M/s. Krishna Tissues Pvt. Ltd., , Kolkata V. ACIT, Central Circle - 3(1), Kolkata , Kolkata

ITA 2215/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0828 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 18-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING
• Assessee Lawyers: S K TULSYAN
• Keywords: Unexplained cash credit; Bogus Share capital; Opportunity of cross examination; Source of fund; Question of law; Corroborative evidences; Accommodation entries; Retraction
• Section: 143(3); 133A; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A NO. 2215/KOL/20 17 ASSESSMENT YEAR : 2014-1 5 M/S KRISHNA TISSUES PVT. LTD. -VS- ACIT, CC-3(1), KOLKATA [PAN: AACCK 5813 G] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.K. TULSYAN, AR FOR THE RESPONDENT : SHRI G. HANGSHING, CIT DATE OF HEARING : 16.11.2017 DATE OF PRONOUNCEMENT : 01.12.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-21, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO.10762/ACIT, CC-3(1)/CIT(A)-21/KOL/2016-17 DATED 08.09.2017 AGAINST THE ORDER PASSED BY THE ACIT, CENTRAL CIRCL E-3(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 29.12.2016 FOR THE ASSESSMENT YEAR 2014-15. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE ADDITION MADE TOWARDS SH ARE CAPITAL U/S 68 OF THE ACT IN THE SUM OF RS 10,56,00,000/- IN THE FACTS AND CIRCU MSTANCES OF THE CASE. 2 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF COATED DIPLEX PAPER BOARD. THE RETURN OF INCOME FOR THE ASST YEAR 2014-15 WAS FILE D BY THE ASSESSEE ON 27.11.2014 DISCLOSING TOTAL INCOME OF RS NIL. DUR ING THE YEAR UNDER REVIEW, THE ASSESSEE HAD RECEIVED EQUITY SHARE CAPITAL WITH SHA RE PREMIUM FROM THE FOLLOWING SHAREHOLDERS :- SR. NO. NAME OF THE ALLOTTEE PAN NO. OF SHARES ALLOTTED FACE VALUE @ RS. 10/- PREMIUM @ 50/- TOTAL (RS. 60/- PER SHARE) 1 APEX TRADEXIM PVT. LTD. AAGCA 8097 C 2,70,0000 2,70,0000 13,500,000 16,200,000 2 BANSI DEALCOM PVT. LTD. AAECB 1132 B 20,000 200,000 1,000,000 1,200,000 3 EPSON ELECTRONICS PVT. LTD AABCE 4985 E 3,750 37,500 187,500 225,000 4 EXTREME TIE- UP PVT. LTD. AACCE 0207 G 12,500 125,000 625,000 750,000 5 RBM IMPEX PVT. LTD. AADCR 6957 Q 411,250 4,112,500 20,562,500 24,675,000 6 SIKSHA DEALTRADE PVT. LTD. AAQCS 7851 L 17,500 175,000 875,000 1,050,000 3 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 3 TOTAL 735,000 7,350,000 36,750,000 44,100,000 FURTHER THE ASSESSEE COMPANY RECEIVED PREFERENCE SH ARE CAPITAL DURING THE YEAR UNDER REVIEW FROM APEX TRADEXIM PVT LTD. THE ASSES SEE ALLOTTED 615000 PREFERENCE SHARES @ RS 100 PER SHARE TO THE SAID SH AREHOLDER. 3.1. TOTAL CAPITAL RECEIVED DURING THE ASST YEAR 20 14-15 FACE VALUE PREMIUM TOTAL EQUITY CAPITAL 73,50,000 3,67,50,000 4,41,00,000 PREFERENCE CAPITAL 6,15,00,000 6,15,00,000 -------------------- TOTAL CAPITAL WITH PREMIUM 10,56,00,000 -------------------- 3.2. A SURVEY OPERATION WAS CONDUCTED U/S 133A OF T HE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 29.7.2015 . POST SURVE Y OPERATIONS, STATEMENT WAS RECORDED U/S 131 OF THE ACT BY DDIT (INV.) OF THE F OLLOWING DIRECTORS OF COMPANIES FROM WHICH THE KRISHNA TISSUES GROUP RAIS ED SHARE CAPITAL :- NAME OF THE PARTY STATEMENT TAKEN ON STATEMENT RE TRACTED ON BRIJ MOHAN NANGALIA 17.8.2015 18.8.2015 JASWANT KUMAR NANGALIA 14.9.2015 16.9.2015 RAJESH KUMAR SINGHANIA 16.9.2015 18.9.2015 4 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 4 3.3. POST SURVEY OPERATIONS AND DURING THE COURSE O F ASSESSMENT FOR THE IMMEDIATELY PRECEDING YEAR I.E ASST YEAR 2013-14, T HE LD AO ASKED THE ASSESSEE COMPANY TO EXPLAIN THE GENUINENESS OF THE SHARE CAP ITAL RAISED DURING THE YEAR. THE LD AO WAS COMPLETELY AWARE OF THE SURVEY PROCEE DINGS AND THE STATEMENT RECORDED OF THE ABOVE PARTIES BY THE DDIT (INV.). THE ASSESSEE VIDE LETTER DATED 9.11.2015 SUBMITTED THE DETAILS OF SHARE ALLOTMENT DURING THE ASST YEAR 2013-14 AND ALSO SUBMITTED THE ANNUAL ACCOUNTS, BANK STATEM ENTS, ITR ACKNOWLEDGEMENTS AND CERTIFICATE OF THE SOURCE OF FUNDS OF THE SHARE APPLICANT COMPANIES. THE DETAILS OF SHARE ALLOTMENT MADE DURING ASST YEAR 20 13-14 ARE AS UNDER :- NAME OF PARTY NO. OF SHARES ISSUED SHARE CAPITAL @ 10/- PER SHARE SHARE PREMIUM @ 50/- PER SHARE TOTAL CAPITAL RAISED DIRECTOR CHAKRA TRADECOM PVT. LTD. 85,000 850,000 4,250,000 5,100,000 RAJESH KUMAR SINGHANIA SHIKSHA DEALTRADE PVT. LTD. 50,000 500,000 2,500,000 3,000,000 BRIJ MOHAN NANGALIA EXTREME TIE UP PVT. LTD. 40,000 400,000 2,000,000 2,400,000 JASWANT KUMAR NANGALIA RBM IMPEX PVT. LTD. 110,000 1,100,000 5,500,000 6,600,000 BRIJ MOHAN NANGALIA 5 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 5 EPSON ELECTRONICS PVT. LTD. 50,000 500,000 2,500,000 3,000,000 BRIJ MOHAN NANGALIA APEX TRADEXIM PVT. LTD. 885,000 8,850,000 44,250,000 53,100,000 RAJESH KUMAR SINGHANIA GBR HOLDINGS PVT. LTD. 45,000 450,000 2,250,000 2,700,000 JASWANT KUMAR NANGALIA MAHAMAYA TIE UP PVT. LTD. 15,000 150,000 750,000 900,000 RAJESH KUMAR SINGHANIA APEX BARTER PVT. LTD. 50,000 500,000 2,500,000 3,000,000 RAJESH KUMAR SINGHANIA 1,330,000 13,300,000 66,500,000 79,800,000 THE LD AO PERUSED THE DOCUMENTS SUBMITTED BY THE AS SESSEE IN DETAIL AND THEREAFTER ISSUED SUMMONS U/S 131 OF THE ACT DATED 18.11.2015 TO THE DIRECTORS OF THE ABOVE COMPANIES TO APPEAR PERSONALLY AND GIVE C OMPLETE DETAILS OF INVESTEMTN IN THE SHARES OF ASSESSEE COMPANY. THE SAID SUMMON WAS DULY COMPLIED WITH BY THE PARTIES CONCERNED AND ALL THE RELATED DOCUMENTS WITH REGARD TO THE INVESTMENT IN THE ASSESSEE COMPANY IN ASST YEAR 2013-14 WERE S UBMITTED. THE LD AO INDEPENDENTLY EXAMINED THE DOCUMENTS SUBMITTED BY T HE ASSESSEE AND THE SHARE APPLICANT COMPANIES IN DETAIL AND FOUND NO DISCREPA NCY WITH REGARD TO THE 6 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 6 IDENTITY, CREDITWORTHINESS OF THE PARTIES AND GENUI NENESS OF THE SHARE ALLOTMENT MADE DURING THE YEAR. THE ASSESSMENT FOR THE ASST YEAR 2013-14 WAS COMPLETED U/S 143(3) OF THE ACT ON 26.3.2016 AND NO ADDITION TOWARDS SHARE CAPITAL WAS MADE U/S 68 OF THE ACT BY THE LD AO, THOUGH THE SA ME WAS PASSED SUBSEQUENT TO THE SURVEY OPERATIONS CONDUCTED ON 29.7.2015. 3.4. FURTHER EVEN IN ASST YEAR 2012-13, THE ASSESS EE ALLOTTED 1522300 EQUITY SHARES TO THE FOLLOWING SHAREHOLDERS AT A PREMIUM O F RS 90 PER SHARE :- NAME OF THE PARTY NUMBER OF SHARES APEX TRADEXIM PVT LTD 1,60,000 RBM IMPEX PVT LTD 30,000 EXTREME TIE UP PVT LTD 10,000 SIDDHI SUPPLIERS PVT LTD 13,22,300 ---------------- 15,22,300 IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASS T YEAR 2012-13, THE LD AO ASKED THE ASSESSEE TO SUBMIT THE SUPPORTING PAPERS WITH REGARD TO THE INCREASE IN SHARE CAPITAL. IN RESPONSE, THE ASSESSEE VIDE LETT ER DATED 29.10.2014 SUBMITTED THE ANNUAL ACCOUNTS, BANK STATEMENTS, ITR ACKNOWLEDGEME NTS AND CERTIFICATE OF THE SOURCE OF FUNDS OF THE SHARE APPLICANT COMPANIES. THE LD AO PERUSED THE SUBMISSIONS OF THE ASSESSEE IN DETAIL AND FOUND NO DISCREPANCY IN THE SHARE CAPITAL RAISED DURING THE YEAR. THE ASSESSMENT FOR THE ASS T YEAR 2012-13 WAS COMPLETED U/S 143(3) OF THE ACT ON 13.11.2014 AND NO ADDITION TOWARDS SHARE CAPITAL WAS MADE U/S 68 OF THE ACT BY THE LD AO. 7 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 7 3.5. THE PROCEEDINGS FOR THE ASST YEAR 2014-15 BEGA N WITH THE ISSUANCE OF NOTICE U/S 143(2) OF THE ACT DATED 28.8.2015 AND THE ASSES SEE WAS ASKED TO EXPLAIN THE GENUINENESS OF SHARE CAPITAL RAISED DURING THE YEAR AMONG OTHER ISSUES. IN RESPONSE, THE ASSESSEE SUBMITTED THE ANNUAL ACCOUNT S, ITR ACKNOWLEDGEMENTS AND RELEVANT BANK STATEMENTS OF SHARE APPLICANT COMPANI ES. SUMMONS U/S 131 OF THE ACT DATED 9.12.2016 WAS AGAIN ISSUED BY THE LD AO T O THE DIRECTORS OF THE SHARE APPLICANT COMPANIES BEING BRIJ MOHAN NANGALIA , JAS WANT KUMAR NANGALIA AND RAJESH KUMAR SINGHANIA. HOWEVER, SUMMON WAS NOT IS SUED TO THE DIRECTOR OF BANSI DEALCOM PVT LTD. IN RESPONSE, THE DIRECTORS OF THE SHARE APPLICANT COMPANIES APPEARED ON 16.12.2016 AND SUBMITTED THE ANNUAL ACCOUNTS, ITR, COMPUTATION OF INCOME AND THE RELEVANT BANK STATEME NTS OF THE SHARE APPLICANT COMPANIES SUBSTANTIATING THE GENUINENESS OF SHARE T RANSACTION. FURTHER, A COPY OF THE RETRACTION AFFIDAVIT WAS ALSO FILED RETRACTING THE CONTENTS OF THE STATEMENT RECORDED BY THE DDIT (INV.) DURING SURVEY OPERATION S. 3.6. THE LD AO OBSERVED THAT IN THE STATEMENT RECO RDED OF BRIJ MOHAN NANGALIA, HE HAD COMMENTED THAT HE HAD PROVIDED ACCOMMODATION ENTRIES OF BOGUS SHARE CAPITAL TO ASSESSEE COMPANY. SINCE THE STATEMENTS WERE RECORDED AT THE BACK OF THE ASSESSEE, THE ASSESSEE REQUESTED THE LD AO TO PROVIDE THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHO HAS GI VEN THE ALLEGED STATEMENTS BEFORE THE DDIT(INV.). HOWEVER, THE LD AO MENTION ED IN HIS ASSESSMENT ORDER DIRECTLY THAT NO OPPORTUNITY OF CROSS EXAMINATION N EED TO BE GIVEN AS THE DIRECTORS OF THE SHARE APPLICANT COMPANIES HAD FILED THE RETR ACTION AFFIDAVIT BEFORE THE LD AO. THE ASSESSEE CAME TO KNOW OF THE RETRACTION AFFIDAVITS FILED BY THE DIRECTORS OF THE SHARE APPLICANT COMPANIES ONLY FRO M THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER AND ACCORDINGLY MADE A REQUEST TO THE LD AO SEEKING FOR 8 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 8 CERTIFIED COPIES OF THE SAID AFFIDAVITS VIDE ITS LE TTER DATED 3.1.2017 FILED ON 5.1.2017, WHICH WERE FURNISHED TO THE ASSESSEE BY T HE LD AO VIDE LETTER DATED 19.1.2017 (I.E AFTER THE COMPLETION OF ASSESSMENT F OR THE ASST YEAR 2014-15 ON 29.12.2016). 3.7. THE LD AO AGAIN RECORDED THE STATEMENT OF JASW ANT KUMAR NANGALIA AND BRIJ MOHAN NANGALIA (DIRECTORS OF SHARE SUBSCRIBING COMP ANIES) ON 16.12.2016 WHEN THEY APPEARED IN PERSON IN RESPONSE TO SUMMONS ISSU ED U/S 131 OF THE ACT, WHEREIN THEY WERE ASKED THE REASON BEHIND INVESTMEN T IN ASSESSEE COMPANY. IN RESPONSE, BOTH THE PARTIES HAD STATED THAT THEIR CO MPANIES INVESTED IN THE ASSESSEE COMPANY KEEPING IN MIND THE GROWTH AND FUTURE PROSP ECTS OF THE COMPANY. IN THIS REGARD, THE ASSESSEE SUBMITTED THAT THE PROFIT S IN THE IMMEDIATELY SUCCEEDING YEAR FY 2014-15 WAS MORE THAN 200% OF THE PROFITS I N FY 2013-14 , BEING THE RELEVANT YEAR UNDER CONSIDERATION AND PROFITS IN TH E FY 2015-16 WAS MORE THAN 300% OF THE PROFITS IN FY 2013-14 AND AS SUCH EARNI NGS PER SHARE (EPS0 HAD ALSO INCREASED. 3.8. THE LD AO NOTED THAT THERE WAS NO BASIS FOR IS SUING SHARES AT A PREMIUM OF RS 50/- PER SHARE. IN THIS REGARD, THE ASSESSEE VI DE LETTER DATED 19.6.2016 SUBMITTED THE CERTIFICATE UNDER RULE 11UA OF THE IN COME TAX RULES ISSUED BY A PRACTICING CHARTERED ACCOUNTANT WHEREIN THE VALUE O F EQUITY SHARE WAS ARRIVED AT RS 67.78 . SINCE THE ASSESSEE HAD ISSUED EQUITY SH ARES AT RS 60 PER SHARE (FACE VALUE OF RS 10 AND PREMIUM OF RS 50 PER SHARE) , AS SUCH THE TOTAL ISSUE PRICE OF RS 60/- PER SHARE WAS LESS THAN THE FAIR MARKET VAL UE AS DETERMINED IN ACCORDANCE WITH RULE 11UA OF THE RULES. 9 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 9 3.9. THE LD AO COMPLETELY OVERLOOKED THE DOCUMENTS SUBMITTED BY THE ASSESSEE AND THE DIRECTORS OF THE SHARE APPLICANT COMPANIES (WHICH WERE COLLECTED BEHIND THE BACK OF THE ASSESSEE) AND ON THE BACKDROP OF TH E DEPOSITIONS TAKEN BY THE DDIT(INV.) , HELD THE SHARE CAPITAL RAISED DURING T HE YEAR OF RS 10.56 CRORES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. IN DOIN G SO, HE ERRED IN PLACING RELIANCE ON THE STATEMENTS WHICH WERE IMMEDIATELY R ETRACTED BY THE PARTIES. THIS ACTION OF THE LD AO WAS UPHELD BY THE LD CITA BY RE ITERATING THE CONTENTS IN THE ASSESSMENT ORDER. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US O N THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) GROSSLY ERRED IN HAVING ENDORSED THE PRESUMPTION OF AO OF TREATIN G THE EQUITY SHARE CAPITAL WITH SECURITY PREMIUM OF RS. 4,41,00,000/- AND PREF ERENCE SHARE CAPITAL OF RS. 6,15,00,000/- RAISED DURING THE YEAR, AGGREGATING T O RS. 10,56,00,000/- AS ACCOMMODATION ENTRIES AND HENCE UNEXPLAINED CASH CR EDIT U/S 68 OF THE ACT WITHOUT PROPERLY APPRECIATING THE EXPLANATION OF TH E APPELLANT WITH AUTHENTIC EVIDENCES IN SUPPORT OF THE GENUINE TRANSACTIONS. 2. THAT THE AO SOLELY BASED ON THE INFORMATION RECE IVED FROM THE DDIT(INV.) AND WITHOUT UNDERTAKING ANY INDEPENDENT EXERCISE TO REB UT THE SUBMISSION AND AUTHENTIC EVIDENCES IN SUPPORT OF THE SHARE CAPITAL MADE ADDITION OF RS. 10,56,00,000/- U/S 68 OF THE ACT AND THE LD. CIT(A) ERRED IN HAVING UPHELD SUCH ILLEGAL ADDITION WITHOUT CONSIDERING THAT ALL THE S HARE APPLICANT COMPANIES HAD FURNISHED THE SOURCE OF FUNDS BEFORE INVESTING IN T HE SHARE CAPITAL OF THE APPELLANT. 3. THAT THE LD. CIT(A) FURTHER ERRED IN HAVING UPHE LD THE ADDITION OF RS. 10,56,00,000/- ON THE BASIS OF ALLEGED STATEMENTS B Y THE DIRECTORS OF DIFFERENT COMPANIES BEFORE THE DDIT(INV.) AND COMPLETELY IGNO RED THE FACT THAT THE STATEMENTS RECORDED BY THE DEPONENTS WERE RETRACTED , LEADING THE ENTIRE EXERCISE MADE BY DDIT(INV.) TO A NULLITY. 4. THAT THE LD. CIT(A) ERRED IN NOT HAVING CONSIDER ED THAT THE ADDITION MADE BY THE AO ON THE BASIS OF CASH TRAIL ASSUMED BY HIM W AS TOTALLY UNFOUNDED AND 10 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 10 BASELESS INASMUCH AS THE FIGURES SHOWN WERE IMAGINA RY AND NOT AS PER RECORDS AND FURTHERMORE THE ENTIRE TRANSACTIONS MENTIONED I N THE CASH TRAIL WERE THROUGH BANKING CHANNEL AND NO CASH WAS DEPOSITED IN THE BA NK ACCOUNT AND THEY WERE NOT RELATED PARTIES TO THE APPELLANT. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 10,56,00,000/- ON ACC OUNT OF SHARE CAPITAL RAISED BY THE APPELLANT AS UNEXPLAINED INCOME U/S 68 OF TH E ACT IN SPITE OF THAT CONDITIONS PRECEDENT TO INVOKE THE SAID SECTION HAV E NOT BEEN SATISFIED IN THE INSTANT CASE. 6. THAT THEREFORE, THE ORDER OF THE LD. CIT(A) SUFF ERS FROM ILLEGALITY AND PERVERSITY INASMUCH AS HE HAS FAILED TO APPRECIATE THAT THE TOUCHSTONE POINTS ON THE BASIC ISSUE OF ADDITION U/S 68 OF THE ACT ARE I DENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS WHICH ARE TOTALLY E STABLISHED AND NOT HENCE THE ADDITION SUSTAINED IN THE GARB OF SEC. 68 ON GENERA LIZED BACKGROUND OF SOME CASES IS NOT ONLY ARBITRARY, WHIMSICAL BUT ALSO BAD IN LAW. 7. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ADDIT ION OF RS. 10,56,00,000/- MADE BY THE AO BY INVOKING PROVISIONS OF SECTION 68 OF THE ACT AS UNEXPLAINED INCOME IN THE HANDS OF THE APPELLANT IN SPITE OF TH E FACT THAT SOURCE OF SHARE APPLICATION MONEY RECEIVED FROM THE SHARE APPLICANT S WAS ALSO ESTABLISHED WITH EVIDENCE AND THE ADDITION WAS ON THE BASIS OF SUSPI CION AND MISNOMER ONLY. 8. THAT THE LD. CIT(A) WHILE UPHOLDING THE ADDITION U/S 68 OF THE ACT OUGHT TO HAVE CONSIDERED THE SETTLED POSITION IN LAW THAT ON US WAS ON THE DEPARTMENT TO LINK THE ASSESSEE WITH THE PURPORTED UNACCOUNTED SO URCE AND WHEN THAT LINK WAS MISSING OR HAD NOT BEEN CONCLUSIVELY PROVED, IT WAS NOT OPEN TO THE DEPARTMENT TO FASTEN THE ASSESSEE WITH SUCH AN UNCALLED FOR AD DITION IN THE GARB OF UNACCOUNTED MONEY MERELY ON SURMISE AND CONJECTURE. 9. THAT WITHOUT ANY PREJUDICE TO THE ABOVE, THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT THE CASE LAWS CITED BY THE APPELLAN T WERE DIRECTLY ON THE ISSUE INVOLVED IN THE APPEAL, WHEREAS THE DECISIONS RELIE D UPON BY HIM WERE DISTINGUISHABLE TO THE FACTS AND CIRCUMSTANCES OF T HE APPELLANTS CASE AND HENCE THE ADDITIONS SUSTAINED U/S 68 OF THE ACT ON SURMIS E AND CONJECTURE IS LIABLE TO BE DELETED. 10. THAT AS THE ORDER OF LD. CIT(A) ON THE ABOVE IS SUES SUFFERS FROM ILLEGALITY AND IS DEVOID OF ANY MERIT, THE SAME SHOULD BE QUAS HED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. 11 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 11 11. THAT THE APPELLANT CRAVES LEAVE TO AMEND, ALTER , MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND/OR RESCIND ANY OR ALL OF THE ABOVE GROU NDS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE CON TAINING ALL THE RELEVANT DOCUMENTS REQUIRED FOR THE DISPOSAL OF THIS APPEAL. THE LD AR ARGUED THAT ASSESSEE IS THE LARGEST MANUFACTURER OF PAPER BOARD IN EASTERN INDIA AND IN ORDER TO EXPAND ITS BUSINESS FURTHER AND TO REDUCE THE BU RDEN OF INTEREST PAYABLE ON ITS LONG TERM BORROWINGS, THE ASSESSEE SOUGHT TO RECEIV E EQUITY AND PREFERENCE SHARE CAPITAL FROM ITS EXISTING SHAREHOLDERS OF THE COMPA NY. ACCORDINGLY IT RECEIVED EQUITY SHARE CAPITAL AT PREMIUM OF RS 50 PER SHARE (FACE VALUE RS 10 PER SHARE) TO THE UNE OF RS 7.98 CRORES FROM THE SHAREHOLDERS AS STATED ABOVE DURING THE ASST YEAR 2013-14. THE ASSESSEE COMPANY ALSO RECEIVED E QUITY SHARE CAPITAL AT PREMIUM OF RS 50 PER SHARE TO THE TUNE OF RS 4.41 C RORES DURING THE ASST YEAR 2014-15 (I.E THE YEAR UNDER APPEAL) FROM ITS EXISTI NG SHAREHOLDERS AND A NEW SHAREHOLDER. THE ONLY NEW SHAREHOLDER FROM WHOM SHA RE CAPITAL AND PREMIUM WAS RECEIVED TO THE TUNE OF RS 12 LACS DURING THE Y EAR UNDER APPEAL WAS FROM M/S BANSI DEALCOM PVT LTD (PAN AAECB1132B). THE DETA ILS OF PARTIES FROM WHOM MONIES WERE RECEIVED ARE AS FOLLOWS:- SR. NO. NAME OF ALLOTTEE NO OF SHARES ALLOTTED IN A Y 2014-15 NO. OF SHARES ALLOTTED IN A Y 2013-14 NO. OF SHARES ALLOTTED IN A Y 2012-13 1 APEX TRADEXIM PVT. LTD. 270,00 885,000 160,000 2 BANSI DEALCOM PVT. LTD. 20,000 3 EPSON ELECTRONICS PVT. 3,750 50,000 12 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 12 LTD. 4 EXTREME TI-UP PVT. LTD. 12,500 40,000 10,000 5 RBM IMPEX PVT. LTD. 411,250 110,000 30,000 6 SIKSHA DEALTRADE PVT. LTD. 17,500 50,000 5.1. APART FROM THIS, THE ASSESSEE COMPANY WAS ALSO IN RECEIPT OF PREFERENCE SHARE CAPITAL FROM ITS EXISTING EQUITY SHAREHOLDER M/S AP EX TRADEXIM PVT LTD TO THE TUNE OF RS 6.15 CRORES DURING THE YEAR UNDER APPEAL . HENCE THE TOTAL CAPITAL WITH PREMIUM RECEIVED DURING THE YEAR WORKED OUT TO RS 1 0.56 CRORES. 5.2. WE FIND FROM THE DETAILS AVAILABLE IN THE PAP ER BOOK AS UNDER :- A) THAT THE SHARE CAPITAL AND PREMIUM HAS BEEN RECE IVED BY THE ASSESSEE COMPANY DURING THE YEAR FROM ITS EXISTING SHAREHOLD ERS ONLY EXCEPT A SUM OF RS 12 LACS RECEIVED FROM M/S BANSI DEALCOM PVT LTD. B) EVEN IN ASST YEAR 2012-13, THE ASSESSEE ALLOTTED 1522300 EQUITY SHARES TO THE FOLLOWING SHAREHOLDERS AT A PREMIUM OF RS 90 PER SH ARE :- NAME OF THE PARTY NUMBER OF SHARES APEX TRADEXIM PVT LTD 1,60,000 RBM IMPEX PVT LTD 30,000 EXTREME TIE UP PVT LTD 10,000 SIDDHI SUPPLIERS PVT LTD 13,22,300 13 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 13 ---------------- 15,22,300 DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S FOR THE ASST YEAR 2012-13, THE LD AO ASKED THE ASSESSEE TO SUBMIT THE SUPPORTI NG PAPERS WITH REGARD TO INCREASE IN SHARE CAPITAL. IN RESPONSE, THE ASSESS EE VIDE LETTER DATED 29.10.2014 (COPY ENCLOSED IN PAGE 6 OF SECOND PAPER BOOK) FILE D ON 3.11.2014 SUBMITTED THE ANNUAL ACCOUNTS, BANK STATEMENTS, ITR ACKNOWLEDGEME NTS AND CERTIFICATE OF THE SOURCE OF FUNDS OF THE SHARE APPLICANT COMPANIES. THE LD AO PERUSED THE SUBMISSIONS OF THE ASSESSEE IN DETAIL AND FOUND NO DISCREPANCY IN THE SHARE CAPITAL RAISED DURING THAT YEAR. THE ASSESSMENT WAS COMPLE TED FOR THE ASST YEAR 2012-13 U/S 143(3) OF THE ACT ON 13.11.2014 WITHOUT MAKING ANY ADDITION TOWARDS SHARE CAPITAL U/S 68 OF THE ACT. (COPY OF THE SAID ORDER IS ENCLOSED IN PAGES 1 TO 5 OF SECOND PAPER BOOK). C) THE SHARE CAPITAL AND PREMIUM RECEIVED FROM THE SHAREHOLDERS DURING THE ASST YEAR 2013-14 TO THE TUNE OF RS 7.98 CRORES WAS VERI FIED BY THE LD AO BY ISSUING SUMMONS U/S 131 OF THE ACT AND THE SAME HAS BEEN AC CEPTED TO BE GENUINE BY THE LD AO AND SCRUTINY ASSESSMENT FOR THE ASST YEAR 201 3-14 WAS COMPLETED BY THE LD AO ON 26.3.2016 WHICH IS 8 MONTHS AFTER THE DATE OF SURVEY. D) THE EQUITY SHARES WERE ISSUED TO THE SHAREHOLDER S AT THE RATE OF RS 60 PER SHARE WHICH INCLUDES PREMIUM OF RS 50 PER SHARE IN BOTH A SST YEARS 2013-14 AND 2014-15. E) THE PREMIUM HAS BEEN DULY JUSTIFIED BY AN INDEPE NDENT SHARE VALUATION DONE BY A CHARTERED ACCOUNTANT IN TERMS OF RULE 11UA OF THE INCOME TAX RULES WHO 14 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 14 HAD CERTIFIED THE VALUE PER SHARE AT RS 67.78 , WHE REAS THE ASSESSEE COMPANY HAD ISSUED SHARES ONLY AT RS 60 PER SHARE ( ENCLOSED IN PAGE 202 OF THE PAPER BOOK WHICH IS PART OF THE REPLY LETTER DATED 19.9.2016 F ILED BEFORE THE LD AO DURING THE SCRUTINY PROCEEDINGS FOR ASST YEAR 2014-15) . F) ONE OF THE MAIN CONTENTIONS OF THE LD AO FOR FRA MING THE ADDITION TOWARDS SHARE CAPITAL WAS DUE TO THE FACT THAT IN THE POST SURVEY PROCEEDINGS, THE SHAREHOLDERS HAD GIVEN A STATEMENT U/S 131 OF THE A CT WHEREIN THEY HAD STATED THAT THE ENTIRE SHARE CAPITAL GIVEN TO KRISHNA TISSUES G ROUP OF COMPANIES ARE MERELY ACCOMMODATION ENTRIES. BUT THESE STATEMENTS HAD BE EN IMMEDIATELY RETRACTED WITHIN ONE OR TWO DAYS FROM THE DATE OF GIVING STAT EMENT BY WAY OF AN AFFIDAVIT EXPLAINING THE CIRCUMSTANCES IN WHICH THE STATEMENT S WERE RECORDED BY THE DDIT(INV.). THE LD AO WAS WELL AWARE OF THESE INI TIAL STATEMENTS AND SUBSEQUENT RETRACTIONS WHILE COMPLETING THE SCRUTIN Y ASSESSMENT FOR THE ASST YEAR 2013-14. AS STATED ABOVE, THE LD AO EVEN EXAMINED T HE SHAREHOLDERS IN PERSON IN ASST YEAR 2013-14 AND ACCEPTED THE FACT THAT THE EN TIRE SHARE CAPITAL RECEIVED IN THAT YEAR AS GENUINE. THE IDENTITY AND CREDITWORTHI NESS OF THE SHAREHOLDERS TOGETHER WITH THE GENUINENESS OF THE TRANSACTIONS W ERE DULY VERIFIED, EXAMINED BY THE LD AO AND ACCEPTED BY THE LD AO IN THE SCRUTINY PROCEEDINGS FOR THE ASST YEAR 2013-14 AND NO ADDITION TOWARDS SHARE CAPITAL WAS MADE THEREON U/S 68 OF THE ACT. DURING THE YEAR UNDER APPEAL (IE ASST YE AR 2014-15), SHARES WERE ISSUED BY THE ASSESSEE TO THE VERY SAME SHAREHOLDER S AT THE VERY SAME RATE INCLUDING PREMIUM OF RS 50 PER SHARE, EXCEPT IN THE CASE OF BANSI DEALCOM PVT LTD, WHICH THE LD AO DID NOT CHOSE TO EVEN VERIFY D URING THE YEAR UNDER APPEAL, WHILE HE CHOSE TO VERIFY THE OTHER SHAREHOLDERS IN THE SCRUTINY PROCEEDINGS FOR THE ASST YEAR 2014-15. THERE IS ABSOLUTELY NO REASON FO R THE LD AO TO TAKE A DIFFERENT 15 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 15 STAND IN THE ASST YEAR 2014-15 WITH REGARD TO THE G ENUINITY OF THE SHARE CAPITAL AND SHARE PREMIUM IN THIS YEAR AS NO FACTS HAD CHAN GED FROM ASST YEAR 2013-14. G) THE DIRECTORS OF THE SHARE APPLICANT COMPANIES ( BRIJ MOHAN NANGALIA, JASWANT KUMAR NANGALIA AND RAJESH KUMAR SINGHANIA) HAD RETRACTED FROM THEIR ORIGINAL STATEMENTS GIVEN DURING THE SURVEY BY FILI NG AN AFFIDAVIT BEFORE THE LD AO WHICH FACT CAME TO THE KNOWLEDGE OF THE ASSESSEE ON LY FROM THE ASSESSMENT ORDER. THIS IS EVIDENT FROM THE LETTER OF THE ASSESSEE DAT ED 3.1.2017 FILED ON 5.1.2017 SEEKING FOR THE CERTIFIED COPIES OF THE RETRACTION AFFIDAVITS FROM THE LD AO (COPY ENCLOSED IN PAGE 203 OF PAPER BOOK). IN FACT THE ASSESSEE HAD SOUGHT FOR CROSS EXAMINATION OF THESE DIRECTORS WHEN IT WAS CONFRONT ED BY THE LD AO DURING THE COURSE OF ASSESSMENT PROCCEDINGS BASED ON THE ORIGI NAL SURVEY STATEMENTS. THIS OPPORTUNITY OF CROSS EXAMINATION WAS DENIED BY THE LD AO TO THE ASSESSEE. THE CERTIFIED COPIES OF THE AFFIDAVITS WERE SUBMITTED B Y THE LD AO TO THE ASSESSEE VIDE HIS LETTER DATED 19.1.2017 (COPY ENCLOSED IN PAGE 2 04 OF PAPER BOOK). THE AFFIDAVITS FILED BY THESE PARTIES ARE ENCLOSED IN P AGES 206 TO 214 OF PAPER BOOK. IN THE SAID AFFIDAVITS, IT HAS BEEN MENTIONED BY TH E SAID DIRECTORS THAT THE STATEMENTS DURING SURVEY WERE MADE OUT OF COERCION AND MENTAL TORTURE PURPORTEDLY CREATED BY THE OFFICE OF THE DDIT(INV.) . ALL THESE AFFIDAVITS WERE FILED WITHIN ONE DAY OF GIVING THE STATEMENT AND HA D BEEN DULY SWORN BEFORE THE NOTARY PUBLIC AT BIDHANNAGAR COURT. H) THE DIRECTORS OF THE SHARE APPLICANT COMPANIES IN RESPONSE TO SUMMONS ISSUED U/S 131 OF THE ACT HAD RESPONDED VIDE REPLY LETTER DATED 16.12.2016 FILED ON 16.12.2016 FOR THE ASST YEAR 2014-15 AS UNDER:- 16 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 16 A) COPY OF THE PAN CARD . B) HARD COPY OF THE ITR FOR THE ASST YEAR 2014-15. C) COMPUTATION OF INCOME FOR THE YEAR ENDED 31.3.20 14. D) COPY OF THE PROFIT AND LOSS ACCOUNT ALONG WITH C OPY OF BALANCE SHEET FOR THE YEAR ENDED 31.3.2014. E) SINCE THE CONCERNED DIRECTOR HAD NO TRANSACTIONS WITH THE ASSESSEE COMPANY IN HIS INDIVIDUAL CAPACITY, HE STATED THAT THERE IS NO QUESTION OF FURNISHING HIS RELEVANT BANK STATEMENT. F) COPY OF THE COMPANYS PAN CARD. G) HARD COPY OF THE COMPANYS ITR FOR THE ASST YEAR 2014-15. H) COMPUTATION OF INCOME OF THE COMPANY FOR THE YEA R ENDED 31.3.2014. I) COPY OF THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE COMPANY FOR THE YEAR ENDED 31.3.2014. J) COPY OF THE RELEVANT BANK STATEMENTS FOR THE ASS T YEAR 2014-15 OF THE COMPANY IN CONNECTION WITH SHARE APPLICATION MONEY MADE FOR EQUITY SHARES AND PREFERENCE SHARES IN ASSESSEE COMPANY. K) COPY OF AFFIDAVIT MADE BEFORE THE NOTARY OF BIDH ANNAGAR COURT RETRACTING FROM HIS STATEMENT MADE U/S 131 OF THE ACT BEFORE T HE DDIT (INV.) IN CONNECTION WITH SURVEY PROCEEDINGS OF ASSESSEE COMPANY. IN THE SAID LETTER, THE DIRECTORS OF THE SHARE APPL ICANT COMPANIES STATED THAT THEY WERE WILLING TO FURNISH FURTHER INFORMATION AS AND WHEN REQUIRED BY THE LD AO. ONE OF THE DIRECTORS OF THE SHARE APPLICANT COMPANI ES MR RAJESH KUMAR SINGHANIA HAD EVEN STATED THAT HE HAD MET WITH AN A CCIDENT AND HURT HIS LEG AND ADVISED MEDICAL TREATMENT AND HENCE UNABLE TO APPE AR BEFORE THE LD AO PERSONALLY, IN SUPPORT OF WHICH DOCTORS PRESCRIPTI ON WAS ALSO ATTACHED. 17 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 17 I) THE ASSESSEE COMPANY IS A PROFIT MAKING COMPANY AND ITS TURNOVER AND NET PROFIT FOR VARIOUS YEARS ARE AS UNDER :- YEAR ENDED TURNOVER NET PROFIT AFTER TAX EPS EXCL.EXCISE DUTY & SALES TAX (RS IN CRORES) (RS IN CRORES) 31.3.2013 190.15 2.02 3.14 31.3.2014 243.59 2.79 3.55 31.3.2015 247.77 5.83 4.62 31.3.2016 217.03 7.64 5.12 EPS STANDS FOR EARNINGS PER SHARE J) FROM THE AFORESAID STATISTICS, IT COULD BE SEEN THAT THE ASSESSEE COMPANY ALSO WAS JUSTIFIED IN ISSUING SHARES AT A PREMIUM OF RS 50 PER SHARE IN ASST YEARS 2013-14 AND 2014-15. AT THE COST OF REPETITION, I T WOULD BE PERTINENT TO NOTE THAT THE ISSUANCE OF SHARES AT A PREMIUM IS ALSO JUSTIFI ED BY AN INDEPENDENT SHARE VALUATION DONE BY A CHARTERED ACCOUNTANT IN TERMS O F RULE 11UA OF THE IT RULES. HENCE IT COULD BE SAFELY CONCLUDED THAT THE INVESTO RS HAD OBTAINED DUE CAPITAL APPRECIATION OUT OF THEIR INVESTMENTS MADE IN CAPIT AL OF THE ASSESSEE COMPANY DUE TO CONSISTENT GOOD PERFORMANCE OF THE ASSESSEE COMP ANY. K) THE SOURCE OF FUNDS WERE ALSO DULY EXPLAINED BY THE SHARE SUBSCRIBING COMPANIES WHICH ARE ENCLOSED IN PAGES 115-119 OF TH E PAPER BOOK ( APEX TRADEXIM PVT LTD) ; PAGES 131-133 OF THE PAPER BOOK (RBM IMPEX PVT LTD ) ; PAGES 145-147 OF THE PAPER BOOK (EXTREME TIE UP PVT LTD) ; PAGES 161-163 OF 18 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 18 THE PAPER BOOK (SHIKSHA DEALTRADE PVT LTD) ; PAGES 175-176 OF THE PAPER BOOK (EPSON ELECTRONICS PVT LTD) AND PAGES 189 190 OF THE PAPER BOOK (BANSI DEALCOM PVT LTD). ALL THE SHAREHOLDERS HAD DULY S UBMITTED A CERTIFICATE WITH REGARD TO INVESTMENT IN THE SHARE CAPITAL OF THE AS SESSEE TOGETHER WITH THEIR AUDITED ACCOUNTS AND ITR ACKNOWLEDGEMENTS AND RELEV ANT PAGES OF THEIR BANK STATEMENTS TO EXPLAIN THEIR SOURCES FOR MAKING INVE STMENTS IN SHARE CAPITAL IN THE ASSESSEE COMPANY. 5.3. WE FIND THAT MR BRIJ MOHAN NANGALIA AND MR JAS WANT KUMAR NANGALIA HAD DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD GIV EN A STATEMENT BEFORE THE LD AO IN PERSON WHEREIN THEY HAD ACCEPTED TO THE FACT THAT THEIR RESPECTIVE COMPANIES HAD INVESTED IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY AND HAD ALSO RETRACTED FROM THE STATEMENTS RECORDED BY THE DDIT( INV.). THEY HAD ALSO STATED THE REASONS AS TO WHY THE STATEMENTS RECORDED BY TH E DDIT(INV.) COULD NOT BE RELIED UPON IN THE FORM OF AN AFFIDAVIT STATING THA T IT HAD BEEN OBTAINED BY COERCION. EXCEPT THE STATEMENT RECORDED U/S 131 O F THE ACT, THE LD AO DOES NOT HAVE ANY CORROBORATIVE EVIDENCE TO COME TO A CONSCI OUS CONCLUSION THAT THE RECEIPT OF SHARE CAPITAL BY THE ASSESSEE IS BOGUS , MORE SO IN THE LIGHT OF HIS DECISION TAKEN FOR THE IMMEDIATELY PRECEDING ASST Y EAR 2013-14 WHEREIN THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM FROM VER Y SAME SHAREHOLDERS WERE ACCEPTED BY THE LD AO IN THE SECTION 143(3) PROCEED INGS AFTER DUE EXAMINATION OF THE SAME. THE DIRECTORS OF THE SHARE APPLICANT COM PANIES HAD PROVED WITH SUPPORTING EVIDENCES THAT THE CONTENTS OF THEIR STA TEMENT WERE NOT TRUE AND AS SUCH THE SAME CANNOT BE USED AGAINST THE ASSESSEE. WE W OULD LIKE TO PLACE RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF VINOD SOLANKI VS UNION OF 19 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 19 INDIA REPORTED IN (2009) 233 ELT 157 (SC) WHEREIN IN THE CONTEXT OF USING THE RETRACTED STATEMENT HAD HELD AS UNDER:- 22. IT IS A TRITE LAW THAT EVIDENCES BROUGHT ON REC ORD BY WAY OF CONFESSION WHICH STOOD RETRACTED MUST BE SUBSTANTIALLY CORROBORATED BY OTHER INDEPENDENT AND COGENT EVIDENCES, WHICH WOULD LEND ADEQUATE ASSURAN CE TO THE COURT THAT IT MAY SEEK TO RELY THEREUPON. 5.4. WE FIND THAT VIDE QUESTION NO. 35 AND 47 ASKED BY THE LD AO TO JASWANT KUMAR NANGALIA AND BRIJ MOHAN NANGALIA RESPECTIVELY , THESE PARTIES WERE ASKED TO COMMENT ON THE CASH TRAIL OF RS 48 LACS AND RS 1 0 LACS AS PREPARED BY THE DDIT(INV.). IN THIS REGARD, BOTH THE PARTIES STAT ED THAT NO CASH WAS DEPOSITED BY THEM IN THE BANK ACCOUNT OF RBM IMPEX PVT LTD. FUR THER, AS PER THE CASH TRAIL REPRODUCED IN THE ASSESSMENT ORDER, RBM IMPEX PVT L TD HAD RECEIVED FUNDS OF RS 24 LACS AND NOT RS 48 LACS. AS WOULD BE EVIDENT FROM THE RELEVANT BANK STATEMENT OF RBM IMPEX PVT LTD AND THE ASSESSEE COM PANY ENCLOSED AT PAGE 132 AND 44-45 RESPECTIVELY OF THE PAPER BOOK, THE ASSES SEE RECEIVED RS 6 LACS FROM RBM IMPEX PVT LTD ON 10.4.2013 AND RS 18 LACS ON 11 .4.2013. FURTHER, THE ENTIRE RS 24 LACS WAS RECEIVED BY RBM IMPEX PVT LTD THROUGH NORMAL BANKING CHANNELS AND NO CASH WAS DEPOSITED IN ITS BANK ACCO UNT. FURTHER NONE OF THE PARTIES WHOSE NAMES ARE MENTIONED IN THE CASH TRAIL ARE IN ANYWAY RELATED TO THE ASSESSEE COMPANY. MOREOVER, BOTH THE PARTIES IN TH EIR STATEMENTS HAD REPEATEDLY STATED THAT THEY HAD SIGNED THE STATEMENTS BEFORE T HE DDIT(INV.) WITHOUT READING THE SAME. IN ANY CASE, THE STATEMENT GIVEN BEFORE THE DDIT(INV.) HAD ALREADY BEEN RETRACTED BY THOSE PARTIES BY WAY OF AN AFFIDA VIT DULY SWORN BEFORE A REGISTERED NOTARY. 20 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 20 5.5. WE ALSO FIND THAT MERELY REJECTING THE EVIDENC ES FILED BY THE ASSESSEE DOES NOT ENTITLE THE LD AO TO MAKE AN ADDITION U/S 68 OF THE ACT . SUCH OUTRIGHT REJECTION OF THE EVIDENCES BY THE LD AO IS TOTALLY CONTRARY TO THE LAW AS LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT VS ORISSA COR PORATION (P) LTD REPORTED IN 159 ITR 78 (SC) WHEREIN IT WAS HELD THAT :- 10. THE QUESTION WAS AGAIN CONSIDERED BY THIS COURT IN HOMI JEHANGIR GHEESTA V. CIT [1981] 41 ITR 135, WHEN THIS COURT R EITERATED THAT IT WAS NOT IN ALL CASES THAT BY MERE REJECTION OF THE EXPLANATION OF THE ASSESSEE, THE CHARACTER OF A PARTICULAR RECEIPT AS INCOME COULD BE SAID TO HAVE BEEN ESTABLISHED ; BUT WHERE THE CIRCUMSTANCES OF THE REJECTION WERE SUCH THAT THE O NLY PROPER INFERENCE WAS THAT THE RECEIPT MUST BE TREATED AS INCOME IN THE HANDS OF T HE ASSESSEE, THERE WAS NO REASON WHY THE ASSESSING AUTHORITY SHOULD NOT DRAW SUCH AN INF ERENCE. SUCH AN INFERENCE WAS AN INFERENCE OF FACT AND NOT OF LAW. IT WAS FURTHER OB SERVED THAT IN DETERMINING WHETHER AN ORDER OF THE TRIBUNAL WOULD GIVE RISE TO A QUESTION OF LAW THE COURT MUST READ THE ORDER OF THE TRIBUNAL AS A WHOLE TO DETERMINE WHETHER EVE RY MATERIAL FACT, FOR AND AGAINST THE ASSESSEE, HAD BEEN CONSIDERED FAIRLY AND WITH DUE C ARE; WHETHER THE EVIDENCE PRO AND CON HAD BEEN CONSIDERED IN REACHING THE FINAL CONCL USION ; AND WHETHER THE CONCLUSION REACHED BY THE TRIBUNAL HAD BEEN COLOURED BY IRRELE VANT CONSIDERATIONS OR MATTERS OF PREJUDICE. IT WAS FURTHER REITERATED THAT THE PREVI OUS DECISIONS OF THIS COURT DID NOT REQUIRE THAT THE ORDER OF THE TRIBUNAL MUST BE EXAM INED SENTENCE BY SENTENCE THROUGH A MICROSCOPE AS IT WERE, SO AS TO DISCOVER A MINOR LA PSE HERE OR AN INCAUTIOUS OPINION THERE TO BE USED AS A PEG ON WHICH TO HANG AN ISSUE OF LAW. IN CONSIDERING PROBABILITIES PROPERLY ARISING FROM THE FACTS ALLEGED OR PROVED, THE TRIBUNAL DID NOT INDULGE IN CONJECTURES, SURMISES OR SUSPICIONS. 13. IN THIS CASE THE ASSESSEE HAD GIVEN THE NAMES AND A DDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAI D CREDITORS WERE THE INCOME-TAX ASSESSEES. THEIR INDEX NUMBER WAS IN THE FILE OF TH E REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTANCE O F THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOU RCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT-WORT HY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURS UE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANY FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE H AS DISCHARGED THE BURDEN THAT LAY ON HIM THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSIO N WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES. 21 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 21 5.6. WE HOLD THAT THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJMANDIR ESTATES (P) LTD VS CIT REPORT ED IN (2016) 386 ITR 162 (CAL) IS NOT APPLICABLE AT ALL TO THE FACTS OF THE INSTA NT CASE. IN THE CASE BEFORE THE HONBLE CALCUTTA HIGH COURT, THERE IS A FINDING TO THE EFFECT THAT THE RECIPIENT COMPANY OF SHARE CAPITAL WITH PREMIUM IS A PAPER CO MPANY AND DOES NOT CARRY ON ANY BUSINESS TO JUSTIFY SUCH HUGE PREMIUM. WHEREA S IN THE INSTANT CASE, THE ASSESSEE COMPANY BEFORE US (I.E KRISHNA TISSUES P L TD) IS A RUNNING COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF COATED DUPLEX PAPER BOARD AND IS A PIONEER IN THAT INDUSTRY IN EASTERN INDIA. THIS C OMPANY WAS INCORPORATED ON 30.3.2005 AND IS HAVING A TURNOVER OF ABOVE RS 200 CRORES. THE ASSESSEE COMPANY BEFORE US HAD DULY JUSTIFIED THE PREMIUM PE R SHARE FOR ALLOTMENT OF SHARES BASED ON THE STRENGTH OF ITS FINANCIALS AND SUPPORTED BY A CHARTERED ACCOUNTANTS CERTIFICATE IN TERMS OF RULE 11UA OF T HE INCOME TAX RULES. THESE FACTS ARE CONSPICUOUSLY ABSENT IN THE CASE BEFORE T HE HONBLE CALCUTTA HIGH COURT IN THE CASE OF RAJMANDIR ESTATES P LTD SUPRA. WE FIND THAT THE THREE INGREDIENTS OF SECTION 68 OF THE ACT ARE DULY FULFILLED IN THE INSTANT CASE WHICH IS NOT SO IN THE CASE BEFORE THE HONBLE CALCUTTA HIGH COURT. HENCE THE RELIANCE PLACED ON THE SAID DECISION BY THE LD DR DOES NOT ADVANCE THE CAS E OF THE REVENUE AS IT IS FACTUALLY DISTINGUISHABLE AS EXPLAINED ABOVE. 5.7. WE FIND THAT THE PREFERENCE CAPITAL TO THE TUN E OF RS 6.15 CRORES HAS BEEN RECEIVED BY THE ASSESSEE COMPANY AT PAR DURING THE YEAR UNDER APPEAL FROM ITS EXISTING SHAREHOLDER ONLY AND HENCE THE FINDINGS GI VEN HEREINABOVE FOR RECEIPT OF EQUITY CAPITAL WOULD APPLY WITH EQUAL FORCE FOR PRE FERENCE CAPITAL ALSO. 22 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 22 5.8. MOREOVER, WE FIND THAT THE STATEMENTS RECORDED BY THE DDIT(INV.) FROM THE DIRECTORS OF THE SHARE SUBSCRIBING COMPANIES HAD LO ST ITS EVIDENTIARY VALUE IN AS MUCH AS THE LD AO HAD RECORDED FURTHER STATEMENT FR OM THE VERY SAME DIRECTORS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE THE LD AO OUGHT NOT TO HAVE PLACED ANY RELIANCE ON THE STATEMENTS RECORDED BY D DIT(INV.) WHICH IS NOT SUPPORTED BY ANY OTHER CORROBORATIVE EVIDENCES. 5.9. WE FIND THAT THE RELIANCE PLACED BY THE LD AR ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR.CIT VS LAXMAN IN DUSTRIAL RESOURCES LTD IN ITA 169/2017, C.M.APPL. 7385/2017 DATED 14.3.2017 IS WELL FOUNDED, WHEREIN IT WAS HELD THAT :- THIS COURT NOTICES THAT THE ASSESSEE HAD PROVIDED S EVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIO NS WERE GENUINE. IT WAS NOT A CASE WHERE THE SHARE APPLICANTS ARE MERELY PROVIDED CONFIRMATION LETTERS. THEY HAD PROVIDED THEIR PARTICULARS, PAN DETAILS, ASSESS MENT PARTICULARS , MODE OF PAYMENT FOR SHARE APPLICATION MONEY, I.E THROUGH BA NKS, BANK STATEMENTS, CHEQUE NUMBERS IN QUESTION, COPIES OF MINUTES OF RESOLUTIO NS AUTHORIZING THE APPLICATIONS, COPIES OF BALANCE SHEETS, PROFIT AND LOSS ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND EVEN BANK STATEMENTS SHOWIN G THE SOURCE OF PAYMENTS MADE BY THE COMPANIES TO THE ASSESSEE AS WELL AS TH EIR MASTER DEBT WITH ROC PARTICULARS. THE AO STRANGELY FAILED TO CONDUCT AN Y SCRUTINY OF DOCUMENTS AND RESTED CONTENT BY PLACING RELIANCE MERELY ON A REPO RT OF THE INVESTIGATION WING. THIS REVEALS SPECTACULAR DISREGARD TO AN AOS DUTIE S IN THE REMAND PROCEEDINGS WHICH THE REVENUE SEEKS TO INFLICT UPON THE ASSESSE E IN THIS CASE. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL IS DISMISSED. 5.10. IN VIEW OF THE AFORESAID FACTS AND FINDINGS A ND RESPECTFULLY FOLLOWING THE VARIOUS JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE , WE HOLD THAT THE ALLEGATION OF THE LD AO THAT THE ASSESSEE HAD INTRODUCED ITS OWN FUNDS IN THE GARB OF SHARE CAPITAL AND PREMIUM IS TOTALLY BASELESS AND IS ONLY ON SURMISES AND CONJECTURES. 23 ITA NO.2215/KOL/2017 M/S KRISHNA TISSUES PVT. LTD. A.YR.2014-15 23 NO EVIDENCE OR DOCUMENTS WERE BROUGHT ON RECORD BY THE LD AO TO EVEN REMOTELY SUGGEST THAT THE ASSESSEE HAS INTRODUCED ITS OWN FU NDS IN THE GARB OF SHARE CAPITAL. HENCE WE HAVE NO HESITATION IN DIRECTING THE LD AO TO DELETE THE ADDITION MADE U/S 68 OF THE ACT TOWARDS SHARE CAPITAL AND SHARE P REMIUM IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, THE GROUND S RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 01.12.2017 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BALAGA NESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 01.12.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. M/S KRISHNA TISSUES PVT. LTD., BD-33, SECTOR-1, SALT LAKE, KOLKATA-700064. 2. ACIT, CC-3(1), KOLKATA, AAYAKAR BHAWAN POORVA, 1 10, SHANTIPALLY, KOLKATA-700107 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S