ITO, WARD-10(1), Kolkata, Kolkata V. M/s Excel Inftabuild Private Limited, Kolkata

ITA 2320/KOL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2963 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit; Question of law; Reasonable cause; Accommodation entries; Onus to prove; Set aside
• Section: 271(1)(c); 143(3); 133(6); 195; 264; 131; 68; 69; 144

Judgement Text

1 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 2320/KOL/2016 ASSESSMENT YEAR: 2012-13 INCOME-TAX OFFICER, WD-10(1), KOLKATA VS. M/S. EXCE L INFRABUILD PVT. LTD. (PAN: AACCE6188Q) APPELLANT RESPONDENT DATE OF HEARING 26.06.2019 DATE OF PRONOUNCEMENT 21.08.2019 FOR THE APPELLANT SHRI C. J. SINGH, ADDL. CIT, DR FOR THE RESPONDENT SHRI MANISH TIWARI, FCA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-4, KOLKATA DATED 28.10.2016 FOR AY 2012-13. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF REVENU E IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION MADE U/S. 68 OF THE INCOME -TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON ACCOUNT OF SHARE CAPITAL AND SHARE PR EMIUM RECEIVED. 3. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE T HAT THE AO PASSED THE ASSESSMENT ORDER U/S. 144(1) OF THE ACT AS NONE APPEARED BEFOR E HIM AT THE TIME OF ASSESSMENT. ACCORDING TO AO, FROM ITD DATABASE THE AO FOUND THA T THE ASSESSEE COMPANY HAD ISSUED PAID UP SHARES INCLUDING SHARE PREMIUM RECEIVED AMO UNTING TO RS.99,14,177/-. ACCORDING TO AO, THERE WAS NON-COMPLIANCE ON THE PART OF THE ASSESSEE AND THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF RS.99,14,177/- REFLECTED IN I TS BALANCE SHEET. HENCE, THE AO ADDED BACK THE WHOLE AMOUNT TO THE TOTAL INCOME OF THE AS SESSEE U/S. 68 OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO FOLLOWING THE DECISION OF THE 2 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EX PORTS PVT. LTD. (2008) 216 CTR 195 (SC) DELETED THE ADDITION MADE U/S. 68 OF THE ACT. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE US. 4. THE LD. DR ASSAILING THE DECISION OF THE LD. CI T(A) SUBMITTED THAT THOUGH THE LD. CIT(A) HAS RELIED ON THE DECISION OF CIT VS. LOVELY EXPORTS PVT. LTD. (SUPRA) TO GIVE RELIEF TO THE ASSESSEE, HOWEVER, HAS IGNORED THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. (2012) 18 TAXMANN.COM 217 (DEL.). ACCORDING TO LD. DR, THE ASSESSEE DID NOT PARTICIP ATE BEFORE THE AO, THEREFORE, THE AO HAD NO OTHER ALTERNATIVE BUT TO PASS AN ORDER U/S. 144 OF THE ACT. ACCORDING TO LD. DR, THE LD. CIT(A) THOUGH HAS CALLED FOR THE REMAND REPORT HAS NOT MADE INVESTIGATION BY EXERCISING HIS CO-TERMINUS POWERS BESTOWED UPON HIM. ACCORDIN G TO LD. DR, THE LD. CIT(A) SHOULD NOT HAVE EVEN ENTERTAINED THE DOCUMENTS PRODUCED BY THE ASSESSEE DURING THE FIRST APPELLATE PROCEEDINGS SINCE THE ASSESSEE HAS NOT MA DE OUT A REASONABLE CAUSE FOR NON- APPEARING BEFORE THE AO. LD. DR ALSO RELIED ON THE CASE LAW OF HONBLE DELHI HIGH COURTS ORDER IN CIT-II VS. JANSAMPARK ADVERTISING & MARKET ING (P) LTD. (2015) 56 TAXMANN.COM 286 (DEL.). THE LD. DR ALSO REFERRED TO THE DECISI ON OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. RUBY TRADERS & EXPORTERS LTD. ( 2004) 134 TAXMAN 29 (CAL). THE LD. DR ALSO POINTED OUT THAT THE INVESTORS DID NOT EVEN HAD RETURNED INCOME OF LESS THAN RS. 30,000/- AND, THEREFORE, THESE COMPANIES DO NOT HAV E CREDITWORTHINESS. ACCORDING TO LD. DR, THEREFORE, THE ORDER OF THE LD. CIT(A) NEED TO BE SET ASIDE. ON THE OTHER HAND, THE LD. AR RELYING ON THE ORDER OF THE LD. CIT(A) BROUGHT T O OUR NOTICE THAT THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE AFTER GOING THROUGH TH E REMAND REPORT OF THE AO WHEREIN THE AO HAS NOT RAISED ANY ADVERSE VIEW AGAINST THE ASSE SSEES DOCUMENTS PRODUCED BEFORE HIM DURING THE REMAND PROCEEDINGS. SINCE THE AO HAS NO T POINTED OUT ANY DEFICIENCY IN THE DOCUMENTS AS WELL AS THE AO HAS MADE HIS INDEPENDEN T ENQUIRIES DURING REMAND PROCEEDINGS BY SENDING NOTICE U/S. 133(6) OF THE AC T TO ALL THE TEN (10) INVESTOR COMPANIES AND AFTER HAVING SATISFIED WITH THE REPLIES GIVEN B Y THE INVESTORS WAS PLEASED TO GIVE THE REMAND REPORT WITHOUT MAKING ANY NEGATIVE COMMENTS AGAINST THE ASSESSEE. THEREFORE, THE LD. CIT(A) AFTER TAKING NOTE OF THE REMAND REPORT A ND THEREAFTER SATISFYING HIMSELF WITH THE 3 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 VERACITY OF THE DOCUMENTS PRODUCED HELD THAT THE AS SESSEE HAS DISCHARGED ITS ONUS OF PROVING THE IDENTITY, CREDITWORTHINESS AND GENUINEN ESS OF THE TRANSACTION AND HAS BEEN PLEASED TO GIVE RELIEF TO THE ASSESSEE WHICH SHOULD NOT BE UNSETTLED BY THIS TRIBUNAL. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS OF THE CASE. WE NOTE THAT THE AO HAS PASSED THE ASSESSMENT ORDER U/S. 14 4(1) OF THE ACT AS NONE APPEARED BEFORE HIM AT THE TIME OF ASSESSMENT. ACCORDING TO AO, FR OM ITD DATABASE HE FOUND THAT THE ASSESSEE COMPANY HAD ISSUED PAID UP SHARES INCLUDIN G SHARE PREMIUM RECEIVED AMOUNTING TO RS.99,14,177/-. ACCORDING TO AO, THERE WAS NON- COMPLIANCE ON THE PART OF THE ASSESSEE AND SO IT COULD NOT EXPLAIN THE SOURCE OF RS.99,14, 177/- REFLECTED IN ITS BALANCE SHEET. HENCE, THE AO HAD NO ALTERNATIVE BUT TO ADD BACK TH E WHOLE AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE U/S. 68 OF THE ACT. ON APPEAL, WHILE GIVING RELIEF TO THE ASSESSEE THE LD. CIT(A) HAS HELD AS UNDER: 4 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 5 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 6 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 7 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 6. HAVING GONE THROUGH THE IMPUGNED ORDER OF THE LD . CIT(A) AND AFTER HAVING GONE THROUGH THE PAPER BOOK WHICH IS RUNNING TO 178 PAGE S PRODUCED BEFORE US, WE NOTE THAT THE LD. CIT(A) HAS TAKEN NOTE THAT THE ASSESSEE HAD MAD E OUT A CASE OF REASONABLE CAUSE FOR NOT COMPLYING WITH THE NOTICE ISSUED BY THE AO. IT WA S BROUGHT TO OUR NOTICE THAT THOUGH THE ASSESSEE COMPANY WAS SERVED WITH THE SUMMONS U/S. 1 31 OF THE ACT FROM AO DATED 20.02.2015 TO PRODUCE THE DETAILS ON 26.02.2015 UN FORTUNATELY THE SAID SUMMONS COULD NOT BE SERVED UPON THE ASSESSEE BEFORE THE DATE OF COMP LIANCE, SINCE IT WAS RECEIVED ONLY ON 28.02.2015. ACCORDING TO LD. AR, THOUGH THE ASSESS EE ENGAGED A COUNSEL TO APPEAR BEFORE THE AO, THE AO HAS PASSED THE EX PARTE ORDER WITHOU T GIVING PROPER OPPORTUNITY TO THE ASSESSEE. IN THE AFORESAID FACTUAL BACKDROP TAKING NOTE THAT NON-COMPLIANCE BY ASSESSEE WAS NOT INTENTIONAL AND THERE WAS REASONABLE CAUSE, THE LD. CIT(A) HAS ALLOWED THE ASSESSEE TO PRODUCE THE DOCUMENTS WHICH WERE PRODUC ED BEFORE HIM WHICH WERE IN TURN SENT TO THE AO FOR VERIFICATION, ENQUIRY; AND REMAN D REPORT WAS SOUGHT FROM HIM IN ACCORDANCE TO RULE 46A OF THE INCOME TAX RULES, 196 2. OUR ATTENTION WAS DRAWN TO THE REMAND REPORT OF THE AO WHICH IS FOUND PLACED AT PA GE 2 OF THE PAPER BOOK WHICH IS REPRODUCED AS UNDER: 8 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 7. FROM THE PERUSAL OF THE AFORESAID REMAND REPORT, WE NOTE THAT THE AO DURING THE REMAND PROCEEDINGS HAD ISSUED NOTICE U/S. 133(6) OF THE ACT TO THE SHARE SUBSCRIBERS AND PURSUANT TO IT, ALL THE INVESTOR COMPANIES HAVE PRO MPTLY REPLIED AND FURNISHED THE REQUISITE DETAILS/DOCUMENTS BEFORE THE AO. THE AO HAS CLARIF IED THAT THE DETAILS FURNISHED BY THE ASSESSEE TALLIED WITH THE DETAILS FURNISHED BY THE INVESTOR COMPANIES REGARDING THE ISSUE OF SHARES TO THESE COMPANIES. THEREAFTER, WE NOTE THA T IN THE REMAND REPORT, THE AO HAS NOT SPELLED OUT ANY ADVERSE VIEW AGAINST THE ASSESSEE C OMPANY IN RESPECT TO THE SHARE CAPITAL 9 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 RAISED BY THE ASSESSEE COMPANY. IN THE LIGHT OF TH E AFORESAID REMAND REPORT AS WELL AS THE DOCUMENTS PRODUCED BY THE ASSESSEE IN RESPECT OF TE N SHARE SUBSCRIBING COMPANIES, WE NOTE THAT THE ASSESSEE HAD PRODUCED THE COPY OF THE REPL Y U/S. 133(6) OF THE ACT FURNISHED BEFORE THE AO DURING THE REMAND PROCEEDING ALONG WITH THE FOLLOWING DOCUMENTS. ALL THE SHARE INVESTORS HAVE PRODUCED (I) THEIR RESPECTIVE COPY O F AUDITED FINANCIAL STATEMENT, (II) THEIR RESPECTIVE INCOME TAX RETURN FILED ALONG WITH THE A CKNOWLEDGMENT FOR THE YEAR UNDER CONSIDERATION; (III) COPY OF THE BANK STATEMENT OF THE RELEVANT PERIOD AND (IV) THE COPY OF THE ALLOTMENT ADVICES. THESE DOCUMENTS ARE FOUND P LACED FROM PAGES 34 TO 178 OF THE PAPER BOOK. WE NOTE THAT THE LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT SINCE THE NOTICE ISSUED BY THE AO U/S. 133(6) TO EACH OF THE TEN SHA RE APPLICANTS HAVE BEEN DULY SERVED ON THEIR RESPECTIVE ADDRESS PURSUANT TO WHICH THEY ALL HAVE REPLIED TO THE AO ALONG WITH THE DOCUMENTS LIKE INCOME TAX RETURN ALONG WITH ACKNOWL EDGMENT, PAN, AUDITED ACCOUNTS, COPY OF BANK STATEMENTS GOES ON TO SHOW THAT THEIR CORPORATE IDENTITY CANNOT BE QUESTIONED. THE GENUINENESS OF THE TRANSACTION HAS BEEN PROVED BY PRODUCTION OF THE BANK STATEMENT OF THESE INVESTOR COMPANIES WHICH GOES ON TO SHOW THAT ALL THE PAYMENTS IN RESPECT OF SHARE CAPITAL PLUS SHARE PREMIUM HAS GONE THROUGH THE BAN KING CHANNEL TO THE ASSESSEE COMPANY. THE CREDITWORTHINESS HAS BEEN PROVED BY THE ASSESSE E COMPANY BY TAKING US THROUGH THE BALANCE SHEET AS ON 31.03.2012 WHICH SHOWS THE FOLL OWING FACTS WHICH IS DEPICTED IN THE CHART BELOW: 10 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 8. FROM THE AFORESAID CHART WE NOTE THAT THE SHARE APPLICANTS HAD SUFFICIENT BALANCE/OWN MONEY TO ADVANCE SHARE APPLICATION MONE Y TO THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDER ATION THEREFORE, CREDITWORTHINESS OF THE INVESTORS STANDS PROVED. MOREOVER, IF THERE WERE A NY DOUBTS STILL LINGERING IN THE MIND OF AO, HE HAD TO CALL FOR REPORTS FROM AO OF THE INVES TOR COMPANIES AS HELD BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF DATAWARE PVT. LT D. (INFRA). WE NOTE THAT ALL SHARE APPLICANTS HAVE SUBMITTED THEIR PAN DETAILS IN THE RETURN OF INCOME ALONG WITH AUDITED REPORT AND FINANCIAL STATEMENT AND COPY OF BANK ACC OUNTS WHEREBY DISCHARGING THE ONUS CASTED UPON IT TO PROVE THE IDENTITY AND GENUINENES S OF THE CASH CREDIT AS REQUISITIONED BY THE AO. AND CREDIT-WORTHINESS OF THE INVESTORS CANN OT BE DOUBTED IN THE BACK-DROP OF FACTS DISCUSSED SUPRA. IN THE LIGHT OF THE AFORESAID FACT S AS DISCUSSED SUPRA, WE NOTE THAT THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. THE CASE LAWS RELIED ON BY THE LD. DR ARE DISTINGUISHABLE ON THE FACTS AND, THEREFORE, NOT AP PLICABLE TO THE CASE IN HAND IN THE FACTUAL BACK GROUND DISCUSSED ABOVE. 9. TAKING NOTE OF THE AFORESAID DOCUMENTS THE LD. C IT(A) WAS OF THE OPINION THAT ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENT ITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSCRIBERS AND DELETED THE ADDITION MADE U/S. 68 OF THE ACT. BEFORE WE ADJUDICATE AS TO WHETHER THE LD. CIT(A)S ACTION IS RIGHT OR E RRONEOUS, LET US LOOK AT SECTION 68 OF THE ACT AND THE JUDICIAL PRECEDENTS ON THE ISSUE AT HAN D. 10. SECTION 68 UNDER WHICH THE ADDITION HAS BEEN MA DE BY THE ASSESSING OFFICER READS AS UNDER: '68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESS ING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ' THE PHRASEOLOGY OF SECTION 68 IS CLEAR. THE LEGISLA TURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH CR EDIT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IN TH IS CASE THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS SHALL BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT 11 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 PREVIOUS YEAR'. THE SUPREME COURT WHILE INTERPRETIN G SIMILAR PHRASEOLOGY USED IN SECTION 69 HAS HELD THAT IN CREATING THE LEGAL FICTION THE PHRASEOLOGY EMPLOYS THE WORD 'MAY' AND NOT 'SHALL'. THUS THE UN-SATISFACTORINESS OF THE EX PLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS THE INCOME OF THE ASSESSEE AS HELD BY THE SUPREME COURT IN THE CASE O F CIT V. SMT. P. K. NOORJAHAN [1999] 237 ITR 570. WE NOTE THAT AGAINST THE SAID DECISION OF HON'BLE GUJARAT HIGH COURT THE SPECIAL LEAVE PETITION FILED BY THE REVENUE HAS ALS O BEEN DISMISSED BY THE HON'BLE APEX COURT. 11. IN THE CASE OF NEMI CHAND KOTHARI 136 TAXMAN 21 3, (SUPRA), THE HON'BLE GUAHATI HIGH COURT HAS THROWN LIGHT ON ANOTHER ASPECT TOUCH ING THE ISSUE OF ONUS ON ASSESSEE UNDER SECTION 68, BY HOLDING THAT THE SAME SHOULD BE DECI DED BY TAKING INTO CONSIDERATION THE PROVISION OF SECTION 106 OF THE EVIDENCE ACT WHICH SAYS THAT A PERSON CAN BE REQUIRED TO PROVE ONLY SUCH FACTS WHICH ARE IN HIS KNOWLEDGE. T HE HON'BLE COURT IN THE SAID CASE HELD THAT, ONCE IT IS FOUND THAT AN ASSESSEE HAS ACTUALL Y TAKEN MONEY FROM DEPOSITOR/LENDER WHO HAS BEEN FULLY IDENTIFIED, THE ASSESSEE/BORROWER CA NNOT BE CALLED UPON TO EXPLAIN, MUCH LESS PROVE THE AFFAIRS OF SUCH THIRD PARTY, WHICH HE IS NOT EVEN SUPPOSED TO KNOW OR ABOUT WHICH HE CANNOT BE HELD TO BE ACCREDITED WITH ANY KNOWLED GE. IN THIS VIEW, THE HON'BLE COURT HAS LAID DOWN THAT SECTION 68 OF INCOME-TAX ACT, SHOULD BE READ ALONG WITH SECTION 106 OF EVIDENCE ACT. THE RELEVANT OBSERVATIONS AT PAGE 260 TO 262, 264 AND 265 OF THE REPORT ARE REPRODUCED HEREIN BELOW:- 'WHILE INTERPRETING THE MEANING AND SCOPE OF SECTIO N 68, ONE HAS TO BEAR IN MIND THAT NORMALLY, INTERPRETATION OF A STATUTE SHALL BE GENE RAL, IN NATURE, SUBJECT ONLY TO SUCH EXCEPTIONS AS MAY BE LOGICALLY PERMITTED BY THE STA TUTE ITSELF OR BY SOME OTHER LAW CONNECTED THEREWITH OR RELEVANT THERETO. KEEPING IN VIEW THES E FUNDAMENTALS OF INTERPRETATION OF STATUTES, WHEN WE READ CAREFULLY THE PROVISIONS OF SECTION 68 , WE NOTICE NOTHING IN SECTION 68 TO SHOW THAT THE SCOPE OF THE INQUIRY UNDER SECTION 68 BY T HE REVENUE DEPARTMENT SHALL REMAIN CONFINED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLAC E BETWEEN THE ASSESSEE AND THE CREDITOR NOR DOES THE WORDING OF SECTION 68 INDICATE THAT SE CTION 68 DOES NOT AUTHORIZE THE REVENUE DEPARTMENT TO MAKE INQUIRY INTO THE SOURCE(S) OF TH E CREDIT AND/OR SUB-CREDITOR. THE LANGUAGE EMPLOYED BY SECTION 68 CANNOT BE READ TO IMPOSE SUC H LIMITATIONS ON THE POWERS OF THE ASSESSING OFFICER. THE LOGICAL CONCLUSION, THEREFOR E, HAS TO BE, AND WE HOLD THAT AN INQUIRY UNDER SECTION 68 NEED NOT NECESSARILY BE KEPT CONFI NED BY THE ASSESSING OFFICER WITHIN THE TRANSACTIONS, WHICH TOOK PLACE BETWEEN THE ASSESSEE AND HIS CREDITOR, BUT THAT THE SAME MAY BE EXTENDED TO THE TRANSACTIONS, WHICH HAVE TAKEN P LACE BETWEEN THE CREDITOR AND HIS SUB- CREDITOR. THUS, WHILE THE ASSESSING OFFICER IS UNDE R SECTION 68, FREE TO LOOK INTO THE SOURCE(S) 12 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 OF THE CREDITOR AND/OR OF THE SUB-CREDITOR, THE BUR DEN ON THE ASSESSEE UNDER SECTION 68 IS DEFINITELY LIMITED. THIS LIMIT HAS BEEN IMPOSED BY SECTION 106 OF THE EVIDENCE ACT WHICH READS AS FOLLOWS: 'BURDEN OF PROVING FACT ESPECIALLY WITHIN KNOWLEDGE .-WHEN ANY FACT IS ESPECIALLY WITHIN THE KNOWLEDGE OF ANY PERSON, THE BURDEN) OF PROVING THA T FACT IS UPON HIM. ' ******** WHAT, THUS, TRANSPIRES FROM THE ABOVE DISCUSSION IS THAT WHITE SECTION 106 OF THE EVIDENCE ACT LIMITS THE ONUS OF THE ASSESSEE TO THE EXTENT OF HI S PROVING THE SOURCE FROM WHICH HE HAS RECEIVED THE CASH CREDIT, SECTION 68 GIVES AMPLE FR EEDOM TO THE ASSESSING OFFICER TO MAKE INQUIRY NOT ONLY INTO THE SOURCE(S)OF THE CREDITOR BUT ALSO OF HIS (CREDITOR'S) SUB-CREDITORS AND PROVE, AS A RESULT, OF SUCH INQUIRY, THAT THE MONEY RECEIVED BY THE ASSESSEE, IN THE FORM OF LOAN FROM THE CREDITOR, THOUGH ROUTED THROUGH THE SUB-CR EDITORS, ACTUALLY BELONGS TO, OR WAS OF, THE ASSESSEE HIMSELF. IN OTHER WORDS, WHILE SECTION 68 GIVES THE LIBERTY TO THE ASSESSING OFFICER TO ENQUIRE INTO THE SOURCE/SOURCE FROM WHERE THE CREDI TOR HAS RECEIVED THE MONEY, SECTION 106 MAKES THE ASSESSEE LIABLE TO DISCLOSE ONLY THE SOUR CE(S) FROM WHERE HE HAS HIMSELF RECEIVED THE CREDIT AND IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE SOURCE(S) OF THE SUB-CREDITORS. IF SECTION 106 AND SECTION 68 AR E TO STAND TOGETHER, WHICH THEY MUST, THEN, THE INTERPRETATION OF SECTION 68 ARE TO STAND TOGET HER, WHICH THEY MUST, THEN THE INTERPRETATION OF SECTION 68 HAS TO BE IN SUCH A WAY THAT IT DOES NOT MAKE SECTION 106 REDUNDANT. HENCE, THE HARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVIDE NCE ACT AND SECTION 68 OF THE INCOME- TAX ACT WILL BE THAT THOUGH APART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSESSEE MUST ESTABLISH THE GENUINENESS OF THE TRANSACTION AS WEL L AS THE CREDITWORTHINESS OF HIS CREDITOR, THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR MUST REMAIN CONFIN ED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR. WHAT F OLLOWS, AS A COROLLARY, IS THAT IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS BETWEEN HIS CREDITOR AND SUB-CREDITORS NOR IS IT THE BURDEN OF THE ASSESSEE TO PROVE THAT THE SUB-CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE CASH CREDIT TO THE CREDITOR FROM WHOM THE CASH CREDIT HAS BEEN. EVENTUALLY, RECEIVED BY THE ASSESSEE. IT, THE REFORE, FURTHER LOGICALLY FOLLOWS THAT THE CREDITOR'S CREDITWORTHINESS HAS TO BE JUDGED VIS-A- VIS THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR, AND IT IS NO T THE BUSINESS OF THE ASSESSEE TO FIND OUT THE SOURCE OF MONEY OF HIS CREDITOR OR OF THE GENUINEN ESS OF THE TRANSACTIONS, WHICH TOOK BETWEEN THE CREDITOR AND SUB-CREDITOR AND/OR CREDITWORTHINE SS OF THE SUB- CREDITORS, FOR, THESE ASPECTS MAY NOT BE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSE SSEE. ' ********** ' ... IF A CREDITOR HAS, BY ANY UNDISCLOSED SOURCE, A PARTICULAR AMOUNT OF MONEY IN THE BANK, THERE IS NO LIMITATION UNDER THE LAW ON THE PART OF THE ASSESSEE TO OBTAIN SUCH AMOUNT OF MONEY OR PART THEREOF FROM THE CREDITOR, BY WAY OF CHEQUE IN THE FORM OF LOAN AND IN SUCH A CASE, IF THE CREDITOR FAILS TO SATISFY AS TO HOW HE HAD ACTU ALLY RECEIVED THE SAID AMOUNT AND HAPPENED TO KEEP THE SAME IN THE BANK, THE SAID AMOUNT CANNO T BE TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE. IN OTHER WORDS, THE GENUIN ENESS AS WELL AS THE CREDITWORTHINESS OF A CREDITOR HAVE TO BE ADJUDGED VIS-A-VIS THE TRANSACT IONS, WHICH HE HAS WITH THE ASSESSEE. THE REASON WHY WE HAVE FORMED THE OPINION THAT IT IS NO T THE BUSINESS OF THE ASSESSEE TO FIND OUT THE ACTUAL SOURCE OR SOURCES FROM WHERE THE CREDITO R HAS ACCUMULATED THE AMOUNT, WHICH HE ADVANCES, AS LOAN, TO THE ASSESSEE IS THAT SO FAR A S AN ASSESSEE IS CONCERNED, HE HAS TO PROVE THE GENUINENESS OF THE TRANSACTION AND THE CREDITWO RTHINESS OF THE CREDITOR VIS-A-VIS THE TRANSACTIONS WHICH HAD TAKEN PLACE BETWEEN THE ASSE SSEE AND THE CREDITOR AND NOT BETWEEN THE 13 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 CREDITOR AND THE SUB-CREDITORS, FOR, IT IS NOT EVEN REQUIRED UNDER THE LAW FOR THE ASSESSEE TO TRY TO FIND OUT AS TO WHAT SOURCES FROM WHERE THE CREDI TOR HAD RECEIVED THE AMOUNT, HIS SPECIAL KNOWLEDGE UNDER SECTION 106 OF THE EVIDENCE ACT MAY VERY WELL REMAIN CONFINED ONLY TO THE TRANSACTIONS, WHICH HE HAD' WITH THE CREDITOR AND H E MAY NOT KNOW WHAT TRANSACTION(S) HAD TAKEN PLACE BETWEEN HIS CREDITOR AND THE SUB-CREDIT OR ' ********** 'IN OTHER WORDS, THOUGH UNDER SECTION 68 AN ASSESSI NG OFFICER IS FREE TO SHOW, WITH THE HELP OF THE INQUIRY CONDUCTED BY HIM INTO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE CREDITOR AND THE SUB-CREDITOR, THAT THE TRANSACTION BETWEEN THE TWO WERE NOT GENUINE AND THAT THE SUB-CREDITOR HAD NO CREDITWORTHINESS, IT WILL N OT NECESSARILY MEAN THAT THE LOAN ADVANCED BY THE SUB-CREDITOR TO THE CREDITOR WAS INCOME OF T HE ASSESSEE FROM UNDISCLOSED SOURCE UNLESS THERE IS EVIDENCE, DIRECT OR CIRCUMSTANTIAL, TO SHO W THAT THE AMOUNT WHICH HAS BEEN ADVANCED BY THE SUB-CREDITOR TO THE CREDITOR, HAD ACTUALLY B EEN RECEIVED BY THE SUB-CREDITOR FROM THE ASSESSEE .' ********** 'KEEPING IN VIEW THE ABOVE POSITION OF LAW, WHEN WE TURN TO THE FACTUAL MATRIX OF THE PRESENT CASE, WE FIND THAT SO FAR AS THE APPELLANT IS CONCE RNED, HE HAS ESTABLISHED THE IDENTITY OF THE CREDITORS, NAMELY, NEMICHAND NAHATA AND SONS (HUF) AND PAWAN KUMAR AGARWALLA. THE APPELLANT HAD ALSO SHOWN, IN ACCORDANCE WITH THE BU RDEN, WHICH RESTED ON HIM UNDER SECTION 106 OF THE EVIDENCE ACT, THAT THE SAID AMOUNTS HAD BEEN RECEIVED BY HIM BY WAY OF CHEQUES FROM THE CREDITORS AFOREMENTIONED. IN FACT THE FACT THAT THE ASSESSEE HAD RECEIVED THE SAID AMOUNTS BY WAY OF CHEQUES WAS NOT IN DISPUTE. ONCE THE ASSESSEE HAD ESTABLISHED THAT HE HAD RECEIVED THE SAID AMOUNTS FROM THE CREDITORS AFOREM ENTIONED BY WAY OF CHEQUES, THE ASSESSEE MUST BE TAKEN TO HAVE PROVED THAT THE CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE LOANS. THEREAFTER THE BURDEN HAD SHIFTED TO THE ASSESSING OFFICER TO PROVE THE CONTRARY. ON MERE FAILURE ON THE PART OF THE CREDITORS TO SHOW THAT T HEIR SUB-CREDITORS HAD CREDITWORTHINESS TO ADVANCE THE SAID LOAN AMOUNTS TO THE ASSESSEE, SUCH FAILURE, AS A COROLLARY, COULD NOT HAVE BEEN AND OUGHT NOT TO HAVE BEEN, UNDER THE LAW, TRE ATED AS THE INCOME FROM THE UNDISCLOSED SOURCES OF THE ASSESSEE HIMSELF, WHEN THERE WAS NEI THER DIRECT NOR CIRCUMSTANTIAL EVIDENCE ON RECORD THAT THE SAID LOAN AMOUNTS ACTUALLY BELONGED TO, OR WERE OWNED BY, THE ASSESSEE. VIEWED FROM THIS ANGLE, WE HAVE NO HESITATION IN HO LDING THAT IN THE CASE AT HAND, THE ASSESSING OFFICER HAD FAILED TO SHOW THAT THE AMOUN TS, WHICH HAD COME TO THE HANDS OF THE CREDITORS FROM THE HANDS OF THE SUB-CREDITORS, HAD ACTUALLY BEEN RECEIVED BY THE SUB-CREDITORS FROM THE ASSESSEE. IN THE ABSENCE OF ANY SUCH EVIDE NCE ON RECORD, THE ASSESSING OFFICER COULD NOT HAVE TREATED THE SAID AMOUNTS AS INCOME DERIVED BY THE APPELLANT FROM UNDISCLOSED SOURCES. THE LEARNED TRIBUNAL SERIOUSLY FELL INTO E RROR IN TREATING THE SAID AMOUNTS AS INCOME DERIVED BY THE APPELLANT FROM. UNDISCLOSED SOURCES MERELY ON THE FAILURE OF THE SUB-CREDITORS TO PROVE THEIR CREDITWORTHINESS. 12. FURTHER, IN THE CASE OF CIT V. S. KAMALJEET SIN GH [2005] 147 TAXMAN 18(ALL.) THEIR LORDSHIPS, ON THE ISSUE OF DISCHARGE OF ASSESSEE'S ONUS IN RELATION TO A CASH CREDIT APPEARING IN HIS BOOKS OF ACCOUNT, HAS OBSERVED AND HELD AS U NDER:- '4. THE TRIBUNAL HAS RECORDED A FINDING THAT THE AS SESSEE HAS DISCHARGED THE ONUS WHICH WAS ON HIM TO EXPLAIN THE NATURE AND SOURCE OF CASH CRE DIT IN QUESTION. THE ASSESSEE DISCHARGED 14 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 THE ONUS BY PLACING (I) CONFIRMATION LETTERS OF THE CASH CREDITORS; (II) THEIR AFFIDAVITS; (III) THEIR FULL ADDRESSES AND GIR NUMBERS AND PERMANENT ACCOUN T NUMBERS. IT HAS FOUND THAT THE ASSESSEE'S BURDEN STOOD DISCHARGED AND SO, NO ADDIT ION TO HIS TOTAL INCOME ON ACCOUNT OF CASH CREDIT WAS CALLED FOR. IN VIEW OF THIS FINDING, WE FIND THAT THE TRIBUNAL WAS RIGHT IN REVERSING THE ORDER OF THE AA C, SETTING ASIDE THE ASSESSMENT ORDER. 13. WE ALSO TAKE NOTE OF THE DECISION OF THE HON' BLE HIGH COURT, CALCUTTA IN THE CASE OF S.K. BOTHRA & SONS, HUF V. INCOME-TAX OFFICER, WARD - 46(3), KOLKATA 347 ITR 347 WHEREIN THE COURT HELD AS FOLLOWS: 15. IT IS NOW A SETTLED LAW THAT WHILE CONSIDERING THE QUESTION WHETHER THE ALLEGED LOAN TAKEN BY THE ASSESSEE WAS A GENUINE TRANSACTION, THE INIT IAL ONUS IS ALWAYS UPON THE ASSESSEE AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY THE APPELLANT IS NOT SATISFACTORY, THE ASSESSING OFFICER CAN DISBELIEVE THE ALLEGED TRANSA CTION OF LOAN. BUT THE LAW IS EQUALLY SETTLED THAT IF THE INITIAL BURDEN IS DISCHARGED BY THE ASS ESSEE BY PRODUCING SUFFICIENT MATERIALS IN SUPPORT OF THE LOAN TRANSACTION, THE ONUS SHIFTS UP ON THE ASSESSING OFFICER AND AFTER VERIFICATION, HE CAN CALL FOR FURTHER EXPLANATION F ROM THE ASSESSEE AND IN THE PROCESS, THE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO ASSES SEE. 16. IN THE CASE BEFORE US, THE APPELLANT BY PRODUCI NG THE LOAN-CONFIRMATION-CERTIFICATES SIGNED BY THE CREDITORS, DISCLOSING THEIR PERMANENT ACCOUN T NUMBERS AND ADDRESS AND FURTHER INDICATING THAT THE LOAN WAS TAKEN BY ACCOUNT PAYEE CHEQUES, NO DOUBT, PRIMA FACIE, DISCHARGED THE INITIAL BURDEN AND THOSE MATERIALS D ISCLOSED BY THE ASSESSEE PROMPTED THE ASSESSING OFFICER TO ENQUIRE THROUGH THE INSPECTOR TO VERIFY THE STATEMENTS. 14. IN A CASE WHERE THE ISSUE WAS WHETHER THE ASSE SSEE AVAILED CASH CREDIT AS AGAINST FUTURE SALE OF PRODUCT, THE AO ISSUED SUMMONS TO TH E CREDITORS WHO DID NOT TURN UP BEFORE HIM, SO AO DISBELIEVED THE EXISTENCE OF CREDITORS A ND SADDLED THE ADDITION, WHICH WAS OVERTURNED BY LD. CIT(A). HOWEVER, THE TRIBUNAL RE VERSED THE DECISION OF THE LD. CIT(A) AND UPHELD THE AOS DECISION, WHICH ACTION OF TRIBU NAL WAS CHALLENGED BY THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF CRYSTAL NETWORKS (P. ) LTD. V. COMMISSIONER OF INCOME-TAX 353 ITR 171 WHEREIN THE TRIBUNALS DECISION WAS OVE RTURNED AND DECISION OF LD. CIT(A) UPHELD AND THE HONBLE HIGH COURT HAS HELD THAT WH EN THE BASIC EVIDENCES ARE ON RECORD THE MERE FAILURE OF THE CREDITOR TO APPEAR CANNOT B E BASIS TO MAKE ADDITION. THE COURT HELD AS FOLLOWS: 8. ASSAILING THE SAID JUDGMENT OF THE LEARNED TRIBU NAL LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT INCOME-TAX OFFICER DID NOT CONSIDER TH E MATERIAL EVIDENCE SHOWING THE CREDITWORTHINESS AND ALSO OTHER DOCUMENTS, VIZ., CO NFIRMATORY STATEMENTS OF THE PERSONS, OF HAVING ADVANCED CASH AMOUNT AS AGAINST THE SUPPLY O F BIDIS. THESE EVIDENCE WERE DULY CONSIDERED BY THE COMMISSIONER OF INCOME-TAX (APPEA LS). THEREFORE, THE FAILURE OF THE PERSON TO TURN UP PURSUANT TO THE SUMMONS ISSUED TO ANY WI TNESS IS IMMATERIAL WHEN THE MATERIAL DOCUMENTS MADE AVAILABLE, SHOULD HAVE BEEN ACCEPTED AND INDEED IN SUBSEQUENT YEAR THE 15 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 SAME EXPLANATION WAS ACCEPTED BY THE INCOME-TAX OFF ICER. HE FURTHER CONTENDED THAT WHEN THE TRIBUNAL HAS RELIED ON THE ENTIRE JUDGMENT OF THE C OMMISSIONER OF INCOME-TAX (APPEALS), THEREFORE, IT WAS NOT PROPER TO TAKE UP SOME PORTIO N OF THE JUDGMENT OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND TO IGNORE THE OTHER PORTIO N OF THE SAME. THE JUDICIAL PROPRIETY AND FAIRNESS DEMANDS THAT THE ENTIRE JUDGMENT BOTH FAVO URABLE AND UNFAVOURABLE SHOULD HAVE BEEN CONSIDERED. BY NOT DOING SO THE TRIBUNAL COMMITTED GRAVE ERROR IN LAW IN UPSETTING THE JUDGMENT IN THE ORDER OF THE COMMISSIONER OF INCOME -TAX (APPEALS). 9. IN THIS CONNECTION HE HAS DRAWN OUR ATTENTION TO A DECISION OF THE SUPREME COURT IN THE CASE OF UDHAVDAS KEWALRAM V. CIT [19671 66 ITR 462. IN THIS JUDGMENT IT IS NOTICED THAT THE SUPREME COURT AS PROPOSITION OF LAW HELD THAT THE T RIBUNAL MUST IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE, ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL THE CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. 10. WE FIND CONSIDERABLE FORCE OF THE SUBMISSIONS O F THE LEARNED COUNSEL FOR THE APPELLANT THAT THE TRIBUNAL HAS MERELY NOTICED THAT SINCE THE SUMM ONS ISSUED BEFORE ASSESSMENT RETURNED UNSERVED AND NO ONE CAME FORWARD TO PROVE. THEREFOR E, IT SHALL BE ASSUMED THAT THE ASSESSEE FAILED TO PROVE THE EXISTENCE OF THE CREDITORS OR F OR THAT MATTER THE CREDITWORTHINESS. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL THAT THE COMMISS IONER OF INCOME-TAX (APPEALS) HAS TAKEN THE TROUBLE OF EXAMINING OF ALL OTHER MATERIALS AND DOCUMENTS, VIZ., CONFIRMATORY STATEMENTS, INVOICES, CHALLANS AND VOUCHERS SHOWING SUPPLY OF B IDIS AS AGAINST THE ADVANCE. THEREFORE, THE ATTENDANCE OF THE WITNESSES PURSUANT TO THE SUM MONS ISSUED, IN OUR VIEW, IS NOT IMPORTANT. THE IMPORTANT IS TO PROVE AS TO WHETHER THE SAID CA SH CREDIT WAS RECEIVED AS AGAINST THE FUTURE SALE OF THE PRODUCT OF THE ASSESSEE OR NOT. WHEN IT WAS FOUND BY THE COMMISSIONER OF INCOME- TAX (APPEALS) ON FACTS HAVING EXAMINED THE DOCUMENT S THAT THE ADVANCE GIVEN BY THE CREDITORS HAVE BEEN ESTABLISHED THE TRIBUNAL SHOULD NOT HAVE IGNORED THIS -FACT FINDING. INDEED THE TRIBUNAL DID NOT REALLY TOUCH THE AFORESAID FACT FI NDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AS RIGHTLY POINTED OUT BY THE LEARNED COU NSEL. THE SUPREME COURT HAS ALREADY STATED AS TO WHAT SHOULD BE THE DUTY OF THE LEARNED TRIBUN AL TO DECIDE IN THIS SITUATION. IN THE SAID JUDGMENT NOTED BY US AT PAGE 464, THE SUPREME COURT HAS OBSERVED AS FOLLOWS: 'THE INCOME-TAX APPELLATE TRIBUNAL PERFORMS A JUDIC IAL FUNCTION UNDER THE INDIAN INCOME-TAX ACT; IT IS INVESTED WITH AUTHORITY TO DE TERMINE FINALLY ALL QUESTIONS OF FACT. THE TRIBUNAL MUST, IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL THE CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. ' 11. THE TRIBUNAL MUST, IN DECIDING AN APPEAL, CONSI DER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. IT IS A LSO RULED IN THE SAID JUDGMENT AT PAGE 465 THAT IF THE TRIBUNAL DOES NOT DISCHARGE THE DUTY IN THE MANNER AS ABOVE THEN IT SHALL BE ASSUMED THE JUDGMENT OF THE TRIBUNAL SUFFERS FROM M ANIFEST INFIRMITY. 12. TAKING INSPIRATION FROM THE SUPREME COURT OBSER VATIONS WE ARE CONSTRAINED TO HOLD IN THIS MATTER THAT THE TRIBUNAL HAS NOT ADJUDICATED UPON T HE CASE OF THE ASSESSEE IN THE LIGHT OF THE EVIDENCE AS FOUND BY THE COMMISSIONER OF INCOME-TAX (APPEALS). WE ALSO FOUND NO SINGLE WORD HAS BEEN SPARED TO UP SET THE FACT FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THERE ARE MATERIALS TO SHOW THE CASH CREDIT WA S RECEIVED FROM VARIOUS PERSONS AND SUPPLY AS AGAINST CASH CREDIT ALSO MADE. 13. HENCE, THE JUDGMENT AND ORDER OF THE TRIBUNAL I S NOT SUSTAINABLE. ACCORDINGLY, THE SAME IS SET ASIDE. WE RESTORE THE JUDGMENT AND ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). THE APPEAL IS ALLOWED. 16 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 15. WHEN A QUESTION AS TO THE CREDITWORTHINESS OF A CREDITOR IS TO BE ADJUDICATED AND IF THE CREDITOR IS AN INCOME TAX ASSESSEE, IT IS NOW W ELL SETTLED BY THE DECISION OF THE CALCUTTA HIGH COURT THAT THE CREDITWORTHINESS OF THE CREDITO R CANNOT BE DISPUTED BY THE AO OF THE ASSESSEE BUT THE AO OF THE CREDITOR. IN THIS REGARD S OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE COMMISSI ONER OF INCOME TAX, KOLKA TA-ILL VERSUS DATAWARE PRIVATE LIMITED ITAT NO. 263 OF 2011 DATE: 21ST SEPTEMBER, 2011 WHEREIN THE COURT HELD AS FOLLOWS: IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSI NG OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX ASSESSEE. AFTER GETTING TH E PAN NUMBER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE AS SESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINE NESS' OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFI CER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NO T ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMI TTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OFFICER OF THE ASS ESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENE SS' OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX (A PPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL-ACCEPTED PRINCIPLE WHICH ARE REQUIRED TO B E FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH THE AUTHORITIES. 16. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE SUPREME COURT WHILE DISMISSING SLP IN THE CASE OF LOVELY EXPORTS AS HAS BEEN REPORTED AS JUDGMENT DELIVERED BY THE CTR AT 216 CTR 295: 'CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDIS CLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961? WE FIND NO MERIT IN THIS SPEC IAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE A SSESSEE- COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. 17. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT WHILE RELYING ON THE CASE OF LOVELY EXPORTS, IN THE APPEAL OF COMISSIONER OF INCOME TAX, KOLKATA-IV VS ROSEBERRY MERCANTILE (P) LTD., I TAT NO. 241 OF 2010 DATED 10- 01-2011 HAS HELD: 17 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONEY OR ACCOUNTED MONEY AND THE LD. CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION. ' IT APPEARS FROM THE RECORD THAT IN THE ASSESSMENT P ROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION HAD BRO UGHT RS. 4, 00, 000/- AND RS.20,00,000/- TOWARDS SHARE CAPITAL AND SHARE PREMIUM RESPECTIVEL Y AMOUNTING TO RS.24,00, 000/- FROM FOUR SHAREHOLDERS BEING PRIVATE LIMITED COMPANIES. THE A SSESSING OFFICER ON HIS PART CALLED FOR THE DETAILS FROM THE ASSESSEE AND ALSO FROM THE SHARE A PPLICANTS AND ANALYZED THE FACTS AND ULTIMATELY OBSERVED CERTAIN ABNORMAL FEATURES, WHIC H WERE MENTIONED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT NA TURE AND SOURCE OF SUCH MONEY WAS QUESTIONABLE AND EVIDENCE PRODUCED WAS UNSATISFACTO RY. CONSEQUENTLY, THE ASSESSING OFFICER INVOKED THE PROVISIONS UNDER SECTION 68/69 OF THE I NCOME TAX ACT AND MADE ADDITION OF RS.24,00,000/-. ON APPEAL THE LEARNED CIT (A) BY FOLLOWING THE DECI SION OF THE SUPREME COURT IN THE CASE OF CL. T. VS. M/S. LOVELY EXPORTS PVT. LTD., REPORTED IN (2008) 216 CTR 195 ALLOWED THE APPEAL BY HOLDING -THAT SHARE CAPITAL/PREMIUM OF RS. 24,00,00 0/- RECEIVED FROM THE INVESTORS WAS NOT LIABLE TO BE TREATED UNDER SECTION 68 AS UNEXPLAINE D CREDITS AND IT SHOULD NOT BE TAXED IN THE HANDS OF THE APPELLANT COMPANY. AS INDICATED EARLIER, THE TRIBUNAL BELOW DISMISSED THE APPEAL FILED BY THE REVENUE. AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASE OF CL. T. VS. M/S. LOVELY EXPORTS PVT. LTD. [SUPRA], WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF THE ASSESSEE AND THUS, NO SUB STANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND I S DISMISSED. 18. OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX VS M/S. NISHAN I NDO COMMERCE LTD DATED 2 DECEMBER, 2013 IN INCOME TAX APPEAL NO.52 OF 2001 W HEREIN THE COURT HELD AS FOLLOWS: THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INC REASE IN SHARE CAPITAL BY RS.52,03,500/- WAS NOTHING BUT THE INTRODUCTION OF THE ASSESSEE'S OWN UNDISCLOSED FUNDS/INCOME INTO THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. THE ASSE SSING OFFICER ACCORDINGLY TREATED THE INVESTMENT AS UNEXPLAINED CREDIT UNDER SECTION 68 O F THE INCOME TAX ACT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) BEING THE FIRST APPELLATE AUTHORITY AND C ONTENDED THAT THE ASSESSING OFFICER HAD NO MATERIAL TO SHOW THAT THE SHARE CAPITAL WAS THE INC OME OF THE ASSESSEE COMPANY AND AS SUCH THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SE CTION 68 OF THE ACT WAS WRONG. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AF TER HEARING THE DEPARTMENT AND THE ASSESSEE COMPANY DELETED THE ADDITION OF RS. 52, 03 ,500/- TO THE INCOME OF THE ASSESSEE COMPANY DURING THE ASSESSMENT YEAR IN QUESTION. THE LEARNED COMMISSIONER OF INCOME TAX 18 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 APPEALS FOUND THAT THERE WERE AS MANY AS 2155 ALLOT TEES, WHOSE NAMES, ADDRESSES AND RESPECTIVE SHARES ALLOCATION HAD BEEN DISCLOSED. THE COMMISSIONER OF INCOME TAX APPEALS, FURTHER FOU ND THAT THE ASSESSEE COMPANY RECEIVED THE APPLICATIONS THROUGH BANKERS TO THE ISSUE, WHO HAD BEEN APPOINTED UNDER THE GUIDELINES OF THE STOCK EXCHANGE AND THE ASSESSEE COMPANY HAD BEE N ALLOTTED SHARES ON THE BASIS OF ALLOTMENT APPROVED BY THE STOCK EXCHANGE. THE ASSES SEE COMPANY HAD DULY FILED THE RETURN OF ALLOTMENT WITH THE REGISTRAR OF COMPANIES, GIVING C OMPLETE PARTICULARS OF THE ALLOTTEES. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT INQUIRES HAD CONFIRMED THE EXISTENCE OF MOST OF THE SHAREHOLDERS AT THE ADDRESSES INTIMA TED TO THE ASSESSING OFFICER, BUT THE ASSESSING OFFICER TOOK THE VIEW THAT THEIR INVESTME NT IN THE ASSESSEE COMPANY WAS NOT GENUINE, ON THE BASIS OF SOME EXTRANEOUS REASONS. T HE COMMISSIONER OF INCOME TAX (APPEALS) TOOK NOTE OF THE OBSERVATION OF THE ASSESSING OFFIC ER THAT ENQUIRY CONDUCTED BY THE INCOME TAX INSPECTOR HAD REVEALED THAT NINE PERSONS MAKING APPLICATIONS FOR 900 SHARES WERE NOT AVAILABLE AT THE GIVEN ADDRESS AND RIGHTLY CONCLUDE D THAT THE TOTAL SHARE CAPITAL ISSUED BY THE ASSESSEE COMPANY COULD NOT BE ADDED AS UNEXPLAINED CASH CREDIT UNDER 'SECTION 68 OF THE INCOME TAX ACT. MOREOVER, IF THE NATURE AND SOURCE OF INVESTMENT BY ANY SHAREHOLDER, IN SHARES OF THE ASSESSEE COMPANY REMAINED UNEXPLAINED , LIABILITY COULD NOT BE FOISTED ON THE COMPANY. THE CONCERNED SHAREHOLDERS WOULD HAVE TO E XPLAIN THE SOURCE OF THEIR FUND. THE LEARNED COMMISSIONER ON CONSIDERING THE SUBMISS IONS OF THE, RESPECTIVE PARTIES AND CONSIDERING THE MATERIALS, FOUND THAT THE ASSESSING OFFICER HAD APPLIED THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT ARBITRARILY AND IL LEGALLY AND IN ANY CASE WITHOUT GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF REPRESENTATION AND /OR HEARING. LEARNED TRIBUNAL AGREED WITH THE FACTUAL FINDINGS O F THE LEARNED COMMISSIONER AND ACCORDINGLY THE LEARNED TRIBUNAL DISMISSED THE APPE AL OF THE REVENUE AND AFFIRMED THE DECISION OF THE LEARNED COMMISSIONER. MR. DUTTA APPEARING ON BEHALF OF THE PETITIONERS CI TED JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. RUBY TRADER S AND EXPORTERS LIMITED REPORTED IN 236 (2003) ITR 3000 WHERE A DIVISION BENCH OF THIS COURT HELD THAT WHEN SECTION 68 IS RESORTED TO, IT IS INCUMBENT ON THE ASSESSEE COMPAN Y TO PROVE AND ESTABLISH THE IDENTITY OF THE SUBSCRIBERS, THEIR CREDIT WORTHINESS AND THE GENUIN ENESS OF THE TRANSACTION. THE AFORESAID JUDGMENT WAS RENDERED IN THE CONTEXT OF THE FACTUAL BACKGROUND OF THE AFORESAID CASE WHERE, DESPITE SEVERAL OPPORTUNITIES BEING GIV EN TO THE ASSESSEE, NOTHING WAS DISCLOSED ABOUT THE IDENTITY OF THE SHAREHOLDERS. IN THE INST ANT CASE, THE ASSESSEE DISCLOSED THE IDENTITY AND ADDRESS AND PARTICULARS OF SHARE ALLOCATION OF THE SHAREHOLDERS. IT WAS ALSO FOUND ON THE FACTS THAT ALL THE SHAREHOLDERS WERE IN EXISTENCE. ONLY NINE SHAREHOLDERS SUBSCRIBING TO ABOUT 900 SHARES OUT OF 6, 12,000 SHARES WERE NOT FOUND A VAILABLE AT THEIR ADDRESSES, AND THAT TOO, IN COURSE OF ASSESSMENT PROCEEDINGS IN THE YEAR 199 4, I.E., ALMOST 3 YEARS AFTER THE ALLOTMENT. BY AN ORDER DATED 2ND MAY, 2001, THIS COURT ADMITTE D THE APPEAL ON THREE QUESTIONS WHICH ESSENTIALLY CENTRE AROUND THE QUESTION OF WHETHER T HE APPELLATE COMMISSIONER ERRED IN LAW IN DELETING THE ADDITION OF RS. 52, 03, 500/- TO THE I NCOME OF THE ASSESSEE AS MADE BY THE ASSESSING OFFICER. WE ARE OF THE VIEW THAT THERE IS NO QUESTION OF LAW INVOLVED IN THIS APPEAL FAR LESS ANY SUBSTANTIAL QUESTION OF LAW. THE LEARNED TRIBUNAL HAS CONCURRED WITH THE LEARNED COMMISSIONER ON FACTS AND FOUND THAT THERE WERE MATERIALS TO SHOW THAT THE ASSESSEE HAD DISCLOSED THE PARTICULARS OF THE SHAREHOLDERS. THE FACTUAL FINDINGS CANNOT BE INTERF ERED WITH, IN APPEAL. WE ARE OF THE VIEW 19 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 THAT ONCE THE IDENTITY AND OTHER RELEVANT PARTICULA RS OF SHAREHOLDERS ARE DISCLOSED, IT IS FOR THOSE SHAREHOLDERS TO EXPLAIN THE SOURCE OF THEIR F UNDS AND NOT FOR THE ASSESSEE COMPANY TO SHOW WHEREFROM THESE SHAREHOLDERS OBTAINED FUNDS. 19. FURTHER, OUR ATTENTION WAS DRAWN TO THE DECISI ON OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX VS M/S. L EONARD COMMERCIAL (P) LTD ON 13 JUNE, 2011 IN ITAT NO 114 OF 2011 WHEREIN THE COURT HELD AS FOLLOWS: THE ONLY QUESTION RAISED IN THIS APPEAL IS WHETHER THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL BELOW ERRED IN LAW IN DELETING THE ADDITION OF RS.8,52,000/-, RS. 91,50,000/- AND RS. 13,00,000/- MADE BY THE ASSESSING OFFICER O N ACCOUNT OF SHARE CAPITAL, SHARE APPLICATION MONEY AND INVESTMENT IN HTCCL RESPECTIV ELY. AFTER HEARING MD. NIZAMUDDIN, LEARNED ADVOCATE APPE ARING ON BEHALF OF THE APPELLANT AND AFTER GOING THROUGH THE MATERIALS ON RECORD, WE FIN D THAT ALL SUCH APPLICATION MONEY WERE RECEIVED BY THE ASSESSEE BY WAY OF ACCOUNT PAYEE CH EQUES AND THE ASSESSEE ALSO DISCLOSED THE COMPLETE LIST OF SHAREHOLDERS WITH THEIR COMPLETE A DDRESSES AND GIR NUMBERS FOR THE RELEVANT ASSESSMENT YEARS IN WHICH SHARE APPLICATION WAS CON TRIBUTED. IT FURTHER APPEARS THAT ALL THE PAYMENTS WERE MADE BY THE APPLICANTS BY ACCOUNT PAY EE CHEQUES. IT APPEARS FROM THE ASSESSING OFFICERS ORDER THAT H IS GRIEVANCE WAS THAT THE ASSESSEE WAS NOT WILLING TO PRODUCE THE PARTIES WHO HAD ALLEGEDLY AD VANCED THE FUND. IN OUR OPINION, BOTH THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL BELOW WERE JUSTIFIED IN HOLDING THAT AFTER DISCLOSURE OF THE F ULL PARTICULARS INDICATED ABOVE, THE INITIAL ONUS OF THE ASSESSEE WAS SHIFTED AND IT WAS THE DUTY OF THE ASSESSING OFFICER TO ENQUIRE WHETHER THOSE PARTICULARS WERE CORRECT OR NOT AND IF THE AS SESSING OFFICER WAS OF THE VIEW THAT THE PARTICULARS SUPPLIED WERE INSUFFICIENT TO DETECT TH E REAL SHARE APPLICANTS, TO ASK FOR FURTHER PARTICULARS. THE ASSESSING OFFICER HAS NOT ADOPTED EITHER OF THE AFORESAID COURSES BUT HAS SIMPLY BLAMED THE ASSESSEE FOR NOT PRODUCING THOSE SHARE APPLICAN TS. IN OUR VIEW, IN THE CASE BEFORE US SO LONG THE ASSE SSING OFFICER WAS UNABLE TO ARRIVE AT A FINDING THAT THE PARTICULARS GIVEN BY THE ASSESSEE WERE FALSE, THERE WAS NO SCOPE OF ADDING THOSE MONEY UNDER SECTION 68 OF THE INCOME- TAX ACT AND THE TRIBUNAL BELOW RIGHTLY HELD THAT THE ONUS WAS VALIDLY DISCHARGED. WE, THUS, FIND THAT BOTH THE AUTHORITIES BELOW, ON CONSIDERATION OF THE MATERIALS ON RECORD, RIGHTLY APPLIED THE CORRECT LAW WHICH ARE REQUIRED TO BE APPLIED IN THE FACTS OF THE PRESENT CASE AND, THUS, WE DO NOT FIND ANY REASON TO INTERF ERE WITH THE CONCURRENT FINDINGS OF FACT BASED ON MATERIALS ON RECORD. THE APPEAL IS, THUS, DEVOID OF ANY SUBSTANCE AND IS DISMISSED SUMMARILY AS IT DOES NOT INVOLVE ANY SUBSTANTIAL QUESTION OF LAW. 20. FROM THE DETAILS AS AFORESAID WHICH EMERGES FRO M THE PAPER BOOK FILED BEFORE US AS WELL AS BEFORE THE LOWER AUTHORITIES, IT IS VIVID T HAT ALL THE SHARE APPLICANTS ARE (I) INCOME TAX ASSESSEES, (II) THEY ARE FILING THEIR RETURN OF IN COME, (III) THE SHARE APPLICATION FORM AND 20 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 ALLOTMENT LETTER IS AVAILABLE ON RECORD, (IV) THE S HARE APPLICATION MONEY WAS MADE BY ACCOUNT PAYEE CHEQUES, (V) THE DETAILS OF THE BANK ACCOUNTS BELONGING TO THE SHARE APPLICANTS AND THEIR BANK STATEMENTS, (VI) IN NONE OF THE TRAN SACTIONS THE AO FOUND DEPOSIT IN CASH BEFORE ISSUING CHEQUES TO THE ASSESSEE COMPANY, (VI I) THE APPLICANTS ARE HAVING SUBSTANTIAL CREDITWORTHINESS WHICH IS REPRESENTED BY A CAPITAL AND RESERVE AS NOTED ABOVE. 21. AS NOTED FROM THE JUDICIAL PRECEDENTS CITED ABO VE, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE THEN THERE IS A DUTY CA STED UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF CREDIT FOUND IN HIS BOOKS. IN THE INSTANT CASE, THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL WITH PREMIUM FROM SHARE AP PLICANTS. THE NATURE OF RECEIPT TOWARDS SHARE CAPITAL IS SEEN FROM THE ENTRIES PASSED IN TH E RESPECTIVE BALANCE SHEETS OF THE COMPANIES AS SHARE CAPITAL AND INVESTMENTS. IN RES PECT OF SOURCE OF CREDIT, THE ASSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIENTS I.E. IDENT ITY OF SHARE APPLICANTS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF SHARE APPLICAN TS. FOR PROVING THE IDENTITY OF SHARE APPLICANTS, THE ASSESSEE FURNISHED THE NAME, ADDRES S, PAN OF SHARE APPLICANTS TOGETHER WITH THE COPIES OF BALANCE SHEETS AND INCOME TAX RETURNS . WITH REGARD TO THE CREDITWORTHINESS OF SHARE APPLICANTS, AS WE NOTED SUPRA, THESE COMPANIE S ARE HAVING CAPITAL IN SEVERAL CRORES OF RUPEES AND THE INVESTMENT MADE IN THE APPELLANT COM PANY IS ONLY A SMALL PART OF THEIR CAPITAL. THESE TRANSACTIONS ARE ALSO DULY REFLECTED IN THE BALANCE SHEETS OF THE SHARE APPLICANTS, SO CREDITWORTHINESS IS PROVED. EVEN IF THERE WAS ANY DOUBT IF ANY REGARDING THE CREDITWORTHINESS OF THE SHARE APPLICANTS WAS STILL SUBSISTING, THEN AO SHOULD HAVE MADE ENQUIRIES FROM THE AO OF THE SHARE SUBSCRIBERS AS H ELD BY HONBLE JURISDICTIONAL HIGH COURT IN CIT VS DATAWARE (SUPRA) WHICH HAS NOT BEEN DONE, SO NO ADVERSE VIEW COULD HAVE BEEN DRAWN. THIRD INGREDIENT IS GENUINENESS OF THE TRANSACTIONS, FOR WHICH WE NOTE THAT THE MONIES HAVE BEEN DIRECTLY PAID TO THE ASSESSEE COMP ANY BY ACCOUNT PAYEE CHEQUES OUT OF SUFFICIENT BANK BALANCES AVAILABLE IN THEIR BANK AC COUNTS ON BEHALF OF THE SHARE APPLICANTS. IT WILL BE EVIDENT FROM THE PAPER BOOK THAT THE APPELL ANT HAS EVEN DEMONSTRATED THE SOURCE OF MONEY DEPOSITED INTO THEIR BANK ACCOUNTS WHICH IN T URN HAS BEEN USED BY THEM TO SUBSCRIBE TO THE ASSESSEE COMPANY AS SHARE APPLICATION. HENCE THE SOURCE OF SOURCE OF SOURCE IS PROVED BY THE ASSESSEE IN THE INSTANT CASE THOUGH T HE SAME IS NOT REQUIRED TO BE DONE BY THE 21 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 ASSESSEE AS PER LAW AS IT STOOD/ APPLICABLE IN THIS ASSESSMENT YEAR. THE SHARE APPLICANTS HAVE CONFIRMED THE SHARE APPLICATION IN RESPONSE TO THE NOTICE U/S 133(6) OF THE ACT AND HAVE ALSO CONFIRMED THE PAYMENTS WHICH ARE DULY CORROBORATED WITH THEIR RESPECTIVE BANK STATEMENTS AND ALL THE PAYMENTS ARE BY ACCOUNT PAYEE CHEQUES. 22. WE ALSO NOTE THAT RECENTLY THE ITAT KOLKATA IN SEVERAL CASES HAS DELETED THE ADDITION ON ACCOUNT OF SHARE APPLICATION IN SIMILAR CIRCUMST ANCES. THE RELEVANT PORTION OF THE DECISIONS ARE AS FOLLOWS: (A) THE LD ITAT KOLKATA. IN DC IT VS GLOBAL MERCANT ILES PVT.LTD IN ITA NO. 1669/KOL/2009 DATED 13-01-2016. IN THIS THE DECISIO N THE LD. TRIBUNAL HELD AS FOLLOWS: 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BOOK FILED BY T HE ASSESSEE. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED ARE NOT REITERATED HE REIN FOR THE SAKE OF BREVITY. WE FIND THAT THE ASSESSEE HAD GIVEN THE COMPLETE DETAI LS ABOUT THE SHARE APPLICANTS CLEARLY ESTABLISHING THEIR IDENTITY, CREDITWORTHINE SS AND GENUINENESS OF TRANSACTION PROVED BEYOND DOUBT AND HAD DULY DISCHARGED ITS ONU S IN FULL. NOTHING PREVENTED THE LEARNED AO TO MAKE ENQUIRIES FROM THE ASSESSING OFF ICERS OF THE CONCERNED SHARE APPLICANTS FOR WHICH EVERY DETAILS WERE VERY MUCH M ADE AVAILABLE TO HIM BY THE ASSESSEE. WE FIND THAT THE RELIANCE PLACED BY THE L EARNED LD. CIT(1) ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS LOV ELY EXPORTS (P) UD REPORTED IN (2008) 216 CTR 195 (SC) IS VERY WELL FOUNDED, WHERE IN, IT HAS BEEN VERY CLEARLY HELD THAT THE ONLY OBLIGATION OF THE COMPANY RECEIVING T HE SHARE APPLICATION MONEY IS TO PROVE THE EXISTENCE OF THE SHAREHOLDERS AND FOR WHI CH THE ASSESSEE HAD DISCHARGED THE ONUS OF PROVING THEIR EXISTENCE AND ALSO THE SOURCE OF SHARE APPLICATION MONEY RECEIVED. 3.4. 1. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALS O COVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS ROSEBERRY MERCANTILE (P) LTD IN GA NO. 3296 OF 2010 ITAT NO. 241 OF 2010 DATED 10.1.2011, WHEREIN THE- QUESTIONS RAISED BEFORE THEIR LORDSHIPS AND DECISION RENDERED THEREO N IS AS UNDER:- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTE RED INTO BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONEY OR ACCOUNTED MONEY AND THE LD. CIT(A) OUGHT TO HAVE HELD THAT TH E ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION. ' IT A NO. 1669/KOI/2009-C-AM M/S. GLOBAL MERCANTILES PVT. LTD 11 HELD AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND A FTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASES OF CIT VS M/S LOVELV EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF THE ASSESSEE AN D THUS, NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL IS DEVOI D OF ANY SUBSTANCE AND IS DISMISSED. 22 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 3.4.2. IN VIEW OF THE AFORESAID FINDINGS AND RESPEC TFULLY FOLLOWING THE DECISION OF THE APEX COURT (SUPRA) AND JURISDICTIONAL HIGH COURT (S UPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND ACCORDINGLY, THE GR OUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 4. THE LAST GROUND TO BE DECIDED IN THIS APPEAL OF THE REVENUE IS AS TO WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADDITIO N U/S 68 OF THE ACT MADE IN RESPECT OF ALLOTMENT OF SHARES TO 20 INDIVIDUALS FOR AN AMO UNT OF RS.57,00,000/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. 1. THE BRIEF FACT OF THIS ISSUE IS THAT THE ASSE SSEE HAD RECEIVED SHARE APPLICATION MONIES FROM 20 INDIVIDUALS IN THE EARLIER YEAR WHIC H WERE KEPT IN SHARE APPLICATION MONEY ACCOUNT. DURING THE ASST YEAR UNDER APPEAL, T HE ASSESSEE ALLOTTED SHARES TO THESE 20 INDIVIDUALS OUT OF TRANSFERRING THE MONIES FROM SHARE APPLICATION MONEY ACCOUNT TO SHARE CAPITAL ACCOUNT. THE DETAILS OF 20 INDIVIDUALS ARE REFLECTED IN PAGE 6 & 7 OF THE LEARNED CIT(A) ORDER. THE LEARNED AO ASK ED THE ASSESSEE TO PRODUCE THE SHAREHOLDERS BEFORE HIM. HE FOUND THAT THE ASSESSEE DID NOT DO SO BUT FURNISHED COPIES OF PAY ORDERS USED FOR PAYMENTS TO THE ASSES SEE COMPANY AND ALSO FURNISHED INCOME TAX PARTICULARS AND BALANCE SHEETS OF ALL TH E SHAREHOLDERS. THE LEARNED AO ON ANALYZING ALL THE BALANCE SHEETS OBSERVED THAT THE SHAREHOLDERS HAVE PALTRY INCOME AND SMALL SAVINGS AND NONE OF THEM HAVE ANY BANK AC COUNT AND HUGE CASH BALANCES WERE SHOWN IN THEIR HANDS OUT OF WHICH PAY ORDERS W ERE OBTAINED. BASED ON THIS, THE LEARNED AO CONCLUDED THAT THESE SHAREHOLDERS DO NOT HAVE CREDITWORTHINESS TO INVEST IN THE ASSESSEE COMPANY AND BROUGHT THE ENTIRE SUM OF RS. 57,00,000/- TO TAX AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 4.2. ON FIRST APPEAL, THE LEARNED CIT(A) OBSERVED T HAT ENTIRE SHARE APPLICATION MONIES OF RS. 57,00,000/- WE RECEIVED DURING THE PR EVIOUS YEAR 2004-05 RELEVANT TO ASST YEAR 2005-06 FROM 20 PERSONS AND THE SHARES WE RE ALLOTTED TO THEM DURING THE ASST YEAR UNDER APPEAL. HE OBSERVED THAT THE ASSESS EE HAD FURNISHED DETAILS OF THE SHARE APPLICANTS GIVING THE DATE WISE RECEIPTS, MOD E OF PAYMENT, AMOUNT, NAME, ADDRESS, INCOME TAX RETURNS, PA NO. OF SHARE APPLIC ANTS ALONG WITH THEIR BALANCE SHEET. THE LEARNED CITA ALSO OBSERVED THAT THE ASSE SSEE IN ITS REPLY TO SHOW CAUSE NOTICE BEFORE THE LEARNED AO HAD REQUESTED HIM TO U SE HIS POWER AND AUTHORITY FOR THE PHYSICAL APPEARANCE OF THE SHAREHOLDERS WHICH W AS NOT EXERCISED BY THE LEARNED AO. INSTEAD THE LEARNED AO CONTINUED TO INSIST ON T HE ASSESSEE TO PRODUCE THE SHAREHOLDERS BEFORE HIM. HE ULTIMATELY CONCLUDED TH AT THE ASSESSEE HAD DULY DISCHARGED ITS ONUS OF PROVIDING COMPLETE DETAILS O F THE SHAREHOLDERS AND IN ANY CASE, NO ADDITION COULD BE MADE U/S 68 OF THE ACT IN THE ASST YEAR UNDER APPEAL AS NO SHARE APPLICATION MONIES WERE RECEIVED DURING THE ASST YE AR UNDER APPEAL. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US BY FILING THE FOLLOW ING GROUND:- 'THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE U/S 68 IN RESPECT OF THE ALLOTMENT OF SHARES TO 20 NUMBERS OF INDIVIDUAL INVESTORS FOR AN AMOUNT OF RS . 57 LAKHS, WHERE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE INVESTORS WERE NOT ESTABLISHED. 4.3. THE LEARNED DR PRAYED FOR ADMISSION OF THE ADD ITIONAL GROUND RAISED BEFORE US AND VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED A O. IN RESPONSE TO THIS, THE LEARNED AR FAIRLY CONCEDED TO ADMISSION OF THIS ADD ITIONAL GROUND AND VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 23 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 4.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BOOK FILED BY T HE ASSESSEE. WE FIND THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE SEPARATELY BEFORE US VIDE ITS COVERING LETTER DATED 9. 12.2011 IS ADMITTED AS IT APPEARS TO BE A GENUINE AND BONAFIDE ERROR OF OMISSION ON THE PART OF THE REVENUE FROM NOT RAISIN G THIS GROUND IN THE ORIGINAL GROUNDS OF APPEAL FILED ALONG WITH THE MEMORANDUM O F APPEAL. MOREOVER, IT DOES NOT REQUIRE ANY FRESH EXAMINATION OF FACTS. HENCE THE S AME IS ADMITTED HEREIN FOR THE SAKE OF ADJUDICATION. 4.4. 1. WE FIND FROM THE DETAILS AVAILABLE ON RECOR D THAT THE SHARE APPLICATION MONIES FROM 20 INDIVIDUALS IN THE SUM OF RS.57,00,000/- HA S BEEN RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2004-05 RELEVANT TO ASST YEAR 2005-06 AND ONLY THE SHARES WERE ALLOTTED TO THEM DURING THE ASST YEAR UNDER AP PEAL. ADMITTEDLY NO MONIES WERE RECEIVED DURING THE ASST YEAR UNDER APPEAL AND HENC E THERE IS NO SCOPE FOR INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. HENCE WE H OLD THAT THE ORDER PASSED BY THE LEARNED CITA IN THIS REGARD DOES NOT REQUIRE ANY IN TERFERENCE. ACCORDINGLY THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. (B) THE ITAT KOLKATA IN R.B HORTICULTURE & ANIMAL PROJECTS CO. LTD, ITA NO. 632/KOLL2011 DATED 13-01-2016. IN THIS THE DECISION THE LD. TRIBUNAL HELD AS FOLLOWS: 6. WE HAVE HEARD THE LEARNED DR AND WHEN THE CASE WAS CALLED ON FOR HEARING , NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER, WE FIND FROM THE FILE THAT THE ASSESSEE HAD FILED A DETAILED PAPER BOOK AND WRITTEN SUBMISSIONS. HENCE THE CASE IS DISPOSED OFF BASED ON THE ARGUMENTS OF THE LEARNED DR AND WRITTEN SUBMISSIONS AND PAPER BOOK ALREADY AVAILABLE ON RECORD. THE FACTS STATED IN THE LEARNED CIT(A) WERE NOT CONTROVERTED BY THE LEARNED DR BEFORE US. WE FIND THAT THE ASSESSEE HAD GIVEN THE COMPLETE DETAILS ABOUT THE SHARE APPLICANTS CLEARLY ESTABLISHING THEIR IDENTITY, CREDITWORTHINE SS AND GENUINENESS OF TRANSACTION PROVED BEYOND DOUBT AND HAD DULY DISCHARGED ITS ONUS IN FU LL. NOTHING PREVENTED THE LEARNED AO TO MAKE ENQUIRIES FROM THE ASSESSING OFFICERS OF THE C ONCERNED SHARE APPLICANTS FOR WHICH EVERY DETAILS WERE VERY MUCH MADE AVAILABLE TO HIM BY THE ASSESSEE. WE FIND THAT THE RELIANCE PLACED BY THE LEARNED CITA ON THE DECISION OF THE H ON'BLE APEX COURT IN THE CASE OF CIT VS LOVELV EXPORTS (P) LTD REPORTED IN (2008) 216 CTR 1 95 (SC) IS VERY WELL FOUNDED, WHEREIN, IT HAS BEEN VERY CLEARLY HELD THAT THE ONLY OBLIGATION OF THE COMPANY RECEIVING THE SHARE APPLICATION MONEY IS TO PROVE THE EXISTENCE OF THE SHAREHOLDERS AND FOR WHICH THE ASSESSEE HAD DISCHARGED THE ONUS OF PROVING THEIR EXISTENCE AND ALSO THE SOURCE OF SHARE APPLICATION MONEY RECEIVED. 6. 1. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS ROSEBERRV MERCANTI LE (P) LTD IN GA NO. 3296 OF 2010 ITAT NO. 241 OF 2010 DATED 10.1.2011, WHEREIN THE QUESTI ONS RAISED BEFORE THEIR LORDSHIPS AND DECISION RENDERED THEREON IS AS UNDER:- - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTERED INT O BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONEY OR ACCOUNTE D MONEY AND THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABL ISHED THE GENUINENESS OF THE TRANSACTION.' HELD AFTER HEARING THE LEARNED COUNSE L FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CA SES OF CIT VS M/S LOVELY EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOU R OF THE ASSESSEE AND THUS, NO 24 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APP EAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND IS DISMISSED. 6.2. WE FIND THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS VALUE CAPITAL SERVICES P LTD REPORTE D IN (2008) 307 ITR 334 (DEL) , WHEREIN IT WAS HELD THAT: 'IN RESPECT OF AMOUNTS SHOWN AS RECEIVED BY THE ASS ESSEE TOWARDS SHARE APPLICATION MONEY FROM 33 PERSONS, THE ASSESSING OFFICER REQUIR ED THE ASSESSEE TO PRODUCE ALL THESE PERSONS. WHILE ACCEPTING THE EXPLANATION AND ITA NO. 632/KOI12011--C-AM M/S. R.B HORTICULTURE 6 & ANIMAL PROJ. CO. LTD THE STATEMENTS GIVEN BY THREE PERSONS THE ASSESSING OFFICER FOUND THAT THE RESPONSE FROM THE OTHERS WAS EITHER NOT AVAILABLE OR WAS INADEQUATE AND ADDED AN AMOUNT OF RS. 46 LAK HS PERTAINING TO 30 PERSONS TO THE INCOME OF THE ASSESSEE. THE COMMISSIONER (APPEALS) UPHELD THE DECISION OF T HE ASSESSING OFFICER. ON APPEAL, THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONE R (APPEALS) AND DELETED THE ADDITIONS. ON FURTHER APPEAL: HELD, DISMISSING THE APPEAL, THAT THE ADDITIONAL BU RDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLICANTS DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOM E OF THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW AROSE. ' 6.3. WE FIND THAT THE ARGUMENT OF THE LEARNED DR TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO FOR VERIFICATION OF SHARE SUBSCRIBERS WO ULD NOT SERVE ANY PURPOSE AS THE RATIO DECIDED IN THE ABOVE CASES IS THAT IN ANY CASE, NO ADDITION COULD BE MADE IN THE HANDS OF THE RECIPIENT ASSESSEE. IN VIEW OF THE AFORESAID FINDIN GS AND RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COURT (SUPRA), JURISDICTIONAL HIGH COURT ( SUPRA) AND DELHI HIGH COURT (SUPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A ) AND ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. (C) THE LD. ITAT KOLKATA IN ITA NO.1061/KO1/2012 I N THE CASE OF ITO WD.3(2) KOL, VS. M/S. STEEL EMPORIUM LTD DATED 05-02-2016. IN TH IS THE DECISION THE LD. TRIBUNAL HELD AS FOLLOWS: 10. WE HAVE HEARD BOTH THE RIVAL PARTIES AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. BE FORE US THE LD. AR SUBMITTED THAT THE ASSESSEE RAISED SHARE APPLICATION MONEY DURING THE YEAR FROM 25 APPLICANTS. THE AO WAS FURNISHED WITH THE COPY OF FORM 2 OF ALLOTMENT OF S HARES TO THE APPLICANTS AS FILED WITH THE REGISTRAR OF COMPANIES, WEST BENGAL. ON THE DATE OF RECEIPT OF SHARE APPLICATIONS FROM THE APPLICANTS, THEY FURNISHED THEIR ADDRESSES, WHICH W ERE RECORDED IN THE REGISTER OF MEMBERS. THE AO OBSERVED THAT AS PER ROC RECORDS THE ADDRESS ES OF THE NINE COMPANIES WERE DIFFERENT FROM THE ADDRESS AS PER FORM FILED WITH HIM. THE AO ISSUED NOTICES U/S.133(6) TO ALL THE COMPANIES AT THE ADDRESSES FURNISHED IN FORM 2 AS F ILED WITH HIM, WHICH WERE DULY SERVED AT THE GIVEN ADDRESSES. THE A0 ARGUED THAT THE LETTERS SHOULD NOT HAVE BEEN SERVED AT THE GIVEN ADDRESS BY THE ASSESSEE. HE SERVED A SHOW A CAUSE N OTICE DATED 09.12.2011 ASKING FOR THE EXPLANATION FROM THE ASSESSEE AS TO HOW THE NOTICES U/S. 133(6) COULD BE SERVED TO THESE NINE COMPANIES WHO HAD DIFFERENT ADDRESS AS PER ROC RECO RDS. THE AO WAS EXPLAINED VIDE LETTER 25 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 DATED 20.12.2011 OF THE ASSESSEE THAT THOSE COMPANI ES HAD CHANGED THEIR ADDRESSES SINCE FILING OF FORM 2 WITH THE REGISTRAR. FURTHER, IT WA S NONE OF THE BUSINESS OF THE ASSESSEE TO QUESTION THE ADDRESSES OF THE APPLICANTS AS LONG AS THEY AFFIRM THE ADDRESS. THE APPLICANTS WERE DULY INCORPORATED BODIES UNDER THE COMPANIES A CT. 1956 SINCE LONG. THEY HAVE BEEN REGULARLY FILING THEIR RETURNS OF INCOME UNDER THE INCOME TAX ACT AND ARE BEING ASSESSED BY THE REVENUE SINCE LONG. SOME OF THEM ARE EVEN REGIS TERED AS NON-BANKING FINANCIAL COMPANIES WITH RESERVE BANK OF INDIA. THEY HAVE BE EN FILING RETURNS REGULARLY WITH REGISTRAR OF COMPANIES AND RBI SINCE LONG. THE LETTERS MIGHT HAVE BEEN RECEIVED AT THEIR OLD ADDRESSES BECAUSE IN CASE OF CHANGE IN THE ADDRESS, PEOPLE IN STRUCT THE INCUMBENTS AT OLD ADDRESSES NOT TO REFUSE THE RECEIPT OF LETTERS AND RECEIVE THE SA ME. JUST BECAUSE, A LETTER WAS RECEIVED AT THE OLD ADDRESS INSTEAD OF PRESENT ADDRESS, IT CANNOT B E SAID THAT THE IDENTITY OF THE APPLICANT HAS NOT BEEN VERIFIED. ALL OF THESE COMPANIES HAD DULY REPLIED TO NOTICE U/S. 133(6) AND CONFIRMED THE TRANSACTION WITH ALL THE EVIDENCES. THE AO HAS NOT RAISED ANY OBJECTION ON ANY OF THE INFORMATION FURNISHED BEFORE HIM. THE AO HAS NOT AS KED THE RESPECTIVE COMPANY APPLICANTS ALSO TO EXPLAIN THE ALLEGED DISCREPANCY IN THE ADDR ESS. THE AO HAS NOT BROUGHT ANY MATERIAL ON ACCOUNT OF RECORD TO DISBELIEF THE EVIDENCES FUR NISHED WITH HIM AND TREAT THE TRANSACTION AS NOT GENUINE. THE ASSESSEE SUBMITTED THE FOLLOWING M ATERIAL AT THE TIME OF ASSESSMENT. A) COPY OF SHARE APPLICATIONS FROM THE SHARE APPLIC ANTS (COPIES ENCLOSED) B) COPY OF FORM 2 FILED WITH REGISTRAR OF COMPANIES , WEST BENGAL (COPY ENCLOSED) C) COPY OF FORM 18 ABOUT THE REGISTERED OFFICE OF T HE APPLICANTS FOR CHANGE OF ADDRESS SUBSEQUENT TO THE DATE OF ALLOTMENT, I.E. 31.03.200 9 (COPIES ENCLOSED) D) MEMBERS REGISTER E) SHARE APPLICATION & ALLOTMENT REGISTER F) COPY OF BOARD RESOLUTION. G) REPLIES FROM SHARE APPLICANTS TO THE NOTICE U/S. 133(6) ISSUED TO THEM BY THE AO SEEKING INFORMATION AND DOCUMENTS ABOUT THE SOURCES AND TO EXAMINE THEIR IDENTITY, GENUINENESS OF THE TRANSACTION AND THEIR CREDITWORTHINESS. (COPY E NCLOSED). H) COPY OF AUDITED ACCOUNTS. I) COPY OF BANK STATEMENTS. J) COPY OF INCOME TAX ACKNOWLEDGMENT OF RETURN FILE D FOR AY 2009- K) COPY OF PAN CARD. L) DETAILS OF SOURCES OF FUNDS. M) COPY OF COVERING LETTER FOR DELIVERY OF SHARES. N) COPY OF MASTER DATA AS PER MINISTRY OF COMPANY A FFAIRS RECORDS. O) COPY OF ANNUAL RETURN. P) COPY OF MEMORANDUM AND ARTICLES OF ASSOCIATION. 26 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 FINALLY THE LD. AR RELIED ON THE ORDER OF THE LD. C IT(A 10. 1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE AO HAS MADE THE ADDITION OF THE SH ARE APPLICATION MONEY BECAUSE ALL THE NINE COMPANIES WERE HAVING THE COMMON ADDRESS AND THE NO TICE SENT UNDER SECTION 133(6) WAS RECEIVED BY THE SINGLE PERSON. ACCORDINGLY THE AO O PINED THAT THE ASSESSEE HAS USED ITS UNACCOUNTED MONEY IN THE SHARE APPLICATION TRANSACT IONS. HOWEVER WE FIND THAT ALL THE MONEY RECEIVED IN THE FORM OF SHARE CAPITAL IS DULY SUPPO RTED WITH THE REQUISITE DOCUMENT AS DISCUSSED ABOVE. TO OUR MIND THE BASIS ON WHICH THE ADDITION WAS MADE BY THE AO IS NOT TENABLE. THE LD. DR ALSO COULD NOT BROUGHT ANYTHING ON RECORD TO CONTROVERT THE FINDINGS OF THE LD. CIT(A). IN VIEW OF ABOVE WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE ID. CIT(A). ACCORDINGLY THE GROUND RAISED BY REVENUE IS DISMISS ED. (D) THE LD ITAT KOLKATA IN ITO VS CYGNUS DEVELOPERS (I) P LTD IN ITA NO. 282/KOL/2012 DATED 2.3.2016. IN THIS THE DECISION THE LD. TRIBUN AL HELD AS FOLLOWS: 6. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED TH E ADDITION MADE BY THE AO OBSERVING AS FOLLOWS '6) I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE DETAILS AND DOCUMENTS FI LED BY THE APPELLANT COMPANY IN THE COURSE OF ASSESSMENT: PROCEEDINGS VIDE LETTER DT. 3 -10-2007. ON CAREFUL CONSIDERATION OF THE FACTS AND IN LAW I AM OF THE OPINION THAT THE AO WA S NOT JUSTIFIED IN MAKING, THE ADDITION AGGREGATING TO RS.54,00,000/- U/S.68 OF THE ACT BEI NG THE AMOUNT OF SHARE APPLICATION MONEY BY HOLDING THAT THE APPELLANT COMPANY HAS FAILED TO PROVE THE IDENTITY, AND CREDITWORTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF TRANSAC TIONS. IT IS OBSERVED THAT ALL THE THREE SHARE APPLICANT COMPANIES I.E. M/S. SHREE SHYAM TREXIM PV T. LTD., M/S NAVALCO COMMODITIES PVT. LTD. AND M/S. JEWELLOCK TREXIM PVT. LTD. HAD FILED THEIR CONFIRMATIONS WHEREIN EACH OF THEM CONFIRMED THAT THEY HAD APPLIED FOR SHARES OF THE A PPELLANT -COMPANY. ALL THE THREE COMPANIES PROVIDED- THE CHEQUE NUMBER, COPY OF BANK STATEMENT S AND THEIR PAN. IT IS OBSERVED THAT THESE COMPANIES ALSO FILED, COPIES OF THEIR RETURN OF INC OME AND FINANCIAL STATEMENTS FOR AS WELL AS COPY OF THEIR ASSESSMENT ORDER U/S. 143(3) OF THE I . T ACT FOR AY 2005-06. IN THE CASE OF M/S. JEWELLOCK TREXIM PVT. LTD. THE ASSESSMENT FOR AY 20 05-06 WAS COMPLETED BY THE ITO WARD 9(3), KOLKATA AND THE ASSESSMENTS IN THE CASE OF M/ S. NAVALCO COMMODITIES PVT. LTD. AND M/S. SHREE SHYAM TREXIM PVT. LTD. FOR A. Y.2005-06 AND A Y.2004-05 RESPECTIVELY WERE COMPLETED BY THE I TO, WARD 9(4), KOLKATA. UNDER THE CIRCUMST ANCES, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE SHARE APPLICA NT COMPANIES WERE NOT IN EXISTENCE. THE ASSESSMENT ORDERS WERE COMPLETED ON THE ADDRESS AS PROVIDED BY THE APPELLANT COMPANY IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS NOT KNOWN A S TO HOW THE AO'S INSPECTOR HAD REPORTED THAT THE AFORESAID COMPANIES WERE NOT IN EXISTENCE AT THE GIVEN ADDRESS. SINCE THE APPELLANT COMPANY HAD PROVIDED SUFFICIENT DOCUMENTARY EVIDENC ES IN SUPPORT OF ITS CLAIM OF RECEIPT OF SHARE APPLICATION MONEY, I AM OF THE OPINION THAT T HE NO ADDITION U/S.68 COULD BE MADE IN THE HANDS OF APPELLANT COMPANY. ON GOING THROUGH THE VA RIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT, IT IS OBSERVED THAT THE VIEW TAKEN AS ABOVE IS ALSO SUPPORTED BY THEM. IN VIEW OF ABOVE THE AO IS DIRECTED TO DELETE THE ADDI TION OF RS.54,00,000/ -. THE GROUND NOS. 2 AND 3 ARE ALLOWED, ' 7. AGGRIEVED BY THE ORDER OF CIT{A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR , WHO RELIED ON THE ORDER OF AO. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDE R OF CIT(A) AND FURTHER DREW OUR ATTENTION TO THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS RAJ KUMAR AGARWAL VIDE ITA NO. 179/2008, DATED 17. 11.2009 WHEREIN TH E HON 'BLE ALLAHABAD HIGH COURT TOOK A 27 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 VIEW THAT NON PRODUCTION OF THE DIRECTOR OF A PUBLI C LIMITED COMPANY WHICH IS REGULARLY ASSESSED TO INCOME TAX HAVING PAN, ON THE GROUND TH AT THE IDENTITY OF THE INVESTOR IS NOT PROVED CANNOT BE SUSTAINED. ATTENTION WAS ALSO TO T HE SIMILAR RULING OF THE ITAT KOLKATA BENCH IN THE CASE OF ITO VS DEVINDER SINGH SHANT IN IT A NO.20BIKO112009 VIDE ORDER DATED 17.04.2009. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS., WE A RE OF THE VIEW THAT ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. IT MAY BE SEEN FROM THE GROUNDS OF APPEAL RAISED BY THE REVENUE THAT THE REVENUE DISPUTED ONLY THE PROOF OF IDENTITY OF THE SHAREHOLDER. IN THIS REGARD IT IS SEEN THAT FOR A Y.2004-05 SHREE SHYAM TREXIM PVT. LTD., WAS ASSESSED BY ITO, WARD- 9(4), KOLKATA AND THE ORDER OF ASSESSMENT U/S/143(3 ) DATED 25.01.2006 IS PLACED IN THE PAPER BOOK. SIMILARLY NAVALCO COMMODITIES PVT. LTD., WAS ASSESSED TO TAX U/S 143(3) FOR A Y.2005- 06 BY I TO, WARD- 9(4), KOLKATA BY ORDER DATED 20.0 3.2007. SIMILARLY JEWELLOCK TREXIM PVT. LTD WAS ASSESSED TO TAX FOR A Y.2005-06 BY THE VERY SAME ITO- WARD- 9(3), KOLKATA ASSESSING THE ASSESSEE. IN THE LIGHT OF THE ABOVE FACTUAL POS ITION WHICH IS NOT DISPUTED BY THE REVENUE, IT CANNOT BE SAID THAT THE IDENTITY OF THE SHARE APPLI CANTS REMAINED NOT PROVED BY THE ASSESSEE. THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT AS WELL AS ITA T KOLKATA BENCH ON WHICH RELIANCE WAS PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUPPORTS THE VIEW THAT FOR NON PRODUCTION OF DIRECTORS OF THE INVESTOR COMPANY FOR EXAMINATION BY THE AO IT CANNOT BE HELD THAT THE IDENTITY OF A LIMITED COMPANY HAS NOT BEEN ESTABLISHED. FOR THE REASONS GIVEN ABOVE WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEA L OF THE REVENUE. ' 23. RELIANCE IN THIS REGARD IS ALSO PLACED ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS GANGESHWARI METAL (P) LTD (ITA NO. 5 97 OF 2012) DATED 21.01.2012. IN THIS CASE THE ASSESSEE HAD RECEIVED SHARE APPLICATION MO NEY OF RS.55.50 LACS DURING THE YEAR IN QUESTION. THE ASSESSEE FILED THE COMPLETE NAMES, AD DRESSES OF THE SHARE APPLICANTS, CONFIRMATORY LETTERS FROM THEM, COPIES OF BANK STAT EMENTS OF BOTH THE COMPANY AS WELL AS THE SHARE APPLICANTS AND COPIES OF SHARE APPLICATIO N FORMS. IN SPITE OF THE AFORESAID DOCUMENTARY EVIDENCES THE AO HELD THE EXPLANATION T O BE UNACCEPTABLE AND TREATED THE SHARE APPLICATION AS UNEXPLAINED CASH CREDIT THEREB Y MAKING ADDITION UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961. ON APPEAL THE CIT(APPEALS ) DELETED THE AFORESAID ADDITION HOLDING THAT THE IDENTITY OF THE SHARE APPLICANTS S TOOD ESTABLISHED BEYOND DOUBT, ALL THE PAYMENTS WERE THROUGH ACCOUNT PAYEE CHEQUES AND THE SHARE APPLICANTS WERE REGULAR INCOME-TAX ASSESSEES. THE CIT(APPEALS) FURTHER HELD THAT THE REVENUE DID NOT BRING ANY EVIDENCE ON RECORD TO SUGGEST THAT THE SHARE APPLIC ATION HAD BEEN RECEIVED BY THE ASSESSEE FROM ITS OWN UNDISCLOSED SOURCES NOR ANY MATERIAL W AS BROUGHT ON RECORD TO SHOW THAT THE APPLICANTS WERE BOGUS. THE REVENUE WAS NEITHER ABLE TO CONTROVERT THE DOCUMENTARY EVIDENCES FILED BY THE APPELLANT NOR PROVE THAT THE SHARE APPLICATION WERE INGENUINE OR THE APPLICANTS WERE NON-CREDITWORTHY. THE FINDINGS OF T HE CIT(APPEALS) WERE UPHELD BY THE 28 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 INCOME-TAX APPELLATE TRIBUNAL. ON APPEAL TO THE HIG H COURT, THE REVENUE PLACED STRONG RELIANCE ON THE DECISION OF ANOTHER COORDINATE BENC H OF THE SAME COURT IN THE' CASE OF CIT VS NOVO PROMOTERS & FINLEASE (P) LTD (342 ITR 169). THE HIGH COURT HOWEVER HELD THAT THE AFORESAID JUDGMENT WAS DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. THE COURT OBSERVED THAT IN THAT JUDGMENT THE ASSESSING OFFICE R HAD BROUGHT ON RECORD ENOUGH CORROBORATIVE EVIDENCE TO SHOW THAT THE ASSESSEE HA D ROUTED UNACCOUNTED MONIES INTO ITS BOOKS THROUGH MEDIUM OF SHARE SUBSCRIPTION. THE SHA RE APPLICANTS HAD CONFESSED THAT THEY WERE 'ACCOMMODATION ENTRY PROVIDERS'. THE ASSESSING OFFICER IN THE LATTER CASE WAS ABLE TO PROVE WITH ENOUGH MATERIAL THAT THE SHARE SUBSCRIPT ION WAS A PRE-MEDITATED PLAN TO ROUTE UNACCOUNTED MONIES. IN THE PRESENT CASE HOWEVER THE DEPARTMENT WAS UNABLE TO BRING ANY MATERIAL WHATSOEVER SHOWS THAT SHARE APPLICATION WA S IN THE NATURE OF ACCOMMODATION ENTRIES. THE COURT OBSERVED THAT THE APPELLANT HAD FILED SUFFICIENT DOCUMENTARY EVIDENCES TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. THE AO HOWEVER CHOSE TO SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTED ALL THE EVIDENCE IN HIS POSSESSION AND THEN MERELY REJECT THE SAME WITHOUT CONDUCTING ANY INQUIRY OR VERIFICATION WHATSOEVER. THE COURT THUS HELD THAT THE DECISION OF CIT VS NOVO PROMOTERS & FINLEASE (P) LTD (342 ITR 169) WAS NOT APPLICABLE TO THE FACTS OF THE CASE. INSTEAD IT WAS HELD THAT THE ISSUE IN HANDS WAS ON THE LINES OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD (319 ITR 5). ACCORDINGLY THE ADDITION MADE UNDER SECTION 68 ON ACCOUNT OF SHARE APPLICATI ON WAS DELETED. 24. WE WOULD LIKE TO REPRODUCE THE HON'BLE HIGH CO URT ORDER IN CIT VS. GANGESHWARI METAL P.LTD. IN ITA NO. 597/2012 JUDGEMENT DATED 21 .1.2013, THE HON'BLE HIGH COURT AFTER CONSIDERING THE DECISIONS IN THE CASE OF NOVA PROMO TERS AND FINLEASE PVT. LTD. 342 ITR 169 AND JUDGEMENT IN THE CASE OF CIT VS. LOVELY EXPORTS 319 ITR (SAT 5)(5. C) HELD AS FOLLOWS:- AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES O F CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRIES OUT THE EXERCISE WHIC H IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER 'SITS BACK WITH FOLDED HANDS' TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COMES FORWARD T O MERELY REJECT THE SAME ON THE PRESUMPTIONS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER AFTER NOTING THE FACTS, MERELY REJECTED THE SAME. THIS WO ULD BE APPARENT FROM THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO TH E FOLLOWING EFFECT:- 29 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 ''INVESTIGATION MADE BY THE INVESTIGATION WING OF T HE DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMOD ATION ENTRY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID AMOUNT OF RS.1, 11,50,000/- MAY NOT BE ADDED TO ITS INCOME. IN RESPONSE, THE ASSESSEE HAS SUBMITTED THA T THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSEE. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WA S STATED THAT THE ACTUAL AMOUNT RECEIVED WAS RS.55,50,000/- AND NOT RS.1,11,50,000/ - AS MENTIONED IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND CORRECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE TAKEN AT RS.55,50,000/-. THE ASSESSEE HAS FURTHER TRIES T O EXPLAIN THE SOURCE OF THIS AMOUNT OF RS.55,50,000/- BY FURNISHING COPIES OF SHARE APP LICATION MONEY, BALANCE4 SHEET ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED THAT TH E QUESTION OF ADDITION IN THE INCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANA TION OF THE ASSESSEE HAS BEEN DULY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS ENTRY REM AINS UNEXPLAINED IN THE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATI ON WING OF THE DEPARTMENT. AS SUCH ENTRIES OF RS.5~50/000/- RECEIVED BY THE ASSESSEE A RE TREATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO IT S INCOME. SINCE I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F ITS INCOME/ PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE BEING INITIATED SEPARAT ELY. THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. ( SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVOUR OF THE REVENUE IN THAT CASE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE AND FALL I N THE SECOND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA). THER E WAS A CLEAR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISH ED ALL THE MATERIAL WHICH WE HAVE ALREADY REFERRED TO ABOVE. IN SUCH AN EVENTUALITY NO ADDITI ON CAN BE MADE UNDER SECTION 68 OF THE INCOME TAX ACT 1961. CONSEQUENTLY, THE QUESTION IS ANSWERED IN THE NEGATIVE. THE DECISION OF THE TRIBUNAL IS CORRECT IN LAW 25. THE CASE ON HAND CLEARLY FALLS IN THE CATEGORY WHERE THERE IS LACK OF ENQUIRY ON THE PART OF THE A. O. AS IN THE CASE OF GANJESHWARI MET ALS (SUPRA). B) IN THE CASE OF FINLEASE PVT LTD. 342 ITR 169 (SU PRA) IN ITA 232/2012 JUDGEMENT DT. 22.11.2012 AT PARA 6 TO 8/ IT WAS HELD AS FOLLO WS. '6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF TH E PARTIES. IN THIS CASE THE DISCUSSION BY THE COMMISSIONER OF INCOME TAX (APPEA LS) WOULD REVEAL THAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIED CO PIES ISSUED BY THE ROC IN RELATION TO THE SHARE APPLICATION AFFIDAVITS OF THE DIRECTOR S, FORM 2 FILED WITH THE ROC BY SUCH APPLICANTS CONFIRMATIONS BY THE APPLICANT FOR COMPA NY'S SHARES, CERTIFICATES BY AUDITORS ETC. UNFORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF T HE INVESTIGATION REPORT AND THE STATEMENT OF MR. MAHES GARG. TO ELEVATE THE INFEREN CE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CON CLUSIONS WOULD BE IMPROPER, MORE SO WHEN THE ASSESSEE PRODUCED MATERIAL. THE LEAST T HAT THE ASSESSING OFFICER OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NEC ESSARY, INVOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLICANTS OR DIREC TORS. NO EFFORT WAS MADE IN THAT REGARD. IN THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORTHY OR LACKED CREDIBILITY THE ASSESSING O FFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FA CTS AND THE STATEMENTS OF 30 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 MR.MAHESH GARG THAT THE INCOME SOUGHT TO BE ADDED F ELL WITHIN THE DESCRIPTION OFS.68 OF THE INCOME TAX ACT 1961. HAVING REGARD TO THE EN TIRETY OF FACTS AND CIRCUMSTANCES, THE COURT IS SATISFIED THAT THE FINDING OF THE TRIB UNAL IN THIS CASE ACCORDS WITH THE RATIO OF THE DECISION OF THE SUPREME COURT IN LOVEL Y EXPORTS (SUPRA). THE DECISION IN THIS CASE IS BASED ON THE PECULIAR FACTS WHICH ATTRACT THE RATIO OF LOVELY EXPORTS (SUPRA). WHERE THE ASSESSEE ADDUCES EVIDENCE IN SUPPORT OF THE SHARE APPLICATION MONIES, IT IS OPEN TO THE ASSESSING OFF ICER TO EXAMINE IT AND REJECT IT ON TENABLE GROUNDS. IN CASE HE WISHES TO RELY ON THE R EPORT OF THE INVESTIGATION AUTHORITIES, SOME MEANINGFUL ENQUIRY OUGHT TO BE CO NDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE ASSESSEE AND THE ALLEGED HAWALA OPERATO RS, SUCH A LINK WAS SHOWN TO BE PRESENT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P ) LTD. (SUPRA) RELIED UPON BY THE REVENUE. WE ARE THEREFORE NOT TO BE UNDERSTOOD TO C ONVEY THAT IN ALL CASES OF SHARE CAPITAL ADDED UNDER SECTION THE RATIO OF LOVELY EXPORTS (SUPRA) IS ATTRACTED, I RRESPECTIVE OF THE FACTS, EVIDENCE AND MATERIAL. ' 26. IN THIS CASE ON HAND, THE ASSESSEE HAD DISCHAR GED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLI CANTS, THEREAFTER THE ONUS SHIFTED TO AO TO DISPROVE THE DOCUMENTS FURNISHED BY ASSESSEE CAN NOT BE BRUSHED ASIDE BY THE AO TO DRAW ADVERSE VIEW CANNOT BE COUNTENANCED. IN THE ABSENCE OF ANY INVESTIGATION, MUCH LESS GATHERING OF EVIDENCE BY THE ASSESSING OFFICER, WE HOLD THAT AN ADDITION CANNOT BE SUSTAINED MERELY BASED ON INFERENCES DRAWN BY CIRCUMSTANCE. A PPLYING THE PROPOSITIONS LAID DOWN IN THESE CASE LAWS TO THE FACTS OF THIS CASE, WE ARE I NCLINED TO UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 27. TO SUM UP SECTION 68 OF THE ACT PROVIDES THAT IF ANY SUM FOUND CREDITED IN THE YEAR IN RESPECT OF WHICH THE ASSESSEE FAILS TO EXPLAIN T HE NATURE AND SOURCE SHALL BE ASSESSED AS ITS UNDISCLOSED INCOME. IN THE FACTS OF THE PRESENT CAS E, BOTH THE NATURE & SOURCE OF THE SHARE APPLICATION RECEIVED WAS FULLY EXPLAINED BY THE ASS ESSEE. THE ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GE NUINENESS OF THE SHARE APPLICANTS. THE PAN DETAILS, BANK ACCOUNT STATEMENTS, AUDITED FINAN CIAL STATEMENTS AND INCOME TAX ACKNOWLEDGMENTS WERE PLACED ON AO'S RECORD. ACCORDI NGLY ALL THE THREE CONDITIONS AS REQUIRED U/S. 68 OF THE ACT I.E. THE IDENTITY, CRED ITWORTHINESS AND GENUINENESS OF THE TRANSACTION WAS PLACED BEFORE THE AO AND THE ONUS SHIFTED TO AO TO DISPROVE THE MATERIALS PLACED BEFORE HIM. WITHOUT DOING SO, THE ADDITION MADE BY THE AO IS BASED ON CONJECTURES AND SURMISES CANNOT BE JUSTIFIED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, NO ADDITION WAS WARRANTED UNDER SECTION 68 O F THE ACT. THEREFORE, WE DO NOT WANT TO 31 ITA NO. 2320/KOL/2016 M/S. EXCEL INFRABUILD PVT. LTD, AY- 2012-13 INTERFERE IN THE IMPUGNED ORDER OF LD. CIT(A) WHICH IS CONFIRMED AND CONSEQUENTLY THE APPEAL OF REVENUE IS DISMISSED. 28. IN THE LIGHT OF THE AFORESAID FACT AND CIRCUMST ANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAID ORDER IS H EREBY CONFIRMED. THEREFORE, THE REVENUES APPEAL IS DISMISSED. 29. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 21ST AUGU ST, 2019. SD/- SD/- (DR. A. L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21ST AUGUST, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ITO, WARD-10(1), KOLKATA. 2 RESPONDENT EXCEL INFRABUILD (P) LTD., TOWER-30, FLAT NO. C, 7 TH FLOOR, CENEXX VALLY, DIAMOND HARBOUR ROAD, THAKUR PUKUR, K OLKATA-700 014. 3. 4. CIT(A)-4, KOLKATA (SENT THROUGH E-MAIL) CIT-, , KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR