M/S MULTIVENTURE FINANCIAL SERVICES PVT LTD., Mumbai V. ITO 3 (2)(2), Mumbai

ITA 4882/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4905 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT ANDHALA
• Assessee Lawyers: VISHNU AGGARWAL
• Keywords: Unexplained cash credit; Capital asset; Business income; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Deemed to accrue or arise in india; Question of law; Corroborative evidences; Deemed dividend; Capital receipt; TDS; Set aside; Capital Gains
• Section: 143(3); 2(22)(e); 133(6); 201; 251; 113; 48; 72; 13; 22; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NOS.3715, 3716 & 3717/M/2019 ASSESSMENT YEARS: 2010-11, 2011-12, 2013-14 INCOME TAX OFFICER- 3(2)(2), ROOM NO.673A, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD., 113, 1 ST FLOOR, MAKER CHAMBER-V, NARIMAN POINT, MUMBAI 400 021 PAN: AADCM 2372F (APPELLANT) (R ESPONDENT) ITA NO.3718/M/2019 ASSESSMENT YEAR: 2013-14 INCOME TAX OFFICER- 3(2)(2), ROOM NO.673A, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. MULTIVENTURE PROPERTIES PVT. LTD., 113, 1 ST FLOOR, MAKER CHAMBER-V, NARIMAN POINT, MUMBAI 400 021 PAN: AAECM7195F (APPELLANT) (R ESPONDENT) ITA NO.4882/M/2019 ASSESSMENT YEAR: 2010-11 M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD., 113, 1 ST FLOOR, MAKER CHAMBER-V, NARIMAN POINT, MUMBAI 400 021 PAN: AADCM 2372F VS. INCOME TAX OFFICER- 3(2)(2), ROOM NO.673A, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VISHNU AGGARWAL, A.R. REVENUE BY : SHRI BHARAT ANDHALA, D.R. DATE OF HEARING : 14.01.2020 DATE OF PRONOUNCEMENT : 22.02.2021 M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 2 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED CROSS APPEALS HAVE BEEN PREFERRED AGAINST THE ORDER DATED 27.03.2019 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEARS 2010-11, 2011-12 & 2013-14. ITA NO.3717/M/2019 2. THE ISSUE RAISED IN GROUND NO.1 TO 3 BY THE REVE NUE IS AGAINST THE DELETION OF RS.4,63,00,000/- BY LD. CIT (A) AS MADE BY THE AO TOWARDS THE AMOUNT/SURPLUS RECEIVED BY TH E ASSESSEE UPON RETIREMENT FROM THE PARTNERSHIP FIRM. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED R ETURN OF INCOME ON 30.09.2013 DECLARING INCOME OF RS.20,32,5 42/-. THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED F OR SCRUTINY UNDER CASS AND STATUTORY NOTICES WERE DULY ISSUED A ND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT ASSESSEE WAS PARTN ER IN INNOVATIVE CONSTRUCTION COMPANY, PUNE IN TERMS OF D EED OF PARTNERSHIP DATED 21.12.2006. THE ASSESSEE RETIRED FROM THE PARTNERSHIP ON 08.08.2012 AND RECEIVED AN AMOUNT OF RS.4,63,00,000/-. THE ASSESSEE REDUCED THE SAID MO NEY RECEIVED FROM THE PARTNERSHIP IN THE COMPUTATION OF TOTAL INCOME WHILE FILING THE RETURN OF INCOME ON THE GROUND THA T UPON RETIREMENT FROM THE FIRM THERE IS NO TRANSFER OF AS SETS AND THE AMOUNT RECEIVED IS A CAPITAL RECEIPT WHICH IS NOT L IABLE TO TAX. THE AO, HOWEVER, NOT CONVINCED WITH THE REPLY OF TH E ASSESSEE, ISSUED SHOW CAUSE NOTICE DATED 11.03.2016 AS TO WHY THE SAID AMOUNT RECEIVED FROM THE PARTNERSHIP CONCERN SHOULD NOT BE M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 3 TREATED AS INCOME OF THE ASSESSEE WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 21.03.2016 WHICH IS REPR ODUCED BY THE AO IN PARA 4.3 OF THE ASSESSMENT ORDER. THE AO OBSERVED THAT AT THE TIME OF BECOMING PARTNER THE ASSESSEE H AD INVESTED BY WAY OF CAPITAL A SUM OF RS.5,37,00,000/- IN THE PARTNERSHIP WHEREAS UPON RETIREMENT THE ASSESSEE GOT AN AMOUNT OF RS.10 CRORES COMPRISING RS.5,37,00,000/- TOWARDS CAPITAL TO BE PAID WITHIN 3 MONTHS FROM THE DATE OF RETIREMENT AND THE BALANCE WAS TO BE PAID WITHIN 12 MONTHS FROM THE DATE OF RE TIREMENT. THE AO CAME TO THE CONCLUSION THAT ASSESSEE HAS SOL D THE GOODWILL WHICH IS ENJOYED BY HIM BY VIRTUE OF BEING PARTNER IN THE SAID FIRM AND THUS IT IS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT AND FINALLY ADDED THE SURP LUS AS LONG TERM CAPITAL GAIN IN THE ASSESSMENT FRAMED UNDER SE CTION 143(3) OF THE ACT DATED 26.03.2016. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALL OWED THE APPEAL OF THE ASSESSEE BY HOLDING AND OBSERVING AS UNDER: 3.1.3 THESE GROUNDS PERTAIN TO ADDITION OF RS. 4,6 3,00,000/- MADE BY ASSESSING OFFICER HAVING TREATED THE MONEY RECEIVED ON RETIRE MENT FROM PARTNERSHIP FIRM, AS LONG TERM CAPITAL GAIN, I FIND THAT THE A.O. HAS DI SCUSSED THIS ISSUE AT PARA 4 OF HER ORDER. THE APPELLANT CONTENDED VEHEMENTLY BEFORE TH E ASSESSING OFFICER THAT THE SUM RECEIVED ON RETIREMENT AS PARTNER FROM PARTNERS HIP FIRM, IS NOT TRANSFER OF ANY CAPITAL ASSETS AS DEFINED U/S 2 (47) OF THE IT ACT, THEREFORE, NOT TAXABLE IN THE HANDS OF THE APPELLANT. THE APPELLANT ALSO RELIED UPON VA RIOUS JUDICIAL DECISIONS , SUCH AS, THE CIT, PUNE VS RIYAZ SHEIKH (BOMBAY- HC), TRIBHUV ANDAS G PATEL VS CIT (SC), CIT VS R LINGMALLU RAGHUKUMAR (SC), PRASHANT JOSHI VS ITO (BOMBAY -HC) ETC. HOWEVER, ON THE OTHER HAND, THE AO RELIED ON SHEVANTIBHAI C MEH TA (ITAT - PUNE BENCH) AND DREW THE CONCLUSION THAT THE RETIREMENT AMOUNT WAS TAXABLE AS LONG TERM CAPITAL GAIN. 3.1.4 THE FACTS, IN BRIEF, ARE THAT THE APPELLANT W AS A PARTNER IN THE FIRM, NAMELY, INNOVATIVE CONSTRUCTION COMPANY, PUNE W.E.F. 21/12/ 2006. IT RETIRED FROM THE SAID FIRM WITH EFFECT FROM 08/08/2012, AS PER THE RETIRE MENT DEED. AS PER THE DEED, IT WAS MUTUALLY AGREED BETWEEN THE FIRM AND RETIRING P ARTNER TO PAY A SUM OF RS.10 CRORE TO THE APPELLANT. WHILE COMPLETING THE ASSESS MENT U/S 143(3) OF THE ACT, AN ADDITION AS LONG TERMS CAPITAL GAIN, IN RESPECT OF THE AFORESAID AMOUNT, WAS MADE BY THE AO. THE STAND OF THE ASSESSEE RIGHT FROM ASS ESSMENT STAGE IS THAT THERE IS NO TRANSFER OF CAPITAL ASSET AND HENCE, NO CAPITAL GAI N CHARGEABLE TO TAX ARISES AT ALL. M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 4 HOWEVER, THE AO DID NOT ACCEPT THE CONTENTION OF TH E ASSESSEE AND MADE THE ADDITION AS LONG TERM CAPITAL GAIN. 3.1.5 AS STATED, THE AO HAS PLACED RELIANCE UPON TH E DECISION OF THE PUNE BENCH IN SHEVANTIBHAI C MEHTA VS ITO, 83 TTJ 542, PUNE AND O N ANOTHER DECISION IN N.A. MODY VS. CIT (1986) 162 ITR 420 AND HAS DECIDED AGA INST THE APPELLANT COMPANY. THE ISSUE BEFORE ME IS ABOUT TAXABILITY OF AMOUNT R ECEIVED BY THE ASSESSEE ON RETIREMENT FROM THE PARTNERSHIP FIRM. IN REACHING T HE DECISION ON THIS ISSUE, I FIND GUIDANCE FROM THE RATIO OF FOLLOWING JUDGEMENTS AS ARE BEING DISCUSSED HERE UNDER IN THE RECENT JUDGEMENT OF PCIT VS. R.F. NANGRANI H UF (93 TAXMANN.COM 302), THE HON'BLE JURISDICTIONAL BOMBAY HIGH COURT, ON IDENTICAL FACTS, HAS DEALT WITH THE ISSUE AFTER CONSIDERING THE CASES RELIED UPON A ND HAS DECIDED IN FAVOUR OF ASSESSEE. IT IS PERTINENT TO MENTION HERE THAT THE DECISION OF MUMBAI TRIBUNAL IN THE SAID CASE WAS AFFIRMED BY HON'BLE JURISDICTIONA L BOMBAY HIGH COURT. THE RELEVANT PORTION FROM THE ORDER DATED 10TH DECEMBER 2014 OF THE MUMBAI TRIBUNAL BENCH IS REPRODUCED HERE UNDER: '2.5. IN THE LIGHT OF THE ABOVE, MORE SPECIFICALLY, WHEN THE ISSUE HAS BEEN SETTLED BY THE HON'BLE JURISDICTIONAL HIGH COURT, W E FIND MERIT IN THE APPEAL OF THE ASSESSEE. THE HON'BLE APEX COURT, AS DISCUSS ED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE AFORESAID CASE ALS O, IN CIT VS. R. LINGAMALLU RAJKUMAR (2001), 247 ITR 801, HELD THAT AMOUNTS REC EIVED ON RETIREMENT BY A PARTNER IS NOT SUBJECT TO CAPITAL GAINS TAX. OUR VIEW IS ALSO FORTIFIED BY THE DECISION BY THE COORDINATE BENCH IN ACIT VS. SHRI N. PRASAD, EXECUTIVE CHAIRMAN, SECUNDERABAD (ITA NO.1200/HYD /2010) ORDER DATED 27/01/2014. 2.6. HOWEVER, THE HON'BLE KARNATAKA HIGH COURT IN C ITVS DYNAMIC ENTERPRISES, WHILE INTERPRETING SECTION 45(4) OF TH E ACT HELD THAT IN CASE OF DISTRIBUTION OF CAPITAL ASSET ON THE DISSOLUTION OF THE FIRM, THERE IS A TRANSFER OF CAPITAL ASSET BY THE FIRM IN FAVOUR OF A PERSON RESULTING PROFIT ARE GAINS SHALL BE CHARGEABLE TO TAX AS INCOME OF THE FIRM.' HOWEVER, IN VIEW OF THIS DECISION FROM HON'BLE APEX COURT, WE ARE OF THE VIE W THAT IN CASE OF RETIREMENT OF A PARTNER, THE AMOUNT SO RECEIVED, CA NNOT BE BROUGHT TO TAX. OUR VIEW IS FURTHER FORTIFIED BY THE DECISION FROM CHALASANI VENKATESWARA RAO VS. ITO (25 TAXMAN.COM 378)(AP). THE DIVISIONFB ENCH OF HON'BLE ANDHRA PRADESH HIGH COURT IN L. RAGHU KUMAR FOLLOWED THE D ECISION OF THE HON'BLE GUJARAT HIGH COURT IN CIT VS. MOHAN BHAI PAMA BHAI (1973) 91 ITR 393 (GUJ.) HAS HELD THAT NO TRANSFER IS INVOLVED WHEN A RETIRI NG PARTNER RECEIVES AT THE TIME OF RETIREMENT FROM THE FIRM, HIS SHARE IN THE PARTNERSHIP ASSET EITHER IN CASH OR ANY OTHER ASSET. THE RATIO LAID DOWN IN P.H . PATEL (171 ITR 128) WHEREIN IT WAS HELD THAT WHEN A PARTNER RETIRES FRO M A PARTNERSHIP TAKING HIS SHARE OF PARTNERSHIP INTEREST, THERE IS NO ELEM ENT OF TRANSFER OF INTEREST IN THE PARTNERSHIP ASSET BY THE RETIRING PARTNER. T HEREFORE, CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES BY APPLYING THE RATIO LAID DOWN BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RI YAZ A. SHEKH, WHICH IS BINDING ON US, WE REVERSE THE ORDER OF THE ID. COMM ISSIONER OF INCOME TAX (APPEALS). THUS, APPEAL OF THE ASSESSEE IS ALLOWED. ' M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 5 THIS IS NOTE-WORTHY HERE TO MENTION THAT AGAINST TH E AFORESAID TRIBUNAL ORDER, THE DEPARTMENT PREFERRED APPEAL BEFORE THE HON'BLE JURI SDICTIONAL HIGH COURT, WHEREIN VIDE ORDER DATED 18/04/2018 IN THE CASE OF VERY SAM E ASSESSEE (2018) 93 TAXMANN.COM 302 (BOMBAY - HC), THE HON'BLE HIGH COU RT HELD AS UNDER: IT: AMOUNT RECEIVED BY RETIRING PARTNER ON RETIREME NT FROM FIRM ON ACCOUNT OF GOODWILL WILL NOT BE SUBJECTED TO TAX AS CAPITAL GAINS IN HIS HANDS [2018] 93 TAXMANN.COM 302 (BOMBAY) HIGH COURT OF BOMBAY PRINCIPAL COMMISSIONER OF INCOME-TAX-26 MUMBAI V. R.F. NANGRANI HUF* M.S. SANKLECHA AND SANDEEP K. SHINDE, JJ. IT APPEAL NO. 33 OF 2016+ APRIL 18, 2018 SECTION 45 OF THE INCOME-TAX ACT, 1961 - CAPITAL GA INS -CHARGEABLE AS (FIRM/PARTNER, IN CASE OF) -.ASSESSMENT YEAR 2009-1 0 - WHETHER AMOUNT RECEIVED BY RETIRING PARTNER ON RETIREMENT FROM FIR M ON ACCOUNT OF GOODWILL WILL NOT BE SUBJECTED TO TAX AS CAPITAL GAINS IN HI S HANDS - HELD, YES [PARA 3] [IN FAVOUR OF ASSESSEE] CASES REFERRED TO . 3.1.6. .. .... 3.1.7. .. .... 3.1.8. IN THE LIGHT OF THE ABOVE DECISIONS, MORE SP ECIFICALLY, WHEN THE ISSUE HAS BEEN SETTLED BY THE HON'BLE JURISDICTIONAL BOMBAY H IGH COURT ITSELF, IT CAN BE SAID THAT THE SURPLUS RECEIVED ON RETIREMENT FROM PARTNE RSHIP FIRM IS NOT TAXABLE U/S 45, AS THERE IS NO 'TRANSFER' U/S 2(47) AND WHEN THERE IS NO TRANSFER, THERE IN NO QUESTION OF ANY CAPITAL GAIN ARISING TO THE APPELLA NT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS JUDICIAL PRONO UNCEMENTS REFERRED AND RELIED ABOVE BY ME AND ALSO CERTAIN JUDICIAL PRONOUNCEMENT RELIED UPON BY THE APPELLANT IN ITS WRITTEN SUBMISSION WHICH HAS BEEN PRODUCED A BOVE, ADDITION MADE BY THE AO UNDER THE HEADING LONG TERM CAPITAL GAIN CANNOT BE SUSTAINED AND THEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 4,63,00,0 00/- MADE AS LONG TERM CAPITAL GAIN. THIS GROUND OF APPEAL IS, THEREFORE, ALLOWED. GROUND ALL OWED M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 6 WHILE PASSING THE ORDER THE LD. CIT(A) RELIED ON TH E DECISION OF HONBLE SUPREME COURT AND ALSO THE JURI SDICTIONAL HIGH COURT BESIDES RELYING ON THE DECISION OF OTHER JUDICIAL FORUMS AND THUS ALLOWED THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT ASSESSEE BECAME PARTNER IN THE FIRM NAMELY M/S . INNOVATIVE CONSTRUCTION CORPORATION VIDE PARTNERSHI P DEED DATED 21.12.2006 BY INVESTING A SUM OF RS.5,37,00,0 00/- AS HIS CAPITAL CONTRIBUTION IN THE FIRM. THEREAFTER, THE ASSESSEE GOT RETIRED FROM THE SAID FIRM ON 08.08.2012 AND WAS GI VEN RS.10 CRORES AS FULL AND FINAL SETTLEMENT OF ALL HIS CLAI MS IN THE FIRM. THUS THE ASSESSEE RECEIVED A SURPLUS RS.4,63,00,000 /- OVER AND ABOVE THE AMOUNT INVESTED IN THE FIRM. ACCORDING T O THE AO THERE IS A TRANSFER OF GOODWILL OF THE FIRM WHEN A PARTNER RETIRES FROM THE FIRM AS PER THE PROVISIONS OF SECTION 2(47 ) OF THE ACT AND THEREFORE THE SAID SURPLUS IS TAXABLE AS CAPITA L GAIN UNDER SECTION 45 OF THE ACT. HOWEVER, THE LD. CIT(A) AFT ER FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASES OF PCIT VS. R.F. NANGRANI HUF (2018) 93 TAXMAN.COM 302 (BOM), I TO VS. PRASHANT S. JOSHI (2010) 189 TAXMAN 1 (BOM), CIT VS . RIYAZ A. SHEIKH (2014) 41 TAXMANN.COM 455 (BOM), ITO VS. SHR I RAJNISH M. BHANDARI (2012) 7 TMI 934- ITAT PUNE, CIT VS. MO HANBHAI PAMABHAI (1973) 91 ITR 393 (GUJ) & ACIT VS. MOHANBH AI PAMABHAI (1987) 165 ITR 166 (SC) HAS DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE BY PASSING A VERY DETAILED A ND REASONED ORDER. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE ARE INCLINED TO UPHOLD THE ORDER OF LD. CIT(A) AS THE LD. CIT(A) HAS RIGHTLY HELD THAT AMOUNT RECEIVED BY THE PARTNER UPON RETIR EMENT DOES NOT RESULT INTO ANY TRANSFER OF ASSETS (GOODWILL) A ND THEREFORE NOT M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 7 LIABLE FOR CAPITAL GAIN TAX UNDER SECTION 45 OF THE ACT. IN ALL THE ABOVE DECISIONS IT HAS BEEN HELD THAT UPON RETIREME NT OF A PARTNER FROM THE FIRM ANY AMOUNT RECEIVED BY THE PA RTNER OVER AND ABOVE HIS INVESTMENT WILL NOT BE SUBJECTED TO C APITAL GAIN TAX IN THE HANDS OF THE PARTNER. SIMILARLY, HONBL E BOMBAY HIGH COURT IN THE CASE OF CIT VS. MOHANBHAI PAMABHAI (SU PRA) HAS LAID DOWN THE SAME RATIO WHICH HAS BEEN AFFIRMED BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. MOHANBHAI PAM ABHAI AS REPORTED IN (1987) 165 ITR 166 (SC). WE ARE THEREF ORE INCLINED TO UPHOLD THE ORDER OF LD. CIT(A) ON THIS ISSUE AND THE GROUND NO.1 TO 3 RAISED BY THE REVENUE ARE DISMISSED. 6. THE ISSUE RAISED IN GROUND NO.4 TO 6 BY THE REVE NUE IS AGAINST THE DELETION OF RS.1,40,00,000/- BY LD. CIT (A) AS ADDED BY THE AO TOWARDS DEEMED DIVIDEND UNDER SECTION 2(2 2)(E) OF THE ACT. 7. THE FACTS IN BRIEF ARE THAT THE AO DURING THE CO URSE OF ASSESSMENT PROCEEDINGS NOTICED THAT ASSESSEE HAS RE CEIVED A LOAN OF RS.1,77,79,758/- FROM M/S. MULTIVENTURE AGR O AND INFRASTRUCTURE PVT. LTD. THE AO ALSO OBSERVED FROM THE DETAILS FILED BY THE ASSESSEE THAT M/S. BAY TREE AGRO FIRMS PVT. LTD. IS A SHAREHOLDER IN THE LENDER COMPANY HOLDING 1,63,000 SHARES WHICH COMES TO 48.66% OF THE TOTAL SHAREHOLDINGS. M/S. BAY TREE AGRO FIRMS PVT. LTD. IS ALSO A SHAREHOLDER IN THE ASSESSEE COMPANY HOLDING 10,500 SHARES BEING 41.44% OF THE T OTAL SHAREHOLDINGS. THE AO ALSO NOTED THAT M/S. MULTIVE NTURE AGRO AND INFRASTRUCTURE PVT. LTD. IS HAVING ACCUMULATED PROFIT OF RS.8,44,37,813/- ON 31.03.2013 AND THEREFORE THE MO NEY ADVANCED BY THE SAID COMPANY TO THE ASSESSEE TO THE TUNE OF RS.1,77,79,758/- IS COVERED BY THE PROVISION OF SEC TION 2(22)(E) M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 8 OF THE ACT AND SHOULD BE TAXED AS DEEMED DIVIDEND. ACCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUED ON 11.0 3.2016 AS TO WHY THE SAME SHOULD NOT BE TREATED AS DEEMED DIV IDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT A ND ADDED TO THE INCOME OF THE ASSESSEE WHICH WAS REPLIED BY THE ASSESSEE VIDE WRITTEN SUBMISSION DATED 21.03.2016 WHICH IS R EPRODUCED BY THE AO IN PARA 6.3 OF THE ASSESSMENT ORDER. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE SAID MONEY WAS REC EIVED BY THE ASSESSEE FOR ACQUIRING RIGHTS IN SHARES AND PRO PERTIES ON BEHALF OF M/S. MULTIVENTURE AGRO AND INFRASTRUCTURE PVT. LTD. AND THE ASSESSEE IS ACTING AS AGENT AND FACILITATOR . THE ASSESSEE SUBMITTED THAT UNDER THE TERMS OF ADVANCE IT WAS TO PURCHASE SHARE INVESTMENTS AND PROPERTY OF CERTAIN COMPANIES AFTER CARRYING OUT THE DUE DILIGENCE AND REGULATORY CLEAR ANCES THE SAID PROPERTIES WERE TO BE HANDED OVER TO M/S. MULTIVENT URE AGRO AND INFRASTRUCTURE PVT. LTD., HOWEVER, THE ASSESSEE COULD NOT CARRY OUT THE SAID WORK DUE TO SEVERAL REGULATORY A ND OTHER TITLE ISSUES AND REFUNDED A SUM OF RS.90 LACS OUT OF THE SAID MONEY RECEIVED BY THE ASSESSEE. IT IS PERTINENT TO STATE THAT RS.37,79,758/- WAS COMING FROM THE EARLIER YEARS AN D ONLY RS.1,40,00,000/- WAS ADVANCED BY THE SAID COMPANY D URING THE YEAR AND THUS ONLY RS.50 LAKHS REMAINS TO BE REFUND ED. THE ASSESSEE SUBMITTED THAT SINCE THIS IS ADVANCE TAKEN BY THE ASSESSEE OUT OF BUSINESS AND COMMERCIAL CONSIDERATI ONS, THE SAME CAN NOT BE TAXED AS DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT. THE SUBMISSIONS AN D CONTENTIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND THE AO ADDED A SUM OF RS.1,40,00,000/- RECEIVED BY THE ASS ESSEE DURING THE YEAR FROM M/S. MULTIVENTURE AGRO AND INF RASTRUCTURE PVT. LTD. AS DEEMED DIVIDEND. M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 9 8. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALL OWED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO CONSIDERAT ION THE DETAILED ARGUMENTS AND SUBMISSIONS MADE BY THE ASSE SSEE WHICH ARE EXTRACTED BY THE LD. CIT(A) IN PARA 3.2.2 BY OBSERVING AND HOLDING AS UNDER: 3.2,3 THIS GROUND PERTAINS TO ADDITION OF RS. 1,40 ,00,000/- MADE BY ASSESSING OFFICER UNDER U/S 2 (22) (E) AS DEEMED DIVIDEND. I FIND THAT THE A.O. HAS DISCUSSED THIS ISSUE AT PARA 6 OF HIS ORDER. THE FACTS IN BRI EF, ARE THAT THE APPELLANT COMPANY DURING THE IMPUGNED YEAR RECEIVED IN TOTAL SUM OF R S. 1,77,79,758/- FROM COMPANY M/S MULTIVENTURE AGRO INFRASTRUCTURE PVT. LTD. OUT OF THE TOTAL SUM RS. 1,77,79,758/, THE AMOUNT OF RS. 39,79,758- WAS THE OPENING BALANCE WHICH WAS RECEIVABLE FROM M/S MULTIVENTURE AGRO INFRASTRUCTUR E PVT LTD AND THE BALANCE OF RS. 1,40,00,OOO/-IS ADVANCE RECEIVED BY THE APPELLANT F OR BUSINESS PURPOSE OUT OF WHICH THE APPELLANT HAS RETURNED OF RS. 90,00,000/- - DURING THE YEAR AND THE BALANCE PAYABLE BY THE APPELLANT WAS RS. 50,00,000/ - TO THE M/S MULTIVENTURE AGRO INFRASTRUCTURE PVT LTD.. THE AO NOTICED THAT THERE WERE COMMON SHAREHOLDERS IN THE IN BOTH THE APPELLANT COMPANY AND M/S MULTIVENT URE AGRO & INFRASTRUCTURE PVT LTD (MAIPL) HAVING SHAREHOLDING 41.44 % (10,500 SHA RES) AND 48.66% (1,63,000 SHARES) RESPECTIVELY IN THE BOTH COMPANIES AND THER EFORE THE SUM OF RS. 1,40,00,000/-RECEIVED AS BUSINESS ADVANCE FROM MAIP L WAS ADDED AS DIVIDEND U/S 2(22)(E) OF THE IT ACT 1961 IN THE HANDS OF APPELLA NT. 3.2.4 THE APPELLANT CONTENDED THAT THE COMPANY HAS RECEIVED THE SAID AMOUNT AS ADVANCE FOR THE PURPOSE OF ACQUIRING CERTAIN RIGHTS IN SHARES AND PROPERTIES AS AGENT AND ON BEHALF OF THE MULTIVENTURE AGRO AND IN FRASTRUCTURE PVT. LTD. UNDER THE TERMS OF ADVANCE OUR CLIENT WAS REQUIRED TO PURCHAS E SHARES INVESTMENTS AND PROPERTIES OF CERTAIN COMPANIES, CARRY OUT DUE DILI GENCE, OBTAIN TITLE AND OTHER REGULATORY CLEARANCE AND HAND OVER THE SAID ASSETS TO MULTIVENTURE AGRO AND INFRASTRUCTURE PVT. LTD. ON COMPLETION OF DUE DILIG ENCE AND OBTAINING ALL REGULATORY CLEARANCES. THE APPELLANT COULD NOT CARRY OUT THE S AID WORK DUE TO REGULATORY AND TITLE ISSUES AND HENCE REFUNDED RS. 90,00,000/- FRO M RS. 1,40,00,000/- RECEIVED AS ADVANCE FROM THE SAID COMPANY AND BALANCE OF RS. 50 ,00,000/- SHOWN AS CLOSING BALANCE AS ON 31.03.2013 IN THE BOOKS OF ACCOUNTS, FURTHER THE APPELLANT PLEAD THAT IT WAS NOT A SHAREHOLDER IN M/S MULTIVENTURE AGRO I NFRASTRUCTURE PVT LTD (MAIPL) AND THEREFORE PROVISION OF THE SECTION 2 (22) (E) O F THE IT ACT CANNOT BE INVOKED IN THE HANDS OF THE APPELLANT. IN OTHER WORDS, THE CON TENTION OF THE APPELLANT IS THAT THE FIRST CONDITION TO BE SATISFIED FOR INVOKING PR OVISION OF SECTION 2(22)(E) OF THE ACT WAS THAT APPELLANT SHOULD BE A SHAREHOLDER IN THE C OMPANY WHICH HAD GIVEN LOAN. THE APPELLANT HAD RELIED VARIOUS JUDICIAL JUDGEMENT THE SAME HAS BEEN NARRATED IN THE ABOVE PARAGRAPHS. 3.2.5 THE ISSUE BEFORE ME IS WHETHER PROVISION OF S ECTION 2 (22) (E) IS APPLICABLE IN THE CASE OF COMMON SHAREHOLDERS OR THE LENDER HAS T O BE THE SHAREHOLDER OF THE COMPANY. THE APPELLANT HAS PLEADED THAT SINCE IT WA S NOT A DIRECT SHAREHOLDER IN M/S MULTIVENTURE AGRO INFRASTRUCTURE PVT LTD (MAIPL ), THEREFORE, THE PROVISIONS OF SECTION 2 (22) (E) OF THE IT ACT CANNOT BE INVOKED IN THE HANDS OF THE APPELLANT. IN M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 10 OTHER WORDS, THE MAIN CONTENTION OF THE APPELLANT I S THAT THE FIRST AND FOREMOST CONDITION TO BE SATISFIED FOR INVOKING PROVISIONS O F SECTION 2(22)(E) OF THE ACT WAS THAT APPELLANT SHOULD BE A DIRECT SHAREHOLDER IN THE COMPANY WHICH HAD GIVEN LOAN OR ADVANCES. THE APPELLANT HAS RELIED VARIOUS JUDICIAL DECISIONS, SOME OF WHICH HAVE BEEN NARRATED IN THE ABOVE PARAGRAPHS. 3.2.6. THE ISSUE BEFORE ME IS, THEREFORE, WHETHER P ROVISIONS OF SECTION 2 (22) (E) ARE APPLICABLE EVEN IN THE CASE OF COMMON SHAREHOLDERS OR, WHETHER THE RECIPIENT HAS TO BE A DIRECT SHAREHOLDER OF THE LENDING COMPANY B EFORE THESE PROVISIONS ARE INVOKED ! THE ASSESSING OFFICER HAS HELD THAT SINCE SHAREHOLDING PATTERN OF BOTH THE APPELLANT COMPANY AND THE LENDER COMPANY ARE LARGEL Y COMMON, IT COULD ATTRACT THE PROVISIONS OF SECTION 2(22)(E), I.E. DEEMED DIV IDEND. HERE, ONE THING IS TO BE NOTED THAT THE OTHER ELEMENTS OF DEEMED DIVIDEND AR E NOT BEING DEBATED HERE, AS THE MAIN GROUSE OF THE APPELLANT BASICALLY IS THAT IT IS NOT A REGISTERED SHAREHOLDER AT ALL, AS IS MANDATORY UNDER THE PROVISIONS OF SEC TION 2(22)(E). SO, THE MAIN ISSUE ACTUALLY BOILS DOWN TO THE JURISDICTION OF THE AO I N INVOKING PROVISIONS OF SECTION 2(22)(E). THE APPELLANT SAYS THAT IT IS NOT A REGIS TERED SHAREHOLDER OF THE LENDER COMPANY OR THE REGISTERED PARTNER OF THE LENDING FI RM, SO, THERE IS NO QUESTION OF INVOKING DEEMED DIVIDEND PROVISIONS. HENCE, ONCE TH IS ASPECT IS SETTLED, THERE IS NO REQUIREMENT OF GOING INTO OTHER ELEMENTS OF DEEMED DIVIDEND AS TO WHETHER THEY ARE PRESENT OR NOT. THIS IS ALSO TO BE NOTED HERE T HAT THESE FACTS ARE ALSO NOT IN DISPUTE THAT THE APPELLANT COMPANY IS NOT DIRECTLY A SHAREHOLDER IN THE LENDING COMPANY . THE CASE OF THE AO IS ONLY THIS THAT SINC E THERE ARE COMMON SHAREHOLDERS IN BOTH THE LENDING AND BORROWING CONCERNS, IT CAN BE INTERPRETED TO MEAN THAT THE BORROWING COMPANY IS ACTUALLY A BENEFICIAL SHAREHOLDER IN THE LENDING COMPANY. SO , THE AO'S STAND IS INTERPRETATIVE RATHER THAN VERY E XPLICIT. IT DOES NOT FOLLOW STRAIGHT FROM THE SECTION AS SUCH. SO, THE QUESTION IS - IS HER INTERPRETATION LEGALLY VALID ! TO BE MORE SPECIFIC, HAS IT STOOD THE TEST OF JUDICIAL SCRUTINY ! LET US SEE. 3.2.7 .. IN THE CASE OF ACIT VS. BHAUMIK COLOUR (P.) LTD. [2 009] 118 ITD 1 (MUM.- ITAT) (SPECIAL BENCH) ....................... . .. IN THE RECENT JUDGMENT DCIT VS. GEBBS HEALTHCARE SO LUTIONS (P.) LTD. [2017] 82 TAXMANN.COM 333 (MUMBAI - TRIB.) IT WAS H ELD THAT ....................................... . .. IN THE VERY RECENT JUDGMENT GIVEN BY THE ACIT VS. M ICROFINISH VALVES (P.) LTD. [2018] 100 TAXMANN.COM 146 (BANGALORE - TRIB.) , ....................................... . .. IN THE CASE OF DCIT VS. NEHA HOME BUILDERS (P.) LTD . (2018) 98 TAXMANN.COM 465 (MUMBAI TRIB.), ....................................... M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 11 . .. IN THE CASE OF DCIT VS. GILBARCO VEEDER ROOT INDIA (P.) LTD. (2018) 96 TAXMANN.COM 262 (MUMBAI TRIB.), ....................................... . .. IN THE CASE OF CIT VS. UNIVERSAL MEDICARE (P.) LTD. (2010) 190 TAXMANN 144 (BOMBAYHC), ....................................... . .. IN THE CASE OF CIT VS. N.S.N. JEWELLERS (P.) LTD. ( 2015) 57 TAXMANN.COM 113 (BOMBAY HC), ....................................... . .. 3.2.8 NOW, MOVING STILL FURTHER, I NOTE THAT THIS I SSUE STANDS VIRTUALLY PRE-EMPTED A JUDGEMENT OF NO LESS THAN THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS MADHUR HOUSING AND DEVELOPMENT COMPANY, 401 ITR 152 , IN WHICH CASE THE APEX COURT HAS HELD THAT THE DEEMED DIVIDEND WAS BASICAL LY A LEGAL FICTION. THAT, THE CONCEPT OF LEGAL FICTION DOES NOT EXTEND TO THE TER M SHAREHOLDER AND COULD NOT BE FURTHER EXTENDED FOR BROADENING THE CONCEPT OF SHAR EHOLDERS. THE APEX COURT HAS FURTHER HELD THAT THE CIRCULAR NO 495 DATED 22/09/1 987, OF CBDT WAS NOT BINDING ON THE HIGH COURT, AND, THAT, ALTHOUGH THERE WERE PERS ONS HAVING SUBSTANTIAL INTEREST IN THE ASSESSEE COMPANY AND THE COMPANY WHICH GAVE THE LOAN, THE ASSESSEE COMPANY NOT BEING A DIRECT SHAREHOLDER OF THE COMPA NY WHICH GAVE THE LOAN , THE LOAN WAS NOT ASSESSABLE AS DEEMED DIVIDEND IN THE H ANDS OF THE ASSESSEE. THE SUPREME COURT DISMISSED THE APPEALS OF THE REVENUE. IT UPHELD THE DELHI HIGH COURT DECISION IN CIT VS ANKITECH PVT LTD 340 ITR 14 IN T OTO SAYING THAT THEY AGREE COMPLETELY. 3.2.9. .. 3.2.10. NOW, IT IS FOUND THAT THIS INSTANT CASE OF THE APPELLANT FALLS WITHIN THE FOUR CORNERS OF THE JUDGEMENT REPRODUCED ABOVE. RESPECTF ULLY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT AND LD DELHI HIGH COURT, I DI RECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.1,40,00,000- MADE ON ACCO UNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT AS THE APPELLANT COMPANY IS NOT A REGISTERED AND LEGAL SHAREHOLDER IN THE LENDER COMPANY WHICH IS A MANDAT ORY CONDITION FOR INVOKING PROVISIONS OF DEEMED DIVIDEND, AS PER THE ORDER OF HON'BLE SUPREME COURT AS DISCUSSED ABOVE. SO, THE QUESTION OF APPLICABILITY OF PROVISIONS OF DEEMED DIVIDEND DOES NOT ARISE AT ALL IN THIS CASE. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. GROUNDS ALLOWED 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS PLACED BEFORE US. WE FIND M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 12 THAT IN THIS CASE THE ASSESSEE HAS TAKEN ADVANCE OF RS.1,77,79,758/- FROM M/S. MULTIVENTURE AGRO AND INFRASTRUCTURE PVT. LTD. COMPRISING RS.37,79,358/- AS OPENING BALANCE COMING FROM EARLIER YEARS AND RS.1,40,00,00 0/- ADVANCE TAKEN DURING THE YEAR. THE SAID COMPANY HA D ACCUMULATED PROFITS OF RS.8,44,37,813/- AS ON 31.03 .2013. ANOTHER COMPANY M/S. BAY TREE AGRO FIRMS PVT. LTD. IS A COMMON SHAREHOLDER HOLDING 48.66% IN M/S. MULTIVENT URE AGRO AND INFRASTRUCTURE PVT. LTD. SHARES AND ALSO 41.6 6% SHARES IN THE ASSESSEE COMPANY. ACCORDING TO THE ASSESSEE TH E ADVANCE WAS GIVEN OUT OF BUSINESS AND COMMERCIAL CONSIDERAT IONS IN ORDER TO PROCURE INVESTMENTS AND PROPERTIES ON BEHA LF OF M/S. MULTIVENTURE AGRO AND INFRASTRUCTURE PVT. LTD. AFTE R DUE DILIGENCE AND OBTAINING NECESSARY CLEARANCES FROM T HE GOVERNMENT AUTHORITIES WHICH COULD MATERIALISE. TH E AO ADDED THE SAME AS DEEMED DIVIDEND WITHIN THE MEANING OF S ECTION 2(22)(E) OF THE ACT ON THE GROUND THAT ASSESSEE HAS NOT FILED ANY CONTRACT OR PROOF TO THE EFFECT THAT THIS WAS TAKEN OUT OF BUSINESS CONSIDERATIONS AND ADDED RS.1,40,00,000/- RECEIVED DURING THE YEAR AS DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF T HE ACT. THE LD. CIT(A) DELETED THE DISALLOWANCE BY HOLDING THAT THE ASSESSEE CAN NOT BE REGARDED AS BENEFICIAL OWNER OF THE SHAR ES IN M/S. MULTIVENTURE AGRO AND INFRASTRUCTURE PVT. LTD. IN VIEW OF THE FACT THAT THERE IS A COMMON SHAREHOLDER IN BOTH THE ASSESSEES AS WELL AS M/S. MULTIVENTURE AGRO AND INFRASTRUCTUR E PVT. LTD. WHO HOLDS SUBSTANTIALLY SHAREHOLDINGS IN BOTH THE CONCERNS. THE LD. CIT(A) RELIED ON THE AFORESAID DECISION IN THE CASE OF CIT VS. MADHUR HOUSING AND DEVELOPMENT CO. (SUPRA) WHIL E PASSING THE ORDER WHEREIN THE HONBLE SUPREME COURT HAS HEL D THAT DEEMED DIVIDEND WAS BASICALLY A LEGAL FICTION WHICH CAN NOT BE M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 13 STRETCHED AND EXTENDED FOR BROADENING THE CONCEPT OF SHAREHOLDERS. HON'BLE APEX COURT ALSO HELD THAT CI RCULAR NO.495 DATED 22.09.1987 OF CBDT WAS NOT BINDING ON THE HIG H COURT AND THAT ALTHOUGH THERE WERE PERSONS HAVING SUBSTAN TIAL INTEREST IN THE ASSESSEE COMPANY AND THE COMPANY WH ICH GAVE LOAN, THE ASSESSEE COMPANY WAS NOT BEING A DIRECT S HAREHOLDER OF THE COMPANY WHICH GAVE THE LOAN, THE LOAN WAS NO T ASSESSABLE AS DEEMED INCOME IN THE HANDS OF ASSESSEE AND THUS HONBLE SUPREME COURT DISMISSED THE APPEAL OF THE REVENUE. WE ALSO NOTE THAT IN THE CASE OF CIT VS. ANKITECH PVT. LTD. (2012) 340 ITR 14 (DEL), THE DECISION OF THE HONBLE DELHI HIGH C OURT ON THE SIMILAR ISSUE WHICH WAS AFFIRMED BY HONBLE SUPREM E COURT, THE COURT HAS HELD AS UNDER: ACCORDING TO SECTION 2(22)(E) OF THE INCOME-TAX AC T, 1961, THE FOLLOWING CONDITIONS ARE TO BE SATISFIED : (I) THE PAYER COMPANY MUST BE A CLOSELY HELD COMPANY ; (II) IT APPLIES TO ANY SUM PAID BY WAY OF LOAN OR ADVANCE D URING THE YEAR TO THE FOLLOWING PERSONS : (A) A SHAREHOLDER HOLDING AT LEAST 10 OF THE VOTING POWER IN THE PAYER COMPANY ; (B) A COMPANY IN WHICH SUCH SHAREHOLDER H AS AT LEAST 20 PER CENT. OF THE VOTING POWER ; (C) A CONCERN (OTHER THAN COMPANY) I N WHICH SUCH SHAREHOLDER HAS AT LEAST 20 PER CENT. INTEREST ; (III) THE PAYER COMPA NY HAS ACCUMULATED PROFITS ON THE DATE OF ANY SUCH PAYMENT AND THE PAYMENT IS OUT OF ACCUMULATED PROFITS ; (IV) THE PAYMENT OF LOAN OR ADVANCE IS NOT IN THE COURSE OF ORDINARY BUSINESS ACTIVITIES. BY A DEEMING PROVISION IT IS THE DEFINITION OF DIVIDEND WHICH IS ENLARGED. THE LEGAL FICTION DOES NOT EXTEND TO SHAREHOLDER. THE FICT ION IS NOT TO BE EXTENDED FURTHER FOR BROADENING THE CONCEPT OF SHAREHOLDERS. CIRCUL AR NO.495, DATED SEPTEMBER 22, 1987, ISSUED BY CENTRAL BOARD OF DIRECT TAXES IS NO T BINDING ON THE HIGH COURT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE-COMPANY HAD RECEIVED ADVANCES OF RS.6,32,7 2,265 BY WAY OF BOOK ENTRY FROM A COMPANY, JGPL AND THE SHAREHOLDERS HAVING SU BSTANTIAL INTEREST IN THE ASSESSEE-COMPANY ALSO HAD 10 PER CENT. OF THE VOTIN G POWER IN JGPL. THE ASSESSING OFFICER WAS OF THE VIEW THAT AS THE TWO GUPTAS WERE MEMBERS HOLDING SUBSTANTIAL INTEREST IN JGPL WHICH HAD PROVIDED LOANS AND ADVAN CES TO THE ASSESSEE-COMPANY AND THESE VERY PERSONS HAD SUBSTANTIAL INTEREST IN THE ASSESSEE-COMPANY, FOR THE PURPOSE OF SECTION 2(22)(E) OF THE ACT THE AMOUNT R ECEIVED BY THE ASSESSEE FROM JGPL WHICH CONSTITUTED ADVANCES AND LOANS WOULD B E TREATED AS DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)(E) OF THE ACT A ND ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE. THE TRIBUNAL DELETED THE A DDITION. ON APPEAL TO THE HIGH COURT: M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 14 HELD, DISMISSING THE APPEALS, THAT THE TRIBUNAL WAS CORRECT IN LAW IN DELETING THE ADDITION OF RS.6,32,72,265 MADE BY THE ASSESSING OF FICER IN THE HANDS OF THE ASSESSEE-COMPANY UNDER SECTION 2(22)(E). 10. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISIO N OF THE HONBLE SUPREME COURT AND HONBLE DELHI HIGH COURT UPHOLD THE ORDER OF LD. CIT(A) WHICH HAS BEEN PASSED AFTER FOLLOWING THE DECISION OF THE HON'BLE APEX COURT AND HONBLE DELH I HIGH COURT BESIDES VARIOUS OTHER DECISIONS OF CO-ORDINATE BENC HES OF THE TRIBUNAL THAT THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT CAN NOT BE INVOKED WHERE THE ASSESSEE IS NOT A SHAREHOLDER IN THE COMPANY WHICH HAS ADVANCED THE LOAN. IN THE PRESEN T CASE, THE ASSESSEE IS NOT HOLDING ANY SHARE IN THE M/S. MULTI VENTURE AGRO AND INFRASTRUCTURE PVT. LTD. THEREFORE, THE ADDITI ON WAS RIGHTLY DELETED BY THE LD. CIT(A). ACCORDINGLY, GROUNDS NO .4 TO 6 ARE DISMISSED. 11. GROUND NO.7 & 8 ARE GENERAL IN NATURE AND NEEDS NO ADJUDICATION. ACCORDINGLY, THE APPEAL OF THE REVEN UE IS DISMISSED. ITA NO.3718/M/2019 A.Y.2013-14 12. THE ISSUE RAISED IN VARIOUS GROUNDS OF APPEAL B Y THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.2 ,50,00,000/- BY LD. CIT(A) AS MADE BY THE AO ON ACCOUNT OF DEEME D DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT. 13. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS TA KEN A LOAN OF RS.2,65,00,000/- FROM M/S. MULTIVENTURE AGRO AND INFRASTRUCTURE PVT. LTD. THE AO NOTED THAT M/S. BA Y TREE AGRO FIRMS PVT. LTD. IS A COMMON SHAREHOLDER ON THE ASSE SSEE AS WELL AS ON THE ABOVE COMPANY WHO LENT MONEY TO THE ASSES SEE AS THE SAID COMPANY WAS HOLDING 48.66% IN THE LENDER COMPA NY AS M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 15 WELL AS 43.86% IN THE ASSESSEE COMPANY. THE AO ALS O NOTED THAT M/S. MULTIVENTURE AGRO AND INFRASTRUCTURE PVT. LTD. IS HAVING ACCUMULATED PROFIT OF RS.8,44,37,813/- ON 31 .03.2013 AND ACCORDINGLY CAME TO CONCLUSION THAT THE LOAN AD VANCED TO THE ASSESSEE OF RS.2,65,00,000/- SHOULD BE ASSESSED UNDER SECTION 2(22)(E) OF THE ACT. SINCE THE FACTS IN TH E PRESENT CASE ARE SIMILAR TO ONE AS DECIDED BY US IN ITA NO.3717/ M/2019 A.Y. 2013-14 IN GROUND NOS.4 TO 6 WHEREIN WE HAVE UPHELD THE ORDER OF LD. CIT(A) BY DISMISSING THE APPEAL OF THE REVEN UE. THEREFORE, OUR FINDING IN GROUND NOS.4 TO 6 OF ITA NO.3717/M/2019 A.Y. 2013-14 WOULD, MUTATIS MUTANDIS , APPLY TO THIS APPEAL AS WELL. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO.3716/M/2019 A.Y.2011-12 14. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS.96,000/- BY LD. CIT(A) AS MADE BY TH E AO UNDER SECTION 68 OF THE ACT ON ACCOUNT OF ADDITION TO UNS ECURED LOAN BY TREATING THE SAME AS CASH CREDIT UNDER SECTION 68 OF THE ACT. 15. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS OBSERVED THAT THERE IS AN INCREASE OF RS.96,000/- I N THE UNSECURED LOANS. THE AO ALSO NOTED THAT IN A.Y. 20 08-09 THE ENQUIRY WAS CONDUCTED INTO THE GENUINENESS OF THE U NSECURED LOANS AND THE SAME WERE ADDED TO THE INCOME OF THE ASSESSEE BY TREATING THE SAME AS BOGUS AND NON GENUINE ACCORDIN G TO THE AO. THE ASSESSEE SUBMITTED BEFORE THE AO THAT INCR EASE OF RS.96,000/- IN UNSECURED LOANS REPRESENTED THE INTE REST CAPITALIZED QUA THE LOANS TAKEN IN EARLIER YEARS. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE AS SESSEE AND ISSUED SHOW CAUSE NOTICE AS TO WHY THE SAME SHOULD NOT BE M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 16 TREATED AS UNEXPLAINED CASH CREDIT AND BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE WHICH WAS REPLIED BY THE ASS ESSEE VIDE WRITTEN SUBMISSIONS DATED 21.03.2016 BY SUBMITTING THEREIN THAT THE ASSESSEE HAS NOT RAISED ANY LOAN IN A.Y. 2 008-09 AND IN FACT THESE LOANS WERE RECEIVED IN A.Y. 2006-07 AND 2007-08 AND DURING THE YEAR, THE ASSESSEE HAS ONLY MADE PROVISI ONS FOR INTEREST @ 12% ON OUTSTANDING LOANS. THE ASSESSEE SUBMITTED THAT ALL THE NECESSARY DOCUMENTS WERE FURNISHED IN A.Y. 2008- 09 TO PROVE THAT THESE LOANS WERE GENUINE AND THERE FORE THE ASSESSMENT OF THE ASSESSEE HAS BEEN WRONGLY REOPENE D BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT, HOWEVE R, THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE AND TREATE D THE SAME AS UNEXPLAINED CASH CREDIT REASONING THAT THE ASSESSEE HAS NOT DISCHARGED THE ONUS AND ADDED TO THE INCOME OF THE ASSESSEE. 16. IN THE ABOVE PROCEEDINGS, THE LD. CIT(A) ALLOWE D THE APPEAL OF THE ASSESSEE ON THIS GROUND DELETING THE ADDITIO N OF RS.96,000/- BY TAKING INTO CONSIDERATION THE REPLY OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 3.1.3 THIS GROUND PERTAINS TO ADDITION OF RS. 96,0 00/- MADE BY ASSESSING OFFICER U/S 68 OF THE IT. ACT. I FIND THAT THE A.O. HAS DISCUSS ED THIS ISSUE AT PARA 10 OF HER ORDER. THE APPELLANT CONTENDED BEFORE THE ASSESSING OFFICE R THAT NO NEW UNSECURED LOANS WERE RECEIVED IN THE AY 2011-12.BUT, THAT, THEY HAD RECEIVED IT IN AY 2006-07 AND 2007-08. DURING THE CURRENT YEAR, THE APPELLANT COM PANY HAD MADE PROVISION OF INTEREST @ 12% ON OUTSTANDING LOANS ONLY. THE ASSES SING OFFICER HAS NOT DISCUSSED ANY OF THE ARGUMENTS GIVEN BY THE APPELLANT ON THIS ISSUE AND NOR SHE HAS COMMENTED ON WHY SHE WAS NOT SATISFIED WITH THE CLA IM OF THE APPELLANT THAT NO FRESH AMOUNTS WERE RECEIVED IN THE AY 2011-12. THE ASSESSING OFFICER HAS ONLY CONTENDED THAT THE ENTIRE LOANS WERE ADDED IN AY 20 08-09 AND THEREAFTER, SHE HAS CONCLUDED THAT THE INCREASE IN THE OPENING AND CLOS ING BALANCE OF LOANS OF RS.96,000/- IS BOGUS AND HAS TREATED THE SAME AS UN EXPLAINED CASH CREDIT U/S 68 OF THE IT ACT 1961. THE APPELLANT HAD CONTENDED THAT T HE LOANS WHICH WERE ADDED IN AY 2008-09 BY THE LEARNED ASSESSING OFFICER HAVE SI NCE BEEN DELETED BY THE LEARNED CIT (APPEALS), BUT IN VAIN. 3.1.4 IN THE INSTANT CASE, I FIND THAT THE ASSESSIN G OFFICER HAS APPLIED THE PROVISIONS OF SECTION 68 IN THE MOST MECHANICAL MANNER, NOT BR INGING ANYTHING ON RECORD TO DISPROVE THE CONTENTION OF THE APPELLANT THAT NO FR ESH CREDIT/ AMOUNTS WERE RECEIVED IN AY 2011-12 BUT THAT ONLY OPENING BALANC ES WERE APPEARING IN THE BALANCE SHEET AND WHATEVER INCREASE IN OPENING AND CLOSING BALANCE, ARE JUST M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 17 PROVISION OF INTEREST MADE ON LOANS. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS. 96,000/- MADE U/S 68 OF THE IT ACT. THIS GROUND OF APPEAL IS, THEREFORE, ALLOWED. 17. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD INCLUDING THE IMPUGNED ORDER, WE FIND THAT D URING THE YEAR THE ASSESSEE HAS NOT RAISED ANY UNSECURED LOAN S BUT PROVIDED INTEREST @ 12% WHICH COMES TO RS.96,000/- WHICH IS THE ONLY INCREASE IN THE UNSECURED LOANS. THESE LO ANS WERE TAKEN BY THE ASSESSEE IN 2006-07 & 2007-08. THE I SSUE OF RAISING OF UNSECURED LOANS HAVE BEEN VERIFIED BY TH E AO DURING ASSESSMENT PROCEEDINGS OF A.Y. 2008-09 WHEN THE ASS ESSEE FILED ALL THE NECESSARY SUPPORTING EVIDENCES BEFORE THE A O BUT AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT, HOWEVER, THE SAID ADDITION HAS BEEN DEL ETED BY THE LD. CIT(A). WE NOTE THAT ASSESSEE HAS NOT RAISED A NY FRESH LOAN DURING THE YEAR UNDER CONSIDERATION. THEREFORE, WE DO NOT FIND ANY INFIRMITY OR ANOMALY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. CONSEQUENTLY, THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 18. THE ISSUE RAISED IN GROUNDS NO.2 & 3 IS AGAINST THE DELETION OF RS.5,10,00,000/- BY LD. CIT(A) AS MADE BY THE AO ON ACCOUNT OF RECEIPT OF SHARE CAPITAL/SHARE PREMIUM. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE AO NOTICED THAT ASSESSEE HAS RAISED SHARE APPLICATI ON/SHARE PREMIUM FROM 8 PARTIES AND CALLED UPON THE ASSESSEE TO FILE THE DETAILS OF THE INVESTORS SUCH AS NAME, ADDRESSES, P AN NUMBERS AND CONFIRMATIONS ETC. ALONG WITH PROOF OF PAYMENTS . THE ASSESSEE FILED BEFORE THE AO ALL THE NECESSARY EVID ENCES AND THE DETAILS OF SHARE APPLICATION MONEY RECEIVED IS INCO RPORATED AND APPENDED IN PARA 9.1 OF THE ASSESSMENT ORDER. THE AO ALSO M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 18 ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO TH E INVESTORS TO VERIFY THE GENUINENESS, HOWEVER, IN SEVERAL CASES T HE NOTICES WERE RETURNED UNSERVED AND IN ONLY ONE CASE M/S. NE XT TECHNOLOGY PVT. LTD. WHICH IS A GROUP CONCERN OF TH E ASSESSEES REPLY WAS RECEIVED. ACCORDINGLY, A SHOW CAUSE NOTI CE WAS ISSUED TO THE ASSESSEE AS TO WHY THE SHARE APPLICATION MON EY RAISED FROM 7 PARTIES AGGREGATING TO RS.5,10,00,000/- SHOU LD NOT BE TREATED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE ASSESSEE REPLIED THE SHOW CAUSE NOTICE VIDE WRI TTEN SUBMISSIONS DATED 21.03.2016 WHICH IS REPRODUCED BY THE AO IN PARA 9.5 OF THE ASSESSMENT ORDER. THE AO FINALLY, NOT CONVINCED WITH THE REPLY OF THE ASSESSEE, ADDED THE ENTIRE AM OUNT OF SHARE APPLICATION MONEY RAISED FROM 7 PARTIES OF RS.5,10, 00,000/- TO THE INCOME OF THE ASSESSEE BY TREATING THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68. 19. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AL LOWED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO CONSIDERAT ION THE REPLY OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER : 3.2.12 I HAVE ANALYSED THE DOCUMENTS FILED BY TH E APPELLANT IN RESPECT OF SHARE APPLICANTS. ON PERUSAL OF THE ABOVE DOCUMENTS IN RESPECT OF ALLEGED SHARE APPLICANTS, IT IS CLEARLY SEEN THAT: I) THE SHARE APPLICATION MONEY HAS BEEN RECEIVED AND R EPAID THROUGH BANKING CHANNEL. II) WHOLE OF THE MONEY RECEIVED HAVE BEEN REP AID WITHOUT EVEN ALLOTTING THE SHARES. III) IF THE INTENTION WAS TO BRING UNACCOUNTE D MONEY INTO SYSTEM AND MAKE IT WHITE MONEY, THEN, THE APPELLANT WOULD NOT HAVE RETURNED MONEY AGAIN THROUGH BANKING CHANNELS WITH HEAVY INTEREST. IV) THE APPELLANT HAD PAID INTEREST ON REPAYM ENT AND ALSO TDS HAS BEEN DEDUCTED IN EACH CASE. 3.2.13 IN REACHING THE DECISION ON THIS ISSU E, I FIND GUIDANCE FROM THE RATIO OF THE FOLLOWING JUDGEMENTS. THESE ARE AS UNDER: IT WAS POINTED OUT IN THE CASE OF H.R MEHTA VS. AC1 T, MUMBAI (2016) 72 TAXMANN.COM 110 (BOMBAY - HC), THAT THE REPAYMENT O F MONEY WITH INTEREST IS A DECISIVE FACTOR IN DETERMINING WHETHE R THE MONEY TAKEN WAS TO M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 19 BE TREATED AS GENUINE AS WELL. IF RE-PAYMENT IS NOT BEING DISTURBED BY THE AO, HE HAS TO ACCEPT THE RECEIPT OF MONEY ALSO AS G ENUINE ONLY.THE RELEVANT EXTRACT OF THE CASE IS REPRODUCED AS UNDER: 16. IN THE INSTANT CASE ALTHOUGH THE APPELLANT ASSE SSEE HAS CALLED UPON US TO DRAW AN INFERENCE THAT THE BURDEN SHIFTE D TO THE REVENUE IN THE PRESENT CASE ONCE IT WAS ESTABLISHED THAT TH E PAYMENTS WERE MADE AND REPAID BY CHEQUE WE NEED NOT HASTEN AND AD OPT THAT VIEW AFTER HAVING GIVEN OUR THOUGHT TO VARIOUS ISSUES RA ISED AND THE DECISIONS CITED BY MR.TRALSHAWALLA AND FINDING THAT ON A VERY FUNDAMENTAL ASPECT, THE REVENUE WAS NOT JUSTIFIED I N MAKING ADDITION AT THE TIME OF REASSESSMENT WITHOUT HAVING FIRST GIVEN THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE DEPONE NT ON THE STATEMENTS RELIED UPON BY THE ACIT. QUITE APART FRO M DENIAL OF AN OPPORTUNITY OF CROSS EXAMINATION, THE REVENUE DID N OT EVEN PROVIDE THE MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT S OUGHT TO CONCLUDE THAT THE LOAN WAS A BOGUS TRANSACTION. 17. IN OUR VIEW IN THE LIGHT OF THE FACT THAT THE M ONIES WERE ADVANCED APPARENTLY BY THE ACCOUNT PAYEE CHEQUE AND WAS REPA ID VIDE ACCOUNT PAYEE CHEQUE, THE LEAST THAT THE REVENUE SH OULD HAVE DONE WAS TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO MEET THE CASE AGAINST HIM BY PROVIDING THE MATERIAL SOUGHT TO BE USED AGA INST ASSESSEE IN ARRIVING BEFORE PASSING THE ORDER OF REASSESSMENT T HIS NOT HAVING BEEN DONE, THE DENIAL OF SUCH OPPORTUNITY GOES TO R OOT OF THE MATTER AND STRIKES AT THE VERY FOUNDATION OF THE REASSESSM ENT AND THEREFORE RENDERS THE ORDERS PASSED BY THE CIT (A) AND THE TR IBUNAL VULNERABLE. IN OUR VIEW, THE ASSESSEE WAS BOUND TO BE PROVIDED WITH THE MATERIAL USED AGAINST HIM APART FROM BEING PERMITTI NG HIM TO CROSS EXAMINE THE DEPONENTS. DESPITE THE REQUEST DATED 15 TH FEBRUARY, 1996 SEEKING AN OPPORTUNITY TO CROSS EXAMINE THE DE PONENT AND FURNISH THE ASSESSEE WITH COPIES OF STATEMENT AND D ISCLOSE MATERIAL, THESE WERE DENIED TO HIM. IN THIS VIEW OF THE MATTE R, WE ARE INCLINED TO ALLOW THE APPEAL ON THIS VERY ISSUE. 18. ONCE WE TAKE THIS VIEW IT IS NOT NECESSARY TO C ONSIDER THE SECOND QUESTION AS TO WHETHER OR NOT THE TRIBUNAL HAD ERRE D IN LAW IN HOLDING THAT THE AMENDMENT TO SECTION 147(3) WITH E FFECT FROM 1ST APRIL, 1989 WERE APPLICABLE TO REASSESSMENT PROCEED INGS AGAINST THE APPELLANT IN RESPECT OF ASSESSMENT YEAR 1983-84. TH IS ISSUE CAN BE CONSIDERED IN AN APPROPRIATE CASE AND NEED NOT DETA IN US ANY FURTHER. MR. TRALSHAWALA HAD RELIED UPON THE DECISI ON IN RANCH! HANDLOOM EMPORIUM (SUPRA) WHICH HELD THAT THE DIREC T TAX LAWS (AMENDMENT) ACT, 1987 CAME INTO FORCE FROM 1ST APRI L, 1989. THE CASE BEFORE THAT COURT RELATED TO ASSESSMENT YEAR 1 988-89 AND THE RELEVANT ACCOUNTING YEAR BEING 9TH JULY, 1986 TO 27 TH JUNE, 1987 AND HENCE THE COURT HELD THAT THERE WAS NO DOUBT THAT T HE ASSESSMENT IN THAT YEAR WOULD BE GOVERNED BY THE UNAMENDED PROVIS IONS. THE APPLICABILITY OF THE AMENDED PROVISIONS NEED NOT BE GONE INTO BY US IN THE PRESENT CASE SINCE WE ARE OF THE VIEW THAT O N VERY FIRST M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 20 QUESTION, WE ARE INCLINED TO HOLD AGAINST THE REVEN UE AND IN FAVOUR OF THE ASSESSEE. IN THE ABOVE DECISION, IT WAS HELD BY THE JURISDICT IONAL BOMBAY HIGH COURT THAT SINCE LOAN WAS ADVANCED AND REPAID VIDE ACCOUN T PAYEE CHEQUES, AND APPELLANT ONCE PRIME FACIE HAD ESTABLISHED THEBONAF IDE OF THE LOAN TRANSACTIONS, IT WAS FOR THE REVENUE TO ESTABLISH T HAT IT WAS NOT BONAFIDE. IN THE CASE OF AYACHICHANDRASHEKHARNARSANGJIVS. CIT [2014] 42 TAXMANN.COM 251 (GUJARAT-HC), THE DECISION GIVEN IS PRECISELY ON THIS ISSUE ONLY. IN THIS JUDGEMENT, THE HON'BLE GUJARAT HIGH C OURT HAS CLEARLY HELD THAT WHERE THE LOANS WERE TAKEN AND THEREAFTER REPAID TH ROUGH BANKING CHANNELS AND IF THE REPAYMENT IS ACCEPTED BY THE DEPARTMENT AS GENUINE, THEN, THE RECEIPT OF LOANS SHOULD ALSO BE TAKEN AS GENUINE. T HE RELEVANT EXTRACT OF THE CASE IS REPRODUCED AS UNDER: 'BEING AGGRIEVED AND DISSATISFIED WITH THE ORDER PA SSED BY THE CIT(A) IN DELETING THE ADDITION OF RS.1,45,00,000/- MADE B Y THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME-TAX ACT ON T HE GROUND THAT THE LOAN TAKEN FROM SHRI ISHWAR ADWANI WAS NOT EXPL AINED SATISFACTORILY, THE REVENUE PREFERRED APPEAL BEFORE THE ITAT AND BY IMPUGNED JUDGMENT AND ORDER, ITAT DISMISSED THE APP EAL PREFERRED BY THE REVENUE CONFIRMING THE ORDER PASSED BY THE C IT(A) DELETING THE AFORESAID ADDITION. BEING AGGRIEVED AND DISSATI SFIED WITH THE IMPUGNED JUDGMENT AND ORDER PASSED BY THE ITAT, THE REVENUE HAS PREFERRED THE PRESENT TAX APPEAL WITH THE AFORESAID SUBSTANTIAL QUESTION OF LAW; 5. HEARD SHRI PRANAV DESAI, LEARNED COUNSEL APPEARI NG ON BEHALF OF THE REVENUE. THE ONLY CONTENTION ON BEHALF OF THE R EVENUE IS THAT ON THE LAST DAY OF PASSING THE ORDER, COMMUNICATION DA TED 22/12/2008 OF THE ASSESSEE ALONG WITH THE CONFIRMATION LETTER OF SHRI ISHWAR ADWANI CONFIRMING THE LOAN/ADVANCE OF RS.1,45,00,000/- GIVEN TO THE ASSESSEE, WAS PRODUCED BEFORE THE ASSE SSING OFFICER I.E. ON THE DAY THE ASSESSING OFFICER PASSED THE ORDER A ND THEREAFTER THE SAME WAS REPRODUCED BEFORE THE CIT(A) AND THE CIT(A ) CONSIDERED THE SAME, THE CIT(A) OUGHT TO HAVE REMANDED THE MAT TER TO ENABLE THE ASSESSING OFFICER TO HOLD FURTHER INQUIRY AND, THEREFORE, IT IS REQUESTED TO ADMIT/ALLOW THE PRESENT TAX APPEAL. 6. HAVING HEARD SHRI PRANAV DESAI, LEARNED COUNSEL APPEARING ON BEHALF OF THE REVENUE AND ON PERUSAL OF THE ORDER P ASSED BY THE CIT(A) CONFIRMED BY THE ITAT, IT APPEARS THAT CIT(A ) WAS SATISFIED WITH RESPECT TO THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF SHRI ISHWAR ADWANI AND, THEREFO RE, DELETED THE ADDITION OF RS.1,45,00,000/- MADE BY THE ASSESSING OFFICER IT IS REQUIRED TO BE NOTED THAT AS SUCH AN AMOUNT OF RS.1 ,00,00,000/-VIDE CHEQUE NO. 102110 AND AN AMOUNT OFRS.60 LAKH VIDE C HEQUE NO. 102111 WAS GIVEN TO THE ASSESSEE AND OUT OF THE TOT AL LOAN OF RS.1.60 CRORE, RS.15 LAKH VIDE CHEQUE NO. 196107 WAS REPAID AND, THEREFORE, AN AMOUNT OF RS.1,45,00,000/- REMAINED OUTSTANDING TO BE PAID TO SHRI ISHWAR ADWANI. IT HAS ALSO COME ON RECORD THAT THE SAID LOAN M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 21 AMOUNT S BEEN REPAID BY THE ASSESSEE TO SHRI ISHWAR ADWANI IN THE IMMEDIATE NEXT FINANCIAL YEAR AND THE DEPARTMENT HA S ACCEPTED THE REPAYMENT OF LOAN WITHOUT PROBING INTO IT. IN THE A FORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WHEN THE ITAT HAS HELD T HAT THE MATTER IS NOT REQUIRED TO BE REMANDED AS NO OTHER VIEW WOULD BE POSSIBLE, WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED ORDER PASSED BY THE ITAT. NO QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUE STION OF LAW ARISES IN THE PRESENT TAX APPEAL. HENCE, THE PRESEN T TAX APPEAL DESERVES TO BE DISMISSED AND IS ACCORDINGLY DISMISS ED. IN THE INSTANT CASE, IT WAS HELD THAT THAT WHERE TH E DEPARTMENT HAD ACCEPTED REPAYMENT OF LOAN IN SUBSEQUENT YEAR, NO A DDITION WAS TO BE MADE IN CURRENT YEAR ON ACCOUNT OF CASH CREDIT. 3.2.14 THE FACTS OF THE BOTH THE CASES ARE SIMILAR TO THE APPELLANT'S CASE, AS IN BOTH THE CASES, THE ASSESSEE HAD REPAID THE AMOU NT RECEIVED BY BANK CHANNELS WHICH WERE REMAINING OUTSTANDING IN THE BO OKS OF ACCOUNT OF THE ASSESSEE AND THE DEPARTMENT HAD ACCEPTED THE REPAYM ENT OF LOAN WITHOUT PROBING INTO THE SAME. IT WAS HELD THAT THE ADDITIO N U/S 68 WAS NOT SUSTAINABLE. LN OUR CASE ALSO, THE APPELLANT COMPAN Y HAS REPAID THE ENTIRE SHARE APPLICATION MONEY RECEIVED FROM ALT THE SEVEN PARTIES, AND THE DEPARTMENT HAS ACCEPTED THE REPAYMENT WITHOUT PROBI NG IN TO THE SAME, HENCE, THIS CASE ALSO DESERVES THE SAME TREATMENT. 3.2.14 FOLLOWING ARE SOME MORE IMPORTANT DECISIO NS IN THIS REGARD: THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . CREATIVE WORLD TELEFILMS LTD (2011) 333 ITR 100 (BOM) HAS HELD THAT WHEN THE ASSESSEE HAD GIVEN THE DETAILS OF NAME AND ADDRESS OF THE SHAREHOLDER, THE IR PAN/GIR NUMBER AND HAD ALSO GIVEN CHEQUE NUMBER, NAME OF BANK, AND THE AO DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIMATELY RETURN ED BACK WITH AN ENDORSEMENT 'NOT TRACEABLE', TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION OF CASH CREDIT IN RESPECT OF SHARE APPLICATION MONE Y. 3.2.15 THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V GAGANDEEP INFRASTRUCTURE PVT LTD (ITA 1613 OF 2014 DATED 20.0 3.2017) HAS HELD THAT THE SUPREME COURT DECISION IN CIT V LOVELY EXPORTS P LT D (317 ITR 218) IS APPLICABLE FOR ALL ASSESSMENT YEARS PRIOR TO AY 201 3-14. IN THE SUPREME COURT DECISION IN LOVELY EXPORTS P LTD (SUPRA), THE HON'BLE SUPREME COURT HAS HELD THAT IF THE AMOUNTS HAVE BEEN SUBSCRIBED B Y BOGUS SHAREHOLDERS, IT IS FOR THE REVENUE TO PROCEED AGAINST SUCH SHAREHOL DERS BY REOPENING THEIR ASSESSMENTS. THIS BEING THE LAW OF THE LAND, IT MUS T BE APPLIED TO THE ASSESSEE'S CASE.LT IS TRUE THAT THE AO OBSERVED THA T THE COMPANIES HAD NO RECENT AGM AND BANK STATEMENT SHOWED DEPOSIT PRIOR TO THE PAYMENT TO THE APPELLANT. BUT, ALL THESE DEPOSITS ARE BY CHEQU E ONLY AND ARE VARIOUSLY BANK LOANS, PAYMENTS FROM BUSINESS PARTIES ETC ETC. ON THE CONTRARY, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER D ID NOT DO HIS DUTY IN ISSUING NOTICE U/S 133(6) OF THE ACT TO ANY OF THE SUBSCRIBERS. THE ASSESSEE WAS NOT GIVEN A CHANCE TO DISCHARGE THE BURDEN OF P ROOF U/S 68 OF THE ACT. M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 22 3.2.16 THE HON'BLE BOMBAY HIGH COURT DECISION OF CI T VS ORCHID INDUSTRIES LTD (ITXA 1433 OF 2014) IS IN THE SAME CONTEXT OF B OGUS SHARE APPLICATION MONEY. IN THIS CASE, A SURVEY WAS CONDUCTED U/S 13 3A OF THE INCOME TAX ACT, 1961 ON 24.11.2004. IN THE ASSESSMENT ORDER PA SSED U/S 143(3) DATED 29.12.2006, AN ADDITION OF RS. 95,00,000/- WAS MADE IN RESPECT OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM THE SEVEN P ARTIES ON THE BASIS OF ENQUIRY MADE BY ADIT (INV) - UNIT IV, KOLKATTA AS T HE IDENTITY AND CREDIT WORTHINESS OF THE PARTIES AND GENUINENESS OF THE TR ANSACTION COULD NOT BE PROVED. AN APPEAL WAS FILED BEFORE CIT(A) AGAINST T HE AFORESAID ADDITION MADE IN THE ASSESSMENT ORDER. DURING THE APPEAL PRO CEEDINGS, IT WAS ARGUED THAT NO PROPER OPPORTUNITY WAS GIVEN TO THE ASSESSE E TO PRODUCE THE PARTIES EVEN THOUGH THE PARTIES WERE READY TO APPEAR BEFORE THE AUTHORITIES. THEREFORE, CONSIDERING THIS REQUEST OF THE ASSESSEE , THE MATTER WAS REMANDED BACK TO THE ASSESSING OFFICER WITH A DIREC TION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE PARTIES. HOWEVER, EVEN DURING THE COURSE OF REMAND REPORT PROCEEDINGS WHICH LASTE D FOR ALMOST TWO YEARS, THE PARTIES COULD NOT BE PRODUCED IN SPITE OF SEVER AL OPPORTUNITIES GIVEN BY THE ASSESSING OFFICER. THEREFORE, THE ADDITION OF R S. 95,00,000/- WAS CONFIRMED BY THE CIT(A) VIDE HIS ORDER DATED 17.06. 2011. ON FURTHER APPEAL, THE APPEAL WAS ALLOWED BY HON'BLE ITAT ON THE GROUN D THAT ALL THE RELEVANT DOCUMENTARY EVIDENCES HAVE BEEN PRODUCED AND THUS, THE GENUINENESS OF THE TRANSACTION AND IDENTITY AND CREDIT WORTHINESS OF THE PARTIES HAS BEEN ESTABLISHED. THUS, THE ADDITION OF RS.95,00,000/- W AS DELETED BY HON'BLE ITAT VIDE ITS ORDER DATED 07.02.2014. THE DEPARTMENT FILED AN APPEAL TO HON'BLE BOMBAY HI GH COURT RAISING THE FOLLOWING QUESTIONS OF LAW: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, ORDERS OF THE TRIBUNAL WAS PERVERSE IN DELETIN G THE ADDITION OF RS.95,00,000/- MADE U/S. 68 OF THE ACT, RELYING ONL Y ON THE DOCUMENTARY EVIDENCE PRODUCED BY THE RESPONDENT COM PANY WHILE IGNORING THE KEY FACTOR THAT THESE ENTITIES WERE NO T TRACEABLE AT THEIR GIVEN ADDRESSES? WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE TRIBUNAL ERRED IN NOT APPRECIATING THE O BSERVATIONS MADE BY THE DELHI HIGH COURT IN NOVA PROMOTERS A ND FINLEASE PVT. LTD. 18 TAXMAN.COM 217 WHEREIN THE COURT HAS OBSERVED TH AT CASES OF THIS TYPE CANNOT BE DECIDED ONLY ON THE BASIS O F DOCUMENTARY EVIDENCES ABOVE AND THERE IS NEED TO TAKE INTO ACCO UNT THE SURROUNDING CIRCUMSTANCES? THE TRIBUNAL OUGHT TO HAVE TAKEN NOTE OF THE FACT T HAT THE ASSESSEE WAS NOT ABLE TO PRODUCE EVEN A SINGLE PARTY BEFORE THE AO DESPITE AGREEING BEFORE THE CIT(A) THAT IT WILL PRODUCE ALL PARTIES BEFORE THE AO DURING REMAND PROCEEDINGS.' THE BOMBAY HIGH COURT OBSERVED THAT THE ASSESSEE HA D PRODUCED THE DOCUMENTS SUCH AS PAN, CONFIRMATION, BANK STATE MENT, ALLOTMENT LETTERS, FINANCIAL STATEMENTS. THE BALANCE SHEETS S HOW SIGNIFICANT FUNDS TO M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 23 INVEST IN SHARES OF THE ASSESSEE. THE HON'BLE BOMBA Y HIGH COURT HELD THAT CONSIDERING THE VOLUMINOUS DOCUMENTARY EVIDENCE, ON LY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE ID ASSESSING OF FICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE HON'BLE BOMBAY HIGH C OURT HELD AS UNDER: THE TRIBUNAL HAS CONSIDERED THAT THE ASSESSEE HAS PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH T HE GENUINENESS OF THE PARTY SUCH AS PAN OF ALL THE CREDITORS ALONG WITH T HE CONFIRMATION, THEIR BANK STATEMENTS SHOWING PAYMENT OF SHARE APPLICATIO N MONEY. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS A/SO PRODUCED THE ENTIRE RECORD REGARDING ISSUANCE OF SHARES I.E. ALLOTMENT OF SHARES TO THESE PARTIES, THEIR SHARE APPLICATION FORMS, ALLOTMENT LETTERS AN D SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF TH ESE PERSONS DISCLOSES THAT THESE PERSONS HAD SUFFICIENT FUNDS IN THEIR AC COUNTS FOR INVESTING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLUMINOUS DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDG MENT IN CASE OF GAGANDEEP INFRASTRUCTURE (P.) LTD. (SUPRA) WOULD BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. IN THE CASE OF ORCHID INDUSTRIES P LTD (SUPRA), THE AO HAD ISSUED 133(6) NOTICES TO THE PARTIES. DESPITE THE FACT THAT THE PARTIES DID NOT APPEAR BEFORE THE AO, THE HON'BLE BOMBAY HIGH COURT HAVE HELD THAT THE TRANSA CTION WAS GENUINE AS THE ASSESSEE PRODUCED VOLUMINOUS DOCUMENTARY EVIDENCE. 3.2.17 RECENTLY, THE HON'BLE MUMBAI ITAT IN THE CAS E OF ARCELI REALTY LTD V ITO (ITA 6492/M/2016), HAS FOLLOWED THE DECISION OF JURISDIC TIONAL HIGH COURT IN THE CASE OF GAGANDEEP INFRASTRUCTURE P LTD. THE ISSUE INVOLVED THEREIN WAS ALSO RELATED TO SHARE APPLICATION MONEY ACCEPTED BY THE ASSESSEE FR OM PRAVIN JAIN GROUP OF COMPANIES AND THE INFORMATION IN THIS REGARD HAD BE EN RECEIVED BY THE AO FROM THE DGIT (INV) MUMBAI. IN THAT CASE ALSO, THE ASSES SEE HAD SUBMITTED THE SUPPORTING DOCUMENTARY EVIDENCES SUCH AS COPY OF IT R, BALANCE SHEET AND BANK STATEMENT OF THE INVESTOR COMPANIES, BOARD RESOLUTI ON, CONFIRMATION, ROC RETURN ETC. IN THIS CASE, THE HON'BLE ITAT HELD THAT 'THE ASSES SEE DULY FURNISHED THE PROOF OF IDENTITY LIKE PAN, BANK ACCOUNT DETAILS FR OM THE BANK, OTHER RELEVANT MATERIAL, GENUINENESS OF THE TRANSACTION, PAYMENT T HROUGH BANKING CHANNEL AND EVEN THE SOURCE OF SOURCE, THEREFORE, THE ASSESSEE HAS PROVED THE CONDITIONS LAID DOWN U/S 68 OF THE ACT. IT IS ALSO NOTED THAT IN SP ITE OF REPEATED REQUEST, THE ID AO DID NOT PROVIDE OPPORTUNITY TO CROSS EXAMINE THE CO NCERNED PERSONS AND EVEN THE RELEVANT INFORMATION AND ALLEGATION, IF ANY, MADE T HEREIN, WHICH HAS BEEN USED AGAINST THE ASSESSEE, WAS NOT PROVIDED TO THE ASSES SEE. AT THIS STAGE, WE ADD HERE THAT MERE INFORMATION IS NOT ENOUGH RATHER IT HAS T O BE SUBSTANTIATED WITH FACTS. THE INFORMATION MAY AND MAY NOT BE CORRECT. FOR FAS TENING THE LIABILITY UPON ANYBODY, THE DEPARTMENT HAS TO PROVIDE THE AUTHENTI CITY OF THE INFORMATION TO THE PERSON AGAINST WHOM SUCH INFORMATION IS USED. THE P RINCIPLE OF NATURAL JUSTICE, DEMANDS THAT WITHOUT CONFRONTING THE ASSESSEE OF SU CH EVIDENCE, IF ANY, OR THE INFORMATION, NO ADDITION CAN BE MADE. EVEN OTHERWIS E, AS PER ARTICLE 265 OF THE M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 24 CONSTITUTION ONLY LEGITIMATE TAXES HAVE TO BE LEVIE D AND COLLECTED. IN OUR HUMBLE OPINION, THE ASSESSEE HAS DULY DISCHARGED THE ONUS CASTE UPON IT, THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE COU RTS, WE REVERSE THE ORDER OF THE ID CIT(A), RESULTANTLY, THIS GROUND OF THE ASSESSEE IS ALLOWED.' 3. 2. 18 THE ISSUE REGARDING ADDITIONS U/S.68 ON SH ARE APPLICATION MONEY HAS BEEN CONSIDERED BY VARIOUS HON'BLE COURTS. SOME OF THE R ELEVANT FINDINGS OF COURTS ARE CONSIDERED AS UNDER: I. CIT VS. GANGESHWARI METAL P. LTD. 361 IT R 10 (DELHI) THE HON'BLE HIGH COURT OF DELHI HAS HELD THAT THE G ENUINENESS OF THE TRANSACTIONS IS ESTABLISHED AS THE TRANSACTIONS ARE ROUTED THROUGH BANKING CHANNELS. IT WAS SEEN THAT THE SHARE APPLICATION MO NEY WAS RECEIVED THROUGH A/C PAYEE CHEQUES, DETAIL OF WHICH HAD BEEN FILED BY THE ASSESSEE BY FILING THE COPY OF THE BANK A/C OF THE SHARE APP LICANTS. THUS WHERE THE RETURN OF INCOME WAS FILED BY THE CREDITORS OF THE ASSESSEE AND WAS ACCEPTED BY THE AO NAD PAYMENTS WERE THROUGH A/C PA YEE CHEQUES THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. T HE REVENUE COULD NOT PROVE THAT THE MONEY RECEIVED BY THE APPELLANT IN T HE FORM OF SHARE APPLICATION HAS COME FROM ITS OWN SOURCES. NO EVIDE NCES REGARDING THIS HAVE BEEN BROUGHT ON RECORD BY THE AO. IN CIT VS. DIVINE LEASING & FINANCE LTD. 299 ITR 26 8 THE HON'BLE DELHI HIGH COURT HELD THAT BURDEN OF PR OOF CAN SELDOM BE DISCHARGED THE HILT BY THE ASSESSEE. IF THE A.O. HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, RAT HER DUTY BOUND, TO CARRY OUT THOROUGH INVESTIGATIONS. BUT IF THE A.O. FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HI S SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. IF RELEVANT DETAILS OF ADDRESS AND IDENTITY OF THE SUBSCRIBERS ARE FURNISHED TO THE DEPARTMENT ALONGWITH COPIES OF THE SHAREHOLDERS REG ISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ETC. IT WOULD CONSTI TUTE ACCEPTABLE PROOF OR EXPLANATION BY THE ASSESSEE. III. IN HINDUSTAN INKS & RESINS LTD. VS. DY. C.I.T . 60 DTR 0018 (2011) THE HON'BLE GUJARAT HIGH COURT HAS HELD AS UNDER: 'FROM THE CONCURRENT FINDINGS RECORDED BY THE AUTHO RITIES BELOW, IT IS APPARENT THAT NONE OF THE PARTIES HAVE RECORDED ANY FINDINGS TO THE EFFECT THAT THE IDENTITY OF THE DEPOSITORS HAD NOT BEEN ESTABLISHED BY THE ASSESSEE. THE CASE OF THE RESPON DENT IS THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF SUCH C ASH AS WELL AS CREDITWORTHINESS OF THE DEPOSITS. IT IS NOT THE CAS E OF THE REVENUE THAT THE SUBSCRIBERS ARE BOGUS, THE CASE OF THE REV ENUE IS THAT THE SOURCE OF SUCH CASH AS WELL AS CREDITWORTHINESS OF THE DEPOSITORS HAS NOT BEEN EXPLAINED. IN THE CIRCUMSTANCES, THE DEPAR TMENT IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF THE DEPOSITS NAMED BY THE ASSESSEE, HOWEVER, UNDER NO CIRCUMSTANCES, C AN THE AMOUNT M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 25 OF SHARE CAPITAL BE REGARDED AS THE UNDISCLOSED INC OME OF THE ASSESSEE.' IV. IN CIT VS. K.C. FIBRES LTD. IN IT APPEAL NO.701 OF 2009 THE HON'BLE DELHI HIGH COURT HELD THAT IN SO FAR AS ASSESSING COMPANY IS CONCERNED, IT IS NOT DISPUTED THAT MONEY WAS PAI D TO IT, TOWARDS THE AFORESAID SHARE APPLICATION MONEY, BY MEANS OF CHEQ UES. IT IS NOT FOR THE ASSESSING COMPANY TO PROBE AS TO THE SOURCE FROM WH ERE DP COLLECTED THE AFORESAID MONEY. IT WAS FOR THE AO, IN THESE CIRCUM STANCES TO INQUIRE INTO THE AFFAIRS OF DP WHICH IS AN INDEPENDENT COMPANY I N AS MUCH AS NO FINDING IS ARRIVED AT BY THE AO THAT THE TWO COMPANIES ARE UMBRELLA COMPANIES OR HAVE ANY RELATIONSHIP WITH EACH OTHER. V. IN CIT VS. STL EXTRUSION (P) LTD. 333 IT R 269 THE HON'BLE MADHYA PRADESH HIGH COURT HELD THAT THO UGH IT IS THE DUTY OF THE ASSESSEE TO ESTABLISH THE GENUINENESS O F THE CREDITS BUT IN THE PRESENT CASE THE ASSESSEE HAS DULY ESTABLISHED THE IDENTITY AND SOURCE OF CREDITS. THE TRIBUNAL HAS ALSO HELD THAT ONCE THE I DENTITY AND SOURCE OF THE SUBSCRIBERS OF THE SHARES IS ESTABLISHED NO ADDITIO N CAN BE MADE U/S.68. THE ASSESSEE HAVING DULY FURNISHED THE NAME, AGE, ADDRE SS, DATE OF FILING THE APPLICATION OF SHARES, NUMBER OF SHARES OF EACH SUB SCRIBER THERE WAS NO JUSTIFICATION FOR THE AO FOR MAKING THE IMPUGNED AD DITION BECAUSE ONCE THE EXISTENCE OF THE INVESTORS / SHARE SUBSCRIBERS IS P ROVED, ONUS SHIFTS ON THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPLICAN TS ARE BOGUS OR THE IMPUGNED MONEY BELONGS TO THE ASSESSEE ITSELF. AFTE R FILING OF THE AFFIDAVITS OF THE SAID SUBSCRIBER THE APPELLANT AT NO STAGE OF THE PROCEEDINGS SOUGHT ANY OPPORTUNITY TO REBUT THE SAID AFFIDAVITS. VI. IN CIT VS. PRAYAG HOSPITAL & RESEARCH IT APPEAL NO.917 OF 2010 THE HON'BLE DELHI HIGH COURT HELD THAT SHAREHOLDERS OF THE ASSESSEE COMPANY HAVING APPEARED BEFORE THE AO AND FURNISHED AFFIDAVITS ALONG WITH SUPPORTING DOCUMENTS CONFIRMING THEIR INVESTMENT IN THE ASSESSEE, IDENTITY OF THE CREDITORS IS ESTABLISHED AND THEREFORE, ADDI TION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. VII. IN CIT VS. TDI MARKETING (P) LTD. IT APPE AL NO.340 OF 2009 THE HON'BLE DELHI HIGH COURT HELD THAT ASSESSEE COM PANY HAVING FURNISHED COMPLETE DETAILS OF SHAREHOLDERS NAME, AD DRESSES, PAN AND BANKERS AND THEY HAVING CONFIRMED THE INVESTMENT AN D THE AO HAVING NOT GIVEN HIS SPECIFIC COMMENTS ON HIS ENQUIRIES PERTAI NING TO THEM EXCEPT FOR NINE SHAREHOLDERS, ADDITION U/S.68 CANNOT BE SUSTAI NED. VIII. IN CIT VS. GANGOUR INVESTMENT LTD. (2011)33 5 ITR 359 THE HON'BLE HIGH COURT OF DELHI HELD THAT ASSESSEE COMPANY HAVING FILED THE SUBSCRIPTION FORMS OF THE INVESTORS, INCL UDING TT LTD., A GROUP COMPANY, CONTAINING DETAILS AND INFORMATION WITH RE SPECT TO THEIR ADDRESSES M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 26 AS WELL AS PAN, THEREBY ESTABLISHING THEIR IDENTITY AND ALSO SUPPLIED A COPY OF THE STATEMENT OF BANK ACCOUNTS OF TT LTD., IT HA S DISCHARGED ITS ONUS IN RESPECT OF THE VERACITY OF THE TRANSACTION AND THER EFORE, THE ADDITION U/S.68 MADE BY THE AO IN RESPECT OF THE IMPUGNED INVESTMEN T MADE BY TT LTD. HAS BEEN RIGHTLY DELETED. 3.2.19 THUS, CONCLUDINGLY, IT HAS TO BE SAID THAT T HE APPELLANT HAS DONE EVERYTHING IN ITS POWER TO PROVE THE GENUINENESS OF THE TRANSACTI ONS ASSREQUIRED TO PROVE THE SATISFACTORY NATURE OF SHARE CAPITAL/LOAN TRANSACTI ON. IN THESE CIRCUMSTANCES, THE ONUS HAD CLEARLY SHIFTED TO THE AO IN VIEW OF THE F ACT OF RE-PAYMENT OF MONEY WITH INTEREST. IF THE AO WAS NOT SATISFIED WITH EVEN THI S, SHE WAS DUTY BOUND TO SPECIFY WHAT MORE MATERIAL HE WANTED TO APPELLANT TO FURNIS H. THE AO NEVER ASKED FOR ANY FURTHER MATERIAL. THIS LEADS TO THE INESCAPABLE CON CLUSION THAT THE AO COULD NOT THINK OF ANY FURTHER MATERIAL TO ASK FOR AND PROCEE DED TO REJECT THE APPELLANT'S CLAIMS, RELYING UPON THE INFORMATION/MATERIAL, WHIC H HE NEVER EVEN BROUGHT TO THE NOTICE OF THE APPELLANT FOR ANY PROPER REBUTTAL. TH E UNEQUIVOCAL CONCLUSION IS THAT THE IMPUGNED SHARE APPLICATION MONEY RECEIVED FROM THE IMPUGNED PARTIES, HAVE TO BE TREATED AS EXPLAINED SATISFACTORILY. NO COGEN T MATERIAL HAS BEEN ADDUCED BY THE AO TO SHOW THAT SHARE APPLICATION MONEY WAS UNE XPLAINED AND/ OR, WHY THE RE- PAYMENT OF THE SAME WAS DONE. IN FACT, THE APPELLAN T COMPANY HAS RETURNED THE SHARE APPLICATION MONEY ALONG WITH HEAVY INTEREST T O THE PARTIES CONCERNED. IF THERE WAS ANY INTENTION OF THE APPELLANT TO BRING T HE UNDISCLOSED MONEY IN THE BOOKS THROUGH SHARE APPLICATION, THEN, WHY THE APPE LLANT SHALL RETURN THE MONEY TO THE PARTIES EVEN WITH INTEREST ! THEREFORE, THE IMP UGNED ADDITION MADE UNDER THE SECTION 68 FAILS ON SEVERAL COUNTS - (1) RELIANCE O N EVIDENCE THAT IS TOTALLY INADEQUATE, (2) FAILURE TO RECOGNIZE THE SATISFACTO RY NATURE OF THE EXPLANATION 7 EVIDENCE TENDERED BY THE APPELLANT TO EXPLAIN THE T RANSACTION, AND (3) LASTLY, FAILURE TO ADDUCE ANY INDEPENDENT FINDING WHILE CONDUCTING THE RE-ASSESSMENT PROCEEDINGS. HENCE THE IMPUGNED ADDITION CANNOT BE SUSTAINED. 3.2.20 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS JUDICIAL PRONOUNCEMENTS REFERRED AND RELIED ABOVE BY ME AND ALSO CERTAIN JUDICIAL PRONOUNCEMENT RELIED UPON BY THE APPELLANT IN ITS W RITTEN SUBMISSIONS WHICH HAVE BEEN PRODUCED ABOVE, ADDITION MADE BY THE AO UNDER THE HEADING SHARE CAPITAL /SHARE APPLICATION MONEY CANNOT BE SUSTAINED AND TH EREFORE, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 5,10,00,000/- MADE U/S 6 8 OF THE IT ACT. THIS GROUND OF APPEAL IS, THEREFORE, ALLOWED. GROUND ALLOWED 20. THE LD. CIT(A) WHILE DECIDING THE CASE OF THE ASSESSEE GAVE A FINDING THAT ASSESSEE HAS FILED ALL THE NECESSARY EVIDENCES BEFORE THE AO COMPRISING CONFIRMATIONS FROM SHAREH OLDERS, PAN CARDS, IT ACKNOWLEDGEMENT OF SHAREHOLDERS, SHARE AP PLICATION FORMS DISCLOSING MODE OF PAYMENT, NUMBER OF SHARES SUBSCRIBED, SHARE PREMIUM, BANK DETAILS AND BOARD R ESOLUTION OF THE SHAREHOLDER COMPANIES AUTHORIZING THE INVEST MENT IN M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 27 EQUITY SHARES OF THE ASSESSEE. THE LD. CIT(A) ALSO NOTED THAT ALL THE 7 SHAREHOLDERS WERE NOT ISSUED SHARES AND AS P ER THE TERMS THE ASSESSEE HAS REPAID BACK THE APPLICATION MONEY ALONG WITH INTEREST @ 12% ON WHICH TDS HAS BEEN DEDUCTED AND D EPOSITED WITH THE GOVERNMENT TREASURY. THE LD. CIT(A) HAS G IVEN A VERY DETAILED FINDING IN PARA 3.2.3 TO 3.2.18 IN DECIDIN G THE APPEAL OF THE ASSESSEE. LD. CIT(A) HAS DISCUSSED THE INVESTOR WISE HISTORY AND ALSO THE SOURCES OF INVESTMENTS OF THE INVESTOR S AS CONTAINED IN PARA NO.3.2.9. THE LD. CIT(A) HAS FOL LOWED THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F H.R MEHTA VS. AC1T, MUMBAI (2016) 72 TAXMANN.COM 110 (BOM) WHEREI N IT HAS BEEN HELD THAT REPAYMENT OF MONEY WITH INTEREST IS A DECISIVE FACTOR IN DETERMINING WHETHER THE MONEY TA KEN WAS TO BE TREATED AS GENUINE. IF THE REPAYMENT IS NOT BEI NG DISTURBED BY THE AO, HE HAS TO ACCEPT THE RECEIPT OF MONEY AL SO AS GENUINE. THE HONBLE BOMBAY HIGH COURT HAS HELD TH AT WHERE THE MONEY RECEIPT HAS BEEN REPAID VIDE ACCOUNT PAYE E CHEQUES THE ASSESSEE HAS PRIMA-FACIE ESTABLISHED THE BONAFI DES OF LOAN TRANSACTIONS, NO ADDITION IS WARRANTED. SIMILARLY, THE LD. CIT(A) HAS FOLLOWED THE DECISION OF HONBLE BOMBAY HIGH CO URT IN THE CASE OF CIT VS. CREATIVE WORLD TELEFILM (2011) 333 ITR 100 (BOM.), CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. ITA NO.1613 OF 2014 DATED 20.03.2017, CIT VS. GANGESHWARI METAL PVT. LTD. 361 ITR 10 (DEL.), CIT VS. DIVINE LEASING & FINANCE LTD. 299 ITR 268 DELHI HC AND VARIOUS OTHER DECISIONS AS REFERRE D TO IN PARA 3.2.14 OF THE APPELLATE ORDER. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DE CISION OF THE LD. CIT(A). WE FIND THAT IN THIS CASE THE ASSESSEE HAS RAISED SHARE APPLICATION MONEY FROM 8 PARTIES. THE AO ADD ED M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 28 RS.5,10,00,000/- AS UNEXPLAINED CREDIT IN RESPECT O F 7 PARTIES WHEREAS 8 TH PARTY WHICH IS A SISTER CONCERN OF THE ASSESSEE HA S BEEN LEFT OUT AND HAS BEEN ACCEPTED BY THE AO. WE NOTE THAT IN THIS CASE THE ASSESSEE HAS RAISED MONEY THROUGH BAN KING CHANNEL AND FURNISHED ALL THE NECESSARY EVIDENCES C OMPRISING CONFIRMATIONS FROM THE INVESTORS, PAN NUMBERS, ITR ACKNOWLEDGEMENTS, ANNUAL ACCOUNTS, BOARD RESOLUTION S OF THE SUBSCRIBING COMPANIES, SHARE APPLICATION FORMS AND ALSO THE BANK DETAILS. WE ALSO NOTE THAT THESE INVESTORS WE RE NOT ALLOTTED SHARES DURING THE YEAR AND THEIR MONEY WAS REPAID A LONG WITH INTEREST OF 12% PER ANNUM. WE FURTHER NOTE THAT TH E ASSESSEE HAS DEDUCTED TDS FROM THE INTEREST PAID TO THE INVE STORS AND DEPOSITED THE SAME IN THE GOVERNMENT TREASURY. IN THIS BACKGROUND WE HAVE PERUSED THE ORDER OF LD. CIT(A) AND ALSO THE VARIOUS DECISIONS CITED BY THE LD. CIT(A) WHILE ALL OWING THE APPEAL OF THE ASSESSEE WHICH INCLUDED THE DECISION OF VARIOUS HIGH COURTS INCLUDING HONBLE BOMBAY HIGH COURT AND OTHER CO- ORDINATE BENCHES OF THE TRIBUNAL. WE, THEREFORE, D O NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS OF LD. CIT(A) AS THE LD. CIT(A) HAS CONSIDERED ALL THE ASPECTS OF THE MONEY RAISED BY THE ASSESSEE AND ALSO THE VARIOUS EVIDENCES FILED VIS- -VIS THE RATIO LAID DOWN IN THE DECISIONS AS DISCUSSED HEREINABOVE . ACCORDINGLY, THE GROUND NOS.2 & 3 ARE DISMISSED. 22. THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO.3715/M/2019 A.Y. 2010-11 23. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS.9,90,000/- BY LD. CIT(A) AS MADE BY THE AO UNDER SECTION 68 OF THE ACT ON ACCOUNT OF UNSECURED LOANS. M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 29 24. THE ISSUE RAISED IN GROUND NO.1 IS IDENTICAL TO ONE AS DECIDED BY US IN GROUND NO.1 IN ITA NO.3716/M/2019 A.Y. 2011-12 WHEREIN WE HAVE UPHELD THE ORDER OF LD. CIT (A). IN THE INSTANT CASE ALSO THE ISSUE IS IDENTICAL QUA THE IN TEREST PROVISIONS OF RS.9,90,000/- IN RESPECT OF LOANS RA ISED IN EARLIER YEARS AND THERE IS NO ADDITION TO THE UNSECURED LOA NS DURING THE CURRENT YEAR AS THE ASSESSEE HAS NOT BORROWED ANY M ONEY DURING THE CURRENT ASSESSMENT YEAR. ACCORDINGLY, O UR FINDING ON GROUND NO.1 IN ITA NO.3716/M/2019 A.Y. 2011-12 WOUL D, MUTATIS MUTANDIS, APPLY TO GROUND NO.1 IN ITA NO.3715/M/2019 A.Y. 2010-11.THE GROUND NO. 1 IS DIS MISSED. 25. THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE DELETION OF ADDITION OF RS.1,40,00,000 BY LD. CIT(A) BY RESTRIC TING THE ADDITION TO RS.95 LAKHS AS MADE BY THE AO OF RS.2,35,00,000/- UNDER SECTION 68 OF THE ACT. 26. THE ISSUE RAISED IN GROUND NO.2 & 3 IS IDENTICA L TO ONE AS DECIDED BY US IN GROUND NO.2 & 3 IN ITA NO.3716/M/2 019 A.Y. 2011-12 WHEREIN WE HAVE UPHELD THE ORDER OF LD. CIT (A) DELETING THE ADDITION OF RS.5,01,00,000/- AS MADE BY THE AO UNDER SECTION 68 OF THE ACT TOWARDS SHARE CAPITAL/SHARE A PPLICATION MONEY. THEREFORE, OUR FINDING IN GROUND NOS.2 & 3 OF ITA NO.3716/M/2019 A.Y. 2011-12 WOULD, MUTATIS MUTANDIS , APPLY TO GROUND NO.2 & 3 OF ITA NO.3715/M/2019 A.Y. 2010- 11. ACCORDINGLY, THE GROUND NO.2 & 3 ARE DISMISSED. 27. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ITA NO.4882/M/2019 A.Y. 2010-11 (ASSESSEES APPEAL) M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 30 28. IN GROUND NO. 1 THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) UPHOLDING THE JURISDICTION OF THE AO TO RE-O PEN THE ASSESSMENT UNDER SECTION 147 R.W.S. 148 OF THE ACT. AT THE TIME OF HEARING THE LD AR DID NOT PRESS THIS GROUND AND THEREFORE SAME IS DISMISSED AS NOT PRESSED. 29. IN GROUND NO. 2 THE ASSESSEE HAS CHALLENGED THE PART CONFIRMATION OF THE ADDITION TO THE TUNE OF RS.95, 00,000/- BY LD. CIT(A) AS AGAINST THE ADDITION MADE BY THE AO O N ACCOUNT OF SHARE APPLICATION MONEY/SHARE CAPITAL UNDER SECTION 68 OF THE ACT. IN THIS CASE, WE HAVE ALREADY UPHELD THE ORDE R OF LD. CIT(A) WHEREIN THE LD. CIT(A) HAS DELETED THE ADDITION OF RS.1,40,00,000/- BY FOLLOWING OUR DECISION IN ITA NO.3716/M/2019 A.Y. 2011-12 ON GROUND NO.2 & 3. HO WEVER, THE FACTS QUA THE ADDITION SUSTAINED BY LD. CIT(A) OF RS.95,00,000/- ARE NOT SAME. THE ONLY DIFFERENCE W E NOTICE IS THAT IN THOSE CASES WHERE WE HAVE UPHELD THE ORDER OF LD. CIT(A) THE ASSESSEE HAS REPAID THE SHARE APPLICATION MONEY ALONG WITH THE INTEREST WHEREAS IN THIS CASE THE REPAYMENT HAS NOT BEEN MADE. 30. THE FACTS IN BRIEF ARE THAT DURING THE COURSE O F ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAS RAISED SHARE APPLICATION MONEY FROM SIX PARTIES AGGREGATING TO RS.2,35,00,000/- AND CALLED UPON THE ASSESSEE TO FU RNISH THE NECESSARY DETAILS AND EVIDENCES IN ORDER TO PROVE T HE GENUINENESS OF THE SAME. THE AO ALSO ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO THESE INVESTORS, HOWEV ER, THE SAME WERE RETURNED UNSERVED. THE ASSESSEE PRODUCED BEFO RE THE AO THE EVIDENCES COMPRISING CONFIRMATIONS, ITRS, ACKNOWLEDGMENTS, SHARE APPLICATION FORMS, BOARD RES OLUTIONS M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 31 AND PAYMENTS THROUGH BANKING CHANNELS, HOWEVER, AO WAS NOT SATISFIED WITH THE GENUINENESS OF THIS SHARE APPLIC ATION MONEY AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 31. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PA RTLY ALLOWED THE APPEAL OF THE ASSESSEE TO THE EXTENT OF RS.1,40 ,00,000/- DURING THE YEAR WHICH HAS BEEN REPAID BY THE ASSESS EE DURING THE YEAR ALONG WITH THE INTEREST OF 12%, HOWEVER, S USTAINED THE ADDITION IN RESPECT OF 5 SHAREHOLDERS TO THE TUNE O F RS. 95,00,000/- AS MENTIONED FROM SR.NO. 1 TO 5 IN PARA 9.1 OF THE ASSESSMENT ORDER TO WHOM THE SHARES WERE ALLOTTED B Y THE ASSESSEE. THE LD. CIT(A) WHILE PARTLY SUSTAINING T HE ADDITION RELIED ON TWO DECISIONS NAMELY NRI IRON AND STEEL 1 03 TM.COM 48 SC AND ITO VS. SYNERGY FINLEASE PVT. LTD. ITA NO.4778/DEL/2013 AND THUS JUSTIFIED THE ADDITION TO THE TUNE OF RS. 95,00,000/- WHICH HAS BEEN UNDER CHALLENGE BEFO RE US. 32. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT TH E ONLY DISTINGUISHABLE FACTS QUA THE ADDITION SUSTAINED BY LD. CIT(A) OF RS.95,00,000/- FROM 5 SHARE APPLICANTS AS MENTIONED IN PARA 9.1 AT SL. NO.1 TO 5 ARE THAT IN THESE CASES THE SH ARES WERE ALLOTTED BY THE ASSESSEE AS PARTLY PAID UP AND THUS THE FULL PAYMENT WAS NOT MADE BY THE APPLICANTS. THE BALANCE CALL MONEY DUE FROM THESE SHAREHOLDER WAS NOT PAID DESPI TE VARIOUS REMINDERS AND FOLLOW UPS BY THE ASSESSEE. ULTIMATEL Y THE ASSESSEE FORFEITED THE MONEY ALREADY PAID UP OF RS. 95,00,000/- BY THESE INVESTORS. THESE SHARE APPLICANTS WERE M/S DESIRE VINCOM PVT LTD., M/S NIGHTANGLE VYAPAR PVT LTD. ,M/S CHIN PURNI COMMERCE PVT LTD., M/S CHANDRA MUKHI INVESTME NT ADVISORY PVT LTD. AND M/S WELLPLAN VIOCOM PVT LTD. THE M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 32 UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS FILED AL L THE DOCUMENTS NAMELY CONFIRMATIONS OF THE INVESTORS, TH EIR PAN CARD, ITRS, SHARE APPLICATION FORMS, NUMBER OF SHAR ES SUBSCRIBED, SHARE PREMIUM AND PROOFS OF RECEIPT THR OUGH BANKING CHANNEL WITH THE AO TO PROVE THE IDENTITIES AND CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS O F THESE INVESTMENTS. THE LD CIT(A) HAS CONFIRMED THE ADDITI ON ONLY ON THE GROUND THAT IN THESE CASES THE ASSESSEE HAS NOT REPAID THE MONEY BUT FORFEITED THE SAME. THE LD CIT(A) HAS DIS CUSSED IN DETAIL THE EACH INVESTOR IN PARA 3.2.19 OF THE APPE LLATE ORDER. THE ONLY REASON CITED BY THE LD CIT(A) FOR CONFIRMI NG THIS AMOUNT IS THAT THE INCOME OF THE INVESTORS IS VERY MEAGER. WE HAVE ALSO EXAMINED THE FINANCIALS QUA THESE INVEST ORS AND FIND THAT THEY HAVE THE REQUISITE RESOURCES TO INVEST IN THE ASSESSEE COMPANY. WE FIND MERIT IN THE CONTENTIONS OF THE LD AR THAT THE FORFEITURE OF AMOUNT ALREADY PAID ON PARTLY PAID UP SHARES IS A CAPITAL RECEIPT AS THE SAME HAS NOT ACCRUED FROM NO RMAL BUSINESS ACTIVITIES OF THE ASSESSEE. BESIDES THE DE CISIONS RELIED UPON BY THE LD CIT(A) ARE DISTINGUISHABLE ON FACTS AND ARE NOT APPLICABLE TO THE PRESENT FACTS. THE CASE OF THE AS SESSEE IS ALSO SQUARELY COVERED BY THE DECISION OF DCIT(OSD), CIR- 4VS MAHALAXMI RUBTECH LTD. ITA NO. 1190/MUM/AHD/2014 OR DER DATED 06.03.2017 AND SUNITA GUPTA SHARE BROKER LTD VS ACIT ITA NO. 4188/DEL/2010 ORDER DATED 7.12.2011. THE OP ERATIVE PARA IN THE CASE OF DCIT(OSD), CIR-4 VS MAHALAXMI R UBTECH LTD(SUPRA) IS REPRODUCED BELOW: 6. WE HAVE HEARD THE CONTENTIONS OF LD. DEPARTMENT AL REPRESENTATIVE AND GONE THROUGH THE RECORDS PLACED BEFORE US AS WELL AS THE DECISION OF THE CO-ORDINATE BENCH, AHMEDABAD IN THE CASE OF DCIT(OSD) VS. BRIJL AXMI LEASING & FINANCE LTD.(SUPRA). SOLITARY GRIEVANCE OF THE REVENUE THRO UGH THIS APPEAL IS AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) DELETING THE ADDITION OF RS.94.80 LACS BY M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 33 TREATING THE AMOUNT RECEIVED ON ACCOUNT OF FORFEITU RE OF SHARE APPLICATION MONEY BY WAY OF ISSUE OF SHARE WARRANTS AS CAPITAL RECEIP TS AS AGAINST LD. ASSESSING OFFICER S ORDER TREATING IT TO BE REVENUE RECEIPT. WE OBSE RVE THAT THERE IS NO DISPUTE FROM THE SIDE OF REVENUE TO THE ESTABLISHED FACT THAT AS SESSEE RECEIVED THE APPLICATION MONEY OF RS.94.80 LACS FOR TECHNICAL TEXTILE PROJEC T AS PER SECURITY EXCHANGE BOARD OF INDIA AND BOMBAY STOCK EXCHANGE GUIDELINES AND W ITH THE NECESSARY APPROVAL FOR ISSUING SHARE WARRANTS. THIS SUM OF RS.94.80 LACS H AS BEEN SHOWN IN THE AUDITED BALANCE SHEET UNDER THE HEAD SHARE-HOLDERS FUND. AS THE SHARES WERE TO BE ALLOTTED BEFORE 24.2.2009 BUT THE SHARE WARRANT APP LICANTS FAILED TO GIVE THE BALANCE AMOUNT, THE WARRANT APPLICATION MONEY HAD B EEN FORFEITED DURING THE RELEVANT YEAR. 6.1 WE FURTHER OBSERVE THAT SIMILAR ISSUE DEALING W ITH SIMILAR FACTS RELATING TO FORFEITURE OF SHARE APPLICATION MONEY TO BE TREATED AS CAPITAL RECEIPT OR REVENUE RECEIPT CAME UP BEFORE THE CO-ORDINATE BENCH, AHMED ABAD IN THE CASE OF DCIT(OSD) VS. BRIJLAXMI LEASING & FINANCE LTD. (SUP RA) AND REVENUES APPEAL WAS DISMISSED BY OBSERVING AS FOLLOWS :- '7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE THE ASSESSEE WAS TO RECEIVE CALL MONEY IN RESPECT O F SHARE AS PER THE TERMS OF PROSPECTUS AND THE ALLOTMENT LETTERS, BUT THE SA ME WERE NOT RECEIVED FROM SOME OF THE SHAREHOLDERS. IN THIS CASE, THE SH ARE APPLICATION MONEY WAS FORFEITED AS PER THE TERMS OF THE PROSPECTUS. T HE ABOVE FACTS ARE NOT IN DISPUTE. THE SHORT QUESTION WHICH FALL FOR OUR CONS IDERATION IS WHETHER THE ABOVE FORFEITURE AMOUNT IS TAXABLE UNDER THE PROVIS IONS OF INCOME-TAX ACT, 1961 OR NOT. THE LEARNED DR VEHEMENTLY PLACED RELIA NCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF T.V. SUNDA RAM IYENGAR & SONS LTD. (SUPRA) FOR HIS CONTENTION THAT FORFEITED AMOUNT IS TAXABLE AS REVENUE RECEIPT. HOWEVER, WE FIND THAT THE FACTS OF THE CAS E THAT WERE BEFORE THE HON'BLE SUPREME COURT ARE DISTINGUISHABLE FROM THE FACTS BEFORE US. IN THE INSTANT CASE NO SECURITY DEPOSIT OR ADVANCE RECEIVE D FOR PERFORMANCE OF THE CONTRACT WAS FORFEITED. IN FACT, THE AMOUNT RECEIVE D WAS AGAINST ISSUE OF SHARES AND ISSUE OF SHARES IS NOT THE BUSINESS OF T HE ASSESSEE. THE SAME CANNOT BE TREATED AS RECEIPT IN THE NORMAL COURSE O F THE BUSINESS OF THE ASSESSEE WHICH IS ENGAGED IN FINANCING AND LEASING BUSINESS. FURTHER, THE ASSESSEE HAS ALSO NOT CREDITED THE FORFEITED AMOUNT IN ITS PROFIT & LOSS ACCOUNT BUT IN CONTRADISTINCTION TO THAT IT HAS CRE DITED THE SAME IN CAPITAL RESERVE ACCOUNT. IN THE ABOVE FACTS, IN OUR CONS ID ERED OPINION THE DECISION OF THE TRIBUNAL IN THE CASE OF PRISM CEMENT LTD. (S UPRA) IS MORE APPLICABLE WHICH WAS RENDERED BY THE TRIBUNAL AFTER DULY CONSI DERING THE AFORESAID DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F T.V. SUNDARAM IYENGAR & SONS LTD. (SUPRA). THE TRIBUNAL IN THE SAID CASE HAS HELD AS UNDER : '15. THUS, THE EARNEST MONEY OR AN ADVANCE AMOUNT R ECEIVED ON ACCOUNT OF ISSUANCE OF NCDS, IF FORFEITED ON ACCOUN T OF NON-PAYMENT OF CALL MONEY, THE LOAN LIABILITY WOULD ONLY CONVER T INTO A CAPITAL RECEIPT. IT WOULD NOT ASSUME A CHARACTER OF REVENUE RECEIPT OR BUSINESS RECEIPT BECAUSE NCDS WERE NOT ISSUED IN TH E COURSE OF REGULAR BUSINESS OF THE ASSES SEE AS EVIDENT FROM T HE FACTS OF THE CASE. ASSESSEE'S MAIN BUSINESS IS OF CEMENT AND IT WAS IN THE PROCESS OF SET UP OF CEMENT MANUFACTURING PLANT AT SATNA DU RING THE M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 34 IMPUGNED ASSESSMENT YEAR. IN THESE CIRCUMSTANCES, W E ARE CONSTRAINED TO HOLD THAT THE AMOUNT RECEIVED BY THE ASSESSEE IN LIEU OF ISSUANCE OF NCDS WHICH WERE FORFEITED LATER, ON ACCOUNT OF NON- PAYMENT OF CALL MONEY ASSUMES A CHARACTER OF CAPITA L RECEIPT WHICH EARLIER WAS SHOWN AS A LOAN LIABILITY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IF WE CONSIDER THIS RECEIPT TO BE A BUSIN ESS RECEIPT EVEN THEN IT WOULD NOT BE TAXABLE TO TAX UNDER THE PROVI SIONS OF SECTION 41(1) OF THE ACT, INASMUCH AS THERE WAS NO ALLOWANC E OR DEDUCTION OF THIS LIABILITY IN THE EARLIER YEARS.' IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE AF ORESAID DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). IT IS CONFIRMED AND TH E GROUND OF APPEAL OF THE REVENUE IS DISMISSED.' 7. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-OR DINATE BENCH IN THE ABOVE CASE, WE FIND THAT THE FACTS DEALT IN THIS CASE ARE SIMIL AR TO THOSE IN THE CASE OF ASSESSEE AND LD. COMMISSIONER OF INCOME TAX(A) HAS ALLOWED A SSESSEES APPEAL IN A RIGHT PERSPECTIVE BY TREATING THE AMOUNT OF RS.94.80 LACS RECEIVED AS SHARE APPLICATION MONEY FOR ISSUING OF SHARE WARRANTS AS CAPITAL RECE IPT AND NOT REVENUE RECEIPT AS IT WAS NOT EARNED FROM REGULAR BUSINESS ACTIVITIES CAR RIED ON BY THE ASSESSEE. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORD ER OF LD. COMMISSIONER OF INCOME TAX(A) AND UPHOLD THE SAME. ACCORDINGLY THE GROUND OF REVENUE IS DISMISSED. IN VIEW OF THESE FACTS AND THE DECISION OF THE COOR DINATE BENCH OF THE TRIBUNAL WE HOLD THAT THE MONEY FORFEITED BY TH E ASSESSEE OF RS. 95,00,000/- CAN NOT BE ADDED UNDER SECTION 68 O F THE ACT. ACCORDINGLY WE SET ASIDE THE ORDER OF CIT(A) AND DI RECT THE AO TO DELETE THE ADDITION. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 33. IN THE RESULT, THE APPEALS OF THE REVENUE ARE D ISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.02.2021. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.02.2021. * KISHORE, SR. P.S. M/S. MULTIVENTURE FINANCIAL SERVICES PVT. LTD. & OR S ITA NO.3715/M/2019 & ORS 35 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.