DCIT, CIR.-11(1), Kolkata, Kolkata V. M/s Jagannath Banwarilal Texofabs Pvt. Ltd., Kolkata

ITA 1762/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4909 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 05-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CIT LD
• Assessee Lawyers: AKKAL DUDHEWEWALA FCA LD
• Keywords: Unexplained cash credit; Bogus Share capital; Unexplained investment; Gift; Share purchase agreement; Source of fund; Retrospective amendment; Question of law; Accommodation entries; Onus to prove
• Section: 143(3); 260A; 133(6); 131; 68; 69

Judgement Text

1 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA [BEFORE SHRI A. T. VARKEY, JM & SHRI A.L.SAINI, AM] I.TA NO. 1762/KOL/2016 ASSESSMENT YEAR: 2012 - 13 D.C.I.T, CIR - 11(1), KOLKATA VS. M/S. JAGANNATH B ANWARILAL TEXOFABS PVT. LTD APPELLANT RESP ONDENT DATE OF HEARING 04.09.2018 DATE OF PRONOUNCEMENT 26 .10.2018 FOR THE APPELLANT SHRI ROBIN CHOUDHURY, ADDL. CIT, LD. SR.DR FOR THE RESPONDENT SHRI AKKAL DUDHEWEWALA, FCA, LD.AR ORDER PER SHRI A.T. VARKEY, JM THIS IS AN AP PEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (APPEALS) , 4 , KOLKATA DATED 20 - 05 - 2016 FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF THE LD. CIT(A) DELETING THE ADDITION MADE BY THE AO U/S. 68 OF THE ACT IN RESPECT OF ADDITION MADE BY THE AO ON SHARE SUBSCRIPTION MONEY RECEIVED DURING THE YEAR. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR AY 2012 - 13 ON 28.09.2012 SHOWING TOTAL INCOME OF RS.51, 76,909. - . LATER, THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED UPON THE ASSESSEE, WHICH WERE DULY COMPLIED WITH. FROM THE DETAILS FURNISHED THE AO NOTED THAT THE ASSESSEE COMPANY HAD RAISED CAPITAL AGAINST ALLOTMENT OF EQUITY SHARES DURING THE YEAR. IN THIS REGARD THE AO SOUGHT DETAILS CONCERNING CORRESPONDENCE MADE FOR SHARE APPLICATION, TRADE LICENSE/PROFESSIONAL TAX ETC. OF THE APPLICANT, ADDRESS PROOF, BOARD RESOLUTION & JUSTIFICATION OF ISSUING SHARES AT HIGH PREMIUM. AT PARA 3.4 OF THE ASSESSMENT ORDER THE AO ACKNOWLEDGES THAT THE RELEVANT DOCUMENTS OF THE SHARE APPLICANTS WHO HAD SUBSCRIBED TO THE ASSESSEES EQUITY CAPITAL I.E. 2 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . AUDITED ACCOUNTS, IT ACKNOWLEDGMENT, BANK STATEMENT, EXPLANATION REGARDING SOURCE OF THE SOURCE OF FUN DS, BOARD RESOLUTION, FORM 18 FILED BEFORE THE ROC ETC. WERE FURNISHED BY THE ASSESSEE AND WERE AVAILABLE ON HIS RECORD. BEFORE THE AO THE ASSESSEE ALSO FURNISHED A DETAILED JUSTIFICATION REGARDING THE PREMIUM CHARGED ON SHARES. THE AO THEREAFTER HAD ISSU ED SUMMONS UPON THE DIRECTORS OF THE INVESTEE COMPANIES, WHICH WERE SERVED BUT NONE OF THE DIRECTORS ATTENDED THE SUMMONS. THE AO NOTED THAT ALTHOUGH THE ASSESSEES TRANSACTION AND THE INTRODUCTION OF FRESH CAPITAL MAY APPEAR TO BE REAL BUT THE APPARENT HA D TO BE DISTINGUISHED FROM THE REAL. ACCORDING TO AO, MOST OF THE SHARE SUBSCRIBERS HAD PETTY INCOME IN FORM OF INTEREST OR COMMISSION AND THAT THEY DID NOT DECLARE ANY SUBSTANTIAL INCOME. HE FURTHER OBSERVED THAT THE ASSESSEE COMPANY DID NOT PAY ANY DIVID END ON THE SHARES ISSUED DURING THE YEAR. THE AO FURTHER REFERRED TO MODUS OPERANDI OF INTRODUCTION OF BOGUS SHARE CAPITAL WHEREIN UNACCOUNTED CASH IS FOUND DEPOSITED IN ACCOUNTS OF DIFFERENT COMPANIES, WHICH ARE ROUTED TO THE DESTINATION COMPANY I.E. THE ASSESSEE COMPANY IN FORM OF SHARE CAPITAL. REFERRING TO THE AFORESAID CIRCUMSTANCES AND THE JUDGMENTS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VSDURGA PRASAD MORE (82 ITR 542) &SUMATIDAYALVS CIT (214 ITR 801) AND THE THEORY OF PREPONDERANCE OF THE P ROBABILITY AND TAKING INTO ACCOUNT THE FACT THAT SHARE APPLICANTS DID NOT COMPLY WITH THE NOTICE U/S 131, THE AO HELD THAT THE ASSESSEE COMPANY HAD FAILED TO ESTABLISH THE EVIDENCES FURNISHED BY THE SHARE APPLICANTS BY NOT PRODUCING THEM AND HENCE IT FAILE D IN ITS DUTY TO DISCHARGE THE ONUS TO SUBSTANTIATE IDENTITY & CREDITWORTHINESS OF THE SHARE SUBSCRIBERS AND THE GENUINENESS OF THE TRANSACTIONS. THE AO ACCORDINGLY ADDED THE SHARE CAPITAL OF RS.10,00,000/ - ALONG WITH SHARE PREMIUM OF RS.4,90,00,000/ - TOTA LING RS.5,00,00,000/ - BY WAY OF UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY U/S. 68 OF THE ACT. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO DELETED THE SAME. AGGRIEVED BY THE LD. CIT(A)S DECISION, THE REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FURNISHED BEFORE US. WE NOTE THAT THE ASSESSEE HAS RAISED SHARE CAPITAL OF RS. 5,00,00,000/ - DURING THE YEAR UNDER CONSIDERATION. THIS CAPITAL WAS RAISED BY WAY OF ISSUE OF 10000 SHARES OF RS. 10/ - EACH AT A PREMIUM OF RS. 490/ - PER SHARE. THE AO ADDED BACK THE ENTIRE SHARE APPLICATION MONEY RAISED FROM THE SHARE APPLICANTS DURING THE YEAR UNDER CONSIDERATION PRIMARILY ON THE PREMISE THAT DIRECTORS OF THE SHAREHOLDER COMPANI ES FAILED TO APPEAR BEFORE HIM. THE LD. DR APPEARING ON BEHALF OF THE REVENUE ASSAILED THE ORDER OF THE LD. CIT(A). THE LD. DR ARGUED THAT MERE DOCUMENTARY EVIDENCES WERE NOT SUFFICIENT TO DISCHARGE THE GENUINENESS OF THE TRANSACTIONS AND THAT THE PERSONAL APPEARANCE OF DIRECTORS OF SHARE APPLICANTS WAS INDEED A PRE - REQUISITE TO 3 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . ASCERTAIN WHETHER THE THREE INGREDIENTS PRESCRIBED IN SECTION 68 STOOD SATISFIED. THE LD. DR THEREAFTER TOOK US THROUGH THE RELEVANT DOCUMENTS FURNISHED BY THE ASSESSEE COMPANY IN T HEIR PAPERBOOK. WITH REGARD TO THE IDENTITY OF THE SHARE SUBSCRIBERS, HE SUBMITTED THAT ALL THE SHARE APPLICANTS WERE PAPER COMPANIES AND THE FACT THAT NONE OF THE DIRECTORS ATTENDED THE SUMMONS PROVED THEIR NON - EXISTENCE. THEREAFTER THE LD. DR FIRST REFER RED TO THE INVESTMENT OF RS.50,00,000/ - MADE BY M/S COXIS FINANCE & INVESTMENT P LTD AND INVITED OUR ATTENTION TO ITS IT ACKNOWLEDGMENT FOR AY 2012 - 13 TO SHOW THAT IT HAD RETURNED A MEAGER INCOME AND HENCE THE SOURCE OF ITS PAYMENT OFSHARE APPLICATION MONI ES TO THE ASSESSEE COMPANY WAS IN DOUBT AND HENCE SUBMITTED THAT THE CREDITWORTHINESS OF ALL THE SHARE APPLICANTS WERE SUSPICIOUS. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT JUSTIFIED THE REASONS FOR ISSUING SHARES AT A HIGH PREMIUM AND THAT TH IS PARTICULAR ASPECT WAS NOT DEALT WITH BY THE LD. CIT(A).THEREFORE ACCORDING TO THE LD. DR, THE GENUINENESS OF THE TRANSACTION REMAINED UN - PROVED. HE THEREFORE VEHEMENTLY ARGUED THAT THE ORDER OF THE LD. CIT(A) BE REVERSED AND THAT THE ORDER OF THE AO BE RESTORED. 5. ON THE OTHER HAND THE LD. AR FIRST DREW OUR ATTENTION TO THE SEVERAL GROUNDS RAISED BY THE REVENUE IN THE APPEAL, EACH OF WHICH RELATED TO ALLEGED DELETION OF ADDITION MADE U/S 68 ON ACCOUNT OF LOAN CREDITORS AND THE DISALLOWANCE OF THE INTER EST PAID ON LOANS. THE LD. AR SUBMITTED THAT NONE OF THESE GROUNDS EMANATED FROM THE APPELLATE ORDER IN AS MUCH AS THERE WAS NO ADDITION OR DISALLOWANCE MADE BY THE AO ON ACCOUNT OF THE LOAN CREDITORS OR THE INTEREST PAID BY THE ASSESSEE COMPANY. THE LD. A R FURTHER SUBMITTED THAT THE LD. CIT(A)S DELETION OF ADDITION MADE BY THE AO U/S 68 ON ACCOUNT OF SHARE CAPITAL HAS NOT BEEN AGITATED BY THE REVENUE IN THE APPEAL. HE THEREFORE SUBMITTED THAT WHEN THE GROUNDS OF APPEAL ITSELF DID NOT EMANATE FROM THE APPE LLATE ORDER THE APPEAL PREFERRED BY THE REVENUE DESERVED TO BE DISMISSED. THEREAFTER ON THE MERITS OF THE CASE, OUR ATTENTION WAS DRAWN BY THE LD. AR TO PAGE NOS. 68 TO 476 OF THE PAPER BOOK FROM WHERE WE NOTE THAT THE FIFTEEN SHAREHOLDERS HAD SUBMITTED TH E FOLLOWING RELEVANT DETAILS AS CALLED FOR AND HAD CONFIRMED THE TRANSACTION WITH THE ASSESSEE COMPANY. THE EVIDENCES WHICH WERE FILED BEFORE THE AO, INCLUDED THE FOLLOWING DETAILS. (A) INCOME TAX RETURN OF THE SHARE HOLDERS (B)COPY OF THE BANK ACCOUNT OF THE SHARE HOLDERS (C) TRANSACTION WITH THE ASSESSEE WAS DULY HIGHLIGHTED IN THE BANK STATEMENT (D) EXPLANATION ALONG WITH EVIDENCE OF SOURCE OF SOURCE OF THE FUNDS OF THE APPLICANT (E) AUDITED ACCOUNTS OF THE SHARE HOLDERS 4 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . (F) BOARD RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF INVESTEE COMPANY (G) RELEVANT ADDRESS PROOFS BY WAY OF PROFESSIONAL TAX ENROLMENT CERTIFICATES / FORM 18 FILED BY THE APPLICANTS WITH ROC 6. THE LD. AR SUBMITTED THAT THE DETAILS OF PAN, IT ACKNOWLEDGMENT, PROFESSIONAL TA X ENROLMENT CERTIFICATES ETC. AND THE FORM 18 FURNISHED BY THE SHARE APPLICANTS WITH THE ROC DULY PROVED THE IDENTITY OF THE SHARE SUBSCRIBERS. HE FURTHER POINTED OUT THAT IN ALL CASES THE NOTICES ISSUED BY THE AO WERE DULY SERVED UPON THE SHARE APPLICANTS THROUGH THE POSTAL AUTHORITIES, WHICH FURTHER FORTIFIED THE EXISTENCE OF SHARE APPLICANTS AT THEIR GIVEN ADDRESSES. THE LD. AR THEREAFTER INVITED OUR ATTENTION TO THE RESPECTIVE BALANCE SHEETS OF THE SHARE APPLICANTS TO SHOW THAT EACH OF THEM HAD SUFFICIE NT FUNDS AVAILABLE AT THEIR DISPOSAL TO MAKE INVESTMENT IN THE ASSESSEE COMPANY. REFERRING TO THE RESPECTIVE BANK STATEMENTS, IT WAS FURTHER POINTED OUT THAT THE TRANSACTIONS WERE CONDUCTED THROUGH PROPER BANKING CHANNEL AND THAT THERE WERE NO CASH DEPOSIT S IN ANY OF THE BANK ACCOUNT OF THE SHARE APPLICANTS. HE ALSO INVITED OUR ATTENTION TO THE EXPLANATION FURNISHED BY EACH OF THE SHARE APPLICANTS REGARDING THEIR SOURCE OF FUNDS. IT WAS THUS SUBMITTED THAT THE FUND FLOW POSITION OF THE SHARE APPLICANT AND N OT THE PROFITABILITY WAS THE DECISIVE CRITERIA TO EXAMINE THE CREDITWORTHINESS OF THE SHARE APPLICANTS. REFERRING TO THE LD. CIT(A)S ORDER, IT WAS SUBMITTED THAT THESE FACTUAL ASPECTS WERE TAKEN INTO CONSIDERATION AND THEREAFTER THE LD. CIT(A) WAS PLEASED TO HOLD THAT THE CREDITWORTHINESS OF THE SHARE APPLICANTS HAD BEEN ESTABLISHED. WITH REGARD TO THE GENUINENESS OF THE TRANSACTION, THE LD. AR POINTED OUT THAT IT WAS NEVER THE AOS CASE THAT THE ASSESSEE DID NOT SUBSTANTIATE THE JUSTIFICATION FOR HIGH SHA RE PREMIUM. HE DREW OUR ATTENTION TO PARA 3.1 OF THE ASSESSMENT ORDER WHEREIN THE LD. AO NOTED THAT HE HAD CALLED FOR THE JUSTIFICATION OF SHARE PREMIUM TO WHICH THE ASSESSEE COMPANY HAD FURNISHED A DETAILED EXPLANATION ALONG WITH COMPUTATION OF PREMIUM, W HICH IS AVAILABLE AT PAGE 67 OF THE PAPERBOOK. ACCORDING TO LD. AR, BEING SATISFIED WITH THIS EXPLANATION, THE AO HAS NOWHERE IN THE ENTIRE ASSESSMENT ORDER ALLEGED THAT THE ASSESSEE COMPANY HAD FAILED TO JUSTIFY THE SHARE PREMIUM. IT WAS ALSO SUBMITTED TH AT THE LD. CIT(A) HAD ALSO DEALT WITH THIS ASPECT AT PARA 4.15 & 4.16 OF THE APPELLATE ORDER. THE LD. AR ALSO INVITED OUR ATTENTION TO THE ASSESSMENT ORDERS PASSED BY THE INCOME - TAX DEPARTMENT IN THE RESPECTIVE TAX ASSESSMENTS OF THE SHARE APPLICANTS TO FU RTHER SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE IDENTITY & CREDITWORTHINESS OF THE SHARE SUBSCRIBERS. 5 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . 7. BEFORE WE ADJUDICATE AS TO WHETHER THE LD. CIT(A)S ACTION IS RIGHT OR ERRONEOUS, LET US LOOK AT SECTION 68 OF THE ACT AND THE J UDICIAL PRECEDENTS ON THE ISSUE AT HAND. SECTION 68 UNDER WHICH, THE ADDITION HAS BEEN MADE BY THE AO READS AS UNDER: '68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR.' THE PHRASEOLOGY OF SECTION 68 IS CLEAR. THE LEGISLATURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH CREDIT MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IN THIS CASE THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS SHALL BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR'. THE SUPREME COURT WHILE INTERPRETING SIMILAR PHRASEOLOGY USED IN SECTION 69 HAS HELD THAT IN CREATING THE LEGAL FICTION THE PHRASEOLOGY EMPLOYS THE WORD 'MAY' AND NOT 'SHALL'. THUS THE UN - SATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS THE INCOME OF THE ASSESSEE AS ALSO HELD BY THE SUPREME COURT IN THE CASE OF CIT V. SMT. P . K. NOORJAHAN [1999] 237 ITR 570. 8. THE MAIN PLANK ON WHICH THE AO MADE THE ADDITION WAS BECAUSE THE DIRECTORS OF THE SHARE SUBSCRIBERS DID NOT TURN UP BEFORE HIM. FROM THE NOTICES ISSUED U/S 131, IT IS NOTED THAT EACH OF THE SHARE SUBSCRIBING COMPANY WAS REQUIRED TO FURNISH THE FOLLOWING DETAILS FOR EXAMINATION: - DETAILS OF SHARES OF ASSESSEE APPLIED FOR INCLUDING NUMBER OF SHARES, NOMINAL PRICE, PREMIUM AND AMOUNT - CORRESPONDENCE MADE FOR APPLICATION OF SHARES - COPY OF BALANCE SHEET, PROFIT & LOSS A/C, IT ACK FOR FY 2011 - 12 - COPY OF BANK STATEMENTS EVIDENCING TRANSACTION WITH ASSESSEE - SOURCE OF FUNDS FOR MAKING INVESTMENTS IN THE ASSESSEE COMPANY - TRADE LICENSE/P.TAX CERTIFICATE ETC. TOWARDS ADDRESS PROOF - COPY OF RESOLUTION PASSED BY THE BOARD AUTHORIZING INVESTMENT IN SHARES OF ASSESSEE - REASONS FOR MAKING PAYMENT OF PREMIUM. 9. IT IS NOTED THAT THE ALL THE ABOVE REQUISITIONED DOCUMENTS WERE FURNISHED BEFORE THE AO WHICH SUBSTANTIATED THE TRANSACTION BETWEEN THE ASSESSEE COMPANY AND THE SHAR E 6 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . APPLICANTS. IT IS THEREFORE NOT A CASE WHERE THE DOCUMENTS SOUGHT FROM THE APPLICANTS TO EXAMINE THE TRANSACTION WERE NOT AVAILABLE BEFORE THE AO. AS THE REGARDS THE ISSUE OF NON - APPEARANCE OF THE SHARE APPLICANTS, WE NOTE THAT IN SUCH A CASE THE HON'BLE APEX COURT IN THE CASE OF ORISSA CORPN. (P) LTD. (SUPRA) 159 ITR 78 AND THE HON'BLE GUJARAT HIGH COURT, IN THE CASE OF DY. CIT V. ROHINI BUILDERS [2002] 256 ITR 360 /[2003] 127 TAXMAN 523, HAS HELD THAT ONUS OF THE ASSESSEE (IN WHOSE BOOKS OF ACCOUNT CRED IT APPEARS) STANDS FULLY DISCHARGED IF THE IDENTITY OF THE CREDITOR IS ESTABLISHED AND ACTUAL RECEIPT OF MONEY FROM SUCH CREDITOR IS PROVED. IN CASE, THE ASSESSING OFFICER IS DISSATISFIED ABOUT THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNTS OF THE CREDI TORS, THE PROPER COURSE WOULD BE TO ASSESS SUCH CREDIT IN THE HANDS OF THE CREDITOR (AFTER MAKING DUE ENQUIRIES FROM SUCH CREDITOR). IN ARRIVING AT THIS CONCLUSION, THE HON'BLE COURT HAS FURTHER STRESSED THE PRESENCE OF WORD 'MAY' IN SECTION 68. RELEVANT O BSERVATIONS AT PAGES 369 AND 370 OF THIS REPORT ARE REPRODUCED HEREUNDER: - 'MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COULD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE ASSESSING OFFICER, CANNOT BE A GROUND TO TREAT THE LOANS TAKEN BY THE ASSESSEE FROM THOSE CREDITORS AS NON - GENUINE IN VIEW OF THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE CASE OF ORISSA CORPORATION [1986] 159 ITR 78. IN THE SAID DECISION THE SUPREME COURT HAS OBSERVED THAT WHEN THE ASSESSEE FURNISHES NAMES AND ADDRE SSES OF THE ALLEGED CREDITORS AND THE GIR NUMBERS, THE BURDEN SHIFTS TO THE DEPARTMENT TO ESTABLISH THE REVENUE'S CASE AND IN ORDER TO SUSTAIN THE ADDITION THE REVENUE HAS TO PURSUE THE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON - COM PLIANCE OF SUMMONS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE SUFFICIENT TO DRAW AND ADVERSE INFERENCE AGAINST THE ASSESSEE. IN THE CASE OF SIX CREDITORS WHO APPEARED BEFORE THE ASSESSING OFFICER AND WHOSE STATE MENTS WERE RECORDED BY THE ASSESSING OFFICER, THEY HAVE ADMITTED HAVING ADVANCED LOANS TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES AND IN CASE THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CASH AMOUNT DEPOSITED BY THOSE CREDITORS IN THEIR BANK ACCOUNTS, TH E PROPER COURSE WOULD HAVE BEEN TO MAKE ASSESSMENTS IN THE CASES OF THOSE CREDITORS BY' TREATING THE CASH DEPOSITS IN THEIR BANK ACCOUNTS AS UNEXPLAINED INVESTMENTS OF THOSE CREDITORS UNDER SECTION 69. 10. UNDISPUTEDLY THE SHARE APPLICANTS IN THIS CASE AR E THE BANK ACCOUNT HOLDER IN THEIR RESPECTIVE BANKS IN THEIR OWN NAME AND ARE SOLE OWNER OF THE CREDITS APPEARING IN THEIR BANK ACCOUNT FROM WHERE THEY ISSUED CHEQUES TO THE ASSESSEE COMPANY. FOR THE PROPOSITION THAT A BANK ACCOUNT HOLDER HIMSELF IS THE 'O WNER' OF 'CREDITS' APPEARING IN HIS ACCOUNT (WITH THE RESULT THAT HE HIMSELF IS ACCOUNTABLE TO EXPLAIN THE SOURCE OF SUCH CREDITS IN WHATEVER WAY AND FORM, THE SAME HAVE EMERGED) SUPPORT CAN BE DERIVED FROM SECTION 4 OF BANKERS BOOK EVIDENCE ACT 1891 WHICH READS AS UNDER: - '4. MODE OF PROOF OF ENTRIES IN BANKERS' BOOKS SUBJECT TO THE PROVISIONS OF THIS ACT, A CERTIFIED COPY OF ANY ENTRY IN A BANKERS' BOOK SHALL IN ALL LEGAL PROCEEDINGS BE RECEIVED AS PRIMA FACIE EVIDENCE OF THE EXISTENCE OF SUCH ENTRY, AND SHALL BE ADMITTED AS EVIDENCE OF THE MATTERS, TRANSACTIONS AND ACCOUNTS THEREIN RECORDED IN EVERY CASES WHERE, AND TO THE SAME EXTENT AS, THE ORIGINAL ENTRY ITSELF IS NOW BY LAW ADMISSIBLE, BUT NOT FURTHER OR OTHERWISE. 7 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . 11. FOLLOWING THE SAID PROVISIONS , THE CO - ORDINATE BENCH OF ALLAHABAD TRIBUNAL IN THE CASE OF ANANDPRAKASHAGARWAL REPORTED IN 6 DTR (ALL - TRIB) 191 HELD AS UNDER: - THE QUESTION THAT REMAINS TO BE DECIDED NOW IS WHETHER THE SUBJECT MATTER OF TRANSFER WAS THE ASSET BELONGING TO THE TRANSFER OR/DONORS THEMSELVES. THERE IS ENOUGH MATERIAL ON RECORD WHICH GOES TO SHOW THAT THERE WERE VARIOUS CREDITS IN THE BANK ACCOUNTS OF THE DONORS, PRIOR TO THE TRANSACTION OF GIFTS, WHICH UNDISPUTEDLY BELONGING TO THE RESPECTIVE DONORS THEMSELVES, IN THEIR OW N RIGHTS. NO PART OF THE CREDITS IN THE SAID BANK' ACCOUNTS WAS GENERATED FROM THE APPELLANT AND/OR FROM ITS ASSOCIATES, IN ANY MANNER. THE CERTIFICATES ISSUED BY THE BANKS ARE CONSTRUABLE AS EVIDENCE ABOUT THE OWNERSHIP OF THE TRANSFERORS OR THEIR RESPECT IVE BANK ACCOUNTS, AS PER S.4 OF THE BANKERS' BOOKS EVIDENCE ACT 1891, WHICH READ AS UNDER: '4. WHERE AN EXTRACT OF ACCOUNT WAS DULY SIGNED BY THE AGENT OF THE BANK AND IMPLICIT IN ITS WAS A CERTIFICATE THAT IT WAS A TRUE COPY OF AN ENTRY CONTAINED IN ONE OF THE ORDINARY BOOKS OF THE BANK AND WAS MADE IN THE USUAL AND ORDINARY COURSE OF BUSINESS AND THAT SUCH BOOK WAS IN THE CUSTODY OF THE BANK, IT WAS HELD ADMISSIBLE IN EVIDENCE. RADHESHYAM V. SAFIYABAI IBRAHIM AIR 1988 BOM.361 : 1987 MAH. 725: 1987 BANK J 552. IN VIEW OF THE POSITION OF LAW AS DISCUSSED ABOVE, IT IS ALWAYS OPEN FOR A BORROWER TO CONTEND, THAT EVEN THE CREDITWORTHINESS OF THE LENDER STANDS PROVED TO THE EXTENT OF CREDITS APPEARING IN HIS BANK ACCOUNT AND HE SHOULD BE HELD TO BE SUCCESS FUL IN THIS CONTENTION. 12. IN THE CASE OF NEMI CHAND KOTHARI 136 TAXMAN 213, (SUPRA), THE HON'BLEGUAHATI HIGH COURT HAS THROWN LIGHT ON ANOTHER ASPECT TOUCHING THE ISSUE OF ONUS ON ASSESSEE UNDER SECTION 68, BY HOLDING THAT THE SAME SHOULD BE DECIDED B Y TAKING INTO CONSIDERATION THE PROVISION OF SECTION 106 OF THE EVIDENCE ACT WHICH SAYS THAT A PERSON CAN BE REQUIRED TO PROVE ONLY SUCH FACTS WHICH ARE IN HIS KNOWLEDGE. THE HON'BLE COURT IN THE SAID CASE HELD THAT, ONCE IT IS FOUND THAT AN ASSESSEE HAS A CTUALLY 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 A CCREDITED WITH ANY KNOWLEDGE. IN THIS 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 PAGE 260 TO 262, 264 AND 265 OF THE REPORT ARE REPRODUCED HER EIN BELOW: - 'WHILE INTERPRETING THE MEANING AND SCOPE OF SECTION 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 LOGICALLY PERMITTED BY THE STATUTE ITSELF OR BY S OME OTHER LAW CONNECTED THEREWITH OR RELEVANT THERETO. KEEPING IN VIEW THESE FUNDAMENTALS OF INTERPRETATION 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 UNDER SECTIO N 68 BY THE REVENUE DEPARTMENT SHALL REMAIN CONFINED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR NOR DOES THE WORDING OF SECTION 68 INDICATE THAT SECTION 68 DOES NOT AUTHORIZE THE REVENUE DEPARTMENT TO MAKE INQUIRY INT O THE SOURCE(S) OF THE CREDIT AND/OR SUB - CREDITOR. THE LANGUAGE EMPLOYED BY SECTION 68 CANNOT BE READ TO IMPOSE SUCH LIMITATIONS ON THE POWERS OF THE ASSESSING OFFICER. THE LOGICAL CONCLUSION, THEREFORE, HAS TO BE, AND WE HOLD THAT AN INQUIRY UNDER SECTION 68 NEED NOT NECESSARILY BE KEPT CONFINED BY THE ASSESSING OFFICER WITHIN THE TRANSACTIONS, WHICH TOOK PLACE BETWEEN THE ASSESSEE AND HIS CREDITOR, BUT THAT THE SAME MAY BE 8 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . EXTENDED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE CREDITOR AND HIS S UB - CREDITOR. THUS, 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 ASSESSEE 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 CASH CREDIT, SECTION 68 GIVES AMPLE FREEDOM TO THE ASSESSING OFFICER TO MAKE INQUIRY NOT ONLY I NTO THE SOURCE(S)OF THE CREDITOR BUT ALSO OF HIS (CREDITOR'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 ROUTED THROUGH THE SUB - CREDITORS, ACTUALLY BELONGS T O, OR WAS OF, THE ASSESSEE HIMSELF. IN OTHER WORDS, WHILE SECTION 68 GIVES THE LIBERTY TO THE ASSESSING OFFICER TO ENQUIRE INTO THE SOURCE/SOURCE FROM WHERE THE CREDITOR HAS RECEIVED THE MONEY, SECTION 106 MAKES THE ASSESSEE LIABLE TO DISCLOSE ONLY THE SOU RCE(S) FROM WHERE HE HAS HIMSELF RECEIVED THE CREDIT AND IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THESOURCE(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 TOGETHER, 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 CONSTRUCTION OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF THE IN COME - TAX ACT WILL BE THAT THOUGH APART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSESSEE MUST ESTABLISH THE GENUINENESS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF HIS CREDITOR, THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF T HE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS 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 GENUINENESS 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 ADVANCE THE CASH CREDIT TO THE CREDITOR FROM WHOM THE CASH CREDIT HAS BEEN. EVENTUALLY, RECEIVED BY THE ASSESSEE. IT, THEREFORE, FURTHER LOGICALLY FOLLOWS THAT THE CREDITOR'S CREDITWORTHINESS HAS TO BE JUDGED VIS - A - VIS THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR, AND IT IS NOT THE BUSINESS OF THE ASSESSEE 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 CREDITWORTHINESS OF THE SUB - CREDITORS, FOR, THESE ASPECTS MAY NOT BE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSES SEE. ' ********** ' ... 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 THEREOF FROM THE CREDITOR, BY WAY OF C HEQUE 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 AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE . IN OTHER WORDS, THE GENUINENESS AS WELL AS THE CREDITWORTHINESS OF A CREDITOR HAVE TO BE ADJUDGED VIS - A - VIS THE TRANSACTIONS, WHICH HE HAS WITH THE ASSESSEE. THE REASON WHY WE HAVE FORMED THE OPINION THAT IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OU T THE ACTUAL SOURCE OR SOURCES FROM WHERE THE CREDITOR HAS ACCUMULATED THE AMOUNT, WHICH HE ADVANCES, AS LOAN, 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 CR EDITOR VIS - A - VIS THE TRANSACTIONS WHICH HAD TAKEN PLACE BETWEEN THE ASSESSEE 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 FIND OUT AS TO WHAT SOURCES FROM WHERE T HE CREDITOR HAD RECEIVED THE AMOUNT, HIS SPECIAL KNOWLEDGE UNDER SECTION 106 OF THE EVIDENCE ACT MAY VERY WELL REMAIN CONFINED ONLY TO THE TRANSACTIONS, WHICH HE HAD' WITH THE CREDITOR AND HE MAY NOT KNOW WHAT TRANSACTION(S) HAD TAKEN PLACE BETWEEN HIS CRE DITOR AND THE SUB - CREDITOR... ' 9 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . ********** 'IN OTHER WORDS, THOUGH UNDER SECTION 68 AN ASSESSING 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 - CREDITO R, THAT THE TRANSACTION BETWEEN THE TWO WERE NOT GENUINE AND THAT THE SUB - CREDITOR HAD NO CREDITWORTHINESS, IT WILL NOT NECESSARILY MEAN THAT THE LOAN ADVANCED BY THE SUB - CREDITOR TO THE CREDITOR WAS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE UNLESS TH ERE IS EVIDENCE, DIRECT 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 CREDITORS, NAMELY, NEMICHANDNAHATA AND SONS (HUF) AND PAWAN KUMAR AGARWALLA. THE APPELLANT HAD ALSO SHOWN, IN ACCORDANCE WITH THE BURDEN, 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 CREDITORS AFOREMENTIONED. IN FACT THE FACT THAT THE ASSESSEE HAD RECEIVED THE SAID AMOUNTS BY W AY OF CHEQUES WAS NOT IN DISPUTE. ONCE THE ASSESSEE HAD ESTABLISHED THAT HE HAD RECEIVED THE SAID AMOUNTS FROM THE CREDITORS AFOREMENTIONED BY WAY OF CHEQUES, THE ASSESSEE MUST BE TAKEN TO HAVE PROVED THAT THE CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE T HE LOANS. THEREAFTER THE BURDEN HAD SHIFTED TO THE ASSESSING OFFICER TO PROVE THE CONTRARY. ON MERE FAILURE ON THE PART OF THE CREDITORS TO SHOW THAT THEIR SUB - CREDITORS HAD CREDITWORTHINESS TO ADVANCE THE SAID LOAN AMOUNTS TO THE ASSESSEE, SUCH FAILURE, A S A COROLLARY, COULD NOT HAVE BEEN AND OUGHT NOT TO HAVE BEEN, UNDER THE LAW, TREATED AS THE INCOME FROM THE UNDISCLOSED SOURCES OF THE ASSESSEE HIMSELF, WHEN THERE WAS NEITHER DIRECT NOR CIRCUMSTANTIAL EVIDENCE ON RECORD THAT THE SAID LOAN AMOUNTS ACTUALL Y 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 ABSENCE OF ANY SUCH EVIDENCE ON RECORD, THE ASSESSING OFFICER COULD NOT HAVE TREATED 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 MERELY ON THE FAILURE OF THE SUB - CREDITORS TO PROVE THEIR CREDITWORTHINESS. 13. IN THE CASE OF CIT VSJALAN HARD COKE LTD (95 TAXMANN.COM 330), THE HONBLE RAJASTHAN HIGH COURT NOTED THAT THE ASSESSEE HAD FURNISHED THE DETAILS OF THE SHARE APPLICANTS BUT EXPRESSED ITS INABILITY TO PRODUCE THE SHARE APPLICANTS BEFORE THE AO FOR EXAMINATION. THE HONBLE HIGH COURT HELD THAT ME RE NON - APPEARANCE OF SHARE APPLICANTS COULD NOT BE REASON ENOUGH TO ASSESS THE SHARE APPLICATION MONIES RECEIVED BY WAY OF UNEXPLAINED CASH CREDIT. THE SLP FILED BY THE REVENUE AGAINST THIS JUDGMENT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. THE RELE VANT EXTRACTS OF THE JUDGMENT ARE AS FOLLOWS: 6.2 TAKING INTO CONSIDERATION THE AFORESAID DECISION WE ARE OF THE CONSIDERED OPINION THAT COMPANY CANNOT BE ASSESSED FOR THE INCOME TAX TO FIND OUT THE PERSON WHO HAS APPLIED AS SHARE HOLDER. THE VIEW OF TAKE N BY THE TRIBUNAL IS JUST AND PROPER, THEREFORE, THE ISSUE IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 14. FURTHER, IN THE CASE OF CIT V. ORCHID INDUSTRIES (P.) LTD. [2017] 88 TAXMANN.COM 502/397 ITR 136, THE HONBLE BOMBAY HIGH COUR T ON THE ISSUE OF NON - APPEARANCE OF SHARE APPLICANTS HAD HELD AS UNDER: 10 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . '[5] THE ASSESSING OFFICER ADDED RS.95 LAKHS AS INCOME UNDER SECTION 68 OF THE INCOME TAX ACT ONLY ON THE GROUND THAT THE PARTIES TO WHOM THE SHARE CERTIFICATES WERE ISSUED AND WHO HAD PAID THE SHARE MONEY HAD NOT APPEARED BEFORE THE ASSESSING OFFICER AND THE SUMMONS COULD NOT BE SERVED ON THE ADDRESSES GIVEN AS THEY WERE NOT TRACED AND IN RESPECT OF SOME OF THE PARTIES WHO HAD APPEARED, IT WAS OBSERVED THAT JUST BEFORE ISSUANCE OF CHEQ UES, THE AMOUNT WAS DEPOSITED IN THEIR ACCOUNT. [6] THE TRIBUNAL HAS CONSIDERED THAT THE ASSESSEE HAS PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE PARTY SUCH AS PAN OF ALL THE CREDITORS ALONG WITH THE CONFIRMATION, THEIR BANK STATEM ENTS SHOWING PAYMENT OF SHARE APPLICATION MONEY. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECORD REGARDING ISSUANCE OF SHARES I.E. ALLOTMENT OF SHARES TO THESE PARTIES, THEIR SHARE APPLICATION FORMS, ALLOTMENT LET TERS AND SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THESE PERSONS DISCLOSES THAT THESE PERSONS HAD SUFFICIENT FUNDS IN THEIR ACCOUNTS FOR INVESTING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLU MINOUS DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDGMENT IN CASE OF GAGANDEEP INFRASTRUCTURE (P.) LTD. (SUPRA) WOULD BE APPLICABLE IN THE FACTS AND CIRCUMS TANCES OF THE PRESENT CASE' 15. FURTHER, IN THE CASE OF CIT V. S. KAMALJEET SINGH [2005] 147 TAXMAN 18(ALL.) THEIR LORDSHIPS, ON THE ISSUE OF DISCHARGE OF ASSESSEE'S ONUS IN RELATION TO A CASH CREDIT APPEARING IN HIS BOOKS OF ACCOUNT, HAS OBSERVED AND HEL D AS UNDER: - '4. THE TRIBUNAL HAS RECORDED A FINDING THAT THE ASSESSEE HAS DISCHARGED THE ONUS WHICH WAS ON HIM TO EXPLAIN THE NATURE AND SOURCE OF CASH CREDIT IN QUESTION. THE ASSESSEE DISCHARGED THE ONUS BY PLACING (I) CONFIRMATION LETTERS OF THE CASH CR EDITORS; (II) THEIR AFFIDAVITS; (III) THEIR FULL ADDRESSES AND GIR NUMBERS AND PERMANENT ACCOUNT NUMBERS. IT HAS FOUND THAT THE ASSESSEE'S BURDEN STOOD DISCHARGED AND SO, NO ADDITION TO HIS TOTAL INCOME ON ACCOUNT OF CASH CREDIT WAS CALLED FOR. IN VIEW OF THIS FINDING, WE FIND THAT THE TRIBUNAL WAS RIGHT IN REVERSING THE ORDER OF THE AA C, SETTING ASIDE THE ASSESSMENT ORDER. 16. FURTHER THE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF S.K. BOTHRA& SONS, HUF V. INCOME - TAX OFFICER, WARD - 46(3), KOLKAT A (347 ITR 347)ALSO 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 TRANSACTION, 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 OFFICER 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 S UPPORT OF THE LOAN TRANSACTION, THE ONUS SHIFTS UPON THE ASSESSING OFFICER 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 B EFORE US, THE APPELLANT BY PRODUCING THE LOAN - CONFIRMATION - CERTIFICATES SIGNED BY THE CREDITORS, DISCLOSING THEIR PERMANENT ACCOUNT NUMBERS AND ADDRESS AND FURTHER INDICATING THAT THE LOAN WAS TAKEN BY ACCOUNT PAYEE CHEQUES, NO DOUBT, PRIMA FACIE, DISCHARG ED THE INITIAL BURDEN AND THOSE MATERIALS DISCLOSED BY THE ASSESSEE PROMPTED THE ASSESSING OFFICER TO ENQUIRE THROUGH THE INSPECTOR TO VERIFY THE STATEMENTS. 17. FURTHER, THE HON'BLE HIGH COURT AT CALCUTTA IN THE CASE OF CRYSTAL NETWORKS (P.) LTD. V. CO MMISSIONER OF INCOME - TAX (353 ITR 171), ON THE ISSUE OF UNEXPLAINED CASH CREDITS, HELD THAT WHEN THE BASIC EVIDENCES ARE ON RECORD THE MERE FAILURE OF THE CREDITOR TO APPEAR CANNOT BE BASIS TO MAKE ADDITION. THE COURT HELD AS FOLLOWS: 11 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . 8. ASSAILING THE SAI D JUDGMENT OF THE LEARNED TRIBUNAL LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT INCOME - TAX OFFICER DID NOT CONSIDER THE MATERIAL EVIDENCE SHOWING THE CREDITWORTHINESS AND ALSO OTHER DOCUMENTS, VIZ., CONFIRMATORY STATEMENTS OF THE PERSONS, OF HAVING ADVAN CED CASH AMOUNT AS AGAINST THE SUPPLY OF BIDIS. THESE EVIDENCE WERE DULY CONSIDERED BY THE COMMISSIONER 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 MATERIAL D OCUMENTS 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 COMMISSIONER OF INCOME - TAX (A PPEALS), THEREFORE, IT WAS NOT PROPER TO TAKE UP SOME PORTION OF THE JUDGMENT OF THE COMMISSIONER OF INCOME - TAX (APPEALS) AND TO IGNORE THE OTHER PORTION OF THE SAME. THE JUDICIAL PROPRIETY AND FAIRNESS DEMANDS THAT THE ENTIRE JUDGMENT BOTH FAVOURABLE AND UNFAVOURABLE SHOULD HAVE BEEN CONSIDERED. 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 S UPREME COURT IN THE CASE OF UDHAVDASKEWALRAM V. CIT [19671 66 ITR 462. IN THIS JUDGMENT IT IS NOTICED THAT THE SUPREME COURT AS PROPOSITION OF LAW 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 ASSESSEE AND THE COMMISSIONER IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. 10. WE FIND CONSIDERABLE FORCE OF THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE APPELLANT THAT THE TRIBUNAL HAS MERELY NOTIC ED THAT SINCE THE SUMMONS ISSUED BEFORE ASSESSMENT RETURNED UNSERVED AND NO ONE CAME FORWARD TO PROVE. THEREFORE, IT SHALL BE ASSUMED THAT THE ASSESSEE FAILED TO PROVE THE EXISTENCE OF THE CREDITORS OR FOR THAT MATTER THE CREDITWORTHINESS. AS RIGHTLY POINT ED OUT BY THE LEARNED COUNSEL THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) HAS TAKEN THE TROUBLE OF EXAMINING OF ALL OTHER MATERIALS AND DOCUMENTS, VIZ., CONFIRMATORY STATEMENTS, INVOICES, CHALLANS AND VOUCHERS SHOWING SUPPLY OF BIDIS AS AGAINST THE ADVAN CE. THEREFORE, THE ATTENDANCE OF THE WITNESSES PURSUANT TO THE SUMMONS ISSUED, IN OUR VIEW, IS NOT IMPORTANT. THE IMPORTANT IS TO PROVE AS TO WHETHER THE SAID CASH CREDIT WAS RECEIVED AS AGAINST THE FUTURE SALE OF THE PRODUCT OF THE ASSESSEE OR NOT. WHEN I T WAS FOUND BY THE COMMISSIONER OF INCOME - TAX (APPEALS) ON FACTS HAVING EXAMINED THE DOCUMENTS THAT THE ADVANCE GIVEN BY THE CREDITORS HAVE BEEN ESTABLISHED THE TRIBUNAL SHOULD NOT HAVE IGNORED THIS - FACT FINDING. INDEED THE TRIBUNAL DID NOT REALLY TOUCH THE AFORESAID FACT FINDING OF THE COMMISSIONER OF INCOME - TAX (APPEALS) AS RIGHTLY POINTED 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 THE SAID JUDGME NT NOTED BY US AT PAGE 464, THE SUPREME COURT HAS OBSERVED AS FOLLOWS: 'THE INCOME - TAX APPELLATE TRIBUNAL PERFORMS A JUDICIAL FUNCTION UNDER THE INDIAN INCOME - TAX ACT; IT IS INVESTED WITH AUTHORITY TO DETERMINE FINALLY ALL QUESTIONS OF FACT. 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 ASSESSEE AND THE COMMISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. ' 11. THE TRIBUNAL MUST, IN DECIDING A N APPEAL, CONSIDER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL CONTENTIONS 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 TRIBUNAL DOES NOT DISCHARGE THE DUTY IN THE MANNER AS ABOVE THEN IT SHALL BE ASSUMED THE JUDGMENT OF THE TRIBUNAL SUFFERS FROM MANIFEST INFIRMITY. 12. TAKING INSPIRATION FROM THE SUPREME COURT OBSERVATIONS WE ARE CONSTRAINED TO HOLD IN THIS MATTER THAT TH E TRIBUNAL HAS NOT ADJUDICATED UPON THE CASE OF THE ASSESSEE IN THE LIGHT OF THE EVIDENCE AS FOUND BY THE COMMISSIONER OF INCOME - TAX (APPEALS). WE ALSO FOUND NO SINGLE WORD HAS BEEN SPARED TO UP SET THE FACT FINDING OF THE COMMISSIONER OF INCOME - TAX (APPEA LS) THAT THERE ARE MATERIALS TO SHOW THE CASH CREDIT WAS RECEIVED FROM VARIOUS PERSONS AND SUPPLY AS AGAINST CASH CREDIT ALSO MADE. 12 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . 13. HENCE, THE JUDGMENT AND ORDER OF THE TRIBUNAL IS NOT SUSTAINABLE. ACCORDINGLY, THE SAME IS SET ASIDE. WE RESTORE THE JU DGMENT AND ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS). THE APPEAL IS ALLOWED. 18. WHEN A QUESTION AS TO THE CREDITWORTHINESS OF A CREDITOR IS TO BE ADJUDICATED AND IF THE CREDITOR IS AN INCOME TAX ASSESSEE, IT IS NOW WELL SETTLED BY THE DECISION O F THE CALCUTTA HIGH COURT THAT THE CREDITWORTHINESS OF THE CREDITOR CANNOT BE DISPUTED BY THE AO OF THE ASSESSEE BUT THE AO OF THE CREDITOR. IN THIS REGARDS OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CIT VSDATAWAREPV T LTD (ITAT NO. 263 OF 2011) DATED 21.09.2011 WHEREIN THE COURT HELD AS FOLLOWS: IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSING OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX ASSESSEE. AFTER GETTING THE PAN NUMBER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE ASSESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINENESS' OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFICER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NOT ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CRE DENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMITTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OFFICER OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENESS' OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX (APPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL - ACCEPTED PRINCIPLE WHICH ARE REQUIRED TO BE FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH THE AUTHORITIES. 19. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE SUPREME 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 UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THA T IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE - COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. 20 . OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE CALCUTTA HIGH COURTIN THE APPEAL OF COMMISSIONER OF INCOME TAX, KOLKATA - IVVSROSEBERRY MERCANTILE (P) LTD., ITAT NO. 241 OF 2010 DATED 10 - 01 - 2011, WHER EIN IT WAS HELD AS BELOW: '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 INTO WHITE MONEY OR ACCOUNTED MONEY AND THE LD. CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION. ' 13 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . IT APPEARS FROM THE RECORD THAT IN THE ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION H AD 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 COMPANIES. THE ASSESSING OFFICER ON HIS PART CALLED FOR THE DETAILS FROM THE ASSES SEE 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 UNSATISFACTORY. CONSEQUENTLY, THE ASSESSING OFFICER INVOKED THE PROVISIONS UNDER SECTION 68/69 OF THE INCOME TAX ACT AND MADE ADDITION OF RS.24,00,000/ - . ON APPEAL THE LEARNED CIT (A) BY FOLLOWING THE DECISION OF THE SUPREME COU RT IN THE CASE OF CL. T. VS. M/S. LOVELY EXPORTS PVT. LTD., REPORTED IN (2008) 216 CTR 195 ALLOWED THE APPEAL BY HOLDING - THAT SHARE CAPITAL/PREMIUM OF RS. 24,00,000/ - RECEIVED FROM THE INVESTORS WAS NOT LIABLE TO BE TREATED UNDER SECTION 68 AS UNEXPLAINED CREDITS AND IT SHOULD NOT BE TAXED IN THE 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 CL. T. VS. 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 FAVOUR OF THE ASSESSEE AND THUS, NO SUBSTANTIAL QU ESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND IS DISMISSED. 2 1 . OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX VS M/S. NISHAN INDO COMMERCE LTD IN ITA NO. 52 OF 2011 DATED 2 DECEMBER, 2013 WHEREIN THE COURT HELD AS FOLLOWS: THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INCREASE 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 ASSESSEE COMPANY. THE ASSESSING OFFICER ACCORDINGLY TREATED THE INVESTMENT AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE FILE D AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) BEING THE FIRST APPELLATE AUTHORITY AND CONTENDED THAT THE ASSESSING OFFICER HAD NO MATERIAL TO SHOW THAT THE SHARE CAPITAL WAS THE INCOME OF THE ASSESSEE COMPANY AND AS SUCH THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT WAS WRONG. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AFTER HEARING THE DEPARTMENT AND THE ASSESSEE COMPANY DELETED THE ADDITION OF RS. 52, 03,500/ - TO THE INCOME OF THE ASSESSEE COMPANY DURING THE A SSESSMENT YEAR IN QUESTION. THE LEARNED COMMISSIONER OF INCOME TAX APPEALS FOUND THAT THERE WERE AS MANY AS 2155 ALLOTTEES, WHOSE NAMES, ADDRESSES AND RESPECTIVE SHARES ALLOCATION HAD BEEN DISCLOSED. THE COMMISSIONER OF INCOME TAX APPEALS, FURTHER FOUND T HAT THE ASSESSEE COMPANY RECEIVED THE APPLICATIONS THROUGH BANKERS TO THE ISSUE, WHO HAD BEEN APPOINTED UNDER THE GUIDELINES OF THE STOCK EXCHANGE AND THE ASSESSEE COMPANY HAD BEEN ALLOTTED SHARES ON THE BASIS OF ALLOTMENT APPROVED BY THE STOCK EXCHANGE. T HE ASSESSEE COMPANY HAD DULY FILED THE RETURN OF ALLOTMENT WITH THE REGISTRAR OF COMPANIES, GIVING COMPLETE PARTICULARS OF THE ALLOTTEES. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT INQUIRES HAD CONFIRMED THE EXISTENCE OF MOST OF THE SHAREHOLDERS AT THE ADDRESSES INTIMATED TO THE ASSESSING OFFICER, BUT THE ASSESSING OFFICER TOOK THE VIEW THAT THEIR INVESTMENT IN THE ASSESSEE COMPANY WAS NOT GENUINE, ON THE BASIS OF SOME EXTRANEOUS 14 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . REASONS. THE COMMISSIONER OF INCOME TAX (APPEALS) TOOK NOTE OF THE O BSERVATION OF THE ASSESSING OFFICER THAT ENQUIRY CONDUCTED BY THE INCOME 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 TH E ASSESSEE COMPANY COULD NOT BE ADDED AS UNEXPLAINED CASH CREDIT UNDER 'SECTION 68 OF THE INCOME TAX ACT. MOREOVER, IF THE NATURE AND SOURCE OF INVESTMENT BY ANY SHAREHOLDER, IN SHARES OF THE ASSESSEE COMPANY REMAINED UNEXPLAINED, LIABILITY COULD NOT BE FO ISTED ON THE COMPANY. THE CONCERNED SHAREHOLDERS WOULD HAVE TO EXPLAIN THE SOURCE OF THEIR FUND. THE LEARNED COMMISSIONER ON CONSIDERING THE SUBMISSIONS OF THE, RESPECTIVE PARTIES AND CONSIDERING THE MATERIALS, FOUND THAT THE 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 OPPORTUNITY OF REPRESENTATION AND/OR HEARING. LEARNED TRIBUNAL AGREED WITH THE FACTUAL FINDINGS OF 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 CITED JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME T AX VS. RUBY TRADERS AND EXPORTERS LIMITED REPORTED IN 236 (2003) ITR 3000 WHERE 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 C REDIT 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 OPPORTUNITIES BEING GIVEN TO THE ASSESSEE, NOTHING WAS DISCLOSED ABOUT THE I DENTITY OF THE SHAREHOLDERS. 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 SU BSCRIBING TO ABOUT 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., ALMOST 3 YEARS AFTER THE ALLOTMENT. BY AN ORDER DATED 2ND MAY, 2001, THIS COURT AD MITTED THE APPEAL ON THREE QUESTIONS WHICH ESSENTIALLY CENTRE AROUND THE QUESTION 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 OFFICER. 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 ASSESSEE HAD DISCLOSED THE PARTICULARS OF THE SHAREHOLDERS. THE FACTUAL FINDINGS CANNOT BE INTERFERED WITH, IN APPEAL. WE ARE OF THE VIEW THAT ONCE THE IDENTITY AND OTHER RELEVANT PARTICULARS OF SHAREHOLDERS ARE DISCLOSED, IT IS FOR THOSE SHAREHOLDERS TO EXPLAIN THE SOURCE OF TH EIR FUNDS AND NOT FOR THE ASSESSEE COMPANY TO SHOW WHEREFROM THESE SHAREHOLDERS OBTAINED FUNDS. 2 2 . FURTHER, 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. LEONARD COMMERCIAL (P) LTD IN ITAT NO. 114 OF 2011 DATED 13 TH JUNE, 2011 WHEREIN 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 IN DELETING THE ADDITION OF RS.8,52,0 00/ - , RS. 91,50,000/ - AND RS. 13,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL, SHARE APPLICATION MONEY AND INVESTMENT IN HTCCL RESPECTIVELY. 15 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . AFTER HEARING MD. NIZAMUDDIN, LEARNED ADVOCATE APPEARING ON BEHALF OF THE APPELLANT AND AFTE R 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 OF SHAREHOLDERS WITH THEIR COMPLETE ADDRESSES AND GIR NUMBERS F OR THE RELEVANT ASSESSMENT YEARS IN WHICH SHARE APPLICATION WAS CONTRIBUTED. IT FURTHER APPEARS THAT ALL THE PAYMENTS WERE MADE BY THE APPLICANTS BY ACCOUNT PAYEE CHEQUES. IT APPEARS FROM THE ASSESSING OFFICERS ORDER THAT HIS GRIEVANCE WAS THAT THE ASSESS EE 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 DISCLOSURE OF THE FULL PARTICULARS INDICATED ABOVE, TH E INITIAL ONUS OF THE ASSESSEE WAS SHIFTED AND IT WAS THE DUTY OF THE ASSESSING OFFICER TO ENQUIRE WHETHER THOSE PARTICULARS WERE CORRECT OR NOT AND IF THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PARTICULARS SUPPLIED WERE INSUFFICIENT TO DETECT THE REAL SHARE APPLICANTS, TO ASK FOR FURTHER 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 ASSESSING OFFICER WAS UNABLE TO ARRIVE AT A FINDING THAT THE PARTICULARS GIVEN BY THE 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 VALIDLY DISCHARGED. WE , THUS, FIND THAT BOTH THE AUTHORITIES BELOW, ON CONSIDERATION OF THE MATERIALS ON RECORD, RIGHTLY APPLIED THE CORRECT LAW WHICH ARE REQUIRED TO BE APPLIED IN THE FACTS OF THE PRESENT CASE AND, THUS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE CONCURRE NT FINDINGS OF FACT BASED ON MATERIALS ON RECORD. THE APPEAL IS, THUS, DEVOID OF ANY SUBSTANCE AND IS DISMISSED SUMMARILY AS IT DOES NOT INVOLVE ANY SUBSTANTIAL QUESTION OF LAW. 2 3 . FURTHER, IN THE CASE OF PR.CITVS HI - TECH RESIDENCY (P) LTD (96 TAXMANN.C OM 402), THE GRIEVANCE OF THE REVENUE BEFORE THE HONBLE DELHI HIGH COURT WAS THAT THE NONE OF THE INVESTORS IN THE SHARE CAPITAL OF THE ASSESSEE HAD PERSONALLY APPEARED BEFORE THE AO AND FOR THAT REASON THE ADDITION MADE BY THE AO U/S 68 WAS JUSTIFIED. WH ILE DISMISSING THE APPEAL OF THE REVENUE, THE HIGH COURT HELD AS FOLLOWS: 4. THE COURT FINDS THAT THE EXERCISE FOR DETERMINING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTORS OF THE SHARE CAPITAL OF THE ASSESSEE AS WELL AS LENDERS WAS UNDE RTAKEN IN AN ELABORATE MANNER BY THE CIT (A). COMMENTS FROM THE AO WERE SOUGHT. DETAILED REASONS HAVE BEEN GIVEN BY THE CIT (A) TO COME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCHARGED ITS ONUS OF ESTABLISHING THE IDENTITY, GENUINENESS AND CREDITWORTHINE SS OF BOTH THE INVESTORS AS WELL AS THE LENDERS. THIS HAS BEEN CONCURRED WITH BY THE ITAT IN THE IMPUGNED ORDER WHICH IS AGAIN AN EXTREMELY DETAILED ONE. 5. THE CONCURRENT FACTUAL FINDINGS OF BOTH THE CIT (A) AND ITAT HAVE NOT BEEN SHOWN TO BE PERVERSE BY THE APPELLANT. THIS IS VIRTUALLY THE FOURTH STAGE OF THE LITIGATION. 6. QUESTION (1) IS ACCORDINGLY ANSWERED IN THE NEGATIVE, I.E ., IN FAVOUR OF THE ASSESSEE. IT IS NOTED THAT THE SLP FILED BY THE REVENUE AGAINST THIS JUDGMENT HAS BEEN DISMISSED BY THE HO NBLE SUPREME COURT. 16 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . 2 4 . IN THE LIGHT OF THE AFORESAID DECISIONS OF THE HONBLE APEX COURT AND JURISDICTION HIGH COURT AND OTHER HIGH COURTS, LET US NOW EXAMINE THE PRESENT CASE IN HAND. WE WILL EXAMINE EACH SHARE SUBSCRIBERS TOTALING FIFTEEN (15). THE LD . AR HAS EXTENSIVELY BROUGHT OUT THE RELEVANT FACTS IN RESPECT OF EACH SHARE SUBSCRIBERS WHICH WILL THROW LIGHT AS TO THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSCRIBERS. WE NOTE FROM PAGES 68 TO 99 OF THE PAPER BOOK THE DETAILS OF M/S. COXIS FINANCE & INVESTMENT PVT. LTD. IS GIVEN. WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.50,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY IS A REGISTERED NON - BANKING FINANCIAL COMPANY WITH THE RESERVE BANK OF INDIA. COPY OF THE CERTIFICATE OF ENROLMENT ISSUED BY THE PROFESSIONAL TAX AUTHORITIES IDENTIFYING THE SAID APPLICANT HAS ALSO BEEN PLACED IN THE PAPERBOOK. FOR THE RELEVANT YEAR THE COMPANY HAD TURNOVER FROM TRADING IN SHARES & SECURITIES AND INTEREST INCOME WHICH AGGREGATED TO RS.4,20,03,297/ - . THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 6(1), KOLKATA AND WAS HAVING PAN AABCC4057B. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.5,18,28,833/ - AVAILABLE AS ON 31/03/2011 WHICH WAS SUFFICIENT ENOUGH TO COVER THE COST OF INVESTMENT OF RS.50,00,000/ - MADE IN THE ASSESSEE COMPANY . THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DETAILS FILED IN THE PAPER BOOK. IT IS NOTED THAT TH E INCOME - TAX ASSESSMENT OF THIS COMPANY WAS FRAMED BY THE TRO - 2, KOLKATA AND THE COPY OF THE ORDER PASSED U/S 143(3) IS ALSO AVAILABLE IN THE PAPER BOOK.THE LD. AR ALSO DREW OUR ATTENTION TO THE FACT THAT APART FROM INVESTING IN SHARES OF THE ASSESSEE COMP ANY, THE SHARE APPLICANT HAD ALSO ADVANCED LOAN OF RS.25,00,000/ - TO THE ASSESSEE DURING THE YEAR; DETAILS OF WHICH WERE AVAILABLE IN THE TAX AUDIT REPORT FILED IN THE PAPER BOOK. IT IS NOTED THAT THAT THE GENUINENESS OF THE RECEIPT OF LOAN FROM M/S. COXIS FINANCE & INVESTMENT PVT. LTD. AND ITS IDENTITY & CREDITWORTHINESS OF THIS APPLICANT WITH REGARD TO THIS LOAN TRANSACTION OF RS.25,00,000/ - HAS NOT BEEN DOUBTED BY THE AO. 2 5 . IN RESPECT OF M/S. ANMOLIKTRACON PVT. LTD., THE LD. AR DREW OUR ATTENTION TO PAGE 100 TO 122 OF THE PAPER BOOK FROM WHERE WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.25,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 20/09/1995 AND WAS HAVING COMPANY IDEN TIFICATION NUMBER U5110WB1995PTC074414. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 9(1), KOLKATA AND WAS HAVING PAN AACCA7904J. THIS COMPANY 17 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.48,37,82,527/ - AS ON 31/03/2012 AND RS.1,49,73,373/ - AS ON 31/03/2011 RESPECTIVELY. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS F ROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. 2 6 . IN RESPECT OF M/S. RADIANT EQUITY MANAGEMENT PRIVATE LIMITED, OUR ATTENTION WAS DRAWN BY THE LD . AR TO PAGES 123 TO 154 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.25,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 30/12/1994 AND WAS HAVING COMPAN Y IDENTIFICATION NUMBER U63090WB1994PTC066993. THIS COMPANY IS ALSO A REGISTERED NON - BANKING FINANCIAL COMPANY WITH THE RESERVE BANK OF INDIA. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 9(3), KOLKATA DECLARING INCOME OF RS.1,05,605/ - AND WAS HAVING PAN AABCR3645N. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.64,35,05,315/ - AS ON 31/03/2012. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEME NT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THA T THE INCOME - TAX ASSESSMENT OF THIS COMPANY WAS COMPLETED U/S 143(1) AND THE ORDER PASSED BY THE CPC, BENGALURU IS ALSO AVAILABLE IN THE PAPER BOOK. 2 7 . COMING TO M/S. AACHMAN MARKETING PVT. LTD., LD. AR DREW OUR ATTENTION TO PAGES 155 TO 176 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.25,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 29/03/1995 AND WAS HAVING COMPANY IDENTIFICATION NUMBER U51109WB1995P TC070285. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 1(4), KOLKATA AND WAS HAVING PAN AAECA5341B. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.5,64,18,145/ - AS ON 31/03/2012. THE COPY OF THE BANK STATEMEN T OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PE RUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS COMPANY WAS COMPLETED U/S 143(1) 18 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . AND THE ORDER PASSED BY THE CPC, BENGALURU IS ALSO AVAILABLE IN THE PAPER BOOK.THE LD. AR ALSO DREW OUR ATTENTION TO THE FACT THAT APART FROM INVESTING IN SHARES OF THE ASSESSEE COMPANY, THE SHARE APPLICANT HAD ALSO ADVANCED LOAN OF RS.22,16,000/ - TO THE ASSESSEE; DETAILS OF WHICH WERE AVAILABLE IN THE TAX AUDIT REPORT FILED IN THE PAPER BOOK. IT IS NOT ED THAT THAT THE GENUINENESS OF THE RECEIPT OF LOAN FROM M/S. AACHMAN MARKETING PVT LTD. AND ITS IDENTITY & CREDITWORTHINESS OF THIS APPLICANT WITH REGARD TO THIS LOAN TRANSACTION HAS NOT BEEN DOUBTED BY THE AO. 2 8 . WITH REGARD TO M/S KOTRIWAL COMMERCIAL PVT LTD, THE LD. AR DREW OUR ATTENTION TO PAGES 177 TO 204 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.25,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY IS A REGISTERED N ON - BANKING FINANCIAL COMPANY WITH THE RESERVE BANK OF INDIA. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 9(4), KOLKATA AND WAS HAVING PAN AABCR4087F. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.33,45,01,2 16/ - AS ON 31/03/2012. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SH ARE APPLICATION WAS THE APPLICATION MONEY RECEIVED BY THIS COMPANY FROM M/S FASTSPEED AGENCIES PVT LTD; WHICH IS EVIDENT FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS CO MPANY WAS FRAMED BY THE ITO, WARD 9(4), KOLKATA AND THE COPY OF THE ORDER PASSED U/S 143(3) IS ALSO AVAILABLE IN THE PAPER BOOK. THE AO OF THE SHARE APPLICANT HAS CATEGORICALLY MENTIONED THAT HE HAS EXAMINED AND ACCEPTED THE SOURCE OF FUNDS I.E. THE SHARE CAPITAL RAISED BY THE APPLICANT DURING THE YEAR. 2 9 . COMING TO M/S. MINOLTA FINANCE LTD., OUR ATTENTION WAS DRAWN BY THE LD. AR TO PAGES 205 TO 228A OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.40,00,000/ - IN THE ASSESSEE COMP ANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 15/01/1993 AND WAS HAVING COMPANY IDENTIFICATION NUMBER L65921WB1993PLC057502. THIS COMPANY IS A PUBLIC LIMITED COMPANY WHICH HAD DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 4(2), KOLKATA AND WAS HAVING PAN AABCM7439F. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.8,65,99,740/ - AS ON 31/03/2012 AND RS.8,91,21,950/ - AS ON 31/03/2011 RESPECTIVELY. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. 19 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSA L OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. 30 . IN RESPECT OF M/S. PARSHWA CHEMICALS PVT. LTD., THE LD. AR DREW OUR ATTENTION TO PAGES 229 TO 249 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.25,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 30/03/1990 WAS HAVING CINU23201WB1990PTC048729. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 1(4), KOLKATA AND WAS HAVING PAN AACCP0681 M. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.5,64,05,509/ - AS ON 31/03/2012 AND RS.2,16,24,728/ - AS ON 31/03/2011 RESPECTIVELY. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMI NATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE P APER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS COMPANY WAS FRAMED BY THE TRO - 2, KOLKATA AND THE COPY OF THE ORDER PASSED U/S 143(3) IS ALSO AVAILABLE IN THE PAPER BOOK. 3 1 . COMING TO M/S. SUBHMANGAL COMMERCIAL PRIVATE LIMITED, THE LD. AR DR EW OUR ATTENTION TO PAGES 250 TO274 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.25,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 20/03/2009 AND WAS HA VING COMPANY IDENTIFICATION NUMBER U51909WB2009PTC134364. FOR THE RELEVANT YEAR THE COMPANY HAD TURNOVER AGGREGATING TO RS.3,21,39,780/ - . THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 3(1), KOLKATA AND WAS HAVING PAN AANCS1260J. THIS COMPA NY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.71,52,246/ - AS ON 31/03/2012. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEP OSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS COMP ANY WAS COMPLETED U/S 143(1) AND THE ORDER PASSED BY THE CPC, BENGALURU IS ALSO AVAILABLE IN THE PAPER BOOK. 3 2 . IN RESPECT OF M/S. FASTTRACK TIE - UP PRIVATE LIMITED, THE LD. AR DREW OUR ATTENTION TO PAGES 275 TO 304 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF 20 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . RS.20,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 20/06/2005 AND WAS HAVING COMPANY IDENTIFICATION NUMBER U51109WB2005PTC103828. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 9(2), KOLKATA AND WAS HAVING PAN AAACFS9038L. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.7,80,30,246/ - AS ON 31/03/2012 AND RS.4,80,16,365/ - AS ON 31/03/2011 RESPECTIVELY. THE COMPANY ALSO HAD TANGIBLE ASSET BASE COMPRISING OF COMPUTER & OFFICE EQUIPMENT. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS ALSO DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS COMPANY WAS FRAMED BY THE ITO, WARD 9(2), KOLKATA AND THE COPY OF THE ORDER PASSED U/S 143(3) IS ALSO AVAILABLE IN THE PAPER BOOK. 3 3 . COMING TO M/S. HOOGHLY JUTE MILLS (BOBBILI) PVT LIMITED, OUR ATTENTION WAS DRAWN BY THE LD. AR TO PAGES 305 TO 334 OF THE PAPER BOOK WHEREI N WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.30,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 23/01/2008 AND WAS HAVING COMPANY IDENTIFICATION NUMBER U17125WB2008PTC122012. TH IS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 5(4), KOLKATA AND WAS HAVING PAN AACCH2335J. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.13,39,51,826/ - AS ON 31/03/2012 AND RS.8,80,99,948/ - AS ON 31/03/2011 RES PECTIVELY. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS COMPANY WAS FRAMED BY THE ITO, WARD 9(2), KOLKATA AND THE COPY OF THE ORDER PASSED U/S 143(3 ) IS ALSO AVAILABLE IN THE PAPER BOOK. 3 4 . AT PAGES 335 TO 359 OF THE PAPER BOOK, THE DETAILS OF M/S. AGASTYA PLASTICS PVT. LTD. IS GIVEN. WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.30,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 11/01/1995 AND WAS HAVING COMPANY IDENTIFICATION NUMBER U51219WB1995PTC067328. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 1(4), KOLKATA AND WAS HAVING PAN AACCA1521H. THIS COMPANY WA S HAVING A PAID UP CAPITAL WITH FREE RESERVES AND 21 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . SURPLUS OF RS.3,03,79,986/ - AVAILABLE AS ON 31/03/2011 WHICH WAS SUFFICIENT ENOUGH TO COVER THE COST OF INVESTMENT OF RS.30,00,000/ - MADE IN THE ASSESSEE COMPANY . THE COPY OF THE BANK STATEMENT OF THE COMP ANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DETAILS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS COMPANY WAS FRAMED BY THE ITO, WARD 1(4), KOLKATA AND THE COPY OF THE ORDER PASSED U/S 143(3) IS ALSO AVAILABLE IN THE PAPER BOOK.THE LD. AR ALSO D REW OUR ATTENTION TO THE FACT THAT APART FROM INVESTING IN SHARES OF THE ASSESSEE COMPANY, THE SHARE APPLICANT HAD ALSO ADVANCED LOAN OF RS.10,86,000/ - TO THE ASSESSEE WHICH WAS REPAID DURING THE YEAR; DETAILS OF WHICH WERE AVAILABLE IN THE TAX AUDIT REPOR T FILED IN THE PAPER BOOK. IT IS NOTED THAT THAT THE GENUINENESS OF THIS LOAN TRANSACTION WITH THIS APPLICANT, M/S AGASYTA PLASTICS PVT LTD HAS NOT BEEN DOUBTED BY THE AO. 3 5 . IN RESPECT OF M/S MEGHNASAREE EMPORIUM PVT LTD, WE NOTE THAT THE DETAILS ARE AV AILABLE AT PAGES 360 TO 383 OF THE PAPER BOOK. THIS COMPANY INVESTED A SUM OF RS.60,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 22/06/1993 AND WAS HAVING COMPANY IDENTIFICATION NUMBER U52322WB1993PTC059210. THIS COMPANY IS ALSO REGISTERED AS A NON - BANKING FINANCIAL COMPANY WITH THE RESERVE BANK OF INDIA. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 4(2), KOLKATA AND WAS HAVING PAN AACCM0261H. COPY OF THE CERTIFICA TE OF ENROLMENT ISSUED BY THE PROFESSIONAL TAX AUTHORITIES IDENTIFYING THE SAID APPLICANT HAS ALSO BEEN PLACED IN THE PAPERBOOK. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.6,51,13,765/ - AVAILABLE AS ON 31/03/2011 WHICH W AS SUFFICIENT ENOUGH TO COVER THE COST OF INVESTMENT OF RS.30,00,000/ - MADE IN THE ASSESSEE COMPANY. FURTHER IN THE RELEVANT YEAR THE COMPANY HAD REPORTED TURNOVER IN EXCESS OF RS.292.68 LACS. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OT HER DETAILS FILED IN THE PAPER BOOK. THE LD. AR ALSO DREW OUR ATTENTION TO THE FACT THAT APART FROM INVESTING IN SHARES OF THE ASSESSEE COMPANY, THE SHARE APPLICANT HAD ALSO ADVANCED LOAN OF RS.48,69,000/ - TO THE ASSESSEE WHICH WAS REPAID DURING THE YEAR; DETAILS OF WHICH WERE AVAILABLE IN THE TAX AUDIT REPORT FILED IN THE PAPER BOOK. IT IS NOTED THAT THAT THE GENUINENESS OF THIS LOAN TRANSACTION WITH THIS APPLICANT, M/S MEGHASAREE EMPORIUM PVT LTD HAS NOT BEEN DOUBTED BY THE AO. 22 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . 3 6 . IN RESPECT OF M/S. RIMJ HIM SALES AGENCY PVT LTD, OUR ATTENTION WAS DRAWN BY THE LD. AR TO PAGES 384 TO 414 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.40,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS C OMPANY WAS INCORPORATED ON 15/10/2007 AND WAS HAVING COMPANY IDENTIFICATION NUMBER U51109WB2007PTC119633. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 4(1), KOLKATA AND WAS HAVING PAN AADCR8017Q. THIS COMPANY WAS HAVING A PAID UP CAPITAL WI TH FREE RESERVES AND SURPLUS OF RS.9,86,35,421/ - AS ON 31/03/2012 AND RS.5,52,28,705/ - AS ON 31/03/2011 RESPECTIVELY. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE T HAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSE SSMENT OF THIS COMPANY WAS FRAMED BY THE ITO, WARD 9(3), KOLKATA AND THE COPY OF THE ORDER PASSED U/S 143(3) IS ALSO AVAILABLE IN THE PAPER BOOK. 3 7 . COMING TO M/S. JIWANJYOTIVINIMAYPVT LTD, OUR ATTENTION WAS DRAWN BY THE LD. AR TO PAGES 415 TO 443 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.50,00,000/ - IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 19/12/2008 AND WAS HAVING COMPANY IDENTIFICATION NUMBER U51909WB 2008PTC131379. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 6(2), KOLKATA AND WAS HAVING PAN AACCJ1128K. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.10,00,10,279/ - AS ON 31/03/2012 AND RS.6,01,04,669/ - AS ON 31/03/2011 RESPECTIVELY. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HA D MADE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS COMPANY WAS FRAMED BY THE ITO, WARD 9(3), KOLKATA AND THE COPY OF THE ORDER PASSED U/S 143(3) IS ALSO AVAILABLE IN THE PAPER BOOK. 3 8 . WITH REGARD TO M/S RAMDOOTVANIJYAPVT LTD, THE LD. AR DREW OUR ATTENTION TO PAGES 444 TO 476 OF THE PAPER BOOK WHEREIN WE NOTE THAT THIS COMPANY INVESTED A SUM OF RS.30,00,000/ - IN THE ASSESSEE CO MPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 9(3), KOLKATA AND WAS HAVING PAN AADCR0491C. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES 23 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . AND SURPLUS OF RS.8,38,27, 632/ - AS ON 31/03/2012. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. ON EXAMINATION OF THE BANK STATEMENT IT IS TAKEN NOTE THAT THERE IS NO DEPOSIT OF CASH. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MA DE THE SHARE APPLICATION ARE ALSO AVAILABLE FROM A PERUSAL OF THE BANK STATEMENT AND OTHER DOCUMENTS FILED IN THE PAPER BOOK. IT IS NOTED THAT THE INCOME - TAX ASSESSMENT OF THIS COMPANY WAS FRAMED BY THE ITO, WARD 9(3), KOLKATA AND THE COPY OF THE ORDER PAS SED U/S 143(3) IS ALSO AVAILABLE IN THE PAPER BOOK.THE AO OF THE SHARE APPLICANT HAS CATEGORICALLY MENTIONED THAT HE HAS EXAMINED AND ACCEPTED THE SOURCE OF FUNDS I.E. THE SHARE CAPITAL RAISED BY THE APPLICANT DURING THE YEAR. 3 9 . FROM THE DETAILS AS AFOR ESAID WHICH EMERGES FROM THE PAPER BOOK FILED BEFORE US AS WELL AS BEFORE THE LOWER AUTHORITIES, IT IS VIVID THAT ALL THE SHARE APPLICANTS ARE (I) REGULAR INCOME TAX ASSESSEES, (II) THEY ARE FILING THEIR RETURN OF INCOME, (III) THE BOARD RESOLUTIONS APPROV ING THE INVESTMENT IN THE ASSESSEE COMPANY IS AVAILABLE ON RECORD, (IV) THE SHARE APPLICATION MONEY WAS MADE BY ACCOUNT PAYEE CHEQUES, (V) THE DETAILS OF THE BANK ACCOUNTS BELONGING TO THE SHARE APPLICANTS AND THEIR BANK STATEMENTS, (VI) IN NONE OF THE TRA NSACTIONS THE AO FOUND DEPOSIT IN CASH BEFORE ISSUING CHEQUES TO THE ASSESSEE COMPANY, (VII) THE SHARE APPLICANTS HAVE FURNISHED DECLARATION EXPLAINING THE SOURCE OF FUNDS OUT OF WHICH THE CHEQUES WERE ISSUED TO THE ASSESSEE COMPANY, (VIII) THE APPLICANTS ARE HAVING SUBSTANTIAL CREDITWORTHINESS WHICH IS REPRESENTED BY A CAPITAL AND RESERVE AS NOTED ABOVE. 40 . AS NOTED FROM THE JUDICIAL PRECEDENTS CITED ABOVE, 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 HIS BOOKS. IN THE INSTANT CASE, THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL WITH PREMIUM FROM SHARE APPLICANTS. THE NATURE OF RECEIPT TOWARDS SHARE CAPITAL IS SEEN FROM THE ENTRIES PASS ED IN THE RESPECTIVE BALANCE SHEETS OF THE COMPANIES AS SHARE CAPITAL AND INVESTMENTS. IN RESPECT OF SOURCE OF CREDIT, THE ASSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIENTS I.E. IDENTITY OF SHARE APPLICANTS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHI NESS OF SHARE APPLICANTS. FOR PROVING THE IDENTITY OF SHARE APPLICANTS, THE ASSESSEE FURNISHED THE NAME, ADDRESS, PAN OF SHARE APPLICANTS TOGETHER WITH THE COPIES OF BALANCE SHEETS AND INCOME TAX RETURNS. WITH REGARD TO THE CREDITWORTHINESS OF SHARE APPLIC ANTS, AS WE NOTED SUPRA, THESE COMPANIES ARE HAVING CAPITAL IN SEVERAL CRORES OF RUPEES AND THE INVESTMENT MADE IN THE ASSESSEE COMPANY IS ONLY A SMALL PART OF THEIR CAPITAL. THESE TRANSACTIONS ARE ALSO DULY REFLECTED IN THE BALANCE SHEETS OF THE SHARE APP LICANTS, SO CREDITWORTHINESS IS PROVED. EVEN IF THERE WAS ANY DOUBT IF ANY REGARDING THE CREDITWORTHINESS 24 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . OF THE SHARE APPLICANTS WAS STILL SUBSISTING, THEN AO SHOULD HAVE MADE ENQUIRIES FROM THE AO OF THE SHARE SUBSCRIBERS AS HELD IN THE SEVERAL JUDGMENTS CITED ABOVE, WHICH HAS NOT BEEN DONE, SO NO ADVERSE VIEW COULD HAVE BEEN DRAWN. THE THIRD INGREDIENT IS GENUINENESS OF THE TRANSACTIONS, FOR WHICH WE NOTE THAT THE MONIES HAVE BEEN DIRECTLY PAID TO THE ASSESSEE COMPANY BY ACCOUNT PAYEE CHEQUES OUT OF SUFF ICIENT BANK BALANCES AVAILABLE IN THE BANK ACCOUNTS OF THE SHARE APPLICANTS. IT WILL BE EVIDENT FROM THE PAPER BOOK THAT THE ASSESSEE HAS EVEN DEMONSTRATED THE SOURCE OF MONEY DEPOSITED INTO THEIR BANK ACCOUNTS, WHICH IN TURN HAS BEEN USED BY THEM TO SUBSC RIBE TO THE ASSESSEE COMPANY AS SHARE APPLICATION. HENCE THE SOURCE OF SOURCE IS PROVED BY THE ASSESSEE IN THE INSTANT CASE THOUGH THE SAME IS NOT REQUIRED TO BE DONE BY THE ASSESSEE AS PER LAW AS IT STOOD/ APPLICABLE IN THIS ASSESSMENT YEAR. THE SHARE APP LICANTS HAVE CONFIRMED THE SHARE APPLICATION AS WELL AS THE PAYMENTS MADE TO THE ASSESSEE COMPANY, WHICH ARE DULY CORROBORATED WITH THEIR RESPECTIVE BANK STATEMENTS AND ALL THE PAYMENTS ARE BY ACCOUNT PAYEE CHEQUES. 4 1 . WE FIND THAT THE HONBLE SUPREME CO URT IN THE CASE OF M/S EARTH METAL ELECTRICALS P LTD VS CIT &ANR. REPORTED IN 2010 (7) TMI 1137 IN CIVIL APPEAL NO. 21073 / 2009 DATED 30.7.2010 ARISING FROM THE ORDER OF HONBLE BOMBAY HIGH COURT HAD HELD AS UNDER: - ORDER DELAY CONDONED. LEAVE GRANTED. HEARD LEARNED COUNSEL ON BOTH SIDES. WE HAVE EXAMINED THE POSITION. WE FIND THAT THE SHAREHOLDERS ARE GENUINE PARTIES. THEY ARE NOT BOGUS AND FICTITIOUS. THEREFORE, THE IMPUGNED ORDER IS SET ASIDE. THE APPEAL IS ALLOWED ACCORDINGLY. NO ORDER AS TO COSTS . 4 2 . WE FURTHER FIND THAT IN AS MANY AS FOUR INSTANCES, THE SHARE APPLICANTS HAD ALSO ADVANCED LOANS TO THE ASSESSEE COMPANY. THE AO HAS INDEED ACCEPTED THE IDENTITY & CREDITWORTHINESS OF THESE APPLICANTS IN THEIR CAPACITY OF LENDERS AND DID NOT DOUBT TH E GENUINENESS OF THE LOAN TRANSACTIONS. IN SUCH A SCENARIO, WE DO NOT FIND ANY REASON FOR THE AO TO DISPUTE THE GENUINENESS OF THE SHARE APPLICATION MONIES RECEIVED FROM SUCH PARTIES WHEN THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS IN RESPECT OF THE L OANS TRANSACTIONS HAD NOT BEEN DISPUTED. THESE FACTS LEND CREDENCE TO THE ASSESSEES CASE THAT THE ADDITION MADE BY THE AO U/S 68 WAS BASED ON MERE SUSPICION AND CONJECTURE, LACKING ANY COGENT BASIS. 25 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . 4 3 . IN THE INSTANT CASE BEFORE US, WE ALSO NOTE THAT TH E SHARE SUBSCRIBING COMPANIES ARE DULY ASSESSED TO INCOME TAX. THE LD AR HAD PLACED ON RECORD THE COPIES OF THE ASSESSMENT ORDERS FRAMED IN THE CASES OF SEVERAL OF THE SHARE SUBSCRIBING COMPANIES, AS NOTED ABOVE. IT THEREFORE CANNOT BE DISPUTED THAT THE SH ARE SUBSCRIBING COMPANIES ARE NOT IN EXISTENCE. FROM THE ASSESSMENT ORDERS, IT IS NOTED THAT THE SHARE SUBSCRIBING COMPANIES ARE DULY ASSESSED TO INCOME TAX AND THEIR INCOME TAX PARTICULARS TOGETHER WITH THE COPIES OF RESPECTIVE INCOME TAX RETURNS WITH THE IR BALANCE SHEETS ARE ALREADY ON RECORD. WE ALSO FIND THAT THE LD. CIT(A) HAD CATEGORICALLY STATED THAT THE SCRUTINY ASSESSMENTS WERE FRAMED ON THE SHARE SUBSCRIBING COMPANIES FOR THE ASST YEAR 2012 - 13 WHICH SHOWS THEIR EXISTENCE IS GENUINE AND TRANSACTION S CARRIED OUT BY THEM WERE THE SUBJECT MATTER OF EXAMINATION BY THE INCOME TAX DEPARTMENT IN SCRUTINY PROCEEDINGS. THIS FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. 4 4 . WE MAY GAINFULLY REFER TO THE JUDGMENT IN THE CASE OF PR. CIT VS PARADISE I NLAND SHIPPING (P) LTD (84 TAXMANN.COM 58) WHEREIN THE BOMBAY HIGH COURT HAD DELETED SIMILAR ADDITION ON SIMILAR SET OF FACTS MADE ON ACCOUNT OF UNEXPLAINED CASH CREDITS AND THE SLP FILED BY THE REVENUE AGAINST THE JUDGMENT HAS BEEN DISMISSED BY THE HONBL E SUPREME COURT. THE RELEVANT EXTRACTS OF THE JUDGMENT IS AS FOLLOWS: 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATIONS TO THE RIVAL CONTENTIONS OF THE LEARNED COUNSEL AND WE HAVE ALSO GONE THROUGH THE RECORDS. THE BASIC CONTENTION OF THE LEARNED COUNSEL AP PEARING FOR THE APPELLANTS REVOLVES UPON THE STAND TAKEN BY THE APPELLANTS WHETHER THE SHAREHOLDERS WHO HAVE INVESTED IN THE SHARES OF THE RESPONDENTS ARE FICTITIOUS OR NOT. IN THIS CONNECTION, THE RESPONDENTS IN SUPPORT OF THEIR STAND ABOUT THE GENUINENES S OF THE TRANSACTION ENTERED INTO WITH SUCH COMPANIES HAS PRODUCED VOLUMINOUS DOCUMENTS WHICH, INTER ALIA, HAVE BEEN NOTED AT PARA 3 OF THE JUDGMENT OF THE CIT APPEALS WHICH READS THUS : 'THE ASSESSMENT IS COMPLETED WITHOUT REBUTTING THE 550 PAGE DOCUMENTS WHICH ARE UNFLINCHING RECORDS OF THE COMPANIES. THE LIST OF DOCUMENTS SUBMITTED ON 09.03.2015 ARE AS FOLLOWS : 1. SONY FINANCIAL SERVICES LTD. - CIN U74899DL1995PLC068362 - DATE OF REGISTRATION 09/05/1995 6. ON GOING THROUGH THE DOCUMENTS WHICH HAVE BEEN P RODUCED WHICH ARE BASICALLY FROM THE PUBLIC OFFICES, WHICH MAINTAIN THE RECORDS OF THE COMPANIES. THE DOCUMENTS ALSO INCLUDE ASSESSMENT ORDERS FOR LAST THREE PRECEDING YEARS OF SUCH COMPANIES. 7. THE APPELLANTS HAVE FAILED TO EXPLAIN AS TO HOW SUCH COMPANI ES HAVE BEEN ASSESSED THOUGH ACCORDING TO THEM SUCH COMPANIES ARE NOT EXISTING AND ARE FICTITIOUS COMPANIES. BESIDES THE DOCUMENTS ALSO INCLUDED THE REGISTRATION OF THE COMPANY WHICH DISCLOSES THE REGISTERED ADDRESS OF SUCH COMPANIES. THERE IS NO MATERIAL ON RECORD PRODUCED BY THE APPELLANTS WHICH COULD REBUT THE DOCUMENTS PRODUCED BY THE RESPONDENTS HEREIN. IN SUCH CIRCUMSTANCES, THE FINDING OF FACT ARRIVED AT BY THE AUTHORITIES BELOW WHICH ARE BASED ON DOCUMENTARY EVIDENCE ON RECORD CANNOT BE SAID TO BE P ERVERSE. LEARNED COUNSEL APPEARING FOR THE APPELLANTS WAS UNABLE TO POINT OUT THAT ANY OF SUCH FINDINGS ARRIVED AT BY THE AUTHORITIES BELOW WERE ON THE BASIS OF MISLEADING OF EVIDENCE OR FAILURE TO 26 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . EXAMINE ANY MATERIAL DOCUMENTS WHILST COMING TO SUCH CONCL USIONS. UNDER THE GUISE OF THE SUBSTANTIAL QUESTION OF LAW, THIS COURT IN AN APPEAL UNDER SECTION 260A OF THE INCOME TAX ACT CANNOT RE - APPRECIATE THE EVIDENCE TO COME TO ANY CONTRARY EVIDENCE. CONSIDERING THAT THE AUTHORITIES HAVE RENDERED THE FINDINGS OF FACTS BASED ON DOCUMENTS WHICH HAVE NOT BEEN DISPUTED, WE FIND THAT THERE ARE NO SUBSTANTIAL QUESTION OF LAW WHICH ARISES IN THE PRESENT APPEAL FOR CONSIDERATION. 4 5 . WE ALSO FIND THAT THE HONBLE APEX COURT RECENTLY IN THE CASE OF PRINCIPAL CIT VS VAISHNO DEVI REFOILS & SOLVEX REPORTED IN (2018) 96 TAXMANN.COM 469 (SC) WHEREIN THE SLP OF THE REVENUE HAS BEEN DISMISSED BY THE HONBLE APEX COURT. THE BRIEF FACTS OF THAT CASE WERE THAT THE ADDITION U/S 68 OF THE ACT WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF CAPITAL CONTRIBUTED BY THE PARTNER OF THE FIRM. THE HONBLE GUJARAT HIGH COURT NOTED THAT WHEN THE CONCERNED PARTNER HAD CONFIRMED BEFORE THE ASSESSING OFFICER ABOUT HIS FACT OF MAKING CAPITAL CONTRIBUTION IN THE FIRM AND THAT THE SAID INVESTMENT IS AL SO REFLECTED IN HIS INDIVIDUAL BOOKS OF ACCOUNTS, THEN NO ADDITION COULD BE MADE U/S 68 OF THE ACT. THE DECISION OF HONBLE GUJARAT HIGH COURT IS REPORTED IN (2018) 89 TAXMANN.COM 80 (GUJ HC) . THE SLP OF THE REVENUE AGAINST THIS JUDGMENT WAS DISMISSED BY THE HONBLE SUPREME COURT. 4 6 . WITH REGARD TO THE LD. DRS CONTENTION THAT THE ASSESSEE DID NOT JUSTIFIABLY EXPLAIN THE HIGH PREMIUM CHARGED UPON ISSUE OF SHARES, WE FIND THIS CONTENTION TO BE FACTUALLY INCORRECT. WE NOTE THAT BEFORE THE AO, THE ASSESSEE C OMPANY HAD FURNISHED A DETAILED JUSTIFICATION FOR CHARGING PREMIUM ON ISSUE OF SHARES, WHICH IS AVAILABLE AT PAGE 67 OF THE PAPER BOOK. IT IS NOTED THE ASSESSEE COMPANY WAS RECORDING SUBSTANTIAL GROWTH IN ITS TURNOVER, PROFIT AS WELL AS EPS OVER THE YEARS, WHICH JUSTIFIED THE CHARGE OF PREMIUM. IN THESE CIRCUMSTANCES WE FIND THAT THE ASSESSEE COMPANY HAD ADDRESSED THE REASONS FOR CHARGING HIGH PREMIUM BEFORE THE AO AND NO INFIRMITY THEREIN WAS POINTED OUT BY THE AO IN THE ASSESSMENT ORDER. WE FURTHER FIND TH AT EVEN THE LD. CIT(A) HAD CATEGORICALLY DEALT WITH THIS ASPECT AT PARA 4.15 & 4.16 OF THE APPELLATE ORDER AND THE LD. DR WAS UNABLE TO BRING ANYTHING ON RECORD TO DISLODGE THE FINDINGS OF THE LD. CIT(A) . 4 7 . WE MAY GAINFULLY REFER TO THE FOLLOWING DECISI ONS OF THE HONBLE HIGH COURT IN THE CASES AS UNDER : (A) IN THE CASE OF PR. CIT VS CHAIN HOUSE INTERNATIONAL (P) LTD [2018] (98 TAXMANN.COM 47)THE AO HAD ADDED THE SHARE APPLICATION BY WAY OF UNEXPLAINED CASH CREDITS WAS THAT THE ASSESSEE WAS UNABLE TO GI VE ANY JUSTIFIABLE REASON FOR ISSUING SHARES AT A PREMIUM. THE HONBLE MADHYA PRADESH HIGH COURT DID NOT AGREE WITH THIS REASONING GIVEN BY THE AO FOR MAKING ADDITION U/S 68, HOLDING AS UNDER: 27 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . ISSUING THE SHARE AT A PREMIUM WAS A COMMERCIAL DECISION. IT I S THE PREROGATIVE OF THE BOARD OF DIRECTORS OF A COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF SHAREHOLDER WHETHER THEY WANT TO SUBSCRIBE THE SHARES AT SUCH A PREMIUM OR NOT. THIS WAS A MUTUAL DECISION BETWEEN BOTH THE COMPANIES. IN DAY TO D AY MARKET, UNLESS AND UNTIL, THE RATES IS FIXED BY ANY GOVT. AUTHORITY OR UNLESS THERE IS ANY RESTRICTION ON THE AMOUNT OF SHARE PREMIUM UNDER ANY LAW, THE PRICE OF THE SHARES IS DECIDED ON THE MUTUAL UNDERSTANDING OF THE PARTIES CONCERNED. [PARA 52] ONCE THE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF INVESTORS ARE ESTABLISHED, THE REVENUE SHOULD NOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARMCHAIR OF A BUSINESSMAN OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE OF ASCERTAINING HOW MUCH I S A REASONABLE PREMIUM HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE. [PARA 53] THERE IS NO DISPUTE ABOUT THE RECEIPT OF FUNDS THROUGH BANKING CHANNEL NOR THERE IS ANY DISPUTE ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE INVESTORS AND, THER EFORE, THE SAME HAS BEEN ESTABLISHED BEYOND ANY DOUBT AND THERE SHOULD NOT HAVE BEEN ANY QUESTION OR DISPUTE ABOUT PREMIUM PAID BY THE INVESTORS; THEREFORE, UNLESS THERE IS A LIMITATION PUT BY THE LAW ON THE AMOUNT OF PREMIUM, THE TRANSACTION SHOULD NOT BE QUESTIONED MERELY BECAUSE THE ASSESSING AUTHORITY THINKS THAT THE INVESTOR COULD HAVE MANAGED BY PAYING A LESSER AMOUNT AS SHARE PREMIUM AS A PRUDENT BUSINESSMAN. THE TEST OF PRUDENCE BY SUBSTITUTING ITS OWN VIEW IN PLACE OF THE BUSINESSMAN'S HAS NOT BEEN APPROVED BY THE SUPREME COURT. [PARA 54] (B) IN THE CASE OF CIT V. GAGANDEEP INFRASTRUCTURE (P.) LTD. [2017] 80 TAXMANN.COM 272/247 TAXMAN 245/394 ITR 680 THE REVENUE CONTENDED THAT THE FACT THAT THE SHARES WERE ISSUED AT HIGH PREMIUM RAISED SUSPICION ON THE GENUINENESS OF THE TRANSACTIONS. WHILE DISMISSING THIS PLEA RAISED BY THE REVENUE, THE HONBLE BOMBAY HIGH COURT HELD AS UNDER: (E) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APR IL, 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013 - 14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT WAS NOT EVEN THE CASE OF THE REVENUE THAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJECT YEAR S HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBSEQUENTLY EFFECTIVE ONLY FROM 1ST APRIL, 2013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUC ED STATES THAT IT WAS INTRODUCED 'FOR REMOVAL OF DOUBTS' OR THAT IT IS 'DECLARATORY'. THEREFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PROVISO TO SECTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE - PROVISO SECTION 68 OF THE ACT LAID DOWN BY THE COURTS NAMELY THE GENUINENESS OF THE TRANSACTION, IDENTITY AND THE CAPACITY OF THE INVESTOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P.) LTD.(SUPRA) IN THE CONTEXT TO THE PRE - AMENDED SECTION 68 OF THE ACT HAS HELD THAT WHERE THE REVENUE URGES THAT THE AMOUNT OF SHA RE APPLICATION MONEY HAS BEEN RECEIVED FROM BOGUS SHAREHOLDERS THEN IT IS FOR THE INCOME TAX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHOLDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SA ME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. (F) IN THE ABOVE CIRCUMSTANCES AND PARTICULARLY IN VIEW OF THE CONCURRENT FINDING OF FACT ARRIVED AT BY THE CIT(A) AND THE TRIBUNAL, THE PROPOSED QUESTION OF LAW DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. 28 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . (C) IN CIT VSANSHIKA CONSULTANTS PVT LTD (62 TAXMANN.COM 192), THE AO HAD ADDED THE SHARE APPLICATION MONIES TREATING IT TO BE THEIR UNACCOUNTEDMONIES ROUTED THOUGH ACCOMMODATION ENTRIES SINCE THE SHARES WERE ISSUED AT A HIGH PREMIUM. THE HONBLE DELHI HIGH COURT DID NOT AGREE WITH THIS CONTENTION PUT FORTH BY THE REVENUE, BY OBSERVING AS UNDER: WHETHER THE ASSESSEE - COMPANY CHARGED A HIGHER PREMIUM OR NOT, SHOULD NOT HAVE BEEN THE SUBJECT MATTER OF THE ENQUIRY IN THE FIRST INSTANCE. INSTEAD, THE ISSUE WAS WHETHER THE AMOUNT INVESTED BY THE SHARE APPLICANTS WERE FROM LEGITIMATE SOURCES. THE OBJECTIVE OF SECTION 68 IS TO AVOID INCLUSION OF AMOUNT WHICH ARE SUSPECT. THEREFORE, THE EMPHASIS ON GENUINENESS OF ALL THE THREE ASPECTS, IDENTITY, CREDITWORTHINESS AND THE TRANSACTION. WHAT IS DISQUIETING IN THE PRESENT CASE IS WHEN THE ASSESSMENT WAS COMPLETED, THE INVESTIGATION REPORT WHICH WAS SPECIFICALLY CALLED FROM THE CONCERNED DEPARTMENT WAS AVAILABLE BUT NOT DISCUSSED BY THE ASSESSING OFFICER. HAD HE CARED TO DO SO, THE IDENTITY OF THE INVESTORS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE SHARE APPLICANTS WOULD HAVE BEEN APPARENT. EVEN OTHERWISE, THE SHARE APPLICANTS' PARTICULARS WERE AVAILABLE WITH THE ASSESSING OFFICER IN THE FORM OF BALANCE SHEETS INCOME - TAX RETURNS, PAN DETAILS ETC. WHILE ARRIVING AT THE CONCLUSION THAT HE DID, THE ASSESSING OFFICER DID NOT CONSIDER IT WORTHWHILE TO MAKE ANY FURTHER ENQUIRY BUT BASED HIS ORDER ON THE HIGH NATURE OF THE PREMIUM AND CERTAIN FEATURES WHICH APPEARED TO BE SUSPECT, TO DETERMINE THAT THE AMOUNT HAD BEEN ROUTED FROM THE ASSESSEE'S ACCOUNT TO THE SHARE APPLICANTS' ACCOUNT. AS HELD CONCURRENTLY BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL, THESE CONCLUSI ONS WERE CLEARLY BASELESS AND FALSE. THIS COURT IS CONSTRAINED TO OBSERVE THAT THE ASSESSING OFFICER UTTERLY FAILED TO COMPLY WITH HIS DUTY CONSIDERS ALL THE MATERIALS ON RECORD, IGNORING SPECIFICALLY THE MOST CRUCIAL DOCUMENTS. 4 8 . IN THE FACTS OF THIS C ASE, WE ALSO AGREE WITH THE FINDINGS OF THE LD. CIT(A) THAT THE AO DID PRECIOUS LITTLE TO BRING ON RECORD ANY AFFIRMATIVE EVIDENCE WHICH PROVED THAT THE SHARES ISSUED DURING THE YEAR WAS IN - GENUINE. IN THE ASSESSMENT ORDER, THE AO HAS ONLY MADE GENERAL ASS ERTIONS AND MODUS OPERANDI OPERATED BY FEW PAPER COMPANIES TO JUSTIFY THE ADDITION. HOWEVER NO SUBSTANTIVE MATERIAL HAS BEEN BROUGHT ON RECORD TO DISPROVE THE DOCUMENTARY EVIDENCES PLACED ON RECORD BY THE ASSESSEE. THE ONLY SPECIOUS PLEA OF THE AO IS THAT NONE OF THE SHAREHOLDERS APPEARED BEFORE HIM. HOWEVER, AS DISCUSSED EARLIER, NOTHING MUCH TURNED ON ACCOUNT OF THEIR NON - APPEARANCE. WE FIND THAT THE DOCUMENTS AS REQUISITIONED IN THE NOTICES ISSUED U/S 131 BY THE AO TO EXAMINE THE GENUINENESS OF THE TRANS ACTIONS, WERE AVAILABLE ON HIS RECORD AND NOTHING WAS BROUGHT ON RECORD BY THE AO TO DISPROVE THE SAME. FURTHER, FROM THE ASSESSMENT ORDERS PASSED BY THE DIFFERENT OFFICERS OF THE INCOME - TAX DEPARTMENT IN THE CASES OF SHARE APPLICANTS PROVES THAT THEY WERE VERY MUCH IN EXISTENCE AND REGULARLY ASSESSED TO TAX. WE THEREFORE NOTE THAT THE IMPUGNED ADDITION WAS MADE BY THE AO WITHOUT ANY ENQUIRY OR APPLICATION OF MIND INTO THE MATERIAL PLACED BEFORE HIM. INOUR CONSIDERED VIEW, THE ASSESSEE COULD ONLY FURNISH T HE RELEVANT DETAILS TO PROVE ITS PRIMARY ONUS. THEREAFTER THE ONUS SHIFTS TO THE REVENUE. THE SHIFTING OF ONUS IS LIKE A PENDULUM CLOCK BETWEEN THE ASSESSEE AND THE AO. ONCE THE ASSESSEE HAD FURNISHED ALL THE RELEVANT DOCUMENTATION IN RESPECT OF TRANSACTIO N BETWEEN THE ASSESSEE COMPANY AND SHARE APPLICANTS, THE AO COULD NOT STRAIGHT 29 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . AWAY DRAW ADVERSE INFERENCE ABOUT THE TRANSACTION OF RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM BY THE ASSESSEE COMPANY WITHOUT FIRST CONDUCTING INDEPENDENT ENQUIRIES INTO THE M ATERIAL FURNISHED BY THE ASSESSEE COMPANY. THIS IN OUR CONSIDERED OPINION WAS NOT IN ACCORDANCE WITH THE DUE PROCESS OF LAW.IN THE ABSENCE OF ANY INVESTIGATION, MUCH LESS GATHERING OF EVIDENCE BY THE ASSESSING OFFICER, WE HOLD THAT AN ADDITION CANNOT BE SU STAINED MERELY BASED ON INFERENCES DRAWN BY CIRCUMSTANCE. APPLYING THE PROPOSITIONS LAID DOWN IN THE ABOVE MENTIONED CASE LAWS TO THE FACTS OF THIS CASE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 4 9 . WE ALSO FIND THAT THE RELIANCE PLACED BY THE LD DR ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF RAJMANDIR ESTATES SUPRA WAS DISTINGUISHABLE ON FACTS AS THE SAID DECISION WAS RENDERED IN THE CONTEXT OF VALIDITY OF REVISIONARY JURISDICTION U/S 263 OF THE ACT BY THE LEARNED ADMINISTRATIVE COMMISSIONER. THIS FACT HAS ALREADY BEEN ADDRESSED BY THIS TRIBUNAL IN THE CASE OF VSP STEEL P LTD SUPRA. NO DECISION WHATSOEVER WAS RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJ MANDIR ESTATES P LT D ON MERITS OF THE ADDITION AND HENCE DOES NOT COME TO THE RESCUE OF THE REVENUE IN THE FACTS OF THE INSTANT CASE. 50 . INSTEAD, WE FIND THAT THE DECISION OF THE HONBLEDELHI HIGH COURT IN THE CASE OF CIT VSGANGESHWARI METAL (P) LTD (ITA NO. 597 OF 2012) D ATED 21.01.2012 IS OF MUCH RELEVANCE IN THE FACTS OF THE ASSESSEES CASE. IN THIS CASE THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY OF RS.55.50 LACS DURING THE YEAR IN QUESTION. THE ASSESSEE FILED THE COMPLETE NAMES, ADDRESSES OF THE SHARE APPLICANTS, CONFIRMATORY LETTERS FROM THEM, COPIES OF BANK STATEMENTS OF BOTH THE COMPANY AS WELL AS THE SHARE APPLICANTS AND COPIES OF SHARE APPLICATION FORMS. IN SPITE OF THE AFORESAID DOCUMENTARY EVIDENCES THE AO HELD THE EXPLANATION TO BE UNACCEPTABLE AND TREATED THE SHARE APPLICATION AS UNEXPLAINED CASH CREDIT THEREBY MAKING ADDITION UNDER SECTION 68 OF THE INCOME - TAX ACT, 1961. ON APPEAL THE CIT(APPEALS) DELETED THE AFORESAID ADDITION HOLDING THAT THE IDENTITY OF THE SHARE APPLICANTS STOOD ESTABLISHED BEYOND DOU BT, ALL THE PAYMENTS WERE THROUGH ACCOUNT PAYEE CHEQUES AND THE SHARE APPLICANTS WERE REGULAR INCOME - TAX ASSESSEES. THE CIT(APPEALS) FURTHER HELD THAT THE REVENUE DID NOT BRING ANY EVIDENCE ON RECORD TO SUGGEST THAT THE SHARE APPLICATION HAD BEEN RECEIVED BY THE ASSESSEE FROM ITS OWN UNDISCLOSED SOURCES NOR ANY MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT .THE APPLICANTS WERE BOGUS. THE REVENUE WAS NEITHER ABLE TO CONTROVERT THE DOCUMENTARY EVIDENCES FILED BY THE APPELLANT NOR PROVE THAT THE SHARE APPLICATIO N WEREINGENUINE 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, THE REVENUE PLACED STRONG 30 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . RELIANCE ON THE DECISION OF ANOTHER COORDINATE BENCH OF THE S AME COURT IN THE' CASE OF CIT VS NOVO PROMOTERS &FINLEASE (P) LTD (342 ITR 169). THE HIGH COURT HOWEVER HELD THAT THE AFORESAID JUDGMENT WAS DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. THE COURT OBSERVED THAT IN THAT JUDGMENT THE ASSESSING OFFICER HAD BROUGHT ON RECORD ENOUGH CORROBORATIVE EVIDENCE TO SHOW THAT THE ASSESSEE HAD ROUTED UNACCOUNTED MONIES INTO ITS BOOKS THROUGH MEDIUM OF SHARE SUBSCRIPTION. THE SHARE APPLICANTS HAD CONFESSED THAT THEY WERE 'ACCOMMODATION ENTRY PROVIDERS'. THE ASSESSIN G OFFICER IN THE LATTER CASE WAS ABLE TO PROVE WITH ENOUGH MATERIAL THAT THE SHARE SUBSCRIPTION WAS A PRE - MEDITATED PLAN TO ROUTE UNACCOUNTED MONIES. IN THE PRESENT CASE HOWEVER THE DEPARTMENT WAS UNABLE TO BRING ANY MATERIAL WHATSOEVER SHOWS THAT SHARE AP PLICATION WAS 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 APPLICANT AND THE GENUINENESS OF THE TRANSACTION. THE AO HOWE VER 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 THE DECISION OF CIT VS NOVO PROMOTERS &FINLEASE (P) LTD (342 ITR 169) WAS NOT APPLICABLE TO THE FACTS OF THE CASE. INSTEAD IT WAS HELD THAT THE ISSUE IN HANDS WAS ON THE LINES OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD (319 ITR 5). ACCORDINGLY THE ADDITI ON MADE UNDER SECTION 68 ON ACCOUNT OF SHARE APPLICATION WAS DELETED. THE RELEVANT EXTRACTS OF THE JUDGMENT IS AS FOLLOWS: - AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES OF CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRIES OUT THE E XERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER 'SITS 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 PRESUMPTIONS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER AFTER 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 EFFECT: - ''INVESTIGATION MADE BY THE INVESTIGATION WING OF THE 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 BOOKS 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 N OT RS.1,11,50,000/ - AS MENTIONED 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 ASSESSEE HAS FURTHER TRIES TO EXPLAIN THE SOURCE OF THIS AMOUNT OF RS.55,50,000/ - BY FURNISHING COPIES OF SHARE APPLICATION MONEY, BALANCE4 SHEET ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED THAT THE QUESTION OF ADDITION IN THE INCOME OF THE ASSESSEE DOES NOT A RISE. THIS EXPLANATION OF THE ASSESSEE HAS BEEN DULY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS ENTRY REMAINS UNEXPLAINED IN THE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT. AS SUCH ENTRIES OF RS.55,50,000/ - RECEIVE D BY THE ASSESSEE ARE TREATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS INCOME. SINCE I AM 31 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME/ PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE BEI NG 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 FAVOUR 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 THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED ALL THE MATERIAL WHICH WE HAVE ALREADY REFERRED TO ABOVE . IN SUCH AN EVENTUALITY NO ADDITION CAN BE MADE UNDER 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 5 1 . FURTHER, IN THE DECISION OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF CIT V. KAMDHENU STEEL & ALLOYS LTD. [2012] 19 TAXMANN.COM 26/206 TAXMAN 254/[2014] 361 ITR 220 IS ALSO RELEVANT, WHEREIN IT WAS HELD AS UNDER : 'ONCE ADEQUATE EVIDENCE/MATERIA L IS GIVEN, WHICH WOULD PRIMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVING THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTER IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED T HAT IT HAS 'CREATED' EVIDENCE, THE REVENUE IS SUPPOSED TO MAKE THOROUGH PROBE BEFORE IT COULD NAIL THE ASSESSEE AND FASTEN THE ASSESSEE WITH SUCH A LIABILITY UNDER S.68; A.O. FAILED TO CARRY HIS SUSPICION TO LOGICAL CONCLUSION BY FURTHER INVESTIGATION AND THEREFORE ADDITION UNDER S.68 WAS NOT SUSTAINABLE.' 5 2 . THE SLP FILED AGAINST THE ABOVE DECISION HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT. 5 3 . IN THE CASE OF FINLEASEPVT LTD. 342 ITR 169 (SUPRA) IN ITA 232/2012 JUDGEMENT DT. 22.11.2012 AT PARA 6 TO 8/ IT WAS HELD AS FOLLOWS. '6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF THE PARTIES. IN THIS CASE THE DISCUSSION BY THE COMMISSIONER OF INCOME TAX (APPEALS) WOULD REVEAL THAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIED COPIES ISSUED BY THE RO C IN RELATION TO THE SHARE APPLICATION AFFIDAVITS OF THE DIRECTORS, FORM 2 FILED WITH THE ROC BY SUCH APPLICANTS CONFIRMATIONS BY THE APPLICANT FOR COMPANY'S SHARES, CERTIFICATES BY AUDITORS ETC. UNFORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF M ERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND THE STATEMENT OF MR. MAHESGARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS WOULD BE IMPROPER, MO RE SO WHEN THE ASSESSEE PRODUCED 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 MADE IN THA T REGARD. IN THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORTHY OR LACKED CREDIBILITY THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FACTS AND THE STATEMENTS OF MR.MAHESHGARG THAT T HE INCOME SOUGHT TO BE ADDED FELL WITHIN THE DESCRIPTION OFS.68 OF THE INCOME TAX ACT 1961. HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRCUMSTANCES, THE COURT IS SATISFIED THAT THE FINDING OF THE TRIBUNAL IN THIS CASE ACCORDS WITH THE RATIO OF THE DECISIO N 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 MEANINGFUL ENQUIRY OUGHT TO BE CONDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE ASSESSEE AND THE ALLEGED HAWAL A 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 32 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . THEREFORE NOT TO BE UNDERSTOOD TO CONVEY THAT IN ALL CASES OF SHARE CAPITAL ADDED UNDER SECTION THE RATIO OF LOVELY EXPORTS (SUPRA) IS ATTRACTED, IRRESPECTIVE OF THE FACTS, EVIDENCE AND MATERIAL. ' 5 4 . WE ALSO NOTE THAT RECENTLY THE ITAT KOLKATA IN SEVERAL CASES HAS DELETED THE ADDITION ON ACCOUNT OF SHARE APPLICATION IN SIMILAR CIRCUMSTANCES. THE RELEVANT PORTION OF THE DECISIONS, ARE AS FOLLOWS: (A) IN THE CASE OF DCIT VS GLOBAL MERCANTILESPVT.LTD IN ITA NO. 1669/KOL/2009 DATED 13 - 01 - 2016, THIS TRIBUNAL HELD AS FOLLOWS: 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDI NG THE DETAILED PAPER BOOK FILED BY THE ASSESSEE. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED ARE NOT REITERATED HEREIN FOR THE SAKE OF BREVITY. WE FIND THAT THE ASSESSEE HAD GIVEN THE COMPLETE DETAILS ABOUT THE SHARE APPLICANTS CLEARLY ESTABLISHING THE IR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION PROVED BEYOND DOUBT AND HAD DULY DISCHARGED ITS ONUS IN FULL. NOTHING PREVENTED THE LEARNED AO TO MAKE ENQUIRIES FROM THE ASSESSING OFFICERS OF THE CONCERNED SHARE APPLICANTS FOR WHICH EVERY DETA ILS 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 APEX COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) UD REPORTED IN (2008) 216 CTR 195 (SC) IS VERY WELL FOUN DED, WHEREIN, IT HAS BEEN VERY CLEARLY HELD THAT THE ONLY OBLIGATION OF THE COMPANY RECEIVING THE SHARE APPLICATION MONEY IS TO PROVE THE EXISTENCE OF THE SHAREHOLDERS AND FOR WHICH THE ASSESSEE HAD DISCHARGED THE ONUS OF PROVING THEIR EXISTENCE AND ALSO T HE SOURCE OF SHARE APPLICATION MONEY RECEIVED. 3.4. 1. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS 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 LORDSHIPS 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 TRANSACTION ENTERED INTO BY THE ASS ESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONEY OR ACCOUNTED MONEY AND THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION. ' HELD AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AN D AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASES OF CIT VS M/S LOVELV EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF THE ASSESSEE AND THUS, NO SUBSTANTIAL 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 RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COURT (SUPRA) AND JURISDICTIONAL HIGH COURT (SUPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(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 I N DELETING THE ADDITION U/S 68 OF THE ACT MADE IN RESPECT OF ALLOTMENT OF SHARES TO 20 INDIVIDUALS FOR AN AMOUNT OF RS.57,00,000/ - IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. 1. THE BRIEF FACT OF THIS ISSUE IS THAT THE ASSESSEE HAD RECEIVED SHARE APPLI CATION MONIES FROM 20 INDIVIDUALS IN THE EARLIER YEAR WHICH WERE KEPT IN SHARE APPLICATION MONEY ACCOUNT. DURING THE ASST YEAR UNDER APPEAL, THE ASSESSEE ALLOTTED SHARES TO THESE 20 INDIVIDUALS OUT OF TRANSFERRING THE MONIES FROM SHARE APPLICATION MONEY AC COUNT TO SHARE 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 33 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . THE SHAREHOLDERS BEFORE HIM. HE FOUND THAT THE ASSESSEE DID NOT DO SO BUT FURNISHED COPIES O F PAY ORDERS USED FOR PAYMENTS TO THE ASSESSEE COMPANY AND ALSO FURNISHED INCOME TAX PARTICULARS AND BALANCE SHEETS OF ALL THE SHAREHOLDERS. THE LEARNED AO ON ANALYZING ALL THE BALANCE SHEETS OBSERVED THAT THE SHAREHOLDERS HAVE PALTRY INCOME AND SMALL SAVI NGS AND NONE OF THEM HAVE ANY BANK ACCOUNT AND HUGE CASH BALANCES WERE SHOWN IN THEIR HANDS OUT OF WHICH PAY ORDERS WERE OBTAINED. BASED ON THIS, THE LEARNED AO CONCLUDED THAT THESE SHAREHOLDERS DO NOT HAVE CREDITWORTHINESS TO INVEST IN THE ASSESSEE COMPAN Y AND BROUGHT THE ENTIRE SUM OF RS. 57,00,000/ - TO TAX AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 4.2. ON FIRST APPEAL, THE LEARNED CIT(A) OBSERVED THAT ENTIRE SHARE APPLICATION MONIES OF RS. 57,00,000/ - WE RECEIVED DURING THE PREVIOUS YEAR 2004 - 05 REL EVANT TO ASST YEAR 2005 - 06 FROM 20 PERSONS AND THE SHARES WERE ALLOTTED TO THEM DURING THE ASST YEAR UNDER APPEAL. HE OBSERVED THAT THE ASSESSEE HAD FURNISHED DETAILS OF THE SHARE APPLICANTS GIVING THE DATE WISE RECEIPTS, MODE OF PAYMENT, AMOUNT, NAME, ADD RESS, INCOME TAX RETURNS, PA NO. OF SHARE APPLICANTS ALONG WITH THEIR 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 USE HIS POWER AND AUTHORITY FOR THE PHYSICAL APPEARANCE OF THE SHAREHOLDERS 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 CASE, NO ADDITION COULD BE MADE U/S 68 OF THE ACT IN THE ASST YEAR UNDER APPEAL AS NO SHARE APPLICATION MONIES WERE RECEIVED DURING THE ASST YEAR UNDER APPEAL. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US B Y FILING THE FOLLOWING GROUND: - 'THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE U/S 68 IN RESPECT OF THE ALLOTMENT OF SHARES TO 20 NUMBERS OF INDIVIDUAL INVESTORS FOR AN AMOUNT OF RS. 57 LAKHS, WHERE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE INVESTORS WERE NOT ESTABLISHED. (B) IN THE CASE OF DCIT VS R.B HORTICULTURE & ANIMAL PROJECTS CO. LTD IN ITA NO. 632/KOL/2011 DATED 13 - 01 - 2016, THIS TRIBUNAL HELD AS FOLLOWS: 4.3. THE LEARNED DR PRAYED FOR ADMISSION OF THE ADDITIONAL 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 ORDER OF THE LEARN ED CIT(A). 4.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BOOK FILED BY THE ASSESSEE. WE FIND THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE SEPARATELY BEFORE US VIDE ITS COVERING LET TER DATED 9. 12.2011 IS ADMITTED AS IT APPEARS TO BE A GENUINE AND BONAFIDE ERROR OF OMISSION ON THE PART OF THE REVENUE FROM NOT RAISING THIS GROUND IN THE ORIGINAL GROUNDS OF APPEAL FILED ALONG WITH THE MEMORANDUM OF APPEAL. MOREOVER, IT DOES NOT REQUIRE ANY FRESH EXAMINATION OF FACTS. HENCE THE SAME IS ADMITTED HEREIN FOR THE SAKE OF ADJUDICATION. 4.4. 1. WE FIND FROM THE DETAILS AVAILABLE ON RECORD THAT THE SHARE APPLICATION MONIES FROM 20 INDIVIDUALS IN THE SUM OF RS.57,00,000/ - HAS BEEN RECEIVED BY T HE ASSESSEE DURING THE FINANCIAL YEAR 2004 - 05 RELEVANT TO ASST YEAR 2005 - 06 AND ONLY THE SHARES WERE ALLOTTED TO THEM DURING THE ASST YEAR UNDER APPEAL. ADMITTEDLY NO MONIES WERE RECEIVED DURING THE ASST YEAR UNDER APPEAL AND HENCE THERE IS NO SCOPE FOR IN VOKING 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 ANY INTERFERENCE. ACCORDINGLY THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 6. WE HAVE HEARD THE LEARNED DR AN D 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 WRITTEN SUBMISSIONS. HENCE THE CASE IS DISPOSED OFF BASED ON THE ARGUMENTS OF THE L EARNED DR AND WRITTEN SUBMISSIONS AND PAPER BOOK ALREADY AVAILABLE ON RECORD. THE FACTS STATED IN THE 34 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . LEARNED CIT(A) WERE NOT CONTROVERTED BY THE LEARNED DR BEFORE US. WE FIND THAT THE ASSESSEE HAD GIVEN THE COMPLETE DETAILS ABOUT THE SHARE APPLICANTS CLEA RLY ESTABLISHING THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION PROVED BEYOND DOUBT AND HAD DULY DISCHARGED ITS ONUS IN FULL. 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 CITA ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VSLOVELV EXPORTS (P) LTD REPORTED IN (2008) 216 CTR 195 (SC) IS VERY WELL FOUNDED, WHEREIN, IT HAS BEEN VERY CLEARLY HELD THAT THE ONLY OBLIGATION OF THE COMPANY RECEIVING THE SHARE APPLICATION MONEY IS TO PROVE THE EXISTENCE OF THE SHAREHOLDERS AND FOR WHICH THE ASSESSEE HAD DISCHARGED THE ONUS OF PROVING THEIR EXISTE NCE AND ALSO THE SOURCE OF SHARE APPLICATION MONEY RECEIVED. 6. 1. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VSROSEBERRV 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 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 TRANSACTION ENTERED IN TO BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONEY OR ACCOUNTED MONEY AND THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION.' HELD AFTER HEARING THE LEARNED COUNSEL FOR THE A PPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASES OF CIT VS M/S LOVELY EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF TH E ASSESSEE AND THUS, NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED 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 CA PITAL SERVICES P LTD REPORTED IN (2008) 307 ITR 334 (DEL) , WHEREIN IT WAS HELD THAT: 'IN RESPECT OF AMOUNTS SHOWN AS RECEIVED BY THE ASSESSEE TOWARDS SHARE APPLICATION MONEY FROM 33 PERSONS, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE ALL THES E PERSONS. WHILE ACCEPTING 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 ASSESSING OFFICER FOUND THAT THE RESPONSE FROM THE OTHERS WAS EITHER NOT AVAILABLE OR WAS INA DEQUATE AND ADDED AN AMOUNT OF RS. 46 LAKHS PERTAINING TO 30 PERSONS TO THE INCOME OF THE ASSESSEE. THE COMMISSIONER (APPEALS) UPHELD THE DECISION OF THE ASSESSING OFFICER. ON APPEAL, THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) AND DELE TED THE ADDITIONS. ON FURTHER APPEAL: HELD, DISMISSING THE APPEAL, THAT THE ADDITIONAL BURDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLICANTS DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MADE BY 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 SUBSTANTIAL 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 VER IFICATION OF SHARE SUBSCRIBERS 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 ASSESSEE. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTFULLY FOLLOWING THE DECIS ION OF THE APEX COURT (SUPRA), JURISDICTIONAL HIGH COURT (SUPRA) AND DELHI HIGH COURT (SUPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. (C) IN THE CASE OF ITO WD.3(2) KOL, VS. M/S. STEEL EMPORIUM LTDIN ITA NO.1061/KO1/2012 DATED 05 - 02 - 2016, THIS TRIBUNAL HELD AS FOLLOWS: 35 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . 10. WE HAVE HEARD BOTH THE RIVAL PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. BEFORE US TH E LD. AR SUBMITTED THAT THE ASSESSEE RAISED SHARE APPLICATION MONEY DURING THE YEAR FROM 25 APPLICANTS. THE AO WAS FURNISHED WITH THE COPY OF FORM 2 OF ALLOTMENT OF SHARES TO THE APPLICANTS AS FILED WITH THE REGISTRAR 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 MEMBERS. THE AO OBSERVED THAT AS PER ROC RECORDS THE ADDRESSES OF THE NINE COMPANIES WERE DIFFERENT FROM THE ADDRESS AS PER FORM F ILED WITH HIM. THE AO ISSUED NOTICES U/S.133(6) TO ALL THE COMPANIES AT THE ADDRESSES FURNISHED IN FORM 2 AS FILED WITH HIM, WHICH WERE DULY SERVED AT THE GIVEN ADDRESSES. THE A0 ARGUED THAT THE LETTERS SHOULD NOT HAVE BEEN SERVED AT THE GIVEN ADDRESS BY T HE ASSESSEE. HE SERVED A SHOW A CAUSE NOTICE DATED 09.12.2011 ASKING FOR THE EXPLANATION FROM THE ASSESSEE 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 LET TER DATED 20.12.2011 OF THE ASSESSEE THAT THOSE COMPANIES HAD CHANGED THEIR ADDRESSES SINCE 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 ADD RESS. THE APPLICANTS WERE DULY INCORPORATED BODIES UNDER THE COMPANIES ACT. 1956 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 THEM ARE EVEN REGISTERED AS NON - BANKING FINANCIAL COMPANIES WITH RESERVE BANK OF INDIA. THEY HAVE BEEN FILING RETURNS REGULARLY WITH REGISTRAR OF COMPANIES AND RBI SINCE LONG. THE LETTERS MIGHT HAVE BEEN RECEIVED AT THEIR OLD ADDRESSES BECAUSE IN CASE OF CHANGE IN THE ADDRESS, PE OPLE INSTRUCT THE INCUMBENTS AT OLD ADDRESSES NOT TO REFUSE THE RECEIPT OF LETTERS AND RECEIVE THE SAME. JUST BECAUSE, A LETTER WAS RECEIVED AT THE OLD ADDRESS INSTEAD OF PRESENT ADDRESS, IT CANNOT BE SAID THAT THE IDENTITY OF THE APPLICANT HAS NOT BEEN VE RIFIED. ALL OF THESE COMPANIES 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 FURNISHED BEFORE HIM. THE AO HAS NOT ASKED THE RESPECTIVE COMPANY APPL ICANTS 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 HIM AND TREAT THE TRANSACTION AS NOT GENUINE. THE ASSESSEE SUBMITTED THE FOLLOWING MATERIAL AT THE TIME OF ASSESSMENT. A) COPY OF SHARE APPLICATIONS FROM THE SHARE APPLICANTS (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 THE APPLICANTS FOR CHANG E OF ADDRESS SUBSEQUENT TO THE DATE OF ALLOTMENT, I.E. 31.03.2009 (COPIES ENCLOSED) D) MEMBERS REGISTER E) SHARE APPLICATION & ALLOTMENT REGISTER F) COPY OF BOARD RESOLUTION. G) REPLIES FROM SHARE APPLICANTS TO THE NOTICE U/S. 133(6) ISSUED TO THEM BY T HE AO SEEKING INFORMATION AND DOCUMENTS ABOUT THE SOURCES 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 ACKNOWLEDGM ENT OF RETURN FILED 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 AFFAIRS 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. CIT(A 10. 1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE AO HAS MADE THE ADDITION OF THE SHARE APPLICATION MONEY BECAUSE ALL THE NINE COMPANIES WERE HAVING THE COMMON ADDRESS AND THE NOTICE SENT UNDER SECTION 133(6) WAS RECEIVED BY THE SINGLE PERSON. ACCORDINGLY THE AO OPINED THAT THE ASSESSEE HAS USED ITS UNACCOUNTED MONEY IN THE SHARE APPLICATION TRANSACTIONS. HOWEVER WE FIND THAT ALL THE MONEY RECEIVED IN THE FORM OF SHARE CAPI TAL 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 THE 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. 36 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . (D) IN THE CASE OF ITO VS CYGNUS DEVELOPERS (I) P LTD IN ITA NO. 282/KOL/2012 DATED 2.3.2016, THIS TRIBUNAL HELD AS FOLLOWS: 6. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED THE ADDITION MADE BY THE AO OBSERVING AS FOLLOWS '6) I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE DETAILS AND DOCUMENTS FILED BY THE APPEL LANT COMPANY IN THE COURSE OF ASSESSMENT: PROCEEDINGS VIDE 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 TO RS.54,00,000/ - U/S.68 OF THE ACT BEIN G THE AMOUNT OF SHARE APPLICATION MONEY BY HOLDING THAT THE APPELLANT COMPANY HAS FAILED TO PROVE THE IDENTITY, AND CREDITWORTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF TRANSACTIONS. IT IS OBSERVED 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 THEY HAD APPLIED FOR SHARES OF THE APPELLANT - COMPANY. ALL THE THREE COMPANIES PROVI DED - THE CHEQUE NUMBER, COPY OF BANK STATEMENTS AND THEIR PAN. IT IS OBSERVED THAT THESE COMPANIES ALSO FILED, COPIES OF THEIR RETURN OF INCOME AND FINANCIAL STATEMENTS FOR AS WELL AS COPY OF THEIR ASSESSMENT ORDER U/S. 143(3) OF THE I. T ACT FOR AY 2005 - 0 6. IN THE CASE OF M/S. JEWELLOCKTREXIM PVT. LTD. THE ASSESSMENT FOR AY 2005 - 06 WAS COMPLETED BY THE ITO WARD 9(3), KOLKATA AND THE ASSESSMENTS IN THE CASE OF M/S. NAVALCO COMMODITIES PVT. LTD. AND M/S. SHREE SHYAMTREXIM PVT. LTD. FOR A. Y.2005 - 06 AND AY.20 04 - 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 A DDRESS AS PROVIDED BY THE APPELLANT COMPANY IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS NOT KNOWN AS TO HOW THE AO'S INSPECTOR HAD REPORTED THAT THE AFORESAID COMPANIES WERE NOT IN EXISTENCE AT THE GIVEN ADDRESS. SINCE THE APPELLANT COMPANY HAD PROVIDED SUFFICIENT DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM OF RECEIPT OF SHARE APPLICATION MONEY, I AM OF THE OPINION THAT THE NO ADDITION U/S.68 COULD BE MADE IN THE HANDS OF APPELLANT COMPANY. ON GOING THROUGH THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UP ON BY THE APPELLANT, IT IS OBSERVED THAT THE VIEW TAKEN AS ABOVE IS ALSO SUPPORTED 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'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS RAJ KUMAR AGARWAL VIDE ITA NO. 179/2008, DATED 17. 11.2009 WHEREIN THE HON 'BLE ALLAHABAD HIGH COURT TOOK A VIEW THAT NON PRODUCTION OF THE DIRECTOR OF A PUBLIC LIMITED COMPANY WHICH IS REGULARLY ASSESSED TO INCOME TAX HAVING PA N, 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 VSDEVINDER SINGH SHANT IN IT A NO.20BIKO112009 VIDE ORDER DATED 17.04.2009. 9. WE H AVE CONSIDERED THE RIVAL SUBMISSIONS., WE ARE OF THE VIEW THAT ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. IT MAY BE SEEN FROM THE GROUNDS OF APPEAL RAISED BY THE REVENUE THAT THE REVENUE DISPUTED ONLY THE PROOF OF IDENTITY OF THE SHAREHOLDER. IN T HIS 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. SIMILARLY NAVALCO COMMODITIES PVT. LTD., WAS ASSESSED TO T AX U/S 143(3) FOR A Y.2005 - 06 BY I TO, WARD - 9(4), KOLKATA BY ORDER DATED 20.03.2007. SIMILARLY JEWELLOCKTREXIM PVT. LTD WAS ASSESSED TO TAX FOR A Y.2005 - 06 BY THE VERY SAME ITO - WARD - 9(3), KOLKATA ASSESSING THE ASSESSEE. IN THE LIGHT OF THE ABOVE FACTUA L POSITION WHICH IS NOT DISPUTED BY THE REVENUE, IT CANNOT BE SAID THAT THE IDENTITY OF THE SHARE APPLICANTS REMAINED NOT PROVED BY THE ASSESSEE. THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT AS WELL AS ITA T KOLKATA BENCH ON WHICH RELIANCE WAS PLACED B Y THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUPPORTS THE VIEW THAT FOR NON PRODUCTION OF DIRECTORS OF THE INVESTOR COMPANY FOR EXAMINATION BY THE AO IT CANNOT BE 37 I.T.A NO 1762/KOL/2016 M/S. JAGANNATH BANWARILAL TEXOFABS PVT.LTD . HELD THAT THE IDENTITY OF A LIMITED COMPANY HAS NOT BEEN ESTABLISHED. FOR THE REASONS GIVEN AB OVE WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. ' 5 5 . TO SUM UP, SECTION 68 OF THE ACT PROVIDES THAT IF ANY SUM FOUND CREDITED IN THE YEAR IN RESPECT OF WHICH THE ASSESSEE FAILS TO EXPLAIN THE NATURE AND SOURCE SHALL BE ASSESSED AS ITS UNDISCLOSED INCOME. IN THE FACTS OF THE PRESENT CASE, BOTH THE NATURE & SOURCE OF THE SHARE APPLICATION RECEIVED WAS FULLY EXPLAINED BY THE ASSESSEE. THE ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLICANTS. THE PAN DETAILS, BANK ACCOUNT STATEMENTS, AUDITED FINANCIAL STATEMENTS AND INCOME TAX ACKNOWLEDGMENTS WERE PLACED ON AO'S RECORD. WITHOUT DOING SO, THE ADDITION MADE BY THE AO IS BASED ON CONJECTURES AND SURMISES CANNOT BE JUSTIFIED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, NO ADDITION WAS WARRANTED UNDER SECTION 68 OF THE ACT. THEREFORE, WE DO NOT WANT TO INTERFERE IN THE IMPUGNED ORDER OF LD. CIT(A). 5 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 - OCTOBER, 201 8 . SD/ - SD/ - ARJUN LAL SAINI A.T. VARKEY ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 26 - 10 - 2018 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ REVENUE : THE DCIT, CIR - 11(1), KOLKATA P - 7 CHOWRINGHEE SQUARE, KOLKATA - 700 069. 2 RESPONDENT/ ASSESSEE: M/S. JAGANNATH BANWARILAL T EXOFABS PVT. LTD. 201/B SADASUKH KATRA, M.D ROAD, BURRABAZAR, KOLKATA - 700 007. 3. CIT, 4. CIT(A), KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA **PP/SPS TRUE COPY BY BY ORDER ASSISTANT REGI STRAR ITAT KOLKATA