M/s Satyam Smelters Pvt. Ltd., Kolkata V. D.C.I.T.,Circle-3(1), Kolkata

ITA 2445/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1151 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TULSYAN
• Keywords: Unexplained cash credit; Unexplained investment; Depreciation; Source of fund; Question of law; Onus to prove; Set aside
• Section: 143(3); 133(6); 195; 73; 72; 13; 22; 68; 69

Judgement Text

1 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( )BEFORE . , /AND . # . $ , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VAR KEY, JM] I.T.A. NO. 2445/KOL/2019 ASSESSMENT YEAR: 2012-13 M/S. SATYAM SMERTEX PVT. LTD. (PAN: AAICS3549K) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 16.01.2020 DATE OF PRONOUNCEMENT 29.05.2020 FOR THE APPELLANT SHRI A. K. TULSYAN, FCA FOR THE RESPONDENT SHRI VIJAY SHANKAR, CIT, DR ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-5, KOLKATA DATED 23.09.2019 FOR AY 2012-13. 2. THE ONLY GROUND OF APPEAL OF THE ASSESSEE IS AGA INST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.16 CR. U/S. 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) BEING THE SHARE CAPITAL A ND SHARE PREMIUM RECEIVED DURING THE YEAR. GROUND NO. 1 OF THE ASSESSEE IS AS UNDER: 1. THAT THE LD. CIT(A) WAS WRONG IN CONFIRMING THE ADDITION OF A SUM OF RS.16,00,00,000/- U/S. 68 OF THE ACT BEING THE SHAR E CAPITAL AND SHARE PREMIUM MONEY RECEIVED DURING THE YEAR FROM THE SHARE APPLICANTS WITHOUT APPRECIATING THE FACT THAT THE DETAILS AND DOCUMENTS PROVIDED TO HIM WERE FULLY EX AMINED AND NONE OF THE SHARE APPLICANTS WERE FOUND TO BE BOGUS. FURTHER, ALL TH E SHARE APPLICANTS ARE ASSESSED TO INCOME TAX AND THE ENTIRE SHARE APPLICATION MONEY W AS RECEIVED THROUGH PROPER BANKING CHANNELS. THUS, ADDITION MADE BY LD. AO AND CONFIR MED BY LD. CIT(A) IS UNJUSTIFIED AND NEEDS TO BE DELETED. 3. FACTS IN BRIEF IS THAT THE ASSESSEE VIDE ITS RET URN OF INCOME FOR THE AY 2012-13 ON 07.09.2012 SHOWING AN INCOME OF RS.2,18,95,330/- . LATER THE CASE WAS SELECTED FOR SCRUTINY AND AFTER ISSUE OF STATUTORY NOTICE, THE A O NOTES THAT THE ASSESSEE HAD 2 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 INTRODUCED RS 16 CRORES AS SHARE APPLICATION MONEY INTO THE COMPANY FROM TWO (2) PRIVATE LIMITED COMPANIES (I) M/S. SET SQUARE HOLDI NG PVT. LTD. (M/S. SSHPL) TOTAL AMOUNT RECEIVED RS. 5 CR. AND (II) M/S. HIGHLIGHT G OODS PVT. LTD. (M/S. HIGHLIGHT) RS.11 CR.[TOTAL RS.16 CR] THE AO WAS OF THE OPINIO N THAT THE ASSESSEE HAD INTRODUCED ITS UNDISCLOSED INCOME IN THE GUISE OF SHARE APPLIC ATION MONEY INTO ITS OWN COMPANY. SO, HE ISSUED NOTICE TO THE ASSESSEE AND CONVEYED T O THEM THAT HE WANTS TO MEET THE DIRECTORS OF THE SHARE APPLICANT COMPANIES AND ALSO WANTED TO EXAMINE/CROSS EXAMINE (IN ORDER TO FIND OUT THE GENUINENESS OF THE TRANS ACTION). HOWEVER, THE AO NOTES THAT IN RESPONSE THE ASSESSEE COMPANY SUBMITTED SOME DOC UMENTS RELATING TO THE INVESTMENT, HOWEVER, DID NOT PRODUCE ANY OF THE INV ESTORS BEFORE HIM. SO ACCORDING TO HIM, ASSESSEE FAILED TO PROVE THE AUTHENTICITY, GEN UINITY AND CREDITWORTHINESS OF THE INVESTORS. THEREFORE, HE WAS OF THE OPINION THAT T HE ASSESSEE COMPANY HAS ENTERED INTO SHAM TRANSACTION WITH THE INVESTORS AND INTRODUCED UNACCOUNTED MONEY IN THE FORM OF SHARE APPLICATION/ALLOTMENT. THE AO ALSO WAS OF THE OPINION THAT THE ASSESSEE WAS UNABLE TO PROVE WITH PROPER EVIDENCE THAT INVESTO R COMPANIES ARE THEIR OWN GROUP COMPANIES. THEREFORE, HE WAS PLEASED TO ADD THE EN TIRE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE U/S. 68 OF THE ACT AS UNDI SCLOSED CASH CREDIT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO CONFIRM THE ACTION OF THE LD. CIT(A) AND DISMISSED THE ASSESSEE S APPEAL. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4. THE LD. AR ASSAILING THE DECISION OF THE LD. CIT (A) CONTENDED THAT THE ASSESSEE COMPANY IS A GENUINE COMPANY WHICH HAS RETURNED AN INCOME OF MORE THAN RS.2.18 CR. IN ITS RETURN OF INCOME. ACCORDING TO LD. AR, TURN OVER OF THE ASSESSEE COMPANY IS MORE THAN RS. 73 CR. AND IT IS INTO THE MANUFACTURI NG AND SALE OF IRON AND STEEL. ACCORDING TO LD. AR, INVESTMENTS IN THE SHARES OF A SSESSEE ARE MADE BY GROUP CONCERNS ONLY WHEREIN THE DIRECTORS OF THE ASSESSEE COMPANY AND RELATIVES ARE THE DIRECTORS. ACCORDING TO LD. AR, M/S. HIGHLIGHT WHI CH HAD INVESTED RS. 11 CR. HAS UNDERGONE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT FOR AY 2012-13 AND AY 2017-18 AND DREW OUR ATTENTION TO THE ASSESSMENT ORDERS PAS SED FOR AY 2012-13 DATED 15.12.20- 19 PLACED AT PAGES 6 AND 7 OF THE PAPER BOOK AND CO PY OF THE ASSESSMENT ORDER U/S. 3 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 143(3) FOR AY 2017-18 FOUND PLACED AT PAGES 8 AND 9 OF THE PAPER BOOK. ACCORDING TO LD. AR, M/S. SSHPL WHICH HAD INVESTED RS.5 CR. IN T HE ASSESSEE COMPANY HAS ALSO UNDERGONE SCRUTINY ASSESSMENT U/S. 143(3) OF THE AC T FOR AY 2011-12 AND DREW OUR ATTENTION TO PAGES 1 AND 2 OF THE PAPER BOOK AND AL SO FOR AY 2017-18 THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT IS FOUND PLACED AT PA GES 3 TO 5 OF THE PAPER BOOK. THUS, ACCORDING TO LD. AR, WHEN THE TWO INVESTING COMPANI ES ASSESSMENTS HAVE UNDERGONE SCRUTINY PROCEEDINGS UNDER SECTION 143(3) OF THE AC T, THEN THE QUESTION OF IDENTITY OF THE INVESTOR COMPANIES CANNOT BE DOUBTED. ACCORDIN G TO THE LD. COUNSEL, BOTH THE INVESTOR GROUP COMPANIES HAVE ENOUGH CREDITWORTHINE SS TO INVEST IN THE ASSESSEE COMPANY AND DREW OUR ATTENTION TO THE FACT THAT M/S . SSHPL HAS CAPITAL WITH FREE RESERVE AND SURPLUS OF RS.48,89,59,014/- AS ON 31.0 3.2012 AND M/S. HIGHLIGHT HAS PAID UP CAPITAL WITH FREE RESERVE AND SURPLUS OF RS.16,6 9,60,353/- AS ON 31.03.2012. AND ACCORDING TO LD. AR, THE ENTIRE PAYMENT HAS BEEN MA DE THROUGH BANKING CHANNEL AND, THEREFORE, THE TRANSACTIONS ARE GENUINE. IT WAS AL SO BROUGHT TO OUR NOTICE THAT NO CASH WAS DEPOSITED BEFORE THE TRANSFER OF THE AMOUNTS TO THE ASSESSEE COMPANIES AND DREW OUR ATTENTION TO THE BALANCE SHEET TO SHOW THAT TH E FREE RESERVE AND CAPITAL ARE COMING FROM THE EARLIER YEARS ONWARDS. ACCORDING TO THE L D. AR, M/S. SSHPL HAS BEEN INCORPORATED ON 09.02.1987 [AY 1987-88] AND M/S. H IGHLIGHT ON 21.07.2008 [AY 2009-10] AND BOTH OF THEM HAVE CIN AND SEPARATE PAN AND ARE REGULAR INCOME TAX ASSESSEES AND M/S. SSHPL IS UNDER THE JURISDICTION OF ITO, WARD-5(4), KOLKATA AND M/S. HIGHLIGHT IS UNDER THE JURISDICTION OF ITO, WA RD-1(1), KOLKATA. THEREFORE, IN THE LIGHT OF THE AFORESAID FACTS AND SINCE THE INVESTOR COMPANYS DIRECTORS ARE ALSO THE ASSESSEE COMPANYS DIRECTORS AND SINCE THESE DIRECT ORS OF M/S. SSHPL AND M/S. HIGHLIGHT WERE EARLIER DIRECTORS OF THE ASSESSEE CO MPANY GOES ON TO SHOW THAT THEY ARE GROUP COMPANIES; AND, ACCORDING TO LD. AR, SINCE TH E ASSESSEE COMPANY IS DOING GOOD BUSINESS AND TAKING NOTE OF THE GROWTH OF THE COMPA NY AND CONSEQUENT FUTURE PROSPECT THEY IN THEIR WISDOM HAVE DECIDED TO INVEST/INFUSE SHARE CAPITAL WITH THE CONSENT OF THE ASSESSEE COMPANYS DIRECTOR SHOULD NOT BE LOOKED WI TH SUSPICION AS DONE IN THE CASE OF JAMAKHARCHI COMPANIES. ACCORDING TO LD. AR, THE WH OLE PROBLEM IN THIS CASE WAS THAT THE AO FROM THE INCEPTION ITSELF LOOKED AT THE ASSE SSEE WITH SUSPICION, AS IF THE ASSESSEE 4 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 IS A BOGUS COMPANY AND UNFORTUNATELY, THE LD. CIT(A ) ALSO TOWED THE SAME LINE. ACCORDING TO LD. AR, THE LD. CIT(A) HAS TERMED THE ASSESSEE COMPANY TO BE NOT HAVING ANY BUSINESS WITHOUT LOOKING INTO THE BALANC E SHEET AND P&L ACCOUNT OF THE ASSESSEE. ACCORDING TO THE LD. AR IF THE LD. CIT(A ) WOULD HAVE LOOKED INTO THE BALANCE SHEET AND P&L ACCOUNT OF ASSESSEE, THEN IT WOULD HAVE REVEALED THAT ASSESSEE COMPANY IS A FULL-FLEDGED COMPANY WHICH HAD TURNOVE R OF MORE THAN RS. 73 CR. AND PROFIT OF MORE THAN RS. 2 CR. WHICH ENABLED THE ASS ESSEE TO RETURN AN INCOME OF RS.2.18 CR. THE SHARE SUBSCRIBERS, ACCORDING TO LD. AR., WE RE INVESTMENT COMPANIES AND, THEREFORE, INVESTMENTS ARE MADE WITH AN INTENTION T O RECAP LONG TERM RETURN AND THEIR PROFIT AND LOSS IN THE INITIAL YEARS CANNOT BE THE YARDSTICK TO CAST NEGATIVE ASPERSIONS ON ITS CREDIBILITY. THEREFORE, ACCORDING TO LD. AR, SINCE THE ASSESSEE COMPANY IS A GENUINE MANUFACTURING COMPANY, THE DECISION OF THE GROUP COMPANIES TO INVEST IN THE ASSESSEE COMPANY FOR BOOSTING FURTHER GROWTH OF THE ASSESSEE COMPANY SHOULD BE ALLOWED AND ADDITION MADE SHOULD BE DELETED. 5. PER CONTRA, THE LD. CIT, DR CONTENDED THAT THE A O HAD DIRECTED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANIES BEF ORE HIM. HOWEVER, THE ASSESSEE DID NOT DO SO AND THE ASSESSEE ALSO FAILED TO PRODUCE T HE DOCUMENTS TO SHOW THAT THE INVESTORS WERE GROUP CONCERNS. ACCORDING TO LD. DR , A PERUSAL OF THE P&L ACCOUNT OF THE INVESTING COMPANIES WOULD REVEAL THAT THEY WERE HAVING VERY MEAGER INCOME AND, THEREFORE, THE AO DREW ADVERSE INFERENCE AGAINST TH E INTRODUCTION OF SHARE CAPITAL ALONG WITH PREMIUM OF RS. 40/-. ACCORDING TO LD. DR, SIN CE THE ASSESSEE COMPANY FAILED TO PRODUCE THE DIRECTORS AS WELL AS THE DOCUMENTS TO P ROVE THEIR CREDITWORTHINESS, THE AO MADE THE ADDITION WHICH HAS BEEN RIGHTLY CONFIRMED BY THE LD. CIT(A) WHICH DECISION SHOULD NOT BE INTERFERED WITH BY THIS TRIBUNAL. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO HAS TAKEN NOTE TH AT THE ASSESSEE COMPANY HAD FILED THE RETURN OF INCOME SHOWING AN INCOME OF RS.2.18 C R. FOR THE AY UNDER CONSIDERATION I.E. AY 2012-13. WE NOTE THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 19.08.2004 (AY 2005-06) FOR MANUFACTURE OF IRON AND STEEL. THE AUDITED FINANCIALS OF THE ASSESSEE 5 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 COMPANY ARE FOUND PLACED IN THE PAPER BOOK FROM PAG ES 72 TO 94. ON PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE COMPANY IT REVEALS TH AT AS ON 31.03.2011 (EARLIER AY 2011-12) THE ASSESSEE HAD A SHARE CAPITAL OF RS.6,7 2,20,000/- AND RESERVE AND SURPLUS OF RS.30,45,14,918/- THUS A TOTAL SHAREHOLDERS FUN D COMES TO RS.37,17,34,918/-; AND THIS YEAR THE SHARE CAPITAL AND RESERVE AND SURPLUS AS ON 31.03.2012 HAS RAISED TO RS.55,45,48,441/-. THE ASSESSEE COMPANYS RECEIPT FROM OPERATIONS LESS EXCISE DUTY AS ON 31.03.2011 (EARLIER YEAR) IS RS.81,17,45,076/- A ND REVENUE FROM OPERATIONS NET IS RS.74,42,85,645/- AND IT IS NOTED THAT IN THE YEAR UNDER CONSIDERATION AS ON 31.03.2012, THE GROSS REVENUE FROM OPERATIONS COMES TO RS.80,05 ,04,567/- AND NET REVENUE FROM OPERATIONS IS RS.73,05,69,628/-. IN THIS YEAR THE OTHER INCOME COMES TO RS.63,45,436/- AND THUS THE TOTAL REVENUE IN THIS ASSESSMENT YEAR IS RS.73,69,15,164/- AND IN THE EARLIER YEAR IT WAS RS.74,75,10,565/-. WE ALSO NOTE FROM T HE EXPENSES, THE COST OF MATERIAL CONSUMED, MANUFACTURING AND OPERATING COST CHARGES IN INVENTORY AND FINISHED GOODS AND STOCK-IN-TRADE, EMPLOYEES BENEFIT EXPENSES, FI NANCE COST, DEPRECIATION AND AMORTIZATION EXPENSES AND OTHER EXPENSES TOTAL COME S TO RS.70,30,38,654/- THIS YEAR AS ON 31.03.2012 AND IN LAST YEAR IT WAS RS.71,96,83,1 83/- AND THE PROFIT BEFORE TAXATION AS ON 31.03.2012 WITH THE ASSESSEE COMPANY IS RS.33,38 ,76,510/- FROM EARLIER YEAR IT IS RS.2,78,27,382/-. 7. WE NOTE THAT THE ASSESSEE COMPANY IN THIS YEAR U NDER CONSIDERATION HAS TAKEN SHARE CAPITAL OF RS.16 CR. FROM THE FOLLOWING TWO C OMPANIES: SL. NAME PAN ADDRESS NO. OF SHARES AMOUNT (RS.) 1. M/S. SET SQUARE HOLDINGS PVT. LTD. AADCS4693P 20B, ABDUL HAMID STREET, 7 TH FLOOR, BLOCK 7A, KOL-700 069 10,00,000 5,00,00,000/- 2. M/S. HIGHLIGHT GOODS PVT. LTD. AACCH1378M 20B, ABDUL HAMID STREET, 7 TH FLOOR, BLOCK 7A, KOL-700069 22,00,000 11,00,00,000/- 8. THE MAIN PLEA OF THE ASSESSEE IS THAT BOTH THE S HARE APPLICANTS ARE GROUP COMPANIES AND THE DIRECTORS OF BOTH THE PRIVATE LIM ITED COMPANIES ARE CLOSE RELATIVES OF THE DIRECTORS OF THE ASSESSEE COMPANY. THE FOLL OWING CHART WILL GIVE A BIRDS EYE 6 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 VIEW AND REVEAL THE RELATIONSHIP BETWEEN THE DIRECT ORS OF THE ASSESSEE COMPANY AND THE SHARE APPLICANT COMPANIES WHICH IS AS UNDER: ASSESSEE COMPANY NAME OF DIRECTORS SATYAM SMELTERS PVT. LTD. RAJIV DALMIA RAHUL AGARWAL INDU DALMIA NAME OF THE SHARE APPLICANT NAME OF DIRECTOR RELATI ON SET SQUARE HOLDINGS PVT. LTD. ALOK KUMAR AGARWAL RAJ KUMAR AGARWAL UNCLE OF RAHUL AGARWAL (DIRECTOR OF ASSESSEE) UNCLE OF RAHUL AGARWAL (DIRECTOR OF ASSESSEE) HIGHLIGHT GOODS PVT. LTD. MANISH DALMIA COUSIN BROT HER OF RAJIV DALMIA (DIRECTOR OF ASSESSEE) 9. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE SHARE HOLDERS OF THE SHARE APPLICANT COMPANIES ARE ALSO THE SHAREHOLDER OF THE ASSESSEE COMPANY AND ALL ARE RELATED TO THE SHAREHOLDERS OR DIRECTORS OF THE ASSESSEE COMPANY A ND THE NATURE OF THE RELATIONSHIP CAN BE SEEN/EXPLAINED BY THE CHART INFRA WHICH IS A S UNDER: NAME OF THE SHARE APPLICANT NAME OF DIRECTOR RELATI ON SET SQUARE HOLDINGS PVT. LTD. A) PAWAPURI MERCANTILES PVT. LTD. (PAGE NO. 42 OF PAPER BOOK) B) LISKA TRADING PVT. LTD. C) ALMAL FINANCIERS & CONSULTANTS PVT. LTD. D) BENZMARK CREDIT CAPITAL PVT. LTD. SHAREHOLDER OF THE ASSESSEE COMPANY (PAGE NO. 81 OF PAPER BOOK) SHAREHOLDER OF THE ASSESSEE COMPANY (PAGE NO. 81 OF PAPER BOOK) RAHUL AGARWAL IS A COMMON DIRECTOR SHAREHOLDER OF THE ASSESSEE COMPANY (PAGE NO. 81 OF PAPER BOOK) GOPAL KUMAR AGARWAL (FATHER OF RAHUL AGARWAL) IS A DIRECTOR HIGHLIGHT GOODS PVT. LTD. E) ENERGY MARKETING PVT. LTD. F) INDU DALMIA MANISH DALMIA (COUSIN BROTHER OF RAJIV DALMIA) IS A DIRECTOR WIFE OF RAJIV DALMIA (DIRECTOR OF ASSESSEE COMPANY) 10. WITH THE AID OF THE AFORESAID CHARTS, THE LD. A R OF THE ASSESSEE POINTED OUT TO US THAT ALL THE SHARE APPLICANTS/DIRECTORS BELONG TO T HE SAME FAMILY AND ALSO THEY FUNCTION 7 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 AS A GROUP CONCERNS AND, THEREFORE, THE ENTIRE MONE Y RECEIVED BY THE ASSESSEE COMPANY IS FROM ITS OWN GROUP COMPANIES AND INDIVIDUALS WHO ARE RELATIVES ONLY. 11. IN ORDER TO SHOW THE CREDITWORTHINESS OF THE S HARE APPLICANT COMPANIES, WE NOTE THAT M/S. SET SQUARE HOLDINGS PVT. LTD. HAD NET OWN FUND OF RS.48,89,51,014/- AND HAD INVESTED RS.5 CR. IN THE ASSESSEE COMPANY AND M/S. HIGHLIGHT GOODS PVT. LTD. HAD NET OWNED FUND OF RS.16,69,60,353/- AND INVESTED RS. 11 CR. IN THE ASSESSEE COMPANY. 12. IN ORDER TO PROVE THE IDENTITY OF THE SHARE AP PLICANTS THE ASSESSEE COMPANY HAD FILED THE COPY OF THE AUDITED ACCOUNTS, INCOME TAX ACKNOWLEDGMENT, COMPUTATION OF INCOME FOR AY 2011-12 TO 2013-14 OF BOTH THE COMPAN IES AND ALSO DREW OUR ATTENTION TO THE FACT THAT BOTH THE COMPANYS ASSESSMENTS HAV E BEEN SCRUTINIZED U/S. 143(3) OF THE ACT BY THEIR RESPECTIVE AOS. WE NOTE THAT M/S. SET SQUARE HOLDINGS PVT. LTD. [CIN- U01134WB1987PTCO 41856, PAN AADCS4639P] HAS BEEN INCORPORATED ON 09.02.1987 AND HAD ITS OWN CIN AND PAN. LIKEWISE, M/S. HIGHLIGHT GOODS PVT. LTD. [CIN-U51101WB2008PTC127695, PAN- AACCH1378M] HAD BE EN INCORPORATED ON 21.07.2008 AND WAS HAVING CIN AND PAN, THE DETAILS OF WHICH ARE GIVEN BELOW: NAME OF COMPANY CIN PAN M/S. SET SQUARE HOLDINGS PVT. LTD. [CIN- U01134WB1987PTCO 41856, AADCS4639P M/S. HIGHLIGHT GOODS PVT. LTD. CIN- U51101WB2008PTC127695 AACCH1378M 13. WE NOTE THAT IN ORDER TO PROVE THEIR BONA FIDE THE ASSESSEE COMPANY HAD FILED AN AFFIDAVIT NOTARIZED ON 12.03.2015 (FOUND PLACED AT PAGE NOS. 32 TO 35 AND 61 TO 62 OF PAPER BOOK) RELATING TO SHARE APPLICATION MONEY GIV EN BY ITS SHAREHOLDERS ALONG WITH THE SOURCE OF FUNDS THEREOF TO CONFIRM THE SHARE TR ANSACTION WITH THE ASSESSEE COMPANY. MOREOVER, TO PROVE THE GENUINENESS OF THE TRANSACTI ON ON THE ASSESSEE HAD ALSO FILED THE DIRECTORS AND THE SHAREHOLDERS COMPANIES, COPY OF THEIR RESPECTIVE INCOME TAX RETURN ACKNOWLEDGMENT, COMPUTATION OF TOTAL INCOME AND BALANCE SHEET AND P&L ACCOUNT FOR AYS 2011-12 TO 2013-14 BEFORE THE AO AN D LD. CIT(A). 8 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 14. AFTER PERUSAL OF THE DOCUMENTS PRODUCED BEFORE US IN THE PAPER BOOK, WE NOTE THAT IN RESPECT OF SHARE HOLDER M/S. SET SQUARE HOL DING PVT. LTD. THE FOLLOWING FACTS. THE RELEVANT DOCUMENTS ARE PLACED AT PAGES 36-62A O F THE PAPER BOOK WHEREIN IT CAN BE SEEN THAT THIS COMPANY INVESTED A SUM OF RS. 5,00,00,000/- IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 09.02.1987 AND WAS HAVI NG COMPANY IDENTIFICATION NUMBER UO 1134WB1987PTCQ41856. THIS COMPANY DULY HAS FILED ITS RETURN OF INCOME BEFORE ITO WARD 5(4), KO LKATA AND WAS HAVING PAN AADCS4693P. THIS COMPANY WAS HAVING A PAID UP CAPIT AL WITH FREE RESERVES AND SURPLUS OF RS. 48,89,51,014/- AS ON 31/03/2012. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE P APER BOOK. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE TH E SHARE APPLICATION ARE ALSO SHOWN IN DOCUMENTS FILED IN THE PAPER BOOK. 15. IN RESPECT OF THE SHAREHOLDER M/S. HIGHLIGHT GO ODS PVT. LTD., WE FIND THAT THE RELEVANT DOCUMENTS ARE PLACED AT PAGES 1- 35A OF TH E PAPER BOOK WHEREIN IT CAN BE SEEN THAT THIS COMPANY INVESTED A SUM OF RS. 11, 00,00,000/- IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 21.07.2008 AND WAS HAV ING COMPANY IDENTIFICATION NUMBER U51101WB2008PTC127695. THIS C OMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 1(1), KOLKATA AND WAS HAVING PAN AACCH1378M. THIS COMPANY WAS HAVING A PAID UP CAPIT AL WITH FREE RESERVES AND SURPLUS OF RS.16,69,60,353/- AS ON 31/03/2012. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE P APER BOOK. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE TH E SHARE APPLICATION ARE ALSO SHOWN IN DOCUMENTS FILED IN THE PAPER BOOK. 16. MOREOVER WE NOTE THAT THE AO AFTER ISSUING ONE NOTICE HAS MADE THE ADVERSE INFERENCE AGAINST THE ASSESSEE WHEREIN THE ASSESSEE HAD REPLIED THAT IT IS READY TO 9 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 PRODUCE THE DIRECTORS OF THE SHARE APPLICANT COMPAN IES BEFORE THE AO WHICH IS EVIDENT FROM THE LETTER DATED 26.02.2015 FOUND PLACED AT PA GE 23 OF THE PAPER BOOK. IN ORDER TO JUSTIFY THE PREMIUM OF RS.40/- PER SHARE THE LD. AR SUBMITTED THAT THE ASSESSEE HAS ISSUED 32,00,000 SHARES AT RS. 50/- PER SHARE WITH FACE VALUE OF RS. 10 AND PREMIUM OF RS.40/- PER SHARE. THE COMPANY WAS INCORPORATED ON 19.08.2004 WITH A VISION TO BECOME A LEADING MANUFACTURER OF IRON & STEEL AND H AS RAISED FUNDS TIME AND AGAIN AS PER THE GROWING REQUIREMENT OF THE COMPANY. FURTHER , THE TURNOVER OF THE COMPANY IS AROUND RS. 80 CRORES IN THE RELEVANT YEAR. HENCE, C ONSIDERING OVERALL FACTUAL BACKGROUND INCLUDING THE TURNOVER AS WELL AS FUTURE PROSPECTS OF THE ASSESSEE COMPANY, PREMIUM DEMANDED BY THE COMPANY SHOULD BE CONSIDERE D IN A PRACTICAL/COMMERCIAL SENSE BY THE A.O. FURTHER, IN THIS REGARD IT IS NOT ED THAT PRIOR TO ISSUANCE OF SHARES I.E. ON F.Y 2010-11 THE NET ASSETS VALUE (NAV) OF THE CO MPANY WAS AROUND RS.55/- PER SHARE AND THEREFORE ISSUANCE OF SHARES AT A PREMIUM OF RS. 40/- PER SHARE IS VERY MUCH JUSTIFIED. THE PROFITS OF THE COMPANY HAVE RISEN FR OM RS.1,96,32,168/- TO RS.2,28,13,523/- AS COMPARED TO THE IMMEDIATELY PRE CEDING FINANCIAL YEAR. TAKING THE FUTURE PROSPECTS AND GROWTH RATE OF THE COMPANY, IN VESTMENT IN THE COMPANY CANNOT BE FAULTED AND IN THE LIGHT OF FACTS DISCUSSED CANNOT BE TERMED UNREASONABLE. 17. TAKING NOTE OF THE AFORESAID FACTS AND DOCUMENT S WE ARE OF THE OPINION THAT ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENT ITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSCRIBERS AND THE AO WAS UNJUSTIFIED TO MAKE THE ADDITION U/S. 68 OF THE ACT AND THE LD CIT(A) ERRED IN CONFI RMING THE ADDITION WITHOUT APPRECIATING THE FACTS IN THE CORRECT PERSPECTIVE. LET US LOOK AT SECTION 68 OF THE ACT AND THE JUDICIAL PRECEDENTS ON THE ISSUE AT HAND. 18. SECTION 68 UNDER WHICH THE ADDITION HAS BEEN MA DE BY THE ASSESSING OFFICER READS AS UNDER: '68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ' 10 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 THE PHRASEOLOGY OF SECTION 68 IS CLEAR. THE LEGISLA TURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAI NED CASH CREDIT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. IN THIS CASE THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS S HALL BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR'. THE SUPREME COURT WHILE INTERPRETING SIMILAR PHRASEOLOGY USED IN SECTION 69 HAS HELD THA T 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 SUPREME COURT IN THE CASE OF CIT V. SMT. P. K. NOORJAHAN [1999] 237 ITR 570. WE NOTE THAT AGAINST THE SAID DECISION OF HON'BLE GUJARAT HIGH COURT THE SPECIAL LEAVE PETITION FILED BY THE REVENUE HAS ALSO BEEN DISMISSED BY THE HON'BLE APEX COURT. 19. THE MAIN PLANK ON WHICH THE AO MADE THE ADDITIO N WAS BECAUSE THE DIRECTORS OF THE SHARE SUBSCRIBERS DID NOT TURN UP BEFORE HIM. IN SUCH A CASE THE HON'BLE APEX COURT IN THE CASE OF ORISSA CORPN. (P) LTD. (SUPRA) 159 ITR 78 AND THE HON'BLE GUJARAT HIGH COURT, IN THE CASE OF DY. CIT V. ROHINI BUILDE RS [2002] 256 ITR 360 /[2003] 127 TAXMAN 523 , 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 C ASE, 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 ARRIVI NG AT THIS CONCLUSION, THE HON'BLE COURT HAS FURTHER STRESSED THE PRESENCE OF WORD 'MA Y' IN SECTION 68. RELEVANT OBSERVATIONS AT PAGES 369 AND 370 OF THIS REPORT AR E REPRODUCED HEREUNDER:- 'MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDI TORS COULD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE ASSESSING OFFICER, CANN OT 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 WHEN T HE ASSESSEE FURNISHES NAMES AND ADDRESSES OF THE ALLEGED CREDITORS AND THE GIR NUMB ERS, THE BURDEN SHIFTS TO THE DEPARTMENT TO ESTABLISH THE REVENUE'S CASE AND IN O RDER 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 O FFICER UNDER SECTION 131, BY THE 11 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 ALLEGED CREDITORS WILL NOT BE SUFFICIENT TO DRAW AN D 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 OFF ICER, THEY HAVE ADMITTED HAVING ADVANCED LOANS TO THE ASSESSEE BY ACCOUNT PAYEE CHE QUES AND IN CASE THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CASH AMOUNT DEPO SITED 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 B ANK ACCOUNTS AS UNEXPLAINED INVESTMENTS OF THOSE CREDITORS UNDER SECTION 69. 20. 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. NISH AN INDO COMMERCE LTD DATED 2 DECEMBER, 2013 IN INCOME TAX APPEAL NO.52 OF 2001 W HEREIN THE COURT HELD AS FOLLOWS: THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INC REASE IN SHARE CAPITAL BY RS.52,03,500/- WAS NOTHING BUT THE INTRODUCTION OF THE ASSESSEE'S OWN UNDISCLOSED FUNDS/INCOME INTO THE BOOKS OF ACCOUNTS OF THE ASSE SSEE COMPANY. THE ASSESSING OFFICER ACCORDINGLY TREATED THE INVESTMENT AS UNEXPLAINED C REDIT UNDER SECTION 68 OF THE INCOME TAX ACT AND ADDED THE SAME TO THE INCOME OF THE ASS ESSEE. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) BEING THE FIRST APPELLATE AUTHORITY AND C ONTENDED THAT THE ASSESSING OFFICER HAD NO MATERIAL TO SHOW THAT THE SHARE CAPITAL WAS THE INCOME OF THE ASSESSEE COMPANY AND AS SUCH THE ADDITION MADE BY THE ASSESSING OFFI CER UNDER SECTION 68 OF THE ACT WAS WRONG. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AF TER HEARING THE DEPARTMENT AND THE ASSESSEE COMPANY DELETED THE ADDITION OF RS. 52 , 03,500/- TO THE INCOME OF THE ASSESSEE COMPANY DURING THE ASSESSMENT YEAR IN QUES TION. 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 FOU ND THAT THE ASSESSEE COMPANY RECEIVED THE APPLICATIONS THROUGH BANKERS TO THE IS SUE, WHO HAD BEEN APPOINTED UNDER THE GUIDELINES OF THE STOCK EXCHANGE AND THE ASSESS EE COMPANY HAD BEEN ALLOTTED SHARES ON THE BASIS OF ALLOTMENT APPROVED BY THE ST OCK 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 ADDRES SES 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 RE ASONS. THE COMMISSIONER OF INCOME TAX (APPEALS) TOOK NOTE OF THE OBSERVATION OF THE A SSESSING OFFICER THAT ENQUIRY CONDUCTED BY THE INCOME TAX INSPECTOR HAD REVEALED THAT NINE PERSONS MAKING APPLICATIONS FOR 900 SHARES WERE NOT AVAILABLE AT T HE GIVEN ADDRESS AND RIGHTLY CONCLUDED THAT THE TOTAL SHARE CAPITAL ISSUED BY TH E 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 SHAREHOL DER, IN SHARES OF THE ASSESSEE 12 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 COMPANY REMAINED UNEXPLAINED, LIABILITY COULD NOT B E FOISTED ON THE COMPANY. THE CONCERNED SHAREHOLDERS WOULD HAVE TO EXPLAIN THE SO URCE OF THEIR FUND. THE LEARNED COMMISSIONER ON CONSIDERING THE SUBMISS IONS OF THE, RESPECTIVE PARTIES AND CONSIDERING THE MATERIALS, FOUND THAT THE ASSESSING OFFICER HAD APPLIED THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT ARBITRARILY AND IL LEGALLY AND IN ANY CASE WITHOUT GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF REPRESENTATION AND/OR HEARING. LEARNED TRIBUNAL AGREED WITH THE FACTUAL FINDINGS O F THE LEARNED COMMISSIONER AND ACCORDINGLY THE LEARNED TRIBUNAL DISMISSED THE APPE AL OF THE REVENUE AND AFFIRMED THE DECISION OF THE LEARNED COMMISSIONER. MR. DUTTA APPEARING ON BEHALF OF THE PETITIONERS CI TED JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. RUBY T RADERS AND EXPORTERS LIMITED REPORTED IN 236 (2003) ITR 3000 WHERE A DIVISION BE NCH OF THIS COURT HELD THAT WHEN SECTION 68 IS RESORTED TO, IT IS INCUMBENT ON THE A SSESSEE COMPANY TO PROVE AND ESTABLISH THE IDENTITY OF THE SUBSCRIBERS, THEIR CREDIT WORTH INESS 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 SHAREHOLDER S. 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 A LL THE SHAREHOLDERS WERE IN EXISTENCE. ONLY NINE SHAREHOLDERS SUBSCRIBING TO ABOUT 900 SHA RES OUT OF 6, 12,000 SHARES WERE NOT FOUND AVAILABLE AT THEIR ADDRESSES, AND THAT TOO, I N COURSE OF ASSESSMENT PROCEEDINGS IN THE YEAR 1994, I.E., ALMOST 3 YEARS AFTER THE ALLOT MENT. BY AN ORDER DATED 2ND MAY, 2001, THIS COURT ADMITTE D THE APPEAL ON THREE QUESTIONS WHICH ESSENTIALLY CENTRE AROUND THE QUESTION OF WHE THER 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 T HAT THERE IS NO QUESTION OF LAW INVOLVED IN THIS APPEAL FAR LESS ANY SUBSTANTIAL QU ESTION OF LAW. THE LEARNED TRIBUNAL HAS CONCURRED WITH THE LEARNED COMMISSIONER ON FACTS AND FOUND THAT THERE WERE MATERIALS TO SHOW THAT THE ASSESSEE HAD DISCLOSED THE PARTICULARS OF THE SHAREHOLDERS. THE FACTUAL FINDINGS CANNOT BE INTERF ERED WITH, IN APPEAL. WE ARE OF THE VIEW THAT ONCE THE IDENTITY AND OTHER RELEVANT PART ICULARS 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 OBTAIN ED FUNDS. 21. FURTHER, OUR ATTENTION WAS DRAWN TO THE DECISI ON OF THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX VS M/S. 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 DE LETING THE ADDITION OF RS.8,52,000/-, RS. 91,50,000/- AND RS. 13,00,000/- MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF SHARE CAPITAL, SHARE APPLICATION MONEY AND INVESTMENT IN HTCCL RESPECTIVELY. AFTER HEARING MD. NIZAMUDDIN, LEARNED ADVOCATE APPE ARING ON BEHALF OF THE APPELLANT AND AFTER GOING THROUGH THE MATERIALS ON RECORD, WE FIND THAT ALL SUCH APPLICATION MONEY 13 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 WERE RECEIVED BY THE ASSESSEE BY WAY OF ACCOUNT PAY EE CHEQUES AND THE ASSESSEE ALSO DISCLOSED THE COMPLETE LIST OF SHAREHOLDERS WITH TH EIR 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 H IS GRIEVANCE WAS THAT THE ASSESSEE WAS NOT WILLING TO PRODUCE THE PARTIES WHO HAD ALLE GEDLY 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 N OT AND IF THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PARTICULARS SUPPLIED WERE INSU FFICIENT 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 A PPLICANTS. IN OUR VIEW, IN THE CASE BEFORE US SO LONG THE ASSE SSING OFFICER WAS UNABLE TO ARRIVE AT A FINDING THAT THE PARTICULARS GIVEN BY THE ASSESSEE WERE FALSE, THERE WAS NO SCOPE OF ADDING THOSE MONEY UNDER SECTION 68 OF THE INCOME- TAX ACT AND THE TRIBUNAL BELOW RIGHTLY HELD THAT THE ONUS WAS VALIDLY DISCHARGED. WE, THUS, FIND THAT BOTH THE AUTHORITIES BELOW, ON CONSIDERATION OF THE MATERIALS ON RECORD, RIGHTLY APPLIED THE CORRECT LAW WHICH ARE R EQUIRED TO BE APPLIED IN THE FACTS OF THE PRESENT CASE AND, THUS, WE DO NOT FIND ANY REAS ON 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. 22. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE SUPREME COURT WHILE DISMISSING SLP IN THE CASE OF LOVELY EXPORTS AS HAS BEEN REPORTED AS JUDGMENT DELIVERED BY THE CTR AT 216 CTR 295: 'CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDIS CLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEI VED BY THE ASSESSEE- COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSME NTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. 23. 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 14 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 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 ACCOUNTE D MONEY AND THE LD. CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION. ' IT APPEARS FROM THE RECORD THAT IN THE ASSESSMENT P ROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATIO N HAD BROUGHT RS. 4, 00, 000/- AND RS.20,00,000/- TOWARDS SHARE CAPITAL AND SHARE PREM IUM RESPECTIVELY AMOUNTING TO RS.24,00, 000/- FROM FOUR SHAREHOLDERS BEING PRIVAT E 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 OB SERVED CERTAIN ABNORMAL FEATURES, WHICH WERE MENTIONED IN THE ASSESSMENT ORDER. THE A SSESSING OFFICER, THEREFORE, CONCLUDED THAT NATURE AND SOURCE OF SUCH MONEY WAS QUESTIONABLE AND EVIDENCE PRODUCED WAS UNSATISFACTORY. CONSEQUENTLY, THE ASSESSING OFF ICER INVOKED THE PROVISIONS UNDER SECTION 68/69 OF THE INCOME TAX ACT AND MADE ADDITI ON OF RS.24,00,000/-. ON APPEAL THE LEARNED CIT (A) BY FOLLOWING THE DECI SION OF THE SUPREME COURT IN THE CASE OF CL. T. VS. M/S. LOVELY EXPORTS PVT. LTD., REPORT ED 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 SECTIO N 68 AS UNEXPLAINED CREDITS AND IT SHOULD NOT BE TAXED IN THE HANDS OF THE APPELLANT C OMPANY. AS INDICATED EARLIER, THE TRIBUNAL BELOW DISMISSED THE APPEAL FILED BY THE REVENUE. AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASE OF CL. T. VS. M/S. LO VELY EXPORTS PVT. LTD. [SUPRA], WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOL VED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF THE ASSESSEE AN D THUS, NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND IS DISMISSED. 24. IN THE LIGHT OF THE AFORESAID DECISIONS OF THE HONBLE APEX AND JURISDICTIONAL HIGH COURT, LET US EXAMINE THE PRESENT CASE IN HAND . WE WILL EXAMINE EACH SHARE SUBSCRIBERS TOTALLING TWO (2). THE LD. AR TOOK PAI NS TO BRING OUT THE RELEVANT FACTS IN RESPECT OF EACH SHARE SUBSCRIBERS WHICH WILL THROW LIGHT AS TO THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSC RIBERS. WE NOTE FROM PAGES 36 TO 62A OF THE PAPER BOOK WHEREIN THE DETAILS OF M/S. SET SQUARE HOLDING PVT. LTD. ARE FURNISHED. THIS COMPANY INVESTED A SUM OF RS.5,00,00,000/- IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 09.02.1987 AND WAS HAVI NG COMPANY IDENTIFICATION NUMBER UO 1134WB1987PTCQ41856. THIS COMPANY DULY HAS 15 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 FILED ITS RETURN OF INCOME BEFORE ITO WARD 5(4), KO LKATA AND WAS HAVING PAN AADCS4693P. THIS COMPANY WHICH HAD INVESTED RS.5 CR. IN THE A SSESSEE COMPANY HAS ALSO UNDERGONE SCRUTINY ASSESSMENT U/S. 143(3) OF THE ACT FOR AY 2011-12 AND WHICH FACT IS DISCERNABLE FROM A PERUSAL OF PAGES 1 AND 2 OF THE PAPER BOOK AND ALSO FOR AY 2017-18 THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT IS FOUND PLACED AT PAGES 3 TO 5 OF THE PAPER BOOK. THUS, THIS INVESTING COMPA NYS ASSESSMENTS HAVE UNDERGONE SCRUTINY PROCEEDINGS UNDER SECTION 143(3) OF THE AC T, AND THEN THE QUESTION OF IDENTITY OF THIS INVESTOR COMPANY CANNOT BE DOUBTED. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS. 48,89 ,51,014/- AS ON 31/03/2012. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DU LY AVAILABLE IN THE PAPER BOOK. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THI S COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO SHOWN IN DOCUMENTS FILED IN THE PAPER BOOK. AND IT IS A GROUP ENTITY WITH COMMON SHARE HOLDERS WHO ALL ARE INCOME TAX ASSESSEES AND THEIR DETAILS ARE WITH THE DEPARTMENT AND DISCUSSED IN DETAIL SUPRA. 25. IN RESPECT OF THE SHAREHOLDER M/S. HIGHLIGHT GOODS PVT. LTD ., WE FIND THAT THE RELEVANT DOCUMENTS ARE PLACED AT PAGES 1- 35A OF TH E PAPER BOOK WHEREIN IT CAN BE SEEN THAT THIS COMPANY INVESTED A SUM OF RS. 16, 00,00,000/- IN THE ASSESSEE COMPANY. THE SHARE APPLICATION WAS MADE BY ACCOUNT PAYEE CHEQUE. THIS COMPANY WAS INCORPORATED ON 21.07.2008 AND WAS HAVI NG COMPANY IDENTIFICATION NUMBER U51101WB2008PTC127695. THIS C OMPANY DULY FILED ITS RETURN OF INCOME BEFORE ITO WARD 1(1), KOLKATA AND WAS HAVING PAN AACCH1378M. THIS COMPANY WHICH HAD INVESTED RS. 11 CR. HAS UNDE RGONE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT FOR AY 2012-13 AND AY 2017-18 WHICH FACT IS DISCERNABLE FROM A PERUSAL OF THE ASSESSMENT ORDERS PASSED FOR AY 2012-13 DATED 15.12.20-19 PLACED AT PAGES 6 AND 7 OF THE PAPER BO OK AND COPY OF THE ASSESSMENT ORDER U/S. 143(3) FOR AY 2017-18 FOUND PLACED AT PA GES 8 AND 9 OF THE PAPER BOOK. THUS, THIS INVESTING COMPANYS ASSESSMENTS HAVE UND ERGONE SCRUTINY PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, AND THEN THE QUEST ION OF IDENTITY OF THIS INVESTOR 16 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 COMPANY CANNOT BE DOUBTED. THIS COMPANY WAS HAVING A PAID UP CAPITAL WITH FREE RESERVES AND SURPLUS OF RS.16,69,60,353/- AS ON 31/ 03/2012. THE COPY OF THE BANK STATEMENT OF THE COMPANY IS DULY AVAILABLE IN THE PAPER BOOK. THE DETAILS OF SOURCE OF FUNDS FROM WHICH THIS COMPANY HAD MADE THE SHARE APPLICATION ARE ALSO SHOWN IN DOCUMENTS FILED IN THE PAPER BOOK. AN D IT IS A GROUP ENTITY WITH COMMON SHARE HOLDERS WHO ALL ARE INCOME TAX ASSESSE ES AND THEIR DETAILS ARE WITH THE DEPARTMENT AND DISCUSSED IN DETAIL SUPRA. 26. FROM THE DETAILS AS AFORESAID WHICH EMERGES FRO M THE PAPER BOOK FILED BEFORE US AS WELL AS BEFORE THE LOWER AUTHORITIES, IT IS VIVI D THAT ALL THE SHARE APPLICANTS ARE (I) INCOME TAX ASSESSEES, (II) THEY ARE FILING THEIR R ETURN OF INCOME, (III) THE SHARE APPLICATION FORM AND ALLOTMENT LETTER IS AVAILABLE ON RECORD, (IV) THE SHARE APPLICATION MONEY WAS MADE BY ACCOUNT PAYEE CHEQUES, (V) THE DE TAILS OF THE BANK ACCOUNTS BELONGING TO THE SHARE APPLICANTS AND THEIR BANK ST ATEMENTS, (VI) IN NONE OF THE TRANSACTIONS THE AO FOUND DEPOSIT IN CASH BEFORE IS SUING CHEQUES TO THE ASSESSEE COMPANY, (VII) THE APPLICANTS ARE HAVING SUBSTANTIA L CREDITWORTHINESS WHICH IS REPRESENTED BY A CAPITAL AND RESERVE AS NOTED ABOVE .(VIII) AND ALL THE DIRECTORS AND SHARE HOLDERS ARE RELATIVES AND REGULAR INCOME TAX ASSESSEES (IX) BOTH COMPANIES ARE GROUP ENTITIES HAVING COMMON RELATIVES ARE SHARE HO LDERS. (X) CANNOT BE TERMED AS JAMMA KARCHI COMPANIES 27. AS NOTED FROM THE JUDICIAL PRECEDENTS CITED ABO VE, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE THEN THERE IS A DUTY CASTED UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF CREDIT FOUND IN HI S BOOKS. IN THE INSTANT CASE, THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL WITH PRE MIUM FROM SHARE APPLICANTS. THE NATURE OF RECEIPT TOWARDS SHARE CAPITAL IS SEEN FRO M THE ENTRIES PASSED IN THE RESPECTIVE BALANCE SHEETS OF THE COMPANIES AS SHARE CAPITAL AN D INVESTMENTS. IN RESPECT OF SOURCE OF CREDIT, THE ASSESSEE HAS TO PROVE THE THREE NECE SSARY INGREDIENTS I.E. IDENTITY OF SHARE APPLICANTS, GENUINENESS OF TRANSACTIONS AND CREDITW ORTHINESS OF SHARE APPLICANTS. FOR PROVING THE IDENTITY OF SHARE APPLICANTS, THE ASSES SEE FURNISHED THE NAME, ADDRESS, PAN 17 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 OF SHARE APPLICANTS TOGETHER WITH THE COPIES OF BAL ANCE SHEETS AND INCOME TAX RETURNS. BOTH THE SHARE APPLICANT COMPANIES ASSESSMENT HAD U NDERGONE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT AND THEREFORE THEIR IDENTITY CANN OT BE DOUBTED. WITH REGARD TO THE CREDITWORTHINESS OF SHARE APPLICANTS, AS WE NOTED S UPRA, BOTH COMPANIES ARE HAVING CAPITAL IN SEVERAL CRORES OF RUPEES AND THE INVESTM ENT MADE IN THE APPELLANT COMPANY IS ONLY A PART OF THEIR CAPITAL. THESE TRANSACTIONS AR E ALSO DULY REFLECTED IN THE BALANCE SHEETS OF THE SHARE APPLICANTS, SO CREDITWORTHINESS IS PROVED. EVEN IF THERE WAS ANY DOUBT IF ANY REGARDING THE CREDITWORTHINESS OF THE SHARE APPLICANTS WAS STILL SUBSISTING, THEN AO SHOULD HAVE MADE ENQUIRIES FROM THE AO OF T HE SHARE SUBSCRIBERS AS HELD BY HONBLE JURISDICTIONAL HIGH COURT IN CIT VS DATAWAR E (SUPRA) WHICH HAS NOT BEEN DONE, SO NO ADVERSE VIEW COULD HAVE BEEN DRAWN. THI RD INGREDIENT IS GENUINENESS OF THE TRANSACTIONS, FOR WHICH WE NOTE THAT THE MONIES HAVE BEEN DIRECTLY PAID TO THE ASSESSEE COMPANY BY ACCOUNT PAYEE CHEQUES OUT OF SU FFICIENT BANK BALANCES AVAILABLE IN THEIR BANK ACCOUNTS ON BEHALF OF THE SHARE APPLI CANTS. IT WILL BE EVIDENT FROM THE PAPER BOOK THAT THE APPELLANT HAS EVEN DEMONSTRATED THE SOURCE OF MONEY DEPOSITED INTO THEIR BANK ACCOUNTS WHICH IN TURN HAS BEEN USE D BY THEM TO SUBSCRIBE TO THE ASSESSEE COMPANY AS SHARE APPLICATION. HENCE THE SO URCE OF SOURCE OF SOURCE IS PROVED BY THE ASSESSEE IN THE INSTANT CASE THOUGH THE SAME IS NOT REQUIRED TO BE DONE BY THE ASSESSEE AS PER LAW AS IT STOOD/ APPLICABLE IN THIS ASSESSMENT YEAR. THE SHARE APPLICANTS HAVE CONFIRMED THE SHARE APPLICATION IN RESPONSE TO THE NOTICE U/S 133(6) OF THE ACT AND HAVE ALSO CONFIRMED THE PAYMENTS WHICH ARE DULY COR ROBORATED WITH THEIR RESPECTIVE BANK STATEMENTS AND ALL THE PAYMENTS ARE BY ACCOUNT PAYEE CHEQUES. 28. WE ALSO NOTE THAT RECENTLY THE ITAT KOLKATA IN SEVERAL CASES HAS DELETED THE ADDITION ON ACCOUNT OF SHARE APPLICATION IN SIMILAR CIRCUMSTANCES. THE RELEVANT PORTION OF THE DECISIONS ARE AS FOLLOWS: (A) THE LD ITAT KOLKATA. IN DC IT VS GLOBAL MERCANT ILES PVT.LTD IN ITA NO. 1669/KOL/2009 DATED 13-01-2016. IN THIS THE DECISIO N THE LD. TRIBUNAL HELD AS FOLLOWS: 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BOOK FILED B Y THE ASSESSEE. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED ARE NOT REITER ATED HEREIN FOR THE SAKE OF BREVITY. WE FIND THAT THE ASSESSEE HAD GIVEN THE CO MPLETE DETAILS ABOUT THE SHARE APPLICANTS CLEARLY ESTABLISHING THEIR IDENTITY, CRE DITWORTHINESS AND GENUINENESS 18 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 OF TRANSACTION PROVED BEYOND DOUBT AND HAD DULY DIS CHARGED ITS ONUS IN FULL. NOTHING PREVENTED THE LEARNED AO TO MAKE ENQUIRIES FROM THE ASSESSING OFFICERS OF THE CONCERNED SHARE APPLICANTS FOR WHICH EVERY D ETAILS WERE VERY MUCH MADE AVAILABLE TO HIM BY THE ASSESSEE. WE FIND THAT THE RELIANCE PLACED BY THE LEARNED LD. CIT(1) ON THE DECISION OF THE HON'BLE APEX COUR T IN THE CASE OF CIT VS LOVELY EXPORTS (P) UD REPORTED IN (2008) 216 CTR 19 5 (SC) IS VERY WELL FOUNDED, WHEREIN, IT HAS BEEN VERY CLEARLY HELD THA T THE ONLY OBLIGATION OF THE COMPANY RECEIVING THE SHARE APPLICATION MONEY IS TO PROVE THE EXISTENCE OF THE SHAREHOLDERS AND FOR WHICH THE ASSESSEE HAD DISCHAR GED THE ONUS OF PROVING THEIR EXISTENCE AND ALSO THE SOURCE OF SHARE APPLIC ATION MONEY RECEIVED. 3.4. 1. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALS O COVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS R OSEBERRY MERCANTILE (P) LTD IN GA NO. 3296 OF 2010 ITAT NO. 241 OF 2010 DATED 1 0.1.2011, WHEREIN THE- QUESTIONS RAISED BEFORE THEIR LORDSHIPS AND DECISIO N RENDERED THEREON IS AS UNDER:- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY IN TO WHITE MONEY OR ACCOUNTED MONEY AND THE LD. CIT(A) OUGHT TO HAVE HE LD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION. ' IT A NO. 1669/KOI/2009-C-AM M/S. GLOBAL MERCANTILES PVT. LTD 11 HELD AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND A FTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASES OF CIT V S M/S LOVELV EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FA VOUR 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. 3.4.2. IN VIEW OF THE AFORESAID FINDINGS AND RESPEC TFULLY FOLLOWING THE DECISION OF THE APEX COURT (SUPRA) AND JURISDICTIONAL HIGH COUR T (SUPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND AC CORDINGLY, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 4. THE LAST GROUND TO BE DECIDED IN THIS APPEAL OF THE REVENUE IS AS TO WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADD ITION U/S 68 OF THE ACT MADE IN RESPECT OF ALLOTMENT OF SHARES TO 20 INDIVIDUALS FO R AN AMOUNT OF RS.57,00,000/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. 1. THE BRIEF FACT OF THIS ISSUE IS THAT THE ASSE SSEE HAD RECEIVED SHARE APPLICATION MONIES FROM 20 INDIVIDUALS IN THE EARLI ER YEAR WHICH WERE KEPT IN SHARE APPLICATION MONEY ACCOUNT. DURING THE ASST YE AR UNDER APPEAL, THE ASSESSEE ALLOTTED SHARES TO THESE 20 INDIVIDUALS OU T OF TRANSFERRING THE MONIES FROM SHARE APPLICATION MONEY ACCOUNT TO SHARE CAPIT AL ACCOUNT. THE DETAILS OF 20 INDIVIDUALS ARE REFLECTED IN PAGE 6 & 7 OF THE L EARNED CIT(A) ORDER. THE LEARNED AO ASKED THE ASSESSEE TO PRODUCE THE SHAREH OLDERS BEFORE HIM. HE FOUND THAT THE ASSESSEE DID NOT DO SO BUT FURNISHED COPIES OF PAY ORDERS USED FOR PAYMENTS TO THE ASSESSEE COMPANY AND ALSO FURNISHED INCOME TAX PARTICULARS AND BALANCE SHEETS OF ALL THE SHAREHOLDERS. THE LEA RNED AO ON ANALYZING ALL THE BALANCE SHEETS OBSERVED THAT THE SHAREHOLDERS HAVE PALTRY INCOME AND SMALL SAVINGS AND NONE OF THEM HAVE ANY BANK ACCOUNT AND HUGE CASH BALANCES WERE SHOWN IN THEIR HANDS OUT OF WHICH PAY ORDERS WERE O BTAINED. BASED ON THIS, THE 19 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 LEARNED AO CONCLUDED THAT THESE SHAREHOLDERS DO NOT HAVE CREDITWORTHINESS TO INVEST IN THE ASSESSEE COMPANY AND BROUGHT THE ENTI RE SUM OF RS. 57,00,000/- TO TAX AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 4.2. ON FIRST APPEAL, THE LEARNED CIT(A) OBSERVED T HAT ENTIRE SHARE APPLICATION MONIES OF RS. 57,00,000/- WE RECEIVED DURING THE PR EVIOUS YEAR 2004-05 RELEVANT TO ASST YEAR 2005-06 FROM 20 PERSONS AND T HE SHARES WERE ALLOTTED TO THEM DURING THE ASST YEAR UNDER APPEAL. HE OBSERVED THAT THE ASSESSEE HAD FURNISHED DETAILS OF THE SHARE APPLICANTS GIVING TH E DATE WISE RECEIPTS, MODE OF PAYMENT, AMOUNT, NAME, ADDRESS, INCOME TAX RETURNS, PA NO. OF SHARE APPLICANTS ALONG WITH THEIR BALANCE SHEET. THE LEAR NED CITA ALSO OBSERVED THAT THE ASSESSEE IN ITS REPLY TO SHOW CAUSE NOTICE BEFO RE THE LEARNED AO HAD REQUESTED HIM TO USE HIS POWER AND AUTHORITY FOR TH E PHYSICAL APPEARANCE OF THE SHAREHOLDERS WHICH WAS NOT EXERCISED BY THE LEARNED AO. INSTEAD THE LEARNED AO CONTINUED TO INSIST ON THE ASSESSEE TO PRODUCE T HE SHAREHOLDERS BEFORE HIM. HE ULTIMATELY CONCLUDED THAT THE ASSESSEE HAD DULY DISCHARGED ITS ONUS OF PROVIDING COMPLETE DETAILS OF THE SHAREHOLDERS AND IN ANY CASE, NO ADDITION COULD BE MADE U/S 68 OF THE ACT IN THE ASST YEAR UN DER APPEAL AS NO SHARE APPLICATION MONIES WERE RECEIVED DURING THE ASST YE AR UNDER APPEAL. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US BY FILING THE FO LLOWING GROUND:- 'THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE U/S 68 IN RESPE CT OF THE ALLOTMENT OF SHARES TO 20 NUMBERS OF INDIVIDUAL INVESTORS FOR AN AMOUNT OF RS. 57 LAKHS, WHERE GENUINENESS OF THE TRANSACTIONS AND CR EDITWORTHINESS OF THE INVESTORS WERE NOT ESTABLISHED. 4.3. THE LEARNED DR PRAYED FOR ADMISSION OF THE ADD ITIONAL GROUND RAISED BEFORE US AND VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED AO. IN RESPONSE TO THIS, THE LEARNED AR FAIRLY CONCEDED TO ADMISSION O F THIS ADDITIONAL GROUND AND VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A ). 4.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BOOK FILED B Y THE ASSESSEE. WE FIND THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE SEPARA TELY BEFORE US VIDE ITS COVERING LETTER DATED 9. 12.2011 IS ADMITTED AS IT APPEARS TO BE A GENUINE AND BONAFIDE ERROR OF OMISSION ON THE PART OF THE REVEN UE FROM NOT RAISING THIS GROUND IN THE ORIGINAL GROUNDS OF APPEAL FILED ALON G WITH THE MEMORANDUM OF APPEAL. MOREOVER, IT DOES NOT REQUIRE ANY FRESH EXA MINATION OF FACTS. HENCE THE SAME IS ADMITTED HEREIN FOR THE SAKE OF ADJUDICATIO N. 4.4. 1. WE FIND FROM THE DETAILS AVAILABLE ON RECOR D THAT THE SHARE APPLICATION MONIES FROM 20 INDIVIDUALS IN THE SUM OF RS.57,00,0 00/- HAS BEEN RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2004-05 RELE VANT TO ASST YEAR 2005-06 AND ONLY THE SHARES WERE ALLOTTED TO THEM DURING TH E ASST YEAR UNDER APPEAL. ADMITTEDLY NO MONIES WERE RECEIVED DURING THE ASST YEAR UNDER APPEAL AND HENCE THERE IS NO SCOPE FOR INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. HENCE WE HOLD THAT THE ORDER PASSED BY THE LEARNED CITA IN THIS REGARD DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY THE GROUN D NO. 3 RAISED BY THE REVENUE IS DISMISSED. (B) THE ITAT KOLKATA IN R.B HORTICULTURE & ANIMAL PROJECTS CO. LTD, ITA NO. 632/KOLL2011 DATED 13-01-2016. IN THIS THE DECISION THE LD. TRIBUNAL HELD AS FOLLOWS: 20 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 6. WE HAVE HEARD THE LEARNED DR AND WHEN THE CASE WAS CALLED ON FOR HEARING , NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER, WE FIND FROM THE FILE THAT THE ASSESSEE HAD FILED A DETAILED PAPER BOOK AND WRITTEN SUBMISS IONS. HENCE THE CASE IS DISPOSED OFF BASED ON THE ARGUMENTS OF THE LEARNED DR AND WRITTE N SUBMISSIONS AND PAPER BOOK ALREADY AVAILABLE ON RECORD. THE FACTS STATED IN TH E LEARNED CIT(A) WERE NOT CONTROVERTED BY THE LEARNED DR BEFORE US. WE FIND T HAT THE ASSESSEE HAD GIVEN THE COMPLETE DETAILS ABOUT THE SHARE APPLICANTS CLEARLY ESTABLISHING THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION PRO VED BEYOND DOUBT AND HAD DULY DISCHARGED ITS ONUS IN FULL. NOTHING PREVENTED THE LEARNED AO TO MAKE ENQUIRIES FROM THE ASSESSING OFFICERS OF THE CONCERNED SHARE APPLI CANTS FOR WHICH EVERY DETAILS WERE VERY MUCH MADE AVAILABLE TO HIM BY THE ASSESSEE. WE FIND THAT THE RELIANCE PLACED BY THE LEARNED CITA ON THE DECISION OF THE HON'BLE APEX CO URT IN THE CASE OF CIT VS LOVELV EXPORTS (P) LTD REPORTED IN (2008) 216 CTR 195 (SC) IS VERY WELL FOUNDED, WHEREIN, IT HAS BEEN VERY CLEARLY HELD THAT THE ONLY OBLIGATION OF THE COMPANY RECEIVING THE SHARE APPLICATION MONEY IS TO PROVE THE EXISTENCE OF THE SHAREHOLDERS AND FOR WHICH THE ASSESSEE HAD DISCHARGED THE ONUS OF PROVING THEIR E XISTENCE AND ALSO THE SOURCE OF SHARE APPLICATION MONEY RECEIVED. 6. 1. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS ROSEBERRV MERCANTILE (P) LTD IN GA NO. 3296 OF 2010 ITAT NO. 241 OF 2010 DATED 10.1.2011, WHERE IN THE QUESTIONS RAISED BEFORE THEIR LORDSHIPS AND DECISION RENDERED THEREON IS AS UNDER:- - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTE RED INTO BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONE Y OR ACCOUNTED MONEY AND THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION.' HELD AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF T HE SUPREME COURT IN THE CASES OF CIT VS M/S LOVELY EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COV ERED 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. 6.2. WE FIND THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS VALUE CAPITAL SERVICES P LTD REP ORTED IN (2008) 307 ITR 334 (DEL) , WHEREIN IT WAS HELD THAT: 'IN RESPECT OF AMOUNTS SHOWN AS RECEIVED BY THE ASS ESSEE TOWARDS SHARE APPLICATION MONEY FROM 33 PERSONS, THE ASSESSING OF FICER REQUIRED THE ASSESSEE TO PRODUCE ALL THESE PERSONS. WHILE ACCEPTING THE E XPLANATION AND ITA NO. 632/KOI12011--C-AM M/S. R.B HORTICULTURE 6 & ANIMAL PROJ. CO. LTD THE STATEMENTS GIVEN BY THREE PERSONS THE ASSESSING OFF ICER FOUND THAT THE RESPONSE FROM THE OTHERS WAS EITHER NOT AVAILABLE OR WAS INA DEQUATE AND ADDED AN AMOUNT OF RS. 46 LAKHS PERTAINING TO 30 PERSONS TO THE INCOME OF THE ASSESSEE. THE COMMISSIONER (APPEALS) UPHELD THE DECISION OF T HE ASSESSING OFFICER. ON APPEAL, THE TRIBUNAL SET ASIDE THE ORDER OF THE COM MISSIONER (APPEALS) AND DELETED THE ADDITIONS. ON FURTHER APPEAL: HELD, DISMISSING THE APPEAL, THAT THE ADDITIONAL BU RDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLICANTS DID NOT H AVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MADE BY THEM ACTUALLY EM ANATED FROM THE COFFERS OF 21 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS TH E UNDISCLOSED INCOME OF THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW AROSE. ' 6.3. WE FIND THAT THE ARGUMENT OF THE LEARNED DR TO SET ASIDE THIS ISSUE TO THE FILE OF THE LEARNED AO FOR VERIFICATION OF SHARE SUBSCRIBERS WO ULD NOT SERVE ANY PURPOSE AS THE RATIO DECIDED IN THE ABOVE CASES IS THAT IN ANY CAS E, NO ADDITION COULD BE MADE IN THE HANDS OF THE RECIPIENT ASSESSEE. IN VIEW OF THE AFO RESAID FINDINGS AND RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COURT (SUPRA), J URISDICTIONAL HIGH COURT (SUPRA) AND DELHI HIGH COURT (SUPRA) , WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. (C) THE LD. ITAT KOLKATA IN ITA NO.1061/KO1/2012 I N THE CASE OF ITO WD.3(2) KOL, VS. M/S. STEEL EMPORIUM LTD DATED 05-02-2016. IN THIS THE DECISION THE LD. TRIBUNAL HELD AS FOLLOWS: 10. WE HAVE HEARD BOTH THE RIVAL PARTIES AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER O F THE AO. BEFORE US THE LD. AR SUBMITTED THAT THE ASSESSEE RAISED SHARE APPLICATIO N MONEY DURING THE YEAR FROM 25 APPLICANTS. THE AO WAS FURNISHED WITH THE COPY OF F ORM 2 OF ALLOTMENT OF SHARES TO THE APPLICANTS AS FILED WITH THE REGISTRAR OF COMPANIES , WEST BENGAL. ON THE DATE OF RECEIPT OF SHARE APPLICATIONS FROM THE APPLICANTS, THEY FUR NISHED THEIR ADDRESSES, WHICH WERE RECORDED IN THE REGISTER OF MEMBERS. THE AO OBSERVE D THAT AS PER ROC RECORDS THE ADDRESSES OF THE NINE COMPANIES WERE DIFFERENT FROM THE ADDRESS AS PER FORM FILED WITH HIM. THE AO ISSUED NOTICES U/S.133(6) TO ALL THE CO MPANIES AT THE ADDRESSES FURNISHED IN FORM 2 AS FILED WITH HIM, WHICH WERE DULY SERVED AT THE GIVEN ADDRESSES. THE A0 ARGUED THAT THE LETTERS SHOULD NOT HAVE BEEN SERVED AT THE GIVEN ADDRESS BY THE ASSESSEE. HE SERVED A SHOW A CAUSE NOTICE DATED 09.12.2011 ASKIN G FOR THE EXPLANATION FROM THE ASSESSEE AS TO HOW THE NOTICES U/S. 133(6) COULD BE SERVED TO THESE NINE COMPANIES WHO HAD DIFFERENT ADDRESS AS PER ROC RECORDS. THE AO WA S EXPLAINED VIDE LETTER DATED 20.12.2011 OF THE ASSESSEE THAT THOSE COMPANIES HAD CHANGED THEIR ADDRESSES SINCE FILING OF FORM 2 WITH THE REGISTRAR. FURTHER, IT WA S NONE OF THE BUSINESS OF THE ASSESSEE TO QUESTION THE ADDRESSES OF THE APPLICANTS AS LONG AS THEY AFFIRM THE ADDRESS. THE APPLICANTS WERE DULY INCORPORATED BODIES UNDER THE COMPANIES ACT. 1956 SINCE LONG. THEY HAVE BEEN REGULARLY FILING THEIR RETURNS OF IN COME UNDER THE INCOME TAX ACT AND ARE BEING ASSESSED BY THE REVENUE SINCE LONG. SOME OF THEM ARE EVEN REGISTERED AS NON- BANKING FINANCIAL COMPANIES WITH RESERVE BANK OF I NDIA. THEY HAVE BEEN FILING RETURNS REGULARLY WITH REGISTRAR OF COMPANIES AND R BI SINCE LONG. THE LETTERS MIGHT HAVE BEEN RECEIVED AT THEIR OLD ADDRESSES BECAUSE I N CASE OF CHANGE IN THE ADDRESS, PEOPLE INSTRUCT THE INCUMBENTS AT OLD ADDRESSES NOT TO REFUSE THE RECEIPT OF LETTERS AND RECEIVE THE SAME. JUST BECAUSE, A LETTER WAS RECEIV ED AT THE OLD ADDRESS INSTEAD OF PRESENT ADDRESS, IT CANNOT BE SAID THAT THE IDENTIT Y OF THE APPLICANT HAS NOT BEEN VERIFIED. ALL OF THESE COMPANIES HAD DULY REPLIED TO NOTICE U /S. 133(6) AND CONFIRMED THE TRANSACTION WITH ALL THE EVIDENCES. THE AO HAS NOT RAISED ANY OBJECTION ON ANY OF THE INFORMATION FURNISHED BEFORE HIM. THE AO HAS NOT AS KED THE RESPECTIVE COMPANY APPLICANTS ALSO TO EXPLAIN THE ALLEGED DISCREPANCY IN THE ADDRESS. THE AO HAS NOT BROUGHT ANY MATERIAL ON ACCOUNT OF RECORD TO DISBEL IEF THE EVIDENCES FURNISHED WITH HIM AND TREAT THE TRANSACTION AS NOT GENUINE. THE ASSES SEE SUBMITTED THE FOLLOWING MATERIAL AT THE TIME OF ASSESSMENT. A) COPY OF SHARE APPLICATIONS FROM THE SHARE APPLIC ANTS (COPIES ENCLOSED) B) COPY OF FORM 2 FILED WITH REGISTRAR OF COMPANIES , WEST BENGAL (COPY ENCLOSED) 22 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 C) COPY OF FORM 18 ABOUT THE REGISTERED OFFICE OF T HE APPLICANTS FOR CHANGE OF ADDRESS SUBSEQUENT TO THE DATE OF ALLOTMENT, I.E. 31.03.200 9 (COPIES ENCLOSED) D) MEMBERS REGISTER E) SHARE APPLICATION & ALLOTMENT REGISTER F) COPY OF BOARD RESOLUTION. G) REPLIES FROM SHARE APPLICANTS TO THE NOTICE U/S. 133(6) ISSUED TO THEM BY THE AO SEEKING INFORMATION AND DOCUMENTS ABOUT THE SOURCE S AND TO EXAMINE THEIR IDENTITY, GENUINENESS OF THE TRANSACTION AND THEIR CREDITWORT HINESS. (COPY ENCLOSED). H) COPY OF AUDITED ACCOUNTS. I) COPY OF BANK STATEMENTS. J) COPY OF INCOME TAX ACKNOWLEDGMENT OF RETURN FILE D FOR AY 2009- K) COPY OF PAN CARD. L) DETAILS OF SOURCES OF FUNDS. M) COPY OF COVERING LETTER FOR DELIVERY OF SHARES. N) COPY OF MASTER DATA AS PER MINISTRY OF COMPANY A FFAIRS RECORDS. O) COPY OF ANNUAL RETURN. P) COPY OF MEMORANDUM AND ARTICLES OF ASSOCIATION. FINALLY THE LD. AR RELIED ON THE ORDER OF THE LD. C IT(A 10. 1 FROM THE AFORESAID DISCUSSION WE FIND THAT THE AO HAS MADE THE ADDITIO N OF THE SHARE APPLICATION MONEY BECAUSE ALL THE NINE COMPANIES WERE HAVING THE COMM ON ADDRESS AND THE NOTICE SENT UNDER SECTION 133(6) WAS RECEIVED BY THE SINGLE PER SON. ACCORDINGLY THE AO OPINED THAT THE ASSESSEE HAS USED ITS UNACCOUNTED MONEY IN THE SHARE APPLICATION TRANSACTIONS. HOWEVER WE FIND THAT ALL THE MONEY RECEIVED IN THE FORM OF SHARE CAPITAL IS DULY SUPPORTED WITH THE REQUISITE DOCUMENT AS DISCUSSED ABOVE. TO OUR MIND THE BASIS ON WHICH THE ADDITION WAS MADE BY THE AO IS NOT TENABL E. THE LD. DR ALSO COULD NOT BROUGHT ANYTHING ON RECORD TO CONTROVERT THE FINDIN GS OF THE LD. CIT(A). IN VIEW OF ABOVE WE FIND NO REASON TO INTERFERE IN THE ORDER O F THE ID. CIT(A). ACCORDINGLY THE GROUND RAISED BY REVENUE IS DISMISSED. (D) THE LD ITAT KOLKATA IN ITO VS CYGNUS DEVELOPERS (I) P LTD IN ITA NO. 282/KOL/2012 DATED 2.3.2016. IN THIS THE DECISION T HE LD. TRIBUNAL HELD AS FOLLOWS: 6. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED TH E ADDITION MADE BY THE AO OBSERVING AS FOLLOWS '6) I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE DETAILS AND DOCUMENTS FILED BY THE APPELLANT COMPANY IN THE COURSE OF ASSESSMENT: PROCEEDINGS VIDE LETTER D T. 3-10-2007. ON CAREFUL CONSIDERATION OF THE FACTS AND IN LAW I AM OF THE O PINION THAT THE AO WAS NOT JUSTIFIED IN 23 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 MAKING, THE ADDITION AGGREGATING TO RS.54,00,000/- U/S.68 OF THE ACT BEING THE AMOUNT OF SHARE APPLICATION MONEY BY HOLDING THAT THE APPELLA NT COMPANY HAS FAILED TO PROVE THE IDENTITY, AND CREDITWORTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF TRANSACTIONS. IT IS OBSERVED THAT ALL THE THREE SHA RE APPLICANT COMPANIES I.E. M/S. SHREE SHYAM TREXIM PVT. LTD., M/S NAVALCO COMMODITIES PVT . LTD. AND M/S. JEWELLOCK TREXIM PVT. LTD. HAD FILED THEIR CONFIRMATIONS WHEREIN EAC H OF THEM CONFIRMED THAT THEY HAD APPLIED FOR SHARES OF THE APPELLANT -COMPANY. ALL T HE THREE COMPANIES PROVIDED- THE CHEQUE NUMBER, COPY OF BANK STATEMENTS AND THEIR PA N. IT IS OBSERVED THAT THESE COMPANIES ALSO FILED, COPIES OF THEIR RETURN OF INC OME AND FINANCIAL STATEMENTS FOR AS WELL AS COPY OF THEIR ASSESSMENT ORDER U/S. 143(3) OF THE I. T ACT FOR AY 2005-06. IN THE CASE OF M/S. JEWELLOCK TREXIM PVT. LTD. THE ASSESSM ENT FOR AY 2005-06 WAS COMPLETED BY THE ITO WARD 9(3), KOLKATA AND THE ASSESSMENTS I N THE CASE OF M/S. NAVALCO COMMODITIES PVT. LTD. AND M/S. SHREE SHYAM TREXIM P VT. LTD. FOR A. Y.2005-06 AND AY.2004-05 RESPECTIVELY WERE COMPLETED BY THE I TO, WARD 9(4), KOLKATA. UNDER THE CIRCUMSTANCES, I AM OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE SHARE APPLICANT COMPANIES WERE NOT IN EXISTENCE. THE ASSE SSMENT ORDERS WERE COMPLETED ON THE ADDRESS AS PROVIDED BY THE APPELLANT COMPANY IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS NOT KNOWN AS TO HOW THE AO'S INS PECTOR HAD REPORTED THAT THE AFORESAID COMPANIES WERE NOT IN EXISTENCE AT THE GI VEN ADDRESS. SINCE THE APPELLANT COMPANY HAD PROVIDED SUFFICIENT DOCUMENTARY EVIDENC ES IN SUPPORT OF ITS CLAIM OF RECEIPT OF SHARE APPLICATION MONEY, I AM OF THE OPI NION THAT THE NO ADDITION U/S.68 COULD BE MADE IN THE HANDS OF APPELLANT COMPANY. ON GOING THROUGH THE VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT, IT IS OBSERVED THAT THE VIEW TAKEN AS ABOVE IS ALSO SUPPORTED BY THEM. IN VIEW OF ABOVE THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.54,00,000/ -. THE GROUND NOS. 2 AND 3 ARE ALLOWE D, ' 7. AGGRIEVED BY THE ORDER OF CIT{A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR , WHO RELIED ON THE ORDER OF AO. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A) AND FURTHER DREW OUR ATTENTION TO THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS RAJ KUMAR AGARWAL VIDE ITA NO. 179/2008, DATED 17. 11.2 009 WHEREIN THE HON 'BLE ALLAHABAD HIGH COURT TOOK A VIEW THAT NON PRODUCTIO N OF THE DIRECTOR OF A PUBLIC LIMITED COMPANY WHICH IS REGULARLY ASSESSED TO INCO ME TAX HAVING PAN, ON THE GROUND THAT THE IDENTITY OF THE INVESTOR IS NOT PROVED CAN NOT BE SUSTAINED. ATTENTION WAS ALSO TO THE SIMILAR RULING OF THE ITAT KOLKATA BENCH IN THE CASE OF ITO VS DEVINDER SINGH SHANT IN IT A NO.20BIKO112009 VIDE ORDER DATED 17.04.2009 . 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS., WE A RE OF THE VIEW THAT ORDER OF CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. IT MAY B E SEEN FROM THE GROUNDS OF APPEAL RAISED BY THE REVENUE THAT THE REVENUE DISPUTED ONL Y THE PROOF OF IDENTITY OF THE SHAREHOLDER. IN THIS REGARD IT IS SEEN THAT FOR A Y .2004-05 SHREE SHYAM TREXIM PVT. LTD., WAS ASSESSED BY ITO, WARD- 9(4), KOLKATA AND THE OR DER OF ASSESSMENT U/S/143(3) DATED 25.01.2006 IS PLACED IN THE PAPER BOOK. SIMILARLY N AVALCO COMMODITIES PVT. LTD., WAS ASSESSED TO TAX U/S 143(3) FOR A Y.2005-06 BY I TO, WARD- 9(4), KOLKATA BY ORDER DATED 20.03.2007. SIMILARLY JEWELLOCK TREXIM PVT. LTD WA S ASSESSED TO TAX FOR A Y.2005-06 BY THE VERY SAME ITO- WARD- 9(3), KOLKATA ASSESSING TH E ASSESSEE. IN THE LIGHT OF THE ABOVE FACTUAL POSITION WHICH IS NOT DISPUTED BY THE REVEN UE, IT CANNOT BE SAID THAT THE IDENTITY OF THE SHARE APPLICANTS REMAINED NOT PROVED BY THE ASSESSEE. THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT AS WELL AS ITA T KOLKATA BENCH ON WHICH RELIANCE WAS PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUPPORTS THE VIEW THAT FOR NON PRODUCTION OF DIRECTORS OF THE INVESTOR COMPANY FOR EXAMINATION B Y THE AO IT CANNOT BE HELD THAT THE IDENTITY OF A LIMITED COMPANY HAS NOT BEEN ESTABLIS HED. FOR THE REASONS GIVEN ABOVE WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEAL O F THE REVENUE. ' 24 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 29. IN THIS CASE ON HAND, THE ASSESSEE HAD DISCHAR GED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLI CANTS, THEREAFTER THE ONUS SHIFTED TO AO TO DISPROVE THE DOCUMENTS FURNISHED BY ASSESSEE AND THE DOCUMENTS PRODUCED BY THE ASSESSEE CANNOT BE BRUSHED ASIDE BY THE AO TO D RAW ADVERSE VIEW, WHICH ACTION OF AO CANNOT BE COUNTENANCED. IN THE ABSENCE OF ANY IN VESTIGATION, MUCH LESS GATHERING OF EVIDENCE BY THE ASSESSING OFFICER, WE ARE OF THE CONSIDERED VIEW THAT ADDITION CANNOT BE SUSTAINED MERELY BASED ON INFERENCES DRAW N BY CIRCUMSTANCE. APPLYING THE LAW LAID DOWN IN THESE CASE LAWS TO THE FACTS OF THIS CASE, WE ARE INCLINED TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TA X (APPEALS) AND GIVE RELIEF TO THE ASSESSEE. 30. TO SUM UP SECTION 68 OF THE ACT PROVIDES THAT IF ANY SUM FOUND CREDITED IN THE YEAR IN RESPECT OF WHICH THE ASSESSEE FAILS TO EXPL AIN THE NATURE AND SOURCE, IT SHALL BE ASSESSED AS ITS UNDISCLOSED INCOME. IN THE FACTS OF THE PRESENT CASE, BOTH THE NATURE & SOURCE OF THE SHARE APPLICATION RECEIVED WAS FULLY EXPLAINED BY THE ASSESSEE. THE ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENT ITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLICANTS. THE PAN DETAIL S, BANK ACCOUNT STATEMENTS, AUDITED FINANCIAL STATEMENTS AND INCOME TAX ACKNOWLEDGMENTS WERE PLACED ON AO'S RECORD, INCLUDING THAT OF THE DIRECTORS AND SHARE HOLDERS O F SHARE SUBSCRIBING ENTITIES AS DISCUSSED SUPRA. ACCORDINGLY ALL THE THREE CONDITIO NS AS REQUIRED U/S. 68 OF THE ACT I.E. THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTION WAS PLACED BEFORE THE AO AND THE ONUS SHIFTED TO AO TO DISPROVE THE MATER IALS PLACED BEFORE HIM. WITHOUT DOING SO, THE ADDITION MADE BY THE AO AND CONFIRMED BY LD CIT(A) ARE BASED ON CONJECTURES AND SURMISES, SO THEIR IMPUGNED ACTION CANNOT BE JUSTIFIED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, NO AD DITION WAS WARRANTED UNDER SECTION 68 OF THE ACT. THEREFORE, WE DO ALLOW THE APPEAL OF ASSESSEE AND DIRECT DELETION OF ADDITION OF RS 16 CR UNDER SECTION 68 OF THE ACT. 31. BEFORE PARTING, IT IS NOTED THAT THE ORDER IS B EING PRONOUNCED AFTER NINETY (90) DAYS OF HEARING. HOWEVER, TAKING NOTE OF THE EXTRAO RDINARY SITUATION IN THE LIGHT OF THE COVID-19 PANDEMIC AND LOCKDOWN, THE PERIOD OF LOCKD OWN DAYS NEED TO BE EXCLUDED. 25 ITA NO.2445/KOL/2019 SATYAM SMERTEX PVT. LTD., AY 2012-13 FOR COMING TO SUCH A CONCLUSION, WE RELY UPON THE D ECISION OF THE CO-ORDINATE BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF DCIT VS. JSW LIMITED IN ITA NO. 6264/MUM/2018 & 6103/MUM/2018, ASSESSMENT YEAR 2013 -14, ORDER DT. 14 TH MAY, 2020. IN THE LIGHT OF THE ABOVE DISCUSSION, THE APP EAL OF ASSESSEE IS ALLOWED. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 29TH MAY, 2020 SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29TH MAY, 2020 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. SATYAM SMELTERS PVT. LTD., BLOCK-7 A, 7 TH FLOOR, 20B, ABDUL HAMID STREET, KOLKATA-700 069. 2 RESPONDENT DCIT, CIRCLE-3(1), KOLKATA., 3 . THE CIT(A)-5, KOLKATA (SENT THROUGH E-MAIL) 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .