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

ITA 2089/KOL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0266 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Question of law; Set aside
• Section: 143(3); 80G; 250; 264; 13; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI ABY T. VARKEY, JUDICIAL MEMBER) ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD-6(1), KOLKATA............................................................................. APPELLANT VS. M/S. DHANKAMAL COMMONSALES PVT. LTD................................................................RESPONDENT 10, CLIVE ROW KOLKATA 700 001 [PAN : AAECD 1957 A] APPEARANCES BY: SHRI RAM BILASH MEENA, CIT, D/R, APPEARING ON BEHALF OF THE REVENUE. SHRI V.K. JAIN, FCA, APPEARED ON BEHALF OF THE ASSESSEE. DATE OF CONCLUDING THE HEARING : MARCH 5 TH , 2020 DATE OF PRONOUNCING THE ORDER : JUNE 17 TH , 2020 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 23, KOLKATA, (HEREINAFTER THE LD. CIT(A)), PASSED U/S. 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 03/07/2017 FOR THE ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE IS A COMPANY AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 DECLARING TOTAL INCOME OF RS. 390/-. THE ASSESSING OFFICER PASSED AN ORDER U/S 143(3) OF THE ACT ON 28/03/2015, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 9,86,00,390/- INTERALIA MAKING AN ADDITION OF SHARE CAPITAL RECEIVED ALONG WITH SHARE PREMIUM U/S 68 OF THE ACT. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE LD. FIRST APPELLATE AUTHORITY GRANTED RELIEF ON THE GROUND THAT:- A) SECTION 68 OF THE ACT, DOES NOT APPLY ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS IT WAS BARTER/EXCHANGE OF SHARES/INVESTMENTS. B) THAT THE ASSESSEE HAS PROVED THE CREDITWORTHINESS AND IDENTITY OF THE SHARE APPLICANT COMPANIES AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. C) THE SHARES IN QUESTION WERE ALLOTTED THROUGH PASSING OF JOURNAL ENTRIES ONLY AGAINST THE DISCHARGE OF DEBTS. 3. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THIS IS A CASE WHERE SHARES WERE ALLOTTED AT A PREMIUM TO THE SHARE APPLICANT COMPANIES IN EXCHANGE OF SHARES FROM THOSE COMPANIES. THE UNDISPUTED FACTS ARE THAT THESE ARE NON CASH TRANSACTIONS AND ONLY JOURNAL ENTRIES HAVE BEEN PASSED. 3.1. THE HONBLE MADRAS HIGH COURT IN THE CASE OF ITO IN TAX CASE (APPEAL) NO. 246 OF 2017, JUDGMENT DT. 06/08/2018, FOLLOWING QUESTION OF LAW :- (I) WHETHER THE LEARNED TRIBUNAL ERRED IN CONFIRMING THE VALUATION OF SHARES ALLOTTED IN SETTLEMENT OF CREDIT? (II) WHETHER THE LEARNED TRIBUNAL ERRED IN HOLDING THAT VALUE OF SHARES ALLOTTED TO INDIVIDUALS WOULD AMOUNT TO UNEXPLAINED CASH CREDIT? AT PARA 25 TO 28 OF THE JUDGMENT, THE HONBLE MADRAS 24. THE QUESTION OF WHETHER THE LEARNED TRIBUNAL ERRED IN CONFIRMING THE VALUATION OF SHARES ALLOTTED IN SETTLEMENT OF THE PREEXISTING LIABILITY TAXABLE AS UNEXPLAINED CASH CREDIT, DOES NOT INVOLVE ANY QUESTION OF LAW, FAR LESS ANY SUBSTANTIAL QUESTION OF LAW. 25. HOWEVER, THE SECOND QUESTION IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME TAX V. ELECTRO POLYCHEM LTD., SUPRA, AND COMMISSIONER OF INCOME TAX V. STELLER INVESTMENT LTD., SUPRA. 26. THIS CASE IS DISTINGUISHABLE FROM THE CASE OF C.I.T. V. LOVELY EXPOS PVT. LTD., REPORTED IN 216 CTR 195, IN THAT THE TRANSACTIONS WERE ONLY BOOK TRANSACTIONS, AND THERE WAS NO CASH RECEIPT. THE DECISION OF INCOME TAX V. FOCUS EXPORTS PVT. LTD., REPORTED IN (2014) 90 CCH 0105 (DELHI); (II) COMMISSIONER OF INCOME TAX V. GLOBUS SECURITIES & FINANCE PVT. LTD., REPORTED IN (2014) 264 CTR 481 (DELHI); (III) ONASSIS AXLES PRIVATE LIMITED V. COMMISSIONER OF INCOME TAX, REPORTED IN (2014) 364 ITR 53 (DELHI); (IV) OLWIN TILES INDIA (P) LTD. V. DEPUTY COMMISSIONER OF INCOME TAX, REPORTED IN (2016) 382 ITR 291 (GUJARAT); (V) B.R.PETROCHEM PVT. LTD. V. THE INCOME TAX OFFICER, (ORDER DATED 24.4.201 (VI) RAJMANDIR ESTATES PRIVATE LIMITED V. PRINCIPAL COMMISSIONER OF INCOME TAX, REPORTED IN (2016) 386 ITR 162 (CALCUTTA), CITED ON BEHALF OF THE RESPONDENT ARE DISTINGUISHABLE, IN THAT THE CASH CREDITS TOWARDS SHARE CAPIT WERE ADMITTEDLY ONLY BY WAY OF BOOK ADJUSTMENT AND NOT ACTUAL RECEIPTS 2 M/S. DHANKAMAL COMMONSALES AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THIS IS A CASE WHERE SHARES WERE ALLOTTED AT A PREMIUM TO THE SHARE APPLICANT COMPANIES IN EXCHANGE OF SHARES FROM THOSE COMPANIES. THE UNDISPUTED FACTS ARE THAT THESE ARE NON CASH TRANSACTIONS AND ONLY JOURNAL ENTRIES HAVE BEEN PASSED. THE HONBLE MADRAS HIGH COURT IN THE CASE OF M/S. V.R. GLOBAL ENERGY PVT. LTD. VS. ITO IN TAX CASE (APPEAL) NO. 246 OF 2017, JUDGMENT DT. 06/08/2018, HAD CONSIDERED THE WHETHER THE LEARNED TRIBUNAL ERRED IN CONFIRMING THE VALUATION OF SHARES ALLOTTED IN SETTLEMENT OF THE PRE- EXISTING LIABILITY TAXABLE AS UNEXPLAINED CASH WHETHER THE LEARNED TRIBUNAL ERRED IN HOLDING THAT VALUE OF SHARES ALLOTTED TO INDIVIDUALS WOULD AMOUNT TO UNEXPLAINED CASH CREDIT? AT PARA 25 TO 28 OF THE JUDGMENT, THE HONBLE MADRAS COURT HELD AS FOLLOWS: 24. THE QUESTION OF WHETHER THE LEARNED TRIBUNAL ERRED IN CONFIRMING THE VALUATION OF SHARES ALLOTTED IN SETTLEMENT OF THE PREEXISTING LIABILITY TAXABLE AS UNEXPLAINED CASH CREDIT, DOES NOT INVOLVE ANY QUESTION OF LAW, FAR LESS ANY SUBSTANTIAL QUESTION OF LAW. 25. HOWEVER, THE SECOND QUESTION IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME TAX V. ELECTRO POLYCHEM LTD., SUPRA, AND OF INCOME TAX V. STELLER INVESTMENT LTD., SUPRA. 26. THIS CASE IS DISTINGUISHABLE FROM THE CASE OF C.I.T. V. LOVELY EXPOS PVT. LTD., REPORTED IN 216 CTR 195, IN THAT THE TRANSACTIONS WERE ONLY BOOK TRANSACTIONS, AND THERE WAS NO CASH RECEIPT. THE DECISION S IN (I) COMMISSIONER OF INCOME TAX V. FOCUS EXPORTS PVT. LTD., REPORTED IN (2014) 90 CCH 0105 (DELHI); (II) COMMISSIONER OF INCOME TAX V. GLOBUS SECURITIES & FINANCE PVT. LTD., REPORTED IN (2014) 264 CTR 481 (DELHI); (III) ONASSIS AXLES PRIVATE COMMISSIONER OF INCOME TAX, REPORTED IN (2014) 364 ITR 53 (DELHI); (IV) OLWIN TILES INDIA (P) LTD. V. DEPUTY COMMISSIONER OF INCOME TAX, REPORTED IN (2016) 382 ITR 291 (GUJARAT); (V) B.R.PETROCHEM PVT. LTD. V. THE INCOME TAX OFFICER, (ORDER DATED 24.4.201 7 IN T.C.(A) NO.1498 OF 2007; AND (VI) RAJMANDIR ESTATES PRIVATE LIMITED V. PRINCIPAL COMMISSIONER OF INCOME TAX, REPORTED IN (2016) 386 ITR 162 (CALCUTTA), CITED ON BEHALF OF THE RESPONDENT ARE DISTINGUISHABLE, IN THAT THE CASH CREDITS TOWARDS SHARE CAPIT WERE ADMITTEDLY ONLY BY WAY OF BOOK ADJUSTMENT AND NOT ACTUAL RECEIPTS ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THIS IS A CASE WHERE SHARES WERE ALLOTTED AT A PREMIUM TO THE SHARE APPLICANT COMPANIES IN EXCHANGE OF PURCHASE OF SHARES FROM THOSE COMPANIES. THE UNDISPUTED FACTS ARE THAT THESE ARE NON CASH M/S. V.R. GLOBAL ENERGY PVT. LTD. VS. HAD CONSIDERED THE WHETHER THE LEARNED TRIBUNAL ERRED IN CONFIRMING THE VALUATION OF SHARES EXISTING LIABILITY TAXABLE AS UNEXPLAINED CASH WHETHER THE LEARNED TRIBUNAL ERRED IN HOLDING THAT VALUE OF SHARES ALLOTTED COURT HELD AS FOLLOWS: - 24. THE QUESTION OF WHETHER THE LEARNED TRIBUNAL ERRED IN CONFIRMING THE VALUATION OF SHARES ALLOTTED IN SETTLEMENT OF THE PREEXISTING LIABILITY TAXABLE AS UNEXPLAINED CASH CREDIT, DOES NOT INVOLVE ANY QUESTION OF LAW, FAR LESS ANY 25. HOWEVER, THE SECOND QUESTION IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME TAX V. ELECTRO POLYCHEM LTD., SUPRA, AND 26. THIS CASE IS DISTINGUISHABLE FROM THE CASE OF C.I.T. V. LOVELY EXPOS PVT. LTD., REPORTED IN 216 CTR 195, IN THAT THE TRANSACTIONS WERE ONLY BOOK S IN (I) COMMISSIONER OF INCOME TAX V. FOCUS EXPORTS PVT. LTD., REPORTED IN (2014) 90 CCH 0105 (DELHI); (II) COMMISSIONER OF INCOME TAX V. GLOBUS SECURITIES & FINANCE PVT. LTD., REPORTED IN (2014) 264 CTR 481 (DELHI); (III) ONASSIS AXLES PRIVATE COMMISSIONER OF INCOME TAX, REPORTED IN (2014) 364 ITR 53 (DELHI); (IV) OLWIN TILES INDIA (P) LTD. V. DEPUTY COMMISSIONER OF INCOME TAX, REPORTED IN (2016) 382 ITR 291 (GUJARAT); (V) B.R.PETROCHEM PVT. LTD. V. THE 7 IN T.C.(A) NO.1498 OF 2007; AND (VI) RAJMANDIR ESTATES PRIVATE LIMITED V. PRINCIPAL COMMISSIONER OF INCOME TAX, REPORTED IN (2016) 386 ITR 162 (CALCUTTA), CITED ON BEHALF OF THE RESPONDENT ARE DISTINGUISHABLE, IN THAT THE CASH CREDITS TOWARDS SHARE CAPIT AL WERE ADMITTEDLY ONLY BY WAY OF BOOK ADJUSTMENT AND NOT ACTUAL RECEIPTS WHICH COULD NOT BE SUBSTANTIATED AS RECEIPTS TOWARDS SHARE SUBSCRIPTION MONEY. 28. THE APPEAL IS, THUS, ALLOWED AND THE JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL DATED 1.9.2016 IS S ADDITIONS UNDER SECTION 68 OF THE 1961 ACT ARE ALSO SET ASIDE. THE QUESTIONS OF LAW ARE ANSWERED AGAINST THE REVENUE. NO COSTS. CONSEQUENTLY, CMP NO.9496 OF 2017 IS CLOSED. 4. THE HONBLE CALCUTTA HIGH COURT IN T COMMISSIONER OF INCOME- TAX 6. THE MATTER CAME UP IN APPEAL BEFORE THE TRIBUNAL AND IT WAS ALSO ARGUED THAT THE COMPANIES HAD TO REDUCE THEIR INDEBTEDNESS IN VIEW OF COMPANIES ACT . THE TRIBUNAL HELD AS FOLLOWS : 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE CASE SOUGHT TO BE MADE OUT IN FAVOUR OF THE ASSESSEE IS RATHER STRANGE. THE ASSESSEE MAINTAINS OF ACCOUNT AND MAKES CERTAIN ENTRIES. THE ASSESSEE IS NOW TRYING TO CONVINCE US THAT THE ENTRIES MADE IN THE BOOKS WERE FALSE AND NO VALUE SHOULD BE ATTACHED TO THEM. IT IS IMPOSSIBLE FOR US TO HOLD THAT WE HAVE TO DISREGARD THE ENTRIES IN T HE BOOKS OF ACCOUNT MERELY BECAUSE IT SUITS THE ASSESSEE. IF THE IDEA WAS TO REDUCE THE INDEBTEDNESS OF THE COMPANIES WE DO NOT UNDERSTAND HOW IT HAS BEEN BROUGHT OUT WHEN CORRESPONDING ASSETS HAVE ALSO BEEN JETTISONED BY THOSE COMPANIES MAKING THE OVERALL NOT ALSO SEE HOW RULE 58 ALSO, IF THOSE ENTRIES WERE MERELY ADJUSTMENT ENTRIES WE DO NOT UNDERSTAND WHY JOURNAL ENTRIES WERE NOT PASSED MAKING HAVALAS WHICH SHOULD HAVE BROUGHT THE SAME RESULT. THE VERY FACT THAT CASH ENTRIES ARE MADE FOR THE PURCHASE OF SHARES BY THE ASSESSEE WOULD SHOW THAT THE ASSESSEE HAD PAID CASH FOR THE PURCHASE OF SHARES. OBVIOUSLY, THE ASSESSEE IS NOT ABLE TO SHOW HOW THE CASH WAS PROVIDED. THE CONCERNS FROM WHOM CASH ALLEGEDLY PASSED DID NOT HAVE ENOUGH CASH BALANCE TO LEND MONEY TO THE ASSESSEE. IN THESE CIRCUMSTANCES, THE INCOME OFFICER WAS FULLY JUSTIFIED IN DRAWING THE CONC CASH INTO THE BOOKS OF ACCOUNT FOR THE PURCHASE OF SHARES BUT THE SOURCE THEREOF WAS UNEXPLAINED. THE LEARNED COMMISSIONER OF INCOME JUSTIFIED IN ENDORSING THE FINDINGS OF THE INCOME NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. THE APPEAL ACCORDINGLY FAILS AND IS DISMISSED.' 7. A MISCELLANEOUS APPLICATION WAS FILED URGING THAT SOME ARGUMENTS ADVANCED BY THE ASSESSEE WERE NOT CONSIDERED BY TH FINDINGS AS FOLLOWS : 'THE ASSESSEE'S REPRESENTATIVE, AS IS CLEAR FROM OUR LOG BOOKS, CLEARLY REFERRED TO RULE 58A AT THE TIME OF HEARING. AS THERE WAS NO SUCH RULE IN THE THE ARGUMENT HAD TO BE IGNORED. FURTHER, THE DOCUMENT AT PAGE 7 OF THE PAPER 3 M/S. DHANKAMAL COMMONSALES WHICH COULD NOT BE SUBSTANTIATED AS RECEIPTS TOWARDS SHARE SUBSCRIPTION 28. THE APPEAL IS, THUS, ALLOWED AND THE JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL DATED 1.9.2016 IS S ET ASIDE, FOR THE REASONS DISCUSSED ABOVE. ADDITIONS UNDER SECTION 68 OF THE 1961 ACT ARE ALSO SET ASIDE. THE QUESTIONS OF LAW ARE ANSWERED AGAINST THE REVENUE. NO COSTS. CONSEQUENTLY, CMP NO.9496 THE HONBLE CALCUTTA HIGH COURT IN T HE CASE OF JATIA INVESTMENT CO. VS TAX REPORTED IN 1994 206 ITR 718 CAL, HELD AS FOLLOWS: 6. THE MATTER CAME UP IN APPEAL BEFORE THE TRIBUNAL AND IT WAS ALSO ARGUED THAT THE COMPANIES HAD TO REDUCE THEIR INDEBTEDNESS IN VIEW OF RULE 58 . THE TRIBUNAL HELD AS FOLLOWS : 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE CASE SOUGHT TO BE MADE OUT IN FAVOUR OF THE ASSESSEE IS RATHER STRANGE. THE ASSESSEE MAINTAINS OF ACCOUNT AND MAKES CERTAIN ENTRIES. THE ASSESSEE IS NOW TRYING TO CONVINCE US THAT THE ENTRIES MADE IN THE BOOKS WERE FALSE AND NO VALUE SHOULD BE ATTACHED TO THEM. IT IS IMPOSSIBLE FOR US TO HOLD THAT WE HAVE TO DISREGARD THE ENTRIES IN HE BOOKS OF ACCOUNT MERELY BECAUSE IT SUITS THE ASSESSEE. IF THE IDEA WAS TO REDUCE THE INDEBTEDNESS OF THE COMPANIES WE DO NOT UNDERSTAND HOW IT HAS BEEN BROUGHT OUT WHEN CORRESPONDING ASSETS HAVE ALSO BEEN JETTISONED BY THOSE COMPANIES MAKING THE OVERALL RATIO OF INDEBTEDNESS THE SAME AS BEFORE. WE DO NOT ALSO SEE HOW RULE 58 A OF THE INDIAN COMPANIES ACT COMES INTO THE PICTURE. ALSO, IF THOSE ENTRIES WERE MERELY ADJUSTMENT ENTRIES WE DO NOT UNDERSTAND WHY JOURNAL ENTRIES WERE NOT PASSED MAKING HAVALAS WHICH SHOULD HAVE BROUGHT THE SAME RESULT. THE VERY FACT THAT CASH ENTRIES ARE MADE FOR THE PURCHASE OF SHARES BY THE ASSESSEE WOULD SHOW THAT THE ASSESSEE HAD PAID CASH FOR THE PURCHASE OF THE ASSESSEE IS NOT ABLE TO SHOW HOW THE CASH WAS PROVIDED. THE CONCERNS FROM WHOM CASH ALLEGEDLY PASSED DID NOT HAVE ENOUGH CASH BALANCE TO LEND MONEY TO THE ASSESSEE. IN THESE CIRCUMSTANCES, THE INCOME OFFICER WAS FULLY JUSTIFIED IN DRAWING THE CONC LUSION THAT THE ASSESSEE BROUGHT CASH INTO THE BOOKS OF ACCOUNT FOR THE PURCHASE OF SHARES BUT THE SOURCE THEREOF WAS UNEXPLAINED. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) WAS FULLY JUSTIFIED IN ENDORSING THE FINDINGS OF THE INCOME - TAX OFFICER. WE, NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. THE APPEAL ACCORDINGLY FAILS AND IS DISMISSED.' 7. A MISCELLANEOUS APPLICATION WAS FILED URGING THAT SOME ARGUMENTS ADVANCED BY THE ASSESSEE WERE NOT CONSIDERED BY TH E TRIBUNAL. THE TRIBUNAL GAVE ITS 'THE ASSESSEE'S REPRESENTATIVE, AS IS CLEAR FROM OUR LOG BOOKS, CLEARLY REFERRED TO RULE 58A AT THE TIME OF HEARING. AS THERE WAS NO SUCH RULE IN THE COMPANIES ACT THE ARGUMENT HAD TO BE IGNORED. FURTHER, THE DOCUMENT AT PAGE 7 OF THE PAPER ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD WHICH COULD NOT BE SUBSTANTIATED AS RECEIPTS TOWARDS SHARE SUBSCRIPTION 28. THE APPEAL IS, THUS, ALLOWED AND THE JUDGMENT AND ORDER OF THE LEARNED ET ASIDE, FOR THE REASONS DISCUSSED ABOVE. ADDITIONS UNDER SECTION 68 OF THE 1961 ACT ARE ALSO SET ASIDE. THE QUESTIONS OF LAW ARE ANSWERED AGAINST THE REVENUE. NO COSTS. CONSEQUENTLY, CMP NO.9496 JATIA INVESTMENT CO. VS HELD AS FOLLOWS: - 6. THE MATTER CAME UP IN APPEAL BEFORE THE TRIBUNAL AND IT WAS ALSO ARGUED RULE 58 A OF THE 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE CASE SOUGHT TO BE MADE OUT IN FAVOUR OF THE ASSESSEE IS RATHER STRANGE. THE ASSESSEE MAINTAINS REGULAR BOOKS OF ACCOUNT AND MAKES CERTAIN ENTRIES. THE ASSESSEE IS NOW TRYING TO CONVINCE US THAT THE ENTRIES MADE IN THE BOOKS WERE FALSE AND NO VALUE SHOULD BE ATTACHED TO THEM. IT IS IMPOSSIBLE FOR US TO HOLD THAT WE HAVE TO DISREGARD THE ENTRIES IN HE BOOKS OF ACCOUNT MERELY BECAUSE IT SUITS THE ASSESSEE. IF THE IDEA WAS TO REDUCE THE INDEBTEDNESS OF THE COMPANIES WE DO NOT UNDERSTAND HOW IT HAS BEEN BROUGHT OUT WHEN CORRESPONDING ASSETS HAVE ALSO BEEN JETTISONED BY THOSE RATIO OF INDEBTEDNESS THE SAME AS BEFORE. WE DO COMES INTO THE PICTURE. ALSO, IF THOSE ENTRIES WERE MERELY ADJUSTMENT ENTRIES WE DO NOT UNDERSTAND WHY JOURNAL ENTRIES WERE NOT PASSED MAKING HAVALAS WHICH SHOULD HAVE BROUGHT THE SAME RESULT. THE VERY FACT THAT CASH ENTRIES ARE MADE FOR THE PURCHASE OF SHARES BY THE ASSESSEE WOULD SHOW THAT THE ASSESSEE HAD PAID CASH FOR THE PURCHASE OF THE ASSESSEE IS NOT ABLE TO SHOW HOW THE CASH WAS PROVIDED. THE CONCERNS FROM WHOM CASH ALLEGEDLY PASSED DID NOT HAVE ENOUGH CASH BALANCE TO LEND MONEY TO THE ASSESSEE. IN THESE CIRCUMSTANCES, THE INCOME -TAX LUSION THAT THE ASSESSEE BROUGHT CASH INTO THE BOOKS OF ACCOUNT FOR THE PURCHASE OF SHARES BUT THE SOURCE THEREOF TAX (APPEALS) WAS FULLY TAX OFFICER. WE, THEREFORE, DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. THE 7. A MISCELLANEOUS APPLICATION WAS FILED URGING THAT SOME ARGUMENTS ADVANCED E TRIBUNAL. THE TRIBUNAL GAVE ITS 'THE ASSESSEE'S REPRESENTATIVE, AS IS CLEAR FROM OUR LOG BOOKS, CLEARLY REFERRED TO COMPANIES ACT , THE ARGUMENT HAD TO BE IGNORED. FURTHER, THE DOCUMENT AT PAGE 7 OF THE PAPER BOOK BEING THE DIRECTION OF THE RESERVE BANK TO NON NOT CONSIDERED AS IT WAS NOT PRODUCED BEFORE THE AUTHORITIES BELOW. IT WAS ALSO NOT THE CASE OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW THAT THE ENTRIES WERE MADE IN PURSUANCE OF THE RESERVE BANK'S DIRECTION. THE LETTERS ADDRESSED BY THE THREE LIMITED COMPANIES ATTEMPTING TO EXPLAIN THAT THE ENTRIES IN THEIR BOOKS WERE ADJUSTMENT ENTRIE COMMISSIONER, AS THEY WERE CONTRARY TO FACTS. THE COMMISSIONER OF INCOME (APPEALS) ALSO TOLD THAT, HAVING REGARD TO THE CLEAR NARRATION IN THE STOCK ACCOUNT OF THE VARIOUS CONCERNS, THE ASSESSEE'S STORY T ONLY CONTRA ENTRIES WERE MADE HAD TO BE REJECTED. THE TRIBUNAL AGREED WITH THIS FINDING. IN FACT, THE NOTICE WITH WHICH THE LIMITED COMPANIES ATTEMPTED TO REDUCE THEIR BORROWINGS DOES NOT EXPLAIN THE CASH ENTRIES. WHAT THE ASSESSEE W AS REQUIRED IS TO PROVE THE SOURCE FOR THE PURCHASE OF SHARES. IN THIS ATTEMPT, THE ASSESSEE HAS FAILED. WE, THEREFORE, DO NOT FIND ANY MISTAKE IN OUR ORDER.' 8. AT THE HEARING, MR. BAJORIA, LEARNED COUNSEL APPEARING FOR THE ASSESSEE, SUMMED UP THE FACTS AT THE OUTSET. 9. THE PARTNERS OF THE ASSESSEE SEVERAL BUSINESSES AND INDUSTRIES THROUGH NUMEROUS FIRMS, CONCERNS AND COMPANIES COMMONLY KNOWN AS THE JATIA GROUP. THE THREE COMPANIES OF THE GROUP, VIZ., JATIA I NDUSTRIES PVT. LTD., PRAISE CO. PVT LTD., AND ONKAR INDUSTRIES PVT. LTD., BORROWED LARGE SUMS FROM MESSRS. GAZANAND BISSWESWARLAL AND CO. (FOR SHORT GB AND CO.), A SOLE CONCERN OF SHRI J. M. JATIA THE ASSESSEE. THE RATIO OF THE SAID RESERVES EXCEEDED THE PERMISSIBLE LIMIT UNDER THE CIRCULAR ISSUED BY THE RESERVE BANK OF INDIA IN EXERCISE OF ITS POWERS UNDER THE 193 4. ACCORDING TO THE DIRECTIONS OF THE RESERVE BANK OF INDIA, THE SAID THREE COMPANIES OF THE GROUP BEING NON DOWN THE RATIO OF THE LOAN TO SHARE CAPITAL AND FREE RESERVES TO THE CEILING LIMIT OF 25% (LATER REDUCED REQUIREMENT OF CONFORMING TO THIS PRESCRIBED CEILING LIMIT OF THE VOLUME OF LOANS, THE SAID THREE COMPANIES WERE TO LIQUIDATE THE LOANS BORROWED FROM THE SAID PROPRIETARY CONCERN OF SHRI J. M. JATIA. BUT THE REQUISITE LIQUIDITY TO DISCHARGE THE LOANS. SINCE THE LENDING PROPRIETARY CONCERN OF SHRI J. M. JATIA BELONGED TO THE SAME GROUP, AN ARRANGEMENT WAS MADE FOR REDUCTION OF THE VOLUME OF BORROWING OF THE COMPANIES TO THE REQUISITE THEREFORE, A PARTNERSHIP FIRM, I.E., THE ASSESSEE, WAS CONSTITUTED ON APRIL 20, 1975, WITH THE MEMBERS OF THE JATIA FAMILY AS ITS PARTNERS. WITHIN THREE DAYS FROM THE DATE OF CONSTITUTION OF THE FIRM, THE SAID THREE COMPANIES SHOWED SALE OF SHARES W HICH IT HAD BEEN HOLDING IN VARIOUS COMPANIES OF THE JATIA GROUP TO THE FIRM. IN EXCHANGE, AS CONSIDERATION, THE FIRM MADE A CREDIT ENTRY IN THE CASH BOOK OF AN AGGREGATE SUM OF RS. 11.20 LAKHS IN FAVOUR OF THE SAID THREE COMPANIES. THE SAID THREE COMPANIE CASH BOOKS AS REPAYMENT OF LOAN AGGREGATING IN ALL TO RS. 11.20 LAKHS. THE ASSESSEE- FIRM SHOWED THE AMOUNT OF CONSIDERATION PAYABLE TO THE THREE COMPANIES AS PAID OUT OF THE LOAN FROM THE SAID SOLE CONCERN OF SH 4 M/S. DHANKAMAL COMMONSALES BOOK BEING THE DIRECTION OF THE RESERVE BANK TO NON - FINANCIAL COMPANIES, WAS NOT CONSIDERED AS IT WAS NOT PRODUCED BEFORE THE AUTHORITIES BELOW. IT WAS ALSO THE CASE OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW THAT THE ENTRIES WERE MADE IN PURSUANCE OF THE RESERVE BANK'S DIRECTION. THE LETTERS ADDRESSED BY THE THREE LIMITED COMPANIES ATTEMPTING TO EXPLAIN THAT THE ENTRIES IN THEIR BOOKS WERE ADJUSTMENT ENTRIE S WERE NOT BELIEVED BY THE INSPECTING ASSISTANT COMMISSIONER, AS THEY WERE CONTRARY TO FACTS. THE COMMISSIONER OF INCOME (APPEALS) ALSO TOLD THAT, HAVING REGARD TO THE CLEAR NARRATION IN THE STOCK ACCOUNT OF THE VARIOUS CONCERNS, THE ASSESSEE'S STORY T HAT NO CASH PASSED BUT ONLY CONTRA ENTRIES WERE MADE HAD TO BE REJECTED. THE TRIBUNAL AGREED WITH THIS FINDING. IN FACT, THE NOTICE WITH WHICH THE LIMITED COMPANIES ATTEMPTED TO REDUCE THEIR BORROWINGS DOES NOT EXPLAIN THE CASH ENTRIES. WHAT THE ASSESSEE AS REQUIRED IS TO PROVE THE SOURCE FOR THE PURCHASE OF SHARES. IN THIS ATTEMPT, THE ASSESSEE HAS FAILED. WE, THEREFORE, DO NOT FIND ANY MISTAKE IN OUR ORDER.' 8. AT THE HEARING, MR. BAJORIA, LEARNED COUNSEL APPEARING FOR THE ASSESSEE, AT THE OUTSET. 9. THE PARTNERS OF THE ASSESSEE - FIRM ARE MEMBERS OF THE JATIA FAMILY RUNNING SEVERAL BUSINESSES AND INDUSTRIES THROUGH NUMEROUS FIRMS, CONCERNS AND COMPANIES COMMONLY KNOWN AS THE JATIA GROUP. THE THREE COMPANIES OF THE NDUSTRIES PVT. LTD., PRAISE CO. PVT LTD., AND ONKAR INDUSTRIES PVT. LTD., BORROWED LARGE SUMS FROM MESSRS. GAZANAND BISSWESWARLAL AND CO. (FOR SHORT GB AND CO.), A SOLE CONCERN OF SHRI J. M. JATIA -- ONE OF THE PARTNERS OF THE ASSESSEE. THE RATIO OF THE SAID BORROWING TO THE PAID- UP SHARE CAPITAL AND RESERVES EXCEEDED THE PERMISSIBLE LIMIT UNDER THE CIRCULAR ISSUED BY THE RESERVE BANK OF INDIA IN EXERCISE OF ITS POWERS UNDER THE RESERVE BANK OF INDIA ACT 4. ACCORDING TO THE DIRECTIONS OF THE RESERVE BANK OF INDIA, THE SAID THREE COMPANIES OF THE GROUP BEING NON - FINANCIAL COMPANIES WERE REQUIRED TO KEEP DOWN THE RATIO OF THE LOAN TO SHARE CAPITAL AND FREE RESERVES TO THE CEILING LIMIT OF 25% (LATER REDUCED TO 15%). LEARNED COUNSEL SUBMITTED THAT FOR THE REQUIREMENT OF CONFORMING TO THIS PRESCRIBED CEILING LIMIT OF THE VOLUME OF LOANS, THE SAID THREE COMPANIES WERE TO LIQUIDATE THE LOANS BORROWED FROM THE SAID PROPRIETARY CONCERN OF SHRI J. M. JATIA. BUT THE SAID COMPANIES HAD NOT THE REQUISITE LIQUIDITY TO DISCHARGE THE LOANS. SINCE THE LENDING PROPRIETARY CONCERN OF SHRI J. M. JATIA BELONGED TO THE SAME GROUP, AN ARRANGEMENT WAS MADE FOR REDUCTION OF THE VOLUME OF BORROWING OF THE COMPANIES TO THE REQUISITE THEREFORE, A PARTNERSHIP FIRM, I.E., THE ASSESSEE, WAS CONSTITUTED ON APRIL 20, 1975, WITH THE MEMBERS OF THE JATIA FAMILY AS ITS PARTNERS. WITHIN THREE DAYS FROM THE DATE OF CONSTITUTION OF THE FIRM, THE SAID THREE COMPANIES SHOWED SALE HICH IT HAD BEEN HOLDING IN VARIOUS COMPANIES OF THE JATIA GROUP TO THE FIRM. IN EXCHANGE, AS CONSIDERATION, THE FIRM MADE A CREDIT ENTRY IN THE CASH BOOK OF AN AGGREGATE SUM OF RS. 11.20 LAKHS IN FAVOUR OF THE SAID THREE COMPANIES. THE SAID THREE COMPANIE S, IN TURN, SHOWED THE CREDIT ENTRIES IN THE CASH BOOKS AS REPAYMENT OF LOAN AGGREGATING IN ALL TO RS. 11.20 LAKHS. THE FIRM SHOWED THE AMOUNT OF CONSIDERATION PAYABLE TO THE THREE COMPANIES AS PAID OUT OF THE LOAN FROM THE SAID SOLE CONCERN OF SH ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD FINANCIAL COMPANIES, WAS NOT CONSIDERED AS IT WAS NOT PRODUCED BEFORE THE AUTHORITIES BELOW. IT WAS ALSO THE CASE OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW THAT THE ENTRIES WERE MADE IN PURSUANCE OF THE RESERVE BANK'S DIRECTION. THE LETTERS ADDRESSED BY THE THREE LIMITED COMPANIES ATTEMPTING TO EXPLAIN THAT THE ENTRIES IN THEIR BOOKS S WERE NOT BELIEVED BY THE INSPECTING ASSISTANT COMMISSIONER, AS THEY WERE CONTRARY TO FACTS. THE COMMISSIONER OF INCOME -TAX (APPEALS) ALSO TOLD THAT, HAVING REGARD TO THE CLEAR NARRATION IN THE STOCK HAT NO CASH PASSED BUT ONLY CONTRA ENTRIES WERE MADE HAD TO BE REJECTED. THE TRIBUNAL AGREED WITH THIS FINDING. IN FACT, THE NOTICE WITH WHICH THE LIMITED COMPANIES ATTEMPTED TO REDUCE THEIR BORROWINGS DOES NOT EXPLAIN THE CASH ENTRIES. WHAT THE ASSESSEE AS REQUIRED IS TO PROVE THE SOURCE FOR THE PURCHASE OF SHARES. IN THIS ATTEMPT, THE ASSESSEE HAS FAILED. WE, THEREFORE, DO NOT FIND ANY MISTAKE IN OUR ORDER.' 8. AT THE HEARING, MR. BAJORIA, LEARNED COUNSEL APPEARING FOR THE ASSESSEE, FIRM ARE MEMBERS OF THE JATIA FAMILY RUNNING SEVERAL BUSINESSES AND INDUSTRIES THROUGH NUMEROUS FIRMS, CONCERNS AND COMPANIES COMMONLY KNOWN AS THE JATIA GROUP. THE THREE COMPANIES OF THE NDUSTRIES PVT. LTD., PRAISE CO. PVT LTD., AND ONKAR INDUSTRIES PVT. LTD., BORROWED LARGE SUMS FROM MESSRS. GAZANAND BISSWESWARLAL AND CO. ONE OF THE PARTNERS OF UP SHARE CAPITAL AND RESERVES EXCEEDED THE PERMISSIBLE LIMIT UNDER THE CIRCULAR ISSUED BY THE RESERVE RESERVE BANK OF INDIA ACT , 4. ACCORDING TO THE DIRECTIONS OF THE RESERVE BANK OF INDIA, THE SAID THREE FINANCIAL COMPANIES WERE REQUIRED TO KEEP DOWN THE RATIO OF THE LOAN TO SHARE CAPITAL AND FREE RESERVES TO THE CEILING LIMIT TO 15%). LEARNED COUNSEL SUBMITTED THAT FOR THE REQUIREMENT OF CONFORMING TO THIS PRESCRIBED CEILING LIMIT OF THE VOLUME OF LOANS, THE SAID THREE COMPANIES WERE TO LIQUIDATE THE LOANS BORROWED FROM THE SAID COMPANIES HAD NOT THE REQUISITE LIQUIDITY TO DISCHARGE THE LOANS. SINCE THE LENDING PROPRIETARY CONCERN OF SHRI J. M. JATIA BELONGED TO THE SAME GROUP, AN ARRANGEMENT WAS MADE FOR REDUCTION OF THE VOLUME OF BORROWING OF THE COMPANIES TO THE REQUISITE LIMIT. THEREFORE, A PARTNERSHIP FIRM, I.E., THE ASSESSEE, WAS CONSTITUTED ON APRIL 20, 1975, WITH THE MEMBERS OF THE JATIA FAMILY AS ITS PARTNERS. WITHIN THREE DAYS FROM THE DATE OF CONSTITUTION OF THE FIRM, THE SAID THREE COMPANIES SHOWED SALE HICH IT HAD BEEN HOLDING IN VARIOUS COMPANIES OF THE JATIA GROUP TO THE FIRM. IN EXCHANGE, AS CONSIDERATION, THE FIRM MADE A CREDIT ENTRY IN THE CASH BOOK OF AN AGGREGATE SUM OF RS. 11.20 LAKHS IN FAVOUR OF THE SAID THREE S, IN TURN, SHOWED THE CREDIT ENTRIES IN THE CASH BOOKS AS REPAYMENT OF LOAN AGGREGATING IN ALL TO RS. 11.20 LAKHS. THE FIRM SHOWED THE AMOUNT OF CONSIDERATION PAYABLE TO THE THREE COMPANIES AS PAID OUT OF THE LOAN FROM THE SAID SOLE CONCERN OF SH RI ). M. JATIA, VIZ., GB AND CO., BY MAKING A DEBIT ENTRY IN THE CASH BOOK WITHOUT, HOWEVER, RECEIVING ANY CASH. NECESSARY ENTRIES RELATING TO THE TRANSACTIONS WERE PASSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, GB AND CO., AND THE THREE COMPANIES THROUGH THEIR RESPECTIVE CASH BOOKS. THUS, THE CASH BOOK SHOWED THAT THERE WAS MERELY A CIRCULATION OF CASH ENDING AT THE POINT IT BEGAN, THE CUMULATIVE EFFECT BEING THAT THE ASSESSEE BECAME A DEBTOR TO GB AND CO. IN PLACE OF THE SAID THREE COMPANIES OF THE GROUP 10. THIS IS THE CRUX OF THE WHOLE MATTER. THE INCOME TRANSACTIONS WERE RECORDED IN THE CASH BOOK THROUGH A CIRCUIT, BUT AT NO POINT IN THE CIRCUIT THERE WAS CASH. IN THE WORDS OF THE INCOME FOUND BY HIM THAT WARRANTED THE ADDITION OF THIS AMOUNT OF RS. 11.20 LAKHS IN THE HANDS OF THE ASSESSEE IS AS UNDER : 'IN VIEW OF THE TRANSACTIONS RECORDED ABOVE, IT IS APPARENT THAT THE MONEY FLOWING AMONGST THE PARTIES INCLUDING THE ASSESSEE BELONGING TO MESSRS. GB AND CO. THE SAME CANNOT BE SAID TO HAVE BELONGED TO MESSRS. JATIA INDUSTRIES PVT. LTD., MESSRS. ONKAR INDUSTRIES PVT. LTD., AND MESSRS. PRAISE CO. P. LTD., AS THEY DID NOT HAVE THEIR OWN CASH BALANCE FOR ADVANCING MONEY T O MESSRS. GB AND CO.' 11. WHAT THE OFFICER DRIVES AT IS THAT EACH OF THE PARTIES MADE ENTRIES IN THE CASH BOOK IN SPITE OF THEIR NOT HAVING ANY CASH TO PASS ON. 12. THEREFORE, THE ADVANCE OF LOAN IN CASH BY GB AND CO. TO THE ASSESSEE REFLECTED I N THE ENTRY IN THE CASH BOOK OF THE ASSESSEE CREDIT, WHICH ATTRACTS THE PROVISIONS OF 13. ACCORDING TO SHRI BAJORIA THOUGH THE ENTRIES WERE MADE IN THE CASH BOOK IN THE CASE, THERE WAS NO PASSAGE OF CASH AT ANY STAGE. THE WHOLE THING WAS ARRANGED BY THE ENTRIES TO SHOW THAT GB AND CO. NOTIONALLY ADVANCED CASH TO THE ASSESSE HAVING CASH TO PASS ON. THE ASSESSEE SHARES TO THE SAID THREE COMPANIES THE SAME NONEXISTENT CASH AS THE AGGREGATE PURCHASE VALUE OF THE SHARES HELD BY THE SAID COMPANIES IN THE OTHER COMPANIES OF THE GROUP WITHOUT, HOWEVER, ANY PASSAGE OF CASH AND THE SAID COMPANIES IN THEIR TURN PASSING ON THE SAID NON 14. SHRI BAJORIA EMPHASISED THAT, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE INCOME- TAX OFFICER EXAMINED THE TRA ENTRIES NOT INVOLVING AT ANY STAGE ANY CASH. HE POINTED OUT THAT THE ENTIRE TRANSACTIONS WERE EFFECTED BETWEEN THE ASSESSEE BELONGING TO THE JATIA GROUP ONLY FOR THE REQUIREMENT OF COMPLYING WIT DIRECTIONS OF THE RESERVE BANK OF INDIA THAT CAST ON THE COMPANIES A STATUTORY OBLIGATION TO REDUCE THEIR BORROWING TO MAINTAIN PARITY WITH THE LOAN AND CAPITAL RATIO AS PRESCRIBED. THE ASSESSEE THREE COMPANIES AS UNDERTAKING THE LIABILITY. 5 M/S. DHANKAMAL COMMONSALES VIZ., GB AND CO., BY MAKING A DEBIT ENTRY IN THE CASH BOOK WITHOUT, HOWEVER, RECEIVING ANY CASH. NECESSARY ENTRIES RELATING TO THE TRANSACTIONS WERE PASSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, GB AND CO., AND THE THREE COMPANIES THEIR RESPECTIVE CASH BOOKS. THUS, THE CASH BOOK SHOWED THAT THERE WAS MERELY A CIRCULATION OF CASH ENDING AT THE POINT IT BEGAN, THE CUMULATIVE EFFECT BEING THAT THE ASSESSEE BECAME A DEBTOR TO GB AND CO. IN PLACE OF THE SAID THREE COMPANIES OF THE GROUP . 10. THIS IS THE CRUX OF THE WHOLE MATTER. THE INCOME - TAX OFFICER'S CASE IS THAT THE TRANSACTIONS WERE RECORDED IN THE CASH BOOK THROUGH A CIRCUIT, BUT AT NO POINT IN THE CIRCUIT THERE WAS CASH. IN THE WORDS OF THE INCOME - TAX OFFICER, THE POSITION BY HIM THAT WARRANTED THE ADDITION OF THIS AMOUNT OF RS. 11.20 LAKHS IN THE HANDS OF THE ASSESSEE IS AS UNDER : 'IN VIEW OF THE TRANSACTIONS RECORDED ABOVE, IT IS APPARENT THAT THE MONEY FLOWING AMONGST THE PARTIES INCLUDING THE ASSESSEE - FIRM CANNOT BE EX BELONGING TO MESSRS. GB AND CO. THE SAME CANNOT BE SAID TO HAVE BELONGED TO MESSRS. JATIA INDUSTRIES PVT. LTD., MESSRS. ONKAR INDUSTRIES PVT. LTD., AND MESSRS. PRAISE CO. P. LTD., AS THEY DID NOT HAVE THEIR OWN CASH BALANCE FOR ADVANCING O MESSRS. GB AND CO.' 11. WHAT THE OFFICER DRIVES AT IS THAT EACH OF THE PARTIES MADE ENTRIES IN THE CASH BOOK IN SPITE OF THEIR NOT HAVING ANY CASH TO PASS ON. 12. THEREFORE, THE ADVANCE OF LOAN IN CASH BY GB AND CO. TO THE ASSESSEE N THE ENTRY IN THE CASH BOOK OF THE ASSESSEE - FIRM, IS UNEXPLAINED CASH CREDIT, WHICH ATTRACTS THE PROVISIONS OF SECTION 68 OF THE INCOME- TAX ACT, 1961. 13. ACCORDING TO SHRI BAJORIA , THE WHOLE MATTER BOILS DOWN TO THE FACT THAT THOUGH THE ENTRIES WERE MADE IN THE CASH BOOK IN THE CASE, THERE WAS NO PASSAGE OF CASH AT ANY STAGE. THE WHOLE THING WAS ARRANGED BY THE ENTRIES TO SHOW THAT GB AND CO. NOTIONALLY ADVANCED CASH TO THE ASSESSE E- FIRM THOUGH NOT HAVING CASH TO PASS ON. THE ASSESSEE - FIRM, IN TURN, PAID AS CONSIDERATION FOR THE SHARES TO THE SAID THREE COMPANIES THE SAME NONEXISTENT CASH AS THE AGGREGATE PURCHASE VALUE OF THE SHARES HELD BY THE SAID COMPANIES IN THE OTHER COMPANIES OF THE GROUP WITHOUT, HOWEVER, ANY PASSAGE OF CASH AND THE SAID COMPANIES IN THEIR TURN PASSING ON THE SAID NON -EXISTENT CASH TO GB AND CO. 14. SHRI BAJORIA EMPHASISED THAT, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE TAX OFFICER EXAMINED THE TRA NSACTIONS AND FOUND THAT THESE ARE ONLY ENTRIES NOT INVOLVING AT ANY STAGE ANY CASH. HE POINTED OUT THAT THE ENTIRE TRANSACTIONS WERE EFFECTED BETWEEN THE ASSESSEE - FIRM AND THE CONCERNS BELONGING TO THE JATIA GROUP ONLY FOR THE REQUIREMENT OF COMPLYING WIT DIRECTIONS OF THE RESERVE BANK OF INDIA THAT CAST ON THE COMPANIES A STATUTORY OBLIGATION TO REDUCE THEIR BORROWING TO MAINTAIN PARITY WITH THE LOAN AND CAPITAL RATIO AS PRESCRIBED. THE ASSESSEE - COMPANY MERELY SUBSTITUTED THE SAID THREE COMPANIES AS DEBTORS TO GB AND CO. AND RECEIVED THE SHARES FOR UNDERTAKING THE LIABILITY. ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD VIZ., GB AND CO., BY MAKING A DEBIT ENTRY IN THE CASH BOOK WITHOUT, HOWEVER, RECEIVING ANY CASH. NECESSARY ENTRIES RELATING TO THE TRANSACTIONS WERE PASSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, GB AND CO., AND THE THREE COMPANIES THEIR RESPECTIVE CASH BOOKS. THUS, THE CASH BOOK SHOWED THAT THERE WAS MERELY A CIRCULATION OF CASH ENDING AT THE POINT IT BEGAN, THE CUMULATIVE EFFECT BEING THAT THE ASSESSEE BECAME A DEBTOR TO GB AND CO. IN PLACE OF THE SAID THREE TAX OFFICER'S CASE IS THAT THE TRANSACTIONS WERE RECORDED IN THE CASH BOOK THROUGH A CIRCUIT, BUT AT NO POINT TAX OFFICER, THE POSITION BY HIM THAT WARRANTED THE ADDITION OF THIS AMOUNT OF RS. 11.20 LAKHS IN 'IN VIEW OF THE TRANSACTIONS RECORDED ABOVE, IT IS APPARENT THAT THE MONEY FIRM CANNOT BE EX PLAINED AS BELONGING TO MESSRS. GB AND CO. THE SAME CANNOT BE SAID TO HAVE BELONGED TO MESSRS. JATIA INDUSTRIES PVT. LTD., MESSRS. ONKAR INDUSTRIES PVT. LTD., AND MESSRS. PRAISE CO. P. LTD., AS THEY DID NOT HAVE THEIR OWN CASH BALANCE FOR ADVANCING 11. WHAT THE OFFICER DRIVES AT IS THAT EACH OF THE PARTIES MADE ENTRIES IN THE 12. THEREFORE, THE ADVANCE OF LOAN IN CASH BY GB AND CO. TO THE ASSESSEE -FIRM, AS FIRM, IS UNEXPLAINED CASH TAX ACT, 1961. , THE WHOLE MATTER BOILS DOWN TO THE FACT THAT THOUGH THE ENTRIES WERE MADE IN THE CASH BOOK IN THE CASE, THERE WAS NO PASSAGE OF CASH AT ANY STAGE. THE WHOLE THING WAS ARRANGED BY THE ENTRIES TO FIRM THOUGH NOT FIRM, IN TURN, PAID AS CONSIDERATION FOR THE SHARES TO THE SAID THREE COMPANIES THE SAME NONEXISTENT CASH AS THE AGGREGATE PURCHASE VALUE OF THE SHARES HELD BY THE SAID COMPANIES IN THE OTHER COMPANIES OF THE GROUP WITHOUT, HOWEVER, ANY PASSAGE OF CASH AND THE SAID COMPANIES IN 14. SHRI BAJORIA EMPHASISED THAT, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE NSACTIONS AND FOUND THAT THESE ARE ONLY ENTRIES NOT INVOLVING AT ANY STAGE ANY CASH. HE POINTED OUT THAT THE ENTIRE FIRM AND THE CONCERNS BELONGING TO THE JATIA GROUP ONLY FOR THE REQUIREMENT OF COMPLYING WIT H THE DIRECTIONS OF THE RESERVE BANK OF INDIA THAT CAST ON THE COMPANIES A STATUTORY OBLIGATION TO REDUCE THEIR BORROWING TO MAINTAIN PARITY WITH THE LOAN AND COMPANY MERELY SUBSTITUTED THE SAID DEBTORS TO GB AND CO. AND RECEIVED THE SHARES FOR 15. CONFRONTED WITH THE QUESTION WHY THE REDUCTION OF LOAN COULD NOT BE ACHIEVED BY STRAIGHTAWAY TRANSFER OF THE SHARES IN QUESTION BY THE SAID THREE COMPANIES TO GB AND CO. IN D SHRI BAJORIA EXPLAINED THAT SUCH A COURSE WAS NOT ACCEPTABLE TO ALL THE MEMBERS OF THE FAMILY AS THE LENDER, GB AND CO., IS THE SOLE CONCERN OF SHRI J.M. JATIA. TO AVOID THE JEOPARDY OF THE OTHER MEMBERS O ARRANGEMENT HAD TO BE MADE, AND THE ASSESSEE DEVICE TO PROTECT THE INTEREST OF ALL MEMBERS OF THE GROUP. IN ANY CASE, IT. WAS URGED THAT THE TRANSACTIONS AS ALSO THE CREATION OF THE ASSESSEE DEV ICES TO AVOID THE MISCHIEF OF THE CEILING IMPOSED BY THE RESERVE BANK OF INDIA ON THE AFORESAID THREE NON THE SHOES OF THE SAID THREE COMPANIES. THE COMPANIES CEASED TO BE DEBTORS AND, TO THAT EXTENT, THE MAGNITUDE OF ITS LOAN FELL WITHIN THE PRESCRIBED RATIO. 16. IT IS FINALLY EMPHASISED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ULTIMATE RESULT IS THAT THE FIRM BECOMES A DEBTOR TO GB AND CO. AND THE THREE NON FINANCIAL COMPANIES OF THE GROUP GOT DISCH EMPHASISED THAT, AT THE WORST, IT CAN BE SAID THAT THE ASSESSEE VALUABLE ASSETS BEING THE SAID SHARES OF THE EQUIVALENT VALUE OF THE DEBT TAKEN OVER BY IT FROM THE COMPANIES, I.E., RS. 11.20 LAKHS. 17. THEREFO RE, THE QUESTION OF CASH CREDIT DOES NOT COME IN, THERE BEING NO ACTUAL PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTIONS ARE MERE BOOK ENTRIES. IT WAS CONTENDED THAT THE FACT THAT THE ENTRIES PASSED THROUGH THE CASH BOOK COULD NOT DETRACT FROM WAS ALSO URGED THAT THE ENTRIES WERE PASSED THROUGH THE CASH BOOK SO THAT THE REPAYMENT OF LOANS BY THE SAID THREE COMPANIES COULD BE ESTABLISHED BEFORE THE RESERVE BANK OF INDIA. BUT, ACCORDING TO SHRI BAJ AMOUNTS TO AN ARTIFICE EMPLOYED TO DECEIVE ANY AUTHORITIES, BECAUSE THE TRANSACTIONS SHOWING THE AMOUNT AS RECEIVED IN CASH AND PAID AWAY SPONTANEOUSLY AND SIMULTANEOUSLY WERE NOT ACTUAL BUT ONLY NOTIONAL. HE, HOWEVER, STAT ED THAT, AS FAR AS THE QUESTION OF NATURE OF THE TRANSACTIONS AND THE ENTRIES CLEARLY SHOW THAT NO CASH, IN FACT, FLOWED. IT WAS FURTHER STRESSED THAT THE TRANSACTIONS ARE ABO OUTSIDER IS INVOLVED. THE ENTRIES WERE MADE IN THE BOOKS OF THE CONCERNS OF THE SAME GROUP. THE SHARES IN QUESTION WERE ALSO OF THE COMPANIES OF THE GROUP. THERE WAS NO ATTEMPT AT HIDING THE TRANSACTIONS. NOR IS IT THE CASE OF ANY OF THE PARTI ES TO THE TRANSACTION THAT THERE WAS ANY PASSING OF CASH. EVERY PARTY UNEQUIVOCALLY STATED THAT THE TRANSACTIONS WERE CARRIED INTO EFFECT MERELY BY WAY OF ADJUSTMENTS OF THE SAID LOANS AND THE SHARE TRANSFERS. 18. SHRI A.C. MOITRA, THE LEARNED ADVOCATE FO GROUNDS ON WHICH THE TRIBUNAL HAS AFFIRMED THE ADDITION OF THE AMOUNT OF RS. 11.20 LAKHS AS UNEXPLAINED CASH CREDIT. HE PARTICULARLY EMPHASISED THAT THE ASSESSEE'S CONTENTION THAT THE ENTRIES ARE ONLY ADJUSTMENT ENTRIES IS NOT ACCEPTABLE, BECAUSE THE ADJUSTMENT ENTRIES ARE NOT MADE THROUGH THE CASH BOOK. IT IS AN ACCEPTED PRINCIPLE OF ACCOUNTING THAT BOOK ADJUSTMENTS AND THE 6 M/S. DHANKAMAL COMMONSALES 15. CONFRONTED WITH THE QUESTION WHY THE REDUCTION OF LOAN COULD NOT BE ACHIEVED BY STRAIGHTAWAY TRANSFER OF THE SHARES IN QUESTION BY THE SAID THREE COMPANIES TO GB AND CO. IN D ISCHARGE OF THE LOANS, WITHOUT CREATING A CIRCUIT, SHRI BAJORIA EXPLAINED THAT SUCH A COURSE WAS NOT ACCEPTABLE TO ALL THE MEMBERS OF THE FAMILY AS THE LENDER, GB AND CO., IS THE SOLE CONCERN OF SHRI J.M. JATIA. TO AVOID THE JEOPARDY OF THE OTHER MEMBERS O F THE JATIA FAMILY THIS ARRANGEMENT HAD TO BE MADE, AND THE ASSESSEE - FIRM HAD TO BE CREATED AS A DEVICE TO PROTECT THE INTEREST OF ALL MEMBERS OF THE GROUP. IN ANY CASE, IT. WAS URGED THAT THE TRANSACTIONS AS ALSO THE CREATION OF THE ASSESSEE ICES TO AVOID THE MISCHIEF OF THE CEILING IMPOSED BY THE RESERVE BANK OF INDIA ON THE AFORESAID THREE NON -FINANCIAL COMPANIES. THE ASSESSEE- FIRM STEPPED INTO THE SHOES OF THE SAID THREE COMPANIES. THE COMPANIES CEASED TO BE DEBTORS AND, MAGNITUDE OF ITS LOAN FELL WITHIN THE PRESCRIBED RATIO. 16. IT IS FINALLY EMPHASISED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ULTIMATE RESULT IS THAT THE FIRM BECOMES A DEBTOR TO GB AND CO. AND THE THREE NON FINANCIAL COMPANIES OF THE GROUP GOT DISCH ARGED. LEARNED COUNSEL ALSO EMPHASISED THAT, AT THE WORST, IT CAN BE SAID THAT THE ASSESSEE - FIRM HAS RECEIVED VALUABLE ASSETS BEING THE SAID SHARES OF THE EQUIVALENT VALUE OF THE DEBT TAKEN OVER BY IT FROM THE COMPANIES, I.E., RS. 11.20 LAKHS. RE, THE QUESTION OF CASH CREDIT DOES NOT COME IN, THERE BEING NO ACTUAL PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTIONS ARE MERE BOOK ENTRIES. IT WAS CONTENDED THAT THE FACT THAT THE ENTRIES PASSED THROUGH THE CASH BOOK COULD NOT DETRACT FROM OR EFFACE THE ESSENTIAL NATURE OF THE ENTRIES. IT WAS ALSO URGED THAT THE ENTRIES WERE PASSED THROUGH THE CASH BOOK SO THAT THE REPAYMENT OF LOANS BY THE SAID THREE COMPANIES COULD BE ESTABLISHED BEFORE THE RESERVE BANK OF INDIA. BUT, ACCORDING TO SHRI BAJ ORIA, THAT DOES NOT MEAN THAT IT AMOUNTS TO AN ARTIFICE EMPLOYED TO DECEIVE ANY AUTHORITIES, BECAUSE THE TRANSACTIONS SHOWING THE AMOUNT AS RECEIVED IN CASH AND PAID AWAY SPONTANEOUSLY AND SIMULTANEOUSLY WERE NOT ACTUAL BUT ONLY NOTIONAL. HE, ED THAT, 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, FLOWED. IT WAS FURTHER STRESSED THAT THE TRANSACTIONS ARE ABO OUTSIDER IS INVOLVED. THE ENTRIES WERE MADE IN THE BOOKS OF THE CONCERNS OF THE SAME GROUP. THE SHARES IN QUESTION WERE ALSO OF THE COMPANIES OF THE GROUP. THERE WAS NO ATTEMPT AT HIDING THE TRANSACTIONS. NOR IS IT THE CASE OF ANY OF THE ES TO THE TRANSACTION THAT THERE WAS ANY PASSING OF CASH. EVERY PARTY UNEQUIVOCALLY STATED THAT THE TRANSACTIONS WERE CARRIED INTO EFFECT MERELY BY WAY OF ADJUSTMENTS OF THE SAID LOANS AND THE SHARE TRANSFERS. 18. SHRI A.C. MOITRA, THE LEARNED ADVOCATE FO R THE REVENUE, REITERATED THE GROUNDS ON WHICH THE TRIBUNAL HAS AFFIRMED THE ADDITION OF THE AMOUNT OF RS. 11.20 LAKHS AS UNEXPLAINED CASH CREDIT. HE PARTICULARLY EMPHASISED THAT THE ASSESSEE'S CONTENTION THAT THE ENTRIES ARE ONLY ADJUSTMENT ENTRIES IS NOT ACCEPTABLE, BECAUSE THE ADJUSTMENT ENTRIES ARE NOT MADE THROUGH THE CASH BOOK. IT IS AN ACCEPTED PRINCIPLE OF ACCOUNTING THAT BOOK ADJUSTMENTS AND THE ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD 15. CONFRONTED WITH THE QUESTION WHY THE REDUCTION OF LOAN COULD NOT BE ACHIEVED BY STRAIGHTAWAY TRANSFER OF THE SHARES IN QUESTION BY THE SAID THREE ISCHARGE OF THE LOANS, WITHOUT CREATING A CIRCUIT, SHRI BAJORIA EXPLAINED THAT SUCH A COURSE WAS NOT ACCEPTABLE TO ALL THE MEMBERS OF THE FAMILY AS THE LENDER, GB AND CO., IS THE SOLE CONCERN OF SHRI J.M. F THE JATIA FAMILY THIS FIRM HAD TO BE CREATED AS A DEVICE TO PROTECT THE INTEREST OF ALL MEMBERS OF THE GROUP. IN ANY CASE, IT. WAS URGED THAT THE TRANSACTIONS AS ALSO THE CREATION OF THE ASSESSEE -FIRM WERE ICES TO AVOID THE MISCHIEF OF THE CEILING IMPOSED BY THE RESERVE BANK OF INDIA FIRM STEPPED INTO THE SHOES OF THE SAID THREE COMPANIES. THE COMPANIES CEASED TO BE DEBTORS AND, MAGNITUDE OF ITS LOAN FELL WITHIN THE PRESCRIBED RATIO. 16. IT IS FINALLY EMPHASISED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ULTIMATE RESULT IS THAT THE FIRM BECOMES A DEBTOR TO GB AND CO. AND THE THREE NON - ARGED. LEARNED COUNSEL ALSO FIRM HAS RECEIVED VALUABLE ASSETS BEING THE SAID SHARES OF THE EQUIVALENT VALUE OF THE DEBT TAKEN RE, THE QUESTION OF CASH CREDIT DOES NOT COME IN, THERE BEING NO ACTUAL PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTIONS ARE MERE BOOK ENTRIES. IT WAS CONTENDED THAT THE FACT THAT THE ENTRIES PASSED THROUGH THE OR EFFACE THE ESSENTIAL NATURE OF THE ENTRIES. IT WAS ALSO URGED THAT THE ENTRIES WERE PASSED THROUGH THE CASH BOOK SO THAT THE REPAYMENT OF LOANS BY THE SAID THREE COMPANIES COULD BE ESTABLISHED BEFORE THE ORIA, THAT DOES NOT MEAN THAT IT AMOUNTS TO AN ARTIFICE EMPLOYED TO DECEIVE ANY AUTHORITIES, BECAUSE THE TRANSACTIONS SHOWING THE AMOUNT AS RECEIVED IN CASH AND PAID AWAY SPONTANEOUSLY AND SIMULTANEOUSLY WERE NOT ACTUAL BUT ONLY NOTIONAL. HE, IS CONCERNED, THE NATURE OF THE TRANSACTIONS AND THE ENTRIES CLEARLY SHOW THAT NO CASH, IN FACT, FLOWED. IT WAS FURTHER STRESSED THAT THE TRANSACTIONS ARE ABO VE BOARD. NO OUTSIDER IS INVOLVED. THE ENTRIES WERE MADE IN THE BOOKS OF THE CONCERNS OF THE SAME GROUP. THE SHARES IN QUESTION WERE ALSO OF THE COMPANIES OF THE GROUP. THERE WAS NO ATTEMPT AT HIDING THE TRANSACTIONS. NOR IS IT THE CASE OF ANY OF THE ES TO THE TRANSACTION THAT THERE WAS ANY PASSING OF CASH. EVERY PARTY UNEQUIVOCALLY STATED THAT THE TRANSACTIONS WERE CARRIED INTO EFFECT MERELY BY R THE REVENUE, REITERATED THE GROUNDS ON WHICH THE TRIBUNAL HAS AFFIRMED THE ADDITION OF THE AMOUNT OF RS. 11.20 LAKHS AS UNEXPLAINED CASH CREDIT. HE PARTICULARLY EMPHASISED THAT THE ASSESSEE'S CONTENTION THAT THE ENTRIES ARE ONLY ADJUSTMENT ENTRIES IS NOT ACCEPTABLE, BECAUSE THE ADJUSTMENT ENTRIES ARE NOT MADE THROUGH THE CASH BOOK. IT IS AN ACCEPTED PRINCIPLE OF ACCOUNTING THAT BOOK ADJUSTMENTS AND THE ENTRIES IN EFFECTING THEM ARE MADE BY JOURNAL ENTRIES AND NOT CASH ENTRIES. HE URGED THAT THE PURPORTED THE THREE LIMITED COMPANIES DOES NOT EXPLAIN THE WHOLE MATTER, BECAUSE THE ENTRIES ARE CASH ENTRIES. THE FACT REMAINS THAT, AT EVERY STAGE, THE PARTIES SHOWED THE PAYMENTS AND RECEIPTS OF CASH EVEN WHEN AVAILABLE FOR SUCH ENTRIES. THIS QUITE JUSTIFIES THE ADDITION AS SUSTAINED BY THE TRIBUNAL. 19. WE HAVE PERUSED THE ASSESSMENT ORDER CAREFULLY. WE FIND THAT CASH DID NOT PASS AT ANY STAGE THOUGH ENTRIES WERE MADE IN THE CASH BOOK SHOWIN PAYMENTS AND RECEIPTS ; BUT SINCE THE ENTRIES MADE A COMPLETE ROUND, NO PASSING OF CASH WAS NECESSARY FOR THE PURPOSE OF MAKING THE ENTRIES. THAT THERE WAS NO PASSING OF CASH IS ALSO ADMITTED BY THE INCOME HAVE ALREADY EXTRACTED T 14 OF HIS ASSESSMENT ORDER. THE INCOME THE RESPECTIVE PARTIES DID NOT RECEIVE CASH NOR DID PAY CASH AS NONE HAD ANY CASH FOR THE PURPOSE. THE ONLY POINT IN THE AS NOT INVOLVING THE PASSING OF CASH SHOULD NOT HAVE FOUND A PLACE IN THE CASH BOOK, BUT IN THE LEDGER ACCOUNT THROUGH JOURNAL ENTRIES. THERE IS ANOTHER SELF CONTRADICTION IN THE INCOME ENTRY ON THE CREDIT SIDE OF THE CASH BOOK, BUT MERELY A NOTIONAL OR FICTITIOUS CASH ENTRY, AS ADMITTED BY HIM, THERE IS NO REAL CREDIT OF CASH TO ITS CASH BOOK ; THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDI CANNOT ARISE. 20. ONE OF THE GROUNDS OF THE TRIBUNAL FOR DISBELIEVING THE ASSESSEE'S CASE IS THAT THE ADJUSTMENT ENTRIES WERE MADE BY NOTIONAL CASH ENTRIES WITH A VIEW TO BRINGING DOWN THE DEBT THE DEBT THE SAID COMPANIES ALSO JETTISONED THEIR ASSETS, I.E., THE SHARES HELD BY THEM OF EQUIVALENT SUM WITHOUT ACHIEVING THE AVOWED PURPOSE. HERE THE TRIBUNAL CERTAINLY MISDIRECTED ITSELF. THE RATIO TO BE REDUCED IS OF THE LOAN IN RELATION TO THE SHARE CAP DESIRED EFFECT OF REDUCING THE BORROWED CAPITAL. 21. AGAIN, AS REGARDS THE TRIBUNAL'S REFUSAL TO TAKE NOTICE OF THE DIRECTIONS OF THE RESERVE BANK, IT IS NOT CORRECT FOR THE TRIBUNAL TO HOLD THAT THE S DOCUMENT WAS A NEW EVIDENCE IN THE TRUE SENSE OF THE TERM. THE ASSESSEE HAS BEEN CONSISTENTLY PLEADING BEFORE THE LOWER AUTHORITIES THAT THE ENTRIES HAD TO BE MADE IN ORDER TO BRING THE COMPANIES IN CONFORMITY WITH THE SAID DIRECTION. MOREOVER, THE DIR ECTION OF THE RESERVE BANK IS A PUBLIC DOCUMENT WITHIN THE MEANING OF SECTION 74 AND PUBLIC AUTHORITY ARE GENERALLY ADMISSIBLE IN EVIDENCE SUBJECT T PROVING THEM AS LAID DOWN IN 22. IN OUR VIEW, THE EFFECT AND IMPORT OF THE TRANSACTIONS IS THAT TH TOOK OVER THE LIABILITY OF THE AFORESAID NON EXCHANGE FOR THE SHARES AS AFORESAID. 7 M/S. DHANKAMAL COMMONSALES ENTRIES IN EFFECTING THEM ARE MADE BY JOURNAL ENTRIES AND NOT CASH ENTRIES. HE URGED THAT THE PURPORTED MOTIVE OF THE ENTRIES BEING THE REDUCTION OF LOANS OF THE THREE LIMITED COMPANIES DOES NOT EXPLAIN THE WHOLE MATTER, BECAUSE THE ENTRIES ARE CASH ENTRIES. THE FACT REMAINS THAT, AT EVERY STAGE, THE PARTIES SHOWED THE PAYMENTS AND RECEIPTS OF CASH EVEN WHEN THERE WAS NO CASH AVAILABLE FOR SUCH ENTRIES. THIS QUITE JUSTIFIES THE ADDITION AS SUSTAINED BY THE 19. WE HAVE PERUSED THE ASSESSMENT ORDER CAREFULLY. WE FIND THAT CASH DID NOT PASS AT ANY STAGE THOUGH ENTRIES WERE MADE IN THE CASH BOOK SHOWIN PAYMENTS AND RECEIPTS ; BUT SINCE THE ENTRIES MADE A COMPLETE ROUND, NO PASSING OF CASH WAS NECESSARY FOR THE PURPOSE OF MAKING THE ENTRIES. THAT THERE WAS NO PASSING OF CASH IS ALSO ADMITTED BY THE INCOME - TAX OFFICER HIMSELF. WE HAVE ALREADY EXTRACTED T HE OBSERVATION OF THE INCOME- TAX OFFICER IN PARAGRAPH 14 OF HIS ASSESSMENT ORDER. THE INCOME - TAX OFFICER HAS CLEARLY OPINED THAT ALL THE RESPECTIVE PARTIES DID NOT RECEIVE CASH NOR DID PAY CASH AS NONE HAD ANY CASH FOR THE PURPOSE. THE ONLY POINT IN THE AS SESSMENT ORDER IS THAT THE ENTRIES NOT INVOLVING THE PASSING OF CASH SHOULD NOT HAVE FOUND A PLACE IN THE CASH BOOK, BUT IN THE LEDGER ACCOUNT THROUGH JOURNAL ENTRIES. THERE IS ANOTHER SELF CONTRADICTION IN THE INCOME -TAX OFFICER'S FINDING THAT, IF THERE W AS NO REAL CASH ENTRY ON THE CREDIT SIDE OF THE CASH BOOK, BUT MERELY A NOTIONAL OR FICTITIOUS CASH ENTRY, AS ADMITTED BY HIM, THERE IS NO REAL CREDIT OF CASH TO ITS CASH BOOK ; THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDI 20. ONE OF THE GROUNDS OF THE TRIBUNAL FOR DISBELIEVING THE ASSESSEE'S CASE IS THAT THE ADJUSTMENT ENTRIES WERE MADE BY NOTIONAL CASH ENTRIES WITH A VIEW TO BRINGING DOWN THE DEBT -AND- CAPITAL RATIO, I.E., THAT WHILE BEING DISCHARGED OF DEBT THE SAID COMPANIES ALSO JETTISONED THEIR ASSETS, I.E., THE SHARES HELD BY THEM OF EQUIVALENT SUM WITHOUT ACHIEVING THE AVOWED PURPOSE. HERE THE TRIBUNAL CERTAINLY MISDIRECTED ITSELF. THE RATIO TO BE REDUCED IS OF THE LOAN IN RELATION TO THE SHARE CAP ITAL AND THE RESERVES. JETTISONING THE SHARES HAD THE DESIRED EFFECT OF REDUCING THE BORROWED CAPITAL. 21. AGAIN, AS REGARDS THE TRIBUNAL'S REFUSAL TO TAKE NOTICE OF THE DIRECTIONS OF THE RESERVE BANK, IT IS NOT CORRECT FOR THE TRIBUNAL TO HOLD THAT THE S DOCUMENT WAS A NEW EVIDENCE IN THE TRUE SENSE OF THE TERM. THE ASSESSEE HAS BEEN CONSISTENTLY PLEADING BEFORE THE LOWER AUTHORITIES THAT THE ENTRIES HAD TO BE MADE IN ORDER TO BRING THE COMPANIES IN CONFORMITY WITH THE SAID DIRECTION. ECTION OF THE RESERVE BANK IS A PUBLIC DOCUMENT WITHIN THE SECTION 74 OF THE EVIDENCE ACT, 1872. DOCUMENTS OF A PUBLIC NATURE AND PUBLIC AUTHORITY ARE GENERALLY ADMISSIBLE IN EVIDENCE SUBJECT T PROVING THEM AS LAID DOWN IN SECTIONS 76 AND 78 OF THE EVIDENCE ACT. 22. IN OUR VIEW, THE EFFECT AND IMPORT OF THE TRANSACTIONS IS THAT TH TOOK OVER THE LIABILITY OF THE AFORESAID NON - FINANCIAL COMPANIES TO GB AND CO. IN EXCHANGE FOR THE SHARES AS AFORESAID. ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD ENTRIES IN EFFECTING THEM ARE MADE BY JOURNAL ENTRIES AND NOT CASH ENTRIES. HE MOTIVE OF THE ENTRIES BEING THE REDUCTION OF LOANS OF THE THREE LIMITED COMPANIES DOES NOT EXPLAIN THE WHOLE MATTER, BECAUSE THE ENTRIES ARE CASH ENTRIES. THE FACT REMAINS THAT, AT EVERY STAGE, THE PARTIES THERE WAS NO CASH AVAILABLE FOR SUCH ENTRIES. THIS QUITE JUSTIFIES THE ADDITION AS SUSTAINED BY THE 19. WE HAVE PERUSED THE ASSESSMENT ORDER CAREFULLY. WE FIND THAT CASH DID NOT PASS AT ANY STAGE THOUGH ENTRIES WERE MADE IN THE CASH BOOK SHOWIN G PAYMENTS AND RECEIPTS ; BUT SINCE THE ENTRIES MADE A COMPLETE ROUND, NO PASSING OF CASH WAS NECESSARY FOR THE PURPOSE OF MAKING THE ENTRIES. THAT THERE TAX OFFICER HIMSELF. WE TAX OFFICER IN PARAGRAPH TAX OFFICER HAS CLEARLY OPINED THAT ALL THE RESPECTIVE PARTIES DID NOT RECEIVE CASH NOR DID PAY CASH AS NONE HAD ANY SESSMENT ORDER IS THAT THE ENTRIES NOT INVOLVING THE PASSING OF CASH SHOULD NOT HAVE FOUND A PLACE IN THE CASH BOOK, BUT IN THE LEDGER ACCOUNT THROUGH JOURNAL ENTRIES. THERE IS ANOTHER SELF - AS NO REAL CASH ENTRY ON THE CREDIT SIDE OF THE CASH BOOK, BUT MERELY A NOTIONAL OR FICTITIOUS CASH ENTRY, AS ADMITTED BY HIM, THERE IS NO REAL CREDIT OF CASH TO ITS CASH BOOK ; THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDI T 20. ONE OF THE GROUNDS OF THE TRIBUNAL FOR DISBELIEVING THE ASSESSEE'S CASE IS THAT THE ADJUSTMENT ENTRIES WERE MADE BY NOTIONAL CASH ENTRIES WITH A VIEW TO CAPITAL RATIO, I.E., THAT WHILE BEING DISCHARGED OF DEBT THE SAID COMPANIES ALSO JETTISONED THEIR ASSETS, I.E., THE SHARES HELD BY THEM OF EQUIVALENT SUM WITHOUT ACHIEVING THE AVOWED PURPOSE. HERE THE TRIBUNAL CERTAINLY MISDIRECTED ITSELF. THE RATIO TO BE REDUCED IS OF THE LOAN IN ITAL AND THE RESERVES. JETTISONING THE SHARES HAD THE 21. AGAIN, AS REGARDS THE TRIBUNAL'S REFUSAL TO TAKE NOTICE OF THE DIRECTIONS OF THE RESERVE BANK, IT IS NOT CORRECT FOR THE TRIBUNAL TO HOLD THAT THE S AID DOCUMENT WAS A NEW EVIDENCE IN THE TRUE SENSE OF THE TERM. THE ASSESSEE HAS BEEN CONSISTENTLY PLEADING BEFORE THE LOWER AUTHORITIES THAT THE ENTRIES HAD TO BE MADE IN ORDER TO BRING THE COMPANIES IN CONFORMITY WITH THE SAID DIRECTION. ECTION OF THE RESERVE BANK IS A PUBLIC DOCUMENT WITHIN THE OF THE EVIDENCE ACT, 1872. DOCUMENTS OF A PUBLIC NATURE AND PUBLIC AUTHORITY ARE GENERALLY ADMISSIBLE IN EVIDENCE SUBJECT T O THE MODE OF OF THE EVIDENCE ACT. 22. IN OUR VIEW, THE EFFECT AND IMPORT OF THE TRANSACTIONS IS THAT TH E ASSESSEE FINANCIAL COMPANIES TO GB AND CO. IN 23. IN THE PREMISES, WE ANSWER ALL THE QUESTIONS, IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 5. THE KOLKATA D BENCH OF THE TRIBUNAL IN THE CASE OF COMMUNICATIONS LTD. VS. ITO IN DT. 09/11/2018, HELD AS FOLLOWS: 6. ON THESE FACTS, WE FIND THAT THE ISSUE IN QUESTION WHICH IS TO BE ADJUDICATED IS WHETHER THE ADDITION CAN BE MADE U/S 68 OF THE ACT BE MADE WHERE THERE WAS ALLOTMENT OF SHARES OTHER THAN BY WAY OF CASH I.E. FOR CONSIDERATION FOR PURCHASE OF SHARES OF ANOTHER COMPANY. THIS ISSUE IS COVERED BY THE ORDER OF THE 'C' BENCH OF THE KOLKATA TRIBUNAL IN THE CASE OF 1614/KOL/2016 & C.O. NO.56/KOL/2016; DT. 26/09/2018, WHE HELD AS FOLLOWS:- '4. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTSET, WE FIND THAT THE ASSESSEE HAD NOT RAISED ANY SHARE CAPITAL BY RECEIPT OF CASH CONSIDERATION IN THE INSTANT CASE. THE SHARES WERE ISSUED FOR CONSIDERATION OTHER THAN COMPANY MAKING INVESTMENT IN SHARES IN SOME OTHER COMPANY. EFFECTIVELY, THE ASSESSEE PURCHASED CERTAIN SHARES FROM THE AFORESAID SIX SHAREHOLDERS AND INSTEAD OF PAYING CASH TO THEM, ASSESSEE COMPANY ISSUED SHARES IN ITS OWN COMPAN Y TO THOSE SHAREHOLDERS. HENCE THE ASSESSEE HAD MADE INVESTMENTS IN SHARES OF ANOTHER COMPANY FOR WHICH CONSIDERATION WAS SETTLED THROUGH ISSUANCE OF ITS SHARES TO THOSE SHAREHOLDERS. NOW THE CRUCIAL POINT IS WHETHER THE PROVISIONS OF SECTION 68 COULD BE I INVESTMENT TOWARDS SHARE CAPITAL. THERE WAS NO RECEIPT OF ANY SUM AS PROVIDED U/S 68 OF THE ACT IN THE INSTANT CASE. IT WOULD BE PERTINENT HERE TO REFER TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF REPORTED IN 187 ITR 308 (SC) WHEREIN IT WAS HELD THAT 'ANY SUM' MEANS 'SUM OF MONEY'. WE FIND THAT LD. CIT(A) HAD DELETED THE ADDITION BY OBSERVING AS UNDER: '6. ON CONSIDERATION OF THE REPRODUCED ABOVE, IT IS SEEN THAT APPLY TO CASES OF PURCHASE OF SHARE ASSETS AND ALLOTMENT OF SHARES BY THE APPELLANT WHEN PUR ASSESSMENT YEAR: 2012 AND ALLOTMENT ARE UNDER A BARTER SYSTEM. THE AO HAS NOT REFUTED THE APPELLANT'S CLAIM THAT SHARES WERE ALLOTTED IN EXCHANGE FOR ACQUISITION OF SHARES BY THE APPELLAN SURRENDERED SUCH SHARES TO THE APPELLANT. THOUGH AS PER THE AO TO APPLY SECTION 68 TRANSACTIONS PURPORTEDLY EXECUTED BY ENTRY O MULTIPLE LAYERS AND OTHER COMPLEXITIES, INTRODUCING DELAYS IN 8 M/S. DHANKAMAL COMMONSALES 23. IN THE PREMISES, WE ANSWER ALL THE QUESTIONS, IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE KOLKATA D BENCH OF THE TRIBUNAL IN THE CASE OF M/S. ABA EARTHLINE COMMUNICATIONS LTD. VS. ITO IN ITA NO. 1141/KOL/2017; ASSESSMENT YEAR 2012 HELD AS FOLLOWS: - THESE FACTS, WE FIND THAT THE ISSUE IN QUESTION WHICH IS TO BE ADJUDICATED IS WHETHER THE ADDITION CAN BE MADE U/S 68 OF THE ACT BE MADE WHERE THERE WAS ALLOTMENT OF SHARES OTHER THAN BY WAY OF CASH I.E. FOR CONSIDERATION FOR PURCHASE COMPANY. THIS ISSUE IS COVERED BY THE ORDER OF THE 'C' BENCH OF THE KOLKATA TRIBUNAL IN THE CASE OF ITO VS. M/S. ANAND ENTERPRISES LTD., ITA NO 1614/KOL/2016 & C.O. NO.56/KOL/2016; DT. 26/09/2018, WHE REIN IT HAS BEEN '4. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTSET, WE FIND THAT THE ASSESSEE HAD NOT RAISED ANY SHARE CAPITAL BY RECEIPT OF CASH CONSIDERATION IN THE INSTANT CASE. THE SHARES WERE ISSUED FOR CONSIDERATION OTHER THAN CASH IN LIEU OF ASSESSEE COMPANY MAKING INVESTMENT IN SHARES IN SOME OTHER COMPANY. EFFECTIVELY, THE ASSESSEE PURCHASED CERTAIN SHARES FROM THE AFORESAID SIX SHAREHOLDERS AND INSTEAD OF PAYING CASH TO THEM, ASSESSEE COMPANY ISSUED SHARES IN ITS OWN Y TO THOSE SHAREHOLDERS. HENCE THE ASSESSEE HAD MADE INVESTMENTS IN SHARES OF ANOTHER COMPANY FOR WHICH CONSIDERATION WAS SETTLED THROUGH ISSUANCE OF ITS SHARES TO THOSE SHAREHOLDERS. NOW THE CRUCIAL POINT IS WHETHER THE PROVISIONS OF SECTION 68 COULD BE I NVOKED IN THE INSTANT CASE FOR MAKING INVESTMENT TOWARDS SHARE CAPITAL. THERE WAS NO RECEIPT OF ANY SUM AS PROVIDED U/S 68 OF THE ACT IN THE INSTANT CASE. IT WOULD BE PERTINENT HERE TO REFER TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SHRI H.H. RAMA VARMA VS. CIT REPORTED IN 187 ITR 308 (SC) WHEREIN IT WAS HELD THAT 'ANY SUM' MEANS 'SUM OF MONEY'. WE FIND THAT LD. CIT(A) HAD DELETED THE ADDITION BY OBSERVING AS UNDER: '6. ON CONSIDERATION OF THE AR'S SUBMISSION, ESPECIALLY THE PORTION REPRODUCED ABOVE, IT IS SEEN THAT SECTION 68 OF I.T. ACT, 1961 DOES NOT APPLY TO CASES OF PURCHASE OF SHARE ASSETS AND ALLOTMENT OF SHARES BY THE APPELLANT WHEN PUR CHASE ITA NO. 1141/KOL/2017 ASSESSMENT YEAR: 2012 - 13 M/S. ABA EARTHLINE COMMUNICATIONS LTD AND ALLOTMENT ARE UNDER A BARTER SYSTEM. THE AO HAS NOT REFUTED THE APPELLANT'S CLAIM THAT SHARES WERE ALLOTTED IN EXCHANGE FOR ACQUISITION OF SHARES BY THE APPELLAN T FROM THE COMPANIES WHICH SURRENDERED SUCH SHARES TO THE APPELLANT. THOUGH AS PER THE AO TO SECTION 68 TO MAKE THE SAID ADDITION IN THE APPELLANT'S HAND. TRANSACTIONS PURPORTEDLY EXECUTED BY ENTRY O PERATORS INVOLVE MULTIPLE LAYERS AND OTHER COMPLEXITIES, INTRODUCING DELAYS IN ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD 23. IN THE PREMISES, WE ANSWER ALL THE QUESTIONS, IN THE AFFIRMATIVE AND IN M/S. ABA EARTHLINE ITA NO. 1141/KOL/2017; ASSESSMENT YEAR 2012 -13, ORDER THESE FACTS, WE FIND THAT THE ISSUE IN QUESTION WHICH IS TO BE ADJUDICATED IS WHETHER THE ADDITION CAN BE MADE U/S 68 OF THE ACT BE MADE WHERE THERE WAS ALLOTMENT OF SHARES OTHER THAN BY WAY OF CASH I.E. FOR CONSIDERATION FOR PURCHASE COMPANY. THIS ISSUE IS COVERED BY THE ORDER OF THE 'C' BENCH ITO VS. M/S. ANAND ENTERPRISES LTD., ITA NO . REIN IT HAS BEEN '4. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTSET, WE FIND THAT THE ASSESSEE HAD NOT RAISED ANY SHARE CAPITAL BY RECEIPT OF CASH CONSIDERATION IN THE INSTANT CASH IN LIEU OF ASSESSEE COMPANY MAKING INVESTMENT IN SHARES IN SOME OTHER COMPANY. EFFECTIVELY, THE ASSESSEE PURCHASED CERTAIN SHARES FROM THE AFORESAID SIX SHAREHOLDERS AND INSTEAD OF PAYING CASH TO THEM, ASSESSEE COMPANY ISSUED SHARES IN ITS OWN Y TO THOSE SHAREHOLDERS. HENCE THE ASSESSEE HAD MADE INVESTMENTS IN SHARES OF ANOTHER COMPANY FOR WHICH CONSIDERATION WAS SETTLED THROUGH ISSUANCE OF ITS SHARES TO THOSE SHAREHOLDERS. NOW THE CRUCIAL POINT IS WHETHER THE NVOKED IN THE INSTANT CASE FOR MAKING INVESTMENT TOWARDS SHARE CAPITAL. THERE WAS NO RECEIPT OF ANY SUM AS PROVIDED U/S 68 OF THE ACT IN THE INSTANT CASE. IT WOULD BE PERTINENT HERE TO REFER TO THE SHRI H.H. RAMA VARMA VS. CIT REPORTED IN 187 ITR 308 (SC) WHEREIN IT WAS HELD THAT 'ANY SUM' MEANS 'SUM OF MONEY'. WE FIND THAT LD. CIT(A) HAD DELETED THE ADDITION BY OBSERVING AS UNDER: AR'S SUBMISSION, ESPECIALLY THE PORTION OF I.T. ACT, 1961 DOES NOT APPLY TO CASES OF PURCHASE OF SHARE ASSETS AND ALLOTMENT OF SHARES CHASE ITA NO. 1141/KOL/2017 13 M/S. ABA EARTHLINE COMMUNICATIONS LTD AND ALLOTMENT ARE UNDER A BARTER SYSTEM. THE AO HAS NOT REFUTED THE APPELLANT'S CLAIM THAT SHARES WERE ALLOTTED IN EXCHANGE FOR T FROM THE COMPANIES WHICH SURRENDERED SUCH SHARES TO THE APPELLANT. THOUGH AS PER THE AO TO TO MAKE THE SAID ADDITION IN THE APPELLANT'S HAND. PERATORS INVOLVE MULTIPLE LAYERS AND OTHER COMPLEXITIES, INTRODUCING DELAYS IN INTRODUCTION OF UNACCOUNTED CASH/MONEY AND MULTIPLE PLAYERS BEING INCORPORATED ENTITIES. MEASURES TAKEN BY THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDING FALLS MUCH SHORT OF BE DONE IN SUCH CASE LAWS, WHICH HAVE EVOLVED ON THIS ISSUE, CALL FOR CONCERTED ACTIONS ON THE PART OF THE AO PINPOINTING UTILIZATION OF UNEXPLAINED/UNACCOUNTED/UNTAXED MONEY AND THE PLAYERS AND THE BENEFICIARIES EFFECTIVELY USING THE W MONEY. FOR EXAMPLE INTRODUCTION AND USE OF BLACK MONEY IN THE PRESENT CASE MAY BE AT A DIFFERENT POINT OF TIME AND IN DIFFERENT HANDS. THE AO'S ACTION IN THE PRESENT CASE CANNOT BE UPHELD IN LAW. I, THEREFORE, DELETE THE ADDI ARE ALLOWED.' 4.1. WE FIND THAT THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SINGHANIA REPORTED IN 235 ITR 616 (ALL) HAD HELD IN THE CONTEXT OF DONATION AS DEDUCTION U/S 80G OF THE ACT THAT THE EXPRESSION 'ANY SUM PAID' USED IN THE SAID SECTION DENOTES ' SUM OF MONEY PAID' . HENCE IF CERTAIN SHARES WERE DONATED BY A PERSON, THEN THE SAME WOULD NOT FALL ELIGIBLE FOR DEDUCTION U/S 8 OF THE ACT. WE ALSO FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF JATIA INVESTMENT COMPANY (CO.) VS. CIT SUPPORTS THE CASE OF THE ASSESSEE HEREIN, WH 'IT IS FINALLY EMPHASISED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ULTIMATE RESULT IS THAT THE FIRM BECOMES A DEBTOR TO GB AND CO. AND THE THREE NON FINANCIAL COMPANIES OF THE GROUP GOT DISCHARGED. LEARNED COUNSEL ALSO EMPH ASISED THAT, AT THE WORST, IT CAN BE SAID THAT THE ASSESSEE VALUABLE ASSETS BEING THE SAID SHARES OF THE EQUIVALENT VALUE OF THE DEBT TAKEN OVER BY IT FROM THE COMPANIES, I.E., RS. 11.20 LAKHS. THEREFORE, THE QUESTION OF CASH CREDIT DOES PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTIONS ARE MERE BOOK ENTRIES. IT WAS CONTENDED THAT THE FACT THAT THE ENTRIES PASSED THROUGH THE CASH BOOK COULD NOT DETRACT FROM OR EFFACE THE ESSENTIAL NATURE OF TH ALSO URGED THAT THE ENTRIES WERE PASSED THROUGH THE CASH BOOK SO THAT THE REPAYMENT OF LOANS BY THE SAID THREE COMPANIES COULD BE ESTABLISHED BEFORE THE RESERVE BANK OF INDIA. BUT, ACCORDING TO SHRI BAJORIA, THAT DOES NOT MEAN THAT IT AMO UNTS TO AN ARTIFICE EMPLOYED TO DECEIVE ANY AUTHORITIES, BECAUSE THE TRANSACTIONS SHOWING THE AMOUNT AS RECEIVED IN CASH AND PAID AWAY SPONTANEOUSLY AND SIMULTANEOUSLY WERE NOT ACTUAL BUT ONLY NOTIONAL. HE, HOWEVER, STATED THAT, AS FAR AS THE QUESTION OF NATURE OF THE TRANSACTIONS AND THE ENTRIES CLEARLY SHOW THAT NO CASH, IN FACT, FLOWED. IT WAS FURTHER STRESSED THAT THE TRANSACTIONS ARE ABOVE BOARD. NO OUTSIDER IS INVOLVED. THE ENTRIES WERE MADE IN THE BOOKS OF THE CONCERNS OF THE SAME GROUP. THE SHARES IN QUESTION WERE ALSO OF THE COMPANIES OF THE GROUP. 9 M/S. DHANKAMAL COMMONSALES INTRODUCTION OF UNACCOUNTED CASH/MONEY AND MULTIPLE PLAYERS BEING INCORPORATED ENTITIES. MEASURES TAKEN BY THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDING FALLS MUCH SHORT OF WHAT IS REQUIRED TO BE DONE IN SUCH CASE LAWS, WHICH HAVE EVOLVED ON THIS ISSUE, CALL FOR CONCERTED ACTIONS ON THE PART OF THE AO PINPOINTING UTILIZATION OF UNEXPLAINED/UNACCOUNTED/UNTAXED MONEY AND THE PLAYERS AND THE BENEFICIARIES EFFECTIVELY USING THE W EBLIKE SCHEME TO PLUNDER BLACK MONEY. FOR EXAMPLE INTRODUCTION AND USE OF BLACK MONEY IN THE PRESENT CASE MAY BE AT A DIFFERENT POINT OF TIME AND IN DIFFERENT HANDS. THE AO'S ACTION IN THE PRESENT CASE CANNOT BE UPHELD IN LAW. I, THEREFORE, DELETE THE ADDI TIONS AND GROUNDS OF APPEAL NOS. 3 & 4 ARE ALLOWED.' 4.1. WE FIND THAT THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF REPORTED IN 235 ITR 616 (ALL) HAD HELD IN THE CONTEXT OF DONATION AS DEDUCTION U/S 80G OF THE ACT THAT THE EXPRESSION 'ANY SUM PAID' USED IN THE SAID SECTION DENOTES ' SUM OF MONEY PAID' . HENCE IF CERTAIN SHARES WERE DONATED BY A PERSON, THEN THE SAME WOULD NOT FALL ELIGIBLE FOR DEDUCTION U/S 8 OF THE ACT. WE ALSO FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF JATIA INVESTMENT COMPANY (CO.) VS. CIT REPORTED IN 206 ITR 718 (CAL) ALSO SUPPORTS THE CASE OF THE ASSESSEE HEREIN, WH EREIN IT WAS HELD AS UNDER: 'IT IS FINALLY EMPHASISED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ULTIMATE RESULT IS THAT THE FIRM BECOMES A DEBTOR TO GB AND CO. AND THE THREE NON FINANCIAL COMPANIES OF THE GROUP GOT DISCHARGED. LEARNED COUNSEL ALSO ASISED THAT, AT THE WORST, IT CAN BE SAID THAT THE ASSESSEE - FIRM HAS RECEIVED VALUABLE ASSETS BEING THE SAID SHARES OF THE EQUIVALENT VALUE OF THE DEBT TAKEN OVER BY IT FROM THE COMPANIES, I.E., RS. 11.20 LAKHS. THEREFORE, THE QUESTION OF CASH CREDIT DOES NOT COME IN, THERE BEING NO ACTUAL PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTIONS ARE MERE BOOK ENTRIES. IT WAS CONTENDED THAT THE FACT THAT THE ENTRIES PASSED THROUGH THE CASH BOOK COULD NOT DETRACT FROM OR EFFACE THE ESSENTIAL NATURE OF TH ALSO URGED THAT THE ENTRIES WERE PASSED THROUGH THE CASH BOOK SO THAT THE REPAYMENT OF LOANS BY THE SAID THREE COMPANIES COULD BE ESTABLISHED BEFORE THE RESERVE BANK OF INDIA. BUT, ACCORDING TO SHRI BAJORIA, THAT DOES NOT MEAN THAT UNTS TO AN ARTIFICE EMPLOYED TO DECEIVE ANY AUTHORITIES, BECAUSE THE TRANSACTIONS SHOWING THE AMOUNT AS RECEIVED IN CASH AND PAID AWAY SPONTANEOUSLY AND SIMULTANEOUSLY WERE NOT ACTUAL BUT ONLY NOTIONAL. HE, HOWEVER, STATED THAT, 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, FLOWED. IT WAS FURTHER STRESSED THAT THE TRANSACTIONS ARE ABOVE BOARD. NO OUTSIDER IS INVOLVED. THE ENTRIES WERE MADE IN THE BOOKS OF THE CONCERNS OF THE GROUP. THE SHARES IN QUESTION WERE ALSO OF THE COMPANIES OF THE GROUP. ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD INTRODUCTION OF UNACCOUNTED CASH/MONEY AND MULTIPLE PLAYERS BEING INCORPORATED ENTITIES. MEASURES TAKEN BY THE AO IN THE COURSE WHAT IS REQUIRED TO BE DONE IN SUCH CASE LAWS, WHICH HAVE EVOLVED ON THIS ISSUE, CALL FOR CONCERTED ACTIONS ON THE PART OF THE AO PINPOINTING UTILIZATION OF UNEXPLAINED/UNACCOUNTED/UNTAXED MONEY AND THE PLAYERS AND THE EBLIKE SCHEME TO PLUNDER BLACK MONEY. FOR EXAMPLE INTRODUCTION AND USE OF BLACK MONEY IN THE PRESENT CASE MAY BE AT A DIFFERENT POINT OF TIME AND IN DIFFERENT HANDS. THE AO'S ACTION IN THE PRESENT CASE CANNOT BE UPHELD IN LAW. TIONS AND GROUNDS OF APPEAL NOS. 3 & 4 4.1. WE FIND THAT THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SOHANLAL REPORTED IN 235 ITR 616 (ALL) HAD HELD IN THE CONTEXT OF ALLOWABILITY OF DONATION AS DEDUCTION U/S 80G OF THE ACT THAT THE EXPRESSION 'ANY SUM PAID' USED IN THE SAID SECTION DENOTES ' SUM OF MONEY PAID' . HENCE IF CERTAIN SHARES WERE DONATED BY A PERSON, THEN THE SAME WOULD NOT FALL ELIGIBLE FOR DEDUCTION U/S 8 0G OF THE ACT. WE ALSO FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF REPORTED IN 206 ITR 718 (CAL) ALSO EREIN IT WAS HELD AS UNDER: 'IT IS FINALLY EMPHASISED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ULTIMATE RESULT IS THAT THE FIRM BECOMES A DEBTOR TO GB AND CO. AND THE THREE NON - FINANCIAL COMPANIES OF THE GROUP GOT DISCHARGED. LEARNED COUNSEL ALSO FIRM HAS RECEIVED VALUABLE ASSETS BEING THE SAID SHARES OF THE EQUIVALENT VALUE OF THE DEBT TAKEN NOT COME IN, THERE BEING NO ACTUAL PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTIONS ARE MERE BOOK ENTRIES. IT WAS CONTENDED THAT THE FACT THAT THE ENTRIES PASSED THROUGH THE CASH BOOK COULD NOT DETRACT FROM OR EFFACE THE ESSENTIAL NATURE OF TH E ENTRIES. IT WAS ALSO URGED THAT THE ENTRIES WERE PASSED THROUGH THE CASH BOOK SO THAT THE REPAYMENT OF LOANS BY THE SAID THREE COMPANIES COULD BE ESTABLISHED BEFORE THE RESERVE BANK OF INDIA. BUT, ACCORDING TO SHRI BAJORIA, THAT DOES NOT MEAN THAT UNTS TO AN ARTIFICE EMPLOYED TO DECEIVE ANY AUTHORITIES, BECAUSE THE TRANSACTIONS SHOWING THE AMOUNT AS RECEIVED IN CASH AND PAID AWAY SPONTANEOUSLY AND SIMULTANEOUSLY WERE NOT ACTUAL BUT ONLY NOTIONAL. HE, IS CONCERNED, THE NATURE OF THE TRANSACTIONS AND THE ENTRIES CLEARLY SHOW THAT NO CASH, IN FACT, FLOWED. IT WAS FURTHER STRESSED THAT THE TRANSACTIONS ARE ABOVE BOARD. NO OUTSIDER IS INVOLVED. THE ENTRIES WERE MADE IN THE BOOKS OF THE CONCERNS OF THE GROUP. THE SHARES IN QUESTION WERE ALSO OF THE COMPANIES OF THE GROUP. THERE WAS NO ATTEMPT AT HIDING THE TRANSACTIONS. NOR IS IT THE CASE OF ANY OF THE PARTIES TO THE TRANSACTION THAT THERE WAS ANY PASSING OF CASH. EVERY PARTY UNEQUIVOCALLY STATED THAT T WAY OF ADJUSTMENTS OF THE SAID LOANS AND THE SHARE TRANSFERS. SHRI A. C. MOITRA, THE LEARNED ADVOCATE FOR THE REVENUE, REITERATED THE GROUNDS ON WHICH THE TRIBUNAL HAS AFFIRMED THE ADDITION OF THE AMOUNT LAKHS AS UNEXPLAINED CASH CREDIT. HE PARTICULARLY EMPHASISED THAT THE ASSESSEE'S CONTENTION THAT THE ENTRIES ARE ONLY ADJUSTMENT ENTRIES IS NOT ACCEPTABLE, BECAUSE THE ADJUSTMENT ENTRIES ARE NOT MADE THROUGH THE CASH BOOK. IT IS AN ACCEPTED PR ENTRIES IN EFFECTING THEM ARE MADE BY JOURNAL ENTRIES AND NOT CASH ENTRIES. HE URGED THAT THE PURPORTED MOTIVE OF THE ENTRIES BEING THE REDUCTION OF LOANS OF THE THREE LIMITED COMPANIES DOES NOT EXPLAIN T ENTRIES ARE CASH ENTRIES. THE FACT REMAINS THAT, AT EVERY STAGE, THE PARTIES SHOWED THE PAYMENTS AND RECEIPTS OF CASH EVEN WHEN THERE WAS NO CASH AVAILABLE FOR SUCH ENTRIES. THIS QUITE JUSTIFIES THE ADDITION AS SUSTAINED BY THE TRIBUNAL. WE HAVE PERUSED THE ASSESSMENT ORDER CAREFULLY. WE FIND THAT CASH DID NOT PASS AT ANY STAGE THOUGH ENTRIES WERE MADE IN THE CASH BOOK SHOWING PAYMENTS AND RECEIPTS ; BUT SINCE THE ENTRIES MADE A COMPLETE ROUND, NO PASSING OF CASH WAS NECESSARY FOR THE PURPOSE OF MAKING THE ENTRIES. THAT THERE WAS NO PASSING OF CASH IS ALSO ADMITTED BY THE INCOME EXTRACTED THE OBSERVATION OF THE INCOME ASSESSMENT ORDER. THE INCOME RESPECTIVE PARTIES DID NOT RECEIVE CASH NOR DID PAY CASH AS NONE HAD ANY CASH FOR THE PURPOSE. THE ONLY POINT IN THE ASSESSMENT ORDER IS THAT THE ENTRIES NOT INVOLVING THE PASSING OF CASH SHOULD NOT HAVE FOUND A PLACE IN BUT IN THE LEDGER ACCOUNT THROUGH JOURNAL ENTRIES. THERE IS ANOTHER SELF CONTRADICTION IN THE INCOME ENTRY ON THE CREDIT SIDE OF THE CASH BOOK, BUT MERELY A NOTIONAL OR FICTITIOUS CASH ENTRY, AS ADMITTED BY HIM, THERE IS NO REAL CREDIT OF CASH TO ITS CASH BOOK ; THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDIT CANNOT ARISE. ONE OF THE GROUNDS OF THE TRIBUNAL FOR DISBELIEVING THE ASSESSEE'S CASE IS THAT THE ADJUSTMENT ENTRIES WERE MADE BY NOTIONAL CASH ENTRIES WITH A VIEW TO BRINGING DOWN THE DEBT THE DEBT THE SAID COMPANIES ALSO JETTISONED THEIR ASSETS, I.E., THE SHARES HELD BY THEM OF EQUIVALENT SUM W TRIBUNAL CERTAINLY MISDIRECTED ITSELF. THE RATIO TO BE REDUCED IS OF THE LOAN IN RELATION TO THE SHARE CAPITAL AND THE RESERVES. JETTISONING THE SHARES HAD THE DESIRED EFFECT OF REDUCING THE BORROWED CAPITAL. 10 M/S. DHANKAMAL COMMONSALES THERE WAS NO ATTEMPT AT HIDING THE TRANSACTIONS. NOR IS IT THE CASE OF ANY OF THE PARTIES TO THE TRANSACTION THAT THERE WAS ANY PASSING OF CASH. EVERY PARTY UNEQUIVOCALLY STATED THAT T HE TRANSACTIONS WERE CARRIED INTO EFFECT MERELY BY WAY OF ADJUSTMENTS OF THE SAID LOANS AND THE SHARE TRANSFERS. SHRI A. C. MOITRA, THE LEARNED ADVOCATE FOR THE REVENUE, REITERATED THE GROUNDS ON WHICH THE TRIBUNAL HAS AFFIRMED THE ADDITION OF THE AMOUNT LAKHS AS UNEXPLAINED CASH CREDIT. HE PARTICULARLY EMPHASISED THAT THE ASSESSEE'S CONTENTION THAT THE ENTRIES ARE ONLY ADJUSTMENT ENTRIES IS NOT ACCEPTABLE, BECAUSE THE ADJUSTMENT ENTRIES ARE NOT MADE THROUGH THE CASH BOOK. IT IS AN ACCEPTED PR INCIPLE OF ACCOUNTING THAT BOOK ADJUSTMENTS AND THE ENTRIES IN EFFECTING THEM ARE MADE BY JOURNAL ENTRIES AND NOT CASH ENTRIES. HE URGED THAT THE PURPORTED MOTIVE OF THE ENTRIES BEING THE REDUCTION OF LOANS OF THE THREE LIMITED COMPANIES DOES NOT EXPLAIN T HE WHOLE MATTER, BECAUSE THE ENTRIES ARE CASH ENTRIES. THE FACT REMAINS THAT, AT EVERY STAGE, THE PARTIES SHOWED THE PAYMENTS AND RECEIPTS OF CASH EVEN WHEN THERE WAS NO CASH AVAILABLE FOR SUCH ENTRIES. THIS QUITE JUSTIFIES THE ADDITION AS SUSTAINED BY THE WE HAVE PERUSED THE ASSESSMENT ORDER CAREFULLY. WE FIND THAT CASH DID NOT PASS AT ANY STAGE THOUGH ENTRIES WERE MADE IN THE CASH BOOK SHOWING PAYMENTS AND RECEIPTS ; BUT SINCE THE ENTRIES MADE A COMPLETE ROUND, NO PASSING OF CASH FOR THE PURPOSE OF MAKING THE ENTRIES. THAT THERE WAS NO PASSING OF CASH IS ALSO ADMITTED BY THE INCOME - TAX OFFICER HIMSELF. WE HAVE ALREADY EXTRACTED THE OBSERVATION OF THE INCOME - TAX OFFICER IN PARAGRAPH 14 OF HIS ASSESSMENT ORDER. THE INCOME - TAX OFFI CER HAS CLEARLY OPINED THAT ALL THE RESPECTIVE PARTIES DID NOT RECEIVE CASH NOR DID PAY CASH AS NONE HAD ANY CASH FOR THE PURPOSE. THE ONLY POINT IN THE ASSESSMENT ORDER IS THAT THE ENTRIES NOT INVOLVING THE PASSING OF CASH SHOULD NOT HAVE FOUND A PLACE IN BUT IN THE LEDGER ACCOUNT THROUGH JOURNAL ENTRIES. THERE IS ANOTHER SELF CONTRADICTION IN THE INCOME - TAX OFFICER'S FINDING THAT, IF THERE WAS NO REAL CASH ENTRY ON THE CREDIT SIDE OF THE CASH BOOK, BUT MERELY A NOTIONAL OR FICTITIOUS ENTRY, AS ADMITTED BY HIM, THERE IS NO REAL CREDIT OF CASH TO ITS CASH BOOK ; THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDIT ONE OF THE GROUNDS OF THE TRIBUNAL FOR DISBELIEVING THE ASSESSEE'S CASE IS THAT ADJUSTMENT ENTRIES WERE MADE BY NOTIONAL CASH ENTRIES WITH A VIEW TO BRINGING DOWN THE DEBT -AND- CAPITAL RATIO, I.E., THAT WHILE BEING DISCHARGED OF THE DEBT THE SAID COMPANIES ALSO JETTISONED THEIR ASSETS, I.E., THE SHARES HELD BY THEM OF EQUIVALENT SUM W ITHOUT ACHIEVING THE AVOWED PURPOSE. HERE THE TRIBUNAL CERTAINLY MISDIRECTED ITSELF. THE RATIO TO BE REDUCED IS OF THE LOAN IN RELATION TO THE SHARE CAPITAL AND THE RESERVES. JETTISONING THE SHARES HAD THE DESIRED EFFECT OF REDUCING THE BORROWED CAPITAL. ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD THERE WAS NO ATTEMPT AT HIDING THE TRANSACTIONS. NOR IS IT THE CASE OF ANY OF THE PARTIES TO THE TRANSACTION THAT THERE WAS ANY PASSING OF CASH. EVERY PARTY HE TRANSACTIONS WERE CARRIED INTO EFFECT MERELY BY SHRI A. C. MOITRA, THE LEARNED ADVOCATE FOR THE REVENUE, REITERATED THE GROUNDS ON WHICH THE TRIBUNAL HAS AFFIRMED THE ADDITION OF THE AMOUNT OF RS. 11.20 LAKHS AS UNEXPLAINED CASH CREDIT. HE PARTICULARLY EMPHASISED THAT THE ASSESSEE'S CONTENTION THAT THE ENTRIES ARE ONLY ADJUSTMENT ENTRIES IS NOT ACCEPTABLE, BECAUSE THE ADJUSTMENT ENTRIES ARE NOT MADE THROUGH THE CASH INCIPLE OF ACCOUNTING THAT BOOK ADJUSTMENTS AND THE ENTRIES IN EFFECTING THEM ARE MADE BY JOURNAL ENTRIES AND NOT CASH ENTRIES. HE URGED THAT THE PURPORTED MOTIVE OF THE ENTRIES BEING THE REDUCTION OF LOANS OF HE WHOLE MATTER, BECAUSE THE ENTRIES ARE CASH ENTRIES. THE FACT REMAINS THAT, AT EVERY STAGE, THE PARTIES SHOWED THE PAYMENTS AND RECEIPTS OF CASH EVEN WHEN THERE WAS NO CASH AVAILABLE FOR SUCH ENTRIES. THIS QUITE JUSTIFIES THE ADDITION AS SUSTAINED BY THE WE HAVE PERUSED THE ASSESSMENT ORDER CAREFULLY. WE FIND THAT CASH DID NOT PASS AT ANY STAGE THOUGH ENTRIES WERE MADE IN THE CASH BOOK SHOWING PAYMENTS AND RECEIPTS ; BUT SINCE THE ENTRIES MADE A COMPLETE ROUND, NO PASSING OF CASH FOR THE PURPOSE OF MAKING THE ENTRIES. THAT THERE WAS NO PASSING TAX OFFICER HIMSELF. WE HAVE ALREADY TAX OFFICER IN PARAGRAPH 14 OF HIS CER HAS CLEARLY OPINED THAT ALL THE RESPECTIVE PARTIES DID NOT RECEIVE CASH NOR DID PAY CASH AS NONE HAD ANY CASH FOR THE PURPOSE. THE ONLY POINT IN THE ASSESSMENT ORDER IS THAT THE ENTRIES NOT INVOLVING THE PASSING OF CASH SHOULD NOT HAVE FOUND A PLACE IN THE CASH BOOK, BUT IN THE LEDGER ACCOUNT THROUGH JOURNAL ENTRIES. THERE IS ANOTHER SELF - TAX OFFICER'S FINDING THAT, IF THERE WAS NO REAL CASH ENTRY ON THE CREDIT SIDE OF THE CASH BOOK, BUT MERELY A NOTIONAL OR FICTITIOUS ENTRY, AS ADMITTED BY HIM, THERE IS NO REAL CREDIT OF CASH TO ITS CASH BOOK ; THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDIT ONE OF THE GROUNDS OF THE TRIBUNAL FOR DISBELIEVING THE ASSESSEE'S CASE IS THAT ADJUSTMENT ENTRIES WERE MADE BY NOTIONAL CASH ENTRIES WITH A VIEW TO CAPITAL RATIO, I.E., THAT WHILE BEING DISCHARGED OF THE DEBT THE SAID COMPANIES ALSO JETTISONED THEIR ASSETS, I.E., THE SHARES HELD BY ITHOUT ACHIEVING THE AVOWED PURPOSE. HERE THE TRIBUNAL CERTAINLY MISDIRECTED ITSELF. THE RATIO TO BE REDUCED IS OF THE LOAN IN RELATION TO THE SHARE CAPITAL AND THE RESERVES. JETTISONING THE SHARES HAD THE AGAIN, AS REGARDS THE TRIBUNAL'S REFUSAL TO TAKE NOTICE OF THE DIRECTIONS OF THE RESERVE BANK, IT IS NOT CORRECT FOR THE TRIBUNAL TO HOLD THAT THE SAID DOCUMENT WAS A NEW EVIDENCE IN THE TRUE SENSE OF THE TERM. THE ASSESSEE HAS BEEN CONSISTENTLY PLEADING B MADE IN ORDER TO BRING THE COMPANIES IN CONFORMITY WITH THE SAID DIRECTION. MOREOVER, THE DIRECTION OF THE RESERVE BANK IS A PUBLIC DOCUMENT WITHIN THE MEANING OF SECTION 74 AND PUBLIC AUTHORITY ARE GENERALLY ADMISSIBLE IN EVIDENCE SUBJECT TO THE MODE OF PROVING THEM AS LAID DOWN IN IN OUR VIEW, THE EFFECT AND IMPORT OF THE TRANSACTIONS IS THAT THE ASSESSEE TOOK OVER THE LIABILITY OF THE AFORESAID NON EXCHANGE FOR THE SH IN THE PREMISES, WE ANSWER ALL THE QUESTIONS, IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' 4.2. IT WOULD BE PERTINENT TO NOTE THAT IN THE INSTANT CASE, THE LD. AO HAD NOT DOUBTED THE INVESTMENT MADE IN SHA 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 DECISION OF PUNE TRIBUNAL IN THE CASE OF KANTILAL AND BROS. VS. A ITD 412 (PUNE TRIB.) ALSO SUPPORTS THE CASE OF THE ASSESSEE. 4.3. IN VIEW OF THE AFORESAID OBSERVATIONS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE LD. AO HAD ERRONEOUSLY INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT TO THE FACTS OF THE INSTANT CASE, WHICH, IN OUR CONSIDERED OPINION, ARE NOT AT ALL APPLICABLE HEREIN. THIS IS A SIMPLE C OF CERTAIN COMPANIES FROM CERTAIN SHAREHOLDERS WITHOUT PAYING ANY CASH CONSIDERATION AND INSTEAD THE CONSIDERATION WAS SETTLED THROUGH ISSUANCE OF SHARES TO THE RESPECTIVE PARTIES. MOREOVER, IN THE BALANCE SHEET OF THE ASSESSEE COMP ANY IN THE SCHEDULE TO SHARE CAPITAL, IT IS VERY 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 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 REVENUE ARE DIS 7. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE CASE FACTS OF THE CASE ON HAND, WE DELETE THE ADDITION IN QUESTION MADE U/S 68 OF THE ACT. 11 M/S. DHANKAMAL COMMONSALES AGAIN, AS REGARDS THE TRIBUNAL'S REFUSAL TO TAKE NOTICE OF THE DIRECTIONS OF THE RESERVE BANK, IT IS NOT CORRECT FOR THE TRIBUNAL TO HOLD THAT THE SAID DOCUMENT WAS A NEW EVIDENCE IN THE TRUE SENSE OF THE TERM. THE ASSESSEE HAS BEEN CONSISTENTLY PLEADING B EFORE THE LOWER AUTHORITIES THAT THE ENTRIES HAD TO BE MADE IN ORDER TO BRING THE COMPANIES IN CONFORMITY WITH THE SAID DIRECTION. MOREOVER, THE DIRECTION OF THE RESERVE BANK IS A PUBLIC DOCUMENT WITHIN THE SECTION 74 OF THE EVIDENCE ACT, 1872. DOCUMENTS OF A PUBLIC NATURE AND PUBLIC AUTHORITY ARE GENERALLY ADMISSIBLE IN EVIDENCE SUBJECT TO THE MODE OF PROVING THEM AS LAID DOWN IN SECTIONS 76 AND 78 OF THE EVIDENCE ACT. IN OUR VIEW, THE EFFECT AND IMPORT OF THE TRANSACTIONS IS THAT THE ASSESSEE TOOK OVER THE LIABILITY OF THE AFORESAID NON - FINANCIAL COMPANIES TO GB AND CO. IN EXCHANGE FOR THE SH ARES AS AFORESAID. IN THE PREMISES, WE ANSWER ALL THE QUESTIONS, IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' 4.2. IT WOULD BE PERTINENT TO NOTE THAT IN THE INSTANT CASE, THE LD. AO HAD NOT DOUBTED THE INVESTMENT MADE IN SHA RES BY THE ASSESSEE 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 - DECISION OF PUNE TRIBUNAL IN THE CASE OF KANTILAL AND BROS. VS. A CIT REPORTED IN 52 ITD 412 (PUNE TRIB.) ALSO SUPPORTS THE CASE OF THE ASSESSEE. 4.3. IN VIEW OF THE AFORESAID OBSERVATIONS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS RELIED UPON HOLD THAT THE LD. AO HAD ERRONEOUSLY INVOKED THE PROVISIONS OF OF THE ACT TO THE FACTS OF THE INSTANT CASE, WHICH, IN OUR CONSIDERED OPINION, ARE NOT AT ALL APPLICABLE HEREIN. THIS IS A SIMPLE C ASE OF ACQUIRING SHARES OF CERTAIN COMPANIES FROM CERTAIN SHAREHOLDERS WITHOUT PAYING ANY CASH CONSIDERATION AND INSTEAD THE CONSIDERATION WAS SETTLED THROUGH ISSUANCE OF SHARES TO THE RESPECTIVE PARTIES. MOREOVER, IN THE BALANCE SHEET OF THE ASSESSEE ANY IN THE SCHEDULE TO SHARE CAPITAL, IT IS VERY 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 SECTION 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 REVENUE ARE DIS MISSED.' 7. APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE CASE - LAW CITED ABOVE, TO THE FACTS OF THE CASE ON HAND, WE DELETE THE ADDITION IN QUESTION MADE U/S 68 OF THE ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD AGAIN, AS REGARDS THE TRIBUNAL'S REFUSAL TO TAKE NOTICE OF THE DIRECTIONS OF THE RESERVE BANK, IT IS NOT CORRECT FOR THE TRIBUNAL TO HOLD THAT THE SAID DOCUMENT WAS A NEW EVIDENCE IN THE TRUE SENSE OF THE TERM. THE ASSESSEE HAS BEEN EFORE THE LOWER AUTHORITIES THAT THE ENTRIES HAD TO BE MADE IN ORDER TO BRING THE COMPANIES IN CONFORMITY WITH THE SAID DIRECTION. MOREOVER, THE DIRECTION OF THE RESERVE BANK IS A PUBLIC DOCUMENT WITHIN THE OF THE EVIDENCE ACT, 1872. DOCUMENTS OF A PUBLIC NATURE AND PUBLIC AUTHORITY ARE GENERALLY ADMISSIBLE IN EVIDENCE SUBJECT TO THE MODE OF THE EVIDENCE ACT. IN OUR VIEW, THE EFFECT AND IMPORT OF THE TRANSACTIONS IS THAT THE ASSESSEE TOOK FINANCIAL COMPANIES TO GB AND CO. IN IN THE PREMISES, WE ANSWER ALL THE QUESTIONS, IN THE AFFIRMATIVE AND IN FAVOUR OF 4.2. IT WOULD BE PERTINENT TO NOTE THAT IN THE INSTANT CASE, THE LD. AO HAD NOT RES BY THE ASSESSEE COMPANY. THERE IS NO DISPUTE RAISED BY THE LD. AO WITH REGARD TO NUMBER OF SHARES; VALUE THEREON - ORDINATE BENCH CIT REPORTED IN 52 4.3. IN VIEW OF THE AFORESAID OBSERVATIONS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS RELIED UPON HOLD THAT THE LD. AO HAD ERRONEOUSLY INVOKED THE PROVISIONS OF OF THE ACT TO THE FACTS OF THE INSTANT CASE, WHICH, IN OUR CONSIDERED ASE OF ACQUIRING SHARES OF CERTAIN COMPANIES FROM CERTAIN SHAREHOLDERS WITHOUT PAYING ANY CASH CONSIDERATION AND INSTEAD THE CONSIDERATION WAS SETTLED THROUGH ISSUANCE OF SHARES TO THE RESPECTIVE PARTIES. MOREOVER, IN THE BALANCE SHEET OF THE ASSESSEE ANY IN THE SCHEDULE TO SHARE CAPITAL, IT IS VERY CLEARLY MENTIONED BY WAY OF NOTE THAT THE FRESH SHARE CAPITAL WAS RAISED DURING THE YEAR FOR CONSIDERATION 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 MISSED.' LAW CITED ABOVE, TO THE FACTS OF THE CASE ON HAND, WE DELETE THE ADDITION IN QUESTION MADE U/S 68 OF THE 6. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE CASE WITH THE VIEW TAKEN BY US ON THIS ISSUE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THIS APPEAL OF THE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. KOL KATA, THE SD/- [ABY T. VARKEY] JUDICIAL MEMBER DATED : 17.06.2020 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. M/S. DHANKAMAL COMMONSALES PVT. LTD 10, CLIVE ROW KOLKATA 700 001 2. INCOME TAX OFFICER, WARD- 6(1), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 12 M/S. DHANKAMAL COMMONSALES APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THE ABOVE CASE - LAW AND CONSISTENT WITH THE VIEW TAKEN BY US ON THIS ISSUE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THIS APPEAL OF THE REVENUE. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. KATA, THE 17 TH DAY OF JUNE, 2020. [ J. SUDHAKAR REDDY ACCOUNTANT MEMBER M/S. DHANKAMAL COMMONSALES PVT. LTD 6(1), KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES ITA NO. 2089/KOL/2017 ASSESSMENT YEAR: 2012-13 M/S. DHANKAMAL COMMONSALES PVT. LTD LAW AND CONSISTENT WITH THE VIEW TAKEN BY US ON THIS ISSUE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND SD/- J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES