ITO, Ward- 6(1), Kolkata, Kolkata V. M/s. DSR Impex Pvt. Ltd., Kolkata

ITA 2087/KOL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7077 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Source of fund; Set aside
• Section: 143(3); 22; 131; 68; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.2087/KOL/2017 ( / ASSESSMENT YEAR:2012-13) ITO, WARD-6(1), KOLKATA VS. M/S DSR IMPEX PVT. LTD. 2, LAL BAZAR STREET, KOLKATA-700001 ./ ./PAN/GIR NO.: AAACD 9236 A (ASSESSEE) .. (RESPONDENT) ASSESSEE BY : SHRI BAIJ NATH SINGH, JCIT RESPONDENT BY :NONE / DATE OF HEARING : 14/11/2019 /DATE OF PRONOUNCEMENT : 05/02/2020 / O R D E R DR. A.L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTA INING TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-23, KOLKATA IN APPEAL NO. 265/CIT(A)-23/WD -6(1)/16-17, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 23/03/2015. 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F ASSESSEE IN SPITE OF ISSUANCE OF NOTICE FOR HEARING MORE THAN ONE OCCASION AND LD . DEPARTMENTAL REPRESENTATIVE(DR), WAS PRESENT FOR THE ASSESSEE RE VENUE. IN THE ABSENCE OF ANY APPEARANCE BY THE ASSESSEE, THE APPEAL IS BEING DIS POSED OF EX PARTE QUA THE ASSESSEE, AFTER HEARING LD. DR FOR THE REVENUE ON M ERITS IN TERMS OF RULE 24 OF THE INCOME TAX APPELLATE, TRIBUNAL, RULES, 1963. M/S DSR IMPEX PVT. LTD. ITA NO.2087/KOL/2014 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 3. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ S AS FOLLOWS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD CIT(A) HAS ERRED IN DELETING ADDITION OF RS. 5,20,00,000/- REC EIVED ON ACCOUNT OF ALLEGED SHARE CAPITAL AND SHARE PREMIUM U/S.68 OF THE I.T.A CT WHICH HAS BEEN MADE MERELY ON THE ASSESSEES SUBMISSION. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN ACCEPTING THE THORUGH INVESTIGATION/ENQUIR Y MADE BY THE AO DURING ASSESSMENT PROCEEDINGS BEFORE CONCLUSIVELY REACHED AT THE VIEW OF ALLEGED SHARE CAPITAL AND SHARE PREMIUM WHICH COULD NOT BE SUBSTA NTIATED BY THE ASSESSEE. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN VIOLATING OF RULE-46A OF THE I.T..RULES,19 62 FOR REMITTING THE SAME BEFORE THE AO FOR FURTHER INVESTIGATION AND ENQUIRY. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD CIT(A) HAS ERRED IN LAW IN ACCEPTING THE FACT THAT THE ASSESSE E HAD FAILED TO SATISFY THE GENUINENESS AND AUTHENTICITY OF CASH CREDIT. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HUMBLY REQUESTED TO SET ASIDE THE ORDER OF LD.CLT(A) AND RESTORE BACK T HE ASSESSMENT ORDER PASSED BY THE AO. 6. 'THAT THE ASSESSEE CRAVES FOR LEAVE TO ADD, DELETE AMEND OR MODIFY ANY GROUND BEFORE OR AT THE TIME OF APPELLATE PROCEEDIN GS. 4. FACTS OF THE CASE WHICH CAN BE STATED QUITE SHOR TLY ARE AS FOLLOWS: DURING THE PREVIOUS YEAR ASSESSEE COMPANY ISSUED SHARES AGAINS T THE DEBT DUE TO THE SHARE HOLDERS COMPANIES ON ACCOUNT OF THE PURCHASES OF IN VESTMENTS.THERE IS NO RECEIPT OF CASH OR ANY MONEY BY THE ASSESSEE. THE FACT WAS STATED BEFORE THE AO, TOGETHER WITH THE DETAILS OF INVESTMENTS PURCHASED AGAINST A LLOTMENT OF SHARES. THE SHARES WERE SO ALLOTTED TO SUCH SELLERS OF INVESTMENTS, WE RE IN TERMS OF AGREEMENT ENTERED INTO BY THE ASSESSEE WITH SUCH COMPANIES RESPECTIVE LY. THE COPIES OF THE AGREEMENT SO EXECUTED WITH EACH OF THE SHAREHOLDERS WERE FURNISHED BEFORE AO. THE ENTRIES IN THE BOOKS OF THE ASSESSEE WERE PASSE D THROUGH THE JOURNAL ENTRIES ONLY AND NO CASH OR BANK TRANSACTION WAS RECORDED I N THE BOOKS. THE EXTRACT OF BOOKS OF ACCOUNTS WITH JOURNAL ENTRIES WAS FURNISH ED BEFORE AO. THE DETAILS AND PARTICULARS OF JOURNAL ENTRIES ARE AS FOLLOWS:- THE ASSESSEE HAD DULY REFLECTED UNDER SCHEDULE 2.5 OF THE ANNUAL ACCOUNTS OF THE ASSESSES. CORRESPONDING ENTRIES IN THE BOOKS OF THE SHARE HOL DERS FOR SALE OF SHARES TO DATE OFAGREEMENT NAME OF SELLER 30.03.2012 ALLIANCE DEALCOMM PVT LTD M/S DSR IMPEX PVT. LTD. ITA NO. ASSESSMENT YEAR: THE ASSESSEE HAD DULY RECORDED PURCHASES OF SUCH INVESTMENT AND WERE REFLECTED UNDER SCHEDULE 2.5 OF THE ANNUAL ACCOUNTS OF THE ASSESSES. CORRESPONDING ENTRIES IN THE BOOKS OF THE SHARE HOL DERS FOR SALE OF SHARES TO NAME OF SELLER PARTICULARS O F INVESTMENTS SOLD . AMOUNT OF DEBTS DISCHARGED BY ALLOTTING EQUITY SHARES NUMBER AND AMOUNT OF EQUITY SHARES ALLOTTED. 36000 FULLY RS 4600 EQUITY PAID UP SHARES 90,00,000 SHARES OF VANTAGE ASSESSEE TRADELINK PVT RS 92,00,000 LTD 2000 FULLY PAID RS UP SHARES OF 2,00,000 CIRCLE INFRA PROJECTS PVT M/S DSR IMPEX PVT. LTD. ITA NO. 2087/KOL/2014 ASSESSMENT YEAR: 2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 RECORDED PURCHASES OF SUCH INVESTMENT AND WERE REFLECTED UNDER SCHEDULE 2.5 OF THE ANNUAL ACCOUNTS OF THE ASSESSES. THE CORRESPONDING ENTRIES IN THE BOOKS OF THE SHARE HOL DERS FOR SALE OF SHARES TO NUMBER AND AMOUNT OF EQUITY SHARES ALLOTTED. 4600 EQUITY SHARES OF ASSESSEE FOR RS 92,00,000 M/S DSR IMPEX PVT. LTD. ITA NO.2087/KOL/2014 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 THE ASSESSEE AND ALLOTMENT OF FRESH SHARES OF THE A SSESSEE BY THE ASSESSEE WERE FURNISHED.THE AO HAS ADMITTED IN HIS ORDER ABO UT THE ALLOTMENT OF SHARES SALE OF INVESTMENT. WE REFER TO PARA 3 PAGE 2 OF TH E ASSESSMENT ORDER THAT MENTIONS 'THESE SHARE HOLDERS FUND HAVE BEEN SHOWN AS AGAIN INVESTED IN DIFFERENT PRIVATE LIMITED COMPANIES. BOTH RECEIVING OF SHARE APPLICATION MONEY AND INVESTING IN OTHER PRIVATE LIMITED COMPAN IES HAVE BEEN DONE THROUGH CHAIN OF TRANSACTIONS OF SHARE ALLOTTEE COM PANIES ASSESSEE COMPANY AND INVESTEE COMPANIES. HOWEVER, THE ASSESSING OFFICER REJECTED THE CONTENT ION OF THE ASSESSEE AND MADE ADDITION TO THE TUNE OF RS.5,20,00,000/-. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER OBSERVING THE FOLLOWING: 5.1. GROUNDS OF APPEAL, ASSESSMENT ORDER AND SUBM ISSIONS OF THE A.R. WERE DULY CONSIDERED. THE ISSUE UNDER CONSIDERATION IS THAT W HETHER THE EXCHANGE OF SHARES OR ISSUE OF SHARES IN KIND INVITES THE PROVISIONS O F U/S 68 OF THE ACT OR NOT. 5.2. APPLICABILITY OF SECTION 68 1. THE ASSESSEE PLEADED THAT THERE IS NO RECEIPT OF AN Y SUM OF MONEY, HENCE THE CREDIT OF SUM OF MONEY HAD NOT ARISEN IN HIS CASE. HE ELABORATED THAT IN EXCHANGE OF BUYING THE EXISTING INVESTMENTS OF THE PARTIES, THE DEBT WAS DISCHARGED BY ALLOTTING ITS OWN FULLY PAID UP EQUIT Y SHARES. THERE WAS NO EXCHANGE OF MONEY, NEITHER THE ASSESSEE RECEIVED AN Y CASH OR SUM OF MONEY NOR THE OTHER PARTY HAS SHOWN SUCH PAYMENT. 2. THE ASSESSEE FURTHER ARGUED THAT IN CASE ON NON-REC EIPT OF ANY MONEY, THE ADDITION U/S 68 AS MONEY EARNED FROM UNDISCLOSED SO URCE IS NOT GOOD IN LAW. IN SUCH CASE, LOGICALLY THERE IS NO UNDISCLOSED INC OME. THE JURISDICTION OF PROVISIONS OF SECTION 68 IS BASED ON PREMISE THAT T HE ASSESSEE HAD ENTERED ITS OWN UNDISCLOSED EARNED INCOME AS CASH CREDIT, WHICH HAD EARNED BY EVASION OF INCOME TAX. 3. THE ASSESSEE FURTHER ARGUED THAT THE VERY PREMISE O F SECTION 68 IN HIS CASE HAS FAILED, AS IN SUCH CASE, IT CANNOT BE IMPLIED THAT HE HAS EARNED INCOME, EVEN OTHERWISE TAXABLE OR NOT. 4. IN THESE SHARE TRANSACTION, THE ADDITION U/S 68 OF THE ACT AS UNEXPLAINED CASH CREDIT WILL NOT COME, AS THE TRANSACTION IS NOT UND ER THE PREVIEW OF CASH CREDIT, AS THERE IS NO CASH RECEIPT OR RECEIPT OF A NY MONEY OR CREDIT OF ANY M/S DSR IMPEX PVT. LTD. ITA NO.2087/KOL/2014 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 MONEY. THE ASSESSEE ALLOTTED ITS SHARES THROUGH JOU RNAL ENTRIES ONLY. THE ALLOTMENT OF SHARES IS AGAINST THE DISCHARGE OF SUC H DEBTS ONLY. 5. THE AR PLEADED THAT THE CREDITWORTHINESS OR CAPACIT Y TO INVEST IS PROVED BY THE VERY NATURE OF TRANSACTIONS. THE INVESTEE COMPA NIES HAD SOLD THEIR OWN INVESTMENTS TO THE ASSESSEE. THOSE INVESTMENTS WERE APPEARING IN THEIR RESPECTIVE BALANCE SHEET(S), THE SOURCE OF SUCH INV ESTMENTS BY INVESTEE COMPANIES WAS ALSO PROVIDED AND SAME WERE NEITHER R EFUTED NOR REBUTTED BY THE AO. 6. IT IS TRUE THAT THE PRIMA-FACIE EVIDENCE IS RECEIPT OF MONEY FOR LOGICAL STEPS TO INVOKE THE JURISDICTION OF SECTION 68 OF THE ACT. T HE SECTION PUTS THE ASSESSEE UNDER A CLOUD, WHEN PRIMA FACIE EVIDENCE IS IN PLAC E, LOGICALLY, UNLESS ANY AMOUNT IS CREDITED, THE NECESSITY TO OFFER THE EXPL ANATION ABOUT THE SOURCE OF CASH CREDIT AND REBUTTAL BY THE AO OF THE EXPLANATI ON OF THE ASSESSEE DOES NOT ARISE. THE SECTION PUTS THE ASSESSEE UNDER A CLOUD, ONLY AFTER THE FIRST AND PRIMARY EVIDENCE OF RECEIPT OF MONEY IN THE BOOKS O F THE ASSESSEE IS FOUND. THE ASSESSEE MUST DISPEL THAT CLOUD TO THE REASONAB LE SATISFACTION OF THE ASSESSING AUTHORITIES. IN THIS CASE, THE ASSESSEE H AD NOT RECEIVED OR CREDITED ANY MONEY AS SHARE APPLICATION, THE PRIMA EVIDENCE DOES NOT EXIST AND IN SUCH A SITUATION THE ASSESSEE WAS NOT OBLIGED TO EXPLAIN THAT IT IS NOT OUT OF HIS UNDISCLOSED INCOME OR FORM THE SOURCE WHICH HAS EVA DED THE TAX. 7. THE ASSESSEE MUST DISPEL THAT CLOUD TO THE REASONAB LE SATISFACTION OF THE ASSESSING AUTHORITIES. THE ARGUMENT IS THAT AS THE ASSESSEE HAD NOT RECEIVED OR CREDITED ANY MONEY AS SHARE APPLICATION, THE PRIME EVIDENCE DOES NOT EXIST. IN A RECENT JUDGEMENT OF HON'BLE ITAT KOLKATA, IN CASE OF WELLMAN WACOMA LTD. VS. DCIT IT IS HELD THAT. 'IN THE INSTANT CASE, THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL FORM SEVEN SHARE APPLICANTS. THE NATURE OF RECEIPT TOWAR DS SHARE CAPITAL IS WELL ESTABLISHED FROM THE ENTRIES PASSED IN THE RESPECTI VE BALANCE SHEETS OF THE COMPANIES AS SHARE CAPITAL AND INVESTMENTS. HENCE T HE NATURE OF RECEIPT IS PROVED BY THE ASSESSEE BEYOND DOUBT. IN RESPECT OF SOURCE OF CREDIT, THE ASSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIEN TS I.E. IDENTITY OF SHARE APPLICANTS, GENUINENESS OF TRANSACTIONS AND CREDITW ORTHINESS OF SHARE APPLICANTS. WE PLACE RELIANCE ON THE DECISION OF TH E HON'BLE APEX COURT IN THIS REGARD IN THE CASE OF DHAKESHWARI COTTON MILLS LTD. VS. CIT REPORTED IN 26 ITR 775 (SC) WHEREIN IT HAS BEEN HELD THAT NO ADDITION CAN BE MA DE WITHOUT MATERIAL AND ON MERE SUSPICION.' 8. THE ASSESSEE RELY OF THE CASE LAW, WHERE IN HON'BLE JURISDICTIONAL HIGH COURT JATIA INVESTMENT CO VS CIT [1994] 206 ITR 718 (CAL) HAD ACCEPTED THE CONTENTION OF THE ASSESSEE AND STATED, IN CASE THER E IS NO CASH RECEIPTS, THE QUESTION OF CASH CREDIT DOES NOT ARISES. 9. THE AR RELIED UPON THE SUPREME COURT JUDGMENT IN CI T VS. P. MOHANAKALA (1995) SUPP SCC 453 AND IN SUMITIDAYAL VS CIT (SC). DURING THE COURSE OF DECIDING ABOUT THE APPLICABILITY OF SECTION 68, THE APEX COURT ELABORATED ON THE PROVISION OF SECTION 68, AND IN BOTH CASES, STA TED THAT THE PRIMARY EVIDENCE IS THE RECEIPT OF MONEY. WHEREAS, IN THE C ASE OF ASSESSEE, THE M/S DSR IMPEX PVT. LTD. ITA NO.2087/KOL/2014 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 6 66 6 ASSESSING OFFICER, FAILED TO ESTABLISH THAT THE AS SESSEE HAS RECEIVED ANY SUM OF MONEY DURING THE YEAR. IN THE CASES, MAINDRANATH DA S VS. CIT BIHAR & ORISSA (PATNA HC) AND GOVINDRAJUMUDALLAR VS. CIT, H YDERABAD (SC). IT WAS CLEAR THAT IF THERE IS RECEIPT OF AN AMOUNT IN THE ACCOUNTING YEAR, IT IS INCUMBENT IN THE FIRST INSTANCE UPON THE ASSESSEE T O SHOW THAT IT DOES NOT BEAR THE CHARACTER OF INCOME, IF HE FAILS TO DO SO, THE ASSESSING OFFICER MAY HOLD THE SAME AS INCOME FROM DISCLOSED SOURCE OR UNDISCL OSED SOURCE. IN CASE OF SMT. SRILEKHA BANERJEE AND OTHERS VS. CIT (SC) IT W AS HELD THAT IF THERE IS AN ENTRY IN THE ACCOUNTS BOOKS OF THE ASSESSEE WHICH S HOWS THE RECEIPT OF SUM OR CONVERSIONS OF HIGH DENOMINATION NOTES TENDERED FOR CONVERSION BY ASSESSEE HIMSELF (LAST INSTANCE WAS PECULIAR TO THAT CASE), IT IS NECESSARY FOR THE ASSESSEE TO ESTABLISH, IF ASKED WHAT IS THE SOURCE OF MONEY IS AND PROVE THAT IT DOES NOT BEAR THE NATURE OF INCOME. IN ALL ABOVE RE FERRED CASES, THE PRIME EVIDENCE IS ANY SUM CREDITED IN BOOKS ON RECEIPTS O F MONEY. UNLESS THERE IS ANY RECEIPT OF MONEY, NO INCOME CAN BE STATED TO HA VE BEEN EARNED EITHER FORM DISCLOSED SOURCE OR UNDISCLOSED SOURCE. 5(3). THE AR FURTHER REPLACED HIS RELIANCE ON THE VARIOUS JUDICIAL PRONOUNCEMENTS AS MENTIONED ABOVE IN THE SUBMISSION OF THE APPELLATE WHEREIN IT HAS BEEN HELD THAT SHARE APPLICATION MON EY/SHARE CAPITAL CANNOT BE ADDED U/S 68 IF THE IDENTITY, CREDITWORTHINESS AND GENUINESS OF THE APPLICANTS/SHAREHOLDERS ARE ESTABLISHED. THE ADDITI ON OF RS. 5,20,00,000/- RAISED BY THE WAY OF SHARE CAPITAL & SHARE PREMIUM U/S 68 OF THE I.T. ACT 1961 IS NOT JUSTIFIED IN VIEW OF THE FACTS AND LEGA L PROVISIONS THAT ALL THE TRANSACTION IN RESPECT THEREOF ARE AS PER AGREEMENT S ENTERED WITH THE APPLICANT COMPANIES AND THE SAME ARE DULY RECORDED IN THE BOOKS OF THE COMPANY AS WELL AS THE SUBSCRIBER ENTITIES WHICH AR E VERIFIABLE FORM THEIR FINANCIAL STATEMENTS FILED IN RESPONSE TO NOTICES U /S. 133(6), ALL THESE SHAREHOLDERS ARE BODIES CORPORATE INCORPORATED UNDE R THE COMPANIES ACT, 1956 AND THEY ARE REGULARLY FILING THEIR INCOME TAX RETURNS AND THUS THEIR IDENTITY IS ESTABLISHED BEYOND DOUBT, THE A.O. HAD NOT CONDUCTED ANY ENQUIRY NOR BOUGHT ANY MATERIAL ON RECORD TO ESTABLISH THAT THE SHARE CAPITAL WERE BOGUS AND FICTITIOUS, THAT AS THE SHARES WERE ALLOT TED AGAINST CONSIDERATION FOR PURCHASE OF EQUITY SHARES HELD BY THESE APPLICANT C OMPANIES. THE AR ARGUED THAT NO TRANSACTION HAS TAKEN PLACE THROUGH BANK AN D AS SUCH THE PROVISIONS OF SECTION 63 DOES NOT APPLY AT ALL, NO. ADDITION C OULD BE MADE U/S 68 OF THE I.T. ACT, 1961 IN THE ABSENCE OF EVIDENCE THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS NOTHING BUT ASSESSEE'S OWN UNACCOUNTED MONEY WHICH WAS BROUGHT TO THE BOOKS IN THE FORM OF SHARE CAPITAL. 5(4). THE AO PLACED HIS RELIANCE ON THE VARIOUS JUD GMENTS AS MENTIONED IN THE ASSESSMENT ORDER. HOWEVER AO'S ACTION IN MAKING ADD ITION U/S 68 BY RELYING UPON THE DECISIONS ARE TOTALLY MISPLACED. THE AO HA S DRAWN ADVERSE INFERENCE ON THE GROUND THAT DIRECTOR OF THE SHAREHOLDER COMP ANIES DID NOT APPEAR IN PERSON IN RESPONSE TO SUMMONS. THE FAILURE ON THE P ART OF THE DIRECTORS OF THE SHAREHOLDER COMPANIES TO APPEAR IN PERSON DOES NOT SUGGEST THAT IDENTITY, PROOF AND GENUINENESS OF THE TRANSACTION FURNISH BY THE ASSESSEE COMPANY STANDS DISPROVED. THE FACTS OF THE CASES, AS CITED BY THE AO IN HIS ORDER ARE TOTALLY DIFFERENT WITH THE FACTS OF THE ASSESSEE. I N THOSE CASES, AS REFERRED BY THE AO, THE ASSESSEE HAD RECEIVED MONIES BY CHEQUE/ DRAFT AND ALLOTTED SHARES. WHEREAS IN THE CASE UNDER CONSIDERATION, NO MONEY W AS RECEIVED THROUGH BANKING CHANNEL BY THE ASSESSEE. THERE IS NO CASH T RANSACTION IN THE CASE OF M/S DSR IMPEX PVT. LTD. ITA NO.2087/KOL/2014 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 7 77 7 THE ASSESSEE AS THE SHARES WERE ISSUED AGAINST THE SHARES OF ANOTHER COMPANIES. I FIND THAT IT IS NOT A CASE WHERE SHARE S WERE ISSUED ON HIGH PREMIUM AND THEREAFTER, THOSE SHARES WERE PURCHASED AT A NOMINAL PRICE AND THERE IS CHANGE OF MANAGEMENT AS RELIANCE PLACED BY THE AO BISAKHA SALES PVT. LTD. AND OTHERS. THE ASSESSMENT ORDER DOES NOT SUGGEST SUCH OBSERVATION/FINDING BY THE AO. THE AR DURING THE AP PELLATE PROCEEDING SUBMITTED THAT THERE IS NO CHANGE IN MANAGEMENT OF THE COMPANY AND THESE SHARES WERE NOT PURCHASED ON NOMINAL PRICE. THE AO HAS NOT FOUND ANY DEFECT AND/OR DEFICIENCY IN THE SOURCE OF FUND EXPLAINED B YTHE SHARE APPLICANTS THROUGH THEIR REPLIES TO THE STATUTORY SUMMONS ISSU ED U/S 131 OF THE ACT TO THEM. IT IS NOT IN DISPUTE THAT THE ASSESSEEHAD FUR NISHED THE DOCUMENTS RELATING TO THE SHARE APPLICANTS BEFORE AO. IT IS ALSO OBSER VED THAT EVERY SHARE APPLICANT IN THEIR RESPECTIVE REPLIES TO THE SAID S UMMONS ISSUED U/S 131 OF THE ACT, FURNISHED ALL RELEVANT DOCUMENTS. THE ENTIRE D ETAILS OF THE SHARE APPLICANTS, PROVING THEIR IDENTITY, CREDITWORTHINES S AND GENUINENESS OF TRANSACTIONS WERE DULY PROVIDED BY THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO HAD THUS ERRONEOUSLY STATED THAT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S HAS NOT BEEN PROVED THE ASSESSEE. 5(5). THE AO FAILED TO APPRECIATE THE FACT THAT THE RE WAS NO SUM CREDITED IN THE BOOKS OF ACCOUNT OF THE APPELLATE AND NO MONEY WAS RECEIVED. THE ASSESSEE HAD ALLOTTED ITS SHARES AGAINST THE DISCHA RGE OF DEBTS BY JOURNAL ENTRIES IN BOOKS. THE AO FAILED TO VERIFY THE FACTS OF THE CASE. THE SHARES WERE ALLOTTED AGAINST THE ACQUISITION OF INVESTMENTS UND ER THE AGREEMENTS. THE COPIES OF THESE DOCUMENTS WERE ALSO FILED DURING TH E APPELLATE PROCEEDINGS. I FIND THAT THERE IS NO REAL CASH ENTRY ON THE CREDIT SIDE OF THE CASH BOOK. THE SHARES WERE ISSUED AGAINST THE SHARE. IT IS MERELY A NOTIONAL ENTRY AND THERE IS NO REAL CREDIT IN THE CASH BOOK AND BANK ACCOUNT. T HE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY UNEXPLAINED CASH CREDIT CAN NOT ARISE. THEREFORE, THE QUESTION OF CASH CREDIT DOES NOT COME IN, THERE BEI NG NO ACTUAL PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTION AR E MERE BOOK ENTRIES. THE TRANSACTIONS SHOWING THE AMOUNT AS RECEIVED IN CASH OR IN KIND AND DISCHARGED WERE NOT ACTUAL CASE BUT ONLY NOTIONAL B Y JOURNAL ENTRIES. AS FAR AS THE QUESTION OF SECTION 68 IS CONCERNED, THE NATURE OF THE TRANSACTIONS AND THE ENTRIES CLEARLY SHOW THAT NO CASH, IN FACT, ALLOWED . 5(6). IN THE REMAND REPORT AO EXAMINED THE ISSUES A ND NOTHING ADVERSE WAS REPORTED. 5(7) FROM THE ABOVE, IT IS CONCLUDED THAT THE ASSES SEE CASE DOES NOT COME UNDER PREVIEW OF SEC 68 AND HENCE ADDITION MADE OF RS. 5,20,00,000/- U/S 68 ARE DELETED. ASSESSEE GETS A RELIEF OF RS. 5,20,00, 000/-. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. M/S DSR IMPEX PVT. LTD. ITA NO.2087/KOL/2014 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 8 88 8 6. THE LD. DR HAS PRIMARILY REITERATED THE STAND TA KEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. WE HAVE HEARD LD. D.R. FOR THE REVENUE AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. WE NOTE THAT THE LD. CIT(A) HAS RIGHTLY OBS ERVED THAT SHARES HAVE BEEN ISSUED AGAINST THE SHARES THEREFORE IT IS NOTHING B UT BARTER SYSTEM OF ISSUING SHARES IN LIEU OF SHARES.THEREFORE SECTION 68 OF THE ACT D OES NOT APPLY AND FOR THAT WE RELY ON THE JUDGMENT OF CO-ORDINATE BENCH OF ITAT K OLKATA IN THE CASE OF M/S ANAND ENTERPRISES LTD. IN ITA NO. 1614/KOL/2016 FOR A.Y. 2012-13 DATED 26/09/2018 WHEREIN IT WAS HELD AS FOLLOWS: 4.2. IT WOULD BE PERTINENT TO NOTE THAT IN THE INS TANT CASE, THE LD. AO HAD NOT DOUBTED THE INVESTMENT MADE IN SHARES BY THE ASSESS EE COMPANY. THERE IS NO DISPUTE RAISED BY THE LD. AO WITH REGARD TO NUMBER OF SHARES; VALUE THEREON INVESTED BY THE ASSESSEE COMPANY. WE ALSO FIND THAT THE CO-ORDINATE BENCH DECISION OF PUNE TRIBUNAL IN THE CASE OF KANTILAL A ND BROS. VS. ACIT REPORTED IN 52 ITD 412 (PUNE TRIB.) ALSO SUPPORTS THE CASE OF T HE ASSESSEE. 4.3. IN VIEW OF THE AFORESAID OBSERVATIONS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID JUDIC IAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE LD. AO HAD ERRONEOUSL Y INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT TO THE FACTS OF THE INSTANT C ASE, WHICH, IN OUR CONSIDERED OPINION, ARE NOT AT ALL APPLICABLE HEREIN. THIS IS A SIMPLE CASE OF ACQUIRING SHARES OF CERTAIN COMPANIES FROM CERTAIN SHAREHOLDERS WITH OUT PAYING ANY CASH CONSIDERATION AND INSTEAD THE CONSIDERATION WAS SET TLED THROUGH ISSUANCE OF SHARES TO THE RESPECTIVE PARTIES. MOREOVER, IN THE BALANCE SHEET OF THE ASSESSEE COMPANY IN THE SCHEDULE TO SHARE CAPITAL, IT IS VER Y CLEARLY MENTIONED BY WAY OF NOTE THAT THE FRESH SHARE CAPITAL WAS RAISED DURING THE YEAR FOR CONSIDERATION OTHER THAN CASH. HENCE WE HOLD THAT PROVISION OF SE CTION 68 OF THE ACT ARE NOT APPLICABLE IN THE INSTANT CASE AND ACCORDINGLY THE ENTIRE ADDITION DESERVES TO BE DELETED WHICH HAS RIGHTLY BEEN DONE BY THE LD. CIT( A) WHICH DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE RE VENUE ARE DISMISSED. 8..RESPECTFULLY FOLLOWING THE JUDGMENT OF THE CO-OR DINATE BENCH ON THE SIMILAR FACTS IN THE CASE OF M/S ANAND ENTERPRISES LTD. (SU PRA) WE NOTE THAT THE SHARES HAVE BEEN ISSUED IN EXCHANGE OF SHARES THEREFORE NO ANY CASH IS INVOLVED IN THESE TRANSACTIONS. HENCE THE PROVISION OF SECTION 68 DOE S NOT ATTRACT THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A). M/S DSR IMPEX PVT. LTD. ITA NO.2087/KOL/2014 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 9 99 9 9. WE NOTE THAT DURING THE APPELLATE PROCEEDINGS, L D CIT(A) CALLED REMAND REPORT FROM ASSESSING OFFICER. WE NOTE THAT IN THE REMAND REPORT AO EXAMINED THE ISSUES AND NOTHING ADVERSE WAS REPORTED. WE NOTE THAT HON`BLE HIGH COURT OF MADRAS, IN THE CASE OF SMT. B. JAYALAKSHMI, [2018] 96 TAXMANN.COM 486 (MADRAS) HELD THAT WHERE COMMISSIONER (APPEALS) ON BASIS OF REMAND REPORT OF ASSESSING OFFICER, ALLOWED CLAIM OF ASSESSEE, REVENUE WAS NOT ENTITLED TO MAIN TAIN AN APPEAL BEFORE TRIBUNAL AGAINST SAID ORDER OF COMMISSIONER (APPEALS).THAT B EING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HI S ORDER ON THIS ISSUE, IS HEREBY UPHELD AND THE GROUNDS OF APPEAL RAISED BY THE REVE NUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 05.02.2020 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 05/02/2020 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-6(1), KOLKATA 2. M/S DSR IMPEX PVT. LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATABENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES