RICHTIME TRADING COMPANY Private LIMITED , MUMBAI V. INCOME TAX OFFICER 13(3)(2), MUMBAI

CO 291/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2321 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 08-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAKESH MOHAN; SUNIL HIRAWAT A RS
• Assessee Lawyers: D G PANSARI
• Keywords: Unexplained cash credit; Share purchase agreement; Principle of natural justice; Valuation report; Accommodation entries; Retraction; Reassessment proceedings; Set aside
• Section: 143(3); 133(6); 148

Judgement Text

P A G E | 1 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 4139/MUM/2017 (ASSESSMENT YEAR: 2007 - 08 ) ITO - 13(3)(2 ), R. NO. 227 , 2 ND FLOOR, AAYKAR BHAVAN M.K. ROAD , MUMBAI 400 0 20 VS M/S RICHTIME TRADING COMPANY PVT. LTD., OFFICE NO. 2, GROUND FLOOR, GULMOHAR COMPLEX, HSG. SOC. LTD, STATION ROAD,GOREGAON (EAST) MUMBAI 400 063 PAN AADCR0694P (APPELLANT) (RESPONDENT) C.O NO. 291/MUM/2018 (ARISING OUT OF ITA NO. 4139/MUM/2017) (ASSESSMENT YEAR: 2007 - 08 ) ITO - 13(3)(2), R. NO. 227, 2 ND FLOOR, AAYKAR BHAVAN M.K. ROAD, MUMBAI 400 020 VS M/S RICHTIME TRADING COMPANY PVT. LTD., OFFICE NO. 2, GROUND FLOOR, GULMOHAR COMPLEX, HSG. SOC. LTD, STATION ROAD,GOREGAON (EAST) MUMBAI 400063 PAN AADCR0694P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI D.G. PANSARI, D.R RESPONDENT BY: SHRI RAKESH MOHAN & SHRI SUNIL HIRAWAT, A.RS DATE OF HEARING: 24.06.2019 DATE OF PRONOUNCEMENT: 2 8 . 08 .2019 P A G E | 2 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 21, MUMBAI, DATED 20.03.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 2 7.03.2015 FOR A . Y. 2007 - 08. FURTHER, THE ASSESSEE IS ALSO BEFORE US AS A C ROSS - O BJECT OR . THE REVENUE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE L D. CIT (A) WAS CORRECT IN DELETING THE ADDITION OF RS.2,51,90,000/ - ON ACCOUNT OF SHARE PREMIUM/SHARE APPLICATION MONEY/UNEXPLAINED CASH CREDIT U/S.68 WITHOUT APPRECIATING THE FACT THAT SHRI PRAVEEN KUMAR JAIN WAS PROVED TO BE ONE OF LEADING ENTRY PROVIDERS OPERA TING IN MUMBAI WHO COULD NOT BE PRODUCED BY THE ASSESSEE AS HIS WITNESS DURING THE ASSESSMENT PROCEEDINGS BEFORE THE A.O. 2. THE APPELLA NT PRAYS THAT THE ORDER OF THE L D. CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORE D. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF APPEAL WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES , SECURITIES AND CLOTH ITEMS HAD FILED ITS RETURN OF INCOME FOR A.Y. 2007 - 08 ON 30.10.2007, DECLARING ITS TOTAL LOSS AT ( - ) RS. 30,93,251/ - . ASSESSMENT UNDER SEC. 143(3) , DATED 24.11.2009 WAS FRAMED IN THE HANDS OF THE ASSESSEE AND ITS LOSS WAS ASSESSED AT ( - ) RS. 29,97,800/ - . ON THE BASIS OF INFORMATION RECEIVED BY THE A.O FROM THE DGIT(INV.), MUMBAI, DATED 07.03.2014 THAT THE ASSESSEE AS A BENEFICIARY HAD OBTAINED ACCOMMODATION ENTR IES IN THE GARB OF SHARE CAPITAL AND/OR SHARE APPLICATION MONEY AMOUNTING TO RS.1, 3 0,00,000/ - DURING TH E YEAR UNDER CONSIDERATION VIZ. A.Y. 2007 - P A G E | 3 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. 08 THE CASE OF THE ASSESSEE WAS REOPENED UNDER SEC. 147 OF THE ACT. IN COMPLIANCE TO THE NOTICE ISSUED UNDER SEC. 148, IT WAS SUBMITTED BY THE ASSESSEE THAT ITS RETURN OF INCOME FILED UNDER SEC.139 MAY BE TREATED A S HAVING BEEN FILED IN COMPLIANCE TO THE SAID NOTICE. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O CALLED FOR DETAILS IN RESPECT OF THE 7 ENTITIES WERE SHOWN TO HAVE SUBSCRIBE D TO THE SHARE CAPITAL OF THE ASSESSEE COMPANY. FURTHER, I N ORDER TO VERIFY THE AUTHENTICITY OF THE AFORESAID TRANSACTION S THE A.O ISSUED NOTICES UNDER SEC. 133(6) OF THE ACT TO ALL THE 7 PARTIES. IN COMPLIANCE , REPLIES OF 6 PARTIES WERE RECEIVED BY THE A.O AND IN CASE OF ONE PARTY THE NOTICE WAS RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE ENDORSEMENT L EFT. INSPITE OF THE FACT THAT THE NOTICE COULD NOT BE SERVED ON ONE OF THE PARTY VIZ. M/S RAJLAXMI SECURITIES PVT. LTD., REPLY OF THE SAID PARTY WAS ALSO FILED WITH THE A.O . ON A PERUSAL OF THE CASE RECORDS A ND THE REPLIES RECEIVED IN RESPONSE TO THE NOTICES ISSUED UNDER SEC. 133(6) , IT WAS OBSERVED BY THE A.O , THAT THE SAME SUFFERED FROM CERTAIN INFIRMITIES, AS UNDER : SR. NO. NAME OF THE PARTY PARTICULARS 1. M/S ALKA DIAMOND INDUSTRIES THE SAID PARTY HAD C ONFIRMED ONLY RS.20 LAC AS AGAINST THE AMOUNT OF RS.36 LAC WHICH WAS SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. 2. M/S HEMA TRADING PVT. LTD. THE PARTY HAD CONFIRMED ONLY RS.15 LAC AS AGAINST TOTAL INVESTMENTS OF RS.30 LAC SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 3. M/S REAL GOLD TRADING PVT. LTD. THE PARTY HAD CONFIRMED RS.15 LAC AS AGAINST RS.30 LAC SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 4. M/S LEXUS INFOTECH LTD. THAT AS THE NOTICE UNDER SEC. 133(6) COU LD NOT BE SERVED ON THE SAID PARTY, THEREFORE THE A.O TREATED IT AS BOGUS PARTY. 5. M/S RAJLAXMI SECURITIES PVT. LTD. NOTICE WAS RETURNED. 6. M/S JAVADA INDIA IMPEX LTD. NO REPLY WAS RECEIVED BY THE A.O FROM THE SAID PARTY. THE ASSESSEE IN ORDER TO SUBSTANTIATE THE AUTHENTICITY OF THE AMOUNTS RECEIVED FROM THE AFORESAID SHARE APPLICA NTS FILED THEIR COPIES OF THE P A G E | 4 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. I NCOME TAX COMPUTATION S , COPIES OF THE RETURNS OF INCOME AND THE BANK STATEMENTS. FURTHER, THE AD D RE S SES OF THE 7 PARTIES WERE A LSO SUBMITTE D BY THE ASSESSEE. NOTICES UNDER SEC. 133(6) WHICH WERE NOW ISSUED BY THE A.O WERE RESPONDED BY ALL THE PARTIES. THE ASSESSEE FILED REPLIES BEFORE THE A.O IN RESPECT OF ALL THE 7 INVESTORS. AS REGARDS THE VARIANCE THAT HAD EMERGED ON THE BASIS OF THE REPLI ES RECEIVED IN RESPECT OF INVESTMENT S MADE BY THREE INVESTOR PARTIES VIZ. (I) M/S ALKA DIAMOND INDUSTRIES PVT. LTD; (II) M/S HEMA TRADING PVT. LTD.; AND (III) M/S REAL GOLD TRADING PVT. LTD. AS IN COMPARISON TO THAT SHOWN BY THE ASSESSEE IN ITS BOOKS OF A CCOUNTS , IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAID CONCERN S IN THEIR CONFIRMATIONS HAD NOT MENTIONED THE IR RESPECTIVE INVESTMENTS AND HAD ONLY ATTACHED THE SHARE APPLICATION FORMS AND THE BANK STATEMENTS FOR CONFIRMING THAT THEY HAD MADE INVESTMENT W ITH THE ASSESSEE COMPANY. THE ASSESSEE IN ORDER TO DISPEL ANY DOUBT S AS REGARDS THE GENUINENESS OF ITS AFORESAID CLAIM FILED THE COP IES OF THE BANK STATEMENTS AND THE SHARE APPLICATION FORMS FOR THE REMAINING AMOUNT OF INVESTMENT MADE BY THE AFORE SAID THREE PARTIES. FURTHER, IT WAS SUBMITTED BY THE ASSESSEE THAT SHARES WERE ALLOTTED TO THE SAID INVESTORS IN RESPECT OF BOTH THE SHARE APPLICATIONS AT THE SAME TIME. THE ASSESSEE ALSO FILED A VALUATION REPORT FOR JUSTIFYING THE SHARE PREMIUM CHARGED ON T HE SHARES WHICH WERE VALUED AT RS.103 / - PER SHARE. HOWEVER, THE A.O WAS NOT PERSUADED TO SUBSCRIBE TO THE CLAIM OF THE ASSESSEE AS REGARDS THE AUTHENTICITY OF ITS CLAIM OF HAVING RECEIVED GENUINE SHARE CAPITAL AND SHARE PREMIUM FROM THE AFOREMENTIONED PART IES. IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE DURING THE YEAR HAD CLAIMED TO HAVE RECEIVED SHARE CAPITAL OF RS. 27,56,000/ - AND SHARE PREMIUM OF RS.2,47,50,000/ - FR OM THE FOLLOWING 10 PARTIES: P A G E | 5 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. SR. NO. NAME OF THE ALLOTEES PAN NO. OF SHARES ALLOTTED F ACE VALUE PREMIUM 1. RAJLAXMI SECURITIES PVT. LTD. AAACR2632J 58000 580,000 5,220,000 2. ALKA DIAMOND INDUSTRIES LTD. AAACA5236D 36000 360,000 3,240,000 3. HEMA TRADING CO. PVT. LTD. AABCH4279G 3000 0 300,000 2,700,000 4. JAVDA INDIA IMPEX LTD. AAACA7065L 20000 200,000 1,800,000 5. KUSH HINDUSTAN ENTERTAINMENT LTD. AACCK3597M 25000 250,000 2,250,000 6. LEXUS INFOTECH LTD. AAACL4646G 15000 150,000 1,350,000 7. REAL GOLD TRADING CO. PVT. LTD. AACCR4512K 30000 300,000 2,700,000 8. VENUGUARD JEWELS LTD. AAACV3480A 15000 150,000 1,350,000 9. YASH V. JEWELS LTD. AAACY1119P 25000 250,000 2,250,000 10. PADAM JAIN - KARTA: PADAM JAIN HUF AAAHP5124N 21000 210,000 1,890,000 TOTAL 254000 27,50,000 2,47,50,000 THE AO WAS OF THE VIEW THAT EXCEPT FOR THE SHARE CAPITAL OF RS. 2,10,000/ - AND SHARE PREMIUM OF RS.18,90,000/ - THAT WAS RECEIVED BY THE ASSESSEE FROM ONE OF THE AFOREMENTIONED PARTY VIZ. MR. PADAM JAIN (DIRECTOR) KARTA OF PADAM JAIN, HUF, THE EXPLANATION OF THE ASSESSEE OF HAVING RECEIVED GENUINE SHARE CAPITAL AND SHARE PREMIUM FROM THE REMAINING PARTIES DID NOT MERIT ACCEPTANCE. ACCORDINGLY, THE A.O MADE AN ADDITION OF THE BALANCE SHARE CAPITAL OF RS.23,30,000/ - AND SHARE PREMIUM OF RS.2,28,60,000/ - UNDER SEC. 68 IN THE HANDS OF THE ASSESS EE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). AS REGARDS THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O UNDER SEC.147 OF THE ACT, IT WAS OBSERVED BY THE CIT(A) THAT AS THE RE WAS REQUISITE MATERIAL BEFORE THE A.O WHICH HAD LED TO THE FORM ATION OF THE BELIEF ON HIS PART THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THEREFORE, HE UPHELD THE SAME. HOWEVER, T HE P A G E | 6 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. CIT(A) AFTER DELIBERATI NG ON THE MERITS OF THE ADDITIONS MADE BY THE A.O WAS NOT PERSUADED TO SUBSCRIBE TO THE SAME. IT WAS NOTICED BY THE CIT(A) THAT THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS HAD DULY COMPLIED WITH THE DIRECTIONS OF THE A.O AND HAD SUBMITTED THE REQUISITE DETAILS AS WERE SOUGHT BY HIM TO SUPPOR T THE AUTHENTICITY OF THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED BY HIM FROM THE INVESTOR PARTIES VIZ. (I) COPIES OF THE RETURNS OF INCOME; (II) COPIES OF THE COMPUTATION OF INCOME FILED ALONG WITH THEIR RESPECTIVE RETURNS OF INCOME; AND (III) COPIES OF THE BANK STATEMENTS OF THE SHARE APPLICANTS. APART THERE FROM, IT WAS OBSERVED BY THE CIT(A) THAT THE COMPLETE ADDRESSES OF THE 7 SHARE APPLICANTS UNDER CONSIDERATION WAS ALSO SUBMITTED WITH THE A.O. FURTHER, THE CIT(A) OBSERVED THAT THE NOTICES ISSUED UND ER SEC.133(6) BY THE A.O WERE ALSO RESPONDED BY ALL THE PARTIES. AS REGARDS THE DISCREPANCIES PERTAINING TO THE ACTUAL INVESTMENTS MADE BY THREE OF THE SHARE APPLICANTS VIZ. (I) M/S ALKA DIAMOND INDUSTRIES LTD; (II) M/S HEMA TRADING PVT. LTD; AND (III) M/S REAL GOLD TRADING PVT. LTD., AS HAD INITIALLY EMERGED, IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE HAD DULY EXPLAINED THAT THE SAME HAD ARISEN FOR THE REASON THAT THE SAID RESPECTIVE PARTIES WHO HAD MADE THE INVESTMENTS VIDE TWO SHARES APPLICATION FOR MS HAD BY WAY OF AN OVERSIGHT INADVERTENTLY FURNISHED DETAILS ONLY IN RESPECT OF ONE SHARE APPLICATION FORM. IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESSEE I N ORDER TO DISPEL ANY DOUBT S AS REGARDS THE AUTHENTICITY OF ITS AFORESAID CLAIM HAD IN THE COURSE OF THE ASSESSMENT PROCEEDINGS PLACED ON RECORD THE COPY OF THE BANK STATEMENTS AND THE SHARE APPLICATION FORM S FOR THE REMAINING AMOUNT OF INVESTMENTS WHICH WERE MADE BY THE AFORESAID PARTIES. APART THERE FROM, IT WAS OBSERVED BY THE CIT(A) THAT THE ASSESS EE HAD IN ORDER TO JUSTIFY THE PREMIUM CHARGED HAD ALSO FILED THE VALUATION REPORT , AS PER WHICH , THE SHARES WERE VALUED AT RS.103 / - PER SHARE. AS REGARDS ONE OF THE SHARE APPLICANT VIZ. M/S P A G E | 7 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. RAJLAXMI SECURITIES PVT. LTD. ON WHOM THE NOTICE ISSUED UNDER S EC. 133(6) COULD NOT BE SERVED, IT WAS OBSERVED BY THE CIT(A) THAT THE NON - SERVICE OF THE SAID NOTICE WAS NEVER BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE BY THE A.O IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT WAS OBSERVED BY THE CIT(A) THAT IN CASE THE A.O WOULD HAD BROUGHT THE FACT AS REGARDS THE NON - SERVICE OF NOTICE UNDER SEC. 133(6) ON THE AFORESAID PARTY TO THE KNOWLEDGE OF THE ASSESSEE, THEN THE LATTER WOULD HAD PLACED ON RECORD THE REQUISITE DOCUMENTS TO SUBSTANTIATE THE AUTHENTICITY OF THE TRANSACTION WITH THE SAID PARTY. ALSO, IN THE CASE OF ANOTHER SHARE APPLICANT VIZ. M/S JAVDA INDIA IMPEX LTD. WHEREIN THE NOTICE ISSUED UNDER SEC. 133(6) WAS NEITHER RETURNED NOR CONFIRMED , THE CIT(A) WAS OF THE VIEW THAT IF THE SAID FACT WOULD HAVE BEEN BROUGHT TO THE NOTICE OF THE ASSESSEE THEN IT WOULD HAVE BEEN ABLE TO PLACE ON RECORD THE REQUISITE DOCUMENTS TO SUPPORT THE AUTHENTICITY OF ITS TRANSACTION WITH THE SAID PARTY. ON THE BASIS OF NECESSARY DELIBERATIONS, IT WAS OBSERVED BY THE CIT(A) THAT TH E ASSESSEE HAD DISCHARGED THE PRIMARY ONUS THAT WAS CAST UPON IT TO PROVE THE AUTHENTICITY OF ITS TRANSACTIONS WITH THE AFOREMENTIONED PARTIES BY PLACING ON RECORD SUPPORTING DOCUMENTARY EVIDENCE VIZ. (I) COPIES OF THE RETURNS OF INCOME OF THE INVESTOR PAR TIES; (II) COPIES OF THE PAN NO S . OF THE INVESTOR PARTIES; AND (III) COMPLETE DETAILS ALONGWITH THE ADDRESSES OF THE PARTIES. FURTHER, IT WAS OBSERVED BY THE CIT(A) THAT THE RECEIPT OF THE AMOUNTS FROM THE AFOREMENTIONED PARTIES HAD TAKEN PLACE THROUGH ACC OUNT PAYEE CHEQUE S AND NO CASH WAS FOUND DEPOSITED IN THE BANK ACCOUNT S OF EITHER OF THE SAID INVESTOR PARTY. ALSO, IT WAS NOTICED BY HIM THAT THE SHARE CERTIFICATES HAD BEEN ISSUED TO ALL THE AFORESAID PARTIES AND THE R EGISTRAR OF C OMPANIES WAS ALSO INFOR MED BY THE ASSESSEE. INTERESTINGLY, IT WAS NOTICED BY THE CIT(A) THAT ALL THE REQUISITE DOCUMENTARY EVIDENCE WERE FILED NOT ONLY ONCE BUT TWICE I.E AT THE TIME OF THE ORIGINAL ASSESSMENT , AND AGAIN AT THE P A G E | 8 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. TIME OF THE REASSESSMENT PROCEEDINGS. IT WAS OBSERV ED BY THE CIT(A) THAT THE A.O HAD NOT BROUGHT ON RECORD ANY EVIDENCE WHICH WOULD REVEAL THAT THERE WAS ANY CASH TRAIL IN RESPECT OF THE AMOUNTS RECEIVED BY THE ASSESSEE FROM THE AFORESAID PARTIES. IN FACT, IT WAS OBSERVED BY THE CIT(A) THAT THE A.O HAD NOT BEEN ABLE TO POINT OUT ANY SPECIFIC EVIDENCE WHICH WOULD REVEAL THAT THE ASSESSEE COMPANY HAD RECEIVED THE SHARE APPLICATION MONEY IN LIEU OF CASH PAID TO THE SAID RESPECTIVE PARTIES. FURTHER , IT WAS NOTICED BY THE CIT(A) THAT THE A.O IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS HAD HIMSELF ADMITTED THAT ALL THE 10 PARTIES HAD CONFIRMED OF HAVING MADE INVESTMENT S WITH THE ASSESSEE COMPANY . ALSO, IT WAS OBSERVED BY THE CIT(A) THAT THE 7 PARTIES IN RESPECT OF WHICH THE ASSESSMENT WAS REOPENED HAD ALS O IN THE COURSE OF THE REASSESSMENT PROCEEDINGS CONFIRMED THE IR RESPECTIVE INVESTMENT S IN THE SHARE CAPITAL/PREMIUM WITH THE ASSESSEE COMPANY. IN THE BACKDROP OF THE AFORESAID FACTS, THE CIT(A) HOLDING A CONVICTION THAT THE A . O HAD FAILED TO POINT OUT ANY REASON FOR NOT ACCEPTING THE AUTHENTICITY OF THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM THAT WAS RECEIVED BY THE ASSESSEE FROM THE AFOREMENTIONED PARTIES , DELETED THE RESPECTIVE ADDITION S THAT WERE MADE IN THE HANDS OF THE ASSESSEE VIZ. (I). SHARE CAP ITAL: RS.23,30,000/ - ; AND (II). S HARE PREMIUM: RS.2,28,60,000/ - . 5. T HE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPAL BEFORE US. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, THE ASSESSEE COMPANY HAD DURING THE YEAR UNDER CONSIDERATION RECEIVED SHARE CAPITAL OF RS. 27,50,000/ - AND SHARE PREMIUM OF RS.2,47,5 0,000/ - FROM 10 PARTIES. IN THE COURSE OF THE ORIGINAL ASSESSMENT COMPLETED UNDER SEC. 143(3), DATED P A G E | 9 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. 24.11.2009 THE A.O HAD AT PARA 9 ACKNOWLEDGED THAT ALL OF THE 10 PARTIES HAD CONFIRMED THE INVESTMENTS OF RS.2,47,50,000/ - . HOWEVER, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV.) , MUMBAI, THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTR IES TOWARDS SHARE APPLICATION MONEY FROM 7 PARTIES AMOUNTING TO RS.1,30,00,000/ - THE CASE OF THE ASSESSEE WAS REOPENED UNDER SEC. 147 OF THE ACT. WE FIND TH AT IN THE COURSE OF THE REASSESSMENT PROCEEDINGS ALSO THE AFOREMENTIONED 7 PARTIES HAD ONCE AGAIN CONFIRMED THE IR RESPECTIVE INVESTMENT S BY WAY OF SHARE CAPITAL AND SHARE PREMIUM WITH THE ASSESSEE COMPANY. APART THERE FROM, WE FIND THAT THE ASSESSEE IN ORD ER TO DISCHARGE THE ONUS THAT WAS CAST UPON IT AS REGARDS PROVING THE AUTHENTICITY OF THE TRANSACTIONS WITH THE AFORESAID INVESTORS HAD ALSO PLACED ON RECORD THE REQUISITE DOCUMENTARY EVIDENCE VIZ. (I) COMPLETE DETAILS OF THE ADDRESSES OF THE RESPECTIVE PARTIES ; (II) COPIES OF THE RETURN S OF INCOME OF THE PARTIES; AND (III) COPIES OF THE PAN OF THE SAID RESPECTIVE PARTIES. ALSO, AS OBSERVED BY THE CIT(A) , THE SHARES CERTIFICATES HAD BEEN ISSUED TO ALL OF THE AFORESAID PARTIES AND IN COMPLIANCE OF THE OBLI GATION CAST AS PER THE MANDATE OF LAW THE REGISTRAR OF COMPANIES WAS ALSO INFORMED. INTERESTINGLY, AS OBSERVED BY US HEREINABOVE, THE AFORESAID DOCUMENTARY EVIDENCE S WERE FILED BY THE ASSESSEE NOT ONLY ONCE BUT TWICE I.E AT THE TIME OF THE O RIGINAL ASSESSMENT AND AGAIN IN THE COURSE OF THE REASSESSMENT PROCEEDINGS. FURTHER, A S IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES , ALL THE AFORESAID TRANSACTIONS O F RECEIPT OF AMOUNTS FROM THE AFOREMENTIONED PARTIES WERE THROUGH ACCOUNT PAYEE CHEQUE S AND NO CASH WAS FOUND TO HAVE BEEN DEPOSITED IN ANY OF THE BANK ACCOUNT S OF EITHER OF THE AFOREMENTIONED INVESTORS . A PERUSAL OF THE ORDER OF THE CIT(A) REVEALS THAT THE A.O HAD NOT BROUGHT ON RECORD ANY MATERIAL WHICH WOULD SHOW THAT THE TRANSACTION OF THE ASSESSEE WITH THE AFOREMENTIONED PARTIES WAS NOT GENUINE. IN FACT, WE FIND THAT EVEN IN P A G E | 10 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. THE COURSE OF THE R EMAND PROCEEDING S THE A.O COULD NOT PLACE ON RECORD ANY DOCUMENTARY EVIDENCE WHICH COULD DISLODGE THE CLAIM OF THE ASSESSEE THAT IT HAD ENTE RED INTO GENUINE TRANSACTIONS WITH THE AFOREMENTIONED PARTIES. AS OBSERVED BY THE CIT(A) , WE FIND THAT NO EVIDENCE WAS BROUGHT ON RECORD BY THE A.O WHICH COULD SHOW ANY CASH TRAIL IN RESPECT OF THE AMOUNTS THAT WERE RECEIVED BY THE ASSESSEE FROM THE CONCER NED INVESTORS PARTIES . AS REGARDS THE CREDITWORTHINESS OF THE INVESTOR PARTIES, THE DETAILS FILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS REVEALED THE FINANCIALS OF THE SAID RESPECTIVE PARTIES, AS UNDER : SR. NO. NAME OF THE SHAREHOLD ER TOTAL AMOUNT INVESTED SHARE CAPITAL AND RESERVE S PROFIT AS PER P & L ACCOUNT. 1. M/S RAJLAXMI SECURITIES P. LTD. (MERGED WITH RELIANCE LIFE SCIENCES P. LTD. W.E.F 1.04.2005) 58,00,000 89,73,46,000 9,55,46,000 2. M/S ALKA DIAMOND INDUSTRIES LTD. 36,00,000 8,85,42,697 7,04,781 3. M/S HEMA TRADING CO. PVT. LTD. 30,00,000 2,33,26,373 8,74,231 4. M/S JAVDA INDIA IMPEX LTD. 20,00,000 4,78,74,058 19,99,371 5. M/S KUSH HINDUSTAN ENTERTAINMENT LTD. 25,00,000 3,58,30,148 9,41,041 6. M/S LEXUS INFOTECH LTD. 15,00,000 3,04,05,264 9,74,381 7. M/S REALGOLD TRADING P. LTD. 30,00,000 2,26,22,501 9,01,383 8. M/S VENGUARD JEWELS LTD. 15,00,000 4,87,17,269 5,55,237 9. M/S YASH V. JEWELS LTD. 25,00,000 3,85,79,248 8,92,825 10. PADAM JAIN HUF 21,00,000 N.A. N.A TOTAL 2,75,00,000 6. WE FIND THAT THE A.O HAD NOT BEEN ABLE TO DISLODGE THE CREDITWORTHINESS OF THE AFOREMENTIONED PARTIES AT SERIAL NO. 1 TO 9 BY PLACING ON RECORD ANY DOCUMENTARY EVIDENCE PROVING TO THE CONTRARY. IN FACT, WE FIND THAT THOUGH THE CIT(A) IN THE COURSE OF THE REMAND PROCEEDINGS HAD SPECIFICALLY ASKED THE A.O TO FURNISH THE SPECIFIC INCRIMINATING EVIDENCE, HOWEVER, HE HAD FAILED TO PLACE ON RECORD ANY P A G E | 11 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. SUCH EVIDENCE WHICH WOULD REVEAL THAT THE SHARE APPLICATION MONEY /SHARE PREMIUM WAS RECEIVED BY THE ASSESSEE IN LIEU OF CASH. ALSO, WE FIND THAT THE A.O HAD NOT DEALT WITH AND CONSIDERED THE RETRACTION OF SHRI PRAVIN KUMAR JAIN, WHEREIN HE HAD CLAIMED THAT AS HIS STATEMENT RECORDED AT THE TIME OF SEARCH WAS UNDER UNDUE PRESSUR E , THEREFORE, FOR THE SAID REASON THE SAME HAD BEEN RETRACTED BY HIM. ON THE BASIS OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD DULY SUBSTANTIATED THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR PARTIES, AND ALSO HA D PROVED THE GENUINENESS OF THE TRANSACTION OF RECEIPT OF SHARE APPLICATION MONEY FROM THE AFOREMENTIONED RESPECTIVE PARTIES. IN FACT, WE FIND THAT THE A.O HAD FAILED TO DEMONSTRATE ON THE BASIS OF ANY IRREFUTABLE DOCUMENTARY EVIDENCE WHICH COULD HAVE PERSU ADED US TO SUBSCRIBE TO HIS VIEW THAT THE ASSESSEE COMPANY HAD NOT ENTERED INTO ANY GENUINE TRANSACTIONS WITH THE AFOREMENTIONED PARTIES AND HAD MERELY OBTAINED ACCOMMODATION ENTRIES IN THE GARB OF THE AFOREMENTIONED TRANSACTIONS . AS A MATTER OF FACT, WE F IND THAT THE ENTIRE ADDITION MADE BY THE A.O IS ON THE BASIS OF THE INFORMATION RELATED TO THE OUTCOME OF THE SEARCH PROCEEDINGS CONDUCTED IN THE CASE OF SHRI PRAVIN KUMAR JAIN, AN INFAMOUS ACCOMMODATION ENTRY PROVIDER. AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, THE A.O NEITHER IN THE COURSE OF THE ASSESSMENT OR THE REMAND PROCEEDINGS HAD PLACED ON RECORD ANY MATERIAL WHICH WOULD DISLODGE THE CLAIM OF THE ASSESSEE THAT IT HAD ENTERED INTO GENUINE TRANSACTIONS WITH THE AFOREMENTIONED PARTI ES. ACCORDINGLY, ON THE BASIS OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD DULY DISCHARGED THE ONUS THAT WAS CAST UPON IT AS REGARDS PROVING THE AUTHENTICITY OF THE TRANSACTIONS INVOLVING THE RECEIPT OF SHARE APPLICA TION MONEY FROM THE AFOREMENTIONED PARTIES. AS REGARDS THE DISCREPANCIES WHICH HAD INITIALLY EMERGED VIZ. (I) NON - AVAILABILITY OF THE PARTIES AT THE ADDRESSES; P A G E | 12 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. AND (II) DIFFERENCE IN THE AMOUNT OF INVESTMENT MADE BY THREE SHARE APPLICANTS VIZ. M/S ALKA DIA MOND INDUSTRIES LTD , M/S HEMA TRADING PVT. LTD. AND M/S REAL GOLD TRADING PVT. LTD., THE SAME AS OBSERVED BY US HEREINABOVE WAS DULY EXPLAINED AND RECONCILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS ITSELF. FURTHER, AS REGARDS THE RETURN OF NOTICES ISSUED UNDER SEC. 133(6) TO ONE OF THE SHARE APPLICANT VIZ. M/S RAJLAXMI SECURITIES PVT. LTD., WE FIND THAT THE CIT(A) HAD RIGHTLY OBSERVED THAT THE A.O WAS IN ERROR IN NOT INTIMATING THE SAID FACT TO THE ASSESSEE. BE THAT AS IT MAY, WE FIND THAT AS THE REQUISITE CONFIRMATION ALONG WITH OTHER SUPPORTING DOCUMENTARY EVIDENCE AS REGARDS THE INVESTMENT MADE BY THE SAID PARTY WAS PLACED ON RECORD BY THE ASSESSEE , THEREFORE, THERE WAS NO PLAUSIBLE REASON FOR DRAWING OF ANY ADVERS E INFERENCES IN RESPECT OF THE INVESTMENT MADE BY THE SAID CONCERN. SIMILARLY, IN THE CASE OF M/S JAVDA INDIA IMPEX LTD. WHERE NEITHER THE NOTICE ISSUED UNDER SEC.133(6) WAS RETURNED NOR ANY CONFIRMATION WAS RECEIVED, WE ARE IN AGREEMENT WITH THE VIEW TAKE N BY THE CIT(A) THAT THE A.O WAS IN ERROR IN NOT BRINGING THE SAID FACT TO THE NOTICE OF THE ASSESSEE. HOWEVER, AS THE ASSESSEE HAD ALSO SUBSTANTIATE D THE GENUINENESS OF THE INVESTMENT MADE BY THE SAID PARTY BY PLACING ON RECORD SUPPORTING DOCUMENTARY EVID ENCE WHICH HAD NOT BEEN REBUTTED BY THE A.O, THEREFORE, THE CIT(A) HAD RIGHTLY VACATED THE ADDITION MADE BY THE A.O IN RESPECT OF THE INVESTMENT MADE BY THE SAID PART Y . WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS NOT FINDING ANY INFIRMITY IN THE ORDER O F THE CIT(A), WHO WE FIND HAD AFTER EXTENSIVE DELIBERATIONS RIGHTLY DELETED THE ADDITION MADE BY THE A.O TOWARDS VIZ. (I). S HARE CAPITAL OF RS.23,30,000/ - ; AND (II). S HARE PREMIUM OF RS.2,28,60,000/ - UNDER SEC. 68 OF THE ACT, UPHOLD HIS ORDER. 7. THE APPEA L FILED BY THE REVENUE IS DISMISSED. P A G E | 13 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. C.O. 291/MUM/2018 (ARISING OUT OF ITA NO.4139/MUM/2017) 8 . THE ASSESSEE HAS RAISED BEFORE US THE FOLLOWING CROSS OBJECTION S : 1. O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE RESPONDENT CHALLENGES THE RE - OPENING U/S. 148 ISSUED BY ASSESSING OFFICER IS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ALTERNATIVELY THE RESPONDENT PLEASE THAT THE LEARNED CIT(A) HAS NOT DECIDED THE ISSUE RAISED BY RESPONDENT ON RE - OPENING U/S.148 OF THE ACT BY THE ASSESSING OFFICER IS BAD IN LAW AND AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 9 . WE FIND THAT THE ONLY EFFECTIVE OBJECTION OF THE ASSESSEE IS THAT THE CIT(A) HAD ERRED IN NOT DECIDING THE ISSUE PERTAINING TO THE VALI DITY OF THE REOPENING OF THE ASSESSMENT UNDER SEC.148 BY THE A.O. WE HAVE PERUSED THE ORDER OF THE CIT(A) AND FIND THAT THE LATTER HAD AFTER EXTENSIVE DELIBERATIONS AT PAGE 3 TO 5 PARA 4.1 - 4.2 SPECIFICALLY DISPOSE D OFF THE OBJECTION OF THE ASSESSEE AS R EGARDS THE VALIDITY OF THE JURISDICTION ASSUMED BY THE A.O UNDER SEC. 147 OF THE ACT . ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE AFORESAID OBJECTION RAISED BY THE ASSESSEE IS MISCONCEIVED AND MISPLACED . WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS DISMISS THE C ROSS O BJECTION FILED BY THE ASSESSEE. 10. THE C ROSS O BJECTION FILED BY THE ASSESSEE IS DISMISSED. 11. THE APPEAL OF THE REVENUE AS WELL AS THE C ROSS O BJ ECTION FILED BY THE ASSESSEE ARE DISMIS SED. ORDER PR ONOUNCED IN THE OPEN COURT ON 2 8 . 08 .2019 S D / - S D / - ( SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 28 . 08 .2019 PS. ROHIT P A G E | 14 ITA NO.4139/MUM/2017 & C.O. NO. 291/MUM/2018 (ARISING OUT ITA NO. 4139/MUM/2017) AY. 2007 - 08 ITO VS. M/S RICHTIME TRADING CO. PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI