Appeal Details
Counselvise Citation
[2023] 100 COUNSELVISE.COM (IT) 6486 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 8 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-10-2023
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
25-09-2023
Assessment Year
2012-2013
Appeal Filed On
02-02-2021
Judgement Text
| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE SHRI RAJPAL YADAV, HON’BLE VICE PRESIDENT & DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 Income Tax Officer, Ward-5(1), Kolkata Vs M/s. Safeline Marketing Pvt. Ltd. 3 rd Floor, R. No. 5 16, India Exchange Place, Dalhousie Kolkata - 700001 [PAN: AAOCS7729P] अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Shri Sunil Surana, A/R Revenue by : Shri S. Datta, CIT, D/R सुनवाई कᳱ तारीख/Date of Hearing : 26/09/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 16/10/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The present appeal is directed at the instance of the revenue against the order of the Learned Commissioner of Income Tax (Appeals) – 7, Kolkata ((hereinafter the “ld. CIT(A)”) dt. 24/08/2022, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2012-13. 2. Registry has informed that the appeal is time barred by 12 days. Condonation application has been filed by the Revenue. Perusal of the same shows that the delay was on account of COVID-19 restrictions. We, therefore, in view of the judgment of The Hon’ble Supreme Court vide Miscellaneous Application No. 21 of 2022 find that the limitation period in filing appeal between 15.03.2020 till 28.02.2022 has been excluded for calculating the limitation period. Since the period of I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 2 limitation in the case of the assessee falls during this period, the same deserves to be extended and we, therefore, condone the delay of 12 days and admit the appeal for adjudication. 3. The revenue has raised the following grounds of appeal:- “1. That on the facts and in the circumstances of the case, Ld. CIT(A) was justified in the deleting the addition of Rs. 14,20,50,000/- made by the Assessing Officer on account of share capital and premium in the course assessment in absence of identity of the creditors, genuineness and creditworthiness of the entire transactions. 2. That on the facts and in the circumstances of the case, Ld. CIT(A) was justified in the deleting the addition of Rs. 14,20,50,000/- made by the Assessing Officer where no personal attendance was made by any director of the share allottee companies during the course of assessment proceedings and as such identity & creditworthiness of the creditors and genuineness of transactions could not be verified. 3. That on the facts, the principles which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT(Central)-l, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) suggests that "the assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the A.O., failure of which, would justify addition of the said amount to the income of the assessee". In the facts and under the circumstances of the case, the assessee company has failed to do so other than submission of mere statements of various kinds. Thus, the decision of the Ld. CIT(A) is erroneous in holding that the raised share capital was not the assessee's own income. 4. That on the facts, the principle which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT(Central)-1, Kolkata vs NRA iron & Steel Pvt. Ltd. (412 ITR 161) also suggests that the Assessing Officer is duty bound to investigate the creditworthiness of the creditor /subscriber, verify the identity of the subscribes, and ascertain whether the transaction is genuine, or these are bogus entries of name lenders. In the facts of the case, in spite of best efforts made by the assessing officer, he could not verify the same as there was no response from the companies to whom share were allotted on private placement basis. Thus, the decision of the Ld. CIT(A) is erroneous in holding that the raised share capital was not the assessee's own income. 5. that on the facts, the principles which has been laid down by the Hon'ble Supreme Court in the case of Pr. CIT(Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) also suggests that if the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lact credit- I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 3 worthiness. Then the genuineness of the transactions would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section of the act, In the facts of the case, the Ld. CIT(A) completely ignored this aspect, thus he has erred in giving relief to the assessee. 6. That on the facts of the present case, clearly the Assessee Company failed to discharge the onus required under section 68 of the Act, the Assessing Officer was justified in adding back the amounts to the income of the Assessee and the Ld. CIT(A) has erred in allowing relief to the assessee. 7. That on the facts, in absence of verification, Ld. CIT(A) should have remanded the matter to A.O. for fresh verification. Thus, he has violated the provisions of Rule 46A of the I. T. Rules. 8. That on the facts, the appellant craves to add, alter, amend, delete or substitute any of the grounds and/or take additional grounds before or at any time of hearing of this appeal. 9. That on the facts, further the Assessing Officer made disallowance of Rs. 39,694/-as u/s. 14A r.w. Rule 8D which has been deleted by the CIT(A)-7, Kolkata. The CIT(A) was not justified denying the findings of the Assessing Officer.” 4. Facts in brief are that the assessee is a Private Limited Company engaged in the business of share investments. Nil income declared in the e-return filed for Assessment Year 2012-13 on 20/09/2012. After the return being processed u/s 143(1)(a) of the Act, the case selected for scrutiny through CASS followed by issuance of notice u/s 143(2) and 142(1) of the Act. In the notice u/s 142(1) of the Act, the ld. Assessing Officer called for various details including the details of the share subscribers who have applied for the equity share of the companies and have paid equity share capital of Rs. 14,20,500/- along with share premium of Rs.14,06,29,500/- . The assessee filed complete details as called for by the Assessing Officer but the same were termed as useless paper work by the Assessing Officer along with an I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 4 observation that the assessee company has not conducted any considerable business activity. The ld. Assessing Officer without specifically pointing out any mistakes or defects in the documents filed by the assessee observed that the assessee has an unusual trend of introduction of funds in the form of share capital and security premium which are from unaccounted source of funding. Even though all the notices issued u/s 133(6) of the Act were duly served upon the share subscribers and all the details were filed by them and notices u/s 131 of the Act issued to the directors were served and replies were filed but still ld. Assessing Officer was not satisfied with this exercise and concluded the assessment by treating the alleged sum of Rs. 14,20,50,000/- as unexplained and made addition thereof u/s 68 of the Act along with minor disallowance of Rs.39,594/- u/s 14A of the Act. Income assessed at Rs. 14,20,81,000/-. 4.1. Aggrieved the assessee preferred appeal before the ld. CIT(A) and filed complete details of each of the share subscribers along with the copy of notices u/s 133(6) and replies to notices u/s 131 of the Act, copies of the assessment order of various share subscribing companies framed u/s 143(3) or 147 of the Act were in some cases, additions were made in the hands of the share subscribing companies. Based on these facts including audited financial statements, bank statements, letters confirming the alleged transactions along with the source for making such investment by each of the share subscribing companies, the ld. CIT(A) found merit in all these details and was satisfied that the assessee has successfully explained the nature and source of the I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 5 alleged sum and after analyzing the facts of the case and placing reliance on settled judicial precedents, deleted the addition made u/s 68 of the Act. 5. Aggrieved, the revenue is now in appeal before this Tribunal. 6. The ld. D/R vehemently argued supporting the order of the ld. Assessing Officer and stated that merely filing these paper documents cannot be treated as a compliance to explain the nature and source of the alleged sum. Surrounding circumstances which includes the meagre income offered by the share subscribers though they were having huge net worth, no regular business activity carried out by the assessee company as well as by the share subscribers and the flow of funds in the bank statement indicates that share subscribing companies are engaged in rotation of funds and providing accommodation entries and they are jamakharchi or shell companies and, therefore, the ld. Assessing Officer has rightly added the sum in the hands of the assessee. The Ld. DR has further relied upon the decision of the Hon’ble Supreme Court in the case of PCIT vs. NRA Iron & Steel (P) Ltd. reported in [2019] 103 taxmann.com 48(SC). 6.1. On the other hand, the ld. Counsel for the assessee apart from placing reliance on the detailed finding of the ld. CIT(A) further took us through the various documents placed in the paper book containing 899 pages in which right from the beginning of the assessment proceedings, all the papers filed at various stages have been mentioned. It is further submitted that all the share applicants were issued notices u/s 133(6) of the Act by the ld. Assessing Officer I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 6 which have duly been served and been complied by way of giving replies directly to the Assessing Officer along with all the documents as called for. He also submitted that all the share subscribing companies have sufficient net worth to explain the source of investment made in the equity shares of the assessee company. It is also submitted that the Directors of two share subscribing companies, namely, Surakshit Vincom Pvt Ltd. and Wellplan Dealers Pvt. Ltd., were issued summons u/s 131 of the Act which were duly served upon the assessee and were required to appear on 09/03/2015, however, they did not appear but made sufficient compliance by filing replies to the said notices. He further stated that up to Assessment Year 2012-13, as far as the alleged sum is concerned, the assessee was only required to explain the nature and source and not the source of source but still the assessee has filed complete details to explain the nature and source as well as the source of source of the alleged sum, which is discernible from confirmation letters filed by the share applicants about the alleged said transactions and in the very same letter, they have provided the information about the source of investment which is in the shape of funds received from other sources by the share subscribing companies. Finally, he stated that most of the share subscribing companies have also passed through the scrutiny proceedings u/s 143(1)/143(3)/147 of the Act. So far as the judicial precedents are concerned, the ld. Counsel for the assessee referred and relied on various decisions including the decision of this Tribunal in I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 7 the case of M/s. Bhikshu Agency Pvt. Ltd. vs. ITO, Ward-5(3), Kolkata in ITA No. 551/Kol/2016; Assessment Year 2008-09, order dt. 25/05/2023. 7. We have heard rival contentions and perused the record placed before us. The revenue is aggrieved with the finding of the ld. CIT(A) deleting the addition of Rs.14,20,50,000/- made by the Assessing Officer u/s 68 of the Act treating the alleged sum received towards issue of equity share capital along with share premium received from following eleven share applicants:- 1) Raghban Tie-up Pvt. Ltd. 2) Sahanbhuti Merchants Pvt. Ltd. 3) Sankatmochak Vanijya Pvt. Ltd. 4) Subhdrishti Marketing Pvt. Ltd. 5) Subhmayee Mercantile Pvt. Ltd. 6) Suhana Mercantile Pvt. Ltd. 7) SUkriti Vinimay Pvt. Ltd. 8) Surakshit Vincom Pvt. Ltd. 9) Vedic Mercantile Pvt. Ltd. 10) Wellplan Dealer Pvt. Ltd. 11) Zoom Vyapaar Pvt. Ltd. 8. We further observe that the assessee is required to explain the nature and source of the alleged sum and all relevant details were filed before the Assessing Officer and thereafter before the ld. CIT(A) also filed copies of assessment order of various share subscribing companies which have also passed through scrutiny proceedings for the very same Assessment Year. The ld. CIT(A) after examining all I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 8 these and considering the fact that all the notices u/s 133(6) of the Act issued to the eleven share subscribers were duly served and acted upon by each of the share subscribers by filing reply to the Assessing Officer and furnishing all these details and also considering the replies to the summons issued u/s 131 of the Act which were issued to Directors of few share applicant companies deleted the impugned addition. We in order to bring on record the details filed by the assessee before the lower authorities and specifically before the ld. CIT(A), would like to go through the documents mentioned in the index of the paper book, which is reproduced below:- “ Index: 1. Notice issued u/s 143(2) 2. Assessee files following preliminary papers in support of the return of income 1. Letter along with 2. Power of Attorney 3. Acknowledgement of return of income 4. Audited Financial Statements 3. Notice issued u/s 142(1) 4. Assessee files following documents: 1. Letter stating name, address, PAN of share applicants, Names and addresses of directors, nature of business, details of bank account along with 2. Statement containing name, address of share applicants, no of shares allotted and amount received 3. Bank Statement 4. Form 5 filed with ROC for increase in authorised share capital 5. Form 2 (return of allotment) filed with ROC along with list of allottees 5. Letter from TRO-5 stating transfer of case by Ld. CIT to TRO-5 6. Notice issued u/s 142(1) seeking details which were already filed by the assessee 7. Notice issued u/s 133(6) issued to all share applicants: ■ Baghban Tie-up Pvt. Ltd. ■ Sahanbhuti Merchants Pvt. Ltd. I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 9 ■ Sankatmochak Vanijya Pvt. Ltd. ■ Subhdrishti Marketing Pvt. Ltd. ■ Subhmayee Mercantile Pvt. Ltd. ■ Suhana Mercantile Pvt. Ltd. ■ Sukriti Vinimay Pvt. Ltd. ■ Surakshit Vincom Pvt. Ltd. ■ Vedic Mercantile Pvt. Ltd. ■ Wellplan Dealer Pvt. Ltd. ■ Zoom Vyapaar Pvt. Ltd. 8. Replies filed by all the share applicants to notice u/s 133(6) 8.1. Baghban Tie-up Pvt Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.2. Sahanbhuti Merchants Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.3. Sankatmochak Vanijya Pvt. Ltd. • Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 10 • PAN Card • Acknowledgement of return of income • Audited Financial Statements • Bank Statement • Acknowledgements of share application money paid • Share allotment advice • Share certificate • Form 18 • Certificate of Incorporation • Identity Proof of Director 8.4. Subhdrishti Marketing Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.5. Subhmayee Mercantile Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.6. Suhana Mercantile Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 11 ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.7. Sukriti Vinimay Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.8. Surakshit Vincom Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.9. Vedic Mercantile Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 12 ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.10. Wellplan Dealer Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 8.11. Zoom Vyapaar Pvt. Ltd. ■ Letter confirming issue price, amount invested with source thereof, details of directors along with copies of following documents ■ PAN Card ■ Acknowledgement of return of income ■ Audited Financial Statements ■ Bank Statement ■ Acknowledgements of share application money paid ■ Share allotment advice ■ Share certificate ■ Form 18 ■ Certificate of Incorporation ■ Identity Proof of Director 9. Summon issued u/s 131 to director of following two share applicants requiring to appear on 03.03.2015 whereas the summon was served on 09.03.2015:- I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 13 1. Surakshit Vincom Pvt. Ltd. 2. Wellplan Dealers Pvt. Ltd. 10. Replies filed by share applicants to summon u/s 131 since summon served after date fixed of compliance:- 10.1. Surakshit Vincom Pvt. Ltd. ■ Covering letter along with stating "details of AO where assessed" ■ Voter Id Card of director ■ Mentioning that other details/document have already been filed ■ Annual Return 10.2. Wellplan Dealer Pvt. Ltd ■ Covering letter along with stating "details of AO where assessed" ■ Voter Id Card of director ■ Mentioning that other details/document have already been filed ■ Annual Return 11. Summon u/s 131 issued to director of assessee company requiring to appear on 03.03.2015 whereas the summon was served on 09.03.2015:- 12. Reply to summon u/s 131 filed by director of assessee company along with ■ Covering Letter ■ Voter Id Card of director ■ Certificate of Incorporation ■ Annual Return 13. Show Cause Notice (SCN)issued requiring alleging that "source of funding has not been found to be satisfactorily substantiated." and requiring the assessee to explain why disallowance u/s 14A r/w Rule 8D should not be imposed. The SCN dated 05.03.2015 requiring compliance on 16.03.2015 was served on 13.03.2015 14. The assessee filed detailed reply to SCN along with copies of following documents of each of the share applicants ❖ Certificate of Incorporation - Baghban Tie-up Pvt. Ltd. - Sahanbhuti Merchants Pvt. Ltd. - Sankatmochak Vanijya Pvt. Ltd. - Subhdrishti Marketing Pvt. Ltd. - Subhmayee Mercantile Pvt. Ltd. - Suhana Mercantile Pvt. Ltd. - Sukriti Vinimay Pvt. Ltd. - Surakshit Vincom Pvt. Ltd. I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 14 - Vedic Mercantile Pvt. Ltd. - Wellplan Dealer Pvt. Ltd. - Zoom Vyapaar Pvt. Ltd. ❖ Memorandum and Articles of Association - Baghban Tie-up Pvt. Ltd. - Sahanbhuti Merchants Pvt. Ltd. - Sankatmochak Vanijya Pvt. Ltd. - Subhdrishti Marketing Pvt. Ltd. - Subhmayee Mercantile Pvt. Ltd. - Suhana Mercantile Pvt. Ltd. - Sukriti Vinimay Pvt. Ltd. - Surakshit Vincom Pvt. Ltd. - Vedic Mercantile Pvt. Ltd. - Wellplan Dealer Pvt. Ltd. - Zoom Vyapaar Pvt. Ltd. ❖ Share Application Forms - Baghban Tie-up Pvt. Ltd. - Sahanbhuti Merchants Pvt. Ltd. - Sankatmochak Vanijya Pvt. Ltd. - Subhdrishti Marketing Pvt. Ltd. - Subhmayee Mercantile Pvt. Ltd. - Suhana Mercantile Pvt. Ltd. - Sukriti Vinimay Pvt. Ltd. - Surakshit Vincom Pvt. Ltd. - Vedic Mercantile Pvt. Ltd. - Wellplan Dealer Pvt. Ltd. - Zoom Vyapaar Pvt. Ltd. ❖ Allotment Advice - Baghban Tie-up Pvt. Ltd. - Sahanbhuti Merchants Pvt. Ltd. - Sankatmochak Vanijya Pvt. Ltd. - Subhdrishti Marketing Pvt. Ltd. - Subhmayee Mercantile Pvt. Ltd. - Suhana Mercantile Pvt. Ltd. - Sukriti Vinimay Pvt. Ltd. - Surakshit Vincom Pvt. Ltd. - Vedic Mercantile Pvt. Ltd. - Wellplan Dealer Pvt. Ltd. I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 15 - Zoom Vyapaar Pvt. Ltd. ■ Annual return of assessee company ■ Return of allotment (Form 2) filed by assessee company 15. Copy of assessment order of share applicants passed u/s 143(3) or 143(3)/147 orl43(l) ■ Baghban Tie-up Pvt. Ltd. ■ Subhdrishti Marketing Pvt. Ltd. ■ Suhana Mercantile Pvt. Ltd. ■ Sukriti Vinimay Pvt. Ltd. ■ Surakshit Vincom Pvt. Ltd. ■ Vedic Mercantile Pvt. Ltd. ■ Wellplan Dealer Pvt. Ltd. 9. Further we observe that the ld. CIT(A) after observing the above details and also considering the ratio laid down by the Hon’ble Courts in various decisions and also the decisions of this Tribunal in other cases adjudicating similar issues, deleted the addition observing as follows:- “5.2.1. I have considered the submission of the AR of the appellant in the backdrop of the assessment order I have also considered the various judicial citations as relied upon by both the AO as well as the AR in support of their respective stands in the matter I have also considered the materials on record by way of paper book filed by the AR in deciding the issue involved At the outset there is no dispute that during the year under consideration, the assessee company raised ^14,20.50,000/- by way of issue of 1,42,050 Shares of ?10/- each at a premium of t990/- each. An analysis of the events that occurred and my findings and decision thereto are elucidated as follows 5.2.2. In course of the assessment proceedings the AO inter alia required the assessee to file details and evidences of share capital and premium raised during the year. In compliance thereto the assessee filed name, address and PAN of share applicants, no of shares allotted and amount received along with copies of form -2 (return of allotment) and form-5 (increase in authorised capital). Thereafter, the AO in order to verify the identities and creditworthiness of the investors and genuineness of the transactions issued notices u/s 133(6) to all the share applicants all of which were duly served. In compliance thereto the share applicants confirmed the amount invested in the assessee company and also explained source of such funds The investors also filed copies of their certificate of incorporation. PAN Card, form 18 (address proof), return of income, audited financial statements, bank I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 16 statements, share application acknowledgements, allotment advice, share certificates, address proof. 5.2.3. Later, the AO issued summons to the director of the assessee company as well as directors of two investors viz. Surakshit Vincom Pvt Ltd. and Wellplan Dealers Pvt. Ltd. In compliance to the above summons, the directors of both the investor companies filed written submission along with voter ID Card of its director, jurisdiction of the share subscribers and submitted that the other details required have already been filed and are part of the assessment records. Similarly in compliance to the summon issued to the director of the assessee company, the director submitted copies of identity proof and certificate of incorporation of the assessee company as proof of their respective identities and further submitted that the details required are already filed. 5.2 4 Finally the AO issued a SCN stating that "source of funding has not been found to be satisfactorily substantiated" and required the assessee to explain why provisions of Sec. 14A r/w Rule 8D should not be applied 5.2.5. In response to the same, the assessee filed copies of (i) Company master data downloaded from MCA showing that status of all share applicants on MCA is ACTIVE (ii) Signatory details downloaded from MCA (iii) Certificate of Incorporation (iv) Memorandum and Articles of Association (v) Share Application Forms (vi) Allotment Advice of all the share applicants. The assessee also submitted that (a) All the share applicants are companies registered under the Companies Act 1956 and are regularly filing their return of income and their status of MCA is active, (b) All the share applicants are income tax assessee and have filed their return of income (c) All the notices and summons issued to all the share applicants have been served and complied confirming the amount invested by them and explaining the source thereof and by filing details and documents as called for. (d) All the share applicants have sufficient net worth to invest. (e) All the transactions have taken place through banking channels and have duly been recorded in their regular books of account and reflected in their audited financial statements and returns of income filed by them (f) There is no finding that the returns of income filed by the share applicants have been rejected by their assessing officer, (g) No adverse material whatsoever has been brought on record by the AO. (h) The "nature of receipt" is share application money and the "source of fund" is the share applicants who invested the money from accounts held in their own names, (i) The assessee in not required to prove source of source yet the share applicants in their replies have explained the source of funds of amounts invested in the assessee company, (j) Necessary evidences in support of the identities and creditworthiness of the share applicants and genuineness of the transactions have been provided both by the assessee as well as the share applicants whereas no tangible adverse material whatsoever has been has been brought on record by the AO in the absence of which no addition can be made merely on the basis of surmises and conjectures. The assessee also cited various judgements to the proposition that (i) By furnishing names, address and PAN of the share applicants, details of amount received, nos. of shares allotted, amount adjusted against share capital and premium and copies of share application forms, certificate of incorporation, MOA/AOA PAN Card and I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 17 the share applicants having confirmed the transactions and explaining source of such funds and by filing copies of their acknowledgements of return of income, audited financial statements, bank statements, certificate of incorporation, MOA/AOA, share application acknowledgements, allotment advices, share certificates and identity and address proof of their directors had duly discharged the initial onus lying upon them u/s 68 (ii) Once the identity of the share applicants is proved who confirmed the transactions with the assessee no addition in the hands of assessee could be made (iii) all the share applicants had sufficient net worth to invest in the assessee company (iv) the share applicants are income tax assessee and the payment being received from bank accounts held by the share applicants in their own name the identities and creditworthiness of the share applicants and genuineness of the transactions cannot be doubted upon (v) the amendment to Sec 68 is applicable from AY 2013-14 and therefore the assessee is not required to prove source of source. In any case all the share applicants have also proved the sources of funds (vi) The share premium is a capital receipt and no additions can be made on account of high share premium as Sec. 56(2)(viib) has been brought on statute w e f AY 2013-14 and that fixing of share premium is a commercial decision and in the absence of any provision under the Act, the same cannot be interfered with and (vii) Both the assessee and share applicants filed necessary details and evidences in support of their identities, creditworthiness and genuineness of the transaction and therefore the onus had shifted upon revenue to prove otherwise. As no adverse material has been brought on record, no addition was called for. The assessee further submitted that there being no exempt income, disallowance u/s 14A was not called for 5 2.6. However, the AO assessed the share capital and premium as unexplained cash credit on the ground that (a) the documents filed by the assessee and the share applicants were 'useless paper work' (b) the assessee did not comply with various notices issued by the AO (c) the assessee's conduct was 'mysterious' and 'recalcitrant' (d) the assessee company had no business activity (e) the assessee did not disclose its nature of business (f\identities of companies in which investments made was not disclosed by assessee (g) the assessee and the share applicants did not invest in quoted shares (h) the investments were made by unknown persons (i) the investors had no creditworthiness, (j) share premium charged was too high which is indicative of unaccounted money. The AO in support of his action relied on the decisions in the cases of CIT v Ruby Traders &'Exporters Ltd. 134 Taxman 29 (Cal), CIT v Precision Finance Pvt. Ltd. 208 ITR 463 (Cal), CIT v Nipun Builders & Developers Pvt. Ltd. (2013) 30 taxmann.com 292 (Delhi)) Kachwala Gems v JCIT, Jaipur 158 Taxman 71 (SC), A Govindarajulu Mudaliar c CIT [1995] 34 ITR 807, CIT v Devi Prasad Viswanath Prasad [1969] 72 ITR 194 (SC), CIT v Independent Media Pvt. Ltd. [2012] 25 taxmann.com 276 (Delhi), Star Griha Pvt. Ltd v CIT and M/s Bisakha Sales Pvt. Ltd. v CIT. 5.3.1. I have gone through the assessment order and the submission and evidences adduced by the appellant. Based upon the same, I deal with the various adverse findings of the AO based upon which the share capital and premium have been assessed as unexplained cash credit. I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 18 5.3.2. Regarding ‘useless paper work’ from the perusal of the notices issued and the replies submitted by the assessee and the investor, I have noted that assessee and the investors have submitted only the details, documents and explanation as called for by the AO. The AO has also not mentioned that what irrelevant papers were filed. The copies of documents relating to each of the share applicants being (i) Company Master Date (ii) Director Details (iii) Certificate of Incorporation (iv) MOA/AOA (v) PAN Card (vi) Share Application Form (vii) Allotment Advice (vii) Share Certificates (ix) returns of income (x) audited financial statements (xi) bank statement, (xii) confirmation of investment and source thereof are relevant papers and cannot be rejected merely terming the same as 'useless paper work. Therefore, the finding of the AO that the assessee or the investors submitted 'useless paper work' is against the facts and materials on record and are merely based on surmises and conjectures. 5.3.3. Regard non-compliance to 'various notices', the AO has not specifically pointed out any specific instance of non-compliance. On going through the assessment order and evidences adduced by the assessee, it is apparent that the in response to notice u/s 143(2) dated 14.08.2013, the assessee on 12.11.2013 filed copies of acknowledgement of return of income and audited financial statements. Thereafter on 26.11.2013 the AO issued notice u/s 142(1) and in compliance thereto the assessee on 23.12.2013 filed names, address, PAN of share applicants, details of share application money received, details of shares allotted, amount adjusted against share capital and premium, bank statement, form -2 (return of allotment), form -5 (increase in authorised share capital). On 27.1 1.2014, the AO issued another notice u/s 142(1) seeking details which were already filed. On 19.01.2015, the AO issued notices to all the share applicants which were complied with by the share applicants by filing replies from time to time. Later the AO issued summons to the directors of the assessee company and two share applicants which were also complied with by filing necessary details. Finally the AO issued a Show Cause Notice on 05.03.2015 to which the assessee filed its reply on 16.03 2015 As such the finding that the assessee did not comply with 'various notices' is factually incorrect. 5.3.4. The AO has in the assessment order has mentioned that during the course of the assessment proceedings, the conduct of the assessee was 'mysterious' and 'recalcitrant' However, the AO has not mentioned any basis for arriving at such conclusion. From the perusal of the evidences on record, it is apparent that the assessee has complied with each and every notices, summons and show cause notices issued by the AO. The AO has also not referred to any notice/summon that was not so complied with As such I find no basis to hold that the conduct of the assessee was 'mysterious' or 'recalcitrant'. 5.3.5. Regarding finding of the AO that the assessee had no business and it did not disclose its business, it is evident from the assessment order against column 'nature of business' the AO has mentioned the nature of business as share investment'. The same is also evident from the audited financial statement of the assessee company. As such the findings that the assessee had no business or it did not disclose it nature of business are contrary to the facts and materials on record. I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 19 5.3.6. Regarding the finding of the AO that the assessee did not disclose the companies in which it made investment is also factually incorrect. The details of investments were filed along with the audited financial statements. 5.3.7 Regarding the observation of the AO that the assessee as well invested in unlisted shares instead of quoted shares, I note that it is settled law that it is for the assessee to manage its own business affairs and the AO cannot sit in the judgement of the assessee. In any case, the AO himself accepted the genuineness of the investments which is evident from the fact that he computed disallowance u/s 14A in respect of such investments 5.3.8. The finding of the AO that the investors were unknown person is also factually incorrect as the assessee company and the share applicants had common directors 5.3.9. Regarding, the finding of the AO that the investors had no creditworthiness the appellant has successfully demonstrated that each of the investors had net worth many times the amount invested in the assessee company. 5.3.10. Regarding high share premium, I find that once the identities and creditworthiness of investors and genuineness of transactions is proved section 68 cannot be invoked on account of high share premium. Therefore, the findings made by the AO based upon which he has assessed the share capital and premium as unexplained cash credit are factually incorrect contrary to material on records and merely based upon surmises and conjectures 6. On the issue of adverse inference being drawn by the AO on account of high share premium, I find that the first and second proviso to Sec 68 have been inserted by the Finance Act, 2012 w.e.f. 01.04.2013. As such the same applies from AY 2013-14. Similarly 2(24)(xvi) to tax the difference in consideration of value of shares exceeding the fair market value has also been brought on statute by the Finance Act w.e.f. 01.04.2013 and applicable from AY 2013-14. Therefore the said provision does not apply to this year i.e. AY 2012-13. In this regard reference is made to the following judicial decisions: 6.1. In the case of ACIT v Gagandeep Infrastructure Pvt. Ltd. ITA No. 5784/Mum/2011 decided on 23.04.2014 the Hon'ble ITAT on the issue of high share premium held as under: "11. We have carefully perused the orders of the lower authorities. In our considered view, the issue of shares at premium is always a commercial decision which does not require any justification. Further the premium is a capital receipt which has to be dealt with in accordance with Sec 78 of the Companies Act, 1956. Further the company is not required to prove the genuineness, purpose or justification for charging premium of shares, share premium by its very nature in a capital receipts and is not income for its ordinary sense It is not in dispute that the assessee had filed all the requisite details/documents which are required to explain credits in the books of accounts by the provisions of Sec. 68 of the Act. The assessee has successfully established the identity of the companies who have purchased shares at a premium The assessee has also filed bank details to explain the source of the share holders and the genuineness of the transaction was also established by filing copies of share application forms and Form No. 2 filed with the Registrar of I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 20 Companies. The entire dispute revolves around the fact that the assessee has charged a premium of Rs 190/- per share. No doubt a non-est company or a zero balance sheet company asking for Rs. 190/- per share defies all commercial prudence but at the same time we cannot ignore the fact that it is a prerogative of the Board of Directors of the company to decide the premium amount and it is the wisdom of the share holders whether they want to subscribe to such a heavy premium. The Revenue authorities cannot question the charging of such huge premium without any bar from any legislated law of the land The amendment has been brought in the Income Tax Act under the head "Income from other sources" by inserting Clause (viib) to Sec. 56 of the Act wherein it has been provided that any consideration for issue of shares, that exceeds the fair value of such shares the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be treated as the income of the assessee but the legislature in its wisdom has made this provision applicable w.e.f. 1.4.2013 i.e. on and from AY 2013-14 In so far as the year under consideration is concerned, the transaction has to be considered in the light of the provisions of Sec 68 of the Act. There is no dispute that the assessee has given details of names and addresses of the share holders their PAN Nos, the bank details and the confirmatory letters 11.1. Considering all these undisputed facts, it can be safely concluded that the initial burden of proof as rested upon the assessee has been successfully discharged by the assessee. Even if it is held that excess premium has been charged, it does not become income as it is a capital receipt. The receipt is not in the revenue field What is to be probed by the AO is whether the identity of the assessee is proved or not. In the case of share capital, if the identity is proved, no addition can be made u/s 68 of the Act We draw support from the decision of the Hon’ble Supreme Court in the case of Lovely Exports Pvt Ltd. 317 ITR 218. We, therefore do not find any error or infirmity in the findings of the Ld. CIT(A) Ground No 1 is accordingly dismissed." 6.2. The aforesaid view of the ITAT has been upheld by the Hon'ble Bombay High Court in CIT v Gagandeep Infrastructure Pvt. Ltd. [2017] 394 ITR 680 (Bombay) Further the Hon'ble High Court observed as under: "(e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April. 2013 Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre- proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 21 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 share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax m accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit.” 6 3. In the case of DCIT vs. M/s. Alcon Biosciences (P) Ltd ITA No 1946/Mum/2016 decided on 28.02.2018 the Hon'ble ITAT. Mumbai held as under "As regards the AOs observation with regard to the issue of shares at a face value of Rs 10/- issued at a premium of Rs. 990 per share, we find that there is no merit in the findings of the AO for the reason that the issue of shares at a premium and subscription to such shares is within the knowledge of the company and the subscribers to the share application money and the AO does not have any role to play as long as the assessee has proved genuineness of transactions. We further notice that the AO cannot question issue of shares at a premium and also cannot bring to tax such share premium within the provisions of section 68 of the Act before (supra) held that Proviso inserted to section 68 is prospective in nature.” 6.4. In the case of CIT vs. Chain House International (P) Ltd. [2019] 408 ITR 561 (M.P.) the Hon'ble Madhya Pradesh High Court,' on the issue of premium, held as under: "Issuing the share at a premium was a commercial decision. Il is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies In day to day market, unless and until, the rates if 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....." 6.5. The SLP filed by the revenue against the above decision has been dismissed by the Hon'ble Supreme Court as reported on PCIT v Chain House International (P.) Ltd. [2019] 262 Taxman 207 (SC). 6.6. In the case of Green Infra Ltd. v ITO [2013] 145 ITD 240 (Mumbai] the Hon'ble Mumbai Tribunal held as under: "10.1 No doubt a non-est company or a zero balance company asking for a share premium of Rs. 490/- per share defies all commercial prudence but at the same time we cannot ignore the fact that it is a prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of the share holders whether they want to subscribe to such a heavy premium. The Revenue authorities cannot question the charging of such of huge premium without any bar from any legislated law of the land. Details of subscribers were before the Revenue authorities The AO has also confirmed the transaction from the subscribers by issuing notice u/s. 133(6) of the Act. ..." I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 22 6.7. In the case of PCIT v Apeak Infotech [2017] 397 ITR 148 (Bombay) the Hon'ble Bombay High Court held as under: "(c) In any case, we may point out that the amendment to section 68 of the Act by the addition of proviso thereto took place with effect from April 1, 2013. Therefore it is not applicable for the subject assessment year 2012-13. So far as the pre-amended section 68 of the Act is concerned, the same cannot be invoked in this case, as evidence was led by the respondents-assessees before the Assessing Officer with regard to identity, capacity of the investor as well as the genuineness of the investment. Therefore, admittedly, the Assessing Officer did not invoke section 68 of the Act to bring the share premium to tax. Similarly, the Commissioner of Income-tax (Appeals) on consideration of facts, found that section 68 of the Act cannot be invoked. In view of the above, it is likely that the Revenue may have taken an informed decision not to urge the issue of section 68 of the Act before the Tribunal." 6.8. As such, the amendment in section 68 of the Act took place wherein the addition of proviso was with effect from 01.04.2013 and so is not applicable in the AY. Further, as noted, the definition of income as provided under section 2(24) of the Act at the relevant time (AY 2012-13) did not define as income any consideration received for issue of shares in excess of its fair market value. This came into effect from 01.04.2013 and thus would have no application to the share premium receiver by the assessee in the previous year relevant to AY 2012-13. 7. While assessing the share capital and premium as unexplained cash credit based upon his best judgement, the Ld. AO has relied upon several judicial pronouncements, which are dealt with as follows: 7.1. CIT v Ruby Traders & Exporters Ltd. 134 Taxman 29 (Cal) In the above case, it was held that the primary onus lies upon the assessee to establish the identities and creditworthiness of the share applicants and genuineness of the transactions. In the present case, the assessee as well as the investors has filed (i) Company Master Data (ii) Director Details (iii) Certificate of Incorporation (iv) MOA/AOA (v) PAN Card (vi) Share Application Form (vii) Allotment Advice (viii) Share Certificates (ix) returns of income (x) audited financial statements (xi) bank statement, (xii) confirmation of investment and source thereof in respect of each of the share applicants All the investors are income tax assessees who have filed their returns of income. All the investors had sufficient net worth to invest. All the transactions have taken place through bank accounts held by the investors in their own name. The investors have confirmed the investments made in the assessee company and have also explained source thereof. As such the assessee company duly discharged the primary onus lying upon it. 7.2. CIT v Precision Finance Pvt. Ltd. 208 ITR 463 (Cal) In this case, the enquiry of the ITO revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to the identity of the creditors was not established. I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 23 Whereas in the present case there is no dispute that all the investors are income tax assessee and have filed their returns of income All the notices and summons issued to them were duly served and complied with 7.3 CIT v Nipun Builders & Developers Pvt. Ltd., (2013) 30 taxrnann.com 292 (Delhi) In this case, the AO issued summons to the subscribers which returned unserved and the inspector report also confirmed that the addresses mentioned there were no such persons. However in the present case all the notices and summons issued to them were duly served and complied with. 7.4. Kachwala Gems v JCIT, Jaipur 158 Taxman 71 (SC) The AO also relied upon the decision in the above case in support of his action to assessee the share capital and premium as unexplained cash credit u/s 144 alleging that the assessee did not comply to 'various notices'. However as discussed above, there was no non-compliance on the part of t e assessee passing of assessment order u/s 144 is uncalled for. 7.5. A Govindarajulu Mudaliar c CIT [1995] 34 ITR 807, CIT v Devi Prasad Viswanath Prasad [1969] 72 ITR 194 (SC), CIT v Independent Media Pvt. Ltd. [2012] 25 taxmann.com 276 (Delhi) The AO has further relied upon the decisions in the aforesaid cases to the proposition that if the assessee offers no explanation about the source of fun and nature of receipts, the AO can assessee the same as unexplained cash credit However in the present case, the assessee filed name, address and PAN of share applicants, return of allotment, form for increase in authorised capital. The AO then issued notices and summons to the investors which were duly served and complied with by filing details, documents and explanations as called for. No deficiency whatsoever have been found in the details and documents filed by the assessee, The identities of the investors was established by filing copies of certificate of incorporation PAN card, address proof and returns of income. The creditworthiness of the investor was evident from their audited financial statement whereby each of the share applicant had net worth many time more than the amount invested by them The genuineness of transactions was also proved by showing that each assessee was income tax assessee and the transactions had taken place through bank account held by the investors in their own name. 7.6. The reliance of the AO on the decision of the Hon'ble jurisdictional ITAT in the case of Star Griha Pvt. Ltd. v CIT and M/s Bisakha Sales Pvt. Ltd. v CIT is misconceived. In both the cases, the reassessment proceedings were initiated by the AO at the instance of the assessee to assess petty amount as escaped income. In the guise of such reassessment proceedings, the share capital raised was accepted by the AO through stage managed inquiry. It is in the said context the action of the Ld. PCIT setting aside the assessment order was upheld. 7.7. As such all the case laws relied upon by the AO are factually distinguishable. 8. The fact remains that the assessee filed complete details of share capital raised. All the investor are income tax assessees and transactions have taken place through banking channels from accounts held by the investors in their own name and that I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 24 each of the investors have net worth many times more than the amount invested. The notices and summons issue to the share applicants were duly served and complied with by filing details and evidences as called for and also confirming the investments made by them and explaining source thereof. As such I am of the considered view that the assessee has duly discharged the onus lying upon it u/s 68 and the burden shifted upon the AO whereas no adverse material has been brought on record. In such case, provision of Sec. 68 cannot be invoked. In this regard, reference is made to the decisions in the following cases: 8.1. In the case of Orissa Corpn. (P) Ltd. 159 ITR 78 (SC), the Apex Court has held that onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). 8.2. In the case of Nemi Chand Kothari 136 Taxman 213 (Gauhati), the Hon'ble Gauhati High Court has thrown light on another aspect touching the issue of onus on assessee under section 68 of the Act, by holding that the same should be decided by taking into consideration also 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 ms knowledge. The Hon'ble Court in the said case held that, once it is found that an assessee has actually taken money from depositor/lender who has been fully identified, the assessee/borrower cannot be called upon to explain, much less prove the affairs of such third party, which he is not even supposed to know or about which he cannot be held to be accredited with any knowledge. 8.3. In the case of CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18(AII.) on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, the Hon'ble High Court has observed and held as under- “4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent account numbers. It has found that the assessee’s burden stood discharged and so, no addition to his total income on account of cash credit was called for In view of this finding, we find that the Tribunal was right in reversing the order of the AAC, setting aside the assessment order." 8.4. Hon'ble jurisdictional High Court, Calcutta in the case of S.K. Bothra & Sons, HUF v. Income-tax Officer, Ward- 46(3), Kolkata 347 ITR 347 (Cal), has 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 support of the loan I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 25 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 before 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, discharged the initial burden and those materials disclosed by the assessee prompted the Assessing Officer to enquire through the Inspector to verify the statements." 8.5. On the issue of creditworthiness of a creditor who is an income tax assessee and where the amount has been received through banking channels from bank account held by the creditor in his own name, the Hon'ble Jurisdictional Calcutta High Court in the case of CIT v Dataware Pvt. Ltd. ITA No. 263 of 2011 Date- 21st September, 2011 held as under: "In our opinion, in such circumstances, the Assessing officer of the assessee cannot take the burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After getting the PAN number and getting the information that the creditor is assessed under the Act the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness" of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course the Assessing officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing Officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities." 8.6. In the case of Lovely Exports reported in 216 CTR 295 (SC), the Hon'ble Supreme Court while dismissing SLP held as under: "Can the amount of share money be regarded as undisclosed income under section 68 of the Income tax Act, 1961? We find no merit in this special leave petition for the simple reason that if the share application money is received by the assessee- company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law Hence, we find no infirmity with the impugned judgment. 8.7. Replying on the above decision in the case of Lovely Exports, Hon'ble jurisdictional High Court in the case of CIT v Roseberry Mercantile (P) Ltd., ITAT No. 241 of 2010 dated 10- 01-2011 held as under: "On the facts and in the circumstances of the case, Ld. CIT(A) ought to have upheld the assessment order as the transaction entered into by the assessee was a scheme for laundering black money into white money or accounted money and the I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 26 Ld. CIT (A) ought to have held that the assessee had not established the genuineness of the transaction." It appears from the record that in the assessment proceedings it was noticed that the assessee company during the year under consideration had brought Rs. 4,00.000/- and Rs 20,00,000/- towards share capital and share premium respectively amounting to Rs.24.00. 000/- from four shareholders being private limited companies The Assessing Officer on his part called for the details from the assessee and also from the share applicants and analyzed the facts and ultimately observed certain abnormal features, which were mentioned in the assessment order. The Assessing Officer, therefore, concluded that nature and source of such money was questionable and evidence produced was 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 Court in the case of C.I.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 CIT 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 question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed." 8.8. Again the Hon'ble High Court, Calcutta in the case of CIT v Nishan Indo Commerce Ltd (ITA No. 52 of 2001) dated 2.12.2013 held as follows. “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 their funds and not for the assessee company to show wherefrom these shareholders obtained funds." 8.9. Basically the law requires documentary evidences on record in dealing with the issue of authenticity. It is not the case of the AO that necessary documentary evidences are not on record but the only major reliance placed on his action is based on non-attendance of the directors of the subscriber companies before him u/s 131 of the Act. It is no longer res Integra that such non-attendance should be considered as a factor which should be used by the AO in coming to an adverse conclusion against the appellant. On an overall analysis of the issue, I find that the AO has not made out his case with cogent material on record that the appellant could come under the purview of section 68 of the Act with regard to share capital as reflected in the balance sheet when there is no finding with any cogent material evidence that the same was actually bogus in nature. It is accordingly observed that creditworthiness of the share subscribers to make investment in the share capital of the appellant company cannot be a disputed matter as per material facts on record. I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 27 The aforesaid facts underlined by evidences clearly prove the identity of the share applicants, their creditworthiness and source of funds, as well as the genuineness of the transactions being investments in the share capital issued by the appellant, which was subscribed to by each of them. Thus, it is proved beyond any doubt or dispute that the share applicants are actually found to have subscribed to the share capital issued by the appellant during the year under consideration as clearly evident not only from their respective books of accounts but also from their audited accounts filed with the income tax authorities in relation to their own income tax assessments and the sources of such funds are also explained by each of the share applicants in their replies addressed to the AO. However, the AO had not brought these disputable facts on record but acted on his whims and fancies. It is observed that the burden which lay on the appellant, in relation to section 68 of the Act, has been duly discharged by it and nothing further remains to be proved by it on the issue. Since the conditions precedent for discharging of burden of proof under the provisions of section 68 of the Act is met with adequate evidence, the addition made under such pretext deserves to be deleted. In this respect it is imperative to refer to the decision of the jurisdictional High Court in the case of CIT vs. Sagun Commercial (P) Ltd. [ITA No. 54 of 2001 dated 17.02.2011] wherein it was held as under: "After hearing the learned advocate for the appellant and after going through the materials on record, we are at one with the Tribunal below as well as the Commissioner of Income-tax (Appeals) that the approach of the Assessing Officer cannot be supported. Merely because those applicants were not placed before the Assessing Officer, such fact could not justify disbelief of the explanation offered by the assessee when details of Permanent Account Nos. payment details of shareholding and other bank transactions relating to those payments were placed before the Assessing Officer. It appears that the Tribunal below has recorded specifically that the Assessing Officer totally failed to consider those documentary evidence produced by the assessee in arriving at such conclusion. We, therefore, find no reason to interfere with the decision passed by the Commissioner of Income- tax (Appeals) and the Tribunal below and answer the questions formulated by the Division Bench in the affirmative and against the Revenue. The appeal is, thus, dismissed." 8.10. Further, the Hon'ble jurisdictional High Court in the case of CIT vs Gayatri Portfolio Fund (P) Ltd [ITA No. 664 of 2004 dated 26.08.2014], it was observed as under: “We find that the learned Tribunal has confirmed the order passed by the CIT who had overturned the order of the Assessing Officer by making the following observation: ".... We find that the identity of the 5 parties investing in the share capital is not in doubt They are body corporates and their complete addressees are on record This is the very first assessment in the life of the assessee company. The amounts were deposited by these 5 corporates per account payee cheques. These parties were not shareholders of the assessee company at the time when the case was reopened under section 147 or when the summons were issued to them We find that the assessee has I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 28 filed before the A.O. copies of share application forms duly signed along with the complete addresses of the investors along with their I. T. file numbers account payee cheque numbers and the assessee s bank statements disclosing the deposits of these amounts. In these facts we find that the assessee has discharged its initial onus to prove the identity of the investors as well as their creditworthiness. It is not the case of the Revenue that the investor parties did not exist or that or that the money was not invested by them through banking channels. Having found such, the Tribunal had relied on the judgment in Hindustan Tea Trading Co. Ltd. v. CIT (Cal.): 263 ITR 289 (Cal) to uphold the order of the CIT. In view of the findings above noted, no substantial question of law arises and therefore, the appeal and the application are dismissed." 8.11. Again, the Hon'ble Jurisdictional High Court in the case of CIT vs. Sanchati Projects (P.) Ltd. [ITAT 140 of 2011 dated 08.06.2011] has observed as under: "It appears from record that the assessee company during the relevant assessment year under appeal raised its share capital by way of receiving share application money against 1,64,000 equity shares aggregating to Rs. 82,00,000/- from 8 different parties. The Assessing Officer, however, treated the share application money of Rs. 45.00,000/-received from five different persons as unexplained cash credit in the hands of the assessee. According to the Assessing Officer, those parties had the same addresses as that of the assessee and they had no fixed assets and utilised their capitals in share application of the assessee company. The Assessing Officer, therefore, was of the view that the money ultimately went to the beneficiary through these companies and there was no advertisement even published by the assessee company inviting share application and no Registrar was engaged for such raising of share capital. Being dissatisfied the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), however, set aside the said order of assessment and came to the conclusion that all the share applicant/companies were assessed to the tax and their PAN and acknowledgement of I.T. returns along with their audited balance sheets, bank statements showing transactions etc. were made available to the Assessing Officer. It was pointed out that there was no legal bar of more than one company being registered at the same address and, thus, according to the Commissioner of Income-tax (Appeals), the doubt . raised by the Assessing Officer about all those companies at the same address did not hold good. Being dissatisfied, the Revenue preferred an appeal before the Tribunal below and by the order impugned herein, the said Tribunal has affirmed the order passed by the Commissioner of Income-tax (Appeals). After hearing Mr. Nizamuddin, learned advocate appearing on behalf of the appellant and after going through the aforesaid materials, we agree with the Tribunal below that the Assessing Officer failed to establish that the share applicants did not have the means to make investment and that such investment actually emanated from the coffers of the assessee company. The receipt of share capital money had been duly recorded in the books of the assessee company and the I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 29 payment of share application money was also duly recorded in the audited account of each of the share applicants. We, thus, find that both the authorities below on the basis of the aforesaid materials on record were quite justified in deleting the aforesaid addition of Rs. 4 5,00,000/- done by Assessing Officer. We are of the view that the order impugned does not suffer from any defect whatsoever and no question of substantial error of law arises justifying our interference. The appeal is, thus, summarily dismissed." 8.12. There is no evidence adduced on record to show by the AO that the identities of the share applicants are not proved and/or that the subscription made by them to the share capital of the appellant was not genuine and/or the source of investment was not fully explained to the satisfaction of the AO. In the present case, the assessee has duly discharged the onus lying upon it to establish the source of fund (i.e. identities and creditworthiness of the investors and genuineness of the transactions) and nature of receipt. The finding of the AO about non-compliances, non furnishing of details and furnishing of useless paper work by assessee are factually incorrect. Further there is no evidence adduced on record to show that the investments made with the appellant in the shape of share application monies disclosed in the returns of the share applicants were rejected by their respective AOs. In view of the foregoing, the AO is directed to delete the impugned amount of ₹14,20,50,000/- added u/s 68 of the Act. These grounds are allowed.” 10. After perusing the finding of the ld. CIT(A) wherein details filed have been duly examined by the ld. CIT(A) extensively, we notice that the assessee has also placed a chart before the ld. CIT(A) reflecting the details of net worth of each of the share subscribers and the percentage of investment made in the equity share capital of the assessee company and the same is reproduced below:- Name of Company Capital Reserves Net Worth Invested in ‘a’ % age to NW Baghban Tie Up Pvt. Ltd. 1,116,000 100,574,079 101,690,079 16,200,000 15.93 Sahanbhuti Mechants Pvt Ltd 300,000 19,770,246 20,070,246 8,900,000 44.34 Sankatmochak vanijya Pvt Ltd 300,000 19,762,785 20,062,785 10,900,000 54.33 Subhdristi Marketing Pvt. Ltd. 1,610,770 112,541,386 114,152,156 14,300,000 12.53 Subhmayee Mercantile Pvt. Ltd. 229,000 12,784,656 13,013,656 4,000,000 30.74 Suhana Mercantile Pvt. Ltd. 2,071,500 111,659,329 113,730,829 12,900,000 11.34 Sukriti Vinimay Pvt. Ltd. 1,598,100 108,294,195 109,892,295 18,450,000 16.79 Surakshit Vincom Pvt. Ltd. 2,144,650 125,585,421 127,730,071 19,700,000 15.42 Vedik Mercantile Pvt. Ltd. 2,028,300 107,884,365 109,912,665 12,000,000 10.92 Wellpian Dealer Pvt Ltd 2,179,750 123,877,413 126,057,163 23,100,000 18.33 Zoom Vyapaar Pvt Ltd 300,000 19,787,275 20,087,275 1,600,000 7.79 I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 30 10.1. From perusal for the above chart as well as the details mentioned (supra), we find that the assessee has filed complete details to explain the nature and source and also identity and creditworthiness of the share applicants and genuineness of the share transactions to the extent which the assessee could have been able to place forth. Thus, the assessee has discharged the primary onus casted upon it and in absence of any other contrary material placed by the ld. Assessing Officer or the ld. D/R, we fail to find any infirmity in the finding of the ld. CIT(A) deleting the impugned addition. 11. So far as the reliance of the Ld. DR on the decision of the Hon’ble Supreme Court in the case of “PCIT v/s NRA Iron & Steel (P) Ltd.” (supra) is concerned, we find that the Hon’ble Supreme Court in para 8.2 of the said decision has made the following observations: “8.2 As per settled law, the initial onus is on the Assessee to establish by cogent evidence the genuineness of the transaction, and credit- worthiness of the investors under Section 68 of the Act. The assessee is expected to establish to the satisfaction of the Assessing Officer CIT v. Precision Finance (P.) Ltd. [1995] 82 Taxman 31/[1994] 208 ITR 465 (Cal.): Proof of Identity of the creditors; Capacity of creditors to advance money; and Genuineness of transaction This Court in the land mark case of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laid down that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 31 open to the Revenue to hold that it is the income of the assessee, and there would be no further burden on the revenue to show that the income is from any particular source.” Further, in para 9 of the said decision, the hon’ble Supreme Court has observed as under: “9. The Judgments cited hold that the Assessing Officer ought to conduct an independent enquiry to verify the genuineness of the credit entries. In the present case, the Assessing Officer made an independent and detailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports revealed that the share-holders were either non-existent, or lacked credit-worthiness. “ There after the Hon’ble Supreme Court summed up the principles which emerged after deliberating upon various case laws as under: “11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit- worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act.” 11.1. The Hon’ble Supreme court, thus, has held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then the AO is duty bound conduct to conduct an independent enquiry to verify the I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 32 same. However, as noted above, the Assessing Officer in this case has not made any independent enquiry to verify the genuineness of the transactions. The assessee having furnished all the details and documents before the Assessing Officer and the Assessing Officer has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged initial burden upon him to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, the burden shifted upon the Assessing Officer to examine the evidences furnished and even made independent inquiries and thereafter to state that on what account he was not satisfied with the details and evidences furnished by the assessee and confronting with the same to the assessee. In view of this, the aforesaid decision of the Hon’ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd., in our humble view, is not applicable to the facts and circumstances of the case in hand. 12. Our view that the assessee has explained the nature and source of the alleged sum and that the ld. CIT(A) has extensively examined the facts of the case before deleting the impugned addition, is further supported by the decision of this Tribunal in the case of M/s. Bhikshu Agency Pvt. Ltd. (supra) wherein under identical facts and circumstances, the Tribunal held as under:- “11. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments and decisions referred by ld. Counsel for the assessee and also gone through the decisions referred in the impugned order. The issue for our consideration is whether ld. CIT(A) was justified in confirming the action of ld. AO making addition of Rs. 4,07,30,000/- u/s 68 of the Act treating I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 33 the share application money/share capital received during the year as unexplained. We notice that during the year under consideration the assessee has received share application money against issue of equity shares having face value of Rs. 10/- and security premium of Rs. 240/- and received sum of Rs. 4,07,30,000/- from the following share applicants: S.No.Name, Address & PAN of Applicants No. of Shares Share Capital (Rs.) Premium (Rs.) Total (Rs.) 1 Anjaniputra Dealcom Pvt. Ltd. 33/2A, Malanga Lane, Kolkata - 700 012 PAN - AAGCA8240D 12600 126,000.00 3,024,000.00 3,150,000.00 2 Araballi Commotrade Pvt Ltd. 3, Bentinck Street Kolkata - 700 001 PAN-AAGCA7979P 12000 120,000.00 2,880,000.00 3,000,000.00 3 Baghbaan Vyapaar Pvt Ltd. 21-B; Canning Street, Kolkata - 700 001 PAN-AADCB0528L 8000 80,000.00 1,920,000.00 2,000,000.00 4 Bhikshu Dealer Pvt Ltd. 2, Raja Woodmunt Street, Kolkata - 700 001 PAN- AADCB0673N 15320 153,200.00 3,676,800.00 3,830,000.00 5 Bogenvilia Goods Pvt. Ltd. 33/2A, Malanga Lane, Kolkata - 700 012 PAN - AADCB0808R 10000 100,000.00 2,400^)00.00 2,500,000.00 6 Daanvir Commodities Pvt. Ltd. 133, Canning Street, Kolkata - 700 001 PAN - AACCD5354M 12600 126,000.00 3,024,000.00 3,150,000.00 7 Debasmita Vyapaar Pvt. Ltd. 33/2A, Malanga Lane, Kolkata - 700 012 PAN-AACCD5621M 12000 120,000.00 2,880,000.00 3,000,000.00 8 Ghanshyam Dealcom Pvt. Ltd. 33/2A, Malanga Lane. Kolkata - 700 012 PAN - AADCG0634N 11000 110,000.00 2,640,000.00 2,750,000.00 9 Hasta Vyapaar Pvt Ltd. P-4, N.H.B.A Road, Kolkata - 700 001 PAN - AABCH8115P 8200 92,000.00 2,208,000.00 2,300,000.00 10 Jamuna Tradecom Pvt Ltd. 3, Bentinck Street, Kolkata - 700 001 PAN -AABCJ9440R 11300 113,000.00 2,712,000.00 2.825,000.00 I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 34 11 Namaskar Vyapaar Pvt Ltd. 33/2A, Malanga Lane, Kolkata - 700 012 PAN - AACCN6952H 11200 112,000.00 2,688,000.00 2,800,000.00 12 Panchmukhi Tracom Pvt. Ltd. 33/2A, Malanga Lane, Kolkata - 700 012 PAN - AAECP5495K 12600 126,000.00 3,024,000.00 3,150,000.00 13 Sujali Tradelink Pvt. Ltd. 3, Bentinck Street, Kolkata - 700 001 PAN - AAKCS6637A 11000 110,000.00 2,640,000.00 2,750,000.00 14 Tulsi Tracom Pvt Ltd. 2, Raja Woodmunt Street Kolkata - 700 001 PAN-AACCT6121A 14100 141,000.00 3,384,000.00 3,525,000.00 TOTAL 1629201,629,200.00 39,100,800.00 40,730,000.00 12. We further, note that the assessee company firstly passed through reassessment proceedings u/s 147 r.w.s. 143(3) of the Act completed vide order dated 08.04.2010. Thereafter, revisionary proceedings were carried out regarding the proper enquiry not conducted by ld. AO in relation to the share application money received during the year. Though the assessee filed all the details including confirmation letters along with PAN, copy of bank statements, income tax return, balance sheet of subscribing companies and the relevant documents regarding issue of shares, share application form prepared for the purpose of Companies Act. However, in the revisionary proceedings which were completed on 28.03.2013, the reassessment order of ld. AO was set aside with the direction to examine the genuineness and source of the share capital and also to examine the directors on oath, change of the directorship, liquidation of assets and conducting enquiries and verification as directed in the revisionary order. 13. We, further, notice that in the assessment proceedings carried out in compliance to the revisionary proceedings u/s 263 of the Act, the assessee has again filed all the relevant documents as needed to prove the identity of the share applicants, genuineness of the transaction and creditworthiness of the share applicants thereby discharging its primary onus casted upon it under the provisions of Section 68 of the Act. However, ld. AO was not satisfied and he issued notice u/s 133(6) of the Act and summon u/s 131 of the Act to the share applicant companies as well as the directors respectively. Except for not appearing personally before ld. AO, all the notices u/s 133(6) of the Act were complied and even with regard to summons u/s 131 of the Act replies were filed along with the documents but showing the inability to appear in person. 14. We, further, notice that the documents filed by the assessee to explain the alleged receipt of share application money and share premium has not been doubted by any of the lower authorities. It is not the case of the Revenue that the share I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 35 applicant companies were not having sufficient funds to apply in the equity shares capital of the assessee company. Even ld. CIT(A) in the impugned order has stated that sufficient details have been submitted by share applicants/subscribers in response to the notices u/s 133(6) of the Act which proved that the transactions were genuine. Ld. CIT(A) has, thus, confirmed that the transactions were genuine but still observed mere furnishing of copies of income tax return, details of payment through banking channels etc. would not establish the genuineness of the share capital. 15. We are surprised to note that when the assessee has discharged its onus by filing all necessary details and has explained the nature and source and even when the share applicant companies have independently replied to ld. AO, but still if the ld. AO is not satisfied then he has to mention the reason. Just because the directors of the share applicant companies have not appeared in person cannot be a ground to treat the alleged share application money as unexplained. When all the share applicant companies are duly registered with the Registrar of Companies which is further proved by the master data filed by the assessee what stops the Revenue authorities to use the powers provided under the Income Tax Act to call for the persons to appear personally before them and to record the statement. Such duty cannot be solely casted upon the assessee considering the fact that the alleged sum was received during the financial year 2007-08 and the proceedings in compliance to 263 order were carried out after six years. There are plethora of decisions where it has been held that merely for not appearing in person before ld. AO cannot be a ground to treat the receipts of share application money as unexplained. 16. We drew support from the decision of this Tribunal in the case of M/s. Kemex Engineering (P) Ltd. (supra) wherein similar issue was under consideration, however, the facts of the present assessee are on much better footing since in the instant case the share subscribers have furnished the requisite information directly to ld. AO. Relevant finding of the Tribunal is reproduced below: “7. We have heard the rival contentions and perused the material available on record and have given our thoughtful consideration to the elaborate observations and findings given by the Ld. CIT(A) while giving relief to the assessee. At the outset, we note that notices u/s. 133(6) of the Act were issued by the Ld. AO to all the five subscribers, who had replied giving all the details and documents required by the Ld. AO along with confirming the transaction of they making investment in the share capital of the assessee. We also take note of the fact that the share subscribers had furnished copies of their ITR acknowledgments which showed that each of them were regular income tax assessees, testifying their identity. 7.1. From the perusal of the paper book and the documents placed therein, it is seen that all the share applicants are (i) income tax assessees, (ii) they are filing their income tax returns, (iii) share application form and allotment letter is available on record, (iv) share application money was made by account payee cheques, (v) details of the I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 36 bank accounts belonging to share applicants and their bank statements, (vi) in none of the transactions there are any deposit of cash before issuing cheques to the assessee, (vii) all the share applicants are having substantial creditworthiness represented by their capital and reserves. 7.2. We also take note of the elaborate and well reasoned findings and decisions arrived at by the Ld. CIT(A) by taking into consideration all the details and documents placed on record. The relevant findings and decisions from the following paras are extracted as under: “4.5. To sum up the foregoing, it is observed that all the notices u/s. 133(6) were served at the respective addresses of ach of the five shareholders by registered post. The share subscribers had furnished copies of income-tax Acknowledgments which showed that each of them were regular income-tax assessees who were assessed in their own rights with reference to their audited financial results. These facts established the identity of the share applicants. It is further noted that each of the share subscriber had furnished copies of the audited accounts for the FY 2011-12. Examination of these accounts revealed that each share subscribing company was having substantial own funds in the form of capital & reserves which were several times more than the share subscription amount paid to the appellant. In find that only a fraction of the net owned funds of the respective subscribing companies was invested in assessee’s equity shares. The investments made by each of the share subscribers were paid by way of account payee cheques and/or RTGS and there was no prior cash deposit in their bank accounts. In view of the aforesaid facts it can be safely inferred that the assessee had discharged its onus of substantiating the creditworthiness of the shareholders. The shareholders had also furnished copies of their share allotment advices. They had also explained the nature of their respective source of funds. All these facts considered cumulatively substantiate the genuineness of the transactions involving subscription of share capital. 4.6. It is noted that in the impugned order much emphasis was placed on the act that the shareholders did not respond to the notices u/s. 131. I however, find that although the share subscribing companies did not appear before the AO yet the material documents requisitioned by the AO in his notice u/s. 131 had already been furnished before the AO by the shareholders. From the perusal of the assessment order, I find that save & except making an assertion that the Directors of the share applicant companies failed to appear beore him, the AO did not bring on record any substantive material to disprove the documentary evidences which the appellant as well as the share subscribers had placed on AO’s record in support of the share subscription transactions. The material available on record shows that the AO had also made independent enquiries from the shareholders u/d. 133(6) of the Act. The facts and circumstances furnished by the shareholders in response thereto, supported the AR’s contention that the identity of all the five share I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 37 subscribing companies stood established. Referring to the copies of the bank statements, the AR established that payment of subscription amounts were recorded in the bank statements of the respective companies. The entries in the bank statement proved that the share subscription amount was transferred through banking channel. Besides the entries in the bank statements also substantiated that before payment of share subscription mounts, no cash was deposited in the bank accounts of the subscribing companies. The AR further pointed out that appellant had furnished explanations before the AO with regard to immediate sources from which share subscription amounts were paid. On these facts therefore, I find that in terms of section 106 of the Evidence Act, the creditworthiness of the share subscribers and the genuineness of the transactions could not have been doubted by the AO merely on the ground that Directors of the share subscribers did not appear before the AO for verification. Gainful reference in this regard may be made to following observations made the Hon’ble Bombay High Court in the case of CIT Vs. Orchid Industries Limited (397 ITR 136). “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 statements 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 letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons disclosed that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous 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 circumstances of the present case.” 4.8. There is per se no quarrel with the proposition put forth by the AO that m tax proceedings the AO is not required to accept apparent as real. The AO has both duty as well as obligation to bring out the truth and present the real facts. For that purpose the AO is permitted to undertake investigation and enquiries so as to unearth the actual and real facts. The AO has been given power by the Legislature to prove that apparent is not real and thereafter make the assessment with reference to actual state of affairs. There is also no denial that the AO while assessing the income is permitted to take into consideration the human probabilities and if he proves that the conduct of the parties is not in conformity with the actions of prudent person then he may overlook the form of the transaction and find out the substance of the transaction and determine the tax consequences based on the real facts. In the I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 38 impugned order the AO has doubted the genuineness of the entire transaction on the ground that it was against the human probability that the companies would invest in shares of the appellant company. The AO has also alleged that the unaccounted monies belonging to the assessee and ploughed back in the form of share capital by adopting the modus operandi where the unaccounted cash was rotated in four-five layers and thereafter the money was brought into the assessee’s bank account in the form of share capital. I however find that before these conclusions were recorded the AO himself did not bring on record sufficient tangible and cogent material to support his conclusion that the amount credited in the assessee’s books in the form of share capital and premium actually represented assessee’s undisclosed income. 4.15. Applying the judicial principles laid down in the above decisions to the appellant’s case. I find that the AO had made addition u/s. 68 without proper application of mine and incorrect appreciation of the relevant provisions of the Act. In the above judicial decisions, it has been held that before an addition u/s. 68 is made, it is necessary for the AO to bring on record irrefutable material or evidence which would prove that there was no valid issuance of the shares and for that reason the assessee had failed to prove identity & creditworthiness of the shareholders and also failed to substantiate genuineness. If these touchstones are applied to the appellant’s case then I find that the copies income tax acknowledgments and service of notices at their addresses established the identity of all the share subscribers. In the balance sheets of the respective share subscribers, the investments in assessee’s share were recorded and each subscriber in its balance sheet had disclosed sufficiently large investible funds. The assessee had also filed copies of the bank statements of the respective share subscribing companies which established that the share subscription amounts were received through banking channel. The sources of making payment were also furnished and the entries in bank statements indicated that there was no deposit of cash prior to clearance of the cheques in assessee’s favour. All these facts and documents considered cumulatively establish that the assessee had discharged the onus of proving creditworthiness of the share sub subscribers and the genuineness of the transactions. I therefore hold that the AO was not justified in making the impugned addition of Rs.,1,82,50,000/- u/s. 68 of the Act which is accordingly deleted. These grounds are therefore allowed.” 7.3. Before arriving at our finding, we refer to the following judicial precedents to buttress our observations and conclusions: i) The decision of Hon’ble Jurisdictional High Court of Calcutta in the case of CIT v. Dataware Pvt. Ltd. in ITAT No. 263 of 2011 dated 21.09.2011 wherein Hon’ble jurisdictional High Court held that “After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 39 from the Assessing Officer of the creditor as to the genuineness" of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself could not enter into the return of the creditor and brand the same as unworthy of credence.” ii) Decision of Hon’ble Madras High Court in the case of CIT v. Creative World Telefilms P. Ltd. (2011) 333 ITR 100 (Mad) wherein it was held as under: “In the case in hand, it was not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement "not traceable". The Assessing Officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the Assessing Officer. In the above circumstances, the view taken by the Tribunal could not be faulted. No substantial question of law was involved in the appeal.'' iii) Judgment of Hon’ble Jurisdictional High Court in the case of Exoimp Resources (India) Ltd. vs. CIT (supra), wherein it was held as follows: “It is incumbent upon the Assessing Authority to examine the explanation of the creditor and arrive at a conclusion as to whether the explanation was satisfactory. The conclusion arrived by the Assessing Authority is to be communicated to the assessee if such explanation is not considered satisfactory. If thereupon the assessee submits any comments or furnishes further information, in that event, the Assessing Authority has to examine the same and arrive at his own conclusion. The inbuilt safeguard provided in section 68 cannot be ignored by the Assessing Authority at his sweet will. The Assessing Authority can add the share capital as undisclosed income if no explanation is offered by the assessee. But since the details/explanations were offered, it was incumbent on the Assessing Authority to examine the same and arrive at a cogent conclusion. Assessing Officer having failed to discharge such obligation the addition is not sustainable in law.., case of CIT vs. Lovely Exports Ltd. (2008) 216 CTR 195 (SC) that where share application money.” 7.4. In the course of assessment proceeding, Ld. AO directed the assessee to produce the director of the assessee and also the directors of the subscriber companies along with relevant documentary evidence and details which was not complied with in full. Ld. Counsel submitted that mere non-appearance of directors is no basis for invoking I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 40 provisions of section 68 of the act for which he placed reliance on the decision of Hon’ble Supreme Court in the case of CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) wherein it was held as under: “In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise. The High Court was, therefore, right in refusing to refer the questions sought for. Decision of the High Court affirmed.” 8. We notice that all the details were very much placed before the Assessing Officer but while framing the assessment, no efforts have been made by the Assessing Officer to examine the correctness of various proof, filed by the assessee by carrying out any investigation. Merely for non-appearance of the directors, the ld. Assessing Officer disregarded all these documents which have been placed before various statutory authorities including Registrar Of Companies, Income Tax Department and Schedule Banks. The assessee by way of filing all these documents necessary to prove identity, creditworthiness and genuineness of the alleged transaction, has discharged the initial burden casted upon it under the provisions of section 68 of the Act. Unless and until, the assessing authority finds any lacuna or adversity or defect in the said documents, the burden to prove remains on the Revenue authorities. In the instant case, ld. Assessing Officer failed to discharge the burden and summarily disregarded the documents filed by the assessee by merely referring to some decisions and not going into the facts of the case except referring to the price per share. 9. We further observe that provision for examining the source of source under the provisions of section 68 of the Act has been brought in by Finance Act 2012 w.e.f. 01.04.2013 as per which “where an assessee is a company (not being a company in which public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 41 deemed to be not satisfactory unless: a) the person being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited and b) such explanation in the opinion of the Assessing Officer has been found to be satisfactory.” Since the instant appeal pertains to assessment year 2012-13, and the said amendment brought in by Finance Act 2012 is effective from 01.04.2013, it is not applicable on the case before us. Even otherwise, it is not in dispute that the assessee has filed all the relevant documents of the share subscriber companies and further, in order to prove the source of source, copies of bank statements, audited balance sheets of all the nine subscriber companies are placed on record. 10. As far as the decision of Coordinate bench of ITAT, Kolkata in the case of Bishakha Sales Pvt. Ltd. (supra) referred by the Assessing Officer in making the addition, in our view, it does not support the addition as the said decision is delivered in the context of proceedings u/s 263 of the Act on the issue of enquiry regarding huge premium received on share application. 11. Further, in respect of ground nos. 3, 4 and 5, reference to the judgment of Hon’ble Supreme Court in the case of NRA Iron & Steel Pvt. Ltd. (412 ITR 161) is found to be distinguishable on facts in as much as in the said decision, Ld. AO has made extensive enquiries and some of investors were found to be non-existent. Upon going through the facts involved in that judgment, it is noted that, in the decided case the AO had made extensive enquiries and from that he had found that some of the investor companies were non-existent, which is certainly not the case before the undersigned. In the decided case, certain investor companies also failed to produce their bank statements proving the source for making investments in assessee company. In the facts o f the present case however not only have the shareholders furnished their bank statements and investment schedules to establish the source of funds but they have also furnished their respective sources of funds in response to notices issued by the AO u/s. 133(6) of the Act. 12. We, therefore, respectfully following the judgment referred hereinabove by the Hon’ble Courts and also considering the facts and circumstances of the case, are of considered view that since the assessee has sufficiently explained the identity and creditworthiness of the share subscriber companies and the genuineness of the transaction of applying for the equity shares of the assessee company and since nothing contrary to the evidence filed by the assessee has been placed on record by the Revenue, except the reason that the directors failed to appear to the summons issued u/s. 131 of the Act, we find no reason to interfere with the meritorious finding of the Ld. CIT(A). We accordingly dismiss the grounds raised by the revenue in this respect. 13. In the result, appeal of the revenue is dismissed.” I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 42 17. Further, we find that recently the Hon'ble Jurisdictional High Court in the case of M/s. Sreeleathers (supra) adjudicating similar issue relating to the addition u/s 68 of the Act and dealing with the onus casted upon the assessee to establish the existence, genuineness and creditworthiness of the new loans held as follows: “3. We have heard Mr. Vipul Kundalia, learned Senior Standing Counsel along with Mr. Anurag Roy, learned Advocate for the appellant and Mr. Avratosh Mazumder, learned Senior Advocate assisted by Mr. Avra Mazumder and Mr. Md. Bilwal Hossain, learned Advocates for the respondents. 4. Before we examine the correctness of the order passed by the Tribunal and consider whether a substantial question of law arises for consideration in this appeal we need to take note of section 68 of the Act. This provision deals with cash credits. It states that 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 crucial words in the said provision are "assessee offers no explanation". This would mean where the assessee offers no proper, reasonable and acceptable explanation as regard the amount credited in the books maintained by the assessee. No doubt the Income-tax Act places the burden of proof on the tax payer. However, this is only the initial burden. In cases where the assessee offers an explanation to the credit by placing evidence regarding the identity of the investor or lender along with their conformations, it has been held that the assessee has discharged the initial burden and, therefore, the burden shifts on the Assessing Officer to examine the source of the credit so as to be justified in referring to section 68 of the Act. After the Assessing Officer puts the assessee on notice and the assessee submits the explanation with regard to the cash credit, the Assessing Officer should consider the same objectively before he takes a decision to accept or reject it. In Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC), it was held that if the explanation given by the assessee shows that the receipt is not of income nature, the department cannot convert good proof into no proof or otherwise unreasonably reject it. On the other hand, if the explanation is unconvincing, the same can be rejected and an inference shows that the amount represents undisclosed income either from a disclosed or an undisclosed source CIT v. P. Mohanakala [2007] 161 Taxman 169/291 ITR 278/210 CTR 20 (SC). The explanation given by the assessee cannot be rejected arbitrarily or capriciously, without sufficient ground on suspicion or on imaginary or irrelevant grounds Lal Mohan Krishna Lal Paul v. CIT [1944] 12 ITR 441 (Cal.) and Anil Kumar Singh v. CIT [1972] 84 ITR 307 (Cal.). I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 43 5. Further to be noted that where the assessee furnishes full details regarding the creditors, it is up to the department to pursue the matter further to locate those creditors and examine their creditworthiness. It has been further held in A.S. Sivan Pillai v. CIT [1958] 34 ITR 328 (Mad.) that while drawing the inference, it cannot be assumed in the absence of any material that there has been some illegalities in the assessee's transaction. Thus, more importantly, as held by the Hon'ble Supreme Court in CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC), the onus of proving that the appellant was not the real was on the party who claims it to be so. Bearing the above legal principles in mind, if we examine the case on hand, it is clear that the assessing officer issued show cause notice only in respect of one of the lender M/s. Fast Glow Distributors. The assessee responded to the show cause notice and submitted the reply dated 22-12-2017.The documents annexed to the reply were classified under 3 categories namely: to establish the identity of the lender, to prove the genuineness of the transactions and to establish the creditworthiness of the lender. The assessing officer has brushed aside these documents and in a very casual manner has stated that mere filing PAN details, balance sheet does not absolve the assessee from his responsibility of proving the nature of transaction. There is no discussion by the assessing officer on the correctness of the stand taken by the assessee. Thus, going by the records placed by the assessee, it could be safely held that the assessee has discharged his initial burden and the burden shifts on the assessing officer to enquire further into the matter which he failed to do. In more than one place the assessing officer used the expression "money laundering." We find such usage to be uncalled for as the allegations of money laundering is a very serious allegations and the effect of a case of money laundering under the relevant Act is markedly different. Therefore, the assessing officer should have desisted from using such expression when it was never the case that there was any allegations of money laundering. Paragraphs 5.4 and 5.5 of the assessment order are all personal perception and opinion of the assessing officer which needs to be ignored. Much reliance was placed on the statement of Shri Ashish Kumar Agarwal, which statement has been extracted in full in the assessment order and it cannot be disputed that there is no allegation against the assessee company in the said statement. There is no evidence brought on record by the assessing officer to connect the said entry operator with the loan transaction done by the assessee. Therefore, the statement is of little avail and could not have been the basis for making allegations. The assessing officer ignored the settled legal principle and in spite of the assessee having offered the explanation with regard to the loan transaction, no finding has been recorded as regards the satisfaction on the explanation offered by the assessee. Therefore, the assessing officer ignored the basic tenets of law before invoking his power under section I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 44 68 of the Act. Fortunately, for the assessee, CIT(A) has done an elaborate factual exercise, took into consideration, the creditworthiness of the 13 companies the details of which were furnished by the assessee. More importantly, the CIT noted that all these companies responded to the notices issued under section 133 (6) of the Act which fact has not been denied by the assessing officer. On going through the records and the net worth of the lender companies, the CIT has recorded the factual findings that the net worth of those companies is in crores of rupees and they have declared income to the tune of Rs. 45,00,000/- and 75,00,000/-. Therefore, the assessing officer if in his opinion found the explanation offered by the assessee to be not satisfactory, he should have recorded so with reasons. We find that there is no discussion on the explanation offered by the assessee qua, one of the lenders. Admittedly, the assessee was not issued any show cause notice in respect of other lenders. However, they are able to produce the details before the CIT(A) who had in our view rightly appreciated the facts and circumstances of the case. As pointed out earlier, the assessing officer brushed aside the explanation offered by the assessee by stating that merely filing PAN details, balance sheet does not absolve the assessee from his responsibilities of proving the nature of transactions. It is not enough for the assessing officer to say so but he should record reasons in writing as to why the documents which were filed by the assessee along with the reply dated 22-12-2017 does not go to establish the identity of the lender or prove the genuineness of the transaction or establish the creditworthiness of the lender. In the absence of any such finding, we have to hold that the order passed by the assessing officer was utterly perverse and rightly interfered by the CIT(A). The Tribunal re- appreciated the factual position and agreed with the CIT(A). The tribunal apart from taking into consideration, the legal effect of the statement of Ashish Kumar Agarwal also took note of the fact that the notices which were issued by the assessing officer under section 133(6) of the Act to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the assessing officer and there is no discussion on this aspect. Thus, we find that the tribunal rightly dismissed the appeal filed by the revenue. 6. For all the above reasons, we find that no question of law much less, substantial question of law arises for consideration in this appeal. 7. Accordingly, the appeal fails and is dismissed.” 18. We, therefore, under the given facts and circumstances of the case and after examining the same in light of the ratio laid down in the judgements and decisions referred herein above, are inclined to hold that since the assessee has sufficiently discharged its primary onus casted upon it under the provisions of Section 68 of the Act by way of filing all the necessary documents sufficient to explain the nature I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 45 and source of the alleged share application money and also sufficient enough to prove the identity of the share applicants, genuineness of the transaction and also creditworthiness of the share applicants and also observing that a thorough independent enquiry has been conducted by ld. AO by way of issuing notices u/s 133(6) & 131 of the Act and except for not appearing personally before ld. AO all the other information as called for by ld. AO has been supplied and also considering the fact that most of the alleged share applicants have passed through the scrutiny proceedings under section 143(3) of the Act and are also active companies appearing on the Portal of Ministry of Corporate Affairs filing all relevant documents year-wise and therefore, in view of the decisions referred herein above, set aside the finding of ld. CIT(A) and delete the addition made u/s 68 of the Act. Hence, the grounds of appeal raised by the assessee are allowed.” 13. Our view is further supported by various judicial decisions. Some of the decisions are as under:- a) The co-ordinate bench in the case of ITO vs. Forceful Estates Pvt. Ltd. in ITA No. 2558/Kol/2018; Assessment Year 2012-13, order dt. 08/02/2023, and for necessary reference, the facts and findings of the Tribunal read as follows:- “5. The ld. counsel has further invited our attention to the impugned order of the CIT(A) to submit that the ld. CIT(A) has categorically noted that the assessee during the year had raised share capital including share premium amounting to Rs.7,60,00,000/- from six share subscribers. The Assessing Officer had issued notices u/s 133(6) of the Act to the share applicants and in response, they all confirmed the transactions and furnished details/documents as called for including source of fund in their hands. The ld. CIT(A) has considered the evidences and details on record and found that the assessee has been able to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction. The relevant part of the order, for the purpose of ready reference, is reproduced as under: “5. Conclusion: Ground No.1 & 2 I have considered the order of the A.O as well as the submission of the appellant. I have also considered the judicial decisions relied upon by the appellant. The facts of the case have already been discussed as above. It is observed that in the year under consideration the appellant company had raised share capital of Rs.7,60,00,000/-from 6 parties. In the course of the assessment proceedings, to verify the receipt of share capital, the AO issued notices u/s.133(6) to all the 6 share applicants and in response, they all I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 46 confirmed the transactions submitted the details/document in respect of the subscription of shares of the appellant. In the course of the appellate proceedings, the appellant filed copy of each of the assessment orders passed in all the 6 cases of the shareholders for that year in which the share subscription amount has been received by the assessee company. Besides, the income-tax return filing acknowledgment, Audited Balance and sheets as on 31.03.2012, relevant bank, copy of the notices issued u/s 133(6) to the shareholders and reply thereof were also submitted. It is observed form the details & documents furnished by the appellant that in the cases of 2 share holders, namely 1) M/s Alfort Merchants Private Limited, 2) M/s Sharekhan Merchants Private Limited, the Assessment Orders u/s 143(3) for Lne AY 2012-13 were passed u/s. 143(3) without taking any adverse view. Therefore, it can be assumed that the respective Assessing Officers have all verified the accounts and therefore any amount that is credited from these two companies to the assessee company is fully explained. The assessment in the case of the other 4 share holders, namely, 1) M/s. Dhanamrit Commercial Private Limited, 2) M/s Jealous Commercial Private Limited, 3) M/s Mutual Merchants Private Limited, 4) Winsom Vanijya Private Limited were also passed u/s.143(3) where additions u/s 68 & u/s.14A of the Act were made. Therefore, the entire capital of all the above mentioned share holders had been added in its hands u/s 68 of the I.T. Act Thus, once an amount is already taxed, whatever investment is being made out of it in the assessee company can be treated as explained and the Same cannot be taxed again. Further, it is apparent from the records that the notices u/s.133 (6) issued to the shareholders were served on the their respective address by the postal authorities and in response, they confirmed the transactions and also submitted the details of the source of funds for making investment. Hence, the identity & creditworthiness of the shareholders are not in doubt. Further, all the share application money was received through banking channels. Therefore, the issue for my consideration now is -whether the share capital of Rs.7,60,00,000/- raised during the year by the appellant can be treated as unexplained cash credit u/s. 68 of the I.T Act or not. When the identity & creditworthiness of the shareholders have been clearly established because all of them were scrutinized u/s 143(3) and thus the source of the share capital and the share premium are clearly established and the transactions have all taken place through banking channels, merely for failure of the directors of the assessee and the shareholders to appear before AO in person in response to the summons issued to them u/s.131 of the Act, the addition cannot be in my considered opinion, unjustified. Where the corpus becomes technically explained in the eyes of law, how can, the credits I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 47 arising out of the same corpus can be viewed as unexplained u/s 68 of the IT Act. In view of the facts & circumstances of the case it is held that the addition of Rs.7,60,00,000/- for the share capital raised by the appellant from 6 share applicants as unexplained cash credit u/s 68 of the Act was not justified and the same is directed to be deleted. The appeal of the assessee company on Grounds No.1 & 2 are treated as allowed. Ground no. 3 is general in nature, which does not require adjudication. 6. In the result, the appeal of the assessee is treated as allowed.” 6. A perusal of the above concluding part of the order of the CIT(A) reveals that the ld. CIT(A) has not only taken note of the accounts of the share subscribers but also, noted that all the six share subscribers were assessed u/s 143(3) of the Act. Out of which, no additions were made in case of two share subscribers. However, in the case of other four share subscribers, the additions were made regarding their source of income. Now, it is settled law, once the addition has been made in the hands of the share subscribers, the investments by which share subscribers in the hands of the other company whose shares have been subscribed stood explained then no additions in such a case would be warranted in the hands of the assessee company as it would amount to double additions of the same amount. Even if the said addition stand confirmed in the appeal or stand deleted, in both the instances, the investment in the hands of the assessee company will stand proved. Reliance has been placed in this respect on the decision of the Coordinate Kolkata bench of the Tribunal in the case in the case of DCIT vs. M/s Maa Amba Towers Ltd. in ITA No.1381/Kol/2015 vide order dated 12.10.2018. The aforesaid decision has been further relied upon by the coordinate Kolkata bench of the Tribunal in the case of “Steelex India (P) Ltd vs. ITO, Ward- 3(2), Kolkata”I.T.A. No.2666/Kol/2019 decided vide order dated 09.09. 2022. 7. Further, a perusal of the Assessment order would reveal that the AO has duly acknowledged the receipt of the relevant documents/evidences not only from the assessee, but also from the subscriber companies. However, he insisted for personal appearance of the directors of the subscriber companies without even going through and discussing about the discrepancies, if any, in the documents furnished by the assessee as well as by the share subscriber companies to prove the identity and creditworthiness of the subscribers and the genuineness of the transaction. The AO has not pointed out in the Assessment Order as to what further enquiries he wanted to make from the directors of the subscribers to insist for their personal presence. The Assessee in this case, as noted above, explained about the identity, creditworthiness and financials etc. of each of the share subscriber company I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 48 individually. However, we note that in the assessment order that the AO has not even mentioned the names of the share subscriber companies and even has not mentioned a word as to which of the share subscriber company or the corresponding transaction thereof was not genuine and on what grounds. The AO, in our view, could have taken an adverse inference, only if, he would have pointed out the discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the subscriber companies. Even if the directors of the subscriber companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. The Ld. Counsel for the assessee has rightly placed reliance upon the decision of the Hon’ble Bombay High Court in the case of PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd. reported in (2017) 84 taxman.com 58 (Bom) wherein the Hon’ble High Court has held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of “Crystal networks (P) Ltd. vs CIT” (supra) has held as under: “We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding.” 8. As the ld. CIT(A), in this case, has not only duly examined the facts and explanation as furnished by the assessee but also has given a categorical finding that the identity and creditworthiness of the share subscribers and genuineness of the transaction stood established. I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 49 9. The ld. DR could not point out any distinct facts warranting our interference in the order of the CIT(A). 10. In view of the above, we accordingly upheld the order of the CIT(A). The appeal of the revenue is, therefore, dismissed.” 14. Considering the ratio laid down by the Co-ordinate Bench of this Tribunal in the case of M/s. Bhikshu Agency Pvt. Ltd. (supra) and various other judgments including those by Hon’ble Jurisdictional High Court, we are satisfied that the same is squarely applicable on the facts of the instant case before us, as the assessee has filed complete documentary evidence to prove the identity and creditworthiness of the share applicants and genuineness of the alleged transactions of receiving share application money which has been carried out through banking channel, all share subscribers are regularly assed to tax and have sufficient net worth to invest in the equity capital of the assessee company. We thus uphold the findings of the ld. CIT(A) deleting the impugned addition of Rs.14,20,50,000/- made u/s 68 of the Act and dismiss the grounds of appeal no. 1 to 6, raised by the revenue. 15. So far as Ground No. 7 is concerned, in view of the above discussion and on perusal of the order of the ld. CIT(A), we notice that though certain details were not filed before the ld. Assessing Officer but ld. CIT(A) who has co-terminus power to that of the ld. Assessing Officer had all these details before him while adjudicating the issues raised in the instant appeal. At the end of the ld. Assessing Officer, no discussion has been made about the financials of any of the companies or any further examination or specifically pin pointing any error to the I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 50 assessee. The ld. CIT(A) has taken a view that the best the assessee could do to explain the nature and source of the alleged sum, has been done by the assessee. All the documentary evidence referred above prima facie are sufficient to prove the identity and creditworthiness of the share subscribers and genuineness of the transactions. Hence there is no violation of Rule 46 of the rules at the end of the ld. CIT(A). Thus, Ground No. 7 is dismissed. 16. Ground No. 8 is general in nature. 17. Ground No. 9 relates to disallowance of Rs.39,694/- made u/s 14A r.w.r. 8D of the Rules. We find that the ld. CIT(A) while deleting the disallowance has relied on the decision of the Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT reported in 378 ITR 33 (Del.) wherein the Hon’ble Court has held that no disallowance u/s 14A of the Act can be made in a year in which no exempt income has been earned or received by the assessee. As the assessee has not earned any exempt income during the year, we respectfully following the decision in the case of Cheminvest Ltd. (surpa), uphold the finding of the ld. CIT(A) and dismiss Ground No. 9 raised by the revenue. 18. In the result, appeal of the revenue is dismissed. Order pronounced in the Court on 16 th October, 2023 at Kolkata Sd/- Sd/- (RAJPAL YADAV) (DR. MANISH BORAD) VICE PRESIDENT ACCOUNTANT MEMBER Kolkata, Dated 16/10/2023 *SC SrPs I.T.A. No. 20/Kol/2021 Assessment Year: 2012-13 M/s. Safeline Marketing Pvt. Ltd. 51 आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata
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