ACIT, Circle-5(2), Kolkata , Kolkata V. M/s Nirnidhi Marketing Pvt. Ltd., Kolkata

ITA 1960/KOL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1591 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-11-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 01-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP CHOUBE
• Assessee Lawyers: S M SURANA
• Keywords: Source of fund; Fair market value; Capital receipt
• Section: 143(3); 142(1); 115JB; 201; 143(2); 13; 131; 68

Judgement Text

ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 1 | P A GE , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VAR KEY, JM] I.T.A. NO. 1960/KOL/2017 ASSESSMENT YEAR: 2012-13 ACIT, CIRCLE-5(2), KOLKATA VS. M/S NIRNIDHI MARKETING PVT. LTD. (PAN:AACCN 7876 J) APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 26.11.2020 DATE OF PRONOUNCEMENT 09.12.12.2020 FOR THE APPELLANT SHRI SANDEEP CHOUBE, CIT FOR THE RESPONDENT SHRI S. M. SURANA, ADVOCATE ORDER PER SHRI A.T. VARKEY, JM: THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF LD. CIT(A)-2, KOLKATA DATED 06.06.2017 FOR A.Y. 2012-13. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENU E ARE AS UNDER: 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT A PREMIUM OF RS. 1 ,990 ON A FACE VALUE OF SHARE OF RS. 10 IS JUSTIFIED WHEN NO PROPER PHYSICA L ACTIVITY OF THE PRIVATE LIMITED COMPANY WAS NOTICED. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT RS. 9,50,00,000 /- ADDED U/S 68 OF THE INCOME TAX ACT, 1961 IS NOT MAINTAINABLE WHEN IDENTITY, GE NUINENESS AND CREDITWORTHINESS OF THE SHARE APPLICANT WAS NOT PRO VED. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT EVEN WHEN NO R ESPONSE IS MADE AGAINST SUMMON U/S 131 IS ISSUED FOR PERSONAL EXAMINATION T O PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS, THE TRANSACTION IS STILL VALID. ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 2 | P A GE 4. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT WITHOUT EXAMINA TIONS OF THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE APPLI CANT FROM HIS END, THE TRANSACTION IS STILL VALID. 5. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE, AMEND OR MODIFY ANY GROUND BEFORE OR AT THE TIME OF APPELLATE PROCEEDIN GS. 3. FROM THE PERUSAL OF THE AFORESAID GROUNDS OF APP EAL, IT IS DISCERNED THAT THE REVENUE IS AGGRIEVED BY THE ACTION OF THE LD. CIT(A ) IN ORDERING DELETION OF THE ADDITION OF RS. 9.50 CRORES MADE BY ASSESSING OFFIC ER (HEREINAFTER REFERRED TO AS THE AO) U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) AS WELL AS AGAINST THE ACTION OF LD. CIT(A) IN HOLDING THAT T HE PREMIUM OF RS. 1,990/- ON FACE VALUE OF SHARE OF RS. 10 IS JUSTIFIED WHEN ACCORDIN G TO REVENUE NO PROPER PHYSICAL ACTIVITY OF THE PRIVATE LIMITED COMPANY (ASSESSEE C OMPANY) COULD BE NOTICED ( SEE, GROUND NUMBER 1 ). 4. BRIEF FACTS OF THE CASE AS NOTED BY THE AO IS TH AT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 21.09.2012 DECLARING TOTAL INCO ME OF RS. 1,74,21,518/- AND BOOK PROFIT OF RS. 1,88,83,977/- U/S 115JB OF THE ACT. T HE AO NOTES THAT THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. THEREAFTER HE NOTES THAT HE ISSUED NOTICE U/S 143(2) AND 142(1) OF THE ACT AND THE ASSESSEE WAS A SKED TO FURNISH CERTAIN DOCUMENTS. ACCORDING TO AO, SHRI RAJESH AGARWAL, FCA REPRESENT ING THE ASSESSEE APPEARED BEFORE HIM AND FURNISHED VARIOUS DOCUMENTS IN THE C OURSE OF PROCEEDINGS. ACCORDING TO AO WHILE PERUSING THE AUDITED ACCOUNTS OF THE AS SESSEE FOR THE YEAR ENDED 31.03.2012, HE FOUND THAT THE ASSESSEE COMPANY HAS RAISED SHARE CAPITAL INCLUSIVE OF SECURITIES PREMIUM OF RS. 9.50 CRORES BY ALLOTING 4 7,500 NUMBERS OF EQUITY SHARES AT A FACE VALUE OF RS. 10/- EACH AT PREMIUM OF RS. 1,990 /- PER SHARE TO SOLE SHARE APPLICANT M/S SAIBABA FINVEST PVT. LTD. (HEREINAFTER REFERRED TO AS M/S SAIBABA). ACCORDING TO AO, HE HAD ISSUED NOTICE U/S 142(1) ASKING FOR THE DETAILS OF NEW SHARE APPLICANT PURSUANT TO WHICH THE ASSESSEE HAD FILED DETAILS OF THE SHARE APPLICANT M/S SAIBABA; AND THEREAFTER HE ISSUED FURTHER NOTICE U/S 131 OF THE ACT TO M/S SAIBABA TO VERIFY THE ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 3 | P A GE GENUINENESS OF THE SHARE APPLICANT INCLUDING THAT O F THE SHARE PREMIUM. ACCORDING TO AO, IN SPITE OF NOTICE U/S 131 OF THE ACT BEING SEN T TO THEM, THE SHARE APPLICANT DID NOT BOTHER TO APPEAR BEFORE HIM ON THE DATE OF HEARING FIXED ON 17.03.2015. THEREFORE THE AO OBSERVES IN HIS ASSESSMENT ORDER SUCH NON-CO-OPERATION BEFORE THE ASSESSING AUTHORITY CAN ONLY BE ASSUMED TO BE WILLFUL AND THE CREDITS IN THE BOOKS OF ACCOUNTS AS NOT SATISFACTORILY EXPLAINED. FROM THE P/L ACCOUNT AND BALANCE SHEET OF THE SAID M/S SAIBABA PRODUCED BY THE ASSESSEE IT IS EVIDENT THAT NO BUSINESS ACTIVITY HAS BEEN CARRIED ON JUSTIFYING THE HUGE PREMIUM. THEREAFTER HE WAS OF THE OPINION THAT UNACCOUNTED MONEY HAS BEEN LAUNDERED BY CREATING FA ADE OF PAPER WORK AND THEN AFTER CITING FEW CASE LAWS OF THE APEX COURT HELD T HAT SINCE THERE WAS NO COMPLIANCE ON THE PART OF THE SUBSCRIBING COMPANY (M/S SAIBAB A) AND SINCE THEY HAVE NOT BEEN FORTHCOMING IN ITS REPLY TO THE SUMMONS U/S 131 OF THE ACT, HE (AO) HELD THAT IDENTITY, CREDITWORTHINESS OF THE SHARE SUBSCRIBER AND THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED AND THEREFORE ADDIT ION WAS MADE U/S 68 OF THE ACT OF THE ENTIRE SHARE CAPITAL AND SHARE PREMIUM COLLECTE D BY THE ASSESSEE. 5. AGGRIEVED BY THE AFORESAID ACTION OF AO, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO DELETE THE ADDITION BY HOLDING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZE D REPRESENTATIVE OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER FRAMED IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. THE A.R OF THE APPELLANT HAS SUBMITTED THAT THE GRO UND OF APPEAL 3 TO 9 RELATES TO ADDITION OF SHARE CAPITAL AND PREMIUM RS. 9.50 CRORE HELD AS UN EXPLAINED CASH CREDIT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF IRON ORE FINE S. THE TURNOVER OF THE APPELLANT FOR THE FY 2010-11 WAS RS. 373.89 CRORES AND PAT WAS RS. 1.45 CRORE AND EPS OF RS. 145.43 PER SHARES. DURING THE YEAR, THE APPELLANT COMPANY ISSU ED 47500 EQUITY SHARES OF RS. 10/- EACH AT A PREMIUM OF RS. 1990/- EACH. IN COURSE OF THE ASSESSMENT PROCEEDINGS THE ID. AO ISSUED A SPECIFIC 142(1} NOTICE ON 04,03.2015 ALONG WITH DETAILED QUESTIONNAIRE SEEKIN G VARIOUS DETAILS OF. IN RESPONSE TO THE SAME THE APPELLANT FILED EACH AND EVERY DETAILS, DO CUMENTS, EVIDENCES AND EXPLANATIONS AS CALLED FOR INCLUDING DOCUMENTS IN SUPPORT OF THE ID ENTITY AND CREDITWORTHINESS OF THE SHARE CAPITAL AND GENUINENESS OF THE TRANSACTION AND EXPL ANATION REGARDING THE JUSTIFICATION OF SHARE PREMIUM WITH REFERENCE TO EPS AND NAV. THE APPELLANT STATED THAT THE EPS (PAT/ NO. OF SHAR ES) OF THE COMPANY FOR THE F Y 2010-11 WAS RS. 145.43 PER SHARE. THE MARKET VALUE OF SHARE BY CAPITALISING THE EPS @ 7% WOULD COME TO RS. T,933/- PER SHARE. AS SUCH THE SHARE IS SUE PRICE OF RS. 2,000/- IS NOT TOO HIGH. SIMILARLY THE NAV OF THE SHARES AS AT 31.03.2011 WA S RS. 1,988/- PER SHARES. AS SUCH THE ISSUE PRICE OF RS. 2,000/- IS NOT TOO HIGH. THE APPELLANT FURTHER S A CAPITAL RECEIPT AND TILL 31,03.2012 THERE WAS NO PROVISION TO TAX THE SAME. BESIDES, IT WAS. FURTHER EXPLAINED THAT FIXING SHARE ISSUE PRICE AND TO SUBSCRIBE OR NOT ARE COMMERCIAL DECISION AND THE SAME CANNOT BE INTERFE PROVISION OF SEC. 56(2)(VII)(B), ONLY THE EXCESS OF SHARE ISSUE PRICE OVER AND ABOVE FMV AS PER RULE 11UA IS TAXABLE W.E.F. ASSESSMENT YEAR 201 3 SHARE ISSUE PRICE WAS RS. 2,000/ SUCH THE SHARE PREMIUM WAS NOT AT VARIANCE THE AR OF THE APPELLAN T FURTHER PLACED HIS RELIANCE ON VARIOUS JUDGMENT SUBMISSIONS AND CONSIDERED. THE LD. AO DID NOT BRIN G OUT ANY DEFICIENCIES IN THE DETAILS, DOCUMENTS AND EVIDENCES FILED BY THE APPELLANT. IN SPITE OF THE SAME THE LD. AO ASSESSED THE SHARE CAPITAL AND PREMIUM AS UNEXPLAINED CASH CREDI T THE AO HAS MADE OBSERVATION THAT NO BUSINESS ACTIVI TY HAS BEEN CARRIED ON JUSTIFYING THE HUGE PREMIUM. IT APPEARS THAT THE AO NOT GONE THROU GH THE ACCOUNTS OF THE APPELLATE. THE DETAILS OF THE SHARE CAPITAL, RESERVES AND SURPLUSE S, TURNOVER, INCOME, PRO RETURN INCOME OF THE APPELLATE ARE GIVEN BELOW WHIC H CLEARLY INDICATED THE HUGE PREMIUM OF THE APPELLATE. EVEN IF, WE GO BY THE PROVISION OF SEC. 56(2)(VII)( B), APPLICABLE W.E.F. ASSESSMENT YEAR 2013 14 ONLY THE EXCESS OF SHARE ISSUE PRICE OVER AND ABOVE FMV AS P ER RULE 11UA IS TAXABLE. WHEREAS IN THE INSTANT CASE THE SHARE ISSUE PRICE W AS RS. 2,000/ WAS RS. 1,988/- PER SHARE SAME CALCULATION O F THE FMV WAS ALSO SUBMITTED BY THE APPELLATE DURIN G THE ASSESSMENT PROCEEDING BEFORE THE AO VIDE HIS LETTER DATED 11.0 3.2015 IN COMPLIANCE TO THE NOTICE 142(1) DATED 04.03.2015 ISSUED TO THE APPELLATE. THE AO DI D NOT FIND OUT ANY MIS CALCULATION OF THE APPELLATE THE ASSESSEE IS ENGAGED IN TRADING OF IRON ORE FINE S. IT WAS INCORPORATED ON 16.03.2008 AND STARTED ITS BUSINESS FROM F Y 2008 RS. 131.22 AND RS. 145.43 PE RATIO COMES TO JUST 13.75 WHICH GIVES A TAX FREE RETURN @ 7.27%. EVEN AS PER RULE 11UA AS APPLICABLE FROM ASST. YEAR 2013 1 FIND THAT THE AP PELLATE COMPANY RECEIVED A LOAN OF RS. 3,00,000/ RECEIVED LOAN AGGREGATING RS. 15,13,50,000/ SAME PARTY AND ASSESSMENT WAS ALSO COMPLETED BY THE SAME ASSESSING OFFICER (BY NAME AS WELL AS DESIGNATION)- AND BOTH THESE TRANSACTIONS WERE ACCEPTED AS GENUIN E BY THE SAME AO. IN VIEW OF ABOVE, THERE APPLICANT AND GENUINENESS OF THE TRANSACTION. THE S HARE AMOUNT OF SHARE CAPITAL BY IT IN THIS FINANCIAL YEAR HAS BEEN VERIFIED U/S ITA NO. M/S NIRNIDHI MARKETING PVT. LTD. IS NOT TOO HIGH. THE APPELLANT FURTHER S UBMITTED THAT THE SHARE PREMIUM IS A CAPITAL RECEIPT AND TILL 31,03.2012 THERE WAS NO PROVISION TO TAX THE SAME. BESIDES, IT WAS. FURTHER EXPLAINED THAT FIXING SHARE ISSUE PRICE AND TO SUBSCRIBE OR NOT ARE COMMERCIAL DECISION AND THE SAME CANNOT BE INTERFE RED TO! IT WAS FURTHER EXPLAINED THAT EVEN UNDER TH E PROVISION OF SEC. 56(2)(VII)(B), ONLY THE EXCESS OF SHARE ISSUE PRICE OVER AND ABOVE FMV AS PER RULE 11UA IS TAXABLE W.E.F. ASSESSMENT YEAR 201 3 - 14. WHEREAS IN THE INSTANT CASE THE RS. 2,000/ - AND VALUE AS PER RULE 11UA WAS RS. 1,988/ SUCH THE SHARE PREMIUM WAS NOT AT VARIANCE WITH THE FMV. T FURTHER PLACED HIS RELIANCE ON VARIOUS JUDGMENT S SUBMISSIONS AND CONSIDERED. THE LD. AO DID NOT BRIN G OUT ANY DEFICIENCIES IN THE DETAILS, DOCUMENTS AND EVIDENCES FILED BY THE APPELLANT. IN SPITE OF THE SAME THE LD. AO ASSESSED THE SHARE CAPITAL AND PREMIUM AS UNEXPLAINED CASH CREDI T . THE AO HAS MADE OBSERVATION THAT NO BUSINESS ACTIVI TY HAS BEEN CARRIED ON JUSTIFYING THE HUGE PREMIUM. IT APPEARS THAT THE AO NOT GONE THROU GH THE ACCOUNTS OF THE APPELLATE. THE DETAILS OF THE SHARE CAPITAL, RESERVES AND SURPLUSE S, TURNOVER, INCOME, PRO RETURN INCOME OF THE APPELLATE ARE GIVEN BELOW WHIC H CLEARLY INDICATED THE HUGE PREMIUM OF THE APPELLATE. EVEN IF, WE GO BY THE PROVISION OF SEC. 56(2)(VII)( B), APPLICABLE W.E.F. ASSESSMENT YEAR 2013 EXCESS OF SHARE ISSUE PRICE OVER AND ABOVE FMV AS P ER RULE 11UA IS TAXABLE. WHEREAS IN THE INSTANT CASE THE SHARE ISSUE PRICE W AS RS. 2,000/ - AND VALUE AS PER RULE 11UA PER SHARE . AS SUCH THE SHARE PREMIUM WAS NOT AT VARIANCE WITH THE FMV. F THE FMV WAS ALSO SUBMITTED BY THE APPELLATE DURIN G THE ASSESSMENT PROCEEDING BEFORE THE AO VIDE HIS LETTER DATED 11.0 3.2015 IN COMPLIANCE TO THE NOTICE 142(1) DATED 04.03.2015 ISSUED TO THE APPELLATE. THE AO DI D NOT FIND OUT ANY MIS CALCULATION OF THE APPELLATE THE ASSESSEE IS ENGAGED IN TRADING OF IRON ORE FINE S. IT WAS INCORPORATED ON 16.03.2008 AND STARTED ITS BUSINESS FROM F Y 2008 -09. IT'S PROFIT AFTER TAX FOR F Y 2009 - RS. 131.22 AND RS. 145.43 PER SHARES. CONSIDERING THE SHARE ISSUE PRICE OF RS . PE RATIO COMES TO JUST 13.75 WHICH GIVES A TAX FREE RETURN @ 7.27%. EVEN AS PER RULE 11UA AS APPLICABLE FROM ASST. YEAR 2013 -14, THE FMV COMES TO RS. 1,988/- PER SHARES. PELLATE COMPANY RECEIVED A LOAN OF RS. 3,00,000/ - DURING THE YEAR AND ALSO RECEIVED LOAN AGGREGATING RS. 15,13,50,000/ - FOR THE NEXT ASSESSMENT YEAR 2013 SAME PARTY AND ASSESSMENT WAS ALSO COMPLETED BY THE SAME ASSESSING OFFICER (BY NAME AS AND BOTH THESE TRANSACTIONS WERE ACCEPTED AS GENUIN E BY THE SAME AO. IN VIEW OF ABOVE, THERE IS NO DOUBT ABOUT THE IDENTITY AND CREDITWORTHINESS OF TH E SHARE APPLICANT AND GENUINENESS OF THE TRANSACTION. THE S HARE AMOUNT OF SHARE CAPITAL BY IT IN THIS FINANCIAL YEAR HAS BEEN VERIFIED U/S 133(6). ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 4 | P A GE UBMITTED THAT THE SHARE PREMIUM IS A CAPITAL RECEIPT AND TILL 31,03.2012 THERE WAS NO PROVISION TO TAX THE SAME. BESIDES, IT WAS. FURTHER EXPLAINED THAT FIXING SHARE ISSUE PRICE AND TO SUBSCRIBE OR NOT ARE COMMERCIAL RED TO! IT WAS FURTHER EXPLAINED THAT EVEN UNDER TH E PROVISION OF SEC. 56(2)(VII)(B), ONLY THE EXCESS OF SHARE ISSUE PRICE OVER AND ABOVE FMV AS 14. WHEREAS IN THE INSTANT CASE THE AND VALUE AS PER RULE 11UA WAS RS. 1,988/ - PER SHARE. AS S AS MENTIONED IN THE SUBMISSIONS AND CONSIDERED. THE LD. AO DID NOT BRIN G OUT ANY DEFICIENCIES IN THE DETAILS, DOCUMENTS AND EVIDENCES FILED BY THE APPELLANT. IN SPITE OF THE SAME THE LD. AO ASSESSED THE THE AO HAS MADE OBSERVATION THAT NO BUSINESS ACTIVI TY HAS BEEN CARRIED ON JUSTIFYING THE HUGE PREMIUM. IT APPEARS THAT THE AO NOT GONE THROU GH THE ACCOUNTS OF THE APPELLATE. THE DETAILS OF THE SHARE CAPITAL, RESERVES AND SURPLUSE S, TURNOVER, INCOME, PRO FIT BEFORE TAX AND RETURN INCOME OF THE APPELLATE ARE GIVEN BELOW WHIC H CLEARLY INDICATED THE JUSTIFICATION OF THE EVEN IF, WE GO BY THE PROVISION OF SEC. 56(2)(VII)( B), APPLICABLE W.E.F. ASSESSMENT YEAR 2013 - EXCESS OF SHARE ISSUE PRICE OVER AND ABOVE FMV AS P ER RULE 11UA IS TAXABLE. AND VALUE AS PER RULE 11UA AS SUCH THE SHARE PREMIUM WAS NOT AT VARIANCE WITH THE FMV. THE F THE FMV WAS ALSO SUBMITTED BY THE APPELLATE DURIN G THE ASSESSMENT PROCEEDING BEFORE THE AO VIDE HIS LETTER DATED 11.0 3.2015 IN COMPLIANCE TO THE NOTICE 142(1) DATED 04.03.2015 ISSUED TO THE APPELLATE. THE AO DI D NOT FIND OUT ANY MIS TAKE IN THE FMV THE ASSESSEE IS ENGAGED IN TRADING OF IRON ORE FINE S. IT WAS INCORPORATED ON 16.03.2008 AND - 10 AND 2010-11 WAS PER SHARES. CONSIDERING THE SHARE ISSUE PRICE OF RS . -2,000/-, THE PE RATIO COMES TO JUST 13.75 WHICH GIVES A TAX FREE RETURN @ 7.27%. EVEN AS PER RULE 11UA PER SHARES. DURING THE YEAR AND ALSO FOR THE NEXT ASSESSMENT YEAR 2013 -14 FROM THE SAME PARTY AND ASSESSMENT WAS ALSO COMPLETED BY THE SAME ASSESSING OFFICER (BY NAME AS AND BOTH THESE TRANSACTIONS WERE ACCEPTED AS GENUIN E BY THE SAME AO. DOUBT ABOUT THE IDENTITY AND CREDITWORTHINESS OF TH E SHARE APPLICANT AND GENUINENESS OF THE TRANSACTION. THE S HARE AMOUNT OF SHARE CAPITAL SUBSCRIBED ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 5 | P A GE THE. AO ISSUED SUMMON U/S 131 TO THE SHARE APPLICAN T AT THE FAG END OF THE ASSESSMENT PROCEEDINGS FIXING THE DATE OF HEARING ON 17.03.201 5. THE DIRECTORS OF SHARE APPLICANT MR. MOHIT BAJPAI AND MR. ASHISH KUMAR PATHAK BOTH ARE R ESIDENTS OF MADHYA -PRADESH. AS SUCH THEY COULD NOT COMPLY WITH THE SAME AT SUCH SHORT N OTICE TOWARDS THE END OF THE FINANCIAL YEAR. THE APPELLATE FILED COMPANY MASTER DATA WHICH SHOWING THE ADDRESS OF BOTH THE DIRECTORS RESIDING IN MADHYA PRADESH. IN SPITE OF T HAT THE SUMMON WAS DULY SERVED. EVIDENCES WERE FILED. AS SUCH MERE NON-COMPLIANCE O F THE SUMMON BY THE CREDITOR CANNOT BE HELD AGAINST THE APPELLANT. IN THIS REGARD THE APPE LLATE PLACED HIS RELIANCE ON THE JUDGEMENT OF DELHI HIGH COURT IN CASE OF CIT VS VICTOR ELECTR ODES LTD 329 ITR 271 (DELHI), HON'BLE ITAT KOLKATA, IN M/S CYGNUS DEVELOPERS (I) PVT LTD. VS ITO WARD-9(3) AND THE GUJARAT HIGH COURT IN THE CASE OF DCIT VS ROHINI BUILDERS ( 127 TAXMAN 523). THE AR HAS ALSO FILED HIS REPLY ON THE CASE LAWS WHICH WERE RELIED BY THE AO AND SUBMITTED THAT THE FACTS ARE NOT SIMILAR TO THAT CASE AS MENTIONED ABOVE. I FIND THAT THE AR HAS SUBMITTED, REGARDING IDENTIT Y OF THE INVESTOR THE APPELLANT FILED COPIES OF MASTER DATA, MEMORANDUM AND ARTICLES OF ASSOCIAT ION, PAN CARD, DIRECTORS PAN CARD AND THEIR ITRS. THE SHARE SUBSCRIBER IS ALSO AVAILA BLE AT THE GIVEN ADDRESS FOR VERIFICATION. HENCE, IDENTITY OF THE SUBSCRIBERS IS ESTABLISHED B EYOND ALL DOUBT. SO FAR AS GENUINENESS OF THE TRANSACTIONS, IT IS STATED THAT SHARE SUBSCRIPTIONS WERE RECEIVED THROUGH BANKING CHANNEL WHICH IS TRACEABLE FROM THE ORIGIN TO THE DESTINATI ON OF SUCH PAYMENT AND FURTHER CONFIRMED THROUGH DOCUMENTS FURNISHED. FURTHER, THE IMPUGNED SHARE APPLICATION MONIES WERE RECORDED IN THE BALANCE SHEETS AND DULY REFLECTED IN THEIR R ETURNS FILED WITH THE RESPECTIVE ASSESSING OFFICER OF THE SHARE APPLICANTS. THEREFORE, THE GEN UINITY OF THE TRANSACTIONS REGARDING RECEIPT OF SHARE APPLICATION IS BEYOND CONTROVERSY AND CANN OT BE CALLED INTO QUESTION. AS FAR AS CREDITWORTHINESS OF THE SHARE APPLICANTS IS CONSIDE RED, IT IS STATED THAT THE ENTIRE GAMUT OF TRANSACTIONS WAS UNDERTAKEN BY WAY OF ACCOUNT PAYEE CHEQUES ONLY. IN RESPECT OF THE SHARE APPLICANT, THERE WERE MORE THAN ENOUGH FUNDS TO SUB SCRIBE, TO THE SHARES OF THE APPELLANT AS THE FOLLOWING FACTS WILL UNEQUIVOCALLY TESTIFY AND PROVE. IT IS POINTED OUT THAT FUNDS HELD ON ACCOUNT OF SHAREHOLDERS DISCLOSED IN THE BALANCE SH EETS AS ON THE 31-03-2012. IN COMPLIANCE TO THE SUMMON, THE INVESTOR APPEARED AND FILED ALL THE DETAILS, DOCUMENTS AND EVIDENCES AS CALLED FOR. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES OF THE CASE, 1 FIND SUBSTANCE IN THE ARGUMENT OF THE AR. IN VIEW OF THE AFORESAID FINDINGS AND RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE APEX COURT, HON'BLE JURISDICTI ONAL HIGH COURT, HON'BIE OTHER HIGH COURT, HON'BLE JURISDICTIONAL TRIBUNAL (SUPRA) AND CO-ORDINATE BENCH DECISIONS OF VARIOUS TRIBUNALS, SUPRA, I HAVE COME TO THE CONCLUSION THA T THE ISSUE IS' SQUARELY COVERED BY THE DECISION OF VARIOUS COURTS AND TRIBUNALS AS MENTION ED AND DISCUSSED ABOVE AND ALSO VARIOUS OTHER DECISIONS RELIED UPON BY THE AR WHICH ARE NOT CONSIDERED HERE FOR THE SAKE OF BREVITY. 1 HAVE NO OPTION BUT TO ACCEPT THE ARGUMENTS TENDERED BY THE AR OF THE APPELLANT IN THIS RESPECT. FURTHER, I HAVE NO HESITATION TO HOLD THAT THE IMPUGNED ADDITION MADE BY INVOKING THE PROVISIONS OF SECTION 68 BY THE AO IS NOT JUSTI FIED IN THE CIRCUMSTANCES AND ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION MADE ON T HIS ACCOUNT. THESE GROUNDS OF APPEAL ARE ALLOWED. 6. AGGRIEVED BY THE AFORESAID ACTION OF LD. CIT(A) GIVING RELIEF TO THE ASSESSEE, THE REVENUE HAS PREFERRED THIS APPEAL BEFORE US. ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 6 | P A GE 7. ASSAILING THE DECISION OF LD. CIT(A), THE LD CIT DR SHRI SANDEEP CHAUBE CONTENDED THAT M/S SAIBABA (SOLE SHARE APPLICANT) W AS ONLY INCORPORATED ON 26.02.2010 AND HAS SUBSCRIBED TO THE SHARES AT A FA CE VALUE OF RS. 10 ALONG WITH SHARE PREMIUM OF RS. 1,990/- WHICH CANNOT BE BELIEVED. AC CORDING TO HIM, STANDARD OF PROOF ACCEPTED IN THE FIELD OF TAXATION LAW IS BASE D ON THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY AND PER-SE THIS TRANSACTION LOOKS IMPROBABLE. HE DREW OUR ATT ENTION IN PAGE 47 OF PB WHEREIN THE BANK STATEMENT OF M/S SAI BABA IS FOUND PLACED. ACCORDING TO LD. D.R A PERUSAL OF THE SAME, IT COULD REVEAL M ONEY COMING IN AND GOING OUT FROM THE ACCOUNT IN REGULAR INTERVAL; AND THEREAFTER HE DREW OUR ATTENTION TO PAGE 105 OF THE BALANCE SHEET OF M/S SAIBABA AND WONDERED AS TO HOW THIS COMPANY WHICH HAS BEEN INCORPORATED JUST TWO YEARS BACK HAS SHARE CAPITAL OF RS. 2,15,73,250/- AND RESERVE & SURPLUS OF RS. 35,87,43,750/-. ACCORDING TO LD. D.R , EVEN THOUGH THE AO HAD ISSUED SUMMONS U/S 131 OF THE ACT TO THE M/S SAIBABA, NO D IRECTORS APPEARED BEFORE THE AO TO SUBSTANTIATE THAT THEY HAD GENUINELY SUBSCRIBED FOR THE SHARES OF ASSESSEE COMPANY AND JUSTIFIED THE PREMIUM OF RS. 1,990 PER SHARE OF THE ASSESSEE COMPANY. ACCORDING TO LD. D.R THE WHOLE TRANSACTION IS AN EYE WASH AND SO UNBELIEVABLE, PER-SE IMPROBABLE FOR THE SHARE SUBSCRIBING COMPANY TO DO SO. THEREFORE ACCORDING TO LD. D.R THE ORDER OF LD. CIT(A) IS ERRONEOUS AND THEREF ORE HE WANTED US TO REVERSE THE ORDER OF LD. CIT(A) AND UPHOLD THE ORDER OF AO. 8. PER CONTRA, THE LD. A.R OF THE ASSESSEE SHRI S. M. SURANA SUPPORTED AND JUSTIFIED THE IMPUGNED ACTION OF THE LD. CIT(A). AC CORDING TO LD. A.R. THE ASSESSEE COMPANY MANUFACTURES AND EXPORTS IRON ORE FINES AND ALSO TRADES IN COAL. AND HE BROUGHT OUT THE FOLLOWING FACTS AGAINST THE CONTENT ION OF THE REVENUE RAISED IN THE FIRST GROUND OF APPEAL, THAT ASSESSEE COMPANY DOES NOT DO ANY BUSINESS WHICH CAN BE NOTICED. ACCORDING TO LD. A.R, THE TURNOVER OF THE ASSESSEE COMPANY DURING THE YEAR WAS MORE THAN RS. 227 CRORES. AND THE TURNOVER OF T HE IMMEDIATELY EARLIER YEAR WAS RS. 373 CRORES. AND THE NET PROFIT DURING THE YEAR WAS MORE THAN RS. 1.88 CRORES AND IMMEDIATELY EARLIER YEAR WAS RS. 2.12 CRORES. THE F IXED ASSETS OF THE ASSESSEE ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 7 | P A GE COMPANY WERE MORE THAN RS. 2.78 CRORES (AFTER DEPRE CIATION) AND SECURED LOANS FROM BANK WAS TO THE TUNE OF RS. 25,57,400/- (REFER PAPE R BOOK PAGE 6). 9. IN RESPECT OF THE SHARE ISSUED DURING THIS ASSES SMENT YEAR, THE LD. A.R SUBMITTED THAT DURING THE YEAR THE ASSESSEE HAD ISS UED 47,500 SHARES OF RS. 10/- EACH AT PREMIUM OF RS. 1990 AND THIS CAPITAL WAS RAISED FROM A SISTER CONCERN OF THE ASSESSEE I.E. SOLE SHARE APPLICANT / SUBSCRIBER (M/ S SAIBABA). THE AO DURING ASSESSMENT PROCEEDINGS HAD ASKED FOR FULL DETAILS A ND EVIDENCES OF THE CAPITAL RAISED VIDE NOTICE U/S 142(1) DATED 4.3.2015 AND FIXING DA TE OF HEARING ON 13.3.2015. ACCORDING TO HIM, THE ASSESSEE HAD FILED ALL THE RE PLIES, EXPLANATIONS AND DETAILS ASKED FOR VIDE LETTER DATED 11.03.2015 WHICH IS PLACED AT PAPER BOOK PAGE 40-41 AND ALSO DREW OUR ATTENTION TO THE PAPER BOOK SERIAL NUMBER 5, A- TO O (PAGES 46-116 OF PB) WHICH ACCORDING TO HIM ALSO INCLUDES THE PROOF OF SOURCE OF THE INVESTMENT. IT WAS POINTED OUT BY THE LD. A.R THAT THE AO HAD ALSO RAI SED QUERY ABOUT THE APPLICABILITY OF SECTION 56(2)(VIIB) WHICH WAS ALSO EXPLAINED VIDE P AGE 41 OF PB AND BROUGHT TO OUR NOTICE THAT IN THIS RELEVANT ASSESSMENT YEAR (I.E. ASSESSMENT YEAR 2012-13) AS PER THE LAW PREVAILING IN THIS ASSESSMENT YEAR, THE PREMIUM RECEIVED COULD BE TREATED ONLY AS A CAPITAL RECEIPT. 10. IN RESPECT OF NON-APPEARANCE OF DIRECTIONS OF M /S SAIBABA, WHICH LED TO THE AO TAKING AN ADVERSE VIEW AGAINST THE ASSESSEE COMPANY , THE LD. A.R POINTED OUT THAT THE AO HAD ISSUED SUMMONS U/S 131 FOR PERSONAL APPEARAN CE OF THE AUTHORIZED PERSON AND NOT FOR PERUSAL APPEARANCE OF THE DIRECTOR. ACCORDI NG TO HIM, THIS FACT IS DISCERNIBLE FROM THE ADMISSION MADE BY THE AO IN THE ASSESSMENT ORDER ITSELF TO THIS EFFECT AND DREW OUR ATTENTION TO PARA 2 PAGE 2 OF THE ASSESSME NT ORDER. AND FURTHER BROUGHT TO OUR NOTICE THAT VERY LITTLE REACTION TIME WAS GIVEN BY THE AO FOR THE APPEARANCE OF THE AUTHORIZED PERSON OF ASSESSEE COMPANY. ELABORATING FURTHER ON THE LESS TIME GIVEN BY AO FOR PHYSICAL APPEARANCE, THE LD. A.R SUBMITTED T HAT AFTER THE ASSESSEE HAD FILED THE REPLY DATED 13.03.2015, PURSUANT TO THE NOTICE OF AO DATED 04.03.2015, THE AO ISSUED SUMMONS TO APPEAR ON 17.3.2015 FOR THE PURPO SE OF EXPLAINING THE BONAFIDE OF ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 8 | P A GE SHARE APPLICATION MADE BY IT AS WELL AS THE PREMIUM OFFERED FOR SUCH SHARE APPLICATION. THUS, IT WAS POINTED OUT BY THE LD. A.R THAT WHAT T HE AO WANTED WAS THE PERSONAL APPEARANCE OF THE AUTHORIZED PERSON OF M/S SAIBABA TO EXPLAIN THE SHARE APPLICATION; AND THE SUPPOSED TO BE HUGE PREMIUM EVEN THOUGH ACC ORDING TO LD. A.R THE PREMIUM WAS DULY JUSTIFIED VIDE THE SUBMISSION OF THE ASSES SEE REFERRED (SUPRA) AND THE BREAKUP VALUE OF THE SHARE WHICH WILL BE DISCUSSED INFRA. FURTHER ACCORDING TO LD. A.R, THE SUMMONS ISSUED BY AO WAS DULY SERVED UPON THE SHAREHOLDER M/S SAIBABA. IT WAS BROUGHT TO OUR NOTICE THAT SRI UTKARSH SURES H SHELAR AND SHRI ASHISH KUMAR PATHAK WAS COMMON DIRECTOR OF THE ASSESSEE COMPANY AS WELL AS SHAREHOLDER COMPANY IN AY 2012-13 AND AY 2013-14 RESPECTIVELY AND DREW OUR ATTENTION TO PAGE 71/76 OF PB WHICH IS ANNUAL RETURN OF ASSESSEE COMPANY AND P AGE 81 OF PB WHICH IS THE MASTER DATA OF SHAREHOLDER COMPANY M/S SAIBABA AND OTHER D OCUMENTS WHICH WILL BE DISCUSSED IN DETAIL [INFRA]. THE LD. A.R SUBMITTED THAT TWO OF THE DIRECTORS WERE RESIDENTS/STATIONED AT STATE OF MADHYA PRADESH AND OTHER ONE WAS RESIDENT OF PUNE, SO COULD NOT APPEAR WITHIN THE SHORT TIME ALLOWED AND THEREFORE THE AO ERRONEOUSLY ASSUMED THAT THE NON-APPEARANCE BY THE DIRECTORS OF M/S SAIBABA WAS WILLFUL. IT WAS BROUGHT TO OUR NOTICE THAT LATER ON THE DIRECTORS I N FACT HAD APPEARED BEFORE AO; HOWEVER THEIR STATEMENTS WERE NOT RECORDED BY THE A O ON THE PLEA THAT ASSESSMENT WAS COMPLETED ON 26.3.2015. THE LD. A.R CHALLENGED THE FOLLOWING CONCLUSION OF AO 'FROM PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE SAID SAIBABA FINVEST PVT LTD. PRODUCED BY THE ASSESSEE, IT IS EVIDENT THAT NO BUS INESS ACTIVITY HAS BEEN CARRIED ON JUSTIFYING THE HUGE PREMIUM.' HOWEVER, ACCORDING TO LD. A.R, THE AO MISSED THE V ITAL POINT THAT THE SHARE PREMIUM IS TO BE DECIDED ON TH E BASIS OF BUSINESS ACTIVITY AND BREAKUP VALUE OF THE SHARES OF COMPANY WHICH ISSUES THE SAME (I.E. IN THIS CASE THE ASSESSEE COMPANY) AND NOT ON THE BASIS OF THE BUSIN ESS OF THE SHARE APPLICANT (M/S SAIBABA). ACCORDING TO LD. A.R, THE AO MISDIRECTED HIMSELF ON THE ISSUE BEFORE HIM AND THEREAFTER THE AO REFERRED TO CERTAIN DECISIONS OF HONBLE APEX COURT NAMELY SUMATI DAYAL, DURGA PRASAD MORE, PRECISION FINANCE LTD. WHICH ACCORDING TO LD AR ARE NOT APPLICABLE TO THE FACTS OF THIS CASE AND TH US ERRONEOUSLY ADDED BACK THE ENTIRE SHARE CAPITAL & PREMIUM AMOUNT AS UNEXPLAINED. ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 9 | P A GE 11. THE LD. A.R THEN SUBMITTED THAT THE ASSESSEE AG GRIEVED BY THE ACTION OF AO HAD FILED AN APPEAL BEFORE THE LD. CIT(A) WHO TOOK NOTE OF THE NUMBER OF QUERIES AND REQUISITIONS MADE BY THE AO U/S 142(1) IN THE FIRST NOTICE ITSELF I.E. ON 4.3.2015 WHICH HAVE BEEN REPRODUCED AT PAGE 4 OF THE CIT(A) ORDER. ACCORDING TO LD. A.R., THE LD. CIT(A) FURTHER NOTED THAT THE ASSESSEE COMPANY HAD FILED EACH AND EVERY DETAILS CALLED FOR BY THE AO. ACCORDING TO LD. A.R, THE LD. CIT(A) TOOK NOTE OF THE MARKET VALUE OF THE SHARES AT BOTH BREAKUP VALUE UNDER RU LE 11UA OF THE INCOME TAX RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULES) AND COM PUTATION BY YIELD METHOD WAS ALSO NOTED AND REFERRED TO PAGE 5 OF HIS ORDER WHICH COM PUTATION JUSTIFIED THE PREMIUM. MOREOVER, ACCORDING TO LD. A.R, IT WAS ALSO NOTED BY THE LD CIT(A) THAT THE SHAREHOLDER (M/S SAIBABA) WAS A PROMOTER GROUP COMP ANY WHICH FACT WAS NOTED AT PAGE 11 OF THE IMPUGNED ORDER. ACCORDING TO LD. A.R , THE LD CIT(A) ALSO NOTED TO THE FACT THAT IN THE SUBSEQUENT YEAR I.E. IN ASSESS MENT YEAR 2013-14 HUGE LOAN OF RS. 15,13,50,000/- WAS GIVEN BY THE SAME SHAREHOLDER TO THE ASSESSEE WHICH WAS DULY ACCEPTED BY THE VERY SAME AO IN THE SCRUTINY ASSES SMENT COMPLETED U/S 143(3) WHICH FACT IS EVIDENT FROM PERUSAL OF PAPER BOOK PAGE 136 -137 (LEDGER ACCOUNT OF M/S SAIBABA) AND 138-144 ASSESSMENT ORDER OF ASSESSEE C OMPANY FOR AY 2013-14. THE LD. CIT(A) NOTED THAT ORIGINALLY THE AMOUNT IN QUES TION WAS ALSO TAKEN AS LOAN WHICH FACT IS EVIDENT FROM A PERUSAL OF PAGE 46 OF THE PA PER BOOK (LEDGER ACCOUNT OF ASSESSEE COMPANY) WHICH WAS SUBSEQUENTLY TRANSFERRED TO ISSU E OF SHARES. MOREOVER, ACCORDING TO LD. A.R, THE LD. CIT(A) NOTED THE NET WORTH OF THE ASSESSEE COMPANY WAS TO THE TUNE OF RS. 38,03,17,000/- (AS ON 31.3.2011) WHICH FACT IS EVIDENT FROM PERUSAL OF PAPER BOOK PAGE 105. THE LD. CIT(A) TOOK NOTE OF TH E FACT THAT M/S SAIBABA WAS INCORPORATED ON 10 JANUARY 1996 AND IS REGISTERED N BFC WHICH FACT IS EVIDENT FROM PERUSAL OF PAGE 105 WHEREBY STATUTORY RESERVE U/S 4 5C OF RESERVE BANK OF INDIA (RBI) ACT HAS BEEN CREATED AND THE AUDITORS REPORT AT PA GE 100 CLEARLY SPELLS OUT THAT THIS COMPANY (M/S SAIBABA) IS REGISTERED NBFC AND THAT I T IS REGULARLY ASSESSED TO TAX AND HAD UNDERGONE SCRUTINY ASSESSMENT WHICH WERE COMPLE TED U/S 143(3) OF THE ACT AND ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 10 | P A GE THAT TOO WITHOUT ANY ADVERSE REMARK WHICH FACT IS E VIDENT FROM PAPER BOOK PAGE 170- 175. 12. SO, ACCORDING TO THE LD. A.R THAT IT CANNOT BE DENIED THAT NUMEROUS DETAILS WERE ASKED BY AO DURING ASSESSMENT FROM ASSESSEE AN D THE ASSESSEE HAD FILED ALL THE DETAILS CALLED FOR BY THE AO. AND FROM THE DOCUMENT S FILED BEFORE THE AO & LD. CIT(A), IT WAS PROVED THAT THE SHAREHOLDER (M/S SAI BABA) IS GROUP CONCERN AND IS AN NBFC RECOGNIZED BY THE RBI AND THAT THE DIRECTORS W ERE COMMON AND THE FACT THAT IT HAS UNDERGONE SCRUTINY ASSESSMENT CANNOT BE DENIED. SO ACCORDING TO LD. A.R ITS EXISTENCE OF THE COMPANY I.E. M/S SAIBABA CANNOT BE DOUBTED OR DISPUTED NOR HAVE BEEN DISPUTED. FURTHER ACCORDING TO LD. A.R, THE NO TICE U/S 131 WAS ISSUED TO M/S SAIBABA WITHOUT ALLOWING REASONABLE TIME AND OPPORT UNITY BY FIXING THE DATE OF APPEARANCE ON 17.03.2015, STILL THE DIRECTORS APPEA RED BUT THEIR STATEMENTS WERE NOT RECORDED. ACCORDING TO LD. A.R., SUBSEQUENT YEAR LO AN, ALMOST DOUBLE THE AMOUNT OF SHARE CAPITAL FROM THE SAME PARTY I.E. RS. 15 CRORE S WAS ACCEPTED BY THE AO IN THE IMMEDIATELY NEXT YEAR, AND THAT THE SHARES WERE ISS UED AT THE BREAKUP VALUE AT THE TIME OF ISSUE AND THEREFORE ACCORDING TO LD. A.R, THE LD . CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION AND SO HE DOES NOT WANT US TO INTERFERE WITH THE IMPUGNED ORDER. THE LD. A.R ALSO RELIED ON THE FOLLOWING CASE LAWS TO SUPPORT THE ACTION OF LD. CIT(A): (A) RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF CYGNUS DEVELOPERS P LTD., KOLKATA ITA 282/K/2012 DATED 2.3.2016 WHEREIN THE J UDGEMENT OF ALLAHABAD HIGH COURT HAVE BEEN RELIED ON THAT THE PRODUCTION OF DIRECTOR IS NOT NECESSARY WHEN THE CREDIT IS EXPLAINED. SIMILAR VIEW IS TAKEN IN THE CASE OF DEVENDRA KUMAR SANT. (B) THE HON'BLE SUPREME COURT IN THE CASE OF PARADISE I NLAND SHIPPING CO LTD. REPORTED IN 2018 93 TAXMANN.COM 84 HAS HELD THAT WH EN THE ASSESSEE HAS FILED ALL THE EVIDENCES AND DOCUMENTS FROM PUBLIC OFFICES AND BROUGHT ON RECORD THE ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 11 | P A GE ASSESSMENT ORDERS PASSED IN THE CASE OF SAID COMPAN IES, ADDITION CANNOT BE MADE U/S 68 OF THE ACT. 13. FURTHER ACCORDING TO THE LD. A.R AS FAR AS THE LAW IN RESPECT OF ADDITION MADE OF SHARE PREMIUM IS CONCERNED , THE ADDITION MADE O N ACCOUNT OF SHARE PREMIUM IS ERRONEOUS AS PER THE LAW IN FORCE FOR THE RELEVANT ASSESSMENT YEAR 2012-13 IS CONCERNED. ACCORDING TO HIM, THE SHARE PREMIUM CRED ITED BY THE ASSESSEE COULD BE TREATED ONLY AS A CAPITAL RECEIPT AND COULD NOT BE TAXED TILL 31.03.2012, BECAUSE THERE WAS NO PROVISION TO TAX THE SAME. AND ACCORDING TO HIM, THE PROVISION FOR TAXATION OF SHARE PREMIUM WAS INSERTED BY FINANCE ACT, 2012 W.E .F. 01.04.2013 AND SO IS APPLICABLE FROM NEXT ASSESSMENT YEAR I.E. AY 2013-1 4 AND NOT IN THIS ASSESSMENT YEAR I.E. AY 2012-13. MOREOVER, IT WAS POINTED OUT TO US THAT EVEN AFTER THE AMENDMENT WAS MADE IN LAW IT CAME INTO FORCE FROM THE NEXT AY 2013-14 ONWARDS, AND THAT TOO ONLY THE EXCESS SHARE ISSUE PRICE, THAT IS OVER AND ABOVE THE MARKET PRICE COULD ONLY BE TAXED U/S 56(2)(VIIB) OF THE ACT WHICH WAS ALSO INSERTED BY FINANCE ACT, 2012 W.E.F. 01.04.2013 FOR AY 2013-14 AND NOT IN THIS AY 2012-1 3 . EVEN THOUGH THIS WAS THE LEGAL POSITION AND THE ASSESSEE AS PER LAW WAS NOT BOUND TO JUSTIFY THE SHARE PREMIUM PRICE OF RS. 1900/-, HOWEVER THE ASSESSEE DEMONSTRATED BE FORE THE AO THAT EVEN THE FAIR MARKET VALUE OF SHARES IF CALCULATED AS PER RULE 11 U OF INCOME TAX RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULES) WHICH WAS P RESCRIBED IN SECTION 56(2)(VIIB) OF THE ACT, STILL THE PRICE OF RS. 1,988/- PER SHARE WHEREAS THE ASSESSEE HAS SOLD THE SHARE AT RS. 10 AT SHARE PREMIUM OF RS. 1,990/- SO THE DI FFERENCE IS NEGLIGIBLE I.E. RS. 2/- ONLY IN EXCESS AND EVEN AS PER EPS (EARNING PER SHA RE) IT COMES TO RS. 1,933/- PER SHARE SO THE SHARE PREMIUM OF RS. 1,990/- IS NOT EX CESS AND IS FAIR AND REASONABLE PRICE. SO IN THE AFORESAID FACTS AND CIRCUMSTANCES, THE LD AR DOES NOT WANT US TO INTERFERE WITH THE IMPUGNED ORDER OF LD CIT(A). 14. FURTHER THE LD AR IN ORDER TO SHOW THAT M/S SAI BABA IS A SISTER CONCERN DREW OUR ATTENTION TO THE FACT THAT M/S SAIBABA WHICH IS A PRIVATE LIMITED COMPANY WAS HELD BY TWO PRIVATE LIMITED COMPANIES I.E. M/S GREENARY DISTRIBUTORS PVT LTD AND M/S ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 12 | P A GE PRETTY DEALERS PVT LTD WHICH ARE IN TURN HELD BY TW O OTHER COMPANIES I.E, M/S RBM FINANCE PVT LTD AND M/S BENGAL CREDIT CORPORATION P VT. LTD; WHICH MEANS M/S GREENARY DISTRIBUTORS PVT. LTD. WAS HELD BY M/S RBM FINANCE PVT LTD (40%) AND M/S BENGAL CREDIT CORPORATION PVT. LTD. (60%). AND LIKE WISE, M/S PRETTY DEALERS PVT. LTD. WAS HELD BY M/S RBM FINANCE PVT. LTD. (60%) AND M/S BENGAL CREDIT CORPORATION PVT. LTD (40%). AND BOTH THESE COMPANIES I.E. M/S R BM FINANCE PVT. LTD. AND M/S BENGAL CREDIT CORPORATION PVT. LTD. WAS HELD BY M/S SANRISE HOLDINGS PVT. LTD. FOR THE FINANCIAL YEAR 2011-12 (I.E. AY 2012-13) WHICH WAS THE ULTIMATE HOLDING COMPANY OF M/S SAIBABA FINVEST PVT. LTD. ( SOLE SHARE APPLICANT IN THIS CASE ). IT WAS BROUGHT TO OUR NOTICE THAT THE FOLLOWING WERE THE DIRECTORS OF M/S SANRISE HOLDINGS PVT. LTD:- SL. NO. NAME FROM TO 1. VINAY ROHIDAS PATIL 17.03.2010 20.03.2012 2. UTKARSH SURESH SHELAR 17.03.2010 21.01.2013 3. ALOK DROLIA 15.03.2012 THEREAFTER HE DREW OUR ATTENTION TO THE FACT THAT S HRI UTKARSH SURESH SHELAR WAS THE DIRECTOR OF ASSESSEE COMPANY (M/S NIRNIDHI MARKETIN G PVT. LTD.) FROM 08.10.2011 TO 05.10.2012, WHICH SHOWS THAT SHRI UTKARSH SURESH SH ELAR WAS THE COMMON DIRECTOR OF THE HOLDING COMPANY OF M/S SAIBABA (I.E. M/S SANRIS E HOLDINGS PVT LTD) AS WELL AS THE DIRECTOR OF THE ASSESSEE COMPANY DURING THE AY 2012 -13. THEREAFTER HE DREW OUR ATTENTION TO PAGE NOS. 71-76 OF PB WHEREIN WE NOTE THAT THE ANNUAL RETURN OF THE ASSESSEE COMPANY HAVE BEEN PLACED FROM WHERE WE NOT E THAT THE ASSESSEE COMPANY HAS BEEN REGISTERED ON 19.03.2008 AND PERUSAL OF PA GE 76 REVEALS THAT SHRI ASHISH KUMAR PATHAK WHO WAS THE DIRECTOR OF THE ASSESSEE C OMPANY WAS INDUCTED AS DIRECTOR OF M/S SAIBABA WHICH FACT IS REVEALED FROM PERUSAL OF PAGE NO. 91 OF PB WHICH IS THE COMPANYS MASTER DATA OF M/S SAIBABA FROM WHICH IT IS NOTED THAT SHRI ASHISH KUMAR PATHAK IS DIRECTOR FROM 30.05.2012 TO 11.02. 2016 (REFER PAGE NO. 92 OF PB). THUS, THE LD. A.R SUBMITTED THAT M/S SAIBABA, THE S OLE SHARE APPLICANT / HOLDER WAS A SISTER CONCERN IN THE RELEVANT ASSESSMENT YEAR I.E. AY 2012-13 AND SUBSEQUENT ASSESSMENT YEARS AND THEREFORE, NO ADVERSE VIEW OUG HT TO HAVE BEEN TAKEN AGAINST THE ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 13 | P A GE ASSESSEE COMPANY FOR SUBSCRIBING FOR SHARES. SO IN THE AFORESAID FACTS AND CIRCUMSTANCES, THE LD AR DOES NOT WANT US TO INTERF ERE WITH THE IMPUGNED ORDER OF LD CIT(A). 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE NOTE THAT ASSESSEE IS A MANUFACTURER AND EXPORTER OF IRON ORE FINES AN D ALSO TRADES IN COAL. THE ASSESSEE COMPANY WAS INCORPORATED ON 16.03.2008 AND STARTED ITS BUSINESS FORM F.Y. 2008-09 AND IN THIS ASSESSMENT YEAR IT HAS RETURNED INCOME OF RS. 1,74,21,518/- AND BOOK PROFIT OF RS. 1,88,83,977/- U/S 115JB OF THE ACT. WE NOTE THAT IN THIS ASSESSMENT YEAR (2012- 13) THE ASSESSEE COMPANY HAS ISSUED 47,500 NUMBERS OF EQUITY SHARES OF FACE VALUE OF RS. 10 EACH AT PREMIUM OF RS. 1,990/- PER SHARE TO ANOTHER PRIVATE LIMITED COMPANY M/S SAIBABA FINVEST PVT. LTD, WHICH IS A SISTER CONCERN AS BROUGHT TO OUR NOTICE [SUPRA] WHEREIN WE NOTED THAT IN THIS RELEVANT ASSE SSMENT YEAR COMMON DIRECTOR WAS THERE IN ASSESSEE COMPANY AND HOLDING COMPANY OF M/ S SAIBABA. WE NOTE THAT SRI UTKARSH SURESH SHELAR WAS COMMON DIRECTOR OF THE AS SESSEE COMPANY AS WELL AS THE HOLDING COMPANY OF SHARE-SUBSCRIBING COMPANY IN AY 2012-13 AS WE NOTED IN DETAIL AT PARA 14 [SUPRA]; AND SHRI ASHISH KUMAR PATHAK WH O WAS THE DIRECTOR OF THE ASSESSEE COMPANY WAS INDUCTED AS DIRECTOR OF M/S SAIBABA IN AY 2013-14 WHICH IS EVIDENT FROM THE MASTER DATA OF SHAREHOLDER COMPANY M/S SAI BABA. DURING THE SCRUTINY ASSESSMENT THE AO ISSUED NOTICES U/S 142(1) AND 143 (2) OF THE ACT AND CALLED FOR THE FOLLOWING DETAILS & SUPPORTING DOCUMENTS: 1. INVESTOR WISE DETAILS OF INCREASE IN SHARE CAPI TAL A. NAME OF INVESTOR B. DATE OF RECEIPT C. BANK STATEMENT OF INVESTOR D. BANK STATEMENT OF ASSESSEE E. DETAILS OF UTILIZATION F. AUTHORIZED SHARE CAPITAL G. FORM 2 H. FORM 20B ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 14 | P A GE I. FORM 23AC J. FORM 5 K. DATE OF ALLOTMENT L. NO. OF SHARES ALLOTTED M. AMOUNT OF SHARE CAPITAL N. AMOUNT OF SHARE PREMIUM 2. JUSTIFICATION OF SHARE PREMIUM WITH REFERENCE T O NAV A. NAV AS AT 01.04.2011 B. EPS PER SHARE C. ISSUE PRICE 3. JUSTIFICATION OF SHARE PREMIUM WITH REFERENCE TO EPS FINANCIAL YEAR 2009-10 2010-11 PAT NO. OF SHARES EPS 4. DOCUMENTS IN SUPPORT OF THE IDENTITY AND CREDITW ORTHINESS OF THE SHARE CAPITAL AND GENUINENESS OF THE TRANSACTION A. COMPANY MASTER DATA B. SIGNATORY DETAIL C. CERTIFICATE OF INCORPORATION D. STATEMENT OF SOURCE OF FUND E. PAN CARD F. ACKNOWLEDGEMENT OF RETURN OF INCOME G. AUDITED FINANCIAL STATEMENT AND IT IS NOTED THAT IN RESPONSE TO THE SAME THE AS SESSEE HAD FILED ALL THE DETAILS AND DOCUMENTS AND EXPLANATIONS AS CALLED FOR BY THE AO INCLUDING DOCUMENTS IN SUPPORT OF THE IDENTITY AND CREDITWORTHINESS OF THE SHARE C APITAL AND GENUINENESS OF THE TRANSACTION AND EXPLANATION REGARDING THE JUSTIFICA TION OF SHARE PREMIUM WITH REFE RENCE TO EPS AND NAV ASSESSEE HAD APPEARED BEFORE HIM AND FURNISHED REQU ISITE DOCUMENTS. HOWEVER, TAKING NOTE THAT THE ASSESSEE HAD ISSUED SHARE CAPITAL PLU S PREMIUM OF RS. 9.5 CRORES, HE THEREAFTER ISSUED SUMMONS THE ACT SUMMONING THE AUTHORIZED PERSONS ( APPEAR BEFORE HIM ON 17.03.2015 ADVERSE INFERENCE AGAINST THE SHARE APPLICANT M/S SAIBABA AND MADE AN ADDITIO N U/S 68 OF THE ACT AND FRAMED THE ASSESSMENT ON 26.03.2015. ON APPEAL THE LD. CIT(A) ADDRESSED THE ALLEGATION OF THE AO THAT SHARE PREMI UM OF RS. 1,990/ COMPANY IS VERY HIGH SINCE THE THE LD. CIT(A) HAS TAKEN NOTE OF THE FOLLOWING FINA NCIAL DATA OF THE ASSESSEE COMPANY WHICH SHOWS THAT AO ERRED IN HIS FINDING TH AT ASSESSEE COMPANY WAS NOT DOING ANY BUSINESS. THE LD. CIT(A) EXAM INED THE ASPECT RS. 1,990/- PER SHARE. THE LD. CIT(A) NOTED IN THIS CONTEXT THA T THE ASSESSEE HAD FILED DETAILED CALCULATION OF PRICE OF SHARES AS PER NET ASSET VALUE METHOD (NAV) AS WELL AS EARNING PER SHARE CAPITALIZATIONS AY 2011- 12 (PREVIOUS ASSESSMENT YEAR) HAD TURNOVER OF RS. 3 73.89 CRORES AND PROFIT AFTER TAX (PAT) WAS RS. 1.45 CRORES AND EARNING PER SHARE (EPS) WAS RS. 145.43 PER SHARE THEREFORE THE MARK ET VALUE OF SHARE BY CAPITALIZING THE SHARES) @ 7% TAX FREE RATE CIT(A) TOOK NOTE OF THE FACT THAT THE VALUE OF SHAR E OF ASSESSEE COMPANY AT A PRICE ITA NO. M/S NIRNIDHI MARKETING PVT. LTD. RENCE TO EPS AND NAV ; AND THE AO HAS ACKNOWLEDGED THAT THE LD. A.R OF THE ASSESSEE HAD APPEARED BEFORE HIM AND FURNISHED REQU ISITE DOCUMENTS. HOWEVER, TAKING NOTE THAT THE ASSESSEE HAD ISSUED SHARE CAPITAL PLU S PREMIUM OF RS. 9.5 CRORES, HE TO THE SHARE SUBSCRIBING COMPAN Y M/S SAIBABA AUTHORIZED PERSONS ( DIRECTORS) OF THE ASSESSEE APPEAR BEFORE HIM ON 17.03.2015 . HOWEVER SINCE NONE APPEARED BEFORE HIM THE SHARE APPLICANT M/S SAIBABA AND MADE AN ADDITIO N U/S 68 OF THE ACT AND FRAMED THE ASSESSMENT ON 26.03.2015. ON APPEAL THE LD. CIT(A) ADDRESSED THE ALLEGATION OF THE AO THAT SHARE PREMI UM OF RS. 1,990/ COMPANY IS VERY HIGH SINCE THE ASSESSEE COMPANY IS NOT INTO ANY BUSINESS ACTIVITY. THE LD. CIT(A) HAS TAKEN NOTE OF THE FOLLOWING FINA NCIAL DATA OF THE ASSESSEE COMPANY WHICH SHOWS THAT AO ERRED IN HIS FINDING TH AT ASSESSEE COMPANY WAS NOT INED THE ASPECT OF SHARE PREMIUM OF THE ASSESSEE COMPANY PER SHARE. THE LD. CIT(A) NOTED IN THIS CONTEXT THA T THE ASSESSEE HAD FILED DETAILED CALCULATION OF PRICE OF SHARES AS PER NET ASSET VALUE METHOD (NAV) AS WELL CAPITALIZATIONS (EPS) METHODS AND THAT THE ASSESSEE COMPANY FOR 12 (PREVIOUS ASSESSMENT YEAR) HAD TURNOVER OF RS. 3 73.89 CRORES AND PROFIT AFTER TAX (PAT) WAS RS. 1.45 CRORES AND EARNING PER SHARE (EPS) WAS RS. 145.43 PER ET VALUE OF SHARE BY CAPITALIZING THE EPS =(PAT/ NUMBER OF TAX FREE RATE WOULD COME TO RS. 1,933/- PER SHARE . THEREFORE THE LD. CIT(A) TOOK NOTE OF THE FACT THAT THE VALUE OF SHAR E OF ASSESSEE COMPANY AT A PRICE ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 15 | P A GE ACKNOWLEDGED THAT THE LD. A.R OF THE ASSESSEE HAD APPEARED BEFORE HIM AND FURNISHED REQU ISITE DOCUMENTS. HOWEVER, TAKING NOTE THAT THE ASSESSEE HAD ISSUED SHARE CAPITAL PLU S PREMIUM OF RS. 9.5 CRORES, HE Y M/S SAIBABA U/S 131 OF OF THE ASSESSEE COMPANY TO SINCE NONE APPEARED BEFORE HIM , HE DREW THE SHARE APPLICANT M/S SAIBABA AND MADE AN ADDITIO N U/S 68 OF THE ACT AND FRAMED THE ASSESSMENT ON 26.03.2015. ON APPEAL THE LD. CIT(A) HAS ADDRESSED THE ALLEGATION OF THE AO THAT SHARE PREMI UM OF RS. 1,990/ - OF THE ASSESSEE ASSESSEE COMPANY IS NOT INTO ANY BUSINESS ACTIVITY. THE LD. CIT(A) HAS TAKEN NOTE OF THE FOLLOWING FINA NCIAL DATA OF THE ASSESSEE COMPANY WHICH SHOWS THAT AO ERRED IN HIS FINDING TH AT ASSESSEE COMPANY WAS NOT SHARE PREMIUM OF THE ASSESSEE COMPANY I.E. PER SHARE. THE LD. CIT(A) NOTED IN THIS CONTEXT THA T THE ASSESSEE HAD FILED DETAILED CALCULATION OF PRICE OF SHARES AS PER NET ASSET VALUE METHOD (NAV) AS WELL THE ASSESSEE COMPANY FOR 12 (PREVIOUS ASSESSMENT YEAR) HAD TURNOVER OF RS. 3 73.89 CRORES AND PROFIT AFTER TAX (PAT) WAS RS. 1.45 CRORES AND EARNING PER SHARE (EPS) WAS RS. 145.43 PER EPS =(PAT/ NUMBER OF . THEREFORE THE LD. CIT(A) TOOK NOTE OF THE FACT THAT THE VALUE OF SHAR E OF ASSESSEE COMPANY AT A PRICE OF ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 16 | P A GE RS.10 + RS. 1,990 = RS. 2,000/- IS NOT UNREASONABLE . AND AS PER THE NET ASSET VALUE METHOD (NAV) VALUE OF SHARES AS COMPUTED AS PER RUL E 11UA OF THE RULES AS ON 31.03.2011 WAS RS. 1,988/- PER SHARE AND THUS THE I SSUE PRICE OF RS. 2,000/- CANNOT BE SAID TO BE HIGH. EVEN THOUGH THE ASSESSEE HAD FILE D ALL THE DETAILS AND DOCUMENTS CALLED FOR BY THE AO U/S 142(1) OF THE ACT, THE AO HAS DRAWN ADVERSE VIEW AGAINST THE SHARE CAPITAL & PREMIUM WHILE FRAMING THE ASSESS MENT ON 26.03.2015 JUST BECAUSE THE DIRECTOR OF M/S SAIBABA (SHARE SUBSCRIBING COMP ANY) DID NOT TURN UP BEFORE HIM (AO) ON 17.03.2015. IT WAS BROUGHT TO OUR NOTICE T HAT ALL THE DIRECTORS EXCEPT ONE WHO RESIDES AT PUNE, ARE RESIDENTS OF STATE OF MADHYA P RADESH AND THEREFORE COULD NOT COME ON SHORT NOTICE. IT WAS ALSO BROUGHT TO OUR NO TICE THAT THE SUMMONS ISSUED U/S 131 OF THE ACT WAS DULY SERVED UPON THE ADDRESS OF COMPANY. ACCORDING TO LD AR, NO ADVERSE VIEW OUGHT TO HAVE BEEN TAKEN AGAINST TH E ASSESSEE SINCE IT HAD FILED ALL THE DETAILS / EXPLANATIONS / DOCUMENTS ASKED FOR BY THE AO U/S 142(1) OF THE ACT WHICH IS FOUND PLACED AT PG 40 AND 137 OF PB. IN THIS CONTEX T WE NOTE THAT THE ASSESSEE HAD FILED ALL THE DOCUMENTS TO SUBSTANTIATE THE IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF THE SHARE SUBSCRIBING COMPANY M/S SAIBABA WHICH HAS BEEN INCORPORATED ON 10.01.1996 AND IT IS A REGISTERED NBFC BY RBI (REFE R PAGE 100 & 105 OF PB) WHICH SHOWS THAT STATUTORY RESERVE U/S 45C OF THE RESERVE BANK OF INDIA ACT HAS BEEN CREATED AND THE AUDITORS REPORT AT PAGE 100 CLEARL Y SPELLS OUT M/S SAIBABA IS A REGISTERED NBFC. IT HAS NOT BEEN DISPUTED BY THE RE VENUE THAT THE SHARE SUBSCRIBING COMPANY IS A REGULAR INCOME TAX ASSESSEE. WE NOTE T HAT ASSESSMENT IN RESPECT OF M/S SAIBABA FOR AY 2014-15 HAS BEEN COMPLETED U/S 143(3 ) OF THE ACT AND COPY OF WHICH IS PLACED AT PAGE 170 TO 175 OF THE ACT. MOREOVER, IT HAS BEEN NOTED BY THE LD. CIT(A) THAT THIS ASSESSEE COMPANY HAS RECEIVED A LO AN OF RS. 3 LAKHS. DURING THE RELEVANT ASSESSMENT YEAR FROM THIS SHARE SUBSCRIBIN G M/S SAIBABA AND HAS RECEIVED LOAN AGGREGATING TO RS. 15,13,50,000/- FOR (ASSESS MENT YEAR I.E. AY 2013-14) FROM THE VERY SAME SHARE SUBSCRIBING COMPANY M/S SAIBABA . OUR ATTENTION WAS DRAWN TO THE FACT THAT SCRUTINY ASSESSMENT WAS COMPLETED BY THE AO OF THE ASSESSEE COMPANY WHEREIN THE SAID LOAN TRANSACTION [RS 15.13 CRORES] HAS BEEN ACCEPTED AS GENUINE BY THE VERY SAME AO (BY NAME AND DESIGNATION) WHO TOOK ADVERSE VIEW OF M/S SAIBABA ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 17 | P A GE IN THIS RELEVANT ASSESSMENT YEAR. SO WHEN THE FACT IS THAT THE SHARE SUBSCRIBING COMPANY M/S SAIBABA HAS UNDERGONE SCRUTINY ASSESSME NT U/S 143(3) FOR AY 2014-15 AND M/S SAIBABAS ACTION OF GIVING LOAN OF RS. 15.1 3 CRORES TO ASSESSEE COMPANY HAS BEEN ACCEPTED BY THE VERY SAME AO FOR SUBSEQUENT YE AR I.E. AY 2013-14 IN SCRUTINY ASSESSMENT OF ASSESSEE COMPANY FOR AY 2013-14, THEN IT CANNOT BE SAID THAT SHARE SUBSCRIBING COMPANY M/S SAIBABAS IDENTITY AND CRED ITWORTHINESS CAN BE DOUBTED. MOREOVER, WE NOTE FROM A PERUSAL OF PAGE 105 OF PB WHICH IS THE BALANCE SHEET OF M/S SAIBABA AS ON 31.03.2012, THE SHARE CAPITAL WAS TO THE TUNE OF RS. 2,15,73,250/- PLUS RESERVE AND SURPLUS TO THE TUNE OF RS. 35,87,43,750 /- TOTALING TO RS. 38,03,17,000/-. THUS, IT CAN BE NOTED THAT M/S SAIBABA HAD CREDITWO RTHINESS AS ON 31.03.2012 TO INVEST RS. 9.5 CRORES IN THE ASSESSEE COMPANY. MOREOVER, W E NOTE THAT M/S SAIBABA HAD INCOME FROM OPERATION (BUSINESS) FOR AY 2011-12 AT RS. 68,06,774/- AND IN THIS YEAR RS. 24,71,368/-. THE COPY OF BANK STATEMENT OF M/S SAIBABA IS PLACED FROM PAGE 47 TO 52 WHICH REVEALS THAT THE SHARE APPLICATION MONEY H AS BEEN TRANSFERRED FROM BANK ACCOUNT OF M/S SAIBABA TO THE ASSESSEE COMPANY. THU S, THERE CAN BE NO DOUBT AGAINST THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF M /S SAIBABA. IT IS NOTED THAT THE LD. CIT(A) HAS CLEARLY GIVEN A FINDING A FACT THAT THE SHARE APPLICANT COMPANY M/S SAIBABA HAD ENOUGH FUND FOR SUBSCRIBING FOR SHARES IN THE ASSESSEE COMPANY WHICH FACTUAL FINDING HAVE NOT BEEN CHALLENGED BY THE REV ENUE/DEPARTMENT IN THIS APPEAL, SO THIS FINDING OF FACT CRYSTALLIZES. THEREFORE, WE FI ND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND CONFIRM THE SAME. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMI SSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 09.12.20 20. SD/- SD/- (J(( (J. S. REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09.12.2020 SB, SR. PS ITA NO. 1960/KOL/2017 M/S NIRNIDHI MARKETING PVT. LTD. A.Y. 2012-13 18 | P A GE COPY OF THE ORDER FORWARDED TO: 1. APPELLANT- ACIT, CIRCLE-5(2), KOLKATA 2. RESPONDENT- M/S NIRNIDHI MARKETING PVT. LTD., 150, LENIN SARANI, 2 ND FLOOR, KOLKATA-700013. 3. THE CIT(A)- 2, KOLKATA (SENT THROUGH E-MAIL) 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES, KOLKATA