JASAMRIT CREATINS P.LTD, MUMBAI V. ITO 6(3)(2), MUMBAI

ITA 1164/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9898 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 07-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: ANJU KISNADWALA
• Keywords: Source of fund; Valuation report; Accommodation entries
• Section: 143(3); 260A; 133(6); 147; 68; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 1164/MUM/2016 (ASSESSMENT YEAR: 2012-13) M/S. JASAMRIT CREATIONS P. LTD. FLAT NO. 901, BUILDING B ASHOK TOWER, NEAR ITC HOTEL, PAREL, MUMBAI 400017 VS. INCOME TAX OFFICER- 6(3)(2) ROOM NO. 503, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN AABCJ8511H APPELLANT RESPONDENT APPELLANT BY: SHRI ANJU KISNADWALA RESPONDENT BY: MS. POOJA SWAROOP DATE OF HEARING: 15.02.2018 DATE OF PRONOUNCEMENT: 14.03.2018 O R D E R PER RAJESH KUMAR, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-12, MUMBAI DATED 28.12.2015 FOR A.Y. 2012-13 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: - 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN PASSING THE APPELLATE ORDER, WHICH IS INVALID AND BAD IN LAW. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF 5,00,00,000/- MADE BY THE ASSESSING OFFICER U/S. 68 OF THE ACT. THE LEARNED CIT(A) OUGHT TO HAV E DELETED THE AFORE-STATED ADDITION OF 5,00,00,000/- IN RESPECT OF SHARE CAPITAL AND SHARE PREMIUM. 3. AT THE OUTSET THE LEARNED A.R. OF THE ASSESSEE POIN TED OUT THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDENTICAL T O THE ONE AS DECIDED BY THE COORDINATE BENCH IN ITA NO. 1091/MUM/2016 FOR A .Y. 2012-13 VIDE ORDER DATED 08.02.2018 IN THE CASE OF SISTER CONCER N OF THE ASSESSEE. THE LEARNED A.R. ALSO SUBMITTED THAT MONEY IS RAISED BY THE ASSESSEE FROM THE ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 2 SAME INVESTOR, M/S. JANITOR DISTRIBUTORS PVT. LTD. BY WAY OF ALLOTMENT OF 250000 EQUITY SHARES OF FACE VALUE OF 100/- AT A PREMIUM OF 100/- EACH THEREBY RAISING A TOTAL AMOUNT OF 5 CRORES. THE LEARNED A.R. FURTHER SUBMITTED BEFORE THE BENCH THAT THE ASSESSEE HAS DU LY PROVED BEFORE THE AO ALL THE THREE INGREDIENTS NECESSARY FOR MAKING A DDITION UNDER SECTION 68 OF THE INCOME TAX ACT (HEREINAFTER THE ACT), I .E. IDENTIFY, CREDITWORTHINESS AND GENUINENESS BY FILING NECESSA RY DOCUMENTS. THE LEARNED A.R. SUBMITTED THAT GENUINENESS OF THE TRAN SACTION HAS NOT BEEN DOUBTED AND THE ONLY ISSUE IS OF ALLOTMENT OF SHARE S AT A HIGH PREMIUM WITHOUT ANY JUSTIFICATION AS THE SOLE GROUND FOR MA KING ADDITION. THE LEARNED A.R. ALSO POINTED OUT THAT THE CIT(A) HAS D ISCUSSED THE ISSUE IN DETAIL AND THE FACT OF SEEKING INVESTMENT FROM M/S. JANITOR DISTRIBUTORS PVT. LTD. IN ANOTHER SISTER CONCERN, M/S. JASAMRIT CONSTRUCTION P. LTD. IN A.Y. 2011-12 WAS ALSO ACCEPTED BY THE REVENUE WAS D ULY DISCUSSED AND THE INDEPENDENT ENQUIRY CONDUCTED BY THE AO UNDER S ECTION 133(6) WAS ALSO DULY RESPONDED AND ALL THE NECESSARY DOCUMENTS WERE PLACED BEFORE THE AO. FINALLY THE LEARNED A.R. PRAYED THAT FOLLOW ING THE ORDER OF THE COORDINATE BENCH THE APPEAL OF THE ASSESSEE SHOULD BE ALLOWED. 4. THE LEARNED D.R., ON THE OTHER HAND, FILED WRITTEN SUBMISSION DATED 15.02.2018 SUBMITTING THAT THE ASSESSEE HAS NOT SUB MITTED ALL THE NECESSARY DOCUMENTS BEFORE THE AO AND NO VALUATION REPORT OF EQUITY PREFERENCE SHARES JUSTIFYING THE ALLOTMENT OF SHARE S AT A PREMIUM WAS FILED. THE LEARNED D.R. RELIED ON THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF JANSAMPARK ADVERTISING & MARKE TING (P) LTD. 375 ITR 373 IN WHICH IT WAS HELD THAT EVEN IF THE ASSESSEE FAILED TO BRING EVIDENCE ON RECORD THE FIRST APPELLATE AUTHORITY AND THE TRI BUNAL , WHICH ARE FORUMS FOR FACT FINDING, N THE EVENT OF AO FAILING TO DISC HARGE HIS FUNCTIONS PROPERLY. THE LEARNED D.R. ALSO POINTED OUT THAT IN THIS CASE BOTH THE COMPANIES, INVESTOR AND INVESTEE, DID NOT DO ANY BU SINESS AND THEREFORE THE TRANSACTIONS IS SURROUNDED WITH DOUBTS AND MISC HIEF AND THEREFORE THE ORDER PASSED BY THE AUTHORITIES BELOW NEED BE UPHEL D. ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 3 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD INCLUDING THE DECISIONS CITED B Y THE RIVAL PARTIES . IN THIS CASE WE FIND THAT THE ASSESSEE HAS ISSUED 250,000 10% CUMULATIVE REME DIABLE PREFERENCE SHARES OF FACE VALUE OF 100/- EACH TO M/S. JANITOR DISTRIBUTORS PVT. LTD. A T A PREMIUM OF 100/- EACH THUS RAISING A SUM OF 5 CRORES FROM M/S. JANITOR DISTRIBUTORS PVT. LTD. IN THIS CASE THE ONL Y ISSUE IS THAT THE SHARES WERE ISSUED AT A VERY HIGH PREMIUM WITHOUT BEING AN Y JUSTIFICATION OR RATIONAL FOR THE SAID SHARE PREMIUM. THE LEARNED D. R. IN THE WRITTEN SUBMISSION ALSO CONTENDED THAT NO VALUATION REPORT IN RESPECT OF SHARES JUSTIFYING HIGHER PREMIUM HAD BEEN FILED BEFORE THE LOWER AUTHORITIES. IN OUR OPINION THE ALLOTMENT OF SHARES AT A PREMIUM IS A BUSINESS DECISION WHICH HAS TO BE TAKEN BY THE ASSESSEE AS TO ON WHAT CONDITION THE ALLOTMENT SHOULD BE MADE. MOREOVER, THE ASSESSEE BE LONGS TO G.R. AGARWAL GROUP, UDAIPUR AND ITS FLAGSHIP COMPANY WAS G.R. IN FRAPROJECTS LTD. WHICH IS ENGAGED IN DEVELOPMENT OF INFRASTRUCTURAL FACILITIES AND IS KNOWN AND FAMOUS FOR QUALITY CONSTRUCTION AND PUNCTUALITY . THE ANNUAL TURNOVER OF LASTS THREE YEARS RANGED BETWEEN 800 TO 850 CRORES AND EVEN THE BIG MARKET PLAYERS SUCH AS INDIA BUSINESS EXCELLENCE FU ND I AND IDFC INVESTMENT ADVISORS LTD. INVESTED HUGE AMOUNTS BY W AY OF SHARES IN G.R. INFRAPROJECTS LTD. IN 2011. MOREOVER, THERE IS NO B AR ON ISSUE OF SHARES ON A PREMIUM BETWEEN TWO PARTIES TILL A.Y. 2012-13 AND IT IS ONLY W.E.F. A.Y. 2013-14 THAT SECTION 56(1)(VIIB) HAS BEEN BROUGHT O N THE STATUTE BOOK WHICH PROVIDES FOR ADDITION OF AMOUNT EXCESS OF CON SIDERATION RECEIVED IN SUCH ALLOTMENT OF SHARES OVER AND ABOVE THE FAIR MA RKET VALUE OF SHARES AND NOT APPLICABLE TO THE CURRENT YEAR. THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S. JASAMRIT CONSTRUCTIONS PVT. LTD. IN ITA NO. 1091/MU M/2016 DATED 28.02.2018 WHEREIN IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH IN FAVOUR OF THE ASSESSEE. THE OPERATIVE PART OF THE ORDER IS REPRODUCED FOR READY REFERENCE: - ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 4 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IMPUGNED ORDER AND VARIOUS DECISIONS CITED BY RIVAL PARTIES. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE ISSUED 250,00,000 10% NON CUMULATIVE E REDEEMABLE PREFEREN CE SHARES OF 100/- EACH AT A PREMIUM OF 100/- EACH TO M/S. JANITOR DISTRIBUTORS PVT. LTD. ON 31.03.2012. THE ASSESSEE COMPANY WAS NOT CA RRYING ON ANY BUSINESS DURING THE YEAR AND SO WAS THE INVESTOR CO MPANY M/S. JANITOR DISTRIBUTORS PVT. LTD. THE SOURCE OF INVESTMENT WA S OUT OF SALE OF SHARES WHICH WERE HELD BY M/S. JANITOR DISTRIBUTORS PVT. L TD. THE AO ALSO RECORDED A FINDING IN THE ASSESSMENT ORDER THAT M/S JANITOR DISTRIBUTORS PVT. LTD. THE INVESTOR COMPANY WAS NOT DOING ANY BU SINESS BUT WAS DOING PURCHASE AND SALES OF SHARES OF OTHER COMPANIES AND THE INSTANT INVESTMENT IN THE ASSESSEE COMPANY WAS MADE OUT OF SALE OF SHARES BY THE SAID COMPANY. ACCORDING TO THE AO THE TRANSACTI ON IS NOT GENUINE AND IS A SHAM TRANSACTION ON THE GROUND THAT THE ASSESS EE COMPANY WAS NOT DOING ANY BUSINESS AND THERE WAS NO JUSTIFICATION I N ISSUING SHARES ON A PREMIUM TO THE INVESTOR WHEN THE COMPANY HAS NO BAC KGROUND SUCH AS MODALITY OF BUSINESS AND GROWTH TRAJECTORY ETC AND THUS DOUBTED THE ENTIRE TRANSACTION. THE AO EVEN OBTAINED INFORMATIO N UNDER SECTION 133(6) OF THE ACT FROM THE INVESTOR M/S JANITOR DIS TRIBUTORS PVT. LTD. BUT WAS NOT SATISFIED WITH THE SAME MAINLY IN VIEW OF T HE FACT THAT THERE WAS NO BUSINESS IN BOTH THE COMPANIES INVESTOR AS WELL INVESTEE COMPANY AND THUS THE SHARES COULD NOT HAVE BEEN ISSUED AT S UCH A HIGH PREMIUM. WE FIND FROM THE RECORD THAT THE ASSESSEE HAS PRODU CED THE FOLLOWING RECORDS BEFORE THE AO IN ORDER TO PROVE THE GENUINE NESS, CREDITWORTHINESS AND REASONABLENESS OF THE TRANSACTION: - (I) DULY CONFIRMED COPIES OF ACCOUNT; (II) ARTICLES AND MEMORANDUM OF THE JANITOR DI STRIBUTORS PVT. LTD.; (II) AUDITED ANNUAL ACCOUNTS OF JANITOR DISTRIBUTORS PVT . LTD.; (IV) BANK STATEMENT FOR THE PERIOD 01.04.2 011 TO 31.03.2012 EVIDENCING THE IMPUGNED INVESTMENT; (V) COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME ALON G WITH COMPUTATION OF TOTAL INCOME; (VI) FORM NO.20B BEING ANNUAL RETURN OF THE ASSESS EE COMPANY; (VII) FORM 2 BEING RETURN OF ALLOTMENT AND (VIII) EXPLANATION REGARDING SOURCE OF FUNDS FOR SUBSCRIBING TO 10% REDEEMABLE PREFERENCE SHARES. THE AO EXAMINED ALL THESE DOCUMENTS FILED BY THE AS SESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND BY DISAPPR OVING THE SAME TREATED THE ENTIRE THE ENTIRE CAPITAL AND PREMIUM A GGREGATING TO 5 CRORES AS UNEXPLAINED INCOME UNDER SECTION 68 OF TH E ACT RELYING ON VARIOUS DECISIONS AS HAS BEEN DISCUSSED IN THE ASSE SSMENT ORDER. THE AO WHILE COMING TO THE CONCLUSION OF SAID TRANS ACTION BEING NON ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 5 GENUINE AND SUSPICIOUS OBSERVED THAT THE TURNOVER OF THE ASSESSEE WAS NIL AND THERE BEING NO PROFIT TO SUPPORT TO JUS TIFY THE ISSUE OF PREFERENCE SHARES AT A PREMIUM AND IN VIEW OF THAT THE ASSESSEE COMPANY COULD NOT HAVE BEEN MADE AT HUGE PREMIUM. W E FIND THAT THE ASSESSEE COMPANY BELONGS TO G.R. AGARWAL GROUP, UDAIPUR AND ITS FLAGSHIP COMPANY IS G.R. INFRAPROJECTS LTD. WHI CH IS ENGAGED IN DEVELOPMENT OF INFRASTRUCTURAL FACILITIES/PROJECTS AND IS VERY FAMOUS AND KNOWN IN THE MARKET FOR QUALITY CONSTRUCTION AN D TIMELY CONSTRUCTION OF INFRASTRUCTURAL PROJECTS LIKE ROAD, HIGHWAYS AND FLYOVERS, ETC. THE AVERAGE TURNOVER FOR THE LAST TH REE YEARS OF THE SAID FLAGSHIP COMPANY WAS AROUND 800 TO 850 CRORES WITH THE NET PROFIT RANGING BETWEEN 35 TO 50 CRORES. IT IS ALSO A FACT THE PRIVATE EQUI TY FUNDS, NAMELY INDIA BUSINESS EXCELLENCE FUND I AND IDFC INVESTMENT ADVISORS LTD. INVESTED 80 CRORES BY WAY OF EQUITY CAPITAL IN G.R. INFRAPROJECTS LTD. IN 2011 AND THE COMPANY IS IN TH E PROCESS OF LISTING OF ITS SHARES IN THE MARKET. IN VIEW OF ALL THESE F ACTS WE ARE NOT IN A POSITION TO AGREE WITH THE CONCLUSION OF THE AO AS CONFIRMED BY THE LEARNED CIT(A) THAT THE SHARES IN THE ASSESSEE COMP ANY WERE ISSUED AT A PREMIUM WHICH IS SHAM AND NON GENUINE AS THE P OTENTIAL AND GROWTH TRAJECTORY OF THE ENTIRE GROUP HAS TO BE SEE N AND NOT THE INDIVIDUAL COMPANY. IN OUR PINION THE INVESTMENTS I N THE MARKET ARE DRIVEN BY THE PAST TRACK RECORD, MARKET REPUTATION AND GROWTH POTENTIAL OF THE GROUP AND NOT ON THE BASIS OF THE NET WORTH OR TURNOVER OF THE COMPANY. IT IS ALSO REVEALED FROM T HE RECORD BEFORE US THAT OUT OF THE MONEY RAISED BY THE ASSESSEE A SUM OF 1,32,52,572/- WAS UTILISED FOR ACQUIRING OFFICE AT MUMBAI FROM WH ICH THE ASSESSEE COMPANY EARNS REGULAR RENTAL INCOME AND 3,35,00,000/- WAS UTILISED FOR ACQUIRING PLOT NO. 45 AT PWD COLONY, JODHPUR FO R REAL ESTATE PROJECT AND 20,00,000/- WAS INVESTED IN SHARES OF G.R. INFRAPRO JECTS LTD. AND THE BALANCE AMOUNT WAS ADVANCED TO GROUP C ONCERNS. WE FIND MERIT IN THE ARGUMENT OF THE LEARNED A.R. THAT M/S. JANITOR DISTRIBUTORS PVT. LTD. IS NOT A SHELL COMPANY EITH ER BY RBI OR SEBI AND IS AN ACTIVE COMPANY ON THE WEBSITE OF THE MINI STRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA AND THE COMPANY IS BEI NG ASSESSED TO TAX AND EVEN THE SCRUTINY ASSESSMENTS WERE MADE FO R A.Y. 2007-08 AND A.Y. 2012-13 U/S 143(3) OF THE ACT. COPIES OF R ELEVANT ASSESSMENT ORDERS WERE PLACED BEFORE THE BENCH. IT WAS ALSO NOTED THAT THESE ASSESSMENTS HAVE ATTAINED FINALITY AND N O PROCEEDINGS UNDER SECTION 147 OR 263 ARE PENDING IN RESPECT OF THE SAID INVESTOR. FURTHER THE GENUINENESS OF THE TRANSACTION CAN BE S EEN FROM THE FACT THAT A SIMILAR TRANSACTION OF INVESTMENT BY M/S. JA NITOR DISTRIBUTORS PVT. LTD. IN THE GROUP COMPANY M/S LOKESH BUILDERS PVT. LTD. HAS BEEN EXAMINED BY THE INCOME TAX OFFICER, WARD-1, UD AIPUR IN THE ASSESSMENT PROCEEDINGS OF M/S LOKESH BUILDERS PVT. LTD. AND ACCEPTED WHILE FRAMING ASSESSMENT UNDER SECTION 143 (3) OF THE ACT VIDE ORDER DATED 27.03.2015 AFTER CONDUCTING DETAIL ED ENQUIRY DATED ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 6 25.02.2015 WHICH HAS BEEN PLACED BEFORE THE BENCH D URING THE COURSE OF HEARING. THE DEPARTMENT CANNOT ACCEPT ONE OF THE TWO SAME TRANSACTIONS ENTERED INTO BY GROUP COMPANIES, ONE T HE ASSESSEE AND THE SECOND OF LOKESH BUILDER PVT. LTD. WITH THE SA ME INVESTOR UNDER SAME FACTS AND CIRCUMSTANCES AS NON GENUINE AND SHA M AND TREAT THE OTHER AS A VALID TRANSACTION. IN OUR OPINION TH E INVESTMENT IS A CONSCIOUS DECISION WHICH IS TAKEN AFTER WEIGHING TH E PROS AND CONS AS TO THE GROUP TO WHICH THE COMPANY BELONGS, GROWTH A ND FUTURE PERSPECTS AND STATUS OF THE GROUP VIS-A-VIS OTHER S IMILARLY PLACED COMPANIES IN A PARTICULAR ARENA OF THE SAME FIELD O F ACTIVITIES. IN THIS CASE WE NOTE THAT THE ASSESSEE BELONG TO THE VERY F AMOUS G.R. AGARWAL GROUP OF COMPANIES WITH THE FLAGSHIP COMPAN Y G.R. INFRAPROJECTS LTD. WHICH IS ENGAGED IN THE DEVELOPM ENT OF INFRASTRUCTURAL FACILITIES LIKE ROAD, HIGHWAYS AND FLYOVERS AND HAS A TURNOVER OF MORE THAN 800 CRORES TO 850 CRORES OVER A PERIOD OF THREE YEARS WITH NET PROFIT OF 30 TO 50 CRORES. THE INVESTMENT IN THE FLAGSHIP COMPANY TO THE TUNE OF 80 CRORES BY PRIVATE EQUITY FUNDS, I.E. INDIA BUSINESS EXCELLENCE FUND I AND IDFC INVESTMEN T ADVISORS LTD. IN 2011 REALISING THE GROSS POTENTIAL OF THE COMPAN Y, WHICH IS IN THE PROCESS OF LISTING THE SHARES IN THE MARKET. SEEING THE FACTS IN TOTALITY WE ARE OF THE VIEW THAT THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO PROVE THAT THE TRANSACTION TO BE SHAM AND NON GENUINE AND THUS WE ARE NOT IN AGREEMENT WITH THE CONCLUSION DR AWN BY THE CIT(A) ON THE ISSUE. THE CASE OF THE ASSESSEE IS ALSO SUPP ORTED BY A SERIES OF DECISIONS RELIED UPON BY THE LEARNED A.R. IS DISCUS SED AS UNDER: - IN THE CASE OF ACIT VS. GAGANDEEP INFRASTRUCTURE PV T. LTD. IT HAS BEEN HELD THAT THE ISSUE OF SHARES AT PREMIUM IS AL WAYS A COMMERCIAL DECISION WHICH DOES NOT REQUIRE ANY JUST IFICATION. IT WAS FURTHER HELD BY THE HON'BLE TRIBUNAL 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 SHAREHOLDERS WHE THER THEY WANT TO SUBSCRIBE TO SUCH PREMIUM. THE REVENUE AUTH ORITIES CANNOT QUESTION CHARGING OF SUCH HUGE PREMIUM. IN CIT VS. CREATIVE WORLD TELEFILMS LTD. [333 ITR 1 00 (BOM)] THE HONBLE BOMBAY HIGH COURT SUSTAINED THE DELETION OF THE ADDITION MADE U/S. 68 OF THE ACT IN RESPECT OF THE SHARE APP LICATION MONEY BY OBSERVING THAT 'THE QUESTION SOUGHT TO BE RAISED IN THE APPEAL WAS ALSO RAISED BEFORE THE TRIBUNAL AND THE TRIBUNA L WAS PLEASED TO FOLLOW THE JUDGMENT OF THE APEX COURT IN THE CAS E OF CIT V. LOVELY EXPORTS P. LTD. [2008] 216 CTR 195; [2009] 3 19ITR (ST.) 5, WHEREIN THE APEX COURT OBSERVED THAT IF THE SHARE A PPLICATION MONEY IS RECEIVED BY THE ASSESSEE-COMPANY FROM ALLE GED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSIN G OFFICER, THEN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. IN T HE CASE IN HAND, IT IS NOT DISPUTED THAT THE ASSESSEE HAD GIVE N THE DETAILS OF ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 7 NAME AND ADDRESS OF THE SHAREHOLDER, THEIR PAN/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME OF THE BANK. IT WAS EXPECTED ON THE PART OF THE ASSESSING OFFICER TO MA KE PROPER INVESTIGATION AND REACH THE SHAREHOLDERS. THE ASSES SING OFFICER DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIM ATELY RETURNED BACK WITH AN ENDORSEMENT 'NOT TRACEABLE'. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER OUGHT TO HAV E FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT DETAI LS OR FROM THEIR BANKERS SO AS TO REACH THE SHAREHOLDERS SINCE ALL T HE RELEVANT MATERIAL DETAILS AND PARTICULARS WERE GIVEN BY THE ASSESSEE TO THE ASSESSING OFFICER. IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE FAULTED. NO SUBSTANTIAL QUES TION OF LAW IS INVOLVED IN THE APPEAL. IN THE RESULT, THE APPEAL I S DISMISSED IN LIMINE WITH NO ORDER AS TO COSTS. IN ARCELI REALITY LIMITED VS. ITO FOR A.Y. 2007-08 IN ITA NO. 6492/ MUM/2016 DATED 21.04.2017 THE TENABILITY OR OTHERWI SE OF ADDITION MADE U/S. 68 OF THE ACT IN RESPECT OF SHAR E APPLICATION MONEY RECEIVED WAS THE SUBJECT-MATTER FOR CONSIDERA TION. THE HON'BLE TRIBUNAL, AFTER TAKING NOTE OF AND RELYING UPON THE AFORESAID RULINGS IN CIT V. GAGANDEEP INFRASTRUCTUR E P. LTD. (394 ITR 680) AND CIT V. CREATIVE WORLD TELEFILMS LTD. ( 333 ITR 100), WAS PLEASED TO DELETE THE DISPUTED ADDITION. IN THE CASE OF LALITHA JEWELLERY MART P. LTD. VS. D CIT (399 ITR 425 (MAD) THE HON'BLE MADRAS HIGH COURT HELD THAT THE A SSESSEE CANNOT UPON ITS INVESTORS TO DISCLOSE ALL SUCH BUSI NESS TRANSACTIONS THEY CARRIED ON IN THE IMMEDIATE PAST AND AS TO HOW MUCH THEY MADE FROM THEIR RESPECTIVE BUSINESS ENTER PRISES. THE ASSESSEE CANNOT CALL UPON ITS INVESTORS TO PROVE TH EIR GOOD BUSINESS SENSE IN INVESTING IN THE ASSESSEE-COMPANY , AS SUCH INVESTORS CANNOT GAIN ANY CONTROLLING STAKE. IN THE CASE OF ORCHID INDUSTRIES PVT. LTD. VS. DCIT IN ITA NO. 1867/MUM/2013 DATED 07.02.2014 THE COORDINATE BENCH OF THIS TRIBUNAL HELD THAT MERELY BECAUSE THE CHEQUES WERE DEPOSITED IN THE RESPECTIVE ACCOUNTS WOULD NOT LEAD TO THE CONCL USION THAT THESE CHEQUES MONEY WAS THE ASSESSEES OWN MONEY RO UTED THROUGH THESE PARTIES UNTIL AND UNLESS IT IS FOUND IN THE ENQUIRY AND SUBSTANTIATED WITH THE FACTS AND MATERIAL. .................................IN VIEW OF THE ABO VE DISCUSSION AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE AO UNDER SECT ION 68 OF THE ACT IS NOT JUSTIFIED AND THE SAME IS HEREBY DELETED . THE ABOVE DECISION OF THE COORDINATE BENCH HAS BEEN UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. ORCHID PVT. LTD. IN ITA NO. 1433 OF 2014 DATED 05.07.2017. IN THE CASE OF PRINCIPLE CIT VS. M/S. PARADISE INLA ND SHIPPING PVT. LTD. IN TAX APPEAL NO. 66 OF 2016 DATED 10.04.2017 THE HON'BLE ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 8 JURISDICTIONAL HIGH COURT OBSERVED THAT ONCE THE AS SESSEE HAS PRODUCED DOCUMENTARY EVIDENCE TO ESTABLISH THE EXIS TENCE OF SUCH COMPANIES, THE BURDEN WOULD SHIFT ON THE REVENUE-AP PELLANT HEREIN TO ESTABLISH THEIR CASE. THERE NO INFIRMITY IN THE FINDINGS ARRIVED AT BY THE ITAT AS WELL AS CIT APPEALS ON TH E CONTENTIONS RAISED BY THE APPELLANT-REVENUE IN THE PRESENT CASE AND, AS SUCH, THE QUESTION OF INTERFERENCE BY THIS COURT IN THE P RESENT PROCEEDINGS UNDER SECTIONS 260A OF THE INCOME TAX A CT WOULD NOT AT BE JUSTIFIED. 10. WE FIND THAT THE DECISIONS RELIED UPON BY THE LEARN ED D.R. TO SUPPORT THE DECISIONS OF THE FIRST APPELLATE AUTHOR ITY WERE CLEARLY DISTINGUISHABLE AS EXPLAINED IN THE ENSUING PARAGRA PHS. IN THE CASE OF SREELEKHA BANERJEE (SUPRA) THE ISSUE FOR VERIFIC ATION WAS OF THE SOURCE OF VERY HIGH DENOMINATION NOTES. THE ASSESSE E EXPLAINED THAT THE HIGH DENOMINATION NOTES REPRESENTED THE CASH OU T OF THE CASH WITHDRAWAL FROM THE BANK WHICH NOT ACCEPTED BY THE AO ON THE GROUND THAT THE ASSESSEE DID NOT MENTION THE ACCOUN T FOR WITHDRAWAL OF CASH AND THE BOOKS OF ACCOUNT MAINTAINED AND PRO DUCED BEFORE HIM DID NOT REFLECT THE BANK ACCOUNT AND THE AO NOT ICED DISCREPANCIES IN THE STATEMENT FILED BY THE ASSESSEE. IN THE CASE OF ITO VS. ZARA TRADING PVT. LTD. AND KHUSHARA REAL ESTATE PVT. LTD . (SUPRA) THE REASONABLENESS OF SHARE PREMIUM IN THE LIGHT OF VAR IOUS PARA METERS LIKE INFORMATION FROM INVESTIGATION WING OF INCOME TAX DEPARTMENT ABOUT THE ASSESSEE HAVING TAKEN ACCOMMODATION ENTRI ES AND NON- COMPLIANCE BY THE DIRECTORS/INVESTOR COMPANY IN THE PROCEEDINGS AND NON FURNISHING OF DOCUMENTARY EVIDENCES TO ESTABLIS H IDENTITY OF SHARE APPLICANT, ETC. WHEREAS IN THE PRESENT CASE I S IDENTIFICATION OF THE SOURCE. IN THE CASE OF MAJOR METAL LTD. (SUPRA) THE ADDITIO N ON ACCOUNT OF SHARE CAPITAL WAS CONFIRMED BY HON'BLE ITAT AS WELL BY THE HON'BLE HIGH COURT BECAUSE THE SHARE APPELLANT-COMP ANIES CATEGORICALLY ADMITTED THAT THEY HAD GIVEN ACCOMMOD ATION ENTRIES BY ACCEPTING CASH AGAINST CHEQUES ISSUED AND CHARGE D COMMISSION. THE DIRECTORS OF THESE SHARE APPELLANT COMPANIES WERE ALSO CROSS-EXAMINED BY THE ASSESSEE WHEREAS IN THE PRESENT CASE THE FACTS ARE DIFFERENT. IN THE CASE OF BISAKA SHARES PVT. LTD. (SUPRA) THE HON'BLE TRIBUNAL CONFIRMED THE ORDER PASSED UNDER SECTION 2 63 BY CIT BECAUSE THE AO DID NOT CONDUCT ANY ENQUIRY ABOUT TH E GENUINENESS OF SHARE APPLICATION AND SIMPLY ACCEPTE D THE RETURN FILED BY THE ASSESSEE IN THE ASSESSMENT COMPLETED U NDER SECTION 143(3) R.W.S. 147 OF THE ACT WHEREAS THIS NOT THE F ACT IN THE PRESENT CASE. IN THE CASE OF DURGA PRASAD MORE (SUPRA) IT WAS HEL D BY THE HON'BLE SUPREME COURT THAT THOUGH APPARENT MUST BE CONSIDERED REAL UNLESS IT WAS SHOWN THAT THERE WERE REASONS TO BELIEVE THAT ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 9 THE APPARENT WAS NOT REAL, IN A CASE WHERE A PARTY RELIED ON SELF- SERVING RECITALS IN DOCUMENTS IT WAS FOR THAT PARTY TO ESTABLISH THE TRUTH OF THOSE RECITALS, AND THAT THE TAXING AUTHOR ITIES WERE ENTITLED TO LOOK INTO SURROUNDING CIRCUMSTANCES TO FIND OUT REALITY OF THE RECITALS. THE DOCUMENTS CONSIDERED BY THE HON'BLE C OURT IN THIS RULING WERE A DEED OF CONVEYANCE AND ANOTHER DEED O F SETTLEMENT IN RESPECT OF A PROPERTY SITUATED IN CALCUTTA. IN THE CASE OF SHANKAR INDUSTRIES (SUPRA) THE FINDI NG RECORDED BY THE HON'BLE COURT WAS THAT THE ASSESSEE WAS REQUIRE D TO PRODUCE PROOF OF IDENTITY OF THE CREDITOR, CAPACITY OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION. IT WAS ONLY FOR THE REASON THAT EXCEPT THE IDENTITY OF THE CREDITOR NOTHING WAS PRO DUCED BY THE ASSESSEE IN SUPPORT OF A CASH CREDIT THAT THE RULIN G OF THE HON'BLE COURT WENT AGAINST IT. BUT IN THIS CASE ALL THE EVI DENCES WERE PRODUCED BY THE ASSESSEE BEFORE THE AO. IN THE CASE KANT & CO. (SUPRA) THE RATIO LAID DOWN WAS THAT IN CASE OF A CASH CREDIT ENTRY, IT IS NECESSARY FOR TH E ASSESSEE TO PROVE NOT ONLY THE IDENTITY OF THE CREDITORS BUT AL SO THE CAPACITY OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIO N ABOUT WHICH THERE CAN BE NO DISPUTE. THE FACTS OF THE PRESENT C ASE ARE DIFFERENT. IN THE CASE OF PRAKASH TEXTILE AGENCY (SUPRA) THE A SSESSEE COULD ESTABLISH ONLY THE EXISTENCE AND IDENTITY OF THE CR EDITOR AND, HENCE, THE DECISION OF THE HON'BLE COURT WENT AGAIN ST IT BUT IN THIS CASE ASSESSEE COULD PROVE AL THE EVIDENCES. IN ORIENTAL WIRE INDUSTRIES P. LTD. (SUPRA) THE PRO POSITION LAID DOWN WAS THAT IN CASE OF A CREDIT APPEARING IN THE BOOKS, IT IS FOR THE ASSESSEE TO PROVE THE SOURCE OF THE LOAN, CAPAC ITY OF THE CREDITOR AND THE FACT THAT THE LOAN WAS IN FACT GIV EN BY THE PERSON CONCERNED WHEREAS THE FACTS OF THE PRESENT CASE ARE DIFFERENT. IN UNITED COMMERCIAL & INDUSTRIES CO. (SUPRA) IT IS HELD THAT IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF HIS CREDITORS, THE CAPACITY OF SUCH CREDITORS AND THE G ENUINENESS OF THE TRANSACTION. IN THE PRESENT CASE ASSESSEE HAS P ROVED ALL THESE FACTS. IN THE CASE OF M.A. UNNEERI KUTTI (SUPRA) ONLY THE IDENTITY OF THE CREDITOR WAS ESTABLISHED. IN OTHER WORDS, THE CREDI TWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS WERE NOT PR OVED WHERE AS IN THE PRESENT CASE IDENTIFY, GENUINENESS AND CR EDITWORTHINESS WERE PROVED. IN PRECISION FINANCE PVT. LTD. (SUPRA) IT IS HELD T HAT IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITORS, TH EIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION ABOUT WHICH ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 10 THERE CAN BE NO QUARREL, WHICH HAS BEEN DULY COMPLI ED WITH BY THE ASSESSEE IN THE PRESENT CASE. IN THE CASE OF NOVA PROMOTORS & FINLEASE PVT. LTD. (SUPRA) THE AO HAD RECEIVED INFORMATION FROM INVESTIGATION WING AB OUT 16 ENTRY OPERATORS WHO HAD GIVEN ACCOMMODATION ENTRIES TO SE VERAL PERSONS INCLUDING THE ASSESSEE. UPON EXAMINATION, T HE ASSESSING OFFICER FOUND THAT THE MATERIAL AVAILABLE SHOWED LI NK BETWEEN THE ENTRY PROVIDERS AND THE ASSESSEE-COMPANY. BESIDES, OUT OF THE 22 COMPANIES WHOSE NAMES FIGURED IN THE INFORMATION GI VEN BY THEM TO THE INVESTIGATION WING, 15 COMPANIES HAD PROVIDE D SHARE SUBSCRIPTION MONIES TO THE ASSESSEE. IN INDEPENDENT MEDIA (P) LTD. (SUPRA) THE ALLEGED S HAREHOLDERS HAD CONFESSED THAT THEY HAD PROVIDED ENTRY AGAINST RECEIPT OF CASH. THE FACTS OF THE PRESENT CASE ARE DIFFERENT. IN FOCUS EXPORTS PVT. LTD. (SUPRA) THE ASSESSEE WAS NOT CO- OPERATIVE AND DID NOT FURNISH COMPLETE DETAILS/PART ICULARS IN RESPECT OF THE SHARE APPLICATION MONEY RECEIVED. IN FACT, THE ASSESSEE HAD 'ABSCONDED' AS A RESULT OF WHICH THE A SSESSMENT WAS COMPLETED EX-PARTE WHEREAS IN THE PRESENT CASE THE FACTS ARE DIFFERENT. IN N R PORTFOLIO PVT. LTD. (SUPRA) NOT ONLY THE SHA RE APPLICANTS DID NOT ATTEND THE PROCEEDINGS DESPITE SUMMONS ISSUED U /S.131 OF THE ACT BUT ALSO MOST OF THE NOTICES WERE RECEIVED BACK UNSERVED WHEREAS IN THE PRESENT THE INVESTOR PROVIDED INFORM ATION IN RESPONSE TO NOTICE UNDER SECTION 133(6). 11. IN THE LIGHT OF THE ABOVE FACTS AND THE RATIO L AID DOWN BY VARIOUS DECISIONS, WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) CONFIRMING THE ORDER OF THE AO ON THE GROUND THAT THE SHARE CA PITAL AND SHARE PREMIUM ARE NON GENUINE AND SUSPICIOUS IS NOT CORRE CT AND THEREFORE CANNOT BE SUSTAINED. IN THE PRESENT CASE THE IDENTI TY, CREDITWORTHINESS AND GENUINENESS ARE PROVED BY FILI NG THE NECESSARY EVIDENCES. WE, THEREFORE, SET ASIDE AND REVERSE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. 6. IT IS CLEAR FROM THE ABOVE ORDER THAT THAT CLEAR FI NDING HAS BEEN RECORDED BY THE COORDINATE BENCH WITH RESPECT TO A LL THE THREE INGREDIENTS, I.E. CREDITWORTHINESS AND IDENTITY OF THE INVESTOR COMPANY I.E M/S JANITOR DISTRIBUTORS LTD. AND GENUINENESS OF THE TRANSACTIO NS. THE HONBLE HIGH COURT OF BOMBAY, IN THE CASE OF GAGANDEEP INFRASTRU CTURE PVT LTD 394 ITR 680 HAS HELD THAT PROVISO TO SECTION 68 OF THE ACT WAS APPLICABLE FROM ASSESSMENT YEAR 2013-14 AND THE ASSESSMENT YEAR 201 2-13. ITA NO. 1164/MUM/2016 M/S. JASAMRIT CREATIONS P. LTD. 11 IN VIEW OF THE ABOVE SAID FACTS AND DECISION UNDE R IDENTICAL FACTS BY THE COORDINATE BENCH IN THE CASE OF THE SISTER CONCERN AS DISCUSSED ABOVE, WE REVERSE THE ORDER OF THE CIT(A) AND ALLOW THE APPEA L OF THE ASSESSEE. THE AO IS DIRECTED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH MARCH, 2018. SD/- SD/- ( MAHAVIR SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14 TH MARCH , 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -57, MUMBAI 4. THE CIT (IT)-1, MUMBAI 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.