AI Insights
The case revolves around an appeal by the Income Tax Officer, Ward-4(1), Kolkata against M/s Ritu Viniyog & Traders Pvt. Ltd., concerning the assessment year 2012-13. The primary issue was the deletion of an addition of Rs. 1,87,90,024 made by the Assessing Officer (AO) under the impression that it was unexplained cash credit under Section 68 of the Income Tax Act. The CIT(A) had earlier deleted this addition, which the revenue challenged. The Tribunal examined the submissions, evidence, and the legal provisions, ultimately agreeing with the CIT(A) and dismissing the revenue's appeal.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 127325 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 9 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-11-2022
Appeal Filed By
Department
Order Result
DismissedAllowed
Bench Allotted
C
Next Hearing Date
19-10-2022
Assessment Year
2012-2013
Appeal Filed On
08-02-2021
Judgement Text
आयकर अपील य अ धकरण, कोलकाता पीठ ‘‘सी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 41/Kol/2021 Assessment Year: 2017-18 ITO, Ward-4(1), Kolkata Vs. M/s Ritu Viniyog & Traders Pvt. Ltd. (PAN:AABCR 2109 K) Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 20.10.2022 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 17 .11.2022 For the Appellant/ नधा /रती क$ ओर से Shri Manish Tiwary, A.R For the Respondent/ राज व क$ ओर से Smt. Ranu Biswas, Addl. CITDR ORDER / आदेश Per Rajesh Kumar, AM: This is the appeal preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-7, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 27.07.2020 for the AY 2012-13. 2. Though the Registry has pointed out that the appeal is time barred, however, in view of the decision of the Hon’ble Supreme Court in Miscellaneous Application No. 665 of 2021 in SMW(C ) No. 3 of 2020, the period of filing appeal during the COVID- 19 pandemic is to be excluded for the purpose of counting the limitation period. In view of this, the appeal is treated as filed within the limitation period. 2 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. 3. The only issue raised by the revenue is against the deletion of addition of Rs. 1,87,92,024/- by the Ld. CIT(A) as made by the AO in respect of share capital and share premium being unexplained cash credit during the year. 4. Facts in brief are that the assessee filed the return of income on 30.09.2012 declaring total income of Rs. Nil. The case of the assessee was selected under CASS for scrutiny because of large share premium received and accordingly statutory notices were issued and duly served on the assessee. In response to the said notices, the Ld. A.R of the assessee appeared before the AO from time to time and also filed the necessary evidences such as names, addresses, PANs of share applicants and details of bank accounts etc. It was submitted before the AO that out of equity share capital and share premium of Rs. 1,87,90,000/-, Rs. 1,71,90,000/- was received in the earlier financial years and only Rs. 16,00,000/- was received during the instant financial year. However undisputedly the allotment of equity shares was made during the year. To corroborate these facts, the assessee has filed audited accounts, share application ledgers, confirmations from share applicants, bank statements and their ITRs before the AO. The AO also issued summons u/s 131 to the assessee with the directions to produce all the share applicants with requisite details however none appeared in response to the said summon. The AO finally added the entire amount to the income of the assessee u/s 68 of the Act, as unexplained cash credit on the ground that none appeared in response to the said summons and therefore the genuineness of the transactions and creditworthiness of the share applicants could not be examined, in the assessment u/s 143(3) of the Act dated 12.03.2015. 5. The Ld. CIT(A) allowed the appeal of the assessee after considering and taking into account the written submissions of the assessee which are extracted in the appellate order in Para 4.1 from page no. 3 to 13 by observing and holding as under: 4.1. At the appellate stage, the AR of the appellant discussed the issues and filed counter written submission to the effect that section 68 of the Act could not have been attracted in the instant case. The written submission in this regard is as follows: “Ground Nos. 1 to 3. 3 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. All these grounds has been preferred against adverse findings which has resulted in addition of Rs.1,87,90,000/- as unexplained cash credit u/s 68 of the Act. The factual position will reveal that the appellant, a private limited company was incorporated on23.12.1993 to carry on the business in terms of the object clause of its Memorandum of Association. The e-return of income u/s. 139(1) of the Income Tax Act, 1961 for the relevant assessment year was filed disclosing nil income. The said return was selected for scrutiny by issue of notice U/s 143(2). Subsequently, a notice U/s142(1) was issued calling for details & documents specified therein. In response thereto, A/R appeared from time to time to explain the return and furnish details of accounts. The details and documents furnished on record included, inter-alia, name & address, PAN of share applicants to whom equity shares were allotted during the year amounting to Rs. 1,87,90,000/-. Out of this sum Rs. 1,71,90,000/- was received in earlier financial years and only net amount of Rs. 16,00,000/- was received during the relevant assessment year. The entire share allotment was made during the relevant assessment year only. The appellant filed its Audited accounts, share application ledger, confirmation from share applicants, bank statement. It also filed Income Tax return acknowledgement, statement of accounts & Bank statements and confirmations of all the shareholders before the Assessing officer in course of assessment proceedings. We draw your kind attention to the chart herein above to plead that in respect of most of the parties no fresh sum of money was credited during the relevant year under consideration as the balances oftheir account represented opening balances. We refer to the ledger accounts of such share applicants filed in the paper book in support of our contentions. /As far as applicability of section 68of the Act is concerned it is submitted that there being no credit entry into the books of accounts during the year, addition cannot be validly made as per provisions of section 68 as they are only applicable in a case where any unexplained credit is found in the books of accounts in that particular previous year. We place reliance upon following decisions:- a) CIT vs Usha Stud Agricultural Farms Ltd reported in 301 ITR 384 Delhi High Court held that “ since it is a finding of fact recorded by the CIT(A) that this credit balance appearing in the accounts of the assess. Does not pertain to the year under consideration, under these circumstances, the assessing officer was not justified in making the impugned addition u/s 68of the Act and as such no fault can be found with the order of the Tribunal which has endorsed the decision of the CIT(A). b) DCIT vs Amod Petrochem Private Limited reported in 307 ITR 265 Gujrat High Court held that “in other words, what came in the books of accounts of the assessee company for the previous year relevant year to the assessment year in question, The tribunal was, therefore, justified, in holding that the assessees liabilities to pay tax in respect of unexplained deposits of Rs. 1,61,895/- did not arise. c) Shri Vardhman Overseas Ltd reported in 24 SOT 393 Delhi ITAT held that “since the amounts in question were brought forward balances, they could not be added to income of the assessee for the year under consideration, as the question of genuineness thereof could be examined only in the year in which they were credited to the account of the assessee”. d) It is abundantly clear from the above facts that the appellant had furnished the full details of shareholders with name, address, PAN, etc to whom 93,950 shares of Rs. 10/- each with premium of Rs. 190/- per share were allotted during the year after adjustment of share application money of Rs. 1,71,90,000/- received in earlier year and balance of Rs 16,00,000/- received in the current assessment year. The various documents furnished in respect of the 4 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. subscriber as furnished on record forms part of paper book accompanying this written submission. e) In the instant case, the shareholders are mostly individuals, HUFs except one shareholder who is a corporate entity and duly incorporated under the Companies Act, 1956. The share applicant company as well as other shareholders who are individuals & HUFs are also independently assessed to tax. Therefore the identities of all the 42 shareholders are verifiable from Departments own record and website. So far as genuineness of the transactions it is stated that share subscriptions received during the relevant previous year amounting to Rs. 16,00,000/- were received by account payee cheques through banking channel which is traceable from the origin to the destination of such payment. The transactions are verifiable from the bank statements of the appellant company and the outgoing sfrom the Bank statements of all the 14 shares subscriber individuals as furnished on record. Therefore, the genuineness of the transactions should not be called into question. As far as creditworthiness of the share applicants is concerned it is stated that the entire gamut of transactions was undertaken through banking channel and there was sufficient balance available to enable to invest the necessary fund. In respect of all the share applicants, there were more than enough funds to subscribe to the shares of the appellant as the following facts will unequivocally testify and prove. As regards 42 shareholders who are individuals and HUFs it is submitted that all such non-corporate individuals & HUFs in their letters confirmed their application for shares and source of payment which were dispatched by post as well as by delivery through messenger in the office of AO. copies of all such replies are filed in paper book. f) We place reliance to the decision of Jurisdictional High Court in the case of Exoimp Resources (India) Ltd. -VS- C.l.T. (2005) 276 ITR 87 (Cal) wherein it was opined that if the assessee furnishes an explanation in respect of cash credit U/s. 68, it is incumbent upon the Assessing Authority to examine the explanation and arrive at a conclusion as to whether the explanation was satisfactory. In case the explanation of the assessee is considered as not satisfactory, Assessing authority has to communicate his view point in arriving such conclusion. If thereupon the assessee submits any comments or furnishes further information, in that event, the Assessing Authority has to examine the same and arrive at his own conclusion. The inbuilt safeguard provided in section 68 cannot be ignored by the Assessing Authority at his sweet will. The documents furnished on record to establish identity and creditworthiness of the shares subscribers as well as genuineness of transactions have not been proved to false by causing any enquiry by A.O. In the absence of any attempt to find fault in these documents, it has to be presumed that the appellant discharged the burden which is cast U/s 68 of the Income Tax Act. Hence, the scope of holding that shares capital is unexplained is rare and remote. g) The provisions of section 68 stipulate that any sum found credited in the assessee’s books of account of the relevant year and in respect of which the assessee failed to explain the nature and source of such credit shall be assessed as unexplained credit. The facts of the present case as explained at para 5, 6 and 7 of this submission will reveal that both the nature and source of share application money was fully explained by the appellant. The appellant has conclusively proved the identity and creditworthiness of the share applicants as well as genuineness of transactions. The PAN details, Bank statement, Audited Accounts and I. T. Return acknowledgement of all the share application were placed on A.O. records. h) As per requirement of law, the initial burden lies on the tax payer to explain the nature and source of share application money received by the assessee It is also clear that the tax payer 5 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. has to establish satisfactorily the identity and creditworthiness of the shareholders as well as genuineness of transactions to discharge its primary burden as per mandate of section 68 of the Act. The initial burden has been duly discharged by providing the identity, creditworthiness and genuineness by furnishing copies of return along with Audit report and financial statement as well as copies of Bank statements of the shareholders as well as the appellant company. These are verifiable from relevant documents which forms part of paper book. None of these documents submitted on record have been proved to be false or bogus by Ld. A.O. by causing enquiry. Ld. A.O. has drawn adverse inference against the appellant merely on the plea that none of the directors of shareholders companies as well as individuals or karta of HUFs attended personally in terms of summons u/s 131. i) Therefore, the onus to disprove the assessee’s explanation stands shifted on the revenue. A.O. has failed to find any fault either on such explanations and or various documentary evidences establishing identity, creditworthiness and genuineness of transactions. The impugned order does not show any adverse inference relating to identity by mismatch of PAN and / or non availability of share applicant at the given address. The order also does not say that capital and reserves of shareholders fall short of their investment with the appellant company. Nor there is any attempt that there was no adequate balance in the share holders bank A/c prior to issue of cheque for investment with the appellant. Therefore the onus which shifted on the revenue cannot be said as reverted back on the taxpayer. Consequently, all the documentary evidences available on records establishing identity, creditworthiness and genuineness have to be acted upon as a valid and genuine one in the absence of any challenge from the Revenue. In the circumstances, it is pointed out that Ld. A.O. has framed assessment in most perfunctory manner and without any objective application of mind to the facts, materials and evidences placed on records. j) We have earlier explained that while allotting 93,950 shares of Rs. TO/- each at a premium of Rs. 190/- each the appellant adjusted share application money of Rs. 1,71,90,000/- received in earlier years. Hence only a balance amount of Rs. 16,00,000/- i.e. (1,87,90,000 - 1,71,90,000) may be said as cash credit u/s 68 of the Act in the present year. It is settled law that share application money received in earlier year cannot be considered as unexplained cash credit u/s 68 in the present year merely on the ground that shares were allotted in A. Y 2012-13. Further the remaining sum was mostly received from same brought forward shareholders and some new shareholders who have furnished all the requisite evidences in support of genuineness of claim. k) It is evident from assessment order that the only reason for which so-called cash credit has been considered as unexplained is that directors of shareholders companies failed to appear in person in response to summons u/s 131. We invite attention to the decision of Bombay High Court in the case of CIT - \/s - U. M. Shah, Proprietor, Shrenik Trading Co. 90ITR 396 wherein it was held -“If the parties had received the summons but did not appear, the assessee could not be blamed." l) The other allegation of Ld. A.O. shows that the assessee company as confronted with the non-compliance of summons u/s 131 by directors of Shareholder Companies and was directed to produce the shareholder companies for examination which was not acted upon. It is humbly submitted that companies Act has not given any power to direct the shareholders companies and / or to enforce attendance before A.O. We would now like to draw your attention to section 68 of the Income Tax Act which requires assessee to provide satisfactory explanation about the sum found to be credited in the books of assessee. It is a fairly settled legal position held by various decisions discussed subsequently 6 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. that if the assessee proves the following things then the addition under Section 68 of the Act cannot be made: • Identity of share holder • Genuineness of the transaction • Creditworthiness of shareholder. As to establish identity, creditworthiness and genuineness of share application received from above party, the appellant furnished various documents were submitted during the Assessment Proceedings by the AJR of the assessee. It is abundantly clear from the above that the appellant had furnished the full details of shareholder with name, address, PAN, etc from whom aggregate sum of Rs. 1,87,90,000/-was received. All the requirements of the Ld. Assessing Officer were fully complied with. The appellant did not fail to produce any relevant evidence in this respect. It is also not the case of the AO that the appellant has fallen short of filing evidences. In the instant case, the identity of the shareholder which is a body corporate was duly incorporated under the Companies Act, 1956. The share applicant company is also independently assessed to income tax under PAN which is allotted by the income tax department. Hence there is no scope to hold that the appellant company failed to discharge its obligation to establish identity of shareholder. So far as genuineness of the transactions it is stated, the impugned share were recorded in the balance sheets and duly reflected in their returns filed with the respective Assessing Officer of the share applicants. Therefore, the genuineness of the transactions regarding receipt of share application is beyond controversy and cannot be called into question. As far as creditworthiness it is stated that the detail of the share applicant furnished included their Audited balance sheet wherein Capital balance as well as reserves appearing in the share Applicant Company confirms that investments is very meagre. Therefore, the creditworthiness of shareholders is also established beyond any doubt. On reference to the details filed in the course of the proceedings u/s 143(3) which has been furnished by way of a paper book, it would be noted that in compliance to the AO’s requisition, the A/R of the appellant had furnished various documentary evidences substantiating the share capital along with the share premium monies paid by the respective share subscribers. The documents so furnished, inter alia, included copies of share application forms, copies of the relevant bank statements in respect of accounts from which share capital monies were paid, PAN and address of the share subscribers for the year ended 31st March 2012. The appellant also furnished copy of the Return of allotment filed with the ROC in Form 2 evidencing the allotment of shares to all the share subscribers. Also furnished^ were copies of bank statements evidencing those payments were made through proper backing channel! The documents furnished before the AO substantiated that each of the share applicant company was regularly assessed to tax and the payments towards share application monies was made through their respective bank accounts. The appellant submits that during the assessment proceedings it had placed before the AO full and complete information with regard to share subscription amounts received from all the shareholders. Each of the shareholders was regularly assessed to tax. Each of the shareholder possessed sufficient capital and reserves out of which share subscription amounts were paid through account payee cheques. The net owned funds of each share applicant was several times more than the investment made in equity of the appellant. The appellant had therefore established identity of the shareholders, creditworthiness of the shareholders & genuineness 7 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. of the transactions in course of- the assessment proceedings. On scrutiny of audited balance sheet of each share subscriber company filed before the AO, c is evident that each share applicant had substantial resources of their own when compared with the total investible funds available with each share applicant, investment made in the equity shares of the appellant company was not significant. Case relied by Ld AO. Ld AO referred to the judgment of IT AT Kolkata in the case of Bisakha Sales Pvt Ltd which is factually distinguishable from the instant case. The ratio of this decision cannot have any application in the present case hence same cannot be applied in the appellant case. We bring your honor’s attention to the judgment of Kolkata ITA T in the case of Riddhi Siddhi Vincome Pvt Ltd Vs CIT-III, Kolkata wherein the following observations were made ”we have revisited the decision of the Co-ordinate Bench of this Tribunal in the case of Bisakha Sales Pvt. Ltd. Here it is specifically clarified that in none of the cases relating to the 263 orders In respect of the share application/ premium cases including the decision in the case of Bisakha Sales Pvt. Ltd. has the Tribunal given any finding as to what is to be assessed and what is not to be assessed in respect of 263 orders passed by the Id. CITs in these groups of cases all that the Tribunal has done is to give its finding whether the order of the Id. CITs passed order u/s 263 are sustainable on the facts of the cases or not” Case relied by Appellant The grievance of the AO is that there was no personal compliance of the share applicant was made which is factually incorrect since the Ld AO has never issued summon u/s 131 to the share applicant. Still non appearance of share applicants or director of the appellant company cannot be the ground for addition under the act. In this regard we draw your attention to the case of Nemi Chand Kothari 136 Taxman 213, (supra), the Hon'ble Gauhati High Court has thrown light on another aspect touching the issue of onus on 6 ITA No.1162/Kpl/2015 Wiz-Tech Solutions Pvt. Ltd., AY 2012-13 "assessee under section 68, by holding that the same should be decided by taking into consideration the provision of section 106 of th.e Evidence Act which says that a person can be required to prove only such facts which are in his knowledge. The Hon'ble Court in the said case held that, once it is found that an assessee has actually taken money from depositor/lender who has been fully identified, the assessee/borrower cannot be called upon to explain, much less prove the affairs of such third party, which he is not even supposed to know or about which he cannot be held to be accredited with any knowledge", In this view, the Hon'ble Court has laid down that section 68 of Income-tax Act, should be read along with section 106 of Evidence Act. Further reliance is placed on the decision of Hon'ble Apex Court in the case of Orissa Corporation Pvt. Ltd. reported in 159 ITR 78 and Hon’ble Gujarat High Court in the case of DCIT Vs. Rohini Builders reported in 256 ITR 360 wherein it was held "Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the 'Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the -alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference 8 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. against the assessee. in the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors bytreating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69”. It is submitted that the Hon’ble Jurisdictional High Court in case of Crystal Networks (P)Ltd vs CIT reported in 353 ITR 171 (Cal) had held that when the basic evidences are on record, the mere failure of the creditor to appear before the Assessing Officer cannot be the basis to make addition. At the outset it is submitted that the equity share allotment at premium by the appellant company is neither sham nor income of the appellant. The appellants case relates to a matter before the introduction of section 56(2) (viib) of the Act. We would rely upon the recent decision in the case of Green Infra Ltd wherein the Hon’ble Mumbai IT AT held that the share allotment at premium by a company cannot be taxed as income invoking section 56 of the Income tax Act. The revenue's appeal being IT A No. 1162 of 2014 against the above order has been dismissed by the Hon'ble Bombay High Court vide its judgement dated 19.01.2017. The Hon'ble Court dismissed the contention of the Revenue that the premium of Rs. 490/- admittedly defies all commercial prudence. The court noted that the Hon’ble ITAT examined all parameters of Sec. 68 and upheld the order of the ITAT in spite of the fact that the share premium defied all commercial prudence. Furthermore, in order to justify the price of shares, the assessee company at the assessment stage had submitted before the Ld AO a copy of valuation of share certificate issued by a chartered accountant, wherein the fair market of equity shares of the assessee company was stated. It is submitted that issuing shares at a premium was a commercial decision and did not require justification under any law at that point of time. It is further submitted that share premium by its very nature is a capital receipt. Furthermore, we rely on the decision of Hon’ble Supreme Court in the case of Standard Vaccum Oil Co reported in 59 ITR 685 where it had been held that premium realized from the issue of its shares represented reserve not includible in computing the profits of the company for the purpose of Indian Income-tax Act, 1922. In addition to above, we also rely on High Court decisions in the cases of Om Oils & Seeds Exchange Ltd 152 ITR 552 and Krishnaram Baldeo Bank (P) Ltd reported in144 ITR 600 On reference to the details filed in the course of the proceedings u/s 143(3) which has been furnished by way of a paper book, it would be noted that in compliance to the AO’s requisition, the A/R of the appellant had furnished various documentary evidences substantiating the share capital along with the share premium monies paid by the respective share subscribers. The documents so furnished, inter alia, included copies of share application forms, copies of the relevant bank statements in respect of accounts from which share capital monies were paid, PAN and address of the share subscribers for the year ; , ended 31st, March 2012. The appellant also furnished copy of the Return of allotment filed with the ROC-in Form 2 evidencing the allotment of shares to the share subscribers. The documents furnished before the AO substantiated that each of the share applicant company was regularly assessed to tax and the payments towards share application monies was made through its respective bank accounts. The share applicant has also provided all the requisite details required by the Ld AO. Ld AO without taking into consideration the above mentioned facts proceed and completed the assessment after making addition u/s 68 ofthe Act The appellant-therefore submits that the AO was grossly Section 68 and the same deserves to be deleted in full.’’ 4.2. I have considered the submission assessment order. I have also considered the case laws as relied upon by both the AO and the AR in support of their respective stand in the matter. I have also gone through the paper book filed by the AR which is on record. The brief facts of the matter are that the AO made an addition of Rs. 1,87,90,000 During the year, the appellate company it at Rs. 1,78,50,500/- unexplained receipt On perusal of the assessment order and the Paper Book, it is gathered that the appellant issued share showing Share Capital and premium is reproduced hereunder. The list is actually for 43 parties and in respect of one party namely Debdoot Enclave Pvt. Ltd. no share was allotted during the year and the earlier investment of 9 I.T.A. No. Assessment Year: M/s Ritu Viniyog & Traders Pvt. Ltd. therefore submits that the AO was grossly- unjustified in making the addition under Section 68 and the same deserves to be deleted in full.’’ 4.2. I have considered the submission of the AR of the appellant in the backdrop of the assessment order. I have also considered the case laws as relied upon by both the AO and the AR in support of their respective stand in the matter. I have also gone through the paper book hich is on record. The brief facts of the matter are that the AO made an Rs. 1,87,90,000/- u/s 68 of the Act while passing the order u/s 143(3) of the Act. During the year, the appellate company raised share capital of Rs. 9,39,500/ - and the AO treated the whole amount of Rs. unexplained receipt On perusal of the assessment order and the Paper Book, it is gathered that the appellant issued share with premium to forty two (42) parties. The p showing Share Capital and premium is reproduced hereunder. The list is actually for 43 parties and in respect of one party namely Debdoot Enclave Pvt. Ltd. no share was allotted during the year and the earlier investment of Rs. 6,00,000/- was carried over to next year I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. unjustified in making the addition under of the AR of the appellant in the backdrop of the assessment order. I have also considered the case laws as relied upon by both the AO and the AR in support of their respective stand in the matter. I have also gone through the paper book hich is on record. The brief facts of the matter are that the AO made an passing the order u/s 143(3) of the Act. 9,39,500/- and premium on treated the whole amount of Rs. 1,87,90,000/-as unexplained receipt On perusal of the assessment order and the Paper Book, it is gathered premium to forty two (42) parties. The party wise list showing Share Capital and premium is reproduced hereunder. The list is actually for 43 parties and in respect of one party namely Debdoot Enclave Pvt. Ltd. no share was allotted s carried over to next year. 10 I.T.A. No. Assessment Year: M/s Ritu Viniyog & Traders Pvt. Ltd. I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. 11 I.T.A. No. Assessment Year: M/s Ritu Viniyog & Traders Pvt. Ltd. I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. 12 I.T.A. No. Assessment Year: M/s Ritu Viniyog & Traders Pvt. Ltd. I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. 4.3. On perusal of the assessment order it transpires that the AO made addition in respect of share value with premium pertaining to 42 parties. However the AO did not make any separate discussion in respect of each investor. Rather the AO made a consolidated a short discussion in respect of the addition. The AO raised the point of huge investments in shares by the investors instead of investing in their own profit making businesses or ventures. Moreover, the AO also stated that the transactions through b rotation of money. AO further narrated in the assessment order that to verify the 3 ingredients of genuine financial transaction i.e. identity of investor, genuineness of the transaction and creditworthiness of the investor directed to produce the principal officer / director / individual in respect of the company / individuals who made investment in the shares of appellant company. The AO further stated that inspite of providing sufficient opportunity to justify the position of the appellant, the appellant failed to justify the sale of shares withirpremiUmS5 and receipt of money thereon. After narrating all these issues and citing some Bisakha Sales Pvt. Ltd., both ITAT cases, and Apex Court cases of CIT Vs. Durga Prasad More and Sumati Dayal Vs. CIT, the AO made the addition of the share investment with premium in respect of 42 parties amounting to and premium of Rs.1,78,50,500/ 4.4. Though theA.O had not ma pertinent to make discussion and express my views in respect of each investor. At page Paper Book, the Balance Sheet of the appellant company from which it is ascertainable that Share Application money pending allotment as on 31.03.2011 was Rs.1,71,90,000/ Book and the individual ledger A/c is also available at page No. 124 to 126 of the Paper Book. Now on reconciliation of the list of shares allotted to the shareholders as on 31.03.2012 and list of share application money pending allotment as on 31.03.2011, it i respect of only one party i.e., Debdoot Enclave (P) Ltd., opening balance as on 01.04.2012 was Rs. 6,00,000/-, no share was allotted during the year and forward to next year and in respect of balance 37 part (1,71,90,000- 6,00,000) shares were allotted during the year. Now in respect of these 37 parties for an amount of Rs. 1,65,90,000/ the concerned year no money was receiv credited in the books of accounts and in the bank account of the appellant company during the year. As there is no credit of money either in the books of account or bank account of the appellant company, there i the Act in respect of investment of Rs. 1,65,90,000/ said sum as unexplained cash for the year under consideration. In such view of the matter the AO is directed to delete the impugned amount of Rs. 1,65,90,000/ 4.5. In respect of the following eight (8) parties, though they are old investors (share allotment is pending) but during the year they had made fresh investment for purchase of shares. The parties with final investments are furnished as follows: 13 I.T.A. No. Assessment Year: M/s Ritu Viniyog & Traders Pvt. Ltd. On perusal of the assessment order it transpires that the AO made addition in respect of share value with premium pertaining to 42 parties. However the AO did not make any separate discussion in respect of each investor. Rather the AO made a consolidated a short discussion in respect of the addition. The AO raised the point of huge investments in shares by the investors instead of investing in their own profit making businesses or ventures. Moreover, the AO also stated that the transactions through banking channel were just for the rotation of money. AO further narrated in the assessment order that to verify the 3 ingredients of genuine financial transaction i.e. identity of investor, genuineness of the transaction and creditworthiness of the investor, summon u/s 131 of the Act was issued to the appellant and directed to produce the principal officer / director / individual in respect of the company / individuals who made investment in the shares of appellant company. The AO further stated of providing sufficient opportunity to justify the position of the appellant, the appellant failed to justify the sale of shares withirpremiUmS5 and receipt of money thereon. After narrating all these issues and citing some-case lawssuch as Star Griha Pvt Bisakha Sales Pvt. Ltd., both ITAT cases, and Apex Court cases of CIT Vs. Durga Prasad More and Sumati Dayal Vs. CIT, the AO made the addition of the share investment with premium in respect of 42 parties amounting to Rs. 1,87,90,000/- (Share ca 1,78,50,500/-). had not made any investor-wise discussion but as per my opinion it pertinent to make discussion and express my views in respect of each investor. At page Balance Sheet of the appellant company –raised on 31.03 from which it is ascertainable that Share Application money pending allotment as on 1,71,90,000/- and the list of 38 parties is available at page 123 of Paper and the individual ledger A/c is also available at page No. 124 to 126 of the Paper Book. Now on reconciliation of the list of shares allotted to the shareholders as on 31.03.2012 and list of share application money pending allotment as on 31.03.2011, it i respect of only one party i.e., Debdoot Enclave (P) Ltd., opening balance as on 01.04.2012 , no share was allotted during the year and sum of Rs. forward to next year and in respect of balance 37 parties for an amount of Rs. 1,65,90,000/ 6,00,000) shares were allotted during the year. Now in respect of these 37 parties for an amount of Rs. 1,65,90,000/- payments were made in earlier years and during the concerned year no money was received by the appellant company and no money was credited in the books of accounts and in the bank account of the appellant company during the year. As there is no credit of money either in the books of account or bank account of the appellant company, there is no question of any cash credit as per provision of Section 68 of the Act in respect of investment of Rs. 1,65,90,000/-. The AO has no locus standi to add the said sum as unexplained cash for the year under consideration. In such view of the matter the is directed to delete the impugned amount of Rs. 1,65,90,000/-. 4.5. In respect of the following eight (8) parties, though they are old investors (share allotment is pending) but during the year they had made fresh investment for purchase of shares. The parties with final investments are furnished as follows: I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. On perusal of the assessment order it transpires that the AO made addition in respect of share value with premium pertaining to 42 parties. However the AO did not make any separate discussion in respect of each investor. Rather the AO made a consolidated and very short discussion in respect of the addition. The AO raised the point of huge investments in shares by the investors instead of investing in their own profit making businesses or ventures. anking channel were just for the rotation of money. AO further narrated in the assessment order that to verify the 3 ingredients of genuine financial transaction i.e. identity of investor, genuineness of the transaction and , summon u/s 131 of the Act was issued to the appellant and directed to produce the principal officer / director / individual in respect of the company / individuals who made investment in the shares of appellant company. The AO further stated of providing sufficient opportunity to justify the position of the appellant, the appellant failed to justify the sale of shares withirpremiUmS5 and receipt of money thereon. awssuch as Star Griha Pvt. Ltd. and Bisakha Sales Pvt. Ltd., both ITAT cases, and Apex Court cases of CIT Vs. Durga Prasad More and Sumati Dayal Vs. CIT, the AO made the addition of the share investment with (Share capital of T9,39,500/- but as per my opinion it-is pertinent to make discussion and express my views in respect of each investor. At page 5 of the on 31.03.2012 is available from which it is ascertainable that Share Application money pending allotment as on and the list of 38 parties is available at page 123 of Paper and the individual ledger A/c is also available at page No. 124 to 126 of the Paper Book. Now on reconciliation of the list of shares allotted to the shareholders as on 31.03.2012 and list of share application money pending allotment as on 31.03.2011, it is gathered that in respect of only one party i.e., Debdoot Enclave (P) Ltd., opening balance as on 01.04.2012 sum of Rs. 6,00,000/- carried ies for an amount of Rs. 1,65,90,000/- 6,00,000) shares were allotted during the year. Now in respect of these 37 payments were made in earlier years and during ed by the appellant company and no money was credited in the books of accounts and in the bank account of the appellant company during the year. As there is no credit of money either in the books of account or bank account of the s no question of any cash credit as per provision of Section 68 of . The AO has no locus standi to add the said sum as unexplained cash for the year under consideration. In such view of the matter the 4.5. In respect of the following eight (8) parties, though they are old investors (share allotment is pending) but during the year they had made fresh investment for purchase of shares. The In the backdrop of the three ingredients of a proper financial transaction, it is pertinent to make a discussion on each of the party separately as follows: 1. InduSahal (Rs.1,50.000 company for ,50,000/- during the year. So in this case there was fresh money credited in the books of a/c & Bank a/c of the appellant company. From page Nos. 32 to 38 of the Paper 14 I.T.A. No. Assessment Year: M/s Ritu Viniyog & Traders Pvt. Ltd. In the backdrop of the three ingredients of a proper financial transaction, it is pertinent to ake a discussion on each of the party separately as follows: 1,50.000):The share investor purchased share of the appellant during the year. So in this case there was fresh money credited in the books of a/c & Bank a/c of the appellant company. From page Nos. 32 to 38 of the Paper I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. In the backdrop of the three ingredients of a proper financial transaction, it is pertinent to ):The share investor purchased share of the appellant during the year. So in this case there was fresh money credited in the books of a/c & Bank a/c of the appellant company. From page Nos. 32 to 38 of the Paper 15 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. AWAPS9317G and regularly filing her income tax return. The share investor is available at the given address. So the identity of the shareholder proved beyond doubt. The share investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. Copies of share allotment advice and share certificate are also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and,. Balance Sheet are also available. At page 136 of the paper book duly signed confirmation of accounts are also available, These facts are the indicator of genuineness of the transaction. On perusal of the Balance Sheet, it is gathered that the total investment in shares of the investor is Rs. 33,70,000/- and therefore the investment of ,50,000/- is a small fragment of it and old investment with the appellant was Rs. 5,00,000/-, so total investment is Rs. 6,50,000/- which is a small part of total share investment of the party. So the creditworthiness of the share investor cannot be doubted. So the three basic ingredients of identity, genuineness of transaction andcreditworthiness of the party are fully satisfied here. The casual and arbitrary addition made by the AO is not-’acceptable for which the impugned addition of ,50,000/- is liable to be deleted. 2. Pawan Kumar Jajoo (HUF (Rs. 2,00.000) Here also the share investor purchased share of the appellant company for Rs. 2,00,000/- during the year. So, in this case there was fresh money credited in the books of a/cs & Bank a/c of the appellant company. From page Nos. 39 to 44 of the Paper Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investors has valid PAN being No. AAJHP7312R and regularly filing her income tax return. The share investor is available at the given address. So the identity of the shareholder cannot be doubted. The share investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. The copy of share allotment advice and share certificate is also available. Moreover, the share investor is regularly maintaining books of a/c and copies of income& Expenditure A/c andBalance Sheet are also available. At page 137 of the paper book duly signed confirmation of accounts are also available. These facts are the indicator of genuineness of the transaction. So the creditworthiness of the share investor cannot be doubted. So the three basic ingredients of identity, genuineness of transaction and creditworthiness of the party are fully satisfied here. The casual and arbitrary addition made by the AO is not acceptable for which the impugned addition of Rs. 2,00,000/- is liable to be deleted. 3. Rai Kumar Jain (HUF) (Rs.2,00,000) In this case also the share investor purchased share of the appellant company for Rs. 2,00,000/-during the year. So, in this case there was fresh money credited in the books of a/cs & Bank A/c of the appellant company. From page Nos. 45 to 50 of the Paper Book, the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. AAMHR3070B and regularly fling its income tax return. The share investor is available at the given address. So the identity of the shareholder is proved beyond doubt. The share investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. Copies of share allotment advice and share certificate are also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. At page 138 of the paper book duly signed confirmation of accounts are also available. These facts are the indicator of genuineness of the transaction. On perusal of the Balance Sheet, it is gathered that the total investment in shares of the .investor is Rs. 24,90,000/- and old investment with the appellant company was Rs. 5,00,000/-, so Total investment .is Rs. 16 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. 7,00,000/- which is a small part of total share investment of the party. So the-creditworthiness of the share investor cannot be doubted. So the three basic ingredients of identity, genuineness of transaction and creditworthiness of -the party are fully satisfied here. The casual and arbitrary addition made by the AO is not acceptable for which the impugned addition of Rs. 2,00,000/- is liable to be deleted. 4. Sabita Devi Agarwal (Rs. 1,50.000) This is a case where the share investor purchased share of the appellant company for Rs. 1,50,000/- during the year. So, in this case there was fresh money credited in the books of a/cs & Bank A/c of the appellant company. From page Nos. 51 to 57 of the Paper Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. AFWPA4191B and regularly filing her income tax return. The share investor is available at the given address. So the identity of the shareholder is proved beyond doubt. The share investor is also regularly maintaining Bank A/o and all the transactions were through the 'banking channel. The copy of share allotment advice and share certificate is also available. Moreover, the share investor regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. At page 139 of the Paper Book duly signed confirmation of accounts are also available. These facts are the indicator of genuineness of the transaction. On perusal of the Balance Sheet, it is gathered that the total investment in shares of the investor is Rs. 9,20,000/- and old investment with the appellant company was Rs. 5,00,000/-, so total investment is Rs. 6,50,000/- which is a part of total share investment of the party. So the creditworthiness of the share investor cannot be doubted. So the three basic ingredients of identity, genuineness of transaction and creditworthiness of the party are re fully satisfied here. The casual and arbitrary addition made by the AO is not acceptable for which the impugned addition of ?1,50,000/- is liable to be deleted. 5. Santosh Sharma (Rs. 1,50,000) Here also the share investor purchased share of the appellant company for ?1,50,000/- during the year. So, in this case there was fresh money credited in the books of a/cs & Bank A/c of the appellant company. From the page No. 58 to 64 of the Paper Book the documents etc of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. AMIPS8271R and regularly filing her income tax return. The share investor is available at the given address. So the identity of the shareholder is proved beyond doubt. The share investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. Copies of share allotment advice and share certificate are also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. At page 140 of the paper book duly signed confirmation of accounts are also available. These facts are the indicator of genuineness of the transaction. On perusal of the Balance Sheet, it is gathered that the total investment in shares of the investor is Rs.34,37,500/- and old investment with the appellant company was Rs. 5,00,000/-, so total investment is Rs. 6,50,000/- forms only a small part of total share investment of the party. So the creditworthiness of the share investor cannot be doubted. In such event the three basic ingredients of identity, genuineness of transaction and creditworthiness of the party are fully satisfied here'. The casual and arbitrary addition of the AO is not acceptable for which the impugned addition of Rs. 1,50,000/- is liable to be deleted. 6. Shiv Ratan Aqarwal (HUF) (Rs. 5,25.000) 17 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. "Here also, the share investor purchased share of the appellant company for Rs. 5,25,000/- during the year. So, in this case there was fresh money credited in the books of a/cs & Bank A/c of the appellant company. From page Nos. 65 to 70 of the Paper Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. AAFHS6012R. The share investor is also regularly maintaining Bank A/c and all the transactions, .were through the banking channel. Copies of share allotment advice and share . 'certificate arealso available, Moreover, the share investor is regularly maintaining books of a/c : and copies of Income & Expenditure A/c and Balance Sheet are also available. At page 141 of the paper book duly signed confirmation of accounts are also available. These facts are the vindicator of genuineness of the transaction. On perusal of the Balance Sheet, it is gathered that the total investment in shares of the investor is Rs.34,37,500/- and old investment with the appellant companywas Rs.2,00,000/-, so total investment is Rs. 7,25,000/- out of which Rs.1,00,000/- is refunded to the party and share for the sum of Rs. 6,25,000/- allotted during the year) which is a small part of total share investment of the party. So the creditworthiness of the share investor cannot be doubted. In such event the three basic ingredients of identity, genuineness of transaction and creditworthiness of the party are fully satisfied here. The casual and arbitrary addition of the AO is not acceptable for which the impugned addition of Rs. 5,25,000/- is liable to be deleted. 7. Shvam SundarSahal (HUF)(Rs. 2,00,000) Here again the share investor purchased share of the appellant company for Rs. 2,00,000/- during the year. So, in this case there was fresh money credited in the books of a/cs & Bank A/c appellant company. From page Nos. 71 to 79 of the Paper Book the documents etc. of Sis pmt are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. AAGHS5734K and regularly filing its income tax return. The share investor is available at the given address. So the identity of the shareholder is proved beyond doubt. The sham investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. Copies of share allotment advice and share certificate are also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. At page 142 of the paper book duly signed confirmation of accounts are also available. These facts are the indicator of genuineness of the transaction. On perusal of the Balance Sheet, it is gathered that the total investment in shares of the investor is Rs.13,25,000/- and old investment with the appellant company was Rs. 2,50,000/-, so total investment is Rs. 4,50,000/- which is a small part of total share investment of the party. So the creditworthiness of the share investor cannot be doubted. So the three basic ingredients of identity, genuineness of transaction and creditworthiness of the party are fully satisfied here. The casual and arbitrary addition of the AO is not acceptable for which the impugned addition of Rs. 2,00,000/- is liable to be deleted. 8. Uma Sharma (Rs. 1,50,000) Here also, the shareinvestor purchased share of the appellant company for Rs. 1,50,000/- during the year. So, in this case there was fresh money credited in the books of a/c & Bank A/c of the appellant company. From page Nos. 80 to 86 of the Paper Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. AWAPS9316H and regularly filing her income tax return. The share investor is available at the given address. So the identity of the shareholder is proved beyond doubt. The share investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. Copies of share allotment advice and share certificate are also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. At page 143 of the paper book duly signed confirmation genuineness. r of the transaction. On per investment in shares of the investor is company was Rs. 5,00,000/ share investment of the party. So the doubted. So the three basic conditions creditworthiness of the party are fully satisfied here. The casual and arbitrary additi AO is not acceptable for which the impugned addition of 4.6. Now in respect of the following five parties there are fresh investments with the appellant company for the purchase of shares during the year un parties and discussion in 1. Biiav Kumar Jaj In the Paper Book at page No. 87 to 92, the copies of various evidences are available. In the instant case, the share investor has valid PAN being No. ACPPJ5793E and the share investor is regularly filing his income tax return and the share purchaser is a address. So the identity allotment and share certificate etc. are also available. The copy of income & expenditure A/c 18 I.T.A. No. Assessment Year: M/s Ritu Viniyog & Traders Pvt. Ltd. book duly signed confirmation of accounts are also available. These facts are the indicator of genuineness. r of the transaction. On perusal of the Balance Sheet, it is gather shares of the investor is Rs. 35,27,500/- and old investment with the appellant Rs. 5,00,000/- so total investment is Rs. 6,50,000/- which is a small part of total the party. So the creditworthiness of the share investor cannot be doubted. So the three basic conditions such as -identity, genuineness of transaction and creditworthiness of the party are fully satisfied here. The casual and arbitrary additi AO is not acceptable for which the impugned addition of Rs. 1,50,000/- is liable to be deleted. 4.6. Now in respect of the following five parties there are fresh investments with the appellant company for the purchase of shares during the year under consideration. The list of these five discussion in respect of each of them are delineated as follows: joo (Rs.1,25,000) In the Paper Book at page No. 87 to 92, the copies of various evidences are available. In the instant case, the share investor has valid PAN being No. ACPPJ5793E and the share investor is income tax return and the share purchaser is a address. So the identity-of the share purchaser is proved beyond doubt. Copies of share allotment and share certificate etc. are also available. The copy of income & expenditure A/c I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. f accounts are also available. These facts are the indicator of usal of the Balance Sheet, it is gathered that the total and old investment with the appellant which is a small part of total creditworthiness of the share investor cannot be identity, genuineness of transaction and creditworthiness of the party are fully satisfied here. The casual and arbitrary addition of the is liable to be deleted. 4.6. Now in respect of the following five parties there are fresh investments with the appellant der consideration. The list of these five respect of each of them are delineated as follows: In the Paper Book at page No. 87 to 92, the copies of various evidences are available. In the instant case, the share investor has valid PAN being No. ACPPJ5793E and the share investor is income tax return and the share purchaser is available at the given of the share purchaser is proved beyond doubt. Copies of share allotment and share certificate etc. are also available. The copy of income & expenditure A/c 19 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. and Balance Sheet as on 31.03.2012 are also available. The share investor maintains regular books of a/cs. All -the transaction were through banking channel. Moreover, at page 144 of the paper book duly signed confirmation of account is available. All these documents and- evidences go to show the -genuineness of the transaction. The Balance Sheet revealed that the total investment of the share investor as on 31.03.2012 is Rs. 37,33,000/- whereas investment with the appellant company is only Rs. 1,25,000/-, which revealed that the creditworthiness and genuineness of the transaction is proved beyond doubt. So the three ingredients of a genuine business transaction of identity of the party, creditworthiness of the party and genuineness of the transaction stands proven beyond doubt for which the impugned addition of Rs. 1,25,000/- is liable to be deleted. 2. Kusum Lata Goenka (Rs. 1,00,000) Here also, the share investor purchased share of the appellant company for Rs. 1,00,000/- during the year. So in this case there was fresh money credited in the books of a/c & Bank A/c of the appellant company. From the page No. 93 to 97 of the Paper Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. ADOPG8603Q and regularly filing her income tax return and the share purchaser is available at the given address. So the identity of the share purchaser is proved beyond doubt. The share investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. The copy of share allotment letter and share certificate is also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. Moreover, at page 145 of the paper book duly signed confirmation of accounts is available, All these documents and evidences go to show the genuineness of the transaction. On perusal of the Balance Sheet, it is gathered that the total investment in shares of the investor is Rs. 24,16,700/- whereas the share investment with the appellant company is only Rs.1,00,000/-. So the creditworthiness of the share investor cannot be doubted. In such event the three ingredients of a genuine business transaction of identity of the party, creditworthiness of the party and genuineness of the transaction stands proven beyond doubt for which the impugned addition of Rs. 1,00,000/- is liable to be deleted. 3. Madhuri Devi Sahal (Rs. 2,50,000) Here also, the share investor purchased share of the appellant company for Rs.2,50,000/- during the year. So in this case there was fresh money credited in the books of a/c & Bank A/c of the appellant company. From page No. 98 to 104 of the Paper Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. ADOPG8603Q and regularly filing her income tax return and the share purchaser is available at the given address. So the identity of the share purchaser is proved beyond doubt. The share investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. The copy of share allotment letter and share certificate is also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. Moreover, at page 146 of the paper book duly signed confirmation of accounts is available. All these documents and evidences go to show the genuineness of the transaction. On perusal of the Balance Sheet, it is gathered that the total investment in shares of the investor is Rs. 27,95,000/- whereas the share investment with the appellant company is only Rs. 2,50,000/-. So the creditworthiness of the share investor cannot be doubted. So the three ingredients of a genuine business transaction of identity of the party, creditworthiness of the party and genuineness of the transaction stands proven beyond doubt for which the impugned addition of Rs. 2,50,000/- is liable to be deleted. 20 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. 4. Santosh Aqarwal (Rs.1,25,000) Here also, the share investor purchased share of the appellant company for Rs. 1,25,000/- during the year. So in this case there was fresh money credited in the books of a/c & Bank A/c of the appellant company. From page No. 105 to 107 of the Paper Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. ABCPA4394C and regularly filing his income tax return and the share purchaser isavailable at the given address. So the identity of the share purchase^ improved beyond doubt. The share investor is also regularly maintaining Bank A/'c and all the transactions were through the banking channel. Copies of share allotment letter and share certificate are also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. All the transactions were through banking channel. Moreover, at page 147 of the paper book duly signed confirmation of accounts is available. All these documents and evidences go to show the genuineness of the transaction. So the creditworthiness of the share investor cannot be doubted as well. So the three ingredients of a genuine business transaction of identity of the party, creditworthiness of the party and genuineness of the transaction stands proven beyond doubt for which the impugned addition of Rs. 1,25,000/- is liable to be deleted. 5. Sanwar Mai Aqarwal (Rs.3,25,000/-) Here also, the share investor purchased share of the appellant company for Rs.3,25,000/- during the year. So in this case there was fresh money credited in the books of a/c & Bank A/c of the appellant company. From page No.108 to 113 of the Paper Book the documents etc. of this party are available. On perusal of those papers etc. it revealed that the share investor has valid PAN being No. ACMPA3952F and regularly filing his income tax return and the share purchaser is available at the given address. So the identity of the share purchaser is proved beyond doubt. The share investor is also regularly maintaining Bank A/c and all the transactions were through the banking channel. Copies of share allotment letter and share certificate are also available. Moreover, the share investor is regularly maintaining books of a/c and copies of Income & Expenditure A/c and Balance Sheet are also available. Moreover, at page 148 of the paper book duly signed confirmation of accounts is available. All these documents and evidences go to show the genuineness of the transaction. So the creditworthiness of the share investor cannot be doubted as well. So the three ingredients of a genuine business transaction of identity of the party, creditworthiness of the party and genuineness of the transaction stands proven beyond doubt for which the impugned addition of Rs. 3,25,000/- is liable to be deleted. 4.7. In view of the foregoing the entire impugned addition of Rs. 1,87,90,000/- madeby the AO u/s 68 of the Act is hereby directed to be deleted. These grounds areallowed.” 6. After hearing the rival parties and perusing the material on record including the impugned order, the undisputed facts as culling out are that during the year the assessee allotted equity shares amounting to Rs. 1,87,90,000/- out of which Rs. 1,71,90,000/- was received in earlier assessment years. The details of said money received in earlier years are given in the tables in the appellate order as extracted 21 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. hereinabove. The Ld. CIT(A) has given a finding of facts to this effect in the appellate order. We note that the assessee has issued shares to 42 parties amounting to Rs. 1,87,90,000/- comprising of share capital of Rs. 9,39,500/- and share premium of Rs. 1,78,50,500/-. We also note that only net amount Rs. 16,00,000/- out of the above amount was received during the year whereas the balance was received in the earlier assessment years and a finding a fact was recorded by the Ld. CIT(A) to this effect also. We note that the Ld. CIT(A) observed that 43 rd party in whose name a sum of Rs. 6,00,000/- was coming from earlier years as share application money, there was no allotment during the year. The Ld. CIT(A) therefore noted that so far as the allotment of shares against the money which was received in the earlier years is concerned ,the provisions of Section 68 of the Act were not attracted. In our opinion this is the correct position of law, as money received in the earlier assessment years cannot be termed as received during the year and therefore the same cannot be considered as cash credit in the books of accounts of the assessee during the instant year. The Ld. CIT(A) also noted that from 8 parties from whom Rs. 17,25,000/- received during the year were old and the assesse had received a sum of Rs. 34,50,000/-in the earlier assessment years as apparent from the details given in the appellate order. The Ld. CIT(A) discussed each and every party and recorded a finding of fact that the identity, creditworthiness of the investors and genuineness of the transactions were duly proved. Similarly a finding was recorded in respect of 5 parties from whom Rs. 9,25,000/- was received during the year that identity, creditworthiness of the investors and genuineness of the transactions were duly proved and finally the Ld. CIT(A) after taking into accounts all the facts and arguments of both sides ,passed a detailed and reasoned order deleting the addition by allowing the appeal of the assessee. We note that the assessee has filed all the evidences before the AO as well as before the Ld. CIT(A) in respect of money received during the year as well as in earlier years comprising names, addresses, bank statements, confirmations, audited accounts etc. which confirmed these investments in the assessee company. Mere fact that summons issued u/s 131 were not complied with and honoured by the assessee to produce the 22 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. directors of the investing companies could not be a ground for making addition. The case of the assesse finds support from the decisions which are discussed as under: a) CIT vs Usha Stud Agricultural Farms Ltd reported in 301 ITR 384 Delhi High Courtheld that “ since it is a finding of fact recorded by the CIT(A) that this credit balance appearingin the accounts of the assess. Does not pertain to the year under consideration, under thesecircumstances, the assessing officer was not justified in making the impugned addition u/s 68of the Act and as such no fault can be found with the order of the Tribunal which has endorsedthe decision of the CIT(A). b) DCIT vs Amod Petrochem Private Limited reported in 307 ITR 265 Gujrat High Courtheld that “in other words, what came in the books of accounts of the assessee company forthe previous year relevant year to the assessment year in question, The tribunal was,therefore, justified, in holding that the assessees liabilities to pay tax in respect of unexplaineddeposits of Rs. 1,61,895/- did not arise. c) Shri Vardhman Overseas Ltd reported in 24 SOT 393 Delhi ITAT held that “since theamounts in question were brought forward balances, they could not be added to income of theassessee for the year under consideration, as the question of genuineness thereof could beexamined only in the year in which they were credited to the account of the assessee”. d) The Hon'ble Apex Court in the case of Orissa Corporation Pvt. Ltd. reported in 159 ITR 78 and Hon’ble Gujarat High Court in the case of DCIT Vs. Rohini Builders reported in 256 ITR 360 wherein it was held "Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the 'Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the -alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference against the assessee. in the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors bytreating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69”. e) The Hon’ble Jurisdictional High Court in case of Crystal Networks (P)Ltd vs CIT reported in 353 ITR 171 (Cal) had held that when the basic evidences are on record, the mere failure of the creditor to appear before the Assessing Officer cannot be the basis to make addition. Considering the facts as narrated above and ratio laid down in the above decisions , we are of the considered view that the money received in the earlier years can not be 23 I.T.A. No.41/Kol/2021 Assessment Year: 2012-13 M/s Ritu Viniyog & Traders Pvt. Ltd. taxed as unexplained cash credit during the year. We further hold that the assesse has proved and satisfied all the conditions of section 68 of the Act qua the money received during the year. Therefore the ld CIT(A) has rightly deleted the addition. Accordingly we uphold the order of ld. CIT(A) by dismissing the appeal of the revenue. 7. In the result, the appeal of the revenue is dismissed. Order is pronounced in the open court on 17 th November, 2022 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 17 th November, 2022 SB, Sr. PS Copy of the order forwarded to: 1. Appellant- ITO, Ward-4(1), Kolkata 2. Respondent – M/s Ritu Viniyog & Traders Pvt. Ltd., 315, Todi Chambers, 3 rd Floor, 2, Lal bazaar Street, Kolkata-700001. 3. Ld. CIT(A)-7, Kolkata (Sent through e-mail) 4. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata
Other Referred Cases
CIT vs Usha Stud Agricultural Farms Ltd, DCIT vs Amod Petrochem Private Limited, Shri Vardhman Overseas Ltd vs CIT, Exoimp Resources (India) Ltd vs CIT, Orissa Corporation Pvt. Ltd vs CIT, DCIT vs Rohini Builders, Crystal Networks (P) Ltd vs CIT
Laws Referred To
Income Tax Act, 1961
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