M/s. Aditya Paper Industries Pvt. Ltd., , Kolkata V. ITO, Ward - 4(4), Kolkata , Kolkata

ITA 232/KOL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6099 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Unexplained cash credit; Question of law; Accommodation entries; Retraction
• Section: 143(3); 133A; 133(6); 131; 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM & SHRI M.BAL AGANESH, AM ] I.T.A NO. 232/KOL/201 8 ASSESSMENT YEAR : 2012-1 3 M/S ADITYA PAPER INDUSTRIES PVT. LTD. -VS- IT O, WARD-4(4), KOLKATA [PAN: AAHCA 7223 R ] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI S.K. TULSIYAN, ADVOCATE FOR THE RESPONDENT : SHRI S. DASGUPTA, ADDL . CIT (DR) DATE OF HEARING : 20.06.2018 DATE OF PRONOUNCEMENT : 11.07.2018 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)-13, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO. 152/CIT(A)- 13/W-4(4)/KOL/2016-17 AGAINST THE ORDER PASSED BY THE ITO, WARD-4(4), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 16.03.2015 FOR THE ASSESSMENT YEAR 2012-13. 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 SHARE CAPITA L U/S 68 OF THE ACT IN THE SUM OF RS 1,25,00,000/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY INCORPORATED ON 26.5.2009 WITH THE OBJECT OF MANUFA CTURE AND SALE OF ALL KINDS OF PAPERS, BOARD, CORRUGATED BOARD, PRINTING, ABSORBEN T AND WRITING PAPER. IT IS A SISTER CONCERN OF M/S KRISHNA TISSUES P LTD (IN SHORT KTPL ) WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF COATED DIPLEX PAPER BOARD. DURING THE YEAR UNDER REVIEW, THE ASSESSEE HAD RECEIVED TOTAL EQUITY SHARE CAPITAL WI TH SHARE PREMIUM OF RS 1,25,00,000/- WITH A PREMIUM OF RS 90 PER SHARE FROM THE FOLLOWIN G SHAREHOLDERS :- A) RBM IMPEX PVT LTD B) EXTREME TIE-UP PVT LTD C) MAHAMAYA TIE-UP PVT LTD D) WINSON VANIJYA PVT LTD E) UPHAR VANIJYA PVT LTD F) KAMNA HOUSING PVT LTD 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE LD AO CALLED FOR EXAMINATION OF VARIOUS DETAILS AND DOCUMENTS WITH SUPPORTING EVIDE NCES AND ONE SUCH ISSUE OF EXAMINATION WAS WITH REGARD TO RECEIPT OF SHARE CAP ITAL AND SHARE PREMIUM RECEIVED DURING THE YEAR BY THE ASSESSEE. THE ASSESSEE SUBM ITTED ALL THE DETAILS REGARDING THE RECEIPT OF SHARE CAPITAL WITH PREMIUM BEFORE THE LD AO BY SUBMITTING THE NAMES AND ADDRESSES OF THE SHAREHOLDERS, THEIR BALANCE SHEETS , THEIR INCOME TAX RETURN ACKNOWLEDGEMENTS AND THEIR BANK STATEMENTS. THE LD AO DID NOT FIND ANYTHING ADVERSE ON THOSE DETAILS AND DOCUMENTS FILED BY THE ASSESSE E. THE LD AO THEREAFTER ISSUED SUMMONS U/S 131 OF THE ACT TO THE DIRECTOR OF THE A SSESSEE COMPANY AND NOTICES U/S 133(6) OF THE ACT TO THE SHARE APPLICANT COMPANIES. ALL THE SHARE APPLICANTS RESPONDED TO THE NOTICES U/S 133(6) OF THE ACT VIDE THEIR FOR WARDING LETTERS ALONG WITH VARIOUS DOCUMENTS ENCLOSING IN SUPPORT OF PROVING THEIR IDE NTITIES, CREDITWORTHINESS AND GENUINENESS OF THEIR SHARE SUBSCRIPTION IN THE ASSE SSEE COMPANY. IN RESPONSE TO THE 3 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 3 SUMMONS ISSUED BY THE LD AO, ONE OF THE DIRECTORS O F THE ASSESSEE DURING THE TIME OF ISSUANCE OF SUMMONS DURING 2015 APPEARED BEFORE THE LD AO AND A STATEMENT WAS RECORDED FROM HIM BY THE LD AO. THE DIRECTOR WHO A PPEARED BEFORE THE LD AO STATED THAT HE WAS NOT THE DIRECTOR OF THE ASSESSEE COMPAN Y DURING THE FINANCIAL YEAR 2011-12 WHEN SHARE CAPITAL WAS RAISED, AND THAT THE OTHER D IRECTOR COULD NOT APPEAR BEFORE THE LD AO DUE TO ILL HEALTH. HE ALSO REPLIED THAT HE HAS NO IDEA ABOUT THE REASON WHY THE OTHER ERSTWHILE DIRECTOR, MR MANISH JAIN, DID NOT APPEAR. THE LD AO OBSERVED THAT UNLESS THE ASSESSEE AS WELL AS THE APPLICANT COMPANIES / INVES TORS APPEAR WITH ALL ITS BOOKS, BANK STATEMENTS, COPIES OF IT RETURNS, COPIES OF ROC RET URNS AND INCOME TAX RETURNS OF THE DIRECTORS, THE VERACITY OF THE TRANSACTIONS COULD N OT BE FOUND OUT. THE LD AO FURTHER OBSERVED THAT DUE TO NON-COMPLIANCE ON THE PART OF DIRECTORS IN PRODUCING ALL THE DETAILS REQUISITIONED U/S 131 OF THE ACT, THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS AND GENUINENESS OF THE TRANSACTIONS BETWEEN SHAREHO LDERS AND ASSESSEE COMPANY COULD NOT BE VERIFIED AND ACCORDINGLY ADDED THE ENTIRE MO NEY RECEIVED TOWARDS SHARE CAPITAL AND SHARE PREMIUM IN THE SUM OF RS 1,25,00,000/- AS UNEXPLAINED CASH CREDIT OF THE ASSESSEE U/S 68 OF THE ACT. 3.2. THE ASSESSEE PLEADED BEFORE THE LD CITA THAT A LL THE REQUISITE DETAILS THAT WERE CALLED FOR WERE DULY FURNISHED BEFORE THE LD AO AND THERE IS NO REASON FOR THE LD AO TO CONCLUDE THAT THE THREE INGREDIENTS OF SECTION 68 O F THE ACT WERE NOT CONCLUSIVELY PROVED BY THE ASSESSEE WARRANTING MAKING AN ADDITIO N THEREON. IT WAS SUBMITTED THAT THE LD AO NOWHERE IN HER ORDER HAD SPECIFIED THAT WHAT PREMIUM, ACCORDING TO HER, OUGHT TO BE REASONABLE SHARE PREMIUM PER SHARE IN PLACE OF R S 90 PER SHARE CONSIDERED HIGH BY HER. THE ASSESSEE ALSO SUBMITTED THAT THE LD AO IGN ORED MANY VITAL FACTORS INCLUDING ITS BOOK VALUE PER SHARE BEING RS 29.35 PER SHARE BEFOR E FRESH ISSUE OF SUBJECT SHARE CAPITAL, FUTURE PROSPECTS OF DOING BUSINESS IN BIG WAY WITHOUT NEED TO SERVICE DEBT LIABILITY BY WAY OF INTEREST PAYMENTS, CREDIBILITY OF PRESENT MANAGEMENT WHO WAS 4 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 4 RUNNING A BIGGEST PLANT OF MANUFACTURING OF DUPLEX PAPER BOARD IN EASTERN INDIA AND CLOSE CONTROL OF INVESTOR COMPANIES OVER AFFAIRS AN D FUNDS OF THE ASSESSEE AFTER THEIR INVESTMENT IN SHARES OF ASSESSEE COMPANY, THE SAME BEING A PRIVATE LIMITED COMPANY. THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD AO AND ALSO FURNISHED THE FOLLOWING DETAILS BEFORE THE LD CITA :- A) BANK STATEMENTS FOR THE YEAR ENDED 31.3.2012 OF SHARE APPLICANT COMPANIES. B) FINAL ACCOUNTS FOR YEAR ENDED 31.3.2012 OF SHARE APPLICANT COMPANIES. C) INCOME TAX RETURN ACKNOWLEDGEMENTS OF SHARE APPL ICANT COMPANIES FOR ASST YEAR 2012-13. D) MASTER DATA OF CONCERNED SHARE APPLICANT COMPANI ES AS PER WEBSITE OF MINISTRY OF CORPORATE AFFAIRS (MCA) WHICH SHOWS PARTICULARS OF THEIR DIRECTORS AND ALSO SHOWS THAT ALL OF THESE COMPANIES ARE ACTIVE. E) THE COPIES OF FORM NO. 18 FILED BY THOSE SHARE A PPLICANT COMPANIES FOR SITUATION OF THEIR RESPECTIVE REGISTERED OFFICES. F) PAN AND ADDRESS PROOF OF DIRECTORS OF SHARE APPL ICANT COMPANIES. G) THE CHART OF NET WORTH OF CONCERNED SHARE APPLIC ANTS AS ON 31.3.2012 EXTRACTED FROM THEIR RESPECTIVE BALANCE SHEETS WHICH SHOWS THAT TH EIR NET WORTH IS SEVERAL TIMES MORE THAN THE AMOUNT INVESTED BY THEM IN THE SHARES OF T HE ASSESSEE COMPANY DULY PROVING THEIR CAPACITY TO INVEST IN SHARES WITH PREMIUM IN THE ASSESSEE COMPANY. H) DETAILS OF DIRECTORSHIPS HELD IN VARIOUS COMPANI ES BY THE DIRECTORS OF SHARE APPLICANT COMPANIES :- NAME OF THE DIRECTOR NAME OF THE COMPANY URVIL VERMA UPAHAR VANIJYA P LTD WINSON VANIJYA P LTD JASWANT KUMAR NANGALIA EXTREME TIE UP PRIVATE LTD RBM IMPEX PRIVATE LTD RAJESH KUMAR SINGHANIA MAHAMAYA TIE UP P LTD 5 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 5 BRIJMOHAN NANGALIA RBM IMPEX P LTD THE ASSESSEE ALSO REQUESTED THE LD CITA TO ISSUE FR ESH NOTICES U/S 133(6) OF THE ACT OR ISSUE SUMMONS U/S 131 OF THE ACT TO THE CONCERNED S HARE APPLICANTS AS ASSESSEE HAD NO POWER TO FORCE ANY PERSON FOR HIS OR ITS PERSONAL D ETAILS. THE LD CITA SOUGHT FOR A REMAND REPORT FROM THE LD AO FOR EXAMINATION OF THE VARIOUS DETAILS FILED BY THE ASSESSEE THAT ARE AVAILABLE ON RECORD. 3.3. THE LD AO SUBMITTED HIS REMAND REPORT BY STAT ING THAT SUMMONS WERE ISSUED TO THE 6 SHARE APPLICANTS . OUT OF THAT, THREE COULD NOT BE DELIVERED AND RETURNED WITH A REMARK INSUFFICIENT ADDRESS. TWO ENTITIES DID NOT PREFE R TO APPEAR BUT HAD SEND THEIR SUBMISSION ALONG WITH COPY OF ITR FOR ASST YEAR 201 2-13, PROFIT AND LOSS ACCOUNT, BANK STATEMENTS , SHARE APPLICATION AND ALLOTMENT LETTER . ONE OF THEM NEITHER APPEARED NOR SUBMITTED ANY REPLY IN THIS REGARD. ACCORDINGLY, T HE LD AO CONCLUDED THAT VERIFICATION COULD NOT BE CARRIED OUT IN RESPECT OF SHARE APPLIC ANTS AS DIRECTED BY THE LD CITA IN THE REMAND ORDER. 3.4. THE ASSESSEE AGAIN SUBMITTED BEFORE THE LD CIT A THAT THE LD AO HAD NOT CARRIED OUT THE REQUISITE ENQUIRY AND EXAMINATION AS DIRECTED B Y THE LD CITA AND THAT THE DIRECTORS OF THE SHARE APPLICANT COMPANIES WERE WILLING TO AP PEAR BEFORE THE LD AO. THE REMAND REPORT OF LD AO CLEARLY PROVES THAT BECAUSE OF HIS OVERBURDEN AND BEING PRE-OCCUPIED WITH TIME BARRING CASES, NECESSARY VERIFICATIONS CO ULD NOT BE CARRIED OUT. INSTEAD THE LD AO HAD MENTIONED ABOUT ALLEGED STATEMENTS OF DIRECT ORS OF ASSSESSE, SHARE APPLICANT COMPANIES ALLEGEDLY ADMITTING THAT THOSE COMPANIES WERE CREATED BY PROVIDING ALLEGED ACCOMMODATION ENTITIES IN THE FORM OF BOGUS SHARE C APITAL / BOGUS SHARE PREMIUM , 6 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 6 BOGUS UNSECURED LOANS. THE ASSESSEE EXPLAINED BEFO RE THE LD CITA THAT THIS WAS MADE BY THE LD AO BASED ON THE PROCEEDINGS IN THE CASE O F GROUP COMPANY OF M/S KRISHNA TISSUES P LTD (IN SHORT KTPL) WHEREIN SURVEY U/S 13 3A OF THE ACT WAS CONDUCTED ON 29.7.2015 AND POST SURVEY OPERATIONS, STATEMENT WAS RECORDED U/S 131 OF THE ACT BY DDIT (INV.) OF THE FOLLOWING DIRECTORS OF COMPANIES FROM WHICH THE KRISHNA TISSUES GROUP RAISED SHARE CAPITAL :- NAME OF THE DIRECTOR STATEMENT STATEMEN T NAME OF THE RELATED COMPANIES TAKEN ON RETRACTED ON IN WHICH P ERSON IS A DIRECTOR BRIJ MOHAN NANGALIA 17.8.2015 18.8.2015 RBM IMP EX PVT LTD EXTREME TIE-UP PVT LTD JASWANT KUMAR NANGALIA 14.9.2015 16.9.2015 RBM IMPEX PVT LTD EXTREME TIE-UP PVT LTD RAJESH KUMAR SINGHANIA 16.9.2015 18.9.2015 MAHAM AYA TIE-UP PVT LTD SANJAY BAJORIA 14.08.2015 16.8.2015 UPHAR VANI JYA PVT LTD 3.5. THE ASSESSEE SUBMITTED THAT THE LD AO PLACED R ELIANCE ON THE STATEMENTS RECORDED FROM THE DIRECTORS OF M/S KRISHNA TISSUES P LTD BY THE DDIT (INV.) PURSUANT TO SURVEY CONDUCTED IN THEIR BUSINESS PREMISES ON 29.7.2015 W HEREIN THEY HAD INITIALLY STATED THAT THE ENTITIES WERE INVOLVED IN PROVIDING ACCOMMODATI ON ENTRIES. LATER THE SAID STATEMENTS WERE RETRACTED BY THEM BY FILING INDEPEN DENT AFFIDAVITS DULY EXPLAINING THE REASONS FOR THE RETRACTION IMMEDIATELY AFTER THE SU RVEY I.E WITHIN FEW DAYS OF COMPLETION OF THE SURVEY AND ALSO CONFIRMING THE FACT OF THEIR COMPANIES IN WHICH THEY ARE DIRECTOR, FOR HAVING MADE THE INVESTMENTS IN SHARES WITH PREM IUM IN THE ASSESSEE COMPANY AS WELL AS KRISHNA TISSUES P LTD (KTPL IN SHORT). THE ASSESSEE SUBMITTED THAT THE LD AO DID NOT MENTION ANYTHING ABOUT THE RETRACTION STATE MENTS MADE BY THE DIRECTORS OF KTPL 7 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 7 IN HIS REMAND REPORT. THE ASSESSEE FILED BEFORE TH E LD CITA , THE COPIES OF AFFIDAVITS WITH EVIDENCE OF FILING THE SAME WITH AO AND COPY O F DEPOSITION GIVEN BY MR B M NANGALIA ON 16.12.2016 BEFORE THE AO IN ASSESSMENT PROCEEDINGS OF KTPL (POST SURVEY) . IT WAS SUBMITTED THAT THE DEPOSITIONS M ADE BEFORE THE DDIT(INV.) HAVING BEEN RETRACTED LATER, DOES NOT HAVE ANY EVIDENTIARY VALUE. IT WAS SUBMITTED THAT IN THE ASSESSMENT PROCEEDINGS OF KTPL FOR THE ASST YEAR 20 13-14 WHICH WAS COMPLETED POST SURVEY IN THEIR CASE ON 29.7.2015, THE LD AO AFTER EXAMINING THE RECORDS AND DIRECTORS HAD ACCEPTED THE SHARE CAPITAL AND PREMIUM RECEIVED BY KTPL IN THE SCRUTINY ASSESSMENT FRAMED FOR THE ASST YEAR 2013-14 IN THE HANDS OF KTPL. HOWEVER, THE SHARE CAPITAL AND PREMIUM RECEIVED BY KTPL FROM THE VERY SAME SHAREHOLDERS DURING THE ASST YEAR 2014-15 WAS SUBJECT MATTER OF ADDITIO N IN THE SCRUTINY ASSESSMENT PROCEEDINGS FOR THE ASST YEAR 2014-15, WHICH WAS AL SO CONFIRMED BY THE LD CITA. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THIS TRIBUNAL WHICH WAS DECIDED IN FAVOUR OF THE ASSESSEE IN ITA NO. 2215/KOL/2017 DAT ED 1.12.2017 IN THE CASE OF KTPL FOR ASST YEAR 2014-15. THIS TRIBUNAL ORDER WAS AL SO PLACED BEFORE THE LD CITA BY THE ASSESSEE BEFORE US. THE LD CITA HOWEVER DID NOT H EED TO THE CONTENTIONS OF THE ASSESSEE AND UPHELD THE ACTION OF THE LD AO. AGGRI EVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE ASSESSEE HAD RAISED SHARE CAPITAL WITH PREMIUM DURING THE YEAR AS UNDER:- DATE OF APPLICATION NAME OF APPLICANT NO. OF SHARES APPLIED CHEQUE NO. BANK AMOUNT(RS.) APPLICANTS PAN DATE OF ALLOTMENT NO. OF SHARES 07.12.2011 UPHAR VANIJYA PVT. LTD. 20000 743750 ALLAHABAD BANK 2,000,000 AABCU2424J 01.02.2012 20000 17.12.2011 EXTREME TIE UP PVT. LTD. 20000 858630 IDBI BANK 2,000,000 AACCE0207G 01.02.2012 20000 19.12.2011 UPHAR VANIJYA 10000 743755 ALLAHABAD BANK 1,000,000 AABCU2424J 01.02.2012 10000 8 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 8 PVT. LTD. 06.01.2012 KAMNA HOUSING PVT. LTD. 10000 734883 ALLAHABAD BANK 1,000,000 AAECK4606K 01.02.2012 10000 07.01.2012 KAMNA HOUSING PVT. LTD. 5000 734885 ALLAHABAD BANK 500,000 AAECK4606K 01.02.2012 5000 07.01.2012 KAMNA HOUSING PVT. LTD. 10000 734884 ALLAHABAD BANK 1,000,000 AAECK4606K 01.02.2012 10000 09.01.2012 WINSON VANIJYA PVT. LTD. 5000 735089 ALLAHABAD BANK 500,000 AABCW0316P 01.02.2012 5000 09.01.2012 MAHAMAYA TIE-UP PVT. LTD. 20000 227257 IDBI BANK 2,000,000 AAFCM6647R 01.02.2012 20000 06.03.2012 R.B.M IMPEX PVT. LTD. 25000 584062 PUNJAB NATIONAL BANK 2,500,000 AADCR6857Q 13.03.2012 25000 125000 12,500,000 125000 4.1. WE HAVE GONE THROUGH THE STATEMENTS RECORDED F ROM SHRI BRIJ MOHAN NANGALIA, SHRI RAJESH KUMAR SINGHANIA, SHRI SANJAY KUMAR BAJO RIA AND SHRI JASWANT NANGALIA WHEREIN INITIALLY THEY HAD STATED THAT THEY WERE IN VOLVED IN PROVIDING BOGUS ACCOMMODATION ENTRIES IN THE FORM OF SHARE CAPITAL / SHARE PREMIUM FOR VARIOUS COMPANIES. WE FIND THAT THESE STATEMENTS WERE SUBSE QUENTLY RETRACTED BY THEM WITHIN 2 DAYS FROM THE DATE OF RECORDING THE STATEMENT AND A N INDEPENDENT AFFIDAVITS WERE FILED BY THE SAID PARTIES. THESE DOCUMENTS ARE ENCLOSED IN PAGES 24 TO 46 OF THE PAPER BOOK FILED BEFORE US. WE FIND THE ASSESSEE COMPANY HAD S UBSTANTIAL INCOME IN THE FORM OF INTEREST AMOUNTING TO RS 10,18,759/- AND HAD PAID I NTEREST TO THE TUNE OF RS 9,55,173/- ON THE BANK LOANS AVAILED BY IT. THE LD AR ARGUED THAT THE ASSESSEE COMPANY IS INCORPORATED ON 26.5.2009 WITH THE OBJECT OF MANUFA CTURE AND SALE OF ALL KINDS OF PAPERS, BOARD, CORRUGATED BOARD, PRINTING, ABSORBEN T AND WRITING PAPER. IT IS A SISTER CONCERN OF M/S KRISHNA TISSUES P LTD (IN SHORT KTPL ) WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF COATED DIPLEX PAPER BOARD. WE FIND THAT THE SHARE CAPITAL WAS RECEIVED BY THE ASSESSEE WITH SHARE PREMIUM OF RS 9 0 PER SHARE. IN THIS REGARD, IT WAS ARGUED THAT EVEN THOUGH THE BOOK VALUE PER SHARE PR IOR TO INFUSION OF THE SUBJECT MENTIONED SHARE CAPITAL IN THE ASSESSEE COMPANY WAS RS 29.35 PER SHARE, THE SHARE 9 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 9 SUBSCRIBERS HAD COME FORWARD TO INVEST IN THE ASSES SEE COMPANY BASED ON FUTURE PROSPECTS OF THE ASSESSEE COMPANY AND ACCORDINGLY I NVESTMENT AT RS 100 PER SHARE WITH PREMIUM OF RS 90 PER SHARE WAS WORKED OUT BY THE AS SESSEE COMPANY. 4.2. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD FUR NISHED THE FOLLOWING DOCUMENTS BEFORE THE LOWER AUTHORITIES TO JUSTIFY THE RECEIPT OF SHA RE CAPITAL AND SHARE PREMIUM FROM VARIOUS SHAREHOLDERS :- A) NAMES AND ADDRESSES OF THE SHAREHOLDERS TOGETHER WITH THEIR INCOME TAX RETURN ACKNOWLEDGEMENTS FOR THE ASST YEAR 2012-13. B) BANK STATEMENTS FOR THE YEAR ENDED 31.3.2012 OF SHARE APPLICANT COMPANIES. C) FINAL ACCOUNTS FOR YEAR ENDED 31.3.2012 OF SHARE APPLICANT COMPANIES. D) MASTER DATA OF CONCERNED SHARE APPLICANT COMPANI ES AS PER WEBSITE OF MINISTRY OF CORPORATE AFFAIRS (MCA) WHICH SHOWS PARTICULARS OF THEIR DIRECTORS AND ALSO SHOWS THAT ALL OF THESE COMPANIES ARE ACTIVE. E) THE COPIES OF FORM NO. 18 FILED BY THOSE SHARE A PPLICANT COMPANIES FOR SITUATION OF THEIR RESPECTIVE REGISTERED OFFICES. F) PAN AND ADDRESS PROOF OF DIRECTORS OF SHARE APPL ICANT COMPANIES. G) THE CHART OF NET WORTH OF CONCERNED SHARE APPLIC ANTS AS ON 31.3.2012 EXTRACTED FROM THEIR RESPECTIVE BALANCE SHEETS WHICH SHOWS THAT TH EIR NET WORTH IS SEVERAL TIMES MORE THAN THE AMOUNT INVESTED BY THEM IN THE SHARES OF T HE ASSESSEE COMPANY DULY PROVING THEIR CAPACITY TO INVEST IN SHARES WITH PREMIUM IN THE ASSESSEE COMPANY. H) DETAILS OF DIRECTORSHIPS HELD IN VARIOUS COMPANI ES BY THE DIRECTORS OF SHARE APPLICANT COMPANIES. 4.3. IT IS NOT IN DISPUTE THAT AFTER COLLECTION OF ALL THESE DOCUMENTS, THE LD AO ALSO SOUGHT TO CROSS VERIFY THE SAME FROM THE SHAREHOLDER COMPA NIES BY ISSUING NOTICE U/S 133(6) OF 10 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 10 THE ACT INDEPENDENTLY BEHIND THE BACK OF THE ASSESS EE. ALL THESE NOTICES U/S 133(6) OF THE ACT WERE DULY RESPONDED BY THE SHARE APPLICANT COMPANIES ALONG WITH THEIR VARIOUS DOCUMENTS TO PROVE THEIR IDENTITY, THEIR CREDITWORT HINESS AND GENUINENESS OF TRANSACTIONS, WHEREIN THEY HAD DULY CONFIRMED THAT THEY HAD INDEED INVESTED IN THE ASSESSEE COMPANY WITH PREMIUM. ALL THESE DOCUMENTS ARE ENCLOSED IN PAGES 129 TO 211 OF THE PAPER BOOK FILED BEFORE US. WE FIND THAT ON E OF THE DIRECTORS OF THE ASSESSEE COMPANY HAD DULY RESPONDED TO THE SUMMONS ISSUED U/ S 131 OF THE ACT BEFORE THE LD AO. HE HAD GIVEN PROPER EXPLANATIONS BEFORE THE L D AO REGARDING THE TRANSACTIONS. THE STATEMENT RECORDED FROM HIM BY THE LD AO IS ENC LOSED IN PAGES 78 TO 80 OF THE PAPER BOOK FILED BEFORE US. 4.4. IT IS NOT IN DISPUTE THAT THE LD AO IN THE REM AND PROCEEDINGS HAVING STATED THAT DUE TO PAUCITY OF TIME AND DUE TO HEAVY PRESSURE OF TIM E BARRING ASSESSMENTS, HE COULD NOT PROCEED TO MAKE DETAILED EXAMINATION OF FACTS THAT WERE STATED BY THE ASSESSEE COMPANY. HAVING SAID SO, THE LD AO PLACED HEAVY RELIANCE ON THE STATEMENTS RECORDED FROM THE DIRECTORS OF THE ASSESSEE COMPANY IN THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE ACT IN THE HANDS OF KTPL. WE FIND THAT THESE STAT EMENTS WERE SUBSEQUENTLY RETRACTED WITHIN 2 DAYS BY ALL THE DIRECTORS AND THE SAME WER E PART OF RECORDS. WE FIND THAT THE LD AO AGAIN RECORDED THE STATEMENT OF JASWANT KUMAR NA NGALIA AND BRIJ MOHAN NANGALIA ON 16.12.2016 IN THE COURSE OF ASSESSMENT PROCEEDIN GS OF KTPL WHEN THEY APPEARED IN PERSON IN RESPONSE TO SUMMONS ISSUED U/S 131 OF THE ACT, WHEREIN THEY WERE ASKED THE REASON BEHIND INVESTMENT IN KTPL, AMONG OTHER COMPA NIES. IN RESPONSE, BOTH THE PARTIES HAD STATED THAT THEIR COMPANIES INVESTED IN THE ASSESSEE COMPANY KEEPING IN MIND THE GROWTH AND FUTURE PROSPECTS OF THE COMPANY . IN THE SAID STATEMENT, THE LD AO EVEN CONFRONTED THE DEPONENTS (I.E JASWANT KUMAR NA NGALIA AND BRIJ MOHAN NANGALIA) ABOUT THE RETRACTION MADE BY THEM WITHIN 2 DAYS OF GIVING STATEMENT ORIGINALLY AS IS EVIDENT FROM THE DETAILS AVAILABLE IN PAGES 90 & 10 3 OF THE PAPER BOOK BEFORE US IN 11 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 11 RESPECT OF JASWANT KUMAR NANGALIA AND BRIJ MOHAN NA NGALIA RESPECTIVELY. WE FIND THAT THESE DEPONENTS HAD CATEGORICALLY STATED BEFOR E THE LD AO THAT THE INVESTMENTS WERE MADE BY THEIR COMPANIES IN KTPL AND ITS GROUP OF CO MPANIES BASED ON GROWTH AND FUTURE PROSPECTS OF THE SAID GROUP. THESE DEPONENT S HAD STATED THAT THE ORIGINAL STATEMENTS WERE SIGNED BY THEM WITHOUT UNDERSTANDIN G ITS CONTENTS THEREON AND THE SAME WERE RECORDED UNDER COERCION. WE FIND THAT THE LD AO THEREAFTER ACCEPTED THE CONTENTIONS OF THE SHARE SUBSCRIBERS OF KTPL AND AC CEPTED THE RECEIPT OF SHARE CAPITAL WITH SHARE PREMIUM BY KTPL FOR THE ASST YEAR 2013-1 4 AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT FOR KTPL. HOWEVER, HE TOOK A COMPLETELY CONTRARY STAND WHILE COMPLETING THE SCRUTINY ASSESSMENT OF KTPL FOR THE ASST YEAR 2014-15 FOR THE ADDITIONAL RECEIPT OF SHARE CAPITAL AND SHARE PREMI UM. THIS MATTER HAD COME UP BEFORE THIS TRIBUNAL IN THE CASE OF KTPL AND THIS TRIBUNAL IN ITA NO. 2215/KOL/2017 DATED 1.12.2017 HAD DECIDED THE ISSUE IN FAVOUR OF THE AS SESSEE. MOREOVER, WE FIND THAT THE STATEMENTS RECORDED BY THE DDIT(INV.) FROM THE DIRE CTORS OF THE SHARE SUBSCRIBING COMPANIES HAD LOST ITS EVIDENTIARY VALUE IN AS MUCH AS THE LD AO HAD RECORDED FURTHER STATEMENT FROM THE VERY SAME DIRECTORS DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. HENCE THE LD AO OUGHT NOT TO HAVE PLACED ANY RELIAN CE ON THE STATEMENTS RECORDED BY DDIT(INV.) WHICH IS NOT SUPPORTED BY ANY OTHER CORR OBORATIVE EVIDENCES. 4.5. HENCE WE FIND THAT THE MAIN RELIANCE PLACED BY THE LD AO ON THE STATEMENTS RECORDED FROM DIRECTORS IN THE CASE OF KTPL HAD BEE N ALREADY ADDRESSED BY THIS TRIBUNAL IN THE CASE OF KTPL VIDE ORDER DATED 1.12.2017. HE NCE THE RELIANCE PLACED ON THOSE STATEMENTS WHICH STOOD RETRACTED LATER AND PROPERLY EXPLAINED CANNOT BE USED AS AN EVIDENCE IN THE SCRUTINY PROCEEDINGS OF THE ASSESSE E COMPANY BEFORE US AND NO ADVERSE INFERENCE COULD BE DRAWN ON THE ASSESSEE COMPANY. WE WOULD LIKE TO PLACE RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF VINOD SOLANKI VS UNION OF INDIA 12 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 12 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. 4.6. 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 L AW AS LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT VS ORISSA CORPORATION (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 13 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 13 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. 4.7. WE FIND THAT ALL THE QUESTIONS THAT WERE RELEV ANT FOR THE ASSESSMENT HAS ALREADY BEEN ASKED BY THE LD AO FROM SHRI JASWANT KUMAR NANGALIA AND SHRI BRIJ MOHAN NANGALIA DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF KTPL , A GROUP COMPANY OF ASSESSEE COMPANY. IN THE SAID STATEMENT, THEY HAD CATEGORIC ALLY REPLIED THAT THEIR COMPANIES HAD DULY INVESTED IN THE SHARE CAPITAL WITH PREMIUM IN KTPL GROUP OF COMPANIES WHICH ADMITTEDLY INCLUDES ASSESSEE COMPANY ALSO. THEY HA D DULY EXPLAINED THE PURPOSE OF MAKING SUCH INVESTMENTS WITH PROPER REASONING THERE ON IN THEIR STATEMENTS BEFORE THE LD AO. HENCE IT COULD BE SAFELY CONCLUDED THAT RECORD ING OF FRESH STATEMENTS AGAIN FROM THE VERY SAME PERSONS IN THE COURSE OF ASSESSMENT P ROCEEDINGS OF THE ASSESSEE COMPANY WITH REGARD TO RECEIPT OF SHARE CAPITAL AND SHARE P REMIUM, WOULD NOT IN ANY WAY ADVANCE THE CASE OF THE REVENUE AS ALL THE REQUISIT E DETAILS ARE ALREADY AVAILABLE ON RECORD AND IN VIEW OF THE FACT THAT THE SUBJECT MEN TIONED INVESTMENTS IN ASSESSEE COMPANY , AMONG OTHERS , WERE ALSO DULY ANSWERED BY THOSE DIRECTORS IN THEIR RESPECTIVE STATEMENTS. 4.8. 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 INDUSTRI AL RESOURCES LTD IN ITA 169/2017, C.M.APPL. 7385/2017 DATED 14.3.2017 IS WELL FOUNDED, WHEREIN IT WAS HELD THAT :- 14 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 14 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 B ANKS, BANK STATEMENTS, CHEQUE NUMBERS IN QUESTION, COPIES OF MINUTES OF RE SOLUTIONS 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 DATA 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. 4.8.1. WE FIND THAT THE FACTS BEFORE THE HONBLE DE LHI HIGH COURT SUPRA ARE THE SAME WITH THE FACTS IN THE INSTANT CASE. ADDED TO THAT, THE ONLY RELIANCE OF THE REVENUE AS IS EVIDENT FROM THE REMAND REPORT OF THE LD AO IS THE STATEMENTS RECORDED FROM TWO DIRECTORS OF THE ASSESSEE COMPANY IN THE COURSE OF PROCEEDINGS OF GROUP COMPANY I.E. KTPL. THESE STATEMENTS WERE SUBSEQUENTLY RETRACTED AND THE SAME WERE TAKEN DUE COGNIZANCE BY THIS TRIBUNAL WHILE DISPOSING OFF THE APPEAL IN THE CASE OF KTPL FOR ASST YEAR 2014-15 IN ITA NO. 2215/KOL/2017 DATED 1.12.20 17. 4.9. IN VIEW OF THE AFORESAID PECULIAR FACTS AND PE CULIAR DOCUMENTS RELATING THERETO AND RESPECTFULLY FOLLOWING THE VARIOUS JUDICIAL PRECEDE NTS RELIED UPON HEREINABOVE, WE HAVE NO HESITATION IN HOLDING THAT ALL THE THREE INGREDI ENTS OF SECTION 68 OF THE ACT WERE DULY SATISFIED IN THE INSTANT CASE. WE HOLD THAT THE AUT HORITIES BELOW ERRED IN MAKING AN ADDITION U/S 68 OF THE ACT TOWARDS SHARE CAPITAL AN D SHARE PREMIUM IN THESE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. SINCE THE ADD ITION MADE TOWARDS SHARE CAPITAL AND SHARE PREMIUM IS DIRECTED TO BE DELETED ON THESE PE CULIAR FACTS, THE OTHER LEGAL ISSUES RAISED BY THE ASSESSEE IN ITS GROUNDS ARE NOT REQUI RED TO BE ADJUDICATED AND WE REFRAIN TO 15 ITA NO.232/KOL/2018 M/S ADITYA PAPER INDUSTRIES PVT. LTD. A.YR. 2012-13 15 GIVE OUR OPINION ON THE SAME AND THOSE ISSUES ARE L EFT OPEN. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 11.07.2018 SD/- SD/- [S.S. GODARA] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 11.07.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. M/S ADITYA PAPER INDUSTRIES PVT. LTD., 167, OLD CHINA BAZAR STREET, KOLKATA-700001. 2. ITO, WARD-4(4), KOLKATA. 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