ITO, KOLKATA V. BLACKBERRY VYAPAAR PVT. LTD., KOLKATA

ITA 1234/KOL/2023

AI Insights

The case involves Blackberry Vyapaar Pvt. Ltd., which faced scrutiny over the substantial share capital and premium it raised, amounting to Rs. 15,33,00,000, during the assessment year 2008-09. The Income Tax Officer (ITO) initially added this amount to the company's income as unexplained, citing lack of evidence on the identity and creditworthiness of the shareholders and the genuineness of the transactions. The CIT(A) later deleted this addition, leading to the Revenue's appeal. The Tribunal, referencing a similar case (BST Infratech Ltd.), found that the company failed to substantiate the genuineness of the transactions and the creditworthiness of the investors, thus allowing the Revenue's appeal and confirming the AO's order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711407 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: misc
• Other Referred Cases: Pr. CIT(Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161), Commissioner of Income-tax vs. Divine Leasing & Finance Ltd. [2007] 158 Taxman 440 (Delhi), M/s. Treadstone International vs. DCIT in ITA No.21/LKW/2014, M/s. Simplex Casting Ltd. vs. DCIT (OSD)-3(1), Mumbai in ITA No. 1562/MUM/2015, Phool Singh vs. ACIT in ITA No. 2901/Del/2014, Principal Commissioner of Income-tax (Central)-2 vs. BST Infratech Ltd. [2024] 161 taxmann.com 668 (Calcutta)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Sham transactions; Accommodation entries; Assessment record; Rule 8D; Revision of order; Liquidation; Bogus
• Section: 148; 263; 68; 131; 133(6); 14A

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री जॉजज माथान, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 ITO, Kolkata Vs. Blackberry Vyapaar Pvt. Ltd. (Appellant) (Respondent) PAN: AADCB3718L Appearances: Department represented by : P.N. Barnwal, CIT, DR. Assessee represented by : None. Date of concluding the hearing : 16-June-2025 Date of pronouncing the order : 24-July-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2008-09 dated 03.08.2023, which has been passed against the assessment order u/s 143(3)/263/147 of the Act, dated 31.03.2014. None appeared on behalf of the assessee and the appeal was heard with the assistance of the Ld. DR. Printed from counselvise.com Page | 2 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. 1.1. The Registry has informed that the appeal filed by the Revenue is barred by limitation by 49 days. An application seeking condonation of delay has been filed by the assessee stating as under: “In this case, date of filing of appeal before Hon'ble ITAT has already been expired as per date of order of NFAC, Delhi (i.e. 02.10.2023]. Due to the following reasons delay for filing 2nd appeal has been made for the A.Y. 2008 09. (i) On 05.09.2023: Appeal Order downloaded from ITBA portal. (ii) On 29.09.2023: Assessment record received from WRITER. (iii) On 04.10.2023: ASR send to o/o PCIT-2, Kolkata through Proper Channel. (iv) On 13.10.2023: ASR send to o/o PCIT-2, Kolkata from o/o JCIT, Range- 5, Kolkata. (v) On 31.10.2023: Certificates for filing appeal u/s 253 of the IT Act has been received from o/o PCIT-2, Kolkata. Kindly condone the said delay for filing 2nd Appeal.” 1.2. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the Revenue had a reasonable and sufficient cause and was prevented from filing the instant appeal within statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal: “1. Whether on the facts and in the circumstances of the case and in law, the Ld. NFAC, Nev Delhi was justified in deleting the addition of Rs. 15,33,00,000/- u/s 68 of the IT Act or account of Share Capital and Premium in the course of assessment in absence of identity of the Creditors, Genuineness and Creditworthiness of the entire transactions. 2. Whether on the facts and in the circumstances of the case, Ld. NFAC, New Delhi was justified in deleting the addition of Rs. 15,33,00,000/- made by the Assessing Officer where no personal attendance was made by any director of the share allottee companies during the course of assessment Printed from counselvise.com Page | 3 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. proceedings and as such identity & creditworthiness of the creditors and genuineness of the transactions could not be verified. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. NFAC, New Delhi has failed to appreciate the principle which has been laid down by the Hon’ble Supreme Court in the case of Pr. CIT(Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) wherein it is suggested that the Assessing Officer is duty bound to investigate the creditworthiness of the creditor/subscriber, verify the identity of the subscribers and ascertain whether the transaction is genuine or these are bogus entries of name lenders . In facts of the case, in spite of best efforts made by the assessing officer, he could not verify the same as there was no response from the companies to whom shares were allotted during the course of assessment proceedings. Thus, the decisions of the Ld. NFAC, New Delhi is erroneous in holding that the raised share capital was not the assessee’s own income. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. NFAC has not appreciated the ratio of decision of Apex Court in the case of Pr. CIT(Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) wherein it suggests that “the assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the A.O., failure of which, would justify addition of the said amount to the income of the assessee In the facts and under the circumstances of the instant case, the assessee company has failed to do so other than submission of mere statements of various kinds. Thus, the decision of the Ld. NFAC, New Delhi is erroneous in holding that the raised share capital was not the assessee’s own income. 5. Whether on the facts and in the circumstances of the case and in law, the Ld. NFAC, New Delhi is failed to appreciate the principle which has been laid down by the Hon’ble Supreme Court in the case of Pr. CIT(Central)-1, Kolkata vs NRA Iron & Steel Pvt. Ltd. (412 ITR 161) wherein it is suggested that if the enquirers and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the IT Act. In the facts of the case, Ld. NFAC, New Delhi completely ignored this aspect, thus he has erred in giving relief to the assessee. 6. Whether on the facts of the present case, clearly the Assessee Company failed to discharge the onus required under Section 68 of the Act, the Assessing Officer was justified in adding back the amounts to the income of Printed from counselvise.com Page | 4 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. the assessee and Ld. NFAC, New Delhi has erred in allowing relief to the assessee. 7. The appellant craves to add, alter, amend, delete or substitute any of the grounds on and/or take additional grounds before or at any time of hearing of this appeal.” 3. Brief facts of the case are that the return of income for AY 2008- 09 was filed showing total loss of ₹47,599/- which was processed u/s 143(1) of the Act and subsequently, the case was reopened by issuing notice u/s 148 of the Act and the order u/s 147/143(3) of the Act was passed on 28.05.2010 assessing total income of ₹32,201/-. Subsequently, on 28.03.2013 an order u/s 263 of the Act was passed by the CIT, Kolkata-II, Kolkata (‘the CIT’) setting aside the order passed u/s 147/143(3) of the Act dated 28.05.2010 and directing the Assessing Officer (hereinafter referred to as Ld. 'AO') to do the assessment afresh. The background of the case as excerpted from the order of the Ld. CIT u/s 263 of the Act is mentioned at pages 2 and 3 of the assessment order. In view of the special facts and circumstances as well as the judicial decision relied upon in the case of Commissioner of Income- tax vs. Divine Leasing & Finance Ltd. reported in [2007] 158 Taxman 440 (Delhi)/[2008] 299 ITR 268 (Delhi)/[2007] 207 CTR 38 (Delhi)[16-11-2006] the order u/s 147/143(3) of the Act was set aside vide the order passed u/s 263 of the Act with the direction to the Ld. AO as mentioned hereunder: “i) Examine the genuineness and source of share capital, not on a test check basis, but in respect of each and every shareholder by conducting independent enquiry not through the assessee. The bank account for the entire period should be examined in the course of verification to find out the money trail of the share capital. ii) Further the A.O. should examine the directors as well as examine the circumstances which necessitated the change in directorship if applicable. He should examine them on oath to verify their credentials as director and reach a logical conclusion regarding the controlling interest. Printed from counselvise.com Page | 5 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. iii) The A.O. is directed examine the source of realization from the liquidation of assets shown in the balance sheet after the change of Directors, if any. After conducting the inquiries & verification as directed above, the A.O. should pass a speaking order, providing adequate opportunity of being heard to the assessee.” 4. The Ld. AO issued summons u/s 131 of the Act to both the then directors Shri Pawan Kumar Sharma and Shri Atul Kumar Sultania, which were duly served upon them but none of the directors appeared in response to the summons issued. The Ld. AO noted that the assessee company was incorporated with a capital of ₹1 Lakh and had raised share capital amounting to ₹1,53,20,000/- by issuing 15,32,000 equity shares having face value of ₹10/- at a premium of ₹90/- per share by private placement amounting to ₹13,78,80,000/-. There were 17 shareholders as per Form No. 2 filed before the ROC and investment to the tune of ₹15,32,00,000/- was also observed from the Balance Sheet furnished for the assessment year under consideration. Perusal of the records revealed that the assessee company utilized funds received from the issue of shares in making the said investment. During the course of hearing, the Ld. AR produced the books of account viz. cash book, bank statement etc., which were examined by the Ld. AO and to verify the justification of the share capital and share premium received and the identity, creditworthiness and genuineness of the 17 alleged shareholders, summons u/s 131 of the Act were issued to the Principal Officers (being the then directors) of the assessee company but none of them appeared. Therefore, as per the Ld. AO, the identity, creditworthiness and genuineness of the 17 shareholders remained unexplained. Further, the share capital, reserve and surplus, net worth, turnover of the assessee company also remained unexplained which are necessary for an investor to consider before an investment is made. The Ld. AO concluded that the investment was done without minimum Printed from counselvise.com Page | 6 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. business prudence and is not usual, as it lacks the motive of profit or gain. This was contended by the fact that the directors also failed to appear before the Ld. AO. However, there was compliance in respect of the notices issued u/s 133(6) of the Act and a perusal of the reply received shows that all these companies were conduit companies, popularly known as name lenders, which were being used to allow only book entries by colouring the same in the shape of transactions as appeared in their replies. It appeared to the Ld. AO that the assessee company had arranged its own money and routed it through these companies in the garb of share capital and share premium and resorted to such manipulation in transactions to give an appearance of genuineness which are in fact sham transactions. Accordingly, the sum of ₹15,32,00,000/- received from 17 alleged shareholders and ₹1,00,000/- as initial share capital was treated as bogus, added u/s 68 of the Act and charged to tax. Further, disallowance u/s 14A of the Act was also made and a sum of ₹47,599/- u/s 14A read with Rule 8D of the I.T. Rules, 1962 and another sum of ₹44,500/- on account of commission received and equivalent amount of expenditure under the head donation was disallowed and the total income was computed at ₹15,33,44,500/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who relied upon the decision of the Coordinate Bench of Lucknow in the case of M/s. Treadstone International vs. DCIT in ITA No.21/LKW/2014 order dated 30.10.2015 and dismissed the ground challenging the jurisdiction of the Ld. AO. For non-compliance of summons by the directors, the appellant submitted that the directors did not receive the notices and also submitted that the revisionary assessment order was passed under suspicion and not based on any concrete finding of evidence, especially Printed from counselvise.com Page | 7 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. when the assessee had discharged the primary onus and had filed the required evidence before the Ld. AO and relied upon the decisions of the Coordinate Benches of (a) Mumbai in the case of M/s. Simplex Casting Ltd. vs. DCIT (OSD)-3(1), Mumbai in ITA No. 1562/MUM/2015 for AY 2010-11 order dated 04.11.2016 and (b) Delhi in the case of Phool Singh vs. ACIT in ITA No. 2901/Del/2014 for AY 2010-11 order dated 11.04.2017. The Ld. CIT(A) held that the assessee had discharged the onus of filing requisite details to substantiate the genuineness of the transaction and creditworthiness of the persons paying for equity share capital and deleted the addition of ₹15,33,00,000/-. The addition of ₹47,599/- on account of disallowance u/s 14A of the Act was however confirmed and the appeal was partly allowed. Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before this Tribunal. 5. Ground no. 1 is regarding the absence of identity of the creditors, genuineness and creditworthiness of the entire transactions. In Ground no. 2 it is mentioned that no personal attendance was made by any of the directors of the share allottee companies during the course of assessment proceedings and as such identity and creditworthiness of the creditors and genuineness of the transactions could not be verified. In Ground no. 3 the revenue has relied upon the decision of Hon'ble Supreme Court in the case of PCIT vs. NRA Iron & Steel Pvt. Ltd. reported in 412 ITR 161 wherein it is mentioned that the Assessing Officer is duty bound to investigate the creditworthiness of the creditor/subscriber, verify the identity of the subscribers and ascertain whether the transactions are genuine or these are bogus entries of name lenders and since despite best efforts made by the Assessing Officer, he could not verify the same as there was no response from the companies, therefore, the NFAC, Delhi is erroneous in holding that the raised share Printed from counselvise.com Page | 8 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. capital was not the assessee’s own income. Similar grounds have been raised in Ground nos. 4 and 5 of the appeal as well as in Ground no. 6. 6. The Ld. DR drew our attention to page 4 of the assessment order in which it is mentioned that the summons u/s 131 of the Act to the directors were partly served and no compliance was made but when the notices u/s 133(6) of the Act were issued there was compliance. The Ld. AR of the assessee was given an opportunity to produce the directors before the Ld. AO but none appeared. There is no evidence of creditworthiness of the subscribers and no evidence for the genuineness of the transaction of ₹15.33 Crore. It was brought to our notice that on the face value of ₹10/- premium of ₹90/- was charged from the 17 subscribers. The assessee submitted before the Ld. CIT(A) as per para 4.15 of the order of the Ld. CIT(A) that the directors did not receive notices. It is contrary to the finding of the Ld. AO at page 5 where it is categorically mentioned that summons were served and no opportunity was provided to the Ld. AO to verify the same. It was brought to our notice that the directors did not appear and even the Ld. AR failed to produce the directors. 7. We have heard the submissions made and examined the facts of the case. On identical facts, the Hon'ble Calcutta High Court in the case of Principal Commissioner of Income-tax (Central)-2 vs. BST Infratech Ltd. [2024] 161 taxmann.com 668 (Calcutta)/[2024] 468 ITR 111 (Calcutta)[23-04-2024] have held as under: “■ The Commissioner (Appeals) has analysed the three principles which are required to be fulfilled namely identity, creditworthiness and genuineness of the transaction. It is not in dispute that the investors whose details have been referred are all either group companies or having a common set of directors. Further the assessee has not been able to dislodge the factual findings recorded by the Commissioner (Appeals) that the share application Printed from counselvise.com Page | 9 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. money was received from independent legal entities. By way of illustration if the case of GTPL is taken, it is found that they have invested Rs. 8.10 crores in the assessee-company. The said company receives a total of Rs. 1.65 crores on 1-6-2011 and 2-6-2011 from eight private limited companies/entities. Out of the said amount, Rs. 1.50 crores was remitted to the assessee’s bank account on 2-6-2011 by three cheques of Rs. 50 lakhs each. The balance remained at Rs. 15.09 lakhs. On 2-6-2011, an amount of Rs. 38 lakhs was remitted to the account by a private limited company and the balance rose to Rs. 53.09 lakhs out of this an amount of Rs. 50 lakhs was remitted to the assessee-account on the same day. On 4-6-2011, DSPL deposited another sum of Rs. 60 lakhs of which Rs. 50 lakhs was remitted to the assessee on 6-6-2011. On 6-6-2011 HGPL transferred a sum of Rs. 10 lakhs to this account by taking a closing balance to Rs. 23.08 lakhs. On the same day an amount of Rs. 20 lakhs was remitted to the assessee- account. On 6-6-2011 DSPL transferred Rs. 25 lakhs, Rs. 38 lakhs and Rs. 37 lakhs to this account and out of this amount Rs. 1 crore was remitted to the assessee’s account in two transactions on 7-6-2011. On 14-6-2011, MDPL remitted an amount of Rs. 35 lakhs to the account which was immediately transferred to the assessee’s account. On 18-7-2011, SRPL credited an amount of Rs. 50 lakhs to the account which was remitted to the assessee’s account on 19-7-2011. On 20-7-2011 amount of Rs. 30 lakhs was received through RTGS in the account and the amount was transferred to the account of the assessee on the same day. On 2-1-2012 an amount of Rs. 40 lakhs was deposited into account by two companies and this was remitted to the assessee’s account on 3-1-2012. On 3-1-2012 SGTPL credited to the account a sum of Rs. 20 lakhs and out of the said amount Rs. 40 lakhs was transferred to the assessee’s account on 4-1-2012. The Commissioner (Appeals) has in the above manner examined the factual position and has analysed the pattern of the transactions in the bank accounts of the five investor companies to that of the assessee’s bank account. They have received cheques from somewhere and immediately issued in favour of another company and the balance remaining in the account was very meagre the bank account has been operated solely for the purpose of rotating money. [Para 28] ■ With regard to the other investor namely MCPL on perusal of the bank statements, it was found that the said company had transactions with the assessee between 23-7-2011 to 28-7-2011 and the entire sum remitted to the assessee by MCPL had come from GTPL. The bank statements of HIL Engineering was also thoroughly examined more particularly the pattern of transaction and it was held that the only apparent purpose for which the bank accounts have been used is to receive money from one account and transfer it to another. With regard to the investor PMPL the bank statements revealed that the entire sums are remitted by PMPL to the assessee had come from GTPL. The analysis done by the Commissioner (Appeals) would Printed from counselvise.com Page | 10 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. reveal the nature and character of the transaction and the Commissioner (Appeals) cannot be faulted to have held that the transactions are well planned and stage managed to show genuineness behind which a clean and simple ‘round tripping’ of funds is taking place. The Commissioner (Appeals) on examination of the facts found that the bank accounts act as ‘highway’ in the ‘journey of money’ on a rotation and laundry trial from one entity to another and by this way these bank accounts create a façade of documentary evidence for clean money in the form of account payee cheques for any kind of accommodation entries. [Para 29] ■ The Commissioner (Appeals) did not stop with the above findings but proceeded to analyse the data which was made available in the form of return of income, bank statements etc. and found that the investors have purchased the shares of the assessee at a premium and all have shown similar characteristics, the revenue from operations are either nil or are negligible; the returns are either of loss or of insignificant income below taxable limit; they have been issued shares at very high premium without having earned any revenue from business operations; they have invested on shares at very high premium in companies who also have not earned anything from business operations; their balance sheet shows that even though they do not earn anything, they invite huge investments in their accounts and this money is used to make further investments at high premiums in other companies and they have also issued unsecured loans to other companies; money obtained from the route of share premium is rerouted for supplying sources of receipts of money to other companies; the circuit of investments remains within a group companies and in this manner through a circular routing of funds, the capital of each of the companies is enhanced and this inflated capital is then used for providing loans etc. to desired entities; the bank accounts show huge sums are received from one concern through cheques or RTGS and immediately diverted to other companies of the group and the bank balance remains negligible before and after such transfers; each of these companies invest in each other at very high premiums even though there is no business conducted; there is no reason or logic provided by any of the companies as to on what basis they arrived at the value of premium on shares to be issued as neither the assessee nor its investors had followed the guidelines of RBI or ICAI or any other guidelines for determining the rate of premium on their shares. Thus, the fixing of rate for premium is arbitrary and devoid of any financial or accounting rationale; the investors have not bothered to ensure protection of their investments; the investor company do not have any business operations worth noticing yet they have raised huge capital through issue of shares at a premium and also made investments in shares of other companies at a premium even though the other companies like them, did not have any promising business activities. Thus, on analysing the data which was available it is seen that each of the companies have invested in each Printed from counselvise.com Page | 11 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. other and the investments have been made by rotating funds from one account to another. The assessee has not been able to explain why the investors companies had applied for shares in the assessee’s company at a high premium even though the face value of the share was Rs. 10 per share. The pattern of transaction clearly shows that these investors companies had raised capital by issue of shares at a very high premium and the transaction is repetitive. Therefore, the mere fact that the transactions were though banking channels or that the companies where income-tax assessees or registered with Registrar of Companies can in no manner be sufficient to discharge the onus under section 68. The Tribunal did not examine the factual matrix in the depth and in the manner it ought to have done. Therefore, the findings rendered by the Tribunal are perverse. It was argued by the assessee that there is no material to show ‘round tripping’ of funds; there is no finding that the money which has come to the assessee is ill- gotten money and that the Commissioner (Appeals) did not examine how the money came to the investors and failed to note that the company had requisite share capital resource. Various documents which were placed before the tribunal in the form of a paper book was submitted to the court for its perusal. [Para 30] ■ It is viewed that it is not required to show that the money which came to the assessee is ill-gotten and what is required to be seen is whether the transaction was genuine. It may be true that the identity of the investor company has been established as they are registered with the Registrar of Companies and they are regularly assessed to income-tax. Assuming without admitting that at the relevant point of time when the investor- companies invested in the assessee-company by purchasing shares at high premium, they had sufficient funds in the bank accounts, the question would be as to whether this by itself will establish the creditworthiness of the investor companies. This is a fit case where the doctrine of ‘source of source’ or ‘origin of origin’ should be made applicable. It is said so because the Commissioner (Appeals) has brought the evidence and the materials on record which manifestly show the involvement of the assessee as the Directors of the five investors companies and the Director of the assessee- company are all closely related. [Para 31] ■ The facts clearly show that the doctrine of ‘origin of origin’ has to be applied in the case on hand and this exercise has been rightly done by the Commissioner (Appeals) by lifting the veil and enquiring into the real nature of the transaction. The pattern of remittances made to the five investor companies and immediately thereafter to the assessee-company clearly shows that the shares subscriptions were collected as a part of premeditated plan which has been conceived by the assessee. [Para 32] ■ The Tribunal fell in error in holding that the Commissioner (Appeals) has not pointed out any doubt or discrepancy with regard to the identity of the investors. The Tribunal has posed a wrong question which has led to a Printed from counselvise.com Page | 12 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. wrong answer. The question is not whether the identity of the investor has to be established but the question was whether the investor had requisite creditworthiness and whether such creditworthiness was a make belief situation by means of a circular transaction and if the same had been established. The Tribunal has held that the findings rendered by the Commissioner (Appeals) that the assets in the form of investments have been created through rotating of money in between the group companies and the assets mainly consists of cash and cash equivalents are not enough to prove that any unaccounted money of the assessee has been introduced in the assessee-company warranting addition under section 68. This finding upon consideration of the facts is perverse.[Para 33] ■ The Commissioner (Appeals) has made an elaborate exercise to assess the creditworthiness of the investor companies as well as the genuineness. All the investor companies are group companies and the directors are closely related to the director of the assessee-company and the director himself is one of the directors in one of the investor companies namely PMPL and the spouse of the director is the director of MCPL, an investor company. Therefore, on a deeper scrutiny of the factual position would show that the investor company did not have a genuine creditworthiness and consequently the transaction has to be held to be not genuine. Whether or not the onus is discharged depends on facts of each case as well as it depends on whether the two parties are related or known to each other; the manner or mode by which the parties approach each other, the quantum of money, the object and purpose for which payment/investment was made. As held earlier certificate of incorporation of the companies, payment by banking channel etc. cannot tantamount to satisfactory discharge of onus and the facts of the case on hand speaks for itself as it is obvious. Thus, the principle of Preponderance of Probabilities applies with full force to the case on hand which leads to the irresistible conclusion that the finding rendered by the Commissioner (Appeals) is legal and valid. [Para 34] ■ It is noted that the Tribunal has made certain observations as regards the future prospects of the assessee company as they are a steel industry and that their fixed assets and also the turnover had increased substantially. However, this appears to have not been the submission when the assessee filed an appeal before the Commissioner (Appeals) challenging the addition made by the Assessing Officer. This is evident from the grounds of appeal which have been set out in the order passed by the Commissioner (Appeals). The finding rendered by the Tribunal is probably taken from the written submissions made by the assessee before the Tribunal giving certain facts and figures regarding the expanding of business activities of the assessee. The assessee in their submission contended that their business activity has increased considerably and for the purpose of expansion funds were required and therefore the assessee raised funds from various means, increment in share capital from associates being one of them. The fact Printed from counselvise.com Page | 13 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. clearly demonstrates that the source of the funds which have flown into the account of the assessee have substantially come from one company namely GTPL and the said company had contributed to the other companies and the funds transferred to those companies were transferred to the assessee- company invariably on the same day leaving a bank balance which was almost negligible and the bank statements reveal that prior to the inflow of the funds into those investing companies, the bank balance was negligible and after the transfer it was also negligible. The assessee had contended before the Tribunal that the amount was credited through proper banking channels and the investing companies are body corporate registered with the Registrar of Companies and individually assessed to income tax and therefore the genuineness of the parties is beyond doubt. However, this is not the litmus test to discharge the burden on the assessee to establish creditworthiness of the investing companies as well as the genuineness of the transaction. Thus, it is to be held that the explanation offered by the assessee is neither proper, reasonable or acceptable. [Para 35] ■ The Commissioner (Appeals) was right in adopting a logical process of reasoning considering the totality of the facts and circumstances surrounding the allegations made against the assessee taking note of the minimum and proximate facts and circumstances surrounding the events on which charges are founded so as to reach a reasonable conclusion and rightly applied the test that a reasonable/prudent man would apply to arrive at a conclusion. On facts it is convinced to hold that the assessee has not established the capacity of the investors to advance moneys for purchase of above shares at a high premium. The creditworthiness of those investors companies is questionable and the explanation offered by the assessee, at any stretch of imagination cannot be construed to be a satisfactory explanation of the nature of the source. The assessee has miserably failed to establish genuineness of the transaction by cogent and credible evidence and that the investments made in its share capital were genuine. As noted above merely proving the identity of the investors does not discharge the onus on the assessee if the capacity or the creditworthiness has not been established. [Para 37] ■ In the light of the above discussion, it is held that the assessee has failed to discharge legal obligation to prove the genuineness of the transaction and the creditworthiness of the investor which has shown to be so by a ‘round tripping’ of funds. For all the above reasons, the revenue succeeds. [Para 38] ■ In the result the appeal is allowed, the order passed by the Tribunal is set aside and the order passed by the Commissioner (Appeals) is restored and the substantial questions of law are answered in favour of the revenue. [Para 39]” Printed from counselvise.com Page | 14 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. 8. Since in this case, the identity, creditworthiness of the creditors/share applicants and the genuineness of the transactions could not be proved, therefore, there was justification for making the additions. The Ld. CIT(A) was, however, was carried away by the fact that the directors did not receive the notices, therefore, they could not appear which, however, is contrary to the facts mentioned by the Ld. AO in the assessment order, as was also pointed out by the Ld. DR before us. Thus, the order of the Ld. CIT(A), not being based upon facts of the case and there being no justification for charging huge premium of ₹90/- on the face value of ₹10/- per share and the inability to produce the directors for examination but response being received for notices issued u/s 133(6) of the Act, all establish the fact that the share capital was arranged by the assessee and therefore, despite the directors not appearing, the self-serving responses to notices u/s 133(6) of the Act were filed. Thus, in view of the finding of the Ld. AO and the principles laid down in the decision of the Hon'ble Jurisdictional High Court in the case of BST Infratech Ltd. (supra), the failure of the assessee to justify the charging of share premium and no further compliance before us, the order of the Ld. CIT(A) is hereby set aside and the order of the Ld. AO is hereby confirmed. Hence, all the grounds of appeal raised by the Revenue are allowed. 9. In the result, the appeal filed by the Revenue is allowed. Order pronounced in the open Court on 24th July, 2025. Sd/- Sd/- [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 24.07.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 15 I.T.A. No.: 1234/KOL/2023 Assessment Year: 2008-09 Blackberry Vyapaar Pvt. Ltd. Copy of the order forwarded to: 1. ITO, Ward 6(1), Kolkata. 2. Blackberry Vyapaar Pvt. Ltd., 7/1B, Grant Lane, 2nd Floor, R.No.-22, Kolkata, West Bengal, 700022. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "