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

ITA 2090/KOL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9857 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 131; 68

Judgement Text

ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 INCOME TAX OFFICER,................................ ..................................APPELLANT WARD-6(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. DHANGANGA REALTORS PVT. LIMITED,.............. ...................RESPONDENT 9/12, LAL BAZAR STREET, KOLKATA-700 001 [PAN: AAECD1941Q] APPEARANCES BY: SHRI ROBIN CHOUDHURY, ADDL. CIT, SR. D.R , FOR THE APPELLANT SHRI V.K. JAIN, FCA, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JULY 11, 2019 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 25, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KOLKATA ZONE) :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 20.07.2017 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.9.81 CRORES MADE BY THE ASSESSING OFFICER UNDER SECTION 68 BY TREATING THE SHARE CAPI TAL AND SHARE PREMIUM RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONS IDERATION AS UNEXPLAINED CASH CREDIT. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION D ECLARING TOTAL INCOME OF RS.440/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE CLAIM OF THE ASSESSEE OF HAVING RAISED SHARE CAPITAL OF RS.1 ,98,000/- WITH PREMIUM ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 2 OF RS.9,79,02,000/- WAS EXAMINED BY THE ASSESSING O FFICER. IN THIS REGARD, HE NOTED, AT THE OUTSET, THAT THE ASSESSEE-COMPANY HAD NO TRACK RECORD OR ASSET BASE AND APPARENTLY WITH NO VISIBLE FUTURE PR OSPECT, IT HAD RECEIVED HIGH PREMIUM PER SHARE WHICH DEFIED ALL COMMERCIAL AND FINANCIAL PRUDENCE AND LOGIC. DURING THE COURSE OF THE EXAMIN ATION, SUMMONS UNDER SECTION 131 WERE ISSUED BY THE ASSESSING OFFI CER TO THE DIRECTORS OF THE ASSESSEE-COMPANY AS WELL AS TO THE DIRECTORS OF THE INVESTOR COMPANIES. NONE, HOWEVER, APPEARED IN RESPONSE TO T HE SAID SUMMONS FOR EXAMINATION BEFORE THE ASSESSING OFFICER. NEVERTHEL ESS, CERTAIN DETAILS AND DOCUMENTS WERE FURNISHED ON PERUSAL OF WHICH, T HE ASSESSING OFFICER RECORDED HIS FINDINGS AS UNDER:- (I) ALL THE COMPANIES WERE IN THEIR INITIAL YEARS OF OPERATION; (II) THEY WERE BASICALLY INVESTMENT COMPANIES, (III) INCOME TAX RETURNS FILED BY THEM SHOWED A NOM INAL INCOME/LOSS; (IV) THERE WAS HARDLY ANY BUSINESS ACTIVITY CARRIED ON BY THESE COMPANIES; (V) INVESTOR-COMPANIES RECEIVED SHARE CAPITAL WITH HUGE PREMIUM, WHICH IN TURN WAS INVESTED IN THE ASSESSEE - COMPANY AS WELL AS SIMILAR OTHER COMPANIES. ON THE BASIS OF THE ABOVE FINDINGS RECORDED BY HIM , THE ASSESSING OFFICER ARRIVED AT A CONCLUSION THAT THERE WAS ABSO LUTELY NO JUSTIFICATION FOR THE EXORBITANT PREMIUM RECEIVED BY THE ASSESSEE -COMPANY ON ALLOTMENT OF ITS EQUITY SHARES. HE ALSO HELD THAT T HE CLAIM OF THE ASSESSEE OF HAVING RECEIVED EXORBITANT PREMIUM ON ALLOTMENT OF ITS SHARES WAS NOT ACCEPTABLE EVEN IN THE LIGHT OF PREPONDERANCE OF PR OBABILITY AND NORMAL HUMAN BEHAVIOUR. ACCORDINGLY RELYING ON THE VARIOUS JUDICIAL PRONOUNCEMENTS DISCUSSED IN HIS ORDER, THE ASSESSIN G OFFICER TREATED THE ENTIRE AMOUNT OF RS.9.81 CRORES RECEIVED BY THE ASS ESSEE-COMPANY ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM AS UNEXP LAINED CASH CREDIT AND ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 3 ASSESSEE UNDER SECTION 68 IN THE ASSESSMENT COMPLET ED UNDER SECTION 143(3) VIDE AN ORDER DATED 28.03.2015. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) CHALLENGING THE ADDITION MADE BY THE A SSESSING OFFICER UNDER SECTION 68 ON ACCOUNT OF SHARE CAPITAL AND SH ARE PREMIUM AMOUNT AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A SSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 MAIN LY BY RELYING ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF JATIA INVESTMENT COMPANY VS.- CIT [206 ITR 718]. THE RELEVANT OBSER VATIONS AND FINDINGS RECORDED BY THE LD. CIT(APPEALS) IN THIS REGARD IN HIS IMPUGNED ORDER ARE EXTRACTED BELOW:- THE SHARE TRANSACTION, ADDED U/S 68 OF THE ACT AS UNEXPLAINED CASH CREDIT WILL NOT COME UNDER THE PRE VIEW OF CASH CREDIT, AS THERE IS NO CASH RECEIPT OR RECE IPT OF ANY MONEY OR CREDIT OF ANY MONEY. THE ASSESSEE ALLO TTED ITS SHARES THROUGH JOURNAL ENTRIES ONLY. THE ALLOTM ENT OF SHARES IS AGAINST THE DISCHARGE OF SUCH DEBTS ONLY. THE AR OF THE APPELLATE PLACED HIS RELIANCE IN HONB LE JURISDICTIONAL HIGH COURT WHO HAD ACCEPTED THE CONTENTION OF THE ASSESSEE AND STATED THAT IN CASE THERE IS NO CASH RECEIPTS, THE QUESTION OF CASH CREDIT DO ES NOT ARISES. IT IS IN THE CASE OF JATIA INVESTMENT CO VS . CIT [1994] 206 ITR 718 (CAL.). THE FACTS OF THE CASE ARE SIMILAR TO THE FACTS OF T HE CASE OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF JATIA INVESTMENT CO. [1994] 206 ITR 718 (CAL.). THE AO PLACED HIS RELIANCE ON THE VARIOUS JUDGMENTS AS MENTIONED IN THE ASSESSMENT ORDER. HOWEVER AO'S ACT ION IN MAKING ADDITION U/S 68 BY RELYING UPON THE DECIS IONS IS TOTALLY MISPLACED. THE FACTS OF THE CASES, AS CI TED BY THE AO IN HIS ORDER ARE TOTALLY DIFFERENT WITH THE FACTS OF THE APPELLANT. IN THOSE CASES, AS REFERRED BY THE A O, THE ASSESSEE HAD RECEIVED MONIES BY CHEQUE/DRAFT AND ALLOTTED SHARES, WHEREAS IN THE CASE UNDER CONSIDER ATION, NO MONEY WAS RECEIVED THROUGH BANKING CHANNEL BY TH E ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 4 APPELLANT. THERE IS NO CASH TRANSACTION IN THE CASE OF THE APPELLANT AS THE SHARES WERE ISSUED AGAINST THE SHA RES OF ANOTHER COMPANIES. ON THE BASIS OF SUBMISSIONS WITH DOCUMENT, IT CAN SAFELY CONCLUDED THAT THE INFORMAT ION THAT THE SHARES WERE ISSUED AGAINST THE SHARES WAS VERY MUCH AVAILABLE WITH THE AO DURING THE ASSESSMENT PROCEEDING. THE AO FAILED TO APPRECIATE THE FACT THAT THERE WAS NO SUM CREDITED IN THE BOOKS OF ACCOUNT OF THE APPELLA TE AND NO MONEY WAS RECEIVED. THE ASSESSEE HAD ALLOTTE D ITS SHARES AGAINST THE DISCHARGE OF DEBTS BY JOURNAL EN TRIES IN BOOKS. THE AO FAILED TO VERIFY THE FACTS OF THE CASE. THE SHARES WERE ALLOTTED AGAINST THE ACQUISITION OF INVESTMENTS UNDER THE AGREEMENTS. THE COPIES THESE DOCUMENTS WERE ALSO FILED DURING THE APPELLATE PROCEEDINGS. I FIND THAT THERE IS NO REAL CASH ENTR Y ON THE CREDIT SIDE OF THE CASH BOOK. THE SHARES WERE ISSUE D AGAINST THE SHARE. IT IS MERELY A NOTIONAL ENTRY AN D THERE IS NO REAL CREDIT IN THE CASH BOOK AND BANK ACCOUNT . THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY UNEXPLAINED CASH CREDIT CANNOT ARISE. THEREFORE, TH E QUESTION OF CASH CREDIT DOES NOT COME IN, THERE BEI NG NO ACTUAL PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTIONS ARE MERE BOOK ENTRIES. THE TRANSACTION S SHOWING THE AMOUNT AS RECEIVED IN CASH OR IN KIND A ND 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 E NTRIES CLEARLY SHOW THAT NO CASH, IN FACT, FLOWED. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES OF THE CASE, I FIND SUBSTANCE IN THE ARGUMENT OF THE AR THAT THERE IS NO CASH INVOLVED I N THE ISSUE OF SHARE CAPITAL IN THE APPELLATE CASE. IN VI EW OF THE AFORESAID FINDINGS AND RESPECTFULLY FOLLOWING T HE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT DECI SION IN THE CASE OF JATIA INVESTMENT CO, I HAVE COME TO THE CONCLUSION THAT THE ISSUE IS SQUARELY COVERED BY TH E DECISION OF JURISDICTIONAL HI.GH COURT AS MENTIONED AND DISCUSSED ABOVE. I HAVE NO OPTION BUT TO ACCEPT THE ARGUMENTS TENDERED BY THE AR OF THE APPELLANT IN TH IS RESPECT THAT THERE IS NO SUM WAS CREDITED IN THE BO OKS OF ACCOUNT AS PER THE PROVISION U/S 68 OF THE ACT. ACCORDINGLY, THE CASE OF APPELLATE DOES NOT COME UN DER THE PREVIEW OF THE SECTION 68 OF THE ACT. FURTHER, I HAVE NO HESITATION TO HOLD THAT THE IMPUGNED ADDITION MA DE ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 5 BY INVOKING THE PROVISIONS OF SECTION 68 BY THE AO IS NOT JUSTIFIED IN THE CIRCUMSTANCES. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION MADE ON THIS ACCOUN T. THESE GROUNDS OF APPEAL ARE ALLOWED. [PAGE 13-16] AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. THE LD. D.R. SUBMITTED THAT NEITHER THE DIRECTOR S OF THE ASSESSEE- COMPANY NOR EVEN THE DIRECTORS OF THE INVESTOR COMP ANIES HAD APPEARED BEFORE THE ASSESSING OFFICER FOR EXAMINATION IN RES PONSE TO THE SUMMONS ISSUED UNDER SECTION 131. HE CONTENDED THAT THIS VI TAL ASPECT, HOWEVER, WAS COMPLETELY IGNORED BY THE LD. CIT(APPEALS) AND THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 WAS DELETED BY HIM BY RELYING ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF JATIA INVESTMENT COMPANY (SUPRA). HE CONTENDED THAT THE C ASE OF JATIA INVESTMENT CO. (SUPRA) DECIDED BY THE HONBLE CALCU TTA HIGH COURT AND RELIED UPON BY THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER TO GIVE RELIEF TO THE ASSESSEE IS DISTINGUISHABLE ON FACTS. HE ALSO C ONTENDED THAT THE FOLLOWING JUDICIAL PRONOUNCEMENTS, ON THE OTHER HAN D, ARE IN FAVOUR OF THE REVENUE ON THIS ISSUE:- (I) SMT. REKHA KRISHNA RAJ VS.- ITO [261 CTR 79 ]; (II) ITO VS.- BLESSINGS COMMERCIAL PVT. LIMITED [9 1 TAXMANN.COM 176 (KOLKATA-TRIB.); (III) VIMAL ORGANICS LIMITED VS.- CIT [297 CTR 54 9 (ALLAHABAD)]. THE LD. D.R. ALSO CONTENDED THAT NONE HAD APPEARED ON BEHALF OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S AND IN THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, IT WAS NOWHERE SP ECIFICALLY POINTED OUT THAT THE AMOUNT OF SHARE CAPITAL AND SHARE PREMIUM IN QUESTION WAS NOT RECEIVED BY THE ASSESSEE IN CASH OR BY CHEQUE. HE I NVITED OUR ATTENTION TO THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R TO SHOW THAT THE ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 6 ASSESSING OFFICER IN THE ABSENCE OF SUCH SPECIFIC C ASE MADE OUT BY THE ASSESSEE HAD NO OCCASION TO EXAMINE/VERIFY THE CASE OF THE ASSESSEE IN THE LIGHT OF THE DECISION OF THE HONBLE CALCUTTA H IGH COURT IN THE CASE OF JATIA INVESTMENT CO. HE CONTENDED THAT THE LD. CIT( APPEALS), HOWEVER, OVERLOOKED THIS VITAL ASPECT AND ALLOWED A RELIEF T O THE ASSESSEE BY RELYING ON THE COPIES OF AGREEMENTS BETWEEN THE ASS ESSEE AND THE SHARE SUBSCRIBERS, WHICH WERE FILED FOR THE FIRST TIME BE FORE HIM. HE CONTENDED THAT THERE IS THUS A CLEAR VIOLATION OF RULE 46A OF INCOME TAX RULES, 1962 BY THE LD. CIT(APPEALS) AND URGED THAT THE MATTER M AY BE SENT BACK TO THE ASSESSING OFFICER FOR VERIFICATION/EXAMINATION OF T HE CASE MADE OUT BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE DL. CIT( APPEALS) BY RELYING ON THE ADDITIONAL EVIDENCE. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT( APPEALS) GIVING RELIEF TO THE ASSESSEE ON THE ISSUE UNDER CONSIDERA TION. HE CONTENDED THAT THE TRANSACTIONS INVOLVING RAISING OF SHARE CAPITAL AND SHARE PREMIUM MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDER ATION DID NOT REPRESENT CASH CREDIT AS THERE WAS NO CASH INVOLVED IN THE SAID TRANSACTION AND ITS SHARES WERE ISSUED BY THE ASSES SEE-COMPANY AGAINST INVESTMENT MADE IN THE SHARES OF OTHER COMPANIES. H E CONTENDED THAT THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF JATIA INVESTMENT CO. (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AND THE LD. CIT(APPEALS) WAS FULLY JUSTIFIED IN DELETIN G THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 BY RELYING O N THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE FIRST IS SUE THAT IS REQUIRED TO BE CONSIDERED AND DECIDED RELATES TO THE APPLICABIL ITY OF SECTION 68 TO THE TRANSACTIONS WHERE THERE IS NO CASH INVOLVED AND TH ERE IS NO CREDIT TO THE CASH ACCOUNT. IN THIS REGARD, THE LD. D.R. HAS RELI ED ON THREE JUDICIAL ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 7 PRONOUNCEMENTS IN SUPPORT OF THE REVENUES CASE. IN THE FIRST CASE OF BLESSINGS COMMERCIAL PVT. LIMITED (SUPRA) RELIED UP ON BY THE LD. D.R., CHEQUES OF HUGE AMOUNT WERE ISSUED IN FAVOUR OF THE ASSESSEE AGAINST THE ISSUE OF SHARE CAPITAL AND IT WAS HELD BY THE TRIBU NAL THAT SECTION 68 WAS APPLICABLE AS A SUM OF MONEY WAS CREDITED IN THE BO OKS OF THE ASSESSEE. IN THE CASE OF VIMAL ORGANICS LIMITED (SUPRA) RELIED U PON BY THE LD. D.R., THE ASSESSEE HAD RECEIVED CHEQUES FOR A SUM OF RS.15,00 ,000/- AND ENTRIES IN THIS REGARD WERE MADE IN THE BOOKS OF ACCOUNT OF TH E ASSESSEE FOR HAVING RECEIVED THE SAID AMOUNT BY WAY OF UNSECURED LOANS FROM VARIOUS PERSONS. IN THESE FACTS OF THE SAID CASE, IT WAS HE LD BY THE HONBLE ALLAHABAD HIGH COURT THAT SUM FOUND CREDITED IN TH E BOOKS OF ACCOUNT OF THE ASSESSEE INCLUDED WITHIN ITS FOLD, THE ENTRY E ITHER BY WAY OF CASH OR BY CHEQUES IRRESPECTIVE OF THE ENCASHMENT OF THE CH EQUES AND THE ESSENTIAL CONDITIONS FOR APPLICABILITY OF SECTION 6 8 STOOD FULFILLED. BOTH THESE CASES CITED BY THE LD. D.R. THUS INVOLVED DIF FERENT FACTS AND THE SAME, THEREFORE, ARE NOT APPLICABLE IN THE PRESENT CONTEXT, WHERE WE ARE CONSIDERING THE APPLICABILITY OF SECTION 68 TO THE TRANSACTIONS WHICH DO NOT INVOLVE ANY CASH AND THERE IS NO CREDIT TO THE CASH ACCOUNT. 7. AS REGARDS THE THIRD CASE OF SMT. REKHA KRISHNA RAJ (SUPRA) RELIED UPON BY THE LD. D.R., SECTION 68 WAS HELD TO BE APP LICABLE BY THE HONBLE KARNATAKA HIGH COURT EVEN TO AN UNEXPLAINED CREDIT REPRESENTING VALUE OF SUPPLIES MADE BY SUPPLIERS ON CREDIT. WHILE ARRIVIN G AT THIS CONCLUSION, IT WAS HELD BY THEIR LORDSHIPS THAT THERE IS NO INDICA TION IN SECTION 68 THAT SUCH A CREDIT SHOULD BE A CASH CREDIT. IT WAS HELD THAT IT MAY BE A CASH CREDIT OR IT MAY BE A CREDIT REPRESENTING THE VALUE OF THE SUPPLIES MADE BY THE SUPPLIERS ON CREDIT AND THE ESSENCE FOR APPL YING SECTION 68 IS THAT THE CREDIT SHOULD BE SHOWN IN THE ACCOUNT OF THE AS SESSEE. ALTHOUGH THIS DECISION SUPPORTS THE CASE OF THE REVENUE ON THE IS SUE UNDER CONSIDERATION, IT IS OBSERVED THAT THE VIEW TAKEN B Y THE HONBLE KARNATAKA HIGH COURT IN THE SAID CASE IS CONTRARY T O THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF JATIA IN VESTMENT CO. (SUPRA) ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 8 RELIED UPON BY THE LD. CIT(APPEALS) TO GIVE RELIEF TO THE ASSESSEE ON THE ISSUE UNDER CONSIDERATION. IN THE CASE OF JATIA INV ESTMENT CO. (SUPRA), THE THREE NBFCS HAD TAKEN LOANS FROM THE PROPRIETARY CO NCERN BELONGING TO THE SAME GROUP. IN THE SAID CASE, THEY WERE REQUIRE D TO BE LIQUIDATED THE LOANS BORROWED FROM THE SAID PROPRIETARY CONCERN OF SHRI J.M. JATIA AS PER THE RBI GUIDELINES BUT THERE WAS NO CASH AVAILABLE TO REPAY THE SHARES HELD BY THE THREE NBFCS, WHICH WERE TRANSFERRED TO AN INVESTMENT COMPANY, NAMELY JATIA INVESTMENT CO. AND THE AMOUNT S WERE ADJUSTED BY THE NBFCS AGAINST THE LOAN AMOUNT PAYABLE TO THE PR OPRIETARY CONCERN. THE PARTNERSHIP FIRM OF JATIA INVESTMENT CO. THUS R ECEIVED SHARES FROM THE THREE NBFCS AND ALSO TOOK OVER THE LOANS PAYABL E BY THE SAID NBFCS TO THE PROPRIETARY CONCERN. THESE TRANSACTIONS WERE ENTERED INTO IN ITS BOOKS OF ACCOUNT BY THE PARTNERSHIP FIRM THROUGH CA SH BOOK BY DEBITING THE INVESTMENT IN SHARES AND CREDITING THE LOAN AMO UNT OF THE PROPRIETARY CONCERN. THIS CREDIT APPEARING IN THE BOOKS OF ACCO UNT OF THE PARTNERSHIP FIRM OF M/S. JATIA INVESTMENT CO. (SUPRA) WAS TREAT ED BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 AND ON CONFIRMATION OF THE SAME, THE MATTER REACHED TO THE HONBLE CALC UTTA HIGH COURT. IT WAS HELD BY THEIR LORDSHIPS THAT WHEN THE CASH DID NOT PASS AT ANY STAGE AND SINCE THE RESPECTIVE PARTIES DID NOT RECEIVE CASH N OR DID PAY ANY CASH, THERE WAS NO REAL CASH ENTRY ON THE CREDIT SIDE OF THE CASH BOOK AND THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDIT WOULD NOT ARISE. IN OUR OPINION, THE RATIO O F THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JA TIA INVESTMENT CO. (SUPRA) SQUARELY COVERS THE ISSUE UNDER CONSIDERATI ON IN FAVOUR OF THE ASSESSEE AND RESPECTFULLY FOLLOWING THE SAME, WE HO LD THAT SECTION 68 IS NOT APPLICABLE WHEN THE RELEVANT TRANSACTIONS DO NO T INVOLVE ANY CASH AND THERE IS NO CREDIT TO THE CASH ACCOUNT. WE, THE REFORE, HOLD THAT SECTION 68 HAS NO APPLICATION TO THE TRANSACTIONS W HICH DOES NOT INVOLVE CASH AND WHERE THERE IS NO CREDIT TO CASH ACCOUNT. ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 9 8. THE NEXT QUESTION THAT ARISES FOR OUR CONSIDERAT ION IN THE CONTEXT OF PRESENT CASE IS WHETHER THE TRANSACTIONS IN QUESTIO N OF ISSUE OF SHARE CAPITAL WITH PREMIUM BY THE ASSESSEE-COMPANY INVOLV ED ANY CASH OR NOT. IN THIS REGARD, IT IS OBSERVED THAT EVEN THOUGH THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER HAS RECORDED A FINDING OF FACT THAT NO MONEY WAS RECEIVED THROUGH BANKING CHANNEL BY THE ASSESSEE AN D THERE WAS NO CASH TRANSACTION IN THE CASE OF THE ASSESSEE AS THE SHAR ES WERE ISSUED AGAINST THE SHARES OF ANOTHER COMPANIES, THERE WAS NO SUCH FINDING RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. AS R IGHTLY POINTED OUT BY THE LD. D.R., NO SUCH CASE, IN FACT, WAS SPECIFICAL LY MADE OUT BY THE ASSESSEE BEFORE THE ASSESSING OFFICER CHALLENGING T HE APPLICABILITY OF SECTION 68 ON THE GROUND THAT THE RELEVANT TRANSACT IONS OF THE ISSUE OF SHARES DID NOT INVOLVE CASH AND IT WAS NOT A CASE O F RECEIPT OF ANY MONEY THROUGH BANKING CHANNEL AGAINST THE ISSUE OF SHARES . AS A MATTER OF FACT, NEITHER THE DIRECTORS OF THE ASSESSEE-COMPANY NOR T HE DIRECTORS OF THE INVESTOR COMPANIES APPEARED BEFORE THE ASSESSING OF FICER FOR EXAMINATION IN RESPONSE TO SUMMONS ISSUED UNDER SEC TION 131 AND THE RELEVANT DETAILS AND DOCUMENTS WERE FURNISHED BY TH E ASSESSING OFFICER IN AN ATTEMPT TO EXPLAIN THE RELEVANT TRANSACTIONS AS IF SECTION 68 WAS APPLICABLE. IT APPEARS THAT THE LD. CIT(APPEALS), H OWEVER, OVERLOOKED THIS VITAL FACT AND ALLOWED THE RELIEF TO THE ASSESSEE B Y DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 BY R ELYING ON A NEW STAND TAKEN BY THE ASSESSEE IN THE LIGHT OF ADDITIONAL EV IDENCE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE SAME. AS RIGHTLY CONTENDED BY THE LD. D.R., THERE IS THUS A CLEAR VI OLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 BY THE LD. CIT(APPEALS) AND THIS MATTER, THEREFORE, SHOULD GO BACK TO THE ASSESSING OFFICER IN ORDER TO GIVE HIM AN OPPORTUNITY TO VERIFY THIS STAND TAKEN BY THE ASSES SEE FOR THE FIRST TIME BEFORE THE LD. CIT(APPEALS). WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VE RIFYING THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION OF ISSUE OF SHARES DID NOT INVOLVE ANY CASH AND THERE WAS NO CREDIT TO THE CAS H ACCOUNT AND TO ITA NO. 2090/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. DHANGANGA REALTORS PVT. LIMITED 10 DECIDE THE SAME ACCORDINGLY IN THE LIGHT OF THE DEC ISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JATIA INVE STMENT CO. (SUPRA). 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 25 , 2019. SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER V ICE-PRESIDENT (KZ) KOLKATA, THE 25 TH DAY OF SEPTEMBER, 2019 COPIES TO : (1) INCOME TAX OFFICER, WARD-6(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. DHANGANGA REALTORS PVT. LIMITED, 9/12, LAL BAZAR STREET, KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKAT A, (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.