ITO 4(3)(4), MUMBAI V. SIDHIVINAYAK FILAMENTS P LTD, MUMBAI

ITA 3003/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2516 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 26-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH RAJORE
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Unexplained cash credit; Bogus Share capital; Income from undisclosed sources; Search and seizure; Source of fund; Fair market value; Accommodation entries; TDS
• Section: 56(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JM & SHRI M.BALAGANESH, AM ITA NO. 3003 / MUM/20 1 7 ( ASSESSMENT YEAR : 2012 - 13 ) ITO 4(3)(4) R.NO.637, 6 TH FLOOR AAYAKAR BHAVAN MUMBAI 400 020 VS. M/S. SIDHIVINAYAK FI LAMENTS PVT.LTD. 3, JOHARI MANSION, 1 ST FLOOR 259, KALBADEVI ROAD MUMBAI 400 002 PAN/GIR NO. AADCS8676A ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY SHRI SATISH RAJORE ASSESSEE BY SHRI HARI S. RAHEJA DATE OF HEARING 11 / 06 /201 9 DATE OF PRONOUNCEM ENT 21 / 06 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 3003/MUM/2017 FOR A.Y. 2012 - 13 A RISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 9, MUMBAI IN APPEAL NO. CIT(A) - 9/CIR - 4/143/2015 - 16 DATED 0 9/01/2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 13/03/2015 BY THE LD. INCOME TAX OFFICER 4(3)(4), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 2 2. THE FIRS T ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE TOWARDS UNSECURED LOAN OF RS.25 LAKHS U/S.68 OF THE ACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS.25 LAKHS FROM M/S. FASTLINE MULTI TRADE PVT. LTD., THE LD. AO OBSERVED THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION IN THE CASE OF SHRI PRAVEEN KUMAR JAIN AND HIS GROUP CONCERN S , IT EMERGED THAT M/S. FAS TLINE MULTI T RA DE PVT. LTD WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES ONLY. MOREOVER, THE NOTICE ISSUED U/S.133(6) OF THE ACT TO THE SAID LENDER RETURNED UNSERVED . A CCORDINGLY, A SHOW C AUSE NOTICE WAS ISSUED TO THE ASSESSEE BY THE LD. AO SHOW - CAUSING AS TO WHY THE SAID UNSECURED LOAN OF RS.25 LAKHS SHOULD NOT BE BROUGHT TO TAX AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT IN THE HANDS OF THE ASSESSEE. IN RESPONSE, THE ASSESSEE SUBMITTED VIDE LETTER DATED 09/03/2015 , CONFIRMATION FROM THE LENDER, COPY OF R ETURN OF INCOME OF THE LENDER, FINANCIAL STATEMENTS OF THE LENDER ETC., THE LD. AO OBSERVED THAT MERELY FILING CONFIRMATION DOES NOT ESTABLISH THAT THE TRANSACTION WAS GENUINE AND IN THE SEARCH CONDUCTED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTM ENT IN THE CASE OF SHRI PRAVEEN KUMAR JAIN AND HIS GROUP OF CONCERNS, IT HAD EMERGED THAT THIS LENDER WAS INVOLVED ONLY IN PROVIDING ACCOMMODATION ENTRIES. THE LD. AO OBSERVED THAT ASSESSEE HAD PLOUGHED ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 3 BACK ITS UNACCOUNTED INCOME IN THE GARB OF UNSECURED LOANS AND INTRODUCED THE SAME IN THE BOOKS OF ACCOUNTS. WITH THESE OBSERVATIONS, HE MADE ADDITION U/S.68 OF THE ACT IN THE SUM OF RS.25 LAKHS. 3.1. BEFORE THE LD. CIT(A), THE ASSESSEE STATED THAT THIS LOAN OF RS.25 LAKHS WAS RECEIVED FROM M/S. FASTLINE MUL TI T RADE PVT. LTD., BY ACCOUNT PAYEE CHEQUES / RTGS. THE ASSESSEE HAD PAID INTEREST ON SUCH LOANS AFTER DUE DEDUCTION OF TAX AT SOURCE THEREON. ASSESSEE HAD FILED CONFIRMATION OF LOAN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAD ALSO FILED INCOME TAX RETURN ACKNOWLEDGEMENT FOR A.Y.2012 - 13 OF THE LENDER TOGETHER WITH THE FINANCIAL STATEMENTS AND ITR ACKNOWLEDGEMENTS FOR THE A.YRS 2013 - 14 AND 2014 - 15 OF THE LENDER. THE ASSESSEE ALSO SUBMITTED THAT THE COPY OF BANK STATEMENT OF THE LENDER WAS A LSO FURNISHED BEFORE THE LD. AO. HENCE, IT WAS PLEADED THAT THE ASSESSEE HAD PROVED THE THREE NECESSARY INGREDIENTS OF THE SECTION 68 OF THE ACT VIZ. IDENTITY OF THE CREDITOR, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITOR. THE LD. AO H AD NOT FOUND ANY DEFICIENCIES IN THE SAID DOCUMENTS FILED BY THE ASSESSEE AND MERELY RELIED ON THE STATEMENTS GIVEN BY SHRI PRAVEEN KUMAR JAIN AND HIS GROUP OF CONCERNS DURING THE COURSE OF THEIR SEARCH OPERATIONS. 3.2. THE ASSESSEE SUBMITTED THAT IT HAD REQUESTED THE LD. AO TO FURNISH COPY OF STATEMENT EITHER OF SHRI PRAVEEN KUMAR JAIN OR DIRECTORS OF THE LENDER COMPANY OR ANY OTHER DOCUMENT OR EVIDENCES WHICH ARE BEING ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 4 RELIED UPON BY THE LD. AO TO DRAW ADVERSE INFERENCE ON THE ASSESSEE ON THE SUBJECT MEN TIONED TRANSACTIONS. IT WAS ALSO PLEADED THAT NO SUCH STATEMENTS WERE GIVEN TO THE ASSESSEE. IT WAS ALSO PLEADED THAT THE LD. AO DID NOT ALLOW CROSS EXAMINATION OF PERSONS ON WHOSE STATEMENTS THE LD. AO HAD PLACED HEAVY RELIANCE. 3.3. THE LD. CIT(A) ON DU E APPRECIATION OF VARIOUS DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE THAT ARE AVAILABLE ON RECORD BEFORE THE LD. AO , OBSERVED THAT THE LD. AO HAD MERELY USED THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND THE STATEMENTS RECORDED DURING THE COUR SE OF SEARCH ACTION U/S.132 OF THE ACT CARRIED OUT IN THE CASE OF SHRI PRAVEEN KUMAR JAIN AND HIS GROUP CONCERNS WITHOUT ESTABLISHING THE FACT THAT THE ASSESSEE HAD REALLY OBTAINED ACCOMMODATION ENTRIES AND BROUGHT BACK ITS UNEXPLAINED MONEY AS UNSECURED L OAN. HE OBSERVED THAT THE ASSESSEE HAD DULY DISCHARGED ITS ONUS BY FURNISHING THE NECESSARY DOCUMENTARY EVIDENCES TO PROVE THE GENUINENESS OF THE LOAN RECEIVED BY IT. THE LD. CIT(A) ON PERUSAL OF THE FINANCIAL STATEMENTS OF THE LENDER OBSERVED THAT THE LOA N GIVEN TO THE ASSESSEE IS DULY REFLECTED IN THE AUDITED BALANCE SHEET OF THE LENDER UNDER THE HEAD SHORT TERM LOANS AND ADVANCES. THE ASSESSEE HAS PAID INTEREST ON THIS LOAN AFTER DEDUCTION OF TAX AT SOURCE. FURTHER, THE LD. AO HAD NOT PROVIDED TO THE A SSESSEE ANY EVIDENCES OR OTHER FINDINGS OF THE SEARCH ACTION IN THE CASE OF SHRI PRAVEEN KUMAR JAIN WHICH COULD PROVE THAT THE LENDER COMPANY HAS GIVEN ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 5 TO THE ASSESSEE ONLY ACCOMMODATION ENTRIES. THE LD CIT(A) OBSERVED THAT THE LD. AO HAD NOT SUPPLIED COPI ES OF STATEMENT RECORDED FROM SHRI PRAVEEN KUMAR JAIN AND OTHER DIRECTORS OF THE LENDER COMPANY TO THE ASSESSEE TO SHOW THAT THE LOAN GIVEN TO THE ASSESSEE BY THE LENDER COMPANY IS ONLY ACCOMMODATION ENTRY. 3.4. ON THE CONTRARY, THE ASSESSEE WAS ABLE TO PR OVE ON RECORD THAT THE LENDER COMPANY HAD DULY OFFERED THE INTEREST INCOME RECEIVED FROM THE ASSESSEE AND TAKEN CREDIT FOR THE TDS THEREON WHICH HAS ALSO BEEN GRANTED BY THE LD. AO OF THE LENDER COMPANY. THE ENTIRE TRANSACTIONS ARE BY ACCOUNT PAYEE CHEQUE. THE ASSESSEE HAS FILED THE ENTIRE COPIES OF ITS BANK STATEMENTS AS WELL AS THE BANK STATEMENTS OF THE LENDER COMPANY. ALL THESE DOCUMENTS GO TO PROVE THAT THE LOAN RECEIVED BY THE AS SESSEE FROM M/S. FASTLINE MULTIT RADE PVT. LTD., IS A GENUINE LOAN. THE ID ENTITY OF THE LOAN IS NOT DISPUTED BY THE LD. AO. THE LOAN TRANSACTIONS GIVEN BY THE LENDER COMPANY TO THE ASSESSEE COMPANY BY WAY OF ACCOUNT PAYEE CHEQUE / RTGS IS DULY DISCLOSED IN THE BALANCE SHEET OF THE LENDER COMPANY AND HENCE, THE GENUINENESS OF THE TRANSACTION IS ALSO ESTABLISHED. THE FINANCIAL STATEMENTS OF THE LENDER COMPANY SUFFICIENTLY GO TO PROVE THAT THERE IS ADEQUATE CREDITWORTHINESS FOR THE LENDER TO ADVANCE A SUM OF RS.25 LAKHS TO THE ASSESSEE COMPANY. HENCE, THE LD. CIT(A) OBSERVED THAT TH E THREE NECESSARY INGREDIENTS OF SECTION 68 OF THE ACT HAD BEEN DULY ESTABLISHED BEYOND DOUBT BY THE ASSESSEE COMPANY. ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 6 THE LD. CIT(A) OBSERVED THAT IN THE INSTANT CASE, THE ASSESSEE HAD DULY ESTABLISHED THE NATURE AND SOURCE OF CREDIT IN THE FORM OF UNSECU RED LOAN. THE LD. CIT(A) ALSO OBSERVED THAT THE ASSESSEE HAD FILED THE BANK STATEMENT OF THE LENDER COMPANY WHEREIN THE SOURCE OF SOURCE IS ALSO REFLECTED THEREON WHICH IS ALSO PROVED IN THE INSTANT CASE BY THE ASSESSEE COMPANY. THE LD. CIT(A) FURTHER ADDE D THAT THERE WAS NO CASH DEPOSIT IN THE BANK STATEMENT IN THE BANK ACCOUNT OF THE LENDER BEFORE GRANTING OF LOAN TO THE ASSESSEE. NO FURTHER ACTION WAS TAKEN BY THE LD. AO WITH REGARD TO THE VARIOUS DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE BY MAKING ENQUIRIES WITH THE ASSESSING OFFICER OF THE LENDER COMPANY DESPITE KNOWING THE DETAILS OF ASSESSMENT PARTICULARS OF LENDER COMPANY. WITH ALL THESE OBSERVATIONS, THE LD.CIT(A) DELETED THE ADDITION MADE IN THE SUM OF RS.25 LAKHS TOWARDS UNEXPLAINED CASH CRE DIT U/S.68 OF THE ACT. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS. THE PRIMARY FACTS STATED HEREINABOVE AND THE VARIOUS DOCUMENTARY EVIDENCES THAT WERE SUBMITTED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES REMAIN UNDISPUTED AND HENCE, THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. IN THE INSTANT CASE, WE FIND THAT THE ASSESSEE HAD SUBMITTED ALL THE DOCUMENTARY EVIDENCES TO PROVE THE THREE NECESSARY INGREDIENTS OF SECTION 68 OF THE ACT JUSTIFYING THE VERACITY OF THE LOAN TAKEN BY THE ASSESSEE FROM M/S. FASTLINE MULTI T RADE PVT. LTD.,. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 7 PAID INTEREST ON THE SAID LOAN AFTER DUE DEDUCTION OF TAX AT SOURCE AND THAT THE SAID INTEREST INCOME HAS ALSO BEEN OFFERED BY THE LENDER COMPANY AND THE REVENUE HAD GIVEN DUE CREDIT FOR THE TDS CLAIM THEREON IN THE ASSESSMENT OF LENDER COMPANY. EVEN IN THE HANDS OF THE ASSESSEE COMPANY, THE INTEREST PAID ON LOANS IS ALLOWED AS DEDUCTION. FROM THE ELABORATE FINDINGS GIVEN BY THE LD. CIT(A) ABOVE , WE FIND THAT THE ASSESSEE HAD DULY DISCHARGED THE NECESSARY THREE INGREDIENTS OF SECTION 68 OF THE ACT IN THE INSTANT CASE. MERELY BECAUSE THE NOTICE U/S.133(6) OF THE ACT RETURNED UNSERVED, NO ADVERSE INFERENCE COULD BE DRAWN ON THE ASSESSEE IGNORI NG THE VARIOUS DOCUMENTARY EVIDENCES ON RECORD. NOTHING PREVENTED THE LD. AO TO MAKE ENQUIRIES FROM HIS SIDE WITH THE ASSESSING OFFICER OF THE LENDER COMPANY, AND EXAMINE THE VERACITY OF THE LOAN TAKEN BY THE ASSESSEE, THE DETAILS OF WHICH ARE VERY MUCH AV AILABLE BEFORE THE LD. AO. WE ALSO FIND THAT THE ENTIRE ADDITION HAS BEEN MADE MERELY BY PLACING RELIANCE ON THE STATEMENT RECORDED FROM SHRI PRAVEEN KUMAR JAIN DURING THE COURSE OF HIS SEARCH ACTION, WHICH STATEMENT WAS ALSO NOT FURNISHED TO THE ASSESSEE FOR ITS REBUTTAL AND CROSS EXAMINATION, THOUGH SPECIFICALLY ASKED FOR IN THE COURSE OF ASSESSMENT PROCEEDINGS. IN THESE FACTS AND CIRCUMSTANCES, THERE IS NO CASE FOR THE REVENUE TO DRAW ADVERSE INFERENCE ON THE VARIOUS DOCUMENTARY EVIDENCES SUBMITTED BY TH E ASSESSEE EVENTUALLY TO TREAT THE LOAN RECEIVED FROM M/S. FASTLINE MULTI T RADE PVT. LTD., AS INGENUINE LOAN . ACCORDINGLY, WE DO NOT FIND ANY ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 8 INFIRMITY IN THE ORDER OF THE LD. CIT(A) GRANTING RELIEF TO THE ASSESSEE AND THE GROUND NO.1 RAISED BY THE REVENU E IS DISMISSED. 6. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE IN THE SUM OF RS.2,50,00,000/ - TOWARDS UNEXPLAINED SHARE CAPITAL AND SHARE PREMIUM IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD. AO OBSERVED THAT DURING THE YEAR THE ASSESSEE COMPANY HAD ISSUED ONE LAKH SHARES OF FACE VALUE OF RS.10/ - EACH AT A PREMIUM OF RS.240/ - PER SHARE TOTALLING TO RS.2,50,00,000/ - . IN OTHER WORDS, THE ASSESSEE DURING THE YEAR RECEIVED SHARE CAPITAL AND SHARE PREMIUM FROM THE FOLLOWING PERSONS: - SR NO. NAME OF THE PERSON FROM WHOM SHARE PREMIUM RECEIVED AMOUNT TOWARDS FACE VALUE (IN RS.) AMOUNT TOWARDS PREMIUM (IN RS.) TOTAL AMOUNT (IN RS.) 1 PRRANETA INDUSTRIES LTD/AADHAR VENTURES INDIA LTD 2,00,000/ - 48,00,000 / - 50,00,000/ - 2 DHANUSH TECHNOLOGIES LTD 2,00,000/ - 48,00,000/ - 50,00,0007 - 3 SPECIALITY PAPERS LTD 2,00,000/ - 48,00,000/ - 50 ? 00,000/ - 4 EMPORIS PROJECTS LTD 2,00,000/ - 48,00,000/ - 50,00,000/ - 5 SHRI GANESH SPIN N ERS LTD/YANTRA NATURAL RESOURCES PVT LTD 2,00,000/ - 48,00,000/ - 50,00,000/ - TOTAL 10,00,000/ - 2,40,00,000/ - 2,50 ,00,000/ - ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 9 7.1. THE LD. AO OBSERVED THAT DURING THE COURSE OF SEARCH AND SEIZURE ACTION BY THE INVESTIGATION WING OF INCOME TAX DEPARTMENT AT THE RESIDENCE AND OFFICE OF SHRI SHIRISH CHANDRAKANT SHAH ON 09/04/2013, IT WAS FOUND THAT THE SAID PERSON WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES THROUGH A WEB OF COMPANIES. THE AFORESAID FOUR CONCERNS WERE PART OF THE COMPANIES FOUND TO BE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AND CONTROLLED BY SHRI SHIRIS H C SHAH. THE LD. AO BASED ON THE INFORMATION GATHERED DURING THE SEARCH ACTION IN THE CASE OF SHIRISH C SHAH PROCEEDED TO TREAT THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM THE AFORESAID FIVE PERSONS IN THE SUM OF RS.2,50,00,000 AS BOGUS AND ACCORDINGLY, SHOW CAUSED THE ASSESSEE AS TO WHY THE S AME SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. THE ASSESSEE FILED A REPLY VIDE LETTER DATED 09/03/2015 WHEREIN IT SUBMITTED COPIES OF CONFIRMATION FROM THE INVESTORS DULY CONFIRMING THE INVESTMENT MADE BY THEM IN THE ASSESSEE COMPA NY, BANK STATEMENTS, ITR ACKNOWLEDGEMENTS , THEIR FINANCIAL STATEMENTS, SHARE APPLICATION FORMS, BOARD RESOLUTION FOR MAKING THE INVESTMENT, THE LETTER CONFIRMING THE INVESTMENT MADE BY THEM IN THE ASSESSEE COMPANY, RETURN OF ALLOTMENT FILED WITH REGISTRAR OF COMPANIES FOR HAVING ALLOTTED THE SHARES AT PREMIUM, BANK STATEMENTS EVIDENCING THE INVESTMENT MADE IN THE ASSESSEE COMPANY TOGETHER WITH ITS SOURCE OF FUNDS. THE LD. AO HOWEVER, DISREGARDED THE ENTIRE EVIDENCES ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 10 FILED BY THE ASSESSEE WITHOUT FINDING ANY DEFICIENC IES IN TH ESE DOCUMENTARY EVIDENCES SUBMITTED BEFORE HIM. THE LD. AO MERELY PLACED RELIANCE ON THE INVESTIGATION REPORT OF THE INVESTIGATION DEPARTMENT CARRIED OUT IN THE CASE OF SHRI SHIRISH C SHAH. ACCORDINGLY, HE TREATED THE RECEIPT OF SHARE CA PITAL AND SHARE PREMIUM IN THE SUM OF RS.2,50,00,000/ - AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT AND COMPLETED THE ASSESSMENT. 7.2. THE ASSESSEE SUBMITTED THE AFORESAID VARIOUS DOCUMENTARY EVIDENCES THAT WERE FILED BEFORE THE LD. AO AND REQUESTED FOR C ONSIDERATION OF THE SAME BY THE LD. CIT(A). IT WAS PLEADED THAT THE AFORESAID DOCUMENTS WOULD DULY PROVE THE THREE NECESSARY INGREDIENTS OF SECTION 68 VIZ. IDENTITY OF THE INVESTORS, CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE TRANSACTIONS. IT WAS FURTHER PLEADED THAT THE ASSESSEE IS NO WAY CONNECTED WITH SHRI SHIRISH C SHAH AND HE HAD NOT REFERRED TO THE NAME OF THE ASSESSEE PER SE IN ANY OF HIS STATEMENTS BEFORE THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. IT WAS SPECIFICALLY PLEADED THAT ALL THE AFORESAID FIVE CONCERNS ARE REGULARLY ASSESSED TO INCOME TAX AND HAD DISCLOSED IN THEIR AUDITED BALANCE SHEET, THE AMOUNTS INVESTED IN THE ASSESSEE COMPANY AND THAT THE TRANSACTIONS OF MAKING INVESTMENT IN THE ASSESSEE COMPANY WERE MADE BY ACC OUNT PAYEE CHEQUES / RTGS AND THE IMMEDIATE SOURCE OF CREDIT IS ALSO PROVED BY THE ASSESSEE COMPANY. HENCE, THE SOURCE OF SOURCE WAS ALSO PROVED IN ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 11 THE INSTANT CASE AND THAT THERE WAS NO CASH DEPOSIT IN THE BANK STATEMENTS OF THE RESPECTIVE PARTIES PRIOR T O THE DATE OF MAKING INVESTMENT IN THE ASSESSEE COMPANY. HENCE, THERE IS NO REASON TO DOUBT THE GENUINENESS OF THE TRANSACTION IN THE INSTANT CASE. IT WAS PLEADED THAT THE ENTIRE ADDITION MADE BY THE LD. AO BASED ON THE STATEMENT OF SHRI SHIRISH C SHAH , IS NOTHING BUT AN ADDITION MADE ON THE BASIS OF SUSPICION , SURMISE AND CONJECTURE. 7.3. THE LD. CIT(A) APPRECIATED THE CHART GIVEN BELOW WHICH HAD BEEN CULLED OUT FROM VARIOUS DETAILS FILED BY THE ASSESSEE TO DRIVE HOME THE POINT THAT THE ENTIRE TRANSACTIO NS HAVE BEEN CARRIED OUT THROUGH REGULAR BANKING CHANNELS AND CREDITWORTHINESS OF ALL THE PARTIES WERE PROVED BEYOND DOUBT : - (A) DETAILS OF BANK TR ANSA CTION FOR SHARE CAPITAL & SHARE PREMIUM S NO . DETAILS OF SHARE APPLICANT BANK DETAILS CHEQUE/ DD ETC. DATE AMOUNT REMARKS, IF ANY 1 PRRANETA INDUSTRIES LTD/ AADHAR VENTURES INDIA LTD. S - 574/577 BELGIUM SQUARE RING ROAD, SURAT - 395002. PAN:AABCP415 5F ING VYSYA BANK LTD. NARIMAN POINT BRANCH A/C NO. 508001038 RTGS/VYSA H 1126070325 1 17.9.2011 50,00,000 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 12 2 DHANUSH TECHNOLOGIES LTD. 2 - AB, GEE GEEEMARALD, NUNGAMBAKKAN CHENNAI - 600034 PAN: AABCD3429L ING VYSYA BANK LTD. DADART. T. MUMBAI RTGS/VYSA H 1291700492 18.10.2011 50,00,000 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE 3 SPECIALITY PAPERS LTD. MORAL NATIONAL H IGHWAY, VAPI GUJARAT PAN:AECS0861Q ING VYSYA BANK LTD. DADAR BRANCH MUMBAI A/CNO.561011013 89 RTGS/VYSA H 1129170458 3 18.10.2011 50,00,000 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQ L IE 4 EMPORIS PROJECTS LTD. 209, SARTHIK - 2 OPP. RAJPATHCLUB AHMEDABAD - 380015 ING VYSYA BANK LTD. DADAR BRANCH MUMBAI A/CNO.5610110136 22 RTGS/ VVSAH 11263701474 RS.3000000 RTGS/ VYSAH 11270703287 RS.2000000 TOTAL RS. 500000 20.0 9.2011 27.09,2011 50,00,000 NO CASH DEPOSIT IN BANK A/C BEFORE ISSUING OF CHEQUE ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 13 ( B) SOURCE FOR SHARE CAPITAL & SHARE PREMIUM S. NO. DETAILS OF SHARE APPLIC ANT CONTRIBUTION'S CAPITAL AS ON 31.03.2011 (PRECEDING F.Y. IN WHICH CONTRIBUTION MADE) NATURE AND AMOUNT OF FUND IN THE BALANCE SHEET AMOUNT/ CAPITA 1 CONTRIBUTED BY THE PARTY TO APPELLANT REMARKS, IF ANY 1 PRRANETA INDUSTRIES LTD/AADHAR VENTURES INDIA LTD. S - 74/577 BELGIUM SQUARE RING ROAD, SURAT - 395002. PAN:AABCP415 5F RS. 426992891 OWN FUND RS. 426992891 I. SHARE CAPITAL/ APPLICATION RS. 225721000/ - II. RESERVE AND SURPLUS RS. 201271891 / - 50,00,000 OWN FUND OF (HE PARTY RS. 426992891 WHICH IS MUCH HIGHER THAN THE AMOUNT RECEIVED 5 SHRI GANESH SPINNERS LTD./ VANTRA NATURAL RESOURCES LTD. G.T. ROAD, KARNAL SIDE, VILLAGE SIMLA MOLANA, PANIPAT 1321 03 PAN: AACCS4221Q ING VYSYA BANK LTD. NARIMAN POINT BRANCH MUMBAI A/ CNO.50001 1038954 NEFT/VYSAH 11318707156 14.11.2011 50,00,000 , ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 14 2 DHANUSH TECHNOLOGIES LTD, 2 - AB, GEE GEEEMARALD, NUNGAMBALDKAM CHENNAI - 600034 PAN: AABCD3429L RS. 2876887931 OWN FUND RS. 2876887931 I. SHARE CAPITAL/ APPLICATION RS. 179426300/ - II. RESERVE AND SURPLUS RS. 2697461 631 / - 50,00,000 OWN FUND OF THE PARTY RS. 2876887931 WHICH IS MUCH HIGHER THAN THE AMOUNT RECEIVED 3 SPECIALITY PAPERS LTD. MORAI NATIONAL HIGHWAY, VAPI GUJARAT PAN: AAECSOS61Q RS. 1554048000 OWN FUND RS. 1749209000 I. SHARE CAPITAL/ APPLICATION RS. 1749 209000 50,00,000 OWN FUND OF THE PARTY RS . 1554048000 WHICH IS MUCH HIGHER THAN THE AMOUNT RECEIVED II. RESERVE AND SURPLUS RS. (195261000) 4 EMPORIS PROJECTS LTD. 209, SARTHIK - 2 OPP. RAJPATH CLUB AHMEDABAD - 380015 RS. 1361027511 OWN FUND RS. 13610 27511 I. SHARE CAPITAL/ APPLICATION RS. 587532000 50,00,000 OWN FUND OF THE PARTY RS. 1361027511 WHICH IS MUCH HIGHER THAN THE AMOUNT RECEIVED II. RESERVE AND SURPLUS RS. 773495511 5 SHRI GANES H SPINNERS LTD./ YANTRA NATURAL RESOURCES LTD. G.T. ROAD, KARNAL SIDE, RS. 2937175438 OWN FUND RS. 2937175438 I. SHARE CAPITAL/ APPLICATION 50,00,000 OWN FUND OF THE PARTY RS. 2937175438 WHICH IS MUCH HIGHER THAN THE AMOUNT ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 15 7. 4 . THE LD. CIT(A) OBSERVED THAT THE AFORESAID DOCUMENTARY EVIDENCES TOGETHER WITH THE AFORESAID TABULATI ON GOES TO PROVE THAT THE ASSESSEE HAD DISCHARGED THE PRELIMINARY ONUS COST ON IT TO PROVE THE GENUINENESS OF THE TRANSACTION BY SUBMITTING THE REQUISITE DETAILS WITH DOCUMENTARY EVIDENCES AND HAD DISCHARGED ITS ONUS OF SATISFYING THREE NECESSARY INGREDIEN TS OF SECTION 68 OF THE ACT. THE LD. CIT(A) SPECIFICALLY POINTED OUT THAT THE LD. AO HAD NOT BROUGHT ANY CONTRARY EVIDENCE ON RECORD TO DISPROVE A LL THESE TRANSACTIONS. THE LD. CIT(A) ALSO OBSERVED THAT OUT OF THE FIVE SHARE HOLDER COMPANIES, FOUR COMPANIE S ARE PUBLIC LIMITED COMPANIES WHOSE SHARES ARE QUOTED IN VARIOUS STOCK EXCHANGES. THE LD. CIT(A) ALSO PLACED RE LIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD., VS. ADDITIONAL CIT REPORTED IN 368 ITR 1 (BOM) WHEREIN IT WAS HELD THAT THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WAS UNDOUBTEDLY ON CAPITAL ACCOUNT AND THERE IS NO EXPRESS PROVISION IN THE A CT TO TAX THE SAME. THE LD. CIT(A) ALSO TOOK NOTE OF THE FACT THAT CBDT VIDE ITS INSTRUCTION N O.2/2016 DATED 29/10/2016 DIRECTED THE REVENUE NOT TO FILE SLP BEFORE THE HONBLE SUPREME COURT AGAINST THIS HIGH COURT ORDER. THE LD. CIT(A) FURTHER PLACED RELIANCE ON THE CO - ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE VILLAGE SIMLA MOLANA, PANIPAT 132103 PAN: AACCS4221Q RS. 554303625 II. RESERVE AND SURPLUS RS. 2382871813 RECEIVED ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 16 CASE OF ACIT VS. GAGANDEEP INFR ASTRUCTURE PVT. LTD., IN ITA NO.5784/MUM/2011 DATED 23/04/2014 WHEREIN IT WAS HELD THAT THE AMENDMENT IN SECTION 56(2) (VIIB) OF THE ACT WHEREIN IT IS PROPOSED TO TAX THE PREMIUM RECEIVED ON SHARES WHICH WAS IN EXCESS OF FAIR MARKET VALUE OF THE SHARES, I S PROSPECTIVE IN NATURE AND APPLICABLE ONLY FROM A.Y.2013 - 14 ONWARDS. THE SAID JUDGMENT ALSO HELD THAT THE AMENDMENT IN PROVISO TO SECTION 68 OF THE ACT IS ALSO APPLICABLE ONLY FROM A.Y.2013 - 14 ONWARDS. ACCORDINGLY, THE RECEIPT OF SHARE CAPITAL AND SHARE PR EMIUM CANNOT BE BROUGHT TO TAX U/S.68 OF THE ACT UP TO A.Y.2012 - 13. 7. 5 . BASED ON THE AFORESAID OBSERVATIONS, THE LD. CIT(A) DELETED THE ADDITION MADE U/S.68 OF THE ACT TOWARDS SHARE CAPITAL AND SHARE PREMIUM IN THE SUM OF RS.2,50,00,000/ - . 8. AGGRIEVED, T HE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL S AVAILABLE ON RECORD INCLUDING THE ENTIRE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES WHICH ARE NOT IN DISPUTE BEFORE US. THESE DOCUMENTS ARE AL SO PLACED ON RECORD IN THE FORM OF DETAILED PAPER BOOKS BY THE ASSESSEE. WE FIND THAT THE LD. CIT(A) HAD ELABORATELY DEALT WITH THE ENTIRE ISSUE BY DUE APPRECIATION OF THE VARIOUS DOCUMENTARY EVIDENCES SUBMITTED IN RESPECT OF INVESTOR COMPANIES DULY PROVIN G THE THREE NECESSARY INGREDIENTS OF SECTION 68 OF THE ACT VIZ. IDENTITY OF THE INVESTORS, CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 17 TRANSACTIONS. WE FIND THAT NONE OF THESE DOCUMENTARY EVIDENCES WERE CONTROVERTED BY THE LD. AO BY PROCEEDING TO MAKE FURTHER ENQUIRY IN THIS REGARD. NONE OF THESE FACTS WERE EVEN DENIED BY THE LD. AO OR ANY DEFICIENCIES WERE FOUND THEREON BY THE LD. AO AND WE ALSO TAKE NOTE OF THE FACT THAT OUT OF THE FIVE INVESTOR COMPANIES WHO HAD INVESTED MONIES IN THE ASSESS EE COMPANY, FOUR OF THEM ARE PUBLIC LIMITED COMPANIES WHICH ARE LISTED IN VARIOUS STOCK EXCHANGES. WE ALSO TAKE NOTE OF THE FACT THAT THE LD. CIT(A) HAD PLACED RELIANCE ON THE CO - ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF GAGANDEEP INFRASTRUCT URE SUPRA, WHEREIN IT WAS HELD THAT THE AMENDMENT TO SECTION 56(2)(VIIB) AND PROVISO TO SECTION 68 OF THE ACT ARE ONLY PROSPECTIVE IN NATURE AND APPLICABLE ONLY FROM A.Y.2013 - 14 ONWARDS AND NOT EARLIER. WE FIND THAT THIS JUDGMENT HAS BEEN SUBSEQUENTLY APPR OVED BY THE HONBLE JURISDICTIONAL HIGH COURT. WE FIND THAT THE L D . D R VEHEMENTLY RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NAVODAYA CASTLES (P) LTD., REPORTED IN 50 TAXMANN.COM 110 . WE HOLD THAT THE DECISION OF HONBLE JURISDICTI ONAL HIGH COURT WOULD BIND THIS TRIBUNAL. HENCE, IN VIEW OF THE AFORESAID OBSERVATIONS AND VARIOUS DECISIONS OF HONBLE JURISDICTI O NAL HIGH COURT RELIED UPON BY THE LD. CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE, WE DO NOT DEEM IT FIT TO INTERFERE IN THE SAID ORDER OF THE LD. CIT(A). ACCORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. ITA NO.3003/MUM/2017 M/S. SIDDHIVINAYAK FILAMENTS P. LTD. 18 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 / 06 /201 9 SD/ - ( PAWAN SINGH ) SD/ - ( M .BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 21 / 06 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//