ITO 9(2)(1), MUMBAI V. BANAS FIANCE LTD, MUMBAI

ITA 1096/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8018 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 03-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAKASH JHUNJUNWALA; ABHISHEK JHUNJUNWALA LD ARS
• Keywords: Unexplained cash credit; Retrospective amendment; Onus to prove
• Section: 68; 143(3); 133(6)

Judgement Text

ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1096/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) INCOME T AX OFFICER - 9(2)(1) ROOM NO.601A, 6 TH FLOOR AAYKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. / VS. M/S. BANAS FINANCE LTD. E-109, CRYSTAL PLAZA, NEW LINK ROAD, ANDHERI (W) MUMBAI-400 053 ./ ./PAN/GIR NO. AAACB-2236-J ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : PRAKASH JHUNJUNWALA & ABHISHEK JHUNJUNWALA- LD. ARS REVENUE BY : PURUSHOTTAM TRIPURI - LD.CIT-DR / DATE OF HEARING : 27/11/2018 / DATE OF PRONOUNCEMENT : 02/01/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2011-12 AGITATE THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-4, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-4/IT-02/ITO.2(1)(1)/2014-15 DATED 11/12/2015 ON FOLLOWING SOLE GROUND OF APPEAL: - ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE IN THE ASSESSME NT ORDER EVEN THOUGH THE ASSESSEE HAD NOT DISCHARGED THE ONUS TO PROVE THE G ENUINENESS OF THE INVESTMENT MADE BY THE PARTIES CONCERNED AND THEIR CREDITWORTH INESS. THE ASSESSMENT FOR THE IMPUGNED AY WAS FRAMED BY LD . INCOME TAX OFFICER-2(1)(1), MUMBAI [AO] IN SCRUTINY ASSESSMENT U/S. 143(3) ON 28/03/2014 WHEREIN THE INCOME OF THE ASSESSEE WAS A SSESSED AT RS.1980.46 LACS UNDER NORMAL PROVISIONS AFTER CERTA IN ADDITIONS / ADJUSTMENTS AS AGAINST NIL RETURN E-FILED BY THE ASSESSEE ON 30/09/2011. DURING IMPUGNED AY, THE ASSESSEE BEING RESIDENT CORPORATE ENTITY WAS STATED TO BE ENGAGED IN THE BUSINESS OF FINANCE, SHARE TRADING AND COMMISSION AGENT. AS EVIDENT FROM GROUNDS OF APPEAL, THE SOLE SUBJEC T MATTER OF THE APPEAL IS CERTAIN ADDITION U/S 68. 2.1 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE ISSUED 99 LACS EQUITY SHARES OF FACE VALUE OF RS.10 /- EACH AT A PREMIUM OF RS.10/- PER SHARE. ACCORDINGLY, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS, IDENTIFY AND CREDIT WORTHINESS OF SHARE APPLICANT AS WELL AS JUSTIFICATION OF SHARE PREMIUM RECEIVED ON THE S HARES. THE ASSESSEE SUBMITTED THAT THE SHARE CAPITAL WAS RAISED AFTER C OMPLYING WITH SEBI RULES AND REGULATIONS AND THE MONEY SO RAISED WAS U SED FOR THE PURPOSE OF ASSESSEES BUSINESS. THE ASSESSEE FURNISHED PERMANENT ACCOUNT NUMBER [PAN], ADDRESS OF SHARE APPLICANTS INCLUDING CONFIRMATION LETTER, COPY OF SHARE APPLICATION FORM AND ALLOTMENT OF SHA RES. TO VERIFY THE GENUINENESS OF THE TRANSACTIONS, NOTICE U/S 133(6) WAS ISSUED TO ALL SHARE APPLICANT WITH A REQUEST TO FURNISH COPY OF T HEIR RESPECTIVE BALANCE SHEET, CAPITAL ACCOUNT, COPY OF RETURN OF INCOME, B ANK STATEMENTS ETC. ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 3 AND ALSO TO PROVE THE CREDITWORTHINESS AND GENUINEN ESS OF THE TRANSACTIONS. 2.2 THE RESPONSE FROM THE SHARE APPLICATIONS WAS RE CEIVED WHICH WAS DULY CONSIDERED BY LD. AO AND THE BANK STATEMENTS O F THE INVESTOR WAS ANALYZED WHICH REVEALED THAT EXCEPT FOR IMMEDIATE D EBIT / CREDIT TRANSACTIONS, THERE WAS NO MAJOR ACTIVITY / REGULAR FLOW IN THE BANK ACCOUNTS. THE ASSESSEE, VIDE REPLIES DATED 08/11/20 13, 11/02/2014, 25/03/2014 & 27/03/2014, SUBMITTED VARIOUS DETAILS / EXPLANATIONS ETC. IN SUPPORT OF THE TRANSACTION. THE VALUATION OF THE SH ARE WAS SOUGHT TO BE JUSTIFIED IN TERMS OF RULE 11UA AND THE SAME WAS DU LY SUPPORTED BY PRICING CERTIFICATE DATED 03/11/2010 ISSUED BY R.SONI & CO., CHARTERED ACCOUNTANTS. HOWEVER, IT WAS NOTED THAT THE MARKET VALUE PER SHA RE ON THE DATE OF PREFERENTIAL ALLOTMENT WAS RS.9.37 ONLY WHEREAS THE SHARES WERE ISSUED AT MUCH HIGHER PRICES. CONSEQUENTLY, TH E ASSESSEE, IN TERMS OF SECTION 68, WAS REQUIRED TO EXPLAIN THE NA TURE AND SOURCE OF THE TRANSACTIONS. SINCE THE ASSESSEE, IN THE OPINION OF LD. AO, COULD NOT JUSTIFY THE EXCESSIVE SHARE PREMIUM QUA INTRINSIC VALUE OF SHARES AND THE NATURE AND SOURCE OF CREDIT ENTRIES REMAINED UNEXPL AINED, THE PROVISIONS OF SECTION 68 WERE APPLICABLE TO THE ASSESSEE. THE LD. AO ALSO MADE CERTAIN OBSERVATIONS ON THE BANK ACCOUNTS OF THE SH ARE APPLICANTS WHICH HAVE ALREADY BEEN GIVEN ON PAGE NUMBERS 7 & 8 OF THE QUANTUM ASSESSMENT ORDER. FINALLY, AFTER RELYING UPON CERTA IN JUDICIAL PRONOUNCEMENTS, THE AFORESAID AMOUNT OF RS.19.80 CR ORES WAS TREATED AS UNEXPLAINED CASH CREDIT U/S 68 AND ADDED TO THE INCOME OF THE ASSESSEE. ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 4 3.1 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 11/12/2015 WHE REIN THE ASSESSEE, VIDE ELABORATE SUBMISSIONS AND RELYING UPON SEVERAL JUDICIAL PRONOUNCEMENTS SUBMITTED THAT THE PRIMARY INGREDIEN TS OF SECTION 68 WERE FULFILLED BY THE ASSESSEE AND THEREFORE, ADDIT IONS WERE NOT JUSTIFIED. THE SUBMISSIONS OF THE ASSESSEE HAS ALREADY BEEN EX TRACTED IN THE IMPUGNED ORDER ON PAGE NUMBERS 5 TO 21. UPON CAREFU L CONSIDERATION, LD. CIT(A) NOTED THAT THE APPLICANT HAD FILED DOCUM ENTARY EVIDENCES IN THE SHAPE OF PAN CARD, INCOME TAX RETURNS, CLIENT MASTER DATA IS SUED BY NSDL AFTER KYC VERIFICATION OF THE SHAREHOLDERS, CIN, CERTIFICATE OF INCORPORATION OF SHARE APPLICANTS, SHARE APPLICATIO N FORMS, LETTER OF ALLOTMENT OF SHARES, CONFIRMATION OF ACCOUNTS, BALA NCE SHEETS OF SHARE APPLICANTS, DE-MAT STATEMENTS, BANK STATEMENTS OF T HE SHARE APPLICANTS, ASSESSMENT ORDER U/S 143(3) OF FEW INVESTORS, APPRO VAL FROM BOMBAY STOCK EXCHANGE TO ISSUE THE SHARES ETC. AND THEREFORE, THE PRIMATE ONUS TO PROVE THE TRANSACTIONS WAS DULY DISCHARGED BY TH E ASSESSEE. IT WAS ALSO NOTED THAT THERE WERE NO IMMEDIATE CASH DEPOSI TS IN THE BANK ACCOUNTS OF THE SHARE APPLICANTS AND THE ASSESSEE W AS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. THE VALUATION WAS ALSO FOUND TO BE JUSTIFIED IN TERMS OF DOCUMENTARY EVIDENCES AND KEEPING IN VI EW THE FACT THAT THE MARKET PRICE OF THE SHARES AS ON 31/03/2011 WAS RS. 37.70. IT WAS ALSO HELD THAT THE PROVISIONS OF SECTION 56(2)(VIIB) WER E NOT APPLICABLE TO THE ASSESSEE SINCE IT WAS A LISTED COMPANY IN WHICH PUB LIC WAS SUBSTANTIALLY INTEREST. IT WAS ALSO OBSERVED THAT IT WAS THE WISD OM OF THE SHAREHOLDERS WHETHER TO SUBSCRIBE THE SHARES AT HIGH PREMIUM OR NOT. ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 5 3.2 FINALLY, AFTER PLACING RELIANCE ON JUDICIAL PRO NOUNCEMENTS AS CITED BY THE ASSESSEE, THE MATTER WAS CONCLUDED IN ASSESS EES FAVOR BY MAKING FOLLOWING OBSERVATIONS: - 3.4 AFTER CONSIDERING THE ENTIRE FACTS AND CIRCUMST ANCES OF THE CASE AS WELL AS THE JUDICIAL PRONOUNCEMENTS REFERRED AND RELIED ABO VE, I HOLD THAT AO IS NOT JUSTIFIED IN MAKING THE ADDITION U/S 68 OF THE SHARE CAPITAL AND SHARE PREMIUM MONEY RECEIVED BY THE APPELLANT. THE JUDICIAL DECISIONS R ELIED BY AO ARE DISTINGUISHABLE ON FACTS. THE SHARE CAPITAL AND SHARE PREMIUM MONEY RE CEIVED BY APPELLANT IS OF CAPITAL NATURE AND DOES NOT CONSTITUTE A REVENUE RE CEIPT. THE PROVISION OF SEC. 56(2)(VIIB) HAD BEEN INSERTED W.E.F 1/4/2013, ACCOR DINGLY WOULD NOT APPLY FOR THE IMPUGNED YEAR. IN ANY CASE, THE APPELLANT IS A LIST ED COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED, THUS PROVISION OF SEC.56( 2)(VIIB) SHALL NOT APPLY. THE APPELLANT HAD FILED RELEVANT DOCUMENTS TO ESTABLISH THE IDENTITY OF SHARE APPLICANTS, GENUINENESS OF TRANSACTION AND CAPACITY OF SHARE-HO LDERS. FURTHER, THE ASSESSMENT ORDER OF ONE SHARE HOLDER M/S HANDFUL INVESTRADE PT LTD HAD BEEN COMPLETED U/S.143(3) OF I.T. ACT, THUS TRANSACTIONS MADE BY S UCH COMPANY WITH THE APPELLANT CANNOT BE TREATED AS NON-GENUINE. ALL SHARE-HOLDERS HAD CONFIRMED THE TRANSACTIONS ENTERED WITH THE APPELLANT AND FILED DOCUMENTS TO P ROVE THEIR INVESTMENTS MADE IN SHARES OF APPELLANT COMPANY. LD. ASSESSING OFFICER HAS NOT ABLE REFER TO ANY ADVERSE EVIDENCE. THE QUOTED PRICE OF THE SHARES OF APPELLANT COMPANY LISTED IN BOMBAY STOCK EXCHANGE AT END OF THE YEAR AS ON 31/3 /2011 IS DISCLOSED OF RS 37.70 PER SHARE AGAINST WHICH THE APPELLANT DURING DECEMB ER, 2010 HAD ISSUED THE SHARE ON PREFERENTIAL BASIS @ RS 20 PER SHARE. THE AO HAD NOT FOUND ANY FAULT IN THE DOCUMENTS AND IS THEREFORE NOT JUSTIFIED IN BRUSHIN G ASIDE THE DOCUMENTS FILED BY APPELLANT. THE AO-HAD NOT BROUGHT ANY CONTRARY DOCU MENTARY EVIDENCE TO DISPROVE THE TRANSACTION AND HAD NOT ESTABLISHED THAT THE AP PELLANT HAD INTRODUCED ITS UNACCOUNTED MONEY IN GARB OF SHARE CAPITAL/PREMIUM. ACCORDINGLY, I HOLD THAT THE ADDITION MADE IN ASSESSMENT OF SHARE CAPITAL AND SH ARE PREMIUM MONEY OF RS.19,80,00,000/- CANNOT BE SUSTAINED AND IS THEREF ORE DELETED. I DIRECT AO DELETE THE ADDITION U/S.68 OF RS.19,80,00,000/-. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4.1 THE LD. CIT-DR, SHRI PURUSHOTTAM TRIPURI, VEHEMENTLY CONTESTED THE STAND OF FIRST APPELLATE AUTHORITY BY SUBMITTIN G THAT THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE WERE NOT GENUINE AND LA CED WITH ULTERIOR MOTIVE TO EVADE THE TAXES IN THE FINAL OUTCOME. THE LD. DR, BY WAY OF ELABORATE WRITTEN SUBMISSIONS, CONTENDED THAT THE A SSESSEE, IN A VERY ORGANIZED AND SYSTEMATIC MANNER, INDULGED IN GENERA TING FICTIOUS LONG ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 6 TERM CAPITAL GAINS [LTCG] FOR THE INVESTORS BY RESORTING TO DUBIOUS METHOD OF SHARE ALLOTMENT AND PRICE MANIPULATION ON THE STOCK EXCHANGE. IT WAS FURTHER SUBMITTED THAT THE FINANCI ALS OF THE ASSESSEE DID NOT JUSTIFY ISSUE OF SHARES AT A HIGH PREMIUM OF RS .10/- PER SHARE WHEREAS THE MARKET VALUE DURING ALLOTMENT PERIOD WA S MUCH LESS. OUR ATTENTION HAS ALSO BEEN DRAWN TO THE FACT THE SHARE PRICES WERE MANIPULATED BY THE ASSESSEE ON THE STOCK EXCHANGE W ITH THE CONNIVANCE OF THE ASSOCIATED CONCERNS SO AS TO GENERATE FICTIT IOUS LTCG FOR THE INVESTORS AGAINST CERTAIN COMMISSION. OUR ATTENTION HAS BEEN DRAWN TO THE DOCUMENTS OBTAINED FROM THE WEBSITE OF BOMBAY STOCK EXCHANGE AS WELL AS SEBI TO BUTTRESS THE ARGUMENTS STATED BEFORE US. 4.2 PER CONTRA, LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR], AT THE OUTSET, SUBMITTED THAT THE SUBSEQUENT EVENTS / ALLEGATIONS COULD NOT BE THE BASIS FOR MAKING ADDITION IN THE HANDS OF TH E ASSESSEE AND LD. CIT-DR COULD NOT MAKE ALTOGETHER A NEW CASE AGAINST THE ASSESSEE BY BRINGING OUT NEW FACTS / EVENTS ON RECORD WHICH WER E NEVER CONSIDERED BY THE LOWER AUTHORITIES. IT WAS FURTHER CONTENDED THAT THE ADDITIONS WERE MADE U/S 68 AND THE ONUS WAS ON ASSESSEE TO DEMONST RATE FULFILMENT OF THREE PRIMARY CONDITIONS AS ENVISAGED BY SECTION 68 AND NOTHING MORE. THE ATTENTION HAS BEEN DRAWN TO THE FACT THAT THE A SSESSEE WAS A LISTED PUBLIC COMPANY AND MADE PREFERENTIAL ALLOTMENT OF S HARES AFTER OBTAINING STATUTORY APPROVAL FORM CONCERNED AGENCIES VIZ. SEB I / BSE ETC. ALL THE FORMALITIES AS TO SHARE ALLOTMENT WERE DULY COMPLIE D WITH BY THE ASSESSEE. IT HAS FURTHER BEEN CONTENDED SINCE THE I DENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S HAVE DULY BEEN ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 7 DEMONSTRATED BY THE ASSESSEE, FIRST APPELLATE AUTHO RITY WAS QUITE JUSTIFIED IN DELETING THE SAME. IT HAS FURTHER BEEN SUBMITTED THAT THE PROVISIONS OF SECTION 56(2)(VIIB) WERE NOT APPLICAB LE TO THE ASSESSEE SINCE THE ASSESSEE WAS A PUBLIC COMPANY. 5.1 WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS A ND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING WRITTEN SUBMISSIONS / DOCUMENTS PLACED IN THE PAPER-BOOK & JUDICIAL PRONOUNCEMENTS CITED BEFORE US. SOME UNDISPUTED FACTS TO BE NOTED ARE THAT THE ASSESSEE IS A PUBLIC LISTED COMPANY AND THE MADE PREFERENTIAL ALLOTMENT OF SHAR ES HAVING FACE VALUE OF RS.10/- PER SHARE TO AS MANY AS 49 INVESTO RS AT A PREMIUM OF RS.10/- PER SHARE. THE LD. AO HAS DOUBTED THE VALUA TION OF SHARES ON THE PREMISE THAT THE MARKET VALUE WAS MUCH LOWER TH AN THE ISSUE PRICE AND THE FINANCIALS OF THE COMPANY DID NOT JUSTIFY I SSUE OF SHARES AT HIGH PREMIUM. HOWEVER, WE FIND THAT NOTHING IN LAW PROHI BITS ISSUE OF SHARES AT PRICES HIGHER THAN THE PREVAILING MARKET PRICES. THE REVENUE, BY QUESTIONING THE WISDOM OF THE INVESTOR, COULD NOT M AKE ADDITION IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/ S 68 UNLESS IT WAS ESTABLISHED THAT THE ASSESSEES UNACCOUNTED MONEY W AS ROUTED IN THE BOOKS THROUGH THE MECHANISM OF FICTITIOUS SHARE ALL OTMENT. NOTHING ON RECORD DEMONSTRATE SUCH EXCHANGE OF CASH BETWEEN TH E INVESTOR AND THE ASSESSEE. 5.2 IT IS NOTED THAT THE ADDITION HAS BEEN MADE AS UNEXPLAINED CASH CREDIT U/S 68 WHICH CAST ONUS ON THE ASSESSEE TO DE MONSTRATE FULFILMENT OF THREE PRIMARY CONDITIONS VIZ. IDENTITY OF THE IN VESTOR IS ESTABLISHED BY THE ASSESSEE, THE INVESTORS HAD CREDITWORTHINESS TO MAKE THOSE ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 8 INVESTMENT AND THE TRANSACTIONS WERE GENUINE. SO FA R AS THE FULFILMENT OF THESE PRIMARY INGREDIENTS OF SECTION 68 IS CONCERNE D, WE FIND THAT THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THE FULFILME NT OF THE SAME WHICH IS EVIDENT FROM THE ORDERS OF BOTH THE LOWER AUTHORITIES. THE TRANSACTIONS HAVE DULY BEEN CONFIRMED BY THE INVEST ORS IN RESPONSE TO NOTICE U/S 133(6). THE ASSESSEE HAS FILED VOLUMINOU S DOCUMENTARY EVIDENCES BEFORE BOTH THE LOWER AUTHORITIES WHICH P ROVE THE FULFILMENT OF THESE CONDITIONS. EVEN THE ASSESSMENT ORDER U/S 143 (3) OF AN ENTITY WHO MADE AN INVESTMENT OF RS.290 LACS HAS BEEN PLACED O N RECORD WHEREIN NO ADVERSE VIEW HAS BEEN TAKEN AGAINST THE INVESTOR . THE SHARE ALLOTMENT HAS BEEN MADE AFTER FOLLOWING DUE PROCEDU RE OF LAW AND AFTER OBTAINING STATUTORY APPROVAL FROM THE CONCERNED GOV ERNMENT AGENCIES VIZ. SEBI & STOCK EXCHANGES . THE COMPLETE DETAILS OF THE SAME, AS REQUIRED BY LAW, HAS BEEN FILED WITH REGISTRAR OF COMPANIES AND THE NEW SHARES HAVE SUBSEQUENTLY BEEN LISTED ON THE STOCK E XCHANGE. THE NATURE OF DOCUMENTS FILED BY THE ASSESSEE, TO SUPPO RT THE TRANSACTIONS, HAVE ELABORATELY BEEN GIVEN ON PAGE NUMBERS 22 TO 24 OF THE IMPUGNED ORDER AND THE SAME ARE NOT UNDER DISPUTE. 5.3 THE LD. CIT-DR HAS ALLEGED PRICE RIGGING /MANIP ULATION ON THE PART OF THE ASSESSEE TO SUBMIT THAT THE SAME WAS DONE TO GENERATE FICTITIOUS LTCG FOR THE INVESTORS. HOWEVER, WE FIND THAT THIS MATTE R IS THE DOMAIN OF SEBI / STOCK EXCHANGE OR OTHER CONCERNED GOVERNM ENT AGENCIES AND THIS FACT, ALONE, COULD NOT BE THE BASIS FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE UNLESS THE AFORESAID FACT OF PRICE MAN IPULATION IS ESTABLISHED CONCLUSIVELY AND IT COULD BE DEMONSTRAT ED THAT THE ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 9 ASSESSEES UNACCOUNTED MONEY GOT ROUTED IN THE SYST EM THROUGH THIS MANIPULATION. IT IS TRITE LAW THAT THE ADDITIONS CO ULD NOT BE MADE MERELY ON THE BASIS OF GUESS WORK, DOUBTS, SUSPICION, CONJ ECTURES OR SURMISES. NOTHING ON RECORD ESTABLISHES THIS FACT AND SECONDL Y, IT WAS NOT THE CASE OF THE LD. AO TO MAKE THE ADDITIONS IN THE HANDS OF THE ASSESSEE ON THE BASIS OF SUBSEQUENT PRICE MANIPULATION IN THE MARKE T. THE LD. AO HAS DOUBTED THE TRANSACTIONS PRIMARILY BY QUESTIONING T HE HIGH SHARE PREMIUM. HOWEVER, TO REITERATE, THE REVENUE, BY QU ESTIONING THE WISDOM OF THE INVESTOR, COULD NOT MAKE ADDITION IN THE HAN DS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S 68 UNLESS IT WAS ESTABL ISHED THAT THE ASSESSEES UNACCOUNTED MONEY WAS ROUTED IN THE BOOK S THROUGH THE MECHANISM OF FICTITIOUS SHARE ALLOTMENT. NOTHING ON RECORD ESTABLISHES THIS FACT. 5.4 SO FAR AS THE NATURE OF PROVISO TO SECTION 68 A S INTRODUCED BY FINANCE ACT, 2012 WITH EFFECT FROM 01/04/2013 IS CONCERNED, THE SAME HAS APTLY BEEN SETTLED BY JURISDICTIONAL BOMBAY HIGH COURT IN CIT VS. GAGANDEEP INFRASTRUCTURE PRIVATE LIMITED [80 TAXMAN N.COM 272] WHEREIN IT HAS BEEN HELD AS UNDER: - ( E ) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTR ODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APRIL, 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013- 14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT W AS NOT E VEN THE CASE OF THE REVENUE THAT SE CTION 68 OF THE ACT AS IN FORCE DURING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBS EQUENTLY EFFECTIVE ONLY FROM 1ST APRIL, 2013 WAS ITS NORMAL MEANING. THE PA RLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE ACT WIT H RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATES THAT IT WAS INTRODUCED 'FOR REMOVAL OF DOUBTS' OR THAT IT IS 'DECLARATORY'. THEREFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PR OVI SO TO SECTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRET ATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO . IN ANY VIEW OF THE MATTER ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 10 THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE- PROVISO SECTION 68 OF TH E ACT LAID DOWN BY THE COURTS NAMELY THE GENUINENESS OF T HE TRANSACTION, IDENTITY AND THE CAPACITY OF THE INVESTOR HAVE ALL BEEN EXAM INED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SAT ISFIED. FURTHER IT WAS A SUBMISSION ON BEHALF OF TH E REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P.) LTD. ( SUPRA ) IN THE CONTEXT TO THE PRE-AMENDED SECTION 68 OF T HE ACT HAS HELD THAT WHERE THE REVENUE URGES THAT THE AMOUNT OF SHARE AP PLICATION MONEY HAS BEEN RECEIVED FROM BOGUS SHAREHOLDERS THEN IT IS FO R THE INCOME TAX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHO LDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD TH E SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH C REDIT. RESPECTFULLY FOLLOWING THE SAME, WE FIND SUBSTANTIA L FORCE IN THIS ARGUMENT ADVANCED BY LD. AR THAT THE ASSESSEE WAS R EQUIRED TO PROVE THE SOURCE OF THE MONEY ONLY AND NOTHING BEYOND. WE FIND THAT THE ASSESSEE HAS DEMONSTRATED THE SAME BY FILING BANK S TATEMENTS, INCOME TAX RETURNS, FINANCIAL STATEMENTS & VARIOUS OTHER D OCUMENTS AS NOTED BY LOWER AUTHORITIES AND WHICH ARE NOT UNDER DISPUT E. 5.5 SO FAR AS THE PROVISIONS OF SECTION 56(2)(VIIB) ARE CONCERNED, WE FIND THAT THE SAME DO NOT APPLY TO THE ASSESSEE IN VIEW OF THE FACT THAT THESE PROVISIONS ARE INSERTED BY FINANCE ACT, 2012 AND APPLICABLE WITH EFFECT FROM 01/04/2013 ONLY. SECONDLY, THESE PROVIS IONS DO NOT APPLY TO THE ASSESSEE SINCE THE ASSESSEE IS A PUBLIC LISTED COMPANY. 5.6 THE CONSIDERATION OF THE TOTALITY OF ABOVE FACT S AND CIRCUMSTANCES LEAD US TO INEVITABLE CONCLUSION THAT LD. CIT(A) WA S JUSTIFIED IN PROVIDING RELIEF TO THE ASSESSEE IN TERMS OF CATENA OF JUDICI AL PRONOUNCEMENTS AS DISCUSSED IN THE IMPUGNED ORDER. FINDING NO INFIRMI TY IN THE SAME WE DISMISS THE APPEAL. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ITA NO.1096/MUM/2016 M/S. BANAS FINANCE LTD. ASSESSMENT YEAR :2011-12 11 ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND JANUARY, 2019. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 02/01/2019 SR.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +,#&- , - , / DR, ITAT, MUMBAI 6. , ./ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.