Bhupati Dealmark Private Limited , Kolkata V. Pr.CIT-4, Kolkata

ITA 2405/KOL/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5809 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 05-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MISS PUJA SOMANI. ADVOCATES; PRODUCING ALL; WAY OF ACCOUNT PAYEE
• Keywords: Unexplained cash credit; Revision of order; Opportunity of being heard; Principle of natural justice; Source of fund; Question of law; Fair market value; Capital receipt; Reassessment proceedings; Set aside
• Section: 68; 69; 56; 263; 139; 143(3); 142(1); 133(6); 195; 143(2); 264; 64; 48; 13; 119

Judgement Text

1 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA आयकर अपील य अधीकरण, यायपीठ –“A” कोलकाता, [Before Shri P.M. Jagtap, Vice President (KZ) &Shri A. T. Varkey, Judicial Member] ITA No. 2405/Kol/2019 Assessment Year: 2012-13 Bhupati Dealmark Private Limited PAN: AAECB5954B Vs. Pr. CIT-4, Kolkata Appellant Respondent Date of Hearing (Virtual) 30.11.2021 Date of Pronouncement 22.12.2021 For the Appellant Shri S.K. Tulsiyan& Miss Puja Somani. Advocates, ld.AR For the Respondent Shri Devi Sharan Singh, CIT, ld. DR ORDER Per Shri A.T Varkey, JM This is an appeal preferred by the assessee against the order of Learned Principal Commissioner of Income-tax (hereinafter referred to Ld. Pr. CIT), Kolkatadated12-03-2019 for the Assessment Year (in short AY) 2012-13 passed under section (in short u/s) 263 of the Income-tax Act, 1961 (hereinafter referred to as the "Act"). 2. The main grievance of the assessee is against the action of the Ld. Pr. CIT invoking his second (2 nd )revisional jurisdictional u/s. 263 of the Act against the action of the Assessing Officer (hereinafter referred to as 'AO') who framed the re-assessment order pursuant to the first revisional order dated 23.08.2016 which impugned action of Ld. Pr. CIT, according to assessee, is without satisfying the requisite conditional precedent as stipulated u/s. 263 of the Act and therefore without jurisdiction and resultantly bad in law, so it has to be quashed. [Please note that since there are two assessment orders, and two Ld. Pr. CIT's involved in this Appeal, for better & easy understanding the case, the AO, who framed the original assessment order is called as 'First AO' and the re-assessment /second assessment framed AO will be called as the 'Second AO' and the first revisional order passed by Pr. CIT is 2 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd called as 'First Ld. Pr. CIT' and the second incumbent, who passed the impugned order is called as 'Second Ld. Pr. CIT]. 3. Brief facts of the case are that the assessee company filed its return of income on 11.09.2012 declaring loss (- of Rs. 2615/-). The case was selected for scrutiny u/s. 143(2) of the Act under CASS and assessment u/s. 143(3) of the Act was framed by the AO (hereinafter referred to as the First AO) in the original first assessment on 12.03.2015 making addition of total income of Rs. 1,89,81,000/- under section 68 of the Act on account of alleged unexplained cash credit being share premium received [ hereinafter referred to as the first assessment order]. Thereafter, the Ld.Pr.CIT-4 (hereinafter referred to as the First Ld. Pr.CIT) interfered with the assessment order dt.12.03.2015 u/s. 263 of the Act. So, in order to carry out proper verification of this issue, the First Ld. Pr.CIT by order dated 21.09.2016 was pleased to set aside the original/first assessment order of the AO dated 12.03.2015 for de-novo assessment and directed the AO to specifically examine the source of share application money, identity of investors and its genuineness (hereinafter referred to as the First revisional order). The First Ld. Pr. CIT’s specific direction is given below:- "4(v) Considering the above facts and circumstances of case, the assessment order passed on 12.03.2015 is set aside denovo with a direction to AO to carry out (1) proper examination of books of account and Bank accounts of assessee as well as investors.AO is also directed to (2)examine the source of share application,(3) identity of the investor and its genuineness. The assessment proceedings may be initiated at the earliest and to be completed without waiting time barring date. The A.O must provide sufficient opportunity of being heard to the assessee in order to meet natural justice, equity and fairness."[emphasis given] 4. Pursuant to first revisional order passed by the First Ld. Pr.CIT dated 21.09.2016, in the second round of re-assessment, the AO (hereinafter referred to as Second AO) framed the reassessment order dated 3.11.2016 by accepting the return filed by assessee without making any addition in respect of share premium u/s. 143(3) read with section 263 of the Act (hereinafter referred to as the second reassessment order). 5. In respect of the said second re-assessment order dated 03.11.2016, the Ld. Pr. CIT-4 (hereinafter referred to as the second Ld. Pr.CIT, vide his show cause notice (SCN) dated 16.01.2019 proposed to exercise his revisional jurisdiction. The second Ld. Pr.CIT 3 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd thereafter heard the assessee and passed the impugned order dated 12.03.2019 wherein he was pleased to again set aside the reassessment order/second assessment order dated 07.12.2016 and directed de-novo adjudication (hereinafter referred to as the impugned second revisional order of Ld. Pr. CIT or impugned order) by observing as under:- “7.2 In my considered opinion, this is a case of lack of enquiry on the part of the AO, The decision on this issue could be taken only after examining and verifying the facts/ submission of the AR on this score. Not collecting the full facts and not taking enquiry to logical end which could enable AO to take decision based on the totality of facts makes this order erroneous in so far as prejudicial to the interest of revenue. After having considered the position of law and facts and circumstances of the instant case, I am of the considered opinion that the assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interest of revenue in accordance with the Explanation 2(c) below section 263 (1) of the Act. Accordingly, the assessment is set aside to the table of A.O on the issue as outlined in para- 2 above. The A.O is directed to provide reasonable opportunity to the assessee company to produce documents & evidences which it may choose to rely upon for substantiating its own claim, The AO is further directed to adjudicate the said issue de novo and pass a fresh assessment order in accordance with the relevant provisions of law.” 5. Aggrieved by the aforesaid impugned action of the second Ld. Pr.CIT, the assessee is before us challenging the jurisdiction of second Ld. Pr.CIT which is a legal issue, so we have to first deal with it. 6. The Ld. AR, Shri S.K. Tulsiyan first of all wants us to adjudicate the legal issue. Assailing the impugned action of the Second Ld. Pr. CIT to exercise for the second time revisional jurisdiction u/s. 263 of the Act, as wholly without jurisdiction Shri S.K. Tulsiyan contended that the Ld. Pr.CIT ought not to have invoked the revisional jurisdiction since second AO had framed the reassessment pursuant to the first revisional order of First Ld. Pr.CIT dated 21.09.2016, which impugned action of the second Ld. Pr.CIT, according to him is without satisfying the requisite conditional precedent as stipulated in Section 263 of the Act and so bad in law. According to Ld.AR, the First Ld. Pr.CIT while passing his first revisional order dated 21.09.2016 has given specific direction while setting aside the original first assessment order passed by the First AO on 12.03.2015 wherein he directed the second AO to carry out proper examination in respect of share capital & premium 4 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd which assessee received during the assessment year. Shri S.K. Tulsiyan pointed out the specific instructions of the First Ld. Pr. CIT to the second AO – (i) proper examination of the books of account (ii) proper examination of bank account of the assessee as well as investors (iii) the AO was directed to examine the source of share application money (iv) the identity of the investors and the genuineness of the transaction. According to Ld. AR, all the aforesaid directions of the First Ld. Pr.CIT were obeyed in letter and spirit by the second AO. The Ld. AR brought to our notice that second AO had conducted enquiry by issuing statutory notices on 2.11.2016 u/s. 142(1) of the Act. According to the Ld. AR, pursuant to said notice, Shri Ashish Trivedi, director of the assessee-company appeared before the second AO which fact has been acknowledged by the second AO in the assessment order; and the second AO also admits that the Director of the assessee-company had produced copy of ITR, audited accounts, computation of income, details of directors, details of business activities, details of increase in share capital, Form 2 and Form 5, list of shareholders, details of bank account. The Ld. AR pointed out that in the second/re- assessment order, the second AO has accepted that the aforesaid details were examined. The Ld.AR also drew our attention to the fact that the second AO has clearly acknowledged that the investors identity, genuineness and creditworthiness as well as the source of funds have been verified by him. Therefore, according to Ld. AR, pursuant to the first revisional order of the First Ld. Pr. CIT passed u/s. 263 of the Act when was compiled in letter and spirit by the second AO, subsequent/impugned action of the next incumbent in the chair of Pr.CIT-4 (second) to undertake an exercise of revisional jurisdictional under section 263 (revision) which culminated in second revisional order dated 12.03.2019 tantamount to the new incumbent in the chair of Pr.CIT-4 (second) reviewing the order of his predecessor Pr. CIT- 4 (First) dated 21.09.2016, which is not permitted by Law. According to Ld. AR, the second Ld. Pr. CIT - 4 by passing the second revisional order dated 12.03.2019 has substituted the First Pr. CIT's order passed u/s. 263 of the Act dated 21.09.2016 with his own order which he cannot do since the second assessment order/re-assessment of the Second AO dated 03.11.2016 was pursuant to the first revisional order of the First Ld. Pr. CIT and on the subject matter on which specific directions/instructions were given by the First Ld. Pr.CIT, which since having been complied by the AO, brings into operation the doctrine of merger the subject matter i.e, share capital & premium collected by assessee company. Resultantly 5 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd the second Ld. Pr.CIT, again cannot rake-up the same subject matter without the second Ld. Pr.CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator while the AO was carrying out the directions of First Ld. Pr.CIT pursuant to the first revisional order, which exercise according to Ld.AR unfortunately this Second Ld. Pr.CIT has not done. So according to Ld. A.R, he cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper on the very same subject on which merger has taken place by virtue of the order of First Ld. Pr. CIT. Therefore, according to Ld.AR, if this practice is allowed, there will be no end to the assessment proceedings, since if the next i.e third or fourth Pr. CIT does not like the next assessment orders being passed by an AO under his jurisdiction, in the way he thought it as proper enquiry to have been conducted in a given case or subject matter, then he will interfere and ask the AO to re-do the assessment again and again, which is not permissible and that is exactly why the Parliament in its wisdom has brought in safeguards, restrictions & conditions precedent to be satisfied strictly before assumption of revisional jurisdiction. According to Ld.AR, the conditions precedent is that the Ld. Pr. CIT should find that assessment order framed by the AO as erroneous in so far as prejudicial to the Revenue. According to Ld.AR, the Second Ld. Pr. CIT without satisfying this condition precedent has invoked the revisional jurisdiction (second time), so all his actions are ab initio void. The Ld. AR also pointed out that only from the next AY i.e. AY 2013-14 i.e. with effect from 01.04.2013, the Parliament has inserted sub-clause (vii) (b) in sub-section(2) to section 56 of the Act by which the share premium could have been ascertained and brought to tax. The Ld. AR also pointed out that only from AY 2013-14, the AO when considering section 68 of the Act could have even looked for the second source of the share capital & premium. In this assessment year (AY 2012-13) the onus on the assessee in respect of credit found in the books was confined to prove the identity, creditworthiness and genuineness of the Source i.e. only the first source not the second source also. And since that was the requirement of law, according to Ld AR, when the assessee face the scrutiny proceedings before the AO, he is bound to satisfy the AO as per the law in force during this relevant assessment year (AY 2012-13) and it cannot be expected from him/assessee to be a clairvoyant to anticipate the requirement of law for future years and satisfy those also before the AO in the present AY, when there is no such requirement of law that the assessee must be aware of the source of 6 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd source of the share-applicant at the time when he collects the share capital itself and according to him, if it is insisted then it is unfair and unreasonable. According to Ld. AR, when the law was only that assessee need to be aware of first source only then the AO could not have gone and verified beyond the source of the share applicants from whom the assessee had received the share capital. So when the requirement of law is only that assessee must ascertain that the share-applicant, who proposed to invest in assessee's company's share capital has proper identity and creditworthiness and is capable of investing in the assessee, then the AO in turn can verify the identity, creditworthiness and genuineness of the share subscriber from whom the assessee received the share capital and verify whether the identity is proper, whether the transaction took place through banking channel, etc. and the creditworthiness of the share applicant etc. According to Shri S.K. Tulsiyan, if the AO or even the Ld. Pr. CIT expecting/asking the assessee to find out the source of source of share-applicant, when the Law does not in this AY requires assessee to fulfil, then it would be quiet unreasonable, harsh and unfair practice, which action is against the Rule of Law, which is a basic feature of the Constitution of India. Since the law was that assessee should furnish the source of share capital it received in this A.Y, assessee by producing all documents in respect of share-applicants had discharged its onus, then burden shifts to the shoulder of AO to find fault with the documents or test the veracity of the documents. Despite the law was as such, then also AO in the first round itself had issued notice u/s. 133(6) of the Act to all the share applicants/subscribers have clearly acknowledged having received their replies to the section 133(6) notice. It was pointed out by the Ld AR that the source of source was also disclosed before the second AO and also furnished inter-alia information that they are having PAN and regularly filing tax returns. Therefore, according to Ld. AR, the AO has conducted enquiries and has recorded these facts and, therefore, order of the AO who is a quasi-judicial authority vested with the power to assess the income of an assessee cannot be termed as erroneous for lack of enquiry. Further according to Ld. AR, the view of the second AO on the facts of the case is a plausible view and the Second Ld. Pr. CIT has not termed the view of second AO to be unsustainable in Law. So the Ld AR contented that the very action of invoking of jurisdiction u/s. 263 of the Act by the Second Ld. Pr. CIT is bad in law and so has to be quashed. 7 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 9. Per contra, the Ld CIT /DR Shri Devi Sharan Singh vehemently opposed the plea of the Ld. AR and contended that the Second Ld. Pr. CIT had the jurisdiction to interfere by exercising his jurisdiction u/s. 263 of the Act and pointed out to us that the words used in Section 263 does not bar in any way second or third or fourth exercise of revisional jurisdiction, if he finds the assessment order/re-assessment order of AO is erroneous in so far as prejudicial to the Revenue. According to him, the AO has not conducted proper enquiry. And also he pointed out that the first Ld. Pr. CIT while setting aside the original/first assessment order has ordered the Second AO to frame re-assessment/second assessment de- novo meaning that AO was given full liberty to enquire on all issues including share capital and premium collected by assessee. So according to Ld. CIT /DR the contention of Ld. AR that the second Ld. Pr. CIT cannot have directed fresh assessment on share capital & premium is devoid of merit and no merger took place as contended by the Ld. AR, so the doctrine of merger did not take place in this case because the Ld. Pr.CIT (First) has directed de novo assessment. So according to Ld. CIT DR, the Second Ld. Pr. CIT’s impugned action is correct since the AO’s second assessment order was erroneous. And, therefore, he does not want us to interfere. 13. We have heard both the parties and carefully gone through the submissions as put forth on behalf of the assessee and Revenue along with the documents furnished and the case law(s) relied upon by both the parties. It is noted that in this case the original return was filed on 11.09.2012 u/s. 139 of the Act showing loss of Rs. 2615 and the original first assessment was framed by the First AO u/s. 143(3) of the Act on 12.03.2015 by making an addition of Rs. 1,89,84,820/-. Thereafter, the First Ld. Pr. CIT-4, Kolkata issued SCN to the assessee-company conveying his intention to interdict in the first AO’s action in framing the said original first assessment order dated 12.03.2015. Thereafter, the First Ld. Pr.CIT passed his First Revision order u/s. 263 of the Act on 21.09.2016 wherein he was pleased to set aside the original assessment order dated 12.03.2015 and directed de novo assessment along with the specific direction to inquire about the collection of share capital & premium. Pursuant to the direction of the First Ld. Pr.CIT dated 21.09.2016, the second AO framed the de-novo re-assessment order dated 03.11.2016, wherein the second AO was pleased to accept the assessee’s transaction in respect of collection of share premium to the of Rs. 8 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 1,89,81,000/-. Thereafter, the new incumbent in the office of Pr. CIT-4, Kolkata issued show cause notice dated 16.01.2019 (hereinafter referred to as the Second SCN) and conveyed his intention to revise the re-assessment/second assessment order of the AO dated 03.11.2016. After hearing the assessee, the second Ld. Pr.CIT has set aside the re- assessment/second assessment order of the AO dated 03.11.2016, wherein the Second Ld. Pr. CIT, Kolkata-4, Kolkata vide order dated 12.03.2019 directed the AO to pass a fresh assessment order. 15. Aggrieved by the aforesaid action of the Second Ld Pr. CIT, Kol-4, now the assessee is before us. The question before us is twofold. Firstly, whether the second Ld. Pr. CIT satisfied the statutory condition- precedent as prescribed in section 263 of the Act before invoking the Revisionary Jurisdiction. Secondly, whether the Second Ld Pr. CIT can again interfere in the re-assessment order framed by the AO which was pursuant to the first revisional order passed by the First Ld. Pr. CIT u/s. 263 of the Act, when the subject matter was the same and the re-assessment order of the second AO has merged with the First Revisional order of First Ld. Pr. CIT. In order to adjudicate both this legal issues, first of all we need to examine the basic jurisdictional issue i.e. whether the condition precedent stipulated by section 263 of the Act was satisfied, so that the Second Ld. Pr. CIT could have exercised his revisional power which he is empowered to do by the Act. For that, we note that the statutory condition precedent as prescribed by section 263 of the Act is that the Ld. Pr. CIT can invoke the revisional jurisdiction, if the assessment order is erroneous in so far as prejudicial to the Revenue. Keeping this in mind, we have to examine as to whether in the first place the order of the Second Assessing Officer found fault by the Second Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedent laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC), wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the Commissioner of Income Tax ( in short, 'CIT'). The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) 9 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd incorrect application of law; or (iii)Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated an issue before him; then the assessment order passed by the Assessing Officer can be termed as an erroneous order. Coming next to the second limb, which is required to be examined is as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined one has to understand what is prejudicial to the interest of the revenue? The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Officer adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the Pr. CIT /CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue "unless the view taken by the Assessing Officer is unsustainable in law." 16. Taking note of the aforesaid dictum of law of the Hon'ble Apex Court which was laid in Malabar Industries Ltd vs. CIT (supra), let us examine whether the second assessment order/re-assessment order passed by the Second AO u/s. 143(3)/263 of the Act dated 03.11.2016 is erroneous in so far as prejudicial to the interest of the revenue. As we have seen the First AO in the original first assessment order passed u/s. 143(3) of the Act made an addition of Rs. 1,89,84,820/- by an order dated 12.03.2015, which has been interdicted by the first revisional order passed by the First Ld. Pr. CIT vide order dated 21.09.2015, wherein the Ld. Pr. CIT was pleased to set aside the original first assessment order dated12.03.2015 and directed the AO to de novo assess the income of the assessee and gave specific direction to enquire about share capital & premium. The operative portion of the first revisional order dated 28.03.2016 is again reproduced below for the sake of continuity:- "4(v) Considering the above facts and circumstances of the case, the assessment order passed on 12.03.2015 is set aside denovo with a direction to carry out proper examination of books of accounts and Bank accounts of assessee as well 10 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd as investors. The AO is also directed to examine the source of share application, identity of investors and its genuineness. The assessment proceedings may be initiated at the earliest to be completed without waiting time barring date. The AO must provide sufficient opportunity of being heard to the assessee in order to meet natural justice, equity and fairness."(emphasis given by us) 17. Pursuant to the aforesaid direction of the First Ld. Pr. CIT, the Second AO has framed the re-assessment/second assessment order by accepting the return filed by the assessee & without making any addition in respect of share premium vide order dated 03.11.2016. 18. Thereafter, the Second Ld. Pr. CIT issued show cause notice (hereinafter referred to as the second SCN) dated 16.01.2019 pointing out certain faults in the AO’s second assessment / re-assessment order dated 03.11.2016. 20. Thereafter, the Second Ld. Pr. CIT again was pleased to set aside the re- assessment/second assessment order of the AO dated 03.11.2016 and directed fresh assessment ( which means a third assessment to be framed). 21. The aforesaid action of the Second Ld. Pr. CIT dated 12.03.2019 is challenged before us. According to the Ld. Counsel, Shri S.K. Tulsiyan, the Ld. Pr. CIT erred in assuming his jurisdiction without satisfying the jurisdictional conditional precedents as prescribed u/s. 263 of the Act and, therefore, the action of the Ld. Pr. CIT is wholly without jurisdiction and therefore, ab-initio void and therefore, need to be struck down. We note that in order to interfere with the second assessment/re-assessment order passed by the Second AO u/s. 143(3)/263 of the Act dated 03.11.2016, the Second Ld. Pr. CIT has alleged lack of enquiry on the part of the AO in respect of share application money, and for not collecting the full facts. Therefore, it is noted that according to Ld. Pr. CIT, the AO's (second AO) decision was not based on the totality of facts, which makes the second assessment/re-assessment order erroneous in so far as prejudicial to the interest of the revenue. The second Ld. Pr. CIT also opines that the AO's order dated 07-12-2016 of the AO (second assessment/re- assessment order) is in accordance with the Explanation 2(c) below section 263(1) of the Act( supra), therefore by deeming fiction of law the order is erroneous. Therefore, he was pleased to set aside the said re-assessment order/second assessment order and directed the 11 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd AO to pass a fresh/ De-novo assessment order, which will be the third assessment order. According to Shri S.K. Tulsiyan, the Second Ld. Pr. CIT in the second round while exercising his revisional jurisdiction could not have first of all assumed revisional jurisdiction and secondly could not have modified the earlier revisional order of the First Ld. Pr. CIT's passed u/s 263 of the Act dated 21.09.2016, when the fact remains that the AO has followed the direction of the First Ld. Pr. CIT-4 on the subject matter i.e share application money (share capital & premium) while passing the second re-assessment order dated 03.11.2016. In order to appreciate this contention of Ld AR, we perused the first revisional order dated 21.09.2016 passed u/s. 263 of the Act by the first incumbent Ld. Pr. CIT while setting aside the original first assessment order dated 12.03.2015 wherein he has recorded certain finding of fact after perusal of the records (first assessment folder/records of assessee). The First Pr CIT has acknowledged that in the first round of assessment proceedings, the assessee company had duly furnished before the AO the following documents:- (i) audited financial statements; (ii) copy of Form filed with the ROC; (iii) copy of PAN Card of the assessee company; (iv) details and copy of share applicants; (v) bank statement reflecting the transaction; (vi)records relating to investors in order to establish identity, genuineness and creditworthiness of the share subscribers were filed by them pursuant to AO’s notice u/s 133(6) of the Act. (viii) pursuant to the notices, the share applicants have duly filed their replies along with documents called for by the AO. (Refer page-8 PB order sheet) 22. The First Ld. Pr.CIT found that AO in the first assessment proceedings though has been provided with the aforesaid documents has not examined these documents, which according to him, should have been carried out by the AO. At para 4 of his order, the Ld First PCIT has made a important finding of fact that assessee had discharged its onus by furnishing these details/documents. Further, the Ld. Pr. CIT found fault with the AO’s order in not discussing the basis of evidence on which adverse inference was drawn against the assessee. Moreover, the First Ld. Pr. CIT found fault with the AO for not bothering to 12 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd examine the contention of the assessee or to bring on record anything against the assessee and according to him, the AO has simply jumped to the conclusion and treated the share premium as unexplained cash credit. Therefore, according to the First Ld. Pr. CIT the first original assessment order framed u/s. 143(3) dated 12.03.2015 was against the principle of natural justice and, therefore, he found it fit to order de novo assessment and gave specific direction in respect of share capital & premium collected by assessee. 23. Thereafter, the Ld. Pr. CIT was pleased to direct " assessment order passed on 12.03.2015 is set aside de novo with the direction to the AO to carry out proper examination of books of account and bank statement of the assessee as well as the investor. The AO is also directed to examine the source of share application, entity of investor and its genuineness". He also directed that the assessment proceedings to be initiated at the earliest and to be completed without waiting for time bar limit. With the aforesaid specific direction, the First Ld. Pr. CIT has set aside the first original assessment order dated 12.03-2015. 24. So we note that the second AO was specifically directed by the First Ld. Pr. CIT to carry out the followings actions in addition to de-novo assessment. Thereafter, we note that the original assessment of AO dated 12.03.2016 was set aside back to AO u/s. 263 of the Act by the First Ld. Pr. CIT by his first revisional order dated 21.09.2016 for de-novo assessment which means the second AO is free to assess the income of assessee afresh but with specific directions to AO while framing the reassessment order vide para 4(v) of his order. The specific directions of First Ld Pr CIT to AO are as under: (i) To carry out proper examination of the books of accounts and bank account of the assessee; ii) To carry out proper examination of the books of accounts and bank account of the investors; iii) AO to examine the source of the share applicants; iv) The AO to examine the identity of the investor and its genuineness; v) The AO to complete the assessment at the earliest without waiting for the time barring date. v) The AO to complete the assessment at the earliest without waiting for the time barring date. 25. Now let us examine whether the second AO carried out his role of an investigator. In this respect, we note that pursuant to the aforesaid direction of the First Ld. Pr. CIT (first 13 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd revisional order) dated 21.09 2016, the Second AO has recorded in his reassessment second assessment order that pursuant to his notice u/s. 142(1) of the Act, Shri Ashish Trivedi, director of the assessee company appeared and produced the following documents:- i) Copy of ITR (Income Tax Returns) ii) Audited accounts iii) Computation of income iv) Details of business activities v) Details of investment/share capital vi) Form 2 and Form 5 vii) List of shareholders viii) Details of bank accounts. 26. The AO also acknowledges in his re-assessment/second assessment order that he has examined the aforesaid details and thereafter verified the investors identity, genuineness and creditworthiness and also their source of fund to invest in the assessee company. Thereafter, the second AO by order dated 03.11.2016 accepted the return filed by the assessee and thus it is noted that second AO did not draw any adverse inference against the share premium collected by the assessee. This action carried out by the second AO while framing the second assessment/re-assessment has been faulted as a case of lack of enquiry by the second Ld. Pr. CIT and the precise question is whether the action of second AO in accepting the share capital and premium collected by the assessee can be termed as a case of lack of enquiry. 27. According to us, when the Assessment Order is framed on an issue which is the result of lack of enquiry, then the assessment order in respect of that issue would be erroneous because of that omission on the part of the AO to investigate that relevant fact which if enquired could have created a different result and consequently affected the veracity of the very claim made by the assessee. Then in that case we can say that the AO failed to discharge his role as an investigator, which omission caused prejudice to the Revenue, then the condition precedent to invoke revisional jurisdiction us/. 263 of the Act will be satisfied. So the question is whether this fault i.e. lack of enquiry on share capital and premium alleged by the second Ld. Pr.CIT is correct, which is a mixed question of fact and law. 14 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 28. So the question is whether there is any merit on the finding of the Second Ld. Pr. CIT that the second assessment order/re-assessment order dated 3.11.2016 can be termed as erroneous for lack of enquiry. On a conjoint reading of the second SCN and operative portion of the impugned order, it can be safely deduced that according to Second Ld. Pr. CIT, the AO in the second round has not enquired about the share capital & premium collected by the assessee. For that we need to carefully examine as to whether the second AO has carried out his dual role as an investigator as well as an adjudicator while deciding the issue of share capital and premium collected by the assessee for AY 2012-13. Before we examine about the investigative role of the AO, we need to examine the law as it stood in AY 2012-13 and is applicable in this case. Section 68 of the Act reads as under:- Section 68: Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year: Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless- (a) The person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) Such explanation in the opinion of the Assessing officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10]. 29. Here it is to be noted that the first proviso and second proviso was inserted by Finance Act, 2012 with effect from 01.04.2013, so it is applicable only for/from AY 2013- 14 and not for this AY 2012-13. 30. Next let us refer to the definition of income stated in Section 2(24) of the Act. Section 2(24) of the Act includes:- i) profits and gains ...... ..... 15 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd ...... ..... xvi) any consideration received for issue of shares as exceeds the Fair Market Value of the shares referred to in clause (viib) of sub-section (2) of section 56. 31. It is noted that this amendment was made by an insertion of clause (xvi) in section 2(24) of the Act was by Finance Act 2012 with effect from 01.04.2013. 32. Correspondingly, the Parliament inserted sub-clause (viib) in sub-section 2 of section 56 of the Act by Finance Act 2012, w.e.f. 01.04.2013, that is for AY 2013-14 (not this AY 2012-13) in respect of computing and taxing the premium of shares in the hands of assessee (i.e.to tax the difference in consideration of value of shares if it exceeded the fair market value), which for the purpose of complete understanding of the law though not applicable is reproduced as under:- Section 56(2)(viib): "Where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares: Provided that this clause shall not apply where the consideration for issue of shares is received- (i) By a venture capital undertaking from a venture capital company or a venture capital fund, or (ii) By a company from a class or classes of persons as may be notified by the Central Government in this behalf. Explanation- For the purposes of this clause, (a) The fair market value of the shares shall be the value- (i) As may be determined in accordance with such method as may be prescribed, or (ii) As may be substantiated by the company to the satisfaction of the Assessing Officer based on the value, on the date of issue of shares, of its assets, including intangible assets being goodwill, know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature. 16 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd Whichever is higher: (b) Venture capital company, venture capital fund, and venture capital undertaking shall have the meanings respectively assigned to them in clause (a), clause (b) and clause (c) of Explanation to clause (23FB) of section 10]". 33. So we note that in this assessment year before us i.e. AY 2012-13, the law in force was that if any sum is found credited in the books of an assessee in a financial year and, if the AO asks for the explanation of assessee in respect of the nature and source thereof, then the assessee is duty bound to explain the nature and source of the credit entry in the books and if the assessee fails to explain or if the AO is not satisfied, he may charge to income tax the sum so credited. So, the assessee is bound to explain before the AO the nature and source of share capital, i.e. the identity, creditworthiness and genuineness of the share capital. In this AY, the assessee is bound to know about the share applicants who wish to invest their identity, whether they have the financial capacity (creditworthiness) and they are genuine investors in their company (assessee). In this AY, the assessee is not bound by law at the time of collection of share capital to ask the share-applicants from where it is getting the money to invest in the assessee's company. And we also note that share premium can be taxed if it exceeds the fair market value only from next AY i.e. AY 2013-14 and not in this A.Y. For coming to such a conclusion let us discuss few case laws: (A) Coming to the share premium, it is noted that this Tribunal in ITA- 2411/KOL/2017 in the case of Kanchan Plywood Products Pvt. Ltd. -vs.- ITO vide order dated 01.05.2019 has taken note that - Per contra, the Learned DR vehemently supported the order of the authorities below and wondered us to how the assessee- company issued share to three Private Limited Companies when its face value of Rs.10/- at a premium of Rs. 990/-. According to the Learned DR, the assessee- company had a meager return of income in the year under consideration and therefore, question of any person subscribing such high premium to the shares of the assessee-company cannot be believed. According to the Learned DR when the income of the assessee is meager, the action of the share subscribing companies in giving astronomical prices for the shares is against preponderance of probabilities 17 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd and cited the decision of the Hon'ble Supreme Court as well as Delhi High Court in CIT vs N .R. Portfolio Pvt. Ltd. 34. Further, according to Ld. AR in the case of unlisted companies, it is common knowledge that premium fixed is a matter of mutual agreement and ITAT Mumbai in the case of Gagandeep Infrastructure Pvt. Ltd., (supra) has held that it is a prerogative of the Board of Directors of the company to decide the premium amount and it is the wisdom of the shareholders whether they want to subscribe to such a heavy premium. And the aforesaid view of the ITAT has been upheld by the Hon'ble Bombay High Court order dated 20th March 2017. Further the Hon'ble High Court observed as under- "(i) We find that the proviso to Section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1 st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. Infact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1 st April, 2013 was its normal meaning. The Parliament did not introduce to Section 68 of the Act with retrospective effect nor does the proviso so introduced that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it has found satisfied. (ii) Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in CIT vis. Lovely Exports (P) Ltd. 317 ITR 218 in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from 18 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. " (B) The Tribunal Mumbai Bench in the case of DCIT vs. M/s. Alcon Biosciences (P) Ltd., ITA No. 1946/M/2016, Order dated 28.02.2018 held as under· "As regards the AOs observation with regard to the issue of shares at a face value of Rs. 10/- issued at a premium of Rs. 990 per share, we find that there is no merit in the findings of the AO for the reason that the issue of shares at a premium and subscription to such shares is within the knowledge of the company and the subscribers to the share application money and the AO does not have any role to play as long as the assessee has proved genuineness of transactions. We further notice that the AO cannot question issue of shares at a premium and also cannot bring to tax such share premium within the provisions of section 68 of the Act, before (supra) held that Proviso inserted to section 68 is prospective in nature. Hon'ble M.P. High Court in the case of CIT vs. Chain House International (P) Ltd., order dated 07.08.2018, decision reported in 98 taxmann.com47 has held at para 52 as under- "Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until. the rates if fixed by any Govt. Authority or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned . ". (C) The Mumbai Tribunal in the case of ACIT-I(I) vs. M/s. Gagandeep Infrastructure Pvt. Ltd. the ITAT has held as under: "We have carefully perused the orders of the lower authorities. In our considered view, the issue of shares at premium is always a commercial decision which does not require any justification. Further the premium is a capital receipt which has to be dealt with in accordance with Sec. 78 of the Companies Act, 1956. Further, the company is not required to prove the genuineness, purpose or justification for charging premium of shares, share premium by its very nature in a capital receipt and is not income for its ordinary sense. It is not in dispute that the assessee had filed all the requisite details/documents which are required to explain in the 19 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd books of accounts by the provisions of Sec. 68 of the Act. The assessee has successfully established the identity of the companies who havepurchased shares at a premium. The assessee has also filed bank details to explain the source of the shareholders and the genuineness of the transaction was also established by filing copies of share application forms and Form No. 2 filed with the Registrar of Companies. Considering all these undisputed facts, it can be safely concluded that the initial burden of proof as rested upon the assessee has been successfully discharged by the assessee. Even if it is held that excess premium has been charged, it does not become income as it is a capital receipt. The receipt is not in the revenue field. What is to be probed by the AO is whether the identity of the assessee is proved or not. In the case of share capital, if the identity is proved, no addition can be made u/s 68 of the Act. We draw support from the decision of the Hon'ble Supreme Court in the case of Lovely Exports Ltd. 317 ITR 218: 35. Relying on the aforesaid judicial precedents of Hon'ble High courts and the Tribunal. we are of the opinion that in this AY i.e. AY 2012-13, the amendment in section 68 of the Act took place wherein the addition of proviso was with effect from 01.04.2013 and so is not applicable in this AY. Further, as noted, the definition of income as provided under section 2(24) of the Act at the relevant time (AY 2012-13) did not define as income any consideration received for issue of shares in excess of its fair market value. This came into effect from 01.04.2013 and thus would have no application to the share premium received by the assessee in the previous year relevant to AY 2012-13. With this back-drop in respect of the requirement of law, let us study the judicial precedents which were laid by the Hon'ble Apex Court and Hon'ble High Courts on the provision of section 68 of the Act, while dealing with Share Capital/loan etc so that we can examine whether pursuant to the specific direction of First LdPr CIT, the second AO has discharged his role as an investigator and whether his re-assessment/second assessment order is a plausible view or can be termed as unsustainable view. Before we adjudicate let us look at section 68 of the Act as is applicable in this case and judicial precedents on the issue at hand. 36. Section 68 which is applicable in this relevant assessment year (AY 2012-13) in respect of unexplained credit reads as under:- 20 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing 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 Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this 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 previous year". The Hon'ble Supreme Court while interpreting 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 explanation 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 Hon'ble Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570. 37. In a case wherein the AO made the addition u/s 68 of the Act because the lenders of loan to assessee did not turn up before him [AO], the Hon'ble Apex Court in the case of Orissa Corpn. (P) Ltd. (supra) 159 ITR 78 has held that onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). In arriving at this conclusion, the Hon'ble Court has further stressed the presence of word "may" in section 68. The Hon'ble Apex Court ratio was taken note by the Hon'ble Gujarat High Court in the case of Dy CIT vsRohini Builders (2002) 2561TR360 wherein the Hon'ble High Court observed at pages 369 and 370 of this order are reproduced hereunder:- "Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that 21 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference against the assessee. in the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by' treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69. 37. In the case of Nemi Chand Kothari 136 Taxman 213, (supra), the Hon'ble Guahati High Court has thrown light on another aspect touching the issue of onus on assessee under section 68 of the Act, by holding that the same should be decided by taking into consideration also 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. The Hon'bleCourt in the said case held that, once it is found that an assessee has actually taken money from (depositor/lender who has been fully identified, the assessee/borrower cannot be called upon to explain, much 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 knowledge. 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 order are reproduced herein below:- "While interpreting the meaning and scope of section 68, one has to bear in mind that normally, interpretation of a statute shall be general, in nature, subject only to such exceptions as may be logically permitted by the statute itself or by some other law connected therewith or relevant thereto. Keeping in vie v these 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 the Revenue Department shall remain confined to the transactions, which have taken place between the assessee and the creditor nor does the wording of section 68 indicate that section 68 does not authorize the Revenue Department to make inquiry into the source(s) of the credit and/or sub-creditor. The language employed by section 68 cannot be read to impose such limitations on the powers of the Assessing Officer. 22 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd The logical conclusion, therefore, has to be, and we hold that an inquiry under section 68 need not necessarily be kept confined 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 place between the creditor and his sub-creditor. Thus, while the Assessing Officer is under section 68, free to look into the source(s) of the creditor and/or of the sub- creditor, the burden on the assessee under section 68 is definitely limited. This limit has been imposed by section 706 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 that 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 his proving the source from which he has received the cash credit, section 68 gives ample freedom 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-creditors, 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 creditor has received the money, section106 makes the assessee liable to disclose only the source(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 706 and section 68 are to stand together, which they must, then, the interpretation of section 68 are to stand together, which they must, then the interpretation of section 68 has to be in such a way that it does not make section 706 redundant. Hence, the harmonious construction of section 706 of the Evidence 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 well 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 confined to the transactions, which have taken place between the assessee and the creditor. What follows, 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 subcreditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been eventually, received by the assessee. It, therefore, 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 not the business of the assessee to find out the source of money of his creditor or of the genuineness of 23 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd the transactions, which took between the creditor and sub-creditor and/or creditworthiness of the sub- creditors, for, these aspects may not be within the special knowledge of the assessee. " “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 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 actually received the said amount and happened to keep the same in the bank, the said amount cannot be treated as income of the assessee from undisclosed source. In other words, the genuineness as well as the creditworthiness of a creditor have to be adjudged vis-a-vis the transactions, which he has with the assessee. The reason why we have formed the opinion that it is not the business of the assessee to find out the actual source or sources from where the creditor has accumulated the amount, which he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuineness of the transaction and the creditworthiness of the creditor vis-a-vis the transactions which had taken place between the assessee and the creditor and not between the 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 creditor 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 he may not know what transaction(s) had taken place between his creditor and the sub-creditor ... " ********** "In other words, though under section 68 an Assessing 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 not necessarily mean that the loan advanced by the sub- creditor to the creditor was income of the assessee from undisclosed source unless there is evidence, direct or circumstantial, to show that the amount which has been advanced by the sub-creditor to the creditor, had actually been 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 concerned, he has established the identity of the creditors, namely, NemichandNahata and Sons (HUF) and Pawan Kumar Agarwalla. The appellant had also shown, in accordance with the burden, 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 24 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd established that he had received the said amounts from the creditors aforementioned 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 their 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, treated as the income from the undisclosed sources of the assessee himself, when there was neither 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 holding that in the case at hand, the Assessing Officer had failed to show that the amounts, 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 evidence 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 error in treating the said amounts as income derived by the appellant fromundisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness." 38. Further, in the case of CIT v. S. Kamaljeet Singh [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 under:- "4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent account numbers. It has found that the assessee's burden stood discharged and so, no addition 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." 39. 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 initial 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 transaction of loan. But the law is equally settled that if the initial burden is discharged by the assessee by producing sufficient materials in support of the loan transaction, the onus shifts upon the Assessing Officer and after 25 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd verification, he can call for further explanation from the assessee and in the process, the onus may again shift from the Assessing Officer to assessee. 16. In the case before us, the appellant by producing the loan-confirmation- certificates signed by the creditors, disclosing their permanent account 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 disclosed by the assessee prompted the Assessing Officer to enquire through the Inspector to verify the statements." 40. In a case where the issue was whether the assessee availed cash credit as against future sale of product, the AO issued summons to the creditors who did not turn up before him, so AO disbelieved the existence of creditors and saddled the addition, which was overturned by Ld. CIT(A). However, the Tribunal reversed the decision of the Ld. CIT(A) and upheld the AO's decision, which action of Tribunal was challenged in the Hon'ble High Court, Calcutta in the case of Crystal Networks (P.) Ltd. v. Commissioner of Income-tax 353 ITR 171 wherein the Tribunal's decision was overturned and decision of Ld. CIT(A) upheld and the Hon'ble High Court held that when the basic evidences are on record the mere failure of the creditor to appear cannot be basis to make addition. The court held as follows: 8. Assailing the said judgment of the learned Tribunal learned counsel for the appellant submits that Income-tax Officer did not consider the material evidence showing the creditworthiness and also other documents, viz; confirmatory statements of the persons, of having advanced cash amount as against the supply of bidis. These evidence were duly considered by the Commissioner of Income-tax (Appeals). Therefore, the failure of the person to turn up pursuant to the summons issued to any witness isimmaterial when the material documents made available, should have been accepted and indeed in subsequent year the same explanation was accepted by the Income-tax Officer. He further contended that when the Tribunal has relied on the entire judgment of the Commissioner of Income-tax (Appeals), therefore, it was not proper to take up some portion of the judgment of the Commissioner of Income-tax (Appeals) and to ignore the other portion of the same. The judicial propriety and fairness demands that the entire judgment both favourable 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 UdhavdasKewalram v. CIT [19671 66 ITR 462. In this judgment it is noticed that the Supreme Court as proposition of law held that the Tribunal must In deciding an appeal, consider with due care, all the material facts 26 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 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 of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore, it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter the creditworthiness. As rightly pointed out by the learned counsel that the Commissioner 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 bidis as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued, in our view, is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or not. When it was found by the Commissioner of Incometax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored thisfact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal 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 judicial function under the Indian Income-tax Act; it is invested with authority to determine 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, consider 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 also 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 manifest infirmity. 12. Taking inspiration from the Supreme Court observations we are constrained to hold in this matter that the Tribunal has not adjudicated upon the 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 was received from various persons and supply as against cash credit also made. 27 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 13. Hence, the judgment and order of the Tribunal is 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. 41. 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 well settled by the decision of the Hon'ble Jurisdictional Calcutta High Court that the creditworthiness of the creditor cannot be disputed by the AO of the assessee but the AO of the creditor. In this regards our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the COMMISSIONER OF INCOME TAX, KOLKA TA-Ill Versus DATAWARE PRIVATE LIMITED ITAT No. 263 of 2011 Date: 21 st September, 2011 whereinthe Hon'ble Court held as follows: "In our opinion, in such circumstances, the Assessing 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 the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness" of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness" of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well- accepted principle which are required to be 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." 42. 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 undisclosed income under section 68 of the Income tax Act, 1961? We find no merit in this special leave petition for the simple reason that if the share application money is received by the assessee- company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual 28 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. 43. 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., ITAT No. 241 of 2010 dated 10- 01-2011 has held: "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 proceedings it was noticed that the assessee company during the year under consideration had brought Rs.4, 00, 000/- and Rs. 20,00,000/- towards share capital and share premium respectively amounting to Rs. 24,00, 000/- from four shareholders being private limited companies. The Assessing Officer on his part called for the details from the assessee and also from the share applicants and analyzed the facts and ultimately observed certain abnormal features, which were mentioned in the assessment order. The Assessing Officer, therefore, concluded that nature and source of such money was questionable and evidence produced was unsatisfactory. Consequently, the Assessing Officer invoked the provisions under Section 68/69 of the Income Tax Act and made addition of Rs. 24,00,000/-. On appeal the Learned CIT (A) by following the decision of the Supreme Court in the case of CIT. vs. M/s. Lovely Exports Pvt. Ltd., reported in (2008) 216 CTR 195 allowed the appeal by holding that share capital/premium of Rs. 24,00,000/- received from the investors was not liable to be treated under Section 68 as unexplained 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 CIT. 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 substantial question of law is involved in this appeal. The appeal is devoid of any substance and is dismissed. 44. 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 Indo Commerce Ltd dated 2 December, 2013 in INCOME TAX APPEAL NO.52 OF 2001 wherein the Court held as follows: 29 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 'The Assessing Officer was of the view that the increase 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 Assessing Officer accordingly treated the investment as unexplained credit under Section 68 of the Income Tax Act and added the same to the income of the assessee. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) being the First Appellate Authority and contended that the Assessing Officer had no material to show that the share capital was the income of the assessee company and as such the addition made by the Assessing Officer under Section 68 of the Act was wrong. The learned Commissioner of Income Tax (Appeals) after 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 Appeals found that there were as many as 2155 allottees, whose names, addresses and respective shares allocation had been disclosed. The Commissioner of Income Tax Appeals, further found 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 been allotted shares on the basis of allotment approved by the Stock Exchange. The Assessee Company had duly filed the return of allotment with the Registrar of Companies, giving complete 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 intimated to the Assessing Officer, but the Assessing Officer took the view that their investment in the Assessee Company was not genuine, on the basis of some extraneous reasons. The Commissioner of Income Tax (Appeals) took note of the observation of the Assessing Officer 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 concluded 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 explain the source of their fund. The learned Commissioner on considering the submissions 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 illegally and in any case without giving the assessee adequate opportunity of representation and/or hearing. Learned Tribunal agreed with the factual findings of the learned Commissioner and accordingly the learned Tribunal dismissed the appeal of the Revenue and affirmed the decision of the learned Commissioner. 30 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd Mr.Dutta appearing on behalf of the petitioners cited judgment of the Division Bench of this Court in Commissioner of Income Tax Vs. Ruby Traders 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 company to prove and establish the identity of the subscribers, their credit worthiness and the genuineness of the transaction. The aforesaid judgment was rendered in the context of the factual background of the aforesaid case where, despite several opportunities being given to the assessee, nothing was disclosed about the identity of the shareholders. In the instant 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 available at their addresses, and that too, in course of assessment proceedings in the year 1994, i. e., almost 3 years after the allotment. By an order dated 2nd May, 2001, this Court admitted the appeal on three questions which essentially centre around the question of whether the Appellate Commissioner erred in law in deleting the addition of Rs. 52, 03, 500/- to the income 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 interfered with, in appeal. We are of the view that once the identity and other relevant particulars of shareholders are disclosed, it is for those shareholders to explain the source of their funds and not for the assessee company to show wherefrom these shareholders obtained funds." 45. Further, 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. Leonard 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 on account of share capital, share application money and investment in HTCCL respectively. After hearing Md. Nizamuddin, learned Advocate appearing on behalf of the appellant and after going through the materials on record, we find that all such application money were received by the assessee by way of account payee cheques and the assessee also disclosed the complete list of shareholders with 31 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd their complete addresses and GIR Numbers for the relevant assessment years in which share application was contributed. It further appears that all the payments were made by the applicants by account payee cheques. It appears from the Assessing Officers order that his grievance was that the assessee was not willing to produce the parties who had allegedly advanced 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 full 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 Assessing Officer was of the view that the particulars supplied were insufficient to detect the 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 applicants. In our view, in the case before us so long the Assessing 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 interfere 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. 46. In the light of the afore-cited judicial precedents, let us examine the case in hand and find out whether pursuant to the specific direction of First Ld. Pr. CIT, the second AO has discharged his role as an investigator in respect of share capital and premium collected by the assessee or whether the AO failed to enquire on this issue and whether his reassessment/ second assessment order is a plausible view or it can be termed as an unsustainable view in law. We on a conjoint reading of the First Revisional Order of the First Pr. CIT dated 21.09.2016 and the reassessment /Second assessment of the AO dated 03.11.2016, the following facts can be discerned:- (a) The First Ld. Pr. CIT has recorded a finding after perusal of the first assessment records/folder that during the first round of scrutiny proceeding, the assessee company produced the following documents before the first AO in the original 32 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd assessment to satisfy the AO in respect of identity, creditworthiness and genuineous of share subscribers:- (i) audited financial statements; (ii) copy of Form filed with the ROC; (iii) copy of PAN Card of the assessee company; (iv) details and copy of share applicants; (v) bank statement reflecting the transaction; (vi) records relating to investors in order to establish identity, genuineness and creditworthiness of the share subscribers. (vii) pursuant to AO’s notice u/s. 133(6) all the investor companies had filed documents to prove their identity & creditworthiness (viii) share applicants conformation & bank statements. 47. We note that the First Ld. Pr.CIT in his first revisional order, found that AO in the first assessment proceedings though has been provided with the aforesaid documents has not examined these documents, which according to him, should have been carried out by the AO. Further, the Ld PCIT held at para 4, that by submitting these documents the assessee had discharged its onus. Moreover, the First Ld. Pr. CIT found fault with the AO for not bothering to examine the contention of the assessee or to bring on record anything against the assessee and thus according to him, the AO has not discussed the basis of evidence to draw adverse inference against the assessee and therefore, was pleased to set aside the actions of AO to add the share premium collected by assessee as unexplained cash credit u/s. 68 of the Act. Therefore, according to the First Ld. Pr. CIT, the first original assessment order framed u/s. 143(3) of the Act dated 12.03.2015 was against the principle of natural justice and, therefore, he found it fit to order denovo assessment and gave specific direction in respect of share capital & premium collected by assessee. 48. Thereafter, the Id. Pr. CIT was pleased to direct "........assessment order passed on 12.03.2015 is set aside de novo with the direction to the AO to carry out proper examination of books of account and bank to statement of the assessee as well as the investor. The AO is also directed to examine the source of share application, entity of investor and its 33 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd genuineness". He also directed that the assessment proceedings to be initiated at the earliest and to be completed without waiting for time bar limit. With the aforesaid specific direction, the First Ld. Pr. CIT has set aside the first original assessment order dated 12-03-2015. 49. So we note that the second AO was specifically directed by the First Ld. Pr. CIT to carry out the followings actions in addition to de-novo assessment which means the second AO was free to assess the income of assessee afresh, however, he has to do the following specific actions as directed in respect of share- applicants who applied for shares in assessee-company. The specific directions of Ld. Pr CIT to AO are as under: (i) To carry out proper examination of the books of accounts and bank account of the assessee; ii) To carry out proper examination of the books of accounts and bank account of the investors; iii) AO to examine the source of the share applicants; iv)The AO to examine the identity of the investor and its genuineness; v) The AO to complete the assessment at the earliest without waiting for the time barring date. 50. In the second round before the AO for de novo re-assessment, the second AO as per the specific direction of the First Ld. Pr. CIT (supra), conducted the reassessment proceeding. As per the specific direction of Ld. First Pr. CIT, the Second AO firstly summoned the director of the assessee company Shri Ashis Trivedi before him, who duly appeared and produced the books of account on and furnished the relevant details viz., (i) copy of ITR, (ii) audited accounts, (iii) details of directors, (iv) the details of the share- applicants, (v) details of business activity, (vi) details of increase in share capital. (vii) Form 2, (viii) Form 5, (ix) bank statements evidencing payment through banking transaction, which fact the AO has acknowledged in the reassessment order. [And here we should keep in mind that the First Ld. Pr. CIT's finding of fact after perusal of original assessment records that assessee in the first round before AO has produced PAN,ROC details, audited financial statements, details and copy of share applicants, bank statements reflecting the transaction records relating to investors to establish identity, creditworthiness & genuineness. And the finding of First Ld. Pr. CIT that pursuant to notice u/s. 133(6), the investors had filed documents confirming the share transactions& premium filed documents as required by the AO. Further, the Ld PCIT held at para 4, that by submitting these 34 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd documents the assessee had discharged its onus.] And after examining these documents, we find that the second AO taking note that all the six (6) shareholders, all the shareholders have filed their respective (i) PAN details (ii) CIN detail (iii) Audited Annual Report for FY 2011-12 (AY 2012-13), (iv) ITR acknowledgement for AY 2012-13 which the AO acknowledges that he verified the same and thus we note that the identity of the investors were duly furnished by the assessee's director; and the AO verified the veracity of the same which facts were already in the assessment folder as found by Ld. First PCIT which were obtained by AO (first) from all the share applicants by issuing notice u/s 133(6) of the Act and moreover it is common knowledge that in this computer/digital era, the AO on a click of the mouse, could have easily verified the identity of the share applicant which is available in the website of Ministry of Corporate Affairs and the ITR Acknowledgments filed by them, will enable the AO to cross verify and collect details from the AO of the respective share applicants and independently from the Revenue's departmental data base. We note that all the share subscribing parties filed all the documents called for by the AO [PB-1, PAGES 15-129] and were also examined by the AO along with audited accounts from which these details show their identity;- SL NO NAME OF ALLOTTEE CIN PAN NO Whether ITR filed for AY 2012-13 1 Nayan Tie Up Pvt Ltd U50404MH2009PTC2043 55 AACCN9155G Yes 2 Tribhuvan Deal Trade Pvt Ltd U52190WB2010PTC1554 16 AACCT3855B Yes 3 ManomayCommosale Pvt Ltd U74999WB2011PTC1639 84 AAHCM2756 M Yes 4 Intellect Fincon Pvt Ltd U51909WB1994PTC0628 89 AAGCS8100G Yes 5 BalajiFinvest Pvt Ltd U65993WB1995PTC1570 00 AAACB9794P Yes 6 Aakriti Overseas Pvt Ltd U52190WB2009PTC1374 90 AAHCA9111 A Yes 35 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 51. Thus, we note that the AO after verification as aforesaid, has not drawn any adverse opinion or doubted the identity of the share applicants which view of AO is a possible view in the light of the documents referred to and we also by applying the presumption in section 114 of Indian Evidence act 1872, we presume that the quasi-judicial act of the second AO have been regularly performed. Moreover, the First Ld. Pr.CIT while setting aside the first AO’s order has returned a finding that assessee in the first found itself has filed the relevant documents to prove identity, creditworthiness and genuineness of the share capital and assessee has discharged the onus on it at para4; And after perusing their replies and supporting documents and thereafter having verified their veracity, the second AO was satisfied with the explanation of assessee in respect to the nature and source of credit entries which view of second AO cannot be faulted. And we also note that all the shareholders are regular income tax assessee. Therefore, in the light of the aforesaid documents discussed their identity cannot be disbelieved and the AO’s satisfaction in respect of identity of the shareholders is a possible view and cannot be termed as unsustainable in law or facts. 52. Coming to the creditworthiness of the shareholders, our attention was drawn to the balance sheet of the shareholders (PB-I) which was filed before the AO and the Ld. Pr. CIT and we note that their source of investment and net worth as per balance sheet as on 31.03.2012 as well as the sum invested by them in the assessee is discernible as under:- SL NO NAME OF ALLOTTEE Share Capital Subscribed Networth as per audited accounts Networt h, P/b Page No. Bank Statemen t, P/b, Page No. Source of Investm ent, P/b, Page No. 1 Nayan Tie Up Pvt Ltd 20,00,000 6,76,05,253 39 44 31 2 Tribhuvan Deal Trade Pvt Ltd 60,00,000 26,04,94,44 8 55 49 48 3 ManomayCommosale Pvt Ltd 35,00,000 10,32,95,04 7 70 77 63 4 Intellect Fincon Pvt Ltd 40,00,000 21,18,73,88 7 87 96 80 36 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 5 BalajiFinvest Pvt Ltd 15,00,000 31,54,34,31 8 107 100 99 6 Aakriti Overseas Pvt Ltd 20,00,000 13,92,74,54 8 124 115 117 53. So, from a perusal of the above chart, we note that the assessee and the shareholders have brought to the notice of Second AO that they (share subscribers) have enough net worth to invest in the assessee company and the share subscribing companies pursuant to the AO's notice u/s. 133(6) of the Act have furnished their respective audited accounts from which the aforesaid facts are clearly discernible and moreover the share subscribers have also filed before the second AO the source from which they subscribed to shares of assessee (though not required as per law in force for AY 2012-13), bank statement, audited balance sheet etc. Thus the assessee had discharged the onus on it about the creditworthiness of the share- holders. So we note that the source of the investments has been clearly brought to the notice of the second AO during the assessment/reassessment proceedings. Further, the bank statements of all the shareholders as well as that of assessee were filed before the AO, which revealed that the share capital and premium have been subscribed by them through banking channel (NEFT or cheque ) which goes on to show that the assessee has discharged the onus in respect of genuineness of the transaction. Based on the documents and materials called for by the AO who accepted the same after verification is an act of enquiry. And we note that revenue has not brought on record any material to challenge the veracity of the documents referred to above. Moreover, the second Ld. Pr. CIT in his impugned order has not brought any material to rebut the presumption of second AO to justify his intervention u/s. 263 of the Act and which would have upset the decision of the second AO's factual view on the identity, creditworthiness and genuinity of the share transaction. In such scenario, the second AO's view based on the documents referred to by him is a plausible view and in consonance with judicial precedents (supra) which we would like to discuss/ examine each share subscribers 54. Moreover, the second Ld. Pr. CIT in his impugned order has not brought any material to rebut the presumption of second AO to justify his intervention u/s. 263 of the Act and which would have upset the decision of the second AO’s factual view on the identity, 37 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd creditworthiness and genuinity of the share transaction. In such a scenario, the second AO’s view based on the documents referred to by him is a plausible view and in consonance with judicial precedents (supra) which we would like to discuss/ examine each share subscribers. 1. Nayan Tie Up Pvt Ltd On perusal of the paper book, it reveals that documents are placed at page 29-44a of share applicant, Nayan Tie Up Pvt Ltd which is a Private Limited Company, and which has Permanent Account No.AACCN9155G and CINU50404MH2009PTC204355.We note that this share applicant company has filed its Pan Card, ITR acknowledgment, relevant Bank Statement, source of funds and audited accounts in response to the notice issued u/s 133(6) of the Act. A copy of its Income Tax Return Acknowledgment for AY 2012-13 is placed at page 32 of the paper book. On perusal of the Audited Accounts of this share applicant (Page 34-43), it is noted that its Net-worth (Share Capital plus Reserves and Surplus) as on 31.03.2012 was Rs.6,76,05,253/-, page 39 of the paper book and the investment made in the assessee-company including share premium was Rs.20,00,000/-. Entire Share Application money of Rs.20,00,000/- was received by the assessee through normal banking channels on 22-09-2011. The financial statement of this share applicant shows that it had enough funds to invest in the assessee-company and the transaction has happened through normal banking channels. Further, it is noted that the share applicant had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. 2. Tribhuvan Deal Trade Pvt Ltd On perusal of the paper book, it reveals that documents are placed at page 45-60 of share applicant, M/s Tribhuvan Deal Trade Pvt Ltd, which is a Private Limited Company and which has Permanent Account No.AACCT3855B and CINU52190WB2010PTC155416.We note that this share applicant company has filed its Pan Card, ITR acknowledgment, source of funds, relevant Bank Statement and audited accounts in response to the notice issued u/s 133(6) of the Act. A copy of its Income Tax Return Acknowledgment for AY 2012-13 is placed at page 50 of the paper book. On perusal of the Audited Accounts of this share applicant (Page 51-60), it is noted that its Net-worth (Share Capital plus Reserves and Surplus) as on 31.03.2012 wasRs.26,04,94,448/-, page 55 of the paper book and the investment made in the assessee-company including share premium was Rs.60,00,000/-. 38 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd Entire Share Application money of Rs.60,00,000/- was received by the assessee through normal banking channels on 28-12-2011. The financial statement of this share applicant shows that it had enough funds to invest in the assessee-company and the transaction has happened through normal banking channel. Further, it is noted that the share applicant had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. 3. Manomay Commosale Pvt Ltd On perusal of the paper book, it reveals that documents are placed at page 61-77a of share applicant, M/s Manomay Commosale Pvt Ltd whichis a Private Limited Company and which has Permanent Account No.AAHCM2756M and CINU74999WB2011PTC163984.We note that this share applicant company has filed its Pan Card, ITR acknowledgment, source of funds, relevant Bank Statement and audited accounts in response to the notice issued u/s 133(6) of the Act. A copy of its Income Tax Return Acknowledgment for AY 2012-13 is placed at page 64 of the paper book. On perusal of the Audited Accounts of this share applicant (Page 65-76), it is noted that its Net-worth (Share Capital plus Reserves and Surplus) as on 31.03.2012 was Rs.10,32,95,047/-, page 70 of the paper book and the investment made in the assessee-company including share premium was Rs.35,00,000/-. Entire Share Application money of Rs.35,00,000/- was received by the assessee through normal banking channels on 18-08-2011. The financial statement of this share applicant shows that it had enough funds to invest in the assessee- company and the transaction has happened through normal banking channel. Further, it is noted that the share applicant had furnished the source of investment made in the assessee- company after getting the notice under section 133(6) of the Act. 4. Intellect Fincon Pvt Ltd On perusal of the paper book, it reveals that documents are placed at page 78-96a of share applicant M/s Intellect Fincon Pvt Ltd which is a Private Limited Company and which has Permanent Account No.AAGCS8100G and CINU51909WB1994PTC062889.We note that this share applicant company has filed its Pan Card, ITR acknowledgment, source of funds, relevant Bank Statement and audited accounts in response to the notice issued u/s 133(6) of 39 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd the Act. A copy of its Income Tax Return Acknowledgment for AY 2012-13 is placed at page 81 of the paper book. On perusal of the Audited Accounts of this share applicant(Page 82-95), it is noted that its Net-worth (Share Capital plus Reserves and Surplus) as on 31.03.2012 wasRs.21,18,73,887/-, page 87 of the paper book and the investment made in the assessee-company including share premium was Rs.40,00,000/-. Entire Share Application money of Rs.40,00,000/- was received by the assessee through normal banking channels on 20-09-2011. The financial statement of this share applicant shows that it had enough funds to invest in the assessee-company and the transaction has happened through normal banking channel. Further, it is noted that the share applicant had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. 5. Balaji Finvest Pvt Ltd On perusal of the paper book, it reveals that documents are placed at page 97-113 of share applicant, M/sBalaji Finvest Pvt Ltd which is a Private Limited Company and which has its Permanent Account No.AAACB9794P and CINU65993WB1995PTC157000.We note that this share applicant company has filed its Pan Card, source of funds, ITR acknowledgment, relevant Bank Statement and audited accounts in response to the notice issued u/s 133(6) of the Act. A copy of its Income Tax Return Acknowledgment for AY 2012-13 is placed at page 101 of the paper book. On perusal of the Audited Accounts of this share applicant (Page 102-113), it is noted that its Net-worth (Share Capital plus Reserves and Surplus) as on 31.03.2012 was Rs.31,54,34,318/-, page 107 of the paper book and the investment made in the assessee-company including share premium was Rs.15,00,000/-. Entire Share Application money of Rs.15,00,000/- was received by the assessee through normal banking channels on 19-09-2011. The financial statement of this share applicant shows that it had enough funds to invest in the assessee-company and the transaction has happened through normal banking channels. Further, it is noted that the share applicant had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. 40 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd 6. Aakriti Overseas Pvt Ltd On perusal of the paper book, it reveals that documents are placed at page 114-129 of share applicant, M/s Aakriti Overseas Pvt Ltd which is a Private Limited Company and which has its Permanent Account No.AAHCA9111A and CINU52190WB2009PTC137490.We note that this share applicant company has filed its Pan Card, ITR acknowledgment, source of funds, relevant Bank Statement and audited accounts in response to the notice issued u/s 133(6) of the Act. A copy of its Income Tax Return Acknowledgment for AY 2012-13 is placed at page 118 of the paper book. On perusal of the Audited Accounts of this share applicant (Page 119-129), it is noted that its Net-worth (Share Capital plus Reserves and Surplus) as on 31.03.2012 was Rs.13,92,74,548/-, page 124 of the paper book and the investment made in the assessee-company including share premium was Rs.20,00,000/-. Entire Share Application money of Rs.20,00,000/- was received by the assessee through normal banking channels on 22-09-2011. The financial statement of this share applicant shows that it had enough funds to invest in the assessee-company and the transaction has happened through normal banking channel. Further, it is noted that the share applicant had furnished the source of investment made in the assessee-company after getting the notice under section 133(6) of the Act. 55. So, from the aforesaid facts revealed during the second round, we note that second AO has discharged his duty as an Investigator and had made enquiries as per the direction of the First Ld. Pr.CIT dated 21-09-2016 u/s. 263 of the Act (First 263 order) and further we note that the Second Ld. Pr. CIT while issuing the Show Cause Notice while exercising his revisional jurisdiction for second time has not made even a single allegation about the noncompliance/failure on the part of Second AO in respect of the specific direction given by the First Ld. Pr. CIT dated 21-09-2016 while setting aside the original assessment order passed by the AO dated 12-03-2015. In other words, in the impugned order the second Ld. Pr. CIT has not found fault with the action of the second AO in giving effect to the specific directions given by him while passing the first revisional order on 21-09-2016. Thus, we note that when the second AO while framing the reassessment order pursuant to the specific direction of the First Ld. Pr. CIT’s order dated 21-09-2016 (first revisional order) has complied with the specific directions of the First Ld. Pr. CIT and based on the inquiry 41 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd conducted and after perusal of the documents which reveals the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the share subscribers, the satisfaction of AO as envisaged in sec. 68 of the Act is a plausible view and the fact that the share subscribers responded to the notice issued u/s 133(6) of the Act and produced all documents along with the audited financial statements and other documents albeit in the first round referred supra, the assessee had discharged the onus upon it about the identity, creditworthiness and genuineness of the share capital and premium collected by the assessee from the respective share subscribers, which fact has been endorsed by Ld First PCIT at para4 of the first revisional order. And since the aforesaid exercise was carried out by the second AO in the reassessment proceedings and the documents referred to above are in the assessment folder, the Second Ld. Pr. CIT erred in holding the reassessment order of the AO in respect of share capital and premium collected by the assessee as erroneous as well as prejudicial to the interest of the revenue. In the light of the aforesaid discussions and on perusal of the documents, we are of the view that AO’s view to accept the identity, creditworthiness and genuineness of the share capital and premium collected from the share subscribers was a plausible view which is not a unsustainable view in law. 56. To sum up, we find from the above said facts that the Second AO has conducted enquiry on the specific subject matter i.e. share capital and premium collected by the assessee-company (CASS items). Therefore, the finding of Second Pr. CIT that the Second AO has not conducted enquiry is incorrect and is flowing from suspicion only. And as discussed, the allegation/fault pointed out by the Second Ld. Pr. CIT that the Second AO failed to collect total facts also cannot be accepted for the simple reason that Ld. Pr. CIT has not spelt out in the impugned order what he meant by total facts or in the alternative when the assessee has discharged its onus, as required by the law in force in this AY 2012-13, then the Ld. Pr. CIT ought to have called for which ever additional documents/materials or issued summons or issued notices and collected those facts which according to Second Ld. Pr. CIT, the AO omitted to collect and then demonstrated that those actions/documents which he collected in that process gave result to a different finding of fact which will turn upside down the claim of the assessee and thus able to show that the actions/omission of AO in conducting the investigation was erroneous, which unfortunately is not the case before us. 42 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd And equally bad is the bald allegation/fault that second AO has not collected total facts cannot be accepted being vague and based on conjectures and surmises and so meritless. Since the assessee company has discharged its onus as discussed supra, and still if the Second Pr. CIT had to find the order of Second AO erroneous for lack of enquiry or for not collecting the entire facts, then the Second Pr. CIT ought to have called for the additional facts which he thinks that the Second AO has not collected from the assessee or the shareholders and then explained in his impugned order as to what effect those additional documents would have made on the second assessment order/reassessment order or in other words the impact on the decision making process of framing the second assessment order due to the failure of second AO’s omission to collect the additional documents. However, we note that the Second Pr. CIT has not carried out any such exercise or even spelled out in his impugned order, which all documents the second AO failed to collect for considering the total facts; and even if we presume he has conducted such an exercise, then he has not been able to bring out any adverse factual finding to upset the view of Second AO. So we find no merit in the vague allegation of second Pr. CIT that the second AO has not collected the full facts necessary to decide the issue of share capital & premium.So we note that the Second AO, the assessing authority who is a quasi- judicial office has discharged his dual role as an investigator as well as an adjudicator. Looking from another angle of doctrine of merger canvassed before us, we note from the facts of this case that the second Ld. Pr. CIT – 4 by passing the second revisional order dated 12.03.2019 has substituted the First Pr. CIT’s order passed u/s. 263 of the Act dated 21.09.2016 with his own order which he cannot do since the second assessment order/re-assessment of the Second AO dated 03.11.2016 was pursuant to the first revisional order of the First Ld. Pr. CIT and on the very same subject matter which inter alia was the issue flagged by CASS, which exercise since having been complied by the AO, brings into operation the doctrine of merger the subject matter i.e. share capital & premium collected by assessee company. Resultantly the second Ld. Pr.CIT, again cannot rake-up the same subject matter without the second Ld. Pr.CIT in the second revisional order spells out where the error happened to second AO as an investigator or adjudicator, which exercise the Second Ld. Pr.CIT has not done, so the second Ld. Pr. CIT cannot be permitted to again ask the AO to start the investigation in the way he thinks it proper on the very same subject on which merger has taken place by virtue of the order of 43 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd First Ld. Pr. CIT. And if this practice is allowed, then there will be no end to the assessment proceedings meaning no finality to assessment proceedings and that is exactly why the Parliament in its wisdom has brought in safe-guards, restrictions & conditions precedent to be satisfied strictly before assumption of revisional jurisdiction. Be that as it may be, as discussed above, we find that the Second Ld. Pr. CIT without satisfying the condition precedent u/s 263 of the Act has invoked the revisional jurisdiction (second time), so all his actions are ab initio void. 57. Lastly, coming to the observations of the Second Ld. Pr.CIT that the assessment order passed by the AO is erroneous in so far as it is prejudicial to the interest of the Revenue in accordance with Explanation 2(c) to section 263(1) of the Act.[ For ready reference it is reproduced.] Explanation 2 under section 263 of the Act reads as under:- For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if in the opinion of the Principal Commissioner or Commissioner,- (a).......... (b)........... (c)the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or 58. However, we note that the Ld. Pr. CIT has made a bald statement that the AO’s assessment order attracts Explanation 2(c) u/s. 263 of the Act. However, he failed to spell out in his impugned order how the action of AO while framing the assessment order is not in accordance to any order, direction or instruction issued by the Board under section 119 of the Act. So, the deeming fiction as envisaged in Explanation (2) u/s. 263 of the Act cannot be used to interfere with the order of AO. This action of Ld. Pr. CIT is bad for non- application of mind. In the light of the aforesaid discussion and case laws cited supra, we find merit in the appeal filed by the assessee, therefore, we allow the appeal of assessee on the ground that since the Ld. PrCIT has exercised his revisional jurisdiction u/s. 263 without satisfying the condition precedent as stipulated in section 263 of the Act. 44 ITA No.2405/Kol/2019 AYs. 2012-13 Bhupati Dealmark P. Ltd Therefore, we hold that the impugned action of the Ld. Pr. CIT is without jurisdiction and, therefore, is null in the eyes of law and consequently it is quashed. 59. In the result, the appeal of assessee is allowed Order is pronounced in the open court on 22 nd December, 2021 Sd/- Sd/- (P.M.Jagtap) (Aby. T. Varkey) Vice-President(KZ) JudicialMember Dated : 22 nd December, 2021 **PP(Sr.P.S.) Copy of the order forwarded to: 1. Appellant –M/s. BhupatiDealmark Private Limited 6/7 Vivekananda Road, Kolkata-700 007. 2 Respondent –The Pr. CIT-4, Kolkata AaykarBhawan, P-69 Chowringhee Square, Kolkata-700 069. 3. 4. 5. CIT(A)-, Kolkata (sent through e-mail) CIT- , Kolkata. DR, ITAT, Kolkata. (sent through e-mail) By order, /True Copy, Senior P.S./D.D.O Income Tax Appellate Tribunal Kolkata