Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 1950 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 month(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-11-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2009-2010
Appeal Filed On
07-06-2017
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHAR AT, JM VK;DJ VIHY LA-@ ITA NO. 492/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2009-10 THE DCIT CENTRAL CIRCLE-2 JAIPUR CUKE VS. M/S. BHOLENATH REAL ESTATES PVT. LTD 248, MUSARAF BHAWAN, HALDIYON KA RASTA, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AACCB 8619 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY:SMT. ROLEE AGARWAL, CIT - DR SHRI PRAVEEN KUMAR MITTAL, DCIT SHRI KAMLESH KUMAR MEENA, DCIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI VIJAY GOYAL, CA AND SHRI GULSHAN AGARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11/10/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 02 /11/2017 VKNS'K@ ORDER PER BENCH THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-4, JAIPUR DATED 31-03-2017 FOR THE ASSESSMEN T YEAR 2009-10 RAISING THEREIN SOLITARY GROUND AS UNDER:-. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 2,90,00,000/- MADE U/S 56(1) OF THE ACT IGNORING THE FACT THAT ASSETS OF THE ASSESSEE COMPANY DONT COMMENSURATE TO PREMIUM CHARGED AND F URTHER ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 2 IGNORING THE FACT THAT NEITHER ANY BUSINESS ACTIVIT Y WAS PERFORMED NOR ANY BUSINESS INCOME HAS BEEN SHOWN BY THE ASSESSEE. 2.1 APROPOS SOLITARY GROUND OF THE REVENUE, THE AO MADE THE ADDITION OF RS.2,90,00,000/- U/S 56(1) OF THE ACT IN THE HAN DS OF THE ASSESSEE COMPANY BY OBSERVING AS UNDER:- 16. HAVING DEALT WITH EACH OF THE CONTENTION OF T HE ASSESSEE AND HAVING FOUND THE SAME TO BE UNTENABLE IT IS IMP ORTANT TO PLACE ON RECORD CERTAIN ASPECTS WHICH HAVE A BEARING ON THE ISSUE AT HAND. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTI L IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EX ECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX HAS TO HAVE SOME RECITALS MADE IN A DOCUM ENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. TH E TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE NOT ENTITLED TO LOO K INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS. 17. IN THE ABOVE BACK GROUND OF THE FACTS AND CIRCU MSTANCES SURROUNDING THIS CASE, IT IS HEREBY HELD THAT THE R ECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WAS PART OF A LARGE SHAM TRANSAC TION BY WAY OF WHICH A SUM OF RS. 2,90,00,000/- WAS INTRODUCED INT O THE BOOKS OF THE ASSESSEE COMPANY IN THE FORM OF SHARE PREMIUM ATTAC HED TO THE SHARE CAPITAL. AS DISCUSSION ABOVE, THE PREMIUM OF RS. 4 90/- PER SHARE WAS NOT JUSTIFIED AT ALL ON THE BASIS OF ABSOLUTELY NO ASSETS, NO BUSINESS ACTIVITY, NO INCOME, NO NET WORTH NOR ANY PROMISE F OR CREATION OF ANY ASSETS, BUSINESS ACTIVITY, INCOME OR NET WORTH IN T HE FUTURE. ACCORDINGLY, THE CHARGING AND RECEIPT OF SHARE PREM IUM TO THE TUNE OF RS. 2,90,00,000/- IS HELD TO BE SHAM. THE SAID AMO UNT IS FURTHER HELD TO BE THE INCOME OF THE ASSESSEE COMPANY IN THE NAT URE OF INCOME ENVISAGED U/S 56(1) OF THE INCOME TAX ACT, 1961. TH E SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 3 2.2 IN FIRST APPEAL, THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 2,90,00,000/- MADE BY THE AO BY OBSERVING AT PAGES 97 & 98 OF HIS ORDER AS UNDER:- 3.2.2 I HAVE CONSIDERED ASSESSEE'S SUBMISSION AND CAREFULLY GONE THROUGH ASSESSMENT ORDER. I HAVE ALSO TAKE A NOTE OF FACTUA L MATRIX OF THE CASE AS WELL AS APPLICABLE CASE LAWS RELIED UPON. I HAVE ALREADY GIVEN A DETAILED FINDINGS IN PARA 2.1.4.7 WHEREIN TOTAL OF RS. 8,71,97,727/- HAS BEEN SUSTAINED IN THE HANDS OF M/S. . MOTISONS GLOBAL PVT. LTD, M/S. MOTISONS ENTERTAINMENT PVT. LTD, M/S. MOTISONS BUILDTECH PVT. LTD AND M/S. SHIVANSH BUILDTECH PVT. LTD, DETAILS OF WHICH ARE AS UNDER:- NAME OF APPELLANT COMPANY ITA NO. A.Y. ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/RELIEF GIVEN MOTISONS GLOBAL PVT LTD 753/14-15 2009-10 2,75,00,000 - 2,75,00,000 MOTISONS GLOBAL PVT LTD 754/14-15 2011-12 6,96,50,000 - 6,96,50,000 MOTISONS GLOBAL PVT LTD 767/14-15 2012-13 42,07,29,600 5,94,47,727 36,12,81 ,873 MOTISONS GLOBAL PVT LTD 755/14-15 2013-14 4,41,00,000 50,50,000 3,90 ,50,000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 2009-10 3,40,00,000 - 3,40,00,000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 2011-12 1,95,00,000 - 1,95,00,000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 2012-13 7,78,00,000 1,41,50,000 6,36 ,50,000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3,03,00,000 - 3,03,00,000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3,68,27,500 82,00,000 2,8 6,27,500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2,00,00,000 - 2,00,00,000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10,30,00,000 - 10,30,00,000 BHOLENATH 770/14-15 2009-10 2,90,00,000 - 2,90, 00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 4 REAL ESTATES PVT. LTD. RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2,00,00,000 - 2,00,00,000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90,00,000 3,50,000 86,50,000 94,14,07,100 8,71,97,727 85,42,09,373 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, ADDITION OF RS. 2,90,00,000/- MADE ON A/C OF BOGUS SHARE CAPITAL IN THE HANDS OF M/S.BHOLENATH REAL ESTATE PVT. LTD IS HERE BY DELETED. ASSESSEE GETS RELIEF IN GR NO. 2 & 3. PARA 2.1.4.7 READS OF LD. CIT(A)S ORDER AS UNDER:- 2.1.4.7 IN VIEW OF THE ABOVE FINDINGS, IT IS ALSO SEEN THAT THIS CASH /DD WAS DEPOSITED AT 4 TH CHANNEL OF SOURCE/ STAGE. THIS MONEY CAME TO THE HANDS OF SOME OF APPELLANT COMPAN IES THROUGH THE SIX COMPANIES ASSESSED IN JAIPUR. HOWEVER, ON PERUS AL OF WRITTEN SUBMISSIONS AND COMPLIANCE TO SHOW CAUSE LETTER, IT IS ALSO SEEN THAT THE ASSESSEE HAS NOT CONTROVERTED THE FACTS NARRATE D BY SHRI SANTOSH CHOUBE, SHRI RAJESH KR SINGH AND SHRI AJIT SHARMA A ND ALSO COULD NOT SATISFACTORILY EXPLAIN THE REASONS OF CASH DEPOSITS MADE TO THOSE ACCOUNTS. THEREFORE, DULY CONSIDERING THOSE FACTS AS EVIDENCES (BOTH DOCUMENTARY & ORAL) GATHERED DURING SEARCH AND & PO ST-SEARCH OPERATION, ADDITION TO THE EXTENT OF RS. 8,71,97,72 7/- IS SUSTAINED AND BALANCE IS DELETED, DETAILS GIVEN AS UNDER:- NAME OF APPELLANT COMPANY ITA NO. A.Y. ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/RELIEF GIVEN MOTISONS GLOBAL PVT LTD 753/14-15 2009-10 2,75,00,000 - 2,75,00,000 MOTISONS GLOBAL PVT LTD 754/14-15 2011-12 6,96,50,000 - 6,96,50,000 MOTISONS GLOBAL PVT LTD 767/14-15 2012-13 42,07,29,600 5,94,47,727 36,12,81 ,873 MOTISONS GLOBAL PVT LTD 755/14-15 2013-14 4,41,00,000 50,50,000 3,90 ,50,000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 2009-10 3,40,00,000 - 3,40,00,000 MOTISONS ENTERTAINMENT 766/14-15 2011-12 1,95,00,000 - 1,95,00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 5 (I) PVT. LTD MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 2012-13 7,78,00,000 1,41,50,000 6,36 ,50,000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3,03,00,000 - 3,03,00,000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3,68,27,500 82,00,000 2,8 6,27,500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2,00,00,000 - 2,00,00,000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10,30,00,000 - 10,30,00,000 BHOLENATH REAL ESTATES PVT. LTD. 770/14-15 2009-10 2,90,00,000 - 2,90,00,000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2,00,00,000 - 2,00,00,000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90,00,000 3,50,000 86,50,000 94,14,07,100 8,71,97,727 85,42,09,373 IT IS PERTINENT TO MENTION HERE THAT M/S. MAYUKH VINIMAY PVT.LTD RECEIVED SHARE APPLICATION OF RS. 10,54,95,000/- IN AY 2009- 10 WHICH WAS ADDED AS INCOME OF M/S.MAYUKH VINIMAY PVT. LTD IND A.Y. 2009-10. THERE AFTER IN SUBSEQUENT YEARS THE PART OF THE FUNDS OWNED BY THIS COMPANY WAS INVESTE D IN THE COMPANIES UNDER APPEAL AS UNDER:- S.N. NAME OF COMPANY (UNDER YOUR APPEAL) ASSESSMENT YEAR AMOUNT 1. MOTISONS GLOBAL PVT. LTD 2012-13 6,93,49,800 2. MOTISONS GLOBAL PVT. LTD 2013-14 2,24,50,000 3. MOTISONS ENTERTAINMENT (INDIA)PVT LTD. 2012-13 1,55,00,000 TOTAL 10,72,29,800 FURTHER IT IS ALSO SUBMITTED THAT ADDITION MADE BY THE AO TANTAMOUNT TO DOUBLE ADDITION. IT IS ALSO MENTIONED HERE THAT AS PER LD. ARS REQUEST, APPELLATE PROCEEDINGS ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 6 IN CASE OF M/S. MAYUKHVINIMAY PVT. LTD HAVE BEEN KE PT IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY HON'BLE ITAT. IN VIEW OF AFOREMENTIONED FINDINGS, NOW ADDITIONS MADE BY THE AO ARE BEING DISCUSSED WITH RESPECT TO GROUNDS OF APPEAL RAISED BY THE RESPECTIVE ASSESSEE IN PARA BELOW. 2.3 DURING THE COURSE OF HEARING, THE LD. DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE ORDER OF THE LD. CIT(A) M AY BE SET ASIDE . 2.4 ON THE OTHER HAND, THE LD.AR SUPPORTED THE ORDE R OF THE LD. CIT(A) FOR WHICH THE LD.AR OF THE ASSESSEE FILED THE FOLLO WING WRITTEN SUBMISSION PRAYING THEREIN TO DISMISS THE APPEAL OF THE DEPART MENT. 2.01.2 SUBMISSION OF ASSESSEE:- A) DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ALLOTTED 58,000 EQUITY SHARES OF RS. 10 EACH TO VARIOUS COMPANIES AT A PRE MIUM OF RS. 490/- PER SHARE DETAIL OF WHICH IS AS UNDER: - SR. NO. NAME NO. OF SHARES ALLOTED/ APPLIED DURING THE YEAR AMOUNT ADJUSTED AGAINST SHARE CAPITAL RATE PER SHARE AMOUNT ADJUSTED AGAINST SHARE PREMIUM RATE OF PREMIUM PER SHARE ISSUE PRICE OF THE SHARE TOTAL CONSIDERA TION RECEIVED 1 LAVENDER DEALCOM PVT. LTD. 6000 60,000 10 29,40,000 490 500 30,00,000 2 ARCADE DEALCOM PVT. LTD 4000 40,000 10 19,60,000 490 500 20,00,000 3 TARANG SUPPLIERS PVT. LTD 3000 30,000 10 14,70,000 490 500 15,00,000 4 TRANSIT VINIMAY PVT. LTD 12400 1,24,000 10 60,76,000 490 500 62,00,000 5 VANDANA DEALERS PVT. LTD 19600 1,96,000 10 96,04,000 490 500 98,00,000 6 VARIETY DEALCOM PVT. LTD 5000 50,000 10 24,50,000 490 500 25,00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 7 7 VANILA VINIMAY PVT. LTD 3000 30,000 10 14,70,000 490 500 15,00,000 8 OUTLOOK TRACOM PVT. LTD 5000 50,000 10 24,50,000 490 500 25,00,000 TOTAL 58000 5,80,000 2,84,20,000 2,90,00,000 B). THE LD. AO HAS NOT MADE THE ADDITION UNDER THE DEEMING PROVISIONS OF SECTION 68 OF INCOME TAX ACT. THE LD AO MADE THE AD DITION BY APPLYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT ON THE GROUND THAT THE ASSETS OF THE ASSESSEE COMPANY DON T COMMENSURATE TO PREMIUM CHARGED AND ANY BUSINESS ACTIVITY WAS NOT P ERFORMED OR ANY BUSINESS INCOME HAS NOT BEEN SHOWN BY THE ASSESSEE. THE LD CIT(A) HAS NOT CONFIRMED THE ADDITION MADE BY LD AO BY APP LYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT, ON T HE BASIS OF HIS DETAILED FINDINGS AT PAGE 39-42 OF HIS ORDER. THE ASSESSEE RELIES ON THE FINDINGS OF LD CIT(A). D ) JUSTIFICATION OF CHARGING SHARE PREMIUM THE ASSESSEE HAS SUBMITTED THE JUSTIFICATION FOR CH ARGING THE SHARE PREMIUM WHICH IS SUMMARIZED AS UNDER: - NAME OF COMPANY REASON FOR CHARGING SHARE PREMIUM BHOLENATH REAL ESTATES PVT LTD (I) OWNING LARGE CHUNK OF AGRICULTURAL LAND AT VILLAGE GAIJI, TEHSIL MOJAMABAD, DISTT JAIPUR (IN BETWEEN BAGRU TO DUDU A T MAIN NH JAIPUR AJMER ROAD) AND PLANNING DEVELOPMENT OF TOWN SHIP THEREON. (II) MARKET RATE OF LAND WAS VERY HIGH THAN BOOK VA LUE WHICH WAS ON COST. (III) GOODWILL OF MOTISONS GROUP. E) SHARE PREMIUM/CAPITAL IS CAPITAL RECEIPT: IF SHARES ARE ISSUED AT PREMIUM THEN CAPITAL RECEIP T AGGREGATE AMOUNT OF PREMIUM IS TO BE TRANSFERRED TO AN ACCOUNT CALLE D THE SHARE PREMIUM ACCOUNT. THIS SHARE PREMIUM ACCOUNT IS NOT DISTRIBU TABLE AS INCOME JUST LIKE AS ANY OTHER CAPITAL ASSETS. ON WINDING UP, TH E SURPLUS MONIES IN THE SHARE PREMIUM ACCOUNT IS TO BE RETURNED TO THE SHARE HOLDERS AS CAPITAL. SO LONG AS THE COMPANY IS A GOING CONCERN, THE MONIES IN SHARE PREMIUM ACCOUNT CAN NEVER BE RETURNED TO THE SHAREH OLDERS EXCEPT THROUGH THE MEDIUM OF A REDUCTION PETITION, OR, IN OTHER WORDS, EXCEPT ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 8 UNDER EXACTLY THE SAME CONDITIONS AS THOSE UNDER WH ICH ANY OTHER CAPITAL ASSET CAN REACH THE SHAREHOLDERS HANDS. DIS TRIBUTION OF SHARE PREMIUM AMOUNT IS NOT PERMITTED THROUGH DIVIDEND. I T IS TAKEN OUT OF THE CATEGORY OF DIVISIBLE PROFITS. THE PROVISIONS I N RESPECT OF ISSUE OF SHARES AT PREMIUM ARE THE SAME IN THE OLD COMPANY A CT AS WELL AS IN THE NEW COMPANY ACT. HENCE COMPANIES ACT CLEARLY ME NTIONS THAT AMOUNT RECEIVED AS PREMIUM IS CAPITAL RECEIPT AND N OT A REVENUE RECEIPT. THE SHARE PREMIUM IS ALSO VERIFIABLE FROM RETURNS OF ALLOTMENT SUBMITTED IN ROC. AS PER DEPARTMENTAL CIRCULAR (MCA ) NO. 3/77 DATED 15.04.1977 THE MONIES IN THE SHARE PREMIUM ACCOUNT CANNOT BE TREATED AS FREE RESERVES, AS THEY ARE IN THE NATURE OF CAPI TAL RESERVES. F) ON THE ISSUE OF SHARES AT PREMIUM, THE LD. ITAT, MUMBAI BENCH IN THE CASE OF ACIT V/S GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014-T1 0L- 656-ITAT-MUM (PB PG 354-359 OF CASE LAWS) OBSERVED THAT ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION W HICH DOES NOT REQUIRE ANY JUSTIFICATION . THE FINDING OF THE ITAT WAS CONFIRMED BY MUMBAI HIGH COURT IN ITS DECISION DATED 20.03.2017 IN APPEAL NO. 1613 OF 2014. PB PAGE 306-366 /CASE LAWS) FURTHER THE PREMIUM IS A CAPITAL RECEIPT WHICH HAS TO BE DEALT WITH IN ACC ORDANCE WITH SECTION 78 OF COMPANIES ACT 1956. FURTHER THE COMPANY IS NO T REQUIRED TO PROVE THE GENUINENESS, PURPOSE OR JUSTIFICATION FOR CHARG ING PREMIUM OF SHARES, SHARE PREMIUM BY ITS VERY NATURE IS A CAPIT AL RECEIPTS AND IS NOT INCOME FOR ITS ORDINARY SENSE . IN THE CASE BEFORE MUMBAI BENCH HAS TO CONSIDER A CASE WHERE PREMIUM OF RS.190 PER SHARE W AS CHARGED. THE TRIBUNAL OBSERVED AS UNDER ( PG 358 TO 359/CASE LAWS) : 11. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LO WER AUTHORITIES. IN OUR CONSIDERED VIEW, THE ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION WHICH DOES NOT REQUIRE ANY JUST IFICATION. FURTHER THE PREMIUM IS A CAPITAL RECEIPT WHICH HAS TO BE DEALT WITH IN ACCORDANCE WITH SEC. 78 OF THE COMPANIES ACT, 1956. FURTHER, THE COMPANY IS NOT REQUIRED TO PROVE THE GENUINENESS, P URPOSE OR JUSTIFICATION FOR CHARGING PREMIUM OF SHARES, SHARE PREMIUM BY ITS VERY NATURE IN A CAPITAL RECEIPTS AND IS NOT INCOME FOR ITS ORDINARY SENSE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD F ILED ALL THE REQUISITE DETAILS/DOCUMENTS WHICH ARE REQUIRED TO EXPLAIN CRE DITS IN THE BOOKS OF ACCOUNTS BY THE PROVISIONS OF SEC. 68 OF THE ACT . THE ASSESSEE HAS SUCCESSFULLY ESTABLISHED THE IDENTITY OF THE COMPAN IES WHO HAVE PURCHASED SHARES AT A PREMIUM. THE ASSESSEE HAS ALS O FILED BANK DETAILS TO EXPLAIN THE SOURCE OF THE SHARE HOLDERS AND THE GENUINENESS OF THE TRANSACTION WAS ALSO ESTABLISHED BY FILING C OPIES OF SHARE APPLICATION FORMS AND FORM NO. 2 FILED WITH THE REG ISTRAR OF COMPANIES. THE ENTIRE DISPUTE REVOLVES AROUND THE F ACT THAT THE ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 9 ASSESSEE HAS CHARGED A PREMIUM OF 190/- PER SHARE. NO DOUBT A NON-EST COMPANY OR A ZERO BALANCE SHEET COMPANY ASK ING FOR 190/- PER SHARE DEFIES ALL COMMERCIAL PRUDENCE BUT AT THE SAME TIME WE CANNOT IGNORE THE FACT THAT IT IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF THE COMPANY TO DECIDE THE PREMIUM AMOU NT AND IT IS THE WISDOM OF THE SHARE HOLDERS WHETHER THEY WANT TO SU BSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORITIES CANNOT QUEST ION THE CHARGING OF SUCH HUGE PREMIUM WITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND. THE AMENDMENT HAS BEEN BROUGHT IN THE INCOME TAX ACT UNDER THE HEAD 'INCOME FROM OTHER SOURCES' BY I NSERTING CLAUSE (VIIB) TO SEC. 56 OF THE ACT WHEREIN IT HAS BEEN PR OVIDED THAT ANY CONSIDERATION FOR ISSUE OF SHARES, THAT EXCEEDS THE FAIR VALUE OF SUCH SHARES, THE AGGREGATE CONSIDERATION RECEIVED FOR SU CH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL B E TREATED AS THE INCOME OF THE ASSESSEE BUT THE LEGISLATURE IN ITS W ISDOM HAS MADE THIS PROVISION APPLICABLE W.E.F 1.4.2013 I.E. ON AND FRO M A.Y. 2013-14. IN SO FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED , THE TRANSACTION HAS TO BE CONSIDERED IN THE LIGHT OF THE PROVISIONS OF SEC. 68 OF THE ACT. THERE IS NO DISPUTE THAT THE ASSESSEE HAS GIVE N DETAILS OF NAMES AND ADDRESSES OF THE SHARE HOLDERS, THEIR PAN NOS, THE BANK DETAILS AND THE CONFIRMATORY LETTERS. 11.1. CONSIDERING ALL THESE UNDISPUTED FACTS, IT CA N BE SAFELY CONCLUDED THAT THE INITIAL BURDEN OF PROOF AS RESTE D UPON THE ASSESSEE HAS BEEN SUCCESSFULLY DISCHARGED BY THE ASSESSEE . EVEN IF IT IS HELD THAT EXCESS PREMIUM HAS BEEN CHARGED, IT DOES NOT B ECOME INCOME AS IT IS A CAPITAL RECEIPT. THE RECEIPT IS NOT IN THE REVENUE FIELD. WHAT IS TO BE PROBED BY THE AO IS WHETHER THE IDENTITY OF T HE ASSESSEE IS PROVED OR NOT. IN THE CASE OF SHARE CAPITAL, IF THE IDENTITY IS PROVED, NO ADDITION CAN BE MADE U/S. 68 OF THE ACT. WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F LOEVELY EXPORTS PVT. LTD. 317 ITR 218. WE, THEREFORE DO NOT FIND AN Y ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). GROUND NO. 1 IS ACCORDINGLY DISMISSED. G) AS PER PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT, 1961 INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOT AL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEA D 'INCOME FROM OTHER SOURCES', IF IT IS NOT CHARGEABLE TO INCOME-T AX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14 , ITEMS A TO E. IN THE CASE OF THE ASSESSEE COMPANY, THE AMOUNT WAS RECEIVED FROM INVESTORS WER E AGAINST SHARE APPLICATION AND THE SAME IS CAPITAL RECEIPT WHICH W AS ADJUSTED AGAINST SHARE CAPITAL AND SHARE PREMIUM. THE MONEY SO RECEI VED TO ASSESSEE COMPANY WAS CAPITAL RECEIPT AND WAS NOT REVENUE REC EIPT, THEREFORE THE SAME CANNOT BE TAXED IN THE HANDS OF ASSESSEE COMPA NY UNDER SECTION 56(1) OF INCOME TAX ACT, 1961 BECAUSE THIS SECTION DEAL WITH INCOME ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 10 AND NOT WITH CAPITAL RECEIPTS. THE INVESTORS WHO SU BSCRIBED THE SHARE CAPITAL OF ASSESSEE COMPANY IS ALSO SHOWING THE AMO UNT PAID TO ASSESSEE AS THEIR INVESTMENT IN SHARES OF ASSESSEE COMPANY A ND NECESSARY DOCUMENTS IN THIS REGARD WAS SUBMITTED TO LD. AO. T HEREFORE THE ASSESSEE HAS PROVED WITH DOCUMENTARY EVIDENCES THAT THE AMOUNT WAS RECEIVED AGAINST SHARE APPLICATION I.E. CAPITAL REC EIPT, THEREFORE THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSEE. FURTHE R FOR TREATING THE SHARE CAPITAL/SHARE PREMIUM AS INCOME OF THE ASSESS EE COMPANY NO COGENT REASON HAS BEEN GIVEN BY LD. AO. FURTHER, TH ERE IS NO DEEMING FICTION HAS BEEN GIVEN IN SECTION 56(1) OF INCOME T AX ACT, 1961 WHEREIN THE INCOME CAN BE TAXED UNDER DEEMING PROVI SION. H) BY FINANCE ACT 2012 A NEW CLAUSE (VIIB) WAS INSE RTED IN 56(2). MEMORANDUM EXPLAINING THE PROVISIONS IN FINANCE BIL L 2012 STATED AS UNDER:- SHARE PREMIUM IN EXCESS OF THE FAIR MARKET VALUE IS TO BE TREATED AS INCOME. SECTION 56(2) PROVIDES FOR THE SPECIFIC CATEGORY O F INCOMES THAT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. IT IS PROPOSED TO INSERT A NEW CLAUSE IN 56(2). THE NEW CLAUSE WILL APPLY WHERE, ACCOMPANY, NOT BEING A COM PANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES, IN A NY PREVIOUS YEAR, FROM ANY PERSON BEING A RESIDENT, ANY CONSIDERATION FOR ISSUE OF SHARES. IN SUCH A CASE IF THE CONSIDERATION RECEIVED FOR ISSUE OF SHARES EXCEEDS THE FACE VALUE OF SHARES, THE AGGREGATE CONSIDERATI ON RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHAR ES SHALL BE CHARGEABLE TO INCOME TAX, UNDER THE HEAD INCOME FR OM OTHER SOURCES. THIS AMENDMENT EFFECTIVE FROM 1 ST APRIL 2013 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2013-14 AND SU BSEQUENT ASSESSMENT YEARS. IN THE MEMORANDUM IT IS MENTIONED THAT PREMIUM IN EXCESS OF FAIR MARKET VALUE IS TO BE TREATED AS INCOME. THIS SUGGESTS THAT PREMIUM IN EXCESS OF FAIR MARKET VALU E WAS NOT AN INCOME BUT IS TO BE TREATED AS INCOME DUE TO AMENDE D PROVISION. BEFORE THE AMENDMENT, CONSIDERATION RECEIVED AS PRE MIUM WAS NOT INCOME. THE LEGISLATURE IN ITS WISDOM REQUIRED THE SHARE PREMIUM IN EXCESS OF FAIR MARKET VALUE TO BE INCOME FROM ASSES SMENT YEAR 2013- 14 AND NOT THE ENTIRE PREMIUM TO BE TREATED AS INCO ME. CBDT VIDE CIRCULAR NO.3 OF 2012 DATED 12.06.2012 HAS ALSO MEN TIONED THAT PROVISIONS OF 56(2)(VII B) WILL BE APPLICABLE FOR A SSESSMENT YEAR 2013-14 ONWARD . THEREFORE, AMENDMENT IN SECTION 56(2)(VIIB) OF ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 11 INCOME TAX ACT, 1961 EFFECTIVE FROM 1 ST APRIL 2013 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 20 13-14 AND SUBSEQUENT ASSESSMENT YEARS AND THE PROVISIONS OF T HIS SECTION CANNOT BE MADE APPLICABLE IN PREVIOUS YEARS. IN THIS REGAR D THE RATIO HAS BEEN LAID DOWN IN FOLLOWING JUDGMENTS: - A) BY FINANCE ACT 1994, SECTION 55(2) WAS AMENDED TO PROVIDE THAT COST OF ACQUISITION OF A TENANCY RIGHT WILL BE TAKEN AS NIL. THE HONBLE APEX COURT IN THE CASE OF D.P. SANDU BROS. CHEMBUR (P) LTD (SUPRA), HELD THAT AMENDMENT TOOK EFFECT FROM 1 ST APRIL, 1995 AND THEREFORE WILL NOT BE APPLICABLE FOR A.Y. 1987-88. SIMILAR FINDING HAS BEEN RECORDED BY HONBLE RAJ, HIGH COURT IN THE CASE OF GOTAN LIME S TONE KHANIJ UDHYOG. THE RATIO OF LAW IN RESPECT OF AMENDMENT IN 55(2) BEING HELD AS PROSPECTIVE IS APPLICABLE FOR 56(2)(VIBE) AND HENCE SHARE PREMIUM IN EXCESS OF FA IR MARKET VALUE CAN NOT BE HELD TAXABLE FOR A.Y. 2011- 12. B) RECENTLY THE HONBLE APEX COURT IN THE CASE OF M.G. PICTURES (MADRAS) LTD V/S ACIT 373 ITR 39 HELD THAT AMENDMENT IN SECTION 40A(3) W.E.F. FROM 1.4.19 96 IS PROSPECTIVE AND CANNOT BE APPLIED TO PREVIOUS YE ARS OF BLOCK PERIOD PRIOR TO F.Y. 1995-96. C) THE FIGURE OF 10,000 WAS CHANGED TO 20,000 U/S 4 0A(3) OF INCOME TAX ACT, 1961 AND 269SS OF INCOME TAX ACT, 1961 BY DIRECT TAX LAWS (AMENDMENT) ACT 1987 W.E.F. 1.4.1989. THE CBDT VIDE CIRCULAR NO.522 DATED 18.08.1988 STATED THAT AMENDMENT IN SECTION 40A(3) IS APPLICABLE FOR A.Y. 1989-90 AS IT IS A SUBSTANTI VE PROVISION AND SINCE 269SS IS A PROCEDURAL PROVISION , THE EFFECTIVE DATE WILL BE 1.4.89 I.E. PREVIOUS YEAR RE LEVANT TO A.Y. 89-90. D) THE FIVE JUDGE CONSTITUTION BENCH IN THE CASE OF CIT V VATIKA TOWNSHIP (P) LTD. 367 ITR 466 HAD AN OCCASION TO CONSIDER AS TO WHETHER PROVISO ADDED TO SECTION 113 OF THE I.T. ACT, IS PROSPECTIVE OR RETROSPECTIVE. THE HONBLE APEX COURT WHILE CONSIDERING THE VARIOUS DECISIONS HELD (AS PER PAGE 469 OF ITR 367). ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 12 THAT SURCHARGE LEVIED BY ASSESSING OFFICER FOR THE BLOCK ASSESSMENT PERTAINING TO THE PERIOD FROM JUNE 1, 2002 WAS LIABLE TO BE DELETED. AN AMENDMENT MADE TO A TAXING STATUTE CAN BE SAID TO BE INTENDED TO REMOVE HARDSHIPS ONLY OF THE ASSESSEE, NOT OF THE DEPARTMENT. IMPOSING A RETROSPECTIVE LEVY ON THE ASSESSEE WOULD HAVE CAUSE D UNDUE HARDSHIP AND FOR THAT REASON PARLIAMENT SPECIFICALLY CHOSE TO MAKE THE PROVISO EFFECTIVE FR OM JUNE 1, 2002. WHERE A BENEFIT IS CONFERRED BY A LEGISLATION, THE RULE AGAINST A RETROSPECTIVE CONSTRUCTION IS DIFFER ENT. IN A LEGISLATION CONFERS A BENEFIT ON SOME PERSONS BUT WITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOM E OTHER PERSON OR ON THE PUBLIC GENERALLY, AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISL ATORS OBJECTS, THEN PRESUMPTION WOULD BE THAT SUCH A LEGISLATION, GIVING IT A PURPOSIVE CONSTRUCTION, WO ULD WARRANT IT TO BE GIVEN A RETROSPECTIVE EFFECT. THIS EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PROVISION AS RETROSPECTIVE. WHERE A LAW IS ENACTED FOR THE BENEF IT OF COMMUNITY AS A WHOLE, EVEN IN THE ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO BE RETROSPECTI VE IN NATURE. THE HONBLE APEX COURT FURTHER NOTICED THAT CBDT CIRCULAR MENTIONED THAT PROVISO IS APPLICABLE FROM 1.6.2002. IN RESPECT OF 56(2)(VII B), CBDT VIDE CIRCULAR NO.3 OF 2012 DATED 12.06.2012 HAS ALSO MENTIONED THAT PROVISIONS OF 56(2)(VII B) WILL BE APPLICABLE FOR ASSESSMENT YEAR 2013-14 ONWARD. HENCE SHARE PREMIUM EVEN IF IN EXCESS OF FAIR MARKE T VALUE IS NOT TAXABLE U/S 56(1) FOR THE A.Y. 2011-12 . I) SECTION 56 IS NOT A CHARGING SECTION. THIS SECTI ON STARTS WITH THE FOLLOWING SENTENCE. INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED F ROM THE TOTAL INCOME UNDER THE ACT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD. INCOME FROM OTHER SOURCES IF IT IS NOT CHARG EABLE TO INCOME TAX. UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14, ITE MS A TO E. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 13 FOR AN INCOME TO BE TAXED U/S 56, IT HAS TO SATISFY THREE CONDITIONS. (A) IT SHALL BE CLASSIFIABLE AS INCOME AS PER THE C HARGING SECTION OF THE ACT. (B) IT SHALL NOT BE EXCLUDED FROM THE TOTAL INCOME (E.G. SECTION10). (C) IT IS NOT CHARGEABLE TO TAX UNDER ANY OF THE SP ECIFIED HEADS IN SECTION 14, ITEMS A TO E. THE FINANCE BILL 2012 AS PRESENTED ON 16 TH MARCH 2012 INCLUDED A NEW CLAUSE (VIIB) U/S 56(2) OF I.T. ACT [342 ITR1(ST)]. NO PROPOSAL IN THE ORIGINAL BILL TO INSERT A NEW CLAUSE U/S 2(24). SUB SEQUENTLY NOTICE OF AMENDMENTS TO FINANCE BILL WAS GIVEN [SEE 343 ITR 3 7(ST)] AND AMENDMENTS ALSO MADE IN CHARGING SECTION 2(24) IN I NSERTING CLAUSE (XVI) IN 2(24) OF I.T. ACT W.E.F. 1.4.2013 READS AS UNDER: (XVI) ANY CONSIDERATION RECEIVED FOR ISSUE OF SHARE S AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES REFERRED TO IN CLAU SE (VIIB) OF SUBSECTION (2) OF 56. THE AMENDMENT MADE IN 2(24) IS ALSO APPLICABLE W.E. F. 01.04.2013 AND IT CANNOT BE APPLIED EARLIER TO 01-0 4-2013. J) THE INCOME FOR THE PURPOSE OF THE INCOME TAX ACT IS DEFINED IN SECTION 2(24) OF THE INCOME TAX ACT 1961. SECTION 2(24) OF THE INCOME ACT 1961 GIVES INCLUSIVE DEFINITION OF INCOME BUT THE I NCOME SHOULD BE LOOK INTO ITS NORMAL MEANING. THE INCOME WILL NOT INCLUD E CAPITAL RECEIPTS UNLESS IT IS SPECIFIED IN INCOME TAX ACT. THIS ARGU MENT FINDS SUPPORTS FROM THE AMENDMENT MADE BY FINANCE ACT 2012 W.E.F. 1.4.2013 IN SECTION 56(VIIB) AND CLAUSE (XVI) OF SECTION 2(24) OF INCOME TAX ACT, 1961 WHEREIN CERTAIN SHARE PREMIUMS WERE MADE TAXAB LE W.E.F. 01.04.2013. IF THE SAME WERE ALREADY TAXABLE U/S 56(1)/ 2(24) OF INCOME TAX ACT, 1961 THEN THERE WAS NO NEED TO MAKE THESE AMENDMENTS IN THE ACT. IN CASE THERE IS NO CHARGING PROVISION FOR SPECIFIC RECEIPT, THEN IT CANNOT BE TAXED. THE FIVE MEMBER BENCH OF THE APEX COURT IN CIT V VATIKA TOWNSHIP P LTD 367 ITR 4 66 (PB PG 19/CASE LAWS) . TAX LAWS ARE CLEARLY IN DEROGATION OF PERSONAL RIG HTS AND PROPERTY INTERESTS AND ARE, THEREFORE, SUBJECT TO S TRICT CONSTRUCTION AND ANY AMBIGUITY MUST BE RESOLVED AGA INST ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 14 IMPOSITION OF THE TAX. IN BILLINGS V U.S 232 U.S.26 1 AT PAGE 265, 34 S.CT 421 (1914), THE SUPREME COURT CLEARLY ACKNOWLEDGED THIS BASIC AND LONG STANDING RULE OF S TATUTORY CONSTRUCTION. TAX STATUTES SHOULD BE STRICTLY CONSTRUED, AND, IF ANY AMBIGUITY BE FOUND TO EXIST, IT MUST BE RESOLVED IN FAVOUR OF CITIZEN... IF A PERSON SOUGHT TO BE TAXED COMES WITHIN THE LETTER OF THE LAW HE MUST BE TAXED, HOWEVER GREAT T HE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND TO BE. ON THE OTHER HAND, IF THE CROWN SEEKING TO RECOVER THE TAX, CANNOT BRING THE SUBJECT WITHIN THE LETTER OF THE LAW, THE SUBJECT IS FREE, HOWEVER APPARENTLY WITHIN THE SPRIT OF THE LAW THE CASE MIG HT OTHERWISE APPEAR TO BE AS OBSERVED IN PARTINGTON V ATTOMEY G ENERAL LR4HL100. SINCE FOR THE YEAR UNDER CONSIDERATION THERE WAS NO PROVISION IN INCOME TAX ACT, 1961 WHEREIN THE FAIR VALUE OF SHAR E COULD BE COMPUTED AND THE EXCESS SHARE PREMIUM COULD BE TAXE D, THEREFORE IN ABSENCE OF COMPUTATION PROVISION THE S AME CANNOT BE TAXED. THE RELIANCE IS ALSO PLACED ON FOLLOWING CASES: - I) THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CADELL WVG. MILLS CO.(P) LTD. V CIT 249 ITR 265 (PB 22- 41/CASE LAWS) HAD AN OCCASION TO CONSIDER THE TAXABILITY OF A SUM RECEIVED IN RESPECT OF CONSIDER ATION OF TENANCY RIGHT. HONBLE HIGH COURT HELD THAT SURRENDER OF TENANCY RIGHT WHICH WAS NOT CHARGABLE TO TAX AS CAPITAL GAIN UNDER SECTION 45 COULD NOT BE T AXED AS CASUAL AND NON RECURRING RECEIPT UNDER SECTION 1 0(3) R.W. S. 56 UNDER THE HEAD INCOME FROM OTHER SOURCE S. II) THE HONBLE APEX COURT IN THE CASE OF CIT V D.P. SANDU BROS. CHEMBUR (P) LTD 273 ITR 1 (PB 42- 49/CASE LAWS) ALSO HOLD THAT AS PER 2(24)(VI) ONLY INCOME WHICH IS CHARGEABLE U/S 45 IS TO BE INCLUDED IN INCOME AND IF COMPUTATION PROVISION U/S 45 FAILS TH EN CHARGING PROVISIONS WILL FAIL. REF. TO CIT V B.C. SRINIVASA SETTY 128 ITR 294. III) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE O F CIT V GOTAN LIME STONE KHANIJ UDYOG 269 ITR 399 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 15 (PB 56-65/CASE LAWS) ALSO HELD THAT IN CASE COMPUTATION PROVISION U/S 48 COULD NOT BE APPLIED F OR WANT OF ASCERTAINABLE COST OF ACQUISITION, THEN CAP ITAL GAIN DOES NOT ARISE TO BE INCLUDED IN TOTAL INCOME ON ACCOUNT OF FAILURE OF APPLICABILITY OF COMPUTATION PROVISION. THE HONBLE HIGH COURT REFERRED TO DECIS ION OF BOMBAY HIGH COURT IN THE CASE OF CADELL WVG. MIL LS CO (P) LTD. (SUPRA). IV) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF S. ZORASTER AND CO. V/S CIT 322 ITR 35 (PB 66- 68/CASE LAWS) HAD ON OCCASION TO CONSIDER THE TAXABILITY OF RECEIPT OF RS.20,000 RECEIVED BY VEND EE ON DEFAULT OF THE PURCHASER AS PER AGREEMENT FOR SELL OF PREM PRAKASH TALKIES. THE HONBLE HIGH COURT AFTER REFERRING TO THE DECISION OF APEX COURT IN THE CASE OF TRAVANCORE RUBBER AND TEA CO LTD. V CIT 243 ITR 158 HELD THAT SUCH RECEIPT IS CAPITAL RECEIPT. SUCH CAPITAL RECEIPT IS NOT TAXABLE IN VIEW OF JUDGMENT OF APEX COURT IN D.P. SANDU BROS. CHEMBUR (P) LTD (SUPRA). HENCE CAPITAL RECEIPT IS NOT TAXABLE UNLES S THERE IS CHARGING PROVISION FOR A CAPITAL RECEIPT AND COMPUTATION PROVISIONS ARE ALSO APPLICABLE. V) THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VODAFONE INDIA SERVICES P. LTD. V/S UOI 368 ITR 1 (PB 76-107/CASE LAWS) HAD AN OCCASION TO CONSIDER THE DIFFERENCE BETWEEN THE SHARE PREMIUM DETERMINED BY REVENUE AND THE SHARE PREMIUM CHARGED AS DEEMED LOAN AND TAXING OF NATIONAL INTEREST ON DEEMED LOAN . THE HONBLE BOMBAY HIGH COURT HAS REFERRED TO THE DECISION OF APEX COURT IN THE CASE OF MATHURAM AGGARWAL V/S STATE OF MP (1999) 8 SCC 667 FOR THE TEST TO INTERPRET A TAXING STATUE WHICH READS AS UN DER: THE INTENTION OF THE LEGISLATURE IS A TAXATION ST ATUTE IS TO BE GATHERED FROM THE LANGUAGE OF THE PROVISIONS PARTICULARLY WHERE THE LANGUAGE IS PLAIN AND UNAMBIGUOUS. IN A TAXING ACT IT IS NOT POSSIBLE TO ASSUME ANY INTENTION OR GOVERNING PURPOSE OF THE STATUTE MORE THAN WHAT IS STATED IN THE PLAIN LANGU AGE. IT IS NOT THE ECONOMIC RESULTS SOUGHT TO BE OBTAINED B Y MAKING THE PROVISION WHICH IS RELEVANT IN INTERPRET ING A FISCAL STATUTE. EQUALLY IMPERMISSIBLE IS AN INTERPR ETATION ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 16 WHICH DOES NOT FLOW FROM THE PLAIN, UNAMBIGUOUS LANGUAGE OF THE STATUTE. WORDS CANNOT BE ADDED TO O R SUBSTITUTED SO AS TO GIVE A MEANING TO THE STATUTE WHICH WILL SERVE THE SPENT AND INTENTION OF THE LEGISLATU RE. THE STATUTE SHOULD CLEARLY AND UNAMBIGUOUSLY CONVEY THE THREE COMPONENTS OF THE TAX LAW I.E. SUBJECT OF THE TAX, THE PERSON WHO IS LIABLE TO PAY THE TAX AND THE RAT E AT WHICH THE TAX IS TO BE PAID. IF THERE IS ANY AMBIGU ITY REGARDING ANY OF THESE INGREDIENTS IN A TAXATION ST ATUTE THEN THERE IS NO TAX IN LAW. THEN IT IS FOR THE LEG ISLATURE TO DO THE NEEDFUL IN THE MATTER. HONBLE BOMBAY HIGH COURT IN THIS CASE (VODAFONE CASE) OBSERVED THAT ISSUE OF SHARES AT A PREMIUM IS ON CAPITAL ACCOUNT AND GIVES RISE TO NO INCOME. 56(1) PROVIDES THE INCOME OF EVERY KIND WHICH IS NOT EXCLUDED FROM THE TOTAL INCOME IS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. HOWEVER BEFORE SECTION 56 OF THE ACT CAN BE APPLIED THERE MUST BE INCOME WHICH ARISES. IF THE RECEIPT IS CAPITAL THEN IT IS NOT INCOME. HENCE SHARE PREMIUM IS NOT AN INCOME. I) THE CBDT VIDE CIRCULAR/INSTRUCTION NO.2 DATED 29.01 .2015 HAS STATED AS UNDER [371 ITR 6(ST)]. IN REFERENCE TO THE ABOVE CITED SUBJECT, I AM DIRE CTED TO DRAW YOUR ATTENTION TO DECISION OF THE HIGH COURT OF BOM BAY IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD V UOI FOR THE ASSESSMENT YEAR 2009-10 (WP NO.871 OF 2014) WHEREIN THE COURT HAS HELD INTERALIA, THAT THE PREMIUM ON SHARE ISSUE WAS ON ACCOUNT OF A CAPITAL ACCOUNT TRANSACTION AND DOE S NOT GIVE RISE TO INCOME AND HENCE, NOT LIABLE TO TRANSFER PR ICING ADJUSTMENT. IT IS HEREBY INFORMED THAT THE BOARD HAS ACCEPTED T HE DECISION OF THE HIGH COURT OF BOMBAY IN THE ABOVE M ENTIONED WRIT PETITION. IN VIEW OF THE ACCEPTANCE OF THE ABO VE JUDGMENT, IT IS DIRECTED THAT THE RATIO DECIDENDI OF THE JUDG MENT MUST BE ADHERED TO BY THE FIELD OFFICERS IN ALL CASES WHERE THE ISSUE IS INVOLVED. THIS MAY ALSO BE BROUGHT TO THE NOTICE OF THE ITAT, DRPS AND CIT (APPEALS). ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 17 IN VIEW OF ABOVE INSTRUCTION, IT IS CLEAR THAT RATI O DECIDING OF TREATING OF SHARE PREMIUM AS CAPITAL RECEIPT IS BIN DING ON REVENUE AUTHORITIES. J. IN VIEW OF THE ABOVE SUBMISSIONS, IT IS CLEAR TH AT SHARE PREMIUM RECEIVED IS A CAPITAL RECEIPT AND CONSIDERATION REC EIVED CANNOT BE CONSIDERED AS INCOME FOR THE YEAR UNDER CONSIDERATI ON BY APPLYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT. K. THE LD CIT(A) ISSUED SHOW CAUSE NOTICE TO ASSESS EE TO TAX THE SHARE CAPITAL UNDER SECTION 68 OF ITAX ACT AS AGAINST 56( 1) APPLIED BY LD AO BUT HE SATISFIED ABOUT THE INGREDIENTS OF SECTIO N 68 OF I.TAX ACT AND NO ADDITION WAS SUSTAINED FOR AY 2009-10 EVEN U /S 68 OF I.TAX ACT. THE LD AO ISSUED SEVERAL NOTICES TO ASSESSEE TO EX PLAIN THE SHARE CAPITAL. THE ASSESSEE SUBMITTED DETAILED REPLY AND DOCUMENTS FROM TIME TO TIME AS UNDER:- S.NO PARTICULARS COPY AT PB PG NO 1 COPY OF QUERY LETTER OF AO DATED 05.11.2014. 43-4 6 2 COPY OF REPLY OF ASSESSEE DATED 20.11.2014 FILED IN RESPONSE TO QUERY LETTER DATED 05.11.2014. 47-53 3 COPY OF QUERY LETTER OF AO DATED 31.12.2014. 54-5 5 4 COPY OF REPLY OF ASSESSEE DATED 10.01.2015 FILED IN RESPONSE TO QUERY LETTER DATED 31.12.2014. 56-57 5 COPY OF SHOW CAUSE NOTICE OF AO DATED 06.02.2015. 58-61 6 COPY OF REPLY OF ASSESSEE DATED 13.02.2015 FILED IN RESPONSE TO SHOW CAUSE NOTICE DATED 06.02.2015. 62-65 7 COPY OF REPLY OF ASSESSEE DATED 03.03.2015. 66 8 COPIES OF DOCUMENTS FILED BEFORE AO ALONG WITH VARIOUS SUBMISSION IN RESPECT OF IDENTITY, CREDITWORTHINESS OF SHAREHOLDER AND GENUINENESS OF TRANSACTIONS 67-233 THE ASSESSEE HAS SUBMITTED SUFFICIENT DOCUMENTS BE FORE THE LD AO TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SHARE CAPITAL AND LD AO SATISFIED THAT ADDITION UNDER SECTION 68 CANN OT BE MADE, SO HE APPLIED SECTION 56(1) OF ITAX ACT TO MAKE THE ADDIT ION. THE ASSESSEE SUBMITTED DETAILED REPLY BEFORE LD C IT(A) VIDE LETTER DATED 12/07/2016 (COPY AT PB PG 234-287). LD CIT(A) WHEN ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 18 SATISFIED THAT THE ADDITION U/S 56(1) CANT BE MADE , HE TRIED TO SUSTAIN THE ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF INCOME TAX ACT. HE ISSUED A SHOW CAUSE NOTICE VIDE LETTER DATE D 09/03/2017 (COPY AT PB PG 288-334). THE ASSESSEE SUBMITTED DETAILED REPLY ON THE SHOW CAUSE NOTICE OF LD CIT(A) VIDE LETTER DATED 24-03-2 017 & 28/03/2017 ALONGWITH DOCUMENTS (COPY AT PB PG 335-421) . TO SUPPORT THAT SHAREHOLDERS WERE GENUINE AND CREDITWORTHINESS IS P ROVED, THE ASSESSEE HAS FILED ALL DETAILS, IN RESPECT OF INCORPORATION/ EXISTENCE OF INVESTORS AND DETAILS OF CHEQUES VIDE WHICH AMOUNTS WERE RECE IVED. THE CAPACITY OF SHAREHOLDERS IS VERIFIABLE FROM THE COPY OF THE BALANCE SHEET OF THE SHAREHOLDERS. THE SHAREHOLDERS HAVE FUNDS ON A PRIO R DATE FROM THE ALLOTMENT OF SHARES GIVEN BY THE ASSESSEE COMPANY A ND SUCH FUNDS WERE MORE THAN THE AMOUNT OF SHARE APPLICATION. L) DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THE FOLLOWING DOCUMENTS TO PROVE THEIR IDENTITY OF SHAREHOLDERS, CREDITWORTHINESS OF SHAREHOLDERS AND GENUINENESS OF TRANSACTION WITH THEM: - NAME OF SHAREHOLDER PARTICULARS OF DOCUMENTS SUBMITTED COPY AT PB PAGE LAVENDER DEALCOM PVT. LTD. SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALON G WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 71-74 75 76 77-78 79 80 81-90 91 ARCADE DEALCOM PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALON G WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 92-93 94 95 96 97 98 99-109 110 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 19 TARANG SUPPLIERS PVT. LTD. SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALON G WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 111 112 113 114 115 116-126 127 TRANSIT VINIMAY PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALON G WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 128-135 136 137 138-140 141-143 144 145-155 156 VANDANA DEALERS PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALON G WITH ANNEXURE OF 31.03.09. 157-161 162 163 164-166 167 168-178 VARIETY DEALCOM PVT. LTD. SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALON G WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 179-180 181 182 183 184 185 186-195 196 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 20 VANILA VINIMAY PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALON G WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 197-198 199 200 201 202 203 204-213 214 OUTLOOK TRACOM PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALON G WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 215-216 217 218 219 220 221 222-232 233 M) ALL THE SHARE CAPITAL/SHARE APPLICATION WAS REC EIVED THROUGH A/C PAYEE CHEQUES AND VERIFIABLE FROM BANK STATEMENT OF ASSES SEE AS WELL AS BANK STATEMENT OF THE PARTY. THE ONUS U/S 68 OF THE ASSE SSEE IS TO PROVE THE IDENTITY, CAPACITY AND GENUINENESS OF THE TRANSACTI ONS HAS BEEN DISCHARGED WHICH MAY BE SEEN FROM THE FOLLOWINGS:- I) IDENTITY:- THE ASSESSEE PROVED THE IDENTITY OF ALL THE COMPA NIES BY FILING THE SHARE APPLICATION RECEIVED FROM THE PARTIES AND THE PARTIES ARE DULY IN EXISTENCE AND THE EXISTENCE OF THE PART IES CAN BE VERIFIED FROM THE OFFICIAL WEBSITE OF MCA. THE LD. AO ALSO NOT DOUBTED THE IDENTITY OF THE ABOVE NAMED COMPANIES. FURTHER THE NOTICE ISSUED U/S 133(6) OF INCOME TAX ACT, 1961 WA S DULY SERVED ON ALL THE COMPANIES WHICH ALSO PROVE THE ID ENTITY OF THE PARTIES. II) CREDITWORTHINESS ALL THE COMPANIES ARE INCOME TAX ASSESSEE AND DU LY FILING THE INCOME TAX RETURN AND BALANCE SHEETS. THERE IS SUFF ICIENT SOURCE OF FUNDS WITH ALL THE COMPANIES TO INVESTMEN T SHARE CAPITAL/SHARE APPLICATION IN THE ASSESSEE COMPANY. THE ASSESSEE SUBMITTED THE COPIES OF BANK ACCOUNT/DECLARATION OF SOURCE OF ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 21 FUNDS WITH THEM OF INVESTOR COMPANIES. THE BANK STA TEMENT SHOWS THE HUGE TRANSACTION OF HIGH VALUE IN THE ACC OUNTS OF THE COMPANIES. THE CHART SHOWING THE AMOUNT INVESTED BY THE ABOVE NAMED COMPANIES IN ASSESSEE COMPANY VIZ A VIZ OWN FUNDS WITH THE INVESTOR COMPANY ARE AS UNDER: - NAME OF THE INVESTOR COMPANY AMOUNT INVESTED IN ASSESSEE COMPANY SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2009 SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2008 LAVENDER DEALCOM PVT. LTD. 30,00,000 7,97,50,000 7,97,50,000 ARCADE DEALCOM PVT. LTD 20,00,000 11,71,00,000 11,71,00,000 TARANG SUPPLIERS PVT. LTD 15,00,000 2,55,00,000 2,55,00,000 TRANSIT VINIMAY PVT. LTD 62,00,000 14,47,02,766 14,47,00,000 VANDANA DEALERS PVT. LTD 98,00,000 9,39,42,000 9,39,42,000 VARIETY DEALCOM PVT. LTD 25,00,000 12,15,57,203 12,15,50,000 VANILA VINIMAY PVT. LTD 15,00,000 12,54,50,000 12,54,50,000 OUTLOOK TRACOM PVT. LTD 25,00,000 8,60,00,000 8,60,00,000 FROM THE ABOVE CHART IT IS CLEAR THAT ALL THE INVE STOR COMPANIES WERE HAVING THEIR OWN SHARE CAPITAL AND RESERVE & S URPLUS WHICH WERE MUCH MORE THAN TO THE AMOUNT INVESTED IN THE ASSESSEE COMPANY. FROM THE AUDITED P & L ACCOUNT OF THESE COMPANIES IT IS APPARENT THAT THESE COMPANIES HAD T RADING ACTIVITIES OF LARGE AMOUNT. THE ABOVE CHART SHOWS T HAT THE INVESTOR COMPANIES WERE HAVING THEIR OWN INDEPENDEN T FUNDS AND HAVING THEIR INDEPENDENT SOURCE TO INVEST IN TH E SHARES OF THE ASSESSEE COMPANY. APART FROM THE INVESTMENT MAD E IN THE SHARES OF ASSESSEE COMPANIES, THE INVESTOR COMPANIE S WERE ALSO HAVING INVESTMENTS IN SHARES OF OTHER COMPANIES OR LOANS & ADVANCES TO PARTIES WHICH IS MUCH MORE THAN TO THE AMOUNT INVESTED IN THE ASSESSEE COMPANY, THEREFORE FROM TH E BANK STATEMENT AS WELL AS FINANCIALS STATEMENTS OF THE I NVESTOR COMPANIES THEIR CREDITWORTHINESS IS DULY PROVED. III) GENUINENESS THE ASSESSEE SUBMITTED THE SHARE APPLICATION FORM RECEIVED FROM ABOVE COMPANIES AGAINST THE SHARE APPLICATION RECEIVED FROM THE COMPANIES. THE SHARE APPLICATION IS SUPPOR TED BY ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 22 BOARD RESOLUTION PASSED IN THE INVESTOR COMPANIES. THE ASSESSEE COMPANY HAS ALLOTTED THE SHARES TO THE INV ESTOR COMPANIES. THE PROPER RETURNS WERE FILED BEFORE THE ROC AGAINST ALLOTMENT OF THE SHARES TO THESE COMPANIES. FURTHERMORE, THE DEPARTMENT HAS CARRIED OUT INTENSI VE SEARCH OPERATIONS OVER THE ASSESSEE AND NO ANY INCRIMINATI NG MATERIAL WAS FOUND TO SHOW THAT THE MONEY AGAINST THE SHARE ALLOTMENT WAS OWN MONEY OF THE COMPANY. SHARES CERTIFICATES W ERE ISSUED AGAINST THE ALLOTMENT OF THE SHARES TO THESE COMPANIES WERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE COMPANY OR ITS DIRECTOR OR EMPLOYEES. THIS FACT SHOWS THAT AFT ER ALLOTMENT OF SHARES BY THE APPELLANT COMPANY SHARE CERTIFICATES WERE DISPATCHED TO THE SUBSCRIBER COMPANIES. NO ANY ENTR Y IN BOOKS OF ACCOUNT OR DOCUMENT WAS FOUND SHOWING PAYMENT OF CASH TO THESE INVESTOR COMPANIES AGAINST RECEIPT OF CHEQUES FROM THESE COMPANIES AGAINST ALLOTMENT OF SHARES. THEREFORE TH E GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBTED. N) ONUS TO PROVE SOURCE OF SOURCE FROM THE SHOW CAUSE NOTICE GIVEN BY LD CIT(A) AND EXCEL SHEET PROVIDED TO THE ASSESSEE SHOWING CHAIN OF SOURCE IT IS APPARENT THAT EVEN THERE IS NO CASH DEPOSIT TILL 4 TH STAGE OF CHANNEL SOURCE (COPY AT PB PG 669 TO 698/ AY 2012-13 FILED IN THE CASE OF M OTISONS ENTERTAINMENT (INDIA) PVT LTD ITA NO 485/JP/17) . IF THERE IS ANY CASH DEPOSITED AT 4 TH CHANNEL OR BEYOND TO THAT STAGE THEN THE INQUIRY SHOULD HAVE BEEN MADE FROM THE CONCERNS IN WHOSE BA NK A/C SUCH FUNDS FLOATED AND NECESSARY ACTION SHOULD HAVE BEEN TAKEN IN THE CASES OF SUCH CONCERN BUT THE ASSESSEE CANNOT BE HOLD RES PONSIBLE FOR CASH DEPOSIT IN SOME ACCOUNT AT 4 TH CHANNEL. UNDER SECTION 68 OF INCOME TAX ACT, 1961 THE ONUS OF THE ASSESSEE IS TO PROVE THE SOURCE OF CREDIT ENTRY AND THERE IS NO ONUS OF ASSESSEE TO PR OVE THE SOURCE OF SOURCE OR SOURCE OF ALL CHANNEL SOURCES. THE AMENDM ENT IN SECTION 68 OF I. TAX WAS MADE BY INSERTING THE FOLLOWING PR OVISO TO SECTION 68 W.E.F. 01/04/2013 WHICH REQUIRE TO PROVE SOURCE OF FINDS IN THE HANDS OF SHAREHOLDER COMPANY. THOUGH NOT REQUIRED BY LAW BUT STILL THE ASSESSEE HAS PROVED SOURCE OF FINDS IN THE HAND S OF SHAREHOLDER COMPANY. THE AMENDED SECTION EVEN DOES NOT REQUIRE TO PROVE SOURCE OF FUNDS IN THE HANDS OF 3 RD OR 4 TH STAGE. FURTHER THE AMENDMENT IN SECTION 68 OF I.TAX WAS MADE BY INSERTING THE FOLLOWING PROVISO TO SECTION 68 W.E.F . 01/04/2013 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 23 ' PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY, (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED) A ND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUC H CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSI NG OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: THE ABOVE PROVISO WAS INSERTED WITH EFFECT FROM THE 1ST DAY OF APRIL, 2013 SO IT CANNOT BE APPLIED RETROSPECTIVELY. THEREFORE AS PER LAW THE ASSESSEE HAS NO ONUS TO PROVE SOURCE OF SOURCE. HO NBLE MUMBAI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX 1 VS M/S. GAGANDEEP INFRASTRUCTURE PVT.LTD HELD AS UNDER:- (E) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APRIL, 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 201314 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT WAS NOT EVEN THE CASE OF THE REVENUE T HAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBSEQUENTLY EFFECTIVE ONLY FROM 1ST APRIL, 2013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATES THAT IT W AS INTRODUCED FOR REMOVAL OF DOUBTS OR THAT IT IS DECLARATORY. THE REFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PROVISO TO SECTION 68 OF THE AC T IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE PROVISO SECTION 68 OF THE ACT LAID DOWN BY THE COURTS NAMELY THE GENUI NENESS OF THE TRANSACTION, IDENTITY AND THE CAPACITY OF THE INVES TOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEH ALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) IN TH E CONTEXT TO THE ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 24 PRE AMENDED SECTION 68 OF THE ACT HAS HELD THAT WHE RE THE REVENUE URGES THAT THE AMOUNT OF SHARE APPLICATION MONEY HA S BEEN RECEIVED FROM BOGUS SHAREHOLDERS THEN IT IS FOR THE INCOME T AX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHO LDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DO ES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. (F) IN THE ABOVE CIRCUMSTANCES AND PARTICULARLY IN VIEW OF THE CONCURRENT FINDING OF FACT ARRIVED AT BY THE CIT(A ) AND THE TRIBUNAL, THE PROPOSED QUESTION OF LAW DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. BUT IN THE CASE OF THE ASSESSEE THE FACT REMAINS TH AT THE ASSESSEE HAS ALSO PROVED SOURCE OF SOURCE BY SUBMITTING THE COPY OF BANK STATEMENT OF THE SHARE APPLICANT COMPANY WHEREIN NO CASH DEPOSIT WAS MADE AGAINST THE SHARE APPLICATION MONEY. THEREFORE, THE ADDITION ON SHARE APPLICATION RECEI VED BY THE ASSESSEE CAN NEITHER BE MADE U/S 56(1) OF INCOME TAX ACT, 1 961 NOR U/S 68 OF INCOME TAX ACT, 1961. THE VARIOUS JUDGMENTS AND ARG UMENTS REGARDING ADDITION MADE U/S 56(1) OF INCOME TAX ACT , 1961 HAS BEEN SUBMITTED IN FORGOING PARAS. THE VARIOUS JUDGMENTS REGARDING ADDITION CANNOT BE MADE U/S 68 OF INCOME TAX ACT, 1961 ARE A S UNDER:- A) RAJASTHAN HIGH COURT: - (I) CIT-1, JAIPUR V/S M/S. ARL INFRATECH LTD, (PB P G 130 TO 143/CASE LAWS) WHEREIN HONBLE RAJASTHAN HIGH COURT HAS RECENTLY CONFIRMED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN D B ITA NO 24/2014 VIDE ORDER DATED 28/09/2016 REGARDIN G DELETION OF ADDITION OF SHARE CAPITAL MADE BY APPL YING THE PROVISIONS OF 68 OF INCOME TAX ACT, 1961. (II) COMMISSIONER OF INCOME-TAX, JAIPUR II VERSUS MORANI AUTOMOTIVES (P.) LTD. NO.- D.B. IT APPEAL NO. 619 OF 2011 DATED.- OCTOBER 23, 2013 (RAJASTHAN HIGH COURT) (PB PG 144 TO 149/CASE LAWS). THE FINDINGS OF HONBLE RAJASTHAN HIGH COURT WAS AS UNDER:- ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 25 10. THE POINTS AS SOUGHT TO BE RAISED BY THE APPELL ANT- REVENUE IN THE PRESENT CASE ARE ALL THE MATTERS REL ATING TO APPRECIATION OF EVIDENCE. THE RELEVANT FACTORS H AVE BEEN TAKEN INTO ACCOUNT AND CONSIDERED BY THE APPEL LATE AUTHORITIES BEFORE RETURNING THE FINDINGS IN FAVOUR OF THE ASSESSEE. EVEN AS REGARDS THE THREE REFERRED SHARE CAPITAL CONTRIBUTORS, IT IS NOTICED THAT THEY ARE E XISTING ASSESSEES HAVING PA NUMBERS; AND ARE BEING REGULARL Y ASSESSED TO TAX. THE APPELLATE AUTHORITIES CANNOT B E SAID TO HAVE ERRED IN DELETING THE ADDITIONS IN THEIR RE GARD TOO AT THE HANDS OF ASSESSEE-COMPANY. 11. ULTIMATELY, THE QUESTION AS TO WHETHER THE SOURCE OF INVESTMENT OR OF CREDIT HAS BEEN SATISFACTORILY EXPLAINED OR NOT REMAINS WITHIN THE REALM OF APPRECIATION OF EVIDENCE; AND THE COURTS H AVE CONSISTENTLY HELD THAT SUCH A MATTER DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. IN THE CASE OF CIT V. ORISSA CORPN. (P.) LTD. [1986) 159 ITR 78 (SC), THE HON'BLE SUPREME COURT HELD AS UNDER:- '13. IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WA S IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITOR S WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER S. 131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WER E CREDIT-WORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE T HE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES , THE ASSESSEE COULD NOT DO ANY THING FURTHER. IN THE PRE MISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASS ESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES.' 12. IN THE CASE OF CIT V. CHANDRA PRAKASH RANA [200 1] 48 DTR 271 (RAJ.), THIS COURT NOTICED SIMILAR NATUR E ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 26 GROUNDS URGED ON BEHALF OF THE REVENUE AND FOUND TH E SAME NOT LEADING TO ANY SUBSTANTIAL QUESTION OF LAW . THIS COURT NOTICED, OBSERVED, AND HELD AS UNDER:- '7. LEARNED COUNSEL FOR THE APPELLANT (REVENUE) CONTENDED THAT FIRSTLY TRIBUNAL ERRED IN ACCEPTING THE EXPLANATION OFFERED BY ASSESSEE IN RELATION TO SOURCE OF INCOME. HIS SECOND SUBMISSION WAS THAT WHAT WAS OFFERED BY ASSESSEE WAS NO EXPLANATION AND HENCE SHOULD NOT HAVE BEEN ACCEPTED AND LASTLY LEAR NED COUNSEL MADE SINCERE ATTEMPT ON HIS PART AFTER TAKI NG US THROUGH FACTUAL SCENARIO OF THE EXPLANATION AND CONTENDED THAT IT CAN NEVER BE TAKEN AS SATISFACTOR Y EXPLANATION FOR DELETING THE ADDITION MADE BY AO. W E DO NOT AGREE TO THIS SUBMISSION FOR MORE THAN ONE REASON. 8. IN THE FIRST PLACE, IT IS A PURE QUESTION OF FAC T, WHAT TO SAY QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUESTION OF LAW. SECONDLY, THIS COURT CANNOT AGAIN IN THIS APPEAL UNDERTAKE THE EXAMINATION OF FACTUAL IS SUES NOR CAN DRAW FACTUAL INFERENCES ON THE BASIS OF EXPLANATION OFFERED BY ASSESSEE. THIRDLY, ONCE THE EXPLANATION IS ACCEPTED BY THE TWO APPELLATE CO URTS I.E. CIT(A) AND TRIBUNAL IN THIS CASE, THEN IN SUCH EVENT, A CONCURRENT FINDING RECORDED ON SUCH EXPLANATION B Y TWO APPELLATE COURTS IS BINDING ON THE HIGH COURT. 9. PERUSAL OF IMPUGNED FINDING QUOTED SUPRA WOULD GO TO SHOW THAT TRIBUNAL DID EXAMINE THE EXPLANATION OFFERED BY ASSESSEE IN DETAIL AND THEN RECORDED A FINDING FOR ITS ACCEPTANCE. SUCH FINDING WHEN CHALLENGED DOES NOT CONSTITUTE A SUBSTANTIAL QUESTION OF LAW WITHIN THE MEANING OF S. 260A IBID IN AN APPEAL ARISING OUT OF SUCH ORDER. 10. IN OUR OPINION, THEREFORE, ONCE THE CIT(A) AND TRIBUNAL ACCEPTED THE EXPLANATION OF ASSESSEE A ND ACCORDINGLY, DELETED CERTAIN ADDITIONS MADE BY AO HOLDING THE TRANSACTION OF SHARES TO BE GENUINE, TH EN IT WOULD NOT INVOLVE ANY SUBSTANTIAL ISSUE OF LAW AS S UCH. IN OTHER WORDS, THIS COURT IN ITS APPELLATE JURISDI CTION UNDER S. 260A IBID, WOULD NOT AGAIN DE NOVO HOLD YE T ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 27 ANOTHER FACTUAL INQUIRY WITH A VIEW TO FIND OUT AS TO WHETHER EXPLANATION OFFERED BY ASSESSEE AND WHICH FOUND ACCEPTANCE TO THE CIT(A) AND TRIBUNAL IS GOOD OR BAD, OR WHETHER IT WAS RIGHTLY ACCEPTED, OR NOT. IT IS ONLY WHEN THE FACTUAL FINDING RECORDED HAD BEEN ENTIRELY DE HORS THE SUBJECT, OR THAT IT HAD BEEN BASED ON NO REASONING, OR BASED ON ABSURD REASONING TO THE EXTE NT THAT NO PRUDENT MAN OF AVERAGE JUDICIAL CAPACITY CO ULD EVER REACH TO SUCH CONCLUSION, OR THAT IT HAD BEEN FOUND AGAINST ANY PROVISION OF LAW, THEN A CASE FOR FORMULATION OF SUBSTANTIAL QUESTION OF LAW ON SUCH FINDING CAN BE SAID TO HAVE BEEN MADE OUT. 11. IN OUR VIEW, NO SUCH ERROR COULD BE NOTICED BY US IN THE IMPUGNED ORDER BECAUSE AS OBSERVED SUP RA, THE TRIBUNAL DID GO INTO THE DETAILS OF EXPLANATION OFFERED BY ASSESSEE AND THEN ACCEPTED THE EXPLANATI ON BY PLACING RELIANCE ON THE DOCUMENTS FILED BY ASSES SEE. AS A CONSEQUENCE THEREOF, THE ADDITIONS MADE BY AO CAME TO BE DELETED.' 13. IN CIT V. SHREE BARKHA SYNTHETICS LTD. [2004] 2 70 ITR 477 (RAJ.), IN A SIMILAR NATURE MATTER, THIS CO URT OBSERVED THAT THE TRIBUNAL HAVING FOUND THAT THE COMPANIES FROM WHICH THE SHARE APPLICATION MONEY HA D BEEN RECEIVED BY THE ASSESSEE-COMPANY WERE GENUINEL Y EXISTING AND THE IDENTITY OF THE INDIVIDUAL INVESTO RS WERE ALSO ESTABLISHED AND THEY HAD CONFIRMED THE FACT OF MAKING INVESTMENT, THE FINDING THAT ASSESSE E HAD DISCHARGED INITIAL BURDEN AND ADDITION UNDER SECTIO N 68 COULD NOT BE SUSTAINED, WAS ESSENTIALLY A FINDING O F FACT. THIS COURT SAID,- '19. A PERUSAL OF THE AFORESAID FINDING GOES TO SHOW THAT DELETION HAS BEEN MADE ON APPRECIATION OFEVIDENCE, WHICH WAS ON RECORD FINDIN G THAT THERE WAS EXISTENCE OF INVESTORS AND THEIR CONFIRMATION HAS BEEN OBTAINED, WERE FOUND TO BE SATISFACTORY. ALL THESE CONCLUSIONS ARE CONCLUSIONS OF FACT BASED ON MATERIAL ON RECORD AND , THEREFORE, CANNOT BE SAID TO BE PERVERSE SO AS TO G IVE RISE TO QUESTION OF LAW, WHICH MAY BE REQUIRED TO B E CONSIDERED IN THIS APPEAL UNDER S.260A OF THE IT AC T.' ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 28 14. THE RATIO OF THE DECISIONS AFORESAID DIRECTLY A PPLIES TO THE PRESENT CASE TOO. HEREIN, AS NOTICED, THE AP PELLATE AUTHORITIES HAVE RETURNED THE FINDINGS OF FACT IN FAVOUR OF THE ASSESSEE AFTER DUE APPRECIATION OF TH E EVIDENCE ON RECORD, ON RELEVANT CONSIDERATIONS, AND ON SOUND REASONINGS. THESE FINDINGS HAVE NEITHER BEEN SHOWN SUFFERING FROM ANY PERVERSITY NOR APPEAR ABSU RD NOR ARE OF SUCH NATURE THAT CANNOT BE REACHED AT AL L. THUS, NO CASE FOR INTERFERENCE IN THE FINDINGS OF T HE APPELLATE AUTHORITIES IS MADE OUT. IN THE RESULT, THE APPEAL FAILS AND IS, THEREFORE, DISMISSED. (III) BARKHA SYNTHETICS LTD. VS. ASSTT. CIT (005) 197 CTR (RAJ) 432. (PB PG 150 TO 156/CASE LAWS) SUBSTANTIAL QUESTION OF LAWCASH CREDIT VIS-A-VIS S HARE APPLICATION MONEYTRIBUNAL FOUND THAT 6 OUT OF 7 COMPANIES FROM WHICH THE SHARE APPLICATION MONEY HA D BEEN RECEIVED WERE GENUINELY EXISTING AND NO ENQUIR Y WAS CONDUCTED IN RESPECT OF THE SOURCE OF SHARE APPLICATION MONEY AT THE TIME OF MAKING THE INVESTM ENT IN THE ASSESSEE-COMPANY AND THUS THE ASSESSEE HAS DISCHARGED ITS INITIAL BURDEN EXCEPT IN ONE CASEAS REGARDS INDIVIDUAL INVESTORS, THE TRIBUNAL FOUND TH AT IDENTITY OF 9 OUT OF 10 INVESTORS HAS BEEN ESTABLIS HED AND THEY HAVE CONFIRMED THE FACT OF MAKING INVESTME NT IN THE SHARES OF THE ASSESSEE-COMPANY AND NO FURTHE R ENQUIRY WAS DIRECTED BY THE AOTHUS, ADDITIONS WERE SUSTAINED ONLY IN RESPECT OF INVESTMENTS SAID TO HA VE BEEN MADE BY U, AN INDIVIDUAL INVESTOR AND BY W LTD ., FOR THE REASON THAT SUCH INVESTMENTS WERE NOT PROVE D FINDING OF THE TRIBUNAL IS ESSENTIALLY A FINDING OF FACT WHICH IS NOT VITIATED IN LAWNO SUBSTANTIAL QUESTIO N OF LAW ARISE FOR CONSIDERATION. (IV) CIT VS. FIRST POINT FINANCE LTD. (2006) 206 CT R (RAJ) 626 : (2006) 286 ITR 477 (RAJ HC). (PB PG 157 TO 162/CASE LAWS) INCOMECASH CREDITSHARE APPLICATION MONEY TRIBUNAL FOUND THAT THE INVESTORS ARE GENUINELY EXI STING PERSONS AND THEY HAVE FILED CONFIRMATIONS IN RESPEC T OF ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 29 INVESTMENTS MADE BY THEM AND THEIR STATEMENTS WERE ALSO RECORDEDAMOUNT OF SHARE CAPITAL/SHARE APPLICATION MONEY COULD NOT BE TREATED AS UNEXPLAIN ED CASH CREDITS AND NO ADDITION COULD BE MADE UNDER S. 68NO SUBSTANTIAL QUESTION OF LAW ARISES. (V) COMMISSIONER OF INCOME TAX VS. BHAVAL SYNTHETICS ( RAJ HC) (2013) 84 DTR 0449 (RAJ) (PB PG 163 TO 165/CASE LAWS) HELD THAT EVEN IN CASE OF DOUBT ABOUT SUBSCRIBERS TO INCREASED SHARE CAPITAL, AMOUNT OF S HARE CAPITAL COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF COMPANYAMOUNT REFERABLE TO SHARE APPLICATION COULD NOT BE ATTRIBUTED TO ASSESSEE AND COULD NOT BE ASSE SSED IN ITS HANDSAPPEAL DISMISSED (VI) COMMISSIONER OF INCOME TAX VS. AKJ GRANITES (P ) LTD. ( RAJ HC) (2008) 301 ITR 0298 (PB PG 166 TO 168/CASE LAWS) HELD THAT IN RESPECT OF SHARE APPLICATIONS RECEIVED FROM DIFFERENT PLACES ACCOMPA NIED WITH SHARE APPLICATION MONEY, NO PRESUMPTION CAN BE DRAWN THAT SAME BELONG TO THE ASSESSEE AND CANNOT B E ASSESSED IN HIS HANDS AS HIS UNDISCLOSED INCOME UNL ESS SOME NEXUS IS ESTABLISHED THAT SHARE APPLICATION MO NEY FOR AUGMENTING THE INVESTMENT IN BUSINESS HAS FLOWN FROM ASSESSEES OWN MONEYNO SUBSTANTIAL QUESTION OF LAW ARISESBARKHA SYNTHETICS LTD. VS. ASSTT. CIT (2005) 197 CTR (RAJ) 432 FOLLOWED. (VII) COMMISSIONER OF INCOME-TAX, CENTRAL, JAIPUR VERSUS SUPERTECH DIAMOND TOOLS (PVT) LTD. (RAJ HC) D. B. IT APPEAL NO. 74 OF 2012 DATED: - 12 DECEMBER 2013. (PB PG 169 TO 174/CASE LAWS) (VIII) COMMISSIONER OF INCOME-TAX - I, JAIPUR VERSU S AL LALPURIA CONSTRUCTION (P.) LTD (RAJ HC) D.B. IT APPEAL NOS. 256 OF 2010 AND 26 & 39 OF 2011 DATED: - 25 FEBRUARY 2013. (PB PG 175 TO 176/CASE LAWS) (IX) COMMISSIONER OF INCOME-TAX, AJMER VERSUS HS. BUILDERS (P.) LTD. D.B. INCOME TAX (RAJ HC) APPEAL NO. 48 OF 2006 DATED: - 03 MARCH 2012. (PB PG 177 TO 185/CASE LAWS) ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 30 (X) CIT VS JAI KUMAR BAKLIWAL (2014) 101 DTR (RAJ) 377 : (2014) 267 CTR (RAJ) 396 (PB PG 186 TO 192/CASE LAWS). NO LIABILITY TO PROVE SOURCE OF SOURCE. (XI) ARAVALI TRADING CO VS INCOME TAX OFFICER (2008 ) 8 DTR (RAJ) 199. (PB PG 193 TO 200/CASE LAWS) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ESTABLISHED AND HE CON FIRMS THE LOANS. (XII) CIT VS HEERA LAL CHAGAN LAL TANK (2002) 157 I TR 281 (RAJ) (PB PG 201 TO 202/CASE LAWS) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ESTABLISHED AND HE CONFIRMS THE LOANS. B) ITAT JAIPUR/JODHPUR I) SHALIMAR BUILDCON (P) LTD. VS ITO (2011) 128 ITD 0396 (JAIPUR) (PB PG 214 TO 238/CASE LAWS) IN THIS CASE HONBLE ITAT JAIPUR BENCH HAS RELIED ON ITS OLD DECISION IN THE CASE OF HOTEL GAUDAVAN ITA NO. 1162 AND 1137/JP/2008 AND ADDITION ON ACCOUNT O F SHARE CAPITAL WAS DELETED. 28.5 ON IDENTICAL ISSUE, THE TRIBUNAL, JAIPUR BENCH IN THE CASE OF HOTEL GAUDAVAN (P) LTD. (SUPRA) HAS HEL D AS UNDER : '6. AS REGARDS THE ISSUE ON MERIT IN THE DEPARTMENT AL APPEAL, WE CONCUR WITH THE VIEWS OF THE LEARNED CIT (A) THAT THE AO HAS NOT CONSIDERED THE EXPLANATION OF T HE ASSESSEE. THE AMOUNT UNDER CONSIDERATION OF RS. 1.8 9 CRORE HAS BEEN RECEIVED BY THE ASSESSEE AS SHARE APPLICATION MONEY FROM M/S JALKANTA TECHNICAL & FINANCIAL SERVICE (P) LTD. (JTFSPL) AFTER A PROPER RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE AFORESAID COMPANY THROUGH BANKING CHANNEL. M/S JTFSPL IS HAVING PERMANENT ACCOUNT AND FILING ITS RETURN OF INCOME REGULARLY. THE AO HAS NOWHERE MENTIONED THAT MONEY BELONGS TO THE ASSESSEE COMPAN Y ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 31 AND THEREFORE, PROVISIONS OF S. 68 CANNOT BE INVOKE D. THE LEARNED CIT(A) HAS RIGHTLY RELIED UPON THE DECI SION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287 WHI CH HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT OF INDIA. THE LEARNED CIT(A) HAS ALSO RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF BARKHA SYNTHETICS LTD. VS. ASSTT. CIT (2005 ) 197 CTR (RAJ) 432 AND ALSO THE DECISION OF TRIBUNAL, JODHPUR BENCH IN THE CASE OF UMA POLYMERS (P) LTD. VS. DY. CIT (DT. 27TH FEB., 2006) [REPORTED AT (2006) 1 01 TTJ (JD)(TM) 124ED.] WHERE IT HAS BEEN HELD THAT T HE ASSESSEE HAS TO PROVE THE EXISTENCE OF THE SHAREHOL DERS WHICH IN THE PRESENT CASE IS NOT UNDER DISPUTE. THEREFORE, THE ASSESSEE HAS DISCHARGED THE BURDEN A ND THEREFORE THE AO WAS NOT JUSTIFIED IN MAKING ANY ADDITION UNDER S. 68 OF THE ACT. THE LEARNED COUNSE L FOR THE ASSESSEE HAS REFERRED TO THE DECISION OF HONBL E SUPREME COURT OF INDIA IN THE CASE OF DIVINE LEASIN G & FINANCE LTD. DT. 21ST JAN., 2008, THE COPY OF WHICH IS PLACED ON RECORD WHERE IT HAS BEEN OBSERVED BY THE SUPREME COURT AS UNDER : CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S. 68 OF IT ACT, 1961 ? WE FIND NO MERIT IN THIS SLP FOR THE SIMPLE REASON THA T IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS I N ACCORDANCE WITH LAW. THEREFORE, WE FIND NO INFIRMIT Y IN THE ORDER OF THE LEARNED CIT(A), WITH THE IMPUGNED JUDGMENT. THE SAID DECISION OF HONBLE SUPREME COURT OF INDIA HAS BEEN FOLLOWED BY THE TRIBUNAL, DELHI BENCH IN T HE CASE OF ITO VS. BHOR MAL DHANSI RAM LTD. IN ITA NO. 4670/DEL/2007, DT. 3RD MARCH, 2006. THE COPY OF THE SAID DECISION OF TRIBUNAL, DELHI BENCH IS PLACED ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI H .M. SINGHVI, CHARTERED ACCOUNTANT HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT OF INDIA ON THE S AID ISSUE IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD . ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 32 (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 WHEREIN IT HAS BEEN HELD THAT IF THE SHARE APPLICAT ION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOM E OF ASSESSEE COMPANY.' 28.6 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE LTD. (SUPRA) HAD AN OCCASION TO CONSIDER THE ADDITION ON ACCOUNT OF SHA RE APPLICATION MONEY. WE ARE REPRODUCING THE HELD PORT ION FROM THE DECISION OF HONBLE DELHI HIGH COURT AS MENTIONED IN (2007) 207 CTR (DEL) 38 (SUPRA). 'INCOMECASH CREDITSHARE APPLICATION MONEY BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HIL T BY THE ASSESSEEIF THE AO HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY-BOUND, TO CARRY OUT THOROUGH INVESTIGATIONSBU T IF THE AO FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALIN GS, HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND T REAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANYIF RELEVANT DETAILS OF ADDRESS AND IDENTITY OF THE SUBSCRIBERS ARE FURNISHED TO THE DEPARTMENT ALO NG WITH COPIES OF THE SHAREHOLDERS REGISTERS, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR EXPLANATION BY THE ASSESSEEDEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWI NG AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICESTRIBUNAL HAS NOTED THAT THE ASSESSEE COMPAN Y IS A PUBLIC LIMITED COMPANY WHICH HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC ISSUE THROUGH BANKING CHANNELS AND THE SHARES WERE ALLOTTED IN CONSONANCE WITH THE PROVISIONS OF SECURITIES CONTRACT (REGULAT ION) ACT, 1956, AS ALSO THE RULES AND REGULATIONS OF DEL HI STOCK EXCHANGECOMPLETE DETAILS WERE FURNISHED TRIBUNAL HAS FURTHER FOUND THAT THE AO HAS NOT BROU GHT ANY POSITIVE MATERIAL OR EVIDENCE WHICH WOULD INDIC ATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 33 PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRE SENTED COMPANYS OWN INCOME FROM UNDISCLOSED SOURCES.' 28.7 THE HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (SUPRA) HELD THAT IF THE SH ARE CAPITAL MONEY IS RECEIVED BY THE ASSESSEE COMPANY F ROM ALLEGED BOGUS SHAREHOLDERS THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF SUCH SHAREHOLDERS IN ACCORDANCE WITH LAW. SUCH SHARE APPLICATION MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. 28.8 THE HONBLE HIGH COURT IN THE CASE OF FIRST POINT FINANCE LTD. (SUPRA) HELD THAT BURDEN OF PROOF ON T HE ASSESSEE COMPANY LIES TO THE EXTENT OF MAKING OUT A CASE THAT INVESTOR EXISTS AND THEREAFTER IT IS NOT FOR T HE ASSESSEE TO FURTHER PROVE WHERE THEY HAVE BROUGHT MONEY FROM TO INVEST WITH IT. 28.9 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. UNITED BIO-TECH (P) LTD. 2010 TIOL-533-HC-DEL HELD THAT IN CASE THE IDENTITY OF THE SHARE APPLICA NTS HAS BEEN ESTABLISHED AND IT IS FOUND THAT THE SAID APPL ICANTS ARE CORPORATE ASSESSEES WHO ARE ASSESSED TO TAX WIT H IT DEPARTMENT THEN THERE IS NO CASE OF ANY SUBSTANTIAL QUESTION OF LAW. IN THE INSTANT CASE, THE SHARE APP LICANTS ARE CORPORATE ASSESSEES. 28.10 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAMIR BIO-TECH (P) LTD. (SUPRA) HELD THAT IF INVESTMENTS HAVE BEEN SHOWN BY THE SHARE APPLICANTS IN THEIR AUDITED BALANCE SHEET THEN THE ADDITION CANNO T BE MADE UNDER S. 68 OF THE ACT. 28.11 IN VIEW OF THE LEGAL POSITION AS DISCUSSED ABOVE, THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 1.10 CRORE WITHOUT BRINGING ON RECORD ANY MATERIAL FOR THE ADDITION. SIMPLY ON THE BASIS OF INFORMATION WH ICH IS NOT SUBSTANTIATED IN THE COURSE OF ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE, THE AO COULD NOT HAVE ADDED THE AMOUNT. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 34 (II) THE HONBLE ITAT, JAIPUR BENCH, JAIPUR IN ITS JUDGMENT THE CASE OF M/S JADAU JEWELLERS & MANUFACTURERS PVT. LTD., B-1, TRIMUTRI CIRCLE, GOVIND MARG, JAIPUR IN ITA NO. 686/JP/2014 DATED 14.12.2015 (PB PG 239 TO 267/CASE LAWS) GAVE THE FOLLOWING FINDINGS:- .6.1 ON FACTS ALSO, THE ASSESSEE HAS PRODUCED BEF ORE THE ASSESSING OFFICER COPY OF SHARE APPLICATION, CONFIRMATION OF THE CASH CREDITORS, COPY OF PAN, CO PY OF BOARD RESOLUTION, COPY OF DIRECTORS REPORT, AUDITO RS REPORT, COPY OF BALANCE SHEET, COPY OF P&L ACCOUNT, COPY OF BANK ACCOUNT IN ALL THE CASES TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE C ASH CREDITORS. THE LD ASSESSING OFFICER MADE ADDITION O N THE BASIS OF INVESTIGATION CONDUCTED BY THE ITO, INVESTIGATION WING, KOLKATA BUT THE LD ASSESSING OF FICER OF THE ASSESSEE HAS NOT CLARIFIED WHAT INQUIRY HAD BEEN CONDUCTED AND WHAT EVIDENCES COLLECTED WHICH GOES AGAINST THE ASSESSEE. THE NOTICE U/S 131 ISSUED BY THE ITO, INVESTIGATION WING, KOLKATA WERE SERVED IN CAS E OF VIDYA AGENCIES PVT. LTD. AND SHIVARPAN MERCANTILES PVT. LTD., BUT COMPLIANCE COULD NOT BE MADE ON THE GIVEN DATE BECAUSE CONCERNED OFFICER WAS ON LEAVE. IN CASE OF MIDDLETON GOODS PVT. LTD. AND LACTRODRYER MARKETING PVT. LTD., NOTICES WERE SERVED ON THE ASS ESSEE AND IN COMPLIANCE TO THE NOTICE, THE PARTY SUBMITTE D ALL THE DOCUMENTS IN THE IT OFFICE. THE CASE LAW REFERR ED BY THE LD CIT(A) I.E. DECISION OF HONBLE DELHI HIGH C OURT IN THE CASE OF NIPUN BUILDERS AND DEVELOPERS PVT. L TD. VS. CIT AND VIJAY POWER GENERATOR LTD. VS CIT (SUPR A) ARE NOT SQUARELY APPLICABLE ON THE FACTS OF THE CAS E AS THERE WAS SHORT TIME AVAILABLE WITH THE ASSESSING OFFICER AS WELL AS INVESTIGATION WING OF KOLKATA. T HE COPY OF INQUIRY HAS NOT BEEN PROVIDED BY THE ASSESS ING OFFICER TO THE ASSESSEE. AS PER FINDINGS OF THE HON 'BLE DELHI HIGH COURT IN THE CASE NIPUN BUILDERS AND DEVELOPERS PVT. LTD. VS. CIT (SUPRA), THE INVESTIGA TION OFFICER AT KOLKATA HAD NOT DEPUTED INSPECTOR TO ENQ UIRE THE WHEREABOUTS OF THE COMPANY. THE CASE LAWS REFER RED BY THE ASSESSEE ARE SQUARELY APPLICABLE ON THE FACT S AND CIRCUMSTANCES OF THE APPELLANTS CASE, THEREFORE, W E REVERSE THE ORDER OF THE LD CIT(A) ON TECHNICAL GRO UND AS WELL AS ON MERIT ALSO. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 35 (III) UMA POLYMER (P) LTD. , 101 TTJ 124, JODHPUR (PB PG 282 TO 318/CASE LAWS) INCOMECASH CREDIT SHARE APPLICATION MONEYIN RESPECT OF SHARE CAPITAL MONEY, THE ASSESSEE-COMPANY HAS TO PROVE ONLY THE EXISTENCE OF THE PERSON IN WHOSE NAME SHARE APPLICA TION IS RECEIVEDNO FURTHER BURDEN IS CAST ON THE ASSESS EE TO PROVE WHETHER THAT PERSON HIMSELF HAS INVESTED THE MONEY OR SOME OTHER PERSON HAS MADE THE INVESTMENT IN HIS NAMEBURDEN TO PROVE THAT THE MONEY DID NOT BELONG TO HIM BUT TO SOMEBODY ELSE IS ON THE REVENUEDISTINCTION BETWEEN A PUBLIC COMPANY AND A PRIVATE COMPANY IS NOT VERY MATERIAL FOR THIS PURPO SE AO TREATED THE INVESTMENTS MADE BY TEN SHAREHOLDERS IN THE ASSESSEE-COMPANY AS BOGUS AND MADE ADDITION UNDER S. 68 NOT JUSTIFIEDIN ALL THE CASES EXCEPT THAT OF V, AO HAD OBTAINED THE BANK STATEMENTS OF THE SHAREHOLDERS WHICH CLEARLY SHOW THAT THE ACCOUNTS W ERE REGULARLY MAINTAINED AND THE SHAREHOLDERS HAD MADE DEPOSITSFURTHER, THE SHAREHOLDERS ARE ALSO ASSESSE D TO TAXSIMPLY BECAUSE SCRUTINY ASSESSMENTS WERE NOT MADE IN THE CASE OF SHAREHOLDERS, SUCH ASSESSMENTS COULD NOT BE MADE IN THE COURSE OF ASSESSMENT OF TH E ASSESSEEHAVING REGARD TO THE INFORMATION COLLECTED BY THE AO FROM THE BANKS, IDENTITY OF THE SHAREHOLD ERS WAS FULLY ESTABLISHEDIF ANY SHAREHOLDER IS FOUND T O HAVE MADE UNEXPLAINED INVESTMENT, THEN ADDITION OF SUCH INVESTMENT IS REQUIRED TO BE MADE IN THE HANDS OF THE SHAREHOLDER AND NOT IN THE ACCOUNT OF THE ASSES SEE U HAD INVESTED IN THE SHARE CAPITAL THROUGH CHEQUE EXCEPT FOR A SMALL SUM WHICH WAS RETURNED TO HERHE R BANK ACCOUNT SHOWS SEVERAL ENTRIES, BOTH CREDIT AND DEBIT, WHICH HAVE NO RELATION WITH THE AMOUNT INVES TED WITH THE ASSESSEE-COMPANYMERELY BECAUSE SHE HAS NOT SUBMITTED HER RETURNS AFTER THE ASST. YR. 1984- 85, IT CANNOT BE SAID THAT SHE WAS NOT ASSESSED TO TAXTHO UGH V HAS NOT BEEN SHOWN TO BE ASSESSED TO TAX, HE HAD MADE MAJOR PART OF INVESTMENTS TOWARDS SHARE CAPITA L THROUGH CHEQUES AND HIS IDENTITY IS NOT DOUBTED ACCORDINGLY, SHARE CAPITAL ADVANCED BY U AND V IS A LSO TO BE ACCEPTED AS GENUINETHEREFORE, NO ADDITION OF SHARE CAPITAL MONEY COULD BE MADE IN THE HANDS OF T HE ASSESSEE-COMPANY. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 36 (IV) THE LD. JAIPUR TRIBUNAL IN THE CASE OF DCIT V M/S KAMDHENU STEEL AND ALLOYS LTD. 2014-TIOL-709- ITAT - (PB PG 203 TO 213/CASE LAWS) CASE RELATES TO SEARCH AND ISSUE OF SHARES ON PREMIUM. HELD THAT T HE ASSESSEE HAD SUBMITTED THE PARTICULARS OF REGISTRAT ION OF THE APPLICANT COMPANY, THE CONFIRMATION FROM THE SH ARE APPLICANTS, BANK ACCOUNT DETAILS FROM WHICH PAYMENT THROUGH ACCOUNT PAYEE CHEQUES, SO THE ASSESSEE HAD DISCHARGED ITS INITIALLY ONUS. (V) M/S. ARL INFRATECH LTD. VS. THE ACIT ITA NO. 619/JP/2013 (PB PG 268 TO 281/CASE LAWS) ITAT JAIPUR. THE FINDINGS OF HONBLE ITAT WAS AS UNDER:- BEFORE, WE PROCEED TO DECIDE THE ISSUE ON MERITS, W E WOULD LIKE TO DISCUSS THE SCHEME OF THE ACT AND PRE CEDENTS ON THE ISSUE INVOLVED IN THIS APPEAL AS UNDER:- IN CASES WHERE SHARE APPLICATION MONEY IS FOUND R ECORDED IN THE BOOKS OF AN ASSESSEE WHICH MAY REPRESENT CRE DIT IN THE BOOKS AND THE SHARE APPLICANT IS IDENTIFIED, THAT A MOUNT CANNOT BE ADDED IN THE ASSESSEE'S HANDS U/S 68 OF T HE ACT. THE HON'BLE RAJASTHAN HIGH COURT HAS REPEATEDLY REI TERATED THE ABOVE LEGAL POSITION. THESE CASES ARE: (I) CIT VS. SHREE BARKHA SYNTHETICS LTD. 182 CTR 17 5 (RAJ.) (II) BARKHA SYNTHETICS LTD. VS. ACIT (2005), 197 CT R 432 (RAJ).13 IN COMING TO THE ABOVE CONCLUSION, THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDERED AT LENGTH THE RELEVANT DECISIONS ON THE ISSUE LIKE CIT VS. STELLE R INVESTMENT LTD. (2000) 164 CTR (SC) 287 = 251 ITR 263 (SC) WHI CH HAS CONFIRMED THE DECISION OF HON'BLE DELHI HIGH COURT REPORTED IN (1992) 192 ITR 287. THE HON'BLE COURT HAS GONE T O THE EXTENT OF STATING THAT EVEN IF IT BE ASSUMED THAT T HE SUBSCRIBER TO THE SHARE CAPITAL ARE NOT GENUINE, NEVERTHELESS, UNDER NO CIRCUMSTANCES CAN THE AMOUNT OF SHARE CAPITAL BE RE GARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS CASE , THE SHARE SUBSCRIBER IS IDENTIFIED. THERE CAN BE NO DISPUTE R EGARDING THE ABOVE STATED LEGAL POSITION. THE FOLLOWING DECI SIONS ALSO LAY DOWN THE SAME RATIO:- (I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 6 DTR 30 8 (SC) (II) CIT VS. DOLPHIN CONPACK LTD. (2006) 283 ITR 19 0 (DEL.) (III) CIT VS. GUJARAT HEAVY CHEMICALS LTD. (202) 25 6 ITR 795(SC) (IV) CIT VS. KWICK TRAVELS (1992) 199 ITR (ST.) 85 (SC) ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 37 THIS ISSUE HAS BEEN DEALT AT LENGTH BY THE THIRD ME MBER IN THE CASE OF UMA POLYMERS (P) LTD. VS. DCIT, (2006) 101 TTJ (JD.) T.M. 126 = (2006) 284 ITR (AT) 1 JODHPUR. 2.6 ADVERTING, THE FACTS OF THE GIVEN CASE, WE ARE OF THE CONSIDERED OPINION THAT ALL THE SHARE APPLICANTS ST AND IDENTIFIED. THE ASSESSEE HAS PROVIDED PANS OF THE S HARE APPLICANTS. THE MODE OF PAYMENT HAS ALSO BEEN MADE EXPLAINED. THERE IS NO DIRECT OR INDIRECT RELATION BETWEEN THE ASSESSEE COMPANY AND THE SHARE APPLICANTS. THE STAT EMENTS RECORDED DURING SURVEY HAS GOT NO EVIDENTIARY VALUE AND THE LAW IS VERY MUCH SETTLED ON THIS ISSUE. IN ANY CASE , EVEN UNDER THE PROVISIONS OF SECTION 68 OF THE ACT, THE ASSESSEE CANNOT BE FORCED TO PROVE THE SOURCE OF THE SOURCE. THE LAW ON THIS SUBJECT IS ALSO SETTLED BY NUMEROUS DECISIO NS. THE ALLEGED REPORT OF THE INSPECTOR OF THE DEPARTMENT W HO IS STATED TO HAVE VISITED AT THE GIVEN ADDRESSES OF TH E SHARE APPLICANTS WAS NEVER PUT OR CONFRONTED TO THE ASSES SEE. THE CUMULATIVE EFFECTS OF THESE REASONS IS THAT THE IMP UGNED ADDITION CANNOT BE ADDED IN THE HANDS OF THE ASSESS EE COMPANY. ACCORDINGLY, WE ORDER TO DELETE THE ENTIRE ADDITIONS AND ALLOW THE APPEAL OF THE ASSESSEE. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. THE DEPARTMENT FILED APPEAL BEFORE HONBLE RAJASTHAN HIGH COURT. HONBLE RAJASTHAN HIGH COURT CONFIRMED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN DB ITA NO 24/2014 VIDE ORDER DATED 28/09/2016 (C) OTHER HIGH COURTS (I) 2014 (8) TMI 605 - MADRAS HIGH COURT THE COMMISSIONER OF INCOME TAX VERSUS PRANAV FOUNDATIONS LTD. T. C. (A). NO. 262 OF 2014 DATED - 12 AUGUST 2014 (PB PG 343 TO 346/CASE LAWS) ADDITION U/S 68 SHARE APPLICATION AND SHARE PREMI UM AMOUNT CREDITED BUT NOT PROVED - WHETHER THE TRIBUN AL WAS RIGHT IN UPHOLDING THE ORDER OF THE CIT(A) WHO DELETED THE ADDITION MADE U/S 68, BEING THE SHARE APPLICATION MONEY AND SHARE PREMIUM AMOUNT CREDITED BY THE ASSESSEE WHICH WAS NOT PROVED HELD THAT:- FOLLOWING THE DECISION IN CIT V. LOVELY EXPORTS (P) LTD. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - ALL THE FOUR PARTIES, WHO ARE SUBSCRIBERS OF THE ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 38 SHARES, ARE LIMITED COMPANIES AND ENQUIRIES WERE MA DE AND RECEIVED FROM THE FOUR COMPANIES AND ALL THE COMPANIES ACCEPTED THEIR INVESTMENT - THE ASSESSEE HAS CATEGORICALLY ESTABLISHED THE NATURE AND SOURCE OF THE SUM AND DISCHARGED THE ONUS THAT LIES ON IT IN TERM S OF SECTION 68 OF THE ACT - WHEN THE NATURE AND SOURCE OF THE AMOUNT SO INVESTED IS KNOWN, IT CANNOT BE SAID TO BE UNDISCLOSED INCOME - THE ADDITION OF SUCH SUBSCRIPT IONS AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT I S UNWARRANTED DECIDED AGAINST REVENUE. (II) CIT VS. ILLAC INVESTMENT (P) LTD. (2007) 207 C TR (DEL) 687; (PB PG 341 TO 342/CASE LAWS) ASSESSEE- COMPANY HAS SATISFACTORILY ESTABLISHED THE IDENTITY OF THE SHARE SUBSCRIBERS AND DELETED THE ADDITION UNDE R S. 68, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. (III) CIT VS. DIVINE LEASING & FINANCE LTD. (2007) 207 CTR (DEL) 38; (PB PG 321 TO 340/CASE LAWS) INCOMECASH CREDITSHARE APPLICATION MONEY BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HIL T BY THE ASSESSEEIF THE AO HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTYBOUND, TO CARRYOUT THOROUGH INVESTIGATIONSBUT IF THE AO FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALIN GS, HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREA T THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANYIF RELEVANT DETAILS OF ADDRESS AND IDENTITY OF THE SUBSCRIBERS ARE FURNISHED TO THE DEPARTMENT ALO NG WITH COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER, ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR EXPLANATION BY THE ASSESSEEDEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWI NG AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICESTRIBUNAL HAS NOTED THAT THE ASSESSEE-COMPAN Y IS A PUBLIC LIMITED COMPANY WHICH HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC ISSUE THROUGH BANKING CHANNELS AND THE SHARES WERE ALLOTTED IN CONSONANCE WITH THE PROVISIONS OF SECURITIES CONTRACT (REGULAT ION) ACT, 1956, AS ALSO THE RULES AND REGULATIONS OF DEL HI STOCK EXCHANGECOMPLETE DETAILS WERE FURNISHED ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 39 TRIBUNAL HAS FURTHER FOUND THAT THE AO HAS NOT BROU GHT ANY POSITIVE MATERIAL OR EVIDENCE WHICH WOULD INDIC ATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRE SENTED COMPANYS OWN INCOME FROM UNDISCLOSED SOURCESAS REGARDS RECEIPT OF SHARE CAPITAL ON ISSUE OF RIGHTS SHARES TO FIVE COMPANIES, THESE COMPANIES WERE DULY INCORPORATED UNDER THE SIKKIMESE COMPANIES ACT AND WERE ASSESSED UNDER THE SIKKIMESE TAXATION MANUAL THEIR SHARE SUBSCRIPTIONS WERE ALSO RECEIVED THROUG H BANKING CHANNELS AND FOUND TO BE VALID BY THE JURISDICTIONAL AOTHEREFORE, NO ADDITION COULD BE MADE UNDER S. 68 (IV) CIT V/S VALUE CAPITAL SERVICES P LTD. 307 ITR 334 (DELHI) (PB PG 319-3202/CASE LAWS) HELD THAT THERE IS ADDITIONAL BURDEN ON THE DEPARTMENT TO SHOW THAT EV EN IF SHARE APPLICANTS DID NOT HAVE THE MEANS TO MAKE INVESTMENT, THE INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS UNDISCLOSED INCOME OF TH E ASSESSEE. (V) CIT V/S STL EXTRUSION (P) LTD. 333 ITR 269 (MP) (PB PG 347 TO 350/CASE LAWS) INCOMECASH CREDIT SHARE APPLICATION MONEYASSESSEE HAS DULY ESTABLISHED THE IDENTITY AND SOURCE OF CREDITS ADDITIONS NOT SUSTAINABLE. (VI) CIT V/S ARUNANDA TEXTILES (P) LTD. , 333 ITR 116 (KARNATAKA) (PB PG 351 TO 353/CASE LAWS) SHARE APPLICATION MONEYASSESSEE ABLE TO IDENTIFY THE SHAREHOLDERSIT IS NOT FOR THE ASSESSEE-COMPANY TO ESTABLISH BUT IT IS FOR THE DEPARTMENT TO ENQUIRE W ITH THE INVESTORS ABOUT THE CAPACITY TO INVEST THE AMOUNT I N THE SHARES. (VII) BHAV SHAKTI STEEL MINES (P) LTD. VS. CIT (200 9) 18 DTR (DEL) 194 INCOMECASH CREDITGENUINENESS CIT(A) NOT ONLY FOUND THAT THE IDENTITY OF EACH OF THE SHAREHOLDERS STOOD ESTABLISHED, BUT ALSO EXAMINED T HE FACT THAT EACH OF THEM WERE INCOME-TAX ASSESSEES AN D HAD DISCLOSED THE SHARE APPLICATION MONEY IN THEIR ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 40 ACCOUNTS WHICH WERE DULY REFLECTED IN THEIR IT RETU RNS AS WELL AS IN THEIR BALANCE SHEETSTRIBUNAL WAS NOT THEREFORE JUSTIFIED IN COMING TO THE CONCLUSION THA T THE CIT(A) HAD NOT CONSIDERED THE MATTER IN THE RIGHT PERSPECTIVEORDER PASSED BY TRIBUNAL REMANDING THE MATTER FOR EXAMINING THE SHARE APPLICANTS SET ASIDE AND THAT OF CIT(A) RESTORED (D) OTHER BENCHES OF ITAT (I) ITO V M/S. RELIANCE MARKETING PVT. LTD. 2015- TIOL-319-TAT-DEL (PB PG 367 TO 375/CASE LAWS) IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY FURNI SHING THEIR PAN NUMBER AND COPY OF ACKNOWLEDGMENT OF INCOME-TAX RETURN. THE AMOUNT ON ACCOUNT OF SHARE APPLICATION WAS RECEIVED THROUGH BANKING CHANNEL, COPIES OF THE CONFIRMATION ALONGWITH AFFIDAVIT OF T HE PARTIES WERE FURNISHED. THE ASSESSEE ALSO FURNISHED THE COPY OF SHARE APPLICATION FORMS, COPY OF FORM NO.2 FILED WITH REGISTER OF COMPANIES (ROC), SHOWING ALLOTMENT OF SHARES TO THE APPLICANTS. THEREFORE, T HE ASSESSEE DISCHARGED THE ONUS CAST UPON IT, (II) INCOME TAX OFFICER VS. MS. SUPERLINE CONSTRUCTION P. LTD. ITAT, BOMBAY TRIBUNAL (A) ITA NO. 3644 TO 3648, 3650, 3651MUM/2014 30TH NOVEMBER, 2015 (2015) 45 CCH 0281 MUM TRIB. (PB PG 376 TO 392/CASE LAWS) ADDITIONADDITION ON ACCOUNT OF BOGUS SHARE APPLICATION MONEYASSESSEE WAS IN BUSINESS OF BUILDER AND DEVELOPERASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147RE-ASSESSMENT PROCEEDINGS WERE INITIATED ON BASIS OF INFORMATION RECEIVED FROM DIRECTORATE OF INCOME-TAX (INVESTIGATION) WITHOUT RECORDING AOS OWN SATISFACTION AND INFORMATION WAS ACCEPTED IN MECHANICAL MANNERAFTER REOPENING OF ASSESSMENT U/S 147, AO MADE ADDITION OF RS.40 LAKHS RECEIVED BY ASSESSEE FROM VARIOUS CORPORATE ENTITIE S ADDITION WAS MADE BY AO ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY UNDER PROVISIONS OF S 68CIT(A) DELETED ADDITION MADE BY AOHELD, IN CASE OF CIT VS . M/S. LOVELY EXPORTS (PVT) LTD, REPORTED IN [2008] 2 16 CTR 195 (SC), IT WAS HELD THAT IF SHARE APPLICATION ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 41 MONEY WAS RECEIVED BY ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAME WERE GIVEN TO AO THEN DEPARTMENT WAS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT I T COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF ASSE SSEE COMPANYIT WAS SUBMITTED BY ASSESSEE THAT AO HAD FAILED TO APPRECIATE STATEMENTS OF ANY PERSON RECOR DED U/S 143(3) R.W.S. 147THAT ASSESSEE-COMPANY HAD FUL LY DISCHARGED BURDEN OF PROOF, ONUS OF PROOF AND EXPLA INED SOURCE OF SHARE CAPITAL AND ADVANCES RECEIVED BY ESTABLISHED IDENTITY, CREDITWORTHINESS AND GENUINEN ESS OF TRANSACTION BY BANKING INSTRUMENTS WITH DOCUMENT ARY EVIDENCESASSESSEE COMPANY SUBSTANTIATED DETAILS WITH DOCUMENTARY EVIDENCES AS EXTRACTED FROM WEBSIT E OF MINISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF IND IA BEFORE AOTHESE FACTS HAD NOT BEEN REBUTTED ON BEHALF OF REVENUEITAT WAS NOT INCLINED TO INTERFER E WITH FINDINGS OF CIT(A) WHO THUS RIGHTLY DELETED EN TIRE IMPUGNED ADDITIONS OF RS.40 LAKHS MADE BY AO U/S 68 ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVED B Y ASSESSEE-COMPANY HELD: IT WAS POINTED OUT IN THE CASE OF CIT VS. M/S. LOV ELY EXPORTS (PVT) LTD, REPORTED IN [2008] 216 CTR 195 ( SC) THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAME ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSME NTS IN ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. (PARA 2.3) IN THIS BACKGROUND, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSING OFFICER FAILED TO APPRE CIATE THAT THERE WAS NO DOCUMENTARY EVIDENCE AGAINST THE ASSESSEE-COMPANY TO SUPPORT SUCH IMPUGNED ADDITIONS . IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THAT THE STATEMENTS OF ANY PERSON RECORDED U/S 143(3) R.W.S. 147. THE ASSESSEE-COMPANY HAD FULLY DISCHARGED THE BURDE N OF PROOF, ONUS OF PROOF AND EXPLAINED THE SOURCE OF SHARE CAPITAL AND ADVANCES RECEIVED BY ESTABLISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 42 TRANSACTION BY BANKING INSTRUMENTS WITH DOCUMENTARY EVIDENCES. THE FURTHER STAND OF THE ASSESSEE HAD BE EN THAT THE ASSESSEE-COMPANY SUBSTANTIATED THE DETAILS WITH THE DOCUMENTARY EVIDENCES AS EXTRACTED FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS, GOVERNMEN T OF INDIA BEFORE THE ASSESSING OFFICER. THESE FACTS HAD NOT BEEN REBUTTED ON BEHALF OF THE REVENUE. (PARA 2.4) IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS WELL AS CONSIDERING THE DECISIONS A S DISCUSSED ABOVE ON THE SIMILAR ISSUE, ITAT WAS NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE CIT( A) WHO HAD RIGHTLY DELETED THE ENTIRE IMPUGNED ADDITIO NS OF RS.40 LAKHS MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVED BY THE ASSESSEE-COMPANY. (PARA 2.5) CONCLUSION: WHEN ASSESSEE-COMPANY HAD SUBSTANTIATED DETAILS WITH DOCUMENTARY EVIDENCES AS EXTRACTED FRO M WEBSITE OF MINISTRY OF CORPORATE AFFAIRS, GOVERNMEN T OF INDIA BEFORE AO, THEN ADDITIONS MADE BY AO U/S 6 8 ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVED B Y ASSESSEE-COMPANY WAS RIGHTLY DELETED. (III) MEERA ENGINEERING & COMMERCIAL CO. (P) LTD. V S. ASSTT. CIT (1997) 58 TTJ (JAB) 527 (PB PG 393 TO 399/CASE LAWS) INCOMECASH CREDITSGENUINENESS OF SHARE CAPITAL OF COMPANYALL THE 51 SHAREHOLDERS FILED THEIR AFFIDAVITS AND CONFIRMATORY LETTERS AND 24 OF THEM FILED THEIR REPLIES ALSO TO NOTICE UNDER S. 13 3(6) NAMES OF PARTIES PURCHASING THE SHARES WITH AMOUNT SUBSCRIBED WERE FURNISHED BEFORE AOALL DOCUMENTS CLEARLY SHOW THAT SHAREHOLDERS DO EXIST ASSESSEE- COMPANY HAD DISCHARGED ITS ONUS OF EXPLAINING THE C ASH CREDITS AS REQUIRED UNDER LAWIF THE COMPANY IS ABL E TO ESTABLISH THAT SHAREHOLDERS EXISTED AND THEY HAVE INVESTED MONEY FOR PURCHASE OF SHARES BURDEN OF COMPANY TO PROVE THE CREDIT IS DISCHARGEDIDENTITY OF SHAREHOLDERS NOT IN DISPUTEASSESSEE IS NOT REQUIRE D TO PROVE CREDIT-WORTHINESS OF SHAREHOLDERSADDITION DELETED ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 43 (IV) ALLEN BRADLEY INDIA LTD. VS. DY. CIT (2002) 74 TTJ (DEL) 604 : (2002) 80 ITD 43 (DEL); INCOMECASH CREDITSUBSCRIPTION TO SHARE CAPITAL AND LOANIN CA SE OF LIMITED COMPANIES JURISDICTION OF AO WOULD BE LIMITED ONLY TO SEE WHETHER IDENTITY OF SHAREHOLDER S IS ESTABLISHED AND WHETHER THEY EXIST OR NOTONCE IDENTITY IS ESTABLISHED, THEN, POSSIBLY NO FURTHER ENQUIRIES NEED TO BE MADESINCE THE SHAREHOLDERS OF ASSESSEE-COMPANY WERE IN EXISTENCE, THEY WERE ASSES SED TO TAX, COMPLETE DETAILS WERE AVAILABLE, SHARE CAPI TAL MONEY AS WELL AS LOAN WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND THEY WERE CLEARED THROUGH PROPER BANKING CHANNELS, AO WAS NOT JUSTIFIED IN DISBELIEV ING THE CAPITAL INVESTED BY THE SHAREHOLDER COMPANIES SIMILARLY, AO WAS NOT JUSTIFIED IN DISBELIEVING THE LOAN TAKEN FROM DTL AS THE CHEQUES WERE CLEARED THROUGH BANK CHANNELS AND CONFIRMATION AND SUPPORTING EVIDENCE WAS FILEDCIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS. (V) 2017 (3) TMI 1047-ITAT AHMEDABAD INCOME TAX OFFICER, WARD 8 (1), AHMEDABAD VERSUS SEVEN STAR AVIATION SERVICES PVT. LTD (PB PG 400 TO 404/CASE LAWS) ADDITION U/S 68 - SHARE APPLICATION MONEY AND UNSECURED LOAN RECEIVED. HELD THAT: - WHE N THE DEPOSITORS ARE REGULAR TAX PAYERS AND THE ADVAN CES MADE BY SUCH DEPOSITORS AS ALSO SHARE APPLICATION MONIES PAID BY SUCH SHAREHOLDERS ARE DULY ACCEPTED IN THEIR PERSONAL ASSESSMENTS, THERE CANNOT BE ANY OCC ASION TO HOLD THAT THESE AMOUNTS ARE UNEXPLAINED IN THE H ANDS OF THE COMPANY. THE CREDIT WORTHINESS OR IDENTITY CANNOT BE AN ISSUE IN SUCH A SITUATION. (VI) 2016 (10) TMI 920 - ITAT HYDERABAD M/S. HARIOM CONCAST AND STEEL PVT. LTD. VERSUS INCOME TAX OFFICER, WARD-2 (2) , HYDERABD (PB PG 405 TO 411/CASE LAWS) ADDITION FOR SHARES ISSUED ON PREMIUM. HELD THAT: - SHARE PREMIUM CANNOT BE BROUG HT TO TAX INVOKING THE PROVISIONS OF SECTION 68, UNLES S THERE IS A LINK WITH EITHER QUID PRO QUO TRANSACTIO N OR INVESTING BY ASSESSEE-COMPANY IN THEIR ACCOUNTS SO AS TO RECEIVE IT BACK AS SHARE CAPITAL. NO SUCH EVIDENCE WAS BROUGHT ON RECORD. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 44 (E) SUPREME COURT I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 INCOMECASH CREDITSHARE APPLICATION MONEYIF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMEN T IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSES SMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED A S UNDISCLOSED INCOME OF ASSESSEE COMPANY. II) CIT VS. STELLER INVESTMENT LTD. (200) 251 ITR 263 (SC) EVEN IF THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL OF ASSESSEE-COMPANY WERE NOT GENUINE, THE AMOUNT COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE-COMPANY. (III) CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 79 (SC) F) RATIO LAID DOWN IN FOLLOWING CASES NOT APPLICAB LE TO THE FACTS OF THE CASE OF ASSESSEE:- I) NOVA PROMOTERS & FINLEASE PVT. LTD (2012) 342 IT R 169 (DELHI HIGH COURT): - SUMMONS SENT TO THE COMPANIES RECEIV ED BACK UNSERVED AND OTHER SUMMONS REMAINED UNCOMPLIED WITH WHEREAS, IN THE CASE OF THIS ASSESSEE COMPANY, NOTI CE U/S 133(6) WAS SENT TO INVESTOR COMPANIES, ALL OF WHICH WERE SERVE D AND SOME OF THEM WERE COMPLIED WITH. II) CIT V/S N. R. PORTFOLIO PVT. LTD 206 (2014) DLT (DB) (DEL)/ 264 CTR 0258 (DEL) ASSESSED U/S 144 OF ITAX ACT. IN THIS CASE THE AO ISSUED SEVERAL NOTICES AND SHOW CAUSE NOTICE WHICH WAS NOT SERVED/COMPLIED AND ASSESSMENT WAS FRAMED U/S 144 O F INCOME TAX ACT. IN OUR CASE ALL THE COMPLIANCES WERE MADE AND EVIDENCES SUBMITTED. III) N TARIKS PROPERTIES PVT. LTD 227 TAXMANN.COM 3 73 (WITH REFERENCE TO DECISION OF DELHI HIGH COURT IN 264 CT R 472) AO NOTICED THAT EXTRACTS OF BANK ACCOUNT HAD BEEN FABR ICATED AND AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR THE PURPOSE OF MAKING PAY ORDER OR DEMAND DRAFT THERE WAS DEPOS IT OF CASH. IN ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 45 OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHA REHOLDER COMPANY. IV) CIT V/S NAVODAYA CASTLE PVT. LTD 367 ITR 306 (D ELHI HIGH COURT) AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQU ES FOR THE PURPOSE OF MAKING PAY ORDER OR DEMAND DRAFT THE RE WAS DEPOSIT OF CASH. IN OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHAREHOLDER COMPANY. V) CIT V/S MAF ACADEMY PVT. LTD 206 (2014) DLT 277 (DB)(DEL)/ 361 ITR 0285 (DEL) AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR THE PURPOSE OF MAKING PAY ORDER OR DEMA ND DRAFT THERE WAS DEPOSIT OF CASH. IN OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHAREHOLDER COMPANY. FURTHER, THE SUMMONS U/S SE CTION 131 OF I.TAX ACT WERE SENT TO THE SHAREHOLDERS WHICH WERE RECEIVED BACK UN- SERVED. IN VIEW OF THE ABOVE SUBMISSION, THE HUMBLE ASSESS EE PRAYS YOUR HONOR KINDLY TO DISMISS THE APPEAL FILED BY THE DEPARTMEN T. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO MENTION THA T THE SIMILAR ISSUE HAS BEEN DEALT WITH AND DECIDED BY THIS BENCH OF ITAT V IDE ITS ORDER DATED 30-10-2017 IN THE CASE OF ACIT, CENTRAL CIRCLE-2, JAIPUR VS MOTISONS BUILDTECH PVT. LTD IN ITA NO. 481/JP/2017 (REVENUE S APPEAL) FOR THE ASSESSMENT YEAR 2009-10 BY OBSERVING AS UNDER:- 4.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE THAT THE DEPART MENT CARRIED OUT SEARCH OVER MOTISONS GROUP ON 31-10-2012. THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDING OBSERVED THAT IN THE COURSE OF SEARCH AND SEIZURE A CTION U/S 132 OF THE ACT, CASH, JEWELLERY, VALUABLES, STOCK-IN-TRADE, DOCUMENTS, BO OKS OF ACCOUNT AND / OR LOOSE PAPERS WERE FOUND AND / OR SEIZED FROM THE PREMISES OF THE MEMBERS OF THE MOTISONS GROUP OF WHICH ONE SUCH MEMBER HAPPENS TO BE THE AS SESSEE. THE AO ALSO NOTED THAT THE GROUP IS INVOLVED IN INTRODUCING LARGE SHARE CA PITAL ON HIGH PREMIUM IN ACCOUNTS ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 46 OF VARIOUS GROUP COMPANIES THROUGH THE KOLKATA BASE D COMPANIES. THE AO HAS MENTIONED THESE DETAILS AT PAGE 3 AND 4 OF HIS ASSE SSMENT ORDER. THE AO FURTHER NOTED THAT THE RECEIPT OF SHARE CAPITAL IS RS. 3,03,000/- AND THE PREMIUM IS TO THE TUNE OF RS. 2,99,97,000/- DURING THE YEAR UNDER CONSIDERATI ON WHICH IS NOT ONLY ABNORMAL BUT ALSO APPEARED TO BE PART OF A WELL PLANNED EXERCISE OF TAX EVASION. ACCORDINGLY, THE AO ISSUED THE SHOW CAUSE NOTICE DATED 6-02-2015 TO THE ASSESSEE COMPANY REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE AMOUNT OF RS. 3,03,00,000/- SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE U/S 56(1) OF THE ACT. THE ASSESSEE SUBMITTED THE REPLY BEFORE THE AO WHO REJECTED THE ASSESSEE'S CON TENTION AND MADE THE ADDITION OF RS. 3,03,00,000/- U/S 56(1) OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. IN FIRST APPEAL, THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 3,03,00,000/- MADE BY THE AO. THE RELEVANT PORTION OF LD. CIT(A)S ORDER FROM PARA 2.1.4.2 TO 2.1.47 IS REPRODUCED HEREUNDER:- 2.1.4.2 FINAL OBSERVATION : 2.1.4.2.1 I HAVE CONSIDERED ASSESSEES SUBMISSION AND ALSO T AKEN A NOTE OF JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT AS WELL AS THE FACTUAL MATRIX OF THE CASE. THE BRIE F FACTS OF THE CASE ARE THAT MOTISONS GROUP HAS S EVERAL COMPANIES. THESE COMPANIES ISSUED SHARE CAPITAL ON PREMIUM TO VARIOU S OTHER COMPANIES. THE AO HELD THAT THE RECEIPTS ON ACCOUNT OF SHARE CAPITAL ON PREMIUM IS TAXABLE INCOME U/S 56(1) OF I. TAX AC T, ACCORDINGLY HE MADE THE ADDITIONS IN THE HANDS O F VARIOUS COMPANIES AS UNDER:- S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. 1 MOTISONS GLOBAL PVT. LTD 2009-10 BHOLENATH TRADER S PVT. LTD 25,00,000 DEBRAJ VINCOM PVT. LTD 15,00,000 KINGFISHER VINIMAY PVT. LTD 20,00,000 NAWAB VYAPAR PVT. LTD 50,00,000 REALITY MERCHANT PVT. LTD 47,00,000 SANMUKH VINCOM PVT. LTD 15,00,000 SHREYA TIE UP PVT. LTD 53,00,000 VICTOR TRADCOM PVT. LTD 50,00,000 TOTAL 2,75,00,000 2 MOTISONS GLOBAL PVT. LTD 2011-12 ADARSH DEAL TRAD E PVT. LTD 5,00,000 ADHUNIK DEALMARK PVT. LTD 42,00,000 AXION COMMODEAL PVT. LTD 36,00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 47 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. BHOLENATH TRADERS PVT. LTD 1,03,00,000 BHUSAN DISTRIBUTORS PVT. LTD 25,00,000 CONTRA VANIJYA PVT. LTD 78,00,000 DEBDARU VINIMAY PVT. LTD 21,00,000 DEEP COMMOSALES PVT. LTD 50,00,000 DHANLABH TRADELINKS PVT. LTD 27,00,000 PUSPA DEALERS PVT. LTD 60,00,000 PUSPA TRADING PVT. LTD 12,50,000 RUPA TRACOM PVT. LTD 60,00,000 SPANGLE DEALTRADE PVT. LTD 70,00,000 SURYA DEAL TRADE PVT. LTD 14,00,000 SWABHIMAN DEALERS PVT. LTD 68,00,000 VIKASH TRADECOM PVT. LTD 25,00,000 TOTAL 6,96,50,000 3 MOTISONS GLOBAL PVT. LTD 2012-13 ALLIANCE TRADECO M PVT. LTD 3,05,00,000 EVERSHINE SUPPLIERS PVT. LTD 1,60,00,000 ALLIANCE TRADECOM PVT. LTD 3,95,58,900 EVERSHINE SUPPLIERS PVT. LTD 4,86,99,600 MAYUKH VINIMAY PVT. LTD 6,93,49,800 MAYUKH VINTRADE PVT. LTD 13,99,800 REGENT BARTER PVT. LTD 4,04,71,800 REGENT DEALERS PVT. LTD 7,59,99,900 ROSE SUPPLIERS PVT. LTD 9,87,49,800 TOTAL 42,07,29,600 4 MOTISONS GLOBAL PVT. LTD 13-14 ALLIANCE TRADECOM PVT. LTD 50,50,000 EVERSHINE SUPPLIERS PVT. LTD 1,45,00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 48 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. MAYUKH VINIMAY PVT. LTD 2,24,50,000 REGENT DEALERS PVT. LTD 16,00,000 ROSE SUPPLIERS PVT. LTD 5,00,000 TOTAL 4,41,00,000 5 MOTISONS ENTERTAINMENT (I) PVT. LTD 2009-10 BHOLE NATH TRADERS PVT. LTD 35,00,000 DEBDARU VINIMAY PVT. LTD 50,00,000 INDIGO VINIMAY PVT. LTD 50,00,000 KINGFISHER VINIMAY PVT. LTD 20,00,000 REALITY MERCHANT PVT. LTD 25,00,000 SHREYA TIE UP PVT. LTD 75,00,000 SUMERU VINCOM PVT. LTD 35,00,000 VICTOR TRADCOM PVT. LTD 50,00,000 TOTAL 3,40,00,000 6 MOTISONS ENTERTAINMENT (I) PVT. LTD 2011-12 ACCES S TRADELINK PVT. LTD 20,00,000 BHOLENATH TRADERS PVT. LTD 40,00,000 CHAKRA DEAL TRADE PVT. LTD 15,00,000 DEBDARU VINIMAY PVT. LTD 15,00,000 INTERLINK SAVING AND FINANCE P LTD 25,00,000 PUJA TIE UP PVT. LTD 15,00,000 SANMUKH VINCOM PVT. LTD 45,00,000 TARA VINIMAY PVT. LTD 20,00,000 TOTAL 1,95,00,000 7 MOTISONS ENTERTAINMENT (I) PVT. LTD 2012-13 ALLIA NCE TRADECOM PVT. LTD 1,59,00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 49 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. EVERSHINE SUPPLIERS PVT. LTD 93,00,000 EVERSHINE SUPPLIERS PVT. LTD 17,00,000 MAYUKH VINIMAY PVT. LTD 1,55,00,000 REGENT BARTER PVT. LTD 1,79,00,000 REGENT DEALERS PVT. LTD 1,40,00,000 ROSE SUPPLIERS PVT. LTD 35,00,000 TOTAL 7,78,00,000 8 MOTISONS BUILDTECH PVT. LTD 2009-10 ARCADE DEALC OM PVT. LTD 30,00,000 DEBDARU VINIMAY PVT. LTD 25,00,000 DEBDOOT VINIMAY PVT. LTD 35,00,000 MATRABHUMI DEALERS PVT. LTD 44,00,000 PUJA TIE-UP PVT. LTD 50,00,000 PUSHPA DEALERS PVT. LTD 25,00,000 PUSHPA TRADING PVT. LTD 40,00,000 SHREYA TIE UP PVT. LTD 10,00,000 TARANH SUPPLIERS PVT. LTD 34,00,000 VANDANA DEALERS PVT. LTD 10,00,000 TOTAL 3,03,00,000 9 MOTISONS BUILDTECH PVT. LTD 2012-13 ALLIANCE TRA DECOM PVT. LTD 1,80,00,000 EVERSHINE SUPPLIERS PVT. LTD 28,00,000 REGENT BARTER PVT. LTD 1,60,27,500 TOTAL 3,68,27,500 10 GODAWARI ESTATES PVT. LTD 2010-11 DEBDARU VINIMA Y PVT. LTD 25,00,000 JAI PITRESHWAR VYAPAAR PVT. LTD 15,00,000 MAINAK VINCOM PVT. LTD 50,00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 50 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. PUSPA DEALERS PVT. LTD 50,00,000 SNOWFALL COMMERCIAL PVT. LTD 25,00,000 VIGNESH INFO SERVICES PVT. LTD 35,00,000 TOTAL 2,00,00,000 11 GODAWARI ESTATES PVT. LTD 2012-13 BAKLIWAL VYAPA AR PVT. LTD. 1,23,00,000 JASMINE COMMODITIES PVT. LTD 65,00,000 BUNIYAD VANIJYA PVT LTD 50,00,000 PUJA BARTER PVT. LTD. 60,00,000 DHANLABH TRADELINKS PVT. LTD 25,00,000 DEVANG COMMERCIAL PVT. LTD 50,00,000 EXTENT VINIMAY PVT. LTD 25,00,000 NEHA DEAL TRADE PVT LTD 20,00,000 SPRING SALESPVT LTD 67,00,000 MANALI TRADECOM PVT LTD. 50,00,000 TARGET VINCOM PVT LTD 50,00,000 BERNSTAIN MARKETING PVT LTD 15,00,000 KESARINANDAN VANIJYA PVT LTD 5,00,000 DEEP COMMOSALE PVT LTD 50,00,000 APOLLO VINTRADE PVT LTD 25,00,000 INNOVA COMMERCIAL PVT LTD 25,00,000 PRAYASH DEALTRADE PVT LTD 40,00,000 JUSTIFY VANIJYA PVT LTD 50,00,000 SOLTY FINANCIAL CONSULTANTS P LTD 50,00,000 ACHIEVER COMMOTRADE PVT LTD 50,00,000 SISHMAHAL COMMOTRADE PVT. LTD 20,00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 51 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. ADVANTAGE DEALTRADE PVT. LTD 25,00,000 ORIGIN VINIMAYPVT LTD 40,00,000 RUKMANI INTERNATIONAL PVT LTD 50,00,000 TOTAL 10,30,00,000 12 BHOLENATH REAL ESTATES PVT. LTD 2009-10 LAVENDER DEALCOM PVT. LTD. 30,00,000 ARCADE DEALCOM PVT. LTD 20,00,000 TARANG SUPPLIERS PVT. LTD 15,00,000 TRANSIT VINIMAY PVT. LTD 62,00,000 VANDANA DEALERS PVT. LTD 98,00,000 VARIETY DEALCOM PVT. LTD 25,00,000 VANILA VINIMAY PVT. LTD 15,00,000 OUTLOOK TRACOM PVT. LTD 25,00,000 TOTAL 2,90,00,000 13 RAINBOW BUILDCON PVT LTD 2009-10 ANURAJ SECURITI ES PVT LTD 20,00,000 MATRIBHUMI DEALERS PVT LTD 25,00,000 NAROTTAMKA TRADE & VYAPAAR PVT LTD 15,00,000 PUJA DEALCOM PVT LTD 40,00,000 TARANG SUPPLIERS PVT LTD 30,00,000 VANDANA DEALERS PVT LTD 30,00,000 PUJA TIE-UP PVT LTD 40,00,000 TOTAL 2,00,00,000 14 SHIVANSH BUILDCON PVT. LTD 2012-13 EVERSHINE SUP PLIERS PVT. LTD 90,00,000 TOTAL 90,00,000 TOTAL ADDITIONS 94,14,07,100 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 52 DURING THE APPELLATE PROCEEDING, SH VIJAY KR GOYAL HAS REQUESTED TO KEEP THE APPELLATE MATTER PENDING FOR TIME BEING IN CASE OF M/S MAYUKH VINIMAY PVT LTD AS THE APPEAL AGAINST THE ORDER OF 263 IS PENDING FOR ADJU DICATION BEFORE THE HONBLE ITAT KOLKATA WHERE MATTER PERTAINING TO JURISDICTION OF CIT WHO PASSED THE ORDER OF 263, H AS BEEN CHALLENGED. IT IS FURTHER SUBMITTED THAT ASSESSEE H AS ALSO MADE REQUEST TO ITAT KOLKATA TO TRANSFER TH E SAID CASE TO ITAT JAIPUR WHICH IS STILL PENDING FOR CONSIDERATION. IN RESPECT OF ADDITION MADE ON A/C OF BOGUS SHARE CAP ITAL, AO HAS ALSO MADE SIMILAR ADDITION OF RS. 10,54,95,000/= IN THE HANDS OF M/S MAYUKH VINIMAY P LTD, TANTAMOUNTS TO D OUBLE ADDITION . AFTER DULY TAKING A NOTE OF THE SAME, APPELLATE ORD ER IN CASE OF M/S MAYUKH VINIMAY PVT LTD IS BEING K EPT IN ABEYANCE TILL THE DISPOSAL OF SAID APPEAL BY HONBLE ITAT. W ITH REGARD TO DECISIONS RELIED UPON BY THE UNDERSIG NED, SH VIJAY GOYAL WERE DIFFERENTIATED ON FACTS AS UNDER: (I) NOVA PROMOTERS & FINLEASE PVT. LTD (2012) 342 I TR 169 (DELHI HIGH COURT): SUMMONS SENT TO THE COMPANIES RECEIVED BACK UNSERVED AND OTHER SUMMONS REMAINED UNCOMPLIED WITH WHEREAS, IN THE CASE OF ASSESSEE COMPANIES, NOTICE U/S 133(6) WAS SENT TO I NVESTOR COMPANIES, ALL OF WHICH WERE SERVED AND MOS T OF THEM WERE COMPLIED WITH. (II) CIT V/S N. R. PORTFOLIO PVT. LTD 206 (2014 ) DLT (DB) (DEL)/ 264 CTR 0258 (DEL) : ASSESSED U/S 144 OF ITAX ACT. IN THIS CASE THE AO ISSUED SEVERAL NOTICES AND SHOW CAUSE NOTICE WHICH WAS NOT SERVED/COMPLIED AN D ASSESSMENT WAS FRAMED U/S 144 OF INCOME TAX ACT. IN OUR CASE ALL THE COMPLIANCES WERE MADE AND EVIDENC ES SUBMITTED. (III) N TARIKS PROPERTIES PVT. LTD 227 TAXMANN.COM 373 (WITH REFERENCE TO DECISION OF DELHI HIGH COURT IN 264 CTR 472) : AO NOTICED THAT EXTRACTS OF BANK ACCOUNT HAD BEEN F ABRICATED AND AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR THE PURPOSE OF MAKIN G PAY ORDER OR DEMAND DRAFT THERE WAS DEPOSIT OF CA SH. IN OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHA REHOLDER COMPANY . (IV) CIT V/S NAVODAYA CASTLE PVT. LTD 367 ITR 306 ( DELHI HIGH COURT): AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR THE PURPOSE OF MAKING PAY O RDER OR DEMAND DRAFT THERE WAS DEPOSIT OF CASH. I N OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHAREHO LDER COMPANY. (V) CIT V/S MAF ACADEMY PVT. LTD 206 (2014) DLT 277 (DB)(DEL)/ 361 ITR 0285 (DEL) : AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR TH E PURPOSE OF MAKING PAY ORDER OR DEMAND DRAFT THERE WAS DEPOSIT OF CASH. IN OUR CASE NO CASH DEPOSIT IN THE BANK AC COUNT OF SHAREHOLDER COMPANY. FURTHER, THE SUMMONS U/S SECTION 131 OF I.TAX ACT W ERE SENT TO THE SHAREHOLDERS WHICH WERE RECEIVED BACK UNSERVED. (VI) RAJMANDIR ESTATES PVT. LTD 70 TAXMANN.COM 124: RELATES TO ORDER PASSED BY CIT U/S 263 OF NCOME TAX ACT, 1961. (VII) CIT V/S SUMATI DAYAL (1995) 80 TAXMAN 89 (SC) & CIT V/S DURGA PRASAD MORE [1971] 82 ITR 540 (SC) : NO APPLICATION AS AMPLE EVIDENCE HAVE BEEN FILED BY ASSESSEE. FURTHER NO SOURCE OF CONCEALED INCOME WAS FOUND. FURTHER NO D OCUMENT WAS FOUND AS THE RESULT OF INTENSIVE SEARCH OPERATIONS TO SHOW OUTFLOW OF UNACCOUNTED MONEY AGAINST THE RECEI PTS OF SHARE APPLICATION MONEY THROUGH THE BANKING CHANNELS. THIS SHOW THE PREPONDERANCE OF PROBABILITIES IS IN FAVOUR OF ASSE SSEE. (VIII) CIT V/S MUSSADILAL RAM BHAROSE [1987] 165 IT R 14 THIS JUDGMENT RELATES TO PENALTY U/S 271(1)(C). IN SUPPORT OF ITS CONTENTION, ASSESSEE THROUGH AR H AS RELIED UPON FOLLOWING JUDGMENTS FACT OF WHICH AR E IDENTICAL TO THE FACT OF THE CASE OF ASSESSEE: JURISDICTIONAL RAJASTHAN HIGH COURT ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 53 (I) CIT-1, JAIPUR V/S M/S. ARL INFRATECH LTD, WHEREIN HONBLE RAJASTHAN HIGH COURT HAS RECENTLY CONFIRMED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN DB ITA NO 24/2014 VIDE ORDER DATED 28/09/2016. (II) COMMISSIONER OF INCOME-TAX, JAIPUR II VERSUS MORANI AUTOMOTIVES (P .) LTD. NO.- D.B. IT APPEAL NO. 619 OF 2011 DATED.- OCTOBER 23, 2013 (RAJASTHAN HIGH COUR T). (III) BARKHA SYNTHETICS LTD. VS. ASSTT. CIT (005) 197 CTR (RAJ) 432. (IV) CIT VS. FIRST POINT FINANCE LTD. (2006) 206 CT R (RAJ) 626 : (2006) 286 ITR 477 (RAJ HC). (V) COMMISSIONER OF INCOME TAX VS. BHAVAL SYNTHETICS ( RAJ HC) (2013) 84 DTR 0449 (RAJ). (VI) COMMISSIONER OF INCOME TAX VS. AKJ GRANITES (P ) LTD. (RAJ HC) (2008) 301 ITR 0298 . I) COMMISSIONER OF INCOME-TAX, CENTRAL, JAIPUR VERSUS SUPERTECH DIAMOND TOOLS (PVT) LTD. (RAJ HC) D. B. IT APPEAL NO. 74 OF 2012 DATED: - 12 DECEMBER 2013. VIII) COMMISSIONER OF INCOME-TAX - I, JAIPUR VERSUS AL LALPURIA CONSTRUCTION (P.) LTD (RAJ HC) D.B. IT APPEAL NOS. 256 OF 2010 AND 26 & 39 OF 2011 DATE D: - 25 FEBRUARY 2013. (IX) COMMISSIONER OF INCOME-TAX, AJMER VERSUS HS. B UILDERS (P.) LTD. D.B. INCOME TAX (RAJ HC) APPEAL NO. 48 OF 2006 DATED: - 03 MARCH 2012. (X) CIT VS JAI KUMAR BAKLIWAL (2014) 101 DTR (RAJ) 377 : (2014) 267 CTR (RAJ) 396. NO LIABILITY TO PROVE SOURCE OF SOURCE (XI) ARAVALI TRADING CO VS INCOME TAX OFFICER (2008 ) 8 DTR (RAJ) 199. BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ES TABLISHED AND HE CONFIRMS THE LOANS. (XII) CIT VS HEERA LAL CHAGAN LAL TANK (2002) 157 I TR 281 (RAJ) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ES TABLISHED AND HE CONFIRMS THE LOANS. SINCE, THE COMMON ISSUES ARE INVOLVED IN ALL THESE 15 COMPANIES THEREFORE, FOR CONVENIENCE, I AM DEALI NG THE ISSUE IN COMPOSITE MANNER FIRST ON THE BASIS OF FAC TS AND THEN ON LEGALITY ALSO . THE FOLLOWINGS FACTS ISSUES EMERGE FROM THE FINDINGS OF AO AND SUBMISSIONS SUBMITTED BY LD AR. A) ISSUE OF ACCORDING OPPORTUNITY OF CROSS EXAMINATION OF SH SANTOSH CHOUBE, SH AJIT SHARMA & SH RAJESH K UMAR SINGH TO THE ASSESSEE. B) CHARGING OF PREMIUM ON SHARES AND TAXABILITY BY APP LYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT. C) ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 O F INCOME TAX ACT 2.1.4.2 (A) ACCORDING OPPORTUNITY TO CROSS EX AMINE SH SANTOSH CHOUBE, SH AJIT SHARMA & SH RAJESH KUMAR SINGH BUT BEFORE ASKING FOR AN OPPORTUNITY FOR CROSS EXAM INING THEM, ASSESSEES HAS TO DISPROVE THE CORRECTNE SS OF THEIR ASSERTIONS AS EMANATING FROM THE STATEMENTS RECORDED OF SH SANTOS H CHOUBE, SH AJIT SHARMA AND SH RAJESH KUMAR SINGH. CORROBORATIVE EVIDENCES IN FORM OF BANK STATEMENTS OBTAINED IN TH IS REGARD AND THEIR ANALYSIS FURTHER PROVES THE THE ORY OF CASH DEPOSIT PRIOR TO TRANSFER OF SHARE APPLICATION MONEY. VIDE SHOW CAUS E LETTER ISSUED , ASSESSEE HAS ALREADY BEEN CONFRON TED WITH THE ORAL EVIDENCES GATHERED DURING THE SURVEY OPERATION FROM AFOREMENT IONED 3 PERSONS BY INVESTIGATION DIRECTORATE KOLKAT A. FURTHER, THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AS DECID ED IN NATH INTERNATIONAL SALES VS. UOI , AIR 1992 (DEL) 295) WHEREIN HON'BLE SUPREME COURT HAS ALSO HELD THAT THE RIGHT OF HEARING DOES NOT NECESSARILY INCLUDE RIGHT OF CROSS EXAMINATION. THE RIGHT OF CROSS EXAMINATION MUST DEPEND UPON THE CIR CUMSTANCES OF EACH CASE. IN THIS REGARD, ASSESSEE IS TRYING TO USE THIS SHIELD OF ABSENCE OF OPPORTUNITY TO CROSS-EXAMINE OF SH SANTOSH CHOUBE, SH AJIT SHARMA AND SH RAJESH KUMAR SINGH. IT WILL BE ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 54 MISCARRIAGE OF JUSTICE IF ASSESSEE BE GIVEN BENEFIT ON THIS A/C. IT IS ALSO NOT POSSIBLE TO ALLOW OPPO RTUNITY OF CROSS-EXAMINATION OF EACH PARTIES. ASSESSEE IS SUPPOSED TO CONTROVERT AL L FACTS GATHERED FROM THE ORAL EVIDENCES AS WELL AS FROM BANK ENQUIRIES. IN VIEW OF THESE FACTS, ASSESSEES GRIEVANCE IS NOT JUSTIFI ED AS PROPER OPPORTUNITY DURING THE APPELLATE PROCE EDING HAS ALREADY BEEN GIVEN TO CONTROVERT THOSE FINDINGS AS MENTIONED IN THE SH OW-CAUSE LETTER. 2.1.4.2 (B) CHARGING OF PREMIUM ON SHARES & ITS TAX ABILITY . THE AO HAS OBSERVED THAT COMPANIES HAVE RECEIVED AB NORMAL SHARE PREMIUM WHEREAS AS PER THE AUDITED P&L ACCOUNT AND BALANCE SHEET, THESE COMPANIES, DO NOT HAVE ANY BUS INESS/PROFIT AND PHYSICAL ASSETS/ASSETS ARE NOT IN COMMENSURATE TO VALUE OF SHARE WITH THE COMPANIES WHICH APPEARED TO BE A PAR T OF A WELL PLANNED EXERCISE OF TAX EVASION. IN THI S REGARD, LD AR HAS SUBMITTED FOLLOWING REASONS FOR CHARGING OF PREMIUM : NAME OF COMPANY REASON FOR CHARGING SHARE PREMIUM MOTISONS GLOBAL PVT. LTD 1. OWING A BIG AND VALUABLE LAND IN THE HEART OF CI TY AT LAL KOTHI, TONK ROAD, JAIPUR AND CONSTRUCTING ONE OF THE MOST BEAUTIFUL BUILDING OF JAIPUR CITY T HEREON. 2. GOODWILL OF MOTISONS GROUP. MOTISONS ENTERTAINMENT (I) PVT. LTD 1. THE ASSESSE E COMPA NY BOOKED A BIG SPACE (MEANT FOR CINEMA HALL) IN UN DER CONSTRUCTION COMPLEX NAMING WORLD TRADE PARK FURTHER, THE LEASING OUT THIS SPACE TO WORLD FAMOUS CINEMA THEATRE OPERATOR CINEPOLIS WAS UNDER PROCESS. 2. GOODWILL OF MOTISONS GROUP. MOTISONS BUILDTECH PVT. LTD 1. OWING A BIG AND VALU ABLE AGRICULTURE LAND AT VILLAGE DUDU, GIDANI NOLYA (AT AJMER ROAD, NEAR DUDU) FOR WHICH PLANNING OF TOWNSHIP WAS THERE. 2. OWNING VALUABLE LAND IN THE HEART OF CITY AT C-S CHEME AND CONSTRUCTING THE BUILDING THEREON 2. GOODWILL OF MOTISONS GROUP. GODAWARI ESTATES PVT. LTD 1. NBFC COMPANY EXPECTING GOOD REVENUE. 2. GOODWILL OF MOTISONS GROUP. BHOLENATH REAL ESTATES PVT LTD (I) OWWING LARGE CHU NK OF AGRICULTURAL LAND AT VILLAGE GAIJI, TEHSIL MO JAMABAD, DISTT JAIPUR (IN BETWEEN BAGRU TO DUDU AT MAIN NH JAIPUR AJMER ROAD) AND PLANNING DEVELOPMENT OF TOWNSHIP THEREON. (II) MARKET RATE OF LAND WAS VERY HIGH THAN BOOK VA LUE WHICH WAS ON COST. (III) GOODWILL OF MOTISONS GROUP. RAINBOW BUILDCON PVT. LTD 1. OWNING LARGE CHUNK OF AGRICULTURAL LAND AT VILLA GE GIDANI (NEAR DUDU AT MAIN NH JAIPUR AJMER ROAD AND PLANNING DEVELOPMENT OF TOWNSHIP THEREON. 2. THE MARKET RATE OF THIS LAND WAS VERY HIGH THAN BOOK VALUE. 3. GOODWILL OF MOTISONS GROUP. SHIVANSH BUILDCON PVT. LTD 1. OWNING A VALUABLE LAN D IN THE HEART OF CITY AT SEEWAD AREA, BAPU NAGAR, JAIPUR AND PLANNING A COMMERCIAL PROJECT THEREON. 2. GOODWILL OF MOTISONS GROUP. THE LD AR HAS FURTHER SUBMITTED THAT THAT THE SHAR ES WERE ALLOTTED TO THE INVESTOR COMPANIES AT PREMI UM, AFTER MUTUAL DISCUSSION BETWEEN ASSESSEE COMPANIES AND INVESTOR COMPANIES. MOTISONS GROUP ENJOYS VERY HIGH REPUTATION AND GOODWILL IN MARKE T WHICH WAS MAIN REASON FOR HIGH PREMIUM. HONBLE ITA T, MUMBAI BENCH IN THE CASE OF ACIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014-T10L-656-ITAT-MUM HAS HELD THAT ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION W HICH DOES NOT REQUIRE ANY JUSTIFICATION . THE ASSESSEE FURTHER SUBMITTED THAT WHEREVER THE AUTHORIZED SHARE CAPITAL IS REQUIRED TO BE INCREASE, THE SAME HAS BEEN INCREASED, IT WAS PUREL Y A COMMERCIAL DECISION OF THE COMPANIES ON WHICH I NCOME-TAX DEPARTMENT CANNOT STEP INTO SHOES OF ASSESSEE. IN VIEW OF THIS , IT WOULD BE WORTHWHILE TO REPRODUCE SECTION 56(1) OF THE ACT HERE AS UNDER: INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOTAL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'INCOME FRO M OTHER SOURCES', IF IT IS NOT CHARGEABLE TO INCOME - TAX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14 , ITEMS A TO E. HERE, I FIND THAT THE MONEY SO RECEIVED AGAINST THE SHARE CAPITAL AND SHARE PREMIUM IS CAPITAL RECEIPT AND NOT REVENUE RECEIPT, THEREFORE THE SAME CANNOT BE TAXED IN THE HANDS OF ASSESSEE COMPANIES UNDER SECTION 56(1) OF INCOME TA X ACT, 1961. THE CBDT VIDE CIRCULAR/INSTRUCTION NO.2 DATED 29.01.2015 HAS STATED AS UNDER [371 ITR 6(ST)]. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 55 IN REFERENCE TO THE ABOVE CITED SUBJECT, I AM DIREC TED TO DRAW YOUR ATTENTION TO DECISION OF THE HIGH COURT OF BOMBAY IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD V UOI FOR THE ASSESSMENT YEAR 2009-10 (WP NO.87 1 OF 2014) WHEREIN THE COURT HAS HELD INTERALIA, THAT TH E PREMIUM ON SHARE ISSUE WAS ON ACCOUNT OF A CAPITA L ACCOUNT TRANSACTION AND DOES NOT GIVE RISE TO INCOME AND HE NCE, NOT LIABLE TO TRANSFER PRICING ADJUSTMENT. IT IS HEREBY INFORMED THAT THE BOARD HAS ACCEPTED T HE DECISION OF THE HIGH COURT OF BOMBAY IN THE ABOVE MENTIONED WRIT PETITION. IN VIEW OF THE ACCEP TANCE OF THE ABOVE JUDGMENT, IT IS DIRECTED THAT TH E RATIO DECIDENDI OF THE JUDGMENT MUST BE ADHERED TO BY THE FIELD OFFICERS IN ALL CASES WHERE THE ISSUE IS INV OLVED. THIS MAY ALSO BE BROUGHT TO THE NOTICE OF THE ITAT, DRP S AND CIT (APPEALS). IN VIEW OF ABOVE INSTRUCTION OF CBDT SHARE PREMIUM CANNOT BE TREATED AS REVENUE RECEIPT TAXABLE U/S 56 (1) OF INCOME TAX ACT. FURTHER THIS SHOULD BE SEEN WITH RE FERENCE TO AMENDMENT MADE BY FINANCE ACT 2012 BY IN SERTION OF CLAUSE (VIIB) TO SECTION 56 OF INCOME TAX ACT, 1961 . THIS AMENDMENT WAS MADE EFFECTIVE FROM 01/04/2013 . MEMORANDUM EXPLAINING THE PROVISIONS IN FINANCE BIL L 2012 STATED AS UNDER : SHARE PREMIUM IN EXCESS OF THE FAIR MARKET VALUE I S TO BE TREATED AS INCOME. SECTION 56(2) PROVIDES FOR THE SPECIFIC CATEGORY OF INCOMES THAT SHALL BE CHARGEABLE TO INCOME TAX UND ER THE HEAD INCOME FROM OTHER SOURCES. IT IS PROPOSE D TO INSERT A NEW CLAUSE IN 56(2). THE NEW CLAUSE W ILL APPLY WHERE, ACCOMPANY, NOT BEING A COMPANY IN WHIC H THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES , IN ANY PREVIOUS YEAR, FROM ANY PERSON BEING A RESID ENT, ANY CONSIDERATION FOR ISSUE OF SHARES. IN SUCH A CASE IF THE CONSIDERATION RECEIVED FOR ISSUE OF SHA RES EXCEEDS THE FACE VALUE OF SHARES, THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS T HE FAIR MARKET VALUE OF THE SHARES SHALL BE CHARGEA BLE TO INCOME TAX, UNDER THE HEAD INCOME FROM OTHER SO URCES . THE SAID AMENDMENT IS EFFECTIVE FROM 1 ST APRIL 2013, IT WILL ACCORDINGLY APPLY IN RELATION TO AY 2013-14 AND SUBSEQUENT AYS. IN THE MEMORANDUM IT IS MENTIONED THAT PREMIUM IN EXCE SS OF FAIR MARKET VALUE IS TO BE TREATED AS INCOME. CBDT VIDE CIRCULAR NO.3 OF 2012 DATED 12.06.2012 HAS ALSO MENTIONED TH AT PROVISIONS OF 56(2)(VII B) WILL BE APPLICABLE FO R ASSESSMENT YEAR 2013-14 ONWARD . IN ALL THE CASES OF FOLLOWING ASSESSEE COMPANIES SHARE CAPITAL AND PREMIUM WAS RECEIVED IN THE ASSES SMENT YEARS EARLIER TO AY 2013-14 EXCEPT THE FOLLOWING ONE:- NAME OF COMPANY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE NO OF SHARES SHARE CAPITAL @ RS. 10 PER SHARE SHARE PREMIUM RATE OF PREMIUM PER SHARE TOTAL AMOUNT MOTISONS GLOBAL PVT. LTD ALLIANCE TRADECOM PVT. LTD 12625 1,26,250 49,23,750 390 50,50,000 EVERSHINE SUPPLIERS PVT. LTD 36250 3,62,500 1,41, 37,500 390 1,45,00,000 MAYUKH VINIMAY PVT. LTD 56125 5,61,250 2,18,88,75 0 390 2,24,50,000 REGENT DEALERS PVT. LTD 4000 40,000 15,60,000 390 16,00,000 ROSE SUPPLIERS PVT. LTD 1250 12,500 4,87,500 390 5,00,000 TOTAL 1,10,250 11,02,500 4,29,97,500 4,41,00,000 THEREFORE IN VIEW OF CLAUSE (VIIB) OF SECTION 56 OF I.TAX ACT, THE SHARE PREMIUM CHARGED BY M/S MOTISO NS GLOBAL PVT LTD IN AY 2013-14 CAN BE EXAMINED WHETHER IT EXCEEDS THE FAIR MARKET VALUE OF THE SHARES OR NOT. IN THIS REGARD THE ASSESSEE HAS EXPLAINED THAT THE SHARE PREMIUM IN EXCESS TO VALUE COMPUTED AS PER MANNER & METHOD PROVIDED IN THIS SECTION R.W .R. 11UA OF INCOME TAX RULES 1962 CAN ONLY BE TAXED BY APPLYING PROVISIONS OF SECTION 56(VIIB) OF THE ACT. THE VALUE OF SHAR ES OF THE ASSESSEE COMPANY COMPUTED AS PER MANNER & METHOD OF THIS RULES IS AS UNDER: PARTICULARS AS PER METHOD (A) (NET ASSETS VALUE METHOD) AS PER METHOD (B) (DISCOUNTED FREE CASH FLOW METHOD) BOOK VALUE OF TOTAL ASSETS LESS PREPAID EXPENSES & PRELIMINARY EXPENSES AS ON LAST B/S I.E. 31.03.2012 53,88,09,212 53,88,09,212 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 56 ADD: - APPRECIATION IN MARKET VALUE OF ASSETS (IN E XCESS TO BOOK VALUE) LAND AT SB-110* NA 25,52,48,216 TOTAL ASSETS (A) 53,88,09,212 79,40,57,428 TOTAL LIABILITIES, EXCLUDING SHARE CAPITAL AND RESE RVES & SURPLUS (L) 76,56,570 76,56,570 TOTAL AMOUNT OF PAID UP EQUITY SHARE CAPITAL AS SHO WN IN B/S (PE) 2,05,05,820 2,05,05,820 PAID UP VALUE OF SUCH EQUITY SHARES (PV) 10 FAIR MARKET VALUE OF SHARES [(A-L)/PE]*PV [(53,88,09,212- 7656570)/2,05,05,820]*10 = RS. 259 PER SHARES [(79,40,57,428-7656570)/2,05,05,820]*10 = RS. 384 PER SHARES* FOR DECIDING THE ISSUE PRICE OF SHARES THE ASSESSEE COMPANY CHOOSE THE PRICE AS DETERMINED BY OPTION 2 AND CONSIDERING THE VALUE OF GOODWILL & ENHANCEMENT IN VALUE OF OTHER ASSETS THE ISSUE PRIC E OF SHARES DECIDED RS. 400 PER SHARES WHICH IS QUI TE REASONABLE. THE ASSESSEE HAS FURTHER CLARIFIED THAT THE MARKET VALUE OF LAND AT SB-110, TONK ROAD JAIPUR, IS TAKE N ON THE BASIS OF VALUE OF ADJACENT LAND AT SB-111 PURCHASED DURING THE YEAR U NDER CONSIDERATION (JUST ADJOINING TO LAND AT SB-110) AND AREA OF BOTH THE LANDS ARE ALMOST SAME. IT WAS FURTHER STATED BY THE ASSESSEE THAT IN OPTION TWO THE APPRECIATION IN VA LUE OF ASSETS HAS BEEN TAKEN ONLY IN RESPECT TO LAND AS FOR THIS THE DIRECT EVID ENCE IS AVAILABLE. THE VALUE OF OTHER ASSETS & GOOD WILL IS NOT TAKEN IN ABOVE COMPUTATIONS. HOWEVER WHILE DECIDING THE VALUE OF S HARES THE SAME SHOULD ALSO BE TAKEN INTO CONSIDERAT ION. THEREFORE, I FOUND THE EXPLANATION OF ASSESSEE IN CASE OF MOTISONS GLOBAL PVT LTD THAT THE ISSUE PRIC E OF THE SHARES IN AY 2013-14 IS IN ACCORDANCE WITH THE VALU E OF SHARES AS COMPUTED AS PER RULE 11UA OF INCOME TAX RULES 1962 AND IT IS ACCEPTABLE. ACCORDINGLY, NO ADDITION CAN BE MADE IN AY 2013-14 ALSO AS INCOME OF M/S MOTISON S GLOBAL PVT LTD AS PER PROVISIONS OF SECTION 56(2)(VIIB)OF THE ACT 1961. THEREFORE, AOS ACTION IN THIS REGARD IS NOT CORRECT AS PER THE APPLICABLE PROVISIONS OF THE ACT. 2.1.4.2 (C) ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT THE ASSESSEE SUBMITTED THAT IN ALL THE CASES, CRED IT ENTRIES ARE SUPPORTED BY SHARE APPLICATION CONTA INING (I) NAME/ ADDRESS /PAN OF PARTY, (II) DETAIL OF PAYMENT RECEI VED, (III) COPY OF BOARD RESOLUTION, (IV) COPY OF P AN CARD OF PARTY , (V) COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE, (VI) DECLARATION OF SOURCE OF FUNDS W ITH PARTY (VII) COPY OF ACK. OF ITR AND COMPUTATION, (VIII) COPY OF AUDIT R EPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE . NONE OF NOTICE SENT U/S 133(6) RECEIVED BACK AS UN-SERVED . FURTHER IT IS ALSO SUBMITTED THAT THE LD AO HAS NOT MADE THE ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT SO IT CANNOT BE APPLIED BY CIT(A). AS PER SECTION 251 (1)(A) OF IN COME TAX ACT, 1961 THE CIT (A) HAVE THE POWER IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUAL THE ASSESSMENT BUT HE HAS NO POWER TO MODIFY THE BASIC THEME OF AS SESSMENT ORDER. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSEE HAS SUBMITTED AMPLE DOCUMENTS AND SATISFIED THE LD AO. THE LD. AO BEING SATISFIED WITH THE SUBMISSION OF ASSESSEE ON SECTION 68 OF THE ACT, HAS NOT APPLIED SECTION 68 OF THE ACT F OR THE ADDITION. THE PROVISIONS OF SECTION 68 SPECI FIED THE AUTHORITY MENTIONED AS ASSESSING OFFICER . THE CIT(A) IS NOT ASSESSING OFFICER SO HE CANNOT STEP INTO THE SATISFACTION OF AO FOR MAKING THE AD DITION WHEN THE LD AO HAS SATISFIED ABOUT THE INGREDIENTS OF SECTION 68 OF INCOME TAX ACT. HONBLE ITAT DELHI BENCH IN THE CASE OF SH. SHAMSHER SINGH GILL C/O S.K. MONGA & ASSOCIATES VERSUS ITO, WARD-2, HARIDWAR ITA NO 2987/DEL/2015 ORDER DATED 28/02/2017. IT WAS FURTHER STATED BY LD AR THAT THE ASSESSEE HA S SUBMITTED AMPLE DOCUMENTS TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SHARE CAPITAL. UNDER SECTION 68 OF INCOME TAX ACT, 1961 THE ONUS OF THE ASSESSEE IS TO PROVE THE SOURCE OF CREDIT ENTRY AND THERE IS NO ONUS OF ASSESSEE TO PROVE THE SOURCE OF SOURCE OR SOURCE OF ALL CHANNEL SOURCES. THE AMENDMENT IN SECTION 68 OF THE ACT WAS MADE BY INSERTING THE FOLLOWING PROVISO TO SECTION 68 W.E.F . 01/04/2013 WHICH REQUIRE TO PROVE SOURCE OF FUNDS IN THE HANDS OF SH AREHOLDER COMPANY. THOUGH NOT REQUIRED BY LAW BUT S TILL THE ASSESSEE PROVED SOURCE OF FUNDS IN THE HANDS OF SHAREHOLDER COMPANY . THE AMENDED SECTION EVEN DOES NOT REQUIRE TO PROV E SOURCE OF FUNDS IN THE HANDS OF 3 RD OR 4 TH STAGE. I HAVE ALSO PERUSED THE CASE RECORDS. IN T HIS REGARD, I FIND THAT THE AO HAS ISSUED NOTICE U/ S 133(6) OF THE ACT TO INQUIRY THE IDENTITY, CREDITWORTHINESS AND G ENUINENESS OF TRANSACTIONS. AO HAS ISSUED TOTAL 94 NOTICES FOR SHARE CAPITAL OF RS. 35,29,50,000/-. ON PERUSAL OF CASE RECORDS, IT IS SEEN THAT COMPLIANCE WAS MADE FOR 41 NOTICES ISS UED U/S 133(6) OF THE ACT WHICH INVOLVESD SHARE CAPITAL AMOUNTING TO TOTAL OF RS. 15,59,00,000/-. THE STATUS OF NOTICES ISSUED U /S 133(6) OF INCOME TAX ACT CAN BE SEEN FROM CHART GIVEN BELOW: ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 57 NAME OF ASSESSEE COMPANY TOTAL NOTICE ISSUED TOTAL AMOUNT FOR NOTICE ISSUED RECEIVED UN- SERVED NUMBER OF COMPLIANCE AMOUNT UNDER COMPLIANCE MOTISONS GLOBAL PVT. LTD AY 2009-10 8 2,75,00,000 0 4 1,00,00,000 MOTISONS GLOBAL PVT. LTD AY 20111-12 16 6,96,50,000 0 9 3,64,00,000 MOTISONS ENTERTAINMENT (I) PVT. LTD (AY 2009-10) 8 3,40,00,000 0 3 1,20,00,000 MOTISONS ENTERTAINMENT (I) PVT. LTD (AY 2011-12) 8 1,95,00,000 0 3 75,00,000 MOTISONS BUILDTECH PVT. LTD AY 2009-10 10 3,03,00,000 0 3 70,00,000 GODAWARI ESTATES PVT. LTD AY 2010-11 6 2,00,00,000 0 3 1,10,00,000 GODAWARI ESTATES PVT. LTD AY 2012-13 24 10,30,00,00 0 0 15 6,22,00,000 BHOLENATH REAL ESTATES PVT. LTD AY 2009-10 7 2,90,00,000 0 1 98,00,000 RAINBOW BUILDCON PVT. LTD AY 2009-10 7 2,00,00,000 0 0 0 TOTAL 94 35,29,50,000 0 41 15,59,00,000 2.1.4.3 FURTHER, IN RESPONSE TO SHOW CAUSE NOTICE ISSUED B Y ME U/S 250 (4) OF THE ACT, IS SUBMITTED THAT THE ASSESSEE HAS ALSO CARRIED OUT SEARCH OVER THE ROC S ITE AND FOUND THAT CHARGE HAS BEEN REGISTERED OVER THE ASSETS OF SOME OF THE INVESTOR COMPANIES UNDER COMPANIES ACT IN FAVOUR OF LEADING BANKS LIKE SBI ETC FOR CRORES OF RUPEES WH ICH PROVES THAT THE SHAREHOLDER COMPANIES ARE NOT SHELL COMPANY-RATHER CREATING OF CHARGE PROVES CREDITWORTHINESS OF THE C OMPANIES. THE ASSESSEE SUBMITTED THE FOLLOWING CHART WITH SEARCH REPORT ON ROC SITE: NAME OF SHAREHOLDER (INVESTOR COMPANY) NAME OF ASSESSEE COMPANY IN WHICH SHARE WERE TAKEN AMOUNT OF SHARE CAPITAL OF THE INVESTOR COMPANY AMOUNT, SRN AND CHARGE ID AND DATE OF CHARGE CREATED NAME OF BANK/FINANCIAL INSTITUTION IN WHOSE FAVOUR CHARGE WAS CREATED ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 58 NAME OF SHAREHOLDER (INVESTOR COMPANY) NAME OF ASSESSEE COMPANY IN WHICH SHARE WERE TAKEN AMOUNT OF SHARE CAPITAL OF THE INVESTOR COMPANY AMOUNT, SRN AND CHARGE ID AND DATE OF CHARGE CREATED NAME OF BANK/FINANCIAL INSTITUTION IN WHOSE FAVOUR CHARGE WAS CREATED RUKMANI INTERNATIONAL PVT LTD GODAWARI ESTATES PVT. LTD 50,00,000 50 CRORE SRN C05684162 CHARGE ID 10501185 DATE 24/03/14 AXIS BANK LTD NAROTTAMKA TRADE & VYAPAAR PVT LTD RAINBOW BUILDCON PVT LTD 15,00,000 85.50 CRORE SRN C72436744 CHARGE ID 10606561 DATE 30/09/15 UNION BANK OF INDIA VIKASH TRADECOM PVT. LTD MOTISONS GLOBAL PVT. LTD 25,00,000 9.43 CRORE SRN C67525196 CHARGE ID 10345786 DATE10/02/2012 PUNJAB NATIONAL BANK . ARCADE DEALCOM PVT. LTD MOTISONS BUILDTECH PVT. LTD 30,00,000 3.22 CRORE SRN B44276514 CHARGE ID 10366837 DATE 29/06/2012 PUNJAB NATIONAL BANK . ARCADE DEALCOM PVT. LTD BHOLENATH REAL ESTATES PVT. LTD 20,00,000 3.22 CRORE SRN B44276514 CHARGE ID 10366837 DATE 29/06/2012 PUNJAB NATIONAL BANK . MATRIBHUMI DEALERS PVT LTD RAINBOW BUILDCON PVT LTD 25,00,000 50.00 CRORE SRN C05683776 CHARGE ID 10501186 DATE 24/03/2014 AXIS BANK LTD PUJA TIE UP PVT. LTD (I) MOTISONS ENTERTAINMENT (I) PVT. LTD 15,00,000 2.50 CRORE SRN C71816029 CHARGE ID 10431745 DATE 24/05/2013 PUNJAB NATIONAL BANK . (II) MOTISONS BUILDTECH PVT. LTD 50,00,000 2.25 CRORE SRN C718166656 CHARGE ID 10431744 DATE 24/05/2013 (III) RAINBOW BUILDCON PVT LTD 40,00,000 1.65 CRORE SRN C71814016 CHARGE ID 10431742 DATE 18/05/2013 1.95 CRORE SRN C71817654 CHARGE ID 10431746 DATE 22/05/2013 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 59 NAME OF SHAREHOLDER (INVESTOR COMPANY) NAME OF ASSESSEE COMPANY IN WHICH SHARE WERE TAKEN AMOUNT OF SHARE CAPITAL OF THE INVESTOR COMPANY AMOUNT, SRN AND CHARGE ID AND DATE OF CHARGE CREATED NAME OF BANK/FINANCIAL INSTITUTION IN WHOSE FAVOUR CHARGE WAS CREATED KINGFISHER VINIMAY PVT. LTD (I) MOTISONS GLOBAL PVT. LTD 20,00,000 87.50 CRORE SRN C03615010 CHARGE ID 10490641 DATE 31/03/2014 STATE BANK OF INDIA (II) MOTISONS ENTERTAINMENT (I) PVT. LTD 20,00,000 101.94 CRORE SRN B73228603 CHARGE ID 10419836 DATE 21/03/2013 NAWAB VYAPAR PVT. LTD MOTISONS GLOBAL PVT. LTD 50,00,000 9.95 CRORE SRN C67525006 CHARGE ID 10345784 DATE 10/02/2012 PUNJAB NATIONAL BANK SNOWFALL COMMERCIAL PVT. LTD GODAWARI ESTATES PVT. LTD 25,00,000 8.00 CRORE SRN B94083011 CHARGE ID 10289761 DATE 04/05/2011 BANK OF INDIA TOTAL 3,85,00,000 THE ASSESSEE FURTHER CLARIFIED THAT OUT OF ABOVE 1 0 CASES, IN 4 CASES WHICH HAVE SHARE CAPITAL OF RS. 1.15 CRORES WITH THE FOLLOWING APPELLANT COMPANIES, NOTICES U/S 133(6) S ENT BY AO WERE ALSO COMPLIED BY THESE COMPANIES NAME OF ASSESSEE COMPANY NAME OF INVESTOR COMPANY AMOUNT OF SHARE APPLICATION RECEIVED MOTISONS GLOBAL PVT. LTD AY 2009-10 KINGFISHER VINIMAY PVT. LTD 20,00,000 MOTISONS GLOBAL PVT. LTD AY 2011-12 VIKASH TRADE COM PVT LTD 25,00,000 MOTISONS ENTERTAINMENT (I) PVT. LTD (AY 2009-10) KI NGFISHER VINIMAY PVT. LTD 20,00,000 GODAWARI ESTATES PVT. LTD (AY 2012-13) RUKMANI INTE RNATIONAL PVT LTD 50,00,000 TOTAL 1,15,00,000 HOWEVER, IN CASE OF FOLLOWING 9 PARTIES CASES HAVIN G SHARE CAPITAL OF RS. 2.70 CRORES WITH FOLLOWING A PPELLANT COMPANIES, NOTICES U/S 133(6) ISSUED REMAINED UN - COMPLIED OR NOT COMPLIED, BUT THEIR IDENTITY AND CREDITWORTHINESS IS FURTHER PROVED FROM REGISTRATION OF CHARGE UNDER COMPANIES ACT NAME OF ASSESSEE COMPANY NAME OF INVESTOR COMPANY A MOUNT OF SHARE APPLICATION RECEIVED MOTISONS GLOBAL PVT. LTD (AY 2009-10) NAWAB VYAPAR PVT LTD 50,00,000 MOTISONS BUILDTECH PVT. LTD (AY 2009-10) ARCADE DEA LCOM PVT. LTD 30,00,000 MOTISONS BUILDTECH PVT. LTD (AY 2009-10) PUJA TIE U P PVT. LTD 50,00,000 MOTISONS ENTERTAINMENT (I) PVT. LTD (AY 2011-12) PUJA TIE UP PVT. LTD 15,00,000 GODAWARI ESTATES PVT. LTD (AY 2010-11) SNOWFALL CO MMERCIAL PVT. LTD 25,00,000 BHOLENATH REAL ESTATES PVT LTD (AY 2009-10) ARCADE DEALCOM PVT. LTD 20,00,000 RAINBOW BUILDCON PVT LTD (AY 2009-10) MATRIBHUMI DE ALERS PVT LTD 25,00,000 RAINBOW BUILDCON PVT LTD (AY 2009-10) PUJA TIE UP P VT LTD 40,00,000 RAINBOW BUILDCON PVT LTD (AY 2009-10) NAROTTAMA TRA DE & YYAPAAR PVT LTD 15,00,000 TOTAL 2,70,00,000 FURTHER SIX SHARE APPLICANT COMPANIES WERE ASSESSED BY THE SAME AO FOR AY 2013-14 WHEREIN GENUINENESS OF THESE COMPANIES WERE NOT DOUBTED . FURTHER, OUT OF THESE SIX COMPANIES, THE ASSESSME NT OF ONE M/S MAYUKHA VINIMAY PVT LTD ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 60 FOR AY 2009-10 WAS MADE IN SAME CIRCLE I.E. CENTRAL CIRCLE-2, JAI PUR WHEREIN ADDITION OF RS. 10,54,95,000/- WAS MADE ON ACCOUNT OF ITS SHARE CAPITAL BY PASSING ORDER U /S 143(3) R.W.S.263 OF THE ACT. IN OTHER COMPANIES CASES, ASSESSMENT F OR AY 2009- 10 WAS MADE U/S 148 OF THE ACT BY THEIR RESPECTIVE JURISDICTIONAL AO WHEREIN THEIR FUNDS/ SHARE CAPITA L WAS ASSESSED. THE SHARE CAPITAL RECEIVED FROM THESE COMPANIES ARE AS UNDER: S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT 3 MOTISONS GLOBAL PVT. LTD 2012-13 ALLIANCE TRADECO M PVT. LTD 3,05,00,000 EVERSHINE SUPPLIERS PVT. LTD 1,60,00,000 ALLIANCE TRADECOM PVT. LTD 3,95,58,900 EVERSHINE SUPPLIERS PVT. LTD 4,86,99,600 MAYUKH VINIMAY PVT. LTD 6,93,49,800 REGENT BARTER PVT. LTD 4,04,71,800 REGENT DEALERS PVT. LTD 7,59,99,900 ROSE SUPPLIERS PVT. LTD 9,87,49,800 TOTAL 41,93,29,800 4 MOTISONS GLOBAL PVT. LTD 13-14 ALLIANCE TRADECOM PVT. LTD 50,50,000 EVERSHINE SUPPLIERS PVT. LTD 1,45,00,000 MAYUKH VINIMAY PVT. LTD 2,24,50,000 REGENT DEALERS PVT. LTD 16,00,000 ROSE SUPPLIERS PVT. LTD 5,00,000 TOTAL 4,41,00,000 7 MOTISONS ENTERTAINMENT (I) PVT. LTD 2012-13 ALLIA NCE TRADECOM PVT. LTD 1,59,00,000 EVERSHINE SUPPLIERS PVT. LTD 93,00,000 EVERSHINE SUPPLIERS PVT. LTD 17,00,000 MAYUKH VINIMAY PVT. LTD 1,55,00,000 REGENT BARTER PVT. LTD 1,79,00,000 REGENT DEALERS PVT. LTD 1,40,00,000 ROSE SUPPLIERS PVT. LTD 35,00,000 TOTAL 7,78,00,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 61 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT 9 MOTISONS BUILDTECH PVT. LTD 2012-13 ALLIANCE TRA DECOM PVT. LTD 1,80,00,000 EVERSHINE SUPPLIERS PVT. LTD 28,00,000 REGENT BARTER PVT. LTD 1,60,27,500 TOTAL 3,68,27,500 14 SHIVANSH BUILDCON PVT. LTD 2012-13 EVERSHINE SUP PLIERS PVT. LTD 90,00,000 TOTAL 90,00,000 TOTAL ADDITIONS 58,70,57,300 2.1.4.4 AS REGARD SEIZED DOCUMENTS [PARTY-1/EXHIBIT AS-3/PGE21], SH VIJAY GOYAL, THE LD AR OF THE ASSESSEE HAS FURTHER CLARIFIED THAT FMV AND MAXIMUM APPRECIATION WRITTEN 250/- AND SHARES WERE ALSO ALLOTTED FOR RS. 250/- IN THAT PERIOD. IT IS PERTINENT TO ALSO NOTE THAT THERE IS NO INCRIMINATING NOTING TO SHOW THAT SHARE CAPITAL WAS ACQUIRED AGAINST THE UNACCOUNTED CASH OF ASSESSEE GROUP. AS REGARD TALLY ACCOUNTS, THE LD AR OF ASSESSEE HAS EXPLAINED THAT T HE TALLY ACCOUNTS OF SIX COMPANIES (ASSESSED BY SAME AO FOR AY 2013-14 ) WERE FOUND IN PEN DRIVE OF ACCOUNTANT SHRI BANWARI LAL YOGI FOUND AND SEIZED FROM RESIDENCE OF CHHABRA BROTHERS. SAME WER E RECEIVED FOR RECONCILIATION PURPOSE. SINCE THE UP TO DATE ACCOUNTS WERE NOT THERE IN TALLY AND MISSING SUPPORTING BILLS AND VOUCHERS FROM THE SEARCHED PREMISE CLEARLY INDICAT ES THAT ASSESSEE GROUP WAS NOT MAINTAINING THE BOOKS OF ACCOUNT OF SHAREHOLDER COMPANIES. FURTHER IN SUCH TALLY ACCOUNT THERE IS NO ENTRY OF OUTFLOW OF ANY IN THIS REGARD, IT IS ALSO SEEN THAT THE ASSESSMENT OF THESE SIX COMPANIES WERE MADE BY SAME AO FOR AY 2013-14 WHEREIN HE HAS NOT MADE ANY ADVERSE COMMENTS . FURTHER, THE TALLY ACCOUNT HAVE NO MATERIAL TO SH OW THAT THE APPELLANT COMPANIES OBTAINED THE SHARE CAPITAL BY GIVING UNACCOUNTED CASH. AS REGARD THE STATEMENTS OF EMPLOYEES OF MOTISONS GROUP/DIRE CTORS OF THESE SIX INVESTOR COMPANIES, THE AR OF THE APPELLANT COMPANI ES HAS GIVEN A PLAUSIBLE EXPLANATION THAT EMPLOYEES OF MOTISONS GROUP WERE DIRECTORS OF SIX COMPANIES. MAJOR SHARE HOLDIN G COMPANY OF THESE SIX COMPANIES WAS M/S MAYUKH VIN TRADE PVT. LTD AND SHAREHOLDER OF THIS COMPANY WAS CHHABRA FAMILY MEMB ERS (OWNER OF MOTISONS GROUP), THEREFORE THE KNOWN DIRECTOR WERE APPOINTED IN THESE SIX COMPANIES. FURTHER NONE OF T HE EMPLOYEE ADMITTED TO HAVE MANAGED THE UNACCOUNTE D MONEY OF THE ASSESSEE COMPANY ROUTED IN ITS BOOKS THROUGH SHARE CAPITAL. 2.1.4.5 HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT -1, JAIPUR VS M/S. ARL INFRATECH LTD, HAS RECENTLY CONFIRMED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN DB ITA NO 24/2014 VIDE ORD ER DATED 28/09/2016. HONBLE ITAT JAIPUR BENCH IN THIS CASE HAS MADE THE FOLLOWING FINDINGS : ..BEFORE, WE PROCEED TO DECIDE THE ISSUE ON MERIT S, WE WOULD LIKE TO DISCUSS THE SCHEME OF THE ACT AND PRECEDENTS ON THE ISSUE INVOLVED IN THIS APPEAL AS UNDER: IN CASES WHERE SHARE APPLICATION MONEY IS FOUND RE CORDED IN THE BOOKS OF AN ASSESSEE WHICH MAY REPRESENT CREDIT IN THE BOOKS AND THE SHARE APPLICA NT IS IDENTIFIED, THAT AMOUNT CANNOT BE ADDED IN TH E ASSESSEE'S HANDS U/S 68 OF THE ACT. THE HON'BLE RAJ ASTHAN HIGH COURT HAS REPEATEDLY REITERATED THE ABOVE LEGAL POSITION. THESE CASES ARE: (I) CIT VS. SHREE BARKHA SYNTHETICS LTD. 182 CTR 17 5 (RAJ.) (II) BARKHA SYNTHETICS LTD. VS. ACIT (2005), 197 CT R 432 (RAJ).13 IN COMING TO THE ABOVE CONCLUSION, THE HON'BLE JURI SDICTIONAL HIGH COURT HAS CONSIDERED AT LENGTH THE RELEVANT DECISIONS ON THE ISSUE LIKE CIT VS. STELLE R INVESTMENT LTD. (2000) 164 CTR (SC) 287 = 251 ITR 263 (SC) WHICH HAS CONFIRMED THE DECISION OF HON'BL E DELHI HIGH COURT REPORTED IN (1992) 192 ITR ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 62 287. THE HON'BLE COURT HAS GONE TO THE EXTENT OF ST ATING THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBE R TO THE SHARECAPITAL ARE NOT GENUINE, NEVERTHELESS, UND ER NO CIRCUMSTANCES CAN THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS CASE, THE SHARE SUBSCRIBER IS IDENTIFIED. T HERE CAN BE NO DISPUTE REGARDING THE ABOVE STATED LEGAL POSITION. THE FOLLOWING DECISIONS ALSO LAY DOWN THE SAME RATIO : (I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 6 DTR 308 (S C) (II) CIT VS. DOLPHIN CONPACK LTD. (2006) 283 ITR 19 0 (DEL.) (III) CIT VS. GUJARAT HEAVY CHEMICALS LTD. (202) 25 6 ITR 795(SC) (IV) CIT VS. KWICK TRAVELS (1992) 199 ITR (ST.) 85 (SC) THIS ISSUE HAS BEEN DEALT AT LENGTH BY THE THIRD ME MBER IN THE CASE OF UMA POLYMERS (P) LTD. VS. DCIT, (2006) 101 TTJ (JD.) T.M. 126 = (2006) 284 ITR (AT) 1 JODHPUR. 2.6 ADVERTING, THE FACTS OF THE GIVEN CASE, WE ARE OF THE CONSIDERED OPINION THAT ALL THE SHARE APPLIC ANTS STAND IDENTIFIED. THE ASSESSEE HAS PROVIDED PANS OF THE S HARE APPLICANTS. THE MODE OF PAYMENT HAS ALSO BEEN MADE EXPLAINED. THERE IS NO DIRECT OR INDIRECT RELA TION BETWEEN THE ASSESSEE COMPANY AND THE SHARE APPLICANTS. THE STATEMENTS RECORDED DURING SURVEY H AS GOT NO EVIDENTIARY VALUE AND THE LAW IS VERY MUC H SETTLED ON THIS ISSUE. IN ANY CASE, EVEN UNDER THE PROVISIONS OF SECTION 68 OF THE ACT, THE ASSESSEE C ANNOT BE FORCED TO PROVE THE SOURCE OF THE SOURCE. THE LAW O N THIS SUBJECT IS ALSO SETTLED BY NUMEROUS DECISION S. THE ALLEGED REPORT OF THE INSPECTOR OF THE DEPARTMENT W HO IS STATED TO HAVE VISITED AT THE GIVEN ADDRESSES OF THE SHARE APPLICANTS WAS NEVER PUT OR CONFRONTED TO THE ASSESSEE. THE CUMULATIVE EFFECTS OF THESE REASONS IS THAT THE IMPUGNED ADDITION CANNOT BE ADDED IN THE H ANDS OF THE ASSESSEE COMPANY. ACCORDINGLY, WE ORDER TO DELETE THE ENTIRE ADDITIONS AND ALLOW THE APPEAL OF THE ASSESSEE. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAN DS ALLOWED.. THE DEPARTMENT FILED APPEAL BEFORE HONBLE RAJASTH AN HIGH COURT. HONBLE RAJASTHAN HIGH COURT CONFIRM ED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN DB ITA NO 24/2014 VIDE ORDER DATED 28/09 /2016. FURTHER , HONBLE RAJASTHAN HIGH COURT IN ANOTHER CASE COMMIS SIONER OF INCOME-TAX, JAIPURII VERSUS MORANI AUTOMOTIVES (P.) LTD. NO. D.B. IT APPEAL NO. 619 OF 2011 DATED.- OCTOBER 23, 2013 HELD THAT : 10. THE POINTS AS SOUGHT TO BE RAISED BY THE APPELL ANT-REVENUE IN THE PRESENT CASE ARE ALL THE MATTERS RELATING TO APPRECIATION OF EVIDENCE. THE RELEVANT FACTORS H AVE BEEN TAKEN INTO ACCOUNT AND CONSIDERED BY THE APPELLATE AUTHORITIES BEFORE RETURNING THE FINDINGS IN FAVOUR OF THE ASSESSEE. EVEN AS REGARDS THE THR EE REFERRED SHARE CAPITAL CONTRIBUTORS, IT IS NOTICED THAT THEY ARE EXISTING ASSESSEES HAVING PA NUMBERS; AND ARE BEING REGULARLY ASSESSED TO TAX. THE APPELLATE AUTHORITIES CANNOT BE SAID TO HAVE ERRED IN DELETIN G THE ADDITIONS IN THEIR REGARD TOO AT THE HANDS OF ASSES SEE-COMPANY. 11. ULTIMATELY, THE QUESTION AS TO WHETHER THE SOUR CE OF INVESTMENT OR OF CREDIT HAS BEEN SATISFACTORI LY EXPLAINED OR NOT REMAINS WITHIN THE REALM OF APPREC IATION OF EVIDENCE; AND THE COURTS HAVE CONSISTENTL Y HELD THAT SUCH A MATTER DOES NOT GIVE RISE TO ANY S UBSTANTIAL QUESTION OF LAW. IN THE CASE OF CIT V. ORISSA CORPN. (P.) LTD. [1986) 159 ITR 78 (SC), THE HON'BLE SUPREME COURT HELD AS UNDER:- '13. IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDI TORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER S. 131 AT THE INSTANCE OF THE ASSESSEE, DID N OT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT-WORTHY OR WERE SUCH WHO CO ULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANY THING FURTHER. IN THE PRE MISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BUR DEN THAT LAY ON HIM, THEN IT COULD NOT ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 63 BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES.' 12. IN THE CASE OF CIT V. CHANDRA PRAKASH RANA [200 1] 48 DTR 271 (RAJ.), THIS COURT NOTICED SIMILAR NATURE GROUNDS URGED ON BEHALF OF THE REVENUE AND F OUND THE SAME NOT LEADING TO ANY SUBSTANTIAL QUESTION OF LAW. THIS COURT NOTICED, OBSERVED, AND HELD AS UNDER: '7. LEARNED COUNSEL FOR THE APPELLANT (REVENUE) CONTEND ED THAT FIRSTLY TRIBUNAL ERRED IN ACCEPTING THE EXPLANATION OFFERED BY ASSESSEE IN RELATION TO SOURCE OF INCOME. HIS SECOND SUBMISSION WAS THAT WHAT WAS OFFERED BY ASSESSEE WAS NO EXPLAN ATION AND HENCE SHOULD NOT HAVE BEEN ACCEPTED AND LASTLY LEARNED COUNSEL MADE SINCERE AT TEMPT ON HIS PART AFTER TAKING US THROUGH FACTUAL SCENARIO OF THE EXPLANATION AND CONTENDED T HAT IT CAN NEVER BE TAKEN AS SATISFACTORY EXPLANATION FOR DELETING THE ADDITION MADE BY AO. W E DO NOT AGREE TO THIS SUBMISSION FOR MORE THAN ONE REASON. 8. IN THE FIRST PLACE, IT IS A PURE QUESTION OF FAC T, WHAT TO SAY QUESTION OF LAW, MUCH LESS SUBSTANTI AL QUESTION OF LAW. SECONDLY, THIS COURT CANNOT AGAIN IN THIS APPEAL UNDERTAKE THE EXAMINATION OF FACTUAL ISSUES NOR CAN DRAW FACTUAL INFERENCES ON THE BASIS OF EXPLANATION OFFERED BY ASSESSEE. THIRDLY, ONCE THE EXPLANATION IS ACCEPTED BY THE TWO APPELLATE COURTS I.E. CIT(A) AND TRIBUNAL IN THIS CASE, THEN IN SUCH EVEN T, A CONCURRENT FINDING RECORDED ON SUCH EXPLANATION BY TWO APPELLATE COURTS IS BINDING ON T HE HIGH COURT. 9. PERUSAL OF IMPUGNED FINDING QUOTED SUPRA WOULD G O TO SHOW THAT TRIBUNAL DID EXAMINE THE EXPLANATION OFFERED BY ASSESSEE IN DETAIL AND THEN RECORDED A FINDING FOR ITS ACCEPTANCE. SUCH FINDING WHEN CHALLENGED DOES NOT CONSTITUTE A SUBST ANTIAL QUESTION OF LAW WITHIN THE MEANING OF S. 260A IBID IN AN APPEAL ARISING OUT OF SUCH ORDER. 10. IN OUR OPINION, THEREFORE, ONCE THE CIT(A) AND TRIBUNAL ACCEPTED THE EXPLANATION OF ASSESSEE AND ACCORDINGLY, DELETED CERTAIN ADDITIONS MADE BY AO HOLDING THE TRANSACTION OF SHARES TO BE GENUINE, THEN IT WOULD NOT INVOLVE ANY SUBSTANTI AL ISSUE OF LAW AS SUCH. IN OTHER WORDS, THIS COURT IN ITS APPELLATE JURISDICTION UNDER S. 2 60A IBID, WOULD NOT AGAIN DE NOVO HOLD YET ANOTHER FACTUAL INQUIRY WITH A VIEW TO FIND OUT AS TO WHETHER EXPLANATION OFFERED BY ASSESSEE AND WHICH FOUND ACCEPTANCE TO THE CIT(A) AND TRIBUN AL IS GOOD OR BAD, OR WHETHER IT WAS RIGHTLY ACCEPTED, OR NOT. IT IS ONLY WHEN THE FACTU AL FINDING RECORDED HAD BEEN ENTIRELY DE HORS THE SUBJECT, OR THAT IT HAD BEEN BASED ON NO R EASONING, OR BASED ON ABSURD REASONING TO THE EXTENT THAT NO PRUDENT MAN OF AVERAGE JUDICIAL CAPACITY COULD EVER REACH TO SUCH CONCLUSION, OR THAT IT HAD BEEN FOUND AGAINST ANY P ROVISION OF LAW, THEN A CASE FOR FORMULATION OF SUBSTANTIAL QUESTION OF LAW ON SUCH FINDING CAN BE SAID TO HAVE BEEN MADE OUT. 11. IN OUR VIEW, NO SUCH ERROR COULD BE NOTICED BY US IN THE IMPUGNED ORDER BECAUSE AS OBSERVED SUPRA, THE TRIBUNAL DID GO INTO THE DETAILS OF EXPL ANATION OFFERED BY ASSESSEE AND THEN ACCEPTED THE EXPLANATION BY PLACING RELIANCE ON THE DOCUMENTS FILED BY ASSESSEE. AS A CONSEQUENCE THEREOF, THE ADDITIONS MADE BY AO CAME TO BE DELETED.' 13. IN CIT V. SHREE BARKHA SYNTHETICS LTD. [2004] 2 70 ITR 477 (RAJ.), IN A SIMILAR NATURE MATTER, THIS COURT OBSERVED THAT THE TRIBUNAL HAVING FOUND THAT THE COMPANIES FROM WHICH THE SHARE APPLICATION MONEY HAD BEEN RECEIVED BY THE ASSESSEE -COMPANY WERE GENUINELY EXISTING AND THE IDENTITY OF THE INDIVIDUAL INVESTORS WERE ALSO ESTABLISHED AND THEY HAD CONFIRMED THE FACT OF MAKING INVESTMENT, THE FINDING THAT ASSESSE E HAD DISCHARGED INITIAL BURDEN AND ADDITION UNDER SECTION 68 COULD NOT BE SUSTAINED, W AS ESSENTIALLY A FINDING OF FACT. THIS COURT SAID,- '19. A PERUSAL OF THE AFORESAID FINDING GOES TO SHO W THAT DELETION HAS BEEN MADE ON APPRECIATION OFEVIDENCE, WHICH WAS ON RECORD FIN DING THAT THERE WAS EXISTENCE OF INVESTORS AND THEIR CONFIRMATION HAS B EEN OBTAINED, WERE FOUND TO BE SATISFACTORY. ALL THESE CONCLUSIONS ARE CONCLUSIONS OF FACT BASED ON MATERIAL ON RECORD AND, THEREFORE, CANNOT BE SAID TO BE PERVERS E SO AS TO GIVE RISE TO QUESTION OF LAW, WHICH MAY BE REQUIRED TO BE CONSID ERED IN THIS APPEAL UNDER S.260A OF THE IT ACT.' 14. THE RATIO OF THE DECISIONS AFORESAID DIRECTLY A PPLIES TO THE PRESENT CASE TOO. HEREIN, AS NOTICED, THE APPELLATE AUTHORITIES HAVE RETURNED THE FINDING S OF FACT IN FAVOUR OF THE ASSESSEE AFTER DUE APPRECIATION OF THE EVIDENCE ON RECORD, ON RELEVANT CONSIDERATIONS, AND ON SOUND REASONINGS. THESE FINDINGS HAVE NEITHER BEEN SHOWN SUFFERING FR OM ANY PERVERSITY NOR APPEAR ABSURD NOR ARE OF SUCH NATURE THAT CANNOT BE REACHED AT ALL. T HUS, NO CASE FOR INTERFERENCE IN THE FINDINGS OF THE APPELLATE AUTHORITIES IS MADE OUT. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 64 IN THE RESULT, THE APPEAL FAILS AND IS, THEREFORE, DISMISSED. LD AR SH VIJAY GOYAL HAS ALSO SUBMITTED THAT THE DE CISIONS OF JURISDICTIONAL HIGH COURT IS BINDING FOR ALL THE REVENUE AUTHORITIES AS HELD BY HONBLE APEX COURT IN THE CA SE OF CIT VS G.M MITTAL STAINLESS STEEL (P), CIT (2003) 263 ITR 255 WHEREIN IT HAS HELD BY HONBLE SUPREME COURT THAT DECISION OF JURISDICTIONAL HIGH COURT IS BINDING ON THE REVENUE AUTHORITIES WITHIN THE STATE. REVENUE AUTHORITIES W ITHIN THE STATE CANNOT REFUSE TO FOLLOW THE JURISDI CTIONAL HIGH COURTS DECISION ON THE GROUND THAT THE DECISION OF SOME OT HER HIGH COURT WAS PENDING DISPOSAL BEFORE THE SUPR EME COURT . THERE ARE NO MATERIAL CHANGE IN THE FACTS OF THE APPELLAN T COMPANIES WITH THE FACTS OF THE ABOVE CITED CASES DECIDED BY HONBLE RAJASTHAN HIGH COURT AS THE APPELLANT COMPANIES HAV E SUBMITTED DOCUMENTS SUCH AS (I) SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY, (II) DETAIL OF PAYMENT R ECEIVED ETC. (III) COPY OF BOARD RESOLUTION, (IV) C OPY OF PAN CARD OF PARTY, (V) COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE,(VI) DECLARATION OF SO URCE OF FUNDS WITH PARTY (VII) COPY OF ACK. OF ITR AND COMPUTATION, (V III) COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE PROVED ALL THE INGREDIENTS OF SECTION 68 OF THE AC T. APART FROM THIS, IT IS ALSO TO BE NOTED HERE THA T SIX COMPANIES INVOLVING SHARE CAPITAL OF RS. 58,70,57,300/- TO AP PELLANT COMPANIES WERE ASSESSED BY SAME AO FOR AY 2 013-14 AND IN OTHER CASES AS PER THE FACTS AVAILABLE FROM RECORDS NON O F THE NOTICES ISSUED U/S 133(6) OF THE ACT REMAINED UNSERVED AND MANY OF THEM HAVE ALSO MADE COMPLIANCE TO THE NOTICES ISSUED U/S 133(6) OF THE ACT. FURTHER FROM SEARCH REPORT OF R OC, IT IS ALSO SEEN THAT SOME OF THE INVESTOR COMPANIES HAVE CHARGE REGISTER ED UNDER COMPANIES ACT IN FAVOUR OF LEADING BANKS F OR CRORES OF RUPEES. 2.1.4.6 THEREFORE, IN VIEW OF THE FINDINGS OF HONBLE JUR ISDICTIONAL HIGH COURT, THE IDENTITY, CREDITWORTHIN ESS AND GENUINENESS OF TRANSACTION OF THESE COMPANIES CANNO T BE HELD AS DOUBTFUL AND ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT CANNOT BE UPHELD. HOWEVER, IT IS ALSO TO BE SEEN THAT THE INVESTIGATION DIRECTORATE HAS CARRIE D OUT INVESTIGATION FOR DEPOSIT OF CASH/DD AT FOURTH STAGE OF CHANNEL SOURCE IN SOM E CASES. THE CHART SHOWING CASH DEPOSIT/DD DEPOSIT AT 4TH CHANNEL AS PER INQUIRIES MADE BY INVESTIGATION WING IS AS UNDER: COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS BUILDTECH P LTD 2012-2013 15,00,000 EVERSH INE SUPPLIERS P LTD SWASTIK TRADERS MOTISONS BUILDTECH P LTD 2012-2013 20,00,000 ALLIA NCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECUR ITIES MOTISONS BUILDTECH P LTD 2012-2013 17,00,000 ALLIAN CE TRADECOM P LTD SWASTIK TRADERS MOTISONS BUILDTECH P LTD 2012-2013 30,00,000 ALLIAN CE TRADECOM P LTD SWASTIK TRADERS TOTAL 82,00,000 MOTISONS ENTERTAINMENT P LTD 2012-2013 18,00,000 RO SE SUPPLIERS P LTD SHYAM FASHION AND DURGA ENTERPRI SES MOTISONS ENTERTAINMENT P LTD 2012-2013 46,00,000 RE GENT BARTER P LTD DURGA ENTERPRISES AND SHYAM FASHI ON MOTISONS ENTERTAINMENT P LTD 2012-2013 4,50,000 MAY UKH VINIMAY P LTD SHYAM FASHION AND DURGA ENTERPRIS ES MOTISONS ENTERTAINMENT P LTD 2012-2013 10,00,000 M AYUKH VINIMAY P LTD SHYAM FASHION AND DURGA ENTERPR ISES MOTISONS ENTERTAINMENT P LTD 2012-2013 16,00,000 RE GENT DEALERS P LTD SHYAM FASHION MOTISONS ENTERTAINMENT P LTD 2012-2013 10,00,000 RE GENT DEALERS P LTD DURGA ENTERPRISES MOTISONS ENTERTAINMENT P LTD 2012-2013 8,00,000 REG ENT DEALERS P LTD DURGA ENTERPRISES AND SHYAM FASHI ON MOTISONS ENTERTAINMENT P LTD 2012-2013 29,00,000 A LLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL S ECURITIES TOTAL 1,41,50,000 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 65 COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS GLOBAL P LTD 2012-2013 17,00,000 ROSE SUP PLIERS P LTD DURGA ENTERPRISES AND SHYAM FASHION MOTISONS GLOBAL P LTD 2012-2013 18,00,000 ROSE SUPP LIERS P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 19,00,000 ROSE SUPP LIERS P LTD NIBU NAGI AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 3,50,000 ROSE SUPPL IERS P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 14,00,000 ROSE SUPP LIERS P LTD SHYAM FASHION MOTISONS GLOBAL P LTD 2012-2013 18,50,000 ROSE SUPP LIERS P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 18,00,000 REGENT BA RTER P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 18,00,000 MAYUKH VI NIMAY P LTD NIBU NAGI AND KEVILHULIE SUNOTSU MOTISONS GLOBAL P LTD 2012-2013 35,00,000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 16,00,000 MAYUKH VI NIMAY P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 15,00,000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 41,00,000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 16,47,727 EVERSHINE SUPPLIERS P LTD PNB, AXIS BANK, SILIGURI MOTISONS GLOBAL P LTD 2012-2013 36,00,000 EVERSHINE SUPPLIERS P LTD DURGA ENTERPRISES AND SHYAM FASHIO N MOTISONS GLOBAL P LTD 2012-2013 18,00,000 EVERSHINE P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 9,00,000 REGENT DEA LERS P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 18,00,000 REGENT DE ALERS P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 9,00,000 REGENT DEA LERS P LTD KEVIHULIE SINOTSU MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 28,50,000 REGENT DEALERS P LTD DURGA ENTERPRISES AND SHYAM F ASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 18,50,000 REGENT DEALERS P LTD SHYAM FASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 22,00,000 ALLIANCE TRADECOM P LTD PNB, AXIS BANK SILIGURI, SWASTIK TRADERS AND GLOBAL SECURITIES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 10,00,000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 35,00,000 ALLIANCE TRADECOM P LTD M/S SWASTIK TRADERS , GLOBAL SECURITIES AXIS BANK SILIGURI, MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 20,00,000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECURITIES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 20,00,000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECURITIES ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 66 COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 16,00,000 ALLIANCE TRADECOM P LTD DURGA ENTERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 9,50,000 ALLIANCE TRADECOM P LTD SHYAM FASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 10,00,000 ALLIANCE TRADECOM P LTD SHYAM FASHION AND DURGA EN TERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 3000000 A LLIANCE P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 16,00,000 ALLIANCE P LTD P LTD NIBU NAGI MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 19,50,000 ALLIANCE TRADECOM P LTD DURGA ENTERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2013-2014 5050000 A LLIANCE TRADECOM P LTD SHYAM FASHION AND DURGA ENTE RPRISES TOTAL 6,44,97,727 SHIVANSH BUILDCON P LTD 2012-2013 3,50,000 EVERSHIN E SUPPLIERS P LTD DURGA ENTERPRISES, SWASTIK AND SHYAM FASHION TOTAL 3,50,000 GRAND TOTAL 8,71,97,727 2.1.4.7 IN VIEW OF ABOVE FINDINGS, IT IS ALSO SEEN THAT THIS CASH/DD WAS DEPOSITED AT 4 TH CHANNEL OF SOURCE/STAGE . THIS MONEY CAME TO THE HANDS OF SOME OF APPELLANT COMPAN IES THROUGH THE SIX COMPANIES ASSESSED IN JAIPUR. H OWEVER, ON PERUSAL OF WRITTEN SUBMISSIONS AND COMPLIANCE TO SH OW CAUSE LETTER , IT IS ALSO SEEN THAT ASSESSEE HAS NOT CONTROVERTED THE FACTS NARRATED BY SH SANTOSH CHOUBE, SH RAJESH KR S INGH AND SH AJIT SHARMA AND ALSO COULD NOT SATISFAC TORILY EXPLAIN THE REASONS OF CASH DEPOSITS MADE TO THOSE ACCOUNTS . THEREFORE, DULY CONSIDERING THOSE FACTS AND EVID ENCES( BOTH DOCUMENTARY & ORAL) GATHERED DURING SEARCH & POST-S EARCH OPERATION , ADDITION TO THE EXTENT OF RS. 8,7 1,97,727/= IS SUSTAINED AND BALANCE IS DELETED, DETAILS GIVEN AS UNDER: NAME OF APPELLANT COMPANY ITA NO AY ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/ RELIEF GIVEN MOTISONS GLOBAL PVT. LTD 753/14-15 2009-10 2,75,00 ,000 ------------- 2,75,00,000 MOTISONS GLOBAL PVT. LTD 754/14-15 2011-12 6,96,50 ,000 --------------- 6,96,50,000 MOTISONS GLOBAL PVT. LTD 767/14-15 2012-13 42,07,2 9,600 5,94,47,727 36,12,81,873 MOTISONS GLOBAL PVT. LTD 755/14-15 2013-14 4,41,00 ,000 50,50,000 3,90,50,000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 200 9-10 3,40,00,000 --------------- 3,40,00,000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 201 1-12 1,95,00,000 ---------------- 1,95,00,000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 201 2-13 7,78,00,000 1,41,50,000 6,36,50,000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3,03 ,00,000 --------------- 3,03,00,000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3,68 ,27,500 82,00,000 2,86,27,500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2,00,0 0,000 -------------- 2,00,00,000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10,30, 00,000 -------------- 10,30,00,000 BHOLENATH REAL ESTATES PVT LTD 770/14-15 2009-10 2 ,90,00,000 --------------- 2,90,00,000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2,00,0 0,000 --------------- 2,00,00,000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90,00 ,000 3,50,000 86,50,000 TOTAL ADDITIONS 94,14,07,100 8,71,97,727 85,42,09,373 ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 67 IT IS PERTINENT TO MENTION HERE THAT M/S MAYUKH VIN IMAY PVT LTD RECEIVED SHARE APPLICATION OF RS. 10,54,95,000/- IN AY 2009-10 WHICH WAS ADDED AS INCOME OF M/S MAYUKH VINIMAY PVT LTD IN AY 2009-10. THEREAFTER IN SUBSEQUENT YEARS THE PART OF THE FUNDS OWNED BY THIS COMPANY WAS INVESTED IN THE COMPANIES UNDER APPEAL AS UNDER: S.NO NAME OF COMPANY (UNDER YOUR APPEAL) ASSESSMENT YEAR AMOUNT 1 MOTISONS GLOBAL PVT LTD 2012-13 6,93,49,800 2. MOTISONS GLOBAL PVT LTD 2013-14 2,24,50,000 3 MOTISONS ENTERTAINMENT (INDIA) PVT LTD 2012-13 1, 55,00,000 TOTAL 10,72,99,800 FURTHER, IT IS ALSO SUBMITTED THAT ADDITION MADE BY THE AO TANTAMOUNT TO DOUBLE ADDITION. IT IS ALSO M ENTIONED HERE THAT AS PER LD ARS REQUEST, APPELLATE PROCEEDINGS IN CASE OF M/S MAYUKH VINIMAY PVT LTD HAVE BEEN KEP T IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY HONBLE ITAT. IN VIEW OF AFOREMENTIONED FINDINGS, NOW ADDITIONS M ADE BY THE AO ARE BEING DISCUSSED WITH RESPECT TO G ROUNDS OF APPEAL RAISED BY THE RESPECTIVE ASSESSEE IN PARA BELOW. SECTION 68 OF THE ACT PROVIDES REGARDING ANY SUM F OUND CREDITED IN THE BOOKS OF AN ASSESSE MAINTAINED AND EXPLANATION OFFERED BY THE A SSESSEE IS NOT SATISFACTORY IN THE OPINION OF THE AO THEN SUCH SUM CREDITED BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE SECTION 68 READS AS UNDER:- SECTION 68 CASH CREDITS: WHERE ANY SUM IS FOUND C REDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YE AR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE (ASSESSING) OF FICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THUS THE SUM SO RECEIVED BY ASSESSEE TOWARDS SHARE APPLICATION AND SHARE PREMIUM COULD HAVE BEEN TAXED AS INCOME U/S 68 OF THE ACT. HOWEVER, THE AO HAS NOT INVOKED PROVISIONS OF SEC 68 OF THE ACT. THE AO INVOK ED THE PROVISIONS OF SEC 56(1) OF THE ACT WHICH READS AS UNDER:- 56. INCOME FROM OTHER SOURCES . (1) INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED F ROM THE TOTAL INCOME UNDER THE ACT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD. INCOME FR OM OTHER SOURCES, IF IT IS NOT CHARGEABLE TO INCOME TAX UNDER ANY OF THE HEADS SPECIFIED IN SECT ION 14, ITEMS A TO E. THE PROVISIONS OF SECTION 56(1) THE ACT CAN BE INV OKED TO TAX INCOME OF EVERY KIND WHICH IS NOT CHARGEABLE TO TAX UNDER ANY HEAD SPECI FIED IN SECTION 14 FROM ITEM NO. A TO E IS CHARGEABLE UNDER THE HEAD INCOME FROM OT HER SOURCES BY THE PROVISIONS OF SECTION 56 OF THE ACT. . THEREFORE, PROVISIONS OF SEC 56(1) ARE NOT APPLICABLE. FURTHER THE AMENDED PROVISIONS OF SEC 56 (2) OF THE I.T. AC T, 1961 SPECIFY THE VARIOUS INCOME TO BE ASSESSED UNDER THIS SECTION. THE PREMIUM ON SHARES HAS BEEN INCLUDED BY PROVISION OF SEC 56(2)(VIIIB)OF THE ACT W.E.F. 01-0 4-2014 WHICH IS REPRODUCED AS UNDER: ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 68 56(2) IN PARTICULAR, AND WITHOUT PREJUDICE TO THE GENERALITY OF THE PROVISIONS OF SUB-SECTION (1), THE FOLLOWING INCOMES, SHALL BE CH ARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FROM OTHER SOURCES NAMELY:- (I) DIVIDENDS (IA) TO (VIIA) (VIIB) WHERE A COMPANY, NOT BEING A COMPANY IN WHI CH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON BEING A RESIDENT, ANY CONSIDERATION FOR ISSUE OF SHARES THA T EXCEEDS THE FACE VALUE OF SUCH SHARES, THE AGGREGATE CONSIDERATION RECEIVED FOR SU CH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES: THIS HAS ALSO BEEN INCLUDED IN THE DEFINITION OF IN COME U/S 2(24)OF THE ACT W.E.F. 01- 04-2013. THE RELEVANT PORTION READS AS UNDER:- (XVI) ANY CONSIDERATION RECEIVED FOR ISSUE OF SHA RES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARE REFERRED TO IN CLAUSE (VIIB) OF SUB-SECTION ( 2) OF SECTION 56;] TO TAX THE INCOME UNDER THE ACT, IT MUST COME UNDER THE DEFINITION OF INCOME AS PROVIDED U/S 2(24) OF THE I.T. ACT, 1961. THERE WER E AMENDMENTS IN SEC 2(24) OF THE ACT AND IN SECTION 56(2) OF THE ACT W.E.F. 01-04-20 13 ARE NOT APPLICABLE TO A.Y. UNDER CONSIDERATION. BY THESE AMENDED PROVISIONS, ANY CON SIDERATION RECEIVED FOR ISSUE OF SHARES THAT EXCEEDS THE FACE MARKET VALUE OF SUCH S HARES THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL BE TAXABLE AS PER CLAUSE (VIIB) OF SUB-SECTION 2 OF SECTION 56 OF THE ACT. THE CBDT VIDE CIRCULAR NO. 3 OF 2012 DATED 12-06-2012 HAS ALSO MENTIONED T HAT PROVISION OF SECTION 56(2)(VIIB) WILL BE APPLICABLE FOR A.Y. 2013-14. TH US THE RELEVANT PORTION OF CBDT CIRCULAR IS REPRODUCED IS AS UNDER:- SHARE PREMIUM IN EXCESS OF FAIR MARKET VALUE TO BE TREATED AS INCOME IN THE FINANCE BILL, 2012, IT HAD BEEN PROPOSED [SE CTION 56(2), AS SUB-CLAUSE [(VIIB)] THAT IN CASE OF A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC AR E SUBSTANTIALLY INTERESTED, WHICH RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON BEING A RESIDENT, AN Y CONSIDERATION FOR ISSUE OF SHARES AND THE CONSIDERATION RECEIVED FOR ISSUE OF SUCH SHARES EXC EEDS THE FACE VALUE OF SUCH SHARES, THEN THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL BE CHARGEABLE TO INCOME TAX. AN EXEMPTION WAS PROVI DED IN A CASE WHERE THE CONSIDERATION FOR ISSUE OF SHARES IS RECEIVED BY A VENTURE CAPITAL UNDERTAKING FROM A VENTURE CAPITAL COMPANY OR A VENTURE CAPITAL FUND. (I) IT HAS NOW BEEN FURTHER PROVIDED THAT SUCH EXC ESS SHARE PREMIUM IS INCLUDED IN THE DEFINITION OF 'INCOME' UNDER SUB-CLAUSE (XVI) OF CLAUSE (24) OF S ECTION 2. (II) CONSIDERING THAT THE PROPOSED AMENDMENT MAY C AUSE AVOIDABLE DIFFICULTY TO INVESTORS WHO INVEST IN START-UPS WHERE THE FAIR MARKET VALUE MAY NOT BE DETERMINED ACCURATELY, IT IS PROPOSED TO PROVIDE AN EXEMPTION TO ANY OTHER CLASS OF INVESTOR S AS MAY BE NOTIFIED BY THE CENTRAL GOVERNMENT. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL, 2 013 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSMENT Y EARS. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 69 THE PROVISIONS OF SEC 56(2)(VIIB) OF INCOME-TAX AC T, 1961 ARE APPLICABLE W.E.F. 1 ST APRIL, 2013 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSMENT YEARS. THE INCOME AS MENTIONE D IN SECTION 56(2)(VIIB) IS INCLUDED IN DEFINITION OF SECTION 2(24) OF THE ACT W.E.F. 01-04-2013. THEREFORE, THE PROVISIONS OF THESE SECTIONS CANNOT BE MADE APPLICA BLE PRIOR TO THAT A.Y. 2013-14. IT IS PERTINENT TO NOTE THAT THE LD. CIT(A) HAD ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE TO TAX THE SHARE CAPITAL UNDER SECTION 68 OF THE I.T. ACT, 1961 AS AGAINST SECTION 56(1) APPLIED BY THE AO. HOWEVER, HE HAD N OT MADE ANY ADDITION UNDER SECTION 68 OF THE ACT. HIS OBSERVATION ON THIS ISSU E IS IN PARA 2.1.4.6 WHICH READS AS UNDER:- 2.1.4.6 THEREFORE, IN VIEW OF THE FINDINGS OF HON 'BLE JURISDICTIONAL HIGH COURT, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION OF THESE COMPANIES CANNOT BE HELD AS DOUBTFUL AND ADDITION BY APPLYING THE PROVISIONS OF SEC 68 OF TH E ACT CANNOT BE UPHELD. THE REVENUE HAS NOT PREFERRED APPEAL AGAINST THIS F INDINGS THE LD. CIT(A). IT IS ALSO PERTINENT TO NOTE THAT AO HAS MADE WHOLE ADDITION B Y INVOKING SECTION 56 OF THE ACT, HENCE THE AMENDED PROVISION W.E.F. 01-04-2013 ARE A PPLICABLE ONLY ON SHARES PREMIUM RECEIVED ON FAIR MARKET VALUE. IN VIEW OF THESE FACTS, CIRCUMSTANCES OF THE CASE AND THE CASE LAWS RELIED ON BY THE LD.AR OF TH E ASSESSEE (SUPRA), IT IS CLEAR THAT SHARE PREMIUM RECEIVED CANNOT BE CONSIDERED AS INCO ME FOR THE YEAR UNDER CONSIDERATION BY INVOKING PROVISIONS OF SECTION 56 (1) OF THE ACT. THEREFORE, IN OUR CONSIDERED VIEW, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 3,03,00,000/- AND WE CONCUR WITH HIS FINDINGS ON THE ISSUE IN QUE STION THUS THE REVENUES APPEAL IN ITA NO. 481/JP/2017 IS DISMISSED. SINCE THE ISSUE RAISED BY THE REVENUE IN THE PRES ENT APPEAL IS SAME AS DECIDED IN THE APPEAL OF THE REVENUE IN ITA NO.481 /JP/2017FOR THE ASSESSMENT YEAR 2009-10 IN THE CASE OF ACIT, CENTRA L CIRCLE-2, JAIPUR VS MOTISONS BUILDTECH PVT. LTD JAIPUR SHALL APPLY MUT ATIS MUTANDIS IN THIS APPEAL OF REVENUE ALSO. THUS SOLITARY GROUND OF THE REVENUES APPEAL IN ITA NO.492/JP/2017 FOR ASSESSMENT YEAR 2009-10 IS DISMISSED. ITA NO. 492/JP/2017 DCIT, CENTRAL CIRCLE-2, JAIPUR VS M/S. BHOLENAT H REAL ESTATES PVT.LTD. JAIPUR 70 3.0 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 02 -11-20 17. SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/11/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CENTRAL CIRCLE2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. BHOLENATH REAL ESTATES PVT. L TD., JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 492/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR
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