ITO, Ward - 3(2) , Kolkata V. M/s. Dreamz Movies & Entertainment Pvt. Ltd., , Kolkata

ITA 2569/KOL/2018

AI Insights

The appeals filed by the Revenue against the orders of the Commissioner of Income-tax (Appeals) pertained to two private limited companies, M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. and M/s. Dreamz Movies & Entertainment Pvt. Ltd., both engaged in different business activities but appeared to be sister concerns. The primary issue was the addition made under Section 68 of the Income Tax Act, 1961, concerning unexplained cash credits in the form of share capital and share premium received by the companies. The Assessing Officer (AO) had initially added these amounts as unexplained due to insufficient evidence provided by the assessees to substantiate the nature and source of the funds. The CIT(A) had later deleted these additions, which the Revenue challenged in the Tribunal. The Tribunal, after examining the submissions and evidence, upheld the AO's decision, confirming the additions as unexplained cash credits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128780 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 09-12-2018
• Other Referred Cases: Sumati Dayal Vs. CIT, CIT Vs. Durga Prasad More, M/s. Bisakha Sales Pvt. Ltd. vs. CIT, M/s Star Griha Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Onus to prove
• Section: 131; 68; 271(1)(c); 143(3); 142(1); 133(6); 250; 143(2); 13

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री राजपाल यादव, उपाध्यक्ष (कोलकाता क्ष े त्र) एवं डॉ. मनीष बोरड, ल े खा सदस्य क े समक्ष Before SRI RAJPAL YADAV, VICE PRESIDENT & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A. No.: 2038/KOL/2016 Assessment Year: 2012-13 ITO, Ward-12(2), Kolkata.........................................Appellant Vs. M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd........................................................................Respondent [PAN: AADCD 6024 B] I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 ITO, Ward-3(2), Kolkata...........................................Appellant Vs. M/s. Dreamz Movies & Entertainment Pvt. Ltd........................................................................Respondent [PAN: AADCD 7316 A] Appearances by: Sh. P.P. Barman, Addl. CIT, (D/R), appeared on behalf of the Revenue. None appeared on behalf of the Assessee. Date of concluding the hearing : February 8 th , 2023 Date of pronouncing the order : May 3 rd , 2023 I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 2 of 18 ORDER Per Manish Borad, Accountant Member: Both these appeals filed by the Revenue are directed against separate orders passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals)-4, Kolkata [in short ld. “CIT(A)”] dated 04.08.2016 and by ld. CIT(A)- 7, Kolkata dated 14.09.2018, respectively. 2. When the case was called for, none appeared on behalf of both the assessees. Looking to the names as well as the address of both the companies it prima facie indicates that they are sister concerns and part of the same group and for this reason both these appeals have been taken together. On perusal of the records, we notice that in the case of I.T.A. No.: 2038/KOL/2016 in the past on the dates of hearing on14.03.2018, 08.05.2018, 03.08.2022, 07.12.2022, 08.12.2022 & today also i.e. on the given date of hearing there is no representation on behalf of the assessee. Similarly, in the case of I.T.A. No.: 2569/KOL/2018 in the past on 10.08.2022, 07.12.2022, 08.12.2022 & even today none appeared on behalf of the assessee even when notices were sent through registered post. Both these appeals are at the instance of the Revenue and in the records, we are able to lay hand on paperbook containing 92 pages and in the top of the paperbook date of hearing is mentioned 11.09.2018. This paperbook has been given only in the case of M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. Since then there is no representation on behalf of I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 3 of 18 the assessee and since the appeals are of year 2016 & 2018 i.e. almost 7 years & 5 years old, we deem it proper to adjudicate these appeals ex-parte qua the assessee based on the material available on record and considering the submissions of ld. D/R. Facts in I.T.A. No.: 2038/KOL/2016, M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd.: 3. Facts in brief are that the assessee is a private limited company. Income of Rs. 2,56,398/- declared in the e-return filed on 29.08.2012 for AY 2012-13. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. The representative on behalf of the assessee appeared on few occasions. Ld. AO noticed that during the year the assessee company has received share capital and share premium totalling to Rs. 2.61 Cr which inter alia contained share capital of Rs. 18 lakh against issue of 1,80,000 equity shares at the rate Rs. 10/- each to two group concerns and the remaining amount received against issuing of 1,21,500 equity shares of face value of Rs. 10/- and share premium of Rs. 190/- thereby receiving 2.43 Cr. Ld. AO wanted to examine the nature and source of alleged share capital and share premium. But in absence of any satisfactory reply by the assessee, ld. AO framed the assessment ex-parte u/s 144/143(3) of the Act and added the entire share capital of Rs. 2.61 Cr received during the year as unexplained cash credit u/s 68 of the Act. Along with minor other disallowances of Rs. 150/- income assessed at Rs. 2,63,56,550/-. I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 4 of 18 Facts in I.T.A. No.: 2569/KOL/2018 M/s. Dreamz Movies & Entertainment Pvt. Ltd.: 4. Facts in brief are that the assessee is a private limited company engaged in production and distribution of movies. Income of Rs. 3,86,840/- declared in the return filed on 30.08.2012 for AY 2012-13. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) & 142(1) of the Act. ld. AO examined the financial statements and noticed that during the year the assessee has received share capital and share premium of Rs. 2.79 Cr. Ld. AO further noticed that out of the said sum, Rs. 4 lakh was received from the sister concern and the balance amount was received from two share subscribers namely M/s. Blossom Vinimay Pvt. Ltd. and M/s. Baliraja Distributors Pvt. Ltd. at Rs. 2.25 Cr and Rs. 50 lakh, respectively against the issue of equity shares of face value of Rs. 10/- and share premium of Rs. 190/-. Ld. AO called for the details to examine the nature and source of the said sum. M/s. Blossom Vinimay Pvt. Ltd. did not comply to the office summons and the other allottees though complied but could not furnish details/information as required to establish the genuineness of the transaction and creditworthiness of the share subscribers. Though number of opportunities were given by ld. AO but the assessee failed to explain the alleged sum. Ld. AO accordingly accepted the share capital of Rs. 4 lakh received from the group companies but for the remaining sum of 2.75 Cr made the addition u/s 68 of the Act for unexplained cash credit and further, made an addition by disallowing the I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 5 of 18 commission expense of Rs. 6 lakh allegedly paid by the assessee to arrange for the alleged bogus share capital. Income assessed at Rs. 2,84,86,840/-. 5. Aggrieved, both the assessees preferred appeal before ld. CIT(A) against the additions made by ld. AOs and filed the details of the share subscribers and their financial statements and ld. CIT(A) was satisfied with those details and deleted the additions made u/s 68 of the Act in case of both the assessees and also deleted the disallowance of commission expense. 6. Aggrieved, the Revenue is now in appeal before this Tribunal raising following grounds: I.T.A. No.: 2038/KOL/2016, M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd.: “1. On the facts and in circumstances of the case Ld. CIT(A) had erred to allow relief on this ground on the view that all the share applicants are existing assessees and no adverse finding have been found by the AO, without considering the failure from the part of the assessee to prove visual activity of business and creditworthiness to make investment of the subscribers. 2. The appellant craves leave to add, alter or modify the grounds of appeal before or at the time of hearing.” I.T.A. No.: 2569/KOL/2018, M/s. Dreamz Movies & Entertainment Pvt. Ltd: “1) The Ld. CIT(A) has failed to appreciate the fact and also erred in deleting the addition of Rs. 2,75,00,000/- u/s 68 as assessee itself failed to substantiate the genuineness of the share transaction and creditworthiness of the share allottee companies even in response to summon u/s 131 of the I.T. Act issued to the Directors of the assessee company as well as share holding companies. I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 6 of 18 2) The Ld. CIT(A) has erred in deleting the addition of Rs. 6,00,000/- on account of commission paid as the assessee failed to explain the necessity of commission payment since there was no business activity of the company during the year. 3) The appellant craves the leave to make any addition, alteration, modification etc. Of the grounds either before the appellate proceedings or in the course of appellate proceedings.” 7. Ld. D/R vehemently argued supporting the order of ld. AO and stated that two of the share subscribers namely M/s. Blossom Vinimay Pvt. Ltd. and M/s. Baliraja Distributors Pvt. Ltd. are jama- kharchi/shell companies engaged in providing accommodation entry and do not have regular source of income to justify the creditworthiness to make the said investment and further, not able to prove the genuineness of the transaction of making such huge investment in the assessee company. 8. We have heard ld. D/R and perused the records placed before us. Revenue is aggrieved with the deletion of addition made u/s 68 of the Act by ld. CIT(A). We notice that in the case of the assessee namely M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. in I.T.A. No.: 2038/KOL/2016, ld. AO made the addition u/s 68 of the Act treating share capital and share premium received from issuing equity shares of face value of Rs. 10/- at Rs. 2.61 Cr as unexplained received from the following share subscribers: Sl. No. Name Share Premium 1 Dreamz Wealth & Consultancy Pvt. Ltd. 9 lakh (no share premium) 2 Dreamz Pbc Web Length Pvt. Ltd. 9 lakh (no share premium) 3 Blossom Vinimay Pvt. Ltd. 1.93 Cr (share premium of Rs. 190/- per share) I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 7 of 18 4 Baliraja Distributors Pvt. Ltd. 50 lakh (share premium of Rs. 190/- per share) Total 2.61 Cr 9. In the case of another assessee i.e. M/s. Dreamz Movies & Entertainment Pvt. Ltd. in I.T.A. No.: 2569/KOL/2018, the addition for unexplained share capital and share premium was made by ld. AO towards the sum received from the following share subscribers: Sl. No. Name Share Premium 1 Baliraja Distributors Pvt. Ltd. 50 lakh (share premium of Rs. 190/- per share) 2 Blossom Vinimay Pvt. Ltd. 2.25 Cr (share premium of Rs. 190/- per share) Total 2.75 Cr 10. From above, we notice that equity shares have been allotted by both the assessee companies to four share subscribers of which two namely Dreamz Pbc Web Length Pvt. Ltd. and Dreamz Wealth & Consultancy Pvt. Ltd. which prima facie seems to be group companies, ld. AO made the addition for share capital of Rs. 18 lakh received from group concerns only in the case of I.T.A. No.: 2038/KOL/2016 since there was no proper representation by the assessee. Ld. CIT(A) has deleted the additions considering the replies filed by the assessee. Before moving further, since Rs. 9 lakh each has been received by M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. from its two sister concerns namely Dreamz Pbc Web Length Pvt. Ltd. and Dreamz Wealth & Consultancy Pvt. Ltd., we find no justification in the action of ld. AO making the said addition since they are group companies and the investments have been made at the face value of Rs. 10/- I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 8 of 18 without paying any premium and transactions carried out through banking channel and it can be safely concluded that the assessee has been able to explain the said sum of Rs. 18 lakh received from its two sister concerns for the business purposes which, thus, do not call for any addition u/s 68 of the Act and to this extent, we confirm the finding of ld. CIT(A). 11. Now, what remains before us is the addition made u/s 68 of the Act regarding share capital and share premium received from received from two concerns namely M/s. Blossom Vinimay Pvt. Ltd. and M/s. Baliraja Distributors Pvt. Ltd. Since the addition of similar nature has been made in the case of both the assessees in the case of which Revenue is in appeal before us, we find it pertinent to go through the finding of ld. AO in the case of M/s. Dreamz Movies & Entertainment Pvt. Ltd. in I.T.A. No.: 2569/KOL/2018 and the same reads as follows: “In course of hearing the assessee furnished details of fresh capital raised giving names of following four parties. Sl. Name of allottee Address No Of shares Face Value per share Premiun) per share Amount % 1 Deamz Pbc Web Length Pvt Ltd 10 Dr Sarat Banerjee Road, Ground Floor Kol-29 10000 10 - 100000 2 Dreamz Wealth & Consultancy Pvt Ltd -do- 30000 10 - 300000 3 Baliraja Distributors Pvt Ltd 1/1 Meridith Street, 4th Floor, Kolkata- 69 25000 10 190 5000000 4 Blossom Vinimay Pvt Ltd 3 Parbati Chakraborty 112500 10 190 22500000 I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 9 of 18 Lane, Kolkata- 26 Total 177500 2,7900000 It appears that assessee company issued shares to Dreamz Pbc Weblength Pvt. Ltd. & Dreamz Wealth & Consulting Pvt. Ltd. 10,000 and 30,000 respective at face value @ 10 without any premium. Whereas the assessee company issued shares to Baliraja Distributors Pvt. Ltd. and Blossom Vinimay Pvt. Ltd 25,000 and 112500 respectively face value @ 10 and premium @190. Notice u/s. 133(6) of the IT Act was issued on 25.7.2014 to aforesaid two parties to verify the transactions. It appears from the reply received in response to aforesaid notice u/s. 133(6) that Blossom Vinimay Pvt. Ltd. has been merged with Dreamz PBC Web Length Pvt. Ltd from 22.01.2014. It is seen from the reply that during the relevant year Blossom Vinimay had almost no business activity. It has shown other income service charge of Rs. 25,000 /-. Immediate source ^investment shown by the allotee company was made from sale of investment of unquoted shares. In order to verify the transactions, source of investment and creditworthiness of the party summons u/s. 131 of the I. T. Act was issued on 12.02.2015 giving opportunity of hearing on 27.02.2015. The-party has made no compliance. The assessee company was also requested through this office summons dated 17.02.2015 to produce the directors of share allottees for verification. The assessee did not comply with said summons/ notice till date. Notice u/s. 133(6) of the IT Act dated 25.7.2014 could not be served in the case of Baliraja Distributors Pvt. Ltd at the address given by the assessee. Later assessee filed a changed address of the party of Baliraja Distributors Pvt. Ltd as 3, Parbati Chakraborty Lane, Kolkata - 700026. Considering assessee's aforesaid submission notice u/s. 133(6) of the IT Act was reissued on 10.01.2015. But the party has not complied with said notice. Then summons u/s. 131 of the IT Act was issued on 28.01.2015 giving opportunity of hearing on 11.2.2015. In response to said summons, Sri Rabindra Soni one of the directors appeared on 11.02.2015 and gave his statement to be recorded. However he could not give any reply as regards to formation and activities of his company. Even he admitted that he has no idea whether the investment in assessee company was approved by any board meeting or not. As regards to source of investment it was stated that same was from sale of equity shares to Sunflower Vintrade and I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 10 of 18 Racon Marketing. Though he promised to give details of sale of shares by 17.02.2015 but he could not furnish any details till date. As regards to reason for purchase of share of the assessee company with high value of premium he replied that can only be justified by the directors of that period. He could not produce books of accounts to substantiate the transaction. He could not even furnish/produce bank statement for whole relevant year i.e F.Y 11-12. Later the assessee was requested by this office summons dated 17.02.2015 to produce the director of other allottee company and director of Baliraja Distributors Pvt. Ltd for relevant period. The assessee by letter dated 27.12.2015 stated that, " Relevant portion of bank statement of the company Baliraja Distributors Pvt. Ltd, highlighting the transactions in which the share application money was given to our company. They had also produced before you the relevant part of bank statement, explaining the source of fund which was given to Dreamz movies towards share application money". Thus the assessee avoided it responsibility. On scrutiny of Balance Sheet, P & L A/c of Baliraja Distributors Pvt. Ltd & Blossom Vinimay Pvt Ltd it appears that these are paper/ shell company. It is already mentioned that the allottees have no business activities and investment was made from sale of unquoted shares. In order to examine genuineness of the fresh capital raised identity of the persons and creditworthiness was required to be established. The appearance of the director of the assessee company as well as the directors of the said allottee companies who had invested fresh share capital in the assessee company was necessary to authenticate the transaction of share capital and creditworthiness of the applicants. It is worth noting to mention that the necessary investigation /enquiries could have been carried out to come to the logical conclusion of authenticity of share capital raised. i) Personal appearance of the directors of the assessee company as well as the directors of the share holding companies who had fresh share application and premium in the said A.Y. ii) Detailed narration of all debit and credit entries found in the bank statement of F.Y. 2011-12. iii) Bank Statement for the said F.Y.2011-12 i.e. A.Y.2012-13 I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 11 of 18 iv) All the books of account and supporting evidences for cross verification. M/s Blossom Vinimay Pvt Ltd has not complied with this office summons. The other allottee though complied but could not furnish details / information as required to establish genuineness of transactions and creditworthiness. The assessee has also failed to comply with the above referred notices/ summons by furnishing the above stated documents or producing the share allottees to discharge its burden of proof cast upon it. Following the principle of natural justice the assessee was given sufficient opportunities of hearing but has not complied with the said notices/summons with the right spirit. Now the burden of proof clearly has shifted on the assessee company to substantiate the said cash credit found in the assessee's book under the garb of fresh share capital by producing its own director as well as the director/ principal officer of the fresh share holding party before the undersigned. For the compliance, the assessee company has been given number of opportunities to produce the directors as stated above for the verification of the fresh cash credit purportedly In the form of fresh share capital introduced during the year in the light of the identity and creditworthiness of the share holding companies as well as the genuineness of the said transactions. It may be mentioned here that such introduction of share capital was shown in large number of cases on the basis of dummy companies which were created solely for the purpose of building up share capital. It is surprising that a company which have no track record of any worth- while business nor any reputation in terms of reliable management has attracted the subscribers to pay high premium per share. It is well settled principle of law as declared by the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT (214 ITR 801) (SC) that the true nature of transaction have to be ascertained in the light of surrounding circumstances. It needs to be emphasized that standard of proof beyond reasonable doubt has no applicability in determination of matters under taxing statutes. It is also well settled that tax authorities are entitled to look into surrounding circumstances to find out the reality of the transaction by applying the test of human probability. This was the principle laid down by the Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More 82 ITR 540 (SC). I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 12 of 18 In this connection reliance is placed in decision of Hon'ble ITAT, Kolkata in the case of M/s. Bisakha Sales Pvt. Ltd. vs. CIT. In its judgment hon'ble ITAT has discussed the issue elaborately regarding activities of tax escapement and to channelize the black money through issuing share premium. Reference is also invited to the decision of the Hon'ble ITAT in the cases of: M/s Star Griha Pvt. So it was highly required to investigate what was the actual motive in the mind of the share holders who invested their funds in this assessee company to come to the logical conclusion about the true nature of the said transactions involved in the course of share transfers between the assessee company and the purported investors. In the light of the ratio of the decisions as discussed earlier in the cases mentioned judicial pronouncements vis-a-vis the facts and circumstances in the instant case as well as the assessee's inability to discharge its own burden of proof to substantiate its claim of introduction of fresh share capital even after given several number of opportunities, it is held that the purported fresh capital along with the premium aggregating to Rs. 2,75,00,000 /- is nothing but the assessee's own money conducted under the garb of fresh share capital into the assessee's business. Therefore, Rs. 2,75,00,000 /- is hereby treated as unexplained cash credit found in the books of the assessee during the A.Y.2012-13 and subsequently added back to the total income of the assessee. Penalty proceedings u/s 271 (1)(c) of the IT Act is also initiated on this score for concealment of income by way of furnishing inaccurate particulars of its income. Commission: In this year the assessee has shown commission paid of Rs.600000/-. In course of hearing the assessee furnished name and address of the two persons Prasun Mukherjee & Soumya Ghosh to whom commission paid of Rs.4,00,000/- & 2,00,000/- respectively. Notice u/s 133(6) of the IT Act could not be served in the case of Soumya Ghosh at the address given by the assessee. Later the assessee furnished the detail of address. Reply of both parties has been perused. Both of them stated that there was no written agreement and they were given commission for providing services of arranging inter corporate deposits. Apart from raising share capital the assessee has given loan to a single party Rahee Infratech Ltd. It I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 13 of 18 has already been mentioned that during this year the assessee has no business activities. The assessee could not substantiate the necessity of the services as claimed by the aforesaid party. There was no justification of commission paid. As such commission paid of Rs.6,00,000/- is disallowed and added back as not expended for purpose of business. Subject to above total income is computed as below: Net profit as per P& L account Rs.403462/- Add: Depreciation to be considered separately Rs. 26102/- Share capital as discussed Rs.27500000/- Bogus commission Rs. 600000/- Rs.28126102/- Gross total income RS.28529564/- Less: Depreciation allowable Rs.42721/- Income from business Rs.28486843/- Total Income Rs. 28486840/- Tax payable as per computation enclosed. Proceedings u/s 271(1)(c) of the IT Act has been initiated for concealment of particulars of income. Assessed u/s 143(3) of the IT Act as above. Issue D.N, computation & copy of the order to the assessee.” 12. From going through the above finding of ld. AO, we notice that sufficient opportunities were granted to the assessee and except filing the financial statement, he was unable to discharge its onus to explain the nature and source of the alleged sum received against issue of equity shares. Provisions of Section 68 of the Act has a direct bearing on this issue and for necessary adjudication, we reproduce below the said provision: “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, I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 14 of 18 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 [or second 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.” 13. From perusal of the above Section and not considering the amendments made after 01.04.2012, we observe that Section 68 of the Act is invoked if any sum is found credited in the books of an assessee for which the assessee either does not offer any explanation about the nature and source thereof or the explanation offered by him is not found to be satisfactory in the opinion of the Assessing Officer. In the given case, though the assessee has given the explanation by filing the financial statements of the share applicants but they are in itself not sufficient to satisfy ld. AO as well as ld. CIT(A) and even we are also not satisfied with the nature and source of the alleged credit. 14. Though during the course of hearing there is no representation on behalf of the assessee and since 2019 no efforts I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 15 of 18 have been taken by both the assessees to plead against the appeal filed by the Revenue only a paperbook containing 92 pages has been filed. So far as the documents filed with regard to Dreamz Wealth & Consultancy Pvt. Ltd. and Dreamz Pbc Web Length Pvt. Ltd. since we have already confirmed the action of ld. CIT(A) there remains no need to examine these documents. 15. So far as the remaining two concerns M/s. Blossom Vinimay Pvt. Ltd. and M/s. Baliraja Distributors Pvt. Ltd., we notice that the assessee has filed the income tax return and audited financial statement for FY 2011-12. From going through the audited profit and loss account of M/s. Blossom Vinimay Pvt. Ltd., we notice that revenue from operation is NIL during the FY 2011-12 and was NIL in the immediately preceding financial year. There is no transaction except other income for FY 2011-12 and other expense of Rs. 30,787/-. Neither there is any regular business activity nor any fixed assets are appearing in the balance sheet. Moving on the financial statements of M/s. Baliraja Distributors Pvt. Ltd., we notice that revenue from operation is only Rs. 3,34,201/- during FY 2011-12 and in the immediately preceding financial year i.e. FY 2010-11 it was just Rs. 36,493/-. Except this entry of revenue from operations, there are no other expenses except the one claimed under the head ‘other expenses’. Here also the story remains the same as no regular business activities seem to be carried out, no fixed assets are held by the assessee and only the non-trade investments are appearing that too in around 68 private limited companies which are not fetching any income to the assessee. I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 16 of 18 Prima facie both these companies look to be jama-kharchi/shell companies/accommodation entry providers and in absence of any representation on behalf of the assessee which may have helped the assessee to discharge the primary onus casted upon it under the provisions of Section 68 of the Act to explain the nature and source of the alleged sum, we fail to find any merit in the finding of ld. CIT(A) giving relief to the assessee without discussing the financials of both the share subscriber companies. Ld. CIT(A) has also not dealt the issue as to what prompted the alleged share subscribers to invest in the equity shares of the assessee company at a whopping premium of Rs. 190/- per share without there being any regular business activity of the assessee company. Before us the assessee has even not filed the audited financial statement of the assessee company. Merely proving the identity of the share subscribers and to some extent creditworthiness by making the investment from accumulated reserve and surplus cannot suffice the purpose. To cross the hurdle of provisions of Section 68 of the Act which requires that the explanation if any filed by the assessee regarding nature and source should be sufficient to satisfy ld. AO and since the Tribunal is the last fact-finding body, the assessee had sufficient opportunity to place the facts and also to explain the nature and source of alleged share capital and share premium by placing material evidence on record. However, the assessee miserably failed on this count. 16. We, thus, find merit in the exhaustive working of ld. AO who after having provided sufficient opportunity to the assessee came I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 17 of 18 to a conclusion that the assessee companies failed to discharge the primary onus casted upon it to prove the genuineness of the transaction of equity share capital and share premium received from two share subscribers who are not having any regular business, having meagre income and failing to prove the genuineness of the said transaction. 17. We, in view of our above discussions, partly reverse the finding of ld. CIT(A) and confirm the addition made u/s 68 of the Act at Rs. 2.43 Cr in the case of the assessee namely M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. in I.T.A. No.: 2038/KOL/2016 and in the case of another assessee namely M/s. Dreamz Movies & Entertainment Pvt. Ltd. in I.T.A. No.: 2038/KOL/2016, we reverse the finding of ld. CIT(A) and confirm the addition of Rs. 2.75 Cr made u/s 68 of the Act. 18. In the result, the appeals filed by the Revenue in I.T.A. No.: 2038/KOL/2016 is partly allowed and I.T.A. No.: 2569/KOL/2018 is allowed. Kolkata, the 3 rd May, 2023 Sd/- Sd/- [Rajpal Yadav] [Manish Borad] Vice President Accountant Member Dated: 03.05.2023 Bidhan (P.S.) I.T.A. No.: 2038/KOL/2016 I.T.A. No.: 2569/KOL/2018 Assessment Year: 2012-13 M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd. M/s. Dreamz Movies & Entertainment Pvt. Ltd. Page 18 of 18 Copy of the order forwarded to: 1. ITO, Ward-12(2), Kolkata. 2. ITO, Ward-3(2), Kolkata. 3. M/s. Dreamz Life Care Nursing & Diagnostic Centre Pvt. Ltd., Dakhineer Apartment, Flat-2A, Block-1, 116, N.S.C. Bose Road, Kolkata-700 040. 4. M/s. Dreamz Movies & Entertainment Pvt. Ltd., Dakhineer Apartment, Flat-2B, Block-1, 116, N.S.C. Bose Road, Kolkata-700 040. 5. CIT(A)-4, Kolkata. 6. CIT(A)-7, Kolkata. 7. CIT- 8. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata