DCIT 1(2)(1), MUMBAI V. INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA P.LTD, MUMBAI

ITA 3399/MUM/2017

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 3782 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 09-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABDUL HAKEEM
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Source of fund; Additional evidence; Question of law; Valuation report; Capital receipt; Onus to prove
• Section: 142(1); 143(2); 13; 22; 131; 68; 69; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL ME MBER ITA NO. 3399 /MUM/201 7 ( ASSESSMENT YEAR : 20 12 - 13 ) D CIT - 1 (2)(1) ROOM N O . 535 , 5 TH FLOOR AAYKAR BHAWAN M.K.ROAD MUMBAI - 400 020 VS. M/S. INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. MAKER CHAMBERS - III NARIMAN POINT, MUMBAI - 400 021 PAN/GIR NO. AACCI5147H ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SANJAY R. PARIKH REVENUE BY ABDUL HAKE E M DATE OF HEARING 17/09/2019 DATE OF PRONOUNCEMENT 30 /09 /201 9 / O R D E R P ER S. RIFAUR RAHMAN (A.M) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSION ER OF INCOME TAX ( APPEALS ) 6 , MUMBAI , DATED 28/02/2017 AND IT PERTAINS TO THE ASSESSMENT YEAR (AY) 20 12 - 13. 2. BRIEF FACTS OF THE CASE ARE THAT A SSESSEE IS ENGAGED IN THE BUSINESS OF I NSTITUTIONAL INVESTOR ADVISORY SERVICES, FILED ITS RETURN OF INCOME FOR THE AY 2012 - 13 ON 26/09/2012 , DECLARING TOTAL INCOME AT RS. NIL AND CLAIMING LOSS AT RS. 1,55,41,260/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE I.T.ACT, 1961 [ IN SHORT ACT ] WERE ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE , THE LD. AR OF THE ASSESSE FILED THE RELEVANT INFORMATION AS ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 2 CALLED FOR . D URING THE ASSESSMENT PROCEEDINGS, THE LD. AO NOTICED THAT ASS ESSEE HAS IN RECEIPT OF SHARE CAPITAL TO THE EXTENT OF RS. 8,30,22,500/ - AND SHARE APPLICATION MONEY PENDING FOR ALLOTMENT OF RS. 1,33,30,000/ - . THE LD. AO OBSERVED THAT ASSESSEE IS UNLISTED COMPANY AND ASSESSEE HAS ISSUED SHARE CAPITAL WITH SHARE PREMIUM AND HAS NOT SUBSTANTIATED THE IN TRINSIC VALUE OF THE SHARE S IN COMPARISON TO THE SHARE PREMIUM . F URTHER , HE OBSERVED THAT ASSESSEE HAS NOT FILED COMPLETE DETAILS SHOWING THE NATURE OF THIS SHARE PREMIUM THAT IS ASSESSEE IS NOT FILED ANY JUSTIFICATION FOR T HE EXCESS PREMIUM RECEIVED IN COMPARISON TO THE INTRINSIC VALUE OF THE SHARE. ACCORDINGLY , LD . AO ASKED THE ASSESSEE TO FILE THE DETAILS AN EXPLANATION WITH REGARD TO ACTIVITIES OF THE COMPANY , DETAILS OF THE SHAREHOLDERS ALONG WITH PAN ADDRESS , BASIS OF V ALUATION, COPIES OF SHARE ALLOTMENT LETTERS AND BANK STATEMENT OF THE APPLICANT AND SOURCES OF MONEY FOR THE INVESTMENTS, IN RESPONSE , ASSESSEE FILED PARTY WISE DETAILS OF INCREAS E IN SHARE CAPITAL, COPIES OF BANK STATEMENT OF THE ASSESSEE AND COPIES OF RO C RECORDS , IN RESPECT OF SHARE ALLOTMENT. 3 . AFTER CONSIDERING THE ABOVE SUBMISSIONS , LD. AO OBSERVED THAT ASSESEE HAS ISSUED SHARE APPLICATION MONEY TO THE EXTENT OF RS. 12 CRORES AND RECEIVED RS. 8,30,22,500/ - AS FULLY PAID EQUITY SHARE CAPITALS. AT THE TIME OF FILING RETURN OF INCOME , ASSESSEE HAS NOT FILED COMPLETE DETAILS SHOWING THE NATURE OF THE SHARE AMOUNT RECEIVED THAT IS JUSTIFICATION FOR THE EXCESS PREMIUM RECEIVED IN COMPARISON THE INTRINSIC VALUE OF THE SHARE. FURTHER, HE OBSERVED THAT ASS ESSEE HAS ISSUED SHARES OF RS. 10/ - EACH AT THE PREMIUM OF RS. 10.3. DURING THE ASSESSMENT PROCEEDINGS , ASSESSEE HAS NOT JUSTIFIED RECEIVING SUCH HUGE SHARE APPLICATION MONEY AND ASSESSEE ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 3 HAS NOT EXPLAINED , THE SOURCE OF FUNDS OF THE SHARE HOLDERS. FURTHE R, HE OBSERVED THAT THERE CANNOT BE ANY ADDITION IN RESPECT OF SHARE PREMIUM , SO LONG AS , SOURCE OF FUNDS IS EXPLAINED IN THE HANDS OF THE SHARE HOLDERS. THE LD. AO OBSERVED THAT SECTION 68 REQUIRES THE ASSESEE TO EXPLAIN NATURE AND SOURCE OF THE CREDIT EN TRY. ACCORDING TO HIM , ASSESSE HAS TO EXPLAIN NATURE AND SOURCE OF THE CREDIT ENTRY TO THE SATISFACTION OF THE AO . HO WEVER, IN THIS CASE ASSESSEE HAS NOT FILED ANY JUSTIFICATION FOR QUANTUM OF PREMIUM . T HEREFORE , THE ABOVE CASES COVERED IN SECTION 68 OF T HE ACT , BY RELYING ON THE CERTAIN CASE LAW , AO HAS MADE THE ADDITION OF THE TOTAL SHARE CAPITAL RECEIVED BY THE ASSESSEE , INCLUDING PREMIUM U/S 68 O F THE ACT. AGGRIEVED BY THE ABOVE ORDER , ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), BEFORE THE LD. C IT(A) ASSESSEE MADE THE FOLLOWING SUBMISSIONS: - 3. DETAILS SOUGHT VS. FURNISHED DURING TH E H EARING STATUS OF DETAILS SOUGHT AND PROVIDED DU RING THE HEARING REFERENCE POINT NO 4.1 OF THE ASSESSMENT ORDER DETAILS SOUGHT DURING THE HEARING STATUS OF CO MPLIANCE I BRIE F NOTE ON COMPANY ACTIVITIES COMPLIED - NOTE FU RNISHED II DETAILS OF SHAREHOLDERS, DIRECTORS ALONG WITH T H EIR PAN, ADDRESS, ALLOTMENT OF SHARES COMPLIED - DETAILS FURNISHED III BASIS OF VALUATION O F SHARES AND DETERMINATION OF SH ARE VALUATION REPORT NOT ASKED FOR AND NO T PROVIDED . IV COPIES OF SHARE ALLOTMENT LETTERS TO THE SHAREHOLDERS COMPLIED - COPY OF ALLOTMENT LETTERS FURNISHED . ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 4 V BANK STATEMENT OF TH E S H ARE APPLICANTS AND THE SOURCES OF MONEY PAID FOR PURCHASE OF SH ARES, THEIR BALANCE SHEET ETC. (REFER NOTE - 1 BELOW) PARITY COMPLIED - - BALANCE SHEETS OF CORPORATE ENTITIES FAMISHED. BANK STATEMENT OF ONE OF THE T HREE INDIVIDUAL SHAREHOLDERS FURNISHED. NOTE - 1 I N RESPECT OF THE SOURCE OF PAYMENT, THE LEARNED AO ASKE D FOR THE COPIES OF THE BANK STATEMENTS OF A LL THE SHAREHOLDERS AND THEIR BALANCE SHEETS. WHILE THE BANK STATEMENT IN RESPECT OF ONE THE INDIVIDUAL SHAREHOLDERS (MR. AM I T T ANDON 739600 EQUITY SHARES) WAS PROVIDED, IT WAS EXPLAINED TO THE LEARNED A.O. THAT THE OTHER TWO INDIVIDUAL SHAREHOLDERS FOR WHOM THE BANK STATEMENTS WERE NOT READILY AVAILABLE WERE SENIOR PROFESSIONALS AND THE SOURCE OF THEIR INVESTMENT IN THE SHARE CAPITAL OF T HE ASSESSES COMPANY WAS THE I R RETAINED EARNINGS OVER THE YEARS. PAN AND TAX JURISDICTION DETAILS OF THESE INDIVIDUAL SHAREHOLDERS WERE FURNISHED. NONE OF THESE INDIVIDUALS ARE REQUIRED TO F ILE THEIR BALANCE SHEETS WITH THEIR RETURN. FURTHER, COPIES OF THE BAN K STATEMENT OF T HE ASSESSES COMPANY HIGHLIGHTING THE NAMES OF THE INDIVI DUAL SHAREHOLDERS AGAINST THE CREDIT ENTRIES VIDE WHICH AMOUNTS WERE RECEIVED FROM THEM WERE ALSO FURNISHED. MOREOVER IT WAS EXPLAINED TO THE LEARNED A.O, THAT OBTAINING COPIES OF THE BANK STATEMENTS FROM THE INSTITUTIONAL SHAREHOLDERS I.E. BSE LIMITED, H DFC INVESTMENT LIMITED, TATA INVESTMENT CORPORATION LIMITED, FITCH INC. USA AND AXIS BANK LIMITED, WAS DIFFICULT , INSTEAD THE PUBLISHED ANNUAL ACCOUNTS OF BSE LIMITED, HDFC INVESTMENT LIMITED, TATA INVESTMENT CORPORATION LIMITED EVIDENCING THE INVESTMENT I N THE ASSESSES COMPANY WERE MADE AVAILABLE. SHARE CAPITAL OF THESE FINANCIAL INSTITUTIONS IN THE ASSESSES COMPANY WAS RS. 5,00,07,5007 - OUT OF TOTAL INCREASE IN SHARE CAPITAL OF RS,8,29,22,500/ - DURING THE YEAR. 4. SOURCE OF PAYMENT AND THE DETAILS OF S HAREHOLDERS THE LEARNED A.O. MENTIONS IN THE ORDER THAT THE NATURE AND SOURCE OF MONEY IN RESPECT OF THE SNARE CAP ITAL AND T HE SHARE APPLICATION MONEY WAS NOT SATISFACTORILY EXPLAINED TREATING TO T HE ADDITION OF RS.9,63,52,500 / - UNDER SEC.68 OF THE ACT. A PERUSAL OF THE LIST OF THE INSTITUTIONAL SHAREHOLDERS OF THE COMPANY WILL CONFIRM THAT THESE ARE ALL RENOWNED NAMES WHICH HAVE A NET - WORTH IN MILLIONS. CREDIT WORTHINESS OF THESE INSTITUTIONS AND SOURCES OF THEIR INVESTMENTS COU L D HAVE BEEN EASILY ESTABL ISHED BY REVIEW OF THEIR BALANCE SHEET & CASH FLOW STATEMENTS FOR THE YEAR RESPECTIVELY. IT IS UNREASONABLE TO EXPECT THESE FINANCIAL INSTITUTIONS TO PROVIDE THEIR BANK STATEMENT AS E VIDE NCE OF THE SOURCE OF THEIR INVESTMENT IN THE ASSESSEE COMPANY. THE I NVESTMENT MADE BY THEM IN THE ASSESSES COMPANY REPRESENTS A VERY SMALL PORTION OF THEIR TOTAL INVESTMENT. MOREOVER THESE INVESTMENTS ARE REFLECTED IN THEIR ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 5 AUDITED STATEMENTS, EXTRACTS OF WHICH WERE SUBMITTED DURING THE COURSE OF THE HEARING . 5. DETAILS NOT F URNISHED IN THETAX RETURN AT VARIOUS PIECES IN THE ORDER, THE LEARNED A O HAS STATED THAT THE DETA ILS OF THE JUSTIFICATION OF THE PREMIUM WERE NOT FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME. IN TH IS REGARD IT MAY BE MENTIONED THAT THERE I S NO REQUIREMENT /OPPORTUNITY FOR THE ASSESSEE TO FURNISH THESE DETAILS IN THE INCOME TAX RETURN FILED ONLINE IN FORM 6. THE SHARE PREMIUM ACCOUNT FORMS PART OF THE BALANCE SHEET OF THE COMPANY AND IN THE DETAILS OF BALANCE SHEET TO BE FURNISHED IN THE ITR, THE SAME HAS BEEN DULY DEPICTED. THE ASSERTION OF THE LEARNED A.O. THAT THE JUSTIFICATION IN RESPECT OF PREMIUM RECEIVED VIS - A - VIS THE INTRINSIC VALUE OF SHA R ES WAS NOT SATISFACTORILY EXPLAINED DURING THE COURSE OF THE HEARING IS FACTUALLY INCORRECT AS IT WAS NOT ASKED FOR. MOREOVER IT HAS BEEN STATED IN THE ASSESSMENT ORDER AT POINT NO 4 (K) THAT THE PROVISIONS OF SE C 56 (2) (VII ) (B) WERE NOT APPLICABLE DURING THE A, Y. 2012 - 13 . . 6 . NOTE O N PREMIUM CHARGED WHI L E NO JUSTIFICATION OF THIS PREMIUM IS R EQUIRED IN TERMS OF THE PROVISIONS OF SEC 56 (2)(VII)(B) AS APPLICABLE DURING AY 2012 - 13, THE FOLLOWING MAY BE POINTED OUT IN THIS REGARD IN SUPPORT OF THE ASSESSEE'S POSITION. A) TH E PREMIUM RECEI VED WAS BASED ON THE BUSINESS PL AN THAT WAS PRESENTED TO THE INVESTORS AND THE PROJECTIONS MADE BY THE COMPANY OF ITS FUTURE PROFITABILITY AND CASH FLOWS. B) IN ADDITION THE PREMIUM FACTORED IN THE UNIQUE NATURE OF THE BUSINESS AND TH E NEED TO START SUCH A SERVICE M INDIA, C) THESE BUSINESSES A RE NOT VALUED ON THE BASIS OF MORE TRADITIONAL BENCHMARKS, BUT TYPICALLY TRADE AT REVENUE MULTIPLES. A COMPARABLE WILL BE RATING AGENCIES. SO IT I S ADVANTAGEOUS TO INVEST EAR L Y. ONCE BUSINESS GETS OFF - THE GROUND, TH E Y BECOME VERY EXPENSIVE ON A PE OR REVENUE MULTIPLE BASIS . 7 . FAVORABLE CASE LAW ON JUSTIFICATION OF PREMIUM IN A SIMILAR CASE THE DECISION OF THE MUMBAI TRIBUNAL IN THE CAS E OF GREE N INFRA LIMITED VS ITO (TS - 420 - I TAT - 2 0 13(MUM) SQUARELY COVERS THE CASE OF THE A SSESSEE. THE FACTS OF THE CASE ATE SIMILAR TO THAT OF THE ASSESSEE. THE ORDER DEALS WITH THE JUSTIFICATION OF PREMIUM CHARGED BY NEWLY INCORPORATED COMPANIES AND WAS HELD IN FAVOR OF THE ASSESSEE, THE SALIENT POINTS OF THE ORDER ARE ENUMERATED BELOW ; - A) ISSUE OF SHAFTS AT A PREMIUM WAS A COMMERC IAL DECISION AND DID NOT REQUIRE JUSTIFICATION UNDER ANY LAW CURRENTLY IN FORCE. B) SHARE PREMIUM IS A CAPITAL RECEIPT UNDER SEC 78 OF THE ACT. C) IT IS THE PREROGATIVE OF THE BOARD OF DIRECTORS OF THE COMPANY TO DECIDE THE PREMIUM AND THE WISDOM OF TH E SHAREHOLDERS TO SUBSCRIBE TO SHARES AT SUCH VALUE, ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 6 D) !N THE ABSENCE OF ANY RESTRICTIONS OF ANY SAW IN FORCE, REVENUE CANNOT QUESTION THE CHARGING OF THE PREMIUM. E) SINCE THE TRANSACTIONS HAVE BEEN DONE ENTIRELY THROUGH BANKING CHANNELS, THE PROVISI ONS OF SEC.68 CANNOT BE APPLIED. 8. P ROVISO TO SEC.68 OF THE ACT IT MAY ALSO BE POINTED OUT HERE THAT THE PROVISO TO SEC. 68 WHICH DEALS WITH THE SHARE CAPITAL ! AND SHARE APPLICATION MONEY CREDITED TO THE ACCOUNT OF A COMPANY (NOT BEING A COMPANY IN WHIC H PUBLIC IS SUBSTANTIALLY INTERESTED) HAS BEEN INSERTED BY THE FINANCE ACT 2012 W.E.F. 01.04.2013. THIS HOWEVER HAS LITTLE RELEVANCE IN THE CASE OF THE ASSESSEE AS THERE IS ABSOLUTELY NO UNCERTAINTY ABOUT TH E NATURE OF SOURCE OF THE AMOUNTS RECEIVED AS SHA RE CAPITA! AND SHARE APPLICATION MONEY. 9. ISSU E OF SHARES AT PREMIUM A DEVISE TO CLAIM TOSSES IN FUTURE THE LEARNED A. O . FURTHER GOES ON TO STATE IN THE ORDER THAT ISSUE OF SHARES AT PREMIUM IS A DEVICE BY THE COMPANIES TO CLAIM LOSSES IN SUBSEQUENT Y EARS BY WAY OF ISSUE OF BONUS SHARES. THE ORDER STATES THAT IN CASE OF ISSUE OF SHARES AT PREMIUM, THE TAX RETURNS OF THE SHAREHOLDERS FOR THE SUBSEQUENT TWO YEARS SHOULD ALSO BE CALLED FOR THIS IS NOTHING BUT A FIGMENT OF IMAGINATION OF THE LEARNED A.O. NO BONUS SHARES HAVE BEEN ISSUED BY THE COMPANY IN THE SUBSEQUENT YEARS TILL DATE AND NONE OF THE SHAREHOLDERS HAS TRANSFERRED/SOLD ANY OF THE SHARES HELD BY IT IN THE SUBSEQUENT YEARS TILL DATE. BASED ON THE ABOVE, IT CAN BE CONCLUDED THAT THERE IS NO VA LIDITY IN CLAIM MADE BY THE LEARNED A.O. THAT THESE ENTITIES PURCHASED SHARES AT PREMIUM TO GAIN SOME TAX ADVANTAGE. 10. COMPLIANCE WITH OTHER LAWS REGULATIONS A] ROC I T MAY ALSO BE POINTED OUT HERE, THAT DUE COMPLIANCE HAS BEEN MADE BY T HE ASSESSED W ITH THE OTHER APPLICABLE LAWS AND REGULATIONS WITH RESPECT TO THE ALLOTMENT OF SHARES. THE REQUIRED ROC FILINGS IN RESPECT OF THE ALLOTMENT OF SHARES HAVE BEEN DULY MADE FRONT TIME TO TIME. THESE SHARE ALLOTMENTS HAVE BEEN DUTY TAKEN ON RECORD BY THE ROC A ND NO OBJECTION/ADVERSE REMARK HAS BEEN RECEIVED IN T THIS REGARD. B ] FEMA FURTHER IN TERMS OF PROVISIONS OF FEMA, ISSUE OF SHARES BY A RESIDENT INDIAN COMPANY TO NON RESIDENT ENTITY CANNOT BE DONE AT A VALUE LESS THAN THE FAIR VALUE OF THE SHARE. THE FILI NGS TO BE MADE TO THE RBI IN RESPECT OF THE ALLOTMENT OF SHARES TO A NON - RESIDENT ENTITY INCLUDE A FAIR VALUATION REPORT BY A CHARTERED ACCOUNTANT THIS REPORT WAS DULY OBTAINED IN RESPECT OF ALLOTMENT OF 22,25,000 EQUITY SHARES ON 28. 0 3.2 0 12 TO FITCH INC U SA AT RS.13 . 33 PER EQUITY SHARE, INCLUSIVE OF PREMIUM OF RS 3 . 33 PER SHARE. THIS REPORT WAS PART OF THE DOCUMENTS SUBMITTED TO THE RBI AS EVIDENCE OF COMPLIANCE WITH FEMA PROVISIONS. COPY OF THE LETTER RECEIVED FROM RBI DATED 11. 09.2012 CONFIRMING THE FEMA COMPLIANCE IN ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 7 RESPECT OF THE SHARES ALLOTTED TO THE NON - RESIDENT CORPORATE ENTITY WAS ALSO SUBMITTED DURING THE HEARING. A COPY OF THIS REPORT DATED 2 0.03.2012 WHICH CERTIFIED THE FAIR VALUE OF THE SHARE TO BE RS.12.5 0 PER SHARE IS BEING FURNISHED SEPARA TELY AS ADDITIONAL EVIDENCE. 4 . FURTHER , ASSESSEE FILED ADDITIONAL EVIDENCE , LIKE CONFIRMATION LETTERS FROM THE INDIVIDUAL SHAREHOLDERS AND CONFIRMATION OF REMITTANCES, SHAREHOLDER AGREEMENTS AND VALUATION REPORT , AS FAR AS DOMESTIC AND FOREIGN INSTITUT IONAL INVESTORS, THE SAME WAS FORWARD ED TO THE LD. AO FO R HIS RESPONSE. ACCORDINGLY, LD. AO FILED THE REMAND REPORT , DATED 09/12/2016 AND A COPY OF THE SAME WAS ALSO GIVEN TO THE ASSESEE. IN RESPONSE , ASSESEE FILED REPLY TO THE REMAND REPORT , WHICH IS REP RODUCED BELOW: - 1. THE APPELLANT BEFORE YOUR HONOUR IS A LIMITED COMPANY CARRYING ON BUSINESS OF ADVISING INSTITUTIONAL INVESTORS, FINANCE AND TRADING. FOR THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD FILED THEIR RETURN OF INCOME ON 28.09.2012 DECLARING LOSS OF RS, 1,55,41,26 0 / - . THE RETURN OF THE APPELLANT WAS SELECTED FOR SCRUTINY BY THE DEPUTY COMMISSIONER OF INCOME TAX - 1(2){1), MUMBAI(A O ). IN RESPONSE TO NOTICES, THE APPELLANT APPEARS BEFORE THE AO FROM TIME TO TIME AND - FRIED VARIOUS DETAILS AND EX PLANATIONS. HOWEVER, DISREGARDING THE DETAILS AND EXPLANATIONS FURNISHED BY THE APPELLANT, THE AO HAS ASSESSED THE INCOME OF T HE APPELLANT AT A POSITIVE INCOME OF RS. 8,08,11,240/ - BY MAKING AN ADDITION OF RS. 9,63,52,500/ - ON ACCOUNT OF SHARE CAPITAL MONE Y. 2. A GGRIEVED BY THE SAME, THE APPELLANT IS IN APPEAL BEFORE YOUR HONOUR. 3. AT THE OUTSET, THE APPELLANT SUBMITS THAT T HE SHARE CAPITAL MONEY WAS RECEIVED FROM PARTIES AS PER STATEMENT ATTACHED WITH APPEAL MEMO - YOUR HONOUR WOULD APPRECIATE THAT OUT OF THE SE PARTIES , MAJOR AMOUNT WAS RECEIVED FROM TATA INVESTMENT CORPORATION LIMIT ED, HDFC INVESTMENTS LIMITED, BS E LIMITED AND FITCH GROUP, INC., USA. YOUR HONOUR WOULD APPRECIATE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT HAD FILED THE PAR TY WISE DETAILS OF SHARE CAPITAL WHICH ALSO INCLUDED THE PERMANENT ACCOUNT NUMBER OF SHARE APPLICANTS, COPIES OF BANK STATEMENTS OF COMPANIES HIGHLIGHTING THE CREDIT ENTRIES IN RESPECT OF SHARE CAPITA! AND COPIES OF ROC RECORDS ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 8 INCLUDING RETURN OF ALLOTMEN T T H E APPE LL ANT HAD THE REAFTER VIDE FETTER DATED 27 .01.2015 FILED COPIES OF ANN UAL ACCOUNTS OF BSE LIMITED, TATA INVESTMENT CORPORATION LIMITED AND HDFC INVESTMENTS LIMITED . YOUR HONOUR WOULD APPRECIATE THAT TH E INVESTMENTS MADE BY THEM IN TH E APPELLANT CO MPAN Y WERE DULY REFLECTED IN THEIR A NNUA L ACCOUNTS. HOW EVER, THE AO INSISTING THAT THE APPELLANT FURNISH COPIES OF BANK STATEMENTS OF THESE PARTIES. HOWEVER, AS THESE PARTIES WERE BIG ENTITIES, IT WAS NO T POSSIBLE FOR THE APPELLANT TO FURNISH THE BANK STA TEMENTS OF THESE PARTIES. TH E AO ACCORDINGLY ADDED THE ENTIRE SHARE CAPITA L AS THE INCOME OF THE APPELLANT. 4. THE APPELLANT HAD FILED AN APPLICATION UNDER RULE 46A WHEREIN IT WAS POINTED OUT THAT TH E AO WAS IN A HURRY TO COMPLETE THE ASSESSMENT IN AS MUCH &S HE PASSED THE ASSESSMENT ORDER ON 28.01.2015 I.E. WITHIN SEVENTEEN DAYS F RO M THE DATE FIXED FOR }HO FIRST EFFECTIVE HEARING, THE APPELLANT HAS ACCORDINGLY FILED THE CONFIRMATION FROM THE INDIVIDUAL AND CORPORATE SHAREHOLDERS. AS REGARDING FITCH GR OUP INC., USA, THE APPELLANT HAD TILED THE FOREIGN INWARD REMITTANCE CERTIFICATE AND SHAREHOLDERS AGREEMENT . AS REGARDS BSE LIMITED, TATA INVESTMENT CORPORATION L IMITED AND AXIS BANFF LIMITED, T HE APPELLANT FILED CONFIRMATION SETTERS ALONG WIT H SHARES SUBS CRIPTION AND SHAREHOLDERS AGREEMENT 5. YOUR HONOUR WOULD APPRECIATE THAT THE AO HAS IN THE REMAND REPORT STALED THAT T HE APPELLANT WAS GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE ALL TH E DOCUMENTARY EVIDENCES DURING T HE ASSESSMENT PROCEEDINGS TO SUPPORT I TS STAND. THE AO HAS THEREAFTER REPRODUCED THE PROVISIONS OF RULE 46A AND STATED THAT NONE OF TH E CONDITIONS GET FULFILLED IN THE PRESENT CASE. T HE AO HAS ACCORDINGLY STA TED THAT THE ADDITIONAL EVIDENCES SHOULD NOT B E ADMITTED. 6. IN THIS REGARD, THE APPELLANT SUBMITS THAT THE AO H AS HIMSELF THE REMAND REPORT STATED THAT AFTER THE INITIAL SUBMISSION ON 13.01.2015, THE APPELLANT WAS GIVEN TIME TILL THE PASSING OF THE ORDER I,E.2 9 .01.2015, YOUR HONOUR WOULD APPR ECIATE THAT WITHIN THESE SIXTEEN DAYS, THE APPELLANT HAD FILED WHATEVER EVIDENCES WERE THERE IN THEIR POSSESSION AND WHICH ACCORDING TO THEM WOULD HELP IN ESTABLISHING THE GENUINENESS OF THE SHARE APPLICATION MONEY. YOUR HONOUR WOULD APPRECIATE THAT IN SPITE OF BEING GIVEN ONLY SIXTEEN DAYS , THE AP PELLANT HAS FILED THE BALANCE SHEETS OF BSE LIMITED, TATS INVESTMENT C ORPORATION LIMITED, HDFC INVESTMENTS LIMITED END AXIS BANK LIMITED. YOUR HONOUR WOULD APPR ECIATE THAT FROM THE BALANCE SHEETS OF THESE CONCERNS THAT THESE COMPANIES HAVE REFLECTED THE IN VESTMENT MADE BY THEM IN THE APPELLANT COMPANY. FURTHER, THE APPELLANT HAD ALSO FILED THE PERMANENT ACCOUNT NUMBER OF A LL THE SHAREHOLDERS. THE AO HAVING BEEN INFORMED THAT IT WAS NOT POSSIBLE FOR THE APPELLANT TO OBTAIN THE BANK STATEMENTS OF THESE LIMITE D COMPANIES , SHOULD HAVE CA LL ED FOR THE SAME FROM THE PARTIES, IF HE CONSIDERED FT NECESSARY. YOUR HONOUR WOULD APPRECIATE THAT THE HON'BLE SUPREME COURT HAS IN THE CASE OF CIT V ORISSA CORPORATION (P) ) LTD . IN THIS CONNECTION, THE HONBLE HIGH COURT HAS H ELD AS UNDER. ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 9 '13. IN IBIS CASE, THE ASSESSES BAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS, IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME - TAX ASSESSES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVE NUE, APART FROM ISSUING NOTICES UNDER S, 131 AT THE INSTANCE OF THE ASSESSES, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EX A MINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE & CREDITWORTHY OR WERE SUCH WHO COU LD ADVANCE THE ALLEGED TEENS; THERE WAS NO EFFORT MADE TO PURSUE THE SO - CALLED A LLEGED CREDITORS, IN THOSE CIRCUMSTANCES, THE ASSESSE E COULD NOT DO ANYTHING FURTHER. !N THE PREMISES, IF THE TRIBUNAL CA ME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED T HE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. !F THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES.' 7. IN THE PRESENT CASE, THE APPELLANT HAD FURNISHED THE PERMANENT ACCOUNT NUMBERS OF THE LENDERS ALONG WITH THE NAMES AND ADDRESSES. THE AO HAS NOT EVEN ISSUED NOTICES U/ S .133 ( 6) OR SUMMONS U/S,131 TO VERIFY THE VERACITY OF THE CREDITORS. THE APP ELLANT H AVING FURNISHED THE NAMES , ADDRESSES AND PERMANENT ACCOUNT NUMBERS HAD DISCHARGED THE INITIAL ONUS CAST ON THEM. HE NCE , THE ONUS THEREAFTER SHIFTED ON THE A O , WHICH HE FAILED TO DISCHARGE . 8. YOUR HONOUR WOULD APPRECIATE THAT THE ADDITIONAL EVIDENCES WERE FILED IN SUPPORT OF THEIR CLAIM TO PROVE THE GENUINENESS OF THE & SHARE APPLICATION MONEY. 9. ACCORDINGLY, THE APPELLANT PRAYS THAT THE ADDITIONAL EVIDENCES MAY BE ADMITTED AND THE ISSUE MAY BE DECIDED AS PER LAW . 10. AS REGARDS MERITS OF THE CASE, THE AO HAS ON THE LAST PAGE OF THE REMAND REPORT STATED THAT SAMPLE VERIFICATION OF THE DOCUMENTS HAS BEEN DONE. ON THE BASIS OF THE SAID DOCUMENTS, THE AO HAS STATED THAT THESE DOCUMENTS MATCH WITH THOSE SUBMITTED BY THE ASSESSEE VIDE SUBMISSION DA TED 20.01.2015 . THE AO HAS ALSO DRAWN YOUR HONOUR'S ATTENTION THAT THE APPELLANT WAS ASKED TO PRODUCE THE BANK STATEMENTS OF THE PARTIES DURING THE ASSESSMENT PROCEEDINGS WHICH HAVE NOT BEEN PROVIDED TILL DATE . 11. AS REGARDS SHARE VALUATION, THE AO HA S STATED THAT SHARE VALUE WAS REPORTED TO BE RS.12.50 PER SHARE AS AGAINST WHICH, SHARES HAVE BEEN ISSUED TO A FEW PARTIES AT RS.13.33 PER SHARE . YOUR HONOUR WOULD APPRECIATE THAT THE APPELLANT WAS IN A POSITION TO RECOVER SOME EXTRA PREMIUM WHICH IT HAS D ON& END ACCORDINGLY, NO ADVERSE INFERENCE IS CALLED FOR ON THAT ACCOUNT. THE AO HAS FINALLY STATED THAT YOUR HONOUR MAY DECIDE THE ISSUE ON MERITS. 12. A PERUSAL OF THE DOCUMENTS FURNISHED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS AS ALSO AS ADDITIONAL EVIDENCES BEFORE YOUR ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 10 HONOUR, YOUR HONOUR WOULD APPRECIATE THAT THE APPELL ANT HAS FIFED CONFIRMATION OF AL L THE PARTIES RESIDING IN INDIA . APART FROM TH E SAME, THE APPELLANT HAD FILED SHARE SUBSCRIPTION AND SHARE CAPITAL AGREEMENT WITH THE DOMESTIC CORPOR ATE INVESTORS VIZ. BSE LIMITED, TATA INVESTMENT CORPORATION LIMITED, HDFC INVESTMENTS LIMITED END AXIS BANK LIMITED. FURTHER, THE APPELLANT HAS ALSO FIFED COPIES OF ANNUAL ACCOUNTS OF BSE LIMITED, TATA INVESTMENT CORPORATION LIMITED AND HDFC INVESTMENTS LI MITED WHICH SHOWS THE INVESTMENTS MADE BY THEM IN THE APPELLANT COMPANY. YOUR H ONOUR WOULD APPRECIATE THAT IF T HE AO HAD ANY DOUBT REGARDING GENUINENESS OF THESE PARTIES, THE AO SHOULD HAVE SUMMONED T HE SAID PARTIES AND SHOULD HAVE VERIFIED THEIR GENUINENE SS, THE AO NOT HAVING DONE SO AND THE APPELLANT HAVING D ISCHARGED THE PRIMARY ONUS OF PROVING T HE IDENTITY BY WAY OF CONFIRMATION LETTER, THE CAPACITY BY WAY OF THEIR ANNUAL ACCOUNTS AND GENUINENESS BY WAY OF SHARE SUBSCRIPTION AND SHAREHOLDER AGREEMENT, T HE ONUS THEREAFTER LIED WITH THE AO TO SHOW THE APPELLANT STATE OF AFFAIRS WERE & NOT TRUE. 13. AS REGARDS INVESTMENT BY FITCH GROUP INC., THE APPE LL ANT HAS FORWARDED THE CERTIFICATE OF FOREIGN INWARD REMITTANCE ALONG WITH SHARE SUBSCRIPTION AND SHAREHOL DERS AGREEMENT. YOUR HONOUR WOULD APPRECIATE THAT FROM THE FOREIGN INWARD REMITTANCE CERTIFICATE , THE CERTIFICATE SPECIFIES THE NAME AND ADDRESS OF THE REMITTER I.E. FITCH GROUP INC. AND PURPOSE OF REMITTANCE AS 'TOWARDS EQUITY SUBSCRIPTION'. THE GENUINENE SS OF THE SAME IS A/SO PROVED BY THE SHARE SUBSCRIPTION AND SHAREHOLDERS AGREEMENT. 14. YOU R HONOUR WOULD APPRECIATE THAT T HE APPE LLANT HAS DISCHARGED THE PRIMARY ONUS CAST ON IT AND IF THE AO NEEDED ANY OTHER DETAILS OR WANTED TO VERIFY ANYTHING FURTH ER, IT WAS FOR HIM TO CA LL FOR NECESSARY EVIDENCES FROM THE CONCERNED PARTIES EITHER BY SENDING SIMPLE LETTER OR BY ISSUING SUMMONS U/S. 131. THE AO NOT HAVING DONE SO, NO ADVERSE INFERENCE CAN B E CALLED FOR ON THAT ACCOUNT. 15. YOUR HONOUR WOULD APPREC IATE THAT VARIOUS DECISIONS INCLUDING THAT OF THE HONBLE SUPREME COURT HAVE HELD THAT WHERE THE ASSESSES HAS DISCHARGED PRIMARY ONUS, THE ONUS THEREAFTER WAS ON THE AO TO DISPROVE THE SAME . RELIANCE IN THIS REGARD IS PLACED ON THE FOLL OWING DECISIONS: A) CI T V. ORISSA CORPORATION P. LTD. (198 6 ) 159 ITR 8 6 (SC) - WHERE ASSESSEE HAS GIVEN THE CORRECT NAME AND ADDRESS OF THE A LL EGED CREDITORS, IT COULD BE SAID THAT HE HAS DISCHARGED HIS ONUS TO PROVE THE GENUINENESS OF CREDITS IN HIS ACCOUNTS AND UNLESS THE REV ENUE AUTHORITY ISSUES NOTICE TO TEST THE GENUINENESS OF THE TRANSACTION OR THE CAPACITY OF THE CREDITOR TO PAY, THE AMOUNT CANNOT BE ADDED IN THE HANDS OF THE ASSESSES. B) CITV.NOORJEH AN(SMT P. K ) (1999) 237 I TR 570 ( SC) - THE PHRASEOLOGY OF SECTION 69 IN CREA TING THE LEGAL FICTION EMPLOYS THE WORD 'MAY' AND NOT SHALL . THE UNSATISFACTORINESS S OF THE EXPLANATION DOES NOT AND NEED NOT, AUTOMATICALLY, RESULT IN DEEMING THE VALUE OF THE ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 11 INVESTMENT TO BE THE INCOME OF THE ASSESSEE. COMMENT - EVEN SECTION 68 USES T HE WORD 'MAY . C) CIT V. VRINDAVAN FARMS (P) LTD, [WWW.ITATON LINE.ORG] - IF THE IDENTITY AND OTHER DETAILS OF THE SHARE APPLICANTS ARE AVAILABLE , THE SHARE APPLICATION MONEY CANNOT BE TREATED AS UNDISCLOSED INCOME IN THE HANDS OF THE COMPANY. THE ADDI TION, IF AT ALL, SHOULD BE IN THE HANDS OF THE APPLICANTS IF THEIR CREDITWORTHINESS CANNOT BE PROVED. D) C I T V. CACMET PACKAGING (INDIA) P. LID. (2014) 367 ITR 217 (ALL) - GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF APPLICATION PROVED . AMOUNT NOT ASSESSABLE. E) CI T V. SACHITEL COMMUNICATIONS P. LTD. (2014) 227 TAXMAN 219 (GUJ) - WHERE IDENTITY AND CAPACITY PROVED, ADDITION WAS DELETED. F) CIT V. SAM TOBACCO INDIA LTD. (2014) 222 TAX MAN 58 (A LL ) - WHERE IN SUPPORT OF RECEIPT OF SHARE APPLIC ATION MONEY ASSESSEE PRODUCED NAMES , ADDRESSES AND PAN OF DEPOSITORS, IT WAS SUFFICIENT TO PROVE THEIR IDENTITY AND CREDITWORTHINESS, G) CIT V. NISHAN INDO COMMERCE LTD. (2014) 101 DTR 413 (CAT) - ONCE IDENTITY DISCLOSED DELETION WAS JUSTIFIED, H) CI T V. NIPUAN AUTO P. LTD, (2014) 101 DTR 413 (DEL.) - ASSESSEE DIVERGING INITIAL BURDEN, DELETION OF ADDITION JUSTIFIED, I) I TO V, NEELKANTH FINBUI L D LTD, (2015) 40 ITR (TRIB) 665 (DE L ) - EVEN IF THE SH ARE CAP ITAL IS BOGUS, NO ADDI TION CAN BE MADE IN A SSESSEE'S H ANDS IF IDENTITY OF SHAREHOLDER IS ESTABLISHED. ASSESSEE IS NOT REQUIRED TO SHOW SOURCE OF SHAREHOLDER'S FUNDS . 16 . IN VIEW OF THE ABOVE, THE APPELLANT PRAYS MINE ADDITION MADE BY THE AO OF RS.9,63,52,500/ - MAYBE DENTED,' 5 . AFTER CONSIDERING , THE REMAND REPORT AND SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) OBSERVED THAT MAJOR INVESTORS IN THE ASSESS EE COMPANY ARE REPUTED NATIONAL, INTERNATIONAL INVESTORS AND FINANCIAL INSTITUTIONS APART FROM THE PROMOTERS AND THEIR FAMILY MEMBERS, THE SUBSCR IB ERS TO THE SHARES ARE NOT ONLY FILED THEIR INCOME - TAX RETURNS , BUT ALSO THEIR BALANCE SHEET , AS WELL AS BANK ACCOUNTS. FURTHER, HE HAS LISTED THE INFORMATION SUBMITTED BY THE ASSESSEE RELATING TO THE INVESTORS IN THE COMPANY, WHICH ARE GIVEN BELOW: (I) M/S. BSE LIMITED HAVE INVESTED RS.4 ,00,00,000 / - , OUT OF WHICH RS.3 ,00,07,500 / - HAS BEEN ADDED BY THE AO U/S.98. M/S.BSE LIMITED IS A REPUTED COMPANY WELL - KNOWN THROUGHOUT THE COUNTRY. ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 12 IT IS HAVING PAN: AACCB6672L AND FILING ITS REGULAR INCOME - TAX RETURN WITH DCI T.CIR,2(1 ) (1) , MUM BAI . THE MONEY WAS RECEIVED FROM BSE LIMITED THROUGH RTGS, ICICI BANK (ESCROW) ON 31 . 12.2011 AND IT WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE - ICICI BANK, NARIMAN POINT BRANCH, CURRENT ACCOUNT NO,000405074138. (II) M/S. TATA INVESTME NT CORPORATION LTD. HAVE INVESTED RS. 1,33,30,0007 - , OUT OF WHICH RS,1, 00,00,000 / - HAS BEEN ADDED BY THE AO U/S.68. M/S TATA INVESTMENT CORPORATION LTD. IS A REPUTED COMPANY WELL - KN OWN THROUGHOUT THE COUNTRY. IT I S HAVING PAN: AAACT4120F AND FILING ITS REG ULAR INCOME - TAX RETURN WITH DCIT.CIR 2(3), MUMBAI. THE MONEY WAS RECEIVED FROM TATA INVESTMENT CORPORATION LTD. THROUGH CHEQUE NO.293182 - CATHOLIC SYRIAN BANK LTD., FORT BRANCH ON 16 . 09 . 2012 AND IT WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE - ICICI B ANK. NARIMAN POINT BRANCH, CURRENT ACCOUNT NO.00040507413 8 . (III) M/S.HDFC INVESTMENT LTD. HAVE INVESTED RS,1,33,30,000/ - , OUT OF WHICH RS . 1,00,00,000 / - HAS BEEN ADDED BY THE AO U/S,68. M/S.HDFC INVESTMENT LTD. IS A REPUTED COMPANY WELL - KNOWN THROUGHOUT THE COUNTRY. IT IS HAVING PAN: AAACH1462L AND FILING ITS REGULAR INCOME - TAX RETURN WITH C IR. 1(1)(10) , MUMBAI. THE MONEY WAS RECEIVED FROM HDFC INVESTMENT LTD. THROUGH CHEQUE NO.979559 - HDFC BANK ON 23 . 11 . 2011 AND I T WAS CREDITED TO THE BANK ACCOUNT OF T HE ASSESSEE - ICICI BANK, NARIMAN POINT BRANCH, CURRENT ACCOUNT NO.00040507413 8 . (IV) M/S.FITCH GROUP INC HAVE INVESTED RS.2,96.59,250/ - , OUT OF WHICH RS.2,25,50,000/ - HAS BEEN ADDED BY THE AO U/S.68. M/ S .FITCH GROUP INC IS A WELL REPUTED INTERNATIONAL INVESTOR SITUATED AT ONE STATE STREET PLAZA, NEW YORK, NY 10004. USA. THE MONEY WAS RECEIVED FROM M/S.FITCH GROUP INC THROUGH RTGS, CHASE BANK ON 23,7.2012 AND IT WAS CREDITED TO THE BANK ACCOUNT OF THE - ICICI BANK, BANK, NARIMAN POINT BRANCH, CURRENT ACCOUNT 105074138. (V) M /S. AXIS BANK LIMITED HAVE INVESTED RS.1,33.30, 000/ - , OUT OF WHICH RS.1 ,33, 30,000/ - HAS BEEN ADDED BY THE AO U/S.68. M/S. AXIS BANK LIMITED IS A WELL REPUTED BANK WELL - KNOWN THROUGHOUT ME COUNTRY. IT IS HAVING PAN: AAACU2424K AND FIFING ITS REGULAR INCOME - TAX RETURN WITH CIR,1(1)(1), MUMBAI THE MONEY WAS RECEIVED FROM AXIS BANK LIMITED THROUGH RTGS, AXIS BANK ON 30.12.2011 AND IT WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE - AXIS BANK, NARIMAN BANK, CURRENT ACCOUNT NO.911020001 938527 . ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 13 (VI) MR. AMIT TANDON HAS INVESTED RS,73,96,00 0 / - , OUT OF WHICH RS.73,96,000/ - HAS BEEN ADDED BY THE AO U/S.6S. MR. AMIT TANDON IS THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY. HE IS HAVING PAN: AADPT7741C AND IS REGULARLY ASSESSED WITHCIR 3( 1)(1 ), MU MBAI FOR A LONG PERIOD. THE MONEY WAS RECEIVED THROUGH BANK TRANSFER FROM ICICI BANK IN FOUR INSTALLMENTS ON 20.05.2011, 23.11.2011, 06.02.2012 AND 23.03.2012 AND THE TRANSACTION LA DULY REFLECTED IN THE ACCOUNTS OF MR AMIT TANDON AND THE ASSESSEE COMPANY. THE SAME WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE - ICICI BANK, NARIMAN POINT BRANCH, CURRENT ACCOUNT NO.000405074138. (VII) M RS. ANSHU TANDON HAS INVESTED RS.1,000/ - , OUT OF WHICH RS.1,000/ - HAS BEEN ADDED BY THE AO U/S. 8 MRS. ANSHU TANDON IS THE WIFE OF SHRI AMIT TANDON. SHE IS HAVING PAN: AAGPT9630F AND IS REGULARLY ASSESSED WITH WARD - 21 (1)(4) , MUMBAI FOR A LONG PERIOD. THE MONEY WAS RECEIVED THROUGH BANK TRANSFER FROM ICICI BANK ON 19.07,2011 AND THE TRANSACTION IS DULY REFLECTED IN THE ACCOUNTS OF MRS. ANSHU TANDON AND THE ASSESSEE COMPANY. THE SAME WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE - ICICI BANK, NARIMAN POINT BRANCH, CURRENT ACCOUNT N 0 .D004 050 7413 8 . (VIII) MS. ANURATI TANDON HAS INVESTED RS.1 ,000/ - . OUT OF WHICH RS. 1,000/ - HAS BEEN ADDED BY THE AO U/S.68, MS. ANURATI TANDON IS THE DAUGHTER OF SHRI AMIT TANDON. SHE IS HAVING PAN: AHDPT8515H AND IS REGULARLY ASSESSED WITH WARD - 5(1)(1), MUMBAI FOR A LONG PERIOD. THE MONEY WAS RECEIVED THROUGH CHEQUE NO,7 YES BANK ON 21.07,2011 AND IT WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSES ICICI BANK. NARIMAN POINT BRANCH, CURRENT ACCOUNT NO.000405074138. (IX) ANIL SINGHVI HAS INVESTED RS . 25,50, 000 / - , OUT OF WHICH RS.25,50.000/ - HAS TEEN ADDED BY THE AO UTE.68. MR. ANIL SINGHVI IS A RETIRED CEO OF AMBUJA CEMENT HE IS HAVING PAN: AABPS5805J AND IS REGULARLY ASSESSES WITH CIRCLE - .3(2 )( 1). MUMBAI FOR ALONG PERIOD. THE MONEY WAS RECEIVED THROUGH BANK TRANSFER FROM IC1CI BANK IN TWO INSTALLMENTS ON 31.03.2011 AND 12.07.2011. THE SAME WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE - ICICI BANK, NARIMAN POINT BRANCH, CURRENT ACCOUNT NO.000405074138. (X) SMT. NISHI SINGHVI HAS INVESTED RS.50,000/ - . OUT OF WHICH RS.50.000/ - HAS BEEN ADDED BY THE AO U/S.68. SMT, NISHI SINGHVI IS THE WIFE OF SHRI ANIL SINGHVI. SHE IS HAVING PAN: AIQPS4G28A AND IS REGULARLY ASSESSED WITH CIRCLE - 18(1), MUMBAI FOR A LONG PERIOD. THE MONEY WAS RECEIVED THROUGH CHEQUE NO.385248 - ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 14 HDFC BANK ON 21 . 07.2011 AND IT WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESEE - ICICI BANK. NARIMAN POINT BRANCH, CURRENT ACCOUNT NO.00040507413 8 . (XI) MR, RAJAN JAYAKUMAR HAS INVESTED RS.1 0,20,745 / - . OUT OF WHICH RS,7,65,000 / - HAS BEEN ADDED BY THE AO U/S.68, MR. RAJAN JAYAKUMAR IS THE EXECUTIVE DIRECTOR OF THE ASSESSEE COMPANY. HE IS HAVING PAN; ACUPJ3514E AND IS REGULARLY ASSESSED WITH INCOME TAX OFFICE, NON CORPORATE CIRCLE, NUNGAMBAKKAM HIGH ROAD, CHENNAI - 600 034. THE MONEY WAS RECEIVED IN TWO INSTALLMENTS (I) RS.1 , 000/ - THROUGH CHEQUE NO.154456 - HDFC BANK ON 21 . 07.2011 AND (II) RS,7,65, 000 / - THROUGH CHEQUE NO.643523 - PUNJAB NATIONAL BANK ON 26.03.2012. THE SAME WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE - ICICI BANK, NARIMAN POINT BRANCH, CURRENT ACCOUNT NO.000405074138. (XII) MRS. SUDHA JAYAKUMAR HAS INVESTED RS.1 ,000 / - , OUT OF WHICH RS,1 , 000/ - HAS BEEN ADDED BY THE AO U /S.68 . MRS. SUDHA JAYAKUMAR IS THE WIFE OF MR. RA]AN JAYAKU M AR, SHE IS HAVING PAN: ADHPJ7017L AND IS REGULARLY ASSESSED WITH INCOME TAX OFFICE, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI. THE MONEY WAS RECEIVED THROUGH CHEQUE N O.218531 - HDFC BANK ON 21 . 07.2011 AND WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE - ICICI BANK, NARIMAN POINT BRANCH. CURRENT ACCOUNT NO.000405074138. 6 . FURTHER, HE OBSERVED WITH REGARD TO DETAILS FILED BY THE ASSESEE ARE AS BELOW: - 8.2 . FROM PE RUSAL OF THE DETAILS FILED BY THE APPELLANT, IT CAN BE CONCLUDED THAT: - (1) COMPLETE DETAILS OF SHAREHOLDERS, NAME, ADDRESS, PAN, AMOUNT OF SHARE SUBSCRIPTION WERE FURNISHED BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS. (2) ALL SUBSCRIBERS TO SHARE CAPITAL PAID THEIR SHARE SUBSCRIPTION BY CHEQUE OR BANK TRANSFER. SHARE SUBSCRIPTION WAS RECEIVED IN CURRENT B ANK ACCOUNTS OF THE APPELLANT (ICI CI BANK, NARIMAN POINT BRANCH, CURRENT ACCOUNT NO: 00405074138 AND AXIS BANK, NARIMAN BANK, CURRENT ACCOUNT NO - .9 11 020001938527 ). THE CREDITS TOWARDS SUBSCRIPTION OF SHARES WERE DULY TRACED IN THE BANK STATEMENTS OF THE APPELLANT COMPANY AND WERE NOT CASH DEPOSITS. COPIES OF BANK STATEMENTS OF THE APPELLANT TRACING SHARE SUBSCRIPTION RECEIVED AND NAMES OF RESPECTIVE SHAREHOLDERS WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 15 (3) BANK STATEMENT OF ONE OF THE INDIVIDUAL INVESTORS, MR. AMIT TANDON, WHO MADE THE LARGEST INVESTMENT AMONGST THE INDIVIDUALS TO SUBSCRIBE 7,39,600 EQUITY SHARES, WAS SUBMITTED DURING ASSESS MENT PROCEEDINGS. (4) THE AUDITED BALANCE SHEETS OF CORPORATE SHAREHOLDERS (THE BSE LIMITED, TATA INVESTMENT CORPORATION LTD., HD FC INVESTMENTS), WHICH ARE LARGE FINANCIAL INSTITUTIONS, WERE ALSO FURNISHED DURING THE ASSESSMENT PROCEEDINGS AND SUCH BALANC E SHEETS REFLECT THE INVESTMENT MADE IN SHARE CAPITAL OF THE APPELLANT. CREDITWORTHINESS OF THESE INSTITUTIONS AND SOURCES OF THEIR INVESTMENTS COULD HAVE BEEN ESTABLISHED BY REVIEW OF THEIR BALANCE SHEET AND CASH FLOW STATEMENTS FOR THE YEAR RESPECTIVELY. (5) DETAILS OF SHARE SUBSCRIPTION RECEIVED (GIVING DETAILS OF SHAREHOLDERS NAME, ADDRESS, PAN, ASSESSMENT JURISDICTION, AMOUNT OF SHARE SUBSCRIPTION, CHEQUE DETAILS, DETAILS OF APPELLANT'S BANK ACCOUNT) WERE ALSO FURNISHED. 8.3 APART FROM IT, APPELLAN T ALSO SUBMITTED THE FOLLOWING DETAILS: (1) RETURN OF ALLOTMENT FILED WITH REGISTRAR OF COMPANIES IN RESPECT OF SHARE OF ALLOTMENT TO ABOVE SHAREHOLDERS ALONG WITH BOARD RESOLUTIONS WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. DUE COMPLIANCE HAS BEE N MADE BY THE APPELLANT WITH THE OTHER APPLICABLE LAWS AND REGULATIONS WITH RESPECT TO THE ALLOTMENT OF SHARES. THE REQUIRED ROC FILINGS IN RESPECT OF THE ALLOTMENT OF SHARES HAVE BEEN DULY MADE FROM TIME TO TIME. THESE SHARE ALLOTMENTS HAVE BEEN DULY TAKE N ON RECORD BY THE ROC AND NO OBJECTION/ADVERSE REMARK HAS BEEN RECEIVED IN THIS REGARD. (2) COPY OF THE LETTER RECEIVED FROM RBJ DATED 11.09 . 2012 CONFIRMING THE FEMA COMPLIANCE IN RESPECT OF THE SHARES ALLOTTED TO THE NON - RESIDENT CORPORATE ENTITY ( FITCH GROUP INC, USA) WAS ALSO SUBMITTED DURING THE HEARING. (3) ADDITIONAL EVIDENCES SUBMITTED DURING THE COURSE OF APPEAL HEARING. THE CONFIRMATIONS WERE NOT IN ITS POSSESSION AT THE TIME OF ASSESSMENT HEARINGS AND ACCORDINGLY THE SAME COULD NOT BE FILED WITH THE AO. AS REGARDS THE FOREIGN INWARD REMITTANCE CERTIFICATE AND SHARE SUBSCRIPTION AND SHAREHOLDER AGREEMENTS, THE APPELLANT DID NOT REALIZE AT THE RELEVANT POINT OF TIME THAT THE SAME MAY BE ALSO HELPFUL TO SUPPORT ITS STAND. 8 .4 DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, ADDITIONAL EVIDENCES WERE FURNISHED WHICH WERE REQUIRED FOR FINDING THE TRUE NATURE OF THE TRANSACTIONS. SINCE CONSIDERATION OF THE ADDITIONAL EVIDENCES WERE NECESSARY FOR FINDING THE TRUE NATURE OF TRANSACTIONS, THEREFO RE ADDITIONAL EVIDENCES WERE ADMITTED AND FORWARDED TO THE AO FOR HIS COMMENTS. THE REMAND REPORT RECEIVED FROM THE AO HAS BEEN DISCUSSED IN PARA 6 OF THIS ORDER . ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 16 7 . AFTER CONSIDERING , THE ABOVE OBSERVATIONS LD. CIT(A) HAS DELETED THE ADDITIONS U/S 68 W ITH THE FOLLOWING OBSERVATIONS: - 8.6 IN THE INSTANT CASE, HAVING REGARD TO THE DOCUMENTS FURNISHED BEFORE ME. J AM CONVINCED ABOUT THE IDENTITY OF THE INVESTOR, GENUINENESS OF TRANSACTION ALONG WITH CREDIT - WORTHINESS OF THE SHAREHOLDERS AND THE SHARE SU BSCRIPTION MONEY PAID BY THEM DULY REFLECTED IN THE BANK ACCOUNT OF THE APPELLANT ASSESSEE COMPANY. THE AO IN HIS REMAND REPORT HAS ALSO CONFIRMED THAT HIS EXAMINATION OF THE DETAILS IN THE DOCUMENTS SUBMITTED AS ADDITIONAL EVIDENCE MATCH WITH THOSE SUBMIT TED BY THE ASSESSEE VIDE SUBMISSION DATED 20.012015 DURING THE SCRUTINY PROCEEDINGS. HENCE, THE FACTS DO NOT WARRANT AN ADDITION UNDER SECTION 68 OF THE ACT. FURTHER, IN THE CONTEXT OF SHARE CAPITAL RECEIVED FROM ALLEGED BOGUS SHAREHOLDERS, THE HON'BLE SUP REME COURT HAS UNEQUIVOCALLY LAID DOWN THE LEGAL POSITION AS TO WHETHER ADDITIONS CAN BE MADE UNDER S ECTION 6S OF THE ACT. AS UNDER I N CASE OF LOVE LY EXPORTS (P) LTD. 21 6 C TR19 5 'IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH /AW BUT THIS AMOUNT OF SHARE MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOME UNDER SECTI ON 68 OF THE ASSESSE COMPANY' 8.7 FROM THE DETAILS FILED, THE APPELLANT HAD NOT ONLY PROVED THE GENUINENESS OF TRANSACTION AND IDENTITY OF THE INVESTORS BUT IT H AS ALSO PROVED THE CREDITWORTHINESS OF INVESTORS. IN VIEW OF THESE FACTS AND RESPECTFULLY FOLL OWING VARIOUS JUDGMENTS OF HON'BLE I TAT AND HON'BLE COURTS AS DISCUSSED IN PARA 8.5, APPEAL OF THE ASSESSEE IS ALLOWED AND ADDITION OF RS,9,63,52,500 / - MADE BY THE AO U/S.68 OF THE ACT IS DELETED. 8 . AGGRIEVED WITH THE ABOVE ORDER, REVENUE IS IN APPEAL B EFORE US, RAISING THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS. 9,63,52,500/ - MADE U/S.68 OF THE I.T.ACT, EVEN WHEN THE ASSESSEE FAILED TO S UBMIT THE B ANK DETAILS IN RESPECT OF CREDITORS AND THEREBY THE FAILURE TO ESTABLISH THE CREDITWORTHINESS OF THE SHARE APPLICANTS AND GENUINITY OF THE TRANSACTION CONTINUED? ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 17 9. BEFORE US, THE LD. DR SUBMITTED THAT AS PER SECTION 68 ASSESSEE HAS TO EXPLAIN , THE NATURE AND SOURCE OF THE INVESTMENT TO THE SATISFACTION OF THE AO, IN THIS CASE ASSESSEE HAS NOT SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF THE ABOVE TRANSACTIONS . FURTHER , HE SUBMITTED THAT ASSESEE HAS NOT EXPLAIN ED, THE CREDIT WORTHINESS OF THE INVESTORS IN THE SHARES. FURTHER, HE SUBMITTED THAT ASSESEE HAS NOT FILED PROPE R PAPERS, IN RELATION TO CREDIT WORTHINESS OR BANK STATEMENTS , AS CALLED FOR BY THE AO , EVEN IN REMAND PROCEEDINGS, HE BROUGHT TO OUR NOTICE PARA 8.7 OF THE LD.CIT (A) AND SUBMIT TED THAT LD. CIT(A) HAS COME TO THE CONCLUSION THAT GENUINENESS IDENTITY AND CREDIT WORTHINESS OF THE INVESTORS WERE EXPLAINED BY THE ASSESSEE , BUT ASSESSEE HAS NOT EXPLAIN ED THE SAME BEFORE THE AO. THEREFORE, HE PRAYED THAT THIS ISSUE MAY BE REMITTED BACK TO THE AO , AS THE ASSESEE HAS NOT FILED ANY BANK STATEMENTS. 10 . ON THE OTHER HAND , LD. AR BROUGHT TO OUR NOTICE , THE DETAILS OF INVESTMENT MADE BY 11 INVESTORS AND SUBMITTED THAT MAJORITY OF THE INVESTMENT S MADE BY THE FINANCIAL INSTITUTIONS AND INTE RNATIONAL INVESTORS AND OTHER INVESTMENTS MADE BY THE PROMOTERS AND THEIR RELATIVES. HE SUBMITTED T HAT DURING REMAND PROCEEDINGS, ASSESSEE HAS FILED CONFIRMATION FROM ALL INVESTORS AND INVESTMENT AGREEMENT AND COPY OF THEIR RETURN OF INCOME AND ANNUAL ACC OUNTS , AS FAR AS INSTITUTIONAL INVESTORS, HE SUBMITTED THAT ALL THE CONFIRMATION AND OTHER INFORMATION , WHICH WAS SUBMITTED BEFORE THE LD. AO AND LD.CIT (A) ARE SUBMITTED IN PAPER BOOK AND FURTHER , HE SUBMITTED THAT ASSESSEE HAS MADE SHARE VALUATION BEFORE ISSUE OF SHARES, THE SAME IS PLACED IN PAPER BOOK PAGES 428 TO 435 OF THE PAPER BOOK ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 18 AND SUBMITTED THAT THE SHARES WERE VALUED BY A REPUT ED SHARE VALUER AND THE SHARE WAS VALUED , AS PER THE FA I R MARKET VALUE OF THE SHARES , AS ON THE DATE OF VALUATION STO OD AT 13.92 PER SHARE , HOWEVER VALUER HAS VALUE D THE SHARE AT RS. 12.5 / - AFTER DISCOUNTING AT 10% , AS THE COMPANY BEING UNLISTED COMPANY . H OWEVER ASSESSEE ADOPTED FOR THE ISSUE OF SHARE S @13.33 PER SHARE . FURTHER , HE SUBMITTED THAT THE ISSUE UNDER CONSIDER ATION I S FOR AY 2012 - 13 , WHEREAS THE AMENDMENT TO SECTION 6 8 AND 56 OF THE A CT WERE TOOK PLACE SUBSEQUENTLY. THEREFORE, SUCH AMENDMENT WILL NOT BE APPLICABLE TO AY 2012 - 13. FURTHER , HE BROUGHT TO OUR NOTICE REMAND REPORT OF THE AO , WHICH IS PLACED ON RECOR D AT PAGE 441 TO 444 OF THE PAPER BOOK , IN THE REMAND REPORT THE LD. AO CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND HE HAS NOT MADE ANY ADVERSE OBSERVATIONS AS FAR AS THE ADDITIONAL EVIDENCE SUBMITTED BEFORE HIM, HOWEVER HE OBSERVED THAT ASSESSEE HAS I SSUED THE SHARES WITH PREMIUM @ 13.33 , WHEREAS THE SHARE WAS VALUED @12.5 PER SHARE BY THE VALUER . FURTHER, HE OBSERVED THAT DURING THE SCRUTINY PROCEEDINGS , ASSESEE WAS ASKED TO PRO DUCE BANK STATEMENT OF THE PARTIES , WHO HAD MADE THE INVESTMENT, FURTHER A SSESSEE WAS ALSO ASKED TO PROVIDE SOURCE OF THE MONEY FOR MAKING THE ABOVE INVESTMENTS BY THE SHAREHOLDERS , THE ABOVE INFORMATION S WERE NOT PROVIDED BY THE ASSESEE. THEREFORE, THE ABOVE ADDITIONAL EVIDENCE SHOULD BE REJECTED , BUT HE SUBMITTED THAT ASSESEE HAS FILED A LL THE INFORMATION BEFORE AO AND WITH REGARD TO ADDITIONAL EVIDENCE , WHICH WAS SUBMITTED BEFORE THE LD. CIT(A) , AO HAS NOT MADE ANY ADVERSE OBSERVATION, HOWEVER LD. AO OBSERVED THAT ASSESSEE HAS NOT FILED BANK STATEMENTS OF THE INVESTORS AND ASS ESEE HAS ALSO NOT EXPLAINED SOURCE OF THE SOURCE OF THE INVESTMENTS. HE BROUGHT TO OUR NOTICE THAT ASSESEE HAS ALREADY SUBMITTED TH E BANK STATEMENT OF ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 19 THE PROMOTERS AND THEIR RELATIVES BEFORE THE AO WITH REGARD TO INSTITUTIONAL INVESTORS, ASSESSEE HAS ALR EADY FILED PAN AND THEIR FINANCIAL STATEMENTS , WHEREIN THEY HAVE RECORDED THE ABOVE INVESTMENTS IN THEIR BOOKS OF ACCOUNTS , ALL THESE WHERE CONSIDERED BY THE LD. CIT(A), IN CONSIDERING THE ASSESSEES APPEAL IN T HIS ORDER. 1 1 . IN THE REJOINDE R, THE LD. DR SUBMITTED THAT THE LD. CIT(A) HAS GONE WITH REPUTATION OF THE PARTIES , WHEREAS HE SHOULD HAVE G ONE WITH PROPER DOCUMENTATION S FURTHER, HE SUBMITTED THAT INITIAL ONUS IS ONLY ON THE ASSESSEE TO PROVE THE GENUINENESS , BUT IN THIS CASE ASSESEE HAS NOT PROVED THE GENUINENESS AND NOT DISCHARGE ITS DUTIES , WHEREAS THE LD. AR SUBMITTED THAT ASSESSEE HAS ALREADY FULFILLED THE INITIAL ONUS BY FILING RELEVANT PAN , RETURN OF INCOME AND ADDRESS OF THE ASSESEE AND ASSESSEE HAS PROPERLY DISCHARGED THE DUTY , FOR THIS PR OPOSITION, THE LD. AR RELIED ON THE FOLLOWING DECISIONS TO SUPPORT THE FINDINGS OF THE LD. CIT (A), CIT - 8 VS GAGANDEEP INFRASTRUCTURE (P) LTD. 394 ITR 680 (BOM) AND CIT - 1 VS ORCHID INDUSTRIES PVT.LTD. 3 97 ITR 136 (BOM) , PR. CIT - 13 VS VEEDHATA TOWER PVT.LTD. 403 ITR 4 15 (BOM) AND JAYNEER INFRAPOWER & MULTIVENTURES (P.) LTD. VS DCIT 103 TAXMAN N .COM 1 1 8 (MUMBAI - TRIB.). 12. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD, WE NOTICE THAT ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM THE P ROMOTERS AND RELATIVES AND DOMESTIC AND INTERNA TIONAL INSTITUTIONAL INVESTORS AS DETAILED BELOW: - NO NAME OF PARTY NO. OF SHARES AMOUNT RECEIVED ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 20 1 MR . A MIT TANDON 739,600 7,396,000 2 MS. ANSHU TANDON 100 1,000 3 MS. ANURAT I TANDON 100 1,000 4 MR, ANIL SINGHVI 250,000 2,500,000 5 MS. NISHI SINGHVI 100 1 ,000 6 R. JAYAK UMAR 76,500 1,019,745 7 MS. SUDHA JAYAK UM AR 100 1,000 8 BOMBAY ST OCK EXCHANGE LIMITED 3 ,000,750 40,000,00 0 9 FITCH INC. USA 2,225,000 29,659,250 10 TAT A INVESTMENT CORPORATION LTD. 1,000,000 13,330,000 11 HDFC INVESTMENTS LTD, 1,000,000 13,330,000 8,292,250 107,238,995 1 3 . THE ABOVE INVESTMENTS INCLUDES FACE VALUE OF RS. 10/ - A ND SHARE PREMIUM OF RS. 3.33 PER SHARE . I T CAN BE SEEN THAT MAJORITY OF THE INVESTMENTS ARE MADE BY B OMBAY STOCK EXCHANGE LIMITED , T ATA INVESTMENT CORPORATION LIMITED , HDFC INVESTMENTS LIMITED AND FOR EIGN INSTITUTIONAL INVESTOR FIT CH INC. USA . T HE TOTAL IN VESTMENTS RECEIVED BY THE ASSESSEE ARE RS. 10 , 72,3 8 ,995/ - OUT OF WHICH RS. 9,63,19,250/ - ARE THE INVESTMENTS FROM INSTITUTIONAL INVESTORS , WHICH IS 90% OF THE TOTAL INVESTMENT , BALANCE 10% INVESTED BY THE PROMOTERS AND THEIR RELATIVES, WE NOTICE THAT THE L D. AO HAS ASKED FOR JUSTIFICATION OF ISSUE OF SHARES WITH PREMIUM AND DISALLOWED CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT SUBMITTED BANK ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 21 STATEMENTS OF ALL THE INVESTORS , IN THE REMAND PROCEEDINGS ASSESEE HAS FILED ALL THE RELEVANT INFORMATION RELATI NG TO ISSUE OF ABOVE SHARES I.E SHARE VALUATION , CONFIRMATION FROM ALL THE PARTIES AND WITH REGARD TO PROMOTERS AND THEIR RELATIVES ASSESSEE HAS FILED PAN , ADDRESS AND THEIR CONFIRMATION LETTERS WITH THEIR BANK STATEMENTS , WITH REGARD TO INSTITUTIONAL INVESTORS, ASSESSEE HAS FILED PAN DETAILS, ADDRESS DETAILS AND ROC ALLOTMENT AND THEIR FINANCIAL STATEMENTS . IN OUR VIEW , IT IS ENOUGH THAT INVESTORS FILE THEIR FINANCIAL STATEMENTS CONFIRMING THE INVESTMENT MADE BY THEM IN THEIR BOOKS OF ACCOUNTS AND TH EY NEED NOT SUBMIT SEPARATE BANK STATEMENTS , AS LONG AS THEY SUBMIT THEIR FINANCIAL STATEMENT, IT IS EQUAL TO SUBMISSION OF BANK STATEMENT . 14. I N THE GIVEN CASE , LD. AO DISALLOWED THE WHOLE SHARE CAPITAL , AS WELL AS SHARE PREMIUM . CONSIDERING THE FACT THAT ASSESEE HAS TO PROVE THE SOURCE OF SOURCE AND JUSTIFICATION FOR ISSUE OF SHARES IN PREMIUM, WE NOTICE THAT ASSESEE HAS ALREADY FILED SHARE VALUATION BEFORE THE AO AND AS PER THE VALUATION THE VALUER HAS VALUE D THE SHARE 13.95 WITH A DISCOUNT FOR THE ASSESEE BEING UNLISTED COMPANY , HOWEVER ASSESEE HAS PROCEEDED TO ISSUE THE SHARES WITH A PREMIUM OF RS . 3.33 , BUT VALUER HAS ORIGINALLY VALUED FOR RS. 3.95 AS THE PREMIUM , ASSESEE HAS ISSUED THE SHARES WITH A MIDDLE VALUE TAKING AS RS. 3.33 PER SHARE . A S LO NG AS IT IS ACCEPTABLE TO THE COMPANY AND THE INVESTORS AND ALSO REASONABLE, REVENUE HAS NO ROLE TO PLAY. FURTHER, THE PREMIUM COLLECTED ARE 1/3 RD OF THE TOTAL SHARE VALUE . 1 5 . W ITH REGARD TO SUBMISSION OF SOURCE OF SOURCE, WE ARE IN AGREE MENT WITH THE A SSESSEE S COUNSEL THAT THE AMENDMENT TO THE SECTION 68 WAS INTRODUCED SUBSE QUENT TO THIS AY. THEREFORE, AO ITA NO.3399/MUM/2017 INSTITUTIONAL INVESTOR ADVISORY SERVICES INDIA LTD. 22 CANNOT INSIST ON THE ASSESSEE TO SUBMIT SOURCE OF SOURCE . A S FAR AS SECTION 68 ADDITION IS CONCERNED , T HE LD. CIT(A) HAS ALREADY CONSIDERED THE SUBMI SSIONS AND REMAND REPORT FROM THE LD. AO AND FOUND THAT ALL THE INGREDIENTS MENTIONED IN THE PROVISION OF SECTION 68 IS ALREADY COMPL IED BY ASSESSEE AND THEREFORE, WE ARE INCLINED TO ACCEPT THE FINDING S OF THE LD. CIT(A) AND ACCORDINGLY , GROUNDS RAISED B Y THE REVENUE ARE DISMISSED. 1 6 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 /09/2019 SD/ - ( RAM LAL NEGI ) SD/ - ( S.RIFAUL RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 30 / 09 / 2019 THIRUMALESH SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COP Y//