No Addition u/s 68 – Share Application Money Proven with Documents

Inter Publicity Pvt. Ltd. Vs DCIT (ITAT Mumbai)

Introduction: The recent order from ITAT Mumbai, dated 17/10/2023, in the case of Inter Publicity Pvt. Ltd. vs. DCIT sheds light on the assessment year 2014-15. The appeal addresses concerns about additions under section 68 of the Income Tax Act related to share application money.

Detailed Analysis: The order discusses the background, search operations, and assessments conducted on the assessee. It outlines the details of share capital received during the relevant year and the subsequent investigations initiated by the AO. The AO raised concerns about the creditworthiness of the subscriber companies, leading to the addition under section 68.

The assessee, in response, submitted various documents such as certificates of incorporation, PAN numbers, balance sheets, bank statements, and more, demonstrating the identity, genuineness, and creditworthiness of the subscribers. The AO, however, rejected these contentions, relying on statements made during the search operation.

The ITAT’s detailed analysis highlights the importance of the assessee’s initial burden to establish the three key factors – identity, genuineness, and creditworthiness. The order emphasizes the admissibility of documents furnished by the assessee, including certificates of incorporation, PAN, and bank statements, as evidence to prove the legitimacy of transactions.

The ITAT discredits the AO’s reliance on statements made during the search, emphasizing the subsequent retractions and the detailed documents submitted by the assessee. The order underscores the AO’s failure to find faults in the evidence provided and dismisses the reliance on investigation reports without contradictory material.

Conclusion: The ITAT’s conclusion, dated 17/10/2023, states that the addition under section 68 in the hands of the assessee was not justified. Both the protective and substantive additions are directed to be deleted. The case highlights the significance of documentary evidence in disproving additions and reinforces the burden-shifting nature of section 68 assessments.

This order sets a precedent for cases where the assessee diligently provides comprehensive documentation, proving the legitimacy of transactions, thereby preventing unjust additions under section 68 of the Income Tax Act.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

These cross appeals are directed against the order dated 12-03-2021 passed by Ld CIT(A)-52, Mumbai and they relate to the assessment year 2014-15. The assessee is aggrieved by the decision of Ld CIT(A) in partially confirming the addition to the extent of Rs.50.00 lakhs made by the AO u/s 68 of the Act in respect of share application money received from M/s Zenstar Marketing P Ltd. The revenue is aggrieved by the decision of Ld CIT(A) in granting relief of addition made u/s 68 of the Act both on substantive basis and protective basis.

2. The facts relating to the cases are stated in brief. The assessee herein is engaged in the business of advertising in print, electronic media, hoarding and creative art work. It belongs to Gauti Group. The assessee along with other group concerns/family members was subjected to search operations under section 132 of the Act on 09-03-2015 by the Investigation wing of the Income tax department. Consequent thereto, the assessments were completed in the hands of the assessee for the above said year under section 143(3) read with section 153A of the Act.

3. The Kolkata investigation wing of the department had reported that many paper companies are indulging in providing accommodation entries in the form of share capital/share premium to various beneficiaries. It was noticed by the department that the assessee’s group has received share capital/share premium from such paper companies. The details of the share capital received by the assessee during the year under consideration herein are given below:-

4. During the course of search proceedings, Shri Sumati Chand Gauti, one of the key persons of the group submitted in the statement recorded u/s 132(4) of the Act that he could not trace out certain companies/directors of those companies who has subscribed to the shares of the assessee group companies. Accordingly he expressed the view that he has no other option but to offer to tax the amount of share capital and share premium raised from certain companies. Another director Shri Sanjay Dugar also agreed in his statement taken u/s 132(4) of the Act that part of share premium received in certain group companies cannot be substantiated as it was received from Jamakarchi companies and agreed to offer the said amounts as undisclosed income.

5. The AO also issued commission to respective assessing officers of Kolkatta and the inspectors report furnished by them revealed that the officers of certain companies have been closed. The AO also noticed that these paper companies are reporting loss or meager profits in various years. The AO also issued notices to various subscriber companies, but most of them were either not responded or returned unserved. In respect of replies received, the AO noticed that they were not able to substantiate the quantum of share premium paid by them. He further noticed that most of the share subscribers are having common addresses or common directors and auditors. He also noticed that these subscriber companies have not received any dividend. Their bank balances were also found to be low. They had received funds from some source before transferring the same to the assessee companies herein. Accordingly, the AO came to the conclusion that these subscriber companies lack credit worthiness.

6. The AO asked the assessee to furnish various details of the subscriber companies. According to AO, the assessee furnished certain details, but they were incomplete. Accordingly, the AO took the view that the genuineness of transactions remained unexplained. Accordingly, the AO asked the assessee to prove the cash credits. It was also show caused as to why such share application money received should not be added to the total income of the assessee.

7. In response to the same, the assessee furnished various documents and submitted that it has proved the three ingredients, viz., Identity of the lender, Genuineness of transactions and Credit worthiness of the lender by producing documents like Incorporation certificate, PAN card, bank statements and financial statements of the creditors. It was further submitted that these companies are engaged in the business of share trading and all the transactions related to the same may be verified from the financial statements of the said companies. It was also submitted that the Share premium is a capital receipt and it has been received as per the private negotiations made between the assessee and share subscribers. It was further submitted that the Companies Act has put in restrictions with regard to the usage of share premium amount. Accordingly, it was contended that the addition u/s 68 could not be made.

8. The assessing officer did not accept the contentions of the assessee. The AO, after referring to various case laws, held that the share application money received by the assessee is unexplained. It is pertinent to note that M/s Starpoint dealers P Ltd and M/s Morpan Merchant P Ltd have invested the impugned amount in the assessee company, out of funds received by them from other group companies. The assessing officer had already assessed the funds received by the group concerns to the extent of Rs.13.14 crores as their income u/s 68 of the Act in their respective hands. Since the above said two companies have invested a sum of Rs.13,98,60,000/- in the assessee company, the AO assessed a sum of Rs.13,14,00,000/- on protective basis u/s 68 of the Act and a sum of Rs.50.00 lakhs on substantive basis. The AO also assessed the share capital of Rs.7.99 crores received from M/s Zenstar Marketing P Ltd as unexplained cash credit u/s 68 of the Act.

9. Before Ld CIT(A), the assessee contended that the admissions were made by Shri Sumati Chand Gouti on pressure from search officials and further the relevant materials were not readily available. It was submitted that the assessee could contact the relevant share subscribers and could collect all details to prove the genuineness of share application money received. Accordingly, it was contended that the admission made during the course of search was incorrect and without any basis and hence, the same cannot be relied upon. With regard to the statement given by Shri Sanjay Dugar, it was submitted that he had resigned from directorship of various companies prior to the date of search and hence he could not have given any statement in respect of assessee group. It was submitted that he had also made admission only for want of relevant details. It was further submitted that both of them have retracted their statement. Accordingly, it was contended that the statements given by both the persons should not be relied upon. The assessee also relied upon various case laws to support its contention that the statement given under duress should not be relied upon. Accordingly, it was contended that the addition could not have been made u/s 68 of the Act, as the assessee has discharged the onus placed upon it.

10. The Ld CIT(A) held that the AO has not made the addition solely on the basis of Statement given by Shri Sumati Chand Gouti and Shri Sanjay Dugar. He also held that the retraction made by them is bald in nature and it did not elaborate as to how the earlier statement was false or contrary to the documents found. The Ld CIT(A) further observed that all the subscribers are unrelated to the assessee and the field inquiries have revealed that those companies are not available at their respective addresses. All of them have not responded to the notices issued by the AO. Accordingly, the Ld CIT(A) held that the assessee has failed to discharge the onus placed upon it.

11. However, the Ld CIT(A) noticed that he had confirmed the additions made in the hands of M/s Starpoint Dealers P Ltd and M/s Morpan Merchant P Ltd. Accordingly he held that the protective addition made in respect of addition relating to the share capital received from them will not survive. Accordingly, the Ld CIT(A) directed that the share capital of Rs.7,14,60,000/- received from Starpoint Dealers P Ltd and Rs.5,99,40,000/- received from M/s Morpan Merchant P Ltd be deleted. The relevant observations made by Ld CIT(A) are extracted below:-

“5.59 Admittedly, the assessment of Starpoint Dealers Pvt Ltd and Morpan Merchant Pvt Ltd has been carried out together with this assessment. The unexplained credits appearing in these two companies during the entire block period has been treated as income of these companies in respective years. The appeal of these years was pending with this office and it is noted that in respect of the credit entries which relate to Kolkatta based jamakarchi companies, these additions have been confirmed at the first appellate level. In light of these facts, since the credits in the books of the appellant company are admittedly out of these sources, the protective addition made by the AO does not survive. The addition of Rs.7,14,60,000 being credit from Starpoint Dealers Pvt Ltd and the credit of Rs.5,99,40,000 being credit from Morpan Merchant Put Ltd is directed to be deleted.”

12. In respect of addition of Rs.7,99,20,000/- received from M/s Zenstar Marketing P Ltd, the Ld CIT(A) noticed that the above said company, in turn, had received funds from M/s Sumati Chand Gouti and M/s SCG Exports P Ltd to the extent of Rs.7.49 crores. Accordingly, the Ld CIT(A) confirmed addition to the extent of Rs.50.00 lakhs and directed deletion of Rs.7.49 crores. The relevant observations made by Ld CIT(A) in this regard are extracted below:-

“5.60 The assessee has further submitted that out of the total credits of Rs.7,99,20,000 from Zenstar in AY 2014-15, an amount of Rs.7,49,20,000/- received by the assessee has been sourced in the hands of M/s Zenstar Marketing Pvt Ltd out of funds received from Sumati chand Gouti and M/s SCG Exports Pvt Ltd. The Appellat has submitted that this is clear from the documents in the form of bank account extracts already submitted. It is argued that both Sumati Chand Gouti and M/s SCG Exports Pvt Ltd have been assessed along with this company and there has not been any question with respect to the credits in the books of either Sumati Chand Gouti or M/s SCG Exports Pvt Ltd. It is claimed that since the source of these amounts is clear, no addition can be made with respect to this amount.

5.61 The submission made by the assessee has examined and the bank account extracts provided to support the above contention has been examined. While dealing with the issue of identity and credit worthiness, it has been held earlier that in case of companies owned by the group, there is no question of proving identity but the credit worthiness has to be demonstrated with respect to each and every transaction. In the present case, the assessee has provided documents to show that the funds advanced to Inter publicity during the year by Zenstar have been sourced from M/s Sumatichand Gauti and M/s SCG Exports Pvt Ltd. The necessary bank account details evidencing credit of this amount in the bank account of Zenstar and debit of the amount in the bank account with subsequenty credit in the bank account of Inter publicity are available on record. The identity and creditworthiness of Sumatichand Gouti or M/s SCG Exports Pvt Ltd remains well established. It is noted that the AO has merely restricted himself to the issue of identity and has not extended the investigation to source of funds in the hands of the investor company. It has been held by Hon’ble Supreme Court in the case of NRA Iron & Steel (P) Ltd (2019)(103 taxmann.com 48)(SC), has stressed upon the need to examine the creditworthiness of the investor companies in case of doubt about these companies.

5.62 In light of the various documents submitted by the appellant as discussed above and the fact that the credit arose out of the funds of Sumati Chand Gouti and M/s SCG Exports Pvt Ltd, the source of credit is found to be suitably explained. The amount credited in the books of the assessee cannot be treated as unexplained credit under such circumstances. As such, the AO is in error in making the addition under section 68 of the Act in this case.

5.63 The source of remaining amount received from Zenstar has not been explained. As such, the addition under section 68 of the Act to the extent of Rs.50,00,000/- stands confirmed….”

Aggrieved by the decisions so rendered by Ld CIT(A), both the parties have filed these appeals.

13. We heard rival contentions and perused the record. In the instant case, the addition has been made u/s 68 of the Act, wherein cash credits, which are essentially share capital/share premium money received by the assessee, have been added. Sec. 68 enables assessment of such types of cash credits, if the assessee fails to prove the nature and source of cash credits. “Nature of cash credit” would mean that the assessee is required to show that it is not of revenue nature. In order to prove the sources, the assessee should discharge initial burden to prove the cash credits placed upon his shoulders of the assessee u/s 68 of the Act, the assessee is required to prove three main ingredients, viz., the identity of the creditor, the genuineness of the transactions and the credit worthiness of the creditor. If the assessee discharges the initial burden, then the burden would shift to the shoulders of the assessing officer, i.e., it is the responsibility of the AO to disprove the claim of the assessee by bringing evidences on record.

14. We shall now examine the facts prevailing in the instant case. It is noticed that it is not the case of the AO that the assessee did not discharge the initial burden placed upon it with regard to the share capital/share premium money received by it. The assessee has furnished all the details relating to the investors in order to discharge the burden placed upon it u/s 68 of the Act. We noticed from the record that the assessee has filed following documents in order to discharge the burden placed upon it under section 68 of the Act :-

a) Certificate of Incorporation of share subscribers.

b) PAN number of share applicants.

c) Balance Sheet of share subscribers

d) Bank Statement of Share subscribers.

e) Acknowledgement of Return of income filed by Share subscribers.

f) Form 2 filed before ROC for allotment of shares.

g) Valuation report of shares

From the details submitted it can be seen that the identities of share subscribers stand proved. Since they have made payments from their bank accounts through account payee cheques, these transactions cannot be treated as bogus. Since the payments have been made from of funds available with them, the credit worthiness would also stand proved. We notice that the AO has observed that these subscribers are either showing loss or meager profits and such meager profits are not commensurate with the investments made by them. However, there is no bar under the law that a person could not make investments out of borrowed funds. In the instant case, it is not the case of the AO that the applicants did not have funds available with them for making investments in the assessee company. In fact, the said investments have been routed through the bank accounts of the assessee as well as the subscribers. Further, these investments are duly reflected in their books of account.

15. We notice that the tax authorities have first relied upon the surrender made by Shri Sumati Chand Gouti and Shri Sanjay Dugar in the statement taken u/s 132(4) of the Act during the course of search. We noticed earlier that the assessee is contending that Shri Sanjay Dugar was not a director during the period in which the search has taken place and hence his statement will not bind the assessee. Be that as it may, we notice that both the parties have admitted during the course of search on the clear reasoning that they immediately did not have details with them. Accordingly, it was agreed to surrender the share capital received by them. After the conclusion of search, these persons have retracted the statements and furnished all the details relating to the share capital received by the assessees. It was also submitted that they have surrendered the income only under pressure. Thus, we notice that the evidences furnished by the assessee to prove the cash credits would outweigh the statements given by them and hence there is merit in the retraction made by them. Accordingly, in the facts and circumstances of the case, we are of the view that the tax authorities could not have relied upon the statements given by the above said two persons without bringing any material contrary to the evidences furnished by them.

16. We notice that the AO has mainly relied upon the report of investigation wing to come to the conclusion that the assessee has availed only accommodation entries. He has also referred to the non-reply of the notices issued by them and non-furnishing of details called for. But the fact would remain that the assessee has furnished the relevant details before the AO and all those details were earlier filed with either Income tax department or with Registrar of Companies, i.e., with Government authorities. Hence the authenticity of those documents could not be doubted with. When all the relevant details are available with the AO, it is the requirement that the AO should examine those documents and could reject them, only if he finds fault with those documents. We notice that the AO did not find any deficiency or fault with the evidences produced by the assessee.

17. With furnishing of all these documents, in our view, the assessee has discharged initial burden placed upon it under section 68 of the Act by furnishing above said documents. Hence the source as well as the source of source also stands proved by the subscribers.

18. The question that arises is whether the Assessing Officer could have made addition under section 68 of the Act by relying upon report of investigation wing or the statement given by the alleged accommodation entry providers. It is apposite to refer to the decision rendered by the Coordinate Bench in the case of M/s. Moraj Realty Pvt. Ltd. (ITA No.708 & 709/Mum/2019 dated 08-12-2020), wherein the decision was rendered by following the decisions rendered by Hon’ble Bombay High Court. It was held as under :-

“17. Moreover, except for relying on the statement of VVB the Assessing Officer has not done any inquiry himself except for referring to a notice issued under section 133(6) in A.Y. 2009-10 only. The learned counsel of the assessee has challenged the very veracity of this observation. He has submitted that assessee has asked for the copy of the said notice issued under RTI Act. In response it was replied that copies thereof are not available. Hence, this shows that even the so called inquiry by the Assessing Officer was done in case of only one party for A.Y. 2009-10 and the veracity of which is itself in doubt.

18. We find ourselves in agreement with the submissions of the assessee’s counsel. We note that except for the statement of the entry operator which was also retracted the addition made by the authorities below is devoid of cogent material. In this regard we note that in similar circumstances honourable Bombay High Court in the case of CIT Vs. Orchid Industries Pvt. Ltd. (ITA No. 1433 of 2014 dated 5.7.2017)(397 ITR 136) held as under :-

“The Assessing Officer added Rs.95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they werenot traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account.

The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case.”

19. Similarly honourable Bombay High Court in the case of Gagandeep Infrastructure Pvt. Ltd. (394 ITR 680) has held as under :-

……………

(ii) Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in CIT v/s. Lovely Exports (P)Ltd. 317 ITR 218 in the context to the preamended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee’s income as unexplained cash credit.

20. Similarly Hon’ble Bombay High Court in the case of CIT Vs. Apeak Infotech (397 ITR 148) has held as under :-

“Amendment to Section 68 of the Act by the addition of proviso thereto took place with effect from ^1st April, 2013. Therefore, it was not applicable for the subject Assessment year 2012-13, So for as the pre-amended Section 68 of the Act was concerned, the same cannot be invoked in this case, as evidence wasled by the Respondents- Assessee before the Assessing Officer with regard to identity, capacity of the investor as well as the genuineness of the investment Therefore, admittedly, the Assessing Officer did not invoke Section 68 of the Act to bring the share premium to tax. Similarly, the CIT(A),on consideration of facts, found that Section 68 of the Act cannot be invoked, in view of the above, it was likely that the Revenue may have taken an informed decision not urge the issue of Section 68 of the Act before the Tribunal. High Court may also point out that decision of High Court in Major Metals Ltd. vs. Union of India, 359 ITR 450 proceeded on its own facts to uphold the invocation of Section 68 of the Act by the Settlement Commission. In the above case, the Settlement Commission arrived at a finding of fact that the subscribers re shares of the Assessee – Company were not creditworthy in as much as they did not have financial standing which would enable them to make an investment of Rs. 6,00,00,000/- at premium of Rs. 990 per share. It was this finding of the fact arrived at by the Settlement Commission which was not disturbed by High Court in its writ-jurisdiction. In the present case the person who have subscribed to the share and paid share premium have admittedly made statement on oath before the Assessing Officer as recorded by the Tribunal. Nofinding in this case has been given by the Authorities that shareholder/share applicants were unidentifiable or bogus.

High Court find that the impugned order of the Tribunal upheld the view of the CIT(A) to hold that share premium is capital receipt and therefore, cannot be taxed as Income. This conclusion was reached by the impugned order following the decision of this Court in Vodafone India Services Pvt. Ltd. (supra) and of the Apex Court in M/s G.S. Homes and Hotel P. Ltd. (supra). In both the above cases the Court has held that the amount received on issue of share capital including premium are on capital account and cannot be considered to be income. It was further pertinent to note that the definition of income as provided under Section 2(24) of the Act at the relevant time did not define as income any consideration received for issue of share in excess of its fair market value. This came into the statute only with effect from ^1st April, 2013 and thus, would have, no application to the share premium received by the Respondent – Assesses in the previous year relevant to the assessment year 2012 – 2013. Similarly, the amendment to Section 68 of the Act by addition of proviso was made subsequent to previous year relevant to the subject Assessment year 2012-13 and cannot be invoked. It may be pointed out that High Court in Commissioner of Income Tax vs. M/s. Gangadeep Infrastructure (P) ltd (Income Tax Appeal No. 1613 of 2014 decided in 20 March 2017) has while refusing to entertain a question with regard to Section 68 of the Act has held that the proviso to Section 68 of the Act introduced with effect from 1 April 2013 will not have retrospective effect and would be effective only from Assessment year 2013-14. In view of the above, Question No .B as proposed also does not give rise any substantial question of law as it is an issue concluded by the decision of High Court in M/s Vodafone India Services Pvt. Ltd. (Supra) and in the Apex Court in M/s G.S. Homes & Hotels P. Ltd. (supra). Thus not entertained. ”

21. Accordingly in the background of aforesaid discussion and precedent in our considered opinion assessee has given all the necessary details required for establishment of identity creditworthiness and genuineness under extant provisions of section 68 of the IT Act. The onus cast upon the assessee stands discharged. The addition by invoking amended provisions of section 68 of the Act which are not applicable for the assessment year is not sustainable.”

19. The Hon’ble Bombay High Court has held in the case of CIT vs. Orchid Industries (P) Ltd (397 ITR 136)(Bom) that the addition u/s 68 could not be made once the assessee had produced the documents to prove the cash credits. It was further held that non-appearance of the share subscriber before the AO will not change this position. It is also apt to refer to the decision rendered by Hon’ble Bombay High Court in the case of PCIT vs. Paradise Inland Shipping (P) Ltd (2017)(84 taxmann.com 58)(Bom). In this case, it was allegation of the revenue that the assessee has received share application money from fictitious companies. The Hon’ble jurisdictional High Court held as under:-

5. We have given our thoughtful considerations to the rival contentions of the learned Counsel and we have also gone through the records. The basic contention of the learned Counsel appearing for the Appellants revolves upon the stand taken by the Appellants whether the shareholders who have invested in the shares of the Respondents are fictitious or not. In this connection, the Respondents in support of their stand about the genuineness of the transaction entered into with such Companies has produced voluminous documents which, inter alia, have been noted at Para 3 of the Judgment of the CIT Appeals which reads thus :

“The assessment is completed without rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows :

1. Sony Financial Services Ltd. – CIN U74899DL1995PLC068362-Date of Registration 09/05/1995

6. On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such Companies.

7. The Appellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot re-appreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration.

8. The Apex Court in the case of Orissa Corpn. (P.) Ltd. (supra), has observed at Para 13 thus :

“13. In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were income- tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under S. 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises.”

9. This Court in the Judgments relied upon by the learned Counsel appearing for the Respondents, have come to the conclusion that once the Assessee has produced documentary evidence to establish the existence of such Companies, the burden would shift on the Revenue-Appellants herein to establish their case. In the present case, the Appellants are seeking to rely upon the statements recorded of two persons who have admittedly not been subjected to cross examination. In such circumstances, the question of remanding the matter for re-examination of such persons, would not at all be justified. The Assessing Officer, if he so desired, ought to have allowed the Assessee to cross examine such persons in case the statements were to be relied upon in such proceedings. Apart from that, the voluminous documents produced by the Respondents cannot be discarded merely on the basis of two individuals who have given their statements contrary to such public documents.

10. We find no infirmity in the findings arrived at by the ITAT as well as CIT Appeals on the contentions raised by the Appellants-Revenue in the present case and, as such, the question of interference by this Court in the present proceedings under Section 260A of the Income Tax Act would not at all be justified.”

20. In our view, the above said decisions rendered by the jurisdictional Hon’ble High Court and the co-ordinate bench supports the case of the assessee. Accordingly, following the above said decision, we hold that the addition made by the Assessing Officer under section 68 of the Act, in the facts and circumstances of the case, was not justified.

21. Since we have held that the addition could not have been made u/s 68 of the Act in the hands of the assessee, in the facts and circumstances of the case, we are of the view that both the protective and substantive addition will not survive. Accordingly we modify the order passed by the learned CIT(A) on this issue and direct the AO to delete all the additions made under section 68 of the Act.

22. In the result, the appeal of the assessee is allowed and the appeal of the revenue is dismissed.

Pronounced in the open court on 17/10/2023.