Act Only If He Is Satisfied About Actual Receipt Of Sum By The Assessee, Inacquiring Investments And Rights? v. M/S Abhijeet Enterprise Ltd

OD–5 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/187/2023IA NO: GA/1/2023, GA/2/2023PRINCIPAL COMMISSIONER OF INCOME TAX 1,KOLKATAVSM/S ABHIJEET ENTERPRISE LTD BEFORE :THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 17 November, 2023 Appearance :Mr. Tilak Mitra, Adv.…for appellantMr. Subhas Agarwal, Adv.…for respondent GA/1/2023 The Court : - We have heard Mr. Tilak Mitra, learned standing Counsel for therevenue/appellant and Mr. Subhas Agarwal, learned Advocate for therespondent/assessee. There is a delay of 1042 days in filing the appeal. Though thereasons given in the petition are not fully convincing, since the appeal has been filedunder Section 260A of the Income Tax Act, (the Act) and they are required to examine asto whether any substantial questions of law arise for consideration, we exercise ourdiscretion in the matter and condone the delay in filing the appeal. ITAT/187/2023 This appeal by the revenue is directed against the order dated 27[th] March, 2019passed by the Income Tax Appellate Tribunal “C” Bench Kolkata (the Tribunal) in ITANo.308/Kol/2017 for the assessment year 2013-14. The revenue has raised the following substantial questions of law forconsideration:- i)Whether the Learned Tribunal has erred in law and fact in setting asidethe order of the CIT (A) with limited direction to invoke section 68 of the Act only if he is satisfied about actual receipt of sum by the assessee, inacquiring investments and rights? ii) Whether the Learned Tribunal has erred in law and fact in treating thetransaction through shares as beyond the ambit of section 68 of the Act,ignoring that ‘shares’ tantamount ‘to money’ here as a medium ofexchange which is a mode of circumventing the said provisions? iii)Whether the Learned Tribunal has erred in law and fact in deleting theaddition under section 68 of the Act, without appreciating the fact thatsection 68 not only includes cash credit but also include a creditrepresenting the value of shares on credit? After we have elaborately heard the learned Advocate for the appellant we findlearned Tribunal was right in allowing the assessee’s appeal to the extent indicated bytaking note of the various decisions of the High Court on the very same subject. In thisregard, we refer to the decision of the High Court At Madras in V.R. Global Energy (P)Ltd. vs. ITO, Corporate Ward 3(4), Chennai 407 ITR 145 (Madras). It was held that whenthe assessee allotted share to a company in settlement of their existing liability ofassessee to the said company, since no cash was involved in the transaction of saidallotment of shares. conversion of this liability in which share capital and sharepremium could not be treated as unexplained cash credits under Section 68 of the Act.The Revenue filed an appeal against the said judgement and the same was dismissed bythe Hon’ble Supreme Court in ITO vs. V.R. Global Energy (P) Ltd. [2020] 113taxmann.com 31(SC). The decision of the Hon’ble Division Bench of the High Court ofDelhi in case of CIT vs. Ritu Anurag Agarwal, 2009(7)TMI 1247, Delhi High Court, thesame also stands in aid to the case of the respondent/assessee. The decision of the Hon’ble Division Bench of this Court in Jatia Investment Co.Vs. CIT (1994) 206 ITR 78 (Cal) will also support the case of the respondent/assessee.In the said decision, the Court found that cash did not pass at any stage though entrieswere made in cash book showing payment and receipts; but since the entries made a The decision of the Hon’ble Division Bench of this Court in Jatia Investment Co.Vs. CIT (1994) 206 ITR 78 (Cal) will also support the case of the respondent/assessee.In the said decision, the Court found that cash did not pass at any stage though entrieswere made in cash book showing payment and receipts; but since the entries made a complete round, no passing of cash was necessary for the purpose of making entries.Further, it was held that if there was no real cash entry on credit side of the cash bookby merely an emotional or fictitious cash entry, as admitted by the Income Tax Officer,there is no real credit to cash, to its cash book the question of inclusion of the amountof the entry as unexplained cash credit cannot arise. In the light of the above decision,the view taken by the learned Tribunal was perfectly in order and sustainable. Thus, we find there is no ground to interfere with the order passed by the learnedTribunal. Accordingly, the appeal is dismissed and the substantial questions of law areanswered in favour of the revenue. The portion of the order and direction of the learned Tribunal remanding thematter for a limited purpose is affirmed. Consequently, the applications stand closed. (T.S. SIVAGNANAM, C.J.) GH/S.Das (HIRANMAY BHATTACHARYYA, J.)