ITO, Wd-10(2), Kolkata, Kolkata V. M/s Sanskrita Properties Pvt. Limited, Kolkata

ITA 694/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3577 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Keywords: Unexplained cash credit; Gift; Revision of order; Question of law; Onus to prove
• Section: 131; 68; 69; 271(1)(c); 142(1); 133(6); 195

Judgement Text

1 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 694/KOL/2017 ASSESSMENT YEAR: 2012-13 INCOME-TAX OFFICER, WARD-10(2), KOLKATA VS. M/S. SANSKRITA PROPERTIES P. LTD. (PAN: AAQCS5128J) APPELLANT RESPONDENT FOR THE APPELLANT SHRI ROBIN CHOUDHURY, ADDL. CIT FOR THE RESPONDENT SHRI ANIL KOCHAR, ADVOCATE DATE OF HEARING 12.12.2018 DATE OF PRONOUNCEMENT 20.02.2019 ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL OF THE REVENUE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -4, KOLKATA FOR AY 2012-13 DA TED 02.02.2017. 2. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ACTION OF THE LD. CIT(A) IN RELATING TO THE ADDITION MADE BY THE AO U/S. 68 OF THE INCOM E-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY HAS RAISED SHARE CAPITAL INCLUDING PREMIUM TO THE TUNE OF RS.5,96,00,000/- B Y ISSUING 2,38750 NUMBER OF SHARES. OUT OF WHICH 5000 SHARES EACH WAS ALLOTTED TO BOTH THE DIRECTORS AT PAR; 2000 SHARES WERE ALLOTTED TO A PRIVATE LIMITED GROUP AT PAR AND THE BALANCE FORM OF SHARES I.E. 28,750 SHARES WERE ALLOTTED TO OTHER INVESTORS (CORPORATE ENTITY AT RS.2000/- EACH AT FACE VALUE OF RS.10/- AND AT A PREMIUM OF RS.1990/- ONLY). ACCORDING TO AO, THE PREMIUM ON SHARES WERE UNREASONABLE AND UNBELIEVABLY HIGH AND AFTER ISSUIN G STATUTORY NOTICES ETC. THE AO WAS OF 2 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 THE OPINION THAT THE MERE RECEIPT OF SHARE PREMIUM FROM CORPORATE ENTITIES THROUGH BANKING CHANNEL DOES NOT JUSTIFY THE CREDITWORTHINESS OF TH E SHAREHOLDER AND MERELY BY SUBMITTING PAPERS AND DOCUMENTS DO NOT IN ANY WAY MEAN COMPLIA NCE. THEREFORE, THE AO RELYING UPON THE HONBLE SUPREME COURT DECISION IN SUMATI DAYAL VS. CIT 214 ITR 801 (SC) ADDED THE ENTIRE SHARE CAPITAL INCLUDING SHARE PREMIUM TO THE TUNE OF RS.5,96,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U /S. 68 OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DELETE THE SAME. AGGRIEVED, REVENUE IS BEFORE US. 4. ASSAILING THE DECISION OF THE LD. CIT(A), THE LD . DR CONTENDED THAT THE LD. CIT(A) ERRED IN RELYING UPON THE JUDGMENT OF THE HONBLE S UPREME COURT IN LOVELY EXPORTS AND IT IS TRITE LAW THAT RATIO OF ANY JUDGMENT CANNOT BE S EEN DIVORCED FROM ITS FACTS. THE LD. DR BEFORE US CITED THE DECISION OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS. MAITHAN INTERNATIONAL (2015) 277 CTR 65 (CAL) AND D REW OUR ATTENTION TO THE PORTION OF THE JUDGMENT WHEREIN THE HONBLE CALCUTTA HIGH COURT HA S DEALT WITH THE DECISION IN LOVELY EXPORTS AND DISTINGUISHED THE FACTS. THE LD. DR TO OK PAINS TO DEMONSTRATE BEFORE US THAT CIT VS. NAVA PROMOTERS & FINLEASE P. LTD. (2012) 3 42 ITR 0169 (DEL.) THE HONBLE DELHI HIGH COURT HAS ALSO DISTINGUISHED THE ORDER OF THE HONBLE SUPREME COURT IN LOVELY EXPORTS. THE LD. DR CITED THE DECISION IN THE CASE OF CIT VS. NAVODAYA CASTLES PVT. LTD. (2014) 367 ITR 0306 (DEL.). TO BUTTRESS HIS CASE H E ALSO DREW OUR ATTENTION TO THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN CIT VS. ACTIV E TRADERS (P) LTD. (1995) 214 ITR 583 (CAL) AND MIMEC (INDIA) P. LTD. VS. DCIT (2013) 353 ITR 0284 (CAL). THE LD. DR ALSO CITED THE DECISION OF HONBLE CALCUTTA HIGH COURT I N CIT VS. NIVEDAN VANIJYA NIYOJAN LTD. (2003) 263 ITR 0623 (CAL) AS WELL AS THIS TRIBUNAL S ORDER IN M/S/. SUBHALAKSHMI VANIJYA PVT. LTD. & ORS. IN ITA NO. 1104/KOL/2014 DATED 30. 07.2015 AND OTHER CASES INCLUDING THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD. 208 IT R 465 TO SAY THAT THE ASSESSEE FAILED TO DISCHARGE THE CREDITWORTHINESS OF THE SHARE SUBSCRI BERS SO APPLYING SECTION 68 ADDITION AS MADE BY THE AO IS LEGALLY TENABLE. THEREFORE, ACCO RDING TO LD. DR, THE DECISION OF THE LD. CIT(A) NEEDS TO BE OVERTURNED AND THAT OF THE AO BE RESTORED. 3 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 5. PER CONTRA, THE LD. AR DREW OUR ATTENTION TO PAG ES 8 TO 13 OF THE IMPUGNED ORDER OF LD. CIT(A) WHEREIN THE HE HAS CLEARLY TAKEN NOTE OF THE FACT THAT THE ASSESSEE HAS DISCHARGED THE ONUS CASTED UPON IT TO PROVE THE IDENTITY, CRED ITWORTHINESS AND GENUINENESS OF THE TRANSACTION. ACCORDING TO LD. AR, ALL THE NOTICES U/S. 133(6) OF THE ACT AND EVEN SUMMONS U/S. 131 OF THE ACT HAS BEEN COMPLIED WITH AND SINC E ALL THE TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH BANKING CHANNELS AND THE SHARE SUBSCRIB ERS ARE ALL INCOME TAX ASSESSEES AND THE DOCUMENTS FILED BEFORE THE AO COULD NOT BE FAULTED WITH, THE AOS ACTION WAS BASED ON CONJECTURE AND SURMISES AND, THEREFORE, THE LD. CIT (A) BY A REASONED ORDER FROM PARA 4.2 TO 4.9 HAS ELABORATELY DEALT WITH THE EVIDENCE FURNISH ED BY THE ASSESSEE AND THEREAFTER TAKING NOTE OF THE HONBLE SUPREME COURT DECISIONS AND OTH ER DECISIONS OF HONBLE HIGH COURTS HAS GIVEN RELIEF TO THE ASSESSEE WHICH DOES NOT CAL L FOR ANY INTERFERENCE FROM OUR PART. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE HAS DISCLOSED RECEI PT OF SHARE CAPITAL MONEY INCLUDING SHARE PREMIUM TO THE TUNE OF RS.5,96,00,000/- FROM VARIOU S SHARE SUBSCRIBERS WHICH ARE CORPORATE ENTITIES. WE NOTE THAT DURING THE ASSESSMENT PROCE EDING, THE AO HAS ISSUED NOTICES U/S. 133(6) TO ALL THE SUBSCRIBERS AND HAS ACKNOWLEDGED THAT THE NOTICES U/S. 133(6) WERE FULLY COMPLIED WITH BY THE SHARE SUBSCRIBERS. WE NOTE TH AT THE AO FURTHER NOTED THAT SUMMONS U/S. 131 OF THE ACT WAS ISSUED TO THE DIRECTOR OF T HE ASSESSEE COMPANY WHICH HAS BEEN COMPLIED WITH AND HIS STATEMENT HAS BEEN RECORDED A LSO. THE AO ALSO DIRECTED THE ASSESSEE COMPANY TO PRODUCE ITS DIRECTORS OF THE SHARE SUBSC RIBERS WHICH WAS ALSO COMPLIED WITH. WE NOTE THAT THE AO HAS ACKNOWLEDGED THAT THE DIREC TOR OF THE ASSESSEE COMPANY PRODUCED SOME OF THE DIRECTORS OF THE INVESTOR COMPANY FOR T HEIR CROSS EXAMINATION AND THEIR DEPOSITIONS WERE RECORDED BY THE AO AND WAS KEPT IT ON RECORD AS DISCERNIBLE FROM READING OF THE ASSESSMENT ORDER. DESPITE THE COMPLIANCES A S AFORESAID BY THE ASSESSEE AND THE SHARE SUBSCRIBING COMPANIES, ACCORDING TO AO THE ASSESSEE FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE INVESTORS DESPITE REASONABLE OPPORTUNITY GIV EN TO IT. 7. ON APPEAL, WE NOTE THAT THE LD. CIT(A) HAS GIVEN A CLEAR FINDING OF FACT THAT ALL THE SHARES SUBSCRIBERS AND REGULARLY ASSESSED TO INCOME TAX AND THE INVESTMENT MADE BY EACH OF 4 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 THEM ARE DULY REFLECTED IN THEIR AUDITED BOOKS OF A CCOUNT AS WELL AS THEIR RESPECTIVE INCOME- TAX RETURN. THE LD. CIT(A) HAS NOTED THAT THE ASSE SSEE IN PURSUANCE TO THE QUERIES/DIRECTIONS MADE BY THE AO FROM TIME TO TIME HAS FILED COPIES O F ITS AUDITED ANNUAL ACCOUNTS INCLUDING VARIOUS DOCUMENTS AND DETAILS AS DESIRED BY THE AO. THE LD. CIT(A) HAS TAKEN NOTE THAT THE DETAILS AND DOCUMENTS PRODUCED BEFORE THE AO INCLUD ED, INTER ALIA, FULL DETAILS OF EACH OF THE SHARE APPLICANTS WHO HAD SUBSCRIBED TO THE PAID UP SHARE CAPITAL AS WELL AS SHARE PREMIUM MONEY RAISED BY THE ASSESSEE. THE LD. CIT(A) HAS TA KEN NOTE THAT PURSUANT TO THE NOTICE ISSUED BY THE AO U/S. 133(6) OF THE ACT ALL THE SHA RE SUBSCRIBERS HAD DULY COMPLIED WITH THE REQUIREMENT STATED IN THE NOTICE. THE LD. CIT(A) T AKING NOTE OF THE FOLLOWING FACTS WAS OF THE OPINION THAT IDENTITY WAS PROVED THAT IS SINCE THE NOTICE U/S. 133(6) OF THE ACT HAVE BEEN DULY SERVED UPON THE RESPECTIVE SHARE SUBSCRIBERS A T THEIR RESPECTIVE ADDRESSES; AND SINCE ALL THE SHARE SUBSCRIBING COMPANIES HAVE BEEN DULY REGI STERED WITH THE REGISTRAR OF COMPANIES FUNCTIONING UNDER THE MINISTRY OF CORPORATE AFFAIRS ; AND THAT THE SHARES SUBSCRIBERS HAVE THEIR RESPECTIVE PAN AND ALL THE SHARE SUBSCRIBERS HAVE RESPONDED TO THE STATUTORY NOTICE ISSUED U/S. 133(6) OF THE ACT AND 131 OF THE ACT AS WELL. MOREOVER, THE LD. CIT(A) NOTED THAT THE SHARE SUBSCRIBERS HAVE DISCLOSED IN THEIR REPLIES THEIR RESPECTIVE PAN ALONG WITH THE ACKNOWLEDGMENT OF SUBMITTING THEIR RETURN OF INCOME AND HAD DULY FURNISHED THEIR AUDIT REPORTS AND FINANCIAL STATEMENTS. THUS, THE LD. CI T(A) CAME TO THE CONCLUSION THAT THE IDENTITY STANDS PROVED WHICH FINDING WE ALSO ENDORS E. THE LD. CIT(A) HAS OBSERVED THAT EACH OF THE SHARE APPLICANTS MAINTAINED BANK ACCOUN TS AND COPIES OF THEIR RESPECTIVE BANK ACCOUNTS FROM WHICH THEY MADE PAYMENT TO THE ASSESS EE FOR SUBSCRIBING THE SHARES ISSUED TO THEM WAS FILED BEFORE THE AO AND THE SHARE APPLICAN TS HAVE CONFIRMED THAT THEY HAVE SUBSCRIBED TO THE SHARES ISSUED BY THE ASSESSEE AND THAT SUCH TRANSACTIONS WERE DULY REFLECTED IN THEIR RESPECTIVE BOOKS OF ACCOUNTS AS WELL AS IN THEIR AUDITED BALANCE SHEET. THUS, THE LD. CIT(A) WAS OF THE OPINION THAT THESE DOCUMENTS AND ACTION GOES ON TO PROVE THE GENUINENESS OF THE TRANSACTIONS WHICH WE ALSO A GREE. NOW, COMING TO THE CREDITWORTHINESS OF THE SHARE SUBSCRIBERS, THE LD. CIT(A) HAS NOTED THAT THE NET WORTH OF EACH OF THE SHARE APPLICANTS AS DISCLOSED IN THEIR RESPECTIVE BALANCE SHEET FAR EXCEEDED THE AMOUNT OF INVESTMENT MADE BY THEM IN THE SHARES OF THE ASSESSEE COMPANY. THIS FACT ACCORDING TO LD CIT(A) GOES ON TO PROVE THAT THE SH ARE SUBSCRIBERS HAVE ADEQUATE 5 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 CREDITWORTHINESS TO MAKE INVESTMENT IN THE SHARE CA PITAL OF THE ASSESSEE. THIS FINDING OF FACT OF THE LD. CIT(A) THAT HE HAS PERUSED THE RESP ECTIVE BALANCE SHEET OF THE SHARE APPLICANTS AND THAT THE NET WORTH OF EACH OF THE SH ARE APPLICANTS AS DISCLOSED IN THEIR BALANCE SHEET FAR EXCEEDED THE INVESTMENT MADE BY THEM IN THE SHARES OF THE ASSESSEE COMPANY HAS NOT BEEN CHALLENGED BY THE REVENUE AS A SPECIFIC GR OUND BY PREFERRING A QUESTION OF FACT BEFORE US IN THIS INSTANT APPEAL, CONSEQUENTLY, THE AFORESAID FINDING OF FACT MADE BY THE LD. CIT(A) HAS CRYSTALLIZED AND CANNOT BE DISTURBED. MO REOVER, LD CIT(A) FINDING CANNOT BE CALLED AS A PERVERSE BECAUSE HIS FINDING OF FACT WA S AFTER PERUSAL OF THE RESPECTIVE AUDITED BALANCE SHEET OF THE SHARE-SUBSCRIBERS. SO WE GIVE OUR IMPRIMATUR TO THE VIEW OF LD CIT(A) THAT THE SHARE SUBSCRIBERS HAVE ADEQUATE CREDITWORT HINESS TO MAKE INVESTMENT IN THE SHARE CAPITAL OF THE ASSESSEE THE LD. AR DREW OUR ATTENTI ON TO THE SIMILAR CASE OF THE ASSESSEES OWN GROUP WHICH WAS DECIDED BY THE TRIBUNAL C BEN CH, KOLKATA IN ITO VS. M/S. SHLOK FASHIONS PVT. LTD. IN ITA NO. 695/KOL/2017 DATED 07 .12.2018 WHEREIN ON SIMILAR FACTS THE AO HAS MADE THE ADDITION WHEREIN THE ASSESSEE AS WE LL AS THE SHARE APPLICANTS HAVE COMPLIED WITH ALL THE REQUISITIONS OF THE AO, WHERE IN THE TRIBUNAL UPHELD THE ORDER OF THE LD. CIT(A) BY HOLDING AS UNDER: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE COMPANY HAD DULY COMPL IED WITH ALL THE DETAILS THAT WERE REQUISITIONED IN THE QUESTIONNAIRE ALONG WITH NOTIC E U/S 142(1) OF THE ACT IN THE COURSE OF ASSESSMENT PROCEEDINGS BY FURNISHING THE ENTIRE DET AILS OF SHAREHOLDERS WHO HAD INVESTED IN SHARE CAPITAL AND SHARE PREMIUM IN THE ASSESSEE COM PANY. IT IS NOT IN DISPUTE THAT THE LD AO SOUGHT TO VERIFY THE DETAILS FILED BY THE ASSESSEE BY WAY OF ISSUE OF NOTICE U/S 133(6) OF THE ACT DIRECTLY . IT IS NOT IN DISPUTE THAT ALL THE SHARE HOLDERS DIRECTLY REPLIED IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT BEFORE THE LD AO CONFIRMING THEIR FACTUM OF INVESTMENTS IN SHARE CAPITAL AND SHARE PREMIUM OF THE ASSESSEE COMPANY. LATER THE L D AO ISSUED SUMMONS U/S 131 OF THE ACT TO THE DIRECTOR OF THE ASSESSEE COMPANY AND ALSO DIREC TED HIM TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANIES. THE DIRECTOR OF THE ASSESSEE C OMPANY APPEARED BEFORE THE LD AO AND A STATEMENT ON OATH U/S 131 OF THE ACT WAS RECORDED F ROM HIM BY THE LD AO. IT IS ALSO NOT IN DISPUTE THAT THE DIRECTORS OF THE INVESTOR COMPANIE S ALSO APPEARED BEFORE THE LD AO AND FROM WHOM STATEMENTS ON OATH WERE RECORDED BY THE LD AO. THESE FACTS ARE ALSO STATED BY THE LD AO IN HIS ASSESSMENT ORDER. THE DIRECTORS OF THE INVE STOR COMPANIES IN THEIR STATEMENTS ON OATH, DID CONFIRM THE FACTUM OF INVESTMENTS MADE IN THE A SSESSEE COMPANY TOWARDS SHARE CAPITAL AND SHARE PREMIUM. NO ADVERSE INFERENCE WAS DRAWN BY THE LD AO WITH REGARD TO THOSE DEPOSITIONS. WHILE IT IS SO, IT COULD BE SAFELY CON CLUDED THAT THE ASSESSEE HAD DISCHARGED ITS ONUS IN FULL EVEN BY PRODUCING THE DIRECTORS OF THE INVE STOR COMPANIES IN RESPONSE TO SUMMONS U/S 131 OF THE ACT , EVENTHOUGH IT IS NOT THE DUTY OF T HE ASSESSEE TO DISCHARGE THE SAME. 5. IT IS NOT IN DISPUTE THAT THE AMOUNTS WERE RECEI VED BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES OR REAL TIME GROSS SETTLEMENT (RTGS) THROUG H REGULAR BANKING CHANNELS. THE AUTHORIZED SHARE CAPITAL OF THE ASSESSEE COMPANY HA D BEEN DULY INCREASED TO ACCOMMODATE THE 6 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 RECEIPT OF SHARE CAPITAL AND THE NECESSARY STATUTOR Y RETURNS IN THAT REGARD WERE DULY FILED WITH THE REGISTRAR OF COMPANIES TOGETHER WITH THE RETURN OF ALLOTMENT OF SHARES TO THE RESPECTIVE SHAREHOLDERS. ALL THE SHAREHOLDERS ARE REGULAR INCO ME TAX ASSESSEES ASSESSED AT KOLKATA. THE ENTIRE DETAILS OF NAMES, ADDRESSES OF SHAREHOLDERS, PAN, INCOME TAX ASSESSMENT PARTICULARS, BANK STATEMENTS, IMMEDIATE SOURCE OF CREDIT FOR MAK ING INVESTMENTS IN THE ASSESSEE COMPANY AND AUDITED FINANCIAL STATEMENTS DULY REFLECTING TH E AMOUNTS INVESTED IN THE ASSESSEE COMPANY AND ALSO PROVING THE CREDITWORTHINESS TO MAKE INVES TMENTS IN ASSESSEE COMPANY. NO ADVERSE INFERENCES WERE DRAWN FROM THE DETAILS SUBMITTED BY THE ASSESSEE AS WELL AS BY THE SHAREHOLDERS BEFORE THE LD AO. WE FIND THAT THE ASSESSEE HAD DU LY DISCHARGED THE NATURE AND SOURCE OF CREDIT REPRESENTED IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM WITHIN THE MEANING OF SECTION 68 OF THE ACT. THE DOCUMENTS RELATING TO SOURCE OF SOURCE OF INVESTOR COMPANIES WERE ALSO PRODUCED BEFORE THE LD AO DIRECTLY BY THE INVESTOR COMPANIES . 6. AS PER THE MANDATE OF SECTION 68 OF THE ACT, THE NATURE AND SOURCE OF CREDIT IN THE BOOKS OF THE ASSESSEE COMPANY HAS BEEN DULY EXPLAINED BY THE ASS ESSEE. THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM FROM SHARE APPLI CANTS. THE NATURE OF RECEIPT TOWARDS SHARE CAPITAL IS WELL ESTABLISHED FROM THE ENTRIES PASSE D IN THE RESPECTIVE BALANCE SHEETS OF THE COMPANIES AS SHARE CAPITAL AND INVESTMENTS, AS THE CASE MAY BE. HENCE THE NATURE OF RECEIPT IS PROVED BY THE ASSESSEE BEYOND DOUBT. IN RESPECT OF SOURCE OF CREDIT, THE ASSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIENTS I.E IDENTITY OF SHA RE APPLICANTS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF SHARE APPLICANTS. THE IDENTITY OF SHARE APPLICANTS IS PROVED BEYOND DOUBT BY THE ASSESSEE BY FURNISHING THE NAME, ADDRESS, PA N OF SHARE APPLICANTS TOGETHER WITH THE COPIES OF BALANCE SHEETS, INCOME TAX RETURNS, BANK STATEMENTS, DETAILS OF SOURCE OF SOURCE ETC. WITH REGARD TO THE CREDITWORTHINESS OF SHARE APPLIC ANTS, THESE COMPANIES ARE HAVING CAPITAL IN SEVERAL CRORES OF RUPEES AND THE INVESTMENT MADE IN THE ASSESSEE COMPANY IS A SMALL PART OF THEIR CAPITAL. THESE TRANSACTIONS ARE ALSO DULY RE FLECTED IN THE BALANCE SHEETS OF THE SHARE APPLICANTS. BY THIS, THE CREDITWORTHINESS OF SHARE APPLICANTS IS ALSO PROVED BEYOND DOUBT. WITH REGARD TO GENUINENESS OF TRANSACTIONS, THE MONIES H AVE BEEN DIRECTLY PAID TO THE ASSESSEE COMPANY BY ACCOUNT PAYEE CHEQUES OR BY RTGS OUT OF SUFFICIENT BANK BALANCES AVAILABLE IN THEIR RESPECTIVE BANK ACCOUNTS. WE FIND THAT THE A SSESSEE HAD EVEN PROVED THE SOURCE OF MONEY DEPOSITED INTO THE RESPECTIVE BANK ACCOUNTS OF SHAR E APPLICANTS, WHICH IN TURN HAD BEEN USED BY THEM TO SUBSCRIBE TO THE ASSESSEE COMPANY AS SHARE APPLICATION. HENCE THE SOURCE OF SOURCE IS ALSO PROVED IN THE INSTANT CASE THOUGH THE SAME IS NOT REQUIRED TO BE DONE BY THE ASSESSEE AS PER LAW. THE SHARE APPLICANTS HAVE CONFIRMED THE FACT O F INVESTMENT IN SHARE CAPITAL AND SHARE PREMIUM IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT AND HAVE ALSO CONFIRMED THE PAYMENTS WHICH ARE DULY CORROBORATED WITH THEIR RESPECTIVE B ANK STATEMENTS AND ALL THE PAYMENTS ARE BY ACCOUNT PAYEE CHEQUES. THE DIRECTORS OF THE SHARE APPLICANTS HAD ALSO DEPOSED BEFORE THE LD AO IN RESPONSE TO SUMMONS U/S 131 OF THE ACT AND CO NFIRMED ALL THE TRANSACTIONS WITH THE ASSESSEE COMPANY. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ORISSA CORPORATION P LTD REPOR TED IN 159 ITR 78 (SC) AND HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS ROHINI BU ILDERS REPORTED IN 256 ITR 360 (GUJ) , WHEREIN IT WAS HELD THAT ONUS OF THE ASSESSEE (IN W HOSE BOOKS OF ACCOUNT, THE CREDIT APPEARS) STANDS FULLY DISCHARGED, IF THE IDENTITY OF THE CRE DITOR IS ESTABLISHD AND ACTUAL RECEIPT OF MONEY FROM SUCH CREDITOR IS PROVED. IN CASE, THE ASSESSI NG OFFICER IS DISSATISFIED ABOUT THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNTS OF THE CREDITO RS , THE PROPER COURSE WOULD BE TO ASSESS SUCH CREDIT IN THE HANDS OF THE CREDITOR (AFTER MAK ING DUE ENQUIRIES FROM SUCH CREDITOR). IN ARRIVING AT THIS CONCLUSION, THE HONBLE COURT HAS FURTHER STRESSED THE PRESENCE OF WORD MAY IN SECTION 68 OF THE ACT. RELEVANT OBSERVATIONS OF HONBLE GUJARAT HIGH COURT AT PAGES 369 & 370 ARE AS UNDER :- MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDI TORS COULD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE ASSESSING OFFICER, CANNOT BE A GR OUND 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 7 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 THE CASE OF ORISSA CORPORATION (1986) 159 ITR 78. I N 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 REVENUES CASE AND IN ORDER TO SUSTAIN THE ADDITION THE REVENUE HAS TO PURSUE T HE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON- COMPLIANCE OF SUMMON S ISSUED BY THE ASSESSING OFFICER UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE S UFFICIENT TO DRAW AND ADVERSE INFERENCE AGAINST THE ASSESSEE. IN THE CASE OF SIX CREDITORS WHO APPE ARED 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 CAS E THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CASH AMOUNT DEPOSITED BY THOSE CREDITORS I N THEIR BANK ACCOUNTS, THE PROPER COURSE WOULD HAVE BEEN TO MAKE ASSESSMENTS IN THE CASES OF THOSE CREDITORS BY TREATING THE CASH DEPOSITS IN THEIR BANK ACCOUNTS AS UNEXPLAINED INVE STMENTS OF THOSE CREDITORS UNDER SECTION 69. FURTHER, WE MAY POINT OUT THAT SECTION 68 UNDER WHI CH THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER READS AS UNDER: '68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ' THE PHRASEOLOGY OF SECTION 68 IS CLEAR. THE LEGISLA TURE HAS LAID DOWN THAT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH CRED IT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IN TH IS CASE THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS 'SHALL BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE SUPREME COURT WHILE INTERPRETING SIMILA R PHRASEOLOGY USED IN SECTION 69 HAS HELD THAT IN CREATING THE LEGAL FICTION THE PHRASEOLOGY EMPLOYS THE WORD MAY AND NOT SHALL. THUS THE UNSATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS THE INCOME OF T HE ASSESSEE AS HELD BY THE SUPREME COURT IN THE CASE OF CIT VS. SMT. P.K. NOORJAHAN [1999] 237 I TR 570. IT WOULD BE PERTINENT TO NOTE THAT AGAINST THE SAID DECISION OF HONBLE GUJARAT HIGH COURT, THE SPECIAL LEAVE PETITION (SLP IN SHORT) PREFERRED BY THE REVENUE WAS DISMISSED BY THE HONBLE SUPREME COURT. 7. UNDISPUTEDLY THE SHARE APPLICANTS IN THIS CASE A RE THE BANK ACCOUNT HOLDER IN THEIR RESPECTIVE BANKS IN THEIR OWN NAME AND ARE SOLE OWNER OF THE C REDITS APPEARING IN THEIR BANK ACCOUNT FROM WHERE THEY ISSUED CHEQUES TO THE APPELLANT. FOR THE PROPOSITION THAT A BANK ACCOUNT HOLDER HIMSELF IS THE 'OWNER' OF 'CREDITS' APPEARING IN HI S ACCOUNT (WITH THE RESULT THAT HE HIMSELF IS ACCOUNTABLE TO EXPLAIN THE SOURCE OF SUCH CREDITS I N WHATEVER WAY AND FORM, THE SAME HAVE EMERGED) SUPPORT CAN BE DERIVED FROM SECTION 4 OF B ANKERS BOOK EVIDENCE ACT 1891 WHICH READS AS UNDER:- '4. MODE OF PROOF OF ENTRIES IN BANKERS' BOOKS SUBJ ECT TO THE PROVISIONS OF THIS ACT, A CERTIFIED COPY OF ANY ENTRY IN A BANKERS' BOOK SHA LL IN ALL LEGAL PROCEEDINGS BE RECEIVED AS PRIMA FACIE EVIDENCE OF THE EXISTENCE OF SUCH ENTRY , AND SHALL BE ADMITTED AS EVIDENCE OF THE MATTERS, TRANSACTIONS AND ACCOUNTS THEREIN RECORDED IN EVERY CASES WHERE, AND TO THE SAME EXTENT AS, THE ORIGINAL ENTRY ITSELF IS NOW BY LAW ADMISSIBLE, BUT NOT FURTHER OR OTHERWISE. FOLLOWING THE SAID PROVISIONS, THE CO-ORDINATE BENC H OF ALLAHABAD TRIBUNAL IN THE CASE OF ANAND PRAKASH AGARWAL REPORTED IN 6 DTR (ALL-TRIB) 191 HELD AS UNDER:- THE QUESTION THAT REMAINS TO BE DECIDED NOW IS WHE THER THE SUBJECT MATTER OF TRANSFER WAS THE ASSET BELONGING TO THE TRANSFEROR/DONORS THEMSELVES . THERE IS ENOUGH MATERIAL ON RECORD WHICH 8 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 GOES TO SHOW THAT THERE WERE VARIOUS CREDITS IN THE BANK ACCOUNTS OF THE DONORS, PRIOR TO THE TRANSACTION OF GIFTS, WHICH UNDISPUTEDLY BELONGING TO THE RESPECTIVE DONORS THEMSELVES, IN THEIR OWN RIGHTS. NO PART OF THE CREDITS IN THE SAID BANK ' ACCOUNTS WAS GENERATED FROM THE APPELLANT AND/OR FROM ITS ASSOCIATES, IN ANY MANNER. THE CERT IFICATES ISSUED BY THE BANKS ARE CONSTRUABLE AS EVIDENCE ABOUT THE OWNERSHIP OF THE TRANSFERORS OR THEIR RESPECTIVE BANK ACCOUNTS, AS PER S.4 OF THE BANKERS' BOOKS EVIDENCE ACT 1891, WHICH READ AS UNDER: '4. WHERE AN EXTRACT OF ACCOUNT WAS DULY SIGNED BY THE AGENT OF THE BANK AND IMPLICIT IN ITS WAS A CERTIFICATE THAT IT WAS A TRUE COPY OF AN ENTRY C ONTAINED IN ONE OF THE ORDINARY BOOKS OF THE BANK AND WAS MADE IN THE USUAL AND ORDINARY COURSE OF BUSINESS AND THAT SUCH BOOK WAS IN THE CUSTODY OF THE BANK, IT WAS HELD ADMISSIBLE IN EVID ENCE. RADHESHYAM V. SAFIYABAI IBRAHIM AIR 1988 BOM. 361 : 1987 MAH. 725: 1987 BANK J 552. IN VIEW OF THE POSITION OF LAW AS DISCUSSED ABOVE, IT IS ALWAYS OPEN FOR A BORROWER TO CONTEND, THAT EVEN THE CREDITWORTHINESS OF THE LENDER STAN DS PROVED TO THE EXTENT OF CREDITS APPEARING IN HIS BANK ACCOUNT AND HE SHOULD BE HELD TO BE SUC CESSFUL IN THIS CONTENTION. 8. IN THE CASE OF NEMI CHAND KOTHARI VS CIT REPORTE D IN 264 ITR 254 (GAU), THE HON'BLE GUAHATI HIGH COURT HAS THROWN LIGHT ON ANOTHER ASPE CT TOUCHING THE ISSUE OF ONUS ON ASSESSEE UNDER SECTION 68, BY HOLDING THAT THE SAME SHOULD B E DECIDED BY TAKING INTO CONSIDERATION THE PROVISION OF SECTION 106 OF THE EVIDENCE ACT WHICH SAYS THAT A PERSON CAN BE REQUIRED TO PROVE ONLY SUCH FACTS WHICH ARE IN HIS KNOWLEDGE. THE HON '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 SECTIO N 106 OF EVIDENCE ACT. THE RELEVANT OBSERVATIONS AT PAGE 260 TO 262, 264 AND 265 OF THE REPORT ARE REPRODUCED HEREIN BELOW:- 'WHILE INTERPRETING THE MEANING AND SCOPE OF SECTIO N 68, ONE HAS TO BEAR IN MIND THAT NORMALLY, INTERPRETATION OF A STATUTE SHALL BE GENERAL, IN NA TURE, SUBJECT ONLY TO SUCH EXCEPTIONS AS MAY BE LOGICALLY PERMITTED BY THE STATUTE ITSELF OR BY SOM E OTHER LAW CONNECTED THEREWITH OR RELEVANT THERETO. KEEPING IN VIEW THESE FUNDAMENTALS OF INTE RPRETATION OF STATUTES, WHEN WE READ CAREFULLY THE PROVISIONS OF SECTION 68, WE NOTICE N OTHING IN SECTION 68 TO SHOW THAT THE SCOPE OF THE INQUIRY UNDER SECTION 68 BY THE REVENUE DEPARTM ENT SHALL REMAIN CONFINED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE AS SESSEE AND THE CREDITOR NOR DOES THE WORDING OF SECTION 68 INDICATE THAT SECTION 68 DOES NOT AUTHORIZE THE REVENUE DEPARTMENT TO MAKE INQUIRY INTO THE SOURCE(S) OF THE CREDIT AND/O R SUB-CREDITOR. THE LANGUAGE EMPLOYED BY SECTION 68 CANNOT BE READ TO IMPOSE SUCH LIMITATION S ON THE POWERS OF THE ASSESSING OFFICER. THE LOGICAL CONCLUSION, THEREFORE, HAS TO BE, AND WE HO LD THAT AN INQUIRY UNDER SECTION 68 NEED NOT NECESSARILY BE KEPT CONFINED BY THE ASSESSING OFFIC ER WITHIN THE TRANSACTIONS, WHICH TOOK PLACE BETWEEN THE ASSESSEE AND HIS CREDITOR, BUT THAT THE SAME MAY BE EXTENDED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE CREDITOR AND HIS SUB-CREDITOR. THUS, WHILE THE ASSESSING OFFICER IS UNDER SECTION 68, FREE TO LOOK INTO THE SOURCE(S) OF THE CREDITOR AND/OR OF THE SUB- CREDITOR, THE BURDEN ON THE ASSESSEE UNDER SECTION 68 IS DEFINITELY LIMITED. THIS LIMIT HAS BEEN IMPOSED BY SECTION 106 OF THE EVIDENCE ACT WHICH RE ADS AS FOLLOWS: 'BURDEN OF PROVING FACT ESPECIALLY WITHIN KNOWLEDGE .-WHEN ANY FACT IS ESPECIALLY WITHIN THE KNOWLEDGE OF ANY PERSON, THE BURDEN) OF PROVING THA T FACT IS UPON HIM. ' ******** 9 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 WHAT, THUS, TRANSPIRES FROM THE ABOVE DISCUSSION IS THAT WHITE SECTION 106 OF THE EVIDENCE ACT LIMITS THE ONUS OF THE ASSESSEE TO THE EXTENT OF HI S PROVING THE SOURCE FROM WHICH HE HAS RECEIVED THE CASH CREDIT, SECTION 68 GIVES AMPLE FREEDOM TO THE ASSESSING OFFICER TO MAKE INQUIRY NOT ONLY INTO THE SOURCE(S)OF THE CREDITOR BUT ALSO OF HIS (CREDITOR'S) SUB-CREDITORS AND PROVE, AS A RESULT, OF SUCH INQUIRY, THAT THE MONEY RECEIVED BY THE ASSESSEE, IN THE FORM OF LOAN FROM THE CREDITOR, THOUGH ROUTED THROUGH THE SUB-CREDITORS, ACTUALLY BELONGS TO, OR WAS OF, THE ASSESSEE HIMSELF. IN OTHER WORDS, WHILE SECTION 68 GIVES THE LIBERTY TO THE ASSESSING OFFICER TO ENQUIRE INTO THE SOURCE/SOURCE FROM WHERE THE CREDITOR HAS RECEIVED THE MONEY, SECTION 106 MAKES THE ASSESSEE LIABLE TO DISCLOSE ONLY THE SOURCE(S) FROM WHERE HE HAS HIMSELF RECEIVED THE CREDIT AND IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE C REDITWORTHINESS OF THE SOURCE(S) OF THE SUB-CREDITORS. IF SECTION 106 AND SECTION 68 ARE TO STAND TOGETHER, WHICH THEY MUST, THEN, THE INTERPRETATION OF SECTION 68 ARE TO STAND TOGETHER, WHICH THEY MUST, THEN THE INTERPRETATION OF SECTION 68 HAS TO BE IN SUCH A WAY THAT IT DOES NOT MAKE SECTION 106 REDUNDANT. HENCE, THE HARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVIDE NCE ACT AND SECTION 68 OF THE INCOME- TAX ACT WILL BE THAT THOUGH APART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSESSEE MUST ESTABLISH THE GENUINENESS OF THE TRANSACTION AS WEL L AS THE CREDITWORTHINESS OF HIS CREDITOR, THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR MUST REMAIN CONFIN ED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR. WHAT F OLLOWS, AS A COROLLARY, IS THAT IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS BETWEEN HIS CREDITOR AND SUB-CREDITORS NOR IS IT THE BURDEN OF THE ASSESSEE TO PROVE THAT THE SUB-CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE CASH CREDIT TO THE CREDITOR FROM WHOM THE CASH CREDIT HAS BEEN. EVENTUALLY, RECEIVED BY THE ASSESSEE. IT, THEREFORE , FURTHER LOGICALLY FOLLOWS THAT THE CREDITOR'S CREDITWORTHINESS HAS TO BE JUDGED VIS-A-VIS THE TRA NSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR, AND IT IS NOT THE BU SINESS OF THE ASSESSEE TO FIND OUT THE SOURCE OF MONEY OF HIS CREDITOR OR OF THE GENUINENESS OF THE TRANSACTIONS, WHICH TOOK BETWEEN THE CREDITOR AND SUB-CREDITOR AND/OR CREDITWORTHINESS OF THE SUB - CREDITORS, FOR, THESE ASPECTS MAY NOT BE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. ' ********** ' ... IF A CREDITOR HAS, BY ANY UNDISCLOSED SOURCE, A PARTICULAR AMOUNT OF MONEY IN THE BANK, THERE IS NO LIMITATION UNDER THE LAW ON THE PART OF THE ASSESSEE TO OBTAIN SUCH AMOUNT OF MONEY OR PART THEREOF FROM THE CREDITOR, BY WAY OF CHEQUE IN THE FORM OF LOAN AND IN SUCH A CASE, IF THE CREDITOR FAILS TO SATISFY AS TO HOW HE HAD ACTUALLY RECEIVED THE SAID AMOUNT AND HAPPENED TO KEEP THE SAME IN THE BANK, THE SAID AMOUNT CANNOT B E TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE. IN OTHER WORDS, THE GENUINENESS AS WELL AS THE CREDITWORTHINESS OF A CREDITOR HAVE TO BE ADJUDGED VIS-A-VIS THE TRANSACT IONS, WHICH HE HAS WITH THE ASSESSEE. THE REASON WHY WE HAVE FORMED THE OPINION THAT IT IS NO T THE BUSINESS OF THE ASSESSEE TO FIND OUT THE ACTUAL SOURCE OR SOURCES FROM WHERE THE CREDITOR HA S ACCUMULATED THE AMOUNT, WHICH HE ADVANCES, AS LOAN, TO THE ASSESSEE IS THAT SO FAR A S AN ASSESSEE IS CONCERNED, HE HAS TO PROVE THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHI NESS OF THE CREDITOR VIS-A-VIS THE TRANSACTIONS WHICH HAD TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR AND NOT BETWEEN THE CREDITOR AND THE SUB-CREDITORS, FOR, IT IS NOT EVEN REQUIRED UND ER THE LAW FOR THE ASSESSEE TO TRY TO FIND OUT AS TO WHAT SOURCES FROM WHERE THE CREDITOR HAD RECEIVE D THE AMOUNT, HIS SPECIAL KNOWLEDGE UNDER SECTION 106 OF THE EVIDENCE ACT MAY VERY WELL REMAI N CONFINED ONLY TO THE TRANSACTIONS, WHICH HE HAD' WITH THE CREDITOR AND HE MAY NOT KNOW WHAT TRANSACTION(S) HAD TAKEN PLACE BETWEEN HIS CREDITOR AND THE SUB-CREDITOR ' ********** 10 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 'IN OTHER WORDS, THOUGH UNDER SECTION 68 AN ASSESSI NG OFFICER IS FREE TO SHOW, WITH THE HELP OF THE INQUIRY CONDUCTED BY HIM INTO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE CREDITOR AND THE SUB-CREDITOR, THAT THE TRANSACTION BETWEEN THE TWO WERE NOT GENUINE AND THAT THE SUB- CREDITOR HAD NO CREDITWORTHINESS, IT WILL NOT NECES SARILY MEAN THAT THE LOAN ADVANCED BY THE SUB-CREDITOR TO THE CREDITOR WAS INCOME OF THE ASSE SSEE FROM UNDISCLOSED SOURCE UNLESS THERE IS EVIDENCE, DIRECT OR CIRCUMSTANTIAL, TO SHOW THAT TH E AMOUNT WHICH HAS BEEN ADVANCED BY THE SUB-CREDITOR TO THE CREDITOR, HAD ACTUALLY BEEN REC EIVED BY THE SUB-CREDITOR FROM THE ASSESSEE .' ********** 'KEEPING IN VIEW THE ABOVE POSITION OF LAW, WHEN WE TURN TO THE FACTUAL MATRIX OF THE PRESENT CASE, WE FIND THAT SO FAR AS THE APPELLANT IS CONCE RNED, HE HAS ESTABLISHED THE IDENTITY OF THE CREDITORS, NAMELY, NEMICHAND NAHATA AND SONS (HUF) AND PAWAN KUMAR AGARWALLA. THE APPELLANT HAD ALSO SHOWN, IN ACCORDANCE WITH THE BU RDEN, WHICH RESTED ON HIM UNDER SECTION 106 OF THE EVIDENCE ACT, THAT THE SAID AMOUNTS HAD BEEN RECEIVED BY HIM BY WAY OF CHEQUES FROM THE CREDITORS AFOREMENTIONED. IN FACT THE FACT THAT THE ASSESSEE HAD RECEIVED THE SAID AMOUNTS BY WAY OF CHEQUES WAS NOT IN DISPUTE. ONCE THE ASSESSEE HAD ESTABLISHED THAT HE HAD RECEIVED THE SAID AMOUNTS FROM THE CREDITORS AFOREM ENTIONED BY WAY OF CHEQUES, THE ASSESSEE MUST BE TAKEN TO HAVE PROVED THAT THE CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE LOANS. THEREAFTER THE BURDEN HAD SHIFTED TO THE ASSESSING OFFICER TO PROVE THE CONTRARY. ON MERE FAILURE ON THE PART OF THE CREDITORS TO SHOW THAT T HEIR SUB-CREDITORS HAD CREDITWORTHINESS TO ADVANCE THE SAID LOAN AMOUNTS TO THE ASSESSEE, SUCH FAILURE, AS A COROLLARY, COULD NOT HAVE BEEN AND OUGHT NOT TO HAVE BEEN, UNDER THE LAW, TREATED AS THE INCOME FROM THE UNDISCLOSED SOURCES OF THE ASSESSEE HIMSELF, WHEN THERE WAS NEITHER DIR ECT NOR CIRCUMSTANTIAL EVIDENCE ON RECORD THAT THE SAID LOAN AMOUNTS ACTUALLY BELONGED TO, OR WERE OWNED BY, THE ASSESSEE. VIEWED FROM THIS ANGLE, WE HAVE NO HESITATION IN HOLDING THAT I N THE CASE AT HAND, THE ASSESSING OFFICER HAD FAILED TO SHOW THAT THE AMOUNTS, WHICH HAD COME TO THE HANDS OF THE CREDITORS FROM THE HANDS OF THE SUB-CREDITORS, HAD ACTUALLY BEEN RECEIVED BY TH E SUB-CREDITORS FROM THE ASSESSEE. IN THE ABSENCE OF ANY SUCH EVIDENCE ON RECORD, THE ASSESSI NG OFFICER COULD NOT HAVE TREATED THE SAID AMOUNTS AS INCOME DERIVED BY THE APPELLANT FROM UND ISCLOSED SOURCES. THE LEARNED TRIBUNAL SERIOUSLY FELL INTO ERROR IN TREATING THE SAID AMOU NTS AS INCOME DERIVED BY THE APPELLANT FROM. UNDISCLOSED SOURCES MERELY ON THE FAILURE OF THE SU B-CREDITORS TO PROVE THEIR CREDITWORTHINESS. 9. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF S.K. BOTHRA & SONS, HUF V. INCOME-TAX OFFICER, WARD- 46(3), KOLKATA REPORTE D IN 347 ITR 347(CAL) WHEREIN THE COURT HELD AS FOLLOWS: 15. IT IS NOW A SETTLED LAW THAT WHILE CONSIDERING THE QUESTION WHETHER THE ALLEGED LOAN TAKEN BY THE ASSESSEE WAS A GENUINE TRANSACTION, THE INIT IAL ONUS IS ALWAYS UPON THE ASSESSEE AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY TH E APPELLANT IS NOT SATISFACTORY, THE ASSESSING OFFICER CAN DISBELIEVE THE ALLEGED TRANSACTION OF L OAN. BUT THE LAW IS EQUALLY SETTLED THAT IF THE INITIAL BURDEN IS DISCHARGED BY THE ASSESSEE BY PRO DUCING SUFFICIENT MATERIALS IN SUPPORT OF THE LOAN TRANSACTION, THE ONUS SHIFTS UPON THE ASSESSIN G OFFICER AND AFTER VERIFICATION, HE CAN CALL FOR FURTHER EXPLANATION FROM THE ASSESSEE AND IN TH E PROCESS, THE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO ASSESSEE. 16. IN THE CASE BEFORE US, THE APPELLANT BY PRODUCI NG THE LOAN-CONFIRMATION-CERTIFICATES SIGNED BY THE CREDITORS, DISCLOSING THEIR PERMANENT ACCOUN T NUMBERS AND ADDRESS AND FURTHER INDICATING THAT THE LOAN WAS TAKEN BY ACCOUNT PAYEE CHEQUES, NO DOUBT, PRIMA FACIE, DISCHARGED THE INITIAL BURDEN AND THOSE MATERIALS DISCLOSED BY THE ASSESSEE PROMPTED THE ASSESSING OFFICER TO ENQUIRE THROUGH THE INSPECTOR TO VERIFY THE STAT EMENTS. 11 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 10. WE FIND THAT THE HONBLE JURISDICTIONAL HIGH CO URT IN YET ANOTHER CASE OF CRYSTAL NETWORKS (P) LTD VS CIT REPORTED IN 353 ITR 171 (CAL) HAD HE LD 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. THE RELEVANT OBSERVATIONS O F THE HONBLE COURT ARE AS UNDER:- 8. ASSAILING THE SAID JUDGMENT OF THE LEARNED TRIBU NAL LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT INCOME-TAX OFFICER DID NOT CONSIDER THE MATERI AL EVIDENCE SHOWING THE CREDITWORTHINESS AND ALSO OTHER DOCUMENTS, VIZ., CONFIRMATORY STATEM ENTS OF THE PERSONS, OF HAVING ADVANCED CASH AMOUNT AS AGAINST THE SUPPLY OF BIDIS. THESE EVIDEN CE WERE DULY CONSIDERED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). THEREFORE, TH E FAILURE OF THE PERSON TO TURN UP PURSUANT TO THE SUMMONS ISSUED TO ANY WITNESS IS IMMATERIAL WHEN THE MATERIAL DOCUMENTS MADE AVAILABLE, SHOULD HAVE BEEN ACCEPTED AND INDEED IN SUBSEQUENT YEAR THE SAME EXPLANATION WAS ACCEPTED BY THE INCOME-TAX OFFICER. HE FURTHER CONT ENDED THAT WHEN THE TRIBUNAL HAS RELIED ON THE ENTIRE JUDGMENT OF THE COMMISSIONER OF INCOME-T AX (APPEALS), THEREFORE, IT WAS NOT PROPER TO TAKE UP SOME PORTION OF THE JUDGMENT OF THE COMM ISSIONER OF INCOME-TAX (APPEALS) AND TO IGNORE THE OTHER PORTION OF THE SAME. THE JUDICIAL PROPRIETY AND FAIRNESS DEMANDS THAT THE ENTIRE JUDGMENT BOTH FAVOURABLE AND UNFAVOURABLE SHOULD HA VE BEEN CONSIDERED. BY NOT DOING SO THE TRIBUNAL COMMITTED GRAVE ERROR IN LAW IN UPSETTING THE JUDGMENT IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). 9. IN THIS CONNECTION HE HAS DRAWN OUR ATTENTION TO A DECISION OF THE SUPREME COURT IN THE CASE OF UDHAVDAS KEWALRAM V. CIT [19671 66 ITR 462. IN T HIS JUDGMENT IT IS NOTICED THAT THE SUPREME COURT AS PROPOSITION OF LAW HELD THAT THE T RIBUNAL MUST IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE, ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL THE CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER IN THE LIGHT O F THE EVIDENCE AND THE RELEVANT LAW. 10. WE FIND CONSIDERABLE FORCE OF THE SUBMISSIONS O F THE LEARNED COUNSEL FOR THE APPELLANT THAT THE TRIBUNAL HAS MERELY NOTICED THAT SINCE THE SUMM ONS ISSUED BEFORE ASSESSMENT RETURNED UNSERVED AND NO ONE CAME FORWARD TO PROVE. THEREFOR E, IT SHALL BE ASSUMED THAT THE ASSESSEE FAILED TO PROVE THE EXISTENCE OF THE CREDITORS OR F OR THAT MATTER THE CREDITWORTHINESS. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL THAT THE COMMISS IONER OF INCOME-TAX (APPEALS) HAS TAKEN THE TROUBLE OF EXAMINING OF ALL OTHER MATERIALS AND DOC UMENTS, VIZ., CONFIRMATORY STATEMENTS, INVOICES, CHALLANS AND VOUCHERS SHOWING SUPPLY OF B IDIS AS AGAINST THE ADVANCE. THEREFORE, THE ATTENDANCE OF THE WITNESSES PURSUANT TO THE SUMMONS ISSUED, IN OUR VIEW, IS NOT IMPORTANT. THE IMPORTANT IS TO PROVE AS TO WHETHER THE SAID CASH C REDIT WAS RECEIVED AS AGAINST THE FUTURE SALE OF THE PRODUCT OF THE ASSESSEE OR NOT. WHEN IT WAS FOUND BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON FACTS HAVING EXAMINED THE DOCUMENTS TH AT THE ADVANCE GIVEN BY THE CREDITORS HAVE BEEN ESTABLISHED THE TRIBUNAL SHOULD NOT HAVE IGNOR ED THIS -FACT FINDING. INDEED THE TRIBUNAL DID NOT REALLY TOUCH THE AFORESAID FACT FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL. THE SUP REME COURT HAS ALREADY STATED AS TO WHAT SHOULD BE THE DUTY OF THE LEARNED TRIBUNAL TO DECID E IN THIS SITUATION. IN THE SAID JUDGMENT NOTED BY US AT PAGE 464, THE SUPREME COURT HAS OBSERVED A S FOLLOWS: 'THE INCOME-TAX APPELLATE TRIBUNAL PERFORMS A JUDIC IAL FUNCTION UNDER THE INDIAN INCOME-TAX ACT; IT IS INVESTED WITH AUTHORITY TO DETERMINE FIN ALLY ALL QUESTIONS OF FACT. THE TRIBUNAL MUST, IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL THE CONTENTIONS RAISED BY THE ASSESSEE AND THE COMM ISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. ' 11. THE TRIBUNAL MUST, IN DECIDING AN APPEAL, CONSI DER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. IT IS ALSO RULED IN THE SAID JUDGMENT AT PAGE 465 THAT IF THE 12 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 TRIBUNAL DOES NOT DISCHARGE THE DUTY IN THE MANNER AS ABOVE THEN IT SHALL BE ASSUMED THE JUDGMENT OF THE TRIBUNAL SUFFERS FROM MANIFEST INFI RMITY. 12. TAKING INSPIRATION FROM THE SUPREME COURT OBSER VATIONS WE ARE CONSTRAINED TO HOLD IN THIS MATTER THAT THE TRIBUNAL HAS NOT ADJUDICATED UPON T HE CASE OF THE ASSESSEE IN THE LIGHT OF THE EVIDENCE AS FOUND BY THE COMMISSIONER OF INCOME-TAX (APPEALS). WE ALSO FOUND NO SINGLE WORD HAS BEEN SPARED TO UP SET THE FACT FINDING OF THE C OMMISSIONER OF INCOME-TAX (APPEALS) THAT THERE ARE MATERIALS TO SHOW THE CASH CREDIT WAS REC EIVED FROM VARIOUS PERSONS AND SUPPLY AS AGAINST CASH CREDIT ALSO MADE. 13. HENCE, THE JUDGMENT AND ORDER OF THE TRIBUNAL I S NOT SUSTAINABLE. ACCORDINGLY, THE SAME IS SET ASIDE. WE RESTORE THE JUDGMENT AND ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). THE APPEAL IS ALLOWED. 11. IT IS NOT IN DISPUTE THAT ALL THE SHARE APPLICA NT COMPANIES IN THE INSTANT CASE BEFORE US ARE ASSESSED TO INCOME TAX. WE FIND THAT THE ASSESSEE H AD DULY PROVED THE SOURCE OF SOURCE OF SOURCE IN THE INSTANT CASE. EVEN IF THE CREDITWORTHINESS OF THE SHARE APPLICANTS ARE TO BE DOUBTED , THEN IT WOULD BE THE DUTY OF THE LD AO OF THE ASSESSEE T O MAKE ENQUIRIES THROUGH THE LD AO OF THE CONCERNED SHARE APPLICANTS. ONCE THE RELEVANT DET AILS ARE FILED BY THE ASSESSEE BEFORE THE LD AO TO PROVE THE CREDITWORTHINESS OF SHARE APPLICAN TS, THEN THE SAME CANNOT BE QUESTIONED / DISPUTED BY THE LD AO OF THE ASSESSEE AS THE SAME W OULD BE TRAVELLING BEYOND HIS JURISDICTION. IN OTHER WORDS, THE CREDITWORTHINESS OF THE SHARE A PPLICANT COMPANIES WOULD HAVE TO BE EXAMINED BY THE ASSESSING OFFICER OF THOSE COMPANIE S AND NOT BY THE ASSESSING OFFICER OF THE ASSESSEE HEREIN. HOWEVER, IT WOULD BE INCUMBENT ON THE PART OF THE LD AO OF THE ASSESSEE HEREIN , TO TRIGGER THE SAID VERIFICATION PROCESS ON THE S IDE OF THE DEPARTMENT. IT WOULD BE INTERESTING TO NOTE IN THIS REGARD THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT KOLKATA III VS M/S DATAWARE PRIVATE LIMITED IN ITAT NO. 263 OF 201 1 DATED 21.9.2011 HAD HELD AS UNDER:- IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSI NG OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX ASSESSEE. AFTER GETTING TH E PAN NUMBER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE AS SESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINE NESS' OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFI CER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NO T ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMI TTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OFFICER OF THE ASS ESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENE SS' OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX (A PPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL-ACCEPTED PRINCIPLE WHICH ARE REQUIRED TO B E FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH THE AUTHORITIES. 12. WE FIND THAT THE HON'BLE JURISDICTIONAL HIGH CO URT IN THE CASE OF CIT VS ROSEBERRY MERCANTILE (P) LTD IN ITAT NO. 241 OF 2010 DATED 10 .1.2011 , WHILE RELYING ON THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS REPORTE D IN 216 CTR 295 (SC) , HAD HELD :- 13 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONEY OR ACCOUNTED MONEY AND THE LD. CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABLISHED THE GENUINENESS OF THE TRANSACTION. ' IT APPEARS FROM THE RECORD THAT IN THE ASSESSMENT P ROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION HAD BRO UGHT RS. 4, 00, 000/- AND RS.20,00,000/- TOWARDS SHARE CAPITAL AND SHARE PREMIUM RESPECTIVEL Y AMOUNTING TO RS.24,00, 000/- FROM FOUR SHAREHOLDERS BEING PRIVATE LIMITED COMPANIES. THE A SSESSING OFFICER ON HIS PART CALLED FOR THE DETAILS FROM THE ASSESSEE AND ALSO FROM THE SHARE A PPLICANTS AND ANALYZED THE FACTS AND ULTIMATELY OBSERVED CERTAIN ABNORMAL FEATURES, WHIC H WERE MENTIONED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT NA TURE AND SOURCE OF SUCH MONEY WAS QUESTIONABLE AND EVIDENCE PRODUCED WAS UNSATISFACTO RY. CONSEQUENTLY, THE ASSESSING OFFICER INVOKED THE PROVISIONS UNDER SECTION 68/69 OF THE I NCOME TAX ACT AND MADE ADDITION OF RS.24,00,000/-. ON APPEAL THE LEARNED CIT (A) BY FOLLOWING THE DECI SION OF THE SUPREME COURT IN THE CASE OF CL. T. VS. M/S. LOVELY EXPORTS PVT. LTD., REPORTED IN (2008) 216 CTR 195 ALLOWED THE APPEAL BY HOLDING -THAT SHARE CAPITAL/PREMIUM OF RS. 24,00,00 0/- RECEIVED FROM THE INVESTORS WAS NOT LIABLE TO BE TREATED UNDER SECTION 68 AS UNEXPLAINE D CREDITS AND IT SHOULD NOT BE TAXED IN THE HANDS OF THE APPELLANT COMPANY. AS INDICATED EARLIER, THE TRIBUNAL BELOW DISMISSED THE APPEAL FILED BY THE REVENUE. AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASE OF CL. T. VS. M/S. LOVELY EXPORTS PVT. LTD. [SUPRA], WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF THE ASSESSEE AND THUS, NO SUB STANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL IS DEVOID OF ANY SUBSTANCE AND I S DISMISSED. 13. WE ALSO FIND THAT THE HON'BLE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS LEONARD COMMERCIAL (P) LTD IN ITAT NO. 114 OF 2011 DATED 13 .6.2011 HAD HELD AS UNDER:- THE ONLY QUESTION RAISED IN THIS APPEAL IS WHETHER THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL BELOW ERRED IN LAW IN DELETING THE ADDITION OF RS.8,52,000/-, RS. 91,50,000/- AND RS. 13,00,000/- MADE BY THE ASSESSING OFFICER O N ACCOUNT OF SHARE CAPITAL, SHARE APPLICATION MONEY AND INVESTMENT IN HTCCL RESPECTIV ELY. AFTER HEARING MD. NIZAMUDDIN, LEARNED ADVOCATE APPE ARING ON BEHALF OF THE APPELLANT AND AFTER GOING THROUGH THE MATERIALS ON RECORD, WE FIND THAT ALL SUCH APPLICATION MONEY WERE RECEIVED BY THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUES AND THE ASSESSEE ALSO DISCLOSED THE COMPLETE LIST OF SHAREHOLDERS WITH THEIR COMPLETE ADDRESSES AND GIR NUMBERS FOR THE RELEVANT ASSESSMENT YEARS IN WHICH SHARE APPLICATION WAS CONTRIBUTED. I T FURTHER APPEARS THAT ALL THE PAYMENTS WERE MADE BY THE APPLICANTS BY ACCOUNT PAYEE CHEQUES. IT APPEARS FROM THE ASSESSING OFFICERS ORDER THAT H IS GRIEVANCE WAS THAT THE ASSESSEE WAS NOT WILLING TO PRODUCE THE PARTIES WHO HAD ALLEGEDLY AD VANCED THE FUND. IN OUR OPINION, BOTH THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL BELOW WERE JUSTIFIED IN HOLDING THAT AFTER DISCLOSURE OF THE F ULL PARTICULARS INDICATED ABOVE, THE INITIAL ONUS OF THE ASSESSEE WAS SHIFTED AND IT WAS THE DUTY OF THE ASSESSING OFFICER TO ENQUIRE WHETHER THOSE PARTICULARS WERE CORRECT OR NOT AND IF THE ASSESSIN G OFFICER WAS OF THE VIEW THAT THE PARTICULARS SUPPLIED WERE INSUFFICIENT TO DETECT THE REAL SHARE APPLICANTS, TO ASK FOR FURTHER PARTICULARS. 14 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 THE ASSESSING OFFICER HAS NOT ADOPTED EITHER OF THE AFORESAID COURSES BUT HAS SIMPLY BLAMED THE ASSESSEE FOR NOT PRODUCING THOSE SHARE APPLICANTS. IN OUR VIEW, IN THE CASE BEFORE US SO LONG THE ASSE SSING OFFICER WAS UNABLE TO ARRIVE AT A FINDING THAT THE PARTICULARS GIVEN BY THE ASSESSEE WERE FAL SE, THERE WAS NO SCOPE OF ADDING THOSE MONEY UNDER SECTION 68 OF THE INCOME- TAX ACT AND THE TRI BUNAL BELOW RIGHTLY HELD THAT THE ONUS WAS VALIDLY DISCHARGED. WE, THUS, FIND THAT BOTH THE AUTHORITIES BELOW, ON CONSIDERATION OF THE MATERIALS ON RECORD, RIGHTLY APPLIED THE CORRECT LAW WHICH ARE REQUIRED TO BE APPLIED IN THE FACTS OF THE PRESENT CASE AND, THUS, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE CONCURRENT FINDINGS OF FACT BASED ON MATERIALS ON RECORD. THE APPEAL IS, THUS, DEVOID OF ANY SUBSTANCE AND IS DISMISSED SUMMARILY AS IT DOES NOT INVOLVE ANY SUBSTANTIAL QUESTION OF LAW. 14. WE ALSO FIND THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VSP STEEL P LTD (FORMERLY M/S TIKMANI METAL P LTD) IN ITA NO. 741/K OL/2014 FOR ASST YEAR 2010-11 HAD HELD AS UNDER:- WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LD DR ARGUED THAT THE ASSESSEE HAD NOT PROVED THE SOURCE OF SOURCE OF SHARE APPLICANTS WHO HAD INVESTED SHARE APPLICATION MONIES IN THE ASSESSEE COMPANY AND ACCORDINGLY PRAYED THAT TH E ADDITION HAS BEEN RIGHTLY MADE U/S 68 OF THE ACT. HE ALSO PLACED RELIANCE ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF SUBHLAKSHMI VANIJYA (P) LTD VS CIT REPORTED IN (2015) 60 TAXMAN N.COM 60 (KOLKATA TRIB.) DATED 30.7.2015. IN RESPONSE TO THIS, THE LD AR ARGUED THAT THERE IS NO MANDATE IN LAW THAT THE ASSESSEE HAS TO PROVE THE SOURCE OF SOURCE OF SHARE APPLICANTS. HE ARGUED THAT IN THE INSTANT CASE, THE ASSESSEE HAD DULY DISCHARGED ITS COMPLETE ONUS BY FURNISHING THE REQUISITE DETAILS. IN CASE IF THE LD AO HAS GOT SOME DOUBTS, HE SHOULD HA VE VERIFIED THE SAME FROM THE AO OF THOSE SHARE APPLICANTS. WE FIND FROM THE PLAIN READING O F SECTION 68 OF THE ACT, THE DUTY CAST ON THE ASSESSEE IS TO EXPLAIN THE NATURE AND SOURCE OF CRE DIT FOUND IN HIS BOOKS. IN THE INSTANT CASE, THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE APPLICATI ON MONEY FROM FIVE SHARE APPLICANTS. THE NATURE OF RECEIPT TOWARDS SHARE APPLICATION MONEY I S WELL ESTABLISHED FROM THE ENTRIES PASSED IN THE RESPECTIVE BALANCE SHEETS OF THE COMPANIES AS INVESTMENTS. HENCE THE NATURE OF RECEIPT IS PROVED BY THE ASSESSEE BEYOND DOUBT. IN RESPECT OF SOURCE OF CREDIT, THE ASSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIENTS I.E IDENTITY OF SH ARE APPLICANTS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF SHARE APPLICANTS. IN THE INST ANT CASE, WE FIND THAT THE IDENTITY OF SHARE APPLICANTS IS PROVED BEYOND DOUBT BY THE ASSESSEE B Y FURNISHING THE NAME, ADDRESS, PAN OF SHARE APPLICANTS TOGETHER WITH THE COPIES OF BALANC E SHEETS AND INCOME TAX RETURNS . WITH REGARD TO THE CREDITWORTHINESS OF SHARE APPLICANTS, THE LD AO HIMSELF STATES THAT THE FIVE SHARE APPLICANTS HAD INVESTED IN ASSESSEE COMPANYS SHARE S BY TAKING MONEY FROM SOME OTHER COMPANIES. HENCE THE SOURCE OF THE SHARE APPLICA NTS FOR MAKING INVESTMENT IN SHARE APPLICATION MONIES OF ASSESSEE COMPANY IS ALSO PROV ED. BY THIS, THE CREDITWORTHINESS OF THE SHARE APPLICANTS IS ALSO PROVED BEYOND DOUBT. THIR D INGREDIENT IS GENUINENESS OF THE TRANSACTIONS. WE FIND THAT THE FIVE SHARE APPLICA NTS HAD PAID THE MONIES TO THE ASSESSEE COMPANY BY ACCOUNT PAYEE CHEQUES OUT OF SUFFICIENT BANK BALANCES AVAILABLE IN THEIR BANK ACCOUNTS, WHICH ARE QUITE EVIDENT FROM THE BANK STA TEMENTS ENCLOSED IN THE PAPER BOOK. WE AGREE WITH THE ARGUMENTS OF THE LD AR THAT THE SOUR CE OF SOURCE OF SHARE APPLICANTS NEED NOT BE PROVED BY THE ASSESSEE HEREIN. WE HOLD THAT THE DE CISION RENDERED BY THIS TRIBUNAL IN SUBHALAKSHMI VANIJYA RELIED UPON BY THE LD DR WAS R ENDERED IN THE CONTEXT OF VALIDITY OF REVISION PROCEEDINGS U/S 263 OF THE ACT AND NOT ON THE MERITS OF THE CASE. THIS TRIBUNAL IN THAT CASE DECIDED THE VALIDITY OF INVOKING REVISIONARY J URISDICTION U/S 263 OF THE ACT BY THE LD CIT AND WHETHER ADEQUATE ENQUIRIES WERE MADE BY THE LD AO IN THE FACTS AND CIRCUMSTANCES OF THAT 15 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 CASE. THIS TRIBUNAL IN SUBHALAKSHMI VANIJYA CASE S UPRA NEVER HAD AN OCCASION TO LOOK INTO THE MERITS OF THE ADDITION PROPOSED TO BE MADE TOWARDS SHARE CAPITAL IN THE FACTS AND CIRCUMSTANCES OF THAT CASE AND NO DECISION WAS RENDERED THEREON O N MERITS OF THE ISSUE. HENCE THE RELIANCE PLACED THEREON BY THE LD DR DOES NOT ADVANCE THE CA SE OF THE REVENUE. IN THE INSTANT CASE, WE FIND THAT THE SHARE APPLICANTS HAVE NOT DENIED THE FACT OF MAKING INVESTMENT IN SHARE APPLICATION MONIES IN ASSESSEE COMPANY, WHICH IS EVIDENT FROM T HE FACT THAT THEY HAD CONFIRMED IN WRITING IN RESPONSE TO NOTICE ISSUED U/S 133(6) OF THE ACT WHI CH WAS ADMITTEDLY DONE BEHIND THE BACK OF THE ASSESSEE. THERE IS NO WHISPER IN THE ENTIRE ASSES SMENT ORDER TO DOUBT THE VERACITY OF THE TRANSACTIONS AND GENUINENESS OF SHARE APPLICANTS AN D THE TRANSACTIONS HEREIN. IN THE INSTANT CASE, THE ASSESSEE HAD INDEED PROVED THE IDENTITY O F THE SHARE APPLICANTS, CREDITWORTHINESS OF SHARE APPLICANTS AND GENUINENESS OF TRANSACTIONS BE YOND DOUBT. WE FIND THAT THE ENTIRE ADDITION HAS BEEN MADE BY THE LD AO BASED UPON SUSP ICION, SURMISES AND CONJECTURES AND NOT UPON PROPER EVALUATION AND APPRAISAL OF THE EVIDENC ES AND DOCUMENTS FILED BEFORE HIM. WE PLACE RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN THIS REGARD IN THE CASE OF DHAKESHWARI COTTON MILLS LTD VS CIT REPORTED IN 26 ITR 775 (SC) WHEREIN IT HAS BEEN HELD THAT NO ADDITION CAN BE MADE WITHOUT MATERIAL AND ON MER E SUSPICION. IN THESE FACTS AND CIRCUMSTANCES, THERE IS NO NEE D TO TREAT THE RECEIPT OF SHARE APPLICATION MONEY FROM FIVE SHARE APPLICANTS AS UNEXPLAINED U/S 68 OF THE ACT. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA IN THIS REGAR D. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 15. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRIB UNAL RECENTLY IN THE CASE OF ITO VS WIZ-TECH SOLUTIONS PVT LTD IN ITA NO. 1162/KOL/2015 DATED 14 .6.2018 HAD HELD AS UNDER:- 28. FROM THE DETAILS AS AFORESAID WHICH EMERGES FRO M THE PAPER BOOK FILED BEFORE US AS WELL AS BEFORE THE LOWER AUTHORITIES, IT IS VIVID T HAT ALL THE SHARE APPLICANTS ARE (I) INCOME TAX ASSESSEES, (II) THEY ARE FILING THEIR RETURN OF IN COME, (III) THE SHARE APPLICATION FORM AND ALLOTMENT LETTER IS AVAILABLE ON RECORD, (IV) THE S HARE APPLICATION MONEY WAS MADE BY ACCOUNT PAYEE CHEQUES, (V) THE DETAILS OF THE BANK ACCOUNTS BELONGING TO THE SHARE APPLICANTS AND THEIR BANK STATEMENTS, (VI) IN NONE OF THE TRANSACTIONS T HE AO FOUND DEPOSIT IN CASH BEFORE ISSUING CHEQUES TO THE ASSESSEE COMPANY, (VII) THE APPLICAN TS ARE HAVING SUBSTANTIAL CREDITWORTHINESS WHICH IS REPRESENTED BY A CAPITAL AND RESERVE AS NO TED ABOVE. 29. AS NOTED FROM THE JUDICIAL PRECEDENTS CITED ABO VE, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE THEN THERE IS A DUTY CASTE D UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF CREDIT FOUND IN HIS BOOKS. IN THE INSTANT CASE, THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL WITH PREMIUM FROM SHARE APPLICANTS. T HE NATURE OF RECEIPT TOWARDS SHARE CAPITAL IS SEEN FROM THE ENTRIES PASSED IN THE RESPECTIVE B ALANCE SHEETS OF THE COMPANIES AS SHARE CAPITAL AND INVESTMENTS. IN RESPECT OF SOURCE OF C REDIT, THE ASSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIENTS I.E. IDENTITY OF SHARE APPLIC ANTS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF SHARE APPLICANTS. FOR PROVING T HE IDENTITY OF SHARE APPLICANTS, THE ASSESSEE FURNISHED THE NAME, ADDRESS, PAN OF SHARE APPLICANT S TOGETHER WITH THE COPIES OF BALANCE SHEETS AND INCOME TAX RETURNS. WITH REGARD TO THE CREDITWO RTHINESS OF SHARE APPLICANTS, AS WE NOTED SUPRA, THESE COMPANIES ARE HAVING CAPITAL IN SEVERA L CRORES OF RUPEES AND THE INVESTMENT MADE IN THE APPELLANT COMPANY IS ONLY A SMALL PART OF TH EIR CAPITAL. THESE TRANSACTIONS ARE ALSO DULY REFLECTED IN THE BALANCE SHEETS OF THE SHARE APPLIC ANTS, SO CREDITWORTHINESS IS PROVED. EVEN IF THERE WAS ANY DOUBT IF ANY REGARDING THE CREDITWORT HINESS OF THE SHARE APPLICANTS WAS STILL SUBSISTING, THEN AO SHOULD HAVE MADE ENQUIRIES FROM THE AO OF THE SHARE SUBSCRIBERS AS HELD BY HONBLE JURISDICTIONAL HIGH COURT IN CIT VS DATAWAR E (SUPRA) WHICH HAS NOT BEEN DONE, SO NO ADVERSE VIEW COULD HAVE BEEN DRAWN. THIRD INGRED IENT IS GENUINENESS OF THE TRANSACTIONS, FOR WHICH WE NOTE THAT THE MONIES HAVE BEEN DIRECTLY PA ID TO THE ASSESSEE COMPANY BY ACCOUNT 16 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 PAYEE CHEQUES OUT OF SUFFICIENT BANK BALANCES AVAIL ABLE IN THEIR BANK ACCOUNTS ON BEHALF OF THE SHARE APPLICANTS. IT WILL BE EVIDENT FROM THE PAPER BOOK THAT THE APPELLANT HAS EVEN DEMONSTRATED THE SOURCE OF MONEY DEPOSITED INTO THE IR BANK ACCOUNTS WHICH IN TURN HAS BEEN USED BY THEM TO SUBSCRIBE TO THE ASSESSEE COMPANY A S SHARE APPLICATION. HENCE THE SOURCE OF SOURCE OF SOURCE IS PROVED BY THE ASSESSEE IN THE I NSTANT CASE THOUGH THE SAME IS NOT REQUIRED TO BE DONE BY THE ASSESSEE AS PER LAW AS IT STOOD/ APP LICABLE IN THIS ASSESSMENT YEAR. THE SHARE APPLICANTS HAVE CONFIRMED THE SHARE APPLICATION IN RESPONSE TO THE NOTICE U/S 133(6) OF THE ACT AND HAVE ALSO CONFIRMED THE PAYMENTS WHICH ARE DULY CORROBORATED WITH THEIR RESPECTIVE BANK STATEMENTS AND ALL THE PAYMENTS ARE BY ACCOUNT PAYE E CHEQUES. 30. ***** 31. ***** 32. WE WOULD LIKE TO REPRODUCE THE HON'BLE HIGH CO URT ORDER IN CIT VS. GANGESHWARI METAL P.LTD. IN ITA NO. 597/2012 JUDGEMENT DATED 21 .1.2013, THE HON'BLE HIGH COURT AFTER CONSIDERING THE DECISIONS IN THE CASE OF NOVA PROMO TERS AND FINLEASE PVT. LTD. 342 ITR 169 AND JUDGEMENT IN THE CASE OF CIT VS. LOVELY EXPORTS 319 ITR (ST) 5(SC) HELD AS FOLLOWS:- AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES O F CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRIES OUT THE EXERCISE WHIC H IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER 'SITS BACK WITH FOLDED HANDS' TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COMES FORWARD T O MERELY REJECT THE SAME ON THE PRESUMPTIONS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER AFTER NOTING THE FACTS, MERELY REJECTED THE SAME. THIS WO ULD BE APPARENT FROM THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO THE FO LLOWING EFFECT:- ''INVESTIGATION MADE BY THE INVESTIGATION WING OF T HE DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMODATION ENT RY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID AMOUNT OF RS.1,11,50,000/- MAY NOT BE ADDED TO ITS INCOME. IN RESPONSE, THE ASSESSEE HAS SUBMITTED THAT THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSEE. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WAS STATED THAT THE ACTUAL AMOUNT RECEIVED WAS RS.55,50 ,000/- AND NOT RS.1,11,50,000/- AS MENTIONED IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND C ORRECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE TAKEN AT RS.55,50,000/-. THE ASSESSEE HAS FURTHE R TRIES TO EXPLAIN THE SOURCE OF THIS AMOUNT OF RS.55,50,000/- BY FURNISHING COPIES OF SHARE APPLIC ATION MONEY, BALANCE4 SHEET ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED THAT THE QUEST ION OF ADDITION IN THE INCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANATION OF THE ASSESSEE HA S BEEN DULY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS ENTRY REMAINS UNEXPLAINED IN THE H ANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT. AS SUCH E NTRIES OF RS.5~50/000/- RECEIVED BY THE ASSESSEE ARE TREATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS INCOME. SINCE I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME/ PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE BEI NG INITIATED SEPARATELY. THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. ( SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVOUR OF THE REVENUE IN THAT CASE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE AND FALL IN THE SE COND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA). THERE WAS A CLE AR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED A LL THE MATERIAL WHICH WE HAVE ALREADY REFERRED TO ABOVE. IN SUCH AN EVENTUALITY NO ADDITI ON CAN BE MADE UNDER SECTION 68 OF THE INCOME TAX ACT 1961. CONSEQUENTLY, THE QUESTION IS ANSWERED IN THE NEGATIVE. THE DECISION OF THE TRIBUNAL IS CORRECT IN LAW 17 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 33. THE CASE ON HAND CLEARLY FALLS IN THE CATEGORY WHERE THERE IS LACK OF ENQUIRY ON THE PART OF THE A. O. AS IN THE CASE OF GANJESHWARI METALS ( SUPRA). B) IN THE CASE OF FINLEASE PVT LTD. 342 ITR 169 (SU PRA) IN ITA 232/2012 JUDGEMENT DT. 22.11.2012 AT PARA 6 TO 8/ IT WAS HELD AS FOLLOWS. '6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF TH E PARTIES. IN THIS CASE THE DISCUSSION BY THE COMMISSIONER OF INCOME TAX (APPEALS) WOULD REVEAL T HAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIED COPIES ISSUED BY THE ROC IN REL ATION TO THE SHARE APPLICATION AFFIDAVITS OF THE DIRECTORS, FORM 2 FILED WITH THE ROC BY SUCH APPLIC ANTS CONFIRMATIONS BY THE APPLICANT FOR COMPANY'S SHARES, CERTIFICATES BY AUDITORS ETC. UNF ORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND THE STATEMENT OF MR. MAHESH GARG. TO ELE VATE THE INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS WOULD BE IMPROPER, MORE SO WHEN THE ASSESSEE PRODUCED MATERIAL. THE LEAST THAT THE ASSESSING OFFICER OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NECESSARY, IN VOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLICANTS OR DIRECTORS. NO EFF ORT WAS MADE IN THAT REGARD. IN THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORTHY OR LACKED CREDIBILITY THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FACTS AND THE STATEMENTS OF MR.MAHESH GARG THAT THE INCOM E SOUGHT TO BE ADDED FELL WITHIN THE DESCRIPTION OFS.68 OF THE INCOME TAX ACT 1961. HAVI NG REGARD TO THE ENTIRETY OF FACTS AND CIRCUMSTANCES, THE COURT IS SATISFIED THAT THE FIND ING OF THE TRIBUNAL IN THIS CASE ACCORDS WITH THE RATIO OF THE DECISION OF THE SUPREME COURT IN L OVELY EXPORTS (SUPRA). THE DECISION IN THIS CASE IS BASED ON THE PECULIAR FACTS WHICH ATTRACT THE RATIO OF LOVELY EXPORTS (SUPRA). WHERE THE ASSESSEE ADDUCES EVIDENCE IN SUP PORT OF THE SHARE APPLICATION MONIES, IT IS OPEN TO THE ASSESSING OFFICER TO EXAMINE IT AND REJ ECT IT ON TENABLE GROUNDS. IN CASE HE WISHES TO RELY ON THE REPORT OF THE INVESTIGATION AUTHORITIES , SOME MEANINGFUL ENQUIRY OUGHT TO BE CONDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE AS SESSEE AND THE ALLEGED HAWALA OPERATORS, SUCH A LINK WAS SHOWN TO BE PRESENT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) RELIED UPON BY THE REVENUE. WE ARE THEREFORE NOT TO BE UNDERSTOOD TO CONVEY THAT IN ALL CASES OF SHARE CAPITAL ADDED UNDER SECTION THE RATIO OF LOVE LY EXPORTS (SUPRA) IS ATTRACTED, IRRESPECTIVE OF THE FACTS, EVIDENCE AND MATERIAL. ' 34. IN THIS CASE ON HAND, THE ASSESSEE HAD DISCHAR GED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLI CANTS, THEREAFTER THE ONUS SHIFTED TO AO TO DISPROVE THE DOCUMENTS FURNISHED BY ASSESSEE CANNOT BE BRUSHED ASIDE BY THE AO TO DRAW ADVERSE VIEW CANNOT BE COUNTENANCED. IN THE ABSENCE OF ANY INVESTIGATION, MUCH LESS GATHERING OF EVIDENCE BY THE ASSESSING OFFICER, WE HOLD THAT AN ADDITION CANNOT BE SUSTAINED MERELY BASED ON INFERENCES DRAWN BY CIRCUMSTANCE. APPLYING THE P ROPOSITIONS LAID DOWN IN THESE CASE LAWS TO THE FACTS OF THIS CASE, WE ARE INCLINED TO UPHOLD T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 35. TO SUM UP SECTION 68 OF THE ACT PROVIDES THAT IF ANY SUM FOUND CREDITED IN THE YEAR IN RESPECT OF WHICH THE ASSESSEE FAILS TO EXPLAIN THE NATURE AND SOURCE SHALL BE ASSESSED AS ITS UNDISCLOSED INCOME. IN THE FACTS OF THE PRESENT CAS E, BOTH THE NATURE & SOURCE OF THE SHARE APPLICATION RECEIVED WAS FULLY EXPLAINED BY THE ASS ESSEE. THE ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINE NESS OF THE SHARE APPLICANTS. THE PAN DETAILS, BANK ACCOUNT STATEMENTS, AUDITED FINANCIAL STATEMENTS AND INCOME TAX ACKNOWLEDGMENTS WERE PLACED ON AO'S RECORD. ACCORDI NGLY ALL THE THREE CONDITIONS AS REQUIRED U/S. 68 OF THE ACT I.E. THE IDENTITY, CREDITWORTHIN ESS AND GENUINENESS OF THE TRANSACTION WAS PLACED BEFORE THE AO AND THE ONUS SHIFTED TO AO TO DISPROVE THE MATERIALS PLACED BEFORE HIM. 18 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 WITHOUT DOING SO, THE ADDITION MADE BY THE AO IS BA SED ON CONJECTURES AND SURMISES CANNOT BE JUSTIFIED. IN THE FACTS AND CIRCUMSTANCES OF THE C ASE AS DISCUSSED ABOVE, NO ADDITION WAS WARRANTED UNDER SECTION 68 OF THE ACT. THEREFORE, W E DO NOT WANT TO INTERFERE IN THE IMPUGNED ORDER OF LD. CIT(A) WHICH IS CONFIRMED AND CONSEQUE NTLY THE APPEAL OF REVENUE IS DISMISSED. 16. WE FIND THAT THE HONBLE SUPREME COURT IN THE C ASE OF M/S EARTHMETAL ELECTRICALS P LTD VS CIT & ANR. REPORTED IN 2010 (7) TMI 1137 IN CIVIL A PPEAL NO. 21073 / 2009 DATED 30.7.2010 ARISING FROM THE ORDER OF HONBLE BOMBAY HIGH COURT HAD HELD AS UNDER:- ORDER DELAY CONDONED. LEAVE GRANTED. HEARD LEARNED COUNSEL ON BOTH SIDES. WE HAVE EXAMINED THE POSITION. WE FIND THAT THE SHA REHOLDERS ARE GENUINE PARTIES. THEY ARE NOT BOGUS AND FICTITIOUS. THEREFORE, THE IMPUGNED ORDER IS SET ASIDE. THE APPEAL IS ALLOWED ACCORDINGLY. NO ORDER AS TO COSTS. 17. IN THE INSTANT CASE BEFORE US, THE SHARE SUBSCR IBING COMPANIES ARE DULY ASSESSED TO INCOME TAX. IT IS NOT IN DISPUTE THAT THE SHARE SUBSCRIB ING COMPANIES ARE IN EXISTENCE. IT IS NOT IN DISPUTE THAT THE SHARE SUBSCRIBING COMPANIES ARE DU LY ASSESSED TO INCOME TAX AND THEIR INCOME TAX PARTICULARS TOGETHER WITH THE COPIES OF RESPECT IVE INCOME TAX RETURNS WITH THEIR BALANCE SHEETS ARE ALREADY ON RECORD . HENCE IT COULD BE S AFELY CONCLUDED THAT THEY ARE GENUINE SHAREHOLDERS AND NOT BOGUS AND FICTITIOUS. ACCORDI NGLY, THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF M/S EARTHMETAL ELECTRICAL S P LTD SUPRA WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE. 18. WE WOULD LIKE TO ADD THAT RECEIPT OF SHARE CAPI TAL FOR A COMPANY IS NOT A PROHIBITED TRANSACTION, AS THAT IS ONE OF THE MAIN SOURCE OF R AISING FUNDS FOR A COMPANY TO RUN ITS INTENDED ACTIVITIES. THE LD CITA HAD CATEGORICALLY GIVEN A FINDING THAT THE LD AO DID NOT BRING ON RECORD SUFFICIENT TANGIBLE AND COGENT MATERIAL TO S UPPORT HIS CONCLUSION THAT THE AMOUNT CREDITED IN THE ASSESSEES BOOKS IN THE FORM OF SHA RE CAPITAL AND SHARE PREMIUM ACTUALLY REPRESENTED ASSESSEES UNDISCLOSED INCOME. THIS FAC TUAL FINDING REMAIN UNCONTROVERTED BY THE REVENUE BEFORE US. ONCE THE REPLIES TO NOTICES ISS UED U/S 133(6) OF THE ACT WERE RECEIVED FROM THE SHARE SUBSCRIBING COMPANIES WHEREIN THEY HAD DU LY CONFIRMED THE TRANSACTIONS WITH THE ASSESSEE COMPANY WHICH WAS FURTHER SUPPLEMENTED BY RESPONDING TO SUMMONS U/S 131 OF THE ACT BY THE DIRECTORS OF THE SHARE APPLICANT COMPANI ES BY GIVING DEPOSITIONS TO THAT EFFECT BEFORE THE LD AO, THERE IS NO SCOPE FOR THE LD AO TO DISB ELIEVE THE TRANSACTIONS FROM THE ANGLE OF THE RECIPIENT ASSESSEE. 19. WE FIND THAT THE RELIANCE PLACED BY THE LD DR O N THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF RAJMANDIR ESTATES SUPRA WAS DI STINGUISHABLE ON FACTS AS THE SAID DECISION WAS RENDERED IN THE CONTEXT OF VALIDITY OF REVISION ARY JURISDICTION U/S 263 OF THE ACT BY THE LEARNED ADMINISTRATIVE COMMISSIONER. THIS FACT HAS ALREADY BEEN ADDRESSED BY THIS TRIBUNAL IN THE CASE OF VSP STEEL P LTD SUPRA. NO DECISION WH ATSOEVER WAS RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJ MANDIR ESTATES P LTD ON MERITS OF THE ADDITION AND HENCE DOES NOT COME TO THE RESCUE OF THE REVENUE IN THE FACTS OF THE INSTANT CASE. 20. WE ALSO FIND THAT THE HONBLE APEX COURT RECENT LY IN THE CASE OF PRINCIPAL CIT VS VAISHNODEVI REFOILS & SOLVEX REPORTED IN (2018) 96 TAXMANN.COM 469 (SC) WHEREIN THE SLP OF 19 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 THE REVENUE HAS BEEN DISMISSED BY THE HONBLE APEX COURT. THE BRIEF FACTS WERE THAT THE ADDITION U/S 68 OF THE ACT WAS MADE BY THE ASSESSIN G OFFICER IN RESPECT OF CAPITAL CONTRIBUTED BY THE PARTNER OF THE FIRM. THE HONBLE HIGH COURT NOT ED THAT WHEN THE CONCERNED PARTNER HAD CONFIRMED BEFORE THE ASSESSING OFFICER ABOUT HIS FA CT OF MAKING CAPITAL CONTRIBUTION IN THE FIRM AND THAT THE SAID INVESTMENT IS ALSO REFLECTED IN H IS INDIVIDUAL BOOKS OF ACCOUNTS, THEN NO ADDITION COULD BE MADE U/S 68 OF THE ACT. THE DECI SION OF HONBLE GUJARAT HIGH COURT IS REPORTED IN (2018) 89 TAXMANN.COM 80 (GUJ HC) . T HE SLP OF THE REVENUE AGAINST THIS JUDGEMENT WAS DISMISSED BY THE HONBLE SUPREME COUR T. 21. TO SUM UP, SECTION 68 OF THE ACT PROVIDES THAT IF ANY SUM FOUND CREDITED IN THE YEAR IN RESPECT OF WHICH THE ASSESSEE FAILS TO EXPLAIN THE NATURE AND SOURCE SHALL BE ASSESSED AS ITS INCOME OF THE PREVIOUS YEAR IN WHICH THE SAME WAS R ECEIVED. IN THE FACTS OF THE PRESENT CASE, BOTH THE NATURE & SOURCE OF THE SHARE CAPITAL RECEI VED WITH PREMIUM WERE FULLY EXPLAINED BY THE ASSESSEE. THE ASSESSEE HAD DISCHARGED ITS ONUS TO P ROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLICANTS. THE PAN DETAIL S, BANK ACCOUNT STATEMENTS, AUDITED FINANCIAL STATEMENTS AND INCOME TAX ACKNOWLEDGMENTS WERE PLACED BEFORE THE LD AO. ACCORDINGLY, ALL THE THREE CONDITIONS AS REQUIRED U /S. 68 OF THE ACT I.E. THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WERE PLACED BEFORE THE LD AO AND THE ONUS SHIFTED TO THE LD AO TO DISPROVE THE MATERIALS PLAC ED BEFORE HIM. WITHOUT DOING SO, THE ADDITION MADE BY THE LD AO IS BASED ON CONJECTURES AND SURMI SES CANNOT BE JUSTIFIED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, NO AD DITION WAS WARRANTED UNDER SECTION 68 OF THE ACT. THEREFORE, WE DO NOT WANT TO INTERFERE IN THE IMPUGNED ORDER OF LD. CIT(A) WHICH IS CONFIRMED AND CONSEQUENTLY THE GROUNDS RAISED BY T HE REVENUE ARE DISMISSED. 8. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THIS TRIBUNAL IN ASSESSEES OWN GROUP CONCERN ON SIMILAR FACTS AND ON THE FACTS OF THE INSTANT APPEAL AS DISCUSSED SUPRA, WE ARE INCLINED TO DISMISS THE APPEAL OF THE REVENUE. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20/02/201 9 SD/- SD/- (DR. A. L. SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH FEBRUARY, 2019 JD.(SR.P.S.) 20 ITA NO. 694/KOL/2017 SANSKRITA PROPERTIES P. LTD., AY 2012-13 COPY OF THE ORDER FORWARDED TO: 1 APPELLANT ITO, WARD-10(2), KOLKATA. 2 RESPONDENT M/S. SANSKRITA PROPERTIES PVT. LTD., 50 C, HARISH MUKHERJEE ROAD, BHAWANIPUR, OPP. FREE INDIA MOTORS GARAGE, KOLKATA- 700 025. 3 4 5 CIT(A)-4, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR