Appeal Details
Counselvise Citation
[2018] 121 COUNSELVISE.COM (IT) 7119 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-05-2018
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
Not Allotted
Assessment Year
2010-2011
Appeal Filed On
13-05-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, A M AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 3390/MUM/2016 ( / ASSESSMENT YEAR: 2010 - 11 ) DY. CIT - 9(3)(1) , 215, AAYAKAR BHAVAN, 2 ND FLOOR, M. K. MARG, MUMBAI - 400 020 / VS. M/S. FERN INFRASTRUCTURE PVT. LTD. 6 TH FLOOR, AKURTI TRADE CENTRE, ROAD NO. 7, MAROL, MIDC, ANDHERI (E), MUMBAI - 400 093 ./ ./ PAN/GIR NO. AABCF 2322 C ( R EVENUE ) : ( ASSESSEE ) ./ I.T.A. NO. 3141/MUM/2016 ( / ASSESSMENT YEAR: 2010 - 11 ) M/S. FERN INFRASTRUCTURE PVT. LTD. MUMBAI - 400 093 / VS. DY. CIT - 9(3)(1), MUMBAI - 400 020 ./ ./ PAN/GIR NO. AABCF 2322 C ( ASSESSEE ) : ( REVENUE ) REVENUE BY : SHRI SAURABH DESHPANDE ASSESSEE BY : SHRI VIJAY MEHTA / DATE OF HEARING : 07.03.2018 / DATE OF PRONOUNCEMENT : 31.05 .2018 / O R D E R PER S HAMIM YAHYA, A. M.: THESE ARE CROSS A PPEAL S BY THE REVENUE AND THE ASSESSEE ARISING OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 26.02.2016 AND P ERTAINS TO THE A SSESSMENT YEAR 2010 - 11. 2. THE GROUNDS OF APPEAL IN REVENUES APPEAL READ AS UNDER: 2 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. (I) 'WHE THER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) ERRED IN DELETING THE ADDITION MAD E U/S 68 OF THE I. T. ACT OF RS. 38,12,79, 600 / - WITHOUT APPRECIATING THE FACT THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FROM DIFFERENT ENTITIES WE RE DECLARED BY THE SALES TAX DEPARTMENT OF MAHARASHTRA AS TO BE HAWALA DEALER AND THE ENTITIES ALSO DID NOT RESPOND TO INQUIRIES MADE BY A. O.' (II) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT T HE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE BEFORE THE AO AND THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCE WITHOUT APPRECIATING THE FACT THAT ASSESSEE WAS TO ESTABLISH HOW AND WHAT PREVENTED THE ASSESSEE FROM FILING THE SAME EVIDENCE BEFORE THE A. O '. (II I ) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) ERRED IN ACCEPTING THE PAPER BOOK SUBMITTED BY THE ASSESSEE AND BASED ON IT HAS ACCEPTED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE ENTITIES FROM WHOM THE ASSESSEE HAS RECEIVED MONIES'. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON TJIE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED . 3. THE GROUNDS OF APPEAL IN ASSESSEES APPEAL READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) 16 HAS ERRED IN CONFIRMING DISALLOWANCE U/S. 68 OF THE ACT, OF PREFERENCE SHARE CAPITAL AMOUNTING TO RS.5,40,00,000/ - RECEIVED FROM M/S. EMPOWER INDUSTRIES INDIA LIMITED. 2. THE ORDER UNDER APPEAL IS NOT ONLY BAD IN LAW AND INVALID, BUT ALSO AGAINS T THE NATURAL LAW OF EQUITY AND JUSTICE. 4. BRIEF FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF B UYING AND RUNNING INFRASTRUCTURE FACILITY AND PROPERTY DEVELOPMENT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS INTRODUCED SHA RE CAPITAL OF RS.38,12,79,600/ - BY WAY OF 'ISSUED, SUBSCRIBED A PAID - UP SHARE CAPITAL' FOR 3,17,733 NON - CUMULATIVE PREFERENCE SHARES, DETAILS OF WHICH ARE AS UNDER : - SR. NO. NAME OF THE SHAREHOLDERS NO. OF EQUITY SHARES AMOUNT (RS.) 1 SONAL COSMETIC (EXPORTS) LIMITED 16700 20040000 2 SONAL INTERNATIONAL LIMITED 16700 20040000 3 SONALI SIL CHEM LIMITED 16700 20040000 4 DYNACHEM PHARMACEUTICALS (EXPORTS) LIMITED 16700 200 4 0000 5 AARIKA STEEL AND M ETAL PRIVATE ' LIMITED 8400 10080000 6 PRIORITY TRADERS PRIVATE LIMITED 20900 25080000 7 EMPOWER INDUSTRIES INDIA LIMITED 41700 50040000 8 EALDOR RETAILS PRIVATE LIMITED 20900 25080000 9 TAC TECHNOSOFT PRIVATE LIMITED 20900 25080000 10 SAFFORD MERCANTILE PRIVATE LIMITED 8400 10080000 3 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 11 BENCHMARK BUILDCON PRIVATE LIMITED 8400 10080000 12 JAGDAMBA COPLEX PRIVATE LIMITED 8400 10080000 13 PROFICIENT MERCHANDISE PRIVATE LIMITED 8400 10080000 14 NIHAL MERCANTILE PRIVATE LIMITED 8400 10080000 15 PRABHAV INDUSTRIES LIMITED 33400 40080000 16 RAW GOLD SECURITIES PRIVATE LIMITED 25033 30039600 17 JYOTI FOODTUFE LIMITED 20900 25080000 18 PASUPATI ENCLAVE PRIVATE LIMITED 8400 10080000 19 LILAC MEDICIN E PRIVATE LIMITED 8400 10080000 TOTAL 317733 381279600 4. THE ASSESSING OFFICER MADE ENQUIRIES FROM THE ASSESSEE REGARDING THE DETAILS OF THE ABOVE. THE ASSESSEE FAILED TO COMPLY. THEREAFTER, THE ASSESSEE SUBMITTED THE PASS BOOK AND BANK STATEMENTS. T HE ASSESSING OFFICER ISSUED SUMMONS U/S. 131(1) OF THE ACT TO THE ABOVE DIFFERENT SHAREHOLDERS. MAJORITY OF THE NOTICES WERE RETURNED UNSERVED. THE ASSESSING OFFICER ALSO ISSUED REQUISITION U/S. 133 TO THE SAID SHAREHOLDERS ASKING FOR DETAILS. THE ASSESSIN G OFFICER NOTED THAT IN THE COURSE OF HEARING ON 18.03.2013, THE LD. COUNSEL OF THE ASSESSEE WAS FINALLY ASKED TO PRODUCE ALL THE SHAREHOLDERS ON 22.03.2013 AS THE ENQUIRIES REVEAL NON - EXISTENCE OF THE SHAREHOLDERS AT THE ADDRESSES PROVIDED BY THE ASSESSEE . IN THE BACKGROUND OF THE AFORESAID, THE ASSESSING OFFICER HELD THAT IDENTITIES OF THE SHAREHOLDERS HAVE NOT BEEN PROVED. HE NOTED THAT THE ASSESSEE HAS MERELY FURNISHED PHOTO COPIES OF SHARE APPLICATION FORMS, BALANCE SHEETS, RELEVANT BANK STATEMENTS ENT RIES OF THE SHAREHOLDERS. HOWEVER, THE ASSESSING OFFICER NOTED THAT EVEN BY DOING SO, THE ASSESSEE HAS NOT ESTABLISHED THE IDENTITY OF THE SAID SHAREHOLDERS AS NEITHER THE CONCERNED PERSONS HAVE BEEN PRODUCED NOR THEIR BOOKS OF ACCOUNTS BEEN FURNISHED. 4 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. THE ASSESSING OFFICER FURTHER NOTED THAT AS PER THE INFORMATION AVAILABLE ON THE OFFICIAL WEBSITE OF ROC(MCA), THE PREFERENCE SHAREHOLDERS LISTED HEREINABOVE HAVE CONTINUED WITH THE ASSESSEE COMPANY TILL 31.03.2012. THE ASSESSING OFFICER NOTED THAT THE ASSESS EE HAS REPEATEDLY CONVEYED THAT IT IS IN CLOSE CONTACT WITH ALL THE SAID CONCERNS. HOWEVER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THOSE PERSONS. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAVE FURNISHED PH OTOCOPIES OF THE SHARE APPLICATION AND RELEVANT BANK STATEMENTS TO PROVE THE CREDITWORTHINESS OF THE SAID SHAREHOLDERS. HOWEVER, THE ASSESSING OFFICER HELD THAT THESE PAPERS CANNOT BE TREATED AS EVIDENCE AS THEY ARE NOT CORROBORATED BY THE RECORDS AND BOOK S OF ACCOUNTS OF THE SHAREHOLDERS. THE ASSESSING OFFICER FURTHER HELD THAT BY MERE FACT THAT THE TRANSACTIONS HAVE TAKEN PLACE THROUGH BANKING CHANNELS, IT CANNOT BE CONSTITUTED THAT THE TRANSACTIONS ARE GENUINE AS THE RELEVANT BOOKS OF ACCOUNT CORROBORATI NG THE SAID TRANSACTIONS HAS NOT BEEN FURNISHED BY THE SHAREHOLDERS FOR VERIFICATION. IN THESE BACKGROUND, THE ASSESSING OFFICER ADDED THE ENTIRE AMOUNT AS UNEXPLAINED CASH CREDIT U/S. 68 AMOUNTING TO RS.38,12,79,600/ - . 5. AGAINST THE ABOVE ORDER, THE ASS ESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSESSEE COMPANY HAS FURNISHED THE FOLLOWING DETAILS DURING THE ASSESSMENT PROCEEDINGS: VIDE LETTER DT. 09.01.2013 5 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. E. COPY OF CORRESPONDENCE AND CONFIRMATION FROM PREFERENCE SHAREHOLDERS SHOWING PAYMENT MADE THROUGH RTGS OR CHEQUES F. COPY OF BANK STATEMENT IN CASE OF 4 SHAREHOLDERS G. COPY OF SHARE APPLICATION FORMS H. COPY OF BOARD RESOLUTION OF SHAREHOLDER COMP ANY VIDE LETTER DT. 14.01.2013 B. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME & BALANCE SHEET AS ON 31.03.2010 OF 6 PREFERENCE SHAREHOLDERS SAFFORD MERCANTILE PRIVATE LIMITED PASUPATI ENCLAVE PRIVATE LIMITED NIHAL MERCANTILE PRIVATE LIMITED BENCHMARK BUILDCON PRIVATE LIMITED JAGDAMBA COMPLEX PRIVATE LIMITED AARIKA STEEL AND METAL PRIVATE LIMITED VIDE LETTER DT. 23.01.2013 C. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME & BALANCE SHEET AS ON 31.03.2 010 OF 7 PREFERENCE SHAREHOLDERS TAC TECHNOSOFT PRIVATE LIMITED PRIORITY TRADERS PRIVATE LIMITED LILAC MEDICINES PRIVATE LIMITED JYOTI FOODSTUFF LIMITED EALDOR RETAILS PRIVATE LIMITED PRABHAV INDUSTRIES LIMITE D EMPOWER INDUSTRIES INDIA LIMITED D. VALUATION REPORT OF CHARTERED ACCOUNTANT JUSTIFYING ISSUE OF SHARES AT PREMIUM, THE RATE OF RS. 1251/ - PER SHARE VIDE LETTER DT. 01.02.2013 C. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME & BALANCE SHE ET AS ON 31.03.2010 OF 4 PREFERENCE SHAREHOLDERS SONAL COSMETIC (EXPORTS) LIMITED SONAL INTERNATIONAL LIMITED SONALSIL - CHEM LIMITED DYNACHEM PHARMACEUTICALS (EXPORTS) LIMITED D. STATEMENT SHOWING DETAILS OF BANK ACCOUN TS OF PREFERENCE SHAREHOLDERS (NAME AND ADDRESS OF BANK ALONGWITH RESPECTIVE BANK ACCOUNT NUMBERS) THE APPELLANT COMPANY HAS ALSO SUBMITTED BANK STATEMENT OF ITS OWN REFLECTING PAYMENT RECEIVED FROM ABOVE SHAREHOLDERS. 7. THEREAFTER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSESSING OFFICER HAS ISSUED SUMMONS U/S. 131. HE ALSO NOTED THAT THE INSPECTOR HAS 6 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. BEEN DEPUTED TO FIND OUT SOME OF THE SHAREHOLDERS. THE ASSESSEE MA DE ELABORATE SUBMISSIONS BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSESSEE HAS SUBMITTED VARIOUS DOCUMENTS BY WAY OF ADDITIONAL EVIDENCES WHICH INCLUDE THE FOLLOWING: I. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME AND FINANCIAL STATEMENT IN C ASE OF PROFICIENT MERCHANDISE PRIVATE LIMITED&RAW GOLD SECURITIES LIMITED FOR A.Y. 2010 - 11 II. COPY OF SIGNED APPLICATION FOR APPLYING TO THE ISSUE OF PREFERENCE SHARES AND BOARD RESOLUTION OF PRIORITY TRADERS PRIVATE LIMITED III. COPY OF PAN CARD IV. BA NK STATEMENTS OF SHAREHOLDERS V. COPY OF SIGNED CONFIRMATION FOR MAKING INVESTMENT IN THE PREFERENCE SHARES OF APPELLANT COMPANY OF THE REMAINING SHAREHOLDERS. 8. THE ASSESSEE STATED THAT THE ASSESSEE WAS NOT PROVIDED SUFFICIENT TIME TO SUBMIT TH ESE EVIDENCES AND SOME OF THE DOCUMENTS AND REGISTER WERE DESTROYED IN FIRE ON 03.12.2011. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REMANDED THE ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER. FIRSTLY, IN THE REMAND REPORT, THE ASSESSING OFFICER REQUESTE D NO T TO ACCEPT THE ADDITIONAL EVIDENCES. HOWEVER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PROCEEDED TO ACCEPT THE SAME. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER NOTED THAT THE EVIDENCES AND DETAILS FURNISHED ARE ALMOST THE SAME WHICH WERE FURNISHED BEFORE THE ASSESSING OFFICER , EXCEPT A FEW ADDITIONAL EVIDENCES. THEREAFTER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT DURING THE REMAND REPORT, THE ASSESSING OFFICER HAD ISSUED FRESH NOTICE U/S. 133(6) DATED 29.04.2015 TO THE SHAR EHOLDERS SEEKING THEM TO FILE CERTAIN DETAILS. IN RESPONSE, 18 SHAREHOLDERS HAVE FILED THEIR REPLY AND SUBMITTED THE DETAILS. THE ASSESSING OFFICER OBSERVED THAT THEY HAVE FAILED TO FURNISH ANY NEW EVIDENCE. 7 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. THEREAFTER, THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) REFERRED TO AN INSPECTORS REPORT WHICH SHOWS THAT THE SOME OF THE PARTIES ACTUALLY EXISTED . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER EXAMINED THE IDENTITY ASPECT OF THE SHAREHOLDERS. HE ALSO EXAMINED THE CREDITWORTHINESS OF THE SHAREHO LDERS INDIVIDUALLY AND ACCORDING TO THE DISCUSSION, HE DELETED ALL THE ADDITIONS EXCEPT ONE. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD MAY BE GAINFULLY REFERRED AS UNDER: 4.2.3 THUS FROM A BARE READING OF THE EXPOSITION OF L AW RELATING TO THE POWER O F THE COMMISSIONER OF INCOME - TAX (APPEALS) TO ADMIT ADDITIONAL EVIDENCE AS MADE BY THE BOMBAY HIGH COURT IN THE ABOVE CITED CASE, IT IS EVIDENT THAT EVEN IF REPEATED OPPORTUNITIES WERE GIVEN TO THE APPELLANT TO PRODUCE EVIDENCE AN D IF THE APPELLANT DOES NOT SUOMOTU PRODUCE ANY ADDITIONAL EVIDENCE, IN THE SPIRIT OF JUSTICE AND FAIR PLAY, IT IS INCUMBENT ON THE FIRST APPELLATE AUTHORITY, BEING QUASI - JUDICIAL AUTHORITY, TO REQUIRE THE APPELLANT TO PRODUCE REQUISITE EVIDENCE OR TO MAKE NECESSARY INQUIRY AND ADMIT ANY SUCH FRESH AN D ADDITIONAL EVIDENCE, BY VIRTUE OF SECTION 250 (4) AND (5) READ WITH SUB - RULE (4) OF RULE 46 A. 4.2.4 IN THE PRESENT CASE, THE DETAILS SUBMITTED BY THE APPELLANT ARE RELEVANT TO THE GROUNDS RAISED IN APPEA L AS THE MAJOR REASONS FOR ADDITION MADE IN THE ASSESSMENT. THE APPELLANT HAS CLEARLY STATED THAT THE APPELLANT WAS NOT PROVIDED WITH ENOUGH TIME OF SUBMITTING OTHER EVIDENCES. THERE WAS NO INTENTIONAL FAILURE ON THE PART OF THE APPELLANT AND EVIDENCES BEI NG MATERIAL AND SUPPORTIVE, AND IN THE INTEREST OF JUSTICE THE EVIDENCES PRODUCED BY THE APPLICANT ARE ADMITTED AND TAKEN ON RECORD AFTER CONSIDERING THE PRINCIPLES LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT PRABHAVATI S. SHAH. FURTHER, THE APPELLANT HAD SUBMITTED MOST OF THE DETAILS DURING THE ASSESSMENT: PROCEEDINGS ITSELF AS CAN BE SEEN FROM THE RECORD. ONLY PART OF THE DETAILS ARE SUBMITTED NOW. EVEN THE SAID FACT IS ACCEPTED BY THE AO IN PARA 15 OF THE REMAND REPORT WHICH IS REPRODUC ED HEIEIN BEL OW, AS P OIN TED CUT BY THE AR OF DIE APPELLANT . 'THE EVIDENCES AND DETAILS FURNISHED NOW ARE THE SAME AS WERE FURNISHED BEFORE THE AO ' V EXCEPT, F EW ADDITIONAL EVIDENCES WHICH WERE ALREADY FURNISHED BEFORE THE C I T(APPEALS).' ' 4.2.5 DURING TH E REMAND PROCEEDINGS, THE AO HAD ISSUED FRESH NOTICES U/S. 133(6) DT . 29.04.2015 TO THE SHAREHOLDERS WHO HAVE SUBSCRIBED SHARES OF THE APPELLANT C OMPANY ASKING THEM TO FILE CERTAIN DETAILS WHICH IS REPRODUCED IN THE REMAND REPORT AT PARA 9. IN RESPONSE TO THE ABOVE, 18 SHAREHOLDERS HAVE FILED THE REPLY AND SUBMITTED THE DETAILS SUMMARY OF WHICH IS REPRODUCED IN PARA 12 OF THE REMAND REPORT. AFTER EXAMINING THE DETAILS AND EVIDENCES FILED BY THE SHAREHOLDERS, THE AO OBSERVED THAT THEY HAVE FAILED TO 8 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. FURNISH ANY NEW EVIDENCES AND INFORMATION TO ESTABLISH THE CREDIT WORTHINESS OF THE PARTIES AND THE GENUINENESS OF THE SHARE APPLICATION MONEY CLAIMED TO BE INVESTED IN APPELLANT COMPANY DURING THE YEAR. ON PERUSAL OF THE REPLIES FILED BY THE SHAREHOLDERS IT CAN B E OBSERVED THAT: I. NOTICES WERE DULY SERVED ON THE GIVEN ADDRESSES AND ALL THE PARTIES, EXCEPT ONE, HAD FILED THEIR REPLIES. THUS THE PARTIES WERE TRACEABLE AT THE GIVEN ADDRESSES. THIS PROVES THEIR IDENTITY WHICH IS FURTHER SUPPORTED BY THE DOCU MENTARY EVIDENCES FILED BY THE APPELLANT COMPANY DURING ASSESSMENT PROCEEDING AND APPELLATE PROCEEDING. II. AO HAD SPECIFICALLY ASKED THE SHAREHOLDERS THE SOURCE OF MAKING INVESTMENT IN THE SHARES OF THE APPELLANT COMPANY AND SHAREHOLDERS HAVE EXPLA INED THE SOURCE OF THE INVESTMENT TO THE AO IN THEIR REPLIES. III. THE SHAREHOLDERS HAVE FILED THE CONFIRMATION OF INVESTING IN THE SHARES OF APPELLANT COMPANY AND HAVE FURTHER CONFIRMED THAT THEY STILL HOLD THE SHARES OF THE APPELLANT COMPANY. IV. ALONGWITH CONFIRMATION, COPY OF FINANCIALS WERE SUBMITTED WHICH SHOWS THE CREDIBILITY OF THE SHAREHOLDER AND BANK STATEMENT WERE ALSO SUBMITTED PROVING THAT THE TRANSACTION IS GENUINE, V. COPY OF VALUATION REPORT WAS ALSO SUBMITTED WHICH WAS C ONSIDERED AS THE BASIS FOR DETERMINING THE PREMIUM FOR THE SHARE INVESTMENT. VI. OUT OF 19 PARTIES, 18 PARTIES HAVE REPLIED TO THE NOTICE U/S. 133(6) AND ONE PARTY I.E. EMPOWER INDIA LTD HAD NOT REPLIED. IT WAS BROUGHT TO MY NOTICE THAT THE SAID PAR TY REFUSED TO COOPERATE AND SUBMIT THEIR DETAILS DUE TO CERTAIN DIFFERENCES WITH THE APPELLANT COMPANY. HOWEVER THE APPELLANT COMPANY SUBMITTED THE DETAILS WITH RESPECT TO THE SAID COMPANY. 4.2.6 FURTHER, THE INSPECTOR WAS DEPUTED TO VISIT THE PREMISES OF THE FOLLOWING SHAREHOLDERS AND TO VERIFY WHETHER THEY ACTUALLY EXIST IN THE GIVEN ADDRESSES. AFTER VISITING THE PREMISES, THE INSPECTOR HAS STATED IN HIS REPORT THAT THE FOLLOWING PARTIES ACTUALLY EXISTED AT THE GIVEN ADDRESSES. INSPECTOR'S REPORT IS AT TACHED HEREWITH; I) AARIKA STEEL AND METAL PRIVATE LIMITED II) SAFFORD MERCANTILE PRIVATE LIMITED III) BENCHMARK BUILDCON PRIVATE LIMITED IV) JAGDAMBA CO MPLEX PRIVATE LIMITED V) PROFICIENT MERCHANDISE PRIVATE LIMITED VI) NIHAL MERCANTILE PRIVATE LIMITED VII)PASUPATI ENCLAVE PRIVATE LIMITED 4.2.7 THE APPELLANT COMPANY HAD FILED THE COPIES OF THE REPLIES RECEIVED IN RESPONSE TO NOTICE U/ S. 133(6) NOTICES IN ITS SUBMISSION AND STATED THAT THE SHAREHOLDERS NOT ONLY FURNISHED THE DOCUMENTARY EVIDENCES BUT ALSO PROVIDED THE EXPLANATION ASKED FOR BY AO. THUS, AO IS NOT CORRECT IN STATING THAT THEY HAVE FAILED TO FURNISH ANY NEW EVIDENCES OR INFORMATION TO ESTABLISH THE CREDIT WORTHINESS OF THE PARTIES AND THE GENUINENESS OF THE SHARE APPLICATION MONEY CLAIMED TO BE INVESTED IN THE APPELLANT COMPANY DURING THE YEAR. 9 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 4.2.8 AS REGARDS IDENTITY OF THE SHAREHOLDER IT HAS BEEN STATED IN THE REMAND REPORT THAT THE APPELLANT COMPANY HAS MERELY FURNISHED SOME DOCUMENTS BUT HAS NOT PRODUCED THE PARTIES FOR EXAMINATION WHICH AO WANTED TO CARRY OUT IN THE ASSESSMENT PROCEEDINGS. IN RESPONSE TO THE SAME THE APPELLANT COMPANY HAS SUBMITTED THAT IDENTITY IS NOT SAID TO BE PROVED ONLY IF THE PARTIES ARE PRODUCED BEFORE LD AO. OTHER DOCUMENTARY EVIDENCES SUCH AS PAN, IT RETURN ACKNOWLEDGEMENT, FINANCIALS OF THE COMPANY AND THE FACT THAT NOTICES U/S, 133(6) WERE DELIVERED TO THE GIVEN ADDRESSES SHOULD NOT BE IGNORED WHICH PROVES THE IDENTITY OF THE SHAREHOLDER. AND RELIED ON DECISION IN CASE OF ACIT V. KISCO CASTING (P.) LTD (20 13) 34 TAXMANN.COM 37 (CHANDIGARH - TRIB). ACCORDING TO THE APPELLANT, ASSESSEE COMPANY WAS READY TO PRODUCE THE PARTIES BEFORE A.O. DURING REMAND PROCEEDINGS BUT HE DID NOT INSIST IT AFTER RECEIVING REPLIES U/S,133(6) OF THE ACT. ' 4.2.9 FURTHER THE APP ELLANT COMPANY HAS MADE REFERENCE TO THE CASE OF M/S. CITYGOLD EDUCATION RESEARCH PRIVATE LIMITED WHEREIN SAME ISSUE WAS RAISED FOR A.Y. 2010 - 11. IT HAS BEEN STATED THAT IN THE ABOVE MENTIONED COMPANY FOLLOWING SHAREHOLDERS WERE HOLDING SHARES WHICH ARE AL SO SHAREHOLDER OF THE APPELLANT COMPANY. THEY APPEARED BEFORE THE DDIT(INV) AT AHMEDABAD AND BARODA AND PARTIES AT AHMEDABAD GAVE THEIR STATEMENTS ALSO IN WHICH THEY HAVE CONFIRMED THAT THEY HELD SHARES IN THE ABOVEMENTIONED COMPANY. FURTHER THEY ALSO EXPL AINED BUSINESS ACTIVITIES CARRIED ON BY THEM AND ALSO PRODUCED AUDITED ACCOUNTS, INVESTMENT REGISTER, RETURN OF INCOME, BANK STATEMENT BEFORE DDIT(INV), UNIT - 1(3), AHMEDABAD. IT NOT ONLY PROVES THAT THE ABOVE PARTIES ACTUALLY EXISTS BUT ALSO PROVES THAT THEY HAVE CAPABILITY TO INVEST IN THE SHARES 'F MEDIANT COMPANY THE DETAILS OF COMPANIES EXAMINED BY DDIT, UNIT - 1 (3) AHMEDABAD IS AS UNDER: I. M/S. PRABHAV INDUSTRIES LTD., BARODA II. M/S. SONAL INTERNATIONAL LTD. III. M/S. SONALSILCHEM LTD IV. M/S. SO NAL COSMETIC EXPORT LTD V. M/S. DYNACHEM PHARMACEUTICALS EXPORT LTD VI. M/S. RAW GOLD SECURITIES PVT LTD. 4.2.10 THE APPELLANT SUBMITTED THAT FROM THE FACTS, EXPLANATION, DOCUMENTARY EVIDENCES AND ALS O JUDICIAL PRONOUNCEMENTS PROVES THAT ADDITION U/S. 68 IS NOT CORRECT SINCE, THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS AND GENUINENESS OF THE TRANSACTION IS PROVED BEYOND DOUBT. THE APPELLANT PLACE RELIANCE ON FOLLOWING CASE LAWS IN SUPPORT THA T IN THE CIRCUMSTANCES OF THE FACTS OF THE CASE OF THE APPELLANT NO ADDITION UNDER SECTION 68 CAN BE MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT: I. ACIT V. KISCO CASTING (P.) LTD (2013) 34 TAXMANN.COM 37 II. CIT V. CREATIVE WORLD TELEFILMS LTD. (2011) 15 TAXMANN.COM 183 (BOM)(HC) III. CIT V. ORBITAL COMMUNICATION (P) LTD (2010) 327 ITR 560 (DELHI) IV. CIT V. SHREE RAMA MULTI TECH LTD. (2013) 34 TAXMANN.COM 177 (GUJARAT) V. CIT V. ORISSA CORPN. (P.) LTD. (1986) 25 TAXMAN 80F (SC) VI . CIT V. APEX THERM PACKAGING (P.) LTD (2014) 42 TAXMANN.COM 473 (GUJ) 10 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. VII. CIT VS. MORANIAUTOMOTIVES (P.) LTD (2014) 45 TAXMANN.COM 473 (RAJASTHAN) VIII. CIT V. NIPUAN AUTO (P.) LTD (2014) 49 TAXMANN.COM 13 (DELHI) IX. CIT V. VACMET PA CKAGING (INDIA) (P.) LTD (2014) 45 TAXMANN.COM 204 (ALLAHABAD) X. CIT V. MISRA PRESERVERS (P.) LTD. (2013) 31 TAXMANN.COM 214 (ALLAHABAD) XI. CIT V. EXPO GLOBE INDIA LTD. (2014) 51 TAXMANN.COM 208 (DELHI) ;; - :: --- ,. XII. ACIT VS. BAHUBALI DYES LT D (2015) 55 TAXMANN.COM 357 (DELHI - TRIB) 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER, REMAND REPORTS SENT BY THE AO AND SUBMISSION S MADE BY THE APPELLANT FROM TIME TO TIME. THE BRIEF BACKGROUND OF THE CASE IS THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS, IT WAS OBSERVED BY THE AO THAT THE ASSESSE E HAD RECEIVED AN AMOUNT OF RS. 38,12,79,600 BY ISSUING 3,17,733 8% NON - CUMULATIVE PREFERENCE SHARES OF RS.100 EACH AT A PREMIUM OF RS. 1,100 TO 19 PARRIES. NOTICES UNDER SECTION 133 (6) AND SUMMONS U/S. 131( 1) WERE ISSUED TO 19 PARTIES, IN SOME CASES THE NOTICES ISSUED WERE RETURNED BACK BY THE POSTAL DEPARTMENT AND IN SOME CASES NOTICES WERE SERVED BUT NO REPLY WAS RECEIVED. THE A.O. ASKED THE AR OF THE ASSESSEE TO PRODUCE THOSE PARTIES. FURHTER, THE AR OF T HE ASSESSEE WAS ALSO ASKED TO EXPLAIN WHY THE AMOUNT RECEIVED FROM SUCH PARTIES AGAINST PREFERENCE SHARES ISSUED, SHOULD NOT BE DISALLOWED UNDER SECTION 68 OF THE ACT IF THE ASSESSEE FAILS TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THOSE PA RTIES. THE APPELLANT VIDE LETTER DATED 09.01.2013, 14.01.2013, 23.01.2013 AND 01.02.2013 SUBMITTED VARIOUS EVIDENCES AS REGARDS SHAREHOLDERS AND OBJECTED THE PROPOSED ADDITION. IN THE OPINION OF THE AO THE APPELLANT HAS NOT DISCHARGED THE ONUS CASTED ON IT TO PROVE THE IDENTITY OF THE PERSON WHO APPLIED FOR SHARES, THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE PERSONS WHO HAVE APPLIED FOR SHARES. THE AO ALSO OBSERVED THAT THE APPELLANT HAS FAILED TO PRODUCE THE SHAREHOLDERS. THE AO RELIED O N VARIOUS CASE LAWS IN SUPPORT THAT THE APPELLANT HAS FAILED TO FULFIL THE ONUS CASTED ON IT. BEFORE DEALING WITH THE CASE LAWS IT IS NECESSARY TO APPRECIATE THE SUBMISSION MADE BY THE APPELLANT, DEVELOPMENT AFTER ADMISSION OF THE ADDITIONAL EVIDENCES AND REPORTS RECEIVED FROM THE AO AND ITS REPLY BY THE APPELLANT. THE APPELLANT HAS EXPLAINED THREE CRITERIA I.E. IDENTITY OF SHAREHOLDER, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION INDIVIDUALLY. I SHALL TAKE UP THIS THREE CRITERIA INDIVIDUALLY. 5.1 I DENTITY OF SHAREHOLDER 5.1.1 AS PER THE AO, APPELLANT COMPANY FAILED TO PROVE THE IDENTITY OF THE SHAREHOLDERS BECAUSE THE APPELLANT COMPANY DID NOT PRODUCE THEM OR FAILED TO ENSURE THEIR COMPLIANCE FOR VERIFICATION OF THE TRANSACTIONS AND FAILED TO FUR NISH ANY EVIDENCE TO PROVE THE IDENTITY OF THE SAID PREFERENCE SHAREHOLDERS. AO ALSO RELIED ON THE REPORT OF THE INSPECTOR WHO COULD NOT FIND 7 SHAREHOLDERS ON THE ADDRESSES PROVIDED BY THE APPELLANT COMPANY. 5.1.2 MERELY NOT PRODUCING SHAREHOLDERS BEFOR E THE AO WOULD NOT MEAN THAT THE APPELLANT COMPANY HAS NOT PROVED THE IDENTITY OF THE SHAREHOLDERS. LD. AO FAILED TO CONSIDER OTHER DOCUMENTARY EVIDENCES SUCH AS COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME, BALANCE SHEET, BANK ACCOUNT DETAILS OF THE SHAREH OLDERS, CONFIRMATIONS OF SHAREHOLDERS ETC. WHICH WERE SUBMITTED DURING ASSESSMENT PROCEEDINGS PROVING THE IDENTITY OF THE SHAREHOLDERS. THE APPELLANT COMPANY HAS ALSO FILED SHARE APPLICATION FORMS 11 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. RECEIVED FROM SHAREHOLDERS AND COPY OF CORRESPONDENCE WITH THE SHAREHOLDERS. IT WAS CONTENDED THAT SHAREHOLDERS WERE NOT UNDER COMMAND OF APPELLANT. THEY WERE NOT READY TO ; - ; 'COME ON REQUESTS OF APPELLANT. 5.1.3 AO HIMSELF HAS STATED IN THE ORDER THAT AS PER THE INFORMATION ON THE OFFICIAL WEBSITE OF THE ROC (MCA) THE PREFERENCE SHAREHOLDERS HAVE CONTINUED WITH THE APPELLANT COMPANY TILL 31.03.2012. THIS, ITSELF , PROVES THE IDENTITY OF SHAREHOLDER AS THEY WERE REGISTERED WITH ROC AND THEIR INFORMATION WAS AVAILABLE ON THE WEBSITE OF THE ROC . 5.1.4 FURTHER DURING THE REMAND PROCEEDING THE NOTICES U/S. 133(6) WERE DULY SERVED TO THE SHAREHOLDERS AND ALL THE SHAREHOLDERS, EXCEPT ONE, FILED THEIR REPLIES WITH THE AO. 5.1.5 INSPECTOR POSTED IN OFFICE OF CIT(A) - 16 VISITED THE PREMISES OF THE 7 SHAREHOLDERS AND AS PER HIS REPORT THOSE PARTIES ACTUALLY EXISTED ON THE ADDRESSES WHICH ARE AS PER ROC SITE. 5.1.6 FURTHER IN CASE OF M/S. CITYGOLD EDUCATION RESEARCH PRIVATE LIMITED WHICH IS A GROUP CONCERN OF THE APPELLANT COMPANY, SAME ISSUE WAS RAISED FOR A.Y. 20 10 - 11. THE FOLLOWING PARTIES HAVE ALSO INVESTED IN M/S. CITYGOLD EDUCATION RESEARCH PRIVATE LIMITED. A. M/S. PRABHAV INDUSTRIES LTD, BARODA B. M/S. SONAL INTERNATIONAL LTD C. M/S. SONALSILCHEM LTD D. M/S. SONAL COSMETIC EXPORT LTD E. M/S. DYNACHEM PHARMA CEUTICALS EXPORT LTD F. M/S. RAW GOLD SECURITIES PVT LTD THE ABOVE PARTIES ARE SHAREHOLDERS OF THE APPELLANT COMPANY ALSO. IN CASE OF M/S. CITYGOLD EDUCATION RESEARCH PRIVATE LIMITED, THE AO HAD ISSUED COMMISSION AT BARODA AND AHMEDABAD TO VERIFY THE ID ENTITY OF THE ABOVE 6 PARTIES. THE COPY OF THE REPORT OF THE AO ALONG WITH REPORT OF THE COMMISSION ISSUED IS ON RECORD OF CIT(A) - 16. ON PERUSAL OF THE REPORT OF DDIT(INV) - !, BARODA DT. 04.06.2014, IT CAN BE SEEN THAT M/S. PRABHAV INDUSTRIES LTD HAD SUBMI TTED COPY OF RETURN OF INCOME FOR AY 2010 - 11, ANNUAL REPORT FOR FY 2009 - 10, LEDGER ACCOUNT OF THE ABOVEMENTIONED COMPANY FOR THE PERIOD 01.04.2009 TO 31.03.2011 AND COPY OF BANK STATEMENTS. IT HAS BEEN STATED THAT THE SAID COMPANY ACTUALLY EXISTS. IT HAS B EEN ALSO STATED THAT FOR THE SOURCE OF INVESTMENT THE SAID COMPANY HAD SUBMITTED ITS BANK STATEMENT AND ALSO THE COMPANY HAD ENOUGH OF UNSECURED S 'VTOMSAND RESERVES AND SURPLUS. DDIT (INV), U NIT - 1(3), AHMEDABAD VIDE LETTER DT. 02.03.2015 SUBMITTED HI S REPORT WHEREIN STATEMENT RECORDED ON OATH U/S. 131(1A) R.W.S. 131(1) OF SHRI VIMAL NEMCHAND GALA (DIRECTOR OF M/S. SONAL INTERNATIONAL LTD, M/S. SONAL SIL CHEM LTD AND M/S. SONAL COSMETIC EXPORT LTD AND AUTHORIZED FOR THE DEPOSITION BY M/S. DYNACHEM PHAR MACEUTICALS EXPORT LTD) AND SHRI HIREN C. CHHATEAWALA (CONSULTANT IN M/S. RAW GOLD SECURITIES PVT. LTD.) WAS ATTACHED. MY LD. PREDECESSOR HAD CONSIDERED THE STATEMENT RECORDED BY DDIT(INV) UNIT 1 (3), AHMEDABAD AND DDIT(INV) BARODA IN THE CASE OF M/S. 12 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. CITY GOLD EDUCATION RESEARCH P. LTD. IN ORDER NO. CIT(A) - 16/ITO 8(1)(3)/IT 178/2012 - 13 DATED 22.05.2015. THE OBSERVATIONS OF QT(A) - 16 I.E. MY PREDECESSOR I S REPRODUCED HEREIN BELOW: '5.14 REPORT OF THE DDIT, (INV) UNIT L - (3) DATED 2 - 3 - 2015 IS SUB THE AO. THE DDIT (INV), AHMEDABAD HAS ALSO FORWARDED THE STATES: - : SHRI VIMAL NEMCHAND GALA, DIRECTOR AND AUTHORISED FOR THE DEPOSITION . M/S DYNACHEM PHARMACEUTICALS (EXPORTS) LIMITED, SONAL INTERNATIONA LIMITED, SONALSIL - CHEM LIMITED, SONAL COSMETIC (EXPORTS) LIM ITED. 5.15 PROM THE STATEMENT OF SHRI VIMAL NEMCHAND GALA IT CAN BE NOTICED AS FOLLOWS: I. BUSINESS ACTIVITIES OF THE COMPANIES WERE EXPLAINED. THEY ARE ENGAGED IN BUSINESS OF TRADING IN CHEMICALS (ANS TO Q 4) II. CONFIRMED THE TRANSACTION OF SUBSCRIBIN G PREFERENCE SHARE OF THE APPELLANT COMPANY. (ANS TO Q 8) IN. DETAILS ABOUT BUSINESS ACTIVITIES (REAL ESTATE) OF APPELLANT COMPANY WERE ALSO PROVIDED. (ANS TO Q 9) IV. THE SHARES WERE SUBSCRIBED FOR THE PURPOSE OF INVESTMENT AND THROUGH COMMON ACQUAINTAN CES. (ANS TO Q9) V. INVESTMENT REGISTERS, AUDITED ACCOUNTS, RETURN OF INCOME AND BANK STATEMENTS WERE PROVIDED FOR THE FY 2009 - 10 OF ALL FOUR COMPANIES. (ANS TO Q 10,11) VI. SOURCE OF FUNDS FOR MAKING INVESTMENT IN THE APPELLANT COMPANY WERE EXPLAINED. IT WAS EXPLAINED THAT THE FUNDS HAVE BEEN PAID OUT OF THE SHARE CAPITAL AND SHORT - TERM LOANS AND ADVANCES OF THE COMPANY. HE SUBMITTED BANK STATEMENTS OF ALL THE 4 COMPANIES HIGHLIGHTING THE PAYMENTS MADE TO THE APPELLANT.(ANS TO Q 12). IT WAS AGAIN STATED T HAT THE COMPANIES HAD SURPLUS FUNDS IN THE FORM OF SHARE CAPITAL THE SAID FUNDS WERE EXTENDED AS LOANS TO VARIOUS PARTIES. THE INVESTMENTS HAVE BEEN MADE OUT OF THE SHARE CAPITAL AND THE SHORT - TERM LOANS TAKEN FROM OTHER PARTIES OR LOAN REPAYMENT IS RECEIV ED BY THESE COMPANIES (.(ANS TO Q 13) VII. JUSTIFICATION OF INVESTING IN THE SHARES ISSUED WITH PREMIUM OF APPELLANT COMPANY WAS PROVIDED. IT IS STATED THAT THE APPELLANT COMPANY WAS COMING UP WITH A TOWNSHIP AT KHALAPUR AND LOOKING AT THE PROSPECTIVE PRO FITS OF THE SAID PROJECT THEY HAVE INVESTED IN THE SAID COMPANY. HE SUBMITTED A COPY OF THE PROJECT REPORT OF THE SAID PROJECT. .(ANS TO Q 17) . VIII. IT WAS CONFIRMED THAT SHARES ARE STILL HELD WITH THE ALL FOUR COMPANIES AND SHARE CERTIFICATES ISSUED BY THE APPELLANT COMPANY TO ALL THE FOUR COMPANIES WERE SUBMITTED.,(ANS TO Q 18,19) THUS, FROM THE ABOVE STATEMENT RECORDED ON OATH AND THE DOCUMENTS PROVIDED BY SHRI VIMOLNEMCHAND GALA, THE IDENTITY & CREDITWORTFUNESS OF LID, M/ S. SONDSHCHEM LTD, M/ S. SONA L COSMETIC EXPORT LTD. AND M/S. DYNA CHEM PHARMACEUTICALS EXPORT LTD. AND GENUINENESS OF THE TRANSACTION WITH THE SAID COMPANIES IS PROVED BEYOND DOUBT.' 5.1.7 THUS FROM THE ABOVE STATEMENT RECORDED ON OATH BY THE DEPARTMENT ITSELF PROVES THE IDENTITY A ND CREDITWORTHINESS OF THE ABOVE MENTIONED 6 COMPANIES FROM WHICH ASSESSEE COMPANY HAD RECEIVED SHARE APPLICATION MONEY. 13 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 5.1.8 IT WAS ALSO SUBMITTED THAT DURING REMAND PROCEEDINGS APPELLANT WAS READY TO PRODUCE THE PRINCIPAL OFFICES COMPANIES FROM WHICH SHARE APPLICATION MONEY WAS RECEIVED BEFORE A.O., BUT AFTER RECEIPT OF RESPONSES U/S.L33(6) A.O. DID NOT INSISTS FOR IT. 5.1.9 KEEPING IN VIEW THE ABOVE ASPECTS, IT CAN BE SAID THAT IDENTITY OF THE SHAREHOLDERS STANDS PROVED. 5.2 CREDITWORTHINESS OF THE SHAREHOLDER 5.2.1 LAO HAS RELIED ON THE STATEMENT RECORDED U/S. 131 ON OATH OF SHRI JAGDISH KUMAR GUPTA, DIRECTOR OF J. KUMAR INFRAPROJECTS LIMITED IN WHICH HE HAS STATED THAT THAT THE SAID COMPANY HAS RECEIVED BOGUS FUNDS IN THE FORM OF SHARE AP PLICATION MONEY PENDING ALLOTMENT AS ON 31.03.2006 FROM A FEW COMPANIES WHOSE CREDIT WORTHINESS IS DOUBTFUL. IN THE SAID LIST, NAME OF 3 COMPANIES WERE ALSO APPEARING. 5.2.2 THE SAID 3 COMPANIES WERE PROVIDING BOGUS FUNDS TO M/S. J KUMAR INFRAPROJECTS LT D, BUT IT DOES NOT PROVE THAT THE SAID COMPANIES HAS MADE BOGUS INVESTMENT IN THE APPELLANT COMPANY ALSO. NO SUCH CONFESSION IS AVAILABLE FOR INVESTMENT IN APPELLANT COMPANY. MOREOVER, THE INVESTMENT MADE IN THE APPELLANT COMPANY IS AFTER THE DATE OF SEARC H ON J.KUMAR INFRA PROJECTS LTD I.E. 26.08.2009. 5.2.3 AS REGARDS ISSUE OF NOTICE U/S. 133(6) TO THE BANK AND OBSERVATION OF AO THAT KYC FORMS DO NOT REVEAL ANY PARTICULARS OR SPECIFICS AS MAY ESTABLISH THE IDENTITY OF THE PERSON BEHIND THE SHAREHOLDER C OMPANY, IT HAS BEEN STATED BY THE APPELLANT THAT THEY ARE DULY SIGNED BY THE DIRECTOR OF THE COMPANY AND ALSO NAME OF THE AUTHORISED DIRECTOR IS MENTIONED ON THE FORM AND BANK A/C ITSELF PROVES THE IDENTITY. 5.2.4 THE APPELLANT COMPANY HAD EXPLAINED INDIV IDUAL CAPACITIES OF EACH SHAREHOLDERS TO''SNOW ITS CREDIBILITY TO INVEST IN SHARES OF APPELLANT COMPANY WHICH IS DISCUSSED IN SUBSEQUENT PARAGRAPHS OF THIS ORDER. 5.3 GENUINENESS OF THE TRANSACTION 5.3.1 AO STATED THAT SINCE APPELLANT COMPANY HAD FAIL ED TO PROVE THE IDEN TITY AND CREDITWORTHINESS OF THE SHAREHOLDERS, GENUINENESS OF THE TRANSACTION IS ALSO NOT SUBSTANTIATED. 5.3.2 ALTHOUGH THE MERE FACT THAT TRANSACTION HAVE BEEN TAKEN THROUGH THE BANKING CHANNEL WOULD NOT CONSTITUTE EVIDENCE OF THE G ENUINENESS OF THE TRANSACTIONS, HOWEVER THE FACT CANNOT BE IGNORED THAT THE RELEVANT BOOKS OF ACCOUNTS OF THE SHAREHOLDERS AND THEIR CONFIRMATION ARE ALSO SUBMITTED. FURTHER DURING THE REMAND PROCEEDINGS ALL THE SHAREHOLDERS, EXCEPT ONE, REPLIED TO THE NOT ICE U/S. 133(6) AND EXPLAINED THEIR SOURCE OF INVESTMENT ALSO. THUS GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. 5.3.3 FURTHER THE AO HAD STATED THAT NOTICES WERE ISSUED U/S. 133(6) TO THE BANKERS, SHAREHOLDERS AND OBSERVED THAT THERE APPEARS THE NA ME OF THE PERSONS WHO WERE THE SAME PERSONS AS APPEARING IN THE LIST OF HAWALA DEALERS ISSUED BY THE SALES TAX (VAT) DEPARTMENT, STATE OF MAHARASHTRA, FROM THE OFFICIAL WEBSITE OF THE SALES TAX (VAT) DEPARTMENT. 5.3.3 IT IS RIGHTLY SAID BY THE APPELLANT THAT AO HAS NOT PASSED ANY ADVERSE COMMENTS ON THE BANK STATEMENTS OF THE SHAREHOLDERS. AO HAD NOWHERE MENTIONED THAT THERE WERE IMMEDIATE CASH WITHDRAWALS IN THE BANK STATEMENT OR THERE WERE MANY DEBIT OR CREDIT ENTRIES. ALSO AO HAS NOT DOUBTED THE FACT THAT THE SHAREHOLDERS HAD ENOUGH BALANCE TO MAKE THE INVESTMENT IN THE APPELLANT COMPANY. THUS, CAPACITY AND CREDIBILITY OF THE 14 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. SHAREHOLDERS IS PROVED BEYOND ANY DOUBT. FURTHER, THEIR NAMES APPEAR IN THE LIST OF HAWALA DEALERS WHICH IS ISSUED BY SALES TAX DEPARTMENT WHICH HAS NO CONNECTION WITH THE INVESTMENT TRANSACTION WITH THE APPELLANT COMPANY. HOW THE SAID INFORMATION, COLLECTED BY AO, RELATES TO SHARE APPLICANTS ARE NOT GIVEN TO THE APPELLANT COMPANY. 6, NOW LET'S DISCUSS THE IDENTITY, CREDIBILITY AND GENUINENESS OF TRANSACTIONS IN RESPECT TO INDIVIDUAL SHAREHOLDERS: 1. IN THE CASE OF SONAL COSMETICS (EXPORTS) LIMITED (RS. 2,00,40,000/ - ), THE SAID COMPANY HAS PRODUCED THE 18 TH ANNUAL REPORT IN THE YEAR UNDER CONSIDERATION. THIS SHOWS THAT IT IS AN OLD COMPANY. THE FINANCIAL STATEMENT OF THE ABOVE COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 12,06,00,000 AND SECURITIES PREMIUM OF RS. 12,06,00,000. II. GROSS BLOCK OF FIXED ASSETS OF RS.3,21,21,162 III. THE COMPANY HAS HUGE INVESTMENTS OF RS.11,07,19,768. 1.1 THE ABOVE DETAILS PROVE THE CRE DIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 1.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133( 6) WERE DULY SERVED. FURTHER, IN CASE OF M/S. CITYGOLD EDUCATION RESEARCH PRIVATE LIMITED, THE SAID PARTY APPEARED BEFORE DDIT (INV) AND EXPLAINED BUSINESS ACTIVITIES CARRIED ON BY THEM AND ALSO PRODUCED AUDITED ACCOUNTS, INVESTMENT REGISTER, RETURN OF INCOME, BANK STATEMENT BEFORE DDIT(INV), UNIT - 1(3), AHMEDABAD. THE OBSERVATION OF THE CIT(A) - 16 I.E. MY PREDECESSOR IN CASE OF ABOVEMENTIONED COMPANY IS REPRODUCED HEREIN BELOW: '5.9.3 ........... FURTHER, IN THE STATEMENT RECORDED ON OATH U /S. 131 OF SHRI. VIMAL GALA, DIRECTOR OF SONAL COSMETICS (EXPORT) LIMITED, HE HAS CONFIRMED THE TRANSACTION OF INVESTING IN THE PREFERENCE SHARES OF THE APPELLANT COMPANY. THE OBSERVATION MADE BY THE AO WERE BEFORE THE ABOVE STATEMENT TAKEN ON OATH. HOWEVE R NOW, THERE IS NO ROOM FOR DOUBT.' 1.3 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 11 OF PAPER BOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 1.4 THE SAID COMPANY ARE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 1.5 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 2. IN CASE OF SONAL INTERNATIONAL LTD (R S. 2,00,40,000), THE SAID COMPANY HAS PRODUCED 17 TH ANNUAL REPORT IN THE YEAR UNDER CONSIDERATION. THIS SHOWS THAT THE COMPANY IS A VERY OLD COMPANY. THE FINANCIAL STATEMENT OF THE ABOVE COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 6 ,27,00,000. II. GROSS BLOCK OF FIXED ASSETS OF RS. 2,92,33,813. III. THE COMPANY HAS HUGE INVESTMENTS OF RS. 3,13,62,987 2.1 THE AB OVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 15 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 2.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. FURTHER, IN CASE OF M/S. CITYGOLD EDUCATION RESEARCH PRIVATE LIMITED, THE SAID PARTY APPEARED BEFORE DDIT (INV) AND EXPLAINED BUSINESS ACTIVITIE S CARRIED ON BY THEM AND ALSO PRODUCED AUDITED ACCOUNTS, INVESTMENT REGISTER, RETURN OF INCOME, BANK STATEMENT BEFORE DDIT(INV), UNIT - 1(3), AHMEDABAD. THE OBSERVATION OF THE CIT(A) - 16 I.E. MY PREDECESSOR IN CASE OF ABOVEMENTIONED COMPANY IS REPRODUCED HE REIN BELOW: 5.13.5 THE ABOVE COMPANY HAS SPECIFICALLY CONFIRMED THE TRANSACTION OF MAKING INVESTMENT I N THE SHARES OF APPELLANT C OMPANY VIDE CONFIRMATION FILED BY THE APPELLANT AT PAGE 254 OF PB AND ALSO IN THE STATEMENT RECORDED ON OATH OF U/S. 131 OF S HRI VIRNAL GALA, DIRECTOR OF SONAL INTERNATIONAL LIMITED, HE HAS CONFIRMED THE TRANS ACTION OF INVESTING IN THE PREFERENCE SHARES OF THE APPELLANT COMPANY. THE OBSERVATION MADE B Y THE AO WERE BEFORE THE ABOVE STATEMENT TAKEN ON OATH. HOWEVER NOW, THERE IS N O ROOM FAR DOUBT.' 2.3 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 21 OF PAPER BOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 2.4 THE SAID COMPANY WERE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 2.5 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT 3. IN CASE OF SONALSIL - CHEM LTD(RS. 2,00,40,000), THE S AID COMPANY HAS PRODUCED 20 TH ANNUAL REPORT IN THE YEAR UNDER CONSIDERATION. THIS SHOWS THAT IT IS VERY OLD COMPANY. THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING; I. EQUITY SHARE CAPITAL OF RS. 8,45,40,000. II. GROSS BLOCK OF FI XED ASSETS OF RS. 6,89,16,942. III. THE COMPANY HAS HUGE INVESTMENTS OF RS. 1,41,83,691 3.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. . 3.2 IDENTITY WAS PROVED BY SUB MITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. FURTHER, IN CASE OF M/S. CITY GOLD EDUCATION RESEARCH PRIVATE LIMITED, THE SAID PARTY APPEARED BEFORE DDIT (INV) AND EXPLAINED BUSINESS ACTIVITIES CARRIED ON BY THEM AND A LSO PRODUCED AUDITED ACCOUNTS, INVESTMENT REGISTER, RETURN OF INCOME, BANK STATEMENT BEFORE DDIT(INV), UNIT - 1(3), AHMEDABAD. THE OBSERVATION OF THE OT(A) - 16 I.E. MY PREDECESSOR IN CASE OF ABOVE MENTIONED COMPANY IS REPRODUCED HEREIN BELOW: '5.11.5 THE AB OVE COMPANY HAS SPECIFICALLY CONFIRMED THE TRANSACTION OF MAKING INVESTMENT IN THE SHARES OF APPELLANT COMPANY VIDE CONFIRMATION FILED BY TLIE APPELLANT AT PB PAGE 193 AND ALSO IN THE STATEMENT RECORDED ON OATH OF U/S. 131 OFSHRI. VIMAL GALA, DIRECTOR OF S ONALSIL CHEM LIMITED, HE HAS CONFIRMED THE TRANSACTION OF INVESTING IN THE PREFERENCE SHARES OF THE APPELLANT COMPANY. THE OBSERVATION MADE BY THE AO WERE BEFORE THE ABOVE STATEMENT TAKEN ON OATH. HOWEVER NOW, THERE IS NO ROOM FOR DOUBT.' 16 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 3.3 THE APPE LLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 31 OF PB WHERE THE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 3.4 THE SAID COMPANY ARE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 3.5 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT 4. IN CASE OF DYNACHEM PHARMACEUTICALS (EXPORTS) LTD. (RS. 2,00,40,000), THE SAID COMPANY HAS PRO DUCED 20 TH ANNUAL REPORT IN THE YEAR UNDER CONSIDERATION. THIS SHOWS THAT IT IS VERY OLD COMPANY. THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEAL THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 11,57,85,000. II. GROSS BLOCK OF FIXED ASSETS OF RS . 2,68,05,018. III. THE COMPANY HAS HUGE INVESTMENTS OF RS. 6,95,50,000 4.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 4.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD A ND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. FURTHER, IN CASE OF M/S. CITYGOLD EDUCATION RESEARCH PRIVATE LIMITED, THE SAID PARTY APPEARED BEFORE DDIT (INV) AND EXPLAINED BUSINESS ACTIVITIES CARRIED ON BY THEM AND ALSO PRODUCED AUDITE D ACCOUNTS, INVESTMENT REGISTER, RETURN OF INCOME, BANK STATEMENT BEFORE DDIT(INV), UNIT - 1(3), AHMEDABAD. THE OBSERVATION OF THE CIT(A) - 16 I.E. MY PREDECESSOR IN CASE OF ABOVEMENTIONED COMPANY IS REPRODUCED HEREIN BELOW: '5.12.5 THE ABOVE COMPANY HAS SPE CIFICALLY CONFIRMED THE TRANSACTION OF MAKING INVESTMENT IN THE SHARES OF APPELLANT COMPANY VIDE CONFIRMATION FILED BY THE APPELLANT AT PAGE 224 OF PB AND ALSO IN THE STATEMENT RECORDED ON OATH OF U/S. 131 OF SHRI. VIRNAL GALA, AUTHORIZED FOR THE DEPOSITI ON BY DYNACHEM PHARMACEUTICALS (EXPORTS) LIMITED, HE HAS CONFIRMED THE TRANSACTION OF INVESTING IN THE PREFERENCE SHARES OF THE APPELLANT COMPANY. THE OBSERVATION MADE BY THE AO LOERE BEFORE THE ABOVE STATEMENT TAKEN ON OATH. HOWEVER NOW, THERE IS NO ROOM FOR DOUBT.' 4.3 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 42 OF PB WHERE THE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS &CHEQUES. 4.4 THE SAID CO MPANY WERE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S, 133(6). 4.5 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 5. IN CASE OF AARIKA S TEEL AND METAL PRIVATE LTD (RS. 1,00,80,000), THE FINANCIAL STATEMENT OF THE ABOVE COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 50,95,000/ - WITH HIGH RESERVES AND SURPLUS OF RS. 9,49,52,194/ - THE COMP ANY HAS HUGE INVESTMENTS OF RS. 9,61,55,000/ - . 5. 1 THE ABOVE DETAILS PROVE THE CREDIBILI TY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 5.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DUL Y SERVED. 17 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 5.3 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 54 OF PB WHERE THE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS &CHEQUES. 5.4 THE SAID COMPANY WERE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). . 5.5 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 6. IN CASE OF PRIORITY TRADERS PRIVATE LIMITED (KNOWN AS CHOICE EXTERIO AND INTERIO PRIVATE LIMITED) (RS. 2,50,80,000), THE FINANCIAL STATEM ENT OF THE ABOVE COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 1,45,00,0007 - WITH HIGH RESERVES AND SURPLUS OF RS . 8,68,60,289/ - II. THE COMPANY HAS HUGE CASH AND BANK BALANCES OF RS. 43,51,534/ - III. THE COMPANY HAS HUGE INVESTME NTS OF RS. 12,43,10,000 6.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 6.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE D ULY SERVED. 6.3 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 86 OF ADDITIONAL EVIDENCE PAPERBOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQ UES. 6.4 THE SAID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 6.5 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 7. IN CASE OF EMPOWER INDUSTRIES INDIA LTD. (R S. 5,00,40,000), THE SAID COMPANY HAS PRODUCED 28 TH ANNUAL REPORT IN THE YEAR UNDER CONSIDERATION. THUS IT IS A VERY OLD COMPANY. THE SAID COMPANY HAS ALSO DECLARED DIVIDEND OF 3% IN A.Y. 2010 - LL.THE FINANCIAL STATEMENT OF THE ABOVE COMPANY REVEALS THE FOL LOWING: I. EQUITY SHARE CAPITAL OF RS. 12,41,42,875, SHARE APPLICATION MONEY OF RS.93,88,06,000 AND RESERVES AND SURPLUS OF RS. 18,70,917 II. FIXED ASSETS OF RS. 5,13,06,789 INCLUDING ADDITIONS MADE IN THE CURRENT YEAR OF RS. 1,19,64,849/ - MAJORLY IN COMPUTER AND COMPUTER PERIPHARELS. III. THE COMPANY HAS INVENTORIES OF RS.3,15,18,831 AND HUGE CASH AND BANK BALANCE OF RS. 5,57,69,177 WHICH INCLUDES BALANCE OF FD WITH FOREIGN BANK OF RS. 1,31,91,650. IV. THE COMPANY HAS HUGE INVESTMENTS OF RS. 64,6 4,90,200. V. THE SAID COMPANY HAS WRITTEN OFF GDR ISSUE EXPENSES OF RS.10,10,431 AND PAID SALARY AND WAGES OF 2,31,46,513. 7.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 7.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 7.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT. 18 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 7.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 96 OF PB WHERE THE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PR EMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 7.5 HOWEVER, THE ABOVE PARTY DID NOT REPLY TO THE NOTICE U/S. 133(6). IN ABSENCE OF ANY CONFIRMATION FROM M/S. EMPOWER INDUSTRIES INDIA LTD. ONUS OF PROVING/ IDENTITY CREDITWORTHINES S AND GENUINENESS OF TRANSACTION IS NOT DISCHARGED. HENCE ADDITION OF RS.5,00,40,000/ - MADE IN THE ASSESSMENT IS CONFIRMED. 8. IN CASE OF EALDOR RETAILS PRIVATE LIMITED(RS. 2,50,80,000), THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLO WING: I. EQUITY SHARE CAPITAL OF RS. 95,35,000 WITH HIGH RESERVES AND SURPLUS OF RS . 5,39,62,966/ - II . THE COMPANY HAS HUGE OPERATIONAL INCOME OF RS. 20,15,25,477/ - 8.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVEST MENT IN THE APPELLANT'S COMPANY. 8.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 8.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR IN VESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT. 8.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 87 OF ADDITIONAL EVIDENCE PAPERBOOK WHERE THE AB OVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 8.5 THE SAID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U /S. 133(6). 8.6 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT 9. IN CCASE OF TAC TECHNOSOFT PRIVATE LIMITED (RS.2,50,80,000), THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS.11,52,00,000/ - II. THE COMPANY HAS HUGE INVESTMENTS OF RS.7,28,20,000/ - 9.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANTS COMPANY. 9.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 9.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS IS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT. 9.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLACED ON PAGE 88 OF ADDITIONAL EVIDENCE PAPERBOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYME NTS MADE THROUGH RTGS & CHEQUES. 9.5 THE SAID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 9.6 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 19 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 10. IN CASE OF SAF FORD MERCANTILE PVT LTD (RS.1,00,80,000), THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 41,26,6007 - WITH HIGH RESERVES AND SURPLUS OF RS. 9,66,71,290/ - II. THE COMPANY HAS HUGE INVESTMENTS OF RS.9,56,30,000/ - 10.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 10.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SE RVED. 10.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT. 10.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLACED ON PAGE 146 OF PAPER BOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 10.5 THE SAID COMPA NY ARE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 10.6 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 11. IN CASE OF BENC HMARK BUILDCON PVT LIMITED (RS. 1,00,80,000), THE FINANC IAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING: I EQUITY SHARE CAPITAL OF RS. 47,94,000/ - WITH HIGH RESERVES/AND SURPLUS OF RS.11,02,79,070/ - II. THE COMP ANY HAS HUGE INVESTMENTS OF RS. 11,61,62,500/ - 11.1 THE ABOVE DETAILS PROVE THE CREDIBIL ITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 11.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 11.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT. 11.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 164 O F PAPER BOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 11.5 THE SAID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 11.6 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT 12. IN CASE OF JAGDAMBA COMPLEX PRIVATE LI MITED (RS. 1,00,80,000), THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 36,70,6007 - WITH HIGH RESERVES AND SURPLUS OF RS. 8,57,26,484/ - II. THE COMPANY HAS INVESTMENT OF RS. 7,03,70,000/ - 12.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 20 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 12 .2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 12.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO EN TRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT. 12.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLACED ON PAGE 184 OF PAPER BOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED F OR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS &CHEQUES. 12.5 THE SAID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 12.6 'HENCE ADDITION MADE IN THE A SSESSMENT IS NOT CORRECT 13. IN CASE OF PROFICIENT MERCHANDISE PRIVATE L IMITED (RS. 1,00,80,000), THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING : I. EQUITY SHARE CAPITAL OF RS.51,68,200/ - WITH HIGH RESERVES AND SURPLUS OF RS.12,78 ,97,313/ - II. THE COMPANY HAS INVESTMENT OF RS.9,77,92,900/ - 13.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACI TY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 13.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADD RESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 13.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PA ID BACK THE AMOUNT OF INVESTMENT. 13.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLACED ON PAGE 188 OF PAPER BOOKS WHERE THE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS &CHEQUES. 13.5 THE SAID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 13.6 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT 14. IN CASE OF NIHAL MERCANTILE PRIVATE LIMITED - RS. 1,00,80,000, THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 38,64,6007 - WITH HIGH RESERVES AND SURPLUS OF RS. 9,03,92,393/ - II. THE COMPANY HAS INVESTMENT OF RS. 8,34,77,0 00/ - . 14.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 14.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 14.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT. 14.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLACED ON PAGE 211 OF PB WHERE THE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 21 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 14.5 THE SAID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 14.6 .HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT 15. IN CA S E OF P RABHAV INDUSTRIES LIMITED - RS. 4,00,80,000, DATE OF INCORPORATION OF THE SAID CO MPANY IS 08/12/1995 AS PER PAN CARD. THUS THIS IS AN OLD COMPANY. THE FINANCIAL STATEMENT OF THE ABOVE COMPANY REVEALS THE FOLLOWING: EQUITY SHARE CAPITAL OF RS. 46,08,91,000 WITH H IGH RESERVES AND SURPLUS OF RS. 1,02,58,57,000 FIXED ASSETS OF RS. 3,74, 78,065 INCLUDING ADDITIONS MADE IN THE CURRENT YEAR OF RS. 3,73,84,39 8 / - MAJORLY IN BUILDINGS, PLANT & MACHINERY AND ELECTRICAL INSTALLATIONS. THE COMPANY HAS HU GE CASH AND BANK BALANCE OF RS. 93,05,748 IT HAS ALSO P AID RIGHT ISSUE EXPENSES OF R S. 4,14,159 AND PENALTY TO STOCK EXCHANGE OF RS. 4,80,000 WHICH PROVES THAT IT'S A RUNNING CONCERN. 15.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 15.2 IDENTITY WAS PROVED BY SUB MITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 15.3 IN CASE OF M/S. CITYGOLD EDUCATION RESEARCH LTD, DDIT(INV) OF BARODA HAD CONFIRMED THE EXISTENCE OF THE ABOVE PARTY. FINANCIAL STATEMENT OF THE ABOVE COMPANY WAS A LSO FILED. THE OBSERVATION OF THE CIT(A) - 16 I.E. MY PREDECESSOR IS REPRODUCED HEREIN BELOW; '5.5.2 ALSO ADDL, DIRECTOR OF INCOME TAX (INVESTIGATION), BARODA, HAS SENT HIS REPORT DATED 4 - 6 - 2024 CONFIRMED THAT THE PARTY NAMELY M/ S. PRABHAV INDUSTRIES LIMI TED ACTUALLY EXISTS AND ITS ADDRESS HAS CHANGED. IT SHOWS THE SHARES AS INVESTMENT AS SHOWN BY THE APPELLANT, BALANCE SHEET FOR Y.E. ON 31 - 3 - 10 IS FILED BEFORE HIM AND THE SAME SHOIVS THE SAME FIGURES AS STATED HEREIN ABOVE, FROM THE BANK STATEMENTS FILED BY IT INVESTMENT ON VARIOUS DATES HAVE BEEN FOUND. IN VIEW OF THIS, OTHER OBSERVATIONS OF THE AO ARE NOT RELEVANT, THOUGH THE APPELLANT HAS SATISFACTORILY REPLIED TO THEM ALSO.' 15.4 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT. 15.5 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION ALSO ON PAGE 241 OF PB WHERE THE THE A BOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 15.6 THE SAID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U /S. 133(6). '15;7; - ,. HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT 16. IN CASE OF RAW GOLD SECURITIES P VT LTD - RS. 3,00,39,600, THE S AID COMPANY HAS GIVEN 14 TH ANNUAL REPORT IN THE YEAR UNDER CONSIDERATION. THIS SHOWS THAT IT IS AN OLD COMPANY. TH E FINANCIAL STATEMENT OF THE ABOVE COMPANY REVEALS THE FOLLOWING: I. EQUI TY SHARE CAPITAL OF RS. 1,34,31, 500. II. CAPITAL RESERVE OF RS. 4,76,920, SECURITIES PREMIUM OF RS. 12,21,22,50 0 AND PROFIT & & LOSS A/C OF RS. 8,06,486. III. THE COMP ANY HAS HUGE INVESTMENTS OF RS. 11,87,98,000. 22 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 16.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 16.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO N OTICE U/S. 133(6) WERE DULY SERVED. FURTHER, IN CASE OF M/S. CITYGOLD EDUCATION RESEARCH PRIVATE LIMITED, THE SAID PARTY APPEARED BEFORE DDIT (INV) AND EXPLAINED BUSINESS ACTIVITIES CARRIED ON BY THEM AND ALSO PRODUCED AUDITED ACCOUNTS, INVESTMENT REGISTER , RETURN OF INCOME, BANK STATEMENT BEFORE DDIT(INV), UNIT - 1(3), AHRNEDABAD. THE OBSERVATION OF THE CIT(A) - 16 I.E. RNY PREDECESSOR IS REPRODUCED HEREIN BELOW: '5.10.4 FURTHER, REPORT OF THE DDIT,(INV) UNIT I - (3) DATED 2 - 3 - 2015 IS SUBMITTED BY THE AO. TH E DDIT (INV), AHRNEDABAD HAS ALSO FORWARDED THE STATEMENT OF SHRI HIREN C CHHATRAWALA, AUTHORIZED BY THE BOARD OF DIRECTOR FOR THE DEPOSITION BY M/S. RAW GOLD SECURITIES PVT LTD. FOLLOWING OBSERVATIONS CAN BE MADE FROM THE STATEMENT OF SHRI HIREN C. CHHATR EWALA: I. BUSINESS ACTIVITIES OF THE COMPANIES OF TRADING IN COMMODITIES ESPECIALLY THROUGH COMMODITY EXCHANGES WERE EXPLAINED. (ANS TO Q 4) II. CONFIRMED THE TRANSACTION OF SUBSCRIBING PREFERENCE SHARE OF THE APPELLANT COMPANY AND SUBMITTED SHARE APPLICAT ION FORM. (ANS TO Q 7) III. DETAILS ABOUT BUSINESS ACTIVITIES OF APPELLANT COMPANY WERE ALSO PROVIDED. (ANS TOQ8) IV. THE. SHARES WERE SUBSCRIBED FOR THE PURPOSE OF INVESTMENT AND THROUGH COMMON ACQUAINTANCES. (ANS TO Q 8) V. INVESTMENT REGISTERS, AUDITED ACCOUNTS, RETURN OF INCOME AND BANK STATEMENTS WERE PROVIDED FOR THE FY 2009 - 20 OF ALL FOUR COMPANIES. (ANS TO Q 9,10) VI. SOURCE OF FUNDS FOR MAKING INVESTMENT IN THE APPELLANT COMPANY WERE EXPLAINED. IT WAS EXPLAINED THAT THE COMPANY HAD SURPLUS FUNDS IN FORM OF SHARE CAPITAL. THE SAID FUNDS ARE EXTENDED AS LOANS TO VARIOUS PARTIES. THE INVESTMENTS HAVE BEEN MADE OUT OF THE SHARE CAPITAL AND THE SHORT - TERM LOANS TAKEN FROM OTHER PARTIES OR LOAN REPAYMENTS RECEIVED BY THESE COMPANIES. .(ANS TO Q 12) VII. IT WAS CONFIRMED THAT SHARES ARE STILL HELD WITH THE ALL FOUR COMPANIES AND SHARE CERTIFICATES ISSUED BY THE APPELLANT COMPANY TO ALL THE FOUR COMPANIES WERE SUBMITTED. (ANS TO Q 75,26) THUS, FROM THE ABOVE STATEMENT RECORDED ON OATH AND THE DOCUMENTS PROVID ED BY SHRI HIREN C. CHHATRE WALA, THE IDENTITY & CREDITWORTHINESS OF M/S. RAW GOLD SECURITIES PVT LTD AND GENUINENESS OF THE TRANSACTION WITH THE SAID COMPANY CANNOT BE DOUBTED. 16.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT 16.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLACED ON PAGE 248 OF PAPER BO OK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 16.5 THE SAID COMPANY ARE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS RE PLY TO NOTICE U/S. 133(6). 16.6 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 23 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 17. IN CASE OF JYOTI FOODSTUFFS LIMITED (KNOWN AS CHOICE PAPER N PRODUCTS LIMITED) - RS. 2,50,80,000, THE SAID COMPANY HAS GIVEN 17 TH ANNUAL REPORT IN THE YEAR U NDER CONSIDERATION. THIS SHOWS THAT IT IS AN OLD COMPANY. THE FINANCIAL STATEMENT OF THE ABOVE COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 98,67 ; 750/ - , PREFERENCE SHARE CAPITAL OF RS. 5,00,000/ - AND SHARE PREMIUM OF RS. 9,98,15,160 / - II. THE COMPANY HAS INVESTMENT OF RS. 5,62,00,000/ - III. THE COMPANY HAS OPERATIONAL INCOME OF RS. 91,79,881/ - . 17.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 17.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 17.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT 17.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLAED ON PAGE 89 OF ADDITIONAL EVIDENCE PAPERBOOK WHERE THE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 17.5 THE SAID COMPANY ARE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 17.6 HENCE ADDI TION MADE IN THE ASSESSMENT IS NOT CORRECT 18. IN C ASE OF PASUPATI ENCLAVE PRIVATE LIMITED - RS. 1,00,80,000, THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING: I E QUITY SHARE CAPITAL OF RS. 37,36,000 / - WITH HIGH RESERVES AND SURPLUS OF RS. 8,73,04,363/ - II. THE COMPANY HAS INVESTMENT OF RS.6,15,40,000/ - 18.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPA NY. 18.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION AD DRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 18.3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS P AID BACK THE AMOUNT OF INVESTMENT 18.4 THE APPELLANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLACED ON PAGE 287 OF PAPER BOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND HAS GIVEN DETAILS OF PAYMENTS MADE THROU GH RTGS & CHEQUES. 18.5 THE SAID COMPANY ARE HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY IT IN ITS REPLY TO NOTICE U/S. 133(6). 18.6 HENCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 19. IN CASE OF LILAC MEDICINES PRIV ATE LIMITED - RS. 2,00,40,000, THE FINANCIAL STATEMENT OF THE SAID COMPANY REVEALS THE FOLLOWING: I. EQUITY SHARE CAPITAL OF RS. 1,30,50,0007 - WITH HIGH RESERVES AND SURPLUS OF RS.4,71,67,413/ - 24 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. II. THE COMPANY HAS INVESTMENT OF RS. 7,90,40,0 00/ - 19.1 19.1 THE ABOVE DETAILS PROVE THE CREDIBILITY OF THE COMPANY AND CAPACITY TO MAKE INVESTMENT IN THE APPELLANT'S COMPANY. 19.2 IDENTITY WAS PROVED BY SUBMITTING PAN CARD AND REGISTRATION ADDRESS. ALSO NOTICE U/S. 133(6) WERE DULY SERVED. 19. 3 THE BANK ACCOUNT OF THE SAID COMPANY REFLECTS THE PAYMENT MADE TO THE APPELLANT COMPANY FOR INVESTING IN SHARES. BUT THERE IS NO ENTRY IN BANK ACCOUNTS WHICH REFLECTS THAT THE APPELLANT COMPANY HAS PAID BACK THE AMOUNT OF INVESTMENT 19.4 THE APPELL ANT HAD ALSO FILED ITS CONFIRMATION WHICH IS PLACED ON PAGE 90 OF ADDITIONAL EVIDENCE PAPERBOOK WHERE THE ABOVE COMPANY HAS CONFIRMED OF HAVING APPLIED FOR THE SHARES AT PREMIUM AND LIAS GIVEN DETAILS OF PAYMENTS MADE THROUGH RTGS & CHEQUES. 19.5 THE SA ID COMPANY IS HOLDING TILL DATE THE SHARES OF THE APPELLANT COMPANY AS STATED BY I T IN ITS REPLY TO NOTICE U/S. 133(6). 19.6 H E NCE ADDITION MADE IN THE ASSESSMENT IS NOT CORRECT. 7. I NOW DISCUSS ALL THE CASES RELIED UPON BY THE AO IN THE ASSESS MENT ORDER AS UNDER: - I. IN CASE OF NIPUN BUILDERS & DEVELOPERS PRIVATE LIMITED, 350 ITR 407 WHEREIN IT WAS HELD THAT: 'IF THE ASSESSEE WAS SERIOUS ENOUGH TO ESTABLISH ITS CASE, IT OUGHT TO HAVE PRODUCED THE PRINCIPAL OFFICERS OF THE SUBSCRIBING COMPANIE S BEFORE THE ASSESSING OFFICER SO THAT THEY COULD EXPLAIN THE SOURCES FROM WHICH THE SHARE - SUBSCRIPTION WAS MADE. THAT WOULD ALSO HAVE TAKEN CARE OF THE DIFFICULTY OF THE ASSESSEE IN PROVING THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES. INSTEAD THE ASS ESSEE TOOK AN ADAMANT, ATTITUDE AND FAILED TO COMPLY WITH THE DIRECTION OF THE ASSESSING OFFICER.... THE ASSESSEE THUS TOOK A VERY EXTREME STAND WHICH WAS NOT JUSTIFIED; CERTAINLY IT DID NOTHING WORTHWHILE TO DISCHARGE THE ONUS TO PROVE THE CREDITWORTHINES S OF THE SUBSCRIBING COMPANIES' IN THE APPELLANT'S CASE, THE APPELLANT HAD REQUESTED SHAREHOLDERS TO COMPLY WITH THE NOTICES ISSUED TO THEM AND ALSO THE ABOVE DOCUMENTS SUBMITTED BY APPELLANT COMPANY PROVE THE IDENTITY OF THE SHAREHOLDERS. FURTHER NOTICE U /S. 133(6) ISSUED DURING REMAND PROCEEDINGS WERE DULY SERVED ON THE SHAREHOLDERS AND THE SHAREHOLDERS HAD FILED THEIR REPLIES ALONG WITH SUPPORTING DOCUMENTS AND EXPLANATION FOR SOURCE OF INVESTMENT. DURING REMAND PROCEEDINGS APPELLANT WAS READY TO PRODUCE THE PRINCIPAL OFFICERS BUT AFTER RECEIPT OF REPLY U/5.133(6), A.O. DID NOT INSIST FOR IT. II. IN CASE OF CIT VS. P. MOHANAKALA (2007) 291 ITR 278 (SC) WHEREIN IT WAS HELD THAT: '25. .....THE DOUBTFUL NATURE OF THE TRANSACTION AND THE MANNER IN WHICH THE SUMS WERE FOUND CREDITED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE HAVE BEEN DULY TAKEN INTO CONSIDERATION BY THE AUTHORITIES BELO W . THE TRANSACTIONS THOUGH APPARENT WERE HELD TO BE NOT REAL ONE. MAY BE THE MONEY CAME BY W AY OF BANK CHEQUES AND PAID THROUGH THE PROCESS OF BANKING TRANSACTION BUT THAT ITSELF IS OF NO CONSEQUENCE.' 25 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. IN THE APPELLANT'S CASE, THE APPELLANT ALONG WITH THE BANK ACCOUNT DETAILS OF THE SHAREHOLDERS, HAS PROVIDED BALANCE SHEET OF SHAREHOLDERS, CONFIRMATION OF THE S HAR EHOLDERS AND MANY OTHER DOCUMENTARY EVIDENCES WHICH SHOW THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDER. III. IN CASE OF VIJAY TALWAR V. CIT (2011) 330 ITR 1 WHEREIN IT IS HELD THAT: '24. ....ALL THE AUTHORITIES BELOW, IN PARTICULAR THE TRIBUNAL, /; ,' IN UNISON THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO RE:'.: PRESUMPTION DRAWN AGAINST HIM UNDER SECTION 68 OF THE ACT, BY PRODUCING THE PARTIES IN WHOSE NAME THE AMOUNTS IN QUESTION HAD BEEN CREDITED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT. IN TH E ABSENCE OF ANY COGENT EVIDENCE, A BALD EXPLANATION FURNISHED BY THE ASSESSEE ABOUT THE SOURCE OF THE CREDITS IN QUESTION VIZ., REALISATION FROM THE DEBTORS OF THE ERSTWHILE FIRM, IN THE OPINION OF THE ASSESSING OFFICER, WAS NOT SATISFACTORY. IT IS WELL S ETTLED THAT IN VIEW OF SECTION 68 OF THE ACT, IVHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSE SSING OFFICER, NOT SATISFACTORY .' IN THE ABOVE CASE THE ASSESSEE DID NOT FURNISH ANY EVIDENCE WHICH SUBSTANTIATES HIS CLAIM. BUT THE APPELLANT COMPANY HAS SUBMITTED DOCUMENTARY EVI DENCES SUCH AS COPY OF CORRESPONDENCE WITH THE SHAREHOLDERS, BALANCE SHEET OF SHAREHOLDERS, BANK ACCOUNT DETAILS OF THE SHAREHOLDERS, COPY OF SHARE APPLICATION AND BOARD RESOLUTION . IN VIEW OF THE ABOVE ANALYSIS THE CASE LAWS RELIED UPON BY THE AO DO NOT SUPPORT HIM AS THE FACTS OF THE APPELLANT'S CASE PROVES ALL THE NECESSARY REQUIREMENTS. 8. NOW I WILL REFER TO THE CASES RELIED UPON BY THE APPELLANT. I. IN CASE OF CIT V. CREATIVE WORLD TELEFILMS LTD. (2011) 15 TAXMANN.COM 183 (BOM)(HC) ASS ESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM SHAREHOLDERS. IN ORDER TO PROVE GENUINENESS OF SAID TRANSACTIONS, ASSESSEE COMPANY HAD GIVEN NAMES AND ADDRESSES OF SHAREHOLDERS ETC. ASSESSING OFFICER REJECTED ASSESSEE'S EXPLANATION AND ADDED AMOUNT SO RECE IVED TO ITS TAXABLE INCOME. TRIBUNAL, HOWEVER, SET ASIDE ADDITION MADE BY ASSESSING OFFICER HOLDING THAT IF SHARE APPLICATION MONEY WAS RECEIVED BY ASSESSEE - COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES WERE GIVEN TO ASSESSING OFFICER, THEN DEPARTME NT COULD ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. ASSESSING OFFICER SHOULD HAVE FOUND OUT DETAILS OF SHAREHOLDERS THROUGH PAN CARDS, BANK ACCOUNT, ETC., SO AS TO REACH THEM BECAUSE ALL RELEVANT DETAILS AND PARTICULA RS WERE GIVEN BY ASSESSEE TO ASSESSING OFFICER. THEREFORE, IMPUGNED ORDER PASSED BY TRIBUNAL WAS UPHELD. II. CI T V. ORBITAL COMMUNICATION (P) LTD (2010) 327 ITR 560 (DELHI) THE ASSESSEE HAD PRODUCED SUBSTANTIAL EVIDENCE TO ESTABLISH THE IDENTITY AND CREDIT WORTHINESS OF CREDITORS AND GENUINENESS OF SHARE APPLICATION BUT FAILED TO PRODUCE CREDITORS; AND ON THAT GROUND, THE ASSESSING OFFICER ADDED SHARE APPLICATION MONEY AS THE ASSESSEE'S UNDISCLOSED INCOME UNDER SECTION 68. HELD THAT, NON - PRODUCTION OF CREDIT ORS COULD NOT BE CONSIDERED TO NEGATE THE EVIDENTIARY VALUE OF REST OF THE MATERIAL AND SHARE APPLICATION MONEY COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 68. 26 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. III. IN THE CASE OF SHREE RAMA MULTI TECH LTD. V CIT (2013) 34 TAXMANN.COM 177 (GUJ) THE ASSESSEE COMPANY HAD FURNISHED COMPLETE DETAILS OF RECEIPT OF SHARE APPLICATION MONEY ALONG WITH SHARE APPLICATION FORMS, NAMES, ADDRESSES, PAN AND OTHER RELEVANT DETAILS OF SHARE APPLICANTS. ON THE BASIS OF THIS IT WAS HELD BY HIGH COURT OF GUJARAT THAT SHARE APPLICATION MONEY COULD NOT BE ADDED AS CASH CREDIT UNDER SECTION 68. IV. IN CASE OF CIT V. ORISSA CORPN. (P.) LTD. (1986) 25 TAXMAN 80F (SC) THE SUPREME COURT AFFIRMED THE DECISION OF HIGH COURT WHEREIN TRIBUNAL DEL ETED THE IMPUGNED ADDITION AS WELL AS THE PENALTY IMPOSED ON THE GROUNDS THAT (I) ASSESSEE HAVE GIVEN THE NAMES AND ADDRESSES OF THE CREDITORS, (II) IT HAD ALSO PRODUCED BEFORE ITO LETTERS OF CONFIRMATION, THE DISCHARGED HUNDIS AND PARTICULARS OF THE DIFFE RENT CREDITORS INCLUDING THEIR GENERAL INDEX NUMBERS WITH THE INCOME - TAX DEPARTMENT AND (III) THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 TO CREDITORS AT INSTANCE OF ASSESSEE, DID NOT PURSUE THE MATTER FURTHER, NOR IT EXAMINE THE SOURCE OF IN COME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT - WORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. V. IN CASE OF CIT V. APEX THERM PACKAGING (P.) LTD (2014) 42 TAXMANN.COM 473 (GUJ) IT WAS HELD THAT WHEN FULL PARTICULAR S, INCLUSIVE OF CONFIRMATION WITH NAME, ADDRESS AND PAN NUMBER, COPY OF INCOME TAX RETURNS, BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND COMPUTATION OF TOTAL INCOME IN RESPECT OF ALL CREDITORS/LENDERS WERE FURNISHED AND WHEN IT HAD BEEN FOUND THAT LOANS WERE FURNISHED THROUGH CHEQUES AND LOAN ACCOUNT WERE DULY REFLECTED IN BALANCE SHEET, ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION. VI. IN CASE OF CIT VS. MORANI AUTOMOTIVES (P.) LTD. (2014) 45 TAXMANN.COM 473 (RRAJASTHAN) IT WAS FOUND THAT CONTRIBUT ORS WERE ALL INCOME TAX ASSESSEES AND THEIR RETURN OF INCOME AND COPIES OF CONFIRMATION ALONG WITH PAN NUMBERS HAD BEEN FURNISHED BY ASSESSEE AND ALSO IDENTITY OF CASH CREDITORS WERE ESTABLISHED. IT WAS THUS HELD THAT ADDITION WAS NOT JUSTIFIED. VII. A REGARDS SHARE APPLICATION MONEY, IN THE CASE OF CIT V. NIPUAN AUTO (P.) LTD. (2014) 49 TAXMANN.COM 13 (DELHI), THE IDENTITY OF THE TWO COMPANIES WHICH IR - SISTER COMPANIES STOOD ESTABLISHED. FURTHERMORE, THIS IS NOT A CASE OF MER E FURNISHING OF COPIES OF BANK ACCOUNTS OF THE SUBSCRIBERS. BUT, IN THE PRESENT CASE, AS NOTICED BY THE COMMISSIONER (APPEALS) THE ASSESSEE HAD FILED THE IT RETURNS OF THE SUBSCRIBER COMPANIES AS ALSO THEIR BANK STATEMENTS AND BALANCE SHEET IN ADDITION TO THE CONFIRMATION LETTER S FROM THE SAID TWO COMPANIES. A COPY OF THE FORM NO. 2 FILED BY THE ASSESSEE WITH THE ROC REGARDING THE ALLOTMENT OF SHARES TO THE SAID TWO COMPANIES HAD ALSO BEEN FURNISHED. IT IS IN THIS BACKDROP THAT THE COMMISSIONER (APPEALS) HAD CONCLUDED THAT THE AS SESSEE HAD BEEN ABLE TO PROVE ITS CASE AND THAT THE ASSESSING OFFICER COULD NOT SHIFT THE BURDEN BACK ON TO THE ASSESSEE - COMPANY WITHOUT THE ASSESSING OFFICER PRODUCING ANY TANGIBLE MATERIAL TO DOUBT THE VERACITY OF THE DOCUMENTS FURNISHED BY THE ASSESSEE. THE TRIBUNAL CONCURRED WITH THE VIEWS TAKEN BY THE COMMISSIONER (APPEALS). VIII. THE TRIBUNAL IN CASE OF CIT V. VACMET PACKAGING (INDIA) (P.) LTD (2014) 45 TAXMARM.COM 204 (ALLAHABAD) HELD THAT THE ASSESSEE HAD FILED DOCUMENT EVIDENCE IN ORDER TO PRO VE THE GENUINENESS OF THE SHARE APPLICATION MONEY CONSISTING OF: (I) SHARE APPLICATION FORMS; (II) COPIES OF BANK ACCOUNTS OF THE SHARE APPLICANTS; (III) COPIES OF THE INCOME TAX RETURNS OF THE SHARE ALLOTTEES; (IV) BALANCE SHEETS AND (V) COPIES OF SHARE 27 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. A LLOTMENT CERTIFICATES AND OF THE BOARD'S RESOLUTION OF THE SHARE APPLICANTS. THE IDENTITY OF THE APPLICANTS WAS HELD TO BE ESTABLISHED BY THE PRODUCTION OF COPIES OF THE PAN CARDS AND REGISTRATION CERTIFICATE WITH THE REGISTRAR OF COMPANIES. ON THIS BASIS, THE TRIBUNAL HELD THAT THE ASSESSEE HAD DISCHARGE THE ONUS WHICH LAY ON IT TO PROVE THE IDENTITY OF THE APPLICANT COMPANIES, THEIR CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS. IX. IN CASE OF CIT V. MISRA PRESERVERS (P.) LTD. (2013) 31 TAXMANN.COM 214 (A LLA HABAD) ASSESSING OFFICER MADE ADDITION TO ASSESSEE'S INCOME IN RESPECT OF U N EXPLAINED SHARE APPLICATION MONEY RECEIVED FROM VARIOUS PERSONS. IN APPELLATE PROCEEDINGS, ASSESSEE BROUGHT ON RECORD EVIDENCE ESTABLISHING IDENTITY OF SHARE APPLICANTS. IT WAS ALSO PROVED THAT THEY MADE PAYMENT BY CHEQUES AND MOST OF THEM WERE ASSESSED T O TAX. TRIBUNAL THUS, SET ASIDE ADDITION MADE BY ASSESSING OFFICER. IMPUGNED ORDER PASSED BY TRIBUNAL DID NOT REQUIRE ANY INTERFERENCE. X. IN CA SE OF CIT V. EXPO GLOBE INDIA LTD. (2014) 51 TAXMANN.COM 2 08 ( DELHI) ASSESSES RECEIVED SHARE APPLICATION MONEY DURING RELEVANT ASSESSMENT YEAR. ASSESSING OFFICER HELD THAT ASSESSEE HAD NOT GIVEN SATISFACTORY EXPLANATION AND INCLUDED ENTIRE AMOUNT UNDE R SECTION 68. ON APPEAL, ASSESSEE FURNISHED INCOME - TAX RETURNS, BALANCE SHEETS, ROC PARTICULARS AND BANK ACCOUNT STATEMENTS OF SHAREHOLDERS. COMMISSIONER (APPEALS) CONSIDERING SAID MATERIALS HELD THAT SHARE APPLICATION MONEY OR SOURCE OF SHARE APPLICATION MONEY HAD BEEN SATISFACTORILY EXPLAINED AND DELETED ADDITION. TRIBUNAL CONFIRMED ORDER OF COMMISSIONER (APPEALS). ENTIRE ISSUE BEING PURELY FACTUAL, NO INTERFERENCE WAS CALLED FOR WITH TRIBUNAL'S ORDER. X I. IN CASE OF ACIT VS. BAHUBALI DYES LTD (2015) 55 TAXMANN.COM 357 (DELHI - TRIB) IT WAS HELD THAT SHARE CAPITAL AS WELL AS SHARE PREMIUM/ RESERVE OF ALL COMPANIES WAS SEVERAL TIMES MORE THAN AMOUNT INVESTED BY THEM IN SHARE CAPITAL OF ASSESSEE COMPANY PROVING THEIR CREDITWORTHINESS. THUS, NO ADDITION COUL D BE MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT. XII. IN CASE OF ACIT V. KISCO CASTING (P.) LTD (2013) 34 TAXMANN.COM 37 (CHANDIGARH - TRIB) ASSESSEE - COMPANY SHOWN RECEIPT OF CERTAIN SUM ON ACCOUNT OF SHARE APPLICATION MONEY. IN ASSESSMENT PROCEEDINGS , ASSESSEE HAD FILED AFFIDAVIT, CONFIRMATION INDICATING NUMBER OF SHARES, AMOUNT INVESTED, MODE OF INVESTMENT AS CHEQUE, BANK ACCOUNT NUMBER, SOURCE OF FUNDS ETC., TO PROVE IDENTITY AND EXISTENCE OF SUBSCRIBERS AS ALSO EVIDENCE OF INVESTMENT IN SHARES THRO UGH BANKING CHANNELS. ASSESSING OFFICER MADE ADDITION OF SAID SHARE CAPITAL MONEY, AS UNDISCLOSED INCOME OF ASSESSEE, ON GROUND THAT PERSONS WHO SUBSCRIBED TO SHARE CAPITAL WERE NOT PRODUCED BEFORE HIM. SINCE ASSESSING OFFICER HAD FAILED TO BRING ON RECORD ANY RELEVANT AND CREDIBLE MATERIAL TO NEUTRALIZE DOCUMENTARY EVIDENCES FILED BY ASSESSEE, IMPUGNED ADDITION WAS TO B E DELETED. 9. THE LD. A.O. HAD MADE ADDITIONS U/S.68 ON THE BASIS THAT NOTICES U/S. 133(6) /131 OF I. T. ACT W ERE NOT SERVED DURING ASSESSM ENT PROCEEDINGS. THE PRINCIPAL OFFICERS OF THE COMPANY WERE ALSO NOT PRODUCED AT THE TIME OF ASSESSMENT. DURING APPELLATE STAGE IT WAS SPECIFICALLY INQUIRED ABOUT NON AVAILABILITY OR NON SERVICE OF NOTICE AT THE TIME OF ASSESSMENT. DURING APPELLATE PROCEED INGS ADDITIONAL EVIDENCES IN FORM OF CONFIRMATION AND LATEST POSTAL ADDRESSES WERE SUBMITTED BY THE APPELLANT WHICH WERE FORWARDED TO THE A.O. FOR CONDUCTING FURTHER NECESSARY INQUIRIES. DURING ASSESSMENT PROCEEDINGS, THE LD. 28 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. A.O. ONCE AGAIN ISSUED NOTICES U/S. 1 33(6) ON THE LATEST ADDRESS WHICH WERE DULY COMPLIED BY THE SUBSCRIBER OF SHARES ALONGWITH ALL NECESSARY DETAILS WHICH WERE CALLED BY THE A.O. EXCEPT EMPOWER INDUSTRIES INDIA LTD. WHICH HAS SUBSCRI BED SHARES OF RS.5,40,00,000/ - . ALL THE SUBSCRIBERS O F SHARES EXCEPT EMPOWER INDUSTRIES INDIA LTD. FURNISHED AUDITED FINANCIALS ALONGWITH OTHER NECESSARY DETAILS AS CALLED BY THE A.O. THEREFORE, THE ONLY BASIS ON WHICH AO MADE ADDITION U/S.!43(3) ABOUT NON SERVICES OF NOTICE ISSUED U/S.131/136 IS NO MORE VAL ID BECAUSE NOT ONLY NOTICES WERE SERVED BUT COMPLIED BY THE RECIPIENT EXCEPT ONE. THE A.O. HAD NOT POINTED OUT ANY DEFECTS IN THE INFORMATION RECEIVED IN RESPONSE TO NOTICES ISSUED U/ S.L33(6). DURING APPELLATE PROCEEDINGS, IT WAS ALSO SUBMITTED THAT AT TH E TIME OF REMAND PROCEEDINGS , APP ELLANT WAS READY TO PRO DUCE THE PRINCIPAL OFFICER OF COMPANIES WHIC H HAD SUBSCRIBED THE SHARES OF APPELLANT COMPANY BUT AFTER RECEIPT OF INFORMATION U/S.L33(6) A.O. DID NOT INSIST FOR IT. THEREFORE KEEPING IN V IEW VARIOUS F ACTS AS NARRATED ABOUT AND VARIOUS CASE LAWS DISCUSSED IN THE FOREGOING PARAGRAPHS OUT OF ADDITION OF RS.38,12,79,600/ - MADE U/S.68, ADDITION OF RS. 5,00,40,000/ - IN RESPECT TO SHARES SUBSCRIBED BY M/S. EMPOWER INDUSTRIES INDIA LTD. WHICH HAD NOT COMPLIED WITH NOTICE ISSUED U/S.!33(6) IS CONFIRMED AND REMAINING AMOUNT OF RS.33,12,39,600/ - IN RESPECT OF WHICH EVIDENCES WERE FURNISHED BY THE SUBSCRIBER OF SHARE CAPITAL IS DELETED. 10. AGAINST THE ABOVE ORDER, THE ASSESSEE AND THE REVENUE ARE IN CROSS APPEAL BEFORE US. 11. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE ASSESSING OFFICER. 12. PER CONTRA, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SUBMITTED ALL TH E NECESSARY DETAILS. HE FURTHER SUBMITTED THAT THE AMENDMENT TO SECTION 68 HAS BEEN HELD BY THE HON'BLE BOMBAY HIGH COURT TO BE PROSPECTIVE. THE SUMMARY OF THE LD. COUNSEL OF THE ASSESSEE SUBMISSIONS ARE AS UNDER: 1. WE ARE THANKFUL TO YOUR HONOURS FOR HAV ING PATIENTLY HEARD THE ABOVE APPEALS ON 07.03.2018 AND GRANTED LEAVE TO FILE BRIEF WRITTEN SUBMISSIONS WITH DIRECTION TO FILE THE CURRENT UPDATED STATUS OF INVESTORS TO ASCERTAIN WHETHER THESE INVESTORS HAVE BEEN EXISTING OR NOT. ACCORDINGLY WE WOULD LIKE TO STATE AND SUBMIT AS HEREUNDER. BACKGROUND 2. THE APPELLANT IS ENGAGED IN THE BUSINESS OF MAINTAINING AND RUNNING INFRASTRUCTURE FACILITIES AND PROPER DEVELOPMENT. THE RETURN OF INCOME FOR A.Y.2010 - 11 WAS FILED ON 29 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 15.10.2010 DECLARING TAXABLE INCOME AT RS. NIL AND CLAIMED CARRIED FORWARD LOSS OF PREVIOUS YEAR RELEVANT TO A.Y.2010 - 11 AMOUNTING TO RS.8,67,35,476/ - . THE BOOK PROFIT U/S. 115 JB OF THE ACT WAS DISCLOSED AT LOSS OF RS.8,79,47,093/ - 3. THE RETURN OF INCOME WAS SUBJECTED TO THE SCRUTINY AS SESSMENT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED FOR DETAILS OF PREFERENCE SHARES. 4. THE APPELLANT COMPANY FURNISHED THE RELATED DETAILS TO THE ASSESSING OFFICER. FOR THE SAKE OF READY REFERENCE, THE LIST OF SHAR EHOLDERS WHO HAD. INVESTED IN PREFERENCE SHARE CAPITAL OF THE APPELLANT IS GIVEN BELOW: SR. NO. NAME OF THE SHAREHOLDERS (RS.) 1. SONAL COSMETIC (EXPORTS) LTD. 2,00,40,000 2. SONAL INTERNATIONAL LTD. 2,00,40,000 3. SONALI SIL - CHEM LTD. 2,00,40,000 4. D YNACHEM PHARMACEUTICALS (EXPORTS) LTD. 2,00,40,000 5. AARIKA STEEL AND METAL P. LTD. 1,00,080,000 6. PRIORITY TRADERS P. LTD. 2,50,80,000 7. EMPOWER INDUSTRIES INDIA LTD. 5,00,80,000 8. EALDOR RETAILS P. LTD. 2,50,80,000 9. TAC TECHNOSOFT P. LTD. 2,50 ,80,000 10 SAFFORD MERCANTILE P. LTD. 1,00,80,000 11 BENCHMARK BUILDCON P. LTD. 1,00,80,000 12 JAGDAMBA COPLEX P. LTD. 1,00,80,000 13 PROFICIENT MERCHANDISE P. LTD. 1,00,80,000 14 NIHAL MERCHANTILE P. LTD. 1,00,80,000 15 PRABHAV INDUSTRIES LTD. 4,00, 80,000 16 RAW GOLD SECURITIES P. LTD. 3,03,39,600 17. JYOTI FOODSTUFF LTD. 2,50,80,000 18. PASUPATI ENCLAVE P. LTD. 1,00,80,000 19. LILAC MEDICINE P. LTD. 1,00,80,000 TOTAL 38,12,79,600 5. THE ASSESSING OFFICER ISSUED SUMMONS U/S. 131 OF THE ACT A S WELL AS REQUISITION U/S. 133(6) OF THE ACT TO THE ABOVE SHAREHOLDERS. THE ASSESSING OFFICER ALSO DEPUTED THE INSPECTORS WHO SUBMITTED THE REPORT THAT THE COMPANIES DID NOT EXIST AT THE ADDRESSES GIVEN. 6. WHILE PASSING THE ASSESSMENT ORDER, THE ASSESSIN G OFFICER CONCLUDED THAT IDENTITY OF THE SHAREHOLDERS WAS NOT ESTABLISHED BECAUSE NOTICES ISSUED WERE RETURNED UNSERVED, THAT THE DETAILS SUBMITTED BY THE APPELLANT SUCH AS SHARE APPLICATION FORMS, BALANCE SHEETS, RELEVANT BANK STATEMENT ENTRIES OF THE SHA REHOLDERS DID NOT ESTABLISH IDENTITY OF THE SHAREHOLDERS. THE ASSESSING OFFICER ALSO STATED THAT KYC FORM RECEIVED FROM BANKS IN RESPONSE TO NOTICE U/S. 1 33(6) OF THE ACT DID NOT REVEAL ANY PARTICULARS OR SPECIFICS AND THAT MERELY BECAUSE SHARE CAPITAL WAS RECEIVED THROUGH BANKING CHANNEL DOES NOT PROVE THE CREDITWORTHINESS OF THE CREDITORS NOR PROVE GENUINENESS OF TRANSACTIONS. THE 30 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. ASSESSING OFFICER ALSO OBSERVED THAT BANKERS OF SOME OF THE SHAREHOLDERS WERE SAME PERSONS WHO WERE APPEARING IN THE LIST OF HA WALA DEALERS FURNISHED BY THE SALES DEPARTMENT OF STATE OF MAHARASHTRA. THE ASSESSING OFFICER ALSO NOTED THAT THE APPELLANT HAD RECEIVED SHARE APPLICATION MONEY PRIOR TO PASSING OF SPECIAL RESOLUTION TO INCREASE ITS SHARE CAPITAL. THEREFORE, THE ASSESSING OFFICER CONCLUDED THAT THE APPELLANT HAS FAILED TO PROVE THE GENUINENESS OF PREFERENCE SHARE CAPITAL RECEIVED BY IT. ACCORDINGLY, THE TOTAL INCOME WAS DETERMINED BY THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 30.03.2013 PASSED U/S. 143(3) OF THE ACT DETERMINING TOTAL INCOME OF THE APPELLANT AS UNDER: - SR. NO PARTICULARS RS. 1. INCOME FROM BUSINESS AS PER ASSESSEE'S COMPUTATION ( - ) 8,67,35,476, ADD : UNEXPLAINED CASH CREDITS U/S. 68 38,12,79,600 TAXABLE INCOME 29,45,44,124 ROUNDED OFF U/S. 288A 29,45,44,120 2. BOOK PROFIT U/S.H5JB OF THE ACT AS PER ASSESSEE'S COMPUTATION ( - ) 8,79,47,093 20. THE APPELLANT FILED APPEAL BEFORE THE CIT(A) AGAINST THE SAID ADDITION MADE U/S.68 OF THE ACT. DURING THE APPELLATE PROCEEDINGS, VARIOUS EVIDENCE WERE FILED BEFORE THE CIT(A) AND THE REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER IN REMAND PROCEEDINGS ISSUED NOTICES U/S.!33(6) OF THE ACT AT THE FRESH ADDRESSES SUBMITTED BY THE APPELLANT AND THE SAME WERE DULY RESPOND ED BY ALL THE PARTIES EXCEPT ONE I.E. EMPOWER INDUSTRIES INDIA LTD. ('EMPOWER' IN SHORT) 21. AFTER TAKING INTO ACCOUNT THE MATERIAL GATHERED DURING THE APPELLATE PROCEEDINGS, THE SUBMISSIONS/DETAILS FILED BY THE APPELLANT, THE REASONS GIVEN FOR MAKING AD DITION U/S.68 OF THE ACT IN THE ASSESSMENT ORDER AND THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER, THE CIT(A) EVALUATED THE AMOUNT INVESTED BY EACH SHAREHOLDER AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER U/S.68 OF THE ACT FOR ALL THE PAR TIES EXCEPT ONE PARTY I.E. EMPOWER. THE REASONS GIVEN BY THE CIT(A) FOR DELETION OF THE SAID ADDITION CAN BE SUMMARIZED AS UNDER: - A. ALL THE PARTIES EXCEPT ONE I.E. EMPOWER HAS DULY CONFIRMED THE TRANSACTIONS IN RESPONSE TO REQUISITIONS SENT BY THE ASSE SSING OFFICER U/S.!33(6) OF THE ACT DURING THE APPELLATE PROCEEDINGS, B. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DEFECT IN THE INFORMATION RECEIVED IN RESPONSE TO NOTICES ISSUED U/S.!33(6) OF THE ACT. C. IN VIEW OF INFORMATION RECEIVED IN RESPONSE TO NOTICES U/S.L33(6)' OF THE ACT, THE ASSESSING OFFICER DID NOT INSIST UPON PRODUCING THE OFFICERS OF THE SHAREHOLDERS OR ISSUE NOTICES U/S.131 OF THE ACT ALTHOUGH THE APPELLANT WAS READY TO PRODUCE PRINCIPAL OFFICERS OF THE SHAREHOLDERS. D. THE IDENTITY OF THE SHAREHOLDERS WAS ESTABLISHED IN VIEW OF THE FOLLOWING: I. THE INSPECTOR HAD VISITED THE PREMISES OF THE SHAREHOLDERS AND HE HAD CONFIRMED ON SUCH VISITS THAT THE PARTIES ACTUALLY EXISTED AT THE GIVEN ADDRESSES, [PARA 4.2.6 OF THE ORDER OF THE CIT(A)]. INSPECTOR POSTED BY THE CIT(A) - 16 HAD VISITED THE PREMISES OF 7 SHAREHOLDERS AND FOUND THAT PARTIES ACTUALLY EXISTED ON THE ADDRESSES WHICH ARE AS PER ROC SITE, [PARA 5.1.5 OF THE CIT(A)'S ORDER] 31 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. II. IN THE CASE OF CITYGOLD EDUCATION RESEARCH LTD. SIMILAR ADDITION WAS MADE AND SIX PARTIES NAMELY, PRABHAV INDUSTRIES LTD, RAW GOLD SECURITIES P. LTD, SONAL INTERNATIONAL LTD, SONAL COSMETICS (EXPORTS) LTD., SONAL SIL CHEM LTD. AND DYNACHEM PHARMACEUTICALS EXPORTS LTD., HAD APPEARED BEFORE DDIT(INV) AT AHMEDABA D AND BARODA. THE PARTIES AT AHMEDABAD HAD GIVEN STATEMENTS THAT THEY HAD MADE INVESTMENTS AND PRODUCED RELEVANT RECORDS SUCH AS INVESTMENT REGISTER, AUDITED ACCOUNTS, LEDGER ACCOUNTS, BANK STATEMENTS, ETC. [PARA 4.2.9, 5.1.6 OF THE GT(A)'S ORDER]. III. T HE ASSESSING OFFICER HAD HIMSELF STATED IN HIS ORDER THAT INFORMATION ON THE OFFICIAL WEBSITE OF THE ROC(MCA), THE PREFERENCE SHAREHOLDERS HAD CONTINUED WITH THE APPELLANT COMPANY TILL 31.03.2012 [PARA 5.1.3 OF THE CIT(A)'S ORDER] E. THE CREDITWORTHINESS O F THE SHAREHOLDERS WAS ESTABLISHED IN VIEW OF THE FOLLOWING FINDINGS GIVEN IN PARA 5.2 OF THE CIT(A): I. STATEMENT OF SHRI JAGDISH KUMAR GUPTA RELIED UPON BY THE ASSESSING OFFICER DOES NOT PROVE THAT THREE COMPANIES REFERRED IN HIS LIST DID NOT MAKE INVES TMENT IN THE APPELLANT. II. THE INVESTMENT WAS MADE IN THE APPELLANT COMPANY SUBSEQUENT TO THE DATE OF SEARCH ON J. KUMAR INFRA PROJECTS LTD. I.E. 26.08.2009. III. THE APPELLANT COMPANY HAD FURNISHED DETAILS WHICH SHOW THE INDIVIDUAL CAPACITY OF THE SHAREH OLDER WHICH HAD BEEN DISCUSSED AT LENGTH IN THE APPELLATE ORDER F. THE REASONS GIVEN BY THE ASSESSING OFFICER, TO CONCLUDE GENUINENESS OF TRANSACTIONS HAD NOT BEEN ESTABLISHED, WERE UNTENABLE IN VIEW OF THE FACT THAT THE ASSESSING OFFICER HAD NOWHERE MEN TIONED THAT THERE WERE IMMEDIATE CASH TRANSACTIONS IN THE BANK STATEMENTS AND THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE FACT THAT SHAREHOLDERS HAD ENOUGH BALANCE TO MAKE THE INVESTMENT IN THE APPELLANT. SIMILARLY, THE LIST OF HAWALA DEALERS ISSUED BY THE SALES - TAX DEPARTMENT HAD NO CONNECTION WITH THE INVESTMENT TRANSACTIONS WITH THE APPELLANT, [PARA 5.3.3 OF THE CIT(A)'S ORDER]. G. THE DETAILS SUBMITTED BY THE APPELLANT PROVE THE IDENTITY - , CREDIBILITY AND GENUINENESS OF TRANSACTIONS IN THE CASE OF EA CH SHAREHOLDER. HOWEVER, SINCE EMPOWER DID NOT RESPOND TO NOTICE U/S.!33(6) OF THE ACT, THE ADDITION IS SUSTAINED U/S.68 OF THE ACT ONLY IN RESPECT OF INVESTMENT MADE BY IT IN THE SHARES OF THE APPELLANT, [PARA 6 READ WITH SUB - PARA 7 OF THE CIT(A)'S ORDER] . 22. THE APPELLANT HAS FILED THE APPEAL BEFORE YOUR HONOURS IN RESPECT OF ADDITION OF RS.5,00,80,000/ - SUSTAINED BY THE CIT(A) IN RESPECT OF INVESTMENT MADE BY EMPOWER, WHEREAS THE ASSESSING OFFICER HAS FILED APPEAL IN RESPECT OF DELETION MADE IN RESPE CT OF INVESTMENTS MADE BY ALL OTHER SHAREHOLDERS. ASSESSEE'S APPEAL 23. THE APPELLANT WOULD LIKE TO FIRST MAKE SUBMISSIONS IN RESPECT OF APPEAL FILED BY IT. 24. IT IS SUBMITTED THAT THE CIT(A) HIMSELF HAD REFERRED TO AND RELIED UPON THE ORDER PASSED B Y HIS PREDECESSOR IN THE CASE OF CITYGOLD EDUCATION RESEARCH LTD. FOR A.Y.2010 - 32 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 11 WHEREIN IDENTICAL ISSUE WAS INVOLVED. THE FOLLOWING SIX PARTIES ARE COMMON WHICH HAD INVESTED IN THE SHARES OF THE APPELLANT AND CITYGOLD EDUCATION RESEARCH P. LTD. I I) PRABHAV INDUSTRIES LTD, II) RAW GOLD SECURITIES P. LTD, III) SONAL INTERNATIONAL LTD, IV) SONAL COSMETICS (EXPORTS) LTD., V) SONAL SIL CHEM LTD. AND VI) DYNACHEM PHARMACEUTICALS EXPORTS LTD. 25. THE CIT(A) HAS EXTRACTED THE RELEVANT PORTION OF HIS PRED ECESSOR ON PAGE 28 OF HIS APPELLATE ORDER AND BY FOLLOWING THE SAID ORDER, THE CIT(A) HAS DELETED ADDITION IN RESPECT OF ABOVE SIX PARTIES. HOWEVER, THE CIT(A) HAS FAILED TO APPRECIATE AND REFER TO THE PARA 5.6 OF THE ORDER OF THE CIT(A) IN THE CASE OF CIT YGOLD EDUCATION RESEARCH LTD. FOR A.Y.2010 - 11 WHEREIN THE FINDINGS IN RESPECT OF INVESTMENT MADE BY EMPOWER IS ALSO DISCUSSED. 26. IT IS UNDISPUTED THAT THE ISSUES AND CIRCUMSTANCES IN THE CASE OF CITYGOLD EDUCATION RESEARCH LTD. AND IN THE CASE OF THE A PPELLANT ARE IDENTICAL. THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE U/S.68 OF THE ACT IN THE CASE OF CITYGOLD EDUCATION RESEARCH LTD. FOR A.Y.2010 - 11 HAS BEEN UPHELD BY THE HON'BLE TRIBUNAL IN ITA NO.4742/MUM/2015 VIDE ITS ORDER DATED 31.01.2018. A COPY OF THE SAID ORDER OF THE HON'BLE TRIBUNAL HAS BEEN SUBMITTED TO THE HON'BLE BENCH AND THE LEARNED DR DURING THE COURSE OF THE HEARING. 27. ON ITS PERUSAL, IT CAN BE SEEN THAT THE ASSESSING OFFICER HAD ALSO MADE ADDITION IN RESPECT OF INVESTMENT MADE BY EMPOWER. IN THE CASE OF CITYGOLD EDUCATION RESEARCH LTD. WHICH IS LISTED ON PAGE 3 OF THE SAID ORDER OF THE HON'BLE TRIBUNAL. THE DISCUSSION MADE BY THE CIT(A) IN RESPECT OF THIS PARTY HAS BEEN EXTRACTED ON PAGE 10 OF THE SAID ORDER OF THE HON'BLE TRIB UNAL. ON ITS PERUSAL, IT CAN BE SEEN THAT THE CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF FACT THAT STATEMENT OF SHRI DEVANG DINESH CHANDRA MASTER, DIRECTOR OF EMPOWER, WAS RECORDED U/S.131 OF THE ACT ON 12.03.2013 (I.E. BEFORE THE ASSESSING OFFICER PA SSED THE ASSESSMENT ORDER IN THE CASE OF APPELLANT) WHEREIN HE HAD ADMITTED THAT TRADING ACTIVITIES WERE BOGUS BUT IT DID NOT MEAN THAT INVESTMENTS WERE BOGUS. THE CONFIRMATION FOR HAVING MADE INVESTMENT BY THE PARTY WAS FILED BY THE ASSESSEE THEREIN AND T HAT INVESTMENT WAS HELD TILL THAT DATE. THE HON'BLE TRIBUNAL UPHELD THE DELETION VIDE PARA 6 OF THE ORDER OF THE HON'BLE TRIBUNAL WHEREIN IT HAS BEEN CONSIDERED THAT NOTICES WERE SERVED IN THE CASE OF EMPOWER AND RELATED DETAILS WERE ON FILE, THE PARTY HAD CONFIRMED TRANSACTION BEFORE DIT, BARODA AND THAT THE CIT(A) HAD DELETED ADDITION AFTER TAKING INTO ACCOUNT THE REMAND REPORT OF THE ASSESSING OFFICER. 28. ON PERUSAL OF THE PAPER BOOK FILED BY THE APPELLANT IT CAN BE SEEN THAT THE APPELLANT HAS FILED T HE REQUISITE DETAILS DISCHARGING THE INITIAL ONUS LAID ON IT U/S.68 OF THE ACT AND THAT NO OTHER MATERIAL IS BROUGHT ON RECORD BY THE ASSESSING OFFICER TO THE CONTRARY. ALTHOUGH THE PARTY HAD NOT RESPONDED TO THE NOTICE ISSUED U/S. 133(6) OF THE ACT, THE S AID PARTY HAD CONFIRMED THE TRANSACTION WITH DETAILS OF PAYMENTS/RTGS AS NOTED IN PARA 7.4 PAGE 35 OF THE ORDER OF THE CIT(A). 29. SINCE THE HON'BLE TRIBUNAL HAS UPHELD THE DELETION MADE BY THE CIT(A) IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER U/S.68 OF THE ACT IN THE CASE OF CITYGOLD EDUCATION RESEARCH LTD. FOR INVESTMENT MADE BY EMPOWER IN SHARES OF CITYGOLD 33 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. EDUCATION RESEARCH LTD., IT IS HUMBLY PRAYED THAT THE ADDITION MADE IN THE CASE THE APPELLANT ASSESSEE FOR INVESTMENT MADE BY EMPOWER MAY KINDLY BE DELETED. IT IS SUBMITTED THAT HON'BLE TRIBUNAL HAVING NOTED THAT INVESTMENT BY EMPOWER IN THE CITYGOLD EDUCATION RESEARCH LTD, AS GENUINE, A DIFFERENT CONCLUSION CANNOT BE ARRIVED AT UNLESS ANY CONTRARY MATERIAL IS BROUGHT ON RECORD. IT IS SUBMI TTED THAT THE STATUS OF THE SHAREHOLDER ON THE WEBSITE OF MOCA IS 'ACTIVE'. DEPARTMENT'S APPEAL 30. IN RESPECT OF GROUNDS FILED BY THE ASSESSING OFFICER, IT IS SUBMITTED THAT THE APPELLANT ASSESSEE HAD FILED ALL THE NECESSARY DETAILS TO DISCHARGE ITS IN ITIAL ONUS LAID U/S.68 OF THE ACT. THE ASSESSEE HAD FILED DETAILS SUCH AS PAN, BANK STATEMENTS, AUDITED FINANCIALS, RESOLUTIONS PASSED, ACKNOWLEDGMENT OF RETURN OF INCOME FILED BY THE INVESTORS, ETC. THE DETAILS OF SUCH PARTICULARS FILED HAVE BEEN INCORPOR ATED ON SAMPLE BASIS [I.E. IN CASE OF TWO INVESTORS NAMELY CHOICE EXTERIO & INTERIO P. LTD. (NOW KNOWN AS ACCELERATE TRADESTAR P. LTD. AND FORMERLY KNOWN AS PRIORITY TRADERS P. LTD.) AND PROFICIENT MERCHANDISE LTD. IN THE PAPER BOOK FILED BEFORE YOUR HONOU RS. 31. THE ASSESSING OFFICER HAS DULY SUBMITTED REMAND REPORT TAKING INTO CONSIDERATION THE VARIOUS DETAILS FILED AND NO ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO DISPROVE THE DETAILS FILED BY THE APPELLANT ASSESSEE. 32. IT IS SUBMITTED THAT THE APPELLANT ASSESSEE HAVING DISCHARGED ITS PRIMARY ONUS AND NO ADVERSE MATERIAL ON CAUSING ENQUIRIES HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER, THE ADDITION MADE BY THE ASSESSING OFFICER U/S.68 OF THE ACT SHOULD NOT BE SUST AINED. 33. IT IS SUBMITTED THAT THE CIT(A) HAS DELETED THE ADDITION AFTER TAKING INTO ACCOUNT MATERIAL AVAILABLE ON THE RECORD AND IN ACCORDANCE WITH THE SETTLED PRINCIPLES OF LAW. 34. DURING THE APPELLATE PROCEEDINGS, THE ASSESSING OFFICER HAD CAUSED FRESH ENQUIRIES AND FURNISHED HIS REMAND REPORT. THE CIT(A) HAS ALSO CAUSED VERIFICATION BY DEPUTING HIS INSPECTOR AND FOUND THE INFORMATION COLLECTED TO BE CORRECT. THUS, IT IS SUBMITTED THAT IT IS NOT THE CASE WHERE NO ENQUIRIES HAD BEEN CAUSED. THE INI TIAL ONUS LAID UPON THE ASSESSEE HAS BEEN DULY DISCHARGED AND ON FURTHER VERIFICATION, NO ADVERSE MATERIAL HAS BEEN FOUND. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER U/S. 68 OF THE ACT HAS BEEN RIGHLTY DELETED BY THE CIT(A). 13. THEREAFTER , THE LD. COUNSEL OF THE ASSESSEE HAS REFERRED TO SEVERAL CASE LAWS WHICH ARE AS UNDER: 1. ACIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. FOR A.Y. 2008 - 09 IN ITA NO. 5784/MUM/2011 DATED 23.01.2014; 2. CIT VS. CREATIVE WORLD TELEFILMS LTD. (333 ITR 100 (BOM)); 3. ITO VS. SH REEDHAM CONSTRUCTION PVT. LTD. FOR A.YS. 2008 - 09, 2009 - 10 AND 2012 - 13 IN ITA NOS. 3754 - 3756/MUM/2017 DATED 14.11.2017; 4. ARCELI REALITY LIMITED V. ITO FOR A.Y. 2007 - 08 IN ITA NO. 6492/MUM/2016 DATED 21.04.2017; 5. LALITHA JEWELLERY MART P. LTD. VS. DCIT (399 IT R 425 (MAD)); AND 34 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 6. ORCHID INDUSTRIES PVT. LTD. VS. DCIT FOR A.Y. 2004 - 05 IN ITA NO. 1867/MUM/2012 DATED 07.02.2014; 14. LASTLY, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE STATUS REPORTS OF THE SHARE APPLICANT COMPANIES FROM THE REGISTRAR OF THE COM PANYS WEBSITE ARE AS UNDER: 48 IT IS SUBMITTED THAT AS DIRECTED BY YOUR HONOURS, WE HAVE CHECKED THE STATUS OF THE APPLICANT COMPANIES ON THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS. THE SUMMARY OF THE VERIFICATION DONE IS AS UNDER: SR. NO. NAME OF THE SHAREHOLDERS COMPANY 1. SONAL COSMETIC (EXPORTS) LTD. ACTIVE 2 SONAL INTERNATIONAL LTD. ACTIVE 3. SONALI SIL - CHEM LTD. ACTIVE 4. DYNACHEM PHARMACEUTICAL (EXPORTS) LTD. ACTIVE 5. AARIKA STEEL AND METAL P. LTD. AMALGAMATED 6. ACCELERATED TRADESTAR P. L TD. (FORMERLY KNOWN AS CHOICE EXTERIO & INTERIO P. LTD. AND PRIOR THERETO KNOWN AS PRIORITY TRADERS P. LTD. ) ACTIVE 7. EMPOWER INDIA LTD. ACTIVE 8. EALDOR RETAILS P. LTD. AMALGAMATED 9. TAC TECHNOSOFT P. LTD. ACTIVE 10. SAFFORD MERCANTILE P. LTD. ACTIVE 11. BENCHMARK BUILDCON P. LTD. ACTIVE 12. JAGDAMBA COPLEX P. LTD. STRIKE OFF 13. PROFICIENT MERCHANDISE P. LTD. ACTIVE 14. NIHAL MERCHANTILE P. LTD. AMALGAMATED 15. PRABHAV INDUSTRIES LTD. ACTIVE 16. RAW GOLD SECURITIES P. LTD. ACTIVE 1 7. WAYFORWARD TRADERS LTD. (FORMERLY JYOTI FOODSTUFF LTD.) ACTIVE 18. PASUPATI ENCLAVE P. LTD. ACTIVE 19. LILAC MEDICINE P. LTD. AMALGAMATED 49. THE SEARCH RESULTS ARE ENCLOSED HEREWITH FOR YOUR HONOURS' READY REFERENCE. 50. IT IS SUBMITTED THAT TH E HON'BLE TRIBUNAL HAS CONFIRMED THE DELETION OF SIMILAR ADDITION MADE U/S.68 OF THE ACT IN THE CASE OF CITYGOLD EDUCATION RESEARCH LTD. (SUPRA) AFTER TAKING INTO ACCOUNT THAT THE INVESTOR COMPANIES ARE NOT SHELL COMPANIES OR APPEAR IN THE LIST PREPARED BY MINISTRY OF CORPORATE AFFAIRS AND THAT THE INVESTORS ARE VERY MUCH ON THE REGISTER OF REGISTRAR OF COMPANIES. HENCE, THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE BY THE CIT(A) MAY KINDLY BE UPHELD. 35 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 15. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED T HE RECORDS. UPON CAREFUL CONSIDERATION WE NOTE THAT ASSESSEE COMPANY IN THIS CASE HAS RECEIVED SHARE APPLICATION MONEY FROM 19 CORPORATE ENTITIES. THE ASSESSEE HAS SUBMITTED THAT DOCUMENTARY EVIDENCES IN CONNECTION WITH THE SHARE APPLICATION MONEY RECEIVED . THESE INCLUDED VARIOUS DETAILS LIKE NAME, ADDRESS, COMPANY INCORPORATION DETAILS, SHARE APPLICATION DETAILS , BALANCE SHEETS, BANK STATEMENTS, PERMANENT ACCOUNT NUMBER AND INCOME TAX RETURNS. THE ASSESSING OFFICER HAS TAKEN ADVERSE INFERENCE BECAUSE HE NO TED THAT ASSESSEE HAS NEITHER PRODUCED THE CONCERNED PARTIES NOR PRODUCE D THEIR BOOKS OF ACCOU NTS. THE ASSESSING OFFICER ALSO NOTE D THAT HIS REQUISITIONS AND NOTICES TO THE ABOVE PARTIES HAVE NOT BEEN RESPONDED. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A PPEALS), THE ASSESSEE MADE ELABORATE SUBMISSIONS AND ALSO SUBMITTED SOME ADDITIONAL DETAILS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REMANDED THE SUBMISSIONS TO THE ASSESSING OFFICER . H E ALSO NOTED THAT THE INSPECTOR OF THE DEPARTMENT WAS ALSO DEPUTED TO FIND OUT SOME OF THE SHAREHOLDERS AND HIS REPORTS WERE IN THE AFFIRMATIVE. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO NOTED THAT UPON FRESH REQUISITION SENT BY THE ASSESSING OFFICER , 18 OF THE SHAREHOLDERS HAVE FILED THEIR REPLY AND SU BMITTED TH E DETAILS. THEREAFTER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY DISCUSSED THE DETAILS AND FINANCIALS SUBMITTED BY THE SHARE APPLICANTS COMPANIES. AFTER ELABORATE FINDINGS ABOUT FINANCIAL POSITIONS OF INDIVIDUAL SHARE APPLICANTS , IN DETAIL H E FINALLY GAVE A FINDING THAT SINCE THAT ASSESSEE HAS ESTABLISHED THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF ALL THE PARTIES , EXCEPT CONFIRMATION FROM ONE OF THE PARTY M/S . EMPOWER INDUSTRIES I NDIA LIMITED, THE ADDITION IN RESPECT OF ALL OTHER 18 PAR TIES WAS DELETED EXCEPT AN ADDITION IN RESPECT OF M/S . 36 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. EMPOWER INDUSTRIES I NDIA LIMITED WHICH HAS NOT RESPONDED TO THE REQUISITION U /S. 133(6) OF THE ASSESSING OFFICER WHICH WAS CONF IRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 16. WE HAVE CAREFU LLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSION S OF THE ASSESSEE'S COUNSEL AND THE CASE LAWS REFERRED . W E FIND THAT SECTION 68 UNDER WHICH THE ADDITION HAS BEEN MADE PROVIDES AS UNDER : CASH CREDITS. 68. WHERE ANY SUM IS FOUND CREDITE D IN THE BOOKS 43 OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION 43 ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY 43 BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE - COMPANY SHALL BE DEEME D TO BE NOT SATISFACTORY, UNLESS ( A ) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND ( B ) SUCH EXPLANATION IN THE OPIN ION OF THE ASSESSING OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM REFERRED TO THEREIN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTUR E CAPITAL COMPANY AS REFERRED TO IN CLAUSE ( 23FB ) OF SECTION 10. 17. THE HON'BLE JURISDICTIONAL HIGH COURT HAD OCCASION TO CONSIDER THE ADDITION OF SIMILAR SHARE APPLICATIONS U /S. 68 IN SEVERAL CASE LAWS. 37 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 18. WE MAY GAINFULLY REFER TO THE HONBLE JURISDI CTIONAL HIGH COURT EXPOSITIONS IN THIS CASE AS UNDER : 1) CIT VS. GAGANDEEP INFRASTRUCTURE (P.) LTD. [2017] 394 ITR 680 (BOM) HAD HELD AS UNDER: (E) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEE N INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APRIL, 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013 - 14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE TH E TRIBUNAL, IT WAS NOT EVEN THE CASE OF THE REVENUE THAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBSEQUENTLY EFFECTIVE ONLY FROM 1ST APRIL, 2013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATES THAT IT WAS INTRODUCED 'FO R REMOVAL OF DOUBTS' OR THAT IT IS 'DECLARATORY'. THEREFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PROVISO TO SECTION 68 OF THE ACT IS IMMATER IAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE - PROVISO SECTION 68 OF THE ACT LAID DOWN BY THE COURTS NAMELY THE GENUINENESS OF THE TRANSACTION, IDENTITY AND THE CAPACITY OF THE INVESTOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P.) LTD.(S UPRA) IN THE CONTEXT TO THE PRE - AMENDED SECTION 68 OF THE ACT 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 SHAREHOLDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. (F) IN THE ABOVE CIRCUMST ANCES AND PARTICULARLY IN VIEW OF THE CONCURRENT FINDING OF FACT ARRIVED AT BY THE CIT(A) AND THE TRIBUNAL, THE PROPOSED QUESTION OF LAW DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. 2) CIT VS. ORCHID INDUSTRIES (P.) LTD. [2017] 397 ITR 136 (BOM) HAD HELD AS UNDER: '5] ' THE ASSESSING OFFICER ADDED RS.95 LAKHS AS INCOME UNDER SECTION 68 OF THE INCOME TAX ACT ONLY ON THE GROUND THAT THE PARTIES TO WHOM THE SHARE CERTIFICATES WER E ISSUED AND WHO HAD PAID THE SHARE MONEY HAD NOT APPEARED BEFORE THE ASSESSING OFFICER AND THE SUMMONS COULD NOT BE SERVED ON THE ADDRESSES GIVEN AS THEY WERE NOT TRACED AND IN RESPECT OF SOME OF THE PARTIES WHO HAD APPEARED, IT WAS OBSERVED THAT JUST BEF ORE ISSUANCE OF CHEQUES, THE AMOUNT WAS DEPOSITED IN THEIR ACCOUNT. 6] THE TRIBUNAL HAS CONSIDERED THAT THE ASSESSEE HAS PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE PARTY SUCH AS PAN OF ALL THE CREDITORS ALONG WITH THE CONFIRMATION , THEIR BANK STATEMENTS SHOWING PAYMENT OF SHARE APPLICATION MONEY. IT WAS 38 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECORD REGARDING ISSUANCE OF SHARES I.E. ALLOTMENT OF SHARES TO THESE PARTIES, THEIR SHARE APPLICATION F ORMS, ALLOTMENT LETTERS AND SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THESE PERSONS DISCLOSES THAT THESE PERSONS HAD SUFFICIENT FUNDS IN THEIR ACCOUNTS FOR INVESTING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLUMINOUS DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDGMENT IN CASE OF GAGANDEEP INFRASTRUCTURE (P.) LTD. (SUPRA) WOULD BE APPLICABLE IN TH E FACTS AND CIRCUMSTANCES OF THE PRESENT CASE' 19. F ROM THE EXPOSITIONS , IT IS CLEAR THAT THE ASSESSEE'S CASE CLEARLY FALSE UNDER THE REALM OF THE ABOVE CASE LAWS. THE PROVISO TO SECTION 68 HAS CLEARLY AND UNAMBIGUOUSLY BEEN HELD TO BE PR OSPECTIVE AND NOT RETROSPECTIVE. A DMITTEDLY THE SAME IS NOT APPLICABLE IN THE ASSESSMENT YEAR WHICH HAS BEEN CONSIDERED HERE , I.E., ASSESSMENT YEAR 2010 - 11. HENCE , ADVERSE INFERENCE TAKEN BY THE ASSESSING OFFICER THAT ASSESSEE COULD NOT PRODUCE THE SHARE APPLICANTS AND A LSO COULD NOT PRODUCE THEIR BOOKS OF ACCOUNT , IS NOT SUSTAINABLE. 20. W E FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS GIVEN A CLEAR FINDING THAT IN RESPECT OF THE SAID SHARE APPLICATIONS , GENUINENESS OF THE TRANSACTION, IDENTITY AND THE CAPA CITY OF THE PARTIES ARE EX AMINED AND FOUND TO BE IN ORDER. W E FIND THAT THE ABOVE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS DULY CORROBORATED BY THE VARIOUS DETAILS SUBMITTED IN RESPECT OF THE ABOVE SAID CORPORATE ENTITIES WHICH INCLUDE NA ME, ADDRESSES, PERMANENT ACCOUNT NUMBER, FINANCIAL STATEMENTS, BANK STATEMENTS AND INCOME TAX RETURN COPIE S AND CONFIRMATIONS GIVEN. THE I NCOME T AX I NSPECTOR HAS ALSO GIVEN IN AFFIRMATIVE HIS REPORT REGARDING THE ADDRESS OF SOME OF THE SHAREHOLDERS INSPECT ED BY HIM. T HE REQUISITIONS GIVEN BY ASSESSING OFFICER IN THE REMAND PROCEEDINGS HAVE BEEN DULY COMPLIED WITH BY ALL PARTIES EXCEPT FOR ONE PARTY NAMELY M/S . EMPOWER INDUSTRIES I NDIA L TD. W E FIND THAT THE FACTS AND CIRCUMSTANCES OF THE CASE 39 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. ARE ALSO IDENTI CAL T O THE GROUP CASE OF THE CASES DECIDED BY THIS ITAT IN THE CASE OF ITO VS. CITY GOLD EDUCATION RESEARCH LTD. (IN ITA NO. 4742/MUM/2015 VIDE ORDER DATED 310.1.2018) . IN THIS CASE ITAT HAD HELD AS UNDER : 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE REMAND REPORT OF THE AO NO. ITO - 8(1)(2)/REMAND REPORT/ CITYGOLD - 10 - 11/13 - 14 DTD. 27.10.14, THE AO IN PARA 3 HAS RECORDED THE COMPLETE DETAILS I.E. THE NAMES AND ADDRESS OF PARTIES AND ISSUED & NOTICES SERVED ON 4 PARTIES NAMELY HAREKRISHNA SECURITIES PVT. LTD., EMPOWER INDUS LTD., PRABHAV INDS LTD., SIGNORA FINANCE PVT. LTD BUT OTHER FIVE PARTIES LEFT THE ADDRESSES GIVEN. THE AO ANALYSED EACH OF THE PARTIES AND THEIR FINANCIALS FROM THE RECOR DS OF THE COMPANY AND ALSO REFERRED TO ADDITIONAL DIT INVESTIGATION BARODA, WHO CONFIRMED THAT THESE PARTIES HAVE CONFIRMED THE TRANSITIONS I.E. PRABHAV INDS LTD., EMPOWER INDUS INDIA LTD. HAREKRISHNA SECURITIES PVT. LTD., SIGNORA FINANCE PVT. LTD. SONAL C OSMETICS (EXPORTS) LTD., RAW GOLD SECURITIES PVT. LTD., SONAL SIL CHEM LIMITED., DYNACHEM PHARMACEUTICALS (EXPORTS) LTD., SONAL INTERNATIONAL LTD., ALKEN MANAGEMENT AND FINANCIAL LTD. AND LILAC MEDICINES PVT. LTD. ALL THESE PARTIES HAVE ADMITTED THE TRANSA CTIONS AND ALSO FILED FINANCIALS OF THESE COMPANIES SHOWING THE INVESTMENT IN SHARES OF THE ASSESSEE COMPANY. THE CIT(A) AFTER GETTING THE REMAND REPORT FROM THE AO, DELETED THE ADDITION. 7. WE FIND THAT THE AO PROCEEDED TO DISCREDIT THE INVESTORS OF THE ASSESSEE, WHICH IS COMPLETELY ERRONEOUS. THE AO WAS LOOKING FOR PROOF BEYOND DOUBT AND PROCEEDED ON AN ELEMENT OF SUSPICION THAT THE AMOUNTS OF INVESTMENTS ARE REALLY THOSE OF THE ASSESSEE, WHICH HAVE BEEN PLOUGHED BACK BY THE ASSESSEE. BUT THE SETTLE PRIN CIPLE OF LAW IS THAT ANY AMOUNT OF SUSPICION HOWEVER, IT STRONG MIGHT BE, IS NO SUBSTITUTE FOR PROOF. SUSPICION IS NOT SUFFICIENT ENOUGH TO LEAD TO THE CONCLUSION THAT THE INVESTMENTS RECEIVED BY THE ASSESSEE COMPANY ARE ALL MANIPULATED RECEIPTS AND ON THA T BASIS HE CAN RECORD A FINDING THAT THE EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY. ACCORDING TO US, SO LONG AS THE PROOF AND IDENTITY OF THE INVESTOR AND THE PAYMENT RECEIVED FROM HIM IS THROUGH A DOUBTLESS CHANNEL LIKE THAT OF A BANKING CHANNEL, TH E RECEIPT IN THE HANDS OF THE ASSESSEE TOWARDS SHARE CAPITAL OR SHARE PREMIUM DOES NOT CHANGE ITS COLOUR. THE MONEY SO INVESTED IN THE ASSESSEE COMPANY WOULD STILL BE THE MONEY AVAILABLE AND BELONGING TO THE INVESTORS. THE CONSISTENT PRINCIPLE FOLLOWED IS THAT THE INVESTORS SOURCES AND CREDITWORTHINESS CANNOT BE EXPLAINED BY THE ASSESSEE. IF THE DEPARTMENT HAS A DOUBT ABOUT THE GENUINENESS OF THE INVESTOR'S CAPACITY, IT IS OPEN TO IT TO PROCEED AGAINST THOSE INVESTORS. WITHOUT TAKING SUCH A COURSE OF ACTION , THE AO PROCEEDED ON CONJECTURES AND SURMISES THAT THE ASSESSEE HAS, IN FACT, PLOUGHED BACK THE MONEY. THE VERY APPROACH OF THE AO IS COMPLETELY OPPOSED TO SETTLED LEGAL PRINCIPLES ENUNCIATED AND THEY HAVE ARRIVED AT CONCLUSIONS CONTRARY TO THE LEGAL PRIN CIPLES ON THE SUBJECT. FURTHER, THEY ARE FINDING FAULT WITH THE ASSESSEE FOR THE ALLEGED FAILURE OF ITS INVESTORS IN PROVING BEYOND DOUBT THAT THEY HAVE THE CAPACITY TO INVEST AT THE MOMENT THEY DID IN THE ASSESSEE. THE ASSESSEE IS NOT EXPECTED TO PERFORM A NEAR IMPOSSIBILITY. 40 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 8. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS COMPLETELY PRODUCED THE EVIDENCES BEFORE THE AO I.E. THE IDENTITY OF THE SHAREHOLDER BY FILING THE REGISTERED ADDRESS WITH ROC, PAN NO. ALONG WITH COPY OF RETURNS OF INCOME FURNISH ED WITH PARTICULAR WARD OF THE DEPARTMENT OF THE INVESTORS. THE ASSESSEE HAS ALSO RECEIVED MONEY FROM SHAREHOLDERS THROUGH ACCOUNT PAYEE CHEQUE AND ISSUED DOCUMENTS SUCH AS SHARE CERTIFICATE, RETURN OF ALLOTMENT FILED WITH ROC FORMS WHICH WERE FILED BEFORE THE AO. THE ASSESSEE HAS ALSO FILED COPIES OF BANK STATEMENT OF THE SUBSCRIBERS SHOWING THAT IT HAD SUFFICIENT BALANCE IN ITS ACCOUNTS TO ENABLED THE SUBSCRIBER TO SUBSCRIBE THE SHARE CAPITAL. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, ONCE THE AO HAS NOT REBUTTED THE EVIDENCES, THE AO CANNOT DISBELIEVE THE SAME. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD . (2017) 394 ITR 680 (BOM), WHEREIN HON'BLE HIGH COURT HAD HELD AS UNDER : - (E) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FI NANCE ACT 2012 WITH EFFECT FROM 1ST APRIL, 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013 - 14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT WAS NOT EVEN THE CASE OF THE REVENUE THAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBSEQUENTLY EFFECTIVE ONLY FROM 1ST APRIL, 2013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCE T O PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATES THAT IT WAS INTRODUCED 'FOR REMOVAL OF DOUBTS' OR THAT IT IS 'DECLARATORY'. THEREFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PROVISO TO SECTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE - PROVISO SECTION 68 OF THE ACT L AID DOWN BY THE COURTS NAMELY THE GENUINENESS OF THE TRANSACTION, IDENTITY AND THE CAPACITY OF THE INVESTOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEHALF OF THE REVEN UE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P.) LTD.(SUPRA) IN THE CONTEXT TO THE PRE - AMENDED SECTION 68 OF THE ACT 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 SHAREHO LDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. (F) IN THE ABOVE CIRCUMSTANCES AND PARTICULARLY IN VIEW OF THE CONCURRENT FINDING OF FACT ARRIVED A T BY THE CIT(A) AND THE TRIBUNAL, THE PROPOSED QUESTION OF LAW DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. 9. FURTHER, IN RECENT DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ORCHID INDUSTRIES PVT. LTD (2017) 397 ITR 136 (BOM), FOLLOWING THE CASE LAW OF GAGANDEEP INFRASTRUCTURE PVT. LTD DELETED THE ADDITION BY OBSERVING IN AS UNDER: - 41 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. '5] ' THE ASSESSING OFFICER ADDED RS.95 LAKHS AS INCOME UNDER SECTION 68 OF THE INCOME TAX ACT ONLY ON THE GROUND THAT THE PARTIES TO WHOM THE SHARE CERTIFICATES WERE ISSUED AND WHO HAD PAID THE SHARE MONEY HAD NOT APPEARED BEFORE THE ASSESSING OFFICER AND THE SUMMONS COULD NOT BE SERVED ON THE ADDRESSES GIVEN AS THEY WERE NOT TRACED AND IN RESPECT OF SOME OF THE PARTIES WHO HAD APPEARED, IT WAS OBSERVED THAT JUST BEFORE ISSUANCE OF CHEQUES, THE AMOUNT WAS DEPOSITED IN THEIR ACCOUNT. 6] THE TRIBUNAL HAS CONSIDERED THAT THE AS SESSEE HAS PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE PARTY SUCH AS PAN OF ALL THE CREDITORS ALONG WITH THE CONFIRMATION, THEIR BANK STATEMENTS SHOWING PAYMENT OF SHARE APPLICATION MONEY. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECORD REGARDING ISSUANCE OF SHARES I.E. ALLOTMENT OF SHARES TO THESE PARTIES, THEIR SHARE APPLICATION FORMS, ALLOTMENT LETTERS AND SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THESE PERSONS DISCLOSES THAT THESE PERSONS HAD SUFFICIENT FUNDS IN THEIR ACCOUNTS FOR INVESTING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLUMINOUS DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE ASSESSI NG OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDGMENT IN CASE OF GAGANDEEP INFRASTRUCTURE (P.) LTD. (SUPRA) WOULD BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE' 10. WE HAVE ALSO MADE ENQUIRY FROM THE LEARNED SR. DEPARTMENTA L REPRESENTATIVE, WHETHER THE INVESTORS OR THIS COMPANY IS A SHELL COMPANY OR IN THE LIST PREPARED BY MINISTRY OF CORPORATE AFFAIRS, GOVT. OF INDIA. THE LEARNED SR. DR, STATED THAT THIS INFORMATION IS NOT AVAILABLE WITH THE DEPARTMENT. FURTHER, WE MADE ENQ UIRY FROM THE LEARNED COUNSEL FOR THE ASSESSEE WHETHER THIS COMPANY HAS BEEN STRIKE OFF FROM THE REGISTRAR OF COMPANIES OR NOT, THE LEARNED COUNSEL STATED THAT IT IS VERY MUCH ON THE REGISTER OF REGISTRAR OF COMPANIES. IN VIEW OF THESE FACTS, WE REACH TO A CONCLUSION THAT THIS IS EXISTING COMPANY AND EVEN THE INVESTORS ARE EXISTING. 11. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS ISSUE OF REVENUE'S AP PEAL IS DISMISSED 12. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 21. W E FIND THAT DELETION OF ADDITION BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS CASE IS IN CONFORMITY WITH THE EXPOSITION S OF THE HONBLE HIGH COURT AND THE DECISION OF ITAT IN ASSESSEE'S GROUP CASE AS ABOVE . FURTHER, WE NOTE THAT THESE COMPANIES ARE ALSO EX ISTING IN THE RECORDS OF REGISTRAR OF COMPANIES. THE REPORT SUPPLIED BY THE LD. COUNSEL OF THE ASSESSEE IN THIS REGARD IS AS UNDER: 42 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. 48 IT IS SUBMITTED THAT AS DIRECT ED BY YOUR HONOURS, WE HAVE CHECKED THE STATUS OF THE APPLICANT COMPANIES ON THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS. THE SUMMARY OF THE VERIFICATION DONE IS AS UNDER: SR. NO. NAME OF THE SHAREHOLDERS COMPANY 1. SONAL COSMETIC (EXPORTS) LTD. ACTIVE 2 SONAL INTERNATIONAL LTD. ACTIVE 3. SONALI SIL - CHEM LTD. ACTIVE 4. DYNACHEM PHARMACEUTICAL (EXPORTS) LTD. ACTIVE 5. AARIKA STEEL AND METAL P. LTD. AMALGAMATED 6. ACCELERATED TRADESTAR P. LTD. (FORMERLY KNOWN AS CHOICE EXTERIO & INTERIO P. L TD. AND PRIOR THERETO KNOWN AS PRIORITY TRADERS P. LTD. ) ACTIVE 7. EMPOWER INDIA LTD. ACTIVE 8. EALDOR RETAILS P. LTD. AMALGAMATED 9. TAC TECHNOSOFT P. LTD. ACTIVE 10. SAFFORD MERCANTILE P. LTD. ACTIVE 11. BENCHMARK BUILDCON P. LTD. ACTIVE 12. JAGDA MBA COPLEX P. LTD. STRIKE OFF 13. PROFICIENT MERCHANDISE P. LTD. ACTIVE 14. NIHAL MERCHANTILE P. LTD. AMALGAMATED 15. PRABHAV INDUSTRIES LTD. ACTIVE 16. RAW GOLD SECURITIES P. LTD. ACTIVE 17. WAYFORWARD TRADERS LTD. (FORMERLY JYOTI FOODSTUFF LTD.) ACT IVE 18. PASUPATI ENCLAVE P. LTD. ACTIVE 19. LILAC MEDICINE P. LTD. AMALGAMATED 49. THE SEARCH RESULTS ARE ENCLOSED HEREWITH FOR YOUR HONOURS' READY REFERENCE. 50. IT IS SUBMITTED THAT THE HON'BLE TRIBUNAL HAS CONFIRMED THE DELETION OF SIMILAR ADDI TION MADE U/S.68 OF THE ACT IN THE CASE OF CITYGOLD EDUCATION RESEARCH LTD. (SUPRA) AFTER TAKING INTO ACCOUNT THAT THE INVESTOR COMPANIES ARE NOT SHELL COMPANIES OR APPEAR IN THE LIST PREPARED BY MINISTRY OF CORPORATE AFFAIRS AND THAT THE INVESTORS ARE VER Y MUCH ON THE REGISTER OF REGISTRAR OF COMPANIES. HENCE, THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE BY THE CIT(A) MAY KINDLY BE UPHELD. 22. H ENCE , FOLLOWING THE ABOVE SAID PRECEDENTS , WE ARE OF THE OPINION THAT THE ADDITION DELETED BY THE LD. COM MISSIONER OF INCOME TAX (APPEALS) ARE IN ACCORDANCE WITH THE ABOVE PRECEDENT'S EXCEPT FOR ONE SHARE APPLICANT NAMELY JAGDAMBA COPLEX PRIVATE LIMITED . IN THE CASE OF THIS COMPANY ACCORDING TO THE SUBMISSIONS OF THE LD COUNSEL OF 43 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. THE ASSESSEE HIMSELF THE NAM E OF THE COMPANY HAS BEEN STRUCK OFF FROM THE WEBSITE OF MINISTRY OF C ORPORATE A FFAIRS. THE MINISTRY OF C ORPORATE A FFAIRS HAS STRUCK OFF SOME OF THE SHELL COMPANIES/COMPANIES WHICH ARE INACTIVE WITH NO ACTIVITY FOR A LONG TIME. HOWEVER , WE ALSO NOTE THAT I N A NUMBER OF SUCH CASES WHERE NAMES HAVE BEEN STRUCK OFF , FRESH APPLICATIONS HAVE BEEN MADE BY THE CBDT WITH THE C OMPANY L AW T RIBUNAL FOR RESTORATION OF THOSE COMPANIES WHOSE NAME HAS BEEN STRUCK OF SO THAT DEPARTMENT CAN PURSUE APPEALS RELATED TO THEM. I N LIGHT OF THESE FACTS , WE DEEM IT APPROPRIATE TO REMIT THE ISSUE OF ADDITION IN THE CASE OF JAGDAMBA COMPLEX PRIVATE LIMITED TO T HE FILE OF THE ASSESSING OFFICER SO THAT ASSESSING OFFICER SHALL EXAMINE THIS CASE AFRESH. 23. IN THE CASE OF M/S . EMPOWER IN DUSTRIES I NDIA LIMITED WE FIND THAT ALL THE FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ARE IDENTICAL AS IN CASE OF ALL OTHER SHARE APPLICANTS , EXCEPT THAT IN THIS CASE THERE HAS BEEN NO REPLY TO THE REQUISITION OF THE ASSESSING OFFICER UNDER SECTION 133(6). ALL THE RELEVANT DETAILS LIKE NAME, ADDRESS, PAN NO., FINANCIAL STATEMENTS, INCOME TAX RETURNS, BANK STATEMENTS WERE DULY SUBMITTED. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE ADDITION ONLY FOR TH E REASON OF NON REPLY TO THE REQUISITION U/S. 133(6) . IN THIS REGARD , IT IS THE SUBMISSION OF THE L D . COUNSEL OF THE ASSESSEE THAT RESPONSE FROM THIS COMPANY WAS NOT OBTAINED BECAUSE OF NOT GOOD RELATIONS WITH THE ASSESSEE COMPANY. IT WAS FURTHER SUBMITTED THAT SHARE APPLICATION FROM THIS COMPANY HAS BEEN FOUND TO BE IN - ORDER BY THE TRIBUNAL IN THE CASE OF CITY GOLD EDUCATION RESEARCH LTD. ( SUPRA ) , A GROUP COMPANY OF THE ASSESSEE . FURTHER, THE 44 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. WEBSITE OF THE MINISTRY OF C ORPORATE A FFAIRS ALSO DOES NOT MENTION THIS COMPANY AS STRUC K O F F. 24. IN OUR CONSIDERED OPINION , IN THE LIGHT AFORESAID SUBMISSIONS , THIS ISSUE ALSO NEEDS TO BE REMITTED TO THE F ILE OF ASSESSING OFFICER FOR FRESH CONSIDERATION. HENCE, WE REMIT THIS ISSUE ALSO TO THE FILE OF ASSESSING OFFICER FOR FRESH EXAMINATIO N. 25. HENCE, WE CONFIRM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF THE DELETION MADE BY HIM EXCEPT IN THE CASE OF M/S . JAGDAMBA COMPLEX PRIVATE LIMITED WHICH HAS BEEN REMITTED BY US TO THE FILE OF ASSESSING OFFICER. THE ADDI TION CONFIRMED THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF M/S . EMPOWER INDUSTRIES I NDIA LIMITED FOR THE REASONS MENTIONED ABOVE HAS ALSO BE EN REMITTED TO THE FILE OF ASSESSING OFFICER . 26. IN THE RESULT , THE APPEALS FILED BY THE R EVENUE A ND THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 31.05.2018 SD/ - SD/ - ( RAVISH SOOD ) (S HAMIM YAHYA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 31.05.2018 . . ./ ROSHANI , SR. PS 45 ITA NO S . 3390 & 3141/MUM/2016 M/S. FERN INFRASTRUCTURE PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / B Y ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
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