RUKMANI AGENCIES PRIVATE LIMITED, MUMBAI V. DCIT, CENT.CIR-5(1), MUMBAI

ITA 2562/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3767 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Unexplained expenditure; Income from undisclosed sources; Principle of natural justice; Opportunity of cross examination; Earning of tax free income; Source of fund; Retrospective amendment; Question of law; Fair market value; Valuation report; Accommodation entries; Onus to prove; Rule 8D
• Section: 143(3); 56(2); 153A; 14A; 133(6); 195; 251; 72; 13; 22; 131; 68; 56; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO.2562/MUM/2018 ( ASSESSMENT YEAR: 2010-11) RUKMANI AGENCIES PRIVATE LIMITED, 4 TH FLOOR, SILVER METROPOLIS, JAICOACH COMPOUND, OPPOSITE BIMBISAR NAGAR, WESTERN EXPRESS, HIGHWAY GOREGAON (E), MUMBAI- 400063. VS. D.C.I.T., CENTRAL CIRCLE-5(1), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. PAN/GIR NO.AAACR 4998 P (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY MS. RITU KAMAL KISHOR (AR) REVENUE BY SHRI AKHTAR H ANSARI (DR) DATE OF HEARING 21/01/2020 DATE OF PRONOUNCEMENT 02/03/2020 / O R D E R PER: R.C. SHARMA, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 07/03/2018 OF LD. CIT(A)-53, MUMBAI FOR THE A.Y. 20 10-11 IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S. 153A OF THE INCOM E TAX ACT, 1961 (IN SHORT, THE ACT). FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITIONS MADE BY THE A.O. U/S 143(3) R.W.S. 153A OF THE INCO ME TAX ACT, 1961 WHICH IS INVALID AND BAD IN LAW. 2. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITI ON OF RS. 22,10,000/- MADE BY THE A.O. U/S 68 OF THE ACT. TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 2 3. THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITI ON OF RS. 16,575/- MADE BY THE A.O. BEING ALLEGED UNEXPLAINED EXPENDITURE @ 0.75% ON AFORESAID ALLEGED CAPITAL INTRODUCED OF RS. 22,10,0 00/-. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE MADE BY THE A.O. U/S 14A OF THE ACT RE AD WITH RULE 8D OF THE IT RULES, 1962. 5. THE ORDER PASSED BY THE LD. CIT(A) IS IN VIOLATI ON OF PRINCIPLES OF NATURAL JUSTICE AND BAD IN LAW. 6. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND ALTE R OR DELETE ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. BRIEF FACTS OF THE CASE ARE THAT A SEARCH & SEIZURE ACTION U/S. 132(1) OF THE I.T. ACT, 1961 WAS CONDUCTED IN THE ANAND RATHI GROUP ALONGWI TH THE OTHER GROUP CONCERNS ON 24/09/2013. DURING THE COURSE OF SEARCH PROCEEDING, IT WAS NOTICED THAT THE ASSESSEE HAD RAISED PREFERE NCE SHARE CAPITAL OF RS. 2,60,000/- IN THE FORM OF 26,000 REDEEMABLE PRE FERENCE SHARES BEARING FACE VALUE OF RS.10/- EACH ON WHICH THE ASS ESSEE HAS SHOWN TO HAVE RECEIVED SHARE PREMIUM OF RS. 19,50,000/- AS O N 31.03.2010. THE ASSESSEE COMPANY ISSUED PREFERENCE SHARES TO M/S. K EN SECURITIES AND M/S NEXUS SOFTWARE LTD. AO OBSERVED THAT IN A.Y.201 0-11, 14 COMPANIES INCLUDING THE ASSESSEE COMPANY OF ANAND RATHI GROUP (HEREINAFTER: ( ARG') HAD RAISED THE CAPITAL OF RS. 13,67,25,000/-. THEREFORE, 14 COMPANIES OF ARG SUBSCRIBED THE SHARES WITH FACE VA LUE OF RS. 10/- ALONG WITH THE PREMIUM THAT VARY FROM RS.30 PER SHA RE TO RS. 75 /- PER SHARE. THE 14 COMPANIES OF THE ARG CONTROLLED DIREC TLY OR THORUGH THE TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 3 EMPLOYEE OF THE ARG SUBSCRIBED THE SHARES FROM TOTA L 32 ENTITIES, OUT OF WHICH 20 COMPANIES WERE HAVING ADDRESS AT MUMBAI, W HILE THE REST WERE LOCATED AT KOLKATA. NOT SATISFIED WITH THE GEN UINENESS OF TRANSACTION, AO ADDED RS.22,10,000/- U/S.68 IN RESP ECT OF THESE SHARES AND ALSO MADE ADDITION OF RS.16,575/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE INCURRED FOR PROCURING SUCH SHARE CAPIT AL. AO HAS ALSO MADE DISALLOWANCE U/S.14A AMOUNTING TO RS.28,114/-. 3. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTI ON OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. AT THE OUTSET, LD. AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN CA SE OF OTHER GROUP CONCERNS OF ANAND RATHI GROUP WHEREIN IN RESPECT OF SAME SEARCH ON 24/09/2013 ADDITION MADE ON ACCOUNT OF ISSUE ON PRE FERENCE SHARES AT PREMIUM WAS DECIDED BY THE TRIBUNAL IN ASSESSEES F AVOUR VIDE ORDER DATED 29/08/2019. 4. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL I N GROUP CASES WHEREIN EXACTLY SIMILAR ADDITION SO MADE BY THE AO AND CONFIRMED BY CIT(A) WAS DELETED BY THE TRIBUNAL AFTER THREADBARE DEALING WITH ALL THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITI ES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LD. AR AND DR DURING THE COURSE OF HEARING. PRECISE OBSERVATION OF THE TRIBUNAL WAS AS UNDER:- 12. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES B ELOW. THE LD. AO HAS MADE ADDITIONS TOWARDS SHARE CAPITAL AND SHARE PREM IUM, ON THE GROUND THAT ALTHOUGH, THE ASSESSEE HAS FILED VARIOUS DETAI LS TO PROVE IDENTITY, TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 4 GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES BUT, ON PERUSAL OF DETAILS FILED BY THE ASSESSEE, IT WAS NO TICED THAT THE ASSESSEE HAS FAILED TO ESTABLISH TRANSACTIONS BETWEEN THE PA RTIES ARE GENUINE IN NATURE AND ALSO THE SUBSCRIBER TO THE SHARE CAPITAL ARE HAVING CAPACITY TO EXPLAIN HUGE INVESTMENTS IN ASSESSEE COMPANY. ACCOR DING TO THE AO, MERE FURNISHING CONFIRMATION LETTERS FROM THE PARTI ES ALONG WITH THEIR PAN NUMBER AND ITR ACKNOWLEDGEMENT IS NOT SUFFICIE NT ENOUGH TO DISCHARGE ,THE ONUS CAST UPON U/S 68 OF THE I.T.ACT , 1961 AND WHAT IS RELEVANT IS TO DISCHARGE THE TRUE IDENTITY OF THE I NVESTORS. ALTHOUGH, THE ASSESSEE HAS FILED CERTAIN DOCUMENTS, INCLUDING PAN NUMBER AND ITR ACKNOWLEDGEMENT AND FINANCIAL STATEMENTS ALONG WITH BANK STATEMENT OF SUBSCRIBERS, BUT WHEN, IT COMES TO GENUINENESS OF T RANSACTIONS AND CREDITWORTHINESS OF THE PARTIES, EXCEPT FILING FINA NCIAL STATEMENTS, NO OTHER EVIDENCES HAS BEEN FILED TO PROVE THAT SHARE CAPITAL RECEIVED FROM SUBSCRIBERS IS GENUINE IN NATURE, WHICH IS SUPPORTE D BY NECESSARY EVIDENCES. THE AO HAS ALSO TAKEN SUPPORT FROM THE F INDINGS RECORDED, DURING THE COURSE OF SURVEY AND STATEMENT RECORDED FROM CERTAIN PERSONS, INCLUDING DIRECTOR AND KEY EMPLOYEE OF ANAND RATHI GROUP TO COME TO THE CONCLUSION THAT THE ASSESSEE HAS ENTERED INTO A N ARRANGED TRANSACTIONS WITH CERTAIN COMPANIES, IN ORDER TO CO NVERT ITS OWN UNACCOUNTED INCOME IN THE FORM OF SHARE CAPITAL, WH ICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE HAS ISSUED SHARE CAPITAL WITH A HUGE PREMIUM OF RS. 30 TO RS. 72 PER SHARE, EVEN THOUGH, THE FINANC IAL OF THOSE COMPANIES IS NOT SUPPORTING SUCH A HUGE VALUATION. FURTHER, THE AO HAS TAKEN SUPPORT FROM THE STATEMENT OF DIRECTOR, DURING THE COURSE OF SEARCH WHERE, HE HAD NOT EXPLAINED SHARE CAPITAL, INCLUDIN G PREMIUM RECEIVED FOR THE YEAR UNDER CONSIDERATION. 13. THE PROVISION OF SECTION 68 OF THE INCOME TAX A CT, 1961 DEALS WITH A CASES, WHERE ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF AN ASSESEE, IN ANY PREVIOUS YEAR, FOR WHICH THE ASSESE E OFFERED NO EXPLANATION ABOUT THE NATURE AND SOURCE, THEREOF OR THE EXPLANATIONS OFFERED BY THE ASSESSEE, IN THE OPINION OF THE AO I S NOT SATISFACTORY, THEN SUM SO FOUND CREDITED MAY BE CHARGED TO INCOME TAX, AS INCOME OF THE ASSESSE OF THAT PREVIOUS YEAR. IN ORDER TO FIX ANY CREDIT WITHIN THE AMBIT OF SECTION 68 OF THE I.T ACT, 1961, THE AO HAS TO E XAMINE THREE INGREDIENTS I.E., IDENTITY, GENUINENESS OF TRANSACT IONS AND CREDITWORTHINESS OF THE PARTIES. IN THIS FACTUAL A ND LEGAL BACKGROUND, IF YOU EXAMINE, THE PRESENT CASE IN THE LIGHT OF VARIO US EVIDENCES FILED BY THE ASSESSEE, IN ORDER TO PROVE CREDIT FOUND IN T HE FORM OF SHARE CAPITAL AND SHARE PREMIUM, ONE HAS TO SEE, WHETHER THE ASSE SSEE HAS DISCHARGED ITS INITIAL ONUS CAST UPON U/S 68 OF THE I.T.ACT, 1 961 OR NOT. IN THIS CASE, THE ASSESEE HAS FILED VARIOUS DETAILS, INCLUDING SH ARE APPLICATION FORM, COPY OF DECLARATION, BOARD RESOLUTION, BANK STATEME NT OF INVESTOR COMPANY, PAN CARD, ACKNOWLEDGMENT OF RETURN OF INCO ME, FINANCIAL TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 5 STATEMENT OF INVESTOR COMPANY, FORM NO. 2 FOR ALLOT MENT OF EQUITY SHARES AND BANK STATEMENT REFLECTING, THE AMOUNT RECEIVED THROUGH BANKING CHANNELS. ONCE, THE ASSESSEE HAS DISCHARGED ITS IN ITIAL ONUS BY FILING VARIOUS DETAILS, THEN THE ONUS SHIFT TO THE AO TO C ARRY OUT FURTHER VERIFICATION, IN THE LIGHT OF EVIDENCES FILED BY TH E ASSESSEE TO ASCERTAIN TRUE NATURE OF TRANSACTIONS BETWEEN THE PARTIES BEF ORE, HE COME TO THE CONCLUSION THAT THE TRANSACTIONS BETWEEN THE PARTIE S ARE GENUINE OR NOT. IN THIS CASE ALTHOUGH, THE AO HAS ISSUED 133(6) NOT ICES TO THE PARTIES, NO FURTHER ENQUIRY HAS BEEN CONDUCTED, INCLUDING ISSUE OF SUMMONS U/S 131. NO DOUBT, NONE OF THE INVESTORS COMPANIES HAVE RESP ONDED TO 133(6) NOTICES ISSUED BY THE AO, BUT FACT OF THE MATTER IS WHEN, ASSESSEE HAS FILED COMPLETE SET OF DOCUMENTS, INCLUDING NAME AND ADDRE SS OF THE PARTIES, IT IS FOR THE AO TO CARRY OUT FURTHER INVESTIGATION BY EXERCISING ALL POSSIBLE OPTIONS AVAILABLE TO HIM, BUT NON ATTENDANCE OF PAR TIES IN RESPONSE TO 133(6) CANNOT BE ATTRIBUTED TO THE ASSESSEE, BECAUS E DUE TO TIME LAG CERTAIN PERSONS MIGHT HAVE LEFT THE PLACE AND FOR THIS NO RESPONSIBILITY CAN BE FASTENED UPON THE ASSESSEE. IN THIS CASE, TH E ASSESSEE DONE WHAT BEST IT COULD DO AND FILED, WHATEVER INFORMATION AV AILABLE WITH IT, IN ORDER TO SATISFY THE AO. IN CASE, THE AO IS NOT SATISFIED WITH DOCUMENTS FURNISHED BY THE ASSESSEE, THEN HE IS FREE TO CARRY OUT HIS OWN INVESTIGATIONS BY EXERCISING POWERS CONFERRED U/S 1 31 OR U/S 133(6) OF THE I.T.ACT, 1961. IN THIS CASE, THE AO, EXCEPT ISSUE OF 133(6) NOTICES NOTHING HAS BEEN DONE TO FIND OUT, THE NATURE OF TRANSACTIO NS BETWEEN THE PARTIES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT WHEN, ASSESSEE HAS FILED COMPLETE DETAILS TO PROVE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES, THEN THERE IS NO R EASON FOR THE AO TO CAME TO THE CONCLUSION THAT SHARE CAPITAL AND SHARE PREMIUM IS UNEXPLAINED ONLY FOR THE REASON THAT DURING THE SEA RCH PROCEEDINGS, THE DIRECTOR OF THE COMPANY HAD ADMITTED THAT HE CANNOT EXPLAIN REASONS WHY BLANK FORMS ARE KEPT IN HIS POSSESSION, IGNORING TH E FACT THAT SUCH ADMISSION HAS BEEN RETRACTED BY FILING AFFIDAVIT AL ONG WITH LETTER EXPLAINING REASONS FRO SUCH ADMISSION DURING SEARCH PROCEEDINGS. FURTHER, ADDITIONS MADE BY THE AO CANNOT BE SUSTAIN ED EVEN ON THIS COUNT BECAUSE, THE AO HAS RELIED UPON STATEMENT OF THIRD PARYIES TO MAKE ADDITIONS TOWARDS SHARE CAPITAL, BUT WHEN THE PRESE NT DIRECTOR OF THE ASSESSEE COMPANY ASKED FOR COPIES OF STATEMENT OF T HIRD PARTY AND ALSO OPPORTUNITY FOR CROSS EXAMINATION OF PERSON WHO GAV E SUCH STATEMENT, THE AO HAS DENIED, THE OPPORTUNITY OF CROSS EXAMINATION AND ALSO NOT FURNISHED COPIES OF STATEMENT. IT IS A SETTLED POSI TION OF LAW THAT ONCE, ANY THIRD PARTY INFORMATION/STATEMENTS IS RELIED UPON T O MAKE ADDITIONS, IT IS THE OBLIGATION OF THE AO TO PROVIDE COPIES OF SUCH STATEMENTS/INFORMATION AND ALSO TO PROVIDE AN OPPORTUNITY OF CROSS EXAMINA TION OF THE PERSON, WHO GAVE THE STATEMENT, WHEN SUCH OPPORTUNITY HAS B EEN AVAILED BY THE PERSON AGAINST WHOM, SUCH STATEMENTS ARE USED. THIS LEGAL PROPOSITION IS SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELLARAM VS CIT 1980 125 ITR 713 (SC), WHERE IT WAS TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 6 HELD THAT WHEN, THIRD PARTY INFORMATION IS RELIED U PON TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE, THE SAME NEEDS TO B E PROVIDED AND ALSO OPPORTUNITY OF CROSS EXAMINATION SHALL BE GIVEN, IF SUCH OPPORTUNITY IS AVAILED BY THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES LTD VS CCE, KOLKATA II IN APPEAL NO 4228 OF 2006 HAS VIDE ORDER DATED 02.09.2015 HAD ALSO UP HELD A SIMILAR LEGAL POSITION AND HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES BY THE ADJUDICATING THE AUTHORITY, THOUGH THE STATEMENTS AND THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW, WHICH MAKES THE ORDER NULLITY IN, AS MUCH AS, IT AMOUNT TO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE, BECAUSE OF WHICH, THE ASSESSEE WAS ADVERSELY AFFECTED. THEREFORE, ON THIS COUNT ALSO T HE ADDITIONS MADE BY THE AO CANNOT BE SUSTAINED. 14. COMING TO THE OTHER ASPECT OF THE ISSUE, THE AO HAS INVOKED THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE I.T. ACT, 1961. WE FIND THAT THE SAID PROVISION HAS BEEN INSERTED BY FINANCE ACT, 20 12 W.E.F 10.04.2013, WHERE IT PROVIDES THAT WHERE A CLOSELY HELD COMPANY ISSUES ITS SHARES AT A PRICE WHICH IS MORE THAN ITS FAIR MARKET VALUE, THE N AMOUNT RECEIVED IN EXCESS OF FAIR MARKET VALUE WILL BE CHARGED TO TAX IN THE HANDS OF THE COMPANY AS INCOME FROM OTHER SOURCES. WE, FURTHER NOTED THAT THE PROVISIONS OF SECTION 56(2)(VIIB) WAS INSERTED BY F INANCE ACT,2012 W.E.F. 1.04.2013 IS APPLICABLE FROM A.Y. 2013-14 ONWARDS. IN FACT, A SIMILAR AMENDMENT HAS BEEN MADE IN SECTION 68 BY INSERTION OF A PROVISO BY THE FINANCE AT 2012 W.E.F. 01.04.2013 AS PER WHICH THE ASSESSEE COMPANY (NOT BEING A COMPANY IN WHICH PUBLIC ARE SUBSTANTIA LLY INTERESTED) AND SUMS SO CREDITED CONSISTS OF SHARE APPLICATION MONE Y, SHARE CAPITAL , SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME C ALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS THE PERSON BEING, A RESIDENT I N WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALS O OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED AND SUCH EXPLANATION IN THE OPINION OF THE AO AFORESAID HAS BEEN FOUND TO BE SATISFACTORY. ON PERUSAL OF AMENDMENTS BROUGHT OUT BY FINANCE ACT 2012, W.E.F. 01.04.2013 TO THE PROVISIONS OF SECTIO N 56(2)(VIIB) AND SECTION 68 OF THE ACT, IT IS VERY CLEAR THAT WHERE THE ASSESSEE HAS ISSUED SHARES AT PREMIUM AND ALSO RECEIVED SHARE CAPITAL AND IF SUCH COMPANY DO NOT OFFER ANY EXPLANATION ABOUT THE NATURE AND S OURCE, THEN SUM SO RECEIVED MAY BE REGARDED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. IN OTHER WORDS, THE PURPOSE OF INSERTION OF PROVISO IS TO EXAMINE THE SOURCE OF INVESTMENT BY SUBSCRIBER TO THE SHARE CAPITAL. THIS AMENDMENT HAS BEEN EXAMINED BY THE HONBLE BOMBAY H IGH COURT IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE (P) LTD. ( 2017) 394 ITR 680, WHERE THE COURT OBSERVED THAT PROVISO INSERTED TO S ECTION 68 W.E.F. 01.04.2013 IS CONSIDERED TO BE PROSPECTIVE IN NATUR E AND IS APPLICABLE FROM A.Y. 2013-14 ONWARDS. FROM THE ABOVE, IT IS VE RY CLEAR THAT SIMILAR TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 7 AMENDMENT HAS BEEN MADE TO PROVISIONS OF SECTION 56 (2) BY INSERTION OF CLAUSE (VIIB) SO AS TO BRING SHARE PREMIUM WITHIN T HE AMBIT OF SECTION 56(2) OF THE I.T ACT, 1961. SINCE, THE PROVISO INS ERTED TO SECTION 68 IS CONSIDERED TO BE PROSPECTIVE IN NATURE, OBVIOUSLY S UB CLAUSE (VIIB) INSERTED TO SECTION 56(2) IS ALSO CONSIDERED TO BE PROSPECTIVE AND CANNOT BE APPLIED TO THE ASSESSMENT YEAR IN QUESTION. EVE N OTHERWISE, ASSUMING FOR A MOMENT ABOVE PROVISIONS ARE APPLICABLE FOR TH E YEAR UNDER CONSIDERATION, IN ORDER TO APPLY SAID AMENDED PROVI SIONS, THE AO HAS TO PROVE THAT THE ASSESSEE HAS NOT PROVED CAPACITY OF THE INVESTORS AND ALSO NOT OFFERED ANY JUSTIFICATION FOR ISSUE OF SHARES A T PREMIUM. IN THIS CASE, FROM THE FACTS ON RECORD, IT IS CLEAR THAT THE ASSE SSEE HAS PROVED IDENTITY AND GENUINENESS OF THE TRANSACTIONS BY FILING NECES SARY EVIDENCES. THE ASSESSEE HAS FILED VALUATION REPORT FROM REGISTERED VALUER AS PER WHICH THE SHARE PRICE OF THE COMPANY IS OVER AND ABOVE PR EMIUM CHARGED BY THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT PROVISIONS OF SECTION 56(2)(VIIB) HAS NO APPLICATION. 15. COMING TO THE CASE LAWS RELIED UPON BY THE ASSE SSEE. THE ASSESSEE HAS RELIED UPON PLETHORA OF JUDGEMENTS, INCLUD ING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD (2008) 216 CTR 195 (SC). IN THE CASE LAWS RELIED UPON BY THE ASSESSEE, THE ISSUE HAS BEEN DEALT AS UNDER:- CIT VS. GOA SPONGE AND POWER LTD (13/02/2012) TAX A PPEAL NO. 16 OF 2012 (HIGH COURT-BOMBAY) 'ONCE THE AUTHORITIES HAVE GOT ALL THE DETAI LS, INCLUDING THE NAME AND ADDRESSES OF THE SHAREHOLDERS, THEIR PAN /GIR NUMBER, SO ALSO THE NAME OF THE BANK FROM WHICH THE ALLEGED INVESTORS RECEIVED MONEY AS SHARE APPLICATION, THEN, IT CANNOT BE TERMED AS 'BOGUS'. THE CONTROVERSY IS COVERED BY THE JUDGEMENTS RENDERED B Y THE HON'BLE SUPREME COURT I N THE CASE OF LOVELY EXPORTS PVT LTD, VS. CIT, (2008) 216 CTR (SC ) 195, AS ALSO BY THIS COURT IN CIT VS. CREATIVE WORLD TELE FILMS LTD, (2011) 333 ITR 100 (BOM). IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE TRIBUNAL'S FINDING THAT THERE IS NO JUSTIFICA TION IN THE ADDITION MADE UNDER SECTION 68 OF THE INCOME TAX ACT ,, 1961 NEITHER SUFFERS FROM ANY PERVERSITY NOR GIVES RISE T O ANY SUBSTANTIAL QUESTION OF LAW.' CIT VS. CREATIVE WORLD TELE FILMS LTD (2011) 333 IT R 100 (BORN- HIGH COURT) 'THE QUESTION SOUGHT TO BE RAISED IN THE AP PEAL WAS ALSO RAISED BEFORE THE TRIBUNAL AND THE TRIBUNAL W AS PLEASED TO FOLLOW THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 1 95. WHEREIN THE APEX COURT OBSERVED THAT IF THE SHARE AP PLICATION MONEY IS RECEIVED BY THE ASSESSEE-COMPANY FROM ALLEG ED BOGUS TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 8 SHAREHOLDERS, W HOSE NAMES ARE GIVEN TO THE AO, TH EN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. IN THE CA SE IN HAND, IT IS NOT DISPUTED THAT THE ASSESSEE HAD GIVEN THE DETAILS OF NAME AND ADDRESS OF THE SHAREHOLDER, THEIR PAN/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME OF THE BA NK. IT WAS EXPECTED ON THE PART OF THE AO TO MAKE PROPER I NVESTIGATION AND REACH THE SHAREHOLDERS. THE AO DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIMATELY RETURNED BACK WIT H AN ENDORSEMENT 'NOT TRACEABLE IN OUR CONSIDERED VI EW, THE AO OUGHT TO HAVE FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT DETAILS OR FROM THEIR BANKERS SO AS TO R EACH THE SHAREHOLDERS SINCE ALL THE RELEVANT MATERIAL D ETAILS AND PARTICULARS WERE GIVEN BY THE ASSESSEE TO THE AO. I N THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE FAULTED.' CIT VS. LOVELY EXPORTS (P) LTD (2008) 216 CTR 195 ( SC) 'IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME S ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PRO CEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSE SSEE COMPANY.' CIT VS. STELLER INVESTMENT LTD (2001) 251 ITR 263 ( SC) (CIVIL APPEAL) 'THAT THE INCREASE IN SUBSCRIBED CAPITAL OF THE RESPONDENT COMPANY COULD NOT BE A DEVICE OF CONVERTING BLACK M ONEY INTO WHITE WITH THE HELP OF FORMATION OF AN INVE STMENT COMPANY, ON THE ROUND THAT, EVEN IF IT BE ASSUMED THAT THE S UBSCRIBERS TO THE INCREASED CAPITAL WERE NOT GENUINE, TINDER NO CIRCUMSTANCES COULD THE AMOUNT OF SHARE CAPITAL BE REGARDE D AS UN DISCLOSED INCOME, AN APPEAL WAS TAKEN BY THE DEPARTMENT TO TH E SUPREME COURT. THE SUPREME COURT DISMISSE D THE APPEAL HOLDING THAT THE TRIBUNAL HAD COME TO A CONC LUSION ON FACTS AND NO INTERFERENCE WAS CALLED FOR.' CIT VS. NAV BHARAT DUOLEX LTD (2013) 35 TAXMANN.COM 289 (ALL- HIGH COURT) 'WE HAVE CONSIDERED THE ARGUMENTS OF THE COUNSEL FO R THE PARTIES. CIT(A) FOUND THAT FIVE COMPANIES SUBSCRIBING THE EQUITY SHARES AMOUNTING TO RS. 25,00.000/- WERE IDENT IFIED AND THEY HAD SUBMITTED THEIR BANK STATEMENTS, CASH EXTRACTS AND RETURNS FILING RECEIPTS. AS SUCH IDENTITY OF THE SHAR E APPLICANT COMPANIES AND PURCHASE OF SHARE HAD BEEN PROV ED BY THE ASSESSEE. SUPREME COURT IN THE CASES OF CIT V. STELLER INVESTMENTS LTD. [2001] 251 ITR 263 AND LOVELY EXP ORTS CASE (SUPRA), HAS HELD THAT THE IDENTITY OF THE SHA REHOLDER ALONE IS TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 9 REQUIRED TO BE PROVED, IN CASE OF THE CAPITA L CONTRIBUTED BY THE SHAREHOLDERS. ACCORDINGLY CIT(A) AND THE T RIBUNAL HAS NOT COMMITTED ANY ILLEGALITY IN ALLOWING THE APPE AL OF THE ASSESSEE. WE DO NOT FIND ANY ILLEGALITY IN THE JUD GMENT OF THE CIT(A) AND THE TRIBUNAL.' CIT VS. JAYDEE SECURITIES & FINANCE LTD (2013) 32 TAXMANN.COM91 (ALL-HIGH COURT) 'THE TRIBUNAL RECORDED FINDINGS THAT THE ASSE SSEE HAD PRODUCED THE RETURN OF INCOME FILED BY THE RELEVANT SHAREHOLDERS WHO HAD PAID SHARE APPLICATION MONEY. THE ASSES SEE HAD ALSO PRODUCED THE CONFIRMATION OF SHARE HOLDERS IND ICATING THE DETAILS OF ADDRESSES, PAN AND PARTICULARS OF CHEQUES THROUGH WHICH THE AMOUNT WAS PAID TOWARDS THE SHARE APPLICATION MONEY. THE TRIBUNAL THEREAFTER RELIED UPON THE JU DGMENT OF THE SUPREME COURT IN CIT V. LOVELY EXPORTS (P.) LT D WHEREIN IT WAS HELD THAT IF THE ASSESSEE PRODUCES THE NAME S, ADDRESSES, PAN DETAILS OF THE SHARE HOLDERS THEN THE ONUS O N THE ASSESSEE TO PROVE THE SOURCE O F SHARE APPLICATION MON EY STANDS DISCHARGED. IF THE ASSESSING AUTHORITY WAS NOT SATISFIED WITH THE CREDITWORTHINESS OF THE SHAREHOLDERS, IT W AS OPEN TO THE ASSESSING AUTHORITY TO VERIFY THE SAME IN THE H ANDS OF THE SHAREHOLDERS CONCERNED, THE TRIBUNAL HAS RELIED UP ON AN ORDER OF THE SUPREME COURT IN CASE O F CIT V. DIV INE LEASING & FINANCE LTD. IN VIEW OF THE DECISION 'OF TH E SUPREME COURT, WE DISMISS THE APPEALS WITH OBSERVATIONS THAT THE D EPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL AS SESSMENTS OF THE SHAREHOLDERS WHOSE NAMES AND DETAILS WERE GIVE N TO THE ASSESSING OFFICER.' ACIT VS. VENKATESHWARLSPAT PVT LTD (2009) 319 ITR 3 93 (CHHATISGARH-HIGH COURT) 'IF THE SHARE APPLICATIONS ARE RECEIVED BY THE ASSE SSEE FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS THE UNDISCLOSED INCOME OF THE ASSESSEE.' MOD CREATIONS PVT LTD VS. ITO (2013) 354 ITR 282 (D EL-HIGH COURT) 'HELD, ALLOWING THE APPEAL, (I) THAT THE ASS ESSEE HAD DISCHARGED THE INITIAL ONUS PLACED ON IT. IN THE EV ENT THE REVENUE STILL HAD A DOUBT WITH REGARD TO THE GENUINENESS OF THE TRANSACTIONS IN ISSUE OR AS REGARDS THE CREDI TWORTHINESS OF THE CREDITORS, IT WOULD HAVE HAD TO DISCHARGE THE ONUS WHICH HAD SHIFTED ON TO IT. A BALD ASSERTION BY THE ASSES SING OFFICER THAT THE CREDITS WERE A CIRCULAR ROUTE ADOPTED BY THE ASSESSEE TO PLOUGH BACK ITS OWN UNDISCLOSED INCOME INTO I TS ACCOUNTS, COULD BE OF N O AVAIL. THE REVENUE WAS REQUIRE D TO PROVE THIS TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 10 ALLEGATION. AN ALLEGATION BY ITSELF WHICH IS BASED ON ASSUMPTION WILL NOT PASS MUSTER IN LAW. THE REVENUE WOULD B E REQUIRED TO BRIDGE THE GAP BETWEEN THE SUSPICIONS AND PROOF IN ORDER TO BRING HOME THIS ALLEGATION. THE TRIBUNAL WITHOUT AD VERTING TO THE PRINCIPLE LAID STRESS ON THE FACT THAT DESPITE OP PORTUNITIES, THE ASSESSEE AND/OR THE CREDITORS HAD NOT PROVED THE GENUINENESS OF THE TRANSACTION. BASED ON THIS IT CONSTRUE D THE INTENTIONS OF THE ASSESSEE AS BEING MALA FIDE. THE TRIBUNAL O UGHT TO HAVE ANALYSED THE MATERIAL RATHER THAN BE BURDENED B Y THE FACT THAT SOME OF THE CREDITORS HAD CHOSEN NOT TO MAKE A PERS ONAL APPEARANCE BEFORE THE ASSESSING OFFICER. IF THE ASS ESSING OFFICER HAD ANY DOUBT ABOUT THE MATERIAL PLACED ON R ECORD, WHICH WAS LARGELY BANK STATEMENTS OF THE CREDITORS AND THEIR INCOME-TAX RETURNS, IT COULD GATHER THE NECESSARY INFORMA TION FROM THE SOURCES TO WHICH THE INFORMATION WAS ATTRIBUTA BLE......IF IT HAD ANY DOUBTS WITH REGARD TO THEIR CREDITWORTHINE SS, THE REVENUE COULD ALWAYS BRING THE SUM IN QUESTION TO TAX IN THE HANDS OF THE CREDITORS OR SUB- CREDITORS.' CIT VS. AL ANAM AGRO FOODS (P.) LTD (2013) 38 TAXMA NN.CORN 375 (ALL-HIGH COURT) TRIBUNAL, HOWEVER, HELD THAT SINCE IDENTITY OF SHA RE HOLDERS STOOD PROVED ON RECORD, AMOUNT OF SHARE APPLICATION MO NEY COULD NOT BE ADDED TO INCOME OF ASSESSEE. ACCORDING TO TRIBUN AL, IN SUCH A CASE AMOUNT COULD BE TAXED IN HANDS OF PERSONS WHO HAD INVESTED' CIT VS. DWARKADHISH INVESTMENT (P) LTD (2011) 330 I TR 298 (DEL-HIGH COURT) 'JUST BECAUSE THE CREDITORS/SHARE APPLICANTS C OULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GI VE THE REVENUE THE RIGHT TO INVOKE S. 68 REVENUE HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSONMOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE 'SOURCE OF SOURCE' IN THE INSTANT CASE, THE TRIBUNAL HAS CONFIRMED THE ORDER OF THE CIT(A) DELETING THE IMPUGNED ADDITION HOLDING THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE APPLICANTS AND THE SHARE APPLICATION MONEY HAS BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES.' CIT VS. NAMASTEY CHEMICALS PVT LTD (2013) 33 TAXMANN.COM271 (GUJ-HIGH COURT) 'IN THE PRESENT CASE ALSO, THE RESPONDENT AS SESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM DIFFERENT S UB SCRIBERS. IT WAS FOUND THAT LARGE NUMBER OF SUBSCRIBERS HAD RES PONDED TO THE LETTERS ISSUED BY THE ASSESSING OFFICER OR S UMMONS ISSUED BY HIM AND SUBMITTED THEIR AFFIDAVITS. IN SOME CASES SUCH REPLIES WERE NOT RECEIVED THROUGH POSTS. RS. 9 LACS REPRESENTED THOSE ASSESSEES WHO DENIED HAVING MADE ANY INVESTMEN T ALTOGETHER. THE ISSUE THUS WOULD FALL SQ UARELY WITHIN THE AMBIT OF THE TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 11 JUDGMENT OF THE SUPREME COURT IN THE CASE NF LOVELY EXPORTS (SUPRA). NO ERROR OF LAW CAN BE STATED TO HAVE BE EN COMMITTED BY THE TRIBUNAL. TAX APPEAL IS THEREFORE DISM ISSED.' CIT VS. PEOPLES GENERAL HOSPITAL LTD (2013) 356 ITR 65 (MP- HIGH COURT) ' HELD , DISMISSING THE APPEALS , THAT IT THE ASSESSEE HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC OR RIGHT S ISSUE THROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE TINDER SEC TION 68 OF THE INCOME-TAX ACT, 1961, IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART O F THE SHARE CAPITAL REPRESENTED THE COMPANY'S OWN INCOME FROM UNDI SCLOSED SOURCES. IT WAS NOBODY'S CASE THAT THE NON R ESIDENT INDIAN COMPANY WAS A BOGUS OR NON-EXISTENT COMPANY O R THAT THE AMOUNT SUBSCRIBED BY THE COMPANY BY WAY OF S HARE SUBSCRIPTION WAS IN FACT THE MONEY OF THE AS SESSEE. THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF THE I NVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AN D THAT THE TRANS ACTION WAS GENUINE. THOUGH THE ASSESSEE'S CONTENTION WAS THAT THE CREDITWORTHINESS OF THE CREDITOR WAS ALSO ESTA BLISHED, IN THIS CASE, THE ESTABLISHMENT OF THE IDENTITY OF THE INVE STOR ALONE WAS TO BE SEEN. THUS, THE ADDITION WAS RIGHTLY DELETED.' CIT VS. SHREE RAMA MULTI TECH LTD (2013) 34 TAXMANN .COM177 (GUJ-HC) 'IT IS NOTED THAT COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL HAVE DULY CONSIDERED ISSUE AND HAVIN G FOUND COMPLETE DETAILS OF THE RECEIPTS OF SHARE APPLICATI ON MONEY, ALONG WITH THE FORM NAMES AND ADDRESSES, PAN AND OTH ER REQUISITE DETAILS, THEY FOUND COMPLETE ABSENCE OF THE GROUND S NOTED FOR INVOKING THE PROVISION OF SECTION 68. MOREOVER , BOTH RIGHTLY HAD APPLIED THE DECISION OF CIT VS. LOVELY EXPORTS (P) LTD TO THE CASE OF THE ASSESSEE. THEREFORE, NO REASON WAS FOUND IN ABSENCE OF ANY ILLEGALITY MUCH LESS ANY PERVERSITY TOO TO INTERFERE WITH THE ORDER OF THE BOTH THESE AUTHORITIES, WHO HAD CONCURRENTLY HELD THE DUE DETAILS HAVING BEEN PROVED. THE ASSESS EE COMPANY HAD PRESENTED THE NECESSARY WORTH PROOF BEF O RE BOTH THE AUTHORITIES AND IT WAS NOT EXPECTED BY THE A SSESSEECOMPANY TO FURTHER PROVE THE SOURCE OF THE DECEASED.' CIT VS. NIKUNJ EXIMP ENTERPRISES (P.) LTD (2013) 35 TAXMANN.COM384 (BOM) 'WHETHER MERELY BECAUSE SUPPLIERS HAD NOT APP EARED BEFORE ASSESSING OFFICER OR COMMISSIONER (APPEALS), I T COULD NOT BE CONCLUDED THAT PURCHASES WERE NOT MADE BY AS SESSEE - HELD, YES.... FURTHER, THERE WERE CONFIRMATION LETTE RS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES A S WELL AS COPIES TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 12 OF BANK STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE IN FACT MADE. IN OUR VIEW, ME RELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSI NG OFFICER OR THE CIT(A), ONE CANNOT CONCLUDE THAT THE PURC HASES WERE NOT MADE BY THE RESPONDENT- ASSESSEE' CIT VS. SAMIR BIO- TECH PVT LTD (2010) 325 ITR 294 (DEL-HIGH COURT) 'IDENTITIES OF THE SUBSCRIBERS ARE NOT IN DO UBT. THE TRANSACTIONS HAVE ALSO BEEN UNDERTAKEN THROUGH BA NKING CHANNELS INASMUCH AS THE APPLICATION MONEY FOR THE SHARES WAS GIVEN THROUGH ACCOUNT PAYEE CHEQUES. THE CREDITWORT HINESS HAS ALSO BEEN ESTABLISHED, AS INDICATED BY THE TRIBU NAL. THE SUBSCRIBERS HAVE GIVEN THEIR COMPLETE DETAILS WI TH REGARD TO THEIR TAX RETURNS AND ASSESSMENTS. IN THESE CIRCUMSTANCES , THE DEPARTMENT COULD NOT DRAW AN ADVERSE INFERENCE AGA INST THE ASSESSEE ONLY BECAUSE THE SUB SCRIBERS DID NOT INITIALLY RESPOND TO THE SUMMONS. THE SUBSCRIBERS, HOWEV ER, SUBSEQUENTLY GAVE THEIR CONFIRMATION LETTERS A S WOULD BE APPARENT FROM THE IMPUGNED ORDER. THE IDENTITY OF T HE SUBSCRIBERS STANDS ESTABLISHED AND IT IS ALSO A FACT THAT THEY HAVE SHOWN THE SAID AMOUNTS IN THEIR AUDITED BALANCE SHEETS AND HAVE ALSO FILED RETURNS BEFORE THE IT AUTHORITIES. THE D ECISION OF THE TRIBUNAL DELETING THE ADDITION CANNOT BEFAULTED. 16. COMING TO THE CASE LAWS RELIED UPON BY THE LEAR NED DR. ALTHOGH, THE LD. DR PLACED HIS RELIANCE ON PLETHORA OF JUDGM ENTS, BUT HE HAD HEAVILY RELIED UPON THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF DCIT VS. NRA IRON & STEEL PVT. LTD. (SUPRA) . INSOFAR AS MOST OF CASE LAWS RELIED UPON BY THE LD. DR WE, NOTICED THA T THE ISSUE INVOLVED IS FACTUAL AND HAS TO BE EXAMINED RATIOS OF CASE LAWS IN LIGHT OF FACTS OF PRESENT CASE. WHEN WE HAD EXAMINED CASE LAWS RELIED UPON BY THE LD. DR IN LIGHT OF FACTS OF PRESENT CASE, WE FIND THAT THE COORDINATE BENCHES HAVE CONSIDERED ALL THOSE CASE LAWS AND HELD THAT MOST O F CASES ARE NOT APPLICABLE TO FACTS OF PRESENT CASE. THEREFORE, WE DO NOT WISH TO DISCUSS THOSE CASE LAWS. BUT WHEN IT COMES TO HONBLE SUPRE ME COURT DECISION IN CASE OF PCIT VS. NRA IRON & STEEL PVT LTD, WE FIND THAT CO- ORDINATE BENCH OF ITAT VIDE ITS ORDER DATED 03.05.2 019 IN THE CASE OF SHREE LAXMI ESTATE PVT. LTD. IN ITA NO. 6557/MUM201 7 FOR A.Y. 2013-14 HAD CONSIDERED THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF NRA IRON & STEEL P. LTD. AND HELD THAT THE FACTS OF THE CASE BEFORE THE HONBLE SUPREME COURT ARE ENTIRELY DIFFERENT, WHERE ON THE BASIS OF FACTS OF THAT CASE HONBLE SUPREME COURT CAME TO THE CONC LUSION THAT MERE FURNISHING OF CERTAIN DOCUMENTS IS NOT SUFFICIENT E NOUGH AND WHAT IS RELEVANT IS ALL THREE INGREDIENTS, I.E. IDENTITY, G ENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES SHOULD BE PROVE D BEYOND DOUBT. WE FIND THAT IN THE CASE BEFORE THE HONBLE SUPREME CO URT THE PARTIES NEVER TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 13 RESPONDED TO 133(6) NOTICES. THE AO HAS CARRIED OU T INQUIRIES BY ISSUING NOTICES U/S. 133(6), FOR WHICH NONE OF THE COMPANIE S HAVE REPLIED. NONE OF THE COMPANIES PRODUCED BANK STATEMENTS TO ESTABL ISH SOURCE OF FUNDS FOR MAKING SUCH HUGE INVESTMENTS IN SHARES, EVEN TH OUGH THEY WERE DECLARING A VERY MEAGRE INCOME IN THE RETURN. NONE OF THE INVESTORS APPEARED BEFORE THE AO, BUT MERELY SENT RESPONSE TH ROUGH DAK. IN THIS CASE, FROM THE FACTS ON RECORD, IT IS CLEAR THAT TH E ASSESSEE HAS FILED COMPLETE SET OF DOCUMENTS, BUT THE AO NEITHER CARRI ED OUT ANY INVESTIGATION NOR ISSUED NOTICES U/S. 133(6) OR SUM MONS U/S. 131(1) TO EXAMINE THE VERACITY OF DOCUMENTS FURNISHED BY THE ASSESSEE. UNLESS, THE AO CARRIED OUT FURTHER INVESTIGATIONS TO ASCERTAIN TRUE NATURE OF TRANSACTIONS, HE CANNOT COME TO THE CONCLUSION MERE LY ON THE BASIS OF DOCUMENTS SUBMITTED BY THE ASSESSEE. THEREFORE, AFT ER CONSIDERING RELEVANT FACTS, THE CO-ORDINATE BENCH CAME TO THE C ONCLUSION THAT DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF NRA IRON & STEEL PVT. LTD. (SUPRA) HAS NO APPLICATION, WHERE T HE AO HAS NOT CARRIED OUT ANY INQUIRIES. THE RELEVANT FINDINGS OF THE TR IBUNAL RE AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD BORROWED LOANS FROM THE AFORESAID LOAN CREDITOR S AND HAD DULY REPAID THE SAME IN SUBSEQUENT YEARS BY ACCOUNT PAYE E CHEQUES, FOR WHICH EVIDENCES ARE ALREADY ON RECORD BEFORE US. I T IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAD PAID INTEREST ON THE AFORESAID LOANS WHICH HAD BEEN ALLOWED AS A DEDUCTION BY THE LOWER AUTHORITIES. WE ARE UNABLE TO PERSUADE OURSELVES AS TO HOW THE I NTEREST PORTION ON LOAN ALONE COULD BE TREATED AS GENUINE TRANSACTI ONS AFTER TREATING THE PRINCIPAL PORTION OF LOAN AS INGENUINE . WE ALSO FIND THAT THE INTEREST PAID ON SUCH UNSECURED LOANS TO A FORESAID LOAN CREDITORS HAVE BEEN DULY SUBJECTED TO DEDUCTION OF TAX AT SOURCE. NOTICE ISSUED U/S 133(6) OF THE ACT BY THE LD AO HA D BEEN DULY REPLIED BY THE CONCERNED LOAN CREDITORS DIRECTLY BE FORE THE LD AO AND NO DEFICIENCIES WERE NOTICED BY THE LD AO THERE ON. AFTER THIS, THE LD AO DID NOT PROCEED TO MAKE FURTHER ENQUIRY O N THE SUBJECT MENTIONED LOAN CREDITORS. IT IS NOT IN DISPUTE THA T THE ASSESSEE AND THE CONCERNED LOAN CREDITORS HAD DULY FILED THEIR R ESPECTIVE BANK STATEMENTS TO PROVE THE IMMEDIATE SOURCE OF CREDIT FOR ADVANCING LOANS TO THE ASSESSEE COMPANY, CONFIRMATION OF HAVI NG GIVEN LOANS TO THE ASSESSEE COMPANY, TOGETHER WITH THEIR INCOME TAX RETURN ACKNOWLEDGEMENTS AND OTHER REQUISITE DETAILS CALLED FOR BY THE LD AO IN THE NOTICE U/S 133(6) OF THE ACT. IN CASE IF THE LD AO HAD ANY DOUBT ON THE VERACITY OF THE DOCUMENTS SUBMITTED BY THE LOAN CREDITORS, THE SAME COULD HAVE BEEN CONFRONTED ON T HE SAID LOAN CREDITORS BY ISSUING SUMMONS U/S 131 OF THE ACT AND EXAMINE THEM ON OATH OR CORRESPONDINGLY VERIFY THE SAME THROUGH THE ASSESSING OFFFICERS OF THE CONCERNED LOAN CREDITORS THROUGH T HE INTERNAL SOURCE OF THE DEPARTMENT. THE LD AO DID NOT DO EIT HER OF THESE IN TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 14 THE INSTANT CASE AND MERELY DISREGARDED THE EVIDENC ES SUBMITTED ON RECORD BEFORE HIM BOTH BY THE ASSESSEE AS WELL AS B Y THE LOAN CREDITORS DIRECTLY TO HIM. THE WRITTEN SUBMISSION S FILED BY THE LD DR IN THIS REGARD IS REPETITION OF VARIOUS CONTENTI ONS ALREADY AVAILABLE ON RECORD BY THE LOWER AUTHORITIES, APART FROM PLACING RELIANCE ON CERTAIN DECISIONS. WE FIND THAT BOTH T HE AFORESAID LOAN ADDITIONS WERE CONFIRMED BY THE LD CITA BY PLACING RELIANCE ON THE DECISION TAKEN BY HIS PREDECESSOR IN ASST YEAR 2012 -13. WE FIND THAT THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE A SST YEAR 2012-13 IN ITA NO. 5954/MUM/2016 DATED 29.12.2017 IN RESPEC T OF LOAN TRANSACTIONS OF ENTITIES CONTROLLED BY SHRI PRAVIN KUMAR JAIN AND OTHERS HAD ELABORATELY DEALT THIS ISSUE AND HELD AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIE S BELOW. THE AO MADE ADDITION TOWARDS UNSECURED LOANS RECEIVED F ROM JOSH TRADING COMPANY PVT LTD AND VIRAJ MERCANTILE PVT LT D ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING WHI CH REVEALED THAT THE ASSESSEE IS THE BENEFICIARY OF BOGUS ACCOM MODATION ENTRIES PROVIDED BY SHRI PRAVEENKUMAR JAIN THROUGH HIS BOGU S COMPANIES. THE AO HAS MADE ADDITIONS U/S 68 OF THE INCOME-TAX ACT, 1961 ON THE GROUND THAT THOUGH THE ASSESSEE HAS FURNISHED N ECESSARY EVIDENCES TO PROVE IDENTITY OF THE PARTIES, BUT FAI LED TO ESTABLISH GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES IN THE BACKDROP OF CLEAR FINDINGS OF INVESTIGATION WING TH AT THOSE COMPANIES ARE HAWALA COMPANIES INVOLVED IN PROVIDIN G M/S SHREE LAXMI DEVELOPERS ACCOMMODATION ENTRIES. THE AO HAS BROUGHT OUT FACTS IN THE LIGHT OF STATEMENT OF SHRI PRAVINKUMAR JAIN DEPOSED BEFORE THE INVESTIGATION WING TO MAKE ADDITION. EXC EPT THIS, THERE IS NO CONTRARY EVIDENCE IN THE POSSESSION OF THE AO TO DISPROVE THE LOAN TRANSACTIONS FROM JOSH TRADING COMPANY PVT LTD AND VIRAJ MERCANTILE PVT LTD. ON THE OTHER HAND, THE ASSESSEE HAS FURISHED VARIOUS DETAILS INCLUDING CONFIRMATION LETTERS FROM THE PARTIES, THEIR BANK STATEMENTS ALONGWITH THEIR FINANCIAL STATEMENT S TO PROVE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES. THE ASSESSEE ALSO FURNISHED EVIDENCES TO P ROVE THAT THE PARTIES HAVE RESPONDED TO THE NOTICES ISSUED U/S 13 3(6) BY AO BY FILING VARIOUS DETAILS. THE ASSESSEE ALSO FILED BAN K STATEMENTS TO PROVE THAT THE SAID UNSECURED LOANS HAVE BEEN REPAI D IN THE SUBSEQUENT FINANCIAL YEARS. THEREFORE, WE ARE OF TH E VIEW THAT THERE IS NO REASON FOR THE AO TO DOUBT THE GENUINENESS OF TRANSACTIONS DESPITE FURNISHING NECESSARY EVIDENCES INCLUDING TH EIR FINANCIAL STATEMENTS, BANK STATEMENTS AND IT RETURNS. 6. THE AO HAS MADE ADDITION U/S 68 OF THE ACT, ON T HE GROUND THAT THE UNSECURED LOANS ARE BOGUS ACCOMMODATION ENTRIES PROVIDED BY SHRI PRAVINKUMAR JAIN THROUGH HIS HAWALA COMPANIES. THE TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 15 PROVISIONS OF SECTION 68 DEAL WITH CASES WHERE ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN ANY FINANCIAL YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT T HE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE AO, SATISFACTORY, THEN SUM SO CREDIT ED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. A PLAIN READING M/S SHREE LAXMI DEVELOPERS OF SECTION 68 MAKES IT CLEAR THAT THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE. IT IS WELL SETTLED LEGAL POSITION THAT TH E ASSESSEE HAS TO DISCHARGE 3 MAIN INGREDIENTS IN ORDER TO DISCHARGE THE INITIAL BURDEN OF PROOF, I.E. THE IDENTITY OF THE CREDITOR, THE GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS. ONCE THE ASSESSEE DISCHARGES INITIAL BURDEN PLACED UPON HIM, THEN THE BURDEN TODIS PROVE THE SAID CLAIM SHIFTS UPON THE AO. IN THIS CA SE, THE ASSESSEE HAS DISCHARGED HIS ONUS CAST U/S 68 BY FILING IDENT ITY OF THE CREDITORS, GENUINENESS OF TRANSACTIONS AND CREDITWO RTHINESS OF THE PARTIES WHICH IS EVIDENT FROM THE FACT THAT THE ASS ESSEE HAS FURNISHED FINANCIAL STATEMENTS OF THE CREDITORS WHEREIN THE S AID TRANSACTION HAS BEEN DISCLOSED IN THE RELEVANT FINANCIAL YEARS. WE FURTHER NOTICE THAT THE ASSESSEE ALSO FILED FINANCIAL STATEMENTS O F THE CREDITORS WHICH ARE ENCLOSED IN PAPER BOOK FILED. ON PERUSAL OF THE FINANCIAL STATEMENTS FILED BY THE ASSESSEE, WE FIND THAT BOTH THE COMPANIES ARE ACTIVE IN THE WEBSITE OF MINISTRY OF CORPORATE AFFA IRS. THIS FACT HAS BEEN FURTHER SUPPORTED BY THE LETTER OF AO WHEREIN THE AO HAS ACCEPTED THAT BOTH COMPANIES, VIZ. JOSH TRADING COM PANY PVT LTD AND VIRAJ MERCANTILE PVT LTD ARE ACTIVE IN MCA WEBS ITE. WE FURTHER NOTICE THAT BOTH THE COMPANIES HAVE FILED FINANCIAL STATEMENTS FOR THE YEAR ENDING 31-03-2006. THEREFORE, WE ARE OF TH E CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL B URDEN CAST U/S 68 BY FILING IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. ONCE, THE ASSESSEE HAS DISCHARGED I TS INITIAL BURDEN, THE BURDEN SHIFTS TO THE AO TO PROVE OTHERWISE. IN THIS CASE, THE AO MADE ADDITION ONLY ON THE BASIS M/S SHREE LAXMI DEV ELOPERS OF INFORMATION RECEIVED FROM INVESTIGATION WING, BUT N OT BASED ON ANY EVIDENCE TO DISPROVE THE LOAN TRANSACTION FROM ABOV E COMPANIES ARE INGENUINE. THEREFORE, WE ARE OF THE VIEW THAT THERE IS NO REASON FOR THE AO TO TREAT LOANS FROM ABOVE 2 COMPANIES AS UNE XPLAINED CREDITS U/S 68 OF THE ACT. 7. COMING TO THE CASE LAWS RELIED UPON BY THE ASSES SEE, THE ASSESSEE HAS RELIED UPON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT LTD (20 17) 394 ITR 680 (BOM). WE HAVE GONE THROUGH THE CASE LAWS RELIE D UPON BY THE ASSESSEE IN THE LIGHT OF THE FACTS OF THE PRESENT C ASE AND FIND THAT THE HON'BLE HIGH COURT CATEGORICALLY OBSERVED THAT THE PROVISO TO SECTION 68 HAS BEEN INSERTED BY THE FINANCE ACT, 2012 WEF 01-04- TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 16 2013 IS APPLICABLE FROM AY 2013-14 ONWARDS. THE COU RT FURTHER OBSERVED THAT THE PARLIAMENT DID NOT INTRODUCE THE PROVISO TO SECTION 68WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO INTRODUCED STATES THAT IT WAS INTRODUCED FOR REMOVA L OF DOUBTS. THEREFORE, IT IS NOT OPEN TO GIVE RETROSPECTIVE EFF ECT. THE RELEVANT PORTION OF THE ORDER OF HIGH COURT IS EXTRACTED BEL OW:- 'THE PROVISO TO SECTION 68 HAS BEEN INTRODUCED BY T HE FINANCE ACT, 2012 WITH EFFECT FROM 1-4-2013. THUS, IT WOULD BE E FFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013-14 ONWARDS AND NOT FO R THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT W AS NOT EVEN THE CASE OF THE REVENUE THAT SECTION 68 AS IN FORCE DUR ING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVI SO ADDED SUBSEQUENTLY EFFECTIVE ONLY FROM 1-42013 WAS ITS NO RMAL MEANING. THE PARLIAMENT DID NOT INTRODUCED TO PROVISO OF SEC TION 68, WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO TO INTROD UCED STATES THAT IT WAS INTRODUCED 'FOR REMOVAL OF DOUBTS' OR THAT IT I S 'DECLARATORY'. THEREFORE, IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING THE BASIS THAT THE ADDITION OF THE PROVI SO TO SECTION 68IS M/S SHREE LAXMI DEVELOPERS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 BOTH BEFORE AND AF TER THE ADDING OF THE PROVISO. IN VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHI LE CONFIRMING THE SECTION 68 LAID DOWN BY THE COURT NAMELY THE GE NUINENESS OF THE TRANSACTION, IDENTITY AND THE CAPACITY OF THE INVES TOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACT IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEH ALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIV ES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAR EHOLDERS, I.E., THEY ARE BOGUS. THE APEX COURT IN A CASE IN THIS CONTEXT TO THE PRE- AMENDED SECTION 68 HAS HELD THAT WHERE THE REVENUE URGES THAT THE AMOUNT OF SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM BOGUS SHAREHOLDERS THEN IT IS FOR THE INCOME-TAX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHOLDER AND AS SESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CA SH CREDIT.' [PARA 3] 8. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION O F HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ARCHID INDU STRIES PVT LTD IN ITA NO1433/MUM/2014 DATED 5TH JULY, 2017. TH E HON'BLE BOMBAY HIGH COURT, AFTER CONSIDERING RELEVANT FACTS AND ALSO BY FOLLOWING JUDGEMENT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT LTD (SUPRA) HELD AS UNDER:_ 6] THE TRIBUNAL HAS CONSIDERED THAT THE ASSESSEE HAS PRODUCED ON RECORD THE DOCUMENTS T O ESTABLISH THE TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 17 GENUINENESS OF THE PARTY SUCH AS PAN OF ALL THE CRE DITORS ALONG WITH THE CONFIRMATION, THEIR BANK STATEMENTS SHOWING PAY MENT OF SHARE APPLICATION MONEY. IT WAS ALSO OBSERVED BY THE TRIB UNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECORD REGARD ING ISSUANCE OF SHARE I.E. ALLOTMENT OF SHARES TO THESE PARTIES, TH EIR SHARE APPLICATION FORMS, ALLOTMENT LETTERS AND SHARE CERT IFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THESE PERSONS DISCLOSES THAT THESE PERSONS HAD S UFFICIENT FUNDS IN THEIR ACCOUNTS FOR INVESTING IN THE SHARES OF THE A SSESSEE. IN VIEW OF THESE VOLUMINOUS DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE ASSESSING OFFIC ER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDGMENT IN CA SE OF GAGANDEEP INFRASTRUCTURE (P) LTD (SUPRA) WOULD M/S SHREE LAXM I DEVELOPERS BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE.' 9. THE ASSESSEE HAS ALSO RELIED UPO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD (2008) 216 CTR 195 (SC). THE HON'BLE APEX COURT WHILE DELETING THE ADDITION MADE U/S 68 OBSERVED THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW, BUT THIS AMOUNT OF SHARE APPLICATION MONEY CANNOT BE REGARDE D AS UNDISCLOSED INCOME U/S 68 OF THE INCOME-TAX ACT, 19 61. 10. COMING TO THE CASE LAWS RELIED UPON BY THE LD.D R. THE LD.DR RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COUR T IN THE CASE OF PRINCIPAL CIT VS BIKRAM SINGH IN ITA NO.55/DEL/2 017 DATED 25- 03-2017. WE HAVE GONE THROUGH THE CASE LAW RELIED B Y THE LD.DR IN THE LIGHT OF FACTS OF THE PRESENT CASE AND FIND THA T THE FACTS OF CASE BEFORE HON'BLE DELHI HIGH COURT ARE ENTIRELY DIFFER ENT FROM FACTS OF THE PRESENT CASE. THE HON'BLE DELHI HIGH COURT, HAS CONSIDERED THE FACT THAT THE INDIVIDUALS, WHO ADVANCED LOANS HAD N O FINANCIAL STRENGTH TO LEND SUCH HUGE SUM OF MONEY TO THE ASSE SSEE, THAT TOO, WITHOUT ANY COLLATERAL SECURITY WITHOUT INTEREST AN D WITHOUT A LENDER AGREEMENT. UNDER THESE FACTS, THE HON'BLE COURT HEL D THAT MERE ESTABLISHING OF THEIR IDENTITY AND THE FACT THAT TH E AMOUNTS HAVE BEEN TRANSFERRED THROUGH CHEQUE PAYMENT DOES NOT BY ITSE LF MEAN THAT THE TRANSACTIONS ARE GENUINE. IN THIS CASE, THE ASSESSE E HAS FURNISHED ALL EVIDENCES AND ALSO THE PARTIES PERSONALLY RESPONDED TO THE NOTICES M/S SHREE LAXMI DEVELOPERS ISSUED BY THE AO U/S 133(6) BY FILING VARIOUS DETAILS, THEREFORE, CASE LAW RELIED UPON BY THE LD.DR CANNOT BE APPLICABLE TO THE FACTS OF THE PRESENT CA SE. 11. IN THIS VIEW OF THE MATTER AND CONSIDERING THE RATIO OF THE CASE LAWS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 18 ASSESSEE HAS DISCHARGED IDENTITY, GENUINENESS OF TR ANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THEREFORE, THERE I S NO REASON FOR THE AO TO MAKE ADDITION TOWARDS LOAN U/S 68 OF THE ACT. HENCE, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS LOANS ALONGWITH INTEREST U/S 68 OF THE ACT. 8.1. WE FIND THAT THE LD DR VEHEMENTLY PLACED RELI ANCE ON THE RECENT DECISION OF HONBLE SUPREME COURT IN THE CAS E OF PCIT VS NRA IRON & STEEL PVT LTD ARISING OUT OF SLP(CIVIL) NO. 29855 OF 2018 DATED 5.3.2019 IN SUPPORT OF CONTENTIONS OF TH E REVENUE ON THE IMPUGNED ISSUE. IN THIS REGARD, WE FIND THAT THE F ACTS BEFORE THE HONBLE SUPREME COURT ARE CLEARLY DISTINGUISHABLE O N THE FOLLOWING GROUNDS:- A) IN PARA 3.6. OF THE SAID JUDGEMENT OF HONBLE SU PREME COURT, IT WAS MENTIONED THAT THE ENTIRE SHARE CAPITAL HAD BEE N RECEIVED BY THE ASSESSEE THROUGH NORMAL BANKING CHANNELS BY ACC OUNT PAYEE CHEQUES / DEMAND DRAFTS, AND PRODUCED DOCUMENTS SUC H AS INCOME TAX RETURN ACKNOWLEDGEMENTS TO ESTABLISH IDENTITY A ND GENUINENESS OF THE TRANSACTION. IT WAS SUBMITTED THAT, THERE W AS NO CAUSE TO TAKE RECOURSE TO SECTION 68 OF THE ACT, AND THAT THE ONU S ON THE ASSESSEE COMPANY STOOD FULLY DISCHARGED. B) IN PARA 3.7. OF THE SAID JUDGEMENT OF HONBLE SU PREME COURT, IT WAS MENTIONED THAT THE AO HAD ISSUED SUMMONS TO THE REPRESENTATIVES OF THE INVESTOR COMPANIES. DESPITE THE SUMMONS HAVING BEEN SERVED, NOBODY APPEARED ON BEHALF OF AN Y OF THE INVESTOR COMPANIES. THE DEPARTMENT ONLY RECEIVED S UBMISSIONS THROUGH DAK, WHICH CREATED A DOUBT ABOUT THE IDENTI TY OF THE INVESTOR COMPANIES. C) IN PARA 3.8. OF THE SAID JUDGEMENT OF HONBLE SU PREME COURT, IT WAS MENTIONED THAT THE AO INDEPENDENTLY GOT FIELD E NQUIRIES CONDUCTED WITH RESPECT TO THE IDENTITY AND CREDIT-W ORTHINESS OF THE INVESTOR COMPANIES, AND TO EXAMINE THE GENUINENESS OF THE TRANSACTION. ENQUIRIES WERE MADE AT MUMBAI, KOLKAT A AND GUWAHATI WHERE THESE COMPANIES WERE STATED TO BE SI TUATED. IN THE AFORESAID CASE BEFORE THE HONBLE SUPREME CO URT, THE RESULT OF THE ENQUIRY BY THE AO REVEALED THE FOLLOWING:- A) NOTICE WERE DULY SERVED ON CERTAIN INVESTOR COMPANI ES, BUT NO REPLY WAS RECEIVED FROM THEM ; B) SOME OF THE INVESTOR COMPANIES WERE FOUND TO BE CL OSED AT THEIR CORRECT ADDRESS ; C) NOTICE COULD NOT BE SERVED ON SOME OF THE INVESTOR COMPANIES ; D) SOME OF THE INVESTOR COMPANIES REPLIED TO NOTICE U/ S 133(6) OF THE ACT WHEREIN THEY HAD CONFIRMED HAVING MADE INVESTME NT IN SHARE TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 19 APPLICATION MONEY IN NRA IRON & STEEL PVT LTD BUT H AD LIMITED INCOME AS PER THEIR INCOME TAX RETURNS WHICH IN TUR N RESULTED IN DOUBTING OF CREDITWORTHINESS ; E) MOST OF THE INVESTOR COMPANIES THOUGH CONFIRMED THE FACT OF HAVING MADE INVESTMENT IN SHARE APPLICATION MONEY IN NRA I RON & STEEL PVT LTD , BUT HAD NOT FILED THEIR BANK STATEMENTS T O PROVE THE IMMEDIATE SOURCE OF CREDIT AVAILABLE TO THEM FOR MA KING THE SAID INVESTMENT. 8.1.1. IN THE INSTANT CASE BEFORE US, THE LD AO DID NOT ISSUE ANY SUMMONS U/S 131 OF THE ACT OR MAKE FURTHER ENQUIRIE S TO EXAMINE THE VERACITY OF THE EVIDENCES FILED ON RECORD BEFOR E HIM BY THE ASSESSEE AS WELL AS BY THE LOAN CREDITORS IN RESPON SE TO NOTICE U/S 133(6) OF THE ACT. MOREOVER, ALL THE LOAN CREDITOR S HAD DULY FURNISHED THEIR RESPECTIVE BANK STATEMENTS PROVING THE IMMEDIATE SOURCE OF CREDIT FOR THEM TO JUSTIFY THAT THEY HAD SUFFICIENT CREDITWORTHINESS TO ADVANCE LOAN TO THE ASSESSEE CO MPANY. FROM THE PERUSAL OF THE BALANCE SHEET OF ALL INVESTOR CO MPANIES, ALL THE LOAN CREDITORS HAD SUFFICIENT OWN FUNDS IN THEIR KI TTY WHICH PROVE THEIR CREDITWORTHINESS TO ADVANCE LOAN TO THE ASSES SEE COMPANY. AS HAS BEEN STATED HEREINABOVE, THE MOST EXCRUCIATING POINT OF DIFFERENCE IN FACTS VIS A VIS THE FACTS OF THE CASE BEFORE THE HONBLE SUPREME COURT SUPRA THAT THE INVESTOR COMPANIES HAD NOT EVEN FURNISHED THEIR BANK STATEMENTS TO PROVE THEIR IMME DIATE SOURCE OF CREDIT FOR MAKING INVESTMENT IN SHARE APPLICATION M ONIES OF NRA IRON & STEEL PVT LTD. FROM THE BANK STATEMENTS FURN ISHED BY THE LOAN CREDITORS IN THE CASE OF THE ASSESSEE HEREIN, WE FIND THAT THERE WERE NO CASH DEPOSITS IN THE BANK ACCOUNTS OF THE L ENDERS PRIOR TO ISSUANCE OF LOAN TO THE ASSESSEE COMPANY. IN THE CASE BEFORE THE HONBLE SUPREME COURT, THE AO IN THAT CASE HAD MADE FIELD ENQUIRIES AT MUMBAI, KOLKATA AND GUWAHATI WHERE THO SE INVESTOR COMPANIES WERE STATED TO BE SITUATED TO EXAMINE THE IR IDENTITY AND CREDENTIALS AND THE RESULT OF SUCH ENQUIRY HAD BEEN SUMMARIZED HEREINABOVE. WHEREAS IN THE INSTANT CASE BEFORE US , NO SUCH ENQUIRIES WERE CONDUCTED BY THE LD AO TO DOUBT THE VERACITY OF THE DETAILS AND EVIDENCES FILED BY THE LOAN CREDITORS I N RESPONSE TO NOTICE U/S 133(6) OF THE ACT DIRECTLY BEFORE HIM. IN THE INSTANT CASE BEFORE US, ALL THE NOTICES U/S 133(6) OF THE ACT WE RE DULY SERVED ON ALL THE AFORESAID LOAN CREDITORS AND ALL OF THEM H AD INDEPENDENTLY FILED THEIR REPLIES DIRECTLY BEFORE THE LD AO. THE BANK STATEMENTS WERE ALSO DULY FURNISHED BY THE LOAN CREDITORS TO P ROVE THAT THEY HAD SUFFICIENT CREDITWORTHINESS TO ADVANCE LOAN TO THE ASSESSEE COMPANY AND SINCE ALL THE TRANSACTIONS WERE ROUTED THROUGH REGULAR BANKING CHANNELS BY ACCOUNT PAYEE CHEQUES AND IN V IEW OF THE FACT THAT THERE WERE NO CASH DEPOSITS PRIOR TO ISSUANCE OF LOAN TO THE ASSESSEE COMPANY, THE GENUINENESS OF TRANSACTIONS A LSO STAND CLEARLY ESTABLISHED. THIS GOES TO PROVE THEIR IDENT ITY, TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 20 CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS OF ALL THE LOAN CREDITORS. IN THIS SCENARIO, IT COULD BE SAFELY PRE SUMED THAT THE LD AO WAS APPARENTLY SATISFIED WITH THE REPLIES GIVEN THEREON BY THE LOAN CREDITORS DIRECTLY BEFORE HIM IN RESPONSE TO N OTICE U/S 133(6) OF THE ACT AND HENCE THERE IS NO NEED TO MAKE ANY EXAM INATION FURTHER. 8.2. IN VIEW OF THE AFORESAID DISTINGUISHING FEATU RES ON FACTS OF THE ASSESSEE COMPANY VIS A VIS THE FACTS BEFORE THE HONBLE SUPREME COURT, WE HOLD THAT THE RELIANCE PLACED BY THE LD D R ON THE DECISION OF HONBLE SUPREME COURT SUPRA DOES NOT COME TO THE RESCUE OF THE REVENUE. 8.3. AT THE COST OF REPETITION, WE WOULD LIKE TO S TATE THAT THE LD CIT(A) HAD MERELY PLACED RELIANCE ON THE DECISION T AKEN BY HIS PREDECESSOR IN ASST YEAR 2012-13 IN ASSESSEES OWN CASE IN SIMILAR SET OF FACTS. WE FIND THAT THIS DECISION FOR ASST YEAR 2012-13 IN ASSESSEES OWN CASE HAS BEEN REVERSED BY THIS TRIBU NAL VIDE ITS ORDER DATED 29.12.2017 REFERRED TO SUPRA. IN VIEW O F OUR AFORESAID FINDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR ASST YEAR 2012-13, WE HOLD THAT THE ASSESSEE COMPAN Y HAD DULY PROVED THE NATURE AND SOURCE OF CREDIT IN THE FORM OF UNSECURED LOAN AND HAD DULY SATISFIED THE THREE NECESSARY ING REDIENTS OF SECTION 68 OF THE ACT VIZ, THE IDENTITY OF THE LOAN CREDITORS , CREDITWORTHINESS OF LOAN CREDITORS AND GENUINENESS OF LOAN TRANSACTIONS. HENCE WE DIRECT THE LD AO TO DELETE THE ADDITION MADE IN THE SUMS OF RS 50 LACS AND RS 25 LACS TOWARDS UN SECURED LOAN U/S 68 OF THE ACT. ACCORDINGLY, THE GROUNDS 1 TO 6 RAIS ED BY THE ASSESSEE ARE ALLOWED. 17. IN THE CASE OF PCIT VS. HI-TECH RESIDENCY PVT. LTD. (2018) 257 TAXMAN 335, HONBLE SUPREME COURT HAS CONSIDERED ID ENTICAL ISSUE AND HELD THAT WHERE AN ASSESSEE COMPANY HAD DISCHARGED THE ONUS OF ESTABLISHING IDENTITY, GENUINENESS OF TRANSACTION A ND CREDITWORTHINESS OF INVESTORS, NO ADDITIONS COULD BE MADE U/S. 68 OF TH E I.T. ACT, 1961. WE, FURTHER, NOTED THAT ALTHOUGH THE APEX COURT HAS NOT EXPRESSED ANY OPINION, BECAUSE OF DISMISSAL OF SLP FILED BY THE A SSESSEE, THE FACT OF THE MATTER IS THAT THIS ISSUE HAS BEEN CONSIDERED BY TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD (SUPRA), WHERE THE ISSUE HAS BEEN THOROUGHLY EXAMINED IN THE LIGHT OF PROVISIONS OF SECTION 68 OF THE ACT, AND HELD THAT IF THE SHARE APPLICATI ON MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDE RS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR ASSESSMENT IN ACCORDANCE WITH LAW, BUT SUM RE CEIVED FROM SHARE HOLDERS CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 21 18. IN THIS VIEW OF THE MATTER AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO TAKING INTO CON SIDERATION VARIOUS CASE LAWS AS DISCUSSED HEREINABOVE, WE ARE OF THE C ONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS TO PRO VE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES BY FILING VARIOUS DOCUMENTS. THE AO, WITHOUT CARRYING OUT FURTHER INQ UIRIES IN ORDER TO ASCERTAIN THE CLAIM OF THE ASSESSEE, JUMPED INTO CO NCLUSION ON THE BASIS OF FINANCIAL STATEMENTS OF THE SUBSCRIBERS THAT NON E OF THEM HAD ENOUGH SOURCE OF INCOME TO ESTABLISH CREDITWORTHINESS. TH EREFORE, WE ARE OF THE VIEW THAT THE AO WAS ERRED IN MAKING ADDITIONS TOWA RDS SHARE CAPITAL U/S 68 OF THE INCOME TAX ACT, 1961. THE LEARNED CIT(A) WITHOUT APPRECIATING RELEVANT FACTS HAS CONFIRMED ADDITIONS MADE BY THE AO TOWARDS SHARE CAPITAL U/S 68 OF THE INCOME TAX ACT, 1961. HENCE, WE REVERSE FINDINGS OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION S MADE TOWARDS SHARE CAPITAL U/S. 68 OF THE INCOME TAX ACT, 1961. 19. INSOFAR AS, ADDITIONS TOWARDS PROBABLE COMMISSI ON PAYMENT TO ENTRY PROVIDES, WE FIND THAT SINCE, WE HAVE DELETED ADDITIONS MADE BY THE AO TOWARDS SHARE CAPITAL, CONSEQUENT ADDITIONS MADE TOWARDS PROBABLE COMMISSION @ 0.75%, ON TOTAL TRANSACTIONS IS ALSO I NCORRECT AND ACCORDINGLY, DIRECT THE AO TO DELETE ADDITIONS MADE TOWARDS COMMISSION ESTIMATION. 5. I HAVE CAREFULLY GONE THROUGH THE ORDER OF THE T RIBUNAL AND FOUND THAT WITH RESPECT TO THE VERY SAME SEARCH AND VERY SAME MODUS OPERANDI AS ALLEGED BY THE AO, ADDITIONS SO MADE WA S DELETED BY THE TRIBUNAL. AS THE FACTS AND CIRCUMSTANCES IN THE CAS E OF PRESENT ASSESSEE WITH SAME A.Y.2010-11 ARE SAME, RESPECTFULLY FOLLOW ING THE ORDER OF THE CO-ORDINATE BENCH, WE DO NOT FIND ANY MERIT FOR THE ADDITION SO MADE ON ACCOUNT OF SHARE CAPITAL AND THE ALLEGED COMMISSION PAID FOR OBTAINING THE SAME. 6. AN ADDITION U/S.14A WAS ALSO MADE BY THE A.O. I N THE GROUP CASES, AND THE SAME HAS BEEN DELETED BY THE TRIBUNA L AFTER OBSERVING AS UNDER:- TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 22 20. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERAT ION FROM GROUND NO.4 OF ASSESSEES APPEAL IS ADDITIONS TOWAR DS DISALLOWANCES OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOM E. WE FIND THAT THE AO HAS MADE ADDITIONS TOWARDS DISALLOWANCES OF EXPE NDITURE IN THE ASSESSMENT FRAMED U/S 143(3) R.W.S. 153A OF THE I.T .ACT, 1961, WITHOUT REFERENCE TO ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. IT IS SETTLED POSITION OF LAW THAT IN ORDER TO MAKE AN Y ADDITIONS IN THE ASSESSMENTS, WHICH ARE FRAMED U/S 153A, THE ADDITIO NS QUA INCRIMINATING MATERIAL IS A MUST. UNLESS, THE AO HA S INCRIMINATING MATERIAL IN HIS POSSESSION TO PROVE THAT ANY ITEM O F ADDITION IS SUPPORTED BY INCRIMINATING MATERIAL FOUND, AS A RES ULT OF SEARCH, NO ADDITIONS COULD BE MADE IN THE ASSESSMENTS FRAMED U /S 153A, IF SUCH ASSESSMENT HAS BEEN COMPLETED /UNABATED AS ON THE D ATE OF SEARCH. IN THIS CASE, THE FACTS WITH REGARD TO NO REFERENCE TO INCRIMINATING MATERIAL, IN RESPECT OF ADDITIONS TOWARDS DISALLOWA NCES OF EXPENDITURE U/S 14A R.W.RULE 8D IS NOT DISPUTED BY THE REVENUE. WHEN, THE BENCH HAS SPECIFICALLY ASKED THE LD. DR ABOUT INCRIMINATI NG MATERIAL, THE LD. DR FAILED TO PROVE THAT THE ADDITIONS MADE BY T HE AO TOWARDS DISALLOWANCES OF EXPENDITURE IS SUPPORTED BY ANY IN CRIMINATING MATERIAL. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEA RCH, NO ADDITIONS COULD BE MADE IN THE ASSESSMENT FRAMED U/S 153A OF THE I.T.ACT, 1961. THIS LEGAL PROPOSITION IS SUPPORTED BY THE DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA LTD. (2015) 37 4 ITR 645, WHERE THE HONBLE HIGH COURT CLEARLY HELD THAT IN A BSENCE OF INCRIMINATING MATERIAL NO ADDITIONS COULD BE MADE, IN RESPECT OF ASSESSMENT WHICH BECOME FINAL AND NO PROCEEDINGS I S PENDING, AS ON THE DATE OF SEARCH. THEREFORE, WE ARE OF THE CONSID ERED VIEW THAT THE AO WAS ERRED IN MAKING ADDITIONS TOWARDS DISALLOWAN CES OF EXPENDITURE, IN RELATION TO EXEMPT INCOME U/S 14A R .W.RULE 8D(2), IN ABSENCE OF SEIZED MATERIALS. THE LD. CIT(A) WITHOUT APPRECIATING THE FACTS SIMPLY UPHELD THE ADDITIONS MADE BY THE AO. T HEREFORE, WE REVERSE THE FINDINGS OF LD.CIT(A) AND DELETE ADDITI ONS MADE BY THE AO TOWARDS DISALLOWANCE OF EXPENDITURE INCURRED IN REL ATION TO EXEMPT INCOME U/S 14A OF THE I.T.ACT, 1961. 21. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED 6. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FOUND THAT WHILE FRAMING ASSESSMENT U/S 153A R.W.S 143(3) OF THE ACT. THE TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 23 A.O. HAS MADE DISALLOWANCE U/S 14A OF THE ACT AMOUN TING TO RS. 28,114/- HOWEVER, NO INCRIMINATING MATERIAL WAS REF ERRED BY THE A.O. WHILE MAKING ADDITION U/S 14A OF THE ACT. THIS ISSU E HAS ALSO BEEN DEALT WITH BY THE TRIBUNAL KIN THE GROUP CASES AS STATED ABOVE AND AFTER OBSERVING THAT IN ABSENCE OF ANY INCRIMINATING MATE RIAL, NO ADDITION CAN BE MADE IN RESPECT OF THE ASSESSMENT WHICH BECOME F INAL AND NO PROCEEDING IS PENDING AS ON THE DATE OF SEARCH. IN THE TRIBUNAL ORDER ALSO AS STATED ABOVE, SEARCH WAS ALSO TAKEN ON 24/0 9/2013 AND WITH REFERENCE TO THE VERY SAME SEARCH, THE A.O. AS MADE DISALLOWANCE U/S 14A OF THE ACT. AS THE FACTS AND CIRCUMSTANCES DURI NG THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE GROUP CASE, WE DO NOT FIND ANY MERIT FOR THE ADDITION MADE U/S.14A OF THE IT ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND MARCH, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 02/03/2020 KARUNA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. TA NO. 2562/MUM/2018 RUKMANI AGENCIES PVT. LD. VS DCIT 24 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//