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57.4 In view of the above, finding force in Ground No.11, the same is accepted and the addition of Rs.7 lacs is deleted.

58. By way of Ground No.12, confirmation of addition of Rs.45 lacs by invoking the provisions of Section 68 of the Income Tax Act, has been brought to challenge. Here, undisputedly, the assessee company submitted the Cash Flow Statements, explanation of each debit and credit entry in the bank account of the assessee company and also filed the balance sheet, affidavit, confirmations, bank statement, ITA 3 &144/CHD/2023 A.Y. 2014-15 ITRs, balance sheets and copies of accounts, etc. However, the AO did not consider each credit entry separately, as was required to be done under the law. He made additions of all the credit entries in the bank account of the assessee company without considering the nature, source, credibility and genuineness of each credit transaction received in the assessee's bank account during the year under consideration. Rather, the AO, to start with, was completely satisfied with the genuineness of the company and the sources of the credit entries in the bank account. In pursuance thereof, the AO had sent a detailed note on the comparison of the assessee company with shell companies and the explanation of the credit entries. This was done by way of Deviation Note, addressed to the Deputy Director of Investigation, Mohali, on 26.12.2019, in the letter No. 1733, dated 24.12.2019, passed on his satisfaction, which had been arrived at with regard to the source of the transactions as per the evidence filed on behalf of the assessee and its regular books of account, which stood duly explained. However, the ADIT (Investigation) Mohali, though she was not authorized to do so and though she did not have any jurisdiction over the matter, rejected the Deviation Note of ITA 3 &144/CHD/2023 A.Y. 2014-15 the AO in a short time of twelve hours of receipt of the Deviation Note. While doing so, the ADIT (Investigation) Mohali observed that the assessee company was a shell company. Vide letter No.1763 dated 27.12.2019, addressed to the AO, the ADIT (Investigation) Mohali rejected the proposal/Deviation Note suggesting that no addition be made and directed the AO to make additions by assigning flimsy reasons. It was on the basis of such dictat and that too, of a third party, that the AO made the additions including the one in question by way of Ground No.11. Accordingly, all the credit entries in the bank account of the assessee company were added as its undisclosed income u/s 68 of the Income Tax Act. We find that such additions, as rightly contended on behalf of the assessee, are not at all sustainable in the eye of the law. Such addition was made without putting the assessee to show cause thereagainst. Also, the assessee was wrongly treated as a shell company, without any query in this regard having been put to the assessee in the questionnaires issued. The documentary evidence, as discussed, filed on behalf of the assessee, was no way taken into consideration by the AO before making the addition. It has not been disputed that the assessee ITA 3 &144/CHD/2023 A.Y. 2014-15 company furnished full explanation concerning the identity, sources, bank account, etc., of each of its creditors and on the basis thereof, no entity could have been treated as a sham entity.

9.3 Facts and material available on record have been considered in detail. Sh. TN Singla and Sh. Jagdish Rai Gupta are the directors/shareholders of the appellant company. Sh. Sahil Singla is the son, Smt. Kiran Singla is the wife and Smt. Sakshi Singla is Daughter in Law of Sh. TN Singla .After taking into consideration the above facts, it is observed that the AO has held in his order the appellant company to be a shell company as merely existing on papers and not carrying out any business activities. After perusing the findings of the AO recorded in the assessment order and the material available on record, it is noted that M/s TJR Properties was having land which was purchased during F.Y. 2007-18 for Rs.l,73,00,000/- and sold during A.Y. 2012-13 for Rs.5,00,05,000/-by executing registered sale deed on 30.11.2011 and paying stamp duty. The same AO has assessed Long Term Capital Gain in the hands of M/s TJR from the said transaction. It is not the case of the AO that the said land was a Benami asset held in the name of M/s TJR. Further, M/s TJR paid earnest money of Rs. 1,50,00,000/- during F.Y. 2016-17 for purchase of a plot to build flat/apartment and paid TDS of Rs. 1,50,000/- @1%. Thus, on facts, it is observed that M/s TJR was having income generating apparatus in past and future years and was undertaking business activities. There is no definition of shell company given under the provisions of Income Tax Act, 1961 or Companies Act, 1956/2013. Every case needs to be examined on merits as per the ITA 3 &144/CHD/2023 A.Y. 2014-15 peculiar facts and circumstances to draw such inference and consequences out of the same as per the provisions of Income Tax Act. In order to decide the merit of addition made by the AO on account of unexplained bank credits u/s 68 of the Act, it is required to examine the source and nature of credits received by the appellant terms of conditions laid down in the provisions of section 68 of the Act. Thus, it required to examine the identity and creditworthiness of the persons from who's amounts have been received and genuineness of the transactions on merit considering each credit separately. The AO has not discussed each and cred separately on merits in the assessment order before drawing the inference that the credits were unexplained. During the assessment proceedings, it was observed by AO after going through the reply of the appellant dated 19.12.2019 in respect of particular of such persons from whom such credits were received that the appellant had cred amounting to Rs 3,22,01,650/- in its bank account and the appellant could not explain purpose of such credits. Thus, the addition of Rs.3,22,01,650/- was made by the AO on the ground that the appellant has failed to explain the purpose and utilisation of such credits The appellant submitted during the appellate proceedings that it had received credits of Rs. 3,22,01,650/- in its bank account maintained with Bank of Maharashtra and furnished documentary evidence in support of identity and creditworthiness of such persons a genuineness of transaction which have been also furnished during the assessment proceedings. The AO was again directed during appellate proceedings vide letter no.295 dated 12.08.2021 to examine such credits on merit in respect of identity and creditworthiness of such persons and genuineness of transaction. In the remand report dated 15.07.2022(supra), the AO did not bring on record any adverse findings in respect of identity and creditworthiness of such persons and genuineness of transactions except by stating that appellant is a shell company and doesn't have any profit generating apparatus. It was further stated that one of the group companies, i. e., M/s Evershine Recreation Pvt Ltd was a shell company from whom the appellant has received credits. However, the AO did not make any further enquiry in respect of credits in the bank account during the remand proceedings and relied upon the facts as discussed in the assessment order. The appellant has discharged its onus as required u/s 68 of the Act. All the above mentioned documents were also furnished before the AO during the assessment proceedings. Although the AO has admitted to have received 'the said documents during the assessment proceedings yet the same were not taken into account by the AO while making addition. The AO has recorded in his order that the appellant could not explain the purpose and utilisation of such credits. However, the AO failed to take cognisance of the fact that addition u/s 68 of the Act is to be made if the appellant doesn't offer any explanation regarding the source and nature of credits received in the bank account or if the explanation offered is not found satisfactory by the AO. Whereas in this case the appellant has duly furnished its explanation in respect of bank credits received during the year under consideration alongwith necessary documentary evidence. If ITA 3 &144/CHD/2023 A.Y. 2014-15 the AO was not satisfied with the explanation of the AO in respect of source and nature of credits received, he should have recorded such dissatisfaction in the assessment order. However, no adverse finding has been recorded in the assessment order in respect of the documentary evidence furnished by the appellant in support of bank credits. The submissions and documents furnished by the appellant during the appellate proceedings were also forwarded to the AO for remand report. In the remand report also, the AO has not even discussed the documentary evidence furnished by the appellant in support bank credits let alone pointing out any defect in the same. In view of the above discussion and after making independent perusal of documents furnished by the appellant, it is noted that the assessment order is non speaking, mechanical in nature and has been passed without discussing merits of the documents.

68. The ld. CIT(A), it is seen, in the impugned order, has observed inter-alia that the assessee had explained that the AO had used the statement of Shri Jagdish Rai Gupta, selectively, in parts, by drawing a wrong inference that M/s TJR Properties Pvt. Ltd. was a shell company; that the assessee had submitted that that M/s TJR Properties was having land which was purchased during F.Y. 2007-18 for Rs.1,73,00,000/- and sold during A.Y. 2012-13 for Rs.5,00,05,000/-by executing registered sale deed on 30.11.2011 and after paying stamp duty. Further, M/s TJR paid earnest money of Rs.1,50,00,000/- during F.Y. 2016-17 for purchase of a plot to build flat /apartment and paid TDS of Rs. 1,50,000/- @1%; that the assessee had submitted that M/s TJR was having income generating apparatus and was undertaking business activities and was not a shell company; that the CIT(A) considered the facts and material available on record and held that Sh. TN Singla and Sh. Jagdish Rai Gupta are the directors/shareholders of the appellant company and Sh. Sahil Singla is the son, Smt. Kiran Singla is the wife and Smt. Sakshi Singla is Daughter ITA 3 &144/CHD/2023 A.Y. 2014-15 in Law of Sh. TN Singla; that after taking into consideration these facts, the ld. CIT(A) observed that the AO has held in his order the appellant company to be a shell company as merely existing on papers and not carrying out any business activities; that after perusing the findings of the AO recorded in the assessment order and the material available on record, the ld. CIT(A) noted that M/s TJR Properties was having land which was purchased during F.Y. 2007-18 for Rs.l,73,00,000/- and sold during A.Y. 2012-13 for Rs.5,00,05,000/-by executing registered sale deed on 30.11.2011 and paying stamp duty. The CIT(A) further observed that the same AO had assessed Long Term Capital Gain in the hands of M/s TJR from the said transaction; that it was not the case of the AO that the said land was a Benami asset held in the name of M/s TJR. Further, M/s TJR paid earnest money of Rs. 1,50,00,000/- during F.Y. 2016-17 for purchase of a plot to build flat/apartment and paid TDS of Rs. 1,50,000/- @1%. Thus, on facts, the CIT(A) observed that M/s TJR was having income generating apparatus in past and future years and was undertaking business activities; that there was no definition of shell company given under the provisions of Income Tax Act, 1961 ITA 3 &144/CHD/2023 A.Y. 2014-15 or Companies Act, 1956/2013. The ld. CIT(A) observed that every case needs to be examined on merits as per the peculiar facts and circumstances to draw such inference and consequences out of the same as per the provisions of Income Tax Act; that in order to decide the merit of addition made by the AO on account of unexplained bank credits u/s 68 of the Act, it was required to examine the source and nature of credits received by the appellant terms of conditions laid down in the provisions of section 68 of the Act. Thus, it was required to examine the identity and creditworthiness of the persons from who's amounts have been received and genuineness of the transactions on merit considering each credit separately. The ld. CIT(A) held that the AO had not discussed each and cred separately on merits in the assessment order before drawing the inference that the credits were unexplained; that during the assessment proceedings, it was observed by AO after going through the reply of the appellant dated 19.12.2019 in respect of particular of such persons from whom such credits were received that the appellant had cred amounting to Rs 3,22,01,650/- in its bank account and the appellant could not explain purpose of such credits. Thus, the addition of ITA 3 &144/CHD/2023 A.Y. 2014-15 Rs.3,22,01,650/- was made by the AO on the ground that the appellant has failed to explain the purpose and utilisation of such credits; that the assessee submitted during the appellate proceedings that it had received credits of Rs. 3,22,01,650/- in its bank account maintained with Bank of Maharashtra and furnished documentary evidence in support of identity and creditworthiness of such persons a genuineness of transaction which have been also furnished during the assessment proceedings; that the AO was again directed during appellate proceedings vide letter no.295 dated 12.08.2021 to examine such credits on merit in respect of identity and creditworthiness of such persons and genuineness of transaction. In the remand report dated 15.07.2022(supra), the AO did not bring on record any adverse findings in respect of identity and creditworthiness of such persons and genuineness of transactions except by stating that appellant is a shell company and doesn't have any profit generating apparatus. It was further stated that one of the group companies, i. e., M/s Evershine Recreation Pvt Ltd was a shell company from whom the appellant has received credits. However, the AO did not make any further enquiry in respect of credits in the bank account during the ITA 3 &144/CHD/2023 A.Y. 2014-15 remand proceedings and relied upon the facts as discussed in the assessment order. It was submitted that the assessee has discharged its onus as required u/s 68 of the Act and all the above mentioned documents were also furnished before the AO during the assessment proceedings; that although the AO had admitted to have received 'the said documents during the assessment proceedings yet the same were not taken into account by the AO while making addition. It was submitted that the AO had recorded in his order that the appellant could not explain the purpose and utilisation of such credits, however, the AO failed to take cognisance of the fact that addition u/s 68 of the Act was to be made if the appellant doesn't offer any explanation regarding the source and nature of credits received in the bank account or if the explanation offered is not found satisfactory by the AO, whereas in this case the appellant has duly furnished its explanation in respect of bank credits received during the year under consideration alongwith necessary documentary evidence. It was submitted that if the AO was not satisfied with the explanation of the AO in respect of source and nature of credits received, he should have recorded such dissatisfaction in the assessment order. However, no adverse ITA 3 &144/CHD/2023 A.Y. 2014-15 finding has been recorded in the assessment order in respect of the documentary evidence furnished by the appellant in support of bank credits. The submissions and documents furnished by the assessee during the appellate proceedings were also forwarded to the AO for remand report. In the remand report also, the AO did not even discussed the documentary evidence furnished by the appellant in support of bank credits let alone pointing out any defect in the same. In view of the above discussion and after making independent perusal of documents furnished by the appellant, it was noted that the assessment order is non speaking, mechanical in nature and has been passed without discussing merits of the documents. The ld. CIT(A) held that there was no direct or indirect evidence pointed out by the AO before making such additions. Therefore, after considering the merits of the case, analysis of credits as per the above table and strength of documentary evidence, it was observed that there was no justification in such addition made in the hands of the appellant u/s 68 of the Act. Therefore, the addition of Rs. 2,77,01,650/- was deleted by the ld. CIT(A).

69.3 Other than the above, the Assessing Officer had wrongly held the assessee company as shell company without any substance or cogent reason, and the ld. CIT(A) has rightly declared this company as a genuine company and not a shell company. The status of the company has already been decided by us in our order of the company for ITA 3 &144/CHD/2023 A.Y. 2014-15 assessment year 2012-13 and 2013-14 on the same facts, wherein we have confirmed it as a genuine company and not as shell company.