SHAKTI SHARE SHOPPEE PVT. LTD., MUMBAI V. ITO ,WD-13(2)(3), MUMBAI

ITA 4100/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0240 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 05-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Unexplained cash credit; Accommodation entries; Penny stocks; Set aside
• Section: 56(2)(vii)(b); 143(3); 56(2); 143(1); 43; 48; 72; 13; 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NOS.4100 & 4101/M/2017 ASSESSMENT YEARS: 2008-09 & 2009-10 M/S. SHAKTI SHARE SHOPPEE PVT. LTD., B-302, RANGOLI VASANT UTSAV, THAKUR VILLAGE, KANDIVALI (EAST), MUMBAI 400 101 PAN: AAACS 9220 K VS. THE INCOME-TAX OFFICER, WARD-13(2)(3), AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VISHNU AGARWAL, A.R. REVENUE BY : SHRI T.S. KHALSA, D.R. DATE OF HEARING : 15.12.2020 DATE OF PRONOUNCEMENT : 23.12.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AGAINST THE ORDER DATED 16.03.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2008-09 & 2009-10. ITA NO.4100/M/2017 A.Y 2008-09 2. THE ASSESSEE HAS RAISED TWO EFFECTIVE ISSUES IN THE VARIOUS GROUNDS OF APPEAL. THE FIRST ISSUE IS JURISDICTIONA L ISSUE CHALLENGING THE ORDER OF LD. CIT(A) WHEREBY THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO IN INITIATING THE RE ASSESSMENT PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT. THE SECOND ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 2 CONFIRMATION OF ADDITION OF RS.1,80,00,000/- BY LD. CIT(A) AS ADDED BY THE AO UNDER SECTION 68 BY TREATING THE SH ARE PREMIUM MONEY RECEIVED BY THE ASSESSEE AS UNEXPLAIN ED CASH CREDIT. FIRST WE WOULD LIKE TO ADJUDICATE THE ISSU E RAISED BY THE ASSESSEE ON MERIT. 3. THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT (A) ON MERIT VIDE GROUND NO.4 TO 10 WHEREIN THE ASSESSEE H AS PRAYED BEFORE THE BENCH THAT THE ADDITION AS CONFIRMED BY LD. CIT(A) OF RS.1,80,000,000/- IS WRONG AND AGAINST THE FACTS OF THE CASE AS THE ASSESSEE HAS SATISFIED THE NECESSARY THREE COND ITIONS AS ENVISAGED BY PROVISIONS OF SECTION 68 OF THE ACT AN D THE AO HAS NOT EXAMINED THE DOCUMENTS/INFORMATION FURNISHED DU RING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS ALSO CHALLENGED THAT THE ASSESSMENT SO FRAMED BY THE AO AS BAD IN LAW AS THE AO HAS FAILED TO BRING ON RECORD ANY CON CRETE EVIDENCE REGARDING THE MONEY CHANGING HANDS AND AL SO IGNORED THE FACT THAT SHRI PRAVIN KUMAR JAIN AND OTHERS HAV E RETRACTED STATEMENTS GIVEN DURING SEARCH. BESIDES THE ASSESSE E ALSO CHALLENGES THE ASSESSMENT ORDER ON THE GROUND OF NO N GRANTING OF CROSS EXAMINATION TO THE ASSESSEE DESPITE SPECI FIC REQUEST MOVED BY THE DIRECTOR OF THE ASSESSEE SHRI DIPAK SI NGHVI AND ALSO THAT THE AMENDMENT TO SECTION 56(2)(VII)(B) IS APPLICABLE FROM 2013-14. THE ASSESSEE FILED THE RETURN OF INCO ME FOR THE YEAR ON 19.09.2008 DECLARING A TOTAL INCOME OF RS.2 8,740/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THEREAFTER THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTIO N 147 BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 28.0 3.2015 AND STATUTORY NOTICES WERE DULY ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN INVESTMENTS I N SHARES, ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 3 SECURITIES AND ALSO TRADING IN SHARES AS MENTIONED IN PARA 2 OF THE ASSESSMENT ORDER. THE AO OBSERVED THAT THE INT RINSIC VALUE OF THE SHARE OF THE COMPANY AS ON 31.03.2007 WAS RS .10 AND AS ON 31.03.2008 RS.10.57, IF THE SHARE PREMIUM IS NOT INCLUDED IN THE CAPITAL. THE CASE OF THE ASSESSEE WAS REOPENED ON THE GROUND THAT ASSESSEE HAS RECEIVED SHARE PREMIUM OF RS.1,80,00,000/- DURING THE YEAR FROM GROUP COMPANI ES BELONGING TO SHRI PRAVIN KUMAR JAIN AS PER DETAIL H EREIN UNDER: SR. NO. NAME OF THE COMPANY AMOUNT 1. ALKA DIAMOND INDUSTRIES LTD. RS.15,00,000/- 2. NAKASHTRA BUSINESS PVT. LTD. RS.30,00,000/- 3. TRIANGULAR INFOCOM LTD. RS.45,00,000/- 4. VANGUARD JEWEL LTD. RS.60,00,000/- 5. YASH-V JEWELS LTD. RS.1,80,00,000/- 4. DURING THE COURSE OF SEARCH PROCEEDINGS ON SHRI PRAVIN KUMAR JAIN AND RELATED ENTITIES, IT WAS REVEALED TH AT SHRI PRAVIN KUMAR JAIN AND HIS ASSOCIATE CONCERNS WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF SHAR E APPLICATION MONEY CUM SHARE PREMIUM, UNSECURED LOAN S AND ALSO BOGUS SHARE SALE AND PURCHASE IN PENNY STOCKS. IT WAS ALSO REVEALED THAT ALL THESE ENTITIES CONNECTED WITH SHR I PRAVIN KUMAR JAIN ARE NOT DOING ANY GENUINE BUSINESS SUCH AS TRADING, MANUFACTURING OR FINANCING ETC AND ARE REN DERING ACCOMMODATION SERVICES. THE AO DISCUSSED IN DETAIL THE MODUS OPERANDI OF SHRI PRAVIN KUMAR JAIN IN THE ASSESSMEN T ORDER FROM PAGE NO.2 TO 19. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE AO CALLED UPON THE ASSESSEE TO FURN ISH THE EVIDENCES/DOCUMENTS RELATING TO THE INVESTORS AND P ROVE THEIR GENUINENESS WHICH WAS REPLIED BY THE ASSESSEE BY FI LING COPIES OF THE LETTER SENT BY THE INVESTORS, PAYMENT DETAI LS BY ACCOUNT PAYEE CHEQUES AND DETAILS OF SHARES ISSUED AT A FAC E VALUE OF 10 ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 4 AT A PREMIUM OF 390, COPIES OF CONFIRMATION OF THE INVESTORS, COPIES OF LEDGER ACCOUNT IN THE BOOKS OF THE INVEST ORS, COPIES OF THE BANK STATEMENTS, IT RETURNS, ANNUAL AUDITED ACC OUNTS IN RESPECT OF ALL THE INVESTORS. BESIDES THE AO HAS A LSO ISSUED SUMMON UNDER SECTION 131 OF THE ACT. HOWEVER, IN S OME CASES THESE WERE SERVED AND IN SOME CASES THE INSPECTOR R EPORTED THAT THE ENTITIES WERE NOT AVAILABLE AT THE AVAILABLE AD DRESSES. THE INVESTOR FILED THE COPIES OF THEIR BALANCE SHEET AN D ITRS ETC. FINALLY, THE AO CAME TO CONCLUSION THAT THE ASSESSE E HAS FAILED TO PROVE THE TEST OF GENUINENESS AND TREATED THE SA ME AS NON GENUINE AND ADDED THE SAME TO THE INCOME OF THE ASS ESSEE AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 BY FRAMING ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 1 47 OF THE ACT VIDE ORDER DATED 18.02.2016. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 5.8. I HAVE CONSIDERED THE SUBMISSIONS AND FACTS O N RECORD CAREFULLY. THE DISTINGUISHING FEATURE IN THIS CASE NOTED IS THAT T HE DIRECTOR OF THE APPELLANT COMPANY WAS SUMMONED AND STATEMENT RECORDED AT THE TIME OF THE ASSESSMENT PROCEEDINGS ITSELF. THE STATEMENT -IS REPRODUCED IN THE ASSESSMENT ORDER. IT IS HIGHLY IMPROBABLE THAT THE DIRECTOR SHRI DEEPAK SIN GHVI COULD NOT NAME THE PERSON WHO WAS CONTACTED FOR INVESTING IN THE APPELLANT CO MPANY WHEN SUCH INVESTORS ARE THE LARGEST SHAREHOLDER IN THE APPELLANT COMPANY. I F SUCH LARGE INVESTMENT WAS MADE, IT IS AGAIN UNBELIEVABLE THAT SUCH INVESTOR W ILL NOT NOMINATE/ITS OWN DIRECTOR AND NOT ATTEND THE AGM OF THE APPELLANT COMPANY. WH EN QUERIED WHY IT HAD TO OBTAIN DETAILS OF INVESTORS FROM ROC, IT TURNED OUT THAT THE INVESTORS HAD SINCE THEN TRANSFERRED THE SHARES TO SINGHVI FAMILY, THE PROMO TERS. DETAILS WERE CALLED INCLUDING COPY OF SHARE TRANSFER MEMO AND THE PURCH ASERS BANK STATEMENT, RETURN OF INCOME AND COMPUTATION OF INCOME. THIS WAS NOT S UBMITTED THOUGH FROM DETAILS FILED IT IS CLEAR THAT ALL SHARES INVESTED TO BY TH ESE 5 INVESTORS HAVE BEEN PURCHASED BY THE SINGHVI FAMILY AND AT PAR. WHY WOULD ANY INV ESTOR INVEST RS 400/ SHARE ONLY TO SELL IT TO THE ORIGINAL PROMOTER FAMILY FOR RS 1 0 PER SHARE? ALL THESE PECULIAR FACTS, SHOW THAT THE TRANSACTIONS ARE NOT GENUINE. 5.9. IN THE FACTS OF THE CASE, THE ADDITIONS MADE A RE CONFIRMED AND GROUNDS OF APPEAL NO 4 TO 7 ARE DISMISSED. ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 5 6. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE THE BEN CH THAT THE ORDER PASSED BY LD. CIT(A) HAS NO BASIS AND THE APPEAL OF THE ASSESSEE HAS BEEN DISMISSED WITHOUT CONSIDERING THE FACTS ON RECORD AND VARIOUS JUDICIAL CITATIONS. THE LD. A.R. SUBMITTED THAT ASSESSEE HAS FILED COPIES OF CONFIRMATIONS, PA N NUMBERS, BOARD RESOLUTIONS, COPIES OF BANK STATEMENTS, IT RE TURNS AND AUDITED ANNUAL ACCOUNTS OF THE INVESTOR ENTITIES DU LY REFLECTING THE INVESTMENTS MADE IN THE ASSESSEE COMPANY, HOWE VER, THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THESE TRANSACTIONS WERE NON GENUINE. THE LD. A.R. SUBMIT TED THAT ASSESSEE HAS PROVED ALL THE THREE INGREDIENTS OF SE CTION 68 I.E. IDENTITY AND CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE TRANSACTIONS BY FURNISHING VARIOUS EVIDENCES AS STATED HEREINABOVE BEFORE THE AO, HOWEVER, THE AO FAILED T O BRING ANY SUBSTANTIVE MATERIAL TO PROVE THAT THE SAID TRANSAC TIONS WERE NON GENUINE. THE LD. A.R. SUBMITTED THAT THE AUTHO RITIES BELOW HAVE ONLY RELIED ON THE STATEMENT OF SHRI PRAVIN KU MAR JAIN WHICH WAS RECORDED DURING THE COURSE OF SEARCH PROC EEDINGS ON SHRI PRAVIN KUMAR JAIN AND HIS RELATED ENTITIES WHE REIN THE SHRI SHRI PRAVIN KUMAR JAIN ADMITTED THAT HE WAS DOING T HE BUSINESS OF PROVIDING THE ACCOMMODATION ENTRIES ONL Y BUT THE AO HAS OVERLOOKED THE FACT THAT THE SAID STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT STOOD RETRACTED BY SHRI PRAVIN KUMAR JAIN AND BY VARIOUS OTHER PERSONS AFTERWARDS. THE LD. A.R., THEREFORE, SUBMITTED THAT THE ASSESSMENT SO F RAMED BY THE AO IS BAD IN LAW AND ADDITION MADE OF RS.1,80,00,00 0/- DESERVED DELETION ON THIS COUNT. IN DEFENCE OF HIS ARGUMENTS THE ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 6 LD. A.R. RELIED ON THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL AS FOLLOWS: 1. ACIT 30(3), MUMBAI. V/S. SHREEDHAM BUILDER S (ITAT MUMBAI) 2. ARCELI REALTY LIMITED V/S. INCOME TAX OFFICER - 15(1)0), MUMBAI. (ITAT MUMBAI) 3. ANIL CHHAGANLAL JAIN V/S. ACIT - 18(1), MUMBAI. (IT AT MUMBAI) 4. INCOME TAX OFFICER, 13(2)(3), MUMBAI. V/S. M/S S HREEDHAM CONSTRUCTION PVT. LTD. (ITAT MUMBAI) 5. M/S SHREE LAXMI ESTATE PVT. LTD. V/S. ITO, WD. 1 5(3)(3), MUMBAI. (ITAT MUMBAI) 6. ACIT 24(3), MUMBAI V/S. SHRI RAMESH RAMSWARUP DAS JINDAL. (ITAT MUMBAI) 7. DCIT - 12(1)(2), MUMBAI. V/S. BAIRAGRA BUILDERS P LTD. (ITAT MUMBAI) 8. M/S. KOMAL AGROTECH P. LTD. V/S. THE INCOME TAX OFFICER, WARD - 2(1 ), HYDERABAD. (ITAT HYDERABAD) 9. ITO - 4(2)(4), MUMBAI. V/S. M/S. KUSHBOO EXPORTS PVT. LTD. (ITAT MUMBAI) 10. INCOME TAX OFFICER - 3(2)(4),MUMBAI. V/S. M/S. PYRAMID RRALTY PVT. LTD. (ITAT MUMBAI) 11. AIM PROPERTIES & INVESTMENT PVT. LTD. V/S. INC OME TAX OFFICER, 5(1)(1), MUMBAI. (ITAT MUMBAI) 12. SUDHANSHU SURESH PANDHARE V/S. ITO WAR D 21(3)(2), MUMBAI. (IT AT MUMBAI) 13. ITO - 10(2)(3), MUMBAI. V/S. J J MULTITRADE PVT LTD. (ITAT MUMBAI) 14. M/S. SDB ESTATE PVT LTD. V/S. ITO - 5(3)(2), CI T(A) 10, MUMBAI. (ITAT MUMBAI) 15. BHARTI SYNTEX LTD. V/S. DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR, (ITAT JAIPUR) 16. ITO VS M/S AHAAN FINANCIAL SERVICES PVT LTD IT A NO. 5904/MUM/2017 7. THE SECOND PLEA OF THE ASSESSEE IS THAT THE SHAR E CAPITAL HAS BEEN RAISED AT A PREMIUM BY ISSUING SHARES WITH FACE VALUE OF RS.10 AT A PREMIUM OF RS.390 WAS IN FACT ON THE BASIS OF BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2007 ACCO RDING TO WHICH THE INTRINSIC VALUE OF THE SHARE WORKS OUT TO RS.411 PER SHARE. THEREFORE, OBJECTION OF THE AO AS PER PARA 2 OF THE ASSESSMENT ORDER THAT THE VALUE OF THE SHARE IS ON LY RS.10 IS WRONG AND AGAINST THE FACTS OF RECORD. THE LD. A. R. SUBMITTED THAT THE FINDINGS RECORDED FOR FORMING BELIEF AS TO THE ESCAPEMENT OF INCOME BY RECORDING REASONS UNDER SEC TION 148(2) IS WRONG AND FALLACIOUS. THE LD. A.R. ALSO SUBMITT ED THAT THE ASSESSEE HAS FILED ALL THE EVIDENCES AS STATED HERE INABOVE BEFORE THE AO EVIDENCING THE ISSUE OF SHARES, CONFIRMATION S OF INVESTMENTS BY THE INVESTORS, EVIDENCE OF PAYMENTS RECEIVED BY ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 7 THE ASSESSEE AND PAYMENTS MADE BY THE INVESTORS THR OUGH BANKING CHANNELS AS IS CLEAR FROM THE BANK STATEMEN TS FILED BEFORE THE AO AS WELL AS BEFORE THE LD. CIT(A) AND THEREFORE THE SAID ISSUE OF SHARES AT A PREMIUM CAN NOT BE ADDED UNDER SECTION 68 OF THE ACT. IN DEFENCE OF HIS ARGUMENT, THE LD. A.R. RELIED ON THE FOLLOWING DECISIONS: 1. PCIT, PANJI V/S. PARADISE INLAND SHIPPING (P.) LTD. 93 TAXMANN.COM84 (SC) 2. CIT V/S. GAGANDEEP INFRASTRUCTURE (P.) LTD. 80 TAXM ANN.COM 272 (HC-BOM) 3. CIT V/S. GREEN INFRA LTD. 78 TAXMANN.COM 340 (HC-BO M) 4. VODAFONE INDIA SERVICES (P.) LTD. V/S. UNION OF IND IA. 50 TAXMANN.COM 300 (HC-BOM) 5. CIT V/S. ORCHID INDUSTRIES (P.) LTD. 88 TAXMAN.COM 502 (HC- BOM) 6. CIT V/S. LOVELY EXPORTS (P) LTD. 216CTR195(SC) 7. CIT V/S. STELLER INVESTMENT LTD. 115TAXMAN99(SC) 8. CIT V/S. CREATIVE WORLD TELEFILMS LTD. 15 TAXMAN.CO M 183 (HC-BOM) 9. CIT V/S. GOA SPONGE AND POWER LTD. TAX APPEAL NO. 1 6 OF 20 1 2 (HC-BOM) 10. CIT V/S. GUJARAT HEAVY CHEMICALS LTD. 256 ITR 795 ( SC) 11. CIT V/S. AQUATIC REMEDIES PVT. LTD. ITA NO. 904 OF 2016(HC- BOM) 12. CIT V/S. GP INTERNATIONAL LTD. 186 TAXMAN 229 (HC- PUNJAB & HARYANA) 13. CIT V/S. ELECTRO POIYCHEM LTD. I TR 661 (HC-MADRAS) 14. CIT V/S. AKJ GRANITES P. LTD. 501 ITR 298 (HC- RAJ) 15. CIT V/S. OASIS HOSPITALITIES (P.) LTD. 298 TAXMAN 2 47 (HC - DELHI) 16. CIT V/S. SUPERTECH DIAMOND TOOLS (P.) LTD. 44 TAXMANN.COM 460 (HC-RAJ) ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 8 17. PR. CIT 5 V/S. LAXMAN INDUSTRIAL RESOURCES LTD. ITA 169/2017 CM APPL. 7385/2017(HC - DELHI) 18. CIT V/S. VALUE CAPITAL SERVICES (P.) LTD. ITA NO. 3 48 OF 2008 (HC-DELHI) 19. NATHU RAM PREMCHAND V/S. CIT 49 ITR 561 (HC-ALLAHAB AD) 20. CIT V/S. EXPO GLOBE INDIA LTD. 51 TAXMANN.COM (HC-D ELHI) 21. CIT VS VICTONY SPINNING MILLS LTD. 50 TAXMANN.COM 4 16 (HC- MADRAS) 22. CIT V/S. DWARKADHISH INVESTMENT (P.) LTD. 1 94 TAXM AN 43 (HC-DELHI) 23. CIT V/S. M/S. NISHAN INDO COMMERCE LTD. ITA NO. 52 OF 2001(HC-CALCUTTA ) 24. CIT V/S. VACMET PACKAGING (INDIA) (P.) LTD. 45 TAXMANN.COM 204 (HC-ALLAHABAD) 25. CIT V/S. GANGESHWARI METAL (P.) LTD. 30 TAXMANN.CO M 328 (HC-DELHI) 26. ACIT V/S. VENKATESHWAR ISPAT (P.) LTD. 3 1 9 ITR 39 3 (HC- CHHATTISGRAH) 27. CIT V/S. NAV BHARAT DUPLEX LTD. 35 TAXMANN.COM 289 (HC- ALLAHABAD) 28. CIT V/S. SAMIR BIO-TECH (P.) LTD. 325 ITR 294 (HC-D ELHI) 29. MOD CREATIONS (P.) LTD. V/S. ITO 13 TAXMANN.COM 1 1 4 (HC- DELHI) 30. CIT V/S. JAY DEE SECURITIES & FINANCE LTD. 32 TAXMA NN.COM 91 (HC-ALLAHABAD) 31. JAYA SECURITIES LTD. V/S. CIT 166 TAXMAN 7 (HC- ALL AHABAD) 32. PR. CIT VS APEAK INFOTECH 397 ITR 148 (BOM-HC) 33. PR. CIT VS. VEEDHATA TOWER PVT LTD 403 ITR 415(BOM- HC) 34. PR. CIT VS . VAISHNODEVI REFOILS & SOLVEX 96 TAXMAN N.COM 469 (SC) & 100 CCH 228 (GUJ-HC) 8. THE LD. A.R. ALSO ARGUED THAT AMENDMENT IN SECTI ON 56(2) (VII)(B) WAS EFFECTIVE FROM A.Y. 2013-14 AND THEREF ORE NOT APPLICABLE TO THE INSTANT YEAR AND THE ASSESSEE WAS AT LIBERTY TO ISSUE SHARE AT A PREMIUM AS THIS WAS A BUSINESS DEC ISION OF THE ASSESSEE AND TAX AUTHORITIES HAVE NO ROLE TO PLAY I N THE SAID ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 9 DECISION AS THESE ARE TAKEN IN THE INTEREST OF BUSI NESS AND OUT OF COMMERCIAL EXPEDIENCIES. FINALLY THE LD. A.R. S UBMITTED THAT THE ASSESSMENT WAS FRAMED BY THE AO WITHOUT GRANTIN G OPPORTUNITY TO ASSESSEE TO CROSS EXAMINE THE PERSON S OF WHOSE STATEMENST THE AO RELIED TO MAKE THE ADDITION. THE LD. A.R. REFERRED TO PAGE NO.170 AND 172 IN THE PAPER BOOK W HEREIN THE DIRECTOR SHRI DIPAK SINGHVI SPECIFICALLY APPEARED O N 15.02.2017 AND 03.03.2017 BEFORE THE AO TO CROSS EXAMINE THE W ITNESSES SHRI PRAVIN KUMAR JAIN & ORS. BUT THEY DID NOT APPE AR BEFORE THE AO AND CONSEQUENTLY COULD NOT BE CROSS EXAMINED . THE LD. A.R. SUBMITTED THAT THE ESTABLISHED AND SETTLED PO SITION OF LAW THAT ANY MATERIAL RELIED BY THE AUTHORITIES WITHOUT AFFORDING A CROSS EXAMINATION TO THE ASSESSEE IS BAD IN LAW. I N DEFENCE OF HIS ARGUMENTS THE LD. A.R. RELIED ON THE FOLLOWING DECISIONS: 1. KISHINCHAND CHELLARAM VS. CIT (1980) 4 TAXMAN 29 (SC) 2. M/S. ANDAMAN TIMBER INDUSTRIES VS. CCE, KOLKATA- II CIVIL APPEAL NO.4228 OF 2006 (SC) 3. H.R. MEHTA VS. ACIT, MUMBAI (2016) 72 TAXMANN.COM 110 (HC-BOM) 4. SHRI SUNIL PRAKASH VS. ACIT 15(2), MUMBAI. ITA 6494/MUM/2014 (ITAT MUMBAI) 9. THE LD. A.R. FINALLY SUBMITTED THAT IN VIEW OF T HE AFORESAID SUBMISSIONS THE ADDITION MAY KINDLY BE DELETED BY R EVERSING THE ORDER OF LD. CIT(A). 10. THE LD. D.R., ON THE OTHER HAND, STRONGLY CONTR OVERTED THE ARGUMENT OF THE LD. A.R. BY SUBMITTING THAT THE ASS ESSEE UNDISPUTEDLY AVAILED THE ACCOMMODATION ENTRIES FROM ENTITIES BELONGING TO SHRI PRAVIN KUMAR JAIN AND THE INVESTM ENT WAS MADE IN THE ASSESSEE COMPANY IN THE FORM OF SHARE C APITAL AND SHARE PREMIUM. THE ENTIRE MODUS OPERANDI OF SHRI P RAVIN ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 10 KUMAR JAIN AND HIS ASSOCIATED CONCERN WAS FOUND TO BE A BOGUS AND SHAM, SYSTEMIC AND ORGANIZED MODE OF PROVIDING ENTRIES TO VARIOUS ENTITIES IN THE MARKET BY ACCEPTING CASH AN D ISSUING CHEQUES. THE ASSESSEE IS ALSO ONE OF THE BENEFICIA RIES OF THE SAME AND THEREFORE THE ARGUMENTS OF THE ASSESSEE TH AT THESE INVESTMENTS WERE GENUINE ARE DEVOID OF TRUTH AND HA S RIGHTLY BEEN ADDED BY THE AO AND CONFIRMED BY THE LD. CIT(A ). THE LD. A.R. SUBMITTED THAT THE MERE FACT THAT THE STATEMEN T GIVEN BY SHRI PRAVIN KUMAR JAIN AND OTHERS DURING THE COURSE OF SEARCH HAVE BEEN RETRACTED LATER ON WILL NOT AFFECT THE BO GUS NATURE OF THE TRANSACTIONS. THE LD. D.R. SUBMITTED THAT THE SHARES WERE ISSUED AT AN EXORBITANT RATE OF RS. 390/- PER SHARE OF THE FACE VALUE OF RS. 10 EACH DESPITE THE FACT THAT ASSESSE E HAS NOT CARRIED OUT ANY BUSINESS AND HAS VERY MEAGER INCOM E. THE LD. D.R. ALSO POINTED OUT THAT THE INVESTORS WHO PURCHA SED THE SHARE FOR RS.400 PER SHARE HAVE SOLD THE SAME BACK TO THE PROMOTERS AT RS.10 PER SHARE AND THIS FACT HAS BEEN MENTIONED BY THE LD. CIT(A) IN PARA 5.8 OF THE APPELLATE ORDE R AND THE ASSESSEE FAILED TO PLACE ON RECORD THE NECESSARY EV IDENCES AND INFORMATION QUA THE PURCHASE AND SALE OF SHARES BY THE PROMOTERS OF THE ASSESSEE COMPANY DESPITE BEING SPE CIFICALLY ASKED BY THE APPELLATE AUTHORITY WHICH SHOWS THAT T HE INTENTIONS OF THE ASSESSEE WERE NOT GOOD AND ASSESS EE WANTS TO CONCEAL THE INFORMATION FROM THE AUTHORITIES BELOW. THE LD. D.R. ALSO TRIED TO DISTINGUISH THE CASE LAWS RELIED UPON BY THE LD. A.R. BY SUBMITTING THAT IN THE PRESENT CASE THE MONEY HAS BEEN RECEIVED THROUGH ACCOMMODATION ENTRIES AND THE REFORE THESE INVESTMENTS ARE NOT GENUINE AND RIGHTLY CONFI RMED BY THE LD. CIT(A) BY UPHOLDING THE ORDER OF AO. ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 11 11. IN THE REBUTTAL, THE LD. A.R. REFERRED TO THE P AGE NO.11 OF THE PAPER BOOK IN A.Y. 2008-09 AND DREW THE ATTENTI ON OF THE BENCH TO THE BALANCE SHEET PLACED AT PAGE NO.11 TO 15 AND POINTED OUT THAT EVEN PRIOR TO ISSUE OF SHARES TO THESE ENTITIES, THE BOOK VALUE PER SHARE WAS RS.411.80 AND THEREFO RE THE ARGUMENTS OF THE LD. D.R. THAT SHARE VALUE WAS ISSU ED AT A VERY HIGH PRICE IS WRONG AND AGAINST THE FACTS ON RECORD . THE LD. A.R. SUBMITTED THAT THE DECISION TO BUY SHARES BACK FROM THESE INVESTORS IS A COMMERCIAL DECISION AND CAN NOT BE D OUBTED BY THE TAX AUTHORITIES. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IM PUGNED ORDER. WE FIND THAT ASSESSEE HAS FILED THE NECESSA RY EVIDENCES AS STATED HEREINABOVE IN SUPPORT OF ITS CLAIM BEFOR E THE AO AS WELL AS BEFORE THE LD. CIT(A). THE EVIDENCES FILED COMPRISED OF COPIES OF ITR, ANNUAL ACCOUNTS, BANK STATEMENTS, PA N NUMBERS, APPLICATION FROM SHARE APPLICANTS, COPIES OF BOARD RESOLUTIONS ETC AND EVEN IN RESPONSE TO SUMMONS ISSUED UNDER SE CTION 131, THESE INVESTORS FILED THEIR AUDITED STATEMENTS, ITR S AND BANK STATEMENT BEFORE THE AO. THE AO HAS ALSO PROCEEDE D ON THE BASIS OF THE STATEMENT OF SHRI PRAVIN KUMAR JAIN AN D OTHERS RECORDED DURING THE COURSE OF SEARCH TO DOUBT THESE TRANSACTIONS AND HAS NOT BROUGHT ON RECORD ANY SUBSTANTIVE MATER IAL TO PROVE THESE INVESTMENTS AS NON GENUINE WHEREAS THE ASSESS EE HAS FILED ALL THE EVIDENCES. WE ALSO FIND THAT THE DIR ECTOR SHRI DIPAK SINGHVI HAS PRESENTED HIMSELF BEFORE THE AO IN ORDE R TO EXAMINE SHRI PRAVIN KUMAR JAIN AND OTHERS, HOWEVER, THE SAM E DID NOT ATTEND BEFORE THE AO AND CROSS EXAMINATION COULD N OT BE ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 12 PERFORMED. BESIDES ,THE AMENDMENT TO SECTION 56(2) (VII)(B) OF THE ACT IS APPLICABLE FROM A.Y. 2013-14 AND NOT TO THE YEAR UNDER CONSIDERATION AND THEREFORE THE QUESTION OF I SSUING SHARES AT A PREMIUM CAN NOT BE EXAMINED IN THIS YEAR AND A LSO ADDITION CAN NOT BE MADE. MOREOVER, WE FIND THAT ON THE DAT E OF ISSUE OF SHARES, THE INTRINSIC VALUE OF THE SHARE AS ON 31.0 3.2007 WAS 411.80 AND THEREFORE THE OBSERVATION OF THE AO THAT SHARES WERE ISSUED AT A VERY HIGH PRICE IS WRONG AND AGAINST TH E FACTS OF THE CASE. WE HAVE ALSO PERUSED THE DECISIONS REFERRED TO AND RELIED BY THE LD. AR OF THE ASSESSEE IN SUPPORT OF HIS ARG UMENTS AND FOUND THEM TO BE SQUARELY APPLICABLE TO THE ASSESSE ES CASE. IN THIS CASE, THE ASSESSEE HAS DISCHARGED THE ONUS CAS T UPON IT BY FILING THE NECESSARY DOCUMENTS BEFORE THE AO AS WEL L AS CIT(A). MOREOVER IN ABSENCE OF CROSS EXAMINATION OF THE PER SONS WHOSE STATEMENTS WERE RELIED BY THE AO, THE ADDITION CAN NOT BE MADE IN VIEW OF THE FACT THAT SPECIFIC PRAYERS TO THE A O TO THIS EFFECT WERE MADE BEFORE THE AO. IN VIEW OF THE ABOVE DISC USSION AND FACTS OF THE CASE, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. 13. THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.4101/M/2017 A.Y 2009-10 14. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDE NTICAL TO THE ONE AS STATED ABOVE IN ITA NO.4100/M/2017 A.Y 2008- 09. THEREFORE, OUR FINDING IN ITA NO.4100/M/2017 A.Y 20 08-09 WOULD, MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WE LL. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NOS.4100 & 4101/M/2017 M/S. SHAKTI SHARE SHOPPEE PVT. LTD. 13 15. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2020. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 23.12.2020. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.