SWETA SYNTHEITCS P.LTD, MUMBAI V. ITO 4(3)(4), MUMBAI

CO 46/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7984 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 30-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SATISH RAJORE
• Assessee Lawyers: N R AGRAWAL; JENISHA MEHTA
• Keywords: Bogus purchase; Bogus Share capital; Gift; Transfer pricing; Search and seizure; Charitable institution; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Source of fund; Additional evidence; Question of law; Fair market value; Third party statement; Accommodation entries; Capital receipt; Onus to prove; Retraction; Set aside
• Section: 133(6); 195; 131; 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI PAWAN SINGH , JM & SHRI M.BALAGANESH, AM ITA NO. 3000 /MUM/201 7 ( ASSESSMENT YEAR : 2007 - 08 ) ITO 4(3)(4) R.NO.637, 6 TH FLOOR AAYAKAR BHAVAN MUMBAI 400 020 VS. M/S. SWETA SYNTHET ICS PVT. LTD., 219/221, MEHTA MANSION ZAVERI BAZAR, KALBADEVI ROAD MUMBAI - 02 PAN/GIR NO. AAACS9101K (APPELLANT ) .. (RESPONDENT ) CO NO.46/MUM/2019 (ARISING OUT OF ITA NO. 3000 /MUM/201 7) ( ASSESSMENT YEAR : 2007 - 08 ) M/S. SWETA SYNTHETICS PVT. LTD., 219/ 221, MEHTA MANSION ZAVERI BAZAR, KALBADEVI ROAD MUMBAI - 02 VS. ITO 4(3)(4) R.NO.637, 6 TH FLOOR AAYAKAR BHAVAN MUMBAI 400 020 PAN/GIR NO. AAACS9101K (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI SATISH RAJORE ASSESSEE BY SHRI N.R.AGRAWAL & MS. JENI SHA MEHTA DATE OF HEARING 12 / 06 /2019 DATE OF PRONOUNCEMENT 12 / 07 /2019 ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 2 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 3000/MUM/2017 AND CO NO.46/MUM/2019 FOR A.Y. 2007 - 08 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 9, MUMBAI IN APPEAL NO. CIT(A) - 9/CIR - 4/155/2015 - 16 DATED 16/01/2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 25/03/2015 BY THE LD. INCOME TAX OFFICER 4(3)(4), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). 2. A T THE OUTSET, THE LD AR STATED BEFORE US THAT HE IS NOT PRESSING THE CROSS OBJECTION PREFERRED BY THE ASSESSEE. THE SAME IS RECKONED AS A STATEMENT MADE FROM THE BAR AND ACCORDINGLY THE CROSS OBJECTIONS OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. 3. THE ONLY ISSUE TO BE DECIDED IN THE APPEAL OF THE REVENUE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS SHARE APPLICATION MONEY IN THE SUM OF RS 2,41,20,000/ - U/S 68 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN SUITING AND SHIRTINGS. THE RETURN OF INCOME FOR THE ASST YEAR 2007 - 08 WAS ELECTRONICALLY FILED BY THE ASSESSEE DECLARING TOTAL INCOME AT RS NIL. THE CASE WAS REOPENED U/S 147 OF THE ACT BY ISSUANCE OF NOTICE U/S 148 OF THE ACT DATED 24.3.2014 ON THE BASIS OF INFORMATION RECEIVED FROM DDIT (INV. - UNIT III(2)) , MUMBAI THAT IN THE STATEMENT RECORDED IN SEARCH AND SEIZURE ACTION CARRIED OUT IN THE CASE OF SHRI P RAVEEN KUMAR JAIN GROUP ON 1.10.2013, HE HAD ADMITTED ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 3 THAT THE ONLY ACTIVITY CARRIED OUT BY ALL THE CONCERNS CONTROLLED BY HIM WAS TO PROVIDING ACCOMMODATION ENTRIES. 4.1. THE LD AO OBSERVED THAT DURING THE YEAR THE ASSESSEE RECEIVED SHARE APPLICATION M ONEY WITH PREMIUM ON ACCOUNT OF PRIVATE PLACEMENT TO COMPANIES TOTALING TO RS 2,41,20,000/ - AS UNDER: - NAKSHATRA BUSINESS PVT LTD (HEMA TRADING COMPANY PVT LTD) - RS 25,20,000/ - JAVDA INDIA IMPEX LTD - RS 25,20,000/ - KUSH HINDUSTHAN ENTERTAINMENT LT D - RS 64,20,000/ - OLIVE OVERSEAS PVT LTD ( REAL GOLD TRADING CO. PVT LTD ) - RS 25,20,000/ - LEXUS INFOTECH LTD - RS 25,20,000/ - ---------------------- RS 1,65,00,000/ - REYNOLDS PETRO CHEM LTD RS 51,00,000/ - UTKANTHA TRADING PVT LTD RS 25,20,000/ - ------------------------ TOTAL RS 2,41,20,000/ - ------------------------ 4.2. THE LD AO ISSUED A SHOW CAUSE NOTICE ON 3.3.2015 TO THE ASSESSEE WHEREIN IT WAS MENTIONED THAT THE SEARCH ACTION IN THE CASE O F SHRI PRAVEEN KUMAR JAIN AND HIS GROUP RESULTED IN COLLECTION OF EVIDENCES AND OTHER FINDINGS, WHICH CONCLUSIVELY PROVED THAT SHRI PRAVEEN KUMAR JAIN, THROUGH A WEB OF CONCERNS RUN, OPERATED AND CONTROLLED BY HIM WAS ENGAGED ONLY IN PROVIDING ACCOMMODATIO N ENTRIES OF VARIOUS NATURE LIKE BOGUS UNSECURED LOANS, BOGUS SHARE APPLICATION MONEY , BOGUS SALES ETC. THE SAID SHOW CAUSE NOTICE ALSO MENTIONED THAT ON VERIFICATION OF THE DATA GATHERED DURING THE COURSE OF SEARCH ACTION OF SHRI PRAVEEN ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 4 KUMAR JAIN, IT WAS FOUND THAT THE PERSONS, WHICH ARE CLAIMED TO HAVE INVESTED IN ASSESSEES COMPANY TO ACQUIRE SHARES ON PREMIUM , ARE THE CONCERNS OPERATED AND / OR CONTROLLED BY SHRI PRAVEEN KUMAR JAIN. ACCORDINGLY, THE LD AO CONCLUDED THAT THE ASSESSEE COMPANY HAD B ROUGHT ITS UNACCOUNTED MONEY INTO THE BOOKS IN THE GARB OF SHARE CAPITAL THROUGH ACCOMMODATION ENTRIES PROVIDED BY SHRI PRAVEEN KUMAR JAIN AND HIS GROUP CONCERNS AND AS TO WHY THE SAME SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE COMPANY U/S 68 OF THE A CT. 4.3. THE ASSESSEE SUBMITTED THAT IT HAD NOT RECEIVED ANY ACCOMMODATION ENTRIES FROM ANY ACCOMMODATION ENTRY PROVIDER AND THAT THE AMOUNTS RECEIVED TOWARDS SHARE CAPITAL / APPLICATION MONEY WITH PREMIUM ARE GENUINE TRANSACTIONS AND THE SHARES WERE ACT UALLY ALLOTTED TO THOSE INVESTORS. THE ASSESSEE SUBMITTED THE DETAILS OF THE SAME AS UNDER: - 4.4. THE ASSESSEE ALSO SUBMITTED THE FOLLOWING DOCUMENTS IN SUPPORT OF THE AFORESAID RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM : - SWETA SYNTHETICS PVT LTD SL. NO DATE NAME OF THE INVESTOR NO. OF FACE PREMIUM EQUITY EQUITY TOTAL SHARES VALUE PER S HARE CAPITAL PREMIUM 1 7.7.06 KUSH HINDUSTHAN ENTERTAINMENT LTD 107000 10 50 1070000 5350000 6420000 2 20.6.06 REYNOLDS PETRO CHEM LTD 85000 10 50 850000 4250000 5100000 3 25.7.06 JAVDA INDIA IMPEX LTD 42000 10 50 420000 2100000 252000 0 4 25.7.06 LEXUS INFOTECH LTD 42000 10 50 420000 2100000 2520000 5 25.7.06 UTKANTHA TRADING PVT LTD 42000 10 50 420000 2100000 2520000 6 25.7.06 HEMA TRADING COMPANY PVT LTD 42000 10 50 420000 2100000 2520000 7 25.7.06 REAL GOLD TRADING CO. PVT LTD 42 000 10 50 420000 2100000 2520000 402000 4020000 20100000 24120000 ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 5 A) SHARE APPLICATION FORMS MADE BY ALL THE ABOVE COMPANIES DULY SIGNED BY THEIR RESPECTIVE AUTHORIZED SIGNATORIES. B) CONFIRMATION FROM THE ABOVE PARTIES CONFIRMING THAT THE PAYMENTS HAVE BEEN MADE THROUGH REGULAR BANKING CHANNELS, GIVING THE DETAILS OF THE SAME AND STATING THAT T HE PAYMENTS HAVE BEEN MADE FOR THE PURPOSE OF SHARE APPLICATION. C) BOARD RESOLUTION RESOLVING THAT THE COMPANY HAS APPLIED FOR EQUITY SHARES OF ASSESSEE COMPANY AND SANCTIONING THE PERMISSION FOR UTILIZATION OF FUNDS. D) COPY OF PAN CARD OF ALL THE ABOV E COMPANIES PROVING THEIR IDENTITY. E) COPY OF FINANCIAL STATEMENTS OF THE ABOVE COMPANIES AS A PROOF OF CREDITWORTHINESS OF THE INVESTORS TO MAKE INVESTMENT IN ASSESSEE COMPANY. IN THE SAID FINANCIAL STATEMENTS, THE FACT OF INVESTMENTS MADE IN ASSESSEE COMPANY WAS DULY REFLECTED. F) BANK STATEMENTS OF ALL THE ABOVE COMPANIES SHOWING THE PAYMENT OF ABOVE SHARE APPLICATION MONEY HAS BEEN DONE THROUGH BANK ACCOUNT OF THE ABOVE COMPANIES AND THEREFORE TRANSACTIONS ARE TOTALLY VALID AND GENUINE WHICH IS MAD E OUT OF COMPANIES OWN SOURCE. G) MEMORANDUM AND ARTICLES OF ASSOCIATION OF ALL THE ABOVE COMPANIES TOGETHER WITH THE CERTIFICATE OF INCORPORATION OF THE AFORESAID COMPANIES. H) COPY OF INCOME TAX RETURNS FILED BY ALL THE ABOVE COMPANIES. I) EVIDENCE TO PROVE THAT THE AFORESAID COMPANIES ARE STILL SHOWN IN ACTIVE CATEGORY IN THE RECORDS OF REGISTRAR OF COMPANIES. J) AFFIDAVITS OF DIRECTORS OF SUBSCRIBER COMPANIES AFFIRMING THE FACT OF MAKING INVESTMENT IN SHARES OF THE ASSESSEE COMPANY WITH PREMIUM. K) COPY OF FORM NO.2 FILED WITH REGISTRAR OF COMPANIES EVIDENCING THE ALLOTMENT OF EQUITY SHARES TO THE AFORESAID INVESTORS. 4.5. THE ASSESSEE ALSO MADE SOME LEGAL SUBMISSIONS THAT THE AMOUNTS RECEIVED TOWARDS SHARE CAPITAL AND SHARE PREMIUM FROM THE A FORESAID INVESTORS CANNOT BE TAXED AS INCOME IN THE HANDS OF THE ASSESSEE COMPANY MERELY BASED ON THE RELIANCE OF THE STATEMENT RECORDED FROM ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 6 SHRI PRAVEEN KUMAR JAIN , WHICH HAD ALSO BEEN SUBSEQUENTLY RETRACTED BY HIM. IT WAS ALSO SUBMITTED THAT SHRI PRAVE EN KUMAR JAIN WAS NEITHER A DIRECTOR NOR A SUBSTANTIAL SHAREHOLDER IN THE AFORESAID INVESTOR COMPANIES. WHILE THAT BE SO, HOW CAN HE BE CONTROLLING THOSE ENTITIES. HENCE ANY STATEMENT GIVEN BY HIM WHO DOES NOT POSSESS ANY POWER IN THOSE INVESTOR COMPANI ES, CANNOT BE ACCEPTED IN THE EYES OF LAW. HENCE IT WAS SUBMITTED THAT THE ALLEGATION LEVELED IN THIS REGARD WAS NOT WARRANTED. 5. THE LD AO HOWEVER COMPLETELY DISREGARDED ALL THE AFORESAID EVIDENCES AND EXPLAINED THE MODUS OPERANDI ADOPTED BY SHRI PR AVEEN KUMAR JAIN WITH THE HELP OF CERTAIN BROKERS AND HOW THE UNACCOUNTED MONEY WAS LAUNDERED BY VARIOUS CONCERNS IN THE FORM OF BOGUS PURCHASES, BOGUS UNSECURED LOANS AND BOGUS SHARE CAPITAL AND PREMIUM. THE LD AO IN PARA 3.19 OF HIS ORDER ACCEPTED THE FACT OF RETRACTION STATEMENT OF SHRI PRAVEEN KUMAR JAIN SUBMITTED BEFORE THE INVESTIGATION WING AND OBSERVED THAT THE SAME CANNOT BE ACCEPTED AS RETRACTION WAS DONE AFTER A CONSIDERABLE LAPSE OF TIME. ACCORDINGLY, THE LD AO PROCEEDED TO TREAT THE SUM OF RS 2,41,20,000/ - BEING SHARE APPLICATION MONEY / SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM AFORESAID 7 PERSONS AS INCOME U/S 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE ASSESSEE BEFORE THE LD CITA REITERATED THE CONTE NTIONS RAISED BEFORE THE LD AO APART FROM PLACING RELIANCE ON VARIOUS DOCUMENTARY EVIDENCES AS LISTED ABOVE. THE ASSESSEE ALSO SUBMITTED THAT ASSESSEE HAD REQUESTED FOR A COPY OF THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN BEFORE THE LD AO WHICH WAS THE MAIN BASIS FOR MAKING THE ENTIRE ADDITION IN THE HANDS OF THE ASSESSEE. IT WAS PLEADED THAT THE LD AO HOWEVER, DID NOT PROVIDE THE STATEMENT COPY / EXTRACT OF THE STATEMENT TO THE ASSESSEE. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 7 NO OPPORTUNITY TO CROSS EXAMINE SHRI PRAVEEN KUMAR JAIN WAS ALSO AF FORDED TO THE ASSESSEE BY THE LD AO. 7. THE LD CITA OBSERVED IN HIS ORDER AS UNDER: - 6.3.1 I HAVE CONSIDERED THE STAND OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS FILED BY THE AR OF THE APPELLANT. IT HAS BEEN OBSERVED BY THE AO THAT DU RING THE COURSE OF SEARCH IN THE CASE OF SHRI PRAVIN BY THE INVESTIGATION WING, IT WAS STATED BY SHRI PRAVIN KUMAR JAIN THAT HE WAS INDULGING IN PROVIDING ACCOMMODATION ENTRY TO VARIOUS PARTIES THROUGH VARIOUS CONCERNS. FURTHER OBSERVATIONS OF THE AO HAS A LREADY BEEN DISCUSSED IN EARLIER PARAGRAPHS. THE ABOVE BEING THE BASIC THRUST OF THE CASE AGAINST THE APPELLANT, THE IMPUGNED ASSESSMENT ORDER NEEDS TO BE EXAMINED TO FIGURE OUT THE QUALITY OF APPELLANT - SPECIFIC EVIDENCE, IF ANY AVAILABLE. BEFORE PROCEEDI NG FURTHER IT WILL BE PERTINENT TO EXAMINE THE FOLLOWING QUESTIONS WHICH MAY BE HELPFUL IN DECIDING THE ISSUE. A. WHAT IS THE NATURE OF EVIDENCE THAT HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE LENDER PARTIES, WHO ADVANCED THE IMPUGNED SHARE CAPITAL/SH ARE APPLICATION TO THE P APPELLANT, WERE BENAMIS OF SHRI PRAVIN JAIN? B. IS THERE ANY MATERIAL THAT HAS BEEN BROUGHT OUT BY THE AO TO SHOW THAT THE SHARE APPLICATION MONEY IN QUESTION ARE PAPER ENTRIES PURCHASED AGAINST PAYMENT OF UNACCOUNTED CASH? C. HAS THE ASSESSING OFFICER BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT COMMISSION WAS PAID TO SHRI PRAVIN JAIN? 6.3.2. FIRST OF ALL, IT WOULD BE WORTHWHILE TO EXAMINE THE IMPUGNED ASSESSMENT ORDER WITH REGARD TO MATERIAL THAT SHOWS THAT THE HAWALA RACKET WAS RUN THROUGH BENAMI ENTITIES OF SHRI PRAVIN JAIN. IN THIS REGARD, IT MAY BE MENTIONED THAT: A. IN THE ASSESSMENT ORDER, THE AO HAS RELIED UPON THE GENERAL STATEMENT GIVEN BY SHRI PRAVIN JAIN. B. ACCORDING TO THE AO, THESE CONCERNS WERE DUMMY CONCERNS USE D BY SHRI PRAVIN JAM IN THE RUNNING HIS HAWALA RACKET. HOWEVER, NO DETAILS OF THE EVIDENCE, IF ANY COLLECTED FROM THESE PERSONS REGARDING THEIR ROLE IN THE ALLEGED HAWALA RACKET, HAS BEEN MENTIONED. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 8 C. WHEN IT COMES TO DETAILING THE ADVERSE MATERIAL, IF AN Y, THE AO, MERELY REFERS TO STATEMENTS MADE SHRI PRAVIN JAIN. HOWEVER, AO NOT MENTIONED ANYWHERE IN THE ASSESSMENT ORDER WHETHER THESE CONCERNS/PARTIES FROM WHOM THE APPELLANT HAS TAKEN SHARE APPLICATION MONEY, ARE TREATED AS NON - GENUINE BORROWINGS BY THE AO. 6.3.3. CERTAIN CONCLUSIONS ARE OBVIOUS, ONE, THE AO HIMSELF IS NOT SO CLEAR ABOUT FACTS AND HAS REFERRED TO MOSTLY THE MATERIAL FACTS WHICH ARE NOT RELEVANT TO THE CASE. TWO, THE AO HAS REFERRED TO ANY ADVERSE MATERIAL IN THE CASES OF SHARE APPLICA NTS THAT ARE BEING DUBBED BY HIM TO BE BENAMIS OF SHRI PRAVINJAIN. 6.3.4. HENCE, IT IS TO BE INFERRED THAT THE QUALITY OF EVIDENCE, SPECIFIC TO THE APPELLANT IS BUT POOR AND NOT FULLY RELIEF UPON. THIS FLAW 7 IS FURTHER MAGNIFIED AS THE ADVERSE MATERIAL IF ANY (REPORT OF THE INVESTIGATION WING AND ALLEGED CONFESSIONAL STATEMENTS OF SHRI PRAVIN JAIN AND OTHERS) HAVE NEVER BEEN BROUGHT ON RECORD BY MAKING THEM AVAILABLE TO THE APPELLANT. FROM THE IMPUGNED ASSESSMENT ORDER, IT IS SEEN THAT THOUGH THE AO APPEAR S TO HAVE TAKEN THE VIEW THAT THE IMPUGNED SHARE APPLICANTS ARE MERE ENTRY PROVIDERS AND THAT THE IMPUGNED SHARE APPLICATION MONEY ENTRIES HAVE BEEN OBTAINED BY THE APPELLANT AGAINST PAYMENTS MADE TO THE SAID ENTRY PROVIDERS IN CASH, WHO SPECIFIC MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT CREDITORS, FROM WHOM THE IMPUGNED SHARE MONEY OF RS.66,00,000/ - WERE TAKEN ARE ENTRY PROVIDERS AND THAT ENTRIES FOR THE SHARE APPLICATION MONEY IN QUESTION HAVE ACTUALLY BEEN OBTAINED AGAINST PAYMENTS MADE BY THE APP ELLANT IN CASH OUTSIDE REGULAR BOOKS OF ACCOUNT. THERE IS NO EVIDENCE BROUGHT ON RECORD FOR PAYMENT OF ANY COMMISSION OR FEE HAVING BEEN MADE BY THE APPELLANT THAT AO HAS PASSED THE ORDER ON THE BASIS OF MERE CONJECTURES AND SURMISES, WITHOUT BOTHERING TO BRING ANY CONCRETE MATERIAL ON RECORD: 6.3.5. THE APPELLANT, HAD FURNISHED VARIOUS DETAILS REGARDING THE LENDERS - THEIR NAMES, PAN, CONSTITUTION, NAMES OF PROPRIETOR/PARTNER/DIRECTOR BEFORE THE AO. FURTHER, THE APPELLANT PROVIDED COPIES OF ACKNOWLEDGEMEN T OF RESPECTIVE INCOME TAX RETURNS, BALANCE SHEETS AND RELEVANT BANK STATEMENTS OF ALL THE SHARE APPLICANTS. OBVIOUSLY, OTHER THAN A GENERAL STATEMENT OF SHRI PRAVIN JAIN THAT HAD REPORTEDLY BEEN RETRACTED SUBSEQUENTLY, NO SPECIFIC MATERIAL TO SUGGEST THE LOANS ARE HAWALA ENTRIES. THERE WAS NOTHING TO SHOW THAT THERE WAS ANY ACTUAL EXCHANGE OF CASE BETWEEN THE APPELLANT AND THE ALLEGED HAWALA GIVERS BEFORE THE IMPUGNED LOANS WERE INCORPORATED IN THE BOOKS OF ACCOUNT OF THE APPELLANT. ALSO, THERE WAS NO MATE RIAL TO SHOW THAT ANY COMMISSION FOR ARRANGING THE HAWALA HAD BEEN PAID BY THE APPELLANT TO THE SAID SHRI PRAVIN JAIN. THE SITUATION REMAINED UNALTERED IN THE COURSE FOR ASSESSMENT PROCEEDINGS, AND THE AO DID NOT IN ANY MANNER IMPROVED UPON WHAT HAD RR RY THE INVESTIGATION WING. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 9 NON - OBSERVANCE OF PRINCIPLE OF NATURAL JUSTICE: NOT MAKING AVAILABLE MATERIAL USED AGAINST THE APPELLANT AND DENYING OPPORTUNITY TO CROSS EXAMINE WITNESSES: IT HAS BEEN SUBMITTED THAT THE AO DID NOT OBSERVE THE PRINCIPLES OF NATURAL JUSTICE ?,ND THE MATERIAL RELIED UPON IS NOT MADE AVAILABLE TO THE APPELLANT AND DENYING THE OPPORTUNITY OF CROSS EXAMINATION OF WITNESSES OR DID NOT MAKE AVAILABLE TO THE APPELLANT ANY ADVERSE MATERIAL, IF AT ALL THERE WAS ANY IN THE POSSESSION OF THE AO. 6.3.7. ON THE ABOVE FACTS, IT IS OBVIOUS THAT THE AO WHILE SUPPOSEDLY ACTING ON A REPORT OF THE INVESTIGATION WING AND SOME ALLEGED THIRD PARTY STATEMENT, NEVER MADE THE SAID REPORT AND EVIDENCE AVAILABLE TO THE APPELLANT. THUS, THE APPELLANT WAS DENIED A CHANCE TO REBUT THE EVIDENCE BY CROSS EXAMINING THOSE, WHO HAD ALLEGEDLY GIVEN STATEMENTS THAT COULD INCRIMINATE THE APPELLANT. ALL THIS IS A CLEAR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, A FUNDAMENTAL POINT TO THE VALIDITY OF THE PROCEED INGS, BEFORE THE AO. 6.3.8. THE FACTS OF THE APPELLANT'S CASE ARE IDENTICAL TO THOSE OF IN THE CASE OF H.R.MEHTA DECIDED BY THE BOMBAY HIGH COURT THROUGH AN ORDER DATED 30/06/2016 IN ITA NO.58 OF 2001. IN THAT CASE, THE ASSESSEE HAD ADDUCED EVIDENCE BY WA Y OF BANK RECORD TO SHOW THAT LOAN HAD BEEN RECEIVED FROM A CREDITOR THROUGH BANKING CHANNELS. THE CREDITOR WAS NOT PHYSICALLY TRACEABLE, AS MUCH TIME HAD ELAPSED AND HIS ADDRESS HAD CHANGED. THE ASSESSMENT HAD BEEN REOPENED ON THE BASIS OF THIRD PARTY EVI DENCE COLLECTED IN A SEARCH ACTION IN THE CASE OF A CHARITABLE TRUST. DESPITE SPECIFIC REQUEST IN THIS REGARD, THE AO CONCERNED DID NOT PROVIDE TO H R MEHTA A COPY OF THE APPRAISAL REPORT AND THIRD PARTY STATEMENT ETC. AND PROCEEDED TO TREAT THE LOAN AS UN EXPLAINED. THE HON'BLE HIGH COURT STRUCK DOWN THE ORDER OF REASSESSMENT BY OBSERVING THAT REVENUE WAS JUSTIFIED IN MAKING THE ADDITION WITHOUT HAVING FIRST GIVEN THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE, THE DEPONENTS ON THE STATEMENTS RELIED UPON BY T HE ACIT. THE RELEVANT DISCUSSION, CONTAINED IN PARAGRAPHS 16 & 17 OF THE HIGH COURT'S ORDER, IS REPRODUCED BELOW: '16. IN THE INSTANT CASE ALTHOUGH THE APPELLANT ASSESSEE HAS CALLED UPON US TO DRAWN INFERENCE THAT THE BURDEN SHIFTED TO THE REVENUE IN TL IE PRESENT CASE ONCE IT WAS ESTABLISHED THAT THE PAYMENTS WERE MADE AND REPAID BY CHEQUE WE NEED NOT HASTEN AND ADOPT THAT VIEW AFTER HAVING GIVEN OUR THROUGH TO VARIOUS ISSUED RAISED AND THE DECISIONS CITED BY MR. TRALSHAWALLA AND FINDING THAT ON A VERY FUNDAMENTAL ASPECT, THE REVENUE WAS NOT JUSTIFIED IN MAKING ADDITION AT THE TIME OF REASSESSMENT WITHOUT HAVING FIRST GIVEN THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT ON THE STATEMENTS RELIED UPON BY TLIE ACIT. QUITE APART FROM ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 10 DENIAL OF AN OPPORTUNITY OF CROSS EXAMINATION, THE REVENUE DID NOT EVEN PROVIDE THE MATERIAL ON THE BASIS OF WHICH T H E DEPARTMENT SOUGHT TO CONCLUDE THAT THE LOAN WAS A BOGUS TRANSACTION. 17. IN OUR VIEW IN THE LIGHT OF THE FACT THAT THE MONIES WERE ADVANCED APPARENTL Y BY THE ACCOUNT PAYEE CHEQUE AND WAS REPAID VIDE ACCOUNT PAYEE CHEQUE THE LEAST THAT T H E REVENUE SHOULD HAVE DONE WAS TO GRANT CM OPPORTUNITY TO THE ASSESSEE TO MEET THE CASE AGAINST HIM BY PROVIDING THE MATERIAL SOUGHT TO BE USED AGAINST ASSESSEE IN ARRI VING BEFORE PASSING THE ORDER OF REASSESSMENT. THIS NOT HAVING BEEN DONE, THE DENIAL OF SUCH OPPORTUNITY GOES TO ROOT OF THE MATTER AND STRIKES AT THE VERY FOUNDATION OF THE REASSESSMENT AND THEREFORE RENDERS THE ORDERS PASSED BY THE CIT(A) AND THE TRIBUNA L VULNERABLE. IN OUR VIEW THE ASSESSEE WAS BOUND TO BE PROVIDED WITH THE MATERIAL USED AGAINST HIM APART FROM BEING PERMITTING HIM TO CROSS EXAMINE THE DEPONENTS. DESPITE THE REQUEST DT. 15 TH FEBRUARY, 1996 SEEKING AN OPPORTUNITY TO CROSS EXAMINE THE DEPON ENT AND FURNISH THE ASSESSEE WITH COPIES OF STATEMENT AND DISCLOSE MATERIAL, THESE WERE DENIED TO HIM. IN THIS VIEW OF THE MATTER WE ARE INCLINED TO ALLOW THE APPEAL ON THIS VERY ISSUE.' 6.3.9. OPPORTUNITY OF CROSS EXAMINATION OF WITNESSES IS AN ESSENT IAL INGREDIENT OF THE A PRINCIPLE OF NATURAL JUSTICE. THIS HAS BEEN AFFIRMED BY THE HON'BLE SUPREME COURT IN THE * CASE OF ANDAMAN TIMBER INDUSTRIES [CIVIL APPEAL NO.4228 OF 2006, DATE OF PRONOUNCEMENT - SEPTEMBER 02, 20151 IN THAT CASE, THE HON'BLE SUPREME COURT HELD 'THAT NOT ALLOWING ASSESSEE THE OPPORTUNITY TO CROSS - EXAMINE WITNESSES, WHOSE STATEMENTS WERE MADE THE BASIS OF A DEMAND, IS A SERIOUS FLAW WHICH MAKES ORDER A NULLITY, AS IT AMOUNTS TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE . 6.3.10. IN THE CASE OF KISHINCHAND CHELLARAM VS. CIT, BOMBAY CITY II 11980] 125 ITR 713 (SC), IT HAS BEEN HELD BY THE APEX COURT THAT IN INCOME TAX PROCEEDINGS WHEN AN EVIDENCE IS TO BE USED AGAINST THE ASSESSEE AND IF IT IS NOT SHOWN TO THE ASSESSEE AN D IF NO OPPORTUNITY TO CONTROVERT IS GIVEN TO THE ASSESSEE, THAT EVIDENCE IS NOT ADMISSIBLE. IT FURTHER HELD THE DEPARTMENT OUGHT TO HAVE CALLED UPON THE MANAGER TO PRODUCE THE DOCUMENTS AND PAPERS ON THE BASIS OF WHICH HE MADE THE STATEMENTS AND CONFRONTE D THE ASSESSEE WITH THOSE DOCUMENTS AND PAPERS. BEFORE, THE INCOME TAX AUTHORITIES COULD RELY UPON THE EVIDENCE, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTU NITY TO CROSS EXAMINE THE MANAGER OF THE BANK WITH REFERENCE TO THE STATEMENTS MADE BY HIM. 6.3.11. ON PRINCIPLES OF NATURAL JUSTICE, IT HAS BEEN HELD BY THE APEX COURT IN THE CASE OF SWADESH COTTON MILLS VS UNION OF INDIA IN 1981 AIR ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 11 818 THAT PHRASE 'NATURAL JUSTICE' IS NOT CAPABLE OF A STATIC AND PRECISE DEFINITION.' 'TWO FUNDAMENTAL MAXIMS OF NATURAL JUSTICE HAVE NOW BECOME DEEPLY AND INDELIBLY INGRAINED IN THE COMMON CONSCIOUSNESS OF MANKIND AS PREEMINENTLY NECESSARY TO ENSURE THAT LAW IS APPLIED IMPARTIALLY OBJECTIVELY AND FAIRLY. THESE TWIN PRINCIPLES ARE (I) AUDIALTERMPARTEM AND (II) NEMOJUDEX IN RE SUA. AUDI ALTERMPARTEM IS A HIGHLY EFFECTIVE RULE DEVISED BY THE COURTS TO ENSURE THAT A STATUTORY AUTHORITY ARRIVES AT A JUST DECISION AND IT IS CA LCULATED TO ACT AS A HEALTHY CHECK ON THE ABUSE OR MISUSE OF POWER.' 'THE MAXIM AUDIALTERMPARTEM HAS MANY FACETS. TWO OF THERE ARE (A) NOTICE OF CASE TO BE MET AND (B) OPPORTUNITY TO EXPLAIN. 'IN FACTS AND CIRCUMSTANCES OF A PARTICULAR CASE WHEN NON - COMPLI ANCE WITH THE IMPLIED REQUIREMENTS OF THE AUDIALTERMPARTEM, RULE OF NATURAL JUSTICE AT THE PRE DECISIONAL STAGE, THE IMPUGNED ORDER CAN BE STRUCK DOWN AS INVALID ON THAT SCORE ALONE.' 6.3.12. IT HAS BEEN ALSO HELD BY THE APEX COURT IN THE CASE OF DELHI TR ANSPORT CORPORATION VS DTC MAZDOOR CONGRESS, IN 1991 AIR 101 THAT THE AUDIALTERMPARTEM, RULE WHICH IS ESSENCE ENFORCES THE EQUALITY CLAUSE OF ARTICLE 14 OF THE CONSTITUTION AND IS APPLICABLE NOT ONLY TO QUASI - JUDICIAL ORDERS BUT TO ADMINISTRATIVE ORDERS AF FECTING PREJUDICIALLY THE PARTY IN QUESTION. 6.3.13. A SIMILAR MATTER CAME UP BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF M/S. GIRA ENTERPRISES & ANOTHER (CIVIL APPEAL NOS. 433 - 434 OF 2006) DATED 21/08/2014. IN THAT CASE, IT WAS ALLEGED THAT PRICES DE CLARED FOR IMPORT PURPOSES HAD BEEN SUPPRESSED. THE CASE WAS BASED ON EVIDENCE CONTAINED IN A COMPUTER PRINTOUT, REPORTEDLY PREPARED ON THE BASIS OF IMPORT DATA, ALLEGEDLY COLLECTED FROM MUMBAI PORT. THIS PRINT OUT SHOWED IMPORT PRICES, HIGHER THAN THOSE D ECLARED BY THE ASSESSEE. THIS PRINTOUT WAS NOT MADE AVAILABLE TO THE ASSESSEE IN THE COURSE OF ADJUDICATION PROCEEDINGS. AFTER HEARING THE MATTER, THE HON'BLE SUPREME COURT WENT ON TO SET ASIDE THE ORDER WITH BELOW EXTRACTED OBSERVATIONS: '22. ...THE RE SPONDENT (REVENUE) DID NOT SUPPLY THE INFORMATION (ALLEGED COMPUTER PRINTOUT) WHICH FANNED THE BASIS OF CONCLUSION THAT THE APPELLANTS HEREIN UNDER - VALUED THE GOODS IMPORTED. IN SUCH A SITUATION, APPELLANTS OBVIOUSLY CANNOT AND DID NOT HAVE ANY OPPORTUN ITY OF ESTABLISHING THAT THE CLAIM OF THE REVENUE IS UNSUSTAINABLE IN LAW. IF THE INFORMATION, WHICH FORMED THE BASIS FOR THE REVENUE TO REJECT THE APPELLANT'S - VALUATION IS SUPPLIED TO THE APPELLANTS, THE - HANTS PERHAPS WILL HAVE THE OPPORTUNITY TO DIS PUTE THE COMPARABILITY OF THE IMPORT ACTIONS ALLEGEDLY CONTAINED IN THE COMPUTER PRINTOUT ON VARIOUS COUNTS MAY NOT BE POSSIBLE TO CATALOGUE. 23. IN UK ABSENCE OF ANY MATERIAL PRODUCED BY THE REVENUE IN PROOF OF THE ALLEGED COMPARABLE IMPORTS AT A HIGHER VALUE, THE IMPUGNED ORDER WHICH ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 12 EVENTUALLY CONFIRMED THE ORIGINAL ORDER OF ASSESSMENT ..... CANNOT BE SUSTAINED FOR TWO REASONS - (1) THE MERE EXISTENCE OF AN ALLEGED COMPUTER PRINTOUT IS NOT PROOF OF THE EXISTENCE OF COMPARABLE IMPORTS; (2) ASSUMING SUCH A PRINTOUT EXISTS AND THE CONTENTS THEREOF ARE TRUE, THE QUESTION STILL REMAINS WHETHER THE TRANSACTION OF THE APPELLANT. THE APPELLANT WILL HAVE TO BE GIVEN REASONABLE OPPORTUNITY TO ESTABLISH (IF HE CAN) THAT THE TRANSACTIONS ARE NOT COMPARABLE.' 6.3.14 GOING BY THE DISCUSSION CONTAINED ABOVE, IT IS OBVIOUS THAT THE INFERENCE DRAWN BY THE AO AGAINST THE APPELLANT IS NOT SUSTAINABLE FOR THE SIMPLE REASON THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN FOLLOWED. FIRST AND FOREMOST, THE APPELLANT HAS N OT BEEN GIVEN ANY ACCESS TO THE MATERIAL (REPORTS, INTIMATIONS, STATEMENTS ETC. USED AGAINST IT. SECONDLY, BY WITHHOLDING THE SAID MATERIAL, THE AO HAS DENIED OF THE APPELLANT AN OPPORTUNITY TO REBUT THE EVIDENCE BY CROSS EXAMINING THE WITNESSES, STATEMENT S, IF ANY MADE BY WHOM, INCRIMINATED THE APPELLANT. ON BOTH COUNTS THE IMPUGNED ASSESSMENT ORDER FAILS SQUARELY. 6.3.15. ABSENCE OF MATERIAL_TO_SHOW THAT THE SHARE APPLICATION MONEY ARE UNEXPLAINED: FROM THE FORGOING, IT IS OBVIOUS THAT THERE IS NO SCOPE FOR ARRIVING AT A CONCLUSION THAT THE APPELLANT HAD TAKEN HAWALA ENTRIES TO INCORPORATE THE IMPUGNED LOANS IN ITS BOOKS OF ACCOUNT. HENCE, THE ONLY ISSUE THAT REMAINS TO BE SEEN IS WHETHER ON THE BASIS OF FACTS BROUGHT ON RECORD THE IMPUGNED LOANS COULD B E TREATED AS UNEXPLAINED WITH THE FORE CORNERS OF SECTION 68 OF THE ACT. AT THE OUTSET, IT WILL NECESSARY TO LOOK AT SOME LEGAL PRECEDENTS WITH REGARD TO THE INTENT AND APPLICATION OF SECTION 68. IT NEEDS NO ELABORATION THAT THROUGH A CATENA OF DECISIONS T HE COURTS HAVE LAID DOWN THE FOLLOWING 3 FUNDAMENTAL TESTS WHICH HAVE TO BE ESTABLISHED TO DISCHARGE THE BURDEN U/S.68 OF THE ACT; - IDENTITY OF THE CREDITORS/SHARE APPLICANTS - CREDIT WORTHINESS OF CREDITORS/SHARE APPLICANTS, AND - GENUINENESS OF THE TRANSITIO NS I.E, WHETHER THE TRANSACTION WAS THROUGH BANKING CHANNEL. 6.3.16 THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. P MOHANKALA [2007] 291 ITR 278/ 161 TAXMAN 169 HELD THAT THE EXPRESSION 'ASSESSEE OFFERS NO EXPLANATION' MEANS WHERE THE ASSESSEE OFF ERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUM FOUND CREDITED IN THE BOOKS MAINTAINED BY THE ASSESSEE. IT FURTHER HELD THAT THE OPINION OF THE AO FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY IS REQU IRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF THE AO IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 13 AVAILABLE ON RECORD. APPLICATION OF MIND IS THE SINE QUA NO N FOR FORMING THE OPINION. 6.3.17. THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HIM AND WHERE THE NATURE AND SOURCE OF A RECEIPT; WHETHER IT BE OF MONEY OR OTHER PROPERTY, C ANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPEN TO THE REVENUE TO HELD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE [ROSHAN DI HAITI VS. CIT [1997] 107 I TR 938(SC). THEREAFTER THE LD CITA PLACED RELIANCE ON VARIOUS JUDGEMENTS IN SUPPORT OF HIS FINDINGS IN PARA 6.3.18 (I) OF HIS ORDER. 7.1. THE LD CITA FURTHER OBSERVED WITH REGARD TO THE ISSUE OF SHARE PREMIUM, SHARE APPLICATION MONEY AND SHARE CAPITAL A S UNDER: - 6.3.18.II. AS REGARDS ISSUE RELATED TO ADDITIONS FOR SHARE PREMIUM AMOUNT INCLUDED IN THE SHARE APPLICATION MONEY SHARE CAPITAL MONEY, REFERENCE IS MADE AND RELIANCE IS PLACED TO THE VARIOUS JUDICIAL PRONOUNCEMENTS. THESE ARE AS UNDER: IN THE CASE OF M/S. VODAFONE INDIA SERVICES P VT LTD VS. ADDL. CIT REPORTED IN 368 ITR 001, HON'BLE BOMBAY HIGH COURT DECIDED THAT : - 'THE AMOUNTS RECEIVED ON ISSUE OF SHARE CAPITAL INCLUDING THE PREMIUM ARE UNDOUBTEDLY ON CAPI TAL ACCOUNT. SHARE PREMIUM HAVE BEEN MADE TAXABLE BY A LEGAL FICTION UNDER SECTION 56(2)(VIIB) OF THE ACT AND THE SAME IS ENUMERATED AS INCOME IN SECTION 2(24)(XVI) OF THE ACT. HOWEVER, WHAT IS BOUGHT INTO THE AMBIT OF INCOME IS THE PREMIUM RECEIVED FROM A RESIDENT IN EXCESS OF UK FAIR MARKE T VALUE OF THE SHARES. IN THIS CASE WHAT IS BEING SOUGHT TO BE TAXED IS CAPITAL NOT RECEIVED FROM A NON RESIDENT I.E. PREMIUM ALLEGEDLY NOT RECEIVED ON APPLICATION OF ALP. THEREFORE, ABSENT EXPRESS LEGISLATION, NO AMOUNT RECEIVED, ACCRUED OR ARISING ON CAP ITAL ACCOUNT TRANSACTION CAN BE SUBJECTED TO TAX AS INCOME. COURT FINDS CONSIDERABLE SUBSTANCE IN THE PETITIONER'S CASE THAT NEITHER TLIE CAPITAL RECEIPTS RECEIVED BY THE PETITIONER ON ISSUE OF EQUITY SHARES TO ITS HOLDING COMPANY, A NON - RESIDENT ENTITY, NOR THE. ALLEGED SHORT - FALL BETWEEN THE SO CALLED FAIR MARKET PRICE OF ITS EQUITY SHARES AND THE ISSUE PRICE OF THE EQUITY SHARES CAN BE CONSIDERED AS INCOME WITHIN THE MEANING OF THE EXPRESSION AS ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 14 DEFINED UNDER T H E ACT. ' (II) THE CBDT VIDE INSTRUCTIONS NO - 02/2015 DATED 29/1/2015 DIRECTED THE REVENUE NOT TO FILE THE SLP BEFORE HON'BLE TO SUPREME COURT AND DIRECTED LD AOS TO ACCEPT THE HIGH COURT ORDER. THE RELEVANT INSTRUCTIONS IS AS UNDER : - 'IN REFERENCE TO THE ABOVE CITED SUBJECT, I AM DIRECTED TO D RAW YOUR ATTENTION TO THE DECISION OF THE HIGH COURT OF BOMBAY IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD FOR A.Y.2QQ9 - 1Q (WP NO.871/2014) = 20U - TII - 19 - HC - MUM - TP, WHEREIN IN THE COURT HAS HELD , INTER - ALIA, THAT THE PREMIUM ON SHARE ISSUE WAS ON ACCOUN T OF A CAPITA! ACCOUNT TRANSACTION AND DOES NOT GIVE RISE TO INCOME AND, HENCE, NOT LIABLE TO TRANSFER PRICING ADJUSTMENT. .. IT IS HEREBY INFORMED THAT THE BOARD H AS ACCEPTED THE DECISION OF THE HIGH COURT OF BOMBAY IN THE ABOVE MENTIONED WRIT PETITION. I N VIEW OF T H E ACCEPTANCE OF THE ABOVE JUDGEMENT, IT IS DIRECTED THAT THE RATIO DECIDED OF THE JUDGEMENT MUST BE ADHERED TO BY THE FIELD OFFICERS IN ALL CASES WHERE THIS ISSUE IS INVOLVED. THIS MAY ALSO BE BROUGHT TO T HE NOTICE OF THE ITAT, DRPS AND CSIT ( APPEALS).' (III) IN THE CASE OF ACIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD BEARING ITA NO. 578 4 / MUM /2014 DATED 23/04/2014 , HON'BLE MUMBAI ITAT DECIDED THAT : 'WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN OUR CONSIDERED VIEW, THE ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION WHICH DOES NOT REQUIRE ANY - JUSTIFICATION. FURTHER THE PREMIUM IS A CAPITAL RECEIPT WHICH HAS TO BE DEALT WITH IN ACCORDANCE WITH SEC.78 OF THE COMPANIES ACT, 1956. FURTHER, THE COMPANY IS NOT REQUIRED TO PROVE THE GENUINENESS, PURPOSE OR JUSTIFICATION FOR CHARGING PREMIUM OF SHARES, SHARE PREMIUM BY ITS VERY NATURE IN A CAPITAL RECEIPTS AND IS NOT INCOME FOR ITS ORDINARY SENSE......, THE ENTIRE DISPUTE REVOLVES AROUND THE FACT THAT THE ASSESSEE HAS CHAR GED A PREMIUM OF RS.190/ - PER SHARE. NO DOUBT A NON - EST COMPANY OR A ZERO BALANCE SHEET COMPANY ASKING FOR RS.190/ - PER SHARE DEFIES ALL COMMERCIAL PRUDENCE BUT AT THE SAME TIME WE CANNOT IGNORE THE FACT THAT IT IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF THE COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF THE SHARE HOLDERS WHETHER THEY WANT TO SUBSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORITIES CANNOT QUESTION THE CHARGING OF SUCH HUGE PREMIUM WITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND. THE AMENDMENT HAS BEEN BROUGHT IN THE INCOME TAX ACT UNDER THE HEAD 'INCOME FROM OTHER SOURCES' BY INSERTING CLAUSE (VIIB) TO SEC.56 OF THE ACT WHEREIN IT HAS BEEN PROVIDED THAT ANY CONSIDERATION FOR ISSUE OF SHARES, THAT EXCEEDS THE FAIR VALUE OF SUCH SHARES, THE AGGREGATE ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 15 CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL BE TREATED AS THE INCOME OF THE ASSESSEE BUT THE LEGISLATURE IN ITS WISDOM HAS MADE THIS PROVISION APPLICABLE W.E.F.L.4.2013 I.E. ON A ND FROM A.Y.2013 - 14. IN SO FAR AS THE YEAR UNDER CONSIDERATION IS CONSIDERATION IS CONCERNED, THE TRANSACTION HAS TO BE CONSIDERED IN THE LIGHT OF THE PROVISION OF SEC.68 OF THE ACT: THERE IS NO DISPUTE THAT THE ASSESSEE HAS GIVEN DETAILS OF NAMES AND ADDR ESSES OF THE SHARE HOLDERS, THEIR PAN NOS, THE BANK DETAILS AND THE CONFIRMATORY LETTERS... CONSIDERING ALL THESE UNDISPUTED FACTS, IT CAN BE SAFELY CONCLUDED THAT THE INITIAL BURDEN OF PROOF AS RESTED UPON THE ASSESSEE HAS BEEN SUCCESSFULLY DISCHARGED BY THE ASSESSEE. EVEN IF IT IS HELD THAT EXCESS PREMIUM HAS BEEN CHARGED, IT DOES NOT BECOME INCOME AS IT IS A CAPITAL RECEIPT. THE RECEIPT IS NOT IN THE REVENUE FIELD. WHAT IS TO BE PROBED BY THE AO IS WHETHER THE IDENTITY OF THE ASSESSEE IS PROVED OR NOT. IN THE CASE OF SHARE CAPITAL, IF THE IDENTITY IS PROVED, NO ADDITION CAN BE MADE U/S.68 OF THE ACT. WE DRAW SUPPORT FROM THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT LTD. 317 ITR 218. WE, THEREFORE DO NOT FIND ANY ERROR OR IN FIRMITY IN THE FINDINGS OF THE LD. CIT(A). GROUND NO.1 IS ACCORDINGLY DISMISSED.' (IV) IN THE CASE OF GREEN INFRA LTD VS. ITO REPORTED IN 38 TAXMANN.COM 253 (MUM - ITAT) DATED 23/08/2013 HON'BLE MUMBAI ITAT DECIDED THAT : DURING PREVIOUS ENDING ON 31 - 3 - 20 09, IT HAD COLLECTED SHARE PREMIUM ON ALLOTMENT OF SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 490 PER SHARE - IT HAD CREDITED SAID AMOUNT IN BALANCE - SHEET UNDER HEAD SHARE PREMIUM ACCOUNT - IT CLAIMED THAT SHARE PREMIUM WAS A CAPITAL RECEIPT NOT EXIGIBLE TO TAX. - ASSESSING OFFICER HAD TAXED SHARE PREMIUM UNDER SECTION 56(1) AS ASSESSEE'S INCOME FROM OTHER SOURCES - WHETHER SINCE EXPENDITURE AND RECEIPTS DIRECTLY RELATING TO SHARE CAPITAL OF A COMPANY ARE OF CAPITAL IN NATURE, SHARE PREMIUM COLLECTED BY ASSES SEE COULD NOT BE TAXED UNDER SECTION 56(1) AS INCOME FROM OTHER SOURCES - HELD, YES - WHETHER SINCE ENTIRE TRANSACTION RELATING TO ALLOTMENT OF SHARES HAD BEEN DONE THROUGH BANKING CHANNEL AND ASSESSEE HAD INVESTED SHARE PREMIUM IN ITS THREE SUBSIDIARY COM PANIES, PROVISIONS OF SECTION 68 AS SUGGESTED BY REVENUE HAD ALSO NOT APPLICABLE TO INSTANT CASE - HELD, 'YES.... NO DOUBT A NON EST COMPANY OR A ZERO BALANCE COMPANY ASKING FOR A SHARE PREMIUM OF RS.490 PER SHARE DEFIES ALL COMMERCIAL PRUDENCE, BUT AT THE SAME TIME ONE CANNOT IGNORE THE FACT THAT IT IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF A COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF THE SHAREHOLDERS WHETHER THEY WANT TO SUBSCRIBE TO SUCH A VERY PREMIUM. THE REVENUE AUTHORITIES CANNO T QUESTION THE CHARGING OF SUCH OF HUGE PREMIUM WITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND.' ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 16 (V) IN THE CASE OF CIT VS. GOA SPONGE AND POWER LTD REPORTED IN APPEAL NO. 16 OF 2012, HON'BLE BOMBAY HIGH COURT DECIDED THAT: 'ONCE THE AUTHORITIES HAV E GOT ALL THE DETAILS, INCLUDING THE NAME AND 'ADDRESSES OF THE SLTAREHOLDERS, THEIR PAN/GIR NUMBER, SO ALSO THE NAME OF THE BANK FROM WHICH THE ALLEGED INVESTORS RECEIVED MONEY AS SHARE APPLICATION, THEN, IT CANNOT BE TERMED AS 'BOGUS'. THE CONTROVERSY IS COVERED BY THE JUDGEMENTS RENDERED B Y THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT LTD, VS. CIT, (2008) 216 CTR (SC) 195, AS ALSO BY THIS COURT IN CIT VS. CREATIVE WORLD TELEFILMS LTD, (2011) 333 ITR 100 (BOM). IN SUCH CIRCUMSTANCES, WE AR E OF THE VIEW THAT THE TRIBUNAL'S FINDING THAT THERE IS NO JUSTIFICATION IN THE ADDITION MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 NEITHER SUFFERS FROM ANY PERVERSITY NOR GIVES RISE TO ANY SUBSTANTIAL QUESTION OF LAW.' (VI) IN THE CASE OF CIT VS. CREATIVE WORLD TELEFILMS LTD REPORTED IN 333 ITR 100. HON'BLE BOMBAY HIGH COURT DECIDED THAT: '...THE TRIBUNAL WAS PLEASED TO FOLLOW THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 (2008) 6 DTR (SC) 30 8 : (2009) 319 ITR 5 (ST.) WHEREIN THE APEX COURT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE - COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REO PEN THEIR INDIVIDUAL ASSESSMENTS. IN THE CASE IN HAND, IT IS NOT DISPUTED THAT THE ASSESSEE HAD GIVEN THE DETAILS OF NAME AND ADDRESS OF THE HOLDER, THEIR PAN/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME OF THE BANK. IT WAS EXPECTED ON THE PART O F THE AO TO MAKE PROPER INVESTIGATION AND REACH THE SHAREHOLDERS. THE AO DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIMATELY RETURNED BACK WITH AN ENDORSEMENT 'NOT TRACEABLE' 1 . IN OUR CONSIDERED VIEW, THE A O OUGHT TO HAVE FOUND OUT THEIR DETAILS THRO UGH PAN CARDS, BANK ACCOUNT DETAILS OR FROM THEIR BANKERS SO AS TO REACH THE SHAREHOLDERS SINCE ALL THE RELEVANT MATERIAL DETAILS AND PARTICULARS WERE GIVEN BY THE ASSESSEE TO THE AO. IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE FAU LTED.' (VII) IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD REPORTED IN 216 CTR 195, HON'BLE APEX COURT DECIDED THAT: 'IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THE N THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY.' ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 17 (VIII) IN THE CASE OF CIT VS. STELLER INVESTMENT LTD REPORTED IN 251 ITR 263, HON'BL E APEX COURT DECIDED THAT: 'THAT THE INCREASE IN SUBSCRIBED CAPITAL OF THE RESPONDENT - COMPANY COULD NOT BE A DEVICE OF CONVERTING BLACK MONEY INTO WHITE WITH THE HELP OF FORMATION OF AN INVESTMENT COMPANY, ON THE ROUND THAT, EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED CAPITAL WERE NOT GENUINE, UNDER NO CIRCUMSTANCES COULD THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME, AN APPEAL WAS TAKEN BY THE DEPARTMENT TO THE SUPREME COURT. THE SUPREME COURT DISMISSED THE APPEAL HOLDING T HAT THE TRIBUNAL HAD COME TO A CONCLUSION ON FACTS AND NO INTERFERENCE WAS CALLED FOR.' (IX) IN THE CASE OF CIT VS. EXPO GLOBE INDIA LTD REPORTED IN 361 ITR 147, HON'BLE DELHI HIGH COURT DECIDED THAT: 'IT HAS BEEN HELD BY HON'BLE SUPREME COURT AND VARIOU S HIGH COURTS THAT NO ADDITION CAN BE MADE ON ACCOUNT OF SHARE APPLICATION MONEY ONCE THE NAMES OF THE SHARE APPLICANTS ARE GIVEN. IN THE INSTANT CASE, IDENTITY OF THESE PERSONS ARE NOT OR DOUBT AND ASSESSMENT PARTICULARS OF ALL THE PERSONS ARE ON RECORD A ND THEN HOLD THAT CREDIT WORTHINESS OF THESE PERSONS ARE NOT ESTABLISHED. THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORT 216 CTR 195 AND ALSO THE JUEDGEMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VALUE CAPITAL SERVICES PVT . LTD 307 ITR 334 ARE RELEVANT OF THIS ISSUE. IT WAS HELD BY HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. ELECTRO POLYCHEM LTD. 294 ITR 661 AND HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SECURITIES LTD 166 TAXMAN 7 THAT NO ADDITION CAN BE MADE ON ACCO UNT OF SHARE APPLICATION MONEY EVEN IF SUBSCRIBER TO CAPITAL ARE NOT GENUINE. THE ABOVE SAID JUDGEMENTS WERE CHALLENGED BY THE DEPARTMENT BY WAY OF SLP BEFORE SUPREME COURT OF INDIA AND SLP HAS BEEN DISMISSED BY SUPREME COURT IN BOTH THE CASES, HI VIEW OF ABOVE SAID FACTS OF CASE AND POSITION OF LAW, I HEREBY DIRECT THE AO TO DELETE THE ADDITION OF RS.69,75,000/ - . ' (X) IN THE CASE OF CIT V. VACMET PACKAGING (INDIA) PVT LTD REPORTED IN 88 CCH 065, HON'BLE ALLAHABAD HIGH COURT DECIDED THAT: 'HELD, ASSE SSEE HAD FILED DOCUMENTARY EVIDENCE TO PROVE GENUINENESS OF SHARE APPLICATION MONEY CONSISTING OF(I) SHARE APPLICATION FORMS; (II) COPIES OF BANK ACCOUNTS OF SHARE APPLICANTS; (HI) COPIES OF INCOME TAX RETURNS OF SHARE ALLOTTEES; (IV)BALANCE SHEETS; AND (V ) COPIES OF SHARE ALLOTMENT CERTIFICATES AND OF BOARD'S RESOLUTION OF THE SHARE APPLICANTS - IDENTITY OF APPLICANTS WAS ESTABLISHED BY PRODUCTION OF COPIES OF PAN CARDS AND REGISTRATION CERTIFICATE WITH TLIE REGISTRAR OF COMPANIES - FINANCIAL CAPACITY WAS A LSO PROVED BY FILING OF COPIES OF THE BANK ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 18 ACCOUNTS FROM WHERE THE SHARE APPLICATION MONEY WAS TRANSFERRED THROUGH BANKING CHANNELS TO THE ASSESSEE - ASSESSEE HAD DISCHARGED ONUS PLACED UPON HIM BY 68 - CONCURRENT FINDING OF FACTS ALSO RENDERED BY CIT(A) AND TRIBUNAL IN THIS REGARD - NO SUBSTANTIAL QUESTION OF LAW ARISES - REVENUE'S APPEAL DISMISSED' (XI) IN THE CASE OF JAYA SECURITIES LTD VS. CIT REPORTED IN 166 TAXMAN 7 (SLP FILED BY DEPARTMENT DISMISSED), HON'BLE ALLAHABAD HIGH COURT DECIDED THAT: 'WHETHE R ANY ADDITION UNDER SECTION 68 CAN BE MADE IN RESPECT OF INVESTMENT MADE BY DIFFERENT PERSONS IN SHARE CAPITAL OF ASSESSEE COMPANY, LIMITED BY SHARES, WHETHER PUBLIC OR PRIVATE - HELD, NO.' 7.1.1. THE LD CITA FURTHER OBSERVED IN HIS ORDER AS UNDER: - 6.3 .20. HENCE, IT IS TO BE INFERRED THAT IN A CASE WHERE THE ASSESSEE HAS SUPPLIED ALL POSSIBLE INFORMATION TO THE AO TO EXPLAIN THE SHARE APPLICATION MONEY TRANSACTION, HE HAS SATISFACTORILY DISCHARGED THE BURDEN CAST ON HIM, STILL THE AO WITHOUT BRINGING AN Y ADVERSE MATERIAL, EXCEPT GENERAL STATEMENT OF PRAVIN JAM, PROCEEDED TO MAKE ADDITION. FROM THE ASSESSMENT ORDER IT IS SEEN THAT AT NO POINT OF TIME, THE AO HAS BROUGHT ANY MATERIAL TO PROVE THAT THE PARTY WAS NOT GENUINE OR NOT HAVING OWN FUNDS TO INVEST IN SHARE CAPITAL OR THE TRANSACTIONS WERE NOT ROUTED THROUGH BANKING CHANNEL. AS STATED EARLIER, IT HAS BEEN EXPLAINED BY THE LD.AR THAT THE COMPANIES WHO HAS INVESTED SHARE APPLICATION MONEY WITH THE APPELLANT COMPANY ARE EXISTING COMPANY AND THEY ARE V ERIFIABLE ON THE WEBSITE OF REGISTRAR OF COMPANY AND THEY ARE HAVING THEIR OWN CIN NUMBER, PAN NUMBER AND REGULARLY FILING RETURNS. AS REGARDS GENUINENESS OF TRANSACTIONS OF SHARE APPLICATION MONEY THROUGH BANKING CHANNEL AND CREDIT WORTHINESS OF THE PARTY HAVING SUFFICIENT OWN FUNDS IN THEIR BOOKS/BALANCE SHEET, THIS MAY BE SEEN FROM THE CHARTS GIVEN IN SUBSEQUENT PARAGRAPHS. 6.3.21. IN THE CASE BEFORE ME, THE RECORD ALSO SHOWS THAT TO PROVE THE GENUINENESS OF THE IMPUGNED SHARE APPLICATION MONEY FROM THE SAID PARTIES, THE APPELLANT HAS FURNISHED TO THE AO THE VARIOUS DETAILS WHICH HAS BEEN ALSO PRODUCED DURING THE COURSE OF APPELLATE PROCEEDINGS AND MAY BE SEEN FROM THE APPELLANT'S SUBMISSIONS REPRODUCED ABOVE AND THEREFORE, FOR THE SAKE OF BREVITY NOT BE ING REPEATED HERE. 6.3.22. THE VARIOUS FACTS AND FIGURES RELATED TO THESE ISSUES CAN BE SEEN FROM THE VARIOUS CHARTS AS NARRATED BELOW: SIVETA SYNTHETICS P RI VATE LIMITED ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 19 A.Y.: 2007 - 08 SI. NO. DETAILS OF SHARES APPLICANT/LOAN CREDITORS BANK DETAILS CHE QUE/ DD/ETC DATE AMOUNTS REMARKS, IF ANY I REYNOLDS PETRO CHEMS. LIMITED INDUSIND BANK LIMITED 970488 16 - 06 - 2006 15,00,000.00 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE 970489 21 - 06 - 2006 12,00,000.00 970490 21 - 06 - 2006 12,00,000.00 970491 21 - 06 - 2006 12,00,000.00 51,00,000.00 2 KUSH HINDUSTAN ENTERTAINMENT LIMITED PUNJAB NATIONAL BANK 325029 10 - 07 - 2006 14,00,000.00 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE 325028 10 - 07 - 2006 50,00,000.00 325061 16 - 11 - 2006 20,000.00 64,20,000.00 3 JAVDA INDIA IMPEX LIMITED PUNJAB NATIONAL BANK 325751 07 - 06 - 2006 10,00,000.00 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQ UE 325752 12 - 06 - 2006 15,00,000.00 050509 26 - 07 - 2006 20,000.00 25,20,000.00 4 REALGOLD TRADING COMPANY PRIVATE LIMITED PUNJAB NATIONAL BANK 325645 13 - 06 - 2006 25,00,000.00 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING O F CHEQUE 069107 26 - 07 - 2006 20,000.00 ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 20 25,20,000.00 5 UTKANDA TRADING PRIVATE LIMITED HDFC BANK LIMITED 177680 21 - 06 - 2006 10,00,000.00 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE 177683 22 - 06 - 2006 15,00, 000.00 559827 26 - 07 - 2006 20,000.00 25,20,000.00 6 HEMA TRADING COMPANY PRIVATE LIMITED CORPORATION BANK 290915 01 - 07 - 2006 25,00,000.00 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE PUNJAB NATIONAL BANK 33204 1 26 - 07 - 2006 20,000.00 25,20,000.00 7 LEXUS INFOTECH LIMITED PUNJAB NATIONAL BANK 325530 03 - 07 - 2006 25,00,000.00 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE 325541 26 - 07 - 2006 20,000.00 25,20,000.00 2,41,20,000.00 2. GENUINITY OF PERSONS/CREDITORS SL . NO. NAME OF PARTIES PAN DETAILS CIN WHETHER EXISTING COMPANY WITH ROC/ LATEST ANNUAL RETURN FILED I REYNOLDS PETRO CHEMS. LIMITED AABCR1282P 31 - 03 - 2016 2 RUSH HINDUSTAN ENTERTAINMENT LIMITED AACCK3597M U921HMH2003PLC143690 31 - 03 - 2016 ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 21 3 JAVDA INDIA IMPEX LIMITED AAACA7065L U67I2OMHI995PLCO88743 31 - 03 - 2016 4 REALGOLD TRADING COMPANY PRIVATE LIMITED AACCR4512K U51909MH2003PTC139464 31 - 03 - 2016 5 UTKANDA TRADING PRIVATE LIMITED AAACU6984E U5I909MH2004PLCI46O6I 31 - 03 - 2016 6 HEMA TRADING COMPANY PRIVATE LIMITED AABCH4279G U5I909MH2004PTCI45254 31 - 03 - 2016 7 LEXUS INFOTECH LIMITED AAACL4646G U74999MHI998PLCII6845 31 - 03 - 2014 L. TRANSACTIONS THROUGH BANK 3. SOURCES OF FUNDS OF THE CONTRIBUTORS / SHARE HOLDERS/APPLICANTS/LOAN CREDITORS SI. NO. DETAILS OF SHARE APPLICANT/ LOAN CREDITORS CONTRIBUTORS CAPITAL AS ON 31.03.06 OF THE PREVIOUS YEAR (PRECEDING FY PRIOR TO THE FY IN WHICH CONTRIBUTION MADE) NATURE AND AMOUNT OF FUND IN THE BALANCE SHEET OF THE CREDITORS AMOUNT LOAN/ CAPITAL CONTRIBUTED BY THIS PARTY TO APPELLANT REMARKS, IF 1 REYNOLDS PETRO CHEMS. LIMITED AS ON 31.03.06 OWN FUND ADDRESS: 7, VIDHI TOWER NO.2, SANGHVI TOWER, ADAJAN ROAD, SURAT, GUJARAT 395 009 RS.48,86,267 1.EQUITY SHARES RS.5,00,000 RS.51,00,000 OWN FUND BORROWED FUND OF PARTY BEING RS.1,18,10,137 IS HIGHER THAN THE AMOUNT RECEIVED 2. RESERVES & SURPLUS RS.43,86,267 3. BORR OWED FUND RS.69,23,870 2. KUSH HINDUSTAN ENTERTAINMENT LIMITED AS ON 31.03.06 OWN FUND OWN FUND OF PARTY BEING RS. . 2,56,99,802 IS HIGHER THAN THE AMOUNT RECEIVED ADDRESS : CS - 2, SILVER AN KLE TYA T RI ROAD, VERSO VA, MUMBAI, MAHARASHTRA 4000 61 RS. 2,56,99, 802 1. EQUITY SHARES RS.2,52,90,000 RS. 64,20,000 2. RESERVES & SURPLUS RS. 4,09,802 JAVDA INDIA IMPEX LIMITED AS ON 31. 03. 06 OWN FUND OWN FUND OF PARTY BEING RS. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 22 ADDRESS: 626 PANCHRATNA OPERA HOUSE, MUMBAI, MAHARASHTRA - 400 004 RS. 3,82,05,088 I. EQUITY SHARES RS. 3,67,90,000 RS. 25,20,000 3,82,05,088 IS HIGHER THAN THE AMOUNT RECE IVED 2. RESERVES & SURPLUS RS. 14,15,088 4 OLIVE OVERSEAS PRIVATE LIMITED AS ON 31. 03. 06 OW N FUND OWN FUND OF PARTY BEING RS. 1,78,17,989 IS HIGHER THAN THE AMOUNT RECEIVED FORMERLY KNOWN AS REALGOLD TRADING COMPANY PRIVATE LIMITED RS. 1,78,17,989 I. EQUITY SHARES RS. 1,75,92,000 RS. 25,20,000 ADDRESS: 211, 2ND FL OOR, NEAR SEJALGLASS.BALAJI ARCADE PREMISES, S.V. ROAD, KANDIVALI - W MUMBAI , MAHARASHTRA 400067 2. RESERVES & SURPLUS RS, 2,25,989 5 UTKANDA TRADING PRIVATE LIMITED AS ON 31. 03. 06 OWN FUND OWN FUND & BORROWED FUND OF PARTY BEING RS. 4,16,51,31 5 IS HIGHER THAN THE AMOUNT RECEIVED ADDRESS: C - 204, 2ND FLOOR, VISHAL APARTMENT TAKI ROAD, TULINJNALLASOPARA (E) THANE, MAHARASHTRA 401209 IN RS. 1,00,000 I. EQUITY SHARES RS. 1,00,000 RS. 25,20,000 2. RESERVES & SURPLUS RS. 14,72,665 3. BORROWED FUND RS. 4,15,51.315 6 NAKSHATRA BUSINESS PRIVATE LIMITED FORMERLY KNOWN AS HEMA T RADING COMPANY PRIVATE LIMITED AS ON 31.03.06 OWN FUND OWN FUND OF BEING RS. RS. 1,79,33,155 I. EQUITY SHA RES RS. 1,76,00,000 RS. 25,20,000 1,79,33,155 IS HIGHER THAN THE AMOUNT RECEIVED ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 23 T HE ABOVE CHART HAS BEEN CUL L ED OUT FROM VARIOUS DETAILS FILED BY THE APPELLANT AND WILL SHOW THAT THE RELEVANT PA RTIES/COMPANIES WERE IN EXISTENCE SINCE THEY WERE HAVING PAN NUMBER AND REGULARLY FILING IT RETURNS AND ALSO HAVING CIN NUMBER AND WERE IN EXISTENCE IN THE RECORDS OF REGISTRAR OF COMPANIES. THE AO HAS NOT BROUGHT ANY ADVERSE MATERIAL AGAINST THIS. AS REG ARDS SUFFICIENCY OF FUNDS, IT MAY BE SEEN FROM THE ABOVE CHART THAT THE RESPECTIVE PARTIES HAD SUFFICIENT FUNDS TO ADVANCE LOAN OR INVEST IN SHARE CAPITAL IN ANY OTHER ENTITY INCLUDING THE APPELLANT AND THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROV E THAT ANY UNDISCLOSED TAXABLE INCOME OF THE APPELLANT COMPANY HAD GONE TO THE ABOVE STATED CONCERNS OF PRAVIN JAIN IN ANY SPECIFIC MANNER AND THE SAME HAS COME BACK IN THE FORM OF SHARE CAPITAL/SHARE APPLICATION MONEY TO THE APPELLANT. AS REGARDS TRANSAC TION, THE AO HAS NO WHERE BEEN ABLE TO BRING ON RECORD THAT ANY UNDISCLOSED CASH AMOUNT OF THE APPELLANT COMPANY WAS DEPOSITED IN THE BANK ACCOUNT/ANY ACCOUNT OF THE SHARE APPLICANTS AND THE SAME AMOUNT WAS UTILIZ ED IN ISSUING THE CHEQUE OR RTGS OR DD BY T HE SHARE APPLICANTS TO INVEST IN THE APPELLANTS COMPANY. ON THE CONTRARY, IT HAS BEEN SUBMITTED BY THE LD. AR THAT THE BANK ACCOUNT SHOW THAT NO CASH HAS BEEN DEPOSITED BEFORE ISSUING THE CHEQUE/RTGS/DD FOR THE APPELLANT. 6.2.23. THUS, IT HAS TO BE SAID THAT THE APPELLANT HAD DONE EVERYTHING IN ITS POWER TO PROVE THE 3 INGREDIENTS REQUIRED TO PROVE THE SATISFACTORY NATURE OF THE LOAN TRANSACTIONS. IN THESE CIRCUMSTANCES, THE ONUS HAD SHIFTED TO THE AO. IF THE AO WAS STILL NOT SATISFIED, HE HAD THE OPTION OF MAKING INQUIRIES FROM THE ALLEGED ADDRESS: 211, 2ND FLOOR, NEAR SEJAL GLASS, BALAJI ARCADE PREMISES, S.V. ROAD, KANDIVALI - W MUMBAI, MAHARASHTRA 400067 2. RESERVES & SURPLUS RS. 3,33,1 55 7 TRIANGULAR INFOCOM LIMITED AS ON 31. 03. 06 OWN FUND OWN FUND OF PARTY BEING RS. 2,03,39,339 IS HIGHER THAN THE AMOUNT RECEIVED FORMERLY KNOWN AS LEXUS INFOTECH LIMITED ADDRESS: CS - 2, SILVER ANKLE TYARI ROAD , VERSOVA, MUMBAI 400 061 RS. 2,03,39,339 I. EQUITY SHARES RS. 2,01,32,000 RS. 25,20,000 2. RESERVES & SURPLUS RS. 1,19,339 ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 24 SHARE APPLICANTS BY SUMMONING THEM. HOWEVER, AS SEEN FROM ASSESSMENT ORDER, HE DID NOT ANY SUCH THING. FURTHER, IF THE AO WAS NOT SATISFIED WITH WHAT HAD BEEN GIVEN TO HIM BY THE APPELLANT, HE WAS DUTY BOUND TO SPECIFY WHAT MORE MATERIAL HE WANTED THE APPELLANT TO FURNISH. THE AO NEVER ASKED FOR ANY FURTHER MATERIAL, THOUGH TIME AND AGAIN THE APPELLANT ASKED IN THEIR SUBMISSIONS. THIS LEADS TO THE INESCAPABLE CONCLUSION THAT THE AO COULD NOT THINK OF ANY FURTHER MATERIAL TO ASK FOR AND PROCEEDED TO REJECT THE APPELLANTS CLAIMS, RELYING UPON THE INFORMATION / MATERIAL WHICH HE NEVER EVEN BROUGHT TO THE NOTICE OF THE APPELLANT FOR ANY REBUTTAL. THE UNEQUIVOCAL CONCLUSION IS THAT ALL THE 3 INGREDIENTS HAVING BEEN SATISFIED, THE IMPUGNED SHARE APPLICATION MONEY HAVE TO BE TREATED AS EXPLAINED SATISFACTORILY AND THE AO WAS NOT JUSTIFIED IN HAVING DISREGARDED OVERWHELMINGLY SUPPORTIVE EVIDENCE. NO COGENT MATERIAL WAS ADDUCED BY HIM TO SHOW THAT LOANS WERE UNEXPLAINED. THEREFORE , THE IMPUGNED ADDITION OF UNDER THE HEADING SHARE APPLICATION MONEY AS MADE IN THE ASSESSMENT ORDER, FAILS ON SEVERAL COUNTS (1) RELIANCE ON EVIDENCE THAT IS TOTALLY INADEQUATE (2) FAILURE TO MAKE AVAILABLE INCRIMINATING MATERIAL (REPORTS, STATEMENTS ET C.) FORMING BASIS FOR ACTION BY THE AO (3) FAILURE TO GIVE DUE OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE WITNESSES, WHOSE STATEMENT MIGHT HAVE BEEN RELIEF UPON; AND (4) FAILURE TO RECOGNIZE THE SATISFACTORY NATURE OF EXPLANATION / EVIDENCE TENDERED BY THE APPELLANT TO EXPLAIN IDENTITY OF CREDITORS, CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE LOAN TRANSACTIONS. HENCE, THE IMPUGNED ADDITION CANNOT BE SUSTAINED. 6.3.24. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS JUDICIA L PRONOUNCEMENTS REFERRED AND RELIED ABOVE BY ME AND ALSO CERTAIN JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT IN ITS WRITTEN SUBMISSION WHICH HAS REPRODUCED ABOVE, ADDITION MADE BY THE AO UNDER THE HEADING SHARE CAPITAL / SHARE APPLICATION MONEY A MOUNT CANNOT BE SUSTAINED AND THEREFORE, THE AO IS DIRECTED TO DELETE THE AMOUNT OF RS.1,65,00,000/ - + 51,00,000/ - + RS.25,20,000/ - TOTALING RS.2,41,20,000/ - . IN THE RESULT, THIS GROUND OF APPEAL IS TO BE TREATED AS ALLOWED. 8. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD TOGETHER WITH THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY BOTH THE COUNSELS BEFORE US AT THE TIME OF HEARING. WE FIND THAT THE LD DR BEFORE US VEHEM ENTLY REITERATED THE FINDINGS OF THE LD AO AND STATED THAT SHRI PRAVEEN KUMAR JAIN WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES WHICH IS EVIDENT FROM THE STATEMENT ON OATH RECORDED FROM HIM AT THE TIME OF HIS SEARCH. THE LD DR ARGUED THAT SUBSEQUENT R ETRACTION OF ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 25 STATEMENT BY SHRI PRAVEEN KUMAR JAIN COULD NOT BE TAKEN INTO CONSIDERATION AS THE SAME WAS DONE AFTER A CONSIDERABLE LAPSE OF TIME. THE LD DR ARGUED THAT THE ASSESSEE HAD ONLY RECEIVED BOGUS SHARE CAPITAL/SHARE APPLICATION AND SHARE PREMIUM MO NIES FROM AFORESAID ENTITIES FROM PARTIES WHO HAVE BEEN FOUND TO BE MERE ACCOMMODATION ENTRY PROVIDERS. THE LD DR VEHEMENTLY RELIED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS ARGUMENTS: - A) PCIT VS BIKRAM SINGH REPORTED IN 85 TAXMANN.COM 104 (DEL HC) B) PCIT VS NRA IRON & STEEL P LTD REPORTED IN 412 ITR 161 (SC) 9.1. WE FIND FROM THE MATERIALS AVAILABLE ON RECORD THAT : - A) THERE IS A CLEAR FINDING TO THE FACT THAT SHRI PRAVEEN KUMAR JAIN IS NEITHER A SUBSTANTIAL SHAREHOLDER NOR A DIRECTOR IN ANY OF TH E INVESTOR COMPANIES. B) THE ASSESSEE HAD SOUGHT FOR THE STATEMENT RECORDED FROM SHRI PRAVEEN KUMAR JAIN FROM THE LD AO WHICH WAS NOT FURNISHED TO HIM. HENCE ANY STATEMENT TAKEN BEHIND THE BACK OF THE ASSESSEE AND WHICH WAS NOT PUT TO THE ASSESSEE FOR HIS REBUTTAL, DOES NOT HAVE ANY EVIDENTIARY VALUE AND HENCE CANNOT BE RELIED UPON. C) ALL THE RELEVANT DETAILS FOR RECEIPT OF SHARE APPLICATION / SHARE CAPITAL / SHARE PREMIUM AS LISTED HEREINABOVE HAVE BEEN DULY FILED BY THE ASSESSEE ON WHICH NO ADVERSE IN FERENCES WERE DRAWN BY THE LD AO. D) NO VERIFICATION WHATSOEVER WAS CARRIED OUT BY THE LD AO WITH THE SAID INVESTOR COMPANIES ON THE SAID EVIDENCES FURNISHED BY THE ASSESSEE. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 26 9.2. WE FIND THAT ALL THE INVESTOR COMPANIES ARE HAVING SUFFICIENT CREDITWORT HINESS TO MAKE INVESTMENT IN THE ASSESSEE COMPANY WHICH WOULD BE EVIDENT FROM THE TABLE HEREINBELOW: - 9.3. NOW IT WOULD BE RELEVANT TO ADDRESS THE CASE LAWS RELIED UPON BY THE LD DR BEFORE US. PCIT VS BIKRAM SINGH REPORTED IN 85 TAXMANN.COM 104 (DEL HC) IN THIS CASE, THE LOANS WERE RECEIVED FROM 8 PERSONS WHOSE IDENTITIES WERE NOT ESTABLISHED. THERE WAS A CLEAR FINDING THAT THE LENDERS DID NOT HAVE SUFFICIENT FINANCIAL STRENGTH TO ADVANCE THE LOANS TO THE ASSESSEE THEREIN, THAT TOO WITHOUT ANY COLLATE RAL SECURITY, WITHOUT ANY INTEREST AND WITHOUT A LOAN AGREEMENT. THE RELEVANT OBSERVATIONS OF THE ASSESSING OFFICER IN THAT CASE ON FACTS WERE AS UNDER: - 9. A BRIEF SUMMARY OF EACH OF THE EIGHT TRANSACTIONS AND CREDITORS THEREOF, AS PER THE AO'S ORDER I S AS UNDER: ( I ) SHRI AMAR SINGH - ONLY A LETTER OF CONFIRMATION WAS FILED. NAME OF THE FATHER AND ADDRESS WAS NOT GIVEN. PAN NUMBER WAS NOT GIVEN. THE INFORMATION REQUESTED FROM GURGAON GRAMIN BANK, FROM WHERE THE CHEQUE WAS ISSUED WITH RESPECT TO THE CO MPENSATION FROM LAND ACQUISITION, WAS ALSO NOT RECEIVED. THE PERSON WAS NOT PRODUCED. THUS, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SHRI AMAR SINGH WERE NOT PROVED. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 27 ( II ) SHRI CHANDAN SINGH - A CONFIRMATION LETTER OF SHRI CHANDAN SINGH WAS FILE D ALONG WITH THE BANK STATEMENT. THE AO NOTICED THAT THE BANK ACCOUNT WAS OPENED WITH A CASH DEPOSIT OF RS.500/ - AND HUGE AMOUNTS OF CASH WAS DEPOSITED IN THIS ACCOUNT BEFORE THE CHEQUES OF RS.60, 00,000/ - AND RS.50, 00,000/ - WERE ISSUED. THE AO CONCLUDED THAT SINCE THE SOURCE OF CASH WAS UNVERIFIED AND SHRI CHANDAN SINGH WAS ALSO NOT PRODUCED, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SHRI CHANDAN SINGH WAS NOT PROVED. ( III ) SHRI HARPREET SINGH - NO DOCUMENTS WERE FILED BY THE ASSESSEE TO ESTABL ISH THE IDENTITY, ADDRESS ETC. EVEN THE PAN NUMBER OR ID PROOF WAS NOT FILED AND HE WAS ALSO NOT EVEN PRODUCED. ( IV ) SHRI OM PRAKASH - NO DOCUMENTS TO ESTABLISH THE ADDRESS, PAN NUMBER, SOURCE OF DEPOSIT AND ID PROOF, WERE FILED. NEITHER WAS A CONFIRMAT ION LETTER FILED NOR WAS HE PRODUCED. ( V ) SHRI SHIV TEJ - NO DOCUMENTS TO ESTABLISH THE ADDRESS, PAN NUMBER, SOURCE OF DEPOSIT AND ID PROOF, WERE FILED. NEITHER WAS A CONFIRMATION LETTER FILED NOR WAS HE PRODUCED. ( VI ) SHRI RAM CHANDER - ONLY A CONFI RMATION LETTER WAS FILED. HOWEVER, THE AO OBSERVED THAT THE SAME WAS NOT SUPPORTED BY ANY EVIDENCE OF IDENTIFICATION, CHEQUE NUMBERS, SOURCES OF INCOME OR SOURCES OF LOAN. THE PERSON WAS NOT PRODUCED. ( VII ) SMT. SUNITA - ONLY A CONFIRMATION LETTER WAS F ILED. HOWEVER, THE AO OBSERVED THAT THE SAME WAS NOT SUPPORTED BY ANY EVIDENCE OF IDENTIFICATION, CHEQUE NUMBERS, SOURCES OF INCOME OR SOURCES OF LOAN AND EVEN SHE WAS NOT PRODUCED. ( VIII ) SHRI VIRENDER YADAV - A CONFIRMATION LETTER WAS PRODUCED BUT NO PAN NUMBER WAS MENTIONED. THE AO OBSERVED THAT THE BANK STATEMENTS REVEAL THE DEPOSIT OF CASH OF RS.13,00,000/ - AND RS.7,00,000/ - IMMEDIATELY BEFORE THE ISSUANCE OF THE CHEQUE IN FAVOUR OF THE ASSESSEE. HE WAS ALSO NOT PRODUCED. 15. THE ITAT BY ORDER DAT ED 19TH JULY, 2016 PARTLY ALLOWED THE ASSESSEE'S APPEAL AND DELETED THE ADDITIONS IN RESPECT OF FOUR OF THE CREDITORS. THE SUMMARY OF THE CONCLUSIONS OF THE ITAT IN RESPECT OF THE EIGHT CREDITORS AND THE TRANSACTIONS IS SET OUT BELOW: ( I ) IN RESPECT OF S MT. SUNITA, THE ITAT HELD THAT ADDITIONAL EVIDENCE WAS SUBMITTED BY THE ASSESSEE AND THE SAME WAS TAKEN ON RECORD. THE ITAT OBSERVED THAT SMT. SUNITA, BEING THE WIFE OF THE ASSESSEE AND HER FINANCIAL AFFAIRS HAVING BEEN HANDLED BY THE ASSESSEE HIMSELF, THE IDENTITY AND CREDITWORTHINESS OF SMT. SUNITA WAS ESTABLISHED. HER PAN CARD HAS BEEN FILED. BY ASSESSING THE BANK ACCOUNTS OF SMT. SUNITA, THE ITAT CONCLUDED THAT THE GENUINENESS AND CREDITWORTHINESS WAS ALSO ESTABLISHED. ( II ) IN RESPECT OF SHRI VIRENDE R YADAV, THE ITAT OBSERVED THAT SINCE HIS PAN CARD ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 28 HAD BEEN SUBMITTED BY THE ASSESSEE, THE MATTER DESERVED TO BE REMANDED TO THE AO TO PASS A SPEAKING ORDER. ( III ) IN RESPECT OF SHRI SHIV TEJ, THE ITAT AFTER RELYING UPON THE DOCUMENTS, PRODUCED BY THE A SSESSEE, RESTORED THE MATTER TO THE FILE OF THE AO AS HE HAD NOT BEEN PRODUCED BEFORE THE AO. ( IV ) IN RESPECT OF SHRI OM PRAKASH, THE ASSESSEE RELIED UPON THE LETTER OF CONFIRMATION, THE PAN CARD AND VOTER IDENTITY CARD TO ESTABLISH THE IDENTITY AND ALS O SUBMITTED THAT THE AO DID NOT RECORD THE STATEMENT OF SHRI OM PRAKASH DESPITE HIS APPEARANCE BEFORE THE AO. THUS, THE ITAT CONCLUDED THAT THE MATTER DESERVED TO BE RESTORED TO THE FILE OF THE AO. ( V ) IN RESPECT OF SHRI RAM CHANDER, THE ITAT REFERRED T O THE CONFIRMATION LETTER ISSUED BY HIM, VOTER ID CARD, THE COPY OF BANK STATEMENT AND THE CHEQUE OF RS. 18.48 LAKHS, WHICH WAS EXPLAINED BY HIM AS HAVING BEEN RECEIVED FROM HIS SISTER VIDYA. THUS, THE ITAT CONCLUDED THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS WAS ESTABLISHED AND THE ADDITION OF RS.10 LAKHS IN RESPECT OF SHRI RAM CHANDER WAS DELETED. ( VI ) IN RESPECT OF SHRI CHANDAN SINGH, THE ITAT REFERRED TO THE COPY OF PAN CARD, VOTER ID CARD AND THE BANK STATEMENT, WHICH WAS SUBMITTED BY THE A SSESSEE. THE ITAT HELD THAT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS WAS ESTABLISHED AND THE ADDITION MADE TO THE TUNE OF RS.1.10 CRORES WAS DELETED. ( VII ) IN RESPECT OF SHRI AMAR SINGH, THE ITAT REFERRED TO THE LETTER OF CONFIRMATION AND VOTER ID CARD TO ESTABLISH THE IDENTITY OF THIS CREDITOR. HE FURTHER REFERRED TO THE BANK STATEMENT, WHICH SHOWED A DEPOSIT OF RS.84,44,762/ - IN HIS BANK ACCOUNT, JUST BEFORE THE ISSUANCE OF CHEQUE OF RS.50 LAKHS TO THE ASSESSEE. ACCORDING TO THE ASSESSEE, THIS AM OUNT WAS RECEIVED FROM THE LAND ACQUISITION OFFICER, GURGAON IN FAVOUR OF SHRI AMAR SINGH. THE ITAT THUS DELETED THE ADDITION OF RUPEES RS.50 LAKHS IN RESPECT OF SHRI AMAR SINGH. ( VIII ) IN RESPECT OF SHRI HARPREET SINGH, THE ITAT REFERRED TO THE LETTER ISSUED BY HIM EXPLAINING THAT THE LOAN WAS GIVEN BY HIS SON MR. DAKSHDEEP SINGH VIDE CHEQUE NO. 58913 DATED 18TH JUNE, 2010 DRAWN ON HDFC BANK. HE ALSO REFERRED TO THE CONFIRMATION LETTER GIVEN BY MR. DAKSHDEEP SINGH. THE ITAT NOTED THAT THE CREDITWORTHINE SS OF MR. DAKSHDEEP SINGH WAS NOT ESTABLISHED AND HENCE THE MATTER WAS RESTORED TO THE FILE OF THE AO TO EXAMINE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS. HOWEVER, FOR STATISTICAL PURPOSE, ADDITION OF RS.3,50,000/ - IN RESPECT OF SHRI HARPREET SINGH W AS ALLOWED. 16. THUS, THE ITAT DELETED THE FOLLOWING ADDITIONS QUA SHRI. AMAR SINGH, SHRI. CHANDAN SINGH, SHRI. RAM CHANDER, AND SMT. SUNITA. RESTORED THE ADDITIONS WITH RESPECT TO SHRI. VIRENDER YADAV, SHRI. OM PRAKASH, SHRI. SHIV TEJ SINGH, AN D SHRI. HARPREET SINGH, TO THE AO FOR ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 29 RECONSIDERATION. IT WAS HELD BY HONBLE DELHI HIGH COURT AS UNDER: - 41. AN ANALYSIS OF THE ABOVE FACTS SHOWS THAT NONE OF THESE FOUR INDIVIDUALS HAVE THE FINANCIAL STRENGTH TO LEND SUCH HUGE SUMS OF MONEY TO THE ASS ESSEE, THAT TOO WITHOUT ANY COLLATERAL SECURITY, WITHOUT INTEREST AND WITHOUT A LOAN AGREEMENT. THE MERE ESTABLISHING OF THEIR IDENTITY AND THE FACT THAT THE AMOUNTS HAVE BEEN TRANSFERRED THROUGH CHEQUE PAYMENTS, DOES NOT BY ITSELF MEAN THAT THE TRANSACTIO NS ARE GENUINE. THE AO AND THE CIT (A) HAVE RIGHTLY HELD THAT THE IDENTITY, CREDITWORTHINESS AND THE GENUINENESS ARE ALL IN DOUBT. MOREOVER, THE COURT NOTES THAT THAT THESE AMOUNTS HAVE BEEN ADVANCED TO THE ASSESSEE WITHOUT ANY EXPLANATION AS TO THEIR RELA TIONSHIP WITH THE ASSESSEE, THE REASON FOR THE PAYMENT OF SUCH HUGE AMOUNTS, AS ALSO WHETHER ANY REPAYMENTS HAVE, IN FACT, BEEN MADE. THERE ARE CONTRADICTIONS IN THE EXPLANATION GIVEN BY THE ASSESSEE AND THE STATEMENTS RECORDED BY THESE FOUR INDIVIDUALS, W HICH ARE IRRECONCILABLE. FOR EXAMPLE, IN THE CASE OF SHRI RAM CHANDER/RAM CHARAN, HE HAD INITIALLY STATED THAT HE HAD GIVEN RS.10,00,000/ - OUT OF THE PROCEEDS OF SALE OF THE LAND BUT THEREAFTER IT WAS CLAIMED BY HIM THAT THE MONEY HAD COME FROM HER SISTER VIDYA. SUCH CONTRADICTIONS CLEARLY RENDER ALL THESE TRANSACTIONS DUBIOUS. THE ITAT COULD NOT HAVE, MERELY BECAUSE THE PAYMENTS WERE THROUGH CHEQUES, HELD THAT THE TRANSACTIONS WERE GENUINE. THE ITAT ERRED IN SIMPLY ACCEPTING THE EXPLANATION OF THE ASSESSEE QUA THE FOUR TRANSACTIONS. THE ITAT, CLEARLY, DID NOT FOLLOW THE BINDING PRECEDENT IN DIVINE LEASING & FINANCE LTD. ( SUPRA ), WHICH IN NO UNCERTAIN TERMS REQUIRES THAT THE AUTHORITIES ARE DUTY BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITORS, SUB SCRIBERS AND THE GENUINENESS OF THE TRANSACTIONS. THUS THE ITAT DID NOT MERELY GIVE FINDINGS OF FACT BUT MISAPPLIED THE LAW. HENCE THE AUTHORITIES CIT V. S. NELLIAPPAN [ 1967] 66 ITR 722 (SC) , ORISSA CORPN. PVT. LTD. ( SUPRA ), GUN NIDHI DALMIA ( SUPRA ) DO NOT SUPPORT THE ASSESSEE'S CASE. THE ASSESSEE HAS FAILED TO DISCHARGE HIS INITIAL BURDEN AS THE EXPLANATION GIVEN BY THE ASSESSEE AND THE FOUR INDIVIDUALS DOES NOT APPEAR TO BE CREDIBLE. HENCE IT COULD BE SEEN THAT THE AFORESAID NARRATION OF FACTS ARE TOTALLY DISTINGUISHABLE WITH FACTS OF THE INSTANT CASE BEFORE US, WHICH ARE NOT REITERATED FOR THE SAKE OF BREVITY. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 30 9.4. FINALLY THE LD DR PLACED RELIANCE ON THE RECENT DEC ISION OF THE HONBLE APEX COURT IN THE CASE OF PRINCIPAL CIT VS NRA IRON & STEEL (P) LTD REPORTED IN 412 ITR 161 (SC) WHEREIN THE DECISION ON ADDITION MADE TOWARDS CASH CREDIT WAS RENDERED IN FAVOUR OF THE REVENUE. WE HAVE GONE THROUGH THE SAID JUDGEMENT AND WE FIND IN THAT CASE, THE LD AO HAD MADE EXTENSIVE ENQUIRIES AND FROM THAT HE HAD FOUND THAT SOME OF THE INVESTOR COMPANIES WERE NON - EXISTENT WHICH IS NOT THE CASE BEFORE US. CERTAIN INVESTOR COMPANIES DID NOT PRODUCE THEIR BANK STATEMENTS PROVING THE SOURCE FOR MAKING INVESTMENTS IN ASSESSEE COMPANY, WHICH IS NOT THE CASE BEFORE US. SOURCE OF FUNDS WERE NEVER ESTABLISHED BY THE INVESTOR COMPANIES IN THE CASE BEFORE THE HONBLE APEX COURT, WHEREAS IN THE INSTANT CASE, THE ENTIRE DETAILS OF SOURCE OF SO URCE WERE DULY FURNISHED BY ALL THE RESPECTIVE SHARE SUBSCRIBING COMPANIES BEFORE THE LD AO IN RESPONSE TO SUMMONS U/S 131 OF THE ACT BY COMPLYING WITH THE PERSONAL APPEARANCE OF DIRECTORS. IN THE INSTANT CASE BEFORE US, AFTER THE RELEVANT DETAILS WERE FU RNISHED BY THE ASSESSEE BEFORE THE LD AO , NO ENQUIRIES WERE FURTHER MADE BY THE LD AO WITH THE SHARE SUBSCRIBERS. THE LD AO MERELY RELIED ON THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN AND PROCEEDED TO MAKE THE ADDITION. HENCE THE DECISION RELIED UPON BY T HE LD DR IS FACTUALLY DISTINGUISHABLE AND DOES NOT ADVANCE THE CASE OF THE REVENUE. 9.5. WE FIND THAT AS PER THE MANDATE OF SECTION 68 OF THE ACT, THE NATURE AND SOURCE OF CREDIT IN THE BOOKS OF THE ASSESSEE COMPANY HAS BEEN DULY EXPLAINED BY THE ASSESSE E. THE CREDIT IS IN THE FORM OF RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM FROM SHARE APPLICANTS. THE NATURE OF RECEIPT TOWARDS SHARE CAPITAL IS WELL ESTABLISHED FROM THE ENTRIES PASSED IN THE RESPECTIVE BALANCE SHEETS OF THE COMPANIES AS SHARE CAPITAL AND INVESTMENTS, AS THE CASE MAY BE. HENCE THE NATURE OF RECEIPT IS PROVED BY THE ASSESSEE BEYOND DOUBT. IN RESPECT OF SOURCE OF CREDIT, THE ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 31 ASSESSEE HAS TO PROVE THE THREE NECESSARY INGREDIENTS I.E IDENTITY OF SHARE APPLICANTS, GENUINENESS OF TRANSACTION S AND CREDITWORTHINESS OF SHARE APPLICANTS. THE IDENTITY OF SHARE APPLICANTS IS PROVED BEYOND DOUBT BY THE ASSESSEE BY FURNISHING THE NAME, ADDRESS, PAN OF SHARE APPLICANTS TOGETHER WITH THE COPIES OF BALANCE SHEETS AND INCOME TAX RETURNS. WITH REGARD TO THE CREDITWORTHINESS OF SHARE APPLICANTS, THESE COMPANIES ARE HAVING CAPITAL AND RESERVES IN SEVERAL CRORES OF RUPEES AND THE INVESTMENT MADE IN THE ASSESSEE COMPANY IS A SMALL PART OF THEIR CAPITAL AS COULD BE EVIDENT FROM THE AFORESAID TABLE. THESE TRA NSACTIONS ARE ALSO DULY REFLECTED IN THE BALANCE SHEETS OF THE SHARE APPLICANTS. BY THIS, THE CREDITWORTHINESS OF SHARE APPLICANTS IS ALSO PROVED BEYOND DOUBT. WITH REGARD TO GENUINENESS OF TRANSACTIONS, THE MONIES HAVE BEEN DIRECTLY PAID TO THE ASSESSEE C OMPANY BY ACCOUNT PAYEE CHEQUES OUT OF SUFFICIENT BANK BALANCES AVAILABLE IN THEIR RESPECTIVE BANK ACCOUNTS. THE SHARE APPLICANTS HAVE CONFIRMED THE FACT OF INVESTMENT IN SHARE CAPITAL AND SHARE PREMIUM BY FILING A CONFIRMATION TOGETHER WITH AN AFFIDAVIT FROM THEIR DIRECTORS AND HAVE ALSO CONFIRMED THE PAYMENTS WHICH ARE DULY CORROBORATED WITH THEIR RESPECTIVE BANK STATEMENTS AND ALL THE PAYMENTS ARE BY ACCOUNT PAYEE CHEQUES. NO VERIFICATION WAS CARRIED OUT BY THE LD AO IN THE INSTANT CASE EITHER BY ISSU ING NOTICES U/S 133(6) OF THE ACT OR BY ISSUING SUMMONS U/S 131 OF THE ACT WITH THE SHARE APPLICANTS. 9.6. UNDISPUTEDLY THE SHARE APPLICANTS IN THIS CASE ARE THE BANK ACCOUNT HOLDERS IN THEIR RESPECTIVE BANKS IN THEIR OWN NAME AND ARE SOLE OWNER OF THE CREDITS APPEARING IN THEIR BANK ACCOUNT FROM WHERE THEY ISSUED CHEQUES TO THE ASSESSEE. FOR THE PROPOSITION THAT A BANK ACCOUNT HOLDER HIMSELF IS THE 'OWNER' OF 'CREDITS' APPEARING IN HIS ACCOUNT (WITH THE RESULT THAT HE HIMSELF IS ACCOUNTABLE TO EXPLAIN T HE SOURCE OF SUCH CREDITS IN ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 32 WHATEVER WAY AND FORM, THE SAME HAVE EMERGED) SUPPORT CAN BE DERIVED FROM SECTION 4 OF BANKERS BOOK EVIDENCE ACT 1891 WHICH READS AS UNDER: - '4. MODE OF PROOF OF ENTRIES IN BANKERS' BOOKS: SUBJECT TO THE PROVISIONS OF THIS ACT , A CERTIFIED COPY OF ANY ENTRY IN A BANKERS' BOOK SHALL IN ALL LEGAL PROCEEDINGS BE RECEIVED AS PRIMA FACIE EVIDENCE OF THE EXISTENCE OF SUCH ENTRY, AND SHALL BE ADMITTED AS EVIDENCE OF THE MATTERS, TRANSACTIONS AND ACCOUNTS THEREIN RECORDED IN EVERY CAS ES WHERE, AND TO THE SAME EXTENT AS, THE ORIGINAL ENTRY ITSELF IS NOW BY LAW ADMISSIBLE, BUT NOT FURTHER OR OTHERWISE. 9.6.1. FOLLOWING THE SAID PROVISIONS, THE CO - ORDINATE BENCH OF ALLAHABAD TRIBUNAL IN THE CASE OF ANAND PRAKASH AGARWAL REPORTED IN 6 D TR (ALL - TRIB) 191 HELD AS UNDER: - THE QUESTION THAT REMAINS TO BE DECIDED NOW IS WHETHER THE SUBJECT MATTER OF TRANSFER WAS THE ASSET BELONGING TO THE TRANSFEROR/DONORS THEMSELVES. THERE IS ENOUGH MATERIAL ON RECORD WHICH GOES TO SHOW THAT THERE WERE VAR IOUS CREDITS IN THE BANK ACCOUNTS OF THE DONORS, PRIOR TO THE TRANSACTION OF GIFTS, WHICH UNDISPUTEDLY BELONGING TO THE RESPECTIVE DONORS THEMSELVES, IN THEIR OWN RIGHTS. NO PART OF THE CREDITS IN THE SAID BANK' ACCOUNTS WAS GENERATED FROM THE APPELLANT AN D/OR FROM ITS ASSOCIATES, IN ANY MANNER. THE CERTIFICATES ISSUED BY THE BANKS ARE CONSTRUABLE AS EVIDENCE ABOUT THE OWNERSHIP OF THE TRANSFERORS OR THEIR RESPECTIVE BANK ACCOUNTS, AS PER S.4 OF THE BANKERS' BOOKS EVIDENCE ACT 1891, WHICH READ AS UNDER: ' 4. WHERE AN EXTRACT OF ACCOUNT WAS DULY SIGNED BY THE AGENT OF THE BANK AND IMPLICIT IN ITS WAS A CERTIFICATE THAT IT WAS A TRUE COPY OF AN ENTRY CONTAINED IN ONE OF THE ORDINARY BOOKS OF THE BANK AND WAS MADE IN THE USUAL AND ORDINARY COURSE OF BUSINESS A ND THAT SUCH BOOK WAS IN THE CUSTODY OF THE BANK, IT WAS HELD ADMISSIBLE IN EVIDENCE. RADHESHYAM V. SAFIYABAI IBRAHIM AIR 1988 BOM. 361 : 1987 MAH. 725: 1987 BANK J 552. IN VIEW OF THE POSITION OF LAW AS DISCUSSED ABOVE, IT IS ALWAYS OPEN FOR A BORROWER TO CONTEND, THAT EVEN THE CREDITWORTHINESS OF THE LENDER STANDS PROVED TO THE EXTENT OF CREDITS APPEARING IN HIS BANK ACCOUNT AND HE SHOULD BE HELD TO BE SUCCESSFUL IN THIS CONTENTION. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 33 9.7. WE FIND THAT THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF S. K. BOTHRA & SONS, HUF V. INCOME - TAX OFFICER, WARD - 46(3), KOLKATA REPORTED IN 347 ITR 347(CAL) HAD HELD AS FOLLOWS: 15. IT IS NOW A SETTLED LAW THAT WHILE CONSIDERING THE QUESTION WHETHER THE ALLEGED LOAN TAKEN BY THE ASSESSEE WAS A GENUINE TRANSACTION, THE INITIAL ONUS IS ALWAYS UPON THE ASSESSEE AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY THE APPELLANT IS NOT SATISFACTORY, THE ASSESSING OFFICER CAN DISBELIEVE THE ALLEGED TRANSACTION OF LOAN. BUT THE LAW IS EQUALLY SETTLED THAT IF THE INI TIAL BURDEN IS DISCHARGED BY THE ASSESSEE BY PRODUCING SUFFICIENT MATERIALS IN SUPPORT OF THE LOAN TRANSACTION, THE ONUS SHIFTS UPON THE ASSESSING OFFICER AND AFTER VERIFICATION, HE CAN CALL FOR FURTHER EXPLANATION FROM THE ASSESSEE AND IN THE PROCESS, THE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO ASSESSEE. 16. IN THE CASE BEFORE US, THE APPELLANT BY PRODUCING THE LOAN - CONFIRMATION - CERTIFICATES SIGNED BY THE CREDITORS, DISCLOSING THEIR PERMANENT ACCOUNT NUMBERS AND ADDRESS AND FURTHER INDICATING T HAT THE LOAN WAS TAKEN BY ACCOUNT PAYEE CHEQUES, NO DOUBT, PRIMA FACIE, DISCHARGED THE INITIAL BURDEN AND THOSE MATERIALS DISCLOSED BY THE ASSESSEE PROMPTED THE ASSESSING OFFICER TO ENQUIRE THROUGH THE INSPECTOR TO VERIFY THE STATEMENTS. 9 .8. WE FIND TH AT THE HONBLE SUPREME COURT IN THE CASE OF M/S EARTHMETAL ELECTRICALS P LTD VS CIT & ANR. REPORTED IN 2010 (7) TMI 1137 IN CIVIL APPEAL NO. 21073 / 2009 DATED 30.7.2010 ARISING FROM THE ORDER OF HONBLE BOMBAY HIGH COURT HAD HELD AS UNDER: - ORDER DELAY CO NDONED. LEAVE GRANTED. HEARD LEARNED COUNSEL ON BOTH SIDES. WE HAVE EXAMINED THE POSITION. WE FIND THAT THE SHAREHOLDERS ARE GENUINE PARTIES. THEY ARE NOT BOGUS AND FICTITIOUS. THEREFORE, THE IMPUGNED ORDER IS SET ASIDE. THE APPEAL IS ALLOWED ACCORDINGLY . NO ORDER AS TO COSTS. IN THE INSTANT CASE BEFORE US, THE SHARE SUBSCRIBING COMPANIES ARE DULY ASSESSED TO INCOME TAX. IT IS NOT IN DISPUTE THAT THE SHARE SUBSCRIBING COMPANIES ARE IN EXISTENCE. IT IS NOT IN DISPUTE THAT THE SHARE SUBSCRIBING ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 34 COMPANI ES ARE DULY ASSESSED TO INCOME TAX AND THEIR INCOME TAX PARTICULARS TOGETHER WITH THE COPIES OF RESPECTIVE INCOME TAX RETURNS WITH THEIR BALANCE SHEETS ARE ALREADY ON RECORD . HENCE IT COULD BE SAFELY CONCLUDED THAT THEY ARE GENUINE SHAREHOLDERS AND NOT B OGUS AND FICTITIOUS. ACCORDINGLY, THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF M/S EARTHMETAL ELECTRICALS P LTD SUPRA WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE. 9.9. WE WOULD LIKE TO ADD THAT RECEIPT OF SHARE CAPITA L FOR A COMPANY IS NOT A PROHIBITED TRANSACTION, AS THAT IS ONE OF THE MAIN SOURCE OF RAISING FUNDS FOR A COMPANY TO RUN ITS INTENDED ACTIVITIES. ONCE ALL THE RELEVANT DETAILS OF THE INVESTOR COMPANIES WERE FILED BY THE ASSESSEE BEFORE THE LD AO , IT IS INCUMBENT ON THE PART OF THE LD AO TO TRIGGER THE FURTHER VERIFICATION ON THE INVESTOR COMPANIES BY EITHER ISSUING NOTICE U/S 133(6) OR SUMMONS U/S 131 OF THE ACT TO EXAMINE THE VERACITY OF THE DOCUMENTS FURNISHED BEFORE HIM. IN THE INSTANT CASE, ADMITTE DLY NO SUCH VERIFICATION WAS CARRIED OUT BY THE LD AO. THE ONLY PREMISE ON WHICH ADDITION WAS MADE WAS BY PLACING RELIANCE ON THE STATEMENT RECORDED FROM SHRI PRAVEEN KUMAR JAIN DURING THE COURSE OF HIS SEARCH ACTION. IN THESE FACTS AND CIRCUMSTANCES, TH ERE IS ABSOLUTELY NO REASON TO DRAW ANY ADVERSE INFERENCE ON THE IMPUGNED TRANSACTIONS AND THE DOCUMENTS SUBMITTED BY THE ASSESSEE. 9.10. WE FIND THAT THE SAME INVESTOR COMPANIES WERE SUBJECT MATTER OF ADJUDICATION BY THE CO - ORDINATE BENCH OF THIS TRIBU NAL IN THE CASE OF AMBEE INVESTMENT & FINANCE PVT LTD VS ITO IN ITA NOS. 3899 AND 3948/MUM/2017 DATED 8.2.2019 WHEREIN THE TRANSACTIONS WITH THE INVESTOR COMPANIES OLIVE OVERSEAS PVT LTD (REAL GOLD TRADING PVT LTD) ; NAKSHATRA BUSINESS PVT LTD (HEMA TRADIN G CO. PVT LTD) ; JAVDA INDIA ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 35 IMPEX LTD ; LEXUS INFOTECH LTD AND KUSH HINDUSTHAN ENTERTAINMENT LTD WERE CONSIDERED AND ISSUE DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEVANT OPERATIVE PORTION OF THE ORDER PASSED BY THIS TRIBUNAL IN ITA NOS. 3899 & 3948/M UM/2017 DATED 8.2.2019 SUPRA ARE AS UNDER: - 8. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE ORDER OF CIT(A) AND NOTED THAT THE AO NOTICED FROM THE BANK ACCOUNT SUBMITTED BY THE ASSESSEE THAT THESE ARE NON - GENUINE TRANSACTIONS. THE ENTIRE BASIS OF TH E AO WAS ON THE INVESTIGATION DONE BY THE OFFICE OF DGIT INVESTIGATION, MUMBAI. FROM THE ABOVE ASSESSMENT ORDER, IT IS CLEAR THAT THE AO HAS NOT MADE ANY ENQUIRY OR INVESTIGATION AND NO EVIDENCE TO CONTROVERT THE FACTUAL DETAILS SUBMITTED BY THE ASSESSEE WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER. THE STATEMENT OF SHRI PRAVIN KUMAR WAS SUPPLIED AND NO CROSS - EXAMINATION WAS PROVIDED. THERE NOTHING ON RECORD ABOUT THE RESULT OF INVESTIGATION HAVING DONE BY THE DGIT (INVESTIGATION), MUMBAI. THE PAPERS F ILED BY THE ASSESSEE CLEARLY DEMONSTRATE THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IS PROVED. THE ASSESSEE HAS PRIMA FACIE DISCHARGED ITS ONUS AND AO HAS NOT CARRIED OUT ANY INQUIRY. IN VIEW OF THE ABOVE, WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. THE FACTS OF THE INSTANT CASE BEFORE US SQUARELY FIT IN INTO THE FACTS BEFORE THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE AFORESAID CASE. THOUGH THIS DECISION WAS RENDERED IN THE CONTEXT OF TR ANSACTIONS WITH 5 PARTIES MENTIONED SUPRA, THE SAME DOCUMENTS THAT WERE FILED FOR THESE 5 PARTIES WERE FILED BY THE ASSESSEE HEREIN FOR THE OTHER TWO PARTIES ALSO VIZ REYNOLDS PETRO CHEM LTD AND UTKANTHA TRADING PVT LTD. HENCE THE DECISION RENDERED THEREON WOULD APPLY WITH EQUAL FORCE FOR THESE TWO COMPANIES ALSO. 9.11. WE FIND THAT THE HONBLE APEX COURT RECENTLY IN THE CASE OF PRINCIPAL CIT VS VAISHNODEVI REFOILS & SOLVEX REPORTED IN (2018) 96 TAXMANN.COM 469 (SC) HAD DISMISSED THE SLP OF THE REVENUE. T HE BRIEF FACTS WERE THAT THE ADDITION U/S 68 OF THE ACT WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF CAPITAL CONTRIBUTED BY THE PARTNER OF THE FIRM. THE HONBLE HIGH COURT NOTED THAT WHEN THE CONCERNED PARTNER HAD CONFIRMED BEFORE THE ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 36 ASSESSING OFFICER ABOUT HIS FACT OF MAKING CAPITAL CONTRIBUTION IN THE FIRM AND THAT THE SAID INVESTMENT IS ALSO REFLECTED IN HIS INDIVIDUAL BOOKS OF ACCOUNTS, THEN NO ADDITION COULD BE MADE U/S 68 OF THE ACT. THE DECISION OF HONBLE GUJARAT HIGH COURT IS REPORTED IN (2018 ) 89 TAXMANN.COM 80 (GUJ HC) . THE SLP OF THE REVENUE AGAINST THIS JUDGEMENT WAS DISMISSED BY THE HONBLE SUPREME COURT. 9.12. WE ALSO FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ORCHID INDUSTRIES PVT LTD REPORTED IN 397 ITR 136 (BOM) HAD HELD AS UNDER: - 5. 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 BEF ORE THE ASSESSING OFFICER AND THE SUMMONS COULD NOT BE SERVED ON THE ADDRESSES GIVEN AS THEY WERE NOT 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 ACC OUNT. 6. 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 M ONEY. 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 BO OKS 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 T HOSE 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. 9.13. WE FIND THAT THE VARIOUS CASE LAWS RELIED UPON BY THE LD CITA INCLUDING THE VARIOUS DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT AMONG OTHER HIGH COURTS ARE SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE BEFORE US. ITA NO.3000/MUM/2017 & CO NO.46/MUM/2019 M/S. SWETA SYNTHETICS PVT. LTD., 37 9.14. IN VIEW OF THE AFORESAID OBSERVA TIONS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND BY RESPECTFULLY FOLLOWING THE VARIOUS JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE LD CITA HAD RIGHTLY DELETED THE ADDITION MADE U/S 68 OF THE ACT IN THE INSTANT CASE ON WHICH WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE OP EN COURT ON THIS 12 / 07 /201 9 SD/ - ( PAWAN SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 12 / 07 / 2019 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//