ASST CIT 9(2)(1), MUMBAI V. BYGGING INDIA P.LTD, MUMBAI

ITA 1482/MUM/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5129 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Share purchase agreement; Question of law; Initiation of penalty proceedings; Tangible material; Valuation report; Accommodation entries; Non compliance; Onus to prove; Set aside
• Section: 143(3); 142(1); 115JB; 143(1); 195; 13; 119; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.1482/M/2015 ASSESSMENT YEAR: 2010-11 ACIT 9(2)(1), ROOM NO.204, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. BYGGING INDIA PVT. LTD., 9, R.N.A. ARCADE, LOKHANDWALA COMPLEX, ANDHERI WEST, MUMBAI 400053 PAN: AAACB0642E (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SATISH R. MODY, A.R. REVENUE BY : MS. KAVITA P. KAUSHIK, D.R. DATE OF HEARING : 19.03.2020 DATE OF PRONOUNCEMENT : 15.07.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER DATED 10.11.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE ONLY GROUND RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.4,83,50,000/- BY THE LD. CIT(A) AS MADE BY THE AO TOWARDS SHARE APPLICATION AND SHARE PREMIUM RECEIVED BY THE ASSESSEE DURING THE YEAR. 3. THE GROUND IS REPRODUCED AS UNDER: 'THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,83,50,000/- CLAIMED TO BE RECEIVED AS SHARE APPLICATION AND SHARE PREMIUM MONEY BY ASSESSEE, IGNORING THE ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 2 FACTUAL FINDING BY THE AO THAT NEITHER THE IDENTITY OF INVESTORS NOR THE CREDITWORTHINESS OF INVESTORS NOR THE GENUINENESS OF THE TRANSACTION IS PROVED. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 15.10.2010 DECLARING AN INCOME OF RS.10,38,75,710/- AND BOOK PROFIT UNDER SECTION 115JB OF THE ACT AT RS.10,97,76,007/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE DULY ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND ENGINEERING. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT DURING THE YEAR, THE ASSESSEE HAS RAISED SHARE CAPITAL TO THE TUNE OF RS.4,83,50,000/- COMPRISING 9,67,000 EQUITY SHARES ISSUED OF FACE VALUE OF RS.10/- EACH AT A PREMIUM OF RS.40/-. ACCORDINGLY, A NOTICE UNDER SECTION 142(1) DATED 16.07.2012 WAS ISSUED TO THE ASSESSEE CALLING UPON TO FURNISH THE VARIOUS DETAILS CONCERNING THE SAID TRANSACTIONS. THE ASSESSEE FILED BEFORE THE AO THE NECESSARY DETAILS WHICH ARE GIVEN IN PARA 4.2 OF THE ASSESSMENT ORDER COMPRISING THE DETAILS OF SOURCE OF INCOME OF THE INVESTOR COMPANIES AND THEIR NATURE OF BUSINESS, CONFIRMATIONS OF TRANSACTION FROM THE INVESTORS, BALANCE SHEETS OF THE INVESTORS ALONG WITH MOA AND IT RETURNS, COPIES OF BANK STATEMENTS EVIDENCING THE PAYMENT RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND BANKING CHANNELS, BANK STATEMENT OF THE INVESTORS EVIDENCING THE INVESTMENTS MADE IN THE ASSESSEE COMPANY. THE ASSESSEE ALSO SUBMITTED BEFORE THE AO THAT THE ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 3 ASSESSEE IS AN OLD COMPANY AND HAS BEEN DOING BUSINESS AND SHOWING A CONSISTENT GROWTH IN THE BUSINESS AND THERE WERE RESERVES AS ON 31.03.2009. IT WAS ALSO STATED THAT THE VALUATION OF SHARE WAS BASED UPON DCF CALCULATION AT THAT TIME AND COPY OF THE SAME WAS ALSO SUBMITTED BEFORE THE AO BESIDES ASSESSEE FILING SHARE ALLOTMENT FORMS, PROOFS OF DELIVERY OF SHARES THROUGH COURIER, BOARD RESOLUTIONS, SHARE CERTIFICATES ETC. THE ASSESSEE RAISED THE SHARE APPLICATION MONEY FROM THE FOLLOWING PARTIES:- SR. NO NAME AND ADDRESS OF THE PERSON NO. OF EQUITY SHARES AMOUNT (RS.) 1 MAPLE MERCANTILE PVT. LTD 18A, RAMAKANTA BOSE STREET, KOLKATA, WEST BENGAL-700 003 60,000 30,00,000 2 TRAMMEL TRADING PVT. LTD 85, NETAJI SUBHAS ROAD, KOLKATA, WEST BENGAL-700 001 1,30,000 65,00,000 3. STHIRLAKSMI MERCANTILE P. LTD 85, NETAJI SUBHAS ROAD, DALHOUSIE, KOLKATA, WEST BENGAL-700 001 1,00,000 50,00,000 4 MUBARAK LUBRICANI P. LTD, 85, NETAJI SUBHAS ROAD, DALHOUSIE, KOLKATA, WEST BENGAL-700 001 50,000 25,00,000 5 GILTEDGE VINCOM P. LTD 85, NETAJI SUBHAIS ROAD, DALHOUSIE, KOLKATA, WEST BENGAL-700 001 50,000 25,00,000 6 BACHCHI FINANCE P. LTD 1 8A, RAMIKANTA BOSE STREET, KOLKATA, WEST BENGAL-700 CDS 50,000 25,00,000 7 DEVRAJ MERCANTILE P LTD 8 A , RAMAKANTA BOSE STREET, KOLKATA, WEST BENGAL-700 003 ; 60000 30,00,000 ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 4 8 MEHANDIPURA TRADELINK P. LTD 85, NETAJI SUBHAS ROAD, DALHOUSIE, KOLKATA, WEST BENGAL-700 001 1,08,000 54,00,000 9 MONTEX COMMERCIAL P. LTD 66, NALINI SETH ROAD, BURRABAZAR, KOLKATA, WEST BENGAL-700 007 50000 25,00,000 10 RAMESHWAR INVESTMENT 50,000 25,00,000 5. THEREAFTER, A COMMISSION UNDER SECTION 131(1)(D) OF THE ACT DATED 28.01.2013 WAS ISSUED TO DDIT-III(4), KOLKATA ALONG WITH ANNEXURES CALLING UPON TO VERIFY THESE ANNEXURES. THE COPY OF THE COMMISSION WAS ALSO FORWARDED TO THE ASSESSEE AND ON 13.02.2013 A LETTER WAS ISSUED TO THE ASSESSEE COMPANY INFORMING ABOUT THE NON COMPLIANCE OF SUMMON ISSUED BY DDIT, INVESTIGATION WING, KOLKATA. THEREAFTER, THE DDIT (INV.) WING, KOLKATA FORWARDED ITS REPORT ON 08.03.2003. IN THE SAID REPORT, THE DDIT (INV.) WING KOLKATA STATED THAT 7 PARTIES HAD SAME ADDRESS WHEREAS SIX COMPANIES WERE NOT EXISTING. THEREAFTER, THE SAID FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE THAT SHAREHOLDERS HAVE NOT COMPLIED WITH THE SUMMON ISSUED ON THE DATE OF COMPLIANCE AND THEY FAILED TO APPEAR IN PERSON DESPITE THEIR PERSONAL PRESENCE BEING ASKED BY DDIT (INV.) WING KOLKATA. IT WAS ALSO STATED THAT INVESTORS DID NOT APPEAR, HOWEVER, FILED ALL THE REPLIES ON SINGLE DAY ON 04.03.2013 WHICH WERE INCOMPLETE AND WERE IN THE SAME FORMAT. THEREAFTER, THE AO ASKED THE ASSESSEE TO FURNISH CERTAIN DETAILS HENCE ORIGINAL SHAREHOLDER REGISTER , ORIGINAL SHARE APPLICATION MONEY FORMS, PROOFS OF DISPATCH OF NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS FOR FINANCIAL YEAR 2009-10 & 2010-11 AND PROOFS OF ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 5 DISPATCH OF SHARE CERTIFICATES TO THE SHAREHOLDERS AND ENTRIES IN THE SHARE REGISTER. ON 25.03.2013, THE ASSESSEE SUBMITTED ITS REPLY THAT ALL 13 PARTIES WERE SERVED WITH THE NOTICES BY DDIT (INV.) WING KOLKATA AND IN RESPONSE, ALL OF THEM HAVE FILED THEIR REQUISITE DOCUMENTS IN THE OFFICE OF DDIT ON 04.03.2013. THE ASSESSEE RESUBMITTED SOME OF THE DOCUMENTS SUCH AS CONFIRMATIONS OF TRANSACTION AND CREDITWORTHINESS OF THE INVESTORS ETC. THE ASSESSEE ALSO STATED THAT NOT ONLY THESE PARTIES HAVE CONFIRMED THEIR INVESTMENTS IN THE ASSESSEE COMPANY BUT ALSO PRODUCED THEIR BANK ACCOUNTS AND BALANCE SHEETS EVIDENCING THE TRANSACTIONS AND ALSO CREDITWORTHINESS. BESIDES THE ASSESSEE SUBMITTED THAT ON 08.03.2013 THE COPIES OF SHARE CERTIFICATES ISSUED TO ALL 13 PARTIES WERE PRODUCED. HOWEVER, THE AO CAME TO A CONCLUSION THAT ASSESSEE HAS NO EXPLANATION TO OFFER AND PRESUMED THAT THESE 13 INVESTORS ARE NOT WILLING TO BE EXAMINED IN PERSON AND FOR THE WANT OF SOME IDENTITY OF THE SHAREHOLDERS OF THE ASSESSEE CAN NOT BE ASCERTAINED AND FINALLY MADE THE ADDITION TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT BY FRAMING ASSESSMENT UNDER SECTION 143(3) VIDE ORDER DATED 30.03.2013. 6. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: AFTER CAREFUL PERUSAL OF THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS FILED BY THE A/R OF THE APPELLANT IT HAS BEEN OBSERVED THAT THE ONLY ISSUE INVOLVED IN THIS APPEAL WHICH NEEDS ADJUDICATION IS THAT WHETHER THE APPELLANT HAS BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE HOLDERS WHO INVESTED IN THE SHARE CAPITAL OF THE COMPANY AND GENUINENESS OF THE TRANSACTIONS. THE SEQUENCE OF EVENTS AS NARRATED IN THE ASSESSMENT ORDER ARE BEING RECAPITULATED TO ARRIVE AT A LOGICAL CONCLUSION. 3.1 ACCORDING TO THE AO THE COMMISSION U/S 131(L)(D) OF THE INCOME TAX ACT, 1961 DATED 28.01.2013 WAS ISSUED TO DDIT(INV.) KOLKATA SINCE ALL THE INVESTORS ARE LOCATED AT KOLKATA (PARA 4.4 OF THE ASSESSMENT ORDER). THE COPY OF THIS COMMISSION ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 6 WAS ENDORSED TO THE LD. A/R OF THE ASSESSEE ON 29.01.2013 REQUESTING HIM TO HELP IN THE COMPLIANCE OF THE COMMISSION ISSUED U/S 131(L)(D) OF THE INCOME TAX ACT, 1961 (PARA 4.5 OF THE ASSESSMENT ORDER). 3.2 THE DDIT(INV.) VIDE LETTER DATED 08.03.2013 INFORMED THE AO THAT A DISCREET ENQUIRY WAS UNDERTAKEN,BY THE INSPECTOR ATTACHED WITH THE UNIT OF INVESTIGATION WING IN ORDER TO FIND OUT THE EXISTENCE AND WHERE ABOUT OR THE COMPANIES NAMELY M/S MEHANDIPURA TRADE LINK PVT. LTD., M/S ABHARANI VINMAY PVT. LTD., VEDIK TIE-UP PVT. LTD., M/S STHIR LAXMI MERCHANT PVT. LTD., TREMMEL TRADING PVT. LTD., M/S MUBARAK LUBRICANT PVT. LTD., M/S GILTEDGE VINCOM PVT. LTD. HAVING THEIR REGISTERED OFFICE AT 85, NETAJI SUBHASH ROAD, KOLKATA. AS PER RECORD OF THE INSPECTOR NONE OF THE ABOVE COMPANIES FOUND TO BE EXISTING AT IBEIR GIVEN ADDRESS AS PER REPORT OF THE INSPECTOR. IT WAS FURTHER STATED BY DI IN HIS REPORT THAT IN THE CASE OF M/S VANRAJ MERCHANT PVT. LTD., M/S DEVRAJ MERCHANT PVT. LTD., M/S MAPPLE MERCHANT PVT. LTD. HAVING THEIR REGISTERED OFFICE AT ISA, RAMAKANTA BOSE STREET KOLKATA AND M/S MONTEX COMMERCIAL PVT. LTD. HAVING REGISTERED OFFICE AT 66, NALINI SHETH ROAD, KOLKATA, M/S BACHI FINANCE PVT. LTD. HAVING REGISTERED OFFICE AT ISA, RAMAKANTA BOSE STREET, KOLKATA, M/S RAMESHWAR INVESTMENT ADVISORY PVT. LTD. HAVING REGISTERED OFFICE AT 18, SIR HARIRARN GOENKA STREET, BURRABAZAR, KOLKATA, THE SUMMONS WERE ISSUED ON 22.02.2013 AND 04.02.2013 BUT NO REPLY WAS RECEIVED. THE REPORT OF THE DDIT(INV.) UNIT KOLKATA RECEIVED ON 22.03.2013 AND WAS COMMUNICATED TO THE A/R OF THE ASSESSEE COMPANY ON THE SAID DATE VIDE ORDER SHEET ENTRY AND THE CASE WAS FIXED FOR 25.03.2013. 3.3 ON 25.03.2013 THE AO WAS INFORMED BY THE ASSESSEE COMPANY THAT ALL THE THIRTEEN PARTIES SUBMITTED THE REQUISITE DOCUMENTS TO THE OFFICE OF THE DDIT(INV.) KOLKATA ON 01.03.2013 AND SOME OF THEM RESUBMITTED ON 11.03.2013. THE COPIES OF THE INFORMATION SUBMITTED WITH THE DDIT WAS ALSO FILED WITH THE AO. IT WAS FURTHER STATED BEFORE THE AO THAT ALL THE PARTIES WHO INVESTED IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY SUBMITTED THEIR BANK STATEMENT, BALANCE SHEET FOR A.Y, 2010-11 AND COPY OF THE SHARE CERTIFICATE. THE ORIGINAL WERE ALSO PRODUCED FOR VERIFICATION. 3.4 THE AO HAS GIVEN THE DETAILED FINDINGS FOR MAKING ADDITION U/S 68 BY TREATING THE INVESTMENT IN SHARE CAPITAL AS UNEXPLAINED CASH CREDIT IN THE ASSESSMENT ORDER. THE AO HAS RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE CIT VS. P MOHAN KALA (2007) 161 TAXMAN 169 AND VIJAY TALWAR VS. CIT 330 ITR1 AND THE JUDGMENT OF DELHI HIGH COURT M THE CASE OF CIT VS. NIPUN BUILDER & DEVELOPER (P) LTD. 350 ITR 407 AND CIT VS. ORISSA CORP. (P) LTD. IN SUPPORT OF THE ADDITION MADE U/S 68. 3.5 IT HAS BEEN OBSERVED THAT ACCORDING TO THE A/R OF THE APPELLANT THE FOLLOWING DOCUMENTS WERE SUBMITTED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS:- A. CONFIRMATION FROM ALL THE INVESTORS, BEING INCORPORATED ENTITIES, IN THE EQUITY OF THE COMPANY DURING THE RELEVANT YEAR B. AUDITED ANNUAL ACCOUNTS OF ALL THE INVESTORS FOR THE RELEVANT YEAR WHEREIN THE INVESTMENT IN THE ASSESSEE COMPANY WAS DULY REFLECTED. ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 7 C. COPIES OF BANK STATEMENTS OF THE ASSESSES COMPANY AS WELL AS THAT OF THE INVESTORS TO ASCERTAIN THAT THE RECEIPT OF MONEY WAS THROUGH NORMAL BANKING CHANNELS AND BY ACCOUNT PAYEE CHEQUES D. COPIES OF THE BOARD RESOLUTION OF THE INVESTOR COMPANIES AUTHORIZING THEM TO INVEST IN THE ASSESSEE COMPANIES SHARES E. COPIES OF THE INCOME TAX RETURNS OF ALL THE INVESTOR COMPANIES FOR HAVING FILLED THEIR INCOME TAX RETURNS FOR THE RELEVANT ASSESSMENT YEAR F. COPIES OF SHARE APPLICATION FORMS AS RECEIVED FROM THE INVESTORS, (ORIGINAL COPIES WERE PROVIDED FOR VERIFICATION) G. COPIES OF SHARE CERTIFICATE ISSUED TO THE INVESTORS ALONGIVITH THEIR PAN DETAILS. 3.6 DURING THE COURSE OF ENQUIRIES MADE BY THE DDIT IN RESPONSE TO SUMMONS THE SHARE HOLDERS HAD COMPLIED WITH THE NOTICE OF THE DDIT AND SUBMITTED THE REPLY ALONGWITH THE RELEVANT DOCUMENTS ON 04.03.2013 AND SOME OF THEM RESUBMITTED THE DOCUMENTS ON 11.03.2013 AND THE AO HAS CONFIRMED THIS FACTS IN THE ASSESSMENT ORDER IN PARA 4.8. 3.7 ACCORDING TO THE A/R OF THE APPELLANT THE APEX COURT HAS DECIDED THIS ISSUE IN THE FOLLOWING CASES I. CIT VS. DIVINE LEASING & FINANCE LTD. (2008) 299 ITR 268 (DEL) II. CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR195 (SC) IN THE CASE OF LOVELY EXPORTS (P) LTD. THE APEX COURT HELD TO THE EXTENT THAT THE AO IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF THE BOGUS SHARE HOLDERS BUT THE SHARE APPLICATION MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THE HEAD NOTE IS BEING REPRODUCED:- 'INCOMECASH CREDITSHARE APPLICATION MONEY IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER WHOSE NAMES ARE GIVEN TO THE AO, THEN 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' 3.8 THE AO HAS RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF NIPUN BUILDERS & DEVELOPER (P) LTD. (2013) 350 ITR 407 AND THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF P. MOHANKALA. THE HEAD NOTES OF THE JUDGMENT OF DELHI HIGH COURT ARE REPRODUCED AS UNDER TO UNDERSTAND THE FINDINGS OF THE HON'BLE DELHI HIGH COURT:- 'INCOMECASH CREDIT EVIDENCE GIVEN BY ASSESSEE NOT SATISFACTORY ONUS OF ASSESSEE AMBIT FOR ENQUIRY OF ACCOMMODATION ENTRIES, AO ISSUED SUMMONS U/S 131 TO SHARE-HOLDERS OF ASSESSEE COMPANY WHICH RETURNED UNSERVED UNSATISFACTORY EXPLANATIONS WERE SUBMITTED BY ASSESSEE, FAILING ITS ONUS TO PROVE GENUINENESS ADDITION WAS MADE BY AOHELD, U/S 68 ONUS IS UPON ASSESSEE TO PROVE THREE INGREDIENTS, I.E., IDENTITY AND CREDITWORTHINESS OF PERSON FROM WHOM THE MONIES WERE TAKEN AND GENUINENESS OF TRANSACTIONIN CASE WHEN AO REQUESTED TO PRODUCE PRINCIPAL OFFICER OF SUBSCRIBING COMPANIES, THAT TOO ONLY AFTER TRYING TO SERVE SUMMONS UNSUCCESSFULLY, ASSESSEE DEVELOPED COLD FEETIT DIRECTED AO TO ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 8 GO TO WEBSITE OF ROC AND SEARCH FOR ADDRESSES OF SHARE-SUBSCRIBERS AND THEN COMMUNICATE WITH THEM FOR PROOF OF GENUINENESS OF SHARE SUBSCRIPTIONALSO ASSESSEE DID NOT PRODUCE PRINCIPAL OFFICER OF COMPANIES WHO SUBSCRIBED TO SHARES; IT MERELY FILED A LETTER AT 'DAK' COUNTER OF AO, STATING THAT COMMUNICATIONS SENT BY IT TO SHARE SUBSCRIBERS HAVE NOT COME BACK UNSERVEDTHIS WAS NOT COMPLIANCE WITH DIRECTION OF AO WHO HAD ISSUED NOTICE TO ASSESSEECERTAINLY ASSESSEE DID NOTHING WORTHWHILE TO DISCHARGE ONUS TO PROVE CREDITWORTHINESS OF SUBSCRIBING COMPANIES- REVENUE'S APPEAL ALLOWED' 3.9 BUT THE A/R OF THE APPELLANT HAS RELIED UPON THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NIPUN AUTO PVT. LTD. (2013) 263 CTR 714 AND HAS STATED THAT THE DELHI HIGH COURT DISTINGUISHED THE JUDGMENT OF NIPUN BUILDERS & DEVELOPER (P) LTD. DISCUSSED SUPRA IN THIS CASE. THE RELEVANT FINDINGS OF THE HON'BLE DELHI HIGH COURT IN THE CASE DISCUSSED SUPRA ARE AS UNDER:- '10. FROM A READING OF THE ABOVE EXTRACT, IT IS APPARENT THAT THE CASE OF NIPUN BUILDERS AND DEVELOPERS PVT. LTD. (SUPRA) WAS DIFFERENT AND IS DISTINGUISHABLE FROM THE PRESENT CASE. IN THAT CASE, THE SUMMONS SENT BY THE ASSESSING OFFICER TO THE COMPANIES WHO HAD APPLIED FOR SHARES HAD BEEN RETURNED WITH THE REMARKS 'NO SUCH COMPANY'. WHEREAS IN THE PRESENT CASE, THE IDENTITY OF THE TWO COMPANIES WHICH ARE SISTER COMPANIES STOOD ESTABLISHED. FURTHERMORE, THIS IS NOT A CASE OF MERE FURNISHING OF COPIES OF BANK ACCOUNTS OF THE SUBSCRIBERS. BUT, IN THE PRESENT CASE, AS NOTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THE ASSESSEE HAD FILED THE INCOME-TAX RETURNS OF THE SUBSCRIBER COMPANIES AS ALSO THEIR BANK STATEMENTS AND BALANCE SHEETS IN ADDITION TO THE CONFIRMATION LETTERS FROM THE SAID TWO COMPANIES. A COPY OF THE FORM NO. 2 FILED BY THE ASSESSEE WITH THE REGISTRAR OF COMPANIES REGARDING THE ALLOTMENT OF SHARES TO THE SAID TWO COMPANIES HAD ALSO BEEN FURNISHED. IT IS IN THIS BACKDROP THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAD CONCLUDED THAT THE ASSESSEE HAD BEEN ABLE TO PROVE ITS CASE AND THAT THE ASSESSING OFFICER COULD NOT SHIFT THE BURDEN BACK ONTO THE ASSESSEE COMPANY WITHOUT THE ASSESSING OFFICER PRODUCING ANY TANGIBLE MATERIAL TO DOUBT THE VERACITY OF THE DOCUMENTS FURNISHED BY THE ASSESSEE. THE INCOME TAX APPELLATE TRIBUNAL CONCURRED WITH THE VIEWS TAKEN BY THE COMMISSIONER OF INCOME-TAX (APPEALS).' MOREOVER, THE A/R OF THE APPELLANT HAS POINTED OUT IN THE WRITTEN SUBMISSIONS THAT THE CASE OF THE HON'BLE DELHI HIGH IN THE CASE OF NIPUN BUILDERS & DEVELOPER (P) LTD IS NOT APPLICABLE AS THERE WAS SPECIFIC INFORMATION FROM THE INVESTIGATION WING TO THE AO ABOUT PARTIES ENGAGING BOGUS TRANSACTIONS. 3.10 THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF P MOHANKALA HAS BEEN DISTINGUISHED BY THE A/R OF THE APPELLANT BY GIVING THE FACTS THAT IN THIS CASE THE HON'BLE SUPREME COURT DEALT WITH THE GIFTS DECLARED BY THE NRI RELATIVES OF THE ASSESSEE AND NOT WITH THE SHARE SUBSCRIPTION. ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 9 3.11 THE HON'BLE DELHI HIGH COURT IN THE CASE CIT VS OASIS HOSPITALITIES (P) LTD. (2011) 333 ITR 119 HAS ALSO HELD THAT PRIMARY ONUS STANDS DISCHARGED WHERE THE ASSESSEE COMPANY HAS FILED COPIES OF PAN, ITRS/BANK ACCOUNT/STATEMENTS OF THE SHARE APPLICANTS. IT HAS BEEN FURTHER HELD THAT THE REMEDY LIES IN REOPENING OF THE CASES OF THE INVESTORS AND NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY. THE HEAD NOTE IS REPRODUCED AS UNDER:- 'INCOMECASH CREDITSHARE APPLICATION MONEYTHOUGH THE SHARE APPLICANTS WERE NOT PRODUCED IN SPITE OF SPECIFIC DIRECTION OF THE AO, ASSESSEE COMPANY HAS FILED COPIES OF PAN, ACKNOWLEDGEMENT OF RETURNS OF THE SHARE APPLICANTS AND THEIR BANK ACCOUNT STATEMENTS OF THE RELEVANT PERIOD WHEN THE CHEQUES WERE CLEARED THUS, PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE ASSESSEE WAS NOT CONFRONTED WITH THE INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING OR GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WHOSE STATEMENTS WERE RECORDED BY THE INVESTIGATION WING TO DRAW ADVERSE CONCLUSION AGAINST THE ASSESSEE AS REGARDS DISCREPANCIES IN THE BANK STATEMENTS, THESE STATEMENTS WERE PROVIDED BY THE SHAREHOLDERS AND WERE PRINTED ON THE BANK STATIONERY ASSESSEE WAS NEVER CONFRONTED WITH THESE DISCREPANCIES BY THE AO IN ANY CASE, IT DOES NOT FOLLOW FROM THESE DISCREPANCIES THAT THE AMOUNT OF SHARE CAPITAL WAS UNDISCLOSED INCOME OF THE ASSESSEE EVEN THE CORRECT BANK STATEMENTS AS CLAIMED BY THE AO SHOW THAT THE ASSESSEE HAS RECEIVED CHEQUES FROM THE SHAREHOLDERSTHOUGH SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNTS OF SOME SHAREHOLDERS IS QUESTIONABLE, AO HAS NOT FURTHER, PROBED THE MATTERTHEREFORE, REMEDY LIES IN REOPENING THE CASE OF THESE INVESTORS AND ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE' 3.12 THE A/R OF THE APPELLANT HAS ALSO RELIED ON THE ORDER OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. PRANAV FOUNDATION LTD. (2014) 90 CCH 0021 THE RELEVANT PART OF THE FINDINGS OF THE HON'BLE HIGH COURT IS AS UNDER:- ''2. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S.68 OF THE IT ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN GO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. THERE IS NO CASE FOR THE REVENUE THAT THE APPLICANTS FOR THE SHARES WERE BOGUS. IN OUR OPINION, THE ADDITIONS WERE RIGHTLY DELETED BY THE CIT (A). NO INTERFERENCE IS CALLED FOR.' 2.4. AGGRIEVED BY THE SAID ORDER, THE PRESENT APPEAL IS FILED RAISING THE SUBSTANTIAL QUESTION OF LAW, REFERRED SUPRA. 3. WE HAVE HEARD THE LEARNED SENIOR STANDING COUNSEL APPEARING FOR THE APPELLANT AND PERUSED THE ORDER PASSED BY THE TRIBUNAL AND THE AUTHORITIES BELOW. ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 10 4. BEFORE ADVERTING TO THE MERITS OF THE CASE, IT WOULD BE RELEVANT TO REFER TO SECTION 68 OF THE ACT, WHICH READS AS UNDER: 'SECTION 68. CASH CREDITS.-WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR.' 5. A BARE READING OF SECTION 68 OF THE ACT MAKES IT CLEAR THAT IN A CASE WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS NOT GIVEN SATISFACTORY EXPLANATION IN RESPECT OF THE SAME, THE ASSESSING OFFICER CAN TREAT THE SAME AS UNDISCLOSED INCOME AND ADD IT TO THE INCOME OF THE ASSESSEE. ALL THAT THE SAID PROVISION CONTEMPLATES IS THAT THE ASSESSEE HAS TO GIVE SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE' OF SUCH SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT. 6. FROM THE FACTS AS ENUMERATED ABOVE, WE ARE OF THE VIEW THAT THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. CASE, REFERRED SUPRA, APPLIES ON ALL FOURS TO THE PRESENT CASE, IN VIEW OF THE FACT THAT ALL THE FOUR PARTIES, WHO ARE SUBSCRIBERS OF THE SHARES, ARE LIMITED COMPANIES AND ENQUIRIES WERE MADE AND RECEIVED FROM THE FOUR COMPANIES AND ALL THE COMPANIES ACCEPTED THEIR INVESTMENT. THUS, THE ASSESSEE HAS CATEGORICALLY ESTABLISHED THE NATURE AND SOURCE OF THE SAID SUM AND DISCHARGED THE ONUS THAT LIES ON IT IN TERMS OF SECTION 68 OF THE ACT. WHEN THE NATURE AND SOURCE OF THE AMOUNT SO INVESTED IS KNOWN, IT CANNOT BE SAID TO BE UNDISCLOSED INCOME. THEREFORE, THE ADDITION OF SUCH SUBSCRIPTIONS AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT IS UNWARRANTED. 7. THAT APART, A READING OF THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. CASE/ REFERRED SUPRA, MAKES IT CLEAR THAT THE DEPARTMENT HAS A RIGHT TO REOPEN THE INDIVIDUAL ASSESSMENT IF THE ALLEGATION OF BOGUS SHAREHOLDING IS PROVED. THIS IS NOT A CASE OF INVESTMENT BY BOGUS SHAREHOLDERS. THE FOUR LIMITED COMPANIES HAVE MADE INVESTMENT AND THAT IS BORNE OUT BY RECORDS. THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL, ON FACTS, HAVE FOUND THAT THE TRANSACTION IN THIS CASE IS BEYOND THE PALE OF CONTROVERSY AND THE ASSESSEE HAS EXPLAINED IN NO UNCERTAIN TERMS THE NATURE AND SOURCE OF THE INCOME.' 3.13 THE A/R OF THE APPELLANT HAS ALSO RELIED ON THE ORDER OF THE DELHI BENCH OF THE HON'BLE IT AT IN THE CASE OF ACIT VS. DIVINE (INDIA) INFRASTRUCTURE PVT. LTD. (2014) 42 CCH 0022 IN WHICH IT HAS BEEN HELD THAT MERELY BECAUSE THE SHARE HOLDERS HAS NOT BEEN PRODUCED BUT THE ASSESSEE HAS FURNISHED DETAILED, PAN, ADDRESSES, ITR ETC. BEFORE THE AO THEN THE ONUS SHIFTS ON THE AO TO DISPROVE CLAIM OF THE ASSESSEE BY ESTABLISHING THAT EVIDENCE FILED BY THE ASSESSEE WAS FALSE. KEEPING IN VIEW THE FACTS THAT THE APPELLANT FILED SUFFICIENT EVIDENCE BEFORE THE AO TO DISCHARGE THE PRIMARY ONUS DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 11 AND THE CASE OF THE ASSESSEE IS COVERED BY VARIOUS JUDGMENTS OF HON'BLE SUPREME COURT AND VARIOUS HIGH COURTS, THE GROUNDS OF APPEAL NO. 1 IS TREATED AS ALLOWED AND THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 48350000/- ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDIT U/S 68. 4. THE GROUNDS OF APPEAL NO.2 RELATING TO INITIATION OF PENALTY PROCEEDINGS U/S 271(L)(C) IS PREMATURE AS NO PENALTY HAS BEEN IMPOSED. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 7. THE LD. D.R. SUBMITTED BEFORE THE BENCH THAT THE INVESTORS WHO INVESTED IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY WERE BOGUS AS THEY HAVE FAILED TO APPEAR BEFORE THE DDIT (INV.) WING KOLKATA. THE DDIT (INV.) WING KOLKATA IN HIS REPORT DATED 08.03.2013 HAS CLEARLY STATED THAT NONE OF THE PARTIES APPEARED IN PERSON AND SUBMITTED THEIR REPLIES ON SINGLE DAY ON 04.03.2013 IN A STANDARD FORMAT. THE LD. D.R. SUBMITTED THAT OUT OF 13 PARTIES 7 PARTIES WERE HAVING SAME ADDRESS AND OTHER 5 PARTIES HAVING SAME ADDRESS AND ALSO HAVE COMMON DIRECTORS. THE LD. D.R. ALSO SUBMITTED THAT THE LD. A.R. HAS RELIED ON THE CASE LAWS WHICH WERE NOT APPLICABLE TO THE ASSESSEES CASE. THE LD. D.R. ALSO REFERRED TO PAGE NO.70 TO 76 BY POINTING OUT THAT THERE ARE DIFFERENT SIGNATURES ON THE CONFIRMATIONS AS FILED AT PAGE NO.70 AND FILED AT PAGE NO.76. THE LD. D.R. ALSO SUBMITTED THAT HUMAN PROBABILITIES HAVE TO BE SEEN IN THIS CASE AS KOLKATA IS A HUB OF ENTRY PROVIDERS AND ALL SCAMS. THE LD. D.R. ALSO RELIED ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF PR. CIT VS. NRA IRON AND STEEL PVT. LTD. OF APEX COURT IN CA NO OF 2019 ARISING OUT OF SLP (CIVIL) NO. 29855 OF 2018. BESIDES, THE LD. D.R. ALSO RELIED ON THE FOLLOWING DECISIONS. 1. CIT VS. NR PORTFOLIO PVT. LTD. (2013) 29 TAXMAN.COM 291 DELHI-HC 2. BUTEX INDIA PVT. LTD. VS. CIT (2012) 18 TAXMAN.COM 9 DEL. ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 12 3. COMMISSIONER OF INCOME TAX VS. NAVODAYA CASTLES PVT. LTD. (2014) 50 TAXMAN.COM 110 DEL. THE LD. D.R. SUBMITTED BEFORE THE BENCH THAT IN THIS CASE THE ASSESSEE HAS FAILED TO PRODUCE THESE PARTIES FOLLOWING WHICH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE PARTIES COULD NOT BE ESTABLISHED AND THEREFORE RELYING ON THE ABOVE SAID DECISIONS PRAYED BEFORE THE BENCH THAT THE ORDER OF LD. CIT(A) MAY BE REVERSED AND THAT OF THE AO MAY BE RESTORED. 8. THE LD. A.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF LD. CIT(A) AND SUBMITTED THAT EVEN THE REPORT FILED BY THE DDIT (INV.) WING KOLKATA ON 08.03.2013 HAS STATED THAT ALL THE PARTIES HAVE FILED THEIR DOCUMENTS. THE LD. A.R. ALSO SUBMITTED THAT ALL THESE DETAILS WERE SUBMITTED BEFORE THE AO ALSO. THE LD. A.R. FURTHER STATED THAT ASSESSEE IS NOT A SHELL COMPANY AND SO WERE THE INVESTORS WHO INVESTED IN THE ASSESSEE COMPANY. THE FACT IS THAT MOST OF THE COMPANIES ARE HAVING SAME ADDRESSES AND COMMON DIRECTORS CAN NOT BE A GROUND FOR DOUBTING THE TRANSACTIONS. THE LD AR SUBMITTED THAT WHILE ISSUING SHARES A VALUATION REPORT WAS GOT PREPARED AS PER DCF METHOD A COPY OF WHICH IS ATTACHED AT PAGE NO.51 TO 63. THE LD. A.R. STATED THAT ALL THE PARTIES REPLIED TO THE NOTICES ISSUED BY DDIT (INV.) WING KOLKATA. THE LD. A.R. ALSO DREW OUR ATTENTION TO PAGE NO.48 OF THE PAPER BOOK WHICH CONTAINS THE DETAILS OF SOURCE OF INCOMES OF THE INVESTOR COMPANIES IN THE ASSESSEE COMPANY AND THE LD. A.R. STATED THAT THE SAID INVESTORS HAVE FULL CREDITWORTHINESS TO INVEST IN THE ASSESSEE COMPANY. THE LD. A.R. SUBMITTED THAT ALL THESE INVESTORS HAVE SUBMITTED COPIES OF BANK STATEMENTS EVIDENCING THE PAYMENTS THROUGH BANKING CHANNELS, COPIES OF THE BALANCE SHEETS SHOWING THAT THOSE INVESTORS HAVE SUFFICIENT ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 13 RESOURCES ON THEIR OWN AND ALSO THE COPIES OF ITRS ETC. THEREFORE, THE CASE LAWS RELIED UPON BY THE LD. D.R. ARE DISTINGUISHABLE AND ARE NOT APPLICABLE TO THE CASE OF THE ASSESSEE. THE LD. A.R. SUBMITTED THAT THE REPORT OF DDIT (INV.) WING KOLKATA IS NOT CORRECT AS THE SAME IS AGAINST THE FACTS ON RECORD. THEREFORE, ALL THE THREE INGREDIENTS WERE DULY SATISFIED IN THE CASE OF THESE INVESTORS AND THE ADDITION UNDER SECTION 68 IS UNWARRANTED AND MAY BE DELETED. IN DEFENCE OF HIS ARGUMENT, THE LD. A.R. RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT VS. M/S. AMI INDUSTRIES INDIA PVT. LTD. ITA NO. 1231 OF 2017 DATED 29.01.2020. IN THIS CASE, THE LD. A.R. SUBMITTED THAT A SIMILAR ISSUE HAS BEEN DECIDED AFTER CONSIDERING THE DECISION OF PR. CIT VS. NRA IRON AND STEEL PVT. LTD.(SUPRA). THEREFORE, THE LD. A.R. PRAYED THAT THE ORDER PASSED BY LD. CIT(A) AFTER CONSIDERING THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORT PVT. LTD. (2008) 216 ITR 195 AND CIT VS. ORISSA CORP. PVT. LTD. (1996) 159 ITR 78 AND THEREFORE SAME MAY KINDLY BE UPHELD. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS RAISED SHARE CAPITAL BY ISSUING SHARES OF FACE VALUE OF RS.10/-EACH AT PREMIUM OF RS.40 THEREBY RAISING A SUM OF RS.4,83,50,000/-. THE DETAILS OF THE INVESTORS HAVE BEEN GIVEN HEREINABOVE WHILE NARRATING THE FACTS OF THE CASE. IN THE PRESENT CASE, THE AO IN ORDER TO VERIFY THESE INVESTMENTS ISSUED COMMISSION TO DDIT (INV.) WING KOLKATA UNDER SECTION 131(1)(D) OF THE ACT BESIDES CALLING UPON THE ASSESSEE TO FURNISH THE EVIDENCES AND DOCUMENTS PROVING THE INVESTMENTS IN SHARE CAPITAL BY THE VARIOUS INVESTMENTS. THE ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 14 ASSESSEE FILED BEFORE THE AO VARIOUS EVIDENCES COMPRISING COPIES OF BANK STATEMENTS OF THESE INVESTORS EVIDENCING THE PAYMENTS THROUGH BANKING CHANNEL, CONFIRMATIONS FROM THE INVESTORS, COPIES OF ITRS AND BALANCE SHEETS OF THE INVESTORS ALONG WITH SHARE APPLICATION FORMS AND SHARE CERTIFICATES. THE DDIT (INV.) WING KOLKATA ALSO ISSUED NOTICES TO THESE 13 INVESTORS AND REQUIRED THEIR PRESENCE. HOWEVER, NONE APPEARED BUT THEY FILED THEIR REPLIES FURNISHING THEREWITH COPIES OF BALANCE SHEETS, BANK STATEMENTS, SHARE CERTIFICATES AND CONFIRMATIONS. THE DDIT(INV) FINALLY SUBMITTED THE REPORT TO THE AO CITING ALL THESE FACTS. NOW THE ISSUE BEFORE US IS WHETHER THE INGREDIENTS UNDER SECTION 68 OF THE ACT NAMELY IDENTITY, CREDITWORTHINESS OF THE PARTIES/INVESTORS AND GENUINENESS OF THE TRANSACTIONS WERE SATISFIED OR NOT. WE HAVE CAREFULLY PERUSED THE ORDER PASSED BY THE LD. CIT(A) FOLLOWING THE HONBLE SUPREME COURT DECISION IN THE CASE OF CIT VS. LOVELY EXPORTS (SUPRA) AND CIT VS. ORISSA CORP. PVT. LTD. (SUPRA). MOREOVER, THE ASSESSEE IS ALSO RELIED ON THE DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF PR. CIT VS. M/S. AMI INDUSTRIES INDIA PVT. LTD. (SUPRA) WHEREIN A SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PARAS ARE REPRODUCED FOR THE SAKE OF READY REFERENCE. 21. FROM THE ABOVE, IT IS SEEN THAT IDENTITY OF THE CREDITORS WERE NOT IN DOUBT. ASSESSEE HAD FURNISHED PAN, COPIES OF THE INCOME TAX RETURNS OF THE CREDITORS AS WELL AS COPY OF BANK ACCOUNTS OF THE THREE CREDITORS IN WHICH THE SHARE APPLICATION MONEY WAS DEPOSITED IN ORDER TO PROVE GENUINENESS OF THE TRANSACTIONS. IN SO FAR CREDIT WORTHINESS OF THE CREDITORS WERE CONCERNED, TRIBUNAL RECORDED THAT BANK ACCOUNTS OF THE CREDITORS SHOWED THAT THE CREDITORS HAD FUNDS TO MAKE PAYMENTS FOR SHARE APPLICATION MONEY AND IN THIS REGARD, RESOLUTIONS WERE ALSO PASSED BY THE BOARD OF DIRECTORS OF THE THREE CREDITORS. THOUGH, ASSESSEE WAS NOT REQUIRED TO PROVE SOURCE OF THE SOURCE, NONETHELESS, TRIBUNAL TOOK THE VIEW THAT ASSESSING OFFICER HAD MADE ENQUIRIES THROUGH THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA AND COLLECTED ALL THE MATERIALS WHICH PROVED SOURCE OF THE SOURCE. ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 15 22. IN NRA IRON & STEEL (P) LTD (SUPRA), THE ASSESSING OFFICER HAD MADE INDEPENDENT AND DETAILED INQUIRY INCLUDING SURVEY OF THE INVESTOR COMPANIES. THE FIELD REPORT REVEALED THAT THE SHAREHOLDERS WERE EITHER NON-EXISTENT OR LACKED CREDIT- WORTHINESS. IT IS IN THESE CIRCUMSTANCES, SUPREME COURT HELD THAT THE ONUS TO ESTABLISH IDENTITY OF THE INVESTOR COMPANIES WAS NOT DISCHARGED BY THE ASSESSEE. THE AFORESAID DECISION IS, THEREFORE, CLEARLY DISTINGUISHABLE ON FACTS OF THE PRESENT CASE. 22. THEREFORE, ON A THOROUGH CONSIDERATION OF THE MATTER, WE ARE OF THE VIEW THAT THE FIRST APPELLATE AUTHORITY HAD RETURNED A CLEAR FINDING OF FACT THAT ASSESSEE HAD DISCHARGED ITS ONUS OF PROVING IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANSACTIONS AND CREDIT-WORTHINESS OF THE CREDITORS WHICH FINDING OF FACT STOOD AFFIRMED BY THE TRIBUNAL. THERE IS, THUS, CONCURRENT FINDINGS OF FACT BY THE TWO LOWER APPELLATE AUTHORITIES. APPELLANT HAS NOT BEEN ABLE TO SHOW ANY PERVERSITY IN THE AFORESAID FINDINGS OF FACT BY THE AUTHORITIES BELOW. 22. UNDER THESE CIRCUMSTANCES, WE FIND NO ERROR OR INFIRMITY IN THE VIEW TAKEN BY THE TRIBUNAL. NO QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW, ARISES FROM THE ORDER OF THE TRIBUNAL. CONSEQUENTLY, THE APPEAL IS DISMISSED. HOWEVER, THERE SHALL BE NO ORDER AS TO COST. 10. THUS IT IS CLEAR FROM THE PERUSAL OF THE ABOVE DECISION THAT ONCE THE ASSESSEE HAS FILED THE NECESSARY EVIDENCES TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS BY PROVING SOURCES OF INVESTMENTS, THEN THE ONUS ON THE ASSESSEE IS FULLY DISCHARGED AND IT IS FOR THE DEPARTMENT TO PROVE TO THE CONTRARY. WE HAVE ALSO PERUSED THE CASE LAWS RELIED UPON BY THE LD. D.R. BUT FOUND THAT THE SAME ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, WE ARE INCLINED TO UPHOLD THE ORDER OF LD. CIT(A) BY DISMISSING THE APPEAL OF THE REVENUE. 11. HOWEVER, BEFORE WE PART WITH THE MATTER, WE MUST DEAL WITH ONE PROCEDURAL ISSUE AS WELL. WHILE HEARING OF THIS APPEAL WAS CONCLUDED ON 19TH MARCH 2020, THE ORDER IS BEING PRONOUNCED TODAY ON 9 TH DAY OF JULY, 2020, MUCH AFTER THE EXPIRY OF 90 DAYS FROM THE DATE OF CONCLUSION OF HEARING. WE ARE ALSO ALIVE TO THE FACT THAT RULE 34(5) OF THE INCOME TAX APPELLATE TRIBUNAL RULES ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 16 1963, WHICH DEALS WITH PRONOUNCEMENT OF ORDERS, PROVIDES AS FOLLOWS: (5) THE PRONOUNCEMENT MAY BE IN ANY OF THE FOLLOWING MANNERS : (A) THE BENCH MAY PRONOUNCE THE ORDER IMMEDIATELY UPON THE CONCLUSION OF THE HEARING. (B) IN CASE WHERE THE ORDER IS NOT PRONOUNCED IMMEDIATELY ON THE CONCLUSION OF THE HEARING, THE BENCH SHALL GIVE A DATE FOR PRONOUNCEMENT. (C) IN A CASE WHERE NO DATE OF PRONOUNCEMENT IS GIVEN BY THE BENCH, EVERY ENDEAVOUR SHALL BE MADE BY THE BENCH TO PRONOUNCE THE ORDER WITHIN 60 DAYS FROM THE DATE ON WHICH THE HEARING OF THE CASE WAS CONCLUDED BUT, WHERE IT IS NOT PRACTICABLE SO TO DO ON THE GROUND OF EXCEPTIONAL AND EXTRAORDINARY CIRCUMSTANCES OF THE CASE, THE BENCH SHALL FIX A FUTURE DAY FOR PRONOUNCEMENT OF THE ORDER, AND SUCH DATE SHALL NOT ORDINARILY (EMPHASIS SUPPLIED BY US NOW) BE A DAY BEYOND A FURTHER PERIOD OF 30 DAYS AND DUE NOTICE OF THE DAY SO FIXED SHALL BE GIVEN ON THE NOTICE BOARD. 12. QUITE CLEARLY, ORDINARILY THE ORDER ON AN APPEAL SHOULD BE PRONOUNCED BY THE BENCH WITHIN NO MORE THAN 90 DAYS FROM THE DATE OF CONCLUDING THE HEARING. IT IS, HOWEVER, IMPORTANT TO NOTE THAT THE EXPRESSION ORDINARILY HAS BEEN USED IN THE SAID RULE ITSELF. THIS RULE WAS INSERTED AS A RESULT OF DIRECTIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIVSAGAR VEG RESTAURANT VS ACIT [(2009) 317 ITR 433 (BOM)] WHEREIN THEIR LORDSHIPS HAD, INTER ALIA, DIRECTED THAT WE, THEREFORE, DIRECT THE PRESIDENT OF THE APPELLATE TRIBUNAL TO FRAME AND LAY DOWN THE GUIDELINES IN THE SIMILAR LINES AS ARE LAID DOWN BY THE APEX COURT IN THE CASE OF ANIL RAI (SUPRA) AND TO ISSUE APPROPRIATE ADMINISTRATIVE DIRECTIONS TO ALL THE BENCHES OF THE TRIBUNAL IN THAT BEHALF. WE HOPE AND TRUST THAT SUITABLE GUIDELINES SHALL BE FRAMED AND ISSUED BY THE PRESIDENT OF THE APPELLATE TRIBUNAL WITHIN SHORTEST REASONABLE TIME AND FOLLOWED STRICTLY BY ALL THE BENCHES OF THE TRIBUNAL. IN THE MEANWHILE ( EMPHASIS, BY UNDERLINING, SUPPLIED BY US NOW), ALL THE REVISIONAL AND APPELLATE ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 17 AUTHORITIES UNDER THE INCOME-TAX ACT ARE DIRECTED TO DECIDE MATTERS HEARD BY THEM WITHIN A PERIOD OF THREE MONTHS FROM THE DATE CASE IS CLOSED FOR JUDGMENT. IN THE RULES SO FRAMED, AS A RESULT OF THESE DIRECTIONS, THE EXPRESSION ORDINARILY HAS BEEN INSERTED IN THE REQUIREMENT TO PRONOUNCE THE ORDER WITHIN A PERIOD OF 90 DAYS. THE QUESTION THEN ARISES WHETHER THE PASSING OF THIS ORDER, BEYOND NINETY DAYS, WAS NECESSITATED BY ANY EXTRAORDINARY CIRCUMSTANCES. 13. LET US IN THIS LIGHT REVERT TO THE PREVAILING SITUATION IN THE COUNTRY. ON 24TH MARCH, 2020, HONBLE PRIME MINISTER OF INDIA TOOK THE BOLD STEP OF IMPOSING A NATIONWIDE LOCKDOWN, FOR 21 DAYS, TO PREVENT THE SPREAD OF COVID 19 EPIDEMIC, AND THIS LOCKDOWN WAS EXTENDED FROM TIME TO TIME. AS A MATTER OF FACT, EVEN BEFORE THIS FORMAL NATIONWIDE LOCKDOWN, THE FUNCTIONING OF THE INCOME TAX APPELLATE TRIBUNAL AT MUMBAI WAS SEVERELY RESTRICTED ON ACCOUNT OF LOCKDOWN BY THE MAHARASHTRA GOVERNMENT, AND ON ACCOUNT OF STRICT ENFORCEMENT OF HEALTH ADVISORIES WITH A VIEW OF CHECKING SPREAD OF COVID 19. THE EPIDEMIC SITUATION IN MUMBAI BEING GRAVE, THERE WAS NOT MUCH OF A RELAXATION IN SUBSEQUENT LOCKDOWNS ALSO. IN ANY CASE, THERE WAS UNPRECEDENTED DISRUPTION OF JUDICIAL WOK ALL OVER THE COUNTRY. AS A MATTER OF FACT, IT HAS BEEN SUCH AN UNPRECEDENTED SITUATION, CAUSING DISRUPTION IN THE FUNCTIONING OF JUDICIAL MACHINERY, THAT HONBLE SUPREME COURT OF INDIA, IN AN UNPRECEDENTED ORDER IN THE HISTORY OF INDIA AND VIDE ORDER DATED 6.5.2020 READ WITH ORDER DATED 23.3.2020, EXTENDED THE LIMITATION TO EXCLUDE NOT ONLY THIS LOCKDOWN PERIOD BUT ALSO A FEW MORE DAYS PRIOR TO, AND AFTER, THE LOCKDOWN BY OBSERVING THAT IN CASE THE LIMITATION HAS EXPIRED AFTER 15.03.2020 THEN ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 18 THE PERIOD FROM 15.03.2020 TILL THE DATE ON WHICH THE LOCKDOWN IS LIFTED IN THE JURISDICTIONAL AREA WHERE THE DISPUTE LIES OR WHERE THE CAUSE OF ACTION ARISES SHALL BE EXTENDED FOR A PERIOD OF 15 DAYS AFTER THE LIFTING OF LOCKDOWN. HONBLE BOMBAY HIGH COURT, IN AN ORDER DATED 15TH APRIL 2020, HAS, BESIDES EXTENDING THE VALIDITY OF ALL INTERIM ORDERS, HAS ALSO OBSERVED THAT, IT IS ALSO CLARIFIED THAT WHILE CALCULATING TIME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY, AND ALSO OBSERVED THAT ARRANGEMENT CONTINUED BY AN ORDER DATED 26TH MARCH 2020 TILL 30TH APRIL 2020 SHALL CONTINUE FURTHER TILL 15TH JUNE 2020. IT HAS BEEN AN UNPRECEDENTED SITUATION NOT ONLY IN INDIA BUT ALL OVER THE WORLD. GOVERNMENT OF INDIA HAS, VIDE NOTIFICATION DATED 19TH FEBRUARY 2020, TAKEN THE STAND THAT, THE CORONAVIRUS SHOULD BE CONSIDERED A CASE OF NATURAL CALAMITY AND FMC (I.E. FORCE MAJEURE CLAUSE) MAYBE INVOKED, WHEREVER CONSIDERED APPROPRIATE, FOLLOWING THE DUE PROCEDURE. THE TERM FORCE MAJEURE HAS BEEN DEFINED IN BLACKS LAW DICTIONARY, AS AN EVENT OR EFFECT THAT CAN BE NEITHER ANTICIPATED NOR CONTROLLED WHEN SUCH IS THE POSITION, AND IT IS OFFICIALLY SO NOTIFIED BY THE GOVERNMENT OF INDIA AND THE COVID-19 EPIDEMIC HAS BEEN NOTIFIED AS A DISASTER UNDER THE NATIONAL DISASTER MANAGEMENT ACT, 2005, AND ALSO IN THE LIGHT OF THE DISCUSSIONS ABOVE, THE PERIOD DURING WHICH LOCKDOWN WAS IN FORCE CAN BE ANYTHING BUT AN ORDINARY PERIOD. 14. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING PRONOUNCEMENT OF ORDERS WITHIN 90 DAYS, ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 19 DISREGARDING THE IMPORTANT FACT THAT THE ENTIRE COUNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING AT LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND REALITIES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO ASSIGNED BY US IS NOT ONLY IN CONSONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TIME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPRECEDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBTEDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)], HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VIDE JUDGMENT DATED 15TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIME-BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY. THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY HONBLE JURISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIOD OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE WORDS ORDINARILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PERIOD DURING WHICH LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIMITS SET OUT IN RULE 34(5) OF ITA NO.1482/M/2015 M/S. BYGGING INDIA PVT. LTD. 20 THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EXCEPTION, TO 90-DAY TIME-LIMIT FOR PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANNOT BE ANY, BAR ON THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BECAUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHEN THE HEARING IS CONCLUDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACTS OF THIS CASE. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.07.2020. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 15.07.2020. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.