M/s Koochie Play Systems Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-4(1)(1), Bangalore

ITA 2828/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2682 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-07-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 12-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SHYAM CHAKRAVARTHY
• Keywords: Opportunity of being heard; Question of law; Valuation report; TDS; Set aside
• Section: 56(2); 68; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 2828 (BANG) 2018 (ASSESSMENT YEAR : 2013 14) M/S. KOCHIE PLAY SYSTEMS PVT. LTD., APPELLANT NO. 23, 3 RD FLOOR, FARAH WINDFORD, 133, INFANTRY ROAD, BANGALORE 560001. PAN. AADCK8647F VS THE DCIT, CIRCLE 4 (1) (1), RESPONDENT BANGALORE. ASSESSEE BY : SHRI SHYAM CHAKRAVARTHY, C. A. REVENUE BY : SHRI M. RAJASEKHAR, ADDL. CIT DR DATE OF HEARING : 17 07 2019 DATE OF PRONOUNCEMENT : 28 08 2019 O R D E R PER A. K. GARODIA, A.M.: THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER OF CIT (A) 9, BANGALORE DATED 28.09.2018 FOR A. Y. 2013 14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER:- GROUND NO. 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(1), BANGALORE (HEREINAFTER REFERRED TO AS 'AO' FOR SHORT) IS BAD IN LAW AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (HEREINAFTER REFERRED TO AS 'CIT (A)' FOR SHORT) HAS ERRED IN CONFIRMING THE SAME IN PART. GROUND NO. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN LAW AND ON FACTS ON ADDITION OF DIFFERENTIAL AMOUNT OF SHARE PREMIUM OF RS 8,15,390 UNDER SECTION 56(2) OF INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'), IGNORING THE FACTS THAT SHARE VALUATION WAS CARRIED BASED ON RECEIPTS OF SHARE APPLICATION MONEY AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME. GROUND NO. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN DISREGARDING THE DOCUMENTARY EVIDENCE ITA NO. 2828/BANG/2018 2 SUBMITTED TO SUBSTANTIAL THE BONA FIDES OF THE SHARE CAPITAL AND SHARE PREMIUM ACCOUNT INVESTED BY REPUTED INVESTORS AND HOLDING THE SAME TO BE INCOME UNDER SECTION 68 OF THE ACT AND THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE SAME IN PART. THE APPELLANT PRAYS THAT EACH OF THE ABOVE GROUNDS BE CONSIDERED DISCRETELY AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, OMIT OR ALTER GROUNDS OF APPEAL BEFORE OR DURING THE HEARING OF THE APPEAL. 3. LEARNED AR OF THE ASSESSEE HAS FILED SYNOPSIS & WRITTEN SUBMISSIONS, REPRODUCED HEREIN BELOW:- SYNOPSIS & WRITTEN SUBMISSIONS THE ABOVE MENTIONED APPELLANT, BEING AGGRIEVED BY THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) - 9, BANGALORE, HAS INSTITUTED THE ABOVE APPEAL BEFORE THIS HON'BLE TRIBUNAL. IN ADDITION TO THE GROUNDS OF APPEAL FILED AT THE TIME OF INSTITUTION OF APPEAL, THE APPELLANT IS FILING THIS SYNOPSIS AND WRITTEN SUBMISSIONS TO ASSIST THIS HON'BLE BENCH. THE APPELLANT IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN PLAYGROUND EQUIPMENTS. FOR THE YEAR 2013-14, THE CASE OF THE APPELLANT WAS SELECTED FOR SCRUTINY. THE FOLLOWING ADDITIONS WERE MADE TO THE DECLARED INCOME, WHICH WERE LATER ON CONFIRMED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). THE ADDITIONS MADE TO THE DECLARED INCOME ARE:- 1. ADDITION OF RS.3,91,89,304/- UNDER SECTION 68 OF THE ACT INVOLVING MOONIES RECEIVED FROM THREE PERSONS VIZ., DEEPAK KALRO, SHAMBAJI RAGHUNATH TUPE & D B CORPORATION LIMITED TOWARDS SUBSCRIPTION OF EQUITY SHARES IN THE APPELLANT COMPANY. 2. ADDITION OF RS.8,15,390/- UNDER SECTION 56(2) OF THE ACT. AGGRIEVED BY THE ORDER OF THE LOWER AUTHORITIES, THE APPELLANT IS IN APPEAL BEFORE THIS HON'BLE TRIBUNAL. THE ISSUES INVOLVED, THEIR RELEVANT GROUNDS AND RELEVANCE TO THE PAPER COMPILATION IS PROVIDED FURTHER IN THIS WRITTEN SUBMISSION. I. RS.1,49,99,446/- ON ACCOUNT OF MONEY RECEIVED FROM DEEPAK KALRO ADDED U/S 68. [GROUND NO. 3] DURING THE YEAR, THE APPELLANT HAS RECEIVED AN AMOUNT OF RS.1,50,00,000/- TOWARDS SHARE CAPITAL AND PREMIUM WHICH IS ADDED BY THE AUTHORITIES UNDER SECTION 68 OF THE ACT. IT IS SUBMITTED THAT THE APPELLANT HAS FULFILLED THE PRIMARY ONUS CAST UPON HIM I.E., IDENTITY OF THE PERSON MAKING THE PAYMENT, CREDITWORTHINESS AND CONFIRMATION BY THE PERSON MAKING SUCH PAYMENT. THE AUTHORITIES BELOW FAILED TO MAKE ANY ENQUIRIES BASED ON THE INFORMATION PROVIDED BY THE APPELLANT. THE ITA NO. 2828/BANG/2018 3 NATURE AND SOURCE OF INVESTMENT MADE IS EXPLAINED. THE RELEVANT PAPERS FORMING PART OF THE PAPER COMPILATION ARE AS UNDER:- IDENTITY: THE IDS SCHEME DECLARED BY SHRI. DEEPAK KALRO IS AT PAGE 101 OF THE PAPER BOOK WHICH CONTAINS THE PERMANENT ADDRESS, PAN AND OTHER RELEVANT INFORMATION. CREDITWORTHINESS: THE IDS IS SELF-EXPLANATORY THAT THE PERSON MAKING THE PAYMENT HAS SUFFICIENT SOURCES. THE APPELLANT HAS ALSO PRODUCED THE BANK STATEMENT OF SHRI. DEEPAK KALRO, WHICH IS PLACED AT PAGE 126 OF THE PAPER BOOK_ AN ANALYSIS OF THE BANK STATEMENT OF SHRI. DEEPAK REVEALS CREDITS TO HIS BANK ACCOUNT FROM SEVERAL PARTIES WHICH IS IN FACT THE SOURCE FOR MAKING THE PAYMENT TO THE APPELLANT. IN OTHER WORDS, AS ON THE DATE OF MAKING THE PAYMENT, THE CREDITOR HAD SUFFICIENT FUNDS TO SUBSCRIBE FOR THE CAPITAL OF THE APPELLANT COMPANY. CONFIRMATION: SHRI. DEEPAK KALRO HAS CONFIRMED THE INVESTMENT MADE VIDE CONFIRMATION LETTER PLACED AT PAGE 112 OF THE PAPER COMPILATION. II. RS.50,05,070/- ON ACCOUNT OF MONEY RECEIVED FROM SHAMBAJI RAGHUNATH TUPE ADDED U/S 68. [GROUND NO. 3] DURING THE YEAR, THE APPELLANT HAS RECEIVED AN AMOUNT OF RS.50,00,000/- TOWARDS SHARE CAPITAL AND PREMIUM WHICH IS ADDED BY THE AUTHORITIES UNDER SECTION 68 OF THE ACT. IT IS SUBMITTED THAT THE APPELLANT HAS FULFILLED THE PRIMARY ONUS CAST UPON HIM I.E., IDENTITY OF THE PERSON MAKING THE PAYMENT, CREDITWORTHINESS AND CONFIRMATION BY THE PERSON MAKING SUCH PAYMENT. THE AUTHORITIES BELOW FAILED TO MAKE ANY ENQUIRIES BASED ON THE INFORMATION PROVIDED BY THE APPELLANT. THE NATURE AND SOURCE OF INVESTMENT MADE IS EXPLAINED. THE RELEVANT PAPERS FORMING PART OF THE PAPER COMPILATION ARE AS UNDER:- IDENTITY: THE INCOME-TAX RETURN FOR THE AY: 2013-14 BY SHRI. SAMBAJI IS AT PAGE 67 OF THE PAPER BOOK WHICH CONTAINS THE PERMANENT ADDRESS, PAN AND OTHER RELEVANT INFORMATION. THE GROSS TOTAL INCOME DECLARED IS RS.2,16,12,775/-. REFER PAGE 67 OF THE PAPER BOOK CREDITWORTHINESS: THE ITR FILED BY SAMBHAJI TUPE IS SELF-EXPLANATORY THAT THE PERSON MAKING THE PAYMENT HAS SUFFICIENT SOURCES. REFER PAGE 67 OF THE PAPER BOOK. FURTHER THERETO, THE BANK STATEMENTS OF SHRI. SAMBHAJI TUPE AND KAVITA TUPE ARE PLACED AT PAGE 114 AND PAGE 120 RESPECTIVELY. CONFIRMATION: OUT OF THE TOTAL INVESTMENT, RS.25,00,000/- IS PAID BY SMT. KAVITA TUPE WIFE OF SHRI. SAMBHAJI TUPE WHICH IS ACCOUNTED RESPECTIVELY IN THEIR BOOKS OF ACCOUNTS. REFER PAGE 171 OF THE PAPER BOOK. ITA NO. 2828/BANG/2018 4 THE CIT(A) FAILS TO IDENTIFY THE GENUINENESS OF THE TRANSACTION. THE MONEY HAS BEEN PAID BY SMT. KAVITA TUPE AND RIGHTFULLY DECLARED AS ADVANCE PAID IN HER BOOKS. THE TRANSACTION STANDS CLARIFIED. REFER PAGE 173 OF PAPER BOOK WHEREIN THE LEDGER ACCOUNT OF SAMBHAJI TUPE IN THE BOOKS OF SMT. KAVITA TUPE REFLECTS THE PAYMENT MADE TO THE APPELLANT AMOUNTING TO RS.25,00,000/-. III. RS.2,00,00,178/- ON ACCOUNT OF MONEY RECEIVED FROM D B CORPORATION LIMITED ADDED U/S 68. [GROUND NO. 3] DURING THE YEAR, THE APPELLANT HAS RECEIVED AN AMOUNT OF RS.2,00,00,000/- TOWARDS SHARE CAPITAL AND PREMIUM WHICH IS ADDED BY THE AUTHORITIES UNDER SECTION 68 OF THE ACT. D B CORPORATION IS A LISTED COMPANY. I T IS SUBMITTED THAT THE APPELLANT HAS FULFILLED THE PRIMARY ONUS CAST UPON HIM I.E., IDENTITY OF THE PERSON MAKING THE PAYMENT, CREDITWORTHINESS AND CONFIRMATION BY THE PERSON MAKING SUCH PAYMENT. THE AUTHORITIES BELOW FAILED TO MAKE ANY ENQUIRIES BASED ON THE INFORMATION PROVIDED BY THE APPELLANT. THE NATURE AND SOURCE OF INVESTMENT MADE IS EXPLAINED. THE RELEVANT PAPERS FORMING PART OF THE PAPER COMPILATION ARE AS UNDER:- IDENTITY: THE AUDITED FINANCIALS OF DB CORPORATION LIMITED FOR FY 2012-13 IS AT PAGE 72 OF THE PAPER BOOK WHICH CONTAINS THE PERMANENT ADDRESS, PAN AND OTHER RELEVANT INFORMATION. CREDITWORTHINESS: AS PER AUDITED FINANCIALS, D B CORPORATION HAS PROFIT AFTER TAX OF RS.343,74,27,405/-. BANK STATEMENTS OF D B CORPORATION LIMITED IS PLACED AT PAGE 130 OF THE PAPER BOOK. CONFIRMATION: THE INVESTMENT MADE IN THE CAPITAL OF THE APPELLANT IS DISCLOSED IN THE AUDITED FINANCIALS OF D B CORPORATION. REFER PAGE 84 OF THE PAPER BOOK. THE LEARNED CIT(A) HAS GIVEN A FINDING THAT THE MONIES RECEIVED HAVE BEEN PAID BACK TO D B CORPORATION LIMITED. IT IS SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE UNDER SECTION 68, WHICH IS CONFIRMED BY THE CIT(A). FOR THE PURPOSES OF SECTION 68, THE CREDIT APPEARING IN THE BOOKS OF ACCOUNTS HAVE TO BE SATISFACTORILY EXPLAINED, WHICH HAS BEEN DONE. THE CIT(A) HAS GONE INTO THE ASPECTS OF PAYMENT WHICH WOULD NOT BE RELEVANT IN SO FAR AS ADDITIONS U/S 68 ARE CONCERNED. THE LEARNED AO IN THE REMAND REPORT HAS ADMITTED THE INVESTMENT MADE BY D B CORPORATION LIMITED. COMMON SUBMISSIONS IN RESPECT OF ADDITIONS MADE UNDER SECTION 68 OF THE ACT. 1. THE FOLLOWING SUBMISSIONS ARE COMMONLY MADE IN RESPECT OF THE ABOVE ADDITIONS. 2. PRIMA FACIE, ALL THE AMOUNTS RECEIVED BY THE APPELLANT ARE RECEIVED THROUGH BANKING CHANNELS. THE AUTHORITIES BELOW HAVE NOT DISPUTED ITA NO. 2828/BANG/2018 5 THE VALUATION REPORTS SUBMITTED BY THE APPELLANT. HENCE THE TRANSACTIONS ARE BASICALLY GENUINE. 3. WITH REGARD TO THE VERACITY OF THE APPLICANTS AND MONIES PAID, THE APPELLANT SUBMITTED ALL THE DOCUMENTS REFERRED ABOVE BEFORE THE AUTHORITIES BELOW. THE AUTHORITIES BELOW OUGHT TO HAVE MADE ENQUIRIES TO CONFIRM THE DOCUMENTS PRODUCED AND STATEMENTS MADE BY THE APPELLANT. IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER NEVER SOUGHT TO MAKE ANY ENQUIRIES OR INVESTIGATION EITHER AT THE TIME OF ASSESSMENT OR THE TIME OF REMAND PROCEEDINGS. WHERE THE APPELLANT HAS DISCHARGED ITS PRIMARY ONUS OF PROVIDING THE DOCUMENTS, INFORMATION ABOUT THE PERSONS MAKING THE PAYMENT AND INCLUDING THEIR CREDIT-WORTHINESS. THE APPELLANT HAS ALSO PRODUCED THE BANK STATEMENTS OF THE PERSONS MAKING THE PAYMENT, WHO HAD SUFFICIENT BANK BALANCES AT THE TIME OF MAKING THE PAYMENT. WHEREFORE, THE LOWER AUTHORITIES WERE DUTY BOUND TO MAKE ALL SUCH ENQUIRIES WHICH THEY FOUND RELEVANT TO ENSURE WHETHER THE CREDITS TO THE BANK ACCOUNT OF THE APPELLANT WERE GENUINE. 4. RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE JHARKHAND HIGH COURT IN THE CASE OF CIT VS. SIDHI VINAYAK METCON LIMITED REPORTED IN 414 ITR 402 WHEREIN THE HON'BLE COURT HAS HELD AS UNDER:- 'THE ADDITIONS UNDER SECTION 68 SHOULD NOT HAVE BEEN MADE BY THE ASSESSING OFFICER BECAUSE THE AMOUNTS WERE RECEIVED BY WAY OF CHEQUES. ALL THE DETAILS REGARDING THE APPLICANTS WERE FURNISHED BY THE ASSESSEE AND DEPARTMENT COULD HAVE ISSUED NOTICES TO SUCH APPLICANTS AND THERE WAS NO NEED FOR THE ASSESSING OFFICER TO HAVE MADE THE ADDITIONS. NO QUESTION OF LAW ARISES.' 5. RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF PR. CIT VS. NRA IRON AND STEEL PRIVATE LIMITED REPORTED IN 412 ITR 161 WHEREIN THE HON'BLE APEX COURT HAS HELD AS UNDER:- 'THE PRINCIPLES WHICH EMERGE WHERE SUMS OF MONEY ARE CREDITED AS SHARE CAPITAL OR PREMIUM ARE 1. THE ASSESSEE IS UNDER A LEGAL OBLIGATION TO PROVE THE GENUINENESS OF THE TRANSACTION, THE IDENTITY OF THE CREDITORS, AND CREDITWORTHINESS OF THE INVESTORS WHO SHOULD HAVE THE FINANCIAL CAPACITY TO MAKE THE INVESTMENT IN QUESTION, TO THE SATISFACTION OF THE ASSESSING OFFICER, SO AS TO DISCHARGE THE PRIMARY ONUS. 2. THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITOR OR SUBSCRIBER, VERIFY THETHE IDENTITY OF THE SUBSCRIBERS, AND ASCERTAIN WHETHER THE TRANSACTION IS GENUINE, OR THESE ARE BOGUS ENTRIES OF NAME-LENDERS. 3. IF THE ENQUIRIES AND INVESTIGATIONS REVEAL THE IDENTITY OF THE CREDITORS TO BE DUBIOUS OR DOUBTFUL, OR LACK CREDITWORTHINESS, 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.' 6. ACCORDING TO THE SUPREME COURT, ONCE THE ASSESSEE PROVIDES WITH THE BASIC INFORMATION ABOUT THE CREDITORS AND THEIR CREDITWORTHINESS, ITA NO. 2828/BANG/2018 6 THE ASSESSING AUTHORITY IS DUTY BOUND TO MAKE AN INVESTIGATION. IN THE INSTANT CASE, THE AUTHORITIES BELOW NEVER VENTURED INTO MAKING ANY SORT OF INVESTIGATION BASED ON THE INFORMATION PROVIDED BY THE APPELLANT. THE BANK STATEMENTS OF THE PERSONS MAKING THE PAYMENT REVEAL THAT THEY HAD SUBSTANTIATE BANK BALANCES TO SUBSCRIBE FOR THE CAPITAL OF THE APPELLANT. WHEREFORE, FAILURE ON THE PART OF THE ASSESSING OFFICER TO ENQUIRE BASED ON DOCUMENTS PRODUCED WILL NOT VITIATE THE GENUINENESS OF THE TRANSACTIONS. 7. IN VIEW OF THE ABOVE, IT IS PRAYED THAT THE ADDITION OF RS.3,91,89,304/- MADE UNDER SECTION 68 OF THE ACT MAY KINDLY BE DELETED IN THE INTEREST OF EQUITY AND JUSTICE. ADDITION OF RS.8,15,390/- UNDER SECTION 56(2) OF THE ACT. [GROUND NO. 2] THE APPELLANT HAD OBTAINED TWO INDEPENDENT VALUATION REPORTS IN DETERMINING THE SHARE PREMIUM. THE VALUATION IS CONDUCTED AT SEPARATE TIME AND DATE. THE LEARNED ASSESSING OFFICER HAS ADDED THE DIFFERENCE IN PREMIUM ARRIVED BY TWO DIFFERENT VALUATION REPORTS. THE VALUATION REPORTS ARE PLACED AT PAGE THE PARTICULARS OF THE VALUATION REPORTS ARE AS UNDER:- SL NO REPORT ISSUED BY DATE OF REPORT VALUE OF SHARE PURPOSE 1 DINESH J RANKA & CO 18-09-2012 RS. 7,882/- VALUED FOR THE PURPOSE OF ISSUING SHARES TO DEEPAK KALRO AND SAMBHAJI TUPE 2 DINESH J RANKA & CO 01-03-2013 RS. 8,217/- VALUED FOR THE PURPOSE OF ISSUING SHARES TO D B CORPORATION LTD. INCREASE IN VALUE PER SHARE RS. 335/ - THE VALUATION REPORT DATED 18-09-2012 WAS VALUED AT THE TIME WHEN THE PAYMENTS WERE RECEIVED FROM THE SUBSCRIBERS I.E., DEEPAK KALRO AND SAMBHAJI TUPE. SIMILARLY, THE VALUATION REPORT DATED 01-03-2013 WAS OBTAINED AT THE TIME WHEN THE PAYMENTS WERE RECEIVED FROM D B CORPORATION LTD. IT IS SUBMITTED THAT THE VALUATION OF SHARE IS BASED ON THE ESTIMATED CASH FLOWS AND SUCH ESTIMATIONS CAN CHANGE FROM TIME TO TIME BASED ITA NO. 2828/BANG/2018 7 ON THE BUSINESS DEVELOPMENTS. SIMILARLY, THE APPELLANT HAS ESTIMATED HIGHER CASH FLOWS DURING THE VALUATION REPORT DATED 01-03-2013 AND HENCE THE SAME IS VALUED AT RS.8,217/-, WHICH IS ISSUED AND ALLOTTED TO D B CORPORATION LTD. IT IS SUBMITTED THAT THE APPELLANT IS JUSTIFIED IN ESTIMATING HIGHER CASH FLOWS SINCE THE ADDITIONAL INVESTMENT BY D B CORPORATION WOULD YIELD HIGHER BUSINESS REVENUE. IT IS PRAYED ACCORDINGLY. FOR THE ABOVE AND SUCH OTHER SUBMISSIONS THAT MAY BE MADE AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE AND EQUITY. 4. IN ADDITION TO THIS, ORAL ARGUMENTS WERE ALSO MADE BY THE LEARNED AR OF THE ASSESSEE AND IN COURSE OF THAT, HE SUBMITTED THAT GROUND NO. 1 IS GENERAL. ABOUT GROUND NO. 2, HE SUBMITTED THAT ON PAGES 61 TO 63 OF THE PAPER BOOK IS THE REPORT DATED 18.09.2012 ISSUED BY M/S DINESH J RANKA & CO. CHARTERED ACCOUNTANTS ABOUT VALUATION OF SHARES FOR ISSUE OF 1903 SHARES TO SHRI D. P. KALRO AND 635 SHARES TO SHRI S. R. TUPE AND ON PAGES 64 TO 66 OF THE PAPER BOOK IS THE REPORT DATED 01.03.2013 ISSUED BY THE SAME VALUER M/S DINESH J RANKA & CO. CHARTERED ACCOUNTANTS ABOUT VALUATION OF SHARES FOR ISSUE OF 2434 SHARES TO DB CORP. LTD. HE ALSO SUBMITTED THAT ON PAGE 170 OF THE PAPER BOOK IS PARTY WISE DETAILS OF TOTAL SHARE HOLDING AT THE END OF THE YEAR AND AS PER THE SAME, IN THE PRESENT YEAR, 100 SHARES WERE ISSUED TO MR. RABEN DAS AT PAR IN ADDITION TO 32,500 SHARES ALREADY HELD BY HIM AND 54 SHARES WERE ISSUED TO MS. KALPANA DAS AT PAR IN ADDITION TO 17,500 SHARES ALREADY HELD BY HER AND AS A RESULT, THEIR SHAREHOLDING AT THE YEAR END WAS 32600 SHARES AND 17554 SHARES RESPECTIVELY. HE ALSO POINTED OUT THAT 1903 SHARES WERE ISSUED TO SHRI D. P. KALRO AND 635 SHARES TO SHRI S. R. TUPE AT A PREMIUM OF RS. 7,872/- PER SHARE IN EACH OF THESE TWO CASES ON 25.03.2013 AND 2434 SHARES WERE ISSUED TO DB CORP. LTD. AT A PREMIUM OF RS. 8,207/- PER SHARE ON 30.03.2013. HE SUBMITTED THAT THE AO HAS ACCEPTED THE RECEIPT OF SHARE PREMIUM @ RS. 7872/- PER SHARE BUT HIS ONLY OBJECTION AS PER PARA 3.5 OF THE ASSESSMENT ORDER IS REGARDING RECEIPT OF EXTRA SHARE PREMIUM OF RS. 335/- PER SHARE ON SHARES ISSUED TO DB CORP. LTD. ON 31.03.2013. HE SUBMITTED THAT THE HIGHER AMOUNT OF SHARE PREMIUM @ OF RS. 8,207/- RECEIVED FROM DB CORP. LTD. IS ALSO SUPPORTED BY THE VALUATION REPORT OF THE SAME CHARTERED ACCOUNTANT AND THEREFORE, THIS ADDITION IS NOT JUSTIFIED AND IT SHOULD BE DELETED. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. ITA NO. 2828/BANG/2018 8 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ADDITION WAS MADE BY THE AO U/S 56. AS PER SECTION 56 (2) (VIIB), RULE 11U AND 11UA ARE PRESCRIBED IN VIEW OF EXPLANATION (A) (I) OF THIS SECTION. AS PER RULE 11UA (2) (B), OPTION IS GIVEN TO THE ASSESSEE TO CHOOSE THE METHOD OF VALUATION. VALUATION AS PER DCF METHOD IS AN APPROVED METHOD AND THE ASSESSEE HAS CHOSEN IT. VALUATION OF PREMIUM @ RS. 7,872/- IS ALSO BY SAME METHOD AS PER A VALUATION REPORT OF THE SAME C. A. DATED 18.09.2012 AND HIGHER VALUATION AT RS. 8,207/- IS ALSO AS PER A VALUATION REPORT OF THE SAME C. A. DATED 01.03.2013. THE REPORT DATED 18.09.2012 IS ACCEPTED BY THE A. O. AND REGARDING THE LATER REPORT, THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THIS LATER VALUATION REPORT AND HE HAS SIMPLY STATED IN PARA 3.5 OF THE ASSESSMENT ORDER THAT IN THE ABSENCE OF PROPER EXPLANATION OR JUSTIFICATION FOR INCREASING THE RATE OF PREMIUM WITHIN A PERIOD OF 5 DAYS, THE EXCESS PREMIUM RECEIVED FROM DAINIK BHASKAR CORPORATION LIMITED IS ADDED BACK U/S 56 (2). LEARNED CIT (A) HAS CONFIRMED THIS ADDITION AS PER PARA 51 & 52 OF HIS ORDER ON THE SAME LOGIC WITHOUT TAKING NOTE OF THESE TWO VALUATION REPORTS. AS PER THE CERTIFICATE GIVEN IN THE PAPER BOOK, BOTH THESE VALUATION REPORTS WERE FURNISHED BEFORE BOTH THE AUTHORITIES I.E. THE AO AS WELL AS CIT (A). NONE OF THEM HAS POINTED OUT ANY DEFECT IN THE SECOND VALUATION REPORT VALUING THE SHARE AT RS. 8,217/- PER SHARE AND THE SHARES WERE ISSUED TO M/S DAINIK BHASKAR CORPORATION LIMITED AT THIS PRICE ONLY WHICH INCLUDED FACE VALUE RS. 10/- PER SHARE AND PREMIUM RS. 8,207/- PER SHARE. UNDER THESE FACTS, IN OUR CONSIDERED OPINION, THIS ADDITION IS NOT JUSTIFIED AND WE DELETE THE SAME. ACCORDINGLY, GROUND NO. 2 IS ALLOWED. 6. REGARDING GROUND NO. 3 IN RESPECT OF ADDITION MADE BY THE AO U/S 68 OF RS. 391,89,304/- AND PARTLY CONFIRMED BY CIT (A) TO THE EXTENT OF RS. 1.5 CRORES RECEIVED FROM SHRI KALRO AS PER PARA 25 OF THE IMPUGNED ORDER OF CIT (A), RS. 2 CRORES RECEIVED FROM M/S DAINIK BHASKAR CORPORATION LIMITED AS PER PARA 44 OF THE IMPUGNED ORDER OF CIT (A) AND RS. 25 LACS RECEIVED FROM SHRI S. R. TUPE THROUGH MRS. KAVITA TUPE AS PER PARA 45 OF THE IMPUGNED ORDER OF CIT (A) TOTAL CONFIRMED RS. 3.75 CRORES, HE SUBMITTED THAT ON PAGES 101 TO 110 OF THE PAPER BOOK IS THE COPY OF DECLARATION BY SHRI DEEPAK KALRO UNDER INCOME DISCLOSURE SCHEMA IN WHICH HE DECLARED THIS INVESTMENT. HE ALSO SUBMITTED THAT ON PAGE 112 OF THE PAPER BOOK IS HIS CONFIRMATION AND ON PAGES 126 TO 129 OF THE PAPER ITA NO. 2828/BANG/2018 9 BOOK IS HIS RELEVANT BANK STATEMENT. HE POINTED OUT THAT AS PER THIS BANK STATEMENT, RS. 50 LACS IS PAID BY HIM TO THE ASSESSEE ON 05.10.2012 AND BEFORE THAT, THERE ARE TWO CREDITS OF RS. 25 LACS EACH ON 03.10.2012 AND 05.10.2012 FROM JHAVERI PROPERTIES. THERE IS ANOTHER PAYMENT OF RS. 50 LACS ON 04.12.2012 AND OF RS. 50 LACS ON 24.12.2012. 7. NOW WE FIND THAT THE ISSUE REGARDING AMOUNT RECEIVED OF RS. 1.5 CRORE FROM DEEPAK PAHLAJRAI KALRO WAS DECIDED BY LD. CIT(A) AS PER PARA NOS. 24 AND 25 OF HIS ORDER. IN PARA NO. 24 OF HIS ORDER, IT IS NOTED BY LD. CIT(A) THAT FINAL CERTIFICATE UNDER THE INCOME DECLARATION SCHEME RULES 2016 HAS NOT BEEN PRODUCED BEFORE HIM. ON THIS BASIS, HE HELD THAT THE IMMUNITY UNDER THE IDS SCHEME 2016 IS NOT AVAILABLE TO SHRI DEEPAK KALRO. BEFORE US, ON PAGES 101 TO 110 IS THE COPY OF DECLARATION MADE BY THE ASSESSEE ON 30.09.2010 UNDER INCOME DECLARATION SCHEME RULES 2016. AS PER THIS DECLARATION SCHEDULE 1, THIS PERSON DEEPAK P KALRO HAS DISCLOSED AN AMOUNT OF RS. 1,54,29,659/- AND AS PER YEARWISE DETAILS AVAILABLE ON PAGE NO. 106 OF THE PAPER BOOK, THIS AMOUNT OF RS. 1,54,29,659/- INCLUDES AN AMOUNT OF RS. 50,69,651/- FOR ASSESSMENT YEAR 2014-15. THE YEAR INVOLVED BEFORE US IS ASSESSMENT YEAR 2013-14 AND THE SHARES WERE ALLOTTED BY THE ASSESSEE TO SHRI DEEPAK P KALRO ON 25.03.2013 AND THEREFORE, THE AMOUNT WAS RECEIVED BY THE ASSESSEE COMPANY FROM SHRI DEEPAK P KALRO PRIOR TO 25.03.2013 AND HENCE, ANY AMOUNT DECLARED FOR ASSESSMENT YEAR 2014-15 CANNOT BE CONSIDERED AT ALL FOR THE PURPOSE OF EXAMINING THE SOURCE OF MONEY RECEIVED BY THE ASSESSEE COMPANY PRIOR TO 25.03.2013. MOREOVER, AS PER PARA NO. 9 OF THE SAID INCOME DECLARATION SCHEME RULES 2016 AVAILABLE ON PAGE NO. 105 OF THE PAPER BOOK, IT WAS REQUIRED TO POINT OUT AS TO WHETHER ANY INCOME HAD EVER BEEN CREDITED IN BANK ACCOUNT ALONG WITH BALANCE IN THE SAID ACCOUNT AS ON 01.06.2016 IF ANY. THERE THE ASSESSEE HAS STATED THAT THE DETAILS ARE GIVEN IN SCHEDULE 2 AND SUCH SCHEDULE 2 IS AVAILABLE ON PAGE NO. 107 OF THE PAPER BOOK AND IN THE SAID SCHEDULE, IT IS STATED THAT THE BALANCE AVAILABLE AS ON 01.06.2016 IS RS. 40,48,088/- IN KOTAK BANK APART FROM SOME SMALL BALANCES IN SOME OTHER BANKS. IN VIEW OF THESE FACTS, THIS EXPLANATION OF THE ASSESSEE IS NOT ACCEPTABLE THAT THE CREDIT WORTHINESS IN THE HANDS OF SHRI DEEPAK P KALRO REGARDING HIS INVESTMENT IN ASSESSEE COMPANY TO THE EXTENT OF RS. 1.50 CRORE ITA NO. 2828/BANG/2018 10 IS EXPLAINED. THIS IS ALSO SEEN THAT ON PAGE NO. 108 OF THE PAPER BOOK IS FORM 2 WHICH IS ACKNOWLEDGMENT OF DECLARATION UNDER SECTION 183 OF THE FINANCE ACT, 2016 IN RESPECT OF THE INCOME DECLARATION SCHEME, 2016 AND AS PER THE SAME, TAX OF RS. 46,28,896/- IS PAYABLE AND IN ADDITION TO THAT, SURCHARGE PAYABLE IS RS. 11,57,225/- AND PENALTY PAYABLE IS ALSO THE SAME AMOUNT I.E. 11,57,225/-, TOTAL TAX, SURCHARGE AND PENALTY AMOUNTS TO RS. 69,43,346/-. AS PER PAGE NOS. 109 & 110 OF THE PAPER BOOK, THERE IS EVIDENCE REGARDING PAYMENT OF RS. 11,07,888/- ONLY. ON PAGE NO. 110 OF THE PAPER BOOK, IT IS NOTED THAT THIS PAYMENT IS FOR ASSESSMENT YEAR 2017-18. HENCE, WE FIND THAT NEITHER THE ASSESSEE HAS PRODUCED ANY EVIDENCE REGARDING PAYMENT OF TAX BY SHRI DEEPAK P KALRO IN RESPECT OF AMOUNT DECLARED BY HIM IN INCOME DECLARATION SCHEME RULES, 2016 AND NOR THE ASSESSEE HAS BROUGHT ON RECORD THE REQUIRED CERTIFICATE ISSUED UNDER THE INCOME DECLARATION SCHEME RULES, 2016. SUCH CERTIFICATE IS NOT EVEN BROUGHT ON RECORD BEFORE US ALSO. UNDER THESE FACTS, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE I.E. REGARDING NOT ACCEPTING THIS EXPLANATION OF THE ASSESSEE THAT CREDIT WORTHINESS OF RS. 1.50 CRORE IN THE HANDS OF SHRI DEEPAK P KALRO HAS BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE. WE THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS PART OF THE GROUND. 8. THE ISSUE REGARDING RECEIPT OF RS. 50 LAKHS FROM SHRI SHAMBAJI RAGHUNATH TUPE HAS BEEN DECIDED BY LD. CIT(A) AS PER PARA NOS. 45 AND 46 OF HIS ORDER. IN PARA NO. 46, LD. CIT(A) HAS ACCEPTED THE EXPLANATION REGARDING AMOUNT OF RS. 25 LAKHS ADVANCED BY SHRI SHAMBAJI RAGHUNATH TUPE DIRECTLY TO THE ASSESSEE BUT IN PARA NO. 45 OF HIS ORDER, IT IS NOTED BY LD. CIT(A) THAT OUT OF THE TOTAL AMOUNT PAID BY SHRI S.R. TUPE OF RS. 50 LAKHS, IT WAS EXPLAINED THAT RS. 25 LAKHS HAS BEEN PAID BY MRS. KAVITA TUPE WIFE OF SHRI S.R. TUPE. FOR READY REFERENCE, WE REPRODUCE PARA NO. 45 FROM THE ORDER OF LD. CIT(A). THIS PARA READS AS UNDER. 45. IN RESPECT OF SHRI TUPE THE APPELLANT HAS PRODUCED COPIES OF RETURNS AND P&L / PROFIT & LOSS BALANCE SHEET. THE SHARE APPLICATION MONEY PAID BY SHRI SHAMBAJI RAGHUNATH TUPE AMOUNTS TO RS. 50,00.000 OUT OF THIS RS. 25,00,000 HAVE BEEN PAID BY MRS. KAVITA TUPE WIFE OF SHRI TUPE. THE SAME IS CLAIMED TO HAVE BEEN REFLECTED IN HER BALANCE SHEET FOR THE RELEVANT YEAR AS MONEY ADVANCED TO HER HUSBAND TO TUPE WHO HAS FURTHER ADVANCED IT TO THE APPELLANT. HOWEVER, NO SATISFACTORY ANSWER WAS PROVIDED TO THE QUESTION AS TO ITA NO. 2828/BANG/2018 11 WHY THIS CIRCUITOUS ARRANGEMENT HAS BEEN MADE AND WHY SHRI SHAMBAJI TUPE HAS NOT PAID MONEY DIRECTLY TO THE APPELLANT. THEREFORE, THE ADDITION ON ACCOUNT OF RS. 25,00,000 PAID BY MRS. KAVITA TUPE IS HEREBY CONFIRMED. 9. BEFORE US, THE LD. AR OF ASSESSEE POINTED OUT THAT ON PAGE NOS. 120 TO 125 OF THE PAPER BOOK IS THE BANK STATEMENT OF MRS. KAVITA TUPE AND FURTHER POINTED OUT THAT ON 08.09.2012, A CHEQUE IS ISSUED BY HER TO THE PRESENT ASSESSEE I.E. KOOCHIE PLAY SYSTEM INDIA PVT. LTD. OF RS. 25 LAKHS. WE FIND THAT BEFORE ISSUE OF THIS CHEQUE, THERE WAS BALANCE IN THIS BANK ACCOUNT OF RS. 90 LAKHS APPROX. AND THERE ARE VARIOUS CREDITS ON VARIOUS DATES BY WAY OF VARIOUS CHEQUES BUT THERE IS NO CASH DEPOSIT IN THIS BANK ACCOUNT OF MRS. KAVITA SAMBHAJI TUPE. EVEN THE OPENING BALANCE AS ON 01.04.2012 WAS ABOUT RS. 26 LAKHS. UNDER THESE FACTS, WE FIND FORCE IN THE SUBMISSIONS OF LD. AR OF ASSESSEE THAT THE CREDIT WORTHINESS OF SHRI S.R. TUPE REGARDING THIS AMOUNT OF RS. 25 LAKHS RECEIVED FROM HIS WIFE MRS. KAVITA TUPE IS ALSO EXPLAINED AND HENCE, WE DELETE THIS ADDITION OF RS. 25 LAKHS. 10. NOW WE ARE LEFT WITH ONE ADDITION OF RS. 2 CRORES MADE IN RESPECT OF AMOUNT RECEIVED FROM D B CORPORATION LTD. THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARA NOS. 37 TO 44 OF HIS ORDER AND FOR READY REFERENCE, WE REPRODUCE THESE PARAS FROM THE ORDER OF LD. CIT(A). 37. THE APPELLANT'S REPRESENTATIVES ON 17.01.2018 SUBMITTED THAT TDS IS MADE ON RS. 35.21 LACS IN FY 12-13 AND FURTHER CLAIMED THAT THE PAYMENT TOWARDS ADVERTISEMENT TO D B CORPORATION IS IN THE NATURE OF THE DEPOSIT/ ADVANCE AND NOT ACTUAL EXPENDITURE AND ACCORDINGLY, NO TDS HAS BEEN MADE. 38. THE APPELLANT'S REPRESENTATIVES WERE ALSO ASKED TO FURNISH THE DATE AND TIME-WISE TRANSACTIONS WITH THE DBCL FOR RECEIPT OF SHARE APPLICATION MONEY AND PAYMENT TOWARDS ADVERTISEMENT DEPOSITS. THIS WAS ALSO FURNISHED ON 17.01.2018 AND IS EXTRACTED AS UNDER: IN THIS REGARD WE WISH TO SUBMIT THE DETAILS OF RECEIPTS TOWARDS SHARE ALLOTMENT FROM AND PAYMENTS TOWARDS ADVERTISEMENT DEPOSIT TO D B CORPORATION LIMITED DURING THE FINANCIAL NEAR 2012-2013 IS AS BELOW. S.NO. PARTICULARS DATE OF PAYMENT TIME OF PAYMENT AMOUNT (RS.) 1 RECEIVED TOWARDS SHARE ALLOTMENT 05.03.2013 11:39:05AM 25,00,000 ITA NO. 2828/BANG/2018 12 2 PAID TOWARDS ADVERTISEMENT DEPO SIT 05.03.2013 05: 50:13PM 25,00,000 3 RECEIVED TOWARDS SHARE ALLOTMENT 06.03.2013 10:54:21AM 25,00,000 4 PAID TOWARDS ADVERTISEMENT D EPOSIT 06.03.2013 03:31:42PM 25,00,000 5 RECEIVED TOWARDS SHARE ALLOTMENT 11.03.2013 01:29:42PM 25,00,000 6 PAID TOWARDS ADVERTISEMENT DEPOSIT 12.03.2013 25,00,000 7 RECEIVED TOWARDS SHARE ALLOTMENT 19.03.2013 01:13: 56PM 25,00,000 8 RECEIVED TOWARDS SHARE ALLOTMENT 19.03.2013 01:14:37PM 25,00,000 9 PAID TOWARDS ADVERTISEMENT DEPOSIT 20.03.2013 50,00,000 10 RECEIVED T OWARDS SHARE ALLOTMENT 26.03.2013 1 0:26:53AM 25,00,000 11 RECEI VED TOWARDS SHARE ALLOTMENT 26.03.2013 10: 27:54AM 25,00,000 12 RECEIVED TOWARDS SHARE ALLOTMENT 26.03.2013 01:16:01 PM 25,00,000 13 PAID TOWARDS AD VERTISEMENT DE POSIT 26.03.2013 04:36:14PM 75,00,000 39. THE INFORMATION IN THE ABOVE CHART IS FROM THE BANK ACCOUNTS OF THE APPELLANT. THE SAME IS EXAMINED. IT IS FOUND THAT ON 05.03.2013 AT 6 PM NET AMOUNT RECEIVED BY THE APPELLANT FROM DBCL IS NIL. SIMILARLY, ON 06.03.2013 AT 6 PM NET AMOUNT RECEIVED BY THE APPELLANT FROM DBCL IS NIL. SIMILARLY, ON 12.03.2013 AT 6 PRR NET AMOUNT RECEIVED BY THE APPELLANT FROM DBCL IS NIL. FURTHER, ON 20.03.2013 AT 6 PM NET AMOUNT RECEIVED BY THE APPELLANT FROM DBCL IS NI,. SIMILARLY, ON 26.03.2013 AT 6 PM NET AMOUNT RECEIVED BY THE APPELLANT FROM DBCL IS NIL. THIS CLEARLY INDICATES THAT MONEY RECEIVED TOWARDS SHARE ALLOTMENT HAS NOT REMAINED WITH THE APPELLANT. 40. THE AMOUNT RECEIVED BY THE APPELLANT FROM M/S. DBCL AS SHARE APPLICATION MONEY AND THE AMOUNT PAID BACK IS ADVERTISEMENT ARE EQUAL AND HAVE CLOSE CORRELATION. 41. I FIND THAT THE MONEY RECEIVED AS SHARE APPLICATION MONEY IS RETURNED AS ADVANCE AND NOTHING REMAINS WITH THE APPELLANT FOR SHARE ALLOTMENT. TAKING BOTH THE TRANSACTIONS TOG( THER, I FIND THAT THE MONEY TAKEN HAS BEEN RETURNED AND THEREFORE, THERE IS NO MONEY FROM DBCL ITA NO. 2828/BANG/2018 13 AVAILABLE WITH THE APPELLANT ON 30TH MARCH I.E. THE DATE OF ALLOTMENT OF SHARES. 42. THE CLAIM MADE BY THE APPELLANT THAT THIS IS AN ADVANCE FOR ADVERTISEMENT IS EXAMINED. I FIND THAT FOR GIVING ADVERTISEMENT TO ANY NEWSPAPER IT IS NOT NECESSARY TO GIVE SUCH HUGE DEPOSIT. THUS, I FIND THAT THE ADVANCE DEPOSITED FOR ADVERTISEMENT IS NOT A NORMAL BUSINESS TRANSACTION. 43. IN TOTALITY, I FIND THAT THE MONEY TAKEN HAS BEEN RETURNED AND THEREFORE, THERE IS NO MONEY AVAILABLE WITH THE APPELLANT ON THE DATE OF ALLOTMENT OF SHARES. THEREFORE, I HOLD THAT THE SHARE APPLICATION PAID BY THE DBCL AND THE ADVANCE PAID BY THE APPELLANT TO DBCL ARE NOTHING BUT SHAM ARRANGEMENT FOR BENEFIT OF THE APPELLANT. FURTHER, THE APPELLANT HAS MISERABLY FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION. 44. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE AO ON ACCOUNT OF THE SHARE APPLICATION MONEY RECEIVED FROM DBCL IS SUSTAINED. THE ADDITION OF RS. 2 CRORES MADE ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM M/S. DBCL IS HEREBY CONFIRMED. 11. FROM THESE PARAS REPRODUCED FROM THE ORDER OF LD. CIT(A), WE FIND THAT THERE IS NO DISPUTE THAT THE AMOUNT IN QUESTION WAS RECEIVED BY THE ASSESSEE FROM D B CORPORATION LTD. CREDIT WORTHINESS OF DB CORP. LTD. IS ALSO NOT IN DISPUTE. THIS IS THE OBJECTION OF LD. CIT(A) AS PER THESE PARAS REPRODUCED ABOVE THAT THE MONEY RECEIVED FROM THIS COMPANY AS SHARE APPLICATION MONEY IS RETURNED AS ADVANCE AND NOTHING REMAINS WITH THE ASSESSEE FOR SHARE ALLOTMENT. WHEREAS THIS WAS THE EXPLANATION OF THE ASSESSEE THAT THE ADVANCE WAS GIVEN TO D B CORPORATION LTD. FOR GIVING ADVERTISEMENT. BUT REGARDING THIS EXPLANATION ALSO, IT IS STATED BY LD. CIT(A) IN PARA 42 OF HIS ORDER AS REPRODUCED ABOVE THAT FOR GIVING ADVERTISEMENT TO ANY NEWSPAPER, IT IS NOT NECESSARY TO GIVE SUCH HUGE DEPOSIT AND HE CAME TO THE CONCLUSION THAT THE ADVANCE DEPOSITED FOR ADVERTISEMENT IS NOT A NORMAL BUSINESS TRANSACTION. IN COURSE OF HEARING, WE ASKED THE LD. AR OF ASSESSEE TO SUBMIT THE DETAILS OF ADVERTISEMENT EXPENSES INCURRED BY THE ASSESSEE COMPANY ON ACCOUNT OF ADVERTISEMENT THROUGH D B CORPORATION LTD. AND SUCH DETAIL HAS BEEN FURNISHED BY LD. AR OF ASSESSEE ON 22.07.2019 AND AS PER THE SAME, AN AMOUNT OF RS. 35,21,493/- HAS BEEN INCURRED ON ACCOUNT OF ADVERTISEMENT EXPENSES THROUGH D B CORPORATION LTD. IN FINANCIAL YEAR 2012-13 AND RS. 1,17,585/- HAS BEEN INCURRED TOWARDS ADVERTISEMENT EXPENSES IN FINANCIAL YEAR 2013-14 TOTAL RS. 36,39,078/-. THE ITA NO. 2828/BANG/2018 14 ASSESSEE HAS ALSO FURNISHED A LETTER DATED 17.07.2019 WRITTEN BY DB CORPORATION LTD. TO THE ASSESSEE COMPANY REGARDING OUTSTANDING BALANCE IN THE NAME OF ASSESSEE COMPANY IN THE BOOKS OF D B CORPORATION LTD. AND AS PER THE SAME, AN AMOUNT OF RS. 1,75,53,580/- WAS PAYABLE BY D B CORPORATION LTD. TO KOOCHI PLAY SYSTEMS PVT. LTD. AS ON 31.03.2013 AND AN AMOUNT OF RS. 1,75,60,591/- WAS PAYABLE BY D B CORPORATION LTD. TO THE PRESENT ASSESSEE COMPANY AS ON 31.03.2014. NOW WE ARE IN YEAR 2019 AND WHETHER TILL NOW, THE AMOUNT IS ADJUSTED AGAINST ADVERTISEMENT EXPENSES OR HAS BEEN RETURNED BY D B CORPORATION LTD. TO THE ASSESSEE COMPANY HAS TO BE LOOKED INTO. MOREOVER, THE RELEVANT ADVERTISEMENT AGREEMENT OF THE ASSESSEE COMPANY WITH THE D B CORPORATION LTD. SHOULD ALSO BE LOOKED INTO TO FIND OUT AS TO WHAT WAS THE REQUIREMENT TO PAY ADVANCE BY ASSESSEE COMPANY TO D B CORPORATION LTD. AS PER THIS AGREEMENT. TO FIND OUT THE TRUE NATURE OF THIS PAYMENT BY THE ASSESSEE COMPANY TO D B CORPORATION LTD. AS TO WHETHER SUCH PAYMENT WAS ON ACCOUNT OF ADVANCE FOR ADVERTISEMENT EXPENSES OR IT IS REFUND OF SHARE APPLICATION MONEY IN SUBSTANCE AS HAS BEEN STATED BY LD. CIT(A) IN HIS ORDER. THIS IS VERY CRUCIAL TO DECIDE THE THIRD INGREDIENT I.E. GENUINENESS OF THE TRANSACTION ALTHOUGH THE IDENTITY AND CREDITWORTHINESS OF THE COMPANY FROM WHOM THE MONEY IN QUESTION WAS RECEIVED HAS NOT BEEN QUESTIONED BY THE AO. IN OUR CONSIDERED OPINION, THIS ISSUE SHOULD GO BACK TO THE FILE OF LD. CIT(A) FOR FRESH DECISION AND HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) IN THIS REGARD AND RESTORE BACK THE MATTER TO HIS FILE FOR FRESH DECISION WITH THE DIRECTION THAT THE ASSESSEE SHOULD BRING ON RECORD THE RELEVANT AGREEMENT FOR ADVERTISEMENT BETWEEN THE ASSESSEE COMPANY AND D B CORPORATION LTD. TO ESTABLISH THAT THIS AMOUNT PAID BY THE ASSESSEE TO D B CORPORATION LTD. IS IN FACT AN ADVANCE FOR ADVERTISEMENT AND NOT REFUND OF SHARE APPLICATION MONEY AS ALLEGED BY THE CIT (A). SECONDLY, THIS IS ADMITTED POSITION THAT TILL 31.03.2014, OUT OF RS. 2 CRORES PAID BY THE ASSESSEE COMPANY TO D B CORPORATION LTD., AN AMOUNT OF RS. 1,75,60,591/- WAS RECEIVABLE BY THE ASSESSEE COMPANY FROM D B CORPORATION LTD. BUT WHAT HAPPENED AFTER 31.03.2014 TILL NOW IS NOT AVAILABLE ON RECORD AND HENCE, THE SAME SHOULD ALSO BE BROUGHT ON RECORD AND IF IT IS FOUND THAT IN THESE YEARS THIS ADVANCE HAS BEEN ADJUSTED AGAINST ANY ADVERTISEMENT EXPENSES OF THE ASSESSEE COMPANY INCURRED DURING THIS PERIOD THEN IT MAY BE ITA NO. 2828/BANG/2018 15 ACCEPTED THAT SUCH PAYMENT WAS ON ACCOUNT OF ADVANCE TO D B CORPORATION LTD. AND NOT REFUND OF SUCH MONEY RECEIVED BY ASSESSEE COMPANY. THE LD. CIT(A) SHOULD PASS NECESSARY ORDER AS PER LAW AFTER EXAMINING ALL THESE FACTS AND AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. IN THIS MANNER, GROUND NO. 3 IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 28 TH AUGUST, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.