ITO, Ward - 5(4), Kolkata , Kolkata V. M/s. Bangabhumi Barter Pvt. Ltd., , Kolkata

ITA 2266/KOL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9334 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 19-11-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 03-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANINDYA KR BHANDOPADHYAY J
• Assessee Lawyers: V K JAIN
• Keywords: Unexplained cash credit; Earning of tax free income; Source of fund; Accommodation entries; Assessment record; Onus to prove
• Section: 143(3); 142(1); 14A; 133(6); 131; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.2266/KOL/2017 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER WARD-5(4), 8 TH FLOOR, AAYAKAR BHAWAN, P-7, CHORWINGHEE SQUARE, KOLKATA-700 069 / V/S . M/S BANGABHUMI BARTER PVT. LTD, 23B, NETAJI SUBASH ROAD, KOLKAT-001 [ PAN NO.AAECB 9445 M ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI ANINDYA KR. BHANDOPADHYAY, JCIT-DR /BY RESPONDENT SHRI V.K.JAIN, FCA /DATE OF HEARING 19-11-2019 /DATE OF PRONOUNCEMENT 10-01-2020 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATAS O RDER DATED 03.08.2017 PASSED IN CASE NO.99/CIT(A)-2/15-16 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. THE ASSESSEES DETAILED PAP ER BOOK RUNNING INTO 255 PAGES COMPRISING OF ASSESSMENT RECORDS, SCRUTINY NO TICES & REPLIES, SEC. 133(6) NOTICES, ITS SUBSCRIBERS DECLARATIONS OF SOURCE OF FUND, LEDGER ACCOUNT, ALLOTMENT LETTER, ITR ACKNOWLEDGEMENT(S), BALANCE-S HEETS WITH DETAILS OF SHAREHOLDERS, CONFIRMATION RESPONSE TO SEC. 133(6) NOTICES, SHARE SUBSCRIBERS ITA NO.2266/KOL/2017 ASSESSMENT YEAR 2012-13 ITO WD-5(4), KOL. VS M/S BANGABHUMI BARTER P VT. LTD. PAGE 2 AGREEMENTS ALONGWITH THEIR MULTIPLE ASSESSMENT ORDE RS U/S 143(3) OF THE ACT; STANDS PERUSED. 2. IT EMERGES AT THE OUTSET THAT THE REVENUES FORMER SUBSTANTIVE GRIEVANCE CANVASSED IN THE INSTANT APPEAL SEEKS TO REVERSE TH E CIT(A)S ACTION DELETING THE UNEXPLAINED CASH CREDITS ADDITION OF 2,51,00,000/- MADE BY THE ASSESSING OFFICER BY TREATING THE ASSESSEES SHARE CAPITAL / PREMIUM AS BOGUS. THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZE D REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS . THE ISSUE UNDER CONSIDERATION IS THAT WHETHER THE ISSUE OF SHARES AGAINST THE SHARES DISC LOSED BY THE APPELLANT INVITE THE MISCHIEF OF THE PROVISIONS OF S. 68 OF THE ACT OR NOT AND AS TO WHETHER THE AD IS JUSTIFIED IN MAKING THE ADDITION TOWARDS SHARE CAPITAL RAISED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE MAIN POINT OF THE APPEAL IS AGAINST THE ADDITION OF SHAR E CAPITAL AND SHARE PREMIUM OF RS2,51,00,000 AS UNEXPLAINED CASH CREDIT. THE AR OF THE APPELLATE HAS SUBMITTED THAT THE ORDE R OF THE ASSESSING OFFICER (AO), THOUGH LENGTHY BUT IS MERE THEORY AND BASED SURMISES AND P RESUMPTIONS NOT HAVING RELEVANCE TO THE FACTS OF THE APPELLANT. THERE IS NO SPECIFIC FINDIN G OF THE AO TO TREAT SUCH RECEIPTS AS UNEXPLAINED CASH CREDIT. THE ADDITIONS ARE MADE WIT H NO REGARDS TO THE FACTS AND RECORDS FILED BEFORE THE AO. THE AO FAILED TO MENTION AND C ONSIDER THE REPLIES WITH SUPPORTING DOCUMENTS FILED BY THE SHARE SUBSCRIBERS. IT IS PER TINENT TO KNOW THAT SUCH REPLIES ARE SUBMITTED INDEPENDENTLY BY EACH OF THE SHARE SUBSCR IBERS IN REPLY TO THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT BY THE AO OF THE APPELLAN T. THE AO IN HIS ORDER NEITHER MENTIONED NOR REFUTED THE SUBMISSION OF THE ASSESSEE AND THIR D PARTIES AFFIRMATIONS OF THE TRANSACTION. THE AO WITHOUT MAKING ANY VERIFICATION TOOK THE SHE LTER OF AMBIGUOUS RELEVANT LANGUAGE TO JUSTIFY HIS PREDETERMINED BIASED ORDER TO MAKE THE ADDITION SOMEHOW. THE ACT OF THE AO IS AGAINST THE LAW AND DEFEAT THE PROCESS OF ADJUDICAT ION OF THE CASE WITH PRUDENT-MIND-IN JUDICIARY MANNER. IN SUPPORT OF THE SUBMISSION OF T HE APPELLANT, THE DOCUMENTS FILED BY THE ASSESSEE, SHARE SUBSCRIBERS AND THIRD PARTIES ARE F ILED HEREWITH. THE APPELLANT ALSO, FILE THE ASSESSMENT RECORDS OF THE SHARE SUBSCRIBERS WHICH A RE NOT FILED BEFORE THE AO, BUT WERE EASILY ACCESSIBLE TO HIM FROM THE INCOME TAX RECORD S OF SUCH SHARE SUBSCRIBERS. THE AO IS TRYING TO JUSTIFY THE FALSIFIED ADDITION BY TAKING THE PLEA THAT THE SHARE SUBSCRIBERS DID NOT ATTENDED THE HEARING ON SUMMONS. THE TRUTH IS FAR O FF. THE SHARE SUBSCRIBERS WERE DENIED THE OPPORTUNITY AND HENCE LEFT WITH NO ALTERNATE BUT TO FILE THE DOCUMENTS AS ASKED FOR BY REGISTERED POST. FURTHER THE AO HAD ISSUED SUMMONS TO 3 COMPANIES DIRECTORS, BUT ADDED THE SUBSCRIPTIONS OF ALL 5 COMPANIES. IT IS ALSO NOT TH E CASE OF THE AO THAT THE SHARE SUBSCRIBERS ARE BOGUS AND NO NOT EXIST AS ALL THE NOTICES WERE SENT BY HIM INDEPENDENTLY BY REGISTERED POST TO SHARE SUBSCRIBERS. NONE OF THE NOTICES RETU RNED UN-SERVED. ALL THE NOTICES WERE COMPLIED WITH. THE ASSESSEE HAD DULY DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION AND THERE IS NO ADVERSE FINDING. THE RE ASON' QUOTED BY THE AO IS NOT APPLICABLE TO TREAT THE TRANSACTION AS UNEXPLAINED CASH CREDIT. THE AR HAS FURTHER SUBMITTED THAT THE ASSESSMENT OF THE SHARE SUBSCRIBERS WERE COMPLETED U/S 143(3) OF THE ACT. THE RELEVANT PORTION OF THE RESP ECTIVE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, WHEREIN THE RESPECTIVE AO ADJUDICATED/R EFERRED THE AMOUNT RAISED BY THE RESPECTIVE ASSESSEE TOWARDS SHARE SUBSCRIPTION AS MENTIONED IN THE SUBM ISSIONS AS ABOVE . IT ITA NO.2266/KOL/2017 ASSESSMENT YEAR 2012-13 ITO WD-5(4), KOL. VS M/S BANGABHUMI BARTER P VT. LTD. PAGE 3 WAS PLEAD BY THE APPELLANT THAT THE SUM SO RAISED B Y THE RESPECTIVE ASSESSEE (SHARE SUBSCRIBER) OF THE APPELLANT, HAS BEEN UTILIZED TO ACQUIRE THE INVESTMENTS BY THE M. THE SHARE SUBSCRIBERS AFTER HOLDING THE INVESTMENTS OVE R A PERIOD SOLD AND TRANSFERRED THE SOME OF THE INVESTMENT TO THE APPELLANT. THE APPELLANT I N TURN, ALLOTTED ITS OWN EQUITY SHARES IN CONSIDERATION THEREOF. THE TRANSACTION WAS RECORDED IN BOOKS BY JOURNAL ENTRIES ONLY. THE AO DURING THE ASSESSMENT PROCEEDING ISSUED NOTI CE U/S 142(1) WAS ISSUED FOR ASKING THE DETAILS AND THE ASSESSEE HAS SUBMITTED THAT THESE R EQUISITE DETAILS DURING THE ASSESSMENT PROCEEDINGS. THE NOTICES U/S 133(6) WERE ISSUED BY THE AO TO ALL THE SHARES HOLDER COMPANIES ASKING THE DETAILS OF THE INVESTMENTS. THE AR OF TH E ASSESSEE HAS SUBMITTED THAT THESE REQUISITE DETAILS WERE FILED BY THE SHAREHOLDER COMPANIES. HO WEVER, THE AO WAS NOT IMPRESSED BY SUCH EVIDENCES ADDUCED ON RECORD. THE NOTICES U/S 133(6) WERE ALSO ISSUED BY THE AO TO ALL THE SHARES HOLDER COMPANIES OF THE SHARE SUBSCRIBERS OF THE APPELLATE I.E. SECOND LAYER OF THE SHAREHOLDERS ASKING THE DETAILS OF THE INVESTMENTS VIDE NOTICE DATED 24.07.2014 AND THESE SECOND LAYER SHARE HOLDER COMPANIES SUBMITTED REQUI SITE DETAILS TO THE AO. HOWEVER, THE AO WAS AGAIN NOT IMPRESSED BY SUCH EVIDENCES ADDUCED O N RECORD. THE AO AGAIN ISSUED SUMMON U/S 131 TO THE DIRECTORS OF THE APPELLATE AS WELL AS SHAREHOLDER COMPANIES. THE DIRECTORS OF THE APPELLATE AS WELL A S SHAREHOLDER COMPANIES DID NOT APPEARED PERSONALLY BEFORE THE AO BUT AGAIN FILED REQUISITE DETAILS AS REQUIRED BY THE AO. THE DID NOT VERIFY THE TRANSACTION INDEPENDENTLY TO COLLECT THE EVIDENCES BUT CITED THE FACT OF NON- COMPLIANCE TO THE SUMMONS AS ONE OF HIS REASON FOR DRAWING THE ADVERSE CONCLUSIONS AGAINST THE INVESTMENT AS WERE MADE BY THE SHAREHOLDER COMP ANIES. HOWEVER, HE HAS NOT INITIATED ANY STEP FOR CONDUCTING THE ENQUIRIES ON THE TRANSA CTIONS TO FORM A LOGICAL VIEW. ON THE OTHER HAND AR HAS STATED THAT THE APPELLATE AND SHARE SUB SCRIBERS HAVE FILED THE DOCUMENTS AND SUPPORTING BEFORE THE AO. THE DOCUMENTS TO PROVE TH E IDENTITY, CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE TRANSACTIONS WERE FILED, BUT THE AO FAILED TO TAKE THE RECOGNITION OF SUCH FACTS. FOR THE REASONS KNOWN TO HIM, THE VERIFICATION OF THE DOCUMENTS IF MADE WOULD HAVE MADE HIS OBSERVATION AUTHENTIC AND LEGAL. THE AO FOUND THAT SHARE APPLICATION MONIES RECEIVED BY THE ASSESSEE WAS NOT HING BUT ASSESSEE'S OWN UNACCOUNTED MONEY WHICH WAS BROUGHT TO THE BOOKS USING BANKING CHANNEL IN THE FORM OF SHARE CAPITAL. ACCORDINGLY, IT WAS ADDED TO THE TOTAL INCOME OF TH E ASSESSEE. I FULLY ENDORSE THE VIEW OF THE AR THAT THE AO'S AC TION IN MAKING ADDITION U/S 68 BY RELYING UPON THE DECISION IN THE CASE OF BISAKHA SALES (P) LTD. VS. CIT, KOLKATA- II IS TOTALLY MISPLACED. THE AO HAS DRAWN ADVERSE INFERENCE ON THE GROUND THAT D IRECTOR OF THE APPELLANT-COMPANY AND SHAREHOLDERS COMPANY DID NOT APPEAR IN PERSON IN RESPONSE TO SUMMONS. THE FAILURE ON THE PART OF THE DIRECTORS T O APPEAR IN PERSON DOES NOT SUGGEST THAT IDENTITY, PROOF AND GENUINENESS OF TRANSACTIONS FUR NISH BY THE APPELLANT COMPANY STANDS DISPROVED . THE AO HAS NOT FOUND ANY DEFECT AND/OR DEFICIENCY IN THE SOURCE OF FUNDS EXPLAINED BY THE SHARE APPLICANTS THROUGH THEIR REP LIES TO THE STATUTORY NOTICES ISSUED U/S. 133(6) OF THE ACT TO THEM. IT IS NOT IN DISPUTE THA T THE ASSESSEE HAD FURNISHED ALL POSSIBLE DOCUMENTS RELATING TO THE SHARE APPLICANTS BEFORE T HE AO. IT IS ALSO OBSERVED THAT EVERY SHARE APPLICANT IN THEIR RESPECTIVE REPLIES TO THE STATUT ORY NOTICES ISSUED U/S. 133(6) OF THE ACT, FURNISHED COPIES OF THEIR RELEVANT DOCUMENTS. THE DOUBTS EXPRESSED IN THE REASONING OF THE AO IN THE INSTANT CASE IS BASED ON THE PREMISE OF NON-APPEARANCE BY THE DIRECTORS ' OF THE APPELLANT COMPANY AND SHAREHOLDERS IN RESPONSE TO SUMMONS ISSUED U/S. 131 OF THE SAID ACT . IN THIS RESPECT, IT IS OBSERVED THAT THERE IS NO GROUND TO DRAW ANY ADVERSE INFERENCE AGAINST THE APPELLANT, IN RELATION TO THE PROVISIONS CONTAINED IN SEC.-68 OF THE SAID ACT SINCE THE APPE LLANT HAD ADDUCED ALL POSSIBLE EVIDENCE IN SUPPORT OF THE SHARE CAPITAL RAISED BY IT AND THERE WAS NOTHING MORE FOR THE DIRECTORS TO STATE IN THAT RESPECT. ITA NO.2266/KOL/2017 ASSESSMENT YEAR 2012-13 ITO WD-5(4), KOL. VS M/S BANGABHUMI BARTER P VT. LTD. PAGE 4 THE ASSESSMENT ORDER DOES NOT SHOW ANY INVESTIGATIO N HAVE BEEN CARRIED OUT OF ANY INFORMATION COLLECTED BY THE DEPARTMENT TO CONCLUDE THAT THE PAYMENT RECOVERED BY THE ASSESSEE WAS ACTUALLY ACCOMMODATION ENTRIES. NO MATERIAL WAS BROUGHT BY THE AO TO PROVE THAT THE MONEY WAS THE ASSESSEE OWN UNDISCLOSED MON EY . ALL THE SHARE APPLICANTS ARE ASSESSED TO INCOME TAX AND HAD REGULARLY FILED THEI R INCOME TAX AND ROC RETURNS. THE AR HAS ALSO BROUGHT TO MY NOTICE WITH COPY OF A SSESSMENT ORDER WHERE THE ASSESSMENT OF THESE SHAREHOLDER COMPANIES WERE COMPLETED U/S143 ( 3) OF THE ACT BY THE DIFFERENT ASSESSING OFFICERS IN DIFFERENT YEARS. HENCE, THE IDENTITY OF THE SHARE APPLICANTS WAS DULY PROVED. THESE COMPANIES ARE BEING ASSESSED U/S 143(3) OF IT ACT B Y RESPECTIVE AOS THE AR FURTHER ARGUED THAT THE TRANSACTION WILL NOT COME UNDER THE PREVIEW OF CASH CREDIT , AS THERE IS NO CASH RECEIPT OR RECEIPT OF ANY MONEY OR CREDIT OF ANY MONEY. THE ASSESSEE DID NOT RECEIVE ANY SHARE APPLICATION MONEY TOO. THE AS SESSEE ALLOTTED ITS SHARES TO THE COMPANIES TO WHOM IT HAD DEBTS TO PAY. THE ALLOTMENT OF SHARES IS AGAINST THE DISCHARGE OF SUCH DEBTS ONLY . THE FACTS WERE DULY DISCLOSED AND EXPLAINED WITH DOCUMENTS TO AD DURING THE COURSE OF HEARING. THE AR IN THIS REGARDS PLACE D HIS RELIANCE IN HON'BLE JURISDICTIONAL HIGH COURT CASE OF JATIA INVESTMENT CO VS CIT [1994 ] 206 ITR 718 (CAL) WHEREIN IT HAD BEEN ACCEPTED THE CONTENTION OF THE ASSESSEE AND STATED THAT IN CASE THERE IS NO CASH RECEIPTS, THE QUESTION OF CASH CREDIT DOES NOT ARISES. THE SHARES WERE ALLOTTED AGAINST THE ACQUISITION OF INVESTMENTS UNDER THE AGREEMENTS. THE COPIES OF THE SE DOCUMENTS WERE ALSO FILED DURING THE APPELLATE PROCEEDINGS. . THE AO HAS PLACED HIS RELIANCE IN THE CASE OF STAR GRIHA PVT. LTD. AND BISHAKHA SALES PVT. LTD, ETC BUT THE FACTS OF THESE CASES ARE NOT SIMIL AR TO THE CASE THE APPELLATE. THE BASIS DIFFERENCE IS THAT IN THE CASE OF APPELLATE THERE I S NO CASH INVOLVED ON ISSUE OF SHARE CAPITAL. FURTHERMORE, THE FACTS ON SAID CASES ARE TOTALLY DI FFERENT. IN THOSE CASES, THE ASSESSEE HAD RECEIVED MONIES BY CHEQUES / DRAFTS AND ALLOTTED SH ARES. WHEREAS IN THE CASE UNDER CONSIDERATION, NO MONEY WAS RECEIVED BY THE APPELLA NT. FURTHERMORE, THE FACTS ON SAID CASES ARE TOTALLY DIFFERENT. IN THOSE CASES, THE ASSESSEE HAD RECEIVED MONIES BY CHEQUES/ DRAFTS AND ALLOTTED SHARES. WHEREAS IN THE CASE UNDER CONSIDER ATION, NO MONEY WAS RECEIVED BY THE APPELLANT. FURTHER, I FIND THAT THERE HAS BEEN NO C ASH TRANSACTION IN THIS CASE, THE MODE OF CONSIDERATION WAS SHARES AND THERE WAS NO MONEY INV OLVED IN THESE-TRANSACTIONS; THE APPELLANT DID NOT HAVE ANY INTENTION TO ROTATE HIS MONEY WITHOUT PAYING ANY TAXES AS ALLEGED BY THE AO IN HIS ORDER. I FIND THAT THERE IS NO REA L CASH ENTRY ON THE CREDIT SIDE OF THE CASH BOOK. THE SHARES WERE ISSUED AGAINST THE SHARE. IT IS MERELY A NOTIONAL ENTRY AND THERE IS NO REAL CREDIT IN THE CASH BOOK AND BANK ACCOUNT. THER EFORE, THE QUESTION OF CASH CREDIT DOES NOT COME IN, THERE BEING NO ACTUAL PASSING OR RECEIPT O F CASH. IN OTHER WORDS, THE TRANSACTIONS ARE MERE BOOK ENTRIES. THE TRANSACTIONS SHOWING THE AMO UNT AS RECEIVED IN CASH AND PAID AWAY WERE NOT ACTUAL BUT ONLY NOTIONAL. AS FAR AS THE QU ESTION OF SECTION 68 IS CONCERNED, THE NATURE OF THE TRANSACTIONS AND THE ENTRIES CLEARLY SHOW TH AT NO CASH, IN FACT, FLOWED. IT IS PERTINENT TO DISCUSS THE PROVISION OF THE SEC TION 68 OF THE ACT. THE SECTION 68 SAYS :- CASH CREDITS . 68 . WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSES SEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLA NATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE C HARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR: THE OBSERVATION OF THE HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF JATIA INVESTMENT CO VS CIT [1994] 206 ITR 718 (CAL.) DATE D 06.08.1992 IN THE SIMILAR MATTER ARE AS UNDER .- ITA NO.2266/KOL/2017 ASSESSMENT YEAR 2012-13 ITO WD-5(4), KOL. VS M/S BANGABHUMI BARTER P VT. LTD. PAGE 5 'THERE IS NO REAL CASH ENTRY ON THE CREDIT SIDE OF THE CASH BOOK, BUT MERELY A NOTIONAL OR I FICTITIOUS CASH ENTRY THERE IS NO REAL CREDIT OF CASH ANY ITS CASH BOOK, THE QUESTION OF INCLUSION OF THE AMOUNT A/THE ENTRY UNEXPLAINED CASH CREDIT CANNOT ARISE' THE FACTS OF THE CASE ARE SIMILAR TO THE FACTS OF T HE CASES OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE OF JATIA INVESTMENT CO. [1994] 206 ITR 718 (CAL.). THE AR OF THE APPELLATE VIDE HIS LETTER DATED 25.07 .2017 HAS FURTHER SUBMITTED THAT ON THE GROUND OF APPEAL, THAT THE GROUNDS OF DELETION ON T HE SHARE CAPITAL AMOUNT, TOGETHER WITH SHARES PREMIUM ADDED U/S 68 IS SUPPORTED BY THE APP ELLATE ORDER PASSED BY THE CIT(23), KOLKATA IN THE CASE OF DSR IMPEX PVT LTD APPEAL NO 265CIT(A)-23/TECH-2/2016-17/KOL FOR ASSESSMENT YEAR 2012-13,DHANKAMLA COMMOSALES PVT LT D APPEAL NO 230/CIT(A)- 23/W- 6(1)2016-17/KOL FOR ASSESSMENT YEAR 2012-13 AND COO LHUT MARKETING PVT LTD APPEAL NO 181/CIT(A)-23/TRO-2/2016/KOL FOR ASSESSMENT YEAR 20 12-13. IN ALL SUCH CASES THE GROUNDS GRANTED ARE RELATING TO ON APPLICABILITY OF SECTION 68 WHERE IN NO SUM WAS CREDITED OR RECEIVED DURING THE YEAR. THE FACTS OF THE CASES (S UPRA) ARE SIMILAR TO THE ABOVE APPEAL. THE AO FAILED TO APPRECIATE THE FACT THAT THERE WAS NO SUM CREDITED IN THE BOOKS OF ACCOUNT OF THE APPELLATE AND NO MONEY WAS RECEIVED. THE ASSESS EE HAD ALLOTTED ITS SHARES AGAINST THE DISCHARGE OF DEBTS BY JOURNAL ENTRIES IN BOOKS. THE AO FAILED TO VERIFY THE FACTS OF THE CASE. THE SHARES WERE ALLOTTED AGAINST THE ACQUISITION OF INVESTMENTS UNDER THE AGREEMENTS. THE COPIES OF THESE DOCUMENTS WERE ALSO FILED DURING TH E APPELLATE PROCEEDINGS. I FIND THAT THERE IS NO REAL CASH ENTRY ON THE CREDIT SIDE OF THE CASH B OOK. THE SHARES WERE ISSUED AGAINST THE SHARE. IT IS MERELY A NOTIONAL ENTRY AND THERE IS N O 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, THE QUESTION OF CASH CREDIT DOES NOT COME IN, THERE BEING NO ACTUAL PASSING OR RECEIPT OF CASH. IN OTHER WORDS, THE TRANSACTION S ARE MERE BOOK ENTRIES. THE TRANSACTIONS SHOWING THE AMOUNT AS RECEIVED IN CASH OR IN KIND A ND DISCHARGED WERE NOT ACTUAL CASE BUT ONLY NOTIONAL BY JOURNAL ENTRIES. AS FAR AS THE QUE STION OF SECTION 68 IS CONCERNED, THE NATURE OF THE TRANSACTIONS AND THE ENTRIES CLEARLY SHOW TH AT 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 INV OLVED IN THE ISSUE OF SHARE CAPITAL IN THE APPELLATE CASE. IN VIEW OF THE AFORESAID FINDINGS A ND RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE C ASE OF JATIA INVESTMENT CO, I HAVE COME TO THE CONCLUSION THAT THE ISSUE IS SQUARELY COVERED B Y THE DECISION OF JURISDICTIONAL HIGH COURT AS MENTIONED AND DISCUSSED ABOVE. I HAVE NO OPTION BUT TO ACCEPT THE ARGUMENTS TENDERED BY THE AR OF THE APPELLANT IN THIS RESPECT THAT THERE IS NO SUM WAS CREDITED IN THE BOOK OF ACCOUNT AS PER THE PROVISION OF U/S 68 OF THE ACT. ACCORDIN GLY, THE CASE OF APPELLATE DOES NOT COME UNDER THE PREVIEW OF THE SECTION 68 OF THE ACT. FUR THER, I HAVE NO HESITATION TO HOLD THAT THE IMPUGNED ADDITION MADE BY INVOKING THE PROVISIONS O F SECTION 68 BY THE AO IS NOT JUSTIFIED IN THE CIRCUMSTANCES. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION MADE ON THIS ACCOUNT. THESE GROUNDS OF APPEAL ARE ALLOWED . 3. LEARNED DEPARTMENTAL REPRESENTATIVE TOOK US TO T HE ASSESSING OFFICERS ASSESSMENT ORDER DATED 0.03.2015 MAKING THE IMPUGNE D SEC. 68 ADDITION OF UNEXPLAINED CASH CREDITS. IT EMERGES FROM PERUSAL T HEREOF THAT THE ASSESSING OFFICER HAD QUOTED THE ASSESSEES FAILURE IN PROVING IDENTI TY, GENUINENESS AND CREDITWORTHINESS OF ITS INVESTOR PARTIES HAVING SUBSCRIBED THE SHARE CAPITAL ALONGWITH PREMIUM DESPITE AFFORDING UMPTEEN OPPORTUNITIES DURING THE COURSE O F SCRUTINY. MR. BHANDOPADHYAY ITA NO.2266/KOL/2017 ASSESSMENT YEAR 2012-13 ITO WD-5(4), KOL. VS M/S BANGABHUMI BARTER P VT. LTD. PAGE 6 NEXT SUBMITTED THAT THE CIT(A) HAS MAINLY GONE BY A SSESSEES AND ITS INVESTORS DOCUMENTARY EVIDENCE ONLY WITHOUT PUTTING THE SAME TO FACTUAL VERIFICATION. HE FURTHER CONTENDED THAT THE LOWER APPELLATE FINDINGS ARE MUT UALLY CONTRADICTORY QUA NATURE OF ASSESSEES SHARE CAPITAL / PREMIUM. THE REVENUE ACC ORDINGLY SEEKS TO RESTORE THE IMPUGNED ADDITION BACK TO THE ASSESSING AUTHORITY B Y PLEADING THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REVERSING THE ASSESSIN G OFFICERS ACTION. 4. LEARNED AUTHORIZED REPRESENTATIVE ON THE OTHER H AND VEHEMENTLY SUPPORTED THE CIT(A)S FOREGOING DETAILED DISCUSSION DELETING THE IMPUGNED ADDITION. HIS FIRST AND FOREMOST ARGUMENT IS THAT THE CIT(A) HAS RIGHTLY HE LD THAT THE SEC. 68 DOES NOT COME INTO PLAY IN FACTS OF THE INSTANT CASE SINCE WE ARE DEALING WITH AN INSTANCE OF SHARE SWAPPING BETWEEN ASSESSEE AND ITS INVESTOR ENTITIES THAN THAT OF ANY SUM CREDITED IN THE BOOKS OF ACCOUNT WHICH COULD BE ADDED AS UNEXPL AINED CASH CREDITS. IT IS FURTHER SUBMITTED THAT THE ASSESSING OFFICERS ASSESSMENT O RDER HAD NOT TAKEN NOTE OF THE ASSESSEES VOLUMINOUS EVIDENCE (SUPRA) RUNNING INTO MORE THAN 256 PAGES PROVING IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE I NVESTORS SHARE SWAPPING AND THEREFORE, THE CIT(A) HAS DELETED THE IMPUGNED ADDI TION. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E FOREGOING RIVAL PLEADINGS. THERE IS HARDLY ANY DISPUTE THAT THE ASSESSING OFFI CER HAD QUOTED ASSESSEES FAILURE IN DISCHARGING ITS ONUS FOR PROVING IDENTITY, GENUINEN ESS AND CREDITWORTHINESS OF THE INVESTOR PARTIES. WE DO NOT FIND ANY DISCUSSION IN THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAD BEEN ABLE TO FACTUAL VERIFY E ITHER OF THE THREE FOREGOING PARAMETERS OF IDENTITY, GENUINENESS AND CREDITWORTH INESS OR THAT OF CORRECTNESS OF THE ALLEGED SHARE SWAPPING AGREEMENTS BETWEEN THE TAXPA YER AND THE CORRESPONDING ENTITIES. COMING TO THE CIT(A)S FINDINGS UNDER CHA LLENGE, WE TAKE NOTE IN HE HAS TREATED THE ASSESSEES CASE AS AN INSTANCE OF SUM C REDITED; BUT AT THE SAMETIME, HE OBSERVES THAT IT HAD ALLOTTED ITS SHARES TO INVESTO R ENTITIES TO WHOM IT HAD SOME DEBTS TO DISCHARGE MR. JAIN ALSO FAILS TO REBUT THE REVENUE S CLINCHING ARGUMENT THAT THE ASSESSEES PLEA OF HAVING SWAPPED ITS SHAREHOLDING WITH THE INVESTOR ENTITIES HAD NEITHER PUT TO FACTUAL VERIFICATION IN THE COURSE O F SCRUTINY NOR IN LOWER APPELLATE PROCEEDINGS. WE THEREFORE DEEM IT APPROPRIATE THAT THIS FORMER ISSUE OF UNEXPLAINED ITA NO.2266/KOL/2017 ASSESSMENT YEAR 2012-13 ITO WD-5(4), KOL. VS M/S BANGABHUMI BARTER P VT. LTD. PAGE 7 CASH CREDITS AMOUNTING TO 2,5100,000/- REQUIRES TO BE SENT BACK TO THE ASSESS ING OFFICER FOR AFRESH DETAILED FACTUAL VERIFICATION AS PER LAW. WE ORDER ACCORDINGLY. SUFFICE TO SAY, THE ASSESSEE SHALL BE AFFORDED THRE E EFFECTIVE OPPORTUNITIES OF HEARING IN CONSEQUENTIAL PROCEEDINGS. THIS FORMER SUBSTANTIVE GRIEVANCE IS TAKEN AS ACCEPTED FOR STATISTICAL PURPOSES. 6. NEXT COMES THE LATTER ISSUE OF SEC. 14A DISALLOW ANCE AMOUNTING TO 6,772/- MADE IN THE CURSE OF ASSESSMENT AND DELETED IN LOWE R APPELLATE PROCEEDINGS. SUFFICE TO SAY, IT HAS COME ON RECORD THAT ASSESSEE HAS NOT DE RIVED ANY EXEMPT INCOME. HON'BLE JURISDICTIONAL HIGH COURTS DECISION IN CIT VS. ASHIKA GLOBAL SECURITIES LTD ITAT 100/2009 GA NO.2122 OF 2014 DATED 11.06.2018 HOLDS THAT THE IMPUGNED DISALLOWANCE DOES NOT APPLY IN ABSENCE OF ANY EXEMP T INCOME. THE REVENUES INSTANT LATTER GRIEVANCE FAILS THEREFORE. 7. THIS REVENUES APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES IN ABOVE TERMS. ORDER PRONOUNCED IN OPEN COURT ON 10/01/2020 SD/- SD/- ( ') () ') (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS * - 10/01/2020 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-5(4),8 TH FLOOR, P-7, CHOWRINGHEE SQ. KOLKATA-69 2. /RESPONDENT-M/S BANGABHUMI BARTER PVT. LTD., 23B, N .S. ROAD, KOLKATA-001 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ))- , - /DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ -,