DCIT, Circle - 8, Kolkata, Kolkata V. M/s. Zimkele Commodeal Pvt. Ltd., Kolkata

ITA 959/KOL/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4626 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 27-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2011
• Court: TRIBUNAL
• Assessee Lawyers: A K TULSIYAN
• Keywords: Unexplained cash credit; Income from undisclosed sources; Question of law; Corroborative evidences
• Section: 143(3); 133(6); 68; 2

Judgement Text

1 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI K. NARASIMHA CHARY, JM] I.T.A NO. 959/KOL/2011 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX, VS. ZIMKELE C OMMODEAL PVT. LTD. CIRCLE-8, KOLKATA. (PAN:AAACZ1002E) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 27.07.2016 DATE OF PRONOUNCEMENT: 24.08.2016 FOR THE APPELLANT: SHRI SALLONG YADEN, ADDL. C IT FOR THE RESPONDENT: SHRI A. K. TULSIYAN, FCA ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-VIII, KOLKATA VIDE APPEAL NO. 432/CIT(A)-VIII/08-09/KOL DATED 11.04.2011. ASS ESSMENT WAS FRAMED BY DCIT, CIRCLE-8, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2006-07 VIDE HIS ORDER DATED 26.12.20 08. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE IN THE SUM OF RS. 1,2 3,75,000/- TOWARDS SHARE APPLICATION MONEY IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD AO OBSERVED THAT THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY OF RS. 1,23,75,000/- IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION FROM THE FOLLOWING PERSONS :- NAME OF SHARE APPLICANT SHARE APPLICATION MONEY REC EIVED EKTA COMMODITIES SUPPLY (P) LTD. INDEX COMMODITIES DEALER (P) LTD. RAMESWAR RETAILERS (P) LTD. ISHUNAND TRADING (P) LTD. UNICON MERCHANTS (P) LTD. JEMCO VANIJYA (P) LTD. DOYEN MARKETING (P) LTD. EVERLIKE COMPUTERS (P) LTD. TOTAL: 15,00,000/- 15,00,000/- 20,00,000/- 15,00,000/- 15,00,000/- 25,00,000/- 15,00,000/- 3,75,000/- RS.1,23,75,000/- 2 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 THE ASSESSEE PRODUCED THE FOLLOWING DETAILS BEFORE THE LD AO TO JUSTIFY THE RECEIPT OF SHARE APPLICATION MONEY AS GENUINE IN NATURE :- (A) NAME AND ADDRESS OF THE SHARE APPLICANT (B) INCOME TAX RETURN ACKNOWLEDGEMENT OF SHARE APPL ICANT FOR THE ASST YEAR 2006-07 (C ) AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDE D 31.3.2006 FOR EACH OF THE SHARE APPLICANTS. (D) COPY OF THE BANK STATEMENTS OF SHARE APPLICANTS FROM WHERE THE PAYMENTS WERE MADE TO THE ASSESSEE COMPANY. (E) COPY OF CERTIFICATE OF INCORPORATION OF SHARE A PPLICANTS (F) CONFIRMATION FROM THE SHARE APPLICANTS IN DETAI LED LETTER FORM CONTAINING THE NECESSARY DOCUMENTS FILED WITH ROC PROVING THE EXISTENCE OF T HE SHARE APPLICANT COMPANIES. (G) SOURCE FOR SHARE APPLICANTS FOR MAKING PAYMENT OF SHARE APPLICATION MONEY TO THE ASSESSEE WITH REFERENCE TO THEIR BANK STATEMENTS. (H) PAN AND INCOME TAX ASSESSMENT PARTICULARS OF SH ARE APPLICANTS. 3.1. THE LD AO SOUGHT TO VERIFY THE GENUINENESS OF THE SAID TRANSACTIONS AND OBSERVED THAT DETAILED ENQUIRY WAS CARRIED OUT AND IT WAS FOUND T HAT SHARE APPLICATION MONIES RECEIVED BY THE ASSESSEE WAS NOTHING BUT ASSESSEES OWN UNACCOU NTED MONEY WHICH WAS BROUGHT TO THE BOOKS USING BANKING CHANNEL IN THE FORM OF SHARE CA PITAL. THE LD AO OBSERVED AS UNDER:- (I) THE CONCERNS WHICH APPLIED FOR ALLOTMENT OF S HARES FOR THE ASSESSEE-COMPANY ARE PAPER COMPANY/JAMAKHARCHI COMPANY. ON ENQUIRY CARRIED OUT BY THIS OFFICE, IT IS FOUND THAT THESE CONCERNS WERE NOT FOUND AT THEIR ADDRESS. (II) ENQUIRY WAS CARRIED OUT AT THE NEIGHBORHOOD OF THE ADDRESSES OF THE SHARE APPLICANT BUT NOBODY WAS AWARE OF EXISTENCE OF ANY SUCH-COMPANY. FURTHER, NO SIGNBOARD WAS THERE. (III) ON PERUSAL OF BANK STATEMENT OF 'SHARE APPLIC ANT', IT WAS FOUND THAT HUGE SHOW THAT HUGE AMOUNT OF CHEQUE IS CREDITED EVERY DAY BUT THE SAME IS TRANSFERRED OUT / TO OTHER CONCERNS ON THE VERY SAME DATE OR AT THE MOST ON THE NEXT DAY. IN OTHER WORDS, ALTHOUGH CHEQUES WORTH CRORES OF RUPEES ARE DEPOSITED IN THE ACCOUNT OF SH ARE APPLICANTS EVERY DAY, THERE IS HARDLY ANY CLOSING BALANCE AT THE END OF EACH DAY. (IV) JUST BEFORE DEBIT OF SHARE APPLICATION MONEY I N THE BANK ACCOUNT OF APPLICANT, THERE IS CREDIT OF MONEY IN THE BANK ACCOUNT OF THE APPLICAN T FROM SOME OTHER CONCERN. (V) THE BANK ACCOUNT STATEMENT OF PARTIES WHO TRANS FERRED MONEY IN ACCOUNT OF SHARE APPLICANT, WERE EXAMINED AND IT WAS FOUND THAT MONE Y HAS COME TO THE ACCOUNT OF SUCH PARTIES FROM SOME OTHER CONCERNS. THESE INTERMEDIARY COMPAN IES THROUGH WHICH THE MONEY HAS BEEN ROUTED TO THE BANK ACCOUNT OF ASSESSEE ARE TYPICAL PAPER/JAMAKHARCHI COMPANIES. THEIR BANK ACCOUNTS SHOW THAT HUGE AMOUNT OF CHEQUE IS CREDITE D EVERY DAY BUT THE SAME IS TRANSFERRED OUT TO OTHER CONCERNS ON THE VERY SAME DAY OR AT TH E MOST ON THE NEXT DAY. IN OTHER WORDS, ALTHOUGH CHEQUES WORTH CRORES OF RUPEES ARE DEPOSIT ED IN THE ACCOUNT OF INTERMEDIARY CONCERNS EVERY DAY BUT THERE IS HARDLY ANY CLOSING BALANCE AT THE END OF EACH DAY. FURTHER THESE INTERMEDIARY CONCERNS ARE NOT FOUND EXIT AT T HEIR ADDRESS WITH BANK. 3 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 3.2. IN VIEW OF ABOVE, IT WAS HELD THAT SHARE APPLI CATION MONEY OF RS.1,23,75,000/- RECEIVED BY THE ASSESSEE WAS NOTHING BUT ASSESSEE'S OWN UNACCOUNTED MONEY. ACCORDINGLY, IT WAS ADDED TO THE TOTAL INCOME OF TH E ASSESSEE. 4. BEFORE THE LD CITA IT WAS SUBMITTED THAT THE A SSESSEE IS A NON-BANKING FINANCE COMPANY (NBFC) ENGAGED IN THE BUSINESS OF GRANTING LOANS AND ADVANCES AND MAKING INVESTMENT IN SHARES. IT WAS SUBMITTED THAT DESPIT E FILING OF COMPLETE DETAILS ABOUT THE SHARE APPLICANTS BEFORE THE LD AO, THE LD AO DID NOT MAKE ANY ATTEMPT TO PROPERLY VERIFY THE TRANSACTIONS. IT WAS SUBMITTED THAT THE THREE INGR EDIENTS FOR ANY CASH CREDIT I.E IDENTITY OF THE SHARE APPLICANTS, GENUINENESS OF TRANSACTIONS AND C REDITWORTHINESS OF SHARE APPLICANTS WERE DULY PROVED AS UNDER:- I) IDENTITY - ALL THE SHARE APPLICANTS WERE AVAILA BLE AT THE GIVEN ADDRESS. ALL ARE BODY CORPORATES REGISTERED WITH REGISTRAR OF COMPANY. FU RTHER, ALL ARE ASSESSED TO I TAX. THE NOTICES U/S. 133(6) OF THE INCOME TAX ACT, 1961 WER E SERVED ON THE PARTIES ON THEIR RESPECTIVE ADDRESSES AND ALL THE RELEVANT DOCUMENTS REGARDING THE PAYMENT OF SHARE APPLICATION WERE FILED BEFORE THE A.O VIDE THE LETTER DATED 15.12.08 BY THE ASSESSEE. II) GENUINENESS & CREDITWORTHINESS: 1) ALL SHARE AP PLICATION MONEY ARE RECEIVED BY WAY OF A/C PAYEE CHEQUE, B) BANK A/C OF THE SHAREHOLDERS W ERE AVAILABLE TO CONFIRM THE SAID TRANSACTION, C) ALL THE SHARE APPLICANT ARE ASSESSE D TO TAX AND THEIR INVESTMENT ARE REJECTED IN THEIR RESPECTIVE ACCOUNTS. HENCE, THE GENUINENESS OF THE SHARE APPLICANTS IS B EYOND DOUBT AND AS THE INVESTMENT IS RESPECTIVE FILES, NO DOUBT CAN BE RAISED. THE ASSESSEE REITERATED THE DOCUMENTS FILED BEFORE THE LD AO IN ADDITION TO FILING THE SUPPORTING EVIDENCES WITH RESPECT TO PROOF OF ADDRE SSS, DECLARATION FROM THE SHAREHOLDERS FOR INVESTMENT IN SHARE APPLICATION MONEY MADE WITH THE ASSESSEE AND ALLOTMENT ADVICE AS REGARDS ALLOTMENT OF SHARES, COPY OF TRADE LICENCE OF SHARE APPLICANTS, AMONG OTHERS. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) LTD REPORTED IN (2008) 21 6 CTR (SC) 195 AND DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS R OSEBERRY MERCANTILE (P) LTD IN ITAT NO. 241 OF 2010 AND G.A. NO. 3296 OF 2010 DATED 10. 01.2011 IN SUPPORT OF ITS CONTENTIONS. THE LD CITA DULY APPRECIATING THE SUBMISSIONS OF TH E ASSESSEE TOGETHER WITH SUPPORTING EVIDENCES ON RECORD AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS SUPRA, DELETED THE ADDITION MADE U/S 68 OF THE ACT. AGGRIEVED, THE R EVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 4 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,23,75,000/- MADE BY THE ASSES SING OFFICER AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 FOR TH E ASSESSMENT YEAR 2006-07. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) COMMITTED GROSS ERROR IN NOT EXERCISING POWERS CONFERRED UPON HIM U NDER SECTION 250(4) OF THE INCOME-TAX, ACT, 1961. 3 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT(A) COMMITTED GROSS ERROR IN PLACING UNDUE RELIANCE UPON THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 EVEN WHEN IT WAS ESTABLISHED BY THE ASSESSING OFFICER THAT THE IDENTITIES OF THE ALLEGE D SHARE APPLICANTS ARE NOT VERIFIABLE. 5. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF TH E LD AO AND RELIED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS:- (A) CIT VS KORLAY TRADING CO. LTD REPORTED IN (1998 ) 232 ITR 820 (CAL) (B) CIT VS MAITHAN INTERNATIONAL REPORTED IN (2015) 375 ITR 123 (CAL) (C ) CIT VS NOVA PROMOTERS AND FINLEASE (P) LTD REP ORTED IN (2012) 342 ITR 169 (DEL) (D) CIT VS NAVODAYA CASTLES PVT LTD REPORTED IN (20 14) 367 ITR 306 (DEL) (E) CIT VS ACTIVE TRADERS (P) LTD REPORTED IN (1995 ) 214 ITR 583 (CAL) (F) CIT VS NIVEDAN VANIJYA NIYOJAN LTD REPORTED IN (2003) 263 ITR 623 (CAL) (G) BISAKHA SALES (P) LTD VS CIT REPORTED IN (2015) 152 ITD 750 (KOL TRIB) (H) SUBHALAKSHMI VANIJYA (P) LTD VS CIT REPORTED IN (2015) 155 ITD 171 (KOL TRIB) HE ARGUED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS WAS RENDERED IN THE CONTEXT OF A PUBLIC LIMITED COM PANY AND WHEREAS IN THE INSTANT CASE, THE ASSESSEE IS A PRIVATE LIMITED COMPANY. 6. IN RESPONSE TO THIS, THE LD AR ARGUED THAT THE LD AO HAD MADE A WILD ALLEGATION THAT THE SHARE APPLICANTS ARE MERELY PAPER COMPANIES WIT HOUT BRINGING ANY MATERIAL ON RECORD. HE HAD STATED THAT AFTER DETAILED ENQUIRY MADE BY H IM, HE HAD DRAWN TO SUCH CONCLUSION. BUT WHAT ENQUIRIES WERE CARRIED OUT BY HIM WERE NOT BRO UGHT ON RECORD BY HIM IN THE ORDER. THE ENTIRE DETAILS OF THE SHARE APPLICANTS DULY PRO VING THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WERE DULY PROVED BY THE ASSESSEE AND THE LD AO HAD NOT MADE ANY ENQUIRY REGARDING THE SAME. THE LD AO HAD ERR ONEOUSLY STATED THAT THERE WAS NO SUFFICIENT BANK BALANCES AVAILABLE WITH THE SHARE A PPLICANTS ON THE DATE OF ADVANCING MONIES TOWARDS SHARE APPLICATION WITH THE ASSESSEE COMPANY WHICH WAS FACTUALLY INCORRECT AS COULD BE EVIDENT FROM THE BANK STATEMENTS OF THE SHARE AP PLICANTS. HE MET EACH AND EVERY ALLEGATION MADE BY THE LD AO IN HIS ASSESSMENT ORDE R IN HIS ARGUMENTS WITH SPECIFIC REFERENCE TO THE RELEVANT PAGES OF THE PAPER BOOK F ILED BY THE ASSESSEE. HE FURTHER ARGUED 5 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 THAT THE LD AO HAD PLACED RELIANCE ON THE REPORT OF THE INSPECTOR OF INCOME TAX WHICH WAS NEVER FURNISHED TO THE ASSESSEE FOR ITS REBUTTAL. IN THE INSTANT CASE, ALL THE THREE INGREDIENTS OF CASH CREDIT WERE DULY PROVED BY THE ASSESSEE INC LUDING THE SOURCE OF SOURCE THOUGH THE SAME IS NOT REQUIRED TO BE PROVED BY THE ASSESSEE A S PER LAW. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS:- (A) BEAR BULL DISTRIBUTORS (P) LTD VS ITO IN ITA NO . 1652/KOL/2008 DATED 24.12.2008 (KOLKATA TRIB) (B) DCIT VS HOWRAH GASES LTD IN ITA NO. 270/KOL/200 9 DATED 23.4.2009 (KOLKATA TRIB) (C ) DCIT VS SHAW AROMATICS PVT LTD IN ITA NO. 2003 /KOL/2009 DATED 19.11.2010 (KOLKATA TRIB) (D) DCIT VS NIKITA METALS PVT LTD IN ITA NO. 525/KO L/2010 DATED 29.10.2010 (KOLKATA TRIB) (E) ITO VS ROSEBERRY MERCANTILE (P) LTD IN ITA NO. 2119/KOL/2009 DATED 18.5.2010 (KOLKATA TRIB) (F) CIT VS ROSEBERRY MERCANTILE (P) LTD IN GA NO. 3296 OF 2010 IN ITAT NO. 241 OF 2010 DATED 10.1.2011 (HONBLE CALCUTTA HIGH COURT) (G) CIT VS LOVELY EXPORTS (P) LTD REPORTED IN (2008 ) 216 CTR (SC) 195 (H) ITO VS HARSHWARDHAN GEMS PVT LTD IN ITA NO. 107 0 & 1337/KOL/2010 DATED 3.2.2016 (KOLKATA TRIB) (I) PRABHU DHAN INFRASTRUCTURE PVT LTD VS DCIT IN I TA NO. 1908/KOL/2012 DATED 20.1.2016 (KOLKATA TRIB) (J) ACIT VS KUNJ ALLOYS PVT LTD IN ITA NO. 239 & 25 7/CTK/2007 DATED 27.11.2015 (KOLKATA TRIB) (K) ACIT VS GLOBAL MERCANTILE (P) LTD REPORTED IN ( 2016) 157 ITD 924 (KOLKATA TRIB) (L) CIT VS NISHAN INDO COMMERCE LTD IN ITA NO. 52/2 001 DATED 2.12.2013 (HONBLE CALCUTTA HIGH COURT) (M) CIT VS ANSHIKA INVESTMENT PVT LTD IN ITA NO. 46 7/2014 DATED 16.4.2015 (HONBLE DELHI HIGH COURT) (N) ACIT VS SRI RAKESH BHARTIA IN ITA NO. 428/KOL/2 012 DATED 29.2.2016 (KOLKATA TRIB) (O) MIHIR KANTI HAZRA VS ITO IN ITA NO. 19/KOL/2013 DATED 10.9.2014 (KOLKATA TRIB) (P) ITO VS GOLD MOHUR PROFILES LTD REPORTED IN (201 5) 45 CCH 344 DATED 18.12.2015 (DELHI TRIB) (Q) KAINYA & ASSOCIATES PVT LTD VS DCIT REPORTED IN (2015) 45 CCH 0021 DATED 10.8.2015 (MUMBAI TRIB) (R ) CIT VS MITUL KRISHNA KAPOOR IN ITA NO. 333 OF 2009 DATED 9.6.2016 (HONBLE CALCUTTA HIGH COURT) (S) CIT VS DIVINE LEASING & FINANCE LTD REPORTED IN (2008) 299 ITR 268 (HONBLE DELHI HIGH COURT) THE LD AR ALSO DISTINGUISHED THE CASE LAWS RELIED U PON BY THE LD DR AND ARGUED THAT THEY ARE FACTUALLY DISTINGUISHABLE AND ARE NOT RELEVANT TO THE FACTS OF THE INSTANT CASE. 6 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE DETAILED PAPER BOOK FILED BY THE ASSE SSEE CONTAINING THE COMPLETE DETAILS OF ALL THE SHARE APPLICANTS AS DETAILED SUPRA. WE FIND T HAT THE ASSESSEE WAS IN RECEIPT OF SHARE CAPITAL INCLUDING SHARE PREMIUM DURING THE ASST YEA R UNDER APPEAL AS UNDER:- SL. NO. NAME & ADDRESS PAN NO. NO. OF SHARES ALLOTTED SHARE CAPITAL SHARE PREMIUM TOTAL AMOUNT CHEQUE NO. & DATE BANK NAME 1. EKTA COMMODITIES SUPPL. (P) LTD., 29A, WESTON STREET, 3 RD FLOOR, KOLKATA- 700012 AABCE2985L 30000 300,000.00 1,200,000.00 1,500,000.00 CHQ. NO.092540 DATE 13/10/2005 O.B.C R. N. MUKHERJEE ROAD 2. INDEX COMMODITIES DEALER (P) LTD. 29A, WESTON STREET, 3 RD FLOOR, KOLKATA-700012. AABCI2190K 30000 300,000.00 1,200,000.00 1,500,000.00 CHQ. NO.092496 DATE-13/10/2005 O.B.C R. N. MUKHERJEE ROAD 3. RAMESWAR RETAILERS (P) LTD. 33, C. R. AVENUE, 9 TH FLOOR, R. NO.909, KOLKATA-700012 AACCR6236J 40000 400,000.00 1,600,000.00 2,000,000.00 CHQ. NO.094295 DATE-17/11/2005 O.B.C R. N. MUKHERJEE ROAD 4. ISHUNAND TRADING (P) LTD. 29A, WESTON STREET, 3 RD FLOOR, KOLKATA-700 012 AABCI1195A 30000 300,000.00 1,200,000.00 1,500,000.00 CHQ NO.125775 DATE-17/11/2005 IDBI BRABOURNE ROAD BRANCH 5. UNICON MERCHANTS (P) LTD., VIP ENCLAVE, A1 BLOCK FLAT NO.302, BAGUIATI, KOLKATA-700059 AAACU6553H 30000 300,000.00 1,200,000.00 1,500,000.00 CH NO. 169727 DATE-17/11/2005 IDBI BRABOURNE ROAD BRANCH 6. JEMCO VANIJYA (P) LTD. 4, G.C. AVENUE, 5 TH FLOOR, KOLKATA-700013. AAACJ7895F 50000 500,000.00 2,000,000.00 2,500,000.00 CH. NO.104641 DATE-16/11/2005 ABN AMRO BANK BRABOURNE ROAD BRANCH 7. DOYEN MARKETING (P) LTD. 23B, N. S. ROAD, 2 ND FLOOR, ROOM NO. 8B, KOLKATA- 700001 AAACD8812G 30000 300,000.00 1,200,000.00 1,500,000.00 CH.NO.004023 DATE-17/11/2005 CENTURIAN BANK INDIA EXCHANGE PLACE BRACH 8. EVERLIKE COMPUTERS (P) LTD., 27, BRABOURNE ROAD, 3 RD FLOOR, KOLKATA-700 001 AAACE5392C 7500 75,000.00 300,000.00 375,000.00 CH. NO.264987 DATE-22/06/2004 CENTURIAN BANK INDIA EXCHANGE PLACE BRANCH. 7.1. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD F URNISHED THE FOLLOWING DOCUMENTS RELATING TO THE SHARE APPLICANTS BEFORE THE LOWER AUTHORITIE S :- (A) NAME AND ADDRESS OF THE SHARE APPLICANTS (B) INCOME TAX RETURN ACKNOWLEDGEMENT OF SHARE APPL ICANTS FOR THE ASST YEAR 2006-07 (C ) AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDE D 31.3.2006 FOR EACH OF THE SHARE APPLICANTS. (D) COPY OF THE BANK STATEMENTS OF SHARE APPLICANTS FROM WHERE THE PAYMENTS WERE MADE TO THE ASSESSEE COMPANY. (E) COPY OF CERTIFICATE OF INCORPORATION OF SHARE A PPLICANTS. (F) CONFIRMATION FROM THE SHARE APPLICANTS IN DETAI LED LETTER FORM CONTAINING THE NECESSARY DOCUMENTS FILED WITH ROC PROVING THE EXISTENCE OF T HE SHARE APPLICANT COMPANIES. (G) SOURCE FOR SHARE APPLICANTS FOR MAKING PAYMENT OF SHARE APPLICATION MONEY TO THE ASSESSEE WITH REFERENCE TO THEIR BANK STATEMENTS. 7 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 (H) PAN AND INCOME TAX ASSESSMENT PARTICULARS OF SH ARE APPLICANTS. (I) SUPPORTING EVIDENCES WITH RESPECT TO PROOF OF A DDRESSS (J) DECLARATION FROM THE SHAREHOLDERS FOR INVESTMEN T IN SHARE APPLICATION MONEY MADE WITH THE ASSESSEE (K) ALLOTMENT ADVICE AS REGARDS ALLOTMENT OF SHARES (L) COPY OF TRADE LICENCE OF SHARE APPLICANTS 7.2. IT IS NOT IN DISPUTE THAT IN THE BALANCE SHE ETS OF SHARE APPLICANTS, THE AMOUNTS PAID TO ASSESSEE WAS DULY REFLECTED UNDER THE HEAD INVESTM ENTS WHICH COULD BE EVIDENT FROM THE RELEVANT PAGES OF THE PAPER BOOK FILED BY THE ASSES SEE. WE FIND FROM THE BANK STATEMENTS OF THE SHARE APPLICANTS ON THE RELEVANT DATES OF MAKIN G INVESTMENTS IN SHARE CAPITAL WITH THE ASSESSEE COMPANY, THAT THEY HAD SUFFICIENT BANK BAL ANCES IN THEIR KITTY AND HENCE CREDITWORTHINESS OF THOSE PARTIES WERE PROVED BEYON D DOUBT. ALL THE SHARE APPLICANTS ARE ASSESSED TO INCOME TAX AND HAD REGULARLY FILED THEI R INCOME TAX AND ROC RETURNS. HENCE, THE IDENTITY OF THE SHARE APPLICANTS WAS DULY PROVE D. ALL THE SHARE APPLICANTS HAD MADE INVESTMENTS IN SHARE CAPITAL WITH THE ASSESSEE COMP ANY THROUGH ACCOUNT PAYEE CHEQUES FROM THEIR DISCLOSED BANK ACCOUNTS WITH SUFFICIENT SOURC ES WHICH WERE DULY EXPLAINED. HENCE, THE GENUINENESS OF THE TRANSACTIONS WAS ALSO PROVED IN THE INSTANT CASE. WE FIND THAT THE ASSESSEE HAD EVEN PROVED THE SOURCE OF SOURCE OF SH ARE APPLICANTS IN THE INSTANT CASE WHICH ARE QUITE EVIDENT FROM THE CONFIRMATIONS FILED BY T HEM BEFORE THE LD AO WHICH ARE FORMING PART OF THE RECORDS AND THE PAPER BOOK. THE SHARE APPLICANTS HAD DULY EXPLAINED THAT THEY HAD LIQUIDATED THEIR EXISTING INVESTMENTS IN SHARES OF CERTAIN COMPANIES FOR WHICH THE PROCEEDS WERE RECEIVED BY CHEQUES AND GOT DEPOSITED IN THEIR REGULAR BANK ACCOUNT. FROM THE SAID BANK ACCOUNT, ACCOUNT PAYEE CHEQUES WERE I SSUED TO THE ASSESSEE COMPANY TOWARDS INVESTMENT IN SHARE CAPITAL BY THEM. HENCE THE SO URCE OF SOURCE FOR SHARE APPLICANTS ALSO IS EXPLAINED IN THE INSTANT CASE BY THE ASSESSEE THOUG H IT IS NOT REQUIRED TO BE PROVED BY THE ASSESSEE AS PER LAW. WE FIND THAT NONE OF THE DOC UMENTS PERTAINING TO THE SHARE APPLICANTS WHICH WERE FILED BEFORE THE LD AO WERE FOUND TO BE INGENUINE OR NON CREDITWORTHY BY THE LD AO. WE FIND THAT THE LD AO HAD MADE A WILD ALLEGAT ION THAT THESE SHARE APPLICANT COMPANIES ARE MERE PAPER COMPANIES WITHOUT BRINGING ANY COGENT MATERIAL AND EVIDENCES ON RECORD. WE FIND THAT THE LD AO HAD NOT BROUGH T ANY MATERIAL OR EVIDENCE ON RECORD WHICH WOULD INDICATE THAT THE SHARE APPLICANTS ARE MERE BENAMIDARS / FICTITIOUS PERSONS OR 8 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 THAT ANY PART OF THE SHARE CAPITAL REPRESENTED THE ASSESSEES OWN INCOME FROM UNDISCLOSED SOURCES. 7.3. NOW IT WOULD BE RELEVANT TO DEAL WITH THE VA RIOUS CASE LAWS RELIED UPON BY THE LD DR ON THE IMPUGNED ISSUE. WE FIND THAT IN THE CASE OF CIT VS KORLAY TRADING CO. LTD REPORTED IN (1998) 232 ITR 820 (CAL), ONLY PAN WAS FILED IN THIS CASE AND NO OTHER DETAIL S WERE FILED AND HENCE THE HONBLE HIGH COURT HELD THAT THE ASSE SSEE HAD NOT DISCHARGED ITS PRIMARY ONUS IN FULL BY PROVING THE OTHER INGREDIENTS OF SE CTION 68 OF THE ACT. IN THE INSTANT CASE, THE ENTIRE DETAILS OF THE SHARE APPLICANTS WERE FILED T OGETHER WITH THEIR CREDITWORTHINESS AND SOURCE OF SOURCE WERE PROVED AND HENCE THE DECISION RELIED UPON IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. SIMILARLY IN CIT VS NIVEDAN VANIJYA NIYOJAN LTD REPORTED IN (2003) 263 ITR 623 (CAL) RELIED UPON BY THE LD DR , THE MAIN INGREDIENTS OF SECTION 68 OF THE ACT NAMELY THE IDENTITY OF THE SUBSCRIBERS, GEN UINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF SUBSCRIBERS WERE NOT PROVED BY THE ASSESSEE IN THAT CASE. WHEREAS, IN THE INSTANT CASE, ALL THE THREE INGREDIENTS WERE PR OVED BY THE ASSESSEE BEYOND ANY DOUBT AND HENCE THE SAID DECISION RELIED UPON BY THE LD DR IS FACTUALLY DISTINGUISHABLE FROM THE INSTANT CASE. 7.4. WITH REGARD TO CIT VS ACTIVE TRADERS (P) LTD REPORTED IN (1995) 21 4 ITR 583 (CAL), CIT VS MAITHAN INTERNATIONAL REPORTED IN (2015) 375 ITR 123 (CAL), SUBHALAKSHMI VANIJYA (P) LTD VS CIT REPORTED IN (2015) 155 ITD 171 (KOL TRIB), BISAKHA SALES (P) LTD VS CIT REPORTED IN (2015) 152 ITD 750 (KOL TRIB) RELIED UPON BY THE LD DR, WE FIND THAT ALL THESE DECISIONS WERE RENDERED IN THE CONTEXT OF VALIDITY OF REVISIONARY JURISDICTION U/S 263 OF THE ACT AND ARE FACTUALLY DISTINGUISHABLE FROM THE INST ANT CASE. WITH REGARD TO RELIANCE PLACED ON CIT VS NOVA PROMOTERS AND FINLEASE (P) LTD REPORTED IN (2012) 342 ITR 169 (DEL ) IS CONCERNED, WE FIND THAT IN THAT CASE, THERE WAS AN INFORMATION ABOUT THE EXISTENCE OF ACCOMMODATION ENTRY PROVIDERS AND THEIR MODUS OPERA NDI IN WHICH THE ASSESSEE WAS ALSO FOUND TO BE INVOLVED AND ENQUIRIES WERE CONDUCTED A ND EVIDENCES WERE BROUGHT ON RECORD AGAINST THAT ASSESSEE. BUT IN THE INSTANT CASE, NO SUCH FACTUAL FINDINGS WITH COGENT EVIDENCE WERE BROUGHT ON RECORD BY THE LD AO EXCEPT MAKING A BALD STATEMENT THAT THE SHARE APPLICANT COMPANIES ARE PAPER COMPANIES AND HENCE T HE SAID DECISION IS FACTUALLY DISTINGUISHABLE FROM THE INSTANT CASE. WITH REGA RD TO RELIANCE PLACED ON CIT VS NAVODAYA CASTLES PVT LTD REPORTED IN (2014) 367 ITR 306 (DEL ) , THE HONBLE DELHI HIGH COURT HAD 9 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 ONLY REMANDED THE MATTER BACK TO THE TRIBUNAL FOR F RESH ADJUDICATION IN AS MUCH AS THE TRIBUNAL HAD ONLY REPRODUCED THE ORDER OF THE COMMI SSIONER (APPEALS) AND THE CO-ORDINATE BENCH DECISION RELIED UPON BY THE TRIBUNAL WAS OVER TURNED BY THE HONBLE DELHI HIGH COURT. HENCE THE RATIO LAID DOWN THEREON CANNOT BE MADE AP PLICABLE TO THE FACTS OF THE INSTANT CASE. 7.5. WE FIND THAT THE ASSESSEE HAD GIVEN THE COMPL ETE DETAILS ABOUT THE SHARE APPLICANTS CLEARLY ESTABLISHING THEIR IDENTITY, CREDITWORTHINE SS AND GENUINENESS OF TRANSACTION PROVED BEYOND DOUBT AND HAD DULY DISCHARGED ITS ONUS IN FU LL. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE CO-ORDINATE BENCH DECISION OF THIS T RIBUNAL IN THE CASE OF ACIT VS GLOBAL MERCANTILE (P) LTD REPORTED IN (2016) 157 ITD 924 ( KOLKATA TRIB) WHICH HAD RENDERED THE DECISION AFTER DULY CONSIDERING THE DECISIONS OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) LTD REPORTED IN (2008) 21 6 CTR (SC) 195 AND DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS ROSEBERRY MERCANTILE (P) LTD IN GA NO. 3296 OF 2010 IN ITAT NO. 241 OF 2010 DATED 1 0.1.2011 . INFACT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE CAL CUTTA HIGH COURT IN THE CASE OF CIT VS ROSEBERRY MERCANTILE (P) LTD SUPRA WHEREIN THE QUES TIONS RAISED BEFORE THEIR LORDSHIPS AND DECISION RENDERED THEREON IS AS UNDER: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) OUGHT TO HAVE UPHELD THE ASSESSMENT ORDER AS THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS A SCHEME FOR LAUNDERING BLACK MONEY INTO WHITE MONEY OR ACCOUNTE D MONEY AND THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ASSESSEE HAD NOT ESTABL ISHED THE GENUINENESS OF THE TRANSACTION.' HELD AFTER HEARING THE LEARNED COUNSEL FOR THE APPELLANT AND AFTER GOING THROUGH THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. M/S LOVE LY EXPORTS PVT LTD, WE ARE AT ONE WITH THE TRIBUNAL BELOW THAT THE POINT INVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF THE ASSESSEE AN D THUS, NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APPEAL IS DEVOI D OF ANY SUBSTANCE AND IS DISMISSED.' 7.7. WE FIND THAT THE ISSUE IS ALSO COVERED BY AN OTHER JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS MITUL KRISHNA KAPOOR IN ITA NO. 333 OF 2009 DATED 9.6.2016) WHEREIN THE QUESTION RAISED AND THE DECISION RENDERED THERE ON ARE REPRODUCED BELOW:- 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNED TRIBUNAL IS JUSTIFIED IN LAW IN CONFIRMING THE ORDER OF C.I.T.(APPEALS) I N DELETING THE ADDITION OF RS.33,90,000/- AND RS.72,57,686/- MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961?' ADDITION OF A SUM OF RS.33.90 LAKHS WAS MADE ON THE BASIS THAT THE ASSESSEE HAD ALLEGEDLY TAKEN LOAN FROM THE CORPUS FUND, WHICH THE ASSESSEE HAS DENIED. 10 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 THE ASSESSING OFFICER PROCEEDED TO ADD THIS SUM OF RS.33.90 UNDER SECTION 68 . C.I.T.(A) HAS CLEARLY HELD THAT THERE IS NO KNOWL EDGE AS TO WHAT THE CORPUS FUND IS. THE C.I.T. ALSO OPINED THAT THERE WAS NO MATERIAL ON THE BASIS OF WHICH THE AFORESAID ADDITION COULD BE MADE AND ON THAT BASIS THE C.I.T. DELETED THE ADDITION. THE LEARNED TRIBUNAL CONCURRED WITH SUCH FINDING OF THE C.I.T.(A). AS REGARDS OTHER SUM OF RS.72,57,686/- IS CO NCERNED, THE ADDITION WAS FOUND ALTOGETHER UNMERITORIOUS BECAUSE 'ALL THESE AMOUNTS ARE PAID B Y CHEQUE OUT OF ACCOUNTED FUND IN THE REGULAR BOOKS OF ACCOUNTS. A COPY OF THE CONFIRMATI ON ALONG WITH THE BANK STATEMENT IN RESPECT OF THE ASSESSEE'S ACCOU NTS WITH BHARAT OVERSEAS BANK IS FILED, DULY CONFIRMED BY SHRI A E MEDHORA ON BEHALF OF M/S. NOV ROJEE & CO. A COPY OF THE BANK ACCOUNT DISCLOSED AND THE REGULAR BOOKS OF ACCOUNTS WERE FI LED BEFORE THE LD.CIT(A) WHICH WERE ALSO MADE AVAILABLE BEFORE THE AO. BASED ON THESE SUBMISSIONS, THE LD.CIT(A) HAS DELETED THE SAME.' THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE SORRY TO SAY, DEPICT CLEAR ABUSE OF POWER OF THE ASSESSING OFFICER. WE WERE INCLINED TO IMPOSE EXEMPLARY COS TS UPON THE REVENUE BUT REFRAINED FROM DOING SO BECAUSE NOTICE OF THIS APPEAL HAS NOT BEEN GIVEN TO THE RESPONDENT. NO ONE HAS APPEARED. THE QUESTION FORMULATED IN THIS CASE IS ANSWERED IN THE AFFIRMATIVE AND AGAINST THE REVENUE. THE APPEAL IS, THEREFORE, DISMISSED. 7.8. WE ALSO FIND THAT THE ISSUE UNDER APPEAL IS ALSO COVERED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS DIVINE LEASING & FINANCE LTD REPORTED IN (2008) 299 ITR 268 AND ALSO VARIOUS OTHER DECISIONS RELIED UPON BY TH E LD AR WHICH ARE NOT CONSIDERED HERE FOR THE SAKE OF BREVITY. 7.9 IN VIEW OF THE AFORESAID FINDINGS AND RESPECTF ULLY FOLLOWING THE DECISIONS OF HONBLE APEX COURT SUPRA ; HONBLE JURISDICTIONAL HIGH COU RT ( SUPRA ) AND CO-ORDINATE BENCH DECISIONS OF VARIOUS TRIBUNALS, WE FIND NO INFIRMIT Y IN THE ORDER OF THE LEARNED CIT(A) AND ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.08.2016 SD/- SD/- (K. NARASIMHA CHARY) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 24TH AUGUST, 2016 JD.(SR.P.S.) 11 ITA NO. 959/KOL/2011 ZIMKELE COMMODEAL PVT. LTD. AY 2006-07 COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT DCIT, CIRCLE-8, KOLKATA. 2 RESPONDENT M/S. ZIMKELE COMMODEAL PVT. LTD., 83A, PARK STREET, KOLKATA-700 016. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .