ACS Traders (P) Ltd., HOWRAH v. PCIT-5, Kolkata

ITA 467/KOL/2020 | 2012-2013
Pronouncement Date: 05-03-2021 | Result: Allowed

Appeal Details

RSA Number 46723514 RSA 2020
Assessee PAN AAHCA0919L
Bench Kolkata
Appeal Number ITA 467/KOL/2020
Duration Of Justice 7 month(s) 4 day(s)
Appellant ACS Traders (P) Ltd., HOWRAH
Respondent PCIT-5, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 05-03-2021
Last Hearing Date 28-01-2021
First Hearing Date 18-02-2021
Assessment Year 2012-2013
Appeal Filed On 31-07-2020
Judgment Text
ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 1 | P A GE B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI J. SUDHAKAR REDDY AM AND SHRI A. T. VARKEY JM] I.T.A. NO. 467/KOL/2020 ASSESSMENT YEAR: 2012-13 ACS TRADERS PVT. LTD. (PAN: AAHCA 0919 L) VS. PCIT-5 KOLKATA APPELLANT RESPONDENT DATE OF HEARING 18.02.2021 DATE OF PRONOUNCEMENT 05.03.2021 FOR THE APPELLANT SHRI SANJAY KEJRIWAL CA FOR THE RESPONDENT SHRI IMOKABA JAMIR CIT ORDER PER SHRI A. T. VARKEY JM: THIS APPEAL PREFERRED BY THE ASSESSEE COMPANY IS A GAINST THE ORDER OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX (HEREINAFTER R EFERRED TO AS LD. PCIT)-5 KOLKATA DATED 03.06.2020 FOR AY 2012-13 U/S 263 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THE LD. PCIT DID NOT ENJOY THE REQUISITE JURISDICTION TO INVOKE THE REVISIONAL POW ER U/S 263 OF THE ACT FOR AY 2012- 13 WHICH IS PURELY A LEGAL ISSUE. SO IT NEEDS TO B E ADJUDICATED FIRST. 3. THE LD. A.R SHRI SANJAY KEJRIWAL ASSAILING THE A CTION OF LD. PCIT TO EXERCISE HIS REVISIONAL JURISDICTION U/S 263 OF THE ACT CONTENDED THAT LD. PCIT WITHOUT SATISFYING THE ESSENTIAL CONDITION PRECEDEN T AS STIPULATED BY THE STATUTE ( SECTION 263 OF THE ACT ) COULD NOT HAVE INVOKED THE REVISIONAL JURISDICTIO N TO INTERFERE WITH THE RE-ASSESSMENT ORDER PASSED BY THE AO. ACCO RDING TO HIM BEFORE THE LD. PCIT INVOKES HIS REVISIONAL JURISDICTION FIRST OF ALL HE HAS TO SATISFY THAT THE AOS RE- ASSESSMENT ORDER WHICH HE PROPOSES TO INTERFERE WIT H IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE AS STIPULATED IN SECTION 263 OF THE ACT. ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 2 | P A GE ACCORDING TO LD. A.R THE LD. PCIT HAS MISERABLY FA ILED TO BRING OUT IN THE IMPUGNED ORDER/ SHOW-CAUSE NOTICE (SCN) AS TO HOW T HE AOS REASSESSMENT ORDER DATED 29.12.2017 IS ERRONEOUS AS WELL AS PREJUDICIA L TO THE REVENUE. ACCORDING TO LD. A.R THE LD. PCIT HAS EXPRESSED HIS DESIRE TO EXERC ISE HIS REVISIONAL JURISDICTION BY ISSUING SHOW-CAUSE NOTICE (SCN) DATED 31.01.2020 WH ICH IS REPRODUCED AS UNDER: SUB: HEARING NOTICE FOR PROCEEDING U/S 263 OF THE I NCOME TAX ACT 1961 IN THE CASE OF M/S ACS TRADERS PVT. LTD. PAN: AAHCA 0919 L AY 201 2-13 PLEASE REFER TO THE ABOVE. THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME FO R THE AY 2012-13 ON 29.09.2012 DECLARING TOTAL INCOME OF RS. NIL. LATER THE CASE WAS ASSESS ED U/S 154/143(3). RELATED TO THE ASSESSMENT YEAR 2012-13 YOUR CASE WAS COMPLETED U/ S 147/143(3) OF THE INCOME TAX ACT 1961 ON 29/09/2012 AT AN ASSESSED INCOME OF RS. 18 992/-. THE ASSESSMENT ORDER WAS PASSED WITHOUT MAKING ANY ADDITION. IN ORDER TO JUDGE THE MERIT OF THE ORDER PASSED BY THE ASSESSING OFFICER THE ASSESSMENT RECORDS WERE PERUSED. THE RECORDS AVAILABLE REVEALE D THAT THE IDENTITY CREDITWORTHINESS & GENUINENESS OF TRANSACTION RELATING TO SHARE CAPITA L OF RS. 25 00 000/- AND SHARE PREMIUM AMOUNTING TO RS. 1 25 00 000/- RECEIVED BY YOUR CON CERN WERE NOT AT ALL EXAMINED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R U/S 143(3) OF THE INCOME TAX ACT 1961. IN VIEW OF THE ABOVE FACTS THE ORDER PASSED U/S 1 43(3)/147 OF THE INCOME TAX ACT 1961 ON 29/12/2017 FOR AY 2012-13 APPEARS TO BE ERRONEOUS I N SOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE ON THIS POINT. IN ORDER TO ELCITI YOUR REACTION YOUR CASE HAS BEE N FIXED FOR HEARING U/S 263 OF THE INCOME TAX ACT 1961 AT MY CHAMBER AT AAYAKAR BHAWAN POORV A 6 TH FLOOR ROOM NO. 601 ON 31.01.2020 AT 4.00 PM. FURTHER AS PER YOUR REQUEST LETTER DATED 14.01.2020 YOUR CASE IS RE-FIXED FOR HEARING ON 17.02.2020 AT 12.30 PM. YOU ARE THEREFORE REQUESTED TO APPEAR EITHER IN P ERSON OR THROUGH YOUR AUTHORIZED REPRESENTATIVE TO EXPLAIN THE ABOVE CASE LACUNA IN THE SAID ORDER WITH SUPPORTING DOCUMENTARY EVIDENCE. AS THE PROCEEDING IS GETTING BARRED BY LIMITATION ON 31.03.2020 YOUR FAILURE TO RESPOND TO THIS NOTICE WILL COMPEL THE UNDERSIGNED TO TAKE A DECISION ON THE MERITS OF THE CASE AND THE PAPERS AVAILABLE WITH TH E DEPARTMENT. 4. ACCORDING TO LD. A.R FROM A PERUSAL OF THE ABOV E SCN ISSUED BY THE LD. PCIT IT CAN BE DISCERNED THAT THE ISSUE ON WHICH H E CONVEYED HIS DESIRE TO REVISE THE AOS ACTION DATED 29.12.2017 WAS IN RESPECT OF THE SHARE-CAPITAL & SHARE PREMIUM OF RS. 25 LAKHS & RS. 1.25 CRORES RESPECTIVELY COLLECTED BY THE ASSESSEE COMPANY FOR AY 2012-13. ACCORDING TO LD. A.R THIS ISSUE REGARDI NG THE SHARE CAPITAL & PREMIUM COLLECTED BY THE ASSESSEE I.E. M/S ACS TRADERS PVT. LTD. HAD UNDERGONE SCRUTINY IN THE HANDS OF AO TWICE AND THEREFORE THIS ISSUE HAD BEEN THOROUGHLY INVES TIGATED BY ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 3 | P A GE THE AO SO THE LD. PCIT ERRED IN HOLDING THAT AO HA S PASSED THE RE-ASSESSMENT ORDER DATED 29.12.2017 WITHOUT CARRYING OUT ANY ENQUIRIE S. 5. THE LD. A.R BROUGHT OUT THE HISTORY OF THIS ASSESSMENT IN RESPECT OF AY 2012- 13 AND SUBMITTED THAT THIS IS A CASE WHERE IN THE A SSESSEES CASE FOR AY 2012-13 WAS INITIALLY SELECTED FOR SCRUTINY U/S 143(3) OF THE A CT AND FIRST ORIGINAL ASSESSMENT ORDER WAS PASSED ON 26.03.2015 AND DREW OUR ATTENTION TO PAGE 72 OF PB AND ORDER SHEET OF ASSESSMENT PROCEEDINGS WHICH IS PLACED AT PAGE 97 T O 98 OF PB WHICH FACT WE FIND IT TO BE CORRECT. THEREAFTER ACCORDING TO LD. A.R THE AO REOPENED THE ORIGINAL ASSESSMENT U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT DATED 28.03.2017 AND DREW OUR ATTENTION TO THE ORDER SHEET OF AO WHI CH IS PLACED AT PAGE 100 TO 102 OF THE PB. THEREAFTER THE LD. A.R DREW OUR ATTENTION TO THE REASONS RECORDED FOR REOPENING THE ORIGINAL ASSESSMENT ( DATED 26.03.2015 ) WHICH WAS GIVEN TO THE ASSESSEE VIDE LETTER DATED 24.11.2017 WHICH IS PLAC ED AT PAGE 75 OF THE PB WHICH READ AS UNDER: SUB: REASONS FOR RE-OPENING THE ASSESSMENT PROCEEDINGS U/S 147 FOR THE AY 2012 - 13-MATTER REGARDING REF: YOUR LETTER DATED 26.04.2017 PLEASE REFER TO THE ABOVE. ON THE BASIS OF INFORMATION RECEIVED ON 24.032017 F ROM ADIT (INVESTIGATION) UNIT- 2(4) KOLKATA IT IS FOUND THAT A GROUP LED BY SHRI KUMAR OM PRAKASH AND HIS ASSOCIATES WERE INVOLVED IN THE BUSINESS OF REAL ES TATES AND OTHER RELATED ACTIVITIES IN HOWRAH. AS PER THE INFORMATION RECEIVED FROM AD IT(INV) THAT ONE OF THE KEY PERSONS AND ENTITIES OF THE SAID GROUP IS M/S ACS T RADERS PVT. LTD. AS 7 DR. ABANI DUTTA ROAD HOWRAH-711106. IN VIEW OF THE INCOME TA X ACT 1961 THE GROUP HAS RAISED SHARE CAPITAL FROM DUBIOUS AND SHELL COMPANI ES AND THIS CAPITAL RAISED IS NOTHING BUT UNACCOUNTED CASH OF THE GROUP REPORTED BY THE INVESTIGATION WING. M/S ACS TRADERS HAVING PAN-AAHCA 0919 L DURING THE FY 2011-12 RELEVANT TO THE AY 2012-13 RAISED CAPITAL OF RS. 1 50 00 000/- (AS PER DATA BASE INFORMATION OF SHELL COMPANIES AS DETAILED.) IN THIS REGARD FURTHER IN VESTIGATION FOR THE CREDITWORTHINESS/GENUINENESS/PROOF OF IDENTITY OF S UCH SHARES CAPITAL (TRANSACTION OF THE ALLOTTEE) WOULD BE REQUIRED AS PER PROVISION OF THE INCOME TAX ACT 1961 IN THE INTEREST OF REVENUE. THE ASSESSEE COMPANY FIELD ITS IT RETURN FOR THE AS SESSMENT YEAR 2012-13 ON 29.09.2012 SHOWING INCOME OF RS. NIL AND CLAIMED LO SS OF RS. 29 508/-. CONSEQUENTLY THE ASSESSEE CAPITAL WAS RAISED OF RS . 1 50 00 000/-DURING THE FY ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 4 | P A GE 2011-12 WHICH IS NOT COMMENSURATE WITH ITS RETURN O F INCOME. IN THIS SITUATION FURTHER INVESTIGATION FOR THE CREDITWORTHINESS/GENU INENESS OF SUCH SHARES CAPITAL WOULD BE REQUIRED AS PER PROVISION OF THE IT ACT 1 961 . FURTHER IT IS NOTICED THAT SECOND ALLEGATION RAISE D REGARDING SALE OF ASSETS AND SUPPRESSION OF VALUE OF SUCH ASSETS IN RELATION TO STAMP DUTY ALSO THROUGH LOWER VALUE DEEDS IN RELATION U/S 50C AND U/S 43CA REGARD ING SELLER CHETAN CONSTRUCTION (FIRM) AND CHAITANYA CONSTRUCTION (PROP. KUMAR OM P RAKASH) AS PER INFORMATION PLACED ON RECORD. IN VIEW OF THE ABOVE REASON RECORDED AS PER ORDER S HEET YOUR CASE HAS BEEN REOPENED U/S 147.[EMPHASIS GIVEN BY US ] 6. FURTHER IN ORDER TO DEMONSTRATE THAT THE AO EVEN DURING THE RE-ASSESSMENT PROCEEDING ( AFTER RE-OPENING ) HAS CONDUCTED FRESH INVESTIGATION INTO THIS ISSUE OF SHARE-CAPITAL & PREMIUM THE LD. A.R DREW OUR ATT ENTION TO PAGE 100 OF PB WHICH IS THE ORDER SHEET MAINTAINED BY THE AO IN RESPECT OF THE RE-ASSESSMENT PROCEEDINGS. A PERUSAL OF IT REVEALS THAT THE AO HAD RECORDED TH IS REASON FOR RE-OPENING (SUPRA) ON 27.03.2017 AND THEREAFTER HAD ISSUED THE NOTICE U/S 148 OF THE ACT ON THE SAME DATE. IT IS NOTED THAT THE HEARING IN RESPECT OF RE-OPENE D ASSESSMENT WAS CONDUCTED BY THE AO ON EIGHT (8) OCCASIONS/DATES AND THEREAFTER HAS PASSED THE REASSESSMENT ORDER [ SECOND/RE- ASSESSMENT ORDER ] DATED 29.12.2017 U/S 143(3) READ WITH SECTION 147 OF THE ACT. THUS ACCORDING TO THE LD. A.R THE AO BEFO RE THE RE-ASSESSMENT ORDER WAS PASSED ON 29.12.2017 HAD FIXED THE MATTER FOR HEA RING ON EIGHT (8) OCCASIONS/DATES; AND DURING THE SAID PROCEEDINGS HE (AO) HAD ISSUED NOTICE U/S 143(2) AS WELL AS U/S 142(1) NOTICE DATED 21.11.2017; AND PURSUANT TO THE ENQUIRIES MADE BY AO THE ASSESSEE HAD FILED REPLY DATED 29.11.2017 ALONG WIT H THE FOLLOWING DOCUMENTS TO SUBSTANTIATE ITS CLAIMS ON THE ISSUE OF SHARE-CAPIT AL AND PREMIUM I.E. SHARE SUBSCRIBERS IDENTITY CREDITWORTHINESS AND GENUINEN ESS OF THE TRANSACTION WITH THE ASSESSEE COMPANY: I) COPY OF AUDITED FINANCIAL STATEMENTS FOR AY 2011-12 II) COPY OF ASSESSMENT ORDER PASSED U/S 143(3) OF THE A CT III) COPY OF RECTIFICATION ORDER PASSED U/S 154 DATED 06 .04.2016 (REFER PAGE 76 OF PB) IV) DETAILS OF SHARE CAPITAL BASED: ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 5 | P A GE A) NAME OF APPLICANT ALONG WITH MAILING ADDRESS B) PAN OF THE SHARE APPLICANTS C) ALLOTMENT DESCRIPTION WITH COPY OF SHARE APPLICATIO N FORM D) BOARD RESOLUTION E) ITR ACKNOWLEDGEMENT OF ALL THE SHARE APPLICANTS F) BANK STATEMENT REFLECTING TRANSACTION G) COPY OF CERTIFICATE OF INCORPORATION OF SHARE APPLI CANT H) COPY OF SOURCE OF FUND 7. THEREAFTER THE LD. A.R POINTED OUT THAT PURSUANT TO THE AO CALLING FOR CERTAIN MORE DETAILS THE ASSESSEE HAD FILED REPLY DATED 08. 12.2017 ALONG WITH FOLLOWING DOCUMENTS: I) COPY OF BANK STATEMENT II) DETAILS OF NATURE OF BUSINESS OF THE COMPANY III) DETAILS OF DIRECTORS OF COMPANY IV) ASSESSEE ALONG WITH ADDRESS AND PAN 8. STILL NOT SATISFIED BY THE SUBMISSION OF THE AFO RESAID DOCUMENTS ACCORDING TO LD. A.R FURTHER ENQUIRIES WERE MADE BY THE AO WHIC H WAS REPLIED BY LETTER DATED 12.12.2017 AND THE ASSESSEE FILED THE FOLLOWING DOC UMENTS ALSO: (I) COPY OF MASTER DATA OF ALL APPLICANTS (II) COMPUTATION OF TOTAL INCOME (III) COPY OF VALUATION REPORT UNDER RULE 11UA OF THE INC OME TAX RULES 1962 (HEREINAFTER REFERRED TO AS RULE) DATED 31.03.2012 9. FURTHER IT WAS BROUGHT TO OUR NOTICE THAT AO HAD ISSUED NOTICE U/S 133(6) OF THE ACT TO ALL THE FIVE (5) SHARE APPLICANTS DATED 01.12.2017 AND 21.12.2017 AND ( AFTER RECEIVING THEIR REPLIES REFER PAGE 60-69 OF P B ) SUMMONS WERE ISSUED TO THE ASSESSEE COMPANY U/S 131 OF THE ACT DATED 21.12.20 17 AND AFTER MAKING ENQUIRIES AS STATED EARLIER I.E. AFTER EIGHT (8) OCCASIONS / HEA RINGS WITH THE LD. A.R OF THE ASSESSEE THE AO HAS ACCEPTED THE SHARE CAPITAL OF RS. TWENTY FIVE (25) LAKHS AND SHARE ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 6 | P A GE PREMIUM OF RS. 1.25 CRORES FROM FIVE (5) SHARE APPL ICANTS. ACCORDING TO LD. A.R FROM A PERUSAL OF THE REASONS RECORDED BY THE AO IN ORDER TO RE-OPEN THE REGULAR / ORIGINAL SCRUTINIZED ASSESSMENT U/S 143(3) DATED 26 .03.2015 ITSELF WOULD REVEAL THAT HE PROPOSED TO REOPEN THE ASSESSMENT ( DATED 26.03.2015 )ON THE BASIS OF AN INFORMATION RECEIVED ON 24.03.2017 FROM ADIT (INV) UNIT-2(4) KOLKATA THAT GROUP LED BY SHRI KUMAR OM PRAKASH AND HIS ASSOCIATES WER E INVOLVED IN THE BUSINESS OF REAL ESTATE AND OTHER RELATED ACTIVITIES AT HOWRAH AND ONE OF THE KEY PERSONS AND ENTITIES OF THE SAID GROUP IS ASSESSEE [M/S ACS TR ADERS PVT. LTD.] AND BASED ON THE INFORMATION THAT THE SAID GROUP HAS RAISED SHARE C APITAL FROM DUBIOUS SHELL COMPANIES ;AND THAT THIS CAPITAL (RS. 25 LAKHS + RS . 1.25 CR. PREMIUM) WHICH THE ASSESSEE HAD RAISED IS NOTHING BUT UNACCOUNTED CASH OF THE COMPANY THE AO RE- OPENED THE ORIGINAL SCRUTINY ASSESSMENT; AND FURTHE R THE AO SPECIFICALLY NOTED THAT THE SHARE CAPITAL RAISED BY ASSESSEE COMPANY OF RS. 1.50 CRORES NEED FURTHER INVESTIGATION ESPECIALLY FOR VERIFYING THE CREDITW ORTHINESS GENUINENESS AND PROOF OF IDENTITY OF THE ALLOTTEES WHICH EXERCISE HE NEEDS TO DO IN THE INTEREST OF THE REVENUE. AND THE OTHER REASON ACCORDING TO AO FOR FURTHER I NVESTIGATION WAS THAT SHARE CAPITAL OF RS. 1.50 CRORES IS NOT COMMENSURATE TO THE RETURN OF INCOME FILED BY THE ASSESSEE. THEREFORE KEEPING THESE REASONS/SUSPICIO N/ALLEGATIONS IN MIND THE AO PROPOSED TO REOPEN THE ASSESSMENT DATED 26.03.2015 AND THEREAFTER CONDUCTED FURTHER INVESTIGATION AFTER RE-OPENING. SO ACCORDING TO LD. A.R WHEN THE AO PROPOSED TO REOPEN THE ORIGINAL SCRUTINY ASSESSMENT ( FIRST ) DATED 26.03.2015 AND HAD CONVEYED HIS INTENTION FOR CONDUCTING FURTHER INVESTIGATION IN RESPECT OF SHARE CAPITAL/ PREMIUM OF RS. 1.50 CRORES COLLECTED BY THE ASSESSE E; AND HAVING RE-OPENED THE ASSESSMENT; AND THEREAFTER HAVING CONDUCTED HEARI NGS ON EIGHT (8) OCCASIONS AND THAT TOO AFTER HAVING INDEPENDENTLY INVESTIGATING/C ONFIRMING BY ISSUING SUMMONS U/S 131 AND NOTICE U/S 133(6) OF THE ACT TO ALL THE SHA RE APPLICANTS; AND BASED ON ALL THE DOCUMENTS/ MATERIALS COLLECTED IN THAT PROCESS AS WELL AS TAKING NOTE OF THE FACT THAT OUT OF THE FIVE SHARE APPLICANTS TWO (2) OF THE SHA RE SUBSCRIBING COMPANIES HAD UNDERGONE SCRUTINY U/S 143(3) OF THE ACT I.E. (I) M /S DIVERSIFY INFRASTRUCTURE PVT. LTD. AND (II) M/S PEWEE INFRASTRUCTURE PVT. LTD. WHICH F ACT IS DISCERNIBLE FROM PERUSAL OF PAGE NOS. 402 TO 410 OF PB [ FROM WHERE WE NOTE THAT SCRUTINY ASSESSMENT U/S 143 (3) ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 7 | P A GE OF THE ACT WAS CARRIED OUT IN THE CASE OF M/S DIVER SIFY INFRASTRUCTURE PVT. LTD. WHICH IS PLACED AT PAGE NOS. 400 TO 404 OF PB FOR AY 2012 -13 AND A PERUSAL OF PAGE 405 TO 412 REVEALS THAT SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT FOR AY 2012-13 WAS CONDUCTED AGAINST M/S PEWEE INFRASTRUCTURE PVT. LTD . ] THE AO IN THE SECOND ROUND/RE-ASSESSMENT AFTER RE-OPENING THE ASSESSMEN T HAS ACCEPTED THE IDENTITY CREDITWORTHINESS AND GENUINETY OF THE SHARE SUBSCRI BERS AND THE TRANSACTION OF SHARE CAPITAL & PREMIUM TO THE TUNE OF RS. 1.50 CRORES IN THE HANDS OF THE ASSESSEE COMPANY FOR AY 2012-13. IN THE LIGHT OF THE AFORESA ID FACTS ACCORDING TO LD. A.R THE LD. PCITS FINDING IN THE IMPUGNED ORDER THAT N O ENQUIRY WAS CONDUCTED BY THE AO WHILE PASSING THE RE-ASSESSMENT ORDER DATED 29/1 2/2017 IS EX-FACIE ERRONEOUS AND FOR THAT HE DREW OUR ATTENTION TO PAGE NO. 5 OF THE LD. PCITS IMPUGNED ORDER DATED 03.06.2020 WHEREIN THE LD. PCIT HAS MADE A FINDING . THE CLAIM OF THE ASSESSEE WAS FOUND TO BE DESTITUTE OF MERIT AS THE RECORDS CLEARLY DEMONSTRATED THAT THE AO MADE ASSESSMENT U/S 143(3)/147 DATED 29.12.2 017 WITHOUT CARRYING OUT ANY INQUIRIES .. FURTHER ACCORDING TO THE LD. A.R THE FAULTS OF TH E AO TAKEN NOTE BY THE LD. PCIT TO INTERFERE/EXERCISE HIS REVI SIONAL JURISDICTION U/S 263 IS THAT DESPITE THERE BEING SPECIFIC INFORMATION FROM THE I NVESTIGATION WING OF THE DEPARTMENT THAT THE ASSESSEE HAD COLLECTED SHARE CA PITAL PLUS PREMIUM FROM DUBIOUS SOURCE ACCORDING TO HIM(LD. PCIT) THE AO SHOULD HAVE LIFTED THE VEIL TO EXAMINE THE GENUINENESS OF THE TRANSACTION AND SHOULD HAVE GONE BEHIND THE ENTRY PROVIDER AND SOURCE OF THE DEPOSIT IN MAKING THE PAYMENT FR OM THE BANK ACCOUNT OF THE AFORESAID COMPANY (SHARE SUBSCRIBERS) AND LOOKED I NTO THE CASH TRAILS; AND SECOND FAULT ACCORDING TO LD. PCIT WAS THAT DESPITE NON-SE RVICE OF NOTICE BY THE POSTAL DEPARTMENT HOW THE SHARE SUBSCRIBERS COULD RESPO ND TO THE AO; AND THIRD FAULT ACCORDING TO LD. PCIT WAS THAT THE AO HAS NOT CARRI ED OUT THE ENQUIRIES AT BANK ON THE BASIS OF REPLIES FROM THE FIVE SHARE SUBSCRIBER S. THEREFORE THE LD. PCIT CONCLUDED THAT THE ORDER PASSED BY THE AO U/S 147/1 43(3) OF THE ACT DATED 29.12.2017 WAS ERRONEOUS AS WELL AS IT IS PREJUDICI AL TO THE INTEREST OF THE REVENUE AND THEREFORE HE CANCELLED THE REASSESSMENT ORDER DATED 29.12.2017 AND DIRECTED THE AO TO CONDUCT DE NOVO ASSESSMENT AND ALSO ADVISED THE AO TO FOCUS ON THE CASH TRAIL OF ALL THE BANK ACCOUNTS INVOLVED IN THE TRANSACTION O F MONEY FROM THE BANK ACCOUNT OF ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 8 | P A GE THE ASSESSEE COMPANY. COUNTERING THE FAULTS POINTED OUT BY THE LD. PCIT TO INTERFERE WITH THE ORDER PASSED BY THE AO THE LD. A.R SUB MITTED THAT IT NEEDS TO BE KEPT IN MIND THAT THE AO HAD RE-OPENED THE FIRST/REGULAR/OR IGINAL 143(3) ASSESSMENT DATED 26.03.2015 ON THE BASIS OF THE INFORMATION OF INVES TIGATION WING TO INVESTIGATE WHETHER THE ASSESSEE HAD RECEIVED THE SHARE-CAPITAL AND PREMIUM FROM DUBIOUS ENTITIES AND THEN HE THOROUGHLY INVESTIGATED THE S AME WHICH IS DISCERNIBLE FROM THE PURPOSE FOR WHICH HE RE-OPENED ON PERUSAL OF THE REASONS RECORDED BY THE AO DATED 24.11.2017. SO ACCORDING TO LD. A.R WHEN TH E AO HAD REOPENED THE ASSESSMENT FOR FURTHER INVESTIGATION KEEPING ALL TH ESE GRAVE SUSPICION IN HIS MIND AND THEREAFTER WHEN HE HAD CONDUCTED INVESTIGATION AS DISCUSSED SUPRA ; AND THEN BEING SATISFIED WITH THE MATERIAL COLLECTED DURING INVESTIGATION THE AO HAD ACCEPTED THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF T HE SHARE CAPITAL AS WELL AS THE PREMIUM COLLECTED BY THE ASSESSEE COMPANY. THE LD. A.R ALSO POINTED OUT THAT IN THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION I. E. AY 2012-13 AS PER LAW IN FORCE FOR THIS ASSESSMENT YEAR IS CONCERNED THE AS SESSEE WAS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE AS WELL AS THE PREMIUM COLLECTED OF RS. 1.25 CRORES WHICH REQUIREMENT OF LAW WAS ONLY FROM THE NEXT ASSESSMEN T YEAR I.E. AY 2013-14 ONWARDS. AND THEREFORE THE ASSESSEE IN THIS ASSESSM ENT YEAR I.E. AY 2012-13 WAS NOT DUTY BOUND TO ASK THE SOURCE OF SOURCE FROM THE SHARE-SUBSCRIBERS ABOUT SHARE- CAPITAL AS WELL AS ABOUT SHARE PREMIUM SUBSCRIBED B Y IT. ACCORDING TO LD. A.R AS PER THE LAW APPLICABLE FOR AY 2012-13 THE ASSESSEE HAD DISCHARGED THE ONUS BY SHARING THE DOCUMENTS WHICH REVEALED THE SOURCE OF THE SHAR E CAPITAL & PREMIUM AND THE AO HAD EXAMINED THE TRUTH / VERACITY OF THE SAME BY IN DEPENDENTLY VERIFYING IT BY ISSUE OF NOTICE U/S 133(6) AND BY EXAMINING THE REPLIES T O IT FROM THE SHARE-SUBSCRIBERS AND FINDING NOTHING DUBIOUS/BOGUS IN THE TRANSACTION (S HARE) THE AO HAS ACCEPTED THE SAME. BY DOING SO ACCORDING TO LD. A.R THE AO HAS DISCHARGED HIS DUTY AS AN INVESTIGATOR AND ADJUDICATOR IN ACCORDANCE TO LAW A PPLICABLE FOR AY 2012-13. ACCORDING TO HIM THE LD. PCIT BY ISSUING SCN ON 31 .01.20120 HAS NOT APPRECIATED THE LEGAL POSITION IN RESPECT OF AY 2012-13 AND HAS FOUND FAULT WITH THE ACTION OF AO AS IF THE ASSESSMENT YEAR UNDER CONSIDERATION IS THAT OF NEXT ASSESSMENT YEAR I.E. AY 2013-13 OR THEREAFTER. SO ACCORDING TO LD. A.R THE LD. PCIT MISDIRECTED ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 9 | P A GE HIMSELF IN LAW AS WELL AS FACT WHILE FINDING FAULT WITH THE ACTION OF AO IN HIS ROLE AS AN INVESTIGATOR AS WELL AS ADJUDICATOR WHEN THE REL EVANT ASSESSMENT YEAR CONCERNED IS AY 2012-13. THUS ACCORDING TO LD. A.R THE AOS A CTION IN ACCEPTING THE SHARE CAPITAL & PREMIUM COLLECTED BY THE ASSESSEE BASED O N THE DOCUMENTARY EVIDENCE FURNISHED BY THE ASSESSEE IN RESPECT OF FIVE (5) SH ARE APPLICANTS AND AFTER THOROUGH INVESTIGATION CANNOT BE FOUND FAULT WITH AND IN AN Y CASE THEIR ( SHARE SUBSCRIBERS ) IDENTITY COULD NOT BE QUESTIONED SINCE TWO OF THE S HARE APPLICANTS HAS UNDERGONE SCRUTINY ASSESSMENT FOR AY 2012-13 (PAGE 400 TO 412 OF PB) AND ALL THE SHARE APPLICANTS BEING ASSESSED TO THE INCOME TAX; AND TH E PAYMENTS WERE MADE THROUGH BANKING CHANNELS COULD NOT HAVE BEEN DOUBTED WHEN THE FACT IS THAT THE AO HAS EXAMINED INDEPENDENTLY THE SAME BY ISSUING SUMMONS U/S 131 AND 133(6) OF THE ACT. THEREFORE ACCORDING TO LD. A.R THE LD. PCIT S ACTION OF USURPING THE REVISIONAL JURISDICTION ON THE SPECIOUS PLEA THAT NO ENQUIRY WAS CONDUCTED BY THE AO IS PATENTLY ERRONEOUS AND BASED ON WRONG ASSUMPTIO N OF FACTS AND LAW; AND THUS ACCORDING TO LD. A.R THE LD. PCIT COULD NOT HAVE I NVOKED REVISIONAL JURISDICTION U/S 263 OF THE ACT. THEREFORE ACCORDING TO THE LD. A.R THE VERY INVOCATION OF SECTION 263 JURISDICTION ITSELF IS BAD IN LAW AND THEREFORE IT HAS TO BE QUASHED. PER CONTRA THE LD. CIT D.R SHRI IMOKABA JAMIR SUPPORTING THE IMPU GNED ORDER OF LD. PCIT VEHEMENTLY OPPOSED THE PLEA OF THE LD. A.R AND SUBM ITTED THAT THE AO IN THE REASSESSMENT PROCEEDINGS AFTER REOPENING U/S 147 OF THE ACT HAS NOT CONDUCTED THE EXERCISE AS REQUIRED BY THE STATUTE DESPITE INCRIMI NATING INFORMATION AGAINST THE ASSESSEE COMPANY. ACCORDING TO LD. CIT D.R THE AO FAILED TO ENQUIRE ON THE ISSUE FOR WHICH RE-OPENING WAS MADE AND THEREFORE THE ORD ER OF RE-ASSESSMENT PASSED BY AO WAS ERRONEOUS FOR WANT OF ENQUIRY; AND THEREFORE THE LD. PCIT RIGHTLY INTERFERED BY INVOKING HIS REVISIONAL JURISDICTION U/S 263 OF THE ACT; AND THEREAFTER HE DREW OUR ATTENTION TO PAGE NOS. 5 AND 6 OF THE IMPUGNED ORDE R AND CONTENDED THAT THE LD. PCIT HAD SATISFIED THE CONDITION PRECEDENT TO INVOKE THE JURISDICTION U/S 263 OF THE ACT. THEREFORE HE PRAYS THAT THIS TRIBUNAL SHOULD NOT I NTERFERE WITH THE IMPUGNED ORDER OF LD. PCIT. ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 10 | P A GE 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. BEFORE WE ADVERT TO THE FACTS AND LAW INVOLVED IN THIS LIS BEFORE US LET US REVISE THE LAW GOVERNING THE ISSUE BEFORE US. THE ASSESSEE HAS CHALLENGED IN THE FIRST PLACE THE VERY USURPATION OF JURISDICTION BY LD. PRINCIPAL CIT TO INVOKE HIS REV ISIONAL POWERS ENJOYED U/S 263 OF THE ACT. THEREFORE FIRST WE HAVE TO SEE WHETHER TH E REQUISITE JURISDICTION NECESSARY TO ASSUME REVISIONAL JURISDICTION IS THERE EXISTING BE FORE THE LD PR. CIT TO EXERCISE HIS POWER. FOR THAT WE HAVE TO EXAMINE AS TO WHETHER I N THE FIRST PLACE THE ORDER OF THE ASSESSING OFFICER FOUND FAULT BY THE PRINCIPAL CIT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE . FOR THAT LET US TAKE THE GUIDANCE OF JUDICIAL PRECEDENCE LAID DOWN BY THE HONBLE APEX COURT IN M ALABAR INDUSTRIES LTD. VS. CIT [2000] 243 ITR 83(SC) WHEREIN THEIR LORDSHIP HAVE H ELD THAT TWIN CONDITIONS NEEDS TO BE SATISFIED BEFORE EXERCISING REVISIONAL JURISD ICTION U/S 263 OF THE ACT BY THE CIT. THE TWIN CONDITIONS ARE THAT THE ORDER OF THE ASSES SING OFFICER MUST BE ERRONEOUS AND SO FAR AS PREJUDICIAL TO THE INTEREST OF THE RE VENUE. IN THE FOLLOWING CIRCUMSTANCES THE ORDER OF THE AO CAN BE HELD TO B E ERRONEOUS ORDER THAT IS (I) IF THE ASSESSING OFFICERS ORDER WAS PASSED ON INCORRECT A SSUMPTION OF FACT; OR (II) INCORRECT APPLICATION OF LAW; OR (III)ASSESSING OFF ICERS ORDER IS IN VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE; OR (IV) IF THE ORDER IS PASSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND; (V) IF THE AO HAS NOT INVESTIGATED THE ISSUE BEFORE HIM; [ BECAUSE AO HAS TO DISCHARGE DUAL ROLE OF AN INVESTI GATOR AS WELL AS THAT OF AN ADJUDICATOR ] THEN IN AFORESAID ANY EVENT THE ORDER PASSED BY THE ASSESSING OFFICER CAN BE TERMED AS ERRONEOUS ORDER. COMING NEXT TO TH E SECOND LIMB WHAT IS REQUIRED TO BE EXAMINED IS AS TO WHETHER THE ACTIONS OF THE AO CAN BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE . WHEN THIS ASPECT NEEDS TO BE EXAMINED ONE HAS TO UNDERSTAND WHAT IS PREJUDICIAL TO THE INTEREST OF T HE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES (SUPRA) HEL D THAT THIS PHRASE I.E. PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. THEIR LORDSHIP HEL D THAT IT HAS TO BE REMEMBERED THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN O RDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE RE VENUE. WHEN THE ASSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND I T HAS RESULTED IN LOSS TO THE ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 11 | P A GE REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE AS SESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE IT CANNOT B E TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW . 11. IN THE LIGHT OF THE LAW AS DISCUSSED LET US EX AMINE WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHETHER THE LD PCIT HAD SUCCESSFULLY USURPED THE REVISIONAL JURISDICTION TO INTERFERE WITH THE RE-AS SESSMENT ORDER PASSED BY THE AO DATED 29.12.2017. IN THIS REGARD WE NOTE THAT THE A SSESSEE COMPANY WAS ESTABLISHED IN THE YEAR 2007-08 FOR TRADING OF HOSIERY GOODS & KATHA (CATECHU) AND IT ORIGINALLY FILED ITS RETURN OF INCOME FOR AY 2012-13 ON 29.09. 2012. THEREAFTER THE ASSESSEES RETURN OF INCOME WAS SELECTED FOR SCRUTINY U/S 143( 2) OF THE ACT AND WE NOTE THAT THE AO IN THE FIRST ROUND WHILE ISSUING NOTICE U/S 142( 1) OF THE ACT DATED 19.12.2014 HAD ENQUIRED ABOUT THE ISSUE OF SHARE CAPITAL AND PREM IUM COLLECTED BY THE ASSESSEE COMPANY BY ASKING QUESTION NUMBER 4 6 AND7 ( REFER PAGE 70 & 71 OF PB ) AND THE ASSESSEE PURSUANT TO THE NOTICE FILED THE DETAILS R EGARDING RAISING OF SHARE CAPITAL AND PREMIUM VIDE LETTER DATED 13/02/2015 ( PAGE 52 & 56 PB ) AND THE AO HAD ACKNOWLEDGED THAT THE ASSESSEES A.R HAD APPEARED A ND FILED THE DETAILS ASKED FOR AND WITHOUT MAKING ANY ADVERSE FINDING AGAINST THE COLLECTION OF SHARE CAPITAL & PREMIUM THE ORIGINAL / REGULAR ASSESSMENT ORDER F OR AY 2012-13 WAS PASSED U/S 143(3) OF THE ACT DATED 26.03.2015 (REFER PAGE 72 OF PB). THEREAFTER IT IS NOTED THAT FOR THIS ASSESSMENT YEAR THE AO HAD PASSED AN ORDE R U/S 154 OF THE ACT ( RECTIFICATION OF MISTAKE ) ON 06.04.2016. THEREAFTER THE ASSESSEES CASE WAS REOPENED BY THE AO U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT ON 28.03.2017 BY RECORDING REASONS ON THAT DATE WHICH FACT IS NOTICED FROM THE ORDER SHEET PLACED AT PAGE 100 OF PB. IT IS NOTED THAT THE REASONS FOR REOPENING WAS GIVEN TO THE ASSESSEE BY THE AO VIDE LETTER DATED 24.11.2017 WHICH IS FOUND PLACED AT PAGE 75 OF THE PB (SUPRA). FROM A PERUSAL OF THE REASONS RECORDED IT IS DISCER NED THAT THE AO RECEIVED INFORMATION THAT THE ASSESSEE COMPANY HAS RAISED SH ARE CAPITAL OF RS. 1.50 CRORES FROM DUBIOUS SHELL COMPANIES WHICH IS NOTHING BUT A SSESSEES OWN MONEY. ACCORDING TO AO THIS INCRIMINATING FACT WAS DISCOVE RED AFTER HE GOT THE INFORMATION ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 12 | P A GE FROM ADIT(INVESTIGATION) WHICH FACT NEED TO BE EXAM INED BY RE-OPENING THE ASSESSMENT AND BY CONDUCTING FURTHER INVESTIGATION. THIS FACT LED HIM TO BELIEVE THAT THERE IS ESCAPEMENT OF INCOME AND THEREFORE HE PROP OSED TO REOPEN THE ASSESSMENT BY RECORDING THE REASONS WHICH HAS BEEN REPRODUCED SUPRA. THEREAFTER IT IS NOTED THAT THE AO DURING THE RE-ASSESSMENT PROCEEDINGS HAS GIV EN EIGHT (8) OPPORTUNITIES OF HEARING TO THE ASSESSEE AND THEREAFTER HAD PASSED T HE RE-ASSESSMENT ORDER U/S 147/143(3) OF THE ACT DATED 29.12.2017. IT IS ALSO NOTED FROM THE ORDER SHEET WHICH IS PLACED FROM 100 TO 102 THAT THE AO HAD ISSUED NOTIC ES U/S 133(6) TO THE SHARE APPLICANTS AS WELL AS SUMMONS U/S 131 OF THE ACT TO THE ASSESSEE COMPANY. WE NOTE THAT THE STATEMENT OF THE DIRECTOR OF ASSESSEE COMP ANY SHRI ASHOK KUMAR AGARWAL WAS RECORDED ON OATH BY AO AS 13/03/2015 U/S 131 OF THE ACT ( REFER 9 TO 12 PB ). WE NOTE THAT DURING THE REASSESSMENT PROCEEDINGS THE A O HAD ISSUED 143(2) NOTICE AND 143(1) NOTICE TO THE ASSESSEE AND SUMMONED VARIOUS DOCUMENTS TO SUBSTANTIATE THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE S HARE TRANSACTION OF RS. 1.50 CRORE. WE NOTE THAT THE ASSESSEE HAD FILED FOLLOWING DOCUM ENTS BEFORE THE AO IN THE SECOND ROUND: I) COPY OF AUDITED FINANCIAL STATEMENTS FOR AY 201 1-12 II) COPY OF ASSESSMENT ORDER PASSED U/S 143(3) OF T HE ACT III) COPY OF ASSESSMENT ORDER PASSED U/S 143(3) DAT ED 06.04.2016 (REFER PAGE 76 PB) IV) DETAILS OF SHARE CAPITAL RAISED: A) NAME OF APPLICANT ALONG WITH MAILING ADDRESS B) PAN OF THE SHARE APPLICANTS C) ALLOTMENT DESCRIPTION WITH COPY OF SHARE APPLICA TION FORM D) BOARD RESOLUTION E) ITR ACKNOWLEDGEMENT OF ALL THE SHARE APPLICANTS F) BANK STATEMENT REFLECTING TRANSACTION G) COPY OF CERTIFICATE OF INCORPORATION OF SHARE AP PLICANTS H) COPY OF SOURCE OF FUND ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 13 | P A GE 12. THEREAFTER PURSUANT TO THE AO CALLING FOR CER TAIN MORE DETAILS THE ASSESSEE HAD FILED ALONG WITH REPLY DATED 08.12.2017 THE FO LLOWING MORE DOCUMENTS: I) COPY OF BANK STATEMENT II) DETAILS OF NATURE OF BUSINESS OF THE COMPANY III) DETAILS OF DIRECTORS OF COMPANY IV) ASSESSEE ALONG WITH ADDRESS AND PAN 13. THEREAFTER FURTHER ENQUIRIES WERE MADE BY THE AO WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 12.12.2017 AND THE ASSES SEE FILED THE FOLLOWING MORE DOCUMENTS: (I) COPY OF MASTER DATA OF ALL APPLICANTS (CIN REG ISTERED ADDRESSES EMAIL ID COMPANY STATUS DIN AND NAME OF DIRECTORS) (REFER P AGE 44 TO 51 OF PB). (II) COMPUTATION OF TOTAL INCOME (III) COPY OF VALUATION REPORT UNDER RULE 11UA OF THE INC OME TAX RULES 1962 (HEREINAFTER REFERRED TO AS RULE) DATED 31.03.2012 14. BASED ON THE AFORESAID DOCUMENTS FILED BY THE A SSESSEE PURSUANT TO NOTICES U/S 142(1) OF THE ACT AND THE AO CONDUCTED FURTHER ENQU IRIES BY ISSUING SUMMONS U/S 131 AND NOTICE 133(6) OF THE ACT TO THE FIVE SHARE SUBSCRIBERS AND AFTER CROSS- CHECKING THE VERACITY OF THE DOCUMENTS FILED BY THE ASSESSEE THE AO WAS PLEASED TO ACCEPT THE IDENTITY CREDITWORTHINESS AND GENUINENE SS OF THE SHARE CAPITAL & PREMIUM OF RS.1.50 CRORES. WE FIND THAT OUT OF THESE FIVE ( 5) SHARE APPLICANTS TWO (2) SHARE APPLICANTS I.E. M/S DIVERSIFY INFRASTRUCTURE PVT. L TD. AND M/S PEWEE INFRASTRUCTURE PVT. LTD. HAS UNDERGONE SCRUTINY ASSESSMENT U/S 143 (3) OF THE ACT FOR RELEVANT AY 2012-13. SO THERE IDENTITY CANNOT BE DISBELIEVED. WE NOTE THAT M/S DIVERSIFY INFRASTRUCTURE PVT. LTD. HAS INVESTED RS. 50 000/- AS SHARE CAPITAL AND RS. 45 LAKHS (PREMIUM) AND M/S PEWEE INFRASTRUCTURE PVT. LTD. HA D INVESTED RS. 1.40 LAKH AS SHARE CAPITAL OF RS. 56 LAKHS (PREMIUM). TOTAL INVE STMENT BY THESE TWO ENTITIES ITSELF IS TO THE TUNE OF RS. 1 02 90 000/- OUT OF RS. 1 50 00 000/-. AND THE REST OF THE THREE ENTITIES SUBSCRIBED THEREFORE BALANCE OF RS. 47.10 LAKH SHARES & PREMIUM I.E. (M/S EVESITE COMMODITIES M/S INTELLECTUAL SECURITIES IN VESTED RS. 20 000/- EACH AS SHARE ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 14 | P A GE CAPITAL AND RS. 8 00 000/- AS PREMIUM (TOTAL RS. 47 10 000/-) AND IT IS NOTED ALL THE FIVE ENTITIES HAVE FURNISHED THEIR RESPECT CIN & DI N NUMBERS REGISTERED ADDRESSES EMAIL-ID AND THEIR RESPECTIVE STATUS OF THESE COMP ANIES ARE SHOWN AS ACTIVE WHICH FACT CAN BE SEEN FROM A PERUSAL OF COMPANY MA STER DATA (REFER PAGE 44 TO 51 OF PB) ( EXCEPT M/S EVERSITE COMMODITIES WHICH HAS BEEN AMAL GAMATED (REFER PG. 46 OF PB). WE FIND THAT ALL THE FIVE SHARE SUBSCRIBERS HAVE DIRECTLY REPLIED TO THE AO PURSUANT TO NOTICE ISSUED U/S 133(6) OF THE ACT WHI CH IS FOUND PLACED AT PAGE 60-69 OF PB. FROM A PERUSAL OF THE SAME THE FOLLOWING DE TAILS ALONG WITH SUPPORTING DOCUMENTS WERE FILED RESPECTIVELY BY THEM DIRECTLY TO THE AO (I) PAN (II) ASSESSING WARD (III) DETAILS OF SHARE (IV) COPY OF ITR (V) CO PY OF AUDITED BALANCE SHEET AND P & L ACCOUNT (VI) COPY OF BANK STATEMENT (VII) SHARE ALLOTMENT ADVICE. IN THE LIGHT OF THE AFORESAID ENQUIRES & DOCUMENTS FURNISHED BY THE M AND AFTER EXAMINING THE DIRECTOR OF ASSESSEE COMPANY ON OATH U/S 131 OF THE ACT THE AO HAD ACCEPTED THE FIVE SHARE SUBSCRIBING COMPANIES IDENTITY; AND THE ENTIRE TRANSACTION HAS BEEN CARRIED OUT THROUGH THE BANKING CHANNEL AND SINCE ALL OF TH EM HAD FILED BALANCE SHEETS AS WELL AS ALL COMPANIES HAD SUFFICIENT CREDITWORTHINE SS TO SUBSCRIBE FOR THE SHARE CAPITAL OF THE ASSESSEE THE AO ACCEPTED CREDITWORTH INESS AND GENUINENESS OF THE SHARE TRANSACTION WITH THE ASSESSEE COMPANY. IT IS NOTED THAT THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION IS AY 2012-13 AND IN THIS ASSESSMENT YEAR AS PER LAW APPLICABLE TO THIS YEAR IS CONCERNED THE ASSESSEE IS DUTY BOUND WHEN CALLED UPON BY THE AO TO SHOW HIM (AO) THE EVIDENCE OF THE SOURCE OF THE SHARE CAPITAL WHICH IN THIS CASE THE ASSESSEE HAD DISCHARGED AND NOT SOURCE OF SOURCE WHICH REQUIREMENT OF LAW CAME IN TO EXISTENCE FROM NEXT ASSESSMENT YE AR I.E. AY 2013-14 AND NOT IN THIS RELEVANT AY 2012-13. HOWEVER IT IS NOTED THAT IN THIS CASE EVEN THE SOURCE OF SOURCE WAS FILED BEFORE THE AO AND IT IS ALSO NOTED THAT ONLY FROM NEXT ASSESSMENT YEAR I.E. AY 2013-14 THE PREMIUM ON SHARES COLLECTE D BY THE ASSESSEE COULD HAVE BEEN BROUGHT TO TAX AND NOT IN THIS YEAR. THUS WE FIND THAT AO AFTER RE-OPENING THE ASSESSMENT HAD CONDUCTED THE AFORESAID ENQUIRIES AS DISCUSSED AND AFTER RECORDING THE STATEMENT OF THE DIRECTOR OF ASSESSEE COMPANY U/S 131 OF THE ACT HAS ACCEPTED THE SHARE TRANSACTION WHICH ACTION OF AO CANNOT B E TERMED AS A CASE OF NO-ENQUIRY AS INCORRECTLY HELD BY THE LD. PCIT. TO SUM UP WE F IND THAT AO IN THE FIRST ROUND ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 15 | P A GE ( ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT DATED 26. 03.2015 ) HAD ITSELF ENQUIRED ABOUT THE SHARE CAPITAL & PREMIUM AS DISCUSSED AT P ARA 10 (SUPRA) AND FURTHER WE FIND THAT IN THE SECOND ROUND ( FOR RE-OPENING U/S 147 ) THE REASON TO RE-OPEN WAS PRECISELY FOR THE SAME REASON I.E. [ ON WHICH ISSUE THE LD. PCIT IN THE IMPUGNED ORDER CONCLUDED THAT THE AO FAILED TO ENQUIRE ON TH E ISSUE I.E. SHARE CAPITAL & PREMIUM OF RS. 25 LAKHS & RS. 1.25 CRORES RESPECTIV ELY ]. THE AO IN THE REASONS RECORDED HAD EXPRESSED HIS DESIRE TO RE-OPEN ON TH E VERY SAME ISSUE I.E. SHARE CAPITAL & PREMIUM OF RS. 1.50 CRORES AND WHICH WAS THE FACT UAL BASIS FOR FORMING A BELIEF ABOUT THE ESCAPEMENT OF INCOME WHICH FACT IS CLEAR LY DISCERNIBLE FOR REASONS RECORDED TO RE-OPEN (SUPRA) ITSELF. AND WE FIND TH AT AFTER RE-OPENING THE AO HAS ENQUIRED BY ISSUING NOTICE U/S 133(6) DIRECTLY TO T HE FIVE SHARE APPLICANTS WHICH WERE REPLIED BY THEM DIRECTLY TO AO; AND ON SUMMONS U/S 131 OF THE ACT THE ASSESSEE COMPANYS DIRECTOR HAD APPEARED BEFORE THE AO AND H IS STATEMENT WAS RECORDED UNDER OATH BY AO U/S 131 OF THE ACT. WE FIND THAT O UT OF THE FIVE SHARE APPLICANT TWO (2) HAVE UNDERGONE SCRUTINY ASSESSMENT U/S 143(3) O F THE ACT AND THEY HAD INVESTED RS. 102 90 000/-. AND ALL THE FIVE SHARE SUBSCRIBER ARE INCOME TAX ASSESSEES AND THEIR ENTIRE DETAILS AS DISCUSSED (SUPRA) HAS BEEN FILED BEFORE THE AO PURSUANT TO HIS NOTICES AND THE AO BEING SATISFIED WITH THEIR IDENT ITY CREDITWORTHINESS & GENUINITY HAVE ACCEPTED AFTER ENQUIRY THE SHARE CAPITAL OF R S. 25 LAKHS & PREMIUM OF RS. 1.25 CRORE WHICH IS A PLAUSIBLE VIEW AS FAR AS LAW WAS A PPLICABLE FOR AY 2012-13 IS CONCERNED. SO THE LD. PCIT ERRED IN FINDING THAT NO ENQUIRY WAS CONDUCTED. THE LD. PCITS ACTION TO INTERFERE EXERCISE THE REVISIONAL JURISDICTION BY TERMING THE AOS ACTION AS A FALL OUT OF NO ENQUIRY IS PERVERSE; AND HIS FINDING FAULT WITH THE AO FOR NOT GOING BEHIND THE CASH-TRAIL IS ALSO ERRONEOUS FOR THE SIMPLE REASON THAT AS PER THE LAW IN FORCE DURING AY 2012-13 THE ASSESSEE HAD DI SCHARGED THE ONUS OF SHARE CAPITAL BY ADDUCING EVIDENCE OF THE SOURCE OF MON EY [ AS WELL AS SOURCE OF SOURCE ] AND THE AO HAS FOUND IT TO BE SATISFYING AND SO HE ACCEPTED IT AFTER ENQUIRY. SO WE FIND THAT THE AO HAD DISCHARGED THE ROLE OF AN INVE STIGATOR AS FAR AS LAW WAS APPLICABLE FOR AY 2012-13 IS CONCERNED. AND SINCE T HE DOCUMENTS/MATERIAL COLLECTED BY THE AO DURING THE RE-ASSESSMENT PROCEEDINGS ARE IN THE ASSESSMENT FOLDER OF THE ASSESSEE AND WHICH COULD HAVE BEEN BEFORE THE LD. P CIT THE LD. PCIT BEFORE ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 16 | P A GE FINDING FAULT WITH THE AO IN RESPECT OF ENQUIRY SHO ULD HAVE BROUGHT OUT AS TO WHERE OR HOW THE AO FAULTED IN HIS ENQUIRY AND FOR THAT HE (LD PCIT) SHOULD HIMSELF HAVE CONDUCTED ENQUIRY AND BROUGHT OUT ANY DEFICIENCY/IN FIRMITY IN THE DOCUMENTS/MATERIAL COLLECTED BY THE AO WHICH THE L D. PCIT HAS NOT DONE. SO THE IMPUGNED ACTION OF LD. PCIT CANNOT BE COUNTENANCED. ACCORDING TO US THERE SHOULD BE FINALITY OF LIS OR ELSE THERE WILL NEVER BE AN Y END TO THE DISPUTES. AND AS WE DISCUSSED THE AOS VIEW ON SHARE CAPITAL & PREMIUM WAS A PLAUSIBLE VIEW AS FAR AS LAW WAS APPLICABLE FOR AY 2012-13 IS CONCERNED SINC E IT IS IN LINE WITH THE DECISION OF NUMBER OF JUDICIAL PRECEDENTS WHICH ARE AS UNDER : 15. IN THE CASE OF CIT V. S. KAMALJEET SINGH [2005] 147 TAXMAN 18(ALL.) THEIR LORDSHIPS ON THE ISSUE OF DISCHARGE OF ASSESSEE'S ONUS IN RELATION TO A CASH CREDIT APPEARING IN HIS BOOKS OF ACCOUNT HAS OBSERVED AND HELD AS UNDER:- '4. THE TRIBUNAL HAS RECORDED A FINDING THAT THE AS SESSEE HAS DISCHARGED THE ONUS WHICH WAS ON HIM TO EXPLAIN THE NATURE AND SOURCE O F CASH CREDIT IN QUESTION. THE ASSESSEE DISCHARGED THE ONUS BY PLACING (I) CONFIRM ATION LETTERS OF THE CASH CREDITORS; (II) THEIR AFFIDAVITS; (III) THEIR FULL ADDRESSES A ND GIR NUMBERS AND PERMANENT ACCOUNT NUMBERS. IT HAS FOUND THAT THE ASSESSEE'S BURDEN ST OOD DISCHARGED AND SO NO ADDITION TO HIS TOTAL INCOME ON ACCOUNT OF CASH CREDIT WAS C ALLED FOR. IN VIEW OF THIS FINDING WE FIND THAT THE TRIBUNAL WAS RIGHT IN REVERSING THE O RDER OF THE AA C SETTING ASIDE THE ASSESSMENT ORDER. 16. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE SUPREME COURT WHILE DISMISSING SLP IN THE CASE OF LOVELY EXPORTS AS HAS BEEN REPORTED AS JUDGMENT DELIVERED BY THE CTR AT 216 CTR 295: 'CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDIS CLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT 1961? WE FIND NO MERIT IN TH IS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY I S RECEIVED BY THE ASSESSEE- COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAME S ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE WE FIND NO INFIRMITY WITH THE IMPU GNED JUDGMENT. 17. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT WHILE RELYING ON THE CASE OF LOVELY EXPORTS IN THE APPEAL OF COMISSIONER OF INCOME TAX KOLKATA-IV VS ROSEBERRY MERCANTILE ( P) LTD. ITAT NO. 241 OF 2010 DATED 10- 01-2011 HAS HELD: ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 17 | P A GE '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. ' IT APPEARS FROM THE RECORD THAT IN THE ASSESSMENT P ROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATIO N HAD BROUGHT RS. 4 00 000/- AND RS.20 00 000/- TOWARDS SHARE CAPITAL AND SHARE PREM IUM RESPECTIVELY AMOUNTING TO RS.24 00 000/- FROM FOUR SHAREHOLDERS BEING PRIVAT E LIMITED COMPANIES. THE ASSESSING OFFICER ON HIS PART CALLED FOR THE DETAILS FROM THE ASSESSEE AND ALSO FROM THE SHARE APPLICANTS AND ANALYZED THE FACTS AND ULTIMATELY OB SERVED CERTAIN ABNORMAL FEATURES WHICH WERE MENTIONED IN THE ASSESSMENT ORDER. THE A SSESSING OFFICER THEREFORE CONCLUDED THAT NATURE AND SOURCE OF SUCH MONEY WAS QUESTIONABLE AND EVIDENCE PRODUCED WAS UNSATISFACTORY. CONSEQUENTLY THE ASSE SSING OFFICER INVOKED THE PROVISIONS UNDER SECTION 68/69 OF THE INCOME TAX AC T 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. R EPORTED IN (2008) 216 CTR 195 ALLOWED THE APPEAL BY HOLDING -THAT SHARE CAPITAL/P REMIUM OF RS. 24 00 000/- RECEIVED FROM THE INVESTORS WAS NOT LIABLE TO BE TREATED UND ER SECTION 68 AS UNEXPLAINED CREDITS AND IT SHOULD NOT BE TAXED IN THE HANDS OF THE APPE LLANT 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 I NVOLVED IN THIS APPEAL IS COVERED BY THE SAID SUPREME COURT DECISION IN FAVOUR OF THE AS SESSEE AND THUS NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. THE APP EAL IS DEVOID OF ANY SUBSTANCE AND IS DISMISSED. 18. OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX VS M/S. N ISHAN INDO COMMERCE LTD DATED 2 DECEMBER 2013 IN INCOME TAX APPEAL NO.52 O F 2001 WHEREIN THE COURT HELD AS FOLLOWS: THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INC REASE IN SHARE CAPITAL BY RS.52 03 500/- WAS NOTHING BUT THE INTRODUCTION OF THE ASSESSEE'S OWN UNDISCLOSED FUNDS/INCOME INTO THE BOOKS OF ACCOUNTS OF THE ASSE SSEE COMPANY. THE ASSESSING OFFICER ACCORDINGLY TREATED THE INVESTMENT AS UNEXP LAINED CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) BEING THE FIRST APPELLATE AUTHORITY AND C ONTENDED THAT THE ASSESSING OFFICER HAD NO MATERIAL TO SHOW THAT THE SHARE CAPI TAL WAS THE INCOME OF THE ASSESSEE COMPANY AND AS SUCH THE ADDITION MADE BY THE ASSESS ING OFFICER UNDER SECTION 68 OF THE ACT WAS WRONG. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AF TER HEARING THE DEPARTMENT AND THE ASSESSEE COMPANY DELETED THE ADDITION OF RS. 52 03 500/- TO THE INCOME OF THE ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 18 | P A GE ASSESSEE COMPANY DURING THE ASSESSMENT YEAR IN QUES TION. THE LEARNED COMMISSIONER OF INCOME TAX APPEALS FOUND THAT THERE WERE AS MANY AS 2155 ALLOTTEES WHOSE NAMES ADDRESSES AND RESPECTIVE SHARES ALLOCATION H AD BEEN DISCLOSED. THE COMMISSIONER OF INCOME TAX APPEALS FURTHER FOU ND THAT THE ASSESSEE COMPANY RECEIVED THE APPLICATIONS THROUGH BANKERS TO THE IS SUE WHO HAD BEEN APPOINTED UNDER THE GUIDELINES OF THE STOCK EXCHANGE AND THE ASSESS EE COMPANY HAD BEEN ALLOTTED SHARES ON THE BASIS OF ALLOTMENT APPROVED BY THE ST OCK EXCHANGE. THE ASSESSEE COMPANY HAD DULY FILED THE RETURN OF ALLOTMENT WITH THE REGISTRAR OF COMPANIES GIVING COMPLETE PARTICULARS OF THE ALLOTTEES. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT INQUIRES HAD CONFIRMED THE EXISTENCE OF MOST OF THE SHAREHOLDERS AT THE ADDRES SES INTIMATED TO THE ASSESSING OFFICER BUT THE ASSESSING OFFICER TOOK THE VIEW TH AT THEIR INVESTMENT IN THE ASSESSEE COMPANY WAS NOT GENUINE ON THE BASIS OF SOME EXTRA NEOUS REASONS. THE COMMISSIONER OF INCOME TAX (APPEALS) TOOK NOTE OF T HE OBSERVATION OF THE ASSESSING OFFICER THAT ENQUIRY CONDUCTED BY THE INCOME TAX IN SPECTOR HAD REVEALED THAT NINE PERSONS MAKING APPLICATIONS FOR 900 SHARES WERE NOT AVAILABLE AT THE GIVEN ADDRESS AND RIGHTLY CONCLUDED THAT THE TOTAL SHARE CAPITAL ISSUED BY THE ASSESSEE COMPANY COULD NOT BE ADDED AS UNEXPLAINED CASH CREDIT UNDER 'SECTION 68 OF THE INCOME TAX ACT. MOREOVER IF THE NATURE AND SOURCE OF INVESTME NT BY ANY SHAREHOLDER IN SHARES OF THE ASSESSEE COMPANY REMAINED UNEXPLAINED LIABILIT Y COULD NOT BE FOISTED ON THE COMPANY. THE CONCERNED SHAREHOLDERS WOULD HAVE TO E XPLAIN THE SOURCE OF THEIR FUND. THE LEARNED COMMISSIONER ON CONSIDERING THE SUBMISS IONS OF THE RESPECTIVE PARTIES AND CONSIDERING THE MATERIALS FOUND THAT THE ASSES SING OFFICER HAD APPLIED THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT ARBI TRARILY AND ILLEGALLY AND IN ANY CASE WITHOUT GIVING THE ASSESSEE ADEQUATE OPPORTUNI TY OF REPRESENTATION AND/OR HEARING. LEARNED TRIBUNAL AGREED WITH THE FACTUAL FINDINGS O F THE LEARNED COMMISSIONER AND ACCORDINGLY THE LEARNED TRIBUNAL DISMISSED THE APPE AL OF THE REVENUE AND AFFIRMED THE DECISION OF THE LEARNED COMMISSIONER. MR. DUTTA APPEARING ON BEHALF OF THE PETITIONERS CI TED JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. RUB Y TRADERS AND EXPORTERS LIMITED REPORTED IN 236 (2003) ITR 3000 WHERE A DIVISION BE NCH OF THIS COURT HELD THAT WHEN SECTION 68 IS RESORTED TO IT IS INCUMBENT ON THE A SSESSEE COMPANY TO PROVE AND ESTABLISH THE IDENTITY OF THE SUBSCRIBERS THEIR CR EDIT WORTHINESS AND THE GENUINENESS OF THE TRANSACTION. THE AFORESAID JUDGMENT WAS RENDERED IN THE CONTEXT OF THE FACTUAL BACKGROUND OF THE AFORESAID CASE WHERE DESPITE SEVERAL OPPORTUNITIES BEING GIVEN TO THE ASSESSEE NOTHING WAS DISCLOSED ABOUT THE IDENTITY OF THE SHA REHOLDERS. IN THE INSTANT CASE THE ASSESSEE DISCLOSED THE IDENTITY AND ADDRESS AND PAR TICULARS OF SHARE ALLOCATION OF THE SHAREHOLDERS. IT WAS ALSO FOUND ON THE FACTS THAT A LL THE SHAREHOLDERS WERE IN EXISTENCE. ONLY NINE SHAREHOLDERS SUBSCRIBING TO AB OUT 900 SHARES OUT OF 6 12 000 SHARES WERE NOT FOUND AVAILABLE AT THEIR ADDRESSES AND THAT TOO IN COURSE OF ASSESSMENT PROCEEDINGS IN THE YEAR 1994 I.E. ALMO ST 3 YEARS AFTER THE ALLOTMENT. BY AN ORDER DATED 2ND MAY 2001 THIS COURT ADMITTE D THE APPEAL ON THREE QUESTIONS WHICH ESSENTIALLY CENTRE AROUND THE QUESTION OF WHE THER THE APPELLATE COMMISSIONER ERRED IN LAW IN DELETING THE ADDITION OF RS. 52 03 500/- TO THE INCOME OF THE ASSESSEE AS MADE BY THE ASSESSING OFFICER. WE ARE OF THE VIE W THAT THERE IS NO QUESTION OF LAW INVOLVED IN THIS APPEAL FAR LESS ANY SUBSTANTIAL QU ESTION OF LAW. ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 19 | P A GE THE LEARNED TRIBUNAL HAS CONCURRED WITH THE LEARNED COMMISSIONER ON FACTS AND FOUND THAT THERE WERE MATERIALS TO SHOW THAT THE AS SESSEE HAD DISCLOSED THE PARTICULARS OF THE SHAREHOLDERS. THE FACTUAL FINDIN GS CANNOT BE INTERFERED WITH IN APPEAL. WE ARE OF THE VIEW THAT ONCE THE IDENTITY A ND OTHER RELEVANT PARTICULARS OF SHAREHOLDERS ARE DISCLOSED IT IS FOR THOSE SHAREHO LDERS TO EXPLAIN THE SOURCE OF THEIR FUNDS AND NOT FOR THE ASSESSEE COMPANY TO SHOW WHER EFROM THESE SHAREHOLDERS OBTAINED FUNDS. 19. FURTHER OUR ATTENTION WAS DRAWN TO THE DECISI ON OF THE HON'BLE HIGH COURT CALCUTTA IN THE CASE OF COMMISSIONER OF INCOME TAX VS M/S. LEONARD COMMERCIAL (P) LTD ON 13 JUNE 2011 IN ITAT NO 114 OF 2011 WHE REIN THE COURT HELD AS FOLLOWS: THE ONLY QUESTION RAISED IN THIS APPEAL IS WHETHER THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL BELOW ERRED IN LAW IN DE LETING THE ADDITION OF RS.8 52 000/- RS. 91 50 000/- AND RS. 13 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL SHARE APPLICATION MONEY A ND INVESTMENT IN HTCCL RESPECTIVELY. 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 O F SHAREHOLDERS WITH THEIR COMPLETE ADDRESSES AND GIR NUMBERS FOR THE RELEVANT ASSESSME NT YEARS IN WHICH SHARE APPLICATION WAS CONTRIBUTED. IT FURTHER APPEARS THA T 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 ALLE GEDLY ADVANCED THE FUND. IN OUR OPINION BOTH THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL BELOW WERE JUSTIFIED IN HOLDING THAT AFTER DISCLOSU RE OF THE FULL 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 C ORRECT OR NOT AND IF THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PARTICULARS SUPPLI ED WERE INSUFFICIENT TO DETECT THE REAL SHARE APPLICANTS TO ASK FOR FURTHER PARTICULA RS. THE ASSESSING OFFICER HAS NOT ADOPTED EITHER OF THE AFORESAID COURSES BUT HAS SIMPLY BLAMED THE ASSESSEE FOR NOT PRODUCING THOSE SHARE A PPLICANTS. 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 ASSE SSEE WERE FALSE THERE WAS NO SCOPE OF ADDING THOSE MONEY UNDER SECTION 68 OF THE INCOM E- TAX ACT AND THE TRIBUNAL 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 R EQUIRED TO BE APPLIED IN THE FACTS OF THE PRESENT CASE AND THUS WE DO NOT FIND ANY REAS ON TO INTERFERE WITH 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. ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 20 | P A GE 20. 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 CASTED UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF CREDIT FOUND IN HI S BOOKS WHEN CALLED UPON BY THE AO TO DO SO. IN THE INSTANT CASE THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL WITH PREMIUM FROM SHARE APPLICANTS. THE NATURE OF R ECEIPT TOWARDS SHARE CAPITAL IS SEEN FROM THE ENTRIES PASSED IN THE RESPECTIVE BALA NCE SHEETS OF THE COMPANIES AS SHARE CAPITAL AND INVESTMENTS. IN RESPECT OF SOURC E OF CREDIT THE ASSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIENTS I.E. IDENTITY OF SHARE APPLICANTS GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF SHARE APPLICAN TS. FOR PROVING THE IDENTITY OF SHARE APPLICANTS THE ASSESSEE FURNISHED THE NAME ADDRESS PAN OF SHARE APPLICANTS TOGETHER WITH THE COPIES OF BALANCE SHEETS AND INCO ME TAX RETURNS. WITH REGARD TO THE CREDITWORTHINESS OF SHARE APPLICANTS THESE COM PANIES ARE HAVING ENOUGH CAPITAL AND THE INVESTMENT MADE IN THE APPELLANT COMPANY IS ONLY A SMALL PART OF THEIR CAPITAL. THESE TRANSACTIONS ARE ALSO DULY REFLECTED IN THE BALANCE SHEETS OF THE SHARE APPLICANTS SO CREDITWORTHINESS IS PROVED. EVEN IF THERE WAS ANY DOUBT IF ANY REGARDING THE CREDITWORTHINESS OF THE SHARE APPLICA NTS 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 DATAWARE (SUPRA ) WHICH HAS NOT BEEN DONE SO NO ADVERSE VIEW COULD HAVE BEEN DRAWN. THIRD ING REDIENT IS GENUINENESS OF THE TRANSACTIONS FOR WHICH WE NOTE THAT THE MONIES HAV E BEEN DIRECTLY PAID TO THE ASSESSEE COMPANY BY ACCOUNT PAYEE CHEQUES OUT OF SU FFICIENT BANK BALANCES AVAILABLE IN THEIR BANK ACCOUNTS ON BEHALF OF THE S HARE APPLICANTS. IT WILL BE EVIDENT FROM THE PAPER BOOK THAT THE APPELLANT HAS EVEN DEM ONSTRATED THE SOURCE OF MONEY DEPOSITED INTO THEIR BANK ACCOUNTS WHICH IN TURN HA S BEEN USED BY THEM TO SUBSCRIBE TO THE ASSESSEE COMPANY AS SHARE APPLICATION. HENCE THE SOURCE OF SOURCE OF SOURCE IS PROVED BY THE ASSESSEE IN THE INSTANT CASE THOUGH T HE SAME IS NOT REQUIRED TO BE DONE BY THE ASSESSEE AS PER LAW AS IT STOOD/ APPLICABLE 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 WHI CH ARE DULY CORROBORATED WITH THEIR RESPECTIVE BANK STATEMENTS AND ALL THE PAYMEN TS ARE BY ACCOUNT PAYEE CHEQUES. THUS THE ASSESSEE HAS DISCHARGED THE ONUS ON IT; AN D TWICE THE AO ENQUIRED ABOUT IT ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 21 | P A GE AND IN THE REASSESSMENT THIS ISSUE HAS BEEN THOROUG HLY ENQUIRED AS DISCUSSED SUPRA AND THE VIEW TAKEN BY AO IS A PLAUSIBLE VIEW IN LIN E WITH THE JUDICIAL PRECEDENCE SUPRA AND SO IT CANNOT BE CALLED ERRONEOUS. SO THE LD PCIT ERRED IN HOLDING THE AOS RE-ASSESSMENT ORDER AS ERRONEOUS. 21. IN THE LIGHT OF THE AFORESAID JUDICIAL PRECEDEN TS AND IN THE LIGHT OF FACT THAT AO HAS CONDUCTED ENQUIRIES IN RESPECT OF SHARE CAPITAL & PREMIUM COLLECTED BY THE ASSESSEE COMPANY BEFORE ACCEPTING THE SHARE SUBSCRI BERS IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND BEING SATISF IED DID NOT FIND IT NECESSARY TO MAKE ANY ADDITION U/S 68 OF THE ACT WHICH ACTION C OULD NOT HAVE BEEN INTERFERED BY THE LD. PCIT U/S 263 OF THE ACT SINCE THE JURISDICT IONAL CONDITION PRECEDENT FOR INVOKING THE SAME IS NOT SATISFIED IN THE FACTS OF THIS CASE AS DISCUSSED SUPRA. HOWEVER IN CASE STILL IF HE (LD. PCIT) WANTED TO EX ERCISE HIS JURISDICTION DESPITE THE AO MAKING ENQUIRIES AS FOUND BY US (SUPRA) THEN HE (LD. PCIT) SHOULD HAVE HIMSELF CONDUCTED PRELIMINARY ENQUIRY AND SHOULD HAVE BEEN ABLE TO SHOW THAT AOS ENQUIRY WAS NOT CORRECTLY MADE BY FINDING DEFICIENCY/INFIRM ITY IN THE DOCUMENTS/ MATERIAL COLLECTED BY THE AO OR EVEN ABLE TO DISPROVE THE TR ANSACTION OF SHARE CAPITAL BY BRINGING MATERIAL TO SUGGEST THAT THE SHARE TRANSAC TION OF ASSESSEE WAS AN EYE WASH. THIS EXERCISE THE LD. PCIT HAS NOT CARRIED OUT. SO ACCORDING TO US IN THE LIGHT OF THE ENQUIRIES CONDUCTED BY THE AO IN RESPECT OF SHARE T RANSACTION THE LD. PCIT COULD NOT HAVE FOUND THE ACTION OF AO TO BE ERRONEOUS FOR WANT OF NO ENQUIRY. AND THE VIEW TAKEN BY THE AO IN RESPECT OF SHARE TRANSACTIO N IS A PLAUSIBLE VIEW; AND AT ANY RATE CANNOT BE TERMED AS UN-SUSTAINABLE VIEW. WE NO TE THAT THE ACTION OF LD. PCIT SMACKS OF ARBITRARIES AND IS BAD IN LAW FOR NON-APP LICATION OF MIND AND THE LD. PCIT PROCEEDED ON WRONG ASSUMPTION OF FACTS. SINCE THE LD. PCIT HAS INTERFERED BY INVOKING 263 JURISDICTION WITHOUT SATISFYING THE CO NDITION PRECEDENT I.E. AOS ORDER TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE REVEN UE THE ISSUANCE OF SCN AND CONSEQUENT IMPUGNED ACTION IS NULL IN THE EYES OF LAW. THEREFORE THE ASSUMPTION OF REVISIONAL JURISDICTION IS BAD IN LAW AND SO QUASHE D. 16. THE ASSESSEE HAD ALSO RAISED ADDITIONAL GROUND OF APPEAL WHICH IS AS UNDER: ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 22 | P A GE 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE PROCEEDINGS INITIATED BY THE LD. PCIT U/S 263 AND THE IMPUGNED ORDER IS NOT VALI D FOR THIS REASON ALSO THAT THE LD. PCIT WANTS TO REVISE THE REASSESSMENT ORDER PAS SED U/S 147 BUT THAT ORDER ITSELF IS NOT VALID BECAUSE OF VARIOUS JURISDICTIONAL DEFE CTS SUCH AS NO SATISFACTION RECORDED OF THE LD. AO REOPENING ONLY FOR VERIFICATION MEC HANICAL SANCTION BY HIGHER AUTHORITIES BORROWED SATISFACTION REASONS RECORDE D ARE SCANTY AND VAGUE REOPENING FOR FISHING AND ROVING INQUIRIES AND HENC E THE IMPUGNED ORDER U/S 263 SHOULD BE SET ASIDE AS VOID. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD AMEND M ODIFY RESCIND SUPPLEMENT OR ALTER THE GROUND STATED HEREIN ABOVE EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 17. SINCE WE HAVE ALREADY ALLOWED THE LEGAL ISSUE RAISED BY THE ASSESSEE THAT THE LD. PCIT LACKED JURISDICTION TO INVOKE SECTION 263 OF THE ACT AND THEREFORE THE IMPUGNED ACTION ITSELF IS AB-INITIO VOID THEREFORE WE HAVE QUASHED IT. THEREFORE WE ARE NOT INCLINED TO ADJUDICATE THE ADDITIONAL GROUN D OF APPEAL (SUPRA) SINCE IT HAS BECOME ACADEMIC AND IS LEFT OPEN. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH 2021. SD/- SD/- (J.S. REDDY) (A. T . VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 05.03.2021 SB SR. PS COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- ACS TRADERS PVT. LTD. 7 DR. ABANI DUTT A ROAD HOWRAH WEST BENGAL-711106. 2. RESPONDENT PCIT-5 KOLKATA 3. THE PR.CIT-5 KOLKATA ITA NO.467/KOL/2020 M/S ACS TRADERS PVT. LTD. A.Y. 2012-13 23 | P A GE 4. CIT- KOLKATA 5. DR KOLKATA BENCHES KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT KOLKATA BENCHES KOLKATA