Aanya Developers Pvt. Ltd., Kolkata V. ITO, Ward-4(3), Kolkata

ITA 285/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1723 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 14-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: MANISH TIWARI
• Keywords: Unexplained cash credit; Source of fund; Retrospective amendment; Question of law; Fair market value; Capital receipt; Onus to prove
• Section: 260A; 133(6); 68

Judgement Text

1 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA ( ) . . , . [ , ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, AM] I.T.A. NO. 285/KOL/2017 ASSESSMENT YEAR: 2012-13 AANYA DEVELOPERS PVT. LTD. (PAN: AAHCA0828Q) VS. INCOME-TAX OFFICER, WARD-4(3), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 08.04.2019 DATE OF PRONOUNCEMENT 14.06.2019 FOR THE APPELLANT SHRI MANISH TIWARI, FCA FOR THE ASSESSEE SHRI C. J. SINGH, JCIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A)-13, KOLKATA DATED 29.11.2016 AY 2012-13. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED THAT THE ASSESSEE HAS RAISED CAPITAL AT A HUGE SHARE PREMIUM DURING THE YEAR AND THE ASSESSEE FAILED TO CORROBORATE THE HIGH VALUE AND CREDITWORTHINESS OF RECEIPT OF SUCH SHARE PREMIUM. ACCORDING TO AO, SUMMONS ISSUED TO THE DIRECTORS OF THE ASSESSEE COMPANY AND THE DIRECTION GIVEN TO THE DIRECTORS OF THE ASSESSEE COMPANY TO PRODUCE THE DIRECTORS OF SHARE SUBSCRIBING COMPANIES WHICH WERE UN- COMPLIED WITH. THEREFORE, ACCORDING TO AO, THE ASSESSEE FAILED TO CORROBORATE THE CREDITWORTHINESS OF THE INVESTORS SO, HE WAS PLEASED TO ADD THE SHARE PREMIUM RECEIVED DURING THE YEAR OF RS.1,24,31,250/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR 2 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 AY 2012-13. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO CONFIRM THE ACTION OF AO. AGGRIEVED, THE ASSESSEE IS BEFORE US. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. ASSAILING THE ORDER OF THE LD. CIT(A), THE LD. AR CONTESTED THAT IN THE ASSESSEE COMPANY NINE (9) SHARE HOLDERS WHICH ARE CORPORATE ENTITIES INVESTED AND THEIR IDENTITY, GENUINENESS AND CREDITWORTHINESS WAS DULY PROVED BY DOCUMENTS FILED BY THE SHARE SUBSCRIBERS / ASSESSEE COMPANY PURSUANT TO THE STATUTORY NOTICES ISSUED BY THE AO. HOWEVER, THE AO AS WELL AS LD. CIT(A) HAS BRUSHED ASIDE ALL THE EVIDENCES AND HAS DRAWN ADVERSE VIEW AGAINST THE ASSESSEE WHICH IS LEGALLY UNSUSTAINABLE AND WANT US TO DELETE THE ADDITION. PER CONTRA THE LD. DR HAS SUBMITTED THAT LD. CIT(A) HAS RIGHTLY UPHELD THE ORDER OF AO BY RELYING ON VARIOUS DECISIONS OF THE HONBLE SUPREME COURTS AND HONBLE HIGH COURTS. 4. HE ALSO SUBMITTED THAT ASSESSEE FAILED TO DISCHARGE THE ONUS CASTED UPON HIM IN SIMILAR CASES AND RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS TO BUTTRESS THIS POINT THAT THE BURDEN OF PROOFS VIZ. IDENTITY OF THE CREDITOR, HIS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION U/S.68 ARE REQUIRED TO BE DISCHARGED BY THE ASSESSEE ONLY. ACCORDING TO HIM, THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. KORLAY TRADING CO. LTD. (1998) 232 ITR 820 (CAL) HAS HELD THAT MERE FILING OF INCOME TAX FILE NO. OF THE CREDITORS TO PROVE GENUINENESS OF THE CASH CREDIT. THE CREDITOR SHOULD BE IDENTIFIED, THE TRANSACTION SHOULD BE GENUINE AND THERE SHOULD BE CREDITWORTHINESS. THE LD. DR FURTHER SUBMITTED THAT IN K.M. SADHUKHAN AND SONS PVT. LTD. VS CIT (1999) 239 ITR 77 (CAL) IT HAS BEEN HELD THAT BURDEN LIES UPON THE ASSESSEE TO PROVE THE NOTED THREE CONDITIONS. IN CIT VS. PRECISION FINANCE PVT. LTD. (1994) 208 ITR 465 (CAL) THE HON'BLE HIGH COURT HELD THAT 'IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. MERE FURNISHING OF THE PARTICULARS IS NOT ENOUGH'. 3 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 THE LD. DR ALSO SUBMITTED THAT IN CIT VS. NIPUN BUILDERS AND DEVELOPERS PVT. LTD. (2013) 350 ITR 407 (DEL) THE HON'BLE COURT WHILE DECIDING THE ISSUE IN FAVOUR OF REVENUE HAS REITERATED THAT - '29 IN.. IN CASE OF PRIVATE LIMITED COMPANIES GENERALLY PERSONS KNOWN TO THE DIRECTORS OR SHAREHOLDERS, DIRECTLY OR INDIRECTLY, BUY OR SUBSCRIBE TO SHARES UPON RECEIPT OF MONEY, THE SHARE SUBSCRIBERS DO NOT LOSE TOUCH AND BECOME INCOMMUNICADO. CALL MONIES, DIVIDENDS, WARRANTS ETC. HAVE TO BE SENT AND THE RELATIONSHIP IS A CONTINUING ONE. IN SUCH CASES THEREFORE THE ASSESSEE CANNOT SIMPLY FURNISH DETAILS AND REMAIN QUIET EVEN WHEN SUMMONS ISSUED TO THE SHAREHOLDERS U/S.131 ... 30 . .. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITION OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ONUS TO PROVE THE TREE FACTUM IS ON THE ASSESSEE AS THE FACTS ARE WITHIN THE ASSESSEE'S KNOWLEDGE. MERE PRODUCTION OF INCORPORATION DETAILS PAN NOS. OR THE FACT THAT THIRD PERSONS OR COMPANY HAD FILED INCOME TAX DETAILS IN CASE OF A PRIVATE LIMITED COMPANY MAY' NOT BE SUFFICIENT WHEN SURROUNDING AND ATTENDING FACTS PREDICATE A COVER UP. THESE FACTS INDICATE AND REFLECT PROPER PAPER WORK OR DOCUMENTATION BUT GENUINENESS, CREDITWORTHINESS, IDENTITY ARE DEEPER AND OBTRUSIVE. COMPANIES NO DOUBT ARE ARTIFICIAL OR JURISTIC PERSONS BUT THEY ARE SOLELESS AND ARE DEPENDENT UPON THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE DECISIONS, CONTROLS AND MANAGE THEM.' 5. THE HON'BLE DELHI HIGH COURT IN CIT VS. NAVODAYA CASTLES PVT. LTD. (2014) 367 ITR 306 (DEL) HELD THAT SHARE CAPITAL IN CASE OF A CLOSELY HELD COMPANY IS REQUIRED TO BE EXAMINED BY THE AO IN TERMS OF THE SEC.68 AND THE FAILURE OF THE ASSESSEE TO SATISFY THE AO CALLS FOR AN ADDITION U/S.68. THE SAID DECISION OF THE HIGH COURT HAS BEEN UPHELD BY THE HON'BLE SUPREME COURT AS REPORTED IN NAVODAYA CASTLES PVT. LTD. VS. CIT (2015) 230 TAXMANN 268 (SC). 6. THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. ACTIVE TRADERS PVT. LTD. HAS HELD THAT THE ASSESSING OFFICER IN THE ASSESSMENT OF A COMPANY HAS JURISDICTION TO ASK FOR INFORMATION FROM THE SHAREHOLDERS REGARDING THE SOURCE OF INVESTMENT MADE IN THE COMPANY. THEIR LORDSHIPS OBSERVED THAT - 'IF A CASH CREDIT IS SHOWN BY THE COMPANY IN ITS BOOKS OF ACCOUNTS AND IF THE SOURCE CANNOT BE EXPLAINED PROPERLY THE ITO MAY ASSESS THE SUM AS INCOME OF THE COMPANY FROM UNDISCLOSED SOURCE.' 4 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 7. THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS NIVEDAN VANIJYA NIYOJAN LTD. (2003) 263 ITR 623 (CAL) HAS HELD THAT WHERE THE ASSESSEE COMPANY DID NOT PRODUCE THE SUBSCRIBERS OF ITS SHARE CAPITAL WHEN REQUIRED TO DO SO, IT FAILED TO ESTABLISH THE IDENTITY OF THE SUBSCRIBERS, PROVE THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION AND THEREFORE ADDITION U/S.68 WAS JUSTIFIED. IN THE SAID DECISION THE HON'BLE COURT HAS PLACED ITS RELIANCE ON THE EARLIER TWO DECISIONS OF THE CALCUTTA HIGH COURT NAMELY M/S. HINDUSTAN TEA TRADING COMPANY LTD. AND M/S.RUBY TRADERS AND EXPORTERS LTD. 8. WHEN THE ISSUE AROSE REGARDING TAXABILITY OF SHARE PREMIUM WHICH IS A CAPITAL RECEIPT, THE ITAT KOLKATA CLARIFIED IN THE CASE OF M/S. SUBHALAKSHMI VANIJYA PVT. LTD. VS. CIT, 155 ITD 171, THAT THE QUESTION BEING ADDRESSED IS NOT WHETHER SHARE PREMIUM IS CHARGEABLE TO TAX BUT ABOUT THE TAXABILITY OR OTHERWISE OF SUCH SHARE CAPITAL I PREMIUM IN TERMS OF SEC.68. 9. FURTHER RELIANCE WAS ALSO PLACED BY THE LD. DR ON THE FOLLOWING DECISIONS: (I) CIT VS. N. R. PORTFOLIO PVT. LTD. (2014) 222 TAXMANN 157 (DEL) PARA 24 & 25. (II) CIT VS. N. TARIKA PROPERTIES INVESTMENTS ITA NO.2080 OF2010 DELHI HIGH COURT DTD.21.11.13. (III) CIT VS. NOVA PROMOTERS AND FINLEASE PVT. LTD. (2012) 342 ITR 169 (DEL). (IV) VISAKHA SALES PVT. LTD. VS. CIT (2014) 52 TAXMANN.COM 305. CITING THE AFORESAID JUDICIAL PRECEDENTS, THE LD DR WANT US TO CONFIRM THE IMPUGNED ORDER OF LD CIT(A). 10. COMING TO THE INSTANT CASE WE NOTE THAT THE ASSESSEE COMPANY HAS RAISED SHARE CAPITAL TO THE TUNE OF RS.1,27,50,000/- DURING THE AY 2012-13. THE SHARE CAPITAL WAS RAISED BY ISSUING SHARES AT A PREMIUM WHERE SECURITIES PREMIUM AMOUNT IS RS.1,24,31,250/- AND VALUE OF SHARES WERE ISSUED AT RS.3,18,750/- AT RS.10/- EACH FOR A PREMIUM OF RS.390/- PER SHARE. WHEN ASKED BY THE AO TO EXPLAIN THE NATURE AND SOURCE OF SHARE CAPITAL AND SHARE PREMIUM 5 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 RAISED BY THE ASSESSEE, THE ASSESSEE FILED BEFORE THE AO THE DETAILS OF NINE CORPORATE BODIES WHICH SUBSCRIBED THE SHARE CAPITAL ALONG WITH THE SHARE PREMIUM. BEFORE THE AO THE ASSESSEE HAD FILED PAPER BOOK CONTAINING 212 PAGES TO SUBSTANTIATE THE SHARE CAPITAL ALONG WITH THE SHARE PREMIUM. THE DOCUMENTS FURNISHED BEFORE THE AO, INTER ALIA, INCLUDED (I) COPIES OF ACKNOWLEDGEMENT OF FILING OF INCOME TAX RETURN OF SHAREHOLDERS, (II) THE STATEMENT OF SOURCE OF FUNDS, (III) AUDITED FINANCIAL STATEMENTS, (IV) COPIES OF RELEVANT BANK STATEMENTS IN RESPECT OF ACCOUNTS FROM WHICH SHARE APPLICATION MONIES WERE PAID, (V) PAN, ADDRESS OF SHARE SUBSCRIBERS FOR THE YEAR ENDED 31.03.2012. (VI) COPY OF THE RETURN ALLOTMENT IN FORM 2 EVIDENCING THE ALLOTMENT OF SHARES TO THE FOUR SHARE APPLICANTS, VII) CERTIFICATE OF INCORPORATION OF SHARE APPLICANTS, VIII) SHARE ALLOTMENT LETTERS ISSUED TO THEM. 11. WE NOTE THAT THE SHARE SUBSCRIBER COMPANIES WERE REGULARLY ASSESSED TO TAX AND THE PAYMENTS WERE MADE THROUGH THE BANK ACCOUNTS AND PURSUANT TO THE NOTICE ISSUED BY THE AO U/S. 133(6) AND 131 OF THE ACT TO ALL THE FOUR SHARE SUBSCRIBERS, THE NOTICES WERE SERVED AND THE SHARE SUBSCRIBERS FURNISHED THE REQUISITE DOCUMENTARY EVIDENCE AS REQUISITIONED BY THE AO. THE SHARE APPLICANTS HAVE FURNISHED THEIR AUDITED FINANCIAL STATEMENTS AND INCOME TAX ACKNOWLEDGMENT FOR FILING OF RETURN FOR AY 2012-13. THUS, THE IDENTITY OF SHARE SUBSCRIBERS IS PROVED. FROM THE BANK STATEMENT OF THE SHARE SUBSCRIBERS IT WAS POINTED OUT TO THE AO THAT THERE WAS NO CASH DEPOSITS PRIOR TO ISSUE OF CHEQUES TO THE ASSESSEE COMPANY. EVEN THE LD. AR OF THE ASSESSEE EXPLAINED TO THE AO THE IMMEDIATE SOURCE OF PAYMENT OF SHARE APPLICATION MONIES TO THE ASSESSEE COMPANY. AND THE SHARE CAPITAL AND PREMIUM WERE PAID THROUGH BANKING CHANNEL TO THE ASSESSEE COMPANY. THUS THE GENUINENESS OF THE TRANSACTION CANNOT BE DISPUTED. THUS, ACCORDING TO LD. AR OF THE ASSESSEE, THE ASSESSEE HAD DISCHARGED 6 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 THE ONUS CASTED UPON IT TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSCRIBERS. ON PERUSAL OF THE AUDITED BALANCE SHEET OF THE SHARE SUBSCRIBING COMPANIES REVEAL THAT THE SHAREHOLDERS POSSESSED SUFFICIENT CAPITAL AND RESERVES OUT OF WHICH SHARE SUBSCRIPTION AMOUNTS WERE PAID THROUGH ACCOUNT PAYEE CHEQUES. THE CHART IS GIVEN BELOW TO BETTER UNDERSTAND THE FUND POSITION OF EACH SHARE APPLICANT: ON PERUSAL OF THE AFORESAID CHART IT REVEALS THAT THE NET OWNED FUNDS OF EACH SHARE APPLICANT WERE SEVERAL TIMES MORE THAN THE INVESTMENT MADE IN EQUITY OF THE ASSESSEE. IT IS EVIDENT THAT EACH SHARE APPLICANT HAD SUBSTANTIAL RESOURCES OF THEIR OWN COMPARED WITH THE TOTAL INVESTIBLE FUNDS AVAILABLE WITH EACH SHARE APPLICANTS AND THAT INVESTMENT MADE IN THE EQUITY SHARES AND THE ASSESSEE COMPANY WAS NOT SIGNIFICANT. WE NOTE THAT THE AO DID NOT POINT OUT ANY DEFECT OR INFIRMITY IN THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE AS WELL AS THE SHARE SUBSCRIBERS. THUS THE CREDITWORTHINESS OF THE AFORESAID SHARE SUBSCRIBERS CANNOT BE DISPUTED. 12. WE NOTE THAT THE ASSESSEE HAD PRODUCED THE AFORESAID DOCUMENTS TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE CAPITAL ALONG WITH SHARE PREMIUM OF THE FOUR CORPORATE SHAREHOLDERS. WE NOTE THAT THE AO HAD ACCEPTED THE SHARE CAPITAL SUBSCRIBED BY THESE NINE CORPORATE ENTITIES. HOWEVER, WITHOUT POINTING OUT ANY DEFECTS HAS ARBITRARILY WITHOUT GIVING ANY 7 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 REASON BY A CRYPTIC ORDER HAS ADDED THE ENTIRE SHARE PREMIUM WHICH WAS ALSO GIVEN BY THE VERY SAME FOUR CORPORATE ENTITIES U/S 68 OF THE ACT. THE LD. AR BROUGHT TO OUR NOTICE THAT THE SIMILAR ADDITIONS WERE MADE BY THE AO IN SIMILAR FIVE CASES WHEREIN THE AO ACCEPTED THE SHARE CAPITAL BUT ADDED THE SHARE PREMIUM WHICH ACTION OF THE AO WAS NOT UPHELD BY THE TRIBUNAL. THE FOLLOWING CASES ARE GIVEN BELOW: I) ITO VS. TREND INFRA DEVELOPERS PVT. LTD. & HAPPY BAGANS PVT. LTD., ITA NO. 2270/KOL/2016 & 2273/KOL/2016 ORDER DATED 26.10.2018. II) ITO VS. SAVERA TOWERS PVT. LTD. ITA NO. 2275/KOL/2016 ORDER DATED 05.12.2018. III) ITO VS. BSNL COMMERCIAL PVT. LTD. ITA NO.686/KOL/2017 ORDER DATED 22.11.2018. IV) ITO VS. TANISH DEALERS PVT. LTD. ITA NO. 1636/KOL/2016 ORDER DATED 07.12.2018. V) ITO VS. DREAMZ MET CONSTRUCTION PROJECTS PVT. LTD. ITA NO. 2047/KOL/2016 ORDER DATED 07.12.2018 13. THE LD. AR DREW OUR ATTENTION TO THE 1 ST CASE OF TREND INFRA DEVELOPERS PVT. LTD., (SUPRA), WHICH ACCORDING TO LD. AR WAS A GROUP OF COMPANY WHEREIN ALSO THE SAME KIND OF ADDITION WAS MADE AFTER ACCEPTING THE SHARE CAPITAL AND ADDING THE SHARE PREMIUM. ACCORDING TO LD. AR, SHARE PREMIUM CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE U/S. 68 OF THE ACT SINCE THE PROVISO WAS INSERTED U/S 68 OF THE ACT ONLY FROM AY 2013-14 AND SIMILAR ADDITIONS MADE ONLY ON SHARE PREMIUM WAS DIRECTED TO BE DELETED AND WHICH ACTION HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT IN PR. CIT VS. APEAK INFOTECH REPORTED IN 88 TAXMAN.COM 695 DATED 08.06.2017 THE LD. AR DREW OUR ATTENTION TO PAGE 7 OF THE CASE LAW PAPER BOOK AND DREW OUR ATTENTION TO THE ORDER PASSED BY THE TRIBUNAL IN TREND INFRA DEVELOPMENT PVT. LTD., SUPRA, WHEREIN WE NOTE IN SIMILAR FACTS THE TRIBUNAL WAS PLEASED TO DELETE THE ADDITION MADE ONLY ON SHARE PREMIUM BY THE AO FOR AY 2012-13. THE TRIBUNAL HELD AS UNDER: 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE FACT STATED HEREINABOVE REMAIN UNDISPUTED BEFORE US BY EITHER OF THE PARTIES AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. AT THE OUTSET, WE FIND THAT THE ASSESSEE HAD RECEIVED SHARE CAPITAL OF RS. 57,900/- FROM SIX SHAREHOLDERS AND RS. 2,88,92,100/- FROM THE VERY SAME SHAREHOLDERS TOWARDS SHARE PREMIUM. THE SHARE CAPITAL RECEIVED BY THE ASSESSEE HAS BEEN DULY ACCEPTED BY THE LD. AO WITHIN THE KEN OF SECTION 68 OF THE ACT. HOWEVER, SHARE PREMIUM COMPONENT HAS BEEN 8 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 DOUBTED BY THE LD. AO. WE FIND THAT THE ASSESSEE IN THE INSTANT CASE HAD DULY COMPLIED WITH BY FURNISHING THE COMPLETE DETAILS OF SHARE SUBSCRIBERS TO PROVE THEIR IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF SHARE SUBSCRIBERS BEYOND DOUBT. THESE ARE DULY SUPPORTED BY THE DOCUMENTARY EVIDENCES WHICH ARE ENCLOSED IN THE PAPER BOOK. THE LD. AO HAD NOT FOUND ANY FALSITY OR ANY ADVERSE INFERENCE OF THE SAID DOCUMENTS. WE FIND THAT THE LD. CIT(A) HAD PLACED HEAVY RELIANCE ON THESE DOCUMENTS AND HAD GRANTED RELIEF TO THE ASSESSEE. ALL THE SHARE SUBSCRIBERS ARE DULY ASSESSED TO INCOME TAX AND THE TRANSACTION WITH THE ASSESSEE COMPANY ARE DULY ROUTED THROUGH BANKING CHANNELS AND ARE DULY REFLECTED IN THEIR RESPECTIVE AUDITED BALANCE SHEETS WHICH ARE ALSO PLACED ON RECORD BEFORE US. IN ANY CASE, ONCE THE RECEIPT OF SHARE CAPITAL HAS BEEN ACCEPTED AS GENUINE WITHIN THE KEN OF SECTION 68 OF THE ACT, THERE IS NO REASON FOR THE LD. AO TO DOUBT THE SHARE PREMIUM COMPONENT RECEIVED FROM THE VERY SAME SHAREHOLDERS AS BOGUS. WE HELD THAT ALL THE THREE NECESSARY INGREDIENTS OF SECTION 68 HAD BEEN DULY COMPLIED WITH BY THE ASSESSEE WITH PROPER DOCUMENTARY EVIDENCES. WE FIND THAT NOTICES ISSUED U/S 133(6) HAVE BEEN DULY COMPLIED WITH. THE ONLY GRIEVANCE OF THE LD. AO WAS THAT THE ASSESSEE COULD NOT PRODUCE THE DIRECTORS OF THE SHARE SUBSCRIBING COMPANIES. IN OUR CONSIDERED OPINION, FOR THIS REASON ALONE, THERE CANNOT BE ANY ADDITION U/S 68 OF THE ACT AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LTD. REPORTED IN 159 ITR 78 (SC). WE FIND THAT THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NOVO PROMOTERS AND FINELEASE PVT. LTD. REPORTED IN 342 ITR 169 (DEL) VEHEMENTLY RELIED UPON BY THE LD. DR BEFORE US, IS NOT APPLICABLE IN THE INSTANT CASE, AS IN THE FACTS BEFORE THE HONBLE DELHI HIGH COURT, THE NOTICES U/S 133(6) HAVE NOT BEEN DULY COMPLIED WITH. HENCE THE DECISION RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE REFERRED TO SUPRA IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE AND IS FACTUALLY DISTINGHUISHABLE. 3.3.1. WE FIND THAT THE RELIANCE PLACED BY THE LD. AR IN THE DECISION OF HONBLE BOMBAY HIGH COURT IN PR. CIT VS. APEAK INFOTECH REPORTED IN 88 TAXMANN.COM 695 DT 08.06.2017 WHEREIN THE QUESTION RAISED BEFORE THE HONBLE BOMBAY HIGH COURT ARE AS UNDER: A. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT TO UPHOLD THE DECISION ON COMMISSIONER OF INCOME TAX (APPEALS) THAT THE SHARE PREMIUM RECEIVED BY THE ASSESSEE-COMPANY CANNOT BE TAXED UNDER SECTION 68 OF THE ACT IGNORING THE RATIO LAID DOWN BY THIS COURT IN ITS DECISION REPORTED IN THE CASE OF MAJOR METALS LTD. VS. UNION OF INDIA [2013] 359 ITR 450 (BOM)? B. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL AS WELL AS THE COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN DELETING ADDITION MADE BY THE ASSESSING OFFICER, BY HOLDING THAT THE SHARE PREMIUM RECEIPT IS CAPITAL IN NATURE? THE HONBLE COURT HELD AS UNDER: REGARDING QUESTION A : (A) THE ISSUE RAISED BY THE REVENUE IN THIS QUESTION IS TO BRING TO TAX THE SHARE PREMIUM RECEIVED UNDER SECTION 68 OF THE ACT. WE FIND THAT THE ISSUE OF BRINGING THE SHARE PREMIUM TO TAX UNDER SECTION 68 OF THE ACT WAS NOT AN ISSUE WHICH WAS URGED BY THE APPELLANT REVENUE BEFORE THE TRIBUNAL. THE ONLY ISSUE WHICH WAS URGED BEFORE THE TRIBUNAL AS RECORDED IN PARA 11 OF THE IMPUGNED ORDER IS THE ADDITION OF SHARE CAPITAL AND SHARE APPLICATION MONEY IN THE HANDS OF THE ASSESSEE AS INCOME UNDER SECTION 28(IV) OF THE ACT. WE FIND THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) DID CONSIDER THE ISSUE OF APPLICABILITY OF SECTION 68 OF THE ACT AND CONCLUDED THAT IT DOES NOT APPLY. THE REVENUE SEEMS TO HAVE ACCEPTED THE SAME AND DID NOT URGE THIS ISSUE BEFORE THE TRIBUNAL. MR. BHOOT, LEARNED COUNSEL APPEARING FOR THE REVENUE ALSO FAIRLY STATES THAT THE ISSUE OF APPLICABILITY OF SECTION 68 OF THE ACT WAS NOT URGED BY THE REVENUE BEFORE THE TRIBUNAL. (B) IT IS A SETTLED POSITION IN LAW AS HELD BY THIS COURT IN CIT V. TATA CHEMICALS LTD. [2002] 122 9 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 TAXMAN 643/256 ITR 395 (BOM.) THAT IN AN APPEAL UNDER SECTION 260A OF THE ACT, THE HIGH COURT CAN ONLY DECIDE A QUESTION IF IT HAD BEEN RAISED BEFORE THE TRIBUNAL EVEN IF NOT DETERMINED BY THE TRIBUNAL. THEREFORE, NO OCCASION TO CONSIDER THE QUESTION AS PRAYED FOR ARISES. (C) IN ANY CASE, WE MAY POINT OUT THAT THE AMENDMENT TO SECTION 68 OF THE ACT BY THE ADDITION OF PROVISO THERETO TOOK PLACE WITH EFFECT FROM APRIL 1, 2013. THEREFORE, IT IS NOT APPLICABLE FOR THE SUBJECT ASSESSMENT YEAR 2012-13. SO FOR AS THE PRE-AMENDED SECTION 68 OF THE ACT IS CONCERNED, THE SAME CANNOT BE INVOKED IN THIS CASE, AS EVIDENCE WAS LED BY THE RESPONDENTS- ASSESSEES BEFORE THE ASSESSING OFFICER WITH REGARD TO IDENTITY, CAPACITY OF THE INVESTOR AS WELL AS THE GENUINENESS OF THE INVESTMENT. THEREFORE, ADMITTEDLY, THE ASSESSING OFFICER DID NOT INVOKE SECTION 68 OF THE ACT TO BRING THE SHARE PREMIUM TO TAX. SIMILARLY, THE COMMISSIONER OF INCOME-TAX (APPEALS) ON CONSIDERATION OF FACTS, FOUND THAT SECTION 68 OF THE ACT CANNOT BE INVOKED. IN VIEW OF THE ABOVE, IT IS LIKELY THAT THE REVENUE MAY HAVE TAKEN AN INFORMED DECISION NOT TO URGE THE ISSUE OF SECTION 68 OF THE ACT BEFORE THE TRIBUNAL. (D) WE MAY ALSO POINT OUT THAT DECISION OF THIS COURT IN MAJOR METALS LTD. V. UNION OF INDIA [2012] 19 TAXMANN.COM 176/207 TAXMAN 185/[2013] 359 ITR 450 BOM . PROCEEDED ON ITS OWN FACTS TO UPHOLD THE INVOCATION OF SECTION 68 OF THE ACT BY THE SETTLEMENT COMMISSION. IN THE ABOVE CASE, THE SETTLEMENT COMMISSION ARRIVED AT A FINDING OF FACT THAT THE SUBSCRIBERS TO SHARES OF THE ASSESSEE'COMPANY WERE NOT CREDITWORTHY INASMUCH AS THEY DID NOT HAVE FINANCIAL STANDING WHICH WOULD ENABLE THEM TO MAKE AN INVESTMENT OF RS. 6,00,00,000 AT PREMIUM AT RS. 990 PER SHARE. IT WAS THIS FINDING OF THE FACT ARRIVED AT BY THE SETTLEMENT COMMISSION WHICH WAS NOT DISTURBED BY THIS COURT IN ITS WRIT JURISDICTION. IN THE PRESENT CASE THE PERSON WHO HAVE SUBSCRIBED TO THE SHARE AND PAID SHARE PREMIUM HAVE ADMITTEDLY MADE STATEMENT ON OATH BEFORE THE ASSESSING OFFICER AS RECORDED BY THE TRIBUNAL. NO FINDING IN THIS CASE HAS BEEN GIVEN BY THE AUTHORITIES THAT SHAREHOLDER/SHARE APPLICANTS WERE UNIDENTIFIABLE OR BOGUS. (E) IN THE ABOVE VIEW QUESTION NO. A IS NOT BEING ENTERTAINED IN VIEW OF THE DECISION IN TATA CHEMICAL LTD. (SUPRA). ACCORDINGLY, THE QUESTION (A) IS NOT ENTERTAINED. REGARDING QUESTION B : (A) WE FIND THAT THE IMPUGNED ORDER OF THE TRIBUNAL UPHELD THE VIEW OF THE COMMISSIONER OF INCOME-TAX (APPEALS) TO HOLD THAT SHARE PREMIUM IS CAPITAL RECEIPT AND THEREFORE, CANNOT BE TAXED AS INCOME. THIS CONCLUSION WAS REACHED BY THE IMPUGNED ORDER FOLLOWING THE DECISION OF THIS COURT IN VODAFONE INDIA SERVICES (P.) LTD. (SUPRA) AND OF THE APEX COURT IN G. S. HOMES AND HOTEL (P.) LTD. (SUPRA). IN BOTH THE ABOVE CASES THE COURT HAS HELD THAT THE AMOUNT RECEIVED ON ISSUE OF SHARE CAPITAL INCLUDING PREMIUM ARE ON CAPITAL ACCOUNT AND CANNOT BE CONSIDERED TO BE INCOME. (B) IT IS FURTHER PERTINENT TO NOTE THAT THE DEFINITION OF INCOME AS PROVIDED UNDER SECTION 2(24) OF THE ACT AT THE RELEVANT TIME DID NOT DEFINE AS INCOME ANY CONSIDERATION RECEIVED FOR ISSUE OF SHARE IN EXCESS OF ITS FAIR MARKET VALUE. THIS CAME INTO THE STATUTE ONLY WITH EFFECT FROM APRIL 1, 2013 AND THUS, WOULD HAVE, NO APPLICATION TO THE SHARE PREMIUM RECEIVED BY THE RESPONDENT'ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2012-13. SIMILARLY, THE AMENDMENT TO SECTION 68 OF THE ACT BY ADDITION OF PROVISO WAS MADE SUBSEQUENT TO PREVIOUS YEAR RELEVANT TO THE SUBJECT ASSESSMENT YEAR 2012-13 AND CANNOT BE INVOKED. IT MAY BE POINTED OUT THAT THIS COURT IN CIT V. GAGANDEEP INFRASTRUCTURE (P.) LTD. [2017] 80 TAXMANN.COM 272/247 TAXMAN 245/394 ITR 680 (BOM.) HAS WHILE REFUSING TO ENTERTAIN A QUESTION WITH REGARD TO SECTION 68 OF THE ACT HAS HELD THAT THE PROVISO TO SECTION 68 OF THE ACT INTRODUCED WITH EFFECT FROM APRIL 1, 2013 WILL NOT HAVE RETROSPECTIVE EFFECT AND WOULD BE 10 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013-14. (C) IN VIEW OF THE ABOVE, QUESTION NO. B AS PROPOSED ALSO DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AS IT IS AN ISSUE CONCLUDED BY THE DECISION OF THIS COURT IN VODAFONE INDIA SERVICES (P.) LTD. (SUPRA) AND IN THE APEX COURT IN G. S. HOMES AND HOTELS (P.) LTD. (SUPRA). THUS NOT ENTERTAINED. THEREFORE, ALL THE SIX APPEALS ARE DISMISSED. NO ORDER AS TO COSTS. 3.3.2. IN VIEW OF THE AFORESAID OBSERVATIONS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENT RELIED UPON HEREINABOVE, WE HOLD THAT THE LD. CIT(A) HAD RIGHTLY GRANTED RELIEF TO THE ASSESSEE IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WHICH IN OUR CONSIDERED OPINION, DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS), AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT THE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INFERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSARILY FOLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEEN ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OBLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPEALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CIT(APPEALS), CANNOT BE APPROVED OR UPHELD.' RESPECTFULLY FOLLOWING THE RATIO LAID BY THE TRIBUNAL, AND TAKING NOTE OF THAT FACTS AND LAW GOVERNING THE ISSUE WERE SIMILAR AND THOUGH THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A) COULD NOT POINT OUT ANY DIFFERENCE IN THE FACTS AND LAW IN THE CASE ON HAND WITH THE AFORESAID ORDER OF THE TRIBUNAL. THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL AND TAKING NOTE OF THE HONBLE BOMBAY HIGH COURTS ORDER IN APEAK INFOTECH (SUPRA), WE ARE UNABLE TO SUSTAIN THE ORDER OF THE LD. CIT(A). WE ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT DELETION OF THE ADDITION OF THE SHARE-PREMIUM MADE IN THIS CASE. 11 ITA NO. 285/KOL/2017 AANYA DEVELOPERS PVT. LTD. AY. 2012-13 14. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 14.06.2019 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 JUNE, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT M/S. AANYA DEVELOPERS PVT. LTD., 9, LAL BAZAR STREET, MERCANTILE BUILDING, A-BLOCK, 1 ST FLOOR, KOLKATA-700 001. 2 RESPONDENT ITO, WARD-4(3), KOLKATA. 3 4 5 CIT (A)-13, KOLKATA. CIT , KOLKATA. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR