A.R. Leasing Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2263/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7074 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: SURESH ANANTHARAMAN
• Keywords: Unexplained cash credit; Earning of tax free income; Question of law; Competent authority
• Section: 14A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 2262/DEL/2013 2262/DEL/2013 2262/DEL/2013 2262/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009 - -- - 10 1010 10 M/S ANSHIKA INVESTMENTS M/S ANSHIKA INVESTMENTS M/S ANSHIKA INVESTMENTS M/S ANSHIKA INVESTMENTS PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., 305, 5 305, 5 305, 5 305, 5 TH THTH TH FLOOR, FLOOR, FLOOR, FLOOR, BHAN BHAN BHAN BHANOT CORNER, OT CORNER, OT CORNER, OT CORNER, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, GREATER KAILASH GREATER KAILASH GREATER KAILASH GREATER KAILASH- -- -I, I,I, I, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 048. 110 048. 110 048. 110 048. PAN : AAACB0113E. PAN : AAACB0113E. PAN : AAACB0113E. PAN : AAACB0113E. VS. VS. VS. VS. COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX (APPEALS) (APPEALS) (APPEALS) (APPEALS) III, III,III, III, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO .3440/DEL/2013 .3440/DEL/2013 .3440/DEL/2013 .3440/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009 - -- - 10 1010 10 DEPUTY COMMISSION DEPUTY COMMISSION DEPUTY COMMISSION DEPUTY COMMISSION ER OF ER OF ER OF ER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -18, 18, 18, 18, ROOM NO.327, 3 ROOM NO.327, 3 ROOM NO.327, 3 ROOM NO.327, 3 RD RDRD RD FLOOR, FLOOR, FLOOR, FLOOR, ARA CENTRE, E ARA CENTRE, E ARA CENTRE, E ARA CENTRE, E- -- -2, 2,2, 2, JHANDEWALAN EXTN., JHANDEWALAN EXTN., JHANDEWALAN EXTN., JHANDEWALAN EXTN., NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S ANSHIKA INVESTMENTS PVT.LTD., M/S ANSHIKA INVESTMENTS PVT.LTD., M/S ANSHIKA INVESTMENTS PVT.LTD., M/S ANSHIKA INVESTMENTS PVT.LTD., 305, 5 305, 5 305, 5 305, 5 TH THTH TH FLOOR, FLOOR, FLOOR, FLOOR, BHANOT CORNER, BHANOT CORNER, BHANOT CORNER, BHANOT CORNER, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, GREATER KAILASH GREATER KAILASH GREATER KAILASH GREATER KAILASH- -- -I, I,I, I, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 048. 110 048. 110 048. 110 048. PAN : AAACB0113E. PAN : AAACB0113E. PAN : AAACB0113E. PAN : AAACB0113E. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO S.2263/DEL/2013, 6968/DEL/2014 & 6969/DEL/2014 S.2263/DEL/2013, 6968/DEL/2014 & 6969/DEL/2014 S.2263/DEL/2013, 6968/DEL/2014 & 6969/DEL/2014 S.2263/DEL/2013, 6968/DEL/2014 & 6969/DEL/2014 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2009 2009 2009 2009 - -- - 10, 2010 10, 2010 10, 2010 10, 2010 - -- - 11 & 2011 11 & 2011 11 & 2011 11 & 2011 - -- - 12 1212 12 M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., 305, 3 305, 3 305, 3 305, 3 RD RDRD RD FLOOR, FLOOR, FLOOR, FLOOR, BHANOT CORNER, BHANOT CORNER, BHANOT CORNER, BHANOT CORNER, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, GREATER KAILASH GREATER KAILASH GREATER KAILASH GREATER KAILASH- -- -I, I,I, I, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 048 110 048 110 048 110 048. .. . PAN : AAACA0423A. PAN : AAACA0423A. PAN : AAACA0423A. PAN : AAACA0423A. VS. VS. VS. VS. COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX COMMISSIONER OF INCOME TAX (APPEALS) (APPEALS) (APPEALS) (APPEALS) III, III,III, III, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA-2262/D/2013 & 5 OTHERS 2 ITA NO ITA NO ITA NO ITA NO .3438/DEL/2013 .3438/DEL/2013 .3438/DEL/2013 .3438/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009 - -- - 10 1010 10 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -18, 18, 18, 18, ROOM NO.327, 3 ROOM NO.327, 3 ROOM NO.327, 3 ROOM NO.327, 3 RD RDRD RD FLOOR, FLOOR, FLOOR, FLOOR, ARA ARA ARA ARA CENTRE, E CENTRE, E CENTRE, E CENTRE, E- -- -2, 2,2, 2, JHANDEWALAN EXTN., JHANDEWALAN EXTN., JHANDEWALAN EXTN., JHANDEWALAN EXTN., NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., 305, 3 305, 3 305, 3 305, 3 RD RDRD RD FLOOR, FLOOR, FLOOR, FLOOR, BHANOT CORNER, BHANOT CORNER, BHANOT CORNER, BHANOT CORNER, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, PAMPOSH ENCLAVE, GREATER KAILASH GREATER KAILASH GREATER KAILASH GREATER KAILASH- -- -I, I,I, I, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 048. 110 048. 110 048. 110 048. PAN : AAACA0423A. PAN : AAACA0423A. PAN : AAACA0423A. PAN : AAACA0423A. (APPELLANT) (RESPONDENT) ASSESSEES BY : SHRI SURESH ANANTH ARAMAN, CA. REVENUE BY : SHRI S.K. JAIN, DR. DATE OF HEARING : 16.08.2016 16.08.2016 16.08.2016 16.08.2016 DATE OF PRONOUNCEMENT : 05.09.2016 05.09.2016 05.09.2016 05.09.2016 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THESE APPEALS BY THE ASSESSEES AND THE REVENUE FOR THE ASSESSMENT YEARS 2009-10, 2010-11 & 2011-12 ARE DIRECTED AGAINST SEPARATE ORDERS OF LEARNED CIT(A)-III, NEW DELHI DATE D 7 TH MARCH, 2013 AND 14 TH NOVEMBER, 2014. ITA NO.3440/DEL/2013 ITA NO.3440/DEL/2013 ITA NO.3440/DEL/2013 ITA NO.3440/DEL/2013 REVENUES APPEAL FOR AY 2009 REVENUES APPEAL FOR AY 2009 REVENUES APPEAL FOR AY 2009 REVENUES APPEAL FOR AY 2009- -- -10 1010 10 IN M/S ANSHIKA IN M/S ANSHIKA IN M/S ANSHIKA IN M/S ANSHIKA INVESTMENTS PVT.LTD. INVESTMENTS PVT.LTD. INVESTMENTS PVT.LTD. INVESTMENTS PVT.LTD. : :: :- -- - 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS APPE AL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,00,00,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. ITA-2262/D/2013 & 5 OTHERS 3 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTED B Y THE LEARNED DR THAT DURING THE ACCOUNTING YEAR RELEVANT TO ASSESSME NT YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS RAISED THE SHARE CA PITAL OF `4 CRORES BY ISSUING THE SHARE OF `100/- EACH AT A PREMIU M OF `39,900/- PER SHARE. THAT THE ASSESSEE IS A PRIVATE LIMITED COMPAN Y AND THERE CANNOT BE ANY JUSTIFICATION FOR SUCH A HUGE PREMIUM. THAT M/S ADHYAY EQUI PREF PVT.LTD. (HEREINAFTER REFERRED TO AS AEPP L) CLAIMED TO HAVE ACQUIRED SUCH SHARES FROM THE ASSESSEE BY INVESTING HUGE SUM OF `4 CRORES JUST FOR 1,000 EQUITY SHARES OF `100/- EACH. TH E ASSESSEE COULD NOT GIVE ANY SATISFACTORY EXPLANATION FOR SUCH A HIGH PREMIUM. THAT ON INVESTIGATION OF BANK ACCOUNT OF AEPPL, IT IS NOTICED THAT THERE WAS A MEAGER BALANCE IN THE BANK ACCOUNT ON THE DATE OF I SSUE OF `4 CRORES TO THE ASSESSEE. THERE HAS BEEN CREDIT OF `12 CRORES ON THE SAME DAY AGAINST WHICH CHEQUES TO THE ASSESSEE AND TWO OTHER ENTI TIES WERE ISSUED. ON THESE FACTS, THE ASSESSING OFFICER RIGHTLY TREA TED THE CREDIT OF `4 CRORES AS UNEXPLAINED AND MADE THE ADDITION THE RE FOR. LEARNED CIT(A) DELETED THE ADDITION WITHOUT PROPERLY APPREC IATING THE FACTS OF THE CASE. HE, THEREFORE, SUBMITTED THAT THE ORDER OF LEARNED CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, POINTED OUT THAT THE IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE ITA T IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 WHEREIN THE SIMILAR ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN THE CASE OF THE AS SESSEE AND OTHER GROUP COMPANIES. IN THAT YEAR ALSO, THE SHARES O F `100/- WERE ALLOTTED AT A PREMIUM OF `39,900/-. THE ITAT, VIDE ORDER DATED 31 ST DECEMBER, 2013 IN ITA NO.2749/DEL/2010, AFTER CONSID ERING ALL THE FACTS, HAS UPHELD THE ORDER OF LEARNED CIT(A) WHEREIN THE CREDIT OF SHARE CAPITAL WAS TREATED AS EXPLAINED. THAT REVENUE HAD FILED THE APPEAL BEFORE HON'BLE JURISDICTIONAL HIGH COURT AGAI NST THE ABOVE ORDER ITA-2262/D/2013 & 5 OTHERS 4 OF THE TRIBUNAL. HON'BLE JURISDICTIONAL HIGH COURT, VIDE ORDER DATED 16 TH APRIL, 2015 IN ITA NO.523/2014, DISMISSED THE APPEAL O F THE REVENUE. HE FURTHER STATED THAT THE ASSESSEE AND OTHER FOUR PRIVA TE LIMITED COMPANIES ARE HOLDING THE MAJOR EQUITY STAKES IN THE U FLEX GROUP OF COMPANIES. THE ASSESSEE HAS REFERRED TO ITS PAPER BOOK W HERE THERE IS CALCULATION OF NET WORTH OF THE THREE COMPANIES AND SHAREHOLDING PATTERN OF THE GROUP AND HAS POINTED OUT THAT THE V ALUE OF EACH SHARE COMES TO `40,616/-. HE, THEREFORE, STATED THAT THE I SSUE OF PER SHARE AT `40,000/- WAS QUITE JUSTIFIED AND IT WAS AT A LESSER RA TE THAN THE BOOK VALUE OF THE ASSETS OF THE COMPANY WHICH ARE ULTIMATEL Y HELD BY THESE PRIVATE LIMITED COMPANIES. HE FURTHER POINTED OUT T HAT THE ACTUAL MARKET VALUE OF THE ASSETS HELD BY UFLEX GROUP OF COMP ANIES IS MUCH MORE THAN THE BOOK VALUE. IF THE LAND OF UFLEX GRO UP OF COMPANIES AT NOIDA IS VALUED AS PER MARKET VALUE ON THE BASIS OF STA MP DUTY VALUATION BY THE COMPETENT AUTHORITY, THEN THE LAND ITSELF IS WORTH MORE THAN `2,000 CRORES WHILE ITS BOOK VALUE IS ONLY ` 38.17 CRORES. THUS, THE ISSUE OF SHARES AT `40,000 PER SHARE IS AT A MUC H LESSER RATE THAN THE WORTH OF THE ASSETS ULTIMATELY CONTROLLED BY THESE PRIVATE LIMITED COMPANIES. HE ALSO STATED THAT THESE SHARES ACQU IRED BY AEPPL HAVE NOT BEEN SOLD TILL DATE. HE ALSO REFERRED TO THE BALANCE SHEET OF AEPPL AND POINTED OUT THAT THE WORTH OF AEP PL IS MORE THAN `100 CRORES WHICH HAS MAINLY BEEN INVESTED IN SHARES. H E FURTHER POINTED OUT THAT THE CREDIT IN THE ACCOUNT OF AEPPL ON THE DATE OF ISSUE OF CHEQUE AND OTHER CONCERN WAS OUT OF THE SALE PROCE EDS OF SHARES OF ANOTHER COMPANY. THUS, AEPPL HAS SOLD THE SHARES OF SOME OTHER COMPANIES AND INVESTED IN THE ASSESSEE AND TWO OTHER CONC ERNS. HE ALSO REFERRED TO THE INCOME TAX RETURNS OF AEPPL, COP Y OF WHICH IS PLACED AT PAGE 161 OF THE ASSESSEES PAPER BOOK. HE FUR THER REFERRED TO THE CERTIFICATE OF INCORPORATION OF AEPPL AND PO INTED OUT THAT THE SAID COMPANY IS IN EXISTENCE SINCE 1994 AND IS REGULARLY INVESTING IN ITA-2262/D/2013 & 5 OTHERS 5 THE SHARES OF VARIOUS COMPANIES. HE, THEREFORE, SUBMITT ED THAT THE ASSESSEE HAS DULY ESTABLISHED THE IDENTITY, CREDITWORTHINE SS AND GENUINENESS OF TRANSACTIONS OF AEPPL. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES AND HAVE PERUSED THE MATERIAL PLACED BEFORE US. ADMI TTEDLY, THE ONUS IS UPON THE ASSESSEE TO PROVE THE CREDIT IN ITS BOOKS OF A CCOUNT WHETHER BY WAY OF LOAN OR SHARE CAPITAL. TO DISCHARG E SUCH ONUS, THE ASSESSEE HAS TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDER AND THE GENUINENESS OF THE TRANSACTION. IN THIS CASE, THERE IS NO DISPUTE WITH REGARD TO THE IDENTITY OF THE SHARE APPLICANT. HOWEVER, THE ASSESSING OFFICER DOUBTED THE CREDITWORTHI NESS OF THE SHARE APPLICANT AS WELL AS GENUINENESS OF THE TRANSACTIO N. AT THE OUTSET, WE MAY POINT OUT THAT THIS ISSUE IS SQUARELY COV ERED BY THE DECISION OF ITAT AS WELL AS HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE. WE FIND THAT IN ASSESSMENT YEAR 2006-0 7, SIMILAR ADDITIONS WERE MADE IN THE CASE OF THE ASSESSEE A ND OTHER GROUP CONCERN. WE FIND THAT IN THE CASE OF THE ASSESSEE , THERE WAS TOTAL CREDIT BY WAY OF SHARE CAPITAL AMOUNTING TO `1 2,78,60,000/-. IN THAT YEAR ALSO, THE SHARE OF `100/- WAS SOLD AT A PREM IUM OF `39,900/-. THE ASSESSING OFFICER MADE THE ADDITION TREATING THE CR EDIT BY WAY OF SHARE CAPITAL AS UNEXPLAINED. THE SAME WAS DELETED BY THE CIT(A). HENCE, THE REVENUE WAS IN APPEAL. THE ITAT, VIDE OR DER DATED 31 ST DECEMBER, 2013 IN ITA NO.2749/DEL/2010, SUSTAINED THE ORDER OF LEARNED CIT(A). THE REVENUE FILED THE APPEAL BEFOR E HON'BLE JURISDICTIONAL HIGH COURT AND HON'BLE JURISDICTIONAL HIGH COURT IN ITA NO.523/2014 VIDE ORDER DATED 16 TH APRIL, 2015 SUSTAINED THE ORDER OF THE ITAT. THE RELEVANT FINDING OF HON'BLE JURISDICT IONAL HIGH COURT READS AS UNDER:- ITA-2262/D/2013 & 5 OTHERS 6 6. THE ONUS CAST UPON THE ASSESSEE UNDER SECTION 68 OF THE ACT TO SATISFY THE DEPARTMENT ABOUT THE TRUE IDEN TITY OF AN INVESTOR, ITS CREDITWORTHINESS AND GENUINENESS OF A TRANSACTION WAS EXPLAINED BY THE SUPREME COURT IN CIT VS. LOVELY EXPORTS (P) LTD., 216 CTR 295. WHILST, THE A O ACTED LEGITIMATELY IN ENQUIRING INTO THE MATTER, THE INFE RENCES DRAWN BY HIM WERE NOT JUSTIFIED AT ALL IN THE CIRCU MSTANCES OF THE CASE. WHETHER THE ASSESSEE COMPANY CHARGED A HIGHER PREMIUM OR NOT SHOULD NOT HAVE BEEN THE SUBJE CT MATTER OF THE ENQUIRY IN THE FIRST INSTANCE. INSTEAD THE ISSUE WAS WHETHER THE AMOUNT INVESTED BY THE SHARE APPLICANTS WERE FROM LEGITIMATE SOURCES. THE OBJECTIO N OF SECTION 68 IS TO AVOID INCLUSION OF AMOUNT WHICH ARE SUSPECT. THEREFORE, THE EMPHASIS ON GENUINENESS OF ALL THE THREE ASPECTS, IDENTITY, CREDITWORTHINESS AND THE TRANSACTION. WHAT IS DISQUIETING IN THE PRESENT CASE IS WHEN THE ASSESSMENT WAS COMPLETED ON 31.12.2007, THE INVESTIGATION REPORT WHICH WAS SPECIFICALLY CALLED FR OM THE CONCERNED DEPARTMENT IN KOLKATA WAS AVAILABLE BUT N OT DISCUSSED BY THE AO. HAD HE CARED TO DO SO, THE IDENTI TY OF THE INVESTORS, THE GENUINENESS OF THE TRANSACTION AND TH E CREDITWORTHINESS OF THE SHARE APPLICANTS WOULD HAVE BEE N APPARENT. EVEN OTHERWISE, THE SHARE APPLICANTS PARTICULARS WERE AVAILABLE WITH THE AO IN THE FORM O F BALANCE SHEETS INCOME TAX RETURNS, PAN DETAILS ETC. WH ILE ARRIVING AT THE CONCLUSION THAT HE DID, THE AO DID N OT CONSIDER IT WORTHWHILE TO MAKE ANY FURTHER ENQUIRY B UT BASED HIS ORDER ON THE HIGH NATURE OF THE PREMIUM AND CERTAIN FEATURES WHICH APPEARED TO BE SUSPECT, TO DETERMINE THAT THE AMOUNT HAD BEEN ROUTED FROM THE ASSESSEES ACCOUNT TO THE SHARE APPLICANTS ACCOUNT. AS HELD CONCURRENTLY BY THE CIT (APPEALS) AND THE ITAT, THESE CONCLUSIONS WERE CLEARLY BASELESS AND FALSE. THIS COURT IS CONSTRAINED TO OBSERVE THAT THE AO UTTERLY FAILED TO COMPLY WITH HIS DUTY CONSIDERS ALL THE MATERIALS ON RECORD, IG NORING SPECIFICALLY THE MOST CRUCIAL DOCUMENTS. WE PLACE THE SE OBSERVATIONS ON THE RECORD AND DIRECT A COPY OF THE JUDGMENT TO BE FURNISHED TO THE CONCERNED INCOME TAX AUTHORITIES FOR APPROPRIATE ACTION TOWARDS REFLECTING THESE OBSERVATIONS SUITABLY IN SERVICE RECORD OF THE CONCERNE D AO TO AVOID SUCH INSTANCES IN THE FUTURE. 7. FOR THE ABOVE REASONS, THIS COURT IS OF THE OPINION THAT THE CONCURRENT FINDINGS OF FACT, AS TO THE TRUE IDENTITY ITA-2262/D/2013 & 5 OTHERS 7 OF THE SHARE APPLICANTS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION, ARE BASED ON SOUND REASONING AND DO NOT CALL FOR INTERFERENCE. NO SUBSTA NTIAL QUESTION OF LAW ARISES. THE APPEALS ARE DISMISSED. 6. THE FACTS OF THE YEAR UNDER CONSIDERATION ARE IDEN TICAL AND, THEREFORE, THE RATIO OF THE ABOVE DECISION OF THE IT AT AS WELL AS HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE WOULD BE SQUARELY APPLICABLE. HOWEVER, FOR THE SAKE OF COMPLETENESS, WE WISH TO MENTION THE FACTS OF THIS YEAR AS WELL. AT PAGE 161 O F THE ASSESSEES PAPER BOOK, THERE IS COPY OF INCOME TAX RETURN OF AE PPL WHEREIN THE INCOME OF MORE THAN `30 LAKHS HAS BEEN DISCLOSED. AT P AGE 166 OF THE ASSESSEES PAPER BOOK, THERE IS BALANCE SHEET FROM WHICH W E FIND THAT THE SHARE CAPITAL IS `7.16 CRORES AND RESERVES AND SURPL US IS `96.48 CRORES. THUS, THE NET WORTH OF THE SHARE APPLICANT CO MPANY IS `103.64 CRORES WHICH IS MAINLY INVESTED IN SHARES. THE COMPANY WAS INCORPORATED IN THE YEAR 1994 FOR WHICH CERTIFICATE OF INCORPORATION IS PLACED ON RECORD. THE AMOUNT HAS BEEN PAID BY CHEQ UE. COPY OF BANK STATEMENT IS ALSO PLACED ON RECORD. THE ASSESSING OFFICER DOUBTED THE CREDITWORTHINESS ON THE GROUND THAT BEFORE THE ISSUE OF CHEQUE TO THE ASSESSEE COMPANY, THERE WAS CREDIT OF `12 CRORES IN THE ACCOUNT OF AEPPL. HOWEVER, WE FIND THAT SUCH CREDIT WAS BY WAY OF SALE OF SHARES OF ANOTHER COMPANY. AEPPL HAS INVESTMENT OF ABOUT ` 100 CRORES IN SHARES AND, THEREFORE, IF THE SAID COMPANY HAS SOLD THE SHARES OF ONE COMPANY AND INVESTED IN ANOTHER COMPANY, THE CREDITW ORTHINESS CANNOT BE DOUBTED. THEREFORE, WE HOLD THAT CREDITW ORTHINESS OF AEPPL WAS DULY ESTABLISHED. 7. COMING TO THE GENUINENESS OF TRANSACTIONS, THE ASSESSING OFFICER HAS DOUBTED THE GENUINENESS MAINLY ON THE GROUND THAT SHARE PREMIUM WAS TOO HIGH. APPARENTLY, IT LOOKS SO. HOWEV ER, THE ASSESSEE ITA-2262/D/2013 & 5 OTHERS 8 HAS EXPLAINED WHY THE SHARE PREMIUM IS SO HIGH. THE ASSE SSEE HAS EXPLAINED THAT APPELLANT COMPANY IS ONE OF THE PROMO TERS OF UFLEX GROUP OF COMPANIES. THE ASSESSEE COMPANY ALONG WITH THE OTHER CO- PROMOTERS HAS PROMOTED VARIOUS OPERATING COMPANIES OF F LEX GROUP. THE MAJOR COMPANIES PROMOTED BY ASSESSEE COMPANY ARE :- (I) UFLEX LTD. (II) FLEX FOODS LTD. (III) ULTIMATE FLEXIPACK LTD. 8. THE FIRST TWO COMPANIES ARE LISTED IN THE STOCK EXCH ANGES AND THIRD ONE IS AN UNLISTED MANUFACTURING COMPANY. THE ASSESSEE COMPANY ALONG WITH OTHER FOUR INVESTMENT COMPANIES IS HOLDING MAJOR EQUITY STAKES IN THE OPERATING COMPANIES OF THE UFLEX GROUP AND EVEN IN SOME CASES HOLDING 100% EQUITY SHARES. THESE FIVE COM PANIES INCLUDING THE ASSESSEE COMPANY ARE FURTHER SHAREHOLDER IN EACH OTHER AND HOLDING ALMOST 97 TO 98% OF SHARES HOLDING IN EACH OTHER. THE REMAINING SHAREHOLDERS ARE THE INDIVIDUAL PROMOTERS A ND OUTSIDE SHAREHOLDERS. SINCE ALL THESE INVESTMENT COMPANIES ARE CROSS HOLDING THE SHARES OF EACH OTHER, HENCE ANY OUTSIDER BY BECOMI NG SHAREHOLDER IN ANY OF THESE COMPANIES ALSO AUTOMATICALLY BECOMES TH E SHAREHOLDER IN THE OTHER FOUR COMPANIES. IN NUTSHELL, IF A PERSON BECOMES SHAREHOLDER IN THE ASSESSEE COMPANY, IT AUTOMATICALLY BE COMES SHAREHOLDER IN THE REMAINING FOUR HOLDING COMPANIES. HE FURTHER SUBMITTED THAT IF THE NET BOOK VALUE OF THE ASSETS IS D IVIDED BY THE NUMBER OF SHARES OF THE ASSESSEE COMPANY, THE WORTH OF EA CH SHARE IS MORE THAN `40,000/-. IN THIS REGARD, HE FURNISHED T HE FOLLOWING WORKING:- ITA-2262/D/2013 & 5 OTHERS 9 AMOUNT IN LAC AS ON 31 ST MARCH 2009 2009 2008 TOTAL ASSETS : 7890.06 9819.24 LESS : LIABILITIES 1806.25 1604.27 SECURED LOANS UNSECURED LOANS 1806.25 1604.27 BOOK NET WORTH 6083.81 8214.97 NO. OF SHARES HOLDING OF DIFFERENT SHAREHOLDING GROUPS IN AIPL 2009 2008 MAIN PROMOTER GROUP 9250 9250 OLD SHAREHOLDERS : EXCLUDING MAIN PROMOTER GROUP 4729 4729 NEW SHAREHOLDER M/S ADHYAY EQUIPREF PVT.LTD. 1000 0 TOTAL SHARES 14979 13979 VALUE OF PER SHARE (IN RS.) 40616 58767 AMOUNT IN LAC BOOK NET WORTH BELONGS TO DIFFERENT 2009 2008 SHAREHOLDING GROUP : MAIN PROMOTER GROUP 3756.94 OLD SHAREHOLDERS : EXCLUDING MAIN PROMOTER GROUP 1920.71 NEW SHAREHOLDER M/S ADHYAY EQUIPREF PVT.LTD. 406.16 9. FROM THE ABOVE, IT IS EVIDENT THAT THE VALUE OF E ACH SHARE IS WORKED OUT AT `40,616/-. THUS, APPARENTLY, HIGHER S HARE PREMIUM OF `39,900/- IS JUSTIFIABLE BECAUSE OF LIMITED NUMBER OF SHARES OF THE ASSESSEE COMPANY WHO ARE ACTUAL OWNER OF ASSETS OF WORTH MORE THAN `60 CRORES. MOREOVER, IN THE EARLIER YEAR ALSO, THE SHARES WERE ALLOTTED ITA-2262/D/2013 & 5 OTHERS 10 AT A PREMIUM OF `39,900/- PER SHARE AND IN AY 2006-0 7, THE ASSESSING OFFICER EVEN GOT THE VERIFICATION MADE THROUGH THE INVESTIGATION WING OF KOLKATA AND THE ITAT HAS ACCEPTED THE CREDIT IN T HE FORM OF SHARE CAPITAL AFTER CONSIDERING THE REPORT OF INVESTIGATION WING OF KOLKATA. HON'BLE JURISDICTIONAL HIGH COURT HAS ALSO UPHELD THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 AFTER TAKI NG DUE NOTE OF HIGH SHARE PREMIUM. IN VIEW OF THE ABOVE, W E ARE OF THE OPINION THAT CONSIDERING THE FACTS OF THE CASE, THE GE NUINENESS OF THE TRANSACTIONS IS DULY ESTABLISHED. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE HAS DULY DISCHARGED THE ONUS OF PROVING THE CREDI T OF SHARE CAPITAL IN ITS ACCOUNT AND LEARNED CIT(A) WAS FULLY J USTIFIED IN ACCEPTING THE SAME AND IN DELETING THE ADDITION. ITA NO. ITA NO. ITA NO. ITA NO.2262 2262 2262 2262/DEL/2013 /DEL/2013 /DEL/2013 /DEL/2013 APP APP APP APPEAL EAL EAL EAL OF M/S ANSHIKA INVESTMENTS PVT.LTD. OF M/S ANSHIKA INVESTMENTS PVT.LTD. OF M/S ANSHIKA INVESTMENTS PVT.LTD. OF M/S ANSHIKA INVESTMENTS PVT.LTD. FOR AY 2009 FOR AY 2009 FOR AY 2009 FOR AY 2009- -- -10 : 10 : 10 : 10 :- -- - 10. GROUND NO.1 RAISED IN THIS APPEAL BY THE ASSESSEE REA DS AS UNDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LOWER AUTHORITIES ERRED IN LAW IN DISALLOWING EX PENSES IN DISALLOWING AGGREGATE EXPENSES OF RS.1,31,82,562/- SECTION 14A OF INCOME TAX ACT, 1961 AND UNDER RULE 8 D(I) AND RULE 8D(III) OF INCOME TAX RULES, 1962. IT IS C ONTENDED THAT SECTION 14A AND RULE 8D ARE NOT APPLICABLE TO T HE ASSESSEE. 11. ALL OTHER GROUNDS RAISED BY THE ASSESSEE ARE ARGUMEN TS IN SUPPORT OF ABOVE GROUND NO.1. 12. AT THE TIME OF HEARING BEFORE US, THE LIMITED AR GUMENT MADE BY THE LEARNED COUNSEL WAS THAT THE ASSESSEE HAD MADE THE I NVESTMENT IN THE SHARES OF OTHER GROUP COMPANIES TO ACQUIRE CONTROL LING INTERESTS IN ITA-2262/D/2013 & 5 OTHERS 11 THOSE COMPANIES. NO INVESTMENT WAS MADE FOR EARNING O F EXEMPT INCOME. THAT VARIOUS BENCHES OF THE ITAT HAVE TAKEN THE VIEW THAT WHERE THE INVESTMENT HAS BEEN MADE FOR ACQUIRING THE CONTROLLING INTERESTS IN THE GROUP COMPANIES, THEN THE DISALLOWANC E CANNOT BE MADE U/S 14A. HE ALSO STATED THAT NO EXPENDITURE WAS I NCURRED BY THE ASSESSEE FOR EARNING OF EXEMPT INCOME BECAUSE NO BORROWE D MONEY WAS INVESTED AND MOREOVER, IT IS A PERMANENT INVESTMENT IN THE FEW GROUP COMPANIES. THUS, NO EXPENDITURE WAS INCURRED. LEARNED DR STATED THAT NO SUCH CLAIM WAS MADE BEFORE THE ASSESSING O FFICER. ALL THESE ASPECTS WOULD REQUIRE VERIFICATION AT THE END OF THE ASSESSING OFFICER. HE, THEREFORE, SUBMITTED THAT ON THIS ISSUE, THE MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. LEARNED COUNSEL FOR THE ASSESSEE HAS NO OBJECTION TO THIS SUGGESTION OF LEARNED DR. 13. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS OF A UTHORITIES BELOW ON THIS POINT AND RESTORE THE MATTER TO THE FILE OF T HE ASSESSING OFFICER. WE DIRECT THE ASSESSING OFFICER TO ALLOW ADEQUATE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO FURN ISH DETAILED EXPLANATION BEFORE THE ASSESSING OFFICER ON THE GROUND ON WHICH HE IS CLAIMING THAT NO DISALLOWANCE U/S 14A IS WARRANTED. T HEREAFTER, THE ASSESSING OFFICER WILL PASS A SPEAKING ORDER. ITA NO.34 ITA NO.34 ITA NO.34 ITA NO.3438 3838 38/DEL/2013 /DEL/2013 /DEL/2013 /DEL/2013 REVENUES APPEAL FOR AY 2009 REVENUES APPEAL FOR AY 2009 REVENUES APPEAL FOR AY 2009 REVENUES APPEAL FOR AY 2009- -- -10 10 10 10 IN M/S A. IN M/S A. IN M/S A. IN M/S A.R. R. R. R. LEASING PVT.LTD. LEASING PVT.LTD. LEASING PVT.LTD. LEASING PVT.LTD. : :: :- -- - 14. THE ONLY GROUND RAISED BY THE REVENUE IN THIS APP EAL READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.6,99,60,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. ITA-2262/D/2013 & 5 OTHERS 12 15. AT THE TIME OF HEARING BEFORE US, BOTH THE PARTI ES FAIRLY ADMITTED THAT THE FACTS IN THIS CASE ARE IDENTICAL TO THE FACT S IN THE CASE OF AEPPL AND, THEREFORE, THEIR ARGUMENTS IN THAT CASE HOLD GO OD. WE FIND THAT DURING THE YEAR UNDER CONSIDERATION, THERE WAS CREDIT OF `6,99,60,000/- IN RESPECT OF SHARE CAPITAL FROM THE FOLLOWING PARTIE S :- (I) M/S ADHYAY EQUIPREF PVT.LTD. `6,00,00,000/- (II) M/S RUPALI SAREE PVT.LTD. `24,80,000/- (III) M/S JAGDAMBA DESIGNERS PVT.LTD. `24,80,000/- (IV) M/S ANCHOR VINIMAY PVT.LTD. `30,00,000/- (V) M/S KHUSABOO BEARING PVT.LTD. `20,00,000/- TOTAL `6,99,60,000/- 16. WE FIND THAT THE ADDITION WAS MADE ON THE SIMILAR GROUND OF HIGH PREMIUM. THE ASSESSING OFFICER HAS MAINLY DISCUSSED THE FACTS RELATING TO AEPPL BECAUSE THE MAJOR AMOUNT WAS RECEI VED FROM THE SAID PARTY. WE HAVE ALREADY DISCUSSED THE IDENTICAL I SSUE WHILE DECIDING THE APPEAL IN THE CASE OF M/S ANSHIKA INVESTM ENTS PVT.LTD. ABOVE WHEREIN WE HAVE CONSIDERED ALL THE FACTS INCLUD ING HIGH SHARE PREMIUM. WE ALSO FIND THAT IN THE CASE OF THE ASSESSEE A LSO, SIMILAR ISSUE HAD ARISEN IN THE EARLIER YEAR AND THE TRIBUNAL, VIDE CONSOLIDATED ORDER IN THE CASE OF AEPPL AND M/S A.R. LEASING PVT.LT D., HAS DELETED THE ADDITION MADE FOR UNEXPLAINED CASH CREDIT IN THE FORM OF SHARE CAPITAL. HON'BLE JURISDICTIONAL HIGH COURT HAS ALSO PASSED THE COMMON ORDER WHEREIN THE ORDERS OF ITAT IN THE CASE OF AEPPL AND M/S A.R. LEASING PVT.LTD. BOTH WERE SUSTAINED. IN VIEW OF THE ABOVE, FOR THE DETAILED DISCUSSION IN THE CASE OF AEPPL ABOVE AS WELL A S IN THE ORDER OF THE ITAT AND HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07, WE DO NOT FIND ANY JUST IFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). ITA-2262/D/2013 & 5 OTHERS 13 IT ITIT ITA NO A NO A NO A NOS SS S. .. .2263 2263 2263 2263/DEL/2013 /DEL/2013 /DEL/2013 /DEL/2013, 6968/DEL/2014 & 6969/DEL/2014 , 6968/DEL/2014 & 6969/DEL/2014 , 6968/DEL/2014 & 6969/DEL/2014 , 6968/DEL/2014 & 6969/DEL/2014 APPEALS OF APPEALS OF APPEALS OF APPEALS OF M/S A.R. LEASING PVT.LTD. FOR M/S A.R. LEASING PVT.LTD. FOR M/S A.R. LEASING PVT.LTD. FOR M/S A.R. LEASING PVT.LTD. FOR AY 2009 AY 2009 AY 2009 AY 2009- -- -10 1010 10, 2010 , 2010 , 2010 , 2010- -- -11 & 2011 11 & 2011 11 & 2011 11 & 2011- -- -12 1212 12 : :: :- -- - 17. THE ONLY GROUND RAISED IN ALL THESE APPEALS IS AGAI NST THE DISALLOWANCE U/S 14A. IN THIS CASE ALSO, THE ARGUMENTS AND SUBMISSIONS OF BOTH THE SIDES WERE SIMILAR TO WHAT WERE RA ISED IN THE CASE OF AEPPL IN ITA NO.2262/DEL/2013. THEREFORE, F OR THE DETAILED DISCUSSION THEREIN, WE SET ASIDE THE ORDERS OF AUTHORITIE S BELOW ON THIS POINT AND RESTORE THE MATTER TO THE FILE OF THE ASSESSI NG OFFICER TO BE READJUDICATED AS PER OUR DIRECTIONS ABOVE. 18. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISM ISSED AND THE APPEALS OF THE ASSESSEES ARE DEEMED TO BE ALLOWED FOR STA TISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 05.09.2016. SD/- SD/- (SUCHITRA KAMBLE (SUCHITRA KAMBLE (SUCHITRA KAMBLE (SUCHITRA KAMBLE ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S ANSHIKA INVESTMENTS PVT.LTD., M/S ANSHIKA INVESTMENTS PVT.LTD., M/S ANSHIKA INVESTMENTS PVT.LTD., M/S ANSHIKA INVESTMENTS PVT.LTD., 305, 5 305, 5 305, 5 305, 5 TH THTH TH FLOOR, BHANOT CORNER, PAMPO FLOOR, BHANOT CORNER, PAMPO FLOOR, BHANOT CORNER, PAMPO FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, SH ENCLAVE, SH ENCLAVE, SH ENCLAVE, GREATER KAILASH GREATER KAILASH GREATER KAILASH GREATER KAILASH- -- -I, NEW DELHI I, NEW DELHI I, NEW DELHI I, NEW DELHI 110 048 AND 110 048 AND 110 048 AND 110 048 AND M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., M/S A.R. LEASING PVT.LTD., 305, 3 305, 3 305, 3 305, 3 RD RDRD RD FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, GREATER KAILASH GREATER KAILASH GREATER KAILASH GREATER KAILASH- -- -I, NEW DELHI I, NEW DELHI I, NEW DELHI I, NEW DELHI 110 048. 110 048. 110 048. 110 048. 2. RESPONDENT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -18, 18, 18, 18, ROOM NO.327, 3 ROOM NO.327, 3 ROOM NO.327, 3 ROOM NO.327, 3 RD RDRD RD FLOOR, ARA CENTRE, E FLOOR, ARA CENTRE, E FLOOR, ARA CENTRE, E FLOOR, ARA CENTRE, E- -- -2, 2,2, 2, JHANDEWALAN EXTN., NEW DELHI. JHANDEWALAN EXTN., NEW DELHI. JHANDEWALAN EXTN., NEW DELHI. JHANDEWALAN EXTN., NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR