ITO 10(3)(1), MUMBAI V. ANERI PROPERTIES P.LTD, NAVI MUMBAI

ITA 3990/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0350 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAI PRATAP SINGH
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Unexplained cash credit; Bogus Share capital; Search and seizure; Source of fund; Retrospective amendment; Onus to prove
• Section: 143(3); 131; 11; 68

Judgement Text

P A G E | 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO.3990/MUM/2014 ( / ASSESSMENT YEAR: 20 0 7 - 08 ) INCOME TAX OFFICER 10(3) (1) , ROOM NO. 456, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400 020 / VS. M/S ANERI PROPERTIES PVT. LTD. A - 12, GRAIN MERCHANT CO - OP . SOCIETY LTD., SECTOR 17, VASHI, NAVI MUMBAI 400705 ./ ./ PAN/GIR NO. AAACK4080F ( / REVENUE ) : ( / ASSESSEE ) / REVENUE BY : SHRI. AJAI PRATAP SINGH / ASSESSEE BY : SHRI DR. K. S HIVARAM / DATE OF HEARING : 30/05 /2017 / DATE OF PRONOUNCEMENT : 16 /06 /2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THAT THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 22, MUMBAI , DATED 25/03 /2014, WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT P A G E | 2 ACT), FOR A.Y. 20 07 - 08 . THAT THE REVENUE HAD ASSAILED THE ORDER OF THE CIT(A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL: - '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS.55,00,000/ - U/S. 68 OF I. T. ACT. 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING RELIEF TO THE ASSE SSEE IN SPITE OF THE FACT THAT THE INVESTIGATION OF THE SEBI, WAS NOT FINALIZED. 1.2 ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CI T(A) FAILED TO APPRECIATE THE FACT THAT THE SEARCH & SEIZURE ACTIONS WERE CONDUCTED BY INVESTIGATION WING IN THE CASE OF RAJAT PHARMACHEM GROUP AND SAPANCO GROUP ON THE SAME ISSUES AND THESE FACTS GOT DUE MENTION IN THE ASSESSMENT ORDER. 1.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) FAILED TO CARRY OUT ENQUI RIES BY HIMSELF THOUGH HE HAS PLENARY POWERS WHICH ASSESSING OFFICER IS HAVING (187 ITR 688 (SC)) AND ONLY MENTIONED THAT THE ASSESSING OFFICER HAS FAILED TO CONDUCT THE NECESSARY INQUIRIES DURING THE REMAND REPORT PROCEEDINGS. 2. THE APPELLANT CRAVES LEAVE T O ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORE D. P A G E | 3 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A.Y. 2007 - 08 ON 17.10.2007 , DECLARING TOTAL INCOME OF RS. NIL WITH A LOSS OF ( RS. 3 , 104/ - ) . THE RETURN OF INCOME OF THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT . THE CASE OF THE ASSESSEE WAS THEREAFTER TAKEN UP FOR SCRUTINY ASSESSMENT UNDER SEC. 143( 2 ). 3 . THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD RECEIVED SUBSCRIPTIONS TOWARDS SHARE CAPITAL DURING THE YEAR UNDER CONSIDERATION , AS UNDER: - SR. NO. NAME OF THE SUBSCRIBER QTY. OF SHARES INVESTED DATE OF CHEQUE FOR INVESTMENT AMOUNT OF SUBSCRIPTION 1 M/S. VANGAURD JEWELS LTD. 2,00,000 21.02.2007 & 09.03.2007 20,00,000 2 M/S. HEMA TRADING CO. PVT. LTD. 1,50,000 15.02.2007 15,00,000 3 M/S. ALKA DIAMOND IND. LTD. 2,00,000 20.02.2007 20,00,000 TOTAL 55,00,000 THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS INFORMATION WAS GATHERED BY THE A.O THAT ONE SHRI NIRMAL KOTECHA WHO WAS THE PROMOTER OF M/S PYRAMID SAIMIRA LTD., HAD FLOATED NUMBER OF COMPANIES TO MANIPULATE THE SCRIPS OF THE ABOVE MENTIONED COMPANY IN THE STOCK MARKET. THAT IT CAME TO THE NOTICE OF THE A.O THAT SEBI HAD IDENTIFIED ABOUT 230 COMPANIES WHICH WERE INVOLVED IN SUCH MANIPULATION OF SHARES BY RIGGING THE PRICES. IT WAS OBSERVED BY THE A.O THAT THE AFORESAID SHARE SUBSCRIBERS OF THE ASSESSEE COMPANY, VIZ. (I). M/S VANGAURD JEWELS LTD., (II). M/S HEMA TRADING CO. PVT. LTD. AND (III). M/S ALKA DIAMOND IND . L TD., FIGURED IN THE LIST OF 230 ENTITIES P A G E | 4 (SUPRA) . THE A.O. CALLED FOR THE KYC DETAILS OF THE COMPANIES FROM THE BANKS WHERE THESE COMPANIES MA INTAINED THEIR AC COUNTS AND HAD ROUTED THEIR FUNDS BY WAY OF SHARE SUBSCRIPTIONS TO THE ASSESSEE COMPANY. THAT AS PER THE INFORMATION GATHERED BY THE A.O. , THE LIST OF PERSONS/DIRECTORS WHO WERE AP POINTED AS AUTHORIZED SIGNATORIES FOR OPERATING THE AFORESAID BANK ACCOUNTS OF THE SUBSCRIBER COMPANIES, WERE AS UNDER: - SR. NO. NAME OF SUBSCRIBER NAME OF THE AU THORIZED SIGNATORY /DIRECTOR 1 M/S. VANGAURD JEWELS PVT. LTD. UMA JAYANT KANSAR 2 M/S. NAKSHATRA BUSINESS PVT. LTD. - 3 M/S. ALKA DIAMOND LTD. GOPAL JAVDA THE A.O. FURTHER OBSERVED THAT THE AFORESAID SUBSCRI BER COMPANIES AT S R. NO.1 TO 3 WERE SHARING A COMMON EMAIL ADDRESS I.E. HKAMALCORP @HOTMAIL.COM , COMMON T ELEPHONE NO S . I.E. 23624583, 2336534 , AS WELL AS WERE O PERATING FROM THE SAME ADDRESS. THE A.O OBSERVED THAT THE MEMORANDUM OF ASSOCIATION (FOR SHORT MOA ) OF THE AFORESAID COMPANIES HAD A PARTICULAR PATTERN , AND ONE SH. K.K JHUNJUNWALA, A CHARTERED ACCOUNTANT FIGURED AS WITNESS IN THE MOA OF ALL THE THREE COMPANIES . THAT STILL FURTHER A SCAN OF THE LIST OF THE 230 ENTITIES (S UPRA) REVEALED THAT THE NAMES OF THE AUTHORIZED SIGNATOR IES OR THE DIRECTORS OF THE AFORE SAID SUBSCRIBER COMPANIES ALSO FIGURED IN THE SAME. THE A.O OBSERVED THAT SEBI HAD SUSPENDED THE A FORESAID THREE COMPANIES FROM TRADING DIRECTLY OR INDIRECTLY IN THE STOCK MARKET. THAT AS PER THE A.O CERTAIN SEARCH AND SEIZURE OPERATIONS CARRIED OUT P A G E | 5 BY THE INVESTIGATION WING OF THE INCOME - TAX DEPARTMENT IN THE CASE OF CERTAIN GROUP COMPANIES, VIZ. RAJAT PHARMACHEM GROUP AND SPANCO GROUP, THEREIN REVEALED THAT THE AFORESAID SUBSCRIBER COMPANIES HAD INDULGED IN PAPER TRANSACTIONS OF TRADING IN GOODS. 4. THE A.O HARBO U RING SERIOUS DOUBTS AS REGARDS THE GENUINENESS AND VERACITY OF THE RAISING OF FUNDS BY WAY OF SHARE SUBSCRIPTIO NS BY THE ASSESSEE COMPANY , THEREIN HAD A STRONG CONVICTION THAT THE SOURCE OF FUNDS MOVING THROUGH A MAZE OF ACCOUNTS BELONGING TO THE SUBSCRIBER COMPANIES HAD REMAINED UNEXPLAINED IN ABSENCE OF GENUINE TRANSACTIONS. THE A.O IN THE BACKDROP OF THE AFORESAID FACTS RECORDED THE STATEMENT OF THE MAIN DIRECTOR OF THE ASSESSEE COMPANY , VIZ. SHRI MAYUR SATRA , WHO HOWEVER STATED T HAT HE WAS NEITHER AWARE OF THE MAIN PERSON S OF THE SUBSCRIBER COMPANIES, NOR ABOUT THE NATURE O F THEIR ACTIVITIES AND WHEREABOUTS. IT WAS FURTHER STATED BY SH. MAYUR SATRA THAT THE MAIN LINK BETWEEN THE ASSESSEE COMPA NY AND THE INVESTOR S WAS ONE S HRI PREMJI DAROD . THE A.O THUS IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTION S AND THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES , THEREIN ISSUED SUMMONS TO THE AFORESAID AUTHORIZED SIGNATORIES/DIRECTORS OF THE SUBSC RIBER COMPANIES . THE SUMMONS ISSUED TO THE AUTHORIZED SIGNATORIES/ D IRECTORS OF THE S UBSCRIBER COMPANIES WERE HOWEVER NOT COMPL IED WITH , AND ON THE BASIS OF IDENTICAL LY WORDED L E TTER S THE AFOREMENTIONED PERSONS DECLINED TO APPEAR BEFORE THE A.O. THAT SUBSEQUENT THERETO ONE SHRI NILESH PARMAR, D IRECTOR OF ONE OF THE SUBSCRIBER COMPANY, VIZ. M/S VANGUARD JEWEL PVT. LTD. APPEAR ED BEFORE THE A.O AND PLACED ON RECORD THE COPY OF THE P ROFIT AND LOSS ACCOUNT AND THE B ALANCE SHEET OF THE SUBSCRIBER COMPANY . TH AT SH. NILESH PARMAR (SUPRA) IN HIS STATEMENT RECORDED BY THE A.O. EXPRESSED HIS UNAWARENESS OF THE TRANSACTIONS REL ATED TO THE INVESTMENT MADE IN THE SHARES OF THE ASSESSEE COMPANY. THAT ON AN ENQUIRY AS REGARDS THE SOURCE OF THE FUNDS FROM WHERE P A G E | 6 INVESTMENT TOWARDS THE SHARES OF THE ASSESSEE COMPANY WAS MADE BY THE SUBSCRIBER COMPANY, IT WAS SUBMITTED BY HIM THAT THE SAME WERE ON ACCOUNT OF RECEIVABLES FROM THE BUSINESS OF TRADING IN DIAMOND. IT WAS HOWEVER GATHERED BY THE A.O. THAT THE COMPANIES WITH WHICH BUSINESS WAS CLAIMED TO HAVE BEEN TRANSACTED BY THE SUBSCRIBER COMPANY, VIZ. M/S VANGUARD JEWEL PVT. LTD, WERE IN ITSELF IDENTIFIED AS COMPANIES INDULGING IN PAPER TRANSACTIONS. THE AFORESAID DIRECTOR WAS CALLED UPON BY THE A.O TO FILE CERTAIN DOCUMENTS , WHICH HOWEVER WERE NEVER FILED BY HIM . 5. THE A.O. IN THE BACKDROP OF THE AFORESAID FACTS , THOUGH BEING OF THE VIEW THAT THERE WAS NO DISPUTE THAT THE FUNDS HA D BEEN RECEIVED BY THE ASSESSEE COMPANY FROM THE SUBSCRIBER COMPANIES THROUGH BANKING CHANNELS, AND AS SUCH THE EXISTENCE OF THE SUBSCRIBERS WAS NOT IN DISPUTE, BUT HOWEVER HAD SERIOUS DO UBTS , BOTH AS REGARDS THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES AND THE GENUINENESS OF THE TRANSACTION S. THE A.O THUS IN THE TOTALITY OF THE AFORESAID FACTS , BEING OF THE CONSIDERED VIEW THAT RECEIPT OF FUNDS BY THE ASSESSEE COMPANY BY WAY OF SHARE SUBSCRIPTION S FROM THE AFORESAID THREE SUBSCRIBER COMPANIES WAS NOT BY WAY OF GENUINE TRANSACTION S, AS WELL AS THE CR EDITWORTHINESS OF THE SUBSCRIBERS WAS ALSO NOT ESTABLISHED, THEREFORE CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT RECEIVED BY WAY OF SHARE SUBSCRIPTIONS DURING THE YEAR MAY NOT BE ADDED BACK TO ITS TOTAL INCOME AS UNEXPLAINED CASH CREDIT UNDER SECTION 6 8 OF THE ACT . THAT IN RESPONSE TO THE AFORESAID SCN THE ASSESSEE COMPANY SUBMITTED VIDE ITS REPLY DATED 29.12.2009 THAT AS THE COMPLETE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES, VIZ. C OMPLETE ADDRESS OF THE PARTIES ; P AN NUMBERS ; COP IES OF THE INCOME TAX RETURN S OF THE SUBSCRIBING COMPANIES ; COP IES OF THE AUDITED P & LOSS A/C AND BALANCE SHEET S OF THE RESPECTIVE COMPANIES FOR A.Y. 2007 - 08 ; CONFIRMATION S OF THE RESPECTIVE SUBSCRIBER COMPANIES , ALONG WITH P A G E | 7 NOTARIZED A FFIDAVIT S OF THE DIRECTORS ADMITTING SUBSCRIBING TO THE SHARES OF THE ASSESSEE COMPANY , AND THE C OP IES OF THE BANK ACCOUNTS OF THE SUBSCRIBER COMPANIES WERE PL ACED ON RECORD OF THE A.O, THEREFORE THE INITIAL ONUS AS STOOD CAST UPON IT TO SUBSTANTIATE THE CREDITWORTHINESS OF THE SUBSCRIBERS AND GENUINENESS OF THE TRANSACTION STOOD DISCHARGED BEYOND ANY SCOPE O F DOUBT. THE ASSESSEE FURTHER FORTIFYING THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES, THEREIN SUBMITTED THAT ALL OF THE RESPECTIVE SUBSCRIBER COMPANIES WERE OF SUBSTANTIAL NET WORTH, AND A PERUSAL OF THEIR RESPEC TIVE BANK ACCOUNTS FROM WHICH THE SHARE SUBSCRIPTIONS WERE RECEIVED BY THE ASSESSEE COMPANY DID NOT REVEAL THAT ANY CASH HAD BEEN DEPOSITED IN THE SAID RESPECTIVE BANK ACCOUNTS, IN THE ABSENCE OF WHICH THERE REMAINED NO OCCASION TO DRAW ANY DOUBTS, EITHER AS REGARDS THE GENUINENESS OF THE TRANSACTIONS OR THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES. 6. THAT THE A.O AFTER PERUSING THE CONTENTIONS OF THE ASSESSEE IN THE BACKDROP OF THE FACTS OF THE CASE THOUGH CONCEDED TO THE FACT THAT THE IDENTITY OF THE SUBSCRIBER COMPANIES WAS NOT DISPUTED, BUT HOWEVER CONCLUDED THAT IT REMAIN ED AS A MATTER OF FACT THAT THE ASSESSEE HAD FAIL ED TO ESTABLISH THE CAPACITY OF THE SUBSCRIBERS , AND THEREIN PROVE THAT THE MONEY SO RECEIVED FROM THE RESPECTIVE SUBSCRIBERS W AS COMING OUT OF THEIR DISCLOSED AND ACCOUNTED SOURCE S OF INCOME . THE A.O THUS BEING OF THE VIEW THAT THE ASSESSEE HAD FAILED TO EXPLAIN BOTH THE N ATURE AND S OURCE OF THE AMOUNT OF RS. 55 LAC WHICH WAS CLAIMED TO HAVE BEEN RECEIVED BY WAY OF SHARE SUBSCRIPTIONS , THERE FORE ASSESSED THE SAME AS AN UNEXPLAINED CREDIT IN THE HANDS OF THE ASSESSEE U/S 68 OF THE ACT . 7. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O THEREIN CARRIED THE SAME IN APPEAL BEFORE THE CIT(A). THAT BEFORE THE CIT(A) P A G E | 8 TH E ASSESSEE OBJECTED TO THE RELIANCE PLACED BY THE A.O ON THE SEBIS ORDER PASSED IN THE CASE OF PYRAMID SAIMIRA THEATRE LTD. IT WAS SUBMITTED BY THE ASSESSEE THAT AS PER THE RECORDS, THE TRANSACTION UNDER THE SCANNER OF SEBI WAS CARRIED OUT IN THE STOCK MARKET IN THE ABOVE MENTIONED CASE ON 21 ST AND 22 ND DECEMBER, 2008, WHEREAS IN THE CASE OF THE ASSESSEE THE SHARE APPLICATION MONEY WAS RECEIVED IN FEBRUARY, 2007. IT WAS SUBMITTED BY THE ASSESSEE THAT THE ISSUE INVOLVED WITH SEBI WAS IN CONNECTION WITH RI GGING OF PRICES OF SHARES OF P Y RAMID SAIMIRA THEATRE LTD. (SUPRA), WHICH HAD NOTHING TO DO WITH THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES AND THE GENUINENESS OF THE TRANSACTION, AS THE TRANSACTION IN THE CASE OF THE ASSESSEE WAS IN CONNECTION WITH S HARE CAPITAL. THE ASSESSEE FURTHER OBJECTED TO THE REFERENCE BY THE A.O IN THE ASSESSMENT ORDER OF CERTAIN SEARCH AND SEIZURE ACTION CONDUCTED BY THE INCOME - TAX DEPARTMENT , WHICH AS CLAIMED BY THE A.O REVEALED THAT THE SUBSCRIBER COMPANIES WERE FOUND TO B E INDULGED IN PAPER TRANSACTIONS OF TRADING IN GOODS. THE CIT(A) IN ORDER TO DISPEL THE AFORESAID DOUBTS, THUS IN ALL FAIRNESS DIRECTED THE A.O TO CONDUCT FURTHER ENQUIR IES BY SUMMONING THE SUBSCRIBERS , AND ALSO TO FIND OUT AS TO WHETHER THE INTERIM ORDER P ASSED BY SEBI WAS FOLLOWED BY A FINAL ORDER . TH E REMAND REPORT OF THE A.O WAS RECEIVED BY THE CIT(A) ON 03.02.2011. T HE A.O IN HIS REMAND REPORT THOUGH CONCEDED THAT NO DETAILS WERE AVAILABLE AS REGARDS ANY SEARCH AND SURVEY OPERATIONS CONDUCTED ON THE SUBSCRIBER COMPANIES, BUT HOWEVER IN COMPLETE DISREGARD TO THE SPECIFIC DIRECTION S OF THE CIT(A), THEREIN NEITHER CONDUCTED ANY ENQUIRIES ABOUT THE SUBSCRIBER COMPANIES, NOR GATHERED ANY INFORMATION AS REGARDS T HE FINAL ORDER OF SEBI. THE CIT(A) THEREFORE ONCE AGAIN ISSUED DIRECTIONS TO THE A.O UNDER SECTION 250(4) AND CALLED UPON HIM TO CONDUCT ENQUIRIES WITH THE SHARE SUBSCRIBERS BY SUMMONING THEM , AS WELL AS GATHER INFORMATION ABOUT THE FINAL OUT COME OF THE SEBI ORDER. THE A.O P A G E | 9 HOWEVER DESPITE SPECIFIC D IRECTIONS BY THE CIT(A) , ONCE AGAIN ACTED IN A MOST CALLOUS MANNER AND DID NOT BOTHER TO ISSUE SUMMON S TO THE SUBSCRIBER COMPANIES UNDER SECTION 131 , NOR GATHERED THE DETAILS AS REGARDS THE FINAL OUTCOME OF THE SEBI ORDER. THE CIT(A) THUS WITNESSING THE MISERABLE FAILURE ON THE PART OF THE A.O TO COMPLY WITH HIS DIRECTIONS , THU S BEING LEFT WITH NO OTHER ALTERNATIVE , THEREIN PROCEEDED WITH ON THE BASIS OF THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM AND THE FAC TS AVAILABLE ON RECORD. 8. THE CIT(A) REFERRING TO THE RECORDS AVAILABLE BEFORE HIM, THEREIN OBSERVED THAT DURING THE COURSE OF THE REMAND PROCEEDINGS THE A.O HAD ADDRESSED A LETTER DATED. 27.09.2013 TO SEBI, IN RESPONSE TO WHICH THE DEPUTY GENERAL MANAGER (INVESTIGATION DEPARTMENT), SEBI HAD FILED A REPLY DATED. 19.09.2013, WHICH READ AS UNDER: - WE HAVE RECEIVED YOUR LETTER DATED SEPTEMBER 05, 2013 WHEREIN YOU HAVE SOUGHT THE DETAILS OF ANY ACTION TAKEN OR CONTEMPLATED BY SEBI IN RESPECT OF THREE COMPANIES AND THE DETAILS OF MONEY LAUNDERING ACTIVITY , IF ANY, UNDERTAKEN BY M/S. ANERI PROPERTIES PVT. LTD. IT BE NOTED THAT SEBI IN THE MATTER OF PYRAMID S A IMIRA THEATRES LTD. ( PSTL) VIDE EX - PARTE, AD IN TERIM ORDER DATED. APRIL 23,2009 INTER - ALIA AMONG OTHERS DIRECTED M/S VANGUARD JEWELS LT., M/S HEMA TRADING COMPANY PVT. LTD. AND M/S ALKA DIAMOND IN D. LTD. NOT TO BUY, SELL OR DEAL IN THE SECURITIES MARKET INCLUDING IN INITIAL PUBLIC OFFERINGS, IN ANY MANNER, EITHER DIRECTLY OR INDIRECTLY, TILL FURTHER DIRECTIONS. THE SAID INTERIM ORDER IS AVAILABLE ON SEBI WEBSITE. NO FINAL ORDER IS PASSED WITH RESPE CT TO THESE COMPANIES TILL DATE. A REFERENCE WAS ALSO MADE TO FINANCE INTELLIGENCE UNIT. P A G E | 10 SEBI HAS INITIATED PROCEEDINGS U/S 11 AND 11B OF SEBI ACT, 1922 AGAINST THE SAID THREE COMPANIES AND THE SAME IS PENDING. THERE IS NO ENTITY WITH THE NAME M/S ANERI P ROPERTIES PVT. LTD. INVOLVED IN THE INVESTIGATION OF PYRAMID SAIMIRA THEATRES LTD. THE CIT(A) BEING OF THE VIEW THAT THOUGH THE ASSESSEE HAD PLACED ON RECORD OVERWHELMING EVIDENCE , VIZ. COMPLETE ADDRESS OF THE PARTIES; PAN NUMBERS; COPIES OF THE INCOME TAX RETURNS OF THE SUBSCRIBING COMPANIES; COPIES OF THE AUDITED P & LOSS A/C AND BALANCE SHEETS OF THE RESPECTIVE COMPANIES FOR A.Y. 2007 - 08; CONFIRMATIONS OF THE RESPECTIVE SUBSCRI BER COMPANIES, ALONG WITH NOTARIZED AFFIDAVITS OF THE DIRECTORS ADMITTING SUBSCRIBING TO THE SHARES OF THE ASSESSEE COMPANY; AND THE COPIES OF THE BANK ACCOUNTS OF THE SUBSCRIBER COMPANIES ON THE RECORD OF THE A.O, AND THUS DISCHARGED THE INITIAL ONUS AS REGARDS THE CREDITWORTHINESS OF THE SUBSCRIBERS AND THE GENUINENESS OF THE TRANSACTIONS, BUT HOWEVER THE A.O ON THE OTHER HAND HAD COMPLETELY FAILED TO CONTROVERT THE EVIDENCES WHICH WERE FILED BEFORE HIM. THE CIT(A) FURTHER OBSERVED THAT DESPITE SPECIFIC DIRECTIONS, THE A.O HAD FAILED TO CONDUCT ENQUIRIES WITH THE SHARE SUBSCRIBERS BY EITHER ISSU ING SUMMONS U/S 131 OR NOTICE S U/S 133(6). THE CIT(A) THUS BEING OF THE VIEW THAT THE A.O. HAD FAILED TO PLACE ON RECORD ANY MATERIAL WHICH COULD GO TO PROVE THA T THE ASSESSEE HAD GIVEN CASH , WHICH IN TURN WAS ROUTED AND GOT INVESTED AS SHARE APPLICATION MONEY WITH THE ASSESSEE COMPANY , NOR HAD PLACED ON RECORD ANY EVIDENCE WHICH COULD GO TO PROVE THAT THE SUBSTANTIAL DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE IN SUPPORT OF CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES AND GENUINENESS OF THE TRANSACTION WAS FOUND TO BE UNTRUSTWORTHY OR LA CKED CREDIBILITY, THERE FORE CONCLUDED THAT THE A.O. H AD FAILED TO DISCHARGE THE ONUS AS WAS SHIFTED ON HIM . THE CIT(A) FURTHER BEING OF THE VIEW THAT THE SHARE P A G E | 11 APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE COMPANY FROM THE AFORESAID SUBSCRIBERS IN FEBRUARY, 2007, WHEREAS THE INVESTIGATION OF SEBI AND ITS ORDER WAS PASSED I N DECEMBER 2008, THEREFORE CONCLUDED THAT IT WAS ABSOLUTELY IMPOSSIBLE THAT THE MONEY EARNED BY RIGGING OF SHARES COULD HAVE BEEN INTRODUCED IN THE FORM OF SHARE APPLICATION MONEY WITH THE ASSESSEE COMPANY . THE CIT(A) FURTH E R PERUSING THE REMAND REPORT OF THE A.O, WHEREIN THE LATTER HAD CONCEDED T HAT THERE WAS NO SUCH MATERIAL AVAILABLE WITH HIM ABOUT THE ALLEGED SEARCHES AND SURVEYS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT , FROM WHERE IT COULD BE GATHERED THAT THE SUBSCRIBER COMPANIES WERE FOUND TO HAVE INDULGED IN PAPER TRANSACTIONS OF TRADING IN GOODS, THUS CONCLUDED THAT THE A.O WHILE FRAMING THE ASSESSMENT HAD WRONGLY REMAINED UNDER THE INFLUENCE OF THE SEBIS ORDER , AS WELL AS PROCEEDED WITH ON THE BASIS OF WRONG AND MISCONCEIVED FACTS . THE CIT(A) THUS HOLDING A STRONG CONVICTION THAT THE A.O. WITHOUT CONDUCTING ANY INDEPENDENT INQUIRY AND GATHERING ANY MATERIAL WHICH COULD GO TO IRREBUTABLY PROVE THAT THE SHARE APPLICATION MONEY SUBSCRIBED BY THE COMPANIES WAS BOGUS, HAD RATHER ONLY ON THE BASIS OF PRESUMPTIONS WRONGLY CHARACTERIZ ED THE AMOUNT OF RS.55 LAC AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. THE CIT(A) THUS RELYING ON A HOST OF JUDICIAL PRONOUNCEMENT S T HEREIN SET ASIDE THE ORDER OF THE A.O AND ALLOWED THE APPEAL OF THE ASSESSEE. 9 . THAT THE REVENUE AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD THEREIN ASSAILED THE SAME IN APPEAL BEFORE US . THAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R ) FOR THE ASSESSEE , THAT THE ISSUE INVOLVED IN THE C ASE OF THE PRESENT ASSESSEE WAS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE M/S JINIT PROPERTIES PVT. LTD. (ITA NO. 3989/MUM/2014, A.Y. 2006 - 07 ; DATED 29.03.2016) (MUM) (TRIB) , WHEREIN A SIMILAR ADDITION MADE BY P A G E | 12 THE A.O HAD BEEN STRUCK DOWN BY THE CIT(A), AND THE APPEAL OF THE REVENUE HAD THEREAFTER BEEN DISMISSED BY THE TRIBUNAL . IT WAS SUBMITTED BY THE LD. A.R. THAT NOT ONLY THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE COMPANY WERE IDENTICAL TO THOSE INVOLVED IN THE CASE OF M/S JINIT PROPERTIES PVT. LTD. ( S UPRA) , BUT RATH ER THE VERY GENESIS AND THE ENTIRE CHAIN OF EVENTS LEADING TO DRAWING OF ADVERSE INFERENCES AND ADDITION OF THE SHARE SUBSCRIPTIONS RECEIVED IN BOTH THE CASES BY THE A.O WERE FOUND TO BE THE SAME. THE LD . A.R IN ORDER TO DRIVE HOME HIS CONTENTION THAT THE FACTS INVOLVED IN THE CASE OF M/S JINIT PROPERTIES PVT. LTD. ( S UPRA) FOR A.Y. 2007 - 08 WERE SIMILAR TO THOSE INVOLVED IN THE APPEAL OF THE PRESENT ASSESSEE, THEREIN REFE RRED TO A CHART PLACED AT PAGE NO. 2 OF THE FACT SHEET F ILED BY HIM, AS UNDER: - PARTICULARS M/S JINIT PROPERTIES PVT. LTD. ASSESSEE ASSESSMENT YEAR 2007 - 08 2007 - 08 SHARE APPLICANTS 3 I.E. M/S HEMA TRADING CO. PVT. LTD. REAL GOLD TRADING PVT. LTD. AND YASH V. JEWELS LTD. 3 I.E. M/S. HEMA TRADING CO. PVT. LTD. M/S. VANGUARD JEWELS LTD. AND M/S. ALKA DIAMOND IND. LTD. REASON FOR ADDITION BY A.O. THE GENUINENESS OF THE TRANSACTION AND THE CREDIT WORTHINESS OF THE SUBSCRIBERS WAS NOT PROVED BY THE ASSESSEE . THE GENUINENESS OF THE TRANSACTION AND THE CREDIT WORTHINESS OF THE SUBSCRIBERS WAS NOT PROVED BY THE ASSESSEE REASON FOR DELETION OF ADDITION BY CIT(A) AO PRESUMED THAT THE SHARE APPLICATION MONEY SUBSCRIBED BY THESE AO PRESUMED THAT THE SHARE APPLICATION MONEY SUBSCRIBED BY P A G E | 13 COMPANIES WERE BOGUS WITHOUT COND UCTING ANY INDEPENDENT INQUIRY AND WITHOUT GATHERING ANY MATERIAL. THESE COMPANIES WERE BOGUS WITHOUT CONDUCTING AN Y INDEPENDENT INQUIRY AND WITHOUT GATHERING ANY MATERIAL. NAME OF CIT(A) AND DATE OF CIT(A) ORDER DR. B. SENTHIL KUMAR 25.03.2014 DR. B. SENTHIL KUMAR 25.03.2014 REMAND REPORT CONTENTS SAME RESPONSE SAME RESPONSE IT WAS THUS IN THE BACKDROP OF THE AFORESAID FACTS AVERRED BY THE LD. A.R. THAT AS THE ISSUE INVOLVED IN THE PRESENT CASE WAS SQUARELY COVERED BY THE ORDER PASSED BY THE TRIBUNAL IN THE CASE OF M/S JINIT PROPERTIES PVT. LTD. (SUPRA), THEREFORE THE ADDITION MADE IN THE HANDS OF THE ASSESSEE MAY THEREIN BE DELETED. THE LD. A.R. FURTHER SUPPORTED THE ORDER OF THE CIT(A) AND THEREIN SUBMITTED THAT THE ADDITIONS MADE BY THE A.O. ON THE BASIS OF ASSUMPTIONS , PRESUMPTIONS AND MISCONCEIVED FACTS HAD RIGHTLY BEEN D ELETED BY THE CIT(A) ON THE BASIS OF A WELL REASONED ORDER . 10 . ALTERNATIVELY, IT WAS SUBMITTED BY THE LD. A.R. THAT EVEN IF IT SO EMERGED THAT THE AMOUNT OF SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE FROM BOGUS SHAREHOLDER S , IN THAT SITUATION ALSO THE A.O. COULD HAVE ONLY PROCEED ED AGAINST THE SHAREHOLDERS AND ASSESS ED THE AMOUNT IN THEIR RESPECTIVE HANDS, WHILE FOR NO SUCH ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE COMPANY. THE LD. A.R. IN SUPPORT OF HIS AFORESAID CONTENTION RELIED O N THE RECENT JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. (ITA NO. 1613 OF 2014, DATED 20.03.2017), WHEREIN THE HONBLE HIGH COURT HAD HELD AS UNDER: - P A G E | 14 W E FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1 ST 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 TH REVENUE THAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGHT THE PROVISO ADDED SUBSEQUENTLY EFFECTIVE ONLY FROM 1 ST 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 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 ADDI TION 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 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 SUBMISSIO N ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOU N T 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 SHAREHOLDERS AN ASSESSING THEM TO TA X IN ACCORDANCE WI6TH LAW. IT DOES NOT ENTITLE THE REVENUE TO P A G E | 15 ADD THE SAME TO THE ASSESSEES INCOME AS UNEXPLAINED CASH CREDIT. PER CONTRA , THE LD. DEPARTMENTAL REPRES E NTATIVE (FOR SHORT D.R.) SUPPORTED THE ORDER OF THE A.O. 1 1 . WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES , PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL INVOLVING IDENTICAL FACTS , AS AVERRED BY THE LD. A.R. , IS COVERED BY THE ORDER PASSED BY A COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO - 10(3), MUMBAI VS. JINIT PROPERTIES PVT. LTD. (ITA 3989/MUM/2014, A.Y. 2007 - 08, DATED 29.03.2015). WE FIND THAT IN THE AFOREMENTIONED CASE WHILE FOR ONE OF THE SUBSCRIBER COMPANY , VIZ. M/S HEMA TRADING CO. PVT. LTD. (SUPRA) WAS COMMON AS IN THE CASE OF THE ASSESSEE COMPANY, BUT FOR THE REMAINING TWO SUBSCRIBER COMPANIES WERE DIFFERENT. BE THAT AS IT MAY, WE HOWEVER FIND THAT THE ISSUE PERTAINING TO THE GENUINENESS OF THE TRANSACTION INVO LVING THE RAISING OF FUNDS BY WAY OF SHARE SUBSCRIPTIONS , AS WELL AS THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES , IN BOTH THE CASES ARE FOUND TO BE SIMILARLY PLACED AND EMERGES FROM THE SAME SET OF FACTS . THAT T HE LD. A.R. IN ORDER TO DRIVE HOME HIS C ONTENTION AS REGARDS THE SIMILARITY BETWEEN THE FACTS INVOLVED IN THE CASE OF THE PRESENT ASSESSEE COMPANY, AS AGAINST THAT OF M/S JINIT PROPERTIES PVT. LTD. (SUPRA) , HAD THEREIN DRAWN OUR ATTENTION TO THE ORDER PASSED BY THE A.O. AND THE CIT(A) IN THE CASE OF THE AFORE SAID PARTY, VIZ. M/S JINIT PROPERTIES PVT. LTD. (SUPRA), ON PERUSAL OF WHICH WE FIND OURSELVES TO BE IN AGREEMENT WITH THE FACTUAL POSITION SO AVERRED BY THE LD. A.R BEFORE US. WE HAVE PERUSED THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JINIT PROPERTIES PVT. LTD. (SUPRA), WHEREIN P A G E | 16 THE TRIBUNAL WHILE DISMISSING THE APPEAL OF THE REVENUE HA D HELD AS UNDER: - WE HAVE HEARD THE RIVA L SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE A.O. HAD MADE AN ADDITION OF RS.55.00 LAC S INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT, T HAT RGTPL, HTCPL AND YVJL HAD SUBSCRIBE D RS.20.000 LACS, RS.20.00 IACS AND RS. 15.00 LACS RESPECTIVELY AS SHARE SUBSCRIPTION MONEY, THAT THE A . O HAD NOT DOUBTED THE IDENTITY OF THE SUBSCRIBERS, THAT HE WAS OF THE OPINION THAT GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SUBSCRIBERS WAS NOT PROVED BY THE ASSESSEE, THAT HE REFERRED TO ORDER OF SEBI AND SEARCH AND SEIZURE ACTIONS CARRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT FOR MAKING THE ADDITION, THAT THE SEBI HAD FOUND THAT ALL THE THREE SUBSCRIBERS WERE ENGAGED IN PRICE RIGGING OF SHARES OF PSTL , THAT THE FAA HAD DIRECTED THE A . O TO CARRY OUT CERTAIN ENQUIRY AND FURNISH REMAND REPORT, THAT THE A . O SUBMITTED TWO REMAND REPORTS, THAT HE DID NOT FOLLOW THE INSTRUCTIONS OF THE FAA ISSUED AS PER PROVISIONS OF SECTION 250(4) OF THE ACT, THAT THE FAA HAD DIRECTED HIM TO VERIFY THE CLAIM MADE BY THE ASSESSEE ABOUT THE CREDIT WORTHINESS OF THE SUBSCRIBERS. WE FIND THAT THE ASSESSEE HAD FILED COPIES OF INCOME TAX RETURNS, DIRECTORS REPORT S, CONFIRMATIONS AND AFFIDAVITS OF THE DIRECTORS OF ALL THE THREE SUBSCRIBERS. THUS, IT HAD DISCHARGED THE BURDEN OF PROOF CAST UPON IT. HOWEVER, THE A . O IGNORED THESE EVIDENCES AND DID NOT MAKE ANY FURTHER ENQUIRIES. IT IS SURPRISING THAT IN SPITE OF CLEAR D IRECTION OF THE FAA, HE CHOSE NOT TO EXAMINE THE EVIDENCES PRODUCED BY THE ASSESSEE. THE FAA HAD GIVEN A CLEAR FINDING OF FACT THAT THERE WAS NO EVIDENCE OF DEPOSIT OF CASH IN THE BANK ACCOUNTS OF THE SUBSCRIBER AT THE TIME OF ISSUING CHEQUES TO THE ASSESS EE FOR P A G E | 17 ALLOTTING SHARES. THE A . O HAS IGNORED THE FACT THAT THE NET WORTH OF ALL THE THREE SUBSCRIBERS WAS APPROXIMATELY RS.2.00 CRORES, THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH BANKING CHANNELS. IT IS FOUND THAT THE A . O DID NOT MAKE ANY ENQUIRIES WITH THE SUBSCRIBERS ABOUT THE INVESTMENTS MADE BY THEM. THE FAA HAS MENTIONED THAT THE INCIDENCE OF PRICE RIGGING TOOK PLACE IN THE MONTH OF DECEMBER OF THE SUCCEEDING YEAR WHEREAS THE SUBSCRIPTION WAS MADE IN EARLIER YEAR. TH US, IT COULD NOT BE SAID THAT ASSESSEE HAD ROUTED ITS UNACCOUNTED MONEY THROUGH THE SUB SCRIBERS I N OUR OPINION, ASSESSEE HAD DISCHARGED ITS ONUS IN PROVING THE IDENTITY OF THE CREDITOR AS WELL AS CREDITWORTHINESS OF THE SUBSCRIBERS AND GENUINENESS OF THE TRANSACTIONS. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY. THE A . O HAD NOT MADE ANY ENQUIRIES TO SUBSTANTIATE HIS STAND. CONSIDERING THE ABOVE, WE UPHOLD THE ORDER OF THE FAA A ND DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE A . O. 12. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDER OF THE CIT(A) AND ARE PERSUADED TO SUBSCRIBE TO THE VIEW ARRIVED AT BY HIM BY WAY OF A WELL REASONED ORDER. WE FIND THAT THE CIT(A) HAD OBSERVED THAT WHILE FOR THE ASSESSEE HAD PLACED ON RECORD OVERWHELMING EVIDENCE IN SUPPORT OF THE CREDIBILITY OF THE SHARE SUBSCRIBERS AND THE GENUINENESS OF THE TRANSACTIONS, AND THUS BY SO DOING HAD DISCHARGED THE INITIAL ONUS AS STOO D CAST UPON IT , WHILE FOR ON THE OTHER HAND THE A.O EXCEPT FOR HARBO U RING DOUBTS, DESPITE SPECIFIC DIRECTIONS BY THE CIT(A) , HAD NEITHER GATHERED INFORMATION AS REGARDS THE SHARE SUBSCRIBERS, NOR VERIFIED ABOUT THE STATUS OF THE FINAL ORDER OF SEBI. TH E CIT(A) HAD FURTHER OBSERVED THAT THE ASSESSEE IN DISCHARGE OF THE ONUS AS STOOD CAST UPON IT AS REGARDS SATISFACTION OF THE NATURE AND SOURCE OF THE CREDIT APPEARING IN ITS BOOKS OF ACCOUNTS, AS P A G E | 18 CONTEMPLATED U/S 68 OF THE ACT, HAD THEREIN PLACED ON RECORD OVERWHELMING EVIDENCE, VIZ. COMPLETE ADDRESS OF THE PARTIES; PAN NUMBERS; COPIES OF THE INCOME TAX RETURNS OF THE SUBSCRIBING COMPANIES; COPIES OF THE AUDITED P & LOSS A/C AND BALANCE SHEETS OF THE RESPECTIVE COMPANIES FOR A.Y. 2007 - 08; CONFIRMATION S OF THE RESPECTIVE SUBSCRIBER COMPANIES, ALONG WITH NOTARIZED AFFIDAVITS OF THE DIRECTORS ADMITTING SUBSCRIBING TO THE SHARES OF THE ASSESSEE COMPANY; AND THE COPIES OF THE BANK ACCOUNTS OF THE SUBSCRIBER COMPANIES, ON THE RECORD OF THE A.O, AND THUS ES TABLISH ED BEYOND ANY SCOPE OF DOUBT , VIZ. (I). IDENTITY OF THE PART IES ; (II). CREDITWORTHINESS OF THE PART IES ; AND (III). GENUINENESS OF THE TRANSACTION S . THE CIT(A) HAD FURTHER OBSERVED THAT AS ALL OF THE RESPECTIVE SUBSCRIBER COMPANIES WERE OF SUBSTANTIA L NET WORTH, AND A PERUSAL OF THEIR RESPECTIVE BANK ACCOUNTS FROM WHICH THE SHARE SUBSCRIPTIONS WERE RECEIVED BY THE ASSESSEE COMPANY DID NOT REVEAL THAT ANY CASH HAD BEEN DEPOSITED IN THE SAID RESPECTIVE BANK ACCOUNTS, THEREFORE THERE REMAINED NO OCCASION TO DRAW ANY DOUBTS, EITHER AS REGARDS THE GENUINENESS OF THE TRANSACTIONS OR THE CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES. WE FURTHER FIND THAT AS OBSERVED BY THE CIT(A), THE A.O HAD NOT ONLY ABSOLUTELY FAILED TO CONTROVERT THE EVIDENCES WHICH WERE FI LED BEFORE HIM BY THE ASSESSEE, BUT RATHER AS A MATTER OF FACT EVEN FAILED TO COMPLY WITH THE DIRECTIONS OF THE CIT(A) AND CARRY OUT THE REQUISITE ENQUIRIES. WE FIND THAT THE CIT(A) DEALING WITH THE CONTENTION OF THE A.O THAT THE ASSESSEE COMPANY HAD INDULGED IN RAISING OF BOGUS SHARE CAPITAL , HAD THEREIN REBUTTED THE SAME BY OBSERVING THAT PURSUANT TO A LETTER DATED. 27.09.2013 WRITTEN BY THE A.O TO SEBI, THE DEPUTY GENERAL MANAGER (INVESTIGATION DEPARTMENT), SEBI , HAD VIDE HIS REPLY DATED. 19.09. 2013, THEREIN CATEGORICALLY STATED THAT THERE WAS NO ENTITY WITH THE NAME M/S ANERI PROPERTIES PVT. LTD. INVOLVED IN THE INVESTIGATION OF PYRAMID SAIMIRA THEATRES LTD. WE HAVE PERUSED THE P A G E | 19 AFORESAID OBSERVATIONS OF THE CIT(A) AND ARE OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF ANY MATERIAL HAVING BEEN PLACED ON RECORD BY THE LD. D.R WHICH COULD PROVE TO THE CONTRARY, AND THEREIN PERSUADE US TO DISLODGE THE SAME, ARE THUS UNABLE TO PERSUADE OURSELVES TO DISTURB THE WELL REASONED ORDER OF THE CIT(A). 13. WE FURTHER FIND OURSELVES TO BE IN AGREEMENT WITH THE OBSERVATIONS OF THE CIT(A) , THAT NOW WHEN THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE COMPANY FROM THE SUBSCRIBER COMPANIES IN FEBRUARY, 2007, WHILE FOR THE INVESTIGATION OF SEBI AND ITS ORD ER WAS PASSED IN DECEMBER 2008, WHICH TOO WAS IN CONTEXT OF SOME RIGGING OF SHARES, THEREFORE IT WAS ABSOLUTELY IMPOSSIBLE THAT THE MONEY EARNED BY SUCH RIGGING OF SHARES COULD HAVE BEEN INTRODUCED IN THE FORM OF SHARE APPLICATION MONEY WITH THE ASSESSEE C OMPANY. WE FURTHER FIND THAT THE ADVERSE INFERENCES ARRIVED AT BY THE A.O THAT THE SUBSCRIBER COMPANIES HAD INDULGED IN PAPER TRANSACTIONS OF TRADING IN GOODS, WAS IN ITSELF FOUND TO BE INCORRECT BY THE A.O IN THE COURSE OF THE REMAND PROCEEDINGS. BE THAT AS IT MAY, WE ARE UNABLE TO FIND ANY REASON TO DISLODGE THE DULY SUBSTANTIATED CREDITWORTHINESS OF THE SUBSCRIBER COMPANIES AND THE GENUINENESS OF THE TRANSACTIONS IN THE BACKDROP OF OVERWHELMING DOCUMENTARY EVIDENCE PLACED ON RECORD BY THE ASSESSEE COMPAN Y IN SUPPORT THEREOF, WHICH WE FIND HAD NOT BEEN REBUTTED BY THE A.O. WE FIND OURSELVES TO BE IN AGREEMENT WITH THE CIT(A) THAT THE A.O WHILE FRAMING THE ASSESSMENT HAD WRONGLY REMAINED UNDER THE INFLUENCE OF THE SEBIS ORDER , AS WELL AS PROCEEDED WITH ON THE BASIS OF WRONG AND MISCONCEIVED FACTS. WE ARE FURTHER OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF ANY MATERIAL HAVING BEEN BROUGHT ON RECORD BY THE A.O , WHICH COULD GO TO IRREBUTABLY DISPROVE AND DISLODGE THE CLAIM OF THE ASSESSEE, THE CIT(A) HAD RIG HTLY CONCLUDED THAT THE ASSESSEE HAD DULY SATISFIED ALL TH E THREE INGREDIENTS CONTEMPLATED U/S 68 OF THE ACT, AND THUS THE AMOUNT OF P A G E | 20 RS. 55 LAC (SUPRA) RECEIVED BY THE ASSESSEE FROM THE SHARE SUBSCRIBERS COULD NOT BE CHARACTERIZED AS AN UNEXPLAINED CASH CREDIT. WE FURTHER BEING OF THE CONSIDERED VIEW THAT AS THE ISSUE INVOLVED IN THE PRESENT APPEAL IS COVERED BY THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S JINIT PROPERTIES PVT. LTD. (SUPRA) , T HEREFORE FINDING NO REASON TO TAKE A DI FFERENT VIEW, THEREFORE RESPECTFULLY FOLLOW THE SAME. 14. BEFORE PARTING, WE MAY HEREIN OBSERVE THAT THOUGH WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON MERITS, HOWEVER , WE MAY HEREIN OBSERVE THAT WE ARE FURTHER PERSUADED TO SUBSCRIBE TO THE VIEW OF THE LD. A.R THAT EVEN IF IT WOULD HAVE EMERGED THAT THE AMOUNT OF SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE FROM BOGUS SHAREHOLDERS, IN THAT SITUATION ALSO THE A.O. COULD HAVE ONLY PROCEEDED AGAINST THE SAID DULY IDENTIFIED SHAREHOLDERS AND ASSESSED THE AMOUNT IN THEIR RESPECTIVE HANDS, WHILE FOR NO SUCH ADDITION WAS LIABLE TO BE MADE IN THE HANDS OF THE ASSESSEE COMPANY. WE FIND THAT THE AFORESAID CONTENTION OF THE LD. A.R IS FOUND WITHIN THE FOUR C ORNERS OF THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. (ITA NO. 1613 OF 2014, DATED 20.03.2017). 1 5 . THE APPEAL OF THE REVENUE IS THUS DISMISSED . ORDER PRONOU NCED IN THE OPEN COURT ON 16 /06/2017 SD/ - SD/ - ( G.S. PANNU ) (RAVISH SOOD) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 16 .0 6 .2017 P A G E | 21 / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI. P A G E | 22 S .NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER