Income-tax Officer, V. Prathamesh Ceramics Pvt. Ltd., Nashik

ITA 2260/PUN/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7181 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-11-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 18-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Share purchase agreement; Principle of natural justice; Valuation report; Accommodation entries; Onus to prove; Set aside
• Section: 133(6); 13; 22; 68; 132; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI LALIET KUMAR , JM . / I TA NO S. 2260 , 2261 & 2262 /PUN/20 14 / ASSESSMENT YEAR S: 2009 - 10 , 2010 - 11 & 2011 - 12 THE INCOME TAX OFFICER, WARD 2(2), NASHIK. ....... / APPELLANT / V/S. PRATHAMESH CERAMICS PVT. LTD. PLOT NO. 4/5, ANANDKUNJ APPTT L . JUNA GANGAPUR NAKA, GANGAPUR ROAD, NASHIK. PAN: AAECP1078Q / RESPONDENT A SSESSEE BY : SHRI KISHORE PHADKE REVENUE BY : SHRI DEEPAK GARG / DATE OF HEARING : 03 .0 2 .2020 / DATE OF PRONOUNCEMENT : 04 .02 .2020 / ORDER PER LALIET KUMAR, JM : THESE THREE APPEALS PREFERRED BY THE REVENUE EMANATES FROM THE ORDERS OF THE LD. CIT(APPEALS) - 2, NASHIK DATED 15.10.2014 FOR THE ASSESSMENT YEARS 2009 - 10 TO 2011 - 12. 2. THESE CASES WERE HEARD TOGETHER, AS THESE APPEALS INVOLVED COMMON GROUNDS AND ARISING FROM THE SAME FACTS A S AGREED BY BOTH THE PARTIES, THE 2 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 APPEAL NO .2261/PUN/2014 FOR THE ASSESSMENT YEAR 2010 - 11 AS LEAD MATTER FOR ADJUDICATION. ITA NO.2261/PUN/2014 A.Y.2010 - 11 3. FOR THE ASSESSMENT YEAR 2010 - 11, THE REVENUE HAS RAISED FO LLOWING GROUNDS IN EFFECT: 1. THE LD. CIT(A) - II, NASHIK HAS ERRED IN DELETING THE ADDITION MADE U/S.68 ON ACCOUNT OF SHARE PREMIUM OF RS.8,09,87,500/ - AND SHARE CAPITAL OF RS.42,62,500/ - DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. 2. THE LD. CIT(A) - II, NASHIK HAS ERRED BY NOT APPRECIATING THE FACT THAT THE SHAREHOLDING COMPANIES ARE ONLY PAPER COMPANIES NOT CARRYING OUT ANY SUBSTANTIAL BUSINESS ACTIVITIES. THE ENTIRE TRANSACTION IS NOTHING BUT MAKE BELIEVE TRANSACTION AND COLOURABLE DEVICES ARE USED TO GIVE COLOUR OF GENUINENESS TO NON GENUINE TRANSACTIONS. 3. THE LD. CIT(A) - II, NASHIK HAS ERRED BY APPLYING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. VS. CIT AS THIS DECISION IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LD. CIT(A) - II, NASHIK HAS ERRED BY NOT APPRECIATING THE FACT THAT THE DECISION OF JURISDICTION BOMBAY HIGH COURT IN CASE OF MAJOR METALS LIMITED VS UOI IN WRIT PETITION NO. 397 OF 2011 AND DECISION OF DELHI HIGH COURT IN CASE OF NOVA PROMOTERS AND FINLEASE PVT. LTD. (ITA NO.342 OF 2011) ARE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LD. CIT(A) - II, NASHIK HAS ERRED IN HOLDING THAT THE TRANSACTION OF SUBSCRIBING SHARE PREMIUM AT THE RATE OF RS.190/ - PER SHARE IS GENUINE BECAUSE THE TRANSACTION IS ROUTED THROUGH BANKING CHANNEL AND THE SHARE HOLDING COMPANIES HAVE FILED THE INCOME TAX RETURNS. THE CIT(A) HAS NOT CONSIDERED THE SURROUNDING CI RCUMSTANCES OF THE TRANSACTION. 6. THE LD. CIT(A) - II, NASHIK HAS ERRED BY NOT CONSIDERING A REPORT RECEIVED FROM INVESTIGATION WING, MUMBAI WHICH SHOWS THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES FROM SHRI PRAMOD JAIN WHO HAS ACCEPTED IN HIS STATEMENT GIVEN DURING THE SEARCH CONDUCTED U/S. 132 OF T HE I.T. ACT THAT HE HAS GIVEN ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES. 7. THE LD. CIT(A) - II, NASHIK HAS ERRED BY NOT GIVING AN OPPORTUNITY TO REPRESENT THE CASE BY JCIT, RANGE 2 NASHIK ON BEHALF OF DEPARTMENT INSPITE OF THE REQUEST MADE TO REPRESE NT THE CASES OF RANGE 2, NASHIK FOR THE SAME. THIS HAS VIOLATED THE PRINCIPLE OF NATURAL JUSTICE. 8. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) - II, NASHIK MAY BE SET ASIDE. 3 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 4. THE BRIEF FACTS IN THIS CA SE ARE THAT THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2010 - 11 HAD NOTICED THAT THE ASSESSEE HAS SHOWN SHARE CAPITAL OF RS.2,59,95,000/ - AND RESERVES AND SURPLUS OF RS.15,85,07,500/ - . THE ASSESSING OFFICER IN PARA 4 HAD MENTIONED THAT ON VERIFICATION OF RESERVES AND SURPLUS, IT WAS FOUND THAT THE AMOUNT OF RS.15,85,07,500/ - IS SHOWN AS RECEIPT OF SHARE PREMIUM. THE ASSESSEE SUBMITTED THAT THE SHARE PREMIUM AS ON 31.03.2009 WAS SHOWN AS RS.7,75,20,000/ - AND THUS, THE SUM OF RS.8,09,87,500/ - WAS SHOWN AS S HARE PREMIUM IN THE ASSESSMENT YEAR 2010 - 11. THE ASSESSING OFFICER IN PARA 4.2 HAD GIVEN DETAILS OF VARIOUS 35 ENTITIES WHICH ARE THE SUBSCRIBERS OF THE SHARE OF ASSESSEE AT SHARE PREMIUM OF RS.190/ - . THE TABULATION MENTIONED BY THE ASSESSING OFFICER IN PA RA 4.2 IS REPRODUCED HEREIN BELOW: SR. NO. SHAREHOLDER NAME SHARE PREMIUM VALUE (RS.) NO OF SHARES HELD SHARE PREMIUM AMOUNT (RS.) 1 NEW PLANET TRADING PVT. LTD. 190 20000 3800000 2 KUSH HINDUATAN PVT. LTD. 190 375000 7125000 3 LEXUS INFOTECH LTD. 190 25000 4750000 4 FASTSTONE TRADING CO. PVT. LTD. 190 25000 4750000 5 ANCHAN PROPERTIES PVT. LTD. 190 11250 2137500 6 CAPETOWN MERCANTILE CO. LTD. 190 25000 4750000 7 PRARAMBH MULTITRADE PVT. LTD. 190 25000 4750000 8 FAIRMOUNT VENTURE PVT. LTD. 190 10000 1900000 9 JAIMAMBE CASSETS PVT. LTD. 190 20000 3800000 10 KAPINDRA MULTITRADE PVT. LTD. 190 47500 9025000 11 MENDOW VENTURE PVT. LTD. 190 175000 3325000 12 CORAL VENTURE PVT. LTD. 190 15000 2850000 13 DOLDRUM INVESTMENT & FINANCIAL LTD. 190 12250 2327500 4 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 4.1 THE ASSESSING OFFICER WITH A VIEW TO VERIFY THE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THESE 35 ENTITIES HAD ISSUED LETTER TO THE 14 OSHIN INVESTMENT & FINANCIAL LTD. 190 17500 3325000 15 BLAZER VENTURE PVT. LTD. 190 10000 1900000 16 CASPER ENTERTAINMENT PVT. LTD. 190 15000 2850000 17 DUKE BUSINESS PVT. LTD. 190 17500 3325000 18 GRAFTON MERCHANT PVT. LTD. 190 30000 5700000 19 KUMAR ENGG. CO. PVT. LTD. 190 50000 9500000 20 MAHADEV VANJIYA PVT. LTD. 190 25000 4750000 21 MATRIX SYSTEL PVT. LTD. 190 49500 9405000 22 MICROCHIP INFOTECH PVT. LTD. 190 35000 6650000 23 NEHA CASSETS PVT. LTD. 190 35000 6650000 24 OCTOPUS INFOTELL PVT. LTD. 190 17500 3325000 25 OLIVE OVERSEAS PVT. LTD. 190 6250 1187500 26 OSTWAL TRADING (INDIA) PVT. LTD. 190 5000 950000 27 RAGHUNANDAN RAJSONS LTD. 190 10000 1900000 28 TRAINGULAR INFOCAM PVT. LTD. 190 16250 3087500 29 RIGMA GRAPAHITE INVESTMENT PVT. LTD. AL - PROOG ENGG. 190 25000 4750000 30 AL - PROOG ENGG. 190 4250 807500 31 AL - BRIGHT ELECTRICAL PVT. LTD. 190 50000 9500000 32 NAKSHTRA BUSINESS PVT. LTD. 190 27500 5225000 33 ETERNITY MULTITRADE PVT. LTD. 190 34500 6555000 34 REALGOLD TRADING CO. 190 37500 7125000 35 HEMA TRADING CO. PVT. LTD. 190 25000 4750000 TOTAL 834250 158507500 TOTAL 834250 15 , 85 , 07 , 500 5 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 ASSESSEE ON 10 TH JANUARY, 2013 ASKING THE ASSESSEE TO SUBMIT THE FOLLOWING SEVEN POINTS: I) NAMES AND ADDRESSES OF THE SHAREHOLDERS WHO HAD PURCHASED SH ARES ON PREMIUM. II) CONFIRMATION OF THESE SHARE HOLDERS WHO HAVE PURCHASED SHARES ON PREMIUM III) COPY OF INCOME TAX RETURNS, COPIES OF BALANCE SHEET AND STATEMENT OF BANK ACCOUNT OF THESE SHAREHOLDERS WHICH SHOW THE ABOVE MENTIONED TRANSACTIONS. IV) THE COPIES OF MINUTE BOOK, ATTENDANCE REGISTER OF ANNUAL GENERAL MEETINGS, DISPATCH REGISTERS ETC. V) THE SHARE CERTIFICATE REGISTER AND COPIES OF COUNTER FILES OF SHARES CERTIFICATES ISSUED BY THE COMPANY TO THESE SHAREHOLDERS. VI) THE DOCUMENTARY EVIDENCE OF JUSTIFICATION OF DETERMINING THE PREMIUM OF RS.190/ - PER SHARE. VII) THE DETAILS OF FINANCIAL ADVISOR/ CA WHO HAS DETERMINED THE VALUE OF SHARE PREMIUM ALONG WITH THE DOCUMENTARY EVIDENCE FOR DETERMINING AMOUNT OF SHARE PREMIUM PER SHARE. 4. 2 THEREAFTER , THE ASSESSING OFFICER HAD ALSO DEPUTED INSPECTORS TO VERIFY THE BUSINESS ACTIVITIES OF THESE 35 COMPANIES. THE A SSESSING OFFICER IN PARA 5.2 MENTIONED AS FOLLOWS: 5.2 TO VERIFY THE ADDRESSES AND BUSINESS ACTIVITIES CARRIED OUT BY THESE COMPANIES, THE INSPECTORS OF THIS OFFICE, SHRI MAHIPAL SINGH AND SHRI BHASKARRAO DEORE WERE DEPUTED. THEY HAVE VISITED THE ADDRESSES OF THESE COMPANIES ON 15.01.2013 WHICH ARE LOCATED AT MUMBAI. IT IS FOUND DURING THE ENQUIRY THAT MOST OF THE COMPANIES ARE LOCATED AT COM MON ADDRESSES. ONE PERSON IS LOOKING AFTER 7 TO 8 COMPANIES. IT APPEARS THAT THIS PERSON IS DEPUTED ONLY FOR THE PURPOSE OF RECEIVING LETTERS AND OTHER CORRESPONDENCE. THERE IS NO INFRASTRUCTURE IN THE OFFICE PREMISES WHICH IS NORMALLY REQUIRED FOR BUSINES S ACTIVITY. IT APPEARS THAT NO ACTIVITY HAS BEEN CARRIED OUT FROM THESE OFFICE PREMISES. THE INSPECTORS HAVE ALSO CONTACTED SOME DIRECTORS OF THESE COMPANIES. IT IS NOTICED THAT THE DIRECTORS ARE NOT AWARE ABOUT THE CO AND ABOUT THE FINANCIAL TRANSACTIONS. THE FINANCIAL TRANSACTIONS HAVE ACTUALLY BEEN HANDLED BY SOME OTHER PERSON. A COPY OF THIS REPORT IS ANNEXED HEREWITH AS ANNEXURE - A . 4.3 THE ASSESSING OFFICER ALSO RECORDED STATEMENT OF MANAGING DIRECTOR, SHRI NITIN PRAKASH WAGASKAR U/S.131 OF THE ACT. THE SUM AND SUBSTANCE OF 6 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 THE STATEMENT RECORDED BY THE ASSESSING OFFICER WAS MENTIONED IN PARA 5.4 TO THE FOLLOWING EFFECT: 5.4..HIS ST ATEMENT REVEALED THAT THE MANAGING DIRECTOR AND PROMOTER OF THE COMPANY DO NOT KNOW THEIR SHAREHOLDER COMPANIES. NEITHER THE DIRECTOR NOR THESE SHAREHOLDERS HAVE MADE ANY CONTACT AFTER THE SUBSCRIPTION OF SHARE CAPITAL. THE SHAREHOLDER COMPANIES WHO HAVE P URCHASED THE SHARES OF THE ASSESSEE AT THE PREMIUM OF RS.190/ - PER SHARE HAVE NOT EVEN ENQUIRED ANY DETAILS OF THEIR INVESTMENTS OR ANY DETAILS REGARDING THE BUSINESS TRANSACTIONS AND PROFITABILITY OF THE ASSESSEE COMPANY. 4.4 THE ASSESSING OFFICER ISSU ED SHOW CAUSE NOTICE TO THE ASSESSEE ON 14.02.2013 AND IN RESPONSE THERETO, THE ASSESSEE FILED DETAILED REPLY AND THE ASSESSING OFFICER HAS CONSIDERED THE REPLY OF THE ASSESSEE. 4.5 THE ASSESSING OFFICER HAD ALSO EXAMINED THE AUDITOR WHO HAD PREPARED THE VALUATION REPORT BY VALUING THE SHARE AT RS.200/ - AND HAD ALSO DISCUSSED THE FALLACY AND CONTRADICTION IN THE REPORT. THE PARAGRAPH 6.1 TO WHICH DEALS WITH THE BASIS OF ARRIVING AT THE SHARE PREMIUM OF RS.190/ - PER SHARE IS TO THE FOLLOWING EFFECT IN THE ASSESSMENT ORDER: 6.12 THE MANAGING DIRECTOR, SHRI NITIN WAGASKAR HAS SUBMITTED THAT THE SHARE PREMIUM WAS DECIDED ON THE BASIS OF VALUATION DONE BY THE AUDITOR SHRI MUKUND KOKIL. THE STATEMENT OF SHRI MUKUND KOKIL WAS RECORDED U/S.131 ON 12.02.2013. HE WAS ASKED TO EXPLAIN THE PROCEDURE AND THE BASIS FOR DERIVING SHARE PREMIUM PRICE OF RS.190/ - SHARE. HE HAS ALSO SUBMITTED THE DETAILS OF WORKING DONE BY HIM WHICH REPRODUCED AS UNDER: PRATHAMESH CERAMICS PRIVATE LIMITED PROJECTED EARNING VALUE METHOD YEAR PROJECTED PROFIT BEFORE TAX (RS. IN CRORES) NOS. OF SHARES IN CRORES EPS (RS.) PE PRICE AS PER PE RS. 2009 - 10 23.37 0.62 38.00 4.50 171.00 2010 - 11 25.92 0.62 42.15 4.50 189.66 7 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 2011 - 12 29.02 0.62 47.19 4.50 212.34 2012 - 13 32.33 0.62 52.57 4.50 236.56 2013 - 14 34.79 0.62 56.57 4.50 254.56 1,064.12 AVERAGE OF 5 YEAR 212.82 ROUNDED OFF TO SAY 200 THUS, THE VALUATION OF SHARE PRICE OF THE COMPANY IS DETERMINED AT RS.200/ - PER SHARE ON THE BASIS OF PROJECTED EARNING VALUE METHOD. AS ALREADY STATED ABOVE THIS COMPANY WAS INCORPORATED IN THE FY 2006 - 07 AND HAS STARTED BUSINESS ACTIVITIES ONLY IN THE FY 2012 - 13. THE ENTIRE PROJECTIONS DONE BY THE CHARTERED ACCOUNTANT IS WITHOUT ANY RATIONALE AND WITHOUT ANY APPLICATION OF MIND. THIS CALC ULATION IS DONE ON HYPOTHETICAL BASIS AND BY APPLYING THIS METHOD ON HYPOTHETICAL BASIS ANY ONE CAN JUSTIFY ANY VALUE OF SHARE. HOW CAN A COMPANY WHICH HAS STARTED BUSINESS ACTIVITIES IN THE FY 2012 - 13 ONLY CAN PROJECT ITS PROFIT OF RS.32.33 CRS IN THE F Y 2012 - 13. IF THIS PROJECTED PROFIT AND TURNOVER IS COMPARED WITH THE ACTUAL TRANSACTIONS OF THE ASSESSEE COMPANY THEN THERE IS NO COMPARISON OF THESE PROJECTED FIGURES WITH THE ACTUAL. THE PROJECTED PROFIT FOR THE FY 2009 - 10 WAS 23.37 CRORES WHEREAS THE A SSESSEE HAS NOT STARTED ANY BUSINESS ACTIVITY IN THE FY 2009 - 10. SIMILARLY THE PROJECTED PROFITS FOR THE FY 2010 - 11 WAS 25.97 CRS WHEREAS THE COMPANY HAS SHOWN LOSS OF RS.92,86,188/ - . THERE CAN BE SOME VARIATIONS IN THE PROJECTED FIGURES WITH THE ACTUAL ON ES BUT IT IS NOT ACCEPTED THAT THE PROJECTED FIGURES DO NOT MATCH WITH THE ACTUAL ONES AT ANY STAGE. THIS FACT ESTABLISHES THAT THE PROJECTED FIGURES ARE IMAGINARY AND HYPOTHETICAL. THE C.A HAS PROJECTED THE FIGURES AS PER HIS OWN WHIMS AND FANCIES AND WI THOUT ANY RATIONAL AND FUNDAMENTAL BASIS. THE ENTIRE EXERCISE HAS BEEN DONE DELIBERATELY AND INTENTIONALLY TO JUSTIFY THE SHARE PREMIUM OF RS.190/ - PER SHARE. THIS ACT OF THE ASSESSEE IS SELF SERVING AND INTENTIONALLY MANIPULATED. IF THE PRICE OF THE SHAR E IS CALCULATED ON THE BASIS OF ACTUAL FUNDAMENTALS OF THE CO. THE SHARE PRICE WILL BE LESS THAN THE FACE VALUE OF THE SHARES AS THE ASSESSEE HAS SHOWN LOSSES. THIS FACT ITSELF PROVES THAT THE PROJECTED EARNINGS AND VALUATION DONE BY THE CHARTERED ACCOUNTA NT IS FABRICATED, MISLEADING AND FLAWED. IT APPEARS THAT THE ENTIRE EXERCISE OF VALUATION HAS BEEN DONE TO JUSTIFY THE ALREADY DETERMINED PRICE OF RS.190/ - PER SHARE. THE ASSESSEE IN CONNIVANCE WITH THE CHARTERED ACCOUNTANT HAS INTENTIONALLY FABRICATED THE FACTS TO JUSTIFY THEIR ACTION. THUS, SHARE PREMIUM OF RS.190/ - PER SHARE IS NOT JUSTIFIABLE ON THE BASIS OF ANY FUNDAMENTALS OF THE ASSESSEE. 4.6 AFTER CONSIDERING THE REPLY OF THE ASSESSEE AND THE STATEM ENT RECORDED U/S.131 OF THE ACT OF THE MANAGING DIRECTOR AND OF THE AUDITOR, GOING THROUGH 8 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 THE FINANCIAL AND AFFAIRS OF THE COMPANY AND REPORT OF THE INSPECTOR DEPUTED FOR VERIFYING THE EXISTENCE OF THE COMPANY, THE ASSESSING OFFICER MADE ADDITION OF RS.8, 5 2,50,000/ - FOR THE ASSESSMENT YEAR 2010 - 11 TO THE FO LLOWING EFFECT IN PARA 13 : 13. IN VIEW OF THE POINTED LISTED ABOVE, IT IS ESTABLISHED BEYOND DOUBT THAT THE OBJECT WAS NOT TO ATTRACT GENUINE INVESTORS BY PEGGING THE PREMIUM AT UNREALISTIC LEVEL BUT TO BRING IN LARGE AMOUNT OF UNACCOUNTED FUNDS IN THE GUISE OF SHARE PREMIUM. THUS, THE ENTIRE SHARE CAPITAL, SHARE APPLICATION AND SHARE PREMIUM SHOWN IN THE NAME OF THE BOGUS COMPANIES IS BOGUS AND UNEXPLAINED. THEREFORE, THE AMOUNT OF SHARE CAPITAL OF R S.42,62,500/ - AND SHARE PREMIUM OF RS.8,09,87,500/ - INTRODUCED IN THE CURRENT ASSESSMENT YEAR IS TREATED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE I.T. ACT AND ADDED TO THE TOTAL INCOME. THUS, THE TOTAL OF RS.8,52,50,000/ - IS ADDED TO THE TOTAL IN COME. THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS ABOUT HIS INCOME AND CONCEALED HIS TAXABLE INCOME ON THESE ISSUES. THEREFORE, I AM SATISFIED THAT PENALTY IS LEVIABLE ON THESE ISSUES AND ACCORDINGLY PENALTY PROCEEDINGS U/S.271(1)(C) IS INITIATED. 5. FEELING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(APPEALS) AND THE LD. CIT(APPEALS) RELYING ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF CIT VS. CREATIVE WORLD TELEFIL MS LTD., (2011) 333 ITR 100 ( BOM.) AND THE DECISION OF TRIBUNAL IN THE MATTER OF M/S. ORCHID INDUSTRIES PVT. LTD. VS. DCIT , CC - 22, MUMBAI, DATED 07.02.2014 GRANTED RELIEF TO THE ASSESSEE AS PER PARA 21 AND 22 TO THE FOLLOWING EFFECT: 21. IN THE ABOVE CI TED CASES, THE BOMBAY HIGH COURT, THE TRIBUNALS IN MUMBAI AND PUNE HAVE FOLLOWED THE HONBLE SUPREME COURT DECISION IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (SUPRA.) WHICH HAS DEALT WITH THE ISSUE OF CASH CREDIT/SHARE APPLICATION MONEY AND HAS HELD A S UNDER: - IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CAN NOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE PRESENT CASE UNDER APPEAL AND THE FACTS OF THE ABOVE MENTIONED CASES, I AM OF THE CONSIDERED VIEW THAT RATIO OF THE SAID 3 ARE APPLICABLE TO THE FA CTS OF THE INSTANT CASE AND THEREFORE, THEY ARE TO BE FOLLOWED. 9 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 22. IN VIEW OF THE ABOVE DISCUSSION AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE ADDITION OF RS.8,52,50,000/ - MADE BY THE AO UNDER SECTION 68 OF THE ACT IS UNJUSTIFIED AND THE SAME IS DELETED. THUS, THE MAIN GROUND RAISED BY THE APPELLANT IS ALLOWED. PITH AND SUBSTANCE OF THE FINDINGS OF THE LD. CIT(APPEALS) IS THAT ON ACCOUNT OF FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE MATTER OF CIT VS. CREATIVE WORLD TELEFILMS LTD. (SUPRA.) AND IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (SUPRA. OF THE HONBLE SUPREME COUR T , THE ASSESSEE WAS ABLE TO ESTABLISH THE OBLIGATION AS REQUIRED U/S.68 OF THE ACT AND THEREFORE, THE ASSESSING OFFICER WA S NOT JUSTIFIED IN MAKING THE ADDITION OF THE SHARE PREMIUM RECEIVED BY THE ASSESSEE. . 6. FEELING AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE IS IN APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. 7. AT THE VERY OUTSET, LD. DR SUBMITTED THAT THE DECISION RENDERED BY THE LD. CIT(APPEALS) WAS REQUIRED TO BE SET ASIDE AS THE SAID DECISION IS CONTRARY TO THE LAW LAID DOWN BY THE HONBLE SUPREME COURT RECENTLY IN THE MATTER OF PRINCIPAL COMMISSIONER OF INCOME TAX ( CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD., SPECIAL LEAVE TO APPEAL (C) NO.29855/2018 WHEREIN IN PARA 11 ON SUCCINCTLY HELD AS FOLLOWS: 11. THE PRINCIPLES WHICH EMERGE WHERE SUMS OF MONEY ARE CREDIT ED AS SHARE CAPITAL/PREMIUM ARE : I. THE ASSESSEE IS UNDER A LEGAL OBLIGATIO N TO PROVE THE GENUINENESS OF THE TRANSACTION, THE IDENTITY OF THE CREDITORS, AND CREDIT - WORTHINESS OF THE INVESTORS WHO SHOULD HAVE THE FINANCIAL CAPACITY TO MAKE THE INVESTMENT IN QUESTION, TO THE SATISFACTION OF THE AO, SO AS TO DISCHARGE THE PRIMARY ON US. II. THE ASSESSING OFFICER IS DUTY BOUND TO INVESTIGATE THE CRE DIT - WORTHINESS OF THE CREDITOR/ SUBSCRIBER, VERIFY THE IDENTITY OF THE SUBSCRIBERS, AND ASCERTAIN WHETHER THE TRANSACTION IS GENUINE, OR THESE ARE BOGUS ENTRIES OF NAME - LENDERS. 10 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 III. IF THE E NQUIRIES AND INVESTIGATIONS REVEAL THAT THE IDENTITY OF THE CREDITORS TO BE DUBIOUS OR DOUBTFUL, OR LACK CREDIT - WORTHINESS, THEN THE GENUINENESS OF THE TRANSACTION WOULD NOT BE ESTABLISHED. IN SUCH A CASE, THE ASSESSEE WOULD NOT HAVE DISCHARGED THE PRIMARY ONUS CONTEMPLATED BY SECTION 68 OF THE ACT. 7.1 IT WAS FURTHER SUBMITTED BY THE LD. DR THAT THE ASSESSING OFFICER IN THE PRESENT CASE IN EFFECT HAD METICULOUSLY EXAMINED THE FINANCIAL STA TEMENTS AND AFFAIRS OF THE ASSESSEE AS WELL AS OF THE INVESTOR COMPANIES AND THEREAFTER HAD COME TO THE CONCLUSION THAT THESE 35 SHARE INVESTING COMPANIES ARE PAPER COMPANIES. IT WAS ALSO SUBMITTED THAT THESE COMPANIES ARE NOT DOING ANY BUSINESS AND HAVING COMMON KEY PERSON NAMELY PRAVEEN KUMAR JAIN AND ARE ALSO OPERATING FROM SAME ADDRESS IN SMALL CUBICLES . IT WAS SUBMITTED BY THE LD. DR THAT ASSESSEE WAS NOT ABLE TO DISCHARGE HIS ONUS AS CONTEMPLATED U/S.68 OF THE ACT. 7.2 IN EFFECT, THE ASSESSING OFFIC ER HAS GIVEN A DETAILED REASONED ORDER WHILE COMING TO THE CONCLUSION THAT THESE COMPANIES WERE PAPER COMPANIES AND THE ASSESSEE WAS NOT ABLE TO DISCHARGE HIS ONUS . IT WAS ALSO THE CONTENTIONS OF THE LD. DR THAT OUT OF THE 35 COMPANIES, SUBJECT MATTER CHALLENGED BEFORE US, 4 COMPANIES WERE COMMON AS BEFORE THE HONBLE SUPREME COURT AND FOR THAT PURPOSE, OUR ATTENTION WAS DRAWN AT PARA 3.3 OF THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE MATTER OF PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD (SUPRA.). 7.3 IT WAS FURTHER CONTENDED BY THE LD. DR THAT THE ASSESSING OFFICER AT PAGE 14 HAD EXAMINED THE FINANCIAL STATEMENTS OF THE ASSE SSEE FOR FINANCIAL YEARS 2007 - 08, 2008 - 09, 2009 - 10 AND 2010 - 11 AND SUBMITTED THAT A BARE PERUSAL OF THE FINANCIAL STATEMENTS IT WAS CLEAR THAT THE ASSESSEE WAS NOT 11 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 DOING ANY BUSINESS AND TURNOVER WAS MENTIONED AS NIL FOR FINANCIAL YEARS 2007 - 08, 2008 - 09 AN D 2009 - 10 AND TURNOVER WAS NEGATIVE FOR FINANCIAL YEAR 2010 - 11 I.E. ( - 18760884). IT WAS ALSO SUBMITTED BY THE LD. DR ON ACCOUNT OF FINANCIAL STATEMENT THAT NET VALUE OF THE SHARE AT THE RATE OF RS.190/ - WAS GROSSLY INAPPROPRIATE AND NOT CORRECT AND NO PRUD ENT MEN WILL INVEST IN A COMPANY WHICH IS NOT FUNCTIONAL AND WHICH IS NOT DOING ANY BUSINESS. THE LD. DR ALSO SUBMITTED THAT EVEN VALUATION REPORT PREPARED BY THE CHARTERED ACCOUNTANT WAS NOT CORRECT AND FOR THAT PURPOSES OUR ATTENTION WAS DRAWN TO FINDING RECORDED BY THE ASSESSING OFFICER REPRODUCED HEREIN ABOVE. THE LD DR HAS ALSO SUBMITTED THAT THE ASSESSING OFFICER HAD EXAMINED THE CHARTERED ACCOUNTANT WHO HAD DONE THE VALUATION OF THE SHARE AND OUR ATTENTION WAS DRAWN TO PAGE 287 (CROSS EXAMINATION OF THE CHARTERED ACCOUNTANT). ON THE BASIS OF THE CROSS EXAMINATION IT WAS SUBMITTED THAT THE CA WAS NOT ABLE TO JUSTIFY THE VALUATION OF THE SHARE. HE HAD ALSO RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE MATTER OF M/S. RDS PROJECTS LTD. VS. ACIT, WPC NO. 11274/2019 DATED 23.10.2019 , VEDANTA LIMITED WPC NO. 13036/2019 AND NDR PROMOTERS (P.) LTD. [2019] 109 TAXMANN.COM 53 (SC) . 8. PER CONTRA, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER O F PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD (SUPRA.) WAS NOT AVAILABLE BEFORE THE LD.CIT(APPEALS) AND THEREFORE, THIS DECISION WAS NOT DEALT WITH BY THE LD. CIT(APPEALS). FURTHER, THE LD. AR HAD SOUGHT TO DISTINGUISH FACTS OF THE SAID CASE AND THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT BY FILING SUPPLEMENTARY SYNOPSIS DATED 10.04.2019 TO THE FOLLOWING EFFECT: 12 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 1. FACTS RELATED TO IDENTITY OF INVESTORS - PERUSAL OF THE ABOVE REFERRED RECENT APEX COURT DECISION REVE ALS FOLLOWING FACTS RELATING TO IDENTITY ASPECT A) THERE WERE 19 INVESTOR COMPANIES WHO MADE INVESTMENT @ RS. 10 (FACE VALUE) + RS.190 (PREMIUM) IN THE SHARE CAPITAL OF NRA IRON & STEEL P LIMITED. B) AFTER GETTING PRIMARY INFORMATION FROM ASSESSEE, AO M ADE ENQUIRIES WITH THESE 19COMPANIES C) SUMMONS WERE ISSUED TO THE 19 COMPANIES D) 2 INVESTORS OF MUMBAI AND 2 INVESTORS OF GAUHATI WERE NON - EXISTENT ON GIVEN ADDRESS E) 4 INVESTORS OF MUMBAI RECEIVED SUMMONS BUT DID NOT REPLY F) 11 INVESTORS OF KOLKATA MADE SUBMISSIONS IN DAK G) (NONE OF THE INVESTORS APPEARED, WHICH CREATED DOUBTS...) 2. FACTS RELATING TO CREDIT - WORTHINESS OF INVESTORS - PERUSAL OF THE HONORABLE APEX COURT RULING REVEALS FOLLOWING FACTS RELATING TO CREDIT - WO RTHINESS ASPECT A) ALL 11 KOLKATA COMPANIES SUBMITTED INFORMATION RELATING TO INVESTMENTS IN NRA (PARA - 3.8) B) ALL 11 KOLKATA COMPANIES HAVE MEAGRE INCOME, IN THE RANGE OF RS. NIL TO RS. 50,000WHEREAS, EACH OF THE 11 COMPANIES INVESTED RS. 90 LACS / RS. 9 5 LACS INTO THE ASSESSEE COMPANY (PARA - 3.8) C) ADDITION MADE BY AO WAS DELETED BY CIT(A) CONSIDERING DISCHARGE OF PRIMARY ONUS, I.E. CONFIRMATIONS, TAX RETURN COPIES, PAN, BANK STATEMENT SHOWING INVESTMENT IN ASSESSEE THROUGH BANK, ETC. (PARA - 4) D) BUT AO' S FIELD REPORTS REVEALED THAT, THE INVESTOR COMPANIES LACKED CREDIT - WORTHINESS (PARA - 9) E) INSUFFICIENT DATA HENCE, ONUS NOT DISCHARGED (PARA - 13) 3. OBSERVATIONS - FOLLOWING FINDINGS EMERGE FROM THE SAID APEX COURT ORDER A) AS PER SECTION 68 (PRIOR TO 2012 AMENDMENT), PRIMARY ONUS IS ON THE ASSESSEE TO SUBSTANTIATE A CREDIT/ CREDIT ENTRY (PARA - 8.2) B) MERE PROVING IDENTITY INSUFFICIENT, ITS CAPACITY OR CREDIT WORTHINESS NOT ESTABLISHED (PARA - 8.3) C) AO DUTY BOUND TO INVESTI GATE ALL ASPECTS [PARA 11 (II)] D) AO OUGHT TO CONDUCT INDEPENDENT ENQUIRY TO VERIFY GENUINENESS (PARA - 9) E) AS PER FACTS, ASSESSEE FAIL ED TO DISCHARGE HIGHER ONUS U/S. 68, HENCE, AO JUSTIFIED TO MAKE ADDITIONS (PARA - 15 R.W. PARA - 14) 13 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 F) IF RECEIVER O F SUCH CREDIT / AMOUNT IS A PRIVATE COMPANY, THEN THE DEGREE OF ONUS OF SUBSTANTIATION IS HIGHER (PARA - 14) G) CREDIT - WORTHINESS AND GENUINENESS OF TRANSACTION DEPENDS ON I. WHETHER AE PARTIES II. WHETHER INVESTOR IS ANGEL INVESTOR OR NOT III. QUANTUM OF MO NEY INVESTED IV. CREDIT - WORTHINESS OF RECEIVER, ..............AND SO ON [PARA - 9(VI)] H) YEAR 2012 SECTION REFERRED TO (AND NOT AMENDED SECTION THEREAFTER) [PARA - 8.1] 4. RATIO - FOLLOWING POINTS EMERGE FROM THE HONORABLE APEX COURT RULING A) CRUCIAL REFERENCE MADE TO KATE - KHANIS CASE HOLDING THAT, ONCE ASSESSEE PROVIDES DETAILS FOR IDENTITY - GENUINENESS - CREDITWORTHINESS, AO MUST CONDUCT ENQUIRY, AS BURDEN PASSES TO HIM. BUT, IF ASSESSEE FAILS TO DISCHARGE HIS BURDEN, NO FURTHER BURDEN ON DEPARTMENT (PA RA - 8.2) B) CRUCIAL REFERENCE MADE TO RATIO OF LOVELY EXPORT'S CASE WHEREIN, IT WAS HELD THAT DEPARTMENT IS DUTY - BOUND TO INVESTIGATE INTO CREDIT - WORTHINESS ASPECT ONCE PRIMARY ONUS IS DISCHARGED BY THE ASSESSEE (PARA - 4) C) CRUCIAL OBSERVATION W.R.T. KAMD HENU'S DECISION FOR THE PROPOSITION THAT, EFFORTS TO FASTEN RACKET OF BOGUS INVESTMENT COMPANIES GO IN VEIN DUE TO LACK OF STEPS BY REVENUE [PARA - 8.4] D) CRUCIAL OBSERVATION W.R.T. MOHANKALA'S DECISION FOR THE PROPOSITION THAT AN ASSESSEE, DESPITE HIS EXPL ANATIONS ARE NOT ACCEPTABLE TO THE REVENUE, CAN STILL CONTEND THAT SUMS CREDITED IN HIS BOOKS IS NOT HIS INCOME (PARA - 9) E) PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH CLOAK OF SHARE CAPITAL/ PREMIUM MUST BE SUBJECTED TO CAREFUL SCRUTINY (PARA - 14 ) 5. SUBMISSION - IT WAS HELD THAT, DISCHARGE OF HIGHER ONUS IS NOT EMANATING FROM THE FACTS OF THE CASE. IN THIS REGARD, FOLLOWING KEY POINTS EMERGE A) P RIMARY FAILURE WITH RESPECT TO IDENTITY OF SOME OF THE INVESTMENT COMPANIES B) NON - DISCHARGE OF ONUS AS REGARDS CREDIT - WORTHINESS C) NON - SUBSTANTIATION OF THE FACTUM OF ABSENCE OF INCOME IN THE PRESENT CASE, ALL THE INVESTORS WERE FOUND ON THE ADDRESSES, WHICH HAVE BEEN VERIFIED BY IT DEPARTMENT. THESE INVESTOR COMPANIES HAVE REPLIED DIRECTLY TO THE LEARNED AO DURING THE PROCESS OF 133(6) ENQUIRY. FURTHER, APPELLANT HAS PLACED ON RECORD, ALL AVAILABLE I - T SCRUTINY ORDERS [143(1) AS WELL AS 143(3)] AND IN SOME OF THE SCRUTINY CASES, ISSUES OF SHARE PREMIUM WAS ALSO REFERRED. AS SUCH, PRESENT FACTUAL MA TRIX IS TOTALLY DIFFERENT COMPARED TO THE FACTS IN NRA'S RULING. FURTHER, THOUGH LOVELY EXPORT'S CASE WAS REFERRED TO, THE SAME WAS NOT DISSENTED, AND AS SUCH, EVEN THE LOVELY EXPORT'S CASE TOO HOLDS THE FIELD. NOW, DESPITE 14 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 SUSPICIOUS FACTUAL MATRIX OF IDE NTITY ASPECT AND CREDIT - WORTHINESS ASPECT, THERE WAS NO ANY FURTHER SUBSTANTIATION ON THESE ASPECTS. THE SAID DECISION, DOES NOT AIR ANY NEGATIVE VIEW VIS - A - VIS THE SHARE PREMIUM ASPECT. CONSIDERING THE ASSESSEE'S FAILURE TO EXPLAIN SUSPICIOUS FACTS OF COM PLIANCES, DECISION WAS REACHED FINALLY TO THE EFFECT THAT, ONUS (RATHER HIGHER ONUS) REMAINED TO BE DISCHARGED, PERMITTING THE AO TO DRAWN AN ADVERSE VIEW. AS SUCH, IT IS SUBMITTED, THE SAID APEX COURT RULING OUGHT TO BE CONFINED TO IT'S OWN PECULIAR FACTS . IT IS REITERATED, IN THE PRESENT CASE, MUCH HIGHER ONUS IS DISCHARGED BY THE APPELLANT AND AS SUCH, THE RATIO OF LOVELY EXPORT'S CASE OUGHT TO APPLY HEREIN, RATHER THAN THE RATIO OF THE NRA'S CASE AS STATED ABOVE. FOR M/S PRATHAMESH CERMAICS PRIVATE LIMI TED . 8.1 IT WAS FURTHER SUBMITTED BY THE LD. AR THAT THE VARIOUS CO ORDINATE BENCHES IN IDENCTICAL FACTS ARE GRANTING RELIEF TO THE SIMILARLY SITUATED ASSESSEE EVEN AFTER THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD (SUPRA.) AND ONE CHART HAS BEEN FILED MENTIONING 25 SUCH C ASES . 8.2 ON MERITS IT WAS SUBMITTED THAT THE COMPANY INVESTED WERE HAVING ROBUST FINANCIAL AND ECONOMIC STATUS AND FOR THAT OUR ATTENTION WAS DRAWN TO THE FOLLOWING CHART: SR. NO. NAME OF INVESTOR DATE SOURCE DETAILS SOURCE AMOUNT (RS.) INVESTMENT IN PCPL (RS.) 1 MATRIX SYSTEL PVT. LTD. 21/10/2009 21/10/2009 18/01/2010 18/01/2010 08/02/2010 08/02/2010 15/02/2010 15/02/2010 RECEIVED FROM NATRAJ VINIMAY PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM GRAFTON MERCHANT PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM SITAL MERCANTILE & CREDIT PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM 62,00,000 50,00,000 10,00,000 37,00,000 17,00,000 35,00,000 10,00,000 37,00,000 15 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 KRIPASAGAR COMMERCIAL PVT. LTD. TOWARDS SHARE APPLICATION MONEY 1,59,00,000 99,00,000 2 MICROCHIP INTOTEL PVT. LTD. 19/01/2010 19/01/2010 19/01/2010 02/02/2010 03/02/2010 03/02/2010 RECEIVED FROM VENKATESH SALES PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM HIGH GROWTH VINTRADE PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM TRIMAX IT INFRASTRUCTURE & SERVICES LTD. AGAINST SALE OF INVESTMENT. RECEIVED FROM CHANDRAMUKHI VANJIYA PVT. LTD. AGAINST SAKE OF INVESTMENT. 25,00,000 10,00,000 52,55,000 32,00,000 1,19,55,000 35,00,000 35,00,000 70,00,000 3 OCTOPUS INTOTEL PVT. LTD. 27/01/2010 29/01/2010 29/01/2010 RECEIVED FROM MATRIX SYSTEL PVT. LTD. TOWARDS SHARE APPLICATION MONEY RECEIVED FROM UTKARSH GOODS PVT. LTD. AGAINST SALE OF INVESTMENT. 20,00,000 AMOUNT NOT MENTIONED 20,00,000 35,00, 000 35,00,000 4 BLAZER VENTURE PVT. LTD. 28/07/2009 28/07/2009 RECEIVED FROM SITAL MERCANTILE & CREDIT PVT. LTD. AGAINST SALE OF INVESTMENT 20,00,000 20,00,000 20,00,000 20,00,000 5 KAPINDRA MULTITRADE PVT. LTD. 15/02/2008 15/02/2008 15/02/2008 21/04/2008 21/04/2008 RECEIVED FROM REALFLAG TRADING CO PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM BHUWANIA VINIMAY PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM SUVIDHA SECURITIES PVT LTD. 12,00,000 38,00,000 25,00,000 50,00,000 25,00,000 16 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 28/07/2009 28/07/2009 AGAINST SALE OF INVESTMENT RECEIVED FROM SITAL MERCANTILE & CREDIT PVT. LTD. AGAINST SALE OF INVESTMENT 20,00,000 95,00,000 20,00,000 95,00,000 6 GRAFTON MERCHANT PVT. LTD. 07/12/2009 07/12/2009 22/01/2010 22/01/2010 RECEIVED FROM OCTOPUS INFOTEL PVT LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM HIGHGROWTH VINTRADE PVT. LTD. AGAINST SALE OF INVESTMENT 25,00,000 35,00,000 60,00,000 25,00,000 35,00,000 60,00,000 7 ALBRIGHT ELECTRICALS PVT. LTD. 26/03/2010 26/03/2010 26/03/2010 26/03/2010 29/03/2010 29/03/2010 RECEIVED FROM MATRIX SYSTEL PVT. LTD. TOWARDS SHARE APPLICATION MONEY RECEIVED FROM MEADOW VENTURE PVT. LTD AGAINST SALE OF INVESTMENT RECEIVED FROM HIGHGROWTH VINTRADE PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM AMRITGIRI SALES PVT. LTD. AGAINST SALE OF INVESTMENT 9,00,000 30,00,000 12,00,000 1,26,00,000 1,77,00,000 50,00,000 50,00,000 1,00,00,000 8. JAIAMBE CASSETES PVT. LTD. 30/05/2008 30/05/2008 08/12/2009 08/12/2009 RECEIVED FROM VENKATESH SALES PVT. LTD. AGAINST SALE OF INVESTMENT RECEIVED FROM GRAFTON MERCHANT PVT. LTD. AGAINST SALE OF INVESTMENT 15,00,000 28,00,000 43,00,000 15,00,000 25,00,000 40,00,000 9. RIGMANDIRAPPA INVESTMENT PVT. LTD. 24/03/2010 25/03/2010 RECEIVED FROM NIRNIDHI CONSULTANTS PVT. LTD. TOWARDS 14,00,000 40,00,000 17 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 25/03/2010 25/03/2010 SHARE APPLICATION MONEY RECEIVED FROM CROWN COMMTRADE PVT. LTD. TOWARDS SHARE APPLICATION MONEY RECEIVED FROM GRAFTON MERCHANT PVT. LTD. TOWARDS SHARE APPLICATION MONEY 7,00,000 61,00,000 50,00,000 50,00,000 10. MADHAV VANJIYA PVT. LTD. 23/09/2009 24/09/2009 24/09/2009 RECEIVED FROM MANOJ KUMAR JAISWAL AGAINST ADVANCE RECEIVED FROM MATRIX SYSTEL PVT. LTD. AGAINST SALE OF INVESTMENT. 12,00,000 38,00,000 50,00,000 50,00,000 50,00,000 11 NEHA CASSETTES PVT. LTD. 29/10/2009 29/10/2009 01/02/2010 01/02/2010 RECEIVED FROM NATRAJ VINIMAY PVT. LTD. TOWARDS SHARE APPLICATION MONEY RECEIVED FROM NATRAJ VINIMAY PVT. LTD. TOWARDS SHARE APPLICATION MONEY 35,00,000 35,00,000 70,00,000 35,00,000 35,00,000 70,00,000 12 KUMAON ENGINEERING CO. PVT. LTD. 05/10/2009 05/10/2009 29/03/2010 29/03/2010 RECEIVED FROM DECCAN VANJIYA PVT. LTD. AGAINST SALE OF INVESTMENT. RECEIVED FROM GULISTAN VANJIYA PVT. LTD. AGAINST SALE OF INVESTMENT. 50,00,000 50,00,000 1,00,00,000 50,00,000 50,00,000 50,00,000 18 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 8.3 THE LD. AR HAD CONCLUDED THAT THE ORDER OF THE ASSESSING OFFICER IS REQUIRED TO BE UPHELD AS THE ASSESSEE HAS DISCHARGED THE ONUS AS REQUIRED U/S.68 OF THE ACT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE HONBLE SUPREME COURT IN THE MATTER OF PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD (SUPRA.) HAS LAID DOWN CERTAIN TESTS IN PARA 11 (SUPRA.) WHICH REQUIRED TO BE COMPLIED WITH BY THE ASSESSEE AND LEGAL OBLIGATION IS REQUIRED TO BE DISCHARGED BY THE ASSESSEE. WE MAY ALSO LIKE TO MENTION THAT THE HONBLE DELHI HIGH COURT IN THE MATTER OF NDR PROMOTERS PVT. LTD. HAD LAID DOWN IN PARAGRAPH 13 TO THE FOLL OWING EFFECT: 13. AS WE PERCEIVE, THERE ARE TWO SETS OF JUDGMENTS AND CASES, BUT THESE JUDGMENTS AND CASES PROCEED ON THEIR OWN FACTS. IN ONE SET OF CASES, THE ASSESSEE PRODUCED NECESSARY DOCUMENTS/EVIDENCE TO SHOW AND ESTABLISH IDENTITY OF THE SHAREHOLDERS, BANK ACCOUNT FROM WHICH PAYMENT WAS MADE, THE FACT THAT PAYMENTS WERE RECEIVED THOROUGH BANKING CHANNELS, FILED NECESSARY AFFIDAVITS OF THE SHAREHOLDERS OR CONFIRMATIONS OF THE DIRECTORS OF THE SHAREHOLDER COMPANIES, BUT THEREAFTER NO FURTHER INQUIRIES WERE CONDUCTED. THE SECOND SET OF CASES ARE THOSE WHERE THERE WAS EVIDENCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY WAS ONLY A PAPER COMPANY HAVING NO SOURCE OF INCOME, BUT HAD MADE SUBSTANTIAL AND HUGE INVESTMENTS IN THE FORM OF SHARE APPLICATION MONEY. THE ASSESSING OFFICER HAS REFERRED TO THE BANK STATEMENT, FINANCIAL POSITION OF THE RECIPIENT AND BENEFICIARY ASSESSEE AND SURROUNDING CIRCUMSTANCES. THE PRIMARY REQUIREMENTS, WHICH SHOULD BE SATISFIED IN SUCH CASES IS, IDENTIFICATION OF THE CREDITORS/SHAREHOLDER, CREDITWORTHINESS OF CREDITORS/SHAREHOLDER AND GENUINENESS OF THE TRANSACTION. THESE THREE REQUIREMENTS HAVE TO BE TESTED NOT SUPERFICIALLY BUT IN DEPTH HAVING REGARD TO THE HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. 9.1 THE DECISION OF THE HONBLE DELHI HIGH COURT WAS CHALLENGED BY THE ASSESSEE IN THE MATTER OF NDR PROMOTERS PVT. LTD. B EFORE THE HONBLE SUPREME COURT. HOWEVER, THE HONBLE SUPREME COURT HAD DISMISSED THE SLP FILED BY THE ASSESSEE. 19 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 9.2 IF WE LOOK INTO THE FACTS OF THE PRESENT CASE THE DECISION OF THE HONBLE SUPREME COURT (SUPRA.) IN THE MATTER OF NRA IRON & STEEL AND ALSO IN THE MATTER OF NDR PROMOTERS PVT. LTD. WERE NOT AVAILABLE TO THE LD. CIT(APPEALS) FOR COMPLYING AND DECIDING THE ISSUE BASED ON THE RATIO LAID DOWN IN THE SAID TWO DECISIONS. 9.3 IT MAY BE USEFUL TO MENTION HERE THAT THE ASSESSING OFFICER HAD ALSO EXAMINED IN DETAILED THE BASIS OF ARRIVING AT THE SHARE PREMIUM OF RS.190/ - PER SHARE WHICH WAS DISCUSSED BY HIM IN PARAGRAPH 6.12 OF THE ASSESSMENT ORDER AND HAD ALSO EXAMINED THE AUDITORS ON OATH. 9.4 F ROM PERUSAL OF THE ORDER OF THE ASSESSING OFFICER AND THE STATEMENT OF THE AUDITOR , WE ARE OF THE OPINION THAT VALUATION DONE BY THE AUDITOR OF THE COMPANY WAS NOT IN ACCORDANCE WITH LAW AND IS CONTRARY TO THE FACTS AS NO BUSINESS WAS CARRIED OUT BY THE ASSESSEE FOR F.Y.2 009 - 10 AND THERE WAS LOSS IN F. Y. 2010 - 11 AND FURTHER, BUSINESS ACTIVITIES OF THE ASSESSEE WERE COMMENCED IN THE F.Y.2012 - 13. THE BASIS OF PROJECTION GIVEN BY THE CHARTERED ACCOUNTANT AS REPRODUCED HEREIN ABOVE ( PARA 6.12 OF THE AOS ORDER) SHOULD HAVE SCIENTIFIC BASIS OR BASED INDUSTRY PROJECTION OR SHOULD BE SOME SET OF COMPARABLES AND MATERIAL AVAILABLE WITH THE AUDITOR TO ARRIVE AT THE VALUATION. NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE EITHER BEFORE US OR BEFORE THE LOWER AUTHORITIES THE BASIS OF ARRIVING AT THE PROJECTION BY THE AUDITOR . 9.5 THE ASSESSING OFFICER HAS MENTIONED IN PARAS 6.1, 6.1.5, 6.1.2 THAT THE VALUATION OF SHARES OF THE COMPANY DONE BY THE AUDITORS SHRI MUKUND KOKIL WAS INAPPROPRIATE AND WAS NOT IN ACCORDANCE WITH FACTS AND FOR THAT PURPOSE, 20 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 HE HAS METICULOUSLY EXAMINED THE BASIS OF THE PROJECTION USED BY THE SAID AUDITORS. 9.6 IN THE PRESENT CASE, THE AUDITORS HAVE NOT DONE THE VALUATION BASED ON ANY SCIENTIFIC FORMULA OR BASIS. IN FACT, THE ASSESSEE WAS NOT DOING ANY BUSINESS UPTO A.Y. 2009 - 10 EVEN AS PER THE MEGA PROJECT CERTIFICATE ISSUED TO THE ASSESSEE BY DESIGNATED AUTHORITY ON 18 - 2 - 2009 AND THEREAFTER ONLY C REDIT FACILITIES WERE PROVIDED BY THE S.B.I. TO THE ASSESSEE, MEANING THEREBY UPTO 18 - 2 - 2009 THERE WAS NO BUSINESS ACTIVITY OF THE ASSESSEE AND THE ASSESSEE - COMPANY WAS MERELY A PAPER COMPANY . FOR SETTING UP OF THE PROJECT CLEARANCE CERTIFICATE WAS ISSUED ON 18 - 2 - 2009 BY THE INDUSTRIES AND LABOUR DEPARTMENT, GOVERNMENT OF MAHARASHTRA. IN VIEW OF THE ABOVE, WE CAN SAFELY CONCLUDE THAT THE PROJECTION MADE BY THE AUDITORS FOR THE ASSESSEE WAS NOT BASED ON COGENT AND SCIENTIFIC METHOD AS THERE WAS NO HISTORY OF BUSINESS ACTIVITIES UPTO F.Y.2012 - 13 . I N OUR OPINION, IT WOULD BE DIFFICULT TO COMPREHEND AND PROJECT THE VALUE OF THE SHARES BASED ON PROJECT REPORT ONLY . FOR THE PURPOSES OF VALUATION OF SHARES, THE VALUATION IS REQUIRED TO BE DONE ON THE BASIS OF THE BOOK VALUE IN THE BALANCE SHEET OF THE ASSESSEE, LIABILITIES OF THE ASSESSEE , PAID UP EQUITY SHARES, CAPITAL PAID UP VALUE ON SUCH EQUITY SHARES. IN THE PRESENT CASE THE VALUATION WAS DONE BY THE AUDITOR WITHOUT ANY BASIS ON THE PROJECTIONS, WITHOU T THERE BEING ANY CLEARANCE OF SETTING UP OF THE PROJECT BY THE GOVT. OR COMMENCEMENT OF INDUSTRY OR THE SANCTION OF THE CREDIT LIMIT. WE ARE OF THE OPINION THAT THE REPORT OF THE AUDITOR WAS WITHOUT ANY BASIS AND THE OBSERVATIONS OF THE ASSESSING OFFIC ER WAS CORRECT IN REJECTING THE VALUATION REPORT . 9.7 FURTHER, WE MAY ALSO POINT OUT THAT THE INSPECTOR S W ERE DEPUTED BY THE ASSESSING OFFICER AFTER COMING TO KNOW ABOUT THE RECEIPT OF SHARES PREMIUM 21 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 BY THE ASSESSEE, FOR THE PURPOSES OF VERIFYING CREDI T WORTHINESS, IDENTITY AND GENUINENESS OF THE COMPANY. THE REPORT WAS SUBMITTED ON 4 - 2 - 2013 BY THE INSPECTOR AND IN THE REPORT IT WAS CATEGORICALLY MENTIONED THAT THESE COMPANIES WERE THE PAPER COMPANIES AND WERE NOT HAVING OFFICE IN F RA - STRUCTURE. VARIOU S COMPANIES WERE WORKING FROM THE SAME ADDRESS WITH ONLY ONE PEON AS THEIR EMPLOYEE. FURTHER, IT WAS ALSO NOTICED THAT MR. PRAVIN KUMAR JAIN IS THE KEY PERSON BEHIND MOST OF THESE COMPANIES AS IS CLEAR FROM THE REPORT OF THE INSPECTOR. THE REPORT OF THE INSPECTOR IS PART AND PARCEL OF THE ASSESSMENT ORDER. IN OUR OPINION, THE ASSESSEE COMPANY HAS NOT COMMENCED ITS BUSINESS ACTIVITY AT THE TIME OF PREPARATION OF VALUATION REPORT BY THE AUDITOR AND SUBSCRIPTION OF SHARE BY 35 COMPANIES, AS THE CLEARANCE FOR MEGA PROJECT WAS ACCORDED BY THE COMPETENT A UTHORITY ON 18 - 2 - 2009. IT IS PR E POSTEROUS AND AGAINST THE HUMAN PROBABILITY THAT THE THIRD PARTY COMPANY WOULD BUY SHARES WITH SUCH HUGE SHARE PREMIUM OF A PAPER COMPANY WHICH HAS NO BUSINESS BACKGROUND AND TRACK RECORD, WITHOUT LOOKING INTO THE ASSETS, BUSINESS, MODEL AND STRONG FUNDAMENTALS OF THE COMPANY. ALL THESE ASPECTS HAVE BEEN METICULOUSLY EXAMINED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IRONICALLY TH E CIT(A) HAS GLOSSED OVER THE FINDINGS RECORDED BY THE ASSESSING OFFICER . THE LD. CIT(APPEALS) HAD MERELY DECIDED THE APPEAL ON THE LINES OF FINDINGS RECORDED BY THE HONBLE SUPREME COUR T IN THE CASE OF LOVELY EXPORTS . WE DO NOT CONCUR WITH THE VIEW ADOPT ED BY THE CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE. NO EXERCISE WAS CARRIED OUT BY THE LEARNED CIT(A) TO GO INTO THE ROOT OF THE MATTER AND FIND OUT THE ACTUAL BUSINESS CARRIED OUT BY THE ASSESSEE AND THE INVESTING COMPANIES AND HE HAD ALSO NOT EX AMINED THE ISSUES FROM THE PROSPECTIVE OF A PRUDENT BUSINESSMAN , I.E. WHETHER THE 22 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 PRUDENT BUSINESS MAN WOULD LIKE TO INVEST AND BUY SHARES OF A PAPER COMPANY HAVING A NEGATIVE NAV AT A PREM IUM OF RS.190/ - PER SHARE OR NOT. 9. 8 WE HAVE ALSO PERUSED THE ORDER OF THE LD. CIT(APPEALS) . IN FACT , LD. CIT(APPEALS) HAS NOT DEALT WITH ANY OF THE FINDINGS RECORDED BY THE ASSESSING OFFICER ON MERIT WHEREBY HE HAD BROUGHT ON RECORD THE FINANCIAL STATUS OF THESE COMPANIES, THE WORKING OF THESE COMPANIES FROM THE SA ME PREMISES THROUGH THE KEY PERSON . THE LD. CIT(APPEALS) HAS NOT DISCUSSED ANYTHING WITH RESPECT TO THE REPORT OF THE INSPECTOR AND OPERATION OF THESE COMPANIES BEING CARRIED OUT BY SHRI PRAVEEN KUMAR JAIN. IN FACT, THE ENTIRE FOCUS OF THE LD. CIT(APPEALS) WAS ON THE DECISION IN THE MATTER OF CIT V. LOVELY EXPORTS PVT. LTD. (SUPRA.) AND ALSO CIT VS. CREATIVE WORLD TELEFILMS LTD. (SUPRA.). 9.9 IN OUR VIEW , BOTH THESE JUDGMENTS, WHICH WERE RELIED UPON BY THE LD. CIT(APPEALS) WERE DISCUSSED AND DELIBERATE BY THE HONBLE SUPREME COURT IN THE MATTER OF PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD (SUPRA.) AND ALSO IN THE MATTER OF PCIT VS. NDR PROMOTERS PVT. LTD. ITA NO.49/2018 DATED 17.01.2019 B Y THE HONBLE DELHI HIGH COURT AGAINST WHICH APPEAL FILED BY THE ASSESSEE WAS DISMISSED BY THE HONBLE SUPREME COURT. THEREFORE, WE ARE OF THE OPINION THAT ONCE THE HONBLE SUPREME COURT IN THE MATTER OF PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD (SUPRA.) HAS CONSIDERED AND DISCUSSED THE DECISION OF THE HONBLE DELHI HIGH COURT THEN RELIEF OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IS OF NO USE. HIGHER WISDOM IS REQUIRED TO BE GIVEN AWAY AND THE MATTER SHOULD BE DECIDE D ON THE BASIS OF THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER OF NRA IRON & STEEL PVT . LTD. 23 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 9.10 WE ALSO FIND THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD (SUPRA.) AS WELL AS PCIT VS. NDR PROMOTERS PVT. LTD. (SUPRA.) AS MENTIONED BY THE ASSESSING OFFICER WHICH WERE NOT CONTROVERTED BY THE LD. AR DURING THE COURSE OF ARGUMENT. IN FACT IN THE ENQUIRY REPORT SUBMITTED BY THE INSPECTOR, IT IS CLEARLY M ENTIONED THAT 11 COMPANIES ARE FUNCTIONING FROM THE SAME OFFICE. THERE WAS A BOARD OF ADVOCATE SHRI JAGDISH PRASAD PUROHIT WAS DISPLAYED OUTSIDE THE CHAMBER NO.105. THERE WERE NO OFFICE ACTIVITIES. BARRING ONE PC AND PRINTER, NO FILES/FOLDERS WERE KEPT IN THE OFFICE. FURTHER, WHEN THE INSPECTOR ASKED ONE STAFF WHO WORK FOR THESE COMPANIES, HE TOLD THAT HE ALONE MANAGES NOT ONLY THESE EIGHT COMPANIES BUT ALSO MANY COMPANIES AND AT PRESENT HE IS THE DIRECTOR OF ONE COMPANY I.E. KUMAO ENGINEERING COMPANY LTD AND HE IS THE KEY PERSON IN ALL THESE COMPANIES. IT WAS FURTHER REPORTED THAT THE SHRI PRAVEEN KUMAR JAIN IS A PERSON BEHIND ALL THESE COMPANIES. 9. 11 FURTHER , WE FIND THAT AFTER PASSING THE DECISION OF HONBLE SUPREME COURT IN THE MATTER OF PRINCIPAL CO MMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD (SUPRA.), THE HONBLE DELHI HIGH COURT RELIED UPON ON THE SAID DECISION IN THE CASES OF I) M/S. RDS PROJECT LIMITED VS. ACIT WP(C) NO.11274/19 DATED 23.10.2019 AND II) M/S. VEDANTA LIMITED VS. ACIT, WP(C) NO.13036/2019 DATED 20.12.2019. IN VIEW OF THE SUBSEQUENT DECISIONS BY DELHI HIGH COURT, IN THE IDENTICAL FACTS, IT WOULD BE OF NO USE FOR THE LD. AR TO RELY UPON THE FINDINGS GIVEN BY THE CO - ORDINATE BENCHES BY FILING CHART GIVING THE DE TAILS OF THE 25 CASES OF THE TRIBUNAL. IT NEEDS NO ADJUDICATION THAT ONCE THE FACTS OF THE CASE ARE SQUARELY COVERED BY THE HONBLE HIGH COURT OR SUPREME COURT THEN THE SAID DECISION S WOULD HAVE THE PRESIDENCY VALUE RATHER THAN THE DECISION OF THE TRIBUNAL . 24 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 9.12 . IN OUR VIEW, OBJECTION POINTED OUT BY THE LD. AR OF THE ASSESSEE IN SUPPORT OF HIS CONTENTION THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER OF PRINCIP AL COMMISSIONER OF INCOME TAX ( CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD. (SUPRA) IS HELD TO BE DISTINGUISHED, HAS NO LEG TO STAND AS THE HONBLE DELHI HIGH COURT IN THE MATTER OF M/S. VEDANTA LIMITED VS. ACIT (SUPRA.) AND ALSO IN THE MATTER OF M/S. RDS PROJECT LIMITED VS. ACIT (SUPRA.), HAS CATEGORICALLY RELIED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE MATTER OF PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD. (SUPRA) AND HAD EXAMINED THE APPLICABILITY OF NRA IRON AND STEEL PVT. LTD. (SUPRA.) . 9. 1 3 AS MENTIONED H EREIN ABOVE, THE DECISION OF THE LD. CIT(APPEALS) WAS REVOLVING AROUND THE APPLICABILITY OF THE DECISION S IN THE MATTER OF LOVELY EXPORTS PVT. LTD. VS. CIT (SUPRA.) AND ALSO IN THE MATTER OF CIT VS. CREATIVE WORLD TELEFILMS LTD. (SUPRA.) WHICH ARE NO MORE B INDING DECISION. 10 . THEREFORE, IN THE LIGHT OF THE ABOVE DISCUSSION, WE DEEM IT APPROPRIATE TO REMAND THIS MATTER TO THE FILE OF LD. CIT(APPEALS) TO DECIDE THE APPEAL IN ACCORDANCE WITH THE DECISION OF THE HONBLE SUPREME COURT (SUPRA.) IN THE MATTER OF NRA IRON & STEEL PVT. LTD. (SUPRA) AND ALSO IN THE MATTER OF NDR PROMOTERS PVT. LTD. (SUPRA.) 11 . NEEDLESS TO SAY, THE PRIMARY ONUS TO PROVE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE 35 SHAREHOLDERS COMPANIES IS ON THE ASSESSE E AS PER PARAMETER MENTIONED IN PARA 11 OF THE DECISION IN THE MATTER OF PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 VS. NRA IRON & STEEL PVT. LTD. (SUPRA) PARA 13 OF THE NDR PROMOTERS PVT. LTD. (SUPRA. 25 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 DELHI HIGH COURT). T HE ASSESSEE IS REQUIRED TO DISCHARGE THE SAME. IN THE LIGHT OF ABOVE, WE DIRECT THE LD. CIT(APPEALS) TO DECIDE THE ISSUE AFRESH AFTER FOLLOWING THE LAW LAID DOWN BY THE HONBLE SUPREME COURT (SUPRA.) IN PARA 11 AND ALSO IN ACCORDANCE WITH THE RATIO LAID DOWN BY THE HONBLE DELHI HI GH COURT IN THE MATTERS OF M/S. VEDANTA LIMITED VS. ACIT (SUPRA.) AND M/S. RDS PROJECT LIMITED VS. ACIT (SUPRA.). THE LD. CIT(APPEALS) IS ALSO DIRECTED TO DECIDE THE MATTER EXPEDITIOUSLY WITH A PERIOD OF SIX MONTHS AFTER PROVIDING REASONABLE OPPORTUNITY O F HEARING TO THE ASSESSEE AND ALSO TO THE ASSESSING OFFICER, AS THE CASE MAY BE. NEEDLESS TO SAY, PRINCIPLES OF NATURAL JUSTICE SHOULD BE MAINTAINED AND OPPORTUNITY OF HEARING SHALL BE GRANTED TO THE ASSESSEE BY THE LD. CIT(APPEALS). 12 . IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.2261/PUN/2014 FOR ASSESSMENT YEAR 2010 - 11 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO S .226 0 & 2262 /PUN/2014 A.Y S . 20 09 - 10 & 2011 - 12 13 . THE GROUNDS AND FACTS IN THESE TWO APPEALS ARE SIMILAR TO THE FACTS AS APPEARED IN I TA NO.2261/PUN/2014 FOR ASSESSMENT YEAR 2010 - 11 AND THEREFORE, OUR DECISION RENDERED IN ITA NO.2261/PUN/2014 SHALL MUTATIS - MUTANDIS APPLY IN THESE TWO APPEALS ALSO WITH SIMILAR DIRECTIONS AS REFERRED IN ITA NO.2261/PUN/2014. THUS, THE ISSUE S RAISED IN BOTH THESE APPEALS ARE REMITTED BACK TO THE FILE OF THE LD. CIT(APP E ALS) FOR FRESH ADJUDICATION AS PER LAW. 14 . IN THE RESULT, APP EALS OF THE REVENUE IN ITA NOS. 2260 & 2262/PUN/2014 FOR ASSESSMENT YEARS 2009 - 10 & 2011 - 12 ARE ALLOWED FOR STATISTICAL PURPOSES . 26 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 15 . IN THE COMBINED RESULT, ALL THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 04 TH DAY OF FEBRUARY , 20 20 . SD/ - SD/ - D. KARUNAKARA RAO LALIET KUMAR ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 04 TH FEBRUARY , 2020. SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 2, NASHIK. 4. THE CIT - 2, NASHIK. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 27 ITA NOS.2260, 2261 & 2262/PUN/2014 A.Y S . 2009 - 10, 2010 - 11 & 2011 - 12 DATE 1 DRAFT DICTATED ON 03.02 .2020 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 04 . 0 2 .20 20 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER