ASST. CIT 12(2)(1), Mumbai V. M/S EVERGLADES MINERALS & RESERVES PVT LTD., Mumbai

ITA 4625/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7507 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Unexplained cash credit; Additional evidence; Question of law; Deemed dividend; Set aside
• Section: 2(22)(e); 133(6); 68

Judgement Text

INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 4625/MUM/2019 (ASSESSMENT YEAR 2010-11) ACIT-12(2)(1) ROOM NO. 128E/262 1 ST FLOOR AAYAKAR BHAVAN M.K. ROAD CHURCHGATE MUMBAI-400 020. VS. M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 1/C, 1 ST FLOOR MONISHA APARTMENT ST. ANDREWS ROAD, BANDRA WEST, MUMBAI-400 050. PAN : AABCE6566D (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI VIMAL PUNAMIYA DEPARTMENT BY SHRI VIJAY KUMAR MENON DATE OF HEARING 11.02.2021 DATE OF PRONOUNCEMENT 23.03.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST OR DER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEAR NED CIT(A)] DATED 11.4.2019 AND PERTAINS TO ASSESSMENT YEAR2010-11. 2. THE GROUNDS OF APPEAL READ AS UNDER :- 1. THE LD. CIT(A) HAS ERRED ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE AND IN LAW, IN DELETING THE ADDITION OF RS. 1,1 8,00,0007- ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22) (E) OF THE ACT WITHOUT APPRE CIATING THAT THE ASSESSEE COMPANY IS A CONCERN IN WHICH THE SHAREHOLD ERS OF M/S ANYUSHKA INVESTMENT PVT. LTD. (THE PAYER COMPANY) HAVE SUBSTAN TIAL INTEREST. 2. THE LD. CIT(A) HAS ERRED ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW, IN DELETING THE ADDITION OF RS. 2,00 ,00,0007- RECEIVED AS SHARE PREMIUM U/S 68 OF THE INCOME TAX ACT, 1961 WITH OUT APPRECIATING THAT ISSUE OF SHARES AT SUCH HIGH PREMIUM BY ASSESSEE CO MPANY WHOSE NET WORTH IS NEGATIVE AND PURCHASE OF THE SAME BY M/S ANYUSHK A INVESTMENTS PVT. LTD (BOTH ASSESSEE COMPANY AND AIPL HAS COMMON DIRECTORS) IS UNACCEPTABLE. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) O N THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 2 APROPOS GROUND NO. 1 3. BRIEF FACTS DURING THE RELEVANT PREVIOUS YEAR, T HE ASSESSEE RECEIVED A LOAN OF RS. 1,18,00,000/- FROM ONE M/S. ANYUSHKA IN VESTMENTS PRIVATE LIMITED (AIPL). THE ASSESSING OFFICER FOUND THAT AI PL WAS A RELATED COMPANY. THE SHAREHOLDING OF THE ASSESSEE AND AIPL WERE AS U NDER (AS AT 1.4.2009) :- COMPANY NAME OF THE SHARE HOLDER SHARE HOLDING M/S. ANYUSHKA INVESTMENTS PRIVATE LIMITED SUYASH PANDEY 51% BHAVNA PANDEY 49% M/S. EVERGLADES MINERALS & RESERVE PVT . LTD. SUYASH PANDEY 50% BHAVNA PANDE Y 50% THE ASSESSING OFFICER OBSERVED THAT BOTH SUYASH PAN DEY AND BHAVNA PANDEY HELD MORE THAN 20% VOTING POWER IN THE PAYER COMPAN Y (AIPL) AND MORE THAN 20% IN THE PAYEE COMPANY (ASSESSEE). THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LOAN OF RS. 1,18,00,000/- ADVANCED BY AIPL TO THE ASSESSEE-COMPANY FELL WITHIN THE MEANING OF DIVIDEND AS PER SECTION 2(22)(E) OF THE ACT BECAUSE BOTH SHRI SUYASH PANDAY AND MRS. BHAVNA PANDAY HELD MORE THAN 10% OF VOTING RIGHTS IN THE PAYER COMPANY AND MORE THAN 20 % IN THE PAYEE COMPANY I.E. THE ASSESSEE COMPANY. THE AO ASKED THE ASSESSE E WHY THE TRANSACTION SHOULD NOT BE BROUGHT UNDER THE PURVIEW OF SECTION 2(22)(E) OF THE ACT. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON TO SHOW- CAUSE WHY THE SUM OF RS. 1,18,00,000/- SHOULD NOT B E TREATED AS DEEMED DIVIDEND. IN RESPONSE TO APPELLANT SUBMITTED THAT T HE ASSESSEE DID NOT HOLD ANY SHARES IN AIPL AND AIPL HELD 80% SHARES IN THE ASSESSEE-COMPANY. THE AO REJECTED THE ASSESSEE'S CONTENTION AND ADDED A S UM OF RS. 1,18,00,000/- TO ASSESSEES TOTAL INCOME. 4. UPON ASSESSEE'S APPEAL LEARNED CIT(A) GRANTED RE LIEF TO THE ASSESSEE ON LIMBS. 5. FIRSTLY HE ACCEPTED THE PROPOSITION THAT AIPL IS AN INVESTMENT COMPANY AND PROVIDING FINANCIAL ASSISTANCE WAS ITS BUSINESS THAT THEREFORE THE LOAN AND M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 3 ADVANCES RECEIVED FROM AIPL DO NOT FALL WITHIN THE DEFINITION OF DIVIDEND. IN THIS REGARD HE REFERRED TO THE DECISION OF HONOURAB LE BOMBAY HIGH COURT IN THE CASE OF CIT VERSUS IMPACT CONTAINERS (40 TAXMANN.CO M 294). FURTHERMORE LEARNED CIT(A) ACCEPTED THE ASSESSEE'S CONTENTION T HAT DIVIDEND CAN BE TAXED IN THE HANDS OF THE SHAREHOLDER ONLY AND SINCE THE ASSESSEE WAS NOT A SHAREHOLDER IN LPL THE DIVIDEND CANNOT BE TAXED IN ITS HANDS. IN THIS REGARD RELIANCE WAS PLACED UPON THE SPECIAL BENCH OF ITAT IN THE CASE OF ACIT VERSUS BHAUMIK COLOUR P. LTD. (118 ITD 1). HENCE, LEARNED CIT(A) DELETED THE ADDITION. 6. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE U S. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. WE FIND THAT IT IS EVIDENT FROM THE FACTS ABOVE ASSESSEE IS NOT A S HAREHOLDER OF THE LENDING COMPANY THAT IS AIPL. HENCE ON THE TOUCHSTONE OF TH E SPECIAL BENCH DECISION OF THE ITAT IN BHAUMIK COLOUR P. LTD. (SUPRA) DEEME D DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT ARE NOT TAXABLE IN THE HANDS OF THE ASSESSEE. 8. FURTHERMORE RELIANCE UPON THE BOMBAY HIGH COURT DECISION IN THE CASE OF IMPACT CONTAINER (SUPRA) IS ALSO GERMANE IN AS M UCH AS WHEN IT IS THE NORMAL BUSINESS OF THE LENDING COMPANY TO GIVE ADVA NCES THE RECEIPT OF ADVANCE FROM THE SAME BY THE ASSESSEE CANNOT BE TER MED AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. 9. HENCE FOLLOWING THE PRECEDENT AS ABOVE, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A), ACCORDINGLY THIS GROUN D RAISED BY THE REVENUE STANDS DISMISSED. APROPOS GROUND NO. 2 10. BRIEF FACTS ARE THAT DURING THE RELEVANT PREVIO US YEAR, THE APPELLANT CREDITED RS. 2,00,00,000/- IN ITS BOOKS. THE ASSESS EE CLAIMED THAT THE SUM REPRESENTED SHARE APPLICATION MONEY; THAT OUT OF TH AT SUM, RS. 400,000/- REPRESENTED SHARE CAPITAL AND THE REMAINING SUM REP RESENTED SHARE PREMIUM M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 4 THAT SHARES OF RS. 10 EACH HAD BEEN ISSUED A PREMIU M OF RS. 490/- EACH. THE ASSESSEE CLAIMED THAT THE SUM OF RS. 2 CRORES WAS R ECEIVED FROM AIPL. THE COURSE OF THE ASSESSMENT PROCEEDINGS, NOTICE UNDER SECTION 133(6) OF THE ACT WAS ISSUED TO AIPL CALLING FOR DETAILS PERTAINING T O ITS TRANSACTIONS WITH THE ASSESSEE. IN ITS REPLY, AIPL CONFIRMED HAVING INVES TED THE SUM OF RS. 2 CRORE IN SHARES IN THE APPELLANT COMPANY. AS REGARDS THE SOU RCE, AIPL SUBMITTED THAT THE SOURCE WAS ACCUMULATED RESERVE & SURPLUS OF THE COMPANY. THE ASSESSING OFFICER OBSERVED THAT THE ONUS TO ESTABLISH THE IDE NTITY OF THE PERSON FROM WHOM THE MONEY WAS RECEIVED, HIS CAPACITY TO PAY TH E MONEY AND THE GENUINENESS OF THE TRANSACTION WAS ON THE ASSESSEE. THE AO OBSERVED THAT IN THIS CASE THOUGH THE IDENTITY OF AIPL WAS ESTABLISH ED, ITS CAPACITY TO PAY THE SUM WAS NOT ESTABLISHED BY THE ASSESSEE. THE AO OBS ERVED AS UNDER: '5.4 AIPL IS A COMPANY WHICH HAS A TURNOVER OF MEREL Y RS. 37.90 LAKHS IN THE CURRENT YEAR (AY 2010-11), WHILE REPORTING A TURNOVER OF ONLY RS.13.14 LAKHS IN THE EARLIER YEAR (AY 2009-10), FURTHER, IN THE CURRE NT YEAR, THE COMPANY HAS MADE A PROFIT OF ONLY RS. 2.68 LAKHS, WHILE INCURRIN G A LOSS OF RS. 8.72 LAKHS IN THE EARLIER YEAR. IN FACT, THE ACTUAL FINANCIALS OF THE COMPANY CANNOT BE ASCERTAINED BECAUSE THE ORIGINAL RETURN FOR AY 2010- 11 HAS NOT BEEN FILED. THE ASSESSEE COMPANY WAS INCORPORATED ON 10.06.2006 BUT IT HAS NOT FILED RETURN OF INCOME FOR AYS 2007-08, 2008-09, 2009-10 & 2010- 11. 5.5 GIVEN THAT AIPL HAS SUCH A MODERATE TURNOVER AND EA RNINGS, THE TRANSACTION OF SUBSCRIBING TO THE SHARES OF THE ASSESSE E COMPANY AT SUCH A HUGE PREMIUM CANNOT BE JUSTIFIED ON ANY NORMS OF BUS INESS THUS THE CREDITWORTHINESS OF AIPL WITH RESPECT TO SUCH IRE TRAN SACTIONS CANNOT BE ESTABLISHED.' 11. THE AO FURTHER OBSERVED THAT THE NAV OF THE SHA RES OF THE ASSESSEE WAS NEGATIVE AND HENCE THERE WAS NO BASIS WHATSOEVER IN THE VALUATION OFFE RED BY THE ASSESSEE TO JUSTIFY ITS VALUE. THE ASSESSING OF FICER CONCLUDED THAT THE TRANSACTION WAS NOT A GENUINE TRANSACTION. ACCORDIN GLY, THE AO TREATED THE SUM OF RS. 2 CRORES AS UNEXPLAINED CASH CREDIT AND ADDED THE SUM TO APPELLANT'S TOTAL INCOME. 12. UPON ASSESSEE'S APPEAL LEARNED CIT(A) NOTED THA T ASSESSEE HAD NOT BEEN GRANTED PROPER OPPORTUNITY BY THE ASSESSING OFFICER . HE NOTED THE CONTENTION OF THE ASSESSEE THAT THE NET OF AIPL WAS RS.5,67,57,55 3/- AND THEREFORE, CAPACITY M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 5 OF AIPL TO INVEST RS. 2 CRORE CANNOT BE DOUBTED. RE GARDING THE OBSERVATION OF THE ASSESSING OFFICER IN PARA 5.4 OF THE ASSESSMEN T ORDER THAT THE ORIGINAL RETURN FOR A.Y. 2010-11 OF AIPL HAD NOT BEEN FILED AND THEREFORE, THE ACTUAL FINANCIAL OF AIPL COULD NOT BE ASCERTAINED, THE AR CONTENDED THAT IT WAS NOT GIVEN ADEQUATE OPPORTUNITY. THE LEARNED CIT(A) NOTE D THAT THE AR POINTED OUT W.R.T. PARA 5.9 OF THE ASSESSMENT ORDER THAT THE AS SESSING OFFICER HAD ASKED THE APPELLANT TO JUSTIFY THE PREMIUM PAID; THAT THE ASSESSING OFFICER DID NOT ASK THE ASSESSEE TO ESTABLISH THE CAPACITY OF THE C REDITOR (AIPL) OR THE GENUINENESS OF THE PAYMENT PER SE. THE LEARNED CIT( A) NOTED THAT IN FACT THE AR POINTED OUT, IN PARA 5.2 OF THE ASSESSMENT ORDER , THE AO HAS MENTIONED THAT THE AIPL HAD IN RESPONSE TO NOTICE ISSUED U/S 133(6) CONFIRMED THE TRANSACTION. 13. HE FURTHER NOTED THAT ASSESSEE HAS FILED FOLLOW ING DOCUMENTS IN SUPPORT OF GENUINENESS OF THE MONEY RECEIVED FROM AIPL. COP IES OF BALANCE SHEET, PROFIT AND LOSS A/C. AND DIRECTORS REPORT OF THE AP PELLANT OF A.Y. 2007-08 TO A.Y. 2010-11 :- A) COPIES OF BALANCE SHEET, PROFIT AND LOSS ACCOUNT AN D DIRECTORS REPORT OF THE APPELLANT FOR A.Y. A.Y. 2007-08 TO A.Y. 2010-11 B) COPIES OF INCOME TAX RETURN, BALANCE SHEET, PR OFIT AND LOSS A/C. AND DIRECTORS REPORT OF AIPL OF A.Y. 2007-08 TO A.Y. 2010 -11 C) COPIES OF ROC RETURNS OF AIPL FOR A.Y. 2008 -09 TO A.Y. 2011-12 D) COPIES OF ROC RETURNS OF THE APPELLANT FOR A .Y. 2008-09 TO A.Y. 201112 HE NOTED THAT ASSESSEE HAS PLEADED THAT AO DID NOT CALL FOR THESE DOCUMENTS SPECIFICALLY HENCE ASSESSEE DID NOT HAVE THE OPPORT UNITY TO SUBMIT THE SAME BEFORE ASSESSING OFFICER. THE LEARNED CIT(A) NOTED THAT THESE DOCUMENTS WERE SENT TO THE AO AS REQUIRED UNDER RULE 46A OF THE ACT BUT DESPITE SEVE RAL REMINDERS THE ASSESSING OFFICER DID NOT COMMENT UPO N THE ADDITIONAL EVIDENCE. HENCE, LEARNED CIT(A) PROCEEDED TO DECIDE THE ISSUE AS UNDER :- I FIND FROM PARA 5.2 OF THE ASSESSMENT ORDER THAT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. AIPL HAD CONFIRMED THE TRANS ACTION. I ALSO FIND FROM THE ADDITIONAL EVIDENCE THAT AIPL HAS BEEN REGULARLY F ILING ITS RETURN OF INCOME AND ALSO ROC RETURN. I FIND THAT IN THE BALANC E SHEET OF AIPL AS AT 31.03.2010 THAT A SUM OF RS. 2.00.00.000/- HAS BEEN S HOWN AS 'INVESTMENT IN SUBSIDIARY COMPANY'. I ALSO FIND THAT DURING THE REL EVANT PREVIOUS YEAR, M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 6 AFTER THE ISSUE 40,000 SHARES, THE APPELLANT BECAME A SUBSIDIARY OF AIPL THEREFORE, THERE IS NO APPARENT INCONSISTENCY BETWEEN THE INFORMATION FURNISHED BY AIPL AND ITS THE BALANCE SHEET. AS MENTI ONED IN PARA 4.2.1 ABOVE, AIPL HAD GIVEN A LOAN OF RS. 1,18,00,0007- TO THE APPELLANT WHICH WAS THE SUBJECT MATTER OF GROUND OF APPEAL NO. 1. BUT THE AO DID NOT DOUBT THE CA PA CITY OF AIPL TO GIVE THAT LOAN. THE CONTENTION OF THE AO THAT THE TRANSACTION WAS NOT G ENUINE BECAUSE THE PREMIUM WAS VERY HIGH IS NOT CORRECT BECAUSE SHARES I N BOTH THE COMPANIES (AIPL AND THE APPELLANT) ARE HELD ENTIRELY BY SUVAS H PANDEY AND BHAVNA PANDEY. THEREFORE, INSPITE OF THE HUGE PREMIUM, THE N ET ASSETS OF THE TWO INDIVIDUAL REMAINED UNCHANGED. 14. HE ALSO REFERRED TO THE DECISION OF HONOURABLE DELHI HIGH COURT IN THAT CASE. HE FURTHER REFERRED TO THE DECISION OF HONOUR ABLE BOMBAY HIGH COURT IN THE CASE OF GAGANDEEP INFRASTRUCTURE PVT. LTD. (80 TAXMANN.COM 272) IN THAT CASE THE QUESTION OF LAW BEFORE HON'BLE COURT IN TH IS CASE WAS AS UNDER :- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION OF RS .7,53,50,000/- U/S.68 OF THE ACT BEING SHARE CAPITAL/SHARE PREMIUM RECEIVED DUR ING THE YEAR WHEN THE AO HELD THE SAME AS UNEXPLAINED CASH CREDIT.' I N THAT CASE, THE HON'BLE HIGH COURT RELYING UPON THE DECISION OF THE APEX COU RT IN CIT VS. LOVELY EXPORT (P) LTD. (SUPRA) HELD THAT IF THE AMOUNTS HAV E BEEN SUBSCRIBED BY BOGUS SHAREHOLDERS, IT WAS FOR THE REVENUE TO PROCEED AGAINST SUCH SHAREHOLDERS; THAT, THEREFORE, THE AO WAS NOT JUSTIFIE D IN ADDING THE AMOUNT OF SHARE CAPITAL SUBSCRIPTION INCLUDING THE SHARE PRE MIUM AS UNEXPLAINED CREDIT U/S. 68 OF THE ACT. ACCORDINGLY LEARNED CIT(A) DELETED THE ADDITION. AG AINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE MADE FOLLOWING SUBM ISSION :- 1. DURING THE YEAR UNDER CONSIDERATION, THE APPELLA NT HAS RECEIVED EQUITY SHARE APPLICATION MONEY FROM THE FOLLOWING INVESTOR'S COMP ANIES: S. NO. NAME OF INVESTOR'S COMPANIES DATE OF INCORPORATION PAN QTY. AMOUNT OF SHARE CAPITAL AMOUNT OF PREMIUM TOTAL AMOUNT 1 M/S. ANYUSHKA INVESTMENTS PRIVATE LIMITED 08/08/1996 AACCA8423E 40,000 4,00,000 1,96,00,000 2,00,00,000 GRAND TOTAL 40,000 4,00,000 1,96,00,000 2,00,00,000 A. DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE APP ELLANT TO GIVE THE CERTAIN INFORMATION/EXPLANATIONS AS STATED IN THE NOTIC E DATED FEBRUARY 19, 2016 (REFER PAGE NO. 12TO20 OF PB-II). IN RESPONSE TO THE SAID NOTICES, THE M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 7 APPELLANT HAS FILED THE FOLLOWING INFORMATION/DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS VIDE LETTERS DATED MARCH 30, 2016 (REFER PAGE NO. 1 TO 4 OF PB-I). B. COMPANY'S MASTER DATA LIKE COMPANY NAME, COMPANY IDENTIFICATION NUMBER (CIN), DATE OF INCORPORATION, REGISTERED ADDRESS, E-M AIL ID, ETC. OF INVESTOR'S COMPANIES DOWNLOADED FROM WWW.MCA.GOV.IN C. NAME, ADDRESS, PAN, INCOME-TAX JURISDICTION, ETC. OF THE INVESTOR'S COMPANIES; D. CERTIFICATE OF INCORPORATION OF THE INVESTOR'S C OMPANIES; E. FORM OF APPLICATION FOR EQUITY SHARES FILLED BY THE INVESTOR'S COMPANIES, F. COPIES OF ALLOTMENT ADVICES GIVEN BY THE APPELLANT TO THE INVESTOR'S COMPANIES; G. COPY OF DIRECTOR REPORT, AUDIT REPORT AND BALANCE SHEET OF THE INVESTOR'S COMPANIES. 2. AFTER THAT, THE AO HAS NOT CALLED FOR ANY FURTHER EXPL ANATION/DOCUMENTS REGARDING THE SAID EQUITY SHARE APPLICATION MONEY RE CEIVED FROM THE SAID INVESTOR'S COMPANIES. 3. THE LEARNED AO ADDED THE PREMIUM ON EQUITY SHARE S APPLICATION MONEY AMOUNTING TO RS. 1,96,00,000/- RECEIVED FROM THE ABOVE INVESTORS UNDER SECTION 68 OF THE ACT ON THE ALLEGED GROUND THAT IT I S UNEXPLAINED CASH CREDIT 4. AT THE OUTSET, THE APPELLANT WOULD LIKE TO DRAW YOUR HONOUR'S KIND ATTENTION TO THE TEXT OF SECTION 68 OF THE ACT THAT READS AS UNDER: '68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OF FERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFA CTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR.' 5. FROM A READING OF THE ABOVE SECTION, IT IS EVIDE NT THAT THE ASSESSEE SHOULD BE ABLE TO PROVIDE SATISFACTORY EXPLANATIONS ABOUT THE SUM FOUND TO BE CREDITED IN THE BOOKS OF THE ASSESSEE. IT IS A FAIRLY SETTLED L EGAL POSITION HELD BY VARIOUS DECISIONS DISCUSSED SUBSEQUENTLY THAT IF THE A SSESSEE PROVES THE FOLLOWING THINGS THEN THE ADDITION UNDER SECTION 68 O F THE ACT CANNOT BE MADE: I. IDENTITY OF THE SHAREHOLDER; II. GENUINENESS OF THE TRANSACTION; 6. CREDIT WORTHINESS OF THE SHAREHOLDER M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 8 7. THE APPELLANT HUMBLY SUBMIT THAT THE APPELLANT HAS AL READY SUBMITTED ALL THE DETAILS REQUIRED TO PROVE THE ABOVE REQUIREMENTS. T HE APPELLANT HUMBLE SUBMISSIONS ARE AS UNDER:- I) AS REGARDS THE IDENTITY OF THE SHAREHOLDER; I. THE APPELLANT HAS FILED THE FOLLOWING INFORMATI ON/DOCUMENTS DURING THE ASSESSMENT PROCEEDINGS TO THE ASSESSING OFFICER. II. COMPANY'S MASTER DATA LIKE COMPANY NAME, COM PANY IDENTIFICATION NUMBER (CIN), DATE OF INCORPORATION, REGISTERED ADDR ESS, E-MAIL ID, ETC. OF INVESTOR'S COMPANIES DOWNLOADED FROM WWW.MCA.GOV.IN; III. NAME, ADDRESS, PAN, INCOME-TAX JURISDICTION, ETC. OF THE INVESTOR'S COMPANIES; IV. CERTIFICATE OF INCORPORATION OF THE INVESTOR'S C OMPANIES; V. FORM OF APPLICATION FOR EQUITY SHARES FILLED BY THE INVESTOR'S COMPANIES, VI. COPIES OF ALLOTMENT ADVICES GIVEN BY THE APPELLAN T TO THE INVESTOR'S COMPANIES; VII. COPY OF DIRECTOR REPORT, AUDIT REPORT AND BALA NCE SHEET OF THE INVESTOR'S B. THE COMPANYS MASTER DATA, INCOME TAX JURISDICTION DE TAILS AND FINANCIALS OF THE INVESTOR'S COMPANIES PROVED THE IDENTITY AS WELL AS FINANCIAL CAPACITY I.E. CREDITWORTHINESS OF THE INVESTOR'S COMPANIES. HE NCE, THE AFORESAID DOCUMENT HAS PROVED THE IDENTITY OF THE SHAREHOLDERS . II) AS REGARDS THE GENUINENESS OF THE TRANSACTION; THE APPELLANT HAS RECEIVED THE SHARE APPLICATION MON EY THROUGH PROPER BANKING CHANNELS AS THE FUNDS WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. PLEASE SEE BANK STATEMENTS FILED WITH THE AO. T HE APPELLANT SUBMIT THAT THE BANK STATEMENT AND OTHER DOCUMENTS SUBMITTED BEFO RE THE AO PROVED THE GENUINENESS OF THE TRANSACTIONS.(REFER P B-II PAGE NO 22-28). III) AS REGARDS CREDITWORTHINESS OF THE SHAREHO LDERS; THE FINANCIALS OF THE INVESTOR'S COMPANIES PROVED THE IDENTITY AS WELL AS FINANCIAL CAPACITY I.E. CREDITWORTHINESS OF THE INVE STOR'S COMPANIES. FURTHER, THE APPELLANT SUBMIT THE DETAILS OF SHARE CAPITAL, RESER VE AND SURPLUS, NETWORTH OF THE INVESTOR'S COMPANIES AS UNDER: SR. NO. NAME OF INVESTOR'S COMPANIES AMOUNT OF SHARE CAPITAL AMOUNT OF PREMIUM TOTAL AMOUNT SHARE CAPITAL OF INVESTORS COMPANIES RESERVES OF INVESTORS COMPANIES NETWORTH OF INVESTORS COMPANIES % (INVESTMENT/ NETWORTH) 1. M/S. ANYUSHKA INVESTMENTS PRIVATE LTD. 4,00,000 1,96,00,000 2,00,00,000 1,00,000 5,66,57,553 5,67,57,553 35.23% TOTAL 4,00,000 1,96,00,000 2,00,00,000 1,00,000 5,66,57,553 5,67,57,553 35.23% M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 9 8. IN VIEW OF THE AFORESAID DETAILS, THE APPELLANT SUBM ITS THAT ALL THE INVESTOR'S COMPANIES HAVE POSITIVE NET WORTH AND HAVE ONLY INVESTED ON AN AVERAGE 35.23% OF THEIR NET WORTH IN THE APPELLANT. HEN CE, THE CREDITWORTHINESS OF THE INVESTOR'S COMPANIES CANNOT DO UBTFUL. 9. FURTHER, THE APPELLANT SUBMIT THAT THE COMPANY'S MAS TER DATA, INCOME- TAX JURISDICTION DETAILS AND FINANCIALS OF THE INVESTO R'S COMPANIES PROVED THE IDENTITY AS WELL AS FINANCIAL CAPACITY I.E. CREDITWO RTHINESS OF THE INVESTOR'S COMPANIES. 10. THE APPELLANT HAS ALSO ALLOTTED THE SHARES TO THE INVESTOR'S COMPANIES IN THE CURRENT YEAR AND ALL THE RELEVANT DETAILS FILED BY THE APPELLANT TO THE ROC AS WELL AS WITH THE AO . 11. THE AO TREATED ONLY SHARE PREMIUM RECEIVED BY T HE APPELLANT AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT ON THE ALLEGED GROUND THAT THE APPELLANT HAS NOT BROUGHT ON RECORD TO PROVE THE I DENTITY, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE INVESTORS WITHOUT APPRECIATING THAT THE APPELLANT HAS SUBMITTED THE COPIES OF DIRECTOR REPORT, BALANCE SHEET, BANK STATEMENTS, SHARE APPLICATI ON FORMS, ETC. CLEARLY BROUGHT OUT THE NATURE OF THE TRANSACTIONS, AMOUNT INVOLV ED AND SCOPE OF THE TRANSACTION. 12. THE APPELLANT SUBMIT THAT THE APPELLANT HAS DISCHARG ED ITS ONUS OF PROVING THE IDENTITY OF THE PARTIES, GENUINENESS OF TH E TRANSACTIONS AND THE CREDITWORTHINESS OF THE SHAREHOLDER. THEREFORE, THE APPELLANT HUMBLY SUBMIT THAT THE ADDITION MADE UNDER SECTION 68 OF THE ACT BE DE LETED. 15. THEREAFTER LEARNED COUNSEL OF THE ASSESSEE PLAC ED RELIANCE UPON A CATENA OF CASE LAWS AND PLEADED THAT THE LEARNED CIT(A) OR DER DESERVES TO BE UPHELD. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE REL IED UPON THE ASSESSING OFFICERS ORDER. 16. UPON CAREFUL CONSIDERATION WE NOTE THAT ASSESSE E HAS SUBMITTED ALL THE NECESSARY DOCUMENTS REQUIRED TO SATISFY THE EXTANT PROVISIONS OF SECTION 68. THE REQUIRED DOCUMENTS AS NOTED ABOVE IN THE ORDER OF LEARNED CIT(A) AND SUBMISSION OF THE ASSESSEE'S COUNSEL WERE AVAILABLE BEFORE THE ASSESSING OFFICER ALSO. THE SAID PARTY IS A GROUP CONCERN AND IT HAS ALSO CONFIRMED THE TRANSACTION. FURTHERMORE WE NOTE THAT ASSESSEE COMP ANY HAS RECEIVED THE SHARE CAPITAL INCLUDING PREMIUM FROM THE SAME GROUP COMPANY THAT IS AIPL, FROM WHOM IT HAS ALSO RECEIVED LOAN OF RS. 1.18 CRO RES. THE ASSESSING OFFICER IS M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 10 NOT DOUBTING THE CAPACITY OF AIPL IN GRANTING THE L OAN BUT IS DOUBTING THE CAPACITY TO GIVE THE SHARE CAPITAL. 17. MOREOVER THE AMENDED PROVISIONS OF SECTION 68 O F THE ACT PROVIDING SATISFACTION OF THE ASSESSING OFFICER REGARDING EXP LANATION FROM THE PARTY FROM WHOM THE CREDIT IS RECEIVED AS PER PROVISO TO SECT ION 68 OF THE ACT WAS INSERTED BY FINANCE ACT, 2012 WITH EFFECT FROM 1/4/ 2013. THE SAME IS NOT APPLICABLE FOR THIS ASSESSMENT YEAR. 18. AS REGARDS THE ISSUE OF JUSTIFICATION OF SHARE PREMIUM THAT IS ALSO NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION AS THE SAME IS APPLICABLE FROM 1.4.2013. 19. THE ABOVE POSITION IS DULY SUPPORTED BY DECISIO N OF HONOURABLE JURISDICTIONAL HIGH COURT IN SEVERAL DECISIONS INCL UDING GAGANDEEP INFRASTRUCTURE PVT. LTD. (SUPRA) & PR. CIT VS. VEED HATA TOWERS PVT. LTD. IN ITAT NO. 819 OF 2015 VIDE ORDER DATED 17.4.2017. ACCORDI NGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF LEARNED CIT(A). ACCORDINGLY WE UPHOLD THE SAME. 20. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STAND DISMISSED. PRONOUNCED IN THE OPEN COURT ON 23.3.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAMIM YAH YA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 23/03/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. M/S. EVERGLADES MINERALS & RESERVES PVT. LTD. 11 BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI