 FILED WITH ROC AS ADDRESS PROOF AND COPY OF PAN CARD FOR IDENTITY PROOF. B) COPY OF PAN CARD OF THE DIRECTORS. C) LIST OF SHAREHOLDERS AS ON 31.03.2012. D) COPY OF I.T. RETURN ALONG WITH AUDITED ACCOUNTS, BALANCE SHEET, FOR THE F.Y. 2009-10 ONWARDS E) COPY OF BANK STATEMENT DULY SHOWING THE TRANSACT ION. F) COPY OF ANNUAL RETURN FOR THE F.Y 2009-10, 2010- 11 AND 2011-12. THE DIRECTOR MR. SIDDHESWAR HALDER VIDE ITS LETTER, SUBMITTED ON 20.03.2015, IN RESPONSE TO NOTICE U/S.131, FURNISHED THE FOLLOWING INFORMATION AND DOCUMENTS:- A) COPY OF PAN CARD FOR IDENTITY PROOF AND COPY OF DRIVING LICENSE AS A PROOF OF ADDRESS. B) COPY OF INCOME TAX RETURN FOR THE A.Y. 2010-11, 2011-12 & 2012-13 C) COPY OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET FOR THE F.Y. 2009-10 ONWARDS. D) COPY OF BANK STATEMENT FOR THE RELEVANT PERIOD. 28. FROM THE DETAILS AS AFORESAID WHICH EMERGES F ROM THE PAPER BOOK FILED BEFORE US AS WELL AS BEFORE THE LOWER AUTHORITIES, IT IS V IVID THAT ALL THE SHARE APPLICANTS ARE (I) INCOME TAX ASSESSEES, (II) THEY ARE FILING THE IR RETURN OF INCOME, (III) THE SHARE APPLICATION FORM AND ALLOTMENT LETTER IS AVAILABLE ON RECORD, (IV) THE SHARE APPLICATION MONEY WAS MADE BY ACCOUNT PAYEE CHEQUES , (V) THE DETAILS OF THE BANK M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 26 66 6 ACCOUNTS BELONGING TO THE SHARE APPLICANTS AND THEI R BANK STATEMENTS, (VI) IN NONE OF THE TRANSACTIONS THE AO FOUND DEPOSIT IN CASH BE FORE ISSUING CHEQUES TO THE ASSESSEE COMPANY, (VII) THE APPLICANTS ARE HAVING S UBSTANTIAL CREDITWORTHINESS WHICH IS REPRESENTED BY A CAPITAL AND RESERVE OF TH E RESPECTIVE COMPANIES. 29. AS NOTED FROM THE JUDICIAL PRECEDENTS CITED ABO VE, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE THEN THERE IS A DUTY CASTED UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF CREDIT FOUND IN HI S BOOKS. IN THE INSTANT CASE, THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL W ITH PREMIUM FROM SHARE APPLICANTS. THE NATURE OF RECEIPT TOWARDS SHARE CAP ITAL IS SEEN FROM THE ENTRIES PASSED IN THE RESPECTIVE BALANCE SHEETS OF THE COMP ANIES AS SHARE CAPITAL AND INVESTMENTS. IN RESPECT OF SOURCE OF CREDIT, THE A SSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIENTS I.E. IDENTITY OF SHARE APPLIC ANTS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF SHARE APPLICANTS. FOR PROVI NG THE IDENTITY OF SHARE APPLICANTS, THE ASSESSEE FURNISHED THE NAME, ADDRES S, PAN OF SHARE APPLICANTS TOGETHER WITH THE COPIES OF BALANCE SHEETS AND INCO ME TAX RETURNS. WITH REGARD TO THE CREDITWORTHINESS OF SHARE APPLICANTS, AS WE NOT ED SUPRA, THESE COMPANIES ARE HAVING CAPITAL IN SEVERAL CRORES OF RUPEES AND THE INVESTMENT MADE IN THE APPELLANT COMPANY IS ONLY A SMALL PART OF THEIR CAPITAL. THES E TRANSACTIONS ARE ALSO DULY REFLECTED IN THE BALANCE SHEETS OF THE SHARE APPLIC ANTS, SO CREDITWORTHINESS IS PROVED. EVEN IF THERE WAS ANY DOUBT IF ANY REGARDIN G THE CREDITWORTHINESS OF THE SHARE APPLICANTS WAS STILL SUBSISTING, THEN AO SHOU LD HAVE MADE ENQUIRIES FROM THE AO OF THE SHARE SUBSCRIBERS AS HELD BY HONBLE JURI SDICTIONAL HIGH COURT IN CIT VS DATAWARE (SUPRA) WHICH HAS NOT BEEN DONE, SO NO ADVERSE VIEW COULD HAVE BEEN DRAWN. THIRD INGREDIENT IS GENUINENESS OF THE TRANSACTIONS, FOR WHICH WE NOTE THAT THE MONIES HAVE BEEN DIRECTLY PAID TO THE ASSE SSEE COMPANY BY ACCOUNT PAYEE CHEQUES OUT OF SUFFICIENT BANK BALANCES AVAILABLE I N THEIR BANK ACCOUNTS ON BEHALF OF THE SHARE APPLICANTS. IT WILL BE EVIDENT FROM TH E PAPER BOOK THAT THE APPELLANT HAS EVEN DEMONSTRATED THE SOURCE OF MONEY DEPOSITED INTO THEIR BANK ACCOUNTS WHICH IN TURN HAS BEEN USED BY THEM TO SUBSCRIBE TO THE ASSESSEE COMPANY AS SHARE APPLICATION. HENCE THE SOURCE OF SOURCE IS PROVED BY THE ASSESS EE IN THE INSTANT CASE THOUGH THE SAME IS NOT REQUIRED TO BE DONE BY THE ASSESSEE AS PER LAW AS M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 27 77 7 IT STOOD/ APPLICABLE IN THIS ASSESSMENT YEAR. THE F OLLOWING CHART EXPLAINS THAT ASSESSEE IN CASE OF SOME INVESTORS PROVED SOURCE OF SOURCE ALSO: SHOWING DETAILS OF SOURCE OF THE APPLICANTS AS WELL AS, SOURCE OF THE SOURCE PARTICULARS OF RECEIPTS BY THE ASSESSEE PARTICULA RS SOURCES OF THE APPLICANT SOURCE OF SOURCE, SHOWING DATE, AMOUNT AND PARTICULARS SL. NO. NAME OF THE APPLICANT DATE AMOUNT (RS.) PARTICULARS DATE AMOUNT (RS.) PARTICULARS 1 M/S GANPATI HIRISE PVT. LTD. 25.04.11 1,60,00,000 CH NO.780813, ON SYNDICATE BANK 25.04.11 1,73,64,400 FROM M/S EMAMI BIOTECH LTD. (VIDE CH NO.001612) AGAINST SALE OF SHARES OF ORIENTAL SALES AGENCY PVT. LTD. --- 2 M/S GAZAL TEXTILES &FINVEST PVT. LTD. 26.04.11 30,00,000 CH NO.289900 ON SYNDICATE BANK 26.04.11 1,00,00,000 FROM M/S LILY ABASAN PVT. LTD. (VIDE CH NO.435197) TOWARDS SHARE APPLICATION MONEY ON 26.04.11 RS.1,80,85,200 FROM M/S EMAMI BIOTECH LTD. (VIDE CH NO.001611) AGAINST SALE OF SHARES OF ORIENTAL SALES AGENCY PVT. LTD. 3 M/S LANDMARK EXIM PVT. LTD. 26.04.11 1,35,00,000 CH NO.437350 ON SYNDICATE BANK 26.04.11 1,73,43,200 FROM M/S EMAMI BIOTECH LTD. (VIDE CH NO.001607) AGAINST SALE OF SHARES OF ORIENTAL SALES AGENCY PVT. LTD. --- 4 M/S PROCTON COMMERCE PVT. LTD. 26.04.11 65,00,000 CH NO.923985 ON SYNDICATE BANK 26.04.11 67,50,000 FROM M/S PUJAM SALES & SERVICES PVT. LTD. (VIDE CH NO.924004) TOWARDS SHARE APPLICATION MONEY ON 26.04.11 RS.1,81,43,200 FROM M/S EMAMI BIOTECH LTD. (VIDE CH NO.001613) AGAINST SALE OF SHARES OF ORIENTAL SALES AGENCY PVT. LTD. 5 M/S SARVOTTAM COMMERCIAL PVT. LTD. 26.04.11 1,10,00,000 CH NO.924444 ON SYNDICATE BANK (I) 26.04.11 (II) 26.04.11 91,92,000 25,00,000 FROM M/S EMAMI BIOTECH LTD. (VIDE CH NO.001610) AGAINST SALE OF SHARES OF ORIENTAL SALES AGENCY PVT. LTD. FROM M/S AVIVA INFRASTRUCTURE PVT. LTD. VIDE CHQ NO.923692 (FOR SHARE APPLICATION MONEY) --- ON 26.04.11 RS.25,00,000 FROM LANDMARK EXIM PVT. LTD. (CH NO 451346 TOWARDS REFUND OF LOAN) THE PAYMENT OF SAID RS.25.00 LACS TO AVIVA INFRASTRUCTURE PVT. LTD. BY LANKMARK EXIM PVT. LTD. IS OUT OF RS.1,73,43,200 RECEIVED FROM M/S EMAMI BIOTECH LTD., ON 26.04.11 (BY CH NO.1607) M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 28 88 8 AGAINST SALE OF SHARES OF ORIENTAL SALESAGENCY PVT. LTD. 5,00,00,000 WE NOTE THAT THE SHARE APPLICANTS HAVE CONFIRMED TH E SHARE APPLICATION IN RESPONSE TO THE NOTICE U/S 133(6) OF THE ACT AND HAVE ALSO C ONFIRMED THE PAYMENTS WHICH ARE DULY CORROBORATED WITH THEIR RESPECTIVE BANK ST ATEMENTS AND ALL THE PAYMENTS ARE BY ACCOUNT PAYEE CHEQUES. 30. WE ALSO NOTE THAT RECENTLY THE ITAT KOLKATA IN SEVERAL CASES HAS DELETED THE ADDITION ON ACCOUNT OF SHARE APPLICATION IN SIM ILAR CIRCUMSTANCES. THE RELEVANT PORTION OF THE DECISIONS ARE AS FOLLOWS: (A) THE LD ITAT KOLKATA. IN DC IT VS GLOBAL MERCANT ILESPVT.LTD IN ITA NO. 1669/KOL/2009 DATED 13-01-2016. IN THIS THE DEC ISION THE LD. TRIBUNAL HELD AS FOLLOWS: 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BO OK FILED BY THE ASSESSEE. THE FACTS STATED HEREINABOVE REMAIN UNDIS PUTED ARE NOT REITERATED HEREIN FOR THE SAKE OF BREVITY. WE FIND THAT THE ASSESSEE HAD GIVEN THE COMPLETE DETAILS ABOUT THE SHARE APPLICAN TS CLEARLY ESTABLISHING THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION PROVED BEYOND DOUBT AND HAD DULY DISCHARGED ITS ONUS IN FU LL. NOTHING PREVENTED THE LEARNED AO TO MAKE ENQUIRIES FROM THE ASSESSING OFFICERS OF THE CONCERNED SHARE APPLICANTS FOR WHICH EVERY DETAILS WERE VERY MUCH MADE AVAILABLE TO HIM BY THE ASSESSEE. WE FIND THAT THE RELIANCE PLACED BY THE LEARNED LD. CIT(1) ON THE DECISION OF THE HON'BLE A PEX COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) UD REPORTED IN (2008) 216 CTR 195 (SC) IS VERY WELL FOUNDED, WHEREIN, IT HAS BEEN VERY CLEARL Y HELD THAT THE ONLY OBLIGATION OF THE COMPANY RECEIVING THE SHARE APPLI CATION MONEY IS TO PROVE THE EXISTENCE OF THE SHAREHOLDERS AND FOR WHI CH THE ASSESSEE HAD DISCHARGED THE ONUS OF PROVING THEIR EXISTENCE AND ALSO THE SOURCE OF SHARE APPLICATION MONEY RECEIVED. 3.4. 1. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALS O COVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT V S ROSEBERRY MERCANTILE (P) LTD IN GA NO. 3296 OF 2010 ITAT NO. 241 OF 2010 DATED 10.1.2011, WHEREIN THE- QUESTIONS RAISED BEFORE THEIR LORDSHIP S AND DECISION RENDERED THEREON IS AS UNDER:- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TR ANSACTION ENTERED INTO BY THE ASSESSEE WAS A SCHEME FOR LAUND ERING BLACK MONEY INTO WHITE MONEY OR ACCOUNTED MONEY AND THE L D. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABL ISHED THE GENUINENESS OF THE TRANSACTION. ' M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 2 22 29 99 9 IT A NO. 1669/KOI/2009-C-AM M/S. GLOBAL MERCANTILES PVT. LTD 11 HELD AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CA SES OF CIT VS M/S LOVELV EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIB UNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAI D SUPREME COURT DECISION IN FAVOUR OF THE ASSESSEE AND THUS, NO SUB STANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND IS DISMISSED. 3.4.2. IN VIEW OF THE AFORESAID FINDINGS AND RESPEC TFULLY FOLLOWING THE DECISION OF THE APEX COURT (SUPRA) AND JURISDICTION AL HIGH COURT (SUPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CI T(A) AND ACCORDINGLY, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 4. THE LAST GROUND TO BE DECIDED IN THIS APPEAL OF THE REVENUE IS AS TO WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADDITION U/S 68 OF THE ACT MADE IN RESPECT OF ALLOTMENT OF SHARES TO 2 0 INDIVIDUALS FOR AN AMOUNT OF RS.57,00,000/- IN THE FACTS AND CIRCUMSTA NCES OF THE CASE. 4. 1. THE BRIEF FACT OF THIS ISSUE IS THAT THE ASSE SSEE HAD RECEIVED SHARE APPLICATION MONIES FROM 20 INDIVIDUALS IN THE EARLI ER YEAR WHICH WERE KEPT IN SHARE APPLICATION MONEY ACCOUNT. DURING THE ASST YEAR UNDER APPEAL, THE ASSESSEE ALLOTTED SHARES TO THESE 20 INDIVIDUAL S OUT OF TRANSFERRING THE MONIES FROM SHARE APPLICATION MONEY ACCOUNT TO SHAR E CAPITAL ACCOUNT. THE DETAILS OF 20 INDIVIDUALS ARE REFLECTED IN PAGE 6 & 7 OF THE LEARNED CIT(A) ORDER. THE LEARNED AO ASKED THE ASSESSEE TO PRODUCE THE SHAREHOLDERS BEFORE HIM. HE FOUND THAT THE ASSESSEE DID NOT DO SO BUT FURNISHED COPIES OF PAY ORDERS USED FOR PAYMENTS TO THE ASSESSEE COMPANY AND ALSO FURNISHED INCOME TAX PARTICULARS AND BALAN CE SHEETS OF ALL THE SHAREHOLDERS. THE LEARNED AO ON ANALYZING ALL THE B ALANCE SHEETS OBSERVED THAT THE SHAREHOLDERS HAVE PALTRY INCOME A ND SMALL SAVINGS AND NONE OF THEM HAVE ANY BANK ACCOUNT AND HUGE CASH BA LANCES WERE SHOWN IN THEIR HANDS OUT OF WHICH PAY ORDERS WERE OBTAINE D. BASED ON THIS, THE LEARNED AO CONCLUDED THAT THESE SHAREHOLDERS DO NOT HAVE CREDITWORTHINESS TO INVEST IN THE ASSESSEE COMPANY AND BROUGHT THE ENTIRE SUM OF RS. 57,00,000/- TO TAX AS UNEXPLAINED CASH C REDIT U/S 68 OF THE ACT. 4.2. ON FIRST APPEAL, THE LEARNED CIT(A) OBSERVED T HAT ENTIRE SHARE APPLICATION MONIES OF RS. 57,00,000/- RECEIVED DUR ING THE PREVIOUS YEAR 2004-05 RELEVANT TO ASST YEAR 2005-06 FROM 20 PERSO NS AND THE SHARES WERE ALLOTTED TO THEM DURING THE ASST YEAR UNDER AP PEAL. HE OBSERVED THAT THE ASSESSEE HAD FURNISHED DETAILS OF THE SHARE APP LICANTS GIVING THE DATE WISE RECEIPTS, MODE OF PAYMENT, AMOUNT, NAME, ADDRE SS, INCOME TAX RETURNS, PA NO. OF SHARE APPLICANTS ALONG WITH THEI R BALANCE SHEET. THE LEARNED CITA ALSO OBSERVED THAT THE ASSESSEE IN ITS REPLY TO SHOW CAUSE NOTICE BEFORE THE LEARNED AO HAD REQUESTED HIM TO U SE HIS POWER AND AUTHORITY FOR THE PHYSICAL APPEARANCE OF THE SHAREH OLDERS WHICH WAS NOT EXERCISED BY THE LEARNED AO. INSTEAD THE LEARNED AO CONTINUED TO INSIST ON THE ASSESSEE TO PRODUCE THE SHAREHOLDERS BEFORE HIM. HE ULTIMATELY CONCLUDED THAT THE ASSESSEE HAD DULY DISCHARGED ITS ONUS OF PROVIDING COMPLETE DETAILS OF THE SHAREHOLDERS AND IN ANY CAS E, NO ADDITION COULD BE MADE U/S 68 OF THE ACT IN THE ASST YEAR UNDER APPEA L AS NO SHARE APPLICATION MONIES WERE RECEIVED DURING THE ASST YE AR UNDER APPEAL. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US BY FI LING THE FOLLOWING GROUND:- M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 30 00 0 'THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE U/S 68 IN R ESPECT OF THE ALLOTMENT OF SHARES TO 20 NUMBERS OF INDIVIDUAL INV ESTORS FOR AN AMOUNT OF RS. 57 LAKHS, WHERE GENUINENESS OF THE TR ANSACTIONS AND CREDITWORTHINESS OF THE INVESTORS WERE NOT ESTABLIS HED. 4.3. THE LEARNED DR PRAYED FOR ADMISSION OF THE ADD ITIONAL GROUND RAISED BEFORE US AND VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR FAIRLY CONCEDED TO ADMISSION OF THIS ADDITIONAL GROUND AND VEHEMENTLY SUPPORTED THE ORDE R OF THE LEARNED CIT(A). 4.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BO OK FILED BY THE ASSESSEE. WE FIND THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE SEPARATELY BEFORE US VIDE ITS COVERING LETTER DATED 9. 12.2011 IS ADMITTED AS IT APPEARS TO BE A GENUINE AND BONAFIDE ERROR OF OM ISSION ON THE PART OF THE REVENUE FROM NOT RAISING THIS GROUND IN THE ORI GINAL GROUNDS OF APPEAL FILED ALONG WITH THE MEMORANDUM OF APPEAL. MOREOVER , IT DOES NOT REQUIRE ANY FRESH EXAMINATION OF FACTS. HENCE THE SAME IS A DMITTED HEREIN FOR THE SAKE OF ADJUDICATION. 4.4. 1. WE FIND FROM THE DETAILS AVAILABLE ON RECOR D THAT THE SHARE APPLICATION MONIES FROM 20 INDIVIDUALS IN THE SUM O F RS.57,00,000/- HAS BEEN RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2004-05 RELEVANT TO ASST YEAR 2005-06 AND ONLY THE SHARES WERE ALLOT TED TO THEM DURING THE ASST YEAR UNDER APPEAL. ADMITTEDLY NO MONIES WERE R ECEIVED DURING THE ASST YEAR UNDER APPEAL AND HENCE THERE IS NO SCOPE FOR INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. HENCE WE HOLD THAT THE ORDER PASSED BY THE LEARNED CITA IN THIS REGARD DOES NOT REQUIRE AN Y INTERFERENCE. ACCORDINGLY THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. (B) THE ITAT KOLKATA IN R.B HORTICULTURE & ANIMAL PROJECTS CO. LTD, ITA NO. 632/KOLL2011 DATED 13-01-2016. IN THIS THE DECISION THE LD. TRIBUNAL HELD AS FOLLOWS: 6. WE HAVE HEARD THE LEARNED DR AND WHEN THE CASE WAS CALLED ON FOR HEARING , NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER , WE FIND FROM THE FILE THAT THE ASSESSEE HAD FILED A DETAILED PAPER BOOK AND WRITTE N SUBMISSIONS. HENCE THE CASE IS DISPOSED OFF BASED ON THE ARGUMENTS OF THE LEARN ED DR AND WRITTEN SUBMISSIONS AND PAPER BOOK ALREADY AVAILABLE ON RECORD. THE FAC TS STATED IN THE LEARNED CIT(A) WERE NOT CONTROVERTED BY THE LEARNED DR BEFO RE US. WE FIND THAT THE ASSESSEE HAD GIVEN THE COMPLETE DETAILS ABOUT THE S HARE APPLICANTS CLEARLY ESTABLISHING THEIR IDENTITY, CREDITWORTHINESS AND G ENUINENESS OF TRANSACTION PROVED BEYOND DOUBT AND HAD DULY DISCHARGED ITS ONUS IN FU LL. NOTHING PREVENTED THE LEARNED AO TO MAKE ENQUIRIES FROM THE ASSESSING OFF ICERS OF THE CONCERNED SHARE APPLICANTS FOR WHICH EVERY DETAILS WERE VERY MUCH M ADE AVAILABLE TO HIM BY THE ASSESSEE. WE FIND THAT THE RELIANCE PLACED BY THE L EARNED CITA ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS LOVELV EXPORTS (P) LTD REPORTED IN (2008) 216 CTR 195 (SC) IS VERY WELL FOUNDED, WHERE IN, IT HAS BEEN VERY CLEARLY HELD THAT THE ONLY OBLIGATION OF THE COMPANY RECEIV ING THE SHARE APPLICATION MONEY IS TO PROVE THE EXISTENCE OF THE SHAREHOLDERS AND F OR WHICH THE ASSESSEE HAD M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 31 11 1 DISCHARGED THE ONUS OF PROVING THEIR EXISTENCE AND ALSO THE SOURCE OF SHARE APPLICATION MONEY RECEIVED. 6.1. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALSO C OVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS ROSEBERRV MERCANTILE (P) LTD IN GA NO. 3296 OF 2010 ITAT NO. 241 OF 2010 DATED 10.1.2011, WHEREIN THE QUESTIONS RAISED BEFORE THEIR LORDSHIPS AND DECISION RENDERED THEREO N IS AS UNDER:- - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY IN TO WHITE MONEY OR ACCOUNTED MONEY AND THE LD. CIT(A) OUGHT TO HAVE HE LD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACT ION.' HELD AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOI NG THROUGH THE DECISION OF THE SUPREME COURT IN THE CASES OF CIT VS M/S LOV ELY EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POIN T INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FA VOUR OF THE ASSESSEE AND THUS, NO SUBSTANTIAL QUESTION OF LAW IS INVOLVE D IN THIS APPEAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND IS DISMISSED. 6.2. WE FIND THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS VALUE CAPITAL SERVICES P LTD REPORTED IN (2008) 307 ITR 334 (DEL) , WHEREIN IT WAS HELD THAT: 'IN RESPECT OF AMOUNTS SHOWN AS RECEIVED BY THE ASS ESSEE TOWARDS SHARE APPLICATION MONEY FROM 33 PERSONS, THE ASSESSING OF FICER REQUIRED THE ASSESSEE TO PRODUCE ALL THESE PERSONS. WHILE ACCEPT ING THE EXPLANATION AND ITA NO. 632/KOI12011--C-AM M/S. R.B HORTICULTURE 6 & ANIMAL PROJ. CO. LTD THE STATEMENTS GIVEN BY THREE PERSONS THE ASSES SING OFFICER FOUND THAT THE RESPONSE FROM THE OTHERS WAS EITHER NOT AVAILAB LE OR WAS INADEQUATE AND ADDED AN AMOUNT OF RS. 46 LAKHS PERTAINING TO 3 0 PERSONS TO THE INCOME OF THE ASSESSEE. THE COMMISSIONER (APPEALS) UPHELD THE DECISION OF T HE ASSESSING OFFICER. ON APPEAL, THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) AND DELETED THE ADDITIONS. ON FURTHER APPEAL: HELD, DISMISSING THE APPEAL, THAT THE ADDITIONAL BU RDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLICANT S DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MADE B Y THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. NO SUBSTANT IAL QUESTION OF LAW AROSE. ' 6.3. WE FIND THAT THE ARGUMENT OF THE LEARNED DR TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO FOR VERIFICATION OF SHARE SUBSCRI BERS WOULD NOT SERVE ANY PURPOSE AS THE RATIO DECIDED IN THE ABOVE CASES IS THAT IN ANY CASE, NO ADDITION COULD BE MADE IN THE HANDS OF THE RECIPIENT ASSESSE E. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COURT (SUPRA), JURISDICTIONAL HIGH COURT (SUPRA) AND DELHI HIGH CO URT (SUPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND AC CORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 32 22 2 (C) THE LD. ITAT KOLKATA IN ITA NO.1061/KO1/2012 I N THE CASE OF ITO WD.3(2) KOL, VS. M/S. STEEL EMPORIUM LTD DATED 05-0 2-2016. IN THIS THE DECISION THE LD. TRIBUNAL HELD AS FOLLOWS: 10. WE HAVE HEARD BOTH THE RIVAL PARTIES AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER O F THE AO. BEFORE US THE LD. AR SUBMITTED THAT THE ASSESSEE RAISED SHARE APPLICA TION MONEY DURING THE YEAR FROM 25 APPLICANTS. THE AO WAS FURNISHED WITH THE C OPY OF FORM 2 OF ALLOTMENT OF SHARES TO THE APPLICANTS AS FILED WITH THE REGISTRA R OF COMPANIES, WEST BENGAL. ON THE DATE OF RECEIPT OF SHARE APPLICATIONS FROM THE APPLICANTS, THEY FURNISHED THEIR ADDRESSES, WHICH WERE RECORDED IN THE REGISTER OF M EMBERS. THE AO OBSERVED THAT AS PER ROC RECORDS THE ADDRESSES OF THE NINE COMPAN IES WERE DIFFERENT FROM THE ADDRESS AS PER FORM FILED WITH HIM. THE AO ISSUED N OTICES U/S.133(6) TO ALL THE COMPANIES AT THE ADDRESSES FURNISHED IN FORM 2 AS F ILED WITH HIM, WHICH WERE DULY SERVED AT THE GIVEN ADDRESSES. THE A0 ARGUED THAT T HE LETTERS SHOULD NOT HAVE BEEN SERVED AT THE GIVEN ADDRESS BY THE ASSESSEE. HE SER VED A SHOW CAUSE NOTICE DATED 09.12.2011 ASKING FOR THE EXPLANATION FROM THE ASSE SSEE AS TO HOW THE NOTICES U/S. 133(6) COULD BE SERVED TO THESE NINE COMPANIES WHO HAD DIFFERENT ADDRESS AS PER ROC RECORDS. THE AO WAS EXPLAINED VIDE LETTER DATED 20.12.2011 OF THE ASSESSEE THAT THOSE COMPANIES HAD CHANGED THEIR ADDRESSES SI NCE FILING OF FORM 2 WITH THE REGISTRAR. FURTHER, IT WAS NONE OF THE BUSINESS OF THE ASSESSEE TO QUESTION THE ADDRESSES OF THE APPLICANTS AS LONG AS THEY AFFIRM THE ADDRESS. THE APPLICANTS WERE DULY INCORPORATED BODIES UNDER THE COMPANIES ACT. 1 956 SINCE LONG. THEY HAVE BEEN REGULARLY FILING THEIR RETURNS OF INCOME UNDER THE INCOME TAX ACT AND ARE BEING ASSESSED BY THE REVENUE SINCE LONG. SOME OF T HEM ARE EVEN REGISTERED AS NON-BANKING FINANCIAL COMPANIES WITH RESERVE BANK O F INDIA. THEY HAVE BEEN FILING RETURNS REGULARLY WITH REGISTRAR OF COMPANIE S AND RBI SINCE LONG. THE LETTERS MIGHT HAVE BEEN RECEIVED AT THEIR OLD ADDRE SSES BECAUSE IN CASE OF CHANGE IN THE ADDRESS, PEOPLE INSTRUCT THE INCUMBENTS AT O LD ADDRESSES NOT TO REFUSE THE RECEIPT OF LETTERS AND RECEIVE THE SAME. JUST BECAU SE, A LETTER WAS RECEIVED AT THE OLD ADDRESS INSTEAD OF PRESENT ADDRESS, IT CANNOT B E SAID THAT THE IDENTITY OF THE APPLICANT HAS NOT BEEN VERIFIED. ALL OF THESE COMPA NIES HAD DULY REPLIED TO NOTICE U/S. 133(6) AND CONFIRMED THE TRANSACTION WITH ALL THE EVIDENCES. THE AO HAS NOT RAISED ANY OBJECTION ON ANY OF THE INFORMATION FURN ISHED BEFORE HIM. THE AO HAS NOT ASKED THE RESPECTIVE COMPANY APPLICANTS ALSO TO EXPLAIN THE ALLEGED DISCREPANCY IN THE ADDRESS. THE AO HAS NOT BROUGHT ANY MATERIAL ON ACCOUNT OF RECORD TO DISBELIEF THE EVIDENCES FURNISHED WITH HI M AND TREAT THE TRANSACTION AS NOT GENUINE. THE ASSESSEE SUBMITTED THE FOLLOWING M ATERIAL AT THE TIME OF ASSESSMENT. A) COPY OF SHARE APPLICATIONS FROM THE SHARE APPLIC ANTS (COPIES ENCLOSED) B) COPY OF FORM 2 FILED WITH REGISTRAR OF COMPANIES , WEST BENGAL (COPY ENCLOSED) C) COPY OF FORM 18 ABOUT THE REGISTERED OFFICE OF T HE APPLICANTS FOR CHANGE OF ADDRESS SUBSEQUENT TO THE DATE OF ALLOTMENT, I.E. 3 1.03.2009 (COPIES ENCLOSED) D) MEMBERS REGISTER E) SHARE APPLICATION & ALLOTMENT REGISTER F) COPY OF BOARD RESOLUTION. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 33 33 3 G) REPLIES FROM SHARE APPLICANTS TO THE NOTICE U/S. 133(6) ISSUED TO THEM BY THE AO SEEKING INFORMATION AND DOCUMENTS ABOUT THE SOURCE S AND TO EXAMINE THEIR IDENTITY, GENUINENESS OF THE TRANSACTION AND THEIR CREDITWORTHINESS. (COPY ENCLOSED). H) COPY OF AUDITED ACCOUNTS. I) COPY OF BANK STATEMENTS. J) COPY OF INCOME TAX ACKNOWLEDGMENT OF RETURN FILE D FOR AY 2009- K) COPY OF PAN CARD. L) DETAILS OF SOURCES OF FUNDS. M) COPY OF COVERING LETTER FOR DELIVERY OF SHARES. N) COPY OF MASTER DATA AS PER MINISTRY OF COMPANY A FFAIRS RECORDS. O) COPY OF ANNUAL RETURN. P) COPY OF MEMORANDUM AND ARTICLES OF ASSOCIATION. FINALLY THE LD. AR RELIED ON THE ORDER OF THE LD. C IT(A 10. 1 FROM THE AFORESAID DISCUSSION WE FIND THAT TH E AO HAS MADE THE ADDITION OF THE SHARE APPLICATION MONEY BECAUSE ALL THE NINE CO MPANIES WERE HAVING THE COMMON ADDRESS AND THE NOTICE SENT UNDER SECTION 13 3(6) WAS RECEIVED BY THE SINGLE PERSON. ACCORDINGLY, THE AO OPINED THAT THE ASSESSEE HAS USED ITS UNACCOUNTED MONEY IN THE SHARE APPLICATION TRANSACT IONS. HOWEVER, WE FIND THAT ALL THE MONEY RECEIVED IN THE FORM OF SHARE CAPITAL IS DULY SUPPORTED WITH THE REQUISITE DOCUMENT AS DISCUSSED ABOVE. TO OUR MIND THE BASIS ON WHICH THE ADDITION WAS MADE BY THE AO IS NOT TENABLE. THE LD. DR ALSO COULD NOT BROUGHT ANYTHING ON RECORD TO CONTROVERT THE FINDINGS OF TH E LD. CIT(A). IN VIEW OF ABOVE WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE ID. CIT(A). ACCORDINGLY THE GROUND RAISED BY REVENUE IS DISMISSED. (D) THE LD ITAT KOLKATA IN ITO VS CYGNUS DEVELOPERS (I) P LTD IN ITA NO. 282/KOL/2012 DATED 2.3.2016. IN THIS THE DECISION T HE LD. TRIBUNAL HELD AS FOLLOWS: 6. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED TH E ADDITION MADE BY THE AO OBSERVING AS FOLLOWS '6) I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE DETAILS AND DOC UMENTS FILED BY THE APPELLANT COMPANY IN THE COURSE OF ASSESSMENT: PROCEEDINGS VI DE LETTER DT. 3-10-2007. ON CAREFUL CONSIDERATION OF THE FACTS AND IN LAW I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN MAKING, THE ADDITION AGGREGATING T O RS.54,00,000/- U/S.68 OF THE ACT BEING THE AMOUNT OF SHARE APPLICATION MONEY BY HOLD ING THAT THE APPELLANT COMPANY HAS FAILED TO PROVE THE IDENTITY, AND CREDI TWORTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF TRANSACTIONS. IT IS OBSE RVED THAT ALL THE THREE SHARE APPLICANT COMPANIES I.E. M/S. SHREE SHYAMTREXIM PVT . LTD., M/S NAVALCO COMMODITIES PVT. LTD. AND M/S. JEWELLOCKTREXIM PVT. LTD. HAD FILED THEIR CONFIRMATIONS WHEREIN EACH OF THEM CONFIRMED THAT T HEY HAD APPLIED FOR SHARES OF THE APPELLANT -COMPANY. ALL THE THREE COMPANIES PRO VIDED- THE CHEQUE NUMBER, M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 34 44 4 COPY OF BANK STATEMENTS AND THEIR PAN. IT IS OBSERV ED THAT THESE COMPANIES ALSO FILED, COPIES OF THEIR RETURN OF INCOME AND FINANCI AL STATEMENTS FOR AS WELL AS COPY OF THEIR ASSESSMENT ORDER U/S. 143(3) OF THE I. T A CT FOR AY 2005-06. IN THE CASE OF M/S. JEWELLOCKTREXIM PVT. LTD. THE ASSESSMENT FOR A Y 2005-06 WAS COMPLETED BY THE ITO WARD 9(3), KOLKATA AND THE ASSESSMENTS IN T HE CASE OF M/S. NAVALCO COMMODITIES PVT. LTD. AND M/S. SHREE SHYAMTREXIM PV T. LTD. FOR A. Y.2005-06 AND AY.2004-05 RESPECTIVELY WERE COMPLETED BY THE I TO, WARD 9(4), KOLKATA. UNDER THE CIRCUMSTANCES, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE SHARE APPLICANT COMPANIES WERE NOT IN EXISTENCE . THE ASSESSMENT ORDERS WERE COMPLETED ON THE ADDRESS AS PROVIDED BY THE APPELLA NT COMPANY IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS NOT KNOWN AS TO HOW T HE AO'S INSPECTOR HAD REPORTED THAT THE AFORESAID COMPANIES WERE NOT IN EXISTENCE AT THE GIVEN ADDRESS. SINCE THE APPELLANT COMPANY HAD PROVIDED SUFFICIENT DOCUMENTA RY EVIDENCES IN SUPPORT OF ITS CLAIM OF RECEIPT OF SHARE APPLICATION MONEY, I AM O F THE OPINION THAT THE NO ADDITION U/S.68 COULD BE MADE IN THE HANDS OF APPEL LANT COMPANY. ON GOING THROUGH THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT, IT IS OBSERVED THAT THE VIEW TAKEN AS ABOVE IS ALSO SUPPO RTED BY THEM. IN VIEW OF ABOVE THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.54, 00,000/ -. THE GROUND NOS. 2 AND 3 ARE ALLOWED, ' 7. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR , WHO RELIED ON THE ORDER OF AO. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A) AND FURTHER DREW OUR ATTENTION TO THE DECISION OF HON'B LE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS RAJ KUMAR AGARWAL VIDE ITA NO. 179/2 008, DATED 17. 11.2009 WHEREIN THE HON 'BLE ALLAHABAD HIGH COURT TOOK A VI EW THAT NON PRODUCTION OF THE DIRECTOR OF A PUBLIC LIMITED COMPANY WHICH IS REGUL ARLY ASSESSED TO INCOME TAX HAVING PAN, ON THE GROUND THAT THE IDENTITY OF THE INVESTOR IS NOT PROVED CANNOT BE SUSTAINED. ATTENTION WAS ALSO TO THE SIMILAR RULING OF THE ITAT KOLKATA BENCH IN THE CASE OF ITO VS DEVINDER SINGH SHANT IN IT A NO.20BI KO112009 VIDE ORDER DATED 17.04.2009. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS., WE A RE OF THE VIEW THAT ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. IT MA Y BE SEEN FROM THE GROUNDS OF APPEAL RAISED BY THE REVENUE THAT THE REVENUE DISPU TED ONLY THE PROOF OF IDENTITY OF THE SHAREHOLDER. IN THIS REGARD IT IS SEEN THAT FOR A Y.2004-05 SHREE SHYAMTREXIM PVT. LTD., WAS ASSESSED BY ITO, WARD- 9 (4), KOLKATA AND THE ORDER OF ASSESSMENT U/S/143(3) DATED 25.01.2006 IS PLACED IN THE PAPER BOOK. SIMILARLYNAVALCO COMMODITIES PVT. LTD., WAS ASSESSE D TO TAX U/S 143(3) FOR A Y.2005-06 BY I TO, WARD- 9(4), KOLKATA BY ORDER DAT ED 20.03.2007. SIMILARLYJEWELLOCKTREXIM PVT. LTD WAS ASSESSED TO T AX FOR A Y.2005-06 BY THE VERY SAME ITO- WARD- 9(3), KOLKATA ASSESSING THE ASSESSE E. IN THE LIGHT OF THE ABOVE FACTUAL POSITION WHICH IS NOT DISPUTED BY THE REVEN UE, IT CANNOT BE SAID THAT THE IDENTITY OF THE SHARE APPLICANTS REMAINED NOT PROVE D BY THE ASSESSEE. THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT AS WELL AS ITAT KOLKATA BENCH ON WHICH RELIANCE WAS PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUPPORTS THE VIEW THAT FOR NON PRODUCTION OF DIRECTORS OF THE INVESTO R COMPANY FOR EXAMINATION BY THE AO IT CANNOT BE HELD THAT THE IDENTITY OF A LIMITED COMPANY HAS NOT BEEN ESTABLISHED. FOR THE REASONS GIVEN ABOVE WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. ' 31. RELIANCE IN THIS REGARD IS ALSO PLACED ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS GANGESHWARI METAL (P) L TD (ITA NO. 597 OF 2012) M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 35 55 5 DATED 21.01.2012. IN THIS CASE THE ASSESSEE HAD RE CEIVED SHARE APPLICATION MONEY OF RS.55.50 LACS DURING THE YEAR IN QUESTION. THE A SSESSEE FILED THE COMPLETE NAMES, ADDRESSES OF THE SHARE APPLICANTS, CONFIRMAT ORY LETTERS FROM THEM, COPIES OF BANK STATEMENTS OF BOTH THE COMPANY AS WELL AS THE SHARE APPLICANTS AND COPIES OF SHARE APPLICATION FORMS. INSPITE OF THE AFORESAID D OCUMENTARY EVIDENCES THE AO HELD THE EXPLANATION TO BE UNACCEPTABLE AND TREATED THE SHARE APPLICATION AS UNEXPLAINED CASH CREDIT THEREBY MAKING ADDITION UND ER SECTION 68 OF THE INCOME- TAX ACT, 1961. ON APPEAL THE CIT(APPEALS) DELETED T HE AFORESAID ADDITION HOLDING THAT THE IDENTITY OF THE SHARE APPLICANTS STOOD EST ABLISHED BEYOND DOUBT, ALL THE PAYMENTS WERE THROUGH ACCOUNT PAYEE CHEQUES AND THE SHARE APPLICANTS WERE REGULAR INCOME-TAX ASSESSEES. THE CIT(APPEALS) FURT HER HELD THAT THE REVENUE DID NOT BRING ANY EVIDENCE ON RECORD TO SUGGEST THAT TH E SHARE APPLICATION HAD BEEN RECEIVED BY THE ASSESSEE FROM ITS OWN UNDISCLOSED S OURCES NOR ANY MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THE APPLICANTS WERE BOGUS. THE REVENUE WAS NEITHER ABLE TO CONTROVERT THE DOCUMENTARY EVIDENCE S FILED BY THE APPELLANT NOR PROVE THAT THE SHARE APPLICATION WERE INGENUINE OR THE APPLICANTS WERE NON- CREDITWORTHY. THE FINDINGS OF THE CIT(APPEALS) WERE UPHELD BY THE INCOME-TAX APPELLATE TRIBUNAL. ON APPEAL TO THE HIGH COURT, TH E REVENUE PLACED STRONG RELIANCE ON THE DECISION OF ANOTHER COORDINATE BENC H OF THE SAME COURT IN THECASE OF CIT VS NOVO PROMOTERS &FINLEASE (P) LTD (342 ITR 169). THE HIGH COURT HOWEVER HELD THAT THE AFORESAID JUDGMENT WAS DISTIN GUISHABLE FROM THE FACTS OF THE PRESENT CASE. THE COURT OBSERVED THAT IN THAT JUDGM ENT THE ASSESSING OFFICER HAD BROUGHT ON RECORD ENOUGH CORROBORATIVE EVIDENCE TO SHOW THAT THE ASSESSEE HAD ROUTED UNACCOUNTED MONIES INTO ITS BOOKS THROUGH ME DIUM OF SHARE SUBSCRIPTION. THE SHARE APPLICANTS HAD CONFESSED THAT THEY WERE ' ACCOMMODATION ENTRY PROVIDERS'. THE ASSESSING OFFICER IN THE LATTER CAS E WAS ABLE TO PROVE WITH ENOUGH MATERIAL THAT THE SHARE SUBSCRIPTION WAS A PRE-MEDI TATED PLAN TO ROUTE UNACCOUNTED MONIES. IN THE PRESENT CASE HOWEVER THE DEPARTMENT WAS UNABLE TO BRING ANY MATERIAL WHATSOEVER SHOWS THAT SHARE APPLICATION WA S IN THE NATURE OF ACCOMMODATION ENTRIES. THE COURT OBSERVED THAT THE APPELLANT HAD FILED SUFFICIENT DOCUMENTARY EVIDENCES TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 36 66 6 APPLICANT AND THE GENUINENESS OF THE TRANSACTION. T HE AO HOWEVER CHOSE TO SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTED ALL THE EVIDENCE IN HIS POSSESSION AND THEN MERELY REJECT THE SAME WITHOUT CONDUCTING ANY INQUIRY OR VERIFICATION WHATSOEVER. THE COURT THUS HELD THAT T HE DECISION OF CIT VS NOVO PROMOTERS &FINLEASE (P) LTD (342 ITR 169) WAS NOT A PPLICABLE TO THE FACTS OF THE CASE. INSTEAD IT WAS HELD THAT THE ISSUE IN HANDS W AS ON THE LINES OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPO RTS PVT LTD (319 ITR 5). ACCORDINGLY THE ADDITION MADE UNDER SECTION 68 ON A CCOUNT OF SHARE APPLICATION WAS DELETED. 32. WE WOULD LIKE TO REPRODUCE THE HON'BLE HIGH CO URT DELHI, ORDER IN CIT VS. GANGESHWARI METAL P.LTD. IN ITA NO. 597/2012 JUDGEM ENT DATED 21.1.2013, THE HON'BLE HIGH COURT AFTER CONSIDERING THE DECISIONS IN THE CASE OF NOVA PROMOTERS AND FINLEASEPVT. LTD. 342 ITR 169 AND JUDGEMENT IN THE CASE OF CIT VS. LOVELY EXPORTS 319 ITR (SAT 5)(5. C) HELD AS FOLLOWS:- AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES O F CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER 'S ITS BACK WITH FOLDED HANDS' TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COMES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIO NS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER AFT ER NOTING THE FACTS, MERELY REJECTED THE SAME. THIS WOULD BE APPARENT FROM THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO THE FOLLOWING EF FECT:- ''INVESTIGATION MADE BY THE INVESTIGATION WING OF T HE DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMODATION ENTRY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID AMOUNT OF RS.1,11,50,000/- MAY NOT BE ADDED TO ITS INCOME. IN RESPONSE, THE ASSESSEE HAS SUBMITTED THAT THERE IS NO SUCH CREDIT IN THE B OOKS OF THE ASSESSEE. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WAS STATED THAT THE ACTUAL AMOUNT RECEIVED WAS RS.55,50,000/- AND NOT RS.1,11,50,000/- AS MENTIONE D IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND CORRECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE TAKEN AT RS.55,50,000/-. THE ASSESS EE HAS FURTHER TRIES TO EXPLAIN THE SOURCE OF THIS AMOUNT OF RS.55,50,000/- BY FURNISHING COPIES OF SHARE APPLICATION MONEY, BALANCE SHEET ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED THAT THE QUESTION OF ADDITION IN THE I NCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANATION OF THE ASSESSEE HA S BEEN DULY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS ENTRY REMAINS UNEXPL AINED IN THE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATI ON WING OF THE DEPARTMENT. AS SUCH ENTRIES OF RS.550000/- RECEIVED BY THE ASSESSEE ARE TREATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS INCOME. SINCE I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 37 77 7 INACCURATE PARTICULARS OF ITS INCOME/ PENALTY PROCE EDINGS UNDER SECTION 271(1)(C) ARE BEING INITIATED SEPARATELY. THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. ( SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVO UR OF THE REVENUE IN THAT CASE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE AND FALL IN THE SECOND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA). THERE WAS A CLEAR LACK OF INQUIRY ON THE PART OF TH E ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED ALL THE MATERIAL WHICH WE HA VE ALREADY REFERRED TO ABOVE. IN SUCH AN EVENTUALITY NO ADDITION CAN BE MADE UNDE R SECTION 68 OF THE INCOME TAX ACT 1961. CONSEQUENTLY, THE QUESTION IS ANSWERED IN THE NEGATIVE. THE DECISION OF THE TRIBUNAL IS CORRECT IN LAW 33. THE CASE ON HAND CLEARLY FALLS IN THE CATEGORY WHERE THERE IS LACK OF ENQUIRY ON THE PART OF THE A. O. AS IN THE CASE OF GANJESHW ARI METALS (SUPRA). B) IN THE CASE OF FINLEASE PVT LTD. 342 ITR 169 (SU PRA) IN ITA 232/2012 JUDGEMENT DT. 22.11.2012 AT PARA 6 TO 8/ IT WAS HEL D AS FOLLOWS. '6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF TH E PARTIES. IN THIS CASE THE DISCUSSION BY THE COMMISSIONER OF INCOME TAX (A PPEALS) WOULD REVEAL THAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CER TIFIED COPIES ISSUED BY THE ROC IN RELATION TO THE SHARE APPLICATION AFFIDA VITS OF THE DIRECTORS, FORM 2 FILED WITH THE ROC BY SUCH APPLICANTS CONFIR MATIONS BY THE APPLICANT FOR COMPANY'S SHARES, CERTIFICATES BY AUD ITORS ETC. UNFORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVES TIGATION REPORT AND THE STATEMENT OF MR. MAHES GARG. TO ELEVATE THE INFEREN CE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS WOULD BE IMPROPER, MORE SO WHEN THE ASSESSEE PRODUC ED MATERIAL. THE LEAST THAT THE ASSESSING OFFICER OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NECESSARY, INVOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLICANTS OR DIRECTORS. NO EFFORT WAS MA DE IN THAT REGARD. IN THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCL OSED WAS UNTRUSTWORTHY OR LACKED CREDIBILITY THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FACTS AN D THE STATEMENTS OF MR.MAHESH GARG THAT THE INCOME SOUGHT TO BE ADDED F ELL WITHIN THE DESCRIPTION OFSECTION 68 OF THE INCOME TAX ACT 1961 . HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRCUMSTANCES, THE COURT IS S ATISFIED THAT THE FINDING OF THE TRIBUNAL IN THIS CASE ACCORDS WITH THE RATIO OF THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS (SUPRA). THE DECISION IN THIS CASE IS BASED ON THE PECULIAR FACTS WHICH ATTRACT THE RATIO OF LOVELY EXPORTS (SUPRA). WHERE THE ASSESSEE ADDUCES EVIDENCE IN SUPPORT OF THE SHARE APPLICATION MONIES, IT IS OPEN TO THE ASSESSING OFFICER TO EXAMINE IT AND REJECT IT ON TENABLE GROUNDS. IN CASE HE WISHES TO RELY ON THE REPORT OF THE INVESTIGATION AUTHORITIES, SOME M EANINGFUL ENQUIRY OUGHT TO BE CONDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE ASSESSEE AND THE ALLEGED HAWALA OPERATORS, SUCH A LINK WAS SHOWN TO BE PRESENT IN THE CASE OF NOVA PROMOTERS &FINLEASE (P) LTD. (SUPRA) RELIED UPON BY THE REVENUE. WE ARE THEREFORE NOT TO BE UNDERSTOOD TO CONVEY THA T IN ALL CASES OF SHARE CAPITAL ADDED UNDER SECTION M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 38 88 8 THE RATIO OF LOVELY EXPORTS (SUPRA) IS ATTRACTED, I RRESPECTIVE OF THE FACTS, EVIDENCE AND MATERIAL. ' 34. WE NOTE THAT ASSESSEE UNDER CONSIDERATION, NOT ONLY HAS PROVED THE SOURCE, BUT HE HAS PROVED SOURCE OF SOURCE ALSO. PARA 29 OF THI S ORDER CONTAINS THE CHART, WHICH EXPLAINS THAT ASSESSEE HAS PROVED SOURCE OF SOURCE, WHICH HE NEED NOT TO PROVE. IN THIS CASE ON HAND,THE ASSESSEE HAD DISCHARGED ITS O NUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLI CANTS, THEREAFTER THE ONUS SHIFTED TO AO TO DISPROVE THE DOCUMENTS FURNISHED B Y ASSESSEE, CANNOT BE BRUSHED ASIDE BY THE AO TO DRAW ADVERSE VIEW, CANNOT BE COU NTENANCED. IN THE ABSENCE OF ANY INVESTIGATION, MUCH LESS GATHERING OF EVIDENCE BY THE ASSESSING OFFICER, WE HOLD THAT AN ADDITION CANNOT BE SUSTAINED MERELY BA SED ON INFERENCES DRAWN BY CIRCUMSTANCE.APPLYING THE PROPOSITIONS LAID DOWN IN THESE CASE LAWS TO THE FACTS OF THIS CASE, WE ARE INCLINED TO UPHOLD THE ORDER O F THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 35. WE NOTE THAT BEFORE US THE DEPARTMENT HAS ALSO RAISED THE GROUND NO. 2 STATING THAT: LD. CIT(A) HAS ERRED INNOT FOLLOWING THE DECISION B Y THE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJ MANDIR ESTATE PRIVATELIMITED REPORTED I N 70 TAXMANN 124(CAL) WE ARE OF THE VIEW THAT JUDGMENT OF THE HON`BLE HIG H COURT OF CALCUTTA IN THE CASE OF RAJ MANDIR ESTATE PRIVATE LIMITED REPORTED IN 70 TAXMANN 124(CAL), RELATES TO SECTION 263 OF THE ACT. THAT IS, IN THIS JUDGMENT, THE ISSUE WAS THAT WHETHER LD CIT WAS RIGHT IN EXERCISING THE JURISDIC TION UNDER SECTION 263 OF THE ACT OR NOT. IN THIS CASE, THE LD CIT HAD DIRECTED T HE ASSESSING OFFICER TO EXAMINE THE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF T HE SHARE SUBSCRIBERS. THE LD CIT HAD GIVEN DIRECTION TO THE ASSESSING OFFICER AND T HIS DOES NOT MEAN THAT LD CIT HAS ADJUDICATED THE ISSUE AGAINST THE ASSESSEE. IT IS J UST DIRECTION GIVEN BY THE LD CITTO ASSESSING OFFICER AND THEREFORE, DOES NOT APPLY TO THE FACTS OF THE ASSESSEE. THEREFORE, ISSUE IN THE CASE OF RAJ MANDIR ESTATE PRIVATE LIMITED REPORTED (SUPRA) IS DISTINGUISHABLE ON FACTS, THAT IS, IT WAS ONLY T HE DIRECTION OF THE LD CIT TO THE ASSESSING OFFICER TO EXAMINE THE GENUINENESS, CREDI TWORTHINESS AND IDENTITY OF THE SHARE SUBSCRIBERS, HENCE, DOES NOT APPLY TO THE ASS ESSEE UNDER CONSIDERATION. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 39 99 9 36. WE NOTE THAT THE DIRECTOR OF THE ASSESSEE COMPA NY, MR. SIDDHESWAR HALDER, VIDE ITS LETTER, DATED 20.03.2015, SUBMITTED IN RES PONSE TO NOTICE U/S.131OF THE ACT, THE FOLLOWING INFORMATION AND DOCUMENTS, VIZ: COPY OF PAN CARD FOR IDENTITY PROOF AND COPY OF DRIVING LICENSE AS A PROOF OF ADD RESS, COPY OF INCOME TAX RETURN FOR THE A.Y. 2010-11, 2011-12 &2012-13, COPY OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET FOR THE F.Y. 2009-10 ONWARDS, COP Y OF BANK STATEMENT FOR THE RELEVANT PERIOD, AND OTHER DETAILS FOR HIS PERSONAL IDENTITY. THE SUBSCRIBER COMPANIES SUBMITTED EVERY DETAIL AS MENTIONED IN PA RA 27 OF THIS ORDER. WE NOTE THAT DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED SOME ADDITIONAL EVIDENCES AND INFORMATION WHICH THE LD. CIT(A) HAS SENT FOR REMAND REPORT FOR EXAMINATION OF THE ASSESSING OFFICER. THIS CLINCHIN G REMAND SUPPORTED ASSESSEES GRIEVANCE. AFTER GETTING PROPER REMAND REPORT, THE LD. CIT(A) CAME TO THE CONCLUSION THAT ASSESSEE HAS PROVED IDENTITY, CREDI TWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. WE NOTE THAT SOURCE OF FUND OF SHARE APPLICANTS VIZ. SARVOTTAM COMMERCIAL PVT. LTD., M/S. LANDMARK EXIM PVT. LTD A ND M/S GANPATI HIRISE PVT. LTD, IS DIRECTLY FROM M/S. EMAMI BIOTECH LTD. (NOW M/S. EMAMI AGROTECH LTD.) AND THE SOURCE OF SOURCE OF FUND OF THE SHARE APPLI CANTS VIZ. M/S. GHAZAL TEXTILES AND FINANCE PVT. LTD AND M/S. PROCTON COMMERCE PVT. LTD, IS ALSO M/S EMAMI BIOTECH LTD. (NOW M/S. EMAMI AGROTECH LTD.), WHICH IS A HIGHLY REPUTED COMPANY. THEREFORE, ASSESSEE HAS EVEN PROVED THE SO URCE OF SOURCE OF SHARE APPLICANTS IN THE INSTANT CASE. WE NOTE THAT SECTIO N 68 OF THE ACT PROVIDES THAT IF ANY SUM FOUND CREDITED IN THE YEAR IN RESPECT OF WH ICH THE ASSESSEE FAILS TO EXPLAIN THE NATURE AND SOURCE, SHALL BE ASSESSED AS ITS UND ISCLOSED INCOME. IN THE FACTS OF THE PRESENT CASE, BOTH THE NATURE & SOURCE OF THE S HARE APPLICATION RECEIVED WAS FULLY EXPLAINED BY THE ASSESSEE. THE ASSESSEE HAD D ISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE S HARE APPLICANTS. THE PAN DETAILS, BANK ACCOUNT STATEMENTS, AUDITED FINANCIAL STATEMENTS AND INCOME TAX ACKNOWLEDGMENTS WERE PLACED ON AO'S RECORD. M/S DELIGHT GRIHNIRMAN PVT. LTD. ITA NO.1755/KOL/2017 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 4 44 40 00 0 ACCORDINGLY ALL THE THREE CONDITIONS AS REQUIRED U/ S. 68 OF THE ACT I.E. THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WAS PLACED BEFORE THE AO AND THE ONUS SHIFTED TO AO TO DISPROVE THE MATERIALS PL ACED BEFORE HIM. WITHOUT DOING SO, THE ADDITION MADE BY THE AO IS BASED ON CONJECT URES AND SURMISES CANNOT BE JUSTIFIED. IN THESE PECULIAR FACTS AND CIRCUMSTANC ES AND IN VIEW OF ASSESSING OFFICERS SUPPORTIVE REMAND REPORT AS ABOVE, NO ADD ITION IS WARRANTED UNDER SECTION 68 OF THE ACT. THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD CIT(A), HIS ORDER ON THIS ISSUE IS HEREBY UP HELD AND GROUNDS OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 37. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14.12.2018 . SD/- ( S. S. GODARA ) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 14/12/2018 ( RS, SR.PS ) / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. /THE APPELLANT- ITO, WARD-6(1), KOLKATA 2. ! / THE RESPONDENT- M/S DELIGHT GRIH NIRMAN PVT. LTD. 3. ' ( ) / THE CIT(A), 4. ' / CIT 5. #$% &&'( , '( , / DR, ITAT, KOLKATA 6. %)*+ / GUARD FILE. !# &
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